U.S. Development Assistance to Bolivia Should Follow International Norms

Hopefully, Assistant Secretary of State, Arturo Valenzuela’s June 1 visit to La Paz will jumpstart efforts to reach and sign a new bilateral framework agreement between Bolivia and the U.S.  A central point of contention continues to be broader transparency and ownership of development aid programs. However, it is not necessary to start from scratch to define how the two countries should structure, implement and monitor development assistance. Key international agreements—ratified by both Bolivia and the United States—including the Paris Declaration on Aid Effectiveness (2005) and the Accra Agenda for Action (2008),[i] provide clear and pragmatic guidelines for agencies’ relationships with host or “partner” countries. Most importantly, these accords guarantee host countries’ ownership and decision-making power over of development policy within their borders. The Bolivia-U.S. bilateral framework agreement should respect and directly reflect these principles.

Key elements of the Paris Declaration and the Accra Agenda:

  • Programs should be implemented through agreements between the donor and the recipient (partner) country;
  • Donors should not support or fund separate initiatives that could undermine the partner nation;
  • Donors and recipients should reach consensus on who will carry out and monitor development initiatives;
  • Cooperation should be carried out through existing host country institutions, not parallel structures formed by donors;
  • Hiring, procurement and implementation should comply with national legislation and procedures;
  • Development assistance should be made more efficient through improved “codes of conduct,” untying aid[ii] and greater “harmonization”[iii] or cooperation between host countries and donors;
  • Specific goals to be met by 2010.

The U.S. actively participated in the development of the Paris Declaration and the follow-up Accra Agenda, and heralded their approval:

“USAID Administrator Andrew Natsios — endorsed the Paris Declaration on Aid Effectiveness. The Paris Declaration commits donor and developing countries and institutions to continue and increase efforts in harmonization, alignment, and managing aid for results.” [iv]

“The United States is pleased with the new Accra Agenda for Action. It is a realistically ambitious agenda. It seeks to change the face of poverty and help developing nations to manage aid more effectively. […] Our President and our Congress demand […] that we use these precious taxpayer funds effectively.”[v]

Furthermore, Bolivia is part a special group of nations selected for monitoring progress towards compliance of the Declaration. An in-depth study, conducted in 2008, provided detailed indicators to facilitate implementation of the accords within Bolivia. [vi]

U.S. non-compliance out of step:  It’s time to rejoin the international community

Although the great majority of international donors to Bolivia have significantly revamped their procedures and practices to comply with these new development norms, USAID, once on the cutting edge of innovative development policy, has lagged far behind.  As a result, U.S. development policy is out of step with the rest of the international community. Continuing to insist on unilateral determination of development initiatives and granting predetermined project implementation units to private contractors – often U.S. based – violates the terms of the Paris Declaration and Accra Agenda and impedes collaboration with other international donors.  Furthermore, U.S. adherence to principles already accepted at the international level in a formal framework agreement with Bolivia would go a long way to mitigate the mistrust of the Morales administration.  The Bolivian government perception that USAID promoted a political agenda supporting opposition departmental governments contributed to the decision to expel Ambassador Goldberg in 2008.

Although new framework for bilateral relations would obligate USAID to significantly modify its operations in Bolivia, this request would bring the institution into compliance with pre-existing international norms, long ratified by the United States and long implemented by other international donors in the country. The Bolivian government must also continue to strengthen internal mechanisms to plan, implement, monitor and evaluate international aid. In short, it’s time for both the United States and Bolivia to sign a framework agreement that reiterates and confirms mutual commitments from the Paris Declaration, Accra Agenda and other international initiatives. Both nations must continue to work towards meeting the goals they committed to complete by 2010.

Other important principles in the Paris Declaration and Accra Agenda:

  • Partner countries exercise effective leadership over their development policies and strategies and coordinate development actions. [Paris Declaration.]
  • Country ownership is key. Developing country governments will take stronger leadership of their own development policies, and will engage with their parliaments and citizens in shaping those policies. [Accra Agenda for Action 8.]
  • Donors’ support for capacity development will be demand-driven and designed to support country ownership. To this end, developing countries and donors will i) jointly select and manage technical co-operation, and ii) promote the provision of technical cooperation by local and regional resources, including through South-South cooperation. [Accra Agenda for Action 14.b.]
  • In determining the most effective modalities of aid delivery, we will be guided by development strategies and priorities established by partner countries. [Paris Declaration I.5.]
  • Increasing alignment of aid with partner countries’ priorities, systems and procedures and helping to strengthen their capacities. [Paris Declaration I.3.ii.]
  • Reforming and simplifying donor policies and procedures to encourage collaborative behavior and progressive alignment with partner countries’ priorities, systems and procedures. [Paris Declaration I.3.v.]
  • Partner countries commit to exercise leadership in developing and implementing their national development strategies through broad consultative processes.
  • Partner countries commit to translate these national development strategies into prioritized results-oriented operational programs as expressed in medium-term expenditure frameworks and annual budgets.
  • Partner countries commit to take the lead in coordinating aid at all levels in conjunction with other development resources in dialogue with donors and encouraging the participation of civil society and the private sector. [Paris Declaration II.14.]
  • Donors commit to using a country’s own institutions and systems, where these provide assurance that aid will be used for agreed purposes, increases aid effectiveness by strengthening the partner country’s sustainable capacity to develop, implement and account for its policies to its citizens and parliament. [Paris Declaration II.17.]
  • Partner countries and donors jointly commit to: Work together to establish mutually agreed frameworks that provide reliable assessments of performance, transparency and accountability of country systems (Indicator 2). [Paris Declaration II.19.]
  • Donors commit to use country systems and procedures to the maximum extent possible. Where use of country systems is not feasible, establish additional safeguards and measures in ways that strengthen rather than undermine country systems and procedures. [Paris Declaration II.21.
  • The capacity to plan, manage, implement, and account for results of policies and programs, is critical for achieving development objectives – from analysis and dialogue through implementation, monitoring and evaluation. Capacity development is the responsibility of partner countries with donors playing a support role. [Paris Declaration II.22.]
  • Donors commit to rely to the maximum extent possible on transparent partner government budget and accounting mechanisms. [Paris Declaration II.26.]
  • Untying aid generally increases aid effectiveness by reducing transaction costs for partner countries and improving country ownership and alignment. [Paris Declaration II.31.]
  • Donors commit to align to the maximum extent possible behind central government-led strategies or, if that is not possible, donors should make maximum use of country, regional, sector or non-government systems.
  • Avoid activities that undermine national institution building, such as bypassing national budget processes or setting high salaries for local staff. [Paris Declaration II.39.]
  • A major priority for partner countries and donors is to enhance mutual accountability and transparency in the use of development resources. [Paris Declaration II.47.]
  • Donors commit to provide timely, transparent and comprehensive information on aid flows so as to enable partner authorities to present comprehensive budget reports to their legislatures and citizens. [Paris Declaration II.49.]
  • Donors will support them by respecting countries’ priorities, investing in their human resources and institutions, making greater use of their systems to deliver aid, and increasing the predictability of aid flows. [Accra Agenda for Action 8.]
  • Developing countries determine and implement their development policies to achieve their own economic, social and environmental goals. [Accra Agenda for Action 12.]
  • Developing country governments will work more closely with parliaments and local authorities in preparing, implementing and monitoring national development policies and plans. They will also engage with civil society organizations (CSOs). [Accra Agenda for Action 13.a.]
  • Donors agree to use country systems as the first option for aid programs in support of activities managed by the public sector. [Accra Agenda for Action 15.a.]
  • Donors will align their monitoring with country information systems. They will support, and invest in strengthening, developing countries’ national statistical capacity and information systems, including those for managing aid. [Accra Agenda for Action 23.c.]
  • We will make aid more transparent. Developing countries will facilitate parliamentary oversight by implementing greater transparency in public financial management, including public disclosure of revenues, budgets, expenditures, procurement and audits.
  • Donors will publicly disclose regular, detailed and timely information on volume, allocation and, when available, results of development expenditure to enable more accurate budget, accounting and audit by developing countries. [Accra Agenda for Action 24.a.]

Appendix: Paris Declaration List of Participating Countries and Organizations in 2005.

Updated list: www.oecd.org/dac/effectiveness/parisdeclaration/members

Participating Countries

Albania Australia Austria Bangladesh
Belgium Benin Bolivia Botswana
[Brazil]* Burkina Faso Burundi Cambodia
Cameroon Canada China Congo D.R.
Czech Republic Denmark Dominican Republic Egypt
Ethiopia European Commission Fiji Finland
France Gambia, The Germany Ghana
Greece Guatemala Guinea Honduras
Iceland Indonesia Ireland Italy
Jamaica Japan Jordan Kenya
Korea Kuwait Kyrgyz Republic Lao PDR
Luxembourg Madagascar Malawi Malaysia
Mali Mauritania Mexico Mongolia
Morocco Mozambique Nepal Netherlands
New Zealand Nicaragua Niger Norway
Pakistan Papua New Guinea Philippines Poland
Portugal Romania Russian Federation Rwanda
Saudi Arabia Senegal Serbia and Montenegro Slovak Republic
Solomon Islands South Africa Spain Sri Lanka
Sweden Switzerland Tajikistan Tanzania
Thailand Timor-Leste Tunisia Turkey
Uganda United Kingdom United States of America Vanuatu
Vietnam Yemen Zambia

*To be confirmed.

Participating Organizations

African Development Bank Arab Bank for Economic Development in Africa
Asian Development Bank Commonwealth Secretariat
Consultative Group to Assist the Poorest (CGAP) Council of Europe Development Bank (CEB)
Economic Commission for Africa (ECA) Education for All Fast Track Initiative (EFA-FTI)
European Bank for Reconstruction and Development (EBRD) European Investment Bank (EIB)
Global Fund to Fight Aids, Tuberculosis and Malaria G24
Inter-American Development Bank International Fund for Agricultural Development (IFAD)
International Monetary Fund (IMF) International Organization of the Francophonie
Islamic Development Bank Millennium Campaign
New Partnership for Africa’s Development (NEPAD) Nordic Development Fund
Organization for Economic Cooperation and Development (OECD) Organization of Eastern Caribbean States (OECS)
OPEC Fund for International Development Pacific Islands Forum Secretariat
United Nations Development Group (UNDG) World Bank

[i] Paris Declaration on Aid Effectiveness and the Accra Agenda for Action. http://www.oecd.org/dataoecd/30/63/43911948.pdf.  Other important international documents include the 2003 “Rome Declaration on Harmonization.” http://www.oecd.org/dataoecd/54/50/31451637.pdf.

[ii] According to the European Union, “Tied aid is aid given on the condition that the beneficiary will use it to purchase goods and services from suppliers based in the donor country.”Untying aid” therefore means opening up those purchases to suppliers based elsewhere than just in the donor country.”

http://europa.eu/legislation_summaries/development/general_development_framework/r12108_en.htm

[iii] Harmonization includes Implementation, “where feasible, common arrangements at country level for planning, funding (e.g. joint financial arrangements), disbursement, monitoring, evaluating and reporting to government on donor activities and aid flows.   Increased use of programme-based aid modalities can contribute to this effort” (Indicator 9 of the Paris Declaration).

[iv] USAID, “Guidance to USAID Field Missions Frequently Asked Questions: Delivering Organization for Economic Cooperation and Development Assistance Committee (OECD/DAC) Paris Declaration on Aid Effectiveness.” (Washington, D.C.: March 2006). http://pdf.usaid.gov/pdf_docs/Pdach113.pdf.

[v] This press statement continues, “The United States delegation succeeded in inserting into the Accra Agenda for Action (AAA) several concrete actions to significantly advance the implementation of the Paris Declaration so that partner developing countries would assume more ownership, accountability and partnership with U.S. foreign assistance….Broad country ownership, including governments, civil society and the private sector, is critical to aid effectiveness. […] The Accra Action Agenda recognizes the importance of country ownership and transparency in ensuring governments are accountable for their development outcomes,” stated U.S. Deputy Delegation Leader, Maureen Harrington of the Millennium Challenge Corporation. USAID Press Release: “Accra Action Agenda Finalized: A Realistically Ambitious Development Agenda” September 4, 2008.  http://www.usaid.gov/press/releases/2008/pr080904_1.html.

[vi] Better Aid.2008 Survey on Monitoring the Paris Declaration MAKING AID MORE EFFECTIVE BY 2010. OECD Full report: http://www.oecd.org/dataoecd/58/41/41202121.pdf.

Bolivia Chapter (in Spanish): http://www.oecd.org/dataoecd/34/40/42622450.pdf.