a presentation at the ESCWA regional consultation on finance for development by Talaat Abdel-Malek Doha, 29 th April 2008

 ESCWA has been a major recipient as well as a major source of ODA for the past 30 years  Without referring to many figures, ODA flows have been characterized by the following:  Substantial variability of flows over time:$16 b in 1977 > $6 b in 2000 > $12 b+ in 2004  Wide differences among recipient countries by all indicators (per capita, etc) 2

3  Sharp differences in ODA management  Main reasons for variability of flows:  From Arab sources: oil revenues – geopolitical factors (Peace Treaty with Israel, Palestine, Iraq, etc) – recent tendency to focus on domestic infrastructure  From non-Arab sources: shifting priorities to LDCs vs. middle income countries, increased influence of human rights, governance & gender in ODA allocations

 Positive: support of physical infrastructure, education, health and (to a lesser extent, environment)  Contribution to improved life expectancy and growth rates  Negative: persistent weak national capacities, dominant role of donors and geopolitical factors, threats of Dutch disease  Overall: a very mixed outcome, with variances among countries 4

 ESCWA member countries face enormous challenges (again, noting country variances):  Out-of-date education system (Including vocational education)  Inadequate public health system  Increasingly polluted environment, and scarce water resources  Ailing civil service bureaucracy  Loss of qualified talents “Brain Drain” 5

 Slow (regressed?) gender development  Widening gap in science & technology in the knowledge Century  High unemployment and youth exclusion  Risk of failing to meet MDG targets 6

 Are we making progress?  Yes, definitely:  But at what pace?  How sustainable? and  What role should ODA play in addressing our challenges?  Once again, country differences must be noted 7

 Issues arising from Monterrey Consensus, Paris Declaration and forthcoming Accra Summit  1. How well does ESCWA countries MANAGE ODA flows (donors and recipients)?  2. What is the status of “national ownership”?  3. Do we have sound national development plans/strategies? How are they implemented? 8

 4. How many countries have an “ODA policy” with clear priorities?  5. To what extent are these aligned with development plans?  6. Are we making good use of South-South cooperation?  6. What mechanisms exist for M&E of aid?  7. What to do about ODA variability and the failure of donors to meet Monterrey pledges?  8. Is it time to consider aid exit strategies? 9

 Twin pillars of development:  Capacity building/development at various levels, and  National (not merely government) ownership of development and ODA management  Without these two prerequisites, ODA will continue to be far less effective and overall national development less sustainable than otherwise 10

 Money (national or foreign) does not BUY development.. It is a lubricant.. Not a cause of development  What does capacity building mean/require?:  The three sides of the Capacity Pyramid: ◦ Institutions ◦ Human resource skills & knowledge ◦ Operating systems 11

HUMAN OPERATING RESOURCES SYSTEMS INSTITUTIONS 12

Within the Institution:  Sound management/leadership  Right person in the right job – no room for nepotism  Adequate incentives based on performance  Flexibility to cope with changes 13

External Setting:  Rule of law  Efficient judicial system  Dynamic, competitive, environment  Rewards for innovation & achievements  De-politicization of decision-making The enabling environment is a national responsibility – donors can provide “best practice” & policy advice & training, but cannot/should not manage it. 14

 What has been ODA’s contribution? ◦ Training, training, and more training ◦ Donor-driven and donor incentives ◦ Little institutional development ◦ Little interest/action by national authorities to sustain and strengthen “capacities” built through ODA ◦ False notion of “Technical assistance” in donor- funded projects (cost of consultants, lack of counterpart involvement and “ownership”) 15

 What position should we take at the Summit?  1. Try to reverse the donor-driven process, or at least get more involved as equal partners  2. Put our house in order (ODA policy, serious attention to building capacities)  3. Think ahead: trade more than aid. The time for this has come. We must not be left behind  4. Adopt the “participatory approach” to development. Our goal is sustainable development, not merely growth. 16

THANK YOU 17