Foreign aid and state building

  • Donors need to look at both institutions of representation and institutions of restraint

Sep 3, 2018-

This short comment aims to look at the trend of foreign investment in Nepal in the midst of its transition from a war-torn to a post-conflict nation, and emphasise the opportunity to shift the traditional state building paradigm to a more context-driven, responsive and accountable path.

The fundamental argument recurring through the comment is that development agencies, when designing and implementing governance and post-conflict reconstruction-based development interventions, have tended to focus primarily on strengthening institutions of representation—government, Parliament and state bodies—as their primary focus on state building. At the same time, they have substantially neglected, thereby undermined, the impact of institutions of restraint—judicial, oversight and quasi-judicial bodies.

Holistic approach

This lopsided approach to state building has largely yielded unintended results, and in some instances, further exasperated Nepal’s perpetual struggle with corruption, impunity and good governance. Therefore, this short comment advocates a more holistic approach whereby balanced impetus is provided to both institutions of representation and institutions of restraint. This will help to institutionalise democracy and the rule of law and provide a reliable framework for sustainable state building in Nepal.

As a least developed country (LDC), Nepal has been steadily receiving foreign aid for more than six decades. It is currently estimated that the foreign aid, including grants and loans, that pours into Nepal adds up to a staggering $3 billion a year, which amounts to a quarter of the country’s annual budget. Primarily, Nepal receives external support for education, local development, health, road construction, energy, agriculture, drinking water and peace and rehabilitation.

In addition, various economic reconstruction and economic, financial and governance reform programmes are also heavily funded by external bilateral and multilateral donor agencies.

Despite continuous interventions at the national, sub-national and local levels by foreign aid agencies, development efforts in Nepal failed to achieve their intended outcome, contributing to a further rise in unemployment, poverty and rural-urban inequality. It is often argued that development failure, together with corruption, inequality, poverty, social exclusion, lack of good governance and short-sightedness of the ruling elite, provided fertile ground for the civil war in Nepal.

In the aftermath of the armed conflict, foreign aid poured in to implement the Comprehensive Peace Agreement, the subsequent multiple elections to the Constituent Assembly and the promulgation of the new constitution. Much of the donor’s focused interventions, predicated on the global aid paradigm of post-conflict reconstruction and good governance initiatives, targeted the institutions of representation. The disbursement of unprecedented aid to the institutions of representation, whilst neglecting institutions of restraint, has fuelled corruption and inequality through elite capture, and ultimately contributed to prolonging the transitional period.

In an article entitled ‘Institutions of Restraint: The Missing Element in Pakistan’s Governance’ published in the Pakistan Development Review, Ishrat Husain, Inayatullah and Charles H Kennedy have written that good governance requires checks and balances in a country’s institutional infrastructure, such that politicians and bureaucrats have the flexibility to pursue the common good, while restraining arbitrary action and corruption. In Nepal, development agencies have tended to adopt disparate approaches to building such infrastructure, thereby prolonging arbitrary actions and corruption.

There have been a few interventions within the institutions of restraint, but they have been few and far between to make a substantial impact on the strengthening of judicial, oversight and quasi-judicial bodies. Furthermore, the interventions geared towards strengthening the institutions of restraint have often limited their scope to the development of human and technical resources at the expense of simultaneously investing in institutionalising a political culture that promotes access to justice, the rule of law and accountability. A holistic approach to state building, therefore, needs to incorporate a context-driven reform of judicial and quasi-judicial structures along with the promotion and institutionalisation of the political ethos that complement it. 

Whilst many foreign aid agencies have acknowledged the role of a formidable and independent judiciary in the establishment of sustainable democratic norms and the institutionalisation of good governance practices and respect for the rule of law, the disparity in interventions within this sector presents an evident dichotomy in thought and practice. In a country with a chequered past with regard to the blatant disregard for transparency, accountability and the rule of law, the exigency of interventions geared toward strengthening the institutions of restraint that will provide checks and balances to the institutions of representation cannot be understated. This is more evident and critical in the context of transitional justice, which is widely regarded as the broader indicator of a state’s transformation from a culture of impunity to a culture of accountability.

Moreover, the promulgation of the new constitution certainly marks a paradigm shift in the constitutional history of Nepal. As a document of compromise, the new constitution has some shortcomings and different interpretative challenges, especially with regard to some fundamental rights. Institutions of restraint, in broader terms, also have a role in implementing and interpreting the constitution. Interventions geared towards strengthening these institutions will also lead to safeguarding access to justice, expediting the implementation of the constitution in the spirit that it was intended, and contribute to social and economic development.

Seizing the opportunity

Following Nepal’s transition from a unitary to a federal country, the need to provide holistic engagement and intervention aimed at assisting both institutions (representation and restraint) becomes even more important to avoid recidivism and potential conflicts in the future.

One, aid providers will have to actively engage with the institutions of representation to institutionalise the transitions mandated by the new constitution—hasten the transition to federalism, support sub-national bodies, strengthen the federal legislature and promote fiscal federalism, and support participatory and inclusive electoral practices at the sub-national and local levels. Two, aid providers will have to simultaneously engage with the institutions of restraint to strengthen security and accountability—support parliamentary oversight committees, independent public service commissions, judicial and quasi-judicial bodies, and constitutional bodies. This approach has the potential to truly impact and chart a progressive course for decades to come, and thereby contribute to overall good governance and sustainable state building.

- Wagley is a development practitioner and holds an LLM in International Law and Human Rights from the University of Sussex, UK.

Published: 03-09-2018 07:55

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