Debate Swirls Over UN Economist’s Assessment

Top UN economist Jeffrey Sachs’ visit to Cambodia ended on Tues­­day, and the Millennium Pro­ject director’s departure has left do­nors, government officials and aca­demics in debate over his call to in­crease development assistance to the country to end poverty.

Many agreed with Sachs on Tues­­day that Cambo­dia probably needs a lot more money to halve po­verty by 2015 and to meet the Mil­len­nium Development Goals.

Where they differed was on whe­­ther anti-corruption and ad­min­istrative measures needed to be undertaken before a massive in­­crease in aid. Many also said that such increases would hinge on new commitments by rich na­tions.

Sachs said Monday that judging by countries in similar circumstan­ces, Cambodia might need $1 bil­­lion in aid per year.

He also said that urgent aid cannot wait for “workshops on corruption” and that proper design of pro­jects could improve their im­ple­­men­tation.

Aid is urgent because except for two goals—decreasing the spread of HIV/AIDS and increasing primary school enrollment—Cambodia is not on track to meet the 2015 goals, Sachs said.

But, donors are focused on im­pro­ving good governance, and have said that administrative and ju­­dicial reform must come before large aid increases, said Shyam Baj­pai, the Asian Development Bank country representative.

“The donor community’s view is that several things need to take place first—and the anti-corruption law is one of them,” he said. “An en­­vironment needs to be created where implementation is more ef­fective.”

Bajpai said that, for the next two to three years, the ADB’s funding to Cambodia is set at around $50 mil­lion per year.

“I think Professor Sachs’ point is that until wealthy nations give more in aid, there is not the mo­ney to increase aid sufficiently. He is talking about the need side but the supply side is another matter,” he said.

Russell Peterson, head of NGO Forum, agreed with the ADB’s view on reform.

“Before aid is increased there are things that need to be done first. Otherwise aid will be wasted and governance could actually be weakened,” he said. “There is al­ways the danger that aid could ac­tually fund corrupt government.”

Peterson added that there must be education of officials about cor­rup­tion, penalties if they steal, and in­­dependent, outside monitoring of the government.

He added that audits could dis­co­­ver corruption but they do not work without enforcement of laws.

“The donors need to make the government aware that assistance is available and [of] what is possible if the government follows through on its reform program,” he said.

He also said that donor methods have to be changed, removing de­pendence on consultants.

“The nature of aid is such that it can create over-dependence, with par­allel structures being set up that undermine the ability of ministries to control their portfolios,” he said.

Peterson said he agreed with Sachs’ argument that grants should replace loans, and argued that the US’ loans to the Lon Nol re­gime between 1970 and 1975 should be forgiven.

Economist Kang Chandararot said that he sided with Sachs in the debate: Aid is too urgently needed to wait for reform.

“I know that some donors are talking about reducing aid to control corruption. I think that since we know some amount of aid will be diverted by corrupt officials, more aid should be given to com­pen­sate us for the loss, that way we still have the roads at least.”

Kang Chandararot said new aid is most urgently needed to im­prove infrastructure, to link isolated communities that he called “islands on the mainland” to markets, to integrate Cambodia into the regional economy, and to im­prove the investment environment.

He said he agreed with Sachs that food processing could create large numbers of jobs here, but ad­ded that licensing and quality con­trol reforms are necessary.

Sachs also said he strongly opposes user fees at public health clinics, a policy the Health Min­is­try has adopted.

“Poor people can’t afford user fees,” he said. “Imposing user fees won’t solve [corruption] and it won’t increase access for poor people.”

Health Minister Nuth Sokhom said the very poor still receive care free of charge under the new user fees scheme.

Economist Sok Hach said the Economic Institute of Cambodia is studying the economic effects of in­creasing aid and raising civil servant salaries. The study should be completed by next month, he said.

UN Resident Coordinator Doug­­las Gardner said Sachs’ visit was useful, paving the way for meetings in September during which the UN will examine progress on the Millennium Pro­ject.

Asked if donors are debating re­form versus increased aid, he said that both must occur.

“I don’t think they are mutually ex­clusive and I think that was his point,” he said. “There are very ur­gent needs especially at the rural level. He talked of bed nets, im­proved seeds…these are very cost effective programs that have a big impact…. There also needs to be re­form.”

Asked about Sachs’ call to make aid easier to monitor, Gardner said that this is an ongoing issue in the development world.

He said that large funding in­creases for the development goals would involve rich nations meeting commitment to give 0.7 percent of their GDPs in aid.