Donor Discontent May Not Lessen Donor Largesse

As the morning dragged on, the complaints mounted. One after another, Cambodia’s foreign donors told the ninth Government-Donor Coordination Committee meeting that work on the country’s reform agenda was not only lagging, in some cases it could not be performed.

And as the Feb 12 meeting in Phnom Penh wrapped up, diplomats hinted that aid could shrink as a result of the poor grades Cambodia received for its flagging efforts on long-awaited government reform.

Prime Minister Hun Sen appeared to respond to the downbeat meeting with donors just days later at a groundbreaking ceremony for a Chinese-funded road in Kratie province where he extolled China’s generosity, which came with no demands on Cambodia.

Yet Hun Sen need not be unduly concerned by the conditions, or “benchmarks,” donor countries have placed on their aid to Cambodia, as achieving reform results are not the only factor in deciding whether the country will receive aid, or how much it will receive.

The hour has many times grown late, but the bell has rarely tolled in Cambodia’s history of recent donor pledges.

A decade ago at the 1997 donors’ Consultative Group in Paris, delegates pledged $450 million to Cambodia but warned that progress on key reforms would be needed to maintain aid at that level.

The day after that CG meeting closed, forces loyal to then-second prime minister Hun Sen ousted then-first prime minister Prince Norodom Ranariddh in bloody street battles in Phnom Penh. Unsurprisingly, Cambodia lost much of its recently pledged aid in the wake of the fighting.

Due to the 1998 elections, the third CG meeting was postponed until 1999. But when it met, donors pledged $470 million in aid. With that figure exceeding Cambodia’s request for assistance by $20 million, donors demanded “actions, not words” for reform. And two days later, Prime Minister Hun Sen promised to step down in two years if Cambodia didn’t make the required progress.

In 2000, the year the CG first agreed to set firm benchmarks for progress, pledges rose to $548 million, which was $48 more than Cambodia had requested. They rose yet again to $615 million in 2001-again exceeding Cambodia’s request by $115 million.

Following that year’s pledges, the Asian Development Bank’s Country Representative Urooj Malik reiterated again that donors wanted real progress on reforms.

“The government’s report card since the last CG meeting does not look good,” Malik said at the time.

Then-British Ambassador Stephen Bridges said there had been “little or no progress” in judicial reform or anticorruption efforts.

“These are key reform issues and are essential for the future development of the country,” Bridges said at the time.

Indeed, Britain pointed out at the 2002 CG meeting that only four of 10 benchmarks had been met. Yet that year pledges rose yet again to $635 million in 2002.

An anti-corruption law has been a donor benchmark since 2002 and children born the day it was first drafted in 1994 are now preparing to enter high school.

A CG meeting could not be scheduled in 2003 due to the political stalemate following that year’s elections. New methods used to calculate total pledges at the 2004 meeting caused the dollar figure drop.

Total pledges amounted to $504 million, however, World Bank Country Director Ian Porter told reporters at the time that by the new measure, 2002’s amount would have been only $514.

International donors again said the government needed to reform. However, at the meeting’s opening, Porter also warned against empty promises.

These were cases in which “governments pretend to reform and their development partners pretend to support such reforms while everyone pursues their own private agenda,” he said.

The World Bank, which, like the ADB and International Monetary Fund, has clear-cut performance-based criteria for setting assistance levels, reduced it’s contribution to $45 million from 2002’s $70 million pledge due to the absence of good governance reforms.

By the 2006 meeting, donor representatives said privately that their benchmarks had been watered down: The long-awaited anticorruption law was no longer required to meet UN standards and prosecutions under existing anti-corruption laws were no longer a benchmark.

Donors pledged a total of $601 million in aid to Cambodia.

At last month’s meeting, there was no mistaking donor dissatisfaction with the government’s malingering in crucially important areas, such as anticorruption, judicial reform and land reform.

In an address on public sector reforms, Australian Ambassador Lisa Filipetto said foreign consultants have been unable to learn even how many civil servants work in each ministry.

“This is aggregate data that is publicly available in almost every other country,” Filipetto said in her speech.

“Providing it would in no way compromise the requirements of confidentiality about the particulars of individual civil servants,” she added.

After the talks turned to the rising number of economic land concessions, Finance Minister Keat Chhon, the meeting’s chairman, said that in the interests of time, further questions on the land concession issue should be raised at the “technical working group” on land.

The land TWG is one of nearly 20 donor-government committees created to hash out the nitty-gritty of policy details.

World Bank Country Manager Nisha Agrawal quickly pointed out to the meeting that the land concession issue in not a discussion the TWG is capable of having. In an e-mail following the conference, Agrawal explained that the TWG is chaired by officials from the Land Management Ministry, whereas land concessions are granted by the Agriculture Ministry.

“So the issue of [concessions] is falling through the cracks and we are not able to have a good dialogue on it except at the GDCC meetings,” she wrote.

Agriculture Minister Chan Sarun said he would prefer to meet with donors personally every three months rather than send representatives to the technical working group on land.

“If the World Bank has something to discuss, we would like to discuss this among two of us in an internal framework,” he said. “Our door is open wide.”

In addition to legal and judicial reforms, in which “concrete advances have been minimal” since June, as French Ambassador Yvon Roe d’Albert told the meeting, Filipetto said public administration reforms were “decidedly off track.” And Canadian Ambassador Donica Pottie said that progress in reforming land sector management has been “less than encouraging” due to “the slow pace of reform.”

Nevertheless, Pottie said following the meeting that donor complaints about the slow pace of reform shouldn’t be allowed to diminish Cambodia’s other successes.

Poverty and infant mortality rates are down in Cambodia while the economy and elementary school enrollment are growing, Pottie said.

“The GDCC is a forum for policy-level discussions between development partners and the Cambodian government, but this focus can overshadow those areas where real progress is being made,” she wrote in an email.

“It may leave the impression that there has been little or no progress,” she added.

A second Western ambassador agreed.

“We bring up only the topics where we don’t see enough progress. That’s why the impression will be that there’s no progress at all,” the ambassador said on condition of anonymity.

“It gives the impression that we’re all pushing the same prayer wheel over and over again,” he said.

Donors are also free to weigh Cambodia’s reform performance against other criteria in deciding on the level of their financial pledges, diplomats said.

“It’s almost impossible to bring [aid] completely in step with political performance,” said the Western ambassador.

First among the pressures preventing levels of assistance to Cambodia from dropping are concerns for vulnerable populations who directly receive foreign assistance, particularly in the areas of health and education.

“It would not make sense to cut aid for this as a penalty for the failure to pass an anticorruption law,” the Western ambassador said. In other, more contentious areas however, donor funds have dried up, he said.

“There is currently no country that supports Cambodia in the forestry sector,” he added.

CPP lawmaker Cheam Yeap, chairman of the National Assembly Commission on Finance and Banking, said the government needs more time to meet its reform obligations to donors.

“If we release three rabbits from a cage at the same time, we can’t kill them all with one bullet,” he said. “We go step by step. We are all trying hard,” he said.

“Some donor countries understand that we are doing whatever Prime Minister Hun Sen has promised. We are doing it but are just unable to complete it on time.”

The Cambodian government is adept at reading the donors’ decisions at the CG and gauging how much foot-dragging will be tolerated in certain reform areas, said SRP Secretary-General Mu Sochua.

“The benchmarks that donors talk about are just things on paper…. The Cambodian government has gotten away with it year after year,” she said.

And the pretense of attempting to achieve imposed reform benchmarks may even be a thing of the past for the government.

In praising China for its no-reform-strings-attached assistance to the government, as Hun Sen did following the 2006 CG meeting and two days after the February donor-government meeting, the prime minister may be saying that he has an alternative development model in mind, Mu Sochua said.

“The China model is a model that does not take into consideration human rights, democracy,” she said, adding that Cambodia’s leaders may no longer need to earn the donors’ approval.

The performance of the Cambodian economy, which, as the IMF announced on Feb 20, grew by 10.5 percent in 2006, down from 2005’s stunning 13.1 percent, has been consistently praised in recent years.

Speaking to a Feb 27 seminar in Phnom Penh on development and reform policies, Hun Sen said that Cambodia was committed to reform. The prime minister also noted how Cambodia’s foreign exchange holdings have sextupled since 1994 to over $1 billion, and that GDP grew by an average of 8.3 percent between 1994 and 2006 and by 9.5 percent in the years since, nearly doubling annual median income to over $500.

With the new-found wealth sloshing around the economy and much talk of positive financial prospects ahead for Cambodia, donor countries that are home to corporations seeking to drill for oil or dig for minerals may not wish to alienate the government, the Western ambassador conceded.

“I think there’s certainly something to that. This is a valid argument,” he said.

The Commerce Ministry announced in October that Australian mining Giant BHP Billiton and Japan’s Mitsubishi Corp had received permission to explore for bauxite in Mondolkiri and Ratanakkiri provinces. US petroleum giant ChevronTexaco, the parent company of Caltex chain of service stations, has so far spent $100 million drilling exploratory wells in Cambodia’s offshore Block A, the Cambodian National Petroleum Authority announced Feb 23.

The CNPA also revealed in September that the French oil firm Total and an unnamed Chinese firm, likely the Chinese National Petroleum Offshore Oil Company, are also vying for the rights to explore for oil in Block B, which with Block A is thought to be the most promising of Cambodia’s six offshore exploration blocks.

There had been brief discussion of postponing the next Consultative Group meeting in June, which has been renamed the Cambodia Development Cooperation Forum, until an anti-corruption law is enacted, said another Western diplomat on condition of anonymity.

The radical proposal, however, didn’t last very long before it was shot down and just like the many other CG meetings, the June meeting is scheduled to go ahead, he said.

“But after that,” the diplomat warned, “consensus among the donors may start to unravel if an effective anti-corruption law is not passed.”

But based on the CG’s 10-year-old track record, that’s a rather unlikely possibility.

(Additional reporting by Chhay Channyda)

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