War-hit area funds to be used for flood recovery

Govt and donors approve diversion of funds from addressing root causes of extremism to rebuilding after floods.

ISLAMABAD: The government and donors on Friday approved diversion of funds allocated for addressing the root causes of extremism in the war-torn regions to rebuild infrastructure in the flood-devastated areas of Khyber-Pakthunkhwa and the volatile tribal belt.

The decision was taken by the government and international donors who had pledged to provide money under the Multi-Donor Trust Fund, administrated by the World Bank (WB) due to transparency issues. The government proposed expanding the scope of the trust fund, which was originally envisaged to give a sense of ownership to the people of Khyber-Pakhtunkhwa, Fata and Balochistan by initiating people-friendly projects.

“The original mandate of the trust fund was to give jobs, food, education, and provide health services to jobless, hungry, illiterate and sick people,” said a senior official of the Economic Affairs Division who works closely with the WB in administrating the trust fund. The official said that according to a Post Crisis Need Assessment Study, carried out by the WB and the Asian Development Bank, deprivation or sense of deprivation was the major cause behind the spread of extremism and terrorism in tribal regions. The study was carried out after the military operation in Malakand division. It is widely believed that by making these tribal people partner in development  the appeal of extremism can be discouraged.

According to the WB, the trust fund was established at the request of the government to support reconstruction and peace-building initiatives in the crisis-hit areas of the K-P, Fata and Balochistan. It stated that donors also agreed that the trust fund should also be used to address urgent needs arising from the recent flooding in these regions.

The WB said that the expanded focus of the Trust Fund would take into account the need to address flood recovery, though the Fund remains committed to the original goals in support of a long-term peace-building strategy for the region.

The steering committee meeting of the Trust Fund was held to approve a financing strategy for the initially pooled money in the Trust Fund.

The World Bank launched the Trust Fund on August 5 after the donors initially committed $130 million. The steering committee also approved the financing plan and asked the government to submit the proposals for the consideration, which could be financed through the special purpose vehicle.

An official of the EAD said that Pakistan also requested the donors to commit more money, as the current pledges are not sufficient to meet the immediate needs arising out of these war-affected areas. The government has put the losses to the economy by ongoing war against terrorism at $43 billion during last nine years. It was expecting that the donors would offer a Marshal Plan to rebuild the affected areas.

Nonetheless, all the hopes dashed to the ground due to Pakistan’s tarnished image. Against an expectation to get $2 billion for the Trust Fund the donors agreed to provide only $130 million and some portion of it now would be diverted to the reconstruction of the flood-affected areas.

Australia, Denmark, the European Union, Finland, Germany, Italy, Sweden, Turkey, the United Kingdom, and the United States have agreed to pool a total of $130 million through the Fund to support the two provinces and Fata. The financing plan of this money was designed based on the preliminary findings of the Post Crisis Need Assessment (PCNA) and on the development plans of the federal and provincial governments.

“The Trust Fund is a good instrument for ensuring better coordination among the donors and the government, thereby enhancing development effectiveness and also reducing transaction costs,” said Rachid Benmessaoud, World Bank country director for Pakistan.

The WB is using its emergency procedures to reduce preparation and approval time for projects under the Trust Fund. At the same time, systems are being put in place to ensure that funds will be used for the intended purposes in a transparent manner, he added.

Published in The Express Tribune, September 18^th, 2010.