Countries in a situation of fragility broadly share some common characteristics. They almost all suffer from structural problems and dysfunctional institutions (sometimes weak, sometimes strong but incapacitated, sometimes illegitimate, and so on). For them, emergency situations are the rule, not the exception.
Attempts to offset shocks – such as the recent food or financial crises, or challenges arising from climate change – are impaired by a lack of long-term prospects. Indeed, immediate needs stand in the way of long-term objectives, such as stability and growth. The daunting consequence is extreme vulnerability and a vicious circle that is difficult to break.
Fragile countries, despite these broad common characteristics, are highly heterogeneous, however, both from an economic and a political point of view. Their rates of growth differ significantly. Life expectancy can vary widely. Some countries are rich in natural resources and attract foreign capital, whereas others do not have enough reserves to pay for imports in the next month. The ethnic composition of these countries is often not uniform, either, and their colonial pasts differ. Their geographical situations and water availability are very country specific, and their political regimes are different and have distinct dynamics.
As a result of these differences, definitions of fragile states vary, as do the various lists of fragile states (which are constantly being debated, because as Engberg-Pedersen points out, no one wants to be included in this list). Indeed, the definition put forward by the Development Assistance Committee of the Organisation for Economic Cooperation and Development highlights that the notion of a fragile country is intrinsically relative, as it refers to a misalignment between a country’s political will, or its capacity, and the universal priorities set out by the donor community.
The first step for donors, if they are to successfully address fragility, is to reach a solid understanding of the local context and underlying politics so they can tailor adequate policies. Donors can help fragile countries to overcome their vulnerability by providing them with funds that, at least in a transitional phase, lengthen their time horizon and enhance their long-term resilience. As a matter of fact, the 2009 European Report on Development,
The 1990s and the early 2000s were marked both by a progressive shift away from project-based assistance towards programme aid and budget support, and by a growing recognition of the domestic role in mediating the impact of aid programmes. The paramount importance of ownership and alignment culminated in the Paris Declaration, endorsed on 2 March 2005.
The combined effect of these two major changes (budget support and ownership) was an increase in aid selectivity, loosely defined as an attempt to reward ‘good performers’ with rising aid flows, as in the case of the EU ‘governance incentive tranche’. The downside of a performance-based allocation mechanism was that some countries – often fragile states – became aid orphans, countries characterized by what was perceived as ‘poor’, as opposed to development-oriented. As a result, these countries recorded sharply declining and volatile aid flows. The growing emphasis on aid selectivity led to a substantial shift in bilateral aid allocation, confronting donors with a difficult dilemma.
The fragility debate has helped to highlight the side-effects of performance-based aid allocation systems and the poverty-efficient allocation paradigm. There is a Catch-22 though. To improve aid effectiveness (such as strategic imperatives), the donor community channels less development assistance to countries which need it most, as they are possibly the least able to use it effectively.