How a ‘firehose of unaccountable aid’ drowns democracy


Afghanistan taught us that a firehose of unaccountable aid can destroy a country’s democratic future, say two leading experts. Are making the same mistake all over again in Ukraine?

Many failures came together to cause Afghanistan’s swift collapse after the U.S. withdrawal, but a central and longstanding lesson from this catastrophe must be that well-intentioned donor largess can foster corruption, undermine institutions, and threaten stability in fragile states and budding democracies, according to the University of Pittsburgh’s Jennifer Brick Murtazashvili and Nataliia Shapoval, vice president for policy research at the Kyiv School of Economics.

So what should donors do to support post-conflict reconstruction efforts? they ask in the Journal of Democracy:

  • First, they should provide direct budget support to the Ukrainian government. Ukraine no longer has the capacity to print money. Thus if it does not receive funds soon, it will face a balance-of-payments crisis. It also has unsustainable levels of debt with extremely high interest rates. Ukraine’s central and local governments and central bank have remained fully operational during the war, keeping the macro-financial situation stable and continuing to provide public services. With the stronger accountability mechanisms that Ukraine has put in place over the past several years, these bodies are capable of managing donor funds.
  • Second, donors should work directly with local governments, nonprofit organizations, and businesses to implement reconstruction projects rather than relying on expensive foreign contractors. Local governments are up to the task, as their leadership during the war has proven. …..Under current rules, local businesses and governments must compete with large U.S. firms for reconstruction funds, putting these entities at a severe disadvantage. The behemoth U.S. contractors will inevitably win and then enter the host country with budgets that dwarf those of local authorities. As we know from Afghanistan and elsewhere, this is an unsustainable model that generally denies local authorities a say in how donors distribute funds and, as a result, undermines the legitimacy of local government.
  • Finally, it is imperative that the United States and other donors establish oversight mechanisms to hold donors accountable for fraud and corruption. The United States should appoint a Special Inspector General for Ukraine Reconstruction, modeled on the Special Inspector General for Afghanistan Reconstruction (SIGAR). …. Only a similar independent government body will be able to hold U.S. actors accountable for the wasteful projects and boondoggles that will inevitably be foisted on Ukraine. Of course, this agency must hold Ukrainians accountable as well.

What will happen if the United States and other donor countries ignore the lessons from Afghanistan? Murtazashvili and Shapoval ask. We can easily imagine a bungled war and reconstruction effort that dumps billions of dollars into Ukraine with little oversight. This would be disastrous for Ukraine’s anticorruption efforts and for the country’s democratic fortunes. RTWT


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