Great expectations

January 22, 2023

A bulk of the $10 billion pledged by donors during the recent Geneva moot is in the form of loans

Great expectations


reat Expectations, the famous work by Charles Dickens, is about the dangers of misplaced ambition and the illusion of social class. The novel highlights the main character, Pip’s misguided ideas about wealth and social status and concludes that true worth comes from inner qualities. One can argue whether Pakistan has misplaced ambition or not, but it is clear that it has great expectations from the international community.

Pakistan has had to seek help from the international community on several occasions over the last two decades. In November 2005, 75 nations and international organisations made pledges worth $6.2 billion in cash, in-kind assistance and soft loans at an international donors’ conference for earthquake victims in Islamabad. Among bilateral partners, Saudi Arabia announced grants and soft loans; the US offered grants and in-kind assistance; China pledged grants and loans; Iran announced a credit line and the UAE offered a financial grant. Among the multilateral lenders, the World Bank (WB) and Islamic Development Bank (IDB) pledged soft loans, whereas the Asian Development Bank (ADB) pledged both grants and loans. The pledges for the projects implemented through UN agencies, INGOs and NGOs materialised quicker than those to be implemented by the ministries.

Four years later, Pakistan’s friends once again pledged to support the return of democracy at the Tokyo Donors Conference 2009. The idea was to support the then-newly elected civilian government’s efforts to stabilise Pakistan’s economy, strengthen democracy and governance, address key development challenges, combat extremism and terrorism and promote private sector growth and job creation. The conference, amidst the war on terror when Pakistan enjoyed the complete trust of the USA (President Obama co-chaired the Friends of Democratic Pakistan Summit with President Zardari), brought together representatives from over 50 countries and international organisations. They pledged $5 billion in aid or soft loans over the next two to five years for Pakistan.

Unlike earthquake pledges of 2005, most of the pledges made in Tokyo did not materialise. Those that did materialised were subject to conditions, delayed or suspended due to various factors such as lack of progress on projects, allegations of misuse, not doing enough on the war on terror or security concerns.

A year later, in 2010, Pakistan was hit by devastating floods. The UN made its largest-ever natural disaster appeal of $2.07 billion to back 483 projects. Those projects were to be implemented by 15 UN agencies, the International Organisation for Migration, and 156 national and international non-governmental organisations. In response to that appeal, $5 billion were pledged by the international community (representatives of sixty countries and organisations) in September 2010 to support the recovery and reconstruction efforts in the flood-affected areas of Pakistan.

The ADB announced extending its trade finance programme for Pakistan by half a billion dollars whereas the World Bank announced using its multi-donor trust fund for reconstruction and peace-building initiatives in Khyber Pakhtunkhwa, the (then) Federally Administered Tribal Areas and Balochistan. The pledges came with certain expectations.

“We look forward to the government of Pakistan’s vision and a long-term strategy for rehabilitation and development with clear priorities,” said the then UN secretary-general, Ban Ki-moon, in an address to a high-level ministerial meeting on the Pakistani flooding in New York.

Great expectations

Importantly, a large part of these pledges is repackaging or (re-announcing) of the earlier initiatives by multilaterals. For example, World Bank’s $2 billion includes $1.3 billion that the bank lent last month. Likewise, the EU had already announced its support for Pakistani flood survivors when it signed an MoU with Pakistan’s Economic Affairs Division. Redirected and re-appropriated loans from the projects where progress (burnout rate) was below par are another part of Geneva pledges.

The World Bank and the US urged Pakistan to reaffirm to donors that it can use aid money responsibly and transparently. “To make most effective use of help and even to secure full donor support, the government (of Pakistan) will need a reconstruction founded on transparency, accountability, flexibility, backed by law,” said Robert Zoellick, the then World Bank president.

The then US secretary of state, Hillary Clinton, conveyed a similar idea, asking Pakistan to “lead by instituting the reforms that will pave the way to self-sufficiency.” She added, “The international community will support Pakistan’s efforts at reform and reconstruction.”

Looking at the small quantum of pledges that materialised after the 2010 floods, one could conclude that Pakistan and the international community failed to meet each other’s expectations. Realising the donors’ fatigue, Pakistan did not ask for international assistance after the floods of 2011 and 2012.

Since 2020, the world has been going through a ‘perma-crisis’. The global and regional existential threats, i.e, Covid-19 and Russia-Ukraine war, respectively, and their cumulative inflationary and recessionary impacts have eroded the capacity of the international community to take care of isolated local existential threats such as floods in a country.

It was not the best time for Pakistan to be hit by the superfoods last summer. We could not demonstrate that we had learned enough lessons from previous disasters and visibly failed to institutionalise the policies that could support disaster risk management. However, it was not entirely our fault that an extreme monsoon event hit us. Part of the devastation from floods was rightly attributed to a warming planet, climate change. Climate scientists now say with much credibility that rich countries, through their indiscriminate use of fossil fuels, are the main culprits for global warming.

That is why the Geneva conference on Pakistan’s latest floods was not called a donors’ conference. It was called the Climate Resilient Pakistan conference. The event, held after United Nations’ COP27 in November 2022, where developing countries had put moral pressure on carbon-emitting rich countries to follow the principles of climate justice and compensate for their climate follies, served as a new vehicle for fundraising for climate-induced loss and damage. UN Secretary-General Antonio Guterres co-hosted the conference with PM Sharif and played an important role in pleading the case of developing countries for climate justice. He minced no words, calling the global financial system “broken” and one that “favours wealthy nations and penalises low- and middle-income countries.”

The international financial system was questioned at COP27 as well. The final declaration of the conference stressed the multilateral financial institutes to be more climate-responsive and meet the emergency needs of climate-vulnerable developing countries.

Great expectations

This pressure may be one of the factors in the multi-lateral pledges. Out of the $9 billion-plus pledges in Geneva, almost $8.2 billion were pledged by the IDB, the WB, the ADB and the Asia Infrastructure Development Bank. Apart from Saudi Arabia, which pledged $1 billion, the contribution of bilateral development partners was symbolic.

Importantly, a large part of these pledges is repackaging or (re-announcing) of the earlier initiatives by multilaterals. For example, the $2 billion pledge by the World Bank includes $1.3 billion that the bank lent last month. Likewise, the EU had already announced its support for Pakistani flood survivors when it signed an MoU with the Economic Affairs Division. Redirected and re-appropriated loans from the projects where progress (burnout rate) was below par are another part of Geneva pledges.

Like previous instances, current pledges, too, will vary in nature. Some are in-kind; others are loans, soft loans and grants. These pledges will not help meet the demand for foreign exchange. They are not for budgetary support but project-specific for flood rehabilitation and recovery. Even the pledges (such as Saudi Arabia’s) that come as budgetary support will take time to materialise.

How long depends on how quickly Pakistan can submit some tangible, doable proposals for flood-affected areas. In Robert Zoellick’s words, “transparency, accountability, flexibility, backed by law” is a must to make the projects palatable to the development partners.

In the last decade, most INGOs have left Pakistan due to our stringent policy of INGO registration. This puts the implementation burden on government or semi-government organisations (occasionally with some UN agencies). Multilaterals know that Pakistan needs more capacity to write tangible project proposals. Hence, they mostly provide technical assistance to the government for a proposal writing unit as part of their support. Frequently, this means that the lenders end up choosing the projects on which the amount would be spent. As mentioned earlier, the smooth disbursement of these pledges will depend on many factors, including our capacity to utilise that money.

One cannot discount the gesture of the international community in Geneva. It has once again come forth to help Pakistan in its time of need. However, it has some expectations from us too. Like Charles Dickens’s protagonist, Pip, we need to remember that true worth comes from inner qualities. We should regain the lost trust of the international community by meeting their expectations for efficiency and transparency in delivering on the Resilient Recovery, Rehabilitation and Reconstruction Framework (4RF) for Pakistan Floods 2022.

The writer heads the Sustainable Development Policy institute.  He tweets @abidsuleri

Great expectations