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Japan kicks in aid; other donors tread warily

Japan kicks in aid; other donors tread warily

JAPAN'S announcement this week of its first grant to the Cambodian government since

July 1997 would seem to be an indicator that for some countries at least, the aid

wagon has started to roll again.

The new grant, which was expected to be formalized in a signing ceremony at the Ministry

of Foreign Affairs Dec 24, will fund an electricity project for Phnom Penh's suburbs.

Kazuhiro Nakai, First Secretary for the Embassy of Japan, said that although Japan's

aid had not been cut after the fighting of 1997, until now no new commitments had

been made. "We are working hard to put our assistance back to the normal level

following the political developments here," he said.

For most donor countries, the story for 1998 seems to be similar. Although many development

projects and programs suffered delays due mainly to the election and its aftermath,

for the most part (with the obvious exception of USAID funding), donors say the level

of assistance has remained consistent throughout 1998.

"Aid hasn't been cut to Cambodia, there are still the same amount of projects

in the pipeline," said Paul Matthews, Resident Representative for the United

Nations Development Program. "It's simply that the pipeline has narrowed in

1998. It takes time to build it up again." He predicted a surge of these backlogged

projects over the next year.

Assistant Country Director for CARE Jonathan Patrick agreed. "Lots of donors

were waiting for the formation of the government, and a lot of projects weren't being

processed," he said. CARE lost $9 million of USAID funding in 1997, effectively

halting two major projects, one of which was 18 months into its two-year cycle. The

knock-on effects of this loss are still being felt. "The whole of 1998 was a

sort of limbo period," he added.

According to Patrick, one result of the loss of assistance was a re-think of the

way that CARE approaches funding. "We think that generally, funding next year

will be good, but one lesson we learnt in July 1997 is that funding sources have

to be diversified."

But despite Japan's evident eagerness to move ahead quickly for next year, many donors

are more cautious. There are concerns that key issues raised at last year's Consultative

Group meeting, held just days before the July coup, have still not been addressed

by the government. When the CG meets again early next year to discuss future funding

policies for Cambodia - after eighteen months of political upheaval - they might

well be tempted to use the phrase "the more things change, the more they stay

the same."

Certainly the list of questions raised at the ë97 meeting makes strikingly familiar

reading - accountability, transparency and corruption - and more specifically, revenue

generation, civil service reform, military demobilization and illegal logging.

"We're looking for some clear intent from the government on these issues,"

said Bill Costello, First Secretary for AusAID. "Donors can only work effectively

in Cambodia where the right policies are in place."

Matthews raised similar concerns. "For us, the most important issue is civil

service reform," he said, "and we'd like to see the redirection of money

from sterile areas, such as the military, into the social sector."

The management of forestry reserves is also a particularly sensitive issue. "It's

deeply concerning that with this rich resource so little money is coming into the

treasury," he said.

In addition, the type of assistance received may be changing. Japan, which provides

the most aid of any donor country, currently funds Cambodia through grants only.

But according to Nakai, "Tokyo is seriously considering the possibility of loans

to the Cambodian government."

Meanwhile, some countries anxious to protect their interests (and their cash) are

starting to lean towards more direct avenues of funding.

"Donors are now looking to give money straight to NGOs rather than through the

government," said Country Director of CONCERN Rob Williams. "They're looking

for accountability and transparency."

Even the date of the proposed CG meeting is proving to be a bone of contention among

the participating countries. Japan has requested February, but there are concerns

that both the Cambodian government and the donor countries themselves would not be

ready until later.

"[Some] are more cautious, and would prefer to wait and look at the new government

to see what happens over the first few months of the new administration," said

one diplomat. "We want to see if they come good on what they've said they'll

do."

Matthews agreed, summarizing the mood of many donors. "The climate may well

be getting tougher, starting next year," he said, citing the possibility that

much more conditional aid could be on the horizon. "If the government thinks

that now the politics is all put back together everything is sunshine and light,

they'll find this isn't the case... is it efficient to keep on giving aid to a country

that isn't going ahead with the reforms everyone's pushing for?"

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