CREATING A PAPER TRAIL: ONE BILLION USD TO GEORGIA
16 February, 2010
by Till Bruckner, Transparency International Georgia published in Georgia Today, Tbilisi, September 2008 On September 3, 2008, US President George W. Bush announced that America would provide Georgia with one billion dollars in “additional economic assistance to meet Georgia’s humanitarian needs and to support its economic recovery.” The statement made headlines around the world and captured the imagination of many Georgians. Assistance of one billion dollars to a country of 4.6 million people works out to over 200 dollars per person in the country, or around 30,000 dollars for every recently displaced Georgian unable to return home this winter. WHERE DO THE BILLION DOLLARS COME FROM? In his speech, Bush stated that “more than half of these funds will be made available in the near term.” As Deputy Director of Foreign Assistance Richard L. Green clarified at a press conference in Washington D.C. on the same day, only 570 million dollars will be made available under the current administration. Out of those 570 million, around 200 million can be released only with Congressional approval. In other words, the US President can only guarantee the provision of 370 million dollars. Where will the additional funds come from? As Mr. Green put it, “it is our hope and expectation that the next Congress and the next administration will provide that funding.” To sum up: Out of one billion dollars, 370 million are guaranteed, 200 million are likely, and the other 430 million may or may not appear over the coming years. WHERE WILL THE MONEY GO TO? At the press conference in Washington, the American Under Secretary for Economic, Energy and Agricultural Affairs Reuben Jeffery stated that the commitment was aimed at “ongoing humanitarian assistance, first and foremost,” mentioning internally displaced people in particular. Physical reconstruction of infrastructure and facilities that have been damaged or destroyed by the Russian incursion was the second purpose, while keeping Georgia’s economy growing was the third. A fact sheet released by the U.S. embassy in Tbilisi on the same day adds “budget support to the government of Georgia” and “other development activities” to the initially stated priorities. Also on the same day, Secretary of State Condoleeza Rice told journalists that “a significant portion” of the package will provide “emergency budget support quickly to the Georgian government.” The only detailed figure to have been made public to date is that 150 million dollars of the package – over a quarter of the total – will be provided through the Overseas Private Investment Corporation (OPIC). According to its most recent annual report, OPIC was created by Congress in 1971 “to enable U.S. businesses to invest and compete in emerging market countries around the world.” Transparency International Georgia has contacted OPIC in order to clarify how it intends to use its 150 million dollars, but the agency has not had the opportunity to reply before the deadline for this article. 420 MILLION MYSTERY DOLLARS With the notable exception of OPIC’s share of the support package, so far neither the State Department, nor the U.S. embassy in Tbilisi, nor USAID have posted any breakdown of how the 570 million dollars will be allocated on their websites. According to Khatia Jinjikhadze of the Public Affairs Section of the U.S. embassy in Tbilisi, the precise allocation of the remaining 420 million dollars is currently being determined in negotiations with the Georgian government and will be available on the embassy website once a decision is finalized. Although the information has not been published, it appears that options are already being discussed. According to an anonymous source, 250 million dollars should go directly to the Georgian government as budgetary support, Millennium Challenge Georgia should receive a further 100 million dollars, and the remaining 70 million dollars should remain for humanitarian activities. These figures raise concerns about transparency. Direct budgetary support is fungible. While the Georgian government may use these funds to pay pensions and civil servants’ salaries, the injection of foreign money can allow funds originally earmarked for this purpose to go for other uses, for example for the reconstruction of the military. At present, it is unclear whether there are any clauses or agreements governing the exact use of these funds and monitoring procedures. Similarly, giving a lump sum of 100 million dollars to Millennium Challenge Georgia is problematic. It seems inappropriate to allocate a fixed sum of money first, and only then to think about how to spend it. Millennium Challenge Georgia, an entity criticized for delays in project delivery, will inevitably come under institutional pressures to “push the money out of the door,” increasing corruption risks. LESS THAN 15% FOR HUMANITARIAN AID? At less than 15% of the total, the 70 million dollars reportedly left over for humanitarian aid would not appear to be the top priority in the support package. Around 30,000 Georgians will not be able to return to their homes this winter, if at all. Aid agencies estimate that superficially rehabilitating buildings currently occupied by displaced people – inserting plywood dividing walls, installing doors and windows, and setting up water and electricity systems – will cost at least one thousand dollars per person. Considering that food aid and other support will have to continue on a running basis, thousands of families might find themselves permanently trapped in temporary accommodation by next spring with no further help forthcoming. This is what happened to tens of thousands of Georgians who fled Abkhazia in the early 1990s, who fifteen years on still live in substandard temporary shelters. URGENT NEED FOR TRANSPARENCY Two days before Bush’s pledge, European leaders announced that the European Union will also provide aid for reconstruction in Georgia. Details of the European package will be decided at a forthcoming international donors’ conference. Transparency International Georgia calls on President Bush, the leaders of the European Union, and multilateral and donor agencies involved in aid to Georgia to make their current approach to supporting the Georgian state and its people conform with their commitments under the2005 Paris Declaration on Aid Effectiveness. The Paris Declaration commits signatories to increasing the accountability of aid to the citizens and parliaments of both donor and recipient countries (article 3), involving a broad range of development partners when formulating development strategies (article 48), and providing “timely, transparent and comprehensive information on aid flows” (article 49). Aid to Georgia will only be effective if the process of allocating and implementing aid is transparent and open to substantive input from - and oversight by - Georgian citizens, legislators, interest groups, and civil society representatives. Donor transparency and inclusive debate within Georgia are the preconditions for increasing accountability and improving the allocation, delivery, and impact of aid.