Economic Research Forum (ERF)

Getting reconstruction right and wrong: lessons from Iraq

78
Bitter experiences in the last two decades have made the international community hesitant to engage in robust reconstruction activities. This Brookings column asks how the process of reconstruction can be managed effectively, and what lessons – positive and negative – can be drawn from the experience with Iraq.

In a nutshell

Actions taken by the international community in the process of reconstruction need to reinforce national success through national institutions.

International actors need to adopt a flexible approach to dealing with the uncertain, fluid and complex nature of reconstruction, even when facing increased security risks.

Problems related to accountability have a major impact on reconstruction outcomes.

Bitter experiences of reconstruction in the last two decades have made the international community hesitant to engage in robust reconstruction activities. Iraq’s reconstruction after the US-led invasion in 2003 contributed significantly to this reluctance.

Between 2003 and 2014, more than $220 billion were spent on rebuilding the country. Despite the huge amount of money spent and extensive projects and programmes implemented, the international community and the Iraqi people view the effort critically. This perception makes the international community focus mainly on humanitarian relief and much less on engagement that requires medium- to long-term commitment.

At the same time, the human suffering and lasting displacement produced by the turmoil in the Middle East demonstrate that the cost of inaction can be great. Humanitarian relief alone does not address the root causes of the conflict and violence. The success or failure of reconstruction can have a significant impact on the peace and stability of the broader global community.

So how can we manage the process effectively? What lessons – positive and negative – can we draw from the Iraq reconstruction experience? The recently published report, ‘The Reconstruction of Iraq after 2003 – Learning from its Successes and Failures‘ identifies several key lessons:

First, actions taken by the international community need to reinforce national success through national institutions. The drive for early results does not justify bypassing national institutions; donors should work through them. A US audit report states that donor-funded physical infrastructure put in place since 2003 was already breaking down by 2005 since Iraqi institutions were not fully engaged, and the roles of institutions in operating and maintaining infrastructure were not sufficiently considered.

Also, international actors need to avoid weakening national institutions and the related social capital through their interventions. In Iraq, policies such as de-Baathfication, dissolution of the Iraqi military and establishment of the Governing Council based on ethno-sectarian divisions have had a lasting negative impact on institutions and societies. Imposing external solutions invites counterproductive reactions from local counterparts.

To be sure, this approach to reconstruction that emphasises national institutions entails serious challenges. A big challenge for reconstruction actors is in finding legitimate partners to work with, as we are witnessing in parts of the Middle East and North Africa (MENA) – such as Syria and Yemen today – while trying to identify national needs in an intensely divided political environment.

Second, international actors need to adopt a flexible approach to deal with the uncertain, fluid, and complex nature of reconstruction, even when facing increased security risks.

Effective implementation depends in large part on the ability to adapt to constantly changing conditions, a difficult task that most donors and international organisations struggled with in Iraq. It is true that maintaining a presence within a country under volatile security conditions increases the risks for concerned staff, but it also provides better opportunities to interact with counterparts and enhance the effectiveness of assistance. Retaining a presence in less volatile parts of Iraq might have allowed for more flexible responses.

The international community needs to devise a new mechanism for coordinating the response to security and development challenges. The dire security situation is usually the biggest hurdle for reconstruction activities and private sector development in a fragile environment. At the same time, security risks can only be fully neutralised by addressing the root causes of violence and extremism through a development approach that contributes to providing economic opportunities, especially among young people.

The 2017 Arab Youth Survey raised possible links between unemployment and the potential for radicalisation. Young Arabs perceived unemployment and extremism as the biggest problems holding back the MENA region. Security and development are inextricably entwined. But there have been historical difficulties in connecting security and development actors in reconstruction, and Iraq was no exception. Developing and strengthening partnerships between the security and development spheres is of paramount importance.

Third, problems related to accountability have a major impact on reconstruction outcomes. For example, dual accountability, the tendency for donors and international organisations to be accountable first to their domestic constituencies and only second to those of recipient states – can make delivering results on the ground difficult. In Iraq, superiors back in donor capitals often overlooked or dismissed the good intentions of international staff in the field.

Furthermore, local accountability can be undermined when reconstruction financing comes from resources unconnected to the local population. The majority of the Iraqi reconstruction budget was funded by oil revenues and donor funding – neither of which held a direct connection to the population at large. In turn, this gave Iraqis little incentive to scrutinise reconstruction spending consistently. External actors, along with national actors, should try harder to leverage reconstruction funds to strengthen the accountability of national institutions toward their citizens.

One proposal to enhance accountability and therefore the effectiveness of reconstruction funding is to revisit the mechanism for distributing oil resources. Shanta Devarajan and colleagues argue that by transferring a portion of natural resource-related government revenues uniformly and universally as direct payments to the population, and taxing the population, some countries could increase both private consumption and the provision of public goods and thereby reduce poverty and enhance social welfare.

This argument might also be made for donor funding. The total financial commitment for the reconstruction of Iraq amounted to somewhere between $7,000 to $9,000 per capita. As much of the spending is thought to have been ineffective in improving the lives of Iraqis, they may have been better off with a transfer of this amount to each citizen.

Today, following the end of major fighting against the Islamic State of Iraq and the Levant (ISIL), the Iraqi government and the international community are facing yet another challenge of reconstruction. To improve the outcome in Iraq and possibly in Syria, Yemen and Libya in the future, international actors need to understand the weight of their responsibility and take the actions necessary to learn from past mistakes. Reconstruction in uncertain, fluid and complex situations requires flexibility and creativity in both thought and response.

This column was originally published by Brookings in October 2019. Read the original article.

 

 

 

 

 

 

 

 

 

 

Most read

Arab countries are caught in an inequality trap

Conventional wisdom, based mainly on surveyed household income distribution statistics, suggests that inequality is generally low in Arab countries. At the same time, little attention has been devoted to social inequalities, whether in terms of outcomes or opportunities. This column introduces a forthcoming report, which offers a different narrative: based on the largest research project on the subject to date and covering 12 Arab countries, the authors argue that the region is caught in an inequality trap.

The Egyptian economy is still not creating good jobs

Growth in Egypt has recovered substantially since the downturn following the global financial crisis and the political instability following the 2011 revolution – but what has happened to jobs? This column reports the results on employment conditions from just released data in the 2018 wave of the Egypt Labor Market Panel Survey.

How Egyptian households cope with shocks: new evidence

Managing risks and reducing vulnerability to economic, social, environmental and health shocks enhances the wellbeing of households and encourages investment in human capital. This column explores the nature of shocks experienced by Egyptian households as well as the coping mechanisms that they use. It also examines the relationship between such risks and job formality and health status.

Egypt’s labour market: facts and prospects

An ERF policy conference on the Egyptian labour market in late October 2019 focused on gender and economic vulnerability. This column summarises the key takeaways from the event.

An appeal for Sudan’s future

Sudan today is on a knife-edge: it can evolve toward peace and democracy – or spiral into instability and violence. As this Project Syndicate column argues, vital and timely international assistance can make the difference between success and failure for the new government.

Has international migration reduced internal migration in Egypt?

Urbanisation is key for economic development, yet Egypt has been lagging behind most other North African countries in this respect in recent decades. This column reports that the country’s lack of urbanisation is partly explained by very low internal migration rates, which in turn seem to have been dampened by high rates of international migration by Egyptians.

Reinforcing the re-emergence of the “missing middle” in Egypt

The more rapid growth of employment in small and medium-sized businesses compared with both micro enterprises and large firms in the Egyptian private sector presages the re-emergence of the ‘missing middle’. This column explains why this is a positive phenomenon that needs to be promoted and reinforced.

Political settlement scenarios for Arab conflicts

Millions of refugees from the Arab conflicts want to return to their countries, rebuild their homes and get their lives back – but what kind of political settlements might support that prospect? This column explores types of political settlements, what happened in the past after conflicts in Algeria and Lebanon, and scenarios for future political settlement in Syria.

Repatriation: scenarios for conflict resolution and reconstruction

What are the prospects for conflict resolution in Syria and other war-torn Arab countries, for reconstruction of their broken economies and societies, and for repatriation of the many refugees that have fled for their lives? This column discusses the notion of inclusive political settlements as a precondition for safe refugee repatriation and reconstruction plans for devastated communities.

Tackling multidimensional poverty in MENA

What does most recent multidimensional poverty assessment of the Middle East and North Africa reveal about health, education, living standards and social security in the region. This column outlines the evidence and potential policy responses.