Adam

Burke and A

nthea Mulakala

DO

NO

RS

AN

D P

EAC

EBU

ILDIN

GPart of the Sri Lanka Strategic Conflict A

ssessment 2005

20

00

– 2

00

5

DONORSANDPEACEBUILDING2000–2005

SIX - PART

SERIES

VO

LU

ME

N.2

0

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

DO

NO

RS AN

D PEA

CEBU

ILDIN

GIN

SR

I LAN

KA

20

00

- 20

05

PA

RT

OF T

HE

SR

I LAN

KA

ST

RA

TE

GIC

CO

NFLIC

T A

SS

ES

SM

EN

T 2

00

5

By Adam Burke and Anthea M

ulakala

Th

e govern

men

ts of th

e Neth

erland

s, Sw

eden

, and

the U

nited

Kin

gd

om

, in co

llabo

ration

with

Th

e Asia Fo

un

datio

n an

d th

e Wo

rld B

ank fu

nd

ed th

is pro

ject. Th

e con

tents o

f the stu

dies sh

ou

ldn

ot b

e con

strued

as reflecting

the view

s of th

e five fun

din

g ag

encies.

© C

op

yrigh

t 2005

Neth

erland

s Min

istry of Fo

reign

Affairs

Sw

edish

Intern

ation

al Develo

pm

ent C

oo

peratio

n A

gen

cyT

he A

sia Fou

nd

ation

Govern

men

t of th

e Un

ited K

ing

do

m o

f Great B

ritain an

d N

orth

ern Irelan

dW

orld

Ban

k

For rep

rod

uctio

ns o

f this p

ub

lication

please co

ntact:

3 1/A R

ajakeeya Maw

atha

Co

lom

bo

7, Sri Lan

ka P

ho

ne: +94 11 2698356

Fax: +94 11 2698358w

ww

.asiafou

nd

ation

.org

All rig

hts reserved

Printed

in S

ri Lanka

Contents

Acknowledgem

ents..............................................................................................................................................| 2

About the Authors.................................................................................................................................................| 3

Acronyms...............................................................................................................................................................

| 4

Executive Summ

ary..............................................................................................................................................| 5

Introduction............................................................................................................................................................| 9

1.Aid to Sri Lanka, Past and Present............................................................................................................

| 11Supporting State Developm

ent..................................................................................................................| 11

Greater Sensitivity, More Varied Approaches.........................................................................................

| 11Conditionality in Sri Lanka - Changing the State.....................................................................................

| 12W

orking Outside the State - Different Approaches................................................................................| 12

Growing Donor Aw

areness of Conflict.....................................................................................................| 12

2.Donors and Peacebuilding 2000-2005.......................................................................................................

| 15The W

ar for Peace Period: Increasing Donor Disillusionment............................................................

| 15Donors Get Com

fortable with the UN

P and LTTE...................................................................................| 16

From Center Stage Back to the Sidelines: Donors Face Their Lim

itations........................................| 20

The Tsunami...................................................................................................................................................

| 21

3.Key Trends Em

erging...................................................................................................................................| 23

Broader Development Trends.....................................................................................................................

| 23Sri Lanka Specific Trends - Sum

mary.......................................................................................................

| 24Integrating Conflict Sensitivity....................................................................................................................

| 24Political Aw

areness......................................................................................................................................| 25

Coordination and Long-term Engagem

ent................................................................................................| 28

4.Conclusions....................................................................................................................................................

| 29Overview

.........................................................................................................................................................| 29

Diplomacy, Politics, and Aid........................................................................................................................

| 30Aid as a Catalyst for Change......................................................................................................................

| 30Transform

ative Measures............................................................................................................................

| 30Possible Steps...............................................................................................................................................

| 31

Appendix: A Sample of Developm

ent Actors...................................................................................................| 35

Bibliography...........................................................................................................................................................| 45 1

| Contents

Donors and Peacebuilding in S

ri Lanka 2000 - 2005 | 2

Acknowledgem

ents

All views expressed in this study are the authors' and do not represent those of the com

missioning agencies,

the facilitators of this study or those who w

ere interviewed. W

e would nevertheless like to thank the follow

ingfor their contributions to this study. Firstly, N

ilan Fernando, Jonathan Goodhand, Bart Klem, Lisa Hedin, and

Sheila Richards who provided feedback on earlier drafts of this report. Secondly, Alan M

artin and GinaGenovese, w

ho provided valuable editorial assistance.

3| A

bout the Authors

About the Authors

Adam Burke

has worked in Sri Lanka regularly since1999. Initially through his role as a social developm

entadviser w

ith the British Department for International Developm

ent (DFID), and then as a consultant to differentorganizations, he has follow

ed the approaches of a wide range of aid actors as Sri Lanka's conflict changed

over time. Fields of engagem

ent include policy analysis, especially on the links between conflict and aid, as

well as design of m

ajor funding programs to support civil society's role in peacebuilding. M

ore widely, he has

worked w

ith donors, United Nations (U.N

.) agencies, and NGOs on developm

ent research, policy, and practiceacross Southeast and South Asia, focusing particularly on conflict-affected environm

ents. Email:

adamitobur@

yahoo.com.

Anthea Mulakala

has worked in the developm

ent field in Canada, the Caribbean and South Asia for over 15years. Her engagem

ent in Sri Lanka extends back to 1991 when she m

anaged a Canadian NGO support

program. Since 2001, she has w

orked for DFID in Sri Lanka as a conflict adviser. She was involved in the

implem

entation of the recomm

endations of the first Strategic Conflict Assessment (SCA1) and has w

orked as acore m

ember of the donor com

munity in Sri Lanka over the past five years. In late 2005 she w

ill begin working

for the World Bank in Indonesia on harm

onizing donor efforts around government decentralization.

Acronyms

ADBAsian Developm

ent BankCFA

Ceasefire Agreement

CPACentre for Policy Alternatives

DACCDevelopm

ent Assistance Coordinating Comm

itteeDFID

U.K. Department for International Developm

entDW

GDonor W

orking Group on the Peace ProcessEU

European UnionFLICT

Facilitating Local Initiatives in Conflict Transformation

GOSLGovernm

ent of Sri LankaGTZ

Deutsche Gesellschaft für Technische Zusamm

enarbeit (German Technical Cooperation)

IFIInternational Financial Institution

JBICJapanese Bank for International Cooperation

JICAJapanese International Cooperation Agency

JVPJanatha Vim

ukthi Peramuna (People's Liberation Front)

LTTELiberation Tigers of Tam

il Eelam (Tam

il Tigers)N

ERFN

orth-East Reconstruction FundN

GON

on Government Organization

ODAOverseas Developm

ent AssistancePA

People's AllianceP-TOM

SPost-Tsunam

i Operational Managem

ent StructureSCA

Strategic Conflict Assessment

SIDASw

edish International Development Agency

SLFPSri Lanka Freedom

PartySLM

M

Sri Lanka Monitoring M

ission TRO

Tamil Rehabilitation Organization

UPFAUnited People's Freedom

AllianceUN

DPUnited N

ations Development Program

me

UNICEF

United Nations Children and Education Fund

UNHCR

United Nations High Com

missioner for Refugees

UNF

United National Front

UNP

United National Party

USAIDUnited States Agency for International Developm

ent

Donors and Peacebuilding in S

ri Lanka 2000 - 2005 | 4

CHANGIN

G DONOR POSITION

S

This report is a contribution to a broader study entitled

"Aid, Conflict and Peacebuilding in Sri Lanka"

(Goodhand and K

lem, 2005), w

hich examines the peace

process in Sri Lanka with a particular focus on

international engagement.

Donors have provided developm

ent assistance to SriLanka for decades, although its significance in thenational econom

y is decreasing. Severe conflict hasaffected Sri Lanka since the early 1980s, although inm

ore recent years a ceasefire has brought some degree of

peace.

Various donors - especially European bilateralorganizations adopting new

er ideas on aid provisionglobally - have becom

e increasingly sensitive to conflictissues and how

they relate to aid programm

ing. Donors

have more relevant know

ledge, are better able to work

together on conflict, and are better at drawing links

between the conflict and their ow

n financial support.

These shifts reflect first and forem

ost changing politicalcircum

stances in Sri Lanka. They also reflect shifting

patterns of aid provision globally, and a tendency among

some donors to consider the local political or social

contexts as increasingly significant factors in aidallocation, especially in extrem

e conditions such asconflict. Sm

aller donors have shifted more than larger

donors in this direction, although recognition of theim

portance of conflict reduction in achieving the aims

of aid provision is increasing across the board.

A continuing ceasefire in Sri Lanka has made it possible

to assist on the ground, and government m

easures to

promote peace and encourage international involvem

enthave facilitated approaches w

ith a more explicit focus on

peacebuilding. In terms of sensitivity to conflict, the

following donor trends have occurred since 2000:

�M

ore specialist staff dedicated to conflict issues.

�Increased political aw

areness, enabling more

nuanced engagement and understanding of the

linkages between aid program

s and conflict.

�M

ore and increasingly sensitive support for civilsociety.

�Increasing collaboration and shared analysis.

�M

ore support to the conflict-affected North-East

region.

�Increased engagem

ent with the LT

TE.

�Increased aw

areness of conflict issues in mainstream

support.

�Support for governm

ent - LTT

E collaboration.

�Increased attention to "transform

ative" processesthat aim

to tackle underlying problems, especially if

they coincide with an econom

ic reform agenda.

These changes are not a response to a different paradigm

in which donors fundam

entally alter their modes of

engagement--there has been no sea-change. M

ost factorsdeterm

ining the shape of donor assistance remain the

same.

AID'S LIMITED ROLE IN

PEACEBUILDING

The notion that aid provision can in itself act as a

significant catalyst or lever to promote peace in Sri

Lanka may be seductive, but risks overlooking a set of

limiting factors:

Executive Summ

ary

5| Executive S

umm

ary

Donors and Peacebuilding in S

ri Lanka 2000 - 2005 | 6

�M

ost aid provision is dependent on diplomatic and

political considerations; aid agencies rarely have thescope to act independently, m

eaning that on-the-ground actions are less significant than w

ider trendsor political developm

ents.

�Aid agencies respond to internal incentives andpriorities that are often geared tow

ard ensuringsm

ooth disbursement of aid and efficient allocation

of resources. This m

eans that in many cases,

comm

on ground will be found only w

hen aconflict-aw

are approach eases resource transfers, asopposed to lim

iting expenditures or creatingobstacles in the aid pipeline.

�T

he aid organizations at the forefront ofpeacebuilding approaches are financiallyinsignificant actors in the Sri Lankan econom

y.W

hile this does not render them useless, and there

are many valid exercises that they can engage in,

their approaches will probably not becom

e comm

oncurrency across the aid com

munity in Sri Lanka. A

straightforward look at the w

ays in which the larger

donors work dem

onstrates that while aid can be

made m

ore conflict-aware, there are serious barriers

to a fully cooperative approach.

�M

ost importantly, aid is not, for the m

ost part, veryeffective as a vehicle for transform

ation. It is arelatively m

inor factor in the politics and mechanics

of conflict in Sri Lanka and in most other countries.

This m

eans that while aid can support dom

inanttendencies or political im

peratives, it can rarelychange them

. The viability of aid as a supporting

factor in the peace process depends entirely onprogress in the peace process itself. In m

ost cases,aid is the cart and not the horse.

The drivers of change in Sri Lanka are political actors,

not donors. The international com

munity is not w

ithoutinfluence, how

ever. Donor countries can optim

ize theirm

any types of engagement in Sri Lanka: trade, m

ilitary,security, diplom

acy, and aid. Donors can provide a

variety of incentives and supportive measure for peace,

but these are generally not aid-related.

IMPLICATION

S FOR DONORS' POLICY AN

DPRACTICE

Sri Lanka faces fundamental governance challenges, and

there will be continuing obstacles in the search for

lasting peace. While donors m

ay rarely be able to tacklesuch issues directly, they can still be involvedproductively. D

onors can provide support in the searchfor solutions to underlying problem

s, and help with

more im

mediate issues relating to peacebuilding. Sm

allerdonors m

ay have a comparative advantage in supporting

larger donors to work along these lines in fields w

herethere are shared objectives. O

ur recomm

endationsinclude:

�W

orking toward greater donor understanding of

background conditions and ways in w

hich aidprovision can be screened or evaluated in order to"do no harm

" and be better targeted to supportconditions conducive to peacebuilding. T

his couldinvolve the recruitm

ent of higher-level Sri Lankanstaff. Also there should be further linkages betw

eenaid and diplom

atic, comm

ercial (and, on occasionm

ilitary) ties, to encourage well grounded and

cooperative approaches with a longer-term

perspective.

�C

onsidering withdraw

al carefully: Donors looking

to withdraw

from Sri Lanka should factor into their

calculations the amount they have invested in

building up a conflict-sensitive approach.W

ithdrawal w

ould waste this asset, and for sm

allerdonors it w

ould send no real signal to thegovernm

ent.

�Seeing pragm

atic comm

on ground: Efforts shouldsupport positive aid provision w

here it can backgovernm

ent policy and help produce a tangiblepeace dividend - in the N

orth and in the South. Yetin term

s of donor coordination, donors must

appreciate that consensus-based approaches may

result in lowest-com

mon-denom

inator strategies,and should strive instead to m

ake donor strengthsm

ore complem

entary.

7| Executive S

umm

ary

�Supporting alternative channels for discussion,debate, and negotiation on conflict issues w

ithin SriLanka.

�Focusing m

ore strongly on domestic capacity-

building--whether through projects, funding, or

policy-based research initiatives--that is always

within the fram

ework of a sound institutional

analysis to ensure that any capacity development

initiatives are not constrained by structural factors.

�W

orking to maintain pragm

atic and appropriatecontact w

ith LTT

E bodies.

�C

onsidering the resentment of the lack of attention

to the South, and how to provide w

ays ofaddressing that shortfall. R

apid economic reform

islikely to further derail the peace process, if it helpsbuild perceptions that the poor Southern m

ajority isbeing ignored.

�C

ontinuing to support the North-East even if a

political settlement rem

ains elusive.

�Expanding civil society funding: this is alreadyunderw

ay, but the trend whereby donors look m

orew

idely at a broader range of actors should becontinued.

�Engaging the diaspora: som

e donors have engagedthe diaspora com

munity and m

ore efforts might be

possible.

9| Introduction

Introduction

This report is a contribution to a broader study entitled

"Aid, Conflict and Peacebuilding in Sri Lanka"

(Goodhand and K

lem, 2005), w

hich examines the peace

process in Sri Lanka with a particular focus on

international engagement. It is one of several

contributing studies to the 2005 Sri Lanka StrategicC

onflict Assessment (SC

A2). Part One is a brief

perspective on foreign assistance to Sri Lanka. Part Two

delves more deeply into the period betw

een 2000 and2005 w

hen donors became actively involved in the peace

process. Using the results of interview

s with donors and

other research carried out in early 2005, Part Three

considers the underlying motivations and incentives for

donor action during this time. Part T

hree also examines

the extent to which the analysis and recom

mendations

of an earlier strategic conflict assessment in 2000 have

been implem

ented and are still relevant. Finally itprovides suggestions for future donor engagem

ent.

This report w

as compiled using inform

ation gatheredthrough the authors' professional engagem

ent in SriLanka dating back to 1991. Further interview

s and areview

of literature conducted in February 2005provided updated and m

ore detailed sources. The report

is intended as a background study, alongside otherbackground studies and additional w

ork, to support them

ulti-donor Strategic Conflict Assessm

ent (known as

SCA2) conducted during 2005. T

he authors of thisreport participated in the earlier strategic conflictassessm

ent conducted in 2000, and in theim

plementation of its recom

mendations. As such, this

report presents a particular perspective on conflict in SriLanka, focusing on the role of donor assistance andprovides an "insider" view

of donor engagement w

iththe Sri Lankan peace processes.

This report aim

s to provide useful and succinctinform

ation that can be used for the SCA2, and for

other purposes. All errors, omissions, or inaccuracies are

the fault of the authors.

11| A

id to Sri Lanka, Past and Present

1.Aid to Sri Lanka, Past and Present

SUPPORTING STATE DEVELOPM

ENT

Donor assistance has supported the governm

ent of SriLanka for decades. H

owever, Sri Lanka has never been

heavily dependent on donor resources. In fact, since theeconom

y has grown w

hile donor funding has remained

constant or declined, aid represents a decreasingproportion of the national budget.

Historically, donor funds have supported state-led

development. Transfers to governm

ent for major

projects, or occasionally for generalized budget support,have helped finance health, education, infrastructure,and other services. T

hese steps have enabled Sri Lanka toregister im

pressive improvem

ents in human

development indicators.

The top-dow

n aid delivery model, as practiced in Sri

Lanka during the period imm

ediately following

independence, tended to support an already over-centralized state. Aid w

as provided to the centralgovernm

ent, and negotiations over how funds w

ereallocated occurred at a central level, arguablyunderm

ining democratic processes and reducing

government accountability to Sri Lankan citizens. A state

that can receive funds centrally without having to ensure

the cooperation of citizens, taxpayers, or local politicalinterests m

ay have less need to listen to local opinion.T

he centralized, technocratic "developmental state" that

aid has tended to support in many countries m

ay lackm

echanisms or political processes to ensure just political

representation and a voice for ethnic or other minorities.

While dom

estic factors are more significant than aid

flows in determ

ining the political make-up of Sri Lanka,

donor assistance-supported centralized structures andpolitical system

s marginalize certain groups w

ithin thepopulation. Perhaps the clearest exam

ple is donorsupport for the M

ahaweli basin developm

ent scheme, a

massive integrated developm

ent program for Sri Lanka's

interior that comm

enced in the 1970s. Donor support

made the schem

e viable, but failed to integrate adequatesocial or political sensitivity. Resentm

ent of the unequalaccess to the benefits of such state investm

ents on thepart of m

inority (chiefly Tamil) populations fuelled

support for subsequent civil war.

GREATER SENSITIVITY, M

ORE VARIEDAPPROACHES

In the past two decades, m

any donor organizations havebecom

e more aw

are of the political context within

which aid is provided. From

the early 1970s, forexam

ple, USAID

began to promote decentralization

within its program

s of support in various countries.O

ther bodies, including many European bilateral

donors, U.N

. agencies, and the World Bank, increased

the level of social assessment and specialist staff engaged

in looking at a wider body of issues in Sri Lanka and

elsewhere. Broader aid discourse has prom

oted a wide

range of solutions to perceived problems, including the

promotion of gender equality and popular participation.

Some donors prom

ote such ideas as a priority, ahead ofm

ore traditional development support to a central state.

This is especially the case in a country like Sri Lanka,

where past successes m

ean that mass poverty (as defined

for example in the M

illennium D

evelopment G

oals) haslargely been elim

inated.

Yet newer developm

ent paradigms m

ay also run intoproblem

s, suffering from a lack of locally appropriate

planning, lack of attention to local political factors, or afailure to gain dom

estic participation in proposed plans.N

ewer w

ays of working can sim

ply lead to a new range

of externally driven initiatives.

Donors and Peacebuilding in S

ri Lanka 2000 - 2005 | 12

More holistic approaches also m

ake disbursement of

large sums of m

oney more challenging. W

hile this is notm

uch of a problem for donors w

hose budgets arelim

ited, it is a real issue for bodies that need to spend ata rapid rate. For developm

ent banks, which need to

provide loans to sovereign governments, there are further

limits on w

hat can be achieved. Loans must flow

tocentral governm

ent, in large quantities.

CONDITION

ALITY IN SRI LAN

KA - CHANGIN

G THESTATE

An awareness that aid alone w

as often ineffective inbringing about econom

ic growth encouraged donors to

attach conditions to their support. This enabled donors

and governments to keep the funding pipeline flow

ing,w

hile attempting to use aid as a lever for reform

s. As inother countries, the strings attached to aid for Sri Lankabecam

e tighter in the 1970s, and starting in 1977, aidw

as used to promote concerted liberalization of the Sri

Lankan economy.

Starting in the late 1980s, donors widened their scope,

recognizing that reform of governm

ent structures was

required as well as econom

ic liberalization. Repeatedefforts have been m

ade to slim dow

n the civil service,im

prove planning and budgetary mechanism

s, andchange the form

or function of a range of linem

inistries. Finally, and most recently, a range of peace

conditionalities has involved a more explicit focus on

conflict-related issues.

Donors have adopted a range of term

s such as"transform

ative approaches," and "building drivers ofchange," to describe efforts to prom

ote reforms of

government structures. In addition to both traditional

projects and conditionality, they have also consideredother w

ays of promoting change by supporting dom

esticconstituencies likely to build pressure for the desiredreform

s, including civil groups, mem

bershiporganizations, m

edia, and research bodies.

WORKIN

G OUTSIDE THE STATE - DIFFERENT

APPROACHES

Aid has increasingly been provided outside government

mechanism

s. In addition to "transformative" support to

promote change, international N

GO

s and a range ofdom

estic bodies have created alternative channels forproviding support in an effort to reach m

arginalizedgroups. Such support m

ay aim to build the voices of

marginalized groups in policy dialogue. A fear of

corruption also encourages donor agencies - especiallythe U

SAID - to avoid funding the governm

ent directly.

Yet for some donors, especially those from

Asia, theprim

e role of the state has not been questioned as it haselsew

here. A host of factors contribute to this, including:greater respect for non-intervention and nationalsovereignty; a desire to avoid foreign interference givenexperiences of colonialism

, external comm

unistagitation, proxy w

ars between superpow

ers, andAm

erican pre-emptive action; positive experiences of

successful state-led development in East and Southeast

Asia; a weaker dem

ocratic tradition and greater respectfor existing ruling elites; and less scrutiny of aid flow

sfrom

civil society domestically. G

iven that Asian donorsare highly significant in Sri Lanka, this is im

portant inconsidering the shape of overall aid flow

s.

GROWIN

G DONOR AW

ARENESS OF CON

FLICT

Through the 1990s, a range of donors becam

e graduallym

ore sensitive to conflict issues. The organizations that

did so tended to be those more w

idely adopting newer

ideas on aid provision. These w

ere chiefly global trends,reflected in program

ming in Sri Lanka and elsew

here. AsSri Lanka em

erged as a middle-incom

e state (accordingto categories used in the W

orld Bank's annual world

development reports and elsew

here), donors who w

ereincreasingly focusing on poverty reduction becam

e lessinterested in disbursing funds to Sri Lanka. Som

ebilateral donors in particular w

ere no longer spendingsubstantial sum

s of money in the country or delivering

large projects through state channels. Consequently, a

13| A

id to Sri Lanka, Past and Present

37%

21%

21%

4% 4% 4%

3%2%

2%2%

JapanAD

BW

orld BankIM

FG

ermany

Norw

ayN

etherlandsKoreaU

SASw

eden

Source: O

ECD

/DA

C

Figure One: Donor flows to Sri Lanka 2002-2003

1.T

hese are gross figures including both loansand grants. T

hey do not include repayments

of loans from the governm

ent of Sri Lanka todonor institutions.

2.Som

e donor contributions do not register inthese statistics (taken from

the OEC

D D

AC).

These donors include: India (sizeable low

-interest loans to G

oSL), China, Saudi Arabia,

Kuw

ait, and other Middle-Eastern

governments.

3.From

the government's perspective, European

and North Am

erican donors are still lesssignificant than the sm

all amounts below

would indicate, given that m

uch of theirsupport is channelled to or through non-governm

ental bodies.

Top Ten Donors of gross O

DA

(2002-3 average in U.S.$)

Japan$249m

ADB

$148m

World Bank

$146m

IMF

$27m

Germ

any$25m

Norw

ay$25m

Netherlands

$24m

Sweden

$19m

Korea

$17m

USA

$16m

good relationship with the governm

ent became less

essential. They w

ere able to focus on the conflict while

still achieving their (reduced) annual aid disbursement

objectives. For some countries, a fairly vocal Tam

ildiaspora w

as another factor drawing donor agencies'

attention to the conflict.

By 2000, some bilateral organizations w

ere alreadyengaged in conflict-related issues as a core aspect of theirw

ork. Other donors, especially the largest three (Japan,

the Asian Developm

ent Bank (ADB), and the W

orldBank), dem

onstrated little recognition of civil war, or

indeed of ethnicity in any respect, in their

Donors and Peacebuilding in S

ri Lanka 2000 - 2005 | 14

documentation or program

ming. O

ften, it was not in

the interests of some donors, or the governm

ent, torecognize issues that w

ould complicate provision of

substantial funds.

The Strategic C

onflict Assessment of 2000

1(SCA1)

summ

arized the general situation regarding donors in SriLanka as follow

s:

"There are basically three types of aid to Sri Lanka:

(1)C

onventional development assistance channelled

through government, w

ith primary focuses on

structural adjustment, liberalization, governm

entreform

, and infrastructure investment.

(2)H

umanitarian assistance provided to the N

orth-East, m

ost of which com

es out of separate, short-term

humanitarian budget lines and aim

s to addressthe social costs of the conflict.

(3)A num

ber of smaller bilateral donors, such as

Norw

ay, Canada, N

etherlands, and Germ

anyprovide assistance to civil society organizationsfocusing on areas such as hum

an rights, conflictresolution, capacity building, and judicial reform

."(G

oodhand 2000).

The assessm

ent continues:

"Broadly, donors have responded to conflict in threew

ays:

(1)T

he predominant approach has been to w

orkaround conflict i.e., conflict is a disruptive factor tobe avoided. T

herefore donors avoid working in

conflict-affected areas and development aid is put

on hold in the North-East. If a link betw

eenconflict and developm

ent is acknowledged, it is that

conflict which is an im

pediment and can be

removed w

ith greater market openness and

deregulation. The m

ajor donors such as Japan andAD

B have taken this line, both of whom

have

avoided working in the N

orth-East until the "war is

over." Although the World Bank has, in recent

years, begun to invest in the North-East, this has

not affected the main portfolio of program

ssupported in the South, w

hich are still in the main

'conflict blind'.

(2)Agencies w

orking in the North-East have been

forced to become m

ore cognisant of the linksbetw

een their programs and conflict. As a result

they have adapted programs so that they can w

orkm

ore effectively in conflict by reducing conflictrelated risks and ensuring that aid does no harm

.International N

GO

s such as OX

FAM and C

ARE

have analysed their programs in relation to the

conflict dynamics, w

hile UN

HC

R, w

orking inJaffna, has avoided m

aking heavy investments that

may be vulnerable to the ebb and flow

of conflict.

(3)T

here is a small group of bilateral donors w

horecognize the link betw

een development and

conflict and have an explicit focus of working on

conflict. Norw

ay, Canada, N

etherlands, Germ

any,Sw

eden, Switzerland, and the U

.K. have all begun

to identify programm

ing opportunities for working

on conflict. A range of initiatives have been fundedin areas, such as hum

an rights, poverty alleviation,good governance, education and conflict resolution,w

hich have an explicit focus on conflict. While

these initiatives are significant in terms of bringing

new ideas and lessons to the donor-governm

enttable, in relation to the bulk of donor funding theyare relatively sm

all scale and unlikely to affect wider

incentives systems and structures."

1U

nlike this assessment, the earlier S

trategic Conflict A

ssessment undertaken in 2000 w

as not a multi-stakeholder exercise. It w

as a shorter and less

inclusive process, undertaken at a time w

hen military conflict w

as under way. H

owever, it provides a starting point and rem

ains a valid interpretation of

events up to 2000, with a particular focus on donor assistance and conflict.

15| D

onors and Peacebuilding 2000-2005

In the five years following the first Strategic C

onflictAssessm

ent of 2000, the political and institutionalcontexts in Sri Lanka have challenged, tested, and calledinto question the extent to w

hich donors in Sri Lanka caneffectively support peace. T

his section analyses donorattitudes and practices over three defined periods thatcorrespond w

ith shifts in the political environment. It also

considers donor engagement w

ith the Liberation Tigers ofTam

il Eelam (LT

TE) and the im

pact of the tsunami on

the international comm

unity's role. Lastly, it reflects onw

hether donor strategies over this five-year period havebeen effective in strengthening the prospects for peace.

THE WAR FOR PEACE PERIOD: IN

CREASING

DONOR DISILLUSION

MEN

T

As the Sri Lankan economy w

eakened in 2000 and2001, m

ilitary deadlock continued in the North. T

heLT

TE m

anaged to inflict major casualties on the arm

edforces and pursue terrorist tactics in the South. T

hespectacular attack on Sri Lanka's only internationalairport, near C

olombo, m

ade it still more apparent that

winning the w

ar in order to create peace was an

impossible task, and dam

aged the economy w

idely.

Over tim

e, more sm

all bilateral donors began to move

their support away from

the People Alliance (PA)governm

ent. The num

bers of donors joining the leadshow

n by the Netherlands; G

ermany (through the

Germ

an Technical Cooperation, G

TZ

); Canada; and

others in earlier years increased. Many N

GO

s alsoresponded to this shift. For the developm

ent banks andthe International M

onetary Fund (IMF), econom

icstagnation w

as probably the primary basis for som

ew

ithdrawal of support for governm

ent policies in 2000and 2001.

At that time, som

e bilateral donors attempted to raise

attention to the perceived inadvisability of providingdonor funds in an environm

ent where conflict w

as bothcontinuing and apparently dam

aging the economy of

the island as a whole. W

hile some donors w

erecontinuing in an environm

ent of "business as usual,"and argued either that the governm

ent had a right topursue a w

ar against a terrorist non-state actor, or thatw

ithdrawal of support w

ould hardly help the situation,others w

ere aiming to establish greater links betw

eenconflict and developm

ent assistance. A range of studiesw

as supported, including the 2000 Strategic Conflict

Assessment, w

ith this aim in m

ind. Positions became

polarized at times, as w

as seen at the Donor Forum

inParis in D

ecember 2000, w

here some donors w

ereoutspoken on the failure of governm

ent to promote

peace in any meaningful w

ay.

By this point, a range of smaller donors w

as activelyengaged in peacebuilding m

easures as a key aspect oftheir program

s. Larger donors, including the ADB and

the World Bank, w

ere focusing increasingly on linksw

ith conflict in their documentation and in practice

through various channels: programs in the N

orth-East,support for the governm

ent-led Relief, Rehabilitationand Reconciliation (3R

) program, and occasional aim

sto integrate ethnic issues into program

ming in the South

or across the island, such as through the World Bank

education sector reform program

. How

ever, the conflictstill rem

ained a secondary factor in the process ofdeciding on resource transfers from

the development

banks and Japan. Given that these donors represent

some 75-80%

of donor funds, this is significant.

Throughout this period, the PA governm

ent maintained

the position that the conflict was an internal m

atter anddiscouraged unsolicited engagem

ent from the

2.Donors and Peacebuilding 2000-2005

Donors and Peacebuilding in S

ri Lanka 2000 - 2005 | 16

international comm

unity. Donors w

ere discouragedfrom

proactively working on conflict or expressing

political viewpoints.

DONORS GET COM

FORTABLE WITH THE UN

P AND

LTTE

The U

NP electoral victory over the PA governm

ent inD

ecember 2001 led to a w

holesale change in theenvironm

ent. The new

government signed a ceasefire

agreement w

ith the LTT

E in February 2002, launchedpeace talks soon after, and opened the doors forinternational engagem

ent and support. While the

previous PA government had m

aintained through the1990s that the conflict w

as an internal matter, the U

NP

saw opportunities in internationalizing the peace

process. Norw

ay played the role of the official facilitatorto the peace process and appointed a special envoy.D

uring this period the UN

P negotiated several tradeand security arrangem

ents with strategic partners like the

U.S. and India. Sim

ilarly, donors saw opportunities in

engaging with a governm

ent willing to listen to donor

perspectives and in expressing themselves in w

ays thatdonors or diplom

atic colleagues would find encouraging.

Added to this was the U

NP governm

ent's economic

policy program, w

hich promoted rapid reform

throughliberalization tow

ard a greater role for the free market

and reduced state intervention. For a majority of donors,

this policy portfolio was very close to the prescriptions

that they themselves w

ould have offered.

Peace architecture (such as peace secretariats and thedonor co-chair/conference m

echanism) w

as rapidly putin place and donors eager to play a constructive rolechannelled support tow

ard these bodies. Japan, who had

previously treaded cautiously over political matters,

appointed a special envoy for the peace process andassum

ed the leading co-chair role. Other donors also

appointed special peace envoys and deployed countlessm

issions to launch reconstruction programs in w

hat was

mistakenly perceived as a post-conflict environm

ent.

The C

FA made provision for the N

ordic countries toestablish the Sri Lanka M

onitoring Mission (SLM

M),

which continues its role to the present.

The U

NP encouraged donor coordination and

harmonization during this period, albeit principally

around their economic reform

agenda. A Developm

entAssistance C

oordinating Com

mittee (D

ACC

) was

proposed in 2003 by the government to ensure

government lead on this effort.

Between late 2002 and early 2003, the governm

ent andLT

TE held six rounds of peace talks. T

he government

also pushed forward on developing its econom

ic plan,w

hile the multilateral agencies (IFIs and the U

.N.) led a

needs assessment for reconstruction in the N

orth-East.In parallel w

ith the formal peace talks, international

donor conferences were planned to m

obilize andleverage international support and financing. T

he Oslo

conference in Novem

ber 2002 built on therecom

mendations from

the first two rounds of peace

talks, with donors endorsing the parties' com

mitm

ent tohum

an rights and other core principles; the new joint

government-LT

TE subcom

mittees; and the

establishment of a N

orth-East Reconstruction Fund(N

ERF). Further conferences w

ere planned in co-chaircapitals, leading to the final high profile TokyoC

onference on Reconstruction and Developm

ent of SriLanka in June 2003. T

here, donors were expected to

pledge major funds tow

ard a needs assessment of the

North-East and the governm

ent's economic recovery

plan (called "Regaining Sri Lanka").

Another significant feature of this period was the

international comm

unity's relationship with the LT

TE.

The international com

munity w

as consistent in its supportfor constructive engagem

ent between the governm

ent andthe LT

TE, hoping it w

ould lead to a negotiated politicalsettlem

ent. Regarding their own relationship w

ith theLT

TE, how

ever, donor positions varied. The U

NP

government's encouraging approach to international

engagement w

ith the LTT

E provided space for donors to

cultivate relationships with the Tigers. T

he ADB and the

World Bank took a pragm

atic approach, developinginform

al working arrangem

ents with key LT

TE

counterparts to ensure effective implem

entation of theirlarge-scale reconstruction projects in the N

orth-East. The

LTT

E regarded the international financial institutions(IFI's) apolitical approach favorably because it broughtresources to their areas. It w

as no surprise that the World

Bank was the LT

TE's custodian of choice for the N

ERF.

UN

ICEF courageously attem

pted to tackle more prickly

issues involving vulnerable children and underagerecruits. T

hrough an approach of constructiveengagem

ent and strategic partnership with LT

TE-

sympathetic organizations like the T

RO, U

NIC

EF was

able to get government and LT

TE agreem

ent to anAction Plan for C

hildren Affected by War.

For bilateral donors, engaging with arm

ed non-stateactors presented unfam

iliar terrain. India and the U.S.

took a harder line with the LT

TE, reflecting their ow

nhistory w

ith the organization (in the case of India), ordom

estic policy constraints restricting association with

terrorist organizations since the events of 9/11. Neither

country engaged directly with the LT

TE. T

he U.S. has

consistently insisted that the LTT

E renounce terrorismin "w

ord and deed" before any kind of recognitionw

ould be forthcoming. M

ost other bilateralorganizations adopted the constructive engagem

entapproach, directly and visibly engaging the LT

TE in Sri

Lanka and abroad, providing a sympathetic hearing, and

in some cases (N

orway, Sw

itzerland) providing fundingand support. Even countries that have proscribed theLT

TE as a terrorist organization (the U

.K., Australia,

and Canada) have chosen this approach. T

his "goodcop, bad cop" routine, w

hether by design orcoincidence, kept the pressure on the LT

TE to reform

on fundamental hum

an rights issues, while still

encouraging their political transformation. T

houghapproaches differed, the com

mon interest am

ong donorsw

as to encourage the government and LT

TE to w

orktogether tow

ard a political solution based on power

sharing and federalism.

When access to the N

orth-East improved (repairing of

the A9 road and resumption of com

mercial flights),

donor traffic to the Vanni increased, as did meetings

with the LT

TE. T

he LTT

E expanded its infrastructureto deal w

ith the international comm

unity with the

creation of the Planning and Developm

ent Secretariat, apeace secretariat, and even donor-friendly guesthousesand restaurants.

The donor response follow

ing the ceasefire was in m

anyw

ays remarkable, given the absence of a political

settlement. In som

e respects they treated a no-war, no-

peace environment as though it w

ere a post-conflictsetting. D

onors hoped that peace would create m

oreopportunities for investm

ent and development assistance

in Sri Lanka, leading to a substantial peace dividend.Based on progress in the form

al talks, donors increasedshort-term

(2-3 year) budget allocations in anticipationof the m

ajor reconstruction needs of the North-East.

Though m

any donors were aw

are that in post conflictsituations m

ajor reconstruction spending is generallyrequired for 5 - 10 years after a peace agreem

ent, donorbureaucracies w

ere operating on shorter time fram

es.T

heir enthusiasm to support the peace process (and so

be associated with a peacebuilding success story),

combined w

ith government encouragem

ent, tended toblind donors to the prevailing risks.

Peace negotiations broke down in April 2003. D

espitethis setback in the peace process, the tw

o donorconferences planned for W

ashington (April 2003) andTokyo (June 2003) w

ent ahead as scheduled. As aproscribed organization in the U

.S., the LTT

E was

barred from participating in the W

ashington conference.T

hey withdrew

from the peace talks soon after.

The Tokyo conference w

as well attended: participants

included the Sri Lankan Prime M

inister, the JapanesePrim

e Minister, the N

orwegian Foreign M

inister, theU

.S. Deputy Secretary of State, and the President of the

ADB. T

he LTT

E did not participate however, arguing

that the conference, like the Washington conference,

undermined the basic principle of parity betw

een parties

17| D

onors and Peacebuilding 2000-2005

Donors and Peacebuilding in S

ri Lanka 2000 - 2005 | 18

in the peace process. $4.5 billion was pledged overall,

20% in the form

of grants and the remaining 80%

asconcessional loans (m

aturity over 30-40 years; most w

itha 10-year grace period; interest rate 1-1.5%

). Adjustedon an annual basis, the $4.5 billion w

orks out to beabout $1.25 billion a year - com

pared to Sri Lanka'snorm

al aid level of around $750 million a year. T

hethree largest pledges cam

e from Japan, the AD

B, and theW

orld Bank, with significant contributions from

othercountries.

The linkage betw

een these funds and the peace processw

as articulated in paragraph 18 of the Tokyo Conference

Declaration (see Figure T

hree below).

The language of the Tokyo D

eclaration struck most

observers as donor conditionality rather than a looserlinkage. T

he former suggests "N

o aid unless peace," while

the latter suggests, "If peace, then increased prospects andopportunities for aid." T

here is a qualitative distinctionbetw

een the two. T

he latter position was the actual

position of most donors w

hile the former w

as theunfortunate m

isinterpretation. The result: confusion and

ambiguity as is evident from

the contradictory views

toward the Tokyo process expressed by individual donors

in Annex 1. How

ever, the government accepted the

conditionality overtones of the declaration, realizing thatthey put m

ore pressure on the LTT

E than thegovernm

ent, and would not im

pede comm

itments to the

government's econom

ic reform strategy. T

he government

was involved in the final drafting of the declaration. T

hegovernm

ent left Tokyo with their pockets full, donors left

Tokyo locked into a declaration that they were ill

prepared to implem

ent. The LT

TE w

ere simply left out

(having chosen not to attend).

For the international comm

unity, the conference processand especially the Tokyo m

eeting were intended to

bolster and support a positive peace process. When the

peace talks went off track in April 2003, the conferences

continued, partly out of their own m

omentum

as planshad been m

ade, but also because donors hoped and feltconfident that talks w

ould resume soon. T

hough stalledtalks w

ere a setback, donors were not prepared to

abandon their support for peace and hoped the Tokyoconference w

ould provide an incentive for parties toresum

e negotiations.

The six m

onths following the Tokyo conference

confirmed the donors' predicam

ent. Peace talks

Figure Two: M

ain pledges made follow

ing Tokyo Conference, 2003 (U.S.$)

�T

hese figures are a guide only, and cover pledges not disbursement. T

hey may not be fully accurate, and are

gross amounts. N

et amounts w

ould have to consider loan repayments as w

ell as pledges that simply repeat

past comm

itments.

�Various donor contributions m

ay not be recorded.

�Sum

s pledged following the tsunam

i of Decem

ber 2004 change the picture considerably.

Top Ten Donors of gross O

DA

(2002-3 average in U.S.$)

Japan$1Billion

ADB

$1Billion

World Bank

$1Billion

EU$293m

USA

$54m

remained on ice, the N

ERF never evolved beyond a

piece of paper, and there was little progress on agreeing

on administrative structures for the N

orth-East. The

ambiguity of the Tokyo D

eclaration led to ad hoc

responses, with som

e donors holding off on theirassistance to the N

orth-East while continuing their

assistance to the government for the South. An extrem

eexam

ple was one donor's delay in financing the

19| D

onors and Peacebuilding 2000-2005

Figure Three: Paragraph 18, Tokyo Declaration

Assistance by the donor comm

unity must be closely linked to substantial and parallel progress in the peace

process towards fulfilm

ent of the objectives agreed upon by the parties in Oslo. T

he Conference encourages the

Governm

ent of Sri Lanka and the LTT

E to enter into discussions as early as possible on a provisionaladm

inistrative structure to manage the reconstruction and developm

ent aspects of the transition process. The

process would need the expeditious developm

ent of a roadmap w

ith clear milestones indicating the path tow

ardsa m

utually acceptable final political solution. With this in view, the international com

munity intends to review

and monitor the progress of the peace process closely, w

ith particular reference to objectives and milestones

including:

a.Full com

pliance with the cease-fire agreem

ent by both parties.

b.Effective delivery m

echanisms relating to developm

ent activity in the NorthEast.

c.Participation of a M

uslim delegation as agreed in the declaration of the fourth session of peace talks in

Thailand

d.Parallel progress tow

ards a final political settlement based on the principles of the O

slo Declaration.

e.Solutions for those displaced due to the arm

ed conflict.

f.Effective prom

otion and protection of the human rights of all people.

g.Effective inclusion of gender equity and equality in the peacebuilding, the conflict transform

ation and thereconstruction process, em

phasizing an equitable representation of wom

en in political fora and at otherdecision-m

aking levels.

h.Im

plementation of effective m

easures in accordance with the U

NIC

EF-supported Action Plan to stopunderage recruitm

ent and to facilitate the release of underage recruits and their rehabilitation andreintegration into society.

i.Rehabilitation of form

er combatants and civilians in the N

orthEast, who have been disabled physically or

psychologically due to the armed conflict.

j.Agreem

ent by the Governm

ent of Sri Lanka and the LTT

E on a phased, balanced, and verifiable de-escalation, de-m

ilitarization and normalization process at an appropriate tim

e in the context of arriving at apolitical settlem

ent.

In relation to monitoring and review

paragraph 20 stated:

"In view of the linkage betw

een donor support and progress in the peace process, the international comm

unityw

ill monitor and review

the progress in the peace process. In implem

enting its own assistance program

mes, the

donor comm

unity intends to take into careful consideration the results of these periodic reviews."

Donors and Peacebuilding in S

ri Lanka 2000 - 2005 | 20

reconstruction of Kilinochchi hospital because of a lack

of progress on peace. High level m

onitoring visits byspecial peace envoys and co-chair m

eetings offeredstatem

ents that consistently condemned the hum

anrights abuses by the LT

TE and urged both sides to

return to the negotiating table, but had little impact.

Political parties dangled the carrot offered by the Tokyoconference as a w

ay of criticizing each other's approachto the peace process. D

onor confidence began to wane.

FROM CEN

TER STAGE BACK TO THE SIDELINES:

DONORS FACE THEIR LIM

ITATIONS

The elections of April 2004 led to a solid defeat of the

UN

P and a return to a government headed by a U

FPAcoalition (SLFP, JV

P, and others). The defeat

demonstrated the southern polity’s rejection of the U

NP

economic reform

package and their concessions to theLT

TE in order to secure it. To ensure a sufficient

majority, the SLFP form

ed a coalition with the JV

P andJH

U, w

ho had made headw

ay in the elections. These

changes reduced government support for the

internationalized peace process and put donors squarelyback into their pre-2001 box. W

hereas the UN

P

government had w

elcomed donor proposals, including

much of the w

ording of the Tokyo agreement, the new

government w

as less amenable. Aw

are of theinternational com

munity's tilt tow

ard the UN

P, theU

FPA pursued a cooler strategy with donors. In

comm

on with earlier PA-led governm

ents, it resistedefforts by donors to form

comm

on positions andrejected the perceived conditions of the TokyoD

eclaration.

By 2004, the reality of Sri Lanka's fragile andfragm

ented governance structure came to the forefront.

With the JV

P advocating strongly against any federalsolution w

ith the LTT

E; the Karuna-led LT

TE split in

the east; continuing political rivalry between the U

NP

and SLFP; stalled peace talks; and the NER

F finallydeclared dead; donors w

ere left scratching their heads asto how

to direct their efforts at peacebuilding.

In early 2004, heads of mission in Sri Lanka tasked a

donor working group w

ith revisiting the TokyoD

eclaration and developing a strategy for monitoring

progress on peace. The D

onor Working G

roup on thePeace Process (D

WG

) was then form

ed, with w

idespreadrepresentation from

bilateral and multilateral agencies.

Figure Four: Political differences: UNP vs. SLFP

IssueU

NP

SLFP

Donor involvem

entin peace process

Encouraged donor interest,international com

munity at center

stage

Donors at arm

s' length, conflict as internal matter

International advisers within

government

Marginalize those w

ithin international comm

unityw

ho are too outspoken or interfering

Peace AgendaEconom

ic issues as central factor topeace

Political issues as central to peace

Tokyo Declaration

Agreed with declaration; w

ereinvolved in drafting

Rejection of the declaration, but not the promise

of $4.5B

Harm

onizationSom

e efforts on coordination Prefer direct bilateral agreem

ents with individual

donors

The D

WG

adopted an approach that encouraged sharedanalysis, provided regular robust inform

ation forcollective or individual donor assessm

ent, but leftdecisions on aid allocation and conditionality up to thediscretion of individual donors. T

his approach won the

support of a wider range of donors, som

e of who had

felt constrained by the conditionalities of the TokyoD

eclaration. A scenario-planning exercise for donorsw

as held in July 2004 that identified significant factorsaffecting progress on peace in Sri Lanka. T

he factorsw

ent beyond the narrow indicators of the Tokyo

Declaration to include issues such as political

fragmentation, econom

ic growth or decline, and social

and cultural values - all of which had altered the

dynamics of peace over the previous three years.

Interestingly, the international comm

unity--particularlydonors--w

as not identified as a critical factor. A localorganization, C

entre for Policy Alternatives, was hired to

provide quarterly reports analyzing trends against thesecritical factors w

ith the aim of helping donors m

akem

ore informed program

ming and financing decisions.

The first report produced on April 30, 2005 reported

generally that the trend toward peace w

as negative and isconsistent w

ith the findings of SCA2.

THE TSUNAM

I

The w

ave that struck countries bordering the IndianO

cean on Decem

ber 26, 2004 killed some 30,000

people in Sri Lanka, and left a far greater number

homeless. It affected areas along the coast in the N

orth,East, and South, in both governm

ent and LTT

E-controlled areas. In the im

mediate afterm

ath,cooperation betw

een government and LT

TE bodies w

asunprecedented. H

owever, after only a short period, this

initial spirit of cooperation waned and the process of

building a meaningful shared body to support

reconstruction has become entangled in political

bargaining.

The huge flow

s of aid offered to Sri Lanka following the

tsunami have given the governm

ent greater room to

21| D

onors and Peacebuilding 2000-2005

Figure Five: How Donors are Perceived in Sri Lanka: Politics and Popular Opinion

In general, while m

any in Sri Lanka welcom

e donor support, there is also a strong undertow of cynicism

concerning the role and motives of foreign organizations.

Media perceptions: too diverse to sum

marize succinctly, given differences betw

een language groups, etc. The

regular and harsh criticism of donors that w

as comm

on while the conflict w

as in full sway has generally been

more m

uted in recent years, possibly giving donors more room

to operate. How

ever, support for the role ofdonors and international bodies in the peace process dim

inished with the end of the U

NP governm

ent. Populistpoliticians and other interests m

ay use the media to prom

ote independence from perceived foreign interference.

Recent protests against supposed neo-colonialism on the part of the W

orld Bank, following a m

isquote attributedto the country director and cited in the m

edia, show how

donor agencies can form part of populist dom

esticpolitical agendas.

Civil bodies: M

any civil society leaders have views that differ from

the limited num

ber of Colom

bo-based bodiesw

ho broadly supported the "principled" approach to aid delivery emerging from

Tokyo. Non-English speaking

bodies are likely to be more critical of donors, and less supportive of international involvem

ent in the peaceprocess. T

hey are less likely to support approaches based on human rights or other international ideals. O

neim

plication may be that donors need to canvas a w

ider cross-section of opinion, rather than a narrower set of

like-minded institutions.

maneuver and an opportunity to press ahead w

ith itsplans. Som

e donors feel that it reduces still further thescope to prom

ote the principles outlined in Tokyo.T

here was now

a willingness to provide support am

ongdonors w

ho had previously been reluctant to do so,given the lack of adherence to Tokyo "principles." Forexam

ple, the U.K

. offered to pay a proportion of SriLanka's debts to m

ultilateral institutions following the

tsunami, in a gesture that is likely to am

ount toconsiderably m

ore than the U.K

.'s annual bilateral aidbudget for the country.

Prior to the tsunami, m

ost donors felt that they hadlim

ited influence in Sri Lanka. With the influx of

enormous sum

s of unconditional tsunami relief and

reconstruction funds and the added bonus of debt relief,Sri Lanka (and especially the governm

ent) is awash w

ithm

oney and the power these funds bring. Any

opportunity the international comm

unity had to exertleverage through these funds in support of conflictresolution or peacebuilding principles has beeneffectively m

issed. Furthermore, the stronger positions

that some donors w

ere pondering prior to the tsunami

may prove m

ore difficult to pursue in the presentcontext.

One aspect of the international com

munity's role in the

situation has been to advocate balance, equity, andconflict sensitivity, particularly since there is an overlapbetw

een conflict-affected areas and tsunami-affected

areas. A set of guiding principles for tsunami response,

developed collaboratively with governm

ent, civil society,and donors, provides a com

mon fram

ework around

which donors can harm

onize their efforts.

One significant positive outcom

e of the tsunami disaster

is the establishment of the Post-Tsunam

i Operational

Managem

ent Structure (P-TOM

S), a mechanism

thatallow

s representatives from the governm

ent, LTT

E, andthe M

uslim com

munity to decide jointly on priorities

for post-tsunami reconstruction in the affected areas of

the North-East. It is supported by a m

ulti-donor trustfund. T

he successful signing of the P-TOM

S was

somew

hat of a surprise for donors who rem

ember the

endless negotiations over NER

F that ultimately failed.

Though a practical m

echanism for tsunam

ireconstruction, the international com

munity recognizes

that the P-TOM

S is one of the few positive indicators of

progress on peace in recent times. If it successfully

proceeds from agreem

ent to implem

entation (always a

challenge in Sri Lanka), it may provide an opportunity

for dispirited donors to re-engage in the peace process.H

owever, donors m

ust be careful to heed the lessons oftheir previously overzealous enthusiasm

over the peaceprocess and not jum

p into the driver's seat. The P-

TOM

S provides a long awaited vehicle, but as

experience and history suggest, the road to success will

be rocky.

Donors and Peacebuilding in S

ri Lanka 2000 - 2005 | 22

This section builds on the findings of research carried

out by the authors in early 2005. Based on keyinform

ant interviews, unpublished donor and N

GO

reports, group discussions, and personal experience, theauthors appraise how

donors are engaging inpeacebuilding. In spite of the fluctuations in the politicaldynam

ics in Sri Lanka and the resulting changes indonor behavior, there have been som

e consistent trendsin donor practice during the five-year period since theinitial strategic conflict assessm

ent.

BROADER DEVELOPMEN

T TRENDS

Donor policies tow

ard Sri Lanka have generally beendriven by international interests and agendas as m

uch as,or m

ore than, by the needs and concerns of the countryitself. As a relatively sm

all country to which donors

dedicate few in-country staff, this tendency is even m

orepronounced than in a larger state such as Indonesia orBangladesh, w

here large aid offices have beenestablished, and national dialogue is m

ore dominant.

Donor Bureaucracies

Each donor body works differently. Each has its ow

nspecific procedures, m

odes of providing aid, priorities,and decision-m

aking processes; and the motivations of

individuals working in donor institutions tend to be

based more around internal incentive structures than the

external working environm

ent in the country ofoperation. For the larger donors, a key im

perativeinvolves ensuring a strong "pipeline" of aid projects thatdisburses m

oney smoothly and effectively according to

set policy. Factors influencing this policy vary, butgenerally depend on:

�Political involvem

ent from the governm

ent of thedonor agency (or from

dominant nations in the case

of multilateral agencies); this is influenced by

broader relations with the recipient governm

ent,including historical legacies, voices of the recipientcountry diaspora in donor nations, trading interests,and geo-strategic objectives;

�Technical approaches favored by in-housespecialists, consultants, etc.;

�T

he practicalities of transferring significant levels ofresources and an incentive to ensure sm

ooth flows

of aid. For lending institutions, the imperative is to

provide large, reliable, and easily transferablegovernm

ent loans.

Global Policies Im

plemented Locally

Donor organizations m

ay be informed by technical staff

on the ground, but policymaking is rarely a bottom

-upprocess. C

ooperative in-country efforts (such as theD

onor Working G

roup in Sri Lanka) can have asignificant im

pact on local working practices, but is

unlikely to affect the over-riding policy-based priorities ofm

ost donors. In Sri Lanka, the factors influencing most

donors' policies are largely driven by agency-specificim

peratives and agendas. Categorization of Sri Lanka as a

middle-incom

e country and one likely to achieve theM

illennium D

evelopment G

oals places it as a lower

priority country for some bilateral donors w

ho have acom

mitm

ent to the poorest countries. This, and the lack

of progress toward peace, has led to the possible departure

or scaling back of some sm

aller donor programs.

Outcom

es of 9/11

The events of 9/11 have affected developm

ent policiesby placing increased em

phasis on issues of globalsecurity and counter-terrorism

. This has had an im

pacton the w

ay some donors engage w

ith the LTT

E. It has

23| K

ey Trends Emerging

3.Key Trends Em

erging

also led to the creation of special reconstruction andstabilization program

s and units within som

e donorcountries (e.g., the U

.S. and the U.K

.) that focus onfailed and fragile states. Even before 9/11, donor staffand academ

ic consultants who focus on conflicts w

ereattracted to Sri Lanka as a potentially successfulexperim

ent in liberal peacebuilding.

Increased Emphasis on C

oordination and Harm

onization

This affects m

ostly EU donors. It m

eans people havem

ore desire to spend time and attention focusing on

working together. T

he irony of this development is that

while it represents a global trend in donor "best

practices," it is resisted by the Sri Lankan government.

SRI LANKA-SPECIFIC TREN

DS-SUMM

ARY

The 2000 assessm

ent suggests that: "Aid is only one of anum

ber of instruments that can be applied to support

such a process and, in relation to diplomatic

interventions, it may be a rather blunt instrum

ent with

limited leverage. T

herefore, aid may com

plement

political processes happening on the ground, but it isunlikely to be a leading edge in a peacebuilding process.U

ltimately, these questions have to be addressed by

political and civil actors within Sri Lanka m

akingdecisions about their definitions of peace, social justiceand future developm

ent" (p. 105). This is a reflection

that is still valid today.

The assessm

ent goes on to state that "conflict blind"developm

ent is a problem: "Aid can follow

the faultlines of conflict and inadvertently increase political,econom

ic, and social exclusion." It then proposes fourfields of engagem

ent:

�Integration of conflict sensitivity

�A politically inform

ed approach

�C

omprehensive and coordinated strategy

�Long-term

strategic engagement

To summ

arize the responses of donors over the last fiveyears in these fields: w

here changes in Sri Lanka anddonor policy shifts have enabled greater engagem

ent inconflict related issues, there has been som

e progress.O

verall, aid provision to Sri Lanka has become m

oreconflict-sensitive since the SC

A of 2000. With the

changing domestic and international dialogue

concerning Sri Lanka, donors are now far m

ore able tow

ork on conflict-related issues. In practical terms, the

continuing ceasefire makes it possible to assist on the

ground. But these changes are not indicative of aparadigm

shift in which donors have fundam

entallyaltered their m

ethods of engagement: there has been no

sea change. Most factors determ

ining the substance ofdonor assistance rem

ain the same.

INTEGRATIN

G CONFLICT SEN

SITIVITY

Many donors have m

ade considerable progressregarding this issue. Som

e bilateral agencies have doneso to such an extent that peacebuilding is their m

ainpriority. U

.N. agencies such as U

NIC

EF have alsoengaged productively in the N

orth-East and on conflictissues m

ore widely, in step w

ith a global move tow

ardrecognizing child rights as an overarching priority. Forothers, the response has been m

ore instrumental-an

increasing awareness that conflict needs to be taken into

account and that it has a real impact on projects and

programs. T

his is a positive if more lim

ited change.

Aid has not generally targeted the fundamental or

underlying problems that generated conflict in the first

place. How

ever, as a result of increasing analytical work,

donors are more aw

are of the underlying causes anddrivers of conflict. Although a "transform

ative"approach to tackling background conditions has notgained m

uch ground, this enhanced understanding hasprovided for som

e useful interventions. Whether these

have made an im

pact on the ground is a matter of

interest, although concerted evaluation is beyond thescope of this study.

Donors and Peacebuilding in S

ri Lanka 2000 - 2005 | 24

Large donors like the ADB and Japan now

considerissues of equity in m

onitoring and appraisal of projects.T

his is a departure from earlier practices. O

ther smaller

donors try to align all of their assistance aroundpeacebuilding priorities.

Some donors - the AD

B, the U.K

., and Switzerland for

example - have created new

posts. This m

akes aconsiderable difference in their ability to engage in issueson the ground, and to generate com

mon positions. It

may also have an im

pact on diplomatic initiatives, as

specialist staff might im

prove institutional knowledge

and understanding of the complexities of the conflict.

More Support to the N

orth-East

Although the frozen peace talks mean that no interim

authority has emerged, m

any donors have found ways of

working in the N

orth-East. These m

ethods generallybuild on existing m

echanisms, w

ith donors operatingeither through international N

GO

s, U.N

. agencies, orgovernm

ent departments. Recognizing the role played by

the LTT

E and its partners in the North-East, m

ost donorsoperating in these areas have found creative and effectivem

eans of ensuring LTT

E cooperation and consultation.

POLITICAL AWAREN

ESS

Engaging with the peace process has im

proved donors'know

ledge both of the dynamics of the conflict and of

shorter-term political im

peratives. Specialist staff,cooperative efforts, and learning exercises such as thescenario planning process of 2004 have increasedknow

ledge and understanding across a wider range of

actors. Whereas in 2000, the num

ber of engaged donorstaff that understood the political dynam

ics of conflictin Sri Lanka w

as limited, a greater num

ber of informed

actors are now engaged. C

loser links with som

e civilsociety bodies has also helped, although there is stillroom

for improvem

ent in that area.

How

ever, this increased awareness is lim

ited. The larger

donors may not see political issues as relevant, or m

ay seethem

as fields that an external actor has no right to engagein. For the larger donors, objectives are broadly the sam

eas before: econom

ic growth and poverty reduction. M

anyw

ould not share the sentiments of the 2000 analysis w

henit states that donors should use aid to leverage dom

esticpolitical shifts so that background conditions areaddressed. T

here has been some instrum

ental engagement

where conflict issues are perceived to have the potential to

damage the realization of other objectives, but this is not

25| K

ey Trends Emerging

Figure Six: North East Housing Reconstruction Program

me

NEH

RP

(North East H

ousing Reconstruction Program

me)is a G

oSL/World Bank project aim

ing to provideconflict-affected fam

ilies with im

proved and affordable housing units. It will entail a cash grant paid in four

installments to vulnerable fam

ilies to help reconstruct their houses. In addition, the technical assistance providedunder this program

will help m

eet the long-term housing needs in the N

orth-East through improved

construction standards, strengthened housing finance options, enhanced private sector involvement in housing

construction, and streamlined m

echanisms to resolve property disputes.

Northeast C

oastal Com

munity D

evelopment Project:T

his ADB project, approved in m

id-Decem

ber 2004, is a$26 m

illion, four-year loan targeting three eastern districts. Under a standard poverty/vulnerability index, Tam

ilpopulations w

ould have emerged as the principle beneficiaries (given their status as the poorest groups). In order

to avoid an allocation that might have led to tension, given the lack of inclusion of other ethnic groups, the

vulnerability index was am

ended to address diversity issues. Subsequent re-design allowed for support to other

(chiefly Muslim

) groups, with the m

ajority of funds still going to the poorest comm

unities.

Donors and Peacebuilding in S

ri Lanka 2000 - 2005 | 26

too different from "w

orking around the conflict," asdescribed in the 2000 analysis.

Donor support for econom

ic liberalization may

demonstrate a long-standing lack of political

understanding. Given the patronage-based structures of Sri

Lankan political systems, a rapid liberalization program

ischallenging - it attacks vested interests and underm

inesgrassroots support. W

hile many m

ay agree that Sri Lankaneeds reform

s, the sequencing of these reforms is a careful

political balancing act. Some argue that donor prom

otionof rapid change under the U

NP governm

ent undermined

grassroots support for the peace process. While a peace

dividend was prom

ised, the reality for many in the South

was rising prices as subsidies w

ere removed. G

iven thatpopular southern support is essential for the peace process,this m

ay have been short-sighted. Indeed, the numbers of

votes won by the JV

P and still more extrem

ist Sinhalagroups in the South in the 2001 election effectively dealt am

assive blow to the peace process.

More and Increasingly Sensitive Support for C

ivil Society

A range of donors support civil bodies working on

conflict related issues. Various donors have made a

conscious effort to move beyond support for an elite

group of NG

Os in C

olombo, and find indigenous

bodies that might be able to build a m

ore generalgroundsw

ell of support for peace. The U

.K., G

ermany,

the U.S., U

.N. bodies, and various other donors are

engaged in this work. T

he World Bank has also done

some exploration in this area. In som

e places -Sw

itzerland for example - civil groups w

ithin thediaspora com

munity are also involved. Yet som

e feel thatcivil society support in general still tends to be carriedout clum

sily, reaching just a few high profile groups.

Increased Engagement w

ith the LTT

E

Donors have a range of positions on w

orking with the

LTT

E or other groups, and support for development

actions is carefully appraised. Organizations have,

Figure Seven: Civil Society Support

FLICT: Facilitating Local Initiatives in C

onflict Transformation is a joint G

TZ

(Germ

any) and DFID

(U.K

.)financed project. T

he overall goal is to strengthen - through a countrywide approach - incentives for conflict

transformation in Sri Lanka by encouraging and supporting civil society to play a m

ore effective and influentialrole in contributing tow

ard a lasting and positive peace. FLICT

expects to achieve this through local initiativesand strengthening organizations' capacities.

The FLIC

T project concentrates its efforts on different focus areas:

Media and inform

ation transfer for building peace

Strengthening democratic space in the N

orth-East

Policy reforms and their im

plementation for a pluralistic society

Other focus areas are linked to longer-term

issues. Crucial issues are the support of "good local governance,"

"multi-ethnic tow

ns as focal points for integration," "a positive role of youth," "academia's role in the peace

process," and "conflict transformation by different organizations in civil society."

The im

plementation of FLIC

T started in 2003 and should be seen as a process. T

hroughout the duration of theproject, FLIC

T w

ill develop a network of partners-strengthening and engaging a body of interm

ediaries with local

initiatives in the medium

and long term. FLIC

T also includes authorities and private sector organizations in its w

ork.

however, found a variety of w

ays to bring internationalexperience to the LT

TE and other bodies in the N

orth-East, w

ith the aim of presenting peaceful and hum

anrights-based exam

ples. Many of these initiatives have

been politically sensitive, and have involved concerteddiplom

atic rather than technical donor attention. The

mainly European donors have pursued an approach of

"constructive engagement" w

ith the LTT

E that hasprovided opportunities for regular dialogue on programand policy issues. T

hese steps are controversial and it istoo soon to judge overall im

pact, but it is unlikely thatdisengagem

ent would have a m

ore positive impact on

welfare or peacebuilding. Aid program

s may provide

valuable diplomatic support w

hen carefully applied with

open support from all sides. T

he ADB and the W

orldBank take a m

ore pragmatic approach to relations w

iththe LT

TE. Because IFI projects bring valuable resources

and development to the N

orth-East and LTT

Ecooperation is necessary for sm

ooth implem

entation,both the banks and the LT

TE recognize the im

portanceof a consultative relationship.

Support for GoSL-LT

TE C

ollaboration

While donors have steered clear of involvem

ent in thesubstance of direct negotiations betw

een the GoSL and

LTT

E, they have sought to support and encouragepractical collaboration betw

een the parties at other levelsaround particular issues or developm

ent programs. T

hem

ost recent example is the P-TO

MS. International

support, patience, and strategically targeted assistancew

ill be critical for the success of P-TOM

S. The

international comm

unity will have observer status

within the P-TO

MS structure. T

he mechanism

alsoprovides an opportunity for donors to support capacitydevelopm

ent and collaboration among key actors around

essential service provision. This could lead to positive

development and political outcom

es.

Some Increased Attention to "Transform

ative" Processes

Some donors feel that m

ainstream developm

ent supportto the governm

ent of Sri Lanka should be used to

promote fundam

ental governance changes. The aim

ofthis is to change the structures and political system

s thatform

part of the background of the conflict: a sense ofinjustice at the perceived unequal treatm

ent of them

inority population. Skewed resource allocation,

language, and education policy, etc., will arguably not

disappear until there is pronounced institutional change.Additionally, a sustainable peace m

ay hinge upondecentralization processes, given the need to find som

eform

of local power-sharing structure. H

owever, w

hilesom

e donors maintain such aim

s, others - especially thelargest three donors (Japan, the AD

B, and the World

Bank) - do not build the bulk of their support aroundthem

. Given the financial dom

inance of these three, thegreater part of donor assistance to Sri Lanka is notdesigned to prom

ote such changes. There is som

eevidence of change, how

ever, as donors like the ADB

and the World Bank try to w

ork more closely w

ithprovincial and local adm

inistrations, particularly in theN

orth-East. Though financing is still agreed upon and

managed w

ith the central authorities, there is increasingrecognition am

ong the IFIs that effectiveim

plementation requires governance reform

s.

Risk-taking

A desire to support a peace process has increased therange of high-risk and potentially high-exposureinitiatives. W

hereas donors preferred to keep a lowprofile in the past, m

ore recently they have on occasionresponded quickly to the peace process, driven by theincentive to contribute to, and be associated w

ith, apotentially successful outcom

e.

The donor harm

onization that seemed possible during

the UN

P government m

ay have given individual donorsthe confidence to take risks, know

ing that their policiesw

ould be supported or shared by other agencies. AnSLFP governm

ent, which discourages harm

onizationand is m

ore sensitive about donor actions, may restrict

risk-taking behavior.

27| K

ey Trends Emerging

Donors and Peacebuilding in S

ri Lanka 2000 - 2005 | 28

COORDINATION

AND LON

G-TERM EN

GAGEMEN

T

There have been im

provements in coordination. T

heseare in som

e cases limited to the sam

e range of small

European donors, but not entirely so. Generally, donor

collaboration and information sharing in Sri Lanka have

improved greatly in the past five years. T

hese effortsrelate both to a m

ore explicit acceptance by donors toaddress conflict issues as part of their core business andalso to international directives around aid effectivenessand harm

onization. Some benefits include joint w

orkbetw

een multilaterals (the U

.N., the AD

B, and theW

orld Bank) and bilaterals (GT

Z, the N

etherlands, andD

FID) on selected projects, and the com

mon positions

developed in Tokyo in 2003. Joint planning exerciseshave also helped im

prove the general intelligence of thedonor com

munity. D

onors collaborate on comm

onpositions to take w

ith GoSL and LT

TE, engage in

shared analytical exercises such as SCA2, and

increasingly co-finance peacebuilding support. Examples

include the UN

ICEF Action Plan (see boxes). T

heW

orld Bank has also established a donor coordinationtrust fund that supports activities such as this SC

A, asw

ell as other harmonization initiatives w

ith government.

The 2000 SC

A comm

ents: "The crux of the problem

isthat short-term

thinking, short-term m

andates, andshort-term

funding are being used to confrontentrenched and long-term

problems and needs." T

his isstill predom

inantly the case. While donor analytical

work has contributed to a m

ore widespread acceptance

of the long-term nature of peacebuilding efforts in Sri

Lanka, in practice, donor timefram

es are still driven byshort-term

cycles of planning and financing. The

expected departure of some bilateral agencies exacerbates

the situation. It is noticeable that the agencies able tow

ork effectively in the North-East have tended to be

those with a long track record of engagem

ent. One

could argue that perhaps donors have aimed too high in

targeting their assistance. Given the slow

pace ofprogress on peace in Sri Lanka, resources geared to thepolitical-peace agenda are high risk and unlikely to bedisbursed according to donor tim

eframes. M

orepragm

atic targeting of assistance over a longer timefram

em

ay be a better option.

Figure Eight: UNICEF and Com

mon Planning

UN

ICEF launched a com

mon approach to address the needs of vulnerable children in the N

orth-East through anAction Plan for C

hildren Affected by War, agreed to by the LT

TE and the governm

ent in late 2000/early 2001.T

he suspension of peace talks halted comm

on work, but U

NIC

EF managed to secure signatures of both sides

nonetheless. How

ever, suspension of talks meant that there w

as no mechanism

for discussing or solving arisingproblem

s. UN

ICEF pioneered approaches that prom

oted interchange between the tw

o sides, and managed to

broker the only human rights agreem

ent. UN

ICEF still practices "shuttle dialogue." T

here is still space throughprovincial structures for interchange betw

een the two sides, on education policy for exam

ple, but work on som

eof the key issues, notably on child soldiers, has been hard going.

OVERVIEW

In Sri Lanka, donors have shifted in approach since2000. D

onors are far more aw

are of conflict-relatedissues, m

ore able to work together on conflict, and

better at drawing links betw

een the conflict and theirow

n financial support. Disagreem

ents persist overw

hether aid can be a lever for peacebuilding.

Donor policies have varied, partly in response to

changing political circumstances in Sri Lanka and partly

because of shifting patterns of aid provision globally.Sm

aller donors have shifted more than larger donors,

although recognition of the centrality of conflict to aidprovision and the need to consider the links areincreasing across the board.

Although every donor is different, there are three broadcategories of donors that em

erge from an analysis of aid

in Sri Lanka: 1) the "big three" of Japan, the ADB, and

the World Bank; 2) the U

.S.; 3) most of the rest,

consisting chiefly of European bilateral donors. Agenciesnot included in these groups are aligned som

ewhere

close to these actors, with the U

.N. agencies and

Western donors tending tow

ard the Europeanperspective, and Asian donors tending tow

ard the "bigthree" position. T

here are, of course, many shades of

subtlety and contradiction within this crude description,

which should not be used to im

ply that the situation ispolarized: all donors have m

uch in comm

on with each

other, especially given the massive aid flow

s arriving forsupport and reconstruction follow

ing the tsunami of

Decem

ber 2004.

Put simply, the European tendency is to attem

pt to useaid directly to prom

ote and support peacebuilding in arange of w

ays. Meanw

hile, the "big three" tendency is toconsider conflict as an im

portant, but not overriding,

issue, with aid disbursem

ent and economic reform

ascentral concerns. T

he U.S. position involves broader

security dimensions, w

hich lead it to take a tougherconditional stance w

ith the LTT

E. These dynam

ics havenot changed significantly since the previous conflictassessm

ent in 2000.

While the "big three" could have better integrated

conflict as a central concern within their program

s ofsupport, sm

aller "European" donors could perhaps haveacted at tim

es with m

ore understanding of the realitiesof aid provision. T

he notion that aid provision can act asa significant catalyst or lever to prom

ote peace in SriLanka is interesting, but perhaps overlooks a set oflim

iting factors:

�M

ost aid provision is dependent on diplomatic and

political considerations; aid agencies rarely have thescope to act independently, m

eaning that on-the-ground actions are less significant than w

ider trendsor political developm

ents. While m

any bilateral aidagencies do link effectively w

ith diplomatic

structures, this is not a universal rule. And for allagencies, aid is provided for a range of reasons.

�Aid agencies respond to internal incentives andpriorities that are often geared tow

ard ensuringsm

ooth disbursement of aid and efficient allocation

of resources. This m

eans that in many cases,

comm

on ground will be found only w

hen aconflict-aw

are approach eases resource transfers, asopposed to lim

iting expenditures or creatingobstacles in the aid pipeline.

�T

he aid organizations at the forefront ofpeacebuilding approaches are financiallyinsignificant actors in the Sri Lankan econom

y.W

hile this does not render them useless, and there

are many valid exercises that they can engage in,

their approaches will probably not becom

e comm

on

29| C

onclusions

4.Conclusions

currency across the aid comm

unity in Sri Lanka. Astraightforw

ard look at the ways in w

hich the largerdonors w

ork demonstrates that w

hile aid can bem

ade more conflict-aw

are, there are serious barriersto a fully cooperative approach.

�M

ost importantly, aid is not, for the m

ost part, veryeffective as a vehicle for transform

ation. It is arelatively m

inor issue in the politics and mechanics

of conflict in Sri Lanka and in most other countries.

This m

eans that while aid can support dom

inanttendencies or political im

peratives, it can rarelychange them

. The viability of aid as a supporting

factor to the peace process depends entirely onprogress in the peace process itself. In m

ost cases,aid is the cart and not the horse.

DIPLOMACY, POLITICS, AN

D AID

An increased political awareness on the part of aid actors

has enabled more nuanced engagem

ent andunderstanding of the linkages betw

een aid programs and

conflict. Better informed experts have ensured that a

range of aid agencies aims to w

ork more intelligently.

Recent experience links prospects for peace with

prospects for greater donor involvement.

These donors recognize the pragm

atic reality of aidprovision as a political act, and have aim

ed to useassistance for valuable ends. Political engagem

ent with

aid flows is not alw

ays beneficial, however. A close

alliance of aid donors with the previous U

NP-led

government m

ay have made it harder to engage w

ith thecurrent governm

ent. While understanding political

realities of aid provision and Sri Lanka, aid agenciesneed to take a long-term

view. While political aw

arenessis im

portant and linkages between aid and a range of

other international issues may be pragm

atically valuable,a long-term

approach is needed. This m

eans betteranalyzing and understanding the difference betw

een thestructures and dynam

ics of the conflict in Sri Lanka andrealizing that a positive change in the dynam

ics may not

necessarily lead to much needed structural change.

AID AS A CATALYST FOR CHANGE

In the aftermath of the Tokyo D

eclaration, donors havecom

e to the general consensus that while aid can benefit

peace, it cannot be used as a lever or catalyst for peace.If this is the only positive outcom

e of the Tokyo process,then it w

as an experience well endured. Aid is not a

blunt instrument that can be used to drive peace. T

hedrivers of change in Sri Lanka are political actors, notdonors. W

hile political actors have used aid as a lever intheir ow

n political interests, donors must not m

istakethis clever m

anipulation for influence. This is not to say

that the international comm

unity is without influence.

Donor countries m

ust optimize the m

any types ofengagem

ent that they bring to Sri Lanka: trade, military,

security, diplomacy, and aid. D

onors can provide avariety of incentives and supportive m

easures for peace,but these are generally not aid related.

TRANSFORM

ATIVE MEASURES

Donor involvem

ent in studying peace and conflict in SriLanka has led to increased aw

areness among som

edonors of m

any of Sri Lanka's deep-seated problems in

terms of political structures, social fabric, and cultural

trends. Many of the proposed solutions to these

problems - decentralization, political reform

, multi-

ethnic representation, etc. - have weak or contested

domestic purchase and appear at present unlikely to

make m

uch headway. T

he key issue - politicalm

arginalization of minority groups - is not likely to be

tackled in the near future. This has led to a degree of

despondency on the part of some donors.

Donor involvem

ent in peacebuilding can createexpectations of rapid change. Post-conflict environm

entsoften create scope for structural adaptations that w

ouldnot otherw

ise be possible. Recent examples include East

Timor and C

ambodia. A less extrem

e case would be

Indonesia following the fall of Suharto, creating scope

for reform including decentralization and

democratization. H

owever, there is no such state of flux

Donors and Peacebuilding in S

ri Lanka 2000 - 2005 | 30

in Sri Lanka. While the dynam

ics of conflict over thepast five years have been fluid, the underlying structuresrem

ain largely intact. Political, economic, or social

change is consequently less feasible; radicaltransform

ations are unlikely given the stability andcontinuity across the South.

It is rare for donor agencies to have the capacity tosuccessfully challenge dom

estic political or socialobstacles. Indeed, it is rare for donors to be as aw

are ofthese problem

s as many of them

are in Sri Lanka. While

international support can help in myriad w

ays, thesolutions to such difficulties are likely to be foundinternally.

Some donors are still trying to support "transform

ative"approaches. But the only field w

here the major donors

are aiming to do so in a com

mitted w

ay is in economic

reform. W

hile there is some discussion and open analysis

of the underlying factors behind the conflict, large aidbureaucracies tend to prom

ote technocratic solutionssupportive of governm

ent policies similar to those used

across the globe. General aw

areness of such issues isfairly lim

ited, and incentives are generally against actionto address underlying political or social problem

s. There

are no quick wins.

How

ever, there are nuances within this picture. Som

em

ajor loans deal fairly sensitively with on-the-ground

problems and w

ith background inequalities or the scopefor transform

ative measures. T

here is the potential tofind w

ays of engaging on these issues, and to encouragegovernm

ent and LTT

E support for such efforts to builda m

ore responsive, multi-ethnic state. At the very least,

projects should reflect awareness of the breakdow

n ofpotential beneficiaries along ethnic lines.

POSSIBLE STEPS

Sri Lanka faces fundamental governance challenges that

are intractable in the short term, such that there w

ill becontinuing obstacles in the search for lasting peace.

While donors m

ay rarely be able to tackle such issuesdirectly, they can still be involved productively. D

onorscan support the search for solutions to underlyingproblem

s, and help with m

ore imm

ediate problems

related to peacebuilding. Examples of potentially fruitful

engagement already exist. W

hile this background studydoes not have the scope to evaluate specific program

s,and it is in any case very challenging to draw

linkagesbetw

een cause and effect, some com

ments and proposals

follow:

Better Analysis

�Factoring in the influence of geopolitical factors onthe key actors in Sri Lanka. T

his suggests a betterunderstanding of the role of India and even C

hina inregional political and econom

ic affairs. Aid donorsshould pursue a m

ore inclusive approach with these

key actors.

�W

orking toward greater donor understanding of

background conditions and the ways that aid

provision can be screened or evaluated in order to "dono harm

" and be better targeted to do some good.

Cooperative efforts am

ong donors can contribute tothis aim

, but should not be an overriding objective.

�Building better understanding of Sri Lankan politics,society, and econom

ics within donor bodies, especially

through the recruitment of higher-level Sri Lankan

staff.

�Building alternative channels for discussion, debate,and negotiation on conflict issues w

ithin Sri Lanka.U

se analysis--of the political economy, the conflict,

and the institutional environment--both as a vehicle

for donors to work together and to inform

programm

ing choices.

Types of Aid

�Focusing m

ore on domestic capacity building,

whether through projects, funding, or policy-based

research initiatives, (but always w

ithin the framew

orkof a sound institutional analysis) to ensure that any

31| C

onclusions

capacity development initiatives are not constrained

by structural factors. An imm

ediate opportunity iscapacity building through the P-TO

MS, enabling

local governance actors to manage tsunam

ireconstruction.

�W

orking to maintain contact w

ith LTT

E bodies,pragm

atically and appropriately. This varies betw

eendonors - no one solution is right.

�C

onsidering the resentment at the lack of attention to

the South, and how to address that shortfall. Rapid

economic reform

is likely to further derail the peaceprocess if it helps build perceptions that the poorsouthern m

ajority is being ignored.

�C

ontinuing to support the North-East. O

vercoming

the challenges posed by interim authorities and

decentralized structures would be desirable, but it m

aybe a long tim

e coming. In the interim

, there areproven m

ethods of engagement that all sides are

content with. G

iven that such engagement can

promote conditions for peace by opening up the

North-East to national and international expertise,

efforts should continue to strengthen interdependencyand prom

ote an array of local bodies. Smaller donors

with m

ore sensitivity to local level issues may be able

to partner with larger funders in order to assist in

sensitive programm

ing in the North-East.

�Expanding civil society funding: this is already underw

ay, but donors should continue to look more w

idelyat a broader range of actors.

�Engaging the diaspora: som

e donors have engaged thediaspora com

munity in efforts to increase

understanding and reduce support for extremism

. It isnot clear w

hether this has succeeded, but continuedefforts m

ight be helpful.

Harm

onization, Coordination, C

omplem

entarity

�Pragm

atic comm

on ground: finding areas where

there is both government interest in pushing through

reforms and large donor interest in pursuing w

orkthat w

ill support peacebuilding (e.g. promoting

spending in the North-East, rather than criticizing

spending in the South); supporting positive aidprovision w

here it will help produce a tangible peace

dividend - in the North and in the South.

�C

ontinued linkage between aid and diplom

atic (oron occasion m

ilitary) ties, to encourage groundedand cooperative approaches, but w

ith a longer-termperspective. C

apitalize on the complem

entary roles ofdevelopm

ent, political, and military departm

ents. Forexam

ple, political or diplomatic leverage m

ay bem

ore effective than aid in influencing nationalpolicies.

�D

onors thinking about withdraw

ing from Sri Lanka

should consider the amount they have invested in

building up a conflict-sensitive approach. Withdraw

alw

ould waste this asset, and for sm

aller donors--giventhe lim

ited amounts involved as a percentage of aid

flows--w

ould send no real signal to government. A

more conflict sensitive approach m

ay be to shift gearsrather than exit. T

his would entail less em

phasis onan assertive policy-influencing role w

ith key politicalactors, and increased em

phasis on working w

ithothers to tackle background conditions, address thesocial costs of conflict, and build constituencies forpeace. Increased joint efforts, secondm

ents and silentpartnerships could reduce transaction costs forsm

aller bilateral donors without the potentially

negative impacts of pursuing a total exit strategy.

�Recognize the differences betw

een individual donorsand groups of donors. Appreciate that consensus-based approaches m

ay result in lowest com

mon

denominator strategies. Strive for better

complem

entarity of donor strengths, incentives andresources. T

he "good cop, bad cop" strategy with the

LTT

E is one example of how

donors have used theirdifferent positions to engage w

ith the LTT

E without

comprom

ising principles. Bilateral partners shouldalso think beyond the "aid basket" w

hen consideringw

hat they can contribute to Sri Lanka.

The ability to im

plement such w

ork depends onm

aintaining good relations with all sides. W

ithin the

Donors and Peacebuilding in S

ri Lanka 2000 - 2005 | 32

context of a "do no harm" approach, there does seem

tobe scope for engaging in a variety of w

ays. None w

illbring about a radical shift in short-term

peacebuildingor longer term

background conditions, but such anim

pact is probably in any case unrealistic. Smaller,

helpful steps are still possible and should form a part of

donor assistance. Smaller donors m

ay have acom

parative advantage in supporting larger donors,w

here there is comm

on ground, to work along these

lines.

The past five years have reaffirm

ed the validity of therecom

mendations of SC

A1. Despite dynam

ic swings in

the peace process, structurally the underpinnings of theSri Lanka conflict have not transform

ed dramatically. In

their desire to support peace, donors must continue to

recognize that any significant shift will be internally and

not externally driven. While developm

ent aid may

provide a means for supporting this shift w

hen ithappens, it w

ill not be the catalyst for it.

33| C

onclusions

The follow

ing section covers some of the actors involved

in development assistance to Sri Lanka. It is not a

complete list, and only provides som

e information, since

there is insufficient space for a more com

prehensiveassessm

ent. Some donors are not covered sim

ply for lackof tim

e. With each actor, points are divided into som

eor all of these sub-headings: program

s/policies;perspectives on aid and conflict; perspectives on donors,Tokyo, and subsequent com

mon indicators; tsunam

i;com

ments.

GOVERNM

ENT PEACE SECRETARIAT

Perspectives on Aid and Conflict

�Recognizes that m

ilitary solution is nonviable. Butm

aintains austere line on LTT

E as a terrorist body.

�India is em

erging as a significant donor as well as a

diplomatic force. T

here is recognition that differentdonors have different approaches.

�G

overnment is strongly prom

oting unifiedsolutions, integrating econom

ies in the North and

South, and promoting investm

ent andinterdependence.

�H

opes tsunami w

ill still lead to comm

onim

plementation m

echanisms.

�N

ational Council for Econom

ic Developm

entincludes sub-com

mittees that donors can be

involved in. North East D

onor Coordinattion

Cluster (one subcom

mittee) deals w

ith North-East.

�In term

s of donors support to transform structures,

there should be scope to make som

e progress.Projects can be m

ore innovative in terms of

connecting different parts of the country. Forexam

ple, the Mahaw

eli Project should have helpedthe N

orth. There should be opportunities in certain

areas to help with reform

s.

�Feels that donors should have few

er "legitimizing"

linkages with LT

TE; such linkages have "absolutely

no impact on LT

TE's transgressions." D

onors needto distance them

selves more from

them and refuse

to approach TRO

; instead, they should work

through mainstream

government structures in

which the LT

TE can continue to practice in and

engage with; recognition that, in practice,

government agents are very close to LT

TE in

Kilinochchi and M

ullaitivu.

Views on Donors

�Strong opposition to com

mon donor positions.

More com

fortable with standard individual donor

projects than with pooled funds, in the N

orth-Eastor elsew

here. Welcom

es support to the North-East,

through channels that have been proven to work

including NG

O or U

.N. delivery, as w

ell as use ofgovernm

ent structures. Does not prom

ote"transform

ative" approaches in the South, althoughthere m

ay be scope in selected fields.

Tokyo and Subsequent Comm

on Indicators

�Strong perception that benchm

arks are "totallyinappropriate, arbitrary, and artificial." G

lad theydid not hold.

LTTE PEACE SECRETARIAT

Perspectives on Aid and Conflict

�Encouraged by efforts on the part of the W

orldBank and the AD

B to work in the N

orth-East.

�Breaks dow

n donors as follows: EU

bilaterals, India,C

hina, Japan, and the USA. India, Japan, and

35| A

ppendix

Appendix: A Sample of Developm

ent Actors

Donors and Peacebuilding in S

ri Lanka 2000 - 2005 | 36

China collectively represent over 80%

of fundsprom

ised. Multilateral banks are also im

portant.Recognizes that EU

bilaterals are not overlysignificant financially, but developm

ent of comm

onpositions has a useful im

pact - especially given theEU

's role as co-chair.

�T

he LTT

E are content with the different w

ays thatdonors can provide support. T

he U.S., for exam

ple,can w

ork through NG

Os, keeping aw

areness ofagreed guiding principles; Japan has been asked bythe LT

TE to ensure equitable allocation of funds

along ethnic/religious lines in all of its programs.

�W

ith India, low-interest loans to the governm

entare provided: it is not certain that any expectationsof equity are placed on the loans.

�W

ith China, planned investm

ent in 16 harbors will

need to address ethnic issues.

�D

onor forums and com

mon donor positions are

welcom

ed; but in reality are less significant thanindividual aspirations of key players.

Tokyo and Subsequent Comm

on Indicators

�G

enerally supportive of what is term

ed "EU" donor

position (referring to comm

on positions taken by arange of bilaterals). At one level, expresses supportfor principle fram

eworks, donor coordination

efforts, and wider application of international

human rights law, and sees the governm

ent as tryingto avoid these EU

principles. Yet at another level, isresistant to such "foreign interference."

Views on Donors

�M

ore supportive of all donors than might be

expected. Appears to send mixed m

essages about thevalue of "principled" approaches advocated by m

anybilaterals. Is w

illing to consider a variety ofm

echanisms to support developm

ent in the North-

East; this means that the political deadlock on an

interim authority does not necessarily need to hold

up development assistance to the N

orth-East. While

welcom

ing engagement in international best

practices, also holds a strong line on maintaining

control, whether contested dom

estically orchallenged by international bodies such as donors.

Comm

ents

�W

ith current alignments, the LT

TE m

ay feel it hasm

ore to gain from a W

estern international stance on"principles" than the current governm

ent (incontrast w

ith the situation under the previous UN

Pgovernm

ent). This m

ay make it challenging for

Western donors to secure the governm

entcooperation necessary for successful interventions.

JAPAN

Programs/policies

�H

as been the largest donor to Sri Lanka for many

years. Bulk of funding through JBIC (concessional

loans); considerable amounts also through JIC

A(technical cooperation grants).

�Traditionally strong relationship w

ith thegovernm

ent, in Sri Lanka and elsewhere. Aid

priorities are set through internal discussions andconsultations w

ith the government; engages in a

process of "anticipatory bargaining," or discussionsw

ith government to determ

ine aid flows along

comm

only agreed objectives. Subsequent need todisburse and coordinate the spending of m

anyloans, w

hich is quite time consum

ing.

�Supportive of continuing ceasefire; regards aid flow

sas im

portant to maintain support for a peace

process. States that if there were a return to w

ar,they w

ould reconsider the value of support. Butcurrently, still w

ishes to support a process thatcontinues to hold, despite recent lack of progress.

�W

orks in the North-East, often through U

.N.

programs. In the N

orth-East especially, theycarefully exam

ine equity and distribution of aidalong ethnic-religious lines as an im

portant part of

project appraisal. This is a change from

the situationpre-ceasefire, w

hen such issues were not considered.

This change reflects aw

areness of the need to reducetension. It is clearly stated by Japan at the 2003Tokyo m

eeting that: "the 'peace dividend' should beevenly distributed, taking into account the balancebetw

een the north-eastern part and the southernpart of the country, and the equally sensitivebalance betw

een Sinhalese, Tamils, and M

uslims."

�Japan has less experience of integratingtransform

ative issues (i.e., promotion of

fundamental governance changes relating to

peacebuilding) into aid support. This is of potential

interest but not a basis of current projectform

ulation or policy.

Conflict Sensitive Approach

�Japan provides m

ore support to the North-East,

often through U.N

. programs. Japan aim

s tocarefully exam

ine equity and distribution of aidalong ethnic-religious lines as an im

portant part ofproject appraisal. T

his is a change from the situation

pre-ceasefire, when such issues w

ere not significantlyconsidered.

Tokyo and Subsequent Comm

on Indicators

�Role in political peace process: facilitated the 2003Tokyo m

eeting, further quarterly monitoring visits

from senior envoy.

�Participation in D

WG

and Tokyo Declaration w

asreluctant; accepts loose principles but not afram

ework or set of restrictions on aid provision.

Paragraph 18 of the Tokyo Declaration should be

seen as positive efforts to encourage a goodbackground environm

ent for the peace process,rather than conditionality of any kind. Efforts touse background principles to form

ulate guidelinesleading to indicators w

ill not work effectively and

are not welcom

ed. Simple principles for engagem

entare w

elcomed, how

ever.

�D

oes not support processes that might lead to

conditionality and associated stipulations: View

sthese as unnecessary and unw

elcome.

Comm

ents

�T

he Japanese approach, along with that of m

ajorconstituencies w

ithin multilateral banks (and m

ostsignificantly w

ithin Sri Lanka), does not perceivesocietal transform

ation as a role for aid. Suchconcepts are m

ore prevalent with W

estern donorsand civil society than elsew

here; additionally, suchchange is regarded by m

any as counterproductiveconditionality or external W

estern impositions on

domestic structures. M

ore practically, ideas oftransform

ation through more nuanced aid provision

limit disbursem

ent capacity and slow dow

n projectcycle m

anagement.

�T

he Japanese development m

odel is different fromcontem

porary Western approaches: strong em

phasison state-led developm

ent with capitalist econom

y,but also w

ith heavy investment in hum

andevelopm

ent, infrastructure, and other redistributivem

easures such as land reform, as appropriate. T

his isnot alw

ays compatible w

ith approaches that placefar greater stress on hum

an rights, participation,political change, and im

proved governance ratherthan top-dow

n support.

ASIAN DEVELOPM

ENT BAN

K

Programs/policies

�T

he aim to support Sri Lanka by disbursing funds

in a timely fashion, board m

embers that are broadly

supportive of government in the first instance, and

an approach that prioritizes economic or

engineering-based solutions, means that

peacebuilding issues do not fall naturally into theAD

B's line of work. H

owever, the AD

B has a strongrecord of offering support rapidly in post-conflictenvironm

ents. In Sri Lanka, it has been able tow

ork increasingly in the North-East; follow

ing the

37| A

ppendix

CFA, the AD

B rapidly offered support and soughtpractical w

ays of providing assistance in the North-

East.

�Inform

ally, conflict understanding/awareness is

growing, as w

ell as an awareness of the links

between project success and m

aintaining peace bothin C

olombo and the head office in M

anila. There is

increasing attention to equity and ethnicity relatedissues, w

ith growing focus on ethnic balance and

transparency as a key aspect of poverty analysis. The

ADB has also been able to w

ork increasingly in theN

orth-East following the C

easefire Agreement. A

conflict specialist, seconded from a bilateral, w

orksin the C

olombo Resident M

ission

�T

he Northeast C

oastal Com

munity D

evelopment

Project, approved in mid-D

ecember 2004, is a $26

million, four-year loan targeting three Eastern

provinces. Under a standard poverty/vulnerability

index, Tamil populations w

ould have emerged as

the principle beneficiaries (given their status as thepoorest groups). In order to avoid an allocation thatm

ight have led to tension given the lack ofinclusion of other ethnic groups, the vulnerabilityindex w

as amended to address diversity issues.

Subsequent redesign allowed for support to other

(chiefly Muslim

) groups, with the m

ajority of fundsstill going to the poorest com

munities.

�N

ECO

RD

- an earlier project now being extended -

also aims to track ethnicity issues in m

onitoring andevaluation.

Comm

on Indicators

�O

verall disbursement and project approval is not

linked to progress toward peace. But projects do

have a phrase comm

enting that disbursement could

be linked to the peace process.

Tsunami

�T

he tsunami has led to a large allocation of nearly

$150 million dollars. T

he ADB conflict specialist

(on secondment from

a bilateral) has been asked tolook at conflict-related aspects of the loan.

USA (USAID)

Programs/Policies

�T

hrough their democracy, governance and conflict

programs, the U

.S. is involved in a range ofinitiatives. Follow

ing three "tracks" of the process-political, diplom

atic, and aid approaches: Track One

through co-chair mechanism

; Track Two through

engaging in parallel political/civil society processes;Track T

hree through support for civil initiatives.

�Involved in a range of initiatives: "O

ne Textinitiative" to bring second-tier political players intodiscussions; local governm

ent support through The

Asia Foundation; people's forums in a range of

locations; annual peace perception surveys, etc.

�Future initiatives: Possible direct support (throughU

.S. NG

Os) to enhance political party aw

areness ofpeacebuilding issues; possible w

ork with civil bodies

like trade unions, etc.; possible work on youth and

civic education.

�T

he U.S. has: 1) a clear understanding of the

political challenges involved, 2) awareness of the

need for transformative approaches and governance-

related issues in the South, and 3) the organizationalcapacity to engage accordingly.

�Aw

areness of a range of second-order conflicts thatcould arise in future years: com

plexities of Muslim

political engagement and issues of attacks on

Christian churches in the South.

Perspectives on Aid and Conflict

�T

here is a perception that major donors have at

least adopted conflict awareness rhetoric, and have

some understanding of the need to look carefully at

equitable distribution of resources. But there is lessdirect acknow

ledgement of governance-related issues

that form the basis of the reasons for conflict.

Tsunami

�Post-tsunam

i reconstruction support is unlikely tobe conflict-sensitive and, in any case, governm

ent

Donors and Peacebuilding in S

ri Lanka 2000 - 2005 | 38

can select from a w

ide range of donors if objectionsare raised. Flow

of reconstruction funds is likely toexacerbate "patronage" netw

orks that are notequitable and could w

ell enhance tensions.

Comm

ent

�T

here is programm

atic support for multiple actors

engaging with a range of issues, generally through

civil society bodies of different descriptions. But thisis tem

pered by recognition of the LTT

E as aterrorist body, and a global environm

ent thatencourages support for governm

ent rather thannon-state actors.

SWEDEN

(Sida)

Programs/Policies

�Sida has been w

orking in Sri Lanka since 1958.

�Integration of conflict into program

ming began in

earnest in 1998. Prior to that, there were program

sin conflict areas, and peacebuilding w

as a focus ofsom

e NG

O/civil society support, but it did not

occupy the central position of the country strategythat it now

has.

�Sw

eden has had, and continues to have, bilateraldevelopm

ent cooperation agreements w

ith thegovernm

ent for over 20 years.

�Since 1998 there has been a tw

o-pronged approachto Sida support: 1) Peace, D

emocracy, and H

uman

Rights and 2) Pro-poor econom

ic development.

�T

he embassy in C

olombo is fully delegated w

ith acountry plan, annually approved by the AsiaD

epartment. T

he embassy has the right to steer

funds and enter into agreements w

ith the GoSL and

civil society organizations in keeping with the

country plan.

�T

he internal Local Project Appraisal Com

mittee

ensures the quality of projects/ programs/sector

support and also ensures that cross cutting issuessuch as dem

ocratic governance, conflict sensitivity,

gender equality, HIV

/AIDS, and environm

entalconcerns are m

ainstreamed.

Comm

on Indicators

�Sida subscribes to paragraph 18 of the TokyoD

eclaration. The clauses are interpreted as "If peace,

then increased prospects and opportunities for aid,"rather than as "N

o aid unless peace."

�Sida has been an active prom

oter and participant ofthe D

onor Working G

roup in the efforts by donorsto find com

mon indicators in m

onitoring the peaceprocess and supporting developm

ent in Sri Lanka.

�Sida supports harm

onization and alignment of

support together with the IFIs and like-m

indeddonors. Sida prefers sector cooperation reflectedthrough core funding and increased harm

onization,even in peace and tsunam

i related interventions (forexam

ple: core support to UN

ICEF's C

ountry Plan;the AD

B on infrastructure development - especially

roads in conflict and tsunami affected areas; the

World Bank on their Education Sector

Developm

ent Credit in the area of social cohesion;

and, together with the N

etherlands Embassy and

Danish D

evelopment C

ooperation, support to thePeace and D

evelopment Fund m

anaged by CH

A).

Conflict Sensitivity

�C

onflict is viewed in a broader light than m

erely theethnic conflict in the country, and is inclusive of allpotential conflicts (for exam

ple, religious conflictand buffer zone issues). H

ence, Sida activelyprom

otes a "do no harm" approach.

�C

onflict sensitivity is essential, but should also bebalanced in support to the N

orth-East and South.

UNICEF

Programs/policies

�U

NIC

EF has been working in the N

orth-East for along tim

e.

39| A

ppendix

�A 2002 D

FID/SID

A evaluation recomm

ended thata m

ore integrated managem

ent structure provide auniform

countrywide approach. T

his enabled work

with sim

ilar government structures island-w

ide,reducing the am

ount of NG

O engagem

ent.

�T

his reorganization and the ceasefire enabledU

NIC

EF to engage in policy issues relating tochildren. O

riginally through an Action Plan forC

hildren, agreed to by the LTT

E and GoSL in late

2002/early 2003, a comm

on approach was

launched. The suspension of peace talks suspended

comm

on working, but U

NIC

EF managed to secure

signatures of both sides. How

ever, suspension oftalks m

eant that there was no m

echanism for

discussing or solving arising problems.

�U

NIC

EF pioneered approaches that promoted

interchange between the tw

o sides and managed to

broker the only human rights agreem

ent. UN

ICEF

still practices "shuttle dialogue." There is still space

through provincial structures for interchangebetw

een the two sides, on education policy, for

example; but w

ork on some key issues, notably on

child soldiers, has been hard going.

Comm

on Indicators

�Benchm

arks on progress toward peace as an

incentive. These have not been put into practice;

the only funds that have been withheld have been as

a result of economic, not peace-related, issues.

Perspectives on Aid

�In the N

orth-East, there are still options forengagem

ent. These options have involved

interchange with all parties for decades, and can

continue in this manner. D

onors can work in the

North-East if they w

ish - there are mechanism

s.

�W

ithout peace talks, and more recently w

ith theLT

TE split in the East, the likelihood of concerted

demobilization is slim

. This has an im

pact on issuessuch as child soldiers - a key topic, given senior

U.N

. involvement and allegations of m

ajortransgressions of agreem

ents.

UNDP

Programs/policies

�Institutional change: U

ND

P has shiftedconsiderably in last 3-4 years. Previously, traditionaldevelopm

ent issues rather than conflict were seen as

the key priority among m

ost staff mem

bers in theSri Lanka office. N

ow, staff are prioritizing a more

conflict-aware and engaged approach. N

ewer staff

are often conflict-focused, leading to more capacity

to engage. This reflects a global shift in U

ND

Pthinking as w

ell as changes in the Sri Lanka office.

�T

he intergovernmental role of U

ND

P does createlim

its on actions, especially with the current

government. Support tends to have to flow

throughthe governm

ent, but that does not rule out some

valuable work. T

hey have to navigate carefully andw

ork quietly; they do not have scope to take onbroad agendas, nor the m

andate to engage theLT

TE as an equal partner. O

thers - for example,

GT

Z - can w

ork more flexibly. M

ore widely,

UN

DP is open to a w

ider range of civil society,governm

ent, and other bodies than they were in the

past.

�Peace Secretariat: Supported peace secretariats onboth sides of the conflict. Also linked M

uslims into

the process, before the establishment of a M

uslimsecretariat. T

his was a slow

process, but perseveranceled to som

e success.

�O

ther work includes sm

all grants through peacesecretariats, including grants to non-Tam

il localbodies in the N

orth-East. This is regarded as a

successful, if small, effort to prom

ote democratic

process and pluralism in the N

orth.

�Process: the U

.N., after the C

FA, was involved in

early needs assessments. T

he UN

P government

requested U.N

. involvement in the social and

economic aspects of peacebuilding and

Donors and Peacebuilding in S

ri Lanka 2000 - 2005 | 40

reconstruction. After the CFA, the U

ND

P was

involved with the prim

e minister's office unit in

efforts to take forward reconciliation/reconstruction.

This w

as unrolled in local government offices (at

the district level, etc.) as well as centrally, and folded

into the 3Rs m

inistry with the change of

government. T

he UN

DP has been responsible for

the "human developm

ent" aspects of comm

onassessm

ents, including gender, local capacitybuilding, etc.

Comm

on Indicators

�Indicators stem

ming from

principles are of mixed

value. They can be beneficial as an exercise for som

ebilateral organizations; but as a w

ider exercise, itdoes not have enough leverage or ow

nership.

GERMAN

Y (GTZ)

Programs/policies

�G

TZ

programs: as w

ith many other bilaterals,

conflict transformation justifies G

TZ

presence in anotherw

ise middle-incom

e nation. Programs link

with conflict across the board.

�Econom

ic promotion w

ork through micro-finance

and vocational training/regional economic

promotion: em

ploys "do no harm" principles.

�Projects in conflict areas: has m

aintained a presencefor som

e time, engaging w

ith all stakeholders - isnow

trying to build capacity by increasing itsoutsourcing. Involves higher-level, on-the-groundengagem

ent.

�Projects on conflict transform

ation: support to theBerghof Foundation’s w

ork, FLICT

civil societyprogram

, and the Education for Social Cohesion

program.

�Aid-diplom

acy linkages more com

plex for Germ

anythan m

any countries, given GT

Z's independent

status as well as m

inisterial divide between aid

operations and diplomatic operations.

Comm

on Indicators

�Post-Tokyo developm

ent of principles is seen bym

any observers as conditionality.

�Aid has not becom

e part of a wider process.

�A "transform

ative" approach to address underlyingproblem

s and set up pluralistic representativestructures on all sides along the lines of theprinciples agreed to in Tokyo has not beenprom

oted by either side, or by the major donors.

�Scenario planning exercise of 2004: aim

ing toansw

er questions of what peace w

ould look like,w

hat principles would be viable, and w

hat are thedrivers of peace. C

oncluded that bilaterals are lessinfluential than thought.

Perspectives on Aid

�D

onors have had increasing dialogue with all sides,

but with different routes and m

otivations. Yet thereare still open doors to w

orking collaboratively with

larger donors.

�T

he LTT

E, as well as the governm

ent, is unwilling

to comprom

ise on anything that bridges a gapbetw

een aid and political issues.

�"Regaining Sri Lanka" docum

ent: very close toprevious U

NP governm

ent policy.

�D

onor meetings: good coordination, but high costs.

Perceived by others as self-interested. It could bereplaced w

ith more direct engagem

ent between Sri

Lankan bodies and donors.

�M

ore domestic capacity building w

ithin projectsw

ould help by questioning the conventional projectdelivery m

odel and finding alternative working

methods.

Tsunami

�Tsunam

i needs assessments, lessons of previous

assessments of how

to work in the N

orth-East etc.,have not been taken fully into account.

41| A

ppendix

SWITZERLAN

D

Programs/policies

�Sw

itzerland has no real development program

.Previously, they had only a sm

all program w

ithsom

e school reconstruction in Jaffna. Since 2002,they have been involved in study tours by theLT

TE, G

oSL, parliamentarians, and the m

edia tostudy federalism

in Switzerland.

�Sw

itzerland has had a new post as Adviser for

Peacebuilding since 2003, who focuses on hum

ansecurity, peacebuilding, and hum

an rights.

�T

he Swiss provide support to the Berghof

Foundation for peacebuilding related work. Support

also was provided to the "O

ne Text Initiative,"along w

ith USAID

.

�Sw

itzerland has regular contact with the LT

TE. T

heTam

il expatriate comm

unity in Switzerland is quite

prominent. T

he Swiss are conducting w

ork with the

diaspora in Switzerland and encouraging insight

into Sri Lankan affairs through stimulating debates

and exchanges.

�T

he concern that aid flows m

ight spoil the peaceprocess is w

idely held.

Comm

on Indicators

�Scenario planning: C

lingendael facilitated a processthat developed 20 issues m

ost relevant to theconflict.

�A like-m

inded approach can lead to joint statements

that produce a comm

on diplomatic stance of

strength. There is a com

mon desire to ensure even-

handedness, and an intelligent donor response ispositive. C

onditionality: valid on issues of human

rights - for example, child soldiers.

Tsunami

�Since the tsunam

i there has been a major Sw

issD

evelopment C

ooperation presence.

U.K. (DFID)

Programs/policies

�Like m

any other bilaterals, conflict is the main

justification for engagement in Sri Lanka, given

their middle-incom

e status. There is som

e pressureto keep a presence given the large Sri Lankancom

munity in the U

.K., but overall there is little

desire to disburse, and therefore only a small

program of support. Pressure to spend is also

reduced by hands-off managem

ent, includingpassing funds to other bodies for use - U

.N.

agencies (UN

ICEF, U

NH

CR

), other donors (forexam

ple, GT

Z on civil society support), and N

GO

s(O

xfam, Save the C

hildren).

�T

he Sri Lanka aid program has undergone m

ajorchanges from

the late 1990s to 2005. It is nowfocused entirely on peacebuilding and governancepriorities. T

he diplomatic position has also shifted,

as peacebuilding receives enhanced priority in SriLanka and around the w

orld. The aid program

'sfocus on peacebuilding m

ay have both beeninfluenced by and contributed to this shift.

�C

hanging internal capacities has enabledengagem

ent: Like various other bilaterals in SriLanka, dedicated peacebuilding staff has enabled aprogram

to develop around peacebuilding issues.

�G

lobally, a stronger and more integrated

conflict/humanitarian section in London has

increased capacity to provide policy and practicalsupport; better linkages betw

een the U.K

.governm

ent departments also exist. G

CPP - the

Global C

onflict Prevention Pool - is one basis ofinterdepartm

ental cooperation. It has enabled abetter collective approach. It is thought that thisapproach has w

orked better in Sri Lanka thananyw

here else where it has been im

plemented by

the U.K

. government.

�Restructuring of Assistance: T

here are plans torestructure U

.K. provision of support to

peacebuilding within Sri Lanka over the next year.

This w

ill involve replacing a distinct DFID

presence

Donors and Peacebuilding in S

ri Lanka 2000 - 2005 | 42

with an enhanced joint political and developm

entsection dedicated to peacebuilding.

Comm

on Indicators

�D

FID has never advocated conditionality as a

means of supporting peace. It did encourage efforts

to support the negotiating parties in achieving theiragreed principles. D

FID encourages com

mon

approaches, trying to gain support for comm

onapproaches from

other, larger donors. They also

support a range of partnerships includingsecondm

ents, support to trust funds, etc. As with

other European bilaterals, prioritization of donorcoordination has led to such approaches in SriLanka.

�T

his prioritization of donor partnerships may reduce

involvement of Sri Lankan institutions in program

s.T

his covers staffing, capacity building, etc.

�D

FID encourages shared analysis and joint

approaches among donors w

here possible.

NETHERLAN

DS

Programs/policies

�Joint diplom

atic and aid operations.

�C

onflict has been firmly on the D

utch aid agendasince the early-m

id 1990s.

�Involvem

ent of the Clingendael Institute for m

anyyears has provided analysis on conflict in Sri Lanka.

�M

ore recently, the Dutch have prom

oted jointw

orking processes.

�T

he Dutch are planning to w

ithdraw from

SriLanka. C

urrent program of support totals

approximately Euros 10m

. The funds are earm

arkedfor environm

ental work w

ith GoSL and the AD

B,peacebuilding w

ith civil society, the Consortium

ofH

umanitarian Agencies, and the N

ECO

RD

(ADB)

project. There is also som

e work w

ith chambers of

comm

erce.

�A presence in the N

orth-East, through NG

Os or

otherwise, gradually results in shifting attitudes in

some areas.

Comm

on Indicators

�Principled approach also cam

e from the elite

intellectual Colom

bo-based Sri Lankan civil society,not just donors.

�Principles based on Paragraphs 17 and 18 of theTokyo D

eclaration were not m

eant to beconditional; they w

ere intended as a politicaldeclaration. H

owever, the perception of

conditionality stuck and was not countered.

�T

he comm

on assessment being planned by C

PAw

ith donor funding should provide a basis fordonors to use at w

ill.

�D

onor working groups are very tim

e-intensive.

43| A

ppendix

Goodhand, J. (2001) Aid, C

onflict, and Peacebuilding in Sri Lanka,The C

onflict, Security and Developm

ent Group,

London.

Goodhand, J., K

lem B., et al. "Aid, C

onflict, and Peacebuilding in Sri Lanka, 2000-2005." A report prepared for thegovernm

ents of the Netherlands, Sw

eden and the U.K

., The Asia Foundation, and the W

orld Bank.

45| B

ibliography

Bibliography

Award w

inning photographs by Annuruddha Lokuhapuarachchi,D

ominic Sansoni and G

emunu A

marasinghe

Adam

Burke and A

nthea Mulakala

DO

NO

RS

AN

D P

EAC

EBU

ILDIN

G

DONORSANDPEACEBUILDING2000–2005