1

Summary

This paper provides recommendations on the long-term dispersal and management of aid in Syria and outlines a framework to ensure aid remains effective, equitable, and realistic, without fostering aid dependency.

The paper draws on international evidence to inform its recommendations, including the cases of Lebanon and Iraq, countries whose demographic composition, social VWUXFWXUHV��DQG�W\SRORJ\�RI�FRQÁLFW�VKDUH�many similarities with Syria. In addition, key stakeholders from international organizations, the donor community and those currently and previously involved in capacity building, reconstruction planning and governmental relations in Syria were interviewed.

Based on its analysis, Menapolis recommends a realistic yet bounded timeline for major aid interventions. This intervention timeline would span approximately 15 years and be divided into three interrelated phases: Immediate Response and Recovery (~0-3 years), Development and Transition (D&T) (~3-7 years), Sustainability (~7- 15 years). Menapolis also recommends that the current Planning and International Cooperation Commission be transitioned into a Syrian Aid Management Authority (SAMA). SAMA would be in charge of standardizing administrative practices, HVSHFLDOO\�WKRVH�UHODWHG�WR�XQLÀHG�budgeting and reporting codes, in order to monitor aid dissemination and effectiveness. Menapolis’s suggested method for aid pooling is an umbrella Multi-Donor Trust Fund (MDTF), to be jointly managed between donors and 6$0$��,I�WKHVH�SRVW�FRQÁLFW�PHDVXUHV�are successfully implemented, Syria can become a paradigm in a region where post-FRQÁLFW�GHYHORSPHQW�KDV�SURGXFHG�OLWWOH�LQ�terms of long-term stability and progress.

.

September, 2013

By Sami Halabi

Preface

This paper seeks to provide recommendations regarding the long-term dispersal and management of aid funding in order to assist the Syrian

people in rebuilding their nation following the cessation of major hostilities. The recommendations in this paper describe a framework to ensure any aid provision is effective, equitable, and realistic, while avoiding fostering aid dependency. This paper draws on international evidence to inform its recommendations, including the cases of Lebanon and Iraq, countries whose demographic composition, social VWUXFWXUHV��DQG�W\SRORJ\�RI�FRQÁLFW�VKDUH�PDQ\�VLPLODULWLHV�WR�WKDW�RI�6\ULD���

7KH�SDSHU�GRHV�QRW�DWWHPSW�WR�GHWDLO�WKH�VSHFLÀFV�RI�KRZ�GLIIHUHQW�IDFHWV�RI�assistance, such as humanitarian response, transitional justice, or Disarmament, 'HPRELOL]DWLRQ��DQG�5HLQWHJUDWLRQ��''5��RI�ÀJKWHUV�VKRXOG�WDNH�SODFH��HDFK�RI�WKHVH³DQG�VLPLODU�SRVW�FRQÁLFW�GHYHORSPHQW�DUHDV³ZDUUDQW�WKHLU�RZQ�DQDO\VLV��Rather, the focus of this paper is on creating the framework and safeguards that ZLOO�DOORZ�DLG�IXQGLQJ�WR�IDFLOLWDWH�WKHVH�DQG�RWKHU�HVVHQWLDO�SRVW�FRQÁLFW�DFWLYLWLHV�LQ�D�PDQQHU�WKDW�KDV�WKH�JUHDWHVW�LPSDFW�DQG�PRVW�HTXLWDEOH�HIIHFW�LQ�D�SRVW�FRQÁLFW�Syria.

There are inherent challenges involved in compiling policy recommendations for a SRVW�FRQÁLFW�HQYLURQPHQW�WKDW�UHPDLQV�D�GLVWDQW�KRSH�RQ�WKH�KRUL]RQ��7KH�GXUDWLRQ�DQG�LQWHQVLW\�RI�WKH�FRQÁLFW��DV�ZHOO�DV�WKH�SDUWLHV�LQYROYHG��ZLOO�REYLRXVO\�DIIHFW�circumstances relevant to aid funding following major hostilities. The political FLUFXPVWDQFHV�XQGHU�ZKLFK�WKH�FRQÁLFW�FRQFOXGHV�ZLOO�DOVR�KDYH�D�ODUJH�EHDULQJ�on the willingness of various international stakeholders to fund a post-war Syria. While these realities cannot be discounted, there remain foreseeable issues relating to the mechanisms, safeguards, and considerations of aid that need to be studied and addressed in order to rebuild physical and governmental structures in a post-FRQÁLFW�HUD�

Implementing Effective, Equitable and Participatory /RQJ�7HUP�3RVW�&RQÁLFW�Development Aid in Syria

Policy Paper

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Methodology

This paper draws upon interviews with original sources involved in the current Syria policy environment, as well as research conducted via desk review on

OHVVRQV�OHDUQHG�LQ�SRVW�FRQÁLFW�UHFRQVWUXFWLRQ�LQ�FRXQWULHV�WKDW�DUH�VLPLODU�WR�6\ULD��VXFK�DV�/HEDQRQ�DQG�,UDT��DV�ZHOO�DV�RWKHU�LQWHUQDWLRQDO�SRVW�FRQÁLFW�VLWXDWLRQV�around the world.

The author interviewed key stakeholders from various international and multilateral organizations, members of the donor community, as well as those currently and previously involved in issues of capacity building, reconstruction planning, policy planning, and governmental relations regarding Syria. The names and positions of those interviewed have been withheld at their request.

The author also consulted a number of academic and international development organization scholarly and archival databases, including JSTOR, the Social Sciences Citation Index, Oxford Scholarship Online, the OECD Library and The New Palgrave Dictionary of Economics, in the pursuit of information relating WR�VWXGLHV�RI�SRVW�FRQÁLFW�VLWXDWLRQV��IUDJLOH�VWDWHV��IXQGLQJ�DVVLVWDQFH��DQG�SRVW�FRQÁLFW�HFRQRPLF�UHIRUP��

Executive Summary

Syria is in the midst of one of the most bloody and destructive civil wars in recent history, and as this paper goes to press, the international community is

deep in discussions about forestalling or escalating foreign military engagement. In this context, making an effort to engage in discussion about how to manage aid LQ�D�SRVW�FRQÁLFW�6\ULD�PD\�VHHP�RYHUO\�RSWLPLVWLF��RU�HYHQ�IRROKDUG\��+RZHYHU��WKH�VFDOH�RI�WKH�FRQÁLFW��DQG�WKH�XUJHQF\�RI�WKH�KXPDQLWDULDQ�VLWXDWLRQ��UHTXLUHV�preparedness for what will emerge once the guns fall silent.

The failure of the international community to consider the needs for ‘day after’ reconstruction and stabilization as a critical part of the planning process would be fundamentally counterproductive to the future of Syria and the region. Lack RI�LQWHUQDWLRQDO�VXSSRUW��LQVXIÀFLHQW�UHVRXUFHV��RU�DLG�PLVPDQDJHPHQW�FRXOG�exacerbate domestic and regional geopolitical considerations, resulting in FRQGLWLRQV�VLPLODU�WR�WKRVH�WKDW�DURVH�LQ�WKH�DIWHUPDWK�RI�RWKHU�UHFHQW�FRQÁLFWV��including those in Iraq and Afghanistan.

(YHQ�EHIRUH�WKH�RQVHW�RI�FRQÁLFW��6\ULD�VXIIHUHG�IURP�ZLGHVSUHDG�HFRQRPLF�inequality, stagnant wages, sustained unemployment, falling labour force participation, and rampant elite corruption. Although the government under Assad had embarked on an ambitious project to open up the economy over the course of WKH�SDVW�GHFDGH��LWV�PRVW�UHFHQW�ÀYH�\HDU�SODQ³ZKLFK�HQGHG�MXVW�EHIRUH�WKH�VWDUW�RI�the protests in 2011—was characterized by elite preference, and failed to produce promised economic opportunities necessary to improve living conditions and UHGUHVV�VRFLHWDO�LQHTXLW\��,Q�WKH�HQVXLQJ�FRQÁLFW��6\ULD�KDV�ORVW�PXFK�RI�ZKDWHYHU�economic progress it had realized, as well as the relative security it enjoyed compared to its neighbours.

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7KH�KXPDQ�WROO�RI�WKH�FRQÁLFW�KDV�EHHQ�VWDJJHULQJ��ZLWK�PRUH�WKDQ���������Syrian men, women, and children who have lost their lives. This tragedy has overshadowed the country’s concurrent downward economic spiral, as trade imbalances, sanctions, and a currency in freefall have brought the Syrian economy WR�LWV�NQHHV��ZLWK�HQVXLQJ�QHJDWLYH�UDPLÀFDWLRQV�IRU�WKRVH�DW�WKH�ORZHU�HQG�RI�Syria’s income scale. Between 2011 and 2013, the country’s cumulative GDP has been estimated to have fallen by 62 percent.1�%HIRUH�WKH�FRQÁLFW��URXJKO\�D�third—or 7.5 million—Syrians were estimated to live below the upper poverty line RI����SHU�GD\��E\�WKH�HQG�RI�������DQ�DGGLWLRQDO�����PLOOLRQ�6\ULDQV�KDG�IDOOHQ�LQWR�poverty, 1.5 million of whom fell below the lower poverty line of $2 per day.2

This economic devastation has been accompanied by widespread physical destruction of critical public and private infrastructure. As of May 2013, it was estimated that 1.2 million homes and 3,000 schools had been destroyed,3 and roughly 55 percent of hospitals had sustained damaged. While it is impossible to IXOO\�HVWLPDWH�WKH�UHDO�FRVWV�RI�WKH�FRQÁLFW��D�-XQH������DVVHVVPHQW�E\�WKH�8QLWHG�Nations estimated that a quarter of all private homes would have to be rebuilt at a FRVW�RI�VRPH�����ELOOLRQ��,I�WKH�FRQÁLFW�ZHUH�WR�FRQFOXGH�E\�WKH�HQG�RI�������WRWDO�physical reconstruction costs were estimated at $80 billion.

For the past several decades the Syrian government under the Assad family has resisted taking on large volumes of external aid. This has resulted in low aid dependency on the part of the Syrian government, but also precluded the EHQHÀWV�WKDW�ZHOO�PDQDJHG�DLG�FDQ�KDYH�RQ�GHYHORSPHQW��,Q�������WRWDO�IRUHLJQ�development aid came to just $340 million, or just under 8 percent of the total $4.3 billion provided to the broader Middle East.4 At present, aid has become extremely fragmented between those countries supporting the regime in Damascus and those supporting the opposition. Furthermore, aid administration has become dispersed across various disparate bodies, including the opposition’s main aid coordination unit, international NGOs, relief and development agencies working in Syria, local councils in opposition areas, and the Syrian government’s own aid coordination and planning unit.

)RU�6\ULD·V�SRVW�FRQÁLFW�GHYHORSPHQW�UHFRQVWUXFWLRQ�DQG�VWDELOL]DWLRQ�WR�EH�successful, it cannot be a linear process or be dictated by a compartmentalization of phases. Evidence from the Organisation for Economic Cooperation and Development has shown that rigid phasing into ‘humanitarian’, ‘emergency’, ¶GHYHORSPHQW·��¶WUDQVLWLRQ·��¶UHFRYHU\·��RU�DQ\�RWKHU�VXFK�DUELWUDULO\�GHÀQLWLYH�terminology is often counter-productive5 at best, and can contribute to the OLNHOLKRRG�D�FRXQWU\�ZLOO�UHODSVH�LQWR�FRQÁLFW�6 Likewise, Syria will require a

1� (FRQRPLVW�,QWHOOLJHQFH�8QLW��¶&RXQWU\�5HSRUW���6\ULD·��(FRQRPLVW�,QWHOOLJHQFH�8QLW��������2 Rabie Nasser, Zaki Mehchy, Khalid Abu Ismail, ‘Socioeconomic Roots and Impact of the Syrian Crisis’, Syrian Center for Policy Research (2013).3 Barbra Surk, ‘Syria Ex-Minister Leads Rebuilding Plan’, Associated Press (2013).4 Organisation for Economic Co-operation and Development Development Assistance Com-mittee, ‘Development at a Glance-Statistics by Region-Asia’, Organisation for Economic Co-operation and Development (2013).5 Organisation for Economic Co-operation and Development Development Assistance Com-mittee, ‘Transition Financing: Building a Better Response’, Organisation for Economic Co-operation and Development (2010).6 Lisa Chauvet, Paul Collier, Marguerite Duponchel, ‘What Explains Aid Projects Success in 3RVW�&RQÁLFW�6LWXDWLRQV"·��:RUOG�%DQN�3ROLF\�5HVHDUFK�:RUNLQJ�3DSHUV��������

4

ÁH[LEOH�DQG�DGDSWLYH�DSSURDFK�WR�DLG��D�IDFW�XQGHUVFRUHG�E\�GLIIHULQJ�OHYHOV�RI�QHHG�across geographical areas.

7R�VWDYH�RII�UHJLRQDO�GLVSDULWLHV��SRVW�FRQÁLFW�IXQGLQJ�DLG�PXVW�FHQWHU�RQ�WKH�DUHDV�PRVW�DIIHFWHG�E\�UHFHQW�FRQÁLFW��ZKLOH�WDNLQJ�LQWR�DFFRXQW�WKDW�VRPH�DUHDV�PD\�still be run by potential ‘spoilers’ such as Jubhat Al Nusra (JAN) or the Kurdistan Workers Party (PKK). There will be an onus on new forms of centralized and local JRYHUQPHQW�VWUXFWXUHV�WR�GHPRQVWUDWH�HIÀFDF\��+XPDQLWDULDQ�DQG�GHYHORSPHQW�DLG�PRQLWRULQJ�PHFKDQLVPV�PXVW�DOVR�LGHQWLI\�QHHGV�DQG�LQWHUYHQWLRQV�LQ�VSHFLÀF�areas to put to good use, while not overriding basic principles of equity. This is particularly true if they are to prove more effective than potential spoilers and/or bring them into the fold of the national reconstruction effort.

While aid activities should not be put into arbitrary planning boxes or rigid time IUDPHV��SRVW�FRQÁLFW�DLG�FDQ�DQG�VKRXOG�EH�WLPHERXQG��LQ�RUGHU�WR�LQVWLO�D�VHQVH�WKDW�LW�LV�QHLWKHU�LQÀQLWH�QRU�PHDQW�WR�UHSODFH�WKH�UROH�RI�WKH�VWDWH��7KHUHIRUH��any timeline for major aid funding interventions needs to take on a realistic yet ERXQGHG�DSSURDFK�WKDW�LQFUHDVHV�HIÀFLHQF\�RI�LQWHUYHQWLRQV�DQG�SULRULWL]HV�VWDWH�capacity and transfer. Loosely speaking, a successful intervention timeline would span around 15 years and be divided into three overlapping and interrelated phases: Immediate Response and Recovery (IRR) (~0-3 years), Development and Transition (D&T) (~3-7 years), Sustainability (~7- 15 years).

In the Immediate Response and Recovery (IRR) phase, state capacity to absorb and deploy aid is typically weak while donor interest is high.7 Therefore this period must be underpinned by activities that consolidate peace and political processes while bringing ‘spoilers’ into the fold of government. In Syria these basic SULQFLSOHV�RI�SRVW�FRQÁLFW�UHFRQVWUXFWLRQ�LQWHUYHQWLRQV�ZLOO�QHHG�WR�EH�UHFRQFLOHG�ZLWK�WKH�VHFWDULDQ�UHDOLWLHV�RI�WKH�FRQÁLFW�DQG�WKH�SUHYLRXV�DGPLQLVWUDWLRQ·V�preferential treatment of certain sects in the public sector. In the immediate DIWHUPDWK�RI�WKH�FRQÁLFW��DLG�WKDW�WDUJHWV�SURJUDPPHV�WKDW�LQFUHDVH�VRFLDO�FRKHVLRQ�must accompany basic humanitarian needs. In addition, development programmes should seek to incorporate social cohesion where possible.

Concurrently with stabilization efforts conducted under IRR, there must be a focused effort to use aid to fund government takeover or basic service provision prioritizing central administration and local provision. While there may be logic to providing aid through nongovernmental organizations and international agencies, due to the immense humanitarian need, there should be focused efforts to transfer services to remaining capable state functions and institutions. The Development and Transition (D&T) phase should place a focus on economic and social policy reform (including tax regimes) that have the greatest chance of success.

This will be followed by a Sustainability funding phase, where aid must be SKDVHG�RXW�LQ�IDYRU�RI�WKH�FDSDFLW\�IRU�VHOI�ÀQDQFLQJ��+RZHYHU��WKH�WUDQVLWLRQ�WR�sustainability can only occur if state institutions gain public legitimacy to impose tax regimes8 and charge economically viable populations for basic public services, a core goal of D&T efforts. Prior to the onset of the Sustainability funding phase,

7� 6DQMHHY�*XSWD��¶(QKDQFLQJ�(IIHFWLYH�8WLOL]DWLRQ�RI�$LG�LQ�)UDJLOH�6WDWHV·��8QLWHG�1DWLRQV�8QLYHUVLW\�:RUOG�,QVWLWXWH�IRU�'HYHORSPHQW�(FRQRPLFV�5HVHDUFK��������8 Ibid.

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potential ‘spoilers’ must have been brought into the fold or sidelined by the re-emergent legitimacy of state institutions.

(YHQ�ZLWK�WKH�JUHDWHVW�RI�HIIRUWV��SHDFH�LQ�SRVW�FRQÁLFW�VLWXDWLRQV�LV�DOZD\V�IUDJLOH��and countries that experience civil war carry a 40 percent risk of sliding back LQWR�FRQÁLFW�9 Moreover, 50 percent of countries that have embarked on economic WUDQVLWLRQV�KDYH�DOVR�VOLSSHG�EDFN�LQWR�FRQÁLFW�10 Therefore, areas in which there is an overlap between peacebuilding and state building—especially in relation to potential ‘spoilers’ in Northern Syria—need to be prioritized, especially with regard to state-society relations. State wealth needs to be redistributed from the former regime elite, and managed as a process rooted in public participation, such as a clearly outlined parliamentary or referendum process that clearly outlines the boundaries of state functions and accommodations required to keep the peace.11

7KH�SURFHVV�RI�GHWHUPLQLQJ�LQFOXVLRQ�LQ�WKH�SRVW�FRQÁLFW�JRYHUQDQFH�HQYLURQPHQW�ZLOO�QHHG�WR�EH�¶LQFOXVLYH�HQRXJK·�VR�WKDW�SDUWLHV�UHVWRUH�FRQÀGHQFH�LQ�LQVWLWXWLRQDO�reform, but not so inclusive as to reward bad behaviour of those with proven history of war-time atrocities.12 The status of fringe groups with non-democratic ideologies such as JAN, those seeking autonomous rule such as the PKK, and remnants of the current regime – with its long history of repression and sectarian capture13 -- will need to be considered in the process of inclusion. In prioritizing peace, it is also important to attempt to bring as many ‘spoilers’ into the fold of the political process as possible through a mixture of negotiations, democratic and procedural inclusion, as well as administrative decentralization.

Aid management in Syria has always been highly centralized. State outreach and services before the war, while based in part on patronage and rife with under-TXDOLÀHG�VWDII��KDG�JUHDW�UHDFK�DQG�SHQHWUDWLRQ�DFURVV�VRFLHW\�14 Although the FXUUHQW�FRQÁLFW�KDV�OHG�WR�D�KLJK�OHYHO�RI�DLG�IUDJPHQWDWLRQ�DFURVV�WKH�FRXQWU\��SRVW�FRQÁLFW�DVVLVWDQFH�VKRXOG�SULRULWL]H�D�VZLIW�UHWXUQ�WR�D�XQLÀHG�VWUXFWXUH�RQFH�major hostilities have subsided.

$�FULWLFDO�ÀUVW�VWHS�LQ�DGGUHVVLQJ�WKH�LVVXH�RI�DLG�PDQDJHPHQW�LV�SXEOLF�QRWLÀFDWLRQ�DQG�FRQVHQVXV�RQ�D�XQLÀHG�QDWLRQDO�UHFRQVWUXFWLRQ�SODQ��$Q\�VXFK�SODQ�VKRXOG�EH�SXEOLFO\�UDWLÀHG��LGHDOO\�WKURXJK�QDWLRQDO�UHIHUHQGXP�RU�YLD�ODZ�SDVVHG�E\�D�legitimate and representative legislature or national assembly, and not a product of executive or foreign decision-making. Ideally, any such plan should be linked to the country’s annual national budget, in order to provide transparency, public monitoring mechanisms, and avenues for changes as necessary. Such a link would require any international assistance to present before national priorities, decided in

9 Chauvet et al., op cit. 10 Graciana del Castillo, ‘Rebuilding War-Torn States: Tomorrow’s Challenges for Post Con-ÁLFW�5HFRQVWUXFWLRQ·��$XVWUDOLDQ�&LYLO�0LOLWDU\�&HQWHU��������11 Katia Papagianni, Building States to Build Peace: Participation and State Legitimation, (2008). 12� :RUOG�%DQN��¶:RUOG�'HYHORSPHQW�5HSRUW��&RQÁLFW��6HFXULW\��DQG�'HYHORSPHQW·��:RUOG�Bank (2011).13 Ivan Briscoe, Floor Janssen, Rosan Smits, ‘Stability and Economic Recovery after Assad: .H\�6WHSV�IRU�6\ULD·V�3RVW�&RQÁLFW�7UDQVLWLRQ·��&RQÁLFW�5HVHDUFK�8QLW��7KH�&OLQJHQGDHO�,QVWLWXWH�(2012).14 Bertelsmann Stiftung, ‘Syria Country Report’, Bertelsmann Stiftung Transformation Index (2012).

6

a democratic fashion,15 and help mitigate against the creation of ‘aid orphans’ or the phenomenon of donor driven aid in Syria.16

7KH�FRRUGLQDWLRQ�RI�SRVW�FRQÁLFW�GRQRU�DLG�DQG�QHHGV�DVVHVVPHQWV�WR�ORFDO�DUHDV�should be centralized under Syrian structures. At present, the legacy Syrian Planning and International Cooperation Commission (PICC) still represents WKH�PRVW�OHJLWLPDWH�JRYHUQPHQW�ERG\�WR�WDNH�RQ�WKLV�WDVN��+RZHYHU��LWV�SUHVHQW�structure does not have the capacity or authority to implement a nation-wide construction plan.17 To enhance legitimacy it is recommended that the Commission be transitioned into a Syrian Aid Management Authority (SAMA) that comes under the auspices of parliament rather than the current Prime Minister or cabinet oversight. New aid coordination bodies that have emerged since the onset of the FRQÁLFW��VXFK�DV�WKRVH�RI�WKH�RSSRVLWLRQ��VKRXOG�EH�PHUJHG�ZLWK�WKRVH�RI�6$0$�WR�SURYLGH�D�XQLÀHG�VWUXFWXUH���

Paradoxically, the development of a centralized national assistance capacity will provide an opportunity to break with the past and implement administrative decentralization based on local preferences, needs, and management. This enhanced authority should preserve new networks of aid deployment across the rebel-held areas, as they are most likely to offer meaningful local buy-in on reconstruction agenda setting and implementation. Centralization should be a corrective to fragmentation, rather than a return to the consolidation of basic services and decision-making as existed under the Ba’ath party. Conversely, potential ‘spoilers’ and local governments must not take over sole responsibility. A core function of SAMA should be the standardization of local administrative SUDFWLFHV��HVSHFLDOO\�WKRVH�UHODWHG�WR�XQLÀHG�EXGJHWLQJ�DQG�UHSRUWLQJ�FRGHV�LQ�RUGHU�to monitor aid dissemination and effectiveness.18

The pooling of donor resources in transitional contexts has historically been seen as an effective mechanism to decrease transaction costs, streamline aid management, decrease fragmentation, adhere to national priorities, and lower risk to donors.19 The international community’s preferred method for conducting this form of aid pooling has most often been a umbrella Multi-Donor Trust Fund (MDTF). Any such MDTF would counter Syria’s previous trend of predominately bilateral aid.

An effective MDTF must be structured in such a manner that would allow for UHDVRQDEOH�GRQRU�SUHIHUHQFHV�WR�EH�PDGH�LGHQWLÀDEOH��ZLWKRXW�RYHUWDNLQJ�D�QDWLRQDO�SXEOLFDOO\�UDWLÀHG�UHFRQVWUXFWLRQ�DJHQGD��7KH�0'7)�VKRXOG�EH�MRLQWO\�PDQDJHG�between donors and Syria, through SAMA, and implemented through existing national systems and structures. External management and implementation by WKH�LQWHUQDWLRQDO�FRPPXQLW\��ZKLOH�WHPSWLQJ�IURP�DQ�HIÀFDF\�VWDQGSRLQW��KDV�historically resulted in the exclusion of government from implementation and

15 Castillo, op. cit.16 Organisation for Economic Co-operation and Development, ‘Principles for Good Inter-national Engagement in Fragile States and Situations’, Organisation for Economic Co-operation and Development (2007).17 Personal correspondence with a member of the international donor community. 18 Organisation for Economic Co-operation and Development (2010), ‘Transition Financing: Building a Better Response’, op. cit.19 Ibid.

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the weakening of overall state capacity.20 Coordinated national management and implementation, while time consuming, allows for donor harmonization, capacity building of state institutions to administer pooled aid, and improved risk management.21

An independent auditor, mutually agreed upon by the donors and the state authority responsible for administering aid, should oversee the MDTF from the beginning. An independent external auditor tasked with oversight of MDTF funding and disbursement is essential to providing up- and downstream transparency to the process.22 This auditor, or another specialized and independent entity, could also be in charge of periodic capacity evaluations to ascertain what donor administered activities can be transferred to the state as time passes.

Any MDTF or other aid should be made in the form of grants,23 especially in WKH�VKRUW�WHUP��&HUWDLQ�XUJHQW�IXQGLQJ�QHHGV��VXFK�DV�IRU�ÁDJVKLS�UHFRQVWUXFWLRQ�projects, could be covered by bilateral subsidized loans, due to urgent need and select interest from a donor country to provide such facilities.24 As aid volatility FRXOG�FDXVH�6\ULD�WR�GUDZ�RQ�RWKHU�VRXUFHV�RI�ÀQDQFLQJ��VXFK�DV�GHEW�PDUNHWV��SAMA should manage aid in a manner that diverts dependency, even if volatility RFFXUV��+LVWRULFDO�HYLGHQFH�KDV�VKRZQ�VXFK�H[WHUQDO�VRXUFLQJ�FDQ��LQ�WLPHV�RI�political instability, have negative implications for debt servicing and threaten aid dependency.

There will be an instinctive inclination to frontload aid expenditure during the ,55�SKDVH��ZKHQ�GRQRU�LQWHUHVW�LV�KLJK�DQG�KXPDQLWDULDQ�QHHG�REYLRXV��+RZHYHU��FXUUHQW�FRQÁLFW�SDWWHUQV�LQGLFDWH�VXFK�IURQWORDGLQJ�ZLOO�QRW�EH�QHFHVVDU\�XQOHVV�WKHUH�LV�VLJQLÀFDQW�DGGLWLRQDO�ZLGHVSUHDG�GDPDJH�WR�QDWLRQDO�LQIUDVWUXFWXUH��Instead, it is recommended that Syria instead smooth the aid expenditure curve as much as possible in order to replenish its dwindling foreign currency reserves and avoid falling into debt cycles, especially during IRR.

$�QDWLRQDO�DLG�VXVWDLQDELOLW\�VWUDWHJ\�PXVW�UXQ�LQ�SDUDOOHO�WR�SXEOLF�ÀQDQFH�decisions regarding how much and what form of debt to take on in order to implement development projects. At present there is an inclination to set the debt WR�*'3�FHLOLQJ�DW����SHUFHQW�DQG�UXQ�GHÀFLWV�RI�DURXQG����SHUFHQW�EHWZHHQ������and 2020, based on an assumption of growth averaging 7 percent during that SHULRG��SUHVXPLQJ�DQ�HQG�WR�FRQÁLFW�EHIRUH�WKDW�SHULRG��25 Such targets are not unreasonable, but they must be accompanied by debt forgiveness and rescheduling from the international community. There is a special moral imperative for countries that funded weapons transfers during the civil war to see that Syria emerges from FRQÁLFW�DQG�GHYHORSV�LQWR�D�YLDEOH�DQG�SURVSHURXV�VWDWH��

20 Organisation for Economic Co-operation and Development Development Assistance Com-PLWWHH��¶,QWHUQDWLRQDO�6XSSRUW�WR�3RVW�&RQÁLFW�7UDQVLWLRQ·��2UJDQLVDWLRQ�IRU�(FRQRPLF�&R�RSHUDWLRQ�DQG�Development (2012).21 Ibid.22� 6DOYDWRUH�6FKLDYR�&DPSR��¶)LQDQFLQJ�DQG�$LG�0DQDJHPHQW�$UUDQJHPHQWV�LQ�3RVW�&RQÁLFW�Situations’, World Bank (2003).23 Organisation for Economic Co-operation and Development, ‘Resource Flows to Fragile and &RQÁLFW�$IIHFWHG�6WDWHV·��2UJDQLVDWLRQ�IRU�(FRQRPLF�&R�RSHUDWLRQ�DQG�'HYHORSPHQW��������24 Schiavo-Campo, op. cit. 25� 3HUVRQDO�FRUUHVSRQGHQFH�ZLWK�D�PHPEHU�RI�WKH�8QLWHG�1DWLRQV�

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Background & Rationale

Rationale

The Syrian Civil War has already dramatically altered the physical, political and VRFLRHFRQRPLF�VWUXFWXUHV�RI�6\ULD��7KH�LQWHQVLW\�DQG�GXUDWLRQ�RI�WKH�FRQÁLFW�

will have long-lasting consequences for the immediate success of the post-Assad transition and interim state development, and these consequences will manifest in relation to aid deployment and management.

Syria’s immediate neighbours, Lebanon and Iraq, offer cautionary guidance on SRVW�FRQÁLFW�UHFRQVWUXFWLRQ��%RWK�QDWLRQV�RIIHU�GLIIHULQJ�FDVH�VWXGLHV�LQ�KRZ�ODUJH�LQÁX[HV�RI�SRVW�FRQÁLFW�DLG�LQWR�D�FRQÁLFW�ZLWK�VHFWDULDQ�RYHUWRQHV�FDQ�exacerbate inequality, further entrench sectarianism and cronyism, and stymie ORQJ�WHUP�QDWLRQDO�GHYHORSPHQW�DQG�UHIRUP��&RXQWULHV�IXUWKHU�DÀHOG��VXFK�DV�Kosovo, Angola, and Afghanistan, also present case precedents of how long-term development aid can be effective or can create societies that remain dependent on foreign assistance.

Accordingly, the manner and form that development aid is deployed, accepted, PDQDJHG��DQG�GLVSHUVHG�LQ�D�SRVW�FRQÁLFW�6\ULD�QHHGV�WR�EH�MXGLFLRXVO\�DVVHVVHG�and planned in order to increase the likelihood that such assistance can be both HTXLWDEOH�DQG�HIÀFLHQW��ZLWK�KLJK�LPSDFW�DQG�ORZ�UHGXQGDQF\��ZKLOH�UHPDLQLQJ�resistant to aid dependency. Furthermore, it is essential that donors undertake careful consideration of public policies prior to the cessation of major hostilities in order to ensure development aid meets its intended purposes and remains in line with national priorities.

Economic conditions

PULRU�WR�WKH�RQVHW�RI�WKH�FXUUHQW�FRQÁLFW��6\ULD·V�IXQGDPHQWDO�HFRQRPLF�indicators were generally sound: annual economic growth was between 4.5 to

5.5 percent, the country had relatively low public debt (some 35 to 40 percent of GDP26��>6HH�)LJXUH��@��ÀVFDO�GHÀFLWV��XVXDOO\�XQGHU�RU�DURXQG���SHUFHQW27), a low FXUUHQW�DFFRXQW�GHÀFLW��DOVR�XQGHU�RU�DURXQG���SHUFHQW���7KH�FRXQWU\�KDG�HPEDUNHG�RQ�D�VWUXFWXUDO�VKLIW�LQ�HFRQRPLF�GLYHUVLÀFDWLRQ�DZD\�IURP�RLO�DQG�HQHUJ\�subsidies28 with the intent of moving into more modern social assistance programs, including the development of a National Social Aid Fund that was intended to consolidate the country’s various universal social assistance programs under a evidence-based distribution framework.29

26� (FRQRPLVW�,QWHOOLJHQFH�8QLW��RS��FLW���27 International Monetary Fund, ‘Syrian Arab Republic: 2009 Article Iv Consultation—Staff 5HSRUW��DQG�3XEOLF�,QIRUPDWLRQ�1RWLFH�·��,QWHUQDWLRQDO�0RQHWDU\�)XQG��������28 Al-Thawra, ‘Syrian Government Approves 11th Five-Year Plan’, Al-Thawra, November 14, 2010. (2010).29 Al-Thawra, ‘Syrian Government Approves 11th Five-Year Plan’, Al-Thawra, November 14, 2010. (2010).

9

Figure 1:

Source: Syrian Center for Policy Studies

+RZHYHU��GHVSLWH�WKHVH�UHODWLYHO\�SRVLWLYH�H[WHUQDO�LQGLFDWRUV��WKH�FRXQWU\�ZDV�suffering from increasing inequity and falling real incomes, compounded by rising LQÁDWLRQ�H[DFHUEDWHG�E\�WKH�SKDVLQJ�RXW�RI�FULWLFDO�VXEVLGLHV���7KHVH�FLUFXPVWDQFHV�were the tinderbox into which the anti-government match was lit: broad popular economic disaffection was channeled into political disaffection, fuelling the 2011 XSULVLQJ�WKDW�KDV�VLQFH�HYROYHG�LQWR�WRGD\·V�DUPHG�FRQÁLFW�30 Even crude indicators of economic equality show that the country’s limited economic growth was not further distributed throughout the population: even as the economy grew steadily. GDP per capita (PPP) remained stagnant [See Figure 2].

Figure 2:

During the period between 2000 and 2010—the same period during which Bashar al-Assad was enacting moderate liberalizing economic reforms—the consumer price index rose 73 points31��WKRXJK�LQÁDWLRQ�UHPDLQHG�UHODWLYHO\�ORZ�XQWLO�������when the government lifted fuel subsidies), meaning that even though nominal wages had risen, real wages remained stagnant [See Figure 3]. Since 2011 and

30� -RVKXD�/DQGLV��¶7KH�6\ULDQ�8SULVLQJ�RI�������:K\�WKH�$VDG�5HJLPH�,V�/LNHO\�WR�6XUYLYH�WR�2013’, Middle East Policy Council (2012).31� 8QLWHG�1DWLRQV�6WDWLVWLFV�'LYLVLRQ��¶6\ULDQ�$UDE�5HSXEOLF·��:RUOG�6WDWLVWLFV�3RFNHWERRN�(2011).

“Broad popular economic

disaffection was channeled into

political disaffection, fuelling the 2011

uprising that has since evolved into

today’s armed KWVÆQK\�

“

10

WKH�RQVHW�RI�FRQÁLFW��H[LVWLQJ�LQÁDWLRQDU\�SUHVVXUHV�KDYH�EHHQ�FRPSRXQGHG�E\�a massive depreciation of the SYP: Before the Central Bank of Syria stepped to invoke a marginal correction in mid-June 2013,32 the pound had depreciated from WKH�RIÀFLDO�UDWH�DURXQG����6<3�GROODU�WR�DV�PXFK�DV�����6<3�GROODU�RQ�WKH�EODFN�market.33

Figure 3:

Source: Syrian Centre for Policy Studies

$OWKRXJK�6\ULD·V�*,1,�FRHIÀFLHQW��RU�PHDVXUHPHQW�RI�LQFRPH�LQHTXDOLW\��KDG�RQO\�risen from 33.7 in 1997 to 35.8 in 2010, the country’s income inequality is on par with most of its regional counterparts.34�+RXVHKROG�VXUYH\V�FRQGXFWHG�DFURVV�Syria show that real incomes had been falling in the years prior to the uprising, in large part because of the removal of subsidies on key items such as fuel and IHUWLOL]HUV��,Q�IDFW��WKH�UHJLRQDO�GLVWULEXWLRQ�RI�FRQÁLFW�VLQFH������FRUUHODWHV�WR�those governorates that just had witnessed the largest falls in real income across the country in the period before the uprising [See Figure 4].

32� (FRQRPLVW�,QWHOOLJHQFH�8QLW��¶6\ULD�(FRQRP\��4XLFN�9LHZ���%ODFN�0DUNHW�([FKDQJH�5DWH�7XPEOHV·��(FRQRPLVW�,QWHOOLJHQFH�8QLW��-XQH������������������33 Ibid.34 Bertelsmann Stiftung, op. cit.

“Household surveys conducted across

Syria show that real incomes had been

falling in the years prior to the uprising, in large part because

of the removal of subsidies on key

items such as fuel IVL�NMZ\QTQbMZ[�

“

11

Figure 4:

Source: Syrian Centre for Policy Studies

Across Syria, unemployment has been an issue in both qualitative and quantitative terms for many years. Although the overall rate of unemployment KDG�UHPDLQHG�UHODWLYHO\�VWDEOH��DW�DURXQG���SHUFHQW�LQ�WKH�\HDUV�OHDGLQJ�XS�FRQÁLFW�under al-Assad, actual labour force participation fell dramatically during the decade preceding the uprising, especially in rural areas [See Figure 5]. With unemployment measured only as the percentage of the population actively but XQVXFFHVVIXOO\�ORRNLQJ�IRU�ZRUN�ODERXU�IRUFH�SDUWLFLSDWLRQ�UHPDLQHG�DW������OHYHOV��the true unemployment rate would have been closer to 24 percent.35

Figure 5:

Source: Syrian Centre for Policy Studies

From 2005 to 2010, Syria was implementing its ‘Social Market’ strategy under the JRYHUQPHQW·V���WK�ÀYH�\HDU�SODQ��7)<3���7KH�EDVLF�WHQDQWV�RI�WKH�6RFLDO�0DUNHW�strategy and overall national plan were to begin the process of shifting away from Syria’s centralized, state-managed regulatory and legal framework towards

35 Rabie Nasser, Zaki Mehchy, ‘Role of Economic Factors in Political Movement: TheSyrian Case’, Arab Planning Institute (2012).

12

a market-oriented economy,36 while preserving the state’s role in the provision of social services and avoiding reliance on foreign aid. Despite these efforts to UHPDLQ�LQGHSHQGHQW�RI�IRUHLJQ�DVVLVWDQFH��WKH�FRXQWU\�ERUURZHG�86�����ELOOLRQ�from Russia (of which $10 billion was subsequently forgiven37), as well as held subsidized loans, including those from the European Investment Bank, for the SXUSRVH�RI�IXQGLQJ�ÁDJVKLS�LQIUDVWUXFWXUH�SURMHFWV�38

Despite these ambitious state objectives, the TFYP did not successfully reverse VRPH�RI�WKH�PDMRU�FKDOOHQJHV�DIÁLFWLQJ�WKH�6\ULDQ�SRSXODWLRQ�DQG�HFRQRP\��According to the communiqué released by the then-deputy PM at the launch of the 11th Five Year Plan in 2011 (which was never published) unemployment remained high at 10.3 percent: The TFYP had created no more than 39,000 new MREV�IURP������WR�������ZLWK�PRUH�WKDQ���������LQGLYLGXDOV�UHPDLQLQJ�RIÀFLDOO\�unemployed.39

(IIHFWV�RI�WKH�&RQÁLFW

The Syrian economy, employment, and infrastructure were already in a state of JHQHUDO�GLVUHSDLU�SULRU�WR�������EXW�WKH�VRFLRHFRQRPLF�HIIHFWV�RI�WKH�FRQÁLFW�

have been devastating to the economic landscape and social fabric of Syria. Staggering loss of life has been accompanied by massive damage to property, infrastructure, and human security. At the end of 2012, economic losses were HVWLPDWHG�WR�WRWDO�����ELOOLRQ�6\ULDQ�3RXQGV��6<3��DV�UHODWLYH�WR�SUH�LQÁDWLRQ�DW�constant prices in 2000,40 while the country’s cumulative GDP between 2011 and 2013 is estimated to have fallen by 62 percent from pre-crisis levels.41�+RZHYHU��VRPH�HVWLPDWHV�RIIHU�D�JOLPPHU�RI�RSWLPLVP��WKH�(FRQRPLVW�,QWHOOLJHQFH�8QLW�UHFHQWO\�HVWLPDWHG�WKDW�LI�WKH�FRQÁLFW�VXEVLGHV�VLJQLÀFDQWO\�E\�������WKH�HFRQRP\�could demonstrate resilience and experience a timid recovery [See Figure 6].

36 Government of the Syrian Arab Republic, ‘Outline of the 10th Five Year Plan’, Government of Syria (2011).37 Nuclear Threat Initative, ‘Syria Missile Chronology’, Monterey Institute of International Studies (2011).38 Personal Correspondence with a Syrian economist. 39 Al-Thawra, op. cit. 40 Nasser et. al., op. cit.41� (FRQRPLVW�,QWHOOLJHQFH�8QLW��¶&RXQWU\�5HSRUW���6\ULD·��RS��FLW����

“The socioeconomic effects of the

KWVÆQK\�PI^M�JMMV�devastating to the

economic landscape and social fabric of ;aZQI��;\IOOMZQVO�

loss of life has been accompanied by massive damage

to property, infrastructure, and

P]UIV�[MK]ZQ\a��

“

13

Figure 6:

Source: the Economist Intelligence Unit

Social and Physical Infrastructure

TKH�FRQÁLFW�KDV�SUHFLSLWDWHG�D�PDVVLYH�UHIXJHH�FULVLV�DQG�GDPDJHG�WKH�GRPHVWLF�VRFLDO�LQIUDVWUXFWXUH�UHTXLUHG�WR�DGGUHVV�WKH�SRVW�FRQÁLFW�QHHGV�RI�WKH�

SRSXODWLRQ��7KH�+XPDQ�'HYHORSPHQW�,QGH[�IRU�6\ULD�KDV�IDOOHQ������SHUFHQW�IURP�pre-crisis levels, returning it to 1993 levels and effectively erasing two decades of progress.42 The number of displaced persons is expected to rise to an estimated 6.8 million internally displaced persons (IDPs) and 3.45 million residing in foreign countries—namely Turkey, Lebanon, and Jordan—by the end of 2013, making it DPRQJ�WKH�PRVW�JHRJUDSKLFDOO\�GLVUXSWLYH�FRQÁLFWV�LQ�PRGHUQ�KLVWRU\�43

Resettling these persons will require an enormous effort in the aftermath of WKH�FRQÁLFW��IRU�ZKLFK�WKHUH�LV�FXUUHQWO\�LQVXIÀFLHQW�LQWHUQDWLRQDO�DVVLVWDQFH�commitments or agency capacity. An estimated 4 million IDPs have been absorbed in host areas,44�GHPRQVWUDWLQJ�D�GHJUHH�RI�FRQWLQXHG�VRFLDO�VROLGDULW\��+RZHYHU��WKHUH�DUH�LQGLFDWLRQV�WKDW�WKLV�VROLGDULW\�LV�RQ�WKH�GHFOLQH�DV�WKH�FRQÁLFW�FRQWLQXHV��raising concerns about the future reintegration of the growing portion of the population that is being displaced.45, 46

%HIRUH�WKH�ZDU�WKH�81'3�HVWLPDWHG�WKDW������SHUFHQW�RI�6\ULDQV�OLYHG�EHORZ�WKH�upper poverty line, while 12 percent lived in extreme poverty.47 It is estimated

42� 6\ULDQ�$UDE�5HSXEOLF��¶5HYLVHG�6\ULDQ�+XPDQLWDULDQ�$VVLVWDQFH�5HVSRQVH�3ODQ��6+$53��January – December 2013’, June 7, 2013, Syrian Arab Republic (2013).43� 8QLWHG�1DWLRQV�+LJK�&RPPLVVLRQHU�IRU�5HIXJHHV��¶6WRULHV�IURP�6\ULDQ�5HIXJHHV·��8QLWHG�1DWLRQV�+LJK�&RPPLVVLRQHU�IRU�5HIXJHHV��������44� ,ELG��3HUVRQDO�&RUUHVSRQGHQFH�ZLWK�D�PHPEHU�RI�WKH�8QLWHG�1DWLRQV�45� 6\ULDQ�$UDE�5HSXEOLF��¶5HYLVHG�6\ULDQ�+XPDQLWDULDQ�$VVLVWDQFH�5HVSRQVH�3ODQ��6+$53��January – December 2013’, op. cit.46 Ibid.47 Abdel-Gadir et. al.(2011), op. cit.

“The Human Development Index for Syria has fallen �����XMZKMV\�NZWU�

pre-crisis levels, returning it to 1993

levels and effectively erasing two decades

WN�XZWOZM[[�

“

14

that by the end of 2012, 3.1 million more Syrians will have fallen below the upper poverty line of $4 per day, and 1.5 million additional Syrians will have entered extreme poverty of less than $2 per day.48 Other social indicators are just as harrowing: an estimated 1.2 million homes and 3000 schools have been destroyed,49 and approximately 55 percent of hospitals have been damaged, with nearly one-third completely destroyed.50 According to some reports, by mid-June 2013, the city of Aleppo had a total of only three surgeons.51

$FURVV�WKH�FRXQWU\��IRRG�VHFXULW\�KDV�EHFRPH�D�PDMRU�LVVXH��8QLWHG�1DWLRQV�estimates cite a 97 percent drop in imports,52 and a roughly 20 percent decrease in areas cultivated with wheat and barley. Shelter and non-food items have become a large concern for aid donors and actors: The regime only formally recognizes 4 percent of IDPs living in collective shelters. All of the 6.8 million expected IDPs are anticipated to require assistance by year’s end, however only 3.67 million are FXUUHQWO\�EHLQJ�WDUJHWHG��$Q�H[SHFWHG������PLOOLRQ�ZLOO�UHTXLUH�FRQÁLFW�UHODWHG�health care in the latter six months of 2013, while more than 10 million Syrians will require water sanitation and hygiene interventions due to damage to the potable water, waste water, and distribution systems, as well as the lack of access to materials needed for maintenance of such systems.

$W�SUHVHQW�WKH�PDLQ�LQWHUQDWLRQDO�ERG\�DVVHVVLQJ�WKH�GDPDJH�IURP�WKH�FRQÁLFW�LV�WKH�8QLWHG�1DWLRQV�(FRQRPLF�DQG�6RFLDO�&RPPLVVLRQ�IRU�:HVWHUQ�$VLD��(6&:$���responsible for drafting the ‘National Agenda for the Future of Syria. By mid-June 2013 ESCWA estimated that a quarter of all private residences would have to be rebuilt at a cost of some $40 billion. At the time of the assessment, major infrastructure such as roads, ports, and power plants were did not constitute a PDMRU�IDFWRU�LQ�UHFRQVWUXFWLRQ�ÀJXUHV��DV�WKH�PDMRULW\�UHPDLQHG�ODUJHO\�LQWDFW�53 this cost calculation would likely be subject to change in the case of foreign military intervention. Without major further structural devastation, total physical reconstruction costs were estimated at $80 billion based on an assumed end to hostilities by December 2014.

48 Nasser et. al., op. cit.49 Surk, op. cit. 50� :RUOG�+HDOWK�2UJDQL]DWLRQ���������RS��FLW��51� 3HUVRQDO�&RUUHVSRQGHQFH�ZLWK�D�PHPEHU�RI�WKH�8QLWHG�1DWLRQV�52 Syrian Arab Republic, ‘Commission of Development and Exports Promotion Report’, Syrian Arab Republic (2013).53 Ibid.

“Across the country, food security has become a major

Q[[]M��=VQ\ML�6I\QWV[�estimates cite a 97 percent drop

in imports, and a roughly 20 percent

decrease in areas cultivated with

_PMI\�IVL�JIZTMa�

“

15

Aid Overview

Over the last several decades the Syrian government has avoided taking on large volumes of external aid comparative to its relative level of development

[See Figure 7]. The country’s total overseas development aid (ODA) is miniscule: in 2011, total development aid came to just $340 million, or just below 8 percent of the $4.3 billion provided to the broader Middle East54 [See Figure 7, 8]. The majority of committed ODA to Syria went to economic and social sectors, VSHFLÀFDOO\�HGXFDWLRQ��ZLWK�OLPLWHG�RIÀFLDO�KXPDQLWDULDQ�DLG�LQ�������$LG�IURP�PXOWLODWHUDO�LQVWLWXWLRQV�ZDV�SUHGRPLQDWHO\�FRQVWUDLQHG�WR�DLG�IURP�8QLWHG�Nations agencies and Arab states [See Figure 8], but even multilateral aid was comparatively low in relation to other Arab nations: the amount of aid from the World Bank was less than $900,000 provided to two projects.55

Rather than take on foreign aid or debt to fund development projects, Syria drew on the international donor community through subsidized loans exempt from FODVVLÀFDWLRQ�DV�2'$³VXFK�DV�WKRVH�IURP�WKH�(XURSHDQ�,QYHVWPHQW�%DQN³ZKHQ�WKH�FRXQWU\�QHHGHG�WR�ÀQDQFH�EDVLF�LQIUDVWUXFWXUH�VXFK�DV�SRZHU�SODQWV�DQG�SRUWV�56 $OWKRXJK�WKH�JRYHUQPHQW�ZDV�DOZD\V�QRQVSHFLÀF�LQ�MXVWLI\LQJ�LWV�IXQGLQJ�VWUDWHJ\��analysts have proposed several reasons for this aversion to aid. One theory posits that the Syrian government preferred to use its own private sector to build the assets it would eventually own,57 while others have suggested that the state simply did not have the administrative capacity to take on the procedures associated with international aid.58 This systemic aversion to foreign aid is evident in the country’s aid-per-capita, which in 2011 averaged $11.6,59 compared to the Arab World average of $35 per person.60

54 Organisation for Economic Co-operation and Development Development Assistance Com-mittee, ‘Development at a Glance-Statistics by Region-Asia’, op. cit. 55 World Bank, ‘Mapping for Results - Syria, Middle East and North Africa’, World Bank (2013).56� (XURSHDQ�8QLRQ��¶6\ULD��(,%�(85����PLOOLRQ�ORDQ�IRU�WKH�SRUW�RI�7DUWRXV·��0D\�����������(XURSHDQ�8QLRQ��������57 Personal correspondence with a member of the international donor community. 58 Personal correspondence with a Syrian economist.59 World Bank, World Development Indicators, World Bank (2011). 60 World Bank, Data: Aid Effectivness, World Bank (2013).

16

)LJXUH����+LVWRULFDO�$LG�WR�6\ULD�VLQFH�����

USD billion, 2010 prices and exchange rates, 3-year average net ODA receiptsSource: OECD – DAC

Figure 8:

The primary government body responsible for the dissemination of aid in Syria is the Planning and International Cooperation Commission, or PICC, better known by its former name of State Planning Commission (SPC). The SPC operates under WKH�DXVSLFHV�RI�WKH�3ULPH�0LQLVWHU·V�2IÀFH��DQG�LV�UHVSRQVLEOH�IRU�IRUPXODWLQJ�DLG��development, and socioeconomic strategy, as well as serving as the main point of communication between international donors and the government. The SPC is separated into four directorates, each of which handles coordination with different geographical areas: the Arab Countries and Funds Directorate, the Asia, America and Africa Directorate, the International Organizations Directorate, and the Europe Directorate. These directorates are responsible for implementing projects on a local

17

OHYHO�ZLWK�PRQLWRULQJ�DQG�HYDOXDWLRQ�IURP�WKH�FHQWUDO�'DPDVFXV�RIÀFH�61

:LWK�WKH�RQVHW�RI�FRQÁLFW��WKH�DLG�HQYLURQPHQW�LQ�6\ULD�KDV�JURZQ�VLJQLÀFDQWO\�PRUH�FRPSOH[��DV�ÀQDQFLQJ�KDV�ELIXUFDWHG�EHWZHHQ�WUDGLWLRQDO�6\ULDQ�VWDWH�GLVEXUVHPHQW�PHFKDQLVPV�DQG�LQVWLWXWLRQV�DQG�VXSSRUW�IRU�WKRVH�DIÀOLDWHG�ZLWK�WKH�anti-Assad movement. The introduction of international sanctions on the Syrian UHJLPH�DQG�DVVRFLDWHG�HOHPHQWV�E\�WKH�8QLWHG�6WDWHV��WKH�(XURSHDQ�8QLRQ��DQG�the Arab League has resulted in the halt of direct aid to the central government in Damascus.62, 63, 64

0HDQZKLOH��PXOWLODWHUDO�KXPDQLWDULDQ�DLG�LV�FRRUGLQDWHG�E\�WKH�8QLWHG�1DWLRQV��the Syrian government, and international NGOs licensed by Damascus.65 In 2013 DORQH��WKH�8QLWHG�1DWLRQV�DVNHG�IRU�D������ELOOLRQ�IRU�UHVSRQVH�WR�WKH�FULVLV��IRU�HYHU\WKLQJ�IURP�VWDELOL]DWLRQ�WR�LPPHGLDWH�KXPDQLWDULDQ�GLVEXUVHPHQWV�66 by the end of June 2013 only 35 percent of that request had been funded.67�8QLWHG�1DWLRQV�DVVLVWDQFH�LV�EHLQJ�SURYLGHG�GLUHFWO\�WR�WKH�SRSXODWLRQ�LQVLGH�6\ULD�WKURXJK�81�OHG�convoys, by May 2013, $685 million had been directed through Syria with a total RI���������EHQHÀFLDULHV�UHDFKHG��7KLV�WUDGLWLRQDO�DVVLVWDQFH�KDV�EHHQ�VXSSOHPHQWHG�by non-lethal aid to anti-Assad forces, humanitarian aid to displaced and affected populations, and capacity building assistance to liberated areas.

61 Planning and International Cooperation Commission, ‘Strategy Formulation’, Government of Syria (2013).62� -HUHP\�6KDUS��&KULVWRSKHU�%ODQFKDUG��¶$UPHG�&RQÁLFW�LQ�6\ULD��8�6��DQG�,QWHUQDWLRQDO�Response’, Congressional Research Service, June 14, 2013, (2013).63� 2IÀFLDO�-RXUQDO�RI�WKH�(XURSHDQ�8QLRQ��¶&281&,/�'(&,6,21����������&)63·��1RYHP-ber 29, 2012 (2012). 64� 2IÀFLDO�-RXUQDO�RI�WKH�(XURSHDQ�8QLRQ��¶1RWLFH�IRU�WKH�DWWHQWLRQ�RI�WKH�SHUVRQV�WR�ZKLFK�restrictive measures provided for in Council Decision 2011/273/CFSP, as implemented by Council ,PSOHPHQWLQJ�'HFLVLRQ����������&)63��DQG�LQ�&RXQFLO�5HJXODWLRQ��(8��1R�����������DV�LPSOHPHQWHG�E\�&RXQFLO�,PSOHPHQWLQJ�5HJXODWLRQ��(8��1R�����������FRQFHUQLQJ�UHVWULFWLYH�PHDVXUHV�DJDLQVW�6\ULD�DSSO\·��1RYHPEHU������������2IÀFLDO�-RXUQDO�RI�WKH�(XURSHDQ�8QLRQ��������65� 6\ULDQ�$UDE�5HSXEOLF��¶5HYLVHG�6\ULDQ�+XPDQLWDULDQ�$VVLVWDQFH�5HVSRQVH�3ODQ��6+$53��January – December 2013’, op. cit. 66� (XURSHDQ�&RPPLVVLRQ��¶6\ULD�&ULVLV�(&+2�)DFWVKHHW·��-XQH�����������(XURSHDQ�&RPPLV-sion (2013). 67 Ibid.

18

Figure 9:

%LODWHUDO�DLG�IURP�:HVWHUQ�DQG�QRQ�*XOI�$UDE�JRYHUQPHQWV�KDV�ÁRZHG�IUHHO\�WR�the opposition and various NGOs working in Syria. In mid-June 2013, $63 million in nonlethal aid was donated to fund opposition local councils, perhaps the most ¶RIÀFLDO·�GH�IDFWR�SURYLGHUV�RI�SXEOLF�VHUYLFHV�LQ�UHEHO�FRQWUROOHG�DUHDV��+RZHYHU��DW�ODVW�UHYLHZ��YLDELOLW\�GHÀFLWV�KDG�OHG�WR�RQO\����PLOOLRQ�RI�WKDW�EHLQJ�GHSOR\HG�directly to local councils.68

The majority funds received for non-lethal operations in rebel-held areas have FRPH�IURP�*XOI�$UDE�VWDWHV��SULPDULO\�4DWDU�DQG�6DXGL�$UDELD�69 At the time of WKLV�ZULWLQJ��4DWDU�KDG�SOHGJHG�����PLOOLRQ�LQ�VXSSRUW�RI�WKH�1DWLRQDO�&RDOLWLRQ�of Syrian Revolutionary and Opposition Forces, or itilaf, bodies responsible for DGPLQLVWHULQJ�DLG�WR�WKH�UHEHO�KHOG�DUHDV��KRZHYHU�RQO\�����PLOOLRQ�KDG�EHHQ�disbursed.70 The geopolitical interests of donors complicate this funding allocation: SROLWLFDO�REVHUYHUV�VXJJHVW�WKDW�ERWK�4DWDU�DQG�6DXGL�$UDELD�DUH�HQJDJHG�LQ�D�struggle over control of the opposition.71

The anti-Assad opposition has little direct oversight of the aid provided in its name from countries and persons not aligned with the government in Damascus. The vast majority such of non-lethal aid is instead provided to international, regional, and local non-governmental organizations working to provide relief and assistance, rather than directly to the itilaf. According to some reports, as much as $100 million of Saudi in-kind contributions have been disbursed via local NGOs, resulting a great deal of overlap among funding priorities and destinations.72 The majority of aid from opposition-aligned forces has been directed to the north of the country, concentrated in areas along the border with Turkey. Certain data suggests WKDW�WKH�JRYHUQRUDWHV�RI�$OHSSR�DQG�,GOLE�KDYH�EHQHÀWHG�GLVSURSRUWLRQDWHO\��

68 Personal correspondence with a member of the Syrian Opposition.69 Ibid.70 Ibid.71� 0DULDP�.DURXQ\��¶6DXGL�(GJHV�4DWDU�WR�&RQWURO�6\ULDQ�5HEHO�6XSSRUW·��5HXWHUV��0D\�����2013 (2013).72 Ibid.

“Bilateral aid from Western and

non-Gulf Arab governments has ÆW_ML�NZMMTa�\W�

the opposition IVL�^IZQW][�6/7[�

_WZSQVO�QV�;aZQI��1V�mid-June 2013, $63

million in nonlethal aid was donated to

fund opposition local councils, perhaps \PM�UW[\�»WNÅKQIT¼�

de facto providers of public services

in rebel-controlled IZMI[�

“

19

perhaps in part to their greater concentration of non-governmental organizations active in their borders73 [See Figure 10].

Figure 10:

Source: Assessment Working Group for Northern Syria

Further evidence of increased aid fragmentation can be seen in the distribution of WKH�WZR�ODUJHVW�GRQRUV��WKH�8QLWHG�6WDWHV�DQG�(XURSHDQ�&RPPLVVLRQ�>6HH�ÀJXUH@��$V�RI�HDUO\�-XO\�������WKH�8QLWHG�6WDWHV�KDG�SURYLGHG�PRUH�WKDQ������PLOOLRQ�WR�address the humanitarian situation in Syria,74 of which $128 million had gone to Syria, while the rest went to neighbouring countries.75�:LWKLQ�6\ULD��WKH�8QLWHG�States relies on various NGOs and/or ‘implementing partners’ to disburse direct DLG��UDWKHU�WKDQ�ZRUNLQJ�WKURXJK�UHOHYDQW�8QLWHG�1DWLRQV�DJHQFLHV��WKH�LWLODI��RU�WKH�central government [See Figure 10].

)XQGLQJ�IURP�(XURSHDQ�QDWLRQV�LV�VLPLODUO\�IUDJPHQWHG��7KH�(XURSHDQ�8QLRQ�provides aid through its European Neighbourhood Partnership Instrument, a programme that otherwise handles national administrative reform, as well as other SURJUDPPHV�VXFK�DV�LWV�7HPSXV�HGXFDWLRQ�UHIRUP�SURJUDP�7KH�(�&��ÀQDQFHV�ORFDO�NGOs through its Non-State Actors and Local Authorities instrument, as well as WKH�(XURSHDQ�,QVWUXPHQW�IRU�'HPRFUDF\�DQG�+XPDQ�5LJKWV�76

73 Assessment Working Group for Northern Syria, ‘Joint Rapid Assessment of Northern Syria II—Final Report’, May 22, 2013, Assessment Working Group for Northern Syria. 74� 8QLWHG�6WDWHV�$JHQF\�IRU�,QWHUQDWLRQDO�'HYHORSPHQW��¶6\ULD�²�&RPSOH[�(PHUJHQF\��)DFW�6KHHW������)LVFDO�<HDU��)<������·��-XO\����������8QLWHG�6WDWHV�$JHQF\�IRU�,QWHUQDWLRQDO�'HYHORSPHQW�(2013).75� 7KH�:KLWH�+RXVH��¶)$&7�6+((7��3UHVLGHQW�2EDPD�,QFUHDVHV�+XPDQLWDULDQ�$VVLVWDQFH�WR�6\ULDQV·��-XQH�����������7KH�:KLWH�+RXVH��������76 European Commission , ‘Development and Cooperation – Europe Aid – Syria’, European Commission (2013).

“As of early July ������\PM�=VQ\ML�

States had provided more than $814

million to address the humanitarian

situation in Syria, of which $128 million

had gone to Syria, while the rest went

to neighbouring KW]V\ZQM[�

“

20

Figure 11:

Source: USAID.

:KLOH�WRWDO�ÀJXUHV�IRU�ELODWHUDO��QRQ�OHWKDO�DLG�WR�WKH�6\ULDQ�JRYHUQPHQW�VLQFH�WKH�VWDUW�RI�WKH�FRQÁLFW�DUH�QRW�DYDLODEOH��WKH�$VVDG�UHJLPH�FRQWLQXHV�WR�UHFHLYH�assistance from various sources. Iran has extended the central government at least $5 billion in credit facilities, for activates ranging from the purchase essential goods such as petroleum77 to supporting the Syrian currency.78 The government DOVR�VWLOO�UHFHLYHV�DLG�WKURXJK�WKH�8QLWHG�1DWLRQV��ZKLFK�LQ�WXUQ�LV�IXQGHG�E\�PDQ\�RI�WKH�VWDWHV�WKDW�RSSRVH�WKH�UHJLPH���8QGHU�WKH�8�1�·V�KXPDQLWDULDQ�UHVSRQVH�SODQ��WKH�6\ULDQ�JRYHUQPHQW�LV�D�NH\�DFWRU��DQG�WKH�8QLWHG�1DWLRQV�VXSSRUWV�WKH�government in the rehabilitation and reconstruction of infrastructure and public VHUYLFHV�GDPDJHG�DV�D�UHVXOW�RI�WKH�FRQÁLFW�79

Perhaps unexpectedly, the regime continues to pay civil servants working in opposition-held territory. These civil servants continue to provide many of the same civil services80�DV�EHIRUH�WKH�RQVHW�RI�FRQÁLFW��RIWHQ�WKURXJK�RSSRVLWLRQ�council structures.81 Civil servants in rebel-controlled areas, including those working with opposition councils, were slated to receive an increase in base wages DV�RI�-XO\����������LQ�RUGHU�WR�DFFRPPRGDWH�IRU�FRQÁLFW�LQGXFHG�LQÁDWLRQDU\�pressures.82

77 Agence France-Presse, ‘Iran Offers Syria $4 Bn Credit Line’, Agence France-Presse, May 27, 2013 (2013).78 Donna Abu-Nasr Alaa Shahine, ‘Syria Counts on $1 Billion Iran Fund to Support Pound’, Bloomberg, June 18, 2013 (2013).79 Syrian Arab Republic, op. cit. 80� 3HUVRQDO�FRUUHVSRQGHQFH�ZLWK�PHPEHUV�RI�WKH�8QLWHG�1DWLRQV�DQG�D�PHPEHU�RI�WKH�6\ULDQ�Opposition.81� $GDP�%DF]NR��*LOOHV�'RUURQVRUR��DQG�$UWKXU�4XHVQD\��¶%XLOGLQJ�D�6\ULDQ�6WDWH�LQ�D�7LPH�RI�Civil War’, Carnegie Endowment for International Peace (2013).82 Syrian Arab News Agency, ‘President Al-Assad Decrees Increasing Monthly Salaries of the State’s Civil, Military Employees and the Retired ‘, Syrian Arab News Agency, June 22, 2013 (2013).

“In addition to formal state institutions and

nascent opposition governance

structures, the KWVÆQK\�PI[�

witnessed the emergence of

parallel institutions separate from the

main opposition or the regime,

including judicial, humanitarian, and

security and policing [MZ^QKM[�

“

21

In addition to formal state institutions and nascent opposition governance VWUXFWXUHV��WKH�FRQÁLFW�KDV�ZLWQHVVHG�WKH�HPHUJHQFH�RI�SDUDOOHO�LQVWLWXWLRQV�VHSDUDWH�from the main opposition or the regime, including judicial, humanitarian, and security and policing services. Chief among these include the Islamic extremist ÀJKWLQJ�JURXS��-DEKDW�$O�1XVUD��-$1���DQG�WKH�ORFDO�6\ULDQ�DUP�RI�WKH�7XUNLVK�Kurdistan Workers’ Party (PKK) Both are reported to have established parallel administrations in areas under their control, with international support and ÀQDQFLQJ�IURP�WKH�*XOI�$UDE�VWDWHV�DQG�VXSSRUWHUV�LQ�7XUNH\��UHVSHFWLYHO\�

Opposition Aid Dynamics

In areas held by the opposition, international assistance is the responsibility of the $VVLVWDQFH�&RRUGLQDWLRQ�8QLW��$&8���KHDGTXDUWHUHG�LQ�*D]LDQWHS��7XUNH\��7KH�

$&8·V����RGG�7XUNH\�EDVHG�VWDII�DQG����WR�����VWDII�RQ�WKH�JURXQG�LQ�6\ULD�DUH�responsible for the coordination of multi-donor aid and local needs assessments.83 :LWKLQ�6\ULD��WKH�$&8�LV�LQWHQGHG�WR�LQWHUIDFH�ZLWK�WKH�/RFDO�$VVLVWDQFH�&RRUGLQDWLRQ�8QLW��/$&8���DQ�RUJDQL]DWLRQ�WDVNHG�ZLWK�SURYLGLQJ�GHYHORSPHQW�and governance oversight for local area councils, and setting standard practices in reporting and dissemination among local civil- and district-level councils in rebel-controlled areas.

'HVSLWH�WKLV�PLVVLRQ��WKH�/$&8�KDV�KDG�OLPLWHG�VXFFHVV�LQ�LWV�PLVVLRQ��DQG�WKH�councils as a whole are characterized by disparate functions, fractured service delivery, and occasionally competing authority.84�7KH�HIÀFDF\�RI�WKH�$&8�DQG�/$&8�KDV�VXIIHUHG�IURP�D�ODFN�RI�PDQGDWH�RU�HQIRUFHPHQW�PHFKDQLVP�LQ�WKHLU�dealings with the international and Syrian community.85 The lack of governance centralization and service delivery capacity in rebel-held areas has led to an administrative ‘chicken and egg’ scenario: the opposition contends that it is not receiving the necessary funds to increase its capacity and act as the legitimate provider of public services, while the international donor community declines to allocate aid in the absence of local council administrative, monitoring and evaluation capacity.86

:LWK�FRXQFLO�FRRUGLQDWLRQ�DQG�HIÀFDF\�KLJKO\�LQFRQVLVWHQW��PXFK�RI�WKH�IRUHLJQ�assistance funnelled to opposition areas is disseminated by local and international NGOs—typically those with close relationships to the donor countries—and sometimes, but not always, in coordination with local councils.87

This ‘centralized localization’ has resulted in unintended negative consequences and complications on the ground: it has furthered fragmentation of local aid dissemination and, through bypassing local institutions, contributed to the de-legitimization of the work of local councils. The establishment of parallel disbursement channels has duplicated costs and overheads,88 exacerbated by donor

83 Personal correspondence with a member of the Syrian Opposition. 84 Ibid.85 Ibid.86 Ibid.87 Ibid.88 Ibid.

“This ‘centralized localization’

has resulted in unintended negative

consequences and complications on the ground:

it has furthered fragmentation

of local aid dissemination and, through bypassing local institutions, contributed to the de-legitimization

of the work of local KW]VKQT[�

“

22

reliance on reliance on their national NGOs, which have much higher operating costs than Syrian institutions and local councils.89 These arrangements have facilitated a precedent of informal public service delivery, increasing the local population’s reliance on the international donor community, NGOs, and other non-state entities for basic service delivery—a precedent that has historically proven GLIÀFXOW�WR�WUDQVLWLRQ�DZD\�IROORZLQJ�WKH�HQG�RI�PDMRU�KRVWLOLWLHV��

As assistance distribution mechanisms have become more complex, and service provision structures have broken down, the country has witnessed the emergence of an informal economy and black markets for basic goods. According to data from WKH�8�.�·V�6WDELOL]DWLRQ�8QLW��WKH�SURSRUWLRQ�RI�WKH�6\ULDQ�ZRUNIRUFH�LQYROYHG�LQ�informal activities rose from 30 percent to around 80 percent between 2011 and 2012. Driven by a combination of necessity and opportunism, these black markets differ in size and character, depending on the presence of central government services, local council functionality, and militia or NGO service provision.90 As these black market activities increase in scope and popular legitimacy, it will be LQFUHDVLQJO\�FRPSOH[�WR�EULQJ�WKHP�EDFN�LQWR�WKH�IROG�RI�DQ\�RIÀFLDO�SXEOLF�VHUYLFH�provision in the post war period.91

Recommendations

Introduction

TKH�6\ULDQ�FRQÁLFW�LV�SHUKDSV�WKH�PRVW�JHRSROLWLFDOO\�FKDUJHG�FLYLO�FRQÁLFW�of the post-Cold War era, and as such, poses inherent complexities for the

SRVW�FRQÁLFW�SHULRG��0RUHRYHU��WKH�LQWHUQDO�G\QDPLFV�RI�WKH�FRQÁLFW³LQFUHDVLQJ�sectarian strife, growing numbers of refugees and IDPs, a breakdown of social and SXEOLF�VHUYLFHV�LQ�PDQ\�DUHDV³ZLOO�PDNH�DGGUHVVLQJ�WKH�SRVW�FRQÁLFW�SHULRG�HYHQ�PRUH�FKDOOHQJLQJ��5HJDUGOHVV�RI�KRZ�WKH�FRQÁLFW�HQGV��WKHUH�DUH�FOHDU�VWHSV�WKDW�can be taken to plan for reconstruction, give guidance to the international donor community, and institute structures necessary for a functioning aid management system. This anticipatory planning will be crucial in order to transition the donor UHVSRQVH�IURP�D�VWDWH�RI�EDVLF�SRVW�FRQÁLFW�HPHUJHQF\�WR�D�ORQJ�WHUP�VXVWDLQDEOH�development agenda that is state-led, participatory, and above all equitable and democratic.

6\ULD·V�SRVW�FRQÁLFW�GHYHORSPHQW�FDQQRW�EH�DSSURDFKHG�DV�D�OLQHDU�SURFHVV�RU�EH�dictated by compartmentalization. Rigid phasing into humanitarian, emergency, GHYHORSPHQW��WUDQVLWLRQ��RU�UHFRYHU\�LQ�SRVW�FRQÁLFW�VLWXDWLRQV�KDV�FRPH�WR�EH�VHHQ�by development professionals as counterproductive92 at best, and as a potential contributing factor to a relapse of hostilities.93

6\ULD�UHTXLUHV�D�PRUH�ÁH[LEOH�DQG�DGDSWLYH�DSSURDFK�WR�DLG��DV�XQGHUSLQQHG�

89 Ibid.90 Ibid.91 Briscoe et. al., op. cit. 92 Organisation for Economic Co-operation and Development (2010), ‘Transition Financing: Building a Better Response’, op. cit.93 Schiavo-Campo, op. cit.

“Syria requires a UWZM�ÆM`QJTM�IVL�

adaptive approach to aid, as underpinned

by the differing levels of need across the

KW]V\Za�

“

23

by the differing levels of need across the country. For instance, much of the public infrastructure in Damascus and the coastal areas is as yet relatively XQKDUPHG��ZKLOH�WKH�FLWLHV�RI�+RPV�DQG�$OHSSR��DQG�RWKHU�DUHDV�LQ�WKH�1RUWK��have experienced extensive devastation: as such, differing regions will require GLIIHUHQW�DLG�LQWHUYHQWLRQV��+RZHYHU��WKLV�QHFHVVDU\�YDULDWLRQ�LQ�UHGHYHORSPHQW�investment will carry the risk of increased regional development disparities—a core complaint of the original protests. There are lessons to be learned from the case of neighbouring Lebanon, where unequal redevelopment exacerbated existing inequity and furthered economic dependence, creating conditions that continue to contribute to instability today.94

,Q�SRVW�FRQÁLFW�VLWXDWLRQV�WKHUH�ZLOO�DOZD\V�EH�D�QDWXUDO�LQFOLQDWLRQ�WR�SURGXFH�visible results, particularly in areas where basic infrastructure still supports aid disbursement, such as urban centres, and it is a truism that aid interventions only produce outcomes in areas that are able to absorb them.95 But in order to stave off regional disparities, and forestall the creation of geographically privileged ‘aid GDUOLQJV·��DVVLVWDQFH�PXVW�EH�GLUHFWHG�WR�WKH�PRVW�DIIHFWHG�DUHDV³VSHFLÀFDOO\�WKRVH�that may not be ‘easy’ to access from a logistical or political perspective. New central and local government structures [See recommendations under ‘Central and Local’] must demonstrate mechanisms that monitor assistance and identify needs DQG�LQWHUYHQWLRQV�LQ�VSHFLÀF�DUHDV��7KHVH�VWUXFWXUHV�PXVW�DOVR�GHPRQVWUDWH�WKHLU�ability to put assistance to equitable and effective use if they are to prove more effective than potential ‘spoilers’ such as JAN or the PKK, and/or bring them into the fold of the national reconstruction effort.

Timing and Effectiveness

While aid activities should not be overly phased, the application of post-FRQÁLFW�DLG�FDQ�DQG�VKRXOG�EH�WLPHERXQG�WR�LQVWLO�D�VHQVH�WKDW�DLG�LV�QHLWKHU�

LQÀQLWH�QRU�PHDQW�WR�UHSODFH�WKH�UROH�RI�WKH�VWDWH��2QH�QHHG�QRW�YHQWXUH�IDU�IURP�6\ULD�WR�ÀQG�H[DPSOHV�RI�KRZ�DLG�GHSHQGHQF\�FDQ�KDYH�QHJDWLYH�UDPLÀFDWLRQV�IRU�VWDWH�GHYHORSPHQW��LQ�QHLJKERXULQJ�/HEDQRQ��WKH�8QLWHG�1DWLRQV�'HYHORSPHQW�Programme continues to administer public services around the country more than two decades after the end of the civil war.96�:LWK�WKH�81'3�DW�WKH�HIIHFWLYH�KHOPV�of public institutions, Lebanese ministries are often unable to make interventions without prior aid commitment.97 In order to prevent the replication of Lebanese conditions in Syria, a timeline for major interventions should involve a realistic yet bounded approach that provides a window for the state’s capacity to be built rather than a door for unending assistance dependency.

*LYHQ�WKH�VFRSH�DQG�VFDOH�RI�WKH�6\ULDQ�FRQÁLFW��WKH�SRVW�FRQÁLFW�UHFRQVWUXFWLRQ�ZLOO�UHTXLUH�D�VLJQLÀFDQW�LQYHVWPHQW�RI�WLPH�DQG�IXQGLQJ��$V�MXVW�DV�FULWLFDOO\��LW�will also require donor states and agencies to frankly acknowledge the scale of the challenge and the issues at stake, and to commit from the outset to a long-term

94� .DWKULQ�+|FNHO��¶%H\RQG�%HLUXW��:K\�5HFRQVWUXFWLRQ�LQ�/HEDQRQ�'LG�1RW�&RQWULEXWH�WR�State Making and Stability’, London School of Economics (2007).95� 3HUVRQDO�FRUUHVSRQGHQFH�ZLWK�D�PHPEHU�RI�WKH�8QLWHG�1DWLRQV��96� 6DPL�+DODEL��¶3URSSLQJ�XS�WKH�6WDWH·��([HFXWLYH�0DJD]LQH��������97 Ibid.

“While aid activities should not be

overly phased, the application of post-KWVÆQK\�IQL�KIV�IVL�

should be timebound to instil a sense that IQL�Q[�VMQ\PMZ�QVÅVQ\M�nor meant to replace \PM�ZWTM�WN�\PM�[\I\M�

“

24

engagement. Planning for this intervention should anticipate at least a decade of support, roughly divided into three overlapping and interrelated phases: Immediate Response and Recovery (~0-3 years), Development and Transition (D&T) (~3-7 years), Sustainability (~7-15 years).

In the initial phase, Immediate Response and Recovery (IRR), there will be an inverse relationship between donor interest and the capacity of the state to absorb and effectively deploy aid.98�,Q�D�SRVW�FRQÁLFW�VLWXDWLRQ�WKH�,55�SKDVH�LV�generally the period that offers the greatest opportunity to initiate new projects, as donor funds and resources are allocated and political will is strong.99�+RZHYHU��WKH�VXFFHVV�RI�VSHFLÀF�W\SHV�RI�LQLWLDWLYHV�ZLOO�GHSHQG�RQ�WKH�W\SH�RI�DLG�(peacebuilding, humanitarian, economic reform, etc.) that is being deployed. This period is also the most critical to establishing a framework to ensure the success of later phases: either high aid effectiveness sustained throughout the redevelopment phase, or an opportunity lost.

Because the capacity of a state to absorb aid is expected to be at its lowest while needs are highest, the IRR phase typically circumvents the structures of national governments and goes straight to non-governmental institutions or international agencies.100 Although Syria is likely to present similar circumstances, aid planners should make focused efforts to fund government takeover of basic service provision from the outset, with an emphasis on central administration and local provision, in order to lay the groundwork for later sustainability. Alongside the restoration of basic services, state capacity support, and physical reconstruction of civic infrastructure (such as schools and hospitals) the IRR must also be underpinned by activities that consolidate peace and political processes while brining spoilers into the fold of government [See recommendations under ‘Peace First’].

A well-executed IRR phase will lay the basis for a ‘second’ phase focused on Development and Transition phase (D&T), as well as the foundations for transitioning selected regions towards a ‘Sustainability’ phase. Although the D&T phase is the most complex of the three broad phases, it also offers the greatest potential success rate for infrastructure reconstruction and social, economic, and political reforms such as education, health, taxation, and social protection,101 as well as the greatest returns on aid assistance and economic growth.102 These interventions have the greatest probability of structural durability and success ����\HDUV�DIWHU�WKH�FRQFOXVLRQ�RI�FRQÁLFW�DQG�WKH�RQVHW�RI�EDVHOLQH�LQVWLWXWLRQDO�stability,103�DQG�ZKHQ�GHVLJQHG�ZLWK�¶VHOI�ÀQDQFLQJ�SURYLVLRQV�DQG�¶VXQVHWV·�IRU�foreign assistance.

The D&T phase should be followed by a Sustainability phase, in which foreign DVVLVWDQFH�LV�SKDVHG�RXW�LQ�IDYRU�RI�VHOI�ÀQDQFLQJ�SXEOLF�VHUYLFHV��7KLV�SKDVH�

98 Gupta, op. cit. 99 Schiavo-Campo, op. cit.100 Organisation for Economic Co-operation and Development (2010), ‘Transition Financing: Building a Better Response’, op. cit.101 Ibid.102� .ODXV�6FKPLGW�+HEEHO��/LQGD�.DOWDQL��,EUDKLP�$��(OEDGDZL��(OEDGDZL��¶3RVW�&RQÁLFW�$LG��Real Exchange Rate Adjustment, and Catch-up Growth’, World Bank (2007).103 Schiavo-Campo, op. cit.

“Although Syria is likely to

present similar circumstances, aid

planners should make focused efforts to fund government

takeover of basic service provision NZWU�\PM�W]\[M\�

“

25

is conditional: in order to be successful, the IRR and D&T phases must have successfully built enabling insistutional capacity and legitimacy that will allow the state to initiate an accountable service delivery and taxation exchange with its citizenry.104 Ten years into the transition, potential spoilers should have been incorporated into legitimate political discourse or otherwise rendered irrelevant by public interest [See recommendations under ‘Peace First‘].

Peace First

PHDFH�LQ�SRVW�FRQÁLFW�VLWXDWLRQV�LV�LQKHUHQWO\�IUDJLOH��7KLV�LV�WUXH�ERWK�LQ�WHUPV�of the role of potential political ‘spoilers’, as well as that of destabilizing,

fragile, and unequal reconstruction conditions: on average, countries emerging IURP�FLYLO�ZDU�FDUU\�D����SHUFHQW�ULVN�RI�VOLGLQJ�EDFN�LQWR�FRQÁLFW�105 Furthermore, FRXQWULHV�HPEDUNLQJ�RQ�WKH�SURFHVV�RI�WUDQVLWLRQ�IRUP�KLJK�OHYHOV�RI�FRQÁLFW�induced macroeconomic inequality have a 50 percent likelihood of relapsing into major hostilities before successfully achieving baseline services delivery and the restoration of formal sector employment.106 Such conditions often necessitate tradeoffs between the accommodation of potentially disruptive political and military actors and necessary measures to promote economic reform and distribution.107

Given the importance of peace to stabilization and reconstruction, redevelopment efforts must prioritize areas where there are overlaps between peacebuilding and state building—particularly in relation to potential ‘spoiler’ groups in northern Syria. This focus should encompass traditional peace process activities, such as the negotiations and signing of treaties, disarmament, demobilization, and reintegration �''5��DFWLYLWLHV��UHFRQFLOLDWLRQ��DQG�SROLWLFDO�VHWWOHPHQWV��LQVWLWXWLRQDO�HIIRUWV�VXFK�DV�FRQVWLWXWLRQDO�GUDIWLQJ��SDUOLDPHQW�IRUPDWLRQ��DQG�HOHFWLRQ�DGPLQLVWUDWLRQ��DQG�informal processes inherent in political negotiations, such as coalition building.108

Although an integrated approach is straightforward in theory, the associated processes of legitimizing peacebuilding will be complicated by ‘spoilers’ empowered by an increasingly fractured political landscape and deteriorated security environment. In the case of justice functions alone, Syria has witnessed deep fragmentation and competition for legitimacy. In opposition-held areas, local collectives are asserting authority over civil, criminal, and family affairs109 while serving as enforcement mechanisms for existing powerbrokers: in Aleppo, the RSSRVLWLRQ�DIÀOLDWHG�¶8QLWHG�&RXUW�RI�WKH�/HJDO�&RXQFLO·�LV�RIWHQ�LQ�FRQÁLFW�ZLWK�the ‘Al Bab’ authority supported by Jabhat al-Nusra. Peacebuilding assistance will need to carefully weigh the priority of peace against concessions to these new players, as well as any long-term integration into future governance structures.

104 Gupta, op. cit.105 Schiavo-Campo, op. cit.106 Castillo, op. cit.107� *UDFLDQD�'HO�&DVWLOOR��¶5HEXLOGLQJ�:DU�7RUQ�6WDWHV��7KH�&KDOOHQJHV�RI�3RVW�&RQÁLFW�(FR-QRPLF�5HFRQVWUXFWLRQ·��&ROXPELD�8QLYHUVLW\�3UHVV��������108 Alina Rocha Menocal, ‘State Building for Peace: A New Paradigm for International Engage-PHQW�LQ�3RVW�&RQÁLFW�)UDJLOH�6WDWHV"·��7KLUG�:RUOG�4XDUWHUO\��������109 Baczko, et. al., op.cit.

“Redevelopment efforts must

prioritize areas where there are

overlaps between peacebuilding and

[\I\M�J]QTLQVO�

“

26

Although international institutions, non-governmental organizations and donor assistance can decrease this risk of relapse,110 none are effective or sustainable substitutes for the development of indigenous state capacity and peacebuilding. (YLGHQFH�IURP�SULRU�FRQÁLFWV�KDV�GHPRQVWUDWHG�ZHDN�FRUUHODWLRQ�EHWZHHQ�FLYLO�VRFLHW\�HIIRUWV�DQG�VXFFHVVIXO�ORQJ�WHUP�FRQÁLFW�PLWLJDWLRQ�DQG�ODVWLQJ�SHDFH�111 ,QVWHDG��FULWLFDO�VWXGLHV�RI�SRVW�FRQÁLFW�HQYLURQPHQWV�VXJJHVW�WKDW�GXUDEOH�SHDFH�efforts are built through support for state institution building, with NGO and civil society efforts playing a supporting role.

Asset Recovery and Inclusion

TKH�6\ULDQ�FRQÁLFW�KDV�EHHQ�FKDUDFWHUL]HG�E\�VXGGHQ�DQG�XQSUHGLFWDEOH�FKDQJH��DV�VXFK��LW�ZRXOG�EH�GLIÀFXOW�WR�VHW�ULJLG�FULWHULD�IRU�WKH�LQFOXVLRQ�DQG�

H[FOXVLRQ�RI�YDULRXV�SRVW�FRQÁLFW�SROLWLFDO�DFWRUV�DW�WKLV�MXQFWXUH��3DVW�H[SHULHQFH�KDV�GHPRQVWUDWHG�WKDW�GHPRFUDWLF�SURFHVVHV�DORQH�DUH�RIWHQ�LQVXIÀFLHQW�WR�FUHDWLQJ�an environment of inclusion, or laying the groundwork for sustainable peace and equitable development: Although important to credibility, public participation in peacebuilding is not a panacea. Referendums and other forms of public SDUWLFLSDWLRQ��VXFK�DV�SXEOLF�FRQVXOWDWLRQV��PD\�EH�LQVXIÀFLHQW�IRU�GHYHORSLQJ�public legitimacy necessary to overcome divisive issues such as sectarianism. Even when public participation is incorporated in stabilization planning, cases such as *XDWDPDOD�GHPRQVWUDWH�WKDW�ÁDZV�LQ�DSSOLFDWLRQ�FDQ�FRQVROLGDWH�SRZHU�DPRQJ�elites while assuming an impermeable veneer of legitimacy.112

$Q�HVVHQWLDO�SRVW�FRQÁLFW�LVVXH�ZLOO�LQYROYH�WKH�UHGLVWULEXWLRQ�RI�SRZHU�DQG�private wealth away form former elites, particularly the ruling Assad family and WKHLU�DIÀOLDWHV�LQ�WKH�0DNKORXI��6DQTDU��6KDOLVK��1DKDV��$LGL��$WWDU��DQG�+DVKPR�families. Stolen asset recovery is more than the repatriation of critical funding for state reconstruction: it offers a procedural mechanism for redress to victims of the Assad regime, a challenge to political impunity, and a model for deterrence against future corruption.113 The ability of the state and international community WR�UHGLVWULEXWH�WKLV�ZHDOWK�DQG�SRZHU�ZLOO�EH�GHSHQGHQW�RQ�WKH�VWUXFWXUH�RI�D�ÀQDO�VHWWOHPHQW�WR�WKH�FRQÁLFW��DQG�UHODWHG�WR�XOWLPDWH�GHFLVLRQV�RQ�OHJDO�DFFRXQWDELOLW\�for members of the former regime and/or opposition groups.

7KH�FDVHV�RI�7XQLVLD�DQG�+DLWL�RIIHU�JXLGDQFH�IRU�WKH�UHDSSURSULDWLRQ��UHSDWULDWLRQ��and redistribution of state wealth currently in private hands, in Syria and abroad. In ERWK�+DLWL�XQGHU�-HDQ�&ODXGH�'XYDOLHU�DQG�7XQLVLD�XQGHU�=LQH�(O�$ELGLQH�%HQ�$OL��the ruling elite engaged in an extensive process of privatization and wealth capture. In Tunisia, the transitional government nationalized assets belonging to the ruling IDPLO\�DQG�LWV�EHQHÀFLDULHV��DQG�DSSRLQWHG�PDQDJHUV�IRU�FRPSDQLHV�DIÀOLDWHG�

110 Schiavo-Campo, op. cit.111 Thania Paffenholz, ‘Civil Society and Peace building: A Critical Assessment’, Lynne Rien-ner (2010).112 Alina Rocha Menocal, ‘Guatemala: power and change analysis’, The Netherlands Ministry of Foreign Affairs and Embassy in Guatemala (2008).113� 0DUN�9��9ODVLF��*UHJRU\�&RRSHU��¶%H\RQG�WKH�'XYDOLHU�/HJDF\��:KDW�1HZ�´$UDE�6SULQJµ�*RYHUQPHQWV�&DQ�/HDUQ�IURP�+DLWL�DQG�WKH�%HQHÀWV�RI�6WROHQ�$VVHW�5HFRYHU\·��1RUWKZHVWHUQ�-RXUQDO�RI�,QWHUQDWLRQDO�+XPDQ�5LJKWV��������

“An essential post-KWVÆQK\�Q[[]M�

will involve the redistribution of

power and private wealth away form

NWZUMZ�MTQ\M[�

“

27

with the former regime, pending public consultation on next steps.114�,Q�+DLWL��where wealth was tied less to market structures and corporate assets, and secreted RYHUVHDV�LQ�SULYDWH�DFFRXQWV��WKH�JRYHUQPHQW�WXUQHG�WR�WKH�8QLWHG�1DWLRQV�DQG�WKH�World Bank for legal assistance in freezing and repatriating stolen assets.115

The actions of these public caretakers must be transparent, their roles accountable to the public, and subject to expert oversight. Planning regarding the end state of liquid or structural assets must give consideration to the potential impact on SHDFHEXLOGLQJ�DFWLYLWLHV�DQG�GHVWDELOL]DWLRQ��KRZHYHU�QR�EDODQFLQJ�RXWFRPH�VKRXOG�preclude statebuilding or reinforce cronyism, corruption or the perpetuation of elite power structures.116 Effective redistribution of these assets will require both democratic and legal features, such as public participation, in order to guard against purely legal processes opaque to public interest or purely democratic processes that may be ineffective at countering dominant socio-political structures.

,Q�DUHDV�ZKHUH�VWDWH�DQG�SHDFHEXLOGLQJ�LQLWLDWLYHV�PD\�FRQÁLFW��WKH�SURFHVV�RI�determining guidelines for political inclusion and exclusion will need to be ¶LQFOXVLYH�HQRXJK·�WR�UHVWRUH�FRQÀGHQFH�LQ�LQVWLWXWLRQDO�UHIRUP��EXW�QRW�VR�LQFOXVLYH�as to reward those with proven history of war-time atrocities.117 The cases of Lebanon and Afghanistan provides a cautionary example of the perpetuation of FRQÁLFW�SRZHU�DQG�VRFLRHFRQRPLF�VWUXFWXUHV�LQ�SRVW�FRQÁLFW�JRYHUQDQFH��RUJDQLF�and essential wartime patronage systems can be used to weaken central state authority,118 and are easily subverted for cronyism and economic capture during peace,119 circumstances that would be expected to increase Syrian fragility.120 The institutionalized inequity and systems of privilege of the Lebanese confessional system also offers a warning against structural appeasement of potential ‘spoilers’121�LQ�GXUDEOH�JRYHUQDQFH�IUDPHZRUNV�WKDW�PD\�EH�GLIÀFXOW�WR�UHVWUXFWXUH�at a later point in time following retrenchment of interests.

6\ULD�RIIHUV�FHUWDLQ�XQLTXH�FRQFHUQV�UHJDUGLQJ�SRVW�FRQÁLFW�VHFXULW\��¶VSRLOHUV�·�and international interests that will complicate the peacebuilding process. The status of fringe groups with non-democratic ideologies such as JAN, those seeking autonomous rule such as the PKK, and remnants of the current regime – with its long history of repression and sectarian capture122 -- will need to be considered in the process of inclusion. In prioritizing peace, it will be also important to attempt to bring as many ‘spoilers’ into the fold of the political process as possible through a mixture of negotiations, democratic and procedural inclusion, as well as administrative decentralization.

114 Alexis Arieff, ‘Political Transition in Tunisia’, Congressional Research Service, June 18 2012.115� 9ODVLF��&RRSHU��RS��FLW�116 Papagianni, op. cit. 117� :RUOG�%DQN��¶:RUOG�'HYHORSPHQW�5HSRUW��&RQÁLFW��6HFXULW\��DQG�'HYHORSPHQW·��RS��FLW�118 Menocal (2011), op. cit. 119� +|FNHO��RS��FLW��120 Personal correspondence with a member of the international donor community. 121 Organisation for Economic Co-operation and Development, ‘The State’s Legitimacy in Fragile Situations’, Organisation for Economic Co-operation and Development (2010).122 Ivan Briscoe, Floor Janssen, Rosan Smits, ‘Stability and Economic Recovery after Assad: .H\�6WHSV�IRU�6\ULD·V�3RVW�&RQÁLFW�7UDQVLWLRQ·��&RQÁLFW�5HVHDUFK�8QLW��7KH�&OLQJHQGDHO�,QVWLWXWH�(2012).

“It will be also important to attempt

to bring as many ‘spoilers’ into the

fold of the political XZWKM[[�

“

28

Local populations that have undergone a process been militarization will need to undergo a process of disarmament, demobilization, and reintegration. Such groups should be included in the implementation of reconstruction operations in their areas, in order to provide opportunities for economic viability outside RI�RSSRUWXQLWLHV�SURYLGHG�E\�DUPHG�FRQÁLFW�123 Efforts should be made to tie reconstruction efforts to wider budgetary processes and decentralization, in order to reinforce local governance and agency, as well as loosen the structures associated with regime administrative control [See recommendations under ‘Central and Local’]. These efforts can assist in bringing spoilers into the political SURFHVV�WKURXJK�QHJRWLDWLRQV�RYHU�VSHFLÀF�EXGJHW�OLQH�LWHPV��VHFXULW\��DQG�service delivery.124 Decentralization of service delivery increases the legitimacy of local administration, while cementing the role of would-be ‘spoilers’ within state structures and constituencies, undermining their ability to act as subversive elements.125

Immediate Considerations for Social Cohesion

There are a number of actions that the international community should take in the immediate aftermath of major hostiles and following the signing of a peace

treaty. Chief among these is the status of the 3.45 million refugees and 6.8 million internally displaced persons, the creation of social cohesion support mechanisms, the lifting of sanctions, the suspension of import tax duties on materials necessary for reconstruction, and the restoration of the Syrian economy.

The resettlement and basic needs of refugees and IDPs need to be prioritised, with the affected populations should be kept as close to home as possible, in keeping with humanitarian relief best practices.126 State institutions should lead the administration of this resettlement relief to the greatest possible, depending on ZKDW�VWDWH�VWUXFWXUHV�H[LVW�DW�WKH�HQG�RI�WKH�FRQÁLFW��

,Q�UHVHWWOHPHQW�DV�HOVHZKHUH��EDVLF�SULQFLSOHV�RI�SRVW�FRQÁLFW�UHFRQVWUXFWLRQ�LQWHUYHQWLRQV�ZLOO�QHHG�WR�EH�UHFRQFLOHG�ZLWK�WKH�VHFWDULDQ�UHDOLWLHV�RI�FRQÁLFW��and the previous administration’s preferential treatment of certain constituencies. According those familiar with current humanitarian issues, much of Syria’s paramedical professionals and primary educators are from the Alawite sect DVVRFLDWHG�ZLWK�WKH�$VVDG�IDPLO\�127 in order to restore these basic capacities, such individuals will require protections from reprisal. In this regard, strengthening peace and social solidarity is a practical necessity for long-term stabilization.128

$FFRUGLQJO\��LPPHGLDWH�SRVW�FRQÁLFW�DVVLVWDQFH�VKRXOG�WDUJHW�SURJUDPPHV�WKDW�LQFUHDVH�VRFLDO�FRKHVLRQ�LQ�DGGLWLRQ�WR�EDVLF�KXPDQ�KXPDQLWDULDQ�QHHGV��H[DPSOHV�LQFOXGH�ORFDO�OHYHO�FRXUWV�IRU�WUDQVLWLRQDO�MXVWLFH��FRQÁLFW�UHVROXWLRQ�SURJUDPPHV�

123� 3HUVRQDO�FRUUHVSRQGHQFH�ZLWK�D�PHPEHU�RI�WKH�8QLWHG�1DWLRQV�124 Clare Lockhart Michael Carnahan, ‘Peacebuilding and Public Finance’, Lynne Rienner (2008).125 Ibid.126� $QGUHZ�5DWKPHOO��¶3ODQQLQJ�3RVW�&RQÁLFW�5HFRQVWUXFWLRQ�LQ�,UDT��:KDW�&DQ�:H�/HDUQ"·��International Affairs (2005).127� 3HUVRQDO�&RUUHVSRQGHQFH�ZLWK�D�PHPEHU�RI�WKH�8QLWHG�1DWLRQV��128 Castillo, op. cit.

29

addressing sectarianism, and development of school curricula to teach tolerance and non-discrimination. The international donor community should consider the establishment of a fund with dedicated resources for social cohesion programming, ZLWK�FOHDU�RYHUVLJKW�>6HH�UHFRPPHQGDWLRQV�XQGHU�¶$LG�0DQDJHPHQW·@��8QOLNH�longer-term capacity building, the immediate timeframes for effective social cohesion programming track closely with high donor interest associated with the SRVW�FRQÁLFW�,55�SHULRG�129�HOHYDWLQJ�WKH�FKDQFH�RI�PHDVXUDEOH�RXWFRPHV��+LJK�levels of social cohesion, particularly in a resettlement context, has been proven to IDFLOLWDWH�SHDFH�DQG�VWDWH�EXLOGLQJ��LV�FULWLFDO�WR�UHGXFLQJ�SRVW�FRQÁLFW�YLROHQFH��DQG�LV�DQ�HIÀFLHQW�DQG�HTXLWDEOH�PDQQHU�WR�HQKDQFH�WUDQVLWLRQDO�MXGLFLDO�SURFHVVHV�130

Support for rehabilitated social structures must be accompanied by the rebuilding of critical private and public infrastructure, and the restoration of economic DFWLYLW\��,Q�WKH�DIWHUPDWK�RI�FRQÁLFW��WKH�LQWHUQDWLRQDO�FRPPXQLW\�PXVW�OLIW�WKH�aggressive international sanctions that were levied on Syria for the purposes of weakening the Assad regime, in order to facilitate a comprehensive aid effort and economic recovery.131 This should be followed shortly afterwards by the development of, cooperation agreements between Syria and neighbouring countries with the capacity to facilitate international reconstruction logistics, particularly Lebanon, Jordan and Turkey—also currently home to the majority of Syrian refugees. These cooperation agreements should be designed to facilitate the repatriation of refugees, and the transfer of goods and materials during the IRR and the D&T phases, as Syria currently does not have the logistical infrastructure or raw materials necessary for reconstruction—an issue that will be compounded VKRXOG�WKH�FRQÁLFW�FRQWLQXH�WR�GHJUDGH�QDWLRQDO�LQIUDVWUXFWXUH�132

$V�SDUW�RI�WKHVH�FRRSHUDWLRQ�DJUHHPHQWV��JRRGV�LGHQWLÀHG�IRU�UHFRQVWUXFWLRQ�should be exempt from import taxes, including those of transit countries, either by the central government’s decision or, if this is not immediately possible, under WKH�8QLWHG�1DWLRQV�WD[�UHOLHI133�FRPPRQ�WR�GRQRU�ÀQDQFHG�SURMHFWV��LQ�RUGHU�WR�minimize cost burdens for reconstruction for both the new Syrian government and LQWHUQDWLRQDO�DLG�HIIRUW��3RVW�FRQÁLFW�HFRQRPLF�DQG�WD[�H[HPSWLRQ�SULQFLSOHV�PXVW�WR�EH�UHFLSURFDO�DQG�ERXQGHG�WR�VSHFLÀF�LWHPV��DFFRUGLQJ�WR�WKH�FKDQJLQJ�QHHGV�of a democratically agreed-upon reconstruction plan [See recommendations under ¶+DYH�D�3ODQ·@��$V�VXFK��FRXQWULHV�VHQGLQJ�JRRGV�WR�6\ULD��HVSHFLDOO\�WKRVH�WKDW�IXQGHG�ZHDSRQV�WUDQVIHUV�GXULQJ�WKH�FRQÁLFW��VKRXOG�H[HPSW�6\ULDQ�H[SRUWV�IURP�taxes in order to facilitate increased economic viability and the redevelopment of WKH�6\ULDQ�H[SRUW�PDUNHW�LQ�WKH�SRVW�FRQÁLFW�HQYLURQPHQW��

Exemptions should expire concluding a predetermined period in order to restore FULWLFDO�UHYHQXH�ÁRZV�IRU�JRYHUQPHQW�VHUYLFHV�IROORZLQJ�WKH�LQHYLWDEOH�RQVHW�RI�

129� $QNH�+RHIÁHU�3DXO�&ROOLHU��¶$LG��3ROLF\�DQG�*URZWK�LQ�3RVW�&RQÁLFW�&RXQWULHV·��(XURSHDQ�Economic Review (2004).130� 8QLWHG�1DWLRQV�+LJK�&RPPLVVLRQHU�IRU�5HIXJHHV��¶3ROLF\�)UDPHZRUN�DQG�,PSOHPHQWDWLRQ�6WUDWHJ\��8QKFU·V�5ROH�LQ�6XSSRUW�RI�WKH�5HWXUQ�DQG�5HLQWHJUDWLRQ�RI�'LVSODFHG�3RSXODWLRQV�¶��8QLWHG�1DWLRQV�+LJK�&RPPLVVLRQHU�IRU�5HIXJHHV��������131 Group of Friends of the Syrian People, ‘Chairmen’s Conclusions of the International Meeting of the Working Group on Economic Recovery and Development of the Group of Friends of the Syrian People’, May 24, 2012, Group of Friends of the Syrian People (2012).132� 3HUVRQDO�&RUUHVSRQGHQFH�ZLWK�D�PHPEHU�RI�WKH�8QLWHG�1DWLRQV��133� 9LFWRU�7KXURQ\L��¶7D[�$VSHFWV�RI�'RQRU�)LQDQFHG�3URMHFWV·��8QLWHG�1DWLRQV�(FRQRPLF�DQG�Social Council (2005).

“Support for rehabilitated social structures must be

accompanied by the rebuilding of critical

private and public QVNZI[\Z]K\]ZM�

“

30

donor fatigue,134�KRZHYHU�WD[�EUHDNV�IRU�6\ULDQ�UHFRQVWUXFWLRQ�ÀUPV�VKRXOG�EH�preserved in order to encourage local businesses, create jobs, and spur economic growth. State revenue considerations should be overseen by a new national FHQWUDO�FRRUGLQDWLRQ�ERG\��LQ�FRQMXQFWLRQ�ZLWK�WKH�2IÀFH�IRU�WKH�&RRUGLQDWLRQ�RI�+XPDQLWDULDQ�$IIDLUV�DQG�WKH�8QLWHG�1DWLRQV�+LJK�&RPPLVVLRQHU�IRU�5HIXJHHV�[See recommendations under ‘Central and Local’].

Aid Management

Aid management in Syria has always been highly centralized. Before the war, state outreach and services, while based in part on patronage and rife with

XQGHU�TXDOLÀHG�VWDII��KDG�JUHDW�UHDFK�DQG�VRFLDO�SHQHWUDWLRQ�135 This centralization offered relatively effective public service delivery, but facilitated corruption at all OHYHOV��WKH�GHSOR\PHQW�RI�DLG�LQ�SDUWLFXODU�ZDV�FDSWXUHG�E\�KROGLQJ�FRPSDQLHV�ZLWK�close ties to the regime.136

$V�WKH�FRQÁLFW�KDV�ZRUQ�RQ��H[LVWLQJ�VWDWH�VWUXFWXUHV�KDYH�EURNHQ�GRZQ�DQG�DLG�IUDJPHQWDWLRQ�KDV�VHW�LQ��(YLGHQFH�IURP�UHFHQW�SDVW�SRVW�FRQÁLFW�DLG�DSSRUWLRQPHQW�KDV�GHPRQVWUDWHG�IUDJPHQWDWLRQ�VLJQLÀFDQWO\�GLOXWHV�RXWFRPHV��ÀYH�\HDUV�DIWHU�the invasion, core aid to Iraq came from 25 development partners, of which only 3 ZHUH�GHHPHG�WR�KDYH�D�´VLJQLÀFDQWµ�HIIHFW�137 If Syria is to avoid similar outcomes, SRVW�FRQÁLFW�DVVLVWDQFH�VKRXOG�SULRULWL]H�D�VZLIW�UHWXUQ�WR�XQLÀHG��VWDWH�OHG�structures once major hostilities have subsided.

7KH�DELOLW\�RI�VWDWH�VWUXFWXUHV�LQ�SRVW�FRQÁLFW�6\ULD�WR�HIIHFWLYHO\�PDQDJH�DLG�administration will depend on the continuity of central government capacity. +RZHYHU��XQOLNH�WKH�SUH�FRQÁLFW�QRUP�RI�FHQWUDOL]DWLRQ��HIIHFWLYH�SRVW�FRQÁLFW�aid management will be necessarily contingent on the prevalence, capacity, DQG�LQWHJUDWLRQ�RI�FRQÁLFW�HUD�RSSRVLWLRQ�FRXQFLOV�DQG�LQGHSHQGHQW�ORFDO�administrations. Evidence has shown that non-formal institutions in fragile post-FRQÁLFW�VWDWHV�RIWHQ�KDYH�PRUH�OHJLWLPDF\�WKDQ�IRUPDO�RQHV��SDUWLFXODUO\�GXULQJ�initial phases when state capacity is low and building legitimacy on the basis of SHUIRUPDQFH�LV�GLIÀFXOW��HYLGHQFH�IURP�6\ULD�LQGLFDWHV�WKH�HPHUJHQFH�RI�VLPLODU�economies of credibility. Although these local structures have contributed to aid fragmentation, they simultaneously offer the opportunity to increase the capacity, OHJLWLPDF\��DQG�HIÀFDF\�RI�D�FRQVROLGDWHG�DLG�DSSURDFK�WKURXJK�GHFHQWUDOL]HG�implementation.138

To the greatest extent possible, aid administration should be monitored and/or overseen by the Syrian state (potentially in partnership with the international community), in order to bolster the legitimacy of its institutions, the centralization of governance, and the frameworks of civil service accountability. Donor-led

134 Gupta, op. cit.135 Bertelsmann Stiftung, ‘Syria Country Report’, Bertelsmann Stiftung Transformation Index (2012).136 Personal correspondence with a Syrian economist. 137 Organisation for Economic Co-operation and Development, ‘Resource Flows to Fragile and &RQÁLFW�$IIHFWHG�6WDWHV·��RS��FLW��138 Organisation for Economic Co-operation and Development, ‘The State’s Legitimacy in Frag-ile Situations’, op. cit.

“To the greatest extent possible,

aid administration should be monitored

and/or overseen by the Syrian state in

order to bolster the TMOQ\QUIKa�

“

31

reconstruction is problematic not only for the restoration of state-citizen relations, but also the execution of sovereignty: In Afghanistan, roughly two-thirds of public services passed through donor agencies instead of the state, even following Afghan government attempted to curtail this practice.139

The international community is right to insist on procedures that govern oversight DQG�SXEOLF�ÀQDQFH�SUDFWLFHV�LQ�DFFRUGDQFH�ZLWK�LQWHUQDWLRQDO�VWDQGDUGV��+RZHYHU��LW�PXVW�PDNH�EHVW�IDLWK�HIIRUWV�WR�GHYHORS�D�ZHOO�GHÀQHG��WLPH�ERXQG�SODQ�WR�transition oversight mechanisms to state institutions and empower state agencies to assume basic service operations, in order to restore the legitimacy and functioning of the state.

Balancing Central and Local

While a reconstruction plan for Syria must be the result of public approval, the implementation and coordination of donor aid and needs assessments

in local areas needs to be centralized. At present the State Planning Commission (SPC) still represents the most competent and legitimate government body to take on this task, however its structure is rudimentary and it does not have the capacity or experience to implement a national reconstruction plan.140 Complicating the matter, the SPC’s authority in regime-held areas has been complemented by the emergence of new aid coordination bodies, such as those of the opposition. In RUGHU�WR�DFFRPPRGDWH�SRVW�FRQÁLFW�UHDOLWLHV��WKH�63&�VKRXOG�EH�WUDQVLWLRQHG�LQWR�D�Syrian Aid Management Authority (SAMA), incorporating opposition assistance bodies, capacity, and reach, and placed under the oversight auspices of Parliament, rather than the Prime Minister or cabinet.

The governance and oversight of a newly incorporated SAMA should consist of a board of directors chaired by parliamentary appointment. This board should include members from the Ministry of Finance and the Central Bank of Syria, tasked with the mandate for coordinating and reconciling debt considerations and strategies with budgetary planning and aid objectives. Such a structure would HQVXUH�WKH�6$0$�GHFLVLRQ�PDNLQJ�SURFHVV�ZDV�DFFRXQWDEOH�WR�D�SXEOLFO\�UDWLÀHG�UHFRQVWUXFWLRQ�SODQ��FRQWLQJHQW�RQ�RSHQ��WUDQVSDUHQW��DQG�DFFHVVLEOH�QDWLRQDO�EXGJHW�LQIRUPDWLRQ��DQG�ZLWKLQ�WKH�FRQWH[W�RI�PDFURHFRQRPLF�SROLF\�XQGHU�SXEOLF�oversight.

3ULRU�WR�WKH�FULVLV��6\ULD·V�SXEOLF�ÀQDQFH�VHFWRU�ODFNHG�WKH�FDSDFLW\�WR�DFFRPPRGDWH�PRGHUQ�SUDFWLFHV�DV�VLPSOH�DV�HIÀFLHQW�DQG�WUDQVSDUHQW�LQYRLFLQJ�V\VWHPV�141 and only two sectors (education and agriculture) had programme- and performance-based budgeting approaches.142 This lack of capacity will require the introduction RI�EDVLF�ÀQDQFLDO�PDQDJHPHQW�V\VWHPV�LQ�RUGHU�WR�PDQDJH�D�QDWLRQ�ZLGH�assistance rollout: in the absence of a concentrated effort to transfer capacity, OHJDO�DQG�UHJXODWRU\�IUDPHZRUNV��ÀVFDO�DXWKRULW\��DQG�DGRSW�DSSURSULDWH�UHYHQXH�

139 James Boyce, Madalene O’Donnell, ‘Peace and the Public Purse: Economic Policies for Postwar Statebuilding’, Center on International Cooperation Studies in Multilateralism (2007).140 Personal correspondence with a member of the international donor community. 141� 7KH�6\ULD�5HSRUW��¶6\ULD�WR�'HOD\�9$7�8QWLO�´$SSURSULDWH�7LPH�DQG�&RQGLWLRQV·��7KH�6\ULD�Report, March 7, 2013 (2013). 142 International Monetary Fund, op. cit.

“The SPC should be transitioned

into a Syrian Aid Management

Authority (SAMA), incorporating

opposition assistance bodies,

capacity, and reach, and placed under the oversight auspices of

8IZTQIUMV\�

“

32

and expenditure policies,143 the state could face an extended period of foreign administration over its assistance. At the minimum SAMA should always be in charge of standardizing administrative practices, especially those related to XQLÀHG�EXGJHWLQJ�DQG�UHSRUWLQJ�FRGHV��LQ�RUGHU�WR�PRQLWRU�DLG�GLVVHPLQDWLRQ�DQG�effectiveness.144

Once this centralized capacity has been built, there will be an opportunity to break with the past and implement a form of administrative decentralization based on local preferences, need, and management. New networks of aid deployment across the opposition-held areas need should preserved and replicated nation-wide, to facilitate local buy-in for the reconstruction agenda setting and implementation. Local needs assessments and priorities can be set at the local council-level and through direct elections, burnishing the legitimacy of the councils, helping resolve FRQÁLFWV�DPRQJ�FRXQFLOV�RYHU�UHVRXUFHV�DQG�FRYHUDJH�DUHDV�145 and allowing the central government to absorb potential ‘spoilers’ into the reconstruction effort by ceding to them some level of authority.

7KH�OHYHO�RI�DXWKRULW\�ZLHOGHG�E\�WKH�ORFDO�FRXQFLOV�LQ�SRVW�FRQÁLFW�6\ULD�ZLOO�GHSHQG�RQ�WKH�ÀQDO�PDNHXS�RI�WKH�GH�IDFWR�DGPLQLVWUDWLRQV��WKH�SROLWLFDO�IDFWRUV�DQG�OHDGHUVKLS�WKDW�UHVXOWV�IURP�WKH�FRQÁLFW��WKH�FRPSOH[LW\�RI�WKH�LQWHUUHODWLRQVKLSV�among players who disperse public services, and those involved in the state-society paradigm, such as state capacity and security.146�8OWLPDWHO\��WKHUH�FDQQRW�be complete centralization of basic services and decisionmaking, as was the case under the Ba’ath party, nor can potential ‘spoilers’ and local governments take over full governance responsibility on their own.

Administering Aid

Providing aid to Syria will be a challenging—and possibly risky—affair JLYHQ�WKH�FRXQWU\·V�JHRSROLWLFDO�VLJQLÀFDQFH�DQG�LQWHUQDO�FRPSOH[LWLHV��,Q�

similar transitional contexts, the pooling of donor resources has been an effective mechanism to decrease transaction costs, streamline aid management, decrease fragmentation, adhere to national priorities, and lower risk to donors.147

The international community’s preferred method for this pooling is an umbrella 0XOWL�'RQRU�7UXVW�)XQG��0'7)V���$Q�0'7)�ZRXOG�SUHVHQW�D�VLJQLÀFDQW�VKLIW�from Syria’s previous predominately bilateral aid engagements. One consequence of an MDTF is the lag time between its establishment and the deployment of aid RQ�WKH�JURXQG��7KLV�JDS�VKRXOG�EH�ÀOOHG�E\�ELODWHUDO�DLG�IRU�XUJHQW�KXPDQLWDULDQ��peace-, and state-building needs. The MDTF should be incorporated alongside the ZLGHU�QDWLRQDO�DQG�SXEOLFO\�UDWLÀHG�UHFRQVWUXFWLRQ�SODQ�WR�HQVXUH�LWV�OLQNDJHV�WR�WKH�public budget and public legitimacy.148 MDTFs also have a good track record of

143� 6DQMHHY�*XSWD�6KDPVXGGLQ�7DUHT��%HQHGLFW�&OHPHQWV��$OH[�6HJXUD�8ELHUJR��¶5HEXLOGLQJ�)LVFDO�,QVWLWXWLRQV�LQ�3RVW�&RQÁLFW�&RXQWULHV·��,QWHUQDWLRQDO�0RQHWDU\�)XQG��������144 Organisation for Economic Co-operation and Development (2010), ‘Transition Financing: Building a Better Response’, op. cit.145 Personal correspondence with a member of the Syrian Opposition. 146 Menocal (2011), op. cit.147 Ibid.148 Schiavo-Campo, op. cit.

33

actually receiving what donors have pledged.149

An effective MDTF must be structured in such a manner that would allow IRU�UHDVRQDEOH�GRQRU�SUHIHUHQFHV�WR�EH�PDGH�LGHQWLÀDEOH��EXW�QRW�LQVRIDU�DV�those preferences would be capable of overtaking a publically agreed-upon reconstruction agenda. Mechanisms to facilitate the servicing of these donor REMHFWLYHV�ZLWKLQ�6\ULDQ�SULRULWLHV�FRXOG�LQFOXGH�WKH�DOORFDWLRQ�WR�ZLGHO\�GHÀQHG�areas of intervention, such as education and healthcare, while avoiding donor HQJDJHPHQW�DW�WKH�SURMHFW�OHYHO�ÀQDQFLQJ�OHYHO��7KLV�GHJUHH�RI�LQWHUPHGLDWH�engagement would help avoid donor-driven aid, while providing assistance WKDW�DGKHUHV�WR�DQ\�IXWXUH�QDWLRQDO�UHFRQFLOLDWLRQ�SURFHVV�DQG�RU�SRVW�FRQÁLFW�reconstruction agenda. The intermediate restrictions common to the MDTF VWUXFWXUH�ZRXOG�VWLOO�EH�ÁH[LEOH�HQRXJK�WR�RIIHU�VHUYLFLQJ�RI�HVVHQWLDO�EXW�WKHPDWLF�activities, such as humanitarian aid or security reform.150

Any resultant MDTF should be jointly managed between donors and Syria via SAMA, and implemented to the greatest extent possible through existing national systems and structures. This approach would help bring the fund in-line with country systems and guard against the exclusion of government from aid implementation.151 External management and implementation by the international FRPPXQLW\��ZKLOH�WHPSWLQJ�IURP�DQ�HIÀFDF\�VWDQGSRLQW��KDV�KLVWRULFDOO\�UHVXOWHG�in the exclusion of government from implementation and the weakening of overall state capacity.152

Although coordinated management and administration of the MDTF is more time consuming for the donor community than direct management, it offers a number RI�EHQHÀWV��6XFK�DQ�DSSURDFK�ZRXOG�HQFRXUDJH�GRQRU�KDUPRQL]DWLRQ��VXSSRUW�WKH�increased competence of state institutions involved in the fund’s administration, and offer improved risk management.153 Through the structures described SUHYLRXVO\�DERYH��IXQGV�ZRXOG�ÁRZ�WKURXJK�WKH�0'7)�WR�6$0$�DQG�WKHQ�WR�ORFDO�administrations.

An independent auditor, mutually agreed upon by the donors and the state authority responsible for administering aid, should oversee the MDTF from the beginning. An independent external auditor tasked with oversight of MDTF funding and disbursement is essential to providing up- and downstream transparency to the process.154 This auditor, or another specialized and independent entity, could also be in charge of periodic capacity evaluations to ascertain what donor administered activities can be transferred to the state as time passes.

In addition to allowing for more effective aid management and distribution, the

149� 6HH�WKH�8QLWHG�1DLWRQV�'HYHORSPHQW�3URJUDPPH·V�'DWDEDVH�RQ�07')�SOHGJHV�DQG�IXQGV�received.150 Schiavo-Campo, op. cit. 151 Organisation for Economic Co-operation and Development Development Assistance Com-PLWWHH��¶,QWHUQDWLRQDO�6XSSRUW�WR�3RVW�&RQÁLFW�7UDQVLWLRQ·��RS��FLW�152 Organisation for Economic Co-operation and Development Development Assistance Com-PLWWHH��¶,QWHUQDWLRQDO�6XSSRUW�WR�3RVW�&RQÁLFW�7UDQVLWLRQ·��2UJDQLVDWLRQ�IRU�(FRQRPLF�&R�RSHUDWLRQ�DQG�Development (2012).153 Ibid.154� 6DOYDWRUH�6FKLDYR�&DPSR��¶)LQDQFLQJ�DQG�$LG�0DQDJHPHQW�$UUDQJHPHQWV�LQ�3RVW�&RQÁLFW�Situations’, World Bank (2003).

34

safeguards described previously would help mitigate potential sensitive political issues regarding the acceptance of foreign assistance from certain actors – and the magnitude to which that assistance is tied to other obligations. Along these lines, the international community should discourage the application and administration of bilateral aid, even if there are immediate, necessity-driven exceptions in the short-term. The more multilateral the aid structure, the more the funding becomes about ‘the plot and not the cast,’ and the more likely the assistance is to provide ORQJ�WHUP��WDQJLEOH�EHQHÀW�WR�WKH�6\ULDQ�SHRSOH�

Economic Considerations

S\ULD·V�HFRQRPLF�VLWXDWLRQ�KDV�GHWHULRUDWHG�VLJQLÀFDQWO\�VLQFH�WKH�RQVHW�RI�WKH�FRQÁLFW��DQG�GHEW�ÀQDQFLQJ�ZLOO�OLNHO\�EH�UHTXLUHG�LQ�WKH�VKRUW�WR�PHGLXP�

WHUP�IRU�D�JRRG�SRUWLRQ�RI�UHFRQVWUXFWLRQ��$V�VXFK��DQ\�SRVW�FRQÁLFW�0'7)�RU�RWKHU�VLJQLÀFDQW�DVVLVWDQFH�VKRXOG�EH�PDGH�LQ�WKH�IRUP�RI�JUDQWV��HVSHFLDOO\�LQ�WKH�short term.155�)RU�FHUWDLQ�XUJHQW�IXQGLQJ�QHHGV��VXFK�DV�IRU�ÁDJVKLS�UHFRQVWUXFWLRQ�projects and essential infrastructure, limited bilateral relationships or subsidized loans would be appropriate due to urgent need and select interest from a donor country to provide such facilities.156

Even with the injection of stabilizing funds, provision-induced aid volatility could FDXVH�6\ULD�WR�GUDZ�RQ�RWKHU�VRXUFHV�RI�ÀQDQFLQJ��VXFK�DV�GHEW�PDUNHWV��$FFRUGLQJ�to the OECD, fragile states are twice as susceptible to aid volatility than other GHYHORSLQJ�QDWLRQV��ZKLOH�SRVW�FRQÁLFW�VWDWHV�IDUH�ZRUVH�GXH�WR�D�IDFWRUV�VXFK�DV�donor interest cycles and mismanagement-induced donor fatigue.157�+LVWRULFDO�evidence has shown that in times of political instability external debt sourcing can UHVXOW�LQ�GHEW�WUDSV��ZLWK�VLJQLÀFDQW�QHJDWLYH�LPSOLFDWLRQV�IRU�GHEW�VHUYLFLQJ��DLG�dependency, and persistent institutional weakness.

The proposed Syrian Aid Management Authority (SAMA) should manage aid in a manner that diverts dependency, even if volatility occurs. There will be an instinctive inclination to frontload aid expenditure during the IRR phase, when donor interest is high and humanitarian need obvious. Although understandably tempting, this frontloading strategy is appropriate for countries where returns on investment in rehabilitating infrastructure are particularly high,158 however current FRQÁLFW�SDWWHUQV�LQGLFDWH�VXFK�IURQWORDGLQJ�ZLOO�QRW�EH�QHFHVVDU\�LQ�6\ULD�XQOHVV�WKHUH�LV�VLJQLÀFDQW�DGGLWLRQDO�ZLGHVSUHDG�GDPDJH�WR�QDWLRQDO�LQIUDVWUXFWXUH�

To date much of Syria’s existing public infrastructure, including roads, ports, DQG�DLUSRUWV��LV�UHODWLYHO\�LQWDFW�FRPSDUHG�WR�PDQ\�RWKHU�SRVW�FRQÁLFW�VLWXDWLRQV��alleviating the need to frontload aid expenditure. Instead, Syria should smooth the aid expenditure curve in as much as possible in order to replenish its dwindling foreign currency reserves and avoid falling into debt cycles, especially during the ,55�SKDVH��6RPH�HYLGHQFH�VXJJHVWV�WKDW�GXULQJ�WKH�ÀUVW�IHZ�\HDUV��ZKHQ�SHDFH�LV�

155 Organisation for Economic Co-operation and Development, ‘Resource Flows to Fragile and &RQÁLFW�$IIHFWHG�6WDWHV·��RS��FLW��156 Schiavo-Campo, op. cit. 157 Organisation for Economic Co-operation and Development, ‘Resource Flows to Fragile and &RQÁLFW�$IIHFWHG�6WDWHV·��RS��FLW�158 Gupta, op cit.

“Syria should smooth the aid expenditure

curve in as much as possible in order

to replenish its dwindling foreign currency reserves

and avoid falling into LMJ\�KaKTM[�

“

35

fragile, the optimum level of aid-to-GDP is around 4.8 percent,159 while during the D&T and early Sustainability phases, this can rise to as high as 13.9 percent if the situation remains fragile.160

Revenue and Debt

A QDWLRQDO�DLG�VXVWDLQDELOLW\�VWUDWHJ\�PXVW�UXQ�LQ�SDUDOOHO�WR�SXEOLF�ÀQDQFH�decisions regarding how much and what form of debt to take on in order to implement development projects. The global economic downturn has had an RYHUDOO�QHJDWLYH�HIIHFW�RQ�JOREDO�GHEW�ÁRZV�WR�IUDJLOH�DQG�SRVW�FRQÁLFW�VWDWHV�161 and WKH�LQWHUHVW�LQ�SURYLGLQJ�ODUJH�DPRXQWV�RI�ORQJ�WHUP�DLG�WR�D�SRVW�FRQÁLFW�6\ULD�KDV�proven lackluster.162 To make up the difference, the country will have to bring in H[WHUQDO�UHYHQXH��+RZHYHU��DV�UDLVLQJ�WD[HV�ZDV�QRW�D�SROLWLFDOO\�H[SHGLHQW�RSWLRQ�prior to the crisis,163 the most likely option for the Syrian government will be to take on debt.

Already there are suggestions to approach Syrian investors to fund a large portion of this debt, and a demonstrated willingness to do so through treasury and infrastructure bonds.164 Other methods of reconstruction, such as public-private SDUWQHUVKLSV��333V��IRU�PDMRU�LQIUDVWUXFWXUH�SURMHFWV³DQG�VSHFLÀFDOO\�IRU�6\ULD·V�much-degraded energy sector, Independent Power Production—are also worth serious consideration and have been championed by economic policy makers prior WR�WKH�FRQÁLFW�165

At present there is an inclination to set the debt to GDP ceiling at 60 percent DQG�UXQ�GHÀFLWV�RI�DURXQG����SHUFHQW�EHWZHHQ������DQG�������EDVHG�RQ�DQ�assumption of growth averaging 7 percent during that period (presuming an end WR�FRQÁLFW�EHIRUH�WKDW�SHULRG��166�+RZHYHU��DOWKRXJK�WKHVH�RSWLRQV�DUH�YDOLG��VRPH�suggested targets offered are cause for concern, and must be accompanied by debt forgiveness and rescheduling from the international community.

Although such targets have been viable in other states, they are not without risk. Angola, a country with a long history of civil war and much higher debt to GDP than Syria (at around 100 percent at the end of the war in 2001) managed to bring its current debt levels down to around 20 percent of GDP and enact various development projects with the help of oil revenues, alongside billions of dollars in tied aid from China.167�+RZHYHU��WKLV�SURFHVV�ZDV�DFFRPSDQLHG�E\�GHEW�IRUJLYHQHVV�

159� 0DUJXHULWH�'XSRQFKHO��¶&DQ�$LG�%UHDN�WKH�&RQÁLFW�7UDS"·��&HQWUH�IRU�WKH�6WXG\�RI�$IULFDQ�(FRQRPLHV��2[IRUG�8QLYHUVLW\��������160 Organisation for Economic Co-operation and Development, ‘Resource Flows to Fragile and &RQÁLFW�$IIHFWHG�6WDWHV·��RS��FLW�161 Ibid.162� 3HUVRQDO�FRUUHVSRQGHQFH�ZLWK�D�PHPEHU�RI�WKH�8QLWHG�1DWLRQV�163� 7KH�6\ULD�5HSRUW��¶6\ULD�WR�'HOD\�9$7�8QWLO�´$SSURSULDWH�7LPH�DQG�&RQGLWLRQV·��7KH�6\ULD�Report, March 7, 2013 (2013).164� 3HUVRQDO�FRUUHVSRQGHQFH�ZLWK�D�PHPEHU�RI�WKH�8QLWHG�1DWLRQV�165 Personal correspondence with a members of the international donor community.166� 3HUVRQDO�FRUUHVSRQGHQFH�ZLWK�D�PHPEHU�RI�WKH�8QLWHG�1DWLRQV�167 Organisation for Economic Co-operation and Development, ‘Angola Country Report’, Afri-can Economic Outlook (2008).

36

and rescheduling from the international community: China considers around 90 percent of its loans to be written off over time.168

The same principles should be applied to Syria, which, even more than Angola, may constitute a moral imperative. Among countries that contributed to escalation RI�KRVWLOLWLHV�WKURXJK�PLOLWDU\�DQG�WDFWLFDO�DLG�WR�ERWK�VLGHV�RI�WKH�FRQÁLFW��WKHUH�VKRXOG�EH�DQ�REOLJDWLRQ�WR�WKH�HPHUJHQFH�RI�6\ULD�IURP�FRQÁLFW�DQG�WR�WKH�development of a viable and prosperous modern state.

Conclusion

The international donor community has already contributed a great deal of aid to address the Syrian crisis. Even so, the amount pledged has fallen far short

RI�QHHGV��2QFH�WKH�FRQÁLFW�KDV�FHDVHG�WKHUH�ZLOO�EH�UHQHZHG�LPSHWXV�WR�LQYHVW�LQ�the future of a sustainable and democratic Syrian state. This state will need support from the international community in order to handle development assistance until it is able to run its own affairs and meet the democratic demands of its population.

7KH�FRXQWULHV�WKDW�FRQWULEXWHG�WR�WKH�SURORQJDWLRQ�DQG�HVFDODWLRQ�RI�WKH�FRQÁLFW�have a moral responsibility and, in many cases, a vested interest in seeing a Syria that is able to handle its own affairs while improving the lives of its citizens. The SROLFLHV�UHFRPPHQGHG�LQ�WKLV�SDSHU�DLP�WR�HIIHFW�VXFK�DV�FKDQJH��EXW�WKH\�ZLOO�come to nothing unless there is a will to end the violence and engage in a process of reconstruction and aid provision aimed at long term sustainability, rather than patchwork solutions.

8QOHVV�WKH�LQWHUQDWLRQDO�FRPPXQLW\�FRPHV�WRJHWKHU��SRVW�FRQÁLFW�SUHSDUHGQHVV�will be inevitably overshadowed by more bloodshed, and an increasingly complex situation will await those involved in stabilization and reconstruction at the end of WKH�FRQÁLFW�SHULRG��$�JHQXLQH�FRPPLWPHQW�WR�VWRSSLQJ�WKH�FRQÁLFW�DQG�HQJDJLQJ�LQ�a process that ensures the peaceful self-determination and economic independent of the citizens of Syria will be essential to the country’s recovery. Managed successfully, the country could represent a beacon of hope in a region where SRVW�FRQÁLFW�GHYHORSPHQW�KDV�SURGXFHG�OLWWOH�LQ�WHUPV�RI�ORQJ�WHUP�VWDELOLW\�DQG�progress.

168� +HOPXW�5HLVHQ��¶,V�&KLQD�$FWXDOO\�+HOSLQJ�,PSURYH�'HEW�6XVWDLQDELOLW\�LQ�$IULFD"·��2(&'�Development Centre (2007).

About Menapolis

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This belief underpins our commitment to delivering innovative research, analysis, and actionable programming in each of our core issue areas. We are committed to an integrated approach that links direct action with public policy research and grassroots experience with international experience. Together, we are more than a consultancy we are a transformation laboratory for one RI�WKH�ZRUOG·V�PRVW�G\QDPLF�DQG�GLIÀFXOW�region.

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