Financial Times

Peter Harrold, the World Bank’s Country director takes up a new assignment with the Bank in Washington next week after four years as the Bank’s representative here. In this interview he discusses and responds to a range of issues:

Reflections on Sri Lanka in the past few years after arriving in the country just after a ceasefire:

Before I came here full time, I was visiting Colombo at the time of the local development forum in May 2002 and met a number of donors who have been around for some years. A number of others and myself were struck by the cynicism of the foreigners (on the peace process) who were around. We were saying here is a chance and one should be optimistic for the future of Sri Lanka.

It’s interesting to see the newspapers which are filled with people and writers saying we knew this was going to happen and that neither side was serious. The fact is that most of us believe there is a good chance of peace and permanent peace to be worked out. And frankly that was why I came – I was first asked whether I was interested in coming to Sri Lanka a little before the ceasefire was signed. I said I was not sure as to what kind of programme we could put together in those circumstances. I said call me again if things turn positive.

And then I came. It’s not possible to leave without reflecting on what might have been …

What might have been?

If we look back at the Oslo debate and the meeting in Japan – some of these moves looked like it could lead to a direction of a settlement. Most of the international community believes that the way forward to sustainable poverty reduction in Sri Lanka is a negotiated peace agreement that leads to a climate where you could have sustainable development.

The Bank has made it clear in our country strategy that one of our fundamental objectives is to support the underlying framework – we don’t get involved in the peace process itself; it’s not our business. But if we could make investments through financing that would make such an eventuality more likely, then that’s something we ought to do.

And something we try to do.

On two separate occasions upto the period the talks broke down in 2003 and again the period immediately after the tsunami there could have been a breakthrough that could have avoided loss of life and not lost the momentum.

Many people say it was all a matter of time (when it would fail) but I guess I have that optimistic view that it could be different and could still be different.

On World Bank programmes in recent years and its progress:

We did review our operations last week – 16 projects. In April 2003, we published for the first time our country assessment strategy and made it available to the public.

We said then that in the four fiscal years from 2002 to 2006 we would provide approximately $800 million and we have provided (over those years) $780 million to Sri Lanka. So we are close to our target.

Was all this money spent?

It was committed. We have been able to have a balanced programme geographically across the island from housing construction in the northeast to the Gami Diriya programme in the south.

On claims of the World Bank putting money in the northeast while neglecting the south:

There were people who said this but it was not technically correct. The amount of money going to the northeast from the internationally community never exceeded 20 percent of the total. Both ours and ADB programmes were about this figure. It was just a myth by some people who opposed the process of reconciliation. If you don’t want reconciliation then it’s a good argument to say all this donor money that should be supporting the poor in the south is instead going to the north. It was not so.

The development partners including ourselves continued to be more supportive of the south than the northeast. However on a per capita basis the amounts were higher in the northeast.

That’s because on a per capita basis they are poorer and an attempt is being made to repair the damage caused during the period of the conflict. People didn’t bother to do their homework and find how much was going to the northeast and how much was going to the rest of the country.

On the World Bank dialogue with civil society:

We had several meetings. Our attempts to be more open and listen more and also listen to people in the village, at least had an effect on the way we do things.

Is this a new Bank policy?

Our previous president listened to leaders of government, leaders of civil society, and people like me (one level below the current management of the Bank).

He came to a very clear conclusion saying that there are too many people telling him that something is wrong; there are too many people who say the management of this institution is arrogant; there are too many people saying that we arrive in a country with our little recipe book of what the country needs to do and we’re not listening to what the country is telling us and what society there is telling us. Instead we are coming in with more or less the same prescription.

Things changed with the former Bank president. He wanted the country directors living in those countries; living and breathing the country for which they are responsible for the World Bank programme. He wanted them to know everything from a local perspective to make Bank programmes as effective as possible. To be on the ground and ensure that the programmes are delivering. That process started from 1997 onwards.

That has dramatically changed the way the World Bank works.

Brought the Bank closer to the people?

Definitely. The biggest change in the World Bank is that in the 1980s we used to figure out what a country needs, spend our time persuading the country or forcing it to accept the prescription that we thought was right for the country.

Since then we spend our time finding out what the people want and what we can do to help the country to achieve its objectives and its strategy because its only by aligning ourselves strongly with that which the government is committed to doing that you could hopefully achieve things.

But that doesn’t mean we accept everything what a government says. We draw on the lessons of experience and try to suggest issues for consideration.
Earlier however we seriously used to think we could make people change their mind.

But if a country is riddled with corruption and that the primary benefit of the programme will go to the elite and not the poor, then there is a problem. If the resources are not being used properly then it’s our right to question. Nobody has the right to World Bank resources; you don’t have a quota that you can draw from. You have to earn those resources by demonstrating that they would be distributed to the people.

On his comments made over two years ago that Sri Lankan officials should be tougher in aid negotiators with donors and own the project – not the other way around:

I think I made the point that what’s the use of going to Tokyo and appealing for billions of dollars of extra money if it’s just going to sit around and not get utilized.

The issue of ownership of programmes and government decisiveness is still very much a question. Dr (P.B.) Jayasundera is tougher than many others (in negotiation) and he has made some progress. Nevertheless it still is the case that far too much of the international programmes belong to the donor or partner concerned and it doesn’t belong to the country.

I think the government is too polite to the development partners; too nice to them and they don’t say to them – you’re not listening; you’re not listening to what our priorities are. That’s not our programme; this is our (government) programme.

But isn’t it a genuine fear of governments that if they don’t heed World Bank advise, the Bank will go elsewhere with their money?

I do agree but by and large I don’t agree that that fear is well founded. I am probably a much more radical critic on these issues than most. The fact is that the world is littered with projects that haven’t succeeded because the government doesn’t care enough.

The development partners claim to be strongly committed to government ownership; claim to be strongly committed to the government’s poverty reduction strategy. So you need to tell them that this is our programme; this is what we want to do. There shouldn’t be projects where partners set up, draw the best from the public sector and offer high salaries.

You should be saying ‘I don’t want that anymore’. You should be demanding to strengthen your institutions. There is a need for serious institution building and transfer the ownership to the country.

But these projects come in with highly paid consultants and expatriates?

The government should demand to change the model. You can’t keep running projects with massive overheads. You need institution building. Some of the development partners support this.

In some tsunami housing programmes that the Bank is involved in, we help the government put together the programme on how they help people to rebuild. It’s working very well. But if there is no plan, no proper design, donors will implement their own programme.

On the current progress of Bank programmes and postponement due to the conflict:

There are significant amounts waiting to be disbursed because we had a build-up in the last few years. We are reasonably well on schedule. We haven’t enforced any cut by policy in the northeast. There has been however a slowdown in some areas due to the problems and, for example, the shortage and high cost of building materials. A bag of cement that costs Rs 500 here is nearly Rs 2,000 in Mullaitivu.

On the peace process and donor views:

Countries that get into a conflict situation like what Sri Lanka has, have basically three choices: somebody wins – one beating the other and the other side disappears.

This is what happened in Sierra Leone, one of the countries I served as country director. The rebels were defeated and they are not a part of government; they don’t exist anymore.

The second choice is war where (like in the Congo), it goes on and on and the country gets poorer. That’s not a choice anyone should make.

The third choice is negotiating a settlement – we have seen this southern Sudan, Aceh and Ireland.

There are far fewer conflicts today than 10 years ago. I am no military expert but the common analysis is that neither side (government or LTTE) could win.

There are many who say there is no military solution – there are many who think the opposite too on both sides.

The question is from a long term perspective whether the negotiated settlement is best or is a military solution better.

Some people didn’t like the negotiated settlement after a series of failures in this area in the past. The international community has always encouraged a negotiated settlement. We are there to support whatever the peace process.

As an individual I feel the negotiated settlement process ought to be in the minds of people to come up with a home grown solution that will meet the aspirations of both sides.

Because the gains from peace are highly positive there must be some way to ensure that the gains get shared so that everybody benefits. It’s not a win-lose situation because there is something extra that happens during peace – take for example the ceasefire period. We believe it’s possible.

Anecdotes and impressions:

We encourage our managers to spend some time in the villages to get a feel of that life. I did that very early on in a very poor village and stayed in a mud house. I’ll always remember how amazingly dark it is when you are away from electricity and other facilities. While chatting to a farmer I saw a bottle of pesticide and asked him whether he got instructions from the shop on how to use it. He said no and I asked how he knew how much pesticide to use on the field.

He looked at me as if I was an idiot and stupid. He picked up the bottle and pointed to the instructions in the bottle and said: “Look I read the instructions. That’s how I know how much to use.”

I was speechless, since for someone who has worked in many (poor) countries (I was in Africa for 10 years), this was mind boggling. It is inconceivable that in any of the poor countries of the world, a poor farmer would be able to read and let alone understand the instructions.

This is a unique and an absolute fact for Sri Lanka that the education system has reached out all the way to the poorest person in the poorest district and that an overall majority has been provided with the life skills. That is a fantastic endowment for Sri Lanka.

It’s a blessing and a curse at the same time. For once you have provided education to the poor you create aspirations and expectations for a better future. However it’s such a national asset.

Similarly there was another surprise during a visit to Killinochchi. The main secondary school was a wreck.

The roof was bombed out, some of the walls were missing. I went inside the school and in the middle of the rubble were 30 to 40 children in spotlessly white uniforms and spotlessly clean. There is nothing more important to their parents than those kids going to school under whatever circumstances.

The desire of the people for education and the ability of the system to provide education in difficult areas like this is extraordinary.

To have a conflict with public servants sitting in the middle of the conflict – you don’t get this anywhere in the world – the process of fighting and living together – amazing.

The government agent is still there; the teachers are being paid by the central government. Its weird; an odd situation. The government agent is delivering services for those living in LTTE-controlled areas.

The people have a desire that the future should be better than the past. That’s very strong in Sri Lanka.