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The failed promise of multi-donor trust funds: aid financing as an impediment to effective state-building in post-conflict contexts

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Multi-donor trust funds (MDTFs) have quickly become one of the most prominent aid modalities. Viewed as a reliable long-term funding source, they are hailed for facilitating donor coordination and ceding unprecedented control of post-conflict reconstruction and development to recipient governments. The advent of the MDTF also highlighted the growing understanding that aid modalities, the form and manner in which assistance is given to developing nations, are themselves a key intervention in war-torn societies and not a passive administrative arrangement. The implementation of MDTFs has, however, frequently nullified their conceptual benefits, particularly in regard to strengthening and legitimating recipient states. Complicated implementation arrangements, donor-dominated coordination and oversight bodies, short timeframes and high expectations pertaining to disbursement have subsumed trust funds to donors' pre-existing modes of operating and made them contravene state building objectives and weaken aid effectiveness. Modalities can, like any other intervention, cause harmful effects. These are discussed in the context of Afghanistan's largest and highest profile reconstruction intervention, the National Solidarity Programme (NSP). This article examines one prominent MDTF, the Afghanistan Reconstruction Trust Fund (ARTF), and its impact upon the NSP and its governance objectives. This critical case study shows the MDTF concept to be fundamentally and theoretically sound but at odds with donor countries' primary attachment to the strategic rather than development impact of post-conflict reconstruction assistance. Such priorities limit aid effectiveness, hamper coordination and sideline the recipient state in the post-conflict reconstruction process.
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Keywords: Afghanistan; aid financing; governance; post-conflict reconstruction; state-building; trust funds

Document Type: Research Article

Affiliations: Post-war Reconstruction and Development Unit, University of York, York, UK

Publication date: April 1, 2009

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