The Trust of History:
Ownership in theRelationships of Nepal andVietnam to Their Donors
FASID, May 23, 2008
Annette Skovsted Hansen
University of Aarhus
ostash@hum.au.dk

Main point: The Trust of History
 Donor and development management isstrongly influenced by history The histories of bilateral aid relationships aretied to issues of trust Many reactions to donors are based on thelength of the relationship and subsequent
expectations of trust or of betrayal of trust

Annette Skovsted Hansen
ostash@hum.au.dk

The Original Comparison
 Donor darlings –1990s Nepal Vietnam
 The Historical Difference

Two different decades
 Internal setup and politics

Who manages donors or development?

Aid dependence Institutional development

Vietnam – Own central ministry MPI response to mistrust Nepal – International design for democracy anddecentralization inspiring trustAnnette Skovsted Hansen
ostash@hum.au.dk

Institutional Development
Nepali Education Sector
Vietnam International design for Ministry of Planning
decentralization
and Investment (MPI)  BPEP I (1992-1997)
 Set the pace
 Program Implementation
Unit (PIU)
 Trial and error
 BPEP II (1999-2004)
 Historical roots
 75 District Education
 Soviet practice
Offices, School
Management Committees, Experience of donor
Resource Persons anddominanceCenters, School Counter mistrust
Improvement Plans, and a
Department of Education
under the Ministry ofAnnette Skovsted Hansen
ostash@hum.au.dk
Education

Donor Management and Managementof Ideas Influenced by History
VietnamNepal
 Soviet sphere of interest  Royal rule Five year plans Five year plans Democracy Coordination office Partner expectations
Donor darling status•Many new donors•Selection options•Donor management

Annette Skovsted Hansen
ostash@hum.au.dk

Long term commitment•Experience with donor
expertises•TrustThe Histories of Bilateral Aid
Relationships and Issues of Trust
Vietnam Lack of donor anddevelopment management
 The Soviet Union Mistrust of partners

 Long term commitment


Sweden and Japan Political or economic
partners
 Experience withdonor expertises
 TrustAnnette Skovsted Hansen
ostash@hum.au.dk

Nepal
 Partner entry
1960s Japan and Norway
1970s Denmark
1980s Finland
1990s Sweden Trust betrayed New education
institutions and basketfunding Long term mistrust ofinternational intentions
 Hydropower

Donor Harmonization Vietnamese government official:”[…] harmonization cannot be seen as
everybody doing everything, but as having afew donors in each field focusing on what therecipient regards as their diverse comparativeadvantages.”

Annette Skovsted Hansen
ostash@hum.au.dk

Basket Funding International community argument Reflect donor harmonization
 Promote national ownership, management,

and accountability
 Local expectations of access and influence Disappointments with transparency
 Who has access to information?
International community rather than Nepalesestakeholders

Annette Skovsted Hansen
ostash@hum.au.dk

Basket Funding in Nepali Education
 Basic Primary Education Program (BPEP II)
 Donor disagreement:

Norway, Denmark, and Finland in favor ofbasket funding and Japan opposed Trust betrayed Initially, basket funding welcomed as means toincrease the local ownership potential – trust
partly based on institutional development andrhetoric of decentralization
 Disappointment in how the lack of transparency inbasket funding counterbalanced the increased
potential of management of ideas in decentralizedinstitutional structureAnnette Skovsted Hansen
ostash@hum.au.dk

The “People” Manages Development
 In 1990, Nepal held general elections. This

democratic turn fostered expectations amonginternational partners and a broader
Nepalese public of a people’s ownership ofideas. When experiences of donorinterventions, democratically electedgovernments, subsequent Maoist
insurgencies, and royal responses did notmeet expectations, popular protests became
a way for Nepalese people to exercise
ownership - in spite of partner preferences.
Annette Skovsted Hansen
ostash@hum.au.dkHydro Energy Potential
 Expectations of potential riches for Nepalese people
 Historically: Electricity was a luxury item from Rana times
 Sustained high end user cost
 ODA hydro power projects were large
 Private sector involvement

 Plans for ARUN III with estimated cost of US$1.1 bill.
 Awareness of smaller more inexpensivealternatives with local jobs and investment
opportunities No government interference on behalf of localinterests
 Popular protest
Abandoned
ARUN III in 1995
Annette Skovsted
Hansenostash@hum.au.dk

Nepal Reacts
 In the case of Nepal, a combination of 1) alternatives (democracy and locally rooted

energy supply) offered by the international
community and 2) the discrepancies between the expectations
to these alternatives and the disappointmentswith the concrete implementation (cost, lack ofinfluence, basket-funding) has angered and inspired a segment of thepopulation enough to take charge through popular
movements to influence decision making andinstitution building. (ARUN III and political unrest
Annette Skovsted Hansen
ostash@hum.au.dk
specifically in 2006)

Who Manages Donors andDevelopment?
 Vietnam
 strong donor management through central
institution, MPI
 Selection of donors based on expertise Nepal demonstrators make a stand to influenceideas and goals of development in an attempt
to manage donors and development,- because no one else in Nepal does?
Annette Skovsted Hansen
ostash@hum.au.dk

Annette Skovsted Hansen
ostash@hum.au.dk

Discussion Inputs
 Trust or mistrust based on historicalexperiences of bilateral relationships
becomes decisive for aid relationships notleast when countries become donor darlings,
because they can choose between
international partners
 Vietnam invested its trust in one government
ministry in reaction to past experiences and in
Nepal demonstrators reacted – haphazardly to what they experienced as betrayed trust
Annette Skovsted Hansen
ostash@hum.au.dk

Country

Main ODA objectives

Strategy

Sectors of Assistance in Nepal

Denmark

Promote sustainable economic
growth, social development
based on improved living
conditions, respect for the ruleof law, good governance

Based on the country
specific strategy (timeframe of five years)
that is negotiated withpartners in the country
in question anddiscussed with Danishinterest group before
being submitted to theDanish Parliament

Education. Natural Resource
Management/Environment Energy, Human
Rights/Good Governance/ Decentralization
and Private sector cooperation, Support
through NGOs, Basket funding and donor
co-ordination

NorwayReduction of poverty,
stimulation of economicgrowth, promotion ofsustainable development andhuman resources, humanrights and democracy

Selected regions arefocused and anemphasis on Norway's
aid policies to beintegrated with that of
the recipient country

Energy/hydropower, Water supply,
Education, Basket funding, Ministry to
Ministry Co-operation, Support throughNGOs, research

FinlandPromotion of global security,
reduction of widespreadpoverty, promotion of humanrights and democracy,
prevention of global andenvironmental problems,
promotion of economic
interaction

Country strategy paper
and an emphasis onlong term commitments from the partner

Water supply and sanitation, energy,education, forestry, environment, basket
funding

SwedenContribute to create conditions
forthe poor to improve theirAnnette Skovsted Hansen
livingconditions
ostash@hum.au.dk

Rights-based
approach, policy
coherence,
harmonization

Water supply and energyCountryDenmark

NorwayFinlandJapan
SwedenSector Involvement in Nepal
Education, Natural resource
Management/Environment Energy, HumanRights/Good Governance/ Decentralization andPrivate sector cooperation, Support through NGOs,
Energy/hydropower, Water supply, Education,
Ministry to Ministry Co-operation, Support throughNGOs, research
Water supply and sanitation, energy, education,
forestry, environment.
Economic infrastructure, agriculture, social sector,
and disaster relief and mitigation
Water supply and energy

Annette Skovsted Hansen
ostash@hum.au.dkTable 2: Sectoral Distribution of Japan’s Grant Aid to Nepal (1969-2002)
In %Sectors
Economic infrastructure

35Agriculture

27

Social Sector

20

Disaster Mitigation

4

Disaster Relief Fund

12

Non-Project Grant Assistance

1Others

1

Total

100

Source: Embassy of Japan in Kathmandu, 2004

Annette Skovsted Hansen
ostash@hum.au.dk

Nepal: Chronology of Donor Entry
1960s Japan and Norway
1970s Denmark
1980s Finland
1990s Sweden

Annette Skovsted Hansen
ostash@hum.au.dk