SUMMARY

The explosion of civil conflicts in the post-Cold War world has tested the World Bank's ability to address unprecedented devastation of human and social capital. Since 1980, the volume of Bank lending to post-conflict countries has increased over 800 percent, to US$6.2 billion, and touched every region and economic sector. This Operations Evaluation Department (OED) assessment of the Bank's post-conflict reconstruction portfolio aims to enhance the institution's ability to respond more effectively and efficiently to the needs of societies rebuilding after conflict. The assessment examines Bank operational policies as they relate to post-conflict reconstruction and calls for a new policy statement that will consolidate, clarify and refine existing policies.

To accomplish its aim the study assesses recent Bank experi-ence in post-conflict reconstruction and extracts lessons for ongoing 3rd future operations. The core of the assessment consists of nine case studies: three chosen for field study ( Bosnia and Herzegovina [BiH], El Salvador, and Uganda) and six chosen for desk reviews (Cambodia, Eritrea, Haiti, Lebanon, Rwanda, and Sri Lanka). In all these cases, the Bank played a significant role in attempting to assist with post-conflict reconstruction. They represent diversity in the causes of state failure or collapse as well as in the factors that influence initiation or resumption of Bank operations. The cases also vary in region and phase of Bank assistance.

In conducting the case studies, six key issues were analyzed: (a) the Bank's main strengths or comparative advantages; (b) its partnership with other donors, international organizations, and NGOs; (c) its role in reconstruction strategy and damage and needs assessment; (d) its role in rebuilding the economy and institutions of governance; (e) its management of resources and processes; and (f) its monitoring and evaluation experience. The study focused on lesson-learning rather than accountability for performance. It examined Bank policies, decision-making processes, non-lending services, and scores of operations, many of them ongoing, making an audit nearly impossible. Although factors of .performance related to process are identified, the study is not meant to be a process review.

Findings and Recommendations Post-conflict reconstruction is a central issue for the Bank; it comprises a significant portion of the portfolio and affects the institution's core activities. In the past, however, the Bank has addressed the special needs posed by civil conflict on an ad hoc basis. The Board took steps to remedy this in 1997 with its endorsement of a policy framework to guide its actions in post-conflict situations. The subsequent creation of the Post-Conflict Unit further advanced work in this area by creating a focal point for policy development, cross-country learning, and the development of expertise. Clearly, if the Bank is to improve the relevance, efficacy, and efficiency of its support to post-conflict countries, it needs to continue in this direction and adjust the way it conducts business to accommodate the special needs of countries emerging from conflict. The findings of this study point to five areas of focus for further improvement: clarifying Bank policy, defining the Bank's role, sharpening the Bank's comparative advantage and performance, considering the folly of some conventional wisdoms, and making appropriate institutional arrangements.

Clarify Bank Policy

The Bank currently lacks an adequate Operational Policy on assistance for post-conflict reconstruction. Policy guidance is now drawn primarily from Operational Policy (OP) 8.5, which was originally developed for reconstruction following natural disasters. Other guidance comes from the Framework for World Bank Involvement in Post-Conflict Countries of April 1997. The main recommendation emerging from the study is that the Bank should revise the Framework and transform it into an Operational Policy, with accompanying Bank Procedures and Good practices to guide Bank staff in providing post-conflict reconstruction assistance. OP8.5 should be revised to apply only to natural disasters (as well as unexpected man-made disasters of limited duration that may require such emergency assistance, such as large-scale industrial, accidents). The new OP, BPs, and GPs should address the following issues:

• readiness to provide economic development policy advice during peace negotiations
• post-conflict aid coordination;
• leadership on macroeconomic and external debt issues in collaboration with the IMF and external donors;
• definition of priorities among macroeconomic stabilization,
• infrastructure rebuilding, and restoration of human and social capital;
• macroeconomic and structural policy conditionality;
• flexibility in programming, design, and implementation;
• institutional arrangements;
• the importance of monitoring and evaluation; and
• promoting equitable development.

The recommendations that follow provide more detail on the issues outlined above, and should be dealt with in the new OP, BPs, and GPs.

Define the Bank's Role

The Bank has a critical role to play in the early stages of post-conflict reconstruction. The Bank can be valuable in external aid coordination, which is specially important in the transition from war to peace. The Bank's use of consultative groups has been particularly effective for mobilizing resources, including facilitating the clearing of arrears; seeking a coordinated approach to macroeconomic issues; and providing information on recovery needs and assistance flows.

Similarly, if invited to participate, the Bank has the potential to make effective contributions to peace negotiations. Bank advice on the economic development dimensions of peace accord options can help improve economic governance components of peace accords and lay a foundation for more effective interpretation and implementation in the critical first months following agreement. The Bank's participation in the peace negotiations in Bosnia and Herzegovina and Guatemala are two examples of its potential to contribute to the peace process.

Although not the focus of the study, the case studies revealed several examples in which the Bank either did not address emerging distributional imbalances or missed a significant opportunity to promote equitable development. The Bank needs to recognize its potential to influence the course of pre-conflict events. Although it may not be appropriate for the Bank to adopt an OP on conflict prevention (as this may imply crossing the line into the realm of political issues which would be inappropriate under the Bank's mandate), Good Practices should be developed that encourage staff to be sensitive to predatory and exclusionary behavior that adversely affects projects and shared development objectives. The Bank should raise such concerns in its dialogue with the government and other donors.

Sharpen the Bank's Comparative Advantage and Performance

The two areas of strongest Bank performance have been support for macroeconomic stabilization and rebuilding physical infrastructure . Supporting the achievement of macroeconomic stabilization should be one of the Bank's highest and earliest priorities in post-conflict situations. The macroeconomic issues at stake in post-conflict reconstruction may call for substantial policy conditionality. Such conditionality requires case-by-case analysis, however. Depending on the country implementation capacity and the political environment, it may not be appropriate to introduce wide-ranging conditionalities all at once.

The Bank should also be prepared to support the rebuilding of physical infrastructure, with adequate attention to necessary policy and institutional reforms. Rebuilding infrastructure often requires demining. Although there are strong economic and humanitarian reasons for demining, the main lesson learned from this assessment is that the Bank's comparative advantage in stand-alone demining projects is not apparent. Adherence to the 1997 Operational Guidelines on Demining, is critical. Bank involvement in such activities should focus primarily on indirect, non-clearance activities, such as coordination, information and mine awareness, training, and institution building. Support for mine clearance should be always integrated with a specific development activity.

The restoration of human and social capital has not been a priority in Bank post-conflict portfolios. The case of BiH, where the Bank supported early and balanced social sector work that produced some promising reports, appears to be an exception. Although completion reports in social sector post-conflict reconstruction are still relatively few, it seems that most results of Bank efforts in these sectors have been modest. Uganda operations produced unsatisfactory results, and modest results are evident so far in the restoration of social and human capital in Eritrea, Haiti, and Rwanda. The El Salvador Basic Education Modernization Project has been a rare exception producing encouraging results in the social sectors. The participatory nature of the program has contributed to consensus-building and the sustainability of the peace process. Partnerships with other international and bilateral agencies and with NGOs that have a solid record in the restoration of human and social capital should be promoted. In providing further support for demobilization and reintegra-tion of ex-combatants, the Bank should strengthen the capacity it has acquired and incorporate the relevant experience of other agencies. Considering the potential importance of demobilization in future Bank programs, further research on the subject is warranted.

The Bank has done little to incorporate gender issues in its post-conflict portfolio. Only in BiH did the Bank make a specific operational effort to address the particular needs of women. Reconstruction efforts must consider the possible economic difficulties faced by women in post-conflict situations, and should also examine the role of women in rebuilding social capital. Analysis can also identify unequal power relations underlying social organizations to ensure that women are not further marginalized by reconstruction interventions.

Consider the Folly of Some Conventional Wisdoms

The devastation of human, social and physical capital often found at the beginning of a post-conflict period, and the particular provisions of a peace agreement, may require that some conventional wisdoms of development practice he set aside for a time. For example, the Uganda case study finds that owing to a history of predatory government tax policy during the conflict periods, pressure by the fund and Bank on tax effort (often included in a standard stabilization package) has had a chilling effect on private investment, driving economic activity into subsistence, or along with investable funds, abroad. The Cambodia case study finds that the Bank has continued to push for downsizing the civil service when the political coalition arrangement under the peace accords was based in part on raising the size of the civil service to absorb large numbers of the incoming parties' functionaries. The Bank's position was not politically realistic from the outset. For human capital development, a conventional wisdom among donors is to focus on primary education. But in a country where conflict has eradicated education systems, as in Rwanda, a case can be made for donor assistance (not necessarily from the Bank) to the secondary and tertiary education levels.

Make Appropriate Institutional Arrangements

Senior management must give high priority to staffing and structuring post-conflict country teams. The country director must have a mandate to give the country substantial if not full-time attention. Resident representatives need sufficient authority to make a wide range of programming and implementation decisions in the field. Despite the high up-front costs, adequately staffed resident missions are a precondition for successful Bank intervention in post-conflict situations. The circumstances of those countries, including weakened government capacity and rapidly changing conditions, require heightened support from the Bank.

Flexibility and speed are paramount in the programming, design, and implementation of Bank post-conflict reconstruction efforts. Standard Bank procurement and disbursement processes have often created stumbling blocks to post-conflict recovery. The Bank should make greater use of preparation and piloting funds, mechanisms for rapid procurement and disbursement, and training in-country entities responsible for procurement.

To implement post-conflict operations satisfactorily, the Bank must be prepared to allocate sufficient administrative budget resources for adequate monitoring. The overall Bank portfolio in a post-conflict country should periodically be assessed for relevance, that is, its contribution to sustainable peace and development. Project-by-project assessments often do not provide the broader picture, although multisectoral or adjustment operations should certainly be assessed on their contribution to the larger objective. The study revealed that delays as long as a year or more have reduced the usefulness of post-conflict completion reports. Post-conflict operations completion reports should be completed in a timely manner. In view of the need for such information in often highly volatile post-conflict settings, the interval between project closing and completion reports should be sharply reduced, with appropriate streamlining of the process. OED should develop guidelines on how to apply evaluation criteria with greater sensitivity to the post-conflict political and economic environment when conducting completion reports.

Conclusion

Societies emerging from conflict face daunting reconstruction challenges. The Bank is firmly committed to assisting these societies, and has much to offer. Its greatest strengths lie in supporting macroeconomic stabilization, rebuilding physical infrastructure, mobilizing resources, and coordinating aid. In other areas, such as rebuilding human and social capital, the Bank's support can be improved. New partnerships with other agencies should be promoted. The Bank can more fully support the peace process by advising peace negotiations on the economic development implications of peace accord options and, later, by implementing policy conditionalities that ease the implementation of peace accords. The post-conflict context implies other requirements for Bank assistance such as the need for proactive involvement of senior management in key decisions; strong commitment by country directors and teams; resident missions with adequate staffing and decision-making authority; timely evaluation and monitoring; and analytic and evaluation work that is sensitive to the potential for Bank operations to increase or decrease the tensions that lead to conflict. Bank processes should be adapted so that the programming, design, and implementation of Bank recon-struction assistance remain timely and flexible in the face of urgent needs and volatile circumstances typically found in post-conflict settings. The recent creation of the Post-Conflict Unit, the Post-Conflict Program, and the adaptable lending instruments are significant steps in this direction. Finally, the Framework for World Bank Involvement in Post-Conflict Reconstruction should be revised to constitute an Operational Policy statement that consolidates, clarifies, and refines .existing policy guidance for support to post-conflict reconstruction.