Multi-Donor Trust Funds and Peace Agreements

Dr Sean Molloy is an Associate of the PSRP and a Research Associate at Newcastle Law School. In this post, he introduces his new report for the PSRP, Peace Agreements and Trust Funds, and examines how trust funds can form a crucial part of the success or failure of a peace process.

In an effort to end violence, peace agreements attempt to address multiple issues often in complex contexts. They can, for instance, seek to create a more equitable distribution of political, economic, and legal power, and create or restructure state and local level institutions to facilitate the governance of a state or sub-state entity. They also frequently establish mechanisms tasked with protecting specific sections of the population, such as women or ethnic minorities, provide for security sector or judicial reform, and initiate a range of economic and social transformations.

Translating the sense of optimism generated by the ‘handshake moment’ of a comprehensive peace agreement into real and meaningful transformation, however, requires the availability of capital – financial, human and technical – to help support the implementation of an agreement and the wider peace process. To this end, multi-donor trust funds, defined as ‘multi-agency funding mechanisms, designed to receive contributions from more than one donor’ (Walton, 2011: 1) are often necessary devices to help support the implementation of peace agreement provisions. These funds can take the form of global trust funds, such as the UN Joint Fund for the 2030 Agenda or regional funds as is the case with The United Nations Great Lakes Regional Strategic Framework. National trust funds exist to offer support in particular countries and can be administered by the country in question or by an appointed administrator such as the UN or World Bank. As a final example, sector-wide trust funds offer assistance to countries in regard to specific sectors (for example, agriculture, infrastructure, trade).

When established in contexts attempting to transition from conflict to peace, these mechanisms, their functions, the donors and recipients involved, along with the sequencing and amount of aid that they provide, can form a crucial part of the success or failure of a peace process. Not only are they necessary to help translate peace agreement provisions from paper to practice but can themselves facilitate or hamper negotiations. Notwithstanding their importance, there is little existing research on how peace agreements provide for or contribute to the ongoing operation of trust funds in transitioning societies. Drawing on the PA-X Peace Agreements database, a recent report by the PSRP attempts to address this gap. This post briefly summarises the reports findings.

1. Trust Funds can support peace in different ways

Trust funds serve a range of purposes. These can discerned from the express provisions of peace agreements and from the activities of MDTFs. Trust funds can:

  • Support implementation of whole agreements

In Liberia, as an example, the Decision A/DEC.3/8/90 on the Establishment of a Special Emergency Fund for ECOWAS Operations in the Republic of Liberia (Ecowas Peace Plan, 7 August 1990) established a Special Emergency Fund for the ECOWAS operations in Liberia. The Special Emergency Fund was to be endowed with an initial amount of US$50 million derived from contributions of ECOWAS member states and donor governments and institutions outside the sub-region (page 1).

  • Support implementation of discrete tasks or aspects of an agreement

For instance, an agreement between Eritrea and Ethiopia, (UN Security Council Resolution 1177, 26 June 1998) requested that the Secretary-General to provide technical support to the parties to assist in the eventual delimitation and demarcation of the common border between Ethiopia and Eritrea and, for this purpose, establishes a Trust Fund and urges all Member States to contribute to it” (page 2).

  • Support implementation at state, sub-state and local levels

An illustration, in this regard, is that of the UN Post-Conflict MPTF for Colombia, which, amongst other things, undertakes ‘activities related to peace pedagogy and strengthening of national and local authorities in preparedness for implementation of the peace agreement’. This fund was established to help support the broader peace process in Colombia and subsequently the implementation of the 2016 peace agreement.

  • Incentivise implementation, ongoing negotiations, or peace
2. Peace agreements have different relationships with trust funds.

Given the range of ways in which trust funds can, in theory, support peace processes generally and peace agreement implementation specifically, peace agreements can play various roles in supporting trust funds.

  • Peace agreements can provide for or encourage the establishment of trust funds.

In Guatemala, for instance, the 1996 Agreement on the Social and Economic Aspects and Agrarian Situation included provisions to re-distribute undeveloped land, to develop a land register, impose new taxes on land, and to implement speedy resolution of land conflicts.

  • Alternatively, peace agreements can indirectly serve as a catalyst for trust funds.

As an illustration, while the 2006 Comprehensive Agreement in Nepal does not provide for the establishment of a MDTF, in February 2007, the government initiated the Nepal Peace Trust Fund (NPTF) and earmarked one billion Nepalese Rupees (NPR) from the government to this fund. This initiative was designed to provide a mechanism for interested donor agencies and governments to contribute to the peace process by providing additional funding. The 2006 agreement thus provided the catalyst for the MDTF that followed.

  • Peace agreements can be used to encourage support for existing trust funds.

In Bosnia, for instance, the 1995 Conclusions of the Peace Implementation Conference held at Lancaster House ‘calls for immediate and generous help for the continuing work of the humanitarian agencies and for contributions to the ICRC appeals and the United Nations consolidated appeals. Often, peace agreements encourage or establish donor conferences to help galvanise resources from the international community.

3. Peace agreements can seek to harness the benefits while reducing externalities of trust funds

Alongside supporting peace in the ways identified above, there are additional potential benefits associated with MDTFs. They can, for instance, simplify funding and financing procedures; improve accountability both of aid received and spent; absorb political risk; improve both local ownership over the implementation of peace accords; and encourage dialogue and cooperation between national, local and international players. At the same time and conversely, limited time-scales provided for trust funds to function can impede longer-term strategic planning and the involvement of international actors can in fact reduce a lack of ownership over trust funds. There are also difficulties associated with the sequencing of aid.

In response, peace agreements can attempt to navigate the space between the positive and negative aspects of MDTFs both in regards to funds that an agreement establishes or those already in operation. These include:

  • Highlighting the importance of national ownership
  • Enabling sub-state units, or particular peace implementation bodies to receive donor assistance directly
  • Elevating domestic interests over international influence
  • Stressing the need for sequencing and absorption capacity of the recipient state

Read the full report here.

Walton, O., 2011. Helpdesk Research Report: Trust Funds in Fragile and Low Capacity States. Governance and Social Development Resource Centre. Available from http://gsdrc.org/docs/open/hd740.pdf