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More Fiscal Monitoring Expected from Donors: Watchdog

The forest burns near Prey Long, Cambodia in this undated handout photo. Senior government officials and tycoons in Cambodia, including relatives of the prime minister, are illegally felling some of that country's last, once great forests while internatio

[Editor’s note: Officials of the UK government said recently the donor country could start withholding future funding from countries that don’t detail how they spend foreign aid. The potential new conditions come as many developed countries are looking for ways to tighten budges and deal with the ongoing effects of the global financial crisis. The UK policy would be attached its $13.2 billion annual aid budget. George Boden, a campaigner for the British watchdog Global Witness, recently spoke to VOA Khmer about the implications of such a policy.]

One of the concerns that we’ve had in many of the case studies for countries that we look at—Cambodia being one of them—is donors continuing to give money for years and years without securing reform of the government.

What do you think the purpose of these aid conditions is?

We very much welcome the announcement of the British government, and we believe [there are] two purposes to the conditions that they’re putting on their aid.

The first is that Britain’s aid budget is increasing over the next few years. Again we very much welcome that. But the government needs to show that this aid has been well spent and that it can justify that increase in expenditure to the British public.

And secondly, and most importantly for us, it’s very important that aid is given in such a way that it promotes sound financial management and good governance. It should also be extended to money from other sources, in particular money from natural resources.

How might this action impact Cambodia?

The British government took the decision last year to end their bilateral development assistance to Cambodia. And as such it’s not clear what impact this announcement would be on development assistance to Cambodia.

However, I would say the UK is still a major multilateral donor, through a series of different agencies, including the EU. So, it’s possible that this idea will ensure that the aid money going to the government is well used.

The other thing to remember is that this announcement is part of an initiative from a number of different governments and the Open Government Initiative. And all of the governments partaking in this are keen to promote transparency both in terms of being transparent with the aid which is given, but also to promote good financial fiscal management to ensure the money that passes through the government system is well spent.

Again, I reiterate our major concern is that [the policy] doesn’t just stop the aid money; they should look at all incoming revenues to ensure that the government is open and transparent about the money they receive and how they use it.

I would add we are not in any way calling for donors to start stipulating how government spends that money. That policy is up to them, as long as it is done in an efficient and a transparent way. That’s exactly what we are calling for. So it may be that some of Cambodia’s other donors also look at similar policies, which could of course impact Cambodia.

What is the value of this policy globally?

One of the concerns that we’ve had in many of the case studies for countries that we look at—Cambodia being one of them—is donors continuing to give money for years and years without securing reform of the government.

To take Cambodia as an example: What we’ve seen over the course of over 10 years is that the government for years and years has been given more and more funding and assistance, while the government has failed to manage incoming revenues from natural resources and other sources.

Improperly, [the revenues] don’t appear in the government’s accounts. We don’t know how they’ve been spending that money. This leaves an accountability gap. So the value of this policy is it covers all revenues coming into the government, particularly natural resource revenues.

If we look at Africa, for example, and the amount of money that goes in from natural resources, [money] for natural resources to the continent is nine times the value of aid. So making sure that those revenues reach government accounts and are spent properly is just as important as making sure the aid does.

We think this policy could really improve governance. It could improve the management of revenues, and it could promote and move the country into a situation where it moves beyond aid dependency and depends on its own revenues and with well-functioning government to act for the interest of its own people.

The US Dodd-Frank Financial Reform Act was passed last year. How do this act, the new conditions of the British government and the EU’s similar legislation contribute to promoting the transparency and governance in the world?

The US passed their Financial Reform Act last year, including Section 1504, which means that all companies listed in New York and who operate in the oil, gas or mining sector have to publish the payments they make to foreign governments.

So in countries around the world, including Cambodia, companies like Chevron and some of the other large major oil companies will have to start publishing all the payments that they make to the governments, including the Cambodia government.

So for the first time Cambodian citizens and citizens in resource-rich countries around the world will be able to see exactly how much money their governments are receiving in return to their countries’ natural resources, and they will then be able to hold their governments to account and ask where that money is going to and what it is being used for.

That includes making sure that companies are prosecuted when they pay bribes to foreign public officials and includes making sure that they are transparent in their dealings with foreign governments. So it’s much more difficult for corruption to take place.

We do think that it is the role of donor countries to both work with governments and citizens of the countries to improve capacity to deal with incoming revenues and to manage their natural resources and share expertise with those countries. But also where the governments are not acting in the interests of the people, when they are corrupt and they are stealing their countries’ natural resources and revenues, [donors] should hold those governments to account and they should withhold funding.

It’s two sides really, making sure we can see how much money is going in in the first place, which is what the Financial Reform Act does and what EU legislation would do, but also, once that money gets to that country, you know how much is there. It means ensuring that [the money] is accounted for properly, that it’s transparently managed and that you can see that the citizens of that country can see what it’s used for.