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    By Mariella Ciuffreda, Sladjana Cosic and Harald Schölzel

    No poverty. Some might call it a utopian ideal, but it is an achievable feat. Eliminating poverty is not just an economic necessity. It is our global responsibility. “No poverty” is the first among the United Nations Sustainable Development Goals, our blueprint for a better and more sustainable future for all. The 17 goals, intended to be achieved by 2030, are interdependent. If we cannot meet one of them, we fail at all of them.

    But poverty is more than just a lack of money or assets. It is lack of food and shelter, as well as lack of access to affordable education, healthcare and basic infrastructure services. To solve poverty, we need to address the underlying issues that contribute to it. Fragility is a critical one.

    Today, half of the world’s poor people live in fragile or conflict-affected countries1. By 2030, up to 80% of the extremely poor are projected to be living in fragile contexts2. Note that’s the same year by which we are supposed to end poverty altogether. This is why fragility has been recognised as a key impediment to the achievement of Sustainable Development Goals, and to our efforts to promote peace and prosperity3.

    Today, half of the world’s poor people live in fragile or conflict-affected countries . By 2030, up to 80% of the extremely poor are projected to be living in fragile contexts

    States of fragility

    Addressing fragility will require investment, one that will strengthen countries’ institutions and make their economies and societies more resilient. This is why many international financial institutions, including the European Investment Bank, are scaling up the volume and types of financing they provide to fragile contexts through both public and private sector investments.

    But how do we even determine which country is fragile? Fragility is characterised by unstable institutions and poor governance, which result in weak political, fiscal, security and service delivery functions. Fragile states are either unable or unwilling to fulfil these core functions for the majority of, or for specific sections of society. They are also more likely to experience violent conflict.

    The link between conflict and fragility is clear. To understand conflict’s causes and drivers, one has to consider the overall institutional framework of the country. Fragility of both institutions and societies are key risk factors for conflict.

    Fragility and conflict have been identified as critical development challenges, both for low- and middle-income countries, and they represent a major trap for developing countries. Since 2010, we have seen a dramatic spike in the number of violent conflicts4. From highly internationalised conflicts, such as the war in Syria, to localised conflicts in east Ukraine, northern Mali, and Mindanao in the Philippines.

    But fragility is about more than just conflict. A country doesn’t need to experience an outright violent conflict to be deemed fragile.

    To understand how fragile a country is, the European Investment Bank relies on specialised sources, such as the Organisation for Economic Co-operation and Development. Its 2020 States of Fragility report lists 57 fragile states. The European Investment Bank has planned or active operations in 39 of them. Other relevant sources include the World Bank’s Harmonized List of Fragile Situations, and the Global Peace Index.

    Sense and sensitivity in conflict development solutions

    Not to invest in countries affected by fragility, conflict and high levels of violence, would be to disregard two billion people living in them. The European Investment Bank has a long record of investing in fragile contexts inside and outside Europe.

    The Bank itself was born at the heart of the European peace project. World War II wounds were still healing back when the EIB was founded. Economic integration was a major aspect of peacebuilding in Europe, and the European Investment Bank played a central role in it.

    In the aftermath of the conflicts in former Yugoslavia in the 1990s, the Bank emerged as the leading international financier supporting reconstruction in the Western Balkans. More recently, the EIB developed, together with the European Commission, a €200 million Early Recovery Programme to support the conflict-affected areas in Ukraine. The United Nations Development Programme is helping ensure the transparency of the programme’s implementation.

    Since the civil war broke out in Mali in 2012, the EIB has supported small businesses and financed water and energy infrastructure in the country. In the capital, Bamako, the Bank worked to provide clean water to more than half a million people, many of whom have fled the conflict-hit north of the country. The Bank is also contributing to the peacebuilding process in Colombia, having approved more than €600 million in financing for infrastructure projects since 2006. It set up an office in Bogotá to promote economic and social development on the continent.

    Bringing water to Gaza

    Gaza has a water crisis. Only 3% of its freshwater meets the World Health Organization’s quality guidelines. One of the most densely populated places in the world, Gaza faces the worst drinking-water conditions in the region. After a decade of work, however, we are close to securing clean water to two million people.

    The solution: a desalination plant powered partly by solar energy , which will provide 55 million cubic meters of quality drinking water a year feeding a rehabilitated and upgraded water distribution network. This project is a result of an international collaboration spearheaded by the European Investment Bank, and its €580 million cost will be split equally between Western and Arab partners.

    It’s a story over a decade in the making, due to the lack of stability in the region and the complex political context.

    Anywhere else, this project might have been easy to implement. But Israel gives approval for the entry of materials and people into Gaza and takes a special interest in “dual use” materials that it considers potential security concerns. Thanks to the commitment of the parties involved, a solution has been found, which will enable the materials to travel to Gaza so the plant can be constructed.

    The EIB’s Conflict Sensitivity Helpdesk supports the project by providing relevant political economy insights and suggesting appropriate measures for project preparation

    The idea for a desalination plant had been recommended years before the EIB stepped in, but as many development projects in fragile areas it required an increased commitment and resourcefulness.

    A common thread

    Fragility is a complex phenomenon. As such it is closely linked to other significant development themes, among which climate change, gender equality, and migration and forced displacement are notable. The European Investment Bank is making important contributions in each of these.

    I. Climate change

    Climate change is a major driver of fragility and a threat multiplier.This doesn’t mean that conflicts emerge solely due to climate change, but that its impact often exacerbates the existing fragility. It is also likely to result in an increase in conflict and violence. On the other hand, conflict and fragility negatively affect the country’s ability to respond and adapt to climate change. The relationship is troublesome both ways.

    However, climate action intervention can also contribute to conflict prevention. Reducing fragility—thereby improving a country’s ability to respond and adapt to climate change—contributes to the success of environmental and climate investments. As the EU climate bank, the EIB seeks to apply its experience in climate finance and reinforce the work on supporting climate projects in fragile contexts.

    II. Gender equality

    Gender considerations should be fully integrated in post-conflict and conflict-prevention policies and programmes. There is a strong correlation between women’s empowerment and gender equality and peace levels in a country6. A 2015 global study even named gender equality the number one predictor of peace. If you contribute to gender equality, you contribute to conflict prevention in a fragile context.

    Women suffer disproportionately from the effects of violent conflict. At the same time, women have a critical role to play in peacebuilding, even though they are often excluded from positions of power. During conflict and post-conflict, women take on the roles of community mobilisers, often lead the recovery efforts and provide humanitarian aid. Women played a critical role in economic recovery in the aftermath of the 1994 genocide in Rwanda and in the Colombian peace negotiations, the result of which is internationally recognised as history’s most inclusive peace deal.

    Since 2018, the European Investment Bank has provided training to its staff focusing on the connection between gender equality and fragility, and seeks to operationalize it by embedding gender equality in everything we do in fragile contexts.

    III. Migration and forced displacement

    An unprecedented 70.8 million people have been forced from their homes in 2019. Among them 25.9 million refugees7. The overwhelming part, however, were internally displaced people impacted by conflict. It’s no wonder migration and forced displacement have become major areas of focus for global development policy makers and institutions in recent years.

    In 2016, the European Investment Bank launched the Economic Resilience Initiative, as part of the European Union’s response to the challenges in the Southern Neighbourhood and Western Balkans. The Economic Resilience Initiative blends funds from donors with EIB financing. It is designed to help these regions respond to crises such as refugee migration, economic downturns, political instability and natural disasters. The initiative is also focusing on creating employment and enhancing economic growth.

    How things should be done

    There were 54 active conflicts in the world in 20195. To break the cycle of fragility and conflict we need to help these societies and their institutions recover. We need to invest in these countries, but in a way that will empower people and create the conditions for them to invest in their own lives. How can investors do that without making a bad situation worse?

    >@EIB

    Uppsala Conflict Data Program.

    First, fragile states are not “blank slates” – or blank states, on which one can build new economic and social systems from scratch. This means dealing with the remnants of its institutions, however compromised they might be.

    If investing in a fragile context, one needs to understand the local context. Not all fragile situations are the same. Avoid the “one size fits all” approach. Adapt strategies, products and services to fit the current and future needs of people and societies, which allow them to be flexible and resilient in times of crisis.

    Expect that the project might take longer to get off the ground compared to regular circumstances. We mustn’t look for a quick fix, but rather a long-term solution. Economic investment alone might create wealth, but this wealth can be destroyed if the conflict re-emerges. This is why we need to apply a conflict sensitive approach and focus on conflict prevention. The investment should enable inclusion of different sections of society, especially those groups that are in danger of being excluded and under-represented. Ensuring an inclusive stakeholder engagement , which specifically targets marginalised groups, can lead to better development outcomes and higher levels of trust from local communities. Continuous inclusive stakeholder engagement is essential in countries where the sources of violence and conflict may be exclusion, discrimination, and marginalisation.

    The main contribution of investment to conflict prevention is in providing conditions for self-sustaining economic growth, accompanied by significant employment creation and income generation. This is crucial to build peace in post-conflict situations. Employment is particularly important to short-term stability as it enables reintegration of ex-combatants and returnees.

    Fragile states are not “blank slates” – or blank states, on which one can build new economic and social systems from scratch.

    Partnerships with local communities, civil society organisations and relevant international organisations are especially vital in fragile and conflict-affected countries. These can strengthen project implementation and lead to efficiency savings, improved targeting of beneficiaries and potential innovations – all of which can help improve project outcomes and sustainability as well as enhance stakeholders’ sense of ownership.

    Finally, the idea behind investment in post-conflict countries is not to restore these societies to the very pre-war conditions that fuelled the conflict in the first place. But to support the transformation of these societies politically, economically and socially by building institutional resilience and creating conditions for investment. Helping these countries make their institutions stronger and providing people with the support to rebuild their lives and livelihoods is the only way of breaking the vicious cycle of fragility and poverty.

    Mariella Ciuffreda is a policy officer at the European Investment Bank. Sladjana Cosic is a senior social development specialist at the Environment, Climate and Social Office (ECSO) of the European Investment Bank. Harald Schölzel is a water engineer at the European Investment Bank.

    1. World Bank
    2. OECD
    3. The New European Consensus on Development, signed by the European Union and its Member States on 7 June 2017, stresses that "countries in situations of fragility or affected by conflict require special attention and sustained international engagement in order to achieve sustainable development" and that "the development cooperation of the EU and its Member States will be targeted where the need is greatest and where it can have most impact, especially in Least Developed Countries and in situations of fragility and conflict”.
    4. World Bank
    5. Uppsala Conflict Data Program
    6. World Bank
    7. UNHCR