LONDON (AlertNet) - The Indian Ocean tsunami triggered the world's biggest ever aid operation. Billions of dollars poured in from all over the world. The money is being used by scores of U.N. agencies, governments, non-governmental organisations and local charities. But how does it all work?
We first need to differentiate between humanitarian aid for meeting immediate needs - food, clean water, medicines, temporary shelter and so on - and reconstruction aid for medium and long-term needs - everything from rebuilding roads to replacing fishing boats and improving coastal protection.
To help make things simple we can split aid into government donations and private donations.
Private donations
This could be loose change dropped into a charity box in your corner store or an online donation to the Red Cross and Crescent. When a charity like Oxfam knows it has raised $1 million it can tell its people at a disaster scene to go on spending up to $1 million - the money does not have to be physically there.
Government donations
This is more complicated because governments cannot give away money without contracts specifying its use. After a disaster a donor government will start by making a pledge, a non-binding promise that is often extremely general and could be in the form of a ministerial statement. It may well include both emergency relief and reconstruction aid. The pledge is an announcement of good intention but agencies on the ground cannot spend the money at this stage.
The critical step is when the government makes a commitment - a legally binding, signed contract. At this point the agency will get the go-ahead from its head office to spend the money even if it has not actually arrived. When it comes to humanitarian aid, a donor government will usually transfer the money within a couple of days of making a commitment.
How is this aid channelled?
Donor governments can give funds via the United Nations, through non-governmental organisations (NGOs) or as bilateral aid direct to another government. Japan for example transferred $250 million directly to various tsunami-affected countries. Australia has likewise pledged $1 billion in grants and interest-free loans to Indonesia.
In a situation like the tsunami where vast amounts are being donated it makes sense to spread money around rather than choke NGOs with funds faster than they can spend them.
Governments can also channel money via a multi-donor trust fund administered by the World Bank. This pooling of resources prevents the recipient country getting bogged down with multiple transactions involving dozens of donors all stipulating different conditions for spending their money.
A multi-donor fund has been set up for Indonesia where there was a risk that the administrative burden in dealing with the huge influx of tsunami aid would hamper action on the ground.
What about the immediate aftermath of a disaster? How are people fed and sheltered until the money arrives?
Many agencies such as the U.N.'s World Food Programme or the children's agency UNICEF have pre-stocked warehouses around the world with food, clothing and tents they can get to a disaster zone within a few hours. Even without cash pledges, they can respond immediately using reserve funds and recoup the money later.
Oxfam for example has what it calls a catastrophe fund and a store of life-saving equipment worth about $3 million, which can be sent anywhere within days.
Who co-ordinates emergency humanitarian aid?
Initial emergency relief is coordinated by the U.N. and its agencies and NGOs. After a disaster the U.N.'s Office for the Co-ordination of Humanitarian Affairs issues a flash appeal setting out the most pressing needs for up to six months.
The assessment is made by the U.N's main representative in the affected country liaising with U.N. agencies, NGOs and the government. The appeal will be divided into categories such as food, shelter, water/sanitation, health, education and agriculture.
Other agencies may make separate appeals. The Red Cross and Red Crescent movement is traditionally much faster than the U.N. in getting its own appeals out, launching them within a day or two of a disaster. A revised appeal will be drafted within seven to 28 days of the disaster, depending on its complexity and then at regular intervals thereafter. If the Red Cross/Red Crescent knows a cyclone is about to hit land it will draft an appeal in advance.
How does emergency relief get from the donor country to the disaster zone?
There is no central agency for channelling funds after a disaster. The flash appeal could be likened to a trade fair where agencies lay out their needs on stalls and donors choose what they want to pay for. The payment is made directly by the donor to the agency.
There is growing support among donors, NGOs and the U.N. for a central body as this would speed things up and reduce the cost of performing multiple transactions. It would also make the system more equitable as some sectors are repeatedly underfunded.
What can hold up the flow of aid?
Emergency humanitarian relief should arrive fairly quickly. The hold-ups usually relate to funds for reconstruction. After a disaster the government of the affected country will draw up a needs assessment in conjunction with bodies like the World Bank and NGOs. Donors have to wait for the government to work out what it needs before they can offer to fund specific projects.
But it is also true to say that some donor countries are slower than others in approving aid. Japan turned its pledges into commitments in just a few days whereas the United States took months to formally approve its tsunami aid.
What role do the World Bank and Asian Development Bank play?
They operate almost entirely bilaterally and do not fund humanitarian action. They see their mission as medium and long-term reconstruction. This explains why the banks have so far only disbursed a fraction of the tsunami money they have put aside. It will start kicking in as the immediate relief operation gives way to infrastructure and livelihood projects to get people back on their feet.
Most ADB tsunami money is in the form of grants with some concessionary loans. Most of the World Bank's tsunami commitment is in the form of credit. Projects include restoring livelihoods, transport and housing, establishing an early warning system for the Indian Ocean and coastal protection.
