The Big Question: What happened to the money raised to help victims of the Asian tsunami?

Paul Vallely
Thursday 21 December 2006 01:00 GMT

Is it true half of it hasn't been spent?

According to the BBC's Newsnight programme, which claims it got access to a UN database, nearly two years after donors pledged billions to help the victims only half the money has been spent. Of the half a million people left homeless by the disaster, only a third have been permanently rehoused.

Some £3.43bn was pledged worldwide but, the BBC says, $3.3bn of that remains unspent. It was particularly critical of the Red Cross, which had been given £1.13bn globally but which still has £670m of that in the bank. Of the 50,000 houses it promised to build in Indonesia, Sri Lanka and the Maldives only 8,000 have been completed. The programme also claimed that many foreign governments had given just a fraction of the millions promised to the worst-hit areas.

So it's a cock-up all round?

Not all round. Smaller agencies like Cafod, which raised just £27m, have spent £21m already building homes and restoring livelihoods in a five-year relief and rehabilitation programme. And Oxfam, which set out a four-year plan, has provided safe water and sanitation to hundreds of thousands of survivors, and says it's on track to spend the funds entrusted to it by the public in the way it said it would, within the time-frame outlined. The problem appears to be with the house-building.

How hard can it be to build a few houses?

It's more than a few. It's half a million that are needed. What the Red Cross says, in its defence, is that before you can begin to build there are lots of other things to sort out first: identifying who needs housing, registering them, assessing land rights, assigning plots, planning constructions, finding contractors and negotiating contracts.

They have a point. In Aceh, the Land Registry itself was washed away, so there's no record of who owns what. Everything is up for dispute. Then there is the fact that most Acehnese rented their homes before the tsunami, so they are not entitled to new houses under government regulations. Should the Red Cross be building houses for exploitative private landlords to rent out again? If it would rather give houses to the poor, who does it buy the land from?

The leading 30 agencies involved in the rehabilitation effort came together as the Tsunami Evaluation Coalition and commissioned a top independent expert, Hugh Goyder, to report on their efforts. "Turning that money into good houses is not so easy as many people suppose," he now says.

In part that is because of practical constraints. There are just not enough competent builders in poor countries. But it is also because the agencies involved are outside their normal area of expertise. "Very few agencies are experienced in housing," says Mr Goyder. "People like the Red Cross are very good at humanitarian relief, temporary shelters, emergency food, water and sanitation - but not house construction on a very large scale. You have to be pretty professional to handle contractors. Agencies have been on a steep learning curve."

So we give money to the wrong people?

In a sense, yes we did. The public response to the tsunami was very untypical. A combination of events - the dramatic nature of the huge wave, its occurrence at Christmas, the size of the disaster, the fact that so many Westerners died, the availability of spectacular video footage and the extensive TV coverage that secured - meant that the global public gave far more than ever before.

It was the quickest and most generous international humanitarian response ever. Giving was on such a scale that private donations covered 40 per cent (£2.8bn) of the money raised. The usual figure is nearer 15 per cent. This meant that the public's cash was, for once, sufficient to cover both relief and reconstruction . And it was concentrated on comparatively small non-governmental organisations.

Who should the money have gone to?

Let Hugh Goyder explain. "The response was driven by the extent of public and media interest, and by the unprecedented funding available, rather than by an assessment of the real need," he says. "There wasn't a good fit between where the money was sent and where it was needed. It went to those organisations with the best fund-raising machines, rather than those with the expertise to do what was required. Unicef, has a great fund-raising machine, but no real expertise in house-building."

This was, in effect, a market in aid. What was needed, by contrast, was a more strategic approach which would have allocated the money to the organisations who could have spent it best.

"The lesson for the future is that agencies may need to re-allocate funds," says Mr Goyder, who queries the prevailing assumption that each agency needs to implement its own programme, particularly in the reconstruction phase. "Organisations like Oxfam are still out in Aceh because they have to account for how they have spent the money. Building houses is not what they do best. Agencies like that are stretched beyond measure."

Didn't governments too fail to deliver?

That's what Newsnight claimed. It said that Sri Lanka was promised £30.1m by Spain, £40.5m by France and £1,531m by China. But each has delivered only around £0.5m each. The United States promised £205m to Indonesia but delivered less than £35.9m.

So it's a scandal?

Hang on. It's true that governments leapfrogged one another with pledges to keep their public and press happy. And it's true we normally say " shock horror" when politicians fail to deliver what they have grandiloquently pledged. But you can't have it both ways. If there's more than enough money sloshing around already - because aid agencies haven't spent all the money they raised - what would be the point of governments coughing up more at this juncture? "Funding isn't the issue here," says Hugh Goyder. "The real question is, why weren't sensible pledges made in the first place?"

That goes to a more profound issue: how do we cope with a set-up where the public gives heavily to something dramatic on the telly but routinely ignores the silent tsunami of poverty which kills the same number of many children in Africa every month - but while no one is looking?

"Huge amounts of money were raised, and with that huge expectations were raised too," concludes Hugh Goyder. The expectations, he suggests, were unrealistic. Just look at New Orleans, he adds. The most powerful nation in the world hasn't been able to rebuild that yet. So why expect a bunch of aid agencies could do more? "Given the constraints, they haven't done badly."

Has the international response to the tsunami been a flop?


* Half the money pledged globally is unspent. Some £1.69bn is sitting in bank accounts, or has never been delivered

* Only one third of the half a million people rendered homeless by the disaster have been permanently rehoused

* The money went to aid agencies that were too small to mastermind such a mammoth task


* Hundreds of thousands of survivors have been helped with the basics through emergency care and long-term building is under way

* Issues around land ownership are far more complex in the Third World than critics glibly assume

* There's no point in delivering more money at this stage to countries who haven't got the physical capacity to spend what is available

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