The United Nations Response to the Indian Ocean Earthquake and Tsunami

Briefing to Member States
By
Alastair McKechnie
Country Director for Afghanistan, Bhutan and Maldives
The World Bank
United Nations, New York,  January 28, 2005

It is hard to believe that this disaster struck only 33 days ago.  Our colleagues in the UN system can justifiably be proud at the scale and impact of the relief effort across the Indian Ocean region.  Much has been done to meet the basic needs of food, shelter, water and health care of those affected by this tragedy.

The responsibility now falls upon those of us now charged with planning, financing and implementing the recovery and reconstruction of the affected areas.  It is time for us to launch an effort that restores communities not to the poverty of before the disaster, but gives them hope and elevates them to the path of higher development.

Damage or needs assessments either have been completed or are being finalized with the governments in Indonesia, Maldives and Sri Lanka.    These have been carried out by teams consisting of government officials and staff from the ADB, UN, World Bank and some bilateral donors.  Current estimates of damage are $4.45 billion for Indonesia, $310-510 million for Maldives and $900-930 million for Sri Lanka.  The India needs assessment will start next week, and the government has roughly estimated that reconstruction would cost $1.5 billion, excluding the hard hit Andaman and Nicobar Islands. The Seychelles government estimates the cost of damage to amount to $30 million and no information is available on the costs in Somalia. 

These very preliminary estimates suggest the cost of rebuilding will be at least $7 billion. To this should be added additional costs of restoring livelihoods and financing any temporary macroeconomic imbalances.  It is clear that the financing needs of the affected countries will be very large indeed, and the economic condition of most of the affected countries indicates that this financing should be on grant or highly concessional terms.

Because of the magnitude of the disaster and its impact on multiple countries and conflict-affected regions, there are special challenges for financing reconstruction and for aid coordination.  These  include:

Ensuring strong country ownership of reconstruction and commitment to implementation.

Making the transition from emergency relief to reconstruction seamless and efficient.  It is desirable to launch reconstruction as early as possible to restore livelihoods and markets and to avoid long-term dependency on relief aid.

Government coordination of the efforts of many donors— more than 60 countries were represented at the UN Flash Appeal in Geneva, each potentially with its own financing, fiduciary, and monitoring and evaluation procedures.

Channeling funds efficiently and transparently to a multiplicity of small and dispersed activities in four countries—facilities worst affected by the disaster were private housing, small business (including fishing and agriculture), schools, and clinics.

Providing for an equitable distribution of reconstruction activities.

Ensuring that funds are put to their intended use.

Let me comment on some of these issues.

Country  leadership would mean that aid coordination during the next phase of recovery and reconstruction would most likely take place at the country level and be country led.  Existing aid coordination mechanisms are available; the Consultative Group for Indonesia has already met on January 19-20 and mobilized $4.5 billion for tsunami related reconstruction and regular development.

Getting people back to self-sufficiency and coordinating assistance to small scale activities  have implications for how efficiently we provide support.  There are lessons from elsewhere that show the advantages of cash for work, programmatic rather than project driven approaches, and community driven development programs that build upon the knowledge and resources of the community.  Four thousand extension workers of an already successful community development program are in place in Northern Sumatra and can be mobilized for reconstruction.  Successful microfinance institutions exist in the affected areas of India and Sri Lanka.

Trust funds are a proven instrument for channeling funds to country priorities, lowering the costs of administration in both recipient and donor, simplifying reporting and providing fiduciary oversight.  Trust fund oversight can be by a committee of multilateral institutions that would ensure equitable distribution of trust fund resources.  The Afghanistan Reconstruction Trust Fund has been cited as an example of how such a trust fund might be organized.  The World Bank is having discussions with several countries and donors about establishing multi-donor trust funds that will finance the next phase of recovery and reconstruction.

Ensuring accountability and transparency is essential to maintaining the confidence of both affected communities and donor country governments accountable to their taxpayers.  Again there are established models for making information on the sources and uses of funds available to those receiving services, and for contracting out auditing, financial management and procurement to outside firms.

Let me add that the World Bank is fully committed to supporting the reconstruction of the tsunami affected countries.  Apart from our role in the needs assessments, we have made funds available for the purchase of urgent supplies through existing soft loans almost immediately.   Within the next few weeks we shall free resources for recovery and reconstruction by restructuring existing soft loans.  Within the next month or two we shall seek approval from our Board for emergency recovery grants and credits.  We are seeking to provide these funds programmatically through direct financing of investment programs, budget support and to multi donor trust funds.

Chairman, ladies and gentlemen…

This is a disaster or regional and global proportions that demands a special response.   We need to help countries restore livelihoods, get people back to work with dignity, and to establish their homes.  Our aim is not to rebuild poverty, but to see that those devastated by the disaster have the hope of a better life.  Reconstruction will only take place if we work together and coordinate and simplify our assistance.  The World Bank will work closely with its UN partners, particularly during the transition from relief to reconstruction, and build upon the wealth of information that has been accumulated during the relief phase.  Large amounts of money have been pledged.  Reconstruction cannot wait.  The time to begin is now.