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Background

World Bank’s Work on Fragility and Conflict
Over the past decade the World Bank Group has rethought its role in supporting country development in low- and middle-income countries experiencing difficulties arising either from conflict or weak institutions and capacity. For low-income countries with reasonable policies and institutions, the Bank, in partnership with others, supports country-owned and -prepared poverty reduction strategies. For those countries whose development has been restricted by the effects of conflict or weak political and economic institutions, the Bank has developed a range of strategic and operational frameworks and financing arrangements (presented below) to address their unique challenges. 
For more information on the need for a special focus on fragility and conflict: "LICUS and Post Conflict: Results for Development"

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Fragile States
LICUS Task Force 
In November 2001, World Bank President James Wolfensohn set up a task force to extend this review process to the minority of low-income countries whose policies and institutions offer limited scope for poverty reduction through donor-supported programs and projects.
The Task Force on the Work of the World Bank Group in Low-Income Countries Under Stress (LICUS) was created to respond to concerns about how the development community, including the Bank, can best help chronically weak-performing countries get onto a path leading to sustained growth, development, and poverty reduction.

A summary of findings of the task force was issued and discussed by the Board on March 19, 2002 (the complete version of the report was discussed by the Board on July 30, 2002). In December 2005 the Board paper “Low-Income Countries Under Stress: Update", December 2005 was submitted to the Board, summarizing the progress made under the LICUS initiative as well as the priorities for future engagement.

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Conflict-Affected States
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The World Bank was originally founded as the International Bank for Reconstruction and Development (IBRD). Since its creation the World Bank's role in reconstruction has moved from rebuilding infrastructure to a more comprehensive approach and broader agenda, which includes the promotion of economic recovery, evaluation of social sector needs, support for institutional capacity building, revitalization of local communities, and restoration of social capital, as well as specific efforts to support mine action, demobilize and reintegrate ex-combatants, and reintegrate displaced populations. An increased premium has, furthermore, been put on preventing the onset, exacerbation, or resurgence of violent conflict.
In line with this more comprehensive approach to conflict-affected countries the World Bank has also broadened its scope by working to promote and integrate a sensitivity to conflict throughout the Bank in all its strategies and activities.

The World Bank's Operational Policy on Development Cooperation and Conflict OP 2.30 sets the overall context and defines the framework for Bank engagement in conflict-affected countries. OP 2.30 enhances the World Bank's capacity to respond rapidly and flexibly, and apply its full potential to break cycles of conflict. The World Bank's activities in conflict-affected areas are also informed by its Operational Policy on Rapid Response to Crises and Emergencies OP 8.00.
The World Bank’s instruments for strategic engagement in conflict-affected countries include Country Assistance Strategies, Interim Strategy Notes and Watching Briefs.

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LICUS Implementation Trust Fund
The LICUS Implementation Trust Fund was approved by the Executive Directors of the Bank in March 2004, allocating $25 million from the Bank's net income to provide modest support for LICUS countries that are undergoing a transition but are in arrears to the Bank and thus unable to obtain regular financing. The trust fund will support these countries in their efforts to introduce basic reforms, strengthen social service delivery, and establish a track record for subsequent access to regular World Bank financing and debt relief.

The LICUS Trust Fund has been replenished twice, first through a $25 million transfer from IBRD surplus in January 2006 and second through an additional $30 million transfer in November 2006. Through the process of the last replenishment the Board clarified that the LICUS Trust Fund can also provide limited support, albeit under more limited circumstances, for high priority activities in active IDA countries that cannot easily be supported with regular IDA resources.  LICUS Implementation Trust Fund: Request  for Second Replenishment, November 2006

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The Post-Conflict Fund
The Post-Conflict Fund (PCF) was established by the World Bank in 1997, to deepen the World Bank's understanding of conflict-affected countries and enhance its ability to support countries in transition from conflict to sustainable peace and economic growth. The Post-Conflict Fund supports planning, piloting and analysis of ground-breaking activities through funding governments and partner organizations in early stages of transition from conflict. The Post-Conflict Fund provides the World Bank with quick and flexible mechanism for early entry in the reconstruction process.


1 Conflict-affected countries are countries 1) that have experienced violent conflict in the past five to ten years, 2) that are currently experiencing violent conflict, and 3) that are perceived as being at risk of violence.




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