The role of public finance in securing development

In my first-ever trial as a twenty-something prosecutor, I confronted the question of the use of force by a security actor. In this case, it was a lowly ‘drunk and disorderly’ trial. When, during cross-examination, a policeman admitted he had raised a fist unprovoked against the (aged) accused, I conferred with the judge and dropped the case.

Questions about the role of security institutions using force in a range of contexts constantly play on our minds: the killing of a citizen by a policeman in unclear circumstances; the launch of missiles or drone attacks on foreign territories as punishment or part of ‘counter-terrorism’ measures. Or we experience the direct effects of localised conflicts, with insurgents causing displacement and egregious hardship.

The ‘security-development nexus’ has been present in policy discourse for more than two decades to help us contend with two challenges: first, how to improve security ‘outcomes’ for citizens; and second, how to reform security as an ‘instrument’, so that it performs a service in our interest as citizens that is professional, accountable, and effective.

But policy discourse has translated into mixed progress on the ground. There are few evidence-based examples of success in the reform of security institutions. Where security reform has been part of an endogenous political process of transformation then changes are palpable.

Democratisation and demilitarisation in Latin America and the transitions in eastern Europe are good examples. Yet as the 2011 World Development Report on Conflict Security and Development reminded us, military transformations (for example, withdrawal from the political arena) take time; 17 years in the quickest cases (Portugal and South Korea).

What has been more challenging is for security sector reform (SSR) as a ‘development project’ to achieve the kinds of gains that can be achieved in other sectors (as indicated, for example, by the Sustainable Development Goals). Many of the prominent international interventions in war-to-peace transitions, such as Afghanistan, Iraq, Mali and Somalia, have security sector reform as key components. But so far there have been few signs that militaries and police forces are being transformed into capable and accountable security service providers, not only for the state but for citizens.

The link between public finance and the security sector has been largely missing from this growing body of policy and practice. While general aspirations for affordability are often stressed regarding SSR, there has been little guidance to support governments in better understanding whether security sector costs are contained within a sustainable macrofiscal envelope, let alone efficiently and effectively allocated.

After all, domestic revenues are the largest source of funding for security and justice institutions. To coin a phrase from the work on financing development: “a country’s ability to mobilize domestic resources and spend them effectively… lies at the crux of financing for development.” These are also at the heart of financing and reform in security.

To fill this gap, a ground-breaking piece of work has come to fruition after a three-year partnership between the World Bank and the United Nations. The product is the publication ‘Securing Development: Public Finance and the Security Sector’. This is a sourcebook providing guidance to governments and practitioners on how to assess public expenditures, to produce the necessary data and analysis to inform decisions around security policy.

The sourcebook builds on a public finance assessment tool, the public expenditure review, which is a tried-and-tested modality for assessing government sector budgets, for example in health or education. This has now been adapted for use in the security and criminal justice sectors. The partnership has been of value in combining the World Bank’s technical strengths in economics, public finance, institutions and governance with the UN’s experience in security, peacekeeping operations and the rule of law.

The partnership has provided rigour to the policy dialogue in the form of data and analysis of the critical challenges facing governments. In war-to-peace transitions, for example, countries face key trade-offs between integrating armed groups into a national force and the fiscal constraints of paying an army. In countries such as Liberia and Somalia, governments have been able to start weighing options on the size of their respective armies, options for right-sizing, including costs for demobilisation and pensions, as well as costs related to increasing police numbers.

In other settings, these tools have been used to provide recommendations on areas in which governments can tighten management and budget controls and obtain greater efficiencies (for example, in the Central African Republic, Mexico, Mali and the Philippines). Above all, it has allowed for a better integration of security institutions, more often than not treated exceptionally, into the government budgeting process. Reform of public financial management in security is a way, albeit an incremental one, to strengthen civilian oversight, accountability and transparency.

In turn, this has potential to improve the way in which external actors finance security institutions in developing countries. According to the OECD, “aid to the security sector comprises a small amount of all sector-allocated aid” (some 1.4% for security and 3.1% for related justice). In 2012, aid allocated to building the security sector in fragile states totalled only US$858m. These figures do not include direct military assistance, which runs into several billions of dollars (and which, as yet, is not globally measured). This aid does not usually follow the principles of ‘aid effectiveness’ and is often provided unilaterally, without scrutiny, consultation or coordination.

Governments still play the primary role in security provision, but bringing in the public finance perspective is beginning to show promising dividends as they face the policy and operational challenges of modernising security services and making them more legitimate and effective.

This article is from Friends of Europe’s upcoming discussion paper  ‘Investing in Sustainable Peace and Development’, in which international experts in these fields consider how policymakers can address the security-development nexus to build peaceful and inclusive societies. This discussion paper complements the Friends of Europe Policy Insight debate ‘To achieve Agenda 2030, give peace a chance’, held as part of the 2017 European Development Days.