AFRO-NETS> Global Fund stalls

[Claudio Schuftan <aviva@netnam.vn>]

Global Fund stalls
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Politics and Policy; 
Infectious-Disease Fund Stalls Amid U.S. Rules for Disbursal

Wall Street Journal 5 August, 2002

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By MICHAEL M. PHILLIPS, Staff Reporter of THE WALL STREET JOURNAL

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A highly publicized fund set up at the behest of the United Nations 
has raised $2.1 billion to fight AIDS and other infectious diseases 
in the developing world. It has announced $1.6 billion in grants 
aimed at life-saving projects in 40 countries. But it has yet to give 
away a single penny.

That is largely because of demands led by the Bush administration 
that the new fund set up a world-wide aid-delivery system from 
scratch -- instead of relying on established agencies the administra-
tion distrusts, such as the U.N. and World Bank.

The Global Fund to Fight AIDS, Tuberculosis & Malaria was created in 
January in response to U.N. Secretary-General Kofi Annan's call. Its 
establishment stirred great hope that rich countries would finally 
spend enough money to defeat diseases that together kill six million 
people a year, mostly in developing countries in Africa and else-
where. Now, however, it is caught in a dilemma between poor nations' 
need for immediate help and donors' antipathy toward agencies set up 
to provide it the fastest.

Tanzania, for example, was promised $25 million for AIDS and malaria 
projects in April when the first round of grants was announced. 
"We're now awaiting a reply from them as to when we can have these 
funds," says Maj. Gen. Herman Lupogo, head of the Tanzanian Commis-
sion for AIDS. "We needed them yesterday."

It is a quandary that exemplifies the pros and cons of the Bush ad-
ministration's war on what it considers wasteful foreign aid. The ad-
ministration is openly dubious that past aid funneled through estab-
lished agencies has had any positive effect -- a topic Treasury Sec-
retary Paul O'Neill has repeatedly stressed, including during his 
much-ballyhooed African jaunt with Bono, the rock star.

The administration vows to resist any efforts to increase foreign as-
sistance unless it can deliver quick, measurable improvements in the 
lives of the poor and sick, and it repeatedly has placed conditions 
on U.S. largess toward that end. The Treasury Department promised 
$300 million in extra funds for the World Bank's loan program for the 
poorest nations, but only if it can demonstrate results. President 
Bush proposed a $5 billion-a-year aid fund aimed strictly at coun-
tries that can meet objective standards for economic and political 
reforms.

And the U.S. pledged $500 million to the global AIDS fund. But the 
administration insisted -- joined by Britain and some other donors -- 
that the fund shun existing aid agencies and build its own system. 
That means it has to line up its own procurement, administrative, au-
diting and other services in each country for each grant.

"I can't tell you how much resistance we've had to this" from some 
global-fund recipients and donors, said one senior U.S. official. 
"We're anxious for quick victories, [but] better that it be done 
right and later, than early and wrong." The fund and its backers face 
mounting pressure to get the money flowing. Some 40 million people 
world-wide carry the virus that causes AIDS; an additional 20 million 
have died of the disease since it first surfaced in the 1980s, and a 
quarter-million more are dying each month. The spread of the AIDS vi-
rus has made vast numbers of people in the developing world and for-
mer East Bloc nations more vulnerable to TB, which claims two million 
lives a year. And as many as 500 million people contract malaria an-
nually.

The fund approved 58 project applications in its first round. Among 
the winners are a Nigerian campaign to widen access to AIDS drug 
cocktails and a Tanzanian project to increase the use of bed nets im-
pregnated with insecticide to combat malaria. Another approved pro-
ject is an effort in Madagascar to promote the use of condoms, mos-
quito nets and other health-related items by using marketing tech-
niques and local retailers such as street vendors and market stalls.

Although the fund has a new executive director, Richard Feachem, it 
is still advertising for many senior positions -- another holdup in 
distributing funds.

"Of course the recipients are impatient -- they want to get started," 
says Dr. Feachem, on leave from his post as director of the Institute 
for Global Health at the University of California. "Equally, the 
countries are understanding that we have to put new arrangements in 
place."

Dr. Feachem hopes to get money to a handful of projects by the time 
his board next meets in October. But even that goal remains up in the 
air. And the vast majority of grant winners probably won't see any 
funds until the end of the year, if not later.

"I don't see any justification for that kind of excess precaution," 
says Milly Katana, a Ugandan AIDS activist who represents private 
charities on the fund's board. "Personally I don't want to just light 
the money on fire and burn it, but at the same time lives are being 
lost."

Dr. Feachem and U.S., British and many other donors say the fund is 
making quick progress for a brand-new aid program. Nonetheless, ten-
sion has emerged among donors and recipients over how fast to go, 
versus how careful to be. "There's simply a higher level of attention 
being paid, and it's [angering people] who are used to having large 
amounts of money given to them," said the U.S. official. "Some of the 
Europeans don't feel as strongly about that -- they just dish the 
money out."

The fund was set up as a Swiss foundation after a spat among donors 
early on; Italy and others were aligned against the U.S. and those 
who didn't want it run by either the U.N. or World Bank. "We would 
have favored a stronger role for the World Bank in the whole dis-
bursement procedure," says Claudio Spinedi, a senior aid official in 
the Italian Ministry of Foreign Affairs.

Initially, despite the U.S.'s discomfort, the fund tried to negotiate 
with the World Bank, the world's largest economic-development lender, 
to take responsibility for the money and its use.

Bank officials, however, refused to accept that role unless they also 
had input into how the projects were selected and implemented -- a 
condition unacceptable to the fund and the U.S. The issue is still in 
limbo, but for the moment the bank has agreed only to hold the fund's 
money and wire grants to the recipients the fund designates.

The fund quickly set up a panel of technical experts who reviewed 
300-plus applications and chose the first recipients. But the fund 
still has only a vague outline of how it will distribute money, moni-
tor its use, and judge its effectiveness. Dr. Feachem promises that 
the fund's staff will number no more than 50, meaning it likely will 
have to hire outsiders to monitor projects in what could ultimately 
be 100 or more countries.

According to the current plan, each project will involve:

* A principal recipient -- perhaps a foreign health ministry, local 
government, company or private charity -- that will implement the 
project, assess its success and report its conclusions to the fund.

* A local fund agent -- such as an accounting firm, bank, or charity 
-- that will audit the money's use. The agent won't examine whether 
the project succeeds.

* A third independent agent that will periodically verify the princi-
pal recipient's assessment of the project's impact on public health.

U.S. officials acknowledge that their approach means somewhat slower 
delivery of the aid, and risks a crescendo of criticism. But, they 
say, if the fund doesn't prove its merits by financing effective 
health projects, the donors won't refill the kitty when it runs dry.

Write to Michael M. Phillips at <michael.phillips@wsj.com3>

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