 Okay. Thanks everybody for coming. This is a Chevron forum and it's the conversations about Darius donor perspectives on development is what with a particular emphasis on global challenges as well as the shifting landscape that we're all operating in. I think it'll be a very interesting discussion. We've got three very qualified folks to share their perspectives on this. I'm going to ask them to please come up to the table now and join me. Dr. Preston, who is the representative for DFID here in Washington along with Mr. Kei Chiro Nakazawa, who's the representative for JICA. He's going to be leaving us in a few weeks, which is really a pity because he's been very well liked here in Washington and has done an excellent job representing JICA and the Japanese government. And then my friend Jennifer Adams, who's the director of the Office of Donor Engagement Bureau for Policy Planning and Learning. So I think we've got the right group of folks who are the, I think can help us talk about the challenges that are ahead. I think we just had a very interesting pregame lunch discussion that we talked about issues of how do we engage with the private sector? How do we think about financing for development? How are the Darius donors thinking about the post-Busan global partnership conversation? We also want to talk about the role of emerging donors, donors such as China and Brazil and what role they have in this discussion as well. So without further ado, I'm going to ask each of my panelists to share a different perspective on how they think about development in each country as a slightly different take. And then we can have a conversation during the panel and we'll open up for a broader discussion. So Andrew, the floor is yours. Great. Thank you very much, Dan. And thank you for the invitation to be here. As Dan says, I'm the development counselor based here. My focus as a DFID person is to work with the U.S. and to promote sort of U.S.-U.K. working on international development. I want to use my time to really cover three areas. I'll give you two minutes around DFID, the U.K. Government Department for International Development, touch upon some of those global shifts and maybe talk in very limited detail about the nature of those shifts. And then finally finish by thinking about what that means, what are the implications of that, both for the international development community but also specifically for DFID. So let's do that. So a word about DFID. The U.K. Government Department for International Development was set up in 1997. It's a cabinet level ministry, so separate from our foreign office or State Department equivalent. It has a very clear focus on poverty reduction and that's set out in legislation, the 2002 International Development Act. Generally within the U.K. there is broad cross-party support for work on international development. In 2013, for the first time the U.K. has spent 0.7 percent of GNI on overseas development assistance, which makes us the first G8 country to do that. So that's a big achievement for the U.K. and shows that political support. But at the same time, increasingly we're facing very significant scrutiny from the media especially, given the broader cuts that are happening within the U.K. DFID, compared to other international development agencies, one of the advantages we have is that we have probably less parliamentary engagement in our day-to-day operations than some other countries and more direct control over our resource allocation processes. The last thing to say is that we have country presences in 28 countries, so a fairly clear focus around a limited number of countries where we have a bilateral footprint. So moving on to the second, a word about sort of global shifts and the nature of those shifts, and I would, I think most of you are probably broadly familiar with the nature of these changes. I think we're living through a fairly significant and momentous period of change in the world of poverty reduction. And I think I would characterize three main dimensions, changing nature of poverty, something about global risks and opportunities, and something about new players and new rules. So let me briefly touch on those three. I mean, I think the first thing to say is that we've done, there's an incredible success story to tell around poverty reduction. So in the last two decades, we've halved the number of people living in extreme poverty, so more than 700 million people are better off today than they were two decades ago. That's a good story. But at the same time, the nature of that poverty is changing very significantly as low-income countries graduate into middle-income countries, we're seeing increasing proportions of poor people living in middle-income countries. I think the statistic is that 72% of people living in extreme poverty are in middle-income countries, and a very large proportion of those are in a small number, they're in some five middle-income countries. So we're seeing increasingly a middle-income country element. And for those within low-income countries, increasingly low-income means the poverty is associated with fragility. So I think some 83% of those living in low-income countries are actually in situations of fragility. So I think what we're seeing there, for development actors, we're seeing a change in the geography of poverty and in the nature of poverty. And obviously that has huge implications for what we need to do as actors. The second area is around sort of other global trends and opportunities, and I'm not going to talk in any detail with these. I think they're mostly familiar to people. But obviously climate change, I think, is a major and very, very significant driver and risks undermining much of the progress that we've made over the last few decades. Link to that, I think we're seeing increasing humanitarian challenges, both in terms of the scale and the number of natural disasters. And obviously there's broader issues such as urbanization, which are also changing the nature of the challenge. Globalization, there are risks and opportunities associated with that as well. Just to flag one, I think many low-income countries are at greater risk of sort of global economic shocks. And so that obviously has policy implications for us as development actors. The sort of youth bulge, I think you could put either in the opportunity or in the risk category. And potentially there's a huge demographic dividends of all these young people coming through in many of these countries. And if we can give them the education and the opportunities and the jobs, they actually could really drive growth and development. But at the same time, if badly managed, it could be a different story. And then the final risk and opportunity is really around technology and innovation. And I think that there are a number of potentially game changing opportunities that that presents. So those are the first two. Poverty's changing. We've got some very significant global trends that are changing the nature of the poverty challenge. I think the third element to mention is really the new players and the new rules. There's a lot of talk in Washington about China, but I think actually we need to look more internationally. There's a range of new actors that are playing an important role on the global stage, whether that's Brazil, whether it's South Africa, whether it's Turkey, there's a very big and significant new set of actors there. They're important both in terms of providing bilateral aid themselves, but also important players on the international stage and how they engage with the international architecture, whether that's the World Bank and the IMF or the UN and so on. And I think they are changing the nature of the game through that process. The last element under the new actors new rules is around financing and the fact that increasingly aid flows represent a smaller proportion of the total flows going to developing countries. So we are looking at a new era in terms of the opportunities around domestic resource mobilization, around private sector flows and so on. The only caveat I would have on that is I think in some countries, aid will continue to be a very significant factor and we shouldn't lose sight of the fact that those private flows go to different countries in different ways and we need to be fairly context specific in our approach. So just to summarize, global shifts, I think we're living in a game changing time and I think we as development actors need to respond to that. So what about the response from a UK perspective? Let me talk briefly about the sort of international element and then very specifically about sort of internal DFID, sort of nuts and bolts. I think that there's a number of processes going on over the next couple of years which collectively could really shift the nature of the international activity. Many of you will be aware of the post-2015 agenda which is going on, very much looking at the kind of the what of how development needs to change. We've had great success over the last few decades, especially around social sector spend. That's redefining, it's looking at issues around jobs and economic growth, governance, some of the elements that weren't there in the original MDGs. Secondly, there's a set of discussions around development financing that are happening, looking at the definition of official development assistance, looking at a follow-up to Monterey and again, the intersex very strongly with the post-2015 agenda but where those conclusions come out I think will shape how we as development actors work. There's the global partnership for effective development cooperation which is the follow-on to the Busan aid effectiveness discussions and which others may be better placed to talk about. But that really is looking at very much at the architecture and trying to bring a more inclusive architecture that moves beyond the old DAC donor recipient relationship into much more of an equal partnership. And I think that's a really exciting area of change. There's obviously the Paris UNFCCC negotiations, so where do we end up on climate change? Again, that could potentially be significant. And finally, in 2015, we've got the next WTO ministerial, so potentially something around trade. Collectively, those five trends, where we come out on some of those negotiations, I think will shape how we as development actors work. And so for the UK government, we've obviously been very active, especially on the post-2015 agenda with our Prime Minister co-chairing the high-level panel and we've been actively engaged across all five of those because we think this stuff matters and we think it's really going to shape how we do development looking forward. Just to conclude, so a little bit of internal stuff within DFID. I mean, I would say that we've been essentially looking at ourselves and asking the question, are we fit for purpose given all these changes? Now, and our Secretary of State issued the challenge to us, are we doing the right things in the right places in the right way? And so we've been doing work sort of looking at that. I just want to flag a couple of things that are maybe shifting. In terms of the right things, we've been very much looking at kind of our portfolios and using a new country diagnostic to essentially try and look much more concretely around what we can do on that. What can we do to help these countries exit from poverty? I think there's a very strong focus in that diagnostic around the kind of both looking at economic growth, but also looking at the politics of the countries and how the political economic elements interface and what that means in terms of how we as donors should be engaging. In terms of the portfolio, I think you're seeing an increasing focus on economic development. This is one of our Secretary of State's three priorities. She made a speech a couple of weeks ago at the London Stock Exchange and she flagged that on our bilateral program we're going to double our spending on economic development up to 1.8 billion pounds by 2015-16. Significant shift there. So that's doing the right things. In terms of the right places, I mean we've basically done a lot of modeling in terms of where poverty is and where it's going to be and which countries are progressing out of that. We think there's probably just under 50 countries which are going to be the core countries which will need a real focus in terms of the lowest income countries. We're not going to change our bilateral footprint in those 28 countries I mentioned, but we're thinking about the other 22 and how we can engage with them, whether through regional programs from the center or whether through the multilaterals. And finally, around the right ways, I mean we're looking at some of our tools and approaches. We're experimenting with things such as the use of returnable capital, something we're using in India. So a different approach recognizing that as countries graduate to middle income status, we need to adopt new approaches. Thanks, Dan. Thanks, Andrew. I'm going to come back. I've got a series of questions for you that I'll come back to after the panelists have presented. Okay, Mr. Nakazawa, thank you for being with us. We were really pleased to have your CEO with us a couple of weeks ago and we hope at some point we'll have him back again at some point as well. And for many of you who are here, we had about 150 people for a half-day conference on Japan's contribution to development and so it's great to have you here. Mr. Nakazawa. Thank you, Dan, for the kind introduction. And I will talk about how we look at the changing landscape as Andrew did. In fact, Andrew covered quite well and comprehensively, so I don't have much to add. But in order for explaining to you about our activities or our response to the changing world, let me summarize briefly. And in between, I will also introduce about JICA, Japan International Corporation Agency. As Andrew said, we can't ignore that the world we live in today has been changing very rapidly. We can observe both power transition and power diffusion. I will summarize like this. First, the South as a whole is driving global economic growth and societal change. The economic output of countries like China, Brazil, and India has grown exponentially, and developing countries now make up nearly half of the world's merchandise trade. These factors have made a historical reduction, a poverty reduction, as Andrew well mentioned. And they have also heightened these emerging economies influencing international affairs. And we can also observe the emergence of non-state actors, as he also mentioned. Not only private enterprises, but also local and international NGOs, informal interest groups, and even influential individuals. Leading private enterprises, for example, are operating in many countries, and their role is significant. And we also have to acknowledge the emergence of warning terrorist groups on the global scene and their capacity to use technologies for dangerous purposes as well. These two trends, power, transition, and diffusion, have significant implications in terms of both opportunities and challenges for the global economy, geopolitics, and also development and development assistance. Some of the hot topics in development that have received lots of attention are engagement with emerging donors and the private sector. And these topics are very much related to the power transition and the power diffusion I just mentioned. So I will touch upon these topics later in my remarks. But let me first introduce our organization, Japan International Corporation Agency, or JAICA, in short. JAICA is an implementing agency for Japanese official development assistance. And we offer concessional loans, technical assistance, and grant aid to support developing countries' efforts to pass sustainable growth and poverty reduction. To give you a sense of scale of our operations, we provided approximately $12 billion US dollars in concessional loans and $3 billion in grant aid and technical assistance to partner countries in our last fiscal year. And during the same period, we offered training for about 26,000 participants from developing countries and dispatched about 9,000 experts abroad. JAICA is also responsible for administering our program of overseas cooperation volunteers. It's similar to the Peace Corps in the US. Last year, we sent over 1,300 new volunteers to developing countries. We have our headquarters in Tokyo, 15 training and education centers in Japan, and more or less 90 overseas offices, including the one in Washington, DC. In 1993, the World Bank published a report called the East Asian Miracle, which characterized the development path taken by high-performance East Asian economies as the market-friendly approach. These Asian economies, such as Korea, Thailand, Malaysia, and Indonesia, were stable macroeconomically, had a high share of international trade in GDP, invested heavily in people, and had a strong competition among domestic firms. I could say that one of the defining characteristics of Japanese ODA has been to encourage this type of market-friendly approach in partner countries. Because we strongly believe that the prosperous private sector is a key for successful and sustainable development. However, we have learned at the same time that dynamic market economies do not arise nor develop just by removing government control. Given the pressure created by globalization, there is a need for strong state capacity to build infrastructure, to invest in human capital, and to establish a regulatory environment where private industry can thrive and where populations can reap their benefits. So we have worked to support and supplement our partner's efforts to build such capacity. Your image of Japanese ODA might be our focus on hard infrastructure, such as roads, ports, and power stations. Yes, it's true. Although we have at least equally focused on human resource development, as I explained, numbers of experts we have sent and trainees we have received a few minutes ago, we have put a priority on infrastructure development for a long time. For example, according to associate professor Sekiyama of Meiji University in Japan, Japan's ODA contributed to 41% of railroad electrification, 11% of power generation, 16% of optical cabling, and 56% of increased production capacity of chemical fertilizer in China between 1980 and 1995. So I believe that hard infrastructure we have supported in many countries together with the human resource development has led to more private sector investment. Clearly it's easier to produce goods and to transport them where there is a stable power supply and transportation network. So in addition to hard infrastructure, we have also invested in governance infrastructure, such as legal systems and regulations. For example, Vietnam and Japan started a joint initiative to improve Vietnamese business environment in 2003 with the aim of strengthening Vietnamese competitiveness. In this initiative, the two governments created a space where Japanese private investors directly talk about challenges they are facing in making investment and doing business in Vietnam. And where the Vietnamese government worked out the best practical solutions in consultation with the private investors. Here, JICA supported the Vietnamese government's efforts to develop solutions and to provide training and necessary resources to implement the reforms. So let me give you a more specific example. When the Vietnamese government decided to establish a master plan for supporting industries development based upon Japanese private investors' demand that they would like to procure basic parts and components locally in Vietnam. JICA assisted the government by dispatching an expert to the Vietnamese agency for SME development. JICA also organized a series of seminars on developing supporting industries and provided concessional loans to SME development banks so that they can expand access to credit for SMEs. So engagement with the private sector and linking development aid with trade and investment is not such a new concept for us. For years, we have pursued various efforts to improve the business climate of developing countries for foreign and domestic investors and manufacturers. However, that being said, we recognize that the shifting global landscape requires new approaches. As advanced economies continue to face fiscal challenges, including Japan, we have to think about how to utilize our scarce public resources to have more impact. Therefore, in Japan, we have been thinking more and more about how to leverage resources and encourage more engagement from the private sector. Some of our latest instruments to partner with the private sector include financial support for feasibility studies to explore the potential viability of various public private infrastructure projects and base of pyramid business in developing countries. We have also launched a private sector investment finance facility which provides loans and equity directly to private companies that proposes profitable projects that also serve a development purpose. Before I close, I'd also like to briefly highlight our engagement with emerging donors if time allows. Yes, please. Actually, Japan has been encouraging emerging countries to share their experiences with other developing countries for nearly 40 years. This is partly because of Japanese, Japan's own historical experiences to catch up with the Western industrialization. As Dan kindly mentioned, this year marks 60th year anniversary of Japanese aid, which means Japan started official development in 1954. And that time, per capita GDP of Japan was around 2,500 US dollars. It's purchasing parity, so almost equal to current like Pakistan. And if I take the example of the UK, per capita GDP of UK in 1855, so 100, you know, 60 years ago. So yet despite our history of South South Corporation and Triangular Corporation, which, you know, South South Corporation facilitated by advanced donor, or traditional donor, I should say, we have come to realize that this modality has often lacked institutions and mechanisms to scale up results. So furthermore, it often suffer from high transaction costs, fragmentation, small scale and limited impact. And that's why we decided to introduce which we call partnership program with 12 emerging aid providers, including Brazil, Mexico, Indonesia, and Morocco, among others. These partnership programs offer a more systematic approach to conduct Triangular Corporation. And under these frameworks, JICA in collaboration with these emerging aid providers holds regular consultations to plan joint activities, dispatch development experts from both countries to other developing countries, jointly conduct training programs and jointly monitor and evaluate progress. Our other big efforts to engage with emerging aid provider is through the Asia Development Forum, which Japan helped to establish. The forum has been held annually since 2010 and it's a space for Asian countries and multilateral organizations, including South Korea, China, Indonesia, India, Thailand, Asian Development Bank, and others, to discuss topical issues, such as how to address infrastructure shortage with public private partnerships and how to promote green growth. Going forward, we think this will be a useful forum for Asian countries to share their experiences and ideas to overcome common development challenges. This is by no means exhaustive list of all of our activities, but I think time is running out, so thank you very much. Thank you, Mr. Nakazawa. Is the Asian Development Forum, is that in Korea this year? Is it next month in March? In Korea, it was already held and this year, the venue is not yet decided. Okay, okay, great. Okay, Jennifer, thank you for doing this. Jennifer, you're the Director of Office of Donor Engagement for the Bureau of Policy Planning and Learning at USAID and the reason I wanted you to be on this panel is you've served as a Mission Director at USAID in Brazil. You also were the point person for USAID in China in terms of as the assistance liaison. So you've thought a lot about emerging donors and you've thought a lot about middle-income countries and so I was particularly interested, I think we've heard from Andrew and Mr. Nakazawa about sort of this changing landscape and one area is how we think about middle-income countries, how we think about emerging donors and I was particularly hoping you would enlighten us a little bit about both Brazil and China as well as talk a little bit more about some of the other folks that come into your inbox during your day job. Thank you, Dan. So I think unlike Difford and Jaika, probably everyone here knows a lot about USAID so I won't give any general introduction to who USAID is. You may not particularly know the part of USAID where I work which is the Policy Bureau and the Policy Bureau is relatively new. Established or re-established I guess you would say only a couple of years ago as the Bureau for Policy Planning and Learning. It has four offices. One of those offices is the Office of Donor Engagement where I work and that's actually a very old office because ever since USAID was established it needed an office to manage the institutional relationships that USAID had with other donor partners so that's what we do in the Office of Donor Engagement and our work has changed I would say quite a bit over the last two to three years. In part because of internal reforms at USAID that go under the rubric of USAID forward and particularly one of the components of that which was enhancing partnership and in terms of enhancing our partnership looking outward and not only inward at USAID I think that has demonstrated itself in a number of ways. One is a very active participation by USAID in some of the events and processes that have been mentioned so far particularly the development of the post 2015 development agenda under the auspices of the UN. The leadership of the global partnership which was established two years ago in Busan as a new type of aid architecture. And in reaching out to new types of partners. So in terms of the new types of partners or the enhanced partnerships that we in donor engagement are seeking to promote that includes as others have said the private sector which has long been a very, very valued partner at USAID and quite an active partner. So I think there is both an expanded set of activities around the global development alliance which has existed for a long time but also a lot of thinking about innovation and the role of the private sector in innovation and in finding new solutions to development problems that is a slightly different I would say emphasis. NGOs and foundations which is as others have mentioned have become a very important set of actors and stakeholders in development. We've put a lot of effort into the last couple of years in deepening our understanding and dialogue with some of our main bilateral donor partners. Both DFID and JICA have been through that with USAID which is a quite intense process in many ways of trying to figure out where by working together and either collaborating very intensively in one country or one sector or by in some sense a division of labor we can achieve more by close coordination than we could achieve without it. So that's been a focus as I say with both Japan and the UK also with QWICA, the Korean Development Agency and with a couple of other key bilateral donor partners. And then the last part that Dan specifically mentioned is it often goes under the title of emerging donors. I don't really think that's a very good title for those countries because I don't think they're really emerging, many of them and I don't think they consider themselves to be donors. So what we have been calling them in USAID and our engagement strategy is pivotal. It's like the Holy Roman Empire, right? Right. I remember that famous thing that the historian called the Holy Roman Empire, so please. So we've been calling them pivotal countries in part because they are pivoting from one role in international development to another role and bringing with them in that pivot I would say not only a movement from being recipients to being donors but really in some ways changing the landscape and the intellectual landscape that is affiliated with development cooperation. So I'll talk a little bit about some of the pivotal countries that we have been most engaged with and how that engagement has differed and how I think it will be changing a little bit in the future. We probably have the most long standing engagement with Brazil. USAID was a partner in Brazil's development for a long time but in part because of the global issues especially environment maintained a presence in Brazil long after Brazil had passed into the threshold of middle income countries and even beyond. And based upon that partnership around certain global issues we began a program of trilateral cooperation where Brazil and USAID worked together particularly in Lucifone countries in Africa on issues related to global health and food security. And we sort of replicated in some senses that model in our engagement in India where USAID has shifted very much from being a donor to India to working together with India on trilateral cooperation particularly again in key technical areas in Africa. And I would say that those trilateral cooperation efforts have a lot of benefits. Tremendous learning experience all the way around and they also suffer from a lot of what Mr. Nakazawa was articulating as some of the drawbacks to trilateral cooperation. Very high transaction costs and very, very difficult to evaluate if the overall efforts through a much more complex institutional arrangement of trilateral cooperation achieves anything more objectively than you would just do through bilateral cooperation. So a lot of issues that are related to that that I think need to be discussed and need to be explored. We have a couple of other models that we've used with other pivotal countries. One very interesting model in South Africa is pooled and joint funding. So some of that funding comes from USAID and some of it comes from the South African government. It used to be from their treasury and their ministry of finance in the future. It will come from their just recently established development cooperation agency to jointly select and support activities in other African countries. And that's been a very interesting model. We have a very close relationship in Indonesia with their new development cooperation agency and just in fact over the last few weeks had a series of workshops looking at how we might cooperate both in terms of some of the development of that agency, their internal policies and procedures and how they move forward as they set up their own enterprise and also certain areas that we might be able to collaborate on in third countries. We've had a lot of outreach recently to Arab donors. Some of them the Arab funds that exist in Saudi Arabia, Kuwait and some other places. And also with the Islamic Development Bank and we intend to carry that conversation one step forward when all of those institutions are in Washington for the World Bank spring meetings. That's something we're also doing under the auspices of the DAC, the OECD DAC which has a longstanding relationship themselves with the Arab donors. Then the one that I think is also very interesting and important to talk about of course is China. So and China is in some ways in a category by itself just due to its size, which is just so much bigger than any of these other countries. It's long history, both its own history and very successful model of development. We would never have achieved the MDG one goal on poverty if it wasn't for China. So the talk that we have now about being able to eliminate extreme poverty and eradicate poverty in the developing world in the next 15 to 20 years is all based upon the success that China had in eradicating poverty in that country. A very powerful model and one that is very powerfully attractive to other developing countries. And it is a model that really didn't depend very much on donor resources, but on a very different type of national development strategy. China in particular, I think because of that history does not identify itself as a donor and does not wish to be a part of any institution that is an amalgamation or a collection of donors. They see very much their activities in other developing countries as being designed around mutual benefit and as being structured around a package of aid, very small trade and investment. So again, a model that I think is different from that of many so-called traditional donors and one that is very attractive to a lot of countries. So I think that the changing landscape, the emergence or the reemergence or the prominence of a lot of these new pivotal countries is important in part for partnership, in part for collaboration and also in part I think because it does pose a number of very important intellectual questions and organizational questions about development assistance in the future. Those questions are circulating a lot at this moment anyway in part because of the post-2015 development agenda and also because of a changing notion of development finance as the other speakers articulated. Official ODA is now very much a minority portion of the overall resources that are available for development and being used by developing countries. So it begins to also shift the conversation from one about ODA to one that is about a much broader, a broader picture with many different types of components including both FDI, including domestic resource mobilization and including a lot of other actors and types of financial flows that will I think reflect very much within both the current discussions in the Development Assistance Committee and in the post-2015 agenda. So one of the things we are trying to do at USAID is to create some vehicles to explore these conversations further with key pivotal countries. Some of that we can do through multilateral organizations, in particular an agreement that we have with the World Bank Institute and some of that we're doing just very directly bilaterally. In April we'll have the first global development dialogue with China, we've had a number of conversations to date but this will be sort of setting the first in a series of annual dialogues. Well we will focus both on sectoral topics where both the US and China are very engaged but also on some of these questions about international architecture and how a development agenda in the future would be shaped both by traditional donors and by new players. Thank you very, very much. I've got a series of questions for you all. This is absolutely fascinating. I wanna first, I'm gonna first ask you, I wanna go to Andrew and to Mr. Nakazawa first to talk about how do you all think about the issue of do you spend your, do your country spend your money via bilateral channels or do you spend more of your money via multilateral channels? How does the UK resolve that and how does Mr. Nakazawa, how does Japan resolve that? And before you answer that let me just make a comment about I was at the World Bank Group when the UK government in 2010 did a, sent a very directive and blunt letter to the CEOs of about I don't know 25 or 30 multilateral organizations saying we're doing a full scale review of all multilateral organizations of which we are shareholders. We would like you within 90 days to respond to us on a series of questions and please tell us what we're getting for our money. And for those organizations that are doing well you'll get more. For those that are doing okay, you'll get the same. And for those of you that aren't, well, you won't. So I think maybe I don't think it was something like that. I'm putting words in your mouth. But I think if you could Andrew when you comment on this issue if you could perhaps enlighten this group a little bit about that I think that was a particularly powerful exercise. And I actually think it's very helpful for bilateral donors to have those sorts of conversations once in a while with the multilateral system. So Andrew and Mr. Nakazawa and then I'll come back. I've got several questions that I think are also more relevant to it as well to include Jennifer in the conversation. Great, thank you Dan. Yes, we have very significant spend through the multilaterals. I think something like 19% of our budget goes through the European Union. And I think about half of our funding overall goes through sort of directly through our multilateral channels. In addition, a lot of our bilateral spend so the money we spend in country we often use the multilateral such as the UN, UNDP to actually deliver that funding. And I would say I think as an organization I think we're broadly multilateralists. We believe in the strength and the sort of scale that multilaterals deliver for us. As Dan says, we had this process in 2010 which we called a multilateral aid review where we essentially looked at the performance of each of the multilaterals we provide core funding to. And we looked at it in terms of relevance to UK development priorities and effectiveness of them in terms of how well do they actually manage themselves and deliver things on the ground. And it was perhaps not quite as blunt as Dan said it but it was effectively, if you do well we'll give you more, if not we'll cut. You ended up cutting several multilateral organizations and putting up others. And we exited from three agencies as well. We've just done a kind of a light touch two year review of that. When we do an, in two years time we'll do a fuller review. I think it's likely that rather than look at individual agencies we'll probably look more at the sort of the landscape of agencies. So for example in Rome you have a lot of agencies that work on food. So we'll look at those collectively and see how do they collectively work. I think that's probably the way in which we'll work. Because often an agency individually may be effective but if it's in, if it's not working well with its other agencies then it's less effective. I think those are the main things. Yeah, Mr. Nakazawa. Hi, yes. You know Japan has tried to improve the efficiency and effectiveness of multilateral development agency like the World Bank or the UN systems. But basically or traditionally we are very supportive to multilateral organizations. I think it is because, partly because historical reasons. What I mean is development assistance by the Japanese government has been used to show our contribution to the international stabilization peaceful and prosperous world to make those peaceful and prosperous world. And we believe that multilateral organizations such as UN or the World Bank return system are very important to make that kind of status of the world. But of course we JICA bilateral organization providing bilateral aid that is also quite very much important. And our audience share between bilateral aid and multilateral aid does not in a significant change in recent years. So I've got a couple more questions that really focused on Andrew and Mr. Nakazawa. And so Jennifer bear with me while I do that. But there's been an ongoing debate in Washington around USAID. I see a lot of people who follow USAID very, very carefully around the conversation of what's called local solutions. So how the US government programs monies and it's partially response to the larger conversation on Busan and local ownership. And there's some other drivers as well. So I know that these pressures are also in Japan and the UK for a long time. The shorthand I thought when I thought about the UK was that there was sort of a predilection towards budget support in the UK system. So how in addition to sort of this multilateral versus bilateral, when you think about your bilateral spending, one question is how do you all think about how you program your monies, the first part of the question. And second, would either of you want to comment on the American debate that's been going on and sort of the USAID conversation about local solutions and what is your perspective on the conversation around local solutions? Great, I think we're going to disagree on this one, Dan. So the first thing I would say on the UK side is that we very much believe that you need to use government systems to improve them. So rather than going in and running a project which sets up a separate project implementation unit to manage all that, and then when the project's finished, get rid of that, where you've effectively built no capacity, we believe that you have to work through government as much as possible. Now I would say that there's a range of different mechanisms that you can use to channel support through government. Budget support is probably the purist of those, but there are other sort of modalities that you can use. So within DFID, I would say my personal view is that we've probably shifted back a little bit from our commitment. We used to be called the Taliban of budget support in the early 2000s, I think. It was painful. Yes. But we probably do less of that now. We do still provide very significant sector support and if people want me to define these issues, I can try. But we, so we're still doing very considerable sector support and we're providing a lot of funding through government systems. So for me as a UK person watching the debate here in the US, I don't really get it. I think that my basic starting point is that if you want to strengthen government and strengthen, and government is important for the delivery of services to poor people in these countries, so you have to work with and through government. It's complex debate, but I'll leave it there. That's perfect. Mr. Nakazawa, your perspective on both, how does Japan program, and then could you comment on your point perspective? Since you're leaving town in a few weeks, feel free to be more blunt than usual, if you will, on this topic. I might be criticizing Japan then. Right. You know, we very much put emphasis upon or importance upon the local solutions and local systems. And, you know, capacity development of, of course, NGOs, CSOs, you know, local communities are important, but, you know, improving the government capacity is really the key for the successful development. And we both, you know, if I look at the statistics of procurement results of our concessional loan, as I mentioned, we provided more or less 10 billion US dollars of concessional loan each year. 2,000 of contracts are given to the local contractors. And surprisingly, you know, the share of Japanese contractors, American contractors, UK contractors, oh, by the way, our concessional loan is, you know, mostly general and tight, so every country's contractors can participate in. Those in advanced countries, contractors, shares, you know, quite small. And through these, you know, project type of, you know, corporations, we also try to improve the kind of soft type of our governance infrastructure we call. Because through the procurement, you know, government can improve, you know, kind of standard of, you know, procurement system or standard of the goods and, you know, materials to be procured. Because, you know, that should be also reviewed by us based upon the international standardized, you know, guidelines for procurement. And that is also our kind of capacity development in terms of making good governance, particularly using project procurement. Okay, I've got one more question for the two of you and then I want to come to Jennifer. I want to talk about China and India and I'm going to come back to that. So, okay, so democracy and governance, we were having lunch earlier today and we were talking to various other donor embassies and one embassy said, we don't like using the term democracy, the United States, we do. We have a new strategy at USA to go over democracy, human rights and governance. When I was in the Bush administration, we talked a lot about democracy and governance. When I think about the UK, I think about Westminster House, the sort of one piece of this. When I think about the UK, you have this new push for the golden thread of governance and Mr. Nakasar, you've been talking about governance and the enabling environment for the private sector. Could each of you talk about how, as your donor agencies, you think about democracy and human rights as well as governance and how you think about those concepts within development as well as, and then talk specifically about the concept of governance just a little bit further and then I'll return to Jennifer. So bear with me, but I'm gonna start with you, Mr. Preston, please. Thanks. I think the first thing I would say, the trend that I think I'm seeing more strongly and differed currently than in the recent past, is I think there's something about recognizing that aid is political, which I think is maybe in this space, but recognizing that we as political actors engaging with these countries and actually the success or failure of aid is often less about the technical side of it and more about whether the actual politics will play out in country. You guys have that field guide about political economy. You should give it a plug. Yeah, yeah, exactly. So exactly that. So there's work around sort of what we call political economy, but basically understanding that the underlying drivers of change and we have a framework on that in the bank. The World Bank has just produced a really good set of case studies around political economy analysis. So I think we feel that you need to work politically in everything you do. So if you're doing a Rhodes project, you need to understand the drivers of, what are the ministers involved with that? What potentially are potential corruption opportunities and so on and what are some of the interest incentives and drivers that are shaping that? So in that sense, I would say that governance and political economy analysis is absolutely critical to everything we do. We also, I think, believe quite strongly in state capacity and in state sort of accountability and responsibility to its citizens. So that naturally, I think, takes us into the democracy space as well and to some degree the right space. I think we're maybe just less, I personally, and probably a slightly less normative than I think certain people are here. I mean, or certain other organizations are. I think DFID does work in the kind of with democracy institutions around elections and so on with elections commissions and so on, but probably not to the same degree that I would say AID and others do. Okay, Mr. Nakazawa, democracy, human rights and governance and this issue of politics as opposed to technocratic solutions. Yeah, we've put, always put high value on democracy, human rights and those kind of thoughts and ideas, but we also have to think that democracy is not only election or market economy is not only the regulations. It really takes time for the country, like let's say Myanmar, to be really democratic country or to be market economies dominating their economy. So we have to be careful looking at their history, culture, development is at the end of the day in a very context specific. We can't push and change it within a very rapid period. Of course it's ideal, but it's not practical. But we have to at least ensure that the direction or political change or economic system change is in the right direction. That we have to make sure. Okay, Jennifer, thanks for your patience on letting me cross-examine your other panelists. So Jennifer, think about, so there's, you work with some very interesting, non-emerging non-donors, right? When I think about in the US government system, I think you're probably one of the real experts on this, both at state and aid, and I certainly look to you when I talk about, we did a report here at CSIS a couple of years ago about transitioning from a foreign assistance paradigm to three thinking sort of middle income countries, and we looked what's called strategic foreign assistance transitions, and please go and read it if you haven't read it yet, if you're in this audience, but can you make, do we need to have, we have an aid mission in India, we have sort of a kind of an aid mission in Brazil, we had one in Russia until we got kicked out, but I just said we should have gotten out of there before they kicked us out. We have 20 or $30 million a year of programming in China, so talk to me and I'm gonna ask each of the other folks to talk about this as well, and I recall, I think, the finance minister of India called the British contribution of assistance, I think it was the technical, it was peanuts, I think was the word that was used, so our pittance, I can't remember the exact word the Indian finance minister used, so can you walk me through, Jennifer, why we have aid programs in those middle income countries? Certainly I can understand why we have a technical engagement from a, you know, from a triangular cooperation standpoint, I think that's very interesting what you said about, we perhaps maybe need to not get so excited about just doing triangular cooperation just for the sake of doing triangular cooperation, I agree with you and I hope we can work with you specifically on that here at CSIS, but okay, so when I go home at Thanksgiving and people are saying, okay, why when they have two trillion dollars of hard currency in China, why are we doing cross-border aid stuff with Thailand or why are we doing such and such with whatever it is, Tibet, and then why are we in Brazil when they're at one or two trillion dollar economy and then in India, we're doing a hundred million dollars in Uttar Pradesh on tuberculosis and they just put up, they're doing a Mars exploration, space exploration program, and so then in, I think in Russia, I think they've revved up the engines for those airplanes to take back Crimea, so we're not there anymore, but we were kind of trundling along until about six months ago, so we got kicked out of there, it was sort of bureaucratic inertia, we were just kind of trundling along, so the same question's gonna go to Japan and the same choice is gonna go to the UK, so why the heck are we in those countries and how do I tell, how do we tell people on the Hill and how do I tell my parents who may have some skepticism about what the heck we're doing with some countries that may not have our best interest at heart, why we'd have foreign aid programs as well as technical cooperation and how they can spend their foreign aid money better. Well, I think that's a really great question, I don't know that I have a really great answer, I think I have a couple of points just based on my own experience and what I've observed over time, so I think part of it has to do with the difficulty of what we call development and putting boundaries on that and an exact definition, so when you get involved in a process of economic and social development, it's not entirely clear at the beginning what the endpoint is, at least I think on the part of USAID, we haven't scientifically and consistently defined what the endpoint is, what a graduation strategy might look like and what would we transition that into? So in the case of Brazil, for example, a place where USAID had been very instrumental for many years in establishing Brazilian environmental NGOs, way past the time when Brazil had entered mental income status and had quite a lot of both economic and political power in the world, the relationship that we had with those Brazilian NGOs was seen both by the US government and by those environmental organizations in Brazil to be very valuable and to be a sort of a contribution that wasn't easily replaced by another US government agency. So it maybe continued past the point when you would define Brazil as a developing country in part because of that historical legacy and in part because we had never really from the outset defined a clear end, a clear transition, a clear exit strategy. So I think that's part of it is the messiness of that. I think part of it is also that the group of middle income countries is so large and so diverse. If you look at the countries that are considered to be middle income countries, it's a huge range and not one that you could easily identify as being a place you didn't wanna be. So for a variety of reasons, among them the fact that most of the people who live on less than $1.25 a day live in middle income countries. So it's not so easy to separate middle income countries from poverty because they're still together in a sense. So I think that's another confounding factor. And then I think that there's also the belief at least in the case of some of these countries that by remaining engaged through a development assistance program, you can continue, you can build upon the influence that you've had over a long time and continue that influence into some of what those countries are beginning to do themselves. I don't know that you could necessarily prove that that's the case, but I think that's something of a belief that by maintaining that engagement and offering what your own experience has been institutionally and developmentally as a model that you continue to have an influence that you wouldn't have if you were no longer present. That's a very complete answer. And I think if you'll read my report, I have a different view than that. And I think that over time, I think we're gonna have a very, very, very hard time. This isn't a U.S. criticism. This is a, the donor community is trundling along. And I think this is a political loser of a topic. And you'll hear as I ask each of the other colleagues, you'll see how I see about this. But my view is that we can outsource some of this to the multilaterals who, some of the folks are here and we've re-upped general capital increases to kind of outsource some of that development stuff to the multilaterals. But I have a hard time believing that our $100 million a year in Uttar Pradesh for tuberculosis is gonna swing that much of a swing votes in the UN Security Council on being a little bit flippant on purpose. But I'm not sure, especially when they're spending, they're putting a man on Mars or an unmanned spacecraft exploration in Mars. I think it's a very hard sell to go to the American taxpayer or the Japanese taxpayer or the British taxpayer. And I know that's where the aid establishment wants to be but I think this is gonna be a loser for the aid establishment and we need to be going with our eyes open and on many of the folks I consider myself, part of the aid community, but this is a political loser. So Mr. Nakazawa, do you guys have an aid program in China? We have some aid program, technical cooperation program for China, particularly for environmental sector. As you know, air pollution in China is now terrible. And in Japan in 1960s and 70s, we had the same program in other areas. So we have some experiences to tackle with those air pollution. And that kind of issues, which is categorized as externalities, very hard for only the private sector to work on is still the area I think some assistance is needed in China. Do you get political pushback at home for Jaika from either your political leadership or from the Japanese populace? And on the one hand, is that a politically touchy subject in Japan? It's a politically touchy subject, but we still keep the very good relationship with technocrats in China. And everyone wants development and sound developments and no one can kind of deny the rights to be developed. And even though sometimes it's politically difficult, but in the long run, we are always neighbors. And we would like to assist our neighbors as well. And let me point out that looking at the history, getting out from middle income trap is not the easy task. And as Andrew pointed out in his first original remarks, now 2,000 of the world extreme poverty resides with in the middle income countries. And Japan, as I mentioned, we have a concessional on arm and last year, we disbursed almost 8 billion US dollars as a new disbursement. And we were repaid by countries like Korea totaling 8 billion US dollars. Which made our concessional on ODA zero because it is counted in net. So we are also reordered by giving a last push, a big push for the middle income countries to be graduated from aid. And that's very important. Can you just talk a minute about how you got, in our report, we talked about how the U.S. had graduated five countries in the last 30 years. And as Jennifer said, there's not some sort of an Excel spreadsheet. It's, in essence, a political process and it's not scientific. Can you give an example of a country where Japan has graduated a country and how did it work? Did you guys just send them a telegram and say congratulations? You're a real country now or congratulations. Thank you very much. And did you guys leave behind some sort of a sinking fund or some sort of a binational foundation? Did you leave some sort of an endowed trust fund at a multilateral donor? How to think of, can you talk of an example? Maybe South Korea may be an example of this. I'm assuming you may have had cooperation there. How did you exit a country, how did that happen and what did you leave behind? You know, we didn't make Korea graduate or we didn't make, you know, exit them. They are the one who made efforts and, you know, we just assisted from behind. And, you know, it's important for, you know, each country to make self-help efforts and that is really the philosophy of, you know, Japanese aid. You know, we don't dominate the discussion with developing countries. They know their problems the best and they know they are the one who should also think about the best solutions, which is very context specific. Okay, but Mr. Nakazawa, have you graduated countries before? I didn't, you know, we didn't graduate the country. You know, we, you know, low income countries needs certain intervention from donors and middle income countries needs probably different set of intervention from, you know, traditional donors. So of course, you know, depending upon the stage of development in each nations, we kind of, you know, made specific type of prescriptions, talked about, you know, the recipient partner countries and decide, you know, what kind of, you know, intervention is suitable for each country. Sometimes it's financial interventions, sometimes just knowledge and experiences type of intervention or sometimes even, you know, working with Korea, let's say for other countries, other low income countries that also increase the capacity, not only, you know, those third country, but also Korea and Japan. Thank you very much. Okay, Andrew. So a couple of years ago, big political to do in the UK about India, assistance to India. As I said, the Indian finance minister called British aid epitants or peanuts. I can't remember what was a P word. I understand there's a very capable person that's gonna be sent to India to be representing the UK in sort of its cooperation as it transitions. Talk about how does the UK think, obviously this is a political issue in the UK. First, talk a little bit of how you guys think about it. I get the general gist of the development community about there's a lot of poor people in middle income countries, but talk about the politics of this and then talk about how have you guys graduated countries and what have you left behind if you've graduated countries? Okay, that's a lot of stuff. Let me, firstly, the politics of this. I mean, I think you're right, Dan. Domestically in the UK, we found it hard to continue providing aid in countries which are doing well. So we have left a number of countries. China, we no longer give assistance to China, although we do have different people sitting in China. We've pulled out of Latin America many years ago. We've actually, I said 28 countries after a review in 2010, we actually pulled out of 16 countries which we chose. Some of that was graduation, some of it was decisions just about not a good fit in terms of different priority areas. So we do have a, but I think your broader point is, yes, the politics of this to a UK domestic audience means that we do have to stop providing aid and that's very strong. In terms of the second element which is really around the kind of, before you get to graduation, just the kind of how you work. I mean, one thing I would say is, I think Jaika has a different range of tools to us and the use of concessional lending, I think gives a lot more flexibility than we in different traditionally have had. We've traditionally only been grant givers. So that means that the nature of the relationship is slightly different. And I think you increasingly, as countries evolve, we're trying to think about different ways that we can engage with them and different types of sort of modalities or mechanisms that we can use to do that. I mean, in terms of graduation, I think it's a whole different topic. I think basically you need to plan it early. I think a lot of it is around depending on the multilaterals and helping to pass on relationships to the multilaterals in terms of the core development focus. And then I think there's a piece which is around the kind of broader UK relationship which I think is something that your report looked at in some detail and thinking about what other bits of the UK. I mean, the other thing I would say on India, as we evolve in India, we're going away from financial aid, but we think that the government of India is interested in our knowledge. And a lot of that knowledge actually doesn't sit in different. It sits in Her Majesty's Revenue and Taxation Office or in the medical side. So partly it's about finding a broader UK set of actors who can bring expertise that the government of India and others in India will value. Thank you all very, very much for answering my questions thoroughly. I appreciate it. So I'm gonna open it up now. We've got time for a few questions from the audience. Let's see here. I see my friend here. I wanna hear from my friend Bill from IFAS. And I also want to hear from my friend Alina Shaskofsky. And I wanna start with those two and then we'll hear from others. Let's start with my friend Bill. Bill, just if you would please. I'll just give you a microphone. Oh, hi. Good afternoon. First of all, my compliments to the panelists. You've been interrogated in public and you've held up rather well. Secondly, it's on the question of graduation. When we see societies that have made progress in democracy and governance, which is where IFAS works and they've made economic progress but not necessarily political progress, I'm wondering what are the standards you apply in this graduation strategy or exit or end of assistance? And I'm particularly interested, obviously, both USAID and DFID are very, very prominent in this space. Thank you very much, Bill. Alina. Thank you very much for that very vigorous discussion. I'm Alina Shaskofsky from Global Development Network. And I was wondering, we haven't touched upon some of the other donors that have been very much in the news in the past year, and that's Australia and Canada, as they changed their agencies very drastically, especially Australia of late with their cutbacks. And I'm just wondering if any of the panelists have any comment about how that's affecting their relationships with those particular donors. Oh, thank you. Okay. So why don't we start with you, Jennifer? It has been a very tumultuous year for donor agencies in general. So there is the example of Australia, the example of Canada, and then an interesting example in the Netherlands, where the merger in some sense of development and trade and a number of very interesting vehicles that are coming out of those kinds of situations. So it doesn't mean that the communication stops. It doesn't mean that there doesn't continue to be a lot of dialogue. I think we continue to talk actively with all of those partners. But it does mean that there is some rethinking, and it goes to what I think some of the panelists have been saying before, that as countries graduate in terms of income criteria, as there are more middle income countries and fewer low income countries, you begin to think that you need a wider range of tools and a greater set of instruments to be able to deal effectively with a very diverse and not very homogeneous development spectrum. So I think there are some interesting lessons that are coming out of these new, no longer development agencies, but more development and foreign affairs or development and trade. And some very interesting models that they are producing that I think would be useful and interesting to agencies like USAID and other more so-called traditional bilateral donors. Let me jump in and just build off what Jennifer was saying. We just pretty something, I think today that's up about Canada's need for a development finance institution. So if you haven't seen it and you're having trouble sleeping at night, you can read this that we just put this out. We were in Ottawa last week and they've merged their trade and diplomacy and development. It's an unpronounceable agency called DFATD. Don't ask me who came up with the acronym. But the takeaway we got from our visit there was that in line with what Jennifer was saying, is that there's been a lot of diplomacy and assistance engagement but they're hoping to take more advantage of the trade and assistance engagement. And we're gonna be doing a lot more work here at CSIS on the trade and assistance conversation. There's a trillion dollars with a T of additional assistance, I'm sorry, of additional trade, half of which is in the developed world and half of which is in the developing world. If we just spent a little bit of assistance dollars and had a little bit of diplomatic focus along with developing country political will to fix the plumbing around trade systems and so the term of art is trade facilitation. And so it's really a development conversation but much of the energy around this has been on the trade side. So in line with Jennifer's point about some of these merged agencies, one of the things I'd like to see a lot more of is how we're gonna have trade facilitation happen where you've got, it's a combination of trade expertise and where the gaps are, spending the money and having the fortitude of an assistance timeline and then the diplomacy to work with countries who've got the political will to actually make things happen. So I think Jennifer, you're absolutely right and I hope we hope to see the same thing in Australia as well and I think given their focus, we just had some from Australia, their take was that the lunch was, we wanna be about a new development agenda and so I think that's something we'll be pushing over the next year but thank you for that comment Alina. So Mr. Nakazawa, you're next. First of all, on your last point which Dan made, we supported many Asian economies during the last 40, 50 years and many of them developed based upon trade-driven growth. What I mean is Japan always try to make those governments policy as market friendly, try to make an enabling environment for foreign direct investment as well as domestic investment and therefore, you mentioned that trade and development might be kind of emerging issue but it's not. It's always an issue and that's the way how Japanese think about development aid. About the government structure issues, I have been in this official development as a business working at Japanese government more than a quarter century now and the name of my organization changes three times because of government restructuring. However, what we have to do is always dominated not by the government restructuring but by the changing and development landscape. So I think whatever the structure is, of course it has huge and important implications but what we have to look at is how their development is working as well as how that could also benefit to the tax barriers. I think this issue, Mr. Tanaka who was here was speaking about we need to find win-win development opportunities and so I think this is going to be, this is a big part of going back to sort of the political exigencies for domestic, developed country domestic audiences. It's true, there's sort of a, I'm excited about it so therefore it must be new but it isn't actually new, you're absolutely right, Mr. Nakazawa, this has not been, but it's something that there could be some synergies if we push on it and I think with the new WTO Bali agreement there's an additional window of opportunity for that. So Andrew, I'm going to give you the last word. Thank you for doing this. Well thank you Dan as well. I'm aware we haven't really responded to Bill's question partly because I think it's a difficult question. I think I wanted to, it made me think of Ethiopia and Rwanda, countries that we're maybe not graduating from but where there is that tension between a country that's growing nicely but there are underlying political challenges and governance challenges. I think the simple reflection that I had is that I think the importance for us as development agencies to be lashed together with our foreign office colleagues I think is absolutely critical and to work together on that. And I think more generally actually as we go forward especially as we as within the UK we're going to be focusing increasingly in fragile states and I think bringing together the kind of development security and the democracy political piece I think is going to be absolutely key. Okay, please join me in. Thank you.