Open Working Group on Sustainable Development Side Event on

1. Open Working Group on SustainableDevelopment Side Event on AddressingVulnerabilities to PromotePeace and Development New York 6 February 2014 « Tackling structural vulnerabilities to avoidconflict and state fragility » By Patrick Guillaumont

2. Ferdicommitment to addressvulnerability Advocacy for givingspecial attention and treatment to poor and vulnerable countries in the post 2015 agenda, in particular to the LDCs Expressedhere in a previousevent in April 2013 , withGovts of France and Burkina Faso, and OHRLLS, as well as in othercircumstances (oftenwith the LDC IV Monitor on the Istanbul Plan of Action, IPoA), Supported by a long lasting research on the determinants, evolution and consequences of « structural vulnerabilities », economic or climatic, and on the LDCs In particular by setting up « retrospectiveseries » of the EconomicVulnerability Index (EVI) used by the CDP for the identification of the LDCs and by a new PhysicalVulnerability to Climate Change Index 

3. A specialtreatment to poor and vulnerable countries consistent with the universalityprinciple of the new agenda Structural vulnerabilities, as structural handicaps to a sustainabledevelopment, lead to unequalopportunitiesbetween people according to the countries wherethey live, To makeopportunitieslessunequalamong world citizens, itisequitable to support moststructurallyvulnerable countries Holds for the structural economicvulnerability, independent of the presentwill of countries, and for the physicalvulnerability to climate change, of which the LICs are not responsible Vulnerability (economic, social or climatic) is the opposite of sustainability in itsvarious dimensions Moreoverintertemporalconsistencyisneeded, with regard to the previouscommitments of the international community (eg LDC IV)

4. The goal of peace and securityenhances the needof a special focus on structurallyvulnerable countries Peace and securityexpected to be a new sustainabledevelopment goal Structural economicvulnerabilities, eithereconomic or climatic, shouldbetackled to promotepeace and security, becausethey are a factor of unrest and conflict, and not onlybecausethey are obstacles to sustainedgrowth A consistent international approach to peace and securityshouldbepreventive, and not only curative Attention of the international communitymainlydrawn by peace and security crises whentheyoccur Ambiguity of the presentapproach of « Fragile states », thatseems more curative thanpreventive

5. Structural economicvulnerability, distinct from state fragility Leads to clearlyseparateLDCs and Fragile States (FS) State fragilitydesigned and identifiedonly from presentpolicy and institutionalfactors: in principlelack of state capacity, politicalwill and legitimacy (manychangingdefinitions)…, often countries in conflict or post-conflict or sufferingfrominsecurity, …and for operational uses by a transitoryassessment of policies and institutions through CPIA Structural economicvulnerabilitydesigned, as with EVI, from factors (frequency of exogenousshocksand exposure to theseshocks), independent of policy and proven to have a negative impact on growth and development But structural vulnerability influences state fragility, So thatmanyLDCs are also FS (most are or have been so) 5

6. Impact of structural vulnerabilities on the risk of conflict Growing body of literature on the economicfactors of conflict Cross country evidence of the link in Africabetweeneitherclimaticshocks (negativerainfallshocks Miguel et al. 2004) or negativecommoditypriceshocks (Brückner and Ciccone, 2010) and the outbreak of civil conflicts Somedebate (and competinghypotheses) about the impact of positive commoditypriceshocks (rentseekingeffect vs opportunitycosteffect), seeming to depend on the kind of commodity (eg coffee vs oil in Colombia, Dube & Vargas, 2009) Clearerevidencewhenconsidering the impact of past export instability (rubs out the impact of the share of mineral exports, Chauvet & Guillaumont2003) Anywaydifficulty to measure the occurrence and severity of conflicts, and to assess the time lagsbetween the variousvulnerabilityfactors and conflict People displacedbecause of conflict(average1986 -2006,as % of pop) 5 times higher in LDCsthan in otherdevelopingcoutriesbetween (CIT, 2009)

7. Illustration of the link

8. More general impact of structural economic on governance and security Otherlogicalreasons and econometricevidence of a social impact of structural economicvulnerability (beside the level of income per capita) In particular impact of export instability, as well as of growthvolatility, on social variables, such as crime, corruption, incomeinequality, and finally on poverty (variousFerdiworks) More generalevidence of an impact of EVI (besideincome per capita and human capital, measured by HAI) on CPIA (Guillaumont , Mc Gillivray and Wagner, 2013): major effect of export instability Significantelasticity of CPIA to EVI (as well as to health or literacy) Meansthat, to a large extent, « Fragile States » are fragile due to their structural economicvulnerability Strongpolicy implications for peace and security

9. Building sustainabledevelopment, peace and security by tackling structural vulnerabilities Targetting at the three components of vulnerability Loweringexposure to shocks: through diversification, improvement of infrastructure, and most important by regionalintegration Narrowing the size of the shocks, eithernatural (mitigation) or external (world macro stability, and international pricesstability as well) Enhancing a « structural resilience »: through human and institutionaldevelopmentleading to an efficient domesticpolicy of riskmanagement,at the macro and micro level (such as innovativeinsuranceschemes)… …and an allocation of international resourcestakingintoaccount structural vulnerabilities

10. Structural vulnerabilities as criteria for ODA allocation Progress: GA December 2012 Resolutionon graduation of LDCs, §23 : « Invites developmentpartners to consider least developed country indicators, gross national income per capita, the humanassets index and the economicvulnerability index as part of theircriteria for allocating official development assistance » A principle first appliedby EU to the next EDF The application of such a principle, in particular by the MultilateralDevelopment Banks, wouldbe a significantprogress in ODA allocation, whichwouldthenrely on criteria meeting principles of equity, effectiveness and transparency… Fragile states wouldthenbetreated in an integrated allocation framework, not as an arbitrary exception, whileaidmodalitiescouldbeadapted to theirspecificfeatures

11. Extension of the principle to the allocation of adaptation resources A similarprinciplemaybeapplied to the concessionalresources for adaptation to climate change For that, relevant to consider the physicalvulnerability to climate change as part ( maybe a main part) of the criteria for allocating official resourcesdevoted to the adaptation to a climate change, for which the poor and vulnerable countries are not responsible, usingagainincome per capita and HAI as complementarycriteria. It wouldbe not onlyequitable and transparent, but also, if combinedwithappropriatedevelopmentmeasures, an efficient wayto protectpeace and security face to the new risks and tensions possiblyresultingfromclimate change

12. Differenciation through criteria or categories? Legitimacy of the LDC categorycomes not onlyfromitsstatus, as the only UN official sub- category of developing countries, but alsofromitsrationale, relying on identification criteria Possible redesigning of criteria through a composite index of structural handicap (EVI and HAI) or of least development (EVI, HAI and GNIpc) Most handicapped SIDS and LLDCs are generallyLDCs…or theirspecific handicaps (vulnerability to climate change, remoteness,…) maybecaptured by appropriate indices, guiding international support For binarymeasures, as thosebenefitting to LDCs (EBA), alwayspossible to come back to thresholds put on specificindicators and criteria But the legitimacycomesfrom the principlesbehind the criteria, addressing structural handicaps to a sustainabledevelopment