Chapter 2Key issues
2.1The complexity of the political situation in Myanmar—the citizens of which are facing a significant humanitarian crisis—has prompted questions about the risk management processes and level of flexibility within Australia’s due diligence framework when delivering development assistance in complex and contested environments.
2.2This chapter begins by describing the views of submitters on the current situation in Myanmar. Following this, the chapter canvasses the key issues raised by submitters and witnesses, including:
the challenge of getting aid where it is needed the most;
the most effective vehicle to get aid into Myanmar;
the need for greater flexibility in the Department of Foreign Affairs and Trade (DFAT) due diligence framework, and the management of risk;
proposed amendments to DFAT’s due diligence framework; and
approaches to delivering aid to Myanmar by other countries.
Views on the current situation in Myanmar
2.3Submitters described the military regime, the State Administrative Council (SAC), as being responsible for the current humanitarian, democratic and human rights crisis facing the citizens of Myanmar. The Myanmar Campaign Network (MCN) stated that the military is ‘the most significant barrier to safe and effective aid delivery’ in Myanmar.
2.4The University of Melbourne’s Initiative for Peacebuilding (Initiative for Peacebuilding) agreed:
The current Myanmar context is one where an illegitimate entity, the Military, has overthrown the democratically elected representatives of the Parliament.
…
The humanitarian crisis in Myanmar will only worsen under a continuing military regime. Amid the current democratic crisis in Myanmar, if the military prevails over the people, there will only be worsening conditions for aid and humanitarian efforts ... The humanitarian crisis will be best addressed when conditions for enabling enduring peace for the nation [are] prioritised.
2.5The military coup has resulted in ‘the loss of over 4000 thousand lives’, the ‘unjust detention of over 25 000 people, of which over 19 600 remain detained’, and the mass displacement of peoples, including ‘1.9 million people internally displaced and over 100 000 refugees fleeing to neighbouring countries’. The MCN submitted that the military regime has failed to consolidate power after the coup and has neither territorial control nor the capacity to administer the functions of government:
As the Myanmar military controls only 15-20% of the country and cannot win on the ground, they are increasingly relying on airstrikes and heavy artillery to attack civilians. Military airstrikes have increased by 300% in the past year compared to 2021, causing loss of life and infrastructure damage. There are widespread reports of torture and conflict-related sexual violence.
2.6The context in which aid and development organisations are working within is important to understand when considering how aid funding should be distributed and delivered. Mr Duncan McArthur, Myanmar Program Director at the Border Consortium, explained:
… it's important to recognise that the State Administrative Council are the primary perpetrators of violence and abuse in Myanmar. It's not a case of foreign aid responding to civilians caught in the crossfire between two armed forces. Rather, it's how does foreign aid respond to atrocities that are being committed by the de facto authorities.
2.7Dr Tun-Aung Shwe, the representative of the National Unity Government (NUG) to Australia, stated ‘[g]iven the deliberate efforts by the Myanmar military to obstruct aid, hindering its delivery to those in dire need, it is essential to examine the existing tools and practices applied in the unique situation’.
2.8From the Australian Government’s perspective, DFAT stated that:
Australia remains deeply concerned about the situation in Myanmar, and the ongoing repression and violence by the military regime. The military coup has reversed years of democratic, economic and development gains and plunged the country into a deep political and humanitarian crisis. Australia is committed to supporting the people of Myanmar through our international advocacy and our development and humanitarian assistance.
Australia's priorities remain:
the cessation of violence and alleviation of the humanitarian situation, including safe and unimpeded access for humanitarian assistance;
supporting ASEAN's efforts to address the crisis, including through the regime's full implementation of ASEAN's Five-Point Consensus on Myanmar;
the release of all those unjustly detained; and
dialogue to return Myanmar to the path of democracy.
Getting aid where it is needed most
2.9The complexity of the humanitarian situation in Myanmar is exacerbated by the difficulties faced by humanitarian and development organisations in being able to operate without interference by the military regime and in gaining access to areas of the country not under SAC control where, arguably, the situation is most dire.
2.10DFAT provided a breakdown of Australia’s estimated official development assistance (ODA) to Myanmar in the 2023–24 financial year which totals $121million. Of this, $42.1 million is bilateral, $15.4 million is regional, and $63.3million is global funding. DFAT noted that Australia’s aid program in Myanmar is the fourth largest ODA country program, after Papua New Guinea, Indonesia and Solomon Islands.
2.11According to DFAT, Australia’s development assistance is delivered through established multilateral, non-government organisations (NGOs) and civil society partners, and ‘supports key needs including healthcare, education, food, social protection services and livelihoods support, and programs that support gender equality and address gender-based violence’.
2.12DFAT confirmed that Australia does not provide any direct funding to the military regime and proactive steps are taken to ensure Australia’s assistance to Myanmar ‘neither goes to the regime nor lends it credibility or legitimacy’.
2.13DFAT noted that its due diligence framework provides a structured approach to identify and manage delivery partner risk, prior to entering into agreements and providing funding, but that these assessments are just one aspect of DFAT’s broader risk management architecture:
DFAT actively manages agreements with our implementing partners to mitigate risk, to make sure that agreements deliver the intended outcomes and value for money, and that we reach our intended beneficiaries. This architecture helps to ensure that our aid is delivered in compliance with the Public Governance, Performance and Accountability Act, and we overlay this architecture with our contextual knowledge and understanding of the situation on the ground in any operating environment, whether it's Myanmar or another country.
In Myanmar our primary concern is to ensure that aid is being delivered effectively to those most in need. That's the most vulnerable, particularly in some of the more challenging areas of the country. In Myanmar we need to take account of a number of factors, of course, ensuring that no money reaches the regime and that it's delivered completely separate to that. We need to take account of the security of both our delivery partners and beneficiaries who will receive assistance. We need to take account of the ability of partners to get aid to those who most need it, including in hard-to-reach areas. Finally, we need to ensure that nothing about our aid delivery would confer legitimacy or credibility on the regime. There's a whole package which starts with the architecture and then takes into account context.
DFAT stated that Australia’s development and humanitarian assistance reaches all states and regions in Myanmar:
We have confidence that our assistance is being delivered in every state and region in Myanmar through a range of implementing partners, including conflict-affected areas of the Chin, the Kayah, the Kachin, Kayin, Rakhine and Shan as well as on the Thai-Myanmar border … We are confident that we are delivering assistance through local partners across all areas: urban, peri-urban and rural, including conflict and non-conflict-affected areas.
2.15However, this claim is disputed in evidence provided to the committee which raises discrepancies with how aid is distributed in urban areas controlled by the SAC and regional areas not controlled by the SAC.
2.16Baptist World Aid submitted that aid is being disproportionately distributed between SAC and non-SAC controlled areas:
Since the 2011 democratic reforms in Myanmar, Australia has increasingly relied on supporting a small number of large-scale programs delivered through UN agencies, pooled funds/programs and large [international] NGOs working through more traditional [United Nations (UN) Office for the Coordination of Humanitarian Affairs (OCHA)-led] humanitarian coordination structures. Since the coup, however, most of these agencies have met with severe restrictions in working outside of areas of SAC control and are being forced to choose between working in SAC controlled areas and non-SAC controlled areas.
OCHA reporting against its own humanitarian plans have consistently shown that aid is being disproportionately skewed toward urban areas, Rakhine state and Ayeywaddy, where comparatively there is little conflict and displacement. Left unaddressed, our concern is that international aid, including Australia’s humanitarian assistance, will be indirectly being instrumentalised by the SAC as an unintentional benefit to one side of the conflict. While DFAT is keenly aware of avoiding support for SAC and is taking considerable steps to address the situation, a key part of ensuring the efficacy of future Australian aid to Myanmar rests on DFAT’s ability to work in a more strategic and flexible manner, including greater flexibility on due diligence requirements.
2.17Similarly, the MCN asserted:
While funding should still be directed through large NGOs and multilateral organisations, this aid can only reach vulnerable communities in junta-controlled areas. Additionally, the junta has weaponized aid by blocking aid convoys, and imposing travel restrictions on humanitarian workers.
…
Larger organisations/[international] NGOs are better able to navigate the security impacts of registering under the SAC so this has the effect of directing more aid funds to these large organisations, and less to smaller local [civil society organisations (CSOs)] and especially groups/ organisations involved in any advocacy work.
Given these challenges, it is vital DFAT re-evaluate the approach to aid delivery. We must prioritise the needs of the most vulnerable communities and focus on supporting grassroots organisations and the CSOs that operate directly on the ground, while continuing our relationships with large NGOs and multilateral organisations.
2.18Whilst the Australian Council for International Development (ACFID) Myanmar Community of Practice (CoP) provided recommendations to improve DFAT’s approach to the provision of aid to Myanmar, outlined later in this chapter, it also recognised DFAT’s flexibility in the use of Australian NGO Cooperation Program (ANCP) funds to support the provision of aid in Myanmar since the 2021 coup:
In particular, we acknowledge DFAT’s flexibility in discussing risk matters on a case-by-case basis, as well as DFAT articulating that partners are best placed to recommend how to deal with specific issues such as registration under the [Organization Registration Law], used of alternative financial transfer mechanisms, and reporting on sensitive program matters within ANCP documentation, based do the particular circumstances of programs and operations in Myanmar. In its engagement with the Community of Practice, DFAT has highlighted that its primary priority is continuing to provide assistance to people in Myanmar.
2.19Mr McArthur also acknowledged the work that DFAT had done since the coup, but noted the distribution of aid could still be improved:
I would also like to recognise that DFAT has done a good job since the coup in trying to be adaptive and responsive to this dramatic change in circumstances. They have resumed support for border-based organisations to reach out into areas which would otherwise be difficult to assist for agencies coming from Yangon, and I would like to put on record our appreciation for that. I think they can go further, and, like many foreign aid organisations and governments around the world, I think there is a challenge for the proportionality of aid to be dispersed more in areas where the needs are most severe. In particular, these are the areas which are being hit by air strikes and heavy artillery attacks in areas administered by ethnic authorities that don't have the capacity to repel military attacks by the military junta. We know that OCHA has raised $181 million this year so far and has assisted 1.8 million people, but we think that the proportionality of aid can be better suited through supporting border-based organisations.
2.20Baptist World Aid provided the following data on the distribution of aid in Myanmar to highlight its disproportionality:
Last year's mid-year report from the [UN] Humanitarian Response Plan (HRP) in Myanmar shows that 81% of food aid beneficiaries during the first half of 2022 were in urban areas of Yangon and Rakhine State, and only 16% of the HRP’s beneficiaries were internally displaced or stateless persons.
In the first half of 2023, OCHA’s Humanitarian Response Plan’s semi-annual report reported that OCHA and the formal humanitarian architecture had expanded their reach outside of Yangon and Rakhine state, but of the USD 181 million spent, 39% of beneficiaries were in Yangon, Rakhine state and Ayeywady Delta, where there is comparatively little conflict and displacement.
2.21At its public hearing, Senator the Hon David Fawcett requested a breakdown of the distribution of Australia’s aid funding between UN agencies, NGOs, and local groups, as well as a breakdown of aid funding by area, particularly between SAC-controlled and non-SAC controlled territories.
2.22DFAT provided a breakdown of the $42.1 million bilateral program by funding type:
UN organisations – 37.7 per cent;
international organisations – 25.9 per cent;
Australian universities – 15.4 per cent;
Australian NGOs – 3.0 per cent;
managing contractors – 4.1 per cent; and
other (advisory services, running costs, unallocated funds) – 13.4 per cent.
2.23However, DFAT did not provide a breakdown of funding by area, instead stated:
Given the sensitivities and the security situation in Myanmar, Australia does not publicise the details of our local implementing partners nor the details of where they are operating. This is at our partners’ request as it can adversely affect the safety and security of staff and beneficiaries.
We cannot verify the accuracy of specific statistics reported by the SpecialAdvisory Council for Myanmar (SAC-M) in September 2022 regarding the territorial control of the regime or opposition groups, given the highly dynamic nature of the conflict in Myanmar.
Australian assistance is being delivered in every State and Region in Myanmar. Despite the challenges, our assistance continues to reach communities across the country, including in conflict-affected areas of Chin, Kayah, Kachin, Kayin, Rakhine and Shan States, as well as on the Thai-Myanmar border. Our monitoring systems with our implementing partners give us assurance that Australian assistance is reaching those most in need.
Who should aid be provided through?
2.24Whilst a number of inquiry participants acknowledged the benefits of providing aid through multilateral organisations such as the UN, most submitters and witnesses advocated for the Australian Government to increase its provision of aid through local organisations. Inquiry participants argued that such groups would be able to achieve a greater level of proportionality in the distribution of aid in Myanmar. Other submitters suggested that engaging more closely with the NUG would better facilitate aid to reach the areas of Myanmar most in need.
Local organisations
2.25Submitters described the extraordinarily diverse number of ethnic service providers and networks of CSOs which are small, geographically particular, and locally led operating in Myanmar. Baptist World Aid stated that, should these networks be resourced, they have the knowledge, flexibility and capability to meet the widespread need within Myanmar, particularly in rural areas.
2.26The ACFID noted that Australia largely delivers its humanitarian assistance through UN agencies and pooled funding. For example, in 2021, 59 per cent of Australia’s total funding was delivered through the UN and other multilateral channels. ACFID acknowledged that while:
… the UN and multilateral organisations do play a vital role in coordinating and enabling humanitarian assistance, particularly through the “cluster system”, they cannot alone be relied on to effectively deliver humanitarian assistance in any given context … A global humanitarian system that does not equally empower and directly fund NGOs and local civil society organisations is poorer in its ability to be locally led, inclusive and accountable to communities which is important because locally led initiatives are shown to be more effective and better meet affected communities needs following disaster.
2.27Furthermore, ACFID stated the efficient delivery of development assistance means that more of every dollar reaches people in need:
Many multilateral organisations sub-contract NGOs—both international and local—to deliver their programs … Such subcontracting arrangements can slow down the process of funds reaching people in need and reduce the direct funding available due to the overhead fees of implementing agencies. Tracking humanitarian funding flows is a challenge, but a 2013 study found that donor funding allocated through the UN Central Emergency Response Fund incurred an estimated 10 percent in overhead fees before it reached implementing NGO partners.
2.28Baptist World Aid also discussed the limitations of providing aid through multilateral organisations in the context of Myanmar. Baptist World Aid acknowledged that the provision of aid through partnerships with multilateral organisations such as the UN and other large international NGOs is ‘with good intention and reason, not least being that well-resourced organisations are trusted to be able to meet accountability standards of donor countries, such as the due diligence framework utilised by DFAT’. However:
… one of the central arguments of this submission is that in Myanmar in particular, (and potentially elsewhere) this usual practice of distribution is proving counter-productive, because, many of the larger UN and [international] NGO aid providers delivering through more traditional OCHA-coordinated humanitarian architecture in-country are being forced to choose between delivering in SAC-controlled/condoned areas or areas outside of SAC control.
Large scale operations that large [international] NGOs undertake require infrastructure capable of accommodating the accompanying logistics that go with such programs. I.e., this being in cities with airports, major roadways, capacity for storage, etc. In Myanmar, these points of distribution are highly visible and accessible by the S.A.C. and as such, easily able to be brought under SAC control, through for example registration, control of visas and threatening humanitarian workers.
2.29ACFID argued that humanitarian funding should be going directly to local organisations on the ground, but NGOs based in Australia with strong local networks and locally led ways of working can play a role as intermediary:
This may involve contextualising the donor’s requirements and priorities and supporting local partners to meet them, providing technical support, and working in partnership. Funding these types of organisations directly, rather than through multilateral organisations, fundamentally means more efficient delivery with more of every dollar reaching people in need; demonstrated effectiveness based on experience; and equity in long-standing relationships that enable locally led responses.
2.30Mr McArthur told the committee that it is ‘a lot easier for international NGOs than for local civil society organisations to meet the due diligence requirements’, but the challenge facing DFAT is ‘how to reduce the amount of funds which are allocated for multilateral funding and increase the amount for faith based or more civil-society-based organisations’. Mr McArthur described the efficacy of funding smaller NGOs like the Border Consortium to deliver aid in Myanmar:
I'll give you an example. Just with the support that [the Border Consortium] has been able to channel through partners this year, we estimate that we've reached about 35 per cent of the internally displaced beneficiaries that have been reported by OCHA through the midyear review of the Humanitarian Response Plan, and we've reached that with less than five per cent of the funding. We really do believe that this border-based assistance is a very cost-effective mechanism that the Australian government could be pursuing more.
2.31As a member of the Churches Agency Network Disaster Operations (CAN DO), Baptist World Aid provided an outline of the dollar value that CAN DO could deliver and to which locations in Myanmar, if they were to receive additional funding from DFAT:
Based on a survey of Australian Church Agency Network Disaster Operations (CAN DO) in late 2022, the maximum response capabilities of this network totals approximately $7.5M AUD. A minimum level of combined funding of at least $4M AUD would be necessary to address the scale of needs, while still achieving significant geographic coverage/spread.
CAN DO Agencies are well positioned to work with local partners across almost all states in Myanmar (Kayin, Kayah, Kachin, Shan, Chin, Mon) and regions/divisions (Mandalay, Taunggyi, Bhamo, Kalay, Hakha, Pekhon, Loikaw, Taungngu, Hpa An and Mawlamyaing, Bago, Upper Bogalay, Yangon, Sagging, Magway). Their capacity extends across a wide range of sectors including food assistance, livelihoods, protection, WASH [(water, sanitation and hygiene)], shelter, psycho-social support, [gender-based violence] and trafficking prevention, nutrition, healthcare and medical relief. Through these interventions, CAN DO and their local partners could reach more than 500,000 people.
2.32The Border Consortium also offered an outline of the dollar value they could effectively deliver in Myanmar, stating:
In 2023, [the Border Consortium] is on track to disburse approximately USD7 million to reinforce the resilience of just under 300,000 [internally displaced persons] in rural areas of southeastern Myanmar. This multi-sectoral response has been delivered through a network of 30 civil society organisations and ethnic service providers. Funds are raised from four bilateral donors and three multilateral donors with DFAT contributing roughly USD 1 million. [The Border Consortium] is confident the absorptive capacities of our local networks are sufficient to double the scale of assistance offered for civilians afflicted by atrocities in 2024. So if DFAT could allocate an additional USD 7 million, then [the Border Consortium’s] partners could assist an additional 300,000 [internally displaced persons] in in 2024.
2.33Mr Mike Bartlett, Advocacy Policy Manager at Baptist World Aid Australia, made the following observation:
Locally led responses through civil society organisations are frequently mentioned as part of the architecture of the government's new international development framework. I can't think of a more critical context than Myanmar, where the need for that language to be translated into practical tools—some kind of modality for the proportionate distribution of aid truly needs to be applied.
2.34DFAT noted that through its new International Development Policy, it will be pursuing ‘a range of efforts to further support locally led development’.
The National Unity Government of Myanmar
2.35As discussed in chapter 1, following the coup, a group of almost 300 politicians opposing the military regime formed the Committee Representing Pyidaungsu Hluttaw (CRPH), which claims to be the legitimate legislative authority for Myanmar. The CRPH announced the formation of an opposition government-in-hiding known as the NUG which includes representatives from the National League for Democracy, ethnic minority and civil society groups, and minor parties.
2.36Dr Shwe explained that the NUG has been working with members of the civil disobedience movement (CDM) and CSOs, who are operating in territories controlled by the NUG and Ethnic Resistance Organisations (EROs), to offer essential support to local communities focusing on health, education, and humanitarian aid. Dr Shwe added that nearly 70 per cent of Myanmar is under the control of the NUG and its allied EROs and that its alliance is not only providing essential services, but also restoring the rule of law in Myanmar through an agreed Federal Democracy Charter.
2.37Dr Shwe submitted that:
Utilizing innovative and alternative approaches without compromising the essence of the due diligence framework to collaborate with CDM networks and the NUG proves to be highly effective in addressing the genuine needs of the people of Myanmar. This method stands as the most efficient way to counter the junta's manipulation of international assistance in the current scenario. The recently established CSOs in Myanmar formed by proficient members of the CDM possess invaluable local insights and operate discreetly, avoiding manipulation by the Myanmar military junta.
2.38The MCN recommended that the Australian Government make a concerted effort to coordinate with the NUG, stating that the NUG are ‘well placed to make representative decisions about Myanmar's development trajectory’ and that ‘supporting their policies with recognition of their legitimacy and funding … builds their strength to meet the needs of the people and act effectively as a government’. Furthermore:
CSOs and the NUG play a pivotal role in addressing the pressing humanitarian challenges and deliver tangible assistance to affected populations.
These organisations have decades of experience in delivering humanitarian relief and support services to areas where people have been displaced or impacted by conflict, as well as documenting human rights abuses.
...
MCN recommends providing aid and development funding to the NUG, Ethnic Administrations and local [CSOs], particularly local/lived experience groups. These CSOs are best placed to deliver support to communities in need as they have the access, local knowledge, and trust of the communities they are serving.
2.39In his submission, Dr Shwe provided the following example of how the NUG has assisted in distributing aid in Myanmar which involved:
… the reception and successful distribution of in-kind assistance from the Global Fund during 2022–2023, amounting to USD 20 million. The NUG utilized this support to combat Malaria, [Tuberculosis], and HIV, collaborating closely with its allied EROs to ensure efficient delivery. Due to the commendable success in 2023, the NUG secured additional funding from the Global Fund, totalling USD 70 million for the next three years.
These success stories demonstrate the existence of alternative and innovative strategies capable of overcoming the limitations of the due diligence framework in Myanmar's distinct context. They also serve as evidence of the NUG and the CDM network's ability to effectively manage international aid without compromising international aid management norms and standards.
2.40Dr Shwe added that the NUG has established financial tools and systems to enable financial independence, free from the military’s interference, for the people of Myanmar, including the Spring Development Bank, Digital Myanmar Currency DMMK, and NUG Pay.
2.41The Australian Government has stated on numerous occasions that it has a longstanding policy of recognising states, not governments.
Flexibility in the due diligence framework and managing risk
2.42Overwhelmingly, submitters and witnesses called for greater flexibility in the application of DFAT’s due diligence framework, given the distinct circumstances of Myanmar which make the delivery of aid particularly challenging.
2.43The Initiative for Peacebuilding submitted that DFAT’s due diligence framework ‘is not at present fit-for-purpose in determining the scope of stakeholders who can be engaged by the Australian Government for the provision of aid to the citizens of Myanmar’. The Initiative for Peacebuilding argued that the current arrangements are prohibitive and a more tailored and flexible funding strategy is needed.
2.44Baptist World Aid agreed that the framework and methodology of DFAT’s aid delivery is not fit-for-purpose in a context such as Myanmar. Because the distribution of aid within Myanmar is currently skewed, favouring SAC-controlled areas, ‘a proportional and flexible aid response through diversified non-traditional delivery mechanisms’ is required. Baptist World Aid explained:
… if Australian aid is to reach those in most need—arguably those in non-SAC controlled areas who are disproportionately affected by the conflict and where the majority of displaced people are—Australia will have to support both in-country aid through more formal humanitarian architecture and through cross-border aid, while also working with local networks and organisations to access areas where there hasn’t previously been significant conflict and displacement, and as a result have not yet been able to develop more sophisticated informal aid delivery channels. This requires supporting non-traditional partners and different types of organisations and networks, which in turn may variously require a more flexible approach to meeting DFAT’s due diligence requirements, a greater appetite for risk, and increased DFAT capacity to develop and manage a wider variety of strategic partnerships and delivery mechanisms.
2.45Furthermore, Mr Bartlett articulated that:
Myanmar is one current context where there is an urgent need, indeed a humanitarian imperative for a change in practice that achieves better outcomes; we need collaboration and creativity that draws on all the knowledge, and experience that all stakeholders have access to.
Faith based organisations have extensive local networks from which to execute a locally led response in Myanmar … as well as knowledge and experience that, brought to a table in collaboration with DFAT, other NGOs, and multilateral organisations, surely contain the capacity to creatively improve our practices towards a more proportional distribution of aid than is currently taking place, whilst mitigating risk in such a way so as to retain integrity with regard to Australian legislation.
Challenges for local organisations to meet requirements
2.46A number of submitters outlined the challenges that CSOs and other community-based networks are facing on the ground in Myanmar in meeting due diligence requirements, whilst balancing the need to mitigate the risks of operating in the current oppressive environment.
2.47According to the Initiative for Peacebuilding, DFAT’s due diligence procedures ‘limit many [local Myanmar] groups and existing network organisations from receiving funding particularly because of the conditions caused by the military coup’. At the hearing, Dr Shwe pointed out that the due diligence framework includes criteria on past performance: ‘[w]ith these criteria, new actors in the field are not able to meet this’, which means that many of the new humanitarian and development entities in Myanmar that have emerged following the coup in February 2021 are unable to meet this criteria.
2.48Baptist World Aid added that:
Under current arrangements, most of these smaller actors and locally led networks would be themselves unable to directly meet due diligence requirements without support, and many are not aligned with an NGO registered as part of the ANCP that might provide them with the capacity to do so.
2.49Furthermore, the Initiative for Peacebuilding submitted:
… many local community-based organisations and networks do not have the necessary legal registration, financial and management systems that would normally be expected due to the political circumstances as well as operating environment.
The usual alternative to working through civil society, of working through a Partner Government direct funding agreement, also cannot apply directly to the [NUG], as recognition of the alternative government has not been seen as politically feasible.
2.50The MCN provided some additional examples of where localised organisations and networks face challenges in meeting the requirements, including:
The requirement to keep audit trails: keeping expenditure records for seven years poses a security risk for partners who are operating under low profiles as they have to find a safe location to store a large number of documents and cannot deny links to the organisation if the office or storage location is raided.
Requiring three quotations for goods and services: this requirement is unfeasible in many circumstances, as often when purchasing from within Myanmar and on the Thai Myanmar border, there is only one source for the required goods.
Counter-terrorism requirements: the requirements that involve sending lists of the personal details of staff create significant risks, including arrest, if these lists are intercepted.
Non-institutional money transfer systems: due diligence frameworks which prevent organisations from using non-institutional money transfer systems such as Hundi creates significant logistical challenges to transfer funds to organisations who are not registered, and not based on the border.
2.51Due to these challenges, MCN recommended that ‘DFAT continue to support and consider opportunities to enable increased flexibility of reporting and accountability mechanisms, tailored to suit each organisation, taking into account the prevailing security environment’.
Managing risk within the due diligence framework
2.52Managing risk in providing development assistance in the context of Myanmar was raised throughout the inquiry. The committee was keen to understand how risk was balanced against achieving the desired outcomes given the challenges of the operating environment, particularly, in a situation where there is a non-cooperative authority.
2.53DFAT stated that the due diligence framework considers risks that relate to Australia’s legislative requirements such as fraud and anticorruption; preventing child exploitation and abuse; preventing sexual exploitation, abuse and harassment; and counterterrorism resourcing. These aspects of risk are applied to the delivery of Australia’s development program in all contexts, however proportionality is also considered when applying the due diligence framework which takes into account the operating context in a particular country.
2.54At the hearing, committee members questioned how DFAT manages risk in the context of Myanmar. In particular, how it balances the outcomes that it wants to achieve with the level of risk it is prepared to take to achieve the outcome:
Senator FAWCETT:… I'm interested to understand, as you assess this, if the outcome we're looking for is to save lives in Myanmar by providing medical help to a community that's just been bombed or had an artillery strike on their village.
Clearly number 14, environmental and social safeguards [in the due diligence framework criteria] are probably not high on their agenda right at this particular point in time. How we discount some of the things from our normal business-as-usual framework may be important, but what structural guidance do you have for your officers who are making this judgement to say: you can discount environmental impacts because their environment has just been destroyed by the Tatmadaw anyway, because the outcome of providing medical care to people who are treating battle wounds is the priority here, and in between you make judgements around efficacy and financial accountability et cetera. Do you consider the risk to outcome, rather than just financial, because I could ground every aircraft and be quite happy that I have absolutely no flight risk. What a good job I've done, but I have not achieved the mission. The mission the taxpayer has given you in this case is to support the people of Myanmar who most need it. How do you find that balance?
…
Mr Fehre:Coming back to your key point, when a delegate in DFAT is approving funding for a particular activity, they have to consider both the benefits—so as you say: what is it that we are trying to achieve?—as well as the risks associated with that and … to what extent have we been able to mitigate those risks. A delegate, in approving funding, is having to balance both benefits with risks and make a context-specific judgement about proceeding with the funding.
2.55The department was unable to provide the committee with a satisfactory answer on how the financial delegates applying the due diligence framework are supported to make difficult decisions about balancing risk with the desired aid outcome.
DFAT’s policy on aid delivery in sensitive and high risk regions/countries
2.56During the committee’s hearing, Section 5.2: ANCP Activities in Sensitive and Higher Risk Regions/Countries of DFAT’s guidance on the ANCP was raised.
2.57NGOs considering ANCP projects in sensitive or high security risk locations must consult with the ANCP team early and prior to submitting new project proposals as part of an Annual Development Plan (ADPlan). An ADPlan is a plan of development programs and projects put forward by an NGO in order to receive funding through the ANCP. NGOs must provide an overview of how the project will be managed, monitored, and where relevant, evaluated, given the operating context. ADPlans should include:
written evidence of the prior approval of the proposed activity by an appropriate government authority;
detail on Australian citizens or permanent residents travelling to project locations, and measures in place to ensure their safety, and measures in place to ensure safety of local staff; and
information on how the project will be monitored and evaluated.
2.58In response to questions as to how the requirement to provide prior approval by an appropriate government authority would apply in Myanmar where the ‘de facto authority is not a cooperative partner in the delivery of aid’, both Baptist World Aid and MCN agreed that this was not a viable option for most groups. MCN stated there ‘is no way that aid groups, humanitarian groups or human rights defenders could be asking the 'government' for any kind of approval’.
2.59In response to a question on notice about the application of Section 5.2 ANCP Activities in Sensitive and Higher Risk Regions/Countries in the context of Myanmar, DFAT stated:
This advice is for ANCP activities being implemented in a range of different high-risk contexts and sensitive locations, and information needs to be locally contextualised. Australia takes proactive steps to ensure our assistance to Myanmar does not go to the military regime or lend it credibility or legitimacy. Therefore for activities that are implemented in Myanmar, DFAT would judge that the first dot point (written evidence of prior approval by an appropriate government authority) is not appropriate for the context.
Dot points two and three above (regarding safety of Australians and local staff, and plans to track project implementation) are valid and critical in high-risk contexts, including Myanmar.
Proposals to improve the provision of aid to Myanmar
2.60Submitters outlined a number of recommendations to improve the provision of aid to Myanmar given the special circumstances it is facing. These proposals included:
recognition of the NUG as the legitimate government of Myanmar;
using a core funding or co-financing model;
alternative approaches to risk management;
prioritising humanitarian assistance in conflict-sensitive areas by investing in and collaborating with local organisations; and
a special circumstance framework for the provision of aid in contested environments.
Recognising the National Unity Government
2.61The Initiative for Peacebuilding suggested that the Australian Government could recognise the NUG as the legitimate government representing the interests of the people of Myanmar, and that by doing so, a due diligence assessment would not be required under a bi-lateral partnership to distribute aid. Furthermore:
Recognition of the [NUG] by the Australian Government would be in line with other donors who are contributing large scale funding to achieve impactful development for grass roots communities who have been most disadvantaged under current frameworks for aid pathways. The adaptive reform needed by DFAT to reach multi-scalar approaches across areas of need, require diversified policy and processes for the current dire and protracted crisis in Myanmar.
2.62Mr McArthur proposed a more multilayered approach where DFAT could engage with subnational authorities:
… where there isn't a legitimate national authority to engage with but there is a determination by DFAT that there is a degree of or enough legitimacy to engage with subnational authorities. That might be one way in which you could marry the scope to the current situation in Myanmar.
…
The NUG would certainly be one of those stakeholders [that DFAT could engage with], but it could also refer to the myriad ethnic resistance organisations—the Karen National Union, the Interim Council for Karenni et cetera—as well as the different ethnic states who are that subnational level rather than at the national level.
A core funding or co-financing model
2.63Another option suggested by the Initiative for Peacebuilding was that the Australian Government could consider the NUG and its network of CSOs as ‘a system of governance’ and:
… consider the purpose of the funding and support at a policy level, rather than at the activity or project level. Under this approach, the intent of the funding grant overall is to have impact on the political economy of the situation and the overall impact of the issue to which the funding relates, rather than to directly fund individual organisations, services or activities.
A core funding or co-financing model within DFAT often is directed towards this higher-level policy level impact and outcome, rather than being directed towards individual budget line items.
2.64The Initiative for Peacebuilding explained how a core funding or co-financing model could work:
The relevant due diligence requirement in DFAT relates to the competence of the overall organisation and its effectiveness in achieving its purpose and passes risk and compliance to the third party using their own systems and processes. A risk management decision made by the third-party organisation to waive or reduce due diligence requirements on the basis of urgency, need, practicality or other information would be weighed up by them against the imperative to achieve the purpose of the grant. In this case, the signalling of ongoing support to ethnic minorities, women, religious groups and displaced people through a third party could be justified by the overall impact of the funding grant, not by the direct impact on individual beneficiaries against an activity budget. When Australian financing is blended with other funds through a co-financing or core funding agreement, the direct audit trail of Australian taxpayer funds does not apply in the same manner, and gives more coverage to DFAT, as well as passing on risk and obligations more effectively to the third party organisation.
Managing risk to increase program efficacy
2.65ACFID proposed an alternative approach to managing risk to increase program efficiency and effectiveness:
In this context, DFAT could consider different types of risk and whether risk—rather than simply being transferred—can be shared and managed through joint approaches with partners. It could pursue this approach through long-term, flexible and multi-year partnerships with NGO and civil society partners that focus less on risk transfer and more on risk management and mitigation through joint diagnostics, treatments and two-way capacity building.
These types of funding arrangements will increase program efficiency and effectiveness and give Australia greater influence over the outcomes it wants to achieve through its development and humanitarian program. Funding local partners, and the NGOs and humanitarian agencies that work with them, is therefore a critical modality in Australia’s toolkit to respond to humanitarian need in insecure environments.
2.66ACFID Myanmar CoP recommended that DFAT improve its guidance to be clearer and consistent on its parameters and approach to risk, including regularly updating guidance within DFAT’s Programming Principles for Myanmar, and in its dialogue with its aid partners. Further, it stated that DFAT should provide clarity on its principles for development partners to engage with government bodies within Myanmar, even if it is non-financial, to ensure implementing partners have confidence to operate in country. This is particularly important given the ‘increasing pressure for agencies to engage with the de-facto military authorities, to confer them legitimacy and recognition, and increased pressure not to criticise the military regime’.
Focusing on localised aid
2.67In a joint submission by a group of individuals who came to Australia to study under the Australia Awards Scholarship program before the 2021 military coup, five recommendations were made focused on ensuring that aid is provided to those most in need, including:
- The prioritisation of humanitarian assistance in conflict-sensitive townships where administrative services are disrupted to lessen suffering and promote resilience among those most affected by the ongoing conflict. To achieve this the government should work with local organisations and community leaders to ensure that assistance is tailored to the specific needs of affected populations, and employ conflict-sensitive approaches to minimise the risk of exacerbating tensions or causing harm to vulnerable communities.
- The provision of cross-border humanitarian assistance to Myanmar refugees and internally displaced persons in border areas through neighbouring countries, collaborating with international partners. A collaborative approach would foster a sense of regional solidarity, emphasising the importance of collective responsibility and global cooperation in response to humanitarian crises.
- Investing in local ownership for delivering essential services. Programs should focus on enhancing access to quality education, providing technical training and skills development, facilitating access to market information and resources, and promoting sustainable livelihoods. By supporting these initiatives, the international community can empower local communities to build an immediate better future and be ready for the reform process.
- Facilitating and promoting inclusive dialogue among champions and stakeholders in Myanmar across ethnic groups, CSOs, political leaders and international organisations. This dialogue should aim to find a peaceful resolution to the conflict and establish a democratic and inclusive peace effort in Myanmar. Importantly, this requires the support of countries like Australia to help build leaders’ capacity and technical expertise.
- The provision of grants for local CSOs to foster grassroots development and empower local communities. Grant application processes should be clear and concise, using plain language and offering translations into local language. And support CSOs to develop capacity building programs to strengthen their project management, financial management, and proposal writing skills.
- Reflecting on the commitments expressed in Australia’s new InternationalDevelopment Policy, the ACFID Myanmar CoP called for the Australian Government to enable a greater localisation of assistance by investing in:
… mechanisms that facilitate local ownership and empower local civil society to deliver essential services, in alignment with commitments expressed in Australia’s new International Development Policy to supporting local leadership, solutions, and accountability, by taking a more flexible and innovative approach to program planning and implementation. This should include:
Supporting establishment and funding for a direct civil society pooled fund to strategically strengthen non-government systems for provision of essential services. This funding should support local agencies’ core operations so that partners can more effectively work through local non-government agencies and community-based organisations for sustainable outcomes.
Continuing to direct funding to multilaterals and multilateral pooled funding mechanisms, as international and local civil society organisations have found it easier and safer to secure approvals under UN or Global Fund managed funding compared to other mechanisms.
A special circumstance framework for ‘Contested Environments’
2.69Baptist World Aid proposed a special circumstance framework that could exist alongside or within the current due diligence framework, which would be available to be utilised when circumstances can be officially identified and designated as ‘Contested Environments’. Baptist World Aid suggested that the criteria for this designation would be best established by DFAT in consultation with ACFID members.
2.70While essentially serving as an exception to the rule, a designation of ‘Contested Environments’ could hold a ‘unique capacity to be applied when complex dynamics regarding the holding of authority in disputed territories make proportional aid distribution problematic’. Within such a framework, BaptistWorld Aid envisaged that, when circumstances require, an investment could be made in humanitarian assistance on a case-by-case basis through locally led humanitarian networks and CSOs. In the context of Myanmar, this investment could be made in non-SAC controlled areas.
2.71Under the proposed framework there would be:
a greater appetite for failure;
greater flexibility on due diligence requirements, such as waiving requirements for registration, tolerating the use of informal funds transfers, remote monitoring arrangements, and reduced paper trails;
longer timeframes to meet due diligence requirements;
flexible forms of support for emerging and developing local response networks; and
a small grants programs managed by partners with minimal due diligence requirements that can provide flexible support to locally led response networks, CSOs and faith-based organisations to meet overhead costs such as transport, equipment, travel and meetings, training, and/or other network and organisational needs.
2.72Whilst Baptist World Aid recognised that this approach could create additional risk, it argued that the additional risk could be largely absorbed, and thus mitigated, through the oversight of established organisations who would act as mediators for local actors in such circumstances. These organisations could be those who are already accredited by DFAT, who have a demonstrated ability to meet compliance and risk standards, and the capacity to hold those standards with downstream partners in Myanmar.
Approaches to delivering aid to Myanmar by other countries
2.73Other countries have similar approaches to Australia in their provision of aid to Myanmar, with some variation. DFAT noted that it conducts comparisons of its due diligence framework with that of other relevant partners:
For example, we've done extensive comparisons between our framework against the UK Foreign, Commonwealth and Development Office's framework, and on occasions have conducted joint assessments with them. There's a fair degree of complementarity between assessment frameworks.
…
Largely, they look at the same elements. The difference comes in where we have different legislative requirements that we're trying to meet, but the basics of governance, financial management, safeguards et cetera are common across frameworks of likeminded development partners.
2.74Most countries provide assistance through a range of institutions and organisations, including the UN, multilateral institutions, NGOs and civil society partners. Like Australia, Norway is primarily channelling assistance through the UN and CSOs since the coup. Similarly, Sweden’s main channels are CSOs, local, multilateral and international organisations, and joint donor funds.
2.75The United Kingdom (UK) has an added focus on supporting ‘diverse CSOs to survive and build resilience in the face of a tightening civic space’, as well as a dedicated fund ‘to strengthen the capacity building of local partners and actors to prioritise localised approaches’.
2.76Finland, on the other hand, has funded projects which have provided technical support to the interim institutions of the NUG. The projects focus on initiatives to prepare and strengthen civil society and the pro-democracy movement for future dialogue with the aim of supporting a return to an inclusive peace process and path to democracy.
2.77Similarly, the United States (US) through USAID has also supported pro-democracy activists, ethnic support organisations and the NUG. On 23December 2022, the Burma Unified through Rigorous Military Accountability (BURMA) Act was amended to enable the appropriation of funds by the USGovernment for ‘programs to strengthen federalism in and among ethnic states in Burma, including for non-lethal assistance for Ethnic Armed Organizations in Burma’, and for ‘political entities and affiliates of EthnicArmed Organizations and pro-democracy movement organizations, that support efforts to establish an inclusive and representative democracy in Burma’. Michael Schiffer, Assistant Administrator of the Bureau for Asia at USAID, stated:
… immediately after the coup, USAID’s bilateral democracy assistance program pivoted to provide emergency support to pro-democracy activists and ethnic support organizations, civil society leaders, journalists, and human rights defenders. This ongoing assistance provides a critical safety net and includes temporary safe houses, subsistence living expenses, emergency medical needs, digital and physical security, legal aid, and psychosocial support, enabling individuals and entities to continue their work for an inclusive, federal and democratic future for their country.
…
Since the passing of the BURMA Act, USAID has further aligned and accelerated programs to support a wide array of actors in Burma. This consists of democracy activists, ethnic support groups, human rights defenders, the civil disobedience movement, civil society actors, women and youth groups, the “National Unity Government”, and the National Unity Consultative Council ...
We have leveraged our democracy and governance budget as the focal point of our aid for these groups, while also using economic development and health programs to deliver basic services and humanitarian aid in order to sustain the resilience of vulnerable, conflict-affected communities. USAID/Burma has provided this assistance mainly via local civil society and ethnic service delivery organizations. This work also bolsters the enabling environment necessary for a future inclusive democracy.
2.78However, the only parliaments that have recognised the NUG as the official Government of Myanmar is the European Union and the French Senate.