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The Global Fund turns 5

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By OLGA PIERCE
Washington (UPI) Dec 15, 2006

In just five years the Global Fund to Fight AIDS, Tuberculosis and Malaria has pioneered a new model of global health financing, but its ongoing success rests on its ability to survive the growing pains of the next five years.

"We have pushed the envelope of country-driven financing," Richard Feachem, executive director of the fund, said at the Center for Global Development in Washington Thursday. "We did trust the demand side, and it works."

The fund was established in 2001 by the United States, Japan, several European countries and the Bill and Melinda Gates Foundation with two goals. The first was to dramatically increase the funding available to fight the global AIDS epidemic. The second was to pioneer a new form of funding where governments and non-governmental organizations in developing countries designed their own projects, and continued funding was based on their performance.

Today the fund boasts $9.8 billion in assets and has given a five-year total of $12 billion to fund 450 projects in 136 countries and has become a compelling argument for more accountability in global health, Feachem said, but it also faces challenges to both its health priorities and its governance structure in the future.

Critics initially questioned the wisdom of taking funding away from failing projects and giving it to projects that were successful. That process, they said, would result in funding being taken away from the poorest, most vulnerable countries and given to wealthier countries with better skills and infrastructure.

However, thus far that has not been the case, Feachem said. The $300 million that has been taken away from underperforming grants all came from programs in relatively high-income, high-capacity countries like South Africa, Pakistan and Nigeria.

"We believe performance-based is the only way to do effective development," said U.S. Global AIDS Coordinator Mark Dybul. The United States currently provides about one-third of the fund's total funding.

But there are also changes in store.

Because the fund was conceived as only a financing body, it has no capacity to provide technical expertise to countries that need help developing or improving their projects. Instead, that help must come from outside.

The decentralized nature of the grants also means that the organization as a whole has greatly diminished bargaining power when it buys AIDS treatments and other products, Feachem said -- and in the future it may bend its principles to take advantage of lower prices that could come from organized negotiation.

The fund must also find a way to secure long-term funding, he said. Currently, most donors commit funds one or two years at a time for five years.

But five- and 10-year commitments are needed so that the fund can know for sure it will be able to keep promises before it makes them, Feachem said. "If the money stops, the drugs stop and people are dead within weeks."

In order to secure that kind of long-term funding, the fund will have to reassure donor countries that recipient countries are doing their part, Dybul said. Some middle-income countries, like China and India, have not made sufficient healthcare investments to build the infrastructure necessary to absorb Global Fund money.

Likewise, many African countries have failed to honor their commitments to spend 15 percent of their government budgets on health. Corruption is also a concern in many countries.

In response, "draconian measures" have been taken, he said. If countries try to impose tariffs on incoming treatments and supplies, they are punished by a two-fold reduction in funding. As a result, all countries have now dropped their tariffs.

Perhaps one of the most fundamental challenges, however, lies within the organization itself.

All voting members of the fund are divided into two blocs: donors and recipients. In order for any motion to move forward, a 70-percent majority of each bloc is required, meaning that a handful of members can completely stall the process.

For most of the fund's history, members have exercised restraint, and small groups of members have not blocked action. Divisions along donor-recipient lines have also been rare.

But at elections for a new executive director earlier this year, a small number of votes ensured that no new leader took over. Feachem and others are hopeful that a new head will be found when the board meets again in February, but a precedent has been set.

One mistake is to formalize the divide between donors and recipients, when they are really both partners, Dybul said, calling the terms "cold war development speak."

Once the unspoken rule against holding up proceedings in such a way is broken, it can be difficult to keep it from happening again, Allen Moore, a senior fellow at the Global Health Council, told United Press International. Filibusters regarding federal circuit appointments were once unheard of in the U.S. Senate -- but once they were tried, they became commonplace.

"There is lots of potential for games to be played," he said.

Others, however, feel that the bloc system serves an important purpose.

"The Global Fund has had to push hard to make sure the people with the money don't have all the power," said Steven Radelet, a senior fellow at the Center for Global Development.

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