Anna Kuznetsova: Your journey in humanitarian aid and international relations spans over three decades. Could you share how your experiences have shaped your approach to supporting the displaced?

Peter Maurer: Reflecting on my 35 years as a Swiss diplomat and at the ICRC, I’ve witnessed a broad range of humanitarian and development challenges at both bilateral and multilateral levels across different policy debates and operational contexts. Post-ICRC, I’m most interested in exploring innovative approaches to resilience-building and community-based support, looking beyond immediate aid to focus on empowering individuals in their efforts to regain control over their lives.

For decades, the international community has grappled with aid policies and practices, the adequacy of credit lines, mandates, and norms, as well as the complexity of the needs of populations, be they refugees, displaced, or other fragile communities. While at the ICRC, the focus was on humanitarian needs in armed conflict, today I am more attentively focusing on complex emergencies and particularly vulnerable populations, which seem to be increasing rapidly. In many fragile contexts, we have to recognise that displacement is a very critical issue, but by far not the only one. Communities are often confronted with armed conflict, poverty, climate change, health challenges, and pandemics, which negatively affect vulnerable societies and push them into multiple crises at the same time. We are increasingly confronted with millions of people in very complex environments, which makes aid policies more challenging and traditional approaches often elusive. Correspondingly, we see considerable support for concepts like resilience building and community-based support.

Seeing the limits of aid, I have been interested in the issue of investments in fragile contexts within the World Economic Forum’s activities. I’m a member of the Elea Foundation, focusing on entrepreneurship in emerging economies, and an Ambassador for the Global Steering Group on Impact Investment, which promotes investment in favour of vulnerable populations and global challenges. Finally, I am President of the Basel Institute of Governance, which looks at corruption and broader governance challenges. After many years of focusing on aid, I was eager to expand my perspectives and deal with the broader environment.

Anna: From your experience, could you please share how the international community governs problems like displacements? And how do we get to legitimate decision-making and to achieve a positive impact in the fields of refugee policies, displacement policies, or policies addressed to poor populations? And, probably most importantly, how can we determine what the populations in need aspire for?

Peter: There’s no one-size-fits-all solution; each context is unique. The key is understanding the specific needs and capabilities of displaced communities. Sometimes, the focus is on making capital available or offering educational opportunities; at other times, urgent intervention with quite traditional humanitarian aid is needed. The most important issue, though, is for governments to create enabling environments for economic participation for vulnerable populations, particularly those displaced.

One of the experiences in my professional life has been that war-affected populations are not first and foremost looking for aid, but for pathways to regain independent lives. Reflections on how to support and deal with the issues of refugees and displaced populations go back to what we want to achieve. It’s important to focus on investment rather than aid, to make blended finance instruments available as an innovative tool, and to increase available resources for displaced populations. Empowerment of local and disenfranchised communities, be they refugees or other displaced communities, is critically important.

Let me illustrate: whenever I visited refugee camps, contrary to all prejudice, refugees were not idly waiting for aid but were mostly engaged in income-generating business activities. Today’s aid policies need to take those positive dynamics into consideration, supporting them in scaling and growing. Instead of merely assisting millions of displaced people, we need to shift the focus to fragile communities and their economic activities. While this may be more complex, the whole point is to foster entrepreneurship, markets, access to markets, and sustainable finance, which allows for income-generating activities, capital accumulation, and finally, the possibility for affected people to regain agency over their lives. I do recognise that this is often politically controversial – but it is so clearly more effective and adequate that it’s worthwhile trying.

Anna: When I was supervising the Livelihood Assistance Programme in Eastern Ukraine, co-financed by Switzerland from 2019 to 2023, we observed the real influence of local empowerment and the development of entrepreneurship and value chains in communities. We also provided a mix of economic support instruments, including vocational education, various sizes of grants for businesses and entrepreneurship, legal and advocacy support, and community-based initiatives. Such instruments are used worldwide. In your opinion, which instrument is, so to say, the most efficient and effective? And where should governments and organisations invest more in order to meet the needs?

Peter: I would be very hesitant to highlight one single element or to scale or rank them, as all of them have their significance. We have to learn to read needs in contexts. Many factors play a role: political and regulatory frameworks, the level of interaction with communities, and the specific skills and profiles of refugee communities. Sometimes, you have highly educated refugee communities; at other times, you have communities with low education levels—this fundamentally changes the importance of educational programmes for refugees. Sometimes, refugees know more about business than those who want to help them, and therefore, refugees need capital to help themselves. The question then is how to make capital available at an acceptable risk in low-security contexts. So, we should be accurate in contextual readings of situations and listen to refugees and adapt to their needs and capacities.

There are three important points I would like to mention. First, governments should focus on opening spaces for the economic activities of displaced and refugee communities. When the political dynamics in a country put extreme restrictions on economic activities, the price tag for basic humanitarian assistance will just increase exponentially. So, instead of having regulations that prevent refugees from accessing the labour market or business activities, the policies should actually provide the opposite. You should open those markets step-by-step while supporting local communities to manage the shocks. I see some countries and aid agencies starting to understand, while others are still much more hindered by political opposition. The second point is how governments can reconceptualise development aid. I refer here to the words of the President of the World Bank, Ajay Banga, who has said many times since taking office that it is often more appropriate to use government funds to de-risk private investment for vulnerable communities than to run traditional public aid programmes.

Thirdly, it seems to me that the focus is too much on making international capital available for fragile contexts instead of exploring how we can facilitate local capital investments. International capital will come when local capital invests in the local market, and when there is a certain amount of stability to guarantee returns. These capacities should be built step by step and with a focus on local institutions. Overall, it just seems much more promising to follow such steps than to throw aid at problems and hope that they will go away. Traditional aid buys time but does not help in long-term economic empowerment.

Anna: Peter, could you please give some encouraging country examples here.

Peter: In some of the largest refugee camps in the north of Kenya, refugees now have easier access to the labour market following legislative reform. These promising improvements have been introduced by the Government of Kenya recently.

Many countries struggle with shaping their legal environments to cope with refugee flows, often influenced by political dynamics. Additionally, there’s a tendency to view refugees as competition for the local population and workforce, leading to few countries having forward-looking legislation that allows refugees labour market access. Turkey developed a highly pragmatic and staggered approach to the labour market for Syrian refugees. Germany also reshaped some legislation following the 2015 influx, working out programmes that build pathways to social integration. However, this came at a political price, highlighting the delicate and politically sensitive nature of the issue. Nevertheless, I firmly believe that the energy of refugee populations should be channelled into economic activity and empowerment, rather than allowing them to become aid-dependent. The international community cannot afford to pay for ineffective policies for decades. In recent years, despite a massive increase in humanitarian needs, humanitarian aid has been decreasing, reflecting an economic and political reality that must prompt us to change policies and overcome political obstacles.

Anna: I would like to ask your opinion about the usefulness of trust funds as support instruments. At the Global Refugee Forum 2023, the decision was taken to establish a new global sponsorship fund to assist refugees. There are several other running funds and programmes aimed at assisting refugees, like, for example, the UNHCR Emergency Response Fund, the World Bank’s Global Concessional Financing Facility, the International Rescue Committee programmes, the Refugee Education Trust, and several European Union trust funds. Are you familiar with any of these funds? Do you think this mechanism effectively addresses the needs of refugees?

Peter: I’m not familiar with all the details of the trust funds you have mentioned, but I believe I know enough to see the advantages of such funds. In the humanitarian context, I have often seen trust funds adding flexibility for upfront financing. They are one of the instruments definitely improving humanitarian assistance. However, I would caution against viewing trust funds as a panacea for solving the humanitarian problems of refugees. It’s not so much about whether you source activities from a fund or another instrument, but rather what you do with the money and what kind of support you encourage and advocate for. Thus, funds are technical instruments that can accelerate humanitarian assistance and are, therefore, a welcome improvement to the humanitarian response.

Anna: My experiences in Ukraine, while I was performing national programme management duties for the livelihood support programme over four years, have shown that mobilising private funding in a crisis or conflict situation is not straightforward. The mobilisation of private funding to support refugees was also one of the key topics at the Global Refugee Forum 2023. According to UNHCR, the private sector committed over USD 250 million, as well as a million pro bono hours, jobs for 100,000 refugees, and over 400,000 training opportunities, catalysing over USD 180 million in investment into refugee-owned and refugee-supporting ventures, and providing over 6000 scholarships. However, with around 114 million refugees worldwide, it seems that private funding alone cannot cover the economic needs of refugees at this stage. So, what are the problems or, so to say, systemic imperfections we still need to overcome to meet the needs of all these refugees? What should be the key focus of development and private partners here? And, can you project how many years we still need to address these challenges?

Peter: Your question actually goes to the fundamentals of our discussion. When we discuss private sector contributions to refugee contexts and humanitarian crises, we need to be clear on what we mean. Do we talk about the private sector as just another donor to humanitarian operations? Do we talk philanthropy? This will not bring us to the scale needed to transform the systemic problems.

If we look at the private sector as an investor, the focus will be on return on investment. The private sector doesn’t view problems as humanitarian problems, but in terms of markets and investments, and they see the frameworks and conditions for investments not fulfilled, because wars are ongoing. In the context of war and violence, situations are insecure; you don’t know when your investment will blow up in the next bombardment of cities, and therefore, it’s just too risky. The question is, can we find de-risking schemes in the economic equations, looking at impact-adjusted returns, which help us to have earlier involvements of the private sector?

Anna: Thank you, Peter. Indeed, for our sustainable future businesses should expand their thinking from being just profit-maximisers to making an impact. And I see that gradually it is happening, especially in secure environments. However, an open question for me is how to motivate private sector to invest into insecure environments? I am thinking about Ukraine now, my home country.

Peter: Even an impact-adjusted return will not be feasible and possible if there is not a major securitisation of investments. And securitisation of investment can only happen by government and multilateral institutions. I can’t see how any responsible capitalist can invest in Ukraine today unless he looks for impact beyond financial return, and unless his operations are reasonably securitised by a government or by multilateral guarantees. And that’s just one example of a conflict-affected and fragile context.

I would, though, make a point that the private sector’s risk appetite could be framed in a more flexible way: within some fragile and war-affected countries, you will find islands of stability to which maybe at certain moments the private sector can invest. It could be these 250 million that you mentioned. But it won’t be 4.5 billion, 25 billion, or 200 billion, which would be needed, as long as there is massive insecurity, as long as there is volatility in political and economic contexts. Therefore, we need to think about impact-adjusted returns, investments in market creations, and generous de-risking.

Can we still identify activities which for private investors can be financially securitised, reasonably de-risked, and with some positive impact on society? The situation in Ukraine is certainly very difficult. But Ukraine has at least the advantage of having a well-educated, industrious society, a motivated group of internally displaced people. You don’t find such positive assets in many other conflict regions, where people have been disrupted and in insecurity for decades. So, we need somehow to overcome this with innovative thinking, structuring risk, de-risking, and impact visions on our investments. We can eventually push the needle. But we cannot make big steps forward unless there are political solutions to conflicts.

Anna: Dear Peter, as you touched upon Ukraine, may I ask you, are the western partners, the western private sector is ready for the impact investments in Ukraine?

Peter: As for now it is certainly not ready; I see a major role for humanitarian organisations, which are used to operating in difficult contexts, in helping the private sector make more granular risk assessments.

When I was President of the ICRC, I always advocated for private sector investment in contexts that seemed difficult to investors, but relatively safe to humanitarian organisations. Despite all odds, the ICRC has a 40-year history of constructing physical rehabilitation centres and hospitals in war zones. These centres function, reintegrating injured people into societal life, which despite the war has a noticeable impact. It’s around such examples that we launched the first humanitarian impact bond. So, it’s important that we find those small avenues and try to gradually enlarge private sector investments in humanitarian contexts. The longer we wait, the more difficult it becomes to bring markets and entrepreneurship back.

Anna: Just to sum up, what key takeaways would you suggest our readers continue thinking about, in order to develop innovative mechanisms to support conflict-affected communities, thereby planting the seeds for our common sustainable future?

Peter: The last couple of decades have shown us that aid policies were not able to cope with the dimension and depth of disruption in many societies. They left people unattended and underserviced. At the same time, markets and capitalist economies have not been able to come up with investments in those contexts that would offer access to markets for poor people, and those disrupted by disaster and wars. As a result, we face a world with 2 billion people surviving really at the bottom of the pyramid. And this is a politically disruptive, socially unsatisfactory, and unsustainably costly situation. My deep conviction is that only if we engage in new approaches combining private and public financing instruments, and if refugees and other fragile communities are able to take their destiny into their own hands, will we eventually see progress towards less political, economic, and social disruption. We are at a critical moment, where the double jeopardy of climate change and social disruption from ongoing out-of-control conflicts and crises is putting hundreds of millions of people in increasingly difficult situations. This highlights the strategic importance of finding new formulas for investment, return, and impact in the most fragile and disrupted contexts.

Anna: We need to continue working together to build partnerships focused on finding the best combinations of private and public, humanitarian, and development assistance to open labour and service markets for people in need, viewing them as an asset rather than a burden to our common sustainable future.

By Anna Kuznetsova, participant in the Diplomacy, Negotiation and Policy Executive Diploma