Is There a New Washington Consensus?

_ by Dani Rodrik

 

 [Dani Rodrik, Professor of Political Economy at Harvard University’s John F. Kennedy School of Government, is the first recipient of the Social Science Research Council’s Albert O. Hirschman Prize. His latest book is One Economics, Many Recipes: Globalization, Institutions, and Economic Growth.]

CAMBRIDGE – Two and a half years ago, senior staff members of the World Bank approached the Nobel laureate Michael Spence to ask him to lead a high-powered commission on economic growth. The question at hand could not have been more important. The “Washington consensus” – the infamous list of do’s and don’ts for policymakers in developing countries – had largely dissipated. But what would replace it?
 
Spence was not sure he was the man for the job. After all, his research had focused on theoretical issues in advanced economies; he had been dean of a business school; and he did not have much experience in economic development. But he was intrigued by the task. And he was encouraged by the enthusiastic and positive response he received from the commission’s prospective members. Thus was born the Spence Commission on Growth and Development, a star-studded group of policymakers – including another Nobelist – whose final report was issued at the end of May.    

The Spence report represents a watershed for development policy – as much for what it says as for what it leaves out. Gone are confident assertions about the virtues of liberalization, deregulation, privatization, and free markets. Also gone are the cookie cutter policy recommendations unaffected by contextual differences. Instead, the Spence report adopts an approach that recognizes the limits of what we know, emphasizes pragmatism and gradualism, and encourages governments to be experimental.

Yes, successful economies have many things in common: they all engage in the global economy, maintain macroeconomic stability, stimulate saving and investment, provide market-oriented incentives, and are reasonably well governed. It is useful to keep an eye on these commonalities, because they frame the conduct of appropriate economic policies. Saying that context matters does not mean that anything goes. But there is no universal rulebook; different countries achieve these ends differently.

The Spence report reflects a broader intellectual shift within the development profession, a shift that encompasses not just growth strategies but also health, education, and other social policies.  The traditional policy framework, which the new thinking is gradually replacing, is presumptive rather than diagnostic .

It starts with strong preconceptions about the nature of the problem: too much (or too little) government regulation, too poor governance, too little public spending on health and education, and so on. Moreover, its recommendations take the form of the proverbial “laundry list” of reforms, and emphasize their complementary nature – the imperative to undertake them all simultaneously – rather than their sequencing and prioritization. And it is biased toward universal recipes – “model” institutional arrangements, “best practices,” rules of thumb, and so forth.

By contrast, the new policy mindset starts with relative agnosticism about what works. Its hypothesis is that there is a great deal of “slack” in poor countries, so simple changes can make a big difference. As a result, it is explicitly diagnostic and focuses on the most significant economic bottlenecks and constraints. Rather than comprehensive reform, it emphasizes policy experimentation and relatively narrowly targeted initiatives in order to discover local solutions, and it calls for monitoring and evaluation in order to learn which experiments work.

The new approach is suspicious of universal remedies. Instead, it searches for policy innovations that provide a shortcut around local economic or political complications. This approach is greatly influenced by China’s experimental gradualism since 1978 – the most spectacular episode of economic growth and poverty reduction the world has ever seen.

The Spence report is a consensus document, and therefore an easy target for cheap shots. It has no “big ideas” of its own, and at times it tries too hard to please everyone and cover all possible angles. But, as Spence puts it with regard to economic reform itself, you need to take small steps in order to make a big difference in the long run. It is quite a feat to have achieved the degree of consensus he has around a set of ideas that departs in places so markedly from the traditional approach.

It is to Spence’s credit that the report manages to avoid both market fundamentalism and institutional fundamentalism. Rather than offering facile answers such as “just let markets work” or “just get governance right,” it rightly emphasizes that each country must devise its own mix of remedies. Foreign economists and aid agencies can supply some of the ingredients, but only the country itself can provide the recipe.

If there is a new Washington consensus, it is that the rulebook must be written at home, not in Washington. And that is real progress.

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Copyright: Project Syndicate, 2008.
www.project-syndicate.org 

 

Iran’s Options

_ by Volker Perthes

 [Volker Perthes is Chairman and Director of Stiftung Wissenschaft und Politik, the German Institute for International and Security Affairs, Berlin. Volker Perthes is the director of the German Institute for International and Security Affairs (SWP), Berlin. This comment is drawn from a report by the author for the Trilateral Commission under the title Of Trust and Security: The Challenge of Iran.]

Berlin — With President Bush in Europe getting EU leaders to agree to toughen UN sanctions against Iran, and with the ongoing debate between John McCain and Barack Obama about whether the US needs to talk with Iran’s rulers, the issue of Iran’s nuclear program is heating up.  Iranians, no surprise, are watching this debate with interest.  They need to do more than watch.

Iran’s political elite sees the United States, rather than Europe, as their appropriate international counterpart. Only the US can give the Islamic Republic the security guarantees it craves. The US, indeed, should be prepared to eventually give such guarantees if it wants Iran to stop the more suspicious parts of its nuclear program.  

But Iran must do its part to make any future dialogue with the US a success. In talks with members of Iran’s policy community, I am continually astounded that they see resolving the nuclear conflict (or, indeed, other problems in which Iran has a stake) to be primarily the responsibility of the US, Europe, and other major powers, not of Iran.

Such passivity is not in Iran’s interest.  As the Middle East’s essential regional player, Iran can trigger and heat up conflicts as well as contribute to their solution. Yet few in the Iranian establishment understand that being the leading regional power brings responsibility; and that only responsible behavior can create legitimacy and acceptance that Iran craves. Iranian policymakers must, therefore, try to develop their own ideas for a negotiated resolution of the nuclear and other regional security issues, as well as to think about how Iran can rebuild trust in its actions.

Iran’s leaders should begin by shunning hostile rhetoric. Incendiary statements about Israel exacerbate the lack of trust among Iran’s would-be partners, and make it hard for those in Europe and the US who are interested in building more favorable relations. Iran hints that it wants to have a high-level dialogue with the US in the not-too-distant future. If true, Iran should realize that violent statements on sensitive issues will set back any serious attempt to get a dialogue going.

Iran could also build trust if it became more transparent, particularly about its own strategic ambitions. A good start would be to publish key documents that are constantly referred to by Iranians but never seen – say, Ayatollah Khamenei’s fatwa that reportedly rules that Islam prohibits the production, stockpiling, and use of nuclear weapons?

It would also be helpful if Iran laid out its strategic vision for the region. It should accept the concerns of its neighbors, seek to develop its own ideas for regional confidence- and security building, and participate in efforts to create regional security arrangements. It should also positively respond to offers from the US to establish confidence-building measures between the two countries’ military forces, particularly their navies.

As to the nuclear issue, Iran should try to switch from the language of “inalienable rights” to one of pragmatic solutions. This would help depoliticize the issue. The right to independent nuclear research and development under the NPT is not disputed. But rather than insist as a matter of principle on operating the fuel cycle independently under national sovereignty, Iran could engage the Saudis about their idea of a regional joint venture, or explore different options of multilateral consortia with other countries. Iran’s parliament, now led by Ali Larijani, Iran’s former nuclear negotiator, could make a strong contribution to confidence building and to the resolution of the nuclear conflict by ratifying the NPT’s Additional Protocol.

Other clarifications are also needed.  Is Iran prepared to accept a compromise that responds to European and other international concerns about its nuclear program, and thereby gain wide-ranging economic, energy, technology and science cooperation? Nuclear energy, after all, is only one technology, and a 20th century, rather than a 21st century one at that. Eventually, partnership with Europe could help Iran keep the best of its young generation at home rather than having them queue for visas at foreign embassies – or, more often, the US consulates in Istanbul or Dubai.

The willingness of major countries to accept Iran with a nuclear status similar to Japan depends on whether Iran not only refers to itself as a status-quo power – which it occasionally does – but whether it acts as such. If it wants to be seen as a status-quo power, it needs to accept local and international efforts at establishing peace between Israel and its neighbors.

For a grand bargain with the US, Iran needs to end its support for militant organizations like Hamas or Palestinian Islamic Jihad which undermine efforts at reaching a two-state solution for Israel and Palestine. Even without such a bargain, however, Iran will have to do certain things if it wants to be seen as a constructive regional player.

It will have to accept all the other states in the region as legitimate players with their own legitimate interests as much as it wants to be recognized as such itself. It will also have to accept the wish of the huge majority of Palestinians for a peaceful settlement with Israel. Iranian officials sometimes try to make relative President Mahmoud Ahmadinejad’s more violent statements about Israel as nothing more than a call for “regime change.” That is not a status-quo policy.
Iran is entitled to seek assurances against externally forced regime change. But it cannot have it both ways, seeking guarantees against regime change at home, and promoting it in its neighborhood.

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Copyright: Project Syndicate, 2008. 
www.project-syndicate.org

 

India at Play

_ by Shashi Tharoor

[Shashi Tharoor, an acclaimed novelist and commentator, is a former Under-Secretary- General of the United Nations.]

New Dehli – On June 1, the Indian Premier League came to a thundering climax with a cliffhanger final match, watched by 60,000 cheering fans in a new stadium and an estimated 300 million television viewers around the world. As cheerleaders danced and waved brightly colored pom-poms, and star sportsmen from across the globe, clad in their teams’ multi-hued regalia, looked forward to a $2.5 million payday, black-market tickets changed hands for as much as $2,500.

Football? Basketball? No, the IPL is the newest Indian innovation revolutionizing that most staid of Victorian sports – cricket.

As the globalizing world discovers a twenty-first-century India full of high-tech computer geeks, efficient businessmen, colorful fashions, and glitzy entertainment – a far cry from the old stock images of fakirs on beds of nails, maharajahs on elephants, and mendicants with begging bowls – it is also finding an India obsessed with what most regard as a nineteenth-century sport.

Cricket has seized the Indian national imagination like no other sport. An international match can fill 100,000-seat stadiums, while attracting TV audiences of 350 million. Airline pilots provide passengers with the latest scores; office-goers cluster around the nearest available television. Cricketers occupy a place in India’s pantheon rivaled only by gods and Bollywood stars. The performances of our heroes are analyzed with far more passion than any political crisis. In no other country does a sport so often command the front pages of leading newspapers.

Cricket first came to India with decorous English gentlemen. It took nearly a century for the “natives” to learn the sport, but when they did, they took to it like snakes to their charmers. Today, the public’s obsession has made India into the sport’s global financial powerhouse, with advertisers and sponsors pouring unheard-of sums into the game.

It is estimated that India alone accounts for nearly 90% of cricket’s worldwide revenues, putting the game’s traditional guardians, England and Australia, in the shade. India has become the most influential country in the sport’s governing body, the International Cricket Council, which has moved its headquarters from London to Dubai, which has no cricketing tradition but is closer to the sport’s new fulcrum in South Asia.

In April and May, the new Indian Premier League revolutionized the sport. By bringing the world’s top players to India at unprecedented salaries (one Australian player was auctioned to his new team for $1.4 million, more than most cricketers previously earned in a lifetime), and by spicing up the game through such innovations as American cheerleaders, the IPL is transforming the sport. When the traditional English cricket season opened in April, as it has for the last couple of centuries, seasoned British journalists ruefully reported that while the players and officials were dutifully present, their minds were far away, following the fortunes of the lucrative league in India.

I have often thought that cricket is really, in the sociologist Ashis Nandy’s phrase, an Indian game accidentally discovered by the British. Everything about cricket seems ideally suited to the Indian national character: its rich complexity, the endless possibilities and variations that can occur with each delivery, the dozen different ways of getting out – all are reminiscent of a society of infinite forms and varieties.

A country where a majority of the population still consults astrologers can well appreciate a sport in which an ill-timed cloudburst, a badly prepared pitch, a lost toss, or the sun in the eyes of a fielder can transform a game’s outcome. Even the possibility that five tense, exciting, hotly-contested, and occasionally meandering days of cricketing could still end in a draw seems derived from ancient Indian philosophy, which accepts that in life the journey is as important as the destination.

So, too, is the fact that cricket is a team game that showcases individual excellence. Indians have long been resigned to defeat for their national side (though this is changing), but they have always managed to produce individual record-breakers – outstanding cricketers like the batsmen Sunil Gavaskar and Sachin Tendulkar, or the all-rounders Vinoo Mankad and Kapil Dev, who were considered to be among the world’s best players, even if the Indian teams to which they belonged lost more often than they won. What offers better consolation than the thrilling endeavors of a gifted batsman or the magical wiles of a talented bowler, each performing his dharma , the individual doing his duty in a team game, just as in life each Indian fulfils his destiny within the fate of the collectivity?

In the old days, cricket was reproached as a sport played by Anglicized elites in the big cities. But now cricket is followed by the masses all over the country. New cricketing heroes have emerged from small towns, none more popular than India’s swashbuckling captain, M.S. Dhoni, the son of a peon in the dusty town of Ranchi, who now commands millions in endorsement fees to tout products that his family could never have aspired to own. Cricket, once the sport of the British upper classes, is in India a great leveler.

Indeed, the sport both reflects and transcends India’s diversity. It is entirely fitting that the Indian team has been led by captains from each of its major faiths – Hindus, Muslims, Parsis, Christians, and a colorful Sikh. A land divided by caste, creed, color, culture, cuisine, custom, and costume is united in consensus around a great conviction: cricket.

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Copyright: Project Syndicate, 2008.
www.project-syndicate.org

 

Ireland Must Go

_ by Uffe Ellemann-Jensen

[Uffe Ellemann-Jensen is a former Minister for Foreign Affairs of Denmark.]

Copenhagen – Ireland should do the rest of Europe a favor and withdraw from the European Union.  That seems to be the only tenable solution to the situation created by the Irish “No” to the Lisbon Treaty. The Irish have created a problem for themselves. They should not let it be a problem for others.
 
It would be sad to lose the merry people of the Emerald Island from the EU family. But it would be even sadder if, because of the Irish “No,” all those who wish to secure the same benefits from European integration that made it possible for the Irish to prosper are left out in the cold.

EU enlargement cannot continue without the many practical and pragmatic elements included in the Lisbon Treaty. And the enlargement process is the most important endeavor the EU has undertaken, including the creation of the euro.

The Union has already taken in countries that need a lot of attention – and others are knocking at the door. They want to catch up with all those who prospered in freedom during the Cold War, and they should be given that opportunity as a matter of fairness. Moreover, enlargement should be regarded as an important element of Europe’s security policy, helping countries that have only recently democratized to secure stability at home and giving them the strength to deal with external pressures.

It is a pity that the Irish – and their partners – did not learn the lesson from Ireland’s rejection of the Treaty of Nice seven years ago. Then as now, only a minority of voters bothered to vote, and a mere 54% of those who did participate, then as now, voted no. A year later, a new referendum approved the Nice Treaty, after it became clear that Ireland’s EU membership was at stake.
 
The unfortunate Irish tradition for referenda should have been addressed after that dismaying experience. It was not. Now the EU is again in the Irish stew. But this time it is difficult to see a way out that offers a second referendum.
 
Renegotiating the treaty is out of the question, since doing so would open a Pandora’s Box of demands from everybody else. So the problem lies with the Irish, and they must solve it.

I cannot help but recall the situation in the summer of 1992, when a small majority of Danish voters rejected the Maastricht Treaty. Back then, there were 12 members in what was then still called the European Community. Following their vote, the Danes were told in unmistakable terms that one way or another the country would have to leave the EU family if we did not find a way out. As Denmark’s foreign minister at the time, I was able to secure some opt-outs from EU directives, and then a second referendum was held. The result was a “Yes” to the Maastricht Treaty. We in Denmark have been marred by those opt-outs ever since.

Our European partners could not throw us out in June 1992 – but the other 11 could create their own EC-11, and we could have been left alone in the empty shell of an EC-12. This time, however, it seems very difficult to see how all others could agree to create an EU-26 while isolating Ireland in an empty EU-27, though that would be a reasonable solution. That is why the Irish should show magnanimity and tell the others to go on without them.

The Irish have been a good example for the new member states. When Ireland joined the EC back in 1972, they were so poor that many feared they would become a burden for the other members. The Irish never were. On the contrary, over a surprisingly short span of time the Irish proved how a small and determined country could use European integration to rise to the status of one of Europe’s richest countries in terms of per capita purchasing power.

Indeed, Ireland has made itself a shining example to those who strive to catch up with the rest of Europe. That is one reason it will be a loss to say goodbye to the Irish, and why their frivolous rejection of the Lisbon Treaty is so tragic.

But Europe must go on. It is now up to Ireland’s leaders to make that possible.

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Copyright: Project Syndicate, 2008.
www.project-syndicate.org

 

The Truth about NATO Burden-Sharing

_ by Jaap de Hoop Scheffer

[Jaap de Hoop Scheffer is Secretary General of NATO.]

BRUSSELS – When discussing Afghanistan, many newspapers continue to suggest that some of Europe’s NATO allies are under-performing in Afghanistan, and are either unable or unwilling to make a greater effort. Naturally, these allies feel that their efforts are under-valued. What is a fair and equitable burden?

First of all, the debate about burden-sharing should not be reduced solely to today’s force levels in Afghanistan, because, however important these force levels are, they tell only part of the story. So let me broaden the debate and offer a more holistic perspective by covering three interconnected elements: defense transformation, operations, and the wider context of the international community’s efforts.

Defense transformation is a key aspect of burden-sharing. It is a golden rule within the alliance that the bulk of NATO’s forces and capabilities are owned by individual nations – the alliance’s fleet of Airborne Warning and Command System (AWACS) aircraft is a rare exception. As I don’t expect nations to abandon this principle, NATO will continue to depend on individual allies and their willingness to commit resources.

Contrary to popular opinion, the type of forces and capabilities needed by NATO are not as widely available in national inventories as one might think. Large proportions of NATO allies’ armed forces are still better suited for static territorial defense than for the expeditionary type of operation needed in Afghanistan. And, when the right type of forces and capabilities do exist, operations led by the United Nations, the European Union, or ad hoc coalitions, as well as national requirements, place additional demands on these assets.

Developing the necessary expeditionary capabilities is a major feature of NATO’s transformation process. But it is not possible to convert territorial forces into expeditionary forces overnight, and the costs of transformation often must compete with the costs of deploying forces for operations. Many allies face the dilemma of either spending money on operations or investing in new acquisition programs.

Moreover, many allies’ failure to respect the 2%-of-GDP target for their defense budgets exacerbates this dilemma, and also widens the capability gap with those allies that are investing in usable and deployable forces. But, while there is no substitute for appropriate defense budgets, we could get more from current spending levels, especially through a smarter approach to defense acquisition.

Unfortunately, despite the efforts of NATO and the EU, Europe’s defense sector remains fragmented, which leads to duplication, unhelpful competition from too many rival systems, and, significant capability gaps or incompatibilities. In Afghanistan, for example, national systems for friendly-force tracking, which are vital to preventing accidental attacks on one’s own forces or allies, are not compatible. Extra time and money has therefore had to be invested in the acquisition of these capabilities.

In Europe, many national defense budgets can no longer sustain both fully-fledged national forces and a national defense industry. Only smarter multinational and transatlantic cooperation will give us forces that are capable of dealing with today’s security challenges.

In an alliance founded on the principle of “all for one, and one for all,” it is vital that all nations are seen to contribute fairly to operations. Thus, NATO, developed a burden-sharing mechanism to assess members’ manning commitments for critical operational activities relative to their gross national income.

This sort of arithmetic has the merit of giving some indications about burden-sharing, but it has also been shown that burden-sharing cannot be fully captured in graphs and spreadsheets. How does one decide what is a fair contribution from a country of 50 million people compared to a country with only four million? How can you evaluate a contribution of light infantry against the provision of critical enablers such as helicopters or air-to-air refueling tankers? Over what time period do you make your calculations?

Common funding, with all members paying a share according to their GDP, is one instrument that can be used to achieve more equitable burden-sharing.

Traditionally, NATO applied a policy of “costs lie where they fall”: each member picked up all the costs for the operational contribution that it made to an Alliance operation. During the past couple of years, NATO’s funding policy has been updated to allow common funding to be used as an incentive for the provision of certain theater-level enabling capabilities, like medical facilities, airports handling troops and supplies, or intelligence.

Burden-sharing is a sensitive issue, for both NATO and the international community, and passions sometimes run high. By stepping back and looking at the broader picture, it is clear that it is not just a matter of having the right capabilities, but also of having the money and political will to deploy them.

No single measure can resolve the burden-sharing problem. But the range of initiatives now underway within NATO should help: transformation efforts to increase the pool of usable and deployable forces; wider use of multinational initiatives; greater reliance on common funding to assist force generation; and a comprehensive approach for sharing burdens more equitably across the entire international community.

An alliance like NATO, in contrast to many “coalitions of the willing,” has the political consultation structures, proven planning mechanisms, effective command and control, and legitimacy that encourages nations to contribute to an operation. Alliance solidarity is not just a slogan. The sense of keeping one’s obligations and commitments to other allies, upon whom one’s own security ultimately depends, is a powerful motive for equitable burden-sharing. Totally fair burden-sharing may not be possible, but a security organization like NATO undoubtedly allows us to come closer to it than any other approach.

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Copyright: Project Syndicate, 2008. 
www.project-syndicate.org

 

Waiting for a consensus on government in Nepal

_ by Nava Thakuria

The last king of Nepal leaves the palace on June 11 to pave way for a secular democratic republic regime at Kathmandu. Meanwhile, the greediness of power among political parties  come to the light. After days of debate and discussions among the political parties including the rebellious communists, there remains confusion about the formation of a stable government in the South Asian country.

As Nepal, a tiny country sandwiched by two giant  neighbours India and Tibet (China) has witnessed  the departure of  its last king Gyanendra from the Narayanhiti Royal Palace in Kathmandu, the 240 years old dynasty came to an end. The parliament on May 28 resolved and declared the Himalayan nation as a federal democratic republic. The main palace is now turned into a museum.

The dethroned king Gyanendra, 60, now lives temporarily at Nagarjuna palace, the summer residence of the former monarch, until a private house is arranged for him. The government has provided security arrangement for the ex-king who will now live as a common man.

Gyanendra gained the throne of the Himalayan kingdom after a bloody massacre in the palace during June 2001, where the then king Birendra Vikram Shah with some of his close relatives was killed by the Crown Prince Dipendra. Later Dipendra shot himself.  King Birendra’s brother Gyanendra then took control of the dynasty, which was shaped by the king Prithivi Narayan Shah in 1768.

But Gyanendra was never accepted as an admired king by the most  Nepalis, as many of them suspected a conspiracy hatched by him to kill the most popular king Birendra. Many of his decisions, one when he dismissed the government to take absolute control of power in February 2005,  made Gyanendra more vulnerable. Otherwise, the king of Nepal, earlier a Hindu Kingdom, was believed to be an incarnation of God (Bishnu) in the form of a human being.

After a decade of armed movement by the Nepali communist (Maoist) rebels for ending the monarchy, the country of 26 million people went for a general election in April 2008 and a Constituent Assembly was formed.  It was expected that a democratic government will be formed in the country with the support of wining political party members, which included the rebels of  Communist Party of Nepal (Maoist) too.

In the 601-member Nepal constituent assembly polls, the Communist Party of Nepal (Maoist) won in 220 constituencies. The other left party named Communist Party of Nepal-United-Marxist-Leninist (CPN-UML) succeeded in 103 constitutions. The major political party Nepali Congress won 110 seats.

Initially the Communist Party of Nepal (Maoist), which led the bloody revolution that killed more than  10,000 people, demanded both the posts of President and Prime Minister in the coalition government.  Surfaced as a new power in Nepali politics, the Maoist chairman Pushpa Kamal Dahal, more popularly known as Prachanda, made it clear that they must be allowed to form the government with both the top posts in their net. Prachanda, during an interview on May 30, stated, “Our Party deserves both the posts of President and Prime Minister. Losers (read Nepali Congress  and CPN-UML ) in the Constituent Assembly polls, cannot get these posts.”

But the other political parties were not in the mood to buy the theory. The Nepali Congress leaders argued, being the largest political party, the CPN-M has the legitimate claim to form the next government, but they should share one post to other coalition partners. Facing the heat, the  Maoist leaders retreated and spared the post of President. They now want a non-political personality as the first President of Nepal.

The Maoists made choices for the ceremonial post. They picked up  names like Mrs. Sahana Pradhan, Ram Raja Prasad Singh, Nara  Bahadur Karmacharya, Padma Ratna Tuladhar and Devendra Raj  Pandey from the civil society groups. They however did not forget to mention that Prachanda must be elevated as the first Prime Minister of Nepal, at any cost, with the executive power.

Lately, putting Nepal into a fresh political crisis, the Communist Party of Nepal (Maoist) ministers in the ruling interim multi-party government resigned on  June 12. It was understood as a pressure tactic to convince Koirala to quit and allow the Maousts to form the government according to their wishes. All the CPN-Maoist misters submitted their resignation letters to their party chief Prachanda, who was initially supposed to handover those to the interim government head Koirala. But later he has decided ‘not to submit’ the letters for the time being.

Talking to this writer, an Indian journalist based in Kathmandu, argues that ‘being the largest political party, they (Maoist) have right to demand anything’. “The Nepali Congress and the Communist party of Nepal (UML) are nowhere close to the Maoists (in respect of number of seats won in the April 10 polls). They are far behind the Maoists,” stated Anirban Roy, the representative of The Hindustan Times in Nepal. He also added that Koirala should have resigned and helped Prachanda to form the government. “After all, Koirala becomes Prime Minster for five times, and should not cling on to the hot seat even after losing the election,” asserted Mr Roy.

Meanwhile, there were news that the Prime Minister GP Koirala  was proposed as the first president of Nepal by the  Nepali Congress. Prachanda however denied to accept Mr Koirala as the President.  Though he is a grand National figure, Prachanda declared, they could not make choice for Mr Koirala because of his age and fragile health.

“Besides, he has been in power for long and if he is given the post (President) there is a possibility of two power centres in the  government,” asserted the Maoist leader.

The CPN-UML has meanwhile proposed that ‘a non-member (of  Constituent Assembly) could become the President’. However the first president should be elected and the person should be able to  acknowledge the essence behind national unity, freedom and  sovereignty, argued CPN-UML General Secretary Jhalanath Khanal.

Meanwhile, the political parties started hammering Prachanda because of his continued guerrilla background. They insisted hat Prachanda must quit the post of chairman of Maoist People’s Liberation Army before joining the government. “There cannot be two parallel armies in a state and Maoist chief  Prachanda, cannot be the chief of two armies,” one of the Nepali Congress worker declared.

“It was perhaps easier for Prachanda to dethrone the king, but running a government will be more challenging task for the man, who emerged as a new epicenter of power in Nepal,” commented a Kathmandu based  political analyst. The analyst, who wanted anonymity, also added, “Making Nepal a country of prosperity, where one-third of the populace lives in acute poverty without access to education and health care, will be his immediate challenge.”

Observing the present political crisis on way to form the government, it is understood that the political leadership including Prachanda have forgotten the real issues. The  long time exploited people of Nepal supported the Maoists to depose the king, but in return they do not deserve a dictator (read in the form of Prachanda), he added.
 

 

Japanese Lessons for China’s Currency

_ by Mark DeWeaver

[Mark A. DeWeaver manages the hedge fund Quantrarian Asia Hedge.]

SHANGHAI – The question of how much China’s currency should appreciate to rebalance its trade has become a global hot-button issue. But the answers have been all over the map, with some finding that the yuan is not undervalued at all, while others argue that it should appreciate against the dollar by more than 30%.

Clearly, there must be major differences in the macroeconomic models used to produce such a wide range of estimates. But the one thing about which everyone seems to agree is the theoretically and empirically unjustified assumption that an equilibrium exchange rate actually exists.

The theoretical problem is simple: a country’s trade balance depends on a lot more than the value of its currency in the foreign exchange markets. Interest rates, employment, aggregate demand, and technological and institutional innovation all play a role. As the economist Joan Robinson pointed out in 1947, just about any exchange rate will be the equilibrium value for some combination of these other variables. The equilibrium exchange rate, she famously argued, is a chimera.

Not surprisingly, the empirical evidence that trade imbalances can be resolved through exchange rate changes alone is unconvincing. In the case of China, the most useful precedent is probably that of Japan in the period from the end of the Bretton Woods fixed exchange-rate regime in August, 1971, to the collapse of its “bubble economy” in 1990. During that period, the yen’s value more than doubled against the dollar, rising from its original fixed rate of 360 to 144 at the end of 1989. Yet, even as Japan’s exports became much more expensive in dollar terms and its imports much cheaper in yen, its trade surplus rose from $6 billion in 1971 to $80 billion in 1989.

For two decades, expectations that an appreciating yen would restore external balance were repeatedly disappointed. At the time of the December 1971 Smithsonian Agreement, 308 yen to the dollar was supposed to do the trick. Fourteen years later, during the Plaza Accord negotiations, the Japanese argued for an eventual level of 200-210, while some US Treasury officials thought the final target should be as high as 165-170. At the end of the 1980’s, some analysts thought rates as high as 120 might finally produce the long-sought equilibrium.

Yet, as Japan entered the “lost decade” of the 1990’s, its exports continued to grow faster than its imports. Japan’s trade surplus peaked only in 1994, at $144 billion, just a few months before the yen’s April 1995 all-time high of 79.75.

In retrospect, it is easy to see why none of these supposed equilibrium exchange rates delivered external balance. As the yen appreciated, Japan responded not by exporting less but by improving productivity and quality control through plant and equipment investment and innovations in factory management, making possible rapid growth in exports of high-value-added products.

Exchange-rate equilibrium calculations from the 1970’s and 1980’s, which could only have been based on the export sector’s contemporary structure, naturally would have little relevance subsequently. The same is true of calculations at the beginning of the 1990’s, which would have forecast Japanese import growth based on extrapolations from the high GDP growth rates of the previous 40 years rather than on the decade of stagnation that ensued.

In China, changes in the export sector’s structure similar to those observed in Japan are now taking place. These changes are likely to make today’s attempts to find an equilibrium yuan-dollar exchange rate seem just as chimerical in hindsight as previous calculations of the yen-dollar equilibrium rate.

For the 30 years since the beginning of China’s economic reforms, Chinese industry has achieved impressive efficiency gains by adopting new technologies and realizing economies of scale, leading to a huge expansion in locally made products suitable for export. While an appreciating currency might eventually drive labor-intensive manufacturers out of business, if Japan’s economic history is any guide, they are likely to be replaced by producers of things like ships, machine tools, semiconductors, and doubtless new products yet to be invented.

The equilibrium yuan-dollar rate is a chimera not because China’s trade could never be balanced, but because the exchange rate alone does not determine equilibrium. The structure of the entire economy matters, too. As this is constantly evolving in unpredictable ways, there is no reason to expect that the assumptions underlying any particular macroeconomic model will ever remain valid long enough for its steady-state solution to be achieved in practice.

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Copyright: Project Syndicate, 2008. 
www.project-syndicate.org

 

Sarkozy’s Secret Rupture

_ by Pascal Boniface

[Pascal Boniface is Director of the Institute for International and Strategic relations, Paris (IRIS). His most recent book is Football et Mondialisation (Football and Globalization).]

PARIS – A year ago, when Nicolas Sarkozy was campaigning for the French presidency, he promised a “rupture” with the past. So far, few French people can see the sort of rupture that Sarkozy promised. But they are wrong to think that nothing has changed in the first year of his presidency. Sarkozy has, in fact, brought about a rupture, albeit in an unexpected area: the foreign policy consensus that has prevailed since the days of Charles de Gaulle.

Of course, it is impossible at this early stage to evaluate with any degree of precision the long-term strategic repercussions of Sarkozy’s apparent decision to return France to NATO’s integrated military command and strengthen the French military commitment to NATO’s out-of-theater engagement – its first ever – in Afghanistan. But the implication of these decisions is clear: France under Sarkozy is now back at the heart of the Atlantic Alliance.

Although this may seem mundane outside France, Sarkozy’s foreign policy revolution has incited fierce opposition at home. Indeed, all left-wing parties denounce Sarkozy’s rupture with the Fifth Republic’s military/diplomatic heritage.

Of course, the left’s real quarrel with Sarkozy’s policy has at its roots in his conception of France’s relationship with the United States. Wariness of America was, to be sure, not just a leftist pose; many Gaullists over the decades have been tinged with anti-Americanism, too. But, although Sarkozy may not have sold his party on the merits of George Bush’s America, he has softened its once habitual suspicions about the US. As a result, a left-right divide has opened in this central area of French diplomacy – a division that has not been seen in France for four decades.

The French left, not surprisingly, rejects Sarkozy’s Atlanticist impulses and frequently charge him with betraying General de Gaulle’s legacy. The majority of French people, however, appear to favor improving ties with the US.

There is more than a little irony here. In the year that the Socialists are celebrating the fortieth anniversary of the May 1968 demonstrations against de Gaulle, they are also trying to steal his diplomatic clothes by proclaiming themselves the defenders of the independent French foreign policy that he championed.

In the 1960’s, both Socialists and Centrists denounced de Gaulle’s “anti-Americanism.” On NATO, France’s Middle East policy, or the constitution, Francois Mitterrand (the Socialist leader in the 1960’s) and the opposition sharply criticized de Gaulle’s go-it-alone ways for shattering the Alliance consensus. Indeed, the Socialists opposed de Gaulle’s decision to withdraw France from NATO’s unified military command, opposed the creation of an independent French nuclear arsenal (they preferred the American nuclear guarantee), and were hostile to de Gaulle’s rupture with Israel after the Six Day War.

But the Socialists began to change their stripes in the late 1970’s, rallying around the concept of nuclear dissuasion as a guarantee of national independence and beginning to distance themselves from America. Although Mitterrand did stand firm with the US on the stationing of Pershing missiles in Europe in the early 1980’s, which won him respect from President Ronald Reagan, by this point the Gaullist consensus on the fundamentals of French foreign policy had spread across all political groups. Even the Communist Party could be said to have basically embraced its tenets.

Sarkozy has now broken with this so-called “Gaullist- Mitterrandist” orientation, which was based on the persistence of a belief in French “exceptionalism” in the field of foreign affairs.  This does not mean that Sarkozy’s France will toe the American line on all international issues. Far from it. But it does mean that France will no longer oppose America just for the sake of opposing America.

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Copyright: Project Syndicate, 2008. 
www.project-syndicate.org

 

Bread and Bush-Bashing

_ by Chris Patten

[Lord Patten is a former Governor of Hong Kong and European Commissioner for External Affairs. He is currently Chancellor of Oxford University and Co-Chair of the International Crisis Group.]

London – I feel a little sorry for President Bush. Whatever his other many failings, he has a pretty good record on aid to poor countries, particularly in healthcare. True to form, he recently announced a big increase in US food aid – good for the hungry poor and good for American farmers.

This was a faster response than some other countries have made to the global food crisis. After falling for more than 30 years, food prices have recently soared. The Economist’s food price index has risen to its highest level since it was started in 1845.  As has happened throughout history, rocketing prices and shortages have caused riots from Bangladesh to Bolivia. The word for bread in Egypt is “aish,” which also means life. Threats to life bring crowds on to the streets.

What made me feel a little sorry for Bush was the reaction to his announcement. Bush referred to the reasons for shortages and price hikes. He did not dwell on the diversion of American corn from food to heavily subsidized bio-fuels. Nor did climate change feature prominently in his argument, although many experts suggest that this may be the cause of the droughts and floods that have ruined wheat harvests in Australia and vegetable oil production in Indonesia and Malaysia.

Bush pointed his finger primarily elsewhere. Food prices had responded to growing demand. In Asia, economic growth had stimulated food consumption. The Chinese and Indians were eating more and eating better. Over a 20-year period, for example, the Chinese had doubled the amount of meat they eat.

What Bush said is of course true. But it is only part of the truth. Globalization has benefited India and China, and the rest of us, too. One key of the principal reasons for the world’s economic growth from 2000-07, despite wars and terrorist atrocities, was that India and China joined the world economy. Hundreds of millions of people were lifted out of poverty.

But many Indians are still wretchedly poor. Too many. They have a miserable diet – not least when compared with Bush’s Texan neighbors. Grain consumption per head in India has remained static, and is less than one-fifth the figure for the US, where it has been rising. I do not imagine you will find too many vegetarians in Crawford, Texas, and the meat consumed by the average American is way ahead of the figure for any other country. Think of all those T-bone steaks.

Bush’s partial explanation of the world food crisis, accurate as far as it went, brought the anger of India’s media and of many politicians down on his head.

According to India’s Defense Minister, A.K. Anthony, presumably an expert on butter as well as guns, Bush’s statement was “a cruel joke.” The parliamentary opposition urged Prime Minister Monmahan Singh, who wisely kept his head down, to join in the populist America-bashing.

Later in the “cruel joke” week, Bush’s White House compounded the sin. According to Bush’s press spokesman, the growth in world demand for oil – in Asia, for example – was one of the causes of the high price of filling the tanks of gas-guzzling Sports Utility Vehicles, as well as more modest family cars, at America’s pumps.

Meanwhile, the US government papered over the fact that Americans, who make up less than 4% of the world’s population, own and drive 250 million of the world’s 520 million cars. More outrage around the world at American double standards.

Now, all this is more than the knock-about of international politics. One day soon, Bush and Cheney will be out of office. But we will still be left with the most difficult global issue we have ever faced: as more of us prosper, how do we deal fairly with some of the economic and environmental consequences?

What do we do about the bottom billion in the world who remain in grinding poverty while the rest of us live better and longer lives? How do we deal with equity on a global scale when we cannot even deal with it country by country?

This conundrum will lie at the heart of the diplomacy next year to find a successor to the Kyoto agreement. Can we prevent a calamitous increase in global warming in a way that is fair, that takes account of past and present responsibility, and that does not thwart legitimate hopes for a better life everywhere? We have never faced a more difficult political task.

Meanwhile, there is a food crisis to solve. We have already seen many examples of how not to deal with it. Stopping food exports is stupid. If we restrict market forces, there will be less food and higher prices. We should also avoid the cheap political trick of holding down what we pay to poor farmers in order to benefit poor city dwellers.

Why do governments do this? The answer is obvious: city dwellers riot; in the countryside, people just starve. The best way to deal with the problem is to subsidize food for the poor; we should not cut the price we pay farmers for growing it.

Having enjoyed a few days of Bush-bashing, India got on with the job of bowing to pre-election political pressures. The government announced that it was suspending trading in futures markets for a number of farm products.

India has the most economically literate triumvirate of politicians in the world in charge of its economy. They must know that this measure will have as much effect on food inflation as rain dancing has on the weather. But politics, alas, is politics.

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Copyright: Project Syndicate, 2008. 
www.project-syndicate.org

 

Wars Against Women

_ by Heleen Mees and Femke van Zeijl

[Heleen Mees is a Dutch economist and lawyer. Her most recent book Weg met het deeltijdfeminisme! examines third generation feminism. She is also the author of a book on European Union law and founder of the women's action committee Women on Top.]

[Femke van Zeijl's most recent book Een nacht in een vijzel looks at women's lives in Mozambique, Sudan, Rwanda, Burundi, Uganda and the Democratic Republic of the Congo.]

AMSTERDAM – Truth is often said to be the first casualty in wartime.  But if the real truth is told, it is women who are the first casualties. In conflict zones, the United Nations children’s agency UNICEF recently observed, sexual violence usually spreads like an epidemic. Whether it is civil war, pogroms, or other armed conflicts, all too often women’s bodies become part of the battlefield. The victims of large-scale sexual atrocities range from baby girls to old women.

In Darfur, janjaweed militia kidnapped a 12-year-old girl and gang-raped her for a week, pulling her legs so far apart that she was crippled for life. The biggest fear of rape victims in Darfur, however, is that they will never find a husband. Under sharia law, raped women are prosecuted for adultery or fornication. Last year, at least two young women in Sudan were sentenced to death by stoning. As Refugees International observes: “The government is more likely to take action against those who report and document rape than those who commit it.”

In the wars now savaging the Democratic Republic of Congo, rape victims also take most of the blame. After being raped, Congolese women are banished by their husbands and ostracized by their communities. Often they are genitally mutilated by a gunshot or tossed on a fire naked.

In cultures where girls and women are married off and chastity is central to womanhood, all is lost for a woman who loses her honor. The subsequent stigma often is a heavier burden than the assault itself. So it should be no surprise that most of these wounded girls and women keep silent.

During the Balkan wars of the 1990’s, women were raped for the purpose of bearing the enemy’s children. According to European Union estimates, 20,000 women in Bosnia alone were victims of rape. The women have been largely left to themselves, traumatized by their experiences and condemned to a life of poverty.

In 1945, an estimated two million women were victims of the Red Army’s sexual cruelties – not only German women, but also Jewish women in hiding, concentration camp survivors, and resistance fighters. According to the German journalist Ruth Andreas-Friedrich, the shame felt about “lost honor” created an “atmosphere of suicide.” In April 1945, there were more than 5,000 suicides in Berlin. Husbands, fathers, and teachers pressured women and girls to end their own lives after Russian soldiers raped them because their “honor” was their major concern.

For many girls and women, non-marital sex remains worse than death. So it is all the more striking – and painful – that for so long this specific war crime has received little attention. During World War II, the prohibition on rape by soldiers was well established in international law, but the post-war Nuremberg and Tokyo war crimes tribunals prosecuted only a handful of cases.

During the genocide in Rwanda, mass rape was the rule. But sexual assault was included only accidentally – and secondarily – in the Rwanda Tribunal’s indictments. After a Rwandan woman spontaneously declared before the tribunal that she and other women had been raped before the massacre, a female judge followed up and revealed the enormous scale of sexual violence against women. The Rwanda Tribunal was the first in history to describe rape as a possible act of genocide.

In 2001, the International Criminal Tribunal for former Yugoslavia in The Hague condemned the systematic rape of women as a crime against humanity. In the landmark Foca case, the ICTY convicted three Bosnian Serbs of rape, torture, and enslavement of Muslim women in 1992. Girls, some of them just 12 years old, were gang-raped for weeks.

Yet the perpetrators of wartime mass rape and other forms of sexual violence usually are not prosecuted. Recently, the Congolese militia leader Thomas Lubanga became the first prisoner to be tried at the International Criminal Court in The Hague for the recruitment of child soldiers. Yet the indictment’s failure to mention violence against women is a “huge shock” to the victims, according to Congolese human rights organizations. In a petition, they asked the ICC to investigate mass rapes committed by all parties in the conflict.
 
The impunity that is characteristic of these heinous crimes must stop. Rape and other forms of sexual violence against women should be openly discussed by governments, members of parliament, militia leaders, and opinion leaders. Prosecution must become the rule. The ICC and other tribunals must give a clear signal to the perpetrators.

For women who have been victims of rape, there are no monetary benefits, memorials or mourning rituals. That must change as well. There should be a monument to the Unknown Raped Woman at the ICC. Maybe then its judges would pay closer attention to sexual violence against women.

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Copyright: Project Syndicate, 2008. 
www.project-syndicate.org

 

Water Pipe Dreams

_ by Dale Whittington and Bjørn Lomborg

[Dale Whittington is Professor of Environmental Sciences and Engineering, and City and Regional Planning, at the University of North Carolina at Chapel Hill, and a professor at the Manchester Business School.]

[Bjørn Lomborg is head of the Copenhagen Consensus Center, adjunct professor at Copenhagen Business School, and author of the The Skeptical Environmentalist and Cool It.]

CHAPEL HILL, NC – Despite recent progress, more than one billion people still lack decent water supplies, and more than two billion go without sanitation services. But, while we often assume that the benefits of improving water and sanitation systems always outweigh the costs, this is not always true.

Piped water and sanitation networks are expensive. Consumers in most countries don’t realize this, because the true costs are hidden by subsidies. New research for Copenhagen Consensus reveals that the full cost of piping water to a household is as high as $80 per month – more than most households in rich countries pay and far beyond the means of most families in developing countries. Assuming that the poor use much less water, the monthly cost of conventional network technologies drops to $20 – still a significant outlay.

If we calculate the time and energy lost in developing nations to gathering, treating, and storing water, and the health burden caused by a lack of decent drinking water and sanitation, the costs of creating a typical water and sewer network can remain higher than the benefits. Spending a large amount of money to do a little amount of good is not a sound investment.

Estimates of what people in poor nations are willing to pay for piped water do not exceed the costs for many water and sanitation projects. Often, they prioritize electrification ahead of running water, even though electricity is not essential for life: whatever the inconvenience, water can be carted home from a vendor or a well, but there is no convenient way to carry electricity.

The health advantages of providing networked water supplies are less dramatic than is often assumed. There are many ways for pathogens to infect people besides contaminated drinking water. Piping clean water without improving sanitation can in some cases actually exacerbate the spread of infectious agents.

Just as the conventional wisdom that all networked water and sanitation systems are good investments can be wrong, it can be wrong in assuming that all dams are bad investments. There are, of course, sound environmental and economic arguments against constructing large dams – and even for decommissioning some. But countries like Ethiopia have virtually no water storage facilities, great variability in rainfall, and attractive sites for hydroelectric generation.

A single reservoir located in Ethiopia’s scarcely inhabited Blue Nile gorge, for example, could produce large amounts of sorely-needed power for Ethiopia, Sudan, and Egypt, mitigate droughts, and lead to improved irrigation. The costs of a hypothetical project – including construction, resettlement of people living in the dam’s way, and carbon emissions – would come to about $3.1 billion. Benefits from power generation, downstream irrigation, carbon offsets, and reduced floods would be worth roughly twice as much.

There are, moreover, alternatives to expensive network infrastructure systems. A deep borehole with a hand pump can typically service about 300 people, with a monthly cost per household of about $2.25. The benefits –time saved, more and better quality water, and reduced diarrhea – are likely in many locations to be three times higher than the costs, often exceeding $7 per month.
 
Another sound short-term policy choice is to use devices like bio-sand filters to reduce the health risks associated with consumption of water contaminated with bacteria and viruses. The filter typically costs a household about $1.40 per month, but in many developing countries yields benefits from improved health that are three times higher.

Many developing nations have tackled the sanitation challenge by building subsidized latrines. However, simply providing access to such facilities can be surprisingly ineffective – a significant number are never used.

A cheaper and more successful approach in South Asia mobilizes communities to achieve environments that are free of open defecation by raising awareness of disease transmission, health costs, and the social benefits of sanitation. A variety of approaches has been used, from conducting “walks of shame” to open-defecation areas to establishing children’s brigades to promote the ban. The community is provided with financial incentives to construct and maintain very basic household latrines. The costs add up to just $0.50 per household, while the benefits from improved health and saved time in many developing countries are worth $1.20.

The international community has committed itself to halving the proportion of people without access to water and sanitation by 2015.The most obvious and comprehensive solution is providing piped water and sanitation to all who lack it. But, given current progress and high capital costs, this appears overly optimistic.

In the meantime, governments and donors should consider cheaper short-term options. While the three low-cost water and sanitation interventions discussed here may not always pass a cost-benefit test, they are likely to attract investment in many circumstances, while simultaneously responding to communities’ preferences. 

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Copyright: Project Syndicate, 2008.
www.project-syndicate.org

 

A Partnership for Peace in the Hindu Kush

_ by Ashley Bommer

[Ashley Bommer worked at the US Mission to the United Nations during the Clinton Administration and is writing a novel that takes place in the Tribal Areas.]

Khyber Pass, Northwest Frontier Province, Pakistan — Pakistani President Pervez Musharraf and Afghan President Hamid Karzai never had a shared border strategy. But, standing at Michni Post, the highest point of the Khyber Pass, staring down at the thousands of trucks and buses buzzing through Afghanistan into Pakistan under the shadows of the Hindu Kush, the answer is obvious: controlling the Afghan-Pakistan border requires a counterinsurgency policy that looks at Afghanistan and Pakistan together.
 
Pakistan’s new government has a great opportunity to make this change. In order to cut off the Taliban and al-Qaeda’s recruitment and supplies, both countries should fight the militants in tandem.

That means, first, improving security training for the border forces, starting with Pakistan’s Frontier Corps, the 50,000-man combat force along the 1,600-mile Afghan border. These “sons of the soil” are in bad shape. They receive no more than two dollars a day to patrol the area, which ranges from 25,000-foot-high mountains to barren deserts.

They also fight with old weapons. As one senior commander told me, “the Taliban are better equipped and have more fire power.” They have no air mobility, and worse, no rapid reaction force to support them. Two Frontier battalions have been under siege at Ladha Fort in South Waziristan for the past few months.

Security along the border can run on parallel tracks. Major General Muhammad Alam Khattak, the Frontier Corps’ Inspector General, made a suggestion to me: “Take our Frontier Corps. Train them somewhere and bring them back.” Afghanistan should do just that. Through NATO’s International Security Assistance Force (ISAF) Afghan National Army training program, it should rotate the Frontier Corps battalions with their Pashtun brothers one at a time. Additional resources provided by Pakistan for proper equipment and force buildup – including the creation of a Frontier Corps Rapid Reaction Force – should be committed so that Frontier Corps soldiers become the counterinsurgency partners in Pakistan that Afghanistan needs.

Second, reconciliation with the insurgents should begin by inducing defections. This was recommended by a senior US military commander, who said that “60% of insurgent activity could be curbed by reconciliation.” Despite overwhelming support for this process, methods to do so are absent.

In Afghanistan’s Helmand Province, 2,000 Taliban fighters were rounded up and vetted by ISAF forces, only to be abandoned after the initiative was not supported by Afghanistan’s central government. In Khost, dozens of former Taliban members from the Tribal Areas defected, promising to lay down their arms in exchange for – only to be given nothing.

In both cases, the defecting insurgents said the same thing: they could recruit dozens more; they just need incentives. A regional reconciliation program targeting mid- and lower-tier Taliban and al-Qaeda commanders should be developed and implemented by Pakistan and Afghanistan.
 
Third, the drug lords should be arrested and detained. As one senior Afghan government official said, “If you can’t remove a corrupt judge, how can you deal with the Taliban?” There are a hundred top drug lords in Afghanistan. Everyone knows who they are. Yet none has been arrested.

Not doing so, due to fear of backlash, only enhances their power. And allowing them to continue to control the smuggling routes creates a ripple effect that bankrolls corruption of provincial officials and the Afghan National Police, which in turn feeds the insurgency.
 
Finally, reform the madrassa system. Not all madrassas are hotbeds of terrorist training. The problem is that Afghan religious students must go to Pakistan for any religious education after 19 or 20 years of age. They are then quickly pressured to become “bad Taliban” through money, propaganda, and pressure from Pakistani mullahs.

To address this problem, Afghan Education Minister Hanif Atmar – perhaps the most reform-minded member of the government – is seeking to build 34 new madrassas (his goal is 2,000) in Afghanistan for higher learning. His proposal, which aims to reform the curriculum to include Islamic studies, gender studies, computer science, and English, should receive overwhelming support.

With fewer students from Afghanistan going to Pakistan, Pakistan could turn its attention to the country’s own madrassas and to the mullahs who convert students into suicide bombers. The curriculum for both countries, based on Minister Atmar’s proposal, should be coordinated. Madrassas that meet these curriculum standards should be registered, supported, and encouraged.

Only an effective Afghan-Pakistan partnership can begin to control the insurgency in the border area. The war in Afghanistan, and destabilization in Pakistan, will not end without it.

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Copyright: Project Syndicate, 2008. 
www.project-syndicate.org

 

A New Deal for Poor Farmers

_ by Jeffrey D. Sachs

[Professor of Economics and Director of the Earth Institute at Columbia University. He is also a Special Adviser to United Nations Secretary-General on the Millennium Development Goals.]

NEW YORK – Many poor, food-importing countries around the world have become desperate in recent months, as global prices of rice, wheat, and maize have doubled. Hundreds of millions of poor people, who already spend a large share of their daily budget on food, are being pushed to the edge. Food riots are mounting. 

But many poor countries can grow more food themselves, because their farmers are producing far below what is technologically possible. In some cases, with appropriate government action, they could double or even triple food production in just a few years.
 
The idea is basic and well known. Traditional farming uses few inputs and gets poor yields. Poor peasants use their own seeds from the preceding season, lack fertilizer, depend on rain rather than irrigation, and have little if any mechanization beyond a traditional hoe. Their farms are small, perhaps one hectare (2.5 acres) or less.

Under traditional agricultural conditions, the yields of grain – rice, wheat, maize, sorghum, or millet – are usually around one ton per hectare, for one planting season per year. For a farm family of five or six living on one hectare, this means extreme poverty, and for their country, it means reliance on expensive food imports, including food aid. 

The solution is to increase grain yields to at least two tons – and in some places to three or more tons – per hectare. If water can be managed through irrigation, this could be combined with multi-cropping (multiple harvests per year) to produce a crop during the dry season. Higher and more frequent yields mean less poverty in farm families, and lower food prices for cities.

The key to increasing yields is to ensure that even the poorest farmers have access to improved seed varieties (usually “hybrid” seeds created by scientific selection of seed varieties), chemical fertilizers, organic matter to replenish soil nutrients, and, where possible, small-scale irrigation methods, such as a pump to lift water from a nearby well. There is nothing magic about this combination of high-yield seeds, fertilizer, and small-scale irrigation. It is the key to the worldwide increase in food production since the 1960’s.

The problem is that these improved inputs have bypassed the poorest farmers and the poorest countries. When peasants lack their own saving accounts and collateral, they are unable to borrow from banks to buy seeds, fertilizer, and irrigation. As a result, they grow food the traditional way, often earning little or nothing from their harvest, because it’s not even enough to keep their families alive.
 
History has shown that government action is required to help the poorest farmers escape the low-yield poverty trap. If farmers can be helped to obtain simple technologies, income can rise, and they can accumulate bank balances and collateral. With a bit of temporary help, perhaps lasting around five years, farmers can build up enough wealth to obtain inputs on a market basis, either through direct purchases from savings or through bank loans.

Around the world, government-run agricultural banks in poor countries once not only financed inputs, but also provided agricultural advice and spread new seed technologies. Of course, there were abuses, such as the allocation of public credits to richer farmers rather than to needy ones, or the prolonged subsidization of inputs even after farmers became creditworthy. And in many cases, government agricultural banks went bankrupt. Still, the financing of inputs played a huge and positive role in helping the poorest farmers to escape poverty and dependency on food aid.
During the debt crisis of the 1980’s and 1990’s, the International Monetary Fund and World Bank forced dozens of poor food-importing countries to dismantle these state systems. Poor farmers were told to fend for themselves, to let “market forces” provide for inputs. This was a profound mistake: there were no such market forces. 

Poor farmers lost access to fertilizers and improved seed varieties. They could not obtain bank financing. To its credit, the World Bank recognized this mistake in a scathing internal evaluation of its long-standing agricultural policies last year.

The time has come to reestablish public financing systems that enable small farmers in the poorest countries, notably those farming on two hectares or less, to gain access to needed inputs of high-yield seeds, fertilizer, and small-scale irrigation. Malawi has done this for the past three seasons, and has doubled its food production as a result. Other low-income countries should follow suit.

Importantly, the World Bank, under its new president, Robert Zoellick, has now stepped forward to help finance this new approach. If the Bank provides grants to poor countries to help small peasant farmers gain access to improved inputs, then it will be possible for those countries to increase their food production in a short period of time.

Donor governments, including the oil-rich countries of the Middle East, should help finance the World Bank’s new efforts. The world should set as a practical goal of doubling grain yields in low-income Africa and similar regions (such as Haiti) during the next five years. That’s achievable if the World Bank, donor governments, and poor countries direct their attention to the urgent needs of the world’s poorest farmers.

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Copyright: Project Syndicate, 2008.
www.project-syndicate.org

 

Impotent America?

_ by Shlomo Avineri

[Shlomo Avineri is Professor of Political Science at the Hebrew University of Jerusalem and a former Director-General of Israel's Foreign Ministry.]

JERUSALEM – Israel’s 60th anniversary has come and gone. So, too, has President George W. Bush’s final visit to the Middle East. Amidst the celebrations and the soul-searching, no meaningful breakthrough in the deadlocked Israeli-Palestinian negotiations is visible.
 
There are immediate reasons why this is so: Israeli Prime Minister Ehud Olmert’s government is weak and unpopular, mainly due to the botched 2006 war against Hezbollah in Lebanon. The Palestinian Authority under Mahmoud Abbas is even weaker, having lost control of Gaza to Hamas after a violent putsch last year.

On the Palestinian side, this is part of a deeper phenomenon: a longstanding failure to create the institutional structures necessary for nation building. For example, in 1936-1939, a Palestinian uprising against British rule deteriorated into a bloody civil war, in which more Palestinians were killed by their brethren than by the British army or the Jewish self-defense forces. This is repeating itself now in Gaza.

Looking back at 60 years of American involvement in the region, one can discern two scenarios in which the United States can bring the local players to an agreement. Absent these conditions, the US is ultimately powerless.

The first scenario is when a real war threatens to spill over into a wider conflict, destabilizing the region and Great Power relations. At such times, resolute American steps can stop the fighting and impose a cease-fire, if not peace.

In 1973, at the end of the Yom Kippur War, Israel was poised to encircle the entire Egyptian Third Army in Sinai. Its troops were on the road to Cairo, threatening to inflict a major defeat on Egypt. Soviet intervention became a real threat. A few tough messages from President Richard Nixon stopped the Israelis in their tracks and enabled the Americans to start a lengthy process of de-escalation that led to a number of interim agreements.

Likewise, in 1982, during the invasion of Lebanon, Israeli troops were about to enter Muslim West Beirut after Syrian agents assassinated the pro-Israeli Lebanese President-elect Bashir Gemayel. This would probably have brought Syria into the war. A few tough calls from President Ronald Reagan to Prime Minister Menachem Begin prevented this.

During the first Gulf War in 1991, when Iraq fired 39 Scud missiles at Israeli civilian targets and US forces failed to stop the Iraqi attacks, Israel was set to strike Iraqi targets, which would have split the US-Arab anti-Iraq coalition. The US warned Israel not to get involved, and Israel was forced to comply.

In all these cases, American involvement was swift and focused on a clear aim, and compliance was verifiable within days, if not hours. In such dramatic situations, US power is at its greatest.

The other scenario is when the two sides have already engaged in bilateral peace talks, paid the domestic political price, and reached agreement on most issues, though some matters remain unresolved and threaten to derail the process. In such cases, America can step in and, by using both carrot and stick, make both sides go the extra mile.

After Anwar Sadat’s visit to Jerusalem in 1977, Israel and Egypt negotiated for a year and reached agreement on most issues: peace, diplomatic relations, and full Israeli withdrawal from all occupied Egyptian territory in Sinai. At this point, President Jimmy Carter – who initially opposed the process – invited both sides to Camp David to hammer out a peace treaty.

In 1993, in secret bilateral negotiations in Norway (unknown to the Americans), Israel and the PLO reached an agreement about mutual recognition and the creation of a provisional Palestinian Autonomous Authority. Yet some issues remained unresolved. President Bill Clinton stepped in, and prevailed upon the two sides to work out their remaining disagreements.

When either of these two scenarios is lacking, American initiatives are stillborn. This happened to Clinton at Camp David in 2000, when he failed to bring Israeli Prime Minister Ehud Barak and PLO Chairman Yasser Arafat to an agreement, and to Bush’s Road Map in 2003, when both sides agreed in principle to its general guidelines, but did little to implement them.

Absent local political will, and when confronted with a peace-making project that may take years to complete, the US is virtually powerless. It is extremely successful as a fire brigade or as a midwife , but not as an initiator . What applies to the US is even truer for the European Union, whose “soft power” is no match for its lack of local credibility.

The same dynamic can be seen elsewhere: for all its power, the US has failed to resolve the conflicts in Cyprus, Bosnia, or Kosovo. The Annan Plan failed in Cyprus because of one party’s opposition; progress now (the minor but symbolically important opening of the Ledra Street crossing in downtown Nicosia) reflects internal political changes on the Greek Cypriot side. Similarly, if Belgrade will change its obstreperous position on Kosovo, this will be due not to US or EU pressure, but to internal political changes in Serbia.

Recognizing the limits of US power doesn’t mean that America is irrelevant: it can stabilize a conflict, help bring about confidence-building measures, and negotiate interim agreements. But at the end of the day, in the case of Israel-Palestine, as in any conflict between two national movements, the key is in the hands of the local players. No national conflict has ever been solved by outside powers, however well intentioned they may be.

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Copyright: Project Syndicate, 2008. 
www.project-syndicate.org

 

Abandoning Asia’s Poor

_ by Isabel Ortiz and Anita Kelles-Viitanen

[Isabel Ortiz, a former ADB senior official, was a founding member of its Poverty Unit. Anita Kelles-Viitanen is a former Manager of Social Development at the ADB.]

NEW YORK — More than half of Asia’s population — 1.8 billion people — live on less than $2 a day; more than 600 million of them try to survive on less than $1 a day. With food prices now soaring, most of Asia’s “working poor,” who are already struggling on degraded lands, in sweatshops, on streets and at homes, risk further destitution.

Yet the Asian Development Bank – an institution whose mission is to reduce poverty – last month approved a new corporate strategy (ADB Long Term Strategic Framework 2008-2020) that is ominously silent on the importance of employment and social protection for the poor. A handful of influential ADB bureaucrats with large salaries, secured pensions, comprehensive health insurance, subsidized housing, and education for their children, have apparently decided that financing subsidized housing, health, nutrition, and child protection programs is not a priority. Nor do they consider land reform, employment services, or pensions for all Asians a priority.

Instead, these officials have decided to refocus ADB operations on three areas: inclusive economic growth, environmentally sustainable growth, and regional integration, with a heavy emphasis on private-sector development. The ADB is abandoning crucial public support for social development.

The new strategy is a reversal of the policies of the late 1990’s, when the ADB changed its objective from “economic growth” to “poverty reduction.” The ADB’s earlier policies were based on broad-based growth, good governance, and social development. Ten years later, only an empty corporate motto of “an Asia and Pacific region free of poverty” is left.

Social protection, housing, employment, and labor are not on the ADB’s new agenda. Health and agriculture will be considered only on a highly selective basis. Only education remains as a future investment sector, given its impact on productivity, but the rest of the much-needed social sector interventions have been abandoned in favor of investment in infrastructure, the environment, regional integration, and finance.

No lesson was learned from the Asian financial crisis, which underscored the importance of social protection. Pensions are mentioned only under financial-sector development: the ADB is to promote private-led insurance, despite evidence from the United Nations, International Labor Organization, World Bank and NGOs showing that private pensions do not reach the poor.

If the ADB were serious about poverty reduction, it would put a significant share of its investments in social development, particularly on non-contributory universal social security schemes that can reduce poverty by 35% to 50%.

Why is the ADB constricting its agenda? Why does it want to deny governments’ access to much-needed funds for social development?

The ADB argues that other agencies are responsible for social development. But that argument is unjustified: while institutions such as the UN and NGOs may work on social development, they are under-funded compared to the ADB. Besides, plenty of other public and private institutions undertake the infrastructure and finance projects that the ADB now wants to focus on. So, what is the ADB’s added value, and whom does it serve?

Certainly the ADB’s new strategy will not serve the majority of Asians, 60% of whom still live in poor rural areas. Indeed, Asia and the Pacific account for three-quarters of the world’s stunted, underweight, and malnourished children. Maternal mortality rates remain dismal in several countries. As food prices rise, so is hunger and poverty.

External and internal pressure at the ADB’s Annual Meeting this May forced the bank to respond to the current food crisis through temporary safety-net food security programs. It also offered medium-term measures such as infrastructure and rural finance. All of these are good, but they are insufficient. Other measures are needed to reduce poverty in rural areas, such as land reform and rights, agricultural extension services, expanding access to health and non-contributory social pensions, just to mention some.

ADB’s major goal, however, seems to be to scale up private-sector support from 15% to 50% of total bank operations. Several countries have expressed reservations about this. It will include direct financing, credit enhancements, and guarantees – a subsidy to a sector known for its risky non-performing operations at the ADB – as well as business-friendly regulations and removal of market “barriers,” which include social and labor rights. Such rights can be tolerated only as minimum social safeguards, which the ADB is trying to neuter through another ongoing review.
Unless the ADB’s member governments reverse its current policies, they, too, will be blamed for ignoring the urgent needs of the poor. Poverty reduction requires both economic and social policies that reach people. Growth on its own is not sufficient to guarantee poverty reduction in Asia and the Pacific.

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Copyright: Project Syndicate, 2008. 
www.project-syndicate.org