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Archive for the ‘Political Violence’ Category

Where should foreign aid go?

The latest World Development Report, the flagship annual publication of the World Bank, proposes that from now on, a much bigger proportion of foreign aid should focus on issues of political conflict and justice.

This might seem natural, given all the wars, violence, terrorism, and displacement around. And political considerations have always influenced aid.

But putting political risk as the central purpose of aid is a sea change.

When the World Bank and other Bretton Woods institutions came about after the Second World War, the initial focus of multilateral aid was infrastructure. After Europe was rebuilt, attention shifted to the “Third World” under the guise of development.

This aid, all the way through the 1980s, strengthened the state much more than the society. There were two reasons for this. First, the Cold War meant that much of multilateral aid really went to prop allies and their offices, even if they were corrupt and brutal dictators. Second, the entire “development project” pushed by the West saw the state as the key dispenser of “development,” be it the provision of healthcare or education or employment.

In the 1990s, large states crumbled under people power, from Berlin to Manila, and donors shifted to the private provision of development. Human development, highlighting individual empowerment, took the scene; NGOs like Brac and Grameen expanded.

The 2000s saw an intensification of the privatization of development to a new level. “Development” was to be achieved through globalization, i.e., foreign trade and investment [1]. This was trickle-down at a world-scale: the state became detached from both planning and provision. Development goals were planned at the international level, and the grand blueprint was set by the UN’s Millennium Development Goals.

In this approach, although implementation was said to be national, the state’s role was mainly at the regulatory level: open up borders and promote an environment conducive to free global enterprise. India in the last decade was the poster child of this approach.

Now we’re back to the future. On the one hand, if conflict is the focus, then multilateral aid will become as political as it was in the height of the Cold War. Even though the potential exists for aid to be distributed on a non-partisan basis to the most conflict-prone parts of the world, history squarely contradicts that promise. Most recently, aid was suspended in Ivory Coast, as a way to punish the autocrat Gbagbo, even though a bloody civil war was raging in the country. The dispensing of aid on political grounds will never be easy.

On the other hand, a conflict focus reinforces the neoliberal idea of development as a global private enterprise. Aid will aim to bring political peace. Once that happens, the hope is that all else will fall in place: MDGs will determine overall targets, the state will (de)regulate to allow private trade and investment to flourish, and development will be the by-product of growth.

The overall logic of conflict and security makes sense. Neither state-led nor private-led development can take place under high political risk. A main challenge will be to ensure that aid is non-political, even though aimed at politically combustive situations. Over the next few blog posts, I will discuss some of the specific challenges and opportunities of targeting foreign aid at reducing political risk.

Notes
1. Philip McMichael discusses this changeover from development to globalization in Development and Social Change: A Global Perspective (Pine Forge Press, 2007). Highly recommended.

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A lot of worry is making the rounds about “Political Islam.” Some of it is valid, some a function of what may be termed the unknown. But the extreme form of the worry, the one that gets inordinate media time, is nonsense. And as a basis for making policy, it is not just nonsense but downright dangerous.

It goes like this: the West should oppose Islamist parties from gaining power because even if they gain power electorally, they will break down democracy, like the Nazis did in 1932-33. The political risk, therefore, is so great that democracy itself can be opposed on principle.

This conception of political risk does disservice to proper analysis because it is not based on evidence and logic. It is based on prejudice. And that is something that all risk analysts should avoid.

I recently wrote an op-ed piece in The Huffington Post debunking this supposed political risk. Here are some excerpts from that:

For decades, Americans have been peddled a scenario with two scary arguments: Islamist electoral takeover is first of all very likely, and once victorious, Islamist parties would dismantle democracy altogether.

What has happened in reality is quite the opposite.

Across the world’s 47 Muslim-majority countries, 154 national elections were held between 1990 and 2006. Out of these, Islamist parties won only 12 elections.

If we only consider only those elections that were free and fair, that is, a reflection of popular will, then only three resulted in a victory by an Islamist party.

The specter that produces right-wing nightmares has been extremely rare.

What about the second part of the argument? Was democracy reversed in the three cases in which Islamist parties won fair and square?

Read more here to find out.

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In the past I’ve touched on the risk of urban unrest (e.g., here). Over the last two years I’ve seen that risk increasing around the world, even though some central banks asserted that the world is on an economic recovery and that the worst of the dangers have passed. That assertion, to me, felt like a sort of ostrich syndrome, by-product of a type of thinking that focuses most energy on economic growth and marginalizes the importance of politics.

Tunisia, Algeria, and today, Egypt are now examples of what I’ve been forecasting: urban political rebellions fueled by issues neglected by the economic status quo.

Tunisia’s Jasmine Revolution was sparked by a young man, Mohamed Bouazizi. He was unable to find a job in Tunisia’s stratified economy, in which a small elite governed with an iron fist, pursuing the philosophy that the government does not owe all that much economically to poorer citizens. He took to selling fruits and vegetables, and even in that, found himself having to pay bribes to corrupt officials. Enough was enough. He doused himself in gasoline and set himself alight. He also set alight a wave of rebellion–the Jasmine Revolution–that overthrew, within a month, a government that had ruled for more than 23 years.

In streets across Algeria, protests against high food prices, corruption, and unemployment have been gaining strength. The government has calculated that in order to survive it needs to accelerate a large public spending program to reduce popular grievances. It remains to be seen whether this suffices. The IMF has warned that to sustain this, Algeria’s economy would need to grow at least 6.5 percent a year.

In Egypt, economic conditions and Mubarak’s decades of sharp political repression have combined into street rebellions. It’s going on as I write: young protesters throwing stones and setting trucks ablaze, and riot police lobbing tear gas and charging the crowds with batons.

What was once a forecasted risk across the region is turning into reality.

One root of this, obviously, is the existence of repressive governments. The other two roots of the anger are the pursuit of conservative economics and the effects of Western foreign policy.

Neoclassical growth-focused economic policy has always discounted the political risks of globalization. In more places than ever before, national economic policy agendas are influenced primarily by a small segment of the financial community and its interests. In the US, Wall Street’s interest to maximize stockholder value has defined its general stance in favor of a small hands-off government. In conversations I’ve had with adherents of neoclassicalism, I’ve often been surprised to see how fanatically this interest is defended as uncompromisable, sacrificed or de-prioritized only at the peril of bringing down the economy.

In most developing countries, the capital market is not as thoroughly organized, nor able to exert such a continuous level of top-grade lobbying power. But the underlying philosophy recognizes growth as the core value. In this philosophy, globalization replaces development. The role of government is to create the conditions under which internal and external exchanges can take place fluently. It is an interest that serves first and foremost the investors and only then the broader public, if it trickles down at all. (Unless you believe in the grand myth that what’s good for investors in invariably good for the populace.)

The problem is not economic growth per se. Growth certainly is needed. The problem is setting Growth up on a pedestal, such that other national priorities are subsumed under it. And this is a world-scale issue. Never has trickle-down theory been so widely accepted within governments across the world. It is much more entrenched now than it was when Ronald Reagan and Margaret Thatcher pursued monetarism as a goal for Western economies. They had to face more vigorous intellectual and policy opposition than what monetarists face today. Neoclassical economics has become established by now not only in the US, but in emerging markets too as an accepted belief that no longer needs defense. (My book, India’s Open-Economy Policy, demonstrated how this ethic or value got entrenched in India in the last decade and a half.)

Promoting growth as value #1 has resulted in a severe neglect of food, healthcare, education, and social stability as direct policy arenas. Governments have taken a backseat in all, believing increasingly that the markets should take care of these. Surprisingly, the mortgage-securities-led recession did not dampen this sentiment. Government’s role here is restricted to performing a bail-out, and not any wider. Government role in food, healthcare, and education have come under fire as instances of big government, whether you consider the Tea Party rant in the US, or public employment in Algeria, or food and fuel subsidies in Jordan.

The political ramifications are stark. The pace of change in Tunisia, for example, has been breathtakingly rapid. As one stunned newspaper editor in Tunis remarked: “Its like night and day, black and white. The changes of the last week have been so huge and rapid, we think we are dreaming.”

America has chosen the right side with a pro-reform and pro-liberty stance in the region. Two aspects of the wider risk picture, however, remains the same. First, citing its security and energy interests, the US has historically suppored most of the Arab repressive regimes that are now in peril. And second, the US has, in the process, lost credibility on the Arab street. According to a 2010 Brookings Institute poll, only 16 percent of the Arab population is hopeful about America’s Middle East policy. In the past, Arab citizens used to dislike US policy but like Americans as a people. The trend has converged dangerously in recent years. A majority now sees both US policy and Americans unfavorably. It’s this majority that’s on the streets now, revolting.

So, we know that monolithic US-backed Arab states face greater political risk. But so does the United States. And mitigation of this particular risk will require a fundamental shift in US foreign policy. Will US policymakers overlook the profound ramifications here, as some Arab tyrants did, to serve narrower interests? Let’s hope not.

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