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Cutting US foreign assistance bad for economy, Arab democracy

August 2, 2011 1 comment

Everyone knows US foreign assistance is slated for spending cuts, but recent aid authorization bills show the major differences already forming between the House and Senate. Never has there been a better opportunity and greater need for democracy promotion and US aid than the Arab Spring. But if the House gets its way, that will mean a sharply decreased US role abroad — and, as I will argue, to the detriment of the US economy.

First, let’s start with the facts. The foreign assistance fund — which includes food aid, supporting stable democratic institutions and the like — is not in any way related to the defense budget. Politicians usually lump the two together, whether intentionally or not, because our military missions in Iraq and Afghanistan have undertaken the ostensible role of democracy promotion. But when you look at the numbers, foreign assistance accounts for a mere 1 percent of the US budget. That still hasn’t stopped people like Rep. Paul Ryan, R-Wisc., from suggesting cuts of 44 percent by 2016. By comparison defense budget — cuts to which the House has tried to avoid — is the largest spending item in the US budget, comprising 24 percent of total spending this fiscal year.

Many people believe the US should turn inward — some argue the nation cannot project itself abroad when it cannot take care of its economic issues at home. I don’t buy that argument. US-based nongovernmental organizations will continue to do a lot of the heavy lifting overseas when it comes to international aid, but they will need government grants to keep major operations going. Denying those funds could lead to job loss, so keeping foreign assistance at current funding levels will keep Americans at work.

Also, it is in US economic interests to promote healthy governments and citizens because it will lead to economic rewards in the future. Corrupt, undemocratic governments will generally operate at the expense of their own people largely by keeping growing wealth for the government elite. That means people have less money to spend on more expensive American goods, which in turn dampens US overseas profits.

Curbing corruption will also ensure future US investment is not wasted. Billions of dollars of US investment — both from the federal government and private citizens or corporations — get lost among red tape or swindling politicians in corrupt foreign nations. Some of those nations — such as Afghanistan, Mongolia and India — sit on treasures of natural resources the US lacks, so US business interests are more than happy to invest. Cleaning up those states would produce a greater return on that investment.

In terms of the hopeful new Arab democracies, US foreign assistance can help build trust between those governing in Arab nations and the US officials with whom they will be communicating. It’s no secret that Egyptians oppose US meddling, a fear the military there is exploiting. But it’s not the Arab street the US must win over — it’s the new, democratically-elected leaders with whom the US must curry favor. The US already is training potential political leaders in Libya, Syria and Egypt — certainly a good start. The US wants to be the nation those new leaders look toward for guidance, but cutting foreign assistance will imperil the US ability to help guide new Arab democracies through the troubles they will encounter during nascent stages. In turn, that will dampen the ability to do everything from strike bilateral trade agreements to establishing and supporting sound human rights protections.

On top of the general budget malaise, a Foreign Relations Authorization bill currently going through the motions on Capitol Hill makes it more difficult for the US to use international aid in corrupt nations:

The corruption indicator has a range of uncertainly (especially around the median) and can have time lags of up to two years.  Using the control of corruption indicator as a hard hurdle for all U.S. economic and development assistance without addressing the inherent problems in the indicator could prove highly challenging.

That bill, pushed by the House (there also is a less restrictive Senate version) is not likely to pass in the Senate. But the writing is on the wall for US foreign assistance. If this debt ceiling fiasco proved anything, it’s that the House and Senate are beholden to very different interests and views. The House will champion spending cuts abroad because, rhetorically, it sounds good. The House will stomach defense cuts, but it will not digest those cuts easily. Still, it’s the assault on foreign assistance that should induce gagging.

 

“Middle East Marshall Plan” should include human rights promotion

U.S. Sens. John Kerry (D-Mass.) and John McCain (R-Ariz.) are planning a sort of Middle East Marshall Plan by tying U.S. intervention with business and economic interests. IF (and I say IF) this is what the U.S. decides to do to break its relative isolation during the Arab Spring, the senators should work to promote human rights at the same time.

This extremely nauseating puff piece about the war veterans/politicians/BFFLs seemed to care less about the news and  more about their on-again, off-again Beltway lovefest. I hope WaPo plans on a follow with some analysis, but in case they don’t, I’ll go ahead and do it anyway.

From The Washington Post:

The elder statesmen are also hoping to forge something resembling a Marshall Plan for the Middle East, aiming to spur massive private-sector investment across a region remade by revolution. The pair traveled to Egypt last weekend with eight Fortune 500 executives in an attempt to ignite investment in a country that has struggled since the February fall of longtime leader Hosni Mubarak.

Human and basic democratic rights such as freedom of speech and free and open elections, ideally, would come before economic development. Without human rights, society is at greater risk of corruption and abuse.

The U.S. has had its rear end pinned to the pine when it comes to supporting revolutionary forces in the Arab Spring. So the first proactive approach the U.S. makes is to support investment and U.S. economic interests, which is not going to set off a ticker tape parade in most Arab countries.

By promoting human rights in tandem with economic interests, the U.S. will appear more benevolent and also secure more stable investments. Fortifying institutions such as free and open elections will make politicians more accountable and curb corruption, which will mean a more honest and even approach to things from government contracts to welfare. Human rights reform will reduce workplace abuses, alleviate gender wage and employment differentials and therefore lead to a more productive and stable economy.

There’s also the dangers posed by opening up economies to the global market when those nations do not have sound human rights protections. “Race to the bottom” scenarios could develop in which nations depress wages to earn a competitive advantage for foreign investment. It also makes exports cheaper and therefore more attractive in the international market, but at the expense of a nation’s own people because it decreases purchasing power. That, in turn, diminishes the opportunity to innovate and be entrepreneurial because citizens have less disposable income and have to provide for families on sub-standard wages.

This is obviously asking for a lot. Promoting business will address youth unemployment, one of the largest causes of the Arab Spring. That alone would go a long way. But the U.S. should aim to have equal involvement in helping craft institutions and human rights reform as it does in boosting the Middle East economy.

Ultimately, the U.S. is currying favor with future Arab leaders, and one way to do that is by bolstering those nations’ economies. The U.S. doesn’t negotiate trade or peace agreements with the Arab street, so I understand the tactic.

But the U.S. has often worried about its image in the Arab world, and its hesitance to support revolutionary forces has not been viewed positively by most Arabs. The perceived inconsistency of the State Department — intervening in Libya but not Syria, for example — only amplifies that negative image.

I truly believe a more active approach to human rights promotion is possible. There is a power vacuum in the Arab world, unlike China, where the U.S. has also used rhetoric rather than might to encourage human rights reforms. The Arab street genuinely wants the freedoms U.S. and other nations have, so I believe it would be more receptive to U.S. help.

Diplomatically, America’s hands are tied. Intervening on the side of revolutionary forces will send a signal to allies that the U.S. is fickle. But the Arab street sees a contradiction between U.S. actions and its purported values of freedom and liberty. Arabs see that as hypocrisy, which amounts to an image problem of the worst kind.

 

Media quiet on Jordanian protests

June 29, 2011 1 comment

Jordanian protests have largely gone unreported by the U.S. media. Most likely it has something to do with the good relations Jordan had with the U.S. and the Hashemite Kingdom’s quiet border with Israel — because, let’s be real here, the U.S. was late to denounce Egyptian leader Hosni Mubarak because of foreign policy implications with Israel.

Jordanian protests have not reached Egypt levels, which would be tough to do considering about half of the Jordanian population are Palestinians with very few rights to begin with — despite being such a large portion of the country, Palestinian representation in parliament is at its lowest ever at 12 percent. I can’t imagine much solidarity between Jordanians and Palestinians when it comes to calling for a new government, although they may both want the same thing. But if they do get the same thing, that means Palestinians could more equal representation and become an enormous bloc of the Jordanian parliament. That’s reason enough for Jordan to balk at true reform.

Ministers have resigned. Legislation curtailing media freedom has been introduced. The prime minister was cleared of a corruption charge despite being implicated in a parliamentary report. The government has been slow to act on promised reforms. There is fear prolonged protests will lead to Islamist gains.

Protests are happening. Corruption is happening. Read about it here, from Amman-based journalist Osama Al Sharif on ArabNews.com:

Jordan is locked in a vicious circle that threatens to deepen the current political and economic crises. The government headed by Marouf Bakhit is being chocked by scandals, resignations and public accusations that it is incapable, or unwilling, to carry out dire political reforms in response to royal directives and public demands.

On Monday the Lower House voted to exonerate the prime minister from charges relating to circumstances under which a casino license was granted to a foreign investor in 2007, when Bakhit headed his first government. Fifty-three deputies voted against him, but the motion was defeated even though a parliamentary report had implicated the prime minister. It was the latest in a series of political crises which have bedeviled the Jordanian government.

Last week Minister of Information Taher Adwan dealt a heavy blow to the government by resigning his post over what he described as amendments hostile to media freedom being introduced to laws that will be presented to the Lower House in spite of the Cabinet’s objections. He warned of forces that are trying to push Jordan toward a dangerous path.

Adwan’s walkout came two weeks after two other ministers resigned apparently over the case of convicted Jordanian businessman, Khaled Shaheen, who was allowed to leave the country earlier this year supposedly to seek medical treatment in the United States. Shaheen’s case became the force behind public protests across the kingdom driving accusations against the government of complicity in one of the most controversial corruption cases in recent times.

The government has initially defended its decision to allow Shaheen to leave his deluxe prison cell on humanitarian reasons, but under media and public pressures, the prime minister later admitted that there have been irregularities in the handling of the case.

Since public protests in Tunisia and Egypt broke out earlier this year, Jordan has been witnessing weekly demonstrations and sit-ins across the country demanding major political reforms and a strong crackdown on official corruption. Most of the government’s mega projects of the past few years have been blemished by accusations of corruption including a royal initiative to provide affordable housing to the country’s poor, and allegations concerning certain deals by an independent government corporation, Mawarid, an investment arm for the army, which is involved in a major development project in the heart of Amman.

The two most pressing issues for Jordanians today are political reforms and fighting corruption. Both are interrelated and both are believed to be connected to the bad economic situation in the country. In response to the first, and after weeks of protests, King Abdallah announced that the government has been instructed to oversee political reforms, especially with regard to introducing new elections and political parties laws.

A National Dialogue Committee, appointed by the prime minister and headed by Speaker of the Upper House Taher Al-Masri, met for almost two months and finally approved two pieces of draft legislations. It was boycotted by Jordan’s powerful Islamist movement, the Muslim Brotherhood. Still the proposed laws were received with enthusiasm by the public and the media. The king said the government will refer the laws to Parliament for approval and in few years Jordanians will be able to elect their own government.

But after almost a month of submitting the draft laws, the government is yet to take action. It is now believed that the laws will be presented to Parliament in its next ordinary session this November. Meanwhile, another committee, appointed by the king, is yet to deliver its report on constitutional amendments. Political parties, especially the Islamists, have been calling for major changes to the constitution limiting the king’s powers and establishing a parliamentary monarchy.

The issue is a contentious one. Young Jordanians rallying under a movement calling itself the 24 March Youth were beaten and attacked by an unidentified mob when they lifted slogans calling for a constitutional monarchy in Jordan three months ago. The government denied any involvement and promised to investigate.

Another showdown took place in the eastern city of Zerqa two months ago when had-liners took to the street demanding freedom for their detained relatives. They clashed with the police and many were seriously injured from both sides. The hard-liners continue to march especially after a royal pardon issued recently failed to include members of their movement.

The fact that the government of Bakhit is embroiled in scandals makes it difficult for it to maintain credibility in the street, especially with regard to its ability to carry out political reforms. Jordanians are calling for its resignation and are appealing to the king to speed up reforms and defuse tension.

Pundits believe there are three forces working against each other in the Jordanian street today. The first is the conservative security apparatus, backed by old guard politicians, which is against adopting major political reforms for fear that they will benefit the Islamists. The second is the Islamist force, led by the Muslim Brotherhood, which is allied with other opposition groups. They are trying to pressure the palace to accept these reforms, fire the government and call for new elections. But there is a third force and that is the youth who are calling for a constitutional and other reforms but do not necessarily see themselves aligned with the Islamists. This last group is growing and gaining support as it becomes active in the street and on social media sites.

There is no doubt that the king is in favor of calculated reforms, but battling these forces is no easy task. In the absence of organized political parties, the common view is that the Islamists stand to gain the most in the future. Jordan is now at a crossroad and the street is frustrated with an impotent government, weak economy and allegations of widespread corruption. Unless concrete moves are made soon the pressure will continue to build up.

Yemen gov’t manipulating economy for political gain?

June 28, 2011 1 comment

Reports out of Yemen point to an impending humanitarian crisis that could turn the tide of revolution in the current regime’s favor.

President Ali Abdullah Saleh’s former tribal allies have turned against him. But he still has military control. Additionally, he has been a willing partner to the U.S. in the fight against a significant al Qaeda terrorist cell in Yemen, meaning there is only passive pressure on the leader from the U.S.

Saleh and his government have virtual power of the purse in Yemen by instigating violence, which many Yemenis believe he is doing to manipulate the political atmosphere. It’s very probable that he is doing just that, causing the economy to sputter recent weeks to legitimate his rule. It’s a way to force acquiescence from the general population, as Saleh is demonstrating that only he can provide well-being and that protesters stand in the way of basic sustenance.

It’s more than just a theory, in my opinion. Saleh will speak to the media “after Thursday” about the nation’s political future, which is sure to include something along the lines of him staying in power indefinitely to restore stability.  Given the wide range of tribal opposition to Saleh’s rule and the ever-present terrorist network in Yemen, there are very few people in the dictator’s camp. Sabotaging the economy may be a last-ditch effort to turn sentiment against the revolution.

From the Yemen Times:

An economic crisis has been gripping Yemen for more than a month now. Shortages of fuel, cooking gas and hour-long blackouts have convinced some Yemenis that that revolutionary youth and the anti-government uprising are to blame.

Moreover, international NGOs and youth groups are trying to mobilize people to improve the situation. The emergency “Food Assistance to Conflict-Affected Persons in Northern Yemen” operation is experiencing a total 2011 financial shortfall of US $27.1 million. The “Emergency Food Security and Nutrition Support to Vulnerable Populations in Yemen” operation is experiencing a total 2011 financial shortfall of US $26.5 million. The “Food Assistance for Somali Refugees” operation is experiencing a total 2011 financial shortfall of US $1.2 million. The Yemen country program, “Food for Girls’ Education”, is experiencing a total 2011 financial shortfall of US $10.8 million.

The story says that people believed the economy was “stable” before the revolutions, but when your country is fighting for water I have serious doubts that the economy pre-revolution was much better. According to The New York Times, nearly half of the nation’s 23 million people live in poverty and 7 million cannot afford three daily meals.

The protest movement has failed to move forward and President Saleh has taken refuge in Saudi Arabia. No doubt Yemenis are wondering aloud where this revolution is headed. If it seems stuck, then Yemenis will drop from the movement. It has reached contagion stage, but in a state with little regard for human rights and a 30-year legacy leadership, contagion can only do so much. This is not like the American Civil Rights movement, where there was some semblance of respect for law and a system of checks and balances, such as elected political representatives and a transparent (if often misguided before then) court system. This is Yemen, where force has proven to be the greatest arbiter.

Kuwaitis jailed for tweets

It took me quite a while to warm up to Twitter, albeit a little quicker than Arab regimes overthrown in part by the micro-blogging site. But Kuwait seems to get the social network’s power, as it plans to try two citizens for criticizing Gulf Arab ruling families.

Twitter was the last frontier of free speech in many of these oppressive regimes, and the United States understood this. But typical to any form of innovation, the second movers on a technology can easily copy the guys who make it to market first. In this sense, Arab governments now know what Twitter is and how to use it — and now they know how to use it against their own citizens. Arab rulers seeking to hold onto power will now watch Twitter for “subversive” activity and attempt to cut dissent movements off at the head. Kuwait’s preferred method appears to be legal intimidation.

From the Lebanon Daily Star:

Nasser Abul, a Kuwaiti Shi’ite Muslim, was arrested for posting criticisms of the Sunni Muslim ruling families in Bahrain and Saudi Arabia, and Lawrence al-Rashidi posted defamatory comments of Kuwait’s emir, he said.

He said both would remain in detention for two more weeks before a hearing is scheduled, where they will likely face charges of harming the Gulf Arab state’s interests and defaming the country’s ruler after being arrested earlier in June.

I’m afraid this may become more of the norm in Arab countries. Iran is already building a state-run internet to monitor social networking (and they were kind of late on that one, too, about two years after the 2009 Green Revolution). Arab nations that could suppress freedom of speech in the physical arena and closed social networks like Facebook were slow to respond to the instantaneous and more open Twitter.

The U.S. realized the benefits of social networking long ago. The U.S. government secretly was on the ground in Egypt teaching protest organizers how to use Twitter, Facebook and other social networking sites. In April, the U.S. State Department also announced $28 million in grants for such activities.

I trust the U.S. has trained protest organizers better than the two disgruntled Kuwaitis in custody. The Arab Spring’s figureheads have been sophisticated, not merely using Twitter for banal opining or complaining about oppressive governments. But now that Arab governments are watching, it will be interesting to see how protesters adjust.

 

US should reevaluate Iraq exit after oil attacks

June 28, 2011 1 comment

Recent reports that Iraqi insurgents are attacking the oil industry should give the US pause about its planned exit considering the impact these incidents could have on long term economic development.

Joel Wing at Musings on Iraq has a good summary (with links) to the reports. In all, there were five mishaps related to oil in June.

Wing explained that oil accounts for 90 percent of the nation’s revenue. He said insurgents plan such attacks to grab headlines, which leads to recruits, which leads to money, which leads to continued operations.

The constant threat of those attacks lead to unpredictability, and Wing hypothesized that insurgent timing was planned to coincide with the beginning of several foreign oil contracts.

This dynamic will have a tremendously negative effect on Iraq’s economic development potential. In his essay “International Investment and Colonial Control: A New Interpretation,” Jeffrey Frieden explained that site-specific foreign investment during a host country conflict is easier to defend with force — for example, oil fields. But there are some major security concerns ahead of the planned US exit from Iraq. The Iraqi police and army do not appear trustworthy or legitimate to many citizens, which means they cannot be counted on to provide vital security for the nation’s precious oil resources.

Whether this causes investor flight remains to be seen — although that’s doubtful considering every country has oil needs. But it could significantly alter the contracts Iraq receives. Maybe not monetarily, but something may have to give. What that is remains unclear, but one thing is certain — investors won’t like the prospect of their millions of dollars going ablaze.

The attacks on oil have another effect — by crippling the nation’s main breadwinner, the insurgents render the government ineffective. Depleted jobs numbers and oil revenue sends a bad signal to the Iraqi people that their government cannot provide for them. That in turn feeds into insurgent recruiting, as those groups are bankrolled by wealthy people and can offer essential services such as education, food and shelter.

In essence, the attacks on oil encourage civilian dependence on insurgent groups for general welfare. It’s a scenario the U.S. has tried to avoid for years, but one that may still be a factor when it leaves.

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