Saudi Arabia, America’s oldest ally in the Middle East, is in the midst of the most profound changes in decades. The leadership is going through an unprecedented generational change and has adopted an aggressive foreign policy. The driver of change is the king’s favorite son, Deputy Crown Prince and Minister of Defense Mohammed bin Salman.

MBS, as he’s often called, is 30 years old, remarkably energetic, and very ambitious. King Salman has promoted him to an array of powerful positions and concentrated power in his hands quickly. In addition to being third in the line of succession behind the king and his cousin Crown Prince Mohammed bin Nayef, he often acts as the country’s top diplomat and he chairs the committee that sets economic and energy policy. He acquires new titles and responsibilities every week. Late in April he became the Saudi chief of a new cooperation council with Jordan, for example, with promises this will lead to stepped-up Saudi financial aid to Jordan.

The prince is the author of “Saudi Vision 2030,” an ambitious plan to wean the country of its dependence on oil income and create a more diverse economy. On May 7 the king issued 51 royal orders restructuring the government to implement his son’s plan, including sacking the oil minister, Ali Naimi, who had run the portfolio for two decades. The new orders also seek to encourage more foreign pilgrimage to the two holy cities of Mecca and Medinah by highlighting the opportunity for pilgrimage not just during the traditional Haj holy month, but year-round as well. Encouraging tourism is a major part of “Vision 2030.” All of the changes bear MBS’s stamp.

MBS effectively makes Saudi oil policy now. He sabotaged Naimi’s efforts to freeze or reduce OPEC oil production last month. His plan to open ARAMCO to outside investment is the centerpiece of “Vision 2030.” Oil is being used as a weapon by keeping production high to keep Iran from getting an oil bonus after the nuclear deal lifted sanctions.

The king has other and older sons with more experience than Prince Mohammed. One is Saudi Arabia’s only astronaut and another is governor of Medinah. But King Salman apparently has unique confidence in the young prince who controls access to his father and the Royal Court.

Other Saudis have been given great responsibility at an early age before. The modern kingdom’s founder, Abdelaziz ibn Saud, captured Riyadh when he was only in his late twenties. His son Faisal represented the kingdom after the First World War in London and Paris at the age of 14 and commanded an army three years later in battle. Prince Bandar became ambassador to the U.S. in his early forties. But MBS’s rise is unique for an heir to the throne in the last half-century. He is the symbol of youth in a nation where most of the population is his age or younger.

The prince is also the hand behind the creation of a new Islamic military alliance based in the kingdom. Some three dozen countries have joined. The prince envisioned the alliance as both a counter to terrorist groups like the so-called Islamic State and al Qaida as well as a counter to Iran and its allies like Hezbollah and Bashar Assad. It held large military exercises called “Northern Thunder” in the kingdom this winter.

MBS is also the architect of Saudi Arabia’s year-old war in Yemen. Initially it was called Operation Decisive Storm but then the war settled into a stalemate so the name was changed. The Saudis and their allies, especially the United Arab Emirates, captured the southern port of Aden but have been unable to wrest control of the capital Sanaa from Zaydi Shia rebels called Houthis and their partner, former Yemeni President Ali Abdullah Saleh.

A fragile cease-fire began last month. Political talks are underway in Kuwait between the rival Yemeni groups but there has been little progress. Meanwhile the Saudis and Emiratis have driven al Qaeda out of several cities along the southeast coast of Yemen. Al Qaeda in the Arabian Peninsula is regrouping and is far from destroyed. But it no longer is the main beneficiary of the war.

The Yemeni people have paid an enormous cost. Both sides have been guilty of egregious violence. The Saudi blockade has left millions of Yemenis at risk of malnutrition and without medical help. The rebels have starved the city of Taiz for months.

The Saudis claim they acted to prevent Iran from creating a puppet regime on the kingdom’s southern border. They were concerned when the Houthis set up direct air links from Sanaa to Tehran and offered use of the port of Hodeida to Iran. Hezbollah and Iran have provided some military advisers to the Houthis, but their influence on the rebels is limited.

The king and his son are pro-American but disenchanted with President Barack Obama. He has sold the kingdom over $100 billion in arms on his watch, according to the Congressional Research service. Obama has backed the Saudi-Yemen war with diplomatic, logistical, and intelligence support. U.S. advisers are now on the ground fighting al Qaeda.

But the Saudis cannot forgive Obama for abandoning Egypt’s President Hosni Mubarak in 2011. If one autocrat could be thrown under the bus, who might be next? They don’t like the Iran nuclear deal and believe Obama has been indecisive in Syria. MBS says he wants America to do more, not less, in the region. He is courting American journalists and think tanks.

King Salman has already dismissed one succesor. His half-brother, Crown Prince Muqrin, was removed from office a year ago without warning or explanation. The 80-year-old king could remove the current crown prince, his nephew Prince Mohammed bin Nayef, and elevate MBS at any time. The old guard in the royal family, which believes MBS is reckless and inexperienced, won’t like it, but they have few options to resist. If the king does put his son in the crown prince position the kingdom will skip a whole generation. It’s already been a remarkable journey for MBS.

This piece was originally published in The Daily Beast.

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President Obama is right to keep at it in Afghanistan, argues a new policy brief by Michael O’Hanlon, senior fellow and director of research for the Brookings Foreign Policy program.

Some have criticized the president’s decision to maintain a significant troop presence there (5,500 troops), instead of following through on the planned military withdrawal. But Afghanistan remains very important to American security, O’Hanlon contends, and the situation in the country is far from hopeless in spite of recent setbacks. We should reinvigorate American efforts in Afghanistan, he argues—not returning to levels seen in previous years, but ramping up somewhat from our current posture.

O’Hanlon calls Obama’s resolve in Afghanistan commendable, but writes that he and his administration are still making mistakes on U.S. policy toward the war-torn country. He advises that Washington make two specific changes to its military strategy in Afghanistan:

1. Allow U.S. and NATO airpower to target the Islamic State and the Taliban (currently, they can only fight those groups if directly attacked). The narrow rules of engagement constraining foreign forces were intended to push Afghan armed forces to defend their territory themselves. While a worthy goal, O’Hanlon says, these rules often prevent us from attacking ISIS (though the targeting strategy towards the group may be changing) as well as the Taliban. They also impose unrealistically high demands on Afghan forces and make too fine a distinction between an array of aligned extremist groups operating in the country.
2. Expand U.S. force presence from the current 5,500 troops to around 12,000 for a few years. In O’Hanlon’s opinion, our current numbers are not enough to work with fielded Afghan forces, and skimping on ground forces has contributed to security challenges in places like Helmand, for instance, which experienced new setbacks in 2015. More broadly, leaders in Washington and Brussels should stress the value of a long-term NATO-Afghanistan partnership, rather than emphasizing an exit strategy. This will signal Western resolve to the Taliban and other groups. While the next commander in chief should set the United States on a gradual path toward downsizing American troops in Afghanistan, he believes it would be a mistake for Obama to do so in the short term.

The long haul

O’Hanlon also argues that the United States needs to take a longer-term perspective on key political and economic issues in Afghanistan. On the economic front, there seems to be little thinking about an agricultural development plan for Afghanistan, associated infrastructure support, and land reform, among other challenges. On the political front, conversations often tend to focus on shorter-term issues like organizing parliamentary elections, reforming the Independent Election Commission, or modifying the current power-sharing arrangement. In the process, conversations about foundational political strategy focusing on Afghan institutions and the health of its democracy get short-changed. The parliament is in need of reforms, for instance, as is the political party system (which should encourage Afghans to group around ideas and policy platforms, rather than tribes and patronage networks).

O’Hanlon concludes that the situation in Afghanistan today, while fraught, is understandable given the Taliban’s resilience and NATO’s gradual withdrawal of 125,000 troops. We should not be despondent, he writes—rather, we should identify specific strategies that can help improve the situation. At the end of the day, Afghans must make the big decisions about the future of their country. But as long as the United States and its partners are still providing tremendous resources—and as long as security threats emanating from South Asia continue to threaten the United States—leaders in Washington should use their influence wisely.

Editor's Note : In this piece from South Asia Hand, Teresita Schaffer and her husband, Howard Schaffer, reflect on how India and Pakistan sometimes find it difficult to shift gears to solve problems, even when they would greatly benefit from doing so. The authors develop this theme more fully in their forthcoming book, "India at the Global High Table: The Quest for Regional Primacy and Strategic Autonomy." The book will be published by Brookings Institution Press this spring.

A deadly avalanche that killed ten Indian soldiers earlier this month on the disputed 20,000 foot high Siachen glacier in Kashmir received extensive coverage in the Indian and Pakistani media. The avalanche prompted some commentators in both countries to call for an early settlement of what seemed to them and to many others (including ourselves) a senseless dispute.

Their voices were largely drowned out in India by an outpouring of patriotic fervor that cast the dead soldiers as “Bravehearts” who had died for their country. The Indian Defense Minister publicly dismissed pleas that both sides pull back from the 47-mile long glacier where they have confronted one another since 1984. Possibilities for a settlement seem remote.

Siachen is one of several disputes between India and Pakistan that range in importance from the future status of Kashmir to the precise location of a small stretch of their international boundary near the Indian Ocean. The Siachen dispute arose because the Line of Control drawn between the contending armies in Kashmir terminates in the high Himalayas. India and Pakistan have different versions of where it should go from there as it makes its way toward the Chinese border. This made the glacier a no-man’s land.

Anticipating a Pakistani move in 1984 to seize Siachen, the Indian army struck first. Since then it has controlled most of the glacier, including the main range. Pakistan also deploys troops in the area. Published figures say that the two countries together maintain about 150 outposts. Published figures would put the numbers of troops somewhere around 1000-2000 for each side. These are small numbers for both armies, but there is a long and complicated logistical and support chain that goes with them. India’s formal reports to parliament put the numbers of soldiers killed from 1984 to date at just under 900; Pakistani losses are variously estimated at 1000-3000.

Some fighting took place in the earlier years, but a ceasefire was worked out in 2003 and remains in place. The real enemy is nature, in this high altitude freezing desert. There have been no deaths by enemy fire in recent years. At the post most recently struck by an avalanche, the oxygen is so thin that it cannot support fire for cooking. Over time, both sides learned to deal more effectively with the bitter cold and piercing winds. The mudslides and avalanches that have kept up a steady stream of death have been triggered both by climate change and by human activity that unsettled the packed snow on the glacier itself. The recent disaster was by no means the most deadly: in April 2012, 140 Pakistani soldiers were buried by another avalanche.

Sporadic efforts to resolve the dispute have included the idea of converting Siachen into an “international peace park.” Less idealistic approaches have focused on the demilitarization of the glacier, but only after both sides had reached an agreement delineating the areas they had occupied before withdrawing and pledging not to try to take them back. These efforts won some support within the government headed by Indian National Congress party leader Manmohan Singh in the 2000s. But they were stoutly opposed by the Indian Army, one of the few security issues on which the normally apolitical uniformed military has taken a public stand.

This was particularly evident in 2006, when India and Pakistan seemed to be coming close to an agreement on the issue. In a telegram later released by Wikileaks, the U.S. Embassy in New Delhi reported in May of that year that “Army Chief J.J. Singh appears on the front page of the Indian Express seemingly fortnightly to tell readers the Army cannot support a withdrawal from Siachen.” The embassy went on to note that “given India’s high degree of civilian control over the armed forces, it is improbable that Gen. Singh could repeatedly make such statements without Ministry of Defense civilians giving it at least tacit approval.” It concluded that “[w]hether or not this is the case, a Siachen deal is improbable while his – and the Army’s – opposition continues to circulate publicly.” After the most recent tragedy, LtGen D. S. Hooda, who heads the Northern Command of the Indian army, has maintained this position. He was quoted in a Kashmiri paper as saying that despite these tragic casualties, India must remain in its present positions. He specifically ruled out the mutual demilitarization suggested by Pakistan.

The Indian public has had ample opportunity to read about the terrible human cost of Siachen, but civilian public opinion is unlikely to force the issue. For Indians, the avalanche tragedy was heightened by the apparently miraculous survival of one of the soldiers, who was reportedly buried under twenty-five feet of snow for six days before being rescued. Medically evacuated to New Delhi, he was visited in the hospital by Prime Minister Narendra Modi and became an instant, highly publicized hero. His death a couple of days later made him a national martyr.

Siachen has been one of the issues discussed between India and Pakistan in the on-again, off-again dialogue they initiated in the late ‘90s. Plans to recommence these wide-ranging discussions in January were postponed following the attack on an Indian air base by Kashmiri dissidents whom the Indians were convinced had been directed from within Pakistan.

Progress on Siachen is unlikely when and if these talks actually begin. Although the Modi government was willing to exchange with Bangladesh a small number of enclaves along their border, abandoning territory in Kashmir would strike a much different nerve both in the ruling BJP, the army, and the country at large. (It would be easier for the Pakistanis to accept since their military, which calls the shots on these issues, could argue that Pakistan had got the better deal by forcing the Indians off the main glacier range.)

So the issue is likely to continue to perplex outsiders like ourselves. Retired Indian Army friends have told us how important Siachen is for Indian security. But we find it difficult to accept the assertion that Siachen is a potential invasion route. The difficulty both Pakistan and India have had sustaining small forces in that terrain would be magnified many-fold if one attempted a major military operation. By the same token, we wonder how important Siachen would be in India’s strategy against China. It has long struck us as a great waste of men and material which, were the two sides to act rationally, could be satisfactory resolved. Worse, the deaths suffered by both sides are only likely to increase as climate change increases the risk of avalanches and mudslides.

But Indians and Pakistanis are not the only people in the world who don’t always act rationally on emotionally-charged issues.

A number of policymakers and analysts in the United States have called for countries like China and India to “do more” in the Middle East. Arguably, both Beijing and Delhi are doing more—though perhaps not in the way these advocates of greater Asian engagement in the Middle East might have wanted. President Xi Jinping recently traveled to the region and India’s Prime Minister Modi will return there over the weekend. After quick trips to Brussels for the India-EU Summit and a bilateral, as well as to Washington for the Nuclear Security Summit, Indian Prime Minister Narendra Modi will head to Riyadh tomorrow. The trip reflects not just the importance of Saudi Arabia for India but also the Middle East (or what India calls West Asia) and the opportunity this particular moment offers to Indian policymakers.

The Middle East has been crucial for India for decades. It’s been a source of energy, jobs, remittances, and military equipment, and holds religious significance for tens of millions of Indians. It’s also been a source of concern, with fears about the negative impact of regional instability on Indian interests. But today, as Modi visits, there’s also opportunity for Indian policymakers in the fact that, for a number of reasons, India is important to Saudi Arabia and a number of Middle Eastern countries in a way and to an extent that was never true before. 

It’s a two-way street

As it has globally, India has a diversified set of partnerships in the Middle East, maintaining and balancing its relationships with the Gulf Cooperation Council countries, Iran, and Israel. The region remains India’s main source of imported oil and natural gas (58 percent of its oil imports and 88 percent of its liquefied natural gas imports in 2014-15 came from the Middle East). In addition, as of January 2015, there were 7.3 million non-resident Indians in the region (64 percent of the total). These non-resident Indians remitted over $36 billion in 2015 (52 percent of the total remittances to India). Add to that India’s Sunni and Shiite populations (among the largest in the world), counter-terrorism cooperation with some countries, India’s defense relationship with Israel, the desire to connect with Afghanistan and Central Asia through Iran, and the potential market and source of capital it represents for Indian companies, and it becomes clear why this region is important for India. 

But, with many Middle Eastern countries pivoting to Asia or at least giving it a fresh look, India arguably has more leverage than it has ever had in the past. There have been a number of reasons why these countries have been looking east recently: 

• traditional strategic partnerships in flux and questions about the U.S. role in the region; 
• the economic slowdown in Europe and the U.S. following the 2008 financial crisis; 
• changing global energy consumption patterns; 
• growing concerns about terrorism in the region; 
• And, in Israel’s case, the boycott, divestment, and sanctions movement. 

In this context, India has some advantages. Its economy is doing relatively well compared to that of other countries and offers a market for goods and services, as well as potentially an investment destination. India, for example, has become Israeli defense companies’ largest foreign customer. 

Crucially for the oil and natural gas-producing states in the region, India also continues to guzzle significant—and growing—quantities of both. But, today, Delhi has buyer’s power. Why? Because oil prices are relatively low and there’s a lot of gas on the market, traditional buyers are looking elsewhere for fossil fuels or looking beyond them to cleaner energy sources. India, too, has more options and has been diversifying its sources of supply (compare India’s 74 percent dependence on the Middle East for oil in 2006-07 to the lower 58 percent that it gets from there now). 

India might still be dependent on the Middle East for energy, but now the Middle East also depends on India as a market.

Thus, India might still be dependent on the Middle East for energy, but now the Middle East also depends on India as a market. This has altered dynamics—and India’s increased leverage has been evident, for example, in the renegotiated natural gas supply deal between Qatar’s RasGas and India’s Petronet, which came with lower prices and waived penalties. Even countries like Iran, which now have more options for partners and have not hesitated to point that out to Delhi, still have an interest in maintaining their India option. Regional rivalries might have made Delhi’s balancing act in the region more complicated, but it also gives each country a reason to maintain its relationship with India. 

And the Modi government has been looking to take advantage of this situation. While its Act East policy received a lot more attention over the last couple of years—from policymakers and the press—this region hasn’t been missing from the agenda or travel itineraries. For example, Modi has traveled to the United Arab Emirates and met with Iranian President Hassan Rouhani on the sidelines of the last Shanghai Cooperation Organization conference, and the Indian president has traveled to Israel, Jordan, and the Palestinian territories. The Indian foreign minister has visited Bahrain, Israel, the Palestinian territories, Jordan, Oman, and the UAE and also participated the first ministerial meeting of the Arab-India Cooperation Forum in Manama earlier this year. The Modi government has also hosted the emir of Qatar, the crown prince of Abu Dhabi, the Bahraini, Iranian, Omani, Saudi, Syrian, and UAE foreign ministers, as well as the Israeli defense minister to India.

China’s increased activity in the region, as well as Pakistan’s engagement with Iran and the rush of European leaders to the latter, have led to calls for speedier action.

But there have been concerns that this engagement is not sufficient, particularly relative to that of some countries. For example, China’s increased activity in the region, as well as Pakistan’s engagement with Iran and the rush of European leaders to the latter, have led to calls for speedier action. The Indian foreign secretary’s recent comment that “we are no longer content to be passive recipients of outcomes” in this region also seemed to reflect the understanding that Delhi needs to be more proactive about deepening its relationships with the countries in the region, rather than waiting for them to take shape organically or just reacting to events as they occur. 

The Saudi connection

It is in this context that Modi travels to Riyadh. The relationship with Saudi Arabia is one of the key pillars of India’s Middle East policy. A major source of oil, jobs, and remittances, it is also a destination for over 400,000 Indians who go to the country for Hajj or Umra every year. In addition, in recent years, there has been more security cooperation, with Riyadh handing over individuals wanted in India and the two countries working together on countering money laundering and terrorism financing. 

The relationship has not been without problems from Delhi’s perspective. Just to list a few: 

• the Saudi-Pakistan relationship; 
• diaspora-related issues, including the treatment of Indian workers in-country and efforts towards Saudization that might limit employment opportunities for Indian expatriates;
• ideology-related concerns, particularly funding from Saudi Arabia for organizations in India, which might be increasing the influence of Wahhabism in the country; and
• regional dynamics, including Saudi Arabia’s rising tensions with Iran that has had consequences for Indian citizens, for example, in Yemen from where Delhi had to evacuate 4,640 Indians (as well as 960 foreigners).

More recently, incidents involving Saudi diplomats in India have also negatively affected (elite) public perceptions of the country, though the broader impact of this, if any, is unclear. Over the medium-to-long term, there are also concerns about potential instability within Saudi Arabia.

During Modi’s trip, however, the emphasis will be on the positives—not least in the hope that these might help alleviate some of the problems. The prime minister will be hosted by King Salman, who visited India as crown prince and defense minister just before Modi took office. He will also meet a slate of Saudi political and business leaders. The Indian wish-list will likely include diversification of economic ties, greater two-way investment, as well as more and better counter-terrorism cooperation. 

There will not be a large diaspora event—as Modi has done in Australia, Singapore, the UAE, United Kingdom, and the United States—but the prime minister will engage privately with members of the Indian community. He will also meet with Indian workers employed by an Indian company that is building part of the Riyadh metro. It is not hard to assess the reason for this particular engagement, given increased sensitivity in India (particularly in the media) about the treatment of citizens abroad, as well as the government’s interest in making a pitch for Indian companies to get greater market access. But, with Riyadh’s interest in creating jobs for Saudis, Modi will also try to highlight that Indian companies are contributing to the training and employment of locals (especially women) by visiting another Indian company’s all-female business process service center.

This will reflect the broader theme of highlighting to Riyadh and Saudis that it is not just India that benefits from the relationship—they do too. Some in India hope this has an additional effect: of giving Riyadh a reason not to let its relationship with Pakistan limit that with India, and perhaps occasionally making it willing to use some of its leverage with that country to India’s benefit. Despite recent irritants in the Saudi-Pakistan relationship, however, Delhi is realistic about the limits of weaning Riyadh away from Islamabad.

So does all this mean India will “do more” in the Middle East? For all the reasons mentioned above, the country has been involved in the region for a number of years—though, as the Indian foreign secretary has noted, this involvement was not in large part the product of active state policy. Indian interests in the region will likely increase in the future and, thus, so will its corporate and official engagement. But that engagement might not be what some American observers have in mind. As India’s capabilities grow, it might do more in terms of providing maritime security, intelligence sharing, evacuating expatriates when necessary, and contributing to U.N. peacekeeping operations. It could also potentially do more in terms of capacity building within these countries with the support of the host governments. There might also be scope for India to expand its West Asia dialogue with countries like the United States. But it will likely remain wary of picking sides or getting involved in non-U.N.-sanctioned military interventions in the region unless its interests are directly affected (the previous BJP-led coalition government did briefly consider—and then reject—joining the United States coalition in the Iraq war, for instance).

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On May 9, Filipinos elected a new president, Rodrigo Duterte. The long-time mayor of Davao City is the first Philippine president to hail from the southern islands of the archipelago. There, he established a “can-do” reputation on the back of brutal crackdown on crime, which won him the sobriquet “the Punisher.” During his controversial, profanity-laced campaign (his comments on rape, for instance, are truly regrettable), the tough-talking, cavalier eventual winner was described as the “Donald Trump of the Philippines.” He established that his priorities would be to confront crime, drugs, and corruption with a firm hand. Indeed, during a televised debate, Duterte claimed he was even prepared to kill his own children if they were involved in drugs.

Getting the Philippines out of its funk

Duterte’s success reflects a mood in Philippine society today. The Philippines has been a beacon of democracy in Southeast Asia for some time. Long before the Arab Spring or “Reformasi” (the massive social movement that brought down Suharto’s 32-year rule in Indonesia in 1998), the “People’s Revolution” against the Marcos regime in 1986 fired the imagination. 

Yet until very recently, the Philippines had not reaped any economic dividends from democratization. For many years following the “People’s Revolution,” the Philippine economy lurched along, plagued by endemic corruption and incompetent leadership. So deep was the malaise, the country became known as the new “sick man of Asia.” The lack of economic opportunity drove its women—among the most highly educated in the world—to seek employment abroad as housemaids and domestic helpers (remittances from these sources account for 10 percent of GDP). The issue is in fact a larger one, as there is a growing educated class frustrated with the lack of opportunity and upward social mobility. It is this mood that Duterte has tapped into.

[T]here is a growing educated class frustrated with the lack of opportunity and upward social mobility.

It remains to be seen though, now that he has won, if Duterte can “walk the talk.” The fact is that Duterte’s anti-establishment credentials and populist positions on poverty and corruption run sharply athwart an oligarchy that has long been an entrenched part of Philippine society. 

Despite impressive economic growth rates over the last few years under the Benigno Aquino III administration, the Philippines has been beset by a growing wealth disparity. To get at this problem, Duterte will have to have to leave behind his provincial mindset to govern at the national level, where these problems are amplified. Specifically, he will have to deal with a rent-seeking culture and a powerful aristocracy that controls huge chunks of the economy. It will take more than tough talk and populism to create a more equitable distribution of wealth and opportunity.

In the neighborhood

It is still too early to say, but indications are that foreign policy issues will probably not be a priority for Duterte, with two exceptions (neither of which are of his own choosing). Given his unpredictability, few would venture to say with any certainty how he might act on them. 

First, Duterte will have to handle the fallout from the arbitration tribunal rulings on the Philippine case against China’s massive claims in the South China Sea. Most observers agree that from the 15 items awaiting the tribunal’s decision, the majority will be ruled in favour of the Philippines. This would constitute a moral victory for Manila, but would also pose potential problems for the new government in terms of relations with China. Probably mindful of this, Duterte has already spoken of his readiness to engage in dialogue with China on the South China Sea. More to the point, given his likely emphasis on domestic economic issues, it is quite possible that Duterte will pursue a more pragmatic policy towards Beijing with an eye to Chinese investments in infrastructure development. On the other hand, true to character, Duterte also declared that he would set out on his own jet ski to the South China Sea to plant the Philippine flag. Populist posturing aside, at issue is whether Duterte’s unpredictability will jeopardize Manila’s current alignment with fellow ASEAN claimant, Vietnam, or its ongoing support for American efforts to exercise freedom of navigation rights in the South China Sea in response to China’s expansive claims.

Second, Duterte will be in office when the Philippines assumes the chairmanship of ASEAN in 2017. On the occasion of its 50th anniversary (ASEAN was formed in 1967), the Association would be looking to the Philippines, a founder-member, to demonstrate much-needed regional leadership. At stake is nothing less than the unity of ASEAN, which of late has come under increasing strain because of the South China Sea disputes. Duterte said very little about ASEAN during his campaign. Yet one thing should be clear. Given the complex challenges that the region is likely to face in the coming year, Duterte would be well-advised that the imperative of ASEAN unity will require more diplomatic nous and less saber-rattling bravado.

Editors’ Note: How do states manage their armed forces, domestic politics, and foreign affairs? Stephen Cohen, senior fellow with the India Project at Brookings, has studied this and a range of other issues in Southeast Asia since the 1960s. In a new book, titled “The South Asia Papers: A Critical Anthology of Writings,” Cohen reflects on more than a half-century of scholarship on India, describing the dramatic changes he has personally witnessed in the field of research. The following is an excerpt from the book’s preface.

[In the 1960s, questions about how states manage their armed forces] were not only unasked in the South Asian context by scholars; they were also frowned on by the Indian government. This made preparation both interesting and difficult. It was interesting because a burgeoning literature on civil–military relations in non-Western states could be applied to India. Most of it dealt with two themes: the “man on horseback,” or how the military came to power in a large number of new states, and how the military could assist in the developmental process. No one had asked these questions of India, although the first was relevant to Pakistan, then still governed by the Pakistani army in the form of Field Marshal Ayub Khan.

***

During my first and second trips [in the 1960s] my research was as a historian, albeit one interested in the army’s social, cultural, and policy dimensions. I discovered, by accident, that this was part of the movement toward the “new military history.” Over the years I have thus interacted with those historians who were interested in Indian military history, including several of my own students. 

While the standard of historians in India was high in places like the University of Calcutta, military history was a minor field, just as it was in the West. Military historians are often dismissed as the “drums and trumpets” crowd, interested in battles, regiments, and hardware, but not much else. My own self-tutoring in military history uncovered something quite different: a number of scholars, especially sociologists, had written on the social and cultural impact of armed forces, a literature largely ignored by the historians. While none of this group was interested in India, the connection between one of the world’s most complicated and subtle societies, the state’s use of force, and the emergence of a democratic India was self-evident. 

***

A new generation of scholars and experts, many of them Indians (some trained in the United States) and Indian Americans who have done research in India, have it right: this is a complex civilizational-state with expanding power, and its rise is dependent on its domestic stability, its policies toward neighbors (notably Pakistan), the rise of China, and the policies of the United States. 

The literature that predicts a conflict between the rising powers (India and China), and between them and America the “hegemon,” is misguided: the existence of nuclear weapons by all three states, plus Pakistan, ensures that barring insanity, any rivalries between rising and established states will be channeled into “ordinary” diplomatic posturing, ruthless economic competition, and the clash of soft power. In this competition, India has some liabilities and many advantages, and the structure of the emerging world suggests a closer relationship between the United States and India, without ruling out much closer ties between China and India. 

There remain some questions: Can the present Indian leadership show magnanimity in dealing with Pakistan, and does it have the foresight to look ahead to new challenges, notably environmental and energy issues that require new skills and new international arrangements? Importantly, some of the best work on answering these questions is being done in India itself, and the work of Kanti Bajpai, Amitabh Mattoo, Harsh Pant, C. Raja Mohan, Rajesh Basrur, and others reveals the maturity of Indian thinking on strategic issues. It has not come too soon, as the challenges that India will face are growing, and those of Pakistan are even more daunting.

Event Information

U.S. policy towards South Asia has changed considerably over the last seven decades. The nature of U.S. engagement with different countries in the region has varied over time, as has the level of U.S. interest. While India and Pakistan have received the most attention from Washington, the United States has also been engaging with Afghanistan, Bangladesh, Bhutan, Maldives, Nepal, and Sri Lanka, albeit to different degrees. 

On May 19, The India Project at Brookings hosted a panel discussion exploring the past and present U.S approaches towards South Asia, based on Senior Fellow Stephen Cohen’s new book, “The South Asia Papers: A Critical Anthology of Writings” (Brookings Institution Press, 2016). Panelists also assessed the Obama administration’s policies toward the region, and the challenges and opportunities that lie ahead for the next U.S. administration. Fellow Tanvi Madan, director of The India Project, moderated the discussion.

After the discussion, the panelists took questions.

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• U.S. policy toward South Asia: Past, present, and future

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• U.S. policy toward South Asia: Past, present, and future

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An American drone strike that killed leader of the Afghan Taliban Mullah Akhtar Mohammed Mansour may seem like a fillip for the United States’ ally, the embattled government of Afghanistan’s President Ashraf Ghani. But as Vanda Felbab-Brown writes in a new op-ed for The New York Times, it is unlikely to improve Kabul’s immediate national security problems—and may create more difficulties than it solves.

The White House has argued that because Mansour became opposed to peace talks with the Afghan government, removing him became necessary to facilitate new talks. Yet, as Vanda writes in the op-ed, “the notion that the United States can drone-strike its way through the leadership of the Afghan Taliban until it finds an acceptable interlocutor seems optimistic, at best.”

[T]he notion that the United States can drone-strike its way through the leadership of the Afghan Taliban until it finds an acceptable interlocutor seems optimistic, at best.

Mullah Mansour's death does not inevitably translate into substantial weakening of the Taliban's operational capacity or a reprieve from what is shaping up to be a bloody summer in Afghanistan. Any fragmentation of the Taliban to come does not ipso facto imply stronger Afghan security forces or a reduction of violent conflict. Even if Mansour's demise eventually turns out to be an inflection point in the conflict and the Taliban does seriously fragment, such an outcome may only add complexity to the conflict. A lot of other factors, including crucially Afghan politics, influence the capacity of the Afghan security forces and their battlefield performance.

Nor will Mansour’s death motivate the Taliban to start negotiating. That did not happen when it was revealed last July’s the group’s previous leader and founder, Mullah Mohammad Omar, had died in 2013. To the contrary, the Taliban’s subsequent military push has been its strongest in a decade—with its most violent faction, the Haqqani network, striking the heart of Kabul. Mansour had empowered the violent Haqqanis following Omar’s death as a means to reconsolidate the Taliban, and their continued presence portends future violence. Mansour's successor, Mawlawi Haibatullah Akhundzada, the Taliban’s former minister of justice who loved to issue execution orders, is unlikely to be in a position to negotiate (if he even wants to) for a considerable time as he seeks to gain control and create legitimacy within the movement.

The United States has sent a strong signal to Pakistan, which continues to deny the presence of the Afghan Taliban and the Haqqani network within its borders. Motivated by a fear of provoking the groups against itself, Pakistan continues to show no willingness to take them on, despite the conditions on U.S. aid.

Disrupting the group’s leadership by drone-strike decapitation is tempting militarily. But it can be too blunt an instrument, since negotiations and reconciliation ultimately depend on political processes. In decapitation targeting, the U.S. leadership must think critically about whether the likely successor will be better or worse for the counterinsurgency endgame.

Next week, Americans will be looking westward to the Tuesday Democratic primary in California. Meanwhile, in Washington, President Obama and then the U.S. Congress will host someone very familiar with electoral politics: Indian Prime Minister Narendra Modi.

This will be the third Modi-Obama summit since the Indian prime minister took office two years ago. Since their first phone call on May 16, 2014, the two leaders have also met multiple times at regional and global gatherings or on the sidelines of those summits. This frequency has been a departure from the past and has even led some—particularly in the Indian media—to ask: why is Modi visiting the United States again? A simple answer would be “because he was invited,” and there are a few reasons why the White House extended that invitation and why Modi accepted.

At a time when [Obama] is being criticized for not having done enough or for doing the wrong thing on foreign policy, he can point to the U.S.-India relationship as a success.

Achievements logged

For President Obama, there’s the legacy issue. At a time when he is being criticized for not having done enough or for doing the wrong thing on foreign policy, he can point to the U.S.-India relationship as a success, particularly in the context of the rebalance to the Asia-Pacific. U.S. popularity is up in India according to polls and three-quarters of those surveyed in India last year expressed confidence in Obama on world affairs. 

President George W. Bush left office after having signed the historic civil nuclear deal with India. Obama can claim to have put quite a few more runs on the board. At a recent Senate Foreign Relations Committee hearing, Assistant Secretary of State for South and Central Asia Nisha Biswal indeed laid out some key developments in the relationship in the Obama era: 

Strengthening friendships

For Prime Minister Modi and the Indian government, the visit represents another chance to strengthen India’s partnership with a country that Modi has called “a principal partner in the realization of India’s rise as a responsible, influential world power.” The United States is India’s largest trading partner and a crucial source of capital, technology, knowledge, resources, remittances, and military equipment. It can also help ensure multi-polarity in Asia, which is a crucial goal for Indian policymakers. 

The visit is also an opportunity for Modi to engage with legislators and the American private sector—two key constituencies that can help determine the pace of progress in the relationship. House Speaker Paul Ryan has invited the Indian leaders to address a joint session of the U.S. Congress, and Modi will be the fifth Indian prime minister to do so (India’s first prime minister Jawaharlal Nehru gave back-to-back speeches to the House and Senate separately in 1949). But it’ll likely hold special significance for the prime minister and his supporters, given that from 2005 to 2014, then Gujarat Chief Minister Modi was denied entry into the United States. 

A busy calendar

Modi’s has a packed schedule in Washington. On June 6, he’ll visit Arlington National Cemetery, meet with the heads of think tanks, and participate in an event involving the recovery and return of stolen Indian antiquities. On June 7, he’ll meet with President Obama, who will also host a lunch for him, and then Defense Secretary Ashton Carter. That will be followed by meetings with business leaders and an address to the U.S.-India Business Council. Expect to see Modi highlight and defend his government’s two-year record on the economy and make a pitch for U.S. businesses to increase their involvement in India—and particularly some of Modi’s flagship initiatives such as Make in India and Digital India.

Expect to see Modi highlight and defend his government’s two-year record on the economy and make a pitch for U.S. businesses to increase their involvement in India.

June 8 will be devoted to Congressional engagement, including the joint address, a lunch hosted by Speaker Ryan, and a reception hosted by the House and Senate Foreign Relations Committees, as well as the India Caucus. Modi will acknowledge the legislature’s role and significance in developing the U.S.-India relationship, and will likely highlight the democratic values the two countries share, as well as how India and Indians have contributed to the United States, global growth, and the international order. Importantly, in an election year, Modi will likely note the bipartisan nature of the relationship—there’s no indication yet that he will or wants to meet any of the presidential candidates on this visit, though the sessions potentially offer opportunities for him to do so. Republican members of Congress will also seek to highlight their role in the development of the partnership. The interactions on Capitol Hill will also be a chance for Modi to address some Congressional concerns—such as human rights, Iran, non-proliferation, the investment climate—and for Modi to call for the two countries to “accommodat[e] each other’s concerns.”

Do not, however, expect to hear the word “Pakistan”—the Indian government wants to avoid hyphenation and get Americans to think of India beyond India-Pakistan terms. Nor should you expect to hear the word “China,” though there might be subtle attempts to note the contrast with that other Asian giant and make the case for the United States to support the rise of a large Asian democracy that can demonstrate that democracy and development aren’t mutually exclusive.

Parting glance between Modi and Obama

And what’s on the agenda for the Modi-Obama meeting? In one sense, the last few years have signaled a regularization of U.S.-India leader-level summits (with bilateral meetings in 2013, 2014, 2015, and 2016). Over the last two years, high-level meetings have been effective as action-forcing events. This time, officials have been managing expectations, broadly describing the visit as “part of consolidating and celebrating the relationship.” So this is a chance to recognize the steps that the other side has taken to increase the run-rate of the relationship—particularly on defense and security fronts—and tie up some loose ends with an eye towards sustaining momentum into the next administration (without necessarily tying its hands). 

In terms of focus areas, the governments have emphasized (to varying degrees) economic ties, energy and climate change, as well as defense and security cooperation. The Obama administration would like to India ratify the Paris agreement, for instance—unlike in the United States, India doesn’t require legislative approval. Indian officials recognize the importance of this issue to Obama, but are also concerned about U.S. policy continuity given the presumptive Republican nominee’s stand on the issue. Delhi, in turn, is partly using the shared desire for India to meet its clean energy commitments to make the case for an American full-court press to facilitate Indian membership in the Nuclear Suppliers Group (NSG)—similar to the Bush administration’s efforts to help India get an NSG waiver in 2008. The U.S. position has been that India is ready for NSG membership and meets requirements for membership of the Missile Technology Control Regime, and it has supported Indian application and eventual membership of both, as well as two other nonproliferation and export control regimes. Asked if Modi would ask Obama to “go to bat for India” with others on this, the Indian foreign secretary didn’t answer directly but noted: “countries that feel we’re doing the right thing...if they take it upon themselves to…articulate their positions and talk to others, this is what friends do for each other.” Modi himself will visit two other NSG members (Switzerland and Mexico) just before and after the U.S. visit partly to make the case for India’s membership.

The visit will also be a chance to cement and highlight cooperation in and on the Indo-Asia-Pacific region. In addition, observers will be watching to see whether the two countries will sign the Logistics Exchange Memorandum of Agreement (LEMOA)—the logistics support agreement that the Indian defense minister said in April that Secretary Carter and he had “agreed in principle to conclude”—or whether there’ll be further announcements with regard to the Defense Technology and Trade Initiative. There’ll also be interest in whether the countries get serious talks restarted on a Bilateral Investment Treaty, and whether Westinghouse and the Nuclear Power Corporation of India can finalize an agreement to set up reactors in India. Overall, there is a desire to take the relationship to the “next level” but not necessarily in terms of a big deal; rather there’s a search for ways to deepen, operationalize, and institutionalize cooperation—such as through arrangements to share information in the counterterrorism space—and facilitate interaction between an increasing number of stakeholders.

While highlighting areas of convergence, both sides will likely also discuss the divergences that remain—perhaps including the east-west divergence related to Pakistan, the north-south divergence related to Russia, the security-economic divergence with more progress in the partnership on the former than the latter, and the potential expectations-reality divergence. And while the direction of the U.S.-India relationship is likely to remain the same in the near future, how the two countries deal with these divergences will determine the trajectory and the pace of the relationship.

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Editors’ Note: For the United States to succeed in its mission in Afghanistan, it is essential that the Obama administration sustain the current level of U.S. forces there. Recognizing this, John Allen spearheaded a move to ask President Obama to do so, in the following open letter to which former leaders from the military and diplomatic corps signed on. This letter originally appeared on The National Interest.

Washington, DC

June 3, 2016

Dear Mr. President,

We are writing, as Americans committed to the success of our country’s Afghanistan mission, to urge that you sustain the current level of U.S. forces in Afghanistan through the remainder of your term. Aid levels and diplomatic energies should similarly be preserved without reduction. Unless emergency conditions require consideration of a modest increase, we would strongly favor a freeze at the level of roughly ten thousand U.S. troops through January 20. This approach would also allow your successor to assess the situation for herself or himself and make further adjustments accordingly.

The broader Middle East is roiled in conflicts that pit moderate and progressive forces against those of violent extremists. As we saw on 9/11 and in the recent attacks in Paris, San Bernardino and Brussels, the problems of the Middle East do not remain contained within the Middle East. Afghanistan is the place where Al Qaeda and affiliates first planned the 9/11 attacks and a place where they continue to operate—and is thus important in the broader effort to defeat the global extremist movement today. It is a place where Al Qaeda and ISIS still have modest footprints that could be expanded if a security vacuum developed. If Afghanistan were to revert to the chaos of the 1990s, millions of refugees would again seek shelter in neighboring countries and overseas, dramatically intensifying the severe challenges already faced in Europe and beyond.

In the long-term struggle against violent extremists, the United States above all needs allies—not only to fight a common enemy, but also to create a positive vision for the peoples of the region. Today, aided by the bipartisan policies of the last two U.S. administrations, Afghans have established a democratic political system, moderately effective security forces, a much improved quality of life, and a vibrant civil society. Afghans are fighting and dying for their country, and in our common battle against extremism, with more than five thousand police and soldiers laying down their lives annually each of the past several years.

Afghanistan is a place where we should wish to consolidate and lock down our provisional progress into something of a more lasting asset. It is a Muslim country where most of the public as well as government officials want our help and value our friendship. Afghanistan is also a crucial partner in helping to shape the calculations of Pakistan, which has been an incubator of violent extremism but which might gradually be induced to cooperate in building a regional order conducive to peace and economic progress.

You have rightly prioritized Afghanistan throughout your presidency and have successfully achieved several crucial objectives. You have prevented the reemergence of a terrorist sanctuary in Afghanistan, from which attacks on Americans might emanate. You have helped Afghanistan develop security forces so that it is principally Afghans who are defending Afghanistan, thereby enabling a 90 percent reduction in the U.S. military presence relative to its peak (and a two-thirds reduction relative to what you inherited in 2009). You have established a long-term strategic partnership with Afghanistan that can address common threats from extremist groups based in Pakistan. To our minds, these are significant accomplishments. They have established much of the foundation for pursuing the ultimate goals of stabilizing Afghanistan and defeating extremism in the region.

To be sure, there have been significant frustrations in Afghanistan along the way. All of us have lived and experienced a number of them. All of us have, like you, deeply lamented the loss of each American life that has been sacrificed there in pursuit of our mission objectives and our national security.

Yet, though the situation is fraught, we have reason to be confident. President Ghani, Chief Executive Abdullah, and many brave Afghans are working hard to rebuild their country. NATO allies and other partners remain committed to the mission. The level of support we must provide to enable continued progress is much lower than in earlier periods.

Our group is taking full stock of the situation in Afghanistan and will make a broader range of recommendations available to the next U.S. president on the interrelated subjects of governance, the economy, and security. But as an interim measure, and with the NATO Warsaw summit as well as other key decision points still looming on your watch, we urge you to maintain the current U.S. troop strength in Afghanistan through the end of your term. Based on longstanding experience in the country as well as recent trips to Afghanistan by some of us, this step would be seen as a positive reaffirmation of America’s commitment to that nation, its people and its security. It would likely have helpful effects on refugee flows, the confidence of the Taliban, the morale of the Afghan military and Afghan people, the state of the Afghan economy and perhaps even the strategic assessments of some in Pakistan. Conversely, we are convinced that a reduction of our military and financial support over the coming months would negatively affect each of these.

Sincerely,

Ambassadors to Afghanistan

Ryan Crocker

James Cunningham

Robert Finn

Zalmay Khalilzad

Ronald Neumann

Military Commanders in Afghanistan

John Allen

David Barno

John Campbell

Stanley McChrystal

David Petraeus

Special Representatives for Afghanistan/Pakistan

James Dobbins

Daniel Feldman

Marc Grossman

On the invitation of House Speaker Paul Ryan, who stated that “[t]he friendship between the United States and India is a pillar of stability in an important region of the world,” Indian Prime Minister Narendra Modi will be addressing a joint meeting of the U.S. Congress on June 8. There have been five Indian prime ministers who’ve given such remarks: Jawaharlal Nehru (1949, to separate House and Senate gatherings), Rajiv Gandhi (1985), P.V. Narashima Rao (1994), Atal Bihari Vajpayee (2000) and Manmohan Singh (2005). Their speeches were reflective of the contemporary global context and the state of the U.S.-India relationship, but they did share some themes as well. Modi will likely emphasize that he is transforming India (as these other prime ministers asserted as well) and want to highlight the change he is bringing, but his speech might also echo some of these past themes. Below is a look back at what India’s prime ministers have said to Congress—a past glimpse that is also instructive in terms of how much the U.S.-India relationship has changed.

On October 13, 1949, two years of India’s independence (and a few days after the communists had taken over China), Jawaharlal Nehru addressed back-to-back meetings of the House and Senate. Declaring that “Nehru puts India on freedom’s side,” The New York Times noted in a front-page story that "Pandit Nehru expressed pride for India's past, hope for her future, but acute awareness of her present economic difficulties."

On June 13, 1985, Rajiv Gandhi, Nehru’s grandson who had won a major electoral victory the previous year, became the first Indian premier to address a joint meeting of Congress. In an above-the-fold story featuring a photo of a smiling Gandhi, Vice President George H.W. Bush and House Speaker Tip O’ Neill, The New York Times particularly remarked on the 40-year-old prime minister’s youthfulness and remarks on Afghanistan.

On May 18, 1994, a few years after the collapse of the Soviet Union and after having introduced a wave of economic reforms, P.V. Narasimha Rao addressed Congress. Ten days before that The New York Times featured a story on his finance minister Manmohan Singh and the reforms the two leaders were undertaking. Reflecting the relative disinterest in India in the U.S. at the time, the Times did not, however, cover Rao’s speech.

On September 14, 2000, Atal Bihari Vajpayee, India’s first prime minister from the Bharatiya Janata Party (BJP) addressed the U.S. Congress. His two years in power till then had seen India conduct nuclear tests, a crisis with Pakistan seen as a turning point in U.S.-India relations because the U.S. called out Pakistan for its actions, and a U.S. presidential visit to India after two decades. A jovial photo of the prime minister and President Clinton made the front page a couple of days later, but the speech itself did not get coverage in the newspaper of record.

On July 19, 2005, Manmohan Singh, who’d just reached a civil nuclear agreement with President Bush, addressed Congress. His visit—and that agreement—received front-page coverage, but the speech itself was not covered separately.

In his speech, Prime Minister Modi will likely stress the challenge that terrorism poses globally and regionally, and highlight U.S.-India the counter-terrorism cooperation. The last three Indian premiers have addressed this challenge as well.

President Obama reiterated U.S. support for Indian membership of the Nuclear Suppliers Group and encouraged other members to welcome Indian into the group. The U.S. and India have come a long way on a subject that has come up in every prime minister’s speech since Rajiv Gandhi.

Every prime minister has outlined their economic policy objectives and achievements—more recent ones, have highlighted the opportunity India represents. While this was the focus of Modi’s speech to the U.S.-India Business Council, expect this to be a subject he covers in his remarks to Congress as well.

Indian prime ministers have seen the U.S. as a crucial source of technology, and often made the case for technological assistance or transfers or collaboration.

There has also been the linkage between democracy and development in various ways: highlighting the development task India is undertaking in a democratic context, stressing that democracies are better placed over the long-run to innovate and develop equitably, and suggesting that the U.S. has an interest in helping India’s democratic experiment—now democratic engine—succeed.

Whether to address concerns in Congress, note the similarities between India and the U.S., or stress India’s multi-cultural, multi-ethnic, multi-lingual and multi-religious nature, each prime minister has talked about diversity, equality and freedom.

In their speeches, each of the prime ministers have noted the contributions of the growing numbers of Indian-Americans and non-resident Indians in the United States. Modi has made the diaspora a key focus; expect him to emphasize its role.

A week before his speech to Congress, Vajpayee famously asserted that “India and the USA are natural allies.” He’s not the only one to have noted the “natural” character of the relationship, though there’s been different reasoning behind that assertion or hope.

Editors’ Note: International relations almost never progress in a linear fashion. In this excerpt from a new Brookings India briefing book titled “India-U.S. Relations in Transition,” Tanvi Madan examines some of the high-impact but low-probability events that may affect the relationship in the future: so-called “black swans.”

U.S. Secretary of Defense Ashton Carter recently said that the U.S.-India defense partnership would become “an anchor of global security.” But in an increasingly uncertain world, the partnership between these two large and relatively stable democracies can also potentially be a critical anchor of stability more broadly. Here are some black swans—low-probability, high-impact and, in hindsight, predictable events—that could exacerbate regional and global uncertainty and instability, and affect both countries’ interests and, potentially, their relationship. 

• Regional Assertiveness: What might be the impact of greater Chinese or Russian assertiveness—even aggression? How might Russian actions against Ukraine, Georgia, or even a NATO member change not just U.S. calculations, but India’s as well? How will it affect their bilateral relationship? What about a China-U.S. confrontation over Taiwan or in the South China Sea? Or Chinese action against a country like Vietnam, with which India has close ties and which the United States is increasingly engaging? What if there is a sudden or serious deterioration of the situation in Tibet, perhaps in the context of a leadership transition? 
• Chaos in India’s West: What happens if there is political uncertainty in Saudi Arabia, a country with which the United States has close—albeit tense—ties, and which is India’s largest oil supplier and home to millions of Indian citizens? How will the United States and India react if Iran, after all, decides to acquire nuclear weapons? What about the chain reaction either of these scenarios would set off in the Middle East? Closer to India, what if Afghanistan relapses into a total civil war? Or if there is a sharp downturn in stability within Pakistan, with the establishment challenged, the threat of disintegration, and challenges posed by the presence of nuclear weapons? 
• Shocks to the Global Economy: What if a confluence of circumstance leads to a major spike in oil prices? What will the impact be of a major economic crisis in China, not just on the global economy or Chinese domestic stability, but also in terms of how Beijing might react externally? How will the United States and India deal with this scenario? And what if the eurozone collapses under the weight of refugee flows, Britain’s threatened exit, or national financial crises? 
• The Epoch-Defining Security Shock: Both the United States and India have suffered major attacks relatively recently—the United States on September 11, 2001 and India on November 26, 2008. But what if there is another major terrorist attack in either country or on the two countries’ interests or citizens elsewhere? Or a major cyber incident that takes down critical infrastructure? 
• Environmental Challenges: What if rising sea levels cause a catastrophe in Bangladesh resulting in thousands, if not hundreds of thousands, crossing over into India? And then there are the various climate change-related challenges that can perhaps be considered “white swans”—more-certain events, whose effects can be more easily estimated. 

In addition, one could think of domestic black swans in each country and some in the bilateral context. These might include dramatic domestic political developments, or a spark causing a major backlash against immigrants in the United States or American citizens in India. 

As the U.S.-India partnership has developed, and India’s regional and global involvements have increased, the U.S.-India conversation—and not just the official one—has assumed greater complexity. This will help the two countries tackle black swans in the future. So will the further institutionalization of discussions on global and regional issues of the sort already underway. Amid the day-to-day priorities, there should be room for discussing contingencies for black swans in dialogues between the U.S. Deputy Secretary of State and the Indian Foreign Secretary, in the two countries’ dialogue on East Asia, and in discussions between the two policy planning units.

Quoting Walt Whitman in his speech to a joint meeting of Congress last week, Indian Prime Minister Narendra Modi declared: “there is a new symphony in play.” He was referring to the relationship, but there were some new themes in his speech as well, in addition to a few familiar, predictable ones.

The old

Shared Democratic Values. Modi’s speech covered some of the same ground on shared democratic values as his predecessors. Referring to Congress as a “temple of democracy”—a phrased he’s used in the past for the Indian parliament—and to India’s constitution as its “real holy book,” he stressed that freedom and equality were shared beliefs. In a section that elicited laughter, he also commented that the two countries shared certain practices—legislatures known for bipartisanship and operating harmoniously. Also par for the course was Modi’s emphasis on India’s diversity. An implicit response to critics of India on human rights (including minority rights), freedom of the press, and tolerance of dissent, Modi noted that India’s constitution protected the equal rights of all citizens and enshrined freedom of faith. Echoing former prime minister Atal Bihari Vajpayee’s words on unity in diversity, he asserted “India lives as one; India grows as one; India celebrates as one.” 

Terrorism. Like Vajpayee and Manmohan Singh before him, Modi highlighted the challenge of terrorism, stressing it was globally the “biggest threat.” Acknowledging existing India-U.S. counter-terrorism cooperation, he called for more, including an approach “that isolates those who harbor, support and sponsor terrorists; that does not distinguish between ‘good’ and ‘bad’ terrorists; and that delinks religion from terrorism.” Like his predecessors, Modi did not explicitly mention Pakistan, but alluded to it. He asserted that while it was a global problem, terrorism was “incubated” in India’s neighborhood. In what seemed like a reference to the Congressional hold on the subsidized sale of F-16s to Pakistan, the Indian prime minister also lauded that body for “sending a clear message to those who preach and practice terrorism for political gains. Refusing to reward them is the first step towards holding them accountable for their actions.” 

The Indian Economy. From Jawaharlal Nehru onward, prime ministers have outlined their domestic objectives in speeches to Congress, highlighting the reforms they’ve undertaken. Modi did too, highlighting India’s growth rate and economic opportunities, while acknowledging that much remained to be done. And there were also subtle responses to criticisms of Indian economic policy: for example, the remark about legislative gridlock suggested that American policymakers should understand why some reforms in India are taking time; the quip about India not claiming intellectual property rights on yoga was a rejoinder to those who give India a hard time about intellectual property rights (especially in the pharmaceutical sector). He also noted that in the past “wagers were made on our failure,” and yet Indians have time and again found a way to survive and succeed.

The new

Anti-Declinism. For those promising to make America great again, Modi had a message: it already is. In a speech to the U.S.-India Business Council the day before, he exuded optimism—not just about India, but the United States as well, asserting that, to him, “America is not just a country with a great past; it is a country with an exciting future.” In his speech to Congress, he referred to the U.S. as “great” at least four times and spoke of its “innovative genius.” Recalling that he’d thus far visited half of all American states, he noted what he believed was the United States’ “real strength”: Americans’ ability to dream big and be bold. 

In an election year when the nature and extent of American engagement with the world is being debated, Modi acknowledged the country’s global contributions and called for a continued U.S. role in the world. He applauded—and led members of Congress in a round of applause—for “the great sacrifices of the men and women from ‘The Land of the Free and the Home of the Brave’ in service of mankind.” With the exception of Nehru, who paid his respects at the Tomb of the Unknown Soldier, Indian premiers have tended not to mention American troops—partly a result of differing views on the Korean, Vietnam, and Iraq wars. Modi, on the other hand, explicitly mentioned U.S. efforts in Afghanistan, where “the sacrifices of Americans have helped create a better life.” 

In a more challenging, complex, and uncertain world, he asserted that U.S.-Indian engagement could make an impact, by “promoting cooperation not dominance; connectivity not isolation; respect for global commons; inclusive not exclusive mechanisms; and above all adherence to international rules and norms.” (No prizes for guessing the country that went unnamed). 

The Open Embrace. Modi-Obama hugs have fueled many a tweet. But the speech signaled and reflected a much broader embrace—an India-U.S. one that has been in the works for at least the last 17 years but has become much more visible in the last two. In 2000, addressing Congress, Vajpayee called for the two countries to “remove the shadow of hesitation that lies between us and our joint vision.” Not all his compatriots will agree, but Modi declared: “Today, our relationship has overcome the hesitations of history” and recalled Vajpayee labeling the two as “natural allies.” Listing the ways the relationship had grown closer, he emphasized that this “remarkable story” was not a partisan effort: “[t]hrough the cycle of elections and transitions of administrations the intensity of our engagements has only grown.” He also talked about what the two countries could do together, and stressed that the relationship was good for India. While he’s previously called the United States “a principal partner in the realization of India’s rise as a responsible, influential world power,” he went further this time, stating: “In every sector of India’s forward march, I see the U.S. as an indispensable partner.” 

Not a Free-Rider. But throughout the speech, Modi asserted that this relationship benefited both countries “in great measure,” with a “positive impact on the lives” of people in each. Echoing Singh, he noted that many members of Congress indeed believed that “a stronger and prosperous India is in America’s strategic interest.” Modi made the case that India is not a free rider—that through its businesses, market, talent, and diaspora it is contributing to American economy and society. The day before, in his speech to business leaders, he stressed that India was also “poised to contribute as a new engine of global growth” (and made a pitch for support to such “democratic” engines).

Modi furthermore highlighted Indian contributions to global and regional peace and prosperity, noting, for example, that its “soldiers too have fallen in distant battlefields” for freedom and democracy (alluding to the millions that fought in the World Wars). He also highlighted India’s efforts in Afghanistan, its troop contribution to U.N. peacekeeping operations, its role in humanitarian assistance and disaster relief operations in Maldives, Nepal, and Sri Lanka, and its evacuation operations in Yemen in which it rescued Americans as well. In addition, Modi noted India’s contributions of ideas, whether yoga or non-violent protest. And he stressed that India would be a responsible stakeholder and security provider—one that, in partnership with the United States, could “anchor peace, prosperity and stability from Asia to Africa and from Indian Ocean to the Pacific. It can also help ensure security of the sea lanes of commerce and freedom of navigation on seas.” But he also called for international institutions to reflect this role and “the realities of today.”

Members of Congress, for their part, will look to see whether and how Modi’s rhetoric will translate into reality. The prime minister suggested that it won’t always be the way the United States would like. He didn’t use the term “strategic autonomy,” but talked of “autonomy in decision-making”—while noting that it, as well as “diversity in our perspectives,” weren’t bad things for the partnership. And, as is his preferred style, he came up with 3Cs to characterize the state of the relationship: “comfort, candor, and convergence.” Whether they remain characteristic of the partnership, and to what degree, will partly depend on who is the next U.S. president and how she or he sees the U.S. role in the world and India’s place in it.

A recent article in The Guardian caught my eye: “Report accuses government of increasing inequalities in developing countries by financing academies at the expense of state schools.” The report, conducted by the U.N. Committee on the Rights of the Child, was an attack on U.K. aid money being linked to private education providers since the rapid increase in such schools may be contributing to sub-standard education. In particular, they cited the U.K. government’s investments in the Nairobi-based and for-profit Bridge International Academies.

I’ve worked on private education extensively throughout my career and do not believe there is anything wrong with private schools, but in this particular case I couldn’t agree more. But to be clear, it’s the funding strategy that’s the problem.

Private schooling is on the rise in a number of poor countries, and Pakistan—where my education research is focused—is no exception. The majority of these schools are no longer the elite institutions of yore, but low-cost alternatives fighting for survival in a highly competitive environment. These schools have mushroomed in response to increased parental demand and poor public alternatives, but also to the greater availability of teachers in the local labor market.

More importantly, research increasingly demonstrates that there is absolutely nothing wrong with private schools. There's a summary of this research available here; specific examples on India (more here) and Pakistan are also available.

Some key are takeaways from this research are:

• Private schools charge low fees (about $1 to$2 a month in Pakistan).
• The quality is almost certainly higher compared to government schools in the vicinity.
• At least in Pakistan, there is no significant segregation between public and private schools in terms of parental wealth, education, or caste.
• The most significant barrier to attendance in low-cost private schools is not cost—it’s distance. Put simply, there just aren’t enough of them around.

If there is a cheaper and better alternative to public schooling, shouldn’t we encourage children to shift and thus improve the quality of education for all?

Perhaps. But when the rubber from these well-intentioned aid policies hits the road of rural Pakistan, Kenya, or Ethiopia, a very different sort of model emerges. Instead of supporting private schooling, donors end up supporting private schools (or at best private school chains), which is an entirely different action with little theoretical backing. In fact, economic theory screams that governments and donors should almost never do that.

Donors say the problem is that the low-cost private school market is fragmented with no central authority that can be “contracted with.” No one has a good model on how to work with a competitive schooling sector with multiple small players—ironically, the precise market structure that, according to economics, leads to efficiency.

In reality, I suspect the problem goes deeper. Most low-cost private school owners don’t do well at donor conferences. They don’t know how to tell compelling human-interest stories about the good they do. But what they are excellent at is using local resources to ensure that their schools meet the expectations of demanding parents.

The first is a problem of accountability. Public schools are accountable, through a democratic system, to citizens of the country. Private schools are accountable to the parents. And donor-funded private school chains are account to the donors. While both citizen-led accountability and direct accountability to parents have problems, they are grounded in centuries of experience. It’s unlikely that donors in a foreign land, some of whom can’t visit the schools they fund for security reasons, can do better than either citizens or parents.

The second is a problem of market structure. When one private school or private school chain receives preferential treatment and funding, without allowing other private schools to apply for the same funds, the donor is picking winners (remember Solyndra?). The need for private schools as an alternative to government schools is insufficient justification for donors to put their thumbs on the scale and tilt the balance of power towards a pre-identified entity.

In a recent experiment, my colleagues and I gathered direct proof for this assertion. We gave untied grants to low-cost private schools with a twist. In certain villages, we randomly selected a single private school for the grant. In others, we gave the grant to every private school in the village. Our preliminary results show that in villages where we gave the grant to a single school, the school benefitted enormously from an increase in enrollment. Where we gave the grant to multiple private schools, the enrollment increase was split among schools. But only in the villages where we gave the grant to every school did test-scores for children increase.

What happened? When a single private school receives the grant, knowing that the other schools cannot react due to a lack of funds, they engage in “customer poaching” to increase their profits at the expense of others. Some have argued that Uber’s recent fundraising is precisely such an effort to starve competitors of funding.

When you equally support all private schools, customer poaching does not work, and the only way to increase profits and generate returns is to increase the size of the market, either through higher overall enrollments or through new quality offerings.

The first strategy supports pre-identified private schools and concentrates market power. The second, by providing opportunities for all private schools, improves education for children.

Sure, some private school chains and schools are making positive impact and deserve the support they can get. But funding such schools creates the wrong institutional structures and are more likely to lead to disasters than successes (Greg Mortensen and 3 cups of tea, anyone?).

In general, the Government’s responsibility towards the education of children is two-fold:

• Alleviate the market constraints that hold back private schooling without favoring one school over the other—letting parents decide who succeeds and who does not.
• Support and improve public schools to provide an alternative because there will always be children who cannot enroll in private schools, either because they are too expensive or because they are too far away, or because they don’t offer the instruction “basket” that some parents want.

In short, foreign aid should play no part in supporting private schools rather than private schooling.

Editors’ Note: In Southeast Asia, democratization went hand in hand with Islamization, writes Shadi Hamid. So where many assume that democracy can’t exist with Islamism, it is more likely the opposite. The Aspen Institute originally published this post.

In both theory and practice, Islam has proven to be resistant to secularization, even (or particularly) in countries like Turkey and Tunisia where attempts to privatize Islam have been most vigorous. If Islam is exceptional in its relationship to politics — as I argue it is in my new book Islamic Exceptionalism — then what exactly does that mean in practice?

As Western small-l or “classical” liberals, we don’t have to like or approve of Islam’s prominent place in politics, but we do have to accept life as it is actually lived and religion as it is actually practiced in the Middle East and beyond. What form, though, should that “acceptance” take?

If Islam is exceptional in its relationship to politics ... then what exactly does that mean in practice?

First, where the two are in tension, it means prioritizing democracy over liberalism. In other words, there’s no real way to force people to be liberal or secular if that’s not who they are or what they want to be. To do so would suggest a patronizing and paternalistic approach to the Middle East — one that President Barack Obama and other senior U.S. officials, and not just those on the right, have repeatedly expressed. If our own liberalism as Americans is context-bound (we grew up in a liberal democratic society), then of course Egyptians, Jordanians or Pakistanis will similarly be products of their own contexts.

One should be suspicious of “models” of any kind, since models, such as Turkey’s, tend to disappoint. That said, there are good examples outside of the Middle East that deserve a closer look. Indonesia and to a lesser extent Malaysia are often held up as models of democracy, pluralism, and tolerance. Yet, perhaps paradoxically, these two countries feature significantly more shariah ordinances than, say, Egypt, Tunisia or Morocco.

In one article, the Indonesia scholar Robin Bush documents some of the shariah by-laws implemented in the country’s more conservative regions. They include requiring civil servants and students to wear “Muslim clothing,” requiring women to wear the headscarf to receive local government services, and requiring demonstrations of Quranic reading ability to be admitted to university or to receive a marriage license. But there’s a catch. According to a study by the Jakarta-based Wahid Institute, most of these regulations have come from officials of ostensibly secular parties like Golkar. How is this possible? The implementation of shariah is part of a mainstream discourse that cuts across ideological and party lines. That suggests that Islamism is not necessarily about Islamists but is about a broader population that is open to Islam playing a central role in law and governance.

Islamists need secularists and secularists need Islamists. But in Indonesia and Malaysia, there was a stronger “middle.”

In sum, it wasn’t that religion was less of a “problem” in Indonesia and Malaysia; it’s that the solutions were more readily available. Islam might have still been exceptional, but the political system was more interested in accommodating this reality than in suppressing it. There wasn’t an entrenched secular elite in the same way there was in many Arab countries. Meanwhile, Islamist parties were not as strong, so polarization wasn’t as deep and destabilizing. Islamism wasn’t the province of one party, but of most. In a sense, Islamists need secularists and secularists need Islamists. But in Indonesia and Malaysia, there was a stronger “middle,” and that middle had settled around a relatively uncontroversial conservative consensus.

In Southeast Asia, then, democratization went hand in hand with Islamization. To put it more simply, where many assume that democracy can’t exist with Islamism, it is more likely the opposite. What distinguishes Indonesia and Malaysia, as well as their electorates, isn’t some readiness to embrace the gradual privatization of religion. The difference is that their brand of Islamic politics garners much less attention in the West, in part because they aren’t seen as strategically vital and, perhaps more importantly, because the passage of Islamic legislation is simply less controversial domestically. There has been a coming to terms with Islam’s role in public life, where in much of the Middle East, there hasn’t — at least not yet.

In a long-awaited ruling prepared under the United Nations Convention on the Law of the Sea (UNCLOS), an arbitration panel has handed an unequivocal victory to the Philippines in its case against China, which it first filed in early 2013. The arbitration panel deemed invalid virtually all of Beijing’s asserted claims to various islands, rocks, reefs, and shoals in the South China Sea, determining that Chinese claims directly violated the provisions of UNCLOS, which China signed in 1982.

From the outset of Manila’s initiation of the arbitration process, Beijing has refused to participate. However, it did issue a position statement of its own in late 2014, claiming that the arbitration panel violated various UNCLOS provisions and additional agreements signed by the two governments. As the arbitration neared its conclusion, China released a steady stream of editorials and commentaries, claiming that the ruling sought “to deny China’s territorial sovereignty and maritime rights and interests in the South China Sea.” 

Beijing has repeatedly stated that “it does not accept any means of third party dispute settlement or any solution imposed on China.” At the same time, UNCLOS has no enforcement mechanism for carrying out the panel’s judgments. But Beijing’s repeated efforts at shaming and stonewalling have imposed an undoubted cost on its political standing in the region. Moreover, China’s signing of UNCLOS obligated Beijing to compulsory third party determination, though it is not the only power contesting this commitment. 

Beijing’s repeated efforts at shaming and stonewalling have imposed an undoubted cost on its political standing in the region.

The fundamental weakness of China’s policy defense was its reliance on various “historic claims” to most of the maritime expanses of the South China Sea, including areas that directly encroached on the sovereign territory of various neighboring states. Its claims have frequently been encapsulated in the nine-dash line, an ill-defined geographic demarcation initially appearing in a map prepared by cartographers in the Republic of China in 1947 (i.e., prior to the victory of the Chinese Communist Party in 1949). But China’s sweeping claims to “unequivocal sovereignty” failed to address the multiple layers of ambiguity and conflicting judgments found in various policy documents released by Beijing.

Moreover, the arbitration panel emphasized from the outset that its authority did not extend to determinations over sovereignty. Rather, its mandate (distilled from a list of 15 claims in Manila’s original brief) focused on Chinese claims to the continental shelf and to exclusive economic zones extending from land features, reefs, and rocks over which China claimed indisputable sovereignty. The Philippines also contested Chinese activities that infringed on the rights of Filipino fishermen, Beijing’s construction of artificial islands, and the operation of Chinese law enforcement vessels in various shoals. 

Even if Beijing persists in its angry defiance of the arbitration panel’s findings and continues to contest their legitimacy, the sweeping character of the rulings (in a document exceeding 500 pages in length) is impossible to deny. UNCLOS specifically states that land features not deemed an island are entitled only to a 12-mile territorial sea, not to an exclusive economic zone or to a continental shelf. In an especially controversial finding, the panel concluded that Itu Aba (known in Chinese as Taiping Island and the largest land feature in the Spratly Island group and controlled by Taiwan) was not an island; this has been strongly contested by Taipei as well as by Beijing.

The biggest looming issues will focus on how China opts to respond.

The biggest looming issues will focus on how China opts to respond in words and deeds. The arbitration proceeding has triggered strongly nationalistic responses from leaders and experts in China, with many alleging a hidden U.S. hand in the arbitration. American political and military support for the Philippines and other claimants and heightened U.S. air and maritime activities in the South China Sea—all justified as ensuring freedom of navigation in the vital waterways of the region—engenders additional angry responses from the Chinese leadership. 

Beijing continues to insist that it is prepared to enter into bilateral negotiations with Manila over various disputed claims. But with China claiming indisputable sovereignty over various contested features and possessing maritime capabilities that vastly exceed those of any other claimants, will it be prepared to demonstrate flexibility, restrain its responses, and give any credence to the diligent labors of the arbitration panel? Can Beijing envision quiet diplomacy, either with the United States or with regional claimants, as opposed to seeing itself as the endlessly aggrieved party? If Beijing doesn’t exercise restraint and instead takes steps that heighten the risks, these could readily pose new threats to the regional maritime order that cannot possibly be in anyone’s interest. 

The much-awaited rulings of the Permanent Court of Arbitration in The Hague—in response to the Philippines’ 2013 submission over the maritime entitlements and status of features encompassed in China’s expansive South China Sea claims—were released this morning. Taken together, the rulings were clear, crisp, comprehensive, and nothing short of a categorical rejection of Chinese claims.

Among other things, the court ruled China’s nine-dash line claim to the South China Sea invalid because of Beijing’s earlier ratification of the United Nations Convention on the Law of the Sea (UNCLOS). In a move that surprised many observers, the court also ventured a ruling on the status of every feature in the Spratly Islands, clarifying that none of them were islands and hence do not generate an exclusive economic zone (EEZ). Significantly, it ruled that Mischief Reef, which China has occupied since 1995, and Second Thomas Shoal, where China has blockaded Philippine marines garrisoned on an old vessel that was deliberately run aground there, to be within the EEZ of the Philippines.

In the neighborhood

Now that the rulings have been made, what are the implications and way forward for concerned states?

For the Philippines, the legal victory presents a paradoxical challenge for the new government. Prior to the ruling, newly-elected President Rodrigo Duterte indicated on several occasions that he was prepared to depart from his predecessor’s more hardline position on the South China Sea to engage Beijing in dialogue and possibly even joint development. He even hinted that he would tone down Manila’s claim in exchange for infrastructure investment. Given that the ruling decisively turns things in Manila’s favor, it remains to be seen whether the populist Duterte administration would be able to sell the idea of joint development of what are effectively Philippine resources without risking a popular backlash. This will be difficult but not necessarily impossible, given that the Philippines would likely still require logistical and infrastructural support of some form or other for such development projects. 

Since the submission of the Philippine case in 2013, China has taken the position of “no recognition, no participation, no acceptance, and no execution,” as described by Chinese professor Shen Dingli. Beijing continues to adhere to this position, and is likely to dig in its heels given the comprehensive nature of the court’s rejection of China’s claims. This, in turn, will feed the conspiracy theories swirling around Beijing that the court is nothing but a conspiracy against China. 

[T]he rulings are likely to occasion intense internal discussions and debates within the Chinese leadership as to how best to proceed.

Not surprisingly, in defiance of the ruling, China continues to insist on straight baselines and EEZs in the Spratlys. Away from the glare of the media however, the rulings are likely to occasion intense internal discussions and debates within the Chinese leadership as to how best to proceed. Many analysts have the not-unfounded concern that hawkish perspectives will prevail in this debate, at least in the short term—fed by the deep sensibilities to issues of security and sovereignty, and a (misplaced) sense of injustice. This would doubtless put regional stability at risk. Instead, China should do its part to bring the Code of Conduct it has been discussing with ASEAN to a conclusion as a demonstration of its commitment to regional order and stability, and the peaceful settlement of disputes. Beijing should also continue to engage concerned states in dialogue, but these dialogues cannot be conducted on the premise of Chinese “unalienable ownership” of and “legitimate entitlements” in the South China Sea. 

ASEAN will be hosting several ministerial meetings later this month, and the ruling will doubtless be raised in some form or other, certainly in closed-door discussions. For ASEAN, the key question is whether the organization can and will cobble together a coherent, consensus position in response to the ruling, and how substantive the response will be (they should at least make mention of the importance of international law to which all ASEAN states subscribe). For now though, it is too early to tell. 

U.S. policy

As an Asia-Pacific country, the United States has set great stock in the principle of freedom of navigation, and has articulated this as a national interest with regards to the South China Sea. There are however, three challenges for the United States as it proceeds to refine its policy in the region:

1. First, going by the attention it has commanded in Washington, it appears that the South China Sea issue has already become the definitive point of reference of America’s Southeast Asia policy. Southeast Asian states, on the other hand, have expressed their desire precisely that the South China Sea issue should not overshadow or dominate the regional agenda. Hence, even as the United States continues to be present and engaged on South China Sea issues in the region, equal attention, if not more, should be afforded to broaden the scope of their engagement. 
2. Second, in pushing back Chinese assertiveness in the South China Sea, the United States must be careful not to inadvertently contribute to the militarization of the region. There is talk about the deployment of a second carrier group to the region, and the U.S.S. John C. Stennis and U.S.S. Ronald Reagan are already patrolling the Philippine Sea. On the one hand, this is presumed to enhance the deterrent effect of the American presence in the region. Yet on the other hand, Washington should be mindful of the fact that China’s South China Sea claim is also informed by a deep sense of vulnerability, especially to the military activities that the United States conducts in its vicinity. 
3. Finally, in its desire to reassure the region, the United States has sought to strengthen its relations with regional partners and allies. This is necessary, and it is welcomed. At the same time however, Washington should also ensure that this strengthening and deepening of relations is undergirded by an alignment of interests and shared outlooks. This cannot, and should not, be assumed. 

The International Tribunal on the Law of the Sea has ruled on the case that the Philippines brought in 2013, challenging China's claims and behavior in the South China Sea. International lawyers and the policy commentariat has judged the ruling as a sweeping victory for the Philippines and a significant loss for China, which refused to acknowledge the tribunal's jurisdiction or to take part in the proceedings.

The question going forward is how China will respond. Will it double down on the aggressive and coercive activities of the past six years, behavior that has put most of its East Asian neighbors on guard? Will it continue to interpret the Law of the Sea in self-serving ways that very few countries accept? Or, might China recognize that its South China Sea strategy has been an utter failure and that its best response is to take a more restrained and neighborly approach? 

What got us here?

Critical as the next weeks and months will be, it is also useful to take a look back and examine recent events in the broad context of Chinese foreign and security policy over the last four decades. The premise of that reform policy, initiated in the late 1970s and early 1980s, was that a weak China could best ensure its security by engaging and accommodating the international community, in order to gradually build up all aspects of its national power. The most clear-cut feature of this strategy was to join the global economy: China accepted the leadership of the IMF and World Bank; opened the Chinese economy to international trade and investment; carved out critical roles in global supply chains; accepted the liberalization disciplines of the World Trade Organization; and, more recently, began to provide public goods to other developing economies. Not everyone has benefitted from China's economic engagement, but on balance it has been a signal success.

China's reformist leaders also recognized the value of taking an accommodating stance toward its East Asian neighborhood, of which the United States is a part. One side of accommodation was to execute a skillful diplomacy designed to reduce tensions and avoid conflict unless Beijing's fundamental interests were under threat. Accommodation's other side was to delay the modernization of the Chinese military and exercise restraint in the use of those capabilities that it did create. This made sense because China both lacked the power to challenge the United States and Japan militarily and needed the help of those and other countries to grow economically. 

That approach changed in the early 2000s, when Beijing judged that it would only be secure if it expanded its eastern and southern strategic perimeters into the East and South China Seas. That judgment had its own logic, which maritime territorial disputes and reports of maritime energy and mineral resources only intensified. Thus began a program to build the capabilities to project power into the maritime domain and then use them to press its claims. That campaign created frictions with its neighbors. An increasingly overbearing diplomacy didn't help China's reputation either. 

It’s your move, China

Another part of China's grand strategy has been to integrate itself in the system of international institutions, law, norms, and regimes—both global and regional. This step did not signify a fundamental acceptance of the international order that had emerged and evolved after World War II. Rather, it reflected a belief that China could and should use institutions, law, norms, and regimes to protect China's interests against hegemonic behavior by others, particularly the United States. (Conversely, the "West" believed that binding Beijing to "its" order would restrain Chinese bad behavior.)

The tribunal’s decision on the Philippines case was a clear blow to China's long-standing strategy to use international law to advance or protect its interests, prompting feelings of buyer's remorse. The hardy perennial that China has been the victim of humiliation at the hands of Western countries will only add to the resentful reaction. Of course, China rejects the widely-held view that it is bound by the ruling even though it did not participate in the case. Also, this is a court with no enforcement powers, so Beijing could simply ignore the ruling and use its military and law enforcement assets to continue its past pattern of aggressive and coercive actions—essentially increasing the salience of its military power. That course of action would only further push the test of wills between it and Washington, even though neither benefits from a downward spiral of increased competition and conflict.

Beijing could simply ignore the ruling...That course of action would only further push the test of wills between it and Washington, even though neither benefits from a downward spiral of increased competition and conflict.

China could go even further than simply doubling down. Contrary to the tribunal's ruling, it could treat the Spratly Islands as islands under international law; define them as a single unit for purposes of defining maritime boundaries; accordingly draw straight baselines around them; then declare for itself an exclusive economic zone that covered most of the waters of the South China Sea; and finally, over time, challenge the rights of other countries to freedom of navigation and the exploitation of natural resources. For the lay-reader, what is important here is that none of these actions would accord with the widely accepted principles of the Law of the Sea. (Ultimately, China might someday insist to the countries of East Asia that it will no longer tolerate their relying on China for economic prosperity and depending on the United States for security.)

On the other hand, China could conduct a serious assessment of how it has exercised its diplomatic, coercive, and legal power over the last half-decade. Is China really more secure after alienating its East Asian neighbors through heavy-handed diplomacy, stimulating a very public coercive counter-response from the United States (too public in my view), and suffered a significant defeat in the international court of law? Might a tactical retreat at this stage, including a recommitment to international law and institutions, better serve China's strategic interests than more domineering behavior?

A key principle of Chinese diplomatic statecraft beginning in the 1980s was taoguang yanghui, a phrase that basically means to exercise restraint as one steadily builds one's power. The Chinese national security establishment has forgotten that principle as it conducted its recent policy towards the South China Sea. It would do well to revive it.

The development community issued a collective sigh of relief last week when the U.S. Senate, after a seven-month delay, finally confirmed a new Administrator of the United States Agency for International Development (USAID). In addition to dealing with the many global development issues, Gayle Smith also has the task of making good on the Obama administration’s commitment to make USAID a preeminent 21st century development agency.

While a year might seem a short time for anyone to make a difference in a new government position, Gayle Smith assuming the lead in USAID should be seen more as the capstone of a seven-year tenure guiding U.S. global development policy.  She led the interagency process that produced the 2010 Presidential Policy Determination on Development (PDD), and has been involved in every administration development policy initiative since, including major reforms inside USAID.

The five items below are suggestions on how Smith can institutionalize and take to the next level reforms and initiatives that have been part of the development agenda of which she has been a principal architect.

The PPD lays out key elements for making our assistance programs more accountable, including “greater transparency” and “more substantial investment of resources in monitoring and evaluation.”

USAID staff have designed a well thought out Cost Program Management Plan to advance the public availability of its data and to fulfill the U.S. commitment to the International Assistance Transparency Initiative (IATI). What this plan needs is a little boost from the new administrator, her explicit endorsement and energy, and maybe the freeing-up of more resources so phases two and three to get more and better USAID data into the IATI registry can be completed by the end of 2016 rather than slipping over into the next administration. In addition, the fourth and final phase of the plan needs to be approved so data transparency is integrated into the planned Development Information Solution (DIS), which will provide a comprehensive integration of program and financial information. 

Meanwhile, in January 2011 USAID adopted an evaluation policy that was praised by the American Evaluation Association as a model for other government agencies. In FY 2014, the agency completed 224 evaluations. The new administrator could provide leadership in several areas that would raise the quality and use of USAID’s evaluations. She should weigh in on the sometimes theological debate over what type of evaluation works best by being clear that there is no single, all-purpose type of evaluation. Evaluations need to fit the context and question to be addressed, from most significant change (focusing solely on the most significant change generated by a project), to performance evaluation, to impact evaluation.   

Second, evaluation is an expertise that is not quickly acquired. Some 2,000 USAID staff have been trained, but mainly through short-term courses. The training needs to be broadened to all staff and deepened in content. This will contribute to a cultural change whereby USAID staff learn not just how to conduct evaluations, but how to value and use the findings.

Third, evaluations need to be translated into learning. The E3 Bureau (Bureau for Economic Growth, Education and Environment) has set the model of analyzing and incorporating evaluation findings into its policies and programs, and a few missions have bought evaluations into their program cycle. This needs to be done throughout the agency. Further, USAID should use its convening power to share its findings with other U.S. government agencies, other donors, and the broader development community.

Current USAID processes are considered rigid and time-consuming. This is not uncommon to large institutions, but in recent years the agency has been seeking more innovative, flexible instruments. The USAID Global Development Lab is experimenting with what is alternatively referred to as the Development Innovation Accelerator (DIA) or Broad Agency Announcement (BAA), whereby it invites ideas on a specific development problem and then selects the authors of the best, most relevant, to join USAID staff in co-creating solutions—something the corporate sector has been calling for—to be involved at the beginning of problem-solving. Similarly, the Policy, Planning, and Learning Bureau is in the midst of redesigning the program cycle to introduce adaptive management, allowing for greater collaboration and real-time response to new information and evolving local circumstances. Adaptive management would allow for more customized approaches and learning based on local context.

Again, the PPD calls for “innovation.” As with accountability, an expression of interest and support from the new administrator, and an articulation of the need to inculcate innovation into the USAID culture, could move these endeavors from tentative experiment to practice.

Gayle Smith has been immersed in guiding U.S. policy in unstable, fragile states. She knows the territory well and cares. The U.S. has been an active participant and leader in the New Deal for Fragile States. The New Deal framework is a thoughtful, comprehensive structure for moving fragile states to stability, but recent analyses indicate that neither members of the G7+ countries nor donors are following the explicit steps. They are not dealing with national and local politics, which are the essential levers through which to bring stability to a country, and are not adequately including civil society. Maybe the New Deal structures are too complicated for a country that has minimal governance. Certainly, there has been insufficient senior-level leadership from donors and buy-in from G7+ leaders and stakeholders. With her deep knowledge of the dynamics in fragile states, Smith could bring sorely needed U.S. leadership to this arena.

The PPD calls for “robust policy, budget, planning, and evaluation capabilities.” USAID moved quickly on these objectives, not just in restoring USAID former capabilities in evaluation, but also in policy and budget through the resurrection of the planning and policy function (Policy, Planning, and Learning Bureau, or PPL) and the budget function (Office of Bureau and Resource Management, or BRM). PPL has reestablished USAID’s former policy function, but USAID’s budget authority has only been partially restored.

Gayle Smith needs to take the next obvious step. Budget is policy. The integration of policy and budget is an essential foundation of evidence-based policymaking. The two need to be joined so these functions can support each other rather than operating in isolated cones. Budget deliberations are not just about numbers; policies get set by budget decisions, so policy and budget need to be integrated so budget decisions are informed by strategy and policy knowledge.

I go back to the model of the late 1970s when Alex Shakow was head of the Policy, Planning, and Coordination Bureau (PPC), which encompassed both policy and budget. Here you had in one senior official someone who was knowledgeable about policy and budget and understood how the two interact. He was the go-to-person the agency sent to Capitol Hill. He could deal with the range of issues that always unexpectedly arise during congressional committee hearings and markups. He could effectively deal with the State Department and interagency meetings on a broad sweep of policy and program matters. He could represent the U.S. globally, such as at the Development Assistance Committee (DAC) and other international development meetings.

With the expansion of the development agenda and frequency of interagency and international meetings, such a person is in even greater need today. USAID needs three or four senior officials—administrator, deputy administrator, associate administrator, and the head of a joined-up policy/budget function —to cover the demand domestically and internationally for senior USAID leadership with a deep knowledge of the broad scope of USAID programs.    

The arguments for the need to reform U.S. food assistance programs are incontrovertible and have been hashed hundreds of times, so no need to repeat them here. But it is clearly in the interests of the tens of millions of people globally who each year face hunger and starvation for the U.S. to maximize the use of its resources by moving its food aid from an antiquated 1950s model to current market realities. There is leadership for this on the Hill in the Food for Peace Reform Act of 2015, introduced by Senators Bob Corker and Chris Coons. Gayle Smith could help build the momentum for this bill and contribute to an important Obama legacy, whether enactment happens in 2016 or under a new administration and Congress in 2017.

Gayle knows better than anyone the Obama development agenda. These ideas are humbly presented as an outside observer’s suggestions of how to solidify key administration aid effectiveness initiatives. 

Keeping with tradition, we start the year with a compendium of forecasts for 2016 from our guest bloggers and ourselves.  At the end of the year, we will assess how we did (for last year’s forecasting performance, click here).

The prevailing sentiment about economic developments during 2016 is decidedly mixed. There are positive and negative views, sometimes from the same source. Here is a sampling:

On the negative side, “emerging economies will continue to disappoint;” “ODA will be squeezed by refugee costs (and climate change financing commitments);” “geopolitical tensions will remain;” “the dollar will be stronger with a severe impact on emerging economies;” and a range of idiosyncratic, political risks: weak governance and terrorist threats in Kenya; declining investor confidence and rising social strife in South Africa; corruption scandals in Brazil; and low oil prices coupled with domestic and geopolitical tensions in Russia.

On the positive side, “oil prices will remain low;” “the Islamic State will be defeated;” “the effect of monetary policy normalization will be very limited;” “food prices will remain low or fall, helping reduce global hunger;” “African countries will improve cereal yields;” “OECD countries will accept a record number of refugees and migrants;” “oil exporters will reform their economies;” and “peace agreements to end the wars in Syria, Libya and Yemen will be signed.”

An emerging theme is whether the disappointments in developing country growth in 2015 stem from idiosyncratic factors in specific countries—especially the BRICS, Turkey, and Indonesia—or whether those idiosyncratic factors, often associated with domestic political developments, are symptomatic of a broader issue of a slowing down of global convergence. Indeed, this theme of whether convergence remains a strong force that will continue to dominate developing country prospects, or a weak force that is all too easily offset by other factors, will likely remain one of the critical unknowns of 2016.

In summary, it is fair to say that with views as diverse as those we received, the picture for 2016 is complicated to say the least.

There is no analytical clarity in the global economy, despite forecasts from most major organizations (e.g., the IMF) that growth will be better in 2016 than in 2015 in every region except perhaps East Asia (although Asia will still probably record higher growth than anywhere else).

The fears generated by a slowing of one of the main engines of the global economy over the past decade, namely China, are palpable. The big story of 2016 is perhaps that it is an emerging economy, China, which is the major source of uncertainty over this year’s global outlook. While prospects for the major advanced economies—the USA, Europe, and Japan—are relatively stable, it is the developing world where there is the least clarity over the short- term outlook. Certainly, the volatility in global stock markets in the first days of the year suggests that volatility, risk aversion, and differences of views over short-term developments are all high as 2016 begins.

But there is at least one bright note. Almost certainly, prospects will improve for almost 200 million people who were living in countries that last year remained outside the scope of a normally functioning global economy. In Myanmar, Argentina, Venezuela, Cuba, and Iran, economic conditions will improve as a result of recent political developments. In addition, in 2016 there will probably be at least 100 million more people joining the global middle class—those living in households with incomes of $10-100 a day (2005 PPP). Good news for them but a reminder that the task of moving towards a world with sustainable consumption and production patterns remains huge.

There was one consensus thread among our bloggers—all the Europeans appear consumed by the Euro 2016 soccer event (“Spain, France, or Germany will win”), while only one blogger dared to comment on the Olympics (that Brazil would do twice as well as in 2012). It seems that sports will be less complicated than economics in 2016.

This week, the richest business leaders and investors from around the world will gather in Davos, Switzerland, for the annual meeting of the World Economic Forum. In keeping with tradition, a small portion of the agenda will be devoted to global development and the plight of people living at the other end of the global income distribution.

Philanthropy is one way of linking the fortunes of these disparate communities. What if some of the mega-rich could be persuaded to redistribute their wealth to the extreme poor?

This question may feel hackneyed, but it deserves a fresh hearing in light of a dramatic reduction in the global poverty gap over the past several years (Figure 1). The theoretical cost of transfers required to lift all poor people’s income up to the global poverty line of $1.90 a day stood at approximately $80 billion [1] in 2015, down from over $300 billion in 1980. (Values expressed here are in 2015 market dollars.)

Source: Authors’ calculations based on OECD, World Bank

This reduction can be unpacked into two parts. The first is a steep decline in the number of people living below the global poverty line. This is increasingly recognized as one of the defining features of the era. A U.N. goal to halve the poverty rate in the developing world between 1990 and 2015 was nearly achieved twice over. The second and lesser-known factor is the shrinking average distance of the world’s poor from the poverty line. In 1980, the mean daily income of those living below $1.90 was $1.09. In 2012 it was 25 cents higher at $1.34. (Values expressed here in 2011 purchasing power parity dollars.)   

Despite this good news, global poverty still demands attention. Hundreds of millions of people continue to suffer this most acute form of deprivation. In several countries, the prospects for ending poverty over the next generation, in line with a recently endorsed successor U.N. goal, appear challenging at best.

Figure 1 illustrates that in 2006, global aid flows exceeded the cost of the global poverty gap for the first time. This suggests that the elimination of extreme poverty should be possible simply through a more efficient allocation of aid. However, this confuses foreign aid’s goals and functions. The bulk of official foreign aid is used in the provision of public goods, such as physical infrastructure and strengthening institutions. Only 2 percent is directed to social payments and their administration. If the elimination of extreme poverty is to be achieved through targeted transfers, it depends on sources other than foreign aid.

The main source of transfers to the poor is welfare programs run and financed by developing countries themselves. These social safety nets have emerged as an increasingly prominent instrument in the toolkit of developing economy governments. Eighty-three percent of developing economies employ unconditional cash transfer programs, although many are small in scale. Several countries are in the process of building the apparatus for more accurate targeting and authentication through the assembly of beneficiary registries and the rolling out of identity programs. In at least 10 developing countries, social safety nets have succeeded in establishing a social floor by lifting all those people under the poverty line up above the threshold. In the vast majority, however, safety nets are insufficiently targeted or generous for that purpose, reflecting not only resource constraints, but also political choices that can be resistant to change.

A complementary approach is to consider the role of private mechanisms and wealth. NGOs were among the original pioneers of cash transfers in the developing world. More recently, the NGO GiveDirectly has designed a compelling new method of charitable giving that sends money directly to the poor using digital monitoring and payment technology. Its approach has received strong endorsements from independent charity assessors and has been validated by impact evaluations. Yet the scale of its existing donations remains tiny relative to the global poverty gap.

This is where Davos’s global elite could come into play: What difference could a philanthropic donation from the world’s richest people make?

To explore this question, we begin by identifying those developing countries that are home to a least one billionaire. (Our analysis is restricted to billionaires by data, not by the potential largesse of the world’s multi-millionaires. We focus our attention on billionaires in the developing world given the traditional focus of philanthropy on domestic causes.) Let’s assume that the richest billionaire in each country agrees to give away half of his or her current wealth among his or her fellow citizens, disbursed evenly over the next 15 years, roughly in accordance with the Giving Pledge promoted by Bill Gates. That money would be used exclusively to finance transfers to poor people based on their current distance from the poverty line. Transfers would be sustained at the same level for the full 15-year period with the aim of providing a modicum of income security that might allow beneficiaries to sustainably escape from poverty by 2030.

Table 1 summarizes the key results. In each of three countries—Colombia, Georgia, and Swaziland—a single individual's act of philanthropy could be sufficient to end extreme poverty with immediate effect. Swaziland is an especially striking case as it is among the world’s poorest countries with 41 percent of its population living under the poverty line. In Brazil, Peru, and the Philippines, poverty could be more than halved, or eliminated altogether if the billionaires could be convinced to match Mark Zuckerberg’s example and increase their donation to 99 percent of their wealth.

Source: Authors’ calculations based on Forbes, International Monetary Fund, PovcalNet, and the World Bank. Poverty rates post-transfer calculated based on average distance of the poor from the poverty line.  

In other countries—Nigeria, Tanzania, Uganda, and Angola—the potential impact on poverty is only modest. A number of factors account for differences between countries, but two factors that penalize African countries are especially noteworthy. First, the depth of poverty in Africa remains high, with 15 percent of the population living on less than $1.00 a day; and second, Africa has relatively high prices compared to other poor regions, which means more dollars are required to deliver the same amount of welfare.  

For those nations that have more than one billionaire, an alternative scenario is that the country’s club of billionaires makes the pledge together and combines resources to tackle domestic poverty. This would end poverty in China, India, and Indonesia—countries that rank first, second, and fifth globally in terms of the absolute size of their poor populations. The last two columns of Table 2 describe the results.

Table 2. The potential impact on poverty of collective billionaire giving pledges

Source: Authors’ calculations based on Forbes, IMF, PovcalNet, and the World Bank. Poverty rates post-transfer calculated based on average distance of the poor from the poverty line.

This exercise is of course laden with simplifying assumptions. [2] It is intended to provoke discussion, not to provide definitive figures. Moreover, it is open to debate whether transfers represent the most cost-effective way of sustainably ending poverty, the extent to which transfers ought to be targeted, the efficacy of building private transfer programs alongside public safety nets, and whether cash transfers represent the most appropriate use of billionaires’ philanthropy.  

What is less contestable is that a falling global poverty gap presents an opportunity for more systematic efforts for poverty reduction. This raises the question: How low does the poverty gap have to fall before we explicitly design programs to bring the remaining poor above the poverty line? We would argue that we are already beyond this point, not least in countries that remain a long way from ending poverty. Were a billionaire at Davos to commit to using his or her wealth in this fashion, it could trigger a powerful demonstration effect of innovative solutions—not just for other billionaires, but for countries that are currently at risk of being left behind.

[1] The cost of the global poverty gap in 2015 is an overestimate compared with the World Bank’s tentative poverty estimate for the same year. This is due to a different treatment of Nigeria. For this exercise, we rely on data from the 2009/10 Harmonized Nigeria Living Standards Survey reported in PovcalNet, despite its well-documented problems, whereas the Bank draws on the 2010/11 General Household Survey.

[2] Simplifying assumptions include: zero administrative costs in identifying the poor, assessing their income, and administering payments with no leakages, or no portion of those costs being borne by billionaires; the efficacy of administering miniscule transfers to those who stand on the margin of the poverty line; and no change in the cost of closing the poverty gap in a country over time, whether due to population growth, an increase or decrease in poverty, or a change in prices relative to the dollar.   

If the vision of the Sustainable Development Goals (SDGs) is that Mother Earth is heading for trouble and we must collectively solve global problems, then the underfunding of global public goods (GPGs) must be addressed. As the world becomes increasingly globalized, the need for global public goods increases: from action on climate change, financial stability, limiting the spread of diseases, management of conflicts, responding to natural disasters, terrorism, and cyber-warfare. At some level even the eradication of extreme poverty and more inclusive and sustainable development could be considered a global public good because more poverty and unequal development breeds conflict, increases environmental stress, state failure, terrorism, and piracy, thereby increasing the need for the global public goods required to address these issues.

Missing in the recently agreed Addis Ababa Action Agenda (AAAA) and in the Paris Conference of Parties (COP21) are steps that should be taken at a global level that will positively impact many countries, such as:

• A global set of standards on migration to curb exploitation and human rights standards for the migrant population;
• Better coordination of monetary and fiscal policies so as to avoid huge volatility in financial markets, which have large costs on vulnerable countries;
• Strengthened global disaster response mechanisms to handle increasing climate volatility and natural disasters;
• No agreement on a global tax institution demanded by many developing countries and civil society groups; and,
• No progress on carbon taxation.

There is considerable underfinancing of GPGs as it is difficult to get countries to pay for activities outside their borders. Official Development Assistance (ODA) has fallen well short of the agreed target of 0.7 percent of GDP—and in fact is closer to just 0.2 percent. GPG funding from ODA is estimated at only about 10 percent of the total. This problem even afflicts other sources of financing. Multilateral development bank (MDB) financing also underfunds regional, multi-country projects for addressing regional public goods as countries are unwilling to use their country allocations for multi-country projects even if the return on them is higher than the marginal country project.

Global thematic funds to support specific development challenges—Global Alliance for Vaccination and Inoculation (GAVI), Global Fund to Fight AIDS, Tuberculosis and Malaria (GFATM), Global Environmental Fund (GEF) and earlier funds like the Consultative Group for International Agricultural Research (CGIAR)—have been successful in addressing specific development challenges through projects in specific countries, especially for agriculture, the environment, and health. They have also drawn in private philanthropic financing in addition to public resources. But global funding for global public goods has not had the same success, and systematic and sustained financing for disasters, biodiversity, desertification, and even for Ebola outbreaks has been difficult.

The Green Climate Fund, which will begin its work this year and will devote 50:50 share of funding for adaptation and mitigation has very limited funding so far – despite the commitment to provide $ 100 billion per year over and above ODA. But neither the AAAA, nor the SDG’s address many of the trade-offs involved between climate change and poverty eradication. COP 21 also did not provide greater guidance on these matters – despite high expectations that it would. Given the need for rapid economic growth to eradicate poverty for the LDC’s  as well as their need to deal with huge adaptation costs, it probably makes sense not to focus excessively on mitigation in these countries. These countries would increase their global carbon footprint by at best 2-3 percent of the total carbon emissions. The big tradeoffs will arise in the need for rapid growth in middle-income countries to address poverty and their increased emissions, which will accompany faster growth.

Protection of biodiversity is given specific mention in the AAAA, and the Global Strategic Plan for Biodiversity for 2011-20 is endorsed along with its 20 Aichi biodiversity targets. But progress in meeting these targets is slow and at current trends unlikely to be achieved. The AAAA does not address this slow progress or suggest ways to accelerate it. It does endorse the U.N. Convention to Combat Desertification and the African Union Green Wall Initiative; but again with no specificity on how progress on these commitments will be accelerated. The same is true of the attention on oceans and marine resources, where the U.N. Convention on the Law of the Sea is mentioned but with no concrete steps on how to finance, enforce, and protect vulnerable areas, especially the small island developing states (SIDS).

Private philanthropic foundations have played important catalytic roles, such as efforts by the Ford Foundation and the Rockefeller Foundation to help jump-start the Green Revolution in the 1960’s, and the eventual creation of the CGIAR. A somewhat similar role has been played by the Bill & Melinda Gates Foundation for global public health. But no such foundations exist for many underfunded issues, such as disaster relief, peacebuilding, and desertification. These types of activities can be much better funded by more globalized revenue sources. The AAAA does not even mention the need for any such revenue sources.

A key GPG is peacekeeping, international security, and the prevention of conflict. Surprisingly, military spending is also not touched upon in the AAAA but has increased sharply. It dropped in the late 1990s following the end of the Cold War, from $1.5 trillion to around $1 trillion globally, but has increased again to almost $ 2 trillion today. Cutting military expenditure—especially in many developing countries where it exceeds 4 percent of GDP—would be an important step and shifting some of those resources to peacekeeping and conflict prevention would improve public spending.

With the AAAA pushing for new modes of financing, its surprising that for GPG financing more global sources of finance are not considered. At least four such options exist and could go a long way towards financing the SDGs. The first is a carbon tax or auctioning of carbon emissions permits. This is an idea with huge appeal as it will also help dissuade use of fossil fuels and could lower emissions globally, but is opposed by all the major emitters. Carbon taxes have been used in several countries to reduce fossil fuel use without any damage to long-term growth. Emission permits have also been used in some countries to reduce emissions of some harmful chemicals. But they have not been used internationally.

The second is a so-called “Tobin tax,” a tax on all foreign exchange transactions, which might also discourage destabilizing short-term volatile capital movements. The third is to add a pollution tax on all shipping and air travel – whose pollutions costs are not fully captured by existing taxes and fees imposed on them. The fourth is to allow issuance of SDRs to finance GPG’s.

Unfortunately, all these proposals are currently opposed by the major G-20 countries for various reasons. While several European countries—and even some developing ones—have introduced carbon taxes, still more remain opposed to carbon taxation. The Tobin tax idea has been around now for several decades and is considered an anti-globalization proposal even if its revenues were to be used to finance GPGs.  At times in the past, some countries have imposed a tax on foreign exchange transactions, with the explicit purpose of slowing down volatility in capital markets.

Global taxation has the connotation of supra-nationality, which many rich country legislatures—especially in the U.S.—would oppose. One way around this might be to specify how these resources would be used or to use them through MDBs where the richer countries have a controlling vote. To some extent the Global programs—GAVI, GFATM, CGIAR, and now the Green Climate Fund—have done that, but their financing remains much too dependent on national budgets and not on automatic revenue-raising mechanisms. National lotteries have been used in some countries to raise resources for specific causes; global lotteries could be an option for financing some specific global goods. But the world must move to some global means of revenue-raising if it wants to address GPGs seriously. Private financing, innovative financing, and public-private partnerships touted in the AAAA and COP21 can be crowded in, but without more international public financing to address market failure, financing the SDG’s will be difficult.

The world needs to heed Ben Franklin advice in another context “We must hang together or surely we will hang separately.”

On February 9, President Obama submitted his FY 2017 budget request to Congress. The proposed international affairs budget is down 1 percent from current funding levels and 12 percent (in constant dollars) since 2010, better than many domestic accounts. In addition, outside the regular budget, the administration is proposing $1.8 billion ($376 million from the international affairs budget account) to meet the latest pandemic—the Zika virus. Given the budget environment, the proposed amounts for the international affairs budget seem reasonable.

But from a long-term perspective, the budget is alarming. It seems unable to take account of global trends, it relies on fractured and ad hoc processes, and it is excessively siloed into pre-determined sectors.

Being satisfied with relatively small budget cuts does not face the reality of far greater and more pressing challenges today than in 2010. Today, Iraq and Afghanistan are still demanding sizable budget resources. We need to respond to Russia’s muscle-flexing by demonstrating our commitment to its independent neighbors. The effort to move HIV/AIDS to a more sustainable model is commendable but showing minimal success, so U.S. funding cannot slip. The Ebola crisis has been succeeded by the Zika virus. The Middle East is unstable and violent, with half the population of Syria killed or displaced. Sixty million displaced persons is the highest level ever reached. The world is addressing four Level 3 humanitarian crises, an unprecedented number. The fear of terrorism is spreading and disrupting rational political dialogue. Domestic violence and civil strife is increasing in Central America. Free expression is under siege in many countries and civil societies are in need of reinforcement.

Many of these challenges reflect an underinvestment in development in the past. We are using a Rube Goldberg budget system that cobbles together funding from multiple sources for a single objective and locks in funding several years before a penny flows, making it difficult to adjust to changing circumstances.

The budgeting system problem

The 2017 budget uses a gimmick that may not be sustainable. To fund the Iraq war, the Bush administration invented an off-budget account (Overseas Contingent Operations, or OCO, a successor to earlier emergency funding) that does not count against the annual budget caps. The State Department and USAID got part of their budgets starting in 2012 from this account. OCO for FY 2017 is proposed at one-quarter of the international affairs budget. The problem is that OCO cannot be counted on in the long-term, and the sustainable base budget for FY 2017 is down 30 percent from FY 2010 in constant dollars.

The budget process is also absurdly long. The Obama administration began planning the FY 2016 budget in the spring of 2014, roughly 18 months before Congressional appropriations. Typically, it could take another six months for agency officials and appropriation committees to agree on country and program allocations. Only then, 30 months later, can U.S. development professionals working overseas get on with the business of putting those resources to work.  

This budget process, with its long timeframes and pre-determined earmarks and presidential initiatives, means that despite best efforts by USAID, it is difficult to respect “local ownership” of development—something that development experience demonstrates is fundamental to successful and sustainable development.

Presidential initiatives have their place as a way to bring along political allies and the American populace. It is also appropriate and constructive for Congress to weigh in on funding priorities. But it can be counterproductive to effective development when presidential initiatives and congressional earmarks dictate at the micro level and restrict flexibility in implementation, especially in a rapidly changing world with frequent crises. 

Another problem with the current budget system is that most but not all sectors are protected by budget accounts or earmarks. Health is protected and the funding divided into various sub-accounts. Education and agriculture get earmarks. New in the FY 2016 appropriations bill is a separate line item for democracy.

Another structural issue is the crisis-reactive nature of our assistance programs. Health, which garners the lion’s share of U.S. economic assistance, has been dominated for nearly two decades by responses to global crises — first massive funding for combatting HIV/AIDS, followed by significant funding to tackle malaria, Ebola, and now the Zika virus. It is funding by individual disease. Crisis galvanizes political and popular support for the here and now. But what if we had focused on building up national health systems for the last 20 years rather than fighting one-off diseases? If we moved to more preventive approaches now, maybe in 10 or 20 years the pandemic of the day could be met less by the U.S. ramping up in a crisis mode and more by the health systems in those countries affected, with the U.S. playing a supportive and technical role rather than the core funding role. 

These issues are examples of why it is imperative for the next administration and congress to engage in a strategic dialogue on the objectives and priorities of foreign assistance programs, both in funding levels and how the funds are used. It is time to move away from the current structure that resembles building a Cadillac from parts of models stretching from 1949 to 1973, as in the Johnny Cash song "One Piece at A Time.”

Figure 1: How we build our budget

Source: Abernathyautoparts, CC BY-SA 2.5

It is not unrealistic to envisage a more strategic approach. One option is to return to the approach in the 1970s, when all development funding was put into one of just five or six functional accounts, and provide some flexibility in moving funds between accounts.

Policymakers who believe that America is an exceptional or indispensable nation and that world problems do not get solved without American involvement need to take a hard look at whether they are providing the U.S. government with the required diplomatic and development tools. It is high time for U.S. policymakers to take a more strategic approach to the level of funding of international affairs and how the U.S. uses its foreign assistance. The inauguration of a new president and Congress in 2017 offers the opportunity to seize this challenge.

In the past decade, a remarkable shift has occurred in the development landscape. Specifically, acknowledgment of the central role of the private sector in contributing to, even driving, economic growth and global development has grown rapidly. The data on financial flows are dramatic, indicating reversal of the relative roles of official development assistance and private financial flows. This shift is also reflected in the way development is framed and discussed, never more starkly than in the Addis Abba Action Agenda and the new set of Sustainable Development Goals (SDGs). The Millennium Development Goals (MDGs), which the SDGs follow, focused on official development assistance. In contrast, while the new set of global goals does not ignore the role of official development assistance, they reorient attention to the role of the business sector (and mobilizing host country resources).

The U.S. Agency for International Development (USAID) has been in the vanguard of donors in recognizing the important role of the private sector to development, most notably via the agency’s launch in 2001 of a program targeted on public-private partnerships (PPPs) and the estimated 1,600 USAID PPPs initiated since then. This paper provides a quantitative and qualitative presentation of USAID’s public-private partnerships and business sector participation in those PPPs. The analysis offered here is based on USAID’s PPP data set covering 2001-2014 and interviews with executives of 17 U.S. corporations that have engaged in PPPs with USAID.

The genesis of this paper is the considerable discussion by USAID and the international development community about USAID’s PPPs, but the dearth of information on what these partnerships entail. USAID’s 2014 release (updated in 2015) of a data set describing nearly 1,500 USAID PPPs since 2001 offers an opportunity to analyze the nature of those PPPs.

On a conceptual level, public-private partnerships are a win-win, even a win-win-win, as they often involve three types of organizations: a public agency, a for-profit business, and a nonprofit entity. PPPs use public resources to leverage private resources and expertise to advance a public purpose. In turn, non-public sectors—both businesses and nongovernmental organizations (NGOs)—use their funds and expertise to leverage government resources, clout, and experience to advance their own objectives, consistent with a PPP’s overall public purpose. The data from the USAID data set confirm this conceptual mutual reinforcement of public and private goals.

The goal is to utilize USAID’s recently released data set to draw conclusions on the nature of PPPs, the level of business sector engagement, and, utilizing interviews, to describe corporate perspectives on partnership with USAID.

The arguments regarding “why” PPPs are an important instrument of development are well established. This paper presents data on the “what”: what kinds of PPPs have been implemented and in what countries, sectors, and income contexts. There are other research and publications on the “how” of partnership construction and implementation. What remains missing are hard data and analysis, beyond the anecdotal, as to whether PPPs make a difference—in short, is the trouble of forming these sometimes complex alliances worth the impact that results from them?

The goal of this paper is not to provide commentary on impact since those data are not currently available on a broad scale. Similarly, this paper does not recommend replicable models or case studies (which can be found elsewhere), though these are important and can help new entrants to join and grow the field. Rather, the goal is to utilize USAID’s recently released data set to draw conclusions on the nature of PPPs, the level of business sector engagement, and, utilizing interviews, to describe corporate perspectives on partnership with USAID.

The decision to target this research on business sector partners’ engagement in PPPs—rather than on the civil society, foundation, or public partners—is based on several factors. First, USAID’s references to its PPPs tend to focus on the business sector partners, sometimes to the exclusion of other types of partners; we want to understand the role of the partners that USAID identifies as so important to PPP composition. Second, in recent years much has been written and discussed about corporate shared value, and we want to assess the extent to which shared value plays a role in USAID’s PPPs in practice.

The paper is divided into five sections. Section I is a consolidation of the principal data and findings of the research. Section II provides an in-depth “data picture” of USAID PPPs drawn from quantitative analysis of the USAID PPP data set and is primarily descriptive of PPPs to date. Section III moves beyond description and provides analysis of PPPs and business sector alignment. It contains the results of coding certain relevant fields in the data set to mine for information on the presence of business partners, commercial interests (i.e., shared value), and business sector partner expertise in PPPs. Section IV summarizes findings from a series of interviews of corporate executives on partnering with USAID. Section V presents recommendations for USAID’s partnership-making.

Downloads

• WP94PPPReport2016Web

Brookings today releases a report USAID’s Public-Private Partnerships: A Data Picture and Review of Business Engagement, which will be the subject of a public discussion on March 8 featuring a panel of Jane Nelson (Harvard University), Ann Mei Chang (U.S. Agency for International Development (USAID)), Johanna Nesseth Tuttle (Chevron Corp.), and Sarah Thorn (Wal-Mart Stores Inc.).

The report is based on USAID’s database of 1,481 public-private partnerships (PPPs) from 2001 to 2014 and a series of corporate interviews.

The value of those partnerships totals $16.5 billion, two-thirds from non-U.S. government sources – private companies, nongovernmental organizations (NGOs), foundations, and non-U.S. public institutions. Over 4000 organizations have served as resource partners in these PPPs.  Fifty-three percent are business entities, 32 percent are from the non-profit world, and 25 percent are public institutions. Eighty-five organizations have participated in five or more PPPs, led by Microsoft (62), Coca Cola (36), and Chevron (33).

The partnerships are relatively evenly distributed among three major regions—Africa, Latin American/Caribbean, and Asia—but 36 percent of the value of all PPPs is from partnerships that are global in reach.

In analyzing the data, the researchers found that 77 percent of PPPs included one or more business partner, and that 83 percent of these partnerships are connected to a business partner’s commercial interest (either shared value or more indirect strategic interest). In almost 80 percent of those PPPs, the business partner contributes some form of corporate expertise to the partnership.

The purpose of the March 8 panel discussion is to examine the report but also to go beyond by addressing outstanding questions like: how should the impact of public-private partnerships be identified, measured, and evaluated? Is shared value the Holy Grail linking corporate interest to public goods and achieving sustainable results? Where do public-private partnerships fit in USAID’s strategy for engaging the private sector in development, particularly in light of the emphasis on the role of business in advancing the new set of Sustainable Development Goals?

We hope you can join us for what should prove to be an engaging discussion.

The EU and Turkey have reached agreement on the broad outlines of a coordinated strategy to respond to the migration crisis. According to the plan, discussed at an emergency summit on Monday in Brussels, all migrants crossing from Turkey into the Greek islands would be returned. For every migrant Turkey readmits, the EU would resettle one registered refugee from a U.N.-administered camp, effectively establishing a single legal migration pathway.

The deal, which has not been finalized, includes a pledge to speed up disbursement of a 3-billion-euro fund ($3.3 billion) aimed to help Turkey shelter the roughly 2.5 million Syrian refugees currently on its soil, and to decide on additional support. Turkish Prime Minister Ahmet Davutoğlu has requested that Europe double its funding to 6 billion euro ($6.6 billion) over three years. He also called on European leaders to speed up the timetable on lifting visa requirements for Turkish citizens and to kick-start stalled accession talks.

Rough road ahead

Establishing a framework is an important step forward in the effort to forge a common approach to the mounting crisis. German Chancellor Angela Merkel—facing discontent at home over her open door policy—welcomed the tentative deal as a potential breakthrough. So did Britain’s Prime Minister David Cameron.

However, key details remain unresolved: First, it is not clear that all EU countries would agree to take part in such a relocation scheme, given strong opposition to compulsory migrant quotas. On Monday night, Hungarian Prime Minister Viktor Orbán vowed to veto any commitment to resettle asylum seekers. 

[K]ey details remain unresolved.

Second, Ankara’s demands regarding EU membership and visa waivers are likely to be contested. Turkey’s bid for accession has long been controversial, and will only be made more so by the court-ordered seizure of the opposition newspaper Zaman late last week. Visa-free access for Turkish citizens is likewise contentious. Already, leaders of Germany’s conservative Christian Social Union party have vowed “massive resistance” to any such measure.

Third, human rights groups have called into question the plan’s legality. The U.N. High Commissioner for Refugees raised concerns about its legitimacy under EU and international law, expressing unease over the blanket return of foreigners from one country to another. Amnesty International called the proposal a “death blow” to refugee rights. While Europe believes the legal questions can be resolved by declaring Turkey a “safe third country,” Amnesty has cast doubt on the concept. 

And so?

Talks will continue ahead of the EU migration summit, which will take place on March 17 and 18. Meanwhile, NATO will begin carrying out operations in the territorial waters of Greece and Turkey to locate migrant boats. According to Secretary General Jens Stoltenberg, those efforts will focus on “collecting information and conducting monitoring” in an endeavor to stop the smuggling.

In recent weeks, as many as 2,000 migrants each day have been arriving on Greece’s shores. They join more than 35,000 migrants already stranded there, unable to travel north due to border closures along the Western Balkans route. Those closures cast in doubt the future of the continent’s open border regime—and with it, the unity of Europe.

Event Information

A conversation with USAID Administrator Gayle Smith

On March 30, Global Economy and Development at Brookings and the Modernizing Foreign Assistance Network (MFAN) hosted Gayle Smith, administrator of U.S. Agency for International Development (USAID) for an address on the fifth anniversary of the USAID policy on evaluation.

A principal recommendation of the Presidential Policy Determination on Global Development, signed by President Obama in 2010, was greater accountability for U.S. foreign assistance funds, including evaluation of development programs. In 2011, USAID adopted a formal policy on evaluation and since has average some 200 evaluations a year.

Among the issues that will be addressed during the event are the success and challenges in implementing the evaluation policy, the use of alternative evaluation methods, and building a system and process for turning evaluations into learning. Administrator Smith was introduced by Brookings Senior Fellow George Ingram. Following her address, he moderated a panel discussion of Ruth Levine, Wade Warren, and Jodi Nelson.

 Join the conversation on Twitter using #AIDeval

Video

• Assessing the impact of foreign assistance: The role of evaluation

Transcript

• Uncorrected Transcript (.pdf)

Event Materials

• 20160330_usaid_evaluation_transcript

Thursday, South Africa’s highest court found President Zuma guilty of violating the constitution as he refused to reimburse the large sum of money spent on improvements to his personal home. Between 2010 and 2014, the home located in the president’s rural hometown of Nkandla received improvement which cost an estimated $23 million. The improvements include a chicken coop, an amphitheater, a swimming pool, and a helipad. President Zuma has stated that the improvements were necessary to ensure his security and should consequently be paid for with taxpayers’ money. In 2014, public prosecutor Thuli Madonsela ruled that the president should repay part of the taxpayers’ money spent on the improvements of his personal home. In refusing to do so, he violated the country’s constitution “by not complying with a decision by the public protector, the national watchdog.” The court has given the National Treasury 60 days to determine the sum the president must repay. The opposition has stated that they will seek Zuma’s impeachment.

In other South African news, this week, the rand strengthen against the U.S. dollar and reached its highest value since December 8, 2015, the day before President Zuma fired former Finance Minister Nhlanla Nene. The strengthening of the rand was coupled with the strengthening of other Emerging Markets currencies. This hike follows the statement from Federal Reserve Chair Janey Yellen, reiterating the importance to raise U.S. interest rates cautiously, amid risks in the global economy. Investors—weighting prospects of higher U.S. borrowing costs—were holding off in acquiring emerging-market assets.

This week, 17 Angolan activists were sentenced to jail time for rebellion against the government of Jose Eduardo dos Santos. The sentences ranged from two years to eight and a half years. Last June, the activists were arrested during a book club meeting focusing on Gene Sharp’s book titled From Dictatorship to Democracy: A Conceptual Framework for Liberation—a book on nonviolence and resistance to repressive regimes. Monday, the activists were charged and sentenced with acts of rebellion, planning mass action of civil disobedience, and producing fake passports, among other charges. Amnesty International has accused the Angolan court of wrongfully convicting the activists and using the judicial system to “silence dissenting views.”

Later in the week, in response to the jailing of the young activists, the Portuguese branch of hacking group Anonymous claimed the shutdown of 20 government websites, including that of the Ministry of Education and the Ministry of Labor and Social Security, among others. In a Facebook post claiming the attack, the group states, “The real criminals are outside, defended by the capitalist system that increasingly spreads in the minds of the weak.” The functionality of the websites has been restored.  

On Monday, March 28, the U.S. Millennium Challenge Corporation (MCC) withdrew $472 million in aid from the government of Tanzania after the result of the last weekend’s disputed presidential election rerun in the semi-autonomous archipelago of Zanzibar was announced. Incumbent President Ali Mohamed Shein of the ruling Chama Cha Mapinduzi party was declared the winner with 91.4 percent of the vote. However, the rerun was boycotted by the opposition Civic United Front party over the cancellation of last October’s election by the Zanzibar Electoral Commission. The commission claimed the October poll was fraudulent, while the opposition says the allegations of fraud were fabricated to thwart a victory by their candidate.

The MCC was planning a number of power and infrastructure projects in Tanzania, but its development assistance programming is conditional upon beneficiaries meeting certain standards of good governance. The MCC’s board of directors held a vote on Monday, in which they determined that Tanzania was no longer eligible to partner with the MCC given the election outcome. Although the loss of the MCC partnership is a sizable blow to the Tanzanian government, the Tanzanian finance minister appeared optimistic that the power projects would continue despite the MCC’s decision, as he stated: “We weren’t surprised at all because we were prepared for whatever the outcome. We will implement those projects using local sources of fund and the support of from other development partners.” Meanwhile, 10 out of the country’s 14 key western donors withdrew general budget support to Tanzania over the contested election.

Publish What You Fund’s 2016 Aid Transparency Index is out. And as a result, today we can assess whether major donors met the commitments they made five years ago at Busan to make aid transparent by the end of 2015. The index is also a window into the state of foreign aid transparency and how the U.S.—the world’s largest bilateral donor—stacks up.

On the positive side, the index found that ten donors of varied types and sizes, accounting for 25 percent of total aid, have met the commitment to aid transparency. And more than half of the 46 organizations included in the 2016 index now publish data to the International Aid Transparency Initiative (IATI) registry at least quarterly.

At the same time, the index’s assessments show more than half of the organizations still fall into the lowest three categories, scoring below 60 percent in terms of the transparency of their information.

Continuing its leadership on transparency, the Millennium Challenge Corporation comes in second overall in the index, meeting its Busan commitment and once again demonstrating that the institutional commitment to publishing and using its data continues.

Otherwise, at first glance, U.S. progress seems disappointing. The five other U.S. donors included in the 2016 index are all in the “fair” category. Seen through a five-year lens, however, these same five U.S. donors were either in the “poor” or “very poor” categories in the 2011 index. So, all agencies have moved up, and three of them—U.S. Agency for International Development (USAID), Department of the Treasury, and the U.S. President's Emergency Plan for AIDS Relief—are on the cusp of “good.”

In the two biggest U.S. agencies that administer foreign assistance, USAID and the State Department, the commitment is being institutionalized and implemented through more systematic efforts to revamp their outdated information systems. Both have reviewed the gaps in their data reporting systems and developed a path forward. USAID’s Cost Management Plan identifies specific steps to be taken and is well under way. The State Department Foreign Assistance Data Review (FADR) involves further reviews that need to be executed promptly in order to lead to action. Both are signs of a heightened commitment to data transparency and both require continued agency leadership and staff implementation.

The Department of Defense, which slid backwards in the last three assessments (and began at the "very poor" category in 2011), has for the first time moved into the "fair" category.  It is still the lowest performing U.S. agency in the index, but it is now publishing 12 new IATI fields. It is moving in the right direction, but significant work remains to be done.

The third U.S. National Action Plan (NAP) announced last fall—the strongest issued by the U.S. to date—calls for improvements to quality and comprehensiveness of U.S. data and commits the U.S. to doing more to raise awareness, accessibility, and demand for foreign assistance data. This gives all U.S. agencies the imperative to do much more to make their aid information transparent and usable.  

The overall challenge has been laid out in the third NAP:

• Almost all of the U.S. agencies need to improve the breadth and depth of the information they are publishing to meet IATI standards. Far too often, basic information—such as titles—are either not published or are not useful.
• The Millennium Challenge Corporation should continue its leadership role, especially on data use. All agencies should be promoting the use of data among their own staff and by external stakeholders, especially at country level. Feedback will go a long way toward helping them improve the quality of the data they are publishing and thereby help them meet the IATI standards.
• USAID must finish the work on its Cost Management Plan, including putting IATI in the planned Development Information Solution. Additionally, more progress needs to be made on the follow-up to the Aid Transparency Country Pilot Assessment to meet the needs of partners.   
• The State Department needs to follow through on including IATI in the new integrated solution mapped out in its data review.

The leadership of all foreign affairs agencies needs to work harder to make the business case for compiling, publishing, and using data on foreign aid programs. Open data, particularly when it is comparable, timely, accessible, and comprehensive, is an extremely valuable management asset.  Agency leadership should be its champion. So far, we have not seen enough.

U.S. progress on aid transparency was slow to start. It is still not where it needs to be. But with a modest but concerted push, three additional agencies will be in the “good” category and that is a story we can start to be proud of.   

We look forward to continued progress and to the day when all U.S. foreign aid meets transparency standards—a day I believe will be an important one for the cause of greater development, better governance, democratic participation, and reduced poverty worldwide.

Once upon a time, long ago, the development industry was fixated on measuring aid from richer to poorer countries. They called it ODA, standing for Official Development Assistance. For decades this aid has been codified, reported, and tracked, mostly by the Development Assistance Committee of the Organisation for Economic Co-operation and Development (DAC/OECD), a club of advanced economies. In advance of the Spring Meetings of the IMF and World Bank, the DAC announced that ODA has risen by 6.9% over 2014 levels to 132 billion dollars, a record amount. Importantly, ODA increased even after stripping out funds spent on refugees.

The United Nations has established targets for ODA—like the famous 0.7 percent of national income—which have taken on legendary status as benchmarks of national generosity. Only six out of 28 DAC countries met this target last year: Denmark, Luxembourg, The Netherlands, Norway, Sweden and the United Kingdom.

Some institutions and lobby groups remain fixated on ODA, but many development actors now reject it as flawed. A major theme of the Spring Meetings is how to move beyond ODA and expand other forms of financing for development. ODA is, among other things, symptomatic of a charity perspective, rather than investment; inappropriate for South-South cooperation; and unable to capture the big new landscape of public-private links. What’s more, it is riddled with self-serving quirks like scoring numerous flows—the cost of university places in donor countries, and administrative costs of aid agencies—that never reach developing countries.

Perhaps the most telling weakness of ODA is that emerging powers like China and India see little merit (and arguably, some residual stigma) in this concept and, therefore, will not report on that basis to a club to which they do not belong. As their share of the world economy and their interactions with other “developing” countries continue to grow, this means ODA will inevitably start to represent an ever smaller share of official financing for development.

TOSSD stands for Total Official Support for Sustainable Development. The idea, still being fleshed out, is to have a universally accepted measure of the full array of public financial support for sustainable development. TOSSD should differ from ODA in at least three ways:

• First, it should take a developing country perspective rather than a donor country perspective. So it should cover the value of all funding for development that is officially supported, from pure grants to near-market loans and equity investments, as well as guarantees and insurance.
• Second, it should measure cross-border flows from all countries, not just the rich members of the OECD’s Development Assistance Committee.
• Third, it should include contributions to global public goods needed to support development, like U.N. peacekeeping and pandemic surveillance.

There are many complications behind any international attempt to define and track such a huge range of activities. Some are technical, but can probably be resolved with enough goodwill and professionalism. So, for example, we can debate how to establish whether and how official support to private investors changes their behaviour, delivering “additional” development results compared to a situation without that support. In the end, sensible solutions and workarounds will be found.

More difficult are a couple of politically sensitive challenges, which at the same time underlie the value of reaching consensus on a new measure. How far, for example, should the new measure recognise indirect spending on global public goods? Take for example public research on an AIDS vaccine that could lead to prevention of millions of deaths in developing countries. Right now, this would not count as ODA because the promotion of the economic development and welfare of developing countries is not its main objective.

We tend to think that consideration of globe-spanning benefits like these, which do not fit the simple mould of money crossing borders, is an essential feature of a new measure of development finance. However, it will need to be bounded sensibly, not least because of underlying suspicions that the countries that are today most likely to deploy such tools, and claim them as a large part of their distinctive contribution, are among the “old rich”—though that could change quickly. We suggest that spending on a defined list of global public goods should be included, perhaps those that support Agenda 2030, such as U.N. peacekeeping or a global research consortium like GAVI, the Vaccine Alliance.

A second potentially divisive issue, already alluded to, is how to value non-monetary flows, like technical assistance, and in a fair way across countries. We think it would be a powerful positive signal for international cooperation if even modest contributions by low- and middle-income countries are recognised, celebrated, and valued according to the contribution being made, not the cost of providing the assistance. The assistance provided by professionals from developing countries (think Cuban doctors) should be measured at the same prices as assistance provided by professionals from rich countries. Some form of purchasing power parity equivalence would need to be defined and used.

This is a hugely contentious question. Neither of the most obvious answers, the well-organised but globally unloved OECD and the legitimate but under-resourced U.N. secretariat, are likely to be acceptable without some changes. A preferred candidate has to have a sufficiently broad group of countries prepared to self-report on even a loose set of definitions in order to get momentum. At a minimum all the major economies of the world, for example members of the G-20, should be willing to participate. It should also have the technical capacity to help countries provide information in a consistent way.

The International Monetary Fund or World Bank could be candidates—most countries already report to them on a range of data, including financial flows. The Global Partnership for Effective Development Cooperation, with its membership of many development actors and technical support, could be another. Or a new group could be created in much the same way as the International Aid Transparency Initiative. This could even be a revamped Development Assistance Committee that operates with broader support in much the same way as the OECD’s tax work has many non-OECD members participating. What is important is that the guiding principle be to measure official cross-border financial resources that support the new universally-agreed Sustainable Development Goals, and to start now and learn by doing.  Such initiatives are too easily killed by subjecting them to endless external criticism that a perfect solution has not been found.

TOSSD may be one of the least attractive acronyms on offer today. Without disrespect to its OECD authors, it will anyway have to change to something that works for all the major stakeholders, and is not visibly invented in Paris and that also encourages players who are not strictly speaking “official,” like foundations, to sign up. We tend to favor a plainer, simpler wrapper like International Development Contributions (IDC), or Defined Development Contributions (DDC). 

Spring has sprung and once again Publish What You Fund has issued its Aid Transparency Index (ATI). Once again most of the multilateral development banks (MDBs) receive high grades rated as very good. And once again I ask whether those grades are well deserved? At the heart of my question is whether aid agencies are disclosing sufficient information during the critical implementation stage of a project.

Last year we reviewed the practices of 8 aid agencies, 7 of which consistently receive the highest accolades in the ATI. What was evident from our review was the serious asymmetry of the type of aid data released to the public. A major target at Busan in 2011 when donors made commitments to aid transparency and in the establishment of the ATI has been the reporting of aid flows and the projects approved by each agency. There has been growing emphasis since then on reporting information on the results of those projects. But there has been very limited progress in the release of information during project implementation.

The importance of such information should be obvious. It is during project implementation that the various stakeholders need to monitor project progress, report on issues requiring attention, and make changes to ensure achievement of the desired results. It is insufficient to only disclose who wins a contract; consideration should be given to publishing the contracts, reporting on its execution, and disclosing amendments to the contracts. And it is not enough to simply publish the resettlement action plan for a project; how that plan is being implemented must be reported. Real time reporting is the key to being able to adapt and make changes as projects evolve.

It is very evident that the International Aid Transparency Initiative (IATI) and the ATI have had a major positive impact on raising the level of transparency of aid agencies. Discussions with various agencies illustrate how they are keen to getting higher scores each year, carefully analyzing the indicators to guide their actions. However, with only a limited focus and weighting of reporting on project implementation in the ATI, there is no incentive to fill this important gap. 

In its 2016 report, Publish What You Fund has indicated that it will be reviewing its indicators later this year and intends to raise the bar. It would be timely to include information on project implementation in those revisions. One challenge is how to develop indicators that are similarly relevant across a wide variety of aid agencies. Implementation information is most critical for agencies that finance longer-term projects, especially infrastructure, such as the MDBs.  One option is to consider a set of indicators to better “incentivize” the relevant agencies and refer to these as ATI+.

The MDB’s, in their major disclosure reforms since 2010, adopted a principle that “deliberative” information would not be disclosed in order to foster candid and open dialogue within the organization and between the organization and the client country. As per the World Bank’s policy, “The Bank, like any institution or group, needs space to consider and debate, away from public scrutiny.” This excludes emails, notes, and other exchanges either internally or with member countries.

As a result, the project supervision reports, which managements use to monitor projects under execution and are generally published twice a year, were divided between disclosed versus undisclosed sections. The undisclosed sections would offer space for reporting on confidential project concerns including potential corruption. Our review of the disclosed reports suggests that most aid agencies’ task managers tend to take a cautious approach, placing most information in the undisclosed sections. Stakeholders outside the MDB, such as local civil society groups, then, often only see truncated information.

While the adoption of the “deliberative” principle is understandable, its application places a serious responsibility on management to ensure that this is applied with considerable restraint. The MDBs should review the application of this principle and assess the type of information released during implementation.

It is indeed time to raise the bar on transparency and to focus on the most critical information required to ensure results. This is not the moment for complacency with high grades.

Almost two years ago, I alerted readers to a contest, sponsored by the Bill and Melinda Gates Foundation through the Global Development Network, to develop new ideas to improve the impact of development cooperation. The Next Horizons Essay contest 2014 received 1,470 submissions from 142 countries, from which 13 winners were selected.

Four of the winners took part in a roundtable at the Brookings Institution yesterday. Here’s a quick synopsis of the main takeaways.

There is a lot of experimentation happening in the delivery of aid, and most aid agencies are thinking hard about how to position themselves to contribute more to the sustainable development goals. In part, this is because these agencies are mission-driven to improve impact. The current system of aid replenishments of multilateral institutions forces them to compete with each other by persuading donors that they are best deserving of the scarce aid budgets being allocated. Even bilateral aid agencies find themselves under budgetary stress, asked to justify the impact of their lending compared to a counterfactual of channeling the money through a multilateral agency or of contributing to an appeal from the United Nations for humanitarian assistance or climate financing.

Stephen Mwangi Macharia talked about using development assistance to promote social impact investing. He noted the problems of sustainability, dependence, and ownership that can arise in traditional aid relationships and argued that social entrepreneurs can avoid such pitfalls. The question then becomes how donors can best help build the market infrastructure to support such efforts. Stephen’s idea: develop a social impact network initiative to build entrepreneurs’ capacity to develop “bankable” projects and to have a database to help match entrepreneurs and funders. 

There is certainly a lot of interest in social impact investing. According to the Global Impact Investing Network, around $60 billion are already under management (although mostly in developed countries) and the market is growing rapidly. Some questioned the role of aid donors however, noting that they could reduce incentives for others (universities, non-profits, etc.) who charge a fee for business development, awareness raising, and other market services. Others questioned the risk tolerance of donors for impact investing and a culture in many countries where business is viewed suspiciously when it tries to intentionally generate positive social and environmental impacts. As an aside, Judith Rodin, president of the Rockefeller Foundation, has noted that the development of impact investing was one of the accomplishments that she was most proud of.

Ray Kennedy suggested that vertical funds, because of better governance and a sharper focus, should be a preferred channel for development assistance. Interestingly, his argument was not based on advocacy for a particular sector, but on the improved adaptability of these institutions. His evidence provided several examples of how vertical funds changed in response to changing global conditions, and, he argued, such change is a highly desirable virtue in our rapidly changing times.

Of course, the recommendation to favor vertical funds did not go unchallenged. There was a lively discussion about the comparative advantage of different institutions and the dangers of mission creep by more effective institutions into space left open by less effective institutions. Yet, most agreed that new platforms were being fluidly created to solve new problems, and that a “mixed coalition,” to borrow a phrase from one of the participants, was part of the preferred solution.

Yuen Yuen Ang took on the problem of local ownership directly. It is easy to talk about local ownership, she said, but few agencies do anything about it in their actual operations. Instead, they promote best practice ideas, some of which may fail even the basic test of “do no harm.” Basing her arguments on the complexity of how organizations change, she advocates specific internal reforms: diversify staff experiences and backgrounds beyond economics and finance; carve out time for staff to pursue “non-standard” approaches; and build a bank of examples about “best-fit” approaches that have been shown to work in weak institutional settings.

A lively discussion followed on best-fit versus best-practice approaches and, indeed, on whether there is a trade-off between the two or whether the issue is how to balance both at the same time. There was agreement that best-practice applies to some issues, especially where global standards have developed (debt management or anti-money laundering, perhaps). Best-fit is more useful when judgement and a deep understanding of local conditions are required. Some questioned the role of external donor agencies in such contexts, however.

Dan Honig argued for greater autonomy of field-based staff. Based on an extensive and unique data set, he was able to test the impact of the degree of autonomy on project success. The econometrics show significant impact of autonomy on certain activities and in certain situations. When the context is fluid and unpredictable, as in fragile states for example, or when judgement is required, as in institutional development, then autonomy can help. But when desired outcomes are easily measurable, such as school or road construction, then autonomy makes little difference.

During the discussion, there was agreement that too much of a focus on metrics could be distortionary and, in fluid situations, could be damaging. The theme of donor risk aversion came up again, but this time coupled with the idea that metrics, however false and misleading they might be, provide comfort and cover for bureaucrats. A sympathetic hearing was given to former United States Agency for International Development Administrator Andrew Natsios’ concept of “obsessive measurement disorder.” But, participants also warned of the need to show that the costs of autonomy, in the form of larger field presence and a limited ability to scale up, outweighed the benefits.

It was refreshing to see new evidence and multidisciplinary approaches being brought to bear on development effectiveness. The four themes highlighted in these essays—making markets work for the poor, improving agency governance, local ownership and contextualization, and decentralization and autonomy—resonated with those participants who are, or had been, active in aid agencies. I thank the Global Development Network and the Bill and Melinda Gates Foundation for this initiative, as well as to the winning scholars for injecting new ideas into the discourse.

A recent article in The Guardian caught my eye: “Report accuses government of increasing inequalities in developing countries by financing academies at the expense of state schools.” The report, conducted by the U.N. Committee on the Rights of the Child, was an attack on U.K. aid money being linked to private education providers since the rapid increase in such schools may be contributing to sub-standard education. In particular, they cited the U.K. government’s investments in the Nairobi-based and for-profit Bridge International Academies.

I’ve worked on private education extensively throughout my career and do not believe there is anything wrong with private schools, but in this particular case I couldn’t agree more. But to be clear, it’s the funding strategy that’s the problem.

Private schooling is on the rise in a number of poor countries, and Pakistan—where my education research is focused—is no exception. The majority of these schools are no longer the elite institutions of yore, but low-cost alternatives fighting for survival in a highly competitive environment. These schools have mushroomed in response to increased parental demand and poor public alternatives, but also to the greater availability of teachers in the local labor market.

More importantly, research increasingly demonstrates that there is absolutely nothing wrong with private schools. There's a summary of this research available here; specific examples on India (more here) and Pakistan are also available.

Some key are takeaways from this research are:

• Private schools charge low fees (about $1 to$2 a month in Pakistan).
• The quality is almost certainly higher compared to government schools in the vicinity.
• At least in Pakistan, there is no significant segregation between public and private schools in terms of parental wealth, education, or caste.
• The most significant barrier to attendance in low-cost private schools is not cost—it’s distance. Put simply, there just aren’t enough of them around.

If there is a cheaper and better alternative to public schooling, shouldn’t we encourage children to shift and thus improve the quality of education for all?

Perhaps. But when the rubber from these well-intentioned aid policies hits the road of rural Pakistan, Kenya, or Ethiopia, a very different sort of model emerges. Instead of supporting private schooling, donors end up supporting private schools (or at best private school chains), which is an entirely different action with little theoretical backing. In fact, economic theory screams that governments and donors should almost never do that.

Donors say the problem is that the low-cost private school market is fragmented with no central authority that can be “contracted with.” No one has a good model on how to work with a competitive schooling sector with multiple small players—ironically, the precise market structure that, according to economics, leads to efficiency.

In reality, I suspect the problem goes deeper. Most low-cost private school owners don’t do well at donor conferences. They don’t know how to tell compelling human-interest stories about the good they do. But what they are excellent at is using local resources to ensure that their schools meet the expectations of demanding parents.

The first is a problem of accountability. Public schools are accountable, through a democratic system, to citizens of the country. Private schools are accountable to the parents. And donor-funded private school chains are account to the donors. While both citizen-led accountability and direct accountability to parents have problems, they are grounded in centuries of experience. It’s unlikely that donors in a foreign land, some of whom can’t visit the schools they fund for security reasons, can do better than either citizens or parents.

The second is a problem of market structure. When one private school or private school chain receives preferential treatment and funding, without allowing other private schools to apply for the same funds, the donor is picking winners (remember Solyndra?). The need for private schools as an alternative to government schools is insufficient justification for donors to put their thumbs on the scale and tilt the balance of power towards a pre-identified entity.

In a recent experiment, my colleagues and I gathered direct proof for this assertion. We gave untied grants to low-cost private schools with a twist. In certain villages, we randomly selected a single private school for the grant. In others, we gave the grant to every private school in the village. Our preliminary results show that in villages where we gave the grant to a single school, the school benefitted enormously from an increase in enrollment. Where we gave the grant to multiple private schools, the enrollment increase was split among schools. But only in the villages where we gave the grant to every school did test-scores for children increase.

What happened? When a single private school receives the grant, knowing that the other schools cannot react due to a lack of funds, they engage in “customer poaching” to increase their profits at the expense of others. Some have argued that Uber’s recent fundraising is precisely such an effort to starve competitors of funding.

When you equally support all private schools, customer poaching does not work, and the only way to increase profits and generate returns is to increase the size of the market, either through higher overall enrollments or through new quality offerings.

The first strategy supports pre-identified private schools and concentrates market power. The second, by providing opportunities for all private schools, improves education for children.

Sure, some private school chains and schools are making positive impact and deserve the support they can get. But funding such schools creates the wrong institutional structures and are more likely to lead to disasters than successes (Greg Mortensen and 3 cups of tea, anyone?).

In general, the Government’s responsibility towards the education of children is two-fold:

• Alleviate the market constraints that hold back private schooling without favoring one school over the other—letting parents decide who succeeds and who does not.
• Support and improve public schools to provide an alternative because there will always be children who cannot enroll in private schools, either because they are too expensive or because they are too far away, or because they don’t offer the instruction “basket” that some parents want.

In short, foreign aid should play no part in supporting private schools rather than private schooling.

As of last week, it has been a full year since the U.S. Export-Import (Ex-Im) Bank—the government export credit agency which lends money to foreign buyers of American exports—has been unable to approve loans over $10 million. This is because Senator Richard Shelby, Republican of Alabama, is single-handedly holding up the nomination of a third member to the Ex-Im Bank’s five person board; all transactions over $10 million require board approval, and short of its required quorum of three members, no major loans can get through. Looking beyond the immediate fight over Ex-Im, however, underlying trends in both American and international politics suggest commercial diplomacy is on the rise.

The Ex-Im Bank is but one of many instruments of American commercial diplomacy; there is a wide range of policies the government uses to actively help individual American companies compete abroad. Through the Overseas Private Investment Corporation (OPIC), the U.S. government sells political risk insurance to American firms investing in “risky” developing countries. Moreover, U.S. ambassadors frequently lobby foreign governments to award procurement contracts to American firms. Similarly, officials from the Department of State, Department of Commerce, and Office of the U.S. Trade Representative often advocate for U.S. companies involved in investment disputes with foreign governments. What distinguishes active commercial diplomacy from general foreign economic policy—such as signing trade agreements—is that in involves deploying the resources and reputation of the government to help specific firms in particular transactions, rather than broadly setting the rules of the road for all firms to follow. It represents a significantly greater co-mingling of interests and activities between public and private actors.

While both Secretary of State John Kerry and Secretary of Commerce Penny Pritzker have placed considerable emphasis on advancing commercial diplomacy, the long running struggle to keep Ex-Im operating underlines the political fault lines that cut through the issue. On the one hand, as highlighted in the Ex-Im fight, commercial diplomacy can be criticized as crony capitalism or corporate welfare. Government resources are being used to support private gains. Thus those who prefer free and unfettered markets may see commercial diplomacy as simply another form of unnecessary government intervention, akin to industrial policy. At the same time, as globalization has come under attack from both the left and the right in this election cycle, it is easy to see how encouraging further globalization through commercial diplomacy could face populist pushback. Those supporting commercial diplomacy tend to favor greater integration in the global economy—a view which has found little support in the 2016 campaigns to date.

And yet, the current trends in American political debates over globalization may ultimately presage more, not less, reliance on commercial diplomacy. If politicians increasingly view the global economy through a zero-sum, mercantilist lens, they may be more eager to use the power and purse of the U.S. government to help American firms “win” abroad. Indeed, Congress, which has historically been more protectionist than the executive branch, has also consistently pushed the State Department to do more to actively defend the interests of U.S. companies operating overseas (see, for example, here and here). Aggressively fighting to help U.S. companies win contracts and compete abroad could be one plank of an “America First” policy. Thus even if America, and the world, becomes more protectionist, foreign economic policy may become even more preoccupied with assertive commercial diplomacy, even as interest in seeking mutual benefits through economic liberalization subsides.

If the U.S. government does start to prioritize more actively helping American firms in their foreign operations, it will still have a ways to go to catch up to many other countries. China, of course, is well known for using state resources to advance the commercial goals of Chinese firms venturing abroad—which should not be surprising, given that many of these firms are state-owned enterprises. But a number of other advanced democracies—including Japan, Korea, Germany, and France—also have closer and more coordinated relationships between big business and government than the U.S. does. And most of these countries show no signs of slowing down. As a recent report (PDF) from the Ex-Im bank notes, “In the wake of slowing global growth, foreign export credit agencies are becoming more aggressive.” In fact, some of these agencies are capitalizing on Ex-Im’s current plight, offering American companies export financing in return for the promise of job creation. General Electric Co., for instance, recently announced it would expand production in France because Coface, the French equivalent of Ex-Im, will finance GE projects in a number of emerging markets—the type of financing that GE used to get from Ex-Im.

Looking forward, unilateral disarmament in the competitive world of commercial diplomacy—as the U.S. is currently doing with the Ex-Im Bank—is likely to become increasingly rare. The ultimate effects of this accelerating international competition, in both economic and political terms, remain to be seen.

In the course of two days last week, the U.S. Congress passed two foreign aid bills.

What’s more, in the course of five months, Congress has passed three foreign aid bills!

All three bills passed with strong bipartisan leadership and support.

Equally important, all three bills reflect a new era of a more modernized approach to assistance.

The bills avoid many of the problems of past aid legislation, including micromanagement, earmarks, and requirement of frequent reports that are seldom read by members of Congress or their staffs. Each bill was developed in cooperation with the Obama administration and reflects its policies and civil society priorities. And they emphasize strategic approaches, results, use of data, monitoring and evaluation, and learning.

The Foreign Assistance Accountability and Transparency Act of 2016, sponsored by Republicans Sen. Marco Rubio and Rep. Ted Poe and Democrats Sen. Ben Cardin and Rep. Gerry Connolly, is grounded in important principles of foreign aid reform. It enacts into law key policies advocated by the Modernizing Foreign Assistance Network and supported by the U.S. Global Leadership Coalition and many other international development and foreign policy organizations. Robust evaluation and aid transparency, first elevated as elements of the Millennium Challenge Corporation by the Bush administration and later adopted by the Obama administration across all foreign affairs agencies, are institutionalized by the bill. The bill calls for two reports 18 months after enactment, not annual, year-after-year reports, which had been the normal practice and usually resulted in shelves of unread reports. One report will be from the president outlining the monitoring and evaluation guidelines called for in the report, and the other report will be from the Government Accountability Office assessing those guidelines.

This type of independent, objective evaluation is essential to improving assistance; it assesses what we have tried and improves our understanding of what does and does not work. When aggregated across multiple evaluations of similar programs, it produces new knowledge and learning.

Transparency, another important element of aid reform, brings multiple benefits. It provides all stakeholders, including Congress, U.S. taxpayers, intended beneficiaries, government officials, and civil societies in recipient countries, with data and information that allows them to understand where and how assistance is used. It provides data that is critical to making informed decisions. And it keeps agencies and programs focused on their mission and objectives by permitting public scrutiny and accountability.

The Global Food Security Act of 2016, sponsored by Republicans Sen. Johnny Isakson and Rep. Chris Smith and Democrats Sen. Bob Casey and Rep. Betty McCollum, writes into law the administration’s initiative Feed the Future. The core of the bill is a mandate of the president to coordinate a comprehensive U.S. global food security strategy—such a forward-looking strategy will help gain stakeholder buy-in and ultimately provide more consistent, rationale policies and programs. Also included are guidelines that we know from experience produce good development—measurable goals and performance metrics, solid monitoring and evaluation, clear criteria for selecting targets, alignment with local policies and priorities, multi-sectoral approaches, building local capacity and resilience, and partnership with the private sector. The bill authorizes funding for food security but does not earmark it—meaning the funds are authorized but are not required to be expended. And the bill calls for only a single report to Congress a year after the issuance of the strategy.

The third bill, the Electrify Africa Act of 2015, sponsored by Republicans Sen. Bob Corker and Rep. Ed Royce and Democrats Sen. Ben Cardin and Rep. Elliot Engel, is centered on a comprehensive energy strategy for Africa. Similarly, the legislation calls for a strategy that is flexible and responsive to local communities and for policies that promote transparent and accountable governance, local consultation, and monitoring and evaluation. The bill requires two reports, the first within six months of enactment to transmit the strategy and the second three years after enactment to report on implementation. The bill directs U.S. government agencies to use accountable and metric-based targets to measure effectiveness of assistance and to leverage private and multilateral finance.

For those who say that Congress does not support foreign assistance, let’s hope this legislative triple-hat puts that to rest. Similarly, for those who say the Congress does not understand a more effective approach to development, maybe it’s time to become a believer.

China has provided foreign assistance since the 1950s, and is now the largest developing country to provide aid outside of the Development Assistance Committee (DAC), a forum of the world’s major donor countries under the Organization for Economic Cooperation and Development (OECD). Like its foreign policy more broadly, Chinese foreign assistance has adhered to the “Five Principles of Peaceful Coexistence” and emphasized the virtue of national self-reliance. At the same time, it has served a strategic purpose alongside other foreign policy priorities.

A slow start but a steady increase

Compared to top DAC donor countries, the scale of China’s foreign assistance is still relatively small. According to some estimates and OECD International Development Statistics, China’s gross foreign aid in 2001 was extremely limited, amounting to only about 1.8 percent of the total contribution by DAC donors. However, since launching its “Go Global” strategy in 2005, China has deepened its financial engagement with the world, and its foreign aid totals have grown at an average rate of 21.8 percent annually. In 2013, China contributed about 3.9 percent to total global development assistance, which is 6.6 percent of the total contribution by DAC countries and over 26 percent of total U.S. foreign aid. 

Millions of USD (Current)

Gross foreign aid provided by China versus major DAC donors

And the lion’s share goes to: Africa

Africa is one of China’s most emphasized areas of strategic engagement. Particularly since the establishment of the Forum on China-Africa Cooperation (FOCAC) in 2000, the relationship between China and Africa has gotten closer and closer. In 2009, African countries received 47 percent of China’s total foreign assistance. Between 2000 and 2012, China funded 1,666 official assistance projects in 51 African countries (the four countries that don’t have diplomatic relations with China—Gambia, Swaziland, Burkina Faso, and São Tomé and Príncipe—were left out), which accounted for 69 percent of all Chinese public and private projects. Among the 1,666 official projects, 1,110 qualified as Official Development Assistance (ODA)—defined by the OECD as flows of concessional, official financing administered to promote the economic development and welfare of developing countries. The remaining 556 projects could be categorized, also according to the OECD, as Other Official Flow (OOF)—transactions by the state sector that are not “development-motivated” or concessional (such as export credits, official sector equity and portfolio investment, and debt reorganization). (Note: in terms of dollar amounts, not included in the statistics here, most Chinese lending to Africa and other parts of the developing world is not concessional and is therefore not foreign aid.)

Zeroing in on infrastructure

About 61 percent of Chinese concessional loans to Africa are used for infrastructure construction, and 16 percent are for industrial development. The three areas that receive the largest allocations of Chinese concessional loans are transport and storage; energy generation and supply; and industry, mining, and construction. A small portion of the remaining allocations go to health, general budget support, and education. 

Some have interpreted these trends to mean that China is making an effort to export domestic excess capacity in manufacturing and infrastructure, especially considering the uncertainties of China’s economic transition. But the motivations are broader than that. China’s “Africa Policy”—issued in December 2015, in Johannesburg—clearly expresses the Chinese government’s belief that infrastructure construction is a crucial channel for African development. This notion could be connected to the domestic Chinese experience of having benefited from the technological diffusion of foreign aid and foreign direct investment in the construction sector. Moreover, in practice, China’s more than 20 years of experience in implementing international contract projects, as well as advanced engineering technologies and relatively low labor costs, have proved to be a comparative advantage in Chinese foreign assistance. In addition, by prioritizing the principles of non-interference and mutual benefit, China is more comfortable providing infrastructure packages (e.g., turn-key projects) than many other countries. 

Doing assistance better

Legitimate concerns have been raised about China’s tendency to facilitate authoritarianism and corruption, as well that its assistance does not always trickle down to the poor. As such, the state-to-state Chinese approach to providing assistance should be reformed. Globalization scholar Faranak Miraftab indicates that on-the-ground partnerships between communities and the private sector—mediated by the public sector—could achieve synergies to overcome certain shortcomings, creating a win-win situation. With deeper involvement by domestic assistance providers, Chinese foreign assistance could touch more people’s lives by tackling both the short- and long-term needs of the most under-resourced parts of civil society. Domestic assistance providers should exploring public-private partnerships, which among other benefits could yield increased foreign assistance services. By focusing on its comparative advantage in contributing to infrastructure projects that benefit the general public while also facilitating participation from civil society, Chinese foreign assistance could bring more concrete benefits to more individuals. 

China has already begun tackling these and other weaknesses. Although infrastructure and industry still account for the largest share of total official projects in Africa, China has intentionally strengthened its official development finance efforts in areas related to civil society. Projects have surged in the areas of social infrastructure and services, developmental food aid and food security, support to non-governmental organizations, and women in development, to name a few. Moreover, following President Xi Jinping’s promise at the United Nations summit in September 2015, an initial $2 billion has been committed as a down payment toward the China South-South Cooperation and Assistance Fund. The funding is primarily designed to improve the livelihoods of residents of recipient countries and diversify domestic aid providers (e.g., NGOs) qualified to participate or initiate assistance projects in the least-developed countries. 

In order to achieve positive results, it is critical for the Chinese government to carry out detailed management initiatives to engage civil society: for example, establishing a complete system for information reporting and disclosure (actions have already been taken in several ministries and bureaus), publishing guidelines for the private sector to develop assistance services overseas, and improving coordination and accountability among ministries and within the Ministry of Commerce. Although challenges still remain, Chinese foreign assistance is moving in a positive direction without abandoning its defining characteristics.