Next Sunday’s first round of the Tunisian presidential election is unlikely to produce an outright winner but the country can already lay claim to the most democratic success story in the uncertain post-Arab Spring period.

Earlier this year, the Islamist-led National Constituent Assembly in Tunis produced a pluralist constitution that set the stage for a parliamentary contest on October 26 in which the incumbents lost. That simple fact of political alternation is a historic milestone: Ennahda is not the only Islamist party to lose the confidence of its initial protest-vote electorate, but it is the first to live to tell the tale.

Islamist participation in the democratic process

The birthplace of the Arab Spring offers a tantalizing third way toward Islamist participation in the democratic process: a Goldilocks outcome between Turkish majoritarianism and Egyptian militarism. Tunisia is different: it is smaller, lacks a hegemonic army, and Ennahda doesn’t have anywhere near a majority of votes.

The alluring tableau, however, conceals a fragmented elite and a scattered electorate. Twenty-seven parties declared candidates for president, although a handful have dropped out. Last month, more than 15,000 candidates running on over 1,300 party lists vied for 217 parliamentary seats. Only two-fifths of eligible adults registered to vote and less than two-thirds of them actually voted.

The main pattern to emerge from parliamentary elections is the same that has defined the country for decades: an existential battle between Islamists and anti-Islamists with a majority for neither. The Islamists lost six percentage points (32 percent) but the secularists were not exactly embraced. Taking into account non-registration and abstention, the victorious party Nidaa Tounes’s share of the legislative vote (38 percent) corresponds to roughly one out of five eligible voters.

These results accurately reflect a highly polarized society. Nidaa Tounes is led by presidential frontrunner Beji Caïd Essebsi, an 87-year-old who served under every regime since 1956 independence and who stoked voters’ fear of Ennahda’s “seventh century project” during the campaign. Ennahda’s leadership framed the election as a contest “between supporters of the revolution and supporters of the counter-revolution.” It is the only Muslim-majority country where nearly half of the population claims to never step foot in a mosque.

Do Tunisians favor “authoritarian government”?

For the first time since the 2011 revolution, polling this summer showed a majority of Tunisians favoring “authoritarian government” over an “unstable” democratic government. Also for the first time, Ennahda declined to field a presidential candidate to contain apprehensions about them. While Essebsi mostly enjoys an untainted reputation his party, Nidaa Tounes is a loose coalition including many holdovers from the previous regime.

The last time electoral democracies experienced a comparable juncture was not in 2013 Cairo or Gezi Park, but rather Rome during the tense 1970s. In 1976, the Italian Communist Party received one-third of the votes, making it the largest Communist electoral bloc west of the Iron Curtain. Frequent small-scale terrorist attacks took place against the backdrop of global tensions between NATO and Warsaw Pact members.

It is hard to remember a time when the term “socialism” provoked as much angst as “Sharia” does today, but Tunisia stands at a crossroads analogous to the old Cold War alternatives of Washington and Moscow, with Qatar and other Gulf states filling the shoes of the old “evil empire.”

Recognizing that Italy was too divided to govern alone, party leader Enrico Berlinguer proposed a historic compromise (compromesso storico) with the archenemy Christian Democrats to bridge a seemingly impassible cultural-political gap.

Ennahda party faces doubts

Today’s Ennahda party faces the same doubts as Communist leaders in postwar Europe: are they truly pluralist democrats? Do they accept power sharing? The executive director of Nidaa Tounes, Mondher Belhadj Ali, said in an interview in Tunis earlier this year that Ennahda must undergo the equivalent process of the various leftist parties in Europe during the Cold War. The party needs to renounce its “jihadist logic,” Belhadj said, in the same way that the German left distanced itself from international Marxist-Leninist creed at Bad Godesberg in 1959.^[1]

To be considered trustworthy despite its association with a revolutionary ideology, the Italian Communist Party (Partito Comunista Italiano, or PCI) underwent key shifts. Its leadership broke with the international Comintern by supporting Italy’s NATO membership. They also refused Moscow’s order of “intransigence” through silent partnership with a Christian Democrat-led government, giving way to the “via Italiana” – an Italian path – to socialism.

Why did the PCI pursue this path at a moment of rising strength, when their share of the vote was peaking at 32 percent? Italian Communists had no doubt noticed that NATO countries were willing to forego democratic outcomes in Chile three years earlier in the name of political stability and anti-communism.

“Alternative to the Islamic State”

It is also apparent that Ennahda’s leadership has correctly interpreted the West’s silence after the arrest of Egypt’s first democratically elected president last year. The party’s agreement to omit the word “Sharia” from the constitution, its decision to ban the extremist group Ansar Echaria and its voluntary departure from political posts in 2013 have been taken as early signs of a willingness to compromise. There is no exact Islamist equivalent to Moscow and the Comintern, but Ennahda has offered itself up as “the alternative to the Islamic State.” Ennahda has also adopted an official party line not to govern alone but only in alliance with other parties. Party leader Rached Ghannouchi said he hopes to avoid “the repetition of the Egyptian bilateral polarizing model.”

Political pressure already forced Ennahda and its partners to wage not merely ideological but also actual military war on violent Islamist extremism. The martyrs of the Tunisian Revolution now include not only the two secular politicians who were assassinated in the first half of 2013 but also the 39 Tunisian soldiers who have been killed since then – including five in an attack earlier this month.

The interim government has not hesitated to combat religious enemies of the state. President Moncef Marzouki, a human rights activist, looked ashen in an interview in his office this summer: “I deeply regret it: it means killing and arresting people but I have to defend this state” – at times leading to the deaths of a dozen combatants per month, including six on election weekend.^[2]

In the years since the revolution, through a mixture of coercion and conviction, the religious affairs ministry whittled down the number of prayer spaces under the control of Salafi extremists from over 1000 in 2011 to under 100 today. This summer, the government fired an imam who refused to say prayers for a soldier who died in a raid on an Islamist cell.”^[3]

Like Berlinguer before him, Ghannouchi has made timely visits to meet with American officials and offer democratic reassurances – but to far greater effect than the Italian Communists ever managed. Washington’s reception of the PCI is captured by the chiaroscuro headshot of Berlinguer on a June 1976 cover of Time declaiming “The Red Threat.” In 2012, the magazine named Ghannouchi one of the “World’s Most Influential People,” someone who offers “a vision of a moderate, modern and inclusive political movement.”

Critics will point out that shortly after the compromesso storico, the Communist Party’s electoral base bottomed out. Left-wing terrorism did taper off but not before the Red Brigades kidnapped and executed the Communists’ main Christian Democratic interlocutor, former Prime Minister Aldo Moro, in 1978.

Compromise may lead to national unity

With counterterrorism support to resist such extremist violence on the fringes and more enthusiastic backing from Western capitals, however, a Tunisian historic compromise may yet deliver the national unity that the country needs to advance to self-confident partisan rule – and mutual faith in political alternation. The recent announcement of joint U.S.-Tunisian counter-terrorism exercises and a gift of $14 million worth of equipment and supplies are small in scale but their timing conveys a broader reassurance.

The lack of a clear political mandate may turn out to be the hidden advantage of this inaugural election season in Tunisia. The country’s political parties can now use the first full presidency and parliamentary session of a democratic Tunisia to blaze a third way between military rule and majoritarian Islamist democracy.

Just as Italian communism was a different animal than the Soviet Communist Party, Tunisian exceptionalism is a real thing. The accelerated modernization period under Independence leader Habib Bourguiba after decolonization left behind the lowest illiteracy rate and lowest birthrate in the neighborhood. Its relatively peaceful democratic revolution has now passed several institutional milestones. As President Moncef Marzouki put it, “if the experiment in Islamic democracy doesn’t work here then it’s unlikely to work anywhere.”^[4]

The Italian Communist Party voted to dissolve itself almost 24 years ago, not long after the Berlin Wall fell and sealed its obsolescence. An equivalent geopolitical shift in Sunni Islam – away from the hegemony of ideologically rigid Gulf States – is as unimaginable now as was the thaw of November 1989. But a great compromise between the region’s modern nemeses – secularist and Islamist – could well dislodge the first brick.

---

[1] Jonathan Laurence interview with Mondher Belhadj Ali, May 2014, Tunis, Tunisia.
[2] Jonathan Laurence interview with Tunisian President Moncef Marzouki, May 2014, Carthage, Tunisia.
[3] Jonathan Laurence Interview with Tunisian Minister of Religious Affairs Mounir Tlili, May 2014, Tunis, Tunisia.
[4] Ibid.

       

Event Information

The Brookings Doha Center (BDC) hosted a panel discussion on April 21, 2015 regarding Libya’s displacement crisis amid the country’s ongoing violence. The panelists were Houda Mzioudet, a journalist, researcher, and commentator on Libyan and Tunisian affairs; Megan Bradley, a non-resident fellow at the Brookings-LSE Project on Internal Displacement and assistant professor at McGill University, and Ibrahim Sharqieh, the deputy director of the BDC. Sultan Barakat, the BDC’s director of research, moderated the event, which was attended by members of Qatar's diplomatic, academic, and media community.

Sultan Barakat opened the discussion by explaining that the main difference between refugees and internally displaced persons (IDPs) is whether they are able to cross a border. By doing so, refugees gain access to certain types of status and assistance. Otherwise, both groups’ experience of being uprooted is similar, as they are likely to lose their livelihoods, friends, family, and end up in a difficult environment where they are at the mercy of others. Barakat argued that the international community has proven it cannot deal with these challenges, especially in a dignified way, and called for a reexamination of the 1951 Refugee Convention.

Ibrahim Sharqieh then described the displacement crisis within Libya, starting with the 2011 revolution that removed Gadhafi from power. He reported that the number of IDPs in the wake of the fighting reached 550,000, most of whom fled for political reasons, as they were Gadhafi supporters. He said that most IDPs returned to their homes after Gadhafi’s defeat, with the numbers falling to 56,000 by early 2014, though some groups such as the Tawerghans and the Mashashya tribe continued to face difficult situations. Sharqieh noted that due to Libya’s current civil war, the number of IDPs has now increased to 400,000. Many of them are scattered over 35 towns and cities, often lacking shelter due to the small number of available camps. He added that Libya’s IDPs often get caught in crossfire between militia groups, particularly in Benghazi and near Tripoli’s airport, and their movements have been restricted. He found that IDPs from Tawergha at the Janzour camp near Tripoli faced discrimination when they left the camp, which extended to their children that attend area schools.

According to Sharqieh, the ultimate solution is a successful transition where there is national reconciliation and the establishment of a transitional justice law, but he noted that this is not very likely because of the ongoing civil war and presence of rival governments. In the meantime, he expressed that parties to the conflict have an obligation to protect IDPs, providing humanitarian support and education as well. Sharqieh also advocated for IDPs being represented in the ongoing U.N.-sponsored negotiations to ensure that their situation is addressed. He reported that the Tawerghans are highly organized, in communication with the state, and have been able to forge some agreements with Misrata, while more recently displaced IDPs are basically just on the run.

Houda Mzioudet then discussed the Libyans who have crossed into Tunisia, noting that Tunisians historically have not considered Libyans refugees because of their close relations. She said that in 2011 these Libyans’ presence was not considered a major problem, as many found refuge with Tunisian families in the south and Tunisia received U.N. support. She noted, however, that a new wave of Libyans last summer had complicated matters, as these communities were more politically and ideologically diverse. Asked by Barakat whether refugees were bringing Libya’s politics with them, Mzioudet said the Libyans were accused at one time of trying to stir up trouble, but the government took a firm stance against them getting involved in Tunisia’s politics.

Mzioudet argued that the main concern now is how Libyans can be assisted, as many of them have lost trust in the Libyan authorities and are fearful of approaching the Libyan embassy. She reported that Libyans are now living in a state of limbo: they do not need visas, which enables them to live underground, but also prevents them from getting jobs. Mzioudet described this as a challenge for Tunisian authorities, as clear information about these Libyans is hard to come by. She cited estimates of their numbers ranging from the government’s 1.5 million (roughly 10 percent of Tunisia’s population) to a recent study’s 300,000-400,000.

Mzioudet noted that the U.N. High Commissioner for Refugees (UNHCR) has encouraged Libyans to come forward and register, but many have refused to do so. She also recounted that the Tunisia’s extradition of ex-Libyan Prime Minister Al-Baghdadi Al-Mahmoudi caused an uproar and frightened many Libyans. Though Mzioudet noted that civil society groups have done much to help Libyan refugee communities, the U.N. has prioritized other needs and Tunisia is not recognized as a host country by international community. She added that at this point some Libyans are not able to make ends meet and some women have turned to prostitution as a result.

Megan Bradley’s presentation stressed the need for a holistic approach to Libya’s displacement crisis and the importance of thinking about the relationships between the refugee and IDP populations. She explained that the accepted durable solutions for each were similar: local integration in the country of asylum or community where they are sheltering, resettlement to a third country or community, or voluntary repatriation in conditions of safety and dignity. Bradley noted that the expectation generally seems to be that repatriation and return will be the predominant approach for Libyan refugees and IDPs, as occurred remarkably quickly following the revolution. She said this was possible largely because Libyans were able to finance their own returns—rare in displacement situations. Similarly, many displaced Libyans are continuing to depend on their own resources, which Bradley warned is not sustainable.

Bradley went on to make four specific points. First, she emphasized that under international law, the return of displaced persons must be voluntary. She argued that the vast majority of Libyan exiles have legitimate security concerns and should benefit from protections against refoulement, defined as the expulsion of vulnerable individuals. Secondly, Bradley said it was time to think about resources and increased donor contributions, challenging as it may be. She then turned to transitional justice and reconciliation, noting how the overly punitive nature of Libya’s political isolation law and the concept of collective responsibility had needlessly increased displacement. Lastly, Bradley called for delivering current support in ways that can lay groundwork for durable solutions, such as getting Libyan children in schools, providing adequate healthcare, and bringing them out of the shadows.

When Barakat asked about European support for Tunisia, Bradley noted that these countries have a huge potential role to play. At the same time, she suggested that the Tunisian government has not forceful enough in requesting their assistance. With regards to the migration crisis in the Mediterranean, Bradley and the other panelists urged the international community and especially the European Union to put greater emphasis on resolving the political vacuum in Libya and elsewhere on the continent, while allowing for resettlement and legal labor migration in the meantime. In response to a suggestion from an attendee that Libyans should not be considered refugees because they are all still receiving stipends from Libyan institutions, Bradley countered that refugee status has nothing to do with financial resources, but the need for protection. Mzioudet added that some Libyans have reported that their salaries have been withheld, perhaps for past misdeeds, pushing them into destitution.

Sharqieh condemned the failure to recognize what are clearly refugees in Tunisia as such, suggesting that it is convenient for the UNHCR and government of Tunisia because it limits their obligations. Still, he held that many IDPs would return home given effective rule of law and a reliable judicial system, though otherwise they could not risk it. Barakat closed the discussion by suggesting that, considering the trend of intractable conflicts, it was time for a regional approach to handling the resulting displacement issues.

Video

• Uprooted, unprotected: Libya’s displacement crisis
• المقتلعون غير المحميين: أزمة النازحين في ليبيا

Transcript

• Event Transcript (.pdf)

Event Materials

• libya transcript

      

Five years have passed since several Arab countries revolted against their repressive regimes, and peace and stability are nowhere in sight. The unraveling of their political systems pushed these countries into challenging transition processes where violence is always a serious possibility. Yemen and Libya’s civil wars present blunt examples of failed transitions, raising concerns about protracted political instability, not only in those two countries, but potentially in neighboring ones as well. Tunisia theoretically managed to complete its transition successfully. It ratified a new constitution, addressing the need for a new social contract, and held two rounds of elections. Tunisia also passed a transitional justice law to provide a framework for adjudicating both victims’ grievances and perpetrators’ crimes of the past political era. Nonetheless, Tunisia finds its stability challenged by increasing levels of polarization between its various societal segments.

The fact of the matter is that political transitions take a long time—years if not decades—and transitioning countries face the risk of violence. Arab Spring societies are unlikely to transition to sustainable peace and stability as long as they are wracked by deep divisions. Therefore, national reconciliation is paramount to reducing the societal polarization that currently cripples Libya and Yemen and threatens Tunisia’s progress. To attain enduring peace and stability, post-revolution states must engage in inclusive national reconciliation processes, including a national dialogue, a truth-seeking effort, the reparation of victims’ past injuries, dealing with the former regime, and institutional reform. Women, civil society, and tribes, among other social forces, can support the transition process. Yemen, Libya, and Tunisia have each taken specific approaches to trying to reconcile their post-revolution societies, raising or diminishing the chances of civil war or a healthy transition.

An inclusive national dialogue is the starting point of a comprehensive national reconciliation process. It gives transitioning societies an opportunity to develop a vision and theoretical framework for their futures, gives legitimacy to transition processes, and encourages negotiation and compromise. Tunisia held a homegrown national dialogue driven mainly by civil society organizations and Yemen completed an eight-month, U.N.-assisted national dialogue conference. Libya’s engagement in U.N.-led negotiations raised questions over whether all parties had representation.

As each society suffered decades of repression and has a number of unanswered questions, investigating—and dealing with—the truth about the past is also essential. Relatedly, determining how to handle former regime elements has profound implications for post-revolution transitions. While Libya opted to purge all those who served in Muammar Qaddafi’s regime through adopting its “Political Isolation Law,” Yemen chose to grant President Ali Abdullah Saleh immunity from prosecution in return for his abdication—sacrificing justice to preserve peace. However, Saleh later returned to politics, allying with the Houthis to take over the state, meaning Yemen ultimately achieved neither justice nor peace. Tunisia, on the other hand, has adopted a transitional justice law that mandates, among other measures, the investigation and prosecution of the state’s crimes since 1955. While the resulting Truth and Dignity Commission has received thousands of complaints from victims of past abuses, progress has otherwise been slow, as the body has struggled to establish an effective organizational structure or execute a clearly defined work plan. Controversy over the selection of commissioners and an overall lack of publicity has also hindered the truth-seeking process.

Reparations are another important part of the pursuit of justice and healing. Done correctly, they can bring previously marginalized and abused segments of society back into the mainstream, where they can make positive contributions to the development of the country. Yemen and Tunisia experienced extensive human rights violations during the decades-long reigns of Saleh and Zine El Abidine Ben Ali, while lacking the resources to engage in meaningful and comprehensive rehabilitation of victims of past abuses. This left the two countries’ transition processes struggling with a major component—the victims—feeling further marginalization added to their past traumas. Libya, however, who has the resources to fund a process of thorough rehabilitation of victims of its dictatorship, slid into civil war that prevented the proper addressing of past wounds.

Even if these societies overcome their polarization at the personal level, however, they will not accomplish successful transitions unless their healing is accompanied by institutional reforms. “Regime renovation” rather than “regime change” in Yemen presented a serious obstacle to deep reforms of state institutions, eventually leading to some segments of security units taking part in Saleh-Houthi coup against the transitional government. After the collapse of the Qaddafi regime, revolutionaries and militias demanded a purge as a method of institutional reform—similar to de-Baathification in Iraq. The purge contributed to the outbreak of a civil war. Tunisia, on the other hand, approached institutional reform from a different angle and succeeded in putting together a sound formula, but it is facing serious challenges to implementation.

Ultimately, a variety of actors have played key roles in Libya, Yemen, and Tunisia’s national reconciliation processes. In all three countries, women have been integral to bringing about change, and must continue to be involved in reshaping their countries. As agents of change, women helped to initiate the uprisings in Yemen and Libya, and have already proven to be effective agents of reconciliation. In Yemen and Libya, tribes are key stakeholders that must be incorporated after decades of manipulation and marginalization. Depending on the way they become involved, tribes could play key role in either stabilizing or destabilizing transitions. Domestic civil society groups have been essential to Tunisia’s progress so far, and are fast developing in Yemen and Libya. Their continued involvement—and assistance from international groups—will go a long way toward consolidating new states that honor human and civil rights.

The processes of national dialogue, truth seeking, reparation, accountability, and institutional reform, especially if supported by key agents of reconciliation, including women, civil society, and tribes, can combine to create the momentum needed to bridge divides and help post-Arab Spring societies move toward sustainable peace, stability, and development.

This piece was originally published on the Yale Press Blog.

For more of Ibrahim Fraihat’s analysis on Yemen, Libya, and Tunisia after the Arab Spring, read his new book “Unfinished Revolutions” (Yale University Press).  

       

It’s easy to imagine a future in a decade or less when most people will have a smartphone. In our recent paper Pathways to Smarter Digital Financial Inclusion, we explore the benefits of extending financial services to the mass of lower-income people in developing countries who are currently dubious of the value that financial services can bring to them, distrustful of formal financial institutions, or uncomfortable with the treatment they expect to receive.

The report analyzes six inherent characteristics of smartphones that have the potential to change market dynamics relative to the status quo of simple mobile phones and cards. 

Customer-Facing Changes:

1. The graphical user interface.
2. The ability to attach a variety of peripheral devices to it (such as a card reader or a small printer issuing receipts).
3. The lower marginal cost of mobile data communications relative to traditional mobile channels (such as SMS or USSD).

Service Provider Changes:

4. Greater freedom to program services without requiring the acquiescence or active participation of the telco.
5. Greater flexibility to distribute service logic between the handset (apps) and the network (servers).
6. More opportunities to capture more customer data with which to enhance customer value and stickiness.

Taken together, these changes may lower the costs of designing for lower-income people dramatically, and the designs ought to take advantage of continuous feedback from users. This should give low-end customers a stronger sense of choice over the services that are relevant to them, and voice over how they wish to be served and treated.

Traditionally poor people have been invisible to service providers because so little was known about their preferences that it was not possible build a service proposition or business case around them. The paper describes three pathways that will allow providers to design services on smartphones that will enable an increasingly granular understanding of their customers. Each of the three pathways offers providers a different approach to discover what they need to know about prospective customers in order to begin engaging with them. 

Pathway One: Through Big Data

Providers will piece together information on potential low-income customers directly, by assembling available data from disparate sources (e.g. history of airtime top-ups and bill payment, activity on online social networks, neighborhood or village-level socio-demographic data, etc.) and by accelerating data acquisition cycles (e.g. inferring behavior from granting of small loans in rapid succession, administering selected psychometric questions, or conducting A/B tests with special offers). There is a growing number of data analytics companies that are applying big data in this way to benefit the poor.

Pathway Two: Through local Businesses

Smartphones will have a special impact on micro and small enterprises, which will see increasing business benefits from recording and transacting more of their business digitally. As their business data becomes more visible to financial institutions, local firms will increasingly channel financial services, and particularly credit, to their customers, employees, and suppliers. Financial institutions will backstop their credit, which in effect turns smaller businesses into front-line distribution partners into local communities.

Pathway Three: Through Socio-Financial Networks

Firms view individuals primarily as managers of a web of socio-financial relationships that may or may not allow them access to formal financial services. Beyond providing loans to “creditworthy” people, financial institutions can provide transactional engines, similar to the crowdfunding platforms that enable all people to locate potential funding sources within their existing social networks. A provider equipped with appropriate network analysis tools could then promote rather than displace people´s own funding relationships and activities. This would provide financial service firms valuable insight into how people manage their financial needs.

The pathways are intended as an exploration of how smartphones could support the development of a healthier and more inclusive digital financial service ecosystem, by addressing the two critical deficiencies of the current mass-market digital finance systems. Smartphones could enable stronger customer value propositions, leading to much higher levels of customer engagement, leading to more revelation of customer data and more robust business cases for the providers involved. Mobile technology could also lead to a broader diversity of players coming into the space, each playing to their specific interests and contributing their specific set of skills, but together delivering customer value through the right combination of collaboration and competition.

      

Editor’s Note: Brookings will hold an event and live webcast on Wednesday, August 26 to discuss the findings of the 2015 Financial and Digital Inclusion (FDIP) Report and Scorecard. Follow the conversation on Twitter using #FinancialInclusion 

Access to affordable, quality financial services is vital both for ensuring the financial well-being of individuals and for fostering broader economic development. Yet about 2 billion adults around the world still do not have formal financial accounts.

The Financial and Digital Inclusion Project (FDIP), launched within the Center for Technology Innovation at Brookings, set out to answer three key questions:

• Do country commitments make a difference in progress toward financial inclusion?
• To what extent do mobile and other digital technologies advance financial inclusion?
• What legal, policy, and regulatory approaches promote financial inclusion?

To answer these questions, the FDIP team spent the past year examining how governments, private sector entities, non-government organizations, and the general public across 21 diverse countries have worked together to advance access to and usage of formal financial services. This research informed the development of the 2015 Report and Scorecard — the first in a 3-year series of research on the topic.

For the 2015 Scorecard, FDIP researchers assessed 33 indicators across four dimensions of financial inclusion: Country commitment, mobile capacity, regulatory environment, and adoption of selected basic traditional and digital financial services.

The 2015 FDIP Report and Scorecard provide detailed profiles of the financial inclusion landscape in 21 countries, focusing on mobile money and other digital financial services.

On August 26, the Center for Technology Innovation will discuss the findings of the 2015 Report and Scorecard and host a conversation about key trends, opportunities, and obstacles surrounding financial inclusion among authorities from the public and private sectors.

Register to attend the event in-person or by webcast, and join the conversation on Twitter at #FinancialInclusion.

      

The 2015 Brookings Financial and Digital Inclusion Project (FDIP) Report and Scorecard evaluates access to and usage of affordable financial services across 21 geographically and economically diverse countries.

The FDIP Report and Scorecard seek to answer a set of fundamental questions about today’s global financial inclusion efforts, including: 1) Do country commitments make a difference in progress toward financial inclusion?; 2) To what extent do mobile and other digital technologies advance financial inclusion?; and 3) What legal, policy, and regulatory approaches promote financial inclusion?

John D. Villasenor, Darrell M. West, and Robin J. Lewis analyzed the financial inclusion landscape in Afghanistan, Bangladesh, Brazil, Chile, Colombia, Ethiopia, India, Indonesia, Kenya, Malawi, Mexico, Nigeria, Pakistan, Peru, the Philippines, Rwanda, South Africa, Tanzania, Turkey, Uganda, and Zambia. Countries received scores and rankings based on 33 indicators spanning four dimensions: country commitment, mobile capacity, regulatory environment, and adoption.

The authors’ analysis also provides several takeaways about how to best expand financial inclusion across the world:

• Country commitment is fundamental.
• The movement toward digital financial services will accelerate financial inclusion.
• Geography generally matters less than policy, legal, and regulatory changes, although some regional trends in terms of financial services provision are evident.
• Central banks, ministries of finance, ministries of communications, banks, nonbank financial providers, and mobile network operators play major roles in achieving greater financial inclusion.
• Full financial inclusion cannot be achieved without addressing the financial inclusion gender gap.

This year’s Report and Scorecard is the first of a series of annual reports examining financial inclusion activities around the world.

View the full report and a full compendium of the country rankings here.

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• Download the report

      

Event Information

Approximately two billion adults across the world lack access to formal financial services. To address this particular economic challenge, many developing countries have made significant efforts to expand access to and use of affordable financial services for the world’s poor. Financial inclusion can be achieved via traditional banking offerings, but also through digital financial services such as mobile money, among other innovative approaches.

The Brookings Financial and Digital Inclu­sion Project (FDIP) Report and Scorecard seeks to help answer a set of fundamental questions about today’s global financial inclusion efforts, including;

1. Do country commitments make a difference in progress toward financial inclusion?
2. To what extent do mobile and other digital technologies advance finan­cial inclusion?
3. What legal, policy, and regulatory approaches promote financial inclusion? 

To answer these questions, Brookings experts John D. Villasenor, Darrell M. West, and Robin J. Lewis analyzed finan­cial inclusion in 21 geographically, economically, and politically diverse countries. This year’s report and scorecard is the first of a series of annual reports examining financial inclusion activities and assessing usage of financial services in selected countries around the world. 

On August 26, the Center for Technology Innovation at Brookings held a forum to launch the 2015 FDIP Report and discuss key research findings and recommendations. Financial inclusion experts from the public and private sectors also joined the discussion.

Join the conversation on Twitter at #FinancialInclusion and @BrookingsGov

Video

• Measuring progress on financial and digital inclusion

Audio

• Measuring progress on financial and digital inclusion

Transcript

• Uncorrected Transcript (.pdf)

Event Materials

• 20150826_financial_inclusion_transcript

      

Editors Note: On August 23, the Center for Technology Innovation (CTI) released the 2015 Financial and Digital Inclusion Project Report and Scorecard. Brookings will hold an event and live webcast on Wednesday, August 26 to discuss the report’s findings. Follow the conversation on Twitter using #FinancialInclusion and submit comments on the report to FDIPComments@brookings.edu.

Around the world, some two billion adults lack access to an account at a formal financial institution. In order to shrink that number, many countries have made commitments to expanding financial services to the poor. These commitments include recognizing the importance of financial inclusion, developing an inclusion policy, and using data to measure progress toward inclusion goals. The Brookings Financial and Digital Inclusion Project (FDIP) evaluates access to and usage of affordable financial services by underserved people across 21 countries. Of these countries, Kenya, South Africa, Brazil, Rwanda and Uganda were the top scorers.

The 2015 FDIP Report and Scorecard rank these countries based on four dimensions of financial inclusion: country commitment, mobile capacity, regulatory environment, and adoption of traditional and digital financial services. The findings indicate that country commitments do matter for achieving financial inclusion. Some regional trends are present, such as the relatively higher amount of money stored on mobile accounts in Africa. Mobile technology accelerates financial inclusion in places that lack legacy financial institutions. Additionally, a gender gap persists in ownership of financial accounts that could be reversed with greater access to mobile money services. The 2015 Report and Scorecard are the first in a series of publications intended to provide policymakers, the private sector, nongovernmental organizations, and the general public with information that can help improve financial inclusion in these countries and around the world.

 View the 2015 Brookings FDIP Report and Scorecard, watch the webcast of the live event, and send feedback on the report to FDIPcomments@brookings.edu.

      

Editor’s note: This post is part of a series on the Brookings Financial and Digital Inclusion Project, which aims to measure access to and usage of financial services among individuals who have historically been disproportionately excluded from the formal financial system. To read the first annual FDIP report, learn more about the methodology, and watch the 2015 launch event, visit the 2015 Report and Scorecard webpage.

Convenient access to banking infrastructure is something many people around the world take for granted. Yet while the number of people outside the formal financial system has substantially decreased in recent years, 2 billion adults still do not have an account with a formal financial institution or mobile money provider.¹

This means that significant opportunities remain to provide access to and promote use of affordable financial services that can help people manage their financial lives more safely and efficiently.

To learn more about how countries can facilitate greater financial inclusion among underserved groups, the Brookings Financial and Digital Inclusion Project (FDIP) sought to answer the following questions: (1) Do country commitments make a difference in progress toward financial inclusion?; (2) To what extent do mobile and other digital technologies advance financial inclusion; and (3) What legal, policy, and regulatory approaches promote financial inclusion?

To address these questions, the FDIP team assessed 33 indicators of financial inclusion across 21 economically, geographically, and politically diverse countries that have all made recent commitments to advancing financial inclusion. Indicators fell within four key dimensions of financial inclusion: country commitment, mobile capacity, regulatory commitment, and adoption of selected traditional and digital financial services.

In an effort to obtain the most accurate and up-to-date understanding of the financial inclusion landscape possible, the FDIP team engaged with a wide range of experts — including financial inclusion authorities in the FDIP focus countries — and also consulted international non-governmental organization publications, government documents, news sources, and supply and demand-side data sets.

Our research led to 5 overarching findings.

1. Country commitments matter.

   Not only did our 21 focus countries make commitments toward financial inclusion, but countries generally took these commitments seriously and made progress toward their goals. For example, the top five countries within the scorecard each completed at least one of their national-level financial inclusion targets. While correlation does not necessarily equal causation, our research supports findings by other financial inclusion experts that national-level country commitments are associated with greater financial inclusion progress. For example, the World Bank has noted that countries with national financial inclusion strategies have twice the average increase in the number of account holders as countries that do not have these strategies in place.

2. The movement toward digital financial services will accelerate financial inclusion.

   Digital financial services can provide customers with greater security, privacy, and convenience than transacting via traditional “brick-and-mortar” banks. We predict that digital financial services such as mobile money will become increasingly prevalent across demographics, particularly as user-friendly smartphones become cheaper² and more widespread.³

   Mobile money has already driven financial inclusion, particularly in countries where traditional banking infrastructure is limited. For example, mobile money offerings in Kenya (particularly the widely popular M-Pesa service) are credited with advancing financial inclusion: The Global Financial Inclusion (Global Findex) database found that the percentage of adults with a formal account in Kenya increased from about 42 percent in 2011 to about 75 percent in 2014, with around 58 percent of adults in Kenya having used mobile money within the preceding 12 months as of 2014.

3. Geography generally matters less than policy, legal, and regulatory changes, although some regional trends in terms of financial services provision are evident.

   Regional trends include the widespread use of banking agents (sometimes known as correspondents)⁴ in Latin America, in which retail outlets and other third parties are able to offer some financial services on behalf of banks,⁵ and the prevalence of mobile money in sub-Saharan Africa. However, these regional trends aren’t absolute: For example, post office branches have served as popular financial access points in South Africa,⁶ and the GSMA’s “2014 State of the Industry” report found that the highest growth in the number of mobile money accounts between December 2013 and December 2014 was in Latin America. Overall, we found high-performing countries across multiple regions and using multiple approaches, demonstrating that there are diverse pathways to achieving greater financial inclusion.

4. Central banks, ministries of finance, ministries of communications, banks, non-bank financial providers, and mobile network operators have major roles in achieving greater financial inclusion. These entities should closely coordinate with respect to policy, regulatory, and technological advances.

   With the roles of public and private sector entities within the financial sector becoming increasingly intertwined, coordination across sectors is critical to developing coherent and effective policies. Countries that performed strongly on the country commitment and regulatory environment components of the FDIP Scorecard generally demonstrated close coordination among public and private sector entities that informed the emergence of an enabling regulatory framework. For example, Tanzania’s National Financial Inclusion Framework⁷ promotes competition and innovation within the financial services sector by reflecting both public and private sector voices.⁸

5. Full financial inclusion cannot be achieved without addressing the financial inclusion gender gap and accounting for diverse cultural contexts with respect to financial services.

   Persistent gender disparities in terms of access to and usage of formal financial services must be addressed in order to achieve financial inclusion. For example, Middle Eastern countries such as Afghanistan and Pakistan have demonstrated a significant gap in formal account ownership between men and women. Guardianship and inheritance laws concerning account opening and property ownership present cultural and legal barriers that contribute to this gender gap.⁹

   Understanding diverse cultural contexts is also critical to advancing financial inclusion sustainably. In the Philippines, non-bank financial service providers such as pawn shops are popular venues for accessing financial services.¹⁰ Leveraging these providers as agents can therefore be a useful way to harness trust in these systems to increase financial inclusion.

To dive deeper into the report’s findings and compare country rankings, visit the FDIP interactive. We also welcome feedback about the 2015 Report and Scorecard at FDIPComments@brookings.edu.

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¹ Asli Demirguc-Kunt, Leora Klapper, Dorothe Singer, and Peter Van Oudheusden, “The Global Findex Database 2014: Measuring Financial Inclusion around the World,” World Bank Policy Research Working Paper 7255, April 2015, VI, http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2015/04/15/090224b082dca3aa/1_0/Rendered/PDF/The0Global0Fin0ion0around0the0world.pdf#page=3.

² Claire Scharwatt, Arunjay Katakam, Jennifer Frydrych, Alix Murphy, and Nika Naghavi, “2014 State of the Industry: Mobile Financial Services for the Unbanked,” GSMA, 2015, p. 24, http://www.gsma.com/mobilefordevelopment/wp-content/uploads/2015/03/SOTIR_2014.pdf.

³ GSMA Intelligence, “The Mobile Economy 2015,” 2015, pgs. 13-14, http://www.gsmamobileeconomy.com/GSMA_Global_Mobile_Economy_Report_2015.pdf.

⁴ Caitlin Sanford, “Do agents improve financial inclusion? Evidence from a national survey in Brazil,” Bankable Frontier Associates, November 2013, pg. 1, http://bankablefrontier.com/wp-content/uploads/documents/BFA-Focus-Note-Do-agents-improve-financial-inclusion-Brazil.pdf.

⁵ Alliance for Financial Inclusion, “Discussion paper: Agent banking in Latin America,” 2012, pg. 3, http://www.afi-global.org/sites/default/files/discussion_paper_-_agent_banking_latin_america.pdf.

⁶ The National Treasury, South Africa and the AFI Financial Inclusion Data Working Group, “The Use of Financial Inclusion Data Country Case Study: South Africa – The Mzansi Story and Beyond,” January 2014, http://www.afi-global.org/sites/default/files/publications/the_use_of_financial_inclusion_data_country_case_study_south_africa.pdf.

⁷ Tanzania National Council for Financial Inclusion, “National Financial Inclusion Framework: A Public-Private Stakeholders’ Initiative (2014-2016),” 2013, pgs. 19-22, http://www.afi-global.org/sites/default/files/publications/tanzania-national-financial-inclusion-framework-2014-2016.pdf.

⁸ Simone di Castri and Lara Gidvani, “Enabling Mobile Money Policies in Tanzania,” GSMA, February 2014, http://www.gsma.com/mobilefordevelopment/wp-content/uploads/2014/03/Tanzania-Enabling-Mobile-Money-Policies.pdf.

⁹ Mayada El-Zoghbi, “Mind the Gap: women and Access to Finance,” Consultative Group to Assist the Poor, 13 May 2015, http://www.cgap.org/blog/mind-gap-women-and-access-finance.

¹⁰ Xavier Martin and Amarnath Samarapally, “The Philippines: Marshalling Data, Policy, and a Diverse Industry for Financial Inclusion,” FINclusion Lab by MIX, June 2014, http://finclusionlab.org/blog/philippines-marshalling-data-policy-and-diverse-industry-financial-inclusion.

       

Editor’s Note: This post is part of a series on the 2015 Financial and Digital Inclusion Project (FDIP) Report and Scorecard, which were launched at a Brookings public event in August. Previous posts have highlighted five key findings from the 2015 FDIP Report, explored financial inclusion developments in India, and examined the rankings for selected FDIP countries in Southeast and Central Asia, the Middle East, and Africa.

The 2015 Financial and Digital Inclusion Project (FDIP) Report and Scorecard were launched in August of this year and generally reflect data current through May 2015. Since the end of the data collection period for the report, countries have continued to push forward to greater financial inclusion, and international organizations have continued to assert the importance of financial inclusion as a mechanism for promoting individual well-being and macroeconomic development. Financial inclusion is a key component of the United Nations’ Sustainable Development Goals, signaling international commitment to advancing access to and use of quality financial products among the underserved.

We discussed one recent groundbreaking financial inclusion development in a previous post. To learn more about the approval of payments banks in India, read “Inclusion in India: Unpacking the 2015 FDIP Report and Scorecard.”

Below are four other key developments among our 21-country sample since the end of the data collection period for the 2015 FDIP Report and Scorecard. The list is in no way intended to be exhaustive, but rather to provide a snapshot illustrating how rapidly the financial inclusion landscape is evolving globally.   

1) The Philippines launched a national financial inclusion strategy.

In July 2015, the Philippines launched a national financial inclusion strategy (NFIS) and committed to drafting an Action Plan on Financial Inclusion. The Philippines’ NFIS identifies four areas central to promoting financial inclusion: “policy and regulation, financial education and consumer protection, advocacy programs, and data and measurement.”

 As discussed in the 2015 FDIP Report, national financial inclusion strategies often serve as a platform for identifying key priorities, clarifying the roles of key stakeholders, and setting measurable targets. These strategies can foster accountability and incentivize implementation of stated initiatives. While correlation does not necessarily equal causation, it is nonetheless interesting to note that, according to the World Bank, “[o]n average, there is a 10% increase in the percentage of adults with an account at a formal financial institution for countries  that launched an NFIS after 2007, whereas the increase is only 5% for those countries that have not launched an NFIS.”

2) Peru adopted a national financial inclusion strategy.

With support from the World Bank, Peru’s Multisectoral Financial Inclusion Commission established an NFIS that was adopted in July 2015 through a Supreme Decree issued by President Ollanta Humala Tasso. The strategy contains a goal to increase financial inclusion to 50 percent of adults by 2018. This is quite an ambitious target: As of 2014, the World Bank Global Financial Inclusion (Global Findex) database found that only 29 percent of adults in Peru had an account with a formal financial services provider. The NFIS also commits the country to facilitating access to a transaction account among at least 75 percent of adults by 2021.

Peru’s NFIS emphasizes the promotion of electronic payment systems, including electronic money, as well as improvements pertaining to consumer protection and education. Advancing access to both digital and traditional financial services should boost Peru’s adoption levels over time. As noted in the 2015 FDIP Report, while Peru’s national-level commitment to financial inclusion and regulatory environment for financial services are strong, adoption levels remain low (Peru ranked 15^th on the adoption dimension of the 2015 Scorecard, the lowest ranking among the Latin American countries in our sample).

3) Colombia updated its quantifiable targets and released a financial inclusion survey.

The 2015 Maya Declaration Progress Report, published in late August 2015, highlights a number of quantifiable financial inclusion targets set by the Ministerio de Hacienda y Crédito Público de Colombia (Colombia’s primary Maya Declaration signatory) relating to the percentage of adults with financial products and savings accounts. For example, the target for the percentage of adults with a financial product is now 76 percent by 2016, up from a target of 73.7 percent by 2015. The goal for the percentage of adults with an active savings account in 2016 is now 56.6 percent, up from a target of 54.2 percent by 2015. To learn more about concrete financial inclusion targets among other FDIP countries, read the 2015 Maya Declaration Progress Report.

In July, Banca de las Oportunidades, a key financial inclusion stakeholder in Colombia, presented the results of the country’s first demand-side survey specifically related to financial inclusion. As noted by the Economist Intelligence Unit, previous national-level surveys conducted by entities such as the Superintendencia Financiera and Asobancaria have identified supply- and demand-side indicators pertaining to various financial services. As discussed in the 2015 FDIP Report, national-level surveys that focus on access to and usage of financial services can help identify areas of greatest need and enable countries to better leverage their resources to promote adoption of quality financial services among marginalized populations.

4) Nigeria’s “super agent” network enables greater access to digital financial services.

In September 2015, telecommunications company Globacom launched a “super agent” network, Glo Xchange, which can access the mobile money services of any partner mobile money operator. The network has been launched in partnership with four banks. Globacom was given approval in 2014 to develop this network; since then, the company has been recruiting and training its agents. About 1,000 agents will initially be part of this system, with a goal to recruit 10,000 agents by September 2016. Expanding access points to financial services by building agent networks is hoped to boost adoption of digital financial services.

Despite having multiple mobile money operators (19 as of October 2015, according to the GSMA’s Mobile Money Deployment Tracker), Nigeria’s mobile money adoption levels have not reached the degree of success of some other countries in Africa: The Global Findex noted that less than 3 percent of adults in Nigeria had mobile money accounts in 2014, compared with over 30 percent in Tanzania and about 60 percent in Kenya. Nigeria’s primarily bank-led approach to financial services, which excludes mobile network operators from being licensed as mobile money operators, is one factor that may have constrained adoption of mobile money services to date. You can read more about Nigeria’s regulatory environment and financial services landscape in the 2015 FDIP Report.

We welcome your feedback regarding recent financial inclusion developments. Please send any links, questions, or comments to FDIPComments@brookings.edu.

       

       

       

       

       

       

      

Good afternoon Chair Ayotte, Ranking Member Cantwell, and Members of the Subcommittee. Thank you very much for the opportunity to testify today on the important topic of domestic unmanned aircraft systems (UAS).

I am a nonresident senior fellow in Governance Studies and the Center for Technology Innovation at the Brookings Institution. I am also a National Fellow at the Hoover Institution at Stanford, and a professor at UCLA, where I hold appointments in the Electrical Engineering Department and the Department of Public Policy. The views I am expressing here are my own, and do not necessarily represent those of the Brookings Institution, Stanford University or the University of California.

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Editor's Note: This piece originally appeared on Lawfare.

The United States began to use drones in Yemen in 2002 to kill individuals affiliated with al-Qaida in the Arabian Peninsula (AQAP) and its predecessor organizations and disrupt its operations there and abroad. Since then, over 200 strikes have killed over a thousand Yemenis, tens of children, and at least a handful of U.S. citizens – one of whom was a deliberate target. The program has drawn widespread condemnation from human rights organizations and some UN bodies, yet it remains in place because the administrations of George W. Bush and Barack Obama view it as a success, as both have publicly stated.

Criticism of the program often takes the form of debates about which legal regime is relevant to judging a state’s use of targeted killings, which critics call “extra-judicial executions” or simply “assassinations.” While dissent has been strongest in academic and human rights communities, some scholars have echoed the arguments made by states that the imperatives of self-defense permit states to carry out such killings as legitimate acts of war. The Lawfare consensus seems in favor of these strikes.

I share the views of the moral and legal dissenters and hesitate to move beyond those debates because I don’t want to suggest that I accept the program’s legality. 

But I do want to engage those who do view the program as working — after all, if the U.S. administration did not believe it was working, it wouldn’t need to justify it legally. But by what metrics should we consider judging its success?

Perhaps the most obvious metric is whether AQAP leaders are actually being killed and, even more, whether their deaths substantially disrupted the group’s activities in Yemen or its ability to pursue objectives outside of Yemen. For advocates of this metric, the program has been successful in the short term — individuals killed – even if the longer-term impact is less clear because new leaders seem to step in with regularity.

Yet the success in taking out AQAP’s leadership is overstated. The numbers of AQAP members and supporters officially reported as killed are questionable, and probably grossly exaggerated. This is because the U.S. administration considers all adult males in the vicinity of the strikes to be combatants, not civilians, unless their civilian status can be established subsequently. Full investigations are neither desirable nor pragmatic for the U.S. government – particularly now that Yemen is the site of a civil and regional war. Even more troubling is that at times the U.S. may not even be certain of its primary targets. It frequently uses language that is so conditional that there seems to be more than a bit of guessing about the identities of those being targeted.

But I would like to focus on different metric: the longer-term impact of the drone strikes on the legitimacy and attractiveness of al-Qaida’s message in Yemen and its ability to recruit among Yemenis themselves. Drone strikes are widely reported in local media and online and are a regular topic of discussion at weekly qat chewing sessions across the country. Cell phone calls spike after drone strikes, which are also widely reported on Twitter and Facebook. The strikes are wildly unpopular, with attitudes toward the United States increasingly negative. An Arab Barometer survey carried out in 2007 found that 73.5 percent of Yemenis believed that U.S. involvement in the region justified attacks on Americans everywhere.

The narrative that the West, and especially the United States, fears the Muslim world is powerful and pervasive in the region. The U.S. intervenes regularly in regional politics and is a steadfast ally of Israel. It supports Saudi Arabia and numerous other authoritarian regimes that allow it to establish permanent U.S. military bases on Arab land. It cares more about oil and Israel than it does about the hundreds of millions in the region suffering under repressive regimes and lacking the most basic human securities. These ideas about the American role in Middle East affairs – many of them true – are among those in wide circulation in the region.

Al-Qaida has since 1998 advanced the argument that Muslims need to take up arms against the United States and its allied regimes in the region. Yet al-Qaida’s message largely fell on deaf ears in Yemen for many years. Yes, it did attract some followers, mostly those disappointed to have missed the chance to fight as mujahidin in Afghanistan. But al-Qaida’s narrative of attacking the foreign enemy at home did not resonate widely. The movement remained isolated for many years, garnering only limited sympathy from the local communities in which they sought refuge. 

 The dual effect of U.S. acceleration in drone strikes since 2010 and of their continued use during the “transitional” period that was intended to usher in more accountable governance has shown Yemenis how consistently their leaders will cede sovereignty and citizens’ security to the United States. While Yemenis may recognize that AQAP does target the United States, the hundreds of drone strikes are viewed as an excessive response. The weak sovereignty of the Yemeni state is then treated as the “problem” that has allowed AQAP to expand, even as state sovereignty has been directly undermined by U.S. policy – both under President Ali Abdullah Salih and during the transition. American “security” is placed above Yemeni security, with Yemeni sovereignty violated repeatedly in service of that cause. Regardless of what those in Washington view as valid and legitimate responses to “terrorist” threats, the reality for Yemenis is that the United States uses drone strikes regularly to run roughshod over Yemeni sovereignty in an effort to stop a handful of attacks – most of them failed – against U.S. targets. The fact that corrupt Yemeni leaders consent to the attacks makes little difference to public opinion.

Regardless of what those in Washington view as valid and legitimate responses to “terrorist” threats, the reality for Yemenis is that the United States uses drone strikes regularly to run roughshod over Yemeni sovereignty in an effort to stop a handful of attacks – most of them failed – against U.S. targets.

The United States cut aid to Yemen in 1990 when the newly united Yemeni state, which had just rotated into the Arab seat on the UN Security Council, voted against authorization for a U.S.-led coalition to reverse the Iraqi invasion of Kuwait. Yemen suffered a tremendous economic blow, as the United States joined Kuwait and Saudi Arabia in unilaterally severing aid to what was then and still is the poorest Arab nation. But with the rise of jihadi activism on the Arabian Peninsula over the next decade, and particularly after the bombing of USS Cole in 2000, Salih welcomed the return of U.S. aid to Yemen. This included a strong security dimension as the United States began tracking those suspected of involvement in the Cole attacks and other al-Qaida activities. Conspicuous caravans of FBI agents became a topic of local conversations, so the return of a U.S. presence in Yemen was also more visible than it had been previously. Salih claimed to have had advance knowledge of every drone strike.

Saudi Arabia has meddled in Yemen at least since the fall of the northern Mutawakkilite monarchy in the late 1960s. The Saudi intervention that began with air strikes in March of this year and escalated to ground troops is thus only the latest — and most egregious — of the kingdom’s efforts to affect Yemen politics. This background is necessary to understand that if Yemen is a “failed state,” despite scholarly protestations otherwise, it is at least in part due to decades of external actors violating Yemeni sovereignty with near impunity. The drone program, like the Saudi-led war, is merely a recent and overt example.

I lived in Yemen for several years spread over the period from 1994-1999. During that time, the optimism about the democratic opening of 1990 gave way to increasing frustrations as Salih solidified his control over united Yemen. He defeated the southern leadership in the 1994 war and curtailed the freedoms and pluralism that marked the early unification period, but open public debate has always been vibrant. Travel throughout Yemen was easy at that time, the only obstacle being the need to hire an all-terrain vehicle and driver who knew the many poorly marked roads.

The Yemenis I met cut across social classes and regions, but were overwhelmingly welcoming and friendly toward Americans. In my research on Islamist political parties in Yemen and Jordan, I talked to hundreds of self-described Islamists. I spoke to people in the larger cities, the smaller towns, and in rural areas. We spent long hours talking about Islam and debating the contemporary political problems facing Yemen, the United States, and the world. In 1995 we spoke extensively about race and class in America as Yemenis watched the O.J. Simpson trial on CNN International. I often marveled at the knowledge Yemenis had of the U.S. political system; I wondered if most Americans had comparable knowledge of any other country at all. I was welcomed into homes and shared holidays with families.

What strikes me now is how most Islamists saw jihadi groups as having no place in Yemeni politics. There were jihadis in Yemen, of course, primarily the “Afghan Arabs” who had returned from fighting abroad in Afghanistan and other theaters of jihad and faced difficulties reassimilating. Islamists donning mustaches complained about Taliban proclamations that adult male Muslims must sport a beard at least a fist long. They also complained of the Saudi-sponsored “scientific institutes” that taught the super-conservative Wahhabi take on Islam. Salih had even enjoined these extremists to launch deadly attacks against Southern socialists in the first years after unification. Most of the individuals influenced by these trends eventually found their way into al-Qaida circles.

But they were relatively few. Al-Qaida found little success in attracting Yemenis who were not already drawn to jihadi ideas. The al-Qaida recruiting pitch of attacking foreign powers inside of Yemen simply rang hollow. Even the 2000 attack upon USS Cole — a warship docked in Aden — was not widely viewed as the legitimate targeting of a foreign military power intervening in Yemeni politics. Al-Qaida had to resort to extremist tactics precisely because its ideas did not attract a following significant enough to spark a popular mobilization.

For al-Qaida, the drone program is a gift from the heavens. Its recruiting narrative exploits common misperceptions of American omnipotence, offering an alternative route to justice and empowerment. Regardless of American perceptions about the legitimacy or efficacy of the attacks, what Yemeni could now deny that the United States is waging an undeclared war on Yemen?

Most recently, this narrative of direct U.S. intervention has been further substantiated by U.S. material and intelligence support for the Saudi-led military campaign aimed at the return to power of the unpopular and exiled-President Abed Rabbo Mansour Hadi. Photographs of spent U.S.-made cluster bombs are widely circulated. Nor have drone attacks ceased; alongside the often indiscriminate Saudi-led bombing, American drones continue their campaign of targeted assassination. 

One might think that the Saudi attacks would not help al-Qaida, but it is contributing to al-Qaida’s growth in Yemen. The indiscriminate targeting of the Saudi-led campaign undermines any sense of security, let alone Yemeni sovereignty. And AQAP-controlled areas like the port of Mukalla are not being targeted by Saudi or Gulf troops at all. The United States aims to take up the job of targeting AQAP while the Saudi-led (and U.S.-backed) forces focus on defeating the Houthis and restoring Hadi to power. But the overall situation is one in which those multiple interventions in Yemen are creating an environment in which al-Qaida is beginning to appeal in ways it never had before.

For al-Qaida, the drone program is a gift from the heavens. Its recruiting narrative exploits common misperceptions of American omnipotence, offering an alternative route to justice and empowerment.

For these reasons, the U.S. use of drones to kill even carefully identified AQAP leaders in Yemen is counterproductive: it gives resonance to the claims of the very group it seeks to destroy. It provides evidence that al-Qaida’s claims and strategies are justified and that Yemenis cannot count on the state to protect them from threats foreign and domestic.

U.S. officials have argued that the drone program has not been used as a recruiting device for al-Qaida. But it is hard to ignore the evidence to the contrary, from counterinsurgency experts who have worked for the U.S. government to Yemeni voices like Farea Muslimi.

It’s not just that drone strikes make al-Qaida recruiting easier, true as that probably is, but that they broaden the social space in which al-Qaida can function. America does not need to win the “hearts and minds” of Yemenis in the service of some grand U.S. project in the region. But if America wants to weaken al-Qaida in Yemen, it needs at a minimum to stop pursuing policies that are bound to enrage and embitter Yemenis who might otherwise be neutral. 

There is an old saying that when the only tool you have is a hammer, everything starts to look like a nail. The U.S. military — let alone its drones — is not the only tool on which the United States can rely. But when the measure of success is as narrow as the killing of a specific person, the tool gets used with increasing frequency. Indeed, drone strikes have significantly expanded under the Obama administration.

It is crucial to see the bigger picture, the one in which long-time Yemeni friends tell me of growing anti-U.S. sentiment where there was previously very little. Public opinion toward America has clearly deteriorated over the past decade, and to reverse it may take much longer. But the use of drones to kill people deemed enemies of the United States, along with the Saudi-led war against the Houthis, is expanding the spaces in which al-Qaida is able to function.  

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

“If the Americans and their regional allies want to pass through the Strait of Hormuz and threaten us, we will not allow any entry,” said deputy commander of Iran’s Revolutionary Guards, Hossein Salami, last Wednesday. Iran has a long history of making threats against this critical waterway, through which some 17 million barrels of oil exports pass daily, though it has not carried them out. But multiple regional security threats highlight threats to energy transit from and through the Middle East and North Africa (MENA)—and demand new thinking about solutions.

Weak spots

Hormuz attracts attention because of its evident vulnerability. But recent years have seen severe disruptions to energy flows across the region: port blockades in Libya; pipeline sabotage in Egypt’s Sinai, Yemen, Baluchistan in Pakistan, and Turkey’s southeast; attacks on oil and gas installations across Syria and Iraq; piracy off Somalia. Energy security is threatened at all scales, from local community disturbances and strikes, up to major regional military confrontations.

Of course, it would be best to mitigate these energy security vulnerabilities by tackling the root causes of conflict across the region. But while disruption and violence persist, energy exporters and consumers alike should guard against complacency.

A glut of oil and gas supplies globally—with low prices, growing U.S. self-sufficiency, and the conclusion of the Iranian nuclear deal—may seem to have reduced the urgency: markets have hardly responded to recent flare-ups. But major economies – even the United States – still remain dependent, directly or indirectly, on energy supplies from the MENA region. Spare oil production capacity is at unusually low levels, leaving the balance vulnerable to even a moderate interruption.

Most concern has focused on oil exports, given their importance to the world economy. But the security of liquefied natural gas (LNG) shipments is an under-appreciated risk, particularly for countries such as Japan and South Korea which are heavily dependent on LNG. A disruption would also have severe consequences for countries in the Middle East and North Africa, depriving them not only of revenues but potentially of critical imports.

Doing better 

There are three broad groups of approaches to mitigating the risk of energy transit disruptions: infrastructure, institutions, and market. 

1. Infrastructure includes the construction of bypass pipelines avoiding key choke-points and strategic storage.
   
   Existing bypass pipelines include SUMED (which avoids the Suez Canal); the Habshan-Fujairah pipeline in the UAE (bypassing Hormuz); and the Saudi Petroline, which runs to the Red Sea, hence offering an alternative to the Gulf and Hormuz. Proposed projects include a link from other Gulf Cooperation Council (GCC) countries to Oman’s planned oil terminal at Duqm on the Indian Ocean; new or rehabilitated pipelines from Iraq across Jordan and Turkey; an expansion of Petroline; and a new terminal in southern Iran at Jask.
   
   Strategic storage can be held by oil exporters, by importers, or a combination (in which exporters hold oil close to their customers’ territory, as with arrangements between Saudi Arabia and Japan, and between Abu Dhabi and Japan and India).


2. Institutional approaches include mechanisms to deal with disruptions, such as cooperative sharing arrangements.
   
   More analysis has focused on infrastructure than on institutional and market mitigation. Yet these approaches have to work together. Physical infrastructure is not enough: it has to be embedded in a suitable framework of regulation, legislation, and diplomacy. Cross-border or multilateral pipelines require agreements on international cooperation; strategic storage is most effective when rules for its use are clear, and when holders of storage agree not to hoard scarce supplies. 
   
   The effective combination of infrastructure and institutions has a strategic benefit even if it is never used. By making oil exporters and consumers less vulnerable to threats, it makes it less likely that such threats will be carried out.
   
   Alliances can be useful for mutual security and coordination. However, they raise the difficult question of whom they are directed against. Mutually-hostile alliances would be a threat to regional energy security rather than a guarantor. Organizations such as the International Energy Agency (IEA), the International Energy Forum (IEF), Organization of Petroleum Exporting Countries (OPEC), Gulf Cooperation Council, and the Association of Southeast Asian Nations (ASEAN) could all have roles, but none is ideally placed. Rather than creating another organization, reaching an understanding between existing bodies may be more effective.


3. In general, markets cope well with the task of allocating scarce supplies. Better and timelier data, such as that gathered by the IEF, can greatly improve the functioning of markets. Governments do have a role in protecting the most vulnerable consumers and ensuring sufficient energy for critical services, but price controls, rationing, and export bans have usually been counterproductive, and many of the worst consequences of so-called energy crises have come from well-meaning government interference with the normal market process of adjustment.
   
   However, it is generally difficult or impossible for a single company or country to capture all the benefits of building strategic infrastructure—which, as with a bypass pipeline, may only be required for a few months over a period of decades. International financing, perhaps backed by a major energy importer—mostly likely China—can help support such projects, particularly at a time of fiscal austerity in the Middle East.

Energy exporters within the MENA region may often find their interests divergent. But the field of energy security is one area for more fruitful cooperation—at least between groups of states, and some external players, particularly their increasingly important Asian customers. If regional tensions and conflicts cannot be easily solved, such action at least alleviates one of the serious risks of the region’s turmoil.

For more on this topic, read Robin Mills’ new analysis paper “Risky routes: Energy transit in the Middle East.”

      

This election cycle, what will separate Democrats from Republicans on energy policy and their approach to climate change? Republicans tend to be fairly strong supporters of the fossil fuel industry, and to various degrees deny that climate change is occurring. Democratic candidates emphasize the importance of further expanding the share of renewable energy at the expense of fossil fuels, and agree that climate change is a real problem—with some saying the challenge trumps most, if not all, other U.S. security concerns.

Now that there are presumptive nominees for both major political parties, it’s an important moment to outline, in broad strokes, the positions of Secretary Hillary Clinton and businessman Donald Trump. We realize that Democratic Presidential candidate Bernie Sanders has not dropped out of the race, but note that it is fairly unlikely at this point that he would clinch the nomination.

Clinton: Building on the Obama legacy 

Secretary Clinton has laid out the most comprehensive and detailed energy and climate policy proposals of the candidates to date. They are in essence a continuation, and in some cases a further expansion, of existing White House policies under President Obama. The Secretary has stated that she wants the United States to be the “clean energy superpower of the 21st century.”

This starts with the notion that climate change is an existential threat, which the global community has to address as soon as possible. In order to do that, in her view, the United States needs to continue to show leadership on the international stage, as the Obama administration sought to do surrounding the Paris agreement in December 2015. This will require substantial reforms to expand low-carbon options, including nuclear energy to some degree, while tightly regulating fossil fuels (and gradually phasing them out). 

[S]he wants the United States to be the “clean energy superpower of the 21st century.”

The first casualty of this transformation is the coal industry, which Clinton has explicitly acknowledged. She presented a $30 billion plan to revitalize communities where coal production is currently an important industry and job creator, for example, and has campaigned with this message in various state primaries. Implicitly, Secretary Clinton does not seem to believe in the economic viability of carbon capture and sequestration in the United States—this is despite the fact that most analyses, including those of the Intergovernmental Panel on Climate Change (IPCC), suggest that this technology could be a cost-efficient tool in a wider carbon emission mitigation portfolio. 

Clinton sees natural gas as a bridge fuel, though at this point it’s not clear how long that bridge is. Questions remain about the role that natural gas can play in scenarios of deep decarbonization in 2030 and beyond. At the moment, the gas industry is rather nervous of the Secretary’s statement that she’d increase regulations on, in particular, the fracking industry—if her conditions came to fruition, there would very few places where fracking would continue. 

Secretary Clinton believes that oil consumption has to be cut substantially in the coming years, and she has suggested that new drilling in places like the Arctic, off the Atlantic Coast, and on federal lands would be discouraged or banned. She has previously opposed crude oil exports, though we would not anticipate a roll-back of existing policies (in December 2015, the Obama administration lifted the decades-old ban). 

Clinton foresees a new energy economy built on rapidly increasing shares of renewable energy, which should comprise 25 percent of the U.S. fuel mix by 2025 according to her plan (solar energy would be a key focus, with half a billion panels to be installed by the end of her first term). To facilitate this transition, she presented an elaborate energy infrastructure plan to modernize the U.S. grid and improve efficiency in reviewing and approving projects. 

Tax credits to support renewables would be continued under a Clinton White House, whereas fossil fuel subsidies would be phased out. Increased energy efficiency, including harmonization of vehicle efficiency and fuel standards, are high on her agenda as well. The Secretary also supports the Clean Power Plan that the Environmental Protection Agency under the Obama administration has launched, and which is currently on hold in the Supreme Court. 

On the international stage, Clinton supports the Paris agreement on climate change. Should she win the presidency in November, she would make an effort to take this Treaty to the next step, thus continuing U.S. leadership. That would mean reinforcing U.S. leadership along the lines described above, while helping address current uncertainties about finance, transparency, and accountability, to name only a few challenges that remain.

Trump: Drill, baby, drill

Although Donald Trump’s candidacy remains highly controversial, he is now the presumptive Republican nominee for president. To the extent that we know any detailed plans, quod non, it is safe to say that his views on energy and climate change are diametrically opposed to most of Clinton’s. Broadly speaking, Mr. Trump has come out as a fervent supporter of the fossil fuel industry, and has expressed skepticism about the economic viability of renewable energy.

Mr. Trump’s views start with the belief that climate change is not man-made. In the past, the controversial businessman has suggested that climate change might be a hoax invention from China, in order to undermine U.S. industrial interests and job creation. This starting point allows Mr. Trump to be extremely supportive of existing industrial interests (if carbon and other greenhouse gas emissions are not a problem, the thinking goes, then business as usual is the way to go). 

In a speech in North Dakota in late May, Mr. Trump laid out some broad initial ideas for his energy policy. He declared that under his presidency the United States would “accomplish complete American energy independence,” leaving unaddressed arguments about what that would mean for existing international energy trade. 

It is probably safe to say that Mr. Trump would like to further expand oil, gas, and coal production in the country. The latter, in particular, is remarkable: even coal executives have declared that market forces (particularly very competitive natural gas) have been the primary threat to the coal industry. Since Mr. Trump is also a strong supporter of the natural gas industry—and considering the challenges of building new bulk terminals for exports—it is unclear how a revitalization of the coal industry would occur. 

If climate change is a hoax, it will come as no surprise that Mr. Trump will not support efforts to mitigate carbon and other greenhouse gas emissions.

Contrary to his opponent, Mr. Trump would also like to revoke restrictions on drilling for oil and gas, and would permit production on federal lands. He also supports further expansion of energy infrastructure, and would, if elected, ask Trans Canada to resubmit a permit application for the Keystone pipeline, which he’d approve. He has caveated his support for projects like these by demanding that a portion of the revenues from oil and gas flows be redistributed to local communities, to compensate them for intrusion on their private property. Mr. Trump has also indicated that he wants to use revenues from oil and gas production to rebuild U.S. infrastructure more broadly.

If climate change is a hoax, it will come as no surprise that Mr. Trump will not support efforts to mitigate carbon and other greenhouse gas emissions. The candidate has called the Obama administration’s Clean Power Plan “stupid,” and when asked what he would do about the Paris agreement on climate change, he said he’d cancel it. 

Though Trump says the United States must pursue all forms of energy—including renewables—he has expressed skepticism about their economic viability, calling solar energy “very expensive.” Wind energy received similar pejorative feedback, since Trump says it kills eagles and is noisy. During one of the few debates about renewable energy during the Iowa primary, he voiced his support for blending biofuels in vehicles. 

To the polls

The 2016 U.S. presidential election will have a profound impact on global affairs. Not only will it affect a range of security and economic issues in important ways, it also means a lot for global energy and climate policy. Will the United States continue on the trajectory that President Obama has started and continue a major energy transition strategy? Or will it shift course, potentially undermining existing domestic policies and investments, as well as international obligations? In November 2016, the American people will decide.