Editor's note: This blog piece is based on findings from the new book Governance in an Age of Abundance: Experiences from the Extractive Industries in Latin America and the Caribbean, which will be launched at a Brookings public event later today. A Spanish version of this post is available on the Inter-American Development Bank's website. 

The myth of Sisyphus represents in Greek mythology a metaphor for pointless and interminable efforts. Sisyphus was condemned by Zeus to push a huge boulder up a steep hill. Every time he was close to reaching the top, the boulder was made to roll back down the hill and to the starting point, so that Sisyphus had to start all over again, in perpetuity.    

This metaphor may sound familiar to countries rich in natural resources. In many of these countries, citizens have hoped for generations that the revenue derived from extractive industries (oil, gas and mining) would translate into concrete benefits. Instead, rents from extractive industries have frequently been misused, either through wasteful state spending or public and private corruption. In many countries, heavy dependence on revenues from extractive industries has produced economic and political distortions. Also, revenues are all too often centralized at the national level, leaving local communities to wonder about the benefits of hosting extractive industries.

Overcoming the ‘Resource Curse’

The good news is that there are countries that have found a way to overcome the so-called "resource curse." In Norway, for example, the revenue deriving from the extractive industries supports a majority of government investment in education and health, as well as the pension system. While many resource-rich states can make the same claim, what makes Norway unusual is that it has been able to do so while minimizing corruption, mitigating economic distortions and ensuring efficiency in government spending at the same time.  

How did Norway do it? A look at the Natural Resources Governance Index (NRGI), developed by the Natural Resource Governance Institute, provides a possible explanation: by strengthening governance in the extractive sector. This implies establishing a robust legal and regulatory framework, agile mechanisms to promote transparency and disseminate information, effective safeguards and rigorous controls, and an overall institutional environment that is business-friendly and conducive to greater accountability in the public sector. And this is not a phenomenon unique to Norway, but it is replicated in other countries with large extractive sectors, such as Australia, Botswana and Canada.

Extractive Industries in Latin America and the Caribbean

Latin American and the Caribbean are at a crucial juncture in their effort to strengthen governance in the management of natural resources. On the one hand the above-mentioned NRGI, which measures the quality of extractives governance in 58 resource-rich countries, shows that among the eleven world leaders in quality of extractives governance, more than half are countries from the region (Brazil, Mexico, Chile, Colombia, Trinidad and Tobago and Peru). This is especially good news if one considers that Latin America and the Caribbean is the main source of metals at a global level, and that it holds the second largest oil reserves in the world. Latin America and the Caribbean are also remarkable because many countries have managed to develop large extractive sectors while at the same time avoiding the secessionist conflicts over extractives that plague resource-rich countries in other regions of the world.

On the other hand, Latin America still has to resolve some important issues. Overall, the region still falls short on rule of law and corruption measures in comparison to OECD (Organisation for Economic Co-operation and Development) countries. Social conflicts related to the exploitation of natural resources remain a sensitive issue in the region, especially when extractive industries operate in territories where indigenous communities have a significant interest and presence. Citizen demands regarding the control and mitigation of environmental impacts by governments and corporations are increasing, especially in terms of land use and conservation of water resources and forests. And many Latin Americans are increasingly demanding good governance and transparency in state spending.

Transparency is Key to Improving Governance

The recent IDB book Governance in an Age of Abundance: Experiences from the Extractive Industries in Latin America and the Caribbean (IDB, 2014), edited by Juan Cruz Vieyra and Malaika Masson, analyzes these challenges, particularly in light of recent initiatives to strengthen transparency in the governance of natural resources in the region.

The book focuses on two main themes. The first is on how best to improve governance in the extractives sector, especially in a way that promotes inclusive growth and takes into account the concerns of citizens. The key to this is governance mechanisms that include checks and balances to ensure that the needs of local communities are taken into account. The second theme of the book is a focus on evaluating concrete governance proposals, which include improved legislation, licensing arrangements, contracting procedures, and fiscal regimes. Underlying these two themes is a strong argument in favor of strengthened government capacity to produce, use, and disseminate accurate and timely information about the extractive sector.

The book identifies transparency as a key tool to improve the quality of governance in the extractive sector. This is not an easy task, because effective governance of this sector requires states to manage across a complex set of policy domains. Transparency is part of the solution to this problem by making data available to a wider set of stakeholders. This allows for improved coordination inside of government and helps civil society and the private sector to make informed contributions to public policy and hold governments accountable. For example, Colombia, through its Maparegalías initiative, is putting all the information about how money from extractive industry royalties are being spent, community by community, with everything placed online on an interactive map for easy access. But to make the most out of transparency, states need to address shortfalls in human capacity to use newly available data effectively in the public sector. This is particularly true at the sub-national level in many Latin American and Caribbean countries. Ultimately, as transparency improves and governments use data to operate more effectively and efficiently, citizen trust and confidence in the ability of the public sector to manage the wealth produced by extractive industries will improve. 

The findings of the book point towards two key challenges for governments related to designing and implementing transparency initiatives:

1. Governments need to make data more easily available and more accessible to stakeholders. This includes addressing the quality and timeliness of information. It also means improving the ease of use of data, both in terms of the formatting of data and navigability of the platforms that present it.
2. Governments need to be creative about soliciting feedback from stakeholders in the extractive sector. It is not enough to merely present data to the public. Governments should actively seek out input from citizens. This will ultimately mean investing in public and private capacity to analyze available data so that stakeholders can make informed contributions to governance.

These recommendations present the best way for governments in Latin America and the Caribbean to emerge from the paradoxical Sisyphean trap that resource abundance has all too often posed.

The authors are grateful to Pablo Bachelet, Juan Cruz Vieyra, Francesco De Simone and Martin Walter for their comments. 

Event Information

During the past decade, an abundance of wealth in minerals and hydrocarbons in Latin America and the Caribbean has translated into substantial revenues and macroeconomic growth. However, operations in the extractive sector have also led to significant challenges, such as corruption, negative social outcomes and environmental impacts.

On November 4, the Latin America Initiative and Energy Security Initiative at Brookings, with the Inter-American Development Bank (IDB), hosted a discussion on governance and institutional capacity in the extractive sector in Latin America and the Caribbean, drawing on findings from the publication Transparent Governance in an Age of Abundance: Experiences from the Extractive Industries in Latin America and the Caribbean, published by the IDB. Edited by Malaika Masson and Juan Cruz Vieyra, the book presents transparency as a central element to bolster governance quality and state legitimacy in the context of an increasingly demanding citizenry.

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When the head of the world’s largest investment fund raises fundamental questions about U.S. corporations, we should all pay attention.

In a letter earlier this week to the Fortune 500 CEOs, BlackRock Chairman Larry Fink criticized the short-term orientation that he believes shapes too much of today’s corporate behavior. “It concerns us,” he declared, that “in the wake of the financial crisis, many companies have shied away from investing in the future growth of their companies. Too many have cut capital expenditure and even increased debt to boost dividends and increase share buybacks.” And he concluded, “When done for the wrong reasons and at the expense of capital investment, [returning cash to shareholders] can jeopardize a company’s ability to generate sustainable long-term returns.”

Fink is correct on all counts. In a new Brookings paper out today, University of Massachusetts economist William Lazonick states that the 454 companies listed continuously in the S&P 500 index between 2004 and 2013 used 51 percent of their earnings to buy back their own stock, almost all through purchases on the open market. An additional 35 percent went to dividends. “Buybacks represent a withdrawal of internally controlled finance that could be used to support investment in the company’s productive capabilities,” he said.

This is bad for the economy in two ways. As the growth of the U.S. workforce slows dramatically, economic growth will depend increasingly on improved productivity, must of which comes from raising capital investment per worker. Failing to make productivity-enhancing capital investments will doom our economy to a new normal of slow growth.

Many business leaders say that they are reluctant to make long-term investments without reasonable expectations of growing demand for their products. That brings us to the second way in which corporate short-termism is bad for the economy. Most consumer demand comes from wages. If employers refuse to share gains with their employees, growth in demand is bound to be anemic.

Although he clearly cares about his country, Fink is also acting as the steward of $4.8 trillion in investments. In an article published by McKinzie earlier this month, he warns that although the return of cash to shareholders is juicing equity markets right now, investors “will pay for it later when the ability to generate revenue in the long term dries up because of the lack of investment in the future.”

Unlike most other corporate leaders who express concerns about these developments, Fink is unwilling to rely on moral suasion alone. Because current incentives are so perverse, he argued, “It is hard for even the most dedicated CEO to buck this trend.” The constant pressure to produce quarterly results forces executives to go along—or risk losing their jobs. That pressure comes from investors who are, in Fink’s words, “renters, not owners, who are going to trade your stock as soon as they can pocket a quick gain.”

This logic leads BlackRock’s chairman to propose changing the tax code by lengthening to three years the the period needed to qualify for capital gains treatment while taxing trading gains at an even higher rate than ordinary income for investment held less than six months. To encourage truly patient capital, the capital gains rate would be stepped down to zero over a period of ten years.

Stock buybacks are an important explanation for both the concentration of income among the richest households and the disappearance of middle-class employment opportunities in the United States over the past three decades. Over this period, corporate resource-allocation at many, if not most, major U.S. business corporations has transitioned from “retain-and-reinvest” to “downsize-and-distribute,” says William Lazonick in a new paper.

Under retain-and-reinvest, the corporation retains earnings and reinvests them in the productive capabilities embodied in its labor force. Under downsize-and-distribute, the corporation lays off experienced, and often more expensive, workers, and distributes corporate cash to shareholders. Lazonick’s research suggests that, with its downsize-and-distribute resource-allocation regime, the “buyback corporation” is in large part responsible for a national economy characterized by income inequity, employment instability, and diminished innovative capability.

Lazonick also challenges many of the notions associated with maximizing shareholder value, an ideology that has come to dominate corporate America. Lazonick calls for a decrease, or even a ban, in stock buybacks so companies will be able to use these funds to finance capital expenditures but more importantly to attract, train, retain, and motivate its career employees. And some of the funds made available by a buyback ban can even flow to the government, he argues, as tax revenues for investments in infrastructure and human knowledge that can underpin the next generation of innovation.  

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How to react to presidential candidates who are running, in part or wholly, on their experience in private business?

It’s impossible for anyone to come into the White House with all the skills required to be a good president. We can know that key traits include intelligence, both cognitive and emotional; self-confidence; and decisiveness. Also needed are the ability to communicate; to listen and learn; to delegate; to recognize problems–and a sense of humor and humility.

Candidates’ stands on the issues are critical in primaries and in the general election, but I suspect that the views of many independent voters–whose ranks are growing–may not be as intensely held as those of partisan voters.

Given Americans’ widespread frustration with traditional politicians, it is understandable why a few candidates with at least some business experience have entered the fray. Having run a business exposes one to how government affects the private sector, which is the engine of economic growth and drives improvements in living standards.

But running a private-sector business is very different from heading a federal government that employs millions, and that takes in and spends trillions, while also dealing with a wide range of domestic and foreign policy issues, many of which demand immediate attention. These things require dexterity–and the combined challenges are ones that no business ever comes close to dealing with. (Probably the closest experience to the presidency is running a large state. But even then, no governor has had to confront the range of foreign policy challenges facing the president.)

A critical difference between running a business and government is that CEOs can usually make sure that their orders are carried out; and if they’re not, those who didn’t do their jobs can be fired. Imagine a president tried working with Congress that way. “My way or the highway” won’t cut it.

One might think that military leaders would face the same problem, but successful generals, especially in recent times, have had to develop and hone political skills as well as knowing how to fight. Gen. Dwight Eisenhower is now regarded as a good president not only because of his military experience but because he also was a politician-administrator while commanding allied forces during World War II. George Washington had both a military and business background, but he was a politician too–and the government he oversaw wasn’t much larger than his (substantial) private business.

Some 2016 voters will cast ballots based on particular issues. But for others, particularly those who believe this country is on the wrong track, a candidate running on his or her business background in an effort to stand out from the pack is not likely to have the qualifications most important to being a successful president.

In our latest 21st Century Capitalism initiative paper, "What must corporate directors do? Maximizing shareholder value versus creating value through team production," author Margaret M. Blair explores how the share value maximization norm (or the “short-termism” malady) came to dominate, why it is wrong, and why the “team production” approach provides a better basis for governing corporations over the long term.

Blair reviews the legal and economic theories behind the share-value maximization norm, and then lays out a theory of corporate law building on the economics of team production. Blair demonstrates how the team production theory recognizes that creating wealth for society as a whole requires recognizing the importance of all of the participants in a corporate enterprise, and making sure that all share in the expanding pie so that they continue to collaborate to create wealth.

Arguing that the corporate form itself helps solve the team production problem, Blair details five features which distinguish corporations from other organizational forms:

1. Legal personality
2. Limited liability
3. Transferable shares
4. Management under a Board of Directors
5. Indefinite existence

Blair concludes that these five characteristics are all problematic from a principal-agent point of view where shareholders are principals. However, the team production theory makes sense out of these arrangements. This theory provides a rationale for the role of corporate directors consistent with the role that boards of directors historically understood themselves to play: balancing competing interests so the whole organization stays productive.

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The workplace is changing rapidly, and more and more leaders in government and private industry are required to lead those who are geographically separated. Globalization, economic shifts from manufacturing to information, the need to be closer to customers, and improved technological capabilities have increased the geographic dispersion of many organizations. While these organizations offer many exciting opportunities, they also bring new leadership challenges that are amplified because of the separation between leaders and followers. Although much has been researched and written on leadership in general, relatively little has been focused on the unique leadership challenges and opportunities presented in geographically separated environments. Furthermore, most leaders are not given the right tools and training to overcome the challenges or take advantage of the opportunities when leading in these unique settings.

A survey of leaders within a geographically dispersed military organization confirmed there are distinct differences in how remote and local leaders operate, and most leadership tasks related to leading those who are remote are more difficult than with those who are co-located. The tasks most difficult for remote leaders are related to communicating, mentoring and building personal relationships, fostering teamwork and group identity, and measuring performance. To be effective, leaders must be aware of the challenges they face when leading from afar and be deliberate in their engagement.

Although there are unique leadership challenges in geographically dispersed environments, most current leadership literature and training is developed on work in face-to-face settings. Leading geographically dispersed organizations is not a new concept, but technological advances over the last decade have provided leaders with greater ability to be more influential and involved with distant teams than ever before. This advancement has given leaders not only the opportunity to be successful in a moment of time but ensures continued success by enhancing the way they build dispersed organizations and grow future leaders from afar.

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• Proximity to the flagpole: Effective Leadership in geographically dispersed organizations

Last June, Brookings senior fellow Elaine Kamarck and I published a paper laying out the rise of short-term thinking in U.S. corporations. We argued that this trend was bad for the economy, and we suggested policies that would at least slow it down and diminish its effects.

Since then, additional research on short-termism has emerged, and an increasing number of corporate leaders are expressing concern about the trajectory of U.S. firms. Last November, for example, the Boston Consulting Group documented a worrisome decline in the corporate activities and investments designed to discover and nurture future growth opportunities. This turn away from exploratory activities may not immediately affect investors, said the BCG report: in the short term, companies can maintain earnings and shareholder returns by “cutting costs, increasing dividends, and pursuing share buybacks.” (As Kamarck and I showed, this is what is happening across our economy.) But in the long run, BCG researchers found, firms that invest in exploration boost revenues and total returns far faster than do those who are content to exploit their existing lines of business and return most of their earnings to shareholders in the form of dividends and buybacks.

A few days ago, Laurence Fink, the chief executive of the world’s largest investment fund and a long-time foe of short-termism, sent a letter to the heads of S & P 500 companies and large European corporations. He noted that in the twelve months ending September 30 2015, buybacks had risen by 27 percent over the previous year, when buybacks already stood at record levels. “Today’s culture of quarterly earning hysteria,” he declared, is “totally contrary to the long-term approach we need.” And he warned corporate executives that in the absence of well-considered long-term plans for investment and growth, they would expose their firms “to the pressures on investors focused on maximizing near-term profit at the expense of long-term value.”

Many influential investors agree with Fink, and they are joining forces. On February 1, the Financial Times reported that since last summer, the world’s largest asset managers—Warren Buffett, Jamie Dimon, the chief executive of JPMorgan Chase, and the heads of BlackRock, Fidelity, Vanguard, and Capital Group, among others—have been holding secret meetings to frame proposals that would encourage longer-term investments while reducing friction with shareholders. These proposals, which are reportedly some months away from final agreement and publication, may well involve changes in boards of directors, executive compensation, and shareholder rights.

The summit participants plan to support these changes for the companies in which they invest. Given the pools of funds they control, which amount to many trillions of dollars, their coordinated action may well represent a turning-point in the struggle to reorient corporate strategy toward the long term.

In the marijuana reform conversation, one of the grandest boogeymen is “Big Marijuana.” Reform advocates, opponents of marijuana legalization, patients, consumers, media, and many others worry openly that the marijuana industry will consolidate into a corporate beast and a bad market actor reminiscent of Big Tobacco companies.

In a paper released earlier this month entitled, “Worry about bad marijuana—not Big Marijuana,” Jonathan Rauch and I engage the likelihood and risks of the emergence of such a corporate entity. Although the paper makes several points, we begin with a discussion of exactly what “Big Marijuana” means. What we find is that the concept is tossed around so frequently, assigned to so many different types of market actors, that it has ultimately lost meaning.

Often, the term is used to describe any large corporate entity or consolidation effort within the marijuana industry. In reality, standard corporate consolidation or the existence of large companies in an industry are basic aspects in capitalism. What’s more there are huge differences between marijuana industry actors today and Big Tobacco companies of the middle of the 20^th century—in terms of size, scope, and market power to name a few. It should be expected that an industry that is young, fractured, and rapidly maturing will endure periods of consolidation and in the process, large and successful corporate entities will emerge. One should not assume, however, that such behaviors are sinister, suspect, or intent on engaging in immoral or illegal activities.

Nor should one assume that only large corporate entities can engage in bad behaviors. They surely can, but other market actors may as well. The policy conversation around marijuana industry structure often holds Big Marijuana up as the actor who will bring problems for enforcement, diversion, sale to minors, sale to problem users, etc. The reality is that a marijuana entity of any size can behave in many of those behaviors. The problem with an unending focus on industry structure or corporate size is that policymakers and regulators can give a pass to smaller actors who may engage in the types of behaviors people inside and outside of industry seek to avoid—those same types of behaviors we saw from the tobacco industry.

We argue there is a more sensible, safer step forward that begins with a simple premise. There are certain outcomes that the marijuana industry must avoid, and policy and regulation should preferably ban, but at least disincentivize those outcomes. We mention a few in the paper: antisocial marketing (marketing to children or problem users), regulatory capture, outcomes that hurt medical marijuana patients, and increasing barriers to entry and corporate crowd out—but others like diversion, illegal sales, and more must (and do) concern policy makers. In some cases, certain behaviors are more likely to come from larger corporate entities, but many behaviors can happen, independent of firm size.

There are a variety of ways to avoid some of these outcomes beyond a focus on firm size and corporate consolidation. Some of those options are highlighted by the RAND Corporation’s Drug Policy Research Center. In “Options and Issues Regarding Marijuana Legalization,” the authors argue a shift away from the corporate model—either through the use of non-profit entities or government operation of whole portions of the market (supply, retail, or both) can have real benefit. These approaches can allow regulators greater control over negative market actions and induce incentives focused on public health and good governance, rather than profit maximization. Those arguments are quite convincing, but as states continue to construct medical and recreational marijuana programs using the corporate model, it is important to consider policy approaches within that existing framework.

Thus, we recommend that regulators and policy makers not primarily focus on firm size, corporate consolidation, or the corporatization of the marijuana industry. Instead, they should work to avoid specific outcomes they see as unwanted or bad and pass laws, promulgate regulations, conduct information and education campaigns, and take whatever actions are necessary to stop them in their tracks. At the end of the day, one thing is clear: no one wants “Bad Marijuana” regardless of whether it comes from Big, Small, or Otherwise-Sized Marijuana.

Click through to read the full report, “Worry about bad marijuana—not Big Marijuana.”

Click through to watch the public event and paper release “Big Marijuana: How corporations and lobbies will shape the legalization landscape.”

Capitalism has provided unprecedented wealth and prosperity around the world, but a growing community is raising concerns about whether the promise of the capitalist system to achieve a more shared and durable prosperity can be achieved without systemic changes in the way for-profit corporations are governed and managed. The change in public opinion has become evident among workers, consumers, and investors, as well as through new policies enacted by elected officials of both parties: more than ever before, the public supports businesses that demonstrate positive social change and sustainable development. These new attitudes have begun to take root in corporations themselves, with a growing community of investors, business leaders, and entrepreneurs expressing a fiduciary duty to create value not only for shareholders but for society. However, businesses and investors seeking to harness these opportunities face significant institutional and normative barriers to achieving their goals.

In a new paper, the co-founders of non-profit B Lab, Andrew Kassoy, Bart Houlahan, and Jay Coen Gilbert, write about this overarching culture shift, the importance of and impediments to effective impact governance and impact management to make this shift meaningful and lasting, and how a rapidly growing community of responsible businesses has overcome these barriers, is maximizing its social impact, and is creating pathways for others to follow. The impact and growth of the B Corp movement will be maximized not only through increased adoption by business leaders, but also through the unique roles played by research institutions, the media, policy-makers, investors, and the general public. With enough support, this movement may soon transform shareholder capitalism into stakeholder capitalism, in which businesses can more easily live up to their potential to create a more shared and durable prosperity for all. 

This paper is published as part of the Center for Effective Public Management’s Initiative on 21st Century Capitalism. It is one of more than a dozen papers written by academics and practitioners about the changing role of the corporation and the importance of improving corporate governance. The authors of this paper are the co-founders of B Lab, a nonprofit organization that oversees the certification of B Corporations, and a major subject of this paper. The perspectives put forth in this paper are solely those of the authors, based on their professional expertise in this area.

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The Syrian uprising has changed significantly since the first signs of localized armed resistance began emerging in late April 2011. Western states and regional countries opposed to President Assad’s rule failed to manage the formation of an organized and representative political and military opposition body over the past three years. Instead, fragmentation of first the opposition, and then the conflict as a whole, has come to pose numerous serious threats to regional and international security and stability.

In a new Policy Briefing by the Brookings Doha Center, Charles Lister analyzes the Western-backed opposition, the spreading influence of jihadi militants, and the evolving capabilities of pro-government forces. With a definitive military victory seemingly out of reach for all sides of the conflict, Lister argues these parties will remain at a standoff until a political solution is reached. However, as armed groups multiply on either side, even an agreement between government and opposition will be unlikely to end the violence.

Lister concludes that Western and regional countries should focus on two core policy objectives. First: the international community should bolster a cohesive opposition that can challenge the Assad regime in battle as well as in negotiations. Second: the international community should aid Syria’s neighbors in managing the violent spillover of the conflict, particularly curtailing the potential for Syria-based jihadi groups to expand their operations beyond the country.

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Major changes in geopolitics, political economy, and energy markets are altering the global energy landscape. A potential nuclear deal with Iran has raised the possibility of new supplies coming online, and ongoing political gridlock in Iraq has hampered the country’s ability to expand supply. The U.S. energy boom is increasingly viewed as a long-term phenomenon, while a prolonged crisis in Ukraine threatens to impact Russian gas supplies to Europe.

How will the political developments in Iraq and Iran affect oil supply? What will be the impact of the Ukraine crisis on Europe, Russia, and China? How will these shifts help shape the energy markets of tomorrow?

Read the paper online: Brookings Doha Energy Report 2014

The 2014 Doha Energy Forum convened prominent industry experts and policymakers from Asia, the Middle East, Europe, and the United States for an in-depth dialogue on the rapidly changing global energy landscape. Based on the Forum’s plenary and roundtable sessions, this paper from the Brookings’ Doha Center and Energy Security Initiative reflects much of the discussion and debate around these changes. It also outlines the complexity of today’s energy markets and the geopolitical factors that set them in motion.

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Brookings Doha Center Analysis Paper, December 1, 2014

Intense turmoil in Syria and Iraq has created socio-political vacuums in which jihadi groups have been able to thrive. The Islamic State in Iraq and al-Sham (ISIS) had proven to be the strongest and most dynamic of these groups, seizing large swathes of territory in Syria and Iraq. Shortly after routing Iraqi forces and conquering Mosul in June 2014, ISIS boldly announced the establishment of a caliphate and renamed itself the Islamic State (IS). How did IS become such a powerful force? What are its goals and characteristics? What are the best options for containing and defeating the group?

In a new Brookings Doha Center Analysis Paper, Charles Lister traces IS’s roots from Jordan to Afghanistan, and finally to Iraq and Syria. He describes its evolution from a small terrorist group into a bureaucratic organization that currently controls thousands of square miles and is attempting to govern millions of people. Lister assesses the group’s capabilities, explains its various tactics, and identifies its likely trajectory.

According to Lister, the key to undermining IS’s long-term sustainability is to address the socio-political failures of Syria and Iraq. Accordingly, he warns that effectively countering IS will be a long process that must be led by local actors. Specifically, Lister argues that local actors, regional states, and the international community should work to counter IS’s financial strength, neutralize its military mobility, target its leadership, and restrict its use of social media for recruitment and information operations.

Since September of 2014, Jordan has joined other Western and Arab coalition partners in striking Islamic State (IS) positions in Syria, with the country’s King Abdullah framing the war against IS as a “third world war.” How have conflicts on Jordan’s borders and now the country’s direct intervention strained the country’s resources? How have the country’s leaders presented their participation at home and abroad?

In a timely Policy Briefing based on field research, Sultan Barakat and Andrew Leber assess Jordan’s vulnerabilities to regional conflicts and domestic pressures. Despite broad public support for action against IS, they note a growing gap between state and society only exacerbated by adverse events such as the capture and uncertain fate of a downed Jordanian pilot.

Read "Fortress Jordan: Putting the Money to Work"

Ultimately, Barakat and Leber note Jordan’s strategic importance to its allies but caution against it playing a front-line combat role. The authors contend that reducing threats to Jordanian stability lies not in “taking the fight to IS” abroad, but in strengthening Jordanian society at home.

While calling for improved governance in the Kingdom, the authors note reluctance on the part of Jordan’s ruling elites and their allies to promote full-scale political reforms. Barakat and Leber contend that they should therefore channel their fears about regional instability and extremism into productive action on Jordan’s economy. This will entail restructuring aid flows to the country toward productive investment, selectively incorporating Syrian refugees into the workforce, and putting forward a credible vision for the country’s economic future.

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Nearly two years after ousting President Muhammad Morsi, Egypt’s military continues to crack down on the Muslim Brotherhood. Much like during Egypt’s 1952-54 political transition, the recent interactions between the powerful armed state bureaucracy and the influential religious organization have had a major impact on the country’s political trajectory. In both instances, the military and Muslim Brotherhood initially cooperated before ultimately clashing violently. How has each entity determined what approach to take toward the other? What does a continued imbalance in civil-military relations mean for Egypt’s future?

In a new Brookings Doha Center Analysis Paper, Omar Ashour examines the legacies and patterns of cooperation and conflict between the leaderships of Egypt’s military and the Muslim Brotherhood. Relying on extensive field research, he analyzes how each entity has made its critical decisions regarding the other by applying various decision-making models. Ashour considers the impact of cost-benefit analysis, organizational dynamics, factional disputes, and psychological factors to gain a deep understanding of the leaders’ motives.

Read "Collusion to Crackdown: Islamist-Military Relations in Egypt"

Ashour concludes that Egypt's prospects for social stability and economic recovery will remain bleak if the relationship between the military and the Muslim Brotherhood is not redefined within institutional, democratic rules of political competition. He argues that Egypt’s military should embrace a balanced civil-military relationship to realize broad, long-term benefits and avoid otherwise inevitable and costly clashes with segments of Egyptian society. As for the Muslim Brotherhood, Ashour recommends that it reevaluate its recent decisions and work to develop a sustained, solid, and cross-ideological civilian front that can pressure the military to leave politics and allow for democratization.

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The need to confront and drive back the forces of the Islamic State (IS) has pushed long-term reform efforts in Iraq far down the list of priorities. Yet pressing economic reforms – such as restructuring and rebuilding the country’s energy sector – increasingly seem a strategic necessity, as oil prices have fallen far below government projections. How can politicians be persuaded to invest in Iraq’s long-term future at a time of imminent security threats? How can the efforts to reform the Iraqi electricity network be harnessed to reestablish government authority in newly retaken areas?

Luay Al-Khatteeb and Harry Istepanian address these questions through analysis of past attempts at electricity sector reform. They argue that even before IS advances plunged Iraq into a deep political and security crisis, divisions within the Iraqi parliament and various government agencies had stymied efforts at reform. Still, they note that improving the provision of electricity is a clear opportunity to improve basic services to its citizens, boosting government legitimacy and acceptance in areas under its control, especially as it seeks to retake territory from IS.

Khatteeb and Istepanian hold that a comprehensive strategy is needed, one that incorporates an expanded role for the private sector, rationalized electricity tariffs, and a host of technical fixes to improve efficiency. Ultimately, they contend, much will depend on whether the government of Prime Minister Haidar al-Abadi views the IS threat as an excuse for inaction or an impetus for change.

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The recent fall in world oil prices undoubtedly has an impact on the politics of the Middle East, where many states rely heavily on oil to fund their governments and to float their economies more generally. One can cite serious domestic and regional disruptions that have followed severe oil price declines in the recent past. Will the current period of dropping prices result in domestic upheaval and regional war? Is the price drop part of a Saudi power play against its regional rivals?

Read Sultans of Swing? The Geopolitics of Falling Oil Prices

In this Policy Briefing, F. Gregory Gause, III answers the above questions by analyzing the regional impact of previous declines in the price of oil. He argues that Saudi Arabia is merely continuing its policy of only considering production cuts to arrest falling prices if other producers join them. Gause also finds that, despite memorable exceptions, oil-dependent regimes are actually more stable than their non-oil counterparts, including during periods of lower prices.

In considering the Middle East, Gause identifies a pattern of the region’s oil producers negotiating agreements on production cuts, rather than coming to blows, when faced with low prices. He stresses that if Iran, and perhaps Russia, approach Saudi Arabia about negotiating an oil deal, the United States should encourage such talks, and be ready to expand them to include the largest strategic picture of the Middle East.

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The Muslim Brotherhood has faced a great deal of opposition in the Middle East in recent years, with Egypt, Saudi Arabia, and the United Arab Emirates all declaring it to be a terrorist organization. Jordan’s Muslim Brotherhood, which has historically operated as a loyal opposition to the palace, has also come under fire as regional instability has dampened Jordanians’ appetite for protest and reform. While the group still enjoys significant public support, it is facing a number of internal tensions, culminating in its recent split. How can the Jordanian Muslim Brotherhood retain its political clout? Can it play a role in stabilizing and strengthening Jordan?

Read The Muslim Brotherhood in Jordan: Time to reform

In this new Policy Briefing, Neven Bondokji discusses the various reform efforts undertaken by Jordan’s Muslim Brotherhood since 2010, and argues that it urgently needs to see them through. She identifies key challenges, including the division over the Zamzam reform initiative, overlap between the movement and its affiliated political party, the inclusion of women, the ongoing ideological shifts in the movement’s political discourse, and generational tensions. Additionally, Bondokji examines how Jordan’s East Banker-Palestinian fault line is manifested within the Brotherhood.

Bondokji makes a series of recommendations, including that the Muslim Brotherhood ensure the independence of its political party’s leadership and decision-making, actively engage in and disseminate discourse on plural politics and policy debates, and introduce new leaders and styles of communication. She also asserts that Jordan’s government must empower political parties and allow for a more representative parliament. The application of such reforms, Bondokji concludes, would allow Jordan’s Muslim Brotherhood to be an asset in the country’s efforts against destabilizing extremism.

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In 2013, China surpassed the European Union to become the Middle East and North Africa (MENA) region’s largest trading partner, and Chinese oil imports from the region rival those of the United States. Do China’s growing interests in the Middle East imply a greater commitment to the region’s security? How can China and regional governments reinforce these ties through greater diplomatic engagement?

In a new Policy Briefing, Chaoling Feng addresses the key choices facing Chinese and Middle East policymakers. She finds that China’s continued reliance on a framework of “non-intervention” is being challenged by the region’s divisive conflicts. Indeed, China’s economic interests face mounting risks when even maintaining “neutrality” can be perceived as taking a side. Furthermore, China’s case-by-case, bilateral engagement with MENA countries has hindered efforts to develop a broader diplomatic approach to the region.

Read "Embracing Interdependence: The Dynamics of China and the Middle East"

Feng argues that China and particularly the GCC states must work to further institutionalize their growing economic interdependence. China, drawing on its experiences in Africa and Latin America, should take a more holistic approach to engagement with the MENA region, while enhancing Chinese institutions for energy trading. GCC countries, for their part, should aim to facilitate bilateral investments in energy production and support China’s plans for Central and West Asian infrastructure development projects.

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From the rapid fall in oil prices to the conflicts that have threatened key energy sources and transit routes in the Middle East and North Africa, the global energy landscape has shifted dramatically over the past year. The change of a single number – the price of a barrel of crude oil – can carry profound implications for government policies and company decisions around the world, from efforts at subsidy reform to shale oil extraction. Understanding the interplay between key geopolitical events and energy markets remains crucial.

Has Asian consumers’ growing dependence on Middle Eastern energy supplies prompted greater interest in providing for the region’s security? How will new sources and new transit routes reshape the global LNG and natural gas landscape? What has been the impact of falling energy prices on unconventional production and investment in renewable energy resources?

At the fourth annual Brookings Doha Energy Forum, experts and policymakers from around the globe met to discuss the key global energy trends. In broad plenary sessions and focused roundtable discussions, industry leaders from the Middle East, Europe, Asia, and the United States wrestled with these and other questions. The findings of these many conversations are reflected in this report, jointly prepared by the Brookings Doha Center and the Energy Security and Climate Initiative.

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