North and South in the World Political Economy

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Author: Rafael Reuveny | William R. Thompson

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North and South in the World Political Economy

North and South in the World Political Economy Edited by Rafael Reuveny and William R. Thompson © 2008 Blackwell Publishing Ltd. ISBN: 978-1-405-16277-7

North and South in the World Political Economy Edited by

Rafael Reuveny and William R. Thompson

© 2008 by Blackwell Publishing Ltd BLACKWELL PUBLISHING 350 Main Street, Malden, MA 02148-5020, USA 9600 Garsington Road, Oxford OX4 2DQ, UK 550 Swanston Street, Carlton, Victoria 3053, Australia The right of Rafael Reuveny and William R. Thompson to be identified as the authors of the editorial material in this work has been asserted in accordance with the UK Copyright, Designs, and Patents Act 1988. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, except as permitted by the UK Copyright, Designs, and Patents Act 1988, without the prior permission of the publisher. Designations used by companies to distinguish their products are often claimed as trademarks. All brand names and product names used in this book are trade names, service marks, trademarks, or registered trademarks of their respective owners. The publisher is not associated with any product or vendor mentioned in this book. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold on the understanding that the publisher is not engaged in rendering professional services. If professional advice or other expert assistance is required, the services of a competent professional should be sought. First published 2008 by Blackwell Publishing Ltd 1

2008

Library of Congress Cataloging-in-Publication Data North and South in the world political economy / edited by Rafael Reuveny and William R. Thompson. p. cm. Includes bibliographical references and index. ISBN 978-1-4051-6277-7 (hbk. : alk. paper) 1. Developed countries–Economic policy. 2. Developing countries–Economic policy. I. Reuveny, Rafael. II. Thompson, William R. HD87.N67 2008 337.09172′2–dc22 2007049381 A catalogue record for this title is available from the British Library. Set in 10 on 12 pt Sabon by SNP Best-set Typesetter Ltd., Hong Kong Printed and bound in Singapore by C.O.S. Printers Pte Ltd The publisher’s policy is to use permanent paper from mills that operate a sustainable forestry policy, and which has been manufactured from pulp processed using acid-free and elementary chlorine-free practices. Furthermore, the publisher ensures that the text paper and cover board used have met acceptable environmental accreditation standards. For further information on Blackwell Publishing, visit our website at www.blackwellpublishing.com

Contents

List of Figures List of Tables Notes on Contributors List of Abbreviations

1

Observations on the North–South Divide Rafael Reuveny and William R. Thompson

Part I Problems of Trade

viii x xii xiv

1

17

2

Globalization, Poverty, and the North–South Divide Arie M. Kacowicz

3

Reproducing the North–South Divide: The Role of Trade Deficits and Capital Flows Bruce E. Moon

39

New Configuration or Reconfiguration? Conflict in North–South Energy Trade Relations Paul A. Williams

65

4

Part II Problems of Development 5

Virtuous or Vicious Cycle? Human Rights, Trade, and Development Robert G. Blanton and Shannon Lindsey Blanton

19

89 91

vi

Contents

6

Structural Adjustment, Development, and Democracy Mark R. Brawley and Nicole Baerg

104

7

War as Development – in the North but not the South Espen Moe

122

8

Infectious Disease: North and South in an Era of Deepening Globalization Dennis Pirages

Part III Points of Conflict 9

Challenging Hegemony: Political Islam and the North–South Divide Mohammed Ayoob

146

163 165

10 Fear and Loathing in the International System Ays¸e Zarakol

183

11 Globalizing Media and North–South Initiatives Francis A. Beer and G. R. Boynton

201

12 The UN Security Council and the North–South Divide: Plus ça change? Jane Boulden

216

13 “Failed” States and Global Security: Empirical Questions and Policy Dilemmas Stewart Patrick

227

14 Nuclear Proliferation and the Geocultural Divide: The March of Folly J. David Singer

254

Part IV

Alternative Paths to Ameliorating the North–South Divide

267

15 Lessons from/for BRICSAM about South–North Relations: Economic Size Trumps All Else? Andrew F. Cooper, Agata Antkiewicz, and Timothy M. Shaw

269

16 Dueling Imperialism or Principled Policies? A Comparative Analysis of EU and US Approaches to Trade and Development Vicki Birchfield

293

17 Assessing Strategies for Reducing Global Poverty Barry B. Hughes and Mohammod T. Irfan

313

Contents 18 North–South Contradictions and Bridges at the World Social Forum Christopher Chase-Dunn, Ellen Reese, Mark Herkenrath, Rebecca Giem, Erika Gutierrez, Linda Kim, and Christine Petit

vii 341

19 The Higher Realism: A US Foreign Policy for Transcending the North–South Divide Seyom Brown

367

Index

384

Figures

3.1 3.2 3.3 3.4 3.5 6.1 6.2 11.1 11.2 11.3 11.4 11.5 11.6 11.7 15.1 16.1 16.2 17.1 17.2

Income ratios between country categories Trade balance by income group, 1975–2005 Trade as percentage of GDP, 1960–2004 Percentage of nations with trade deficit of 5+ percent of GDP Simplified sketch of the major accounts within a nation’s balance of payments Sample distribution of factor endowments of SAP recipient countries, 1980–2004 Who adjusts? Structural adjustment by factor endowment Sample website pages for Aljazeera, BBC, and CNN Three versions of the story of the revival of the Arab peace initiative of 2002 on the Aljazeera website The BBC’s presentation of the Arab summit story, showing Libya’s leader, Muammar Khaddafi The Algerian horse guard, the picture accompanying the CNN report of the closing of the Arab conference Aljazeera’s story about malaria, focusing on the victim The BBC focuses on the mosquito enemy CNN’s picture of a malaria victim BRICSAM foreign reserves, selected years (US$ billions) Global economic disparities The EU-25’s share in world trade (export and import) in 2003, in percent The framework for policy analysis The Millennium Project’s conceptual framework

40 41 41 42 48 113 115 208 209 210 211 212 212 213 277 296 297 314 319

Figures 17.3 17.4 17.5 17.6 18.1

The modules of International Futures (IFs) World economic growth across three scenarios The deeper drivers of economic productivity in IFs Numbers living in absolute poverty Residences of participants in the 2005 World Social Forum in Porto Alegre

ix 321 325 328 336 344

Tables

1.1 1.2 3.1 3.2 4.1 5.1 5.2 6.1 6.2 6.3 7.1 8.1 8.2 11.1 11.2 11.3 11.4 13.1 13.2 15.1 15.2

Participation in war by “hemisphere” Intrastate warfare by “hemisphere” Financing sources for deficit countries Change in GNI per capita, PPP North–South energy trade conflict Human rights and trade Human rights and trade: variable magnitudes Preferences on trade liberalization Modeling current account adjustment Average adjustment Length of railway line open The disease gap Polio cases worldwide, 2005 Global media networks: initiative frequency by issue category Global media networks: initiative frequency by geographical location (conflict issue category) Global media networks: initiative frequency by type (health issue category) Global media networks: initiative frequency by geographical location (health issue category) Indicators for state weakness in developing countries Capacity and will as dimensions of state weakness in developing countries BRICSAM growth rates 1985–2005, selected years FDI inflows and outflows to/from BRICSAM, selected years

4 5 49 54 74 97 98 111 114 115 129 153 158 204 205 206 207 234 237 273 275

Tables Relative trade of BRICSAM and OECD (total merchandise and commercial services), selected years 15.4 Total gross domestic expenditure on R&D (GERD), selected countries, selected years 15.5 Corruption perception index 16.1 The fundamental concepts of the EU’s new development policy 16.2 Nine principles of development and reconstruction assistance 16.3 Core goals for US bilateral foreign aid 16.4 Net value of the ODA (official development assistance) provided by the EU 17.1 World Bank data and forecasts of poverty 17.2 Poverty head counts and rates across combined framing scenarios 17.3 Internal levers explored: log-normal formulation 17.4 External levers explored: log-normal formulation 17.5 Combined levers explored: log-normal formulation 18.1 Region of residence of WSF05 respondents 18.2 Residence of respondents by world-system zone 18.3 Gender distribution among WSF respondents in Porto Alegre, 2005 18.4 Age breakdown of WSF05 respondents and global population 18.5 World-system position breakdown by racial identification 18.6 Attitudes toward international financial institutions by world-system position 18.7 Attitudes toward the idea of a global democratic government by world-system position 18.8 Logit coefficients, standard errors, and odds for favoring the abolition and replacement of capitalism 18.9 Logit coefficients, standard errors, and odds for favoring the replacement of, or reform of, the IMF and WTO (rather than abolishing them) 18.10 Logit coefficients, standard errors, and odds for the regression of favoring global democratic institutions to solve global social problems 18.11 Logit coefficients, standard errors, and odds for the regression of support for a democratic world government 19.1 World interests to be championed by the United States: expected international support and controversies

xi

15.3

278 283 285 301 304 304 307 317 326 330 333 335 345 345 346 347 348 352 353 355

356

358 359 381

Contributors

Agata Antkiewicz is Senior Researcher, Centre for International Governance Innovation (CIGI), Ontario, Canada. Mohammed Ayoob is University Distinguished Professor and Professor of International Relations, James Madison College, Michigan State University. Nicole Baerg is a graduate student, Department of Political Science, McGill University, Montreal, Canada. Francis A. Beer is Professor Emeritus of Political Science, University of Colorado. Vicki Birchfield is Assistant Professor and Director of the Brussels Summer Program, Sam Nunn School of International Affairs, Georgia Institute of Technology. Robert G. Blanton is Associate Professor of Political Science, University of Memphis. Shannon Lindsey Blanton is Department Chair and Associate Professor of Political Science, University of Memphis. Jane Boulden is Canada Research Chair in International Relations and Security Studies, Royal Military College of Canada. G. R. Boynton is Professor of Political Science, University of Iowa. Mark R. Brawley is Professor, Department of Political Science, McGill University, Montreal, Canada. Seyom Brown is John Goodwin Tower Distinguished Chair in International Politics and National Security at Southern Methodist University in Dallas, Texas. Christopher Chase-Dunn is Distinguished Professor of Sociology, University of California, Riverside. Andrew F. Cooper is Professor of Political Science, Centre for International Governance Innovation (CIGI) and University of Waterloo, Ontario, Canada.

Contributors

xiii

Rebecca Giem is a graduate student in sociology, University of California, Riverside. Erika Gutierrez is a graduate student in sociology, University of California, Riverside. Mark Herkenrath is Lecturer and Postdoctoral Research Associate at the Sociological Institute of the University of Zurich, Switzerland, and a Board Member of the World Society Foundation. Barry B. Hughes is Professor, Graduate School of International Studies, University of Denver, Colorado. Mohammod T. Irfan is a graduate student, Graduate School of International Studies, University of Denver, Colorado. Arie M. Kacowicz is Associate Professor and Chair, Department of International Relations, Hebrew University of Jerusalem. Linda Kim is a graduate student in Sociology at the University of California, Riverside. Espen Moe is Associate Professor of Political Science, Norwegian University of Science and Technology. Bruce E. Moon is Professor of International Relations, Lehigh University, Pennsylvania. Stewart Patrick is Research Fellow, Center for Global Development and Professorial Lecturer, Johns Hopkins University School of Advanced International Studies. Christine Petit is a graduate student in sociology at the University of California, Riverside. Dennis Pirages is Horace Harrison Professor of International Politics, Department of Government, University of Maryland. Ellen Reese is Associate Professor of Sociology at the University of California, Riverside. Rafael Reuveny is Professor, School of Public and Environmental Affairs, Indiana University. Timothy M. Shaw is Professor and Director of the UWI Institute of International Relations, University of the West Indies, St. Augustine, Trinidad. J. David Singer is Professor Emeritus of Political Science, University of Michigan. William R. Thompson is Rogers Professor of Political Science, Indiana University. Paul A. Williams is Assistant Professor of International Relations, Bilkent University, Ankara, Turkey. Ays¸e Zarakol is Assistant Professor of Global Politics at Washington and Lee University.

Abbreviations

BRICSAM CTBT EU FDI IAEA IDA IFs IFIs IMF INGO ISI MDGs MNCs NAFTA NATO NAM NGO NIC NIEO NPT NWFZ ODA OECD OPEC

Brazil, Russia, India, China, South Africa, the ASEAN-4 (Indonesia, Malaysia, Philippines, Thailand), and Mexico Comprehensive Test Ban Treaty European Union foreign direct investment International Atomic Energy Agency International Development Association International Futures international financial institutions International Monetary Fund international non-governmental organization import substitution industrialization Millennium Development Goals multinational corporations North American Free Trade Agreement North Atlantic Treaty Organization Non-Aligned Movement non-governmental organization newly industrialized country New International Economic Order Non-Proliferation Treaty Nuclear Weapon Free Zone Office of Official Development Assistance Organization for Economic Cooperation and Development Organization of Petroleum Exporting Countries

Abbreviations OSCE PPP RTA SAP SARS SMOs SORT UNDP WEF WHO WMD WSF WTO

Organization for Security and Cooperation in Europe purchasing power parity regional trade agreement Structural Adjustment Program Severe Acute Respiratory Syndrome social movement organizations Strategic Offensive Reductions Treaty United Nations Development Programme World Economic Forum World Health Organization weapons of mass destruction World Social Forum World Trade Organization

xv

Chapter 1 Observations on the North–South Divide Rafael Reuveny and William R. Thompson

This volume on the North and South in world politics encompasses a sample of papers delivered at the 2006 annual meeting of the International Studies Association (ISA) in San Diego, California.1 Our intention is not to catalogue exhaustively all of the aspects of this structured dimension of international relations. Nor do we seek to resolve the issues at risk. Rather, our thesis is that North–South issues have already become prominent and are likely to become even more so in the future. We would all do well to recognize them more explicitly and to focus more analytical attention on North– South questions as they move toward the center of the world stage. Even when these North–South questions are not manifested in obvious ways, they tend to be all-pervasive – not unlike the way the old Cold War used to work. Indeed, it seems likely that just as the “East–West” rift dominated much of the second half of the twentieth century, North–South issues are likely to dominate much of the twenty-first century. Yet one question that remains very much open is whether we will recognize the common North–South denominators. With the old Cold War, paranoia helped to see connections everywhere – even when they were not there. Yet in the North–South divide, some Northerners still wonder why many Southerners hate Northerners. Even the terminology seems obscure. Ask typical Americans what they know about the North–South gap and the response is just as likely to have some puzzled reference to the Mason–Dixon line as it is to have something to do with development and inequality.

The Context Economic history is not destiny but it has been a powerful factor in shaping the nature of international relations over the past several centuries. Precisely where one


2

Rafael Reuveny & William R. Thompson

should break into a very long story of economic development is debatable but many analysts would be comfortable with beginning with the British Industrial Revolution in the late eighteenth century.2 Innovations in producing iron and textiles led to the creation of a technological edge for the innovating pioneers, subsequent waves of further radical innovations (steam, electricity, gasoline engines, and computers) in production and transportation, and the uneven diffusion of the capability to emulate, absorb, and improve upon the industrial armature of modern economic growth. The consequent distribution of technological expertise and emulation created an increasingly unequal world in which the economies that could work with the new technology became highly affluent and those that could not, did not – and could not prosper anywhere near to the same extent. Highly structured inequality also created great incentives for late developers to try to catch up to the pioneers as quickly as possible. In turn, these incentives contributed mightily to two world wars and a Cold War that dominated the twentieth century. The late nineteenth-/early twentieth-century technological competition among Britain, Germany, and the United States was an important part of the lead-up to World War I. While popular mythology fixates on reparations and the economic vicissitudes wrought by the Great Depression of the 1930s, the real problem before World War II was always more a matter of late-developing major powers adopting increasingly authoritarian strategies to coercively catch up with the early developers. In World War II, Germany, Italy, and Japan failed to make their coercive strategies succeed. The early developers (primarily Britain and the United States), allied prominently with an authoritarian late developer (the Soviet Union), were able to suppress the challenge. This coalition subsequently dissolved after 1945 into an intensive Cold War waged between the early developers and the next group of late-developing challengers, primarily the Soviet Union and China. The effort ultimately failed as well; again, in part, because the challenger strategies proved not quite up to the task of catching up. In the days of the Cold War, the predominant global axis was thought to be an East–West one, with the Soviet Union and China representing the leaders of the East, and the United States and its more developed allies constituting the West. A synonym for this divide was the categorization of First (the West) and Second (Eastern communist states) worlds. The rest of the world was allocated to a Third World of less competitive and less developed states.3 With the disintegration of the Soviet Union, the Second World categorization became less useful. Some of the Second World joined the First World, and Russia dropped temporarily into the Third World, as did other parts of the former Second World perhaps less temporarily. The time was ripe for a new, simplifying categorization. For some observers, the First World became the North while the Third World became the South.4 One can argue about the appropriateness of the new geographical appellations. Some First World states (Australia and New Zealand) are located about as south of the equator as one can get. Russia, the former leader of the erstwhile Second World, a late arrival to the First World, and a transitory resident in the global South before its fortunes were revived by raw material profits, is located about as north of the equator as one can get. Moreover, some people who live in the North are

Observations on the North–South Divide

3

much poorer than some people who live in the South. But, by and large, the dichotomy works as long as no one assumes a high degree of homogeneity in the two zones. If one places the North Pole at the top of one’s globe, most less developed states are located to the south of most of the more developed and affluent states.5 A good question is whether, or to what extent, this North–South divide will predominate in twenty-first-century international relations to the same extent as the East–West divide preoccupied the second half of the twentieth century. Since East and West had some potential for obliterating each other and the rest of the world in a nuclear war, we may have reason to expect somewhat less fixation on North and South in the twenty-first century, at least as long as the Northern nuclear advantage prevails. But the ultra-clarifying threat of nuclear war aside, there are compelling reasons for anticipating that North–South relations will become one of the leading structural fixations, if not the leading obsession of twenty-first-century international relations. Why might that be? One way to look at the question is to raise questions of morality and justice. In a highly unequal situation, what responsibilities do the well-off have towards the less well-off? A very significant proportion of the world’s population are poor, do not eat enough or very well, are unemployed or underemployed, cannot read very well, suffer disproportionately from infectious diseases, and live relatively short life spans. To whatever extent the less well-off owe their predicament to the actions of the well-off, is there some pressing need to make amends? Even if one denies any responsibility for past activities, what assistance do the Southern poor and malnourished deserve in the present? The problem with these questions, of course, is that whatever the appropriate answers, nothing much tends to change very quickly. These questions, moreover, have been asked literally for centuries. In the process, they have almost become constants, not variables, and therefore do not take us anywhere new. Another approach is to ask what is it that Northerners (and Southerners) worry about? There are, of course, all sorts of concerns, but some of the current Northern foci of worries encompass the threats of conflict in general, terrorism and the need for various types of intervention in particular, nuclear proliferation, migration pressures, infectious disease threats, environmental degradation, global warming, and overpopulation. The obvious point to be made is that none of these issues are independent of the North–South divide. Interstate conflict is already a monopoly of the South or North–South interactions. As Table 1.1 suggests, wars between states have been fought almost exclusively in the South in the past half-century or more. By no means have the participants been exclusively Southerners but conventional wars between Northern states in the future are not considered very likely. Less conventional intrastate wars, as demonstrated in Table 1.2, have also become almost exclusively Southern in location. Somewhat less evident in the two tables is the fact that Northern states do not intervene with military force in other Northern states, but they certainly continue to do so in the South. To the extent then, that international relations is about conflict, international relations has already become increasingly Southern in flavor over the past half-century.

4


Table 1.1 Participation in war by “hemisphere” Intra-North Russo-Hungarian 1956

North–South

Intra-South

Mixed

Sinai 1956

First Kashmir 1948–9

Korean 1950–3

Six Day 1967

Palestine 1948

Israeli–Egyptian 1969–70 Yom Kippur 1973 Falklands 1982 Israel–Syria 1982

Assam 1962

Vietnamese 1965–75 Gulf War 1990–1

Second Kashmir 1965 Football 1969 Bangladesh 1971 Turco-Cypriot 1974 Vietnamese–Cambodian 1975–9 Ethiopian–Somalian 1977–8 Ugandan–Tanzanian 1978–9 Sino-Vietnamese 1979 Iran–Iraq 1980–8 Sino-Vietnamese 1987

Terrorist tactics have been around for a very long time, but the adoption of terrorist campaigns by non-state groups for political purposes has steadily intensified since the Napoleonic Wars. Initially a Northern development, adopted by those resisting Napoleonic occupation, anarchists, and Irish independence advocates, terrorism migrated South as it was increasingly harnessed by anti-colonial, Marxist, and, more recently, Jihadist movements. Yet it can hardly be said to be an exclusively Southern phenomenon because the targets are often Northern, either in location or in personnel. Nuclear proliferation has taken place along interstate rivalry “daisy-chain” channels. The United States’ development of nuclear weapons for fear that the Germans might get there first meant that the Soviets had to have nuclear weapons. If the USA and USSR had them, then the Chinese, British, and French wanted them as well. If the Chinese acquired nuclear weapons, the Indians needed them. If the Indians acquired nuclear weapons, the Pakistanis had to have them, and so on. At one time, it looked as if the daisy-chain sequence had begun to play itself out. Not that long ago, more states were abandoning nuclear weapons development than were seeking to create weapons of mass destruction. But that may be changing with the renewed stimuli of Iranian and North Korean developments on Egyptian, South Korean, and Japanese deliberations. Our point is that the nuclear proliferation problem also began as an intra-Northern process that has largely migrated to the South. Yet

Table 1.2 Intrastate warfare by “hemisphere” Northern

Southern

Russia 1994–6 China 1946–50 Greece 1946–9 Paraguay 1947 China 1947 Yemen Arab Rep. 1948 Costa Rica 1948 Colombia 1948–9 Burma 1948–51 Colombia 1949–62 Indonesia 1950 Philippines 1950–2 Bolivia 1952 Indonesia 1953 Guatemala 1954 Argentina 1955 China 1956–9 Indonesia 1956–60 Lebanon 1958 Cuba 1958–9 Iraq 1959 Republic of Vietnam 1960–5 Zaire 1960–5 Laos 1960–2 Iraq 1961–3 Algeria 1962–3 Yemen Arab Rep. 1962–9 Laos 1963–73 Sudan 1963–72 Rwanda 1963–4 Dominican Rep. 1965 Uganda 1966 Guatemala 1966– 72 Chad 1966–71 China 1967–8 Nigeria 1967–70

Burma 1968–80 Thailand 1970–3 Cambodia 1970–5 Jordan 1970 Guatemala 1970–1 Pakistan 1971 Sri Lanka 1971 Philippines 1972–80 Burundi 1972 Philippines 1972–92 Zimbabwe 1972–9 Pakistan 1973–7 Chile 1973 Ethiopia 1974–91 Iraq 1974–5 Lebanon 1975–90 Angola 1975–91 Ethiopia 1976–7 Guatemala 1978–84 Ethiopia 1978–91 Afghanistan 1978– 92 Iran 1978–9 Nicaragua 1978–9 Cambodia 1978–91 El Salvador 1979–92 Mozambique 1979– 92 Chad 1980–8 Nigeria 1980–1 Uganda 1980–8 Iran 1981–2 Peru 1982–95 Nicaragua 1982–90 Somalia 1982–97 Burma 1983–95 Sri Lanka 1983– Sudan 1983–

Nigeria 1984 Colombia 1984– Iraq 1985–93 India 1985– Yemen P. Rep. 1986 Sri Lanka 1987–9 Burundi 1988 Liberia 1989–90 Rumania 1989 Rwanda 1990–3 Sierra Leone 1991–6 Yugoslavia 1991–2 Turkey 1991– Burundi 1991 Georgia 1991–4 Azerbaijan 1991–4 Bosnia/Herzgovina 1992–5 Algeria 1992– Tajikistan 1992–7 Liberia 1992–5 Angola 1992–4 Zaire 1993 Burundi 1993– Cambodia 1993–7 Rwanda 1994 Yemen 1994 Pakistan 1994–5 Uganda 1996– Liberia 1996 Iraq 1996 Zaire 1996–7 Congo 1997

6


nuclear weapons in Southern hands appears to be very much a leading North–South policy issue, with Northern states demanding that Southern states have no right to construct nuclear weapons because, unlike the Northern states, the newly empowered Southern states cannot be trusted not to use them (or lose them). One of the major contributing factors to the global distribution of economic development was Northern migration to places that were once less populated (North America, Australia, and New Zealand). Migration facilitated diffusion of advanced technological practices, but, since eighteenth- and nineteenth-century migration was uneven, so, too, was the diffusion of those practices. In contrast, migration pressures in the twenty-first century have increasingly come to be focused on Southern desires to move to the relative affluence and prosperity of the North. South and Central Americans want to live and work in North America. Africans and southwest Asians want to live and work in Europe. Asians want to live and work in North America and Europe. Political and physical barriers to these movements have intensified as the pressures for migration out of the South have accelerated.6 Infectious disease is not a monopoly of the South. Yet communicable diseases are more prevalent in less developed areas due to such factors as contaminated water, greater human contact with animals, and penetration of hitherto isolated disease pools. More developed areas specialize in non-communicable diseases. However, given rapid globalized transportation, more developed areas are highly vulnerable to the rapid importation of communicable disease, as witnessed by AIDs and more recent waves of influenzas. The odds of entirely new diseases emerging and spreading in pandemic form throughout the globe are, unfortunately, certainly higher than zero. Environmental degradation and global warming appear to be issues that will become increasingly problematic in the twenty-first century. To the extent that industrialization has been a major agent in bringing about environmental deterioration, Northerners will seek to persuade Southerners to forgo industrialization in order to head off further degradation; China, for instance, may shortly become the world’s leading source of pollution. Southerners will equally naturally demand that it is unfair that their economic fortunes should be held hostage to the green preferences of the North. Resolving this standoff will not be easy. The full extent of global warming effects in the twenty-first century remains subject to debate. Just who will win and lose as a consequence of climate change is not fully predictable. But it seems more likely that the South will be hit harder by global warming problems than the North. The natural catastrophes amplified by global warming (for instance, floods, storms, water shortages, excessive heat, desertification, rising sea levels) will do more damage in areas less prepared to adjust to repeated shocks of nature. Probable outcomes include conflict over scarce goods, more migration, more refugees, and more communicable disease. Population growth, despite all of the looming problems, is likely to be impressive and contested in the twenty-first century. The affluence of the Northern areas has resulted in declining fertility rates in that part of the world. In some parts of the


7

North, the effect has been so strong that states are facing a future with not only a smaller number of people, but also more elderly people, than in the past. These demographic pressures have profound implications for economic productivity, welfare, and security. While they may lead eventually to fewer restrictions to Southern migration, there will also be increased sociopolitical conflict over the transformations in national characteristics. At the same time, Southern fertility rates may also be slowing down in the aggregate but probably not fast enough to prevent at least doubling the size of the world’s population in the next few generations. That, too, will have enormous implications for the world’s carrying capacity (especially in terms of the availability and distribution of food and water), which will be manifested unevenly, to be sure, but will be difficult to avoid as a thoroughly worldwide problem. Some of these problems are not new. Some have become bigger problems in this century. The point remains that they are problems that are unlikely to go away quickly or easily. Northerners may want to distance themselves from Southern problems but, in many cases, that will prove impossible. The North–South divide, overtly and often more subtly, will show up repeatedly in a number of pressing policy-issue areas. A goodly proportion of international relations, therefore, will take on North–South hues of varying intensity. In “anticipation” of what are very much ongoing problems – as opposed to problems for the future – the theme of the 2006 San Diego meeting of the International Studies Association was dedicated to issues concerning the North–South divide. A sampling of the many papers addressing this theme follows. This edited volume includes 18 chapters (besides this introduction), which can be categorized in four interrelated groups. The first part of the volume focuses on problems of North– South trade; the second discusses problems of Southern development; the third part centers on North–South conflict; and the last section discusses possible paths to ameliorating the North–South divide.

Part I: Problems of Trade Beginning with problems of trade, in Chapter 2 Arie Kacowicz approaches poverty as a global problem for international relations, in the context of the North–South divide. The goal is to investigate links between globalization and poverty and look at the normative and practical implications of these links and their connection to the North–South divide. Classifying the way the standard approaches view global poverty, Kacowicz concludes that a radical perspective suggests economic globalization causes and deepens interstate and intrastate income inequality and poverty; a liberal perspective sees economic globalization as the ultimate policy solution to poverty; while according to a realist view globalization and poverty are not necessarily related. Building on this discussion, Kacowicz argues that economic globalization may have both positive and negative effects on global poverty. The issue, however, is important on both moral and practical grounds, reflecting on both distributive justice and the likelihood of conflict. When all is said and done, the North–South divide does not seem to correlate perfectly with any of the three major

8


theories, leaving researchers puzzled when they attempt to explain the North–South divide based on these alternative ideologies. In Chapter 3, Bruce Moon notes that the supporters of globalization expect that free international trade and unhindered capital flows across countries will lead to North–South economic convergence, but the North–South gap has not narrowed so far during the most recent globalization era. Seeking to explain this phenomenon, Moon argues that the reason has to do with the role played by an overlooked manifestation of neoliberalism, the continuation of large trade deficits in poor economies. Economists of the neoclassical tradition generally do not see any problem with the large transfers of foreign capital that are implicit in financing these trade deficits, but critics argue that large trade deficits damage the Southern economies. Testing statistically the effects on economies of persistent trade deficits and the resulting capital flows, Moon argues that the North–South gap will close provided the South avoids trade deficits. Orthodox economic theory also leads to this conclusion, but a political economy model is required to fully reflect the role of state policy and to reveal the negative impact of trade deficits. In light of these results, Moon concludes that the Southern trade deficits are properly seen as channeling both foreign capital and power relations between North and South. Moving to Chapter 4, Paul Williams observes two views regarding the patterns of energy trade conflict between major Southern energy exporters and Northern energy importers. Optimists argue that these conflicts are cyclical and transitory, and are not likely to devastate the growing complementarities of North–South trade. Pessimists observe a secular tendency of declining energy supply and rising energy demand which, when overlaid with superior Northern power, can ultimately lead to resource wars. Based on historical examples, Williams explains the inner workings of a “trade cycle,” a periodical alternation between conditions favorable for sellers and those favorable for buyers. Using this analytical construct, he analyzes historical patterns of recurring North–South energy conflicts, and the consequent strategies. The chapter concludes by assessing whether the recent North–South energy-trade problems represent a passing conflict of the type observed in the 1970s, or signal a structural change toward increasing conflict between Northern importers and Southern exporters. While there are many warnings of looming energy supply downturns, a key factor in the way things will play out, argues Williams, will be the energy consumption of Southern oil exporters themselves, a rise in which may intensify North–South tensions.

Part II: Problems of Development In the first article focusing on problems of Southern development, Robert Blanton and Shannon Blanton study one aspect of the political impact of economic globalization: the linkage between international trade openness and respect for human rights. This issue, they observe in Chapter 5, has been controversial, particularly in the context of Southern development. In one view, international trade openness and respect for human rights may not be compatible objectives; as the level of one variable rises, the level of the other must decline. In contrast, liberals argue that


9

international trade openness and respect for human rights promote each other in a positive feedback: as the level of one variable rises, the level of the other also rises. Blanton and Blanton test empirically the nature of the relationship between the two forces, which may guide public policy. As the current debate implies a reciprocal link between the two forces, they use a simultaneous equations model, for national data from 1980 to 2003. They find that respect for human rights promotes a country’s trade openness, while national trade openness encourages respect for human rights in a country, suggesting the existence of a mutually reinforcing “virtuous cycle” between the two forces. In Chapter 6, Mark Brawley and Nicole Baerg focus on features and effects of Structural Adjustment Programs (SAPs) sanctioned by international financial institutions. They note that SAPs often fail to reach their economic goals because they lose domestic political support. Probing deeper, they find that SAPs often fail because they pursue macroeconomic goals such as low inflation and high economic growth, but do not take politics into account and do not link these goals with microeconomic processes such as structural unemployment. The article employs a non-general equilibrium economic model of the distribution of trade gains that links the adjustment process with international trade performance. The model, argue the authors, explains why the risk of failure increases during adjustment and economic liberalization in the South. Their model is also advanced as one offering insights into how SAPs can be modified to use trade to spur economic growth, improve the balance of payments, and create a domestic political coalition supporting economic liberalization. In Chapter 7, Espen Moe studies the link between war and economic development, rejecting the view that war must impact development negatively. He observes a number of examples in which states experiencing interstate and intrastate wars suffered considerable destruction, but as a result of the conflict underwent a fundamental transformation leading to subsequent economic rejuvenation. Combining the frameworks of Mancur Olson and Joseph Schumpeter, he seeks to predict the conditions under which this outcome is possible. Moe expects that wars coinciding with economic structural change, political consensus, and social cohesion will lead to accelerated economic growth once the war is over. For the test of this thesis, he studies the rise of the USA to economic leadership, the growing economic gap between Great Britain and France following the French Revolution and Napoleonic Wars, and the detrimental effects of the 1960–5 intrastate war in the Congo on the Democratic Republic of Congo. Noting that his first three cases do not say much about North–South differences, he provides a number of reasons why the Congo case suggests that Southern wars are more likely to have detrimental effects on economic development than wars fought among or within Northern countries. The discussion so far has been largely political–economic. In Chapter 8, Dennis Pirages introduces a new element into our discussion: the threat of resurgent and new infectious diseases spreading globally. Observing that periods of historical “proto-globalization,” including the rise of empires and civilizations and colonial networks, experienced large-scale infectious disease outbreaks, he argues that the current globalization is no different. Growing evidence suggests that globalization,

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aided by Southern population growth, industrialization, and urbanization, increases this very threat. Today, the older East–West military security tensions are replaced by growing anxieties over the possible reappearance of transmissible diseases due to greater North–South contacts. These fears reflect a new context for global politics in which traditional national security concerns are broadened to include North– South human development and human security threats. An ever more interconnected global society faces a growing risk of new epidemic outbreaks, the most immediate and probable of which is an outbreak of an influenza pandemic. This outbreak might be more severe than the one that occurred in the twentieth century. Pirages argues that overcoming these threats requires enhanced global governance and, more generally, a paradigmatic shift in defining and ensuring global security to involve more than the traditional concern for military security.

Part III: Points of Conflict Turning to aspects of North–South conflict, Mohammed Ayoob focuses in Chapter 9 on political Islam – the use of Islamic history and religious idiom for domestic and international mobilization of Muslims. This ideology purports that Muslim societies have declined from their greatness since they abandoned the principles of early Islam. Political Islam has evolved as a result of its interactions with other political movements, authoritarian Arab regimes, and global geopolitical transformations involving particularly the current American hegemony. The American approach to Middle East autocratic regimes, Iraq, and the Arab–Israeli conflict, argues Ayoob, promotes Islamic anti-Americanism. This reaction benefits political Islam and has played a role in the current North–South divide, coinciding with the “clash of civilizations.” The Islamic challenge to American hegemony will continue as long as the current US approach to the Middle East continues. Since political Islam challenges Northern control against a background of no secular Southern challenge to the North in the realm of ideas, its challenge may soon have a demonstration effect for the non-Muslim South, which has had its own grievances against the American-led North, many of which are shared with the Muslim world. The idea of challenge is given additional emphasis in Chapter 10. Ays¸ e Zarakol looks at the inconsistencies of systemic norms prescribing sovereign equality in an international system that is highly unequal. In the past several hundred years, more powerful European states gradually moved toward adopting the equality norm but restricted its application initially to the Christian world and later to states that could satisfy certain minimal attributes of “civilization,” including effective bureaucracies and the acknowledgment of human rights and international law. The response in various parts of the agrarian South was a top-down effort to catch up with the more industrialized North. In many cases, though, the catch-up attempts stopped short of reforming the efficacy of imperial/national governmental and military forces within a highly authoritarian political structure. Intellectual discontent with the disappointing extent and pace of reforms has led to successive waves of violence.7 The first wave focused on eliminating authoritarian rulers in the Balkans and Eastern Europe in the late nineteenth/early twentieth


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century. The second wave emphasized the acceleration of decolonization into the 1950s and 1960s. The third wave took on a strong Marxist character but was still aimed at ameliorating inequalities in the then Third World. Zarakol acknowledges that most observers view the fourth wave as one focused on fundamental religion, but she sees something novel in it. Jihadists reject the systemic norm of state sovereignty and instead prefer to construct religious communities. Thus, in contrast to the earlier waves, some Southerners are abandoning the idea that states should provide the principal infrastructure for the international system. Zarakol attributes this new development to the intense dissatisfaction of a disenfranchised, peripheral population who increasingly see conventional institutions as irrelevant to their problems. Information and communication networks are critical in a century dominated by information technological change, and especially critical to conflict concerns. They can also be critical to disseminating images and ideas about the gap between North and South. If media specializing in audiences in different parts of the world have radically different agendas, closing the gap will be all the more difficult. People routinely exposed to vastly different media information are likely to be highly susceptible to misreading what adversaries and competitors are doing. Misperceptions become more common, as do breakdowns in interaction and communication. In this context, Francis Beer and Robert Boynton ask in Chapter 11 whether Northern (the BBC and CNN, for example) and Southern (Aljazeera) media networks treat questions of globalization and change in the same way. Do they focus on entirely different questions? Do they slant the issues to appeal to presumably very different audiences? After all, networks headquartered in very different parts of the world, with different pasts and hierarchical positions, might be expected to view world events through radically different lenses. Yet, comparing Aljazeera, BBC, and CNN, the authors find that the answers are mixed. All three networks tend to focus on conflict and health issues but no strong North–South cleavage is apparent other than that the two Northern networks (BBC and CNN) are more likely to focus on health issues than is Aljazeera. On conflict coverage, there are also some evident biases that reflect different audiences. Aljazeera focuses on the Middle East’s Fertile Crescent area (Iraq to Palestine), while the BBC has more interest in South Asian and sub-Saharan Africa questions. All three are apt to look at local stories (with what is considered local varying by continent), regardless of the issue. So, the general answer at this point in time would appear to be that the three media networks overlap in their coverage to some extent but do so with local “flavors” distinguishing their points of convergence. These findings might suggest that global media biases are not at the head of the line for blame on fueling North–South disagreements. There may be more convergence than divergence, as unexpected as it may be, within this particular global arena. Jane Boulden, in marked contrast, finds no ambiguity in UN Security Council operations (see Chapter 12). Since the Security Council is most strongly characterized by the veto power of permanent members, the institution is clearly a great power institution. It was in a position of stalemate throughout the Cold War because of the US and USSR vetoes; however, with the demise of the Cold War,

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expectations were renewed for a substantial increase in Security Council activity. By and large, there is more activity now but a two-tiered approach has emerged that strongly restrains Security Council behavior. According to Boulden, the great powers continue to keep issues off the agenda in which they have a great deal of interest or, conversely, very little interest. That leaves issues in between as most suitable for Security Council purview. But actual operations in the field tend to be conducted increasingly by Southern troops. Northern troops have been diverted to conflict arenas that are very much of interest to Northern governments and these issues tend to bypass Security Council review. Southern troops have mixed success in coping with conflicts in which the great powers are only moderately interested. Northern resources and financial underpinnings are applied elsewhere. The impression is that Northern military are too valuable to waste on relatively obscure Southern issues. But the double-tiered system also implies that reform efforts to improve the credibility and legitimacy of the Security Council by expanding the number of permanent members are likely to miss tackling the most central problem. Northern troops and resources need to be used in support of Security Council decisions. Otherwise, the Security Council tends to be relegated to “second-class” issues while “first-class” issues, the ones deemed most vital to the great powers, are kept out of the UN altogether. Maintaining the twotiered system will only continue to detract from the Security Council’s perceived legitimacy. Stewart Patrick, writing in Chapter 13, shifts the focus to failed and weak states, and the implications for North–South relations. Setting the stage, he observes that many practitioners and students of foreign policy and international relations believe failed or weak states in the global South generate transnational security threats, including providing safe havens for terrorists, organized crime, and dangerous weapons, and enabling growth of many other transnational problems such as disease pandemics, environmental degradation, regional violent conflict, and humanitarian disasters. However, argues Patrick, little empirical work has explored and documented these links. To date, these connections have relied almost entirely on anecdotal findings. Having documented claims about these connections, and stating several related hypotheses, he attempts to evaluate their empirical validity. The empirical test, he concludes, shows that support for these claims is neither clear-cut nor universal. Each weak or failed state suffers from distinctive problems, and faces unique challenges. As such, there could be no “one size fits all” Northern policy in dealing with failed and weak states and the consequences of their problems. Nor does J. David Singer find any uniform Northern policy in dealing with nuclear proliferation. In Chapter 14, he argues that the desire to develop nuclear weapons of mass destruction represents a clear challenge to Western/Northern military dominance. For some time, Northern states have acted as if only Northern states can be trusted with nuclear weapons while Southern states should be denied what they really do not need and might not be responsible in controlling. The rub, however, is how to enforce this sentiment. Selective bombing of nuclear reactors has been contemplated and tested. So, too, have ad hoc negotiations and treaty restrictions. But states involved in interstate rivalries and those with recent histories


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of warfare have incentives for acquiring nuclear weapon capability other than engaging in symbolic challenges of the status quo. Assuming that most of the inhibitors have at best moderate effects, Singer concludes that further Southern nuclear proliferation is probable and that the only real solution may be to convince people that cleaner and more renewable energy sources are far more attractive paths to economic development.

Part IV: Alternative Paths to Ameliorating the North–South Divide The fourth cluster of papers considers paths for closing the North–South divide. In Chapter 15, Andrew Cooper, Agata Antkiewicz, and Timothy Shaw see a fundamental, endogenous global political–economic evolution at play: the movement of the so-called “emerging economies” towards the top global tier. Identified as the BRICSAM, these emerging economies include Brazil, Russia, India, China, South Africa, the ASEAN-4 (Indonesia, Malaysia, Philippines, Thailand), and Mexico (i.e., BRICSAM), and a few smaller countries. The expected rise of the BRICSAM nations suggests that a new trilateral global structure is in the making. The first tier includes the traditional North, the second tier consists of the BRICSAM nations, and the third tier includes a rather heterogeneous global South. Cooper et al. expect that the BRICSAM nations will have a growing political–economic impact on the world system, especially China and India due to their current political status and economic sizes. This ensuing transformation may create various tensions amongst the BRICSAM nations themselves, including disputes over access to and control over critical resources, attraction of foreign investments, provision of information technology services, and influence in multilateral arenas. The authors conclude that while it is not fully clear how these tensions will play out, the continued rise of the BRICSAM nations will surely create significant ripples throughout the global system. Certainly, if a significant number of Southern states are ultimately transformed into Northern states, the fundamental nature of the North–South gap will be altered. In the interim, the trade and aid policies of the North might conceivably make some difference, even if the past track record is less than promising.8 But there is no reason to assume that all of the parts of the North march to the same drummer on trade and aid questions. Vicki Birchfield, in Chapter 16, asks whether the United States and the European Union (EU) policies reflect their separate interpretations of aid and trade problems or whether are they more oriented toward an ongoing competition between the EU and the United States for influence in the South. In other words, do they behave the way they talk? That they have adopted generally different types of strategies is not particularly contested. The EU interacts with the South within the context of a postcolonial legacy while US aid and trade decisions often have a clear strategic nature. The Europeans are also more multilateraloriented and more generous with aid than are the Americans, although more recent US discourse sometimes sounds more like that of the Europeans. Nonetheless, Birchfield generally finds that EU behavior is more genuinely development-oriented while US policies continue to be guided primarily by considerations of national

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interest. Thus, there is more congruence between EU rhetoric and behavior than is the case for US-stated principles and consequent behavior. Evaluating a related path to closing the divide, Barry Hughes and Mohammod Irfan assess policies for meeting the Millennium Development Goals (MDGs) in Chapter 17, arguing that this is the most integrated and complete set of targets the world community has ever set for reducing world poverty. Led by Jeffery Sachs, the Millennium Project charted strategies for meeting these goals and reported them to the United Nations. The authors report results from using the International Futures (IFs) world model to evaluate policies for cutting the number of people living on less than US$1 per day by half in the period 1990–2015. They find that world poverty will likely greatly fall even without policy intervention, except in subSaharan Africa. Incremental policy intervention can reduce poverty by more than 2 percent in 2015 relative to the base case, but this number is smaller than the uncertainty in the forecast. By 2050, more than 200 million people may escape poverty. Significant improvement requires a holistic policy approach on improved governance, economic liberalization, and other areas; there is no silver bullet. Single policies achieve fairly small improvements. Direct transfer to poor nations is the most effective single measure, particularly for the time frame of 2015. Based on these findings, the authors conclude that policies for reducing poverty must take a longer time horizon than 2015. In Chapter 18, Christopher Chase-Dunn and his coauthors analyze results from a survey administered to attendees of the World Social Forum, Brazil, 2005. The survey studied differences within the progressive segment of global civil society (non-market/state groups such as social clubs, voluntary associations, informal networks, and religious organizations), particularly differences among attendees’ features and favorite strategies to achieve social justice. Overcoming these differences, the authors argue, is important because it will promote more successful collaboration among transnational activists. The survey finds several differences and similarities among participants from the core, semi-periphery, and periphery. For example, participants from the periphery are fewer in number, older, and generally men. The geographic distribution of attendees thus reflects the inequalities they reject. Yet North–South political differences within this group are not large. Both groups reject the current capitalism. However, Southern participants are more skeptical toward reforming or creating global political institutions, and attendees from the semi-periphery are more anti-capitalistic than those from the core. Finally, Seyom Brown concludes in Chapter 19 with an appeal to seven world interests: the survival of the human species, reductions in the recourse to force, reductions in the prevalence of poverty and disease, preservation of plants, climate, resources, and ecologies, the championing of cultural and religious diversity, greater respect for the consent of the governed and for human rights, and mutual accountability across borders for dealing with resources and other populations. Brown’s point is that the delivery of the public goods of security, economic well-being, and governance cannot be successful if they are exclusively oriented toward national interests. The nature of the problems policy makers face is increasingly global in scope. Weapons of mass destruction cannot be regulated by unilateral or dyadic


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disarmament. The incubation and spread of disease cannot be attacked solely within national boundaries. Nor can problems related to deteriorating climate be confined to state-by-state actions. States, including the most powerful ones, will have to accept political and institutional constraints, as part of a “higher realism,” on their national behavior if they are to cope successfully with twenty-first-century problems. As we warned at the outset of this introduction, these papers do not cover the full gamut of North–South questions; space considerations preclude such a major undertaking. Nor do we put forward bold proposals for bridging the North–South divide. We can only highlight some important issues and hope that more attention to these problems will improve our general understanding of what is at stake. Solutions have been proposed, but it remains to be seen whether we fully understand what the North–South divide is about. Until we do have an improved understanding of its many complexities and the full scope of what it might take to alter world inequalities, it is unlikely that any proposed solutions will be widely embraced, adopted, or successful. What seems most likely is that the North–South divide will persist to some variable extent and that we will continue to engage in conflict over its implications. But that is better than ignoring the issues and their implications, for it is not a set of problems that will go away if we pretend it does not exist, does not matter all that much, or will solve itself as long as we remove the artificial restrictions on natural economic growth. Nor are walls built to insulate Northern enclaves likely to work any better than earlier walls to keep “barbarians” out functioned – which is to say, not all that well. The only real alternative is to address North–South issues directly and non-rhetorically. Yet, however “real” this alternative may be, we remain pessimistic that it is a path that will be well trod anytime soon. That hardly alters our prediction that North–South issues will loom large in the twenty-first century.

Notes 1 2

3 4 5 6

7 8

Actually, two volumes have emerged from the San Diego meeting. Reuveny & Thompson (2008) is also about North–South issues but focuses more specifically on one aspect – terrorism. Perhaps the earliest “North–South” divide that we know about involved fourth-millennium bce southern Mesopotamia as an early “north” with its “south” located in northern Mesopotamia, Anatolia, Iran, Syria, the Lebanese coastline, and Egypt. On occasion, analysts would also specify a Fourth World populated by the weakest members of the Third World. Some other analysts prefer to distinguish between developed and lesser developed/developing states. We regard this practice as virtually synonymous with the North–South usage. Australia and New Zealand are two of the more obvious exceptions to this generalization. One irony is that Northern economies depend very much on Southerners to provide engineering and scientific talent to maintain the Northern edge in technological development. They also depend on Southern labor to accomplish tasks for which indigenous workers are often hard to find. As a consequence, building high walls around Northern enclaves is unlikely to work very well. These waves are depicted as waves of terrorism in Rapoport (2004). See Weisbrot et al. (2007) for a negative evaluation of progress in development over the past quarter century.

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References Rapoport, David C. (2004) “The Four Waves of Modern Terrorism.” In Attacking Terrorism: Elements of a Grand Strategy, edited by Audrey Kurth Cronin and James L. Ludes, pp. 46–73. Washington, DC: Georgetown University Press. Reuveny, Rafael & Thompson, William R. (eds.) (2008) Coping with Contemporary Terrorism: Origins, Escalation, Counter Strategies, and Responses. Albany, NY: SUNY Press. Weisbrot, Mark, Baker, Dean, & Rosnick, David (2007) “The Scorecard on Development: 25 Years of Diminished Progress.” In Flat World, Big Gaps, edited by K. S. Jomo and Jacques Baudot, pp. 24–47. New York: United Nations.

Part I Problems of Trade


Chapter 2 Globalization, Poverty, and the North–South Divide* Arie M. Kacowicz

The new rich may worry about envy, but everyone should worry about poverty. The Economist 2001, p. 11 A growing divide between the haves and the have-nots have left increasing numbers in the Third World in dire poverty, living on less than a dollar a day. J. E. Stiglitz, Globalization and Its Discontents, p. 5

Introduction Is globalization a force for equity or for exploitation? Does globalization bring about progress or backwardness, development or underdevelopment, poverty or affluence? What are the possible links between globalization and inequality in general, and between globalization and poverty in particular? How is it possible to evaluate the contradictory assessments of economic globalization and its consequences? Paradoxically, it might be the case that globalization reduces poverty while at the same time it increases inequality and the socioeconomic gap between the “haves” and the “have-nots.” What are the implications of those links? How are * Author’s note: This is a revised and expanded version of a paper delivered at the International Studies Association Annual Convention in San Diego, USA, March 22–25, 2006, and of my article “Globalization and Poverty: Possible Links, Different Explanations,” The Whitehead Journal of Diplomacy and International Relations, 6(2) (Summer/Fall 2005), pp. 111–27. I would like to thank Robert Gilpin, Alex Mintz, David Blainey, Galia Press Bar-Nathan, Marcia Harpaz, Yael Krispin, Orly Kacowicz, Salomon Bergman, Eytan Meyers, and Orit Gal for their comments on previous versions of the paper, and the support of the Leonard Davis Institute for International Relations at the Hebrew University of Jerusalem.


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these possible and convoluted links between globalization and poverty related to the North–South divide? The widespread social and political movements against globalization have become fashionable in our new millennium, as we witnessed during the violent demonstrations against global institutions in Seattle (1999), Prague (2000), and Quebec and Genoa (2001). Although it is not always clear what the vociferous opponents of globalization really want, their claim that Third World poverty has become one of the most pressing moral, political, and economic issues in the political agenda of the globalization era is a legitimate one. In addition to grassroots organizations, NGOs (non-governmental organizations), and fringe groups, mainstream international institutions and organizations have recognized the reality of global inequality and Third World poverty as a pressing issue, at least at the rhetorical level. For instance, the official institutions of Bretton Woods post-World War II liberalism, the International Monetary Fund (IMF) and the World Bank, have turned their focus over the last six years to the eradication of poverty, or at least its reduction, terming it “the single greatest challenge of the century.” Speaking at the plenary session of the 2000 Annual Meetings of the IMF and the World Bank held on September 26–28 in Prague, the governors representing the IMF’s 182 members acknowledged that “although globalization has brought opportunities for growth and development to both rich and poor countries, not everyone has been able to take advantage of the new opportunities.” The task facing the international community, the governors agreed, was to build a successful, truly global economy that works well for all people and addresses the widespread poverty that remains “the unacceptable face of the global economic situation” (IMF 2000: 341). Similarly, the former World Bank President, James D. Wolfensohn, characterized “globalization as an opportunity, and poverty as our challenge,” though recognizing that globalization can relate to risks as well as to opportunities (Wolfensohn 2000: 308). If anything, the aftermath of the 9/11 terrorist attacks against the United States in 2001 has demonstrated the relevance and the urgency of addressing these global issues. Nowadays, there seems to be a global agenda that focuses upon the possible links between globalization and poverty, as epitomized at the United Nations Millennium Summit at New York in September 2000 or the Monterrey Consensus of March 2002. Among the values and principles mentioned in the “United Nations Millennium Declaration,” the links between globalization and poverty were emphasized as follows: The central challenge we face today is to ensure that globalization becomes a positive force for all the world’s people. Its benefits are unevenly shared, while its costs are unevenly distributed. (Quoted in IMF 2000: 351)

Furthermore, in a show of unguarded optimism about translating rhetorical intentions into an operative plan for development and poverty eradication, the leaders of the world gathered at New York City committed themselves to the following deadline:

Globalization and Poverty

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We further resolve to halve by 2015 the proportion of the world’s people who earn less than one dollar a day, who suffer from hunger, and who lack access to safe drinking water. (Quoted in IMF 2000: 351)

This declaration of good intention demonstrates that there is an emerging consensus within the international institutions and the developed countries that we should care about how globalization might impact poverty and inequality. There is also a consensus that globalization should fulfill a positive role in reducing and eradicating poverty. At the same time, there is serious disagreement about whether the link between globalization and poverty and inequality is a positive or a negative one (that is, does more globalization lead to more or to less poverty?), and what the implications are for the North–South divide. Moreover, it is not completely evident that globalization can reduce poverty. After all, different interpretations of similar facts stem from divergent ideological, philosophical, normative, and theoretical approaches to international relations and international political economy. The assumption that the invisible (and invincible?) forces of globalization, including markets, science, and technology, will resolve the problems of inequality and poverty is not completely reassuring, considering the lingering reality of at least a billion people living (or rather, surviving) in absolute poverty. Moreover, there seems to be no consensus in the North or in the South regarding the complicated and contradictory effects of globalization upon poverty. Furthermore, due to the fact that globalization encompasses multiple and even contradictory processes, there is no linear relationship between globalization and poverty. This chapter is a preliminary exercise in assessing in theoretical and deductive terms the possible links between globalization and poverty as a global problem in international relations, within the context of the North–South divide. I ask three questions: (1) What are the possible links between globalization and poverty? (2) What are the implications of these possible links? (3) How are the links between globalization and poverty related to the North–South divide? The answer to the second question contains two dimensions: normative (moral) and “prudential” (or pragmatic). The normative answer to our discussion of globalization, poverty, and inequality recreates the debates about distributive justice and economic and social human rights of the 1970s and 1980s following the Third World demands for a New International Economic Order (NIEO) that eventually failed and did not affect much North–South relations. The “prudential” or pragmatic answer focuses upon the disruptive effects of poverty and inequality in the international system and society, including issues of economic well-being, war and peace, political stability and democratization, environment, and new security issues and threats, such as terrorism, drugs, spread of diseases, and illegal migration flows. Thus, as interdependence transforms the global security agenda, poverty emerges as one of the most pressing issues in world politics (see Mansbach & Rhodes 2003). As for the third question, I argue in the chapter that the possible links between globalization and poverty actually complicate the North–South divide, making it irrelevant to discern clearly the effects of globalization, since there is no consensus

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about its impact upon poverty and inequality. In other words, the different theories and interpretations regarding the links between globalization and poverty do not divide the North from the South, but actually create cleavages within the North and within the South as to the expected and preferred links between globalization and poverty. In the following pages, I define the concepts of globalization and poverty. Once defined, I depict the potential links and permutations between globalization and poverty. Then I address the question of the implications of those links in normative and prudential terms. Finally, I tackle the question of how the links between globalization and poverty are related to the North–South divide.

Defining the Core Concepts: Globalization and Poverty What is globalization? There is a lot of confusion about the term, “globalization” and about the rhetoric of globalization and the “new world order” that followed the end of the Cold War. Hence, globalization can be conceived as a myth, a rhetorical device, a phenomenon, an ideology, a reality, a process, and the context or even structure of current international relations. In both academic and popular discourses, globalization has become one of the catchwords of the new millennium. In fact, globalization is shorthand for a cluster of interrelated changes: economic, ideological, technological, political, and cultural. Economic changes, which encompass the most salient dimension of globalization, include the increasing integration of economies around the world, particularly through trade and financial flows (see IMF 2000: 4). This takes place through the internationalization and deterritorialization of production, the greatly increased mobility of capital and of transnational (multinational) corporations, and the deepening and intensification of economic interdependence. The economic manifestations of globalization include the spatial reorganization of production, the interpenetration of industries across borders, the spread of financial markets, the diffusion of identical consumer goods across distant countries, the massive transfers of population, people, and knowledge moving freely across national borders, and the extension beyond national borders of the same market forces that have operated for centuries at all levels of human economic activity – village markets, urban industries, and financial centers (see Mittelman 1996a; IMF 2000: 4). Ideological changes involve investment and trade liberalization, deregulation, privatization, and the adoption of political democracy in the domestic institutional realm of any given polity. Technological changes refer to information and communication technologies that have shrunk the globe, causing a shift from the production of goods to services. Finally, cultural changes involve trends toward a harmonization of tastes and standards, epitomized by a universal world culture that transcends the nation-state (Li 1997: 5). To sum up, globalization can be defined as the intensification of economic, political, social, and cultural relations across borders. In this sense, it involves more than the geographical extension of a range of phenomena and issues. It implies not


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only a significant intensification of global interconnectedness, but also a consciousness of that intensification (a cognitive change), with a concomitant diminution in the significance of territorial boundaries. Hence, globalization may lead to the integration of states, peoples, and individuals through increasing contact, communications, and trade, creating a holistic, single global system. Globalization is very uneven in both its intensity and geographical scope, as well as in its different domestic and international dimensions and effects. Hence, we might obtain different types of globalization, across a rich regional variation (see Holm & Sorensen 1995: 1–7). It is important to draw a distinction between the qualitative and the quantitative dimensions of globalization: more of the same (quantitative change), or qualitative shifts (a quantum leap). Unlike interdependence, which might imply only a quantitative change, economic globalization invokes a qualitative shift toward a global economic system that is no longer based upon autonomous national economies, but relocates production, distribution, and consumption of goods in a consolidated global marketplace. The economic side of globalization, which receives most of the scholarly attention, is found in “that loose combination of free trade agreements, the Internet, and the integration of financial markets that is erasing borders and uniting the world into a single, lucrative, but brutally competitive, marketplace” (Friedman 1996: 30). It is a small world after all, and that global world is a “McWorld” (Barber 1996) with MTV, CNN, PCs, and Macintoshes. At the same time, globalization is an encompassing process in the political and sociological senses, as it includes a qualitative shift in the conditions of people’s lives, for better or for worse. Liberals believe that globalization has been the inevitable result of technological change; moreover, from their perspective, global economic liberalization will strengthen and lead to political democracy. Globalization will expose societies to democracy, while economic liberalization will provide the material basis for subsequent democratic consolidation. Even if this assertion is true, it conceals a conceptual and normative trap: paradoxically, the economic forces of globalization, by definition, are undemocratic, if not anti-democratic. There is a serious “democratic deficit” here. The lack of accountability of global economic forces poses a serious political problem, for both states and individuals alike. By condensing the time and space of social relations, economic globalization transcends territorial states while not being accountable to elected political officials (Mittelman 1996b: 197). The only form of a checks-and-balances mechanism is in the hands of non-elected market forces, regulated by the logic of economics and efficiency, which resonates with a Darwinist tendency of the “survival of the fittest.” In this (vulgar) Darwinist world, poverty can be considered as an unintended consequence, or “collateral damage,” of the market forces of globalization, as epitomized by the actions of transnational business and multinational corporations. Hence, there seems to be an embedded contradiction between the economic and political logic of globalization, leading to a “democratic deficit” and to serious market failures, unless regulated (and distorted) by the intervention of the state.

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What is poverty? Like globalization, poverty is a loaded concept in the social sciences. The common usage of poverty is referred to as per capita income of less than $1 or $2 a day. In addition, we can cite at least 11 different definitions, which somehow overlap and complement each other. According to Spicker (1999: 151–7), these definitions include: 1

2

3

4

5

Basic needs: Poverty can be understood as a lack of material goods or services, such as food, clothing, fuel, and shelter, that people require (“need”) in order to live and function properly in society (Spicker 1999: 151). In this regard, we can find two categories of poverty: (a) extreme poverty and (b) overall poverty. Extreme poverty (or primary, absolute poverty) implies a lack of income necessary to satisfy basic food needs, usually defined on the basis of minimum calories requirements. In this case, the total earnings are insufficient to obtain the minimum necessities for the maintenance of merely physical efficiency, as in the case of starvation and famines (see Sen 1981: 11). Conversely, overall poverty refers to the lack of income necessary to satisfy essential non-food needs, such as clothing, energy, and shelter (UNDP 2000: 20). Standard of living: In this sense, poverty does not refer to specific forms of deprivation, but to the general experience of living with less than others (Spicker 1999: 151). A related definition refers to poverty in terms of relative deprivation, as a situation in which income meets basic essentials but not the level of social expectations, or in comparison with other social groups (Nurnberger 1999: 61; see also Sen 1981: 17). Limited resources: Poverty implies the circumstances under which people lack the income, wealth, or resources to acquire or consume the things that they need (Spicker 1999: 152). Lack of basic security: Poverty can be regarded in terms of vulnerability to social risks, as equivalent to need (Spicker 1999: 152). As related to a low standard of living and to limited resources, we can then define human poverty in terms of a lack of basic human capabilities. In other words, illiteracy, malnutrition, an abbreviated life span, poor maternal health, illness from preventable diseases, as well as lack of access to goods, services, and infrastructure such as education, communications, and drinking water – all of them indicate a lack of basic human capabilities (UNDP 2000: 20). Lack of entitlement: Both deprivation and lack of resources reflect lack of entitlement, rather than the absence of needed items in themselves. The lack of entitlement becomes then the political and juridical context for poverty; hence, people who have the necessary entitlement are being regarded as no longer poor. In this sense, poverty derives from the relationship between ownership and exchange (see Spicker 1999: 153; see also Sen 1981).

In this context, we should clarify the distinction between poverty and destitution. Poverty has always been an economic and social phenomenon, while destitution has


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become more pronounced only recently given the assault of development on traditional communities and their life support. For instance, large parts of Africa, Latin America, and Asia were poor according to the definitions mentioned above well before colonial administrators and development planners recognized them as poor. At the same time, they were not destitute, in terms of lack of entitlement (see Nandy 2002: 107, 115, 121). 6

7

8

9

10

11

Multiple deprivation: According to this definition, poverty implies long-extended circumstances in which people suffer from a constellation of deprivations experienced over a period of time (Spicker 1999: 153). For many developing countries, three dimensions of human poverty in terms of deprivation include: (a) deprivation of a long and healthy life, as measured by the percentage of people not expected to survive the age of 40; (b) deprivation of knowledge, as measured by adult illiteracy; and (c) deprivation of economic provisioning, from private and public income, as measured by the percentage of people lacking access to health services, safe water, and the percentage of children under 5 who are moderately or severely underweight (UNDP 2000: 22). Exclusion: In this sociological sense, poverty can be seen as a set of social relationships in which people are excluded from participation in the normal pattern of social life (Spicker 1999: 154). Inequality: In relative terms, people may be held to be poor because they are disadvantaged vis-à-vis others in society. In a basic structure of inequality, it is clear that transfers from the rich to the poor can make a substantial dent on poverty in most societies. In this sense, poverty reflects inequality, though the two concepts are not identical (Sen 1981: 14–15; Spicker 1999: 155). It is very important to draw a clear distinction between inequality and poverty. While both might be increasing, they are quite different from one another. It is possible, for instance, that the rich countries are growing faster and therefore becoming more unequal with the rest, while at the same time the poor countries are still gaining in absolute wealth. Hence, we might have less poverty but more inequality simultaneously, as a result of globalization.1 Class: If inequality is considered as a function of the social structure, poverty can then be associated with a given social class or position (Spicker 1999: 155). Dependency: According to this definition, poor people are those who receive social benefits as a result of their lack of means; hence, they are “dependent” (Spicker 1999: 156). Serious deprivation: From a normative (moral) perspective, people are held to be poor when their material circumstances are deemed to be morally unacceptable. Hence, poverty is considered as something that is disapproved of, the elimination of which is regarded as morally good (Sen 1981: 17; Spicker 1999: 157). In this view, poverty is regarded as a “social fact,” and as part and parcel of the normative conventions of society. Poverty is related to the erosion of basic human rights (civil, political, social, and economic), and the lack of entitlement, possibilities, and dignity. Conversely, human rights abuses

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Arie M. Kacowicz lead to poverty and impoverishment. Hence, there is an intrinsic link between poverty and (the lack of) human rights.

When we confront this long list of definitions of poverty with the realities of the North–South divide, the empirical results are ambiguous and even contradictory (see Lazebnik 2005). Both sides in the debate about the links between globalization and poverty have sought support from “hard” data on what is happening to poverty and inequality in the world, though their differences reflect also their alternative definitions of poverty. By some accounts, the proportion of people living in extreme poverty in the developing world fell sharply in the 1990s (see Bhalla 2002). Other assessments, including those published regularly by the World Bank, suggest a more complicated picture (Chen & Ravallion 2001). For some time it was accepted that the proportion of people living in poverty in the world has been declining, but their absolute number has been increasing. This refers to the World Bank’s measure of absolute poverty, defined as living on a real income of less than $1 a day, an operational and practical definition that we can adopt for the purposes of this paper (see Fischer 2003: 8). Yet, others claim that globalization has led to greater poverty (Chossudovsky 1997). In sum, there is not a consistent, fully reliable set of data reflecting longer-term developments in poverty.

Possible Links between Globalization and Poverty We can now turn to an initial assessment of the possible links between globalization and poverty. Does globalization lead to equalization or to polarization? Does it tend to level upward or downward? (Therborn 2000: 33). What are the intended and unintended consequences of globalization upon poverty, and vice versa? It is a very difficult task to assess the consequences of economic globalization due to the contradictory accounts put forth by scholars. To link globalization and poverty it is necessary to examine the potential causal mechanisms between globalization and growing (or decreasing) poverty in the world, such as the Singer–Prebisch argument about the deteriorating terms of trade in the economic relationship between developed and developing countries, as a function of the unbalanced structure between the developed North and the developing, or less-developed, South.2 It is becoming more and more evident, both in rhetorical terms and in the actual practice of states and international institutions, that there are tangible and substantial links between globalization and poverty. For instance, the UNDP (United Nations Development Programme) recognizes (and even suggests) that countries should link their (anti-) poverty programs not only to their national policies, but also to their international economic and financial policies. Thus, in a world of increasing economic integration and globalization, those links can be crucial. For instance, since the debt crisis of the 1980s it has become evident that there is a direct relationship between external debt and poverty (UNDP 2000: 10). At the same time, what remains ambiguous is the character and direction of these possible links, ultimately interpreted according to divergent paradigms of international political economy and disparate normative views of international relations,


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such as liberals versus radicals. For instance, the liberal view of global economic relations, which is based on “mutual” (even “complex”) interdependence, regards international economic relations between developed and developing countries as mutually beneficial and benign. In this view, the forces of globalization will eventually stimulate economic growth in the developing nations, thus reducing and even eradicating poverty by allowing the forces of the market to play themselves out without any state intervention. In contrast, the radical view sustains the notion that the global economic relations between North and South are asymmetrical and approximate a type of zero-sum relationship, according to which the forces of globalization exacerbate inequality and poverty (see Kim 2000: 1). In logical terms, we can speculate about the following possible links between globalization and poverty: (a) globalization causes and deepens poverty, according to a radical perspective; (b) globalization reduces and may even eradicate poverty, according to a liberal logic; and (c) there is no necessary link between globalization and poverty, from a realist and agnostic perspective. The links between globalization and poverty are indeed complex and ambiguous. The big question remains whether globalization promises to improve the economies of developing nations, or exacerbates income gaps within and among nations, or perhaps leads to both contradictory processes simultaneously. In this sense, this may be a two-way street: not only does globalization affect (somehow) poverty but, in turn, poverty might determine the fate of globalization. This claim refutes the neoliberal perspective that focuses only on the other direction, i.e., that globalization brings about the reduction of poverty.

Globalization causes and deepens poverty According to its critics, globalization leaves the poor behind; it causes and deepens poverty. In their view, this is due to several and interrelated reasons. First, without capital, you cannot gain from economic integration. The poor have next to no capital, partly due to lack of entitlement rights and destitution. Second, due to uneven development, globalization exacerbates social and economic gaps within and among states by reinforcing a process of “creative destruction” (Schumpeter, quoted in Weede 2000: 9). Globalization requires economies and societies to adapt, and to do so quickly. Since economies almost never succeed equally, some nations will grow faster than others, so that globalization will increase inequality. Third, from a structural point of view, dependency theorists argue that the poverty of the developing countries is caused by the affluence and exploitation of the rich countries. According to this logic, the very structure and processes of globalization perpetuate and reproduce unequal relations and exchange between the “core” of industrialized countries of the international economic system and its periphery (see Gordon & Spicker 1999: 35; Ramaswamy 2000: 4–9). Finally, globalization has increased inequality, by having significant and uneven effects upon various types of social stratification, including class, country, gender, race, the urban/rural divide, and age, both between and especially within nations (Stewart & Berry 1999: 150). In this view, although contemporary globalization has helped in some cases to narrow

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social hierarchies in certain respects (such as opportunities for women to engage in waged employment), it has tended on the whole to widen gaps in life opportunities. This is due to the uneven distribution of costs and benefits, which tends to favor the already privileged and further marginalize the already disadvantaged (Scholte 2000: 1–2). Overall, globalization is exacerbating inequalities of resources, capabilities, and even of the power to make and break rules in the international arena (Hurrell & Woods 1999: 1). How does globalization produce and reproduce poverty? From a dependency or radical perspective, the adoption of the liberal ideology of globalization and the restructuring of the world economy under the guidance of the Bretton Woods (liberal) institutions increasingly deny developing countries the possibility of building their national economies. Thus, the internationalization and globalization of macroeconomic policies transforms poor countries into open economies and “reserves” of cheap labor and natural resources (Chossudovsky 1997: 37). For instance, it has been claimed that since the early 1980s, the “macroeconomic stabilization” and “structural adjustment” programs negotiated among the IMF, the World Bank, and some developing countries have led to the impoverishment of hundreds of millions of people (ibid.: 33). In addition, the multinational corporations, as carriers of technology, capital, and skilled labor between states, have reinforced the negative effects of foreign capital penetration by creating enclave economies within the host countries, which are characterized by small pockets of economically developed regions, in contrast to the larger peripheral areas which exhibit extreme poverty and little progress, thus enlarging the gap between the rich and the poor (Kim 2000: 1–2). In this sense, globalization is producing a new kind of hegemony that fuses power and wealth in a kind of “corporcracy” of financial markets and corporations that rule the world (Derber, quoted in Dallmayr 2002: 145). In sum, the processes of globalization have led to a ruthless capitalist system characterized by exploitation, domination, and growing inequalities both within and among national societies, composed of the rich core of developed economies and the exploited, impoverished periphery of the Third World countries (Gilpin 2000: 29, 300). In the words of a former chief economist of the World Bank and Nobel Prize winner, “globalization has not succeeded in reducing poverty, or in ensuring stability. If globalization continues to be conducted in the way it has been in the past, globalization will not only not succeed in promoting development, but will continue to create poverty and instability” (Stiglitz 2002: 214, 248).

Globalization can reduce and resolve poverty According to the liberal “globalization thesis,” a quantum leap in human affairs has taken place as the cross-border flow of large quantities of trade, investment, people, and technologies has expanded from a trickle to a flood. These processes are bringing about a brave new world of increasing prosperity and international cooperation, eventually leading to greater equality and convergence in the performance of national economies across the world. As has become evident over the last three decades, participation and integration in the world economy has been highly


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beneficial for developing nations, including China, India, and the NICs (newly industrialized countries) of East and Southeast Asia (see Gilpin 2000: 19, 293, 299–303; Dollar & Kraay 2002; and especially Wolf 2004). From a liberal perspective there seems to be a direct and positive (“reversed”) relationship between globalization and poverty: the more globalization takes place, the less poverty there will be. At the same time, there is a growing recognition that globalization does not progress evenly, despite its overall positive effects for worldwide development (IMF 2000: 4; World Bank 2002). According to this view, those countries that have become integrated into the global economy more quickly than others grow faster and manage to reduce poverty. For example, outward-oriented (export-led) economic policies brought about dynamism and greater prosperity for much of East Asia, transforming it from one of the poorest areas of the world 40 years ago into the most dynamic one nowadays. In contrast, where countries pursued inward-oriented economic policies, such as Import Substitution Industrialization (ISI), their economies stagnated or declined, as happened in much of Latin America and Africa between the 1950s and the 1980s. In sum, adopting and joining the process of global economic integration, interdependence, and globalization can reduce and resolve the problems of poverty and inequality, both within and among nations. Through the promotion of free trade that sustains highquality growth, globalization holds the promise of improved living standards for all the peoples of the world (Camdessus 1999: 386; see also UNDP 2000: 48). In this sense, economic opportunities in the Third World would be far greater, and poverty therefore vastly reduced, except for the barriers to free trade – that is, restrictions on economic freedom – which are erected by rich- and poor-country governments alike (The Economist 2000: 17). In addition to free trade, technology, as the main driver of globalization, can be considered as essential in potentially alleviating and reducing poverty, if properly and effectively disseminated and adopted. Thus, the advances achieved in computing and telecommunications in the North offer enormous opportunities for raising living standards in the Third World. The adoption of liberal economic policies and the right technologies have already brought substantial benefits to all, both increasing the profits of Western corporations, but also raising the productive employment and higher incomes for the world’s poor (The Economist 2000: 17–18).

There is no necessary link between globalization and poverty A third view, neither radical nor liberal, but rather “agnostic” or realist, does not identify a necessary or clear link between globalization and poverty. For instance, Robert Gilpin (2000: 293–4) argues that many of the problems associated with globalization are linked to other factors, which are not part and parcel of the more limited phenomenon of globalization. In other words, by adopting a “minimalist” definition of globalization in economic terms (i.e., trade, investment, and financial flows), technological changes, the third industrial revolution, the digital revolution and the concomitant “digital divide” are not part of globalization itself. Thus, one cannot bless or blame globalization for having positive or pernicious effects upon

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poverty and inequality, since it is a much more limited phenomenon that we thought initially. Moreover, this approach suggests that serious problems that have affected the fate of peoples and states, such as poverty and environmental degradation, are first and foremost directly related to national governments and to national policies, rather than to the supra-national or supra-territorial forces of the global market. Thus, the principal culprits (and saviors) of increasing (or reducing) poverty, of abusing (or conserving) the environment are the national governments themselves, through their decision-making procedures and implementation. In this sense, decisions taken at the national level can be independent and detached from “global” considerations. From this perspective, in normative terms globalization should not be labeled as “bad” or “good,” but as having the potential to do enormous good or tremendous harm, depending on how globalization is managed by the national governments. In other words, it is the way states cope with the processes of globalization that should become the focus of our inquiry (Haass & Litan 1998; Stiglitz 2002: 20, 215).

Normative and Prudential Implications of Poverty From this brief analysis of the possible links between globalization and poverty one can conclude that these links are complex and ambiguous due to the potential mutual effects of the relationship (Anan 2000: 22). In other words, it is not only globalization that might affect poverty in positive or negative directions but rather the poverty and inequality caused by globalization may contribute to social violence, political and social instability, ethnic conflicts, and civil and international wars that shape the global system. For instance, poverty and immiseration, which have been directly linked to overpopulation, resource scarcity, and environmental degradation (as witnessed in many areas of contemporary sub-Saharan Africa), are a direct source of social conflicts, civil wars, and the generation of refugee flows (Hurrell 1999: 260). As Robert Kaplan argued, “Precisely because a large part of Africa is staring into the abyss, it gives a foretaste of how wars, frontiers and ethnic politics will look a few decades from now” (quoted in Martin & Schumann 1997: 25). These are indeed gloomy and pessimistic arguments and statements that indicate the relevance (and urgency) of the issues at stake. Therefore, the analysis of the possible links between globalization and poverty is not just a futile academic exercise for the sake of theorizing in international relations. We should seriously care about the implications and consequences of these links in both ethical and practical terms. From a normative (ethical) standpoint, the persistence of poverty, increasing inequality, and human deprivation diminishes us all as human beings. Poverty, and even more destitution and lack of entitlement, contradict human decency, human rights, and basic claims of distributive justice. Moreover, from a practical standpoint, poverty and extreme inequality are an “international externality” that can disrupt and derail the forces of globalization. As one of the senior officials of the IMF acknowledged recently, “growing inequality poses the greatest risk to the future


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of the global economy. If the majority of the world’s population is increasingly marginalized and economically disenfranchised, then globalization will fail” (IMF 2000: 306). In addition to these economic arguments, it should be emphasized that the persistence of poverty makes global peace and security fragile as well (Nel 2000).

The normative/ethical dimension: Issues of distributive justice and human rights Why should the rich countries help the poor ones? Why should the international institutions and organizations – the United Nations, the World Bank, and the IMF – assist poor people in developing countries? If the answers to those questions are not framed only in prudential terms of rational cost–benefit calculations, then we can move our analysis from the rational to the normative dimension, and from the international to the global realm. In this sense, normative considerations such as (re)distributive global justice depict the links between globalization and poverty as a global problem, within the context of North–South relations. Thus, poverty becomes a global issue since it has implications and ramifications for humankind as a whole, similar to the evolution of political and human rights in the direction of universal jurisdiction for international law when there is a gross violation of those rights. In this sense, there is an international – or even global – responsibility for the fate of the world’s poor, as there is a universal promotion of human rights of various kinds (Finnemore 1996: 126). In a nutshell, from a normative standpoint, we should care about the relationship between globalization and poverty since there is a moral obligation, in terms of human rights and distributive justice, to help the developing countries eradicate poverty. Poverty is then linked to the more general issues of human rights, equity, equality, and distributive justice both within and across borders (see Nel 2000: 1–2). The normative concern of the potential effects of globalization upon poverty echoes the literature on (re)distributive justice that emerged in the 1970s, following the Third World demands for a New International Economic Order (NIEO) (see Doyle 2000), within the context of North–South relations. There are two major normative themes that emphasize the relevance of a moral analysis: (a) human rights; (b) distributive justice in terms of fairness. Human rights represent the basic normative common ground to fight poverty and to understand, in normative terms, our humane concern with the links between globalization and poverty. Considerations of humanity, basic needs, and socioeconomic human rights lead rich countries to help poor ones in extreme cases of relief of distress or famine relief. Moreover, if (extreme) poverty is considered as a basic violation of human rights, then there is a moral obligation to correct that violation. Yet, it should be pointed out that this normative consensus limits itself to extreme cases of absolute deprivation only (see Woods 1999: 16). From this perspective, there is not much obligation to redistribute resources beyond a minimal guarantee of a basic human standard. Thus, the distance from a human rights analysis of moral obligation and a prudential or utilitarian justification to “eradicate poverty” is very short; the two might even overlap.

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The second normative theme, justice as fairness, is more complicated and more difficult to reach and to apply in international relations in a cosmopolitan setting. To start with, there is no normative international consensus whatsoever for a moral case for alleviating poverty and inequalities within or among states, or reforming the global system, in the name of social and distributive justice beyond borders (rather than in the name of human rights). Following the formulation of the late philosopher John Rawls, justice as fairness should be interpreted in terms of equal rights, reciprocity, global equity, and some form of redistribution of the global resources from the haves to the have-nots (see Rawls 1971: 7, 12, 73, 83; Nel 2000; Dallmayr 2002). As part of a hypothetical and ideal social contract, fairness implies that the poor should share in the gains of society as it grows, while the rich should share in the pains of society in times of crises. Yet, our contemporary global economic system tends to ignore or shy away from those issues of distribution as fairness (Stiglitz 2002: 78), while following the logic of quasi-Darwinism through the forces of the market. Thus, the difficulties in trying to implement a scheme of global redistributive justice in international relations remain enormous, as long as we do not have in place a global polity that will guarantee maximum equal liberty to every member of the human community on a cosmopolitan, transnational basis.

The prudential/pragmatic dimension: Issues of security and economics As mentioned above, our concern here regarding the implications of globalization for poverty and inequality is not only normative and moral, but also pragmatic and “prudential” in realpolitik terms and mere cost–benefit analysis. We should care about the mutual relationships between globalization and poverty since there are crucial issues of security (war and peace), and economics (well-being and welfare) at stake. In terms of security, the way in which the “world” (meaning by that mainly the developed countries) copes with poverty and inequality is likely to determine whether the coming decades will be peaceful and stable or violent and dangerous, and to what extent the current international order will not be disrupted. As mentioned throughout the paper, poverty produces frustration and anger, directed both at the governments of developing countries and at citizens of wealthy countries (Mansbach & Rhodes 2003). Moreover, the terrorist attacks on the United States in September 2001 resolved the debate over whether poverty, marginalization, and the lack of development were only a humanitarian concern or a security problem as well. Although the exact nature of the links between poverty and terrorism remains a matter of debate, it is clear that the renewed US interest in enlarging its aid and development to Third World countries stems from this anti-terrorist connection (Matthews 2002: 9). Furthermore, the problem of poverty is also associated with international and civil wars, flows of illegal and legal migrations, refugees, environmental degradation, the spread of diseases, and threats to the existing international order emanating from demands of international and global justice instrumented occasionally through terrorist and guerrilla activities. To sum up, whether we take the liberal, radical, or realist approach, we should care about the links between


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globalization and poverty since the implications of those links are part and parcel of the growing security agenda of the new millennium. Since the impact of globalization upon the developing state is ambivalent, mixed, and uneven, we should watch out for the disruptive effects of poverty back into our global system as an unstable component and catalyst for wars, disasters, domestic and regional instability, environmental degradation, terrorism, refugees, and migration. In economic terms, serious considerations of practicality and pragmatism should justify our concern about those links. In our globalized world, there are different ways for the rich countries to help the poor ones: export capital to them, import products from them, or import the global poor from the Third World through the easing of the political borders and the encouragement of migration flows (Gilpin quoted in Doyle 2000). Nowadays, a considerable portion of the trade of the United States and Europe is geared towards the developing countries, where most of the world’s population lives. Moreover, those countries represent not only potential and emerging markets but also sources of indispensable raw materials. Hence, the costs of neglecting the rapidly growing international class divide and social and economic gaps will be immense not just for the developing world, but for the entire human race, reaped in terms of environmental degradation, humanitarian disasters, and lack of economic growth (Speth 1999: 17). In this utilitarian and cost–benefit analysis regarding the economic fate of the developing countries we can identify an interesting convergence between normative and practical arguments. Focusing resources and policy on poverty can be worthwhile simply on humanitarian grounds (human rights arguments). And yet, the disadvantages of growing up in extreme poverty pose a challenge to a belief in the equality of opportunity, both within and across nations. Hence, helping the underclass to rejoin society is in the interests of all, at both the domestic and international levels. Hence, normative (moral) and pragmatic (cost–benefit) arguments tend to reinforce each other, rather than contradict each other. It should be emphasized that the Bretton Woods institutions traditionally regarded poverty as a national, or at most international problem, rather than as a global one. Thus, the poverty relief measures favored by the World Bank and also by the United Nations Development Programme (UNDP) make provisions especially for international coordination and cooperation, and for economic assistance to the less developed countries on an interstate basis (Lumsdaine 1993: 5). Yet, it remains an open question whether the national and international focus of the World Bank and the UNDP allows for the creation and sustaining of a supra-national or global burdensharing facility that would facilitate the convergence of local, national, regional, interstate and global policies and practices (see Nel 2000: 3). The answer seems to be, so far, a negative one.

Globalization, Poverty, and the North–South Divide To what extent can the different interpretations about the links between globalization and poverty be reconciled within the context of the North–South divide? The answer, it seems, is far from being simple. The gap between the rich and developed

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countries and the poor and less-developed nations does not provide us with a clear guideline about how to understand and interpret these links. In other words, the debate about whether globalization brings about or reduces poverty does not reflect the North–South divide, but rather the ideological cleavages both within the North and within the South about the best way to cope with globalization. The most strident and vocal critiques of globalization do not come from the South, but from certain intellectual circles in affluent North America and Europe. Hence, the debates reflect a North–North gap (i.e., a transatlantic rift about different versions of globalization, confronting the USA and some European countries), or even a domestic debate within the USA or a given European country. While there have been many protests about the effects of globalization in the United States and Europe, it should be pointed out that many voices from the South avidly look for foreign investments and international trade. They actually resent the marginalization of the Third World from the world economy following the end of the Cold War, rather than complaining about the pernicious effects of globalization in the developing countries (see, for instance, Castañeda 1994 on Latin America). If we take Latin America as a recent and interesting example, the emphasis remains on a continuing quest for the insertion into the global economy, despite the leftist credentials and the vociferous rhetoric of political leaders from Lula (in Brazil), to Ortega (in Nicaragua), and even to Chavez in Venezuela. Furthermore, different approaches to globalization and poverty divide countries in the global South. While China, India, and the newly industrializing countries of East and Southeast Asia have successfully managed to integrate themselves into the global economy, many African, Middle Eastern, and Southern Asian countries have remained detached from processes of globalization. Similarly, the turn to the left in recent South American elections echoes a fascinating ideological debate about the need to transcend the Washington Consensus of the 1990s without abandoning the basic tenets of a liberal economy and the promotion of globalization, but in contrast to the more orthodox liberal ideology that characterized the same Latin American countries back in the 1990s. To sum up, there is an empirical (factual) North–South gap in terms of economic indicators and development, but that divide does not correlate with an ideological or theoretical divide. Hence, we will find the most radical opponents of globalization in the North, the most orthodox adherents of neoliberalism in the South (like the Argentine government of the 1990s), and agnostic realists across the board in both developed and developing nations. Hence, we cannot derive specific and clear conclusions about the ideological debate across the North–South divide.

Conclusion In this paper, I have attempted to assess in a preliminary way the different and alternative relationship between the phenomena of globalization and poverty as a global problem in international relations, within the context of the North–South divide. After defining the two concepts of “globalization” and “poverty,” pointing out the different meanings and interpretations, I have suggested several logical links


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between these two. First, from a radical perspective, one can argue that globalization causes and deepens poverty and inequality both within and among nations, mainly for structural reasons. Second, from a liberal perspective, as epitomized by the “Washington Consensus,” the forces of globalization are considered to be the potential solution and cure to the problem of poverty, by reducing and eventually eradicating poverty, at least in absolute terms. From this perspective, the reduction and eradication of poverty can be done eventually and especially by promoting free trade and disseminating in a wiser way the technological impacts of the information revolution. Third, from a realist or “agnostic” view, it might certainly be the case that there is no necessary or clear linkage between globalization and poverty. The argument here, based on a minimalist version of what globalization is, points in the direction of the national governments and states as the potential culprits (and saviors) for the problem of poverty. All in all, the links between globalization and poverty are complex and ambiguous; globalization might have both detrimental and positive effects. Moreover, this is a two-way relationship: poverty substantially affects globalization; hence, it is a global problem that should be tackled by the agents and structures of globalization. The second question addressed in this paper has been the rationale for the concern about those complex links (“What are the implications of these links?”). The answer to this question contains two dimensions: a normative (moral) one, and a practical (or “prudential”) one. The normative answer recreates the debates about distributive justice and economic and social human rights of the 1970s and 1980s and is formulated around two major themes: (a) poverty implies a violation of human rights, and as such should be eradicated; (b) the links between globalization and poverty should encompass a dimension of distributive justice in terms of global equity, fairness, and redistribution of resources. Beyond the normative concern, there are some common-sense practical, pragmatic, and “prudential” reasons why we should be concerned about the implications of the links between globalization and poverty. First, inequality gaps and poverty might exercise disruptive effects upon the international system and society from a security standpoint, as related to war and peace, domestic and international conflicts, political and social instability, lack of democratization, failure of states, export of terrorism, spread of diseases, drugs, transnational crime, environmental degradation, and illegal migration flows. Second, in economic terms, due to the inherent (though asymmetrical) interdependence of the system, it makes good sense to care about the economic growth and development of the developing world because of its potential for markets, raw materials, and economic well-being, not only for the South, but for the entire global economy. Finally, the third question referred to in the paper, which is directly related to the main theme of this book, speculates about the links between globalization and poverty within the North–South divide. The conclusion here is that while there is a clear empirical (factual) gap between developed and less-developed countries, that divide does not correlate with a concomitant ideological/theoretical debate about the merits and pitfalls of globalization. Part of this inconclusive statement is also due to the fact that some aspects of globalization make poverty worse, others reduce

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poverty, and still others have no effect at all. In sum, while the socioeconomic gap between the developed and developing countries perfectly correlates with the North–South divide, we remain puzzled and confused when we attempt to explain that divide by turning to alternative theories and ideologies, in order to discern the very complicated and inconclusive links between globalization and poverty.

Notes 1 2

I would like to thank Robert Gilpin for his comments on this point. I would like to thank Robert Gilpin for his comments on this point.

References Anan, Kofi (2000) We the Peoples: The Role of the United Nations in the 21st Century. New York: United Nations, Department of Public Information. Barber, Benjamin (1996) Jihad versus McWorld. New York: Ballantine Books. Bhalla, S. (2002) Imagine There’s No Country: Poverty, Inequality and Growth in the Era of Globalization. Washington, DC: Institute for International Economics. Camdessus, Michel (1999) “Camdessus Discusses Prospects for Globalization,” IMF Survey 28: 385–8. Castañeda, Jorge G. (1994) “Latin America and the End of the Cold War: An Essay in Frustration.” In Latin America in a New World, edited by Avraham F. Lowenthal and Gregory F. Treverton, pp. 28–52. Boulder, CO: Westview Press. Chen, S. & Ravallion, M. (2001) “How Did the World’s Poorest Fare in the 1990s?” Review of Income and Wealth 47: 283–300. Chossudovsky, Michel (1997) The Globalization of Poverty: Impacts of IMF and World Bank Reforms. London: Zed Books. Dallmayr, Fred E. (2002) “Globalization and Inequality: A Plea for Global Justice,” International Studies Review 4: 137–56. Dollar, David (2004) “Questions and Answers with David Dollar.” The World Bank Group. http://www1.worldbank.org/economicpolicy/globalization/dollarqa. htm, accessed July 26, 2005. Dollar, David & Kraay, Aart (2002) “Spreading the Wealth,” Foreign Affairs 81(1): 120–33. Doyle, Michael W. (2000) “Global Economic Inequalities: a Growing Moral Gap.” In Principled World Politics, edited by Paul Wapner and Lester Edwin J. Ruiz, pp. 79–97. Lanham, MD: Rowman and Littlefield. The Economist (2000) “The Case for Globalization,” The Economist, September 23: 17–18. The Economist (2001) “Does Inequality Matter?” The Economist, June 16: 11– 12. Finnemore, Martha (1996) National Interests in International Society. Ithaca, NY: Cornell University Press.


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Fischer, Stanley (2003) “Globalization and Its Challenges.” Unpublished paper, January 19, 2003. Friedman, Thomas L. (1996) “Answers Needed to Globalization Dissent,” Houston Chronicle, February 8: 30. Gilpin, Robert (2000) The Challenge of Global Capitalism: The World Economy in the 21st Century. Princeton, NJ: Princeton University Press. Gordon, David & Spicker, Paul (eds.) (1999) The International Glossary on Poverty. London: Zed Books. Haass, Richard N. & Litan, Robert E. (1998) “Globalization and Its Discontents: Navigating the Dangers of a Tangled World,” Foreign Affairs 77(3): 2–6. Holm, Hans-Henrik & Sorensen, Georg (1995) “Introduction.” In Whose World Order? Uneven Globalization and the End of the Cold War, edited by HansHenrik Holm and Georg Sorensen, pp. 1–7. Boulder, CO: Westview. Hurrell, Andrew (1999) “Security and Inequality.” In Inequality, Globalization, and World Politics, edited by Andrew Hurrell and Ngaire Woods, pp. 248–71. Oxford: Oxford University Press. Hurrell, Andrew & Woods, Ngaire (1999) “Introduction.” In Inequality, Globalization, and World Politics, edited by Andrew Hurrell and Ngaire Woods, pp. 1–7. Oxford: Oxford University Press. IMF (International Monetary Fund) (1999 and 2000) IMF Survey 28 and 29. Kim, Hae S. (2000) “The Effect of Global Dependency on the Quality of Life in Developing Countries.” Paper presented at the IPSA 18th World Congress, Quebec City, Canada, August 1–5. Lazebnik, Yulia (2005) “Globalization, Poverty, and Inequality.” Unpublished paper. Jerusalem: The Hebrew University of Jerusalem, Department of International Relations. Li, He (1997) “Democracy in Latin America: Does Globalization Matter?” Paper presented at the 1997 Annual Meeting of the APSA, Washington, DC, August 28–31. Lumsdaine, David H. (1993) Moral Vision in International Politics: The Foreign Aid Regime, 1949–1989. Princeton, NJ: Princeton University Press. Mansbach, Richard & Rhodes, E. (2003) Global Politics in a Changing World. Boston, MA: Houghton Mifflin. Martin, Hans-Peter & Schumann, Harold (1997) The Global Trap: Globalization and the Assault on Democracy and Prosperity. London: Zed Books. Matthews, Jessica T. (2002) “September 11, One Year Later: a World of Change,” Carnegie Endowment for International Peace Papers, Special Edition, October 18. McDonald, Ian S. (2000) “Prague Annual Meetings Focus on Issues of Globalization and Poverty Reduction,” IMF Survey 29: 302–3. Mittelman, James H. (1996a) “The Dynamics of Globalization.” In Globalization: Critical Reflections, edited by James H. Mittelman, pp. 1–19. Boulder, CO: Lynne Rienner. Mittelman, James H. (1996b) “Rethinking the ‘New Regionalism’ in the Context of Globalization,” Global Governance 2.

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Nandy, Ashis (2002) “The Beautiful, Expanding Role of Poverty: Popular Economics as a Psychological Defense,” International Studies Review 4: 107–21. Nel, Philip (2000) “Equity as a ‘Global Public Good’?” Paper delivered at the RC 40 Panel, IPSA 18th World Congress, Quebec City, Canada, August 1–5. Nurnberger, Klaus (1999) Prosperity, Poverty, and Pollution. London: Zed Books. Pinker, Robert (1999) “Do Poverty Definitions Matter?” In The International Glossary on Poverty, edited by David Gordon and Paul Spicker, pp. 1–5. London: Zed Books. Ramaswamy, Sushila (2000) “Eclipse of Dependency Theory: the Reasons for History’s Verdict against It.” Paper presented at the IPSA 18th World Congress, Quebec City, Canada, August 1–5. Rawls, John (1971) A Theory of Justice. Harvard, MA: Harvard University Press. Scholte, Jan A. (2000) “Globalization and Equity.” Paper presented at the 41st Annual Convention of the ISA, Los Angeles, March 14–18. Sen, Amartya (1981) Poverty and Famines: An Essay on Entitlement and Deprivation. Oxford: Clarendon Press. Speth, James G. (1999) “The Plight of the Poor: the United States Must Increase Development Aid,” Foreign Affairs 78(3): 13–17. Spicker, Paul (1999) “Definitions of Poverty: Eleven Clusters of Meaning.” In The International Glossary on Poverty, edited by David Gordon and Paul Spicker, pp. 150–62. London: Zed Books. Stewart, Frances & Berry, Albert (1999) “Globalization, Liberalization, and Inequality: Expectations and Experience.” In Inequality, Globalization, and World Politics, edited by Andrew Hurrell and Ngaire Woods, pp. 150–86. Oxford: Oxford University Press. Stiglitz, Joseph E. (2002) Globalization and Its Discontents. New York: W. W. Norton. Therborn, Guran (2000) “Dimensions of Globalization and the Dynamics of (In)Equalities.” In The Ends of Globalization: Bringing Society Back In, edited by Don Kalb et al., pp. 33–48. Lanham, MD: Rowman and Littlefield. UNDP (United Nations Development Programme) (2000) Overcoming Human Poverty: UNDP Poverty Report, 2000. New York: United Nations Publications. Weede, Erich (2000) “The Impact of Globalization: Creative Destruction and the Prospect of a Capitalist Peace.” Paper presented at the IPSA 18th World Congress, Quebec City, Canada, August 1–5. Wolf, Martin (2004) Why Globalization Works. New Haven, CT: Yale University Press. Wolfensohn, James D. (2000) “Wolfenshohn Calls on Governors to Cooperate to Build a More Equitable World,” IMF Survey 29: 308–9. Woods, Ngaire (1999) “Order, Globalization, and Inequality.” In Inequality, Globalization, and World Politics, edited by Andrew Hurrell and Ngaire Woods, pp. 8–35. Oxford: Oxford University Press. World Bank (2002) Globalization, Growth, and Poverty: Building an Inclusive World Economy. Washington, DC: The World Bank and Oxford University Press.

Chapter 3 Reproducing the North–South Divide: The Role of Trade Deficits and Capital Flows* Bruce E. Moon

Introduction The North–South divide can be conceived in several different ways and demarcated along many different dimensions. This chapter emphasizes two interrelated aspects of it: the gap in economic performance between rich and poor nations and the dependency induced by the transactions that link them. It explores the inter-temporal flows and asymmetric exchanges surrounding trade imbalances as a key mechanism that perpetuates both. The yawning income gap between the richest and poorest nations is the most dramatic and visible dimension of the North–South divide, and one that has marked the global political economy for at least two centuries (Maddison 1995, 2001; O’Rourke 2001).1 That it has persisted – and, indeed, widened – during the globalization era is a major challenge to several strands of contemporary theory that predict its demise. As the blue line in Figure 3.1 shows, the GDP (gross domestic product) per capita of the OECD (Organization for Economic Cooperation and Development) countries was about 45 times that of the low-income countries in the early 1960s (read on the right-hand axis).2 That ratio grew to about 73 : 1 in the early 1990s and has declined only to the high 60s early in the twenty-first century.3 The gap between middle- and low-income countries, portrayed in yellow and calibrated on the left-hand axis, traced a similar path, widening from 3.2 to 4.6 over this era. The income ratio between the OECD and middle-income countries has barely budged for nearly half a century: beginning at about 14.1, it grew * Author’s note: An earlier version of this paper was prepared for the International Studies Association Annual Convention in San Diego, USA, March 22–25, 2006.


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Bruce E. Moon Income ratios between country categories 30

80 70

25

60

Ratios

20

50

15

40 30

10

20 5

10

0 1960

0 1965

1970

1975

OECD–middle income ratio

1980

1985

1990

Middle–low income ratio

1995

2000

2005

OECD–low income ratio

Figure 3.1 Income ratios between country categories. as high as 16.3, before declining to a level almost identical to where it began by 2005.4 At the heart of the mechanisms that affect this divide are the complex of transactions that constitute the bridge across it – international trade and the various capital flows that provide its balancing finance. These transactions have grown rapidly in recent years, as shown in Figure 3.2.5 Trade as a percentage of GDP is between 2.5 and 3 times higher today than in the 1960s in every income category. Most factor flows, including migration, technology, and investment capital, have grown even more rapidly over the same period (O’Rourke 2001; Obstfeld & Taylor 2004; Lane & Milesi-Ferretti 2006). Indeed, the stock of financial assets held outside the country of issuance tripled just in the period from 1990 to 2003 (IMF 2005b). According to several theoretical currents discussed below, these flows alone should erode the North–South gap, but Figure 3.1 makes clear that they have not. This chapter examines one potential explanation – that the massive imbalances in trade experienced by nations of the South have overwhelmed the effect of the more heralded expansion of global trade volumes. The high level of trade is a defining attribute of the globalization era, but less noticed is the huge imbalance in national payments accounts that exists alongside it. The North–South divide in this regard is reflected in Figure 3.3, which shows that the average trade balance over the 1975–2005 time period is positive (1.8 percent of GDP) only among upper-income countries.6 By contrast, among lower-income countries, the average trade balance is a deficit of 12.3 percent of GDP. To put this number in some perspective, it should be recalled that recent US trade deficits about

1.76791

Trade balance as % of GDP

2 0 –2

–2.42675 –4 –6 –8

–8.85844

–10 –12

–12.3327 Lower income

Lower middle income

Upper middle income

Upper income

Figure 3.2 Trade balance by income group, 1975–2005.

70

% of GDP

60 50 40

30

Low income

World

OECD

Figure 3.3 Trade as percentage of GDP, 1960–2004.

Middle income

2000

1995

1990

1985

1980

1975

1970

1965

1960

20

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Bruce E. Moon

8

% of nations

6

4

2

0

Lower income

Lower middle income

Upper middle income

Upper income

Figure 3.4 Percentage of nations with trade deficit of 5+ percent of GDP. half that size have produced a (wholly justified) cacophony of alarm bells (Obstfeld & Rogoff 2001, 2005; Roubini & Setser 2004; Setser & Roubini 2005). It is worth noting that those who have minimized the dangers of the US deficit have universally declared that the USA is a special case in which such deficits are more benign than elsewhere; virtually no commentator has defended trade deficits of this size as healthy for most economies (Bernanke 2005; Clarida 2005; Levey & Brown 2005).7 Yet the implications for developing countries have not been addressed. Figure 3.4 makes the same point in a different way, by displaying the incidence of trade deficits that exceed the threshold of about 5 percent of GDP generally identified as a significant risk factor for macroeconomic, currency, and banking crises (Milesi-Ferreti & Razin 1996; Summers 2004). This figure makes clear that dangerously high trade deficits are the rule in low-income countries, occurring in more than three-quarters of all nation-years, and about half the time in lowermiddle-income countries.8 By contrast, such levels are rarities among Northern nations. Among the G-7 countries usually considered the core of the global system, it has happened only twice in the 280 nation-years since 1965 (the UK in 1974 and the USA in 2004–6). Large trade deficits arise in less than 2 percent of nation-years among highincome OECD countries if Greece, Portugal, and Ireland are excluded. Among all upper-income countries, large trade deficits constitute about 13 percent of cases, about one-sixth the incidence among lower-income countries. The pattern that large trade deficits are more or less exclusively a poor-country phenomenon motivates us to consider whether such deficits are a causal factor in

The Role of Trade Deficits and Capital Flows

43

perpetuating the North–South divide by constraining growth and reproducing dependency in the South.9 If the expansion of trade volumes brings benefits, the accompanying expansion of trade deficits may bring dangers as well.10 Yet, despite their ubiquitous appearance in recent years, trade deficits have received almost no attention from empirical studies.11

Trade Deficits, North and South A surprising divergence of theoretical views concerning the basic nature of trade deficits makes the absence of serious attempts to adjudicate their effects mysterious – and potentially damaging to efforts to understand (and narrow) the North–South divide. Trade imbalances can be conceived in at least two ways, which correspond to theoretical expectations concerning their effect on growth and with it the North– South divide. Orthodox liberals emphasize the capital flows which finance deficits – and laud their potential for growth. Political economists and policy makers, especially in the South, emphasize the trade deficit itself – and fear the long-term consequences of the political and economic liabilities they create. This chapter unpacks these alternative theoretical positions, examines their implications for the North– South divide, and confronts them with empirical data concerning the growth effects of these transactions.

Liberal Perspectives Liberal theorists treat trade imbalances as epiphenomenal manifestations of more interesting and important forces, allowing trade deficits to be ignored. And ignore them they do – but not before deriding those who do take notice.12 Until the rapid deterioration of the US trade balance in the late 1990s, only a handful of studies had appeared, and most were dedicated essentially to a denial that there was anything to worry about, largely on the grounds that trade deficits were inherently temporary and necessarily self-limiting. In this, they mirror Adam Smith’s famous observation that “Nothing . . . can be more absurd than this whole doctrine of the balance of trade” (Smith 1937 [1776] : 456 [bk. IV, ch. III, pt. 2, par. 2]). Thus, Heyne (1983: 716) concludes that “a government that tries to watch over the balance of trade has embarked upon a task that is intricate, embarrassing, and fruitless.” Instead, when deficits have been noticed at all, liberal theorists have focused on the capital flows that are thought to balance them.13 As Fisher (1990: 412) puts it, “balance-of-payments accounting serves as a tedious reminder that a current account deficit is simply the sum of the capital account surplus and the loss of official reserves . . .” The conception that trade imbalances could not exist without compensating capital flows is a key linchpin of the equanimity with which liberal theorists view trade deficits. If these capital flows are market transactions in financial assets between willing (income-maximizing) buyers and sellers, then the judgment of the investors that provide such capital would seem to certify that the imbalances should not be considered worrisome.14

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The liberal focus on the national demand for capital yields a simple explanation for the above pattern in trade deficits. Since investment opportunities exceed domestic saving in poor countries, rates of return are relatively high in the South and capital naturally flows from the North to take advantage of them. Trade deficits are thus strongly related to “stages of development” (Siebert 1989; Sinn 1990; Eichengreen 1992; Genberg & Swoboda 1992; Roldos 1996; Chinn & Prasad 2003). Liberals have generally assumed that capital inflows swell the available pool of investment funds and thus generate future growth in the South. Eichengreen and Mussa (1998: 12) put the classic case for international capital mobility this way: “Flows from capital-abundant to capital-scarce countries raise welfare in the sending and receiving countries alike on the assumption that the marginal product of capital is higher in the latter than in the former.” The beneficial effects of these flows for poor countries are an important source of the widespread expectation that the North–South gap must diminish over time (Fischer 1998; Gourinchas & Jeanne 2003). Of course, that judgment surely must depend on how the gains are divided between the initiator and the recipient of the capital flow, a topic discussed below. As a first cut, one would expect the impact to be greater in poor countries, since the capital flows constitute a far larger percentage of GDP in poor countries than in rich ones. The North–South gap should narrow as a result. In fact, had the North–South divide closed over time, it would have been heavily overdetermined. Many theories point to the same outcome, most of which invoke some aspect of North–South flows. The convergence of rich and poor countries is central to Solow’s (1956) iconic neoclassical growth model, in which the central mechanism is the declining marginal returns to capital (Swan 1956; Baumol 1986; Barro & Sala-i-Martin 1997).15 Gershenkron’s (1952) famous invocation of “the advantages of backwardness” rests on the assumption that technology will diffuse from rich to poor countries fast enough to narrow income gaps. Since the poor countries can make a more rapid leap than the richer ones simply through emulation, technological diffusion will narrow the gap between rich and poor (Abramovitz 1986). If that technology diffusion is hampered by financial capacity, as argued by Aghion et al. (2005), the open capital markets of recent decades should accelerate it. Comin et al. (2006) demonstrate that technology convergence is indeed quite rapid and is accelerating. The role of human capital also should hasten income convergence because the gap between rich and poor countries on all of the usual measures of human capital are falling, especially literacy rates and school enrollment, but also life expectancy and infant mortality (Mankiw et al. 1992; Barro & Lee 2001; Kenny 2005; Deaton 2006). Industrialization levels are also converging as poor countries increasingly move away from primary product production (Arrighi et al. 2003). Production and management techniques are diffusing rapidly as well, driven in part by foreign direct investment (FDI) (Dicken 2003). Constraints which affect small market (poor) countries more than rich ones are rapidly being eroded by growing trade opportunities, including economies of scale. Finally, post-materialist values that deemphasize income growth are now widespread in developed countries, which would


45

seem to allow a catch-up by those countries for whom growth is still the overriding priority (Inglehart 1997). In the face of all the reasons to expect a narrowing of the North–South divide, the fact that it has not occurred is a major mystery, suggesting that underlying theories must be rethought or augmented.

Political Economy Perspectives Outside of liberal theory, the view of trade deficits is quite different. The danger of trade deficits is a theme associated with both the oldest of theoretical traditions – mercantilism – and the newest – the anti-globalization movement, heir to the anxieties of structuralist and dependency theories. Mercantilists have long been wary of trade deficits, not least because they have generally identified less with pure theorists and more with policy makers seeking to navigate the dangerous straits represented by deficits.16 Policy makers in poor countries see the balance of trade as a pivotal target of development policy and interpret deficits as an indicator of policy failure. For example, trade deficits have been widely linked to currency crashes (Kaminsky et al. 1997; Demirguc-Kunt & Detragiache 1998; Milesi-Ferretti & Razin 1998), in the aftermath of which governments are nearly twice as likely to fall (Cooper 1971; Frankel 2005). A deficit carries important signaling information to international financial institutions and investors, thus driving the behavior of agents that possess significant power to shape economic and political outcomes. Current account deficit countries tend to have higher real interest rates, by roughly 20 to 30 basis points for each 1 percent of GDP in deficit (Obstfeld & Rogoff 2000; IMF 2005b: 117). Higher interest rates constrain growth even as domestic production and employment falls victim to competitive pressure from imports. Deficit countries suffer exchange rate declines that limit purchasing power for essential imports, but adverse supply and demand elasticities do not usually permit the trade deficit to decline as a result. Trade deficits are thus authentic causal determinants in their own right, playing a critical role in the development of poor nations, both as a direct influence on the macro economy and as a significant constraint on national planning that channels foreign dependence and biases policy choices. Trade deficits place pressure on governments to do things they would not otherwise do.17 Some may compromise growth, such as the tax incentives and subsidies which are used to attract foreign investment but then also diminish the benefit of that investment which occurs (Aitken & Harrison 1999). Others may be beyond the capacity of governments – especially the kinds of governments that experience high trade deficits in the South. Without adequate government regulation and without strong private financial institutions, volatile capital flows may be quite destabilizing. When not sterilized by competent and adequately financed monetary authorities, capital inflows can increase the money supply and induce inflation, appreciate the currency to the detriment of export- and import-competing competitiveness, weaken the finance sector, increase debt and/or other liabilities, and

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induce crisis by creating uncertainty, risk, and vulnerability to both investor-generated and speculator-generated panics. Such scenarios place institutions under great pressure, to which they will sometimes respond badly or miscalculate the uncertainties. For example, Kaminsky et al. (2004) cite repayment pressures to explain pro-cyclical fiscal policy in the South, which exacerbates capital flows that are ordinarily strongly pro-cyclical as well (Gavin et al. 1995). Thus, fiscal deficits are least available when they are needed most: capital outflows are contractionary, but in that environment governments can’t borrow money to balance it (Alesina & Tabellini 2005). (Monetary policy to support the exchange rate is also pro-cyclical.) Where regulatory structures are strong and the financial sector well developed, of course, as in the North, the threat is less. Outcomes are not certain, but the scope for failure widens under the pressure of deficits. Suboptimal policy is induced by high debt levels through various mechanisms, including “fear of floating” (Calvo & Reinhart 2002), constraints on monetary policy because of exchange rate risks (Céspedes et al. 2000; Aghion et al. 2001), excessive holding of reserves (Bosworth & Collins 1999; Hausmann et al. 2001, Calvo & Reinhart 2002), and the inability of central banks to serve as lenders of last resort (Chang & Velasco 2000). Cohen and Portes (2004) describe “gambles for resurrection” in the face of mounting liabilities. Uncertainty about the dispensation of debt reduces investment, particularly long-term growth-producing investment, while also misallocating the investment that does occur toward short-term trading activities (Alesina & Tabellini 1989; Tornell & Velasco 1992). These potential costs must be balanced against potential gains from capital flows that do not appear to be very large, even according to the liberal theory that motivates them. For example, Gourinchas and Jeanne (2003) apply two variants of a neoclassical model to show that the benefits of international financial integration average around 1 percent of GDP as a permanent effect. Despite these concerns, neither political economists nor policy makers are ignorant of the identity relationships among the various categories in balance of payments accounting: They acknowledge that trade deficits are balanced by capital flows. However, they do urge greater attention to the make-up of those flows, how they are secured, and, especially, their connections to the international investment position, a long-term balance sheet for national economies. If trade deficits are financed by capital flows, the result is necessarily an accumulation of long-term liabilities in the form of foreign-owned assets. Loans must be repaid. Portfolio investment may be withdrawn at any moment. Even foreign direct investment can be reversed. In the meantime, all of these foreign-owned assets (domestic liabilities) earn returns that tend to leak from the economy and thus constrain the growth that would have resulted had they been reinvested. Nor do critics dismiss the liberal contention that those capital flows permit poor economies to raise investment levels beyond the meager domestic savings rates that are characteristic of them. However, structuralists do worry that removing the current savings constraint via capital inflows simply introduces a different trade-off, this time with future savings. Current capital inflows create a liability that strongly


47

predicts future capital outflows, which must be financed eventually by future savings. Riding the tiger in this way assumes that the growth induced by capital flows will be sufficient to generate marginal savings that make the process self-financing. But will it?18 In economic theory, the critical determinants are the social rate of return on invested foreign capital (which must be high enough to promote marginal savings at or above the private cost of foreign capital) and the dampening effect on domestic savings by the capital inflow, which must be very low.19 It may not be. Capital inflows do not create a one-to-one initial increase in investment, as a substantial portion is diverted to private consumption and reserve accumulation by government (Bosworth & Collins 1999; Mody & Murshid 2005). Moreover, most capital inflows should be expected to eventually reverse – with interest – so that the benefits from investment-spurred growth are always in a race to exceed the costs of the capital acquisition (i.e., interest on loans or repatriation of profit). There is no free lunch, except in the very narrow sense that it is always possible that you will die before the check arrives. Clearly, the variables determining the net effect are so many and varied that the outcome is better evaluated empirically than assumed theoretically, a task that we commence below. But the adverse effects of capital flows have generally been thought to lag the deficits themselves, which complicates the task of identifying them.20 As a result of the inter-temporal character of trade deficits, we must choose a research design capable of incorporating both short- and long-term effects. Before proceeding, however, we must recognize that trade deficits are far more than accounting abstractions: They are also an element of the power relations among countries.21 Specifically, they introduce two moments of dependency that impose real costs and force trade-offs with values of autonomy, democratic responsiveness, and various social outcomes (Vernengo 2004). First, despite the reassuring accounting logic that capital flows must balance trade deficits, they do not do so automatically. A price must be paid to attract those capital flows – and the price is not always visible on balance sheets. Political economists are prone to worry that both political and economic dynamics make large import levels almost impossible to reverse and commit a nation to a particular pattern of economic organization – an outward orientation reliant on foreign trade, investment, and aid – virtually forever. This diminishes freedom of action in policy making and induces dependence on both impersonal markets and particular power-wielding actors. Second, capital inflows accumulate external liabilities that must eventually be unwound. The process of doing so again engages the deficit country in asymmetric dealings with external forces, which have an important political dimension. We begin our empirical analysis by asking how deficits are financed as they arise and how the resultant liabilities are eventually reduced as the deficit country returns to external balance.

The Financing of Trade Deficits The conventional story is that trade deficits are financed by foreign investors who expect repayment in the form of profit and interest. That is not the only way to

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Balance of payments accounts Current account Trade balance Transfers: Official aid Worker remittances Income from past investments Capital account Financial account FDI Portfolio investment Other (loans, trade credits) Reserves and related items Exceptional financing

Figure 3.5 Simplified sketch of the major accounts within a nation’s balance of payments. finance deficits, however, and an entirely different frame is required if other means are used to balance them. Political economists expect that trade deficits are not only larger in the South than in the North, but also that they are financed differently and thus carry different developmental implications. In principle, of course, deficit financing can occur in a number of ways, as illustrated in Figure 3.5’s simplified sketch of the major accounts within a nation’s balance of payments.22 Trade deficits can be balanced within the current account by either net income from past investments or through current transfers, a category made up largely of official foreign aid and private remittances from workers employed abroad. They can also be financed via the capital account, which registers capital transfers, such as debt forgiveness, investment grants, and migrant remittances. The importance of transfers for the framing of our analysis may be conveyed by contrasting the description offered by two different sources. The World Bank’s World Development Indicators characterizes them this way: “the provision or receipt of goods, services, income, or financial items without a quid pro quo.” The IMF Balance of Payments Manual adds this important qualifier: “Transfers often reflect benefits that cannot be quantified (e.g., improved political or economic relationships between parties).” The former may better convey the spirit of workers’ remittances to their families, but the latter certainly better captures the reality of foreign aid between governments. Neither form of transfer is a market-based economic transaction, since they are motivated largely by political, social, or humanitarian concerns. Official development assistance is a power relationship involving the exchange of an intangible, which is probably valued less highly as an asset (power) by the donor than as a liability (dependence) by the recipient (Hattori


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Table 3.1 Financing sources for deficit countries Financing sources for deficit countries (% of GDP) Trade balance Income Transfers Financial account Reserves & IMF Exceptional finance

High income

Low & middle income

−3.9 −1.2 1.8 3.0 −0.6 0.8

−13.6 −1.3 9.0 4.6 −0.8 2.7

2001). That liability of external dependence cannot be assessed within any monetary framework and it has been best treated within the radical tradition of political economy, where it has been a major theme for decades (Payer 1974). Deficits can also be balanced by capital inflows recorded within the financial account (as portfolio or direct investment, in the form of equity securities, debt instruments, or loans). Within the reserve account, they can be paid for by drawing down reserves or by using IMF credits or loans. Finally, they can be balanced by exceptional finance, a category which is dominated by the contra entry for the accumulation of arrears from past debts, an accounting device used to balance the accounts, but which does not signify any actual transaction. Among high-income countries, the conventional story adequately conveys the major dynamics of deficit funding. The first column of Table 3.1 summarizes the balance of payments accounts for those 37 percent of nation-years in which highincome countries have run a trade deficit (328 of the 879 nation-years between 1975 and 2005).23 Their total financing needs are made up of their trade balance (−3.9 percent of GDP) plus the income outflows (−1.2 percent of GDP) that return to foreign investors the interest and profits earned on their assets – which, from the point of view of the country in question, represent liabilities that have accrued from the financing of past trade deficits. Consistent with the conventional story, the major source of that financing (3.0 percent of GDP) comes from capital inflows recorded in the financial account: FDI (0.7 percent), portfolio investment (0.7 percent), and the “other investment” category, which is mostly loans and trade credits (1.7 percent). Transfers (both capital and current) provide an additional source, but the reported incidence of 1.8 percent of GDP is reduced to 0.9 percent by the exclusion of Israel and its huge influx of private and public aid. Exceptional financing is small and the contribution from reserve assets is negative. In short, capital markets provide the finance necessary to balance relatively small Northern trade deficits. The picture in the South is entirely different. First, 73 percent (2,242 of 3,075) of all low- and middle-income countries run trade deficits, and they are far larger – on average, 13.6 percent of GDP. Income outflows bring total financing needs to 14.9 percent of GDP, about three times that for high-income countries. However,

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the capital inflows registered in the financial accounts are not much larger in the South than in the North, providing less than a third of their financing needs, principally through FDI (2.0 percent of GDP) and loans (1.9 percent), many of which come from international financial institutions (IFIs) and have a concessional element. Instead, the lion’s share of funding comes from transfers (9 percent of GDP), about three-quarters of which is official foreign aid. Together with the 2.7 percent of GDP from exceptional finance (and a sizable fraction of the loans), it is clear that deficit finance in the South is not a matter of private, market-based capital flows designed for financial profit.24 Rather, these deficits are financed largely by rich countries and IFIs in the North, who expect repayment not in coin, but in influence. Trade deficits in the South create a vast network of dependency relations that cannot be captured by traditional views of balance sheets. To assure the steady supply of those flows, governments must govern in ways that will induce other actors to continue them. They typically require much pampering, because their interests are diffuse and they seldom coincide with those of the deficit country. Foreign aid responds as much to political and strategic considerations as to the needs of poor countries, constraining foreign policy in deficit countries (McKinlay & Mughan 1984; Hook 1995). Partly for this reason, its contribution to development has been much questioned (Turnovsky 2005). Worker remittances are less overtly political, but dependence on the export of one’s people to richer countries is hardly a sign of economic health. IFIs continue flows only so long as deficit countries adhere to their policy tenets, the extraordinarily expansive reach of which is demonstrated by the large literature on conditionality (Gould 2004; Welborne 2006). Deficits constitute a policy bias of such disproportionate influence that policy makers regard them as a most unwelcome inheritance, though in recognition of the differences between their short- and long-term consequences, they do not necessarily avoid incurring deficits themselves. Trade deficits increase external dependence and reduce autonomy, shifting the fate of the nation to external factors that cannot be controlled, such as international interest rates which both endanger floating rate debt and induce capital outflows by changing the rates of return available elsewhere. Most obviously, they invite constraints to policy making in the form of IMF and World Bank conditionalities that restrict welfarist approaches (Kozul-Wright & Rayment 2004). Of course, lenders and the multinational corporations that provide FDI exert influence in their own way. The policy bias introduced by this structural dependency may well contribute to the perpetuation of this pattern, since the neoliberal preferences of most external actors has been shown to reinforce trade deficits (see note 9). These concerns about the dependency effects of trade deficits were put clearly by Cheryl Payer three decades ago: The moral of this work is both simple and old-fashioned: that nations, like individuals, cannot spend more than they earn without falling into debt, and a heavy debt burden bars the way to autonomous action. This is particularly true when one’s creditors are also one’s customers, suppliers, and employers. (1974: 214)


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Payer also recognized the difficulty of withdrawing from trade patterns once established: All nations will find that some imports are genuinely essential, and many more are useful if properly utilized, when they develop new industries and a new productive capacity. But . . . the same medicine which, in small doses, aids and stimulates the body’s own powers of recovery may, in massive amounts, enervate and addict the patient beyond hope of recovery . . . Just as a “pusher” finds it good business to provide free samples on which potential users can get “hooked,” so the grant aid of the 1950s served to make poor nations dependent on Western brand names and accustomed to the idea of development via imports, rather than by their own efforts, thus paving the way to the debt slavery of the 1960s and 1970s. (1974: 211)

It is not only demand mechanisms that reinforce this continuing pattern of trade deficits in the South, of course. Even though market-based capital represents only a fraction of actual financing needs, average flows in the range of 5 percent of GDP nearly every year are certainly large enough to create very large liabilities, even after the forgiveness and rescheduling of debt. Since liabilities require annual servicing – whether through the repatriation of the profits from FDI or interest payments on loans – they add a large increment to financing needs that require additional capital inflows. Like a dog chasing its own tail, deficit countries seldom catch up. In fact, when Payer was writing those words in the middle 1970s, the net liability of the average low- and middle-income country was equivalent to 30 percent of its GDP. By 2000, the international investment position of these countries had deteriorated to a deficit of 63 percent of GDP, more than twice the level in the 1970s. Meanwhile the net external position of high-income countries was a surplus of 3 percent of GDP. The contrast between the North and South is even more dramatic with respect to these long-term liabilities than in short-run deficits, since Northern countries are better able to both control macroeconomic aggregates and adjust to them than poor countries, which have bigger problems and more limited freedom of action for dealing with them. The perpetuation of such dependency is illustrated by the recidivism in conditionality programs documented by Bird et al. (2004), and Hutchison and Noy (2003). Their results establish that once under an IMF program, the IMF becomes an unwelcome partner in policy making for an almost indefinite period. Bird et al. (2004) find that recidivism is greatest among those with larger current account deficits and higher levels of debt. Kraay and Nehru (2004), who find that high debt levels lead to default, arrears, rescheduling, and greater debt, consider the distortionary effect of such “debt distress” on government policy, as do Birdsall et al. (2002). As noted by Rieffel (2003), almost all debt negotiations involving the Paris Club, London Club, and HIPC (Heavily Indebted Poor Countries) initiatives also invoke IMF conditionality, and they too are a nearly continuous enterprise. The stickiness of high trade deficits and their pattern of financing can also be illustrated by looking at the incidence of large, protracted deficit episodes. Moon (2006) identifies 114 episodes in 99 nations in which trade deficits larger than 5

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percent of GDP persisted for five or more consecutive years. Nearly two-thirds of these episodes (71 of 114) were financed almost entirely through transfers and exceptional finance, with the attendant dependency effects. Only 14 were marked with surpluses in the financial account equivalent to trade deficits, and only one – Singapore – was able to finance both the trade and income deficits entirely through market-based capital flows. Moreover, efforts to reduce the accumulated liabilities when they become excessive introduce another aspect of dependency. While conventional accounts assume that deficit nations will eventually unwind those liabilities by running trade surpluses, the reality is somewhat different. Escape from high levels of debt through any means is exceedingly difficult, as demonstrated by the fact that 65 of the 114 deficit episodes were still ongoing and liabilities continuing to accumulate as of 2004. Among those episodes that had been financed largely by capital flows, only four countries had ended the run of large deficits and then subsequently returned their net external position to its previous level. Ten others had made a partial balance-sheet recovery, but in only one of the 14 were trade surpluses the largest source of improvements in the net external balance. Exceptional finance, largely debt forgiveness, was the major force in reducing liabilities, with the conditionality associated with it reinforcing dependency. Having established that trade deficits produce extraordinary levels of dependency in the South, we now turn to the second key proposition: the effect of deficits on growth. In doing so, however, we remain aware that the dependency set in motion by trade deficits may have its own effect on growth. For example, several studies have found that participation in IMF programs significantly slows growth (Przeworski & Vreeland 2000; Stone 2002; Gould 2004; Barro & Lee 2005).

The Empirics of Trade Deficits and Growth If trade deficits are largely the province of poor nations, and if they slow growth, we may have found one important mechanism that has allowed the North–South divide to grow despite the presence of powerful theoretical claims that it should be shrinking. To those claims we should add that the high levels of transfers and extraordinary finance we have uncovered should also operate to reduce the North– South performance gap. In fact, we have considerable reason to expect significant growth effects of trade deficits through several channels: the effects of trade deficits themselves, the consequences of the cumulative liabilities they create, the results of government actions designed (sometimes unwisely) to cope with them, and the dependency relations implicit in the deficit syndrome. To evaluate these claims, we perform a statistical test of growth rates in GNI (gross national income) per capita among deficit and non-deficit nations. The weaknesses of the growth regression literature are well known, but there is no better alternative to answering the fundamental question of what accounts for differences in observed growth rates between countries (Hauck & Wacziarg 2004). Our challenge is to formulate a research design which incorporates the major forces that have been identified by existing theory and previous empirical work, while allowing


53

for the inclusion of the effects of trade deficits that operate in both the short and long term. Previous research has examined the effect of trade deficits on growth using several alternative research designs and control models (Moon 2001, 2006; Aizenman et al. 2004). Each replicated and extended a prominent model that reflects the perspectives of the various empirical literatures that are relevant: the effect of trade levels on growth (Levine & Renelt 1992; Frankel & Romer 1999; Bosworth & Collins 2003), the effect of debt on growth (Pattillo et al. 2002, 2004), and the effect of capital flows on growth (Borensztein et al. 1998).25 In each case, it is shown that the trade balance is a significant – and negative – predictor of growth, usually more powerful than the trade volume indicator that is more often used in growth regressions. However, the absence of data on net external positions restricted those analyses to the trade deficits themselves. Without that measure of accumulated deficits, long-term effects could be captured only with cross-sectional analyses whose causal claims are precarious. The availability of new estimates of net external positions from Lane and MilesiFerretti (2006) now enables us to take advantage of the time-series data available for most of the other variables of interest. In particular, we can now separate out the short-term effects of capital flows central to the liberal story, while also seeking the long-term effects of the accumulation of net external position deficits emphasized by more critical perspectives. We do so with a cross-sectional time-series design for 119 countries between 1977 and 2003. Following common practice, we average the relevant variables over nine non-overlapping three-year periods to minimize the noise of yearly fluctuations. Despite the wide variety of models, research designs, and estimators found in the literature, by now certain independent variables stand out as consistently related to growth (Levine & Renelt 1992; Sala-I-Martin 1997; Barro 1991, 1997; Bosworth & Collins 2003): initial GDP per capita, trade openness, investment levels, and population growth.26 Each is included in our analysis to establish a control model that will better reflect the impact of the variables of interest, the trade balance and the net external position. To represent convergence effects in a time-series matrix, initial GDP per capita for each nation was expressed as a percentage of the US value in that year. Both total trade volume (World Bank 2006) and Wacziarg and Welch’s (2003) update and correction of Sachs and Warner’s (1995) well-known binary index are used to measure different facets of trade openness. The investment level variable is gross fixed capital formation from the World Bank (2006), which is also the source of the population growth data. To recognize the sharp differences in global growth over various time periods, total world growth in product is included for each year. The trade balance data is taken from the International Monetary Fund’s “analytic view” of the Balance of Payments. Net external position estimates are from Lane and Milesi-Ferretti (2006). Estimation was performed with Stata’s OLS and random effects cross-sectional time-series routines. The results for all countries are presented in Table 3.2 , with the first pair of columns reporting the OLS estimation and the second pair the random effects analysis. In each, the control model performed as expected and consistently with

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Table 3.2 Change in GNI per capita, PPP OLS coefficient Trade balance Net external position Initial logged GDP % Trade volume WW openness measure Global growth Population growth Investment level constant

.035 .007 −.782 .008 1.135 .625 −.708 .195

Random effects z 2.57 3.63 −80.67 2.79 5.04 4.77 −8.18 10.00

−4.41 −6.72 r2 = .28/N = 813

coefficient .033 .005 −.784 .009 1.270 .619 −.584 .169

z 2.06 1.98 −6.76 2.62 5.19 5.01 −6.01 7.65

−4.327 −6.75 r2 = .28/N = 813

existing literature. Of particular interest is the large negative estimate for the initial GDP term, which confirms a significant convergence effect that should act to narrow the North–South divide, all else being equal. One explanation for its failure to do so is suggested by the estimates for the effect of the trade balance and net external position (NEP). Contrary to the conventional expectation that the capital flows associated with trade deficits would increase growth, the positive coefficients for the trade balance suggest that trade surpluses, not deficits, accelerate growth. Furthermore, these short-term effects are augmented by the long-term implications of deficits in the net external position, where the positive coefficients in both models indicate that deficits in the NEP are associated with slower growth. All of the effects are statistically significant at 0.05. The impact of these results on the North–South gap may be only roughly estimated, but they are clearly of substantive as well as statistical significance. For a typical deficit country of the South since 2000, which ran a trade deficit of about 13 percent of GDP and held a net external position of −55 percent, these estimates project a growth rate about 0.75 percent per year lower than would be expected of a country in perfect balance. This is a sizable effect in the context of average global growth in both North and South of only about 1.75 percent per year. Based on the convergence estimates of Table 3.2, an average country of the South (with a GDP per capita of $3,700) should grow about 3 percent per year faster than the average high-income country ($19,400 per capita). Thus, it appears that the effects of trade deficits alone erase about one-quarter of the expected convergence between North and South.

Conclusion Despite the neglect of trade deficits in the theoretical economics literature, political economists and policy makers know better than to ignore their developmental effects. As put by a recent UNCTAD (2006) report:


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It is no surprise that . . . having learned that reliance on foreign savings rarely pays off as a sustainable development strategy, a growing number of developing countries have shifted to an alternative strategy that relies on trade surpluses as the engine for investment and growth. (2006: iii)

It is true – as the neoliberal proselytizers endlessly proclaim – that the North–South divide could be narrowed, if only the poor countries would emulate the economic policies of the rich. This analysis suggests that it is not their expansion of trade volumes that should be copied but their prudent avoidance of trade deficits.

Notes 1 2 3

4

5 6

7 8 9

Other studies that have found widening gaps include Pritchett (1997) and Mayer-Foulkes (2002) among many others. The aggregated measure of GDP per capita in constant US dollars for each income group was taken directly from World Bank (2006). The staggering growth in that divide from the eighteenth century to the middle of the twentieth is a worthy issue in its own right, but beyond the bounds of this study. Maddison (2005) puts the “West to the rest” ratio at 1.3 : 1 in 1500, 1.9 : 1 in 1820, 3.1 : 1 in 1870, 5.2 : 1 in 1950, and 6.7 : 1 in 2001. For the various ways in which global income inequality can be conceived and measured, especially in the context of the convergence hypothesis, see Mathur (2005), Kenny (2005), and Quah (1997). The data are taken directly from World Bank (2006). The recorded trade balance across all countries averages −6.1 percent of national GDP, even though the actual global total of imports must be identical to exports. The average is negative when normalized by GDP because the largest economies generally run surpluses and the smaller incur deficits. For example, Japan’s 2004 trade surplus of about $100 billion represents only about 2 percent of its GDP, whereas Nicaragua’s deficit of 26.3 percent of GDP amounts to less than $1 billion. In absolute terms, these two nations average a surplus of about $50 billion, but a deficit of about 12 percent when measured as a percentage of GDP. The large average deficit cannot be the result of statistical discrepancies because reported global exports usually slightly exceed reported imports (IMF 2005a). For a treatment of the USA as a special case, see Moon (forthcoming: ch. 9). Data is aggregated from the national level using thresholds for the four income groups derived from World Bank sources. A strong case can be made that, in the South, the expansion of trade volumes and the advent of large trade deficits should be thought of as part of a single syndrome – often as a deliberately engineered pairing of liberalization consequences (Moon, forthcoming: ch. 4; Gourinchas & Jeanne 2003: 1). Several studies have found that in the South – unlike the North – more open economies typically run larger trade or current account deficits (van Wijnbergen 1992; UNCTAD 1999; Moon 2001, 2005; Chinn & Prasad 2003). Other studies have also linked various liberalization “events” – IMF programs, capital account openings, entries into preferential trade areas – to increases in trade deficits (Soloaga & Winters 2001; Evrensel 2002; Hutchison & Noy 2003; Chinn & Ito 2005; Mody & Saravia 2006). It is widely acknowledged that “one of the main motivations behind the push towards the international financial integration of less developed countries has been to accelerate their growth by attracting foreign capital” (Gourinchas & Jeanne 2003: 1). Since that implies trade deficits, the current study is more than an intellectual curiosity about the North–South divide – it has direct relevance for the evaluation of programs that rest upon the belief that the capital flows which finance trade deficits produce developmental benefits in poor countries.

56 10 11

12

13

14

15

16

17 18 19 20

21

22

Bruce E. Moon For doubts concerning the beneficial effects of trade liberalization, see Rodrik (2001). As Calderon et al. (2002: 1) note, “This lack of cross-country empirical evidence is surprising given the fact that the position of the current account is typically used as one of the main leading indicators for future behavior of an economy and is part of the everyday decision process of policy makers.” For example, Heyne (1983: 705): “It might even happen that, if I make my position unmistakably clear, some critic will be able to rescue me from error, and show me why those who speak of trade deficits are in fact making sense, not wandering in darkness and confusion. It isn’t only backwoods editors or small-town journalists who treat deficits in merchandise trade as if they were more than they are.” While acknowledging that such flows can become excessive, there is little basis within this theoretical tradition for considering that eventuality to be common, and few grounds on which to identify the point at which it may occur. The sole exception is found in empirical analyses that have fixated on the sustainability of imbalances and their propensity to end in explosive crises, such as those that marked the late 1990s. However, these studies have not considered the desirability of flows below crisis-inducing magnitudes. A methodological point follows: the presence of investor confidence (or credit-worthiness) contains information that should independently predict future growth, which could bias upward the estimate of the actual effect of capital inflows. Solow’s absolute convergence hypothesis has generally given way to conditional convergence in later work. Conditional convergence implies that a country or a region is converging to its own steady state while the unconditional convergence implies that all countries or regions are converging to a common steady state. In growth regressions, both have been modeled as a negative coefficient on a logged GDP per capita term. The concern is hardly new: 2,000 years ago Emperor Tiberius, concerned over Rome’s increasingly adverse balance of payments with India, complained that “the ladies and their baubles are transferring our money to foreigners.” For a brief history of the mercantilist view, see Moon (forthcoming: ch. 2). More broadly, we can see this view as an internationalization of Shakespeare’s aphorism from Hamlet: “Neither a borrower nor a lender be, for loan oft loses both itself and friend, and borrowing dulls the edge of husbandry.” Keynes’s concerns about the impacts of trade deficits led him to propose an International Clearing Union that would operate on the problem by also pressuring surplus countries to act to remove the imbalance. Of course, Tornell and Lane (1998) remind us that trade surpluses also permit (bad) policies that could not otherwise arise. “Among economic topics on which a large gap exists between theory and empirical evidence, financial integration is certainly well ranked” (Kharroubi 2003: 1). The return must also be transformed smoothly to a form that facilitates repatriation of profits or repayment of loans, a concern that places currency markets and exchange rates front and center. Deficit nations are said to be consuming future goods in the present, suggesting that measures of the current income and welfare of such countries systematically overstate their actual performance (Moon, forthcoming: ch. 4). Such concerns for trade deficits were once a central element of the mercantilist trade policies that dominated all nations’ thinking for centuries (Moon 2000). However, with the advent of liberal theory trade, deficits were consigned to the role of a temporary phantasm by Hume’s species flow adjustment mechanism. Even after changes in national and international monetary systems have revealed Hume’s argument to be simplistic and anachronistic, trade deficits fit awkwardly into liberal theory, and have been considered unworthy of serious study, except in the rare circumstances that they became unmanageable. This schema uses the “analytic presentation” of the categories of the IMF Balance of Payments Manual 5 (BPM 5), adopted in 1993, which renames the old capital account familiar to many readers as the “financial account.” The new “capital account” consists largely of capital transfers, but also non-produced, non-financial assets (e.g., patents). The former are conceptual cousins of the current transfers included in the current account; indeed, until BPM 5 current and capital transfers were not distinguished. The “analytic” presentation removes those transactions, which are


23 24

25

26

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more properly viewed as “exceptional finance,” from the standard accounts and groups them together. Oil exporters are excluded from all the analyses reported in this chapter. The figures are even more dramatic for low-income countries: transfers contribute 10.1 percent of GDP and exceptional finance another 3.9 percent, whereas capital flows amount to only 3.4 percent, mostly in the form of loans. See also Cohen (1997) and Elbadawi et al. (1997) on debt studies, and Dixon and Boswell (1996), Milesi-Ferretti et al. (1996, 1998), Demirguc-Kunt et al. (1998), Bosworth and Collins (1999), Soto (2000), Loungani and Razin (2001), Razin (2002), Gourinchas and Jeanne (2003), Brooks (2004), and Lauretti and Postiglione (2005) on capital flow studies. Other variables often found significant in other growth regressions lacked adequate data over the time period of this study (secondary school enrollments, change in real exchange rate, change in terms of trade, and institutional quality). Each was included in analyses not reported due to the small and biased sample that resulted, but the major conclusions were not affected. Other potential variables were found not to be significant when included in the estimated model (financial depth, global interest rates, oil prices, and inflation rates).

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Cohen, Daniel & Portes, Richard (2004) “Dealing with Destabilizing ‘Market Discipline.’ ” NBER Working Paper 10533 (May). Comin, Diego, Hobijn, Bart, & Rovito, Emilie (2006) “Five Facts You Need to Know about Technology Conversion.” NBER Working Paper 11928 (January). Cooper, Richard (1971) “Currency Devaluation in Developing Countries,” Essays in International Finance 86. Princeton, NJ: Princeton University. Deaton, Angus (2006) “Global Patterns of Income and Health: Facts, Interpretations, and Policies.” NBER Working Paper 12735 (December). Demirguc-Kunt, Asli & Detragiache, Enrica (1998) “The Determinants of Banking Crises in Developed and Developing Countries.” IMF Staff Papers 45(1): 81– 109. Dicken, Peter (2003) Global Shift: Transforming the World Economy. Beverly Hills, CA: Sage. Dixon, William J. & Boswell, Terry (1996) “Dependency, Disarticulation, and Denominator Effects: Another Look at Foreign Capital Penetration,” American Journal of Sociology 102(2): 543–62. Djankov, Simeon, McLiesh, Caralee, & Shleifer, Andrei (2005) “Private Credit in 129 Countries.” NBER Working Paper 11078 (January). Eichengreen, Barry (1992) “Trends and Cycles in Foreign Lending.” In Capital Flows and the World Economy, edited by Horst Siebert. Kiel: World Institute of Economics. Eichengreen, Barry & Mussa, Michael (1998) “Capital Account Liberalization: Theoretical and Practical Aspects.” International Monetary Fund Occasional Paper No. 172. Elbadawi, Ibrahim, Ndulu, Benno, & Ndungu, Njuguna (1997) “Debt Overhang and Economic Growth in Sub-Saharan Africa.” In External Finance for LowIncome Countries, edited by Zubair Iqbal and Ravi Kanbur. Washington, DC: IMF Institute. Evrensel, Ayse Y. (2002) “Effectiveness of IMF-supported Stabilization Programs in Developing Countries,” Journal of International Money and Finance 21: 565– 87. Fischer, Stanley (1998) “Capital Account Liberalization and the Role of the IMF,” Princeton Essays in International Finance 207: 1–10. Fisher, Eric O. (1990) “Sustainable Balance of Trade Deficits,” Journal of Monetary Economics 25: 411–30. Frankel, Jeffrey A. (2005) “Mundell-Fleming Lecture: Contractionary Currency Crashes in Developing Countries,” IMF Staff Papers 52(2): 149–92. Frankel, J. A. & Romer, D. (1999) “Does Trade Cause Growth?” American Economic Review 89(3): 379–99. Gavin, Michael, Hausmann, Ricardo & Leiderman, Leonardo (1995) “The Macroeconomics of Capital Flows to Latin America: Experience and Policy Issues.” Working Paper No. 310, Washington, DC: Interamerican Development Bank. Genberg, Hans & Swoboda, Alexander (1992) “Savings, Investment, and the Current Account,” Scandinavian Journal of Economics 94(2): 347–66.

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Gerschenkron, Alexander (1952) “Economic Backwardness in Historical Perspective.” In The Progress of Underdeveloped Areas, edited by Bert F.Hoselitz. Chicago, IL: University of Chicago Press. Gould, Erica R. (2004) “Distributional Considerations in the Design of IMF Conditionality Programs.” Paper prepared for the Annual Meeting of the American Political Science Association. Gourinchas, Pierre-Olivier & Jeanne, Olivier (2003) “The Elusive Gains from International Financial Integration.” NBER Working Paper 9684 (May). Hattori, Tomohisa (2001) “Reconceptualizing Foreign Aid,” Review of International Political Economy 8(4): 633–60. Hauck, William R. & Wacziarg, Romain (2004) “A Monte Carlo Study of Growth Regressions.” NBER Technical Working Paper 296 (January). Hausmann, Ricardo, Panizza, Ugo, & Stein, Ernesto (2001) “Why do Countries Float the Way They Float?” Journal of Development Economics 56: 387–417. Heyne, Paul (1983) “Do Trade Deficits Matter?” Cato Journal 3: 705–16. Hook, Steven W. (1995) National Interest and Foreign Aid. Boulder, CO: Lynne Rienner. Hutchison, Michael M. & Noy, Ilan (2003) “Macroeconomic Effects of IMF-sponsored Programs in Latin America: Output Costs, Program Recidivism and the Vicious Cycle of Failed Stabilizations,” Journal of International Money and Finance 22: 991–1014. IMF (International Monetary Fund) (2005a) IMF Committee on Balance of Payments Statistics Annual Report. IMF (International Monetary Fund) (2005b) World Economic Outlook: Globalization and External Imbalances. April 2005. Inglehart, Ronald (1997) Modernization and Post-Modernization: Cultural, Economic, and Political Change in 43 Societies. Princeton, NJ: Princeton University Press. Islam, Nazrul (1995) “Growth Empirics: A Panel Data Approach,” Quarterly Journal of Economics 110(4): 1127–70. Kaminsky, G., Lizondo, S., & Reinhart, C. M. (1997) “Leading Indicators of Currency Crises.” IMF Working Paper 97/79. Kaminsky, Graciela L., Reinhart, Carmen M., & Végh, Carlos A. (2004) “When it Rains, it Pours: Procyclical Capital Flows and Macroeconomic Policies.” NBER Working Paper 10780 (September). Kenny, Charles (2005) “Why Are We Worried about Income? Nearly Everything that Matters is Converging,” World Development 33(1): 1–19. Kharroubi, Enisse (2003) “Financial Integration: For Whom can it be a Wrong Medicine?” Banque de France (September) processed. http://web.univpau.fr/ RECHERCHE/CATT/colloques/REFI/PDF/kharroubi.pdf Kozul-Wright, Richard & Rayment, Paul (2004) “Globalization Reloaded: An UNCTAD Perspective.” United Nations Conference on Trade and Development Discussion Paper No. 167 (January). Kraay, Aart & Nehru, Vikram (2004) “When is External Debt Sustainable?” World Bank Policy Research Working Paper 3200 (February).


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Chapter 4 New Configuration or Reconfiguration? Conflict in North–South Energy Trade Relations Paul A. Williams

Introduction As energy prices in the early twenty-first century approached figures last seen during the 1970s “oil shocks,” confrontation between developed consumer countries and less developed supplier countries gained renewed saliency. However, while optimists view price-related pressures leading to conflict as cyclical and transitory, incapable of overwhelming larger North–South trade complementarities, others emphasize the stronger momentum of rising demand and declining supply trends, conjoined with asymmetrical Northern military power, in the direction of “resource wars.” The optimistic case rests largely on the parallel logics of the “product cycle” and “obsolescing bargain” (Vernon 1971). As learning and technological diffusion lower barriers to entry and earlier expropriations have positive demonstration effects (Kobrin 1985), host governments seek to curtail multinational corporations’ (MNC) role in their commodity sectors. While the former concept implies that increased supply from developing countries’ national oil companies (NOCs) would lower prices, thereby reinforcing the need for MNCs’ marketing skills and limiting seizure of their “upstream” assets, countervailing demand pressures allowed NOCs to find their own marketing outlets (Vernon 1977, 1980). Recent accounts point to how signal events, such as the 1982 Debt Crisis, tilted power back to MNCs, which have availed themselves of official Northern institutions to guarantee FDI (foreign direct investment) prerogatives (Mommer 2002; Hildyard & Muttitt 2006; Holland 2006a, 2006b). Thus, the post-2003 resurgence in “resource nationalism” seems anomalous. Nonetheless, this depiction of North–South energy-centric conflict omits the incentives of Northern governments, representing consumer majorities, to use more


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coercion in countering supply manipulation and in preserving their economic latitude to sanction particular Southern exporters. The “resource wars” argument holds that Northern countries, notably the United States, are deploying force to ensure access to stable lower-priced imports (Klare 2002; Rutledge 2005; Hallinan 2006), partially in anticipation of post-2005 “peaks” in global oil and gas output (Darley 2004; Peters 2004; Deffeyes 2005). What remains puzzling, however, is that it was only after the 2003 Iraq War, thought by many to have been motivated by oil, that an incipient post-1998 seller’s market became full-blown, vesting greater economic power in Southern exporting states. Just as US counter-measures to the 1970s “energy crisis” were constrained, the probability of further “resource war” is reduced by US experiences in Iraq, leaving economic adjustment as the most viable alternative response. This chapter elucidates general patterns and types of North–South energy trade conflict pitting governments of less-developed host countries and their organizations against MNCs and major consumer-country governments. Based on the example of oil, it delineates the sociopolitical economy of the “energy trade cycle,” an analytical construct of a general oscillation between “buyers’ markets” and “sellers’ markets,” based not simply on the product cycle model, but also on realism, prospect theory, and constructivism. Realism is consistent with the assumption that host governments have greater incentives to keep prices high than Northern consumers have to suppress them, such that sellers’ markets advantage “offensive” actions by Southern states (to alter the status quo), inclusive of sanctioning selected consumer countries, yet it also concedes a higher likelihood of Northern “counter-offensives” to restore corporate privileges and compel increased or stable supply. Conversely, prospect theory highlights the leverage inhering in actions intended to avert losses, suggesting that buyers’ markets favor “defensive” actions by consumer governments (to defend the status quo), including deterrence of forcible supply cuts by, and the application of sanctions against, select producer governments, but allows that this market structure also stimulates efforts by producer states to prevent price collapses. Finally, a constructivist approach stresses the role of historical events in shifting the relative weight of legitimacy attached to different modes of behavior constituting “offensive” or “defensive” actions. Whereas post-World War II decolonization gradually elevated the importance of, and prevented the erosion of, Southern state sovereignty over territorial resources, later experiences with high inflation rates, commodity price fluctuations, excessive military spending, and “resource” conflict, as well as corruption and NOC underinvestment in the energy sector, produced a different social knowledge that resource wealth can be a “curse” for its holders and should be held in trust for the benefit of Third World populations (Ross 1999; Le Billon 2001; Birdsall & Subramanian 2004; Pegg 2006). The larger insight from constructivism is that divergent social understandings may account for Southern and Northern state behaviors that persist despite unfavorably altered material conditions. The chapter proceeds as follows. The first part surveys the aforementioned theoretical frameworks of inquiry into North–South energy-centric relations. It then

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delineates the “trade cycle” for oil and explicates how its different phases (i.e., buyer’s vs. seller’s market conditions) account both for the occurrence of certain North–South energy-related conflict types as well as limitations on the representative conflict strategies in question. The last section explicitly addresses whether recent North–South energy trade problems represent a basic “reconfiguration” of passing divisions reminiscent of the 1970s or augur a “new configuration” of intensifying conflict between established Northern importer–consumers and growing Southern producer–consumers before considering policy implications and directions for further research.

Theoretical Frameworks Realism Energy-related trade conflict lends itself to realist analysis in important respects. According to this school of thought, the anarchic structure of the international system, in which states remain final arbiters of the ends they pursue and the means they apply, makes conflict endemic. States define the national interest to encompass both a necessary concern for survival, coterminous with territorial sovereignty, and an irreducible minimum of power to ensure survival (Waltz 1979). As states remain uncertain about each other’s intentions, their pursuit of power, even if only for security, results in a collective security dilemma (Jervis 1978). Realism divides on whether states maximize security or power. Defensive realists posit that security can be attained at less than maximum power, notably when defensive means are advantageous to deploy relative to offensive ones (Glaser 1997). Offensive realists counter that, because all capabilities are inherently offensive, states seek security through hegemony, leading to counterbalancing and war (Mearsheimer 2001: 21, 34–6). Hegemony is particularly problematic for lesser powers because the preponderance of power that encompasses singular control over material resources to stabilize the world economy (Keohane 1984: 32) also permits predatory behavior (Snidal 1985: 585–90). For example, the Carter Doctrine, articulating a US prerogative to use force in the Persian Gulf region, is as consistent with denying territorial assets to competitors (Pape 2005: 30–2) as with preserving the egress of petroleum for the sake of the world economy. Structural realists relegate specific motives behind conflict to the unit level of analysis. However, as neoclassical realists contend (Layne 2006: 10–11) and Waltz (1959: 232–4) admits, specific conflicts have “efficient” causes. Chronic material scarcity, not just scarcity of security inhering in anarchy, provides a key impetus for human aggression (Thayer 2000). Others root the drive to acquire more resources in the expanding consumption requirements of modern economies (Klare 2002: 5–15) or, more particularly, in the American capitalist economy and its corollary “Open Door” requirements (Layne 2006: 7–10). If resource shortages seem dire enough, major importing–consuming states face heightened motives to use military force to secure desired supplies against perceived sources of blockage. For the United States, after the “peaking” of protected

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domestic oil output and loss of spare capacity in 1970 (Mommer 2002: 152), incentives grew to ensure flows of Persian Gulf oil. The American government, then trying to extricate troops from Vietnam and facing Soviet expansion of its Mediterranean naval fleet and increased shipments of materiel to its Arab allies, responded to the 1973–4 Arab oil embargo in part by threats of force (Knorr 1976: 236–7), backed by non-activated contingency plans for seizing Gulf oilfields (Alvarez 2004). The collapse of the Soviet counterbalance (Mitchell et al. 2001: 183–4) and a technological shift in favor of offensive means (Orme 1997–8) established the “permissive” context within which forecasts of rising imports of Persian Gulf oil (Klare 2004: 74–8; Rutledge 2005: 141–4) and a post-2005 “peaking” in global oil output could be construed as precipitating the 1990–1 Gulf War and 2003 Iraq invasion (Peters 2004; Deffeyes 2005: 9). Conversely, other realist accounts do stress the ultima ratio nature of great-power interventions. Foreign military occupations must surmount large logistical hurdles and the nationalist resistance (Jervis 1978: 194–5; Le Billon 2001: 570) that prevails in many resource-rich areas of the Third World and that is bolstered by Southern commodity exporters’ dependence on high revenues. As suggested by Kuwaiti threats in early 1974 to detonate oil installations in the event of invasion (Knorr 1976: 236), or by the notion that the value of capturing “upstream” assets can be degraded by otherwise weaker opponents’ efforts to obstruct “downstream” flows (Ross 2004: 350), geographical advantages may favor smaller defenders (Glaser 1997: 189).

Prospect theory Developed to explain anomalies in expected-utility models of decision making, prospect theory serves as an adjunct to realism in accounting for core powers’ persistence in losing military ventures on the periphery, the relative efficacy of deterrence over compellance, preventive war and crisis escalation. It argues that deviations from optimal behavior stem from “reference point bias” (i.e., relating choices to salient expectations), “loss aversion” (striving to avoid losses rather than seeking gains), the “endowment effect” (overvaluing existing possessions), “renormalization” (assimilating new acquisitions faster than perceived losses), and “risk acceptance” (taking risks to avoid certain losses, not to achieve probable gains) (Jervis 1992, 2004; Levy 1997). The relevance of this theory in the issue area of North–South energy relations relates to the supposition that, because leverage devolves on those facing losses, relatively more gradual emergence and longer duration of alternating phases in the “trade cycle” tend to favor “defensive” actions by the side attempting to limit reductions in their existing benefits. For example, multinational corporations’ unilateral lowering of the “posted prices” of their Persian Gulf oil supplies during the buyer’s market conditions of the late 1950s galvanized formation of the Organization of Petroleum Exporting Countries (OPEC) in 1960 (Skeet 1988: 17). Over the following decade, only at a gradual rate often lagging behind demand growth, did OPEC members obtain larger shares of returns from energy-sector FDI. Curtailment


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of demand and export revenues after the 1982 and 1998 market slumps stimulated OPEC coordination with non-OPEC exporters in restricting output to shore up weak prices (Skeet 1988: 201; Mitchell et al. 2001: 166–9). Conversely, as a buyer’s market had become entrenched by the late 1980s, perceptions of Iraq’s “offensive” endeavor to raises prices via attacking Kuwait and expectations that it would sever more oil trade by invading Saudi Arabia and the UAE (United Arab Emirates) led to Northern states’ “defensive” use of force (Copeland 1996: 40). Identifying reference points by which motivations for seemingly risky behavior can be ascertained remains problematic. Incentives exist to manipulate frames of reference to “make an identical situation seem different in terms of people being in the realm of gains in one and being in the realm of losses in the other” (Jervis 2004: 172), as when OPEC countries linked their own post-August 1971 demands for higher “posted prices” and subsequent inflation to the destabilizing efforts of earlier US suspension of the dollar’s convertibility into gold and its falling value (Penrose 1976: 44, 46–7; Skeet 1988: 71–2; Venn 2002: 164). Moreover, motivated biases exist to evade responsibility for adverse changes. Attribution theory, implying that actors tend to blame conflict on others and take credit for successful cooperation (Jervis 1992: 192), can account for Northern officials’ view that sellers’ markets reflect deliberate exporter (in)action, rather than rising consumer demand (Venn 2002: 161). Exporters have obverse incentives to attribute high prices to inadequate consumer-country refining capacity, which also limits Chinese crude imports (Ratliff 2006), or to speculative activity that accompanies supply disruptions (Alster 2006).

Social constructivism Determining the relative defensibility of conflictive actions requires insight into how historical experiences shape the institutional prevalence of specific reference points. Constructivist approaches argue that material resources acquire particular meanings only within larger social structures, which also consist of intersubjective knowledge and practices that (re)produce these structures (Wendt 1995: 73). Some constructivists concede “ontological priority” to “brute facts” over institutional ones (Wendt 1999: 110), but others maintain that “[o]nly because of socially defined use do . . . raw materials constitute resources, which are also assets when they are constituted in reference to immediate ends, or interests” (Onuf 1989: 285). Post-World War II decolonization juxtaposed Southern states’ developmental aspirations against foreign corporate FDI and operational control in their hydrocarbon sectors. Undergirded by rights to seek international arbitration of disputes, the concession system granted sovereign states rents, comprising royalties and taxes, while allowing companies to find, produce, and sell oil, thus consolidating tacit cartel power, outside of the US market, in seven major MNCs (Mommer 2002: 99, 118–25, 161). The norms and rules of the issue area were reproduced by corporate cartel practices of denying export markets for countries, such as Mexico (1938) and Iran (1951), which unilaterally exerted greater sovereignty over their oil industries (Kobrin 1985: 20–3).

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The cartelization of the market, as well as corporate derogration of social norms, as perceived in Esso’s (later Exxon’s) unilateral reduction in crude oil’s “posted price,” then the basis for calculating Gulf Arab governments’ fiscal take, inspired the 1960 creation of OPEC, “a nationalist response to an economic colonialism . . . expressed in the concession system” (Skeet 1988: 222). OPEC’s charter text decried “the attitude . . . adopted by the Oil Companies in effecting price modification” and exhorted member states to try to restore earlier pricing conditions and to stabilize prices through output regulation (ibid.: 246). The latter goal signalled an inchoate shared understanding among its founding members that OPEC should be a cartel, like that of the seven majors abroad and the Interstate Oil Compact Commission in the United States (Mommer 2002: 134–5). OPEC’s evident defensiveness lay in its inability to alter the extant buyer’s market. Decades later, Southern control of territorial resources had become the prevailing norm. Despite evidence of flagging sectoral productivity, key exporting states have tightly guarded power over resource production (Marcel 2006: 3), such that Western scholars were surprised that Venezuela would assent to the insertion of outside arbitration provisos into joint-venture contracts (Mommer 2002: 216–17). Norway was instrumental in getting the 1994 Energy Charter Treaty, intended to open access to Russian reserves and pipelines, to include “Sovereignty over Energy Resources” (ibid.: 176–7), and NAFTA (North American Free Trade Agreement) leaves Mexico’s oil sector nationalized (Rutledge 2005: 99). Before the 2003 Iraq invasion, coalition authorities were admonished to minimize “risks of popular resentment of US neocolonialism leading to violence in the region” (Marcel & Mitchell 2003: 5). The “resource curse” concept (Ross 1999) forms the kernel of an alternative discourse, but using it to justify reversion to pre-1970s norms, rather than to guide efforts to organize transparent collection and popular distribution of revenue in post-conflict locales (Le Billon 2005: 699; Hayes & Victor 2006: 347–8), risks more conflict stemming from resistance to perceived sovereignty losses.

Sociopolitical Economy of the Energy “Trade Cycle” In energy trade relations, scarcity of crucial raw materials relative to demand periodically tilts leverage to the South. The related “product cycle” and “obsolescing bargain” concepts (Vernon 1971, 1980) partially elucidate this shift. While formal sovereignty and the locational immobility of extraction form latent bases for Southern state power, high risks and fixed costs of exploratory mining operations compared to uncertain returns require concessions on royalty, taxation, and ownership to entice MNCs to develop raw materials. However, with technological diffusion, falling output costs, and rising dependence on energy revenues, as exemplified by the fact that OPEC’s petroleum sales totalled nearly one-quarter of collective GDP and over four-fifths of its aggregate export revenue by 1970 (OPEC 2005: 13–15), host governments have firmer incentives to modify the terms of FDI (Vernon 1971: 48). In the product cycle, falling costs of technology and expertise lower prices by multiplying the number of producers, including Southern national oil companies


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(NOCs). Consequently, only the residual need for MNCs’ marketing access would curb encroachment on their “upstream” assets (Vernon 1980: 521–2). Yet, Northern economies and oil demand expanded in the 1960s, and US imports of Middle East petroleum increased sharply after 1970 to compensate for the fall in domestic output and loss of spare capacity (Darmstadter & Landsberg 1976; Mommer 2002: 63–4, 151). This allowed OPEC members to enlarge the extent of their control over “upstream” assets, turning their own NOCs into direct suppliers to oil MNCs and other large industrial consumers (Wilkins 1976: 174; Vernon 1977: 85–6), a trend underscored by the Saudi oil minister’s July 1971 remark that, “due to the coming energy shortages, a seller’s market had arrived” (Penrose 1976: 45). The obsolescing bargain implies, however, that softer markets redound to MNCs’ advantage (Vernon 1980: 523). Until the Arab oil embargo following the 1973 October War, energy conflict was mainly confined to “upstream” property holders (i.e., producer governments versus MNCs). The embargo, by which MNCs were forced to conform to Arab states’ destination restrictions, but could still blunt the boycott’s discriminatory intent by re-routing non-Arab supplies, further propelled NOC “participation” in MNC operations, already identified as a key aim in the UN’s 1962 resolution on Permanent Sovereignty over Natural Resources and OPEC’s 1968 Declaratory Policy (Mommer 2002: 146–60), to the logical end of nationalization (Marcel 2006: 28–9). Between 1970 and 1980, OPEC NOCs’ average share of production increased from one-fifth to nearly four-fifths, while the majors’ fell from 72 to 17 percent (Venn 2002: 44–5). As the boycott did more harm via its broader impact on all consumers, i.e., by subtracting 5 million daily barrels during its initial two months and shrinking world oil trade by 14 percent (Stoubagh 1976: 180), it placed Southern states and Northern populations in direct opposition to each other. Thus, a “trade cycle” should also incorporate the role of consumer majorities in shaping Northern countries’ spectrum of responses to energy scarcity. Consumer countries that are asymmetrically vulnerable in an interdependent relationship face costlier response options (Keohane & Nye 2001: 9–17), regardless of whether these entail adjustment, burden sharing, or force. A seller’s energy market advantages “offensive” action and that by producing–exporting states. Given oil’s low shortterm demand elasticity (Rutledge 2005: 156), boycott-induced price hikes, which cost OECD (Organization for Economic Cooperation and Development) countries $40–50 billion during 1973–4 (Skeet 1988: 103) while boosting OPEC’s “petrodollar” yield from $6 billion to $107 billion during 1973–80, worsened inflation, yet consumption did not fully fall off until energy-market deregulation allowed the 1979–80 oil shock to register its full recessionary impact (Venn 2002: 138–9, 156–7). The near-term context of a seller’s market exacerbated by deliberate cutbacks or cutoffs may even present more salient countervailing imperatives for Northern governments to craft side deals and pursue group “dialogue” with key source states. Oil-consuming states embarked on this path during and after the 1973–4 Arab boycott (Skeet 1988: 106,118–21), similar to European responses to Russian Gazprom’s gas cutoff in January 2006 (Socor 2006c). Consumer countries in hege-

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monic position, such as the United States, have the greatest latitude to engage in “counteroffensive” action. America could even afford “inaction” in the form of price controls, which muffled signals to reduce post-1973 US consumption and inflationary pressures (Ikenberry 1988: 100–1). The political clout of the US dollar has arguably exempted American consumers either from having to pay higher real prices for oil imports, via currency devaluation (Venn 2002: 160–1), or from having to factor the costs of projected military power into oil prices (Baker 2002: 144). Conversely, other OECD countries, even oil producer Britain, have levied higher end-use taxes (Baker 2002: 147; Mommer 2002: 191–2). Nonetheless, the hegemonic consumer country qua hegemon has not entirely eschewed belligerency. West Europe and Japan had vastly more exposed positions, yet the United States was not immune to the effects of boycott, as Arab countries were supplying 20–25 percent of its oil imports, which accounted for one-third of its oil, during June–October 1973 (Darmstadter & Landsberg 1976: 21–2). US threats and voiced desires for OPEC’s “demise” fed a shared understanding among OPEC’s members that even consumer adjustment efforts, like the November 1974 creation of the International Energy Agency (IEA), were confrontational (Skeet 1988: 124–8). The IEA created mechanisms to coordinate stockpiling and release of supplies to cover OECD-country shortages, but with MNCs having lost OPECarea concessions, consumer-country activity, expressed in the IEA’s 1976 Long Term Program, centered mainly on altering market structure by lowering demand and increasing non-OPEC oil purchases (Keohane 1984: 217–40; Mommer 2002: 170–1). In the longer term, as the “obsolescing bargaining” model would expect, MNCs expanded to locations where offsetting compensation enticed them to undertake the costlier effort of extracting oil volumes that are smaller, more fragmented, deeper offshore, contained in landlocked areas, or more difficult to process. Private firms increased offshore drilling, which grew to one-third of oil production in 1995 (Khadduri 1997: 136), extracted oil and built ancillary pipelines from the Caspian Sea region (Jaffe 2000: 150–2), and ventured into heavy-oil drilling in Canada and Venezuela (Deffeyes 2005: 99–108). These endeavors, in conjuction with recession, conservation, and development of alternative energy sources, reduced energy demand by 3 percent during 1979–83, with oil losing 10 percent of energy demand and OPEC losing the same share of total oil demand after 1973 (Mitchell et al. 2001: 178). By 1983, OPEC had been relegated to “residual supplier” of a shrinking gap between falling demand and rising non-OPEC “baseload supply” (Stevens 1997: 20), pressuring OPEC members to violate quotas and some even to court foreign investors (Mommer 2002: 172). Later, concern in major consuming countries shifted to inadequate investment in state-run hydrocarbon firms. Because export revenue expansion tends to ratchet state spending on non-oil-sector items upwards more than revenue shrinkage compels budget cutbacks, producer–exporter governments have high discount rates, preferring to sell more oil than leaving it in the ground (Adelman 1995: 33). The idea that resource wealth brings the “curse” of skewed economic development, authoritarianism, wasteful spending, rising external debt, and corruption (Ross 1999; Pegg


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2006) is consonant with observations that rent-seeking dictators arm heavily for repression and warfare (Le Billon 2001: 566–8). Exemplifying this phenomenon, Iraq used its military capabilities and proximity to the world’s largest oil reserves to threaten enforcement of (neighbors’) OPEC quotas in the 1980s buyer’s market (Adelman 1995: 290), although the same market conditions impelled major consumer countries to oppose Iraq, while also easing the economic burden, notably for the United States, of later sanctioning Iraq and certain other oil producers (Mitchell et al. 2001: 201). However, as the “trade cycle” ascended again, rising dependence on Persian Gulf oil more sharply underscored the implications of underfunded OPEC oil sectors. Finding Gulf opportunities to invest in and book new reserves blocked by NOC monopolies or Northern government-led sanctions, energy MNCs turned to the Caspian region, but, with the historical experience of earlier expropriations, sought Northern official guarantees of the integrity of FDI contracts via a pro-corporate “non-proprietorial fiscal regime” (Mommer 2002: 169) and a host of related devices, notably production-sharing agreements (PSAs), by which host regimes partake of profits only after MNC costs, which can be inflated, are recouped (Rutledge 2005: 184–5; Hildyard & Muttitt 2006: 54–5). However, Russian opposition to the ECT (Energy Charter Treaty) (Mommer 2002: 179), downward revision of estimates of Caspian reserves (Rutledge 2005: 117–19), and US-based MNCs’ dissatisfaction with sanctions (Klare 2004: 95–110; Holland 2006a) undergirded support for regime change elsewhere. American consumer and corporate interests dovetailed in the post-1999 seller’s market. The latter was partially attributed to OPEC actions (NEPDG 2001: 1–12; Venn 2002: 58–60), and suspicions festered that the 2003 Iraq invasion represented an offensive to grab oil and weaken OPEC, backed by evidence that coalition oversight would envelop Iraq into the fold of neoliberal governance centered on PSAs backed by arbitration provisos (Hildyard & Muttitt 2006: 55–7). However, subnational violence in post-invasion Iraq not only reduced US capacity to respond to turmoil in other oil-producing regions, but also boosted prices, thereby helping to reverse liberalization of hydrocarbon FDI everywhere in the South (Mouawad 2006), weaken Northern trade sanctions, and lend greater credence to Southern threats to manipulate levels and destinations of supply (Stroupe 2006a, 2006b).

Market Influences on Types of North–South Energy Trade Conflict The construct discussed also provides a map of North–South energy conflicts that demarcate respective phases (i.e., buyer’s market and seller’s market) of the “trade cycle.” That is, different energy market conditions correspond to salient types of conflictive actions, while movement along the cycle renders these actions more or less viable. Here, seven ideal types of conflict, initiated by Southern producer– exporters against Northern importing–consuming countries or vice versa, occur under fluctuating market conditions that also determine the “defensive” or “offensive” quality of the initial action (a slightly different use of this distinction is found in Ikenberry 1988: 16–19). While resource-related conflict also occurs among

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Table 4.1 North–South energy trade conflict Buyer’s

MARKET STRUCTURE

Seller’s

ASSET/REVENUE ACCRUAL Producer– Exporter

Cartel creation and coordinated output cuts to prop up prices

Tax and royalty hikes and expropriation to increase share of higher asset values ENERGY CUTOFFS Sanctions on select consumers

INITIATOR (target is the other actor)

ASSET/REVENUE DENIAL Importer– Consumer

Sanctions on select exporters

Augmentation of MNC energy FDI privileges

ENERGY WAR Deterrence of forcible supply cuts

Compellance of supply increases or stabilization

exporters as well as among consumers, interest in the above North–South juxtaposition reflects major consuming countries’ more salient need and greater potential ability to acquire supplies from the South. Thus, while the “trade cycle” strongly influences the issue-area balance of power, the consuming majors can more easily avail themselves of extraneous sources of counter-leverage to mitigate “sensitivity” and “vulnerability” interdependence (Keohane & Nye 2001: 9–17). Energy “war” indicates threat or use of force by importing–consuming governments to challenge producer–exporter actions having adverse effects on customerpreferred terms of energy trade. As the lower-left quadrant of Table 4.1 indicates, a defensive “energy war” is executed in a buyer’s market to forestall likely or impending supply cutoffs (see also Copeland 1996). If overall power is also less unbalanced (in favor of Northern countries), efficacy of action is related to collective unity of relevant consuming states in the face of probable resistance by the target state or non-state opposition originating from within that state’s territorial boundaries. Initiated by the United States and its allies Britain and France, the 1990–1 Desert Shield/Storm campaign is an exemplary counter-response to one target state’s (Iraq’s) forcible effort to resolve an inter-producer competition over market share that was suppressing already low prices.


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While the cases involve less overtly belligerent uses of force, this category might be broadened to cover such actions as multilateral Persian Gulf naval protection, by the United States, Britain, France, and the Soviet Union, of Kuwaiti tanker traffic from Iranian attack during the 1980s Iran–Iraq War as well as US military cooperation with amenable producer–exporter regimes, especially the FSU (former Soviet Union) Caspian Sea littoral states of Azerbaijan and Kazakhstan. The latter countries numbered among those exporters registering uninterrupted average annual output increases since 1993 and 1995, respectively, even during the 1998 market downturn (BP 2006: 9), but continued to rely commensurably more on FDI and official Northern assistance to surmount their multiple disadvantages of landlocked position, the late 1990s’ soft market, and (indirect target) Russia’s desire to constrict non-Russian routes of egress for Central Asian oil and gas (Klare 2002: 1–5, 88–92). In addition, a buyer’s market enables Northern actors, aligned with corporate and/or consumer interests, to undertake a defensive type of “asset/revenue denial” (also found in lower-left quadrant) – i.e., banning FDI in the energy sectors of sanctioned exporters and the latters’ global energy sales. A key factor heightening sanctions’ salient “defensive” quality, other than proximity to hostile acts by sanctioned regimes, consists of concomitant enlargement of market share for the remaining non-sanctioned producer–exporters (Luft 2005b). Their respective governments ordered or otherwise condoned boycotts by American or British MNCs of nationalized Mexican and Iranian oil in the late 1930s and early 1950s, respectively (Wilkins 1976: 164–5; Kobrin 1985: 20–3; Mommer 2002: 147), and during various overlapping periods commencing in the 1980s, the US government spearheaded sanctions against Iraq and other countries, such as Iran, Libya, Myanmar, and Sudan (Mitchell et al. 2001: 201). As prices rise, turning the “trade cycle” oscillation upwards, the discipline associated with more nearly universal corporate and/or consumer willingness not to buy sanctioned assets and goods weakens. The US government failed in 1972–3 to prevent Libya from selling oil “stolen” via successive expropriations of British Petroleum assets and those of various American firms (Wilkins 1976: 169). Although a roughly 30 percent increase in mean annual oil prices between 1994 and 1996 (BP 2006: 31) cannot explain US Congressional enactment of the 1995 Iran–Libya Sanctions Act, it may account in part for the growing proclivity of various actors, notably foreign investors, to circumvent UN sanctions against Iraq in the 1990–6 period, as well as the gradual lifting of oil-export restrictions during the 1996–2003 Oil for Food Program (see also Le Billon 2005: 692–4). As the vitiation of sanctions accelerated with the post-2001 strengthening of a seller’s market, burgeoning importers China, and, to a much lesser extent, India, began to apply a perceived “neo-mercantilist” strategy of proffering FDI, concessional loans, politico-diplomatic support, and arms supplies to secure equity positions in, and purchases from, various foreign energy sectors, even those of sanctioned countries like Iran, Myanmar, and Sudan (Shuja 2005; Sichor 2005; Perlez 2006). On the other hand, the near-term context of a buyer’s market exacerbated by more extreme price drops should stimulate and favor a defensive strategy of “asset/

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revenue accrual” (upper-left quadrant) – in short, actions launched by producer– exporters to organize cartels and coordinate output cuts, which diffusely target all consumer countries. Landmark cases include OPEC’s 1960 formation as well as the more widely coordinated and disciplined efforts to cap collective supply after the 1982, 1986, and 1998 price downturns and later the 1986 and 1998 price collapses (Skeet 1988: 201; Mitchell et al. 2001: 166–9). As issue-area power now favors consumers, barriers to effective action depend on an unexpected degree of interproducer quota adherence. In practice, unity has either been enforced by a “swing” producer – an exporter like Saudi Arabia that holds sufficient reserves and spare production capacity to allow it to pursue tactical overproduction in the strategic interest of reining in cheaters – or by one exporter’s use of force against another (Adelman 1995: 290; Claes 2001: 201–37). Sustained ascent of the “trade cycle,” reflecting real shortages or entrenched perceptions of greater scarcity trends, advantages “offensive” action in general, but offers relatively more leverage to producing–exporting states (thus inverting the buyer’s market situation). An overall balance of power that is less favorable to Northern countries further supports the issue-area configuration of power. Consistent with the “obsolescing bargain,” the type of “asset/revenue accrual” indicated in the upper-right quadrant, encompassing tax and royalty hikes, retroactive financial penalties on MNCs, and enlargement of national control over FDI to the extent of outright asset expropriation, reallocates more revenue and property to sovereign exporters. Moreover, these moves widen latitude to sanction consumer countries via “energy cuts” (see below). Notable events include 1970–1 actions by Algeria and Libya. They could act forcefully sooner because their MNCs tended to be less diversified, European demand for light crude had been rising, amplified by reduced flow of Persian Gulf oil after the Suez Canal’s closure during the 1967 Arab oil embargo (Skeet 1988: 40, 46), and US and French officials preferred to avoid a response that would push Algeria into the Soviet orbit (Marcel 2006: 26). In 1970, aided by sabotage of the Saudi Tapline that crossed Syria to the Mediterranean, Libya halted operations of Shell and various US-based firms in order to compel them to raise posted prices and pay retroactive revenue, which was equivalent to increasing their tax rate to 55 percent, while Algeria nationalized Shell and Phillips assets and raised the tax-reference price on French output by 37 percent (Penrose 1976: 41; Skeet 1988: 58–61). “Demonstration” effects of these successes resulted in OPEC using the threat of embargo to foist price and tax increases on MNCs, in the 1971 Teheran and Tripoli agreements (Kobrin 1985: 24–5). Yet, “leapfrogging” by exporting sovereigns to better each other’s terms ratcheted up pressures on MNCs, resulting in Algeria’s 1971 seizure of majority control of French firms, Libya’s expropriation of British Petroleum’s and other firms’ assets prior to October 1973, and OPEC member efforts to enlarge NOC “participation” in MNC operations, from 25 percent before the embargo to 60 percent in 1974, on the way to full nationalization (Skeet 1988: 69–81; Marcel 2006: 28–9). Analogous events recurred after 2003. Average prices of crude oil in OECD countries, increasing by one-fifth between 2001 and 2003, rose by at least four-fifths


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between 2003 and 2005, while prices in the 2002–5 period increased by 42 percent for Japan’s LNG (liquefied natural gas) and by nearly four-fifths for EU-area gas (BP 2006: 31), creating incentives for reversing more liberal FDI terms of the 1990s. Following the 2004 levy of back tax claims on private domestic firm Yukos that led to the forced sale of its assets to state-run Rosneft, Russian agencies leveled charges of ecological damage and cost overruns, widely regarded as tools for asserting national control, against the TNK–BP Kovykta gas venture, Total’s Kharyaga oil holding, the ExxonMobil-led Sakhalin I oil project, and Russia’s only PSA, the Sakhalin II project, then comprising only of Shell, Mitsui, and Mitsubishi (MT 2004; Platts 2006b). Within a similar timeframe, Venezuela raised royalty rates on the heavy-oil joint ventures of ExxonMobil, Chevron, BP, ConocoPhillips, Total, and Statoil, and tax rates on private conventional-oil pumping, assessed back tax penalties on foreign firms, and enlarged the state’s shares in their various projects (AP 2006; DJN 2006a; Forero 2006b). Less likely candidate sovereigns to tighten the terms of energy transactions include landlocked countries. Nonetheless, in May 2006, after previously hiking royalty rates, Bolivia, backed by a dispatch of troops along with Venezuelan-assisted tax auditors to foreign plants and by estimates that costs to largest purchaser Brazil’s Petrobras of LNG imports could quadruple those of lost Bolivian supplies, demanded four-fifths of gas output and revenues generated by Petrobras, British Gas, Total, and Spain’s Repsol, complementing this ultimatum by seeking to raise Petrobras’s contracted price (Forero 2006a; Platts 2006a, 2006c; Reel & Mufson 2006). Chad’s leadership employed back tax assessments and threatened Chevron and Malaysia’s Petronas with expulsion in the context of seeking a 60 percent share in the Chad– Cameroon Pipeline (WSJE 2006), proceeds of which have been held in trust in exchange for World Bank loans (Polgreen 2006). Related to the offensive type of “asset/revenue accrual” (also in the upper-right quadrant), “energy cutoffs” work to the extent that targeted consumer governments lack access to alternatives. In a position akin to that of Arab exporters in 1973, Gazprom- and Transneft-dominated trans-Russian pipeline networks, while affording a near monopsony on Central Asia’s westward energy exports (Olcott 2006: 224–8; Socor 2006a), have served as levers, in the cases of Azerbaijan, Georgia, and the Ukraine, to impose steep gas price hikes on hitherto subsidized FSU importers (an effort undergirded by higher European market prices) in retaliation for perceived anti-Russian acts, or to procure “downstream” assets elsewhere in Europe (Torbakov 2005, 2006; Kramer 2006a; Marples 2006; Socor 2006b). Gazprom has demanded European rates on supplies to Azerbaijan in order to undercut the latter’s shipment of its own gas through the South Caucasus Pipeline, which can be used to assist transit country Georgia and provide a trans-Turkey alternative conduit to Europe (Ismailzade 2006; Socor 2006d). To counter any West European consumer-country resistance to Gazprom’s efforts to acquire distribution networks in Europe, Russia has raised the prospect of diverting more energy supplies to Asia (Kramer 2006b). While most oil is traded fungibly, numerous aspects of the growing energy trade with Asia could potentially establish a conducive basis for targeted supply squeezes. Venezuela’s concessionary and bartered energy sales to favored actors, its building

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of a pipeline to Colombia’s Pacific coast, and cooperation in enhancing China’s capacity to refine heavier and sour crudes (DJN 2005; Hallinan 2006; Tu 2006) lend more credence to Venezuelan – and, in terms of the latter category of action, occasional Canadian – calls to sell more oil to China (Brinkley 2005; Luft 2005a). Other than affiliated “neo-mercantilist” and “resource nationalist” trends, factors based on a seller’s market that may restore pre-1973 levels of market inflexibility, making targeted diversions or cuts more feasible, include (Asian) expansion in the volume of long-term contracts for energy imports and shifts to non-dollar-denominated transactions (Pape 2005: 42; Rutledge 2005: 144; Stroupe 2006a, 2006b). However, to the extent that these trends constrict the scope of the open market, they raise the probability of a more offensive type of “energy war” (lower-right quadrant) by importing countries seeking to compel sovereign exporters to increase or stabilize supply (this may also involve forcing Southern exporters to relinquish control over reserves to Northern firms, as indicated in offensive “asset/revenue denial” below). Actions of this type presuppose an offsetting imbalance of overall power in favor of consumer countries, so coercion may be countered only by potential subnational resistance in the targeted state. Operation Iraq Liberation in 2003 approximates an executed example of this type of action, in contrast to dormant US plans to occupy Gulf states during the 1973 embargo. Evidence for defining this endeavor as an offensive “energy war” is decidedly mixed, but it merits closer analysis. While motives related to Iraq’s resource base cannot be conclusively disentangled from each other or from other factors, and, if existing, were more likely aimed at facilitating corporate activities, a consumeroriented concern cannot be precluded entirely. The conjoined post-1999 contributions of OPEC output restraints and Chinese demand growth led to a seller’s market – prices fluctuated but rose by 93 percent over the 1998–2002 period (BP 2006: 31), yet trends in Iraq’s annual output, which increased slightly on average over the same period, should have attenuated this market structure. However, while average annual output and US-bound exports in the first three years after the invasion were less than under the Oil for Food Program, a fact attributable to unabated infrastructural sabotage, cross-monthly deviations in output and exports decreased in the post-invasion period (Williams 2006: 1078). Nonetheless, while preparations for invasion promoted expectations of future glut, resistance to occupation served to reinforce the inchoate seller’s market and may even have directly encouraged and enabled strategies consonant with “asset/revenue accrual.” The offensive form of “asset/revenue denial” encompasses corporate efforts to increase and guarantee FDI values and may work in tandem with “energy war.” Examples of this include specific endeavors to create a wider space for the PSA form of FDI in Iraq itself (Holland 2006a, 2006b), but it could extend to include resourcesector FDI backed by larger consumer-oriented Southern governments like China or Brazil. It is likely to encounter obstacles resembling those facing energy-centric “warfare,” primarily low-level opposition to privatization, its effects on revenue distribution, and corporate symbols of alien presence that forces stoppages of energy output or exports through violence against foreign installations and personnel, as in Bolivia, Ecuador, Iraq, Nigeria, Pakistan, or Saudi Arabia (Economist 2004;


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Niazi 2005; Timmons 2005; AFP 2006; DJN 2006b; Marquardt 2006; Yardley 2006).

Cyclical Patterns and Secular Trends in North–South Energy Trade Conflict The previous discussion lends itself to postulating that North–South energy trade conflict experienced after 2003 matches a cyclical and temporary “reconfiguration” of divisions reminiscent of the 1970s “oil shocks.” This may also extend to encompass the future of long-distance LNG transport centered on present and potential exporting areas, such as Algeria, Egypt, Indonesia, Iran, Nigeria, Qatar, Russia, Trinidad, and Venezuela. While spreading risk and covering the high fixed costs of this undertaking favors initial North–South cooperation, little in the history of the oil and piped-gas trades guarantees against the recurring conflict typical of mature markets, where a “gas-OPEC” and a swing producer like Qatar could act to set prices (Jaffe & Soligo 2006). Nonetheless, the view of trade conflict patterns in terms of “reconfiguration” suggests that seller’s-market-related tensions will not permanently supersede basic economic complementarities. Conversely, more pessimistic standpoints posit a “new configuration” of intensifying North–South conflict in the context of supply depletion and rising consumption by Southern exporters. Some hold that cumulative non-OPEC production of conventional oil, and possibly gas, are nearing “peaks” or maxima (Darley 2004; Peters 2004; Deffeyes 2005). Even the largest Persian Gulf onshore fields may be maturing (Luft 2003; Simmons 2005), and OPEC data show average daily crude output totals from Venezuela, Kuwait, Iran, Indonesia, Iraq, and Saudi Arabia having reached respective maxima in 1970, 1972, 1974, 1977, 1979, and 1980 (OPEC 2005: 53–62). Indeed, given concern for wasteful practices, including gas flaring, in which MNC operators seemed complicit, OPEC social knowledge of the developmental role of its oil supplies has contained at least a kernal of expressed interest in conservation (Skeet 1988: 49, 126; Simmons 2005: 49–52; Marcel 2006: 26–7). Thus, the 1970s production cuts that Northern governments were likely to have construed as strategic (Skeet 1988: 50–1) may have reflected real geophysical strains (Simmons 2005: 52). NOCs withhold field-level data (Platts 2005), magnifying uncertainty over whether proven reserves could be enlarged by new FDI (Maugeri 2006: 152–155). This obscurity does not contradict the “resource curse” assumption that officials have fewer incentives to invest in state-run energy sectors, nor is it inconsistent with motives to forestall precautionary consumer shifts to alternatives. In the case of Russia, for example, subsidized domestic consumption requirements may have deprived Gazprom of needed revenues to replace reserves as well as worsened the domestic shortages that were externalized to Ukraine in early 2006 (Victor 2006). Warnings of impending supply downturns are legion, but if exporting states ratchet up consumption levels, conflict-moderating North–South complementaries could diminish in the face of inter-consumer rivalries. This is presaged in the

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example of China, which became a net oil importer in 1993 and imported just under half of its total supply in 2004, intensifying competition for supplies (Zweig & Jianhai 2005). However, if energy revenues successfully promote economic diversification, major Southern states would most readily be able to consume more of their own output (Peters 2004: 198–201). Revenues of over US$1.3 trillion and $400 billion, respectively, for OPEC and Russia since 1998 (PIN 2006), instead of being as heavily recycled in the Northern banking sector as in the 1970s (Porter 2005), are also supporting oil stabilization funds, external debt retirement, currency reserve accumulation, and domestic business growth (Aris 2002; Mouawad 2005). While OPEC’s share of world refined products consumption rose only slightly between 1973 and 2003, average OPEC products consumption as a fraction of its total crude output rose from 3 percent to over one-fifth (OPEC 2005: 23, 29–31). OPEC members and Russia also consume most of their natural gas output, which may supply over 50 percent of the total Arab energy market by 2015 for environmental reasons (ENA 2005). Policy implications associated with the optimistic and pessimistic scenarios diverge. Optimistic depictions of the energy “trade cycle” imply a tractably smooth pattern of oscillations, indicating that market conditions, which favor disparate degrees of conflict, modes of action, and relevant initiating actors, tend to be selfcorrecting, but less susceptible to purposive counter-action (Ikenberry 1988), including unilateral exercises of military coercion. By contrast, Malthusian perspectives see an increasingly pronounced volatility in the “trade cycle,” reflecting a convergence of falling supply and rising demand trajectories that can be corrected only by more costly consumer-government responses, as suggested by the Iraq invasion or by recurring American appeals for a “Manhattan Project” to achieve energy independence (Skeet 1988: 117; Layne 2006: 189), and as demonstrated by the Brazilian military government’s shepherding in the 1970s of what is now the world’s premier ethanol fuel production base (Martines-Filho et al. 2006). The account here suggests directions for future research. For one, it necessitates more precise clarification of the antecedent conditions determining where specific countries are located along the North–South spectrum (i.e., depending on the circumstances, countries like Canada, Norway, and Russia are analytically akin to “Southern” exporting sovereigns, while typically Southern states like Brazil, China, and India might identify more closely with “Northern” corporate and consumption interests). Moreover, the framework laid out here does not address whether, and the extent to which, certain actions associated with given market structures lead to conflict because both sides understand that the actions aim to alter the status quo (which also favors other subsidiary actions by one side or the other) or because the changed status quo permits the pursuit, for unrelated ends, of action that itself engenders conflict (i.e., consumer governments may oppose those price rises that allow enemy regimes to better arm themselves). Finally, in suggesting that “buyers’ markets” favor “defensive” actions, while “sellers’ markets” favor “offensive” ones, the treatment here does not fully specify whether the relevant property of the action hinges on motives or means, or whether, and to what extent, the proximity of response to market change also defines the “defensive” or “offensive” quality of


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motives behind this response (e.g., defensively motivated actors cannot necessarily abjure the use of offensive force). Thus, we need more precise methods of determining, operationalizing, and measuring strength of motive as well as differentiating it from advantageousness of means.

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Levy, J. (1997) “Prospect Theory, Rational Choice, and International Relations,” International Studies Quarterly 41: 87–112. Luft, G. (2003) “How Much Oil Does Iraq Have?” Iraq Memo 16: [http://www. brookings.edu/views/op-ed/fellows/luft20030512.htm]. Luft, G. (2005a) “In Search of Crude China Goes to the Americas,” Energy Security, January 18: [http://www.iags.org/n0118041.htm] Luft, G. (2005b) “Reconstructing Iraq: Bringing Iraq’s Economy Back Online,” The Middle East Quarterly 7: [http://www.meforum.org/article/736]. Marcel, V. (2006) Oil Titans: National Oil Companies in the Middle East. London: Chatham House and Washington, DC: Brookings Institution. Marcel, V. & Mitchell, J. V. (2003) “Iraq’s Oil Tomorrow”: [http://www. chathamhouse.org.uk/pdf/research/sdp/Tomorow.pdf]. Marples, D. (2006) “Lukashenka Seeks New Allies to End the Russian Gas Impasse,” Eurasia Daily Monitor, November 29: [http://jamestown.org/edm/article. php?article_id=2371685]. Marquardt, E. (2006) “The Niger Delta Insurgency and Its Threat to Energy Security,” Terrorism Monitor 4: 3–6: [http://www.jamestown.org/terrorism/news/ uploads/TM_004_016.pdf]. Martines-Filho, J., Burnquist, H. L., & Vian, C. E. F. (2006) “Bioenergy and the Rise of Sugarcane-Based Ethanol in Brazil,” Choices: The Magazine of Food, Farm and Resource Issues 21: 91–6. Maugeri, L. (2006) “Two Cheers for Expensive Oil,” Foreign Affairs 85: 149–61. Mearsheimer, J. J. (2001) The Tragedy of Great Power Politics. New York & London: W. W. Norton. Mitchell, J., Morita, K., Selley, N., & Stern, J. (2001) The New Economy of Oil: Impacts on Business, Geopolitics and Society. London: Earthscan Publications. Mommer, B. (2002) Global Oil and the Nation State. Oxford: Oxford University Press. Mouawad, J. (2005) “Saudi Arabia Looks Past Oil in Attempt to Diversify,” New York Times, December 13: [http://www.nytimes.com/2005/12/13/business/ worldbusiness/13saudiecon.htm]. Last accessed December 13, 2005. Mouawad, J. (2006) “Once Marginal, Now Kings of the World,” New York Times, April 23: [http://www.nytimes.com/2006/04/23/weekinreview/23mouawad.html]. Last accessed April 23, 2006. MT (Moscow Times) (2004) “The Dismantling of Russian Oil Giant Yukos,” Alexander’s Gas & Oil Connections, November 11: [http://www.gasandoil.com/ goc/company/cnr44550.htm]. NEPDG (National Energy Policy Development Group) (2001) National Energy Policy. Washington, DC: US Government Printing Office. [http://www. whitehouse.gov/energy/National-Energy-Policy.pdf]. Niazi, T. (2005) “Gwadar: China’s Naval Outpost on the Indian Ocean,” ChinaBrief 5: 6–8: [http://www.jamestown.org/images/pdf/cb_005_004.pdf]. Olcott, Martha Brill (2006) “International Gas Trade in Central Asia: Turkmenistan, Iran, Russia, and Afghanistan.” In Natural Gas and Geopolitics: From 1970 to


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Part II Problems of Development


Chapter 5 Virtuous or Vicious Cycle? Human Rights, Trade, and Development Robert G. Blanton and Shannon Lindsey Blanton

With the rapid increase in global trade over the past few decades, greater attention has been paid to the potential linkages between the international economy and human rights. This is particularly evident in the developing world. For example, following a UN mandate, the Office of the United Nations High Commissioner for Human Rights (OHCHR) has begun analyzing state policies on trade and investment with the goal of promoting fairer trade that achieves greater respect for human rights. In the broader area of development, the OHCHR now emphasizes a rightsbased approach that seeks to integrate international human rights norms and standards into the operational policies and processes of development. Human rights issues, development, and the role of state and international oversight are also being debated in global forums such as the World Bank, the International Monetary Fund (IMF) and the World Trade Organization (WTO), where critics challenge that not enough is being done to protect human rights. Yet it is not just international organizations that are interested in the relationship between trade and human rights. Among human rights activists, a burgeoning grassroots “spotlight” regime has arisen whereby corporate activities are scrutinized and corporate complicity in human rights abuses is aired publicly (Spar 1998). In tandem with these developments, the issue of human rights has received greater emphasis by multinational firms themselves, as evidenced by widespread establishment of corporate social responsibility (CSR) policies (Vogel 2005). Within the US policy-making community, there is also the implicit assumption, reflected in the “Washington Consensus,” that globalization in general, and international trade in particular, will improve human rights as it helps countries to develop. These issues have also been assessed by a growing body of academic literature. Some studies have assessed the impact of economic phenomena such as trade


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openness, FDI (foreign direct investment), and foreign aid on human rights conditions (Apodaca 2001; Richards et al. 2001; Milner 2002; Harrelson-Stephens & Callaway 2003). Others have reversed the causal arrow, focusing on the impact of human rights on trade (Blanton & Blanton 2001) and FDI (Feng 2001; Blanton & Blanton 2006, 2007). Building upon extant research in the area, we examine the reciprocal linkages that may exist between trade and human rights. Specifically, using a simultaneous equation approach, we assess the relationship between trade openness and human rights for the years 1980 to 2003.

Human Rights and Trade: A Virtuous Cycle? Along the lines of the liberal perspective, openness to international trade is “the elixir to the economic, social, and political woes facing many states” (HarrelsonStephens & Callaway 2003: 143). This is particularly true within the developing world, where active engagement with the global economic order is commonly viewed as a central element of a development strategy. Gains from trade, it is argued, help produce broad-based improvements throughout the society, including increased respect for human rights. Moreover, there are reasons to expect that the positive relationship between trade openness and human rights is “mutually reinforcing” (Wolf 2005: 11), as countries that respect human rights are better suited to actively participate in the global trading order. Extant literature posits two primary ways in which trade openness encourages respect for human rights. First, economic and technological spillovers, a byproduct of participation in the global marketplace, facilitate the formation of a middle class (Richards et al. 2001; Milner 2002). As has long been noted, the emergence of an educated and active middle class is a key component for development (Lipset 1959). With regard to human rights, the middle class is increasingly likely to demand respect for personal rights from their government and to hold the state accountable when such rights are violated (Clark & Clark 1993; Richards et al. 2001). Thus the societal changes brought about by trade openness serve to ameliorate human rights. Involvement in the global trading order also reinforces other norms and practices conducive to respect for human rights. Domestically, a commitment to free trade facilitates the development of a “market culture” within a society – including the rule of law, honoring of contracts, limited state intervention, and the peaceful settlement of disputes. Respect for such rights is strongly related to respect for individual rights. Successful market relations require greater transparency and access to information (Blanton & Blanton 2006; see also Mousseau 2003). States who value such openness are thus less able to conceal repressive actions. As posited by Wolf (2005: 25): “[I]t is no accident that commercial societies came to consider freedom of thought and expression of great value.” On a systemic level, integration into the global marketplace connotes integration into the global human rights regime, which includes the broad body of international human rights provisions as well as the less formal “spotlight” regime (Spar 1998).

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There are a great many treaties that address respect for human rights, such as the United Nations Declaration of Human Rights, as well as other provisions that deal with narrower facets of these rights, including economic and social rights, equitable treatment of women, as well as corporate responsibility for human rights.1 Moreover, many international organizations and NGOs monitor human rights issues throughout the world and publicize, or “spotlight,” government and corporate abuses of these rights (see Elliot & Freeman 2001; Vogel 2005). Given the global nature of information flows, actors are increasingly unable to conceal their actions from this “spotlight.” Though this human rights regime has no formal enforcement mechanism, there have been several visible cases in which the “sanction of the market” (Spar 1998: 9) has punished economic actors for their involvement in repressive acts and practices.2 As states become more integrated into the global marketplace, they have an increased incentive to avoid such sanctions. Though few studies have explicitly traced the impact of human rights upon commercial ties, there are reasons to expect a reciprocal relationship between the two. First, an educated and active middle class – whose presence encourages respect for human rights – also connotes a higher quality of human capital within a polity. Simply put, states that respect the individual rights of their citizens are more likely to invest in their well-being, including education and health care (Blanton & Blanton 2007). Moreover, respect for human rights engendered by the aforementioned “market culture” further encourages creativity and entrepreneurship, or “citizen’s voice” (Pritchett & Kaufmann 1998) among the citizenry. Free of the fear of capricious government repression, citizens are more likely to lend their abilities to the domestic economy. The result is a more productive and motivated workforce with the skills increasingly required by the global marketplace (Blanton & Blanton 2007). Conversely, repression of human rights creates a risky environment for business. Economic actors seek to avoid unjust state intervention, whether in the form of corruption, capricious regulation, or nationalization. Yet a repressive state is by definition an interventionist one because it forcibly intrudes into the rights of its citizenry (Rao & Karnik 1994). As William Schulz (2001: 86) concludes, “the theft of property is merely the flip side of stealing political freedom: they both reflect disdain for law.” Along these lines, the influence of the “spotlight” regime would have similar implications for corporate risk. Economic actors seeking to avoid public relations problems, and potential loss of revenue, would be encouraged to seek out trading partners that do not violate international norms of human rights. Thus, to the extent that such potential risks factor into economic decisions, potential trading partners would be encouraged to do business with countries in which human rights are respected rather than repressed. Taken together, these studies suggest a mutually reinforcing relationship between trade openness and human rights. Trade openness contributes to societal changes conducive to respect for human rights, and also integrates a state into the global human rights regime. Conversely, respect for human rights enables states to better compete in the global trading order.

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Trade Openness and Human Rights: A Vicious Cycle? A considerable body of work, extending back to Lenin and the dependency literature (Frank 1967; Dos Santos 1970; see also Hymer 1971), contends that the global economic order has a corrosive effect upon many countries, leading them into a self-perpetuating cycle of poverty and repression. Rather than spurring the growth of a middle class, the global marketplace helps to bring about an environment conducive to the repression of human rights. Furthermore, the denial of human rights is rewarded by global markets, which view such repression as synonymous with lower factor costs and a stable labor force. From this perspective, trade is viewed as a fundamentally asymmetric exchange, leading to the accumulation of capital in the core states and continued exploitation and impoverishment of the periphery. Even if growth occurs in the South, it is not broad-based and equitable, but only serves the interests of elite segments of society (Evans 1979). Such growth does not encourage the development of a middle class. Rather, the resultant “structural bridgehead” (Galtung 1970) between core states and their elite counterparts in the periphery secures the exploitative status quo. Such a situation bodes poorly for human rights. As the status quo exploits many segments of society, the situation is ripe for some sort of collective response, from popular protests to violent regime change. For their part, elites in developing countries – and the state and corporate interests in developed ones – have vested interests in repressing such challenges. Indeed, history is replete with examples of reformist regimes that have been overthrown to maintain the status quo, including Arbenz in Guatemala and Allende in Chile. Moreover, there are noteworthy examples of countries that have violently repressed protests and movements that arose largely as a response to the dictates of the global marketplace, such as the 1989 “Caracazo” riots in Venezuela (Di John 2005) and Indonesia’s violent crackdown on student protests after the Asian financial crisis. Turning the causal arrow in the opposite direction, repression is viewed as a means to better enable countries to compete in this global marketplace. To potential traders, repressive countries connote a “favorable balance of class forces” (London & Ross 1995: 25), replete with low wages and a minimum of economically oriented disputes. Through repression of its populace, a developing state can thus increase its attractiveness as a stable, low-cost trading partner. Along similar lines, some Cold War-era studies noted the growth of “developmental dictatorships” such as Brazil and South Korea, and posited that a “trade-off” (Donnelly 1984) existed between respect for human rights and the pursuit of economic development. In this case, repression is seen as a short-term necessity for the elimination of potential obstacles to pro-growth policies, including openness to global trade. Thus there is reason to expect that a “vicious cycle” exists between trade and human rights. By exploiting many elements of society, particularly in the developing world, trade openness creates conditions conducive to the repression of human rights. Conversely, such repression is treated as an asset by trading partners who value “stability” and inexpensive labor no matter how they are gained.


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Research Design To empirically examine the relationship between trade and human rights, we use a cross-sectional dataset containing information for the years 1980–2003. We assess this relationship across all countries for which complete data are available in a given year.3 We use a simultaneous equation model – specifically, two-stage least squares regression – to account for reciprocal linkages (see Alvarez & Glasgow 2000; Blanton & Blanton 2007).

Key variables We use the Cingranelli–Richards (CIRI) Human Rights measure of government respect for physical integrity rights as our measure of human rights (Cingranelli & Richards 2006). This measure assesses the human rights practices of governments, and is based on a Mokken scale analysis of the level of respect of the government as indicated by four personal integrity rights: protection from torture, extrajudicial killings, disappearance, and political imprisonment. For our purposes, such a narrow measure of human rights is helpful in that it better differentiates respect for human rights from the institutional safeguards that accompany democratic governance, as well as the economic rights and welfare benefits that accompany economic development. The CIRI measure is derived from information about government respect for human rights in reports by the US State Department and Amnesty International. The level of respect is scaled from zero to eight, with zero indicating an absence of respect and eight representing widespread and indiscriminate government respect of all four personal integrity rights. Following analytic precedent (Milner 2002; Harrelson-Stephens & Callaway 2003), we measure trade in terms of trade openness. Trade openness is total trade (exports and imports) expressed as a percentage of a country’s gross domestic product.4 This measure is logged to correct for skewness.

Control variables In simultaneous-equation models, such as that used here, our key variables function as both independent and dependent variables. Thus our system of equations needs to account for the prospective determinants of both trade and human rights. Extant literature points to several economic, political, and geographic factors that likely influence trade openness. Economic development is likely to encourage trade, in that it represents the development of a “market society” (Mousseau 2003) as well as the economic resources to compete in the global economy. Market size also influences trade openness, as countries with large domestic markets are often less reliant on foreign trade (Keshk et al. 2004). Two other macroeconomic variables – foreign exchange reserves and private capital formation – also likely influence trade openness. Foreign exchange reserves indicate the ability of a state to keep its exchange rates steady. Such currency stability should shield the state from sudden fluctuations in foreign trade as well as obviate the need for externally imposed

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liberalization programs (Henisz & Mansfield 2006). We would thus expect it to be negatively related to trade openness. Private capital formation represents enhanced participation in the private sector and thus a business climate conducive to the establishment of global economic ties (Bende-Nabende & Slater 2003).5 Politically, there is reason to suspect that the regime type of a state influences trade openness. However, the particular direction of the relationship is ambiguous. Scholarship has found democracy to be positively related to dyadic trade (Bliss & Russett 1998; Mansfield et al. 2000). However, at the monadic level, the responsiveness of democratic regimes to the demands of their populace may translate into higher levels of trade protection, and hence less openness to international trade.6 A state’s institutional ties to the global economic order also likely affect trade. We thus control for membership in the World Trade Organization. Finally, as transport costs influence the ability of a country to participate in the global trading order – particularly in the developing world – we include a dummy variable for whether a state has coastal access.7 We also account for factors that influence government respect for human rights. Development likely influences human rights conditions, as developed countries are better able to provide for their populace and less likely to resort to repression (Davenport 1995). Though economic growth is generally included as a determinant of repression, there are contrasting expectations for the direction of the relationship. Growing economies may be better able to provide goods and services to a greater portion of their citizenry, which would decrease the need for repression. However, economic growth also increases the expectations of a society, which can increase the number of disaffected citizens. As a result, repression may be necessary to control the populace (Poe & Tate 1994). Regime type may also be related to government respect for human rights. Democratic institutions such as negotiation, compromise, mediation, and voting are conducive to the non-violent resolution of social conflict. However, transitional democracies may be more likely to repress human rights as competition between societal actors increases the likelihood of conflict (Poe & Tate 1994; Apodaca 2001).8 Population may also increase the chances of repression, as larger societies are likely to place a strain on governmental resources. Finally, armed conflict, whether external or internal, is likely related to repression, as states are more likely to forcibly control their population during times of conflict.9

Findings: a virtuous cycle? Results, shown in Table 5.1, depict a strong positive reciprocal relationship between trade and human rights.10 Human rights is significantly related to trade openness, with countries that respect human rights attracting greater levels of trade. Similarly, trade openness is significantly related to respect for human rights, with higher levels of global trade encouraging respect for human rights within a country. Moreover, the magnitude of this relationship is noteworthy – movement from across the full range of values on the CIRI index (from 0 to 8) is associated with an 8 percent increase in trade. These empirical results suggest that trade openness and respect for human rights interact in a “virtuous cycle” – countries that respect human rights


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Table 5.1 Human rights and trade1 Model 1 (DV = Trade) Physical integrity rights (CIRI) Trade openness GDP per capita Market size Private capital formation Foreign exchange reserves WTO membership Coast access GDP growth Democracy Population Internal conflict External conflict

Model 2 (DV = CIRI)

.054 (.027)** .197 −.190 .024 −.020 −.111 .108

(.025)** (.025)** (.003)** (.009)** (.052)** (.063)*

−.008 (.004)**

n = 2405 f = 16.53** r2 = .55

.876 (.429)** .441 (.106)**

.001 .086 −.168 −2.453 −.138

(.009) (.014)** (.113) (.295)** (.304)

n = 2405 f = 23.26** r2 = .51

1

Cell values are slope coefficients; robust (Huber–White) standard errors are in parentheses. * = significant at the .10 level (two-tailed test). ** = significant at the .05 level (two-tailed test).

are more likely to participate in the global marketplace, and such participation has a positive influence on human rights conditions within a state. Findings for the control variables largely reflect those of extant literature. As depicted by Model 1, we find development, measured in terms of GDP per capita, to be positively related to trade. This implies that wealthier countries tend to be more active in the global marketplace.11 As expected, market size is negatively related to trade openness. As shown by the significance of private capital formation, the business climate engendered by an active private sector is conducive to global trade. Conversely, foreign exchange reserves – the financial “buffer” from fluctuations in the global marketplace – are negatively related to trade openness. As for the political variables, we find a negative relationship between democracy and trade. Apparently, the increased responsiveness of democratic regimes to their populace translates into lower levels of trade openness. Thus, though democracies may be more likely to trade with one another (Bliss & Russett 1998), we do not find evidence that they are more open to the global marketplace as a whole. Somewhat surprisingly, WTO membership does not positively influence the level of participation in the global trading order. Apparently, institutional membership does not have a positive, independent impact upon trade openness above and beyond that of the other variables. Finally, our model shows that geography influences trade flows, as countries with coastal access are more open to the global trading order.

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As for the determinants of human rights, we find that – in addition to trade openness – development, measured in terms of GDP per capita, is positively and significantly related to respect for human rights. Thus, wealthier countries are better able – or inclined – to protect the personal rights of their populace. As shown by the significance of the democracy measure, the institutional safeguards of democratic governance translate into increased respect for personal rights. Finally, internal conflict is negatively, and significantly, related to lower levels of physical integrity rights. In addition to the significance of the relationship between human rights and trade, the relative impact of these variables upon each other merits discussion. Towards these ends, the slope coefficients in Table 5.1, as well as the standardized coefficients shown in Table 5.2, provide insights into the magnitude of the relationship between trade and human rights. As mentioned earlier, the slope coefficient for our human rights measure reveals that moving across the full range of variation in our measure of human rights – that is, going from a score of 0 to 8 on the CIRI index – is associated with an 8 percent increase in trade openness.12 This represents a significant shift in openness. For example, in Argentina, this would represent roughly an $8 billion increase in total trade volume in the year 2000. The impact of trade openness on human rights is particularly striking. Holding other factors constant, moving across the full range of the trade openness variable is associated with a 59 percent increase in personal integrity rights. Though countries obviously do not experience such drastic shifts in human rights or trade openness, these magnitudes do demonstrate that trade and human rights have a meaningful impact upon each other. The standardized coefficients, shown in Table 5.2, enable us to directly compare the slope coefficients within each model and thus assess the relative magnitude of

Table 5.2 Human rights and trade: variable magnitudes1 Model 1 (DV = Trade) Physical integrity rights (CIRI) Trade openness GDP per capita Market size Private capital formation Foreign exchange reserves WTO membership Coast access GDP growth Democracy Population Internal conflict External conflict 1

Model 2 (DV = CIRI)

.229 .421 −.660 .312 −.103 −.087 .081 −.108

.207 .222

n/a .269 n/a −.408 n/a

Figures are the standardized slope coefficients (beta weights) of significant independent variables.


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our key variables in relation to other variables within the model. For Model 1, the coefficients reveal that market size and development have the strongest relative impact upon trade openness. However, the impact of human rights (.229) is almost as strong as that of capital formation and stronger than the other macroeconomic variable, foreign exchange reserves. Moreover, its relative impact is greater than that of the other political factors. Examining the determinants of human rights, the coefficients for Model 2 reveal that the relative impact of trade openness, while a good deal less than that of internal conflict, is roughly equivalent to that of development and democracy. Again, these coefficients reveal that trade and human rights have a noteworthy impact upon each other comparable to that of other significant economic and political factors.

Conclusions and Implications Human rights issues have attained a place of prominence among many actors in the global economy, including states, NGOs, and corporations. Moreover, human rights concerns figure prominently on the agenda of organizations that address issues of development, including the UN, World Bank, and the IMF. Yet there are many facets of the relationship between human rights and the global economy that merit further empirical scrutiny. Towards this end, this study has examined the interactive relationship between respect for human rights and one of the most visible facets of the global economic order, international trade. Specifically, using a simultaneous equations model, we assess the reciprocal relationship between human rights conditions, measured in terms of personal integrity rights, and openness to international trade. We find a positive and significant relationship between human rights and trade – ceteris paribus, countries that respect human rights are more open to the global trade order, and increased trade openness is significantly related to improved levels of personal integrity rights. Our results thus support the liberal argument that trade openness encourages human rights, and corroborate extant empirical literature on this issue (Milner 2002; Harrelson-Stephens & Callaway 2003). Moreover, we find that the effect of trade openness on respect for human rights is roughly equivalent to that of other major determinants of human rights, such as income level and regime type. As for the impact of human rights upon trade, our findings further call into question the “conventional wisdom” that a “trade-off” exists between the protection of human rights and the ability of a country to actively participate in the global trading order.13 Rather, results indicate that countries that protect the rights of their populace are better able to participate in the global trading order. This study thus builds upon previous scholarship dealing with globalization and human rights by finding that a mutually reinforcing “virtuous cycle” exists between respect for human rights and openness to the global trading order.14 As the relationship between human rights and the global economy is particularly contentious within developing polities, we believe the findings of our study have implications for the global South. In particular, our results imply that it is possible for there to be a positive synergy between trade and human rights in countries

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seeking to develop. Though some “developmental dictatorships” (Donnelly 1984, 1999) experienced growth while repressing their societies, our results find no broadly based evidence that repressive countries are more successful in competing in the global economy. A new perspective on international legitimacy is evolving which can play an important role in facilitating and reinforcing the connection between trade, human rights, and development. As declared by the UN High Commission on Human Rights, “promoting and protecting one category of rights should therefore never exempt or excuse States from the promotion and protection of other rights” (see Donnelly 1999: 614). We believe that our findings bode well for these efforts to incorporate human rights into broader priorities of development – rather than fundamentally changing the role of human rights practices, such policies serve to further reinforce existing relationships between respect for such rights and the ability of a country to compete in the global trading order.

Notes 1 2 3 4

5

6

7

8

Key international provisions along these lines include the UN Convention on Social and Political Rights, the UN Convention on the Rights of Women, and the UN Global Compact. Notable examples include Shell in Nigeria, Nike in Indonesia, and Unocol in Myanmar (Spar 1998; Bray 1999; Vogel 2005). In all, there were complete data – for at least some of the country-years – for 136 countries. Data for the trade measures are obtained from the World Development Indicators databank (World Bank 2006), and are measured in millions of dollars (US). Unless indicated otherwise, all subsequent variables are also obtained from the World Bank. Development is measured in terms of GDP per capita, expressed in terms of purchasing power parity (PPP), and logged to correct for skewness. Market size is simply the total GDP of a country, again logged and expressed in terms of PPP. Foreign exchange reserves are measured in terms of the months of imports that they can finance. Private capital formation is measured as a percentage of total GDP. All data are obtained from the World Development Indicators (World Bank 2006). Though the linkage between democracy and trade openness has not been explicitly examined at the monadic level, Henisz and Mansfield (2006) find that democracies are more likely to restrict trade in response to higher levels of unemployment. Some mention should be made of two additional macroeconomic variables that are not included here due to missing data concerns. Unemployment likely affects trade openness as it creates a demand for the protection of domestic industries (Wallerstein 1987; Henisz & Mansfield 2006). Exchange rates also influence trade openness in that they influence the relative prices of imports and exports on the global marketplace. Unfortunately, data on these variables are incomplete, particularly within the developing world – inclusion of these variables decreased our number of observations by over 40 percent, with all of the dropped observations coming from outside of the OECD. We did, nonetheless, run alternative models with these variables. Results were consistent with those reported below. Drawn from the Polity IV database (Marshall & Jaggers 2000), our democracy variable is a composite index that assesses regime type in terms of the competitiveness and regulation of political participation, competitiveness and openness of executive recruitment, and the constraints on the chief executive. The composite index ranges from −10, which denotes a strongly autocratic government, to +10 for a strongly democratic one.

Human Rights, Trade, and Development 9

10

11

12

13 14

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As is the case with the trade equation, we use GDP per capita as our proxy for economic development. Economic growth is operationalized as the yearly percentage change in GDP. Population is simply the total population of a country, logged to correct for skewness. Data are obtained from the World Bank. Our measure of democracy is obtained from the Polity IV dataset, while data on internal and external conflict are drawn from Strand et al. (2003). Model 1 is a two-stage least squares model with human rights as the instrumented variable, while Model 2 uses trade openness as the instrumented variable. To control for autocorrelation, standard errors are clustered on each country. Yearly dummies (not shown) are used to account for time stationarity. We use a random-effects, as opposed to a fixed-effects, model as it is more useful for cross-nationally dominated panels (Beck & Katz 2001; see also Li & Resnick 2003; Blanton & Blanton 2007). Fixed-effects models, run as a robustness check, did not change the significance or direction of the key variables reported below. As some of the empirical literature on human rights focuses purely on developing states, we ran parallel analyses using only the sample of developing states, as well as with the smaller sample of low-income developing states. Results were consistent with those reported below. This figure is derived by multiplying the range of variation of the CIRI measure with the slope coefficient for human rights; then dividing their product by the range of the dependent variable (5.40). Along similar lines, Harms and Ursprung (2002) as well as Blanton and Blanton (2006) find that positive relationship between the respect for human rights and FDI inflows. Blanton and Blanton (2007) uncover a similar dynamic in the relationship between FDI and human rights.

References Alverez, R. M. & Glasgow, G. (2000) “Two-Stage Estimation of Nonrecursive Choice Models,” Political Analysis 8(1): 147–65. Apodaca, Clair (2001) “Global Economic Patterns and Personal Integrity Rights After the Cold War,” International Studies Quarterly 45: 587–602. Beck, Nathaniel & Katz, Jonathan (2001) “Throwing the Baby with the Bath Water: A Comment on Green, Kim and Yoon,” International Organization 55(2): 487–95. Bende-Nabende, Anthony & Slater, Jim (2003) “Private Capital Formation: Shortand Long-run Crowding-in (out) Effects in ASEAN, 1971–99,” Economics Bulletin 3: 1–16. Blanton, Robert & Blanton, Shannon Lindsey (2001) “Democracy, Human Rights, and US–Africa Trade,” International Interactions 27: 275–95. Blanton, Shannon Lindsey & Blanton, Robert (2006) “Human Rights and Foreign Direct Investment: A Two-Stage Analysis,” Business & Society 45: 464–85. Blanton, Shannon Lindsey & Blanton, Robert (2007) “What Attracts Foreign Investors? An Examination of Human Rights and Foreign Direct Investment,” Journal of Politics 69: 143–55. Bliss, Harry & Russett, Bruce (1998) “Democratic Trading Partners: The Liberal Connection, 1962–1989,” Journal of Politics 60: 1126–47. Bray, John (1999) “Petroleum and Human Rights: The New Frontiers of Debate,” Oil and Gas Journal 97: 65–9. Cingranelli, David & Richards, David (2006) The Cingranelli–Richards (CIRI) Human Rights Dataset. Available at: www.humanrightsdata.org.

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Clark, C. & Clark, J. (1993) “The Political Economy of Rapid Development in Taiwan,” Journal of Developing Societies 9: 198–211. Davenport, Christian (1995) “Multi-Dimensional Threat Perception and State Repression: An Inquiry into Why States Apply Negative Sanctions,” American Journal of Political Science 39: 683–713. Di John, Jonathan (2005) “Economic Liberalization, Political Stability and State Capacity in Venezuela,” International Political Science Review 25: 107– 24. Donnelly, Jack (1984) “Human Rights and Development: Complementary or Competing Concerns?” World Politics 36(1): 255–83. Donnelly, Jack (1999) “Human Rights, Democracy, and Development,” Human Rights Quarterly 21: 608–32. Dos Santos, Theotonio (1970) “The Structure of Dependence,” The American Economic Review 60: 231–6. Elliot, Kimberly Ann & Freeman, Richard (2001) “White Hats or Don Quixotes? Human Rights Vigilantes in the Global Economy.” NBER Working Paper No. 8102. Cambridge, MA: National Bureau of Economic Research. Evans, Peter (1979) Dependent Development. Princeton, NJ: Princeton University Press. Feng, Yi (2001) “Political Freedom, Political Instability, and Policy Uncertainty: A Study of Political Institutions and Private Investment in Developing Countries,” International Studies Quarterly 45: 271–94. Frank, Andre G. (1967) Capitalism and Underdevelopment in Latin America. New York: Monthly Review Press. Galtung, J. (1970) “A Structural Theory of Imperialism,” Journal of Peace Research 8: 81–119. Harms, P. & Ursprung, H. (2002) “Do Civil and Political Repression Really Boost Foreign Direct Investments?” Economic Inquiry 40: 651–63. Harrelson-Stephens, Julie & Callaway, Rhonda (2003) “Does Trade Openness Promote Security Rights in Developing Countries?” International Interactions 29: 143–58. Henisz, Witold & Mansfield, Edward (2006) “Votes and Vetoes: The Political Determinants of Commercial Openness,” International Studies Quarterly 50: 189–211. Hymer, Stephen (1971) “The Multinational Corporation and the Law of Uneven Development.” In Economics and World Order, edited by J. W. Bhagwati. New York: Macmillan. Keshk, Omar, Pollins, Brian, & Reuveny, Rafael (2004) “Trade Still Follows the Flag,” Journal of Politics 66: 1155–79. Li, Quan & Resnick, Adam L. (2003) “Reversal of Fortunes: Democratic Institutions and Foreign Direct Investment Inflows to Developing Countries,” International Organization 57(4): 175–211. Lipset, S. M. (1959) “Some Social Requisites of Democracy: Economic Development and Political Legitimacy,” American Political Science Review 48: 69–105.


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London, Bruce & Ross, Robert J. S. (1995) “The Political Sociology of Foreign Direct Investment,” International Journal of Comparative Sociology 36: 198– 219. Mansfield, Edward, Milner, Helen, & Rosendorff, Peter (2000) “Free to Trade: Democracies, Autocracies, and International Trade,” American Political Science Review 94: 305–22. Marshall, Monty & Jaggers, Keith (2000) Polity IV Project. Center for International Development and Conflict Management, University of Maryland. Available at http://www.cidcm.umd.edu/inscr/polity/. Milner, Wesley T. (2002) “Economic Globalization and Rights: An Empirical Analysis.” In Globalization and Human Rights, edited by Alison Brysk, pp. 77–97. Berkeley, CA: University of California Press. Mousseau, Michael (2003) “The Nexus of Market Society, Democratic Preferences, and Democratic Peace: Interdisciplinary Theory and Evidence,” International Studies Quarterly 47: 483–510. Poe, Steven C. & Tate, Neal (1994) “Repression of Human Rights to Personal Integrity in the 1980s: A Global Analysis,” American Political Science Review 88: 853–72. Pritchett, Lant & Kaufmann, Daniel (1998) “Civil Liberties, Democracy, and the Performance of Government Projects,” Finance and Development March: 26–9. Rao, M. J. Manohar & Karnik, Ajit (1994) “Economic Systems, Political Structures and Human Rights,” Bulletin of Economic Research 46: 147–70. Richards, David, Gelleny, R., & Sacko, D. (2001) “Money with a Mean Streak? Foreign Economic Penetration and Government Respect for Human Rights in Developing Countries,” International Studies Quarterly 45: 219–39. Schultz, William F. (2001) In Our Own Best Interest: How Defending Human Rights Benefits Us All. Boston, MA: Beacon Press. Spar, Debora (1998) “The Spotlight and the Bottom Line,” Foreign Affairs 77: 7–12. Strand, Håvard, Gleditsch, Nils P., & Wilhelmsen, L. (2003) Armed Conflict Dataset Codebook. Version 2.0. Available at: http://www.prio.no/cwp/ armedconflict/current/codebook_v2_0.pdf. Vogel, David (2005) The Market for Virtue. Washington, DC: Brookings Institution. Wallerstein, Michael (1987) “Unemployment, Collective Bargaining, and the Demand for Protection,” American Journal of Political Science 31: 729–52. Wolf, Martin (2005) Why Globalization Works. New Haven, CT: Yale University Press. World Bank (2006) World Development Indicators Online. Washington, DC: World Bank.

Chapter 6 Structural Adjustment, Development, and Democracy* Mark R. Brawley and Nicole Baerg

Why did structural adjustment programs (SAPs) administered by the IMF (International Monetary Fund) and World Bank fail so often? While different standards have been used to evaluate the impact of SAPs, almost everyone agrees they usually did not improve the country’s balance of payments significantly. SAPs were intended to improve the country’s ability to earn more through exports over the long run. Yet, SAPs were often unable to flip a country’s balance of payments from the negative to the positive. Moreover, in cases where SAPs succeeded economically (achieving a positive balance of payments), they have often done so only in the short run. Why has trade adjustment proved so difficult for these countries, even when they received substantial external support for the process, provided by international financial institutions (IFIs)? We provide an answer on two grounds. First, the economic models behind SAPs rest on unrealistic assumptions about the micro-level processes of trade adjustment. Second, these micro-level dynamics shaped the domestic politics of structural adjustment. Political opposition often made SAPs unsustainable. To explain variation in SAP performance, we turn to both economic and political variables. We employ a new model of the domestic distribution of the gains from trade to explain variation in SAPs’ performance across cases. The IFIs based SAPs on traditional models of trade; these models rest on particular assumptions about how adjustment proceeds. Rather than unpack the process, these models gloss over adjustment. The traditional economic models separate macroeconomic forces (such * Authors’ note: A version of this paper was presented at the International Studies Association Annual Convention in San Diego, USA, March 22–25, 2006. We would like to thank the Canadian Social Sciences and Humanities Research Council for funding.


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as trade) from microeconomic matters (such as unemployment). Political scientists or policy makers relying on traditional general equilibrium macroeconomic models unwittingly buy into a separation of foreign and domestic policy spheres. This has prevented us from connecting trade with other domestic issues that critically influenced SAPs’ performance. Worse, ignorance of the interrelationships between trade and the domestic political economy allowed SAPs to include elements that reduced the likelihood of the entire package’s success. SAPs failed to appreciate the uncertainties and risks inherent in the adjustment process. These risks shaped the behavior of domestic actors – adjustment failed whenever workers would not jump from one sector to another, or when farmers would not change the types of goods they produced. Risks also influenced the politics adjustment generated. The typical models we use in political economy often assume away the risks, thereby yielding unrealistic portraits of domestic actors’ preferences, because they are based on general equilibrium conditions (i.e., the assumption of full employment of all factors of production). These conditions locate all trade’s impact on factors’ rates of return. As a result, preferences on trade are expected to be crisp, clear, and consistent. Once we relax the general equilibrium conditions by introducing the possibility that factors of production may be unemployed (even temporarily), preferences become less clear. Uncertainty about adjustment’s impact produces risk, reshaping preferences and, as a consequence, altering politics. Where does this risk come from? Who is most affected? Did those groups have political voice? By answering these questions, we provide insight into why some SAPs succeeded while others failed. We rely on a model of the domestic distribution of the gains from trade that allows for some unemployment of factors of production to explain why risk arises during adjustment. Economists developed this model to connect the macroeconomic effects of trade with the microeconomic calculations domestic actors also make. It has several advantages over older perspectives. First, it tells us why some groups have ambiguous preferences on trade.1 That allows us to describe politics as fluid and dynamic. Traditional models depict preferences as fixed, making political analyses overly simplistic. Moreover, by describing preferences as immutable, the traditional models provide no guidance for crafting SAPs in ways that would bolster political support for adjustment. The approach we employ claims that some groups cannot be certain of trade liberalization’s impact on their income. This uncertainty can be reduced by coupling liberalization with specific domestic policy interventions. Such interventions sharpen preferences on trade by altering the risks actors face during adjustment. Since SAPs failed to take account of these risks, they included elements such as sharp reductions in government expenditures. With their hands tied, governments could not utilize policy tools necessary for making adjustment more effective economically or more palatable politically. Instead, SAPs often asked governments to implement policies that increased the risks these groups faced, thus fostering such opposition that the program could not be sustained over time. To explain the variation in SAPs’ success across cases, we view economic and political factors together. Debtor countries were all relatively poorly endowed with

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capital. We categorize debtors further, using population density as the proxy for their relative endowments of land and labor. One reason that factor endowments might shape these states’ performance rests in international opportunities. Given the relatively more open markets for industrial goods compared to agricultural items, we expect countries specializing in labor-intensive goods to have a greater probability of successfully expanding their exports compared to those attempting to specialize in land-intensive goods. Domestically, the model we employ tells us there were also fewer political or economic obstacles to slow adjustment in the labor-abundant countries. Put differently, for debtors well endowed with labor, a SAP should have promoted a shift in production toward more labor-intensive techniques, thus economically rewarding labor and having a greater probability of garnering popular support compared to trade adjustment in land-abundant countries. Even among labor-abundant countries, though, SAPs called for sacrifices that democratic regimes would have trouble implementing. The majority of debtors were relatively well endowed with land rather than labor. In these countries, protection rewarded labor. SAPs were bound to be unpopular. Democratic political institutions gave voice to this opposition. As noted above, specialization called for a shift into land-intensive goods – products not likely to penetrate protected Northern markets. This gives us a clear set of expectations for four categories of states that implemented SAPs. Non-democratic labor-abundant countries should have performed best, followed by democratic labor-abundant countries, then non-democratic land-abundant countries, with democratic landabundant countries doing the worst. To explain how we reach these expectations, we first describe the goals of SAPs, providing the logic for interpreting SAPs via trade adjustment. We then introduce the model we use, to lay out why we employ political and economic variables together. We then provide a broad statistical analysis, discuss the results, offer some policy recommendations, and suggest ways to build from those findings with further research.

The Reasoning behind Structural Adjustment Programs Structural adjustment programs were developed as part of the IFIs’ assistance to deeply indebted countries in the 1980s. Many economically developing countries found themselves unable to pay back dollar-denominated loans. Countries pursuing import-substitutions industrialization (ISI) faced enormous difficulties. They had invested dollar-denominated loans in production for domestic markets. They could not easily service their debts because they had not anticipated the rapid rise in the value of the US dollar, nor were they prepared to earn hard currencies by competing in world markets. These countries turned to the IFIs for help. Initially, neither the World Bank nor the IMF was equipped for this undertaking. Repayment was first treated as a form of balance of payments problem; put another way, the debtors needed to improve their balance of payments if they were to service their obligations. The IMF therefore offered financial assistance with conditions, just as it had under the Bretton Woods fixed exchange rate regime. These policies triggered additional new lending from private sources and friendly governments, on


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the understanding that the conditions imposed would improve the debtor’s balance of payments. The IMF’s initial lending relied on short-term instruments, and thus carried shortterm conditions. Fresh inflows of private lending ensured that the relationship between debtors and lenders remained intact, but there was no true solution to the actual problem, the debt itself. In several cases, the debtor’s balance of payments improved temporarily. Rarely did the debtor’s balance of payments position improve over the long run, however. To attain more consistent improvements in debtors’ balance of payments, the IMF (supported by the World Bank) began introducing conditions aimed at making significant, institutionalized changes in production. To capture the deep and lasting effect these conditions were intended to have, these arrangements were described as structural adjustment.

The Components of a Structural Adjustment Program The typical structural adjustment program consisted of five elements. First, the IFIs asked the debtor to liberalize tariffs. Second, they requested liberalization of domestic goods markets. Third, they asked the debtor to liberalize domestic factor markets. Fourth, they requested higher domestic taxes, to improve the debtor state’s fiscal position (since often the state itself held substantial debts). Fifth, they demanded government austerity. The first three policy recommendations were geared toward improving the country’s ability to export more goods and services while importing less, by improving the competitiveness of individual domestic firms. The last two policy recommendations were aimed at improving the state’s ability to service its own international debts. Tariff liberalization would end the protection of inefficient domestic producers. As a consequence of ISI strategies, many debtors had uncompetitive industrial sectors producing basic goods such as steel or cement. Protected behind tariff walls, these producers could charge prices for their goods above the international market price. This made it difficult for other domestic producers (who required basic goods as inputs to manufacture finished products) to compete with foreign firms. Tariff liberalization was meant to lead to more efficient allocation of domestic resources, allowing firms to purchase inputs at lower prices, and hopefully improve the competitiveness of firms more broadly. By becoming more competitive, domestic producers could maintain control of the domestic market (thereby reducing imports) and even capture larger export markets. Liberalization of domestic goods markets was meant to achieve the same goals. If there had been domestic policy interventions backing up ISI, such as subsidies or licensing schemes privileging certain producers, these would also have affected the competitiveness of other domestic firms. Liberalization of domestic factor markets was meant to ease adjustment by accelerating shifts in production toward the country’s comparative advantage. Liberalization of domestic factor markets was meant to ensure that factors of production could flow to the sectors intensively using the locally abundant factor of production. Relying on traditional general equilibrium models of trade, the IFIs

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believed that the chief obstacles to adjustment were artificial barriers in mobility which liberalization would remove. Liberalization equated directly to increased mobility of factors across sectors. Since the state itself had been a major borrower during the era when ISI strategies dominated, the state was directly responsible for making an often-large portion of the repayments. If tariffs had been earning the state revenues, then tariff liberalization would undercut the state’s ability to service debts. Even if liberalization did not harm the state’s fiscal position significantly, the state still needed new revenue streams to meet debt repayments. Increases in domestic taxes were therefore recommended, as were reductions in government expenditures. Austerity would ensure that more of the state’s revenues could be diverted to debt service. For each of these elements of the typical SAP, the economic rationale appears straightforward. To improve a country’s competitiveness in trade, the advice was to open up the economy to competition (domestically as well as from abroad) in order to drive out inefficient producers, and give efficient producers the basis for being more competitive. SAPs were supposed to make trade adjustment proceed smoothly by increasing reliance on markets. SAPs were based on the notion that the fewer interventions in the markets the better. Yet SAPs rarely improved countries’ balance of payments. Why? As we argued above, the lack of success stems from the failure to see adjustment as inherently risky for certain groups. If domestic actors were uncertain about the impact of adjustment, then liberalization of domestic goods and factor markets might not trigger the micro-level changes adjustment required. Reductions in government expenditures often heightened rather than reduced the risks in adjustment. In order to identify which groups stood to gain from adjustment and which did not – as well as which groups fell into this swing category – we need to unpack the adjustment process itself. The model we employ was recently developed by C. Davidson, L. Martin, and S. Matusz (1999). The DMM model, as we refer to it, depicts the impact of liberalization and adjustment on expected income. It yields insight into the configuration and fluidity of interests, and explains why trade policy is linked to other domestic issues.

The DMM Model The DMM model builds off the fundamental two-factor, two-sector Heckscher– Ohlin model with constant-returns-to-scale, and competitive, frictionless product markets. The two factors, capital and labor, are assumed to exist in indivisible units. Each sector requires a mix of capital and labor as inputs; a sector’s ratio of inputs cannot be changed. To be employed productively, both capital and labor must be matched at a particular ratio. Each factor earns the value of its marginal product when employed and nothing when idle.2 Factors are assumed to cycle through periods of unemployment. Once idle, factors search for employment in the sector offering the highest expected income. Initially, Davidson, Martin, and Matusz set an identical ratio of input requirements for each sector. We alter their basic model by assuming that each sector must


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combine factors at a different ratio (i.e., one sector intensively employs the relatively scarce factor, while the other intensively employs the relatively abundant factor). When a combination of scarce and abundant factors in one sector break up (i.e., become unemployed), each searches for new employment. Trade adjustment requires the breaking up and re-forming of combinations of factors, as production shifts across sectors. Break-up rates vary by sector, denoted by bh. In their search, factors calculate expected earnings in each sector. To begin, the pools of factors are described as follows: Ish = the number of type-i factors searching for employment in sector h Ieh = the number of type-i factors employed in sector h Ih = Ish + Ieh with I = Ix + Iy To determine expected income, factors assess which sectors provide employment opportunities. The arrival rate of new employment prospects for a type-i factor in sector h is denoted by eih. Davidson, Martin, and Matusz assume Eh > 0, and that Eh is a constant. The term sh denotes the proportion of labor in the unemployed factors searching in sector h. Then: elh = (1 − sh) Eh ekh = shEh Note that as sh rises or falls, each factor’s probability of finding employment in sector h changes. Intuitively, this represents the difference between the ratio of factors demanded by sector h, versus the pool of idle factors seeking employment in h. When trade liberalization triggers specialization, output in the scarce-factorintensive sector falls, causing the break-up of combinations of land, capital, and labor. The growing, competitive sectors demand inputs at a different ratio. Some of the scarce factor thrown idle during specialization will find employment in the growing sectors, but not all thrown idle will easily make a new productive match. Specialization may therefore push rates of return and employment opportunities in opposite directions for elements of relatively scarce factors. As a result, these factors cannot clearly determine their expected incomes. Expected income is determined by both the likelihood of employment and the rate of return while employed. Each employed factor shares in the returns to its sector, Ph. The proportion going to each factor is represented by alpha: αlh + αkh = 1 Vish represents the expected income for the type-i factor searching for employment in sector h; p represents a subjective discount rate the units of the factors of production use to assess their prospects for making a productive match. Therefore Vieh

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represents the income the type-i factor earns while employed in sector h. The expected income for a searching factor in sector h can then be stated as: pVish = eih(Vieh − Vish) pVieh = αihPh − bh(Vieh − Vish) Davidson, Martin, and Matusz then solve these two equations, finding: pVish = eih αihPh/Δih pVieh = (p + eih) αihPh/Δih Where Δih = p + bh + eih These equations connect the macroeconomic effects of trade with the microeconomic risks individual units of land, labor, and capital face in adjustment. While factors remain concerned about the gains to each sector (P) as they are shaped by tariff levels, they must also consider the risks in shifting from one employment to another to judge whether or not they will partake in higher returns. The risks are captured by the variables in the equations above: p eih Ph bh

a subjective discount rate for the probability of making a new productive match employment probability for factor i in sector h sector h earnings the break-up rate of matches in sector h

The subjective discount rate for finding new productive matches (p) can be thought of in terms of the fluctuating economic conditions. As a proxy for p, we consider sustained peaks and troughs in the economic cycle. During a sustained peak, factors judge they will find new employment rather easily. During a sustained trough – such as an economic slowdown triggered by tightened monetary policy and government austerity – factors calculate new employment will be more difficult to find, thus discounting future income more severely. In other words, recessions negate mobility. Support for trade liberalization (or a SAP) should be more widespread during upturns, while opposition would gain during downturns. Other items on this list capture variables open to policy manipulation, which, when manipulated, sharpen domestic actors’ preferences for or against adjustment. Consider the goals of a SAP in the DMM terms, using subscript x and m to denote the abundant-factor-intensive (or exporting) and scarce-factor-intensive (or importcompeting) sectors respectively. Specialization should shift goods’ prices and the output of each sector, seen in Pm and eim declining, while Px and eix rise. As the prices for scarce-factor-intensive products fall, opportunities to bring land, capital, and labor together to produce such goods decline. Prices for abundant-factor-intensive goods rise, driving up opportunities to combine land, labor, and capital to produce


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these goods. For the abundant factors already employed in the abundant-factorintensive sectors, or mobile across sectors, trade liberalization offers greater opportunities for employment plus a share in rising returns. Owners of these factors clearly benefit from liberalization, so they would consistently support structural adjustment. Liberalization lowers the expected income of the factors specific to the scarcefactor-intensive sector. Opportunities for employment (eim) and returns (Pm) decline. Land, labor, or capital unable to shift out of these sectors would suffer certain losses, ensuring that these support protection. The scarce factor employed in the abundant-factor-intensive sector, or with the possibility of shifting into this production, may partake in higher returns as Px rises. Expected growth of the abundant-factor-intensive sector should mean greater employment opportunities. However, trade liberalization promises both to reduce eim and to raise eix,, and the factor-intensity difference between the two sectors means that the loss of opportunities in the former will outstrip the emergence of opportunities in the latter. In other words, the scarce factor mobile across sectors (or specific to sector x) may have higher returns if employed in the abundant-factor-intensive sector, but faces increasingly greater competition for employment there. Consequently, the scarce factor mobile across sectors or specific to sector x has ambiguous interests in trade – trade creates opportunities for higher earnings, but the number of such opportunities is less than the units of the factor seeking such employment. The set of interests described in the preceding paragraphs is summarized in Table 6.1. When the five elements of a structural adjustment program were enacted, some domestic groups reacted as the SAPs’ designers anticipated, but others did not. Domestic liberalization did not trigger all the expected shifts in production, because some units of the scarce factors of production were unsure of the benefits adjustment offered. The sorts of policy interventions that might have reduced these groups’ risks in adjustment – interventions accelerating adjustment – were not available. The equations above tell us that raising bm (the break-up rate of productive matches in the import-competing sector) compels mobile factors in the scarce-factor-intensive sector to consider exploiting their mobility, and also lowers the expected income of factors in that sector. Decreasing eim lowers expected income in sector m, also encouraging mobile factors to abandon the import-competing sector. But it is also possible to reduce bx (the break-up rate in the other sector) to increase the expected income there. Increasing eix – making matches in the export sector easier – also

Table 6.1 Preferences on trade liberalization

Abundant factor(s) Scarce factor(s)

Employed in the abundant factor intensive sectors

Idle factors

Employed in the scarce factor intensive sectors

For free trade Ambiguous

For free trade Protectionist

Ambiguous Protectionist

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raises expected income in sector x. Yet SAPs typically included drastic reductions in government expenditures, thus undercutting the ability to use these policies. Once a country implementing a SAP entered a sustained economic slowdown, the risks these groups faced rose even higher. These groups would not only fail to act economically, but would oppose the SAP politically. Assuming all the countries enacting SAPs were relatively poorly endowed with capital, we then divide them into two groups: those well endowed with labor compared to land, or land compared to labor.3 We argued above that domestic and international factors would give these two types of economies very different prospects for executing adjustment effectively. Those relatively well endowed with labor would be pushed by SAPs to shift to more labor-intensive forms of production. The DMM model suggests labor would therefore benefit, broadly speaking; thus there would be substantial popular support for the SAP even with government austerity. SAPs’ opponents would be owners of land or capital specific to land- or capitalintensive sectors, as well as any labor stuck there. Owners of land or capital mobile across sectors would have ambiguous interests. Successful adjustment required getting these groups to exercise their mobility; that in turn required granting them some assistance to reduce the risks they faced – if democratic governments had difficulty justifying (and/or sustaining) such policies, their SAPs would be less successful than the SAPs of non-democratic labor-abundant states. In states where land was relatively abundant, the core supporters for adjustment would be the owners of land in land-intensive sectors, plus the owners of land who could shift their production into land-intensive goods. The consistent opponents would be workers and owners of capital specific to labor- or capital-intensive sectors. Workers and owners of capital able to move into land-intensive sectors would have ambiguous preferences. Since governments executing austerity budgets would not be able to reduce the risks workers faced in adjustment, there would be widespread opposition to the SAP. Since few stood to benefit from adjustment, we expect democracy to be negatively correlated with successful adjustment again. In land-abundant democracies, both internal and external forces made SAPs less likely to succeed.

Empirical Evidence To test our arguments, we conduct basic cross-sectional time series analysis on a sample of 18 countries over 24 years. The dependent variable measures the success of the SAP. We proxy this by calculating a one-period annual change in a country’s current account balance. We use the current account balance instead of the country’s net balance of payments because we think it is a better indicator of short-term structural changes. The explanatory variables we consider are population density, regime type, and use of IMF funds. We also include a one-period lag of the country’s current account balance on the right-hand side of the equation to correct for endogeneity. We include two control variables. The first is an index of annual changes in the terms of trade. All other things equal, this controls for short-term current account changes due to changes in relative import–export prices only. The second

Annual change in current account balance (US $ billion)

Structural Adjustment, Development, Democracy 0

100

200

300

400

500

113 600 6 5 4 3 2 1 0 1 2 3

Population density

Figure 6.1 Sample distribution of factor endowments of SAP recipient countries, 1980–2004.

control measure is fuel exports as a percentage of total manufacturing exports. This variable, all other things equal, controls for current account adjustments due to increasing oil revenues. The data come from the World Bank’s World Development Indicators (2006), except for the indicator of regime type. Regime type is the standard POLITY measure from the Polity IV dataset (Jaggers & Gurr 2005). It classifies states on a scale of Authoritarian/Democracy, from −10 to 10. The variable for IMF Funds is constructed by summing net financial flows of IMF non-concessional lending and use of IMF credit. These funds are dedicated specifically to the correction of a country’s balance of payments problems. We first take the mean of the sample population density in order to determine a country’s relative factor endowment. Upon closer examination, however, it is clear that the boundary between labor-scarce and labor-abundant lies well above the sample mean (sample mean is approximately 105 persons per square kilometer). Thus, we use a cut-off point of population density greater than the sample mean, of 200 people per square kilometer, to measure relative factor endowment. Figure 6.1 illustrates the natural clustering of the sample into two distinct groups based on their factor endowments. Those to the left of the y-axis are relatively land-abundant countries such as Argentina, Chile, and Kenya. Those to the right of the y-axis are relatively labor-abundant countries such as Korea, India, Pakistan, and Sri Lanka. If we do not account for the difference in factor endowments, all of the explanatory variables are significantly related to current account performance. As our theory specifies, population density is positively related to current account balance correction. The control variables are not significant. Once we account for differences in factor endowments, however, the results differ.

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First, we restrict the analysis to include only labor-abundant countries. Population is positively related to an improvement in the country’s current account balance, as before, but it is no longer significant. The Polity IV measure is negatively related to an annual correction in the current account and still significant. This suggests that, all other things equal, a greater level of democracy may in fact hinder a laborabundant country’s ability to correct its current account balance within a year. Finally, for the labor-abundant countries, use of IMF funds is not significantly related to a correction in a country’s current account within a year. Improvements are more likely to have come from changing the goods it traded. What about if we restrict our analysis to land-abundant countries? Again, population is positively though not significantly related to a correction in a country’s current account. That is, the greater the number of people, the more likely adjustment will occur. Democracy significantly impedes the adjustment process in these countries, too. Finally, use of IMF funds is more likely to have an impact on a land-abundant country’s current account correction, but only if we control for population density, which is also positive. The implication is that IMF funds were more directly responsible for improvements in the current account balance (i.e., they were handed to lenders), as opposed to making long-term changes in the country’s productive systems (see Table 6.2). Our results also imply that it is more difficult for land-abundant countries to adjust their balance of payments. In order to further examine this, we plot current account balances over time whilst differentiating for factor abundance. As expected, we find that land-abundant countries, on average, recorded current account deficits. Moreover, we also find that, on average, whilst current account correction has occurred over the 24 years, land-abundant countries have not adjusted as easily or

Table 6.2 Modeling current account adjustment (DV: annual correction in a country’s current account balance) All countries Lag current account balance Population Regime type Fund credit Terms of trade Fuel exports Constant R2 N

Labor-abundant countries

Land-abundant countries

−.264 (0.000)*

−.056 (0.001)*

−.276 (0.000)*

5102 (0.042)* −122 (0.001)* .282 (0.000)* −3690 (0.709) 238 (0.922) −1790 (0.149) 0.2415 265

−979 (0.002)* .088 (0.632) −7739 (0.708) 115 (0.093) −1550 (0.636) 0.3655 37

117 (0.002)* .287 (0.000)* 3334 (0.742) 334 (0.894) −2090 (0.128) 0.2505 228

Prais–Winsten model with panel corrected standard errors and standard autocorrelation specification ar1, p-values in parentheses. * Indicates statistically significant at the 0.05 level or better.


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as rapidly as labor-abundant countries. Thus, not only are land-abundant countries recording, on average, negative performance, but their average adjustment is smaller and less rapid compared to labor-abundant countries’ performances. These results are shown in Figure 6.2 and Table 6.3. These statistics confirm, in broad brushstrokes, the relationships we expected to find as developing countries attempted to use trade policy to address their debt problems. Several key points can be drawn from this evidence. Factor endowments alone influenced the probability a debtor country could improve its balance of payments; SAPs were poorly suited for the political economic dynamics found within the majority of indebted countries (which were land-abundant). Democracy and SAPs are negatively correlated in both sets – democratic countries were less likely to improve their balance of payments even with IMF assistance. To add to the persuasiveness of these claims, future research should examine more detailed evidence of the processes involved in SAP failure. Our interpretation

Current account balance (US $ millions)

40000

20000

0

–20000

–40000

1980

1985

1990

Time

1995

2000

Figure 6.2 Who adjusts? Structural adjustment by factor endowment. Table 6.3 Average adjustment Mean CA Balance (1980–2004) Labor-abundant Land-abundant Adjustment (1980–2004) Labor-abundant Land-abundant

93 400 000 −209 000 000 586 000 000 146 000 000

2005

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of the DMM model suggests SAPs failed on differing grounds depending on each country’s political and economic characteristics. Two broad patterns of SAP failure can be described by thinking of adjustment at the micro level, reflecting factor endowments. Democracy then conditioned how those failures played out. Below, we describe these two patterns in more detail, both for suggesting what we would look for in future case studies to confirm or disconfirm our statistical results, and also to lay out our policy recommendations for making externally supported adjustment more successful.

Why SAPs Failed in Labor-Rich Countries For countries rich in labor only, there were obvious areas for potential trade adjustment in both rural and urban areas. SAPs asked for expansion of labor-intensive production in industrial sectors. Capital- and land-intensive sectors should have shrunk, shedding capital, land, and labor to be redeployed into labor-intensive production. The DMM model suggests that labor would follow the market incentives of internal and external liberalization a SAP would entail. There would still be obstacles, primarily due to the unwillingness of the owners of land and/or capital to switch their assets out of land- or capital-intensive production, due to the risks in adjustment. If these groups failed to shift their assets into labor-intensive production, there would be a limit to how far adjustment could proceed. SAPs would also fail politically if these groups decided they were better off without liberalization. In popular terms, the question concerns the decline of capital-intensive business and large landholdings, versus the growth and direction of smallholding agriculture and laborintensive industry. Would land-intensive production in rural areas shift to smaller scale, labor-intensive techniques? Would industry move from the capital-intensive techniques developed under ISI to the labor-intensive techniques now proposed? The DMM model identifies six specific domestic policy interventions that would accelerate adjustment alongside support for tariff liberalization by sharpening the interests of the owners of land and capital in favor of free trade. The first two policies involve increasing the break-up rate within the scarce-factor-intensive sectors (bm). Land reform reallocates land away from large holdings, toward laborintensive production. In capital-intensive industrial sectors, raising the break-up rate involves disrupting the limits on competition in those sectors, or lessening the security of investments there. SAPs often included elements that might have such effects, as they dismantled older ISI-style policies. What SAPs failed to include, however, were sector-based interventions positively promoting adjustment. Two policies involve reducing the break-up rate for laborintensive sectors (bx). Unlike the typical SAP, the recommendation is to allow for increasing job security for labor in the labor-intensive sectors. Unions in these sectors deserve support – not complete liberalization of the factor market. In the same way, investors in smallholding agriculture or small businesses need longerterm security as well. This may be done through extended leases for tenant farmers, or long-term contracts for small businesses. The final two policies should be geared


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toward assisting the microeconomic “matching” of factors of production in the labor-intensive sectors (eix). Ensuring labor and capital are available for smallholding farmers, as well as assisting the flow of capital to labor-intensive, small businesses, will reduce the risks confronting the owners of these assets when they exercise mobility in pursuit of specialization. The IFIs (and creditors more generally) needed to prevent the political strengthening of the opponents of adjustment to ensure adjustment takes place over time. The core of the protectionist coalition could get small businesses and smallholding agriculture to swing to their side through four policies. If these policies were enacted, adjustment would slow, and the SAP’s effectiveness would be reduced. The first two affected the break-up rate in the scarce-factor-intensive sectors (bm). First, they could defend large landowners’ holdings, by opposing land reform. Second, they could strengthen unions in the capital-intensive industrial sectors, by extending them greater job security. The third and fourth policies concern the “matching” problem for land- and capital-intensive sectors (eim). Opponents of SAPs could ensure that credit schemes for agriculture did not favor small over large landholders. Also, they could ensure that credit remained available for capital-intensive industries. The protectionists’ greatest asset, however, was probably the prevalence of economic slowdowns (p). Since recessions negate mobility, opponents of SAPs were much more likely to succeed economically or politically when the economic climate reduced activity.

Illustrative case: South Korea South Korea had begun emphasizing exports as part of its development strategy in the 1960s. This strategy was strengthened in the late 1970s, when the country had further liberalized its tariffs (agriculture remaining heavily protected, however). The country demanded more oil imports at the same time, so that it too found itself in debt. Of course, most people are familiar with the debates surrounding Korea’s economic development: were the strategies market-oriented, or guided by government? Our answer, derived from the DMM model, is both. Many of the interventions the government undertook accelerated trade adjustment, by favoring the shift out of land-intensive or capital-intensive sectors into labor-intensive production. As is well known, land reform had already removed one set of potentially powerful opponents to adjustment – large landholders. Smallholding agriculture could be effective through labor-intensive techniques, but was also shielded from international competition. In industry, the liberalizations, coupled with preferential credit schemes, technological aid, and other government policies, reduced investors’ risks in shifting to new products. As the country became more competitive in textiles and other labor-intensive goods, these same policies were used to move into more capital-intensive sectors. While largely successful, these efforts led to the indebtedness in the late 1970s. Despite remaining creditworthy, Korea’s government decided to enter into adjustment in the early 1980s because of its rising debts. Funds remained available for investment, so the government directed new investments into export sectors –

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drawing in private capital and attracting workers to those sectors, too. Adjustment therefore translated into more jobs; the chief opponents were in the capital-intensive sectors that had expanded in the 1970s, which now had to slow their expansion. The growth of the labor-intensive sectors sustained demand for those capitalintensive goods, however, so that the entire economy would do well by the second half of the 1980s, and continue to do so into the 1990s. Currency devaluations worked as intended here, as well. What about the impact of democracy on adjustment? South Korea introduced democratic reforms in the mid-1980s, which had little effect on its ability to pursue structural adjustment. The country was clearly able to maintain many of its ongoing policies. Politically, democratic reforms largely translated into labor unrest. Workers used their new voice to demand higher wages. The government responded through expansionary policies, which then slowed structural adjustment slightly, and reduced the country’s balance of payments surplus, but also spurred internal growth.

Why SAPs Failed in Land-rich Countries The ingredients for political and economic success in adjustment were lacking in most debtors, however. Here, the scarce factors of production were capital and labor – industrial sectors were both underdeveloped and uncompetitive. Agriculture, on the other hand, was divided over trade policy by sector. Only large landholders consistently favored free trade. Building broad support for trade adjustment must have been extremely difficult here, since only a limited portion of labor would ever favor free trade, and even then not consistently over time. Political advantages clearly lay with the protectionists. The only way to build support for free trade would be to convince labor and capital mobile across sectors that they would partake in gains from greater exports of land-intensive agricultural goods. (As we stated above, given industrialized countries’ failure to open agricultural trade, such gains were not likely to be large.) Since the groups that opposed adjustment were especially strong in urban areas, the political resistance to SAPs should look very different here than in labor-abundant countries. Moreover, in these countries, smallholders also opposed adjustment. Therefore in these countries, if land reforms had already taken place, or were asked for during adjustment, the result was a broad group opposing adjustment. Under democracy, these groups could then build coalitions linking urban and rural interests in overturning the SAP. To support trade adjustment, and build the needed political support to sustain it, the DMM model points to four domestic policies IFIs should have promoted in these countries. The first two would have raised the break-up rate in the capital- and labor-intensive sectors (bm). In agriculture, smallholdings should not have been available for long-term leases. In industry, unions should have been weakened, and industrial investments made less secure. Thirdly, the break-up rate for land-intensive sectors should have been reduced (bx). Rather than fostering land redistribution, in this setting large landholdings need to be defended. The fourth policy also would have enhanced the position of large landholders, easing their ability to find capital


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and labor (eix). Credit made available to agriculture should have been skewed toward large landholders, for instance. Of course, these policies would have slowed industrialization, and generally been politically unpalatable – especially in a democracy. The IFIs should also have been concerned about six policies the opponents of adjustment could have implemented to strengthen the resistance to a SAP. First, protectionists could instigate land reform (bx). Smallholders preferred protection. Land redistribution would create a broad base resisting trade liberalization in this setting. Second, the break-up rate for industries could be reduced (bm). If unions were strengthened, and price guarantees given to industrial products, adjustment would have been slowed. The third policy would have extended such practices to agricultural smallholders – perhaps by giving smallholders longer-term rights or leases so as to reduce bx. The final three policies protectionists could introduce would have increased the ability of capital and labor to find a match in industrial sectors. Urban employment services and easier credit to smallholding agriculture or to industries would have achieved this effect (increasing eim). The basic elements of SAPs had undesirable effects here as well, though for different reasons than in countries rich in labor. While trade liberalization was of course still central, domestic interventions needed to support the sectors that should have been expanding – land-intensive agriculture. Government austerity was significantly more harmful here, since it lessened the probability of drawing any labor or capital into the coalition for free trade (though austerity might also be necessary to undo the locking-in of labor and capital in uncompetitive industrial sectors).

Illustrative case: Ghana Ghana provides an excellent example of this pattern of SAP performance. In the 1980s, the IFIs considered Ghana one of their most successful cases. As in many other countries, Ghana entered the 1980s with balance of payments problems. Cocoa, its chief export, was earning less on international markets, even as the country’s imports were costing more and more. The country’s development strategy had emphasized ISI and social policies targeted at the urban population; the government had also engaged in international borrowing in the 1970s. The first stabilization program, introduced in 1983, had the backing of the government of Jerry Rawlings. Rawlings reduced the government’s budget, cut some services, and introduced both internal and external liberalizations. Importantly, the IFIs asked for liberalization of the domestic cocoa marketing board. The IFIs wanted the returns on cocoa to go to the farmers who grew it. Cocoa is a land-intensive product – large-scale farms can grow cocoa effectively. The SAP was supposed to help the country head back toward its comparative advantage in land-intensive agriculture. Yet, in the late 1970s and early 1980s, the number of smallholdings (i.e., under 2 acres) quadrupled, while the number of larger holdings declined. Holdings greater than 2 acres had accounted for 79 percent of the cultivable land in 1970, but only covered 38.8 percent in 1984 (Hutchful 2002).

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Smallholders had done well in the late 1970s by growing foodstuffs. These had been profitable when Ghana’s currency had been overvalued. The IFIs ended the overvaluation; they also ended subsidies on fertilizers, rural road construction, and other government policies that had supported the spread of smallholdings. Small farmers suffered as the SAP kicked in. Politically, Rawlings had to change the base of his support. He had initially seized power with the backing of urban interests. These groups soon realized adjustment entailed harming their interests. An accomplished politician, Rawlings was able to swing his base of support over time to a mix of merchants, transport workers, and, most importantly, large landholders (Hutchful 2002). Smallholders and urban interests (both industrial-sector workers and civil servants) coalesced in opposition – also demanding democratic reforms. When those political reforms progressed, adjustment became unsustainable. As the DMM model describes, in a land-abundant country such as Ghana, the SAP demanded expansion of land-intensive sectors, and reduction of the others. Nonetheless, it was difficult for the land-intensive sectors to increase their earnings greatly. Moreover, smallholding farmers resisted the changes; they were unwilling to shift production into land-intensive products because it was too risky. Lacking access to fertilizers or credit, they could not hope to ride out adjustment – new cocoa plants do not produce a useful crop for six, seven, or even eight years. Economically, the SAP did not work well – it did not trigger a great enough adjustment in production. Ghana’s external indebtedness rose rapidly in the early 1990s, instead of falling. Politically, democratization gave voice to the opponents of the SAP. While Ghana had once been hailed as the model of structural adjustment, its success had unraveled by the late 1990s.

Conclusions – Making Structural Adjustment Work SAPs have often failed because they ignored the microeconomic dimensions of risk in adjustment; those risks inform the domestic politics triggered by a SAP. Writing about the variable success of structural adjustment in Ghana, Eboe Hutchful argues, “Macroeconomic reform has lacked the backing of a specific package of measures designed to remove constraints on domestic production and allow enterprises to take advantage of the changes in the incentive framework to increase production and enhance exports. It was assumed that, once prices had been realigned, such issues could be left to the ‘market’ ” (Hutchful 2002). Hutchful’s description applies to most SAPs – they targeted macroeconomic objectives, expected liberalization alone to provide the incentives for individual actors to alter production, and even stripped governments of the tools they might have used to accelerate adjustment. In Hutchful’s account, Ghanaian farmers did not respond to price signals from the market, because they lacked “access to irrigation, extension and research, storage facilities, roads to get to market, credit, price supports, assured and affordable inputs, most of which have to be provided by the government” (ibid.). Austerity imposed on government spending prevented such policies from being implemented. The macro-level incentives were in place, but the risks the farmers confronted at the micro level prevented adjustment. By using a new model of the gains from trade,


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we have linked the macro-level policies in SAPs to specific micro-level obstacles in adjustment debtors would face. We offer a more general basis for understanding the criticisms Hutchful and others have made about SAPs, and provide a rationale for specific domestic policy interventions that should make structural adjustment more successful politically as well as economically. Government policies could not only have reshaped micro-level attitudes about economic risk, they could also have helped build political support behind adjustment. SAPs relied on market-oriented liberalizations to facilitate adjustment. Those policy recommendations are compelling only if full employment conditions actually hold. Since these economies were not in general equilibrium (and in fact are typically quite far from those conditions), adjustment was viewed differently. It involved risks. While many have argued that SAPs needed to be more carefully crafted, few have given meaningful advice as to what specifically they mean. Here, we have given an argument as to why adjustment failed to encourage specialization, based on a model of trade and its domestic impact. This argument suggests particular pathologies of SAP failure, which we hope to confirm in more detailed statistical and case studies in the future. More importantly, our argument identifies the particular ways in which micro-level economic policies could be packaged with structural adjustment to assist debtor countries in making sustained improvements in their balance of payments.

Notes 1 2 3

Of course, some of the earliest models introducing sector specificity also depict some groups as having ambiguous interests, though the sources of ambiguity differ. We use “employed” and “unemployed” to refer to land and capital, as well as labor. We use population density to indicate this ratio.

References Davidson, Carl, Martin, Lawrence, & Matusz, Steven (1999) “Trade and Search Generated Unemployment,” Journal of International Economics 48. Hutchful, Eboe (2002) Ghana’s Adjustment Experience. Geneva: UN Research Institute for Social Development. Jaggers, Keith & Gurr, Ted Robert (2005) POLITY IV: Regime Change and Political Authority, 1800–2004 [Computer file]. October 2005 edition. World Bank (2006) World Development Indicators (WDI), April 2006. Manchester, UK: ESDS International (MIMAS), University of Manchester.

Chapter 7 War as Development – in the North but not the South Espen Moe

Introduction War is destructive. It has negative effects on trade, economic growth, and development. It leads to the loss of human lives and to the destruction of infrastructure. Still, some wars may also have had beneficial effects, and certain countries seem to have almost benefited from war. These are countries that because of wars have risen to international dominance, that have experienced rapid growth, technological progress, industrial and economic leadership. However, this applies to a clear minority of wars. Thus, what does it takes for wars to have beneficial long-term effects? May wars explain why some countries have developed into technological and industrial leaders whereas others have failed? In this chapter, I suggest that these are wars that coincide with and contribute to a country’s structural economic change. I also suggest that these are processes that have only benefited the North, and not the South. Wars in the South have very rarely led to any structural change, but only to devastation and destruction and to the replacement of one set of vested interests with another, with no substantive economic effects. This chapter rejects the intuition that war is always and by necessity fraught with negative effects. However, it also provides an argument about the connection between war and development that rejects earlier literature that sought to establish a necessary positive connection between war and development. To a large extent, I draw upon Mancur Olson, while emphasizing that previous Olson-inspired studies have strayed because they have failed to realize that the Olsonian framework in itself does not take us far enough. Instead, Olson (1965, 1982) must be combined with Joseph Schumpeter (1942).1 Olson emphasizes how the silting up of vested interests results in economic rigidities and long-term stagnation, and that external


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shocks – like a war – may lead to the rooting out of vested interests. However, Olson is locked to a neoclassical understanding of the economy, and it is only the inclusion of Schumpeter that yields a theoretical framework that includes both the silting up of vested interests and structural economic change. I am obviously not suggesting that countries should initiate wars in order to create growth and development (this would probably fail in any case). But in situations where conflict is already a fact, or where countries and international organizations are involved in development work, peacekeeping, or peace enforcement, the framework outlined here suggests that conflict may create an opportunity to build new institutions, root out rigidities in the old political and economic system, and thus provide the country with a fresh start. The theoretical framework suggests that major positive (or negative) effects from war can only be expected in periods of structural economic change. This drastically reduces the amount of relevant wars. For all practical purposes it also means that the outliers are the more interesting cases, and that this is where the extra effort should be put in. Quantitative studies usually miss out on this because of a deficient theoretical understanding. Instead, a small-N study of a small number of theoretically selected outliers over a far longer time horizon – preferably several hundred years – focusing on historically traceable causal mechanisms rather than statistical correlations has a far greater chance of revealing interesting results. Following the literature and theory section below, I will be comparing and contrasting three cases (some of which consist of two or more sub-cases) in order to outline three different patterns of war and development. The first case is the USA, which rose from agricultural nation to superpower, undergoing structural changes linked to the Civil War, World War I, and World War II, and even the Cold War. Second, the contrasting case of Great Britain vs. France during the French Revolution and Napoleonic Wars reveals a different pattern, one in which Britain gains from war against France (and France loses), (mostly) not due to structural change in the economy, but because by beating France, Britain effectively eliminated the competition. Third, the case of the Congo (the Democratic Republic) and the 1960–5 civil war reveals a third pattern of war and development, one of devastation and destruction, devoid of any beneficial effects. At the same time, it hints at a systematic difference between North and South. The Congo war is indicative of why wars in the Third World have mostly had purely detrimental effects, unlike wars in the North, where the frequency of wars with beneficial effects has been far greater (if still not exactly great).

Literature and Theory This chapter argues that certain wars have had beneficial effects on a country’s long-term growth and development.2 Empirical studies yield somewhat mixed results. Classics like Sombart as early as 1913 argued that war and preparations for war contributed to the rise of capitalism in Western Europe. Nef (1950) rejected this, emphasizing that most of the progress occurring during war essentially consists of exploiting technological and scientific progress made earlier. A number of more

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contemporary studies (of both interstate and civil wars) also yield varied results. The main argument is that wars for so many and obvious reasons are detrimental to growth and development (e.g., Sandler & Hartley 1995; Collier et al. 20033). Murdoch and Sandler (2002)4 find that war has a negative effect, but only a temporary one. Other studies find no relationship (Wheeler 1980; Barro & Lee 1994),5 whereas some scholars have instead found a positive relationship: Rasler and Thompson (1985) note a positive relationship for systemic wars; more permanently positive relationships are found by Organski and Kugler (1977, 1980), Chan (1987), and Koubi (2005). Very roughly, the part of the literature that argues that there is a positive relationship between war and growth can be divided into three, but here, as well, empirical testing has met with mixed fortunes. The theoretically simplest of these approaches can be found in neoclassical economic theory, whereby economic convergence and catch-up imply that those countries that saw the greatest destruction during wartime are automatically the ones that grow the fastest once the war is over (e.g., Solow 1956; Murdoch & Sandler 2002).6 A somewhat more sophisticated approach can be found with Organski and Kugler’s (1977, 1980) “Phoenix factor.” The losers in a war grow more rapidly, not just because of economic convergence, but because countries exposed to severe physical destruction face a far more dramatic reconstruction effort following the war than countries that faced only minor destruction. This yields an increase in investments, including investments in new equipment and new technology,7 and consequently more rapid economic growth than in the countries where such investments were not necessary. The third approach draws on Mancur Olson’s (1965, 1982) theory about vested interests. Over time, vested interest organizations form. Since these fight for their own narrow interests, and not for the country as a whole, the result is a silting up of economic rigidities, which gradually stifle the economy. However, through external shocks to the economy (war, civil war, revolution) the power of vested interests can be curbed, obsolete economic and political institutions reshaped, and the country given a chance to start afresh. Thus, countries that have fought wars have a greater potential for long-term growth and development than other countries.

Theoretical problems It is reasonable to assume that among the most important reasons why no consensus has developed as to the relationship between war and growth and development, is that our analytical tools have been far too blunt. There are a few obvious problems. First, the above approaches assert that war will necessarily create growth. This is undoubtedly wrong in the sense that we have a wealth of examples of states that have clearly not benefited from war. Our theories should be able to say something about when and under what conditions growth and development can be expected to arise out of war, not just that it will. Second, one of the fundamental flaws about the first two approaches is that they predict more rapid growth with the losers than with the winners. This happens

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more or less automatically, as the losers have a greater catch-up potential, and because they invest in modern equipment. But this does not take other dynamics and causal mechanisms into account. The states that have benefited the most from war are not just the losers, but also some of the undoubted winners. New hegemons have grown technologically and industrially and have become economically powerful. They did so because war fueled or contributed to structural economic change. But these are causal mechanisms that go far beyond what can be found in, for instance, Murdoch and Sandler (2002) or Organski and Kugler (1977, 1980). Third, in most empirical analyses, the dependent variable has been misspecified. This follows from a flawed theoretical foundation, favoring quantitative testing over causal explanation. Regression analyses of the relationship between war and development mostly contain cases for which there is no reason to expect any effect. The consequences are predictable. The analyses end up with findings that are weakly positive, weakly negative, or with no significant finding at all. This is because theories within the neoclassical growth tradition have major problems capturing the effects of structural economic change at the national level. Obvious dependent variables like GDP growth, GDP per capita growth, etc. are aggregate measures with little relevance during times of structural change. What is instead important during such time periods is how the structure of the economy changes, not what happens to GDP. Over time, a lack of structural change will lead to economic stagnation and to a decrease in GDP growth as the country is entangled in industries with little or no growth potential, obsolete products, and old-fashioned technologies. Hence, the null hypothesis is not that GDP (or GDP per capita) growth remains unchanged, but that without structural change it declines. If structural change leads to the decline and phasing-out of old industries, and the growth of new industries, the decline and the growth may easily cancel each other out, or initially even result in negative overall growth. If that is the case, the country has undergone a positive and necessary structural change through the phasing-out of old industries, but without this having resulted in an increase in GDP growth. The corollary of this is that GDP, GDP per capita growth, and other related measures provide a misleading image of whether or not growth and development follow from war. Industrial change, or growth in key sectors or key industries, would be a more appropriate measure of postwar development.8 Fourth and finally, most regression analyses about war and development have focused on time periods that are far too short for us to expect any significant findings. This typically means the postwar era, often starting around 1960–5 (e.g., Barro & Lee 1994; Murdoch & Sandler 2002; Koubi 2005). This has been a period characterized by relative stability in the world economy, with few states undergoing major structural change. These analyses comprise an impressive number of cases, but if the cases are irrelevant, the sheer number is of less importance. If it is the outliers where the relevance is, increasing the amount of cases only makes it harder to get empirical results. That Barro and Lee (1994) do not receive statistically significant findings for 1960–85 should not come as a surprise to anyone!

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Mancur Olson and Joseph Schumpeter A qualitative approach may avoid the above-mentioned problems. There are a number of examples of such approaches. Tilly (1992) talks about how war historically has played a vital role in the development of the state. Other examples tie in with the rise and fall of the “great powers” tradition (e.g., Gilpin 1981; Kennedy 1989; Knutsen 1999). When international hegemony shifts, this implies an economic shift as much as a political and a military shift. Systemic wars (e.g., Rasler & Thompson 1985; Modelski & Thompson 1996; Knutsen 1999) have brought new hegemons to the fore, and these have based their power on technological and industrial strength as much as on military strength (e.g., The Netherlands, Great Britain, the USA), and are thus obvious candidates with respect to states that have gained from war – relatively and absolutely. Hence, what does it take for a war to have long-term beneficial effects? From a theoretical point of view, the expectation is that the war has to coincide with periods of structural economic change, and itself contribute to this change.9 These are the causal mechanisms that we find with Mancur Olson. Olson’s dynamic works independently of whether the state at war ends up being a winner or a loser, whether or not it was exposed to large-scale destruction, or whether the conflict is an interstate war, a civil war, or a revolution. Olson posits a theory with macro consequences manifesting themselves through traceable micro mechanisms, specified by theory. But, like the previously mentioned approaches, Olson finds himself within a neoclassical economic paradigm, and thus needs Schumpeter before he can be applied to what is the core of the problem, namely structural economic change. One of Schumpeter’s points is that particular industries have played key roles in economic growth and development during different historical epochs (see note 8). To Schumpeter, economic stagnation and long-term decline occurs once the potential for growth inherent in the old, existing industries has ceased to exist, and when growth in new and promising technologies and industries has yet to materialize. But Schumpeter lacks a satisfactory theoretical understanding of why his “waves of creative destruction” occur, and this is where Olson combines with Schumpeter to form a theoretical framework that can credibly explain long-term structural change, and why war tied in with such change may have beneficial effects. The combination of Olson and Schumpeter means that the silting up of vested interests in the economy is a problem when these vested interests become powerful enough to secure for themselves arrangements that favor their interests at the expense of the rest of the economy, more specifically at the expense of new technologies and industries. This leads to the economy being locked into a stagnant and obsolescent status quo, blocking new technologies, new industries, and thus future growth and development. Hence, war may have beneficial effects if it can root out such vested interests. The combination of Olson and Schumpeter raises a number of issues with the existing literature. If long-term growth and development is a function of success within specific core industries and technologies, then war cannot be expected to

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yield economic growth if it is not tied in with the state undergoing structural change. This fits well with Rasler and Thompson (1985), but with one important qualification: Rasler and Thompson note a beneficial effect for systemic wars only, and not for regular interstate wars. The framework sketched out here supports the view that no effect can be expected from “regular” wars (or at best a temporary effect), since these are wars that do not lead the state onto a different growth trajectory. But the framework suggests that there are wars besides the systemic wars that may also have beneficial effects with respect to growth and development. The main point is that the war coincides with and contributes to a process of structural economic change. This has typically happened with the systemic wars, but not only these.10 Very briefly, the theoretical framework consists of two main components. The first is the Olsonian–Schumpeterian dynamic described above. War may have beneficial effects if it leads to the rooting out of vested interests blocking structural change. But in its simplest version, Olson only predicts that wars will lead to growth and development, and not under what conditions it will do so. Attempts at testing the Olsonian framework (Chan 1987; Cameron 1988; Quiggin 1992) have assumed that external shocks like war cause the “break-up of distributional coalitions,” and that countries that have fought through a war automatically end up with fewer vested interest groups than countries that have experienced drawn-out periods of stability. This assumption can only be partly justified. It is not a given that war leads to the breaking up and marginalization of vested interest groups. An external shock may also have the opposite result. It may lead to a more segmented society, to vested interests ever more intensely fighting for their existence, and getting away with it because the state is fraught with conflict and fragmentation. In a scenario like this, the shock (war) will only have detrimental effects. Instability (shock) is only beneficial if it breaks up the power of established vested interests. If it does not, it is a negative rather than a positive. This brings me to the second component of the framework. What does it take for a shock (war) to break up vested interest coalitions instead of cementing them? The basic assumption is that only states characterized by a large degree of political consensus among the ruling elites and social cohesion in the people have the ability to break up vested interests. And the other way around: when states that lack consensus and cohesion experience a shock, it will instead accentuate the already existing political differences, making it harder rather than easier to pursue policies of structural change.11 The above implies a methodological criticism of much earlier research. Quantitative approaches should be celebrated for many things, but they do have their limits. Instead, combining comparative (Mill’s Method of Indirect Difference, 1904 [1843]) and historical methods may provide us with a better chance of uncovering interesting findings. There are several reasons for this. First, a number of quantitative studies reveal significant theoretical deficiencies. Regression analyses can provide us with a wealth of correlations, but without solid theoretical foundations, inferring from correlation to causation is a leap of considerable faith. Instead, we need theoretically focused studies of critical cases in order to shed a clearer light on the causal mechanisms. Second, most quantitative studies include far too many cases. The

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framework sketched out here suggests that war can be beneficial, but only under certain circumstances. Most cases of war, civil war, or revolution cannot be expected to have any significant effect (beyond negative effects). A large quantitative study typically includes a clear majority of cases where there is no reason to expect any relationship between the independent and the dependent variables. This actually takes away from our ability to make interesting findings. This also means that the case selection is theory driven, based on existing knowledge about structural economic change and major conflict. This is normally considered methodologically dubious, but in a small-N study it cannot be any other way. In order to limit problems of bias, cases are selected so as to provide ample variation on the dependent variable. In the following, I will be comparing and contrasting the rise of the USA, Great Britain vs. France during the French Revolution and Napoleonic Wars, and, finally, the case of the Congo (the Democratic Republic) and the 1960–5 civil war.

The Rise of the USA The USA has gained from three major wars over the past 150 years: The Civil War, World War I, and World War II/the Cold War (although World War I to a lesser extent than the others). They all denote major shifts in US economic performance.

The Civil War The Civil War put an end to a long-standing Democratic hegemony on US political power. The Democrats had most of their support from the South, representing southern agrarian interests, in particular those of cotton plantation slave owners, and advocating federal laissez-faire and free trade. They were opposed by the Whigs, and later the Republicans, which both drew most of their support from the industrializing Northeast, advocating policies of greater federal activism, like support for railway construction, greater education spending, and tariffs against European imports (as the US was not yet able to compete). During the decades prior to the Civil War, Democratic resistance against these ideas grew ever fiercer. The industrial interests of the Northeast were never strong enough to push through legislation in their favor. This resulted in a Congress of legislative logjam. Measures to promote industrialization and economic growth were held up for decades. As tariffs and railroad and education initiatives were steadily blocked by a Congress dominated by Southern interests, it took the Civil War, and the secession of the South, before a new and Republican political hegemony was carved out. Hence, a number of initiatives that would never have succeeded prior to the war were quickly pushed through. The Democrats preferred tariff reductions. Thus, prior to the Civil War, tariffs had in general been decreasing. Against this, the Republicans promoted tariffs for the protection of domestic industry. With war, a whole set of initiatives favoring industry were passed. The 1861 Morrill Tariff raised tariffs to unprecedented levels, and for the remainder of the century, tariffs were increased more often than not. True, US tariffs were already quite high.12 However,

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with the secession of the South, the Republicans promoted tariffs in order to protect domestic industry. The Morrill Tariff was supposed to be a temporary increase to bring in revenues for the war but it quickly became permanent (Johnson 1997: 434, 532; Sanders 1999: 219; Bensel 2000: 469). Prior to the war, there had been considerable pressure from farm and labor organizations for agricultural and industrial education. A bill in 1857 for the “creation and maintenance of institutions that would provide useful and relevant scientific education for the children of the agricultural and artisanal classes” (Sanders 1999: 316)13 had been fiercely resisted by the Democrats. Once the South seceded, it met with little resistance, and in 1862 the Morrill Land Grant Act ensured large quantities of public land to each state in order to establish colleges with a curriculum emphasizing agricultural and mechanical arts (A&M colleges). Additional reforms were implemented after the war. While the federal government was still not very active,14 the Civil War nevertheless constituted a break with the past, and a break that would not have occurred until later if not for the power shift resulting from the sudden absence of agrarian Southern interests (Sanders 1999: 315; Fogel 2000: 69). The federal government had subsidized railroad construction since the 1850s, but large-scale intervention did not become the norm until after the Civil War.15 Railroad subsidies were instrumental in extending national markets to the West, but Democratic dominance blocked more extensive involvement, increasingly looking upon railroad construction as a conspiracy to wrest economic initiative away from the South through the promotion of Northern industry at the expense of the South. By the 1850s this had become a major frustration. Hence, a transcontinental railroad was impossible until secession. Tellingly, the Pacific Railroad Act was lobbied through Congress only months into 1861. These were railroad subsidies of such dimensions that it “would only have passed over Southern dead bodies” (Johnson 1997: 491). When this did not prove enough, a further Act of Congress raised them in 1864 (Zinn 1995: 233; Johnson 1997: 434, 491, 533; Usselman 2002; Meyer 2003: 5).16 Expansion continued after the war, with a dramatic acceleration in US railroad construction (see Table 7.1).

Table 7.1 Length of railway line open (in kilometers)

1830 1840 1850 1860 1870 1885 1895

Great Britain

France

USA

157 2,390 9,797 14,603 21,558 25,802 27,991

31 410 2,915 9,167 15,544 28,813 34,995

37 4,535 14,518 49,207 84,675 206,587 280,749

Sources: Mitchell (1998b: 673); Freeman and Louçã (2001:193); Cameron and Neal (2003: 201).

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The Homestead Act (1862) was another act to increase the scale of the domestic economy made possible by the war. A Homestead Bill, offering cheap land to settlers in the West, had been blocked in 1852 by Southern senators, seeing this as a threat to slavery. In 1860, it passed, but was vetoed by President Buchanan. In 1862 it passed virtually unopposed.17 The extent to which this opened up the US market is not entirely clear. Johnson (1997: 515) attributes much of the reason for the USA opening up 15 million new acres of farmland every year (1860–1920) to the Homestead Act. However, Atack and Passell (1994: 372) doubt if the act hastened settling to any great extent. Aggregate economic figures are in disagreement as to what extent US growth rates accelerated following the war, and the extent to which, for instance, railroad construction had an effect on growth. However, there is little doubt that during the Civil War measures with a very obvious effect on structural economic change were taken. There is also little doubt that in the long run the US economy benefited. True, there were also distributional consequences, namely a very considerable transfer of capital from the South to the North, as federal policies were now pro-industry and anti-agriculture. This in itself may not have had beneficial effects with respect to overall economic growth, but it did favor what were to become major US growth industries. Established core industries like iron and new and promising industries like chemicals both benefited greatly. The chemical industry was vulnerable throughout the rest of the century, and was almost killed off when Congress in 1883 drastically reduced the tariff on a number of chemical products. Iron was, and remained, one of the most important US industries, although with iron, what has happened so often elsewhere happened here as well: tariff protection stayed on until well after the industry was internationally competitive. To what extent was this policy change a result of political consensus resulting from a shock? The election of Lincoln, leading to the Democrats seceding from Congress and to Civil War, provided the shock. Hence, in one very obvious manner, political consensus was what brought on policy change. The Democrats seceding resulted in a completely Republican Congress, thus making it extremely consensual! Although the Democrats eventually returned, their hegemony had gone, instead giving way to a Republican hegemony. Congress was no longer consensual, and the only major change compared to the prewar situation was that one set of vested interests had given way to another set of vested interests. Yet, the new vested interests were pro-industry instead of pro-agriculture. Hence, for the foreseeable future, this was a vested interest coalition that was beneficial to the growth and development of the USA (even if the fact that politics was still controlled by vested interests also had a number of less beneficial effects, and ever more as time passed).

World War I, World War II (and the Cold War) World War I is a far less obvious case than the Civil War, but deserves a mention, as the USA clearly benefited relative to most European powers. The structural changes taking place as a consequence of the war were changes affecting in par-

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ticular capital-intensive industries like car manufacturing, to the benefit of the USA and the detriment of Europe. The USA entered World War I with total European debts of $3.5 billion. By the end of the war, Europe owed the USA $12.5 billion. Europe was drained of capital exactly at the time that the car industry was about to become vastly more capital-intensive (Heilbroner & Singer 1994: 132; Parrish 1994: 56). One example is Germany, where car manufacture strongly reflected the difficulties German firms had in raising capital. Consequently, more than 70 percent of German car production could be accounted for by firms owned by US corporations. Mass production eventually broke through in Europe, but not until after World War II, when a combination of repressed wages and a large inflow of foreign funds (Marshall Plan, US direct investment) provided the capital (Kurth 1979: 28; Wehler 1985: 44; Keck 1993: 131). In terms of education expenditures, World War I represents a change in trend, although it is unclear to what extent World War I is the trigger for this change, and to what extent these were changes that were already under way. Between 1790 and 1920, government expenditures as a percentage of GNP had increased only very slowly – from 2.5 to 5 percent. From 1920 onwards, government expenditures rose rapidly, to 15 percent by 1940. By 1929, 30 percent of all 17-year-olds were in high school – up from 2 percent in 1865 (Mowery & Rosenberg 1993: 35; Atack & Passell 1994: 652; Goldin 2001). However, while these efforts were undoubtedly helpful, it took another economic shock (the Great Depression) and another political shock (World War II) before the USA finally put the problems of the interwar years behind it. These efforts were then upheld by the Cold War. The transformation undergone by US higher education during and following World War II was nothing short of stunning. From 1940 to 1945, federal R&D (research and development) expenditures soared from $83.2 million to $1,313.6 million.18 The Vannevar Bush report, Science: The Endless Frontier, recommended a large-scale US effort on science and technology. The government should coordinate and fund US research activities, but with private and academic involvement. The massive postwar expansion of the US science system is a legacy of wartime expenditures and of the wartime program overseen by Bush and by his report. It has resulted in a federal commitment to university research that has lasted for more than half a century (Mowery & Rosenberg 1993: 39; 1998: 23, 31; Nelson & Romer 1996: 49; Nairn 2002: 390). Hence, science-based industries have been complemented by a system of research universities at the world research frontier within both science and engineering. US universities have developed from prewar mediocrities into the world’s finest science institutions, with a combined R&D rivaling that of Germany, France, Britain, and Japan put together (Mowery & Rosenberg 1993: 48; 1998: 30, 46). The expansion of the US science system was crucial with respect to the early US lead in new technologies and growth industries like microelectronics and the computer industry. And because of the Cold War, the wartime expansion was upheld. Without the transformation of the science system, it would have been impossible for the USA to take this lead. Prior to World War II, US universities, while well funded, had been scientific mediocrities, with most serious US scholars finishing

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their degrees in Europe rather than in their own country. The US did distinctly poorly in the knowledge-intensive industries that would constitute the growth industries of the future. The primary US interwar growth industry had been car manufacturing, which was capital-intensive rather than knowledge-intensive. But this rapidly changed post-World War II, especially because of a clear US perception that staying ahead of the Soviet Union in the technology race was one of the best ways to enhance national security. Hence, human capital was of the essence. Also, crucial to the early US lead were government procurements triggered by the Cold War. Initial demand for ICT (information and computing technology) products was low, but the military almost single-handedly provided ICT manufacturers with funding and demand. By 1950, more than 90 percent of federal R&D spending was controlled by the Department of Defense and the Atomic Energy Agency. By 1960, defense research accounted for 80 percent of federal R&D funds. Also, the military accounted for a very large proportion of early ICT demand. Defense-related funding from the federal government, both for universities and private interests, was very substantial indeed. In semiconductors, military demand was what gave the USA an early edge. By 1960, the USA produced 90 percent of the world’s integrated circuits (ICs). Out of total US semiconductor production, 40 percent was produced for defense-related purposes, peaking at 48 percent in 1960. Until 1962, an estimated 100 percent of the production of integrated circuits went to military procurements, with the Apollo project another large-scale customer. Government demand was what created a successful IC industry (Mowery & Rosenberg 1998: 32, 124, 134; Langlois & Steinmueller 1999: 25, 69).19 Wartime shocks were instrumental in reshaping the USA. The Civil War was the first such shock, the two world wars, with the Cold War following from World War II, constituted the second. World War I was fortuitous to the USA, but to a greater extent than putting the USA on a different growth trajectory, it rooted out the competition, that is, Western Europe, which suffered greatly. Instead, it was World War II that led to the complete transformation of the US science system and to a permanently expanded role for the government, ensured by the Cold War. This fueled the rise of new growth industries, in particular within microelectronics and computers.

The French Revolution and the Napoleonic Wars The fortunes of Britain and France during the French Revolution and the Napoleonic Wars were highly different. The story is complex, and it reveals patterns that are both similar to and different from those of the USA. The main two growth industries of this period were cotton textiles and iron. In both areas, the British lead prior to the French Revolution was only minor. By 1815 it had grown to a huge gap. The Revolution and the wars accentuated and cemented processes that were already slowly manifesting themselves. First, in one sense, this is an entirely different case and a different pattern than the American. Britain undoubtedly benefited from the wars against France, but it

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is not obvious that the wars contributed to structural economic change. Instead, the Revolution and the wars can be likened to one huge protectionist experiment. Napoleon implemented the Continental System in order to shut Britain out from trading with Europe. In return, Britain imposed a naval blockade on France. These measures hit France far harder than they did Britain. Prior to the Revolution, French technological progress in cotton textiles and iron had to a huge extent depended on the slow and hesitant diffusion of technology across the Channel from Britain. With revolution and war, this came to an almost complete halt. Consequently, by 1815, France employed technology that was 20–30 years behind Britain in both cotton textiles and iron. Moreover, whereas France had moderately increased its production in both industries between 1789 and 1815, this had been an increase in production only, not in technological sophistication. In contrast, British industrial growth had been dramatic and technological progress impressive. Once the war was over and the Continental System abandoned, French production in both cotton textiles and iron plummeted, overwhelmed by cheap and superior British exports, until the French home market was protected by huge import tolls (Trebilcock 1981; Price 1993; Lyons 1994: 268; Wright 1995). To what extent is this a story of British structural economic change through political consensus and social cohesion? At first glance it is not. Britain thrived by cutting off diffusion to its most important competitors. The Napoleonic Wars are often used as an explanation for slow early growth during the Industrial Revolution. Greasley and Oxley (2000: 103) speak of a trough in British aggregate industrial output during the wars, overall growth rates dropping to 1.5 percent (then surging to 3.8 percent in the 1820s). In absolute terms, 1789–1815 was an economic downturn. But in relative terms, compared to France, there is no doubt who suffered more. The war enhanced Britain’s economic advantage, derived from breakthroughs in cotton and iron. However, structural change was under way already prior to the war. It is far easier to see the opposite processes occurring in France. Industrial expansion during the war was more of the same, entailing no technological progress, merely responding to an increase in demand resulting from eastward military expansion. After the wars, weak governments were unable to prevent vested interests from securing for themselves a plethora of favorable regulations. While this saved both cotton textiles and iron in the short run, protection remained, sheltering a great number of obsolete producers (in particular in iron), and stifling the process of structural change for decades to come following 1815 (Mokyr 1990: 252; Magraw 1999: 339). In Britain, two processes of structural change illustrate both the virtues and the pitfalls of the Olsonian argument. While it is true that structural economic change was already under way, this does not mean that Britain was not facing significant popular resistance to new technology. New technology and industry often upset the prevailing status quo, and in Britain the fear that industrialization would lead to mass unemployment was prevalent. Hence, there were a number of riots against new technology and machinery, particularly in the cotton textile industry. It is not at all obvious that resistance was less in Britain than in France. Even before the

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French Revolution, British ruling elites had been clamping down on resistance against the implementation of new technology. This was one area in which political consensus was strong and unanimously pro-industry, against the vested interests of agriculture (Hobsbawm 1969: 67; Mokyr 1990: 256; 2002: 265; Morgan 1999: 46; Pugh 1999: 40; Parente & Prescott 2002: 95). However, both qualitative and quantitative data suggest that this process became far easier following 1789 as a consequence of an increase in social cohesion in the people. Tilly (1995) reports a drastic decline in riots and arrests during this period, countering the fairly considerable rise in unrest that had taken place between 1750 and 1780. On a qualitative note, this is backed up by Knutsen (1999). However, Colley (1992) is probably the one to provide the most elaborate and extensive account of how the British mood changed following the French Revolution and the subsequent wars, and how a number of different processes led to an increase in social cohesion in the British people, drastically reducing the amount of opposition to the implementation of new technology and thus aiding the process of structural change. While the above paragraph tells of events that aided structural change, chances are they were not decisive. However, the British case also shows events that were later to have the effect of preventing structural change, and thus is informative and interesting also in shedding light on different and contradictory Olsonian processes going on at the same time. As mentioned earlier, external shocks do not necessarily break up vested interest coalitions, and may in some cases actually have the opposite result. In Britain, this is what happened in 1815. Because of Napoleon’s Continental System, Britain farmed as much of its fallow land as possible in order to increase agricultural production. As this was typically marginal land, once the war was over these areas could no longer be farmed at a profit. However, in the meantime, a strong vested agricultural interest fought in favor of these lands, and, as agricultural interests were prevalent in Parliament, the end result was the Corn Laws, imposed in 1815 and not repealed until 1846. The Corn Law was a victory for agriculture over manufacturing interests. It significantly increased the price of agricultural goods – to such an extent that it probably accounted for a reduction in purchasing power of about 15–20 percent for the average British worker. In doing so, it also meant a huge transfer of capital from more productive, in particular capital-intensive, industries like iron. It was not until the 1840s that the British government started a gradual implementation of policies of structural change, urged by another external shock – not war, but the worldwide 1837–42 recession and the 1846 Irish potato famine (McKeown 1989: 356; Lloyd-Jones 1990: 603; SchonhardtBailey 1991: 547; Hoppen 1998: 93; Pugh 1999: 69). The British and French case serves to show that there are a number of ways by which to gain from war. In the British case, the gains were primarily reaped through the elimination of the fiercest competition. Prior to the Revolution, the gap between the two had been modest, even if, technologically, France was behind. But as the competition could no longer get access to British technologies and experts, the gap widened. By 1815, Britain was far ahead. As we have seen, consensus and cohesion had both beneficial and detrimental effects with respect to vested interests.

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Civil War in Congo (1960–5) While I cannot make inferences about any systematic differences between North and South based on three cases, the Congo case is certainly suggestive of a number of fairly basic differences. Among other things, it suggests why wars in the Third World, to a far greater extent than in the West, have been more or less exclusively detrimental with respect to growth and development. The reasons are many. First, the war in Congo was a civil war, and this has been the case with most Third World wars over the past half century. Although this does not preclude growth (the American Civil War being an obvious example), chances are that rebuilding from a civil war is harder than after an interstate war. Building political consensus and social cohesion after a civil war is considerably harder than after an interstate war, as this consensus and cohesion in some way needs to include the enemy. In the US case, cohesion was low after the war, but political consensus was reasonably high, for the simple fact that in the US democracy, the Republicans had built a coalition of interests that secured them vested interest support, Congress majorities, and, with a few exceptions, the president. However, this also meant that the Republican coalition was vulnerable to vested interest influence. But the USA got lucky. While the Republican political hegemony was as dependent on vested interests as the preceding Democratic hegemony, they were different vested interests, and the USA was lucky that the new vested interest coalition was pro-industry rather than pro-agriculture. Second, the reason why consensus and cohesion is important is that this is what gives the war the potential to root out vested interests. As elaborated above, civil war has a harder time producing this result than interstate war. Third, civil wars often result in the deterioration of the central power. If there is no central decision-making apparatus left, it is hard to imagine that the outcome is a state with enough relative autonomy to go against vested interests. Fourth, the reason why the rooting out of vested interests is important is that this is what has the potential to move the country onto a new, long-term growth trajectory. If we accept the proposition that at different times in history, different core industries have been the growth engines of the (world) economy, Western countries have a far better vantage point than Third World countries, in the sense that these countries face far fewer constraints (human capital, infrastructure, path dependencies, etc.) with respect to doing well within the new growth industries of the future. For a Third World country like Congo, the end of the war might well lead to stability, and hence improve the potential for Smithian growth – which is good, but not enough. If Smithian growth, as in the expansion of markets (stemming for instance from the protection of property rights and the construction of basic infrastructure), does not lead to Schumpeterian growth (in other words, growth based on human capital, technological innovation, and industrial progress), the country will for all practical purposes remain rooted to a growth trajectory with little potential for catch-up. The country will remain technologically unsophisticated and doomed to production in sectors that have little future promise, are vulnerable to fluctuations in the prices of raw materials, and that have little potential with

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respect to transforming the country institutionally, socially, technologically, and economically. The Congo case fits all of the above. The focus here is not on what has been referred to as Africa’s first Continental War (Gondola 2002), which may now finally be over, but on the civil war(s) that surrounded the country’s transition to independence, lasting roughly from 1960 until Mobutu’s second coup d’état in 1965. This is a story that is very different from that of the USA or Britain. This is a story about how civil war resulted in institutional structures highly inimical to economic growth. It is a story about a country that benefited from a few years of economic convergence and catch-up following 1965, but where the institutional structures set up by Mobutu gradually changed in the wrong direction as a consequence of his becoming more dictatorial and also as a consequence of his implementing economically unsound decisions in order to counter dwindling social cohesion; this, combined with declining raw materials prices, doomed the country to rapid and dramatic stagnation. When in 1960 Belgian Congo was decolonized, power struggles ensued almost immediately. Mutiny broke out in the army within a week, and one month after independence was declared, the mineral-rich province of Katanga declared its independence. This brought the old colonial power, Belgium, back into the conflict almost before it had left. Following anti-colonial speeches and an ultimatum to the UN that Belgian troops must withdraw, or Congo would appeal to the Soviet Union for help, President Kasavubu had Prime Minister Lumumba arrested (after considerable US pressure). After escaping, he was murdered. The secession of Katanga was originally seen as fortuitous by Belgium and the USA, but the latter eventually came to the conclusion that an independent Katanga was a bad idea, and with the UN it put pressure on the leader of Katanga, Moise Tshombe, who adhered to US requests and halted Katanga’s bid for independence (Young 1998; Van der Veen 2004: 38). Within one year of independence (1961), the country was for all practical purposes divided in three. The capital was controlled by the conservatives, essentially seeking to de-Europeanize the existing system by simply replacing white leadership with black, but failing to see a need for more fundamental change. One of the first moves of the new petit bourgeois elite was to raise remunerations of parliamentarians from US$2,000 to 10,000 a year, in a country where the average income was below $50. When the other social classes were denied their share, the army mutinied. The civil war was in part a result of the new ruling class not merely accepting the European privileges for themselves, but actually massively expanding on these (Nzongola-Ntalaja 2002). Against the capital stood Katanga in the southeast, supported by Belgium, and in the northeast the nationalists in Kisangani, supporters of murdered PM Lumumba. The nationalists most likely would have won, since at one stage they controlled two-thirds of the country, but US support for the conservatives and for the army meant that the capital won out. With General Mobutu’s 1965 coup d’état, the brunt of civil war ended, and Mobutu would reign more or less unchallenged for the next 32 years. The coup was welcomed by the USA: he had for long been seen as young, ambitious, with no real ideas, but ruthless –

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someone who could be persuaded to espouse any political agenda if bribed to do so (Gondola 2002: 125; Van der Veen 2004: 40). Mobutu’s coup was also welcomed by large parts of the population, and for the first few years of his reign the new regime was quite popular. Between 1965 and 1973, even economic growth was rapid. Hence, at first sight, this might seem like another country that experienced growth from war, and it might seem like a country where social cohesion and political consensus were actually on the rise. However, most of these positive indications were skin-deep. Although the regime was popular, this stemmed more from its ability to bring order than anything else. After a likely one million deaths (Young 1998: 109), the coup was met with relief, and the regime could claim legitimacy by contrasting discipline and order with rebellion and terror. Further, following rapid growth during the last few decades of Belgian rule, growth had fallen dramatically during five years of civil war. Thus, the 1959 GDP per capita level was not regained until 1967.20 Further, most of the growth experienced until 1974 consisted of catch-up from previously low levels and of Smithian growth. The country did not move onto a different growth trajectory, but merely fulfilled some of the potential it had along the growth trajectory along which it already found itself. As time progressed, it became clear that social development was irrelevant to Mobutu (because it might encourage civil unrest and opposition to the regime), and that policies pursued in order to ensure stability rather than growth were taking their toll (Van der Veen 2004; Young 1998; Nzongola-Ntalaja 2002). Hence, the legitimacy stemming from the provision of order never went beyond that. Mobutu’s system was one of “divide and conquer,” with important positions (particularly in the army) to a large extent drawn from his own ethnic group, the Ngbandi (from the northwest Equateur province). At the same time, part of the reason why the USA considered Mobutu an ideal candidate for strongman was his relatively scant base of support. To the USA, it was preferable to have leaders with no social or political base, as these could be more easily controlled. As time passed and support eroded, his policy became ever more one of setting population groups up against each other, of divide and rule (Young 1998: 116; Nzongola-Ntalaja 2002: 144). Van der Veen (2004: 143) describes him as a pyromaniac fireman, setting fires and then pointing to himself as the savior, as the only one able to put out the fires he himself had lit. With this went the obligatory personality cult, with the concentration and personalization of power complete by 1974. By 1970, national unity was looking ever more artificial. As one the foremost kleptocracies in the world, policies of personal enrichment put an ever-greater toll on the economy. This was not just because Mobutu considered the state his personal property, but also because he extended these practices to his supporters, ensuring loyalty through policies of blatant bribery and corruption. Young (1998: 116) estimates that by the 1970s, 20 percent of GNP went straight to Mobutu and his entourage, and that in addition to this the Bank of Zaire routinely overturned large amounts of its foreign exchange to the president, maybe somewhere in the order of $150 million a year. At its peak, Mobutu’s fortune tallied $5 billion.

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This combined with two major events in 1973–4 to throw the country into what has so far been perpetual decline. First, the extent to which Smithian growth could carry Zaire was shown to have its limits when copper prices suddenly fell through the floor, copper being the country’s most important export. Among other things, it showed how the growth of Zaire post-1965 had been founded on old-established and technologically unsophisticated industries, first and foremost based on the extraction of raw materials. Second, as part of his policies of cohesion, Mobutu decided that the country should be Africanized. This meant changing the country’s name from Congo to Zaire (1971).21 But far more important was the so-called Zairianization, which included the nationalization of a number of industries (starting in 1966), the expropriation of most foreign-owned plantations, small and medium-sized companies, wholesale and retail shops, and the confiscation of the assets of foreign residents. A number of foreign businessmen had to leave the country, depriving the economy of its most skilled people. This was politically opportune. It won Mobutu a set of new and strong supporters who benefited from the policy. Large-scale redistribution created new allegiances, and effectively made the petit bourgeoisie a state bourgeoisie. Ironically, nationalization for all practical purposes meant privatization – as soon as industries were nationalized, they were in the hands of people who used them to fill their own highly private coffers. Once new members were recruited to Mobutu’s circle of support, they instantly became a permanent member of the kleptocracy. Economically, it was a disaster. Economic growth was negative every year from 1974 onwards, inflation routinely above 1,000 percent a year (peaking at 23,700 percent in 1994), and already by 1970, foreign debts had accumulated to $5 billion. From now on, the country quickly went downhill. The popular support that Mobutu had earned as the guarantor of discipline and order dwindled, and he remained in power as late as 1997 essentially because of policies of divide and conquer, ruthlessness, and, until the end of the Cold War, US support. By 1995, most of the population was far poorer than it had been in 1960 (Young 1998; Gondola 2002; Nzongola-Ntalaja 2002).22 In summary, while these final decisions did not take place until the early 1970s, and not during war, it was civil war that had brought Mobutu to power. It was civil war that had brought the country an institutional set-up completely inimical to growth. On the face of it, Mobutu could draw upon a healthy amount of cohesion following the civil war, as people were relieved that peace had arrived. However, what became ever more evident was the extreme fragility of this cohesion. Policies implemented in order to increase support for the regime to an ever-greater extent went on behalf of economic growth. In order to perpetuate support, Mobutu catered to a set of vested interests that had downright disastrous effects on growth. That eight years of decent growth preceded the extremely rapid downturn does not take away from the fact that the civil war was what created the institutional and political house of cards that led to this outcome.

Conclusions Is war always detrimental to long-term economic growth and development? The suggestion made here is that the answer is “no,” both for empirical and theoretical

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reasons. On a theoretical level, my vantage point is the importance of structural economic change for economic growth. A country may be doing well economically, but if it remains forever within the industries that it is already performing well within, the long-term outcome is stagnation. This is for the simple reason that the world is always in a state of flux. Technologies change, industries come and go. If societies never underwent structural change, every country on this planet would still be overwhelmingly agricultural, and we would all be farmers or fishermen – or even hunter–gatherers. Hence, structural change is essential. Periods of structural change do not occur very often, but, when they do, they are important, and typically involve some kind of technological breakthrough, with new industries following from new technological opportunities. This is the so-called Schumpeterian growth. But Schumpeterian growth is not automatic. It can easily be stifled. In fact, there will more or less always be opposition against Schumpeterian growth, because new technology and structural change always harms someone. Hence, through history resistance to change has been widespread, and it has taken a number of different forms. Mancur Olson suggests that external shocks present good opportunities through which vested interests resisting change can be rooted out. And a bigger shock than war is hard to imagine. Hence, a number of scholars have suggested that wars may have beneficial effects. However, this overlooks one important thing. Sometimes wars, rather than fragmenting vested interests and strengthening the state, instead fragment the state and cement vested interests – in which case there is no reason to expect war to have anything but detrimental effects. The theoretical framework thus needs one further component: I suggest that only countries characterized by political consensus and social cohesion have the ability to use war to clamp down on vested interests. Also, the framework suggests that this doesn’t just happen at any time. It must happen in connection with structural change and it must contribute positively to it. This is one of the reasons why contemporary research has a problem producing significant findings. When examining the period 1960–85 we cannot expect any major findings, for the reason that in most parts of the world, this was a period where structural change was not very prominent. Empirically, the cases analyzed here demonstrate three different patterns, to different degrees conforming to the theory. They suggest that wartime is important with respect to the formation and the rooting up of vested interests, sometimes in beneficial ways, and sometimes in detrimental ways. In the USA, both the Civil War and World War II greatly contributed to structural change. In the Napoleonic War case, a different pattern occurred. More than a case of vested interests, this was an example of one country benefiting from war by taking out its most serious competition. At the same time, vested interests plagued France, and revolution and war did not help things, whereas in Britain there are examples both of the formation and the breaking down of vested interests, some conducive to growth, others detrimental. Finally, the Congo case is an example of why war more often than not has effects that are detrimental to growth. Simultaneously, it is also indicative of differences between the North and the South, as it suggests why processes that occurred in the US Civil War and World War II will not readily take place in the Third World.

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Third World wars are very often civil wars, which means that they split the population rather than build consensus and cohesion. Hence, the postwar consensus is often an extremely fragile one, with the political elites supported by fairly narrow vested interests, and not to any great extent representing a majority of the people. This is not helped by the fact that most former colonies have arbitrarily drawn borders comprising people of very different ethnicities, where social cohesion has been hard to come by for the reason that there is very little uniting the population, and where political cleavages very often have been along ethnic lines. In a situation like this, chances that a war will lead a country onto a different and more beneficial growth trajectory are slim to none. It did not happen in Congo either. Social cohesion and growth following the war was skin-deep. In the long run, growth was fragile, and at best to a marginal extent Schumpeterian. The war, rather than rooting out vested interests, installed a tyrant whose power was based on a quite narrow and exceedingly kleptocratic ruling elite. Instead of countering vested interests, the vested interest was deeply entrenched in the state itself. Mobutu could have gone against it. However, that would have seriously endangered his own ability to stay in power. Moreover, he was very much a part of these same interests, enriching himself to a degree almost unmatched by other dictators in history. While few countries have seen misgovernment on the same scale, the Congo case is suggestive of processes that make it far harder for Southern countries to reap the benefits from war that have sometimes been reaped by the North.

Notes 1 2

3 4 5

6 7 8

For an elaboration of this framework, see Moe (2004, 2007). There are considerable theoretical differences between, for instance, wars, civil wars, and revolutions. These differences are of minor importance here. The expectation of growth and development stems from how large-scale conflict in general affects social, political, and economic processes, and not from any dynamic that is specific to, for instance, interstate wars. Thus, there are no theoretical reasons why quite different kinds of conflicts cannot be included in the same study. Civil wars only. Civil wars only. Even though Wheeler (1980) did not find any overall pattern, he found considerable variation between singular cases. Some cases lost out because of war, others gained, whereas most did not exhibit any major change. Although only under certain circumstances, as in certain basic parameters, like the level of investments and demographic growth, human capital essentially remaining unchanged. This somewhat resembles Gerschenkron’s (1966) argument about the “advantages of backwardness.” There is considerable agreement amongst social scientists and historians about which sectors and industries these are. Freeman and Perez (1988) identify five technoeconomic paradigms, each of 50–60 years, starting with the Industrial Revolution and on toward today. These are based around cotton textiles, iron, steel and electricity (including chemicals), oil and “consumer durables” (most notably automobiles), and computers and microelectronics. Similar sectors can be found with, among others, Hobsbawm (1969), Rostow (1978), Bairoch (1982), Gilpin (1987), Modelski and Thompson (1996), Landes (1998), and Freeman and Louçã (2001). For further elaboration of this, theoretically and empirically, see Moe (2004, 2007).

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12 13 14 15 16

17 18 19

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This implies a rejection of the vulgar version of Olson, where conflict almost by itself is a good thing. Conflict is only a good thing if it means that the causal mechanism specified by Olson is actually allowed to play itself out! But Olson does not say that this will necessarily happen, only that conflicts may help trigger such processes. This is something that Thompson would probably agree with. Modelski and Thompson (1996) investigate the relationship between systemic wars and leading economic sectors (for all practical purposes, structural processes of change) and find that leading sectors have risen and fallen about twice as often as there have been systemic wars. For this, I draw on a wealth of scholarship about consensus and cohesion. Links between consensus/cohesion and growth and development can be found, among others, with Fukuyama (1995, 1999), Knutsen (1999), Dayton-Johnson (2001), and OECD (2001). For an explicit link between consensus/cohesion and the power of vested interests, see Moe (2004, 2007). However, tariffs had been reduced in both 1846 and 1857 – in 1857 only six months before major worldwide recession hit, in particular, the US iron industry hard (Paskoff 1989: xxii). In contrast to the established universities, which, much like in Britain, focused on Greek, Latin, literature, and law. Figures by Atack and Passell (1994: 652) reveal that government expenditures increased slightly after the Civil War, but that no break in trend occurred until World War I. Even in the industrialized Northeast, as late as 1849, passenger revenues exceeded freight revenues, even if freight revenues were increasing much faster than passenger revenues (Meyer 2003: 159). The original act gave the railroads a 400-foot right of way, 10 alternate sections of land per mile of track, and loans of $16,000 per mile in flat country, $32,000 in the hills, and $48,000 in the mountains. Between 1861 and 1870, the federal government gave away more than 100 million acres as a direct railroad subsidy. The first transcontinental railroad also received a direct federal loan of $65 million. Total direct aid between 1861 and 1890 amounted to more than $350 million (Johnson 1997: 491, 533). Atack and Passell (1994: 438, 441) estimate that land grants between 1850 and 1880 were worth around $400 million. Still, they are somewhat ambivalent about the effects of the land grants, cautiously admitting that the evidence is ambiguous. It may be that private investments would have been made anyway. The act offered farmers 160 acres of land for $200 after six months of residence, or for nothing after five years of cultivation (Johnson 1997: 491). Of this, the Department of Defense accounted for an increase from $29.6 million to $423.6 million (in 1930 dollars). However, it should be noted that this advantage was not permanent. Toward the end of the 1970s, Japan was in the process of catching up and surpassing the USA, taking advantage of industrial problems in the US semiconductor sector. Agriculture was hit particularly hard. Agricultural exports were down by 50 percent, with commercialized production down by 40 percent. All European names were changed, including Leopoldville, which now became Kinshasa. In 1972, citizens had to drop their Christian names and adopt African names. Mobutu himself ditched Joseph-Désiré for Sese Seko. Overall, an annual GDP per capita growth between 1965 and 1990 of −2.2 percent, and an astonishing annual −8.42 percent between 1990 and 1995 (Young 1998: 118).

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Chapter 8 Infectious Disease: North and South in an Era of Deepening Globalization Dennis Pirages

There is substantial evidence that the deepening globalization responsible for increasing contacts between North and South and breaking down barriers among previously separated peoples is also posing a growing threat to human security from new and resurgent infectious diseases. While there has always been some movement of people and other organisms among the world’s diverse ecosystems, the current flow of people, plants, animals, and microorganisms through increasingly porous borders is unprecedented. Previous periods of increased contact among peoples and movement of organisms among ecosystems, although geographically more limited, have been marked by serious disease outbreaks and even epidemics. There is growing concern that this current “ecological globalization” is creating similar challenges to human well-being on a global scale. Concern over the possible rapid global spread of infectious diseases also focuses attention on a previously neglected aspect of North–South relations. The world’s poor, both within and among countries, are much more vulnerable to infectious diseases than are their wealthier counterparts (Farmer 1999). While this situation has been much ignored in the past, it is assuming much greater importance in an era of globalization. Several deadly diseases have originated recently in the Global South, and by far the largest number of deaths from infectious diseases takes place there. Now, due to significantly increased travel and commerce between North and South, as well as among countries of the Global South, the potential for the rapid spread of both new and resurgent diseases is growing.

Disease and Security Only 35 years ago the Surgeon General of the United States proudly told the US Congress that the time had come to close the book on infectious disease (Harvard


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Working Group 1995). Contrary to this declaration of victory, communicable diseases are now responsible for the deaths worldwide of fifteen million people each year. Since the Surgeon General’s highly optimistic speech, more than twenty known diseases have either reappeared or spread geographically, and more than thirty diseases not previously identified have emerged. An HIV/AIDS pandemic that originated in Africa has been inexorably spreading around the world for more than a quarter of a century and has now taken the lives of at least 25 million people. In late 2002 a previously unknown SARS virus jumped from animals to people in Southern China and within six months had moved to 29 countries, killing close to 900 people, sickening more than 8500, and significantly damaging the emerging Asian economies. More recently, avian flu (H5N1) has moved out of Asia, infected birds around much of the world, and taken more than 200 human lives. The fear is that this deadly virus, which so far has had limited transmission from fowl to people, could cause a pandemic by changing into a form that could be readily transmitted to people and then from person to person. In spite of obvious evidence that infectious disease historically has been a primary source of human misery, fighting it has not traditionally occupied a prominent place on the security agenda. Perhaps this is due to the fact that most victims of infectious disease die quietly and out of sight in the Global South. By contrast, deaths and injuries from military conflict are vivid, violent, and get much media attention. More important, people historically have had a fairly clear understanding of the nature of threats from others and have been able to devise strategies that hopefully would deter them. Prior to the twentieth century, however, the origins and causes of diseases were poorly understood, and even now fatalism prevails in much of the South since effective disease remedies are seemingly beyond reach. While organized warfare has had a considerable impact on the fate of civilizations, it easily could be argued that the impact of infectious disease has been much greater. For example, it is estimated that warfare in the twentieth century was responsible for the deaths of about 111 million civilians and combatants, an average of 1.1 million per year (Anonymous 1999). Communicable diseases, by contrast, in recent years have killed on average fourteen times as many people annually. Even as the world was caught up in the latter stages of World War I, an influenza virus was spreading around the world, often moving with the troops. While estimates vary widely, given the difficulties of collecting data in wartime, before the pandemic was over between 30 and 50 million people had lost their lives to the virus, many times the number of battlefield casualties. According to the World Health Organization (WHO), warfare now accounts for only 0.3 percent of deaths from all causes, while communicable diseases account for 26 percent (WHO 2004: Annex Table 2). Health experts point out that since 1889 the interval between influenza pandemics has been between ten and forty years (McKibbin and Sidorenko 2006: 5). It has been more than 50 years since the Asian flu (H2N2) and more than 40 years since the Hong Kong flu (H3N2) swept the world taking millions of lives. But the world has changed in many ways over the last four decades, and models of how rapidly a highly pathogenic influenza virus could move through this emerging global city

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indicate that, depending on the virulence of the virus, there could be tens to hundreds of millions of deaths (McKibbin and Sidorenko 2006: 26). Now that the wolf may be at the door in the form of another influenza pandemic, it is timely to focus on how disease outbreaks are reshaping North–South health cooperation and in what ways an influenza pandemic could possibly spawn new global efforts to eliminate infectious diseases.

Peoples and Pathogens There is considerable evidence that periods in which there have been major changes in human settlements or mobility have been characterized by serious disease outbreaks (McNeill 1976; McMichael 2001). There are well understood biological dynamics underlying this phenomenon. Over its history, Homo sapiens has coevolved with a host of microorganisms. The well-being of societies has been very dependent on the activities of this multitude of microbes. They decompose various kinds of wastes, enrich soil, and perform other vital biological functions. Only a small portion of these microbes are pathogens, representing disease threats to people, plants, or animals. And even among the pathogens most are only nuisances, causing relatively little lasting damage. But occasionally highly infectious and deadly microbes move rapidly through and among societies, leaving a trail of suffering and death in their wake. Human immune systems have been sharpened by repeated encounters with a wide variety of pathogens, and have developed effective mechanisms for dealing with most of them. But these interactions that have built immunity historically have taken place within the boundaries of relatively isolated societies and ecosystems: local peoples adapting to local pathogens. Significant disease outbreaks, for the most part, only have occurred when, for one reason or another, people have encountered dangerous new pathogens to which they have developed little immunity. Any significant change in circumstances that brings people into contact with new deadly microorganisms can lead to serious disease outbreaks. Exposure to such new disease organisms can happen in many ways. People may migrate to new locations, thereby encountering different pathogens. Previously unknown diseases can jump from animals to people, particularly in situations where people live very close to nature. Or environmental changes can permit pathogens to move to new geographic locations where they previously have been unable to flourish. In the contemporary world the most obvious mechanism bringing people into contact with such pathogens is the increasing mobility of people and microbes due to deepening globalization. Ecological globalization, a much neglected component of the broader process, involves vast changes in relationships among people, between them and other organisms, and between them and the physical environment (Pirages and DeGeest 2004: ch. 6). Because of these dynamics the coevolution of human immune systems and pathogens is no longer primarily the local affair that it has been; it is now increasingly taking place on a global scale. Since the dawn of written records, there have been at least three previous identifiable eras in which significant transformations in relations between people and

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pathogens have led to waves of disease outbreaks (McMichael 2001: 89). There is much evidence that a fourth wave, potentially one of global epidemics (pandemics) is now imminent (Garrett 1991). The first such wave of disease outbreaks resulted from transformations in the human environment that gathered momentum more than 5000 years ago as an agricultural way of life became well established in various parts of the world. The increasing domestication of animals, and living in close proximity to them, brought people closer to the pathogens that these newly tamed species carried. Furthermore, the growth of agrarian communities, and eventually cities, created denser populations, bringing people into more frequent contact with each other and with accumulating urban wastes that often contained disease organisms. Historians consider the large agricultural populations of Asia to have been the source of many infectious diseases that entered human populations from domesticated and pest animal species, while Africa has been seen as the source of vectorborne infectious diseases from wild animals (McMichael 2001: 100–1). A second era of transformation began about 2500 years ago as wider travel promoted more contacts among the expanding civilizations of Eurasia, and between these core civilizations and the more peripheral areas of the world. Early in this period a deadly plague, thought to have originated in Ethiopia, moved through Athens in 430bc, significantly weakening its military and economic power (McMichael 2001: 107). About two thousand years ago emissaries from the expanding Roman Empire began to make regular contact with the Chinese Han Dynasty via overland trade routes. Pathogens apparently traveled with explorers and merchants in both directions causing numerous disease outbreaks and epidemics (McMichael 2001: 107). In Rome during Republican times there were at least eleven major disease outbreaks that undoubtedly originated in the Empire’s periphery. The Antonine smallpox epidemic in ad165 spread widely in the empire and it is estimated that between one-quarter and one-third of those coming into contact with this pathogen died (McNeill 1976: 115–17). This plague played a significant role in the decline of the Roman Empire. Since history is written by the winners and not the losers, the impact of pathogens carried outward from Rome to the peripheral areas is not well documented. Additionally, smallpox and measles apparently moved east from Europe and cut the population of Northern China in half in the third and fourth centuries (McMichael 2001: 107). At the very end of this era, the bubonic plague spread westward from China to Europe and North Africa, moving with caravans along trade routes. The black rat (Rattus rattus) brought fleas bearing this bacillus to the cities of southern Europe in 1346. The plague moved through Europe over the next few years, killing as many as 40 percent of those who came into contact with it. It is estimated that eventually this incidence of the “Black Death” wiped out nearly one-third of the European population (McMichael 2001: 108–11). A third wave of disease outbreaks and epidemics began at the end of the fifteenth century, following in the footsteps of European explorers. When Christopher Columbus and his crew set foot in the Americas in 1492, they brought hitchhiking pathogens from the European disease pool with them. Diseases such as smallpox, measles, and influenza wiped out a significant portion of the indigenous peoples,

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who had little immunity to them. The military history of the period is filled with tales of miraculous conquests of large numbers by mere handfuls of European troops. But there were no real miracles involved. This was simply pathogens at work, leaving local peoples unable to mount a decent defense of their territories (McNeill 1976: 208). Over time, these imported diseases killed approximately twothirds of the indigenous peoples who were exposed to them. The island of Hispaniola (contemporary Haiti and the Dominican Republic) is thought to have had nearly one million indigenous inhabitants in 1498, when it was first settled by Europeans. By 1520 disease had reduced this number to less than one thousand (Hobhouse 1989: 25). As with many aspects of the age of imperialism, these were unequal exchanges, with the flow of pathogens moving mainly from core European countries to these peripheral areas, since there were very few serious communicable diseases (with the possible exception of syphilis) endemic to the less densely populated Western hemisphere. European diseases also spread to much of the Pacific region. Australia’s Aborigines, New Zealand’s Maoris, and numerous Pacific island societies were devastated by these hitchhiking diseases. The native Hawaiian population declined from 300,000 to 37,000 within 80 years of the arrival of Europeans in 1778 (McMichael 2001:114).

The Fourth Wave Many aspects of globalization, technological innovation, and demographic change are now combining to create conditions conducive to a fourth wave of disease outbreaks. While numerous technological breakthroughs in biomedical research, combined with greater economic prosperity in much of the Global North, have dealt serious blows to several traditional diseases, many changes in human mobility and circumstances, the environments shared with pathogens, and ironically even in technology are increasing the likelihood of the spread of serious diseases. Perhaps because of the kind of arrogance manifest in the Surgeon General’s claim that it was time to close the book on infectious disease, Homo sapiens is now inadequately prepared to deal with large-scale disease outbreaks in an emerging global system. In many ways the recent course of sociocultural evolution has strengthened the position of pathogens while weakening our collective capacity to deal with them. Because of a growing faith in unfettered market forces, in many countries good health is now considered to be a private matter rather than a public good (see Garrett 2000). The persisting North–South development gap in the face of vastly increased trade and travel is a closely related concern. Perhaps most important in this context is the triumph of conventional economic efficiency calculations over a broader public interest in making preparations now for dealing with anticipated future disease outbreaks. Major breakthroughs in medical technologies have done much to reduce the burden of communicable disease, particularly in wealthy countries, but other kinds of technological innovations have simultaneously increased the potential for largescale disease outbreaks. Innovations in transportation, for example, have opened

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up international travel to large numbers of people. But these same innovations that have increased mobility for the masses have also created pathways for the rapid worldwide spread of communicable diseases. A world in which a small number of elite travelers leisurely crossed the Atlantic Ocean by steamship, a journey that once took nearly a week, has given way to one in which many thousands of people make the same crossing each day by air in just a few hours. In the five decades between 1950 and 2000 the number of passenger miles flown internationally increased one hundred-fold. This was accompanied by an even greater increase in the volume of air freight. At the turn of the twenty-first century, more than two million people were crossing an international border every day (French 2000: 6–7). This growing speed and pervasiveness of international travel means that many more people and the pathogens that they may carry are in motion at any given time. This increases dramatically both the opportunities for people to encounter novel pathogens and the potential for diseases to spread quickly once they emerge. And people now move from one continent to another much faster than the incubation period of the diseases that they might be carrying, thus making attempts to control the spread of disease through border inspections ineffective. Ironically, even some of the major successes in biomedical innovation, such as the discovery and increasing use of antibiotics, antivirals, and other pharmaceuticals, have rebounded with unforeseen consequences for the delicate balance between people and pathogens. A flood of antibiotics is now reshaping the microbial world, often in unintended ways. For example, about one-third of the antibiotics sold in the United States are fed to farm animals (Brownlee 2000). Although large scale (perhaps indiscriminate) use of antibiotics may be economically rational for individual farmers who can raise healthier animals and get them to market more quickly by regularly feeding them antibiotics, this broad use of them, over time, can shape new strains of drug-resistant pathogens, thus hampering future efforts to stem disease outbreaks (Levy 1998). Use of antiviral medications for similar purposes can also hamper efforts to limit deadly viruses. Chinese farmers, for example, have used amantadine, an antiviral intended for human use against influenza viruses, to try to protect poultry against avian flu, thus contributing, over time, to the decreasing effectiveness of the medication should it be needed to stem the spread of this flu among people (Sipress 2005). While this may have made economic sense for individual Chinese farmers in the short run, the rest of the world (particularly people in the poorer countries of Asia) could yet pay a very heavy price for the use of this relatively inexpensive antiviral on Chinese poultry. Demographic changes in the Global South are also increasing vulnerability to infectious diseases. While population graying in the more affluent North raises the specter of significant increases in chronic diseases among aging populations there, continuing population growth, rampant urbanization, and large-scale deforestation now facilitate the spread of infectious diseases in poorer countries. The current world population of 6.6 billion is projected to grow to nearly 8 billion by 2025, with virtually all of this growth taking place in the cities of the Global South (Population Reference Bureau 2006). Thirty-six percent of the world’s population lived in cities in 1965, and one-half lives there now. In Asia the urban population

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is expected to grow from the current 1.6 billion to 2.6 billion by 2030 (Linden 1996). The larger the number of people living in poverty in densely packed cities, the greater the risk of infectious disease outbreaks rapidly moving through these urban populations. In many parts of the South population growth is forcing people onto previously unoccupied land in remote areas – land that is often carved out of or adjacent to tropical forests. People in these remote settlements can be exposed to new deadly pathogens through contact with forest animal carriers that may not be seriously affected by them. These pathogens have probably lurked relatively undisturbed in their animal hosts in the tropics, jumping to humans only in rare cases. They had little opportunity to adapt to humans, who usually were a “dead end” host species, because the viruses would fizzle out once they swept through a small population at the edge of the forest. But once large numbers of humans moved into the forest, that picture changed (Gibbons 1993: 680). These diseases can now make their way into more densely populated areas along new highways that have been built linking these outposts with larger urban areas, and from there potentially to the rest of the world. Several deadly viruses, including yellow fever, the Marburg and Ebola viruses, hemorrhagic fever, and HIV/AIDS have probably jumped from animals to people under these and similar circumstances. Thus, conditions analogous to those that historically gave rise to the three previous waves of disease outbreaks are once again in place in an era of deepening globalization. While innovations in medical science as well as much improved surveillance of disease outbreaks are better preparing Homo sapiens to deal with infectious disease, the increased speed with which deadly pathogens now can emerge and move from one part of the world to another presents new challenges to human security.

The Disease Divide The persistence of poverty in the face of rapid population growth in the urbanizing Global South now increases the potential for serious disease outbreaks there that could spread rapidly to other parts of the world. In spite of substantial economic growth over the past few decades, the gaps between rich and poor, both among and within most countries, have not significantly narrowed. Between 1970 and 1995, real per capita income for the richest one third of all countries increased at 1.9 percent annually, the middle one third saw an annual increase of only 0.7 percent, while the bottom one third showed no increase at all (Scott 2001). With the exception of the rapid recent industrial growth in China, which ironically may actually be contributing to declining public health there, these trends have changed relatively little over the last decade. Current income inequalities are reflected in comparative health expenditures. In the United States, total per capita expenditures on health stood at $4887 in 2001. However, in Niger, the equivalent figure was $6, in Sierra Leone it was $7, and in Nigeria it was $15 (WHO 2004: Annex Table 6). People living in such impoverished conditions are exposed to the ravages of many serious diseases while having little access to medical care.

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Table 8.1 The disease gap Highest life expectancy Country Japan Sweden Switzerland Italy Australia Spain Canada France Norway

Healthy life expect. 75.0 73.3 73.2 72.7 72.6 72.6 72.0 72.0 71.8

Lowest life expectancy Country Sierra Leone Lesotho Angola Zimbabwe Swaziland Malawi Zambia Burundi Liberia

Healthy life expect. 28.6 31.4 33.4 33.6 34.2 34.9 34.9 35.1 35.3

Source: World Health Organization, The World Health Report 2004 (Geneva: 2004), Annex Table 4.

As table 8.1 indicates, the North–South income gap perpetuates an epidemiologically divided world. In the Global South people suffer from infectious diseases of the poor and underfed at the same time that an increasing number of people in the Global North are afflicted with chronic diseases of the overfed. In Africa, infectious and parasitic diseases account for about one-half of all deaths, while in Europe they account for only two percent. Each year more than 2.3 million people, primarily in poor countries, die from eight diseases that could easily be prevented by vaccination (Carr 2004). Furthermore, there are approximately 17 million refugees and internally displaced people worldwide, most of them in poor countries, due to humanitarian emergencies. Crowded refugee camps are ideal incubators for diseases, and even people who are able to move from them often bring diseases along to their new locations. In the troubled Darfur region in Sudan, for example, from late May to late August 2004 there were 3573 reported cases of hepatitis E, which resulted in 55 deaths (Hopp 2004). Low and middle-income countries carry more than 90 percent of the world’s infectious disease burden but account for only 11 percent of health spending. Because of the lack of purchasing power (effective demand) for vaccines and pharmaceuticals in the poorer countries, they remain a reservoir of pathogens, both known and unknown, that could spawn future deadly disease outbreaks and epidemics. It is somewhat ironic that the world was galvanized in 2002–2003 by the SARS virus that caused only 900 deaths over a two-year period while diseases common in poor countries take millions of lives each year. Nearly 2.8 million people die annually from HIV/AIDS, 2.0 million people die from diarrhea, 1.6 million die from tuberculosis, and 1.2 million die from malaria (WHO 2004: Annex Table 2). The diseases that most commonly affect the poor also have attracted scant research and development spending. Pharmaceutical companies have seen little profit in developing products to combat diseases endemic in poor countries. Between

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1975 and 1997, only 13 out of the 1233 drugs that reached the global market were applicable to the tropical diseases that are responsible for the greatest number of deaths from infectious disease (Carr 2004). Research and development remains largely focused on diseases of the rich. Currently $102.07 is spent on diabetes R&D for each DALY (Disability Adjusted Life Year) lost due to that disease, whereas only $6.20 is spent on R&D for each DALY lost due to malaria (Cohen 2006). When interactions between countries of the North and South were relatively limited, outbreaks of highly infectious and deadly diseases in the periphery received scant attention in the affluent countries. But deepening globalization means that there is now much more travel and trade between North and South. New linkages of all kinds have increased the potential for cross-border transmission of diseases even as borders themselves have begun to disappear. And increased pressure on common pool resources such as air and water has generated shared environmental threats: “Globalization is not simply accelerating long-term trends but is ushering in contextual changes that are qualitatively and quantitatively different in disease risk, health vulnerability, and policy response” (Chen et al. 1999: 289). Maintaining good public health in all parts of the world thus is fast becoming a global public good. Unfortunately, even in the countries of the more affluent North the current rules of efficient capitalism increasingly make the United States, and many other industrialized countries, more vulnerable to large-scale disease outbreaks. For example, there are now few economic incentives for pharmaceutical companies to make significant investments in vaccines. In 2003 the entire world vaccine market was valued at $5.4 billion. This was a mere two percent of the $337.3 billion global market for pharmaceuticals (Garrett 2005: 15). In addition, particularly in the United States the business of making vaccines has become highly litigious, thus creating significant potential liability concerns for manufacturers. Furthermore, low inventories and near-empty warehouses are now generally taken to be signs of efficient operations in an era of “just in time” manufacturing. This type of thinking has unfortunately also permeated healthcare. Prior to the avian flu scare, governments at all levels were loathe to set aside funds for disease preparedness. Although the current US administration has finally begun to allocate some funds to prepare for a potential epidemic, normally “the federal government doesn’t intervene as a guaranteed buyer of flu drugs as it does with weapons. Investors and tax rules conspire to eliminate redundancy and reserves. Anti-trust rules prevent private companies from collaborating to speed development of new drugs” (Wysocki and Lueck 2006). These problems are compounded in poorer countries where being able to build a stockpile of any pharmaceuticals would be a luxury.

Disease and Development Aside from the physical suffering and millions of deaths caused by infectious diseases in the less developed countries, they can also be a significant drag on economic growth. History’s great plagues have played a major role in shaping sociocultural evolution and economic development. The bubonic plague in fourteenth-century

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Europe, for example, wiped out such a large portion of the population there that it arguably set the stage for a burst of labor-saving innovations that gave rise to the Industrial Revolution. More contemporary disease outbreaks also have had significant developmental consequences, which is why some governments have gone to great lengths in an attempt to keep them secret. For example, an outbreak of pneumonic plague in India in 1994 resulted in $1.7 billion in lost exports and tourism, and a cholera outbreak in Tanzania in 1998 meant an economic loss of $36 million, both significant jolts to these developing economies (Ban 2001: 31). But these pale in comparison with the economic damage done to Asian economies by the 2002–3 SARS outbreak, and in sub-Saharan Africa by the ongoing HIV/AIDS pandemic. The 2002–3 SARS outbreak had a devastating economic impact on East Asia, a densely populated and economically developing area. It was only a few weeks after the first SARS-related death that the economies of China, Taiwan, and Singapore went into a tailspin. Trade and tourism are essential to these economies, and SARS became a major constraint on travel and exports. Air traffic came to a near standstill in the region, with major carriers grounding up to 40 percent of their flights. The number of passengers passing through Singapore’s airport, which usually hosts 29 million passengers annually, slowed to a trickle. In South China and Hong Kong some hotels operated at only ten percent of capacity. The Canton Trade Fair, which usually results in $17 billion in business deals, was an economic disaster. Few potential buyers were willing to attend (Engardio et al. 2003). The regional economic impact was considerable. In China, the tourism industry lost an estimated $7.6 billion and 2.8 million jobs. The loss to China’s overall travel economy in 2003 was around $20.4 billion. Singapore’s tourism industry took a hit of some $1.1 billion and 17,500 jobs (Prystay 2003). Economists shaved about 1.5 percentage points off the 2003 growth estimates for the economies of Hong Kong, Singapore, and Malaysia (Engardio et al. 2003). McKibbin and Sidorenko (2006) have explored the potential economic losses that would be associated with a future influenza pandemic. They have developed four scenarios in which the severity of a possible pandemic ranges from “mild” to “ultra.” Their mild pandemic would take 1.4 million lives and the global economy would lose $330 billion dollars of output, 0.8 percent of world product. The ultra pandemic, by contrast, would take 142 million lives and cause a loss of $4.4 trillion, 12.6 percent of world product. These possible influenza pandemics would have a differential impact on the economic fortunes of countries and regions. The “severe” pandemic, with dynamics similar to those of the influenza pandemic of 1918–19, would wipe out 71 million people or 1.1% of the world’s population. These fatalities would be concentrated in China, India, and other less developed countries. China would experience 14.2 million fatalities, India 12.1 million, and the rest of the less developed world 10.0 million (McKibbin and Sidorenko 2006: table 1). By contrast, there would be approximately 1.0 million deaths in the USA, 3.2 million in Europe, and 1.1 million in Japan. The economic shocks associated with the spread of the disease would be considerable in all impacted countries. GDP in the USA would drop 3.0%, in Europe it would fall 4.3%, and Japan would be hit by an 8.3% decline. China’s GDP would

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decline by 4.8%, India’s GDP would decline by 4.9% and the GDP in other less developed countries would decline by 6.3% (McKibbin and Sidorenko 2006: table 7). This type of destructive pandemic also could dramatically reverse many aspects of the currently deepening globalization.

Growing Cooperation The recent challenges of the SARS outbreak, the possibility of a future avian flu pandemic, and fears that diseases endemic in the South could spread to the North, are leading to enhanced North–South cooperation in fighting infectious diseases. Significant progress has been made in increasing surveillance to detect disease outbreaks worldwide, and in preparing coordinated responses to them. Capabilities of locating and responding to disease outbreaks in more remote parts of the Global South have been much enhanced. A global revolution in telecommunications has increased information flow worldwide. It is now much more difficult for politicians to cover up disease outbreaks by restricting access to information. Greater transparency is now noticeable in many less developed countries where future serious disease outbreaks are likely to take place. Even isolated North Korea has recently cooperated with the World Health Organization in monitoring outbreaks of avian flu among fowl. The growth of the Internet has facilitated the development of two important worldwide surveillance networks dedicated to constantly scanning for disease outbreaks. The Program for Monitoring Infectious Diseases (Pro-MED-mail) is an Internet-based service operated by the International Society for Infectious Diseases. It promotes communication within the infectious disease community. Founded in 1994, it currently links more than 30,000 subscribers in 150 countries. It rapidly circulates reports of human, plant, and animal disease outbreaks received from correspondents around the world (Pro-MED-mail 2004). In 2005–6, for example, it provided extensive information about avian flu outbreaks in Asia and other parts of the world, the spread of polio from Sudan to several countries in Africa, the Middle East, and Asia, an outbreak of the deadly Marburg virus in Angola, an outbreak of pneumonic plague in Congo, and it also tracked numerous other significant disease outbreaks. The World Health Organization uses the Internet to facilitate communication within its Global Outbreak Alert and Response Network (GOARN), which it set up in 2000. WHO and the GOARN contribute to global health security by linking laboratories around the world that are capable of identifying pathogens likely to cause disease outbreaks, ensuring the rapid arrival of technical assistance when outbreaks take place, and facilitating long-term preparedness for epidemics. Since the WHO has limited funding, it functions primarily as a coordinating mechanism, tapping into the technical and operational resources of WHO members, regional technical networks, laboratories, other UN organizations, and international non-governmental organizations. In 2005–6 GOARN was very active in tracking avian flu. It also helped to limit the spread of the Marburg virus in Angola by providing direct support to the health ministry there and by coordinating the efforts of

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nearly two dozen different organizations and laboratories from around the world (WHO 2005). The WHO, having only limited enforcement power and inadequate resources, depends heavily on cooperation from other organizations, as well as moral suasion, to deal with outbreaks of infectious diseases. Foremost among these other important organizations is the Center for Disease Control and Prevention (CDC) in the United States. With a total budget of more than eight billion dollars and having nearly 9000 employees, the organization has been very active in identifying pathogens and preventing the spread of infectious diseases within the USA and around the world (Stein 2005). It operates several research field stations abroad and several hundred staff members focus specifically on international health issues (Zacher 1999). The European Union is in the process of setting up its own European Center for Disease Prevention and Control. However, the Center will have only a modest budget of fifty million dollars for 2007 (Wigzell 2005). Likewise, Medecins sans Frontiers (Doctors without Borders) is an important cooperating private sector organization founded in 1971. Its mission is to provide emergency medical and disaster assistance to those in greatest need, generally in the less developed countries. Each year its volunteer staff embarks on more than 3400 aid missions. Its income, eighty percent of which comes from public donations, was $423 million in 2003 (Doctors without Borders 2004). Campaigns to eradicate critical infectious diseases represent another cooperative approach linking public and private sector donors. In 1967 the WHO launched a worldwide effort to eradicate smallpox. A similar campaign to wipe out polio was launched in 1988. More recently, former UN Secretary General Kofi Annan was instrumental in creating The Global Fund to Fight HIV/AIDS, Tuberculosis, and Malaria, three of the most devastating diseases in poor countries. By the end of 2006 the fund had committed $6.6 billion to fight these diseases. The Stop TB Partnership, a cooperative effort of nearly 400 organizations, companies, and government agencies, recently laid out plans to treat 50 million people suffering from tuberculosis and thus potentially save 14 million lives over the next decade (Brown 2006). The campaign to eliminate smallpox, launched in 1967, was an overwhelming success. At a cost of slightly more than $300 million, the disease, which originally was taking two million lives annually, was eradicated within ten years; the last case of smallpox was identified in Somalia in 1977. The campaign was successful for a number of reasons. Smallpox was easy to recognize, and scientists were able to make an inexpensive vaccine that conferred long-term immunity. Perhaps more importantly, the campaign had the political support of leaders in the most affected countries, involved over 200,000 local workers who were able to keep close surveillance on vaccination efforts, and included public education campaigns that helped to ferret out hidden cases (Nelson 1999). The campaign to eradicate polio has been more difficult, hampered by the nature of the disease, politics, and increased international travel. More than four billion dollars, coming from a variety of public and private benefactors, has already been spent on this effort, which was to have eliminated the disease by 2000. Polio has

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been much more difficult to eliminate because only about one case out of every two hundred results in clearly visible symptoms that allow physicians to readily diagnose the disease. Still, the number of countries in which polio is endemic had declined from 125 to only 6 by 2001. Only 483 cases were reported worldwide in that year (Boustany 2005). Politics and religion in the Global South more recently have combined to play an ugly role in foiling continuing attempts to totally eradicate the disease. Preventive polio vaccinations were suspended in the predominately Islamic northern Nigerian state of Kano in 2003. The halt took place because of widespread rumors that the vaccine had been deliberately contaminated as part of a plot to cause sterility or even HIV/AIDS among Muslims. As a result of this suspension, hundreds of new polio cases were confirmed later in Nigeria and the disease quickly spread to ten other African countries, including the troubled Darfur region of Sudan, where it found new victims among the 1.5 million people driven from their homes by the protracted civil war. Polio then moved with Islamic pilgrims to Saudi Arabia during the annual hajj, which was attended by millions of visitors, before travelling with returning pilgrims to Yemen and Indonesia (Boustany 2005). As a result, there were nearly 1500 reported new cases of polio in sixteen countries in the first ten months of 2005 (see Table 8.2). While US public funding for domestic and international health initiatives has only increased slowly, particularly in relation to more conventional security expenditures, the challenges of new and resurgent diseases have given rise to a very significant private sector response. A group of wealthy philanthropists has made fighting the infectious diseases that kill millions in the Global South a high priority. In 1997 media entrepreneur Ted Turner kicked off these efforts with a donation of nearly $1 billion to the United Nations to help the world’s poor, much of this money

Table 8.2 Polio cases worldwide, 2005* Nigeria (endemic) Yemen (imported) Indonesia (imported) India (endemic) Somalia (imported) Sudan (re-established) Pakistan (endemic) Ethiopia (imported) Others Total

560 473 288 47 42 26 19 18 26 1499

* Through November 15. Source: Global Polio Eradication Initiative Data, in Robert Lalasz, “Polio Eradication Efforts Redouble after Startling Worldwide Outbreak,” Population Reference Bureau at www.prb.org (December 14, 2005).

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going to fight disease. In 2000 Bill and Melinda Gates set up their foundation with $30 billion in assets and a strong focus on fighting disease in less developed countries, and in 2006 financial wizard Warren Buffet committed $31 billion of his fortune to the Gates Foundation. Along the way a bevy of entertainment figures and politicians has made fighting disease a new vocation (Cohen 2006). This new flow of funding has been accompanied by a commitment from GlaxoSmithKline PLC to invest substantially in new vaccines, including spending $300 million to develop a rotavirus vaccine, primarily for use in less developed countries (Capell, 2004). The ultimate success of this patchwork of efforts to head off new outbreaks and to deal with the deadly diseases that are still endemic in many poor countries remains to be seen. On the one hand the accelerating pace of globalization and the associated increasing potential for the rapid spread of deadly diseases will continue to create new challenges. But on the other hand the SARS outbreak, the continuing worldwide spread of HIV/AIDS, and growing concern over the ongoing avian flu epidemic have sensitized political leaders to the urgency of the situation. In spite of inadequate funding, the medical community has developed new capabilities for locating, diagnosing, and containing infectious diseases. And a seeming willingness of political leaders in the Global South to cooperate in providing timely information about disease outbreaks, combined with general greater transparency, is encouraging. But these are only the initial steps in confronting the deepening challenge to human security. The next stage in dealing with this problem requires overcoming political and economic inertia. While recent private sector responses are encouraging, such largesse is no substitute for concerted public sector action to both address the deadly diseases still endemic in the Global South and to prepare for a possible future pandemic. There is a pressing need to develop innovative economic mechanisms for creating and providing new vaccines and drugs to fight the killer diseases still endemic in poor countries. There is also a need to streamline vaccine development by relaxing liability concerns that could thwart a rapid response to new disease outbreaks. Most important, however, a continued effort will be required to sensitize political leaders in the United States and other wealthy countries to the need to rethink security priorities and spending to reflect the significance of this growing threat to human security.

References Anonymous (1999) “Millennium of Wars,” Washington Post (March 13). Ban, Jonathan (2001) Health, Security, and US Global Leadership. Washington: Chemical and Biological Arms Control Institute. Boustany, Nora (2005) “Wealthy Muslim Nations Do Little to Stop Spread of Polio,” Washington Post (August 17). Brown, David (2006) “Global Partnership Announces 10-year Plan to Fight Tuberculosis,” Washington Post (January 28).

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Brownlee, Shannon (2000) “Antibiotics in the Food Chain,” Washington Post (May 21). Capell, Kerry (2004) “Vaccinating the World’s Poor,” Business Week (April 26). Carr, Dara (2004) “Improving the Health of the World’s Poorest People,” Washington: Population Reference Bureau. Chen, Lincoln C., Evans, Tim G., and Cash, Richard A. (1999) “Health as a Global Public Good.” In Inge Kahl, Isabelle Grunberg, and Mark Stern, eds., Global Public Goods: International Cooperation in the 21st Century. New York: Oxford University Press. Cohen, Jon (2006) “The New World of Global Health,” Science (January 13). Doctors without Borders (2004) at www.doctorswithoutborders.org/. (June 1). Engardio, Pete, Clifford, Mark L., and Shari, Michael (2003) “Epidemics and Economics,” Business Week (April 28). Farmer, Paul (1999) Infections and Inequalities: The Modern Plagues. Berkeley: University of California Press. French, Hilary (2000) Vanishing Borders: Protecting the Planet in the Age of Globalization. New York: W. W. Norton. Garrett, Laurie (1994) The Coming Plague: Newly Emerging Diseases in a World Out of Balance. New York: Farrar, Straus & Giroux. Garrett, Laurie (2000) Betrayal of Trust: The Collapse of Global Public Health. New York: Hyperion. Garrett, Laurie (2005) “The Next Pandemic,” Foreign Affairs (July/August). Gibbons, Ann (1993) “Where are New Diseases Born?,” Science (August 3). Harvard Working Group on New and Resurgent Diseases (1995) “New and Resurgent Diseases: The Failure of Attempted Eradication,” The Ecologist (January/February). Hobhouse, Henry (1989) Forces of Change. London: Sidgwick & Jackson. Hopp, Marianne (2004) Pro-MED-mail (September 8). Levy, Stuart B. (1998) “The Challenge of Antibiotic Resistance,” Scientific American (March). Linden, Eugene (1996) “The Exploding Cities of the Developing World,” Foreign Affairs (January/February). McKibbin, Warwick J. and Sidorenko, Alexandra A. (2006) Global Macroeconomic Consequences of Pandemic Influenza. Sydney, Australia: Lowy Institute for International Policy. McMichael, Tony (2001) Human Frontiers, Environments and Disease. Cambridge: Cambridge University Press. McNeill, William (1976) Plagues and Peoples. Garden City, NY: Anchor Press. Nelson, Ann Marie (1999) “The Cost of Disease Eradication: Smallpox and Bovine Tuberculosis,” Annals of the New York Academy of Sciences (December). Pirages, Dennis Clark and DeGeest, Theresa Manley (2004) Ecological Security: An Evolutionary Perspective on Globalization. Lanham, MD: Rowman & Littlefield. Population Reference Bureau (2006) 2006 World Population Data Sheet. Washington: Population Reference Bureau.

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Pro-MED-mail (2004) at www.promedmail.org. (October 3). Prystay, Chris (2003) “SARS Squeezes Asia’s Travel Sector,” Wall Street Journal (May 16). Scott, Bruce R. (2001) “The Great Divide in the Global Village,” Foreign Affairs (January/February). Sipress, Alan (2005) “Bird Flu Drug Rendered Useless,” Washington Post (June 18). Stein, Rob (2005) “Internal Dissension Grows as CDC Faces Big Threats to Public Health,” Washington Post (March 6). Wigzell, Hans (2005) “A European CDC?,” Science (March 18). WHO (2004) The World Health Report 2004. Geneva: World Health Organization. WHO (2005) at www.who.int/csr/outbreaknetwork/en/ (April 5). Wysocki, Bernard, Jr. and Lueck, Sarah (2006) “Just-in-Time Inventories Make US Vulnerable in a Pandemic,” Wall Street Journal (January 12). Zacher, Mark W. (1999) “Global Epidemiological Surveillance: International Cooperation to Monitor Infectious Diseases.” In Inge Kaul, Isabelle Grunberg, and Mark A. Stern, eds., Global Public Goods: International Cooperation in the 21st Century. New York: Oxford University Press.

Part III Points of Conflict


Chapter 9 Challenging Hegemony: Political Islam and the North–South Divide Mohammed Ayoob

The North–South divide has been a major fissure in the international system since the days of European colonialism. While it was an important feature of the system during the post-World War II years, its significance was not adequately appreciated for more than four decades because of the political and academic obsession with the Cold War, especially with the balance of terror that appeared to threaten the very existence of all of humanity. Nonetheless, the divisions between North and South manifested themselves in various forms during the Cold War era. They did so in the continuing confrontation between North and South over residual issues of colonialism, racism, and apartheid. They were evident in the attempt by the G-77 to improve the terms of economic exchange between North and South, especially through the unsuccessful attempt to create a New International Economic Order (NIEO). They were demonstrated in the activities of the Non-Aligned Movement (NAM) that embodied the South’s attempt not only to steer clear of Cold War alliances but also to project a united front within the United Nations (UN) and outside on issues that divided North from South. Finally, the North–South division was plainly obvious in the attempt by resource rich and strategically situated countries of the South to take charge of their natural resources, such as oil, and strategic waterways, such as the Suez Canal, that despite decolonization remained largely under the control of Northern powers or firms based in the North. Most such attempts either failed or succeeded only partially because of the weakness of individual Southern countries, many of whom were dependent on Northern powers for the security of their states or, more often, of their regimes. Most Southern states were also economically dependent on Northern markets for the sale of the raw materials they produced, for the import of manufactured and industrial


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goods, and for loans and grants financed by the Northern industrialized countries either directly or through international institutions, such as the World Bank and the International Monetary Fund (IMF). The conglomerate of Northern powers controlled these multilateral lending institutions through the weighted voting formulas on which they operated. In a nutshell, the vulnerability of individual Southern states prevented them from effectively using their collective clout in international forums to make major dents into the North’s monopoly of wealth and power in the international system (Ayoob 1989). Institutions like the G-7 (now the G-8), the exclusive club of the leading industrialized states, and the UN Security Council, whose veto-wielding permanent members determined the institution’s priorities, became leading instruments of the North’s control of both the international economic and security agendas and the marginalization of most Southern concerns.

North versus South in the Post-Cold War Era The end of the Cold War, by removing the overlay of superpower rivalry from other major fissures in the international system, has made the North–South contradiction much more stark during the past two decades. The process of globalization that has pried open vulnerable Southern economies and facilitated the unhindered flow of Northern goods and the unrestrained intrusion of Northern capital into their largely unregulated markets has further augmented the North’s economic advantage over the South (Hirst & Thompson 1999; Hoogvelt 2001; Stiglitz 2002). The large-scale deployment of long-range, precision-guided, high-tech conventional weaponry by Northern powers, especially the United States, has made them militarily immune to retaliation from Southern states trying to resist the North’s military and political domination. The latest Revolution in Military Affairs (RMA) is based on “dramatic improvements in the accuracy and range of weaponry, the acuity of reconnaissance and surveillance, the ease of deception and suppression of the enemy’s defenses, and the effectiveness of command and control” (Orme 1997: 145). Consequently, it has resulted in tremendously increasing the North’s already awesome military advantage vis-à-vis the South (Cohen 1996: 37–54). The two American-led wars against Iraq in 1991 and 2003, in which high-tech weaponry was used to pulverize Iraqi defenses, removed any lingering doubts about the huge military superiority that the North possesses over the South and the effective use it can make of this advantage in conventional warfare against recalcitrant Southern states and regimes. Even those Southern powers that possess substantial military capability, such as India, were forced to rethink their defense strategies in the context of this blatant demonstration of Northern superiority, leading among other things to the Indian testing of nuclear weapons in 1998. To add to all this, the elimination of the Soviet Union/Russia as a major player in the game of international power politics removed any semblance of balance in the international system and deprived Southern countries of an alternative pole of power with whom they could ally to resist Northern/Western attempts at domination and tutelage.1 Consequently, the Northern Concert of Powers, led by the United States and symbolized by NATO (North Atlantic Treaty Organization), has come

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to enjoy unprecedented military and political domination in the international system, thus tilting the balance between North and South in the former’s favor in a way not witnessed since the heyday of European colonialism in the nineteenth century (Ayoob & Zierler 2005). The demise of the Soviet Union also left a major ideological void by discrediting the ideology of socialism that had become closely identified with the USSR. During the Cold War, socialist rhetoric, which had come to represent both economic and political autonomy, was used by several Southern state elites in combination with nationalism to resist Northern domination. Socialism was the ideology of choice for Southern nationalists – Arabs, Africans, Asians, Latin Americans – to mobilize their populations in their attempt to stand up to Northern intrusion and to protect the autonomy of their countries in both the economic and political spheres. The removal of the Soviet Union as a balancer to the West/North and the move toward creating a market economy in China, which effectively jettisoned its socialist ideology while retaining Leninist political control, may not have meant the “end of history” as envisaged by Francis Fukuyama (Fukuyama 1993), yet it certainly signaled a major triumph for economic liberalism that provided ideological justification for penetrating weak and vulnerable Southern economies and polities.

Political Islam as Anti-Hegemonic Ideology As a result of all these changes that have consolidated the hegemony of the Northern powers over the international system, the South has been even more effectively marginalized in the structures of international power than had been the case during the days of the Cold War. What is more, it has been left with no secular ideology or paradigm that can effectively challenge the North in the realm of ideas, especially ideas that can be translated into political action. It is in this context that political Islam has risen to prominence as an ideology capable of challenging the North’s domination not only in the domain of ideas but of political action as well. To its adherents and sympathizers, it offers a more just alternative to the way the current international order is organized. Political Islam, like socialism, possesses the capacity to combine with nationalism to create a heady brew that can mobilize populations simultaneously for God and Country, thus posing a challenge to the North’s agenda for domination. Jamal al-Din al-Afghani, the nineteenth-century scholar and activist who is identified with the notion of pan-Islam, was a leading precursor of contemporary Islamist activists. He was a pioneer in terms of using the vocabulary of Islam in order to mobilize Muslim populations against colonial domination. It is worth noting that al-Afghani found no contradiction between the twin forces of nationalism and pan-Islam in Muslim countries colonized by European powers. He saw them as two sides of the same coin that could be employed simultaneously as tools of resistance against European domination of Muslim lands, demonstrating the compatibility of nationalism and pan-Islam in the Muslim world (Keddie 1972). Contemporary manifestations of political Islam, whether in the Arab world, Turkey, Iran, or elsewhere are heirs to this tradition of combining nationalist agendas with

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Islamic ones in their attempt to mobilize Muslim populations to resist both domestic autocracies and global hegemony. Nevertheless, political Islam suffers from a major shortcoming when compared to socialism. Unlike socialism, which potentially has universal appeal, political Islam’s ideological appeal is restricted to countries that are preponderantly Muslim. In religiously plural countries of the global South, such as Nigeria, political Islam can in fact turn out to be highly divisive. Even in those countries such as Iraq that are divided along sectarian lines political Islam acts as a disruptive rather than a unifying force. This circumscribes its attraction in religiously divided societies. However, one should not underestimate the fact that 1.2 billion people, about onefifth of the world’s population, profess the Islamic faith. Moreover, majority Muslim states – 56 if we go by the membership of the Organization of Islamic Conferences (OIC) – constitute more than one-quarter of the membership of the international system and over 40 percent of the 131 members of G-77, the quintessential representative organization of the global South. What is equally important is that Muslim countries are located in some of the most strategic regions of the world, such as the Middle East and Central, South, and Southeast Asia, and sit atop resources, such as oil and gas, that are vitally important for the economic health of the of industrialized countries of the North. Two-thirds of the world’s proven oil reserves are located in the Middle East, with 62 percent in the Gulf sub-region. Saudi Arabia alone accounts for over 22 percent of the world’s oil reserves (BP 2005). New oil reserves that have recently come on line are also concentrated in substantial measure in the predominantly Muslim countries of Central Asia and the Caucasus. Even more significant, the Gulf subregion’s exportable oil capacity – that is, production minus consumption – is enormous. It will not be far off the mark to assume that if only exportable reserves are measured, the Gulf’s share will go up to at least 80 percent of such reserves. This makes the predominantly Muslim Middle East indispensable to the economic health of industrial states in Europe, North America, and East Asia. Similarly, over 40 percent of the natural gas reserves are located in the Middle East, with Iran and Qatar accounting for 30 percent of the total reserves (BP 2005). There are also clear indications that new pipelines and new technology will boost Middle Eastern gas production and exports to unprecedented heights and sharply increase its profile in the global gas trade within the next 20 years. This will particularly be the case if oil production and/or reserves stagnate and if oil prices become economically unsustainable (Yergin & Stoppard 2003). As long as hydrocarbons continue to be the primary source of energy in the world, the Muslim Middle East will continue to be crucially important in the arena of energy supplies. Furthermore, what political Islam lacks in terms of universal appeal is more than made up by the fervor of its adherents. Political Islam has demonstrated its capacity in several countries of the Muslim world to act as an effective resistance ideology against both authoritarian regimes and their great power supporters. Examples range from Iran under the Shah to Egypt under Sadat and Mubarak. It is its capacity for popular mobilization, and not the occasional dramatic acts of terrorism


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engaged in by the extremist fringe of Islamists, that has major Northern powers worried about the phenomenon called Islamism. This is especially the case since several authoritarian regimes in important Muslim countries, including leading oilproducing ones in the Middle East, are allied to or clients of the Northern powers, more particularly of the United States. It was no coincidence that it was the anti-hegemonic aspect of the Iranian Revolution that its critics in the North found most alarming. Accordingly, the Iranian Revolution was seen by the major powers as emblematic of the potency of political Islam as an instrument for popular mobilization. It was also perceived as the harbinger of future popular movements in the Muslim world that would be likely to threaten Northern interests. This explains why these powers, including the United States, France, Britain, and even the Soviet Union, joined hands in supporting Saddam Hussein’s invasion of Iran in 1980 in order to prevent the Iranian contagion from spreading beyond its borders (Ayoob 1985). The Northern powers’ fear of Islamism’s ideological appeal has been accentuated in the post-Cold War era by the fact that the popularity of political Islam in strategic regions of the world has to a significant degree neutralized the ideological hegemony that the West/North had achieved with the disintegration of the Soviet Union and the consequent discrediting of socialism. There is the related apprehension that the Islamists’ defiance of the current international order may have a demonstration effect on non-Islamic groups, such as the leftist movements in Latin America and elsewhere, that also harbor anti-hegemonic goals. Ideological hegemony is an essential component of political and economic domination since it legitimizes the existing order, no matter how iniquitous it may be, and makes inequality palatable to those at or close to the bottom of the heap. The absence of ideological hegemony or its significant erosion provides the subalterns with the opportunity to mobilize and translate their opposition to structures of domination into effective political action. In the absence of alternatives in the current epoch, political Islam has become the leading anti-hegemonic ideology representing the South’s resistance to the domination of the North. This provides the clue to why leading scholars and analysts in the United States, in a deliberate attempt to obfuscate the real issue, have referred to this confrontation between hegemonism and resistance as the “clash of civilizations” resulting from “Muslim rage” (Lewis 1990; Huntington 1996).

What is Political Islam? What then is political Islam or Islamism, as it has come to be called more recently? In essence, political Islam amounts to the use of religious idiom and religion-based historical references for the mobilization of Muslim populations for political action both domestically and internationally. In other words, it is “a form of instrumentalization of Islam by individuals, groups and organizations that pursue political objectives. It provides political responses to today’s societal challenges by imagining a future, the foundations for which rest on reappropriated, reinvented concepts borrowed from the Islamic tradition” (Denoeux 2002). Political Islam is an

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ideological not a theological construct. It is precisely because of this fact that its appeal resonates with substantial segments of Muslim populations around the world. Contrary to popular perceptions in the West, often deliberately inculcated by media pundits with scant knowledge of the Muslim world, and despite the spread of information technology as a force potentially capable of creating a global virtual umma or community of believers (Seib 2006), most Islamist political activity is undertaken within the framework of the nation-state system whose values have been internalized by Islamists, leaders and followers alike. It is true that there is an Islamic religious vocabulary that transcends political boundaries and, therefore, facilitates empathy and even cooperation among Islamist formations operating in different countries and regions. However, such vocabulary is normally employed to serve objectives specific to discrete national settings. In the process, while the Islamic idiom may continue to appear similar to the uninitiated observer, its actual content undergoes substantial transformation depending upon context. As Eickelman and Piscatori have pointed out, politics becomes “Muslim” by “the invocation of ideas and symbols, which Muslims in different contexts identify as ‘Islamic’, in support of . . . organized claims and counterclaims” (Eickelman & Piscatori 1996: 4). Since the borders of the sovereign, territorial state normally circumscribe such claims and counterclaims and the contestations that accompany them, much of the politics that goes on in the name of Islam is also confined within those boundaries. Furthermore, the large majority of such political activity is undertaken peacefully within the constitutional constraints imposed on Islamist political formations by regimes normally unsympathetic to Islamist causes. Usually, it is fringe groups, whether national or transnational, which undertake violent activity in the name of Islam. Despite the dramatic nature of their terrorist acts, such as the shooting of tourists in Egypt in the mid-1990s, the attacks on New York and Washington in September 2001, and the Bali bombings of October 2002, groups carrying out such attacks – the Egyptian Islamic Jihad, al-Qaeda, and Jemaah Islamiya – are marginal if not irrelevant to the concerns of the large majority of Muslims, Islamists and non-Islamists alike. Their acts of violence and terror are in fact unwanted diversions from the primarily domestic agenda that most Islamist movements and parties pursue, and appear largely counterproductive from the perspective of the major Islamist formations (Ayoob 2007). This is particularly true of the indiscriminate global terrorism engaged in by the franchise known as al-Qaeda. As Fawaz Gerges has pointed out, even the “religious nationalist jihadis,” who engage in violence within the framework of nation-states for objectives confined within national boundaries, find transnational acts of terror, such as the attacks on the World Trade Center on 9/11, abhorrent and counterproductive (Gerges 2005). They do so because it complicates their political agendas, including the reduction of American presence and influence in the Muslim world. In fact, as events in Afghanistan and Iraq have demonstrated, acts of transnational terrorism bring further unwanted intrusion into the affairs of the Muslim world by major Northern powers, especially the United States. However, political Islam does have an international dimension that is the result of two factors. The first is the highly unequal distribution of power in the contem-


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porary international system that provides major Northern powers opportunities for intruding into the Muslim world in order to advance their own objectives. The second, which is to some extent a corollary of the first, is the close relationship between major Northern powers, especially the United States, and repressive and authoritarian regimes in the Muslim world. These two factors inextricably link the anti-regime thrust of many Islamist movements domestically with their anti-hegemonic posture globally. We will return to a discussion of these factors shortly.

The Appeal of Political Islam The appeal of political Islam, both within predominantly Muslim states and across them, can be set down to several factors, some of them inherent in the ideology and others that are exogenous to its intrinsic allure. A major inherent reason for the popularity of Islamist political formations is that they have a simple and apparently coherent explanation for Muslim political decline and an equally simple solution to arrest and reverse this decline. The reversal of this decline vis-à-vis the North/West is of major concern to politically conscious Muslims. The reason for this is simple: Unlike the rest of the former colonial and semi-colonial countries that came into sustained contact with Europe only when Europe was strong and they were weak, the Muslim world, especially the Middle East, had interacted with Europe for a thousand years from a position of superiority in the arts of both war and peace before the tide began to turn late in the seventeenth century. Historically conscious Muslims, therefore, find the present unequal relationship far more galling than most other people in the postcolonial world. It signifies for them a reversal of the “natural” order that requires urgent remedial action. Consequently, they are constantly caught “between memory and desire,” trying to carve out a future for themselves that reflects what they consider to be their glorious past. Stephen Humphreys has summed up this process in the following words: “Memory creates the desire to regain the old and seize hold of the new, in the hope that they will be the same thing. But desire in turn creates the memories that define past and future” (Humphreys 2001: 271). Islamist movements and parties are able to take advantage of this particular historical consciousness and the urge to find a remedy to the present equation with the North by arguing that Muslim societies declined the more they moved away from the model of the golden age, the utopia that Islamists depict in their romanticized version of the early years of Islam. This search for utopia in terms of the return to the pristine purity of early Islam is largely a Sunni preoccupation. However, Shia utopianism in the form of the return of the Mahdi, the twelfth Imam who Shias believe has gone into occultation, also draws its inspiration from their image of the unadulterated age of “justice” that supposedly prevailed not only during the time of the Prophet himself but also during the reign of Ali, the fourth caliph and the first imam of the Shias. The Mahdi on his return, Shias believe, will once again usher in this age of justice which has been lost since the end of Ali’s caliphal rule. What is common between Sunni and Shia Islamists is that both argue that if Muslims are able to recreate true and pure Islamic societies modeled on their

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interpretations of the golden age, they will be able to regain their former glory or at least compete with the West/North on a basis of equality. Their slogan “Islam is the solution” emanates from this interlocking set of arguments. In theory their prescription is, therefore, simple, although it undergoes significant mutation when they attempt to put it into practice in individual countries (Ayoob 2007). A second inherent reason for the popularity of political Islam is the widespread familiarity among Muslims with Quranic vocabulary even if it is incompletely understood by the masses. This has made the Islamists’ rhetoric resonate with large segments of Muslim populations because it is couched in an idiom with which they can identify easily. The use of Islamic vocabulary adds to the appeal of Islamism by demonstrating its “authenticity” since it speaks in the language of the Quran and the hadith, the sayings of the Prophet, and of the salaf al-salih, the righteous ancestors, and not in terms borrowed from the erstwhile colonial rulers often despised for their tyranny and hypocrisy. It is very difficult for secular regimes, especially if they are authoritarian and, therefore, unpopular among their populations, to devise language that can compete with Islamists’ apparently “authentic” rhetoric. Consequently, several regimes in the Muslim world have tried to compete with the Islamists by projecting themselves as equally religious and using religious observance and rhetoric to do so. Such regime attempts to appear more popish than the Pope have usually ended up conceding further ground to Islamists and increasing their popularity among the masses. Egypt, Pakistan, and Morocco, among other countries, demonstrate the veracity of this proposition.

Authoritarian Regimes and Political Islam The inherent appeal of Islamism mentioned above has been augmented by two major factors exogenous to the ideology itself. The first of these, already referred to earlier, is the repressive and unrepresentative nature of many regimes in the Muslim world, especially in the Middle East. The second is a function of the set of policies adopted by major Northern powers, especially the United States, toward the Muslim world in general and the Middle East in particular. The Islamist prescription of return to a pristine Islamic polity has found great resonance in widely diverse Muslim societies, especially because the secular, nationalist project in the immediate postcolonial decades was unable to provide dignity, freedom, power, or wealth to most Muslims around the world. Domestic and international failures were compounded by the authoritarian nature of many Muslim regimes and their perceived dependence upon major Northern powers for security and survival. The “modernizing autocracies,” envisaged by some American political scientists in the 1960s as the solution for political disorder and “system overload” in the postcolonial countries, including their Muslim component, produced little modernization and a colossal amount of autocracy – thus discrediting both the regimes and their secular and modernizing project (Huntington 1968). The failure of imported models and the repressive and dictatorial nature of many regimes they produced amplified the allure of an ideology that based its appeal on “authenticity”


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(even if this authenticity was more imagined than real) and popular participation as opposed to autocratic rule. Furthermore, the authoritarian nature of many Muslim regimes, especially in the broader Middle East, provided crucial political space for the expansion of Islamist political activity. Closed political systems and authoritarian regimes are standing invitations to the growth in the popularity of Islamist political formations. Such regimes stifle political and intellectual debate as well as effectively decimate almost all secular opposition through the medium of the mukhabarat (intelligence/security) state based on the effective penetration of their societies by intelligence agencies with the sole objective of ensuring the security and longevity of existing regimes. Paradoxically, these very regimes, by successfully eliminating secular opposition movements and parties and banishing normal politics, create political and intellectual space for the Islamists to move into. This is the case because even the most efficient and repressive regimes in the Muslim world are unable to fully suppress opposition expressed through the religious idiom. Unlike secular opposition groups, which can be silenced and neutralized by preventing them from speaking in public and from spreading their message through the media, Islamist political activity can never be effectively curbed because of the vocabulary it uses and the institutions it can utilize. Islamic religious idiom, like the vocabulary of most other religions, has the potential of lending itself to political uses. At the same time, it can be made to appear politically innocuous and, therefore, immune to governmental retribution. Publishing houses that print religious literature, mosques and affiliated institutions that subtly disseminate Islamist propaganda, and religiously endowed charitable organizations sympathetic to Islamist causes can be used to send out political messages dressed up in religious garb and to build support for Islamist political activity. Unrepresentative regimes, in addition to repressing political opposition ruthlessly, are usually corrupt and unresponsive to societal demands. Consequently, they fail to provide social services and a social safety net to the most vulnerable segments of their populations. This is another void that Islamist groups move in to fill through charitable networks affiliated to, or set up as front organizations for, Islamist political formations. Such charitable institutions fulfill the religiously enjoined duty of helping the needy by providing social services to the weakest sections of society. More importantly, they assist Islamist groups and movements to cultivate crucial constituencies, especially among the underprivileged segments of the population already alienated from unresponsive and corrupt regimes that can be mobilized for political action. The close nexus between Islamist charitable networks and Islamist political formations has come to provide Islamist groups with great staying power in the face of state repression. It also provides an essential explanation for their growing popularity. Islamist formations are generally more than mere political parties that become active during election times and remain dormant much of the rest of the time. They are simultaneously political machines, social welfare organizations, and NGOs that espouse human rights causes. Moreover, they are very adept at building networks

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at the grassroots through face-to-face interactions, the use of mosques as community centers, and as distribution points for charity and aid to the most vulnerable segments of society. They provide social services that states are unwilling or unable to offer and thereby build a base of sympathizers who can be expected to support their political agenda out of a sense of obligation even more than ideological commitment. Studies conducted in Egypt by Carrie Rosefsky Wickham and in Turkey by Jenny White bear out the validity of this assertion (White 2002; Wickham 2002).

American Policies and the Growth of Political Islam The second exogenous factor adding to the appeal of political Islam is the North– South divide as represented in particular by the policies of major Northern powers – above all the United States, the preeminent power in the international system today. It goes without saying that the current distribution of political, economic, and military power in the international system is heavily tilted against Muslim countries. This is in large part the result of past European colonial domination and the policies followed by the dominant powers in the postcolonial period to solidify and extend the strategic and economic gains they had achieved during the colonial era. Such policies of direct and indirect domination have left an indelible mark on the psyche of most politically conscious Muslims. The major powers and their policies are perceived by most Muslims as being largely responsible for keeping Muslim societies in the sad plight they are in today. This applies with particular force to American policies in the current era. In much of the Muslim world, American policies are seen as akin to those followed by the erstwhile European colonial powers, aimed principally at preventing any challenge to Western/Northern domination arising from Muslim countries. This argument finds great resonance among politically conscious Muslims because it corresponds to reality in significant measure. The policies of erstwhile colonial powers in the 1950s and the 1960s, especially in the Middle East, were widely seen as attempts to maintain their control over strategically important parts of the Muslim world despite the formal end of colonialism. Such policies ranged from the overthrow of the democratically elected Iranian Prime Minister Mossadegh in 1953 after he had nationalized the Anglo-Iranian Oil Company, to the Anglo-French-Israeli invasion of Egypt following President Nasser’s nationalization of the Suez Canal in 1956. The brutal war of independence forced upon the Algerians by France’s intransigent insistence that Algeria was an integral part of France and, therefore, inalienable territory, augmented the feeling among many Muslims that European powers were bent upon the subjugation of Muslim lands even after colonialism had become discredited both as ideology and as a form of governance. Since the major European colonial powers were important allies of the United States and the latter collaborated with Britain in the covert operation in Iran in 1953 and turned a blind eye toward French brutality in Algeria, the opprobrium heaped on the former colonial powers rubbed off on the United States as well. The hostile Muslim perception of the United States was augmented by the Cold War strategies adopted by Washington and its proclivity to step into the European


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powers’ imperial shoes as the managerial power in the Middle East, ostensibly to contain the expansion of Soviet influence. Although American opposition to Arab nationalism and to the emergence of independent centers of power in the Middle East was the result in part of Cold War considerations, it confirmed for most Muslims the fact that American policy was basically a continuation of the colonial policies of the previous era. America’s current military occupation of Iraq has further convinced most Muslims that the United States is working within the same imperialist paradigm that the British and the French did in the Middle East not so long ago (Khalidi 2004). Furthermore, the support extended by Western powers, above all by the United States, during the Cold War and after to authoritarian and repressive regimes in the Muslim world has alienated the Muslim masses from the West in general and the United States in particular. Support extended to the Shah of Iran forms the classic example of this policy but is not the only one of its kind. Propping up regimes like those of Presidents Sadat and Mubarak in Egypt, Kings Hussein and Abdullah in Jordan, and collaborating with Saddam Hussein of Iraq to check the growing influence of revolutionary Iran in the 1980s are part of anti-American folklore not only in the Middle East but also throughout the Muslim world. All this augments the American image among Muslim populations of a global power bent on supporting repressive client regimes to further its own strategic and economic objectives in Muslim countries.

America, Israel, and Political Islam Above all, however, it is the unqualified and unquestioning American support to Israel, especially to its policy of continued occupation of and settlement within Palestinian lands conquered in 1967, that demonstrates to politically conscious Muslims that the United States is committed to treating Muslims and Arabs not only with insensitivity but with utter contempt. The American policy of vetoing or threatening to veto UN Security Council resolutions condemning Israeli policies provides proof beyond doubt to most Muslims of American–Israeli collusion to dominate the Muslim Middle East politically and militarily. The American veto on November 11, 2006, of a Security Council resolution condemning Israel’s attack on the Gaza Strip that killed 18 civilians, many of them children, was yet another confirmation for most Muslims that Israel can do no wrong as far as the United States is concerned. This was the fourth time in three years that the United States vetoed Security Council resolutions deploring Israeli actions, including one in March 2004 to prevent condemnation of Israel’s assassination of Hamas leader Sheikh Yassin and one in December 2003 blocking a measure protesting the construction of Israel’s separation wall in the West Bank (Hoge 2006). The United States has insisted that Middle Eastern countries, including Iraq, Iran, Sudan, and Lebanon, abide by UN Security Council resolutions. Simultaneously, it has supported repeated Israeli defiance and violation of a much larger number of resolutions passed by the same body and blocked the passage of an equal or larger number of resolutions condemning Israeli actions, including violations of the Fourth

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Geneva Convention on the treatment of occupied populations and territories. This disjunction in the American approach to the sanctity of Security Council resolutions strengthens the feeling in the Muslim world that the United States unabashedly uses double standards when it comes to Israeli defiance of international opinion and persistent violation of international law. American insistence that Iran stop its uranium enrichment program while condoning – in fact conniving at – Israeli possession of nuclear weapons and sophisticated delivery systems augments the feeling among most Muslims and others that American policy in the Middle East is largely driven by Israeli concerns, as represented by the Israel lobby in the United States, and not by American national interests (Mearsheimer & Walt 2006a, 2006b). The influence on American policy of domestic pressure groups closely allied to the Bush administration, such as the Christian Right composed largely of white Evangelicals who consider supporting Israel to be “God’s foreign policy,” has increasingly convinced many in the Muslim world that America’s support for Israel is part of a new “Crusade” against Islam (Kirkpatrick 2006). Many Muslims perceive America’s discriminatory policies aimed against Muslim countries, especially in the Middle East, as violation of their dignity, a variable often overlooked by most Western political analysts of the Muslim world. Several of the Muslims’ concerns relating to dignity come together on the issue of Palestine. Palestine has, therefore, become the Muslim grievance par excellence, especially since it was Britain that promised a homeland to the Jews in predominantly Muslim Palestine, and the United States that has been the primary supporter of Israel’s policy of continued occupation and settlement of Palestinian territories conquered in 1967. In the context of this background, many politically conscious Muslims believe that all Muslims are potential “Palestinians,” the ultimate outsiders, who can be dispossessed and dishonored with impunity and the justice of whose cause will always be dismissed by the West/North, and particularly by the United States, as irrational fanaticism. The centrality of the Palestine issue to relations between the Muslim world and the West/North was clearly acknowledged in the report prepared by the High-Level Group, consisting of 20 eminent personalities appointed by the UN Secretary General to address the growing rift between the Muslim countries and Western/ Northern powers. The authors of the report, who included South African Archbishop Desmond Tutu and former Iranian President Mohammad Khatami, proclaimed: The Israeli–Palestinian issue has taken on a symbolic value that colors cross-cultural and political relations among adherents of all three major monotheistic faiths well beyond its limited geographic scope . . . For Palestinians and a majority of people in the Muslim world . . . the establishment of Israel was experienced as an act of aggression that led to the expulsion of hundreds of thousands of Palestinians and to the occupation of their lands. (The UN Alliance of Civilizations Initiative 2006)

Under these circumstances, America’s persistent support for Israeli policies toward occupied Palestinian territories reinforces highly negative views of the United States in Muslim countries.


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The American occupation of Iraq has further fuelled Muslim anger against the United States since it is widely seen as a ploy to fragment a major Arab and Muslim country, to control the oil wealth of the Middle East, and to consolidate Israeli hegemony in the region (Ayoob 2004). It is perceived by many Muslims as a deliberate Western/Northern ploy to dismember and debilitate one of the major Arab powers potentially capable of acting as a balance to Israel in the Middle East. The post-Iraq war rhetoric in the United States and Israel targeting Syria, and more particularly Iran, is seen as the continuation of this policy of eliminating all Muslim countries capable of standing up to Israel and challenging its Northern-supported military hegemony in the Middle East. The American support for and connivance in the Israeli policy of inflicting highly disproportionate damage on Lebanon in July and August 2006 in retaliation for Hizbullah’s kidnapping of two Israeli soldiers has become another major item in the long list of Muslim grievances against the USA, and has further fuelled Muslim anger against Washington and its allies. The widely held suspicion, confirmed by a leading American investigative reporter, that the United States participated in the mapping out of Israeli strategy of eliminating Hizbullah in Lebanon has both ignited greater anger against the United States and led to the lionization of Hizbullah in the Muslim world. According to Seymour Hersh, “The Bush administration . . . was closely involved in the planning of Israel’s retaliatory attacks [against Hizbullah]” and that this would “serve as a prelude to a potential American preemptive attack to destroy Iran’s nuclear installations” (Hersh 2006). As a leading scholar of Islamist politics pointed out, “Far from weakening Hezbollah, Israel’s military onslaught increased the group’s popularity throughout the Muslim world.” Furthermore, it has “made Hezbollah into the new vanguard of armed resistance to Israel and America in the eyes of tens of millions of Arabs and Muslims” (Gerges 2006).

Anti-Americanism Benefits Political Islam The US support for Israel has worked to the advantage of Islamist political formations, Sunni and Shia alike, in the Middle East. The increasing support for Hamas in occupied Palestine and for Hizbullah in Lebanon is in substantial part a reaction to perceived injustices inflicted on Muslim populations because of America’s collusion with Israel, including the resupply of arms to Israel during its invasion of Lebanon in 2006. Islamism thrives to a considerable degree on anti-Americanism in the Muslim world. American policies, when perceived through filters provided by domestic contexts within discrete Muslim countries, further augment anti-Americanism in the Muslim world because they highlight the close relationship between Washington and several unsavory and repressive regimes in the Muslim world. Consequently, a symbiotic relationship has developed between the nature of regimes in Muslim countries and American policies toward the Muslim world, with both reinforcing hostile perceptions simultaneously of local regimes and of the United States among large segments of populations in Muslim countries. It is no coincidence that anti-Americanism is

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highest in those Muslim countries whose regimes are most closely allied with the United States.2 The high level of popular resentment against the United States in Muslim countries redounds to the benefit of Islamist political formations. This is the case because several of the authoritarian regimes in the Muslim world, including those ruling Morocco, Egypt, Jordan, Saudi Arabia, and Pakistan, are allies or clients of the United States, who guarantees their security. They, therefore, dare not oppose, except very feebly, American policies in the Muslim world in general and the Middle East in particular for fear that the United States may withdraw its support to them with consequences likely to be deleterious for such regimes. This was driven home dramatically during the Israeli invasion of Lebanon in July and August 2006, when most Muslim leaders remained silent spectators of America’s one-sided policy on the issue, demonstrated by its blocking for several weeks of attempts by the UN Security Council to pass a resolution calling for an immediate cease-fire that would have spared Lebanon at least some of the suffering it underwent due to Israeli bombings. It was clear that this American stance was coordinated with Israel in order to give the latter enough time to decimate Hizbullah’s military capabilities. The weak-kneed attitude of Middle Eastern leaders regarding the 2006 Israeli invasion of Lebanon and American support for Israel in this venture led to their being castigated as “half men” in much of the Muslim world. The term “half men” was first used by President Bashar Assad of Syria to characterize those elements in the Arab world that refused to support Hizbullah against Israel (Slackman 2006). Although the Syrian government clarified that President Assad did not use the term to refer to Arab leaders, the appellation seems to have stuck to them in the Arab street (Economist 2006). Islamists, on the other hand, have no compunction in opposing American policies vocally and virulently and in rebuking Muslim regimes for collaborating with the United States to promote the latter’s designs, seen as anti-Muslim by large segments of populations in many Muslim countries. This strengthens the Islamists’ political appeal because they articulate opinions widely held by Muslim populations around the world. Therefore, they come to be seen as the primary vehicle for the expression of most Muslims’ genuine grievances both domestically and internationally. It gives the appearance of Islamists being larger than life size within Muslim societies because, in stark contrast to Muslim regimes, they speak to the concerns of large numbers of Muslims, Islamists and non-Islamists alike. The recent American rhetoric about democracy promotion in the Middle East is also perceived in much of the Muslim world as a blatantly hypocritical afterthought to justify the invasion of Iraq after Washington had failed to discover WMDs (weapons of mass destruction) or to establish a link between al-Qaeda and the Saddam regime. It is also seen as a veneer for the promotion of other objectives and as an exercise in dishonesty, especially since the United States has clearly demonstrated its unwillingness to accept democratic outcomes of which it does not approve. The American refusal to deal with a democratically elected Hamas government in occupied Palestine and the imposition of economic sanctions on the Palestinian Authority following the Hamas victory in January 2006 has immeasurably strength-


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ened the perception in the Muslim world that America’s commitment to democracy in the Middle East is skin-deep. All this has redounded greatly to the benefit of Islamist parties and movements, which have projected themselves as leading proponents of democratization in the Middle East and have, as in the case of Hamas in Palestine and the Muslim Brotherhood in Egypt, clearly demonstrated their willingness to participate in the democratic process in their countries (International Crisis Group 2006; Rutherford 2006). The Islamist groupings’ clear-cut opposition both to the United States and to the authoritarian excesses of domestic regimes, plus their increasing commitment to democratic processes, has augmented their support among Muslim populations, with Islamism’s political appeal reaching far beyond the committed devotees of that ideology.

Political Islam and the North–South Divide What is the impact of all these factors on the role played by political Islam in the context of the North–South divide? The interplay of domestic and international variables – namely, opposition to authoritarian regimes domestically and opposition to American hegemony internationally – has created a very visible nexus between political Islam as an ideology of resistance domestically and as an anti-hegemonic ideology internationally. Its appeal and potency, especially as an anti-hegemonic ideology, has increased manifold in the absence of competing ideologies in the South in the post-Cold War era dominated by the United States and the Northern Concert that it leads. Consequently, in popular perceptions both in the North and in the Muslim World the North–South divide has to a significant extent come to coincide with what has been termed the “clash of civilizations,” a thesis that portends the impending inevitable confrontation between Islam and the West/North. While the term “clash of civilizations” may be a misnomer, there is enough evidence to suggest that the Muslim world, especially its political heartland the Middle East, has become the epicenter of “clashes” that are intimately related to the North–South divide. Such confrontations are in substantial part the result of Northern, especially American, policies toward that strategically important region. However, part of the reason for the concentration of such “clashes” in the Muslim world is also related to the potency of political Islam as an anti-hegemonic ideology that is able to galvanize Muslim populations to resist the imposition of a highly iniquitous international order that many Muslims believe deliberately functions in such a fashion as to do grievous damage to their interests both domestically and internationally. Political Islam has, therefore, become the ideology of resistance par excellence in the contemporary era, promoting ideas and agendas that at one time used to be termed “Third Worldism.” Its appeal is likely to increase rather than decrease in the absence of fundamental changes in the policies of major Northern powers, especially the United States, and in the overall dynamics in the relationship between North and South, particularly in the North’s relationship with the Muslim Middle East. Issues such as Palestine, Iraq, and the continued support extended to repressive regimes by the United States

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are likely to remain central to the relationship between the North and the South as far as the Muslim world is concerned. Political Islam as the quintessential antihegemonic ideology will continue to thrive as long as this remains the case. It may also, in the not too distant future, have a major demonstration effect on those elements in the non-Muslim South who harbor their own grievances against Northern, particularly American, hegemony, many of which they share with the Muslim world. Given the current trajectory of political Islam, it is not too far-fetched to speculate that over the next couple of decades it may become the voice of the vulnerable and the weak in the international system, regardless of religious affiliation.

Notes 1 2

The terms “North” and “West” and “Northern” and “Western” are used interchangeably throughout the essay. Polls conducted under the auspices of the Pew Global Attitudes Project confirm these findings. Polls conducted in 2006 showed that favorable opinion of the United States in Jordan and Turkey stood at 15 and 12 percent respectively while in Pakistan it was 27 percent. Details are available on the internet at http://pewglobal.org/reports/display.php?ReportID=252. The findings were released in June 2006 ahead of the Israeli invasion of Lebanon and American replenishment of the Israeli military arsenal during the invasion. One can reasonably expect that favorable ratings for the United States would have gone down further following the Israel–Hizbullah conflict. The finding is corroborated by a poll taken in six Arab countries whose regimes have close ties with the United States – Jordan, Lebanon, Morocco, Saudi Arabia, Egypt, and UAE – in October 2005: 63 percent of the respondents saw the United States as one of the two major threats to their countries, Israel ranking slightly above America at 70 percent; 80 percent identified American policies rather than values as the reason for their negative attitude toward the United States. The poll was conducted jointly by the Anwar Sadat Chair for Peace and Development at the University of Maryland and the polling firm Zogby International. Details are available on the internet at http://www.bsos.umd.edu/SADAT/ PUB/Arab-attitudes-2005.htm.

References Ayoob, Mohammed (1985) “The Iran–Iraq War and Regional Security in the Persian Gulf,” Alternatives 10: 581–90. Ayoob, Mohammed (1989) “The Third World in the System of States: Acute Schizophrenia or Growing Pains?” International Studies Quarterly 33: 67–79. Ayoob, Mohammed (2004) “The War Against Iraq: Normative and Strategic Implications.” In The Wars on Terrorism and Iraq: Human Rights, Unilateralism and US Foreign Policy, edited by T. G. Weiss, M. Crahan, and J. Goering, pp. 155–73. New York: Routledge. Ayoob, Mohammed (2007) The Many Faces of Political Islam. Ann Arbor: University of Michigan Press. Ayoob, Mohammed & Zierler, Matthew (2005) “The Unipolar Concert: The North–South Divide Trumps Transatlantic Differences,” World Policy Journal 22: 31–43.


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BP (2005) “Putting Energy in the Spotlight: BP Statistical Review of World Energy.” Available at: www.bp.com/statisticalreview. Cohen, Eliot A. (1996) “A Revolution in Warfare,” Foreign Affairs 75: 37– 54. Denoeux, Guilain (2002) “The Forgotten Swamp: Navigating Political Islam,” Middle East Policy: 56–81. Economist (2006) “Lebanon and Regional Diplomacy: Arab Neighbours Thinking Ahead,” The Economist, August 24. Eickelman, Dale F. & Piscatori, James (1996) Muslim Politics. Princeton, NJ: Princeton University Press. Fukuyama, Francis (1993) The End of History and the Last Man. New York: Harper Perennial. Gerges, Fawaz (2005) The Far Enemy: Why Jihad Went Global. New York: Cambridge University Press. Gerges, Fawaz A. (2006) “Gauging Terror – Part I, Lebanon,” Yaleglobal Online. Available at: http://yaleglobal.yale.edu/display.article?id=7996. Hersh, Seymour (2006) “Watching Lebanon: Washington’s Interests in Israel’s War,” New Yorker, August 21. Hirst, Paul Q. & Thompson, Grahame (1999) Globalization in Question: The International Economy and the Possibilities of Governance, 2nd edn. Cambridge: Polity. Hoge, Warren (2006) “U.S. Vetoes Security Council Resolution Assailing Israel for Attacks,” New York Times, November 12. Hoogvelt, Ankie M. M. (2001) Globalization and the Postcolonial World: The New Political Economy of Development, 2nd edn. Baltimore, MD: Johns Hopkins University Press. Humphreys, R. Stephen (2001) Between Memory and Desire: The Middle East in a Troubled Age. Berkeley, CA: University of California Press. Huntington, Samuel P. (1968) Political Order in Changing Societies. New Haven, CT: Yale University Press. Huntington, Samuel P. (1996) The Clash of Civilizations and the Remaking of World Order. New York: Simon and Schuster. International Crisis Group (2006) Enter Hamas: The Challenge of Political Integration: ICG Middle East Report. Available at: http://www.crisisgroup. org/library/documents/middle_east_north_africa/iraq_iran_gulf/45_the_shiite_ question_in_saudi_arabia.pdf. Keddie, Nikki (1972) Sayyid Jamal Ad-Din Al-Afghani: A Political Biography. Los Angeles, CA: University of California Press. Khalidi, Rashid (2004) Resurrecting Empire: Western Footprints and America’s Perilous Path in the Middle East. Boston, MA: Beacon Press. Kirkpatrick, David D. (2006) “For Evangelicals, Supporting Israel is ‘God’s Foreign Policy,’ ” New York Times, November 14. Lewis, Bernard (1990) “Roots of Muslim Rage,” Atlantic Monthly 266: 47–60. Mearsheimer, John J. & Walt, Stephen M. (2006a) “The Israel Lobby and US Foreign Policy,” Middle East Policy 13: 29–87.

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Mearsheimer, John J. & Walt, Stephen M. (2006b) “The Israel Lobby,” London Review of Books 28: 3–12. Orme, John (1997) “The Utility of Force in a World of Scarcity,” International Security 22: 138–67. Rutherford, Bruce K. (2006) “What Do Egypt’s Islamists Want? Moderate Islam and the Rise of Islamic Constitutionalism,” Middle East Journal 60: 707–31. Seib, Philip (2006) “Viewpoint: The Virtual Ummah,” Strategic Insights. Available at: http://www.ccc.nps.navy.mil/si/2006/Nov/seibNov06.pdf. Slackman, Michael (2006) “Islamists’ Rise Imperils Mideast’s Order,” New York Times, September 18. Stiglitz, Jospeh E. (2002) Globalization and Its Discontents. New York: W. W. Norton. The UN Alliance of Civilizations Initiative (2006) Alliance of Civilizations, Final Report of the High-Level Group. Available at: http://www.unaoc.org/repository/ HLG_Report.pdf. White, Jenny B. (2002) Islamist Mobilization in Turkey: A Study in Vernacular Politics. Seattle: University of Washington Press. Wickham, Carrie Rosefsky (2002) Mobilizing Islam: Religion, Activism, and Political Change in Egypt. New York: Columbia University Press. Yergin, Daniel & Stoppard, Michael (2003) “The Next Prize,” Foreign Affairs 82: 103–14.

Chapter 10 Fear and Loathing in the International System Ays¸e Zarakol

Yes, the greatest dilemmas facing humanity are still landlessness, homelessness, and hunger . . . But today our televisions and newspapers tell us about these fundamental problems more quickly and more simply than literature can ever do. What literature needs most to tell and investigate today are humanity’s basic fears: the fear of being left outside, and the fear of counting for nothing, and the feelings of worthlessness that come with such fears; the collective humiliations, vulnerabilities, slights, grievances, sensitivities, and imagined insults, and the nationalist boasts and inflations that are their next of kind . . . Whenever I am confronted by such sentiments, and by the irrational, overstated language in which they are usually expressed, I know they touch on a darkness inside me. We have often witnessed peoples, societies and nations outside the Western world – and I can identify with them easily – succumbing to fears that sometimes lead them to commit stupidities, all because of their fears of humiliation and their sensitivities. I also know that in the West – a world with which I can identify with the same ease – nations and peoples taking an excessive pride in their wealth, and in their having brought us the Renaissance, the Enlightenment, and Modernism, have, from time to time, succumbed to a selfsatisfaction that is almost as stupid. Orhan Pamuk, My Father’s Suitcase (Nobel Lecture, 2006) The principle of sovereign equality is what keeps the international system together, but it may also become the cause of its unraveling unless a way is found to address the shortcomings of the sovereignty model. The first step is acknowledging that such shortcomings exist. The theoretical bias in the discipline of International Relations1 toward “like units” and reified conceptions of statehood may be hailed for delivering parsimony and rigor, but such an approach obscures as much as it illuminates.


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Allow me a sweeping generalization at the outset: the majority of the people in the world experience the international system as masking mechanisms of profound inequality, injustice, and disappointment. The empirical fact of inequality in the international system is not a recent development (Tucker 1977: 8). However, the current state of the North–South divide is particularly worrisome given the failures of past attempts to overcome the inequality gap and the specter of disillusionment that has taken the place of the aspirations of upward mobility. A system of inequality is tolerable when the chances of success are somewhat randomly distributed. While pure equality does not exist (and may not be attainable) in such a system, an equality of opportunity to succeed on merits breeds a sense of justice (Rawls 1999). The international system, described as a system of sovereign equals and Great Powers rising by the merited accumulation of material assets, seems to approximate a system of equal opportunity on the surface. In practice, however, not only is there a considerable gap in the distribution of power among the states, but, more strikingly, the same regional patterns of power distribution have been constantly reproduced in the various phases of the modern international system. Put bluntly, power shifts in the international system have been occurring only within groups of haves (the core) and have-nots (the periphery), and not between them. With each turn, the power gap between the core and the periphery is not only growing but also becoming less palatable to those below. The decrease in tolerance is not only due to material conditions. The real problem lies in the collapse of the horizon of hope for the powerless to improve their status within this international system. The development of the European core of the international system, and the subsequent integration of the Third World, has been described in detail elsewhere (Wallerstein 1974; Tilly 1980; Stavrionos 1981; McNeill 1982; Watson 1992; Arrighi 1994; Spruyt 1994; Collins 1999). What is troubling, given our recourse to this excellent literature, is the scant attention paid in mainstream (American) International Relations to the recurrence of power dichotomies in the international system. This results in missed opportunities to link current debates about terrorism, political violence, and clash of civilizations to world-historical perspectives. In this brief article, I aim to make a general case that the North–South divide that has plagued the international system since its inception is maturing or has matured to the level of a systemic (social) contradiction. A social contradiction, as defined by Giddens, is “an opposition or disjunction of structural principles of social systems, where those principles operate in terms of each other but at the same time contravene one another” (1979: 141; italics in the original). The North–South divide is a social contradiction because on the one hand it is aided and reproduced by the operating mechanisms of the principle of sovereign equality, and on the other hand it contravenes the empirical implementation of this principle. I will also make the claim that if the international system is transformed in the future, this contradiction may be the starting point for such a transformation. Because I am making a few bold claims and sweeping generalizations, let me say a few words about epistemology and style at the outset. Earlier versions of this article have come under criticism for both, and I strongly empathize with the

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reviewer comments about the dangers of overgeneralizing, as well as the pitfalls of reifying and ossifying phases and epochs. However, as nuanced and unpredictable as human behavior is, such dangers should not doom aspirations to macrohistorical analysis. Eschewing the study of historical patterns leaves a void that can only be filled with ahistorical theorizing, which may be fruitful in some contexts, but definitely not in all. At the end, judgment on this issue might depend on one’s ontological stance – one cannot presume the existence of social and/or material structures without also expecting that they result in patterns or occurrences that seem to constitute patterns. Examples of such patterns may include the historical recurrence of agrarian–coercive empires (China, Japan, India, Iran, Turkey, Spain, Russia) around the world in the “Long Sixteenth Century” (Derluguian 2000a), or of revolutionary charismatic leaders between the two world wars. In this sense I am hoping, along with Collins (1999) and Derluguian (2002), that we are indeed living in the Golden Age of macrohistorical analysis and I aim to modestly contribute with this brief essay to this larger project. Derluguian has already christened this larger project as a paradigm, and he counts among its practitioners Wallerstein, Anderson, Bourdieu, Ragin, Tilly, and himself. The seemingly disparate research programs of these scholars is brought together by the desire to study the fields of action designated separately as politics, economy, and society as part of the same whole and as mutually related phenomena (Derluguian 2002: 4). I join Derluguian in his view of the world as “a hierarchically organized complex system irreversibly evolving over historical time in numerous discernible and often cyclical patterns” (2002: 3). And finally, I invite the reader who remains unconvinced by the macrohistorical project, or the possibility of executing it properly in article length (or my ability to do so), to give this article a chance as a simple essay meant to stimulate debate. This essay is divided into three sections. In the first section I briefly review the literature on the evolution of the sovereign equality principle. The second section gives an overview of the various historical manifestations of the North–South dichotomy as discussed by other authors. Finally, in the third section I discuss the various attempts of the South to close the gap with the North. I also place some of the contemporary problems of political violence, such as Islamic international terrorism, within the structural context of sovereign equality as a principle of social contradiction.

Sovereign Equality and Inequality In their introduction to Inequality, Globalization and World Politics, the editors Andrew Hurrell and Ngaire Woods note that “the disparity of power among states is becoming more marked” and that the “[l]ess powerful states are, even more than in the past, becoming ‘rule-takers’” (1999: 1). Ironically, the growing inequality between states is a direct consequence of the transmission and implementation of the sovereign equality norm on a global scale. On the one hand, the sovereign equality norm has helped new states to join the international system on as technically equal footing as the original members. On the other hand, the sovereign equality

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norm has operated as a straitjacket mechanism for new members that continually reinforced the power hierarchies that have existed since the inception of the system. The discriminating effects of the sovereignty system have been insightfully analyzed elsewhere (see e.g., Kingsbury 1999; Simpson 2004). To review briefly, mutual recognition of sovereigns as equals, in the sense that they could conduct their domestic business free from interference, was one of the key aspects of the Westphalian settlement (Simpson 2004: 31). In the early stages of the Westphalian system, the only major non-European states that frequently interacted with Europe were Russia and the Ottoman Empire (Watson 1992: 234). Russia dealt with the reality of the Westphalian arrangement and the growing military capacity of Western Europe by undertaking rather successful emulative reforms under Peter the Great, subsequently joining the European society of states at the end of the eighteenth century. As for the Ottoman Empire, her relations with Europe gradually deteriorated from a position of superiority to relative equality (pre-1815, see Bull & Watson 1984) to one of legal inferiority. As a result of this inferior position, Europeans were able to enjoy capitulatory privileges and consular jurisdiction within the Ottoman Empire. The latter were justified by the purported lack of individual rights in the Empire, and the constitutional reforms undertaken to meet these criticisms during the nineteenth century kept falling short of European demands. European relations with the Ottomans created a template that was later extended to institutions and rules Europeans spread to other independent states in the East and the South, such as Siam, China, Japan, and Morocco (Watson 1992: 272). The interference in the domestic affairs of these independent states was justified by the notion of their “semi-civilization.” In the nineteenth century, these “semi-civilized” states were included in the periphery of the international system, with vast tracts of land and many peoples being entirely excluded for lacking any civilization and therefore being deemed suitable for colonization (Kingsbury 1999: 73). Within the semi-civilized periphery, this state of affairs created a strong incentive to join the European society of states in order to be treated as equals (Watson 1992: 273). As a result, rulers in these states undertook emulative reforms, just as Peter the Great had a century earlier, but with more varied success. Within this emulative wave in the nineteenth-century periphery, we can count the Tanzimat Reforms of the Ottoman Empire (1839–76); the Meiji Restoration in Japan (1866–9); the reforms of Mongkut and his son Chulalongkorn in Siam (1851–1900); and the more limited reforms of Naser o-Din Shah and his Prime Minister Mirza Taghi Khan Amir Kabir (1848–51) in Persia. Given the varied penetration of these reforms, these states inched either closer to the core or closer to the fate of colonization. For instance, Morocco, having mostly failed to pursue this path, came under the French “sphere of influence” as early as 1904. On the other hand, the Ottoman Empire was technically recognized as a European power in 1856; and in 1907 during the Second Hague Conference, China, Siam, and Japan (as well as the South American states) were recognized as members of the European state system. This development was partly due to the success of the emulative reforms discussed above, but there was also a growing camp within Europe that envisioned a


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more inclusive world order (Simpson 2004: 159). Nevertheless, in the early decades of the twentieth century a more inclusive system entailed simply bringing the “unequal sovereigns” into the fold of reciprocal diplomacy; the colonized peoples of the East and the South enjoyed no sovereignty whatsoever. The main difference between the early nineteenth-century standard of civilization and the early twentieth-century version was that the requirement of Christianity had been forsaken (see Oppenheim 1905). As long as states accorded basic rights to both citizens and aliens, had a functioning bureaucracy, and adhered to international law, they could be recognized as sovereign equals (Simpson 2004: 256). This idea, introduced as early as the turn of the century, took a while to settle in. For instance, debates over the Ottoman Empire’s status continued until the Kemalist revolution put an end to the Empire. The League of Nations Covenant did not recognize racial equality among nations despite Japan’s protests (Kingsbury 1999: 74). Another problem was that this new-found inclusiveness came at a price. As Kingsbury notes: “Non-European forms of political organization that might have attained widespread legitimacy as alternatives to the European-style sovereign state were subordinated and delegitimized as global models” (1999: 74). Perhaps this was not so much of an issue for the peripheral states of the nineteenth century (many of which now are now tucked in the semi-periphery); as independent and sovereign states with bureaucratic traditions of their own, many had the relative strength and the resources to see the necessary emulative transformation to a somewhat fruitful end. Most of the states that gained their independence and the right to be treated as sovereign “equals” in the decolonization phase after World War II were not so blessed. As a result, as Kingsbury argues, many have the trappings but not the effectiveness of modern states (1999: 84). After World War II, the USA and the USSR emerged as the new “great powers.” However, “The European tradition of an organized international society was so strong that [the USA and the USSR] and their allies agreed that the rules and practices of the previous period should remain provisionally in force with minor changes” (Watson 1992: 289). The European state model had become the norm, and the newly independent former European colonies did not have the luxury or the option of doing away with the model if they wanted to be recognized as sovereign (Jackson 1993). Limited resources were diverted to maintaining the appearance of a modern sovereign state because this meant freedom from intervention and in the long run came to suit the purposes of some of the dictators who now ruled these new states. The only functional variation on the menu of emulation for both peripheral and semi-peripheral states in this period was the purported choice between the two opposite poles. Watson describes the Cold War system: “The two superpowers were not ‘book-ends’ holding together a single closely involved society of states; they were centres round which largely separate societies developed, locked against each other strategically but insulated by geography and ideology” (1992: 289). Once these camps were formed, geography gained highly deterministic influence on membership. However, even in this regard, the early late-movers – i.e., the semiperipheral states that were trying to catch up with the industrialized nations

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within the first half of the twentieth century – had more room for maneuver in terms of following the path that was dictated by the domestic structural arrangements. Derluguian (2000a) makes a compelling argument that the revolutionary socialist and nationalist states of the twentieth century differ not so much in ideology but rather in terms of state capacity. “When a group of intelligentsia alienated from economic property” took control of the state and targeted all assets, the result was socialism. On the other hand, when property owners and intelligentsia took control of the state and targeted clergy and landlords, the result was “national liberation.” It should also be observed, however banally, that while the twentieth century is regarded as the century of (in)famous dictators, these authoritarian leaders – Hitler, Stalin, Mussolini, Ataturk, the Shah, Mao, etc. – cannot be thought of separately from the structural pressures acting on the semi-periphery and the periphery to catch up with the Western core.2 With the collapse of the Soviet Union, the alternative route for modernization/ development/industrialization within the modern state framework also vanished. The end of the Cold War was hailed by declarations of “the end of history.” Capitalist liberalism was supposed to have won out for good (Fukuyama 1992). Recent developments, especially post-9/11, have seemed to contradict this hopeful conclusion; however, those in Fukuyama’s camp were not completely mistaken. The end of the Cold War with the defeat of the USSR did signal the victory of liberal capitalism within this international system. The collapse of the Soviet bloc demonstrated that the economic/political ideology that is most compatible with the progress of the modern Westphalian state is liberal capitalism/capitalist democracy. With the states emerging from the Soviet bloc joining the international system, the sovereignty norm took its most comprehensive and universally applied form. In other words, the expectations surrounding the modern state norm now range from individual rights to adherence to international law to economic liberalism and democracy. Despite (and because of) the dissemination of the sovereign equality principle to all corners of the globe, tiered conceptualizations of the international system have persisted. Instead of civilized, semi-civilized, and barbarous nations, we now have liberal zones of law, on the one hand, outlaw/rogue states, on the other, and many in between (Kingsbury 1999: 90; Simpson 2004).

Dividing the World into Zones In this section, I will briefly review how the hierarchical and tiered thinking about the world the European states adopted in the nineteenth century has persisted over time and has indeed become an intrinsic feature of the international system. A good starting point is Greg Bankoff’s 2003 article where he notes, “[t]erms such as first world–third world, North–South, center–periphery all draw attention to the manifest disparities in material gratification between the two, while simultaneously reducing the latter to a homogenized, culturally undifferentiated mass” (2003: 416). He further goes on to argue that the less powerful side of this dichotomy has been consistently associated with “passivity, ignorance, hunger, illiteracy, neediness,


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oppression and inertia” as well as hazard, natural disasters, disease, risk, and now terrorism. Thus, there are two main problems with the way the international system is hierarchized. First, the regional hierarchies have stayed more or less constant since the nineteenth century, even as the terminology has changed. Second, the very existence of hierarchy has colored the perceptions of the less powerful Other, even as the dominant discourse of risk has changed from disease and incivility to terrorism and lawlessness (see e.g., Said 1994; Neumann 1999; Salter 2002; Bankoff 2003). It is not particularly difficult to demonstrate the first preposition. As also discussed in the previous section, the current debate over zones of legality versus zones of danger and lawlessness strongly echo the nineteenth-century distinctions of civilization and barbarity (Gong 1984; Kingsbury 1999; Salter 2002; Simpson 2004). However, speaking of this issue as if it were the only discourse masks the gravity of the situation on the ground. It is not only the act of classifying the world into various tiers that is consistently reproduced; we also have to pay some attention to the fact that the particular placement of various countries, peoples, and regions within ranked tiers has also stayed more or less constant. The core has been consistently occupied by European states and former colonies populated originally by immigrants from core European countries (the USA, Canada, Australia). States whose existence predates the modern state system – such as the agrarian–coercive empires of the long sixteenth century (e.g., China, Japan, India, Iran, Turkey, Russia) and various Asian states of the Chinese tributary system, as well as colonies populated by a mix of immigrants from the then semi-peripheral European countries and indigenous populations (e.g., South America) – have constituted the semiperiphery. The rest of the colonized world has consistently been relegated to the periphery since their inclusion in the system. Individual states in each tier may have hopes of moving upward, but very few have succeeded. Only the original semiperiphery of the Westphalian system – that is, Southern and Eastern Europe – has been absorbed by the core due to the European integration process, aided a great deal by the lack of cultural barriers to entry. Other states from the semi-periphery such as Japan and Russia have at different times straddled the core and the semiperiphery. Yet, even Japan’s economic advances and membership in G-7 has not made its placement in the First World such a certainty as to end domestic debates in Japan about identity. The mechanisms that perpetuate this process have been successfully explored elsewhere, particularly from a political economy perspective (e.g., see Prebisch & Di Marco 1972; Wallerstein 1975, 1978). However, mainstream International Relations has stayed mostly silent about the impact of these rather immutable categories on the outlook of decision makers and regular people within and outside of the core. By impact, I mean especially the psychological impact. While it might be difficult to demonstrate without carefully crafted surveys that people around the world are aware of these (relatively fixed) status hierarchies and their placement within them, common sense and novelists such as Orhan Pamuk, as quoted on the first page, warn us rather plausibly that there is a psychological toll. There may very well be an additional leap required to go from assuming that there is a certain psychology associated with being part of the South or the East or the periphery to

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convincingly demonstrating that this psychology has any bearing on the way international relations operate. Yet, to expect that there would not be is also problematic in its own right. In the passage I’ve quoted at the beginning of this article, Pamuk says that, “We have often witnessed peoples, societies and nations outside the Western world – and I can identify with them easily – succumbing to fears that sometimes lead them to commit stupidities, all because of their fears of humiliation and their sensitivities.” I think this is a point that the discipline of International Relations should start taking more seriously as a point of investigation. In the same Nobel acceptance speech, Pamuk talks about his sense, growing up in Istanbul, that the world had a center away from him, and how these feelings of provinciality had led him to question his own sense of authenticity. He talks about how this process helped him empathize with both the West and the periphery. I do not wish to generalize too much from an individual example, especially from the example of an exceptionally gifted writer who stands in a rather unique intersection point of cultural dichotomies. However, even this brief acknowledgment of empathy and the confession about the feeling of inadequacy tell us something about the way people experience the international system that most mechanistic accounts of it do not. In the abstract theories of the modern states system this empathy gets lost. As Salter points out, when imperialism is defined simply as a state acquiring more power, it is removed from “its historical roots in European expansion [and] that expansion drops from the view of study” (2002: 117). Imperialism becomes an almost natural fact of life that could be driven by just any state against any state – and perhaps that is a true assessment of the phenomenon in a theoretical vacuum or in the bird’s eye view of human history – but, in the modern state system, neither the sources nor the targets of imperialism have been randomly distributed (even after the decline in the use of the juridical status of the term). When countries in the periphery try to engage in tactics of imperialism – however meekly, in comparison to the historical role models – they are labeled outlaws or rogue states and suffer the consequences (Lustick 1997). This reality is also obscured by abstract theorizing about Great Powers. The structural conditions of this international system, among which we should count the North–South, core–periphery status divide as one of the primary, make it impossible for any country that is in the periphery to become a Great Power. Not now, not in the future. And while a few of the semi-peripheral countries, e.g., Russia, China, Japan, at times have seemed or now seem capable of breaking the core barrier, it is doubtful that their material strength has ever translated or will ever translate into the kind of international rulemaker power that the comfortably Western Great Powers have enjoyed. In other words, the constant recurrence of the North–South, East–West, the West and the Rest, the core and the periphery dichotomies in the modern international system is a comprehensive structural problem that extends well beyond political economy and the disparity in the distribution of material benefits. This is a matter of social exclusion as much as it is a consequence of power disparity and economic exploitation. On a most superficial level, it cannot be denied that people outside of the core spend their lives looking from the outside in; that if they want to participate and feel relevant, they have to listen to the conversations within the West, however


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trivial those may be in substance and however inconsequential to their own lives. It is the Western judgment – expressed in awards such as the Nobel and the Academy Awards, in billboard rankings and world news coverage, in human rights watch lists and credit ratings – that is the arbiter of international prestige and relevance. To assume that the individual satisfactions or humiliations, or even worse, a general sense of invisibility, of inconsequentiality, accrued multiple times over these judgments the core passes every day – to assume that this state of affairs has no bearing on events in world politics when cumulated would be to ignore the human element in social sciences (see also Buzan & Little 2000: 20).

Southern Failure as Systemic Failure During the expansion of the modern states system, the causes of Western domination and the possible recipes that would allow the East/South to catch up were analyzed ad infinitum. Different strategies and ideologies that promise this outcome have been adopted by groups around the world depending on the historical and structural context of a particular time. Given our vantage point from the apex of system maturation (at the very least in a geographical sense), we have perhaps a greater ability than ever before to place these efforts in the larger historical context. Let me try to illustrate a few general patterns with the broadest of brushstrokes. As noted above, the very first non-European states that had to deal with the reality of Western advancement and the Westphalian arrangement were those agrarian–coercive empires that spotted the globe.3 The timing and the scale of their response hinged on their geographical proximity to Western Europe as well as their own domestic constraints. As I have noted above, Russia under Peter the Great was the first in this group to follow a relatively successful, but not in any way comprehensive (none of them were), path of emulative transformation. I have also discussed how this was a template that would be later followed by the other agrarian–coercive states of the then periphery. The impetus for emulation was primarily in military affairs, but it was not a simple matter of competition driving technological borrowing. The reforms also included cosmetic changes such as those in costume and language made to match European civilizations (Neumann 1996: 11). This pattern of cosmetic changes was also replicated in other states such as the Ottoman Empire, Japan, and Siam. The Russian romantic nationalist writer Utkin has a rather unusual view of Peter’s reforms. As discussed by Neumann, Utkin argues that, “Peter’s reforms did not penetrate all of society, and therefore they neither made Russia a Western country nor did they destroy the Russian heritage. Rather, the reforms served as a shield which allowed Russia to maintain its independence and originality while it was at the same time included in the sphere of European culture” (1996: 191). This is a rather optimistic interpretation of what Peter’s reforms achieved; more plausible is the argument that these reforms made Russia passable as a European power from the outside, while effectively blocking the penetration of other mechanisms such as capitalism and (later) popular suffrage, which might have dismantled the

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power base of the agrarian–coercive absolutism. This story, too, is repeated elsewhere. This dual framework of prioritizing the international signaling of “civilization,” on the one hand, while trying to keep premodern mechanisms of power in place, on the other, was the main context for the first waves of political violence in the then periphery. In that first wave of non-state political violence in the international system were organizations such as Narodnaya Volya, which emerged in Russia circa 1879. This was the first group to use extranormal acts of violence to target civilians with the explicit purpose of violating those conventions that distinguish between combatant and non-combatant; in other words, Narodnaya Volya was the first modern terrorist organization (Rapaport 2001: 419). Rapaport argues that the impetus for Narodnaya Volya was the disillusionment left in the wake of massive economic and political reforms introduced by the czars. The tactics of Narodnaya Volya were soon taken up by other groups in Eastern Europe and the Balkans, such as the Serbian Black Hand or the Internal Macedonian Revolutionary Organization (responding to the Ottoman duality toward reform). The organizations of the Balkans differed from their Russian counterpart in their nationalist goals. However, there were also a great many commonalities between these groups. They all targeted “leaders of oppression,” i.e., the absolutist rulers – most famously exemplified by the assassination of the Archduke Ferdinand by the Serbian Black Hand. These groups were responding to the most profound shift the concept of sovereignty had undergone since Westphalia – the notion manifested in the French Revolution that sovereignty derived not from divinity but rather from the people (Reus-Smit 1999). Furthermore, because the emulated sovereign states of Western Europe were (incipient)4 nation-states, popular sovereignty came bundled with the notion of national selfdetermination. It is not possible to do justice to the complicated story of the spread of nationalist political violence in nineteenth-century Eastern Europe, and such is not my intent (see e.g., Smith 1979; Gellner 1983; Anderson 1991). I refer to these nationalist/antimonarchist movements – that is, the first modern wave of terrorism – only to make the simple point that in the eighteenth and nineteenth centuries, even the revolutionary developments in the immediate periphery of the international system did not challenge but actually strengthened the sovereignty norm. Both the conservative leaders in power and their violent opposition were agents in the expansion of the sovereign state system. Absolutist rulers of peripheral agrarian empires responded to the challenges of the Westphalian system with military emulation and cosmetic changes that in effect accepted and endorsed the civilization standards of Western Europe. Their reforms had the consequence of raising expectations, especially among the intelligentsia, and in those cases where they were introduced under Western pressure they made explicit a degree of weakness in the ancien régime for all to see. On the flip side, the revolutionary movements or the terrorist groups of the nineteenth century also had goals that in effect were in line with the sovereignty-as-rooted-in-the-people norm that was emanating from Western Europe. However violent their chosen methods may have been, the stated goals of these extralegal groups were usually


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things such as constitutions, universal suffrage, representation, freedom of speech and press, self-government, and the right to self-determination. Communist philosophy also played an undeniable role in shaping the goals of revolutionary movements of this period – but for the purposes of this article I would like to leave aside any discussion of domestic class conflict in the peripheral states of the nineteenth century. This is because in countries where socialist movements succeeded in capturing the state, the problem of how that sovereign state would deal with the advancement gap of the West became an issue more paramount than the self-actualization of workers (Lenin 1939). Derluguian’s insightful observation about how nationalist and socialist states can be thought of as part of the same spectrum in terms of their responses to international pressures bears repeating. In the early decades of the twentieth century, semi-peripheral independent states that lacked an experience of colonialism (and therefore did not have established trade relationships in primary exports) ended up choosing state-led industrialization patterns. Whether the choice was proto-ISI (import substitution industrialization) justified in nationalist mercantilism (Turkey in the 1920s) or state control of heavy industry justified in anti-imperialist rhetoric (Russia after 1918) depended more on the particular make-up of the ruling coalitions in a particular country than anything else. Of these two paths for “catching up” with the West, nationalist mobilization for modernization has had more widespread appeal throughout the twentieth century, most likely because adopting the communist path required a comprehensive social revolution and therefore demanded a higher degree of ideological commitment and more resources. However, both paths had their willing (and unwilling) adherents in the Third World (Sauvy 1952), which had emerged out of the decolonization phase of 1945–60. Regardless of whether the push for change came from above or below, the people of the Third World had two primary goals: self-determination and, once that was accomplished, autonomy. These goals correlated with the two facets of the modern sovereignty principle: de jure and de facto sovereignty. Self-determination implied wrestling away the control of a territory from colonial control. What Rapaport calls the “second wave” of terrorism was mostly made up of organizations in colonized territories whose main driving purpose was self-determination and independence (2001: 420). Not all anti-colonialist movements were violent, of course, but once again, the sovereignty principle was disseminated to the periphery by both normal and extranormal methods. To put it another way, during the main decolonization phase of the international system, leaders and opposition alike were still working within the framework of the sovereignty principle. Autonomy was a more elusive goal both for the periphery and the semi-periphery. It required closing the ever-growing economic gap with the advanced industrialized countries of the West. For a brief period, decolonization and the idea of developmentalism offered a hope to “the South”/“the Underdeveloped”/“Colonized” that independence would finally usher in progress and modernity, and a real say in how the international system was run. The period after World War II was marked again by state-led developmental strategies outside of the core, with a spectrum ranging from the Soviet socialist approach to the import-substituted industrialization and

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heavy borrowing in Latin America to the Developmental States of East Asia. By the 1970s, there was a growing sense that self-determination was not enough in an international economic system that favored the industrialized countries – as evidenced by the calls for a New International Economic Order (NIEO) emanating from the developing countries in the United Nations. This was the last concerted effort by the leaders of the states in the periphery to demand that inequity in the international system be taken seriously by the North. This period also saw a marked increase in international terrorism. The “third wave” of modern terrorism struck all around the globe; terrorists of the 1970s trained at each other’s facilities, and shared weapons and know-how. Terrorist groups made their presence felt in the West as well, but “[m]any, such as the American Weather Underground, German Red Army Faction, Italian Red Brigades, and French Direct Action, saw themselves as vanguards for the masses of the third world” (Rapaport 2001: 421). The politically violent groups of this period, whatever their particular goals, often took up a strongly anti-imperialist rhetoric in their communications. This was partly due to Soviet interference but it was also because the idea of worldwide communist revolution, at least in theory, held the promise of a structural readjustment of the international system in more equitable terms. As long as the Soviet Union was in existence, Marxism–Leninism, at least as an ideology, offered a small variation from the Western sovereign state norm. Simply by existing, the USSR stood for the idea that not every state had to emulate the Western state model in its entirety. In theory, Marxism was completely against the state. Again, in theory, if communism ever emerged victorious, the international system would be entirely transformed – sovereign states would become a thing of the past. Yet the same time, communism, in the way it was realized, did very little to challenge the sovereign state norm as based in national self-determination. None of the variants of communism offered a global organizing principle that could be an alternative to Westphalian sovereignty. Short of a worldwide communist revolution, socialism had to be practiced more or less within the straitjacket of the Westphalian state. Nevertheless, the existence of an alternative to the Western model, however shallow it may have been in reality, meant something for the periphery in terms of the room for maneuver it offered. For this reason, the collapse of the Soviet Union and the end of the Cold War was only a mixed blessing for the periphery. It did, on the one hand, put an end to proxy conflicts, which were having a destabilizing effect on the development efforts in the Third World. However, with the collapse of the Soviet Union coming at the heels of the debt crisis and the subsequent bust of ISI methods in the developing world, heavy-handed state-led industrialization efforts were dealt a fatal blow. The only way to exist in the international system after the Cold War was to play by Western rules: states had to democratize, liberalize, and trade freely. What I have offered until now is a simplified retelling of a complicated story. My argument is not that there is something inherently wrong with ideals embedded in the sovereignty norm that has now enveloped the entire globe. The capitalist system of free trade and the emphasis on democratic governance, as well as indi-


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vidual rights, are most likely better than their alternatives. However, it is also undeniable that such a system does not offer equal benefits to all when practiced on a global scale. More problematically, the international system has calcified into a hierarchy within which the early comers keep winning at the continuous expense of the latecomers. The twentieth century, with all of its bloodshed, was also a time of experimentation with strategies that might close the power gap that had emerged in the nineteenth century between the North and the South, the West and the East. Most, if not all, of such strategies have proved hopeless. The only regions of the semi-periphery that have advanced their status in the international system during the twentieth century, at least from an economic perspective, are parts of East Asia and Eastern Europe. Given the uniqueness of their circumstances, it is unfortunately doubtful that their success can be replicated elsewhere. The international system as it exists now has reached a critical juncture. Systems of unequal power and resource distribution are legitimate as long as those who are worse off either believe that they can improve their situation one day or share an ideology that justifies the hierarchy. As an example of the former situation, the capitalist system in the United States works well partly because of the widespread belief that it functions as a meritocracy. On the other hand, rigidly stratified societies such as the caste system in India or absolutist monarchies in medieval Europe were made legitimate by appeal to divinity. The problem with the modern states system is that the ideology of the system is one of equality and meritocracy – whereas its reality is one of a fairly rigid hierarchy. Rule-making power, economic benefits, and military advantages are all concentrated in the hands of the Northern/Western countries. None of the solutions conceived in the twentieth century to address this imbalance have proved fruitful. Despite the inequity, the sovereign state system has been accepted as legitimate until now because the semi-periphery and the periphery had hopes of advancing within it. The civilization standard of the nineteenth century was discriminatory, but it made it possible for a country to hope that once it met the standard it would be treated as an equal sovereign and therefore have an equal chance of advancing in the international system. Dividing the world into zones of development in order to justify colonialism (as the League of Nations had done) was problematic, but it provided hope that if a country modernized quickly, it could determine its own fate. Decolonization offered the hope that national independence would break the pattern of exploitation. The Soviet model was an illusion masking an ugly reality, but it provided some countries with the hope that they could catch up to and even surpass Western advancement. With all of these strategies failing, the horizon of hope for the periphery has mostly collapsed. Ironically, it was these hopes of advancement that extended the system of sovereignty around the globe. Now that the sovereignty norm is universally accepted, most people in the periphery have to come to terms with the fact that they live in a world whose center is located away from them and will likely stay that way in the foreseeable future. The best they can hope for is that emulating the Western model will improve their economic situation and perhaps bring them more democracy. There is no choice but to accept this model and, except for rare

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exceptions such as China, this model does not offer anybody any hope of surpassing the West one day. The only concrete option individuals in the periphery have if they desire to rise up in the international pecking order is to immigrate to the core. I do not mean to argue that this kind of hopelessness is enough by itself to topple the system. However, the disappearance of alternative national strategies of mobility in the international system, with only personal strategies of immigration left to fill in the void, does not bode well for the health of the sovereign equality principle. Another symptom of the collapsing of the hope horizon in the periphery is manifested in the dominant rhetoric of the “fourth wave” of terrorism (Rapaport 2001; Kurth Cronin 2002/3). The fourth wave of terrorism, spearheaded by al-Qaeda, is usually analyzed in terms of its religious – Islamist – ideology. However, the most telling difference between the fourth wave and the previous waves is not the emphasis on religion. The crucial difference is that terrorist organizations of the past did not reject the sovereignty norm as rooted in national self-determination. Early terrorist organizations embraced the sovereignty norm – even in violence, they were simply expressing their own perceived right to sovereignty. Even the anti-imperialist organizations of the 1970s such as the Japanese Red Army or the Red Brigades were willing to work within the sovereignty framework (toppling domestic governments first) in order to reach the ultimate goal of worldwide communist revolution. For this reason, terrorist organizations of the past, including those that were internationally active, had primary state targets and particular governments they sought to replace. Al-Qaeda, on the other hand, whose leaders seem to hate the United States the most, has no stated desire to offer its own replacement for the American government. Al-Qaeda attacks many other countries besides the United States. Ideologically, al-Qaeda and its affiliates have no desire to work within the modern sovereignty framework – their state ideal for the world system harkens back to a time well before Westphalia. Most troublingly, Islamist ideology offers an alternative organizing principle for states: religious communities as opposed to national ones. Al-Qaeda’s threat may turn out be exaggerated and the terrorism of the fourth wave may very well prove to be as inconsequential as the previous one. Yet the rhetoric of al-Qaeda, and the ways it differs from the opposition ideologies of the past, merits careful attention. Violent organizations of the past were able to envision success within the sovereign state system. Their attentions were primarily directed to changing domestic dynamics because it was believed that “correct” domestic measures would in turn bring international advancement. Al-Qaeda does not bother with domestic rearrangements. Ironically, nothing demonstrates the disillusionment in the periphery better than the fact that even an extremist and arrogant ideologue such as bin Laden did not think that he could impose his will on the international system by wrestling control of a sovereign state first. In terms of our understanding of North–South, core–periphery relations, alQaeda and Islamic revivalism merit attention mostly because they are symptoms of the general dissatisfaction shared by citizens of the periphery. Feelings of disillusionment, disenfranchisement, humiliation, irrelevance, and hopelessness are not neces-


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sarily fatal threats to the international system, just as they are not sufficient causes for domestic revolutions (Goldstone 2001). They are, however, a poorly articulated but rather fundamental element of world politics today. For now, Muslim communities seem more prone to overblown displays of antiWestern resentment: the riots over the Danish Mohammed cartoons5 and the protests over the Pope’s remarks6 come to mind. To many observers in the West, these reactions seemed out of proportion, hypersensitive, and even hypocritical. For instance, Christopher Hitchens sarcastically commented: “Let’s be sure we haven’t hurt the vandals’ feelings” (2006). It does seem ridiculous that Muslim extremists around the world were attacking Danish embassies and calling for the head of the cartoonists as a way of demanding respect for their religion. Why would Muslims around the world – both moderate and extremist – be so insulted by a handful images or words, given the fact that much worse anti-Western rhetoric spews forth from Muslim extremist groups everyday? Why would Muslims not be equally troubled by acts of aggression and oppression by Muslim leaders? Instead of dismissing all offended Muslims as hypocritical thugs, it is possible to interpret these actions, however misguided, as a last stand for breathing room within the Western sovereign state framework. Reactionary and violent Islam has enjoyed a revival precisely because it offers an answer to the authenticity problem that plagues the periphery. As long as there are no other alternative paths for retaining a modicum of dignity and authenticity, sympathizers of this violent path will continue to grow in numbers. Having yielded to the West in every issue that really matters, the only kinds of authenticity most people in the periphery can grasp at are in their private lives. Cartoons in a faraway country are threatening because they signal that there is no ideological barrier that will stop the creep of the sovereign state norm before it forces the transformation of the private sphere, just as it has every facet of politics and economics.

Conclusion In the opening paragraphs, I made the argument that the sovereign equality principle acts as a contradiction within the international system. The principle and hope of sovereign equality is what brought the South and the East into this international system. At the same time, the advancement of the periphery has been strongly contravened by the sovereignty norm that placed increasing limits on the kind of strategies that may have been adopted to catch up before competing. This resulted in a shared outlook in the periphery: “In the final analysis, though, states and governments belong to the Third World because they perceive themselves as falling into that category. This perception is based on a feeling of deprivation . . . in the prevailing international system” (Ayoob 1989: 72). While this has always been the case throughout the history of the relationship of the periphery with the international system, what is changing now, and for the worse, are the general attitudes toward the sovereign state model. The greatest future source of systemic instability lies in the growing belief in the illegitimacy of the sovereign state model as a solution to the periphery’s problems.

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Notes 1 2

3 4 5

6

I am using the conventional distinction of capitalizing when referring to the discipline, as opposed to the subject of study. One might even postulate a rough inverse correlation between the status proximity of each country vis-à-vis the West at a given time and the degree of personal gain sought by that country’s charismatic/authoritarian leader/liberator. We can also count the hold-over, peripheral European empires in this group. See e.g., Weber (1976). The controversy involved editorial cartoons of the prophet published in the Danish newspaper Jyllands-Posten on September 30, 2005. This led to protests across the Muslim world, some of which escalated into violence, such as setting fire to embassies, storming European buildings, and murders of priests and others associated with Europe. In September 2006, soon after taking office, Pope Benedict XVI quoted a medieval text wherein a Byzantine emperor claimed Mohammed had only brought evil to the world. The remarks were declared offensive by most governments of predominantly Muslim countries, and the Pope soon expressed his regrets.

References Anderson, Benedict R. O’G. (1991) Imagined Communities: Reflections on the Origin and Spread of Nationalism. New York: Verso. Arrighi, Giovanni (1994) The Long Twentieth Century: Money, Power and the Origins of Our Times. London: Verso. Ayoob, Mohammed (1989) “The Third World in the System of States: Acute Schizophrenia or Growing Pains?” International Studies Quarterly 33: 67–79. Bankoff, Greg (2003) “Regions of Risk: Western Discourses on Terrorism and the Significance of Islam,” Studies in Conflict and Terrorism 26(6): 413–28. Bull, Hedley & Watson, Adam (1984) The Expansion of International Society. New York: Oxford University Press. Buzan, Barry & Little, Richard (2000) International Systems in World History: Remaking the Study of International Relations. New York: Oxford University Press. Collins, Randall (1999) Macrohistory: Essays in Sociology of the Long Run. Stanford, CA: Stanford University Press. Derluguian, Georgi M. (2000a) “A Tale of Two Cities (The Adventures in Globalization),” New Left Review Series II-3 (May–June): 47–71. Derluguian, Georgi M. (2000b) “The Neo-Cossacks: Militant Provincials in the Geoculture of Clashing Civilizations.” In Globalizations and Social Movements, edited by John P. Guidry, Michael Kennedy, and Mayer Zald. Ann Arbor, MI: University of Michigan Press. Derluguian, Georgi M. (2002) “Terrorism, the Weapon of the Organizationally Weak.” In Transnational Terrorism in the World-System Perspective, edited by Ryszard Stemplowski. Warsaw: The Polish Institute of International Affairs. Derluguian, Georgi M. (2004) “A Cyclical Theory of Russia’s Historical Change.” In Russie: Le défi d’une metamorphose, edited by Carlos Canales, Lilly A. Lo Manto, and Sergei Plekhanov. Toronto: York University.


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Evans, Peter B. (1979) Dependent Development: The Alliance of Multinational, State, and Local Capital in Brazil. Princeton, NJ: Princeton University Press. Fukuyama, Francis (1992) The End of History and the Last Man. New York: Free Press. Gellner, Ernest (1983) Nations and Nationalism. Ithaca, NY: Cornell University Press. Giddens, Anthony (1979) Central Problems in Social Theory: Action, Structure, and Contradiction in Social Analysis. Berkeley, CA: University of California Press. Goldstone, Jack (2001) “Toward a Fourth Generation of Revolutionary Theory,” Annual Review of Political Science 4 (June): 139–87. Gong, Gerrit W. (1984) The Standard of “Civilization” in International Society. New York: Clarendon Press. Hitchens, Christopher (2006) “Stand up for Denmark!” Slate (February 21). Accessed at: http://www.slate.com/id/2136714/ Hurrell, Andrew & Woods, Ngaire (1999) Inequality, Gobalization, and World Politics. New York: Oxford University Press. Jackson, Robert H. (1993) Quasi-states: Sovereignty, International Relations, and the Third World. New York: Cambridge University Press. Kingsbury, Benedict (1999) “Sovereignty and Inequality.” In Inequality, Globalization, and World Politics, edited by Andrew Hurrell and Ngaire Woods. New York: Oxford University Press. Kurth Cronin, Audrey (2002/3) “Behind the Curve: Globalization and International Terrorism,” International Security 27(3): 30–58. Lenin, Vladimir Ilyich (1939) Imperialism, the Highest Stage of Capitalism. New York: International Publishers. Lustick, Ian S. (1997) “The Absence of Middle Eastern Great Powers: Political ‘Backwardness’ in Historical Perspective,” International Organization 51(4): 653–83. McNeill, William H. (1982) The Pursuit of Power. Chicago, IL: University of Chicago Press. Neumann, Iver B. (1996) Russia and the Idea of Europe: A Study in Identity and International Relations. New York: Routledge. Neumann, Iver B. (1999) Uses of the Other: “The East” in European Identity Formation. Minneapolis, MN: University of Minnesota Press. Oppenheim, Lassa (1905) International Law: A Treatise. London: Longmans, Green, and Co. Pamuk, Orhan (2006) “My Father’s Suitcase” (Nobel Lecture delivered in Stockholm on December 7) http://nobelprize.org/nobel_prizes/literature/laureates/2006/ pamuk-lecture_en.html Prebisch, Raúl & Di Marco, Luis Eugenio (1972) International Economics and Development. New York: Academic Press. Ragin, Charles C. (1994) Constructing Social Research: The Unity and Diversity of Method, Sociology for a New Century. Thousand Oaks, CA: Pine Forge Press. Rapaport, David C. (2001) “The Fourth Wave: September 11 in the History of Terrorism,” Current History (December): 419–24.

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Rawls, John (1999) A Theory of Justice (rev. edn.). Cambridge, MA: Belknap Press of Harvard University Press. Reus-Smit, Christian (1999) The Moral Purpose of the State. Princeton, NJ: Princeton University Press. Said, Edward W. (1994) Orientalism. New York: Vintage Books. Salter, Mark B. (2002) Barbarians and Civilization in International Relations. London: Sterling. Sauvy, Alfred (1952) “Three Worlds, One Planet,” L’Observateur August 14, no. 118: 14. Simpson, Gerry J. (2004) Great Powers and Outlaw States: Unequal Sovereigns in the International Legal Order. New York: Cambridge University Press. Smith, Anthony D. (1979) Nationalism in the Twentieth Century. London: M. Robertson. Spruyt, Hendrik (1994) The Sovereign State and Its Competitors: An Analysis of Systems Change. Princeton, NJ: Princeton University Press. Stavrianos, Leften Stavros (1981) Global Rift: The Third World Comes of Age. New York: Morrow. Tilly, Charles (1990) Coercion, Capital, and the European States, AD 990–1990. Oxford: Blackwell. Tucker, Robert W. (1977) The Inequality of Nations. New York: Basic Books. Wallerstein, Immanuel Maurice (1974) Capitalist Agriculture and the Origins of the European World-Economy in the Sixteenth Century. New York: Academic Press. Wallerstein, Immanuel Maurice (1975) World Inequality: Origins and Perspectives on the World System. Montreal: Black Rose Books. Wallerstein, Immanuel Maurice (1978) The Capitalist World-Economy: Essays, Studies in Modern Capitalism. New York: Cambridge University Press. Watson, Adam (1992) The Evolution of International Society. New York: Routledge. Weber, Eugen (1976) Peasants into Frenchmen: The Modernization of Rural France, 1870–1914. Stanford, CA: Stanford University Press.

Chapter 11 Globalizing Media and North–South Initiatives Francis A. Beer and G. R. Boynton

Globalization is a central concern in twenty-first-century global discourse. Elites based in different global quadrants have diverse positions, not just on the world’s physical surface, but also on its rhetorical plane. Northern elites seem to favor making globalization a powerful symbol in political thought and action. Southern elites may have a more mixed stance, with many favoring local emphases. Among these elites are those at the top of news media. The news media are major purveyors of globalization. Globalization becomes present to the citizens of the world as news media reach out to a global audience. As improving communication technologies have made real-time global communication possible, Northern networks like CNN and the BBC have used the technology to develop globally oriented television news programs. Their offerings, CNN WorldView and BBC World, attempt to connect with a global audience. The further development of the web has allowed organizations with considerably less funding than the BBC and CNN to try for a global audience as well. The Southern network, Al Jazeera, for example, recently supplemented its Arabic-language programming by beginning to produce a news website in English in an obvious attempt to extend its global reach. As global media develop, the use of common technology, language, and professional norms can help drive international integration. A globalizing regime of international communication creates an emerging common space into which media elites can expand. These new channels allow them to grow their audience, to bring their product to a wider market. In order to play on this stage, media actors must adapt to its globalizing constraints and converge. Common media technology, language, and norms mean that media actors have only limited degrees of freedom. At the same time, different media actors spring from distinct roots. Their traditions,


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cultures, contexts, and agendas can vary widely. They seek to construct discrete brands, appealing to particular audiences. This divergence flavors media content, even in a globalizing age. Globalizing media and localizing differences interact. Together, they produce a mixed result, combining international integration and diversity. Our paper builds on prior research on globalizing media (Beer & Boynton 2003, 2004; see also Artz & Kamilipour 2006). It examines similarities and differences in the presentation of news by websites aspiring to a global audience in the North and in the South. We compare the websites of Aljazeera, BBC, and CNN. The central question we ask is: What does “global” come to mean as media from North and South attempt to reach a global audience? How are the stories reported similar and dissimilar? Are there greater differences between Southern (Al Jazeera) and Northern (BBC, CNN) centered global media than within the class of Northern networks (BBC, CNN)? Examining what they make of globalization illuminates the strains in the contemporary vision of globalization and portends a future influenced by media construction of globalization.

Scope and Method This study is based on a large collection of the daily news websites of the Englishlanguage version of Aljazeera, BBC World, and CNN World. The websites were recorded approximately six days a week between January 1, 2005 and early November of 2005. They were captured by downloading and saving the home page of the site and all the pages linked to the home page. The sites were captured at about midnight central standard time USA, which meant they were what viewers saw when they looked at the sites first thing in the morning. The sites may change more than once a day. Any stories that appear and then are taken off the site between midnight one day and midnight the next day are not included in the dataset. The entire collection was searched for stories that included the word “initiative” anywhere in the text; 367 stories were found.

The Coded Language of North–South ”North–South” is a major theme of academic international relations theorizing and research. Generally, the global north is geographically defined to include states in North America, Northern Asia, and Western Europe. The global south includes territories at lower latitudes. Geography, however, is not the only determinant of North–South identity. The degree of economic development as well as political, cultural, and historical linkages can also be important. As a result, China is sometimes included in the global south and Australia in the north. During the early Cold War years after World War II, the dominant axis of separation was East–West, dividing the United States and its Western allies from the more easterly Soviet bloc. With the emergence of détente and the end of the Cold War, the relevance of East–West differentiation declined, and the North–South axis became more promi-

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nent. International security issues between major powers like the United States and Russia became less pressing, at least for a while, and domestic security within such states became more important. Terrorism replaced the Cold War and the “global war on terror” replaced replaced deterrence at the top of the issue agenda. In the context of globalization, political economic concerns of less privileged nations also received more attention. Since we are interested in the way that North–South differences appear in the globalizing news media, it seems appropriate to begin directly with the keywords themselves. Surprisingly, the language of North–South does not exist in the language of news media that aspire to a global audience. The phrase “North–South” as well as the separate words “North” and “South” are present mainly in their absence. They are just not there – the count is zero in the 10 months we examined. It is unclear what we should conclude from the missing keywords. At the very least, media actors do not seem to include “North–South” explicitly in their professional vocabulary. At the same time, many issues that international relations scholars might categorize as North–South do appear in media stories about “initiatives.” News media that aspire to a global audience present many North–South issues in terms of initiatives. The language of initiatives is the language of innovation and action. Initiatives signal that action is breaking into the ongoing stream of events. Revisionist actors are attempting to change the status quo. They may, for example, seek to find a new solution to an ongoing conflict in the Middle East. Or they may attempt new health programs in particular regions. Initiatives are news. Something new is happening. Globalizing news media naturally focus directly on initiatives and indirectly fold North–South themes into stories about them.

Categories of Initiatives With these concerns in mind, we coded the initiatives we found into several major issue categories and counted the frequencies of each for the three global news websites, as described in Table 11.1. Reports about initiatives in conflict and health appear more often than other types of reports. Other issues receive lesser coverage. Stories about economic assistance initiatives are about actions by a nation or group of nations to aid another nation. Reports about economic development initiatives are about activities by a country to improve its own economy. The communication convergence hypothesis suggests that globalizing media will cover different initiative issues in similar ways. Alternatively, a divergence perspective implies radically different news reports. Northern globalizing media – BBC World and CNN World – might be more concerned with East–West issues left over from the Cold War: nuclear weapons, for example. Southern globalizing media, represented by Aljazeera, might be more interested in postcolonial conflicts and development (Slater 2004). Our results tend to be mixed. Table 11.1 shows that Aljazeera does somewhat more stories on initiatives overall, particularly conflict. Aljazeera also takes the lead in reporting initiatives on economic development,

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Table 11.1 Global media networks: initiative frequency by issue category Type of initiative Conflict Health Local [national] politics Economic assistance Economic development Nuclear proliferation Human rights Education Environment Culture Corruption Elections Global institutions Diplomacy Disasters Democracy Total

Aljazeera

BBC World

CNN World

Total

54 7 9 10 14 12 12 1 3 4 4 3 4 1 1 3

21 32 15 14 7 3 3 6 7 3 3 1 0 2 1 0

15 14 18 12 10 9 2 9 2 4 2 5 2 1 2 0

90 53 42 36 31 24 17 16 12 11 9 9 6 4 4 0

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118

107

367

human rights, and – contrary to our expectations – nuclear proliferation. At the same time, the BBC does more on economic assistance, the environment, and health. CNN does more on education, elections, local/national politics. There is no clear North–South pattern in general issue coverage.

Types of Initiatives Inside each of these major initiative issue categories, there are different sub-types of initiatives. Since globalizing media coverage did not reveal clear North–South dimensions between issues, we decided to examine more closely media coverage within two separate issue areas: conflict and health.

Conflict initiatives Conflict initiatives include action items for different locations. Table 11.2 presents the geographical target of conflict-related initiatives. The table shows that there is some difference in geographical coverage between websites. Aljazeera, with its Middle Eastern roots, covers Iraq and Palestine/Israel the most, though the other two networks also give them some play. The BBC likes Pakistan/India and Darfur, perhaps because of its imperial heritage. “Global” gets some attention from Aljazeera and CNN. North–South dimensions again range from mixed to unclear.

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Table 11.2 Global media networks: initiative frequency by geographical location (conflict issue category) Locus

Aljazeera

BBC

CNN

Totals

Palestine–Israel Iraq Pakistan–India Global Darfur Africa Chechnya Afghanistan China–EU China–Russia China–Taiwan Cyprus Eritrea–Ethiopia France–Martinique Iran North Korea Sri Lanka Syria

34 7 1 3 1 1 1 0 0 1 0 1 1 0 1 0 1 1

5 2 6 0 3 1 1 1 0 0 1 0 0 0 0 1 0 0

9 0 0 3 0 1 0 0 1 0 0 0 0 1 0 0 0 0

48 9 7 6 4 3 2 1 1 1 1 1 1 1 1 1 1 1

Totals

54

21

15

90

Health initiatives Table 11.3 presents results for health initiatives, the second most frequent issue category. Among the networks, the BBC seems the most interested in health issues, Aljazeera the least. Malaria and AIDS get somewhat more attention than other themes. There do not seem to be clear North–South asymmetries in the coverage of particular diseases. Interestingly, though, Aljazeera’s malaria coverage is relatively strong, whereas a sexually transmitted disease like AIDS does not exist in Aljazeera netspace. Table 11.4 shows the geographical locations of the different networks’ health stories. There are some North–South differences. Aljazeera, to the extent that it covers health, is most interested in African, Arab, and Islamic sites. The BBC likes the UK best, and indeed many of its stories focus on local themes, for example the National Health Service or the problems of aging. CNN health stories also reflect the news carrier’s national origin, the United States. While reports about initiatives in the nation of origin are the largest category, they are fewer than half the stories for both BBC and CNN. Both these Northern networks cover Southern health stories more extensively than Aljazeera.

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Table 11.3 Global media networks: initiative frequency by type (health issue category) Health initiative for:

Aljazeera

BBC World

CNN World

Total

Malaria AIDS Polio Hospitals Bird flu Stem cell research Fevers Diet Child abuse Weight Prostate cancer Prenatal illness Policy information Mad cow disease Life expectancy Health politics Health education Gulf War Syndrome Fertility Drug trafficking Asthma Alcohol African brain drain

3 0 1 0 2 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0

4 4 2 4

2 4 1 0 2 1 1 0 0 1 0 0 0 1 0 1 0 0 0 0 0 0

9 8 4 4 4 3 3 2 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1

Totals

7

32

14

53

2 2 2 2 0 1 1 1 0 1 0 0 1 1 1 1 1 1

Presenting the News The presentation of the news includes both formatting and content.

Format The format for presenting the news is quite similar for the three websites. There are, however, significant differences, particularly in advertising content. Each has a banner at the top identifying the site as Aljazeera.net or BBC NEWS or CNN.com. The news report is bracketed on the left with a navigation bar to facilitate moving through the websites. Aljazeera and CNN prominently indicate the section of the website for each report at the top of the page. The Aljazeera report shown in Figure 11.1 is in the “ARAB WORLD” section. The CNN report is in the “WORLD”

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Table 11.4 Global media networks: initiative frequency by geographical location (health issue category) Geography

Aljazeera

BBC World

CNN World

Totals

England Africa USA Indonesia EU Global India Iraq Egypt Nigeria South Asia Tropics Uganda Saudi Arabia Zambia Developing World

0 1 0 1 1 1 0 1 1 1 0 0 0 0 0 0

15 5 1 3 2 1 1 1 1 0 0 1 1 0 0 0

0 2 5 0 0 1 2 0 0 0 1 0 0 1 1 1

15 8 6 4 3 3 3 2 2 1 1 1 1 1 1 1

Totals

7

32

14

53

section. The BBC does the same but the section is not as prominently displayed; the section for the report is grayed out on the left-hand navigation bar. On the right, each lists relevant stories that viewers might want to read. For CNN the list is below the photograph, in this case. Aljazeera and CNN World both have advertisements on their pages. On the Aljazeera site there is a banner ad for an airline at the top. The CNN ads generally are on the right of the page. CNN carries more ads than Aljazeera does. BBC World is publicly supported and does not have any ads at all. The report begins with a headline and the date and time the report was posted. The “time stamp” is important because all three websites keep at least some of their reports available for several days. The reader needs to know how new the news is. In each case there is a lead paragraph presented in bold text that is flanked by a photograph. This standard practice is based on the view that web pages need to have a way to focus viewers’ attention. On these busy pages that is even more important than it is on other web pages. Even though the photos are rather small they play the role of standing out to focus attention. The colors are different. The fonts are different. Otherwise, there is a standard for presenting global news on the web that is adopted by all three sites. There is no obvious North–South split here.

Figure 11.1 Sample website pages for Aljazeera, BBC, and CNN.

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Content: conflict stories on the Middle East The Arab League met on March 23, 2005 to consider a Jordanian proposal to revise the Arab peace initiative of 2002. Aljazeera carried the most coverage with the most detail. It devoted three pages to covering the meeting. The headlines and captions to the photographs give the basic themes of the reports. In Figure 11.2, the headline in Report 1 indicates that the Arab League leaders rejected the Jordanian proposal for Arab–Israeli normalization without meeting the demands of the 2002 peace initiative. The text elaborates: “Arab leaders have said Israel cannot expect peace or normalized ties with the Arab world if it does not make concessions and give up occupied lands.” The second important element of the story is in the caption of the photograph. The photograph shows political leaders sitting in the round to conduct their business. But “several Arab leaders were absent from the summit.” Only 13 of the 22 heads of state were present, according to the text. Others offered diplomatic excuses about health or personal matters; they obviously did not want to be a party to what was going to happen at the meeting. The strong support for the earlier 2002 initiative, reflected in the headline, is softened by the limited attendance, reflected in the lower caption. The headline and caption to the photograph in Report 2 do the same work as in Report 1. The Arab League issued a communiqué reaffirming their commitment to the initiative of 2002. The communiqué outlined the basic requirements of their position. That is what you learn from the headline. From the photograph and the caption you can infer that the leaders decided not to raise the matters on which they differed; hence, a congenial photo opportunity and a caption pointing out the congeniality. The text of the report indicates that it could have been otherwise. “The summit managed to avert differences over prickly issues . . .”

Figure 11.2 Three versions of the story of the revival of the Arab peace initiative of 2002 on the Aljazeera website.

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The third report is about Israel’s rejection of the Arab call for action. The headline is followed by three substantial paragraphs outlining Israel’s rejection. That is followed by a recapitulation of the Arab proposal. But the photograph and the caption carry the story back to the Arab League’s deliberations. They are again sitting in a circle producing a communiqué that they know will be rejected. It is easier to reaffirm the 2002 initiative than to tackle the 2005 differences over how best to proceed. The BBC tells a story in prospect. The headline for the report is: “Arab summit to renew Israel offer.” They are writing as the meeting begins, so this is the BBC’s informed speculation about what will happen. The prospective character of the news report is reinforced by the photograph and caption. “Libya’s leader was first to arrive . . .” The accompanying photograph (Figure 11.3) is Libya’s leader, Muammar Khaddafi, being greeted by his host, Abdelaziz Bouteflika, the president of Algeria. This is a picture of a meeting that is only beginning. The report covers many of the points covered in the three Aljazeera reports: the Jordan proposal that is being rejected, the attendance of only 13 of 22 heads of state, a review of the 2002 initiative, and attribution to Saudi Arabia. In addition, the story reports on the agenda for the meeting, and reports on a point that is not covered by Aljazeera. On the first day, Algerian President Bouteflika “called for the UN to issue a definition of terrorism.” He called for a definition of terrorism that could be the basis for “an alliance between civilizations.” Finally, there is a CNN web page from March 23 about the closing of the conference. It is the briefest of the reports, but it covers the major points about the meeting: rejection of Jordan’s proposal, reaffirmation of the 2002 peace plan, and a point not mentioned by Aljazeera or BBC. “Arabs ‘to better market peace plan’”

Figure 11.3 The BBC’s presentation of the Arab summit story, showing Libya’s leader, Muammar Khaddafi.

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Figure 11.4 The Algerian horse guard, the picture accompanying the CNN report of the closing of the Arab conference. was the headline. CNN means business, and marketing is the metaphor that frames the action. CNN reports that Arab leaders conclude the meeting with a plan to set up a committee that will “explain their plan to Europe, the United States and other nations.” However, they are unable to agree on the membership of the committee. The photograph accompanying the report, a picture of the Algerian horse guard (see Figure 11.4), provides what northern CNN editors presume is a bit of oriental local color. The overall story gets generally similar coverage by the different websites. The central themes of the coverage are the rejection of the plan proposed by Jordan and the reaffirmation of the 2002 initiative. There are, however, some differences in texture and details. Aljazeera, appropriately for its regional location, covers the conference more fully than the BBC and CNN with a “before, during, and after” report. The BBC, consistent with Britain’s colonial history in the Arab world, has a rather long story about what the conference will probably do. And CNN has the briefest and most business-like coverage.

Content: health stories Following our discussion of the different networks’ treatment of a specific initiative in the Middle East conflict, we turn to sample news stories from each of the networks about health issues. The Aljazeera story leads with a picture of victims of malaria – African victims (Figure 11.5). The caption says that “malaria kills an African child every 30 seconds.” The headline focuses on the disease: “New boost to malaria research.” The lead paragraph again focuses on malaria. Only next do we read about a new large grant from the Bill and Melinda Gates Foundation. The text that follows again focuses on malaria. At the bottom, there is a wider North–South theme. “If those children were in rich countries,” Bill Gates is quoted as saying, “we would have headlines, we would take action. We wouldn’t rest until every child was protected.”

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Figure 11.5 Aljazeera’s story about malaria, focusing on the victim.

Figure 11.6 The BBC focuses on the mosquito enemy. The story itself is framed by columns of links to other stories. There are five links to other stories about malaria, but the rest are only distantly related or completely unconnected to malaria. The BBC presentation starts with the same technology and the same story, but the framing and interpretation are different. In tune with the BBC’s greater attention to health issues, the flanking columns, particularly the one on the right, provide more supplementary links to information about malaria and health issues. The leads are a bit more action oriented. The headline highlights an actor and an action, rather than the victims. “Gates gives 28m to malaria team.” There is a threatening picture of the mosquito enemy (Figure 11.6). The article tells the story of Bill and Melinda

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Figure 11.7 CNN’s picture of a malaria victim. Gates helping the effort to conquer this debilitating disease and lead all the world’s people to a more healthy future. We found no parallel CNN story at this time. There were, however, earlier treatments in May and June. The first story starts in the global north, highlighting the Gates Foundation, but moves quickly to Zambia in the global south, victims of malaria, and contributions to prevention and treatment. Interestingly, there is almost a full-column ad, no picture, and no focused array of related web links. The second CNN story begins with the headline, “Gates targets global health crisis,” and there is a graphic picture of a malaria victim (Figure 11.7). In this story, however, advertising and web clutter have advanced, eating the news hole, which now gets only about one-third of the available space on the page. All three networks cover malaria with similar formats and themes. Again, there are important differences. Aljazeera focuses more on Southern victims. The Northern networks, BBC and CNN, pay more attention to Northern donors like Bill and Melinda Gates. However, the BBC moves southward in providing more links to other health stories. CNN doesn’t get carried away with alien insects, suffering victims, or charitable heroics in the news hole; it maximizes advertising.

Globalizing Media, North–South Issues, and Global Action Globalizing media ride the wave of emerging communication technology. Our study has focused rather narrowly on three networks that aspire to a global audience – Aljazeera, BBC, and CNN. We have sought to investigate the way they approach global North–South issues by focusing very specifically on the frequency of the keyword “initiative” on their websites and its surrounding textual context. Our research suggests that globalizing journalists are not drawn to “North– South” as an independent topic. We found no use of “North–South” at all. Given this fact, we substituted “initiative” as the object of our attention and got better results. Even here, however, the findings were mixed. “Initiative” appeared rarely

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in the headlines; most often it was embedded further down in the text of the story. It did not appear in quotes from the leading political actors but rather in journalistic summaries of their actions. ”Initiative” appears to be a journalistic term of art, describing a plan, policy, proposal, or project. More than those terms, however, “initiative” frames global events in the language of action. Although it has too many syllables and is too abstract to pack much punch, “initiative” still implies agency and free will, the possibility of change and new beginnings. Above all, it suggests newness, and that is, after all, the domain of news. We found that the different networks reported initiatives in ways that reflected common technology and professional norms, on the one hand, and their diverse cultures, on the other. As we had expected, the web page format itself structured what they could say and how they said it. At the same time, each network started from a different historical and geographical place, which influenced content. American, Arab, and British professional and popular cultures helped frame the news of the day to some extent, even in networks that aspired to a broader global audience. While North–South terms are explicitly missing, North–South perspectives appear implicitly in the reporting of different initiatives. The cultures of the media elites and their target audiences give particular flavors to each network and help to differentiate its personality from competitors. The technology and professional norms of the globalizing media are largely a creation of Northern actors. They have had an important influence in establishing a common platform, a space in which political and media elites create the news. This space has been, at least till now, largely a Northern space, reflecting Northern professional “best practices” and appealing to Northern audiences. Further, Aljzeera’s production of an English-language website uses not only a Northern language but also points to an audience using that language. Southern actors have largely had to try and fit themselves in. At the same time, the emergence of globalizing media with Southern roots, such as Aljazeera, has allowed Southern media actors to speak in a somewhat different voice. To survive in the common communication ecosystem, they must also differentiate themselves and create their own niches. Northern-dominated common technology and norms have driven the convergence of globalizing news media and the integration of international communication. At the same time, Northern and Southern identities and interests, ideologies and interpretations now interact in the mixed, hybrid space that is the emerging international communication order.

References Artz, Lee & Kamilipour, Yahya (2006) The Media Globe: Trends in International Mass Media. Lanham, MD: Rowman and Littlefield. Beer, Francis A. & Boynton, G. R. (2003) “Globalizing Terror,” POROI Journal 2(1). http://inpress.lib.uiowa.edu/poroi/papers/beer030725_outline.html

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Beer, Francis A. & Boynton, G. R. (2004) “Globalizing Political Action: Building bin Laden and Getting Ready for 9/11,” The American Communication Journal 7. http://www.acjournal.org/holdings/vol7/index.htm Slater, David (2004) Geopolitics and the Post-Colonial: Rethinking North–South Relations. Oxford: Blackwell.

Chapter 12 The UN Security Council and the North–South Divide: Plus ça change?* Jane Boulden

Introduction The nature of United Nations Security Council politics, with its focus on the five permanent members (P5) and their accompanying power of veto, means that studies of the Security Council tend to be filtered through assumptions about “great power” politics. The very structure of the Council encourages this approach but the onset of the Cold War and the resulting stalemate in the Council that emerged as a product of East–West tensions drove the point home. There has been little impetus for change in the post-Cold War environment, especially in light of the rise of the United States as the sole superpower (in UN circles sometimes referred to as the P1). As a consequence, as analysts we spend little time studying Security Council decision making or the way in which Security Council decisions are implemented through other lenses, especially those relating to the developing world or “South.” The purpose of this paper is to take a small step in that direction by examining what these two issues – how decisions are made and how they are carried out – tell us about the North–South divide in the context of the debate on Security Council reform. Why does this matter? The immediate impetus for consideration of Security Council reform along with the role of the South lies in the debate and negotiations surrounding the US effort to get a resolution authorizing the use of force against Iraq. Here was an instance where non-permanent members, and the South as part of that group, had the potential to influence the outcome of one of the most important decisions on international peace and security issues in the post-Cold War era. * Portions of this paper have been published as part of: “Double Standards, Distance and Disengagement: Collective Legitimization in the Post-Cold War Security Council,” Security Dialogue 37(3): 409–23.


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At the very same time, the US determination to move against Iraq, with or without Security Council authorization, represented a serious threat to the core principle most valued by smaller states everywhere, including in the developing world – the requirement to refrain from the use of force against the territorial integrity of any state. The whys and hows of the Iraq debate are not the subject of this paper. Rather, I examine the post-Cold War environment of Security Council decision making in a more general sense in order to understand the impact of that environment for the South as a way of prompting new thinking about the ideas about Security Council reform that were given such a push by the Iraq crisis. In an immediate sense, the origins of the September 2005 World Summit and the negotiations leading up to it were a product of the events surrounding the war in Iraq. Launching an effort to galvanize the Organization’s support, US President Bush threatened the UN with irrelevance if it failed to respond to Iraqi defiance of Security Council resolutions (Bush 2002), and then led an invasion of Iraq after the Security Council failed to agree on a resolution authorizing force. In the invasion’s aftermath, the Secretary General of the United Nations, Kofi Annan, spoke of the Organization being at a decisive “fork in the road” and launched the High Level Panel (HLP) to examine the UN’s role in peace and security, its institutions, and how both might be strengthened (Annan 2003). While the process that led to the World Summit in September 2005 was driven by the events surrounding Iraq, it had its roots in the shifting ground of the post-Cold War world, and the Security Council’s response to it. The Security Council’s failed responses to Somalia, Bosnia, and Rwanda, and their non-responses to various other conflicts, had undone the early post-Cold War optimism about the role of the UN, and generated questions about the Council’s credibility and legitimacy well before the vicissitudes of the Iraqi crisis made such questions front-page news. I argue that the existing North–South divide is accentuated when viewed through the lens of post-Cold War Security Council decision making. This happens in two ways. First, a division of labor in implementing Security Council authorized operations has occurred since the end of the Cold War, where developing states are far more involved in blue-helmeted peace operations than developed states. Second, this fact is compounded by the ability of the permanent members of the Council to control the agenda. This means not only that they can ensure that situations in which they have a direct interest or role are not addressed, but that situations in which they have no interest at all are also unaddressed. The combined effect of these two factors suggests that we need to give serious thought to the objectives of any push for Security Council reform.

Permanent Members’ Decision-making Power Identities and roles: the nature of the North–South divide On the surface, the nature of the North–South divide in the Security Council is quite straightforward. No members of the South are permanent members of the Security

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Council.1 In this sense, member states of the South are joined by all but five other member states that are equally disenfranchised when it comes to Security Council politics. Members of the developing world are not alone, therefore, in their role as “other than permanent member” when on the Security Council. This distinction raises the question as to how we categorize states. The question of how the North–South divide plays out on the Council is complicated by the fact that non-permanent members hold multiple identities and play more than one role when they are on the Security Council. This is particularly the case for states from the South, who add that identity to a list that might also include non-aligned (NAM) and G-77 along with regional affiliations. Nigeria, for example, in addition to representing its own interests, could also be speaking as a member of the South, the NAM (Non-Aligned Movement), and the G-77, or as a member of the Economic Community of West African States (ECOWAS) or the African Union (AU). Does it matter, however, which identity is in play when a state is on the Security Council?

Controlling the agenda The existence of the veto derives from the assumption of the founders that the only way to ensure the participation of the great powers in the Organization was to grant them permanent membership in the primary peace and security decision-making body – the Security Council – along with the ability to veto decisions. In addition to the direct control the veto gives them, the veto has the added effect of giving the permanent members an implicit ability to control the Council’s agenda. This means that not only do permanent members have the ability to ensure that issues in which they have an interest in avoiding Council activity stay off its agenda, but also that they can ensure that those issues in which they have no interest at all do not make it on to the agenda either. Kishore Mahbubani, Singapore’s Ambassador at the United Nations during Singapore’s tenure as a non-permanent member of the Security Council, argues that, “the Council’s position shifted with the shifting of priorities of the P5, especially the United States” (Mahbubani 2004: 260). And the High Level Panel states that, “the ability of the five permanent members to keep critical issues of peace and security off the Security Council’s agenda has further undermined confidence in the body’s work” (Report of the Secretary General’s High Level Panel on Threats 2004: 62, para. 246). A statistically based analysis of Security Council decision making, done by Peter Wallensteen and Patrik Johansson, finds that, “States that are somewhat powerful in the international system, be they permanent members or other member states, and that have an interest in preventing international attention to a particular issue, are often capable of doing so” (Wallensteen & Johansson 2004: 23). Little attention is given, however, to the fact that just as permanent members are able to keep issues or conflicts in which they have direct interests away from UN attention or response, they are equally able to ensure that issues or conflict in which they have no interest at all are also left unattended.


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This is not news, or new. It is only in the post-Cold War period, however, that the potential and the implications of this non-interest side of the equation have become clear. The sheer increase in Security Council activity during this time, especially in the early post-Cold War period, may provide part of the explanation. With the end of the Cold War, the potential for Security Council activity increased, as did the numbers of conflicts available for attention. Both factors were compounded by the new willingness of the Council to respond to intrastate conflict. In that context, the Security Council responded to many – but not all – conflict situations. Absent the stalemating influence of Cold War politics as the lens through which Security Council action and inaction was read, the question of which conflicts made it on to the Security Council agenda, let alone were addressed, became an issue in a way that simply did not arise during the Cold War. Why Bosnia or Kosovo and not Sudan, Burundi, or Burma? As Michael Gilligan and John Stedman point out in their study, one of the methodological weaknesses of the existing literature relating to how and when the Security Council decides to authorize a mission is that cases “in which the UN has chosen not to intervene are simply ignored” (Gilligan & Stedman 2003: 42). The purpose here is not to fill that gap, but to affirm the importance of including it in the analysis. What is not on the agenda, and what does not generate a response, is as important as what is and does.

Conceptualizing permanent member interests With that in mind, a spectrum of Security Council activity based on a sliding scale of permanent member (P5) interest can be established based on three general categories of activity. The first category includes conflicts in which one or more permanent member has a strong or vital interest. There are two likely outcomes in these situations. The most likely is that the issue does not make it onto the agenda at all. Alternatively, if the issue does make it on to the Council’s agenda it is because the permanent member in question wants it there, either to allow or encourage assistance in responding or to garner Security Council approval for a planned response. For example, the very fact that the Bush Administration decided to seek a second resolution from the Council after the first unanimous resolution on Iraq, filtering an issue of “vital” national interest through difficult and contentious Council negotiations, is an indication of the importance of the legitimizing power on offer. The profound tensions generated within the Council over Iraq in early 2003 were directly related to the perception, held by the key P5 players involved, that issues of vital “national interest” were at stake. When it comes to most other issues on the Security Council agenda, the linkage to interest is much weaker and the resulting inaction or, at most, selective and limited involvement more pronounced. (Berdal 2003: 26)

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Even when a permanent member does allow an issue of vital interest to be considered at the Council, the option remains, as the Iraq case clearly indicates, for the issue to be pursued as planned even without Council approval. The second category includes areas where permanent members have interests, but interests that are of a less significant nature (in the context of “vital national interest”). One or more of the permanent members may feel something should be done or are desirous of something being done but would prefer not to do it themselves, or cannot do it themselves. In this category permanent member interest can be prompted by a variety of sources, such as the media, NGOs, interest groups, and other public pressure for action, as well as the imperatives of national interest. Examples here include classic peacekeeping operations such as UNEF (United Nations Emergency Force), and early post-Cold War operations such as Namibia and Central America. Indeed, many Security Council authorized responses to conflict fall into this category. The third category comprises conflicts in which permanent members do not have any form of interest and therefore there is no – or very limited – Security Council response. Examples include Sudan until recently, Somalia pre-UNOSOM (United Nations Operation in Somalia) and post-withdrawal, Burma, and Afghanistan prior to September 11, 2001. Kishore Mahbubani notes, for example, that as late as the spring of 2001, non-permanent members of the Council made an attempt to push for a comprehensive policy on Afghanistan. While not rejecting the need for such a policy, the permanent members rebuffed this advance by citing “political realities.” Their attitude changed almost instantly after September 11, 2001 in line “with the shifting priorities of the P-5, especially the United States” (Mahbubani 2004: 260). This category represents a form of permanent member disinterest, as distinct from interest in non-action. These categorizations are necessarily imperfect. Defining interest and perceptions of interest is inevitably a difficult and judgmental enterprise. To do it more coherently would require in-depth research into the foreign policies of the key players. The categorization also does not exclude alternative explanations for the phenomenon, such as regional efforts to keep conflict issues off the Council agenda.2 The point of the exercise is not the categories as such but the idea that permanent member interest in keeping an issue outside of the Security Council’s purview is accompanied by a parallel phenomenon where conflicts of non-interest to the permanent members are also kept off the agenda. Permanent members are just as able to prompt Security Council avoidance of situations in which they have no interests of their own as they are in preventing a Security Council response to situations in which they have very significant interests at stake. As argued earlier, conflicts in which no permanent member has an interest tend not to make it onto the Council’s agenda. For those conflict situations falling below the Security Council radar, the Council is a distant and disengaged entity whose decision making is based on a double standard that is contrary to the universality of the Charter’s expressed ideals. There is a certain unhappy irony in the fact that


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the danger inherent in the permanent members’ veto is not only that they will engineer the system to avoid dealing with conflicts in which they have an interest, but that they will also engineer it to avoid dealing with conflicts in which they do not have an interest. Even for those conflict situations that do appear on the Security Council radar, however, distance and disengagement are fair characterizations. Distance certainly exists between the decision makers and those doing the implementing in blue-helmeted operations. The bulk of these operations are carried out by member states that are not members of the Council, and P5 participation in particular is low. And disengagement characterizes the relationship between the Security Council and coalition and regional organization operations in that, once authorized, Security Council oversight of these operations is relatively minimal.

The Shifting Division of Labor The end of the Cold War brought about a sea change in the composition of UNauthorized peace operations. Two distinct phenomena can be identified. The first is a shift in the composition of the top 10 states contributing to peacekeeping operations. In this instance, peacekeeping operations are taken to mean operations authorized by the Security Council and run by the Secretariat: operations carried out under blue helmets. During most of the Cold War, and certainly during its last decade, the top 10 contributors to peacekeeping operations included traditional peacekeeping states such as Canada, Sweden, and Norway. The balance shifted with the end of the Cold War so that, beginning in the early 1990s, the top 10 troopcontributing states came from the developing world (Neack 1995; Bobrow & Boyer 1997; Durch & Berkman 2006).3 This has remained consistently the case since then. As of November 2006, there were a total of 82,120 personnel involved in United Nations peacekeeping operations (including military, policy, and unarmed observers). Of those, the top nine contributors are all developing states, and of those the top three contributors, Bangladesh, Pakistan, and India, contribute 28,743 combined, or 35 percent of the total of all peace support operations. When taken together, the top nine contributors combine to provide 43,152 or 53 percent of the total deployed personnel (Monthly Summary of Contributions of Military and Civilian Police Personnel, 2006). This is not to suggest that developed states have dropped out of the equation altogether. Rather, the change that has occurred on this side of the equation is that these member states have shifted the bulk of their troop contributions to operations undertaken by coalitions and/or non-Security Council authorized missions: operations not under blue helmets. For example, Canada, a traditional peacekeeper and strong UN supporter, currently only deploys 13 percent of its troops in UN bluehelmeted missions, with the remaining 87 percent deployed in other operations, primarily in Afghanistan.4 This is a distinct shift from Cold War days when such Canadian commitments were 100 percent deployed in UN blue-helmet operations.5

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Contracting out and regional organizations A post-Cold War Security Council tendency to contract out operations to regional organizations and coalitions further compounds this shift at a geographic level. Beginning with the multinational operation to force Iraq to withdraw from Kuwait in 1991, the Security Council has established a pattern of contracting out to coalitions of states willing to undertake authorized missions. These situations are ones in which the use of force is not only likely but key to achieving the goals of the operation. And for the most part they are situations in which states have made the decision to take action and seek Security Council authority, rather than the Security Council determining action is necessary and seeking out a willing group of states. In addition to the multinational force arrayed against Iraq in 1991, coalitions undertook the UNITAF (Unified Task Force) operation in Somalia, the mandate to oust the illegal government in Haiti in 1994, and the mission to stabilize the situation in East Timor because of the violence that occurred in response to the popular consultation in 1999. Beginning at roughly the same time, the Security Council also demonstrated a greater willingness to cooperate with or to “contract out” operations to regional organizations.6 This is particularly the case in Africa, the source of much of the Council’s activity and many of its operations. In the context of developed states focusing more on issues in their own regions of the world, the emphasis on “African solutions for African problems” when it comes to peace support operations marks a further shifting of the burden onto developing states. The situation in West Africa makes this point particularly well. Beginning with Liberia in 1991, ECOWAS has increasingly taken on peace support roles in various conflicts in the region in the past 15 years. In fact, more often than not, ECOWAS has been the lead or sole responder to these conflicts. Of the 15 member states of ECOWAS, 11 fall into the “low human development” category, which includes 30 of 177 ranked states (Human Development Report 2006). The greater emphasis and reliance on regional actors, therefore, must be balanced against the impact of the burden or response for regional actors. Taken together, these developments speak to a clear division of labor in which Western states contribute to coalition operations in their own regions and/or when their own vital interests are involved, while leaving conflicts in the developing world primarily to developing states participating in blue-helmet peace operations. The nature of the operations also means that they do so at a greater distance from Security Council overview than occurs in blue-helmeted operations. These trends work to confirm the existing sense of a UN double standard on international peace and security issues – a double standard in which Western states are unwilling to risk the lives of their troops for non-Western lives. This perception is reinforced by the fact that Western-led coalition operations have involved a significantly higher level of financial, military, and political resources than Western countries have given to operations in other regions, such as Africa. The international response to the crisis in Lebanon confirms this interpretation. There was a strong European response to the call for contributions to expand the


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numbers of troops deployed with the UN Interim Force in Lebanon (UNIFIL). Indeed, Italy’s response places it tenth overall in terms of troop contributions to UN operations generally. Although there was initial confusion as to these contributions, this strong European response stands in contrast to the general response of the North to a number of other conflicts, especially in Africa. The result, therefore, is not just a division of labor between developed and developing states but two tiers of operations with respect to levels of resource and political commitment and geographic location. The panel commissioned by the Secretary General to examine ways of improving peace support operations in 2000 (the Brahimi report) notes that “no developed country currently contributes troops to the most difficult United Nations-led peacekeeping operations from a security perspective, namely the United Nations Mission in Sierra Leone (UNAMSIL) and the United Nations Organization in the Democratic Republic of Congo (MONUC)” (Report of the Panel on United Nations Peace Operations 2000: para.104). A few years later, in a 2003 report to the General Assembly, the Secretary General reiterates this problem: I must once again emphasize, . . . that the developing countries must not be the only ones expected to shoulder the burden for the deployment of formed military units to United Nations peacekeeping operations. The participation of both developing and developed countries in United Nations peacekeeping is critical from a political perspective. (Annan 2003: para. 31)

These trends in Security Council decision making and in the way in which those decisions are carried out work to accentuate and deepen the North–South divide. Operations under blue helmets are, in large measure, carried out by states from the developing world, a trend that was firmly established at the end of the Cold War and has become entrenched since then. When developed states become involved in Security Council authorized operations, it tends to be in a coalition or regional organization framework, and the area of action is in their own regions, or in areas where their own interests are at stake. Thus, the P5 authorize operations under blue helmets but make minimal contributions to them in the form of troops on the ground. They do authorize and contribute when it matters to them, when higherlevel interests are at stake, but they do so at a distance, in operations not under blue helmets, with limited Council oversight. This rough division of labor also has an impact with respect to the nature of the mandate being implemented. In the post-Cold War world the Security Council has increasingly been willing to authorize operations that deal with intrastate conflict and to do so with operations that are multidimensional in nature. Many missions now have wide-ranging tasks that might include election monitoring, human rights monitoring, and security sector reform. The fact that developing states provide such a preponderance of the contributions for UN operations raises questions about the implications of using troops from states where human rights and democratic practices are not necessarily very strong (if present at all) in such operations. This issue is indicative of the type of balancing act the UN must engage in when working to

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carry out Security Council mandates. The need for sufficient troop contributions often outweighs other considerations. On the other hand, it is possible that the nature of the operations these troops are engaging in may have an indirect effect over time on the way in which they do things when they are in their home state.

Security Council Reform: On What Basis, to What End? The question of Security Council reform is a perpetual one at the United Nations. Faced with the inevitability of permanent membership for the P5 during the negotiations on the Charter at San Francisco, other states pushed to ensure that, at minimum, the Charter included provisions for review and amendment. One successful round of Security Council reform occurred in the early 1960s, resulting in the expansion of the numbers of non-permanent members of the Council in 1965. The primary driver for expansion in this instance was the need to increase the representativeness of the Council in response to the changing nature of UN membership that had occurred as a result of decolonization (McCarthy 1998). The push to enlarge the Council did not involve a debate about expanding or changing the permanent members of the Council in the way that has occurred recently. In the current instance, the push for reform has a number of roots. In addition to the desire to increase the representative nature of the Council, there is pressure to consider an increase in the permanent membership of the Council with or without the veto. While this is, in part, a reflection of the same push for greater representativeness – only now within both permanent as well as non-permanent membership – the impetus also comes very strongly from perceptions of double standards and disengagement on the part of the permanent members that have worked to undermine the credibility and legitimacy of the Council as a whole. The assumption driving this analysis is that the push for Security Council reform is in large measure a product of the perceived need to strengthen or recover Security Council legitimacy – in the aftermath of Iraq, certainly, but more broadly than that, in the wake of the failures and near failures of Security Council activity in the postCold War period. The preceding analysis has highlighted some of the factors that have contributed to those perceptions of lost legitimacy. If this analysis is correct, the idea of reforming the Council by expanding its membership may increase its representative nature but it will not necessarily change any of the existing trends in Security Council behavior. Indeed, if permanent membership were be expanded (non-veto or otherwise), such a development would likely consolidate and ensure a continuance of these existing trends. An increase in Security Council membership, especially permanent members, means greater opportunity for limiting what gets on the agenda. The end result of an expansion in membership, therefore, may be a decrease rather than an increase in collective activity under UN auspices. While expansion of Council membership may mean a greater level of representation for the South within the Council, it will not necessarily bring about greater attention or more effective action on issues of greatest concern to them.


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The reform debate that occurred during the lead-up to the World Summit in September 2005 weighed heavily on the question of representativeness. But if the goal of reform is to strengthen the Council’s legitimacy, a more effective response may be found by incorporating a greater understanding of the impact of what the Council does and how it does it into Council practice, along with a concern about its composition. Greater, more equitable representation of member states on the ground in the form of troop contributions, for example, may contribute more to greater legitimacy in the long run. In its report, the High Level Panel suggested this in noting that developed states have “particular responsibilities” and “should do more to transform their existing force capacities into suitable contingents for peace operations” (Report of the Secretary General’s High Level Panel on Threats, Challenges and Change, 2004: para. 216).

Notes 1

2

3 4 5 6

Inevitably, questions of categorization arise. Who constitutes the South when we speak of the North–South divide? For the purposes of this paper, I take the South to mean the developing world, roughly divided along lines established in UNDP’s (United Nations Development Programme’s) Human Development Index. I use the terms the “South” and the developing world interchangeably. The question of China’s position vis-à-vis the South has been an ongoing debate. I do not categorize China as a member of the South. China ranks 81st in the Human Development Index just below Russia at 65th place. Wallensteen & Johansson (2004). Gilligan & Stedman (2003) also make note of this as a factor. This is often the case in Asia or Latin America, where there is a predisposition to deal with situations at the regional level. This shift is difficult to document as UN data, in the form of contributions listed by state (rather than by operation), are not available before 1996. Figures prepared by Andrea Charron, PhD candidate in War Studies, Royal Military College of Canada. Information based on Government of Canada statistics. The shift away from 100 percent blue helmets operations occurred in 1992. Security Council authorization of ECOMOG (Economic Community of West African States Monitoring Group) actions in Liberia in 1992, some two years after ECOMOG intervened, is the first example.

References Annan, Kofi, Secretary General of the United Nations (2003) “Address to the General Assembly.” New York. Berdal, Mats (2003) “The UN Security Council: Ineffective but Indispensable,” Survival 45(2). Bobrow, Davis B. & Boyer, Mark A. (1997) “Maintaining System Stability: Contributions to Peacekeeping Operations,” Journal of Conflict Resolution 41(6): 723–48. Bush, George W. (2002, September 12) President’s Remarks at the United Nations General Assembly. http://www.whitehouse.gov/news/releases/2002/09/20020912-1. html. New York.

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Durch, William J. & Berkman, Tobias C. (2006) Who Should Keep the Peace? Washington, DC: Henry L. Stimson Centre. Gilligan, Michael & Stedman, Stephen John (2003) “Where Do the Peacekeepers Go?” International Studies Review 3(4). Human Development Report (2006) www.undp.org. Mahbubani, Kishore (2004) “The Permanent and Elected Council Members.” In The UN Security Council: From the Cold War to the 21st Century, edited by David M. Malone. Boulder, CO: Lynne Rienner. McCarthy, Patrick A. (1998) Hierarchy and Flexibility in World Politics. Aldershot, UK: Ashgate Publishers. Monthly Summary of Contributions of Military and Civilian Police Personnel (2006, November) [http://www.un.org/depts/dpko/dpko/contributors/]. Neack, Laura (1995) “UN Peace-Keeping: In the Interest of Community or Self?” Journal of Peace Research 32(2): 181–96. Report of the Panel on United Nations Peace Operations http://www.un.org/peace/ reports/peace_operations/. Report of the Secretary General’s High Level Panel on Threats, Challenges and Change (2004) “A More Secure World: Our Shared Responsibility.” http://www. un.org/secureworld/. Wallensteen, Peter & Johansson, Patrik (2004) “Security Council Decisions in Perspective.” In The UN Security Council: From the Cold War to the 21st Century, edited by David M. Malone. Boulder, CO: Lynne Rienner.

Chapter 13 “Failed” States and Global Security: Empirical Questions and Policy Dilemmas Stewart Patrick

Weak and impoverished states and ungoverned areas are not only a threat to their people and a burden on regional economies, but are also susceptible to exploitation by terrorists, tyrants and international criminals. We will work to bolster threatened states, provide relief in times of crisis, and build capacity in developing states to increase their progress. The White House, 2006 National Security Strategy of the United States of America

Introduction One of the dominant influences shaping contemporary North–South relations is the perception that the main threats to international security emanate disproportionately from poorly governed states in the developing world. Beyond representing the hard core of today’s development challenge, such countries are said to enable a host of transnational dangers, such as terrorism, weapons proliferation, organized crime, pandemic disease, environmental degradation, regional conflict, humanitarian catastrophes, and energy insecurity (Crocker 2003; Rice 2003; Fukuyama 2004: 92; Fearon & Laitin 2004: 13). This perception is particularly prominent within advanced market democracies – and notably the United States, where it has gained the status of conventional wisdom. In response, OECD (Organization for Economic Cooperation and Development) governments have begun to adapt their defense, diplomatic, and development policies and instruments to help prevent state failure and respond to its aftermath, and to try to quarantine themselves from the presumed “spillover” effects of state weakness. Such moves have been mirrored by those of international institutions, including the United Nations and the World Bank.


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What is striking is how little empirical analysis has been undertaken to document and explore the connection between state failure and transnational security threats (Patrick 2006a). Scholars and policy makers have advanced blanket associations between these two sets of phenomena, often on the basis of anecdotes or single examples (e.g., al-Qaeda operations in Afghanistan), rather than through sober analysis of global patterns or in-depth case studies that reveal causal linkages. These sweeping generalizations provide little analytical insight or guidance for policy makers, since they fail to distinguish between categories of weak and failing states or to ask whether (and how) particular developing countries are associated with particular threats. Three things have been missing from this discussion. One is appreciation that states in the developing world vary along a continuum in terms of institutional strength, both overall and in particular spheres; equally important, their level of dysfunction can represent a variable mixture of inadequate capacity and insufficient will (Patrick 2006b). A second is a nuanced appreciation of the complex linkages between state weakness, on the one hand, and a country’s propensity to fall victim to or enable particular threats, on the other. A third is recognition that developing countries are embedded in a larger global system that exerts both positive and pernicious impacts on their resilience and vulnerability. The scholarly community has an important role to play in elucidating the diverse sources and expressions of state fragility; clarifying and mapping the connection between particular forms of weakness and specific transnational “spillovers”; and placing any linkages in the context of an integrated global system in which causality may flow in multiple directions. For the governments and peoples of the global South, the newfound strategic significance of weak and failed states is both a blessing and a curse. It carries opportunities, in the form of increased Northern policy attention and resources. But it also entails risks, threatening a distorted pattern of North–South policy engagement that seeks to address the symptoms rather than the causes of state fragility in the developing world. Solid research can help ensure that today’s threat perceptions are grounded in reality; that they help to overcome rather than exacerbate North–South cleavages; and that policy interventions of the wealthy governments and international institutions are aligned with the desires and priorities of the world’s poor. This paper seeks to promote such a constructive research and policy agenda. It begins by documenting growing official attention to the spillover effects of weak and failing states. Noting shortcomings in the reigning concept of the “failed state,” it proposes a new approach to measuring state performance in the developing world. The chapter then turns to five major transnational security threats, suggesting that state weakness is only imperfectly correlated with them. The chapter closes by proposing new donor policies to advance reform in the world’s weakest countries.

Common Claims and Policy Innovations The high strategic salience of weak and failing states is a novel development. It is a direct result of the terrorist attacks on the United States on September 11, 2001. Previously, senior officials in Washington and other capitals tended to regard

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peripheral states with sovereignty deficits primarily as a humanitarian matter. They tugged at Northern heartstrings – and occasionally purse strings – but they were at best third-tier security concerns. This strategic calculus changed dramatically after al-Qaeda’s attacks on the United States from Afghanistan, one of the poorest and most wretched countries in the world. President George W. Bush captured this new view in his National Security Strategy of 2002, declaring: “America is now threatened less by conquering states than we are by failing ones” (White House 2002). This new preoccupation with spillovers from weak or failed states has driven a slew of recent US policy pronouncements and institutional innovations spanning the realms of diplomacy, development, defense, intelligence, and even trade. In early 2006, Secretary of State Condoleezza Rice announced a new “transformational diplomacy” initiative, intended to help build and sustain democratic, well-governed states that will respond to the needs of their people and conduct themselves responsibly in the international system (Rice 2006). To advance this goal, she announced a sweeping plan to ensure that US foreign assistance is more closely aligned with US foreign policy priorities (Patrick 2006c). Such initiatives have been mirrored across the Potomac. The Defense Department’s most recent National Defense Strategy emphasizes military cooperation to strengthen the sovereign capacities of friendly governments in the developing world against the internal threats posed by insurgents, terrorists, and criminals. To respond to this mission, the Defense Department is deploying new assets to the world’s so-called “ungoverned spaces,” including rugged remote regions, uncontrolled borders, and unpoliced coastlines, through such programs as the Greater Horn of Africa Initiative (Whelan 2005). The Central Intelligence Agency (CIA) has identified some 50 lawless zones around the world that are conducive to illicit activity (NIC 2003; Tenet 2003). The Bush administration has even cast its campaign for regional trade liberalization as a means to prevent state failure and its negative externalities (Zoellick 2004). This is not simply a US phenomenon. Both collectively and individually, other rich world governments have adopted similar policy statements and adapted institutions accordingly. The European Security Strategy of 2003 identifies the “alarming phenomenon” of state failure as one of the main threats to the European Union (European Council 2003: 11). In Great Britain, the Prime Minister’s Strategy Unit has advocated a new, government-wide effort to help prevent failed states from generating pathologies like crime, terrorism, disease, uncontrolled migration, and energy insecurity (PMSU 2005). Similarly, Canada’s International Policy Statement of 2005 (Government of Canada 2005) and Australia’s recent white paper on overseas programs (AusAID 2006) advocate cross-departmental collaboration to forestall state collapse and its associated negative consequences. Likewise at the international level, state failure has been depicted as the Achilles heel of collective security. A unifying theme of recent UN reform proposals has been the need for effective, sovereign states to contend with today’s global threats. As UN Secretary General Kofi Annan declared in a December 2004 speech to the Council on Foreign Relations, “Whether the threat is terror or AIDS, a threat to one is a threat to all . . . Our defenses are only as strong as their weakest link.” He expanded on this theme in his 2005 report, In Larger Freedom, declaring, “If states

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are fragile, the peoples of the world will not enjoy the security, development and justice that are their right” (UNGA 2005: 6). In early 2006, UN member states endorsed the creation of a Peacebuilding Commission to ensure that war-torn states do not collapse once again into failure. In parallel with these steps, the major donors of the Organization for Economic Cooperation and Development (OECD) have pursued a so-called “Fragile States” initiative, in partnership with the World Bank’s Low Income Countries Under Stress (LICUS) program (OECD 2005; World Bank 2006). Given this flurry of activity, it is fair to ask whether the underlying assumption animating much of Northern policy is correct. That is, what is the connection between state failure, on the one hand, and transnational threats, on the other? Answering this question requires us first to probe more deeply into the concept of the “failed state.”

The “Failed State” Reconsidered Contemporary approaches to the concept of the “failed state” have suffered from several analytical shortcomings. These include the absence of clear criteria to define “failure”; a cavalier tendency to apply this single label to a heterogeneous group of countries; and an inattention to the specific histories, trajectories, and regimes of the countries so designated. The concept of the “failed state” also raises troubling normative questions, by ignoring the historical antecedents to state failure, placing the blame for any difficulties entirely on developing countries, and (arguably) privileging the preservation of domestic order over the pursuit of justice. The following paragraphs outline these concerns and propose a more variegated approach to conceptualizing state weakness. No Agreed Definition. Perhaps the main limitation of the “failed state” concept is the lack of agreement among both policy makers and scholars about the particular characteristics that warrant such a designation. As Charles Call (2006) pointedly observes, the indicators scholars have proposed for state failure tend to be idiosyncratic. Robert Rotberg (2004–5: 5–9), for example, notes a dozen-odd characteristics of failing states, among them endemic civil wars; inability to control peripheral regions; increased criminal violence and lawlessness; rampant corruption; dramatically declining economic growth; and loss of political legitimacy. Meanwhile, the annual Failed States Index produced by the Fund for Peace and published in Foreign Policy magazine offers a competing set of indicators that overlap only imperfectly with Rotberg’s, including such factors as large-scale refugee movements; mounting demographic pressures; inequitable economic development; sharp or severe economic decline; and the rise of factionalized elites (Call 2006; Fund for Peace 2006). Apples, Oranges, and Other Fruit. Lacking a consensus definition, scholars tend to lump all troubled developing countries into a single, catch-all, “failed state” category. The results are not encouraging. Besides obscuring their unique cultural legacies, historical experiences, and current challenges, this hodgepodge approach risks encouraging generic, one-size-fits-all policies instead of thoughtful


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interventions tailored to the unique causes and expressions of instability in a given case. Among the bottom 20 countries in the 2006 Failed States Index, for instance, one finds Sudan, Iraq, Zimbabwe, Haiti, Afghanistan, Liberia, Pakistan, North Korea, Nepal, Yemen, and Burma. What strikes one immediately is the heterogeneity of these countries in terms of their relative population, political stability, government capacity, regime legitimacy, and current trajectory. Ignoring the Nature of the Regime. A particularly problematic aspect of the grab-bag approach to “failed states” is its failure to distinguish among troubled countries according to the legitimacy of their governing regimes, as well as their commitment (rather than merely capacity) to deliver to their people the basic goods associated with statehood and to engage with the international community. It makes little sense, for example, to group North Korea – whose authoritarian leader Kim Jong Ill is capable of fielding one of the largest armies in the world while permitting his citizens to starve – or Zimbabwe – a once-promising country that President Robert Mugabe has driven into the ground – with post-conflict East Timor or contemporary Liberia, whose recent governments have demonstrated the will but have lacked the capacity to meet the immense needs of their societies. Normative Objections. The “failed state” label also raises normative hackles. First, it ignores the fact that many of the countries so designated have never been effective states. Particularly in Africa, many are the artificial creations of the European scramble for empire and the subsequent abrupt decolonization following World War II. Such “quasi-states” (Jackson 1990) possess the juridical trappings but little of the empirical substance of sovereignty, and their arbitrary borders encompass diverse and often fractious political communities (Mazrui 1984). Many suffered from being the objects of Cold War competition and patronage, which further distorted their institutional development. Second, the “failed state” epithet lays the culpability for state weakness and its attendant spillovers squarely at the feet of dysfunctional governments and societies in the developing world. While this framing provides cognitive consolation to the comfortable, it ignores the fact that the sources of state weakness are often in part a function of sins of omission or commission in the global North. These include casting aside concerns for good governance in resource-rich countries; tolerating bribery of Southern governments by multinational companies domiciled in OECD countries; providing financial havens for the ill-gotten gains of developing world kleptocrats; sustaining demand for narcotics and other illicit commodities; and engaging in a lucrative trade in armaments that subsequently circulate freely in the world’s conflict zones (Moore 2004/5). Finally, the “failed states” lens arguably encourages rich-world policies that promote strong but not necessarily just or equitable rule in the global South. Just as Cold War security concerns led the United States and allied Northern governments to promote strongman rule in the periphery, today’s “global war on terrorism” may encourage a shallow approach to state building that sustains regimes that promise order and stability, rather than supporting the slow and painstaking work of creating legitimate, participatory institutions of governance capable of delivering

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a broader panoply of socioeconomic goods, as well as human security, for their populations (Rubin 2005–6).

Measuring State Weakness Notwithstanding flaws in the concept of the “failed state,” there is merit in attempting to measure institutional strength in developing countries, in the form of an index that ranks state performance in delivering essential political goods (Rotberg 2004– 5). This would recognize that state weakness is relative, with each country falling along a spectrum relative to its cohort, rather than a binary, either/or condition. It would help overcome unproductive debates over whether particular countries should be categorized as “weak,” “failing,” “failed,” or “collapsed,” or some other adjective. It could also have practical utility, if it included measurements on specific sub-categories of state function, thus permitting national authorities and outside actors to pinpoint sources of institutional weakness and target their policy interventions accordingly. There is no consensus about how to define and measure state weakness (Besançon 2003). The following paragraphs review the advantages and drawbacks of some leading approaches. The best-known effort is the CIA-supported State Failure (now Political Instability) Task Force, which uses an extensive dataset to isolate variables associated with the onset of a “severe internal political crisis.” Although considered the most accurate predictor of severe “state failure,” it is not geared to measuring and analyzing cases of more moderate or endemic weakness. More recently, the 2004 report of the Commission on Weak States and US National Security classifies 50–60 countries as “weak states” based on their failure to provide physical security, social welfare, and legitimate institutions (Commission 2004). However, the report relies on only three indicators to define its cohort, omits any quantitative indicators for economic performance, and does not seek to rank states on relative performance. Two other indices actually rank state capacity. The aforementioned “Failed States Index” grades states according to their susceptibility to political instability and violence, using software that scans news articles, US State Department reports, independent studies, and corporate financial filings, noting the number of positive and negative “hits” for each country (Fund for Peace 2006). The effort focuses primarily on the risk of violence, however, rather than other aspects of institutional strength. A more comprehensive model is the Country Indicators for Foreign Policy (CIFP) Project of Carleton University, funded by the Canadian International Development Agency, which measures the state’s ability to provide basic governance functions, on the basis of 74 indicators across 10 dimensions of statehood (Carleton University 2006). More recently, Ashraf Ghani, Clare Lockhart, and Michael Carnahan have proposed a “sovereignty index” to “measure . . . how far short a state falls in performing its basic functions.” They identify 10 areas that could be combined to assess such a country’s sovereignty gap. Their index, which will be released during 2007, places heavy emphasis on the financial and economic components of state function (Ghani et al. 2005).


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These independent efforts have been mirrored at the official level. Britain’s Department for International Development (DFID) has produced an indicative list of 46 “fragile” states, with some 870 million inhabitants, though without attempting to rank them (DFID 2005). The World Bank, meanwhile, classifies 25 very poor, troubled developing countries as Low Income Countries Under Stress (LICUS), as determined by low scores on the Bank’s Country Policy and Institutional Assessments (CPIA) (World Bank 2006). There are two main drawbacks in the Bank’s approach. First, LICUS designation is limited to those countries eligible for grants from the Bank’s International Development Association (IDA) window, thus omitting a number of other fragile countries. Second, the CPIA rests heavily on economic components of governance, giving less weight to security, political, and social considerations. Within the donor community, the closest thing to a true index for state fragility was created in 2006 by USAID, in a document titled Measuring Fragility: Indicators and Measures for Rating State Performance. The model proposes 33 indicators to measure the capacity and legitimacy of state institutions in four critical spheres of governance: security, political, economic, and social (USAID 2006). Unfortunately, the country results generated by this promising exercise have never been released publicly, and the initiative was shelved with the recent reform of US foreign assistance. Collectively, these attempts to define and measure state weakness provide valuable insights, by (among other things) suggesting connections between institutional weakness, poverty, and political violence. At the same time, they tend to suffer from one or more shortcomings, whether by focusing on extreme cases of failure or collapse, rather than a broader spectrum of weakness; by lack of transparency in data sources or incomplete coverage of the relevant countries; or by emphasizing one or two dimensions of state weakness (such as propensity for conflict or strength of economic institutions) while overlooking other manifestations of institutional capacity.

A New Measure of State Weakness Seeking to devise a more balanced and transparent index that builds on insights of previous efforts, the author has collaborated with Susan Rice of the Brookings Institution to create an index of state weakness in the developing world (Rice & Patrick 2007). This seeks to measure the relative performance of all 141 developing and transitional countries1 in fulfilling four sets of critical government functions, relying on 20 widely accepted indicators (see Table 13.1). The security basket evaluates whether a state is able to maintain security for its citizens and sovereignty over its territory. It measures the degree to which citizens are insecure due to lawlessness or violent conflict, repressive government tactics, and the illegal seizure of power. The political basket assesses the extent to which a government rules legitimately and capably. It measures the state’s political accountability to citizens and the ability of state institutions to function effectively and transparently. The economic basket assesses a state’s ability to provide its citizens

Source: Rice and Patrick (2007).

5. Territory Affected by Conflict (Political Instability Task Force, 2006)

4. Gross Human Rights Abuses (Political Terror Scale, 2007)

3. Incidence of Coups (Archigos, 2006; EIU, 2007)

2. Political Stability and Absence of Violence (Governance Matters VI, 2007)

1. Conflict Intensity (Center for Systemic Peace, 2006)

Security

10. Life Expectancy (World Bank, 2007)

9. Access to Improved Water and Sanitation (World Bank, 2007)

8. Undernourishment (Food and Agriculture Organization, 2006)

12. GDP Growth (World Bank, 2007)

7. Primary School Completion Rate (World Bank, 2007)

15. Regulatory Quality (Governance Matters VI, 2007)

14. Inflation Rate (IMF, 2007)

13. Income Inequality (World Bank, 2007)

11. GNI per capita (World Bank, 2007)

Economic

6. Child Mortality Rate (UNICEF, 2007)

Social welfare

Table 13.1 Indicators for state weakness in developing countries

20. Political Freedom (Freedom House, 2007)

19. Voice and Accountability (Governance Matters VI, 2007)

18. Control of Corruption (Governance Matters VI, 2007)

17. Rule of Law (Governance Matters VI, 2007)

16. Government Effectiveness (Governance Matters VI, 2007)

Political


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with a stable economic environment conducive to growth, taking account of recent macroeconomic performance, quality of existing policy and regulatory environment, the strength of the private sector, and the degree to which income is equitably distributed. The social welfare basket assesses how well a state meets basic human needs of its citizens including nutrition, health, education, access to drinking water, and improved sanitation. In each of the four baskets, the index aggregates the underlying indicators to determine a score that reflects a country’s performance in that area. Scores are then normalized on a scale from 0 (weak) to 10 (strong) within each of the four core functions. The four normalized basket scores are then averaged to obtain an overall score of state weakness. Viewed individually, the four underlying basket scores provide separate barometers for state performance in each of the core functions – security, social welfare, economics, and governance.2 While some of the weakest states fail in all four functions, other countries exhibit relative weakness in providing just one or two functions. The ability to compare countries across four principal dimensions of weakness is a distinctive contribution of this approach.

Overview of the rankings The Appendix to this chapter ranks all 141 countries in the index from weakest to strongest. The bottom 20 stand apart in the magnitude of their problems. With a few exceptions, they face challenges in virtually all categories of state function. Nearly all have experienced violence or profound political turmoil in the past five years. With the exception of oil-rich Iraq, Sudan, and Angola, all are low-income countries (below $905 per capita). The bottom 20 include the eight poorest nations in the world (Burundi, DRC [Democratic Republic of Congo], Eritrea, Liberia, Ethiopia, Guinea-Bissau, Somalia, and Sierra Leone). The index suggests that Somalia is by far the weakest country. The Democratic Republic of the Congo and Afghanistan are the most insecure. Looking beyond the bottom 20, we find that state weakness varies along a continuum, with no single component of the index driving results across countries in any consistent sense. There are no major regional differences in performance other than the low sub-Saharan African scores in providing basic social welfare. Among the weakest 60 states, we find three-quarters are low-income states and that more than half are located in sub-Saharan Africa. In general, state weakness is strongly associated with poverty (which explains some 50 percent of variation in country scores), as well as government effectiveness, child mortality, and recent conflict. Individual country scores suggest that weakness may manifest itself in various ways, whether through broad-based decline or marked deterioration in one area. Some countries fare reasonably well on several dimensions but are stung on a single issue such as security (e.g., Colombia, Pakistan, and Algeria) or poor political governance (e.g., oil-rich Equatorial Guinea, the only upper-middle-income country in the bottom 60). Others, such as Mauritania and Yemen, have mediocre scores across the board.

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A Typology of Pathology: Additional Parameters of State Weakness The index described above should permit cross-country comparison of institutional performance in the developing world. Beyond arraying states along a continuum, however, it is useful analytically to distinguish among several categories of weak states, based on their current situation and trajectory, as well as the commitment of their governing regime (not merely capacity) to provide essential political goods. The following seven categories of countries (which occasionally overlap) present distinctive challenges to and require differentiated approaches from would-be interveners: 1.Endemically weak states: This label applies to stagnant, often aid-dependent countries, such as Zambia, that are not at major risk of violent conflict but are characterized by low growth, anemic institutions, and patrimonial systems of political leadership (van de Walle 2005). 2.Resource-rich poor performers: Such countries generate wealth by large natural resource rents that distort the national economy and sustain corrupt, clientelist governance (Rosser 2006). Nigeria, Equatorial Guinea, and Angola provide examples of this phenomenon. 3.Deteriorating situations: This category encompasses states suffering a marked decline in institutional performance, particularly as a result of political or economic crisis, with increasing risk of violence and even state collapse. Policy dialogue between national authorities and donors is poor. Contemporary Zimbabwe provides a case in point. 4.Prolonged political crisis: In such situations, the state is paralyzed or hindered by a political impasse or conflict (e.g., Nepal before 2006). External donors and the host government frequently fail to achieve consensus on a strategy for development. 5.Post-conflict situations: One can distinguish two sub-categories here. The first is a negotiated settlement (e.g., Mozambique), with progress dependent on ongoing political deals, often under the auspices of a multilateral peace operation. The second is clear-cut victory of one side (e.g., Uganda), typically followed by a smaller international presence. As Marina Ottaway (2003) notes, the two scenarios present unique state-building challenges. 6.Brittle dictatorships: Many of the world’s “weakest” states are paradoxically ruled by strongmen (Freedom House 2004). They include North Korea and Myanmar, authoritarian “outposts of tyranny” (in the parlance of the Bush administration) that appear superficially strong but rest on a brittle foundation. 7.Reform-minded governments: In a number of states around the world (e.g., Georgia under Mikheil Saakasvili), reform-minded leaders have attempted to overcome legacies of authoritarian government and failed development policies, often in the context of a democratic transition.


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Table 13.2 Capacity and will as dimensions of state weakness in developing countries

High capacity Low capacity

Strong will

Low will

Relatively Good Performers (e.g., Senegal, Honduras) Weak but Willing (e.g., Mozambique, Timor Leste)

Unresponsive/Corrupt/Repressive (e.g., Burma, Zimbabwe) Weak–Weak (e.g., Sudan; Haiti before 2006)

Will vs. capacity As the sixth and seventh categories above suggest, state weakness is not just a question of inherent capacity or current trajectory but also of will. Assessments of state weakness must thus consider the level of government commitment to actually deliver the goods associated with effective statehood, as well as the legitimacy (or venality) of the ruling regime. By distinguishing between capacity and commitment, we can differentiate four broad categories of states: (1) good performers with both the will and the way; (2) states that are weak but willing; (3) states that have the means but not the commitment; and (4) those with neither the will nor the way (see Table 13.2). Such analytical distinctions have practical utility, informing the mix of incentives that external actors can deploy in engaging poor performers. The goal is to move weak states toward the upper-left quadrant, by filling capacity gaps, persuading unreconstructed elites to mend their ways, or both.

Weak States and Transnational Threats: Rhetoric and Reality3 How does state weakness correlate with the main transnational threats to global security? Based on official rhetoric, one would assume a close overlap. As USAID declared in its 2003 White Paper, When development and governance fail in a country, the consequences engulf entire regions and leap across the world. Terrorism, political violence, civil wars, organized crime, drug trafficking, infectious diseases, environmental crises, refugee flows and mass migration cascade across the borders of weak states more destructively than ever before. (USAID 2003)

To date, such sweeping claims have been overdrawn and based largely on anecdotal evidence. (Logan & Preble 2006; Patrick 2006a). Seeking to take a more rigorous approach, the author is collaborating with Susan Rice on a Weak States Threat Matrix to map the intersection between state weakness in the developing world and specific transnational security threats. Pending the results of that ongoing research, the following paragraphs offer preliminary observations about the oft-stated

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connection between weak and failing states and current patterns of transnational terrorism, weapons proliferation, international crime, infectious disease, and energy insecurity.

Terrorism A central motivation for Northern policy attention to weak and failing states is the conviction that such countries enable transnational terrorist networks. As the New York Times (2005) argues, “Failed states that cannot provide jobs and food for their people, that have lost chunks of territory to warlords, and that can no longer track or control their borders, send an invitation to terrorists.” Such claims are plausible. Data from 1991–2001 suggest that individual terrorists prior to 9/11 came disproportionately from low-income authoritarian countries in conflict, and that most US-designated Foreign Terrorist Organizations used weak and failing states as their primary base of operations (Marshall & Gurr 2005). Weak states have at times provided transnational terrorist organizations with multiple benefits, by offering safe havens and ungoverned spaces; sources of ideological support; bases for training and indoctrination; access to weapons, conflict experience, financial resources, and pools of recruits; staging grounds and transit zones; and targets of attack. Al-Qaeda, for example, enjoyed the hospitality of Sudan and Afghanistan, where it built training camps and enlisted members; exploited Kenya and Yemen to launch attacks on US embassies in Nairobi and Dar es Salaam and the USS Cole; and financed operations through gemstones, including diamonds and tanzanite, from African conflict zones (Takeyh & Gvosdev 2002). To underline this role, jihadi websites have identified weak and failing states as attractive targets of opportunity. With these presumed connections in mind, the US National Strategy for Combating Terrorism commits the United States to “diminishing the underlying conditions that terrorists seek to exploit,” by bolstering state capacities, alleviating poverty, and promoting good governance. As President Bush explained in a September 2005 address to the UN General Assembly: “We must help raise up the failing states and stagnant societies that provide fertile ground for terrorists” (White House 2005). A major strategic aim in the US-led “global war on terrorism” is to deny terrorists access to poorly governed lands, including in Africa, where porous borders, political instability, and lawless regions are perceived as vulnerabilities (Miko 2004; Lyman & Morrison 2004). Under the US Trans-Sahel Counterterrorism Initiative, the Department of Defense is training the security services in a dozen African countries to control their territories. The related Greater Horn of Africa Initiative has involved US soldiers in activities ranging from border security to building schools in coastal Kenya. A closer look suggests that the connection between state weakness and transnational terrorism is more complicated and tenuous than often assumed. First, it is obvious that not all weak and failed states are afflicted by terrorism. As historian Walter Laqueur points out, “In the 49 countries currently designated by the United Nations as the least developed hardly any terrorist activity occurs” (Laqueur 2003:


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11). By itself, weak capacity cannot explain why terrorist activity is concentrated in the Middle East and broader Muslim world, rather than other regions like Central Africa. Clearly, other variables and dynamics – including political, religious, cultural, and geographical factors – shape its global distribution. Similarly, much of the terrorism that occurs in weak and failing states is not transnational but self-contained, motivated by local political grievances (e.g., the FARC in Colombia) or national liberation struggles (e.g., LTTE in Sri Lanka). It is thus only tangentially related to the “global war on terrorism,” which as defined by the Bush administration focuses on terrorists with global reach, particularly those motivated by an extreme Salafist strand of Wahabi Islam. Third, not all weak and failing states are equally attractive to terrorists. Conventional wisdom holds that collapsed, lawless polities like Somalia or Liberia are particularly vulnerable. In fact, terrorists are likely to find weak but functioning states like Pakistan or Kenya more congenial bases of operations. Such poorly governed states are fragile and susceptible to corruption, but they also provide easy access to the financial and logistical infrastructure of the global economy, including communications technology, transportation, and banking services (Menkhaus 2004; Mills 2004). Fourth, weak and failing states may be of declining importance to transnational terrorists. For one thing, the al-Qaeda threat has evolved from a centrally directed network, dependent on a “base,” into a more diffuse global movement, with autonomous cells in dozens of countries, poor and wealthy alike. For another, the source of radical Islamic terrorism may reside less in state weakness in the Middle East than in the alienation of deterritorialized Muslims in Europe. The “safe havens” in the global war on terrorism are as likely to be the banlieues of Paris as the wastes of the Sahara or the slums of Karachi (Roy 2004). In sum, weak and failing states can provide useful assets to transnational terrorists, but they may be less indispensable to their operations than widely believed. If there is a failed state that is important to transnational terrorism today, that state is Iraq. As CIA Director Porter Goss testified in early 2005, the US-led invasion and occupation transformed a brutal but secular authoritarian state into a symbol and magnet for the global jihadi movement (Priest 2005).

Proliferation Fears that weak and failing states may incubate transnational terrorism merge with a related concern: that poorly governed countries may be unable or disinclined to control stocks of nuclear, biological, or chemical weapons or prevent the onward spread or leakage of WMD-related technology. This is not an idle worry. According to the British government, of the 17 states that have current or suspended WMD (weapons of mass destruction) programs, beyond the permanent five members of the UN Security Council, 13 are “countries at risk of instability” (Carnegie Endowment for International Peace 2005; PMSU 2005). Still, it is appropriate to note that the link between state weakness and WMD proliferation is restricted to a relatively small number of developing countries.

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According to experts, the main pathways to WMD proliferation include the collapse of a state armed with nuclear, biological, or chemical weapons; theft of fissile material or a functioning nuclear, biological, or chemical weapon; unauthorized diversion of such weapons, material, or technology; or direct weapons transfer by the ruling regime (Albright 2006). Particularly in the nuclear field, the number of countries that could plausibly serve as sources of weapons or fissile material remains (fortunately) very small. The most frightening prospect is that a nuclear armed state like Pakistan or North Korea might lose control of its weapons through collapse or theft, placing them directly in the hands of a successor regime or non-state actors with little compunction about their use. A more likely scenario may involve the transfer of biological weapons, which are easier to make and transport but difficult to track. Direct transfer of functioning WMD should not be the only concern. Revelations about the international nuclear arms bazaar of Abdul Qader Khan suggest that poor governance may be the Achilles heel of global non-proliferation efforts. For more than two decades, Pakistan’s leading nuclear scientist orchestrated a clandestine operation to sell sensitive expertise and technology, including the means to produce fissile material and design and fabricate nuclear weapons, to Iran, Libya, and North Korea. As David Albright and Corey Hinderson write, “The Khan network could not have evolved into such a dangerous supplier without the utter corruption and dishonesty of successive Pakistani governments, which, for almost two decades, were quick to deny any involvement of its scientists in illicit procurement” (Albright & Hinderson 2005). Nor could it have gone global without institutional weaknesses in more advanced middle-income countries (including Malaysia, South Africa, and Turkey) that possessed manufacturing capabilities but lacked the knowledge, capacity, or will to implement relevant export control and non-proliferation laws. Although US officials and many of their counterparts in Northern states are understandably preoccupied with the dangers of WMD proliferation, for most of the world it is the spread of more mundane but also deadly conventional weapons that poses the greatest threat to human security and civil peace. There is clear evidence that weak, failing, and post-conflict states play a critical role in the global proliferation of small arms and light weapons. More than 640 million such weapons circulate globally, many in private hands for illicit purposes (Small Arms Survey 2006). Weak states are often the source, transit, and destination countries for the illegal arms trade. On the borderlands of the former Soviet Union, vast stockpiles of weapons lie in ill-secured depots, providing tempting targets for rebel groups, terrorists, and criminal networks. Such materiel frequently surfaces on the global black or grey markets, as corrupt officials manipulate legitimate export licenses to obscure the military purpose or ultimate recipient of the shipment. In 1999, the Ukraine export agency transferred 68 tons of munitions to Burkina Faso; they were then shipped to Liberia and ultimately Sierra Leone, landing in the hands of Foday Sankoh’s Revolutionary United Front (Chivers 2005). The easy availability of conventional weapons further weakens state capacity by fueling civil wars and insurgencies and fostering a culture of criminality and impunity. As the experiences of Afghanistan, Haiti, and the DRC (among others) show,


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easy access to instruments of violence complicates efforts by governments and international partners to establish public order and the rule of law, provide relief, and pursue more ambitious development goals.

International crime Beyond posing terrorist or proliferation risks, weak and failing states are said to provide ideal bases for transnational criminal enterprises involved in the production, transit, or trafficking of drugs, weapons, people, and other illicit commodities, and in the laundering of the profits from such activities. The surging scope and scale of international crime underpins these concerns. The global narcotics trade alone is estimated to be a $300–500 billion business. Former IMF managing director Michel Camdessus estimates that money laundering accounts for 2–5 percent of world GDP, or between $800 billion and $2 trillion (US Government 2000: 18). This rise in crime is being driven by the dynamics of globalization. Advances in communications and transportation, the removal of commercial barriers, and the deregulation of financial services have created unprecedented opportunities for illicit activity (Naim 2005). National authorities, particularly in weak states, strain to encourage legitimate commerce while curbing illicit trade (van Schendel & Abraham 2005). The relationship between transnational organized crime and weak states is parasitic. Criminal networks seek to exploit “functional holes” in state capacity (Williams 2001), operating in environments where the rule of law is absent or imperfectly applied, law enforcement and border controls are lax, regulatory and taxation systems are weak, contracts go unenforced, public services are unreliable, corruption is rife, and the state itself may be subject to capture. Thanks to poor governance, the UN Office on Drugs and Crime (2005) notes, Africa has in recent years become “an ideal conduit through which to extract and/or transship a range of illicit commodities, such as drugs, firearms, minerals and oil, timber, wildlife, and human beings.” More generally, criminal groups have become adept at exploiting weak state capacity in conflict zones (from Colombia to the DRC) where political authority is contested or formal institutions have collapsed, and also in fluid, post-conflict settings (like Bosnia or Kosovo) where they have not yet been firmly reestablished. Transnational crime typically reduces state capacity still further, as criminals deploy corruption to gain protection for themselves and their activities and to open new avenues for profit. If state weakness is necessary for the influx of organized crime, it is not sufficient. Even more than a low-risk operating environment, criminals seek profits. In a global economy, realizing high returns requires tapping a worldwide market to sell illicit commodities and launder the proceeds, which in turn depends on access to financial services and modern telecommunications and transportation infrastructure. Such considerations help explain why South Africa and Nigeria have become magnets for transnational organized crime and why Niger has not. Criminals will accept the higher risks of operating in states with greater capacity in return for greater rewards.

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In addition, the link between global crime and state weakness varies by illicit sector. The category “transnational crime” encompasses a vast array of activities, not just limited to drug trafficking, alien smuggling, piracy, environmental crime, sanctions violations, contraband smuggling, counterfeiting, financial fraud, hightech crime, and money laundering. Some of these activities are closely linked to state weakness, narcotics being a case in point: poorly governed states dominate both US and UN lists of major drug producing and transiting nations (UNODC 2006a; US Department of State 2006a). Nearly 90 percent of global heroin, for example, comes from Afghanistan and is trafficked to Europe via poorly governed states in Central Asia or along the “Balkan route.” Burma, likewise, is the second-largest producer of opium and a key source of methamphetamine. Weak states are similarly overrepresented among the worst offenders in trafficking in persons – a $7–8 billion business that sends an estimated 800,000 women and children across borders annually for purposes of forced labor or sexual slavery (UNODC 2006b; US Department of State 2006b). Other criminal sectors like money laundering, financial fraud, cyber crime, intellectual property theft, and environmental crime are less obviously correlated with state weakness. With few exceptions, for example, money laundering occurs primarily in small offshore financial centers, wealthy nations, or middle-income countries. The reason is straightforward: most weak and failing states lack the requisite banking systems. On the other hand, many of the profits being laundered come from activities that emanate from – or transit through – weak states.

Infectious disease The rapid spread of avian influenza, which could conceivably kill tens of millions of people, has made infectious disease a first-tier national security issue. There is growing concern that weak and failing states may serve as important breeding grounds for new pandemics and – lacking adequate capacity to respond to these diseases – endanger global health. As Clive Bell and Maureen Lewis write, “failed or faltering states cannot or will not perform basic public health functions, . . . placing the rest of the world at risk” (Bell & Lewis 2005: 32). Since 1973 more than 30 previously unknown disease agents, including HIV/ AIDS, Ebola, and West Nile virus, have emerged for which no known cures are available. Most have originated in developing countries. Over the same span, more than 20 well-known pathogens, including TB, malaria, and cholera, have reemerged or spread, often in more virulent and drug-resistant forms (NIC 2000). In an age of mass travel and global commerce, when more than 2 million people cross international borders a day and air freight exceeds 100 billion ton kilometers a year, inadequate capacity or insufficient will to respond with vigorous public health measures can quickly threaten lives across the globe. National security and public health experts alike worry that weak and failed states – which invest little in epidemiological surveillance, health information and reporting systems, primary health care delivery, preventive measures, or response capacity – will lack the means to detect and contain outbreaks of deadly disease.


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Although there is little solid data on the link between state capacity and epidemic patterns, the global infectious disease burden falls overwhelmingly (90 percent) on low- and middle-income countries that account for only 11 percent of global health spending (Pirages 2005: 46). The Armed Forces Medical Intelligence Center has devised a typology of countries by health-care status, ranking nations into five categories on the basis of resources and priority devoted to public health, quality of health care, access to drugs, and capacity for surveillance and response. States in the bottom two quintiles are the main victims of the world’s seven deadliest infectious diseases: respiratory infections, HIV/AIDS, diarrheal diseases, TB, malaria, hepatitis B, and measles. Sub-Saharan Africa is most afflicted, with just 10 percent of the world’s population but 90 percent of its malaria and 75 percent of its HIV/ AIDS cases (NIC 2000). The spread of infectious disease is partly a function of breakdowns in public health, especially during periods of political turmoil and war. Nearly all strains of HIV/AIDS in South and Southeast Asia can be traced to northern Burma, an ungoverned warren of drug gangs, irregular militias, and human traffickers (Garrett 2005). The collapse of the DRC likewise made that country a Petri dish for the evolution of numerous strains of the virus. In Ethiopia and several other African countries, rising HIV/AIDS prevalence has paralleled the return and demobilization of ex-combatants and their reintegration into society (Collier et al. 2003). Beyond countries in conflict, many developing and transitional states possess decrepit and decaying public health systems that can easily be overwhelmed. Following the end of the Cold War, the states of the former Soviet Union all experienced spikes in the incidence of measles, TB, and HIV. In spring 2005, weak health infrastructure in Angola amplified an outbreak of the hemorrhagic fever Marburg. The same year, the government of Nigeria failed to enforce a national immunization program, allowing polio, a disease on the brink of eradication, to spread across a broad swath of Africa and beyond to Yemen, Saudi Arabia, and Indonesia. Diseases incubated in weak and failing states pose both direct and indirect threats to Northern countries. The direct threat is that significant numbers of rich world citizens may become infected and die. The indirect threat is that such epidemics may impose high economic costs and undermine key countries or regions. The World Bank estimates that SARS cost the East Asian regional economy some $15–30 billion, despite killing only 912 people (World Bank 2003). The political costs of disease are more nuanced but no less real. In the most heavily affected African countries, HIV/AIDS has decimated human capital and fiscal systems, undermining the already limited capacity of states to deliver basic services, control territory, and manage the economy. It has strained health and education systems, eroded social cohesion, undermined agriculture and growth, and weakened armies. Given the rapid spread of the pandemic into populous countries of Eurasia, total victims could surge to 100 million cases in the coming years, with dramatic increases in countries of strategic significance like India, China, and Russia (NIC 2002).

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Energy insecurity? The doubling of world oil prices during 2005 exposed strains and volatility in the global energy market, at a time of surging global demand, intensifying competition over dwindling reserves and instability in key producer countries from Iraq to Nigeria to Venezuela. To some, these trends suggest that reliance on oil and gas from weak and failing states may endanger global energy security by increasing the volatility, costs, and risk of interruption of supplies. Beyond requiring oil-importing countries in the global North to pay an “insecurity premium,” such dependence threatened to complicate their pursuit of broader national security and foreign policy objectives. Anxiety about energy security is nothing new, particularly in the United States. Much hand wringing accompanied the oil crisis of the 1970s, when domestic US production peaked and the country confronted an Arab oil embargo. Despite temporary shortages and a price shock, the Nixon-era United States found alternative sources of supply. Most economists are confident that today’s markets are similarly capable of absorbing temporary interruptions, albeit at a price. Nevertheless, some new dynamics deserve consideration. First, the quest for energy security is unfolding at a time of increased global competition for limited supplies. Since 2000, the world’s consumption of fossil fuels has risen much faster than most analysts had predicted, driven not only by sustained US demand but also by China’s apparently unquenchable thirst. During 2003–4 alone, Chinese oil imports surged 40 percent, making it the second-largest importing country. The removal of excess production and refining capacity dramatically tightened the global energy market, leaving prices vulnerable to sudden spikes in the event of disturbances in producer countries. Second, such price shocks seem increasingly likely, given growing reliance on energy supplies from weak states, as proven reserves in stable countries peak or become depleted. As Michael Klare (2001: 44) writes, the geographic concentration of exploitable fossil fuels means that the availability of energy is “closely tied to political and socioeconomic conditions within a relatively small group of countries.” Many of the world’s main oil exporters – including Iraq, Nigeria, Russia, Saudi Arabia, and Venezuela – are less stable today than in 2000. The UK government calculates that 43 percent of oil reserves are located in potentially unstable countries like Azerbaijan, where untapped reserves could generate $124 billion in revenue by 2024. Further complicating matters, a large percentage of the world’s oil and gas transits unstable regions (e.g., Transcaucasia) and vulnerable choke points (e.g., the Straits of Hormuz) via pipeline or tanker (US Department of Energy 1999; PMSU 2005). Significantly, the US exposure to volatility and interruption of energy supplies has grown markedly since 1973, when it imported only 34 percent of its crude oil. By 2005, the figure was 58 percent, with fully one-third coming from Venezuela, Nigeria, Iraq, and Angola. Increasingly, US energy security is hostage to foreign


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political developments. Over the past several years, oil markets have tightened in response to strikes in Venezuela, violence in Nigeria, and insurgency in Iraq. This dependence on weak states will only increase. By 2015, the United States will be importing 68 percent of its oil, a full quarter of it from the Gulf of Guinea (up from today’s 15 percent). All of the countries in that region – Angola, Cameroon, CongoBrazzaville, Gabon, Equatorial Guinea, and Nigeria – face tremendous governance challenges (Goldwyn & Morrison 2005). Nigeria, a fragile democracy that Washington hopes will become an anchor of stability in the region, is beset by rampant corruption and crime, simmering ethnic tensions, and grinding poverty. In recent years, rebels in the Niger Delta have repeatedly disrupted some of Nigeria’s oil flow. Rising dependence on energy from weak and failing states promises to have unpleasant ramifications for wider US foreign policy objectives. It will surely complicate US democracy promotion, by encouraging Washington to cozy up to authoritarian dictators or intervene to shore up unstable regimes in regions like the Caucasus or Central Asia.

Conclusions and Policy Implications As I have argued elsewhere (Patrick 2006b), the overlap between state weakness and today’s most pressing transnational threats is hardly clear-cut, much less universal. It depends on the threat in question, the specific sources of state weakness, and the will of ruling regimes to deliver effective governance and control transnational “spillovers.” Each poorly performing country suffers from distinctive pathologies and generates unique domestic and international challenges, of varying gravity. Accordingly, there can be no “one size fits all” response to addressing the sources or consequences of these shortcomings. Scholars can assist policy makers in Northern countries by helping to map the global intersection between state weakness and specific threats; by revealing linkages between spillovers and specific gaps in state capacity or will (such as inability or unwillingness to protect citizens or provide social services); by clarifying pathways of causality in specific cases; and by suggesting points of leverage for external actors seeking to bolster effective and legitimate states and to reduce the negative externalities of poor governance. Clear-headed analysis may also help restrain the worst impulses of Northern governments. In their preoccupation with security, wealthy donor countries often focus more on strengthening the operational capabilities of troubled developing countries to control their borders and territory than on long-term structural reform that addresses the underlying causes of weak state capacity and dysfunctional governance. This is especially true of the United States, which is devoting significant resources to programs like the Trans-Sahel Counterterrorism Initiative and the Greater Horn of Africa Initiative, targeted particularly at training effective security services. The risk is that this approach may empower authoritarian regimes whose dedication to legitimate governance and bettering the life of their citizens

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is minimal at best. To avoid repeating Cold War mistakes, the United States and partner countries must devote sustained diplomatic efforts and adequate resources in support of broad-based political, economic, social, and security sector reform in the global South, with an emphasis on helping local actors build effective, legitimate, and accountable states. (Where a key source of fragility is a noxious ruling regime, donor engagement will necessarily be primarily with non-governmental and opposition actors working for constructive change.) The United States and other Northern governments must also adapt their strategies and policy instruments to deal with the interdependent security, development, and governance challenges posed by the world’s weakest countries. OECD governments increasingly recognize that preventing conflict, promoting recovery, and advancing reform in weak, failing, and war-torn states cannot be done through traditional bureaucratic stove pipes (Picciotto et al. 2004). Accordingly, some are exploring “whole of government” approaches that bring together multiple departments and agencies – not only diplomatic, defense, and development ministries (the so-called “3Ds”), but also their intelligence, treasury, trade, and interior ministry counterparts. They are formulating “joined-up” strategies toward fragile states; embarking on integrated planning processes and joint implementation in the field; and experimenting with pooled funding arrangements (like the UK’s Conflict Pools) to forge inter-agency collaboration. At the same time, individual donor governments are only just beginning to navigate the trade-offs and tensions inherent in attempting to reconcile and harmonize the distinctive mandates, objectives, and time lines of these various departments. A final obstacle to more effective Northern policies remains a general lack of donor understanding of how precisely to foster effective institutions, particularly in the most difficult environments (Fukuyama 2004). While donors have embraced a set of “principles for good international engagement in fragile states” (OECD 2005), their development policies in practice often respond less to the requirements of state building than to the incentives of Northern aid agencies and their NGO and privatesector implementing partners. The frequent result is the creation of a “parallel international public sector” that reinforces weak state aid dependence, rather than promoting sustained economic growth and institutional reform (Ghani et al. 2005). Although donors often bemoan a lack of “absorptive capacity” in weak states, donor “capacity” to engage states with weak institutions has also been severely lacking. Making progress on this front is essential to cut the connection between state weakness and transnational threats.

Acknowledgments I thank the Carnegie Corporation of New York and the Australian National Aid Agency for supporting ongoing research in this field. I am grateful to Susan Rice for ongoing collaboration and to Kaysie Brown and Kevin Ummel for research support and comments on this manuscript.


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Appendix: Index of state weakness in the developing world The 60 weakest states and their index scores are presented below. A basket score of 0.0 represents the worst score in the 141-country sample, a score of 10.0 signifies the best.

Color Coding Key Color coding and quintiles are based on full sample of 141 countries.

Bottom quintile 2nd quintile 3rd quintile 4th quintile Top quintile

Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31

Country SOMALIA AFGHANISTAN CONGO, DEM. REP. SUDAN BURUNDI IRAQ ZIMBABWE ANGOLA ERITREA SIERRA LEONE COTE D’IVOIRE CHAD LIBERIA CENTRAL AFRICAN REP. BURMA HAITI ETHIOPIA GUINEA-BISSAU NORTH KOREA TOGO CONGO, REP. EQUATORIAL GUINEA NEPAL NIGER NIGERIA GUINEA RWANDA UGANDA COMOROS CAMEROON PAKISTAN

Overal score

Economic

Political

Security

Social GNI per welfare capita

0.82 1.06 1.58

1.77 2.15 3.50

0.00 2.08 1.08

0.80 0.00 0.51

0.70 0.00 0.52

226 271 130

2.77 2.82 2.84 3.00 3.14 3.17 3.29 3.30 3.43 3.54 3.54

3.57 4.14 2.21 0.00 3.69 2.28 3.51 5.03 4.10 3.34 4.04

2.06 3.46 1.67 1.56 2.67 2.78 3.87 2.12 2.42 3.91 2.90

0.86 2.24 1.22 6.58 4.74 5.15 5.01 2.48 5.99 5.63 5.96

4.59 1.43 6.27 3.84 1.45 2.48 0.76 3.56 1.21 1.25 1.25

810 100 1134 350 1980 200 240 870 480 140 360

3.73 3.84 3.89 4.05 4.15 4.22 4.30 4.38

3.41 3.16 5.74 5.61 1.85 4.25 4.33 6.09

0.89 2.62 4.03 3.83 0.95 2.68 2.77 1.73

3.56 6.28 4.05 5.06 7.09 5.59 6.16 7.80

7.07 3.31 1.75 1.69 6.73 4.38 3.95 1.91

n/a 480 180 190 n/a 350 1100 8250

4.41 4.47 4.52 4.52 4.53 4.57 4.97 5.00 5.00

5.00 5.14 4.56 4.60 5.04 4.96 3.44 5.45 6.04

3.84 4.69 3.51 2.64 4.26 4.55 4.20 3.09 3.52

2.32 7.12 4.77 7.24 6.31 4.54 8.05 7.37 4.33

6.50 0.94 5.24 3.61 2.51 4.23 4.20 4.07 6.13

290 260 640 410 250 300 660 1080 770 (Continued)

Appendix – continued The 60 weakest states and their index scores are presented below. A basket score of 0.0 represents the worst score in the 141-country sample, a score of 10.0 signifies the best.

Color Coding Key Color coding and quintiles are based on full sample of 141 countries.

Bottom quintile 2nd quintile 3rd quintile 4th quintile Top quintile

Rank 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60

Country ZAMBIA CAMBODIA YEMEN TAJIKISTAN UZBEKISTAN TURKMENISTAN MOZAMBIQUE MAURITANIA PAPUA NEW GUINEA LAOS COLOMBIA SWAZILAND BURKINA FASO EAST TIMOR DJIBOUTI BANGLADESH HENYA GAMBIA MALAWI LESOTHO MADAGASCAR SOLOMON ISLANDS PHILIPPINES MALI SRI LANKA TANZANIA AZERBAIJAN GUATEMALA SYRIA

Source: Rice and Patrick (2007).

Overal score

Economic

Political

Security

Social GNI per welfare capita

5.05 5.05 5.06 5.06 5.07 5.07 5.10 5.11 5.11

4.48 5.70 5.51 5.13 4.53 4.42 4.89 5.72 4.49

4.59 3.00 3.64 3.03 1.78 1.40 5.33 4.34 4.62

8.02 6.94 6.23 6.26 6.42 7.73 8.18 6.12 7.25

3.11 4.57 4.85 5.82 7.54 6.75 1.98 4.24 4.08

630 480 760 390 610 1700 340 740 770

5.26 5.28 5.31 5.33 5.36 5.38 5.39 5.48 5.51 5.57 5.59 5.60 5.62

4.94 5.00 5.62 5.67 3.49 5.47 5.33 5.32 4.29 5.70 3.79 5.21 3.59

2.56 5.79 3.65 4.87 4.41 3.69 3.97 4.72 4.54 4.83 6.40 5.95 5.05

7.84 1.23 8.16 8.18 7.58 8.07 6.29 6.73 8.16 7.97 7.97 7.49 7.47

5.71 9.11 3.80 2.59 5.98 4.29 5.98 5.15 5.06 3.77 4.18 3.76 6.39

500 2740 2430 460 840 1060 480 580 310 170 1030 280 680

5.63 5.73 5.74 5.86 5.88 5.90 5.90

5.59 5.95 5.96 6.21 5.63 4.94 3.86

5.59 6.16 5.47 5.41 3.36 4.66 2.76

2.93 8.37 2.95 7.94 6.64 6.34 7.31

8.40 2.43 8.59 3.89 7.89 7.65 9.67

1420 440 1300 350 1850 2640 1570


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Notes 1 2 3

This includes all low, lower-middle, and upper-middle-income countries as calculated by the World Bank Atlas method. This aggregation methodology implicitly assumes that each of the four core areas of state function contribute to state weakness equally. This section borrows from Stewart Patrick (2006a).[/n]

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van Schendel, Willem & Abraham, Itty (2005) Illicit Flows and Criminal Things: States, Borders, and the Other Side of Globalization. Bloomington, IN: Indiana University Press. Whelan, Theresa (2005) “Africa’s Ungoverned Space: A New Threat Paradigm.” Address at Johns Hopkins University by Deputy Assistance Secretary of Defense Theresa Whelan, December 19, 2005. ftp://ftp.jhuapl.edu/nsadrethink/ 121905/121905_WhelanNotes.pdf White House (2002) National Security Strategy of the United States of America. Washington, DC: White House. White House (2005) President Addresses United Nations High-Level Plenary Meeting. September 14, 2005, at: http://www.whitehouse.gov/news/releases/ 2005/09/20050914.html. Williams, Phil (2001) “Transnational Criminal Enterprises, Conflict, and Instability.” In Turbulent Peace: The Challenges of Managing International Conflict, edited by Chester Crocker, Fen Osler Hampson, and Pameal Aall, pp. 97–112. Washington, DC: United States Institute of Peace. World Bank (2002) World Bank Group Work in Low-Income Countries under Stress: A Task Force Report. Washington, DC: World Bank. World Bank (2003) “Assessing the Impact and Cost of SARS in Developing Asia.” Mimeo. World Bank (2006) Engaging with Fragile States: An IEG Review of World Bank Support to Low-Income Countries Under Stress. Washington, DC: World Bank Independent Evaluation Group. Zoellick, Robert (2004) “CAFTA is a Win–Win,” Washington Post, May 24.

Chapter 14 Nuclear Proliferation and the Geocultural Divide: The March of Folly J. David Singer

When US President Harry Truman dispatched the Enola Gay from the Pacific island of Eniwetok on August 6, 1945 with “Little Boy” in its bomb bay, little did he and his advisors realize that it was far from the opening shot in the long festering of what came to be known as the “North–South” divide: the cleavage between the geographically “North” or culturally Western and those who exist outside that sphere. Their energies were focused on the more immediate challenge of bringing World War II to a rapid and victorious conclusion. Not that the decision to target Hiroshima with the first available – and barely tested – atomic bomb was a simple and obvious one. Aside from the uncertainty of the weapon’s reliability and effectiveness, there was the internal debate as to whether its use was militarily necessary. The Allied consensus was that Japan was far from defeated and that a long and bloody campaign would be needed to take the Pacific islands surrounding Honshu before the final assault. Equally salient to many of the principals was, of course, the desirability of an atomic “message to Moscow.” The prospect of an accelerated Soviet–American rivalry was never far below the surface during the war and there were those who relished a monopoly of quite a few years to develop and put into place strategies for addressing the Russian challenge. In any event, the momentum of battle and the investment in the Manhattan Project were more than sufficient to carry the day. In terms of our discussion here, one of the arguments against the bombing of Hiroshima and Nagasaki was all too prescient: would this be seen as a racially motivated decision? Although the Allies by no means went easier on the Germans than the Japanese – casualties from the attacks on Cologne, Dresden, and other cities were comparable to the atom bomb casualties – the use of such a visibly destructive weapon against an enemy so culturally similar might have been less


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permissible. Did a double standard and a legacy of racist colonialism still exist? Some in the West found such an interpretation, and many in the South and East helped to confirm that fear. Returning to the post-World War II period, one could see in the wars of national liberation against the Dutch, French, British, Spanish, Portuguese, and American occupations harbingers of a later challenge to Western military dominance and, by implication, these weapons of mass destruction. Nor was it mentioned that in several of these struggles, there were intimations and not so elliptical suggestions that atomic and nuclear weapons might well be brought to bear upon these armies of the underdeveloped pre-industrial societies. Then, in the Korean War of 1950–3, the salience was especially apparent, with Russia – never a truly Northern society – and China actively engaged in combat with the US forces, and allusions to the possible use of these weapons. As a matter of fact, between 1955 and 1964, three Asian–African conferences (first, unofficially in Bandung, then officially in Belgrade, and later in Cairo) addressed this emerging polarization, calling for an end to remaining vestiges of colonialism and intimating the possibility of nuclear weapons programs in some of these newly independent states. As the Soviet–American rivalry waxed and waned and we lurched toward and away from the nuclear precipice, certain regularities became increasingly apparent to those for whom nuclear proliferation had become a central concern. While there is no question that racist attitudes played a central role in the North–South/West–East divide, larger strategic considerations were also at work. Political and economic elites in the advanced industrial societies understood that the struggle was as much about the need to dominate in the many spheres – cultural, military, technology, economics – such that there could be no credible resistance to the imperial order. And if the Russian defeat in the Straits of Tsushima offered an early warning, the smashing success at Pearl Harbor was even more compelling – on both sides of the divide. Worse yet were the early Japanese victories in the Pacific: Malaya, Hong Kong, Singapore, Wake Island, Guam, and Burma. At this juncture, the global struggle looked like a stalemate in which the forces of the South were seen – again on both sides – as more than a match for the declining capabilities of the imperialists. With the war over and the ascendance of the West apparently reestablished, it was not surprising that the earlier colonial powers would try to maintain their grip on the former colonies, militarily and economically. But it would not turn out to be simple or inexpensive. While the Japanese empire was decisively dismembered, its legacy was not to be denied. Even as the USSR was mounting a challenge to the Euro-American hegemony in its sphere of influence, the white man was finding a different, but equally rough resistance throughout the so-called “third world.” Thanks to the Japanese success in mobilizing anti-Western armed resistance movements during the Asia campaigns, a fair fraction of those elements survived the war and even grew in size, organization, and dedication in the decades following. For the post-World War II period, the resistance to Western hegemony found lively expression in Burma, Malaya, Indonesia, and the Indo-Chinese states of Vietnam, Cambodia, and Laos. These insurgencies – despite the intense rivalries and

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combat within – nevertheless are equally understood as a regional struggle against Western dominance. While far from a unified movement, we nevertheless can appreciate the general symbolism; nor can we ignore the support that came from the Russians and Chinese, who clearly understood the “correlation of forces” and their role in the ongoing struggle. It is worth noting, even as the dividing line has become less and less one of ethnicity and more one of development and technology, which the Western elites have tried to stem the tide. As a matter of fact, Michael Hunt, in Ideology and US Foreign Policy (1998), observed that: while containment underlined the obligation of a great nation to defend liberty, development theory drew its inspiration from the old American vision of . . . an abiding sense of superiority over the dark skinned peoples of the third world . . . in practice, though, these impressive new formulations amounted to little more than a restatement of the old platitudes about uplift and regeneration formerly directed at the Philippines, China, and Mexico.

Further, as Mazrui (1990) has reminded us, “the great powers do not trust third world countries with those weapons . . . that distrust could become an asset if the threat of a nuclear spread through the third world creates enough consternation in the Northern Hemisphere to result in a massive international movement to declare nuclear weapons illegitimate for everybody.” He later goes on to suggest that “the vaccination of horizontal nuclear proliferation might be needed to cure the world of this nuclear malaise, a dose of the disease becomes part of the necessary cure.”

Efforts to join the Nuclear Weapons Club Despite the series of bloody “wars of national liberation” in Asia, Latin America, and Africa, along with the brutality and suffering of the Korean War of 1950–3, the nuclear club composed of the USA/UK/France/Russia quartet remained closed to Third World nations until October of 1964, when China – still classified as underdeveloped – broke through the barrier. This was clearly not a traditional, Western major power – nor, we might note, was the Soviet Union, being half European and half “Oriental.” The war on the peninsula demonstrated that the North Koreans, with support from China and the USSR, would hold the USA and its allies under the United Nations flag to a military stalemate. Thus, by the end of that struggle, we should have recognized that the international system was no longer centered in and limited to Western Europe and North America; some might, quite reasonably, mark the end of Western hegemony much earlier, as far back as 1905, when President Theodore Roosevelt sat down in Portsmouth, New Hampshire as the Russians acquiesced in the arrival of Japan as a major player, if not yet a major power. In any event, by the 1950s, it was clear that those of us in the West/North could no longer treat the nuclear weapons issue as limited to the major participants in the Cold War.


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The dominant interpretation that nuclear weapons had become the property of the advanced industrial nations, and an instrument to be denied to nations in the underdeveloped “South,” received further reaffirmation in 1955. Israel – now anointed as a Northern/Western state, largely thanks to its initially European population and its close bond to the USA – was not seriously resisted as it began a weapons program that culminated in successful acquisition a decade later. That anointment was punctuated when, in 1981, Israel destroyed Iraq’s Osirik reactor with complete impunity. By now, it was evident that the line between the nuclear haves and have-nots was congruent with what increasingly looked like a geocultural divide. But by the 1970s it was clear that this divide would be breached, with South Africa, Argentina, Brazil, South Korea, India, Pakistan, Iraq, and Iran all launching programs designed to culminate in constructing and testing nuclear weapons. It would be far from a stampede, with Argentina, Brazil, and South Africa all closing down their programs in 1990. In South Africa, where between 1971 and 1979 the white supremacist regime developed and acquired a modest arsenal, the struggle against apartheid gained force at home, along with powerful international support. The white leadership began to realize that the ANC (African National Congress) would ultimately take over the state and thus its nuclear weapons, and the decision to abandon the program became inevitable. In a similar vein, eight other Third World/South states that had begun such programs became persuaded to abandon them between 1970 (Taiwan) and 2004 (Libya). But the dominance of the North continued to be challenged by states of the South. In 1974, India had successfully tested a nuclear weapon, all the while insisting that its test was purely for peaceful purposes, and by the late 1980s or early 1990s their rival Pakistan, with its commitments in Kashmir and a succession of fragile governments, joined the club. The apparent durability of that membership in the club was reinforced by both parties when they resumed testing in 1998. Then occurred what some in the North might have seen as a reversal in the march toward parity. In the context of a rather complicated series of moves between the USA and Libya, the latter responded to an interesting mix of incentives and disincentives, and committed to closing down its program in 2004. That deal seemed so reasonable that some thought it might be applicable to the two most intransigent “Southerners” on the road to acquisition: Iran and North Korea. As Paul (2000) noticed, going nuclear does not necessarily convey major advantages. In addition to the multitude of opportunity costs incurred, many locations and circumstances in which these weapons would not enhance military security can be identified; worse yet, they offer a rival a highly lucrative target, as the Iraqis discovered when the Israelis took out their Osirik reactor. However, despite the growing ambivalence toward the economic and strategic advantages of going nuclear, there remained two strong incentives for the nations of the South. The first was, of course, the symbolic issue: from New Delhi to Tehran it was declared that the development and exploitation of nuclear energy was their “sovereign right” and a rejection of the “white” man’s prerogative to hold and perpetuate a monopoly on the promising new technology. The second was the promise of nuclear energy

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as a primary component of economic development, an escape from reliance on foreign petroleum, and a ticket to the new global marketplace.

Limited Success of Negotiations Most efforts to deal with the proliferation problem, especially that of nuclear weapons, tend to start from the realpolitik point of view, or, less frequently, that of the concerned ethicist. While these two perspectives have much to contribute to our understanding of the problem, they have not done much to bring the problem under control. The USA continues to pursue “improvements” in its nuclear potential, negotiating a deal with India that encourages that emerging regional nuclear power to enhance its capabilities, while the other members of the nuclear club do little to further the aims of the Nuclear Non-Proliferation Treaty (NPT), and such “threshold states” show little interest in signing on to the regime. On the hope that a constructivist approach might help break the impasse, one might examine the situation in which Brazil and Argentina managed to extricate themselves from a typical lose–lose bind in the 1950s to a rapprochement under ABACC (Argentine–Brazilian Accounting and Control Commission) after the military regimes had been replaced. The story is encouraging, but it is difficult to imagine its replay in such other dyads as North and South Korea, Iran and Israel, or worse yet, India and Pakistan. As to the on-and-off process that captures the Russian–US rivalry, we have certainly seen modest progress via the SORT (Strategic Offensive Reductions Treaty) and Comprehensive Test Ban treaties as well as the virtual elimination of their tactical nuclear forces. At the same time, these two major powers still maintain strategic arsenals of awesome size – 5,163 for the USA and just about the same for Russia – on continuous alert, and still targeted on one another’s launching sites. Throughout the latter half of the twentieth century politicians have turned to voluntary agreements and treaties, which have been met with limited success. Here is a list of relevant nuclear agreements from 1945 to the present: • • • • •

• •

1959: The Antarctic Treaty set up a Nuclear Weapon Free Zone (NWFZ) in Antarctica; 1963: Partial Test Ban Treaty prohibits tests in the atmosphere, outer space, and underwater; 1967: Tlatelolco Treaty set up a Latin American NWFZ; 1967: Outer Space Agreement prohibits the stationing of nuclear weapons in outer space; 1968: Non-Proliferation Treaty (NPT) aims at non-proliferation of nuclear weapons, assistance for development of civil nuclear energy, and nuclear disarmament; 1971: Seabed Agreement prohibits the stationing of nuclear weapons on the seabed; 1974: Threshold Treaty limits the maximum yield of weapons;

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1979: Moon Agreement prohibits the stationing of nuclear weapons on the moon; 1985: Rarotonga Agreement made the Pacific a NWFZ; 1996: Pelindaba Agreement made the African continent a NWFZ; and 1996: Comprehensive Test Ban Treaty (CTBT) prohibits new nuclear tests.

The CTBT requires that all 44 countries possessing nuclear reactors ratify the treaty, but India has stated it will never sign, because of the overall discriminatory nature of the regime. And two days after the closure of the 1995 NPT Conference, China continued her testing program; one month later President Chirac announced the resumption of the French nuclear tests despite the fact that nuclear weapon states were encouraged to use the “utmost restraint.”

Some Empirical Evidence Noting the mixed success in restricting the number of nuclear states, is there any research that might tell us what the above experiences reveal? While this inconclusive struggle engaged the relevant states and the very germane international regimes, the scholarly community was far from passive. A few of us were beginning to investigate the proliferation problem and our central focus was on the question of which factors have been most powerful in moving states toward or away from the pursuit of nuclear technology. Quite a few scholars have sought to account for the realities, and while not many of these efforts would qualify as scientific, many of them strike one as insightful, credible, and even persuasive, with a fair representation in the valuable anthology assembled by Davis and Frankel (1993), more than a decade ago. But while recognizing and appreciating the imagination, insight, and effort of these studies, we need to move beyond them and see what we can learn from that handful of more rigorous investigations. Not surprisingly, the earliest data-based studies found that the availability factor was most critical. Kegley et al. (1980) did a thorough survey of the earlier studies, most of which saw security considerations as the dominant factor; their analysis led to the more benign, if tentative, conclusion that the need for and availability of this alternative form of industrial energy were – as implied in the non-proliferation treaty (NPT) – the more powerful determinants in those days. This study was moderately prescient in noting that the commercial availability of conventional energy might yet minimize the importance of self-sufficiency in nuclear technology. Around 1986, Meyer explored the question in a computer simulation, and he found that technological determinism might be less powerful. That is, he found no support for the technological imperative, and found that merely having the economic and engineering capacity would not suffice. Rather, he concluded that several political and military factors were quite salient; for example, there were four major inhibitions: treaty obligations, fear of unauthorized seizure of such resources, fear of nuclear interventions, and – somewhat surprisingly – the desire to maintain a peaceful reputation. Among the critical incentives were regional or global power

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pretensions, pariah status, domestic turmoil, loss of a war, regional proliferation, and a serious conventional weapons burden. As a result of those calculations as of 1982, Meyer predicted, rather impressively, the following most likely short-run proliferators: Israel, Pakistan, Iran, Iraq, and Libya. More recently, Singh and Way (2004) concluded that having the material capabilities would certainly encourage the initiation of a program, but by itself would not necessarily lead to actual acquisition of the weapon. They also found that such familiar realpolitik factors as diplomatic isolation, regional proliferation, absence of a nuclear umbrella, and – unsurprisingly – being a democratic major power were positively correlated with weapons acquisition. While being allied with a major power does barely reduce a state’s propensity to explore, pursue, or acquire these weapons, they do not distinguish between bilateral and multilateral alliances. Thus, it is worth noting the study by Krause (2006), in which he found that the bilateral link does little to inhibit, but when concentrating on multilateral ones, the restraining effect is quite powerful. Singh and Way find that experiencing an enduring rivalry or a high frequency of militarized disputes will strongly encourage the tendency to pursue and acquire. Out of an impressive and complex set of analyses, they conclude that, “policies that produce a higher level of security threat cannot be anything but counterproductive . . .” (2004). Jo and Gartzke (2007) use, among others, a Heckman selection model to explain the decision of some states to move first to R&D (research and development) programs and then to weapons acquisition, and found close convergence with Meyer’s results. First, they found that the material capabilities would account for the initiation of a program, but did little to explain going over the brink to the acquisition of those weapons. Second, they found that such familiar realpolitik factors as diplomatic isolation, regional proliferation, absence of a nuclear defender, and being a democratic major power were positively correlated with weapons acquisition. One result, seldom noted in the literature, is that the old atoms-forpeace program as well as the NPT corollary led to the preliminary programs among regional powers, even though few of them crossed the threshold to actual weapons acquisition. Finally, a study by Tago and Singer (forthcoming) converges strongly with the Singh and Way investigation in terms of both research design and conclusions. One difference, however, is the latter’s decision to examine the effect of vertical proliferation on the part of the original nuclear powers, but – despite the inherent logic of the argument – the effect turns out to be negative. They find that involvement in an enduring rivalry or an interstate war will increase the probability of initiating a weapons program, but these factors diminish when it comes to the actual acquisition of nuclear weapons. Among the disincentives, it turns out that being allied with a nuclear major power does not do much to inhibit imitation of a program but is a powerful deterrent to crossing the acquisition threshold. Lastly, they discover that accession to the NPT has little impact on states’ decision to initiate the program, but, as we well know, has had a powerful impact on deterring the actual acquisition of nuclear weapons. They also find that being in a severe rivalry or in a recent war inclines states toward initiation of a weapons program or the actual acquisition,


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while having a major nuclear power protector or signing on to membership in the non-proliferation treaty regime are moderate inhibitors.

The Current Impasse At first glance our findings seem moderately consistent and robust, offering considerable guidance for contemporary policy makers. They certainly tell us to ameliorate the kind of rivalry behaviors that today embroil the USA vis-à-vis Iran and North Korea. The checkered history of the North’s efforts to dissuade, compel, and coerce these two “pariah” states would certainly qualify for Barbara Tuchman’s March of Folly (1984), as would their own moves and counter-moves. Their story can make an approximation of sense only if we bear in mind their histories vis-à-vis the USA. For the Koreans there is, of course, the brutal war between 1950 and 1953 and its aftermath, in which both sides sought to unify the peninsula by force, including later on US support of a series of military regimes. Equally dramatic for the Iranians were the US-sponsored coup against the Mossadegh regime in 1953 and subsequent efforts to destabilize the regime. Despite intermittent US diplomatic efforts, with mixed support from the West Europeans, Russia, and China in the Iranian case and from Japan and China in the Korean case, the Bush administration took office in 2001 committed to a more confrontational policy in both cases. Assuming that both Iran and North Korea are still interested in working out a deal – which may well be a heroic assumption – there nevertheless remains a major obstacle. That is, many non-weapon states argue that developing nuclear energy for civilian purposes is a “sovereign right” consonant with the principles of the NPT regime. However, the further along they go toward refining uranium or plutonium for energy-grade purposes, the closer they get to the weapons-grade threshold, and the more concerned the USA and the others become that this barrier can be breached. While there are some partial solutions, such as having the more sensitive stages done through the International Atomic Energy Agency (IAEA) or a reliable neutral state or benevolent private agent, most threshold states will find this unsatisfactory and demeaning. And if they do harbor plans for their own weapons acquisition, such a scheme would be totally unacceptable. What is required, then, is to eliminate – or at least reduce – the incentives for turning to civilian nuclear energy for economic development. In addition to the desire of getting closer to the weapon stage and a deterrent against the USA or another threatening major power, there is also the rising cost of petroleum and gas, alongside the environmental menace of carbon-producing energy sources.

Turning to an Unconventional Approach In any event, it may well be time to pursue a different and unconventional approach that I will label as an “environmental approach.” The solution is obvious, but equally elusive: nuclear energy has to become less attractive. This means that the downside of this energy source must be very clearly recognized. First of all, there is the danger of a reactor meltdown or fire; the leakage that has often been well

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covered up; disposing of radioactive waste; and the not-so-clear appreciation of the start-up and maintenance costs in both monetary and electric energy terms. Additionally, going back to carbon-burning sources, in an effort to maintain access to petroleum and gas resources it is important to factor in the military costs, probably adding about $20 per barrel for military occupation, combat operations, prior preparedness, and, of course, loss of life. Finally, once the disadvantages have become clear (why has there been so little new construction in the past two decades?) and the nuclear energy option looks less seductive, the development of alternatives must be accelerated. In sum, a crash program in clean and renewable sources is essential: wind, solar, hydraulic, geothermal, and perhaps even bio-fuels may well be our best hope for avoiding the further extension of nuclear energy. In recent years, Sweden, Germany, Austria, and the Netherlands have begun to phase out nuclear energy, but much more needs to be done to accelerate this trend. If this could be achieved, it might result in the amelioration of burgeoning North–South confrontations so that the global community can move on to address the challenges of peace and prosperity.

Conclusion: Challenges for the Future Thus, our research challenge is to go beyond the earlier paradigms: to try and understand the changing dynamics of world politics, and therefore examine some not yet familiar models of national security decision making. These models need to go beyond what we blithely call “realism,” given the arrival of new non-state actors (Allison 2004), the looming demise of plentiful petroleum, the erratic increase in environmental priorities, the growing impact of globalization especially for developing countries, and the as yet barely grasped outlines in global governance; they need to be markedly augmented in both substance and method. And as researchers begin to appreciate the need for some serious reexamination of the simple paradigms that have held us in thrall for the decades since World War II, it is not unreasonable to urge – and perhaps even expect – a greater sophistication in the policies of the major powers. With American dominance over the North in appreciable decline, and Europeans assuming greater independence along with India and China, we might reasonably look to an increase in the credibility and efficacy of the IAEA and a renewed interest in the value of the NPT. Were this to occur, US policy might well begin to mature. For example, the USA might well come around to the reality that any state with aspirations toward economic development will insist on its sovereign right to develop nuclear power for civilian purposes. A corollary is that the United States will have to back away from its insistence that states like Iran and North Korea may not be permitted to move toward the very enrichment capacity that brings them closer to the threshold between energy-grade and weapons-grade capabilities. As we come to acquiesce in the NPT obligations to permit or even facilitate the proliferation of nuclear energy states, there would seem to be three associated requirements. The first is to invest energetically in the procedures and technologies that will maximize the ability of IAEA to monitor the firebreak that can separate energy-grade materials


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from those sufficient for weapons production. Second, given that this firebreak promises to become more permeable with time, it would make sense to discourage the pursuit of nuclear energy, and one way is to demonstrate that it is far from the economical, safe, and environmentally clean item that its advocates have claimed. Third, for a multitude of reasons, this would be the time for the USA and Russia to call a halt to any further efforts to enhance, expand, or otherwise “improve” their nuclear arsenals. Along the way, as Rose Gottemoeller (2005) has reminded us, the USA could silently stand by the Korean Peninsula Energy Development Organization (KEDO) as preservation and maintenance of the light-water project remains on hold, and to stay with the sister laboratory program in which peaceful nuclear research collaboration continues. Further, given the February 2007 agreement between the United States and North Korea (in which the latter agreed to close down certain facilities in exchange for supplies of fuel oil or aid), which is not that different from the 1994 one, we find a possible range of openings on both sides, especially given the role of El Baradei, Director General of the IAEA. As he sees it – and I think correctly – neither side is quite ready to honestly fulfill its commitments; a fair amount of horse-trading would seem to lie ahead. Worth noting is the regularity with which we see the USA dealing in a more conciliatory way with the North Koreans even though the evidence is pretty good that they have crossed the critical threshold, whereas dealing with Iran will remain somewhat more confrontational. In policy terms, we are certainly at a tipping point in the history of “the bomb.” As these words are penned, the trajectory of US nuclear policies since 1945 has brought us to a dangerous impasse with countries on the other side of the geocultural divide. But with a modicum of rationality and political courage in the USA, a similar turn in the other nuclear weapon states, and strengthening of the IAEA/NPT regime, we may yet escape from what might be history’s most recent “march of folly,” and enter into a phase that might even deserve the label of “reason and reprieve.” On the other hand, it may well be too late for such a happy ending. First of all, many indicators show that the long struggle of the industrially advanced West and North and the Euro-American societies to maintain their dominance in the global system is coming to a close in demographic, technological, commercial, and psychocultural terms. The wretched of the earth have had close to enough and the political elites in countries like Iran and Venezuela are mobilizing against the West to resist Western hegemony. Meanwhile, countries like India and China are not standing against Western hegemony but, rather, voluntarily embracing the Western hegemonic paradigm as Japan had in the past. All of which reminds us that any reference to a clear dichotomous division on the basis of race or geographical position will lead to a gross oversimplification. Over and over other countries have proven their ability to hold the West to a standoff in the military domain; superior technology and fire power appears to be inadequate in the continuing struggle against the white men and their comprador agents. As a matter of fact, two recent events in the context of nuclear proliferation suggest that the message is sinking home. First of all was the American acquiescence to Indian demands for a greater

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exchange of technology and finance, along with the acceptance of India as a legitimate nuclear power. Perhaps equally revealing was the putative slip of President Chirac when he allowed that one or two Iranian weapons might not be such a tragic turn of events. While he skillfully managed to reverse himself in the following days, the message was clear: there is not much that could be done to stop the Iranian program, and it is quite likely that this was not lost on Teheran and on President Ahmadinejad. While the final nail in the coffin has yet to be driven home, we are certainly faced with a standoff, and the struggle will continue. We can only hope that Waltz, Bueno de Mesquita, Riker and the other believers in a mutual deterrence are right.

Acknowledgments Let me thank Robert Packer, Shahryar Minhas, Douglas Lemke, and the rest of the Ann Arbor Correlates of War seminar.

References Allison, Graham (2004) Nuclear Terrorism: The Ultimate Preventable Catastrophe. New York: Times Books/Henry Holt. Davis, Zachary & Frankel, Benjamin, eds. (1993) The Proliferation Puzzle: Why Nuclear Weapons Spread. London: F. Cass. Fanon, Frantz (1968) The Wretched of the Earth. New York: Grove Press. Gottemoeller, Rose (2005) “The Process in Place,” New York Times, August 23. Hunt, Michael (1998) Ideology and US Foreign Policy. New Haven, CT: Yale University Press. Jo, Dong-Joon & Gartzke, Erik (2007) “Determinants of Nuclear Weapons Proliferation,” Journal of Conflict Resolution 51(1): 167–94. Kegley, Charles W., Raymond, Gregory, & Skinner, Richard (1980) “A Comparative Analysis of Nuclear Armament.” In Threats, Weapons, and Foreign Policy, edited by Pat McGowan and Charles W. Kegley. Beverly Hills, CA: Sage. Krause, Volker (2006) “Alliances, Arms and Action: Security Assurance and Nuclear Proliferation.” Unpublished typescript. Mazrui, Ali A. (1990) “Changing the Guards from Hindus to Muslims: Collective Third World Security in a Cultural Perspective,” International Affairs 57(1): 1– 20. Meyer, Stephen M. (1984) The Dynamics of Nuclear Proliferation. Chicago, IL: University of Chicago Press. Paul, T. V. (2000) Power Versus Prudence: Why Nations Forgo Nuclear Weapons. Quebec City, Canada: McGill-Queen’s University Press. Riker, William H. & Bueno de Mesquita, Bruce (1982) “An Assessment of the Merits of Selective Nuclear Proliferation,” Journal of Conflict Resolution 26(2): 283–306.


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Sagan, Scott D. (1996) “Why Do States Build Nuclear Weapons? Three Models in Search of a Bomb,” International Security 21(3): 54–86. Singh, Sonali & Way, Christopher R. (2004) “The Correlates of Nuclear Proliferation,” Journal of Conflict Resolution 48(6): 859–85. Tago, Atsushi & Singer, J. David (forthcoming) The Proliferation of Nuclear Weapons: Correlates and Consequences. Tuchman, Barbara W. (1984) The March of Folly. New York: Ballantine Books.

Part IV Alternative Paths to Ameliorating the North–South Divide


Chapter 15 Lessons from/for BRICSAM about South–North Relations: Economic Size Trumps All Else? Andrew F. Cooper, Agata Antkiewicz, and Timothy M. Shaw

In the coming decades, China and India will disrupt workforces, industries, companies and markets in ways that we can barely begin to imagine . . . How these Asian giants integrate with the rest of the world will largely shape the 21st century global economy. Business Week, August 22–29, 2005, p. 38 As the Davos programme illustrates, India, long overshadowed by China . . . is the country of the moment. Signs abound of an India surging with self-confidence . . . At the root of this change is a reappraisal of the country’s economic potential. This has been brought on by a jump in the trend growth rate to 7 to 8%, double the “Hindu rate of growth” . . . As the balance of power in the global economy shifts towards Asia, such turbocharged growth rates promise to shorten the time-frame in which India rises up the ranks of the world economic powers. Financial Times, January 26, 2006, p. 1 It would be shortsighted to believe that the rise of China and India will have only an economic impact on the rest of the world. The size and strategic importance of both countries mean that they also have significant implications for international relations in the broadest sense. Peter Enderwick, Understanding Emerging Economies: India and China, p. 171 When it comes to the most important reforms of all, it is China, not India, which seems to be frozen in the headlights. In order to continue to climb the economic ladder, China must create an independent judiciary and give much more social and political freedom to its people. India’s legal and electoral systems are highly imper-


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A. F. Cooper, A. Antkiewicz, & T. M. Shaw

fect, but they have existed for decades and have entered the normal transactions of Indians’ daily lives. Meanwhile, the economy is lifting many more people out of poverty than it used to . . . Edward Luce, “One Land, Two Planets,” p. 25

Introduction: Proliferation of and Differentiation among State and Non-state Actors The global political economy is in considerable flux, with a new set of players changing the nature and scope of global interaction. Scholars of orthodox international relations may fail to recognize the multifaceted, irreversible character of the trend toward novel inequalities and hierarchies, yet it is increasingly evident and demonstrable. Much of this emerging post-Cold War, post-bipolar pattern reflects a thickening of interaction, what Martin Shaw (2003) characterizes as “global politics.” The sheer scope of actors and issues in the “new” global political economy compels rethinking. The growing number and variety of states increasingly interact with a host of major international non-governmental organizations (INGOs) and multinational corporations (MNCs) – many of which in effect have their own “foreign policies,” brands, and forms of “public diplomacy” (Melissen 2005). Given this context, questions of communication and mediation amidst such complexity – with huge stakes attached to outcomes – are highly salient. Transnational institutions and forums, whether formal structures or informal policy networks (let alone diasporas) matter now more than ever, with profound implications for what has hitherto been termed “South–North relations.” The latter are likely to be quite transformed over the next five to ten years – by 2010/2015 – onto novel forms of mixed-actor global regulation (The Economist 2006; Gale & Haward 2007), as indicated in the final section below. In parallel with transnational “horizontal” adjustment toward non-state actors as equals, the “vertical” axis of states has changed as well. One direction is downward: of some 200 recognized nation-states, at least 50 can now be characterized as weak or fragile (DFID 2005). The other direction – the core of this chapter – is upward: emerging economies aspiring toward the top tier of global architecture. As suggested at the end, this is likely to generate “new” South–North relations amongst redefined “three worlds.” At first glance, these difficult tendencies may appear to be contradictory, producing very different results at odds with each other. But on closer examination the diverse trends – vertical as well as horizontal – can be seen as two sides of the same coin. Moreover, a novel post-bipolar triad of distinctive state types is gradually evolving: the “first world” club of members of the Organization of Economic Cooperation and Development (OECD); a new “second” tier of emerging economies (The Economist 2006); and an extensive and heterogeneous “third world” (previously the G-77) of the rest (see special issue of International Affairs [2006] on emerging economies or emerging powers). In turn, a new typology of non-state actors has likewise been recognized: of global to local NGOs and MNCs

Lessons from and for BRICSAM

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(Commonwealth Foundation 1999: 16), now including burgeoning global companies headquartered in BRICSAM (Brazil, Russia, India, China, South Africa, the ASEAN-4, and Mexico) (Battat & Aykut 2005; Goldstein 2007) as well as in the OECD. What is apparent in both types of triangular formulations – amongst states and between state and non-state actors – is that a cult of bigness has taken hold. In the immediate post-Cold War era, there appeared to be abundant space for middle-sized actors using agile forms of economic creativity and diplomatic agility to create niches for themselves – classic Canadian–Australian or smaller European middlepower ambitions/illusions (Cooper et al. 1993; Cooper 1997), but such approaches have continued to morph. Evidence of both types of relocations is apparent through new multilateralisms in the 1990s, including heterogeneous coalitions/networks such as the Ottawa and Kimberley Processes around landmines and conflict diamonds, respectively, along with the International Criminal Court (ICC). In the ongoing post-bipolar era, however, the recipe for competitive success is quite different, with the trend among private companies, especially those from the South, most apparent: the “Walmartization” of business practices. But there are contradictory signs as well, such as a split among NGOs on the basis of size and scale (e.g., global Oxfam or World Vision versus more local, smaller groups), advocacy versus subcontracting, and so on. And the emerging economies espouse a wide variety of forms of capitalism beyond established Anglo-American and European corporatist styles (Shaw 2006), not only the great Asian traditions of Japan, China, and India but also Brazil, Russia, and Singapore (Mukherjee Reed 2003; Battat & Aykut 2005; Goldstein 2007). The extent of global reordering has been obscured by a lingering preoccupation with the lasting dominance of the old North Atlantic – the USA and EU – into the new century. This chapter attempts to focus, albeit from a state-centric basis, on the apparent reconfiguration through a close look at the second of these triangular formulations – the emergence of new economies/powers. Along with others (even mutual fund companies), we characterize these as the “BRICSAM” states, including Brazil, Russia, India, and China as the core group (the BRICs), extending to South Africa (South Africa’s role as a middle power has been discussed earlier, see for example van der Westhuizen 1998), ASEAN-4 (Indonesia, Malaysia, Philippines, Thailand), Mexico, South Korea, and other non-emerging economies, especially a set of regional powers such as Egypt, Iran, Nigeria, and Turkey, as the other major powers. To be sure, this heterogeneous grouping presents issues of methods as well as theory and policy, just as the definition of the newly industrialized countries (NICs) and near-NICs did before the mid-1990s Asian “crisis.” While the BRICs may be emergent on a variety of criteria as indicated in the next section, BRICSAM states may score on only some, but not all, dimensions. Such distinctions are apparent in types of mutual funds that invest in such economies: the four BRICs versus the more numerous emerging economies? This perspective leads onto “new regionalisms” (more fluid and open than formal, interstate arrangements) between the global and local: ecological (e.g., river basins/island groups), economic (including brands and logistics), informal/illegal (e.g., drugs, gangs and guns, migrations),

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social (e.g., linguistic and religious communities), strategic (e.g., regional security, mutual deterrence), among others (Boas et al. 2005). A consistent feature of these mid-level states, notwithstanding other variations, is their relative size in both global and regional dimensions. This characteristic raises many points, economic and political, regional and global. But the core question must be whether size alone is enough to change the rules/structures of the extant global system. A reference point in this case can be Russia’s admission to the Group of Eight (G-8). This was done not because of market size, which was shrinking until the recent energy price rises, but because it was aspiring to meet democratic conditionalities. It exists as something of a bridge because it is at the fringe of the G-8 as well as at the border of BRICSAM. A possible connecting point is whether there is a discrepancy between economic scale and political deficiencies, legitimating resistance from established international institutions and the “old” club powers in the G-8 or Trilateral Commission? Does the apparent contrast between more/less liberal/predictable political economies, exemplified by the place of civil society in, say, India by contrast to that in China (even Hong Kong) matter (Quadir & Lele 2004; Fortune 2005; Financial Times 2006)? And how different are the emerging economies of the new century from the “model” NICs of the 1970s and 1980s? The NICs declined to follow the dictates of extreme liberalization advocated in the erstwhile Washington Consensus. But their distinctive “Asian values” did not exclude cronyism/patrimonialism (even in diasporas), hence the Asian crisis of the mid-1990s, which led to increased resistance to orthodox liberalization conditionalities. Moreover, the NICs were relatively small economies in terms of population, with only South Korea having a significant population. By contrast, BRICSAM includes the two most populated societies – China and India – and so may have a proportionately larger, lasting impact, as indicated below. It is also undeniable that the move of BRICSAM, notably China and India, into the new “second world” is impacting other markets and continents such as Africa for energy, raw materials, and services etc., with several of the smaller African oil producers now being amongst the fastest-growing economies in the world. Like the post-crisis NICs, they will come to be characterized by less state direction, more market freedom, more globalization, and increased influence of diasporas, as captured in the special issue of Business Week of 2005: Rarely has the economic ascent of two still relatively poor nations been watched with such a mixture of awe, opportunism and trepidation. The postwar era witnessed economic miracles in Japan and South Korea. But neither was populous enough to power worldwide growth or change the game in a complete spectrum of industries. China and India, by contrast, possess the weight and dynamism to transform the 21st century global economy. (2005: 34)

As we recognized at the start, such analysis presents a range of profound implications for a set of overlapping analytic fields as well as applied policies, not just political science/economy but also development (Haynes 2005), regional (Boas et al. 2005), and security studies (MacLean et al. 2006), to which we return at the end of this chapter. But, first, we look at economic size before turning to some of the


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limitations of macroeconomic preoccupations, such as comparative regional roles. We return to issues of methods and impacts at the end, recognizing that we need to transcend rather simplistic, economistic scenarios that overlook a range of inconvenient factors like conflicts, inequalities, informal sectors, nuclear issues etc.

Macroeconomic Underpinnings of the Power Shift1 Any discussion of global development in the new century must note the changing economic stance of the emerging powers and their growing influence on both the global economy and the global institutional architecture. The unprecedented growth in China (Breslin 2005, 2007) and India (Jenkins 1999; Cohen 2001) draws attention to the new players on the global stage. There are now respected, quantitative, macroeconomic scenarios predicting that in less than 40 years the economies of the BRICs will be bigger than those of the G-6 in US dollar terms (Wilson & Purushothaman 2003; Antkiewicz & Whalley 2005; The Economist 2006). The tables below present the main economic indices of the BRICSAM countries in comparison to those of the OECD and world where applicable.2 Table 15.1 presents the growth rates of BRICSAM economies compared to the OECD and the rest of the world. While the growth rates of the emerging powers tend to be unstable (see Brazil 2000–2005 and Turkey 2000–2002), they are, for the most part, significantly higher than those of the OECD and match or surpass the global average. An even more striking picture emerges when comparing the size of Table 15.1 BRICSAM growth rates 1985–2005, selected years (%) Country

1985

1990

1995

2000

2001

2002

2003

2004

2005

Brazil China Egypt India Indonesia Iran Malaysia Mexico Nigeria Philippines Russia South Africa South Korea Thailand Turkey OECD World

7.9 13.5 6.6 5.6 3.5 1.8 −1.1 2.2 9.7 −7.3 .. −1.2 6.8 4.6 4.2 2.8 3.6

−4.3 3.8 5.7 5.8 9.0 11.2 9.0 5.2 8.2 3.0 −3.0 −0.3 9.2 11.2 9.3 2.5 2.9

4.2 10.5 4.7 7.6 8.4 2.9 9.8 −6.2 2.5 4.7 −4.1 3.1 9.2 9.2 7.2 2.5 2.8

4.4 8.0 5.1 3.9 4.9 5.0 8.9 6.6 4.2 6.0 10.0 4.2 8.5 4.8 7.4 3.9 4.0

1.3 7.5 3.5 5.2 3.8 3.4 0.3 −0.2 3.1 3.0 5.1 2.7 3.8 2.2 −7.5 1.1 1.4

1.9 8.3 3.2 4.1 4.4 7.4 4.1 0.8 1.5 3.1 4.7 3.6 7.0 5.3 7.9 1.6 1.8

0.5 9.3 3.2 8.6 4.9 6.6 5.3 1.4 10.7 4.7 7.3 2.8 3.1 6.9 5.8 2.2 2.9

5.2 9.5 4.3 6.9 5.1 6.5 7.1 4.4 3.6 6.1 7.2 3.7 4.6 6.1 8.9 3.6 4.1

2.6 9.2 4.5 7.1 5.3 4.8 5.1 3.0 5.2 4.7 5.9 4.5 3.7 4.6 5.1 2.9 4.3

Sources: CIA, The World Factbook; OECD Factbook 1990–2004, $US using PPPs and Current Prices; The World Bank; World Development Indicators online.

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BRICSAM GDP (individually and as a group) based on current prices and official (market) exchange rates to GDP at purchasing power parity (PPP) rates reflecting differences in the prices of goods and services across countries. The difference in the relative BRICSAM size calculated on these alternative bases is dramatic. Based on GDP at current prices, BRICSAM in 2005 is approximately 21 percent of that of the OECD, while on the PPP basis it spikes to 66 percent. Simple projections show that if the annual growth differential between BRICSAM and the OECD continues at a modest 4 percent, then BRICSAM’s GDP will be bigger than that of the OECD around the year 2045 (current prices) or 2015 (PPP). China and India are already among the top five biggest economies in the world on PPP basis. It is important to note, however, that despite the large PPP size of their GDP, income per capita in most of the BRICSAM countries is still low when compared to the OECD and quite uneven when compared to each other. For example, according to the World Bank, income per capita in India was approximately $540, in China $1,323, in Thailand $2,356, and in Mexico $5,968 (data for 2004), while the OECD average is approximately $29,000 ($40,000 for the USA). Population figures show BRICSAM accounts for close to 60 percent of the world’s population and more than three times the population of the OECD. It is important to note that even though most of the BRICSAM countries experience population growth rates higher than the world’s average (with the exception of China, Iran, South Korea, and Thailand in 2005), Russia and South Africa are heading in another direction with their negative population growth. Most BRICSAM countries still have a considerably higher proportion of their population in rural areas than the OECD (with the exception of Brazil, Mexico, Russia, and South Korea). They have, however, experienced a significant shift toward urbanization in their population structure over the past 20 years, where Indonesia, Malaysia, and China have seen an average 20 percent decrease in their rural population. While overall inward foreign direct investment (FDI) into BRICSAM is increasing steadily (see Table 15.2), it is very unequal across countries, with China alone receiving close to a half of total FDI inflows. It is important to note that the rate of growth of inward FDI to BRICSAM is more modest than that of either GDP or trade. This is due to the level of FDI outflows from the OECD, which, over the past few years, have remained at about $600 billion. Moreover, FDI from BRICs’ diasporas should not be overlooked, especially remittance flows to China and India. With the OECD being the major source of FDI for the emerging economies, it seems that FDI has been reallocated from one country to another, especially to China at the expense of Brazil, ASEAN, and Mexico. However, the unprecedented surge in FDI flowing into China’s labor-intensive manufacturing sector has begun to plateau in recent years and some believe that, as Chinese wages rise, FDI in its manufacturing may slowly shift to other Asian countries offering even lower wages on their labor (for example Vietnam). BRICSAM countries are also slowly beginning to export capital (Table 15.2) as their MNCs become more active internationally, putting more and more emphasis on South–South transactions (Battat & Aykut 2005; Goldstein 2007). A recent study by the Foreign Investment Advisory Service, a joint facility of the World Bank

1,418 1,956 1,178 106 310 −38 695 1,984 486 12 .. −448 218 160 99 8,135 .. 57,645 .. 14%

Brazil China Egypt India Indonesia Iran Malaysia Mexico Nigeria Philippines Russia South Africa South Korea Thailand Turkey BRICSAM Total OECD World BRICSAM/OECD BRICSAM/World

989 3,487 734 237 1,092 −362 2,611 2,634 1,003 550 .. −78 759 2,575 684 16,914 175,314 207,883 10% 8%

1990 4,405 37,521 595 2,151 4,346 17 5,815 9,526 1,271 1,459 2,065 1,241 1,250 2,070 885 74,617 225,268 341,086 33% 22%

1995 32,779 40,715 1,235 2,319 −4,550 39 3,788 15,483 1,310 1,345 2,714 888 8,591 3,350 982 110,988 1,288,014 1,396,539 9% 8%

2000

Unit: US$ millions

Sources: UNCTAD FDI/TNC Database; OECD International Direct Investment Database.

1985

Country

FDI inflows

Table 15.2 FDI inflows and outflows to/from BRICSAM, selected years

22,457 46,878 510 3,403 −2,978 61 554 27,635 1,277 899 2,748 6,789 3,692 3,886 3,266 121,077 624,946 825,925 19% 15%

2001 16,590 52,743 647 3,449 145 548 3,203 15,129 2,040 1,792 3,461 757 2,975 947 1,063 105,489 561,900 716,128 19% 15%

2002 10,144 53,505 237 4,269 −597 482 2,473 11,373 2,171 347 7,958 720 3,785 1,952 1,753 100,572 458,800 632,599 22% 16%

2003

(Continued)

18,166 60,630 1,253 5,335 1,023 500 4,624 16,602 2,127 469 11,672 585 7,687 1,064 2,733 134,470 406,600 648,146 33% 21%

2004

81 629 3 3 33 −1 210 222 0 −3 .. 51 591 1 0 1,820 .. 62,193 .. 3%


625 830 12 6 −11 0 129 223 415 22 .. 27 1,052 154 −16 3,468 236,516 238,681 1% 1%

1990 1,096 2,000 34 119 1,319 2 2,488 −263 192 98 605 2,498 3,552 887 113 14,740 315,423 358,177 5% 4%

1995 2,282 916 51 509 150 21 2,026 984 169 −108 3,177 271 4,999 −22 870 16,294 1,235,795 1,239,149 1% 1%

2000

Unit: US$ millions

Sources: UNCTAD FDI/TNC Database; OECD International Direct Investment Database.

1985

Country

FDI outflows

Table 15.2 Continued

2002 2,482 2,518 28 1,107 182 39 1,905 930 172 59 3,533 −399 2,617 106 175 15,454 614,900 652,181 3% 2%

2001 −2,258 6,885 12 1,397 125 −26 267 4,405 94 −160 2,533 −3,180 2,420 346 497 13,357 684,258 743,465 2% 2%

249 −152 21 913 15 −356 1,369 1,784 167 197 9,727 577 3,426 486 499 18,922 592,800 616,923 3% 3%

2003

9,471 1,805 159 2,222 107 −114 2,061 2,240 261 412 9,601 1,606 4,792 362 859 35,844 667,800 730,257 5% 5%

2004


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and International Finance Corporation, finds that 35 percent of total FDI outflows from the South in 2003 was directed to other developing countries (Battat & Aykut 2005). BRICSAM countries are increasingly becoming an important source of capital for other developing countries, in part compensating for lower capital inflows from the OECD. Recent years have also witnessed growing engagement of MNCs from developing countries in the OECD. Chinese acquisitions of IBM’s personal computer division, MG Rover business in Britain, Canadian-listed PetroKazakhstan, and attempted takeovers of Unocal and Noranda have attracted a lot of attention (Breslin 2005, 2007) and showed that MNCs from developing countries are gaining experience and beginning to compete internationally (Goldstein 2007).3 Foreign exchange reserves of BRICSAM in 2004 accounted for approximately 40 percent of the world total and constitute close to 80 percent of those of the OECD (see Figure 15.1). China accounts for almost a half of combined BRICSAM foreign exchange reserves (due to large trade surplus and inward FDI). In 2005, Chinese reserves exceeded $800 billion, a greater than 1000 percent increase since 1995, and are expected to exceed $1 trillion in 2006. Some believe that growing Chinese foreign reserves currently kept in US treasuries may even threaten the stability of the American economy if transferred somewhere else (for example, used as cash for buying companies abroad). Currently, China, India, Russia, and Korea are amongst the biggest holders of foreign exchange reserves in the world, holding in 2004 $614 billion, $127 billion, $121 billion, and $199 billion respectively. Growing accumulation of foreign exchange reserves may also facilitate expanding outward investment from the BRICSAM countries. Table 15.3 presents the relative sizes of BRICSAM and OECD trade. The former’s total exports of merchandise and commercial services in 2004 were

4000 3500 3000 2500 2000 1500 1000 500 0 1985

1990

1995

2000 2001 Years

BRICSAM Total

OECD*

2002

2003

World

*High-income OECD member aggregate as per World Bank definition Definition: foreign reserves = total reserves – gold

Figure 15.1 BRICSAM foreign reserves, selected years (US$ billions).

2004


Import

17,745 44,513 13,959 19,743 15,272 14,792 16,115 24,460 10,485 6,304 .. 13,488 34,373 10,984 12,567 254,800 1,652,146 2,335,900 15% 11%

1985 29,257 57,458 15,739 29,523 27,735 24,025 34,652 53,611 7,528 14,763 .. 21,993 79,894 39,205 25,096 460,479 3,212,916 4,229,500 14% 11%

1990 66,944 156,719 16,271 44,769 53,860 16,074 92,512 84,879 12,620 28,341 81,151 36,302 160,513 89,387 40,363 980,705 4,440,462 6,344,200 22% 15%

1995 74,205 260,952 21,171 70,419 58,976 15,924 98,566 199,420 12,185 43,411 60,888 35,352 193,438 77,253 63,035 1,285,195 6,044,334 8,188,600 21% 16%

2000 74,176 282,585 19,112 70,184 53,130 17,627 90,405 192,706 15,116 40,117 73,722 33,352 173,571 76,437 47,863 1,260,103 5,826,028 7,961,900 22% 16%

2001 63,095 341,251 18,565 77,295 55,080 22,275 96,117 193,638 11,560 41,243 83,818 34,510 188,258 81,217 57,826 1,365,748 6,038,911 8,293,000 23% 16%

2002

65,056 467,612 16,931 96,749 59,414 26,158 100,941 196,074 15,692 44,343 102,557 48,887 218,688 93,804 77,109 1,630,015 6,983,968 9,616,100 23% 17%

2003

81,987 632,832 20,224 138,289 54,895 34,075 124,063 225,673 18,371 47,426 129,073 66,179 274,105 118,395 107,842 2,074,059 8,258,465 11,589,500 25% 18%

2004

Table 15.3 Relative trade of BRICSAM and OECD (total merchandise and commercial services), selected years (US$ millions)

27,632 30,275 6,632 12,414 19,434 14,508 17,276 31,193 12,864 6,469 .. 17,994 33,832 9,019 10,793 250,335 1,571,444 2,416,300 16% 10%

1985

1990 35,120 67,839 8,290 22,578 28,163 19,648 33,221 47,933 14,561 11,014 .. 26,840 74,171 29,360 20,841 439,579 3,091,500 4,370,600 14% 10%

Source: World Trade Organisation database.


Export

52,511 167,210 11,712 37,393 50,759 18,893 85,352 89,127 12,950 17,502 91,663 32,267 147,191 71,091 36,112 921,737 4,505,737 6,477,000 20% 14%

1995 64,047 279,349 14,376 58,409 70,464 29,702 112,041 179,934 22,105 43,717 115,130 34,871 202,013 82,842 47,952 1,356,953 5,699,448 7,934,100 24% 17%

2000 66,941 298,999 12,943 60,160 62,722 23,904 102,336 171,097 18,371 35,776 113,099 33,791 178,542 77,900 47,247 1,303,828 5,540,643 7,671,700 24% 17%

2001 69,152 364,972 13,835 68,375 65,685 28,237 108,811 173,156 16,310 39,530 120,751 34,299 189,815 83,412 50,783 1,427,123 5,775,169 8,070,100 25% 18%

2002 82,654 484,603 16,998 80,177 69,250 33,994 118,427 177,873 21,392 40,325 152,017 43,810 225,319 96,027 66,242 1,709,105 6,633,164 9,355,700 26% 18%

2003

107,948 655,385 21,730 115,233 72,330 44,446 143,158 203,014 32,594 43,790 203,616 54,095 293,892 116,346 86,925 2,194,502 7,826,380 11,280,500 28% 19%

2004

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approximately 19 percent of world’s exports and 28 percent of those of the OECD. China leads BRICSAM with approximately one-third of the group’s total exports. With the exception of Indonesia, Philippines, and Mexico, BRICSAM countries’ export growth in 2004 exceeded 20 percent (40 percent in India) and was 10 percent higher than that of the OECD. Simple projections show that if the growth differential for exports between BRICSAM and the OECD remains at 10 percent, BRICSAM exports will surpass those of the OECD in 2018. Under a less optimistic assumption of a 5 percent growth differential, this would occur by 2030. Many question the sustainability of BRICSAM growth both in product and trade, pointing to potential dangers in the financial structures of the BRICSAM economies and risks of financial crisis (for example, due to large non-performing loans in China), environmental constraints, slower growth of FDI inflows, and the absorptive capacity of the OECD limiting exports from BRICSAM. Another issue is such growth being a function of just one sector of each economy. For example, Chinese growth is based on goods trade and FDI inflows, Russian on oil and gas exports to the EU, while Indian growth is internally generated thanks to growing services trade (Kobayashi-Hillary 2005). Brazil depends on its agriculture and mining and South Africa has found a niche in the global supply chains of automotive parts for EU manufacturers (especially catalytic converters and leather seats). Other social issues may also work to limit growth, such as growing inequality (India), ageing societies (China), or increasing health problems (South Africa).

Commonality and Divergence of Interests and Concerns It is often assumed that the emerging economies share common interests and agendas on the international stage. While this may be true to some degree (for example, calling for more consideration for their developmental needs and bigger concessions from developed countries in trade negotiations), BRICSAM countries also compete with one other in various spheres and regions, as did the NICs and near-NICs in the last decades of the twentieth century. Most BRICSAM countries can be considered regional hubs or anchors (Humphrey & Messner 2006) with strong or growing influence on neighboring countries, but they also compete with each other to take the position of the leader in their respective regions (e.g., China and India, Brazil and Mexico). This competitive pattern plays out across a wide continuum from national to micro- and meso-regional perspectives (Boas et al. 2005). At the same time they compete for their international status, although the International Monetary Fund (IMF) is now proposing to begin to recognize their emergence through increasing voting rights. Meanwhile, both India and Brazil call for expanding the UN Security Council so that it includes their representatives. Significantly, this demand is made not only on the basis of an ascendant geopolitical position but because of their economic capabilities and size of populations. Unlike Russia, moreover, any such claim to a place at the exclusive G-8 table is made not on the basis that they are countries in transition to a democratic form of


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government but rather because of the rate of their economic growth, trade potential, and growing influence globally. All emerging countries jointly call for reforms of the Bretton Woods institutions, pointing to their practical inadequacy and outdated structures. For example, voting structure in the IMF is currently dominated by the G-7, with 47.13 percent of votes, and does not represent the interests or concerns of developing countries. A recent study (Woods & Lombardi 2006) points out that countries represented in the IMF by their own Directors retain a high degree of control over decisions made by the Board through both formal and informal mechanisms. Emerging economies (with the exception of China and Russia), who have fewer votes and are represented in the constituencies, have less influence over their representatives and thus delegate much more authority to the IMF. As was apparent at the annual International Monetary and Financial Committee meeting in Singapore in September 2006, both emerging and developing countries alike criticize the World Bank for its rules and recommendations attached to loans, pointing to their inadequacy to meet developmental needs (see, for example, Buira 2003). Emerging countries also pursue economic cooperation via regional trade agreements (RTAs) concluded outside the World Trade Organization (WTO). Faced with the apparent mid-2006 demise of the Doha Round of multilateral trade negotiations, the BRICSAM countries are becoming more and more active in negotiating numerous RTAs (Antkiewicz & Whalley 2006a). The agreements vary in scope and coverage but a growing number of them go well beyond issues covered in the WTO, including services trade liberalization, mutual recognition, competition policy, cooperation in investment, education, tourism, science and technology, movement of persons, coordination of customs procedures, and standards policy. Some countries seem to be custom-tailoring their agreements across their partners in negotiations, which stands in contrast to the cookie-cutter approach shown by both the USA and the EU. Texts of the agreements also tend to be less legalistic and not as detailed as in the American or European RTAs, which leaves more room for subsequent negotiations but may also prove to be the source of potential disputes. It is important to note that BRICSAM countries also offer each other differential treatment, as in the case of recognizing China as a market economy (Brazil and Mexico). Growing economies and market needs of the BRICSAM countries cause increasing competition in various sectors of the global economy. Obvious Chinese domination in manufacturing and trade with the OECD has caused India, Mexico, and others to rethink their policies. China is currently the second-largest exporter to the USA after Canada, replacing Mexico vis-à-vis this status in 2002 despite the latter’s geographical proximity and NAFTA (North American Free Trade Agreement) membership. Unable to compete with Chinese low wages in assembly-oriented manufacturing, India put emphasis on education and services as the underpinnings of its growth (Khilnani 1997; Manor 1998; Das 2000; Kobayashi-Hillary 2005). India is currently the leader in information technology (IT) services but China, Russia, Mexico,

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and a few of the ASEAN states have already started to grow their own IT sectors to benefit from the globalization of services and the second, business product wave of Western outsourcing (the first wave being manufacturing outsourcing to China). Due to the rise of a middle class in the emerging economies, the IT services sector will likely be transformed further (Cohen 2001; Kohli 2001), while Western markets will soon mature and the biggest business opportunities will originate from BRICSAM. Available data (Table 15.4) suggest that BRICSAM countries see the importance of new technologies and their development for their continued economic growth (Kobayashi-Hillary 2005). However, the average expenditure on research and development (R&D), although increasing, is still significantly lower than that of the developed economies both in relative and per capita terms. The Economist (2006) points to the dramatic explosion of engineering graduates in China and India compared to the EU and USA. Another sphere of intensifying competition is access to resources. China and India now bid against each other for resource companies (e.g., PetroKazakhstan) but they are also cooperating in the field, as in the case of joint purchase of Petro-Canada’s stake in Syrian oilfields. Also, China continues to buy up mines, as well as oil and other resource companies in South America and Africa. Such transactions are easier to complete in these countries than in the OECD, as issues of subsidization of purchase (through low-interest loans from the Central Bank), human (and labor) rights and involvement of the government usually are not central considerations. Conversely, China and India’s “scramble for Africa” is already having a profound impact on the demand for and price of its resources, from oil and gas to basic metals. As a result, the acquisition of energy, minerals, and water has quickly increased the number of fast-growing economies in Africa. Foreign investment is yet another sphere of BRICSAM competition. As shown in Table 15.2 above, a major country reallocation of inward FDI has taken place over the last decade away from Brazil, Mexico, and ASEAN and toward China. India has outpaced China in IT, R&D, and business processing FDI, but has lagged behind in manufacturing and assembly. According to the World Investment Report 2005, India is currently the second most attractive FDI destination for MNCs, with China being first, the United States third, Russia fourth, Brazil fifth, and Mexico sixth (Goldstein 2007). China is winning the competition thanks to the higher effectiveness of its low-wage labor (as opposed to other low-wage labor countries) and fewer restrictions as to workers’ rights (Breslin 2005, 2007). However, India is more connected into and more compatible with the established global economy, in part as a legacy of the raj. India’s inheritance of laws and structures in various parts of socioeconomic life from the British, as well as a widerspread knowledge of the English language, has made it easier for foreign investors to engage in business activity there; hence the established outsourcing nexus around Bangalore rather than Bangkok or Beijing (Shaw 2004, 2006). Conversely, the latest Global Competitiveness Report 2005/6 (WEF 2005) suggests that the Indian economy has to address major social and structural constraints like high illiteracy and low enrolment rates, bureaucratic red tape, weak infrastructure, and fiscal deficit. The report adds, “provided these challenges are met, there is no reason why

0.77% 0.60% 0.21% 0.55% .. .. 0.22% 0.31% .. .. 0.97% .. 2.60% 0.12% 0.45% 1.88% 2.55% 2.76% 2.54%

5.11 16.5 6.2 10.8 .. .. 16.8 22.5 .. .. 56.6 .. 320.9 7.7 24.8 393.6 740.9 655.2 502.7

GERD per capita (in PPP$)

1999

0.87% 0.83% 0.19% 0.78% .. .. 0.40% 0.43% .. .. 1.00% 0.56% 2.47% 0.22% 0.63% 1.88% 2.65% 2.95% 3.23%

GERD as % of GDP

* in italics data for 1998. Source: UNESCO Institute for Statistics, Science and technology.

Brazil China Egypt India Indonesia Iran Malaysia* Mexico Nigeria Philippines Russia South Africa* South Korea Thailand Turkey UK US Japan Finland

Country

GERD as % of GDP

1996

60.8 29.2 6.4 18.1 .. .. 30.4 35.8 .. .. 64.8 50.3 342.0 13.4 36.5 443.6 872.5 731.9 757.7

GERD per capita (in PPP$) 1.04% 1.00% 0.19% 0.85% .. .. 0.49% 0.37% .. .. 1.05% .. 2.65% 0.25% 0.64% 1.85% 2.72% 2.98% 3.40%

GERD as % of GDP

2000

2002

76.9 38.7 6.9 20.5 .. .. 43.7 33.3 .. .. 76.0 .. 403.7 16.1 40.0 455.9 928.0 774.4 854.2

.. 1.23% .. .. .. .. 0.69% 0.43% .. .. 1.24% 0.68% 2.91% 0.24% 0.67% 1.88% 2.67% 3.11% 3.46%

.. 56.2 .. .. .. .. 63.3 38.3 .. .. 102.3 68.7 492.3 17.1 42.6 490.6 954.0 836.6 905.2

GERD per GERD per capita (in GERD as % capita (in PPP$) of GDP PPP$)

Table 15.4 Total gross domestic expenditure on R&D (GERD), selected countries, selected years

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India could not join the ranks of the most competitive economies in the world” (WEF 2005: 19). An optimistic pro-Indian perspective has also been advanced by The Economist (2006): People love to argue about whether China or India will win in the economic race, yet both can prosper together. China scores higher than India on many of the key ingredients of growth . . . However, in the long run, India might pull ahead because its population will continue to grow long after China’s has levelled off . . . (2006: 10– 11)

Of the commonalities among the BRICSAM countries, the levels of migration to the OECD and the subsequent and increasing scale of remittances received from their diasporas were recently recognized (perhaps belatedly) by the World Bank as important factors. According to the International Bank for Reconstruction and Development (IBRD), based on officially recorded data, the global flow of remittances rose to $167 billion in 2005, up 73 percent since 2001: “More than half of that increase occurred in China, India and Mexico. Low-income countries, led by India, registered an increase of $18 billion during this period” (IBRD 2005: 87). India, China, Mexico, Philippines, Brazil, Egypt, and Nigeria are among the top 20 remittance-recipient countries. Global Economic Prospects 2006 presents the following data for 2004 for the top three remittance-recipients: India $21.7 billion, China $21.3 billion, and Mexico $18.1 billion; it also includes a figure detailing: “The recent surge in remittance flows to India” (IBRD 2005: 89–90). Aside from changes in legal and incentive structures, the Bank suggests that this is a function of successive generations and sectors of Indian migrations: India has reported a spectacular increase in remittance inflows – from $13 billion in 2001 to more than $21 billion in 2003 . . . During the oil boom in the 1970s and 1980s, thousands of low-skilled Indian workers migrated to the Persian Gulf countries. In the 1990s, migration to Australia, Canada and the US increased significantly, particularly among IT workers on temporary work permits. (IBRD 2005: 89)

We should note cultural, religious, social differences and a more communal approach to economic activity in the emerging countries, which further impacts North–South relations. Their growth experiences and developmental models may pose a challenge to the philosophical and intellectual underpinnings of the more anonymous Western ideals of open markets, free trade, decentralization, and rights of the individual. If India and China continue to grow at very high rates without dramatically changing their social and economic structures, and the rest of BRICSAM joins them, then the intellectual legitimacy (or even hegemony) of the widely accepted Western model of neoliberalism may come into question, and greater economic power could shift toward BRICSAM (Antkiewicz & Whalley 2005). We have emphasized the positive advantages of size in this chapter. Yet a few cautionary notes must also be mentioned. Structurally, the material capabilities of


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Table 15.5 Corruption perception index (CPI) 2000 Country Brazil China Egypt India Indonesia Iran Malaysia Mexico Nigeria Philippines Russia South Africa South Korea Thailand Turkey UK US Japan Iceland

2005

CPI score

Country rank

CPI score

Country rank

3.9 3.1 3.1 2.8 1.7

49 63 63 69 85

4.8 3.3 1.2 2.8 2.1 5 4 3.2 3.8 8.7 7.8 6.4 9.1

36 59 90 69 82 34 48 60 50 10 14 23 6

3.7 3.2 3.4 2.9 2.2 2.9 5.1 3.5 1.9 2.5 2.4 4.5 5.0 3.8 3.5 8.6 7.6 7.3 9.7

62 78 70 88 137 88 39 65 152 117 126 46 40 59 65 11 17 21 1

Source: Transparency International, Corruption Perception Index 2005 and 2000.

the group of emerging powers we have highlighted are matched by the comparable scale of many of their weaknesses. Indeed, even a short list of the latter is highly salient. One of these is the commonalities between these BRIC and BRICSAM countries in terms of corruption (see Table 15.5). A second relates to the economic imperatives spilling over from looming shortages of oil, water, and raw materials. A third is the increasingly uneven gender ratios in China and India, albeit for different reasons (one-child policy versus widespread infanticide, respectively). A fourth is the proportion of the informal (sometimes illegal) sectors of their economies and networks. A fifth is their volatile mix of militaries and weapons, especially nuclear. And a sixth is the high levels of inequality found in these countries, with a few regions growing rapidly (for example, the coastal provinces of China) and a large agrarian base lagging behind. Situationally, one of the major questions is whether the emphasis on size and material interests will translate into robust (or even muscular) forms of competition – or alternatively, whether the focus on size will be offset by the salience of diplomatic skills. What stands out about all the emerging powers is the contrast between their collective image as big rising powers and their different (and nuanced) set of

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diplomatic profiles. Being “middle” inevitably gives rise to ambiguities as well as opportunities, as recognized by Cooper et al. (1993) and Cooper (1997) in an earlier era. China has a hybrid status as both a country of the first tier (a member of the UN Security Council) and as a country with extensive connections to the developing world. It is also a country that combines an emphasis on hard, national security and sovereignty with a concerted charm offensive in bilateral terms and a greater appreciation of diverse forms of multilateralism. India also displays some characteristics of a hybrid persona. Specifically, it wants to join new bilateral clubs, most notably the security arrangement with the USA. However, India also wants to hang onto its G-77 oppositional middle-state maneuverability – a legacy of decades of postcolonial non-alignment. Brazil and South Africa also exhibit multiple personalities on the international stage. In regional terms, they can exploit their advantages as economic powerhouses. In multilateral terms, they mix a concern for order as displayed through the G-8 plus with embedded support of the IBSA (India–Brazil–South Africa) and the G-20 trade coalition from Cancun that helped to scuttle the Doha Round. Meanwhile, Turkey sees itself as a distinctive middle or intermediate state, straddling regions and civilizations. This image has propelled it to offer a broker role on Middle East issues. We turn, in conclusion, to an attempt to put such disparate cases into some sort of analytic framework to guide both analysis and practice.

Conclusion: Macroeconomic versus Other Projections or Outcomes This final section considers a range of specific to comparative implications for BRICs/BRICSAM for international relations theory and policy, given shifts in overly dichotomous South–North relations at the start of the twenty-first century. The emerging three worlds of advanced, emerging, and fragile states points in the direction of revisionist perspectives on the international political economy (IPE) of development by the end of the first decade of the new millennium: 2015 if not 2010. An analysis of the potential influence of BRICSAM countries must go beyond uncritical, narrow, economic-oriented projections and encompass the new political economy of development among BRICSAM states. More problematic scenarios of BRICSAM’s rise and claims on power become apparent when simple projections of economic growth are combined with discussions of sustainability, social development, and diplomacy. Potential profound implications, as recognized at the end of Introduction, arise for a set of overlapping approaches and policies: not just political science and political economy but also development (Haynes 2005), regional (Boas et al. 2005), and security (MacLean et al. 2006) studies. The new IPE of development has to transcend and juxtapose a set of solitudes from “globalization” to resource wars, fragile states to burgeoning diasporas (Payne 2005; Stubbs & Underhill 2005), as well as “competition states” (Cerny 2000) and the “global South” (Shaw 2005, 2006). First, there are several varieties and


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understandings of globalization(s) and capitalism(s) – Brazilian, Chinese, Indian, Russian, and South African companies are increasingly recognized to be global players alongside American, British, European, and Japanese, even though their corporate and financial practices may differ. Today, most mutual funds now offer “BRIC” funds (even though these suffered a significant stock-market drop in spring 2006), and the latest annual report from FedEx (2006: 11), itself an icon of globalization, privileges its investments in China and India. And of particular relevance: all states are regularly ranked according to the several competition, entrepreneurship, and globalization indices, an innovation of the last decade driven by increased global corporate engagement. Second, global networks and supply chains symbolize contemporary production and distribution – decentralized, just-in-time outsourcing and assembly, let alone the global call centre. Third, such computerized networks that have built this global connectivity are exploited by informal and illegal sectors – from forced migration to drug- and gun-running – as well as by global brands and legitimate businesses. Deeply tied to this trend also is the international reaction, forming mixed-actor global coalitions against conflict diamonds and small arms. Fourth, the compression of time and space means that we are all increasingly vulnerable to global factors, whether they be global warming and pollution or global viruses like HIV/AIDS and SARS. And finally, post-bipolar conflicts impact civilian non-combatants rather than soldiers, as has been the case in Congo, Rwanda, Sudan, and a disturbing number of other countries. The heady mixture of resource wars and the political economy of conflict – greed rather than grievance – means that “peacemaking” has become increasingly dangerous and problematic (MacLean et al. 2006). Together, these factors complicate or moderate the roles of the BRIC/BRICSAM, nationally, regionally, and globally, as the place of “middle powers” is more challenging after than during the Cold War. As a variety of responses to such challenges develop – from the Ottawa and Kimberley Processes over landmines and blood diamonds to the UN Global Compact (www.unglobalcompact.org; Thérien and Pouliot 2006) and Extractive Industries Transparency Initiative (EITI) (www.publishwhatyoupay.org) – no one middle power can advance all such diplomatic directions simultaneously, especially as they now typically involve myriad MNCs and NGOs as well as states (Cooper 1997). Such global coalitions themselves evolve over time, changing and challenging assorted actors or animators, as demonstrated by the Kimberley Process to contain, certify, and regulate conflict diamonds and its spawning of the broader Diamond Development Initiative to advance sustainable artisanal mining. Global governance in the twenty-first century requires flexible, innovative forms of “public diplomacy” (Potter 2002; Copeland 2005), which may lead to de facto divisions of power or responsibility amongst the BRICSAM countries (Narlikar 2006). Some may advance the several corporate codes of conduct under consideration; others may support sectoral certification codes from, say, colonial commodities (e.g., International Cocoa Initiative) to fishing, forestry, and mining (www. globalreporting.org; www.globalsullivanprinciples.org; Gale & Haward 2007),

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while still others may focus on global health issues such as the HIV/AIDS epidemic, the Framework Convention on Tobacco Control, among others. Nevertheless, despite myriad diversions and pressures, as already noted, what seems to be emerging is a distinctive “trilateral” world impacted by emerging economies – especially China and India, given the size of their economies, position in the global economy, and dispersion of generations of diasporas. Just as the American deficit may potentially be a problem for the whole world’s financial system, so the sheer size of China and India can make their domestic problems, especially rural–urban and other regional differences, worldwide issues. A variety of tensions may appear along the several dimensions of today’s IPE. For example, access to and security of resource supplies, exercise of influence in multilateral fora, and the philosophical underpinnings of the international system each demonstrate the multiple layers of global pressures. How these differences play out, and potentially how they will be resolved, will be the key to determining the shape of the future global architecture. Will it be done through structural considerations via the projection of sheer size? Or will it be done through diplomatic skill as part of a diverse repertoire of agency? Time will show how the emerging economies impact global politics, security, economics, and societies through the first quarter of the new century. It seems clear, though, that if the BRICSAM economic growth of the last five to ten years continues over the next three to five decades, then multiple ripple effects will be felt at national, regional, and global levels. The potential shift in the global balance of power may be even more pronounced if the BRICSAM countries decide to act collectively and use their joint bargaining power to shape or reform global institutions, from Kimberley Process to Doha Round. Thus a change in the key aspects of global economic governance, international architecture, and geopolitics seems inevitable, and with it new challenges will arise for decision makers and scholars alike – innovative, interdisciplinary responses for the conceptualization of the BRIC/BRICSAM emergence are thus imperative.

Notes 1 2

3

This part draws on Antkiewicz and Whalley (2005). For detailed tables presenting various economic indices of BRICSAM economies see an early draft of this chapter presented at the 2006 Annual International Studies Association convention in San Diego, California. It is important to note that Chinese acquisitions (successful and attempted) in the OECD have raised questions about national security, subsidization of purchase, and transparency of actors involved (Antkiewicz & Whalley 2006b).

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Chapter 16 Dueling Imperialism or Principled Policies? A Comparative Analysis of EU and US Approaches to Trade and Development Vicki Birchfield

Introduction The North–South divide in world politics is a multifaceted, historically complex problem with deep political, cultural, and economic roots. This chapter explores the economic dimension of the divide by examining EU and US policies toward the developing South and assessing the extent to which the respective approaches are principled and effective or whether economic rivalry between the two exacerbates the divide. Drawing our attention to the fact that neither economic superpower has an unblemished track record in development policies, Timothy Garton Ash has recently argued that: “America is, in aid policy, the world’s leading miser, but Europe is, in trade, the world’s leading hypocrite” (2004: 155). This accusation prompts our thinking about the necessity of examining both trade practices and aid policies for a more accurate and coherent understanding of the overall impact of the North’s policies on the development and economic well-being of the South, and as such, is a key aim of this chapter. I offer a comparative analysis of EU and US development strategies by examining their discourses about development assistance and global poverty reduction as well as the specific actions taken in both trade and aid policies. The empirical analysis draws on three sources: (1) EU and US positions taken in the context of the Doha Development Round; (2) the committed actions addressing the UN Millennium Development Goals; and (3) data from the Commitment to Development Index. The chapter is organized into three broad segments. Part one begins by providing a brief depiction of the current economic divide and the respective weight of the United States and Europe in the global economy. Next, I present an overview of the official discourses and stated policies in Washington and Brussels regarding their


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respective commitments to development. This section also necessarily addresses the tricky issue of whether or not we can credibly speak of a distinctive EU approach to development as opposed to the separate bilateral policies of each member state. Relying on Kalypso Nicolaidis’s concept of “narratives of projection,” and Ian Manners’ articulation of Europe as a “normative power,” I argue that we should consider the EU as a significant (and in some respects singular) actor in international development policy. Part three provides an empirical assessment and comparison of how each economic superpower fares when it comes to congruence between normative discourse and specific action that either promotes or inhibits economic development in the South. The conclusion discusses the significance of this analysis and its implications for strategies to combat global poverty and reduce inequality between the North and South.

The European Union, the United States, and the North–South Economic Divide Surprisingly, when looking at the North–South economic divide one finds that very little attention has been paid to the significant divergences between the US and European “projects of regulation for the developing world” (Grugel 2004). Though the North obviously is not restricted to the transatlantic economies, their diplomatic and economic weight justifies an exclusive focus and comparative analysis of their impact on development. While Marxists, dependency scholars, and other critical theorists would readily characterize the very notion of such “regulation of the development process” as a form of intra-capitalist, imperialist rivalry,1 the concern here is to examine both the normative and empirical dimensions of these purported divergences. Therefore, rather than starting from a specific theoretical or ideological grounding, it is important first to lay out the basic empirics of how wealth is distributed in the world economy so as to better understand what constitutes the economic divide of North–South relations and to situate the relative weight and scope of EU and US global economic power. This empirical frame of reference then may serve as the context in which more theoretical assessments can be made about the nature, motivations, and effects of EU and US approaches to development and interactions with the global South. Well over three decades have passed since the Pearson Commission proclaimed the widening gap between the developed and developing countries to be the “central problem of our times.” Today, global inequalities in income and standards of living have reached obscene proportions. The following stylized facts presented by Timothy Garton Ash capture the scope of the divide between the “rich North” and the “poor South.” In round figures, roughly 1 billion of the world’s 6 billion inhabitants are rich. They have an average income of approximately $70 a day. They live mainly in Europe, North America, Japan, and a few other prosperous countries. In the mental geography of development rather than geopolitics, the West of the free is the “North” of the rich. (Thus Australia, though in the Southern hemisphere, is part of the “North.”) At the

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other end, in the poor “South,” more than 1 billion men, women, and children live on less than $1 a day. Only slightly better off are another 1 to 2 billion people living on less than $2 a day. According to UN figures, between 1999 and 2001, some 840 million people went hungry; one in every seven people in the world. At the same time, nearly one-third of Americans suffer from the serious health problem of obesity. Who needs a parable? In the South, men women, and children are dying because they don’t have enough to eat; in the North, they are dying because they eat too much. (2004: 149)

Extremes in private, individual wealth accumulation is further illustration of the inequities and the fundamental distributive malfunctioning of the global economic system. In 1999, it was estimated that the assets of the world’s three richest people, Bill Gates, Warren Buffet, and Paul Allen, “exceeded the total annual gross national product of all the world’s least developed countries with a combined population of some 600 million” (Ash 2004: 150). The tough question arising from comparisons such as these is whether or not the driving factors behind such explosive wealth accumulation among certain individuals and in specific regions are inherently related to increasing impoverishment elsewhere in the world. In other words, is what makes the rich richer also making the poor poorer? Though I do not attempt to answer such a complex, age-old question here, attention to the growing divide and the attempt to establish how the North’s foreign economic practices and development policies may be contributing to it is an important first step. In the final decade of the twentieth century, distribution of the world’s wealth was dramatically captured by the image on the cover of the Human Development Report, shown in Figure 16.1. The champagne glass shows that the richest 20 percent of the world’s population possesses 82.7 percent of total world GNP while the bottom quintile has only 1.4 percent. The 1999 Human Development Report (HDR) claimed that the gap in per capita income (GNP) between the richest fifth of the world’s population and the rest had widened from 30 to 1 in 1960, to 60 to 1 in 1990, to 74 to 1 in 1995 (1999: 104–5). Though the simple measure of GDP per capita reveals a great deal about overall income differentials in the North and the South, the rationale behind the concept of human development is much deeper and more comprehensive than a single statistical indicator. The Human Development Index (HDI) examines basic human capabilities as measured through life expectancy, educational attainment, and income. Of the 174 countries for which the HDI had been constructed, 45 are in the high human development category, 94 in the medium, and 35 in the low human development category. Sixteen countries experienced reversals in human development since 1990 due to the HIV/ AIDS pandemic (mostly in sub-Saharan Africa and Eastern Europe and the CIS (Commonwealth of Independent States) (HDR 1999: 128) The growing polarization of income is starkly captured in the following statistic: over a four-year period (1995–9), the world’s richest 200 people doubled their wealth to over $1 trillion, while the number of people living on less than $1 a day has remained steady at 1.3 billion. Finally, according to World Bank data, the average income in the 20 richest countries is 37 times the average in the poorest 20, doubling the gap over the last 40 years.

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Figure 16.1 Global economic disparities However, the data also illustrate that human poverty is not confined to developing countries; nor are all countries traditionally considered to be in the global South among the lowest development category. Among the 17 industrialized countries, Sweden has lowest human poverty at 7 percent, followed by two other EU countries, The Netherlands and Germany; and the United States has the highest level of poverty at 16.5 percent, closely followed by the United Kingdom (HDR 1999: 131). This leads us to the question of what role each of the two major economic blocs exercises in the global economy. First of all, the United States and the European Union rank as the two largest economies in the world in 2004 with an aggregate gross domestic product of $11.75 trillion and $11.65 respectively. It is obvious that such economic strength provides a huge opportunity to project and wield power in the international system and one aim of this chapter is to investigate how each bloc uses its respective economic prowess and the political leverage flowing from it to the betterment or detriment of the South. Whether we consider the history of European colonialism during the nineteenth century or the “liberal imperialism” of the United States in the twentieth, no historically conscious claim could be made


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Figure 16.2 The EU-25’s share in world trade (export and import) in 2003, in percent.

that such wealth accrued in splendid isolation or without long-term repercussions for the subjugated, exploited, or acquiescent societies brought into the web of the foreign economic relations of Europe and the United States. The end of World War II marked a new era in the economic relationship between the two actors as American capital poured into the devastated continent of Europe and the Bretton Woods financial institutions put into place a regulatory mechanism that permitted the stabilization and recovery of European economies and jumpstarted the international trading and financial system. As a result, a very strong partnership has emerged between the two to the tune of a $2.5-trillion-a-year transatlantic commercial relationship. Both entities represent each other’s largest trade and investment partners and their respective companies and investors supply approximately 6–7 million jobs in each other’s economies. The EU received 24.8 percent of total US exports and provided about 18.9 percent of US imports, while the USA took 22.3 percent of EU exports and provided 18.8 percent of EU imports. Furthermore, cumulative direct investment in each other’s economies is approximately 59 percent of total foreign direct investment.2 These statistics clearly demonstrate the economic interdependence of the EU–US relationship and suggest the need for caution when speaking of the growing transatlantic divide. Combined, the EU and the United States account for more than 40 percent of the world’s GDP (or 60 percent of the industrialized world’s GDP) and over a third of total world trade (Figure 16.2). Given the enormous and relatively equal weight of the European Union and the United States in the international trading system and the fact that much of their wealth is linked to one another’s economies, it is important not to exaggerate the consequences of their economic rivalry. However, the introduction of the euro and

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its growing role as an alternative global reserve currency nonetheless highlights the fundamental competition between the two economic superpowers, or, as Nobel Prize-winning Canadian economist Robert Mundell has suggested, reflects the desire to establish a “balance of powers” in the international monetary system (World Development Report 2003: 30). To conclude this overview of the basic facts of the North–South divide and the relative and combined weight of the economies of the European Union and the United States, it is important to underscore the extreme concentration of wealth. To refer again to the famous 1992 HDR champagne glass, one-fifth of the planet’s population controls almost 85 percent of the world’s economic activity and wealth. In addition to the world trade flows that are significantly North–North, Boyer and Drache have presented evidence showing that roughly 85 percent of foreign investment flow is between the industrial core of Europe, North America, and Japan (1996: 2). Now, we will turn to how the two largest players in the North have addressed this situation both in their rhetoric and policy discourse and in their actual trade and aid policies.

Discourse and Development Policies in the European Union and the United States The European Union The effort to precisely and explicitly define a common European identity has proved quite elusive to say the least, and the problem is even more challenging when speaking about an EU foreign policy identity. Yet, the focus of this chapter is on the European Union (vis-à-vis the United States) as a collective actor in development policies and therefore it is critical at the outset to distinguish between the individual member states’ policies and those of the European Union. Obviously, the EU is a single actor when it comes to trade policies because the 25 members negotiate as a single bloc within the World Trade Organization, but a coordinated multilateral trade policy has not prevented the individual member states from having other bilateral relations with other countries of both the North and the South. Furthermore, the emphasis here is on trade as well as development policies such as aid and humanitarian assistance where the EU does not yet exercise exclusive EU competence. For this examination of normative discourse, however, it is critical to identify how development policy fits into EU external relations and what the EU has projected as its common policy goals in this area. When we examine some of the empirical data it will be necessary to disaggregate the member states from the EU as some of the data are necessarily based on the individual policies as opposed to a common EU policy. Ian Manners (2002) has argued that the EU is a unique entity whose identity in world politics is based on normative, ideational values that transcend narrow national interests – whether civilian or military. The EU’s approach to development may be an important confirmation of this conceptualization of “normative power Europe” and, as a significant pillar of the EU’s external policy, it illustrates a fun-


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damental difference between Europe and the United States neglected in the debates engendered by Kagan’s Mars/Venus caricature. An exception and an interesting response to Kagan and the argument about the widening divides in Europe and America, and therefore of relevance to this analysis, is Kalypso Nicolaidis’s argument that the division is not actually about Europe’s naïve ideas about power versus US realpolitik. As she notes, Europeans know all too well the significance of power in world affairs and likewise Americans certainly do believe in multilateral institutions. However, the divide is real in the sense that the EU increasingly represents and shapes Europe’s role in the world and as such is a “radically different entity from US.” She goes on to claim that: The rest of the world, far from being Hobbesian is attuned to the European choice because both power and purpose matter in international relations; legitimacy translates power into effectiveness. In such a world, the promise held up by the “European difference” is great and lies in the legitimacy of the narrative of projection that the European Union seeks to deploy, that is the consistency between its internal and external praxis and discourse. EU-topia is relevant beyond the shores of its own paradise. (Nicolaidis 2005: 96)

This narrative of projection conceptualization appears to be congruent with the “normative Europe” perspective and helps us to make sense of the EU’s complex, ever-evolving identity as a global actor. In direct relation to how this narrative of projection image helps us to theorize the EU’s legitimacy and capacity to act collectively in the area of development policy and relations with the South, it is significant to consider the following argument made by Nicolaidis: How can its narrative of projection be reconciled with the postcolonial character of the EU project? In part by systematically banishing the kind of dual standards that underpinned colonialist thinking . . . The European Community both inherited the postcolonial guilt of its member states and provided an institutional venue to assuage that guilt, a venue that would be less vulnerable to accusations of neocolonialism than individual member states’ diplomacy. (Nicolaidis 2005: 101)

For Nicolaidis, this narrative of projection requires that Europe – and presumably scholars seeking to understand EU foreign policy identity in these terms – defines power as “the capacity to empower others” (p. 114). In defending this view of power, Nicolaidis points out that while the USA may outspend the EU on the military by a factor of 4, the EU and member states combined outspend the USA on development aid by a factor of 7.3 Thus, I would argue that this is a normatively felicitous way to examine the question of EU policies toward the developing world. But what are the legal basis and the institutional parameters within which the EU operates in the area of development policy? As Martin Holland (2002) has pointed out, Europe’s formal relations with the developing world are as old as the EEC and the Treaty of Rome (1957) and the European Commission has provided

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international development assistance since its founding. The Lomé Convention (1975–2000), preceded by Yaoundé and succeeded by Cotonou in June 2000, was long considered a hallmark of the EU’s policy with the developing world, or more specifically the African, Caribbean, and Pacific countries (ACP) representing the former colonies of Western Europe. The foundation of these agreements was the recognition of partnership and preferential trade arrangements. For a variety of complex reasons, these conventions had severe limitations. Some critics suggest that they perpetuate neocolonial dependencies and studies have shown they have done little to ameliorate the economic situation of the ACP countries. Furthermore, the treaty-based, contractual nature of the relationship also clearly discriminated against other developing states and violated GATT (General Agreement on Tariffs and Trade)/WTO (World Trade Organization) principles of non-discriminatory practices in an open trade system. But trade is only one aspect of the EU’s development policies. Article 130 of the Treaty on European Union states that the Community policy in the development sphere is complementary to the policies pursued by member states and should: (1) foster sustainable economic and social development; (2) facilitate the integration of the developing countries into the world economy; and (3) fight poverty in the developing world (Holland 2002: 2–3). The rising and independent role of the European Parliament has led to a thorough and reflexive evaluation of the EU’s 50-year history of development policies and essentially has forced the Commission to fundamentally revise its policy and elaborate a new framework for development policy, of which the principal aim is the eventual eradication of poverty. Reflecting this change in discursive terms, the most important and recent joint statement by the Council and the Commission issued in July 2005 declared that Community development policy was grounded on the principle of sustainable, equitable, and participatory human and social development. Promotion of human rights, democracy, the rule of law, and good governance are also an integral part of the EU’s development policy strategy. One of the remaining issues on the reform agenda is better coordination between the member states and the EU commission and among the four Directorates-General that deal with development. One thing is clear: the EU member states are incrementally channeling a growing proportion of their total aid programs through the EU, up from 13 percent in 1990 to 17 percent of development assistance now transferred from the member states to the EU itself. These pooled resources alone place the EU assistance efforts among the world’s five leading donor programs, managing approximately $6 billion of development aid annually, roughly the same amount of assistance managed by the UN and the Office of Development Assistance (ODA) of the World Bank and the IMF (Lennon 2001: 127). In 2005 the European Commission issued its latest statement regarding the reinvigorated commitment and the collective or “community” approach to development. The four fundamental concepts that define the EU’s new development policy are shown in Table 16.1. What is most striking about these concepts underlying the EU’s development policy (in addition to succinctness, which is altogether rare for any EU policy) is that two of the four principles imply the alignment of the EU’s values with those


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Table 16.1 The fundamental concepts of the EU’s new development policy • •

•

•

Harmonization: Seeks to harmonize aid procedures with other donors and partner countries. Results-orientation: Evaluates success in terms of concrete achievements not inputs and particularly those measured against the UN Millennium Development Goals (MDGs). Ownership: Aligns EU aid with the national budget process and its implementation mechanisms. Encourages recipient countries to “take ownership” of the assistance program. Coherence: Ensures coherence with other policy areas with a view to reaching MDGs – environment, climate change, security, trade, fisheries, agriculture, research, information society, transport, and energy.

Source: EU Focus, September 2005, p. 6. Publication of the European Commission Delegation to the USA.

of the United Nations and, more specifically, the UN Millennium Development Goals. Of course, it remains to be seen whether or not the discourse is consistent with the actual practice and policy commitments, which we will evaluate in a subsequent section. To summarize and then move to the overview of the US approach, it is interesting to note that while Europeans are fully cognizant and supportive of the leading role their societies play in development assistance, US foreign aid, contrary to what most Americans think, is a mere 0.1 percent of GNI (gross national income) or one-third of European levels. Europeans now provide more than 50 percent of all civilian development assistance in the world and 47 percent of humanitarian assistance in the world, compared to 36 percent from the United States (Rifkin 2004: 304–5). The trend to move foreign aid policy under the purview of the EU, thus to the supranational as opposed to the national level, seems to make sense given the gradual coordination of more foreign economic and commercial policies. Though there may remain difficult issues to resolve regarding further enlargement, protecting cultural identities, and the harmonization of immigration and taxation policies, European citizens show firm support for a growing European foreign policy identity of which an important pillar is strengthening humanitarian and development assistance.

The United States Although one might presume that it is the post-9/11 psychology that is fundamentally reorienting the US approach to development aid toward a “security first” strategy, this policy area has always generally been rooted in the link to security and perhaps the goal of maintaining US hegemony. The Marshall Plan, which funneled $13 billion (equivalent to $90 billion today) of assistance from America to Europe over four years following World War II was directly identified with the

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protection of the “free world” against the encroachment of communism. When President Truman decided to extend the geographical horizons of American aid to spread the benefits of US scientific advances to underdeveloped nations, his motives were more strategic than altruistic. As Stephen Browne has pointed out, the Mutual Security Act replaced the Act for International Development in 1950 and it explicitly stated that aid could only be supplied if it “strengthened the security of the United States” (1999: 11). Clearly demonstrating this point is the way in which ideological and geostrategic conflict with the Soviet Union was reflected in the economic assistance programs. As Browne notes, “the 38th parallel is the most tangible memorial of cold war aid . . . where the US military effort cost the equivalent of four Marshall Plans, and confirmed the pattern of meshing America’s aid with its military security” (Browne 1999: 12). The purported triumph of democratic capitalism and the demise of Cold War politics at the dawning of the twenty-first century have engendered a more liberalized global economy with the United States and the European Union as its chief architects and the WTO as its custodian. Browne argues that now that new rules of a more equitable world trading environment are established, aid must not hinder or distort them. “Aid must not, in other words, work in opposition to freer trade but in favor of it, if donors are not to be perceived as giving with one hand and taking with the other” (1999: 93). Browne’s analysis reiterates the need for simultaneous consideration of both aid and trade policies as we evaluate the policy discourses of both economic powers. In addition to the linkage of development policy with national interest and security concerns, what are the defining principles behind the US approach to addressing development issues and the North–South economic divide? In 2002 President Bush issued the following statement accompanying his $5 billion plan to assist developing nations: America supports the international development goals in the UN Millennium Declaration, and believes that these goals are a shared responsibility of developed and developing countries. To make progress, we must encourage nations and leaders to walk the hard road of political, legal and economic reform, so all their people can benefit. Today, I call for a new compact for global development, defined by new accountability for both rich and poor nations alike. Greater contributions from developed nations must be linked to greater responsibility from developing nations. The United States will lead by example. We will increase our development assistance by $5 billion over the three – over the next three budget cycles. This new money above and beyond existing aid requests – is above and beyond existing aid requests in the current budget I submitted to the Congress. The new compact I propose would multiply this progress. I challenge other nations, and the development banks, to adopt this approach as well. America’s support for the World Bank will increase by almost 20 percent over the next three years. We expect the World Bank to insist on reform and results, measured in improvements in people’s lives. All the development banks should adopt a growth agenda, increasing their support for private sector enterprises and focusing more on


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education, as the Inter-American Development Bank has done. And I challenge the development banks to provide up to half of the funds devoted to poor nations in the form of grants, rather than loans. [Applause] Grants instead of loans that may never be repaid. Many have rallied to the idea of dropping the debt. I say let’s rally to the idea of stopping the debt. (http://www.whitehouse.gov/news/releases/2002/03/ 20020314-7.html)

Two important points of this speech merit comment. First, the acknowledgment of the UN’s Millennium Declaration is interesting given the general negative disposition of the Bush administration toward the United Nations. However, this statement does not necessarily translate into policy linkage as it does in the case of the European Union. Furthermore, the very next sentence emphasizes the necessity of reform, presumably liberal market reforms and the need for greater accountability. The upshot of this speech is the primacy placed on the value of economic growth tied to liberalization and a move away from traditional aid. This emphasis is further captured by the summary statement issued by the USAID, the primary agency responsible for US development policy. The nine principles laid out in Table 16.2 serve to guide US development and reconstruction assistance. The USAID report claims that these principles are fundamental to the success of assistance as an instrument of US foreign policy and national security and as such “are not a checklist, but a summary of the characteristics of successful assistance to achieve development objectives including economic growth, democracy and governance, and social transition.” Particularly noteworthy are the three goals that relate to the control mechanism of ensuring effectiveness and efficiency: accountability, results, and assessment all have to do with the perceived need to monitor how the money is spent and presumably how well the policies are commensurate with the USA’s own vision of “strategic” goals. Contrary to the EU’s guiding principles, there is no specific linkage to the UN’s development goals (MDGs) nor explicit acknowledgment that coordination with other policies such as trade or the environment would be desirable. Ownership appears to convey something slightly different from the way the EU incorporated the concept to reflect the aim of empowering development societies to actually run the development programs. In the US context, it is more about tapping existing leadership that could actually be in conflict with the other goal of minimizing corruption. However, the US framework directly addresses the need for capacity building and strengthening local institutions, which arguably is more specific than anything officially stated by the EU. The overarching dissimilarity that bears emphasis, however, is the EU’s linkage to the UN and its MDG guidelines as a metric for gauging success and coordination with other policies, such as trade, to ensure coherence and effectiveness. Underscoring this difference are the goals for bilateral aid, as listed in Table 16.3. Taken together, the official discourse that characterizes US development policy contains very little, if any, direct reference to coordination with other donor countries or the United Nations, and even less recognition of the need to consider how

Table 16.2 Nine principles of development and reconstruction assistance Ownership Build on the leadership, participation, and commitment of a country and its people. Capacity building Strengthen local institutions, transfer technical skills, and promote appropriate policies. Sustainability Design programs to ensure their impact endures. Selectivity Allocate resources based on need, local commitment, and foreign policy interests. Assessment Conduct careful research, adapt best practices, and design for local conditions. Results Focus resources to achieve clearly defined, measurable, and strategically focused objectives. Partnership Collaborate closely with governments, communities, donors, NGOs, the private sector, international organizations, and universities. Flexibility Adjust to changing conditions, take advantage of opportunities, and maximize efficiency. Accountability Design accountability and transparency into systems and build effective checks and balances to guard against corruption. Source: http://www.usaid.gov/policy/2005_nineprinciples.html

Table 16.3 Core goals for US bilateral foreign aid • • • • •

Promote transformational development Strengthen fragile states Support strategic states Provide humanitarian relief Address global issues and other special, self-standing concerns

Source: White Paper: US Foreign Aid: http://www.usaid.gov//policy/pdabz3221.pdf


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aid and other policy areas might intersect. Unsurprisingly for the world’s largest military power and most dominant player in the world system, even foreign assistance and development policy are cast in strategic and security terms. This does not preclude the possibility that these polices can be beneficial to developing societies, but it confirms that, at least in discursive terms, there a difference between the EU and US approaches.

Empirical Evidence of Congruence between Discourse and Policy The Doha Development Round After five years of negotiations, the Doha Round of trade talks launched in 2001 has reached what appears to be an intractable impasse. Officially labeled as the “development” round, the talks were intended to lure developing countries as well as globalization backlashers back to the table after the collapse of the WTO talks in Seattle in 1999. Responding also in part to the terrorist attacks of September 11, 2001, rich countries were sending a message of solidarity with poorer countries by addressing the root causes of terrorism – the poverty and lack of economic opportunity that purportedly breeds it. The talks were also meant to pick up where the Uruguay Round left off – mainly further liberalization of agricultural and service sectors. The conflict over the agricultural sector specifically has come to symbolize all of the contradictions and hypocrisy behind all of the grandiose declarations about “aid for trade” and eradicating global poverty. Not only does agricultural trade represent the biggest area of conflict between the European Union and the United States (in the form of competing export interests as well as protecting domestic producers), with each blaming the other for not compromising or making adequate concessions to developing countries, it has also revealed divisions among the developing nations who would have very uneven benefits from new trade rules and true liberalization of the sector. Large developing countries such as Brazil and Argentina clearly stand to gain from deeper cuts in EU and US farm tariffs and subsidies but these very cuts would certainly harm the poorest countries, particularly those that currently benefit from preferential treatment for their imports in EU markets. Unfortunately, but not surprisingly, both the Cancun (2003) and the Hong Kong (2005) ministerial meetings ended in stalemate. No easy conclusions can be made about who the biggest culprit is or whose practices are more harmful to the larger cause of promoting economic development and ending practices that are so directly inequitable to the global South. At the Hong Kong meetings, the United States made a vague pledge to reduce its domestic cotton subsidies after being embarrassed by the EU and painted as an enemy of the poor – especially those of West Africa. In retaliation, the United States charges that protectionist policies of the EU’s Common Agricultural Policy pit the narrow interests of a small number of European (mostly French) farmers against the economic well-being of the vast majority of the population in the developing world. Brazil, leader of the Group of 20 – the group of developing nations

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negotiating agriculture – has aligned with the United States to paint the EU as the real roadblock to progress. Brussels has made a commitment to reduce farm tariffs by only 39 percent compared with the Group of 20 proposal of 54 percent and the USA’s proposed cut of 75 percent. In return, the rich countries are also demanding that the big emerging economies such as India and China drastically cut their industrial tariffs, and this is where the rubber hits the road, so to speak, as these countries refuse to budge on market access and tariff reduction unless greater progress is reached on agriculture. Though the European Union has been cast as the biggest obstacle, the joint World Bank and IMF Global Monitoring Report of 2004 judged the EU both as the most open major market for exports from developing countries and as the trading partner which has made the greatest efforts to reduce its average protection levels in their favor. But the United States imports far more from developing countries in nonagricultural goods, accounting for 35 percent of the total in 1990, compared with 14 percent in 1970. Imports of manufactured goods from developing countries now represent 11 percent of the value of manufacturing output – double the level a decade ago. This, of course, has generated concern that imports from developing countries have caused a loss of well-paid manufacturing jobs, which have been replaced by poorly paid service-sector jobs. This is precisely where the North–South linkage becomes extremely complex; it is nearly impossible to draw clear conclusions about the relationship between trade preferences and practices and the degree of poverty in developing societies. Ironically, a recent study by Hertel and Winters (2005) has found that a reduction in poverty as a result of full liberalization of agriculture and goods trade would only be half or a third of previous estimates and the limited package presently offered under Doha would lift only 20 million of 1.1 billion out of destitution rather than the initial estimate of 127 million.4 Such findings reinforce the need to consider development dilemmas and the North–South economic divide from multiple perspectives.

United Nations Millennium Development Goals In September 2000, at the dawn of the new millennium, the General Assembly of the United Nations unanimously adopted the United Nations Millennium Declaration that vowed to make considerable strides toward eradicating global poverty. More specifically, the declaration contained eight proposals to cut the proportion of people in extreme poverty by half by the year 2015.5 One calculation puts the cost of meeting the non-environmental targets at $40 to $70 billion a year above the current $50 billion in development assistance. Another estimate puts costs of environmental goals over a longer period at $25 billion per year. The 2002 conference on Financing for Development in Monterrey confirmed the need for more aid, trade, and debt forgiveness by industrial countries, and both the United States and the European Union made lofty statements about living up to their pledges to meet the UN Millennium Development Goals (MDGs). So how well have the two economic superpowers fared six years into the campaign?


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Table 16.4 Net value of the ODA (official development assistance) provided by the EU, in million euro (current rate)

EU Commission

1990

1995

2000

2002

2003

22,313 2,255

24,023 4,130

27,497 5,330

31,875 5,781

33,036 6,349

Source: http://europa.eu.int/rapid/pressReleasesAction.do?reference=MEMO/05/ 314&format=HTML&aged=0&language=EN&guiLanguage=en

EU undertakings Presently, the European Union (Commission + member states) accounts for 55 percent of world aid. As President Barroso has publicly stated, “to achieve the MDGs, it is necessary to do more, better and faster. The European Commission has made and will make proposals to strengthen the level of ambition and to consolidate its world leadership in Development Policy.”6 At the UN World Summit 2005 he challenged others to match the European Union’s commitments on Development Goals such as the firm determination to reach the long-standing target of 0.7 percent of GNP to official development assistance (ODA) by 2015 (see Table 16.4). The EU has set itself the interim target of 0.56 percent GNI/ODA by 2010. These EU commitments translate into 20 billion euro more ODA per year by 2010 and 45 billion euro more per year by 2015. Half of the increase is earmarked for Africa, the continent most in need of additional support in their efforts to reach the MDGs. US performance According to an OECD study one year after the UN Millennium declaration, the United States had regained its status in 2001 as the largest donor in the OECD’s Development Assistance Committee (DAC) in terms of volume. Its net official development assistance (ODA) was US$ 10.9 billion, about one-fifth of the DAC total. This represented 0.11 percent of its gross national income (GNI), leaving the United States with the lowest ODA/GNI ratio in the DAC. It should be noted that these figures do not include private grants, which are estimated to significantly exceed ODA flows. The DAC encouraged the United States to assume a leadership role in world development cooperation and to further enhance its own policy coherence for development. The DAC Chairman, Mr. Jean-Claude Faure, summarized the committee’s main recommendations to the United States: •

“Build a common development vision. The responsibility for ODA is being handled by about 50 United States government entities. An overarching vision of US development co-operation is needed to manage such a diverse system although the new National Security Strategy represents movement in that direction. The United States Agency for International Development (USAID) is the

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•

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primary aid agency, but is now responsible for just one-half of United States ODA (down from 64 percent in the 1998 Peer Review). There is a need for greater coherence between development and broader government policies (e.g. trade and agriculture). USAID could take on greater government-wide leadership in all areas of development co-operation, including the integration of development considerations in broader national policies”. “Foster stronger international partnerships.” “Enhance public understanding of the long-term nature of development issues. The American public supports the concept of foreign aid, but has an inflated notion of the size of the United States’ ODA effort. Allowing USAID to directly inform the public, combined with a cross-government information policy, would correct misperceptions and add to the growing public and political support for the important United States role in development co-operation.” “Improve efficiency in aid delivery. The DAC acknowledged the efforts being taken in USAID to enhance management credibility with Congress and the public by reforming its internal ‘business systems.’” “Increase aid volume. In light of the massive challenge posed in achieving the development goals of the Millennium Declaration, implementing these recommendations will provide the United States with the scope for considering further increases in its official development assistance.” “Further untie aid. Tied aid generates American support for development assistance. Except for specific forms of aid to least developed countries, United States aid is generally tied to the procurement of goods and services purchased from the United States. The United States, far more than any other DAC member, sends food to developing countries. Transaction costs are expensive and can lead to inefficiencies in finding locally supported solutions in developing countries in non-emergency situations.” (http://www.oecd.org/document/2/0,2340,en_2649_ 201185_2765954_1_1_1_1,00.html)

Overall, the OECD study has found that while aid as a share of GNI has declined over the period 2001–3 in most countries, and most notably in Canada, Finland, France, Germany, Italy, Japan, and the United States, ODA shares have increased in Belgium, Luxembourg, Spain, Switzerland, and the United Kingdom and, from low initial shares, Austria, Greece, and Ireland. Only Denmark, Netherlands, Norway, and Sweden have consistently met the United Nations 0.7 percent target over the whole period covered in the table, but Luxembourg has been meeting the target since 2000. Since ODA shares of GNI reached their low point in 1997, 15 of the 22 DAC members have increased their shares and 11 have committed to remain at or to attain the 0.7 percent target (http://caliban.sourceoecd.org/ vl=827800/cl=29/nw=1/rpsv/factbook/09-02-05-g01.htm).

Commitment to Development Index As the foregoing critique of the US approach illustrates, it’s not just the amount but the quality of the assistance that matters for producing positive change in economic


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development. Jeremy Rifkin (2004) also points out the criticism of the US practice of tying its aid programs to strategic military objectives, not just need, and this serves to remind us that understanding the North–South economic divide requires more holistic analyses of development policies. The Center for Global Development and Foreign Policy (the periodical) may provide the best assessment tool for doing just that. In 2003, the organizations jointly published results of the first study ranking the world’s richest countries according to how much their assistance helps or hinders the economic and social development of poor countries. The Commitment to Development Index (CDI) is designed to examine a range of factors beyond foreign aid programs and generosity of aid, to other practices such as immigration policies, peacekeeping operations, as well as FDI in developing countries. The index penalizes financial assistance to corrupt regimes, environmental harm, and barriers to imports from developing countries. The USA ranks near the bottom. Of the 20 richest countries only Japan fares worse than the USA. Sixteen of the top 19 countries are European. Nine European nations rank in the top 10 countries in the index. One explanation for the low ranking of the USA is that it ties nearly 80 percent of its aid resources to agreements to purchases of US goods and services. It also performs poorly on environmental peacekeeping. The Commitment to Development Index shows that helping to fight poverty and address the disparity between the developed and developing worlds involves more than giving money. The Index ranks 21 rich countries according to their policies in seven areas: (1) Quantity and quality of foreign aid; (2) openness to developingcountry exports; (3) policies that influence investment; (4) migration policies; (5) environmental policies; (6) security policies; and (7) support for creation and dissemination of new technologies. Scores on each component are scaled so that an average score in the CDI’s first year, 2003, is equal to 5.0. A country’s final score is the average of those for each component.7 Though this is only a cursory analysis here, the CDI shows promise for offering a more comprehensive empirical yardstick by which we might gauge the effectiveness and fairness of policies that link the North and the South. Based on the 2003 findings, it appears that the EU is fulfilling its ambition to become a leader in the realm of development policy despite its remaining shortcomings in the trade arena.

Conclusion To return to the question set forth in the title of this chapter, “Are EU and US policies toward the South a form of dueling imperialism or principled policies?,” the implications of the foregoing empirical analysis would suggest that there are elements of both behaviors across a range of different policies. The Europeans may have the higher ground slightly by virtue of having undergone more self-critique and reform and also by virtue of gradually transferring development policies to the supranational level, away from the temptations and perils of pursuing narrow national interests that may come at the expense of the broader interest of development. As Joseph Nye has noted:

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Secretary of State Colin Powell has pleaded to Congress, we need to put more resources into the State Department, including its information services and the Agency for International Development (AID), if we are going to get our messages across. A bipartisan report of the situation of the State Department recently warned that if the “downward spiral” is not reversed, the prospect of relying on military force to protect US national interests will increase because Washington will be less capable of avoiding, managing or resolving crisis through the use of statecraft. (2002: 146)

He adds that US foreign aid has shrunk to 0.1 percent of GNP, roughly one-third of European levels, and US protectionist trade measures often hurt poor countries most. As Maxwell and Riddell (1998) point out, the European model of development is explicitly couched in terms of “partnership,” which is very different from the US approach. Partnership denotes equity and cooperation (Lister 2003), which directly challenges the notion of hierarchy. Interregionalism denotes agreement between distinct but equal regions based on promotion of good government and development through dialogue, and going beyond economic governance to embrace political and institutional reform and social inclusion. At the same time, this strategy seeks a discursive mediation of inequalities between Europe and the South. It is therefore more explicitly concerned with politics and institution building than the US marketled pattern of new regionalism, and endorses a North–South model of global cooperation in which the North assumes some responsibilities for the development of the South. Grugel (2004) says this new regionalism that the European Union represents “appears to be a safe space within which Europe can display identity and norm difference from the US and lay down an identity marker of what it perceives as a more humane governance model in its relations with the developing world, without having to confront or contradict US power head on” (2004: 602). The result may be a distinctive model of governance toward the developing world that has longterm benefits and prospects for tackling the persistent reality of the North–South economic divide.

Notes 1

2 3 4 5

6

For a classic discussion of the economic rivalry between Europe and the United States, see ServanSchreiber (1968). An insightful historical account from a socialist perspective is offered in Mandel (1970). The European Union: A Guide for Americans (1999) Publication of the Delegation of the European Commission to Washington, DC, pp. 22–4. See Nicolaidis (2005: 119, fn. 15). The study was conducted for the World Bank and discussed in the Financial Times, November 16, 2005: 11. The eight goals range from eradication of hunger and poverty to combating HIV/AIDS and achieving an environmentally sustainable, global partnership for development. For more information on the goals, see http://www.un.org/millenniumgoals/. http://europa.eu.int/rapid/pressReleasesAction.do?reference=MEMO/05/314&format=HTML&aged =0&language=EN&guiLanguage=en

Analysis of EU and US Trade and Development 7

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See http://www.cgdev.org/section/topics/aid_effectiveness. See http://www.cgdev.org/section/topics/aid_effectiveness for the raw data and summary rankings.

References Ash, Timothy Garton (2004) Free World. New York: Random House. Boyer, Robert & Drache, Daniel, eds. (1996) States against Markets. London: Routledge. Browne, Stephen (1999) Beyond Aid: From Patronage to Partnership. Aldershot, UK: Ashgate. Elsig, Manfred (2002) The EU’s Common Commercial Policy. Burlington: Ashgate. Gamble, A. & Payne, A. (1996) Regionalisms and World Order. Basingstoke: Macmillan. Grugel, Jean B. (2004) “New Regionalism and Modes of Governance – Comparing US and EU Strategies in Latin America,” European Journal of International Relations 10(4). Grugel, Jean & Hout, W., eds. (1999) Regionalism Across the North–South Divide. London: Routledge. HDR (Human Development Report) (1992) Human Development Report. New York: United Nations Development Report. HDR (Human Development Report) (1999) Human Development Report. New York: United Nations Development Report. Hertel, Thomas W. & Winters, L. Alan (2005) “Estimating the Poverty Impacts of a Prospective Doha Development Agenda,” World Economy (August) 28(8): 1057–72. Holland, Martin (2002) The European Union and the Third World. New York: Palgrave. Hurrell, A. (1994) “Regionalism in the Americas.” In Latin America in a New World, edited by A. Lowenthal and G. Treverton, pp. 171–90. Boulder, CO: Westview Press. Kagan, Robert (2003) Of Paradise and Power: America and Europe in the New World Order. New York: Alfred. A. Knopf. Keck, Margaret E. & Sikkink, Kathryn (1998) Activists Beyond Borders. New York: Cornell University Press. Lennon, David (2001) “The EU: A Leader in Humanitarian and Development Assistance.” In Europe in the New Century: Visions of an Emerging Superpower, edited by Robert J. Guttman, pp. 127–41. London: Lynne Rienner. Lister, M. (1997) The European Union and the South: Relations with Developing Countries. London: Routledge and UACES. Lister, M. (2003). “EU Development Policymaking in a Globalizing World.” EADI conference, EU in the World, Brussels, May 19. Mandel, Ernest (1970) Europe vs. America: Contradictions of Imperialism. New York: New Left Books.

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Manners, I. (1998) “The International Identity of the EU,” Journal of European Integration 21: 238–43. Manners, I. (2002) “Normative Power Europe: A Contradiction in Terms?” Journal of Common Market Studies 42(2): 359–61. Maxwell, S. & Engel, P. (2003) European Development Cooperation to 2010. Working Paper No. 219. Overseas Development Institute. Maxwell, S. & Riddell, R. (1998) “Conditionality or Contract: Perspectives on Partnerships for Development,” Journal of International Development 10 (March–April): 257–68. Nicolaïdis, Kalypso (2005) “The Power of the Superpowerless.” In Beyond Paradise and Power, edited by Tod Lindberg. New York: Routledge. Nicolaïdis, Kalypso & Howse, Robert (2002) “This is my Eutopia . . . Narrative as Power,” Journal of Common Market Studies 40(4): 767–92. Nugent, Neill (1999) The Government and Politics of the European Union. Durham, NC: Duke University Press. Nye, Joseph S. Jr. (2002) The Paradox of American Power. New York: Oxford University Press. Rifkin, Jeremy (2004) The European Dream. New York: Penguin. Servan-Schreiber, J. J. (1968) The American Challenge. New York: Atheneum. World Development Report (2003) Washington, DC: The World Bank.

Chapter 17 Assessing Strategies for Reducing Global Poverty Barry B. Hughes and Mohammod T. Irfan

Among the findings of the analysis of poverty reduction are that: •

Both global numbers in poverty and rates of poverty will likely fall sharply even without incremental human intervention. The regional exception to the generalization is sub-Saharan Africa, where it appears most likely that numbers will rise and rates (portions of the population who are poor) will fall. • Humanity has considerable potential incremental influence on poverty levels and rates, especially in the longer term. Packages of interventions appear unlikely to reduce global poverty rates relative to a Base Case by more than 2 percent before 2015 (much less than the levels of uncertainty in measurement and forecasting), but can potentially move more than 200 million additional people from poverty by 2050. • There are no silver bullets. Economic liberalization, improved governance, and many other interventions reduce poverty, but significant reductions require extensive packages of actions. Interventions have mostly additive effects, rather than trade-off effects, and they also have some synergies.

From Assessment to Forecasting to Action The project of global human development is now better defined and organized than ever before in human history, not least because goals have become increasingly explicit and focused. An important early statement of goals, in Article 25 of the 1948 United Nations Universal Declaration of Human Rights, was highly qualitative:


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Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.

Over time human development goals became more quantitative (and more genderneutral), but they frequently were more oriented toward input or process than toward output and goal accomplishment. For instance, in 1974 the UN General Assembly declared support for a New International Economic Order (NIEO). The NIEO called for financial aid at 0.7 percent of donor GDP (gross domestic product), debt relief, industrial strategies, and increased savings. Yet over time a set of accomplishment-oriented and specific, measurable goals has emerged for the reduction of hunger, of infant mortality, and much else. The global community took an especially large step in September 2000, when at the United Nations Millennium Summit 189 countries committed to the eight Millennium Development Goals (MDGs), the first integrated set of development goals with elaborated targets and quantifiable indicators. For instance, the first goal, targeting reduction of poverty, specifically called for halving by 2015 the proportion of people around the world who live on less than $1 per day (relative to levels in 1990). The pursuit of such goals requires three sets of interacting activities (see Figure 17.1). First, measuring and assessing current conditions and the trajectory of change provides foundational knowledge concerning the specific targets of intervention and the urgency of action. Goals can only be achieved in a process of constant evaluation of actual, changing conditions. Second, framing strategies for action help determine the efforts needed by specific actors to accomplish established goals. Third, forecasting of alternative futures, with and without specific actions or interventions, provides a basis for understanding the potential leverage of human effort with respect to the goals. Each of the three activities is underway in the global project to reduce global poverty. Yet there remains room for improvement, perhaps most significantly with respect to forecasting and its explicit use in the packaging of action strategies. All policy analysis is based, at least implicitly, on forecasting of outcomes with and without action, but very often the forecasting remains implicit and therefore underdeveloped. The primary contribution of this study to the global development project will be to make forecasting more explicit and integrated.1 Forecasting

Goal seeking Measurement and assessment

Figure 17.1 The framework for policy analysis.

Action framing

Strategies for Reducing Global Poverty

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Poverty Reduction and Human Development The first – and in many respects foundational – goal of the MDG set is to “eradicate extreme poverty and hunger.” Two more specific, quantitative targets accompany the goal:2 • •

Halve, between 1990 and 2015, the proportion of people whose income is less than $1 a day. Halve, between 1990 and 2015, the proportion of people who suffer from hunger.

The apparent clarity of goal, target, and indicators is remarkable and laudatory. It is exactly what is needed for the assessment leg of the assault on poverty. Unfortunately, the clarity is also somewhat more apparent than real. Were it fully realized, there would be no difficulty in answering the following two questions: 1What were the proportions of population globally and in different countries/ regions around the world in 1990 that had incomes less than $1 per day? 2What progress has been made in reducing those proportions since 1990? The answers to these critical questions are somewhat contested. There is also uncertainty around the measurement of malnutrition, but the larger debates have focused on poverty. The rest of this section explores what we know and do not know about poverty levels.

The World Bank’s foundational approach The World Bank has taken the lead in measuring poverty and providing data on change in its level. Ahluwalia et al. (1979) first identified an international “absolute poverty” measure for comparison across countries. In doing so they used the International Comparison Project (ICP)’s earliest version of purchasing power parity (PPP) data to explore global levels (see Kravis et al. 1978a, 1978b). They based the level primarily on data from India. The level chosen was $200 per capita, the 45th percentile of income in India in 1970 ICP dollars, which in 1985 dollars is quite close to the more contemporary $1/day level. That initial specification of poverty level corresponded roughly also with access to 2,250 calories per day, something close to a survival minimum. Since 1990 the World Bank (see Ravallion et al. 1991) has relied upon that headcount measure of poverty. One dollar per day was subsequently converted to $1.08 per day at 1993 prices measured at PPP,3 but the shorthand reference to $1 per day remains common. A second international measure of poverty, somewhat further above the basic survival level, is set at $2.15 per day at 1993 PPP. The core of the World Bank’s empirical approach to determining how many people earn less than $1 per day is the use of country-based surveys. The number of surveys has steadily expanded, reaching 454 across 97 developing countries in

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the analysis by Chen and Ravallion (2004) that provided much of the poverty data used by the Millennium Project (2005) in its elaboration of proposals for meeting the MDGs. Such surveys allow the construction of distributions of income or consumption levels across national populations and the specifications of shares associated with various percentiles of population. The attention of the World Bank to distribution of income and consumption is fundamentally important. For instance, it matters much whether the bulk of those in a country below the extreme poverty line of $1 per day cluster just below that level or find themselves significantly below the line. In the latter case the poverty is clearly deeper. The Bank and other analysts therefore supplement poverty head counts with measures such as the poverty gap, which increases with the distance of the income of the poor below $1.4 All of these data and these tools are being used in efforts to answer the two questions raised earlier: What are poverty levels and how have they been changing? Table 17.1 shows the World Bank’s most recent answers to those questions. With respect to change, it also provides forecasts through 2015, the most authoritative ones available.

The great debates around poverty numbers The numbers and patterns in Table 17.1 have been challenged and some calculate more rapid poverty reduction than does the World Bank. The fundamental basis for the challenge lies in use of national account data rather than the Bank’s survey data. The national account data suggest, on the whole, both higher values for income and consumption than do survey data and more rapid growth in them. Therefore they suggest both lower poverty rates and faster reduction. This has led Bhalla (2002), for example, to argue that the first target of the MDGs, the halving of global poverty rates, was actually already accomplished by 2000 when the goals were enunciated. Some efforts to clarify the issues involved (e.g., Deaton 2004) may ultimately move us toward resolution. The choice of analysts between data based in surveys or national accounts would not be so problematic if the calculations of the ratios of mean societal consumption of the two were fundamentally constant over time. Then the estimates of poverty might vary across methodologies, but the patterns of change over time would be fundamentally the same. Deaton (2004: 12) notes, however, that the rate of growth in surveys is about half that in national accounts. For the purposes of forecasting, a key question is whether the ratio of surveybased measures of consumption to national accounts-based measures of consumption will continue to decrease. It really makes no sense to expect those ratios to decline indefinitely. The forecasts in this study begin from 2000 and use estimates of poverty in that year from World Bank sources, thereby accepting the estimates for initial poverty levels from the survey data. Forecasting from 2000 in this study uses national accounts to drive poverty computations. It is, of course, impossible to forecast survey data.


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Table 17.1 World Bank data and forecasts of poverty Millions of people living on

East Asia and the Pacific China Rest of East Asia and the Pacific Europe and Central Asia Latin America and the Caribbean Middle East and North Africa South Asia Sub-Saharan Africa Total Excluding China

less than $1 per day


1990

2002

1990

472 375 97 2 49 6 462 227 1,218 844

214 180 34 10 42 5 437 303 1011 831

2015

2002

2015

14 1,116 748 260 11 825 533 181 2 292 215 78 4 23 76 39 29 125 119 106 3 51 61 40 232 958 1,091 955 336 382 516 592 617 2,654 2,611 1,993 606 1,829 2,078 1,811

Percent of people living on

East Asia and the Pacific China Rest of East Asia and the Pacific Europe and Central Asia Latin America and the Caribbean Middle East and North Africa South Asia Sub-Saharan Africa Total Excluding China



1990

2002

2015

1990

2002

2015

29.6 33.0 21.1 0.5 11.3 2.3 41.3 44.6 27.9 26.1

14.9 16.6 10.8 3.6 9.5 2.4 31.3 46.4 21.1 22.5

0.9 1.2 0.4 0.4 6.9 0.9 12.8 38.4 10.2 12.9

69.9 72.6 63.2 4.9 28.4 21.4 85.5 75.0 60.8 56.6

40.7 41.6 38.6 16.1 22.6 19.8 77.8 74.9 49.9 52.6

12.7 13.1 11.9 8.2 17.2 10.4 56.7 67.1 32.8 38.6

Source: World Bank (2006: 9).

The focus of this study is on income poverty, in large part because the first target of the first Millennium Development Goal is expressed in terms of income. It is important, however, not to lose track of the reality that poverty is much more than an income-based phenomenon. As Amartya Sen (2000) has long emphasized, human capabilities and the freedom of action to which they give rise lie at the heart of human development. Income underpins some such capabilities and freedom, but education and health are among the other key pillars. The larger project will not lose sight of the concept of poverty.

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Tools for Forecasting and Analysis of Leverage Forecasting often begins with simple extrapolation,5 extending existing trajectories of change and anticipating where they might take us. Forecasting must fairly quickly move beyond extrapolation and into causal analysis, if it is to be useful in the evaluation of alternative intervention options. Because the immediate or proximate drivers of poverty levels within societies are average levels and distribution of income plus the size of population, causal analysis is easily begun. Extended causal analysis is not simple, however, because it requires moving beyond proximate drivers to deeper ones and asking what kinds of specific human agency and action might change income, its distribution, or population size.

Existing forecasts Just as Ahluwalia et al. (1979) were path-breaking in establishing a cross-country measure of poverty, they were leaders in the forecasting of it. Their work suffered from the absence of information on China. Nonetheless, they computed that the portion of populations in other less developed countries living in extreme poverty had fallen from 50.9 percent in 1960 to 38.0 percent in 1975. Using population forecasts from the UN 1975 population projections, basing future economic growth prospects on rates between 1960 and 1975, and forecasting income distribution in deciles, they suggested that the number of poor would decline somewhat based on historical trends and even more in their dynamic base case, falling from 38.0 percent of the population in their country set to 16.3 percent by 2000. Subsequent numbers from Chen and Ravallion (2004) showed a decline by about one half in the global portion of poor between 1981 and 2001. Although the Chen and Ravallion data included China and doing so considerably influenced the overall rate of decline in developing countries, it is obvious that the forecasts by Ahluwalia et al. were right not only in direction but in general magnitude. The forecasting of poverty then essentially ceased for about two decades. The declaration of the Millennium Development Goals has, however, reinvigorated it. The United Nations Development Programme’s (UNDP’s) Human Development Report 2003, titled Millennium Development Goals: A Compact Among Nations to End Poverty, undertook simple extrapolation to compare extended trajectories of global regions with the path necessary to accomplish the goals by 2015 (2003: 51). Examining the UNDP extrapolations, however, it is unbelievable that the reduction of poverty in East Asia and the Pacific will continue on a straight line to zero in 2015. Progress will become more difficult in pockets within countries throughout the region. On the other hand, given the increased economic growth of recent years in India, the demographic giant of South Asia, it is quite possible that the downward trajectory the UNDP showed in simple extrapolation could accelerate. In short, more sophisticated forecasts must at least move to the key proximate drivers of poverty reduction, namely economic growth and distributional change. That is the next step that the Human Development Report Office took. In support of the Human Development Report 2005, Yuri Dikhanov (2005) produced a study


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Figure 17.2 The Millennium Project’s conceptual framework.

of change in global income distribution with forecasts to 2015. In addition, he began to look at scenarios for intervention into the forecasting model, specifically a propoor growth scenario. Attention to proximate drivers is, however, still not sufficient for policy-oriented analysis on poverty reduction. Deeper analysis requires that we turn to deeper drivers. That is what motivated the authors of the Millennium Project (2005), directed by Jeffrey Sachs, to produce Figure 17.2. To develop and present their “practical plan” for achieving the MDGs, they elaborate the causal understanding of change in levels of poverty, hunger, education, and other variables related to the goals. The diagram shows the clear impact of economic growth on household income and therefore on poverty, also suggesting some of the drivers of economic growth. Those deeper drivers are ones that most economic production functions recognize. The authors of Investing in Development (Millennium Project 2005) relied heavily on their causal model in elaboration of their plan. As experts with respect to development their mental models were, of course, considerably richer than Figure 17.2. In the course of elaborating their plan, they implicitly made forecasts with respect to the implications of investments in human capital, social capital, knowledge capital, and other factors on economic growth and thought more deeply with respect to the causal implications of official development assistance for public budgets and for such investments in human capital and other drivers of growth. What they were unable to do was explicitly to make forecasts based on their understandings of the global development system. As rich as their mental models

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were, they were insufficiently well elaborated and formalized to allow such forecasting. When the authors turned to a discussion of the costs and benefits of their proposals for achieving their goals, they were generally able to consider explicitly the costs of individual actions, but not match them directly with benefits. Nor could they systematically investigate trade-offs, synergies, reinforcing, or perverse effects of their proposed interventions. Yet another step they did not take was explicitly to address the many differences among the mental models of team members and those between the general approach of the team and other development experts. Explicit and formal computer models can make contributions to thinking about strategies for poverty reduction, adding to more qualitative and expert-judgment based analysis. Computer models often benefit from very extensive and up-to-date empirical information. They handle the calculations of secondary and tertiary effects that address trade-offs, synergies, and other effects. They allow investigation of possible futures with and without interventions, both selected individual ones and strategic packages. Such models come, however, with great costs and disadvantages of their own. They are extremely time-consuming to create. They suffer from shortages of and inadequacies in data and theoretical understandings. The richer and more complex they are, the more difficult it becomes to understand the precise paths by which interventions give rise to outcomes (one needs a model of the model) and the more subject they are to non-discovery of errors in specification. In short, no one should ever believe the results of a formal, computerized simulation of development processes or the forecasted results of human intervention – just as no one should ever take for granted the forecasts of those who base them on simple or complex, individualized and implicit mental models. Forecasts should be an aid to thinking and discussion, not a substitute for them.

International Futures (IFs) International Futures is a large-scale integrated global modeling system. The broad purpose of IFs is to serve as a thinking tool for the analysis of near- through longterm country-specific, regional, and global futures across multiple, interacting issue areas. IFs allows variable time horizons for exploring human leverage with respect to pursuit of key goals in the face of great uncertainty. This section can only very briefly introduce IFs; for detail see the IFs website at www.ifs.du.edu, which provides both web-based and downloadable versions of the model. Hughes and Hillebrand (2006) offer an introduction.6 Three sets of values and goals frame global initiatives and the structure of IFs. First, humans as individuals should be able to develop their capabilities as fully as possible, attaining literacy, securing nutrition and health care that allow a reasonable life expectancy, and gaining access to a basic level of economic resources. The broader purposes of these capabilities are to allow individuals substantial freedom of choice in their pursuit of a fulfilling life (Sen 2000). Second, humans in their interactions with one another desire peace and security (Kant 1795) and also basic fairness and justice (Rawls 1971). Third, humans in their interactions with a broader


Socio-political

Income

321

International political

Government expenditures

Networking

Conflict/cooperation Stability/instability Population

Economic Labor Food demand

Demand, supply, prices, investment

Agriculture

Energy

Land use, water

Resource use, carbon production

Technology

Environmental resources and quality

Figure 17.3 The modules of International Futures (IFs).

biological and physical environment should be able to live in a sustainable manner so that life styles and choices do not jeopardize the life conditions of their own futures and those of subsequent generations (United Nations/Brundtland Commission 1987). Collectively, these goals have increasingly come to be recognized as the pillars of “sustainable human development.” Figure 17.3 shows the specific modules of IFs and a small selected set of connections among them. The elements of particular utility to this study are those in the upper left, namely the population, economic, and sociopolitical modules. The IFs modules all represent 182 countries. An extensive database supports model development and use.

Poverty reduction formulations in IFs IFs relies on two formulations for forecasting income poverty rates as a function of income and distribution, one based on cross-sectional analysis and one tied to lognormal analysis. Why two forecasting formulations? The cross-sectional formulation serves two purposes. First, it helps estimate poverty levels for countries for which there are no survey data. Second, there is a basis on which to question the pure form of the log-normal curve as average income improves (even when aggregate

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measures like the Gini coefficient change very little). Pockets of poverty are a wellknown phenomenon and often persist in remote rural areas, disadvantaged ethnic groups, and other subpopulations in spite of the economic advance of the average population. This phenomenon is chronic poverty, rather than the transient poverty that results from job loss or other life status change. Thus there may be a tendency for the left-hand tail of the log-normal distribution to display some inertia with economic transformation, leaving some additional number of people at or below the poverty line. The cross-sectional formulation might be responsive to them. IncomeLT1CSr = 14.514 − 15.196 * LN(GDPPC2000r) + 56.17 * GINIr where IncomeLT1CS is the percentage living on less than $1 (cross-sectional) GDPPCP2000 is GDP per capita in 2000 $ at PPP GINI is the Gini coefficient r is a specific country/region R2 = .64 Log-normal formulations are the standard. It is useful to make an initial distinction between methods of representing distributions and methods for summarizing the character of those distributions parametrically. By far the most widely used method for representing distributions is the Lorenz curve. Any survey data on income or consumption for a society can be shown in Lorenz curve form with essentially complete accuracy. There is a clear relationship between the Lorenz curve and the expression of shares of income held by shares of population. Although it would theoretically be possible simply to project forward the decile, quintile, or even percentile shares of a Lorenz curve to specify future distributions, doing is impractical if not impossible. It would most likely freeze those distributions, which can be highly dynamic. What we want instead is an analytic representation of the population distribution that can change systematically in form over time in response to both changing average income levels and changing income distributions as represented by something as simple as the Gini coefficient. Moreover, we want a representation from which we can conveniently compute specific deciles or quintiles (thereby generally reconstructing the Lorenz curve) and also compute key poverty measures like the head count and poverty gap. Fortunately, there are a number of analytic formulations and estimation techniques that allow that. The most widely used is the lognormal formulation. Although not all national income distributions have log-normal form, something very close to that form is very typical.7 A log-normal distribution that fully represents the distribution of income in a society can be specified with only two parameters: average income and the standard deviation of it. Usefully for forecasting purposes, the Gini coefficient can substitute for the standard deviation.8


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IncomeLT1LNr = F(LogNormalDistribution, CperCapr, GINIr, NSNARATr) where NSNARATr = f(IncomeLT1LNrt=1, CperCaprt=1, GINIrt=1) where IncomeLT1LN is the percentage living on less than $1 (log-normal) CperCap is household consumption per capita in 2000 $ GINI is the Gini coefficient NSNARAT is the ratio of national surgery poverty level to household consumption from national account data, computed in the initial model year (2000) r is a specific country/region Forecasting economic growth To analyze the leverage of policy interventions, it is necessary to explore the deeper drivers of those proximate drivers, ideally with tools that frame the deeper drivers in terms of something relatively close to action of agent classes: government spending and regulation, household behavior, technical and other assistance by nongovernmental organizations, or decisions by firms. That holy grail of the assessment–forecasting–action triangle may be as difficult to find as the religious one. In this study we make do with the structures that have been developed within the IFs model. The economic module of IFs is a general equilibrium-seeking model that uses inventories as buffer stocks and to provide price signals so that the model chases equilibrium over time. Its production function has Cobb–Douglas form. The IFs specification makes possible attention to many deeper drivers because it has an endogenous representation of multifactor productivity as a function of human capital (education and health), social capital (governance quality and policies), physical and natural capital (infrastructure and energy prices), and knowledge development and diffusion (R&D and economic integration with the outside world). The cohort-component demographic model determines size of the labor force, while domestic and foreign savings help determine capital investment. A social accounting matrix (SAM) envelope ties economic production and consumption to intra-actor financial flows, including government taxation and domestic/international transfers. Many of the agent-based policy levers are available in the structure (such as governmental spending and transfers). GDPr = MFP * Kαr * LABrβ where GDP = Gross Domestic Product K = Capital Stock LAB = Labor MFP = Multifactor Productivity where MFP is a function of many variables, (see Figure 17.5).

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Forecasting distribution If the forecasting of economic growth is very difficult, the forecasting of income distribution is even harder. Many users of the IFs model prefer to specify changes in the Gini coefficient over time exogenously rather than to rely on its endogenous computations. Scenarios with respect to distribution-neutral futures versus either more egalitarian or less egalitarian futures should be a mainstay of analysis.

The Worlds of 2050: Framing Uncertainty Two general categories of uncertainty affect forecasts of global poverty. The first involves formulations, as described in the last section (what drives poverty levels); the second involves the future of the drivers. This section builds a frame for a picture of possible futures of poverty. It does so by examining across the formulations the likely range of the proximate drivers of poverty and therefore the likely rough borders of change in poverty levels. The next section moves to painting a picture to fit into that frame, homing in on the nature of possible human interventions. There are three frame-building population forecasts of the IFs model. The middle case is the Base Case of IFs. The Base Case is not a “business as usual” extrapolation, as base or reference cases are sometimes labeled. Instead it is a full scenario in itself, reflecting the unfolding not just of trends but of dynamic relationships in the model. The interventions made to create the high and low population forecasts were simple variations on the endogenous fertility rate forecasts of the Base Case, scaled so as to create something quite close to the well-known UN population forecasts. To put the forecasts in context, the 2006 Revision of the UN’s World Population Prospects provided high, medium, and low forecasts with values in 2050 of 10.7 billion, 9.1 billion, and 7.7 billion, respectively. Values from IFs for 2050 are quite close to those (10.5, 9.2, and 7.9). All three cases show considerable drops in poverty. The variations in rates by 2015 are not great – in all three population forecasts about 10–11 percent of world citizens still live in poverty using the log-normal formulation. Variations across the three population cases are more substantial by 2050. Using the cross-sectional formulation, the rate of poverty also drops in all three population scenarios, but not nearly as much. There are also three frame-building forecasts of economic growth (see Figure 17.4).9 The middle case is the Base Case of IFs, a global growth rate of about 3.3 percent, quite close to World Bank forecasts (see Hughes 2006 for comparison of IFs forecasts with many others and for more general validation discussion). The interventions made to create the high and low economic forecasts were simple variations on the multifactor productivity forecasts of the Base Case, scaled so as to create something close to rates of GDP growth 1 percent faster or slower than those in the Base Case. To provide some additional historic context for the long-term forecasts, Angus Maddison (2001: 126; see also Maddison 1995) estimated that the world economy grew at a rate of 1.6 percent from 1820 to 1950, at 3 percent between 1973 and 1998, and at 4.9 percent during the “Golden Age” for the world economy from


Base%

High GDP growth%

325

Low GDP growth%

6.5 6.0 5.5 Annual growth rate (%)

5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 1967

1975

1983

1991

1999

2007 Year

2015

2023

2031

2039

2047

Figure 17.4 World economic growth across three scenarios. 1950 to 1973. In general, the growth rate of the world economy has quite steadily accelerated since the beginning of the Industrial Revolution. The great surge from 1950 to 1973 and the fall-off thereafter, however, add uncertainty to forecasting in the twenty-first century. The forecasts of this study for the first half of the twenty-first century are scenarios for a period in which population growth rates are expected to continue a fairly substantial decline across all scenarios, in contrast to the history of most of the twentieth century, which included a rapid rise, peaking, and then some important initial decline in population growth rates. Economic growth rates like those of the Golden Age, involving catch-up after World War II and global peak population growth rates, fall outside of our forecast range. Forecasts of income distribution within IFs are not strong enough to carry much weight in the framing analysis of future poverty levels. This is not a criticism of IFs relative to other forecasting efforts, but rather an absolute statement, because there simply are not useful forecasts of domestic income distributions on a global basis. Ahluwalia et al. (1979) attempted to create distributional forecasts by relying upon the inverted-U of the Kuznets Curve. Longitudinal analysis and even more recent cross-sectional work has, however, largely discredited that pattern. More recent studies have not found a strong alternative foundation for forecasting of Gini coefficients or other distributional measures. The Base Case forecast in IFs produces a fairly flat global average of income distributions across the countries of the world, with a very slight increase in early years because population weighting is used for the global computation and popula-

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tion grows more rapidly in countries with less equal distributions. In both framing cases exogenous changes in domestic distributions enter gradually over the entire 50-year period, shifting initial Gini coefficients upward or downward by 15 percent. As with scenarios around population change and economic growth, the intent is to provide reasonable outer boundaries for expectations in the first half of the century. Alternative scenarios of inequality make about a 3 percent difference in global poverty rates by 2050, very considerably less than do alternative GDP growth rate scenarios. The size of the pie is more important to absolute poverty in the longer run than is its distribution. Completing the framing of implications for poverty reduction of the proximate drivers requires attention to the combined impact of the drivers. Two more complex cases were created to allow that attention. The first is a Worst Case scenario of high population, low economic growth, and deteriorating distribution. The second is a Best Case scenario of low population, high economic growth, and improving distribution. The Worst Case with the cross-sectional formulation actually increases the absolute number of humans in poverty by mid-century. In the Best Case scenario both cross-sectional and log-normal formulations suggest that absolute poverty could be nearly eliminated by mid-century. Remember that absolute poverty kills through malnutrition and bad health, so that is a remarkable prospect. At the same time, remember that crawling out of that condition requires only an income of $1 per day, hardly suggesting that the world’s poor would be doing very well in absolute terms. By 2015 the difference in poverty rates between Best and Worst Cases with the log-normal formulation (see Table 17.2) is about 7 percent, approximating the difference between the two formulations in the Base Case in 2015. By 2050 the difference in poverty rates between the two cases is about 16 percent and the difference in the formulations is much less. Use of wide ranges of proximate drivers to explore the rough outer limits of poverty futures should help shape our expectations for the more detailed and

Table 17.2 Poverty head counts and rates across combined framing scenarios Non-OECD

Poverty numbers (millions) Log-normal Cross-sectional Poverty rates (percent) Log-normal Cross-sectional Source: IFs Version 5.29.

Worst case

Base case

Best case

2015

2050

2015

2050

2015

2050

824 1,135

1,500 1,711

630 1,004

298 588

362 786

11 127

13.6 18.7

16.1 18.3

10.5 16.8

3.8 7.4

6.2 13.5

0.2 1.9


327

focused exploration of human leverage in the next section. Among the most important findings of the framing analysis are the following. Forecasting formulation is, indeed, very important. Uncertainties related to formulation are especially critical in the period up to 2015 when the first MDG calls for a 50 percent reduction in the global poverty rate. Over that period the uncertainties are comparable to what appears to be the outer range of human leverage. In spite of great uncertainty, there appears to be a considerably higher probability that both numbers in poverty and rates of poverty will fall than that they will rise. The exception to the generalization is sub-Saharan Africa, where it appears most likely that numbers will rise and rates will fall (results shown in the next section). It appears that the reductions in poverty that are likely as a result of the population growth, economic growth, and income distribution patterns in the base forecast will reduce poverty globally to something near the poverty target by 2015 and by somewhat less than another factor of two by 2050. Poverty will become progressively harder to reduce. It is critical to remember that much of the anticipated reduction in the Base Case is a direct result of a wide range of policy initiatives already underway to improve the economies of countries around the world and to target the poorest of the world with education, family planning, health initiatives, micro-credit, and much more. The maintenance of such programs is an essential foundation for additional and accelerated progress. Given that each of the proximate drivers identified is subject to considerable human influence via collective and conscious action, humanity does have much incremental discretionary control over poverty levels and rates. Yet because conscious human action is unlikely to cause swings in the combined proximate drivers nearly as large as the ranges selected for them in this framing discussion, it is likely that human influence on poverty rates will be considerably less. Depending on the forecasting formulation and the year, reductions of the poverty rate relative to the Base Case could mean by 2050 the lifting of 280–450 million more people out of extreme poverty, the “poverty that kills.”

The Worlds of 2050: Strategic Interventions The last section framed, using proximate drivers, the probable maximum incremental leverage we have in reducing poverty. The purpose of this section is to explore the choices that might most effectively exercise some or most of that discretionary leverage.

Mapping the levers It is useful to divide deeper drivers and levers for action into domestic and international sub-categories. Figure 17.5 illustrates the manner in which the identification of potential drivers was undertaken and tied simultaneously to the structures of IFs for the investigation of those drivers. With respect to the internal drivers of eco-

328


Health (spending; life expectancy)

Education (spending; years of)

+ Freedom (political; economic)

+

Human capital

+ + Governance quality (effectiveness; transparency/corruption)

Electricity, road, telecom, Net

+

Social capital

+

Infrastructure capital

+ Multifactor productivity (MFP)

+ +

Natural capital

+

+

Energy; bio-resources Knowledge base

+ Knowledge growth (from R&D)

+ Knowledge diffusion (from Convergence)

Figure 17.5 The deeper drivers of economic productivity in IFs.

nomic growth, the analysis builds on three immediate drivers of it, namely supplies of labor, production capital, and multifactor productivity (see the earlier Cobb– Douglas formulation). The figure elaborates the key multifactor productivity (MFP) term, initially by dividing it into five types of capital (excluding the traditional financial capital category, which is combined with MFP in the Cobb–Douglas production function): human capital, social capital, infrastructure capital, natural capital, and what might be called the stock of knowledge or knowledge capital. They in turn have drivers of them, the deeper drivers of interest to us in this analysis. More general analysis, also looking at the external environment, produced the listings of deeper drivers in Tables 17.3 and 17.4. Those by no means exhaust the possible points of intervention in order to accelerate reductions in poverty rates. They do, however, touch on most of those that development experts have identified. As Archimedes pointed out long ago, however, not all levers are the same length and some might have the potential to move the world.


329

Silver bullets? In the fight against poverty, there is a search for silver bullets (as world-moving levers are often labeled in policy analysis). Identification of prospective silver bullets changes over time and across philosophical viewpoints. In recent years the two most prominent candidates, in addition to the classic of trade and financial flow liberalization, tend to be: (1) improved governance (by which is generally meant some combination of reduction of corruption, protection of property rights, and liberalization of markets); and (2) increased and more effective foreign aid (given considerable attention in the Millennium Project’s recommendations for meeting the MDGs). Table 17.3 shows the individual impact forecast by IFs of many of the domestic leverage points, including contributions for silver bullet status. The log-normal formulation was used for the table and the Base Case is shown for comparison. The results of the cross-sectional formulation are not shown, but earlier discussion showed that it would provide higher forecasts. In interpreting Table 17.3, it is essential to remember once again the first rule of forecasting based on models: always distrust the results. Models are oversimplifications of reality, sometimes brutally so. International Futures (IFs) is intended to collect and synthesize a considerable portion of the collective knowledge of a wide range of experts and to tie that knowledge to data and theory. Within these limits the analysis of individual and combined domestic interventions supports several conclusions. First, incremental leverage available for poverty reduction by 2015 (relative to the Base Case, which builds in much action already underway) is quite limited. There is, at least in combination of interventions, however, some quite significant leverage for policies by 2050. On a global basis perhaps 200 million fewer people would live in absolute poverty with a combined package of incremental domestic interventions than without such interventions. What this pattern suggests, however, is that as important as the focus of the MDGs on 2015 may be, policy analysis must take a longer time horizon. Second, there appears to be no silver bullet to reduce poverty among the set of interventions examined. Almost all of the interventions make some contributions to that goal, but the reductions associated with each of them individually are fairly modest. Third, direct transfers to the poor are among the most effective single measures, and perhaps the only one that makes a really significant contribution by 2015. By 2050, however, other interventions are as important or more so. Upon reflection, this temporal pattern makes perfect sense – in the shorter run it is difficult to change the size of the pie; in the longer run doing so has a larger effect than does its division. This finding suggests the importance of exploring further the time paths of the effects of interventions. For instance, according to the log-normal formulation, higher saving and investment actually has a detrimental impact, squeezing the consumption of the poor. In analyses of quicker and lesser rises in investment rates, that negative impact turns significantly positive over time. Because the intervention

627 633 661 630 632 622 631 630 632 633 632 630 614 610

Fertility reduction High fem. labor High investment High education High health exp High govt effect Low corruption High econ free High infrastructure High renewable High R&D Low protection High transfers

All domestic

248

252 258 273 257 258 256 258 257 258 258 258 258 243

258

2015

2015 633

SS Africa

Developing

Base case

Scenarios

Table 17.3 Internal levers explored: log-normal formulation

231

235 235 245 234 235 230 234 233 235 235 234 231 235

235

S Asia

94

221 298 304 280 289 274 273 283 285 295 299 300 255

298

2050

Developing

Absolute poverty (Millions)

74

169 246 258 230 240 230 227 236 236 244 248 252 207

246

2050

SS Africa

9

25 24 20 23 23 21 22 22 24 24 24 21 25

25

2050

S Asia

Source: IFs Version 5.29.

All domestic

9.9

10.2 10.3 10.7 10.2 10.2 10.1 10.2 10.2 10.3 10.3 10.2 10.2 9.9

Fertility reduction High fem. labor High investment High education High health exp High govt effect Low corruption High econ free High infrastructure High renewable High R&D Low protection High transfers 27.2

27.7 27.9 29.5 27.8 27.9 27.7 27.9 27.8 27.9 27.9 27.9 27.9 26.3

27.9

2015

2015 10.3

SS Africa

Developing

Base case

Scenarios

13.7

13.9 13.9 14.5 13.9 13.9 13.6 13.9 13.8 13.9 13.9 13.9 13.7 13.9

13.9

S Asia

1.2

2.8 3.7 3.7 3.5 3.5 3.4 3.4 3.5 3.5 3.6 3.7 3.7 3.1

3.7

2050

Developing

Absolute poverty (Percent)

5.3

12.0 14.0 15.0 13.2 13.6 13.2 13.0 13.5 13.5 13.9 14.2 14.4 11.8

14.0

2050

SS Africa

0.4

1.1 1.1 0.9 1.0 1.0 0.9 1.0 1.0 1.0 1.1 1.1 0.9 1.1

1.1

2050

S Asia

332


of Table 17.5 (see below) continues to ramp up investment over a long period, however, such a cross-over pattern does not emerge. These time-dependent patterns reinforce the argument for a twin-track approach to pursuit of the MDG targets, as proposed by the UN Food and Agricultural Organization (FAO) and the World Food Program at the 2002 Monterrey conference on development financing (UN FAO 2005: 28). The first track focuses on growth in the productivity and longer-term income of the poor; the second track creates social safety nets and provides direct food and other basic assistance to the poor. Some external assistance might be useful or necessary in the interim, in order to help pay some of the costs of long-term investments of various kinds. Fourth, in spite of limited geographic differentiation in Table 17.3, there is some evidence of differential contributions of interventions to different regions. For instance, by 2050, using the log-normal formulation, the high R&D intervention reduces poverty for South Asia, but increases it in sub-Saharan Africa (labeled “SS Africa” in the table). Africa may not have the resources to use such a targeted strategy without greater damage elsewhere. Development experts have long known that one size does not fit all with respect to development policies. As with domestically focused interventions, internationally oriented ones may have important synergies and trade-offs. For instance, there is a logic around the globalization process that says that many interventions are likely to cluster together. Table 17.4 presents the forecasts for each individual international intervention and their combination, using the log-normal formulation. Conclusions are very similar to those drawn from analysis of domestic interventions. First, leverage available for poverty reduction by 2015 is very limited. With the partial exception of higher foreign aid, which provides immediate resources for recipient societies, none of the interventions significantly reduce poverty by 2015. The model may even exaggerate the impact of foreign aid somewhat, because it is not clear how much of such aid would flow to the poorest. The model adds aid to GDP and to income and therefore raises average income and reduces poverty. That model’s pass-through to poor as well as rich is by no means certain in the real world. Second, there is again quite significant leverage for policies by 2050. The combined impact could be a reduction in global poverty of about 140 million people. Third, there still appear to be no silver bullets. In contrast with the domestic interventions, however, there is one clear leader in overall magnitude of impact both by 2015 and in 2050. That is significantly increased foreign aid. And there is a second intervention with very substantial and generally comparable impact by 2050, namely the greater availability of technology. In reality, both fail to be convincing silver bullets – foreign aid because the model does not represent well some of the negative or distorting impacts of it sociopolitically (although the model does capture Dutch disease implications); technology because the model does not parcel out its presumed greater availability to the true deeper drivers, such as greater FDI inflows and even the skills that might return with the same temporary immigrants who send home remittances.


Combined intl

9.8

10.2 10.2 10.3 10.3 10.2 10.1 10.3 10.1

High trade Export promotion High FDI High portfolio High remittances High foreign aid High IFI flows High tech transfer 26.8

28.0 27.9 27.7 27.9 27.8 26.7 27.9 27.6

27.9

2015

2015 10.3

SS Africa

259 258 257 258 257 248 258 255 248

Developing

Base case

Scenarios

629 628 635 633 629 621 633 623 605

High trade Export promotion High FDI High portfolio High remittances High foreign aid High IFI flows High tech transfer Combined intl

258

2015

2015 633

SS Africa

Developing

Base case

Scenarios

Table 17.4 External levers explored: log-normal formulation

282 296 282 298 287 234 287 266 160

298

2050

Developing

13.1

13.7 13.6 14.0 13.9 13.8 13.9 13.9 13.6

13.9

S Asia

2.0

3.5 3.6 3.5 3.7 3.6 2.9 3.5 3.3

3.7

2050

Developing

Absolute poverty (Percent)

232 230 237 235 232 235 235 230 222

235

S Asia

Absolute poverty (Millions)

7.6

13.5 14.1 13.2 14.0 13.6 10.7 13.4 12.8

14.0

2050

SS Africa

236 246 231 246 237 186 235 223 130

246

2050

SS Africa

0.5

0.9 1.0 1.1 1.1 1.0 1.0 1.1 0.9

1.1

2050

S Asia

21 22 24 25 23 22 24 20 12

25

2050

S Asia

334


Intervention packages With a rough map of the impact of individual interventions and of domestic and international packages of them, the next obvious step is to search for more strategic packages that maximize the potential for reducing poverty. The easiest first step is simply to combine the population, domestic, and international interventions explored in the last section. Table 17.5 does that. One quite remarkable thing about combining the interventions is that there appear again to be as many or more additive effects (perhaps even some synergies) as trade-offs, particularly in the impact on poverty forecasts for 2015. That is, the reduction in the number of poor brought about by the simultaneous introduction of all interventions into the simulation is closer to the sum of the reductions from individual packages than to even the largest reductions of the individual packages (the latter would imply overlapping effects or trade-offs across interventions). This finding provides some independent support for the approach advocated by the Millennium Project under the leadership of Jeffrey Sachs. The plan proposed by that large team was not labeled “Big Push” by the writers of the report, but it is in fact an exemplar of that development strategy and is an aggregation similar in many ways to the Combined Intervention (CI) Scenario. Why might there be synergies and what are they? The most obvious and important one is that many of the interventions support economic growth. With economic growth relative to the Base Case, almost all interventions are taking place on a higher base. For instance, educational and health expenditures rise with GDP, so an incremental percentage rise in a society already growing faster as a result of FDI or foreign aid will work from a higher base and have even greater effect. How well does the CI Scenario do in reducing poverty? The last section framed this analysis of poverty by exploring what appear to be the outer limits of human potential to accelerate poverty reduction. It did so by creating a “Best Case” scenario (as well as a Worst Case) by direct manipulation of the proximate drivers of poverty. Figure 17.6 shows the total number living in absolute poverty in the Base Case, the Best Case, and the CI Scenario. The CI Scenario reduces poverty considerably relative to the Base Case, pulling 300 million people out of absolute poverty by 2035 (250 million by 2050 as the numbers in the Base Case continue to decline). Not surprisingly, the CI Scenario does not do as well as the Best Case, which was framed using costless assumptions about changed economic and population growth and redistributed economic wellbeing. In contrast, the CI Scenario was built upward from large numbers of individual interventions, many of which do have real costs. As we have seen, for example, increases in savings and investment can actually reduce consumption and increase poverty in the short run. Thus it is quite impressive how well the CI Scenario does over the longer term. The intelligent packaging of scenarios does offer the opportunity to tackle poverty forcefully enough to push results toward outer boundaries for reasonable expectations. Something like the CI Scenario is unlikely, however, for two related reasons. First, the full set of interventions would be very expensive. Although the costs to


Base case Domestic and intl

Scenarios

Base case Domestic and intl

Scenarios

2015

2015 27.9 25.1

SS Africa

Developing

10.3 9.3

235 218

2015

S Asia

298 50

2050

Developing

246 38

2050

SS Africa

13.9 12.9

2015

S Asia

3.7 0.6

2050

Developing

14.0 2.8

2050

SS Africa

Absolute poverty (percent) using log-normal formulation

258 29

2015

2015 633 573

SS Africa

Developing

Absolute poverty (millions) using log-normal formulation

Table 17.5 Combined levers explored: log-normal formulation

1.1 0.2

2050

S Asia

25 5

2050

S Asia

336

Barry B. Hughes & Mohammod T. Irfan Log-normal formulation Base case

Best case

Combined scenario

1100

Number of people (million)

1000 900 800 700 600 500 400 300 200 100 0 2004

2009

2014

2019

2024 Year

2029

2034

2039

2044

2049

Figure 17.6 Numbers living in absolute poverty. achieve the scenario would almost certainly be less expensive than the costs of continued poverty and lives lost, costs and benefits are seldom distributed across populations in the same fashion on any policy. No matter how much economists talk about Pareto-superiority after compensatory transfers, those asked to pay on the front end for benefits that quite obviously accrue primarily to others reasonably raise doubts about ever receiving such compensation. Second, development as a field has always been subject to arguments about the relative merits of various philosophical tendencies, and different strategic orientations have had prominence over time and retained considerable support. Are there specific proposals that, perhaps by different combinations of the interventions and strategic orientations examined in this chapter, could do better than any of them individually and perhaps prove superior to the simple CI Scenario detailed earlier? Almost certainly. Experiments have been started, for example, to link the Computer Assisted Reasoning System (CARS) of RAND and Evolving Logic (Popper et al. 2005) with IFs and to explore the space of interventions much more deeply and systematically. How does the CI Scenario stack up against combinations of proposals already on the table? For example, the Practical Plan of the Millennium Project (2005) identified many of the same interventions that this analysis has explored.10 There are inherent differences between the structures of such plans and the structure of the analysis undertaken here that make true comparison difficult. With respect to extensive development proposals, many such plans are not fully concrete with respect to the magnitude and timing of interventions proposed. And a model like IFs necessarily works at a more macro level than proposals that typically come out of extended development analysis. These differences make the two approaches


337

to exploring for packages to reduce poverty complementary rather than strictly comparable.

Next Steps There is a great deal that needs to be done to complete this analysis of strategies to reduce global poverty. Among the most important continuing efforts in the larger project are: •

•

•

Examining the impact of interventions on alternative poverty measures, such as poverty gap formulations. Alternative poverty lines, such as $5 per day, are likely before long to supplement the current the $2 per day measure for “moderate poverty” and the $1 measure for “absolute poverty.” Most important, in the spirit of Amartya Sen, capabilities measures such as education and health, and the human development index (HDI) must be added to the analysis. Most of these alternative measures are available within IFs and will be explored. Drilling down geographically and socially. Poverty in East and West Africa are quite different, as are, of course, poverty in India and Pakistan. Further, the interior of China and the coastline vary dramatically, as do rural and urban areas almost everywhere in the world. The larger project intends a country-level analysis with respect to both interventions and results, but will be harder pressed to look inside countries and between rural and urban areas because of the limitations in current analysis tools. Synthesizing development strategies. The project has begun to combine the individual interventions explored in this paper into clusters, including (1) domestic self-help, (2) outward, open orientation, and (3) foreign assistance (including access to technology as well as foreign aid). Preliminary analysis suggests that each strategic cluster has positive, but quite different implications for poverty reduction.

The continuing hope underlying this analysis is that some of the insights can augment efforts like that of the Millennium Project to address the scourge of global poverty.

Notes 1

Support for the project on Prospects for Human Development has been provided by Frederick S. Pardee. This analysis heavily uses the International Futures (IFs) modeling system. Additional funding for IFs comes from the US National Intelligence Council and the United Nations Environment Programme. Thanks also to TERRA project of the European Commission, the Strategic Assessments Group of the US Central Intelligence Agency, the National Science Foundation, the Cleveland Foundation, the Exxon Education Foundation, the Kettering Family Foundation, the Pacific Cultural Foundation, the United States Institute of Peace, and General Motors for funding that contributed to earlier generations of IFs. None of these institutions bears any responsibility for the analysis presented here. IFs also owes much to the large number of students, instructors, and analysts who have used the system over many years and provided much appreciated advice for enhancement. The

338

2

3 4 5

6

7

8

9 10

Barry B. Hughes & Mohammod T. Irfan project further owes great appreciation to Anwar Hossain, Mohammod Irfan, Jonathan Moyer, and José Solórzano for data, modeling, help system and programming support within the most recent model generation. Haider Khan and Krishna Kumar will be co-authors on the first volume of the series on Prospects for Human Development. To assist with assessment of the human condition and progress toward the targets of the MDGs, the UN, International Monetary Fund (IMF), World Bank, and Organization for Economic Cooperation and Development (OECD) have identified quantitative indicators and developed a database. Bhalla (2002) questions whether a price differential of only 8 percent between 1985 and 1993 is reasonable. Ravallion (2003) has strongly defended it. Foster et al. (1984) created a general index that captures both incidence and intensity of poverty. Especially in economics, forecasting is often reserved to mean obtaining results from multiple regression formulations. In broader forecasting literatures, its methods range from extrapolation, through regression formulations and on to complex dynamic simulations, and further to include a variety of qualitative techniques. Forecasting is used in the broader sense in this study. The most important source of documentation for the model is its extensive Help system, available with both web-based and downloadable versions. In addition, a substantial set of project reports and working papers sit on the website at http://www.du.edu/~bhughes/ifswelcome.html. Bourguignon (2003: 7) noted that a log-normal distribution is “a standard approximation of empirical distributions in the applied literature.” He further decomposed the growth and distributional change effects in poverty reduction and explored the interaction between them. The log-normal is not the only parameterization possible of the income distribution and there are advantages and disadvantages of it and others. Other forms include polynomial functions (used by Dikhanov 2005), a generalized quadratic model (Villasenor and Arnold 1989), and the Beta model (Kakwani 1980). Datt (1991) has derived formulations for computing the common aggregate poverty measures from multiple parameterizations of the Lorenz curve. In representing income distribution it is also possible to use non-parametric techniques, such as the Gaussian kernel density function (Sala-i-Martin 2002). Figure 17.5 shows GDP at market exchange rates in order to provide a long historic series. IFs also calculates GDP at purchasing power parity (PPP) and uses that for its poverty forecasting. There is at least one key intervention that the Millennium Project did not highlight, but that proved important here, especially for absolute numbers of the poor. Family planning and associated population growth reduction can be very important in reducing poverty levels in sub-Saharan Africa by 2050. The Practical Plan did heavily emphasize rebuilding and strengthening networks of public health clinics, in part for the maternal care that does tend to reduce fertility rates. Yet the plan never really emphasized family planning’s importance in its own right.

References Ahluwalia, Montek S., Carter, Nicholas, & Chenery, Hollis (1979) “Growth and Poverty in Developing Countries,” Journal of Development Economics 6(3): 299–341. Available at: http://planningcommission.nic.in/aboutus/history/spemsabody.htm [Accessed December 19, 2005] Bhalla, Surjit S. (2002) Imagine There’s No Country: Poverty, Inequality and Growth in the Era of Globalization. Washington, DC: Institute for International Economics. Bourguignon, François (2003) “The Poverty–Growth–Inequality Triangle.” Paper prepared for a Conference on Poverty, Inequality, and Growth, Agence Française de Développement/EU Development Network, Paris, November 13, 2003. Available at: http://www.afd.fr/jahia/webdav/site/myjahiasite/users/ administrateur/public/eudn2003/Bourguignon-paper.pdf [Accessed December 7, 2005]


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Chen, Shaohua & Ravallion, Martin (2004) How Have the World’s Poorest Fared Since the Early 1980s? World Bank: Development Research Group. Available at: http://www.worldbank.org/research/povmonitor/MartinPapers/How_have_the_ poorest_fared_since_the_early_1980s.pdf [Accessed December 6, 2005] Datt, Gaurav (1991) Computational Tools for Poverty Measurement and Analysis Using Grouped Data. World Bank: Welfare and Human Resources Division. Deaton, Angus (2000) Counting the World’s Poor: Problems and Possible Solutions. Available at: http://www.wws.princeton.edu/rpds/downloads/deaton_worlds_ poor.pdf [Accessed December 6, 2005] Deaton, Angus (2004) “Measuring Poverty in a Growing World.” Draft manuscript, Princeton University. Available at: http://www.wws.princeton.edu/rpds/downloads/deaton_measuringpoverty_204.pdf [Accessed December 6, 2005] Dikhanov, Yuri (2005) Trends in Global Income Distribution, 1970–2000, and Scenarios For 2015. UN Human Development Report Office, Occasional Paper 2005/8. Available at: http://hdr.undp.org/docs/publications/background_ papers/2005/HDR2005_Dikhanov_Yuri_8.pdf [Accessed December 6, 2005] Foster, J. E., Greer, J., & Thorbecke, E. (1984) “A Class of Decomposible Poverty Indices,” Econometrica 52(3): 761–6. Hughes, Barry B. (2006) “Assessing the Credibility of Forecasts Using International Futures (IFs): Verification and Validation.” Graduate School of International Studies, University of Denver. Hughes, Barry B. & Hillebrand, Evan E. (2006) Exploring and Shaping International Futures. Boulder, CO: Paradigm Publishers. Kakwani, Nanak (1980) Income Inequality and Poverty: Methods of Estimation and Policy Applications. Oxford: Oxford University Press. Kant, Immanuel (1795) Perpetual Peace: A Philosophical Sketch. Subsequently republished in several forms and volumes. Kravis, I. B., Heston, A., & Summers, R. (1978a) “Real GDP per Capita for More than One Hundred Countries,” Economic Journal 88 (June): 215–42. Kravis, I. B., Heston, A., & Summers, R. (1978b) International Comparisons of Real Product and Purchasing Power, Phase II of the UN International Comparison Project. Baltimore, MD: Johns Hopkins University Press. Maddison, Angus (1995) Monitoring the World Economy: 1820–1992. Paris: OECD. Maddison, Angus (2001) The World Economy: A Millennial Perspective. Paris: OECD Development Centre. Millennium Project (2005) Investing in Development: A Practical Plan to Achieve the Millennium Development Goals. Project Director: Jeffrey D. Sachs. London: Earthscan. Popper, Steven W., Lempert, Robert J., & Bankes, Steven C. (2005) “Shaping the Future,” Scientific American 292(4): 66–71. Ravallion, Martin (2003) “The Debate on Globalization, Poverty, and Inequality: Why Measurement Matters,” International Affairs 79(4): 739–53. Ravallion, Martin, Datt, Gaura, & van de Walle, Dominique (1991) “Qualifying Absolute Poverty in the Developing World,” Review of Income and Wealth 37(4): 345–61.

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Rawls, John (1971) A Theory of Justice. Cambridge, MA: Harvard University Press. Reddy, Sanjay G. & Pogge, Thomas W. (2002) “How Not to Count the Poor – A Reply to Ravallion.” Unpublished manuscript at: http://www.columbia. edu/~sr793/poggereddyreply.pdf Sala-i-Martin, Xavier (2002) The World Distribution of Income (estimated from Individual Country Distributions. NBER Working Paper No. w8933. Available at: http://www.columbia.edu/~xs23/papers/WorldDistribution.htm [Accessed December 6, 2005] Sen, Amartya (2000) Development as Freedom. New York: Anchor Books. United Nations (1987) The World Commission on Environment and Development (Brundtland Commission). In Our Common Future. Oxford: Oxford University Press. United Nations (2003) Human Development Report 2003. New York: United Nations. UN FAO (United Nations Food and Agriculture Organization) (2005) The State of Food Insecurity in the World 2005: Eradicating World Hunger – Key to Achieving the Millennium Development Goals. Rome: FAO. http://www.fao.org/icatalog/ inter-e.htm [Accessed December 28, 2005] Villasenor, J. & Arnold, B. C. (1989) “Elliptical Lorenz Curves,” Journal of Econometrics 40: 327–38. World Bank (2006) Global Economic Prospects 2006. Washington, DC: World Bank.

Chapter 18 North–South Contradictions and Bridges at the World Social Forum Christopher Chase-Dunn, Ellen Reese, Mark Herkenrath, Rebecca Giem, Erika Gutierrez, Linda Kim, and Christine Petit

The World Social Forum (WSF) is both an open meeting space and a movement of movements that are explicitly acting to oppose neoliberal global capitalism and to address issues of global social justice and environmental sustainability. It is also an organization governed by a charter of principles and two leadership bodies: an International Council and a local Organizing Committee. Because it is widely recognized that countries in the global South are especially at risk of exploitation and domination, the world-level meetings of the World Social Forum have all been held in the global South (Porto Alegre, Brazil; Mumbai, India; and Nairobi, Kenya).1 Overcoming global inequalities and injustices is a major goal of those who are participating in the Social Forum process. This paper focuses on North–South differences and complementarities among the people and the movements that are participating in the World Social Forum, using the results from our survey of participants at the meeting in Porto Alegre, Brazil in January of 2005 (abbreviated hereafter to WSF05). Civil society is a residual category of social organizations that are not encompassed by either the state or the market (for a history of the concept, see Calhoun 2001; Islamoglu 2001). It includes the family, informal networks, social clubs and voluntary associations, non-state religious organizations, and social movement organizations. We use the term transnational civil society to mean those in civil society who are consciously communicating, cooperating, and organizing across national boundaries (Amoore & Langley 2004). In this chapter we are studying a particular portion of transnational civil society – that segment that actively participates in, or is allied to, the global justice movement and other progressive social movements. The terminology of “North–South relations” has come to refer to the relations that wealthy and powerful countries have with poor and less developed ones


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(Reuveny & Thompson 2007). It is fair to say that most social science approaches to global social change are core-centric, focusing mainly or only on the “great powers” or the “advanced countries.” Our theoretical approach is the comparative world-systems perspective that analyzes global inequalities as a world-historically constructed hierarchy – an intersocietal stratification system (Chase-Dunn 1998). This global intersocietal hierarchy evolved out of the rise of European societies to power over the rest of the world and it continues to exist despite the decolonization of the Americas, Asia, and Africa.2 This hierarchy is socially constituted and institutionally reproduced but it is also repeatedly challenged by the organized and unorganized resistance of the dominated and exploited peoples. The structure of global governance has evolved in response to these challenges. The terms we prefer are “core,” “periphery,” and “semi-periphery,” defined as structural positions in a global hierarchy that is economic, political–military, and cultural. The core–periphery hierarchy at the global level is organized spatially, but it is not a simple matter of latitude as implied by the North–South terminology. It is a complex and multidimensional hierarchy of different kinds of interrelated power and dependence relations. The world-systems perspective also asserts that capitalism as a system is dependent on successful exploitation and domination of the periphery and the semi-periphery by competing core states and firms (Bornschier & Chase-Dunn 1985; Chase-Dunn 1998).3 The world-systems perspective holds that this global hierarchy is a centrally important structure for understanding and explaining world history and the trajectories of individual countries and regions. The global hierarchy is reproduced over time in the sense that it is hard to move up or down, although there is some vertical mobility. The semi-periphery, composed of large states and national societies with intermediate levels of development, is an important zone because innovations that transform technologies and forms of organization tend to get implemented (and sometimes invented) in the semi-periphery. It is a fertile location that produces structural and evolutionary change. This is the hypothesis of “semiperipheral development” (Chase-Dunn & Hall 1997: ch. 5). Both the hypothesis of semi-peripheral development and the notion of the “necessity of imperialism” are the main justifications for the assertion that core–periphery relations are a key factor in the explanation of world historical social change. The struggle of the elites to move up the hierarchy and to stay on top requires hegemonic strategies that incorporate some of the non-elites into developmental projects, but the resistance of those below to domination and exploitation challenges hegemonic projects with new counter-hegemonic strategies of protection and democratization. This systemic core–periphery struggle is a major engine of world historical social change. Efforts by local and national groups to come together in transnational and international coalitions and organizations are not new. There has been a series of world revolutions in which transnational and international political alliances and organizations have played important roles for centuries (Arrighi et al. 1989; Boswell & Chase-Dunn 2000). The contemporary efforts by activists to overcome North–South cultural differences and to deal with potential and actual contradictory interests

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between workers, women, environmentalists, consumers, indigenous peoples etc. of the North and the South need to be informed by both the failures and the successes of these earlier struggles. In the analyses that follow we use both the North–South distinction and the core–semi-periphery–periphery distinction in order to compare the two. The North– South breakdown we use is based on the World Bank’s classification of countries into high-income, upper-middle-income, lower-middle-income, and low-income countries, with the group of high-income countries designated as the global North. For the core–semi-periphery–periphery breakdown we use Jeffrey Kentor’s (2000, 2002) measure, which includes indicators of military power and international economic dependency along with indicators of national income (see Appendix A). The “North” category is quite similar to the “core” as we have trichotomized Kentor’s measure, except for eight countries that the World Bank includes in its “high income” group (Greece, Hong Kong, Israel, New Zealand, Portugal, Taiwan, South Korea, and Israel). We designate these as semi-peripheral. We find that participants from countries in the periphery are underrepresented at WSF05, which is not surprising given the poverty within that region and the location of the host country. Moreover, our results show that a greater share of respondents from the periphery are affiliated with externally sponsored nongovernmental organizations (NGOs), which tend to have greater financial resources to cover their members’ travel than self-funded social movement organizations (SMOs) and unions. We also find that, despite significant differences in the characteristics of participants from the periphery, semi-periphery, and core, there are not significant differences in terms of their opinions on a number of political issues. However, we did find that, controlling for the effects of other factors, participants from the semi-periphery (mostly Brazilians) are significantly less likely, compared to other participants, to favor strategies that involve the creation of democratic global governance institutions, but are more likely to favor the transformation of the WSF into a global political actor.

How Inclusive is the World Social Forum? The World Social Forum, despite official statements that decry the effort to represent humanity as a whole,4 tries to be broadly inclusive. Here and in other papers5 we present results that shed light on the extent to which this endeavor has been successful. Our survey is not based on a random sample of the WSF05 participants, though we tried to make it as representative as possible given the limitations of collecting responses during the meetings. Toward that aim, we conducted our survey in three languages (English, Spanish, and Portuguese) and surveyed participants at multiple types of events and venues at the WSF meeting. To our knowledge, there have only been a few surveys of WSF participants besides our own: Fundacao Perseu Abramo’s (FPA) survey of participants at the 2001 meeting (Schönleitner 2003) and IBASE’s (Brazilian Institute of Social and Economic Analyses) survey of participants at the 2003, 2004, and 2005 meetings. In another paper (Reese et al. 2006), we compare

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Number of Respondents 1–3 4–11 12–19 20–93

Figure 18.1 Residences of participants in the 2005 World Social Forum in Porto Alegre. some of our findings described below to FPA’s findings about 2001 WSF participants and IBASE’s findings about 2005 WSF participants, in order to get a better sense of how representative our sample was to the total WSF participant population.6 In a nutshell, our findings about the demographic and social characteristics of WSF participants are mostly quite similar to those reported by FPA and IBASE, even though our sample was more international compared to IBASE’s sample. About 54 percent of our respondents were Brazilian, compared to 80 percent of IBASE’s respondents. We also found a higher share (43 percent) of our respondents attended the Forum on behalf of an NGO (FPA: 25 percent; IBASE: 34 percent) and that more of our respondents (49 percent) were attending on behalf of an SMO (FPA: 13 percent; IBASE: 29 percent). From whence did the participants in the 2005 WSF in Porto Alegre come? Based on the 520 survey responses for which we were able to ascertain the respondent’s home city, Figure 18.1 shows a global map of where they came from. There were 163 cities plotted on this GIS map. Obviously the “tyranny of distance,” despite the long-term declining costs of long-distance transportation, continues to be a major factor in shaping the geographical nature of participation in the WSF. This can even be seen within South America. Fifty-six percent of the participants came from Brazil.7 None of our respondents were from the People’s Republic of China, except for the five from Hong Kong, and none were from Russia.8 Table 18.1 shows the home region of the respondents of our survey. Asia and Africa are the most seriously underrepresented world regions. Of course it is not just the tyranny of distance that skews the participation in an event such as the World Social Forum. People from different regions also have very different


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Table 18.1 Region of residence of WSF05 respondents Number of WSF participants

Percentage of WSF participants

Percentage of world population in 2004

South America Western Europe North America (w/out Mexico) Asia Africa Central American and Caribbean Oceania (Australia & NZL)

439 67 53 48 9 7 2

69 10.5 8 7.5 1.4 1.1 0.3

6 12 5 61 12 3 1

Total

625

6,269,900,000

Table 18.2 Residence of respondents by world-system zone Number of WSF participants

Percentage of WSF participants

Percentage of world population in 2005

Core Semi-periphery Periphery

125 451 49

20.0% 72.2% 7.8%

13.3% 54.6% 32.1%

Total

625

6,451,392,455

financial and organizational resources and different degrees of connectivity to transnational civil society. Table 18.2 shows the number and percentages of WSF05 respondents from the core, periphery, and semi-periphery and compares these with percentages of the world’s population in the countries in these categories.9 The core is slightly overrepresented; the periphery, which contains 32 percent of the world’s population, is seriously underrepresented. That is one reason why the 2007 World Social Forum will be held in Nairobi, Kenya.

North–South Differences in Demographic and Social Characteristics In the analysis of demographic, social, and political differences that follows we present the results broken down both by world-system zone categories and by the North–South categorization shown in Appendix A. As mentioned above, 56 (55.5 percent) of our respondents were from Brazil. In this paper, we are particularly interested in comparing the views of politically active participants of the WSF05, those who are consciously participating in transnational civil society. We worried

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Table 18.3 Gender distribution among WSF respondents in Porto Alegre, 2005

Male Female

Male Female

Total WSF

WSF North

WSF South

World population

52% (309) 48% (282)

55% (74) 45% (60)

51% (235) 49% (222)

49% 51%

WSF Core

WSF Semi-periphery

WSF Periphery

56% (65) 44% (52)

50% (215) 50% (215)

66% (29) 34% (15)

(Numbers of respondents are in parentheses) Chi-square = 4.675, sig. = 0.10. Note: The full cross-tabulation and chi-square tables are available at http://irows.ucr.edu/papers/irows31/ irows31appb.htm. We report statistical significance levels that are based on the assumption of random sampling even though our sample is not perfectly random. These are to be used as rule-of-thumb comparisons within our non-random sample.

that some of the respondents were “drop-ins” who were attracted to the atmosphere of the Forum but are not active within social movements, and that this might be distorting our efforts to examine North–South differences within the progressive sector of global civil society. We addressed this concern by constructing a measure that we call “activists.” These are people who participated in at least one political protest in the last year, or who report that they are actively involved in at least one of the social movements listed in our survey, or who have attended the WSF05 meeting on behalf of a social movement organization. Only 31 of our 639 respondents (4.9 percent) did not do at least one of these things. Although some of these respondents may be emergent activists, many are likely to be “drop-ins” who attended the WSF05 for non-political reasons, and so we excluded them from our analyses of North–South differences among WSF participants. The tables below include only those who qualify as social activists. First, we will present and discuss the results of cross-tabulations of North–South differences among attendees and then we will further test the findings with multivariate logistic regressions. Table 18.3 shows the gender breakdown by North–South and core, semi-periphery, and periphery categories. Based on our sample of participants it is likely that slightly more men (52 percent) than women (48 percent) attended the World Social Forum in Porto Alegre in 2005. When the gender numbers are broken down by North–South and core–semi-periphery–periphery categories the story is similar, except for the periphery, where there is a greater preponderance of men in attendance.10 The differences were not large for any of the categories except that of the periphery, where 66 percent of those attending were men and only 34 percent were women. Recall that only 49 of our 625 respondents came from countries that are categorized as being in the periphery. Nevertheless, this is nearly a statistically significant difference between the gender breakdown among those from the periphery and that of the whole group of attendees that answered our survey (sig. = 10 percent).


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Table 18.4 Age breakdown of WSF05 respondents and global population

Under 26 years 26–35 years Over 35 years

Total WSF sample

WSF North

WSF South

In population of countries from which attendees came

42% 29% 29%

22% (30.5%) 38% (14%) 40% (55.5%)

47% (52%) 26% (16%) 26% (32%)

0–24 = 46.6% 25–34 = 15.4% 35+ = 38%

(Country age percentages in parentheses)

Under 26 years 26–35 years Over 35 years

Core

Semi-periphery

Periphery

23% (30.5%) 36% (14%) 42% (55.5%)

49% (50%) 26% (16%) 25% (34%)

24% (58%) 37% (15%) 39% (27%)

(Country age percentages in parentheses) Chi-square = 32.782, sig. = 0.000.

There are a number of plausible explanations for the rather larger gender difference found for the attendees from countries of the periphery. It could be that men are more likely to travel long distances than are women, especially from countries in the periphery, or it could be due to differences in income or education. Women from countries of the periphery still typically do not have as many years of schooling as do men, and this affects income, literacy, involvement in politics, etc. They also have higher fertility rates and less access to child-care services compared to women in the core, making it more difficult for them to travel long distances. Table 18.4 shows the age composition of WSF05 attendees and compares this across respondents’ world-system position. In the last column, we report the average population share in each age group for all of the countries from which respondents came. Forty-two percent of the whole group of attendees were under the age of 26, and 49 percent of those from the semi-periphery were under 26. Brazil is in the semi-periphery and so a large number of the young people in attendance were locals. But those who are included in this table have passed the “activists” test mentioned above. The WSF attracts young activists and this is also indicated by the fact that 23 percent of those who came from the core and 24 percent of those who came from countries of the periphery were under 26 years of age. But we should also recall that 47 percent of the population in countries from which all attendees came are less than 25 years of age. The largest age differences among attendees shown in Table 18.4 have to do with the larger numbers of young people who come from the semi-periphery and older people who come from both the core and the periphery. This is related to the different age structures within the world-system zones. Peripheral countries have only 27 percent of their populations that are over 35, while in core countries it is 55.5 percent, so older people from the periphery are

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Table 18.5 World-system position breakdown by racial identification White

Non-white

Total

Core Semi-periphery Periphery

70% (49) 51% (158) 15% (5)

30% (21) 49% (153) 85% (29)

70 311 34

Total

212

203

415

(Numbers of attendees in parenthesis) Chi-square = 28.040, sig. = 0.000.

overrepresented while those from the core are underrepresented. The percentage of young attendees from the semi-periphery (49 percent) was almost equal to the percentage of that age group in the general population of the semi-peripheral countries from which our respondents came (50 percent). It may be that some of the same factors that explain why significantly more of the attendees who come from countries of the periphery are men also explain why attendees from the periphery tend to be older – for example, income. Table 18.5 shows the core–semi-periphery–periphery breakdown by racial identification. These racial classifications were based on an open-ended question in which respondents were asked to identify their race or ethnicity; respondents’ answers were later recoded in terms of being “white” or “non-white.” The racial self-identification question was not popular, particularly among people from Brazil, where silences about race and racism have a long history, and in Western Europe, where discussions about “race” are often considered to be “racist” (Darder et al. 2004; Telles 2004). Only 438 of our 639 respondents answered the question in a way that could be easily classified. The remaining 201 gave no answer or answered by naming their religion or nationality. Those who responded in terms of their nationality or failed to answer the question mainly came from Western Europe and South America, namely Brazil; surveyors noted that these types of responses seemed to be more common among lighter-skinned people whose lack of “race consciousness” may reflect their position of racial privilege (Álvarez et al. forthcoming).11 Global racial stratification is reflected in the attendees at the World Social Forum. Seventy percent of those from the core (of those who chose to answer the question) were self-identified as white, while only 51 percent of those from the semi-periphery and 15 percent of those from the periphery were self-identified as white. The differences shown in Table 18.5 are statistically significant. Race and racism are North–South issues that must be addressed by all the counter-hegemonic movements (Starr 2004; Álvarez et al. forthcoming). Our results also show significant differences in terms of respondents’ educational background. We found that 60 percent of the “activist” attendees from the semiperiphery were currently students, while only 29 percent of those from the core and 24 percent of those from the periphery were students (Chi-Square = 47.286, sig. = .000). We also found that a significantly higher percentage of attendees from the semi-periphery had less than 16 years of education (54 percent), while only 36


349

percent of those from the core and 43 percent of those from the periphery had less than 16 years. And an amazing 69 percent of the attendees from the periphery had a degree in social sciences, while for those from the core it was 56 percent and from the semi-periphery it was 48 percent. These differences are statistically significant (Chi-Square = 6.289, sig. = .043). Social scientists are far more frequently found among the progressive sector of global civil society than their proportion in the larger world.12 Thirty-two percent of the surveyed attendees speak three or more languages, and among those from the core it is an astounding 50 percent. Thirty-three percent of the attendees from the periphery speak three or more languages, while of those from the semi-periphery only 27 percent speak three or more. These differences are statistically significant. These results show the cosmopolitan nature of the attendees, and also that there are significant differences in language ability among those from the different zones. The lower percentage of respondents from the semi-periphery that speak three or more languages is probably due to the large number of politically active locals from Brazil who attended, who tend to be younger and have lower levels of formal education than other WSF participants. In sum, our analysis of respondents’ sociodemographic characteristics suggests that WSF participants tend to be relatively young, highly educated, and mainly Caucasian. Moreover, most respondents are from Brazil and other (Latin American) countries at the world system’s semi-periphery. In fact, people from the semiperiphery turn out to be overrepresented at the WSF when compared to its share in world population, while there seems to be a strong presence of participants from North America and Europe and a clear underrepresentation of people from the global periphery. These findings corroborate the results found in the surveys of FPA and IBASE (see Reese et al. 2006).

Political and Organizational Involvements The degree of political involvement also seems to differ by world-system zone. We removed the non-political attendees from the analysis, but the remaining activists differ amongst themselves in their level of political activity. Twenty-nine percent of those from the semi-periphery indicate that they participated in five or more political protests in the previous year, while from the core it is 39 percent and from the periphery it is 38 percent. This difference is statistically significant, and may reflect the large number of Brazilian attendees and the fact that non-local participation in the Social Forum requires a greater investment of time and resources than local participation. Such costs tend to weed out those with lower levels of political commitment. There may be other causes of the higher involvement of those from the core. Political activity is correlated with income and education, and these are relatively higher in the core. A similar pattern is found in the responses to the question about whether or not the person is attending on behalf of a social movement organization. Twenty-six percent of those from the core said yes, as did 28 percent of those from the periphery, while only 20 percent of those from the semi-periphery said yes.13 These dif-

350


ferences do not achieve statistical significance, and a somewhat different pattern was revealed by the question about attending on behalf of an NGO. Twenty-one percent of those from the core and 15 percent of those from the semi-periphery said yes, while 40 percent of those from the periphery answered this question in the affirmative (Chi-Square = 18.202, sig. = .000).14 The relatively higher proportion of those from the periphery who are attending on behalf of an NGO may reflect NGOs’ greater access to organizational funds compared to other kinds of political organizations as well as the efforts of NGOs who support the WSF to help overcome the global inequalities that make it difficult for people from the periphery to attend international meetings. These differences are statistically significant. Interestingly, affiliation with a union is highest among core attendees (29 percent) and lowest among those from the periphery (23 percent), while 25 percent of those from the semi-periphery are affiliated with unions. These differences are not statistically significant. A different question about reporting to a union finds the same pattern (15 percent in core, 11 percent in the semi-periphery, and 5 percent in the periphery), but these differences are also not statistically significant. The low level of union involvement among attendees from the periphery is probably not related to the higher level of NGO involvement because respondents were allowed to “check all that apply.” One could easily be affiliated with both a union and an NGO. It is likely that union members in the periphery have lower incomes and that their unions, which in some cases operate under conditions of severe state repression, have fewer financial resources to use for world travel than those in other world system zones. However, it may also be that union members from the periphery are less sanguine about the benefits of participation in transnational social movements than those in the core and the semi-periphery.

Similarities and Differences in Political Views Is there a growing convergence of political views among social activists from the North and South? Valentine Moghadam (2005) has studied the global feminist movement, especially over the past three decades, with an eye to understanding how feminists have made progress in overcoming North–South differences. During the 1960s and 1970s, transnational feminist organizing was largely dominated by feminists from the global North, but there has been growing participation by feminists from the global South. In these early years, there were significant divisions between feminists from the global North and South in terms of their priorities. Northern feminists focused more on gaining legal equality and on expanding women’s reproductive rights, whereas Southern feminists focused on issues associated with underdevelopment and colonialism. Such North–South divisions were evident in the first and second United Nations conference on women in Mexico City and Copenhagen (Stienstra 2000; Moghadam 2005: 5–6). At the third UN conference in 1985 in Nairobi, feminists focused on building bridges among women and establishing a consensus. Three historical shifts facilitated a growing convergence among Northern and Southern feminists in terms of their goals and priorities. First, global restructuring


351

and the rise of neoliberalism contributed to the decline of the Keynesian welfare state, creating new concerns among Northern feminists about economic rights. Second, the new international division of labor relying heavily on cheap female labor contributed to the international growth of unionization among women; it also raised Northern feminists’ concerns about women’s labor rights. Finally, the rise of fundamentalist movements in the global South increased Southern feminists’ concerns about reproductive rights and legal equality. The international diffusion of feminist ideas also contributed to the growing convergence of views among Northern and Southern feminists (Moghadam 2005: 5–6). These developments led to a convergence between Northern and Southern feminists that allowed them to better cooperate on common projects. Tensions between Northern and Southern feminists remain, however, over issues of leadership and participation that are related to Northern feminists’ greater access to resources (Stienstra 2000). Research on other social movements indicates that although transnational social movement cooperation tends to be concentrated within regions, there is growing cooperation across the North–South divide among organizations involved in various social movements; this may help to reduce North–South differences in social activists’ political views over time (Smith 2004a, 2005; Smith & Wiest 2004; see also Starr 2000; Brecher et al. 2002 [2000]; Smith & Johnston 2002; Aguirre & Reese 2004; Smith 2004b; Tarrow 2005; Herkenrath 2006; Glasius & Timms 2006). To what extent do North–South differences still exist for social activists in our sample, who are active in a number of different social movements? If there has been a growing convergence among activists in movements besides the feminist movement, we would expect to find few differences in their political views. We find significant differences in participants’ views across world-system positions with regard to global governance issues, but do find similarities in their views on other issues. Attendees were asked whether they thought that capitalism should be reformed or if it should be abolished and replaced. While 42 percent of the activist attendees indicated that they were in favor of reforms, 58 percent indicated that they were in favor of abolition and replacement. Those from both the core and the semiperiphery were very close to this average percentage (with 58.4 percent and 58.3 percent, respectively, favoring abolition), but only 56 percent of those from the periphery chose abolition and replacement. This might indicate that attendees from the periphery are slightly less radical, but the difference is very small and not statistically significant. It is interesting to note, however, that when we exclude Brazilian respondents from the analysis, participants from the rest of the semi-periphery turn out to be significantly more radical than all others, with a vast majority of 72 percent favoring abolition. Another interesting finding is that over half (58 percent) of our respondents agreed with the proposition that the world needs less economic growth. Understandably, a smaller percentage of the attendees from the periphery agree with this, but it is still widely held. Sixty-two percent of the respondents from core countries agree that the world needs less economic growth, whereas 59 percent from the semi-periphery and 49 percent from the periphery hold this view. These differences

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Table 18.6 Attitudes toward international financial institutions by world-system position Reform Core Semi-periphery Periphery All respondents

11% 13% 18% 13%

(12) (54) (7) (73)

Abolish 15% 28% 25% 25%

(17) (113) (10) (140)

Abolish and replace 74% 59% 58% 62%

(82) (235) (23) (340)


do not attain statistical significance, however, perhaps because of the small number of respondents from the periphery. Attendees were also given three options for international financial institutions such as the World Bank, the International Monetary Fund, and the World Trade Organization. The three options were: reform; abolish; abolish and replace. As shown in Table 18.6, 62 percent of all activist attendees favored abolition and replacement, while 25 percent were in favor of abolition alone, and only 13 percent were in favor of reform. This result indicates that the activist attendees are radical and that a very large number (87 percent) see a need to get rid of existing global financial institutions. But these numbers differ significantly across world-system zones. Participants from the periphery appear to be less radical than those from the core. Eighteen percent of those from the periphery favor reform, while for the core it is 11 percent and for the semi-periphery it is 13 percent. Although our sample of participants from the periphery is small and might not be truly representative of all participants from this zone, their greater propensity toward reform seems to be related to their strong connection to NGOs; six out of the eight reformists from the periphery in our sample are affiliated with NGOs. Seventy-four percent of respondents from the core favor abolition and replacement, while for the semi-periphery it is 58 percent and for the periphery it is 59 percent. This indicates that support for new kinds of global financial institutions is much stronger among attendees from the core, although it is also supported by a majority of those from the non-core. The pure abolitionists (without replacement) are more frequently found in the semiperiphery (28 percent) than in the core (15 percent) or in the periphery (25 percent). These differences are significant at the .038 level. Attendees were also given three options regarding a future democratic world government: good idea and plausible; good idea but not plausible; bad idea. Thirtytwo percent of the activist attendees think that democratic world government is a bad idea, while 39 percent think it is a good idea but not plausible, and 29 percent think it is a good idea and is plausible (see Table 18.7). Among those from the core only 16 percent say that democratic world government is a bad idea, while in the periphery it is 23 percent and in the semi-periphery it is 37 percent. At first, we suspected that this higher skepticism about democratic world government in the semi-periphery was due to the large presence of locally oriented activists from Brazil.


353

Table 18.7 Attitudes toward the idea of a global democratic government by world-system position Good idea and plausible Core Semi-periphery Periphery All respondents

39% 26% 30% 29%

(40) (106) (12) (158)

Good idea but not plausible 45% 37% 48% 39%

(47) (148) (19) (214)

Bad idea 16% 37% 23% 32%

(17) (148) (9) (174)


However, when we exclude Brazilian attendees from the analyses, the percentage of semi-peripheral respondents opposing the idea of a world government rises to 39 percent (results not shown in Table 18.7). Thirty-nine percent of those from the core think democratic world government is a good idea and it is plausible, while 45 percent say that it is a good idea but not plausible. The more sanguine core attitude toward global institutions found here and in the question about international financial institutions may be related to the fact that existing global institutions have been core controlled and that democracy has been mainly institutionalized based on the cultural assumptions that emerged from the European Enlightenment. These facts of world history are likely to make non-core peoples skeptical about the possibility and desirability of so-called democratic global governance. But even in the core there is considerable skepticism about the real possibility of a democratic world government. The interstate system is still strongly institutionalized despite the rise of discourses about globalization. About half of the respondents agree that “The World Social Forum should remain an open space for debate and should not itself take public positions on political issues.” But there is a notable difference among the respondents from the semiperiphery; only 46 percent of the attendees from the semi-periphery agree with this statement while 54 percent of attendees from the core and 57 percent of attendees from the periphery do so. Since such a large share of respondents from the semiperiphery reside in the host country of most of the WSF meetings, it is not surprising that they feel more comfortable, compared to those traveling longer distances to attend, with treating these meetings as representative bodies. Non-local participants are more likely to have greater concerns that statements made by WSF participants exclude the many voices of those unable to attend for financial or other reasons. Consistent with this interpretation, when Brazilian participants are excluded from the analyses, the share of respondents from the semi-periphery holding that the WSF must not take political decisions rises to 52 percent. The debate between those who favor that the “movement of movements” represented at the WSF become more of a global political actor, and those who favor keeping the WSF an open space for public debate continues.

354


Multivariate Results Tables 18.8–18.11 show the results we obtained from multivariate binomial logistic regression analyses; we performed these analyses to see whether the effects of world-system zone on social activists’ political opinions persist when the effects of other explanatory variables are taken into account. To use binomial logistic regression, we transformed the political attitude questions discussed above into dichotomous dependent variables. In the models below, we control for participants’ gender, generation, union affiliation, NGO affiliation, affiliation with a social movement organization (SMO), affiliation with at least one political organization, and Brazilian residence. As above, all of the tables below report results only for respondents who are social activists; we excluded the 31 “non-activists” in our original sample from our logistic regression analyses. Because we did not have full information for every variable for each respondent, we report the number of cases included for each of our models. Multivariate logistic regressions revealed that there are no statistically significant North–South (or world-system position) differences regarding attitudes toward economic growth or whether or not the WSF should refrain from issuing collective political statements. Table 18.8 indicates that, controlling for other factors, respondents from the semi-periphery were significantly more likely than respondents from the core to favor the abolition and replacement of capitalism. Respondents from the periphery were also more likely than respondents from the core to favor the abolition of capitalism, although this relationship was not statistically significant. This lack of statistical significance might be an artifact of the small number of respondents from the periphery, but it could also be a result of these respondents’ privileged status within their societies or close affiliation with NGOs, which tend to be more reformist than other kinds of political organizations. Nevertheless, the direction of this relationship is consistent with the idea that the problems of global capitalism are more keenly felt by people in the global South than the global North. Respondents from Brazil were significantly less likely than participants from the core to express anti-capitalist sentiments, however. This latter finding may be related to the fact that Brazilians reported lower levels of protest activity; the site of the WSF in Porto Alegre made it more accessible to Brazilian activists, allowing a wider range of activists in terms of their levels of political experience, commitment, and radicalism. In contrast, the greater cost of traveling to Porto Alegre for non-local activists may have deterred many local activists who were less radical and less involved in social movements. Table 18.8 also shows that, controlling for other factors, respondents who came of age during the 1960s, when there was a wave of international protest among youth, were significantly more likely than other respondents to express anticapitalist views, as were respondents affiliated with unions and social movement organizations. The relationship between union membership and anti-capitalist views is only statistically significant at the 0.10 level, however. Table 18.9 shows the multivariate results when the responses to the question about what should be done with the IMF and WTO are divided between those who

Table 18.8 Logit coefficients, standard errors, and odds for favoring the abolition and replacement of capitalism Variable

Coefficient S.E. Odds

Semi-periphery (reference category = core)

0.663** 0.342 1.941

Periphery (reference category = core)

0.206 0.425 1.229

Female

−0.026 0.201 0.974

1960s generation

1.046** 0.535 2.846

Union affiliated

0.449* 0.257 1.567

NGO affiliated

−0.328 0.214 0.720

SMO affiliated

1.299*** 0.215 3.667

Affiliated with at least one political organization

0.317 0.467 1.373

Brazilian

−0.620** 0.282 0.538

Constant

−0.555 0.502 0.574

Cases included in the analysis

481

* Statistically significant at the 0.10 level; ** statistically significant at the 0.05 level; *** statistically significant at the 0.01 level.

Table 18.9 Logit coefficients, standard errors, and odds for favoring the replacement of, or reform of, the IMF and WTO (rather than abolishing them) Variable



−1.129*** 0.362 0.324


−0.701 0.484 0.496

Female

0.057 0.218 1.058

1960s generation

−0.270 0.453 0.763

Union affiliated

−0.202 0.261 0.817

NGO affiliated

0.988*** 0.238 2.687

SMO affiliated

−0.292 0.225 0.747


−0.312 0.520 0.732

Brazilian

0.555** 0.277 1.743

Constant

1.679*** 0.570 5.360


481



357

favor their replacement or reform versus those who favor their abolition. A negative logit regression coefficient in this table indicates a greater likelihood to oppose reform or replacement and to favor abolition. The table shows that those respondents from the semi-periphery are more likely than those from the core to favor abolition when the effects of the other variables are controlled, and this relationship is statistically significant at the 0.01 level. Respondents from the periphery are also more likely than respondents from the core to favor abolition, but that coefficient is not statistically significant. The only other coefficient that demonstrates statistical significance in this table shows that those respondents who are affiliated with NGOs and who are Brazilian are more likely than respondents without those characteristics to oppose abolition and be in favor of either reform or replacement. Also recall from our discussion of the bivariate table above that 62 percent of the respondents chose to abolish and replace the international financial institutions while only 25 percent chose to abolish them and not replace them. There are more pure abolitionists from the semi-periphery, but even there it is only 29 percent of the respondents. Table 18.10 shows the multivariate results for those who hold that global problems need to be addressed not by means of local or “national” responses, but by global ones. The question was: “Which of the following approaches would best solve the problems created by global capitalism?” and the possible answers were: strengthen local communities, strengthen nation-states, or create democratic global institutions. Fourteen percent of the respondents chose more than one of these options. To use binary logistic regression, we put those favoring local or national responses to global social problems into a single “non-global” category so that we could compare the characteristics of respondents favoring “global” and “nonglobal” strategies for social change. Table 18.10 shows that respondents from the semi-periphery are significantly more likely than respondents from the core to favor non-global responses to social problems; those from the periphery are also more likely than respondents from the core to favor non-global responses, although this relationship is only statistically significant at the 0.10 level. By contrast, Brazilian respondents appear to be more favorable than respondents from the core toward the creation of global democratic institutions to resolve social problems. None of the other variables show a significant effect on responses to this question. This table supports the notion mentioned above that non-local WSF activists from the semi-periphery are less likely than those from the core to support global strategies for social change. Table 18.11 shows the multivariate results for the question, “Do you think it is a good or a bad idea to have a democratic world government?” Thirty-nine percent of the respondents chose “good idea, but not plausible.” Thirty-two percent chose “bad idea.” And twenty-nine percent chose “good idea and it’s plausible.” Table 18.11 shows that those from the semi-periphery are more likely than respondents from the core to oppose the idea of a democratic world government and this result is statistically significant. Peripheral attendees are also more likely to be against this than those from the core, but that difference is not statistically significant. But it should be recalled that 31 percent of those from the periphery

Table 18.10 Logit coefficients, standard errors, and odds for the regression of favoring global democratic institutions to solve global social problems Variable



−1.463*** 0.403 0.232


−0.736* 0.455 0.479

Female

−0.016 0.220 0.984

1960s generation

−0.114 0.515 0.892

Union affiliated

0.198 0.270 1.219

NGO affiliated

−0.031 0.231 0.970

SMO affiliated

−0.275 0.228 0.760


0.317 0.558 1.373

Brazilian

0.952*** 0.359 2.592

Constant

−0.489 0.577 0.613


422


Table 18.11 Logit coefficients, standard errors, and odds for the regression of support for a democratic world government Variable

Model 2 Coefficient S.E. Odds


−0.839** 0.364 0.432


−0.329 0.491 0.720

Female

−0.035 0.205 0.966

1960s generation

0.441 0.493 1.553

Union affiliated

0.054 0.260 1.055

NGO affiliated

0.253 0.219 1.288

SMO affiliated

0.290 0.214 1.336


0.013 0.454 1.013

Brazilian

Constant

Cases included in analysis

−0.164 0.272 0.849 1.270** 0.505 3.559 474


360


and 26 percent of those from the semi-periphery endorsed the response that a democratic world government is a good idea and is plausible. Nevertheless the overall finding of greater non-core skepticism toward global institutions is upheld by the results in Table 18.11.

Conclusions The results so far show that there are some North–South demographic differences among World Social Forum attendees. Those from the periphery are few, older, and more likely to be men. In addition, participants from the periphery are more likely to be associated with externally sponsored NGOs, rather than with self-funded SMOs and unions, as NGOs have greater access to travel funds. In summary, our survey finds participation at the World Social Forum to be reflective of the global inequalities that WSF participants are opposed to. Since most intercontinental passenger flights departing from the global periphery cost more than the annual per capita income in this zone (see Herkenrath 2006), the notable underrepresentation of WSF attendees from sub-Saharan Africa and other peripheral countries is hardly surprising. International and intercontinental traveling is affordable only to activists with a very privileged social background and activists affiliated with well-funded organizations. Having said this, political differences between WSF participants from the global South and those from the global North seem to be fairly modest. While a clear majority of all respondents from the global South hold that capitalism needs to be abolished, the same is true for respondents from the global North. Only when the effects of local residence are controlled do we find that semi-peripheral attendees are significantly more likely to take radical anti-capitalist stances than attendees from the core. In a similar vein, Southern activists are not significantly more inclined than their Northern counterparts to object to further global economic growth or to favor the WSF remaining an “open space” for political debate. Although opinions on these latter two questions divide the sample into two parts of almost equal size, the dividing line is not between the global North and the South. On the other hand, Southern respondents, especially non-local participants from the semi-periphery, are significantly more likely to be skeptical toward creating or reforming global-level political institutions. Those who favor reforming or abolishing and replacing global institutions in order to resolve social problems need to squarely face these facts. This skepticism probably stems from the historical experience of peoples from the non-core with global-level institutions that claim to be operating on universal principles of fairness but whose actions have either not solved problems or have made them worse. The new abolitionists are posing a strong challenge to both existing global institutions and to those who want to abolish and replace these institutions. These realities must be addressed, not ignored.

Acknowledgments Thanks to Richard Niemeyer for producing the GIS map of WSF05 participant home places in Figure 18.1 and to Toi Carter and Matt Kaneshiro for providing population data broken down by age and gender.


361

Appendix A: Classifications of countries from which WSF05 respondents came World Bank classification15

World-system position16

Global “North”: High income Australia Austria Belgium Canada Denmark Finland France Germany Greece Hong Kong (China) Ireland Israel Italy Japan Korea (Rep.) Netherlands New Zealand Norway Portugal Spain Sweden Switzerland Taiwan (excluded from all sources) United Kingdom United States

Core Core Core Core Core Core Core Core Semi-periphery Semi-periphery Core Semi-periphery Core Core Semi-periphery Core Semi-periphery Core Semi-periphery Core Core Core Semi-periphery Core Core

Global “South”: Upper-middle income Argentina Chile Costa Rica Lebanon Malaysia Mexico Panama South Africa

Semi-periphery Semi-periphery Semi-periphery Periphery Semi-periphery Semi-periphery Semi-periphery Semi-periphery

362


Uruguay Venezuela

Semi-periphery Semi-periphery

Lower-middle income Armenia Bolivia Brazil Colombia Dominican Republic Ecuador El Salvador Iraq Paraguay Peru Philippines

Periphery Periphery Semi-periphery Semi-periphery Periphery Periphery Periphery Periphery Periphery Periphery Periphery

Low income Bangladesh India Kenya Nepal Pakistan Senegal Sudan Vietnam

Periphery Semi-periphery Periphery Periphery Periphery Periphery Periphery Periphery

Notes 1 2

3

4 5 6

7

In 2006 the three “polycentric” meetings were in Pakistan, Mali, and Venezuela. While this chapter is mainly an empirical examination of North–South differences at the World Social Forum, our theoretical perspective suggests possible explanations for some of our results and provides a framework for interpreting the world historical significance of the WSF process that we are studying. The “necessity of imperialism” idea is similar to David Harvey’s (2003) notion that primitive (or primary) accumulation is a necessary and reproduced dimension of the process of capitalist development (see Chase-Dunn 1998: 221–5). See the WSF Charter at: http://wsf2007.org/process/wsf-charter. See Giem and Gutierrez (2006) and Reese et al. (2006). IBASE’s 2005 survey used a stratified sample based on information from the WSF’s registration database. It collected a total of 2,540 surveys in four languages (Portuguese, French, English, and Spanish). The apparent lack of attendance from Canada in Figure 18.1 is due to those attending coming from cities that border the USA. Eighteen of our respondents were from Canada, representing 2.8 percent of the total number of respondents mapped.

The World Social Forum 8

9 10 11

12

13

14 15 16

363

Chase-Dunn and Boswell (1999) have argued that citizens from former state communist regimes such as Russia and China will be unlikely to provide much support for the next round of counterhegemonic struggles. Data on the size and characteristics of the world population reported for Tables 18.1–18.4 are from the United States Census Bureau, International Data Base (2006). These North–South differences do not produce a significant chi-squared. Of the 80 attendees who responded in terms of their nationality, 45 percent were Brazilian, 8 percent came from another South American country, and 33 percent were Western European. Of the 83 who did not answer the question (or said they belonged to “no race,” or the “human race”) 48 percent came from Brazil, 24 percent came from another South American country, and 17 percent came from Western Europe. This finding has stimulated interest in the perennial issues about the roles of intellectuals in social movements, and several events that are planned for the WSF07 in Nairobi have invited activists and academics to investigate, analyze, and confront these issues. A very similar pattern is found in the responses to a question about whether or not the attendee is affiliated with a social movement organization, except that the percentages were a lot higher. And this pattern is also found for a question about reporting to a social movement organization. A similar low semi-periphery–high periphery pattern is found for the question about affiliation with NGOS; this also holds for a question about reporting to an NGO. Based on the Gross National Income per Capita in 2004 (World Bank 2006; see also: www. worldbank.org/data/). Based on Kentor’s measure of the overall position in the world economy in 2000 (Kentor 2002: Table 4). The cutoff point between core and semi-peripheral countries has been set at 2.00, and the cutoff point between semi-peripheral and peripheral countries at −0.89.

References Aguirre, Adalberto & Reese, Ellen (2004) “The Challenges of Globalization for Workers: Transnational and Transborder Issues.” In Special Issue: Justice for Workers in the Global Economy, edited by Adalberto Aguirre and Ellen Reese. Social Justice: A Journal of Crime, Conflict, and World Order 31(2). Álvarez, Rebecca, Gutierrez, Erika, Kim, Linda, Petit, Christine, & Reese, Ellen (forthcoming 2008) “The Contours of Color at the World Social Forum: Reflections on Racialized Politics, Representation, and the Global Justice Movement,” Critical Sociology 34(3). Amoore, Louise & Langley, Paul (2004) “Ambiguities of Global Civil Society,” Review of International Studies 30: 89–110. Arrighi, Giovanni, Hopkins, Terence K., & Wallerstein, Immanuel (1989) Antisystemic Movements. London: Verso. Bornschier, Volker & Christopher Chase-Dunn, Christopher (1985) Transnational Corporations and Underdevelopment. New York: Praeger. Boswell, Terry & Chase-Dunn, Christopher (2000) The Spiral of Capitalism and Socialism: Toward Global Democracy. Boulder, CO: Lynne Reinner. Brecher, Jeremy, Costello, Tim, & Smith, Brendan (2002 [2000]) Globalization from Below: The Power of Solidarity. Cambridge, MA: South End Press.

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Calhoun, Craig (2001) “Civil Society/Public Sphere: History of the Concept.” In International Encyclopedia of the Social and Behavioral Sciences, edited by Neil J. Smelser and Paul B. Baltes, pp. 1897–903. London: Elsevier. Chase-Dunn, Christopher (1998) Global Formation: Structures of the WorldEconomy. Lanham, MD: Rowman and Littlefield. Chase-Dunn, Christopher & Hall, Thomas D. (1997) Rise and Demise: Comparing World-Systems. Boulder, CO: Westview Press. Chase-Dunn, Christopher & Boswell, Terry (1999) “Postcommunism and the Global Commonwealth,” Humboldt Journal of Social Relations 24(1–2): 195– 219. Darder, Antonia, Torres, Rodolfo D., & Miles, Robert (2004) “Does ‘Race’ Matter? Transatlantic Perspectives on Racism after ‘Race Relations.’ ” In After Race: Racism after Multiculturalism, edited by Antonia Darder and Rodolfo D. Torres, pp. 25–46. New York: New York University Press. Giem, Rebecca L. & Gutierrez, Erika J. (2006) “The Politics of Representation in the World Social Forum: Preliminary Findings.” Presented at the World Congress of Sociology, Joint Session of RC02 and RC07: Alternative Visions of World Society: Global Economic Elites and Civil Society in Contestation. Durban, South Africa, July 28. Glasius, Marlies & Timms, Jill (2006) “The Role of Social Forums in Global Civil Society: Radical Beacon or Strategic Infrastructure.” In Global Civil Society 2005/6, edited by Marlies Glasius, Mary Kaldor, Helmut Anheier, and Fiona Holland, pp. 190–238. London: Sage. Harvey, David (2003) The New Imperialism. New York: Oxford. Herkenrath, Mark (2006) “Social Movements and the Challenges of Transnational Coalition-Building: A Case Study on the Hemispheric Social Alliance and the Pan-American Campaign Against the FTAA.” Presented at the XVI ISA World Congress of Sociology, Durban, South Africa, July 23–29. The paper can be downloaded at: http://ww.suz.unizh.ch/herkenrath/publikationen/index. html. IBASE (Brazilian Institute of Social and Economic Analyses) http://www.ibase.org. br. The IBASE Study of participants in WSF05 is at: http://www.ibase.org.br/userimages/relatorio_fsm2005_INGLES2.pdf. Islamoglu, Huri (2001) “Civil Society, Concept and History of.” In International Encyclopedia of the Social and Behavioral Sciences, edited by Neil J. Smelser and Paul B. Baltes, pp. 1891–7. London: Elsevier. Kentor, Jeffrey (2000) Capital and Coercion: The Role of Economic and Military Power in the World-Economy, 1800–1990. New York and London: Garland Press. Kentor, Jeffrey (2002) “The Divergence of Economic and Coercive Power in the World Economy, 1960–2000.” A paper prepared for the Annual Meeting of the International Studies Association: New Orleans, LA. Moghadam, Valentine (2005) Globalizing Women: Transnational Feminist Networks. Baltimore, MD: Johns Hopkins University Press.


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Chapter 19 The Higher Realism: A US Foreign Policy for Transcending the North–South Divide Seyom Brown

Realism Redux The tradition of statecraft and international relations scholarship that proudly calls itself Realist has been experiencing a new lease on life in both the policy community and academia, after having suffered a decline in influence for some 15 years following the end of the Cold War. Pointing to the bad news from Iraq, the revived Taliban insurgency in Afghanistan, and the shattering of illusions in Lebanon, Palestine, Venezuela, Bolivia, the Horn of Africa, and elsewhere about securing peace and justice through the spread of democracy, the Realists are saying, “We told you so”: We told you that the interventionist and Pax Americana thrust of the Bush administration’s doctrines and actions would backfire and undermine US influence. We told you it would provide ammunition not only to the jihadists but also to nationalist/populist politicians around the world who have been branding US foreign policy as neo-imperialism (Goldberg 2005; Rose 2005; Krugman 2006). From the Realist perspective, many of the dangerous fault lines along the socalled North–South divide – a shorthand for a cluster of tensions, some of them religious and cultural (“East–West” as much as “North–South”), some of them between globalist economic modernizers and those who fear being the economic losers in an open world economy – have been exacerbated by US neoconservative/ neo-Wilsonian concepts and policies. Traditional Realists see the corrective in a return to the statecraft that eschews meddling in the domestic affairs of other countries, a statecraft that focuses on US military and economic power in defining both the means and end of foreign policy, a statecraft that favors international order and predictability over revolutionary reform, even if this sometimes means negotiating with unsavory characters. What I call the Higher Realism incorporates many of


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Seyom Brown

these and various of the other philosophical tenets of Traditional Realism that are delineated below. But the Higher Realism regards the traditionalists’ paradigm as insufficiently responsive to the overarching needs of the world as a whole – and thus also, ultimately, of the United States – for reliable provision, globally, of the public goods of basic security, economic well-being, and governance that is widely regarded as legitimate and just – without which the so-called North–South divide can only dangerously deepen.

Traditional Realism Realists, traditionally, have insisted that the United States, in acting to influence conditions abroad, must give priority to the vital national interests of the country – securing the homeland against physical attack, sustaining the economic well-being of the American people, and preserving their basic liberties – and that the grand strategy for serving these national interests must be consistent with both US resources and the international distribution of power, especially (though not exclusively) coercive power. The various schools of Realism –“classical realism” and its contemporary offshoots (“neo-realism,” “structural realism,” “offensive realism,” “defensive realism”) – differ in interesting ways; but for the purpose of the present analysis, they can be regarded as variations within the paradigm. They all assume: (1) that international relations is essentially a political struggle among countries for relative (coercive) power vis-à-vis one another – that is, to be able to control the behavior of the others or, as a minimum, to avoid being controlled by them; (2) that all other dimensions of international relations (e.g., economic, ideological) are subordinate to this political struggle; (3) that the basic anarchic structure of the international determines, or at least reinforces, this behavior; and (4) that there are no prospects for reforming the basic anarchic structure (Smith 1986). Realism also requires that particular policies be chosen prudentially, on the basis of a clear-headed evaluation that a set of conditions is having or is likely to have a significant impact on US interests; that the policies can indeed affect these conditions in desirable ways; that the expected benefits from the prospective course of action are worth its expected costs; and that the American people and their representatives in Congress can be convinced to provide the necessary human and material resources. Near the end of the Truman presidency, Hans Morgenthau, who along with George Kennan and Walter Lippmann tried to give such realist shape to US foreign policy, wrote a series of stinging critiques of the neo-Wilsonian ideas then popular in the halls of ivy and of the national security implications of the effort by fiscal conservatives in the Republican Party to get the in-coming Eisenhower administration to reduce expenditures on foreign affairs. In his In Defense of the National Interest, Morgenthau castigated both the Wilsonians and the isolationists of his day for peddling romantically idealistic notions that, if adopted, would jeopardize the obligation of the US government to protect the country’s core national interest: namely, to secure the blessings of liberty for ourselves and our posterity (Morgenthau

A US Foreign Policy to Transcend the Divide

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1951). Similarly, Kennan in his Realities of American Foreign Policy inveighed against “the imperious seizures of political emotionalism” that he saw transforming the containment policy into a crusade (Kennan 1954: 36). Morgenthau, Kennan, and the other Realists were insistent that US policy makers give primary and unwavering attention to the balance of power between the United States and the Soviet Union, and in particular to make sure this country never fell behind the Soviets in military power. But they were also concerned to advance and maintain international norms and institutions for mobilizing and legitimizing concerted resistance to Soviet imperialism. In that sense, the national interest and the world interest were the same. And although Kennan emphasized building up the internal political and economic strength of societies in the non-communist world as an essential means of containing the Soviets, he joined Morgenthau in cautioning against attempts to universalize the American way of life as the way of organizing society and to project it onto the world’s culturally diverse nations (Morgenthau 1954). Mogenthau, were he around in recent years, would have been leading the charge against the America-knows-best pretensions of both neoconservatism and neo-Wilsonianism. Moreover, the grandiose promises that issued from the highest levels of the US government following 9–11 to simultaneously make the world safe for democracy, human rights, and free markets while vigorously prosecuting the global war on terrorism violated one of the essential ground rules for implementing the Realist canon: the country’s commitments should not outrun its capabilities. The dangers when achievements fall far short of expectations are an isolationist backlash at home, cynical reactions around the world to US professions of global responsibility and leadership, and an encouragement of the enemies of the USA to redouble their efforts. The Realist canon, however, does not necessarily prescribe a downward adjustment of commitments to correct a mismatch between the country’s international commitments and capabilities. Although truly great powers should not forbear from liquidating unsound commitments, an enhancement of capabilities may sometimes be the better course of wisdom. Does Realism provide the kind of wisdom that can help this generation of policy makers avoid the commitments-capabilities gap as they design strategies for dealing with the North–South divide – particularly its dangerous elements, such as terrorism? Yes, but only if Realism’s premises are adapted to the fundamental trends in world politics and economics that have been fusing world interests into US national interests.

Toward a Higher Realism Today, the country desperately needs a renaissance of internationalist yet prudent realist thinking for dealing with terrorism and the wide range of other threats to the security and well-being of the people of the United States: •

a realism that understands how inextricably bound up with world interests – with the security and well-being of people everywhere, including in the poorer

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countries – US national interests have become, yet does not operate from the hubris that what is good for the United States is ipso facto good for the world. a realism that regards the enhancement of international accountability norms and institutions – a rule-based global system – even though they may at times constrain the United States from acting with complete flexibility, as necessary for the country’s long-term security and well-being. a realism that understands how US military superiority and economic primacy, and the will to invoke them at times coercively, remain important (though not essential) components of US power for securing the country’s national interests, and that variegated military capabilities short of “superiority” and economic strength short of “primacy” may well be sufficient for national security purposes. a realism that appreciates the importance of subjecting any coercive use of US material power to widely accepted standards of legitimacy so as not to undermine the “soft” components of power required to induce others to cooperate in building the rule-based global system.

I call this worldview Higher Realism to distinguish it from today’s neo-realism – the most prominent of today’s Realist schools – especially the neo-realist discounting of both the non-material components of power and the importance of international institutions and norms (Waltz 1979; Keohane 1986). Higher Realism takes issue as well with the overly optimistic Wilsonian notions of taming the world through democratization embraced by the neoconservatives in the Bush administration (Bush 2002; 2005) and also by many of the influential foreign policy experts in the Democratic Party (Smith 1994) – creating expectations that Woodrow Wilson himself would have considered romantically naïve (Judis 2004).

World Interests in the National Interest The Higher Realism connects US interests to world interests which economic “South” and “North” and cultural “East” and “West” share. As such it stands a better chance of overcoming resentments at the US posture of omniscience in how to design and run societies. The Higher Realism operates on the premise that there will be considerable controversy when it comes to implementing these world interests; that countries, because of their varying national interests, priorities, capabilities, and cultures, will prioritize the world interests differently and favor different trade-offs among them. A US foreign policy that credibly pursues such world interests, whenever possible through multilateral processes and institutions that do in fact take seriously into account the interests and cultures of others – North and South, East and West – will have a greater prospect of servicing the security and well-being of the people of the United States than a foreign policy animated only by the country’s national interests, narrowly defined. What, then, in the name of Higher Realism, are those world interests whose furtherance are in the national interest of the United States, and for which there are


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reasonable prospects of widespread international support – including from the socalled Third World? The seven world interests postulated here are offered in the spirit of dialogue, to stimulate domestic and international discourse on the nature of the world interests to which the United States and other countries should subscribe, on the priorities among them, on trade-offs among them that may be required in particular situations, and on guidelines and processes for serving them.

World interest 1 First and foremost is the healthy survival of the human species – manifestly the cardinal world (and national) interest, being the sine qua non for the realization of all the other interests. Even with the post-Cold War disappearance of crisis confrontations between the two nuclear-armed superpowers, it requires prominent and frequent assertion, given the continued deployment of weapons capable of reducing the world’s major cities to radioactive rubble, given the lack of known whereabouts of laboratories for breeding diseases such as smallpox whose lethal effects could rapidly spread across the globe, and given the prospect of unaccountable non-state actors, particularly terrorists, getting access to the weapons and substances. And as the avian flu scare reminds us, the healthy survival of the human species can suddenly be placed in jeopardy through the fault of no particular state or agency; yet the need to anticipate and combat such threats points to the fact that the world interest in alleviating poverty (to be discussed below) is also a vital self-interest even of the most prosperous and medically advanced countries. Taking human species survival seriously requires that high priority in funding, diplomatic initiatives, and military planning must be given to measures not only to control the weapons of mass destruction (WMD) now in existence but also to prevent further acquisition and development of these capabilities. Being the country with the largest arsenal of nuclear weapons, and probably better endowed than any other country with a capacity to rapidly produce and deploy horrendous levels of other kinds of highly destructive weapons, the United States should be, as a minimum, taking the lead in fashioning a no-first-use regime for any of the WMDs, and, maximally, contributing its expertise and technology to strengthening verifiable production and deployment prohibitions and disarmament agreements in all WMD categories. Unfortunately, this world interest is not being well served by current US policies. US military planning, procurement, and grand strategy continue to be based on the premise of the Pentagon’s Nuclear Posture Review of December 2001 that, “Nuclear weapons play a critical role in the defense capabilities of the United States, its allies, and its friends. They provide credible military options to deter a wide range of threats, including WMD and large-scale conventional military force. These nuclear capabilities possess unique properties that give the United States options to hold at risk classes of targets [ that are ] important to achieve strategic and political objectives” (US Department of Defense 2001). While the United States and Russia, in the Strategic Offensive Reductions Treaty (SORT), have pledged to mutually reduce the number of operationally deployed

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strategic weapons in their respective arsenals to between 1,700 and 2,200 by 2012, the United States still retains some 6,000 in its active arsenal (a significant proportion of which are still on alert); and those nuclear warheads scheduled to be removed from the active arsenal will not be destroyed, but only put in storage for future activation. In the service of maintaining a robust nuclear weapons arsenal, the United States has not only refrained from ratifying the Comprehensive Test Ban Treaty, but has undertaken work on modernizing that arsenal to give the weapons greater capability against deeply buried targets and to miniaturize the warheads and otherwise improve the flexibility and potency of the nuclear arms (US Department of Defense 2001; Korb & Ogden 2004; Broad 2005). The continuing determination of US national security planners to integrate nuclear weapons into the country’s grand strategy is at cross-purposes with the administration’s professed vital interest in arresting nuclear weapons and other WMD proliferation. The willingness of parties to the Non-Proliferation Treaty (NPT), especially Third World countries, to forego obtaining nuclear arsenals has been conditioned not only on their receiving, as a quid pro quo, assistance from the developed nuclear states in building up domestic nuclear energy capabilities, but also – as a part of the NPT’s “grand bargain” – on fulfillment by the nuclear weapons states of their treaty obligation in Article VI “to pursue negotiations in good faith on effective measures relating to cessation of the nuclear arms race at any early date and to nuclear disarmament . . . under effective international control.” To be sure, there is ample reason to give the highest non-proliferation priority, as the United States has been doing, to arresting efforts of unstable, failing, or “rogue” states to obtain nuclear weapons and/or to transfer them or their components to terrorists. But when this non-proliferation strategy is conducted in ways that appear to reinforce an evolving two-class international system of, on the one hand, selfdefined legitimate nuclear armed states and, on the other hand, the rest (mainly “Southern” or “Eastern” states – only some of whom the legitimate nuclear-armed club members may select as candidates for election into the club), then the legitimacy of the NPT regime itself is called into question. This possible delegitimizing of the NPT regime is a problematic aspect of the US–Indian nuclear deal negotiated by the Bush administration and the Indian government in March 2006, in which India, having defied the non-proliferation norm (albeit not a party to the NPT) is now to be forgiven, and allowed to receive substantial assistance for its nuclear energy program, whereas Pakistan – deemed unworthy of responsible membership in the nuclear-armed club – is to be denied such assistance. The administration, perhaps, could have bargained harder than it did to get India and Pakistan (and Israel) to accept more intrusive inspections by the International Atomic Energy Agency, as a condition for normalizing these countries’ access to US supplies of nuclear energy components. If this indeed is the implication of the current double-standard US nuclear policy, given the rather easy access to dual-purpose nuclear components, the long-feared emergence of a dangerous “Nth-country” world and its threat to the healthy survival of the human species may be closer than many arms control experts have come to believe.


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Over the long run, the healthy survival of the human species could also be threatened by abuse of the planet’s crucial ecologies. The near-term threats are not yet so dire; but even short of calamitous effects cumulating from long-term abuse, sustaining the crucial ecological relationships, as indicated below, is in itself a world interest.

World interest 2 Given the increases in lethality new technologies are generating, even controls on the designated WMDs will be insufficient for avoiding globally destructive warfare unless they are accompanied by concerted commitments from the most powerful actors to reduce the role of force in world politics – international and domestic. In the emerging “polyarchic” world of the twenty-first century (where the actors who can shake up their regions, if not the global system as a whole, are small powers as well as large powers, state actors as well as non-state actors, and where today’s friend may be tomorrow’s enemy, depending on the issue at hand), deterrence strategies, arms control agreements to buttress deterrence, alliances, and collective security institutions will often be ineffective instruments for preventing local conflicts from becoming violent, and for discouraging others from intervening in local wars (Brown 2003). In such a world, the United States, being by far the most heavily and effectively armed power, bears a special responsibility to resist the temptation (enhanced by technological innovations promising precise, low-casualty warfare) to escalate, or to readily threaten to escalate, conflicts to the military level (Brown 2003). Such touting of military force as a very usable trump card, often to be played early rather than later, as in the Bush administration’s justification of preemptive – even preventive – action, presents the United States an exemplar of the kind of international politics that is adverse to a wide range of its own interests (Bush 2002). A global regime in which recurrent war is the arbiter of who gets, what, when, and how is hardly conducive to the free flow of commerce on which the United States increasingly depends. Nor are displays of military prowess the best way to discourage other countries, political movements, or terrorists from acquiring weapons of mass destruction or disruption. Even when the purpose of a military intervention is to secure basic human rights, they are almost always suppressed, if not brutally violated, where the culture of violence predominates. Traditional “just war” theorists had comparable considerations in mind when they insisted that war was to be undertaken only as a last resort, and then only after conscientious assessment as to how the war’s conduct and outcome would affect postwar prospects for peace and justice – not only in the theatre of operations, but worldwide. The United States’ diplomats should be in the forefront of efforts, as reflected in the December 2004 report to the UN Secretary General of the High-Level Panel on Threats, Challenges, and Change, to adapt the just war concepts to contemporary circumstances (United Nations 2004). As the High-Level Panel pointed out, the world interest in reducing the role of force does not rule out countries maintaining effective military capabilities and

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options for deterrence and for self-defense or international peace and security missions. Nor does it rule out military interventions in the event of genocide, ethnic cleansing, or other serious violations of international humanitarian law. Indeed, the “responsibility to protect” ethic endorsed by the Panel may in some of these situations warrant early, even unilateral, preventive uses of force. This paradox of trying to reduce the resort to force in a still largely anarchic (or “polyarchic”) world, in which collective security responses are difficult to come by, should be pointing US policy toward a greater emphasis on conflict resolution diplomacy, giving primacy to carrots over sticks and searching for common interests, especially when dealing with adversaries. The appropriate multilateral model and aegis for conducting this kind of diplomacy may well be the mediational mode of the Organization for Security and Cooperation in Europe (OSCE), which Realists have tended to discount, instead of the mobilization-of-pressure modes of NATO or the UN Security Council. When conflict de-escalation is the objective, institutions and processes designed to induce adversaries to sit down and bargain with one another rather than to mobilize action against those branded as aggressors need to be relied on more and given enhanced prestige (Zartman 2007). And it is of increasing importance for counteracting “clash of civilization” polarizations in the emergent international system that the extra-UN agencies of international conflict resolution and mediation not be mainly creatures of, and managed by, the “North” – e.g., the transatlantic community, or Europe – or even by a “concert of democracies” (Princeton Project on National Security 2006). Rather, as much as possible, they should be established by, and accountable to, groupings of constituent countries that transcend the North–South/East–West divide.

World interest 3 The security and well-being of the people of the United States, not simply moral altruism, require a determined effort to reduce the vast amount of poverty and disease in the world (Rice 2006) – as many as 2.5 billion people existing below the subsistence level of $2 a day, with at least 1 billion suffering in what the World Bank calls “extreme poverty” and facing death by starvation (Food and Agricultural Organization 2006; World Bank 2006). The locales of poverty exhibit a high prevalence of lethal diseases (which kill some 200,000 children under 5 every week). Many of these diseases – AIDS, tuberculosis, prospectively smallpox, also new SARS-like viruses, possibly avian flu – cannot be reliably quarantined (Garrett 2005). Thus the poverty of 40 percent of humankind can ultimately jeopardize the lives of much of the rest, particularly those who travel widely, and even those who would confine themselves to enclaves of affluence. Moreover, unless some way is found to ameliorate poverty around the world, many of its victims are likely to succumb to the reaction of extreme alienation and anger at those better off, becoming the constituents of demagogic politicians and, particularly when the afterlife appears more promising than one’s miserable earthly existence, willing martyrs in campaigns of intercommunal violence or terrorist acts against those believed to be the cause of their plight. Failed and fragile states, civil wars, ethnic and racial con-


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flict (a good deal of it trans-border), hordes of homeless and stateless migrants – all of these threats to regional and world order do correlate highly with poverty, and are often its direct consequences. Recognizing that enough food is being produced to feed everyone while roughly a billion are going hungry, and that significant poverty alleviation is not beyond the world’s economic capacity, 189 countries in September 2000 adopted the so-called Millennium Development Goals (MDGs). These were spelled out in the form of 18 global development targets to be achieved by 2015, including: cutting the proportion of people living in extreme poverty and hunger by half of what it was in 1990; reducing the under-5 child mortality rate by two-thirds; halving and reversing the spread of AIDS and other major diseases; halving the proportion of people without sustainable access to safe drinking water and basic sanitization; eliminating quotas and tariffs for least-developed countries’ exports to the industrial countries; and substantial debt relief for the heavily indebted poor countries. As a part of the MDG campaign, and despite the persisting problem of ensuring that official development assistance is not grossly mismanaged by recipient governments and finds its way to the projects and people that need it most, the United States in 2002 joined the other OECD countries in signing the Monterey Consensus, urging “all developed countries that have not done so to make concrete efforts toward the goal of 0.7 percent of gross domestic product as official development assistance” (United Nations 2002). Most development economists understood that it would take at least twice these amounts of resource transfers to jump-start engines of sustainable development in the poor countries. But the Monterey Consensus, now including the previously opposed United States, was widely regarded as at least a step in the right direction. Four years after Monterey, however, the rich countries cumulatively have appropriated less than half of the nearly $200 billion a year that should by now have been made available. Norway, Denmark, Sweden, and the Netherlands have met or surpassed the 0.7 percent quota, and Britain, France, Germany, Spain, Ireland, Belgium, and Finland have set clear timetables for reaching it. But the United States remains near the very bottom of the list of the 22 OECD countries, contributing a paltry one-sixteenth hundredth of 1 percent of its $10 trillion gross national income (some $16 billion, instead of the target $75 billion). The International Monetary Fund (IMF) and the World Bank in their combined Global Monitoring Report 2005 recognized that with only a decade to go until 2015, “achieving the MDGs seems daunting, especially in Sub-Saharan Africa.” But, instead of reducing the targets or extending their deadlines, the IMF and Bank economists urged the affluent countries to “step up implementation of the commitments they made as part of the Monterey Consensus,” and formulated a detailed agenda of practical cooperative action for generating the required momentum (International Monetary Fund 2005). If the United States government were operating from the premises of Higher Realism, it would be taking a leading role along with the Europeans (who, in the absence of credible US commitments, have stepped out in front by default) and the Japanese in mobilizing the required resources – financial, technological, organiza-

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tional, and intellectual – for achieving the MDGs. As stated in a 2005 joint statement by James Wolfensohn, the outgoing President of the World Bank, and Rodrigo de Rato, the Managing Director of the International Monetary Fund, “At stake are the prospects not only for hundreds of millions of people to escape from poverty, disease, and illiteracy, but also for long-term peace and security.”

World interest 4 Without global cooperation to preserve the planet’s temperate climate and to husband its scarce resources and natural ecologies, the other world interests, particularly in peaceful conflict management and poverty alleviation, are bound to be jeopardized. If the CO2 envelope around Earth continues to thicken and global warming proceeds within the ranges predicted by the Intergovernmental Panel on Climate Change and the National Academy of Sciences, the resulting environmental perturbations can have profoundly disruptive effects on many communities around the world. One of the standard forecasts, a drastic melting of polar ice-caps causing ocean waters to rise and inundate the many coasts and small islands, envisions millions having to abandon their homes and their means of making a livelihood. Some arid regions could benefit from increased precipitation, but the increased heat and humidity in parts of the tropics may generate a proliferation of disease-carrying organisms, while in other areas the desertification of previously fertile crop lands could produce hordes of impoverished migrants (United Kingdom 2006). A heavy burden inevitably falls on the United States in pursuing the world’s vital interest in arresting global warming – being the largest user of energy based on the burning of fossil fuels, the principal source of the CO2 buildup. But the United States has stubbornly refused to shoulder its share of the burden of reducing the production of CO2 as stipulated in the Kyoto Protocol of 1997 (which it actively helped negotiate, then reluctantly signed, and finally rejected) or to seriously take up the challenge of converting to alternative energy sources. Nor has the United States (except for its influential role in banning substances that thin the ozone layer which screens out cancer-producing ultraviolet sunlight) pulled its weight in the international efforts to counter the wide range of threats to the planet’s crucial ecosystems detailed in the 2005 Millennium Ecosystem Assessment Synthesis Report, prepared for the United Nations by 1,300 experts from 95 countries (Reid 2005). There are, of course, tradeoffs to be made between policies pursuant to freemarket/economic development values and various of the policies required by environmental values. But the world interest – and the US national interest – demands that the United States exercise leadership, which it has sloughed off in recent years, in formulating and implementing environmentally sustainable development policies that can best serve both sets of values.

World interest 5 Both as an end in itself, consistent with the continuing e pluribus unum experiment that is the essence of this country, and because otherwise US foreign policy will


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generate increasing hostility, the United States should be a champion, not an adversary, of a culturally and religiously diverse world. The human species, still evolving the characteristics that the larger natural system and human volition will select as the traits worth preserving, has yet to find the way of life most conducive to the realization of basic human needs and wants. Even those who accept the premise of theistic causality can find ample evidence, in the variety of religions, that the gods are not in complete agreement on the best design of human communities. Accordingly, the United States should be generally supportive of efforts by distinct cultural communities around the world to practice their own ways of life and to devise their own political and economic systems, and should refrain from intervening to compel them to emulate the US or other “Western” models (Rudolph 2005). In other words, while favoring “freedom,” this country should never be in the business of forcing people to be free as we define it. This should not, however, preclude interventions, especially when legitimized by a broad international consensus, to counter genocide and other crimes against humanity as defined in the statute of the new International Criminal Court. Nor should such forbearance prevent the United States from engaging in internationally authorized peacekeeping or conflict control operations where required to prevent an eruption of violence.

World interest 6 The world interest in allowing culturally diverse societies to practice their own ways of life, however, can come into conflict with the world interest in political systems based on the informed consent of the governed and respectful of fundamental human rights – democracy in its fullest sense. The latter has become a world interest as the information revolution and the inability of governments to hide their repressive policies has made explosive situations, which are disruptive of world order, in which consent-of-the-governed principles and basic human rights are blatantly violated. Social science research shows that democracies have rarely gone to war against one another, but it does not show that elected governments are necessarily more peaceful externally – especially if headed by virulent populist and highly nationalistic politicians – or that, once elected, they will not turn autocratic and repressive. The prospects for world peace might be better in a world of stable democracies, but it should not be fallaciously, and dangerously, deduced from this that there is an immediate world interest in fomenting insurrections and/or mobilizing military interventions to depose non-democratic regimes. Even with respect to the sponsorship of non-violent pressures to effectuate regime change, policy makers should be asking today whether overall the set of world and US interests will be better served by giving precedence to an assertive democratization policy, particularly in the Middle East, or to policies of constructive engagement even with some rather unsavory governments. There are authoritarian countries (Egypt, or Jordan, for example) in which efforts at rapid democratization may lack the cultural and sociological soil to take root, and in which premature electoral democratization may result in majoritarian tyranny that tramples over the rights of

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minorities and individuals – policies supported by the voters and by their representatives in parliament, but tyranny nonetheless. While statistically it can be shown that economic development does significantly correlate with democracy in poor countries (Halperin et al. 2005), scholarly analysis also indicates that rapid political transformations from authoritarianism to democracy tend to bring on dangerous levels of domestic instability disruptive of sustained economic growth (Mansfield & Snyder 2005). Today’s backlashes against democratization in some Third World countries reflect this dynamic. So does the fear of many dictatorial regimes – China’s rulers being a prime example – of unleashing populist pressures. And what of the economically failing states? Should the lives of millions of people in their jurisdictions be further jeopardized by an insistence on progress in democratization as a precondition for giving them economic aid? Then too, various governments whose cooperation in arms control, conflict management, and counter-terrorism is essential are far from democratic and show little real indication of near-term movement in that direction. The list is extensive and, in addition to the remaining “axis of evil” states (Iran and North Korea), includes countries such as China, Vietnam, Saudi Arabia, Pakistan, Uzbekistan, and Uganda. In any of these states, democratization, when it comes, is more likely to take root if implanted by local reformers able to adapt political change to the indigenous culture. Outsiders – especially Americans today – no matter how wellintentioned and knowledgeable, are prone to offend nationalist sensibilities and inadvertently strengthen the hands of those who benefit from the autocratic status quo. Higher Realism is informed by these complexities. It operates from the premise that the world interest in promoting freedom and democracy in the still often autocratic “South” and “East” is best furthered through a prudential case-by-case assessment – an assessment with substantial input from the locals – of local feasibility and consequences, and of expected costs to other world interests rather than on the basis of a universal strategy of democratization.

World interest 7 All of these world interests imply a greater willingness than in previous historical eras by statespersons, powerful private interests, and the general public around the world to treat the inhabitants of plant Earth as citizens of a global community. But world society cannot be deemed a community unless there is considerable mutual accountability across national borders for how people deal with the planet’s resources and for how they treat one another (Ikenberry 2001; Haass 2005). The accountability principle can be stated simply: Those who can or do crucially affect the security or well-being of others (especially by inflicting harm) are answerable to those whom they immediately and directly affect, and to the larger society whose well-being, norms, and behavior are implicated. The principle is simple, but its implementation is pervaded by complexity (Grant & Keohane 2005). The international structures and procedures needed to ensure that those who can negatively affect the well-being of others are accountable to those they may harm


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range across a wide spectrum. At one end are communications, and possibly ad hoc meetings, between those who can affect one another (when information and/or threats are exchanged and behavioral adjustments are negotiated or refused); at the other end are permanently sitting decision-making institutions. Accountability arrangements also vary across another spectrum, intersecting the first one, ranging from obligations to keep the affected or potentially affected informed of what is (or will be) done to them to agreements not to act without the informed consent of the affected parties. Another dimension of complexity is the fact that such horizontal accountability arrangements (those that operate between states or established international entities) may not always be consistent with vertical accountability (transparency and decision-making arrangements within states or institutions). In political philosophy and practice, much more attention has been devoted to the latter – to understanding and devising processes to ensure that governing authorities and officials act responsibly in implementing the will of their constituents and/or adhering to the purposes of the state or institution. By comparison, horizontal (interstate or multilateral) accountability is underdeveloped, and some of the institutions that have been established to bring a modicum of mutual accountability into the global system, like the IMF and the World Bank, are quite lacking even in transparency, let alone internal democracy. Ironically, internal democracy deficits are also characteristic of some of the most active human rights- and democracy-promoting non-governmental organizations (Florini 2003). Granted the difficulties, a global system of accountability norms, institutions, and processes is in the self-interest of the United States, particularly in a world where its citizens and material assets at home and abroad are increasingly vulnerable to harassment and attack. But for such a system to take hold in the otherwise dangerous and unstable world of the twenty-first century, the United States will have to accept reciprocal obligations to be bound by the accountability norms and processes – in the security field preeminently, but also with respect to the country’s actions, and the actions of its firms and citizens, affecting the global economy, the planet’s environment, and the human rights and dignity of people in other countries. Given the complex and cross-cutting relationships in world society, not all of the accountability obligations and processes can operate globally. Some will involve only two or three neighboring states; some – on the model of the EU – will cover whole regions or continents; and some, such as those required to deal with global warming or the stability of the international monetary system, may have to operate worldwide. The thickest accountability relationships will be functionally specific – that is, applicable to the unique problems in a particular sector. Fortunately, there is some rudimentary scaffolding to build on in the fields of arms control, counter-terrorism, international commerce, international transportation (sea and air), and communications, environmental management, and human rights. In each of these realms states and non-governmental actors have discovered that there are often “positive sum” benefits to be achieved through institutionalized mutual accountability – even if only to establish predictability in one another’s behavior and reduce the costs of fresh negotiations and transactions dispute by

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dispute. But new accountability processes, although thin at the outset, also need to be developed to cover inherently interdependent sectors such as trade (now mainly the province of the World Trade Organization) and the environment (now the responsibility of the UN Environmental Program).

Priorities and Tradeoffs Although most nations and communities could endorse all or most of these seven world interests as consistent with their own self-interests, considerable disagreement is likely when it comes to prioritizing them – both in the sense of according the particular interests higher or lower value when there is tension between them and in the sense of giving them precedence on an agenda of priorities. Such disagreements will also affect the bargaining, domestic and international, over how much of one interest to risk or sacrifice in the service of other interests. Even concern for the healthy survival of the human species – universally carrying the highest value – may not, because of variable and uncertain estimates of the nature of the threats, generate an international consensus on the time-urgency of policies to ward off the threats. Table 19.1 summarizes the kinds of controversies that can be anticipated. Indeed, intense arguments should be expected, especially if the principle of mutual accountability were in fact operating, over how to effectively combat nearterm terrorist threats while protecting individual human rights and furthering democratization, and how to do so in ways respectful of the world’s diverse cultures and religions; and over how to pursue poverty alleviation through economic growth without endangering crucial ecologies. A rule of thumb for making the optimal choices in the hard cases, whether the decisions are made by individual governments or by international agencies, should be: choose so as to bring about the least cumulative value loss (which assumes at least some agreement on the value of the various competing interests). We should remind ourselves, however, that disagreements between communities over priorities and tradeoffs are characteristic also of bargaining within countries over how to serve the most basic of the traditional national interests of one’s country’s survival, economic well-being, and way of life. The fact of difficulty in forging agreement in the very tough global arenas does not vitiate the concept of world interests any more than the reality of conflicting and cross-cutting interests dissuaded James Madison, Alexander Hamilton, John Jay, and John Adams – realists all – from the conviction that chaos could be avoided by enlightened statespersons determined to define and work for the interests of the whole nation. Such serious deliberation in the quest for policies that will optimally serve the world interests without sacrificing the country’s irreducible national interests is the hallmark of Higher Realism. A US foreign policy of this sort, credibly and without hypocrisy designed to serve world interests that are admittedly in the national interest – and structured around international deliberations to find ways of reconciling one’s own preferences with those of other nations – can do much to transcend the North–South/East–West divide and ameliorate its dangerous consequences.

Table 19.1 World interests to be championed by the United States: expected international support and controversies World interests

International support/ controversy

Likely tension between world interests

1. Healthy survival of human species 2. Less use of force

Near universal support

–

Widespread support

3. Reduction of poverty and disease

Near universal support for goals, but much controversy over strategies Near universal support for goals, but much controversy over strategies Considerable controversy in many countries over degree and kinds of behavioral variance acceptable Wide differences around the world over meaning, forms, and fit in various cultures Vague universal commitment to the objective, but US and other actors will need to compromise some prerogative of sovereignty

Possible tension with need to forcibly prevent WMD use Possible tension with militant demands for 3, 5, or 6 Tension over priority for 4 or 6

4. Care of ecologies

5. Cultural and religious pluralism

6. Democracy and human rights

7. International accountability

Tension over priority, and strategies for 3

Tensions with some forms of 6

Tension in many places with 5 and strategies for 3 –

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References Broad, William J. (2005) “US Redesigning Nuclear Weapons,” New York Times, February 7. Brown, Seyom (2003) The Illusion of Control: Force and Foreign Policy in the 21st Century. Washington, DC: Brookings Institution. Bush, George W. (2002) The National Security Strategy of the United States. The White House (September 20). Bush, George W. (2005) “Second Inaugural Address.” January 20 (text available at: www.whitehouse.gov). Campbell, Kurt M., Einhorn, Robert J., & Reiss, Mitchell B., eds. (2004) The Nuclear Tipping Point: Why States Reconsider Their Nuclear Choices. Washington, DC: Brookings Institution. Florini, Ann (2003) The Coming Democracy: New Rules for Running a New World. Washington, DC: Island Press. Food and Agricultural Organization (2006) The State of Food Insecurity in the World 2006. Rome: FAO. Fukuyama, Francis (2006) “After Neoconservatism,” New York Times Magazine, February 19. Garrett, Laurie (2005) HIV and National Security: Where Are the Links? Washington, DC: Council on Foreign Relations. Goldberg, Jeffrey (2005) “Breaking Ranks: What Turned Brent Scowcroft against the Bush Administration,” The New Yorker, October 31: 54–65. Grant, Ruth. & Keohane, Robert O. (2005) “Accountability and the Abuses of Power in World Politics,” American Political Science Review 99(1): 29–43. Haass, Richard N. (2005) The Opportunity: America’s Moment to Alter History’s Course. New York: Public Affairs. Halper, Stefan & Clarke, Jonathan (2004) America Alone: The Neo-Conservatives and the Global Order. Cambridge: Cambridge University Press. Halperin, Morton H., Siegle, Joseph T., & Weinstein, Michael M. (2005) The Democracy Advantage: How Democracies Promote Prosperity and Peace. London: Routledge. Ikenberry, G. John. (2001) After Victory: Institutions, Strategic Restraint, and the Rebuilding of Order After Major Wars. Princeton, NJ: Princeton University Press. International Monetary Fund and the World Bank (2005) Global Monitoring Report 2005: Millennium Development Goals: From Consensus to Momentum. Washington, DC: International Bank for Reconstruction and Development. Judis, John B. (2004) The Folly of Empire: What George W. Bush Could Learn from Theodore Roosevelt and Woodrow Wilson. New York: Scribner. Kennan, George F. (1954) Realities of American Foreign Policy. Princeton, NJ: Princeton University Press. Keohane, Robert O., ed. (1986) Neorealism and Its Critics. New York: Columbia University Press.


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Korb, Lawrence & Ogden, Peter (2004) The Road to Nuclear Security. Washington, DC: Center for American Progress. Krugman, Paul (2006) “They Told You So,” New York Times, December 8. Mann, James (2004) The Rise of the Vulcans: The History of Bush’s War Cabinet. New York: Viking. Mansfield, Edward D. & Snyder, Jack L. (2005) Electing to Fight: Why Emerging Democracies Go to War. Cambridge, MA: MIT Press. Morgenthau, Hans J. (1951) In Defense of the National Interest: A Critical Examination of American Foreign Policy. New York: Alfred A. Knopf. Morgenthau, Hans J. (1954) Politics Among Nations: The Struggle for Power and Peace. New York: Alfred A. Knopf. Princeton Project on National Security (2006) Forging a World of Liberty under Law: US National Security in the 21st Century. Princeton, NJ: Woodrow Wilson School of Public and International Affairs. Reid, Walter V., et al. (2005) Millennium Ecosystem Assessment Synthesis Report. New York: United Nations Environment Program. Rice, Susan E. (2006) “The Threat of Global Poverty,” The National Interest 83 (Spring): 76–87. Rose, Gideon (2005) “Get Real,” The New York Times, August 18. Rudolph, Susan Hoeber (2005) “The Imperialism of Categories: Situating Knowledge in a Globalizing World,” American Political Science Association Perspectives on Politics 3(1): 5–12. Smith, Michael Joseph (1986) Realist Thought from Weber to Kissinger. Baton Rouge, LA: Louisiana State University Press. Smith, Tony (1994) America’s Mission: The United States and the Worldwide Struggle for Democracy in the Twentieth Century. Princeton, NJ: Princeton University Press. United Kingdom, Chancellor of the Exchequer (2006) Stern Review: The Economics of Climate Change. London. United Nations (2002) Final Outcome of the International Conference for Financing Development: Monterey Consensus Document A/AC.257/L13. United Nations (2004) A More Secure World: Our Shared Responsibility. Report of the High-Level Panel on Threats, Challenges, and Change, delivered to the United Nations Secretary General on December 2. United Nations General Assembly document A/59/56. US Department of Defense (2001) Nuclear Posture Review Report. Department of Defense. Waltz, Kenneth (1979) Theory of International Politics. Boston, MA: AddisonWesley. World Bank (2006) 2006 World Development Indicators. Washington, DC: World Bank. Zartman, I. William, ed. (2007) Peacemaking and International Conflict: Methods and Techniques. Washington, DC: United States Institute of Peace Press.

Index

Abdullah 175 aborigines (Australia) 150 Abraham, Itty 241 Abramovitz, Moses 44 absolute poverty measure 315 Adams, John 380 Adelman, M.A. 72–3 advantages of backwardness 44, 140n African National Congress (ANC) 257 African Union (AU) 218 Aghion, Philippe 44, 46 Aguirre, Adalberto 351 Ahluwalia, Montek S. 318, 325 Ahmadinejad, Mahmoud 264 Aitken, Brian 45 Aizenman, Joshua 53 Al-Afghani, Jamal Al-Din 167 Albright, David 240 Alesina, Alberto 46 Algeria energy cuts 76 Allen, Paul 295 al-Qaeda 170, 178, 196, 238–9 Alster, N. 69 Alvarez, L. 68, 348 Alvarez, R.M. 95 Amantadine 151

American Weather Underground 194 Amoore, Louise 341 Anderson, Benedict R. O’G. 185, 192 Anglo-Iranian Oil Company 174 Annan, Kofi 30, 157, 217, 229 Antarctic Treaty (1959) 258 Antarctica Nuclear Weapon Free Zone (NWFZ) 258 anti-Americanism (Islamic) 10 Antkiewicz, Agata 13, 273, 284, 288n Apodaca, Clair 92, 96 Apollo Project 132 Arab League 209–10 Arab oil embargo (1967) 76 Argentine–Brazilian Accounting and Control Commission (ABACC) 258 Aris, B. 80 Arnold, B.C. 338n Arrighi, Giovanni 44, 184, 342 Artz, Lee 202 ASEAN–4 13 Ash, Timothy Garton 215, 293–4 Asian-African conferences (Bandung, Belgrade, Cairo) 255 Assad, Bashar 178 asset/revenue demand 75 Atack, J. 130–1, 141n


Index Ataturk, Mustafa Kemal 188 Athenian plague 149 Australia in North 2 avian flu (H5N1) 147, 154, 156, 159 Aykut, Dilek 271, 274, 277 Ayoob, Mohammed 10, 166–7, 169–70, 172, 177, 197 Baerg, Nicole 9 Bairoch, Paul 140n Baker, R. 72 Ban, Jonathan 155 Bankoff, Greg 188–9 Bank of Zaire 137 Barber, Benjamin 23 Bar-Nathan, Galia Press 19 Barro, Robert J. 44, 52–3, 124–5 Barroso, Jose Manuel 307 Battat, Joseph 271, 274, 277 Baumol, William J. 44 Beck, Nathaniel 101n Beer, Francis A. 11, 202 Bell, Clive 242 Bende-Nabende, Anthony 96 Benedict XVI 198n Bensel, R.F. 129 Berdal, Mats 219 Bergman, Salomon 19 Berkman, Tobias C. 221 Bernanke, Ben S. 42 Berry, Albert 27 Besancon, Marie 232 Bhalla, Surjit S. 26, 316, 338n Birchfield, Vicki 13 Bird, Graham 51 Birdsall, Nancy 51, 66 Black Death 149 Black Hand 192 black rat (Rattus rattus) 149 Blainey, David 19 Blanton, Robert 8-9, 92–3, 95, 101n Blanton, Shannon Lindsey 8–9, 92–3. 95, 101n Bliss, Harry 96–7 Boas, Morten 272, 286 Bobrow, Davis 221 Bolivia tightening of energy transition terms 77 Borensztein, E. 53

385

Bornschier, Volker 342 Boswell, Terry 57n, 363n Bosworth, Barry 46–7, 53, 57n Boulden, Jane 11–12 Bourdieu, Pierre 185 Bourguignon, François 338n Boustany, Nora 158 Bouteflika, Abdelaziz 210 Boyer, Mark A. 221 Boyer, Robert 298 Boynton, G.R. 11, 202 Brawley, Mark 9 Brecher, Jeremy 351 Breslin, Shaun 273, 277, 282 Bretton Woods institutions 20, 281 poverty 33 BRICS 221, 273 BRICSAM 13, 271–4 Brinkley, J. 78 Britain early developer 2, 9 French Revolutionary and Napoleonic Wars 123, 132–4 industrial revolution 2 technological competitor 2 Broad, William J. 372 Brooks, Sarah 57n Broume, Stephen 302 Brown, David 157 Brown, Seyom 14, 42, 373 Brownlee, Shannon 151 Bryson, R. 149 bubonic plague 149, 154 Buchanan, James 130 Bueno de Mesquita, Bruce 264 Buffet, Warren 159, 295 Buira, Ariel 281 Bull, Hedley 186 Bush, George W. 217, 229, 302–3, 370, 373 Bush, Vannevar 131 Buzan, Barry 191 Calderon, Cesar 56n Call, Charles 230 Callaway, Rhonda 92, 95, 97 Calvo, Guillermo 46 Cameron, D. 127 Cameron, R. 129

386

Index

Cancun ministerial meeting (2003) 305 Candessus, Michel 241 Canton Trade Fair 155 Capell, Kerry 159 Caracazo riots 94 Carnahan, Michael 233 Carr, Dana 153–4 Carter Doctrine 67 Carter, Toi 360 Cartwright, F. 149 Castaneda, Jorge G. 34 Center for Disease Control and Prevention (CDC) 157 Cerny, Philip G. 189, 286 Cespedes, Luis Felipe 46 Chad energy transition tightening terms 77 Chan, Steve 124, 127 Chang, Roberto 46 Charron, Andre 225n Chase-Dunn, Christopher 24, 342, 362n, 363n Chavez, Hugo 34 Chen, Lincoln C. 154 Chen, Shaohua 26, 316, 318 China late developer/challenger 2 Chinn, Menzie D. 44, 55n Chirac, Jacques 259, 264 Chivers, C.J. 240 Chossudovsky, Michel 26, 28 christianity requirement 187 Chulalongkorn (Rama V) 186 Cingranelli, David 95 CIRI index (Cingranelli-Richards human rights measure) 95, 98, 101n citizen’s voice 93 civil society definition 341 Clarida, Richard 42 Clark, Cal 92 Clark, Janet 92 clash of civilizations 169, 179 Cohen, Daniel 46, 57n Cohen, Eliot A. 166 Cohen, Jon 154, 159 Cohen, Stephen 273, 282 Colley, Linda 134 Collier, Paul 124, 243 Collins, Randall 46-47, 53, 57n, 184–5

Columbus, Christopher 149 Comin, Diego 44 Commission on Weak State and US National Security 232 Commitment to Development Index (CDI) 309 Common Agricultural Policy (EU) 305 Comprehensive Test Ban Treaty (1996) 259 Computer Assisted Reasoning System (CARS) 336 conflict pools 246 Congo Democratic Republic civil war (1960–5) 123 civil war (1990s) 9, 135–8 constructivism 66 Continental system 133 Cooper, Andrew 13, 271, 286–7 Cooper, Richard 45 Copeland, D.C. 69, 74 Corn Laws 134 corporcracy 28 Correlates of War Seminar (Ann Arbor) 264 Cotonou Convention 300 Country Indicators for Foreign Policy (CIFP) 232 Country Policy and Institutional Assessments 233 Creative destruction waves 129 Crocker, Chester A. 227 Dallmayr, Fred E. 28, 32 Danish Mohammed cartoons 197, 198n Darder, Antonia 348 Darley, J. 66, 79 Darmstadter, J. 72 Das, Gurcharan 281 Davenport, Christian 96 Davidson, C. 108–10 Davis, Zachary 259 Dayton-Johnson, J. 141n “dead end” host species 152 Deaton, Angus 44, 316 DeBoer, J. 150 debt distress 51 Deffeyes, K.S. 65–6, 72, 79 DeGeest, Theresa Manley 148

Index Demirguc-Kunt, Asli 45, 57n democratic world government 357 Denoeux, Guilain 69 dependency theory 94 Derber, Charles 28 Derluguian, Georgi M. 185, 188 Desert Shield/Storm campaign (1990–1) 74 Detragiache, Enrica 45 developmental dictatorships 94, 100 development-rights tradeoff 94 Di Marco, Luis E. 189 Di John, Jonathan 94 diabetes 154 Diamond, J. 149 diarrheal diseases 243 Dicken, Peter 44 Dikhanov, Yuri 318, 338n Direct Action 194 Disease antibiotics 151 giobalization 154 humanitarian emergencies 153 income inequalities 152 Industrial Revolution 155 North-South co-operation 156–7 scenarios 155–6 waves 149–50 disease pandemics and human security 10 distributional coalitions 127 Dixon, William 57n DMM model 108 Doha Round 281, 305 Dollar, David 29 dominant discourse of risk 189 Donnelly, Jack 94, 100 Dos Santos, Theotonio 94 Doyle, Michael W. 31, 33 Drache, Daniel 298 Durch, William J. 221 Dutch disease 332 ebola 152, 242 ecological globalization 146, 148 economic convergence 44, 56n, 124 ECOWAS 218, 222 Eichengreen, Barry 44 Eickelman, Dale F. 170 Eisenhower, Dwight D. 368 El Baradei, Mohamed 263

387

Elbadawi, Ibrahim 57n elite cohesion 141n Elliot, Kimberly Ann 93 emerging trilateral world 288 emulative reforms 186, 191 emulative transformation path 191 “end of history” thesis 167, 188 Enderwick, Peter 269 Energy Charter Treaty (1994) 70, 73 energy cutoffs 77 energy trade cycle 66, 68 energy war 74, 78 Engardio, Pete 155 Enola Gay 254 European Center for Disease Prevention and Control 157 European Union development policy 301 South interactions 13 Evans, Peter B. 94 Evolving Logic 336 Evrensel, Ayse Y. 55n external shocks 124, 127 elite consensus 127 vested interests 139 failed states 12 energy insecurity 244–5 infectious disease 242–3 international crime 241–2 September 11, 2001 linkage 228–9 terrorism 238–30 WMD proliferation 239–41 Failed States Index 230, 232 FARC 239 Faure, Jean-Claude 307 “fear of floating” 46 Fearon, James D. 227 Feng, Yi 92 Ferdinand, Franz (Archduke) 192 Fertile Crescent 11 Finnemore, Martha 31 First Continental War (Africa) 136 First World 2 fiscal regime (non-proprietal) 73 Fischer, Stanley 26, 43–4 Florini, Ann 379 Fogel, R.W. 129 Forero, J. 77

388

Index

Foster, J.E. 338n Fourth World 15n Fragile States Initiative 230 France French Revolutionary and Napoleonic Wars 123, 132–4 Frank, Andre Gunder 94 Frankel, Benjamin 259 Frankel, Jeffrey A. 45, 53 Freeman, C. 93, 129, 140n French, Hilary 151 French Revolutionary and Napoleonic Wars (see also Britain and France) 9, 123, 132–4 Friedman, Thomas L. 23 Fukuyama, Francis 141n, 167, 188, 227, 246 G–6 273 G–7 166, 281 G–8 166, 272 G–77 218 Gal, Orit 19 Gale, Fred 270, 287 Galtung, Johan 94 gambles for resurrection 46 Garrett, Laurie 149–50, 154, 243, 374 Gartzke, Erik 260 Gates, Bill 159, 211–12, 295 Gates, Melinda 159, 212–13 Gates Foundation 159, 211, 213 Gavin, Michael 46 Gazprom and energy cutoff 77 Gellner, Ernest 192 Genberg, Hans 44 Geneva Convention (Fourth) 176 Gerges, Fawaz 170, 177 Germany late developer 2 technological competitor 2 Gershenkron, Alexander 44, 140n Ghana structural adjustment 119–20 Ghani, Ashraf 232, 246 Gibbons, Ann 152 Giddens, Anthony 184 Giem, Rebecca L. 362n Gilligan, Michael 219, 225n Gilpin, Robert 19, 28–9, 33, 36n, 126, 40n

Glaser 67–8 Glasgow, G. 95 Glasius, Marlies 351 GlaxoSmithKline PLC 159 globalization definition 22–3 economic convergence 8 poverty 7, 26–33 thesis 29–9 Global Fund to Fight HIV/AIDS, Tuberculosis and Malaria 157 Global Outbreak Alert and Response Network (GOARN) 156 Global War on Terrorism 239 Goldberg, Jeffrey 368 Goldin, C. 131 Goldstein, Andrea 271, 274, 277, 282 Goldstone, Jack 197 Goldwyn, David L. 245 Gondola, C.D. 136, 138 Gordon, David 27 Goss, Porter 239 Gottemoeller, Rose 263 Gould, Erica R. 50, 52 Gourinchas, Pierre-Olivier 44, 46, 55n, 57n Grant, Ruth 378 Greasley, D. 133 Great Depression (1930s) 2 Greater Horn of Africa Initiative 229, 238, 245 Group of 20 305–6 growth model (neoclassical) 44 Grugel, Jean B. 299, 310 Gurr, Ted R. 13, 238 Gutierrez, Erik J. 362n Gvosdev, Nicholas 238 Haass, Richard N. 30, 378 Hague Conference (Second) 186 Hall, Thomas D. 342 Hallinan, C. 66, 78 Halperin, Morton H. 378 Hamas 178–9 Hamilton, A. 380 Hamlet 56n Harpaz, Marcia 19 Harrelson-Stephens, Julie 92, 95, 99 Harris, M. 101n, 148 Harrison, Ann 45

Index Hartley, K. 124 Harvard Working Group on New and Resurgent Diseases 146–7 Harvey, David 362n Hattori, Tomohisa 48 Hauck, William R. 52 Hausmann, Ricardo 46 Hayes, M.H. 70 Haynes, Jeffrey 286, 272 Heckscher-Ohlin model 108 Heilbroner, R. 131 hemorrhagic fever 152 Henisz, Witold 96, 100n hepatitis B 243 hepatitis E 153 Herkenrath, Mark 351, 360 Hersh, Seymour 177 Hertel, Thomas W. 306 Heyne, Paul 43, 56n High Level Panel on Threats, Challenges and Change (2004) 373 higher realism 15, 370 Hildyard, N. 73 Hillebrand, Evan E. 320 Hinderson, Corey 240 HIPC (Heavily Indebted Poor Countries) initiatives 51 Hirst, Paul Q. 166 Hitchens, Christopher 197 Hitler, Adolf 188 HIV/AIDS 147, 152–3, 155, 158–9, 287, 342–3 Hizbullah 177–8, 180n Hobhouse, Henry 150 Hobsbawm, R. 134, 140n Hoge, Warren 175 Holland, J. 65, 78 Holland, Martin 300 Holm, Hans-Henrik 23 Homestead Act (1862) 130 Hong Kong Flu (H3N2) 147 Hong Kong ministerial meeting (2005) 305 Hoogvelt, Ankie M.M. 166 Hook, Steven W. 50 Hopp, Marianne 153 Hoppen, K.T. 134 Hossain, Anwar 338n Hughes, Barry B. 14, 320 human rights and trade virtuous cycle 92

389

Hume, David 56n Humphreys, Steven 171 Hunt, Michael 256 Huntington, Samuel P. 169, 172 Hurrell, Andrew 28, 30, 185 Hussein, Saddam 169, 175, 178 Hutchful, Eboe 119–21 Hutchison, Michael 51, 55n Hymer, Stephen 94 ice ages 149 ideological hegemony 169 Ikenberry, G.John 72–3, 80, 378 import substitution industrialization (ISI) 29, 106 influenza virus (1918–1919) 147, 155 Inglehart, Ronald 45 Internal Macedonian Revolutionary Organization 192 International Clearing Union 56n International Comparison Project (ICP) 315 International Energy Agency (IEA) 72 International Futures (IFs) 320 International Health Regulations 158 International Monetary Fund (IMF) conditionality 51 fixed exchange rate regime 106 poverty mission 20 International Sanitary Regulations 158 International Society for Infectious Diseases 156 Iranian Revolution 169 Iran–Iraq War 75 Iran–Libya Sanctions Act (1995) 75 Iraq invasion (2003) 73 war 66 Irfan, Mohammod 14, 338n Irish potato famine 134 Islamic Jihad 170 Jackson, Robert H. 187, 231 Jaffe, A.M. 72, 79 Jaggers, Keith 100n, 113 Japan, as late developer 2 Jay, John 380 Jeanne, Olivier 44, 46, 55n, 57n

390

Index

Jemaah Islamiya 170 Jenkins, Rob 273 Jervis, R. 67–9 Jianhai, B. 80 Jo, Dong-Joon 260 Johansson, Patrik 218, 225n Johnson, P. 129–30, 141n Johnston, Hank 351 Judis, John B. 370 Kabir, Mirza Taghi Khan Amir 186 Kacowicz, Arie 7 Kacowicz, Orly 19 Kagan, Robert 299 Kakwani, Nanak 338n Kamilipour, Yahya 202 Kaminsky, Graciela L. 46 Kaneshiro, Matt 360 Kano (Nigeria) polio vaccinations 158 Kant, Immanuel 320 Kaplan, Robert 30 Karnik, Ajit 93 Kasavubu, Joseph 136 Katanga secession 136 Katz, Jonathan 101n Kaufmann, David 93 Keck, O. 131 Keddie, Nikki 167 Kegley, Charles W. 259 Kennan, George F. 368–9 Kennedy, Paul 126 Kenny, Charles 44, 55n Kentor, Jeffrey 343, 363n Keohane, Robert 67, 71–2, 74, 370, 378 Keshk, Omar 95 Keynes 56n Khaddafi, Muammar 210 Khadduri 72 Khalidi, Rashid 175 Khan, Abdul Qader 240 Khan, Haider 338n Kharroubi, Enisse 56n Khatami, Mohammad 176 Khilnani, Sunil 281 Kim, Hae S. 27–8 Kim Jong Ill 231 Kimberly Process 271, 287 Kingsbury, Benedict 186–9

Kirkpatrick, David D. 176 Kisangani 136 Klare, Michael 66–8, 75, 244 kleptocracy 137–8 Knorr, K. 68 Knutsen, T. 126, 134, 141n Kobayashi-Hillary, Mark 281–2 Kobrin, S.J. 65, 69, 75 Kohli, Atul 282 Korb, Lawrence 372 Korean Peninsula Energy Development Organization (KEDO) 263 Koubi, V. 124–5 Kozul-Wright, Richard 50 Kraay, Aart 29, 51 Krakatoa eruption 150 Kramer, A.E. 77 Krause, Volker 260 Kravis, I.B. 315 Krispin, Yael 19 Krugman, Paul 368 Kugler, Jacek 124–5 Kumar, Krishna 338n Kurth Cronin, Audrey 196 Kurth, J.R. 131 Kuznets curve 324 Kyoto Protocol (1997) 376 Laitin, David 227 Lalasz, Robert 158 Landes, D.S. 140n Landsberg, H.H. 72 Lane, Philip R. 40, 53, 56n Langley, Paul 341 Langlois, R.N. 132 Laqueur, Walter 238 late-developing challengers 2 Lauretti, Lucio 57n lawless zones 229 Layne, C. 67, 80 Lazebnik, Yulia 26 LeBillon, P. 66, 68, 70, 73, 75 Lee, Jong Wha 44, 52, 124–5 Lele, Jayant 272 Lemke, Douglas 264 Lenin, Vladimir Ilyich 94, 193 Lennon, David 300 Levey, David H. 42 Levine, Ross 53

Index Levy, Jack S. 68 Levy, Stuart B. 151 Lewis, Bernard 169 Lewis, Maureen 222 Li, He 22 Li, Quan 101n Libya energy cuts 76 Lincoln, Abraham 130 Linden, Eugene 152 Lippmann, Walter 368 Lipset, Seymour M. 92 Lister, M. 310 Litan, Robert E. 30 Little Boy 254 Little, Richard 191 Lloyd-Jones, R. 134 Lockhart, Clare 232 Logan, Justin 237 Lombardi, Domenico 281 Lome Convention (1975–2000) 300 London, Bruce 94 London Club 51 Long Term Program, IEA (1976) 72 Louca, F. 129, 140n Loungani, Prakash 57n Low Income Countries Under Stress (LICUS) 230, 233 LTTE 239 Luce, Edward 270 Lueck, Sarah 154 Luft. G. 75, 78–9 Lula da Silva, Luiz Inacio 34 Lumsdaine, David H. 33 Lumumba, Patrice 136 Lustick, Ian S. 190 Lyman, Princeton 238 Lyons, M. 133 MacLean, Sandra J. 272, 286 Maddison, Angus 39, 55n, 324 Madison, James 380 Magraw, R. 133 Mahbubani, Kishore 218, 220 Mahdi (twelfth Imam) 171 malaria 153–4, 243 Mandel, Ernest 310n Mankiw, N. Gregory 44 Manners, Ian 298

391

Manor, James 281 Mansbach, Richard 21, 32 Mansfield, Edward 96, 100n, 378 Mao Zedong 188 Maoris (New Zealand) 150 Marburg 152, 156, 243 Marcel, V. 70–1, 76, 79 market culture 93 market society 95 Marples, D. 77 Marquardt, E. 79 Marshall, Monty 100n, 238 Marshall Plan 131, 301 Mars/Venus caricature 299 Martin, Hans-Peter 30 Martin, L. 108–10 Martines-Filho, J. 80 Marxism–Leninism and sovereign state norm 194 Mason–Dixon line 1 Mathur, Somesh Kumar 55n Matthews, Jessica T. 32 Matusz, S. 108–10 Maugeri, L. 79 Maxwell, S. 310 Mayer-Foulkes, David 55n Mazrui, Ali 231, 256 McCarthy, Patrick A. 224 McKeown, T.J. 134 McKibbin, Warwick J. 147–8, 155–6 McKinlay, R.D. 50 McMichael, Tony 148–9 McNeill, William H. 148–50, 184 McWorld 23 Mearsheimer, John J. 67, 176 measles 243 Medecins sans Frontiers (Doctors without Borders) 157 media network coverage biases 11 Melissen, Jan 270 Menkhaus, Ken 239 Method of Indirect Difference 127 Meyer, D.R. 129, 141 Meyer, Stephen M. 259 Meyers, Eytan 19 MG Rover 277 Miko, Frances T. 238 Milesi-Ferretti, Gain Maria 40, 42, 45, 53, 57 Mill, J.S. 127

392

Index

Millennium Declaration (2000) 303, 306 Millennium Development Goals (MDGs) 14, 306, 314, 318, 338n, 375 Millennium Project 14, 316, 319, 336 Mills, Greg 239 Milner, Wesley T. 92, 95, 99 Minhas, Shahryar 264 Mintz, Alex 19 Mitchell, B.R. 121 Mitchell, J. 68–70, 72–3, 76 Mittelman, James H. 22–3 Mobuto, Sese Soko (Joseph Desiree) 136, 138, 141n Modelski, George 126, 141n modernizing autocracies 172 Mody, Ashoka 47, 55n Moe, Espen 9, 140n, 141n Moghadam, Valentine 350–1 Mokyr, Joel 133–4 Mommer, B. 65, 68–70, 72, 75 Mongkut (Rama VI) 186 Monterrey Consensus 375 Monterrey Financing for Development Conference (2002) 306, 332 Moon Agreement (1979) 259 Moon, Bruce E. 8, 51, 53, 55n, 56n Moore, Mick 231 Morgan, K. 134 Morgenthau, Hans 368–9 Morrill Land Grant Act (1862) 129 Morrill Tariff (1861) 128–9 Morrison, J. Stephen 238, 245 Mossadegh 174, 261 Mouawad, J. 73, 80 Mousseau, Michael 92, 95 Mowery, D.C. 31–2 Moyer, Jonathan 338n Mubarak, Hosni 168, 175 Mufson, S. 77 Mugabe, Robert 231 Mughan, A. 50 Mundell, Robert 298 Murdoch, J.C. 24–5 Murshid, Antu Panini 47 Muslim Brotherhood 179 Muslim rage 169 Mussa, Michael 44 Mussolini, Benito 188 Mutitt, G. 65, 73

NAFTA 70 Nairn, A. 131 Nandy, Ashis 25 Narlikar, Amrita 287 Narodnaya, Volya 192 narrative of projection 294, 299 Nasser, Gamal Abd’al 174 Neack, Laura 221 Neal, L. 129 necessity of imperialism 362n Nef, J. 123 Nehru, Vikram 51 Nel, Philip 31–3 Nelson, Ann Marie 157 Nelson, R.R. 131 Neo-Wilsonian ideas 368–70 Neumann, Iver B. 89, 191 New International Economic Order (NIEO) 21, 31, 165, 194, 314 New Zealand in North 2 Ngbanda 137 Niazi, T. 79 Nicolaidis, Kalypso 294, 299, 310n Niemeyer, Richard 360 Nixon, Richard 244 Non-Aligned Movement (NAM) 165, 218 non-proliferation regime 261–3 Treaty (NPT, 1968) 258, 260, 372 Noranda 277 North–South divide demise of USSR 166–7 earliest 15n energy conflict and trade cycle 8 environmental degradation 6 global media 213–14 migration 6 nuclear proliferation tensions 4, 6, 12–13 population growth 6–7 Security Council decision-making 217 trade deficits 8 war in Iraq 166 Northern Concert of Powers and NATO 166 Noy, Ilan 51, 55n Nurnberger, Klaus 24 Nye, Joseph S. Jr. 71, 74, 309 Nzongola-Ntalaga, G. 136–8

Index obsolescing bargain 65, 70–1, 76 Obstfeld, Maurice 40, 42, 45 October War (1973) 71 Office d’Hygiene Publique 158 Office of the UN High Commissioner for Human Rights (OHCHR) 91 Ogden, Peter 372 Oil for Food Program (1996–2003) 75, 78 oil peaks 79 oil shocks 79 Olson, Mancur 9, 122–4, 126–7, 133, 139, 141n Operation Iraq Liberation (2003) 78 Oppenheim, Lassa 187 Organization of Petroleum Exporting Countries (OPEC) declaratory policy (1968) 71 formation (1960) 68, 70, 76 Organski, A.F.K. 124–5 Orme, J. 169 O’Rourke, Kevin H. 39–40 Ortega, Daniel 34 Osirik reactor destruction 257 Ostler, R. 147 Ottawa Process 271, 287 Ottaway, Marina 236 Ottoman Empire–European relationship 186 Outer Space Agreement (1967) 258 Outlaw/rogue states 188 Oxley, L. 133 P1 216 P5 216, 218–19 Packer, Robert 264 Pahlevi, Reza 168, 188 Pamuk, Orhan 183, 189–90 Pape, R.A. 67, 78 parallel international public sector 246 Pardee, Frederick S. 337n Parente, S.L. 134 Paris Club 51 Parrish, M.E. 131 partial test ban treaty 258 Paskoff, P.F. 141n Passell 130–1, 141n Patrick, Stewart 228, 233, 237, 245, 249n Pattillo, Catherine 53

393

Paul, T.V. 257 Payer, Cheryl 49-51 Payne, Anthony 286 Peacebuilding Commission 230 Pegg, S. 66, 72 Pelindaba Agreement (1996) 259 Penrose, E. 69, 71, 76 people-pathogens evolutionary equilibrium 151–2 Perez C. 140n Perlez, J. 75 Peter (the Great) 186, 191 Peters, S. 66, 68, 79–80 petroKazakhstan 277 Phoenix Factor 124 Picciotto, Robert 246 Pirages, Dennis 9, 148, 243 Piscatori 170 Poe, Steven C. 96 Polgreen, L. 77 polio 243 elimination 157–8 political Islam 10, 167–80 Popper, Steven W. 336 population aging 151 Population Reference Bureau 151 Porter, E. 80 Portes, Richard 46 Postiglione, Paolo 57n Potter, Evan H. 287 Pouliot, Vincent 287 poverty definition 24–5 normative implications 30 Powell, Colin 310 Prasad, Eswar S. 44, 55n Prebisch, Raul 189 Preble, Christopher 237 Prescott, E.C. 134 Price, R. 133 Priest, Dana 239 Pritchett, Lant 55n, 93 product cycle 65, 70 production-sharing agreements (PSAs) 73 Program for Monitoring Infectious Diseases (Pro-MED-mail) 156 prospect theory 66, 68–9 proto-globalization 9 proto-ISI 193

394

Index

proxy conflicts and USSR collapse 194 Prystay, C. 155 Przeworski, Adam 52 Pugh, M. 134 Purushothaman, Roopa 273 Quadir, Fahimul 272 Quah, D. 35n quasi-states 231 Quiggin, J. 127 Ragin, Charles C. 185 Ramaswamy, Sushila 27 Rao, M.J. Manohar 93 Rapoport, David C. 15n, 192–4, 196 Rarotonga Agreement (1985) 259 Rasler, Karen 124, 126–7 Ratliff, W. 69 Ravallion, Martin 26, 316, 318, 338n Rawlings, Jerry 119 Rawls, John 32, 184, 320 Rayment, Paul 50 Razin, Assaf 42, 45, 57n realism varieties 67, 367–9 Red Army Faction 194 Red Army (Japanese) 196 Red Brigades 194, 196 Reed, Mukherjee 271 Reel, M. 77 Reese, Ellen 343, 349, 351, 362n regional hubs 280 regional trade agreements (RTAs) 281 Reid, Walter V. 376 Reinhart, Carmen M. 46 Renelt, David 53 Resnick, Adam L. 101n resource curse 66, 70, 72 resource nationalism 65 resource wars 65–6 Reus-Smit, Christian 192 Reuveny, Rafael 15n, 342 Revolution in Military Affairs (RMA) 166 Rhodes, Edward 21, 32 Rice, Condoleezza 229, 374 Rice, Susan E. 227 Richards, David 92, 95 Riddell, R. 310 Rieffel, Lex 51 Rifkin, Jeremy 301, 309

Riker, William H. 264 risk discourse 189 Rodrik, Dani 56n Rogoff, Kenneth 42, 45 Roldos, J. 44 Romer, David 53, 131 Roosevelt, Theodore 256 Rose, Gideon 368 Rosenberg 131–2 Ross, M.L. 6, 68, 70, 72, 94 Rostow, W.W. 140n Rotberg, Robert 230, 232 Roubini, Nouriel 42 Roy, Olivier 239 Rubin, Barnett 232 Rudolph, Susan Hoeber 377 Russet, Bruce 96–7 Russia Gazprom gas cutoff (2006) 71 geoeconomic/political location 2 Rutherford, Bruce K. 179 Rutledge, I. 66, 68, 71, 78 Sachs, Jeffery D. 14, 53, 319, 334 Sadat, Anwar 168, 175 Said, Edward W. 189 Sakhalin Projects 77 Salafist strand, Wahhabi Islam 239 Sala-I-Martin, Xavier X. 44, 53, 338 Salter, Mark B. 189–90 Sanders, E. 129, 150 Sandler, T. 124–5 Sankoh, Foday 240 Saravia, Diego 55n SARS (Severe Acute Respiratory Syndrome) 153, 155–6, 159, 243 Sauvy, Alfred 193 van Schendel, Willem 241 Scholte, Jan A. 28 Schonhardt-Bailey, C. 134 Schonleitner, Gunter 343 Schulz, William 93 Schumann, Harold 30 Schumpeter, Joseph 9, 27, 122–3, 126–7 Schumpeterian growth 139 Scott, Bruce R. 152 Seabed Agreement (1971) 258 Second World 2 Seib, Philip 170

Index semi-civilization 186 Sen, Amartya 24–5, 317, 320, 337 sensitivity interdependence 74 Servan-Schreiber, J.J. 310n Setser, Brad 42 Shah, Naser O-Din 186 Shakespeare, William 56n Shaw, Martin 270 Shaw, Timothy 13, 282, 286 Shuja, S. 5 Sichor, Y. 75 Sidorenko, Alexandra A. 147–8, 155–6 Siebert, Horst 44 “silver bullets” 329 Simmons, M.R. 79 Simpson, Gerry J. 186–9 Singer, J. David 12, 131 260 Singh, Sonali 260 Sinn, Stefan 44 Sipress, Alan 151 Skeet, I. 68–71, 76, 79–80 Slackman, Michael 178 Slater, David 96 smallpox elimination campaign 157 Smith, Adam 43 Smith, Anthony 192 Smith, Jackie 351 Smith, Michael J. 368 Smith, Tony 370 Snidal, D. 67 Snyder, Jack L. 378 social constructivism 69–70 social contradiction, definition 184 Socor, V. 71, 77 Soligo, R. 79 Soloaga, Isidro 55n Solorzano, Jose 338n Solow, Robert M. 44, 56n, 124 Sombart, W. 123 Sorenson, Georg 23 Soto, Marcelo 57n South disease 6 global warming effects 6 interstate conflict 3 terrorism migration 4 South Korea structural adjustment 117–18

395

sovereign equality and norm inequality 10, 185–8 sovereignty index 232 Soviet Union late developer 2 Spar, Debora 91–3, 100n Speth, James G. 33 Spicker, Paul 24–5, 27 spotlight regime 93 Spruyt, Hendrik 184 Stalin, Josef 188 Starr, Amory 348, 351 State Failure Task Force 232 Stavrionos, Leften Stavros 184 Stedman, John 219, 225n Steinmueller 132 Stevens, P. 72 Stewart, Frances 27 Stienstra, Deborah 350–1 Stiglitz, Joseph E. 19, 28, 30, 32, 166 Stone, Randall W. 52 Stoppard, Michael 168 Stop TB Partnership 157 Stoubagh, R.B. 71 Strategic Offensive Reductions Treaty (SORT) 258, 371 Stroupe, W.J. 73, 78 structural adjustment programs (SAPs) 9, 28, 107–8 Stubbs, Richard 286 Subramanian, A. 66 Suez Canal nationalization (1956) 174 Summers, Lawrence 42 survival of the fittest thesis 23 Swan, T.W. 44 swing producer 76 Swoboda, Alexander 44 Tabellini, Guido 46 Tago, Atsushi 260 Takeyh, Ray 238 Taliban 367 Tanzimat reforms 186 Tarrow, Sidney 351 Tate, Neal 96 Taylor, Alan M. 40 technoeconomic paradigms 140n Tehran Agreement (1971) 76

396

Index

Telles, Edward E. 348 Tenet, George 229 terrorism waves 15n first wave 192 second wave 193 third wave 194 fourth wave 196 Thayer, B. 67 Therborn, Guran 26 Therien, Jean Philippe 287 Third World 3 Thompson, Grahame 167 Thompson, William R. 15n, 124, 126–7, 140n, 141n, 342 Threshold Treaty (1974) 258 Tiberius 56n Tilly, Charles 126, 134, 184–5 Timmons, H. 79 Timms, Jill 351 Tlatelolco Treaty (1967) 258 TNK–BP Koykh gas venture 77 Torbakov, I. 77 Tornell, Aaron 46, 56n trade deficit economic growth 52–4 financing 47–52 liberal perspectives 43–5 political-economic perspectives 45–7 trade openness and human rights 9, 94, 96 transformational diplomacy initiative 229 transnational civil society definition 341 Trans-Sahel Counterterrorism Initiative 238, 245 Treaty of Rome (1957) 299 tropical diseases and drugs 154 Trebilcock, C, 133 Trilateral Commission 272 Tripoli Agreement (1971) 76 tropical diseases and drugs 154 Truman, Harry 254, 302, 368 Tshombe, Moise 136 Tu, J. 78 tuberculosis (TB) 153, 243 Tuchman, Barbara 261 Tucker, Robert W. 184 Turner, Ted 158 Turnovsky, Stephen J. 50 Tutu, Desmond 176

UN Convention on the Rights of Women 100n, 350 UN Convention on Social and Political Rights 100n UN Emergency Force (UNEF) 220 UN Global Compact 100n UN High Commission on Human Rights 100 UNITAF (Unified Task Force) 222 UN Millennium Declaration 20 UN Millennium Summit 20, 314 UN Mission in Sierra Leone (UNAMSIL) 223 UN Organization in the Democratic Republic of Congo (MONUC) 223 UN Permanent Sovereignty over National Resources Resolution (1962) 71 UN Secretary General’s High Level Panel on Threats, Challenges and Change 226 UN Security Council 11–12 UN World Summit (2005) 307 Underhill, Gregory R.D. 286 United States civil war and economic gains 123, 128 Cold War effects 131–2 domestic political hegemony 128 early developer 2 foreign aid principles 304 North–North gap 34 response to Arab oil embargo (1973–4) 68 rise to economic leadership 9 Southern intervention 13 technological competitor 2 trade deficits 42 warfare gains 128 World War I 123, 130–1 World War II effects 123, 131 Universal Declaration of Human Rights (1948) 93, 313–14 Unocal 277 Ursprung, H. 101n Uruguay Round 305 Usselman, S.W. 129 Utkin, A.I. 91 Van de Walle, Nic 236 Van der Veen, R. 136–7

Index Van der Westhizen, Janis 271 Velasco, Andres 46 Venn, F. 69, 71–2 Vernengo, Matias 47 Vernon, R. 65, 70–1 vested interests 122, 124, 126, 133, 135 elite cohesion 141n Victor, N. 70, 79 Villasenor, J. 338n violence waves 10–11 Vogel, David 91, 93 Vreeland, James R. 52 vulnerability interdependence 74 Wacziarg, Romain 52–3 Wallace, W. 146 Wallensteen, Peter 100n, 218, 225n Wallerstein, Immanuel M. 184–5, 189 Walmartization 271 Walt, Stephen M. 176 Waltz, K.N. 67, 264, 370 war and economic development 9 Warner, Andrew 53 Washington Consensus 34–5, 91, 272 Watson, Adam 84, 186–7 Way, Christopher R. 260 weak states 12 Weber, Eugen 98n Weede, Erich 27 Wehler, H.-U. 131 Weisbrot, Mark 15n Welborne, Bozena C. 50 Welch, R.H. 53 Wendt, A. 69 West Nile virus 242 Whalley, John 184, 273, 288n Wheeler, H. 124, 140n Whelan, Theresa 229 White, Jenny 174 Wickham, Carrie Rosefsky 174 Wiest, Dawn 351 Wigzell, Hans 157

397

van Wijnbergen, Sweder 55n Wilkins, M. 71, 75 will versus capacity 237 Williams, Paul A. 8, 78 Williams, Phil 241 Wilson, Dominic 273 Wilson, Woodrow 368, 370 Winters, Alan L. 55n, 306 Wolf, Martin 29, 92 Wolfensohn, James D. 20, 376 Woods, Ngaire 28, 31, 185, 281 World Bank poverty mission 20 World Bank Atlas method 249n World Health Organization (WHO) 152–3, 156–7 world interests 14, 370 World Social Forum 342 Brazil (2005) 14 Mumbai 341 Nairobi (2007) 341, 345 Porto Alegre 341 World Summit (2005) 217, 225 world-systems perspective 342 World Trade Center attacks 170 Wright, G. 133 Wysocki, Bernard, Jr. 154 Yaounde Convention 300 Yardley, J. 79 yellow fever 152 Yergin, Daniel 168 Young, C. 136–8 Zacher, Mark W. 157 Zairianization 138 Zarakol, Ay¸se 10–11 Zartman, I. William 374 Zierler, Mathew 167 Zinn, Howard 129 Zoellick, Robert 229 Zweig, David 80

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