Ending Poverty, Promoting PeaceThe Quest for Global Security

B r o o k i n g s B l u m R o u n d t a b l eA u g u s t 2 0 0 6

AUTHORS

Lael Brainard, Derek Chollet, and Vinca LaFleur

CO-CHAIRS

Richard C. Blum and Strobe Talbott

The new Brookings Global Economy and Development Program (Brookings Global) was launched in July 2006 to address the challenges

and opportunities of globalization. Brookings Global scholars focus on the mostpressing issues of our time: the drivers shaping the new economy, the rise of new economic powers, and the road out of poverty. By taking a multidisciplinaryapproach to the concerns of globalization, Brookings Global advances research,dialogue, and innovative solutions to aid policymakers and business and civilsociety leaders worldwide. Recognizing that globalization transcends discipli-nary boundaries, Brookings Global also draws on the creative and independentthinking of international scholars with expertise ranging from economics topolitical science to demography, building on the worldwide reputation ofBrookings for high-quality, independent research and ensuring an internationalapproach to policy recommendations and insights.

The Aspen Institute seeks to foster enlightened leadership, the appreciationof timeless ideas and values, and open-minded dialogue on contemporaryissues. Through seminars, policy programs, conferences, and leadershipdevelopment initiatives, the Institute and its international partners seek topromote the pursuit of common ground and deeper understanding in anonpartisan and nonideological setting.

Realizing Rights: The Ethical Globalization Initiative (EGI) is a project led by Mary Robinson, the former president of Ireland and United Nationshigh commissioner for human rights. EGI brings key stakeholders together in new alliances to integrate concepts of human rights, gender sensitivity,and enhanced accountability into efforts to address global challenges andgovernance shortcomings.

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ForewordFrom August 2 to 4, 2006, more than fifty preeminent international leaders from thepublic, private, and nonprofit sectors came together at the Aspen Institute to discuss“The Tangled Web: The Poverty-Insecurity Nexus” and to generate concrete, practicalsteps for participants to pursue in the months ahead.

The roundtable was hosted by Richard C. Blum and the Brookings Institution’sGlobal Economy and Development Program, with the support of honorary co-chairsWalter Isaacson of the Aspen Institute and Mary Robinson of Realizing Rights: TheEthical Globalization Initiative. By exploring the complicated connections betweenpoverty and insecurity, examining the practical implications for public and privateorganizations operating in developing countries, identifying areas of greatest need,and highlighting best practices, the roundtable organizers’ greatest hope is that the passionate dialogue that began in Aspen will be transformed into meaningful actionagainst hunger, homelessness, hardship, and human suffering.

Although the participating experts hailed from around the world and representeddiverse sectors and approaches, each person brought to the table an individual andinstitutional commitment to advancing human security. Rather than summarize theconference proceedings, this essay—like those from previous roundtables—attempts to weave together the informed exchanges, varied perspectives, fresh insights, and innovative proposals that characterized the discussion. A companion volume, Too Poorfor Peace? Global Poverty, Conflict, and Security in the 21st Century, published by theBrookings Institution Press, contains chapters by experts that provide in-depth analysesof the topics addressed at the roundtable.

AcknowledgmentsThe roundtable was made possible by a generous grant from Richard C. Blum, chairmanof Blum Capital Partners, with additional support from the William and Flora HewlettFoundation. The meeting’s success owes greatly to superb research, coordination, andplanning from the associate director of the Brookings Blum Roundtable, Inbal Hasbani,as well as Raji Jagadeesan, Sarah Cannon, Isheta Salgaocar, and Brian Wesolowski.

Published in January 2007 by the Global Economy and Development Program, the Brookings Institution.

(from left to right): Al Gore

(45th Vice President of the

United States), Mohamed

Ibrahim (Founder of Celtel

International), Sir Ketumile

Masire (Former President

of Botswana)

2

A Common Struggle

The fight against global poverty iscommonly—and appropriately—framed

as a moral imperative. Stark images ofsuffering weigh on Western consciences, asimages of hungry children in Niger, AIDSorphans in Tanzania, tsunami victims inIndonesia, and refugees in Darfur are beamedinto our living rooms in real time. In today’sincreasingly interconnected world, the“haves” cannot ignore the suffering of the“have-nots.” Whether or not we choose tocare, we cannot pretend that we do not see.

Yet the effort to end poverty is about muchmore than soothing consciences or extendinga helping hand to those in need. In a worldwhere boundaries and borders have blurred,and where seemingly distant threats canmetastasize into immediate problems, thefight against global poverty has become afight of necessity—not simply because personal morality demands it, but becauseglobal security does as well.

Extreme poverty exhausts governinginstitutions, depletes resources, weakensleaders, and crushes hope—fueling a volatilemix of desperation and instability. Poor,fragile states can explode into violence orimplode into collapse, imperiling theircitizens, regional neighbors, and the widerworld as livelihoods are crushed, investorsflee, and ungoverned territories become aspawning ground for global threats liketerrorism, trafficking, environmental devasta-tion, and disease.

Yet if poverty leads to insecurity, it is also

true that the destabilizing effects of conflictand demographic and environmental chal-lenges make it harder for leaders, institutions,and outsiders to promote human develop-ment. Civil wars may result in as many as 30percent more people living in poverty—andresearch suggests that as many as one-thirdof civil wars ultimately reignite.

In sum, poverty is both a cause of insecurityand a consequence of it.

If the link between poverty and insecurityis apparent, the pathway toward solutions isfar from clear. What, after all, is meant by“insecurity” and “conflict”—two terms that

3

A Fight of Necessity

“A lot of people did not realize that they

were living in such poverty, while others

had a much higher standard of living,

until globalization. People now know.

People are starting to rethink their lives.”

Richard C. BlumChairman and President,Blum Capital Partners, LP

cover a wide range of phenomena, from thefear and want poor individuals suffer to thearmed violence that can engulf entire regions?Is conflict driven by concrete economic factorsor sociopolitical exclusion and humiliation?Should our primary concern be internalinstability or the risk that destabilizing threatswill be exported? Should we worry most aboutindividual livelihoods or the health of the stateitself? Is it necessary to address insecuritybefore poverty can be tackled? Should U.S.policymakers characterize developmentassistance as an American national securitypriority or frame it in moral terms?

It is hard to know which strand to graspfirst to untangle the poverty-insecurity web.But every day, 30,000 children die becausethey are too poor to survive, and last year sawseventeen major armed conflicts in sixteenlocations. Over the next four decades, thepopulation of developing countries will swellto nearly 8 billion—representing 86 percentof humanity. Addressing poverty—and clearly understanding its relationship toinsecurity—needs to be at the forefront ofthe policy agenda. The world simply cannotafford to wait.

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“There’s been a change in the approach to

poverty since when I began working on it.

Originally, this issue was all about morality

and humanitarianism. Now it’s much more

about our own interests in an interconnected

world.… We need to get our leaders to

understand that this issue—poverty—is the

issue for decades to come.”

James D. WolfensohnChairman,Citigroup International Advisory Board;Former President,World Bank

Map of Weak States

The Brookings–Center for Global Developmentproject identifies the weakest states as thosethat suffer from the most significant deficitsin security, economic performance, socialwelfare, and political legitimacy.1 Weak states

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Grasping the Challenge

In recent years, world leaders and policyexperts have developed a strong consensus

that the fight against poverty is important toensuring global stability. This was the coremessage of the 2005 Group of Eight Summitin Gleneagles, Scotland, and it is the under-lying rationale of the UN MillenniumDevelopment Goals.

American policymakers have traditionallyviewed security threats as involving bulletsand bombs—but now even they acknowledgethe link between poverty and conflict.Former secretary of state Colin Powell notesthat “the United States cannot win the waron terrorism unless we confront the socialand political roots of poverty.” The 2006National Security Strategy of the UnitedStates makes the case for fighting povertybecause “development reinforces diplomacyand defense, reducing long-term threats toour national security by helping to build stable, prosperous, and peaceful societies.”And the Pentagon’s 2006 QuadrennialDefense Review focuses on fighting the “longwar,” declaring that the U.S. military has ahumanitarian role in “alleviating suffering, …[helping] prevent disorder from spiraling intowider conflict or crisis.”

Such assertions have a commonsense andcompelling logic. Within states, extremepoverty literally kills; hunger, malnutrition,and disease claim the lives of millions eachyear. Poverty-stricken states tend to haveweak institutions and are often plagued byineffective governance, rendering them

unable to meet their people’s basic needs forfood, sanitation, health care, and education.Weak governments are often unable toadequately control their territory—leavinglawless areas and natural resources to behijacked by predatory actors. Fragile statescan become breeding grounds for criminalactivity, internal strife, or terrorist networks—and often all three simultaneously.

Extreme poverty is also both a source andproduct of environmental degradation—forexample, the deforestation of the AmazonRiver and Congo River basins is damagingbiodiversity and contributing to globalwarming. And in an age of global air travel,when traffic is expected to reach 4.4 trillionpassenger-kilometers flown in 2008, it is easyto see how a disease—whether avian flu,Ebola, or SARS—originating in a developingcountry with poor early warning and responsemechanisms could quickly threaten the livesof people far beyond its borders.

The arguments linking poverty andinsecurity are reinforced by recent scholarlyresearch. Mainstream opinion, in the mediaand elsewhere, tends to characterize civilconflict as stemming from ancient ethnichatreds or political rivalries. Yet the ground-breaking statistical analysis by the Oxfordeconomist Paul Collier shows that ethnicdiversity is in most cases actually a safeguardagainst violence; the most powerful predic-tors of civil conflict are in fact weak eco-nomic growth, low incomes, and dependenceon natural resources. In Collier’s words,

7

The Doom Spiral

countries with all three risk factors “areengaged in a sort of Russian Roulette,” 2

struggling to promote development beforethe bullets start to fly.

It is true that war itself impoverishes, butthe Berkeley economist Edward Miguel andhis colleagues have helped establish con-vincingly that increases in poverty on theirown significantly increase the likelihood ofconflict. Miguel examined annual country-level data for forty-one countries in Sub-Saharan Africa between 1981 and 1999whose populations depend on subsistenceagriculture, and he showed that the drop inper capita income associated with droughtsignificantly increases the likelihood of civilconflict in the following year.3 Given thatdrought is a natural phenomenon, the analysissuggests that violent conflict is driven bypoor economic outcomes, and not the otherway round. Conversely, this research showsthat as such economic factors as personalincome and national growth rates rise, therisk of conflict falls. For each additionalpercentage point in the growth rate of percapita income, the chances for conflict areabout 1 percent less; doubling the level ofincome cuts the risk of conflict in half.According to the U.K. Department forInternational Development, a country with$250 per capita income has a 15 percentlikelihood of internal conflict over fiveyears—many times greater than the 1 percent risk to an economy with $5,000per capita income.4

Why is the risk of conflict higher in poorcountries? Some scholars suggest that it isbecause poor people have little to lose; as TheEconomist wrote, “it is easy to give a poor mana cause.”5 In addition, governments of poorcountries often have little tax base withwhich to build professional security forcesand are vulnerable to corruption. Moreover,poverty is often associated with politicalexclusion, humiliation, and alienation—apoverty of dignity and voice. Finally, whilethe data do not confirm a causal linkagebetween a country’s income inequality and therisk of civil war, recent trends from Mexico toIndia to China suggest that rising expectationsthat go unmet may also fuel unrest. In thewords of Oxfam USA’s president, RaymondOffenheiser, “It isn’t just who’s poor thatmatters, but who cares about being poor.”

Tragically, poverty and insecurity aremutually reinforcing, leading to what theBrookings scholar Susan Rice evocativelycalls a “doom spiral.” Conflict increases infantmortality, creates refugees, fuels trafficking indrugs and weapons, and wipes out infrastruc-ture. It also makes it harder for outsideplayers to deliver assistance and less attractivefor the global private sector to invest. Thus,once a country has fallen into the vortex, it isdifficult for it to climb out—as the world haswitnessed with the ongoing catastrophe inthe Democratic Republic of Congo, a crisisthat has claimed nearly 4 million lives andsparked a massive humanitarian emergency,where most people today are killed not by

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“Framing poverty as a security

issue isn’t about marketing; it’s

about analysis and policy. Conflicts

can be incubators for terrorists

and other actors who affect global

security. We are all part of this

human security issue, and we all

suffer from its consequences.”

Susan E. RiceSenior Fellow,The Brookings Institution

weapons but by easily preventable andtreatable diseases.

Violent conflict also produces considerableeconomic spillover for neighboring countries,as refugees flow in, investment pulls out, andsupply chains and trade routes are disrupted.Moreover, mass movements of people—whether armed rebels or civilian refugees—can be region-wide conveyor belts ofinfectious disease.

Although the overall number of internaland interstate wars is decreasing, a group ofregions and countries remains vulnerable toconflicts over protracted periods—oftencycling back into conflict after stability hasbeen established. Instability is largely concen-trated in and around the poorest parts ofSub-Saharan Africa, and front-line stateswhere Islamic extremists are engaged inviolent conflict, such as Chechnya, Kashmir,Lebanon, Sudan, East Timor, Iraq, andAfghanistan. Unfortunately, poor economicconditions, weak governance, and naturalresource barriers in these areas mean thatviolent conflict and displacement are likely tocontinue—and worsen—without intervention.

What, then, might be useful guidelines fortackling the poverty-insecurity challenge?The first is to help policymakers betterunderstand the issue’s significance andurgency. Part of that task is educating thepress and public to replace the convenientnarrative that “age-old” hatreds drive violencewith a more sophisticated grasp of the linksbetween economic drivers and conflict.

The second guideline is to understand thespecific conditions that heighten the risk ofconflict and human insecurity. These mayinclude deteriorating health conditions,corrupt governments, and inadequateinstitutions. Two areas in particular that canexacerbate instability and merit specialattention are environmental insecurity andlarge youth demographics.

Most of all, it is clear that tackling thepoverty-insecurity nexus is a challenge thatdemands commitment. Promoting lastingstability requires building long-term localcapacity. Interventions that work at one pointmay lose their potency over time and need to be adjusted to new circumstances. Andresearch suggests that assistance is mosteffective not in the immediate aftermath of a conflict, when donor interest is typicallygreatest, but in the middle of the firstpostconflict decade, when the recipientcountry’s absorptive capacity has improved.

Yet such long-term attention is too oftenhard to secure in rich-country capitals whereplayers, parties, and administrations change,and where the “urgent” typically trumps the“important” on the policy agenda. Untilglobal mindsets shift from reactive toproactive, and from responsive to preventive,breaking out of the poverty-insecurity trapwill remain an elusive goal.

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“Static approaches to addressing

poverty can miss opportunities

for action. What works in one

moment of time doesn’t work in

all moments of time.”

George SorosFounder and Chairman,Open Society Institute

International policy should aim to help weak

states move from conflict and autocracy,

through postconflict or postautocratic transi-

tional periods, to the more stable stage of

fragile, functioning democracy.6

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Expanding Opportunity

Natural resource scarcity and abundancehave always been intertwined with

poverty and insecurity. Today, throughoutWest Africa, poor villagers struggle with theeffects of desertification, which degrades theland on which they farm. In Haiti, forest andsoil loss aggravates the country’s economicwoes and sparks periods of conflict. InPakistan, women walk long distances tocollect drinking water from ponds that areused by livestock, leading to tremendoushealth challenges and high infant mortality.Resource abundance also has its perils: Ineastern Congo, innocents are terrorized byrebels whose weapons were financed withlooted diamonds.

When it comes to extreme poverty, thenatural resource challenge is usually seen asone of scarcity—typically of such renewableresources as water, timber, and arable landthat are fundamental for daily survival.Demographic and environmental stresses canexacerbate demands on already weakenedstates. These grievances can foment instabilityfrom below. When demand for resourcesoutweighs supply, when the distribution isperceived to be grossly unfair, and when tensions exist over whether they should betreated as rights or commodities, public frustration can spark civil strife.

In addition, elites may be tempted tomanipulate scarce resources—controllingthem for personal gain, using them to rewardcertain groups over others, or even fueling“top-down” violence in an effort to maintain

power. Scarcity is also often the result ofsevere imbalances of wealth, which is almostalways a key factor in the outbreak of conflictin poor areas.

The challenges of resource scarcity willonly intensify over time. During the nexttwenty years, more than 90 percent of theworld’s projected growth will take place incountries where the majority of the popula-tion is dependent on local renewableresources. Almost 70 percent of the world’spoor live in rural areas, and most depend onagriculture for their main income—whichboth requires and exhausts natural resources.More than 40 percent of the planet’s popula-tion—2.4 billion people—still use wood,charcoal, straw, or cow dung as their mainsource of energy, and more than 1.2 billionpeople lack access to clean drinking water.

Yet resource abundance poses equallydangerous challenges—generally concerningnonrenewable and more easily “lootable”mineral wealth like oil, gas, gold, or dia-monds. More than fifty developing countries,home to 3.5 billion people, depend onnatural resource revenues as an importantsource of government income, and manysuffer from a poverty of plenty.

This so-called resource curse leads topathologies of authoritarian and corruptregimes, led by elites who have few incentivesto invest in social development or alleviatesocial inequities. Abundance can also create“rentier” states, whose resource revenues allowgovernment officials to finance themselves

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A State of Nature:The Environmental Challenge

without directly taxing their citizenry,enabling them to more easily restrict politicaland other rights in return for a measure ofsocial welfare and stability; or leading to“honey pot effects,” in which rogue groupsfight to secure valuable natural resources—which, once acquired, provide additionalmeans to buy weapons, fueling a cycle ofgrowing instability.

For example, though companies likeExxonMobil and Shell have poured moneyand infrastructure into the oil-rich NigerDelta, the region suffers from sustainedconflict and instability. Nigeria currentlyearns $3 billion a month from oil exports,yet the Delta remains deeply poor. Militantgroups, tapping into local frustration at thecontinued deep poverty in this oil-rich regionawash with oil revenues, have fueled violence.Local attacks continue each day, growingmore sophisticated and organized, makingone of the world’s most resource-rich areasalso one of its most dangerous.7

What, then, are some of the measuresstates and outside actors can take to attenuatethe risks that resource scarcity and depend-ence pose to human security?

The place to begin is with sensiblegovernment policies that promote economicdiversification, capacity building, equitabledistribution, enforceable property rights,demographic sustainability, and publichealth. In addition, countries should beencouraged to explore innovative opportunitiesto benefit from their renewable resources, as

Brazil has done by transforming its sugar-cane into ethanol. And outside actors,including nongovernmental organizations(NGOs), can play an important role indefusing disinformation and rumors aboutwho is benefiting from limited naturalresources, because such misunderstandingssometimes create more problems thanresource scarcity itself.

Meanwhile, governments, NGOs, andprivate actors need to be more creative indevising tailored, targeted, emergencyassistance for states facing sudden economicand environmental catastrophes. For example,foreign assistance could be quickly androutinely deployed to states that suffer adrought or commodity price collapse, beforeviolence has a chance to break out. In addition,crop insurance programs and other forms ofprotection could be created for individualswhose livelihoods may be destroyed.8

Just as critical, especially in cases of naturalresource abundance, are efforts to promotetransparency—not only on the budget sideof the ledger, but on the expenditure side as well. Publicizing how much money isflowing in for natural resources, and how it is being allocated, makes it harder forgovernments to skim from the top, and forrebels to benefit from plunder. According to the Publish What You Pay campaign, by2003, U.S. investment in African oilexceeded $10 billion per year, representingtwo-thirds to three-quarters of the totalannual U.S. investment on the continent.

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“The climate crisis is a full-scale planetary

emergency requiring an immediate strategic

global response led by the United States.”

Al Gore45th Vice President of the United States

13

Not a Drop to Drink?

An acute resource problem besets one of life’s most basic necessities: water. As Anthony Nyong,

associate professor at the University of Jos, argues, “Many countries are moving from water

stress to water scarcity to water-driven conflict.” According to the World Health Organization,

more than 5 million people die every year from contaminated water or water-related diseases.

“Many of the wars of the 20th century were about oil, but wars of the 21st century will be over

water,” explains Ismail Serageldin, a former vice president of the World Bank. Some observers

predict that the Nile River basin could be a major site of future conflicts, with 200 million people

and many African countries dependent on its flow.

Some practical solutions are emerging. WaterAid, an NGO dedicated to alleviating poverty and

disease caused by unsafe water and sanitation, has joined forces with Cadbury Schweppes and

Kuapa Kokoo (a farmers’ cooperative that is part of the Fairtrade system), to improve the lives of

cocoa farmers in Ghana by building water wells across the region. More than 300 wells have been

constructed since the launch of the program in 2000, revolutionizing life for the communities by

providing clean and safe drinking water and improving farming practices. Even more, the wells

have freed up time for children to go to school and focus on schoolwork, instead of spending long

hours fetching water for their families.

Another innovative, multisector initiative is PlayPumps International, which provides uniquely

sustainable water pumps across South Africa powered by the force of children playing. PlayPumps

work as children spin on a merry-go-round, pumping water from underground into an easily

accessible tank nearby. When they are installed near schools, PlayPumps give women and children

access to safe drinking water with a simple tap. Nearly 700 PlayPumps systems have been installed

in South Africa, improving the lives of more than a million people, and a recent multisector

investment in PlayPumps by the U.S. government, the Case Foundation, and the MCJ Foundation,

means that even more children and women will benefit from PlayPumps for years to come.

The opportunities to act are within reach, but time is not on our side. According to a Pacific

Institute analysis, between 34 and 76 million people could perish because of water-related

diseases by 2020, even if the UN Millennium Development Goals are met.

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If the revenues from such investments weretransparently and accountably managed, theycould provide the basis for economic growthand poverty reduction.

But such initiatives, promising as they are,are the exception rather than the rule. Andimportant new challenges are looming—forexample, China’s emergence as a powerfulnew player in the energy and commoditysectors may have serious worldwide ramifi-cations as Chinese investors’ demonstrate awillingness to make deals with unsavoryregimes that have little regard for social andenvironmental consequences. As theHarvard University and BrookingsInstitution scholar Jane Nelson writes,“These new players don’t face the same civicactivism, reputation threats, and legalchallenges in their home countries as dotheir Western counterparts when it comesto accusations of labor, human rights, andenvironmental abuses.” 9 The time is now tostart encouraging Chinese business execu-tives to play a responsible role in promotingresource transparency and accountability inthe countries where they invest. Leadersfrom business, government, and civil societyin the West should engage in a series offrank dialogues with their Chinese counter-parts to share the hard-won lessons thathave ultimately led many business leaders toembrace social and environmental standardsand resource transparency as serving theirown core business interests no less than thecommunities in which they operate.

Finally, transcending questions of naturalresource scarcity or abundance withinindividual states are major transnationalenvironmental challenges—such as globalclimate change. Population growth, defor-estation, and industrialization in developingcountries are accelerating the global warmingprocess that is already under way. Risingsurface temperatures on the Earth could fuelextreme weather; melting polar ice caps couldcause severe flooding; shrinking glacierscould result in perilous water shortages; andcontinued climate change could irreversiblydamage the Earth’s ecosystem—evendriving some species into extinction. Inaddition, rising temperatures could spur thespread of dangerous diseases, from malariato dengue fever.

The brunt of climate change is likely to hitdeveloping countries hardest, because theireconomies are more dependent on agriculture,their resources for coping are more limited,and because many have sizable populations inareas that could be devastated by flooding.Both rich and poor nations must join indealing with this shared strategic threat—anddevelop a collective sense of urgency andcommitment—before it is too late.

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“If you look at Nigeria’s per capita income, it boils down

to pennies per person. I would not consider Nigeria a rich

country, but a resource-rich country. Right now in Nigeria

the price of oil is about the same as the price in New

York City. Our families do not see the money—life

expectancy is below fifty years, hospitals are not func-

tioning, and we are struggling to use our resources to

battle these problems. Poverty can still exist amidst

resource abundance.”

Anthony NyongAssociate Professor and Director,Centre for Environmental Resources and Hazards Research,University of Jos, Nigeria

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Powering Growth: The Road to Resource Transparency

Recent years have witnessed pathbreaking efforts to hold governments and corporations account-

able for natural resource transactions. In June 2002, the Publish What You Pay campaign was

founded to help local citizens hold their leaders accountable for the responsible management of

oil, gas, and mining revenues by encouraging oil and mining companies to disclose their pay-

ments to developing country governments. Also in 2002, the British government launched the

Extractive Industries Transparency Initiative. As of 2006, more than twenty producing countries

from Nigeria to Azerbaijan to Peru are following industry’s lead, linking, as Prime Minister Tony

Blair put it, “Publish What You Pay with Publish What You Earn.”

In 2002, the Open Society Institute created Revenue Watch programs in resource-rich coun-

tries to equip civil society, the media, and the public with the tools to monitor their government’s

use of natural resource revenues and to train policymakers to manage these revenues wisely. At

the Brookings Institution, David de Ferranti developed the Transparency and Accountability Project

in the spring of 2006 to strengthen the capacity of domestic civil society organizations (CSOs) to

provide substantive analysis of budget choices and the distribution of public spending. The goal is

for CSOs to become effective and sustainable mechanisms for holding governments accountable,

leading to the more efficient and effective use of scarce public resources, and ultimately, better

development outcomes.

Visionary programs like these have helped to heighten global public awareness of natural

resource transactions, but the effort must continue. Natural resource revenues have the power to

fuel economic development in impoverished countries, but only if such revenues are responsibly

managed, allocated, and delivered.

16

Inspiring Hope

As the United States braces itself forretiring baby boomers, and European

welfare states struggle to support their agingpopulations, the developing world is gettingyounger. Nearly half the people on the planetare under twenty-five years old, and morethan a billion people are between the ages often and nineteen. The disproportionatelylarge share of young people in the popula-tion—the so-called youth bulge—is inabsolute and relative terms the largest cohortever to transition into adulthood, and it willremain so over the next two decades.

This fact presents tremendous challenges,particularly for the developing world. Youngpeople often suffer the most from poverty,lack of educational and economic opportuni-ties, poor health, crime, and armed conflict.Nearly 17 million of the world’s youth arerefugees or internally displaced persons, 130million are illiterate, as many as 300,000fight as child soldiers, and collectively, youngpeople make up almost 60 percent of theworld’s poor.

Moreover, there is strong historicalevidence linking youth bulges to instabilityand conflict. Henrik Urdal of theInternational Peace Research Institute inOslo looked into conflicts dating back to1946 to determine whether youth bulgesincrease the risk of conflict significantly.Using rigorous statistical analysis, he deter-mined that for each percentage-pointincrease in youth population as a share of theadult population, the risk of conflict increases

by more than 4 percent. Furthermore, heargues that “when youth make up more than35 percent of the adult population, whichthey do in many developing countries, therisk of armed conflict is 150 percent higherthan in countries with an age structuresimilar to most developed countries.” 10

Paul Collier adds to this assertion bynoting that the mere existence of a largeyouth demographic lowers the cost ofrecruitment for rebel armies.11 Jack Goldstoneof George Mason University observes thatrising youth bulges coupled with rapidurbanization have been important contribu-tors to political violence, particularly in thecontext of unemployment and poverty.12

Taken together, the research seems to suggesta clear relationship between youth bulges andan increased risk of conflict.

The problem may lie in the fact that in toomany places, the next generation is caught ina troubling cycle where the opportunities tomake a useful contribution to society dimin-ish as the number of youth soars. Yet, thisneed not—and, in terms of economic theory,ought not—be the case. A youthful popula-tion can be a country’s blessing instead of itscurse, providing a “demographic dividend” ofenergetic workers to jump-start productivityand growth.

The problem is that a country hoping toachieve such a positive outcome must provideeconomic opportunities for its young people—and too often, those reaching adulthood facebleak prospects of employment. Saudi

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An Age of Youth:The Demographic Challenge

Arabia, for example, will have 4 millionyoung people joining the labor force in thisdecade—a number equivalent to two-thirdsof the current Saudi workforce. And whenthese young people have had their expecta-tions raised through education, their frustra-tion at not being able to earn a living canrender them susceptible to extremists. As theTufts University professor Marc Sommerswrites, “It often seems that nations don’tknow what to do with their own youngpeople, while armed groups keep discoveringnew ways to make use of them.”13

Too often, assistance programs intended tomake a difference for youth are driven moreby donor priorities and preconceptions thanby what young people themselves really need;for example, too many job programs aredesigned to lure urban migrants back to theland, instead of accepting that many urban-ized youth do not want to leave the city.

The problem is compounded by policyinefficiencies at the national and multina-tional levels—including the lack of politicalpriority attached to youth issues; the absenceof an integrated approach involving not onlyyouth ministries but also health, education,labor, and culture; the lack of empirical dataon what works; and the mismatch betweenmoney spent on education and money spenton ensuring that jobs are available whenyoung people graduate—through programssupporting entrepreneurship, job creation,and enterprise development.

In certain places and policy circles, the

result has been that young people, especiallymales, are seen only as menaces to theircommunities. They are often depictednegatively, as problems to be dealt withrather than potential to be tapped; and moreis made of the fact that men are dispropor-tionately responsible for violent crime than ofthe fact that the vast majority of young men,even those in brutally harsh and desperateconditions, never resort to violence.

The challenge, then, in crafting an effectiveresponse to the “youth bulge” is to resist thetemptation to view young people solely as athreat—and instead approach them as avaluable resource to be protected and culti-vated. Indeed, as those who work withdisadvantaged youth will readily argue, thereis much to be learned from the incredibleresilience and resourcefulness of poor young people.

Increasingly, the international communityis rising to the challenge. Of the UN’s eightMillennium Development Goals, seven relatedirectly or indirectly to the plight of youngpeople. In addition, the World Bank’s WorldDevelopment Report 2007 addresses “develop-ment and the next generation,” which shouldspark further analysis and better focusassistance programs.

Innovative private sector players andNGOs are also working to engage andempower youth in underprivileged areas. Forexample, in 2006 the ImagineNations groupreceived support from the Bill and MelindaGates Foundation to develop programs that

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“We need to provide technical assistance and support

to those designing and shaping national youth policies

whether they are government leaders, NGOs, or youth

themselves, so that we can both create and implement

programs that respond to the real demands of young

people. If we do so, we can successfully create an

environment where youth are perceived as potential

resources instead of potential threats.”

Ehaab AbdouPresident,Nahdet El Mahrousa NGO and Federation of Egyptian Youth NGOs

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From Exclusion to Inclusion: Engaging Youth in the Middle East

The Middle East has before it what could be one of the greatest demographic gifts in modern

history—a potential economic windfall arising from a young and economically active workforce.

Today, young people age fifteen to twenty-four years account for 22 percent of the region’s total

population, the highest regional average worldwide. With the right mix of policies, this demo-

graphic opportunity could be tapped to spur economic growth and promote stability.

Yet millions of young people are already growing up in the Middle East without significant

economic prospects. Youth unemployment in the region stands at 25 percent, the highest level in

the world. In many Middle Eastern countries, unemployment is at its heart a youth problem; in

Syria, for example, youth account for 80 percent of the unemployed.

The Brookings Institution’s Wolfensohn Center for Development recently launched an initiative

focusing on youth exclusion in Egypt, Iran, Syria, and Morocco. The initiative spotlights two main

youth transitions to adulthood—the transition from education to employment, and the transition

to household formation through marriage and family. Through an alliance of academics, policy-

makers, the private sector, and civil society, the Wolfensohn Center will help craft more effective

policies to create opportunities for young people in the region.

While many Middle Eastern youth might enjoy higher levels of education compared with their

peers in South Asia, Latin America, or Africa, the majority of them still lack employment opportuni-

ties that meet their rising expectations. This second-generation development challenge—where

high levels of poverty are replaced by widespread exclusion from economic, social, and political

life—confronts almost every country in the region. How the Middle East tackles this challenge will

offer valuable lessons far beyond its borders.

provide training and capital to a new generationof young entrepreneurs. The goal is not onlyto spur investments in small and medium-sized enterprises but also to create incentivesfor larger companies to hire young people orrecruit them as interns and apprentices.

Another promising initiative is YouthBusiness International (YBI), an interna-tional network of programs created throughthe Prince’s Trust in the United Kingdom tohelp disadvantaged young people becomeentrepreneurs. According to YBI directorAndrew Fiddaman, “There are 300 millionyoung people aged eighteen to thirty who areun- or underemployed. Twenty percent havethe potential to start a business, but only 5percent do.” YBI provides business mentor-ing and seed funding of between $500 and$10,000. Typically, the young entrepreneursrepay the YBI loan within three years. Morethan 13,000 businesses have been createdthrough YBI, with a more than 70 percentsurvival rate; and as each new enterprisetakes firm root, another young leader learnshow to build a business, develop a credithistory, and ultimately become an employerhimself or herself.14

Other organizations are pursuing grass-roots efforts to make youth an integral partof community safety and well-being. InLiberia, a local organization called YouthCrime Watch Liberia is working to assistschools and communities in establishing and sustaining crime prevention programs,including a rape awareness campaign; and in

Kibera, one of Nairobi’s poorest slums,Carolina for Kibera, a grassroots NGOfounded by a former U.S. marine, RyeBarcott, launched a youth recycling programcalled Trash for Cash, through which youngpeople not only clean up their communitiesbut also earn incomes.

As additional programs and policies aredeveloped, several issues should be kept inmind. The first is the overarching obligationto ensure that youth efforts cut across manysectors. Governments need help developingeffective, constructive, comprehensivenational youth policies—and that depends inpart on getting a better grip on what actuallyworks and what does not.

The world also needs a concerted effortto provide employment opportunities foryoung people in poor countries—and this is an area where the private sector has acritical role to play, especially by ensuringthat training and skill development arelinked to market demands.

At the same time, policymakers mustremember that poor youth, especially those inconflict situations, too often find themselvesmarginalized from political discussions andprocesses. Thus, as leaders and activists thinkabout providing opportunities for educatedyouth, they must think not only in economicterms but political terms as well.

Special attention should also be paid topostconflict environments and efforts to helpyouth lift themselves out of poverty. Toooften, assistance efforts focus on the most

20

urgent priorities of postconflict situations—reducing the numbers of weapons andsoldiers—at the cost of programs to addressthe long-term future of combatants, many if not most of whom are young. As Jane HollLute, the assistant secretary general of UNpeacekeeping operations, notes, “DDR”programs that disarm and demobilize fightersare useless without funding and a strategy forthe “R”—the crucial process of reintegrationinto society.

Policymakers should position programs inthe cities and places where youth actually are;and they should use new media to reachyoung people in meaningful ways. Youthshould be encouraged and trusted to organ-ize, lead, or govern programs as much aspossible. There may be useful lessons to belearned from religious groups and evenfundamentalist organizations that haveproven good at mobilizing and motivatingpoor youth. And, crucially, the world com-munity must also invest in letting kids bekids—with funding for programs such asrecreation, leisure, sport, and the arts.

21

“One of the most potent factors that can seriously undermine a

democratization process is an alienated and embittered youth

population that feels excluded and marginalized. Young people

can go either way: They can become an important force for

rebuilding peace and democracy, or they can turn into an army

of spoilers. We do not believe enough in young people, so we

don’t entrust them to have a voice and to participate. It’s

amazing how articulate and precocious young people can be.

Instead of paying lip service to them, we must empower

and invest in youth.”

Olara A. OtunnuPresident,LBL Foundation for Children;Former United Nations Undersecretary General and SpecialRepresentative for Children and Armed Conflict

22

Delivering Results

The challenges that can hasten insecurityin poverty-stricken environments are

both complex and dynamic. Though environ-mental and demographic factors may serve asimminent warning signs, they by no meansrepresent an exhaustive list of the potentialcauses of conflict. As we know all too well,such factors as the spread of HIV/AIDS,rapid urbanization, and fledgling institu-tions—among a host of other issues—mayalso exacerbate the risks leading to insecurity.

Such a wide array of challenges begs thequestion, “Where do we begin?” Regardlessof whether change originates in governmentalinstitutions, the private sector, or civil society,one constant is that leadership matters.

The Role of Leaders:Spotlight on AfricaCountries on every continent suffer frompoverty and insecurity, in part because oftheir political leaders’ decisions and actions—and no country is immune from hapless,corrupt, or even venal leadership, as citizensfrom the Americas to Europe to Asia wouldreadily volunteer. And yet, some regions withweak institutions have been more deeplyafflicted by poor leadership than others.Postcolonial Africa in particular has bornethe burdens of a leadership deficit.

It is true that African countries haveseveral inherent disadvantages to overcome.Their independence from outside rule isrelatively recent; the United States, after all,

has been engaged in its democratic experi-ment for more than two centuries. Africa isthe world’s second most populous continent,comprising fifty-three countries—fifteen ofwhich are landlocked and many of which aretropical. At the same time, many Africancountries possess great human and naturalresources. And yet, according to the HarvardUniversity scholar Robert Rotberg, by somemeasures, 90 percent of Sub-Saharan Africannations have experienced despotic rule in thepast three decades.15

Poor leadership can take a devastating tollon human security. In Zimbabwe, forexample, Robert Mugabe has transformed aregional economic and political success storyinto a repressive, chaotic mess. Fifteen yearsago, a quarter of Zimbabweans were unem-ployed; today, the figure is 70 percent, andinflation has climbed to more than 1,000percent a year. Meanwhile, newspapers havebeen closed and scores of reporters thrownin jail, while Zimbabwe’s police and armedforces have forcibly eradicated slum dwellersin ways reminiscent of the horrific ethniccleansing witnessed during the 1990s in the Balkans.16

Human agency is to blame for millions ofcivilian deaths in Africa in recent years fromCongo to Sudan, Angola, Rwanda, andDarfur. Moreover, the “half-life” of damagedone by bad leaders can far transcend theperiod of misrule. Perceptions matter,especially when trying to attract foreigninvestment from half a world away, and a

23

Agents of Change

country that has been associated withinstability or corruption in the past may findits public image hard to repair for years oreven decades to come.

Polling data confirm that Africans desirehonest leaders and effective governments.And the experience of countries likeBotswana shows that such aspirations canindeed be achieved. Blessed with a strongtradition of open discussion, a culturalheritage that values collective wisdom andaccountability, and, significantly, diamondwealth, Botswana had key resources to drawon in building a strong democracy. Yet,Botswana’s success cannot be divorced fromthe leadership its presidents have provided.In the forty years since independence, SeretseKhama, Ketumile Masire, and Festus Mogaehave used not only government tools but alsotheir personal example to transformBotswana from a poor pastoral country intoone of the continent’s wealthiest and moststable—distributing the benefits of diamondsbroadly, including the provision of freeuniversal education and health care. Today,President Mogae is providing a model forother African leaders to emulate in hisproactive and tireless crusade against theHIV/AIDS pandemic.

Likewise, Mauritius—once a poor sugarcolony—today boasts one of Africa’sstrongest economies, thanks to creative,honest leadership, market opening, and apolitical arena characterized by coalitionbuilding. During the past two decades, per

capita income in Mauritius has nearlydoubled, with an attendant rise in humandevelopment indicators. And Mozambique,which suffered nearly two decades of civilwar, has since 1997 achieved average annualgrowth in gross domestic product of 8.9percent, increased enrollment in primaryschools by 25 percent, and reduced extremepoverty—even as it has built one of SouthernAfrica’s more stable new democracies.

Enlightened leaders with vision andstrength are especially important where thestate’s organizational and institutionalcapacity to govern is lacking. Unsurprisingly,states that successfully manage to providetheir citizens with basic security, politicalfreedom, transportation and communicationinfrastructure, medical necessities, andeducational institutions—states like Botswana,Mauritius, and South Africa—possess themost farsighted and effective leadership.

African leadership must come from within,but outsiders can help. For the internationalcommunity, the challenge is to help find,train, and support the leaders of tomorrow—and assist those who are making a differencetoday. The United States has a strongtradition of identifying and mentoringleadership, through the Truman Scholarship,the White House Fellows Program, thePresidential Management Fellowship, andmany other initiatives; other rich countriesdo as well. Yet many African leaders haverisen to power from the vanguard of militaryor protest groups rather than an executive

24

management background. Developingleadership mentoring programs for talentedAfricans in the twenty- to forty-year-old agebracket—not only within their respectivecountries but on a regional basis as well—could help a new generation of leaders honethe skills, form the networks, and internalizethe ethos of public service that would servethem and their homelands in the future.

Another promising approach is to providewhat the Open Society Institute and theUnited Nations Development Program call a“capacity-building fund” to supplement theincomes of effective public servants in poorcountries—and thereby encourage expatriatesand others who have many other alterna-tives to devote their considerable expertiseto the challenge of governing in theirhomelands. Such funds have helped supporta living wage for government officials fromSerbia to Georgia to Nigeria—but they are neither intended nor designed to be along-term solution.

The international community has othertools to encourage good governance andaccountability, for example, the incentive-based approach of the U.S. MillenniumChallenge Corporation (MCC). By provid-ing aid to countries with a proven commit-ment to reducing poverty and strengtheningdemocracy, the MCC seeks to reward leadersthat rule justly, invest in their people, andencourage economic freedom. The MCCdoes not aspire to be the only tool in thedevelopment kit—but it does provide

substantial amounts of assistance to countriesthat can meet its criteria.

At the same time, honest observersacknowledge not only the difficulty ofcultivating effective leadership from theoutside but also the ways in which outsideactors may contribute to the leadershipproblem. Strategic and diplomatic demandshave prevented the United States and otherWestern governments from being consistentin their criticism of African and otherdeveloping country leaders around the world—and the lion’s share of U.S. assistance flowsto countries based on their strategic impor-tance, with the net result that U.S. assistanceon a per capita basis actually declines asgovernance improves. And despite the West’sprofessed desire to support development inAfrica and elsewhere, trade policies andagricultural subsidies are undermining manypoor countries’ best hope for economicgrowth—thereby shackling the ability ofdemocratically elected leaders to deliverresults to their people.

Leadership from the Private Sector and theNongovernmental CommunityAlthough good governance and capablepublic institutions are indispensable, the fightagainst extreme poverty can only be wonwith active leadership from the private sectorand civil society.

The global private sector has many avenues

25

“There is a long tradition of successful

mentorship and leadership programs in

the United States and Europe, but so

many of the great leaders that come

out of Africa to non-African countries

never return. We need to make sure

future African leaders have incentives

to return and stay in Africa.”

Mary RobinsonExecutive Director,Realizing Rights: The EthicalGlobalization Initiative;Former President of Ireland

26

Rewarding Good Governance

Retirement is often considered the prize at the end of a long career. But in Africa, retiring from

office generally means leaving a well-paid position with extensive perks for limited and unattrac-

tive opportunities. Responding to the lack of incentives available to retiring African leaders,

Mohamed Ibrahim, the Sudanese founder of Celtel International, launched a $5 million annual

prize in October 2006 to entice leaders to exit office.17 The annual prize, awarded based on a

complex index devised by Robert Rotberg of Harvard University’s John F. Kennedy School of

Government, will go to that Sub-Saharan African leader who has demonstrated the greatest

commitment to democracy and good governance during his or her tenure.

Although African leaders have tried to institute collective mechanisms to promote better

leadership and more democratic governance in the past, corrupt and ruthless leaders still stand.

Partnerships such as the African Leadership Council and the New Partnership for Africa’s

Development (NEPAD) demonstrate a commitment to improving governance, but so far the results

have been mixed. For example, though NEPAD created the African Peer Review Mechanism to

monitor and identify governance weaknesses, it has so far failed a critical test by proving reluc-

tant to condemn President Mugabe’s record in Zimbabwe.

Ibrahim’s annual prize adds a new dynamic to the equation. By offering a financial incentive to

break the pattern of long, uninterrupted, and indefinite tenure by often increasingly unaccountable

leaders, the prize actively encourages leaders to rule democratically—and then hand over the

reigns of power at the end of their legal terms. Limited-term appointments and peaceful transfers

of power are at the very heart of democratic and effective government; they inject fresh energy

and ideas into the policy arena and give citizens a reliable process for holding leaders account-

able. Innovative programs like Ibrahim’s prize—combined with systematic efforts to strengthen

civil society and create accountable and transparent institutions—are the type of bold action

required to help transform African governance.

to engage in this vital effort. Investing inpoverty-plagued areas offers tremendousopportunities to enhance both market valueand social value; moreover, the private sectorcan bring to the fight against global povertythe same spirit of leadership, innovation, andinitiative—and the same skills in scaling sizeup, driving costs down, and reaching out tonew clients—required for success in theglobal marketplace. And in contrast to theslow and uncertain pace of public sectoraction on budget appropriations or theadoption of reforms, the private sector hasthe power to take meaningful steps againstpoverty right away.

Sometimes, the core business activity of an enterprise makes the developmentdifference—for example, a mobile telephoneservice provider, a microfinance institution,or a utility company. In other cases, the peaceand prosperity dividend comes more fromthe corporation’s role and example in thecommunity where it operates. As former UNsecretary general Kofi Annan has explained,private sector decisions “on investment andemployment, on relations with local commu-nities, on protection for local environments,[and] on their own security arrangements,can help a country turn its back on conflict,or exacerbate the tensions that fueled theconflict in the first place.”18

Michael Stewart of McKinsey &Company confirms that contemporarydiscussions on corporate social responsibilityamong client companies have greatly evolved;

today, there is far more awareness thatmultinationals’ business models can influencethe prospects for local stability and that corebusiness interests are directly tied to thestability and prosperity of the communitieswhere they work. Though corporate chiefsmight once have dismissed transparency as agovernment issue, there is growing recogni-tion that the diversion of tax and royaltypayments by local government officials candamage business directly by tarnishingreputations, and indirectly, by undermininglocal conditions. Managing risks and maxi-mizing profits cannot come at the cost ofexacerbating social problems or fuelingconflict—and corporate executives arefocusing more intensively on the need forcollective, proactive, strategic action andbusiness statesmanship.

Jane Nelson has described three basiccategories of management challenges andopportunities for corporations—and alsoNGOs—doing business in countries plaguedby political, economic, or physical insecurity.

First and foremost is an organization’sobligation to do no harm—to ensure that theenterprise itself does not spark or exacerbateinsecurity or conflict. As Nelson explains,while the media spotlight in recent years hasbeen trained on resource extraction indus-tries, other sectors also face challenges—forexample, food and beverage companies thatmay strain limited water resources; manufac-turing companies that may lower the bar onworkplace safety for poor laborers; or tourism

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“We have inherited a culture of open

discussion, where the wisdom of a

nation does not sit in one head. It is

the collective wisdom of a nation that

ultimately decides its fate.”

Ketumile MasireFormer President of Botswana

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companies that may pose risks to localenvironments and vulnerable cultures.

New accountability mechanisms have beenestablished in recent years to help corpora-tions manage the “do no harm” imperative—including a wide array of global codes,compacts, and voluntary principles focusedon integrating performance standards andaccountability into the work of companiesand NGOs, from the UN Global Compact tothe banking sector’s Equator Principles andthe diamond industry’s Kimberley Process. Agrowing number of global corporations areseeking to adhere to corporate social respon-sibility approaches that set standards for bestpractices and establish basic principles foroperating in poor and insecure environments.

The second category of engagement isinvesting in local socioeconomic developmentand community resilience—by increasingeconomic opportunity and inclusion; provid-ing access to credit and insurance; enhancingcommunications and technology infrastruc-ture; and supplying basic resources toimprove living conditions. Recent years havewitnessed a welcome burst of new activity inthese areas, driven by creative social entrepre-neurs; innovative, socially conscious investors;and bold partnerships among multinationalcorporations, philanthropic institutions,government agencies, and others. Suchinnovative work has not gone unnoticed. In2006, Muhammad Yunus won the NobelPeace Prize for his pathbreaking efforts toprovide credit to the poor in rural

Bangladesh. Today, the Grameen Bank, whichYunus founded in 1976, has over 6 millionborrowers, 97 percent of whom are women.

There is also a growing awareness thatcompanies and NGOs can and should play alarger role in supporting civil society organi-zations, the media, and such high-risk groupsas youth, women, and ethnic minorities. Byhelping to build more effective communityadvocates for good governance and security,whether through philanthropy or localinvestment, the private sector can helpdevelop greater opportunities while promot-ing high returns. And by choosing to operatein a way that focuses on addressing thegrievances and needs of traditionally disen-franchised groups like women and youth, theprivate sector can help enhance long-termstability. As Robert Annibale, the globaldirector of Citigroup Microfinance, explains,“We’ve transformed the way we think aboutcivil society. We recognize now that civilsociety includes our clients, our customers,our employees. This perspective has led us to be more consultative in our approach.”

The third level of engagement is fororganizations to participate in the broaderpublic policy dialogue—tackling corruption,strengthening institutions, and fortifyinggovernment frameworks. Often, these areareas where collective action is especiallyeffective; for example, business-led groupshave supported efforts from strengtheningthe criminal justice system in South Africa to promoting the peace and reconciliation

28

“We [Citigroup] used to operate in countries

where even though 95 to 98 percent of our

employees were local, we were still known

as a ‘U.S. company.’ We are increasingly act-

ing as though we’re a local company, with

local leaders and stronger relationships to

local institutions and the local governments.”

Lewis B. KadenVice Chairman and Chief Administrative Officer,Citigroup

processes in Sri Lanka, the Philippines,and Guatemala.

Yet, despite the positive role the globalprivate sector can play in developing coun-tries, operating in insecure areas presentssignificant challenges: from dealing withcorrupt governments to weak infrastructure,potential violence, currency and commodityprice swings, shortages of skilled labor, andinsufficient legal protections. According to a2001 survey of the mining industry, whencompanies were asked why they refrained orwithdrew from otherwise sound investments,nearly 80 percent answered that politicalinstability—particularly, armed conflict—wasthe key reason.

To address such concerns, multilateralinstitutions, official donors and lenders,NGOs, and private investors must developnew tools to mitigate risk. Though theimportance of microfinance programs is wellunderstood, adequate financing remainsunavailable for small and medium-sizedenterprises—those with between 10 and 100employees. New mechanisms could becreated to help promote the financing ofthese enterprises by boosting equity orstrengthening long-term loans. The aim ofsuch ideas is not to supplant market mecha-nisms but to create meaningful incentives forprivate investors to venture into markets theymight otherwise write off as hopeless—and,in so doing, help to generate results for poorcountries that have embarked on the difficultpath of reform.

29

“Our company in Africa operates under the anticorruption motto of “not a sin-

gle dollar for brown envelopes.” We only do real business. In the Democratic

Republic of the Congo, it took us years to enter, but when we entered, we did

it properly. We went the extra mile to show clear governance and transparency.

As the founder and largest shareholder, I had only one Board seat—even

though at the early stages I held some 70 percent of company shares. We

used the legal system! Today we have 15 million customers in fourteen

African countries. Imagine how that transformed Africa. This so-called risky

environment was a heaven for us.”

Mohamed IbrahimFounder,Celtel International

Just as global corporations are recalibratingtheir approach to development and socialresponsibility, so too are NGOs adjusting tonew demands. Overall, the pressure foraccountability and transparency has affectedNGOs as well; the community has respondedwith self-regulation mechanisms, codes ofconduct, more engaged governing boards,public reporting, and other improvements. Inaddition, NGOs are learning how to operatein a market context—forging partnershipswith the private sector on behalf of mutualgoals. Oxfam, for example, has helpedUnilever analyze its distribution and retailchain in Indonesia, to better appreciate thecompany’s impact, both good and bad, onpoverty in that country; and in Venezuela,Amnesty International has joined forces withStatoil and the United Nations DevelopmentProgram to train judges on human rights issues.

But especially for NGOs working involatile environments, the past decade haswrought a paradigm shift in their ability tofunction, as respect for the Red Cross andthe Red Crescent and for the GenevaConventions has eroded and NGO represen-tatives have become the targets of kidnapping,assault, and terror. The cost of providingsecurity for staff members has become abarrier to entry for many humanitarianorganizations that otherwise would be on the front lines in insecure areas; for others inuncomfortable proximity to U.S. militarystabilization and reconstruction operations,it has forced new thinking and revampedapproaches to civil-military relations.

In Iraq—one of the places where humani-tarian action and community building aremost needed—Mercy Corps is one of only ahandful of relief organizations still on theground. As Nancy Lindborg explains, MercyCorps operates entirely on the basis ofcommunity acceptance, coinvesting with localcommunities on the infrastructure and socialservices they want—whether sewage systemsor Internet centers. It takes time and patiencefor this kind of complex, bottom-up develop-ment partnership to take root, but the resultis empowered local groups that feel responsi-ble for safeguarding their own achievements.

30

“Locally owned businesses and locally

run groups contribute to stability.

People don’t want to think they are

succeeding by the grace of U.S.

assistance, but by their own means.”

Nancy LindborgPresident,Mercy Corps

PHOTO COURTESY OF CAROLINA FOR KIBERA, INC.

31

“In assessing risk in developing countries, and

considering the most effective methods to

mitigate it, we should recognize the power of

public-private partnerships. This is a dynamic

model that integrates the strengths and

resources of government, the nonprofit com-

munity and, importantly, the private sector, to

use their unique strengths individually to lead

the way to sustained growth and progress

collectively.”

Robert Mosbacher, Jr.President and Chief Executive,Overseas Private Investment Corporation

PHOTO COURTESY OF MERCY CORPS

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Adapting to Change

For decades, experts have debated whetherdemocracy or development should top

the policy agenda. Today, the jury seems tohave settled on a commonsense conclusion:Both democracy and development are essential,and neither can endure without the other.And yet, if there is a mounting consensus onthe virtues of liberal democracies for economicdevelopment and human security, disagree-ment persists over whether foreign interven-tion can transplant democracy into societieswith weak institutional foundations.

Policymakers clearly need a politicalstrategy to compliment their poverty strategy.If poor governance and a lack of accounta-bility are part of the reason that countries arepoor in the first place, then simply throwingmore money at the problem will not help—and could in fact make the situation worse byreinforcing corruption and the capture of thestate by elites. Support for nation buildingand democracy promotion has been sorelytested in recent years by the United States’struggles in Afghanistan and Iraq, butsupport for transparent and accountablegovernance should remain an overarchinggoal of U.S. foreign assistance. Meanwhile,NGOs and others working at the grass rootscan help cultivate poor citizens’ familiaritywith democratic practices and capacity tohold local officials accountable—even inrepressive states, where government-to-government channels are not possible.

Starting in his second term, PresidentGeorge W. Bush has made “transformational

diplomacy” the hallmark of his administra-tion’s foreign policy—a commitment, inSecretary of State Condoleezza Rice’s words,to “work with our many partners around theworld to build and sustain democratic, well-governed states that will respond to the needsof their people—and conduct themselvesresponsibly in the international system.”19

One of the features of transformationaldiplomacy, also known as the “freedomagenda,” is the reorientation of U.S. foreignassistance policy, planning, and oversighttoward the goal of democratization.

Although poverty alleviation is notexplicitly stated as an objective, Bush admin-istration officials argue that their policyaddresses the root cause of hardship.“Achieving transformational developmentrequires more than short-term charity oreven the long-term provision of services,”Randall Tobias, the administration’s newdirector of foreign assistance, explained in aJune 2006 speech. “We must support citizensto make demands of their governments, andreject excuses for failure.”20

To implement this strategy, the U.S.government is in the midst of reforming andrestructuring the way it plans and imple-ments foreign assistance. The processcontinues reforms and programs launched inthe Bush administration’s first term—forexample, the Office of the Global AIDSCoordinator and the Millennium ChallengeCorporation, which together will administera substantial increase in U.S. foreign aid

33

America’s Role:Is Transformational Diplomacythe Route to Security?

dollars. The U.S. government is also reform-ing to improve its response to the varieddevelopment and security challenges in statescoming out of conflict, in particular throughthe newly created State Department coordi-nator for reconstruction and stabilization andnew presidential and Department of Defensedirectives to organize and conduct stabilityoperations in war-torn countries.21

It is too soon to judge whether “transfor-mational diplomacy” is a success. The processis still very much under way, and it will needtime to find its footing. That said, somechallenges to the mission are evidentalready—from shortfalls that may be allevi-ated over time, such as the lack of a sufficienttalent base among diplomats who are newlysupposed to be agents of change; to institu-tional barriers still to be overcome, such asthe traditional divide between “cops” and“caregivers”; to the difficulty of translatingthe theoretical desirability of democracy intoconcrete operational plans and programs; tothe reality that democratization may produceresults that are at loggerheads with U.S.interests—as occurred with Hamas’ strongshowing in the January 2006 Palestinianelections.

In addition, many observers worry thatfocusing aid on democratic reforms willneglect the states that are suffering mostfrom poverty and conflict. Democracy isimportant, but building the institutionsrequired to sustain it takes time; meanwhile,many poor states in conflict confront imme-

diate challenges from pandemic disease toresource scarcities. As Jennifer Windsor ofFreedom House explains, “Why are werevisiting whether poor people have to choosebetween political freedom and freedom frominsecurity or freedom from want? If there isanything we have learned over the last twentyyears, it is that we need to pursue integratedapproaches. The question is how to do thatmost effectively.” The United States will notbe applauded for championing democracy ifit is perceived as ignoring the deprivation ofmillions of impoverished people.

There is also a risk that U.S. democracypromotion will be seen as a self-servingstrategy designed to bolster America’snational security, rather than to lift the livesof needy people around the globe. Critics donot deny the national security benefits ofpromoting democracy, but they argue for ashift of tone in the way the strategy isadvanced—one that assumes more humilityand appears less squarely “made-in-the-U.S.A.”

Similarly, some humanitarian organizationsengaged in development work feel they areon a collision course with the U.S. Agencyfor International Development (USAID)regarding the “branding” of U.S. foreignassistance. USAID’s branding campaign waslaunched in late 2004, with the aim of helpingAmerican taxpayers get “the credit theydeserve” for the foreign assistance programsthey fund. Presumably, the hope is that globalpublics will regard the United States morefavorably if they understand just how much

34

“How can democracy help in

fighting global poverty?

Democracy, when functioning

properly, is inclusive. It provides

accountability and a set of legal

structures that encourage and

allow people to participate.”

Madeleine K. Albright 64th Secretary of State; Principal,The Albright Group, LLC

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assistance comes “from the Americanpeople,” as the revamped USAID taglinereads. To promote the campaign, new federalregulations require all contractors and U.S.NGOs receiving USAID funding to ensuretheir “programs, projects, activities, publiccommunications, and commodities” promi-nently bear the USAID standard graphic.

Some experienced NGOs argue, however,that the most effective way to promotesustainable development is to foster the localownership of programs, and that if America’sstrategic goal is promoting security andreducing poverty, then the focus should be onempowering effective local change agents,not on getting credit for U.S. taxpayers. Asthese NGOs suggest, the branding campaignrisks undermining the effectiveness ofdevelopment and democracy programs,because local communities need to feel likethey are building something themselves, notbe reminded at every turn that their destinydepends on the grace of the United States.

Underlying all these concerns is thecontinued mismatch between the UnitedStates’ stated strategic priorities and the wayaid dollars are actually spent. A recentanalysis by the Brookings Institution incooperation with the Center for Strategicand International Studies counted more thanfifty separate offices addressing more thanfifty separate aid objectives—a laundry listthat is not ranked in any consistent hierarchy.

Moreover, the bulk of U.S. assistance doesnot fund the things the government claims to

35

“All politics is local, but many of these

issues are tremendously global. And

global issues cannot be resolved without

the United States. I know there is a lot

of doubt about the United States around

the world, but many of the same people

who are doubtful are often waiting for

the United States to play a constructive

leadership role.”

Kemal Dervis Administrator,United Nations Development Programme

care about. The United States would like itsaid to be progovernance, but even the MiddleEast Partnership Initiative—the flagshipdemocracy promotion program in thatregion—represented only 2 percent of overallU.S. economic assistance to the Middle Eastin 2005; meanwhile, strategically importantEgypt received an assistance packageamounting to $27 per capita, its autocraticgovernance notwithstanding. Ghana, incontrast, received less than $4 per capita,even while maintaining relatively goodgovernance.22

In 2006, Congress launched the U.S.Commission on Helping to Enhance theLivelihood of People (HELP Commission),whose mandate is to review, over a two-yearperiod, all U.S. foreign assistance anddevelopment programs and make recommen-dations to the U.S. public, president, andCongress on which foreign aid programswork and why, and how U.S. aid dollars canbe made most effective. A key challenge forthe HELP Commission will be assessingwhether development assistance is beingallocated to meet its recipients’ priorities andneeds or to further America’s diplomatic andstrategic ends. Ideally, the two objectivesshould complement each other, but the caseis not always so clear.

The HELP Commission is determined toavoid the fate of previous evaluations, whosereports, in its words, “end up occupying spaceon a bookshelf and making little difference inpolicy.” 23 Yet it also acknowledges the

difficulty of assessing whether a program’ssuccess or failure was the result of its designor implementation. During the past fiftyyears, the United States has learned someimportant lessons, yet it still knows less aboutthe effectiveness of development assistance,or how to measure that effectiveness, than itshould. The time is now to invest in develop-ment aid impact assessments, so that tomor-row’s policymakers have a solid foundation ofdata on which to base future initiatives.

36

“Democracy is not just about having formal insti-

tutions. We’ve learned it’s about the functioning

of those institutions and whether they can pro-

vide transparency and accountability to citizens.”

Smita SinghSpecial Advisor for Global Affairs,The William and Flora Hewlett Foundation

PHOTO COURTESY OF TRISTAN REED

37

“We need both a freedom agenda and

a development agenda.… We need to

think about the different stages of

democracy and what strategies we

should support. There is no generic

universal solution.”

Philip D. ZelikowFormer Counselor,U.S. Department of State;White Burkett Miller Professor of History,University of Virginia

38

A Common Peace

The challenges of poverty and insecurityare not new. But we now recognize

more clearly how much they matter. We havecome a long way in understanding thecomplex relationship between poverty andinsecurity, and we have made importantstrides in solving the problems that stemfrom them. Yet we still have a long way to go in addressing the root causes.

Although there is no single pathway out of poverty or toward peace, we can makeprogress only if we have two basic necessities:good ideas and a common commitment toaction. In the words of Brookings presidentStrobe Talbott, “To address the problem ofthe tangled web of poverty and insecurity, weneed to create a benevolent web of NGOs,private sector representatives, governments,and activists.”

In fighting against poverty and insecurity,we must confront a range of interconnectedissues—from demographics to governance toresource distribution—and embrace a varietyof solutions that span the governmental,NGO, and private sectors. Our fight mustalso include efforts too often relegated to the

security field—such as enhancing thecapacity for conflict resolution and peace-keeping. There are many new avenues forresearch that will advance how we under-stand the difficult problems presented by thecomplex relationship between poverty andinsecurity—and more important, many newopportunities for innovative action to meetthese challenges.

But no single person, organization, orcountry can meet these challenges alone.Only by working together on multiple frontscan we hope to prevail against the scourgesof hunger, homelessness, disease, and suffer-ing. Tackling poverty and insecurity is notjust a matter of doing the right thing—it is amatter of doing the sensible thing to ensureglobal security. For the sake of our sharedsecurity, for the sake of our shared humanity,there is not a moment to waste.

39

A Benevolent Web

“Fighting poverty is not just important

for humanitarian reasons—although

it certainly is that; it’s also in our

self-interest, since poverty breeds

instability. Reducing global poverty is

a classic example of the right thing

being the smart thing.”

Strobe TalbottPresident,The Brookings Institution

Co-ChairsRichard C. Blum: Chairman and President,Blum Capital Partners, LPLael Brainard: Vice President and Director,Global Economy and Development Program,Brookings InstitutionStrobe Talbott: President, BrookingsInstitution

Honorary Co-ChairsWalter Isaacson: President and ChiefExecutive Officer, Aspen InstituteMary Robinson: Executive Director, RealizingRights: The Ethical Globalization Initiative;Former President of Ireland

ParticipantsEhaab Abdou: President, Nahdet ElMahrousa NGO; and Federation of Egyptian Youth NGOsMadeleine K. Albright: 64th U.S. Secretaryof State; Principal, Albright Group, LLCRobert A. Annibale: Global Director,Citigroup Microfinance GroupRye Barcott: Founder and President,Carolina for Kibera, Inc.Carol Bellamy: President and ChiefExecutive Officer, World LearningMary K. Bush: President, Bush InternationalLLC; Chairman, Helping to Enhance theLivelihood of People around the GlobeCommissionDerek Chollet: Non-Resident Fellow,Brookings Institution; Fellow, Center forStrategic and International StudiesDavid Croft: Director, Ethical Sourcing andSustainability, Cadbury SchweppesKenneth W. Dam: Senior Fellow,Brookings Institution; Max Pam ProfessorEmeritus of American and Foreign Law,University of ChicagoKemal Dervis: Administrator, UnitedNations Development ProgramDianne Feinstein: U.S. Senator, CaliforniaAndrew Fiddaman: Director, Youth Business International, InternationalBusiness Leaders ForumAl Gore: 45th Vice President of the United StatesJohn Hewko: Vice President of Operations,Millennium Challenge CorporationMohamed Ibrahim: Founder, CeltelInternational

40

Steen Jorgensen: Director, SustainableDevelopment Network, World Bank John William Kachamila: Former Minister,Office of the Former President of MozambiqueLewis B. Kaden: Vice Chairman and ChiefAdministrative Officer, CitigroupColin Kahl: Assistant Professor of PoliticalScience, University of MinnesotaNancy Lindborg: President, Mercy CorpsJohannes F. Linn: Executive Director,Wolfensohn Center for Development,Brookings InstitutionJane Holl Lute: Assistant Secretary-General,Peacekeeping Operations, United NationsRichard Lyons: S. K. and Angela ChanProfessor of Global Management andExecutive Associate Dean, Haas School ofBusiness, University of California, Berkeley Ketumile Masire: Former President ofBotswanaSylvia Mathews: President, GlobalDevelopment Program, Bill and MelindaGates Foundation Edward Miguel: Associate Professor,Department of Economics, University ofCalifornia, BerkeleyRobert Mosbacher, Jr.: President and ChiefExecutive Officer, Overseas PrivateInvestment CorporationMarc B. Nathanson: Chairman, MapletonInvestments, LLCJane Nelson: Senior Fellow and Director,Corporate Social Responsibility Initiative,John F. Kennedy School of Government,Harvard UniversityA. Richard Newton: Dean, College ofEngineering, University of California, BerkeleyAnthony Nyong: Associate Professor andDirector, Centre for EnvironmentalResources and Hazards Research, Universityof Jos, Nigeria (now at InternationalDevelopment Research Centre, Nairobi)Raymond C. Offenheiser: President,Oxfam AmericaOlara A. Otunnu: President, LBLFoundation for Children; Former UnitedNations Undersecretary General and Special Representative for Children andArmed ConflictCarlos Pascual: Vice President and Director,Foreign Policy Studies, Brookings InstitutionAlan Patricof: Founder and ManagingDirector, Greycroft, LLCSusan E. Rice: Senior Fellow, BrookingsInstitution

Robert I. Rotberg: Director, Program onIntrastate Conflict and Conflict Resolution,John F. Kennedy School of Government,Harvard University; President, World PeaceFoundationKhalid Sheikh: Senior Vice President andChief Economist of Emerging Markets,ABN AMRO Bank NVSmita Singh: Special Adviser for GlobalAffairs, William and Flora Hewlett FoundationMarc Sommers: Associate ResearchProfessor of Humanitarian Studies, FletcherSchool, Tufts UniversityGeorge Soros: Founder and Chairman,Open Society Institute James Steinberg: Dean, Lyndon B. JohnsonSchool of Public Affairs, University of Texas at AustinMichael Stewart: Director of ExternalRelations, McKinsey & CompanyErica Stone: President,American Himalayan FoundationBhekh B. Thapa: Chairman, Institute forIntegrated Development StudiesHenrik Urdal: Research Fellow, Centre forthe Study of Civil War, International PeaceResearch Institute, OsloJennifer Windsor: Executive Director,Freedom HouseJames D. Wolfensohn: Chairman,Citigroup International Advisory Board;Former President, World BankPhilip D. Zelikow: Former Counselor,U.S. Department of State; White Burkett MillerProfessor of History, University of Virginia

Special GuestsPeggy Clark: Managing Director, RealizingRights: The Ethical Globalization InitiativeMelissa S. Dann: Executive Director,Wallace Global FundJamieson Davies: Special Assistant to thePresident, Catholic Relief Services Hemanta Mishra: Executive Director,Newpeak Foundation; Senior Adviser,American Himalayan FoundationPeter A. Reiling: Executive Vice Presidentfor Leadership and Policy Programs,Aspen InstituteBrooke Shearer: Senior Adviser,Global Health Strategies

RapporteurVinca LaFleur: President,Vinca LaFleur Communications

Participant List

41

1. For more information, see Susan E. Rice,“Poverty Breeds Insecurity,” in Too Poorfor Peace? Poverty, Conflict and Security inthe 21st Century, ed. Lael Brainard andDerek Chollet (Brookings, forthcoming).

2. Paul Collier, “The Market for Civil War,”Foreign Policy, May/June 2003, 38.

3. Edward Miguel, Shanker Satyanath, andErnest Sergenti, “Economic Shocks andCivil Conflict: An Instrumental VariablesApproach,” Journal of Political Economy112, no. 4 (2004): 725.

4. Susan Rice, “The Threat of GlobalPoverty,” The National Interest,Spring 2006, 76.

5. “The Global Menace of Local Strife,”The Economist, May 24, 2003, 23.

6. Rice, “Poverty Breeds Insecurity.”

7. Simon Robinson, “Nigeria’s Deadly Days,”Time International, May 22, 2006, 20–22.

8. Edward Miguel, “Poverty and Violence:An Overview of Recent Research andImplications for Foreign Aid,” in Too Poorfor Peace? ed. Brainard and Chollet.

9. Jane Nelson, “Operating in InsecureEnvironments,” in Too Poor for Peace? ed.Brainard and Chollet.

10. Henrik Urdal, “The Demographics ofPolitical Violence: Youth Bulges,Insecurity and Conflict,” in Too Poor forPeace? ed. Brainard and Chollet.

11. Paul Collier, “Doing Well Out of War:An Economic Perspective,” in Greed &Grievance: Economic Agendas in CivilWars, ed. Mats Berdal and David M.Malone (Boulder, Colo.: Lynne Rienner,2000), 91–111.

12. Jack A. Goldstone, “Demography,Environment, and Security,” inEnvironmental Conflict, ed. Paul F. Diehland Nils Petter Gleditsch (Boulder, Colo.:Westview Press, 2001), 84–108.

13. Marc Sommers, “Embracing the Margins:Working with Youth amidst War andInsecurity,” in Too Poor for Peace? ed.Brainard and Chollet.

14. Youth Business International, “YBIInformation Sheet: Youth EmploymentThrough Entrepreneurship”(www.youth-business.org/MainFrame.aspx?MenuID=1&pagename=contentpage.aspx&LinkID=53 [September 2006]).

15. Robert I. Rotberg, “Strengthening AfricanLeadership,” Foreign Affairs, July/August2004, 14–18; the citation here is on 14.

16. Joshua Hammer, “Big Man: Is theMugabe Era Near its End?” New Yorker,June 26, 2006, 28–34; the citation here is on 29.

17. For more information, seewww.moibrahimfoundation.org

18. “Role of Business in Armed Conflict CanBe Crucial, ‘for Good and for Ill,’Secretary-General Tells Security CouncilOpen Debate on Issue,” United NationsPress Release SG/SM/9256-SC/8059,April 15, 2005.

19. Condoleezza Rice, “TransformationalDiplomacy,” lecture at GeorgetownUniversity School of Foreign Service,January 18, 2006.

20. Randall Tobias, “Getting a Better Returnon America’s Investment in People,”remarks at the Initiative for GlobalDevelopment 2006 National Summit,June 15, 2006.

21. E.g., see “National Security PresidentialDirective/NSPD-44,” December 7, 2005(www.fas.org/irp/offdocs/nspd/nspd-44.pdf[September 2006]); and “Department ofDefense Directive 3000.05,” November 28,2005 (www.dtic.mil/whs/directives/corres/pdf/d300005_112805/d300005p.pdf[September 2006]).

22. Lael Brainard, “A Unified Framework forU.S. Foreign Assistance,” in Security byOther Means (Brookings, 2007), 8–16.

23. U.S. Commission on Helping to Enhancethe Livelihood of People, “When andHow Will the Commission Do Its Work?”(http://helpcommission.gov/MyiBelong/EditAbout/When/tabid/66/Default.aspx[September 2006]).

Notes

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