September | 2015 | Normative Narratives

Following the adoption of the Sustainable Development Goals (SDGs) by the UN General Assembly, I would like to highlight a focal point of sustainable human development–utilizing natural resource revenue as a tool for sustainable human development.

Post-2015 Development Financing:

“There’s only so much amount of aid countries can rely on. Indeed, often you can’t rely on aid in the sense of relying on certain amounts every single year… it goes up, it goes down… governments fall in and out of love with the donors… so it’s not so reliable,” said Mr. Nolan.

“At the end of the day, a State operates on the basis of its own revenue collection. And a developmentally-oriented State, a State that actually wants to promote development through infrastructure, health, education spending, needs to raise most of the money itself.”

He added that raising revenue does not necessarily mean going into the rural areas and heavily taxing people. “It actually means taxing the better off in the society and also taxing companies, both domestic and foreign, more effectively.”

Tax rates, he noted, are very low in many low-income countries, in some cases under 15 per cent of gross domestic product (GDP). This could easily be increased by a series of reforms, as well as by better structuring of taxation in the extractive industries and greater attention to the transfer of money out of the country.

Meeting UN-backed climate goals requires leaving the vast majority of natural energy resource in the ground. But sustainable development is contingent on both the intrinsic (electricity) and market value of natural resources; one would be hard pressed to find a development practitioner that does not believe this revenue source is an essential piece of the development financing puzzle.

Developed countries have had decades, if not centuries, of using natural resources limitlessly in their pursuit of development; reliable access to energy is an indispensable part of poverty alleviation, economic growth, and modernization. We are essentially asking the worlds poorest countries to forgo the cheapest form of electricity available in the name of environmental sustainability (do as I say, not as I did). To reconcile this clear mismatch between ability to pay and necessity, the developed world must do more to reach it’s target of $100 billion per year by 2020 to help poorer countries fight climate.

—

The “Natural Resource Curse“:

The “Natural Resource Curse”–the misappropriation of resource revenue–robs the worlds poorest countries of a needed source of development finance. Often times the natural resource curse finances armed conflicts, which cause immeasurable human suffering, roll back development gains, and make future development much more difficult (conflict is often associated with poverty and malnutrition which stunts physical and cognitive development, can prevent children from going to school, and can cause trauma that leads to lifelong psychological issues).

The Natural Resource Curse is not inevitable, but fighting it requires good governance and the security capacity to counter those who wish to extract revenues for their own privilege. Battling the Natural Resource Curse also requires effective sanctions regimes–by driving ill-gotten natural resource revenues to the black market, and attacking that black market and related international money laundering, international criminals and terrorists would lose an important source of funding.

Sanctions, of course, require broad based cooperation. There is a risk that in this era of disorder and instability, the international community might “ease up” on bad-but-stable governments. The importance of good governance of natural resource revenues shows this would be a short-sighted and ultimately counter-productive strategy for fighting international crime and promoting sustainable human development.

If the world is to simultaneously address the needs of Least Developed Countries (LDCs) and reach climate targets, we must focus on making sure LDCs leverage all the resources they do extract to maximize social welfare. Effective “South-South Cooperation“–the sharing of best practices between developing countries–would greatly enhance this effort.

Given the importance of the source, the propensity for corruption (“Resource Curse”), and the need to leave much of the existing deposits in the ground, when it comes to properly managing natural resource revenues for sustainable human development, there is little margin for error.

—

Natural Resources and the SDGs:

Fortunately, proper natural resource revenue management is addressed many times throughout the proposed SDG text:

Goal 1. End poverty in all its forms everywhere

1.4 by 2030 ensure that all men and women, particularly the poor and the vulnerable, have equal rights to economic resources, as well as access to basic services, ownership, and control over land and other forms of property, inheritance, natural resources, appropriate new technology, and financial services including microfinance.

Goal 5. Achieve gender equality and empower all women and girls

5.a undertake reforms to give women equal rights to economic resources, as well as access to ownership and control over land and other forms of property, financial services, inheritance, and natural resources in accordance with national laws

Goal 12. Ensure sustainable consumption and production patterns

12.2 by 2030 achieve sustainable management and efficient use of natural resources

Goal 16. Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels

16.4 by 2030 significantly reduce illicit financial and arms flows, strengthen recovery and return of stolen assets, and combat all forms of organized crime

16.5 substantially reduce corruption and bribery in all its forms

16.6 develop effective, accountable and transparent institutions at all levels

16.7 ensure responsive, inclusive, participatory and representative decision-making at all levels

Goal 17. Strengthen the means of implementation and revitalize the global partnership for sustainable development

Finance

17.1 strengthen domestic resource mobilization, including through international support to developing countries to improve domestic capacity for tax and other revenue collection

17.3 mobilize additional financial resources for developing countries from multiple sources

THOUSANDS SYRIAN REFUGEE

The European Refugee Crisis did not come out of nowhere. In fact, for anybody who follows international affairs, it is an inevitable result of a failure of leadership, shared responsibility, and vision in global security. For the past 70 years, America has been the guarantor of global security for countries seeking to promote democracy and human rights. For many decades this strategy either worked, or we lacked the communications technologies to know that it did not.

However, the decline of the inter-state war (thanks in large part to the economic interdependence and institutions engineered by America post-WWII) and rise of civil wars / non-state (terrorist) actors have led to much more protracted conflicts. The costs of modern warfare, exemplified by America’s “War on Terror”, have left America war-weary and financially strained–the era of “Team America, World Police” is over. This does not mean America should pull back from its extra-territorial human rights obligations, it means that countries that share our values must begin to pull their weight.

These sentiments were recently shared in a statement by UN Secretary General Ban Ki-moon:

“Let us also remember: the high number of refugees and migrants are a symptom of deeper problems – endless conflict, grave violations of human rights, tangible governance failures and harsh repression. The Syrian war, for example, has just been manifested on a roadside in the heart of Europe.”

Mr. Ban said that in addition to upholding responsibilities, the international community must also show greater determination in resolving conflicts and other problems that leave people little choice but to flee. Failing that, the numbers of those displaced – more than 40,000 per day – will only rise.

“This is a human tragedy that requires a determined collective political response. It is a crisis of solidarity, not a crisis of numbers,” the Secretary-General declared.

—

Thomas Friedman, who is by no means a war hawk, had a surprisingly hawkish outlook on the wars of the Middle East and their subsequent refugee crises in his most recent NYT Op-Ed:

Since World War II, U.S. foreign policy has focused on integrating more countries into a democratic, free-market world community built on the rule of law while seeking to deter those states that resist from destabilizing the rest. This is what we know how to do.

But, argues Michael Mandelbaum, author of the forthcoming “Mission Failure: America and the World in the Post-Cold War Era”: “There is nothing in our experience that has prepared us for what is going on now: the meltdown of an increasing number of states all at the same time in a globalized world

Your heart aches for the Syrian refugees flocking to Europe. And Germany’s generosity in absorbing so many is amazing. We have a special obligation to Libyan and Iraqi refugees. But, with so many countries melting down, just absorbing more and more refugees is not sustainable.

If we’re honest, we have only two ways to halt this refugee flood, and we don’t want to choose either: build a wall and isolate these regions of disorder, or occupy them with boots on the ground, crush the bad guys and build a new order based on real citizenship, a vast project that would take two generations. We fool ourselves that there is a sustainable, easy third way: just keep taking more refugees or create “no-fly zones” here or there.

Will the ends, will the means. And right now no one wants to will the means, because all you win is a bill. So the world of disorder keeps spilling over into the world of order. And beware: The market, Mother Nature and Moore’s law are just revving their engines. You haven’t seen this play before, which is why we have some hard new thinking and hard choices ahead.

Obviously the first option–isolating these regions of disorder–is not really an option at all. Pursuing this option would lead to untold human suffering and stifle innovation, trade, and economic growth. Furthermore, these regions of disorder will not simply leave us alone, as evidenced by 9/11, the 2004 Madrid Train bombings, and more recent “lone wolf” terrorist attacks around the world.

One of the great challenges of the 21st century for the global community, therefore, is to establish a fair, equitable, and financially sustainable system for promoting economic development, “positive peace“, and conflict prevention. The UN Security Council must be reformed, in order to allow the “Responsibility to Protect” to fulfill it’s promise and respond to conflicts in a decisive and timely manner.

The Syrian civil war is a case-in-point of what happens when the international community is unwilling to dedicate the necessary resources to stemming a conflict before it gets out of control.

—

There are many considerations when assessing the true cost of war, aside from the obvious financial cost of intervention and casualties. Other less obvious costs include damage to the “host” country (physical damage, lost economic output, the cost of post-conflict reconstruction) and psychological and human development costs to civilians in the “host” country–surely war is not to be rushed into or taken lightly.

But despite all these costs, the use of force must remain as a deterrent; war might be costly for society as a whole, but it can still be very profitable for authoritarian governments and terrorist groups. Given Europe’s relative wealth and proximity to the Middle East / North Africa, it’s role in global security and defending human rights abroad has been feeble. Germany is leading the European campaign to house refugees, but as Friedman and Ban point out, treating the symptom and not the cause is not a sustainable solution.

The U.S. more than does it’s part in fighting these wars, but despite good intentions our track record is far from perfect–both intervention and non-intervention in past decades have had disastrous effects. When the U.S. military is the only show in town, “debates” on the proper course of action devolve into an echo-chamber of American ideas, and any ensuing missteps–be they to act or not to act–are amplified.

Russia, China, and Saudi Arabia will not defend democratic principles. India, while democratic, is inherently non-interventionist. Japan, for it’s part, is beginning to pivot towards playing a greater role in global security. However, when examining countries military capabilities and their ideologies, it is obvious that there is no substitute for Europe (led by Germany) playing a larger role in promoting democracy and human rights abroad, including through the use of force when necessary.

One would hope that the daily influx of thousands of conflict-driven refugees, in addition to a resurgent Russian military, would kick the Europe military machine into gear. Failure to do so does not promote peace or fiscal responsibility, it is a short-sighted and cowardly approach to governance, and one the world cannot afford.