Normative Narratives

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Green News: Properly Managing Natural Resource Revenues–A Focal Point of Sustainable Development

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.

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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.

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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

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Conflict Watch: Hard Power, Soft Power, and Sustainable Human Development

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The Importance of Soft Power:

May 3rd marked World Press Freedom Day, during which high ranking UN officials recognized the important roles that freedom of expression, press, and access to information play in the development process:

The United Nations is marking World Press Freedom Day today with an appeal to all States, societies and individuals to actively defend press freedom as a fundamental right and as a critical contribution to achieving and sustaining the Millennium Development Goals (MDGs).

This call was made in a joint message by Secretary-General Ban Ki-moon and Irina Bokova, Director-General of UN Educational Scientific and Cultural Organization (UNESCO), who said UN bodies are already working together and with other partners under UNESCO’s leadership to create a free and safe environment for journalists and media workers around the world.

Their message goes on to stress that this year, the international community has a once-in-a-generation opportunity to prepare a long-term agenda for sustainable development to succeed the MDGs when they end in 2015.

“Successfully implementing that agenda will require that all populations enjoy the fundamental rights of freedom of opinion and expression, the officials said, underscoring that those rights are essential to democracy, transparency, accountability and the rule of law. “They are vital for human dignity, social progress and inclusive development.”

Also marking the Day, 31 specialists from the largest body of independent experts in the UN Human Rights system called on all Governments to promote and protect the rights to freedom of expression and information, freedom of peaceful assembly, and freedom of association and public participation.

Protection of these fundamental freedoms is essential for full realization of all human rights for all and for the achievement of related development goals. “States must develop more inclusive political processes and allow the media to play a key role in guaranteeing the right of everyone…to freely access information and engage in meaningful development related discourse.”

The experts, known as Special Procedures of the Human Rights Council, comprise the Organization’s largest body of independent fact-finding and monitoring mechanisms that address either specific country situations or thematic issues in all parts of the world.

“Without free media to advocate for and monitor the implementation of the new set of post-2015 targets, there can be no real development for all marginalized, vulnerable or discriminated against. Not now, not ever,” declared the experts.

Mr. Ban said that every day of the year, the fundamental freedom to receive and impart ideas through any media is under assault, “to the detriment of us all.” Indeed, journalists are being singled out for speaking or writing uncomfortable truths – kidnapped, detained, beaten and sometimes murdered.

“Such treatment is completely unacceptable in a world ever more reliant on global news outlets and the journalists who serve them,” said the UN chief.

He told the briefing that last year, 70 journalists were killed; many caught in the cross-fire of armed hostilities. Fourteen more have suffered the same fate this year. Also last year, 211 journalists were being held in prison. Some 456 journalist have been forced into exile since 2008. And since 1992, well over 1,000 journalists have been killed – nearly one per week.

As for the post-2015 agenda, he said free media, traditional and new, are indispensable for development. They can promote transparency about the new goals that Member States will adopt – progress as well as shortfalls. “Social media and mobile technologies offer new tools for accelerating citizen participation and economic and social progress,” he said, adding that the media’s watchdog function is essential for holding Governments, businesses and others to account.

Echoing those sentiments, John Ashe, President of the UN General Assembly, said freedom of expression and freedom of the press are fundamental rights that form an essential pillar of democratic societies. “When journalists are able to report freely, they support informed citizen participation in political and social processes and promote civic engagement,” he added.

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The Limits of Soft Power:

Access to information can combat corruption, fuel populism, and give a voice to the voiceless; the role press freedom in sustainable human development cannot be understated.

However, as much as it pains me to admit it, there are limitations to what “soft power” can achieve. A free press essentially acts as a “spotlight” on abuses of power and social injustices. There are forces that are directly opposed to “Westernization” or “Modernization”; against such forces, shining a “spotlight” is almost entirely ineffective.

An example of such targeted violence is currently playing out in Nigeria, where Boko Haram terrorists (loosely translated to “Western education is a sin”) last month kidnapped over 200 schoolgirls:

These girls, ages 15 to 18 and Christians and Muslims alike, knew the risks of seeking an education, and schools in the area had closed in March for fear of terror attacks. But this school had reopened so that the girls — the stars of their families and villages — could take their final exams. They were expected to move on to become teachers, doctors, lawyers.

Instead, they reportedly are being auctioned off for $12 each to become “wives” of militants. About 50 girls escaped, but the police say that 276 are still missing — and the Nigerian government has done next to nothing to recover the girls.

“We are now asking for world power countries to intervene,” the desperate father of a missing 18-year-old girl, Ayesha, told me by phone. He said that the parents had given up on Nigerian government officials — “they are just saying lies” — and pleaded for international pressure on Nigeria to rescue the girls.

If the girls aren’t rescued, “no parent will allow their female child to go to school,” Hadiza Bala Usman, who has led protests in Nigeria on behalf of the missing girls, warned in a telephone interview.

The best tool to fight extremism is education, especially of girls — and that means ensuring that it is safe to study. The greatest threat to militancy in the long run comes not from drones but from girls with schoolbooks.

More than 200 teenage girls have just been enslaved because they had the brains and guts to seek to become teachers or doctors. They deserve a serious international effort to rescue them.

According to Modernization theory, democratization and other rights based movements are the result of civil society initiatives, which occur when large portions of society become empowered via human capital investment. If people believe they will become targets for embracing “Western” ideals, and that they will not be protected, they will be less inclined to invest in their futures, stymieing modernization efforts.

To be clear, the sort of security that enables human capital investment comes from police forces, peacekeepers, and armies that are accountable to their people, not by international forces dropping bombs / drone strikes, which actually fuels radical sentiments.

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Synergy Between Soft and Hard Power:

In the field of poverty reduction / economic development, it has long been recognized that peace and security are necessary preconditions for sustainable human development. As advances in information and communication technology and improvements in good governance theories shift the focus towards “soft power”, we must not forget the important role that basic security plays in sustainable human development. This is not an either or issue, but a question of finding the right balance between these two synergistic forms of assistance.

While national governments are the primary human rights duty bearers, in the developing world many governments lack the capacity to provide even basic security / public goods. The international community must compliment “good governance” via both “hard” and “soft” support.

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Third World Injustices Result In First World Problems:

When discussing injustices in the developing world, people often say (with varying degrees of indifference) “why should I care?”. If the moral / ethical reasons do not get you, there are “selfish” reasons to promote sustainable human development.

Essentially, sustainable human development it is the only way to reverse trade imbalances and the flow of jobs being outsourced to the developing world. Maybe you do not care about people in other countries, but you probably care about having a job and the general state of your countries economy.

If the “Great Recession” has tough us anything, its that we cannot financially innovate our way to prosperity in an increasingly divergent global economy–it does not work for 99% of us even in the developed world! Only through partial global economic convergence can the majority of people in the developed world hope for “a better future”.

In a blog a few months ago, I ran into an interesting study called “I’m The Guy You Pay Later“; written by law enforcement officials, it argues that money not invested in early childhood education ends up being spent on the back-end on criminal justice expenditures. I can’t help but recognize similarities in the debate over official development assistance (ODA); we can support “good governance” now, or pay the prices later (unsustainable levels of military spending / related underinvestment in other aspects of our economy, the decline of living-wage jobs / high unemployment, etc.).

Another argument against ODA is that it is never effective–this is simply not true. ODA (both “soft” and “hard”), when complimenting “good governance” domestic resource mobilization in the developing world (natural resource revenue accountability, stemming illicit financial outflows, tax system reforms) can help finance the various programs (at all levels; global, regional, national, state, local) the vast majority of people in both the developed and developing worlds need.


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Economic Outlook: An Ounce Of Crisis Prevention Is Worth A Pound Of Cure

So why do the international community and national governments under-fund crises prevention initiatives? (Especially given that there is no singular “cure” for various crises).

The rising scale of needs, a collective inability to resolve protracted crises, and the interplay of new factors such as climate change, are making it harder for Governments and aid workers to effectively respond to humanitarian challenges, the United Nations today reported, stressing that development aid must contribute to managing crisis risk.

The report, World Humanitarian Data and Trends 2013, authored by the UN Office for the Coordination of Humanitarian Affairs (OCHA), highlights major trends in the nature of humanitarian crises, the underlying causes and drivers, and the actors that participate in crises prevention, response and recovery.

“Climate change, population growth, rapid and unplanned urbanization, and food and water insecurity are leaving more and more people at risk of crisis,” write the report’s authors, listing some of the new factors facing the humanitarian community.

Among other trends, the report shows that today’s major humanitarian crises are protracted “with few signs of improvements over the long term.”

Of countries that had an inter-agency appeal in 2012, eight had an appeal in eight or more of the previous ten years, including in Sudan, Democratic Republic of the Congo (DRC) and Somalia.

When not protracted, the crises are often recurrent, occurring as a result of shocks – climate, conflict, price – to chronically vulnerable people.

On these factors, the report concludes that humanitarian assistance is still overwhelmingly focused on response and development aid often fails to target the most vulnerable.

“Less than five per cent of humanitarian funding and less than one per cent of development funding is spent on crisis preparedness and prevention,” according to figures provided.

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Just as one human rights violation enables others, one humanitarian crisis often leads to future manifestations of the same or related crises. The intractable / recurrent nature of humanitarian crises highlights the need to focus on a preventative approach to building resilience to humanitarian crises. Programs which build resilience to humanitarian crises are essentially poverty reduction / sustainable human development programs (think I am oversimplifying? The United Nations Development Programme’s motto is “empowered lives, resilient nations”).

Least developed countries (LDCs) do not have access to private sector credit (at affordable rates), particularly in times of great need (like after a major crisis). Therefore, an essential component of crisis preparedness are counter-cyclical fiscal policies. Many LDCs rely on natural resource rents for financing government programs. Counter-cyclical natural resource funds, such as the Nigeria’s Sovereign Investment Authority (which draws on excess oil rents), can be powerful tools for crisis preparedness.

Responsible use of ODA / natural resource rents relies on “good governance“. Corrupt leaders can easily embezzle ODA / public savings, and send that money offshore where it can never be recovered. Finding the right balance between prevention / preparedness and crisis response is a difficult task even for the most well intended governments / organizations.

However, it is obvious that spending only 1 % of official development assistance (ODA) on preventative / preparedness measures is a short-sighted strategy (although using a broader definition of “preventative action”, as I have, may encompass a larger portion of ODA). Further exacerbating the problem, there is a large gap in ODA commitments from the worlds wealthiest nations. Dedicating a bigger slice of a bigger pie to crisis prevention / preparedness is needed to strike a responsible balance. 

There are obvious reasons why the vast majority of ODA goes towards crisis response. Failure to respond to a humanitarian crisis can create breeding grounds for disease, human rights violations, violence/terrorism, and/or lost generations of economic growth. In addition, it is generally easier to mobilize resources in response to a specific incidence (which is seen as unavoidable), than it is for under-development / extreme poverty (which people often unmistakably attribute to laziness). However, it should be the job of development organizations to direct funding to the avenues which will have the greatest impact.

The democratic governance based approach to sustainable human development helps overcome common development issues. By emphasizing political rights and accountable governance, donors and citizens can be confident money is going (or in the case of preparedness, staying) where it is “supposed” to go. Farsighted “good” governments, whose capacities are fully developed with adequate resources (a combination of public savings / ODA), can achieve the simultaneous goals of economic development and resilience to crisis. By emphasizing human rights and environmental sustainability, humanitarian crises are addressed preventatively.

There is no one “road-map” for Sustainable Human Development. Every country is unique and has to build its own path–what Dr. Jeffrey Sachs refers to as “differential diagnosis“.

However, there are some common steps all LDCs should take if they wish to be on the path to sustainable human development: 

1) Draft Poverty Reduction Strategy Plans (PRSPs) that take into consideration the indispensable role of human rights and accountable governance; 

2) Legislate the human rights accountability from all relevant stakeholders (governments, civil society, NGOs, private sector, IGOs, etc.);

3) Mobilize a greater share of resources for sustainable human development programs to prevent / prepare for humanitarian crises.

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Update: The UNDP-EU just released interactive maps detailing their joint projects over the last 10 years. One of these maps focuses on crisis prevention and recovery projects.


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Economic Outlook: “Supply-Side” Issues Keep 1/3 Of Children Under-Educated

Original article:

“This learning crisis has costs not only for the future ambitions of children, but also for the current finances of Governments,” says the independent Education for All (EFA) Global Monitoring Report Teaching and Learning: Achieving Quality for All,commissioned by the the UN Educational, Scientific and Cultural Organization (UNESCO).

“Around 250 million children are not learning basic skills, even though half of them have spent at least four years in school. The annual cost of this failure: around 129 billion,” it says, noting that in around a third of countries, less than 75 per cent of primary school teachers are trained according to national standards. Some 57 million children are not in school at all.

“These policy changes have a cost,” UNESCO Director-General Irina Bokova says in a forword. “This is why we need to see a dramatic shift in funding. Basic education is currently underfunded by $26 billion a year, while aid is continuing to decline. At this stage, Governments simply cannot afford to reduce investment in education – nor should donors step back from their funding promises. This calls for exploring new ways to fund urgent needs.”

The report notes that in 2011, around half of young children had access to pre-primary education, but in sub-Saharan Africa the share was only 18 per cent. The number of children out of school was 57 million, half of whom lived in conflict-affected countries. In sub-Saharan Africa, only 23 per cent of poor girls in rural areas were completing primary education by the end of the decade.

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Supply and Demand Side Impediments to Education:

My professor for Community Economic Development  had an interesting way of framing development challenges. She urged the class to think about development challenges as primarily “supply-side” or “demand-side” issues.

As one would expect in a development economics course, education was a recurring topic; was the education-gap primarily a demand-side issue (are parents in the developing world not sold on the advantages of education, perhaps compared to the immediate need for income from child labor), or a supply-side issue (was it a lack of schools, roads, electricity, teachers, etc.)?

Of course, supple-side concerns can perpetuate  demand-side issues. For instance, if a parent does not believe their child will receive an adequate education, they may be more inclined to send their child to work instead of school. Therefore, in instances where there is an immediate need for child-labor income, it is all the more essential to ensure that a viable alternative (adequate education) exists.

According to this UNESCO report, the education-gap is primarily a supply side issue. This is encouraging news; given adequate government funding, development aid, and accountable / transparent governance, the education-gap is not an insurmountable problem. There is not some cultural difference holding back educational goals. Given the opportunity, parents will send their children to school (as proven by inputs from “The World We Want” Post-2015 National and Thematic Consultations).

However, even “good governments” that receive development aid face fiscal constraints–notably small tax revenue bases and high borrowing costs. Therefore, these governments must consider innovate means of “stretching a dollar” of education expenditure. One idea worth considering is combining prerecorded classes (taught by an excellent teacher), with an in-person “teaching assistant” to facilitate discussion, monitor homework assignments, and answer basic questions.

Similar to using nurses / physician assistants instead of doctors in certain instances to keep healthcare costs down, using a teaching assistant would put less pressure on finding the elusive “quality teacher” (which tend to be in short-supply even in developed countries). Prerecorded classes could be translated into dialects so that traditionally marginalized groups would have access as well.

This hybrid online / in-person model is not a panacea, but it does present a reasonable substitute for quality education given supply-side constraints. It is certainly an alternative education policymakers in developing countries (and poorer areas in developed countries) should explore.

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The Role of Good Governance:

Governments should have an interest in delivering a quality education to all children. Under-education has both an immediate ($129 billion lost in global put) and future costs (the report said that ensuring an equal, quality education can increase a country’s gross domestic product per capita by 23 percent over 40 years.).

This normative stance requires a long-term and accountable outlook on governance. It is always easier (and personally beneficial) to embezzle development aid than invest in education. This is one reason why democratic governance plays such an important role in development. Governments must be made accountable to their constituents, otherwise socially beneficial policies will be foregone for personal benefits.

Furthermore, when development aid does not go to its intended recipients, it fuels anti-development-aid sentiments. People in the U.S. often argue “why do we send money abroad when we have social problems at home”? When this aid does not go where it is supposed to go (which to be fair, is fairly often), these people see their views as vindicated. Of course it is not an “either-or” situation; there is no reason why the richest nations in the world cannot reach their 0.7% of GDP aid commitment while also addressing domestic concerns. Development aid is a popular scapegoat, not only because the beneficiaries aren’t “us” but “them”, but also because people chronically overestimate the amount we spend on official development aid (ODA).

ODA should be conditional on “good-governance”, including independent oversight of aid-delivery. It is fair for those paying for the aid, and those receiving it. Any government that uses the “national sovereignty” excuse to deny independent oversight of aid-delivery should be found in violation of Article 2.1 of the International Covenant on Economic, Social and Cultural Rights, which states:

“Each State Party to the present Covenant undertakes to take steps, individually and through international assistance and co-operation, especially economic and technical, to the maximum of its available resources, with a view to achieving progressively the full realization of the rights recognized in the present Covenant by all appropriate means, including particularly the adoption of legislative measures.”

 


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Transparency Thursday: “Ghost Money” Flows From the U.S. to Afghani President Karzai

A true transparency piece, aimed at making common knowledge formerly secret financial transactions between the C.I.A. and Afghani President Hamid Karzai, was released last Sunday:

“For more than a decade, wads of American dollars packed into suitcases, backpacks and, on occasion, plastic shopping bags have been dropped off every month or so at the offices of Afghanistan’s president — courtesy of the Central Intelligence Agency.

All told, tens of millions of dollars have flowed from the C.I.A. to the office of President Hamid Karzai, according to current and former advisers to the Afghan leader.

‘We called it ‘ghost money,’’ said Khalil Roman, who served as Mr. Karzai’s deputy chief of staff from 2002 until 2005. ‘It came in secret, and it left in secret.’”

“…there is little evidence that the payments bought the influence the C.I.A. sought. Instead, some American officials said, the cash has fueled corruption and empowered warlords, undermining Washington’s exit strategy from Afghanistan.

‘The biggest source of corruption in Afghanistan,’ one American official said, ‘was the United States.’”

“…the C.I.A. has continued to pay, believing it needs Mr. Karzai’s ear to run its clandestine war against Al Qaeda and its allies, according to American and Afghan officials…’We paid them to overthrow the Taliban’, the American official said.”

 “The cash does not appear to be subject to the oversight and restrictions placed on official American aid to the country or even the C.I.A.’s formal assistance programs, like financing Afghan intelligence agencies. And while there is no evidence that Mr. Karzai has personally taken any of the money — Afghan officials say the cash is handled by his National Security Council — the payments do in some cases work directly at odds with the aims of other parts of the American government in Afghanistan, even if they do not appear to violate American law.”

“While intelligence agencies often pay foreign officials to provide information, dropping off bags of cash at a foreign leader’s office to curry favor is a more unusual arrangement.”

“Afghan officials said the practice grew out of the unique circumstances in Afghanistan, where the United States built the government that Mr. Karzai runs. To accomplish that task, it had to bring to heel many of the warlords the C.I.A. had paid during and after the 2001 invasion.

By late 2002, Mr. Karzai and his aides were pressing for the payments to be routed through the president’s office, allowing him to buy the warlords’ loyalty, a former adviser to Mr. Karzai said.”

“Some of the cash also probably ends up in the pockets of the Karzai aides who handle it, Afghan and Western officials said, though they would not identify any by name.

That is not a significant concern for the C.I.A., said American officials familiar with the agency’s operations. “They’ll work with criminals if they think they have to,” one American former official said.”

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Leaving out the little bit about how Iran was also attempting to buy influence, this seems like it may pretty much be common practice for the C.I.A.

I am admittedly torn on this issue.

The money is not a big deal in terms of the U.S. fiscal position. Tens of millions of dollars, over the course of a decade, amounts to a little more than a drop-in-the-bucket for American defense and intelligence expenditures.

If this money has gone to financing fighting that would otherwise have involved U.S. defense forces, it may well have saved money and American lives. From the American point of view, we may have been backing the lesser of two evils:

“Mr. Salehi, though, is better known for being arrested in 2010 in connection with a sprawling, American-led investigation that tied together Afghan cash smuggling, Taliban finances and the opium trade. Mr. Karzai had him released within hours, and the C.I.A. then helped persuade the Obama administration to back off its anticorruption push, American officials said.

After his release, Mr. Salehi jokingly came up with a motto that succinctly summed up America’s conflicting priorities. He was, he began telling colleagues, “an enemy of the F.B.I., and a hero to the C.I.A.”

 The fact that we have to buy influence in Afghanistan, on top of billions in official aid, shows just how costly and unsustainable nation-building can be, especially when that nation does not particularly want us there. What happens when the money stops, does the Karzai government lose control of the factions it was paying? Does the U.S. lose whatever little influence it does have over Afghani politics? Does the C.I.A. continue paying President Karzai indefinitely until the intractable “War on Terror” is won or abandoned?  

These are not easy questions; one thing I am sure of is that future payments to Karzai will come with stricter conditions of anonymity.

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While the practical side of me says perhaps this money was needed, and indeed may have saved money and American lives compared to not paying it, the political and developmental economist in me is unabashedly opposed to this money.

Any time a government collects “rents”, be it from natural resources, official development aid, or secret financial transactions, that government further tightens its grip on the country. Similar to the “natural resource curse”, this money insulates the government from having to invest in human capital and infrastructure needed to raise the standard of living and productivity of the average Afghani, and put the country on a path to long term sustainable human development. Most governments, like the U.S. government, rely on tax revenue to operate, which is why the U.S government has stake in investing in the American peoples’ productive capacities (beyond the obvious moral and ethical considerations).

If the desired end result is true democracy in Afghanistan, then this money undoubtedly undermined U.S. interests. If the desired end result is a geopolitical ally who we know we can pay off, then the money has arguably served its purpose (although you can certainly argue U.S. influence in Afghani politics is minimal, considering how much we have invested in the country).

How do you feel about this? Do the ends justify the means, or is the U.S. thinking way too short-sighted and simply financing the next autocratic-anti-American regime in the Middle-East? I look forward to hearing some of your thoughts on the matter in the comment section.