Tackling Tax Havens (Center for American Progress)
Wholesale tax evasion, particularly in the developing world, can have devastating effects. Read this piece that I recently wrote for the Center for American Progress’ National Security & International Policy department.
Promoting Inclusive Growth In the Sustainable Development Framework
The International Labour Organization estimates that across the world, over 202 million people are unemployed. Although the developed world has witnessed a recent rise in unemployment in the wake of the global financial crisis, the vast majority of the unemployed are in Southeast Asia and Africa. Not only are young people disproportionately affected by high levels of global employment, but over64% of working age people are working or looking for work.
Those that have jobs might not be that much better off. As income inequality grows across the world, the working poor population also continues to grow.
In the last few years, the United States, one of the most unequal advanced economies, has engaged in a public dialogue among policymakers and the media regarding the widening wealth gap between the rich and poor. As millions across the country struggle to make ends meet, the richest 1% continue to grow richer. While this has sparked bitter commentary about the unfair advantages of privilege from one side and the need to end hand-outs from others, it is clear that across the world, we need to institute mechanisms to promote inclusive growth. This is not a phenomenon solely limited to the developing world.
Nowhere is this more clear right now than in Brazil, a BRIC nation and one of the most rapidly growing economies, but a place where the newfound wealth is largely concentrated in the hands of the country’s elite, which is primarily of European descent. Right now, in 25+ cities, people are protesting against excessive FIFA World Cup spending.
The 2013 Global Peace Index analyzed the political climates of societies across the world and concluded that conflict and violence are on the rise. Fearon and Laitin (2003) hypothesize that economic inequality and poverty are drivers of conflict. If we want a safer and more peaceful world, inclusive growth must figure as a priority in the national agendas of all economies.
As the United Nations Development Programme states, “inclusive growth is both an outcome and a process.” It is the product of participation that fosters productivity and a system that allows people to share in society’s benefits. Societies in which there is participation without benefit-sharing create inequitable and unjust growth. Sharing benefits without participation creates an undesirable welfare state, the antithesis of productivity.
Creating inclusive growth is also imperative in order to avoid financial crises like 2008. To ensure lasting prosperity and economic security, we must utilize and cultivate all of society’s social and economic resources to create competitive economies. This approach requires governments to keep an eye on long-term development solutions instead of the common focus on short-term panaceas that do not address root structural problems.
We cannot only create economic growth; we must also create sustainable growth. This goal can only be realized if the potential sources of growth are expanding. In many developing countries, an over-reliance on lucrative extractive industries leads to a focus on sectors like mining at the expense of others sectors like manufacturing and agriculture. Diversification is a key step in expanding employment opportunities.
Growing unemployment trends worldwide compel necessitate the creation of more mechanisms to increase the pace of growth and the range of opportunities. One of the first steps towards accomplishing such a lofty task is establish a competitive marketplace. The World Economic Forum’s Global Competitiveness Index framework suggests 12 factors that might encourage such an environment like institutions, infrastructure, health and primary education, higher education and training, technological readiness, business sophistication and innovation.
From these criteria, it is also clear that addressing traditional preoccupations of the development field - governance and social services - are a prerequisite for any growth.
That being said, transforming governments and creating prosperity is obviously easier said than done, but as we pursue a better world, mechanisms to produce inclusive growth need to be a greater factor in discussion.
Sparking Innovation in Refugee Camps
Yesterday was World Refugee Day. In recognition of the day, I have written the following post on the potential for innovation to spur resiliency and self-sufficiency in refugee communities.
According to the UN Refugee Agency, there are over 45.2 million displaced people in the world. Global displacement is at an 18-year high. These figures are unsurprising considering that the 2013 Global Peace Index found that peace across the world is deteriorating and violence is taking its place.
1 in every 170 people has been uprooted by conflict. One-third of these people are refugees, people fleeing from war in country’s outside their own, while two-thirds are internally displaced persons.
While refugee camps are typically meant to be short-term solutions, a large number of conflicts today have resulted in protracted refugee situations, cases in which refugees have lived outside of their country for five years or longer. These protected refugee situations are sadly becoming the norm rather than the exception.
Humanitarian agencies provide food, shelter, medical care as well as educational services, however not all of the needs of these refugees are met. What about the cultivation of creativity - a quality necessary to spur entrepreneurship? Without these traits, refugees are unable to attain the economic and social resiliency that help avoid a renewal of conflict upon their return to their home countries.
In protracted refugee camps, the average stay is 17 years. For Afghans in Iran and Pakistan, Sudanese in Chad, Somalis in Kenya and the Burmese in Thailand, this means that camps must evolve beyond their typical preoccupation with emergency needs. In order to avoid a culture of dependency, new strategies must be develop to moves refugees towards self-sufficiency and renew their sense of dignity in the midst of hardship. This shift in perspective would complement the recent United Nation’s High Level Panel on the Post-2015 Development Agenda’s focus on sustainable development.
There are well-documented cases of the thriving entrepreneurial spirit common in many refugee camps. Dadaab, Kenya, the world’s largest refugee camp, is home to “ more than 5,000 businesses… includ[ing] Internet cafes, butcher shops, hotels, barbershops, telephone bureaus, clinics, electricity suppliers and even second-hand motor vehicle dealer.”
As a 2012 Oxford Conference posited, refugees are “natural entrepreneurs” whose need to survive drives innovation, thus meriting access to opportunities that can facilitate a return to simulacrum of normalcy.
In 2006, Uganda took an innovative stance in refugee policy by adopting legislation that allows refugees to move freely within the country and work rather than living in camps. While Uganda’s refugee population is not as large as the refugee populations of other regions, the nation’s approach enables refugees to be self-reliant. Other nations should consider a model along similar lines.
While implementation of micro-finance to spur business in camps can be difficult in refugee settings, it is concept also well-worth further exploration in order to facilitate self-sufficiency. In some nations, however, such development is impeded by restrictions on the participation of refugees in the private sector. Despite legal roadblocks in some regions, research has shown that refugees are often self-employed which creates employment opportunities for local communities as well as potential new markets for the nation.
Creating opportunities for refugees to develop businesses not only builds resiliency, but can help local communities.
For further reading on this topic, please see:
“Kenya can turn the Dadaab refugee camps into an asset”, The Guardian, April 2012
“IT entrepreneurs find surprise success in Kenya’s Dadaab refugee camps”, The Guardian, June 2013
DRC-TANZANIA: Business as usual for Congolese entrepreneurs in refugee camps,IRIN Africa, April 2003
Entrepreneurship and Social Entrepreneurship in Refugee Camps, Unite for Sight
“Resiliency Admist the Fragmented Lives of Afghan Refugee Women”
Why Mali Matters Now
In recent weeks, Mali has been a constant fixture in the headlines. Given the West African nation’s poor standing in the Human Development Index and low governmental capacity, Mali’s relevance to the politics of the G-20 might come as a surprise. However, in the foreign policy debate of the 2012 election, Mali figured as one of the most important factors related to efforts at world peace, particularly in the Middle East.
How does a poor West African country, unknown to most Americans, figure into the security concerns of the developed world?
In that October 22 debate, Mitt Romney (surprisingly, considering his “Russia=geopolitical foe” thing) hit the nail on the head by referencing al-Qaeda’s growing presence in Mali.
Today, Mali is the largest al-Qaeda stronghold in the world. Northern Mali, a vast swath of land nearly the size of France, is currently under the control of Islamist rebels and Jihadists that have been linked to Nigeria’s Boko Haram, Libya’s Ansar al-Sharia — a group linked to the attack on the U.S. consulate in Benghazi last September — and al-Qaeda in the Islamic Maghreb (AQIM).
How did all this happen? Part of the current chaos in Mali can be traced to its colonial history. As was the case in many other African nations, the construction of Mali was a piecemeal endeavor that did not take into consideration that ethnic distribution of its inhabitants. Southern Mali tends to be populated by black-skinned Malians; northern Mali is populated by the nomadic Tuareg people, who identify more with North African populations due to their skin color and other cultural practices. At various times in Mali’s history, the Tuaregs have attempted to rise up and take control, most recently last year. Since a 2012 coup in which the former Malian President Amadou Toumani Toure was overthrown, the country has been divided into the government-held South and the Islamist north.
While human rights advocates have expressed concern about the strict version of Sharia law that the Islamists have implemented, including flogging, stoning and more brutal practices like amputations, security remains the most pressing issue for international bodies. Mali’s instability threatens to not only bring extremist elements into Western Africa, but also destabilize the Western African sub-region and serve as a training ground for terrorists plotting attacks on the West. Additionally, the nation’s wealth of historic sites such as Timbuktu, a major West African trading center in the 14th to 16th centuries that was renowned for its scholars, provides those seeking to make a statement through violence with many prime targets.
In the last two weeks, France has launched an offensive against the rebels in the hope of aiding the Malian government. France’s actions have come after months of debate over how to implement the December 20 U.N. Security Council Resolution that established a “Mali Support Mission.” While France operates in Mali, Nigerian troops are preparing to aid in the stabilization efforts within the next month. A UN coalition of African troops is also currently undergoing training and may deploy as soon as this summer.
Although France has shown signs of success thus far, through the capture of Kidal, the last major militant-held town in Mali, the well-equipped rebels are showing signs of resiliency. It is likely that the conflict may be more protracted than expected due to an underestimation of the opponent. Despite the fact that France has pledged to stay in the country as long as necessary, with the stalled deployment of ECOWAS and UN troops, it remains to be seen whether or not other global powers, like the United States and the United Kingdom, will provide more than mere support services. Presently, the United States Air Force is flying in French troops and providing equipment, but it is unclear whether the American government will more directly engage with the Malian conflict. Last week, several American hostages were killed in a startling attack on a refinery in Algeria. The attack was apparently a retaliation for Algeria’s allowing France to use its airspace for strikes in Mali. Given Tuesday’s announcement of the establishment of a base for U.S. reconnaissance drones and troops in neighboring Niger, it looks clear that American investments in intelligence and military resources are to expand in West Africa. There’s a new frontier to consider in the war on terror.
Museveni Joins the “10,000 Club”
On June 15, Ugandan president Yoweri Museveni quietly marked 10,000 days in power with little notice from the international community. Museveni has been president since 1986 after the fall of the infamous Idi Amin Dada and the subsequent demise of Milton Obote’s second term.
As one of the longest-serving presidents in Africa, Museveni belongs to a gerontocracy full of controversial leaders. In Sub-Saharan Africa, only Zimbabwe’s Robert Mugabe, Equitorial Guinea’s Obiang and Angola’s Dos Santos have been in power longer than Uganda’s aging autocrat. Each of these politicians stands accused of autocratic practices and varying degrees of corruption and abuse of power.
When Museveni began his term in office, he was lauded by Western leaders like Bill Clinton as part of the vanguard of a new generation of African leaders that also included figures like Paul Kagame of Rwanda and Meles Zenawi of Ethiopia, among others. Although they initially received a warm reception from the West, many members of this coterie are now subject to harsh criticism. Zenawi, who passed away last year, was subject to numerous allegations of repression and human rights abuses. Museveni and Kagame’s involvement in the destabilization of Congo and other conflicts in the Great Lakes region have sparked an outcry from the international community.
However, despite these critiques, Museveni’s legacy is not entirely negative. As president, he has accomplished remarkable things. Uganda has made significant headway in the reduction of HIV/AIDS and has made laudable efforts towards economic progress with the help of international financial institutions like the IMF and World Bank. Although Museveni has a history of suppression of opposition parties, he has been a welcome friend to Washington in light of security concerns in the Great Lakes and the Horn of Africa - especially in Somalia. In 1997, Madeleine Albright referred to him as a “‘beacon of hope” who runs a 'uni-party democracy.’“
However, our security interests cannot gloss over Museveni’s escalating abuse of power. In 2006, he abolished presidential term limits just before national elections. Now, former Ugandan army General David Sejusa has accused Museveni of grooming his son Muhoozi Kainerugab to succeed him and called for opposition to the alleged plan. Following the publication of his claims in two newspapers, Sejusa fled to the UK, but is reportedly considering returning back to Uganda to present a political challenge to Museveni.
Although government spokespeople have denied the validity of Sejusa’s plans, in May, police shut down two newspapers, the Daily Monitor and Red Pepper, that published articles regarding Sejusa’s claims. Sejusa remains under investigation for“civil criminality” and violations of military law.
In light of these developments and the fact that Uganda has not had a peaceful political transition since independence in 1962, a power struggle may be brewing. As freedom of expression and opposition remain suppressed, one must wonder how long Ugandans will remain content with the current state of affairs.
Benefits of Hosting the World Cup: A Case Study of Brazil
Every few years, countries around the world engage in a fierce round of competition to host the FIFA World Cup. Aside from the global prestige, many nations believe strongly in the Cup’s capacity to attract massive revenue streams to tourism, transportation and retail sectors and spur modernization.
In order to attract such economic growth, host nations must first invest enormous sums in infrastructure development. The costs of covering these upgrades can be staggering. While Germany spent $1.87 billion on stadiums for the 2006 World Cup and South Africa spent $1.48 billion on arenas, Brazil stands to spend approximately $3.68 billion on modernization and construction of various facilities.TIME estimates that by next year’s games, the state will have invested over $14 billion in the World Cup.
Some commentators claim that sporting events like the World Cup have net or negative benefits for their host countries rather than the positive benefits that public officials frequently tout. Inspecting the post-World Cup trajectories of many former host nations, these critics may have a point.
According to CNN, “eight of the 10 stadiums built or renovated in Japan for the 2002 World Cup lose between $2 million and $6 million a year, the balance of which is picked up by Japanese taxpayers.”
Initial gains in hospitality-related sectors are often short-lived. While events coordinated for the benefit of tourists do provide jobs, these frequently low-paid, temporary positions, which do not foster skill development, are not the solution to the unemployment crisis plaguing many developing nations.
In unequal societies, the impacts of any economic gain may be concentrated among small segments of the population. Inequitable distribution of wealth and lavish spending on the World Cup lead thousands of South Africans to march in Durban over 4 years ago protest FIFA and government spending on the World Cup,
Now history repeats itself in Brazil, a country that is also sharply divided along race and class lines.
In the 2012 Human Development Index, Brazil ranked 85th out of 186 countries. As a society with high levels of inequality, poverty and uneven social cohesion, the soaring costs of Brazil’s World Cup expenditures have sparked an uproar among its citizens.
Hundreds of thousands of Brazilians in over 25 cities have taken to the streets to protest the exorbitant spending on the World Cup, high taxes, corruption and a lack of infrastructure maintenance or quality provision of public goods like education and healthcare.
The protests may threaten President Dilma Rousseff’s re-election prospects next year. A recent Datafolha poll put her approval rating at 57%, a marked decline from her 65% approval rating this March. Considering that former President Lula de Silva left office with an 83% approval rating, Rousseff’s continually slipping approval rating show she is not faring well with Brazilian voters. However, she has publicly supported the protests as a sign of the democracy’s vitality and pledges to work towards easing social tensions and improving services.
Despite Rousseff’s promises, even if investments in events like the World Cup fail to pay off, they often cast a long and terrible shadow over host nations’ economies. Numerous economists and policy analysts have speculated that the massive costs associated with the 2004 Athens Olympics may have triggered Greece’s economic decline. It is imperative that future host nations tread carefully in consideration of their deficits before pursuing such large-scale ventures.