Category Archives: Foreign Policy

Osama Bin Laden Tells Bono to Shove it

I hope Bono doesn't retract his endorsement of "Develop Economies"

Within the aid and development community, there are two camps whose views on the subject are diametrically opposed.  One side, led by economist Jeffrey Sachs and indie rock star Bono (one name), believes in a top-down approach, providing governments with aid money to implement programs that improve the welfare of the population.  The other side, under the spiritual guidance of economist Bill Easterly and championed by Dambisa Moyo, an economist with the conviction and warmth of Ayn Rand, and others, considers unconditional aid transfers to be counterproductive, further entrenching corrupt governments and exacerbating the very problems they are intended to solve.  Easterly and company support a more bottom-up approach, empowering the population to create sustainable economic growth and development.

The latter group derisively refers to the former’s approach to aid as “charity,” which, in this context, is not a good thing.  Charity, they argue, creates dependency and produces unsustainable solutions to long-term problems.  They believe in using capacity-building and commerce  as tools of economic growth, allowing nations to pull themselves up from their proverbial bootstraps.  After all, every first-world nation, with the exception of maybe Singapore, has ridden the tiger of manufacturing to prosperity.  Why should that path be any different for developing countries today?  China has lifted hundreds of millions of its own people out of poverty and is currently making strides toward the same end in Africa.  African nations are increasingly looking to the east for partnerships that offer a path to prosperity through participation in global economy.

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ShoreBank: A Banker to the Poor Goes Bust

ShoreBank is a Chicago-based financial institution that was founded on the principle that everyone deserves access to financial services and that, by offering these services to the urban poor, the community will benefit.  Sound familiar?  Its mission is very much aligned with that of microfinance.  And, since 1973, Shorebank was largely successful in achieving that mission.  Initially serving the South Side of Chicago, the bank eventually spread to Detroit, Cleveland, and much of the Pacific Northwest.   The organization’s ties to microfinance go beyond conceptual: the founders served as the first consultants to Muhammad Yunus when he was scaling up his Grameen Bank in Bangladesh.  David Oser, formerly the chief economist for Shorebank, explains the history of the world-renowned organization:

ShoreBank Corporation, the parent holding company then called the Illinois Neighborhood Development Corporation, was the first to seize on the idea that fostering community economic development needed more than just a bank. A bank, after all, is a reactive institution; it can only lend money to others who then initiate action, whether buying a home, improving a business, or rehabbing an apartment building. So, in the 1970s, the holding company created a non-profit to focus on job training and placement; a loan fund to assist minority entrepreneurs reach scale; and a real estate development company to catalyze neighborhood revitalization in South Shore.

He goes on to explain some of the company’s good works in the developing world: Continue reading

“A Core Pillar of American Power”

This is how President Obama described the role of foreign aid in our geopolitical relationship with the world.  Today on All Things Considered, NPR had a segment on Obama’s speech to the United Nations on America’s changing approach to aid:

President Barack Obama on Wednesday defended U.S. aid to impoverished people even during sour economic times at home yet promised a sterner approach, favoring nations that commit to democracy and economic revival.

Addressing world leaders, Obama offered no new commitments of U.S. dollars, but rather a blueprint of the development policy that will drive his government’s efforts and determine where the money flows. His message was that the United States wants to help countries help themselves, not offer aid that provides short-term relief without reforming societies.

“That’s not development, that’s dependence,” Obama said. “And it’s a cycle we need to break. Instead of just managing poverty, we have to offer nations and people a path out of poverty.”

This isn’t necessarily revolutionary thinking, but it is still significant.  People have been talking about redefining the way we give money to developing countries, and it has always been a tool of foreign policy.  In the past decade USAID has been funding projects that shore up the private sector economy in countries around the world, even if government-to-government aid is still alive and well.  And just a few months ago, a memo titled “A New Way Forward on Global Development” was leaked, detailing this radical change in strategy and approach for foreign aid.

Obama talks about favoring countries that are committed to the principles of democracy and economic revival, though this is only partly true.  We have been known to give money to countries that are not exactly democracies in a traditional sense, and have have withheld money from other countries that are democracies.

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Thoughts on Leaving

I’m writing this on the plane from Bacolod, where I have spent that last 10 months, to Manila. [Note: I got back 4 days ago, and only now am getting around to posting this] Tomorrow I’ll get on another flight to Tokyo, then another to Detroit, and one more back to Boston to the home of my birth.  It is a good opportunity to write a stream-of-consciousness piece on leaving.

I’ve called Bacolod my home for the better part of a year.  True, I’ve used the Philippines as a hub for the rest of Southeast Asia, but Bacolod has been my home for seven of those ten months.  When I return home from Bangkok or Saigon or Hong Kong, it isn’t to Boston.  Home has been Bacolod.  That is no longer the case, and that fact creates mixed emotions.  But first, some background that place.

The Philippines is an archipelago with 7,100 islands.  Negros is located in the middle of the country, in a region called the Visayas, which also includes Cebu, Panay, Leyte, and Samar.  It is the divided into two provinces – Negros Occidental, of which Bacolod is the capital, and Negros Oriental.  It is called the Land of Sugar because it produces the majority of the sugarcane in the country.  In Bacolod, if you want to support local commerce, just pour out a couple of sugar packets.  Negros is also beautiful.  An active volcano, Mt. Kanla-on, stands prominently inland from the coastal city of Bacolod.  Get outside the city and you sink into miles and miles of sugarcane, standing about two meters high and very green.  When you aren’t surrounded by sugarcane, you might be looking out at lime green rice fields, low and vast.  Look to your right on the cliffside road to Dumaguete, the capital of Negros Oriental, and you see the coastline – blue meets green as you drive the dividing line.

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There has been a lull in posting over the last week.  That is because I am getting ready to leave the Philippines after 9 months.  Packing up my things, saying goodbye, and mentally preparing myself for the departure has taken up most of my time.  I’ll be back to posting next week.

Introduction to a Series of Essays

I am in my final month here, coming to the end of my road after a long trip.  I spent 7 months in the Philippines, two weeks each in Cambodia, Thailand, and Burma, a week in Vietnam, four days in Hong Kong, and an afternoon in Japan.  I am taking time to reflect on my time here and pull together everything I have learned into a set of coherent ideas of what it all means. I arrived in December of 2009 knowing next to nothing about microfinance, economic development, or the issue of poverty in developing countries.  I understood these things on a conceptual level, but, as faithful readers of this journal know, my views on what it is and what it does have changed with time.

I have come to the conclusion that poverty is a limitlessly nuanced and complex topic that only becomes more confusing as your understanding of its causes deepen.  It is the product of an interrelated confluence of factors that enable and exacerbate one another.  Everything is a chicken-egg situation.  Because there are no levers to pulls, there is no such thing as a silver bullet to end poverty, despite what some might have you believe.  Microfinance addresses a specific deficiency by increasing access to financial services for the poor.  Microfinance institutions use their position and reach to offer other services – healthcare, education, energy, etc. – but are limited in their ability to really make an impact in these areas.  That is because these services are the province of the state, and their deficiency is due to the failings of the government, whose politicians are democratically elected, but neglect to fulfill their promises of reform and development in the face of the promise of wealth.  Corruption is so deeply entrenched in the bureaucracy that it is immutable in the status quo.
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The Blame Game in Manila

One surefire way to get respect from the international community is to admit to your mistakes and take the blame failures.  But while Hong Kong breathes fire just thinking about the incompetence of the Filipino police and the weak national government, the current president, Noynoy Aquino, and the previous president, Gloria Macapagal-Arroyo, are pointing fingers at one another.  From today’s Philippine Inquirer:

Malacañang [the equivalent of the White House] indicated on Thursday that the administration of former president Gloria Macapagal-Arroyo was also to blame for the bloody end of Monday’s hostage-taking drama at Rizal Park in Manila.

“I would like to point out that the administration of Benigno Aquino III is just 55 days old while Arroyo’s administration lasted for nine years. We just inherited the state of the Philippine National Police,” Secretary Herminio Coloma of the Palace communications and operations office told the ABS-CBN morning news program “Umagang Kay Ganda.”

“The previous administration should also answer for what they did [for the police]. Did they provide enough funds for the modernization of the PNP or did it waste funds for cases like the euro-generals and other corruption cases?” Coloma also said.

It was the first time that the Palace sought to blame the previous administration for the bloody end of the 11-hour standoff that claimed the lives of eight Hong Kong tourists and the hostage-taker, dismissed Senior Inspector Rolando Mendoza.

That is from the current administration.  Continue reading

An Unfortunate Black Mark for the Philippines

By and large, the Philippines is a peaceful and safe place for tourists.  As long as foreigners like myself stay away from the parts of Mindanao controlled by Islamic fundamentalists like Abu Sayyaf and separatists like the Moro Islamic Liberation Front (MILF), the most you will have to worry about is getting your wallet pinched in a marketplace.  In the last two days, that reality has been overshadowed by an isolated act of one disgruntled sociopath who hijacked a bus of tourists from Hong Kong, killing 8 of them before being taken out by a sniper.  It is a tragedy for a lot of reasons, and it is going to have some sad implications for the country.

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Democracy in Africa: One Step Back, Two Steps Forward

According to the Economist, the growing sophistication of election rigging dictators is a good sign:

Citizens plainly like to vote. Even the most authoritarian leaders now feel obliged to hold elections. Presidents Bashir and Mugabe, as well as Meles Zenawi, the prime minister of Ethiopia—none of them natural democrats—have all had to hold elections in recent years. Only a decade ago countries such as Sierra Leone and Liberia were bywords for anarchy and bloodshed. Now their people vote enthusiastically. It will be hard even for dictators to take that right away altogether, for the experience of elections, even flawed ones, seems to help embed democracy. Ghana, for instance, which reverted to civilian rule only in 1992, has twice changed governments after tight elections. This month the incumbent in Somaliland, a nation-in-waiting, conceded electoral defeat. In Nigeria the ruling party, despite efforts to snuff out democracy, is having to concede improvements that should make for a better vote next year.

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Factories in Africa and China’s Special Economic Zones

Magatte Wade, an African entrepreneur and columnist for the Huffington Post, has a vision for the future of Africa that entails becoming a manufacturing powerhouse.  African countries have abundant human capital and low-cost labor.  The current manufacturing giant, China, has recently seen an uptick in labor strikes, with workers gaining more bargaining power, which will ultimately drive up wages.  Here she explains her vision:

My vision for Africa is one in which it becomes the first region of the world to create a socially and environmentally responsible manufacturing base. But key to that vision is that Africa does create a manufacturing base. Because we will never be helped by those Americans who are strictly selfish and self-indulgent, I am appealing to those Americans who want to help to transcend their romance with foreign aid and microfinance, and begin to take seriously investing in African manufacturing and purchasing products made in Africa. Yes, pay attention to the kind of manufacturing that produces the goods you buy. But also remember that we Africans deserve the same respect and quality of life that you have. Microfinance and arts and crafts alone will not get us there.

The article is worth reading in full, as are most of her columns.  She hates Jeffrey Sachs and Bono, the two lightning rods of criticism for the counter-productive aid approach to development, and her screeds are a good read.  But back to the topic at hand.  Continue reading