Is Corruption Always Bad?

Corrupt Money

Corruption is generally vilified as an unmitigated evil. It disenfranchises the poor, weakens public services, reduces investment, and holds back whole societies. And yet, in some instances, corruption can actually be very useful, lubricating business in a way that promotes growth, creates jobs, helps smooth the introduction of needed reforms, and reduces poverty.

What explains this paradox? Continue reading

The “fifth BRIC” motors along

Indonesia, sometimes known as the “fifth BRIC” (after Brazil Russia India China) because of its population size and growth potential, now has debt rated at investment grade for the first time since the Asian financial crisis:

While a credit-rating cut hangs over some nations, the Southeast Asian giant’s sovereign debt has been bumped back up to investment grade by Fitch Ratings, in December, and Moody’s Investors Service this week. Standard & Poor’s will surely follow suit.

Investors have already rewarded the country for solid fundamentals—foreign direct investment grew 20.2% last year to a record $19.3 billion, the government said Thursday, and, earlier this month, Indonesia sold 30-year bonds at a record-low yield of 5.375%. Meanwhile, gross domestic product growth is trotting along at a healthy 6%-plus, public debt is under control, and inflation is relatively benign at under 6%. Still, there are reasons to be cautious.

Corruption and weak infrastructure are perennial problems. Crumbling roads and inadequate ports especially stifle trade, costing as much as 1% of GDP, according to analysts. A recently enacted land acquisition bill should help. But there is much work to be done.

While India and China gain many more headlines, Indonesia may be both a more attractive bet for investors and a better case study for development professionals trying to find lessons applicable to less developed countries.

What can Southeast Asia teach Africa about development?

Southeast Asia has consistently outperformed Sub-Saharan Africa in income growth. As the below chart indicates, its inhabitants were much poorer than Africans in 1960; today they are two and one-half times richer. In fact, over the past half-century, the region has been the most consistently successful in the developing world, growing almost continuously (apart from a brief hiatus after the 1997 Asian financial crisis).

Source: Tracking Development

Southeast Asia’s growth has also been much more inclusive than Africa’s. Whereas the latter’s two growth spurts since independence—in the 1960s and 2000s—have yielded little poverty reduction, Southeast Asia has produced spectacular reductions. Indonesia, for instance, reduced poverty from 60 percent in 1970 to 22 percent in 1984. Vietnam reduced it from 58 percent in 1993 to 14 percent in 2008.

Yet, the region does not meet the standard model for economic success, at least as defined by the World Bank and the rest of the Western development community. Governments have historically not been held in check by elections. Corruption is widespread. Governance has rated low on most indicators.

What then explains this success? Continue reading

Syria: the Security Council paralyzed

It turns out that my last post on the Security Council and Syria was wrong.

Exceptionally wrong, in fact.

Rather than acquiesce to a resolution condemning the Syrian government for repressing its people, China and Russia used their vetoes.  And rather than support the EU-drafted resolution (as had seemed increasingly likely) Brazil, India and South Africa abstained.

This is a big set-back for the EU and the Americans, who were firmly behind the European initiative.  It’s a big win for Russia, which would have been embarrassed if China had even abstained.  And it’s a grim moment for Brasilia, Delhi and Pretoria, who have missed the chance to carve out a distinctive position in the Council on Syria, and opted to avoid a confrontation.  This was a moment the “IBSA” countries  could have seized to show why they deserved more respect at the UN.  They missed it.

More analysis tomorrow.  For now, congratulations to Gabon and Nigeria for voting for the resolution, refuting the claim that all developing countries are anti-interventionist.

Syria: the Security Council in flux

It now looks like the Security Council will vote on a (still too weak) resolution demanding the end of the Syrian crackdown today or tomorrow.  Russia is still bad-mouthing the proposal, drafted by the Council’s European members, but other powers are lining up to back it.  Brazil – previously numbered among opponents of a resolution along with China, India and South Africa – looks like it’s on board:

In a joint statement issued the same day European nations were to seek a vote on a UN Security Council resolution condemning Syria’s crackdown on protests, EU leaders and visiting Brazilian President Dilma Roussef said the two sides “expressed grave concern” at the current situation in Syria.

“They agreed on the need to continue urging the Syrian authorities to put an end to the violence and to initiate a peaceful transition to democracy.”

The well-informed David Bosco predicts that India and South Africa will also vote for the resolution, although the Indians were fighting a rearguard action against it last week.  He thinks that China and, in the end, Russia will abstain.  Meanwhile, Turkey is giving the resolution full support from outside the Council:

Turkish Prime Minister Recep Tayyip Erdogan voiced support for the proposed UN resolution and said he would soon announce sanctions on the neighbouring country.

“The draft resolution before the council today is in the nature of sending a warning. We hope there will a positive outcome of this vote and that there will then be further discussions about whatever further steps need to be taken,” Erdogan told a news conference during a visit to South Africa.

The political picture could change again before the vote, and it can’t be repeated too often that the EU’s resolution has been watered down a lot , with a threat of sanctions reduced to near-invisibility.  But I think that this episode underlines the point Franziska Brantner and I made in our recent update on human rights and the UN for ECFR: many non-Western powers, especially rising powers like Brazil, want to distance themselves from Russia’s obstructionism in UN debates.  Even China is ready to step away from the Russians, as it did over Côte d’Ivoire.   As we noted in our paper, and I repeated here last week, this opens up the EU’s options for coalition-building in New York.  It looks like the EU is finally finding ways to use those options…

Europe and the post-Atlantic security order

It’s obvious that the Asia-Pacific will dominate American strategic thought for the foreseeable future.  Today an Obama administration official confirmed just that:

The Obama administration is “rebalancing” U.S. foreign policy by enacting a “turn to Asia,” a senior State Department official said Tuesday.  “As the long shadow of 9/11 recedes, we are witnessing the re-emergence of the Asia-Pacific as a key theater of global politics and economics,” Kurt Campbell, assistant secretary of State, told a House panel.

What does this mean for America’s NATO allies?  This is a topic I addressed briefly in an op-ed for the EU Institute for Security Studies (EUISS), which has launched an enjoyable online debate about transatlantic cooperation:

Since the Iraq war peaked, US strategic debate has increasingly shifted away from counter-insurgency and stabilisation operations to securing the Asia-Pacific. This has involved diplomatic outreach to India and South-East Asia and a military focus on China’s growing capabilities and its threat to US vessels in the western Pacific.

The European security debate is also evolving, but it is driven by financial concerns. While China’s rise will frame American security policy for years ahead – even in the event of a major terrorist attack – no comparable challenge shapes European worldviews. Russia’s uneven resurgence worries many EU and NATO members, but Moscow’s ambitions centre on energy deals and it does not present a true strategic game-changer. Instead, the need for austerity dominates European thinking.

Do European military forces  have any role to play in Asian-Pacific affairs?  In another contribution to the EUISS debate, Daniel Keohane argues that Europe won’t look far beyond its periphery, and he doesn’t find this surprising:

Put simply, the US is an Asian power, but the Europeans are not. This is not new. During the Cold war, France and Britain carried out a military operation in the Suez Canal, but they did not join the Americans in Vietnam.

Indeed, future historians may conclude that Afghanistan was the exception that proved this post-World War II rule. Most Europeans went to Afghanistan for the sake of their close relationship with the United States, not because it was an existential threat to their security. That unhappy experience makes it very unlikely that Europeans would follow Americans on future military operations beyond Europe’s neighbourhood.

Richard Gowan, therefore, is right about the emerging strategic divergence between Europeans and Americans. But for Europeans the issue is not so much that the Pentagon cares more about Asia; it is that Washington cares much less about Europe.

There are lots of other contributions to the EUISS debate, and they’re all worth a look.  But most of them don’t really address the problem of Europe’s (ir)relevance in the Pacific theater.  Quite a few contributors are still focused on the need for better Euro-American cooperation in the European theater instead, and  all (including Daniel and me) recognize that financial concerns will affect both European and American security policy very deeply.  Nonetheless, I wonder whether the European Security community – and U.S. commentators focused on Europe – have really grappled with the implications of a shift from an Atlantic-centered to a post-Atlantic security order…