Poor countries are clamoring for more funds to fix domestic economic problems often of their own leaders’ making. High-level corruption, plundering of state treasuries and the disintegration of institutions of law and order have disabled growth mechanisms in almost half of the world’s 189 nations. Since last year’s Davos meeting of the World Economic Forum, the cohort of the hopelessly poor has sharply increased, from 1 billion to 1.5 billion. Declining aid from donor countries–the figure for 2000 was barely $40 billion, a 15 percent drop from 1999–and declining foreign investment in the world’s 133 poor countries has meant that developing countries have less than benefited from globalization.
Compounding the problem is the fact that the number of “failed states”–those with collapsing internal political and social systems, and with no hope whatsoever of attracting any fresh aid or investment–has remained at around 40 over the past few years. This despite the international emphasis these past few years on democratization, free markets and good governance. Algeria, Angola, Chad, Indonesia, Nepal, Pakistan, Rwanda, Sri Lanka and Yemen are some of these failed states. Last week, with the assassination of President Laurent Kabila, Congo confirmed its membership in the failed-states club.
In other countries–such as the Philippines and India–the social order and economic stability in specific regions are collapsing because of ethnic or political turmoil, making those regions unsalvageable sinkholes. For example, in Kashmir, what was once a $300 million annual tourism and carpet-export business has dwindled to almost nothing. Anyone who imagines that the ethnic tensions between indigenous Muslims and Hindus can be ameliorated is probably hallucinating.
Notwithstanding the good will of the Davos summiters, the signals of a downturn in many industrialized economies means that domestic political support for extending assistance to the overseas poor may be softening. The big international multilateral institutions such as the World Bank and the U.N. Development Programme aren’t in a position to enhance their annual lending or technical assistance. “The great danger from extreme poverty has yet to manifest itself,” warns New York University’s Ralph Buultjens. “The prospects are for more terrorism stemming from economic desperation, hordes of new illegal migrants and other radical measures aimed at extorting financial lifeblood from the rich countries.”
Failed states are ticking time bombs, where Osama bin Laden clones are mobilizing frustrated masses with anti-globalization, anti-West jeremiads. Some steps that the Davos crowd would do well to consider:
Peacekeeping. Renewed attention to reducing conflicts that lead to violence. This means empowering institutions such as the United Nations to facilitate a dialogue between warring parties. That also means that dues owed to the United Nations by countries such as the United States should be paid up in order to ensure that there’s no letup in peacekeeping.
Credit. Lending institutions such as the World Bank and the regional-development banks need to increase credit to the least-developed countries. Supporting governments–the United States, the Europeans, Japan–must offer more financial sustenance to these institutions. And private-sector institutions should play a strongly complementary role.
Social services. The international community–including corporations and foundations represented at Davos–needs to renew the commitment to basic education and primary health care.
Improved access to markets. Some of the poorest countries have long-established traditions of producing footwear, textiles, agricultural commodities and tools. While there are often political issues involved in keeping such goods out of lucrative Western markets, even the slightest opening of doors would improve the export revenues of poor countries.
A new global agency for better governance. This may smack of “world government” to unreconstructed libertarians, but there’s a sore need for a global corps for leadership training. Who better qualified than the successful entrepreneurs who attend Davos each year? If Nepal’s government were run like Jack Welch runs General Electric, it would soon qualify as a fortunate state, not a failed one. The principles of good governance are the same for countries as for corporations: incorruptible leadership, tough internal discipline, lean budgets, motivated management, high quality of education. And most of all, relentless service for the customer-citizen.
Davos is traditionally both a playground and a pulpit for the world’s power brokers. They have a chance not only to make their voices heard but, now more than ever before, an opportunity to actually generate positive change in despair-ridden societies, the failed states. They mustn’t become failed summiters.
