Private investment for public infrastructure
Deea Ariana, who graduated with a master’s from SAIS last spring, writes:
One of the inevitable costs of conflict is the damage to critical infrastructure that provides basic services to people and stimulates economic growth. Yet infrastructure procurement in post-conflict contexts is often slow and unable to cope with rising demand. Raffi Mardirosian argued that in the aftermath of conflict, an environment fraught with financial and political risks and weak legal structures hinders the construction and operation of infrastructure projects.
Conflict-affected states lack capital, technology, and skilled management that are essential to constructing new infrastructure. Consider Syria: The International Monetary Fund (IMF) states that rebuilding damaged physical infrastructure will be a “monumental task,”with cost estimates in the range of $100-$200 billion. That is nearly three times the country’s GDP back in 2010, before the conflict erupted.
The ongoing war continues to take a heavy toll on civilians and infrastructure. As Merriam Mashatt, Daniel Long, and James Crum note:
In conflict-sensitive environments, the condition of infrastructure is often a barometer of whether a society will slip further into violence or make a peaceful transition out of the conflict cycle. The rapid restoration of essential services, such as water, sanitation, and electricity, assists in the perception of a return to normalcy and contributes to the peace process.
Increasing access to infrastructure service delivery amid fiscal and capacity constraints calls for an alternative to the traditional public provision of infrastructure.
The idea of private investment in infrastructure has gained currency in recent years, leading to creation of public-private partnerships, or PPPs. These are a way for governments to implement infrastructure and services by utilizing the expertise of the private sector. Both parties share significant risks and management responsibilities.
Gonzalo Araya and Jordan Schwartz explain that private participation in infrastructure in countries emerging from conflict typically requires six to seven years to attract significant levels of investment from the day that the conflict is officially resolved. Usually the first infrastructure investments to arrive in conflict-affected countries are in sectors where financial risk is relatively low, which is mostly in telecommunications, as in Afghanistan and Iraq. Private investments in sectors where assets are harder to secure, such as water, power, or roads, are slower to appear or simply never occur.
There are several challenges to infrastructure reconstruction in conflict-sensitive environments that need to be addressed. P. B. Anand delves into these, explaining that weak governance entails corruption and flawed regulatory oversight, insecurity, and fragmented legal systems that discourage foreign investments. The government of a conflict-affected country must mitigate these challenges to nurture a favorable investment climate and encourage private investment in PPPs.
Donor support can also go a long way. As Andre Jones writes, PPP transactions are likely to rely on donor support in the form of capital subsidies, guarantees, or other mechanisms to facilitate private investment. An often-cited example is that of the restoration of Liberia’s power sector following the civil war in 2003. With support from the Norwegian government, the Liberia Electricity Cooperation (LEC) handed over its management to a Canadian power company, which boosted results. LEC began rebuilding electrical distribution in Monrovia, which led to more people having access to electricity and a significant increase in revenue. Losses were curtailed, peak load more than doubled, and fuel efficiency improved.
While public infrastructure projects accrue a net benefit to society as a whole, they nonetheless result in winners and losers. It is necessary to ensure that services also reach those people who are otherwise socially excluded. This guarantees that the society does not risk relapsing into another fresh bout of conflict by fighting over scarce resources.
Share this, I'll really appreciate it:
Filling my gaps
A number of readers have pointed out gaps in the piece I published yesterday on Macedonia. So here are my feeble attempts to fill the lacunae.
Yes, Martin Naunov (who commented on yesterday’s post), judicial accountability is also important. I should have mentioned the special prosecutor and the need to support her fully. But beyond that I don’t usually comment on judicial matters. People should be presumed innocent and tried in court, not in public opinion, no matter who they are or what positions they hold or may have held in the past. Elections should be no shield from judicial accountability. The special prosecutor last month indicted more than a dozen people, but their names are not yet known. They will have to defend themselves in court.
One Twitter critic denounced me for ignoring the Albanians in Macedonia, who he said have suffered from former Prime Minister Gruevski’s Macedonian nationalism. But my piece focused on what I perceive to be the major issues that most concern Washington, not those of most concern to Albanians and Macedonians. Ethnic tension would concern Washington. The wire tapping scandal and its ramifications have not however on the whole generated ethnic tension but rather ethnic cooperation in protests (and to some degree protection from them). Another critic suggested that I should have focused negative attention on Ali Ahmeti, who leads the Albanian political party that was in Gruevski’s coalition. I don’t see how that would have helped me to explain what is of most concern to Washington.
Another critic questioned why Macedonia should want to become a member of NATO, since it is already surrounded by NATO members. That’s not literally true, since neither Kosovo nor Serbia is a NATO member, but it is also irrelevant, as Macedonia really faces no threat from a neighboring state. It has faced serious threats from Albanian extremists, in part exported from Kosovo, but well below the threshold for triggering NATO obligations.
Macedonian citizens give many varied reasons for wanting NATO membership. Some think it is an elite, democratic club that represents an important way station on the path to the European Union. Others believe that the military reforms Skopje has undertaken and the performance of its troops in Afghanistan merit recognition through NATO membership. Albanians in Macedonia tell me they regard NATO membership as an important guarantee of the country’s multiethnic democracy and maintenance of its constitutional protection.
It is all of those things, and more. But for the US, the key is this: Macedonian army soldiers have fought integrated with the Vermont National Guard in Afghanistan. That’s enough for me to think that the Alliance would gain something from Macedonian membership. If its citizens also think there is something to be gained, let’s make a deal.
Share this, I'll really appreciate it:
What I’m thinking about Macedonia
With former Prime Minister Gruevski in DC and I gather a photo published of the dinner a few colleagues and I had with him last night, I’m finding people interested in my views on Macedonia. For what they are worth, here they are.
Gruevski came to power in 2006 as an economic reformer and has a very good record in that department. Macedonia has dramatically improved its business climate, generating small and medium enterprise and attracting foreign investment. Only the European recession has clouded the picture. I’ll leave it to Gruevski’s minions to provide the facts and figures.
He has two problems in Washington:
1) a wire tapping scandal that has revealed what reasonable people believe to be wide-ranging abuse of power during his last mandate as prime minister;
2) his failure to make significant progress with Greece in resolving the “name” issue (Athens objects to the name Macedonia, claiming it should be exclusively Greek).
Gruevski has a long way to go to convince people here that the abuses of power we’ve seen revealed in the last couple of years are finished and that a new era of transparency and accountability is starting. That will have to begin with an impeccable election in December, one that provides both Macedonian citizens and the internationals who count (that’s the US and EU) with an outcome that is widely recognized as legitimate.
Transparency and accountability will require big changes in the way the Macedonian government operates and in its relationship to the press. In a way, that has already started: the local media covered the wire tapping scandal in detail and at length. Future Macedonian governments need to learn to live with the kind of sharp and constant criticism that characterizes democratic societies. They will also need to operate far more cleanly than in the past.
On the “name” issue, some in Washington still think a compromise solution can be found. They urge Skopje and Athens to come up with something that Washington, Berlin and Brussels will find worthy enough to push as part of a broader package of reviving Balkans ambitions to become part of Europe.
My own view is skeptical of that approach. I wouldn’t put all my eggs in that basket. It is certainly difficult for Gruevski to compromise because his political constituency may not accept it, which could lead to a defeat of the necessary referendum. It is difficult for Athens to compromise because it is already feeling humiliated. Berlin and Brussels don’t really want to ask Athens to do anything more than meet the requirements of its various financial bail outs. In weakness there is strength.
Linking Macedonia’s problems with Bosnia’s and Kosovo’s risks compounding the difficulty and making a solution less likely. Nothing will be agreed until everything is agreed, which may be never.
The alternative is NATO membership as The FYROM (The Former Yugoslav Republic of Macedonia, the term used in the United Nations). Both an interim agreement and an International Court of Justice decision weigh in favor of that ugly solution. But it requires getting the issue back up to the President of the United States (in the next administration, not this one). That is extraordinarily difficult. President Bush tried hard at the NATO Bucharest Summit in 2008 to force a solution. The Greeks balked. He failed. Who in the US government wants to tell a new president to put her prestige on the line for something that has a good probability of failure? You can forget about the issue completely if Trump is elected.
Macedonians detest the appellation “The FYROM,” but most tell me they are willing to swallow it, sometimes adding that it also needs to lead to EU membership. That in my view is a bridge too far. Greece will insist on a real solution before Skopje accedes to the EU. I don’t think there is any way out of that vise, in which Athens has a great deal of leverage.
Even getting NATO membership as “The FYROM” will require a significant reduction in Greece’s resistance. The next Macedonian prime minister needs to think about what he can do to reduce the impression among Greeks that calling Macedonia Macedonia threatens their identity. I don’t know what that is, though I can think of a lot of options. How to find out which one the Greeks will value? Ask them, in private, what they would appreciate.
The notion that Macedonia’s problems merit high priority in a Washington consumed with an election campaign, the war against the Islamic State, the roguish challenge from Russia, the economic and military rise of China and dozens of other issues is not convincing. Macedonians need to look for a solution they and the Greeks can bring to Washington for a blessing, without much heavy lifting from the Americans. I hope they do that, early in Hillary Clinton’s presidency.
PS: So here is what I get in response to this post:
Share this, I'll really appreciate it:
Syria and Iran in the next administration
Election day is just a month away, but neither Mr. Trump nor Secretary Clinton have offered a detailed vision for the Middle East. With problems in the Middle East likely to grow in the next four years, it is important to consider what we should expect from the next administration regarding US foreign policy in the region.
The Brookings Institution tackled this question earlier today by asking two of its scholars what they hope to see from the next administration. Politico’s Indira Lakshmanan moderated a discussion between Michael O’Hanlon, a senior fellow at Brookings, and Robert Einhorn, also a senior fellow at Brookings and former negotiator of the JCPOA (Joint Comprehensive Plan of Action, more commonly known as the Iran nuclear deal).
O’Hanlon spoke primarily on Syria and how the US should begin to pursue a solution there. He said most Syrians despise Assad, especially the Sunni Muslims of the opposition, and therefore Assad cannot serve as a unifying force. O’Hanlon advocates a confederal model for Syria that is ruled by independent autonomous zones rather than a strong central government. The moderate opposition would need to be strengthened, trained, and armed by the US and its allies as a part of this plan, though we must make it clear to Assad and Putin that we are not doing so with the intention of creating an army to march on Damascus. While it is imperative that we create safe havens and no-fly zones, we need to be careful how we defend these zones, since the American public has no interest in seeing American boots on the ground in Syria.
Einhorn focused on the fate of the JCPOA under the next administration. He says that although the deal is not perfect, its effectiveness in curbing Iranian nuclear capabilities has been substantial. However, its longevity isn’t guaranteed—it has many opponents both in the US and in Iran, and if Rouhani loses the election next March or if Trump wins the presidency, the deal could be scrapped. The next administration should insist on strict compliance from Iran and continue to condemn Iranian actions not covered by the JCPOA, such as launching ballistic missiles and throwing its weight around in the region.
When asked who he thinks would be best suited to carry out his vision in Syria, O’Hanlon responded that neither candidate has fully thought out what to do in Syria. Obama’s plan for Syria has not worked. The next president will need to completely reevaluate the situation there. O’Hanlon also readily admits that his own vision for confederalism in Syria is ambitious and will take time to implement. But Assad cannot wage this war forever, and it is not the Russia’s interest to remain the enemy of the Sunni Muslim world—both parties will eventually need to compromise.
Einhorn said that Clinton would be the better president for our relationship with Iran. During his time as a JCPOA negotiator, Einhorn found Clinton to have a realistic view of Iran. She knew that this deal would not moderate Iran and that the US would need to continue to oppose Iranian aggression. Trump, on the other hand, doesn’t have a realistic view of the Iran deal. He says that he will renegotiate the deal, but in reality, he wouldn’t have the international support required to make a new deal, nor would he be able to get Iran to the negotiating table.
Share this, I'll really appreciate it:
Plan B options
The Administration is considering plan B for Syria. In order to be effective, it has to somehow rebalance the military situation to enable the non-extremist Syrian opposition to resist effectively the Russian/Iranian/Syrian government/Shia militia onslaught and to fight the Islamic State.
I take as a given two limits: 1) Washington does not want to directly engage Russian forces and 2) it does not want to put significant numbers of troops on the ground in Syria. Nor do I think it will be possible for the President to gain Congressional approval for an expanded Authorization to Use Military Force (AUMF).
Here is a summary of options, all of which I think I have previously discussed on peacefare.net:
1. Encourage Congress to pass and sign the pending sanctions bill. This would have broad political significance, but mainly affect helicopter and airplane parts, if we are prepared to enforce third party prohibitions (i.e. threaten suspension of business with US companies if foreign companies ship parts to Syria).
2. End the impunity of the Syrian air force by destroying helicopters that drop barrel bombs on civilian targets. This can be done with stand-off weapons and does not require US aircraft over Syrian territory. It would likely have to be done as covert action in order to get around the AUMF, which covers only Al Qaeda (and via a stretch Al Qaeda-descended organizations like the Islamic State).
3. Tell the Russians and Iranians we are no longer going to turn a blind eye to Hizbollah engagement in Syria. If they don’t leave, we would need to target them (again as covert action with standoff weapons).
4. Create safe areas inside Syria we are prepared to protect from the air. The opposition, or Turkey, would have to provide ground forces in order to govern there without fear of regime and Islamic State violence. This option would also entail financial and technical assistance to the civilian opposition on a scale not yet attempted.
5. Provide (or allow others to provide) anti-aircraft and other more advanced weapons to vetted opposition groups. Possible use of these weapons against civilian aircraft either in Syria or in the region is the obvious downside. Remember Malaysia Air flight 17.
None of these ideas is a slam dunk. All could generate unintended consequences, in particular Russian and Iranian escalation. It is not clear that Washington would be willing to meet and exceed their responses. Nor is it guaranteed that the non-extremist opposition would be able to take advantage of the opportunities Washington generates.
But without something that changes the military equation, Aleppo is lost and the Syrian/Russian/Iranian alliance will continue its depredations against civilians in Idlib and other opposition strongholds. This would strengthen extremist recruitment and postpone the prospect of any political settlement.
I don’t envy this president, or the next one, in facing the choice among these options, or doing nothing.
Share this, I'll really appreciate it:
The toughest nut in the Middle East
The Middle East Institute held their 7th annual conference on Turkey last week, gathering regional experts to discuss Turkey’s turbulent domestic politics and regional role. This post focuses on the regional issues discussed.
Haim Malka of the Center for Strategic and International Studies focused on Turkey-Israel relations. The reconciliation agreement following Israel’s 2010 raid on a Turkish flotilla headed to Gaza is being implemented. This is a mutually-beneficial, low-cost measure. Strategic cooperation is likely to remain limited.
Syria will test the renewed relationship as it is an arena where both Turkey and Israel’s interests intersect. Israel’s policy on Syria has to date been confused and vague, perhaps intentionally so, but ultimately the Israelis want to see a Syria with minimal Iranian influence. The fall of Iran’s ally Assad may be assumed beneficial to Israel, but the Israelis seem to have followed a ‘better the devil you know’ approach so far and do not appear to be supporting alternative political actors in Syria.
Bill Park of King’s College, London discussed Turkey’s relations with the Kurdish Regional Government (KRG) in Iraq, which saw marked improvement in 2009 and 2010 due to trade and energy connections, shared mistrust of Maliki’s Baghdad government, and President Barzani’s role as a potential partner in the peace process with Turkey’s own Kurds (the PKK). While these foundations for positive relations remain, Turkey’s refusal to support Syrian Kurds in the fight against IS, Turkey’s re-establishing a relationship with Baghdad following the replacement of Maliki by Abadi, and a change in perception of Barzani’s leadership record have undermined the rapprochement.
Senior Associate with the Carnegie Endowment for International Peace Karim Sadjadpour discussed Turkey-Iran relations. There are notable commonalities between the two states as they suffer both a superiority and inferiority complex – both do not see their current status in world affairs as reflecting their histories as great empires. There is also a strong shared cultural history. The Iran-Turkey border has proven stable in an otherwise turbulent region for centuries. Also important is their economic partnership, with shared gas projects and common concern with Kurdish independence.
Having suffered from terrorist attacks, Turkey is disappointed in Iran following Assad’s lead, especially in ignoring the radical Islamist threat in Syria. Upcoming events could exacerbate frictions between Turkey and Iran. These include the upcoming US presidential election, the May 2017 presidential elections in Iran, and whether the nuclear deal lasts ten years.
Presenting the complex relationship of Turkey, the US and Kurds was Amberin Zaman, Public Policy Fellow with the Wilson Center. She believes the US has an opportunity to use its leverage with the Syrian Kurds (the PYD) and Turkey to revive the Turkey-Kurdish peace process. This will require the US to abandon the fiction that the PYD and PKK are separate groups. The PYD is not seeking an independent state but rather a subnational federal unit within Syria, which the Kurds term “Rojava.”
While Turkey is unable to determine a military outcome, Ankara holds considerable soft power, especially in assisting the moderate opposition.
It was agreed among all the panelists that the US must articulate its policy for the region, and Syria in particular, as Turkey and its neighbors are looking for US leadership and unwilling to pursue their own policies without clarification from Washington. That is proving the toughest nut to crack in the Middle East.
RSS - Posts
