South Sudan: Fragile and Resilient

In July 2011, South Sudan gained political independence. With the exception of Eritrea, no other African state has been created in the post-colonial period (i.e., since the 1950s). South Sudan now faces a long and difficult road to stability and prosperity.

Like many of the former European colonies in Africa – especially the Belgian and Portuguese territories – South Sudan’s independence inheritance was limited. In the case of South Sudan, governments in Khartoum systematically marginalized this geographically peripheral region. Some basic data tell a grim tale of under-development:

• Only about 25 percent of the young state’s population is literate. Most developing countries have figures in the range of 50 to 80 percent.
• South Sudan possesses a physical area larger than France. The new country, though, has virtually no paved roads. The longest stretch – connecting the capital of Juba to Uganda – is only about 100 kilometers.
• Less than 1 percent of the population has access to electricity. That’s right, only a tiny fraction of South Sudanese can count on reliable access to a power grid. The 1 percent figure presumably does not include those who have access to a generator.
• Maternal and infant mortality rates are falling, but they are shockingly high. The improved figures (since independence) are: 76 infants deaths per one thousand and 2,054 maternal deaths for every one hundred thousand births. This maternal mortality rate is the worst in the world.
• A disputed border with Sudan and internal conflicts have led to the displacement of hundreds of thousands.

Yet, the new country has weathered its early independence phase better than many predicted. This assessment is especially remarkable given the long standoff with Sudan over oil transit fees. And South Sudan does have key natural resources other than oil. A high percentage of arable land, fairly dependable fresh water supplies, and ecotourism potential are a few of the country’s key natural assets.

The world’s newest state, though, is landlocked and situated in a highly volatile region of Africa. The Central African Republic and the Democratic Republic of Congo are both neighboring failed states. Adjacent portions of Uganda, Kenya, and Sudan have also experienced armed conflict or communal unrest in recent years. The South Sudanese people will require much more resilience in the years ahead.

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Public debt is on the rise in Africa as global investors seek returns. See the full post from Quartz. Here is just one interesting fact from the post: During the last year, Zambia has been able to borrow at a lower cost than Spain.

Business Climate and Failed States

This morning I launched a new business. Although I had to fill out many forms and submit fees to various government agencies, this process has been remarkably easy. In fact, I live in a country that offers helpful public resources to support entrepreneurs. For  entrepreneurs in failed states, starting a business is an arduous and expensive task, and one that is frequently abandoned.

People can reasonably disagree about how much businesses should be regulated. Most, however, would concur with the sentiment that the private sector should be restrained no more than necessary. This principle is especially important with regard to forming a new business. If it is too difficult to legally form an enterprise, whole economies suffer. The dynamism of free markets is suppressed. Prospective entrepreneurs will remain without work or under-utilized as employees of existing companies. And black markets will flourish.

This collage features Franz Kafka and Max Weber, two authorities on bureaucratic obstacles. Illustration credit: Harald Groven (via Flickr, Creative Commons license).

It will come as no surprise that it is very difficult to start a business in failed states. Beyond the challenges of poor infrastructure and under-educated populations, poor governance hinders entrepreneurial activity. Each year the Heritage Foundation and the Wall Street Journal publish an “Index of Economic Freedom.” I don’t agree with all of the ideological judgments behind the index, but it is nonetheless a very valuable dataset.

One of the ten criteria assessed in the index is “Business Freedom,” which is defined as follows:

Business freedom is a quantitative measure of the ability to start, operate, and close a business that represents the overall burden of regulation as well as the efficiency of government in the regulatory process. The business freedom score for each country is a number between 0 and 100, with 100 equaling the freest business environment.

Poor performance on this criterion is common among failed states. Poor performers on “business freedom” are frequently referred to on this blog. These countries include: North Korea, Haiti, Zimbabwe, Central African Republic, Democratic Republic of Congo, and Myanmar (Burma).

In contrast, my home state of Virginia offers a “Business One Stop,” for new businesses. And, based on my experience, Virginia deserves the praise it receives for business friendliness. (Sorry, I couldn’t resist a bit of local boosterism.)

Lindsey Graham and Syria’s WMD

The Obama administration is facing renewed calls for direct American intervention in Syria’s war. One of Obama’s key critics in the Senate is Lindsey Graham, a Republican from South Carolina. Graham is a key Senate leader on military and foreign policy issues, and his views often influence members of both political parties. The following excerpt, which quotes Graham, is from the Washington Post:

Syria is “going to become a failed state by the end of the year” if we don’t intervene, Graham said on CBS’s “Face the Nation.” He warned that “we’re going to start a war with Iran because Iran’s going to take our inaction in Syria as meaning we’re not serious about their nuclear weapons program…. The whole region is going to fall into chaos.” (bold emphasis added)

In March, after allegations of chemical weapons use emerged, Senator Graham advocated the deployment of American soldiers to secure weapons of mass destruction (WMD) sites in Syria. Earlier this week, the South Carolinian seemed to back away from this more aggressive military option.

Even though the American public is war-weary, Graham and others in Congress are right to press the Obama administration on Syria. This key Middle Eastern state is headed for state failure. The longer this two-year war drags on, the more political and security fall-out there will be for Syria, its neighbors, and the rest of the world. As one example, the United Nations is projecting that as much as half of Syria’s population will be displaced inside or outside the country by the end of this year, if current trends continue.

Despite his tough talk about a chemical weapons “red line,” President Obama seems to be in no mood for war. Lindsey Graham may be right about the need for American military involvement in Syria. It is a frightful prospect to consider a failed state with devastating, unsecured weapons. It is far from clear, though, that intervention would arrest a slide toward state failure. The long-term record on failed state interventions is, at best, mixed. Foreign interventions can hasten state failure, too.

Geopolitical Hotspots

A fire provides lighting in a bombed-out apartment building in Aleppo, Syria, December 26, 2012. Photo credit: Freedom House (via Flickr, Creative Commons license).

Syria’s diverse coalition of rebels is gradually closing in on Damascus. The experience in Aleppo, the country’s largest city, suggests that the rebels may face a drawn-out fight for the capital city. Government loyalists in Aleppo continue to control parts of the urban area. This week, the Israeli government is charging that the Assad government has “repeatedly” used chemical weapons over the last month. Sadly, intelligence gathering in Syria is very poor right now, arguably a casualty of austerity cuts in the West.

The photo shows part of a poor district in the city of Aden, Yemen. An estimated 20,000 refugees inhabit this district of 50,000 people. Photo credit: European Union (via Flickr, Creative Commons license).

Yemen faces many challenges, including dwindling oil and water supplies, trans-national terrorist activity, and a surging secessionist movement in the South. Twenty-three years after the northern and southern regions were united, at the end of the Cold War, southerners remain unsure about the wisdom of the unification. As the photo suggests, Yemen is also located near the volatile Horn of Africa region.

Pictured are a United States Navy supply ship and helicopter in the tense South China Sea region. Photo credit: U.S. Navy (via Flickr, Creative Commons license).

Even while world attention has been focused on North Korea’s provocative bluster, the maritime disputes in East and Southeast Asia still simmer. The multi-state dispute over small islands in the South China Seas is very much ongoing. China has recently announced plans to send tourists to the Paracel Islands, which are disputed with Vietnam, but administered by Beijing. This area borders the larger Spratly Islands zone, parts of which are claimed by Brunei, China, Malaysia, the Philippines, Taiwan, and Vietnam.

Bucking the Global Trend: Africa’s Economic Growth

Europe’s economic funk continues. Japan’s aging society is struggling under a huge pile of public debt and slow GDP growth. Recovery in the United States is about what can be expected from a post-financial crisis expansionary cycle. And in China, Communist Party leaders are adjusting to much slower growth. In much of Africa, though, growth prospects are strong, if we can believe aid agencies such as the World Bank and USAID.

On April 15^th, the Washington-based World Bank issued a periodic check-up on Africa’s near-term growth prospects. Partly fueled by high commodity prices – especially for energy resources and minerals – continental growth is forecasted to be more than five percent per year over the period 2013-2015. The optimistic forecast also highlights the impact of increased consumer spending in many countries south of the Sahara, including places like Ethiopia, Angola, Ghana, and Mozambique. Indeed, many sub-Saharan states have seen above-average growth rates for more than a decade, leading to some reduction in still-high poverty rates. The diffusion of mobile phones and more predictable macro-economic conditions are key factors leading to better growth prospects.

USAID and the World Bank are probably right about continued high commodity prices. Even if some of this new African wealth is squandered through corruption, better terms of trade will lift many ordinary people out of poverty. A cautionary word is in order, though. Enclave-based development – especially if it involves oil or high-value minerals – can facilitate political instability and armed conflicts. Think diamonds in Sierra Leone and Angola, numerous precious resources in eastern Democratic Republic of Congo, and oil in Nigeria. In short, over-reliance on mineral and energy exports can lead to so-called “rentier states” (and failed states) that do not necessarily promote broad-based human development. Careful observers of the DRC and Nigeria know about the “resource curse” all too well.

So, boosting international trade between Africa and other continents is set to grow significantly in coming years. With luck and better governance, many states will avoid the worst excesses of the resource curse.

The perennial problem of limited inter-state trade in Africa also requires urgent attention. Vast distances, colonial legacies, poor governance, and under-investment in transportation infrastructure have all contributed to high costs of trade throughout much of the continent. As USAID indicates,

Trade among African countries makes up only 10 percent of the region’s total trade volume. In East Africa, it costs 50 percent more to move freight one kilometer than it does in the United States or Europe, and in landlocked countries transport costs can be as high as 75 percent of the value of the goods they are trying to export.

Like South Asia (India and its neighbors), Africa possesses huge potential for growth in intra-regional trade and investment. This potential will only increase if Africa’s middle classes continue to swell.

The economic news out of Africa is relatively good, particularly compared to the world as a whole. Still, it is worth remembering the continent’s patchwork pattern of progress on governance, peace, and economic reforms. The overall trend is clearly positive, but recent news out of the Central African Republic (CAR), Mali, and the DRC reminds us that progress is geographically uneven.

North Korea, Kim Jong-un, and the End of the Cold War

Is the end near for North Korea’s repressive governing dynasty? With the recent escalation of military tensions in Northeast Asia, it does seem as though the regime led by Kim Jong-un is more brittle than ever. The DPRK’s ratcheting up of tensions with South Korea, Japan, and the United States is most likely a response to internal threats to the governing clique. What is often missed in contemporary news coverage is the increasing flow of independent information to the citizens of this “peculiar failed state.”

In the 1980s, new flows of independent information helped lead to the fall of communism in the Soviet sphere of control in Europe and the U.S.S.R. Radio broadcasts and other flows of information provided an unflattering mirror for those behind the Iron Curtain. In the case of the old Soviet bloc, political liberalization from above facilitated the emergence of a new mass consciousness and political revolution.

In the North Korean context, technological advances – including devices as simple as personal computers, digital tablets, and memory sticks – are offering ordinary citizens more and more alternatives to regime propaganda. Illegal mobile phones, too, are an important part of the new societal reality.

In the West at least, the saber-rattling of the DPRK is attracting only mild interest. Perhaps Americans and others have simply grown too accustomed to the threatening rhetoric of the North Koreans. Let us not forget, though, that Kim Jong-un still presides over a massive conventional army and nuclear warheads. If the country’s rulers deem their internal political situation sufficiently desperate, they could push the United States and its allies to test a new “counter-provocation” plan. According to the Los Angeles Times:

The U.S. and South Korea recently agreed to a ‘counter-provocation’ plan under which they would respond proportionately to a North Korean attack but avoid escalating to heavier weapons or additional targets.

If serious fighting breaks out, it may be difficult to quickly de-escalate the conflict. Let’s hope the North Korean people will figure out a stable and sure path to political revolution before Northeast Asia erupts in widespread fighting. I am not too optimistic about this prospect. What are your perspectives on the Hermit Kingdom?