During his presentation at the University of Michigan/Urban Land Institute Real Estate Forum, Christopher B. Leinberger discusses the impact walkable urbane places has and will have on metropolitan development patterns, the market reasons for this change and how to strategically manage it.

This video is no longer available

Editor’s Note: This piece originally was published on the Guardian’s Sustainable Business website.

I recently returned from Copenhagen, my first time to the Danish capital. Even a three day visit affirms why this city of more than 540,000 residents has received global recognition as a beacon of sustainable development. An incredible 36 percent of all commuting trips to work or school are made by bike along, in many cases, secure bike lanes that protect cyclists from cars and buses. Another 32 percent of city residents either walk or utilize the region's highly-efficient public transportation network of buses and trains.

This kind of sustainable development clearly yields significant environmental benefits. Copenhagen achieved the highest ranking in the 2009 European Green City Index, scoring in the top 10 in all eight categories, from energy efficiency to transport and environmental governance.

Growing green is obviously an environmental imperative. Yet the Copenhagen experience shows that it can be a market proposition as well, with a diverse set of economic and fiscal benefits accruing to cities that are at the vanguard of sustainable development. Cities like Copenhagen, in short, may be inventing a clean economy of place.

Monday Morning, the respected Scandinavian thinktank, recently released a report detailing the effect of building a city that is high in spatial efficiency and rich in transport choices. Some of the benefits are direct and local. Residents who cycle to work or school are healthier, so health care costs decline (by an estimated $380 million a year). Fewer cars on the road means less congestion and fewer accidents, so additional savings are realized.

Yet the big effect from sustainable development may be indirect and global, as specialized firms naturally rise and expand to meet the growing demand for clean services and clean products. Monday Morning's report finds that Copenhagen's clean sector has been a critical contributor to the region's economy in the past decade, with green exports outpacing all other sectors by growing at an astounding 77 percent between 2004 and 2009.

Cities in the U.S. are following suit. Portland, Oregon, is also internationally renowned for its commitment to sustainable development. The Portland metropolis has an expansive public transit system and an urban growth boundary to control development at the urban periphery. The city boasts a green investment fund to provide grants for residential and commercial building projects.

Now the city is striving, like Copenhagen, to reap the economic rewards of sustainable development through business formation, firm expansion, job growth and private investment. In February, Portland released its first regional export plan to double exports over five years by building on the region's distinctive economic and physical attributes. A critical pillar of this strategy involves increasing the export orientation of firms in the burgeoning clean technology sector to serve growing markets in Asia, Latin America and elsewhere.

Both Copenhagen and Portland recognize that urbanization is the dominant market-shaping trend of the century. By 2030 it is estimated that China will have one billion residents while India will have 590 million. These nations and others will demand products and services that enable development that is economically supportive, environmentally sensitive and spatially efficient. And those products and services may disproportionately emerge from firms located in cities, in mature economies and rising nations alike, which are first movers on sustainable development.

The economic benefits of sustainable development could be substantial. Last year, my program at Brookings measured the U.S. clean economy at 2.7 million jobs. That means the clean economy has more jobs than fossil-fuel related industries and is nearly twice the size of the biosciences field and 60 percent of the 4.8 million strong IT sector.

The U.S. clean economy is also incredibly diverse (sweeping across five broad categories and 39 separate clusters) and disproportionately located in the nation's top 100 cities and metropolitan areas.

Green architecture and construction services cluster illustrates the potential for growth and the reality of metropolitan concentration. This segment already employs over 56,000 people in the U.S. Some 90 percent of these jobs are located in the top 100 cities and towns (although those communities house only two-thirds of the population). The segment grew by a healthy annual average of 6.4 percent between 2003 and 2010 and includes firms such as Burns and McDonnell Engineering in Kansas City, McKinstry and Co. in Seattle, and Gensler in San Francisco. Conclusion: the clean economy of place constitutes a virtuous cycle between cities, companies, consumers and clusters.

Let me end where I began, in Copenhagen. The city is not resting on its cycling laurels but setting its sights higher, towards achieving a goal of carbon neutrality by 2025. Shakespeare was wrong: all is not rotten in the state of Denmark. Nurturing what is good — and green — embracing it and extending it could provide a platform for economic growth for decades to come.

An economic analysis of a sample of neighborhoods in the Washington, D.C. metropolitan area using walkability measures finds that:

• More walkable places perform better economically. For neighborhoods within metropolitan Washington, as the number of environmental features that facilitate walkability and attract pedestrians increase, so do office, residential, and retail rents, retail revenues, and for-sale residential values.

• Walkable places benefit from being near other walkable places. On average, walkable neighborhoods in metropolitan Washington that cluster and form walkable districts exhibit higher rents and home values than stand-alone walkable places.

• Residents of more walkable places have lower transportation costs and higher transit access, but also higher housing costs. Residents of more walkable neighborhoods in metropolitan Washington generally spend around 12 percent of their income on transportation and 30 percent on housing. In comparison, residents of places with fewer environmental features that encourage walkability spend around 15 percent on transportation and 18 percent on housing.

• Residents of places with poor walkability are generally less affluent and have lower educational attainment than places with good walkability. Places with more walkability features have also become more gentrified over the past decade. However, there is no significant difference in terms of transit access to jobs between poor and good walkable places.

The findings of this study offer useful insights for a diverse set of interests. Lenders, for example, should find cause to integrate walkability into their underwriting standards. Developers and investors should consider walkability when assessing prospects for the region and acquiring property. Local and regional planning agencies should incorporate assessments of walkability into their strategic economic development plans and eliminate barriers to walkable development. Finally, private foundations and government agencies that provide funding to further sustainability practices should consider walkability (especially as it relates to social equity) when allocating funds and incorporate such measures into their accountability standards.

The Great Recession highlighted the need to change the prevailing real estate development paradigm, particularly in housing. High-risk financial products and practices, “teaser” underwriting terms, steadily low-interest rates, and speculation in housing were some of the most significant contributors to the housing bubble and burst that catalyzed the recession. But an oversupply of residential housing also fueled the economic crisis.

However, a closer look at the post-recession housing numbers paints a more nuanced picture. While U.S. home values dropped steadily between 2008 and 2011, distant suburbs experienced the starkest price decreases while more close-in neighborhoods either held steady or in some cases saw price increases. This distinction in housing proximity is particularly important since it appears that the United States may be at the beginning of a structural real estate market shift. Emerging evidence points to a preference for mixed-use, compact, amenity-rich, transit-accessible neighborhoods or walkable places.

Download » (PDF)

Downloads

• Download paper

As I anticipated in my post on Tuesday, the Hong Kong government on Wednesday announced the details for the 2017 election of the Chief Executive (CE). Based on press commentary from China, it is clear that the PRC government, which has sovereignty over Hong Kong, approves the package. But to understand the implications for democracy in Hong Kong, it is important to look at the details of the proposal.

Since Hong Kong became a special administrative region of China in 1997, the CE has been chosen by an election committee of between 800 and 1,200 individuals. Beijing had promised that starting in 2017 the CE would be elected by the voters of Hong Kong through universal suffrage. Yesterday’s proposal is the latest step in a transition process toward that system. (For all of the recommendations, see the speech of Chief Secretary Carrie Lam to the Legislative Council.) As I outlined in Tuesday’s post, the principal point of controversy for more than a year has been Beijing’s insistence that a nominating committee choose who gets to stand for election. Hong Kong’s democratic camp believes that the nominating committee will give China an opportunity to “screen out” individuals it does not like.

The most prominent element of the Hong Kong government’s proposal yesterday is a recommendation on the procedural mechanism by which the Nominating Committee (NC) would review candidates. This was important for two reasons. One, under the plan the NC will have the authority to pick two or three final candidates to actually run in the election. Two, Mrs. Lam made clear that that the NC’s membership would be similar to the 1,200-person election committee that has picked the CE up until now and is weighted in favor of people who are biased toward Beijing.

Thus, who the NC considers before making its final nominations becomes critical. That will determine whether the election will provide a choice between the majority who have long favored a quick transition to democracy, and those who have preferred to move slower; and also between those who believe that the current economic system benefits only the rich and should be reformed, and those who are happy with current policies.

The proposed procedural mechanism mandates that any individual who can get recommendations from one-tenth to one-twentieth of the NC will be a “potential candidate” and have the opportunity to articulate his/her policy views to the NC and the public in a transparent way. In effect, this means that the NC will likely consider between five to ten individuals for final nomination. And because pan-democrats will have be at least a minority of the NC membership, as they do in the election committee, they will be able to recommend at least one democrat as a potential candidate. That in turn creates the possibility that a democrat could become a final nominee and compete to become CE. In that case, voters who have supported democracy and believe current economic policies are flawed would have a candidate who shares their general outlook. This mechanism would seem to be consistent with what the spokesman of the U.S. Consulate-General said earlier today: “The legitimacy of the chief executive will be greatly enhanced if the chief executive is selected through universal suffrage and Hong Kong’s residents have a meaningful choice of candidates.”

Let me be clear: the pan-democrats do not like this proposal. They do not like a mechanism that amounts to screening by China, and this one certainly opens a backdoor for Beijing to veto candidates it doesn’t like. In addition, the pan-democrats would like to have a promise from Beijing that this is not the end of the reform process when it comes to electing the CE, but Mrs. Lam gave no hope on that score, even though she said future circumstances might require more change.

The pan-democrats were likely unhappy about the government’s refusal to propose changes on two specific issues. Both concern the sub-sectors that will make up the NC, which will be copied from the current election committee. These subsectors represent different parts of the Hong Kong community, but the balance of voting power favors subsectors that 1) represent various business interests, 2) support Beijing on most issues, and 3) are afraid of populist movements. Back in December, the government floated the idea of shifting the balance of power among the existing subsectors so that under-represented groups got more votes, but on one condition, that the existing subsectors agreed. In the end, no change was made here, perhaps due to the stated reasons that there was no social consensus to make this change and that doing so would only create more political controversy. The more likely reason is that the subsectors that stood to lose their relative power were not willing to have their oxen gored.

The second issue had to do with “corporate voting” within subsectors. In some subsectors the constituent members decide their choices based on the preference of the leader of the member organizations. For example, in a subsector made up of commercial firms, the CEO of each member firm decides how to cast the firm’s vote. The alternative would be to have a larger number of people associated with the firm contribute to the decision, up to all the employees. As a matter of principle, the pan-democratic camp has long called for an end to corporate voting, and while there was an opportunity to do so on this occasion, the government didn’t take it.

So, the pan-democratic bloc in the Legislative Council walked out during Mrs. Lam’s presentation to the Legislative Council and has vowed to vote against this proposal. And if all of them did vote against, that would kill the proposal, because it must pass the Legislative Council by a two-thirds margin and the establishment caucus does not have enough votes on its own. On the other hand, Beijing and the Hong Kong government do not need to win over the whole of the disparate democratic camp. They just have to peel off four opposition legislators to secure the necessary majority. Presumably these would be more moderate politicians who might conclude that the reform package is “good enough” compared to the alternative. That is, Beijing and the Hong Kong government say that if the package is vetoed, election of the CE would revert to the 1,200-member election committee, delaying a one-person, one-vote election for some time. The danger for these moderates in voting for the proposal is that they will be excoriated by their colleagues for defecting and betraying principles, to the point of facing a challenge from within their camp in the next legislative election.

Hong Kong public opinion and legislators in particular have to face a couple of critical questions. The first is whether a system that produces a contest between at least one establishment candidate and one democratic candidate is indeed “good enough.” The recommended system could be improved upon in several ways, of that there is no doubt. On the other hand, if this system works as optimists think it could, then Hong Kong voters will have a real choice in picking their leader, for the first time in history.

Second, would this mechanism indeed produce an election contest between at least one establishment candidate and one democratic candidate? Is there a way in which members of the establishment could nominally consider a democratic potential candidate and then deny him or her the nomination? In fact there is. The government’s proposal specifies that after all the potential candidates have been heard from, the NC members then select two or three nominees. Each NC members get two votes, and nomination requires 50 percent. So establishment members of the NC, after going through the motions of considering a pan-democrat, could simply not give that person the majority needed for nomination. The procedure and their numerical majority give them the power to do so.

But is such a bait-and-switch tactic wise politically? If this mechanism is sold both to the public and moderate democrats as a “good enough” way to produce a competitive election but the result is a contest between two individuals associated with the establishment and the status quo, how much legitimacy will the process itself and the person ultimately selected have? Will the polarization, obstructionism, and protests that have come to mark Hong Kong politics subside or grow? Will Beijing face more stability in Hong Kong or less?

In short, does this mechanism not put the establishment in a position that it almost has to nominate a moderate democrat if it is to enjoy broad community respect? And if the establishment is being challenged to do the right thing, so are the democrats. As imperfect as they see the current package, if it creates a good enough chance of electing one of their own, would the democrats not lose community respect if they reject it and deny voters a choice (they already know that Beijing and others will blame them for reverting to the old system)?

This dual challenge creates the possibility of a compromise. The missing ingredient, of course, is the mistrust that each camp has about the intentions of the other, mistrust born of the decades-long struggle over whether Hong Kong should have a genuinely democratic system. Providing that ingredient will be a challenge itself. 

President Paul Kagame of Rwanda has been a very effective leader for his small Central African nation. First, he led the Rwandan Patriotic Front when it ended the 1994 genocide and brought a measure of stability to a land that had just suffered a terrible holocaust. Then as vice president until 2000, and president since then (being formally elected under the current constitution twice, in 2003 and 2010), he has helped usher in remarkable economic growth and human development. Many Western leaders have personally offered high praise for Kagame—calling him a “visionary” and among “the greatest leaders of our time”—and have marshalled considerable resources to aid in Rwanda’s post-genocide development.

But his leadership has not been without controversy. There have been some excesses and allegations of abuses of political opponents during the Kagame years. And his abuses of power have arguably increased in recent years—suggesting that, whatever his past accomplishments, his real motives for wanting to stay in office may have less to do with a call to service and more with his increasingly autocratic tendencies.

On balance, though, he has been an effective leader who has saved countless lives. Does that legacy justify his seeking what would be a third seven-year term in the nation’s 2017 presidential elections? Rwandan voters choose today whether to approve a constitutional amendment—already passed by the Senate—that would allow President Kagame another stint in power.

Murky waters 

Kagame has been for his nation arguably what Franklin D. Roosevelt was for our own, given the nature of the emergencies facing Rwanda that led to his ascent to power. And we elected FDR four times. To be sure, after the fact, we thought better of it and decided never to allow that again. But we did it. George Washington chose not to run for a third term, but he was blessed with a legion of founding fathers of remarkable ability all around him, and was succeeded by Adams and Jefferson. Lincoln never had the chance to consider a third term—and maybe we would have been better off in the day if he could have served for many years. 

I am not comparing Kagame with Washington, Lincoln and Roosevelt to assert that he belongs in their league. But to dramatize the issue, suppose that he is just as important to his nation as those three gentlemen have been to ours. Would that justify another term? Putting the question this way muddies the waters, but I think it is the only fair way to address the issue. 

More often than not, of course, two terms is more than a given leader deserves. Witness President Hamid Karzai in Afghanistan, or Pierre Nkurunziza in Burundi who just garnered a third term amidst much violence, or Joseph Kabila next door in the Democratic Republic of Congo who is due to step down next year. Indeed, Kabila may or may not do so—and it would be unambiguously bad for his country and American interests if he stayed past that date. All the more reason that, for consistency, we should want Kagame to step down—otherwise leaders like Kabila could use his behavior to excuse and justify their own attempts to hold onto power indefinitely. 

But is it really so simple in his case, and is it really such an easy call? Another tough case is President Yoweri Museveni of Uganda, who has brought a degree of peace and development to his nation after the Amin and Obote periods—but who is now in his sixth term. Perhaps once in a blue moon, a nation can benefit from multiple terms in office for a particularly gifted leader at a particularly fraught and important period in a country’s history.

Mr. Kagame: Prove us wrong 

Ultimately, institution building and the establishment of solid democratic procedures are the only sure guarantor of long-term national stability. Kagame is only 58, but he will not live forever. At some point, Rwanda really will need a succession strategy. 

So I hope Kagame chooses not to run again. But if he does run, we need to pressure him to justify it in terms of the legacy he is helping to create so that Rwanda will have future leaders and institutions that can keep the country moving forward.

Ultimately, institution building and the establishment of solid democratic procedures are the only sure guarantor of long-term national stability.

Thus, if Kagame does persuade the public to change the constitution and does win a third elected term, we should cut aid (though not impose stronger measures like trade sanctions) to show our disapproval. That is, we should cut aid unless he uses the third term—which must certainly be his last—to show his countrymen and the world that in fact his rule is about improving his country, not turning it into another fiefdom run by an African strongman. 

For us, taking this approach will necessitate creating a method for evaluating whether Rwanda’s institutions gradually move closer to true democracy in the years ahead so that, whatever might happen with a third term, a fourth term becomes entirely unjustifiable. Presidents for life are bad for their countries while they are alive, and they are dangerous for their countries when they die. Kagame needs to understand this basic fact before he becomes the next world leader who starts out a noble man and then allows power to corrupt him.

More than two decades after the genocide, Rwanda is ready for a more vigorous democratic process—and any responsible leader should be building up the institutions to prepare for that eventuality. Stronger political parties that do not have exclusive ties to just one ethnic group, clear laws constraining and regulating the nature of political competition so that it is inclusive and nonviolent, strong courts—these are the essence of an established democracy, and Rwanda needs them.

Introduction:

Unexpectedly, Italian politics has undergone a significant breakthrough over the last months. New protagonists, new languages, and new projects have markedly enlivened the usually swampy political landscape. In fact, if one adopts concepts and tools that are common to the analysis of political economy in the euro area, one would discover that what happened was far from unexpected. The unprecedented depth of the economic crisis of the last years paved the way to policy responses that were different from those common in the past. How different they should be, is however another question. This analysis shows why change was unavoidable, but some pillars of the “old politics” need to be carefully preserved if the new course is to succeed.

The consequences of the financial crisis on the Italian economy have produced a loss of output of around 9% of Italy's GDP. There had never been a similar loss of income in post-war Italian economy. The protracted recession has caused permanent effects on the output capacity of Italian firms affecting the level of investments that fell by almost 30%. Households have considerably shifted downwards their consumption patterns. This breakthrough in economic behaviors has been mirrored by a sense of deep disappointment among the population vis-à-vis the political class. The dramatic loss of income represented a rupture of the former political-economic model of the Italian economy based on cyclical developments.

Downloads

• Political Economy of Letta and Renzi

Editor's Note: In an interview with La Repubblica's Rosalba Castelletti, Jonathan Laurence discussed the significance of the revelations that the United States has continued to spy on Germany, and what they mean for the future of the transatlantic relationship.

"È un momento delicato, ma non penso che la Germania abbia interesse ad esagerare le tensioni con gli Stati Uniti". A sostenerlo è Jonathan Laurence, professore di Scienze politiche al Boston College ed esperto di Relazioni transatlantiche presso il think tank Brookings Institution di Washington.

Professor Laurence, quest'episodio come inciderà sulle relazioni tra i due Paesi?

"La situazione è tesa. Berlino stavolta non ha espresso solo la consueta indignazione, ma ha compiuto un atto formale con l'espulsione del capo dei servizi segreti, perché è la terza volta che il popolo tedesco apprende di essere spiato dagli americani. La prima volta è successo con il Datagate, la seconda con l'intercettazione del cellulare della cancelliera e ora con due spie tedesche al soldo degli americani".

In cosa differisce quest'ultimo caso dai precedenti?

"Non si tratta di programmi d'alta tecnologia, ma di spionaggio più "vecchia maniera": documenti in cambio di soldi. Stavolta poi non c'è in ballo un problema di sicurezza internazionale. È un nuovo colpo per la reputazione Usa perché ancora una volta si dimostra indifferente alla sensibilità europea riguardo alla raccolta di dati".

E i tedeschi sono forse i più sensibili, visto che hanno sperimentato lo spionaggio della Gestapo e della Stasi...

"Di fatti. L'attuale cancelliera ha fatto il suo debutto in politica proprio dopo il crollo della Stasi. Ecco perché dobbiamo aspettarci che la Germania dichiari a gran voce la sua collera".

Cosa può fare l'amministrazione Usa per riparare?

"Qualcosa di più che cercare infruttuosi colloqui bilaterali o accordi di non spionaggio reciproco. La Germania non è ingenua, sa che i servizi americani hanno bisogno di operare soprattutto dopo il 2001, ma vuole che si lavori insieme. Non credo però che cerchi il conflitto. Berlino e Washington hanno bisogno l'una dell'altra sia sulle sanzioni contro la Russia in merito alla crisi Ucraina sia sull'accordo di libero scambio".

Thanks in large part to his decision to participate in the war in Iraq, former British Prime Minister Tony Blair is a controversial figure in Europe. Yet, Blair’s legacy as a center-left reformer is alive and well in two of Europe’s ruling center-left forces, France’s Socialist Party (PS) and Italy’s Democratic Party (PD).

Both Italy’s Prime Minister Matteo Renzi from the PD and French Prime Minister Manuel Valls of the PS bear strong similarities to the former leader of Britain’s “New” Labour Party. As Blair was when he took office, they are young–Valls is 52 and Renzi is just 39; they are centrists; and they have excellent communication skills that allow them to present themselves as harbingers of change.

Taking a Page Out of Prime Minister Blair’s Book

Renzi and Valls will have to take three pages out of Blair’s book if they want to replicate his electoral achievements: 

1. They must wrest control of their parties from the old guard; 
2. They must take control of the political agenda by giving it a centrist thrust (along the lines of Blair’s ‘Third Way’ between conservatism and social democracy); 
3. They must take control of the political center, even at the cost of shedding votes on the left.  

Renzi is far ahead of Valls in all three respects. He has taken over the PD (via an open primary election which he won resoundingly) after a bitter fight against the party’s old guard. Since taking office in early 2014, he has shown a remarkable ability to dictate the terms of the political debate. While he became prime minister via an inner party coup rather than a general election, he sailed triumphantly through his first electoral test: the European Parliament elections of May 2014. The PD won a larger share of the votes than any other Italian party since the 1950s (41 percent), tapping into constituencies such as entrepreneurs and businessmen who all have a long tradition of contempt for the left.

However, none of Renzi’s achievements rest on firm ground. The main reason is Italy’s appalling financial predicament. The economy has performed abysmally since the 2008 to 2009 recession. Unemployment is over 12 percent, the labor market is overly protective of certain categories and overly unfair to others (particularly the young), the public sector is costly and ineffective and the judicial system byzantine and not entirely reliable. Renzi continues to face harsh criticisms from within his party as his reform agenda flies in the face of traditionally left-leaning constituencies (a few weeks ago the main leftist trade union managed to get about a million people to the streets in protest against a labor market reform bill). Finally, Renzi’s room for maneuver is severely constrained by the tight fiscal rules imposed by the European Union (EU).

For Valls, the path to leadership is a more complicated matter. This is largely due to France’s constitutional set-up, in which the prime minister runs domestic policies but is second in authority to the president. This involves for Valls a variation from Blair’s three-step process—as prime minister, his most urgent priority is not leading the PS but pushing forward a political agenda capable of winning over the political center. He was appointed to the premiership by the current president, the socialist François Hollande, because his previous stint as a tough-talking interior minister and his profile as a business-friendly politician and skillful local manager made him fairly popular with the public. Hollande’s decision was a desperate attempt to revive his own popularity, which has plummeted to unprecedented lows only half-way into his 5-year term, by imparting a new, essentially more pro-market direction to his presidency. Since he stepped in, Valls has tried to change the political agenda by advocating reduced labor costs and lower taxes on businesses.

Like Renzi, Valls is confronted with both internal and external challenges. The first is of course that, although in charge of domestic policies, he is still second-in-command to a highly unpopular president. Because he does not control the PS, Valls faces stiffer opposition to his centrist agenda from within the party than does his Italian counterpart. His calls for a ‘common house’ for reform-oriented leftists and rightists have, unsurprisingly, met with acerbic criticism in the PS. France is in a better economic state than Italy and the government machine is as efficient as ever; yet the French have shown an idiosyncratic resistance to reform which Valls might lack the political authority to overcome. And Valls, just like Renzi, must also make decisions that both help France and comply with EU fiscal rules.

What to Make of Continental Europe’s New Blairs?

In spite of the huge challenges Renzi faces both at home and in the EU, he seems to be the better positioned. Realistically, the chances that he will successfully revive Italy’s economy are slim. Yet Italians do not dream of an era of prosperity, but one of action. Provided Renzi can show that he has begun to tackle the many roadblocks on the path towards growth, Italians are likely to see him as a safer bet than the opposition, which consists of Silvio Berlusconi’s much weakened center-right party and the comedian-turned-politician Beppe Grillo’s anti-establishment 5 Star Movement.

Valls has a harder road ahead. His approval ratings now hover at just around 36 percent (though no other center-left French politician fares much better). He certainly has a popularity problem in his own party during the last presidential campaign, he won only 5.5 percent of the votes in a PS primary contest. Yet Valls also stood out as a credible politician and is now in a position to attract more support. He encapsulates the second half of Hollande’s presidential term, which has made a decision to openly target centrist voters. If Valls manages to regain, at least in part, the favor of the public, the PS might in the end see him as a more appealing presidential candidate in 2017 than Hollande, whose credibility is in poor shape.

Appearing to the public the safer bet is the mark of shrewd politicians. But strong leadership requires one step further. Blair mapped out a course towards prosperity in the much more competitive world of globalization; this, the Iraq war notwithstanding, secured him three electoral victories in a row. For Renzi and Valls, the time to do something alike cannot come soon enough.

Event Information

Advances in mobile technology have transformed the global marketplace, especially in emerging economies. How has mobile technology changed economic progress in emerging economies? Who has benefited and why? How can emerging economies further take advantage of the mobile revolution to propel growth? Which challenges and decisions do policymakers currently face?

On December 10, the Center for Technology Innovation hosted an event to discuss mobile technology’s role and potential future in developing economies as part of the ongoing Mobile Economy Project event series. A panel of experts discussed what is needed to ensure that emerging mobile economies continue to grow, and how intellectual property, spectrum policy, and public policies contribute to sector development.

Join the conversation on Twitter using #TechCTI

Audio

• Mobile Technology’s Impact on Emerging Economies and Global Opportunity

Transcript

• Transcript (.pdf)

Event Materials

• 20141210_mobile_technology_transcript

Event Information

Cutting-edge technology has led to medical breakthroughs, the information age, and space exploration, among many other innovations. The growing ubiquity of advanced technology, however, means that almost anyone can harness its power to threaten national, international, and individual security. In their new book, The Future of Violence: Robots and Germs, Hackers and Drones—Confronting a New Age of Threat (Basic Books, 2015), Benjamin Wittes and Gabriella Blum explore the potential dangers of modern technology when acquired by hostile groups or individuals.

On March 11, Governance Studies at Brookings hosted a book event to discuss the new threats to national security and the developing framework for confronting the technology-enabled threats of the 21^st century. In order to manage the challenges and risks associated with advanced technology, governments, organizations, and citizens must reconsider the intersection of security, privacy, and liberty. What does this mean for domestic and international surveillance? How will the government protect its citizens in an age of technology proliferation?

After the program, panelists will take audience questions.

Audio

• Confronting national security threats in the technology age

Transcript

• Uncorrected Transcript (.pdf)

Event Materials

• 20150311_national_security_technology_transcript

Good afternoon Chair Ayotte, Ranking Member Cantwell, and Members of the Subcommittee. Thank you very much for the opportunity to testify today on the important topic of domestic unmanned aircraft systems (UAS).

I am a nonresident senior fellow in Governance Studies and the Center for Technology Innovation at the Brookings Institution. I am also a National Fellow at the Hoover Institution at Stanford, and a professor at UCLA, where I hold appointments in the Electrical Engineering Department and the Department of Public Policy. The views I am expressing here are my own, and do not necessarily represent those of the Brookings Institution, Stanford University or the University of California.

Downloads

• Download the testimony

Technically, all of the Star Wars films occur a long time ago in a galaxy far, far away, but there are countless gadgets featured in the films that human beings in this galaxy can find here on Earth. Here are a handful of gadgets you will see this weekend when the seventh Star Wars film, "The Force Awakens," blasts into theaters.

Drone surveillance

The evil Galactic Empire has long employed drones and machines to do their dirty work. Way back when the empire was just a glint in Darth Sidious' eyes, his merciless apprentice Darth Maul used autonomous drones to search the desert landscape of Tatooine for fugitive Jedi. Later, when Darth Vader tirelessly searched the galaxy for Luke Skywalker and the Rebel Alliance, he sent similar autonomous drones to countless worlds such as the ice planet Hoth.

Sure, the Empire may call them droids, but on the planet Earth these instruments are essentially remote drones you might see flying in cities or around your neighborhood. In the U.S. the use of unmanned drones to aid law enforcement is on the cutting edge of technology and sparks a spirited debate among privacy advocates. Should fear law enforcement as we would a Sith lord and thus burden them with a warrant-based, technology-centric approach to drone surveillance that might curtail the beneficial use of drones?

Gregory McNeal wrote last year in a Brookings report that a property rights-centric approach with limits on surveillance would best appease privacy advocates and law enforcement, enabling drones to protect privacy in ways even manned surveillance can't achieve. By crafting simple, duration based surveillance legislation, law enforcement would only be permitted to surveil a person for a limited amount of time. Additionally, data retention guidelines could limit the amount of time that surveillance would be accessible to law enforcement.

"Legislators should reject alarmist calls that suggest we are on the verge of an Orwellian police state," McNeal writes, as privacy advocates almost always invoke the the novel 1984 when technology makes surveillance more widespread and pervasive.

As McNeal points out, the police state is hardly as nefarious as Darth Vader, so sensible legislation may be enough in this case to keep law enforcement from falling to the dark side.

Holography

In the first Star Wars film, Princess Leia recorded a short holographic message for Obi-Wan Kenobi asking for his help delivering the Death Star plans to the Rebel Alliance. The droid R2-D2 recorded the message almost as succinctly as many of use record short videos on our cell phone. But when can we expect to send and receive holographic messages ourselves?

Barring some laughable election night hologram shenanigans on CNN, there have been some notable uses of holography in this galaxy. In 2012, the late rapper Tupac Shakur took the stage at the Coachella Festival with contemporaries Snoop Dogg and Dr. Dre. At the 2014 Billboard Music Awards, Michael Jackson performed on stage—five years after his death. These holograms were made possible by artful projections and reflections, creating convincing illusions suitable only for crowded concert halls. The technology is especially popular in South Korea where K-Pop performers regularly "perform" at virtual concerts to adoring fans.

But a bona fide hologram? Researchers at Swinburne University this year used lasers and a specialized graphene mesh to project 3D objects in the air very much like you would see in Star Wars. As TIME Magazine reported, "It’s not quite Princess Leia-quality, and researchers say it has a long way to go before commercialization, but it’s a step."

BB-8 Droid

Since the first teaser for the new Star Wars films, fans have had questions about the new droid character BB-8. Rather than resort to computer animation to bring the droid to life, director J.J. Abrams and Lucasfilm designers sought to produce a live prop that could portray the droid on film.

The filmmakers demoed the droid on stage at Comic Con to the roar of audience applause and delight—"It was the first official confirmation that BB-8 was not a CG creation, but rather, a practical effect."

The use of practical effects in "The Force Awakens" is a return-to-form for the filmmakers who have shunned the special effects and digital artistry of the Star Wars prequel trilogies and instead embraced the kinds of practical effects and puppetry that made the original trilogy so beloved.

The droid BB-8 even has a cousin here on Earth—the robotic ball toy Sphero. Inventors Ian Bernstein and Adam Wilson have adapted their smartphone-controlled spherical toy into a BB-8 toy that performs many of the same practical effects the screen version of BB-8 does in "The Force Awakens."

As the new sequel trilogy continues, filmmakers are sure to wow audiences with amazing technologies—some we may even recognize from planet Earth.

On Friday, June 3, S&P Global Ratings announced that it would not downgrade South Africa’s credit rating to junk, letting South Africa breathe a sigh of relief. The outlook, however, remained negative. While some experts were confident that the rating would not be cut, most continued to warn that future economic or political turmoil could spark a downgrade later this year. The South African Treasury agreed, but remained positive releasing a statement saying:

Government is aware that the next six months are critical and there is a need to step up the implementation [of measures to boost the economy] … The benefit of this decision is that South Africa is given more time to demonstrate further concrete implementation of reforms that are underway.

South Africa, whose current rating stands at BBB- (one level above junk), has been facing weak economic growth—at 1 percent—over past months. The International Monetary Fund has given a 2016 growth forecast of 0.6 percent. Many feared that a downgrade could have pushed the country into a recession. Borrowing by the government would have also become more expensive, especially as it tackles a 3.2 percent of GDP budget deficit for the 2016-2017 fiscal year.

Other credit ratings agencies also are concerned with South Africa’s economic performance. Last month, Moody’s Investors Service ranked the country two levels above junk but on review for a potential downgrade, while Fitch Ratings is reviewing its current stable outlook and BBB- rating.

For South African Finance Minister Pravin Gordhan’s thoughts on the South African economy, see the April 14 Africa Growth Initiative event, “Building social cohesion and an inclusive economy: A conversation with South African Finance Minister Pravin Gordhan.”

This week, the Extraordinary African Chambers—located in Dakar and established in collaboration with the African Union—sentenced former Chadian President Hissène Habré to life in prison. Habré seized power in 1982, overthrowing then President Goukouni Oueddei. He fled to Senegal in 1990 after being ousted by current Chadian President Idriss Deby. After he fled to Senegal, the African Union called on Senegal to prosecute Habré. In 2013, the Extraordinary African Chamber was created with the sole aim to prosecute Habré. The Habré trial is the first trial of a former African head of state in another African country.

Habré faced a long list of charges including crimes against humanity, rape, sexual slavery, and ordering killings while in power. According to Chad’s Truth Commission,  Habré’s government murdered 40,000 people during his eight-year reign. At the trial, 102 witnesses, victims, and experts testified to the horrifying nature of Habré’s rule. His reign of terror was largely enabled by Western countries, notably France and the United States. In fact, on Sunday, U.S. Secretary of State John Kerry admitted to his country’s involvement in enabling of Habré’s crimes. He was provided with weapons and money in order to assist in the fight against former Libyan leader Moammar Gadhafi. Said resources were then used against Chadian citizens.

Also this week, Simone Gbagbo, former Ivorian first lady, is being tried in Côte d’Ivoire’s highest court— la Cour d’Assises—for crimes against humanity. She also faces similar charges at the International Criminal Court though the Ivoirian authorities have not reacted to the arrest warrant issued in 2012. In March 2015, Simone Gbabgo was sentenced to 20 years in jail for undermining state security as she was found guilty of distributing arms to pro-Laurent Gbagbo militia during the 2010 post-electoral violence that left 3000 dead. Her husband is currently on trial in The Hague for the atrocities committed in the 2010 post-election period.

On Monday, May 30, South African chemical and energy company Sasol Ltd announced that Mozambique’s ongoing debt crisis and continuing low global gas prices would not slow down its Mozambican gas project. The company expressed confidence in a $1.4 billion processing facility upgrade stating that the costs will be made up through future gas revenues. In explaining Sasol’s decision to increase the capacity of its facility by 8 percent, John Sichinga, senior vice president of Sasol’s exploration and production unit, stated, “There is no shortage of demand … There’s a power pool and all the countries of the region are short of power.” In addition, last week, Sasol began drilling the first of 12 new planned wells in the country.

On the other hand, on Monday The Wall Street Journal published an article examining how these low gas prices are stagnating much-hoped-for growth in East African countries like Tanzania and Mozambique as low prices prevent oil companies from truly getting started. Now, firms that flocked to promising areas of growth around these industries are downsizing or moving out, rents are dropping, and layoffs are frequent. Sasol’s Sichinga remains positive, though, emphasizing, "We are in Mozambique for the long haul. We will ride the waves, the downturns, and the upturns."

Saudi deputy crown prince and defense minister Mohammad bin Salman is just wrapping up a heavily hyped visit to Washington, aimed at reinforcing the kingdom’s partnership with the United States. Recent years have frayed what is traditionally the central strategic relationship for Riyadh, principally over the Obama administration’s nuclear diplomacy with Iran.

Since the conclusion of the Iranian nuclear deal last July, the perennial antagonism between Riyadh and Tehran has reached a dangerous pitch, fueling the violence that rages in Syria, Iraq, and Yemen and the undercurrent of instability that saturates the region. And the fallout of their rivalry has left its mark well beyond the boundaries of the Gulf, exacerbating volatile energy markets and, by extension, the global economy. 

Within OPEC, Riyadh and Tehran are eyeing each other warily, and their continuing differences torpedoed a proposed ceiling on oil production at OPEC’s latest meeting. The outcome was not surprising; a similar effort to agree on a production freeze between the group and a handful of non-OPEC producers fizzled in April. In the meantime, any incentives for drastic measures to address soft oil prices have abated as oil prices creep back up to approximately $50 a barrel. 

Iran and Saudi Arabia have plenty of reasons to continue pumping for the foreseeable future. Since the lifting of nuclear-related sanctions in January, Iranian leaders have been determined to make up for lost time and lost revenues, already defying expectations by quickly raising production to levels that hadn’t been reached since November 2011 and aggressively cutting prices in hopes of winning back its pre-sanctions export market. 

The centrality of oil to the legitimacy and autonomy of both regimes means that these plans are little more than publicity stunts.

Meanwhile, Saudi Arabia appears prepared to continue pumping at record-high levels, part of a larger strategy aimed at maintaining market share and driving down non-OPEC production. The two states’ economic incentives are compounded by their fierce geostrategic and sectarian rivalry, which has intensified, as evidenced by the standoff over Iranian participation in the annual pilgrimage to Mecca.

But even as the two states duel over oil production and prices, both Saudi Arabia and Iran are conspicuously planning for a post-oil future. Leaders in both countries have decreed an end to the era of oil dependency, endorsing ambitious blueprints for restructuring their economies that—if implemented—would ultimately transform state, society, and the wider region. The centrality of oil to the legitimacy and autonomy of both regimes means that these plans are little more than publicity stunts. Still, just imagine for a moment what it would mean for Iran, Saudi Arabia, and the Middle East if these grandiose agendas were adopted.

Competing and complementary visions

Tehran’s plan actually dates back more than a decade, with the 2005 release of its “20 Year Perspective” (sometimes called “Vision 2025”). The plan laid out extravagant expectations: rapid growth and job creation, diversification away from oil, a knowledge-based economy. Intervening developments—sanctions that targeted Iran’s oil exports and helped expand non-oil trade—have only bolstered the rhetorical commitment of Iran’s supreme leader, Ayatollah Ali Khamenei, to a “resistance economy” in which oil exports constitute a minor part.

“One of our most serious losses is dependence on oil,” Khamenei bemoaned in a 2014 speech. “I am not saying that oil should not be used. Rather, I am saying that we should reduce our dependence on selling crude oil as much as we can.” 

Not to be outdone, Saudi Deputy Crown Prince Salman announced Saudi “Vision 2030,” to address what he described as “an addiction to oil.” The plan, which has met with equal doses of fanfare and skepticism since its announcement last month, aims to create a “thriving economy” and end Saudi dependence on oil revenues by 2020. Vision 2030 includes provisions to sell off a small stake in the kingdom’s state oil company, Saudi Aramco, and create the world’s largest sovereign wealth fund to manage the country’s income, as well as goals of creating 450,000 new private sector jobs, cutting public sector wages, and tripling the country’s non-oil exports all within the same abbreviated time frame.

Jeopardizing domestic stability

There is one hitch, however: these aspirations, though laudable, are preposterously unmoored from current political and economic exigencies. The institutions of governance and the structure of power in resource-rich states such as Saudi Arabia and Iran are organized around the state’s role as purveyors of vital social and economic goods. Riyadh and Tehran distribute cash handouts, provide jobs in already-bloated state bureaucracies, and levy few taxes. Diversifying away from reliance on oil would essentially require Riyadh and Tehran to radically curtail this distributive role, inviting historic social and political changes that could ultimately compromise regime ideology and weaken state legitimacy. 

[T]hese aspirations, though laudable, are preposterously unmoored from current political and economic exigencies.

In Saudi Arabia, the supply of these benefits is central to the monarchy’s legitimacy. To diversify away from oil, which currently accounts for over 70 percent of government revenues, Riyadh would have to drastically cut spending, far more than it already has. Not only would this further slash subsidies and hike fees, it would also effectively force Saudi workers—two-thirds of whom are employed by the state—to take up private sector jobs, 80 percent of which are currently staffed by expatriates. To accomplish this transition would require fundamental changes to the incentive structure for the Saudi labor force: a much broader willingness to accept low-skill, low-wage jobs, as well as the requisite improvements in education and productivity to support larger numbers of Saudi nationals moving into private sector positions.

For the Saudi economy to be truly competitive, Riyadh would have to initiate dramatic changes to a central component of the Saudi social compact—women’s rights and freedoms. The Vision 2030 document boasts that over 50 percent of Saudi university graduates are women and pledges to “continue to develop their talents, invest in their productive capabilities and enable them to strengthen their future and contribute to the development of our society and economy.” 

But the domestic Saudi labor force is overwhelmingly male, and even the plan’s modest aspirations to raise female participation in the workforce from 22 to 30 percent are likely to run into logistical and social obstacles. Shortly after announcing Vision 2030, Deputy Crown Prince Salman said Saudi Arabia is not yet ready to let women drive. A diversified economy will not emerge in the kind of constricted social environment mandated by the Saudi interpretation of sharia (Islamic law). 

Iran’s Islamic Republic doesn’t have the same degree of gender segregation, but Iran’s official interpretation of Islam has still constrained female participation in the workforce. Iran employs an equally low percentage of women—according to a 2014 U.N. report around 16 percent—and women’s unemployment is more than double that of men (nearly 20 percent).

A Saudi man walks past the logo of Vision 2030 after a news conference in Jeddah, Saudi Arabia June 7, 2016. Photo credit: Reuters/Faisal Al Nasser.

The bigger challenge for Iran will be truly opening up its economy to foreign direct investment. This remains hotly contested among the leadership, even in the aftermath of the nuclear agreement and the lifting of related sanctions. While there is some consensus around the need for foreign capital and technology, hardliners including Khamenei are determined to insulate Iran from any accompanying cultural influence and dependency. As the supreme leader recently inveighed, the global economy is “a plan and system that has been devised mainly by Zionist capitalists and some non-Zionists with the purpose of usurping the economic resources of the whole world...If a country merges its economy with the global economy, this is not a source of pride, rather it is a loss and a defeat!”

This deeply-rooted paranoia has provided a convenient platform for the Islamic Republic to galvanize citizens’ loyalty to the state and hostility to outside interference. And it also inhibits the liberalization that makes foreign investment possible: measures to enhance transparency and security, develop more attractive legal and fiscal frameworks, shrink the role of the state, and undertake an array of other structural reforms. Without these measures, Tehran will struggle to capitalize on its extraordinary reengagement with the world. 

While Saudi Arabia has maintained a more consistent and mutually beneficial pattern of foreign investment, its leadership too will have to revamp its approach if it is to broaden its economic base. For Riyadh, the challenge is less one of attracting foreign capital than of developing a sustainable influx of technology and expertise to develop sectors other than energy. The kingdom will also have to overcome serious regulatory hurdles and a proclivity for mammoth (and often white elephant) projects.

Compromising regional clout

Riyadh and Tehran will need to balance their economic aspirations and their approach to the region, too. Historically, their role in global energy markets has largely shielded both states from the fallout of regional instability. The world’s need for reliable oil at reasonable prices has inculcated the commitment of outside powers to secure transportation of resources and considerable autonomy for Riyadh and Tehran from the implications of their own policies. 

As a result, Saudi Arabia and Iran can fund nefarious activity across the region, violate the civil and human rights of their citizens and other residents, and carry out belligerent foreign policies without severe repercussions for their oil revenues. Only in the past five years has Tehran seen the limits of the world’s reluctance to jeopardize its investment with a major oil exporter; and the recent reversal of the U.N. condemnation regarding the Saudi-led coalition in Yemen demonstrates that Riyadh remains insulated.

Saudi Arabia and Iran can fund nefarious activity across the region, violate the civil and human rights of their citizens and other residents, and carry out belligerent foreign policies without severe repercussions for their oil revenues.

Regional developments make the prospect of economic diversification even less likely, as sensitivity to such developments will only increase if either country successfully develops its non-oil sectors. At the same time, regional stability is a basic prerequisite for economic diversification. Robust growth and good governance throughout the Middle East would provide the optimal context for the economic transformation of Iran and Saudi Arabia, since the marketplace for their non-oil exports is concentrated in the immediate neighborhood. But such transformation would require both countries to put economic priorities that serve their general populations above the ideological and religious agendas—supported by oil rents—that propel their regional and international influence and that provide a large portion of their autonomy in foreign policymaking. 

Technocrats in both countries understand this intuitively. At a 2015 conference on Iran’s economy, President Hassan Rouhani wondered “How long can the economy pay subsidies to politics?” He added that the country’s economy “pays subsidies both to foreign policy and domestic policy. Let us try the other way round for a decade and pay subsidies from the domestic and foreign policy to the economy to see [what] the lives and incomes of people and the employment of the youth will be like.” The problem, of course, is political will: neither country is prepared to elevate the interests of its people over the demands of ideology.

Imagining an unlikely future

Can either Iran or Saudi Arabia really kick the oil habit? It seems exceptionally unlikely. Even as Khamenei extols the need for inward-focused development, Tehran is racing to expand crude output level to four million barrels per day by March 2017. 

Oil enabled the creation of the modern Middle Eastern state and fueled the rise of both countries to regional predominance. Oil is a vector for their regional rivalry, and it provides prestige and funds to be used in other arenas of competition. A genuine diversification of the two largest economies in the Middle East and North Africa would jeopardize their revenue streams and domestic legitimacy, as well as their efforts to assert their primacy across the Islamic world.

[N]either country is prepared to elevate the interests of its people over the demands of ideology.

“All success stories start with a vision,” Deputy Crown Prince Salman is quoted as saying on the Vision 2030 website. But vision is insufficient to bridge the gap between aspiration and reality; a serious agenda to implement either the Saudi or the Iranian vision would require painful compromises to regime ideology and a fundamental overhaul of the institutions and the structure of power in both countries. 

Imagine, though, for a moment, that these far-fetched ambitions were quite serious, and that both the Saudi and Iranian leadership were determined to do what was necessary to truly wean their economies off oil dependence. Consider what it might mean for the region if these grandiose ambitions were not simply the illusions of overpriced consultants and embattled technocrats—if a leadership emerged in one or both of the Middle East’s most powerful actors prepared to invest political capital in a genuine transformation of priorities and policies. What might be possible if Tehran and Riyadh sought to compete for economic opportunities instead of fueling violence and sectarianism around the region? If instead of a vicious sectarian and geopolitical rivalry, these two old adversaries engaged in a race to the top?

What will it take to move these visions from wishful thinking to reality? More than rhetoric, to be sure. But even the articulation of improbable objectives will have its impact. As documented in a recent book, Iran’s post-revolutionary experience demonstrates that the regime’s reliance on promises of economic gains has generated public expectations for effective and accountable governance. Now Iranians and Saudis have been told by their leaders—who happen to be officially infallible—that the time has come to transcend oil. What might happen if they believe it?