Less than four months after ascending the throne, Saudi King Salman bin Abdul Aziz Al Saud has made unprecedented changes in the line of succession that benefit his own son Prince Mohammed bin Salman. These shifts come as Salman pursues the most assertive foreign policy in recent Saudi history.

The king removed the sitting Crown Prince Muqrin, his half brother, and promoted the third in line Prince Mohammed bin Nayef, his nephew, up to number two. Salman made his own son, Mohammed bin Salman, the new number three. The King also replaced the ailing foreign minister, Prince Saud al Faisal with a non-royal, the current ambassador to Washington, Adel al Jubeir. Prince Saud had been Foreign Minister since 1975.

According to the royal palace, Prince Muqrin asked to be replaced, but no reason was given. No crown prince has ever given up the position in the history of the modern kingdom, founded in 1902. When Salman ascended the throne in January, the press trumpeted Muqrin as heir and there was no sign he was not eager to be the next in line. Many will assume he was asked to quit.

Speculation will be intense about why that might be. Muqrin was a protégé of the late King Abdullah. He is not close to Salman's branch of the family, the Sudeiris. He also appeared less enthusiastic about Salman's war in Yemen. As a former fighter pilot Muqrin understands the limits of air power, and he may have had doubts about the wisdom of what was initially called Operation Decisive Storm, but has now become a stalemate.

The new crown prince, 55-year-old Mohammed bin Nayef, is famous for defeating Al Qaeda's violent attempt to overthrow the House of Saud a decade ago. MBN, as he is known, led a four-year counter-terrorist campaign that decimated Al Qaeda in the Kingdom and drove its remnants into Yemen. In the process MBN survived at least four assassination plots. His father, the late Crown Prince Nayef, was so reactionary he was nicknamed the Black Prince. But MBN studied in Oregon and with the FBI and Scotland Yard before joining the Saudi interior ministry. He also holds the position of chairman of the Kingdom’s security and political committee coordinating all security issues.

Mohammed bin Salman, MBS, is the face of the Yemen war. He became defense minister in January and has been constantly on Saudi TV appearing to direct the war effort and meeting with foreign leaders to win support for the campaign against the pro-Iranian Zaydi Shia Houthi rebels. He is considered ruthlessly ambitious and is very close to his father. He has given up his position as chief of the royal court but he will undoubtedly keep control of access to the king.

Unlike most Saudi princes, MBS was not educated in the west. Instead he studied at King Saud University. There is controversy over his age, reputed to be anywhere from 29 to 34 (officially his birthday is July 24, 1980). He is chairman of a number of young people's organizations in the Kingdom and seeks to portray himself as the leader of the next generation of Saudis. He also chairs the powerful development and economics committee that coordinates economic policies, including oil price and supply.

In promoting his nephew and son, King Salman is passing the torch to the next generations of royals. Since 1902 the Kingdom has been ruled by the founder of the modern Kingdom Ibn Saud Abd Al Aziz or his sons. Now, Salman will be the last son to reign.

These changes have all been endorsed by the Allegiance Council, the committee of the sons and grandsons of Ibn Saud, but the legitimacy of selecting the next generation has been a question mark over the succession process for years. The king hopes it is now all settled.

The late King Abdullah's own son, Prince Mitab, has kept his powerful position as commander of the Saudi National Guard. The SANG is the family’s praetorian guard, it defends the capital, the holy mosques in Mecca and Medina and the oil industry. SANG troops have occupied Bahrain, the Kingdom’s tiny island neighbor, since the Arab Spring in 2011 to keep a minority Sunni monarchy in power.

The new lineup is solidly pro-American but riven with doubts about American reliability. The royals believe George W. Bush foolishly let Iran gain dominance in Iraq and fear Barack Obama is too eager for a nuclear deal with Iran and a grand rapprochement with Tehran. Repeated assurances by Obama and concrete support for the Yemen war have not altered Saudi doubts about America.

Salman's decision to wage war in Yemen so soon after coming to the throne reflected his acute concern that Iran was gaining a foothold on the Arabian Peninsula in what has always been the soft underbelly of Saudi Arabia, Yemen. The Zaydi Houthi rebels are not pawns of Tehran but they did initiate direct air flights between Sanaa and Tehran early this year, offered Iran port facilities and negotiated a lucrative oil deal. A few Iranian Revolutionary Guard advisers have been assisting the Zaydis for the last few years covertly. From Riyadh's view Iran already dominated decision-making in Baghdad, Damascus and Beirut, it does not want a fourth Arab capital to be aligned with Tehran.

But Salman's intense effort to secure wide Islamic backing for the war has been less than a success. Oman, Yemen's other neighbor, has opted not to join with the other five members of the Gulf Cooperation Council in the fighting, instead staying on the sidelines. The Pakistani parliament voted unanimously to keep neutral and rebuff repeated Saudi requests for ground troops to aid the war effort. Pakistani officials have privately suggested Salman panicked into the war without a viable strategy to get the Houthis out of Sanaa. Even Egypt, which benefits from billions in GCC aid, has opted not to send troops. although it's navy is supporting the Saudi blockade of Yemen.

The Yemen war is part Saudi-Iranian regional rivalry, part the unfinished business of the Arab Spring revolutions and part sectarian Sunni-Shia animosity. It is above all the Salmans’ war, father and son together. The surprise elevation of MBN and MBS underscores how the stakes in this war are crucial, not only to Yemen's future but increasingly to the future of the House of Saud.

This piece was originally published by The Daily Beast.

As much as the nostalgic might hate to admit it, a new year is coming up. And for climate change negotiators, 2015 is a big one: it’s the make-it-or-break it year for a serious, last-ditch effort at an international agreement to slow runaway climate change. 

A new year brings new, hopeful resolutions. Of course, just as ubiquitous are the pesky memories of past resolutions that one never quite accomplished.

Some resolutions fade, understandably. But failure is less forgivable when the repercussions include the increased exploration of fossil fuels at the expense of our warming world. To avoid the most destructive effects of climate change, we must keep two-thirds of existing fossil fuel reserves underground, instead of providing subsidies to dig them up.

One group not living up to its resolution: the G20 members —19 countries and the European Union that make up 85% of global GDP. At the 2009 G20 summit in Pittsburgh, the group agreed to “rationalize and phase out over the medium term inefficient fossil fuel subsidies that encourage wasteful consumption.” At the 2013 summit in St. Petersburg, they reaffirmed this resolution. Yet that same year, these countries funneled $88 billion into exploring new reserves of oil, gas, and coal.

Another resolution abandoned.

This year’s G20 summit will convene in Brisbane, Australia (November 15^th - 16^th) — a perfect opportunity to commiserate about the backsliding on the agreement and to develop a new approach that includes some means of holding each other accountable. So how can the G20 follow through on its laudable and necessary pledge?

1. Get help from the experts.

A new report by the Overseas Development Institute and Oil Change International criticizes the G20 for “marry[ing] bad economics with potentially disastrous consequences for climate change.” It points out that every dollar used to subsidize renewables generates twice as much investment as the dollar that subsidizes fossil fuels.

And the G20 can try harder to heed the doctor’s orders. This report outlines specific recommendations, including revamping tax codes to support low carbon development instead.

2. Set a timeline and stick to it.

National timelines for fossil fuel subsidy phase out would be different depending on the governmental structures and budgeting processes of individual countries. Also, countries can utilize the timeline of the incoming international climate treaty, by including a subsidy phase out as part of a mitigation plan to be measured and reported.

3. It’s easier with friends.

The G20 got it right that no one country should have to go it alone. Now it is time to strengthen its methodology for peer review of inefficient fossil fuel subsidies, and agree upon a transparent and consistent system for tracking and reporting.

That said, it can also be easier to cheat with friends. The new report tracks where investments from G20 state-owned energy companies are directed. As it turns out, G20 countries continue to fund each other’s fossil fuel exploration. Instead of cheating together on their own resolution, G20 members should leverage these relationships to advance investments in clean energy.  

4. Hold each other accountable.

The G20 is not the only group that has committed to phase out fossil fuel subsidies. The issue has received support from advocacy groups, religious leaders, and business constituencies alike. The public will be able to better hold leaders accountable if the G20 declares its commitment and progress loud and proud.

Moreover, G20 members and advocacy organizations can make the facts very clear: fossil fuel subsidies do not support the world’s poor, and the public ends up paying for the externalities they cause in pollution and public health. This accountability to addressing concerns of the people can help the G20 stand up to the fossil fuel industry.

5. If at first you don’t succeed…

True, phasing out fossil fuel subsidies is no piece of cake. There is no G20 standard definition of “inefficient subsidies” or timeline for the phase out. It also hasn’t helped that countries report their own data. They can even opt out of this unenforced commitment altogether. Yet the pledge is there, as is the urgency of the issue. New Year’s resolutions take more than just commitments — they take work. This week’s G20 Leaders Summit is a wonderful place to commit to phasing out fossil fuel subsidies. Again.

Event Information

The world’s top economies had much to discuss at the G-20 summit in Brisbane, Australia last month, including reinvigorating global growth, the reduction of trade barriers, financial regulation reforms, and global infrastructure. The G-20 meeting took place at a key time for U.S. international economic policy, as it came on the heels of President Obama’s prior stops at the APEC summit and the ASEAN summit. As the U.S. joins its G-20 colleagues in aiming to boost G-20 GDP by an additional 2 percent by 2018, there remain many questions about how G-20 countries will follow through with the goals set in Brisbane.

On December 3, the Global Economy and Development program and the Economic Studies program at Brookings welcomed U.S. Treasury Undersecretary for International Affairs Nathan Sheets in his first public address since being confirmed in September. Following the recent G-20 meeting, Sheets discussed his perspectives on priorities for international economic policy in the years ahead across key areas including trade, the international financial architecture, and the United States’ evolving economic relationships.

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Editor's Note: The paper is part of a book entitled, “The G8-G20 Relationship in Global Governance.”

Future global growth faces many challenges. The first is securing economic recovery from the global financial crisis and reviving strong growth. The euro area has experienced a double-dip recession. Growth remains subdued in other advanced economies. Emerging economies (including the BRICS countries of Brazil, Russia, India, China, and South Africa, as well as other major emerging economies) had been the driver of global growth, accounting for almost two thirds of global growth since 2008, but in 2013 they too were experiencing slowing growth. The second challenge is sustaining growth. Many countries have large and rising public debt, and face unsustainable debt dynamics (International Monetary Fund [IMF] 2012). Environmental stresses put the longer-term sustainability of growth at risk. The third challenge is promoting balanced growth. Large external imbalances between countries — China's surplus and the U.S. deficit being the most notable — put global economic stability at risk and give rise to protectionist pressures. Unemployment has reached high levels in many countries, and there are concerns about a jobless recovery. And economic inequality within countries has been rising. More than two thirds of the world's people live in countries where income inequality has risen in the past few decades.

Thus, promoting strong, sustainable, and balanced growth is central objective of the Group of 20 (G20). A core component of the G20 is the Working Group on the Framework for Strong, Sustainable, and Balanced Growth. Yet G20 policy actions since the onset of the global financial crisis in 2008 have focused mainly on short-term crisis response. Economic stabilization is necessary and risks to stability in the global economy, especially those in the euro area, call for firm actions to restore confidence. However, short-term stabilization only buys time and will not produce robust growth unless accompanied by structural reforms and investments that boost productivity and open new sources of growth. To be sure, several G20 members have announced or are implementing structural reforms. But the approach to strengthening the foundations for growth, meeting the jobs challenge, and assuring the longer-term sustainability of growth remains partial and piecemeal. Some elements of an approach are present, but the unrealized potential for a coherent and coordinated strategy and effort is significant. The G20 needs to move beyond a predominately short-term crisis management role to focus more on the longer-term agenda for strong, sustainable, and balanced growth. 

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2015 is a pivotal year for global development; this fall is a pivotal moment. Meetings this fall will determine the global vision for sustainable development for 2030.

Three papers being released today—“Action implications focusing now on implementation of the post-2015 agenda,” “Systemic sustainability as the strategic imperative for the post-2015 agenda,” and “Political decisions and institutional innovations required for systemic transformations envisioned in the post-2015 sustainable development agenda”—set out some foundational ideas and specific proposals for political decisions and institutional innovations, which focus now on the implementation of the new global vision for 2030. This blog summarizes the key points in the three papers listed below.

Fundamentals for guiding actions, reforms and decisions

1) Managing systemic risks needs to be the foundational idea for implementing the post-2015 agenda.

The key political idea latent but not yet fully visible in the post-2015 agenda is that it is not a developing country poverty agenda for global development in the traditional North-South axis but a universal agenda based on the perception of urgent challenges that constitute systemic threats.

The term “sustainable development” by itself as the headline for the P-2015 agenda creates the danger of inheriting terminology from the past to guide the future.

2) Goal-setting and implementation must be effectively linked.

The international community learned from the previous two sets of goal-setting experiences that linking implementation to goal-setting is critical to goal achievement.  G-20 leader engagement in the post-2015 agenda and linking the success of the G-20 presidencies of Turkey (2015), China (2016), and Germany (2017) would provide global leadership for continuity of global awareness and commitment.

3) Focus on the Sustainable Development Goals must be clear.

Criticism of the 17 Sustainable Development Goals (SDGs) as being too defuse and too detailed is ill-founded and reveals a lack of political imagination. It is a simple task to group the 17 goals into a few clusters that clearly communicate their focus on poverty, access, sustainability, partnership, growth, and institutions and their linkages to the social, economic, and environmental systemic threats that are the real and present dangers.

The Bretton Woods era is over. It was over before China initiated the creation of the Asian Infrastructure Investment Bank (AIIB) and the BRICS New Development Bank (NDB). Never has it been clearer than now that maintaining a single global system of international institutions is essential for geopolitical reasons. For the implementation of the post-2015 agenda, all the major international institutions need to commit to them.

In a joint paper with Zhang Haibing from the Shanghai Institutes of International Studies (SIIS), we make five specific governance proposals for decision-makers: 

The implementation of the post-2015 agenda requires that nations internalize the SDGs by debating, adapting and adopting them in terms of their own domestic cultural, institutional, and political circumstances. It will be important for the U.N. declarations in September to urge all countries to undertake domestic decision-making processes toward this end.

2) Presidential coordination committees should be established.

To adequately address systemic risks and to implement the P-2015 agenda requires comprehensive, integrated, cross-sectoral, whole-of-government approaches.  South Korea’s experience with presidential committees composed of ministers with diverse portfolios, private sector and civil society leaders provides an example of how governments could break the “silos” and meet the holistic nature of systemic threats.

3) There needs to be a single global system of international institutions.

China’s Premier Li Keqiang stated at the World Economic Forum in early 2015 that “the world order established after World War II must be maintained, not overturned.” Together with a speech Li gave at the OECD on July 1st after signing an expanded work program agreement with the OECD and becoming a member of the OECD Development Center, clearly signals of China’s intention to cooperate within the current institutional system. The West needs to reciprocate with clear signals of respect for the increasing roles and influence of China and other emerging market economies in global affairs.

4) We must move toward a single global monitoring system for development targets.

The monitoring and evaluation system that accompanies the post-2015 SDGs will be crucial to guiding the implementation of them. The U.N., the OECD, the World Bank, and the IMF have all participated in joint data gathering efforts under the International Development Goals  (IDGs) in the 1990s and the Millennium Development Goals (MDGs) in the 2000s. Each of these institutions has a crucial role to play now, but they need to be brought together under one umbrella to orchestrate their contributions to a comprehensive global data system.

By engaging in the post-2015 agenda, the G-20 leaders’ summits would be strengthened by involving G-20 leaders in the people-centered post-2015 agenda. Systemically important countries would be seen as leading on systemically important issues. The G-20 finance ministers can play an appropriate role by serving as the coordinating mechanism for the global system of international institutions for the post-2015 agenda. A G-20 Global Sustainable Development Council, composed of the heads of the presidential committees for sustainable development from G20 countries, could become an effective focal point for assessing systemic sustainability.

These governance innovations could re-energize the G-20 and provide the international community with the leadership, the coordination, and the monitoring capabilities that it needs to implement the post-2015 agenda.

The flight of humans from Syria has been rapid, massive and dynamic. The number of refugees has grown from 26,000 in the first year of the war to almost 4.2 million now, four years later. It is time for bold action from the world to support Turkey and the other countries of the region hosting the vast majority of refugees.

None of Syria’s neighbors – the primary hosts of refugees – expected the displacement to reach such a scale, nor for the crisis to last this long. Many believed in the early days of the Arab Spring that the oppressive regime of Bashar al-Assad would be replaced by a reformist-minded, popularly-elected government - mirroring the transition that had just taken place in Tunisia and Egypt. Instead, Syria became mired in a civil war between an ever-growing number of opposition groups and the regime, whose repression of civilians, regardless of any involvement in the crisis, has forced millions to flee in terror on either side of the country’s borders.

Until recently, the overwhelming majority of the refugees were fleeing the indiscriminate attacks of the Syrian government. More recently, ISIS has been a significant source of terror, while even more recently Russia’s entry into the conflict has triggered another wave of flight.

Today, the refugee populations registered in Lebanon, Jordan and Turkey total more than 4 million souls. Managing the presence of such large numbers of refugees has been costly on host countries economically, socially and politically. What was expected to be a temporary refugee influx has become a protracted crisis. With no signs of a resolution of the conflict in the foreseeable future, the refugees’ hope to return is diminishing.

The massive influx of refugees into Europe, often via extremely costly and life-threatening channels, reflects the despair and harsh living conditions that many refugees feel. Syrians constitute the majority of the 800,000 migrants that have crossed into Europe this year. As the crisis spills beyond Syria’s immediate neighbors, the EU is experiencing major challenges in managing a response. It is clear that attending to refugees is not only a concern of the immediate neighborhood – but that of a much wider region.

In looking at the challenges to Europe, it is important to underscore that neighboring countries have shouldered most of the burden of caring for the refugees, with inadequate assistance from the international community. Resettlement has been extremely limited, and roughly only a third of the pledges to U.N. response plans have been met.

Now is the time to adopt a comprehensive approach that will offer a better future for refugees and their hosts. Attention must be paid to two areas in particular: Education and access to employment. In this regard, it will be critical to move beyond a strategy focused on humanitarian relief to one explicitly structured around sustainable development and empowerment of refugees.

We need a globally-funded Recovery Program for the Middle East that brings about immediate action to mitigate the impact of the crisis on the economies and services of Syria’s neighbors. As part of that, we need to recognize the skills and income that refugees could contribute to the Turkish economy, if they were only allowed to do so. This program could not be carried out by the Turks alone, but would need the engagement of a range of actors – from the U.N. to the World Bank to the private sector and other donors.

Turkey and its neighbors have generously cared for more than 4 million refugees: But as the displacement crisis enters its fifth year, this burden needs to be shared out much more fairly and effectively.

Sadly, despite the desperate need for peace in Syria, we need to respond to the reality that Syrian refugees will not be able to return home for a while yet. As simultaneously the host of the world’s largest Syrian refugee population as well as host to the G-20 Summit, Turkey is in an ideal position to bring this reality to the attention of G-20 member-states – and leverage more resources to assist it and its neighbors to cope with the crisis.

G-20 leaders must commit to sharing Turkey’s burden and place increased emphasis on empowering refugees to shape their own destinies and become productive members of their host societies.

And it must be remembered: The majority of Syrians want to go home. Eventually they want to be able to contribute to rebuilding a stable and democratic nation for themselves and their families. But peace cannot be served while al-Assad drops barrel bombs on his people and ISIS beheads journalists on the steps of Palmyra. Our leaders must focus on a sustainable political solution to this conflict as the end goal of any plan for the region.

This piece was originally published by Hurriyet Daily News.

Editor's Note: During an event to launch a new report assessing the clean economy, Bruce Katz delivered a presentation highlighting the clean sector’s contribution to boosting exports and increasing manufacturing jobs. Katz's presentation also is featured in an iBook for the iPad.

Thank you, [Brookings Managing Director] Bill [Antholis] for that introduction, and for your leadership in this institution and more broadly in the national debate on climate change.

Before proceeding, I want to first thank my colleagues, Mark Muro, Jonathan Rothwell, Devashree Saha, and our friends at Battelle, particularly Mitch Horowitz and Marty Grueber for their creativity, collegiality, and painstaking attention to detail through a long and rigorous research effort. 

I’d also like to offer a special thanks to the Nathan Cummings Foundation, the General Electric Foundation, Living Cities, and the Surdna Foundation for their support and guidance of the program’s Clean Economy work, as well as the Rockefeller Foundation, who is supporting our policy and practice work around the clean economy in states and metropolitan areas.  

Today, we celebrate not just the release of a report, “Sizing the Clean Economy” but the unveiling of an interactive web site to spur further research, policy and practice, all freely available at www.brookings.edu/cleaneconomy.

We want today’s forum to be a participatory event and urge all of you in the audience and following on our webcast to engage online early and often. Please comment on Twitter via the hashtag created for this event (#cleanecon) and feel free to engage directly with me at @Bruce_Katz and Mark at @MarkMuro1 and send us any questions at MetroQ@brookings.edu.

The question before us: at a time of economic uncertainty and federal polarization, can America’s cities and metropolitan areas lead the nation to a clean economy—to create jobs in the near term and retool and restructure our economy for the long haul?

There is no doubt in our minds that moving to a clean economy is an environmental and energy imperative.  But consumers, companies, and cities are also sending an unequivocal signal: this is a market proposition and an economic transformation as profound as the information revolution.

Consumers around the globe are starting to demand lower carbon, energy efficient products and services: one in four drivers in the U.S., Europe, China, and Japan plans to buy electric vehicles when they are readily available. That would put about 50 million electric cars on the road in places from Baltimore to Beijing, Torino to Tokyo.

Companies see the clean economy as a growth sector: three quarters of major global corporations plan to increase “cleantech” budgets from 2012 to 2014. Global private investment in clean energy alone is up more than 6 fold since 2004, reaching $154 billion in 2010.

Cities and their metropolitan areas, early adapters of sustainable practice, are now competing to build out their special niches in the clean economy. I will provide details later on Greater Seattle’s bold strategy to be the global hub of clean IT. 

For two years, the Brookings Metro Program has hammered home the notion that the United States must pursue a different growth model post recession, a “next economy” that is driven by exports, powered by low carbon, fueled by innovation and rich with opportunity—and delivered by the large metropolitan areas that drive our economy.

Today, we will literally flip the dial and place the clean economy in the center of our macro vision and unveil the scale, scope and spatial geography of this promising growth engine. 

We have three sharp and timely findings.

First, the clean economy is a significant, diverse emerging market in the United States, already populated by some 2.7 million jobs. It is disproportionately manufacturing and export intensive—and offers better prospects for low and middle skilled workers than the national economy as a whole. This is exactly the kind of economy we want to build post-recession.

Second, metropolitan areas are on the vanguard of the clean economy due to their concentration of innovative drivers, as well as the built environment in which most people live, work and play. As in exports, metros specialize in different sectors of the clean economy—and the clustering of firms is catalyzing productive and sustainable growth.

Third, the U.S. must unleash the entrepreneurial energies and dynamism of our metropolitan engines to accelerate growth of the clean economy. That will require a strategic mix of private sector innovation and public policy that is stable, supportive, and predictable.  Given the nature and scale of global competition, U.S. governments, at all levels, must “get in the game” rather than “get out of the way.”  Smart public action can leverage private investment, create desperately needed jobs, and cement our position as the leading edge of innovative growth.

The stakes are very high. Make no mistake—we have a lot to do here and we are falling behind globally. Our competitors in mature and rising economies—Germany, Japan, and China—fully understand the potential of clean, and they are working at warp speed to set favorable conditions for rapid growth and grab their share of the next market revolution. We need to get our public-private act together—in cities and metros, in state capitals, at the now polarized federal level.

So let’s start with our first finding: the clean economy is a significant, diverse emerging market in the United States  

In total, we find there are 2.7 million clean economy jobs all across the United States. To put that number in perspective: the clean economy is nearly twice the size of the biosciences field and 60 percent of the 4.8 million strong IT sector. As you can tell, the clean economy also has more jobs than fossil fuel related industries.  

 Our definition of the clean economy is as follows:

“Any economic activity—measured in terms of establishments and jobs—that produces goods and services with an environmental benefit, or adds value to such products using skills or technologies that are uniquely applied to those products.”

This definition yields a broad and varied picture of economic activity: old and new, public and private, “green” and “blue.”

At the highest level, we find establishments and jobs grouping together in 5 discernible categories: Renewable Energy; Energy and Resource Efficiency; Greenhouse Gas Reduction; Environmental Management, and Recycling; Agricultural and Natural Resources Conservation; and Education and Compliance. Here we follow the categorization the Bureau of Labor Statistics is using for its own “green jobs” assessment due next year.

These categories then naturally break down into fine-grained segments, ultimately 39 in all.

Renewable Energy, for example, has nine segments, including Solar and Geothermal power, and Renewable Energy Services.

Energy and Resource Efficiency has 13 separate segments, from Electric Vehicle Technology to Water Efficient Products.

Greenhouse Gas Reduction, Environmental Management, and Recycling has 12 segments including Green Chemical Products and Professional Environmental Services.

And so on—you get the idea.

Each of the segments, in turn, has a distinct economic profile (cutting across multiple activities, occupations and skills) and a distinct spatial geography given the special assets and attributes of different places.

Let’s drill down a little so we all get on the same page.

Under renewable energy, let’s look at solar photovoltaic, a young rapidly innovating area. This segment employs more than 24,000 people in 555 establishments.

The list includes two major solar manufacturing firms, First Solar—with a major plant in Toledo—and BP Solar—with a facility in the Washington, DC metro, and Bombard Electric in Las Vegas, which helps businesses in that region—casinos, hotels, shopping centers—shift their energy use.

Under Greenhouse Gas Reduction, let’s take a look at Professional Environmental Services, an example of the role that expert services can play in domestic and global markets. This segment boasts some 140,000 workers in 5,400 establishments.

CH2M Hill in Denver provides environmental consulting services throughout the U.S. and the world, Ecology & Environment is a science and technical services firm with a large presence in Los Angeles, and Black & Veatch, out of Kansas City, is an engineering firm specializing in areas from environmental permitting to remediation.

One more definitional cut to consider: we have identified a group of young, super innovative “Cleantech” industries that cross multiple categories and show enormous growth potential. These industries are populated by companies with a median age of 15 years or less.

Most notably, this portfolio of segments—including wind power, battery technologies, bio fuels, and smart grid—grew about 8 percent a year since 2003, or twice as fast as the rest of the economy.

The clean economy, however, is not just broad and diverse, it is disproportionately productive.

The clean economy is export intensive, already taking advantage of the demand for clean goods and services coming from abroad.

In 2009, clean economy establishments exported almost $54 billion, including about $49.5 billion in goods and an additional $4.5 billion in services.

Significantly, clean economy establishments are by our calculations twice as export intensive as the national economy: over $20,000 worth of exports is sold for every job in the clean economy each year compared to just $10,400 worth of exports for the average U.S. job.

The export orientation of the clean economy today provides a platform for more exports tomorrow. With rising nations rapidly urbanizing, the demand for sustainable growth in all its dimensions will only grow, and the U.S. has the potential to serve that demand.

The clean economy also supports a production-driven innovation economy.

We find it employs a higher percentage of scientists than the national economy. Ten percent of clean economy jobs are in science and engineering, compared to 5 percent in U.S. economy generally.

As we now know, manufacturing and innovation are inextricably linked. This provides a stark challenge to the U.S.: we will innovate less unless we produce more.

By our account, the clean economy is a vehicle for production.

Twenty six percent of all clean economy jobs are involved in manufacturing, compared to just 9 percent of jobs in the economy as a whole.

Manufacturing accounts for a majority of the jobs in over half of the clean economy segments, with many sectors having a supermajority of production-oriented jobs.

Solar and wind energy, for example, have more than two thirds of their jobs in manufacturing. And some segments, including appliances, water efficient products, and electric vehicle technologies have over 90 percent of their jobs in manufacturing.

The good news: clean manufacturing is growing, even in the face of national declines in manufacturing employment. 

Finally, the clean economy is opportunity rich, providing prospects for a wide range of workers, and good wages up and down the skills ladder.

The clean economy is easy to enter, available to people of all skill levels: 45 percent of all clean jobs are held by workers with a high school diploma or less, compared to only 37 percent of U.S. jobs.

Once a worker enters the field, he or she is more likely to receive career-building training, as 41 percent of clean jobs offer medium to long-term training, compared to 23 percent of U.S. jobs.

The payoff is higher wages: the median wage in the clean economy is almost $44,000 for the average occupation, significantly higher than the national equivalent of $38,000 and change.

In summary, the clean economy is the kind of economy we want to build: export oriented, innovation fueled, opportunity rich, and balanced.

So here is our second major finding, metros are on the vanguard of the clean economy

Here is the heart of the American economy: 100 metropolitan areas that after decades of growth take up only 12 percent of our land mass, but harbor two-thirds of our population and generate 75 percent of our gross domestic product. 

These communities form a new economic geography, enveloping cities and suburbs, exurbs and rural towns.

Our research shows the extent to which these top 100 metros, in the aggregate, are driving growth in the Clean Economy.

In 2010, they constitute an increasing share of clean economy jobs, almost 64 percent.

And they include an outsized share, 74 percent, of jobs in cleantech industries, including extraordinarily high shares in solar photovoltaic, battery technologies, smart grid, and wind energy.

Innovative clean jobs are predominately in the top 100 metros because these places concentrate the assets that drive innovation, from initial research through commercialization through ultimate deployment

The major metros are also leading the growth of clean economy jobs around the built environment. They harbor 78 percent of jobs in public mass transit, and 90 percent of the jobs in green architecture, design and construction since moving people more efficiently and making buildings energy efficient will primarily be a metropolitan act, given where most people live and travel, and businesses locate.

Incredibly, metros also include a decent share of clean jobs that are traditionally rural, with at least 23 percent of jobs in resource-intensive activities like hydropower, sustainable forestry products, and biofuels, and more than half of organic food and farming jobs.

Metro economies, of course, do not exist in the aggregate; they have distinctive starting points and distinctive assets, attributes and advantages. 

Our research digs deep to profile the clean economy potential of each of the top 100 metro areas.

Four metro areas—New York, L.A., Chicago and Washington—are supersized job centers, with more than 70,000 jobs apiece in the clean economy in 2010. The New York metro alone has more than 152,000 clean economy jobs.

Other major metros—Philadelphia, San Francisco, Atlanta, Boston, Houston and Dallas—are also key players, with more than 38,000 jobs apiece as of that year.

Yet this is not just about the largest metros. As we see here, a different group of small and medium sized metros have more than 3.3 percent of their jobs situated in the clean economy. Albany leads the way, with an impressive 6.3 percent of its jobs in the clean economy.

The power of metros is the power of agglomeration, networks and clusters. 

Our report finds that clusters—the proximity of firms to businesses in related industries—boost metros’ growth performance in the clean economy, and metros facilitate clustering.

Examples include professional environmental services in Houston, solar photovoltaic in Los Angeles, fuel cells in Boston, wind in Chicago, water industries in Milwaukee, and energy efficiency in Philadelphia.

We can talk about clusters in the abstract, but its best to see them in practice from the ground up.

So let’s travel to the Philadelphia metropolis—the nation’s fifth largest—which includes the city of Philadelphia and surrounding counties.

Philadelphia is the fifth largest clean economy job center in the country.

Here we can find the advanced research engines of the University of Pennsylvania and Drexel in University City, who have partnered together on clean energy research and have provided a steady stream of talented workers to public, private and nonprofit firms and intermediaries.

These universities are part of the Greater Philadelphia Innovation Cluster, based at the Navy Yard, on the Delaware River.  This consortium received $129 million in federal funding from multiple agencies to demonstrate the efficacy of new building energy efficient components, systems and models.

The consortium includes strong support of City Hall, led by Mayor Michael Nutter, who has pioneered smart skills training in the energy efficient sector as well as the Philadelphia Industrial Development Corporation, which has been an investor in the Navy Yard.

And then, of course, there are firms and companies, the fuel of the economy, located throughout the Philadelphia metropolis.

Downtown we find Veridity Energy, a small smart grid firm with powerful technology tools. The density of Center City supports a healthy mix of highly skilled service firms. Just around the corner is Realwinwin, which provides finance services to companies making capital investments in energy efficiency.

But metropolitan economies cross city and county borders because different kinds of firms require different urban and suburban footprints—so if we look out to the suburb of Radnor, just past Bryn Mawr and I-476, we find Iberdrola, the second largest wind operator in the United States and a subsidiary of a major Spanish renewable energy company and an example of the wave of foreign direct investment that can help the U.S. build out the clean economy.   

The Philadelphia story reveals why cities and metro areas power our economy: they are hyper linked networks of private firms and public and nonprofit institutions that fertilize ideas, share workers, extend innovation, enhance competitiveness and catalyze growth.

Which leads to our final proposition: to build the next economy the U.S. must unleash the entrepreneurial energies and dynamism of our metropolitan engines.

We compete in a fiercely competitive world.

While America continues to debate the legitimacy of global warming research, our competitors in established nations like Germany, Japan and the U.K. and rising nations like China are taking transformative steps to grow their clean economies in the precise places—Munich, Tokyo, London, Shanghai—that drive their national economies. 

The United States can compete with these and other nations. No other nation can match us in domestic demand, advanced research, venture capital, the power of metro concentration.

But our potential will not be realized unless we provide a strong policy platform for the build out of the clean economy. 

Four steps are essential:  

Step one: scale-up markets by catalyzing demand for clean economy goods and services.  

Step two: drive innovation by investing in advanced R&D at scale, over a sustained period and via new distributed networks.

Step three: catalyze finance to produce and deploy more of what we invent. 

And step four: align with cities and metros to realize the synergies of clustering and place.  

Our competitors know that economy shaping of this magnitude should start at the national scale.

And so, in a perfect world, we would have our federal government create a framework for growth and success.

We have seen some of that leadership in the past few years, through: the procurement driven, market scaling efforts of the Department of Defense, the creation of new innovation vehicles like ARPA-E, some of the financial investments of the Department of Energy’s Loan Guarantee Program, and the metro-supporting investments in new energy regional innovation clusters—like the Greater Philadelphia example—supported by agencies with diverse sets of missions and resources, including DOE, Commerce, Labor, Education, and SBA. 

But with our global competitors continuously upping their goals and expanding their commitments, we desperately need our federal government to go further and act with vision and ambition and consistency.

To scale-up markets, Congress should enact a national clean energy standard (CES) that signals a long term, consistent commitment to alternative energy sources.

To drive innovation, Congress should embrace the call by the American Energy Innovation Council, led by corporate titans like Bill Gates and Jeff Immelt, to invest $16 billion annually in clean energy research and development through ARPA-E and networks of institutions that are multi-disciplinary and engage seamlessly with the private sector.

To catalyze finance, Congress should authorize a technology deployment finance entity—a Green Bank for short—to provide finance of the right scale and risk tolerance to ensure that ideas generated in America lead to products made in America.

Congress should also rationalize, reform, and selectively extend the myriad tax provisions and incentives that currently support the clean economy but which are now chaotic, unstable, inconsistent, and obtuse about evoking innovation and steady price declines from maturing clean technologies.

And to align with regions, Congress should more than double the number of energy innovation hubs and clusters that are seeded and funded.

Frankly, it is not difficult to lay out what reforms and investments are needed to grow the clean economy. Our competitors have given us clear guidance on that score. The only issue is whether our federal government, riven by excessive partisanship and ideological polarization, can muster the will to get anything done.  

Fortunately in the U.S. we have a default proposition when our national government falters, our states act as our “laboratories of democracy” and, as California Lt. Governor Gavin Newsom recently observed, our cities and metros act as the laboratories of innovation.

And so that’s how, for the time being, we will need to build our clean economy in the United States, the hard way, from the ground up.

The good news: there is no shortage of policy innovation and political commitment at the state and metro scale.

To scale up markets, California has set an aggressive renewable portfolio standard of 33 percent renewable energy by 2020. With this strong foundation, San Jose and other cities and counties are doing their part to facilitate consumer adoption: streamlining or even eliminating building permitting for solar panels.

To drive innovation, Wisconsin has created the School of Freshwater Sciences at the University of Wisconsin-Milwaukee to leverage that metro’s rising position in the blue economy. The Milwaukee Water Council is building on this, spearheading a network of scientists and companies to realize Milwaukee’s ambition to be a global hub for freshwater research, firm creation, and business expansion. 

To catalyze finance, Connecticut recently created the Connecticut Clean Energy Finance and Investment Authority. Capitalized with some $50 million annually, this Green Bank could accelerate the generation, transmission, and adoption of alternative energy.

At the municipal level, New York City has capitalized an Energy Efficiency Corporation to spur the financing of energy efficiency in the building sector.

And, finally, smart metros are now moving to build out their distinctive industry clusters.  In Greater Seattle, for example, the Puget Sound Regional Council has developed a business plan to cement that metro’s natural position as a global hub of energy efficient building technologies. This smart public-private initiative includes the establishment of a facility to test, integrate and verify promising energy efficient products and services before launching them to market.

Significantly, this metro vision is being supported by the State of Washington, which has committed to match any federal investment in the testing network.

Let me conclude with this vision: Let’s imagine a world in 20 years where the clean economy permeates every aspect of our economic and social fabric and, in the process, enhances productivity and competitiveness, lowers energy use, spurs further innovation, and provides quality work for a broad cross section of our citizenry. 

We believe today’s research—and the power of millions of consumers, tens of thousands of companies and hundreds of cities and metros—gives us the hope that this vision can become reality.

We have the data to set a platform for sustainable growth.

We have the roadmap to set the foundation for smart investment.

We have the entrepreneurs in all sectors to innovate and replicate. 

Let’s build the clean economy—worker by worker, firm by firm, metro by metro.

Thank you.

Choosing a health plan on one of the new public or private exchanges is no easy task. That’s especially true for those with medical conditions who want to be very sure the plan they enroll in will provide the services they need.

This challenge is not unique to buying health plans, however. It’s always hard for consumers to buy complex and technical services or products when they have little or no expertise in the field. Health insurance can be especially daunting, with so many factors to consider, and even the terminology can be confusing.

Standardizing choices and terms can be helpful to a point. Grouping health plans according to premiums and out-of-pocket costs – bronze, silver, gold and platinum plans – has worked well in the public exchanges. But standardization will always be in tension with innovation, and the reality is that most exchanges will carry a larger inventory of plans than what the typical consumer wants to scroll through. So the question of “choice architecture” – how the plans are filtered or screened – will come to the fore. 

Consumers will have many questions.  What is the price? How do I assess the trade-off between lower premiums and higher cost sharing? Is my doctor in the plan’s network? Are the drugs I take in the formulary (whatever that is)? Things can get real complicated real fast, and it can feel like there are too many, not too few, choices. No wonder some call that “choice anxiety”.

But that view overlooks how technology is likely to reduce choice anxiety in health care, just as it has for other complicated searches.  It used to take a librarian to find an obscure article or a travel agent to plan a vacation. Today a few keystrokes on Google locates the article, and Travelocity makes vacation planning a cakewalk, with everything from on-time flight arrival data to pictures of hotel rooms and customer reviews arranged by star ratings.

Expect technology to have the same dramatic impact on buying health coverage in the near future. There are several reasons for this:

The presentation of consumer information will get better. When large new markets for products and services are created and the demand for buyers’ information rises sharply, the incentive for entrepreneurs – both for-profit and nonprofit – to provide customer-friendly information also rises. We’ve already seen this in parts of the health care market where there has been plenty of choice. Millions of federal employees have for many years been able choose among a wide range of plans with differing benefits.  Many have turned to the highly regarded Consumers’ Checkbook to help them understand and readily compare plans in the federal program.

Checkbook has launched a similar comparison tool for the  Illinois exchange and recently won the Robert Wood Johnson Foundation’s (RWJF) first "Plan Choice Challenge," a nationwide competition to design a technology application that helps people choose their best health plan options.

Navigation technology will make searches simple and quick.  Most consumers don’t want to spend a lot of time comparing plans; they want to find the best buy for their situation as quickly as possible.  That’s why brokers have traditionally encouraged employers to offer their employees a carefully limited set of shopping choices, but we expect plan navigation technology to constantly improve the shopping experience in ways that will help customers search a larger inventory and still make choices more easily.   Stride Health, a San Francisco startup and finalist in the RWJF Challenge, has developed a recommendation technology that searches massive data sets on networks and formularies in seconds to help consumers find a “match” that fits their budget and health care needs.  (Full disclosure – author Joel Ario is an investor).  

Stride is one of more than 40 “web brokers” that has met federal consumer protection and privacy standards enabling it to work with the federal exchange to enroll subsidy-eligible individuals in coverage.  Expect increasing collaboration between public exchanges and private vendors, with a surge of apps and gadgets to make navigation easier and easier in health exchanges.

Technology will allow choices to be tailored to medical history.  Advances in technology won’t just make it technically easier to pick and choose by price and reputation. These advances will also empower Americans to base their choices on their likely medical needs. Today, tailoring your coverage to your medical condition usually means trying to get a doctor– or several doctors– to help you figure out what you should look for in a plan. Even with that help, for the average person it’s still a hit-or-miss proposition. But new forms of choice technology are beginning to utilize questions about medical history to guide buyers towards the plans that are most suited to their condition.  

Checkbook and Stride already allow consumers to enter more detailed health histories and get more sophisticated assistance, and this will only improve as exchanges publish more data in machine readable formats.   Expect more and increasingly sophisticated customized navigators, especially as patients get more access to their electronic medical records.  Also expect sellers to respond with products than bundle services to meet the new demand.

Does this mean that an iPhone app will be all that’s needed to ensure that every consumer can find his or her perfect plan? Not quite.  Health insurance marketplaces will continue to present thorny regulatory challenges.  Insurance regulators will need to guard against unfair practices, such as insurers’ designing benefit plans to drive away applicants with certain health conditions; privacy concerns will be raised whenever apps ask for medical history; and new forms of provider integration will test antitrust doctrine.

But one thing is clear. Improving technology will soon make picking the right health plan a far more precise and simple process – easy enough for many of our children to do on their smart phones or whatever gadget comes next.

Last month, we experienced yet another breakthrough in the epic battle of man against machine. Google’s AlphaGo won against the reigning Go champion Lee Sedol. This success, however, was different than that of IBM’s Deep Blue against Gary Kasparov in 1987. While Deep Blue still applied “brute force” to calculate all possible options ahead, AlphaGo was learning as the game progressed. And through this computing breakthrough that we can learn how to better leverage the data revolution.

In the game of Go, brute-force strategies don’t help because the total number of possible combinations exceeds the number of atoms in the universe. Some games, including some we played since childhood, were immune to computing “firepower” for a long time. For example, Connect Four wasn’t solved until 1995 with the conclusion being the first player can force a win. And checkers wasn’t until 2007, when Jonathan Schaeffer determined that in a perfect game, both sides could force a draw. For chess, a safe strategy has yet to be developed, meaning that we don’t know yet if white could force a win or, like in checkers, black could manage to hold on to a draw.

But most real-life situations are more complicated than chess, precisely because the universe of options is unlimited and solving them requires learning. If computers are to help, beyond their use as glorified calculators, they need to be able to learn. This is the starting point of the artificial intelligence movement.  In a world where perfection is impossible, you need well-informed intuition in order to advance. The first breakthrough in this space occurred when IBM’s Watson beat America’s Jeopardy! champions in 2011. These new intelligent machines operate in probabilities, not in certainty.

That being said, perfection remains important, especially when it comes to matters of life and death such as flying airplanes, constructing houses, or conducting heart surgery, as these areas require as much attention to detail as possible. At the same time, in many realms of life and policymaking we fall into a perfection trap. We often generate obsolete knowledge by attempting to explain things perfectly, when effective problem solving would have been better served by real-time estimates. We strive for exactitude when rough results, more often than not, are good enough.

By contrast, some of today’s breakthroughs are based on approximation. Think of Google Translate and Google’s search engine itself. The results are typically quite bad, but compared to the alternative of not having them at all, or spending hours leafing through an encyclopedia, they are wonderful. Moreover, once these imperfect breakthroughs are available, one can improve them iteratively. Only once the first IBM and Apple PCs were put on the market in the 1980s did the cycle of upgrading start, which still continues today.

In the realm of social and economic data, we have yet to reach this stage of “managed imperfection” and continuous upgrading. We are producing social and economic forecasts with solid 20th century methods. With extreme care we conduct poverty assessments and maps, usually taking at least a year to produce as they involve hundreds of enumerators, lengthy interviews and laborious data entry. Through these methods we are able to perfectly explain past events, but we fail to estimate current trends—even imperfectly.

The paradox of today’s big data era is that most of that data is poor and messy, even though the possibilities for improving it are unlimited. Almost every report from development institutions starts with a disclaimer highlighting “severe data limitations.” This is because only 0.5 percent of all the available data is actually being curated to be made usable. If data is the oil of the 21st century, we need data refineries to convert the raw product into something that can be consumed by the average person.

Thanks to the prevalence of mobile device and rapid advances in satellite technology, it is possible to produce more data faster, better, and cheaper. High-frequency data also makes it possible to make big data personal, which also increases the likelihood that people act on it. Ultimately, the breakthroughs in big data for development will be driven by managerial cultures, as has been the case with other successful ventures. Risk averse cultures pay great attention to perfection. They nurture the fear of mistakes and losing. Modern management accepts failure, encourages trial and error, and reaches progress through interaction and continuous upgrading.

La monnaie électronique a émergé dans les pays de l'Union Economique et Monétaire Ouest Africaine, à la faveur de l'adoption, en 2006, d'une Instruction de la Banque Centrale, instaurant un cadre réglementaire souple et incitatif pour l’exercice de cette activité. L'implication des opérateurs de télécommunications dans l'offre de services financiers basés sur la téléphonie mobile a donné,  dès 2009, une nouvelle dimension à cette activité par l'accroissement du nombre des utilisateurs et des volumes de transactions.

Une activité en expansion

A fin septembre 2015, 22 millions de personnes, soit près d'un quart de la population de l'Union, ont souscrit à des services financiers via la téléphonie mobile. Environ 30% de ces abonnés réalisent au moins une opération sur une période de 90 jours.

Près de 500 millions de transactions ont été aussi réalisées au cours des neuf premiers mois de l'année 2015. La valeur cumulée des transactions atteint 5000 milliards de FCFA (8,5 milliards USD) à fin septembre 2015. De septembre 2013 à septembre 2014, cette valeur est passée de 1000 milliards à 2068 milliards de F CFA, soit une hausse de 107%.

Le réseau de distribution des services financiers via la téléphonie mobile suit également cette tendance haussière, en passant de 93 621 points de services en 2014 à plus de 132 658 points de services à fin septembre 2015.

Source: BCEAO

Le contexte socioéconomique de l'Union explique pour une large part, le succès des services de paiement via la téléphonie mobile. En effet, ce mode de prestation des services de transfert ou de paiement se révèle particulièrement adapté pour les personnes n'ayant pas accès au système bancaire classique, tout en offrant l'opportunité à des institutions non bancaires, en contrepartie de dépôt d'espèces, de mettre à la disposition des usagers une monnaie autre que fiduciaire, dont l'encours leur permet d'effectuer des transactions financières diverses.

L'implication croissante des opérateurs de télécommunications

Les partenariats entre les banques et les opérateurs de télécommunications occupent une place dominante sur le marché. En fin 2015, sur les 33 émetteurs de monnaie électronique sous licence, 25 appartenaient aux dits partenariats.

Au titre du modèle non bancaire, sept acteurs non bancaires ont été agréés pour émettre la monnaie électronique en qualité d'Etablissement de Monnaie Electronique (EME).[1]

Source: BCEAO

Un cadre réglementaire rénové

A la faveur de l'expansion des services financiers via la téléphonie mobile et de l'implication croissante des opérateurs de télécommunication, la Banque Centrale a rénové son cadre réglementaire afin de renforcer la sécurité et la qualité des services de paiement adossés à la monnaie électronique. Les principaux axes d'amélioration portent sur:

• une responsabilisation accrue des émetteurs en clarifiant leurs rôles dans les partenariats avec des prestataires techniques. Ainsi, les activités de prestataire technique sont limitées, sous la responsabilité de l'émetteur, au traitement technique de la monnaie électronique ou à sa distribution. De même, les émetteurs demeurent responsables, de l’intégrité, de la fiabilité, de la sécurité, de la confidentialité et de la traçabilité des transactions réalisées par chacun de leurs distributeurs;


• une stimulation de la concurrence par la transparence de la tarification avec l'obligation faite aux émetteurs de publier leurs tarifs;


• la formulation d'exigences spécifiques en matière de gouvernance et de contrôles interne et externe pour les établissements de monnaie électronique, en exigeant l'honorabilité des dirigeants, le respect du secret professionnel et des audits réguliers des infrastructures;


• une protection accrue des détenteurs de monnaie électronique avec d'une part, le cantonnement des fonds dans  des comptes dédiés, et l'exigence d'une équivalence continue entre l'encours de monnaie électronique et les soldes des comptes de cantonnement et d'autre part, l'obligation de la mise en place d'un mécanisme de recueil et de traitement des réclamations des porteurs de monnaie électronique;


• le renforcement du dispositif de supervision, par la réduction des délais de reporting des activités des émetteurs à la Banque Centrale, et l'adoption de sanctions pour les infractions aux dispositions réglementaires.

L'offre de services financiers via la téléphonie mobile

L'offre de services financiers via la téléphonie mobile comprend trois catégories de services. Il s'agit des services qui impliquent l'usage des espèces (monnaie fiduciaire), de ceux qui sont effectués en monnaie électronique et des services dits de « deuxième génération ».

Le premier type de services concerne essentiellement les dépôts d'espèces ou rechargements de porte-monnaies électroniques, ainsi que les retraits. Ils représentent 24% des transactions effectuées par les utilisateurs. Les dépôts d'espèces sont prédominants et permettent aux clients d'approvisionner leurs comptes de monnaie électronique.

La monnaie électronique rechargée est utilisée à hauteur de 76%, prioritairement pour les achats de crédit téléphonique, les paiements de factures, l'exécution de transferts de personne à personne, de personne à entreprise et aux Administrations publiques. Les principaux services de paiement dans l'UEMOA sont liés au règlement des factures relatives à la consommation d'eau, d'électricité, l'abonnement à des chaînes de télévision satellitaires, l'achat de marchandises dans les grandes surfaces ou de carburant dans les stations-service.

Des paiements d'impôts et taxes auprès des Administrations publiques et le remboursement des échéances de microcrédit sont également effectués, mais de façon très marginale.

Dans l'UEMOA les services dits de « deuxième génération », à savoir la micro-assurance, la micro-épargne et le micro-crédit, font leur apparition. Leur développement pourrait constituer une opportunité de bancarisation des utilisateurs de ces services.

Enfin, un début d'interopérabilité est mis en œuvre sur la base de conventions bilatérales entre les acteurs, notamment en vue d’offrir des services de paiement transfrontaliers entre les Etats membres de l'Union.

Les défis à relever

L'examen de l’évolution des services financiers via la téléphonie mobile dans l'UEMOA fait ressortir quelques obstacles à un développement plus rapide de ces services financiers au sein de l'UEMOA. Il s'agit de:

• la faiblesse du taux d'utilisateurs actifs, en raison du coût élevé des services;
• la méconnaissance des services, du fait d'une éducation financière insuffisante;
• la faible digitalisation des circuits de paiement des Administrations publiques;
• l'insuffisance des partenariats entre les émetteurs bancaires et non-bancaires pour le développement d'une offre de services plus inclusifs, dits de « seconde génération »

En collaboration avec toutes les parties prenantes, la Banque Centrale a développé une stratégie d’inclusion financière visant à améliorer l’accès et l’utilisation de divers services financiers personnalisés et aux prix abordables. La mise en place de ces actions, comme décrite dans la stratégie d’inclusion financière conçue par la BCEAO, devrait résoudre les défis mentionnés ci-dessus.

Lire en anglais »

[1] EME: toute personne morale, autre que les banques, les établissements financiers de paiement, les systèmes financiers décentralisés, habilitée à émettre des moyens de paiement sous forme de monnaie électronique et dont les activités se limitent à l'émission et la distribution de monnaie électronique.

Electronic money, or e-money, emerged in the countries of the West African Economic and Monetary Union (WAEMU) following the adoption, in 2006, of a Central Bank Instruction establishing a flexible regulatory framework aimed at encouraging e-money business. The activity expanded in 2009 with the involvement of telecommunications operators in the provision of mobile telephone-based financial services, which increased the number of users and the volume of transactions.

A growing business

At the end of September 2015, 22 million people, or nearly a quarter of the people in the union, subscribed to financial services via mobile phone. Approximately 30 percent of those subscribers carried out at least one transaction per 90-day period.

Some 500 million transactions took place over the first nine months of 2015. The cumulative value of the transactions was 5 trillion CFA francs ($8.5 billion) by the end of September 2015, a growth of 142 percent from September 2014. Between September 2013 and September 2014, this value grew from CFA 1 trillion to CFA 2.068 trillion, an increase of 107 percent.

The mobile phone financial services distribution network followed a similar upward trend, rising from 93,621 points of services in 2014 to more than 132,658 at the end of September 2015.

Figure 1. Trends in the value of transactions

The socioeconomic environment in the union goes a long way to explaining the success of mobile telephone payment services. Indeed, this method of providing money transfer or payment services is particularly well suited to people who lack access to the mainstream banking system, and also affords non-bank institutions the opportunity to offer users non-cash money against cash deposits, which can then be used for a variety of financial transactions.

The growing involvement of telecommunications operators

The market is increasingly dominated by partnerships between banks and telecommunications operators, which represented 25 of the 33 licensed or authorized e-money issuers at the end of December 2015. In the framework of this model, known as the bank model, the bank has responsibility for issuing the e-money.

The other seven non-bank institutions, under the non-bank model, are authorized to issue electronic money as “Electronic Money Institutions” (EMIs) [1].

In WAEMU, e-money issuers are supported by a regulatory framework that was revised in 2015 to ensure increased security and quality of payment services backed by electronic money.

Figure 2. E-money issuers in WAEMU

Note: DFS denotes microfinance institutions.

A revised regulatory framework

With the expansion of mobile phone financial services and the growing involvement of telecommunications operators, the Central Bank has revised its regulatory framework with the aim of enhancing the security and quality of payment services backed by electronic money. The most salient improvements must focus on:

• Increasing issuer accountability by clarifying users’ roles in partnerships with technical service providers. With this goal in mind, the activities of technical service providers have been restricted to technical processing or the distribution of e-money under the responsibility of the issuer. In addition, issuers are responsible for the integrity, reliability, security, confidentiality, and traceability of all transactions carried out by all of their distributors; Stimulating competition through transparent pricing with an obligation for issuers to publish their rates;


• Specific requirements in terms of governance and internal and external audits for electronic money institutions, standards of integrity on the part of the management, professional secrecy and regular infrastructure audits;


• Increased protection for bearers of electronic money, including keeping funds in dedicated accounts, requiring a constant equivalence between the amount of e-money and the balances in the dedicated accounts, and mandatory creation of a mechanism to take in and deal with complaints by bearers of electronic money;


• Reinforcement of the supervisory mechanism by reducing deadlines for reporting on issuers’ activities to the Central Bank and adopting sanctions for violations of regulatory provisions.

Provision of mobile-phone-based financial services

Mobile-phone-based financial services provided in WAEMU include three categories of services, namely services involving the use of cash (banknotes and coins), e-money services, and so-called “second generation” services.

The first type of service essentially involves deposits of cash or refilling of electronic wallets, as well as withdrawals. This type of service represents 24 percent of user transactions. Cash deposits predominate; they allow customers to provision their electronic money accounts.

Seventy-six percent of the funds deposited into e-money accounts are used, above all, for purchases of telephone credit, payment of bills, person-to-person money transfers, and money transfers from individuals to businesses and from individuals to government agencies. The main payment services found in WAEMU pertain to payment of water or electricity bills, payment of satellite television subscriptions, and purchases of goods in supermarkets or fuel at service stations.

Payments of taxes or income taxes to government agencies and payments of micro-loan installments are also made through mobile phone financial services, but are much less common.

So-called “second generation” services, namely micro-insurance, micro-savings, and micro-credit, are currently emerging in WAEMU. Their development could be an opportunity to provide access to the banking system for the users of the services.

Finally, interoperability is just beginning to be implemented based on bilateral agreements between stakeholders, particularly with a view to offering cross-border payment services between member states of the union.

Challenges

A review of the development of mobile phone financial services in WAEMU reveals some obstacles to the rapid development of this type of financial service within WAEMU. They include:

• a low number of active users, due to the high cost of the services;
• the fact that the services are not well known due to inadequate financial education;
• the low rate of digitization of government agencies’ payment systems; and
• insufficient partnerships between bank and non-bank issuers with a view to developing a more inclusive range of “second-generation” services.

In collaboration with all stakeholders, the Central Bank has developed a financial inclusion strategy to continuously improve, access to and use of diverse, tailored and affordable financial services. The implementation of these actions as described in the Central Bank of West African States (BCEAO) financial inclusion strategy should support the challenges mentioned above.

Read in French »

[1] EMI: any legal entity, other than a bank, financial payment institution, or decentralized financial system, that is authorized to issue payment instruments in the form of electronic money and whose business activities are restricted to electronic money issuing and distribution.

Introduction

Guaranteeing the right to vote and to participate in public and political affairs for all citizens is an important responsibility. Given the precarious position that IDPs can find themselves in and considering the extent to which they may need to rely on national authorities for assistance, IDPs have a legitimate and a heightened interest in influencing the decisions that affect their lives by participating in elections.   

Internally displaced persons often exist on the margins of society and are subject to a number of vulnerabilities because of their displacement. For instance, IDPs face an immediate need for protection and assistance in finding adequate shelter, food, and health care. Over time, they can suffer discrimination in accessing public services and finding employment on account of being an IDP from another region or town. IDPs also face an especially high risk of losing ownership of their housing, property, and land, something which can lead to loss of livelihoods and economic security as well as physical security. Women and children, who often make up the majority of IDP populations, face an acute risk of sexual exploitation and abuse.  

In addition to influencing public policy, elections can also be about reconciliation and addressing divisions and inequities that exist within society. For these reasons and others, IDPs should be afforded an opportunity to fully participate in elections as voters and as candidates.   

As noted in a press release of the Representative of the Secretary General of the United Nations on the Human Rights of Internally Displaced Persons following an official mission to Georgia in December 2005, 

“[IDP] participation in public life, including elections, needs promotion and support. Supporting internally displaced persons in their pursuit of a normal life does not exclude, but actually reinforces, the option of eventual return. … Well integrated people are more likely to be productive and contribute to society, which in turn gives them the strength to return once the time is right."[1]

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Since the conflicts over Abkhazia and South Ossetia in the early 1990s, violence has erupted several times in Georgia, most notably in August 2008. Large-scale human rights violations characterized the August 2008 war, including the displacement of almost 150,000 people. By the time the fighting ended, Georgia had lost the last areas it controlled in South Ossetia and Abkhazia, and Russia subsequently recognized the independence of both. While most of those displaced in the August 2008 war have returned, over 200,000 people from earlier conflicts remain displaced.

On November 19, the Brookings-Bern Project on Internal Displacement will host a discussion of current issues around human rights, democracy and displacement in Georgia. The event will feature a presentation by Tinatin Khidasheli, international secretary of the Republican Party of Georgia, and Giorgi Chkheidze, executive director of the Georgian Young Lawyers’ Association. Following their remarks, Sam Patten, senior program manager for Eurasia at Freedom House, and Nadine Walicki, country analyst for the Internal Displacement Monitoring Centre, will join the discussion.

Senior Fellow Elizabeth Ferris, co-director of the Brookings-Bern Project, will provide introductory remarks and moderate the discussion. After the program, panelists will take audience questions.

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Editor's Note: Launched at a December 5, 2011 event at Brookings, this study is based on a publication developed in 2005 by the Brookings-Bern Project on Internal Displacement: Addressing Internal Displacement: A Framework for National Responsibility.

EXECUTIVE SUMMARY

It is a central tenet of international law that states bear the primary duty and responsibility to protect the fundamental rights and freedoms of persons within their borders, including the internally displaced. While internally displaced persons (IDPs) remain entitled to the full protection of rights and freedoms available to the population in general, they face vulnerabilities that nondisplaced persons do not face. Therefore, in order to ensure that IDPs are not deprived of their human rights and are treated equally with respect to nondisplaced citizens, states are obligated to provide special measures of protection and assistance to IDPs that correspond to their particular vulnerabilities. Reflecting these key notions of international law, the rights of IDPs and obligations of states are set forth in the Guiding Principles on Internal Displacement (hereafter, “the Guiding Principles”).

Using the Guiding Principles as a departure for analysis, this study examines government response to internal displacement in fifteen of the twenty countries most affected by internal displacement due to conflict, generalized violence and human rights violations: Afghanistan, the Central African Republic, Colombia, the Democratic Republic of the Congo, Georgia, Iraq, Kenya, Myanmar, Pakistan, Nepal, Sri Lanka, Sudan, Turkey, Uganda and Yemen. The analysis seeks to shed light on how and to what extent, if any, governments are fulfilling their responsibility toward IDPs, with a view to providing guidance to governments in such efforts. In so doing, this study also seeks to contribute to research and understanding regarding realization of the emerging norm of the “Responsibility to Protect.” To frame the analysis, the introduction to this volume examines the connections among the concepts of national responsibility, “sovereignty as responsibility” and the “Responsibility to Protect” (R2P).

The comparative analysis across the fifteen countries, presented in chapter 1, is based on a systematic application of the document Addressing Internal Displacement: A Framework for National Responsibility (hereafter, “Framework for National Responsibility,” “the Framework”). Seeking to distill the Guiding Principles, the Framework outlines twelve practical steps (“benchmarks”) that states can take to directly contribute to the prevention, mitigation and resolution of internal displacement:

1. Prevent displacement and minimize its adverse effects.
2. Raise national awareness of the problem.
3. Collect data on the number and conditions of IDPs.
4. Support training on the rights of IDPs.
5. Create a legal framework for upholding the rights of IDPs.
6. Develop a national policy on internal displacement.
7. Designate an institutional focal point on IDPs.
8. Support national human rights institutions to integrate internal displacement into their work.
9. Ensure the participation of IDPs in decision making.
10. Support durable solutions.
11. Allocate adequate resources to the problem.
12. Cooperate with the international community when national capacity is insufficient.

It’s a fair question to ask: what was all the fuss about last October? The elections in Georgia and Azerbaijan came and went and the results were no surprise. Azerbaijani incumbent Ilham Aliyev won and Georgia's Mikhail Saakashvilli did not. The Azerbaijani elections were bogus; the Georgian elections were not. So what? Life goes on.

But perhaps it is not that simple. Most outside observers saw these elections as a barometer of democratic progress in a region where the West — and the U.S. in particular — has invested time, resources and effort over more than 20 years to help these countries to build a better future for themselves. As stakeholders in the democratic process in the South Caucasus since Armenia, Azerbaijan and Georgia gained their independence in 1991, Europe and the U.S. must fuss over the outcomes of the Azerbaijani and Georgian elections. 

Beyond Election Day

Evaluating these elections and their impact on the domestic social and political landscape as well as foreign relations requires, however, a focus on more than just election day. The excellent report from the European Stability Inititive on the election observation mission to Azerbaijan makes a strong case for not judging democratic progress based only on how the elections may appear to be conducted on election day.

The Georgian elections proved that post-Soviet governments could change, politicians could change and a European path be chosen. The Azerbaijani elections proved that a regime could “buy” favorable reports from short-term observers imported for election day, carry on with election rigging, continue human rights violations and ignore international criticism, whether from the Department of State or the Organization for Security and Cooperation in Europe’s long-term observer mission.

Why the difference between the two neighboring countries? There are several reasons. First, Georgia’s generally free and fair 2012 parliamentary elections set a strong example for the 2013 presidential elections, and Georgia welcomed outside involvement and observation. Azerbaijan, on the other hand, prevented the visit of U.S. Deputy Assistant Secretary for Democracy and Human Rights Tom Melia before its elections. Second, Georgian political parties, including the opposition, agreed on electoral ground rules. Third, the Georgian population demanded leadership change. Fourth, the outcome of elections in Georgia was accepted as a transparent way to — for the first time in modern Georgian history — transfer political legitimacy.

Test of Democratic Evolution

The real test of democratic evolution has to do with actions — over a period of months before and after election day — as well as rhetoric that affect the integrity of the elections. The pre- and post-election environments in Azerbaijan consist of continuing intimidation of the political opposition and independent NGO leadership, suppression of freedom of expression and official dismissal of any need to change. While Georgia had a pretty good pre-election period, the post-election period remains fraught with challenges to the effectiveness of Parliament and other fragile institutions, and whether the current government will pursue criminal charges against former President Saakashvili.

Is it Our Business?

There are different views regarding whether democratic evolution — in its broadest sense — is our (e.g. the West, U.S.) business at all. Who are we — despite our support for democratic change — with all our defects to establish standards for others to follow? At least for the short-term the Maidan events in Ukraine put this point into practical focus. If a country wants to be part of the West there are certain standards of economic and political reform that must be met as part of that association. In other words values matter. The traditional excuses of geopolitical importance or interests of energy security for failure to accept even the minimal international norms for treatment of a country’s own citizens are gone.

A major issue for the post-election period has become the choice between closer association with the EU or Vladimir Putin’s Eurasian Union. This choice really is about values that countries choose to be identified by. Armenia and Georgia made clear choices at Vilnius summit for the Eastern Partnership: Georgia and Moldova for the EU; Armenia for Eurasian Union. Ukraine was asked to make a decision but chose to walk the line between short-run financial expediency and a long-term commitment to a European future. Azerbaijan decided to choose none of the above; “neutrality” the regime called it. All the while proclaiming — along with its apologists in the West — the strategic importance of Azerbaijani energy for Europe’s future.

These countries can no longer talk their way around this or employ foreign surrogates to do this for them. Arguments for overlooking bogus elections, corruption and human rights abuses based on overriding strategic importance to the U.S. (e.g. war against terror, Northern Distribution Network, energy security) are excuses for inaction on the fundamental values that must be at the core of our relationships in the 21st century.

When countries like Azerbaijan fail to live up to these standards we do not walk away. Rather we continue to insist on solid, value-based behavior by those who profess they are partners with us. That means economic and political reforms to complete the transition from post-Soviet to 21st Century status. This requires observance of human rights, respect for freedom of expression, and release of political prisoners. It also requires a pattern of increasingly democratic elections. That’s why we need to care about elections in the south Caucasus.

We must congratulate Tbilisi on its accomplishments in the October electoral process. At the same time we must encourage the Georgian government to move along with strengthening institutions like Parliament and the judiciary so Georgia can avoid a political justice system.

Harsh geopolitical realities and historic legacies have pushed the South Caucasus states of Armenia, Azerbaijan, and Georgia back onto the foreign policy agendas of the United States, the European Union (EU), and Turkey, at a time when all three have pulled back from more activist roles in regional affairs. The South Caucasus states have now become, at best, second-tier issues for the West, but they remain closely connected to first-tier problems. To head off the prospect that festering crises in the Caucasus will lead to or feed into broader conflagrations, the United States, EU, and Turkey have to muster sufficient political will to re-engage to some degree in high-level regional diplomacy. In “Retracing the Caucasian Circle Considerations and Constraints for U.S., EU, and Turkish Engagement in the South Caucasus,” authors Fiona Hill, Kemal Kirişci, and Andrew Moffatt explore the rationale and assess the options for Western reengagement with Armenia, Azerbaijan, and Georgia given the current challenges and limitations on all sides. Based on a series of study trips to the South Caucasus and Turkey in 2014 and 2015, and numerous other interviews, the authors review some of the current factors that should be considered by Western policymakers and analysts.

Constraints and considerations for U.S., EU, and Turkish engagement in the South Caucasus:

• Divergent trends in the South Caucasus
• Russia’s influence in the South Caucasus
• Regional conflicts
• The United States’ diminishing role in the South Caucasus
• Failure to integrate the South Caucasus into the EU
• Foundering relations with Turkey
• Dashed expectations in the South Caucasus of Western engagement

Despite the challenges that have beset the West’s relations with the South Caucasus and the growing disillusionment in Armenia, Azerbaijan, and Georgia, giving up on engagement is not an option.

Policy options for the future:

• The United States, EU, and Turkey must work together, rather than separately
• “Under the radar” coordination on creative interim solutions and working with other mediators
• Focus on the development of “soft regionalism”
• Work with Georgia as the hub for furthering soft regionalism
• Devise adaptable policies as relations with Iran and China develop in the region

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On April 30, 2007, the Brookings Center on the United States and Europe held its fourth annual conference. As in previous years, the annual conference brought together scholars, officials, and policymakers from both sides of the Atlantic to examine the evolving roles of the United States and Europe in the global arena. Panel discussions covered some critical issues about Europe and the U.S.-Europe relationship: "The French Elections", "NATO and Afghanistan" and "Islam in Europe". Panelists included, among others, Lt. General Karl Eikenberry, Deputy Chairman of the NATO Military Committee; Ashraf Ghani, former Finance Minister of Afghanistan; Tufyal Choudhury of Durham University; Philip Gordon of the Brookings Institution; and Corine Lesnes from Le Monde.

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President Barack Obama has established a broad policy of engagement as a central feature of his administration’s foreign policy agenda. From the earliest days of his presidency, the president has reached out to Iran, Russia and other nations around the world, marking not only a turning of the page but possibly a whole new chapter in U.S. foreign policy. While Europeans have advocated for increased bi-lateral and multi-lateral dialogue for some time, several important questions remain. With which nations or groups should the United States and Europe engage and should there be limits to dialogue in some cases? What are the consequences if dialogue fails? Do Europeans and Americans now have the same agenda and goals for engagement?

On May 29, the Center on the United States and Europe at Brookings (CUSE) will host experts and officials from both sides of the Atlantic for the 2009 CUSE Annual Conference to address these issues. Panelists will examine the prospect of engagement with Iran and Russia, and how to deal with groups such as Hamas and the Taliban. After each panel, participants will take audience questions.

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There has been no shortage of news about South Africa’s recent economic and political turmoil—from its plummeting currency and slowing economy, to President Zuma’s cabinet shake-up, to weeks-long student protests over rising tuition fees in October.

Understanding what is driving political volatility requires understanding the central economic challenge facing South Africa’s major metropolitan regions: insufficient labor market opportunities for young people.

A recent Brookings report found that the unemployment rate among youth (ages 15 to 34) in Gauteng, the home province of the Johannesburg region, was nearly 40 percent, exceeding the 37 percent national rate. Young people continue to flock to Johannesburg, and the broader Gauteng City-Region that surrounds it, in search of economic opportunity. But the city-region has only created jobs at a 1.3 percent annual clip since 2000, far lower than peer regions like Shenzhen (8.2 percent), Istanbul (2.8 percent), and Santiago (2.4 percent), limiting its ability to absorb young workers. At the same time, the skills demands of the labor market have shifted as the region’s economy has transitioned from mining to more advanced services, creating a mismatch between what education and training systems are providing and what the labor market demands. This employment crisis matters for both economic competitiveness (output per worker growth, a rough measure of productivity, has stagnated since 2010) and economic justice (the unemployment rate for black South Africans is four times the rate for whites).

At a recent Global Cities Initiative event in Johannesburg local private, public, and civic leaders discussed both the immense scale of the youth unemployment challenge and an ambitious proposed solution: the youth skills empowerment initiative “Vulindlel’ eJozi” (a Zulu phrase meaning “open the way in Johannesburg”) created by the city of Johannesburg in partnership with the Harambee Youth Employment Accelerator. Of the approximately 1.6 million Johannesburg residents aged 19-34, just under half are not engaged in employment, education, or training. Vulindlel’ eJozi’s seeks to “reach 200,000 of these young people to meaningfully include and engage them in our economy over the next year.”

Vulindlel’ eJozi stands out for at least two reasons. Most glaringly is its sheer scale. Through its work with Harambee and other initiatives, the city of Johannesburg provided over 45,000 opportunities for youth to move towards employment during the first quarter of 2015. Second, the partnership leverages the resources and competencies of the private and civic sectors. Harambee has successfully trained and placed 20,000 youth in sustained formal employment with over 200 employers and ambitiously wants to engage 500,000 South African youth in their training programs. Constant employer feedback on what skills are demanded is one of the accelerator’s hallmarks, helping Harambee achieve higher trainee retention rates than industry averages.  

Youth unemployment, of course, is not a problem unique to South Africa. Recent Brookings research found that labor force participation, employment, and median earnings among American teens and young adults all declined between 2000 and 2014. How effectively the city of Johannesburg can build the institutional architecture to engage with private and NGO actors on a youth employment initiative at this scale will ultimately determine its success. These lessons could serve other cities well as they seek to deliver economic opportunity to their young people.

This year shone a bleak light on the deep racial divides of the U.S. The flash-points of Ferguson, Baltimore and Chicago gave new impetus to movements to reform the criminal justice system and policing. But behind the headlines, the evidence for wide, stubborn race gaps on economic and social indicators is perhaps more troubling still. 

Especially for black Americans, race gaps in family formation, employment, household income, wealth, educational quality, and neighborhood segregation have shown little­—if any—sign of improvement in recent years. The very first Social Mobility Memos was about the barriers to black upward mobility, and in recent months, we have been focusing increasingly on issues of race, place, and opportunity, and here, to close 2015, we recap 15 of our pieces on the subject, including pieces from our colleague Jonathan Rothwell on college, drugs and neighborhoods, and the first Brookings piece from our new nonresident scholar, William Julius Wilson. 

Our hope is that 2016 will see a much greater focus on race and opportunity in America. 

1. Five Bleak Facts on Black Opportunity, Richard V. Reeves and Edward Rodrigue

What would Martin Luther King Jr. think of America in 2015 if he’d lived to see his eighty-sixth birthday? No doubt, he’d be pleased by the legal and political advances of black Americans, crowned by the election and re-election of President Obama.

2. Four charts that show the opportunity gap isn’t going away, Richard V. Reeves

Child poverty rates are coming down slowly, according to figures from the Pew Research Center, except among one racial group: African Americans. This is the latest reminder that the economic gap between black and white Americans is not closing over time. Indeed, on some dimensions, it is widening.

3. Obama’s Post-Presidency? Tackling the Social Mobility Challenge for Black Men, Richard V. Reeves

President Obama’s initiative to boost opportunities for young black men—My Brother’s Keeper—looks to be a post-presidential plan, as much as presidential one. Valerie Jarrett, his closest aide, said that it was a vocation the president and first lady Michelle Obama will undertake “for the rest of their lives…That’s a moral, social responsibility that they feel will transcend the time that he’s president.”

4. School readiness gaps are improving, except for black kids, Richard V. Reeves

Between 1998 and 2010, inequality in school readiness—in terms of math, reading, and behavior—declined quite significantly, according to Reardon and Portilla’s analysis of ECLS data, being presented today at the Association for Public Policy Analysis and Management Annual Conference. This positive trend can be seen for gaps in both income and race (or at least, for Hispanic-white differences).

5. Rich Neighborhood, Poor Neighborhood: How Segregation Threatens Social Mobility, Patrick Sharkey

Racial segregation in American cities has declined slowly, but steadily over the past four decades. This is good news. Over the same timeframe, however, the level of economic segregation has been rising. Compared to 1970, the rich are now much more likely to live in different communities than the poor.

6. Segregation and concentrated poverty in the nation’s capital, Stuart M. Butler and Jonathan Grabinsky

The social mobility gap between black and white Americans has barely narrowed in the last decades, and sharp differences in access to opportunity persist. This racial opportunity gap can, in part, be traced back to the neighborhoods where whites and blacks grow up: research from urban sociologists like Patrick Sharkey and Robert Sampson shows the damaging effects racial segregation and concentrated neighborhood poverty can have on children’s life chances. Washington, D.C. is a case in point.

7. The other side of Black Lives Matter, William Julius Wilson

Several decades ago I spoke with a grieving mother living in one of the poorest inner-city neighborhoods on Chicago’s South Side. A stray bullet from a gang fight had killed her son, who was not a gang member. She lamented that his death was not reported in any of the Chicago newspapers or in the Chicago electronic media.

8. Guns and race: The different worlds of black and white Americans, Richard V. Reeves and Sarah Holmes

“The nation’s consciousness has been raised by the repeated acts of police brutality against blacks. But the problem of public space violence—seen in the extraordinary distress, trauma and pain many poor inner-city families experience following the killing of a family member or close relative—also deserves our special attention.”

9. Measuring the Racial Opportunity Gap, Richard V. Reeves and Quentin Karpilow

The U.S. is sharply divided by race, not least in terms of the opportunities for children—a point that a new report from the Annie E. Casey Foundation vividly shows. At every life stage, there are gaps between kids of different colors.

10. How the War on Drugs Damages Black Social Mobility, Jonathan Rothwell

The social mobility of black Americans has suffered collateral damage from the “War on Drugs.” Being convicted of a crime has devastating effects on the employment prospects and incomes of ex-felons and their children, as my Brookings colleagues and other scholars have found. These findings are often used to motivate efforts to reduce criminal behavior. They should also motivate changes in our criminal justice system, which unfairly punishes black Americans—often for victimless crimes that whites are at least as likely to commit.

11. Black Students at Top Colleges: Exceptions, Not the Rule, Jonathan Rothwell

A generation has been lost in the journey towards race equality in terms of income. The income gap between blacks and whites has been stuck since 1980. Why? Dozens of factors count, of course, but one in particular is worth further exploration: the underrepresentation of black students in elite colleges. As I noted in a previous blog, this could help to explain why blacks earn less than whites, even in the same occupation and with the same level of education.

12. The stubborn race and class gaps in college quality, Jonathan Rothwell

Increasing the number of low-income adults going to—and through—college is an important step towards greater social mobility and reduced income inequality. College is also an important tool for tackling race gaps. But the challenge is not just about quantity: college quality counts for a good deal, too.

13. Single black female BA seeks educated husband: Race, assortative mating and inequality, Edward Rodrigue and Richard V. Reeves

There is a growing trend in the United States towards assortative mating—a clunky phrase that refers to people’s tendency to choose spouses with similar educational attainment. Rising numbers of college-educated women play a key role in this change. It is much easier for college graduates to find and marry each other when there are more equal numbers of each gender within an educational bracket.

14. Sociology’s revenge: Moving to Opportunity (MTO) revisited, Jonathan Rothwell

Neighborhoods remain the crucible of social life, even in the internet age. Children do not stream lectures—they go to school. They play together in parks and homes, not over Skype. Crime and fear of crime are experienced locally, as is the police response to it.

15. Space, place, race: Six policies to improve social mobility, Richard V. Reeves and Allegra Pocinki

At the very heart of the American idea is the notion that, unlike in other places, we can start from nothing and through hard work have everything. That nothing we can imagine is beyond our reach. That we will pull up stakes, go anywhere, do anything to make our dreams come true. But what if that's just a myth? What if the truth is something very different? What if we are…stuck?

I. What does it mean to be an American?

Full disclosure: I'm British. Partial defense: I was born on the Fourth of July. I also have made my home here, because I want my teenage sons to feel more American. What does that mean? I don't just mean waving flags and watching football and drinking bad beer. (Okay, yes, the beer is excellent now; otherwise, it would have been a harder migration.) I'm talking about the essence of Americanism. It is a question on which much ink—and blood—has been spent. But I think it can be answered very simply: To be American is to be free to make something of yourself. An everyday phrase that's used to admire another ("She's really made something of herself") or as a proud boast ("I'm a self-made man!"), it also expresses a theological truth. The most important American-manufactured products are Americans themselves. The spirit of self-creation offers a strong and inspiring contrast with English identity, which is based on social class. In my old country, people are supposed to know their place. British people, still constitutionally subjects of Her Majesty Queen Elizabeth, can say things like "Oh, no, that's not for people like me." Infuriating.

Americans do not know their place in society; they make their place. American social structures and hierarchies are open, fluid, and dynamic. Mobility, not nobility. Or at least that's the theory. Here's President Obama, in his second inaugural address: "We are true to our creed when a little girl born into the bleakest poverty knows that she has the same chance to succeed as anybody else because she is an American; she is free, and she is equal, not just in the eyes of God but also in our own."

Politicians of the left in Europe would lament the existence of bleak poverty. Obama instead attacks the idea that a child born to poor parents will inherit their status. "The same chance to succeed as anybody else because she is an American…."

Americanism is a unique and powerful cocktail, blending radical egalitarianism (born equal) with fierce individualism (it's up to you): equal parts Thomas Paine and Horatio Alger. Egalitarian individualism is in America's DNA. In his original draft of the Declaration of Independence, Thomas Jefferson wrote that "men are created equal and independent," a sentiment that remained even though the last two words were ultimately cut. It was a declaration not only of national independence but also of a nation of independents.

The problem lately is not the American Dream in the abstract. It is the growing failure to realize it. Two necessary ingredients of Americanism—meritocracy and momentum—are now sorely lacking.

America is stuck.

Almost everywhere you look—at class structures, Congress, the economy, race gaps, residential mobility, even the roads—progress is slowing. Gridlock has already become a useful term for political inactivity in Washington, D. C. But it goes much deeper than that. American society itself has become stuck, with weak circulation and mobility across class lines. The economy has lost its postwar dynamism. Racial gaps, illuminated by the burning of churches and urban unrest, stubbornly persist.

In a nation where progress was once unquestioned, stasis threatens. Many Americans I talk to sense that things just aren't moving the way they once were. They are right. Right now this prevailing feeling of stuckness, of limited possibilities and uncertain futures, is fueling a growing contempt for institutions, from the banks and Congress to the media and big business, and a wave of antipolitics on both left and right. It is an impotent anger that has yet to take coherent shape. But even if the American people don't know what to do about it, they know that something is profoundly wrong.

II. How stuck are we?

Let's start with the most important symptom: a lack of social mobility. For all the boasts of meritocracy—only in America!—Americans born at the bottom of the ladder are in fact now less likely to rise to the top than those situated similarly in most other nations, and only half as likely as their Canadian counterparts. The proportion of children born on the bottom rung of the ladder who rise to the top as adults in the U.S. is 7.5 percent—lower than in the U.K. (9 percent), Denmark (11.7), and Canada (13.5). Horatio Alger has a funny Canadian accent now.

It is not just poverty that is inherited. Affluent Americans are solidifying their own status and passing it on to their children more than the affluent in other nations and more than they did in the past. Boys born in 1948 to a high-earning father (in the top quarter of wage distribution) had a 33 percent chance of becoming a top earner themselves; for those born in 1980, the chance of staying at the top rose sharply to 44 percent, according to calculations by Manhattan Institute economist Scott Winship. The sons of fathers with really high earnings—in the top 5 percent—are much less likely to tumble down the ladder in the U. S. than in Canada (44 percent versus 59 percent). A "glass floor" prevents even the least talented offspring of the affluent from falling. There is a blockage in the circulation of the American elite as well, a system-wide hardening of the arteries.

Exhibit A in the case against the American political elites: the U. S. tax code. To call it Byzantine is an insult to medieval Roman administrative prowess. There is one good reason for this complexity: The American tax system is a major instrument of social policy, especially in terms of tax credits to lower-income families, health-care subsidies, incentives for retirement savings, and so on. But there are plenty of bad reasons, too—above all, the billions of dollars' worth of breaks and exceptions resulting from lobbying efforts by the very people the tax system favors.

So fragile is the American political ego that we can't go five minutes without congratulating ourselves on the greatness of our system, yet policy choices exacerbate stuckness.

The American system is also a weak reed when it comes to redistribution. You will have read and heard many times that the United States is one of the most unequal nations in the world. That is true, but only after the impact of taxes and benefits is taken into account. What economists call "market inequality," which exists before any government intervention at all, is much lower—in fact it's about the same as in Germany and France. There is a lot going on under the hood here, but the key point is clear enough: America is unequal because American policy moves less money from rich to poor. Inequality is not fate or an act of nature. Inequality is a choice.

These are facts that should shock America into action. For a nation organized principally around the ideas of opportunity and openness, social stickiness of this order amounts to an existential threat. Although political leaders declare their dedication to openness, the hard issues raised by social inertia are receiving insufficient attention in terms of actual policy solutions. Most American politicians remain cheerleaders for the American Dream, merely offering loud encouragement from the sidelines, as if that were their role. So fragile is the American political ego that we can't go five minutes without congratulating ourselves on the greatness of our system, yet policy choices exacerbate stuckness and ensure decline.

In Britain (where stickiness has historically been an accepted social condition), by contrast, the issues of social mobility and class stickiness have risen to the top of the political and policy agenda. In the previous U.K. government (in which I served as director of strategy to Nick Clegg, the deputy prime minister), we devoted whole Cabinet meetings to the problems of intergenerational mobility and the development of a new national strategy. (One result has been a dramatic expansion in pre-K education and care: Every 3- and 4-year-old will soon be entitled to 30 hours a week for free.) Many of the Cabinet members were schooled at the nation's finest private high schools. A few had hereditary titles. But they pored over data and argued over remedies—posh people worrying over intergenerational income quintiles.

Why is social mobility a hotter topic in the old country? Here is my theory: Brits are acutely aware that they live in a class-divided society. Cues and clues of accent, dress, education, and comportment are constantly calibrated. But this awareness increases political pressure to reduce these divisions. In America, by contrast, the myth of classlessness stands in the way of progress. The everyday folksiness of Americans—which, to be clear, I love—serves as a social camouflage for deep economic inequality. Americans tell themselves and one another that they live in a classless land of open opportunity. But it is starting to ring hollow, isn't it?

III. For black Americans, claims of equal opportunity have, of course, been false from the founding.

They remain false today. The chances of being stuck in poverty are far, far greater for black kids. Half of those born on the bottom rung of the income ladder (the bottom fifth) will stay there as adults. Perhaps even more disturbing, seven out of ten black kids raised in middle-income homes (i.e., the middle fifth) will end up lower down as adults. A boy who grows up in Baltimore will earn 28 percent less simply because he grew up in Baltimore: In other words, this supersedes all other factors. Sixty-six percent of black children live in America's poorest neighborhoods, compared with six percent of white children.

Recent events have shone a light on the black experience in dozens of U. S. cities.

Behind the riots and the rage, the statistics tell a simple, damning story. Progress toward equality for black Americans has essentially halted. The average black family has an income that is 59 percent of the average white family's, down from 65 percent in 2000. In the job market, race gaps are immobile, too. In the 1950s, black Americans were twice as likely to be unemployed as whites. And today? Still twice as likely.

From heeding the call "Go west, young man" to loading up the U-Haul in search of a better job, the instinctive restlessness of America has always matched skills to work, people to opportunities, labor to capital.

Race gaps in wealth are perhaps the most striking of all. The average white household is now thirteen times wealthier than the average black one. This is the widest gap in a quarter of a century. The recession hit families of all races, but it resulted in a wealth wipeout for black families. In 2007, the average black family had a net worth of $19,200, almost entirely in housing stock, typically at the cheap, fragile end of the market. By 2010, this had fallen to $16,600. By 2013—by which point white wealth levels had started to recover—it was down to $11,000. In national economic terms, black wealth is now essentially nonexistent.

Half a century after the passing of the Civil Rights Act, the arc of history is no longer bending toward justice. A few years ago, it was reasonable to hope that changing attitudes, increasing education, and a growing economy would surely, if slowly, bring black America and white America closer together. No longer. America is stuck.

IV. The economy is also getting stuck.

Labor productivity growth, measured as growth in output per hour, has averaged 1.6 percent since 1973. Male earning power is flatlining. In 2014, the median full-time male wage was $50,000, down from $53,000 in 1973 (in the dollar equivalent of 2014). Capital is being hoarded rather than invested in the businesses of the future. U. S. corporations have almost $1.5 trillion sitting on their balance sheets, and many are busily buying up their own stock. But capital expenditure lags, hindering the economic recovery.

New-business creation and entrepreneurial activity are declining, too. As economist Robert Litan has shown, the proportion of "baby businesses" (firms less than a year old) has almost halved since the late 1970s, decreasing from 15 percent to 8 percent—the hallmark of "a steady, secular decline in business dynamism." It is significant that this downward trend set in long before the Great Recession hit. There is less movement between jobs as well, another symptom of declining economic vigor.

Americans are settling behind their desks—and also into their neighborhoods. The proportion of American adults moving house each year has decreased by almost half since the postwar years, to around 12 percent. Long-distance moves across state lines have as well. This is partly due to technological advances, which have weakened the link between location and job prospects, and partly to the growth of economic diversity in cities; there are few "one industry" towns today. But it is also due to a less vibrant housing market, slower rates of new business creation, and a lessening in Americans' appetite for disruption, change, and risk.

This geographic settling is at odds with historic American geographic mobility. From heeding the call "Go west, young man" to loading up the U-Haul in search of a better job, the instinctive restlessness of America has always matched skills to work, people to opportunities, labor to capital. Rather than waiting for help from the government, or for the economic tide to turn back in their favor, millions of Americans changed their life prospects by changing their address. Now they are more likely to stay put and wait. Others, especially black Americans, are unable to escape the poor neighborhoods of their childhood. They are, as the title of an influential book by sociologist Patrick Sharkey puts it, Stuck in Place.

There are everyday symptoms of stuckness, too. Take transport. In 2014, Americans collectively spent almost seven billion hours stuck motionless in traffic—that's a couple days each. The roads get more jammed every year. But money for infrastructure improvements is stuck in a failing road fund, and the railophobia of politicians hampers investment in public transport.

Whose job is it to do something about this? The most visible symptom of our disease is the glue slowly hardening in the machinery of national government. The last two Congresses have been the least productive in history by almost any measure chosen, just when we need them to be the most productive. The U. S. political system, with its strong separation among competing centers of power, relies on a spirit of cross-party compromise and trust in order to work. Good luck there.

V. So what is to be done?

As with anything, the first step is to admit the problem. Americans have to stop convincing themselves they live in a society of opportunity. It is a painful admission, of course, especially for the most successful. The most fervent believers in meritocracy are naturally those who have enjoyed success. It is hard to acknowledge the role of good fortune, including the lottery of birth, when describing your own path to greatness.

There is a general reckoning needed. In the golden years following World War II, the economy grew at 4 percent per annum and wages surged. Wealth accumulated. The federal government, at the zenith of its powers, built interstates and the welfare system, sent GIs to college and men to the moon. But here's the thing: Those days are gone, and they're not coming back. Opportunity and growth will no longer be delivered, almost automatically, by a buoyant and largely unchallenged economy. Now it will take work.

The future success of the American idea must now be intentional.

Entrepreneurial, mobile, aspirational: New Americans are true Americans. We need a lot more of them.

There are plenty of ideas for reform that simply require will and a functioning political system. At the heart of them is the determination to think big again and to vigorously engage in public investment. And we need to put money into future generations like our lives depended on it, because they do: Access to affordable, effective contraception dramatically cuts rates of unplanned pregnancy and gives kids a better start in life. Done well, pre-K education closes learning gaps and prepares children for school. More generous income benefits stabilize homes and help kids. Reading programs for new parents improve literacy levels. Strong school principals attract good teachers and raise standards. College coaches help get nontraditional students to and through college. And so on. We are not lacking ideas. We are lacking a necessary sense of political urgency. We are stuck.

But we can move again if we choose.

In addition to a rejuvenation of policy in all these fields, there are two big shifts required for an American twenty-first-century renaissance: becoming open to more immigration and shifting power from Washington to the cities.

VI. America needs another wave of immigration.

This is in part just basic math: We need more young workers to fund the old age of the baby boomers. But there is more to it than that. Immigrants also provide a shot in the arm to American vitality itself. Always have, always will. Immigrants are now twice as likely to start a new business as native-born Americans. Rates of entrepreneurialism are declining among natives but rising among immigrants.

Immigrant children show extraordinary upward-mobility rates, shooting up the income-distribution ladder like rockets, yet by the third or fourth generation, the rates go down, reflecting indigenous norms. Among children born in Los Angeles to poorly educated Chinese immigrants, for example, an astonishing 70 percent complete a four-year-college degree. As the work of my Brookings colleague William Frey shows, immigrants are migrants within the U. S., too, moving on from traditional immigrant cities—New York, Los Angeles—to other towns and cities in search of a better future. Entrepreneurial, mobile, aspirational: New Americans are true Americans. We need a lot more of them.

This makes a mockery of our contemporary political "debates" about immigration reform, which have become intertwined with race and racism. Some Republicans tap directly into white fears of an America growing steadily browner. More than four in ten white seniors say that a growing population of immigrants is a "change for the worse"; half of white boomers believe immigration is "a threat to traditional American customs and values." But immigration delves deeper into the question of American identity than it does even issues of race. Immigrants generate more dynamism and aspiration, but they are also unsettling and challenging. Where this debate ends will therefore tell us a great deal about the trajectory of the nation. An America that closes its doors will be an America that has chosen to settle rather than grow, that has allowed security to trump dynamism.

VII. The second big shift needed to get America unstuck is a revival of city and state governance.

Since the American Dream is part of the national identity, it seems natural to look to the national government to help make it a reality. But cities are now where the American Dream will live or die. America's hundred biggest metros are home to 67 percent of the nation's population and 75 percent of its economy. Americans love the iconography of the small town, even at the movies—but they watch those movies in big cities.

Powerful mayors in those cities have greater room for maneuvering and making an impact than the average U. S. senator. Even smaller cities and towns can be strongly influenced by their mayor.

There are choices to be made. Class divisions are hardening. Upward mobility has a very weak pulse. Race gaps are widening.

The new federalism in part is being born of necessity. National politics is in ruins, and national institutions are weakened by years of short-termism and partisanship. Power, finding a vacuum in D. C., is diffusive. But it may also be that many of the big domestic-policy challenges will be better answered at a subnational level, because that is where many of the levers of change are to be found: education, family planning, housing, desegregation, job creation, transport, and training. Amid the furor over Common Core and federal standards, it is important to remember that for every hundred dollars spent on education, just nine come from the federal government.

We may be witnessing the end of many decades of national-government dominance in domestic policy-making (the New Deal, Social Security, Medicare, welfare reform, Obamacare). The Affordable Care Act is important in itself, but it may also come to have a place in history as the legislative bookend to a long period of national-policy virtuosity.

The case for the new federalism need not be overstated. There will still be plenty of problems for the national government to fix, including, among the most urgent, infrastructure and nuclear waste. The main tools of macroeconomic policy will remain the Federal Reserve and the federal tax code. But the twentieth-century model of big federal social-policy reforms is in decline. Mayors and governors are starting to notice, and because they don't have the luxury of being stuck, they are forced to be entrepreneurs of a new politics simply to survive.

VIII. It is possible for America to recover its earlier dynamism, but it won't be easy.

The big question for Americans is: Do you really want to? Societies, like people, age. They might also settle down, lose some dynamism, trade a little less openness for a little more security, get a bit stuck in their ways. Many of the settled nations of old Europe have largely come to terms with their middle age. They are wary of immigration but enthusiastic about generous welfare systems and income redistribution. Less dynamism, maybe, but more security in exchange.

America, it seems to me, is not made to be a settled society. Such a notion runs counter to the story we tell ourselves about who we are. (That's right, we. We've all come from somewhere else, haven't we? I just got here a bit more recently.) But over time, our narratives become myths, insulating us from the truth. For we are surely stuck, if not settled. And so America needs to decide one way or the other. There are choices to be made. Class divisions are hardening. Upward mobility has a very weak pulse. Race gaps are widening. The worst of all worlds threatens: a European class structure without European welfare systems to dull the pain.

Americans tell themselves and the world that theirs is a society in which each and all can rise, an inspiring contrast to the hereditary cultures from which it sprang. It's one of the reasons I'm here. But have I arrived to raise my children here just in time to be stuck, too? Or will America be America again?

Editor's note: This piece originally appeared in Esquire.

Campaign finance is a key issue for the quality of democracy. As we noted in a recently-published book of which we are co-authors, and which we had the honor to present in the Hall of Former Presidents of the Legislative Assembly last February 11 (El costo de la Democracia: Ensayos sobre el financiamiento político en América Latina, UNAM, Mexico City, 2015), it is important because of an inescapable fact: While democracy has no price, it does have an operating cost. The use of economic resources is an essential element for democratic competition. More than a pathology of democracy, political financing, when well-regulated, is a normal part of democratic life.

Yet it is undeniable that money is capable of introducing distortions in the democratic process. Its unequal distribution impacts, first, on the real possibilities enjoyed by the parties and the candidates to take their message to the voters. Second, having money gives individuals and social groups a differentiated possibility of participating in elections and exercizing their influence over the candidates through their contributions. This is vital for democracy. When political power is simply a reflection of economic power, the principle of “one person, one vote” loses meaning. Third, fundraising efforts offer obvious opportunities for the articulation of exchanges between donors and those who make decisions on public affairs, or at least for the continual appearance of conflicts of interest. This can be very problematic in the case of Latin America, where there is a risk of money from organized crime penetrating the campaigns.

And so it is not surprising that the issue is on the political agenda in many countries of the region, just as it has been for a long time in Costa Rica. Costa Rica introduced public financing for political parties in 1956, making it the second country in the world to do so, after Uruguay. Nonetheless, the generosity of the government contribution did not avoid a long succession of scandals associated with the issue, a history that includes figures ranging from Robert Vesco and Manuel Antonio Noriega to Carlos Hank González and the illegal donations from the government of Taiwan. 

The wounds left by each of these episodes gave way to worthy yet incomplete regulatory efforts. Most important has been the reform of the Electoral Code approved in 2009, which among many necessary changes prohibited corporate contributions to the political parties. And not only legislative action has made a difference. The Constitutional Chamber of the Supreme Court has also made a difference by lifting bank secrecy on financing, a very important decision that has been pointed to internationally.

Each of these steps has been moving the country in the right direction. This is worth underscoring: At a time when it is so easy to revile the Costa Rican political system, it should be recognized that in terms of political financing the country is, in general, better situated than it was 20 or 30 years ago. All the evidence we have indicates that private contributions today are less important in our campaigns than one generation ago. We can state with great certainty that our parties are financing more than 80% of the cost of their campaigns with the state contribution. That is good news.

However, the current regulatory framework presents problems such as:

a) It continues to be a regulatory system that is somehow upside down: It meticulously keeps tabs on the use of the state contribution by the parties, which does not give rise to conflicts of interest, while it is much less effective when it comes to verifying the truth of the information the parties provide about their private sources of financing, which do have the potential to compromise the autonomy of the political system. Correcting this imbalance, getting the Supreme Electoral Tribunal to prioritize monitoring private financing and to devote more resources to it, would not only be a way to straighten out its priorities, but frankly, all the parties would also breathe a sigh of relief.

b) The system of advances on the state contribution continues to be very limited (only 15% of the subsidy is disbursed before the presidential election and nothing in the case of municipal elections). It is time to admit that eliminating the system whereby the contributions were distributed in advance payments, which existed from 1971 to 1991 (when 50% was disbursed in advances), caused grave prejudice to the political system. The weakness of the advanced disbursement has ended up leaving the parties at the mercy of banks and lenders during the campaigns. Worse still, today the possibility of a party receiving loans during the campaign against its electoral expectations depends entirely on the fickle behavior of the opinion polls. This is unfair and risky, as the OAS electoral observation missions have noted.

c) The legal framework does little to limit parties’ spending on advertising, one of the most effective ways to reduce outlays during campaigns and to bring about fairness in electoral competition, which is one of the most important objectives in improving the current system. One must evaluate the advisability of adopting a system of advertising slots (provided free of charge by those holding concessions for the radio spectrum or purchased by the Supreme Electoral Tribunal and then made available to the parties) as has been done, with a positive outcome, by other democracies in the region such as Argentina, Brazil, Chile, Ecuador, and Mexico.

d) The current regulatory framework has serious vulnerabilities at the local level. Requiring the parties to file a single financial report with the contribution they receive nationwide (the same system that exists for the presidential election) is insufficient when in practice there are 81 local elections in which each candidate raises and spends money autonomously. Let’s be clear: Relatively little is known about who finances the campaigns at the local level in Costa Rica. This would not matter much except that the experience of other countries – from Mexico to Colombia – shows that local campaigns are the preferred point of entry for organized crime to penetrate the electoral structures. Reinforcing the financial controls on municipal elections is one of the country’s most urgent tasks in relation to campaign finance.

Costa Rica has made major strides in regulating political financing. Yet there is an urgent need to address the weaknesses in the current regulatory framework. There are bills in the legislative pipeline, such as No. 18,739, introduced by the Supreme Electoral Tribunal in April 2013, that incorporate almost all the reforms suggested here and that provide an excellent basis for moving this inevitable discussion forward. 

We will have to address the problems in the current regulatory framework sooner or later. The question is whether we will do so before or after the next scandal. Let’s hope that, for once, we act on time.

This piece was originally published by International IDEA.