Indian and Israeli relations are getting even friendlier: Indian Foreign Minister Sushma Swaraj visited Israel in January, and the trip is widely thought to precede higher level visits, including by Prime Minister Narendra Modi (he’d be the first Indian head of government to visit Israel). Israeli President Reuven Rivlin and Prime Minister Benjamin Netanyahu have both also indicated that they plan to travel to India “soon.”

The foreign minister’s visit was part of the ongoing Indian effort not just to broaden and deepen India’s relationship with Israel, but also to make it more public. But the trip—not just to Israel, but to what the Indian government now routinely calls the state of Palestine—also highlighted the Modi government’s attempt to de-hyphenate India’s relations with the Israelis and Palestinians. 

What is the state of India’s relationship with Israel, the Modi government’s approach toward it, and this de-hyphenated approach? 

A blossoming friendship

Since India normalized relations with Israel in 1992, the partnership has developed steadily. The countries have a close defense, homeland security, and intelligence relationship—one that the two governments do not talk much about publicly. Shared concerns about terrorism have proven to be a key driver; so have commercial interests (including Israel’s quest for additional markets and India’s desire to diversify its defense suppliers, get access to better technology, and co-develop and co-produce equipment). India has become Israeli defense companies’ largest customer. Israel, in turn, has shot up on India’s list of suppliers. 

In the early 1990s, Israel—like the United States—did not really figure on India’s list of defense suppliers. However, between 2005 and 2014, it accounted for 7 percent (in dollar terms) of military equipment deliveries—the third highest after Russia and the United States. As Indian President Pranab Mukherjee recently noted, Israel has crucially come through for India at times “when India needed them the most” (i.e. during crises or when other sources have not been available, for example, due to sanctions). The president referred to the assistance given during the Kargil crisis in 1999 in particular, but there has also been less publicly-acknowledged help in the past, including during India’s 1965 and 1971 wars with Pakistan. 

Beyond the defense and security relationship, cooperation in the agricultural sector—water management, research and development, sharing of best practices—might have the most on-the-ground impact, including in terms of building constituencies for Israel at the state level in India. Israeli ambassadors have indeed been nurturing this constituency and reaching out to the chief ministers of Indian states for a number of years. (Incidentally, India, for its part, has felt that the closer relationship with Israel has created a constituency for it in the United States.)

Economic ties have also grown: The two countries are negotiating a free trade agreement, and have been trying to encourage greater investments from the other. The success of Indian and Israeli information technology companies has particularly led to interest in collaboration in that sector. 

The governments have also been trying to increase people-to-people interaction through educational exchanges and tourism, with some success. Israeli tourism officials have highlighted the 13 percent increase in arrivals from India over the last year. And tourist arrivals to India from Israel have doubled over the last 15 years, including thousands of Israelis visiting after their compulsory military service. 

Let’s go public

The India-Israel relationship has developed under Indian governments of different stripes. It was normalized by a Congress party-led government and progressed considerably during the United Progressive Alliance coalition government led by the party between 2004 and 2014. However, while some ministers and senior military officials exchanged visits during that decade, there were not that many high-visibility visits—especially from India to Israel, with the foreign minister only visiting once. A planned 2006 trip by then Defense Minister Mukherjee was reportedly cancelled because of Israeli military operations in Gaza and then the Lebanon war. The last Israeli prime minister to visit India was Ariel Sharon in 2003, and no defense minister had ever visited despite those ties. 

The Israeli ambassador has talked about the relationship being “held under the carpet.” More bluntly, in private, Israeli officials and commentators have said that India has treated Israel like a “mistress”—happy to engage intimately in private, but hesitant to acknowledge the relationship in public. The explanations for this have ranged from Indian domestic political sensitivities to its relations with the Arab countries.

[I]n private, Israeli officials and commentators have said that India has treated Israel like a “mistress”—happy to engage intimately in private, but hesitant to acknowledge the relationship in public.

When the Bharatiya Janata Party (BJP)-led government took office in May 2014 with Modi at its helm, there was a belief that the partnership with Israel would be a priority and more visible. Relations under the BJP-led coalition government between 1998 and 2004 had been more conspicuous. When in opposition, BJP leaders had visited Israel, and also been supportive of that country in election manifestos and speeches. 

As chief minister of the state of Gujarat, Modi himself had expressed admiration for Israel’s achievements, including “how it has overcome various adversities to make the desert bloom.” Traveling there in 2006 with the central agricultural minister, he also helped facilitate trips for politicians, business leaders, and farmers from his state to Israel. His government welcomed Israeli investment and technological assistance in the agricultural, dairy, and irrigation sectors. And, at a time when Modi was not welcome in many Western capitals, Israelis reciprocated: Businesses and government engaged with him, with Israeli ambassadors and consul generals from Mumbai meeting with him long before European and American officials did so. Thus, Modi’s elevation to prime minister was welcomed in Israel, as was the appointment as foreign minister of Swaraj, a former head of the India-Israel Parliamentary Friendship Group.

However, the Modi government’s response to the Gaza crisis in summer 2014 left many perplexed and some of its supporters disappointed. The Indian government initially sought to avoid a debate on the crisis in the Indian parliament, on the grounds that it did not want “discourteous references” to a friend (Israel). After opposition complaints, there was a debate but the government nixed a resolution. In its official statements, the Modi government consistently expressed concern about the violence in general—and, in particular, both the loss of civilian life in Gaza and the provocations against Israel—and called for both sides to exercise restraint and deescalate. Yet, it then voted in support of the U.N. Human Rights Council (UNHRC) resolution that condemned Israel, a move that left observers—including many in the BJP base—wondering why the government didn’t instead abstain. 

Since then, however, the Modi government has moved toward the expected approach. The first sign of this was Modi’s decision to meet with Netanyahu on the sidelines of the opening of the U.N. General Assembly in 2014—despite reported hesitation on the part of some in the foreign ministry. Since then, there have been a number of high-level visits and interactions (and Twitter exchanges), including a few “firsts.” This past October, Pranab Mukherjee, for example, became the first Indian president to travel to Israel, where he declared the state of the relationship to be “excellent.” 

The Israeli ambassador to India has observed the “high visibility” the relationship now enjoys. Also noticed more widely was India abstaining in a July 2015 UNHRC vote on a report criticizing Israeli actions in the 2014 Gaza crisis. Indian diplomats explained the vote as due to the mention of the International Criminal Court (ICC) in the resolution, but observers pointed out that India has voted for other resolutions mentioning the ICC. Israeli commentators saw the abstention as “quite dramatic;” the Israeli ambassador expressed gratitude. Palestinian officials, on the other hand, expressed “shock” and criticized the vote as a “departure.” 

In the defense space, cooperation is only growing: The Indian government moved forward on (delayed) deals to purchase Spike anti-tank missiles and Barak missiles for its navy; it recently tested the jointly-developed Barak 8 missile system, along with Israel Aerospace Industries; and an Indian private sector company has reportedly formed a joint venture with an Israeli company to produce small arms. Cooperation is also continuing in the agricultural sector, with 30 centers of excellence either established or planned across 10 Indian states. More broadly, the two governments are seeking to facilitate greater economic ties, as well as science and technology collaboration. 

There have been questions about why Modi hasn’t visited Israel yet, despite the more visible bonhomie. But, in many ways, it made sense to have the Indian president take the first leadership-level visit during this government. Mukherjee’s position as head of state, as well as the fact that he was a life-long Congress party member and minister, helped convey to both Indian and Israeli audiences that this is not a one-party approach. This point was reinforced by the accompanying delegation of MPs representing different political parties and parts of the country. For similar reasons, it would not be surprising if there was a Rivlin visit to India before a Netanyahu one. 

De-hyphenation? 

The deepening—and more open—relationship with Israel, however, hasn’t been accompanied by a U-turn on the Indian government’s policy toward Palestine. What the Modi government seems to be doing is trying to de-hyphenate its ties with Israel and Palestine. Previous governments have also tried to keep the relationships on parallel tracks—but the current one has sought to make both relationships more direct and visible, less linked to the other, while also making it clear that neither will enjoy a veto on India’s relations with the other. 

The deepening—and more open—relationship with Israel, however, hasn’t been accompanied by a U-turn on the Indian government’s policy toward Palestine.

The Modi government doesn’t demure from referring to the “state of Palestine” rather than “the Palestinian Authority.” It held the first-ever Foreign Office consultations with the Palestinians last spring, and the Indian foreign ministry made it a point to release separate press releases for the president’s and the foreign minister’s trips to Israel and Palestine. The Indian president became the first foreign head of state to stay overnight in Ramallah. Modi met with Mahmoud Abbas, whom the Indian government refers to as the “president of the state of Palestine, on the sidelines of both the U.N. General Assembly meeting in New York and the climate change summit in Paris in 2015. The Indian foreign minister met with Abbas in 2014 in New York, and again in Ramallah on her visit. During their trips, both she and the Indian president also went to the mausoleum of Yasser Arafat (who the BJP in the past called “the illustrious leader of the Palestinian people”).

The government has reiterated India’s traditional position on a two-state solution, indicating its belief in an independent Palestinian state with East Jerusalem as its capital. It voted in favor of the resolution on raising the Palestinian flag at the United Nations, and has continued to sign on to BRICS declarations “oppos[ing] the continuous Israeli settlement activities in the Occupied Territories.” In Ramallah, Sushma Swaraj emphasized that India’s support for Palestinians remained “undiluted.” 

The continuity on this front is not just driven by historic and domestic political factors, but also by India’s broader balancing act in the region. Even as India’s relations with Israel have deepened, it has maintained—and even enhanced—its relations with Iran and the Gulf Cooperation Council (GCC) countries. Modi has welcomed the emir of Qatar, visited the UAE, and met with Iran’s Hassan Rouhani. The first-ever Arab-India Cooperation Forum ministerial meeting also took place in January. It would not be surprising if the Indian prime minister visited Saudi Arabia this year or there were high-level visits exchanged between Delhi and Tehran. The government has emphasized its “strategic intent and commitment to simultaneously enhance relations with the Arab world as well as Israel, without allowing it to become a zero sum game.” And, overall, the Israelis, Palestinians, and GCC countries have not pushed for Delhi to make a choice. 

The de-hyphenated approach, in turn, potentially gives Indian policymakers more space to take India’s relationship with Israel further. But, as was evident during the Indian president’s visit to the region, it hasn’t been problem-free and it has not been feasible to keep the two relationships entirely insulated. An upsurge in violence reportedly caused Israel to nix a proposal for Mukherjee to visit the Al-Aqsa mosque in Jerusalem. There was also some heartburn about the Israeli delay in clearing 30 Indians' computers destined for an India-Palestine Centre for Excellence in Information and Communication Technology at Al-Quds University in Ramallah, as well as its refusal to allow communications equipment to be transferred. In the Israeli press, there was criticism of the president’s lack of mention of Palestinian violence. The Indian president and the foreign ministry also found themselves having to explain the president’s remark in Israel that “religion cannot be the basis of a state.”

There have been other differences between India and Israel as well, notably on Iran (something officials have tended not to discuss publicly). There might be other difficulties in the future, stemming, for example, from: negative public and media reaction in India if there’s another Israel-Palestine crisis; the stalled free trade agreement negotiations; potential Israeli defense sales to China; renewed questions about defense acquisitions from Israel; or the behavior of Israeli tourists in India. But the relationship is likely to continue to move forward, and increase in visibility, including with visits by Rivlin, Netanyahu, and Modi—potentially before the 25th anniversary of the two countries establishing full diplomatic relations on January 29, 2017.

      

The composition and track record of the current Israeli government leads Palestinians to expect very little from Israel in the way of advancing peace. After five decades of military occupation, and repeated failures of two decades of bilateral negotiations based on the Oslo Accords, there is a clear need for new ideas. But the proposals offered by Amos Yadlin’s post last month, “Two states, four paths for achieving them,” do not accord with basic realities on the Palestinian side, and as such do not offer a viable pathway to a two-state outcome.

Yadlin’s argument is premised on the belief that a negotiated two-state outcome is not possible today because of a Palestinian refusal to engage. He argues: “It appears that in 2016, the Palestinians do not view a two-state solution…as a preferred outcome.” Palestinians, by contrast, see their leaders’ actions, like the November 2012 UN General Assembly resolution that accorded Palestine observer state status, as efforts to save the two-state solution in the face of Israeli actions that undermine it.

The outcome Yadlin offers as one that would meet Israel’s needs would require Palestinians to forfeit basic components of statehood and basic principles of Israeli-Palestinian peace that are enshrined in international law, such as the right for Palestinian refugees to return to their or their families’ places of origin in what is today Israel. 

Similarly, Yadlin calls for Palestinians to accept “limitations on their sovereignty” to meet Israeli security concerns. From a Palestinian perspective, though, that sovereignty has been systematically constrained already by Israeli policies, including annexation of territory and the expanding settlement enterprise. These are but two examples of divergent viewpoints between Israelis and Palestinians that doom each of the “four paths” Mr. Yadlin proposes to reach a two-state solution. 

Each of Yadlin’s proposed paths for Israel—negotiations toward a final status agreement (with the expectation that they would fail due to Palestinian intransigence), pursuing a regional agreement, seeking an interim bilateral agreement, and taking unilateral action—is problematic.

“A negotiation process resulting in a final status agreement” – The Oslo Peace Accords and the 20 years of unconsummated negotiations that followed were an intensive effort to achieve just that. However, they failed in part because they did not address the fundamental asymmetry between the parties to those accords—Palestinians recognized a state, and Israel, in turn, recognized the representative body of a national movement seeking its right to self-determination. 

If Israelis were serious about two states, and heeded lessons from the failed interim agreements of the Oslo process, a good starting point would be for Israel to reciprocate the political recognition of Israel that the Palestine Liberation Organization (PLO) made back in 1993. Israel’s recognition of the state of Palestine is long overdue, especially after more than 130 countries—including the Vatican—have done so. 

This symmetrical recognition would also define the end game upfront as the outcome to which both sides are already formally committed—and then both sides can spend their negotiating energies on realizing two states living in peace.

“A regional agreement” – The notion that a regional track could substitute for the bilateral track suggests a failure to learn from the past. At many points throughout the history of this conflict, Israeli politicians and policymakers have sought to transfer the Palestinian issue onto other regional states—as in the Camp David I agreement with Egypt, or the suggestion that Palestinians should instead create their state in Jordan, a sovereign country. 

It is positive that Mr. Yadlin seems to embrace the Arab Peace Initiative (API) as a means for progress toward two states—but it can only play the role he envisions if it morphs into something it is not. 

The API is not a starting point for negotiations, but rather terms of reference for an agreement that Arab states would recognize as sufficient to gain Israel normalization within the Middle East. As such, Yadlin’s call for an “updated version” in which the “plan should be decoupled from the issue of the [occupied] Golan Heights” and “not be conditional on a solution to the refugee problem according to U.N. Security Council Resolution 194 from 1949,” do not take into account Arab governments’ own interests in these issues. Regional peace for Israel is unattainable without Israel first making peace with Palestinians.

“An interim bilateral agreement” – When Palestinians accepted the interim agreements of the Oslo bilateral process, there were 100,000 illegal settlers on the ground. Two decades of negotiations has left us with over 500,000 settlers and with the Palestinian community in the West Bank and Gaza further fragmented and battered. This is why the Palestinian leadership has been crystal clear in rejecting another interim agreement. 

Without more than verbal commitments to a viable two-state solution, and without a clear pathway to get there, another interim agreement would only allow Israel to create more “facts on the ground” that would preclude such a solution. It is hard to understand how such a proposal would offer Palestinians any hope of progress, given the experience of the past two decades. 

“In the case a negotiated agreement cannot be realized, an independent Israeli determination of its own borders” – It is even harder to understand how a unilateral Israeli determination of its own borders could, as Yadlin argues, “reinforce the agreed two-state solution paradigm,” especially because this would likely require massive Israeli military force (along with continued blind support from the United States) to create more facts on the ground. It’s understandable why Israelis would prefer to negotiate this conflict with themselves rather than engage with their adversaries, but it is the vast disparity in power between Israelis and Palestinians, not the logic of conflict resolution, that gives Israelis the realistic ability to do so. Still, this does not mean that unilateral decisions by Israel will one day find support among Palestinians. 

It’s understandable why Israelis would prefer to negotiate this conflict with themselves rather than engage with their adversaries, but it is the vast disparity in power between Israelis and Palestinians, not the logic of conflict resolution, that gives Israelis the realistic ability to do so.

It is the nature of international conflicts that they can “end” only in one of two ways: either the two parties agree to a solution that meets their mutual interests, or the side with greater power dictates, imposes, and enforces an outcome over the objections of the weaker side. In proposing unilateralism as a “solution,” Yadlin abandons the more sustainable former pathway for the latter, which I see as doomed. 

If Israel’s leadership is serious about reaching a two-state solution, the road is defined and clear. It requires that Israelis grapple with the real interests and demands of Palestinians as of equal substance and value to their own, rather than wishing them away. Equality can be achieved in two, truly independent states; or this conflict will default to a single state—as warned by President Obama and Secretary Kerry—marred by a civil rights struggle that may take another 70 years to bear fruition, but whose result is pre-defined.

      

In a lively and wide-ranging debate that aired earlier this month on Al Jazeera English, Brookings Executive Vice President Martin Indyk sparred with Head to Head presenter Mehdi Hasan about American efforts to resolve the Israeli-Palestinian conflict and the United States’ relationship with Israel.

Indyk began by stressing that American support for Israel is what gives the United States an influential role in the peace process and the leverage to encourage Israel to move towards peace. Indyk added that this does not mean that the United States should act as “Israel’s attorney” in the negotiations, and cited a promise he made to Palestinian leaders during the 2013-2014 peace talks led by Secretary of State John Kerry that Washington would not coordinate positions with Israel in advance. 

Brookings Executive Vice President Martin Indyk in a Head to Head interview with Al Jazeera English's Mehdi Hassan.

He pointed out that the United States has traditionally relied on its close relationship with Israel to encourage its leaders to take steps for peace and make offers to the Palestinians, and that no other potential mediator has been able to produce serious offers from Israel. “[The United States is] not neutral, we don't claim to be neutral. We have an alliance with Israel,” Indyk said. “But in order to achieve another interest that we have, which is peace in the region…and a settlement that provides for the legitimate national rights of the Palestinians, we need to be able to influence Israel.”

In responding to questions from Hasan and the audience, Indyk explained that he believes that both Israelis and Palestinians had made important concessions for peace, citing Israel’s acceptance of the Clinton Parameters in 2000, and the Palestinian Liberation Organization’s historic recognition of Israel as part of the Oslo Accords. Indyk also described the dramatic shifts in the way the United States has addressed the Palestinian issue over the past few decades, “from treating it only as a refugee issue and insisting that it be dealt with through Jordan to recognizing Palestinian national rights.” 

When asked about U.S. support for Israel at the United Nations, Indyk responded that this support is definitely warranted given the history of hostility towards Israel at the UN. However, he added that he personally wouldn’t oppose a carefully-worded resolution condemning Israeli settlements “so that the settlers in Israel understand that [settlement expansion] isn’t cost free.” Indyk rejected the notion that Israel has turned from a U.S. strategic asset in the Middle East into a burden, but explained that “making progress on the Palestinian issue enhances America’s credibility in the region and failing to make progress…hurts America’s credibility in the region.” 

Indyk concluded the discussion by reiterating his commitment to achieving Israeli-Palestinian peace and emphasizing that he would “never give up on trying to resolve this conflict in a way that meets Palestinian legitimate national aspirations to an independent and viable contiguous state living alongside Israel, a Jewish state, in peace.” 

       

Last month’s decision by the Palestinian Authority to schedule municipal elections in early October hardly registered in the West Bank and Gaza Strip, much less here in Washington. In light of Hamas’ recent decision to take part in the process, however, those elections have suddenly taken on new meaning. While the election of some 414 village, town, and city councils across the West Bank and Gaza Strip will not change the face of the Palestinian leadership or alter the diplomatic impasse with Israel, local elections have the potential to unlock the current paralysis within Palestinian politics.

Although Palestinian law calls for local elections to take place every four years, they have only been held twice since the creation of the Palestinian Authority (PA) in 1993, only one of which could be deemed genuinely competitive. The first and only local elections to take place in both the West Bank and Gaza Strip were held in 2004-05, in which Hamas—in its first foray into electoral politics—made major gains. Local elections were again held in 2012, although this time Hamas boycotted the process, preventing the vote from taking place in Gaza and allowing Fatah to declare a sweeping, if somewhat hollow, victory. 

Hamas’ decision to take part in this year’s local elections was therefore something of a surprise. Indeed, Hamas initially expressed dismay at the announcement, accusing the leadership in Ramallah of acting without consulting the other parties. Moreover, should the elections proceed as planned on October 8, they would be the first competitive electoral contest in the occupied territories since Hamas defeated Mahmoud Abbas’s ruling Fatah faction in the 2006 legislative election. Those elections triggered an international boycott of the PA which eventually led to the split between Fatah and Hamas and the current political paralysis.

If nothing else, Hamas’ entry into the elections averts another needless internal crisis in Palestinian politics. A boycott by Hamas would likely have further entrenched the political and geographic division between the Fatah-dominated West Bank and Hamas-ruled Gaza Strip, while dealing yet another blow to the beleaguered National Consensus Government, which despite being accepted by both factions in April 2014 has yet to physically return to Gaza. Movement on the reconciliation track could also help push the long-stalled reconstruction of Gaza, which has yet to recover from the devastating war of 2014.

Hamas has little to lose from participating in an election that is unlikely to significantly alter the political landscape one way or the other...[and Fatah] has little to gain from “winning” another electoral process that is largely uncontested.

What explains Hamas’ apparent change of heart? For one, Hamas may believe it has an advantage over Fatah, which continues to suffer from widespread perceptions of corruption and incompetence—a perception reinforced by the collapse of the peace process as well as the unprecedented unpopularity of President Abbas. Hamas may also view the upcoming vote as a way to gauge its current standing and future prospects in anticipation of long-awaited legislative and presidential elections. Either way, Hamas has little to lose from participating in an election that is unlikely to significantly alter the political landscape one way or the other. 

Hamas’ decision to participate in the elections is welcome news for Palestinian voters eager to see the return of competitive elections and a revival of political life after years of stagnation. It even helps Fatah, which has little to gain from “winning” another electoral process that is largely uncontested. More important, as the party that lost both parliamentary elections and a civil war in 2006-07 and that remains the chief proponent of a failed process, Fatah desperately needs a political victory of some kind as well as a basis on which to stake its claim to legitimacy and continued grip on power.

That said, it is important not to overstate the significance of local elections, which in the end will do nothing to address the deeper problems facing Palestinians in the occupied territories, whether from Israel’s continued occupation and its ever-expanding settlement enterprise or the ongoing political dysfunction within their own ranks. On the other hand, the prospect of the first competitive Palestinian elections in a decade represents a small but significant ripple in the otherwise stagnant waters of Palestinian politics.

       

       

       

       

Event Information

The Risk Evaluation and Mitigation Strategies (REMS) program has become an important tool of the U.S. Food and Drug Administration (FDA) in ensuring that the benefits of a given medical product outweigh the associated risks, and has enabled FDA to approve a number of products that might not otherwise have been made available for patient use. Since the implementation of the REMS program, however, concerns have been raised regarding its impact on patient access to products and the associated burden on providers and health care systems. In an effort to address these concerns—and as part of its commitments under the Prescription Drug User Fee Act reauthorization of 2012—FDA has undertaken efforts to standardize and improve the effectiveness of REMS, and to better integrate REMS programs into the health system. As part of this broader initiative, the Agency is currently assessing the feasibility of integrating accredited continuing education (CE) programs and activities into REMS programs that have been developed for a single drug.

Under a cooperative agreement with the FDA, the Center for Health Policy held an expert workshop on May 18, titled “Incorporating Continuing Education into Single-Drug REMS: Exploring the Challenges and Opportunities”. This workshop provided an opportunity for pharmaceutical manufacturers, regulators, CE providers, accreditors, and other stakeholders to explore the ways that CE can be a valuable addition to the REMS toolkit, discuss potential barriers to the development and implementation of REMS-related CE for single products, and identify strategies for addressing those barriers.

Event Materials

• Bio sheet
• REMS CE Meeting Agenda
• REMS_CE_Meeting_Discussion_Guide_Final
• REMS CE Meeting Summary

      

The Risk Evaluation and Mitigation Strategies (REMS) program has become an important tool of the U.S. Food and Drug Administration (FDA) in ensuring that the benefits of a given medical product outweigh the associated risks, and has enabled FDA to approve a number of products that might not otherwise have been made available for patient use. Since the implementation of the REMS program, however, concerns have been raised regarding its impact on patient access to products and the associated burden on providers and health care systems. In an effort to address these concerns—and as part of its commitments under the Prescription Drug User Fee Act reauthorization of 2012—FDA has undertaken efforts to standardize and improve the effectiveness of REMS, and to better integrate REMS programs into the health system. As part of this broader initiative, the Agency is currently assessing the feasibility of integrating accredited continuing education (CE) programs and activities into REMS programs that have been developed for a single drug.

Under a cooperative agreement with the FDA, the Center for Health Policy held an expert workshop on May 18 titled, “Incorporating Continuing Education into Single-Drug REMS: Exploring the Challenges and Opportunities”. This workshop provided an opportunity for pharmaceutical manufacturers, regulators, CE providers, accreditors, and other stakeholders to explore the ways that CE can be a valuable addition to the REMS toolkit, discuss potential barriers to the development and implementation of REMS-related CE for single products, and identify strategies for addressing those barriers.

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Event Information

Under the Food and Drug Administration Amendments Act (FDAAA) of 2007, the FDA has the authority to require pharmaceutical manufacturers to develop Risk Evaluation and Mitigation Strategies (REMS) for drugs or biologics that carry serious potential or known risks. Since that time, the REMS program has become an important tool in ensuring that riskier drugs are used safely, and it has allowed FDA to facilitate access to a host of drugs that may not otherwise have been approved. However, concerns have arisen regarding the effects of REMS programs on patient access to products, as well as the undue burden that the requirements place on the health care system. In response to these concerns, FDA has initiated reform efforts aimed at improving the standardization, assessment, and integration of REMS within the health care system. As part of this broader initiative, the agency is pursuing four priority projects, one of which focuses on improving provider-patient benefit-risk counseling for drugs that have a REMS attached.

Under a cooperative agreement with FDA, the Center for Health Policy at Brookings held an expert workshop on July 24 titled, “Risk Evaluation and Mitigation Strategies (REMS): Building a Framework for Effective Patient Counseling on Medication Risks and Benefits”. This workshop was the first in a series of convening activities that will seek input from stakeholders across academia, industry, health systems, and patient advocacy groups, among others. Through these activities, Brookings and FDA will further develop and refine an evidence-based framework of best practices and principles that can be used to inform the development and effective use of REMS tools and processes.

Event Materials

• REMS_PBRC_Meeting_Agenda
• REMS BR Speaker Bios
• REMS BenefitRisk Meeting Summary
• REMS BenefitRisk communication white paper

       

Summary

Global education plays an important role in contributing to U.S. foreign policy objectives. In a recent speech, Secretary of State Hillary Clinton highlighted education, along with health, agriculture, security, and local governance as the core areas for U.S. international development investment. She emphasized the importance of education, particularly of girls and youth, in improving global stability, speeding economic growth, and helping global health, all of which advance U.S. interests in the world.

But how effective has the U.S. government been in supporting global education? Unfortunately, its many good education activities and programs are not leveraged for maximum impact on the ground, especially in situations of armed conflict and state fragility. Challenges of U.S. foreign assistance—for example, fragmentation across multiple agencies, lack of policy coherence, diminished multilateral engagement—generally affects its work in education. Luckily some of the core strengths of U.S. assistance have an impact as well, specifically the large amount of resources (in total terms, if not relative terms) devoted to education and the vast breadth and depth of American academic, philanthropic and NGO partners engaged in pioneering work on education in the developing world.

This report analyzes the effectiveness of U.S. government education work specifically in relation to conflict-affected and fragile states. Findings across five domains—global reach, resources, technical expertise, policy and multilateral partnerships—show that U.S. education aid falls critically short of what it is capable of achieving. The U.S. government has substantial strengths in this area, especially in global reach, resources, and technical expertise, demonstrating a real comparative advantage in the field of education in situations of conflict and fragility. However, its fragmented policy across agencies and its limited multilateral engagement prevent it from maximizing its strengths, leaving it punching below its weight on this important issue. In this sense, the U.S. government is a classic underachiever, failing to efficiently deploy its many capabilities and potential for maximum impact.

There has never been a better time for looking at the aid-effectiveness of U.S. government education work. The Obama administration is bringing increased focus on the Paris Principles for Aid Effectiveness to its development initiatives. The U.S. Congress is actively engaged with pending legislative action to modernize foreign assistance and improve U.S. support for universal education. Two major reviews of foreign assistance are underway: the Quadrennial Diplomacy and Development Review led by the Department of State and USAID, and the Presidential Study Directive on U.S. Global Development Policy led by the White House.

Questions about foreign assistance reform asked in these two reviews can be applied to the education sector. For example, how can the U.S. government improve its education assistance by using a “whole-of-government” approach, by focusing on comparative advantages and strengths, and by improving coordination and by increasing multilateral engagement?

Careful analysis and answers to these questions can help propel the U.S. from its current position as an underachiever to being a leader in global education, specifically in contexts of conflict and state fragility.

This report makes nine specific recommendations, many of which could be achieved without any substantial increase in funding, that would enable the U.S. government to greatly increase the effectiveness of its education aid to populations living in contexts of conflict and state fragility.

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INTRODUCTION

In August, 2010 the government of Kenya adopted a new constitution. This followed a referendum in which an overwhelming majority of Kenyans voted for change. The decisive impetus for reform came from the widespread violence and political crisis that followed the 2007 election. While claims of electoral fraud provided the immediate catalyst for violence, the deeper causes were to be found in the interaction of a highly centralized ‘winner-take-all’ political system with deep social disparities based in part on group identity (Hanson 2008).

Provisions for equity figure prominently in the new constitution. Backed by a bill of rights that opens the door to legal enforcement, citizenship rights have been strengthened in many areas,including access to basic services. ‘Equitable sharing’ has been introduced as a guiding principle for public spending. National and devolved governments are now constitutionally required to redress social disparities, target disadvantaged areas and provide affirmative action for marginalized groups.

Translating these provisions into tangible outcomes will not be straightforward. Equity is a principle that would be readily endorsed by most policymakers in Kenya and Kenya’s citizens have provided their own endorsement through the referendum. However, there is an ongoing debate over what the commitment to equity means in practice, as well as over the pace and direction of reform. Much of that debate has centered on the constitutional injunction requiring ‘equitable sharing’ in public spending.

On most measures of human development, Kenya registers average outcomes considerably above those for sub-Saharan Africa as a region. Yet the national average masks extreme disparities—and the benefits of increased prosperity have been unequally shared.

There are compelling grounds for a strengthened focus on equity in Kenya. In recent years, the country has maintained a respectable, if less than spectacular, record on economic growth. Social indicators are also on an upward trend. On most measures of human development, Kenya registers average outcomes considerably above those for sub-Saharan Africa as a region. Yet the national average masks extreme disparities—and the benefits of increased prosperity have been unequally shared. Some regions and social groups face levels of deprivation that rank alongside the worst in Africa. Moreover, the deep fault lines running through society are widely perceived as a source of injustice and potential political instability.

High levels of inequality in Kenya raise wider concerns. There has been a tendency in domestic debates to see ‘equitable sharing’ as a guiding principle for social justice, rather than as a condition for accelerated growth and enhanced economic efficiency. Yet international evidence strongly suggests that extreme inequality—especially in opportunities for education— is profoundly damaging for economic growth. It follows that redistributive public spending has the potential to support growth.

The current paper focuses on a group of 12 counties located in Kenya’s Arid and Semi-Arid Lands (ASALs). They are among the most disadvantaged in the country. Most are characterized by high levels of income poverty, chronic food insecurity and acute deprivation across a wide range of social indicators.

Nowhere is the deprivation starker than in education. The ASAL counties account for a disproportionately large share of Kenya’s out-of-school children, pointing to problems in access and school retention. Gender disparities in education are among the widest in the country. Learning outcomes for the small number of children who get through primary school are for the most part abysmal, even by the generally low national average standards.

Unequal public spending patterns have played no small part in creating the disparities that separate the ASAL counties from the rest of Kenya—and ‘equitable sharing’ could play a role in closing the gap. But what would a more equitable approach to public spending look like in practice?

This paper addresses that question. It looks in some detail at education for two reasons. First, good quality education is itself a powerful motor of enhanced equity. It has the potential to equip children and youth with the skills and competencies that they need to break out of cycles of poverty and to participate more fully in national prosperity. If Kenya is to embark on a more equitable pattern of development, there are strong grounds for prioritizing the creation of more equal opportunities in education. Second, the education sector illustrates many of the wider challenges and debates that Kenya’s policymakers will have to address as they seek to translate constitutional provisions into public spending strategies. In particular, it highlights the importance of weighting for indicators that reflect need in designing formulae for budget allocations.

Our broad conclusion is that, while Kenya clearly needs to avoid public spending reforms that jeopardize service delivery in wealthier counties, redistributive measures are justified on the grounds of efficiency and equity.

The paper is organized as follows. Part 1 provides an overview of the approach to equity enshrined in the constitution. While the spirit of the constitution is unequivocal, the letter is open to a vast array of interpretations. We briefly explore the implications of a range of approaches. Our broad conclusion is that, while Kenya clearly needs to avoid public spending reforms that jeopardize service delivery in wealthier counties, redistributive measures are justified on the grounds of efficiency and equity. Although this paper focuses principally on basic services, we caution against approaches that treat equity as a matter of social sector financing to the exclusion of growth-oriented productive investment.

Part 2 provides an analysis of some key indicators on poverty, health and nutrition. Drawing on household expenditure data, the report locates the 12 ASAL counties in the national league table for the incidence and depth of poverty. Data on health outcomes and access to basic services provide another indicator of the state of human development. While there are some marked variations across counties and indicators, most of the 12 counties register levels of deprivation in poverty and basic health far in excess of those found in other areas.

Part 3 shifts the focus to education. Over the past decade, Kenya has made considerable progress in improving access to basic education. Enrollment rates in primary education have increased sharply since the elimination of school fees in 2003. Transition rates to secondary school are also rising. The record on learning achievement is less impressive. While Kenya lacks a comprehensive national learning assessment, survey evidence points to systemic problems in education quality. In both access and learning, children in the ASAL counties—especially female children—are at a considerable disadvantage. After setting out the national picture, the paper explores the distinctive problems facing these counties.

In Part 4 we look beyond Kenya to wider international experience. Many countries have grappled with the challenge of reducing disparities between less-favored and more-favored regions. There are no blueprints on offer. However, there are some useful lessons and guidelines that may be of some relevance to the policy debate in Kenya. The experience of South Africa may be particularly instructive given the weight attached to equity in the post-apartheid constitution.

Part 5 of the paper explores a range of approaches to financial allocations. Converting constitutional principle into operational practice will require the development of formulae-based approaches. From an equitable financing perspective there is no perfect model. Any formula that is adopted will involve trade-offs between different goals. Policymakers have to determine what weight to attach to different dimensions of equity (for example, gender, income, education and health), the time frame for achieving stated policy goals, and whether to frame targets in terms of outcomes or inputs. These questions go beyond devolved financing. The Kenyan constitution is unequivocal in stipulating that the ‘equitable sharing’ provision applies to all public spending. We therefore undertake a series of formula-based exercises illustrating the allocation patterns that would emerge under different formulae, with specific reference to the 12 ASAL focus counties and to education.

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EXECUTIVE SUMMARY

Parents, educators, government ministers and policymakers in all contexts and countries around the world are concerned with learning and how to improve it. There are many reasons for this, but none is more important than the fact that learning is at the heart of success at the individual, community and global levels. Learning First is the title of this report, with the strong implication that learning should be the foremost goal of education policies worldwide.

The present review seeks not only to explain why this is the case but also focuses on what we need to know—that is, what research is needed—in order to improve learning in the decades to come, particularly among those children most in need. This question is addressed in the following six sections.

1. Learning Goals and Research. The first section begins with a historical synopsis of international education goals put forward in 1990 at the World Conference on Education for All in Jomtien (Thailand), in 2000 at the Education for All conference in Dakar, and later in 2000 as a part of the UN Millennium Development Goals for 2015. In 2011, the Center for Universal Education at the Brookings Institution published A Global Compact on Learning: Taking Action on Education in Developing Countries, which stated that there is a “global learning crisis—which affects children and youth who are out of school with limited learning opportunities and those who are in school but not learning the skills they need for their futures.” The present review of learning research in low-income countries follows from that report. The overall purpose is to explore the most pressing learning issues today that require further research attention in the years to come.
    
2. Learning Definitions and Contexts. This section reviews how the field of education has defined learning over the years. Here, learning is defined as a modification of behavior due to experience—such as in knowledge, skills, attitudes and values. Three main principles of effective learning are suggested: individual active involvement, social participation, and meaningful engagement. As a way to emphasize the importance of learning contexts, three individual stories—Illa, a four-year-old Quechua-speaking girl in Peru; Pawan, an eight-year-old primary school student in urban India; and Rachida, a young illiterate woman in rural Morocco—are provided in order to better explain the importance of learning as a culturally specific phenomenon. These stories help to illustrate a more general learning framework, encompassing the relationship between two dimensions of learning—its processes and contexts. A discussion follows concerning the need to disaggregate learners and their learning contexts—between countries and within countries—as a way to overcome frequent and simplistic generalizations about how the “average” child learns.
    
3. Global Change and the Contexts of Learning. This section considers the issue of global change on how learning and learning contexts are being transformed around the world. For example, researchers need to pay more attention to the impact of migration on children’s learning and on educational systems more broadly. In each instance of translocation, children confront the challenges of adapting to a new environment that may include different languages, dialects or cultures within the nonformal learning contexts of daily life. Similarly, in formal education contexts, student migrants have to cope with contrasts in culture, lifestyle and language of schooling, and demonstrate skills and achievement that may vary dramatically with their culture of origin. Other changes due to globalization include increased multilingualism in schools, growing overcrowding in classrooms, inability to keep up with teacher training, changes in intergenerational learning, and the growing importance of 21st-century skills. Based on these observations, it is suggested that learning contexts and needs should be understood as a shifting target.

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May’s jobs gains, released this morning, show that only 38,000 new jobs were added this May, down from an average of 178,000 over the first four months of the year, and the least new jobs added since September 2010.

This year’s monthly job gains and losses can indicate how the economy is doing once they are corrected to account for the pattern we already expect in a process called seasonal adjustment. The approach for this seasonal adjustment that is presently used by the Bureau of Labor Statistics (BLS) puts very heavy weight on the current and last two years of data in assessing what are the typical patterns for each month.

In my paper “Unseasonal Seasonals?” I argue that a longer window should be used to estimate seasonal effects. I found that using a different seasonal filter, known as the 3x9 filter, produces better results and more accurate forecasts by emphasizing more years of data. The 3x9 filter spreads weight over the most recent six years in estimating seasonal patterns, which makes them more stable over time than in the current BLS seasonal adjustment method.

I calculate the month-over-month change in total nonfarm payrolls, seasonally adjusted by the 3x9 filter, for the most recent month. The corresponding data as published by the BLS are shown for comparison purposes. According to the alternative seasonal adjustment, the economy actually lost about 4,000 jobs in May (column Wright SA), compared to the official BLS total of 38,000 gained (column BLS Official).

In addition to seasonal effects, abnormal weather can also affect month-to-month fluctuations in job growth. In my paper “Weather-Adjusting Economic Data” I and my coauthor Michael Boldin implement a statistical methodology for adjusting employment data for the effects of deviations in weather from seasonal norms. This is distinct from seasonal adjustment, which only controls for the normal variation in weather across the year. We use several indicators of weather, including temperature and snowfall.

We calculate that weather in May had a negligible effect on employment, bringing up the total by only 4,000 jobs (column Weather Effect). Our weather-adjusted total, therefore, is 34,000 jobs added for May (column Boldin-Wright SWA). This is not surprising, given that weather in May was in line with seasonal norms.

Unfortunately, neither the alternative seasonal adjustment, nor the weather adjustment, makes todays jobs report any more hopeful. They make little difference and, if anything, make the picture more gloomy.

a. Applies a longer window estimate of seasonal effects (see Wright 2013).
b. Includes seasonal and weather adjustments, where seasonal adjustments are estimated using the BLS window specifications (see Boldin & Wright 2015). The incremental weather effect in the last column is the BLS official number less the SWA number.

      

Ghana attained middle-income status after rebasing its National Accounts, pushing per capita gross domestic product (GDP) of the country above $1,000 in 2007. After recovering from economic recession in 1984 on account of the Bretton Woods sponsored economic reform introduced at that time, Ghana’s growth has been remarkably strong, with its lowest economic growth of 3.3 percent recorded in 1994. The country’s growth rate reached its peak of 15 percent in 2011 on the back of the commencement of commercial production of oil, making it one of the fastest growing economies globally during that year. This has translated into increased per capita income, which reached a high of about $1,900 in 2013.

The concern, however, has been the ability of the country to sustain this growth momentum given the level and quality of education and skills, and, more importantly, the failure of this strong growth performance to be translated into the creation of productive and decent jobs, improved incomes and livelihoods. The structure of the economy remains highly informal, with a shift in the country’s national output composition from agriculture to low-value service activities in the informal sector. The commencement of commercial production of oil raised the share of the industrial sector in national output. However, the continuous decline in manufacturing value added undermines Ghana’s economic transformation effort to promote high and secure incomes and improve the livelihoods of the people.

Structural change towards higher value added sectors, and upgrading of technologies in existing sectors, is expected to allow for better conditions of work, better jobs, and higher wages. But the low level and quality of human resources not only diverts the economy from its structural transformation path of development but also makes it difficult for the benefits of growth to be spread through the creation of gainful and productive employment. Thus, productive structural economic transformation hinges on the level and quality of education and labor skills. A highly skilled, innovative and knowledgeable workforce constitutes a key ingredient in the process of structural economic transformation, and as productive sectors apply more complex production technologies and research and development activities increase the demand for education and skills. However, the observed weak human capital base does not provide a strong foundation for structural economic transformation of Ghana.

Ghana’s employment growth lags behind economic growth, with an estimated employment elasticity of output of 0.47, suggesting that every 1 percent of annual economic growth yields 0.47 percent growth of total employment.

There is also widespread concern about the quality of the country’s growth in terms of employment and inequality, as well as general improvement in the livelihood of the people (see Alagidede et al. 2013; Aryeetey et al. 2014; Baah-Boateng 2013). A key indicator for measuring the extent to which macroeconomic growth results in gains in the welfare of the citizenry is the quality of jobs that the economy generates. Ghana’s employment growth lags behind economic growth, with an estimated employment elasticity of output of 0.47 (see Baah-Boateng 2013), suggesting that every 1 percent of annual economic growth yields 0.47 percent growth of total employment. Besides the slow rate of job creation is the dominance of vulnerable employment and the working poverty rate in the labor market. In 2010, 7 out of 10 jobs were estimated to be vulnerable while only 1 out of 5 jobs could be considered as productive jobs that meet the standard of decent work (Baah-Boateng and Ewusi 2013). Workers in vulnerable employment tend to lack formal work arrangements as well as elements associated with decent employment such as adequate social security and recourse to effective social dialogue mechanisms (Sparreboom and Baah-Boateng 2011). The working poverty rate remains a challenge with one out of every five persons employed belonging to poor households.

The article seeks to provide an analytical assessment of Ghana’s economic growth as one of Africa’s growth giants over a period of more than two decades and the implication for labour market and livelihood outcomes. Growth of labor productivity at the national and sectoral level is examined, as well as the sectoral contribution to aggregate productivity growth. The article also analyses the effect of growth on employment and the employment-poverty linkage in terms of elasticity within the growth-employment-poverty nexus in Ghana. It also delves into a discussion of the constraints on growth and productive employment from both demand and supply perspectives, and identifies skills gaps and the opportunities offered in the country, which has experienced strong growth performance. The article has five sections, with an overview of Ghana’s economic growth performance in Section 2, after this introductory section. This is followed by an overview of the developments in the labor market, specifically in the area of employment, unemployment, poverty, and inequality in Ghana in Section 3. The growth-employment-poverty linkage analysis is carried out in Section 4 followed by a discussion of constraints to growth and employment generation in Section 5. Section 6 provides a summary and conclusion, with some policy suggestions for the future.

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We can all breathe a big sigh of relief – the job market does not appear to be dramatically slowing.

After a very weak jobs report for the month of May – when only 11,000 jobs were created – the employment numbers bounced back strongly in June, with 287,000 payroll jobs created this month.

This represents the strongest monthly rate of new job creation this year, and is well above economist expectations of about 170,000 jobs created. The return of Verizon workers to their jobs after a strike last month accounted for only about 35,000 of these jobs. Employment growth over the past 3 months now averages 147,000 – a bit below last year’s rate but quite good in a labor market where there is now less slack than before.

Job growth was strong in a range of sectors, including leisure and hospitality, health care and information technology. Growth was also notable in professional and business services, retail trade and finance. Even manufacturing showed a small uptick in employment (of 14,000), after having fallen in previous months (due to the rising value of the dollar and economic slowdowns overseas). But construction jobs this month were flat and mining employment fell again, but only slightly.

On the household side of the ledger, unemployment edged up a bit, from 4.7 to 4.9 percent. But much of this was due to a small bounce back in the labor force participation rate, which had dipped in the previous two months. Other concerns, such as rising part-time employment among those preferring full-time work, were also eased as such employment declined this month.

If there was any disappointment in the report, it was in wage growth. Hourly wages rose by just 2 cents this month, or about 1 percent on an annualized basis. Wage growth had been stronger in the two previous months, suggesting that some labor markets were perhaps tightening up. Over the past year, wage growth has averaged 2.6 percent – above the inflation rate and a modest improvement over previous years in which we were slowly recovering from the Great Recession.

Overall, the June jobs report should ease concerns of a coming economic slowdown, which grew stronger after the “Brexit” vote in Britain. Indeed, this report restores the view that prevailed a few months before, of a slowly but steadily improving labor market.

       

June’s jobs gains, released this morning, show that 287,000 new jobs were added in June, an impressive rebound after only 11,000 new jobs were added in May (revised down from from 38,000 at the time of the release).

This year’s monthly job gains and losses can indicate how the economy is doing once they are corrected to account for the pattern we already expect in a process called seasonal adjustment. The approach for this seasonal adjustment that is presently used by the Bureau of Labor Statistics (BLS) puts very heavy weight on the current and last two years of data in assessing what are the typical patterns for each month.

In my paper “Unseasonal Seasonals?” I argue that a longer window should be used to estimate seasonal effects. I found that using a different seasonal filter, known as the 3x9 filter, produces better results and more accurate forecasts by emphasizing more years of data. The 3x9 filter spreads weight over the most recent six years in estimating seasonal patterns, which makes them more stable over time than in the current BLS seasonal adjustment method.

I calculate the month-over-month change in total nonfarm payrolls, seasonally adjusted by the 3x9 filter, for the most recent month. The corresponding data as published by the BLS are shown for comparison purposes. According to the alternative seasonal adjustment, the economy added 286,000 jobs in June (column Wright SA), almost identical to the official BLS total of 287,000 (column BLS Official).

Data updates released today for prior months also reveal some differences between my figure and the official jobs gains from prior months. The official BLS numbers for May were revised down from 38,000 new jobs to a dismal 11,000. My alternative adjustment shows that the economy actually lost 6,000 jobs in May, down from 17,000 jobs gained at the time of the release. [i] The discrepancies between the two series are explained in my paper.

In addition to seasonal effects, abnormal weather can also affect month-to-month fluctuations in job growth. In my paper “Weather-Adjusting Economic Data” I and my coauthor Michael Boldin implement a statistical methodology for adjusting employment data for the effects of deviations in weather from seasonal norms. This is distinct from seasonal adjustment, which only controls for the normal variation in weather across the year. We use several indicators of weather, including temperature and snowfall.

We calculate that weather in June brought up the total by 25,000 jobs (column Weather Effect), but this should be considered a transient effect. Our weather-adjusted total, therefore, is 262,000 jobs added for June (column Boldin-Wright SWA). This is not surprising, given that weather in June was in line with seasonal norms.

It’s good to see the jobs numbers rebounding this month. The May number was somewhat affected by the Verizon strike. Also, it is important to remember that pure sampling error in any one month’s data is large, and that could explain part of the weak employment report for May. Averaging over the last three months, employment is expanding by about 150,000 jobs per month—a healthy pace, although a bit of a step down from last year.

a. Applies a longer window estimate of seasonal effects (see Wright 2013). The June 2015 to May 2016 values in this column have been corrected to remove a coding error that affected the previously reported values.

b. Includes seasonal and weather adjustments, where seasonal adjustments are estimated using the BLS window specifications (see Boldin & Wright 2015). The incremental weather effect in the last column is the BLS official number less the SWA number.

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[i] Note that, due to a small coding error, my alternative seasonal adjustment for May, at the time of the release, should have been 17,000 new jobs, not -4,000, as was reported in my previous post. In addition to the underlying data revisions, and correcting for this error, the revised alternative seasonal adjustment for May is -6,000 jobs added (second row of column Wright SA).

       

       

       

       

       

This paper lays out the fundamentals of a downtown turnaround plan and the unique "private/public" partnership required to succeed. Beginning with visioning and strategic planning to the reemergence of an office market at the end stages, these 12 steps form a template for returning "walkable urbanism" downtown.

Though every downtown is different there are still common revitalization lessons that can be applied anywhere. While any approach must be customized based on unique physical conditions, institutional assets, consumer demand, history, and civic intent, this paper lays out the fundamentals of a downtown turnaround plan and the unique "private/public" partnership required to succeed. Beginning with visioning and strategic planning to the reemergence of an office market at the end stages, these 12 steps form a template for returning "walkable urbanism" downtown.

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Hong Kong has seemed quiet for the last four months. The foreign media moved on to other stories once last fall’s protest movement came to an end. But locally the debate over a new system to elect the territory’s chief executive has continued non-stop, and the situation is about to heat up again. On Wednesday Hong Kong time, the government will announce its proposal for electoral reform. Once it does, the pro-democracy opposition will face some difficult choices.

Here, in not too much detail, is a quick review of the background.

In 2007, the government of the People’s Republic of China, which has sovereignty over Hong Kong, announced it would accept an election of Hong Kong’s chief executive (CE) through universal suffrage for the 2017 election. It also said that candidates would be picked by a Nominating Committee. Pro-democracy politicians and the public at large, a majority of which supports a more democratic system, welcomed the universal suffrage part of this pledge but suspected that Beijing would use the Nominating Committee to restrict who got to run. What good is a one-man-one-vote election, they asked, if voters had to choose between candidates who are from the territory’s conservative establishment camp and will likely accommodate Beijing? (Good question.)

The following ensued:

• After several years of public debate, the Hong Kong government began a formal process consulting the public in December 2013. The key point of disagreement was over whether election candidates could emerge only through a Nominating Committee vote or through other mechanisms as well. Those who wanted other mechanisms believed that the Committee’s membership would be friendly to Beijing and pick candidates accordingly. Some of these skeptics were prepared to engage in civil disobedience to try to get their way.
• In late June 2014, the Hong Kong government announced the results of the consultation and the incumbent CE, C. Y. Leung, made a formal report to Beijing. This was the first step in a five-step process for constitutional revision, a process set by China. There is general agreement that Leung’s report understated the opposition to a nomination system that relied exclusively on the Nominating Committee.
• On August 31st, the Standing Committee of China’s National People’s Congress (NPC-SC) announced a decision on basic parameters for the new system (step two). Sure enough, it ruled out any supplementary nominating mechanisms. It also strongly suggested that the Nominating Committee would be constituted the same way as the 1,200-person Election Committee that had heretofore selected the CE and whose members were mostly friendly towards Beijing. The NPC-SC also limited the number of final CE candidates to two or three and dictated that each had to receive majority support from the Nominating Committee to become a candidate.
• The public response to the decision was sharply negative. The logical conclusion seemed to be that the new system was rigged in a way that Hong Kong voters have to pick among establishment candidates only, and that a pro-democracy aspirant had no way of getting nominated.
• In late September, students began a civil disobedience campaign that was marked by episodes of violence, and resulted in the occupation of three sets of major roadways in the territory. These lasted until early December, but the campaign did not persuade the government to back down on its basic approach.
• At the same time, the Hong Kong government, staying within the parameters Beijing announced on August 31st, began a second consultation process on its more specific reform proposals.

Why, you may ask, doesn’t Beijing just impose the system it wants? The reason is that it already committed that in step three of the five-step constitutional revision process, the government would introduce a bill in the Hong Kong Legislative Council reflecting its final proposal and that the legislature would have to approve it by a two-thirds margin. Even though the legislature is constituted in a way that gives disproportionate power to interests aligned with Beijing, the establishment camp currently does not have enough votes for a two-thirds majority. Consequently, the government must win over four or five moderate legislators from the democratic camp. In response, the more radical democrats have worked hard to keep the moderates committed to rejecting any government that is based on Beijing’s parameters, because it means that China gets to screen who gets to run. 

In light of this problem, the Hong Kong government did a clever thing. In the consultation document, it included the option of “democratizing” the Nominating Committee while remaining within Beijing’s basic parameters. It proposed to do this first by making the body more representative of Hong Kong society and reducing the proportion of seats held by business interests and groups otherwise linked to China. Second, it suggested a two-stage process of selection. In the first stage, the Nominating Committee would consider more “potential candidates” than the two or three that would ultimately be nominated to run in the election. To be picked as a potential candidate, an individual would need the support of only a minority of Committee members (how low was unspecified). This could increase the possibility of one or more democratic politicians emerging as potential candidates and then, in the second stage, at least one of them being selected as a final candidate. The result would be a competitive election.

Last week, Raymond Tam, the Hong Kong government’s secretary for constitutional and mainland affairs, indicated that something along these lines would be proposed by the government this Wednesday. He talked of using “the necessary legal room to maximize the democratic elements” and making the “entrance requirement" for potential candidates no higher than one-eighth of the membership. Additionally, there would be greater openness, transparency and accountability in the process of reviewing potential candidates within the Nominating Committee.

The devil, of course, will be in the details of the proposal (more on that later in the week). Moreover, Tam said nothing about making the Nominating Committee more representative of Hong Kong society. Did that element get set aside, and if so, what are the implications? If the membership of the committee is still biased in favor of the political status quo, would it matter if the process within the Nominating Committee is more competitive and transparent?

Whatever the proposal, the ball will then be in the pan-democrats’ court. Do they vote as a block to reject any process that allows the Nominating Committee to screen candidates? Do they then want to expose themselves to near-certain criticism that their recalcitrance denied the Hong Kong public the opportunity to vote for the CE? Or, do they take a chance on the more flexible approach that Tam is proposing, in the hope and belief that a pan-democrat will be screened in, which in turn would seem to set up a competitive election?

Read Richard Bush's response to the Hong Kong government's proposal for electoral reform »

      

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

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

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

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

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

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

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

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

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

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

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

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

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

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

      

John Kerry to travel to Kenya and Djibouti next week

Exactly one year after U.S. Secretary of State John Kerry’s last multi-country tour of sub-Saharan Africa, he is preparing for another visit to the continent—to Kenya and Djibouti from May 3 to 5, 2015. In Kenya, Kerry and a U.S. delegation including Linda Thomas-Greenfield, assistant secretary of state for African affairs, will engage in talks with senior Kenyan officials on U.S.-Kenya security cooperation, which the U.S. formalized through its Security Governance Initiative (SGI) at the U.S.-Africa Leaders Summit last August. Over the past several years, the U.S. has increased its military assistance to Kenya and African Union (AU) troops to combat the Somali extremist group al-Shabab and has conducted targeted drone strikes against the group’s top leaders.  In the wake of the attack on Kenya’s Garissa University by al-Shabab, President Obama pledged U.S. support for Kenya, and Foreign Minister Amina Mohamed has stated that Kenya is currently seeking additional assistance from the U.S. to strengthen its military and intelligence capabilities.

Kerry will also meet with a wide array of leaders from Kenya’s private sector, civil society, humanitarian organizations, and political opposition regarding the two countries’ “common goals, including accelerating economic growth, strengthening democratic institutions, and improving regional security,” according to a U.S. State Department spokesperson. These meetings are expected to build the foundation for President Obama’s trip to Kenya for the Global Entrepreneurship Summit in July of this year.

On Tuesday, May 5, Kerry will become the first sitting secretary of state to travel to Djibouti. There, he will meet with government officials regarding the evacuation of civilians from Yemen and also visit Camp Lemonnier, the U.S. military base from which it coordinates its counterterror operations in the Horn of Africa region.

Protests erupt as Burundian president seeks third term

This week saw the proliferation of anti-government street demonstrations as current President Pierre Nkurunziza declared his candidacy for a third term, after being in office for ten years.  The opposition has deemed this move as “unconstitutional” and in violation of the 2006 Arusha peace deal which ended the civil war. Since the announcement, hundreds of civilians took to the streets of Bujumbura, despite a strong military presence. At least six people have been killed in clashes between police forces and civilians. 

Since the protests erupted, leading human rights activist Pierre-Claver Mbonimpa has been arrested alongside more than 200 protesters. One of Burundi’s main independent radio stations was also suspended as they were covering the protests.  On Wednesday, the government blocked social media platforms, including Twitter and Facebook, declaring them important tools in implementing and organizing protests. Thursday, amid continuing political protests, Burundi closed its national university and students were sent home. 

Amid the recent protests, Burundi’s constitutional court will examine the president’s third term bid. Meanwhile, U.N. secretary general Ban Ki-moon has sent his special envoy for the Great Lakes Region to hold a dialogue with president Nkurunziza and other government authorities. Senior U.S. diplomat Tom Malinowski also arrived in Bujumbura on Thursday to help defuse the biggest crisis the country has seen in the last few years, expressing disappointment over Nkurunziza’s decision to run for a third term.

China invests billions in African infrastructure

Since the early 2000s, China has become an increasingly significant source of financing for African infrastructure projects, as noted in a recent Brookings paper, “Financing African infrastructure: Can the world deliver?” This week, observers have seen an additional spike in African infrastructure investments from Chinese firms, as three major railway, real estate, and other infrastructure deals were struck on the continent, totaling nearly $7.5 billion in investments.

On Monday, April 27, the state-owned China Railway Construction Corp announced that it will construct a $3.5 billion railway line in Nigeria, as well as a $1.9 billion real estate project in Zimbabwe. Then on Wednesday, the Industrial and Commercial Bank of China (one of the country’s largest lenders) signed a $2 billion deal with the government of Equatorial Guinea in order to carry out a number of infrastructure projects throughout the country. These deals align with China’s “One Belt, One Road” strategy of building infrastructure in Africa and throughout the developing world in order to further integrate their economies, stimulate economic growth, and ultimately increase demand for Chinese exports. For more insight into China’s infrastructure lending in Africa and the implications of these investments for the region’s economies, please see the following piece by Africa Growth Initiative Nonresident Fellow Yun Sun: “Inserting Africa into China’s One Belt, One Road strategy: A new opportunity for jobs and infrastructure?”

      

William Galston and E.J. Dionne, Jr. make the case for universal voting – a new electoral system in which voting would be regarded as a required, civic duty. Why not treat showing up at the polls in the same way we treat a jury summons, which compels us to present ourselves at the court? Galston and Dionne argue that universal voting would enhance the legitimacy of our governing institutions, greatly increasing turnout and the diversity of the American voter base, and ease the intense partisan polarization that weakens our governing capacity.

Citing the implementation of universal voting in Australia in 1924, the authors conclude that universal voting increases citizen participation in the political process. In the United States, they write, universal voting would promote participation among citizens who are not likely to vote—those with lower levels of income and education, young adults, and recent immigrants. By evening out disparities in the electorate, universal voting would put the state on the side of promoting broad civic participation.

In addition to expanding voter participation, universal voting would improve electoral competition and curb hyperpolarization. Galston and Dionne assert that the addition of less partisan voters in the electorate, would force candidates to shift their focus from mobilizing partisan bases to persuading moderates and less committed voters. Reducing partisan rhetoric would help ease polarization and increase prospects for compromise.. Rather than focusing on symbolic, political gestures, Washington might have an incentive to tackle serious issues and solve problems.

Galston and Dionne believe that American democracy cannot be strong if citizenship is weak. And right now, they contend citizenship is strong on rights but weak on responsibilities. Making voting universal would begin to right this balance and send an important message: we all have the duty to help shape the country that has given us so much.

Galston and Dionne recognize that the majority of Americans are far from ready to endorse universal voting. By advancing a proposal that stands outside the perimeter of what the majority of Americans are likely to support, Galston and Dionne aim to enrich public debate—in the short term, by advancing the cause of more modest reforms that would increase participation; in the long term, by expanding public understanding of institutional remedies to political dysfunction. 

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• Dionne and Galston discuss their paper on universal voting

      

In a new research paper—The case for universal voting: Why making voting a duty would enhance our elections and improve our government—Brookings scholars E.J. Dionne, Jr. and William Galston make the case for universal voting—an electoral system in which voting would be regarded as a required, civic duty. Why not treat showing up at the polls in the same way we treat, say, a jury summons? Dionne and Galston argue that universal voting’s benefits would include enhancing the legitimacy of our governing institutions, increasing turnout and the diversity of the American voter base, and easing the intense partisan polarization that weakens our governing capacity.

What do you think of Dionne and Galston’s proposal? Specifically, if voting and registration rules were made easier, should voting in national elections be universal and mandatory for all eligible citizens?

To voice your opinion, click the image below and vote. We will share the results on social media.

       

       

       

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

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

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

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

In cosa differisce quest'ultimo caso dai precedenti?

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

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

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

Cosa può fare l'amministrazione Usa per riparare?

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

      

Next Sunday’s first round of the Tunisian presidential election is unlikely to produce an outright winner but the country can already lay claim to the most democratic success story in the uncertain post-Arab Spring period.

Earlier this year, the Islamist-led National Constituent Assembly in Tunis produced a pluralist constitution that set the stage for a parliamentary contest on October 26 in which the incumbents lost. That simple fact of political alternation is a historic milestone: Ennahda is not the only Islamist party to lose the confidence of its initial protest-vote electorate, but it is the first to live to tell the tale.

Islamist participation in the democratic process

The birthplace of the Arab Spring offers a tantalizing third way toward Islamist participation in the democratic process: a Goldilocks outcome between Turkish majoritarianism and Egyptian militarism. Tunisia is different: it is smaller, lacks a hegemonic army, and Ennahda doesn’t have anywhere near a majority of votes.

The alluring tableau, however, conceals a fragmented elite and a scattered electorate. Twenty-seven parties declared candidates for president, although a handful have dropped out. Last month, more than 15,000 candidates running on over 1,300 party lists vied for 217 parliamentary seats. Only two-fifths of eligible adults registered to vote and less than two-thirds of them actually voted.

The main pattern to emerge from parliamentary elections is the same that has defined the country for decades: an existential battle between Islamists and anti-Islamists with a majority for neither. The Islamists lost six percentage points (32 percent) but the secularists were not exactly embraced. Taking into account non-registration and abstention, the victorious party Nidaa Tounes’s share of the legislative vote (38 percent) corresponds to roughly one out of five eligible voters.

These results accurately reflect a highly polarized society. Nidaa Tounes is led by presidential frontrunner Beji Caïd Essebsi, an 87-year-old who served under every regime since 1956 independence and who stoked voters’ fear of Ennahda’s “seventh century project” during the campaign. Ennahda’s leadership framed the election as a contest “between supporters of the revolution and supporters of the counter-revolution.” It is the only Muslim-majority country where nearly half of the population claims to never step foot in a mosque.

Do Tunisians favor “authoritarian government”?

For the first time since the 2011 revolution, polling this summer showed a majority of Tunisians favoring “authoritarian government” over an “unstable” democratic government. Also for the first time, Ennahda declined to field a presidential candidate to contain apprehensions about them. While Essebsi mostly enjoys an untainted reputation his party, Nidaa Tounes is a loose coalition including many holdovers from the previous regime.

The last time electoral democracies experienced a comparable juncture was not in 2013 Cairo or Gezi Park, but rather Rome during the tense 1970s. In 1976, the Italian Communist Party received one-third of the votes, making it the largest Communist electoral bloc west of the Iron Curtain. Frequent small-scale terrorist attacks took place against the backdrop of global tensions between NATO and Warsaw Pact members.

It is hard to remember a time when the term “socialism” provoked as much angst as “Sharia” does today, but Tunisia stands at a crossroads analogous to the old Cold War alternatives of Washington and Moscow, with Qatar and other Gulf states filling the shoes of the old “evil empire.”

Recognizing that Italy was too divided to govern alone, party leader Enrico Berlinguer proposed a historic compromise (compromesso storico) with the archenemy Christian Democrats to bridge a seemingly impassible cultural-political gap.

Ennahda party faces doubts

Today’s Ennahda party faces the same doubts as Communist leaders in postwar Europe: are they truly pluralist democrats? Do they accept power sharing? The executive director of Nidaa Tounes, Mondher Belhadj Ali, said in an interview in Tunis earlier this year that Ennahda must undergo the equivalent process of the various leftist parties in Europe during the Cold War. The party needs to renounce its “jihadist logic,” Belhadj said, in the same way that the German left distanced itself from international Marxist-Leninist creed at Bad Godesberg in 1959.^[1]

To be considered trustworthy despite its association with a revolutionary ideology, the Italian Communist Party (Partito Comunista Italiano, or PCI) underwent key shifts. Its leadership broke with the international Comintern by supporting Italy’s NATO membership. They also refused Moscow’s order of “intransigence” through silent partnership with a Christian Democrat-led government, giving way to the “via Italiana” – an Italian path – to socialism.

Why did the PCI pursue this path at a moment of rising strength, when their share of the vote was peaking at 32 percent? Italian Communists had no doubt noticed that NATO countries were willing to forego democratic outcomes in Chile three years earlier in the name of political stability and anti-communism.

“Alternative to the Islamic State”

It is also apparent that Ennahda’s leadership has correctly interpreted the West’s silence after the arrest of Egypt’s first democratically elected president last year. The party’s agreement to omit the word “Sharia” from the constitution, its decision to ban the extremist group Ansar Echaria and its voluntary departure from political posts in 2013 have been taken as early signs of a willingness to compromise. There is no exact Islamist equivalent to Moscow and the Comintern, but Ennahda has offered itself up as “the alternative to the Islamic State.” Ennahda has also adopted an official party line not to govern alone but only in alliance with other parties. Party leader Rached Ghannouchi said he hopes to avoid “the repetition of the Egyptian bilateral polarizing model.”

Political pressure already forced Ennahda and its partners to wage not merely ideological but also actual military war on violent Islamist extremism. The martyrs of the Tunisian Revolution now include not only the two secular politicians who were assassinated in the first half of 2013 but also the 39 Tunisian soldiers who have been killed since then – including five in an attack earlier this month.

The interim government has not hesitated to combat religious enemies of the state. President Moncef Marzouki, a human rights activist, looked ashen in an interview in his office this summer: “I deeply regret it: it means killing and arresting people but I have to defend this state” – at times leading to the deaths of a dozen combatants per month, including six on election weekend.^[2]

In the years since the revolution, through a mixture of coercion and conviction, the religious affairs ministry whittled down the number of prayer spaces under the control of Salafi extremists from over 1000 in 2011 to under 100 today. This summer, the government fired an imam who refused to say prayers for a soldier who died in a raid on an Islamist cell.”^[3]

Like Berlinguer before him, Ghannouchi has made timely visits to meet with American officials and offer democratic reassurances – but to far greater effect than the Italian Communists ever managed. Washington’s reception of the PCI is captured by the chiaroscuro headshot of Berlinguer on a June 1976 cover of Time declaiming “The Red Threat.” In 2012, the magazine named Ghannouchi one of the “World’s Most Influential People,” someone who offers “a vision of a moderate, modern and inclusive political movement.”

Critics will point out that shortly after the compromesso storico, the Communist Party’s electoral base bottomed out. Left-wing terrorism did taper off but not before the Red Brigades kidnapped and executed the Communists’ main Christian Democratic interlocutor, former Prime Minister Aldo Moro, in 1978.

Compromise may lead to national unity

With counterterrorism support to resist such extremist violence on the fringes and more enthusiastic backing from Western capitals, however, a Tunisian historic compromise may yet deliver the national unity that the country needs to advance to self-confident partisan rule – and mutual faith in political alternation. The recent announcement of joint U.S.-Tunisian counter-terrorism exercises and a gift of $14 million worth of equipment and supplies are small in scale but their timing conveys a broader reassurance.

The lack of a clear political mandate may turn out to be the hidden advantage of this inaugural election season in Tunisia. The country’s political parties can now use the first full presidency and parliamentary session of a democratic Tunisia to blaze a third way between military rule and majoritarian Islamist democracy.

Just as Italian communism was a different animal than the Soviet Communist Party, Tunisian exceptionalism is a real thing. The accelerated modernization period under Independence leader Habib Bourguiba after decolonization left behind the lowest illiteracy rate and lowest birthrate in the neighborhood. Its relatively peaceful democratic revolution has now passed several institutional milestones. As President Moncef Marzouki put it, “if the experiment in Islamic democracy doesn’t work here then it’s unlikely to work anywhere.”^[4]

The Italian Communist Party voted to dissolve itself almost 24 years ago, not long after the Berlin Wall fell and sealed its obsolescence. An equivalent geopolitical shift in Sunni Islam – away from the hegemony of ideologically rigid Gulf States – is as unimaginable now as was the thaw of November 1989. But a great compromise between the region’s modern nemeses – secularist and Islamist – could well dislodge the first brick.

---

[1] Jonathan Laurence interview with Mondher Belhadj Ali, May 2014, Tunis, Tunisia.
[2] Jonathan Laurence interview with Tunisian President Moncef Marzouki, May 2014, Carthage, Tunisia.
[3] Jonathan Laurence Interview with Tunisian Minister of Religious Affairs Mounir Tlili, May 2014, Tunis, Tunisia.
[4] Ibid.

       

Event Information

The Brookings Doha Center (BDC) hosted a panel discussion on April 21, 2015 regarding Libya’s displacement crisis amid the country’s ongoing violence. The panelists were Houda Mzioudet, a journalist, researcher, and commentator on Libyan and Tunisian affairs; Megan Bradley, a non-resident fellow at the Brookings-LSE Project on Internal Displacement and assistant professor at McGill University, and Ibrahim Sharqieh, the deputy director of the BDC. Sultan Barakat, the BDC’s director of research, moderated the event, which was attended by members of Qatar's diplomatic, academic, and media community.

Sultan Barakat opened the discussion by explaining that the main difference between refugees and internally displaced persons (IDPs) is whether they are able to cross a border. By doing so, refugees gain access to certain types of status and assistance. Otherwise, both groups’ experience of being uprooted is similar, as they are likely to lose their livelihoods, friends, family, and end up in a difficult environment where they are at the mercy of others. Barakat argued that the international community has proven it cannot deal with these challenges, especially in a dignified way, and called for a reexamination of the 1951 Refugee Convention.

Ibrahim Sharqieh then described the displacement crisis within Libya, starting with the 2011 revolution that removed Gadhafi from power. He reported that the number of IDPs in the wake of the fighting reached 550,000, most of whom fled for political reasons, as they were Gadhafi supporters. He said that most IDPs returned to their homes after Gadhafi’s defeat, with the numbers falling to 56,000 by early 2014, though some groups such as the Tawerghans and the Mashashya tribe continued to face difficult situations. Sharqieh noted that due to Libya’s current civil war, the number of IDPs has now increased to 400,000. Many of them are scattered over 35 towns and cities, often lacking shelter due to the small number of available camps. He added that Libya’s IDPs often get caught in crossfire between militia groups, particularly in Benghazi and near Tripoli’s airport, and their movements have been restricted. He found that IDPs from Tawergha at the Janzour camp near Tripoli faced discrimination when they left the camp, which extended to their children that attend area schools.

According to Sharqieh, the ultimate solution is a successful transition where there is national reconciliation and the establishment of a transitional justice law, but he noted that this is not very likely because of the ongoing civil war and presence of rival governments. In the meantime, he expressed that parties to the conflict have an obligation to protect IDPs, providing humanitarian support and education as well. Sharqieh also advocated for IDPs being represented in the ongoing U.N.-sponsored negotiations to ensure that their situation is addressed. He reported that the Tawerghans are highly organized, in communication with the state, and have been able to forge some agreements with Misrata, while more recently displaced IDPs are basically just on the run.

Houda Mzioudet then discussed the Libyans who have crossed into Tunisia, noting that Tunisians historically have not considered Libyans refugees because of their close relations. She said that in 2011 these Libyans’ presence was not considered a major problem, as many found refuge with Tunisian families in the south and Tunisia received U.N. support. She noted, however, that a new wave of Libyans last summer had complicated matters, as these communities were more politically and ideologically diverse. Asked by Barakat whether refugees were bringing Libya’s politics with them, Mzioudet said the Libyans were accused at one time of trying to stir up trouble, but the government took a firm stance against them getting involved in Tunisia’s politics.

Mzioudet argued that the main concern now is how Libyans can be assisted, as many of them have lost trust in the Libyan authorities and are fearful of approaching the Libyan embassy. She reported that Libyans are now living in a state of limbo: they do not need visas, which enables them to live underground, but also prevents them from getting jobs. Mzioudet described this as a challenge for Tunisian authorities, as clear information about these Libyans is hard to come by. She cited estimates of their numbers ranging from the government’s 1.5 million (roughly 10 percent of Tunisia’s population) to a recent study’s 300,000-400,000.

Mzioudet noted that the U.N. High Commissioner for Refugees (UNHCR) has encouraged Libyans to come forward and register, but many have refused to do so. She also recounted that the Tunisia’s extradition of ex-Libyan Prime Minister Al-Baghdadi Al-Mahmoudi caused an uproar and frightened many Libyans. Though Mzioudet noted that civil society groups have done much to help Libyan refugee communities, the U.N. has prioritized other needs and Tunisia is not recognized as a host country by international community. She added that at this point some Libyans are not able to make ends meet and some women have turned to prostitution as a result.

Megan Bradley’s presentation stressed the need for a holistic approach to Libya’s displacement crisis and the importance of thinking about the relationships between the refugee and IDP populations. She explained that the accepted durable solutions for each were similar: local integration in the country of asylum or community where they are sheltering, resettlement to a third country or community, or voluntary repatriation in conditions of safety and dignity. Bradley noted that the expectation generally seems to be that repatriation and return will be the predominant approach for Libyan refugees and IDPs, as occurred remarkably quickly following the revolution. She said this was possible largely because Libyans were able to finance their own returns—rare in displacement situations. Similarly, many displaced Libyans are continuing to depend on their own resources, which Bradley warned is not sustainable.

Bradley went on to make four specific points. First, she emphasized that under international law, the return of displaced persons must be voluntary. She argued that the vast majority of Libyan exiles have legitimate security concerns and should benefit from protections against refoulement, defined as the expulsion of vulnerable individuals. Secondly, Bradley said it was time to think about resources and increased donor contributions, challenging as it may be. She then turned to transitional justice and reconciliation, noting how the overly punitive nature of Libya’s political isolation law and the concept of collective responsibility had needlessly increased displacement. Lastly, Bradley called for delivering current support in ways that can lay groundwork for durable solutions, such as getting Libyan children in schools, providing adequate healthcare, and bringing them out of the shadows.

When Barakat asked about European support for Tunisia, Bradley noted that these countries have a huge potential role to play. At the same time, she suggested that the Tunisian government has not forceful enough in requesting their assistance. With regards to the migration crisis in the Mediterranean, Bradley and the other panelists urged the international community and especially the European Union to put greater emphasis on resolving the political vacuum in Libya and elsewhere on the continent, while allowing for resettlement and legal labor migration in the meantime. In response to a suggestion from an attendee that Libyans should not be considered refugees because they are all still receiving stipends from Libyan institutions, Bradley countered that refugee status has nothing to do with financial resources, but the need for protection. Mzioudet added that some Libyans have reported that their salaries have been withheld, perhaps for past misdeeds, pushing them into destitution.

Sharqieh condemned the failure to recognize what are clearly refugees in Tunisia as such, suggesting that it is convenient for the UNHCR and government of Tunisia because it limits their obligations. Still, he held that many IDPs would return home given effective rule of law and a reliable judicial system, though otherwise they could not risk it. Barakat closed the discussion by suggesting that, considering the trend of intractable conflicts, it was time for a regional approach to handling the resulting displacement issues.

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• Uprooted, unprotected: Libya’s displacement crisis
• المقتلعون غير المحميين: أزمة النازحين في ليبيا

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

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

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On August 26, the Brookings Institution hosted a panel discussion of the findings of the 2015 Financial and Digital Inclusion Project Report and Scorecard. Chief among the report’s findings was the rapid growth of financial products and services targeted at the world’s unbanked population.  Much of the growth stems from innovations in digital payments systems and non-bank financial services.  For example, systems like M-Pesa in Kenya allow customers to store money on their mobile phones and easily transfer it to other M-Pesa users.  Advancing financial inclusion will greatly benefit the two billion people worldwide that still lack access to any financial services.

The report itself ranks a set of 21 countries on four continents chosen for their efforts to promote financial inclusion.  The criteria used to score each country include country commitment, mobile capacity, regulatory environment, and adoption.  The results show that several pathways to financial inclusion exist, from mobile payments systems to so-called “branchless” banking services.  Places that lack traditional banks have seen financial inclusion driven by mobile operators, while others have experimented with third-party agent banking in areas that lack bank branches.   

The panel drew financial inclusion and mobile payments experts from the government, industry, and non-profit groups.  Each panelist touted the benefits of financial inclusion from their own perspective.  Women especially have much to gain from financial inclusion since they have historically faced the most obstacles to opening financial accounts.  In developing countries, a mobile payments system grants women greater privacy, control, and safety compared to cash payments.  Traceable digital payments also make it easier to combat corruption and money laundering.  Salaries paid to government employees and transfer payments to low-income households can be sent straight to a mobile payment account, eliminating opportunities for bribe seeking and theft. 

According to the panelists, financial inclusion can also drive economic growth in developing countries.  As financial services expand, they will also increase in sophistication, allowing customers to do more with their money.  For example, a payments record can be used to establish a credit history for loan applications, and digital savings accounts with interest can help customers protect their wealth against inflation.  These same systems can also be used to provide insurance coverage, reducing financial uncertainty for low-income populations.

The proliferation of financial services has many benefits, but it will also create policy challenges if regulations do not keep up with financial innovation.  Requiring several forms of identification to purchase a mobile phone or open a bank account presents an obstacle to low income and rural customers that live far away from government offices that issue identification. Broad coordination between telecom regulators, ID issuers, banking authorities, and other government agencies is often necessary for lowering barriers to accessing financial services.

It is telling that many countries included in the report are looking to other developing countries for policies to promote financial inclusion.  The scarcity of traditional banks combined with new methods of accessing financial services opens avenues to financial inclusion not seen in most developed countries. Established banking industries and the accompanying regulations leave fewer opportunities for financial innovation, but countries with large unbanked populations can start with a clean slate. Over the next two years, FDIP will continue to monitor and report on developments in financial inclusion around the world.

Send comments on the 2015 FDIP Report and Scorecard and suggestions for future reporting to FDIPComments@brookings.edu.

       

Editor’s Note: The Center for Technology Innovation released the 2015 Financial and Digital Inclusion Project (FDIP) Report on August 26^th. TechTank has previously covered the FDIP launch event and outlined the report’s overall findings. Over the next two months, TechTank will take a closer look at the report’s findings by country and by region, beginning with today’s post on India. 

With about 21 percent of the world’s entire unbanked adult population residing in India as of 2014, the country has tremendous opportunities for growth in terms of advancing access to and use of formal financial services.

In the 2015 Financial and Digital Inclusion Project (FDIP) Report and Scorecard, we detail the progress achieved and possibilities remaining for India’s financial services ecosystem as it moves from a heavy reliance on cash to an array of traditional and digital financial services offered by diverse financial providers.

As noted in the 2015 FDIP Report, government-led initiatives to promote financial inclusion have advanced access to financial services in India. Ownership of formal financial institution and mobile money accounts among adults in India increased about 18 percentage points between 2011 and 2014. Recent regulatory changes and public and private sector initiatives are expected to further promote use of these services.

In this post, we unpack the four components of the 2015 FDIP Scorecard — country commitment, mobile capacity, regulatory environment, and adoption of traditional and digital financial services — to highlight India’s achievements and possible next steps toward greater financial inclusion.

Country commitment: An unprecedented year with no sign of slowing

India’s national-level commitment to promoting financial inclusion earned it a “country commitment” score of 100 percent. A historic government initiative helped India garner a top score: In August 2014, Prime Minister Narendra Modi launched the “Pradhan Mantri Jan-Dhan Yojana,” the Prime Minister’s People’s Wealth Scheme (PMJDY). This effort — arguably the largest financial inclusion initiative in the world — “envisages universal access to banking facilities with at least one basic banking account for every household, financial literacy, access to credit, insurance and pension facility,” in addition to providing beneficiaries with an RuPay debit card.

As part of this effort, the program aimed to provide 75 million unbanked adults in India with accounts by late January 2015. As of September 2015, about 180 million accounts had been opened; about 44 percent of these accounts did not carry a balance, down from about 76 percent in September 2014.

The PMJDY initiative is a component of the JAM Trinity, or “Jan-Dhan, Aadhaar and Mobile.” Under this approach, government transfers (also known as Direct Benefit Transfers, or DBT) will be channeled through bank accounts provided under Jan-Dhan, Aadhaar identification numbers or biometric IDs, and mobile phone numbers.

The Pratyaksh Hanstantrit Labh (PaHaL) program is a major DBT initiative in which subsidies for liquefied petroleum gas can be linked to an Aadhaar number that is connected to a bank account or the consumer’s bank details. As of July 2015, about $2 billion had been channeled to beneficiaries in 130 million households across the country.

Mobile capacity: Ample opportunity for digital services, but limited awareness and use

India received 16^th place (out of the 21 countries considered) in the 2015 FDIP Report and Scorecard’s mobile capacity ranking. India’s mobile money landscape features an extensive array of services, and the licensing of new payments banks (discussed below) may drive the entry of new players and products that can improve low levels of awareness and adoption of digital financial services.

An InterMedia survey conducted from September to December 2014 found that while 86 percent of adults owned or could borrow a mobile phone, only about 13 percent of adults were aware of mobile money. Awareness of mobile money is increasing — the 13 percent figure is double that of the first wave of the survey, which concluded in January 2014 — but uptake remains low. The Global Financial Inclusion (Global Findex) database found only 2 percent of adults in India had a mobile money account in 2014.

Implementing interoperability across mobile money offerings, increasing 3G network coverage by population, and enhancing unique mobile subscribership could boost India’s mobile capacity score in future editions of the FDIP report.

Regulatory environment: Opening up the playing field to non-bank entities

India tied for 7^th place on the regulatory environment component of the 2015 Scorecard. The country’s recent shift to a more open financial landscape contributed to its strong score, although more time is needed to see how recent regulations will be operationalized.

India has traditionally maintained tight restrictions with respect to which entities are involved in financial service provision. Non-banks could manage an agent network on behalf of a bank as business correspondents or issue “semi-closed” wallets that did not permit customers to withdraw funds without transferring them to a full-service bank account. These restrictions likely contributed to the country’s slow and limited adoption of mobile money services.

However, 2014 brought significant changes to India’s regulatory landscape. The Reserve Bank of India’s November 2014 Payments Banks guidelines were heralded as a major step forward for increasing diversity in the financial services ecosystem. These guidelines marked a significant shift from India’s “bank-led” approach by providing opportunities for non-banks such as mobile network operators to leverage their distribution expertise to advance financial access and use among underserved groups.

While these institutions cannot offer credit, they can distribute credit on behalf of a financial services provider. They may also distribute insurance and pension products, in addition to offering interest-bearing deposit accounts.

We noted in the 2015 FDIP Report that timely approval of license applications for prospective payments banks, particularly mobile network operators, would be a valuable next step for India’s financial inclusion path. In August 2015, the Reserve Bank of India approved 11 applicants, including five mobile network operators, to launch payments banks within the next 18 months. As noted in Quartz India, the “underlying objective is to use these new banks to push for greater financial inclusion.” India has also made strides in terms of establishing proportionate “know-your-customer” requirements for financial entities, including payments banks.

While India has made significant progress in terms of promoting a more enabling regulatory environment, room for improvement remains. For example, concerns have been raised regarding the low commission rate for banks distributing DBT, with many experts noting that a higher commission would enhance the ability of these banks to operate sustainably.

Adoption: Access is improving, but promoting use is key

India ranked 9^th for the adoption component of the 2015 Scorecard. Recent studies have demonstrated that adoption of formal financial services among traditionally underserved groups is improving. For example, InterMedia surveys conducted in October 2013 to January 2014 and September to December 2014 found that the most significant increase in bank account ownership was among women, particularly women living below the poverty line. Still, further work is needed to close the gender gap in account ownership.

As noted above, adoption of digital financial services such as mobile money is minimal compared with traditional bank accounts (0.3 percent compared with 55 percent, according to the September to December 2014 InterMedia survey); nonetheless, we believe that the introduction of payments banks, combined with government efforts to digitize transfers, will facilitate greater adoption of digital financial services.

While PMJDY has successfully promoted ownership of bank accounts, incentivizing use of these services is critical for achieving true financial inclusion. Dormancy rates in India are high — about 43 percent of accounts had not been deposited into or withdrawn from in the previous 12 months, according to the 2014 Global Findex.

More time may be needed for individuals to understand how their new accounts function and, equally importantly, how their new accounts are relevant to their daily lives. A February 2015 survey designed by India’s Ministry of Finance, MicroSave, and the Bill & Melinda Gates Foundation found about 86 percent of PMJDY account holders reported the account was their first bank account. While this survey is not nationally representative, it provides some context as to why efforts to promote trust in and understanding of these new accounts will be key to the success of the program.

An opportunity for promoting adoption of digital financial services was highlighted during the public launch of the 2015 Report and Scorecard: As of June 2015, it was estimated that fewer than 6 percent of merchants in India accepted digital payments. The U.S. government is partnering with the government of India to promote the shift to digitizing transactions, including at merchants.

The next annual FDIP Report will examine the outcomes of such initiatives as we assess India’s progress toward greater financial inclusion. Suggestions and other comments regarding the FDIP Report and Scorecard are welcomed at FDIPComments@brookings.edu.

       

Editor’s Note: This post is part of a series on the 2015 Financial and Digital Inclusion Project (FDIP) Report and Scorecard, which were launched at a Brookings public event, “Measuring Progress on Financial and Digital Inclusion,” on August 26^th. Previous posts have highlighted five key findings from the 2015 FDIP Report, explored groundbreaking financial inclusion developments in India, and examined the financial inclusion landscape among FDIP countries in Southeast Asia, Central Asia, and the Middle East.

Today’s post highlights the 2015 Scorecard findings for five of FDIP’s nine African countries: Rwanda, Uganda, Tanzania, Zambia, and Malawi. To learn more about the remaining FDIP African countries, read Amy Copley and Amadou Sy’s recent post on Brookings’s “Africa in Focus” blog.

Rwanda: Significant financial inclusion progress over time, but room for expansion remains

• While Rwanda and Uganda were among the bottom four FDIP countries in terms of GDP in current US dollars as of 2013, both countries tied for 4th place on the overall FDIP scorecard, buoyed by their national commitment to and progress toward financial inclusion. For example, Rwanda has a comprehensive action plan for financial inclusion featured in the country’s Financial Sector Development Program (now in its second phase) and, as noted in the 2014 Maya Declaration, set up a working group to monitor the implementation of the program. As part of its commitment to promoting financial inclusion, Rwanda set a numeric target to increase access to formal financial services from 21 percent of the country’s adult population (as benchmarked in the 2008 FinScope survey) to 80 percent by 2017; it has since increased its goal to 90 percent by 2020. The National Bank of Rwanda serves as the country’s Maya Declaration signatory.
• On the mobile side, Rwanda received a higher score than Uganda for the percentage of unique mobile subscribers, achieving a score of “2” (out of 3 possible points), rather than Uganda’s “1.” Rwanda also scored higher than Uganda in terms of 3G mobile network coverage by population, receiving a “3” rather than Uganda’s “2.” Both countries received the highest scores possible for the mobile money deployment and offerings indicators in the scorecard (e.g., existence of bill payment and international remittance options through mobile money). Rwanda was one of the first countries in Africa to support mobile money cross-border remittances, enabling Tigo subscribers to transfer funds to counterparts in Tanzania.
• Rwanda performed strongly on the regulatory environment dimension of the 2015 FDIP Scorecard, ranking third. A 2012 International Finance Corporation (IFC) Mobile Money Scoping report praised Rwanda for its “highly proactive government” that instituted a comprehensive framework for e-payments, driven by its aim to facilitate a cashless financial ecosystem by 2017. Rwanda’s regulatory environment facilitates both mobile operator-led mobile money services and bank-led mobile banking models. As noted in the 2015 FDIP Report, a national ID is widely available, and specific provisions catering for tiered KYC requirements are underway as part of the draft e-payments legislation for non-bank entities.
• On the adoption front, Uganda received higher scores than Rwanda, ranking 6th in contrast to Rwanda (10th). Among the FDIP countries, Rwanda tied for the highest score in terms of the savings at a formal financial institution but did not receive top scores for any of the other 14 adoption indicators. The relatively low levels of formal financial services adoption should not discount the progress that has been made — as of 2014, the World Bank’s Global Financial Inclusion (Global Findex) database found that takeup of formal accounts had increased to about 42 percent of adults  — but in an absolute sense, Rwanda still has room for growth.
• With respect to further opportunities for improvement, the Economist Intelligence Unit (EIU)’s “Global Microscope 2014: The enabling environment for financial inclusion” report noted that some existing consumer protection issues in Rwanda are expected to be addressed in part by a financial consumer protection law expected to be fully implemented by 2016. Advancing platform interoperability could further incentivize adoption of digital financial services: According to the National Bank of Rwanda, interoperability across mobile money transfer services is in process, but not yet complete.

Uganda:Fairly robust mobile money adoption, but improvements regarding consumer protection and usage are key

• As noted above, Uganda tied with Rwanda for 4th place overall on the 2015 FDIP scorecard. A 2014 financial inclusion report by the Bank of Uganda (Uganda’s Maya Declaration signatory) noted on page iv that in 2011, the Bank of Uganda “adopted a new strategy for financial inclusion based on four pillars: financial literacy, financial consumer protection, financial innovations, and financial services data and measurement.” Like Rwanda, FinScope surveys have been carried out fairly regularly in Uganda, most recently in 2013. These financial services surveys help to identify areas of strength and room for improvement in terms of access to and usage of formal financial services among different demographics.
• On the mobile side, Uganda’s mobile capacity — specifically, its percentage of unique mobile subscribers and 3G mobile network coverage by population — could be improved. Regarding the latter indicator, Uganda’s score was among the bottom five FDIP countries (along with Tanzania, Malawi, and Zambia, also featured in this post). Still, Uganda’s mobile money adoption rates are quite robust: Uganda received a score of “2” for all mobile money account-related indicators under the adoption dimension, with the exception of the percentage of adults who pay bills regularly through a mobile phone, which achieved the top score of “3.”
• On the regulatory side, mobile money guidelines were developed in 2013 to provide some clarity to the industry. However, since these guidelines are not binding in the way that more formal regulations are, developing formal regulations could help ensure greater customer protection and clarity within the market. Uganda does not have a payments law to enable the Bank of Uganda to issues licenses to electronic money institutions, and only banks and other institutions regulated under the Financial Institutions Act can provide retail payment services. As noted in the 2015 FDIP Report, amendments to the Financial Institutions Act and the Micro-Finance and Deposit-Taking Institutions Act, along with new draft agency banking guidelines, are underway to facilitate agent banking.
• In terms of availability and adoption of financial services, a Helix Institute report published in 2014 noted that the products and services offered by agents in Uganda were somewhat limited. Expanding the services offered — such as credit, savings, and insurance — could provide individuals with more opportunities to increase their wealth. These services must be offered with careful regard to consumer protection. Uganda achieved 6th place on the adoption dimension of the scorecard, boosted by its above-average takeup of mobile money compared to other FDIP countries.
• In terms of next steps, moving away from a reliance on basic deposit and withdrawals conducted “over-the-counter” to encourage a greater diversity of offerings and services could strengthen the utility of mobile money for customers. However, providers will also have to build trust in digital financial services, particularly in light of ongoing issues with service down-time and recent fraud scandals such as the recent case against several former employees of MTN charged with defrauding the compnay of over $3 million.

Tanzania: Significant strides in regulatory environment and mobile money adoption, with further growth likely to follow

• Tanzania ranked 12th overall on the FDIP scorecard. As noted in the 2015 Report, Tanzania has demonstrated strong leadership in terms of its national-level commitment to promoting financial inclusion, which has contributed to its enabling regulatory environment for digital financial services. For example, Tanzania launched a National Financial Inclusion Framework in 2013, which contains a quantified target of 50 percent financial inclusion by 2016. These factors will likely drive greater financial inclusion in the future by facilitating the development and adoption of innovative, appropriate, and accessible products for previously underserved communities. However, quantitative data available as of 2015 regarding Tanzania’s overall mobile capacity and adoption of formal financial services indicate that room for growth remains.
• In terms of mobile capacity, Tanzania’s mobile money providers have been noted for offering an array of innovative products, including mobile operator Tigo’s interest-bearing mobile money service. Tanzania’s recent (and quite rare) implementation of interoperable mobile money platforms was also highlighted in the 2015 Report and Scorecard. However, as measured by 2015 GSMA Intelligence data, Tanzania’s score for the percentage of 3G network coverage by population was among the lowest of the FDIP countries, and its rate of unique subscribership was below the FDIP average.
• Tanzania’s regulatory environment has been lauded for enabling a diverse array of entities to offer competitive formal financial services. As noted in the 2015 FDIP Report, the Bank of Tanzania Act was amended in 2006 to permit non-bank entities to offer payment services, and the 2007 Electronic Payment Schemes Guidelines were used to enable mobile network operators to offer payment services. In 2013, agent banking guidelines were issued, and in March 2015, the National Payment Systems Act was passed by Tanzania’s parliament. These various regulations have provided the space and clarity for a variety of providers to enter the digital financial services market.
• On the adoption front, Tanzania has undoubtedly made great strides in terms of advancing mobile money adoption, even outnumbering the total number of mobile money transactions made in Kenya (according to figures noted by the Consultative Group to Assist the Poor in March 2015). However, in terms of the percentage of adults with a mobile money account, there was a difference of over 25 percentage points between Kenya and Tanzania as of 2014, according to the 2014 Global Findex.
  Out of 3 possible points achievable per indicator on the adoption dimension, Tanzania received 2 points for the adoption of mobile money accounts among adults, rural individuals, women, and adults making utility bill payments. However, Tanzania received a score of “1” for the other 11 adoption indicators. As a point of reference, Kenya received a full 3 points for each of the mobile account-related indicators on the adoption dimension, and it tied or exceeded Tanzania’s scores for the other adoption indicators.
• Moving forward, we fully anticipate that Tanzania’s increasingly competitive and robust mobile money environment, combined with strong coordination and financial inclusion leadership among the public and private sectors, will drive greater adoption of formal financial services.

Zambia: Commitment to increasing equity in access to financial services, but usage of available services is limited

• Zambia was ranked 14th overall on the 2015 FDIP Scorecard. As with three of the other countries featured in this post — Rwanda, Tanzania, and Uganda — Zambia achieved a score of 100 percent for country commitment. The Bank of Zambia serves at the country’s Maya Declaration signatory and houses the secretariat for Zambia’s Financial Sector Development Plan. As one of the Bank of Zambia’s Maya Declaration commitments, the country set a goal of ensuring access to financial services for at least half of its adult population by the end of 2016. As of 2014, the “gender gap” in terms of account ownership between men and women was about 5 percentage points in Zambia, according to the Global Findex, making Zambia among the five FDIP countries with the smallest disparity in terms of access to finance by gender. Still, account ownership among women was only about 33 percent in 2014; Zambia’s first lady, Esther Lungu, has emphasized the importance of promoting financial inclusion among women.
• In terms of mobile capacity, Zambia received a score of “2” for both the percentage of unique mobile subscribers and percentage of 3G mobile network coverage by population, as measured by the 2015 GSMA Intelligence database. Zambia received top scores for the other mobile capacity indicators, which focused on the number of mobile money deployments and the type of offerings. However, while about 62 percent of adults owned a mobile phone in Zambia as of 2014, according to a 2014 country brief, only about 5 percent of adults used their mobile phone to pay bills or send or receive money — about 11 percentage points below the average for countries in Sub-Saharan Africa.
• Regarding the country’s regulatory environment, Zambia finalized a draft framework on branchless banking in 2013 and has adopted a tiered approach to KYC requirements for e-money wallets. As noted in the 2015 FDIP Report, draft e-money directives are also undergoing review and are expected to include provisions regarding interoperability. Zambia began working toward a new financial inclusion strategy in advance of expiration of the Financial Sector Development Plan in June 2015, which may inform the direction of future regulatory initiatives.
• Challenges to the formal financial services sector in Zambia include high interest rates, fees, and other costs associated with banking. Further, a 2011 report noted that low literacy rates and high poverty levels have posed challenges to takeup of formal financial services. Efforts to expand access to financial services beyond brick-and-mortar banks have been quite successful, as demonstrated by the greater density (in terms of points of service) of mobile money agents than traditional banks in Zambia as of 2013. As of 2014, mobile money agents accounted for about 45 percent of all financial access points in the country.
• In the near future, Zambia is expected to finalize and issue draft e-money directives and approve draft branchless banking regulations. Increasing usage of more extensive financial services could help individuals reap the full benefits of mobile money — as noted in the FinScope 2015 findings, mobile money customers primarily use the service to send and receive money, purchase airtime, or pay bills.

Malawi: Limited infrastructure constrains adoption, but forthcoming regulations may enhance digital financial ecosystem

• Malawi ranked 19th overall on the 2015 FDIP Scorecard. Among the 21 FDIP countries, Malawi has the lowest GDP in current US dollars, according to the 2013 World Development Indicators database. Despite economic and infrastructural barriers, Malawi has engaged in a variety of efforts to promote digital financial services such as mobile money, including through its participation in the Alliance for Financial Inclusion and the creation of its Mobile Money Coordination Group.
• Regarding the mobile capacity dimension of the 2015 Scorecard, Malawi received the highest number of possible points for its deployment offerings. However, Malawi had the second-lowest rate of unique mobile subscribership among the 21 FDIP countries and the lowest score for the extent of 3G mobile network coverage by population, as measured by data provided in the 2015 GSMA Intelligence database. Expanding mobile networks and facilitating mobile subscribership could boost Malawi’s mobile money environment by increasing access to and incentivizing use of mobile services.
• In terms of Malawi’s regulatory environment, the 2011 Mobile Payment System Guidelines were developed to permit mobile network operators to provide mobile money services. Interoperability has been identified as an objective in these Mobile Guidelines, and the recently launched National Switch may facilitate interoperability. Draft e-money regulations developed by the Reserve Bank of Malawi (the country’s Maya Declaration signatory) are expected to be officially recognized by the Ministry of Finance in 2015; these regulations are anticipated to replace the Mobile Guidelines. As noted in the 2015 FDIP Report, a Payment Systems Bill was finalized in February 2015 and expected to be enacted in December 2015. This bill is expected to help provide greater clarity regarding oversight arrangements for payment services.
• Malawi received a score of “1” for each of the adoption indicators, which placed it among the three lowest-scoring countries for the adoption dimension of the 2015 Scorecard. Financial infrastructure in Malawi is very limited, which constrains adoption of formal financial services. For example, the 2014 International Monetary Fund Financial Access Survey found that there were only about 3 commercial bank branches per 1,000 km2 and per 100,000 adults in Malawi.
• Moving forward, the new regulations described above may even the playing field between banks and non-banks, both in terms of e-money and agent banking, and will permit tiered KYC for e-money service providers. Increasing competition among providers could enhance the diversity of available financial services offerings, which may in turn drive adoption.

       

Editor’s Note: This post is part of a series on the 2015 Financial and Digital Inclusion Project (FDIP) Report and Scorecard, which were launched at a Brookings public event in August. Previous posts have highlighted five key findings from the 2015 FDIP Report, explored financial inclusion developments in India, and examined the rankings for selected FDIP countries in Southeast and Central Asia, the Middle East, and Africa.

The 2015 Financial and Digital Inclusion Project (FDIP) Report and Scorecard were launched in August of this year and generally reflect data current through May 2015. Since the end of the data collection period for the report, countries have continued to push forward to greater financial inclusion, and international organizations have continued to assert the importance of financial inclusion as a mechanism for promoting individual well-being and macroeconomic development. Financial inclusion is a key component of the United Nations’ Sustainable Development Goals, signaling international commitment to advancing access to and use of quality financial products among the underserved.

We discussed one recent groundbreaking financial inclusion development in a previous post. To learn more about the approval of payments banks in India, read “Inclusion in India: Unpacking the 2015 FDIP Report and Scorecard.”

Below are four other key developments among our 21-country sample since the end of the data collection period for the 2015 FDIP Report and Scorecard. The list is in no way intended to be exhaustive, but rather to provide a snapshot illustrating how rapidly the financial inclusion landscape is evolving globally.   

1) The Philippines launched a national financial inclusion strategy.

In July 2015, the Philippines launched a national financial inclusion strategy (NFIS) and committed to drafting an Action Plan on Financial Inclusion. The Philippines’ NFIS identifies four areas central to promoting financial inclusion: “policy and regulation, financial education and consumer protection, advocacy programs, and data and measurement.”

 As discussed in the 2015 FDIP Report, national financial inclusion strategies often serve as a platform for identifying key priorities, clarifying the roles of key stakeholders, and setting measurable targets. These strategies can foster accountability and incentivize implementation of stated initiatives. While correlation does not necessarily equal causation, it is nonetheless interesting to note that, according to the World Bank, “[o]n average, there is a 10% increase in the percentage of adults with an account at a formal financial institution for countries  that launched an NFIS after 2007, whereas the increase is only 5% for those countries that have not launched an NFIS.”

2) Peru adopted a national financial inclusion strategy.

With support from the World Bank, Peru’s Multisectoral Financial Inclusion Commission established an NFIS that was adopted in July 2015 through a Supreme Decree issued by President Ollanta Humala Tasso. The strategy contains a goal to increase financial inclusion to 50 percent of adults by 2018. This is quite an ambitious target: As of 2014, the World Bank Global Financial Inclusion (Global Findex) database found that only 29 percent of adults in Peru had an account with a formal financial services provider. The NFIS also commits the country to facilitating access to a transaction account among at least 75 percent of adults by 2021.

Peru’s NFIS emphasizes the promotion of electronic payment systems, including electronic money, as well as improvements pertaining to consumer protection and education. Advancing access to both digital and traditional financial services should boost Peru’s adoption levels over time. As noted in the 2015 FDIP Report, while Peru’s national-level commitment to financial inclusion and regulatory environment for financial services are strong, adoption levels remain low (Peru ranked 15^th on the adoption dimension of the 2015 Scorecard, the lowest ranking among the Latin American countries in our sample).

3) Colombia updated its quantifiable targets and released a financial inclusion survey.

The 2015 Maya Declaration Progress Report, published in late August 2015, highlights a number of quantifiable financial inclusion targets set by the Ministerio de Hacienda y Crédito Público de Colombia (Colombia’s primary Maya Declaration signatory) relating to the percentage of adults with financial products and savings accounts. For example, the target for the percentage of adults with a financial product is now 76 percent by 2016, up from a target of 73.7 percent by 2015. The goal for the percentage of adults with an active savings account in 2016 is now 56.6 percent, up from a target of 54.2 percent by 2015. To learn more about concrete financial inclusion targets among other FDIP countries, read the 2015 Maya Declaration Progress Report.

In July, Banca de las Oportunidades, a key financial inclusion stakeholder in Colombia, presented the results of the country’s first demand-side survey specifically related to financial inclusion. As noted by the Economist Intelligence Unit, previous national-level surveys conducted by entities such as the Superintendencia Financiera and Asobancaria have identified supply- and demand-side indicators pertaining to various financial services. As discussed in the 2015 FDIP Report, national-level surveys that focus on access to and usage of financial services can help identify areas of greatest need and enable countries to better leverage their resources to promote adoption of quality financial services among marginalized populations.

4) Nigeria’s “super agent” network enables greater access to digital financial services.

In September 2015, telecommunications company Globacom launched a “super agent” network, Glo Xchange, which can access the mobile money services of any partner mobile money operator. The network has been launched in partnership with four banks. Globacom was given approval in 2014 to develop this network; since then, the company has been recruiting and training its agents. About 1,000 agents will initially be part of this system, with a goal to recruit 10,000 agents by September 2016. Expanding access points to financial services by building agent networks is hoped to boost adoption of digital financial services.

Despite having multiple mobile money operators (19 as of October 2015, according to the GSMA’s Mobile Money Deployment Tracker), Nigeria’s mobile money adoption levels have not reached the degree of success of some other countries in Africa: The Global Findex noted that less than 3 percent of adults in Nigeria had mobile money accounts in 2014, compared with over 30 percent in Tanzania and about 60 percent in Kenya. Nigeria’s primarily bank-led approach to financial services, which excludes mobile network operators from being licensed as mobile money operators, is one factor that may have constrained adoption of mobile money services to date. You can read more about Nigeria’s regulatory environment and financial services landscape in the 2015 FDIP Report.

We welcome your feedback regarding recent financial inclusion developments. Please send any links, questions, or comments to FDIPComments@brookings.edu.