On Tuesday, May 24, Nigerian Central Bank Governor Godwin Emefiele announced that the country will adopt a more flexible foreign exchange rate system in the near future. This move signals a major policy shift by Emefiele and President Muhammadu Buhari, who had until this point opposed calls to let the naira weaken. Many international oil-related currencies have depreciated against the dollar as oil prices began their decline in 2014. Nigeria, however, has held the naira at a peg of 197-199 per U.S. dollar since March 2015, depleting foreign reserves and deterring investors, who remain concerned about the repercussions of a potential naira devaluation. Following the announcement, Nigerian stocks jumped to a five-month high and bond prices rose in anticipation that a new flexible exchange rate regime would increase the supply of dollars and help attract foreign investors.

For now it remains unclear exactly what a more flexible system will entail for Nigeria, however, some experts suggest that the Central Bank may introduce a dual-rate system, which allows select importers in strategic industries to access foreign currency at the current fixed rate, while more generally foreign currency will be available at a weaker, market-related level. This new regime raises a number of questions, including how it will be governed and who will have access to foreign currency (and at what rate). On Wednesday, Nigeria’s parliament requested a briefing soon from Emefiele and Finance Minister Kemi Adeosun to provide additional clarity on the new system, although the date for such a meeting has not yet been set.

Earlier this month, Kenya announced plans to close the Dadaab refugee camp, located in northeast Kenya, amid security concerns. The move to close the camp has been widely criticized by international actors. United States State Department Press Relations Director Elizabeth Trudeau urged Kenya to “uphold its international obligations and not forcibly repatriate refugees.” The United Nations High Commissioner for Refugees stated that the closure of the refugee camp would have “devastating consequences.” Despite these concerns, this week, at the World Humanitarian Summit, Kenya stated that it will not go back on its decision and confirmed the closure of the refugee camps within a six-month period.

The camp houses 330,000 refugees, a majority of whom fled from conflict in their home country of Somalia. Kenya insists that the camp poses a threat to its national security, as it believes the camp is used to host and train extremists from Somalia’s Islamist group al-Shabab. Kenya also argued that the developed world, notably the United Kingdom, should host its fair share of African refugees. This is not the first time Kenya has threatened to close the refugee camp. After the Garissa University attacks last April, Kenya voiced its decision to close the refugee camps, although it did not follow through with the plan.

From May 23-27, Lusaka, Zambia hosted 5,000 delegates and participants for the 2016 Annual Meetings of the African Development Bank (AfDB), with the theme, “Energy and Climate Change.” Held in the wake of December’s COP21 climate agreement and in line with Sustainable Development Goals 7 (ensure access to affordable, reliable, sustainable and modern energy for all) and 13 (take urgent action to combat climate change and its impacts), the theme was timely and, as many speakers emphasized, urgent. Around 645 million people in Africa have no access to electricity, and only 16 percent are connected to an energy source. To that end, AfDB President Akinwumi Adesina outlined the bank’s ambitious aim: “Our goal is clear: universal access to energy for Africa within 10 years; Expand grid power by 160 gigawatts; Connect 130 million persons to grid power; Connect 75 million persons to off grid systems; And provide access to 150 million households to clean cooking energy."

As part of a push to transform Africa’s energy needs and uses, Rwandan President Paul Kagame joined Kenyan President Uhuru Kenyatta on a panel to support the AfDB’s “New Deal on Energy” that aims to deliver electricity to all Africans by 2025. Kenyatta specifically touted the potential of geothermal energy sources. Now, 40 percent of Kenya's power needs come from geothermal energy sources, he said, but there is still room for improvement—private businesses, which make up 30 percent of Kenya’s on-grid energy needs, have not made the switch yet.

As part of the meetings, the AfDB, the Organization for Economic Cooperation and Development (OECD), and United Nations Development Program (UNDP) also launched their annual African Economic Outlook, with the theme “Sustainable Cities and Structural Transformation.” In general, the report’s authors predict that the continent will maintain an average growth of 3.7 percent in 2016 before increasing to 4.5 percent in 2017, assuming commodity prices recover and the global economy improves.  However, the focus was on this year’s theme: urbanization. The authors provide an overview of urbanization trends and highlight that successful urban planning can discourage pollution and waste, slow climate change, support better social safety nets, enhance service delivery, and attract investment, among other benefits.

For more on urbanization in sub-Saharan Africa, see Chapter 4 of Foresight Africa 2016: Capitalizing on Urbanization: The Importance of Planning, Infrastructure, and Finance for Africa’s Growing Cities.

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

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

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

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

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

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

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

Competing and complementary visions

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

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

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

Jeopardizing domestic stability

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

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

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

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

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

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

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

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

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

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

Compromising regional clout

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

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

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

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

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

Imagining an unlikely future

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

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

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

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

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

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

Renewable energy is an important source to tackle against climate change, as the latest IPCC report has pointed out. However, due to the existence of multiple market failures such as negative externalities of fossil fuels and knowledge spillovers of new technology, government subsidies are still needed to develop renewable energy, such as solar photovoltaic (PV) cells. In the United States, there have been various forms of subsidies for PV, varying from the federal level to the state level, and from the city level to the utility level. California, as the pioneer of solar PV development, has put forward the biggest state-level subsidy program for PV, the California Solar Initiative (CSI). The CSI has planned to spend around $2.2 Billion in 2007–2016 to install roughly 2 GW PV capacity, with the average subsidy level as high as $1.1/W. How to evaluate the cost-effectiveness and incentive pass-through of this program are the two major research questions we are pursing.

Our cost-effectiveness analysis is based on a constrained optimization model that we developed, where the objective is to install as much PV capacity as possible under a fixed budget constraint. Both the analytical and computational results suggest that due to a strong peer effect and the learning-by-doing effect, one can shift subsides from later periods to early periods so that the final PV installed capacity can be increased by 8.1% (or 32 MW). However, if the decision-maker has other policy objectives or constraints in mind, such as maintaining the policy certainty, then, the optimally calculated subsidy policy would look like the CSI.

As to the incentive pass-through question, we took a structural approach and in addition used the method of regression discontinuity (RD). While in general, the incentive pass-through rate depends on the curvature of the demand and supply curve and the level of market competition, our two estimations indicate that the incentive pass-through for the CSI program is almost complete. In other words, almost all of the incentive has been enjoyed by the customer, and the PV installers did not retain much. Based on the RD design, we observe that PV installers tend to consider the CSI incentive as exogenous to their pricing decision.

The relative good performance of the CSI in terms of both the cost-effectiveness and the incentive pass-through aspect are tightly related to its policy design and program management. International speaking, the biggest challenge for the design of any PV subsidy program is the quick running out of the budget, and in the end, it looks like customers are rushing for the subsidy. Such rushing behavior is a clear indication of higher-than-needed incentive levels. Due to the policy rigidity and rapid PV technological change, the PV subsidy policy may lag behind the PV cost decline; and as a result, rational customers could rush for any unnecessarily high subsidy.

Due to the high uncertainty and unpredictability of future PV costs, the CSI put forward a new design that links the incentive level change and the installed capacity goal fulfillment. Specifically, the CSI has designed nine steps to achieve its policy goal; at each step, there is a PV capacity goal that corresponds to an incentive level. Once the capacity goal is finished, the incentive level will decrease to the next lower level. Furthermore, to maintain the policy certainty, the CSI regulated that every step-wise change in the incentive level should not be higher than $0.45/W, nor smaller than $0.05/W, together with other three constraints.

A good subsidy policy not only requires flexible policy design to respond to fast-changing environment, but also demands an efficient program management system, digitalized if possible. For the CSI, the authority has contracted out a third-party to maintain a good database system for the program. Specifically, the database has documented in detail every PV system that customers requested. Key data fields include 22 important dates during the PV installation process, customers’ zip code, city, utility and county information, and various characteristics of the PV system such as price, system size, incentive, PV module and installer. All information is publicly available, which to some extent fills in the information gap held by customers and fosters the market competition among PV installers. For customers to receive the incentive, their PV systems have to pass the inspection of the local government, and also to be interconnected to the grid. On the supply side, the CSI has also certified and created a list of PV installers that every customer can choose from.

Although the CSI has ended in 2014 due to fast PV cost reduction starting from 2009, its experience has been transferred to other areas in the United States and in Europe. It is highly possible that other similar new technologies and products (e.g. the electric car and the battery) can adopt the CSI policy design, too. In summary, a good and successful policy may need to be simply, clear, credible, foreseeable, flexible, end-able, and incentive-compatible. The PV subsidy policy in China still has a long way to go when compared to the CSI.

What do Americans think about U.S. natural gas? 

The answer depends on who you ask. Presidential candidates, Washington think tank analysts, and ordinary citizens all give widely different answers to that question. In the United States, natural gas is sure to play an important role in the energy mix for the foreseeable future and has yielded several major economic, environmental, and health benefits in the short- and medium-term. Despite this, the image of natural gas has deteriorated in recent years, particularly within the environmental community. 

In a new policy brief, "Natural gas in the United States in 2016: Problem child and poster child," Tim Boersma discusses the various sentiments surrounding the debate over natural gas, analyzing the data supporting or refuting these varied points of view. Additionally, Boersma discusses the role that natural gas can play as a bridge fuel to a low-carbon economy, outlining a policy and research agenda for the utilization of natural gas going forward.

Downloads

• Natural gas in the United States in 2016

A little-known yearly survey conducted by the Census Bureau gathers a wealth of information that helps guide everything from investments in highways and schools to business decisions about building supermarkets and department stores. The American Community Survey gathers neighborhood-level data that isn’t collected in the decennial Census, providing invaluable information about issues from immigration to income levels. Losing that ground-level view of the changes in American life year after year would be disastrous, says Senior Fellow William Frey.

Video

• William Frey: Why the American Community Survey Is Important

Following U.S. troop withdrawal in 2014, Afghanistan faces an uncertain future. Its fate could be compromised or even commanded by war lords, terrorists or corrupt government officials. Fellow Vanda Felbab-Brown spent time on the ground observing events and talking to a mix of Afghans from high ranking officials to village elders, to merchants to the person on the street. In this four-part video series based on her book, “Aspiration and Ambivalence: Strategies and Realities of Counterinsurgency and State-Building in Afghanistan,” Felbab-Brown offers analysis on an Afghanistan in flux.

Video

• Vanda Felbab-Brown: Counterinsurgency and State-Building in Afghanistan after 2014
• Vanda Felbab-Brown: The Afghan People Simply Want to Live and Thrive
• Vanda Felbab-Brown: Pakistan Plays a Significant Role in Afghanistan's Future
• Vanda Felbab-Brown: The Choices the U.S. Makes Will Largely Determine Afghanistan's Future

The civil war tearing through Syria is worsened by a growing tide of refugees and displaced persons along with an escalating humanitarian crisis. Food shortages, a lack of housing and adequate health care are additional burdens that many Syrians now face. Senior Fellow and Brookings-LSE Project on Internal Dispacement Co-Director Elizabeth Ferris examines the cost of war in Syria in this episode of @ Brookings.

Video

• Elizabeth Ferris: Syria’s Escalating Humanitarian Crisis

The only interlocutor for the United States in Turkey will be President Recep Tayyip Erdoğan from now on, Professor Kemal Kirişci has said, adding that Washington has come to recognize the reality that whoever becomes the prime minister “knows he is not going to do anything that is unauthorized.”

The U.S. has lost its hopes regarding Turkish democracy, according to Kirişci, who is at the Washington-based Brookings Institute.

Prior to President Erdoğan’s visit, there were a record number of articles saying he would not receive a warm welcome in Washington, let alone a meeting with U.S. President Barack Obama. Yet Erdoğan ended up in the White House for a long meeting.

I was able to observe both of his visits in May 2013, and the one that took place last March. The difference is day and night. In 2013 the U.S. administration was bending over backwards to welcome Erdoğan, and he was hosted very lavishly.

The last visit was also preceded by the article of Jeff Goldberg, where there was a reference to how disappointed Obama was with his relationship with Erdoğan. I think that the appointment was given because Turkey and the president of Turkey is very central and critical to the fight against the Islamic State of Iraq and the Levant (ISIL). This is the only reason why this appointment was given; this is my reading.

The meeting took place despite Obama’s disillusionment with Erdoğan. Does that mean that Turkey is indispensable, regardless of rules Turkey? Or is Erdoğan not expendable?

Both. The term that is being used in Washington for the U.S. relationship with Turkey is “transactional,” meaning wherever we have common interests and common concerns, we are going to try to cooperate. The idea of a model partnership based on shared liberal values is no longer an issue; the cooperation is out of necessity.

Was there ever a Davutoğlu effect in bilateral relations, since he was one of the figures shaping foreign policy?

Starting in September 2015, Davutoğlu projected the image of a pragmatic person wanting to address a problem. The way in which he handled the European migration crisis was assessed as something positive compared to the rhetoric the president uses where he is constantly criticizing and using contemptuous – almost denigrating – language toward Europe but also the U.S. I suspect that Davutoğlu was offered an audience with Obama [shortly after his meeting with Erdoğan] because of this.

How do you think Washington will see his departure?

At the micro level, they thought that there was room for a pragmatic, solution-oriented relationship with Davutoğlu. But in the course of the last year or two, they had also come to realize that Davutoğlu’s foreign policy based around his book “Strategic Depth” was producing conflict between Turkey and the U.S. – the conflict areas being Syria, ISIL, Egypt, Israel and Iraq. 

Do you think there will be any changes in relations with Davutoğlu’s departure?

I think there is a recognition in Turkey, Europe, the U.S. and the rest of the world that from today onward, Turkey’s foreign policy will be run by the president. The notion that Turkey is a parliamentary system and the president is supposed to be equidistant from political parties does not reflect reality. The U.S., with this experience behind them, has come to recognize this reality. Whoever becomes the PM, they know he is not going to do anything that is unauthorized. The consequence is that Turkey-U.S. relations will not be where they were when Erdoğan first came to power; that’s how I can answer the question because it is comparative. At that time, in addition to Syria, trade, the economy and Turkey’s relations with the EU were also on the agenda.

These issues will no longer be on the agenda; there will be only one issue: the Syrian issue. [But another will be how will] NATO manage the challenges that Russia is bringing to European security? I think there is some room for interaction there.

Has the U.S. given up on Turkey as a reliable ally sharing the same values? 

It is sad but that is the reality. Turkey’s agenda today in the neighborhood is not an agenda that overlaps with the Western transatlantic community’s agenda. There is a lot of aggravation that emerges from that reality. For the U.S., the issue of ISIL is regarded as the major challenge emanating from the Middle East to U.S. and European security. I think they have reached a conclusion that cooperating with Turkey is an uphill battle. They also recognized Turkey and the U.S. have conflicting interests with respect to the PYD [Democratic Union Party]. Turkey considers it a threat to national security whereas the U.S. sees the PYD as an actor with which they are able to cooperate against ISIL in a decisive, reliable and credible manner. In the case of Turkey, there is cooperation but there are question marks over the reliability and credibility and commitment of Turkey.

Why are you using the word sad?

It is sad from a personal point of view because when you look at the world right now, it looks like there are two governance system competing with each other. One governance system is the system to which I thought Turkey was always committed. We became a member of NATO, Council of Europe and the OECD. We aspire to become part of the EU because I suppose we believed the values of members of this community provides more prosperity, stability and security to its citizens. Then there is an alternative form of governance represented by Russia, Iran and China [based on] the idea that the state should have a greater say on the economy, the state interest should prevail over the interests and the rights of individuals and that freedom of expression and media can be curtailed to serve state interests. Turkey is increasingly moving in the direction of this second form of governance.

Why, then, did Brookings invite Erdoğan, producing embarrassing moments when the president’s security detailed interfered with demonstrators?

Brookings has a long-established program called the Global Leaders Forum and invites presidents and prime ministers to give speeches. It is an independent think tank and does not confer legitimacy or illegitimacy on a speaker. The Washington audience got an opportunity to see how Turkey is being governed.

It looks like the U.S. remains indifferent to democratic backpedalling in Turkey.

There was a time at meetings on Turkey in which questions were raised along the lines of, “Why isn’t the U.S. doing more against this backsliding?” Interestingly, in the course of about six months or so, this question is being raised less and less. The U.S. has lost hopes about Turkish democracy. The primary reason for this is that they have this impression that Turkish society, especially after what happened after the June [2015] elections, gives priority to this kind of governance. Also, the Obama administration, especially compared to the Bush and Clinton administrations, is less comfortable with the idea of promoting democracy and supporting democratization.

The interview was originally published in Hürriyet Daily News.

On 15 May the Dominican Republic held its most complex elections since 1994. On this occasion, not only were the president and vice president elected, but also all the members of the lower house, the Chamber of Deputies, and the Senate, as well as local authorities.

There were no surprises. Danilo Medina, of the governing Partido de la Liberación Dominicana (PLD), was re-elected by a large margin, and all indications are that he was also able to conserve his party’s majority in both houses of Congress. We say “all indications are” because the election was beset by irregularities (well-documented by the OAS observer mission); and these irregularities have triggered a serious post-electoral crisis that has yet to be fully resolved.

Medina’s re-election confirms the infallibility of the rule (in place in Latin America since 1978) that every president who reforms the Constitution to keep himself in power has achieved his objective. The only exception was Hipólito Mejía, former president of the Dominican Republic, who amended the Constitution in 2002 to seek a second term, but then failed to get re-elected. This defeat opened the door for the return of Leonel Fernández (also of the PLD), who had already governed from 1996 to 2000, and who won the 2004 election and then (benefitting from Mejía’s reform) got himself re-elected in 2008. Once in office, Fernández reformed the Constitution in 2010 (moving from allowing consecutive re-election to allowing unlimited re-election but with alternating rather than consecutive terms). President Medina amended the Constitution once again, in 2015, on an expeditious basis (within 15 days) to re-enact consecutive re-election and to run again in the elections just held on 15 May. No other country in Latin America has amended the constitutional provision on re-election so many times in such a short period, four times in 21 years. 

Continuity of the PLD for the fourth consecutive term 

With this clear-cut triumph by Medina (he garnered 61.74 per cent of the votes, leading the second-place challenger Luis Abinader, of the recently-formed Partido Revolucionario Moderno (PRM), by more than 25 points), the PLD has now won the presidency for the fourth time in a row, with a total (at the end of this new term) of 16 years in power without interruption. Never before under democratic rules of the game had the same party won four times in a row in the Dominican Republic. 

If we exclude the special cases of the PRI in Mexico (prior to 2000) and the Partido Colorado (in Paraguay), from 1978 to date only four parties or coalitions have won four consecutive presidential contests in the region: Chavismo in Venezuela, which has been in power for 17 years (now in the midst of a profound crisis that could lead to Maduro’s early exit); Brazil’s Workers’ Party (PT), which so far (we’ll see what comes of the trial of Rousseff by the Senate that is about to get under way) has been in power for 13 years; ARENA in El Salvador (which governed without interruption from 1989 to 2009 with presidents Cristiani, Sol, Flores, and Saca); and the Concertación in Chile (from 1990 to 2010, with presidents Aylwin, Frey, Lagos, and Bachelet in her first term). 

Reasons for the victory

What are the reasons that explain Medina’s landslide victory after three consecutive terms of the PLD in office?

In my opinion, a combination of personal, political, and socioeconomic reasons explain this outcome. As to the personal reason, one should highlight the great popularity of President Medina. With approval ratings greater than 70 per cent, he enjoys high levels of popular support, much more than any other Latin American president.

In terms of the political reasons, one should note the advantage that any Latin American president has when seeking consecutive re-election: the enormous concentration of power by the PLD in all areas of the State, accentuated political clientelism, and above all, an opposition that has not figured out a strategy for removing the PLD from power. Mention should also be made of the marked lack of fairness in the electoral contest and the abusive use of state resources in favor of the governing party.

The third important reason that explains Medina’s easy re-election is to be found in the economy. With 7 per cent growth and inflation at 2.5 per cent, the Dominican Republic is one of the two best-performing economies in the region (the other is Panama). This growth stands in stark contrast to a Latin America which (according to World Bank projections) will see negative growth of -0.6 per cent this year. It is also more than 2 percentage points greater than the average growth rate for the countries of Central America.

Challenges

Yet Medina’s second term, despite the strong support he received at the polls, is not problem-free. On the contrary, he faces major challenges, including having the results of the 15 May elections accepted by the opposition so that his legitimacy and, above all, that of the PLD legislators and mayors, will not be called into question.

Improving the quality of democracy is another major challenge. The Dominican Republic is part of the group of countries (according to The Economist) that has a flawed democracy, characterized by marked institutional weakness and high levels of citizen insecurity and corruption. 

Moreover, profound and urgent changes are needed in the political–electoral system aimed at improving the quality and integrity of the electoral process to avoid having to suffer similar problems in future elections. 

In the electoral sphere, the OAS report recommends that it is important to separate voting for members of the lower house from voting for senators. It is also important to provide for fairer electoral competition. This requires adequate regulation of the use of state resources (to keep the party in power from enjoying unfair advantages), strengthening the levels of transparency, oversight, control of political financing (establishing, among other measures, ceilings for campaign spending and limits on private financing), as well as assuring more equal access to the media. 

As regards the political system, the priority includes introducing thorough changes in the party system aimed at modernizing the parties, institutionalizing them and improving their levels of internal democracy. Another priority is ensuring effective gender parity in politics. 

These political–electoral changes need to be supplemented by adequate modernization and strengthening of the electoral organs (JCE - Central Elections Board and the TSE - Superior Electoral Tribunal), ensuring that they are made up of very qualified professionals of renowned prestige, who are totally independent of the political parties. In the area of the economy, despite the current positive macroeconomic outlook, the situation is far from ideal. 40 per cent of the population lives in poverty due to the economy’s serious difficulty generating quality employment (due to its growth model). To this we must add the need to solve the main limitation that the economy has faced for some time, i.e., scarce energy and high energy prices. 

In my opinion, this fourth consecutive victory consolidates the PLD as the predominant party in the Dominican political system (with the risk of becoming a hegemonic party). The PRD, which until recently was the main opposition party under the now-deceased Peña Gómez, weakened by its constant internal strife and divisions, ended up allying with the PLD in this election and won just over 5 per cent of the votes. The other major historical party, the PRSC, of deceased former president Joaquín Balaguer (which allied with the PRM in this election) also obtained few votes; its numbers similar to the PRD’s. The big question is what will happen in the coming years with the recently formed PRM and the leadership of Abinader, in particular, if both he and the party will be able to become consolidated as the main opposition force. 

One will also have to see whether Medina and the PLD have the capacity to steer clear of the attrition and crisis that generally affects “long governments” under a single party or coalition in the region, especially during the curse of the second consecutive term. Of the four “long governments” mentioned above, two, the PT in Brazil and chavismo in Venezuela, are currently experiencing serious crises that could lead to an early end of the terms of presidents Dilma Rousseff and Nicolás Maduro. 

In summary, during his second term Medina should implement an ambitious agenda of reforms. In politics, the priority includes modernizing and strengthening democratic institutions, adopting a law on political parties, and transforming the judiciary and the police to fight insecurity and corruption head on. In economic and social policy, the focus should be on maintaining high growth rates but correcting the serious prevailing inequalities and distortions with the objective of creating quality jobs and thereby reducing the high levels of poverty.

This piece was originally published by International IDEA. 

A central function of the United States Congress is oversight of the executive branch. Congressional oversight, as exercised from the beginning of the nation, is an essential tool in making the separation of powers real by empowering Congress to check the executive. In recent years, however, as polarization has reached paralyzing levels, Congress has largely gotten out of the business of routine and prospective “police-patrol” oversight.  In the absence of the will and the capacity to do prospective oversight, Congress is at risk of losing its power to the executive branch and thus failing one of its most important constitutional roles.

This paper assesses whether or not anything can be done to get Congress back into the oversight business. Specifically, author Elaine Kamarck examines the following question: Assuming that future Congresses develop the political will to conduct oversight, do they have the capacity to do oversight of a large, modern, and complex executive branch?

As Kamarck illustrates, mismatched resources may make it difficult for Congress to resume its oversight function. The modern federal government is a complex and enormous enterprise. But as the executive branch has grown considerably over the past decades, Congress has adopted budget cuts that make the legislative branch less and less capable of undertaking the kinds of systemic oversight that can solve or prevent problems. Congress employs a mere 17,272 professional staff to oversee an executive branch consisting of 4.2 million civil servants and uniformed military. 

“The existing infrastructure that is supposed to help Congress be on top of the executive branch has fallen prey to a mindless dumbing down of Congress,” Kamarck states. She details the five entities that are meant to support Congress in its oversight role: committee staff, the Congressional Research Service, the Government Accountability Office, the Congressional Budget Office, and the Inspectors General, all of which are understaffed and under-budgeted. Kamarck recommends the first thing Congress should do to fix its oversight problem is to properly staff the agencies it already has and to stop nickel and diming and degrading its own capacity.

Furthermore, Kamarck calls for a “Congressional Oversight Office,” a body charged with evaluating governmental performance before a crisis arises. This office should be staffed by implementation professionals who can gather the signals from all the other oversight organizations annually and in sync with the budget cycle.

“Congress needs to get back into the business of productive executive branch oversight,” concludes Kamarck. A Congressional Oversight Office is certainly a step in that direction.

Downloads

• Download the paper

Editor's Note: With the latest coup attempt in Turkey, Turkish democracy survived a major test, and the country turned from the edge of a precipice. writes Kemal Kirisci. But Turkey’s democracy has also taken a severe blow. This article was originally published in The National Interest.

The history of Turkish politics is littered with coups and coup attempts that have occurred in roughly ten-year intervals. It is almost a genetic defect.

• The nascent Turkish democracy experienced its first coup in 1960 when it was barely into its tenth year—led by a group of left-wing “young officers,” who had also forced the General Staff into its ranks. Administrative authority was returned to civilians in October 1961, after having cost the lives of the then-Prime Minister, Adnan Menderes, the Minister of Foreign Affairs, Fatin Rüştü Zorlu, and the Minister of Finance, Hasan Polatkan.
• The second military intervention took place in 1971 against the government of Süleyman Demirel—this time around, though, through a “coup by memorandum.” The military issued to the prime minister an ultimatum—to step aside and be replaced by a technocratic cabinet.
• Less than ten years later, in the midst of endemic violence between left- and right-wing radical groups, the military's top brass carried out another intervention. This was bloodier than the previous two interventions, costing hundreds of lives and leading to massive human-rights violations. After rubberstamping a suffocating constitution on the country, the military handed the government over to a semblance of a democratically-elected government in 1983.
• Surprisingly, Turkey broke this pattern of ten-yearly military interventions, and civilian authority continued until 1997, when there was what was termed a “post-modern coup.” The army rolled out a convoy of tanks into the streets of Ankara, and in a repeat of the coup of 1971, demanded the resignation of the coalition government led by Necmettin Erbakan.
• The next coup occurred a decade later (almost to the day) in April 2007, when the Chief of Staff staged an “e-coup” by posting a set of demands on its website. The coup was a reaction against a long list of democratic reforms that were introduced as a part of the leadership’s pro-EU agenda and were seen as a departure from the staunchly secularist, restrictive mode of governance. Bolstered by the public support for these reforms, however, the incumbent Justice and Development Party (AKP) led by Recep Tayyip Erdoğan, now the current president of Turkey, successfully withstood the “e-coup,” and for the first time, pushed the military back “into the barracks”.

The latest coup attempt—which took place on Friday, July 15—has widely been attributed to a large Gülenist faction within the military and the judiciary that circumvented the established chain of command and held the high command hostage. Gülenists are the followers of the Islamic scholar Fethullah Gülen, who leads a worldwide movement that claims to advocate a moderate form of Sunni Islam with an emphasis on tolerance and interfaith dialogue. Formerly allies with Erdoğan, the Gülenists were blamed for spearheading the corruption scandal in December 2013 that engulfed several government officials, ministers and people in Erdoğan’s intimate circle. Since then, Gülen and Erdoğan have been locked in a power struggle.

Back from the brink

Turkish democracy survived a major test, and Turkey turned from the edge of a precipice. The credit for the coup’s defeat goes to the Turkish people, who heeded Erdoğan’s call to resist this intervention “by any means possible and necessary" and filled the squares. TV reports were filled with eye-to-eye, tense, agitated confrontations between civilians and armed soldiers on the two bridges that connect the Asian and European sides of Istanbul. Public restraint and sobriety helped to prevent escalation of violence. There were nevertheless senseless causalities resulting from fire opened by the mutineers and especially attacks mounted on the parliament building as well as the Headquarters of the General Staff. It could have been a lot worse.

Erdoğan needs to rise above a majoritarian understanding of democracy and do justice to the aspirations of a public that heeded his call by pouring into the streets and squares to defeat the coup attempt.

Clearly, Turkey’s democracy has taken a severe blow—cushioned only by the unequivocal stance of the opposition leaders and the media against the coup. Once again, the nation managed to break this pattern of ten-year coups. This offers the country a matchless opportunity for reconciliation. Granted, Erdoğan has had an exceptionally rough weekend and his frustration with those responsible for or implicated in the coup is understandable. He is correct in calling “for their punishment under the full force of the law of the land.” It will, however, now be critical that he ensure that the rule of law is upheld and rises to the challenge of winning the hearts and minds across a deeply polarized nation. He has the tools for it in his repertoire and had successfully wielded them in the past—especially between 2003 and 2011, when he served as prime minister. In hindsight, this period is often referred to as AKP’s “golden age,” when the economy boomed, democracy excelled, and Turkey was touted as a model for those Muslim-majority countries aspiring to transform themselves into liberal democracies.

As he steers the country from the brink of civil war, Erdoğan needs to rise above a majoritarian understanding of democracy and do justice to the aspirations of a public that heeded his call by pouring into the streets and squares to defeat the coup attempt. This is the least that the Turkish public deserves. This would also be a move in the right direction for Turkey’s neighborhood, which desperately needs a respite from the turmoil resulting from the war in Syria, the instability in Iraq, Russia’s territorial ambitions and now Brexit. This is the moment when a stable, democratic, transparent, accountable and prosperous Turkey needs to come to the fore on the world-stage. The United States needs it too. As much as the White House declared its faith in the strength of Turkey’s democracy and its support for the elected leadership, there is a clear chance for forging closer cooperation between the two countries. The first step in cooperation should be in bringing to justice the perpetrators of this coup, followed by measures to enhance Turkey’s capacity to address and manage the many challenges facing Turkey and its neighborhood.

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.

Contributors: Alice M. Rivlin and Christine Dang-Vu

Recent data suggest that Accountable Care Organizations (ACOs) are improving important aspects of care and some are achieving early cost savings, but there is a long way to go. Not all ACOs will be successful at meeting the quality and cost aims of accountable care. The private sector has to date allowed more flexibility in terms of varying risk arrangements—there are now over 250 accountable care arrangements with private payers in all parts of the country—with notable success in some cases, particularly in ACOs that have been able to move farther away from fee-for-service payments. Future growth of the Medicare ACO program will depend on providers having the incentives to become an ACO and the flexibility to assume different levels of risk, ranging from exclusively upside arrangements to partial or fully capitated payment models.

Given that the first three year cycle of Medicare ACOs ends in 2015 and more providers will be entering accountable care in the coming years, the Centers for Medicare and Medicaid Services (CMS) has indicated that they intend to release a Notice of Proposed Rulemaking (NPRM) affecting the Medicare ACO program.

In anticipation of these coming changes, the Engelberg Center for Health Care Reform has identified the "Top Eight ACO Challenges" that warrant further discussion and considerations for ensuring the continued success of ACOs across the country. To support that discussion, we also present some potential alternatives to current Medicare policies that address these concerns. These findings build on the experiences of the Engelberg Center’s ACO Learning Network members and other stakeholders implementing accountable care across the country.  In some cases, the alternatives might have short-term costs, but could also improve the predictability and feasibility of Medicare ACOs, potentially leading to bigger impacts on improving care and reducing costs over time.  In other cases, the alternatives could lead to more savings even in the short term. In every case, thoughtful discussion and debate about these issues will help lead to a more effective Medicare ACO program.

Top Eight ACO Challenges

1. Make technical adjustments to benchmarks and payments
2. Transition to more person-based payments
3. Increase beneficiary engagement
4. Enhance and improve alignment of performance measures
5. Enable better and more consistent supporting data
6. Link to additional value-based payment reforms
7. Develop bonus payments and other incentives to participate
8. Support clinical transformation

Downloads

• Issue Brief: Improving the Medicare ACO Program

Event Information

In its 50th year, the Medicare program currently provides health insurance coverage for more than 49 million Americans and accounts for $600 billion in federal spending. With those numbers expected to rise as the baby boomer generation ages, many policy experts consider this impending expansion a major threat to the nation’s economic future and question how it might affect the quality and value of health care for Medicare beneficiaries.

On June 5, the Center for Health Policy at Brookings and the USC Leonard D. Schaeffer Center for Health Policy and Economics hosted a half-day forum on the future of Medicare. Instead of reflecting on historical accomplishments, the event looked ahead to 2030—a time when the youngest Baby Boomers will be Medicare-eligible—and explore the changing demographics, health care needs, medical technology costs, and financial resources available to beneficiaries. The panels focused on modernizing Medicare's infrastructure, benefit design, marketplace competition, and payment mechanisms. The event also included the release of five policy papers from featured panelists.

Please note that presentation slides from USC's Dana Goldman will not be available for download. For more information on findings from his presentation download the working paper available on this page or watch the event video.

Video

• Challenges and opportunities facing Medicare in 2030
• Eligibility, benefit design, and financial support
• Could improving choice and competition in Medicare Advantage be the future of Medicare?
• Improving provider payment in Medicare

Audio

• Strengthening Medicare for 2030

Transcript

• Uncorrected Transcript (.pdf)

Event Materials

• Burtless Slides
• 20150605_medicare_2030_transcript