In the face of seemingly weekly terrorist attacks and reports that Islamic State affiliates are growing in number, political leaders are under pressure to take tougher action against ISIS and other violent extremist threats. Removing terrorists from the battlefield and from streets remains critical—President Obama announced last week that the United States will send 250 more special operations forces to Syria, for one, and other military, intelligence, and law enforcement efforts will be important. According to one assessment, the United States has spent $6.4 billion on counter-ISIS military operations since August 2014, with an average daily cost of $11.5 million. As a result of these and related efforts, the territory the Islamic State controls has been diminished and its leadership and resources degraded.

The more challenging task, however, may be preventing individuals from joining the Islamic State or future groups in the first place and developing, harnessing, and resourcing a set of tools to achieve this objective. Violent extremism is most likely to take root when communities do not challenge those who seek to radicalize others and can’t offer positive alternatives. Prevention is thus most effectively addressed by the communities themselves—mayors, teachers, social workers, youth, women, religious leaders, and mental health professionals—not national security professionals, let alone national governments. But it’s easier said than done for national governments to empower, train, and resource those communities. 

Political leaders around the globe are increasingly highlighting community engagement and the role of communities more broadly in a comprehensive counterterrorism strategy. States, however, continue to struggle with how to operationalize and sustain these elements of the strategy. 

Show us the money

First, there is the funding shortfall. Too many national governments continue not to provide local governments and communities with the resources needed to develop tailored community engagement programs to identify early signs of and prevent radicalization to violence. To take just one example of the disparity, the $11.5 million per day the United States spends on its military presence in Iraq is more than the $10 million the Department of Homeland Security was given this year to support grassroots countering violent extremism (CVE) efforts in the United States, and nearly twice as much as the State Department’s Bureau of Counterterrorism received this year to support civil society-led CVE initiatives across the entire globe. Although a growing number of countries are developing national CVE action plans that include roles for local leaders and communities, funding for implementation continues to fall short. Norway and Finland are two notable examples, and the situation in Belgium was well-documented following the March attacks in Brussels.

Prevention is thus most effectively addressed by the communities themselves...not national security professionals, let alone national governments.

At the international level, the Global Community Engagement and Resilience Fund (GCERF)—established in 2014 and modeled on the Global AIDS Fund to enable governments and private entities to support grassroots work to build resilience against violent extremism—has struggled to find adequate funding. GCERF offers a reliable and transparent mechanism to give grants and mentoring to small NGOs without the taint of government funding. Yet, despite the fact that “CVE” has risen to near the top of the global agenda, GCERF has only been able raise some $25 million from 12 donors—none from the private sector—since its September 2014 launch. This includes only $300,000 for a “rapid response fund” to support grassroots projects linked to stemming the flow of fighters to Iraq and Syria—presumably a high priority for the more than 90 countries that have seen their citizens travel to the conflict zone. The GCERF Board just approved more than half of the $25 million to support local projects in communities in the first three pilot countries—Bangladesh, Mali, and Nigeria. GCERF’s global ambitions, let alone its ability to provide funds to help sustain the projects in the three pilots or to support work in the next tranche of countries (Burma, Kenya, and Kosovo) are in jeopardy unless donors pony up more resources to support the kind approach—involving governments, civil society, and the private sector—that is likely needed to make progress on prevention over the long-term.

Go grassroots

Second, national governments struggle with how best to involve cities and local communities. Governments still have a traditional view of national security emanating from the capital. Although a growing number of governments are encouraging, and in some cases providing, some resources to support city- or community-led CVE programs, they have generally been reluctant to really bring sub-national actors into conversations about how to address security challenges. Some capitals, primarily in Western Europe, have created national-level CVE task forces with a wide range of voices. Others, like the United States, have stuck with a model that is limited to national government—and primarily law enforcement—agencies, thus complicating efforts to involve and build durable partnerships with the local actors, whether mayors, community leaders, social workers, or mental health officials, that are so critical to prevention efforts. 

Some members of the target communities remain skeptical of government-led CVE initiatives, sometimes believing them to be a ruse for intelligence gathering or having the effect of stigmatizing and stereotyping certain communities. As debates around the FBI’s Shared Responsibilities Committees show, there are high levels of mistrust between the government—particularly law enforcement—and local communities. This can complicate efforts to roll out even well-intentioned government-led programs aimed at involving community actors in efforts to prevent young people from joining the Islamic State. The trouble is, communities are largely dependent on government support for training and programming in this area (with a few exceptions). 

To their credit, governments increasingly recognize that they—particularly at the national level—are not the most credible CVE actors, whether on- or off-line, within the often marginalized communities they are trying to reach. They’re placing greater emphasis on identifying and supporting more credible local partners, instead, and trying to get out of the way. 

Invest now, see dividends later

On the positive side of the ledger, even with the limited resources available, new (albeit small-scale) grassroots initiatives have been developed in cities ranging from Mombasa to Maiduguri and Denver to Dakar. These are aimed at building trust between local police and marginalized groups, creating positive alternatives for youth who are being targeted by terrorist propaganda, or otherwise building the resilience of the community to resist the siren call of violent extremism. 

Perhaps even more promising, new prevention-focused CVE networks designed to connect and empower sub-national actors—often with funds, but not instructions, from Western donors—are now in place. These platforms can pool limited resources and focus on connecting and training the growing number of young people and women working in this area; the local researchers focused on understanding local drivers of violent extremism and what has worked to stem its tide in particular communities; and mayors across the world who will gather next month for the first global Strong Cities Network summit. Much like GCERF, these new platforms will require long-term funding—ideally from governments, foundations, and the private sector—to survive and deliver on their potential. 

Somewhat paradoxically, while the United States (working closely with allies) has been at the forefront of efforts to develop and resource these platforms overseas and to recognize the limits of a top-down approach driven by national governments, similar innovations have yet to take root at home. More funding and innovation, both home and abroad, can make a huge difference. For example, it could lead to more community-led counter-narrative, skills-building, or counselling programs for young people at risk of joining the Islamic State. It could also help build trust between local police and the communities they are meant to serve, lead to more training of mainstream religious leaders on how to use social media to reach marginalized youth, as well as empower young filmmakers to engage their peers about the dangers of violent extremism. And national prevention networks that aren’t limited to just government officials can help support and mentor communities looking to develop prevention or intervention programs that take local sensitivities into account. Without this kind of rigorous effort, the large sums spent on defeating terrorism will not pay the dividends that are badly needed. 

Event Information

Thailand has been under military rule since May 2014, when General Prayuth Chan-Ocha and the Royal Thai Army seized power after deposing democratically elected Prime Minister Yingluck Shinawatra. Current Prime Minister Prayuth has systematically postponed elections on the grounds of prioritizing order and drafting a new constitution to restore democracy. Since the coup, Thai authorities have used the murky lèse-majesté law to curtail opposition to the monarchy, while the country’s economy has languished.

On February 24, the Center for East Asia Policy Studies at Brookings hosted an event to explore the root causes of Thailand’s political crisis, the implications of an upcoming royal succession, and the possibilities for the road ahead. The event was moderated by Senior Fellow Richard Bush.  Panelists included Duncan McCargo, professor of political science at the University of Leeds, Joshua Kurlantzick, senior fellow at the Council on Foreign Relations, and Don Pathan, an independent security analyst based in Thailand.

 Please follow the conversation on Twitter at #ThaiPolitics

Audio

• Kingdom at a crossroads: Thailand’s uncertain political trajectory

Transcript

• Transcript (.pdf)

Event Materials

• 20160224_thailand_political_crisis_transcript

Editors’ Note: International relations almost never progress in a linear fashion. In this excerpt from a new Brookings India briefing book titled “India-U.S. Relations in Transition,” Tanvi Madan examines some of the high-impact but low-probability events that may affect the relationship in the future: so-called “black swans.”

U.S. Secretary of Defense Ashton Carter recently said that the U.S.-India defense partnership would become “an anchor of global security.” But in an increasingly uncertain world, the partnership between these two large and relatively stable democracies can also potentially be a critical anchor of stability more broadly. Here are some black swans—low-probability, high-impact and, in hindsight, predictable events—that could exacerbate regional and global uncertainty and instability, and affect both countries’ interests and, potentially, their relationship. 

• Regional Assertiveness: What might be the impact of greater Chinese or Russian assertiveness—even aggression? How might Russian actions against Ukraine, Georgia, or even a NATO member change not just U.S. calculations, but India’s as well? How will it affect their bilateral relationship? What about a China-U.S. confrontation over Taiwan or in the South China Sea? Or Chinese action against a country like Vietnam, with which India has close ties and which the United States is increasingly engaging? What if there is a sudden or serious deterioration of the situation in Tibet, perhaps in the context of a leadership transition? 
• Chaos in India’s West: What happens if there is political uncertainty in Saudi Arabia, a country with which the United States has close—albeit tense—ties, and which is India’s largest oil supplier and home to millions of Indian citizens? How will the United States and India react if Iran, after all, decides to acquire nuclear weapons? What about the chain reaction either of these scenarios would set off in the Middle East? Closer to India, what if Afghanistan relapses into a total civil war? Or if there is a sharp downturn in stability within Pakistan, with the establishment challenged, the threat of disintegration, and challenges posed by the presence of nuclear weapons? 
• Shocks to the Global Economy: What if a confluence of circumstance leads to a major spike in oil prices? What will the impact be of a major economic crisis in China, not just on the global economy or Chinese domestic stability, but also in terms of how Beijing might react externally? How will the United States and India deal with this scenario? And what if the eurozone collapses under the weight of refugee flows, Britain’s threatened exit, or national financial crises? 
• The Epoch-Defining Security Shock: Both the United States and India have suffered major attacks relatively recently—the United States on September 11, 2001 and India on November 26, 2008. But what if there is another major terrorist attack in either country or on the two countries’ interests or citizens elsewhere? Or a major cyber incident that takes down critical infrastructure? 
• Environmental Challenges: What if rising sea levels cause a catastrophe in Bangladesh resulting in thousands, if not hundreds of thousands, crossing over into India? And then there are the various climate change-related challenges that can perhaps be considered “white swans”—more-certain events, whose effects can be more easily estimated. 

In addition, one could think of domestic black swans in each country and some in the bilateral context. These might include dramatic domestic political developments, or a spark causing a major backlash against immigrants in the United States or American citizens in India. 

As the U.S.-India partnership has developed, and India’s regional and global involvements have increased, the U.S.-India conversation—and not just the official one—has assumed greater complexity. This will help the two countries tackle black swans in the future. So will the further institutionalization of discussions on global and regional issues of the sort already underway. Amid the day-to-day priorities, there should be room for discussing contingencies for black swans in dialogues between the U.S. Deputy Secretary of State and the Indian Foreign Secretary, in the two countries’ dialogue on East Asia, and in discussions between the two policy planning units.

This weekend the United States will assume the chairmanship of the Arctic Council for a two-year term. While the Obama administration has been preparing for this for several years, it remains to be seen how the president will balance the concerns of most Arctic residents who view development of the region as vital to improving their economic and social livelihood and those individuals inside and outside the administration who want to limit development out of concern for the how economic development may cause local environmental degradation while also accelerating climate change.

As part of this preparation, in May 2013, the president launched a new National Strategy for the Arctic Region based on three principles

1. Advancement of U.S. security interests defined as ensuring the ability of our aircraft and vessels to operate, in a manner consistent with international law through, under, and over the airspace and waters of the Arctic; to support lawful commerce; to achieve greater awareness of activities in the region; and to intelligently evolve our Arctic infrastructure and capabilities including ice-capable platforms as needed;
2. Pursue responsible Arctic regional stewardship defined as protection of the Arctic environment and conservation of its resources, establishment of an integrated Arctic management framework, charting of the Arctic region, and employment of scientific research and traditional knowledge to increase understanding of the Arctic;
3. Strengthen international cooperation defined as working through bilateral relationships and multilateral institutions, including the Arctic Council, to advance collective interests, promote shared Arctic state prosperity, protect the Arctic environment, and enhance regional security, and to work toward U.S. accession to the United Nations Convention on the Law of the Sea.

Undergirding these principles were commitments to make decisions using the best available information, to foster cooperation with the state of Alaska, other international partners, the private sector, and to consult and coordinate with Alaskan natives to gain traditional knowledge. As part of this new strategy, the president appointed Admiral Robert J. Papp Jr. as the U.S. special representative for the Arctic in July 2014. Shortly after his appointment, and in several major speeches since, including one at Brookings, the admiral has stated that the administration’s agenda centers on stewardship of the Arctic Ocean including insuring its safety and security, improving economic and living conditions for the regions’ inhabitants, and addressing the impacts of climate change on the region. 

The administration’s new policy was buttressed in January 2015 by an executive order designed to enhance coordination of all the various agencies responsible for different aspects of federal oversight of the Arctic (Alaska). Paradoxically, however, the fact that the reorganization came nearly in tandem with the announcement of new wilderness restrictions on the exploration of oil and gas in the Arctic National Wildlife Refuge (ANWR) and the Arctic Coastal Plain. This announcement left many Alaskans skeptical on how further restrictions on development of the state’s resources could be viewed as improving economic and living conditions of people in the region. In a February 2015 meeting of Arctic Council Senior Arctic Officials (SAOs) in Yellowknife, Canada, the administration looked to put meat on the bones of what it intended to pursue upon assumption of the chairmanship of the Arctic Council. This resulted in an additional elucidation of 15 broad themes that had originally been presented in a Virtual Stakeholder Outreach Forum on December 2, 2014 in Washington, D.C..

The announced reorganization of government agencies and lines of authority dealing with U.S. Arctic and Arctic Council policy has done little or nothing to streamline the overlapping and sometimes conflicting policies governing natural resource development or energy projects in Alaska. These overlapping jurisdictions are well highlighted in a major new National Petroleum Council (NPC) report, Arctic Potential: Realizing the Promise of U.S. Arctic Oil and Gas Resources. This report was prepared at the request of Energy Secretary Moniz to address how best to pursue prudent development of Alaska’s offshore oil and gas resources and ironically issued shortly after the president’s closing of ANWR. Whether or not the White House was even aware of the NPC’s report, which represented months of substantive work by many people, remains open to question.

The Arctic reorganization plan did little to resolve some key questions as to actually who is in charge of Arctic policy in the United States. While Admiral Papp was named “Coordinator” of the U.S. Arctic Council Chairmanship, this position is not listed in the Council’s enabling documents. Historically, the foreign minister or the secretary of state of the country chairs the Council while a career diplomat chairs the meetings of the senior officials dealing with the day-to-day activities of the Council. It appears that Admiral Papp has neither of these positions. In any case, it looks from the organizational chart that the White House science advisor will be the real coordinator of U.S. Arctic policy.

The chief problem that U.S. Arctic policy must resolve is that while in the Arctic Council we have to address issues affecting the entire Circumpolar North, our domestic Arctic policy centers only on Alaska, where a slew of domestic agencies have overlapping and often conflicting oversight and regulatory responsibilities. The situation is made still more complex by the large amount of the state that is owned by the federal government. This makes it almost inevitable that any resource development project by private or state interests will run into federal government restrictions, in terms of needing to cross federal land to get a resource to market, permitting to ensure that water resources are not polluted, or making sure that fish and wildlife habitats are not disturbed, etc.

Our Arctic policy also suffers from an acute lack of awareness by most Americans that we are an Arctic nation with a huge maritime boundary and very limited resources (ice-worthy ships, proper navigation charts and aids, lack of port facilities, lack of search and rescue capabilities, lack of knowledge of what fishery resources we possess) to protect it. While many of these issues lie outside the scope of the Arctic Council, many are cross-cutting with our Arctic neighbors, most notably with increased traffic in the region (from tourism, fishing, energy development, and shipping) comes the increased possibility of an accident. Currently, the United States does not have the capable means (both in terms of timely response and adequate infrastructure) to respond to an accident in the Arctic, which could be catastrophic, as all of these industries are active and gaining popularity every day.

As the United States takes the helm of the Arctic Council, there are several core issues that the administration must address. Some critical questions are: What is the U.S. position on the development of the Arctic’s oil, gas, mineral, and fishery resources? What specific action is the United States prepared to support in the Arctic Council to uplift the standard of living of Arctic people across the Circumpolar North? Given that each icebreaker costs at least $700 million and that we only have one in operation, what resources are we prepared to expand to build a fleet capable to respond to events in the Arctic? Should any of these expenses be viewed as vital to our national security and defense, and if so, which budget should they be taken out of? What role does the United States in its chairmanship role see for closer interaction between the Arctic Council and the Arctic Economic Council? Would the United States support the closing off of certain ecologically sensitive parts of the Arctic to all commercial exploitation? Finally, how does the administration in its Arctic Council leadership role get its Arctic policy in sync with that of the state of Alaska in its recently released Alaska Arctic Policy Implementation Plan?

Other Arctic nations surpass the United States in terms of Arctic policies. Norway, Russia, Canada, and even Denmark (through complicated ties with Greenland’s claim on the Arctic) all have the Arctic at the front and center of policymaking decisions. I hope to see these issues addressed as the United States moves to enact effective policy on the Arctic over the next two years as the alternative is too great a risk and too great a wasted opportunity. 

Event Information

On April 24, 2015, the United States assumed chairmanship of the Arctic Council for a two-year term. Over the course of the last year, the United States has outlined plans within three central priorities: improving economic and living conditions for Arctic communities; Arctic Ocean safety, security, and stewardship; and addressing the impacts of climate change. Working with partners on the Council, U.S. leaders have moved forward policies ranging from joint efforts to curb black carbon emissions to guidelines for unmanned aerial systems conducting scientific research. With half of its short chairmanship behind it, what has the United States accomplished over the last 12 months? What work remains to be done?

On April 25, the Energy Security and Climate Initiative (ESCI) at Brookings hosted U.S. Special Representative for the Arctic Admiral Robert J. Papp, Jr. for a keynote address on the state and future of U.S. leadership in the Arctic. ESCI Senior Fellow Charles Ebinger moderated the discussion and audience Q&A.

Join the conversation on Twitter using #USArctic

Video

• The halfway point of the U.S. Arctic Council chairmanship: Where do we go from here?

Audio

• The halfway point of the U.S. Arctic Council chairmanship: Where do we go from here?

Event Information

On December 5, 2011, the Brookings-LSE Project on Internal Displacement held a private launch event for its report, From Responsibility to Response: Assessing National Approaches to Internal Displacement, which examines government response to internal displacement in fifteen of the twenty countries most affected by internal displacement due to conflict, generalized violence and human rights violations. The analysis presented in the report is based on the first ever systematic use as an assessment tool of the document, Addressing Internal Displacement: A Framework for National Responsibility, developed by the Brookings-Bern Project on Internal Displacement in 2005 to provide guidance to governments in their response to internal displacement.

Roberta Cohen (nonresident senior fellow at Brookings and former co-director of the Project) moderated the event, which featured remarks from the co-authors of the report, Elizabeth Ferris (senior fellow at Brookings and co-director of the Brookings-LSE Project on Internal Displacement), Erin Mooney (senior IDP and protection adviser at the United Nations and former deputy director of the Project) and Chareen Stark (senior research assistant, Brookings-LSE Project on Internal Displacement). In attendance were representatives from the US Department of State and international NGOs, as well as researchers from think tanks and universities.

Cohen opened the event by discussing the background and significance of the Guiding Principles on Internal Displacement. From the very beginning of discussions about internal displacement, there was an emphasis on the fundamental responsibility of national governments to protect and assist those displaced within their territory. And yet over the years there has been an awareness that international actors also have a role to play. She noted the positive strides that have occurred over the past twenty years in regards to government response to internal displacement. Country visits by the UN experts on IDPs—the Representatives of the Secretary-General on IDPs—have been instrumental to improving government response, in some instances leading governments to address internal displacement for the first time. Today, most governments understand their obligations and responsibilities to protect and assist IDPs; the challenge is often translating that understanding into concrete actions.

Elizabeth Ferris gave an overview of the Framework for National Responsibility, which was used to assess government response in each of the fifteen countries in the report (Afghanistan, The Central African Republic, Colombia, the Democratic Republic of the Congo, Georgia, Iraq, Kenya, Myanmar, Pakistan, Nepal, Sri Lanka, Sudan, Turkey, Uganda and Yemen). The Framework outlines twelve minimum steps—or benchmarks—that governments can take to address the protection and assistance needs of internally displaced persons within their territory, from preventing displacement to appointing a focal point on IDP issues, to facilitating the work of the international community. She explained the methodology used in the study and described the challenges the authors faced in conducting the research. For example, basic data on various aspects of government response was lacking in many instances and it was often difficult to determine the impact of a particular government policy in addressing internal displacement. In addition to analyzing the response of the fifteen governments on each of the twelve benchmarks, the study included four extended case studies commissioned for this report: Afghanistan, Georgia, Kenya and Sri Lanka.  Ferris discussed some of the overall findings of the study, noted that the Framework had proven to be a useful assessment tool for examining national responses to displacement, and suggested a number of areas where further research is needed. 

Erin Mooney briefed the audience on benchmark seven—designating an institutional focal point on IDPs—and benchmark ten—supporting durable solutions for IDPs. Mooney noted that designating a governmental focal point for addressing internal displacement is important for clarifying institutional responsibilities and, therefore, for increasing governmental accountability.  Of the 15 countries assessed, all but one had designated a national institutional focal point for addressing internal displacement. She discussed some of the challenges institutional focal points often face, including a lack of funding and a lack of political clout which often challenge their ability to coordinate across government agencies. Benchmark ten, the achievement of durable solutions, was one of the most complex and politicized areas of government action, and is  arguably the one in which government commitment to addressing displacement becomes most apparent. Governments tend to emphasize return as the primary solution to displacement, but, in situations where return has occurred, there is usually little information about whether IDPs have in fact achieved a durable solution. Mooney discussed some of the challenges the fifteen governments faced in finding durable solutions, noting that in none of the countries have durable solutions to displacement been fully achieved.

Chareen Stark discussed the report’s findings on benchmark one—the prevention of arbitrary displacement—and the study’s overall recommendations. Given that the study assessed governments already experiencing large-scale displacement and, in most instances, multiple waves of displacement, Stark said it was obvious that all fifteen governments had failed to prevent displacement. There were three major limitations to governments’ ability to prevent displacement: many of the governments are themselves parties to conflict; many of the governments assessed do not exercise effective sovereignty over all of their territory, due to the presence of nonstate armed actors and/or foreign militaries; and all of the assessed countries face financial and human capacity limitations. She explained that the study found that nearly half of the countries assessed had developed some sort of preventive measures (at least on paper), including several governments that had taken measures to prevent displacement from natural disasters but not conflict. Stark discussed some of these laws, policies and institutional mechanisms as well as the challenges to their effective implementation. She also outlined the report’s recommendations to governments of countries with IDP populations, such as developing and implementing laws and policies in line with the UN Guiding Principles on Internal Displacement and devoting adequate resources at the national and local levels.

Concluding the discussion, the panel responded to questions from the audience on issues such as incentives for governments to address internal displacement using the Framework for National Responsibility and challenges in data reporting and analysis.  Specific questions were also raised on benchmarks five (laws on internal displacement), six (policies on internal displacement), three (designating an institutional focal point for IDPs) and twelve (working with the international community).

Event Materials

• From Responsibility to Response Nov 2011doc

EXECUTIVE SUMMARY

A few influential Americans have begun to suggest that the United States should reduce its long-standing security commitment to Taiwan. Some say that Taiwan itself has chosen to improve relations with China, so the island has less need for advanced U.S. weaponry and a defense pledge. Others argue that Washington, to avoid unnecessary tensions with a rising China, should accommodate Beijing on the most neuralgic issue—Taiwan.

The first group overstates the limits of the ongoing Taiwan-China détente. True, progress has been made in normalizing, liberalizing, and institutionalizing the economic relationship. But, to the disappointment of many Chinese, none has occurred on political and security issues, because the Taiwan public is not ready to go there and serious conceptual differences exist on how to get there anyway. So the prospects for cross-Strait relations in the near-term are for modest, incremental progress only, or a stall.

The second group misunderstands the benefits and costs of a significant American accommodation to China regarding Taiwan (e.g. by sharply cutting back arms sales). In fact, Washington has frictions with China on a growing list of issues. Conceding to Beijing on Taiwan will not help us elsewhere. Moreover, our friends and allies (e.g. Japan and Korea) will worry that the United States might sacrifice their interests next for the sake of good relations with China. Finally, the primary reason China has failed to incorporate Taiwan on its terms is not U.S. arms sales but because its negotiating position is unacceptable to the Taiwan public.

As China rises and seeks to reshape East Asia more to its liking, how the United States responds will be a critical variable. It needs the right mix of accommodation and firmness. Giving way on Taiwan will neither pacify Beijing nor assure our allies.

Introduction

Should the United States abandon Taiwan? Until recently, even to pose such a question would have been unthinkable in Washington. While the U.S. relationship with Taiwan may have had its ups and downs over the past six decades, but the strong American commitment has endured. But now, individuals who previously served in senior positions in the U.S. government are calling it into question. Theirs is not a modest proposal, and it deserves careful examination.

Some observers believe that Taiwan has become a strategic liability. They remind us that China regards the settlement of the Taiwan problem as its internal affair, yet the United States continues to provide the island with advanced weaponry and at least an implicit pledge to come to its defense. They echo Chinese diplomats who argue that our arms sales are the major obstacle to good U.S.-China relations. (These diplomats also assert that U.S. arms sales both discourage Taipei to negotiate seriously with Beijing and encourage Taiwanese politicians who have separatist agendas.) Therefore, it is argued, the United States needs to reconsider fundamentally its security support for Taiwan.

The most prominent voice for this point of view is Zbigniew Brzezinski, Jimmy Carter’s national security adviser. He argues that the hostility that arms sales foster in Beijing precludes whatever strategic cooperation a declining United States can secure from a rising China. Moreover, he says, “it is doubtful that Taiwan can indefinitely avoid a more formal connection with China,” and points to some version of the unification formula Beijing used for Hong Kong as a possible basis. That in turn would end the island’s need to depend on the United States for its security.[1] Others in this camp, more or less, include retired admiral Bill Owens, retired ambassador Chas Freeman, Charles Glaser of George Washington University, and the members of a policy panel assembled by the Miller Center of the University of Virginia.[2]

To make the conversation even more interesting, there are two other versions of this abandonment idea, ones that start with how Taiwan has changed since 2008:

• At least one conservative Congressman, a long-time supporter of Taiwan, believes that Taiwan was now working with an “autocratic China,” and since he opposes autocracy, the island’s government no longer deserved his support.[3] That is, Taiwan has abandoned U.S. values, which is bad, so he has abandoned Taiwan.
   
• A Portland State University scholar has argued that Taiwan seems to have decided that its own best interests require it to accommodate to China and rely much less on the United States (as Finland accommodated the Soviet Union during the Cold War). But in his view, this is good for Washington because it eliminates a long-time burden.[4]  And a Taiwan scholar recently argued that it was in the island’s own interest to get out of the middle of the China-U.S. rivalry.[5]

In the abstract, it should not be surprising that some Americans are rethinking U.S. support for Taiwan. We live in a new world. China’s power and international role are growing. It is in the interest of the United States to maximize areas of cooperation and mutual benefit with Beijing where possible, even as we demonstrate firmness when it overreaches (as it has). It is not in the U.S. interest to act in ways that lead Chinese leaders to conclude that America pursues a policy of containment. So, this logic goes, perhaps Washington should end commitments that are so offensive to China that it will not cooperate with the United States on projects of strategic value to us. Moreover, as the People’s Liberation Army (PLA) becomes more capable, America may find it harder operationally to honor its commitments to Taiwan, even if it wished to do so.

Taiwan Shifts Strategy

To sort through these competing ideas, it is necessary to understand how U.S.-China-Taiwan relations have changed in the last five years and what it means for U.S. policy.

For twenty-five years, Taiwan has faced a serious dilemma. On the one hand, many Taiwan companies benefit from investing in China to produce goods for the Chinese and international markets. On the other hand, China wishes to end Taiwan’s separate political status on terms similar to that used for Hong Kong, which most Taiwan people oppose. From around 1995 to 2008, Taiwan’s response to China’s political goals was to emphasize the island’s sovereignty, which only led Beijing to fear that Taiwan’s leaders intended to create a totally independent country. China in turn built up military capabilities to deter what it feared, which only made Taiwan more anxious. Washington worried that this action-reaction spiral might lead to war, and it periodically opposed some of Taipei’s initiatives.

Ma Ying-jeou won Taiwan’s 2008 presidential election by articulating a different vision: that the island could better preserve its prosperity, freedom, dignity, and security by engaging China rather than provoking it. Engagement would focus first on enhancing economic cooperation, thus avoiding contentious and unproductive political arguments. Expanding business ties would yield concrete benefits for both sides of the Taiwan Strait. Opening Taiwan universities to Mainland students would fill out enrollments and expose Chinese young people to a democratic society. In short, Ma believed, Taiwan could give China such a large stake in peace that it would not dare to risk that stake by coercing the island into submission. He made significant progress during his first term in removing obstacles to business and liberalizing trade, most notably in reaching an Economic Cooperation Framework agreement with China in 2010, the first step toward creating a free-trade area. Taiwan bounced back fairly quickly from the global economic crisis and had 4 percent growth in 2011. A growing stream of Chinese tourists buoyed some sectors of the Taiwan economy, and the number of Mainland students grew steadily.

Ma had another reason for engaging China: the United States. Taipei’s relations with Washington had suffered before 2008 because U.S. officials feared Taiwan’s political initiatives would spark a Chinese over-reaction, creating a conflict that might require American intervention. The reduction of tensions that Ma’s policies brought about calmed Washington’s fears and increased U.S. confidence that Taiwan’s intentions were constructive. The Bush and Obama administrations responded by improving U.S.-Taiwan relations, by approving three large arms-sales packages and extending other benefits.

Yet Ma’s China policy was not a total accommodation to Chinese wishes. Even though Beijing in 2009 exerted pressure on Taiwan to move toward political and security talks, Ma pushed back, and for good reason. The Taiwan public was not yet ready to support them, particularly the approximately 25 percent who retain the goal of total independence. In any case, there were serious conceptual differences between the two sides, specifically whether Taiwan was a sovereign entity for purposes of cross-Strait relations and the island’s international role. On the security side, China continued to build up its military capabilities relevant to Taiwan—particularly ballistic and cruise missiles. According to one think-tank’s analysis, an intensive missile barrage by the PLA can now ground Taiwan’s air force in the very early stages of a conflict, and Taiwan’s current defense strategy depends on its aircraft getting off the ground.[6] So Ma has spurned Chinese proposals for a peace accord because he does not see how it would improve Taiwan’s security, and his caution has persisted to this day.

In effect, Ma has pursued a mixed or hedging strategy toward China: engage it in areas that both benefit Taiwan and encourage Chinese restraint (economics and education); deflect Beijing on proposals that are not in the island’s interests (politics and security); and preserve a good relationship with the United States (to guard against the worst). A significant part of the Taiwan public—known as the Green Camp—was not happy with Ma’s mix of engagement and firmness. They feared he had put the island on a slippery slope to subordination and unification on China’s terms. The Greens would have preferred more firmness and less engagement. Yet so far, Ma’s strategy has the backing of the majority of island’s public, usually known as the Blue Camp. In the last election apparently, around 55 percent of voters approved of his approach while 45 percent remained skeptical or deeply opposed. 

Back to the Question of Abandonment

The fact that Ma is hedging the island’s bets should be reassuring to Americans who worry that Taiwan is, in effect, “abandoning the United States” for the sake of relations with China. Such strategic appeasement would only be happening if Taipei were willing to concede to Beijing on political and security matters. Yet Taiwan has been unwilling to abandon its claim that it is a sovereign entity and accept a solution similar to that applied to Hong Kong. Instead, it asserts what Ma calls “the sovereignty of the Republic of China.” Moreover, Taipei sees a continuing need for a deterrent against China’s use of its growing military capabilities. Even as it sees the value of enhancing Beijing’s stake in peace, it does not fully trust statements of peaceful intentions. And it is certainly not prepared to terminate its special security relationship with the United States.[7]

The more difficult question is whether the United States, for the sake of its own relationship with China, should, in effect, abandon Taiwan. China believes that U.S. political and security support for Taiwan is the primary reason it has not achieved its unification goal, because it fortifies the confidence of the island’s leaders that they can get away with refusing to negotiate on PRC terms. So Beijing believes that if it could induce Washington to end arms sales to Taiwan’s military, drop even an implicit commitment to defend the island if attacked, and support unification, its problem would be solved. So China would be very pleased if the United States abandoned Taiwan, and has suggested that if only Washington ended arms sales, U.S.-China relations would be problem free.

American analysts have offered several compelling reasons why the United States should not dissociate itself from Taiwan as long as Taiwan desires American support:[8]

• Although Taiwan has at times been the most important source of U.S.-China conflict, it is not the only one. For example, Beijing’s goals in East Asia are not limited to bringing the island back into the PRC fold. In addition, it seeks to expand its security perimeter away from its eastern and southern coast, where it was for decades. That in turn has meant that the PLA navy and air force are operating increasingly in the traditional domain of U.S. and Japanese forces.[9] Removing Taiwan as a problem would in no way end or reduce this mutual impingement; it would only change its location. Taiwan aside, Beijing would still regard American “socialization” as negative.
   
• U.S. allies and partners—Japan, the Republic Korea, and others not necessarily in the Asian region—have have much at stake in Washington’s future approach to Taiwan. Simply put, a United States that would abandon Taiwan could abandon them. Of course, there may be hypothetical reasons why America might withdraw support that stem from Taiwan’s policies rather than its own commitment. So the reasons for any abandonment would be important. But the fear remains.
   
• Whatever China says, U.S. arms are actually not the reason that Beijing has been unable to bring Taiwan “into the embrace of the Motherland.” More to the point, China has not been able to persuade Taiwan’s government and public to accept its formula, which is called “one country, two systems” and was the one used for Hong Kong. If China were to make an offer that was actually to Taiwan’s liking, it would not refuse because of U.S. arms sales. Of course, a weak and friendless Taiwan might conclude that it had no choice but to settle on whatever terms it could extract. But that is not an outcome to which Washington should be a party (nor is it really in China’s interest to gain Taiwan through intimidation).
   
• Finally, how a status quo United States and a reviving China cope with each other—their key foreign policy challenge for the rest of the century—will be played out over the next few decades in a series of test cases. North Korea, maritime East Asia, and Iran are a few of them. Taiwan is another. While active U.S. opposition to Taiwan’s unification with the Mainland would understandably lead Beijing to infer that our intentions are hostile across the board, supporting Beijing’s approach when Taipei objects would be a serious demonstration of weakness.

Should the United States concede to China on Taiwan, the lessons that Beijing would learn about the intentions of the United States would likely discourage its moderation and accommodation on other issues like Korea or maritime East Asia; in that respect, America’s friends and allies are right. Continuity of U.S. policy toward Taiwan will not guarantee that China’s actions in other areas will support the status quo, but it increases the likelihood that it will. Conversely, a China that addresses its Taiwan problem with creativity and due regard to the views on the island says something positive about what kind of great power the PRC will be. A more aggressive approach, one that relies on pressure and intimidation, signals reason for concern about its broader intentions. In this regard, Taiwan is the canary in the East Asian coal mine.

A Slippery Slope?

Even if Taipei does not make a proactive strategic decision to appease Beijing, and even if Washington does not seek to curry Chinese favor by sacrificing Taiwan’s interests, there remains the possibility that Taiwan might undermine itself through inattention or neglect. That is, Taiwan might assume that Beijing’s intentions are so benign that it is prepared to accept some version of the status quo over the long term. Yet China has a different objective—ending Taiwan’s de facto independence more or less on its terms—and it may not have infinite patience. The danger is, therefore, that a frustrated China might seek to exploit the power asymmetry between the two sides of the Strait and intimidate Taiwan into accepting “an offer it can’t refuse.”

So what can Taiwan do to forestall that day? The first thing is to not create the impression in Beijing that the door on unification is closing forever—which Taiwan is currently doing. In addition, there are things it can do at the margin to strengthen itself and therefore increase the confidence needed to resist PRC pressure.

• Economically, sustain the island’s competitiveness in shifting to a knowledge-based economy, and by liberalizing its economic ties with all its major trading partners, not just China. This will require eliminating some protectionist barriers, but the structural adjustment thus created will work to Taiwan’s benefit.
   
• Politically, reform the political system so that it does a better job of addressing the real challenges that Taiwan faces (rather than focusing on relatively superficial issues).
   
• Also politically, foster a clearer sense of what it means to say that Taiwan or the ROC is a sovereign entity, not just for its role in the international system but also regarding cross-Strait relations.
   
• Militarily, enhance the deterrent capabilities of Taiwan’s armed forces in ways that raise the costs and uncertainties for Beijing if it were ever to mount an intimidation campaign.

None of these forms of self-strengthening will be easy. But they will buoy Taiwan’s psychological confidence and reduce the chances of PRC pressure in the first place.

Because the United States has an interest in China approaching its Taiwan “test case” in a constructive manner—that is, avoiding intimidation and accommodating Taiwan’s concerns—it should help Taiwan where it can to improve its odds. The most obvious ways are economically, by drawing Taiwan into the circle of high-quality liberalization, and militarily, by supporting innovative and cost-effective ways to enhance deterrence.

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As part of ongoing cooperative work with the U.S. Food and Drug Administration, the Engelberg Center for Health Care Reform has formed a council to bring together expert perspectives on the challenges facing antibacterial drug development. Designed to include representatives from academia, patient advocacy groups, industry, providers, and government agencies, the Brookings Council on Antibacterial Drug Development (BCADD), will convene twice a year to discuss pressing issues in the treatment of infectious diseases and potential steps to address them.  

The first BCADD meeting, held on August 30, 2012, brought stakeholders together to discuss the following:

• Ongoing antibacterial initiatives at FDA and the Clinical Trials Transformation Initiative
• Statistical and methodological approaches that could be harnessed to improve the efficiency of antibacterial drug development
• Balancing benefit-risk and uncertainty considerations with public health needs
• Next steps for council action

For more information on FDA’s Antibacterial Drug Development Task Force, click here.

Event Materials

• 30 antibacterial drug development summary
• Presentation Slides
• FINAL BCADD Discussion Guide 20120828
• FINAL May 9 Summary 20120828
• Participant List_Final

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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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.

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. 

Partisan gridlock and political extremism threaten to tear down the pillars of public policy and render the U.S. government utterly dysfunctional, argues Senior Fellow Thomas Mann, co-author with Norman Ornstein—resident scholar at the American Enterprise Institute—of It’s Even Worse Than It Looks (Basic Books, 2012). He argues that a flood of super-PAC money, negative ads and cowed mainstream news media are contributing to the problem.

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• Mann: Blame for Gridlock Is Squarely on Republican Party

Over the past year, much attention has been given to the growing production of shale oil and the challenge that these unconventional sources of energy pose to traditional producers in the Gulf. As the world’s leading exporter of liquefied natural gas (LNG), Qatar faces related concerns – mounting competition from new LNG exporters and more competitive pricing in key Asian gas markets. How will this global gas boom unfold? How can Doha develop a robust response to growing volatility in gas pricing and demand?

In a new Brookings Doha Center Analysis Paper, Naser al-Tamimi examines Qatar’s position on the global gas stage and assesses the prospects of new competitors. He argues that new LNG production and exports – from Australia, the United States, and other countries – present a challenge to Qatar’s dominant status in global gas markets, particularly in the Asia-Pacific region. At the same time, diversification and slowing growth in this region’s major economies, such as China, South Korea, and Japan, may reduce LNG demand across the board.

Read "Navigating uncertainty: Qatar’s response to the global gas boom"

Ultimately, Tamimi argues that Qatar’s pricing mechanisms and export revenues will come under significant pressure as a result of these developments, posing a potential challenge to Qatari finances. He contends that an effective response from Qatari officials must emphasize greater exports to the Middle East/North Africa region, greater contract flexibility to attract new buyers, and cooperation with other GCC members to improve Gulf bargaining power in key regional markets.

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This week the Dutch Ministry of Security and Justice announced that it will pay for the successful achievement of employment and prison recidivism outcomes among short-term adult prisoners as part of the new “Work After Prison” social impact bond (SIB)—the fifth such transaction in the Netherlands and one of about 60 in the world. In a SIB—which is a mix of results-based financing, a public-private partnership, and impact investing—private investors provide upfront capital for preventive social services, and in turn an outcome funder (usually government) pays them back plus a return contingent upon the achievement of agreed-upon outcomes. Where consistent social outcomes achievement poses challenges, this model has considerable potential to create a path forward.

What is the social challenge?

Each year in the Netherlands, around 40,000 adults are incarcerated and about 30,000 are released. What’s troubling is that the rate of recidivism two years after release from prison is nearly 50 percent. And the costs of successful reintegration and reduced recidivism rates are high and include enormous amounts of social benefits paid out to previously incarcerated individuals. Multi-pronged approaches are often necessary including programs that address housing needs, employment, mental health and substance abuse issues, and debt settlement. Addressing all of these challenges simultaneously is difficult and often the right incentives are not in place for the outcomes of importance to be at the forefront of decision-making. But SIBs may offer a promising way to meet these hurdles.

Who are the players in the SIB?

In a typical SIB, the players at the table include an outcome funder (government), investors (usually impact investors including foundations), a service provider or providers (usually a non-governmental entity but it can also be public), and the beneficiary population. In addition, there can be external evaluators who assess whether or not the agreed-upon outcome has been achieved; and, in many SIBs, there is also an intermediary party that brings the stakeholders to the table, structures the deal, manage the deal, or conducts performance management for the service provider.

The Dutch SIB for prison recidivism has a total of 10 players not including the beneficiary population. Most interestingly, this deal differs from all four previous SIBs in the Netherlands in that the outcome funder, the Ministry of Security and Justice, is at the national level rather than subnational level—the previous outcome funders were all municipal governments. Notably, less than half of the SIBs in the world have a national-level outcome funder. The Dutch bank ABN Amro, the Start Foundation, and Oranje Fonds are equal investors (and have all invested in previous Dutch SIBs). Three organizations that are part of the Work-Wise Direct Consortium—Exodus Foundation, Restart, and Foundation 180—will provide services to the population in need. Society Impact, an organization supporting social entrepreneurship and innovative financing in the Netherlands, acted as a matchmaker in the transaction by helping to bring all parties to the table. An evaluation arm of the Ministry of Security and Justice and a research entity, Panteia will evaluate whether or not outcomes are achieved.

The beneficiary population includes 150 adults who have been in prison between three and 12 months. There is no targeting based on type of crime, age, or gender and consent must be provided by the participant and the municipality.

What’s at stake?

There are two outcome metrics established in this SIB. In a period of two and half years, the outcome funder will repay investors the principal investment of 1.2 million euros plus a maximum return of 10 percent of the investment (but expected return is around 5 percent) contingent upon: 1) a 25 to 30 percent decrease in the social benefits issued to the previously incarcerated participants (which is estimated to require a 882-month increase in labor force participation by the entire group); and 2) a 10 percent reduction in recidivism among the participants.

Who will benefit?

The beneficiary population

In theory, with all eyes on the target (outcomes), beneficiary populations have a greater chance of success with this results-based financing mechanism compared to traditional input-based financing contracts. The potential for greater collaboration among stakeholders, performance management, and adaptive learning should all bode well for the delivery of the set goals. This could allow for improvements even beyond the targets within the impact bond structure such as improved family life, higher earnings, and increased civic participation.

The outcome funder (and taxpayers)

For the Ministry of Security and Justice, the SIB provides an opportunity to shift to private investors the implementation and financial risk of funding social service programs. If outcomes are achieved, then the ministry repays the investors an amount that represents the value they place on outcome achievement, and if outcomes are not achieved, then they do not pay. What’s more, the ministry could benefit from reduced costs as a result of shifting from remedial to preventive services. Additional cost savings, in particular the reduction in social welfare benefits, and other inherent benefits will be accrued to other government entities as well as society as a whole.

The service providers

There can be multiple benefits for services providers. First, the availability of upfront capital allows them to do their job better. Second, the longer-term (multi-year) contract reduces time spent on grant proposals and allows for more steady funding flows. Third, the SIB can provide an opportunity to strengthen the providers’ systems of data collection. Fourth, it allows the service providers to conduct a rigorous evaluation of their program. Further, SIBs can allow for flexibility and learning-by-doing in the delivery of the social services.

The investors

The three investors in this SIB have an opportunity to earn a financial return of maximum 10 percent if outcomes are successfully achieved. In addition, they benefit from having contributed to the improvement of the lives of the target population and their families. Furthermore, they could generate an impact that goes way beyond the SIB itself. They have the potential to create larger systemic change in the provision of social services by shifting government’s focus away from how services are delivered to which outcomes they want to achieve and by helping to build systems of monitoring and evaluation that allow for systematic assessment of those outcomes.

A way forward

Six years after the implementation of the first SIB for prison recidivism in the United Kingdom, this creative idea has spread to at least 12 other countries with the aim of tackling some of the world’s most intractable social problems. The Netherlands, known globally as a leader on many social and environmental issues, is taking a leading role in the adoption of this mechanism. Moving forward, the rest of the world will be watching to see what lessons can be gleaned from these early experiments as the burden of tough societal issues and potential solutions become increasingly global in nature.

The Brookings Institution today launched the Center for Universal Education, an initiative that will develop and disseminate effective solutions to the challenge of achieving universal quality education. The center becomes part of the Global Economy and Development program and will conduct research and analysis, convene meetings and host policy forums to enhance policy development and understanding on a range of issues relevant to the achievement of universal quality education for the world’s poorest children. Jacques van der Gaag, senior fellow, and Rebecca Winthrop and David Gartner, fellows, will serve as co-directors of the center.

Van der Gaag has been a distinguished visiting fellow in Global Economy and Development at Brookings since 2006 and researched the economics of poverty, the economic consequences of HIV/AIDS and international health care financing. He was most recently a professor of development economics at the Faculty of Economics and Business at the University of Amsterdam. Winthrop, an expert in the field of education in contexts of armed conflict, most recently has been the head of education for the International Rescue Committee and teaching at Columbia University. She will focus on education in contexts of mass displacement, state fragility, and armed conflict and the role of education in long-term solutions for peace and development. Gartner is an expert on global education, global health and international development who recently has been a visiting scholar at Harvard University. His research will focus on global education and the role of international institutions and foreign assistance in global development.

“We are very pleased to welcome these new scholars and the Center for Universal Education to Brookings,” Brookings President Strobe Talbott said. “The center will strengthen and complement our current efforts to contribute to global education and development.”

Established in 2002, the Center for Universal Education (CUE) was previously part of the Council on Foreign Relations and was directed by Gene Sperling. Sperling left the Council on Foreign Relations earlier this year to become senior counselor to U.S. Treasury Secretary Timothy Geithner.

“Jacques, Rebecca and David’s expertise will help CUE develop and disseminate effective solutions to the challenge of achieving universal quality education,” said Kemal Derviş, vice president and director of Global Economy and Development at Brookings. “The center will continue to be a leading forum for shared learning in the global education policy community and will seek to project its own ideas into broader public debates in ways that will strategically support its core mission.”

The new center will focus on the provision of universal quality education among the world's poorest countries. Its affiliated scholars will conduct research and produce policy proposals around the core objective that every child should receive a quality basic education. It will also analyze the challenges and opportunities for the sufficient and effective funding of and programming for universal quality education.

Washington is again paralyzed and pulling back on clean energy economic development. Deficit politics and partisanship are firmly entrenched and the raft of federal financial supports made available through the 2009 stimulus law and elsewhere is starting to expire.

No wonder it’s hard to imagine—especially if you’re sitting in the nation’s capital—how the next phase of American clean energy industry growth will be financed or its next generation of technologies and firms supported.

And yet, one source of action lies hidden in plain sight. With federal clean energy activities largely on hold, a new paper we are releasing today as part of the Brookings-Rockefeller Project on State and Metropolitan Innovation argues that U.S. states hold out tremendous promise for the continued design and implementation of smart clean energy finance solutions and economic development.

Specifically, we contend that the nearly two dozen clean energy funds (CEFs) now running in a variety of mostly northern states stand as one of the most important clean energy forces at work in the nation and offer at least one partial response to the failure of Washington to deliver a sensible clean energy development approach.

To date, over 20 states have created a varied array of these public investment vehicles to invest in clean energy pursuits with revenues often derived from small public-benefit surcharges on electric utility bills. Over the last decade, state CEFs have invested over $2.7 billion in state dollars to support renewable energy markets, counting very conservatively.  Meanwhile, they have leveraged another $9.7 billion in additional federal and private sector investment, with the resulting $12 billion flowing to the deployment of over 72,000 projects in the United States ranging from solar installations on homes and businesses to wind turbines in communities to large wind farms, hydrokinetic projects in rivers, and biomass generation plants on farms. 

In so doing, the funds stand well positioned—along with state economic development and other officials—to build on a pragmatic success and take up the challenge left by the current federal abdication of a role on clean energy economic development.

Yet here is the rub: For all the good the funds have achieved, project-only financing—as needed as it is—will not be sufficient to drive the growth of large and innovative new companies or to create the broader economic development taxpayers demand from public investments.  Also needed will be a greater focus on the deeper-going economic development work that can help spawn whole new industries. 

All of which points to the new brand of fund activity that our paper celebrates and calls for more of. 

In recent years, increasingly ambitious efforts in a number of states have featured engagement on at least three major fronts somewhat different from the initial fund focus: (1) cleantech innovation support through research, development, and demonstration (RD&D) funding; (2) financial support for early-stage cleantech companies and emerging technologies, including working capital for companies; and (3) industry development support through business incubator programs, regional cluster promotion, manufacturing and export promotion, supply chain analysis and enhancement, and workforce training programs.

These new economic development efforts—on display in California, Massachusetts, New York, and elsewhere—show the next era of state clean energy fund leadership coming into focus. States are now poised to jumpstart a new, creative period of expanded clean energy economic development and industry creation, to complement and build upon individualistic project financing. 

Such work could not be more timely at this moment of federal gridlock and market uncertainty.

Along these lines, then, our paper advances several recommendations for moving states more aggressively into this new period of clean energy economic development. We suggest that:

• States should reorient a significant portion (at least 10 percent of the total portfolio) of state CEF money to clean energy-related economic development

• States, as they reorient portions of their CEFS to economic development, should better understand the market dynamics in their metropolitan regions.  They need to lead by making available quality data on the number of jobs in their regions, the fastest-growing companies, the critical industry clusters, gaps in the supply chain for those industries, their export potential, and a whole range of economic development and market indicators

• States also should better link their clean energy funds with economic development entities, community development finance institutions (CDFIs), development finance organizations and other stakeholders who could be ideal partners to develop decentralized funding and effective economic development programs

In addition, we think that Washington needs to recognize the strength and utility of the CEFs and actively partner with them:

• The federal government should consider redirecting a portion of federal funds (for instance, from federal technology support programs administered by the Department of Energy and other programs meant for federal-state cooperation) to provide joint funding of cluster development, export programs, workforce training, and other economic development programs  through matching dollars to state funds that now have active economic development programs, and to provide incentives to states without such programs to create them

• The federal government should create joint technology partnerships with states to advance each state’s targeted clean energy technology industries, by matching federal deployment funding with state funding.

• The states and the federal government, more generally, should look to “decentralize” financing decisions to local entities with street knowledge of their industries, relying on more “development finance” authorities that have financed traditional infrastructure and now could finance new clean energy projects and programs

In sum, our new paper proposes a much greater focus in U.S. clean energy finance on “bottom up,” decentralized clean initiatives that rely on the states to catalyze regional economic development in regions. Such an approach—which reflects the emergence of an emerging “pragmatic caucus” in U.S. economic life—is currently demanded by federal inaction. However, it might also be the smartest, most durable way to develop the clean energy industries of the future without the partisan rancor and obtuseness that has stymied federal energy policy. State clean energy funds—having funded thousands of individual projects—bring significant knowledge to bear as they focus now on building whole industries. For that reason, the funds’ transition from project development to industry creation should be nurtured and supported.

Event Information

The White House Council of Economic Advisers (CEA) was created by Congress in 1946 to advise the president on ways “to foster and promote free competitive enterprise” and “to promote maximum employment, production and purchasing power.” President Truman, who signed the Employment Act of 1946 into law, was unenthusiastic about the Council and didn’t nominate members for nearly six months. Yet the CEA, comprised of three individuals whom Congress says are to be “exceptionally qualified,” has not only survived but also prospered for 70 years and remains an important part of the president’s economic policy decisionmaking.

On February 11, the Hutchins Center on Fiscal and Monetary Policy at Brookings marked this anniversary by examining the ways the CEA and other economists succeed and fail when they set out to advise elected politicians and tap the expertise of some of the “exceptionally qualified” economists who have chaired the Council over the past four decades.

You can join the conversation and tweet questions for the panelists at #CEAat70.

Video

• Panel 1: The CEA in Moments of Crisis
• Panel 2: The CEA and Policymaking
• Panel 3: Current Economic Policy Issues

Audio

• The Council of Economic Advisers: 70 years of advising the president

Transcript

• Uncorrected Transcript (.pdf)

Event Materials

• 20160211_economic_advisers_transcript

The fiscal budget has become a casualty of political polarization and even functions that had enjoyed bipartisan support, like research and development (R&D), are becoming divisive issues on Capitol Hill. As a result, federal R&D is likely to grow pegged to inflation or worse, decline.

With the size of the pie fixed or shrinking, requests for R&D funding increases will trigger an inter-agency zero-sum game that will play out as pointless comparisons of agencies’ merit, or worse, as a contest to attract the favor of Congress or the White House. This insidious politics will be made even more so by the growing tendency of equating public accountability with the measurement of performance. Political polarization, tight budgets, and pressure for quantifiable results threaten to undermine the sustainability of public R&D. The situation begs the question: What can federal agencies do to deal with the changing politics of federal R&D?

In a new paper, Walter D. Valdivia and Benjamin Y. Clark apply punctuated equilibrium theory to examine the last four decades of federal R&D, both at the aggregate and the agency level. Valdivia and Clark observe a general upward trend driven by gradual increases. In turn, budget leaps or punctuations are few and far in between and do no appear to have lasting effects. As the politics of R&D are stirred up, federal departments and agencies are sure to find that proposing punctuations is becoming more costly and risky. Consequently, agencies will be well advised in securing stable growth in their R&D budgets in the long run rather than pushing for short term budget leaps.

While appropriations history would suggest the stability of R&D spending resulted from the character of the budget politics, in the future, stability will need the stewardship of R&D champions who work to institutionalize gradualism, this time, in spite of the politics.

Downloads

• Download the paper