INTRODUCTION

The Obama administration needs to focus on executing its existing financial rescue plans, keep the TARP focused on the banking sector, and create a contingency plan should the banking system destabilize again.

Crystal balls are dangerous, especially when it comes to economic predictions, which is why it is important for the administration to chart a path forward. Public policy must remain focused on the very real possibility that the apparent easing in the economy’s decline may be followed by little or no growth for several quarters and there could possibly be another negative turn. One of the risks is that the United States is very connected to the rest of the world, most of which is in severe recession. The global economy could be a significant drag on U.S. growth.

Cautious optimism should be the order of the day. We fear that the recent reactions of the financial markets and of some analysts carry too much of the optimism without recognizing enough of the uncertainty. There remains a lot of uncertainty and policymakers should not rest on their laurels or turn to other policies, even if they look more exciting. It is vital to follow through on the current financial rescue plans and to have well-conceived contingency plans in case there is another dip down.

We propose three recommendations for the financial rescue plans:

• Focus on execution of existing programs. The Administration has created programs to deal with each of the key elements necessary to solve the financial crisis. All of them have significant steps remaining and some of them have not even started yet, such as the programs to deal with toxic assets. As has been demonstrated multiple times now since October 2008, these are complex programs that require a great deal of attention. It is time to execute rather than to create still more efforts.
• Resist the temptation to allocate money from the TARP to other uses—it is essential to maintain a reserve of Congressionally-authorized funds in case they are needed for the banks. It would be difficult to overemphasize the remaining uncertainties about bank solvency as they navigate what will remain a rough year or more. The banks could easily need another $300 billion of equity capital and might need still more. It is essential that the administration have the ammunition readily available.
• Third, make sure there is a contingency plan to deal with a major setback for the banking system. The plan needs broad support within the administration and among regulators and, ideally, from key congressional leaders. We probably won’t need it, but there is too high a chance that we will require it for us to remain without one. The country cannot afford even the appearance of the ad hoc and changing nature of the responses that were evident last fall.

We also give the administration a thumbs-up for their bank recapitalization as well as the TALF program, while they are much more skeptical of the Treasury’s approaches to toxic assets. The authors also believe it is time to focus on the truly mind-blowing budget deficits given the danger that markets will not be able to absorb the amount of government borrowing needed without triggering a rise in U.S. interest rates and perhaps an unstable decline in the value of the dollar, nor do they believe there should be a another fiscal stimulus except under extreme circumstances.

Downloads

• Download Full Paper - English

       

       

       

       

       

Paris and Rome may be famous for romance, but it’s Filipinos who get the most love. That, at least, is a conclusion that can be drawn from a global love survey conducted by the Gallup Organization.

In our latest column for Bloomberg View, we mine the unique Gallup data for insights into the nature of love and its relationship to nationality, age, money and economic development. The survey, conducted in 136 countries, posed the question: “Did you experience love for a lot of the day yesterday?”

In honor of Valentine’s Day, we thought readers might be interested in seeing the full ranking. So here goes. The first number after each country name is the percentage of respondents who said they had experienced love the previous day. The second (in parentheses) is the sample size for the country.

1. Philippines 93% (2193)
2. Rwanda 92% (1495)
3. Puerto Rico 90% (495)
4. Hungary 89% (1002)
5. Cyprus 88% (988)
6. Trinidad and Tobago 88% (506)
7. Paraguay 87% (1986)
8. Lebanon 86% (970)
9. Costa Rica 85% (1985)
10. Cambodia 85% (1961)
11. Nigeria 84% (1965)
12. Guyana 83% (486)
13. Spain 83% (998)
14. Mexico 82% (989)
15. Tanzania 82% (1941)
16. Ecuador 82% (2126)
17. Jamaica 82% (534)
18. Venezuela 82% (997)
19. Cuba 82% (978)
20. Brazil 82% (1038)
21. Laos 81% (1947)
22. Argentina 81% (1985)
23. Belgium 81% (1015)
24. Canada 81% (1006)
25. Greece 81% (996)
26. U.S. 81% (1224)
27. Denmark 80% (1003)
28. Portugal 80% (995)
29. Netherlands 80% (993)
30. Vietnam 79% (1901)
31. New Zealand 79% (1775)
32. Italy 79% (1000)
33. Colombia 79% (1994)
34. Madagascar 78% (998)
35. Uruguay 78% (1969)
36. Turkey 78% (985)
37. Dominican Republic 78% (1976)
38. United Arab Emirates 77% (961)
39. Saudi Arabia 77% (978)
40. Chile 76% (1982)
41. Malawi 76% (1997)
42. Ghana 76% (1986)
43. South Africa 76% (1968)
44. Australia 76% (1199)
45. Panama 75% (1995)
46. Zambia 74% (1971)
47. Kenya 74% (1965)
48. Namibia 74% (996)
49. Nicaragua 74% (1988)
50. Germany 74% (1214)
51. Ireland 74% (992)
52. Sweden 74% (993)
53. U.K. 74% (1200)
54. Switzerland 74% (986)
55. Montenegro 74% (800)
56. Austria 73% (984)
57. France 73% (1217)
58. Kuwait 73% (934)
59. Finland 73% (993)
60. El Salvador 73% (2000)
61. Pakistan 73% (2253)
62. Zimbabwe 72% (1989)
63. Honduras 72% (1947)
64. Peru 72% (1982)
65. Egypt 72% (1024)
66. Serbia 72% (1474)
67. Bosnia and Herzegovina 72% (1896)
68. Sierra Leone 71% (1986)
69. India 71% (3140)
70. Taiwan 71% (984)
71. Bangladesh 70% (2200)
72. Belize 70% (464)
73. Croatia 69% (958)
74. Macedonia 69% (1000)
75. Mozambique 69% (996)
76. Bolivia 69% (1948)
77. Liberia 68% (988)
78. Iran 68% (963)
79. China 68% (7206)
80. Slovenia 68% (1000)
81. Haiti 68% (471)
82. Norway 67% (992)
83. Sri Lanka 67% (1974)
84. Poland 67% (939)
85. Guatemala 67% (1988)
86. Uganda 66% (1961)
87. Sudan 66% (971)
88. Israel 66% (957)
89. Kosovo 65% (983)
90. Thailand 65% (2377)
91. Jordan 65% (998)
92. Albania 64% (855)
93. Guinea 62% (952)
94. Botswana 62% (999)
95. Angola 62% (957)
96. Burkina Faso 62% (1876)
97. Malaysia 61% (2115)
98. Mali 61% (984)
99. Niger 61% (1925)
100. Palestinian Territories 61% (991)
101. Romania 61% (937)
102. Senegal 61% (1805)
103. Indonesia 61% (2013)
104. Afghanistan 60% (1128)
105. Hong Kong 60% (789)
106. Cameroon 59% (1967)
107. Japan 59% (1138)
108. Nepal 59% (1965)
109. Bulgaria 59% (927)
110. Slovakia 58% (991)
111. Singapore 58% (3002)
112. Czech Republic 58% (992)
113. Mauritania 57% (1960)
114. Benin 56% (974)
115. South Korea 56% (2056)
116. Myanmar 55% (1047)
117. Latvia 54% (1942)
118. Togo 54% (988)
119. Estonia 53% (1800)
120. Lithuania 50% (1863)
121. Russia 50% (4667)
122. Chad 49% (1915)
123. Yemen 48% (959)
124. Ukraine 48% (1930)
125. Ethiopia 48% (1913)
126. Azerbaijan 47% (1824)
127. Tajikistan 47% (1847)
128. Moldova 46% (1937)
129. Kazakhstan 45% (1871)
130. Morocco 43% (1011)
131. Belarus 43% (1992)
132. Georgia 43% (1904)
133. Kyrgyzstan 34% (1969)
134. Mongolia 32% (928)
135. Uzbekistan 32% (962)
136. Armenia 29% (1954)

Note: This content was first published on Bloomberg View on February 13, 2013.

      

President Obama is right to keep at it in Afghanistan, argues a new policy brief by Michael O’Hanlon, senior fellow and director of research for the Brookings Foreign Policy program.

Some have criticized the president’s decision to maintain a significant troop presence there (5,500 troops), instead of following through on the planned military withdrawal. But Afghanistan remains very important to American security, O’Hanlon contends, and the situation in the country is far from hopeless in spite of recent setbacks. We should reinvigorate American efforts in Afghanistan, he argues—not returning to levels seen in previous years, but ramping up somewhat from our current posture.

O’Hanlon calls Obama’s resolve in Afghanistan commendable, but writes that he and his administration are still making mistakes on U.S. policy toward the war-torn country. He advises that Washington make two specific changes to its military strategy in Afghanistan:

1. Allow U.S. and NATO airpower to target the Islamic State and the Taliban (currently, they can only fight those groups if directly attacked). The narrow rules of engagement constraining foreign forces were intended to push Afghan armed forces to defend their territory themselves. While a worthy goal, O’Hanlon says, these rules often prevent us from attacking ISIS (though the targeting strategy towards the group may be changing) as well as the Taliban. They also impose unrealistically high demands on Afghan forces and make too fine a distinction between an array of aligned extremist groups operating in the country.
2. Expand U.S. force presence from the current 5,500 troops to around 12,000 for a few years. In O’Hanlon’s opinion, our current numbers are not enough to work with fielded Afghan forces, and skimping on ground forces has contributed to security challenges in places like Helmand, for instance, which experienced new setbacks in 2015. More broadly, leaders in Washington and Brussels should stress the value of a long-term NATO-Afghanistan partnership, rather than emphasizing an exit strategy. This will signal Western resolve to the Taliban and other groups. While the next commander in chief should set the United States on a gradual path toward downsizing American troops in Afghanistan, he believes it would be a mistake for Obama to do so in the short term.

The long haul

O’Hanlon also argues that the United States needs to take a longer-term perspective on key political and economic issues in Afghanistan. On the economic front, there seems to be little thinking about an agricultural development plan for Afghanistan, associated infrastructure support, and land reform, among other challenges. On the political front, conversations often tend to focus on shorter-term issues like organizing parliamentary elections, reforming the Independent Election Commission, or modifying the current power-sharing arrangement. In the process, conversations about foundational political strategy focusing on Afghan institutions and the health of its democracy get short-changed. The parliament is in need of reforms, for instance, as is the political party system (which should encourage Afghans to group around ideas and policy platforms, rather than tribes and patronage networks).

O’Hanlon concludes that the situation in Afghanistan today, while fraught, is understandable given the Taliban’s resilience and NATO’s gradual withdrawal of 125,000 troops. We should not be despondent, he writes—rather, we should identify specific strategies that can help improve the situation. At the end of the day, Afghans must make the big decisions about the future of their country. But as long as the United States and its partners are still providing tremendous resources—and as long as security threats emanating from South Asia continue to threaten the United States—leaders in Washington should use their influence wisely.

      

Editors’ Note: For the United States to succeed in its mission in Afghanistan, it is essential that the Obama administration sustain the current level of U.S. forces there. Recognizing this, John Allen spearheaded a move to ask President Obama to do so, in the following open letter to which former leaders from the military and diplomatic corps signed on. This letter originally appeared on The National Interest.

Washington, DC

June 3, 2016

Dear Mr. President,

We are writing, as Americans committed to the success of our country’s Afghanistan mission, to urge that you sustain the current level of U.S. forces in Afghanistan through the remainder of your term. Aid levels and diplomatic energies should similarly be preserved without reduction. Unless emergency conditions require consideration of a modest increase, we would strongly favor a freeze at the level of roughly ten thousand U.S. troops through January 20. This approach would also allow your successor to assess the situation for herself or himself and make further adjustments accordingly.

The broader Middle East is roiled in conflicts that pit moderate and progressive forces against those of violent extremists. As we saw on 9/11 and in the recent attacks in Paris, San Bernardino and Brussels, the problems of the Middle East do not remain contained within the Middle East. Afghanistan is the place where Al Qaeda and affiliates first planned the 9/11 attacks and a place where they continue to operate—and is thus important in the broader effort to defeat the global extremist movement today. It is a place where Al Qaeda and ISIS still have modest footprints that could be expanded if a security vacuum developed. If Afghanistan were to revert to the chaos of the 1990s, millions of refugees would again seek shelter in neighboring countries and overseas, dramatically intensifying the severe challenges already faced in Europe and beyond.

In the long-term struggle against violent extremists, the United States above all needs allies—not only to fight a common enemy, but also to create a positive vision for the peoples of the region. Today, aided by the bipartisan policies of the last two U.S. administrations, Afghans have established a democratic political system, moderately effective security forces, a much improved quality of life, and a vibrant civil society. Afghans are fighting and dying for their country, and in our common battle against extremism, with more than five thousand police and soldiers laying down their lives annually each of the past several years.

Afghanistan is a place where we should wish to consolidate and lock down our provisional progress into something of a more lasting asset. It is a Muslim country where most of the public as well as government officials want our help and value our friendship. Afghanistan is also a crucial partner in helping to shape the calculations of Pakistan, which has been an incubator of violent extremism but which might gradually be induced to cooperate in building a regional order conducive to peace and economic progress.

You have rightly prioritized Afghanistan throughout your presidency and have successfully achieved several crucial objectives. You have prevented the reemergence of a terrorist sanctuary in Afghanistan, from which attacks on Americans might emanate. You have helped Afghanistan develop security forces so that it is principally Afghans who are defending Afghanistan, thereby enabling a 90 percent reduction in the U.S. military presence relative to its peak (and a two-thirds reduction relative to what you inherited in 2009). You have established a long-term strategic partnership with Afghanistan that can address common threats from extremist groups based in Pakistan. To our minds, these are significant accomplishments. They have established much of the foundation for pursuing the ultimate goals of stabilizing Afghanistan and defeating extremism in the region.

To be sure, there have been significant frustrations in Afghanistan along the way. All of us have lived and experienced a number of them. All of us have, like you, deeply lamented the loss of each American life that has been sacrificed there in pursuit of our mission objectives and our national security.

Yet, though the situation is fraught, we have reason to be confident. President Ghani, Chief Executive Abdullah, and many brave Afghans are working hard to rebuild their country. NATO allies and other partners remain committed to the mission. The level of support we must provide to enable continued progress is much lower than in earlier periods.

Our group is taking full stock of the situation in Afghanistan and will make a broader range of recommendations available to the next U.S. president on the interrelated subjects of governance, the economy, and security. But as an interim measure, and with the NATO Warsaw summit as well as other key decision points still looming on your watch, we urge you to maintain the current U.S. troop strength in Afghanistan through the end of your term. Based on longstanding experience in the country as well as recent trips to Afghanistan by some of us, this step would be seen as a positive reaffirmation of America’s commitment to that nation, its people and its security. It would likely have helpful effects on refugee flows, the confidence of the Taliban, the morale of the Afghan military and Afghan people, the state of the Afghan economy and perhaps even the strategic assessments of some in Pakistan. Conversely, we are convinced that a reduction of our military and financial support over the coming months would negatively affect each of these.

Sincerely,

Ambassadors to Afghanistan

Ryan Crocker

James Cunningham

Robert Finn

Zalmay Khalilzad

Ronald Neumann

Military Commanders in Afghanistan

John Allen

David Barno

John Campbell

Stanley McChrystal

David Petraeus

Special Representatives for Afghanistan/Pakistan

James Dobbins

Daniel Feldman

Marc Grossman

       

Event Information

A conversation with USAID Administrator Gayle Smith

On March 30, Global Economy and Development at Brookings and the Modernizing Foreign Assistance Network (MFAN) hosted Gayle Smith, administrator of U.S. Agency for International Development (USAID) for an address on the fifth anniversary of the USAID policy on evaluation.

A principal recommendation of the Presidential Policy Determination on Global Development, signed by President Obama in 2010, was greater accountability for U.S. foreign assistance funds, including evaluation of development programs. In 2011, USAID adopted a formal policy on evaluation and since has average some 200 evaluations a year.

Among the issues that will be addressed during the event are the success and challenges in implementing the evaluation policy, the use of alternative evaluation methods, and building a system and process for turning evaluations into learning. Administrator Smith was introduced by Brookings Senior Fellow George Ingram. Following her address, he moderated a panel discussion of Ruth Levine, Wade Warren, and Jodi Nelson.

 Join the conversation on Twitter using #AIDeval

Video

• Assessing the impact of foreign assistance: The role of evaluation

Transcript

• Uncorrected Transcript (.pdf)

Event Materials

• 20160330_usaid_evaluation_transcript

       

South African court rules President Zuma violated the constitution

Thursday, South Africa’s highest court found President Zuma guilty of violating the constitution as he refused to reimburse the large sum of money spent on improvements to his personal home. Between 2010 and 2014, the home located in the president’s rural hometown of Nkandla received improvement which cost an estimated $23 million. The improvements include a chicken coop, an amphitheater, a swimming pool, and a helipad. President Zuma has stated that the improvements were necessary to ensure his security and should consequently be paid for with taxpayers’ money. In 2014, public prosecutor Thuli Madonsela ruled that the president should repay part of the taxpayers’ money spent on the improvements of his personal home. In refusing to do so, he violated the country’s constitution “by not complying with a decision by the public protector, the national watchdog.” The court has given the National Treasury 60 days to determine the sum the president must repay. The opposition has stated that they will seek Zuma’s impeachment.

In other South African news, this week, the rand strengthen against the U.S. dollar and reached its highest value since December 8, 2015, the day before President Zuma fired former Finance Minister Nhlanla Nene. The strengthening of the rand was coupled with the strengthening of other Emerging Markets currencies. This hike follows the statement from Federal Reserve Chair Janey Yellen, reiterating the importance to raise U.S. interest rates cautiously, amid risks in the global economy. Investors—weighting prospects of higher U.S. borrowing costs—were holding off in acquiring emerging-market assets.

Seventeen Angolan activists are sentenced to jail time

This week, 17 Angolan activists were sentenced to jail time for rebellion against the government of Jose Eduardo dos Santos. The sentences ranged from two years to eight and a half years. Last June, the activists were arrested during a book club meeting focusing on Gene Sharp’s book titled From Dictatorship to Democracy: A Conceptual Framework for Liberation—a book on nonviolence and resistance to repressive regimes. Monday, the activists were charged and sentenced with acts of rebellion, planning mass action of civil disobedience, and producing fake passports, among other charges. Amnesty International has accused the Angolan court of wrongfully convicting the activists and using the judicial system to “silence dissenting views.”

Later in the week, in response to the jailing of the young activists, the Portuguese branch of hacking group Anonymous claimed the shutdown of 20 government websites, including that of the Ministry of Education and the Ministry of Labor and Social Security, among others. In a Facebook post claiming the attack, the group states, “The real criminals are outside, defended by the capitalist system that increasingly spreads in the minds of the weak.” The functionality of the websites has been restored.  

Aid cuts due to disputed election rerun hit Tanzania

On Monday, March 28, the U.S. Millennium Challenge Corporation (MCC) withdrew $472 million in aid from the government of Tanzania after the result of the last weekend’s disputed presidential election rerun in the semi-autonomous archipelago of Zanzibar was announced. Incumbent President Ali Mohamed Shein of the ruling Chama Cha Mapinduzi party was declared the winner with 91.4 percent of the vote. However, the rerun was boycotted by the opposition Civic United Front party over the cancellation of last October’s election by the Zanzibar Electoral Commission. The commission claimed the October poll was fraudulent, while the opposition says the allegations of fraud were fabricated to thwart a victory by their candidate.

The MCC was planning a number of power and infrastructure projects in Tanzania, but its development assistance programming is conditional upon beneficiaries meeting certain standards of good governance. The MCC’s board of directors held a vote on Monday, in which they determined that Tanzania was no longer eligible to partner with the MCC given the election outcome. Although the loss of the MCC partnership is a sizable blow to the Tanzanian government, the Tanzanian finance minister appeared optimistic that the power projects would continue despite the MCC’s decision, as he stated: “We weren’t surprised at all because we were prepared for whatever the outcome. We will implement those projects using local sources of fund and the support of from other development partners.” Meanwhile, 10 out of the country’s 14 key western donors withdrew general budget support to Tanzania over the contested election.

       

China has provided foreign assistance since the 1950s, and is now the largest developing country to provide aid outside of the Development Assistance Committee (DAC), a forum of the world’s major donor countries under the Organization for Economic Cooperation and Development (OECD). Like its foreign policy more broadly, Chinese foreign assistance has adhered to the “Five Principles of Peaceful Coexistence” and emphasized the virtue of national self-reliance. At the same time, it has served a strategic purpose alongside other foreign policy priorities.

A slow start but a steady increase

Compared to top DAC donor countries, the scale of China’s foreign assistance is still relatively small. According to some estimates and OECD International Development Statistics, China’s gross foreign aid in 2001 was extremely limited, amounting to only about 1.8 percent of the total contribution by DAC donors. However, since launching its “Go Global” strategy in 2005, China has deepened its financial engagement with the world, and its foreign aid totals have grown at an average rate of 21.8 percent annually. In 2013, China contributed about 3.9 percent to total global development assistance, which is 6.6 percent of the total contribution by DAC countries and over 26 percent of total U.S. foreign aid. 

Millions of USD (Current)

Gross foreign aid provided by China versus major DAC donors

And the lion’s share goes to: Africa

Africa is one of China’s most emphasized areas of strategic engagement. Particularly since the establishment of the Forum on China-Africa Cooperation (FOCAC) in 2000, the relationship between China and Africa has gotten closer and closer. In 2009, African countries received 47 percent of China’s total foreign assistance. Between 2000 and 2012, China funded 1,666 official assistance projects in 51 African countries (the four countries that don’t have diplomatic relations with China—Gambia, Swaziland, Burkina Faso, and São Tomé and Príncipe—were left out), which accounted for 69 percent of all Chinese public and private projects. Among the 1,666 official projects, 1,110 qualified as Official Development Assistance (ODA)—defined by the OECD as flows of concessional, official financing administered to promote the economic development and welfare of developing countries. The remaining 556 projects could be categorized, also according to the OECD, as Other Official Flow (OOF)—transactions by the state sector that are not “development-motivated” or concessional (such as export credits, official sector equity and portfolio investment, and debt reorganization). (Note: in terms of dollar amounts, not included in the statistics here, most Chinese lending to Africa and other parts of the developing world is not concessional and is therefore not foreign aid.)

Zeroing in on infrastructure

About 61 percent of Chinese concessional loans to Africa are used for infrastructure construction, and 16 percent are for industrial development. The three areas that receive the largest allocations of Chinese concessional loans are transport and storage; energy generation and supply; and industry, mining, and construction. A small portion of the remaining allocations go to health, general budget support, and education. 

Some have interpreted these trends to mean that China is making an effort to export domestic excess capacity in manufacturing and infrastructure, especially considering the uncertainties of China’s economic transition. But the motivations are broader than that. China’s “Africa Policy”—issued in December 2015, in Johannesburg—clearly expresses the Chinese government’s belief that infrastructure construction is a crucial channel for African development. This notion could be connected to the domestic Chinese experience of having benefited from the technological diffusion of foreign aid and foreign direct investment in the construction sector. Moreover, in practice, China’s more than 20 years of experience in implementing international contract projects, as well as advanced engineering technologies and relatively low labor costs, have proved to be a comparative advantage in Chinese foreign assistance. In addition, by prioritizing the principles of non-interference and mutual benefit, China is more comfortable providing infrastructure packages (e.g., turn-key projects) than many other countries. 

Doing assistance better

Legitimate concerns have been raised about China’s tendency to facilitate authoritarianism and corruption, as well that its assistance does not always trickle down to the poor. As such, the state-to-state Chinese approach to providing assistance should be reformed. Globalization scholar Faranak Miraftab indicates that on-the-ground partnerships between communities and the private sector—mediated by the public sector—could achieve synergies to overcome certain shortcomings, creating a win-win situation. With deeper involvement by domestic assistance providers, Chinese foreign assistance could touch more people’s lives by tackling both the short- and long-term needs of the most under-resourced parts of civil society. Domestic assistance providers should exploring public-private partnerships, which among other benefits could yield increased foreign assistance services. By focusing on its comparative advantage in contributing to infrastructure projects that benefit the general public while also facilitating participation from civil society, Chinese foreign assistance could bring more concrete benefits to more individuals. 

China has already begun tackling these and other weaknesses. Although infrastructure and industry still account for the largest share of total official projects in Africa, China has intentionally strengthened its official development finance efforts in areas related to civil society. Projects have surged in the areas of social infrastructure and services, developmental food aid and food security, support to non-governmental organizations, and women in development, to name a few. Moreover, following President Xi Jinping’s promise at the United Nations summit in September 2015, an initial $2 billion has been committed as a down payment toward the China South-South Cooperation and Assistance Fund. The funding is primarily designed to improve the livelihoods of residents of recipient countries and diversify domestic aid providers (e.g., NGOs) qualified to participate or initiate assistance projects in the least-developed countries. 

In order to achieve positive results, it is critical for the Chinese government to carry out detailed management initiatives to engage civil society: for example, establishing a complete system for information reporting and disclosure (actions have already been taken in several ministries and bureaus), publishing guidelines for the private sector to develop assistance services overseas, and improving coordination and accountability among ministries and within the Ministry of Commerce. Although challenges still remain, Chinese foreign assistance is moving in a positive direction without abandoning its defining characteristics. 

       

       

       

Chattanooga a few years ago faced what many smaller cities are struggling with today—a sudden decline after years of prosperity in the "old" economy. This case study offers a roadmap for these cities by chronicling Chattanooga's demise and rebirth.

Chattanooga is located in the southern end of the Tennessee Valley where the Tennessee River cuts through the Smoky Mountains and the Cumberland Plateau. The city’s location, particularly its proximity to the Tennessee River, has been one of its greatest assets. Today, several major interstates (I-24, I-59, and I-75) run through Chattanooga, making it a hub of transportation business. The city borders North Georgia and is less than an hour away from both Alabama and North Carolina. Atlanta, Nashville, and Birmingham are all within two hours travel time by car.

Chattanooga is Tennessee’s fourth largest city, with a population in 2000 of 155,554, and it covers an area of 143.2 square miles. Among the 200 most populous cities in the United States, Chattanooga—with 1,086.5 persons per square mile—ranks 190th in population density.2 It is the most populous of 10 municipalities in Hamilton County, which has a population of 307,896, covers an area of 575.7 square miles, and has a population density of 534.8 persons per square mile.

With its extensive railroads and river access, Chattanooga was at one time the “Dynamo of Dixie”—a bustling, midsized, industrial city in the heart of the South. By 1940, Chattanooga’s population was centered around a vibrant downtown and it was one of the largest cities in the United States. Just 50 years later, however, it was in deep decline. Manufacturing jobs continued to leave. The city’s white population had fled to the suburbs and downtown was a place to be avoided, rather than the economic center of the region. The city lost almost 10 percent of its population during the 1960s, and another 10 percent between 1980 and 1990. It would have lost more residents had it not been for annexation of outlying suburban areas.

The tide began to turn in the 1990s, with strategic investments by developing public-private partnerships—dubbed the “Chattanooga way.” These investments spurred a dramatic turnaround. The city’s population has since stabilized and begun to grow, downtown has been transformed, and it is once again poised to prosper in the new economy as it had in the old.

This report describes how Chattanooga has turned its economy around. It begins with a summary of how the city grew and developed during its first 150 years before describing the factors driving its decline. The report concludes by examining the partnerships and planning that helped spur Chattanooga’s current revitalization and providing valuable lessons to other older industrial cities trying to ignite their own economic recovery. 

Download Case Study » (PDF)

Downloads

• Download

       

Executive Summary
Stressed by the catastrophic mortgage foreclosure crisis and the long-run decline of older, industrial regions, communities around the country are becoming increasingly burdened with vacant and abandoned properties. In order to alleviate the pressures on national prosperity caused by these derelict properties, the federal government needs to advance policies that support regional and local land banking for the 21st century.

Land banking is the process or policy by which local governments acquire surplus properties and convert them to productive use or hold them for long term strategic public purposes. By turning vacant and abandoned properties into community assets such as affordable housing, land banking fosters greater metropolitan prosperity and strengthens broader national economic well-being.

America’s Challenge
During the mortgage crisis of the past two years, the nation has seen the number of foreclosures double, and almost 600,000 vacant, for-sale homes added to weak real estate markets. In older industrial regions, chronic economic and population losses have also led to vacancies and abandonment. When left unaddressed, these problem properties impose severe costs on neighborhoods, including reduced property values and tax revenues, increased arson and crime, and greater demands for police surveillance and response. Eight cities in Ohio, for example, were forced to bear $15 million in direct annual costs and over $49 million in cumulative lost property tax revenues due to the abandonment of approximately 25,000 properties. Such negative consequences drain community resources and prevent cities and towns—and the nation—from fully realizing productive, inclusive, and sustainable growth.

Limitations of Existing Federal Policy
The Emergency Assistance Act in the Home and Economic Recovery Act of 2008 is the first to express recognition of land banking in federal legislation, but it has several weaknesses. The act lacks clarity regarding the scope and target for the allocated funding which may hinder effective policy implementation in the short term. Moreover, as an emergency response to the immediate mortgage crisis, it does not sufficiently address the concerns of land banking in the long run. In particular, the act’s $3.92 billion does not come close to meeting the costs associated with the two million foreclosures projected by the end of 2008 and the local revenues lost from vacant and abandoned properties.

A New Federal Approach
Federal policy needs to support effective and efficient land banking. In the short term, the federal government should deploy the Emergency Assistance Act with local and regional flexibility for determining funding priorities. Over the long term, the federal government should implement a new, comprehensive federal land banking program that would:

• Capitalize local and regional land banking by providing sufficient funding to support the several million properties in the process of foreclosure or those that are already vacant and abandoned
• Incentivize local and state code and tax reform to ensure that land banking is not hampered by outdated rules and procedures
• Advance regionalism by encouraging new inter-jurisdictional entities to align the scale of land banking authorities with the scale of metropolitan land issues

Downloads

• Download

       

Even in comfortable times, the service cutbacks and fare increases being proposed by the Metropolitan Transportation Authority would have sparked outrage from New Yorkers. Coming in the depths of the most serious economic crisis since the Great Depression, things seem that much worse.

Not that it's any consolation to frustrated New York transit riders and taxpayers, but you are not alone. Transit agencies like the MTA are reeling nationwide; all are suffering from factors at least some of which they really can't control without some legislative help.

This is not to deny the pain that could occur unless the state comes up with a rescue plan. In its 2009 budget, the agency proposes painful service cutbacks and fare increases to help cover a projected deficit of around $1.5 billion.

No fewer than 51 transit agencies around the country are in the same financial situation. For example, the Massachusetts Bay Transportation Authority that runs Boston's smaller transit system is chewing over major service cuts and fare increases if the state doesn't help cover its $160 million deficit.

The fact that so many transit agencies are struggling may come as a surprise. After all, didn't Washington just pump a lot of money into infrastructure as part of the $787-billion American Recovery and Reinvestment Act? Wasn't public transit a big part of that law?

Yes. The stimulus package provides $8.4 billion to be spent on transit this year. That's a helpful shot in the arm to metropolitan transit agencies that Washington ordinarily relegates to second-class status. And the MTA will receive the largest portion of this money: more than $1 billion. Even by today's standards, that's nothing to sneeze at.

But how much will it really help? Federal rules in effect since 1998 stipulate that this money can be spent only on capital improvement projects and not to finance gaps in day-to-day operating expenses.

Surely there is no transit service without capital - the buses, trains, tracks and other facilities that make the system run. However, operating costs - which are generally about twice as high as capital expenses for the largest transit agencies - cover the salaries of the workers who keep the system running, as well as the debt contracted to pay for capital projects.

So as the federal government aims to put Americans back to work on shovel-ready, temporary construction jobs, transit agencies are looking at the likelihood of laying people off from stable, permanent positions.

Why the disconnect?

The response in Washington is predictably stubborn: Recovery money cannot be used for operating expenses because operating is not a federal role.

You would think that the pressure of this policy would lead to transit agencies that are self-sufficient - where passenger fares pay the full costs of operating the system.

But large metropolitan transit agencies generally "recover" only about one-third of their costs from subway riders and about one-quarter from bus passengers. The MTA has the highest cost-recovery ratio among all subway operators - its fares pay for two-thirds of operating costs.

For large bus systems, the MTA's New York City Transit ranks second only to New Jersey's in terms of the share of operating costs paid for by riders. The Long Island Rail Road is the seventh among the 21 commuter rail systems in the country, recovering from fares close to half of its operating costs.

So what should be done to close the MTA's budget gap?

For one thing, lawmakers in Albany need to recognize that the state contributes a lower proportion of the MTA's budget from its general revenue than other states provide to their transit agencies from general revenue. In New York, about 4 percent of all the MTA operating costs are covered by the state budget; in other states, transit agencies are getting closer to 6 percent.

Raising state general fund support to national levels would be a good place to start helping the MTA.

Another idea is to get Washington to help. Not in doling out more money, but in stepping aside and empowering metropolitan agencies to spend their federal money in ways that best meet their own needs.

Specifically, the federal rules could be changed to allow transit agencies to spend their transit capital stimulus dollars on operating expenses. Certainly, agencies have capital needs as well, but particularly in these stressful economic times they should have the short-term flexibility to use those federal dollars to meet their immediate problems.

Over the long term, some form of federal competitive funding for operating assistance also might provide the right incentive - or reward - to states and localities to commit to funding transit.

Based on their level of commitment, metropolitan agencies, localities and states that legislatively dedicate a stable stream of funds could potentially receive federal operating assistance, perhaps as a matching grant. The federal government would be helping those who help themselves.

The New York metropolitan area cannot afford to have a transit system that is hampered from operating at its fullest and most efficient potential.

An extensive transit network like the MTA provides important transportation alternatives to those who have options and basic mobility for those who don't. It can help mitigate regional air-quality problems by lowering overall automobile emissions and slowing the growth in traffic congestion.

It also can provide economic benefits by creating development opportunities around transit stations and help enhance regional economic competitiveness as an important and attractive metropolitan amenity.

Such a functioning network plays a fundamental role in attracting highly skilled labor and talent, which we know is so important in 21st century metropolitan America.

       

       

Editor’s note: Brookings Senior Fellow Vanda Felbab-Brown is currently on the ground in Afghanistan and sent over a dispatch on what she’s seeing.

President Barack Obama is about to make crucial decisions about the number of U.S. soldiers in Afghanistan in 2016 and possibly after. His decision will be a vital signal to other U.S. allies in Afghanistan and its neighbors. Recent events in Afghanistan, particularly the Taliban's capture of Kunduz, show how too large a reduction in US military and economic support can hollow out the state-building effort and strengthen the Taliban and many other terrorist groups operating in Afghanistan, including those labeling themselves daesh. In such a case, collapse of the government and indeed a collapse of the entire political order the United States has sought to build since 2001 are high. Maintaining support at something close to the current level of effort does not guarantee military or political success or that peace negotiations with the Taliban will eventually produce any satisfactory peace. But it buys us time. On the cusp of a dire situation, Afghan politicians equally need to put aside their self-interested hoarding, plotting, and back-stabbing, which are once again running high, and being put ahead of the national interest.

The Taliban’s recent victory in Kunduz is both highly impactful and different from the previous military efforts and victories of the Taliban over the past several years. For the first time since 2001, the Taliban managed to conquer an entire province and for several days hold its capital. The psychological effect in Afghanistan has been tremendous. For a few days, it looked like the entire provinces of Badakshan, Takhar, and Baghlan would also fall. Many Afghans in those provinces started getting ready to leave or began moving south. If all these northern provinces fell, the chances were high, with whispers and blatant loud talk of political coups intensifying for a number of days, that the Afghan government might fall, and perhaps the entire political system collapse., In short, the dangerous and deleterious political and psychological effects are far bigger than those from the Taliban's push in Musa Qala this year or last year. Particularly detrimental and disheartening was the fact that many Afghan National Army (ANA) and Afghan National Police (ANP) units, led by weak or corrupt commanders, did not fight, and threw down their arms and ran away. Conversely, the boost of morale to the Taliban and the strengthening of its new leader Mullah Akbar Mansour were great. However, the Taliban also discredited itself with its brutality in Kunduz City.

The Taliban operation to take Kuduz was very well-planned and put together over a period of months, perhaps years. Foreign fighters from Central Asia, China, and Pakistan featured prominently among the mix of some 1,000 fighters, adding much heft to local militias that the Taliban mobilized against the militias of the dominant powerbrokers and the United States, as well as the government-sponsored Afghan Local Police. The support of Pakistan's Inter-services Intelligence for the Taliban, which the country has not been able to sever despite a decade of pressure from the United States and more recent engagement from China, significantly augmented the Taliban's capacities.

Kunduz is vital strategic province, with major access roads to various other parts of Afghanistan's north. Those who control the roads—still now the Taliban—also get major revenue from taxing travelers, which is significant along these opium-smuggling routes. It will take time for the Afghan forces to reduce Taliban control and influence along the roads, and large rural areas will be left in the hands of the Taliban for a while. Both in the rural areas and in Kunduz City itself, the Taliban is anchored among local population groups alienated by years of pernicious exclusionary and rapacious politics, which has only intensified since March of this year. Equally, however, many of the local population groups hate the Taliban, have engaged in revenge killings and abuses this week, and are spoiling for more revenge.

Despite the intense drama of the past week, however, Afghanistan has not fallen off the cliff. Takhar and Baghlan have not fallen, nor has all of Badakhshan. The political atmosphere in Kabul is still poisonous, but the various anti-government plots and scheming are dissipating in their intensity and immediacy. On Wednesday, Afghan President Ashraf Ghani reached out to some of those dissatisfied powerbrokers, who have been salivating for a change in political dispensation. The crisis is not over, neither on the battlefield in Kunduz and many other parts of Afghanistan, nor in the Afghan political system. But it is much easier to exhale on Thursday, October 8th.

United States air support was essential in retaking Kunduz and avoiding more of Badakhshan falling into the hands of the Taliban, precipitating a military domino effect in the north and inflaming the political crisis. Despite the terrible and tragic mistake of the U.S. bombing of the Médecins Sans Frontières hospital, maintaining and expanding U.S. air support for the Afghan forces, and allowing for U.S. support beyond in extremis, such as in preventing a similar Taliban offensive, is vital. It is equally important to augment intelligence- assets support. Significant reductions in U.S. assistance, whether that be troops, intelligence, or air support, will greatly increase the chances that another major Taliban success—like that of Kunduz, and perhaps possibly again in Kunduz—will happen again. It would also be accompanied by intensely dangerous political instability.

Equally imperative is that Afghan politicians put aside their self-interested scheming and rally behind the country to enable the government to function, or they will push Afghanistan over the brink into paralysis, intensified insurgency, and outright civil war. In addition to restraining their political and monetary ambitions and their many powerplays in Kabul, they need to recognize that years of abusive, discriminatory, exclusionary governance; extensive corruption; and individual and ethnic patronage and nepotism were the crucial roots of the crisis in Kunduz and elsewhere. These have corroded the Afghan Army and permeate the Afghan Police and anti-Taliban militias. Beyond blaming Pakistan, Afghan politicians and powerbrokers need to take a hard look at their behavior over the recent days and over many years and realize they have much to do to clean their own house to avoid disastrous outcomes for Afghanistan. To satisfy these politicians, many from the north of the country and prominent long-term powerbrokers, President Ghani decided over the past few days to include them more in consultations and power-sharing. Many Afghan people welcome such more inclusive politics, arguing that while the very survival of the country might be at stake, grand governance and anti-corruption ambitions need to be shelved. That may be a necessary bargain, but it is a Faustian one. Not all corruption or nepotism can or will disappear. But unless outright rapacious, exclusionary, and deeply predatory governance is mitigated, the root causes of the insurgency will remain unaddressed and the state-building project will have disappeared into fiefdoms and lasting conflict. At that point, even negotiations with the Taliban will not bring peace.

      

The loss of the Afghan provincial capital Kunduz was a psychological shock to the Afghan people, a strategic and tactical defeat for both Afghanistan and the United States, and a tragedy for those at the Doctors Without Borders hospital there. Yet the shock may prompt essential changes. It is important to examine both Afghan and U.S. responsibility for the disaster, what is happening now and what needs to be done. President Obama’s decision Thursday to maintain existing U.S. force levels into next year was absolutely correct to achieve the goal he stated of “sustainable Afghan capacity and self-sufficiency.”

Kunduz, which has since been recaptured by Afghan forces, was more than just the first provincial capital to be taken by the Taliban; its fall was highly symbolic because it was the site of the Taliban’s last stand in 2001. The poor initial performance of Afghan security forces and the tragic bombing of a nongovernmental organization hospital in the midst of a chaotic response to the attack sparked national disappointment in Afghanistan and international concern. All this came on the back of a dismal year in which many more Afghan civilians died than did so while international forces fought the Taliban, and the national unity government, which came into office on a wave of hope a year ago, stalled on filling essential positions and reforming governance.

The United States and its allies share responsibility for the military losses. We built security forces that depend on air power and need continued intelligence and advisory support. But instead of ensuring that these capabilities are available, we have severely limited air support, transferred key intelligence enablers to Iraq and created a patchwork system that left key areas, including Kunduz, without effective advisers. Our withdrawals from these vital functions based on politically driven timetables ignored reality on the ground, including Taliban capabilities and the embrace of the Islamic State by some militants.

But Afghans need to understand that U.S. support is not, and should not, be a blank check. Both the government and the opposition need to work to improve their military, political and governance performance, and come together instead of pulling the country apart.

The Kunduz setback does not mean the war is lost. Elite Afghan commandos delivered by recapturing critical areas. Whereas Mosul in Iraq remains in enemy hands a year after it fell, Kunduz has returned to government control. President Ashraf Ghani and Chief Executive Abdullah Abdullah appear to be heeding the call to action. During our recent 10-day visit to Afghanistan, each told us that they have agreed to an accelerated appointment process. Five new governors have been named, including three to critical provinces; further appointments and the long-delayed replacement of numerous senior officers is promised and must happen quickly. Appointments must involve effective individuals and cannot be merely political payoffs. Ghani has created a commission to investigate Kunduz, with a mandate to recommend action, that is led by opposition voices, including a former head of intelligence, though it sadly lacks female members.

If government performance takes off, public confidence could begin to be restored. More remains to be done. Afghan power brokers, intent on advancing personal agendas, seek to replace the government. They need to be pressed to stand down. The effort to reduce predatory governance in the provinces and Kabul cannot be shoved aside. Ghani and Abdullah must work effectively together despite the rapacious desires of their supporters and opponents. Broader consultation with the Afghan people is needed.

The United States needs to continue to step up to its own responsibilities, as well. Ground combat troops are not needed, but advisers and air power must be kept in place and not reduced on some blind, years-old timetable. Air power must be available to preempt attacks and not confined, as it is now, to desperate defense after attacks have begun. Afghan and foreign officials we spoke to foresee a crescendo of Taliban attacks as international forces withdraw. An even bigger Taliban offensive next year is likely to stretch battered Afghan forces further. We have not ended a war, only left it to the Afghans too soon.

The United States should maintain its current forces and funding levels, which are less than 10 percent of expenditures a few years ago, and focus on effectively advising Afghan forces. A reduction of the U.S. effort to a “pure” counterterrorism effort, still foreshadowed by the president’s hope of getting to about half the current force level sometime next year, would be disturbingly similar to what President George W. Bush tried a decade ago. Such a premature drawdown would abandon Afghan forces before they are ready, increasing the risk that a renewed terrorist haven will emerge.

Asking our allies to do jobs they are not equipped to do raises the risk of more reversals such as Kunduz and tragedies like the hospital bombing. Obama’s decision to maintain forces properly avoids preempting his successor’s choices about a difficult and evolving situation. That focus, and not a predetermined timetable, should continue to guide decisions throughout the remainder of this administration. The president’s public determination to maintain our current training and advising effort until Afghan forces do not need such help will provide a needed boost to both Afghans and our NATO allies — some of whom have been ahead of us in urging that we stay. And it is the right thing to do for our national interests.

This piece was originally published by The Washington Post.

       

The gruesome theatrics of the Islamic State (IS) captivate the world’s attention, instilling fear in the public from Los Angeles to Paris to Beirut. Yet while arrests are made in Europe and airstrikes continue in Raqqa, Americans ignore developments on another worn-out battlefield: Afghanistan.

Afghanistan faces numerous crises in 2016 that could rock the country and threaten U.S. security investments. The United States still has 10,000 troops stationed in the country. It must take decisive action not to supply vast numbers of troops or massively increase spending, but instead abandon inadequate policies before something catastrophic occurs. These must be more than incremental policy changes that merely stave off disaster for the interim, as this would compound the seriousness of each crisis. After traveling to Afghanistan in October 2015, we have identified key security risks and steps the United States can take to forestall disaster.

In 2015, Taliban violence resulted in more Afghan civilian, police, and military casualties than in any year since U.S. and NATO forces began fighting in Afghanistan. More fighters, better weapons, and new tactics made the 2015 Taliban offensive their most effective yet, with a recent attack in Parwan province that killed six U.S. soldiers serving as a terrible reminder of this grim reality. Next year, the Taliban will aim to take provincial cities, pounce on Kandahar, and spread fear through spectacular attacks. A major Taliban offensive following this year’s fierce assault is almost certain. Indeed, as a recent Department of Defense report describes, the security situation in Afghanistan has grown more precarious over the last year.

The Afghan army has done its best to counter the Taliban assault. Afghan forces retook Kunduz and pushed back serious Taliban offensives in other cities, including Ghazni. While attrition is high due to soldiers overstaying leaves, desertion, and Taliban threats to soldiers’ families, recruitment of new forces has exceeded losses. Yet, strong ground forces cannot compensate for inadequate air support, modern intelligence capabilities, well-functioning logistics (to maintain vehicles and keep essential supplies available), and higher-order assistance for Afghanistan’s still-nascent security institutions. The United States must help fill these critical gaps while maintaining its promises to complete these critical, but unfinished, programs. The United States must also amend the very restrictive rules of engagement that currently limit air support capabilities, and restore intelligence assets that have been withdrawn. Stronger battlefield intelligence capabilities are essential, as we learned after the tragic bombing of the Médecins Sans Frontières (MSF) hospital in Kunduz. More effective air attacks and improved intelligence could seriously disrupt Taliban operations in Afghanistan.

But the Taliban is no longer the only threat to stability in Afghanistan. The influence of the Islamic State is growing, as it recruits more extremist Taliban members and brings in fighters from non-Afghan communities, including Uzbeks and Pakistanis. These IS-inspired groups challenge the new Taliban leader, Mullah Akhtar Mansour, who seeks to cement his leadership after the years-long deception over the death of his predecessor, Mullah Omar. The Taliban fragmentation and competition from IS, especially prominent in the provinces of Zabul and Nangarhar, have led to increased violence, including the recent beheadings of minority Hazaras. The renewed violence reduces already slim hopes for a negotiated peace in Afghanistan.

The United States and NATO must intensify actions against IS in Afghanistan. Like al Qaeda, the group must be a priority target for air and counter terrorist missions. Now is the time to destroy it. At a minimum, coalition forces must restrain the growth of this hostile force before it becomes a significantly larger threat.

Afghanistan is undertaking a unique experiment in elected government. Nearly 70 percent of the electorate voted in 2014, despite threats from the Taliban to kill or mutilate anyone who did so. However, the results were clouded by accusations of widespread fraud. After an extended political impasse, the United States brokered a peaceful settlement and a power-sharing agreement between the two contenders in the run off. The National Unity Government (NUG) was formed with Ashraf Ghani serving as president and his chief rival, Abdullah Abdullah, as chief executive officer.

Military solutions alone cannot solve all of the country’s woes, as the electorate’s participation and the elected officials’ ability to govern are as critical to a stable state as a strong security apparatus. Now, at a time when insurgent attacks need a strong response and the government needs to stop its internal wrangling and start delivering services to civilians, the NUG finds itself politically distracted. Ex-president Hamid Karzai and mujahedeen leaders continue to undermine the government in an attempt to spur its collapse. These attempts are little more than a naked power grab that, if successful, would usher in months of political paralysis while the victors squabble over the spoils of power. This would be disastrous, at a time when insurgent attacks need a strong response and the government needs to start delivering services. The United States and other coalition nations must voice strong opposition to all efforts to change the constitution through a Loya Jirga or the scheduling of early elections. Without first reforming the electoral system, another massively fraudulent election will surely follow. Quiet opposition will be taken as willingness to see the NUG undone.

Despite some positive developments, the Afghan government is losing popular support. More and more Afghans believe that the country is heading in the wrong direction. Thousands of Afghans are fleeing the country, and along with them goes the potential for economic growth. Crime and insecurity in the cities contribute to this brain and asset drain. Stakeholders in Afghanistan must demand governance improvements from the NUG – including opposition to vicious ethnic discrimination and power abuse, which the Taliban exploited in Kunduz – that the Afghan people crave. The government should focus on increasing effective anti-criminal and anti-corruption policing in the major cities, such as Kabul, Herat, and Jalalabad. This would require significant government action against some major power brokers. Additionally, a concerted foreign advisory effort with the police is needed to improve civilian security. These actions require vigorous U.S. and international backing.

Doubts are growing about the United States’ and NATO’s commitment to long-term support for Afghanistan. While President Barack Obama’s decision to retain major security hubs in Afghanistan was a step in the right direction, this progress was undercut by the planned force reductions at the end of 2016. In a worsening security environment, Afghans fear being abandoned by their international partners. To rebuild confidence, a U.S.-led NATO review of conditions on the ground and a demonstrated willingness to fill major gaps, such as air support, would counteract this sense of abandonment.

Not all is gloom. Unlike Karzai, who blamed the United States for most of Afghanistan’s problems and refused to move against massive corruption, Ghani remains committed to reform. There is progress in revenue collection, enforcement action against fraud in Kabul Bank, and some members of the new cabinet are making progress in less visible but important reforms like speeding business licensing and settling land titles. Unlike in Syria and Iraq, militias do not yet dominate either politics or the battlefield. Actions are still available to minimize the looming crises. But planning and decisions are needed now, not after the crises explode.

This piece was originally published by Foreign Policy. 

       

The Pakistani intelligence service is behind the recent attack on a major Indian air force base in Punjab using a terrorist group it created 15 years ago, according to well-informed press and other knowledgeable sources. The attack is designed to prevent any detente between India and Pakistan after Prime Minister Narendra Modi’s surprise Christmas Day visit to Pakistan.

The escalating violence between the two nuclear-weapons states, which have already fought four wars, threatens to get worse. The Pakistani intelligence service has the capability to launch more attacks with little notice, at some point prompting a vigorous Indian response.

On Dec. 31, a team of terrorists infiltrated across the Pakistani border into India. On Saturday they assaulted the Pathankot air base, one of India’s largest air force installations near the border. At least seven Indian soldiers were killed in the fighting, which lasted for days. On Sunday, the Indian Consulate in Mazar-e Sharif in northern Afghanistan was also attacked by gunmen.

Both attacks are the work of the Pakistani terror group Jaish e Muhammad, according to reliable press reports. JEM was created in 2000 by Mualana Masoud Azhar, a longtime Pakistani terrorist leader. Azhar was captured in India in 1994 after taking western hostages in Kashmir. In December 1999 a group of terrorists hijacked an Air India jet flying from Nepal to India and diverted it to Afghanistan. They demanded the release of Azhar and his colleagues in return for the passengers and crew.

And they got it, thanks to help from the Pakistani intelligence service ISI and al Qaeda leader Osama bin Laden, according to accounts of the hijacking based on the Indian officials who negotiated with the terrorists for the hostages’ freedom.

The Afghan Taliban assisted the hijackers once they got to Afghanistan. Once Azhar was traded for the hostages, the ISI took him on a public victory tour through Pakistan to raise money for the jihad against India, and he announced the formation of Jaish e Muhammad, or the Army of Muhammad, in early 2000. JEM received training and weapons from the ISI and worked closely with al Qaeda.

In December 2001, JEM terrorists working with terrorists from another ISI-backed group, Lashkar e Tayyiba (LET), attacked the Indian parliament building in New Delhi. That attack prompted India to mobilize its military, and a tense standoff went on for nine months. Only intense mediation by President Bush’s national security team averted war.

Azhar kept a low profile for several years after LET’s 2008 attack on Mumbai, but he reappeared publicly in 2014, giving fiery calls for more attacks on India and the United States. His group is technically illegal in Pakistan but enjoys the continuing patronage of the ISI.

The ISI is under the generals’ command and is composed of army officers, so the spies are controlled by the Pakistani army, which justifies its large budget and nuclear weapons program by citing the Indian menace. Any diminution in tensions with India might risk the army’s lock on its control of Pakistan’s national security policy. The army continues to distinguish between “good” terrorists like JEM and LET and “bad” terrorists like the Pakistani Taliban, despite decades of lectures from American leaders.

The army has long distrusted Prime Minister Nawaz Sharif, who has advocated a detente with India since the 1990s. An army coup in 1999 sent him into exile in Saudi Arabia for a decade. His warm embrace of Modi on Christmas Day in his home in Lahore undoubtedly angered the generals.

Modi’s visit was the first by an Indian prime minister in more than a decade. It was also Sharif’s birthday and the birthday of Pakistan’s founder, Muhammad Jinnah. Modi’s decision to visit and the warm family greeting Sharif extended set the stage for a planned resumption of formal diplomatic negotiations between the two countries scheduled for later this month.

So far New Delhi has not canceled the planned talks. Modi’s advisers are well aware of the double game the Pakistani army plays and the differences inside the Pakistani establishment. After four wars with Pakistan and a nuclear arms race, Indian experts understand the complexity of the dynamics inside Islamabad. The Indians have accepted Prime Minister Sharif’s public condemnation of the attack and promised to provide evidence of JEM’s role to his government, including cellphones captured in the attack.

Washington put JEM on the terrorist sanctions list years ago—but it continues to coddle the Pakistani army. Gen. Raheel Sharif, the army’s boss (and no relation to the prime minister) got a warm embrace from the Pentagon last fall—despite the ISI’s support for the Afghan Taliban’s offensive against the Kabul government and despite the Pakistani military’s backing of terror groups like JEM.

This piece was originally published by The Daily Beast.

       

In this interview, Vanda Felbab-Brown addresses issues of terrorism, organized crime, and state responses within the context of Boko Haram’s terrorism, insurgency, and militancy in the Niger Delta. She was interviewed by Jide Akintunde, Managing Editor of Financial Nigeria magazine.

Q: The Boko Haram menace has been with Nigeria for seven years. Why is it that the group does not appear to have run out of resources?

A: Boko Haram has been able to sufficiently plunder resources in the north to keep going. It has accumulated weapons and ammunition from seized stocks. It also taxes smuggling in the north. But its resources are not unlimited. And unlike other militant and terrorist groups, such as ISIS or the Taliban, Boko Haram faces far more acute resource constraints.

Q: Boko Haram is both an insurgent and a terrorist group. Does this explain why it is arguably the deadliest non-state actor in the world and the group that has used women for suicide bombings the most in history?

A: Boko Haram’s record in 2015 of being the deadliest group is a coincidence. Very many other militant groups have combined characteristics of an insurgency and a terrorist group. Its violence belies its weaknesses as much as its capacities.

Boko Haram’s resort to terrorism, often unrestrained terrorism and unrestrained plunder, reflect its loss of territory and most limited strategy calibration and governance skills. Its terrorist attacks, including by female suicide bombers, also reflect the limitation of the military COIN (counter-insurgency) strategy. For instance, after the international clearing, little effective control and “holding” is still exercised by the Nigerian military or its international partners.

Q: Although many views have rejected economic deprivation or poverty as the root cause of the insurgency, almost everyone agrees that military victory over the group would not help much if economic improvement is not brought to bear in the Northeastern Nigeria – the theatre of the insurgent activities. Is this necessarily contradictory?

A: Economic deprivation is hardly ever the sole factor stimulating militancy. There are many poor places, even those in relative decline compared to other parts of the country, where an insurgency does not emerge. But relative economic deprivation often becomes an important rallying cause. And indeed, there are many reasons for focusing on the economic development of the north, including effectively suppressing militancy but it also goes beyond that. Improving agriculture, including by investing in infrastructure and eliminating problematic and distortive subsidies in other sectors, would help combat insurgency and prevent its reemergence.

Q: While Nigerians remain befuddled about the grievances of Boko Haram, we are clear about the gripes of the militants in the oil-rich Niger Delta: they want resource control, since the Nigerian state has been unable to develop the area that produces 70 per cent of the federal government’s revenue. So, is the state always just and right in suppressing militant groups?

A: Indeed not; the state is hardly always just in suppressing militancy, even as suppressing militancy is its key imperative. Economic grievances, discriminations, and lack of equity and access are serious problems that any society should want to tackle. Even if there are “no legitimate grievances,” the state does not have a license to combat militancy in any way it chooses. Its own brutality will be discrediting and can be deeply counterproductive.

The Nigerian state’s approach to MEND (Movement for the Emancipation of Niger Delta) is fascinating: essentially the cooptation of MEND leaders through payoffs, but without addressing the underlying root causes. The insurgency quieted down, but the state’s approach is hardly normatively satisfactory nor necessarily sustainable unless new buyoffs to MEND leaders are again handed over. But that compounds problems of corruption, accountability, transparency, and inclusion.

Q: We can raise the same issue about economic justice in the way criminal and terrorist organizations operate their underground economies. How flawed have you found the alternative social orders that the leaders of criminal and terrorist organizations claim to foster?

A: The governance – the normative, political, and economic orders -- that militant groups provide are often highly flawed. They often underdeliver economically and they lack accountability mechanisms, even when they outperform the state in being less corrupt and providing swifter justice.

However, the choice that populations face is not whether the order that militants provide is optimal or satisfactory. The choice that matters to people is whether that order is stable and better than that provided by the state. So the vast majority of people in Afghanistan, for example, say they don’t like the Taliban. But they don’t like corrupt warlords or corrupt government officials even. It’s not the absolute ideal but the relative realities that determine allegiances or at least the (lack of) willingness to support one or the other.

Moreover, the worst outcome is constant contestation and military instability. A stable brutality is easier to adjust to and develop coping mechanisms for than capriciousness and unstable military contestation.

Q: The Nigerian amnesty programme seemed to be a model in resolving issues between the state and the non-state actors in the Niger Delta, given the quiet in that region in the past few years of the programme. But since the political power changed at the federal level, we are seeing signs of the return of sabotage of oil installations. What models, say in Latin America or elsewhere, can help foster more sustainable peace between governments and non-state actor militant groups?

A: I don’t think that the MEND programme is a model, precisely because of the narrow cooptation I alluded to. Many of the middle-level MEND commanders as well as foot soldiers are dissatisfied with the deal. And much of the population in the Delta still suffers the same level of deprivation and exclusion as before. The deal was a bandage without healing the wounds underneath. It’s a question how long it will continue sticking. Despite its many urgent and burning tasks and a real need to focus on the north, the Nigerian government should use the relative peace in the Delta to move beyond the plaster and start addressing the root causes of militancy and dissatisfaction there. 

This interview was originally published by Financial Nigeria.

       

2016 is shaping up to be a potentially critical year for Afghanistan. ISIS is rising there, the Taliban is gaining ground, the stability of the Afghan government is deteriorating by the day, and national elections are coming in October. The US, China, Pakistan, and the Afghan government are currently holding talks aimed at bringing the Taliban to the table to try negotiate an end to the war.

Of those countries, it's Pakistan that is the most significant. Pakistan has probably the most influence of anyone over whether those talks will succeed in getting the Taliban to agree to sit down and negotiate a peace agreement with the Afghan government. But there's a lot more going on with the peace talks that are perhaps the country's best or only remaining hope.

To understand how this works and why it matters, I spoke to Vanda Felbab-Brown, a senior fellow in the Center for 21st Century Security and Intelligence at the Brookings Institution and an expert on Afghanistan. What follows is a transcript of our conversation, lightly edited for clarity and length.

Jennifer Williams: Could you start by just explaining how Pakistan has been involved in the conflict between the Taliban and Afghanistan historically?

Vanda Felbab-Brown: That goes back to the creation of independent Pakistan, with issues having to do with the Pashtun minority in Pakistan, which is also the majority population of Afghanistan, and irredentist claims by Afghan Pashtun politicians, as well as the Cold War rivalry between the Soviet Union and the United States, who at different times supported either Pakistan or Afghanistan and played the two against each other.

Then you have the Taliban emerging in the 1990s, and Pakistan fully supports the Taliban: They help equip it, they provide intelligence, advisers, and during the Taliban era when they ruled country, Pakistan is one of only three countries that recognize the Taliban regime.

They continued supporting the Taliban throughout the past decade, and US-Pakistan relations became very fraught and complicated. It's never been easy. Pakistanis sometimes use the expression that the United States treats Pakistan like a condom: uses it when they need it then discards it when they are finished with it. It's a fairly common saying in Pakistan, especially in the military. So there is a sense of betrayal on the part of the United States, untrustworthiness, that it's an exploitative relationship on the part of the US toward Pakistan.

I should also say that Pakistan has long supported many Islamic extremist groups as part of its asymmetric policy toward India, and some of these groups have now mutated, or they slipped Pakistan's full control.

Even with respect to the Afghan Taliban, there is a lot of support from the Pakistani state intelligence services and military to the Afghan Taliban. At the same time, Pakistan has been under enormous US and international pressure to act against them, and so they will take the occasional action against the Afghan Taliban as well. But those actions are mostly seen as halfhearted, incomplete window dressing.

JW: So what role is Pakistan playing today? I know that they just had the four-party talks and that Pakistan has been insisting that these talks take place in Pakistan. Are they trying to speak for the Taliban?

VFB: I'm not sure that it's a fair characterization that they are speaking for the Taliban. Certainly the Afghan government, including in the latest talks, often insinuates or alleges that Pakistan speaks for the Taliban. But they clearly do not.

The relationship between the Taliban and Pakistan is hardly smooth and perfect. Many members of the Afghan Taliban deeply resent the level of Pakistani interference, even as the group has been supported by Pakistan. There is a lot of Afghan Pashtun nationalism also among the Taliban that deeply resents the influence and attempts at control by the Pakistani state.

Part of the key issue in the relationship is that although Pakistan supports the Afghan Taliban, and although it has historically supported other extremist groups, it does not have perfect control. And arguably, its control is diminishing. And so they posture, they do their double game. They want to appear strong, and so they posture that they have much greater control than they have, but at the same time they deny that they have any nefarious role.

In reality, they are playing both sides against the middle, and they often have much less capacity to control and rein in the extremist groups, including the Afghan Taliban, than many assume. The widespread criticism of Pakistan is one of its duplicity and its nefarious activity and its lack of willingness to act against the Afghan Taliban. Those are true, but they are also coupled with limits to their capacity. They are riding a tiger that they cannot control fully.

So they have been hosting these four-way talks that involve them, the US government, the Afghan government, and the Chinese government. The Afghan government is desperate to achieve some sort of negotiated deal with the Taliban. It feels under tremendous pressure, the military is taking a pounding from the Taliban, and the government lacks legitimacy.

The US has similar views on the notion that the way out of the predicament in Afghanistan is a negotiated deal. The Chinese also like the idea. They have their own influence in Pakistan. China would very much like to say that they finally achieved what the US failed to do over the past decade, that they will bring peace to Afghanistan, and that they will do it by enabling the negotiations.

Pakistan is responsive to China. Their relationship with China is much stronger than their relationship with the United States. They often tell the US that China is their old friend, that China is the country that hasn't betrayed them, unlike the United States. China has promised massive economic development in Pakistan at $40 billion. The Pakistanis often say to the US that the Pakistan-China relationship is "greater than the Himalayas and deeper than the ocean." Very flowery.

JW: What's the relationship like between the Afghan government and Pakistan today?

VFB: The crucial man there really is the Pakistani chief of the army staff Raheel Sharif; no relation to [Prime Minister] Nawaz Sharif. I think that there is sort of goodwill and motivation right now, even on the army staff — but that is juxtaposed with, again, the limits of control even the chief has. With almost clockwork regularity you have a round of negotiations in Pakistan or you have a meeting between Raheel Sharif and [Afghan President Ashraf] Ghani, and the next day a bomb goes off in Kabul and people die, or the Indian consulate is attacked.

All those ploys are meant to destroy any beginning of a more positive relationship and have been very effective in subverting the process. The same goes on between Pakistan and India. Meanwhile, Ghani is taking an enormously risky strategy with respect to the negotiations. It's vastly unpopular in Afghanistan, and many, many Afghans hate Pakistan and blame it for all of their troubles.

They use Pakistan as the explanation of everything that ever goes wrong in Afghanistan. And the Pakistanis are responsible for a lot, but there's much, much blame and responsibility that lies on Afghan politicians and Afghan people.

So Ghani's outreach and engagement with Pakistan is extremely unpopular. He's spending an extreme amount of political capital, and does not have support from his partner in the government, Abdullah Abdullah, and the northern Tajik factions that hate Pakistan with great vitriol. So the more Pakistan is unable to deliver things like the Haqqani network, reducing or stopping its attacks in Kabul, the more politically impossible for Ghani the process will be.

JW: So what does that mean in terms of the stability of Afghanistan's unity government?

VFB: The unity government is extremely strained. "Unity" it isn't. The Pakistani negotiation angle is just too big for the strain. It might be strategically important. It might be a very significant element in getting any negotiation going, but it's also extremely politically costly, and the longer it doesn't produce anything, the more politically costly and unsustainable it will be.

In October, there are supposed to be parliamentary elections and district elections in Afghanistan, and, more important, this loya jirga [a national assembly of Afghan elders]. And unless there is some sort of major breakthrough by the summer, a lot of the negotiations and political process with both the Taliban and Pakistan will be put on ice, because it will just be politically impossible in the context of the loya jirga and the elections.

So they really have until the summer to make some sort of breakthrough, and then you will have months of morass and extreme political instability in Afghanistan, but it will also not be conducive in any way to improving either the relationship with Pakistan or the negotiations.

JW: How does Pakistan fit into the rise of ISIS in Afghanistan? What's the relationship there? And how might this affect the peace negotiations?

VFB: The rise of ISIS-Khorasan is one of the most interesting developments. It complicates the negotiations for the Taliban. They oppose the negotiations, and they're a big problem for Mullah Mansour and those who want to negotiate. They enable defections, make them easy, and make them costly.

At the same time, it is interesting because ISIS does not have the same linkages to Pakistan that the Afghan Taliban had, even though ISIS includes many defectors from the Taliban. They quite specifically reject what they call the "yoke" that Pakistan has put on the Afghan Taliban, and they call the Afghan Taliban leadership traitors because of the close relationship with Pakistan.

Moreover, ISIS-Khorasan also has quite a few members of various Pakistani extremist groups like Lashkar-e Taiba and members of TTP [Tehrik-e Taliban Pakistan]. So there is also a lot of resentment and hostility toward Pakistan.

I think the rise of ISIS might make Pakistan be cooperative to some extent, but on the other hand, I think it will also reinforce in the mind of many Pakistan security controllers that it's important to cultivate the Afghan Taliban as friends against the bigger danger of ISIS.

JW: Now that ISIS-Khorasan has directly targeted Pakistan, the consulate in Jalalabad, do you think Pakistan will take action?

VFB: I think they'll take action against ISIS and groups like Tehrik-e Taliban. I don't think it will produce more resolve to go after the Afghan Taliban. That's my view. Others are hoping that they will finally accept the realities and really believe that they have to fight all of the insurgents, all of the terrorists, and that they cannot differentiate among them. I am not persuaded that that will, in fact, happen.

JW: So what does this all mean for the prospects for peace? Are you hopeful at all?

VFB: I think the peace negotiations are important, but I am skeptical that anything will happen quickly.

I think that if by summer the Taliban has been willing to join the negotiating table, that will be an important breakthrough, but nothing will be agreed. The summer will be very bloody, and then there will be the political [wrangling] associated with the loya jirga and the elections.

In my view, even if the Taliban comes to the negotiating table, we are looking at years of negotiations, and certainly no breakthrough before 2017 and likely much longer.

And so the question is whether we, the United States, are prepared to stand by with Afghanistan for that long and whether the Afghans will have the resolve. So it's really important that the military and the police fight as hard as they can, because the weaker they fight, the more they defect, the more intimidated they are, the more brain drain that flows from Afghanistan, the stronger the Taliban is viewed and the more intransigent they will be in the negotiations. Now the negotiations will be very much about the military battlefield as much as they will about what's happening at the table for a long time.

This interview was originally published by Vox.

       

Vanda Felbab-Brown writes that after more than a decade of struggles against al-Qaida and the Taliban, U.S. President Barack Obama hoped to extricate the United States from participating militarily in Afghanistan’s counterinsurgency. But as the end of his presidency approaches in the summer of 2016, Afghanistan again faces crisis. Very few trends in the country are going well. The U.S. drone killing of the Taliban leader Mullah Akhtar Mohammad Mansour in Baluchistan, Pakistan in May 2016 provides a fillip to the embattled Afghan government and may in the long-term result in fragmentation and internal withering of the Taliban. But that outcome is not guaranteed nor likely to materialize quickly. In fact, the Taliban swiftly announced Mawlawi Haibatullah Akhundzada, a deputy to Mullah Mansour, as its new leader to avoid the tensions and chaos that surrounded Mansour’s appointment.

The Taliban has mounted and sustained its toughest military campaign in years, and the war has become bloodier than ever. Despite the Taliban’s internal difficulties, its military energy shows no signs of fizzling out. The influence of the particularly vicious Haqqani network within the Taliban has grown. Moreover, the Islamic State established itself in Afghanistan in 2015, although it faces multiple strong countervailing forces.

Most ominously, Afghanistan’s political scene remains fractious and polarized. The National Unity Government of President Ashraf Ghani and his chief executive officer and rival Abdullah Abdullah (created in the wake of the highly contested presidential elections of 2014) has never really found its feet. Fundamental structural problems of the government remain unaddressed, and after two years in power the government may face its end as a result of a possible Loya Jirga assembly in the fall of 2016. Even if the Jirga does not meet, Afghanistan’s leadership will face potentially debilitating crises of legitimacy. Afghanistan’s elite has not taken any steps to heal the country’s deep and broad political wounds. Instead, the dominant mode of politics is to plot the demise of the government and focus on a parochial accumulation of one’s power at the expense of the country’s national interest, and even the very survival of the post-2001 order.

Struggling to deliver the promised improvements in government efficiency and reduction in corruption, President Ghani staked the two first years of his presidency on negotiations with the Taliban. In order to facilitate the negotiations, he reached out to Pakistan in a daring and politically costly gambit in the fall of 2014 and repeatedly since. The payoff so far has been limited and Ghani’s political space is shrinking. The death of Mullah Mansour is likely to complicate the process even more.

In the paper, Felbab-Brown discusses the evolving international support for Afghanistan; military developments in Afghanistan since the fall of 2014 and the intensity of the Taliban’s battlefield thrust; the Taliban’s internal cohesion, fragmentation and leadership successions; President Ghani’s outreach to Pakistan and the effort to negotiate with the Taliban; and Afghan political processes and trends.

Downloads

• Blood and faith in Afghanistan: A June 2016 update

       

       

       

       

As expected, the latest data from the Census Bureau’s 2009 American Community Survey (ACS) confirm that the worst U.S. economic downturn in decades exacerbated trends set in motion years before, by multiplying the ranks of America’s poor. Between 2007 and 2009, the national poverty rate rose from 13 percent to 14.3 percent, and the number of people below the poverty line jumped by 4.9 million. Yet because the economic impact of the Great Recession was highly uneven across the nation, the map of U.S. poverty shifted in important ways over the past couple of years, with implications for both national and local efforts to alleviate poverty.

An analysis of poverty in the nation’s 100 largest metro areas, based on recently released data from the 2009 American Community Survey, indicates that:

The number of poor people in large metro areas grew by 5.5 million from 1999 to 2009, and more than two-thirds of that growth occurred in suburbs.  By 2009, 1.6 million more poor lived in the suburbs of the nation’s largest metro areas compared to the cities.

Between 2007 and 2009, the poverty rate increased in 57 of the 100 largest metro areas, with the largest increases clustered in the Sun Belt.  Florida metro areas like Bradenton and Lakeland, and California metro areas like Bakersfield, Riverside-San Bernardino-Ontario, and Modesto, each experienced increases in their poverty rates of more than 3.5 percentage points.

Poverty increased by much greater margins in 2009 than 2008, with cities and suburbs experiencing comparable rates of growth in the recession’s second year.  Between 2008 and 2009, cities and suburbs gained 1.2 million poor people, together accounting for about two-thirds of the national increase in the poor population that year.

Several metro areas saw city poverty rates increase by more than 5 percentage points, while many suburban areas experienced increases of 2 to 4 percentage points between 2007 and 2009.  The city of Allentown, PA saw a 10.2 percentage-point increase in its poverty rate, followed by Chattanooga, TN with an increase of 8.0 percentage points.  Sun Belt metro areas were among those with the largest increases in suburban poverty, including Lakeland, FL and Riverside-San Bernardino-Ontario, CA.

Downloads

• Full Paper
• Appendix A
• Appendix B

       

The United States exported and imported $4.0 trillion worth of international goods in 2014, making it the world’s second-largest trader, after China. The responsibility for moving all those products falls to the country’s 400-plus seaports, airports, and border-crossing facilities, though a smaller group does most of the country’s heavy lifting. In fact, ports in just 10 metropolitan areas move 60 percent of all international goods by value.

This level of concentrated port activity creates a spatial mismatch in the country’s trade flows. While a few ports handle a majority of international trade, few of the goods leaving or entering those ports start or end their journey in that port’s local market: 96 percent actually move to or from other parts of the United States. As a result, problems within and outside certain port facilities—whether a labor dispute like the recent West Coast port strike or congestion near Philadelphia’s seaport or airport—quickly become logistical costs borne by the entire country.

The 10 largest metropolitan port complexes represent a wide range of U.S. geographies, modal specialties, and international connections. Total volumes for these port complexes, listed below, are based on an aggregation of imports and exports across all sea, air, truck, rail, and pipeline facilities in each region. All data are from 2010, and you can find more detailed metrics within the Metro Freight interactive.

10. Chicago-Joliet-Naperville, IL-IN-WI

Total Value: $92.8 billion
Local Share: 4.6 percent
Top Trade Region: Asia Pacific ($41.5 billion)

A traditional Midwest powerhouse of production, metropolitan Chicago is home to a variety of industries and infrastructure assets that connect it to the Midwest and global marketplace. The proximity of factories, warehouses, and rail lines to its major port facilities, particularly O'Hare International Airport, places Chicago at a strategic crossroads for goods distribution.

9. San Francisco-Oakland-Fremont, CA

Total Value: $103.9 billion
Local Share: 4.4 percent
Top Trade Region: Asia Pacific ($77.6 billion)

The San Francisco metro area—and the Bay Area as a whole—may be more well-known as a center for tech innovation, but it also contains some of the largest port facilities in the country. The Port of Oakland and the Port of San Francisco  account for the bulk of water traffic ($55.3 billion overall) moving through the area, while Oakland International Airport and San Francisco International Airport help transport nearly $48.6 billion in electronics, precision instruments, and other high-value goods.

8. Seattle-Tacoma-Bellevue, WA

Total Value: $116.9 billion
Local Share: 8.2 percent
Top Trade Region: Asia Pacific ($89.4 billion)

The Seattle metro area plays a critical role cycling goods throughout the Pacific Northwest and the rest of the country, largely owing to the key connections its port facilities have forged with China ($47.9 billion) and Japan ($22.0 billion). Valuable transportation equipment and electronics represent a large chunk of these port volumes ($52.7 billion), although sizable amounts of machinery, textiles, and agricultural products are also processed through area facilities. The Port of Seattle and the Port of Tacoma are especially important in this respect, as they look to partner more closely in years to come.

7. Miami-Fort Lauderdale-Pompano Beach, FL

Total Value: $123.7 billion
Local Share: 2.0 percent
Top Trade Region: Latin America ($97.2 billion)

Miami is the country’s primary gateway to Latin America, especially when excluding petroleum-related trade moving through Gulf Coast ports. And while the region and state have made impressive investments at the Port Miami seaport, it is actually Miami International Airport that generates the most regional trade ($74.8 billion). Miami’s facilities are a key component of Florida’s statewide strategy to use trade and logistics to grow local industries.

6. Laredo, TX

Total Value: $124.4 billion
Local Share: 0.0 percent
Top Trade Region: NAFTA ($121.0 billion)

Laredo may only house 250,000 people, but it might be the most important Texas metro area you’ve never heard of, considering that virtually every international good passing through it heads somewhere else in the U.S. The border town is the southernmost point of Interstate 35—the so-called NAFTA superhighway—and handles almost half of U.S./Mexican surface trade. With automotive and other supply chains continuing to stretch across the binational border, Laredo is poised to grow in importance over the coming years.

5. Anchorage, AK

Total Value: $137.4 billion
Local Share: 0.2 percent
Top Trade Region: Asia Pacific ($136.0 billion)

Anchorage may be thousands of miles from the closest U.S. market, but it has a long legacy as a major connector to the Pacific marketplace, resting less than 9.5 hours by air from 90 percent of the industrialized world. In particular, Ted Stevens International Airport was the cargo hub for Northwest Airlines Cargo, once the country’s largest carrier, and still has a vibrant freight business led by FedEx Express and UPS hubs. Continued growth in high-value, low-weight goods trade with Asia can only benefit Anchorage’s cargo business.

4. Houston-Sugar Land-Baytown, TX

Total Value: $168.1 billion
Local Share: 10.6 percent
Top Trade Region: Latin America ($48.3 billion)

As one of the world’s leading centers for energy and chemical production, the Houston metro area—along with other parts of the Gulf Coast region—depends on an enormous set of seaport facilities to transport these goods. Collectively, $100.6 billion of energy products and chemicals/plastics pass through these ports annually, accounting for about 60 percent of all their international goods. Stretching more than 25 miles in length and situated close to the Gulf of Mexico, the Port of Houston houses many of the area’s marine terminals.

3. Detroit-Warren-Livonia, MI

Total Value: $206.7 billion
Local Share: 4.9 percent
Top Trade Region: NAFTA ($186.6 billion)

Although the Detroit metro area contains a number of freight facilities, such as the Port of Detroit, that unite the Great Lakes region, its land border crossings to Canada make it one of the busiest sites of commerce in North America and beyond. Each year, nearly $175.8 billion in international goods travel by truck and rail between Detroit and Canada—relying almost exclusively on the aging Ambassador Bridge and the Michigan Central Railway Tunnel. The planned New International Trade Crossing (NITC), however, holds promise for expanding capacity at this crucial junction.

2. New York-Northern New Jersey-Long Island, NY-NJ-PA

Total Value: $349.2 billion
Local Share: 9.7 percent
Top Trade Region: Europe ($153.9 billion)

The Port of New York and New Jersey, which spans several marine facilities including the Port Newark-Elizabeth Marine Terminal, is one of the biggest freight assets in the country, cementing the New York metro area’s role as the chief East Coast seaport complex ($185.0 billion). Remarkably, almost the same value of goods ($162.7 billion) flows through the area’s expansive air cargo facilities, including John F. Kennedy International Airport and Newark Liberty International Airport. Combined with New York’s enormous amount of global corporate headquarters, New York is the country’s most globally fluent metro area.

1. Los Angeles-Long Beach-Santa Ana, CA

Total Value: $417.5 billion
Local Share: 6.0 percent
Top Trade Region: Asia Pacific ($362.2 billion)

The Los Angeles metropolitan area not only boasts two of the largest seaports in the Western Hemisphere—the Port of Los Angeles and the Port of Long Beach—but also has one of the busiest cargo airports nationally, Los Angeles International Airport (LAX). Together, these port facilities channel a wide range of international goods like electronics, machinery, and textiles across the country, many of which come from Asian trade partners like China ($211.3 billion) and Japan ($58.5 billion). Still, only a fraction of these goods actually start or end locally (6 percent), speaking to the port complex’s extensive geographic reach in the U.S.

       

       

       

       

       

       

       

The U.S. military will carry out a major modernization of its strategic nuclear forces in the 2020s.

It will cover all three legs of the strategic triad.

Much of the planned program makes sense. The long-range standoff (LRSO) — a new nuclear-armed cruise missile to outfit strategic bombers — does not.

The primary reason for the modernization program is that many US strategic weapons systems are aging out, and American policy is that, as long as there are nuclear weapons, the United States will maintain a safe, secure and robust nuclear deterrent.

The Ohio-class ballistic missile submarines will begin to hit the end of their service life in the late 2020s, and the Navy will need new submarines. Submarines and submarine-launched ballistic missiles (SLBMs) make up the most survivable leg of the triad, and they carry the bulk of deployed US strategic warheads.

The service life of the Minuteman III intercontinental ballistic missile (ICBM) runs out in 2030. The Air Force seeks a replacement ICBM. At a minimum, keeping an ICBM leg of the triad would require another life extension program for existing Minuteman III missiles.

As for the air-breathing leg of the triad, the Air Force wants to procure 80 to 100 B-21 bombers. Plans are shrouded in secrecy but reportedly will incorporate stealth features and advanced electronic warfare capabilities to allow the aircraft to penetrate contested air space. The Air Force is also modernizing the B61 nuclear gravity bomb for use on strategic bombers.

One can and should question the Pentagon’s desired numbers for these programs. That is especially the case given the projected costs of strategic modernization, which Pentagon officials openly admit they do not know how to fund.

It is not clear why the United States will need to replace 400 deployed ICBMs on a one-for-one basis, particularly as the Air Force several years ago was prepared to go down to 300. A force of 200-300 ICBMs would suffice and result in significant cost savings. Likewise, one can challenge the requirement for 12 new ballistic missile submarines, as opposed to nine or 10.

The biggest question, however, arises over the LRSO, with a projected cost of $20 billion to $30 billion. The Air Force originally developed nuclear-armed air-launched cruise missiles (ALCMs) in the 1970s because the B-52 — then the mainstay of the strategic bomber fleet — presented a big target for adversary radars. That would make it hard for the aircraft to penetrate air defenses. A B-52 armed with ALCMs could remain outside of radar range and release its cruise missiles.

The B-2, with its stealth features, was designed to restore a penetrating capability. The Air Force plans to use stealth and electronic warfare capabilities to give the B-21 a penetrating capability as well. If these bombers can defeat and penetrate air defenses, that makes the LRSO redundant. (Moreover, unlike in the 1970s, the Air Force today has very capable long-range conventionally armed cruise missiles that provide a standoff capability for bombers.)

If, on the other hand, the stealth of the B-21 will be compromised in the not-too-distant future, then one has to question the wisdom of spending $60 billion to $80 billion — and perhaps more — to procure the B-21. If we believe the B-21 would soon encounter problems penetrating air defenses, scrap that program. Buy instead modified Boeing 767s, a variant of which will serve as the Air Force’s new aerial tanker, and arm them with the LRSO.

The Air Force’s evident attachment to the B-21 suggests, however, that it believes that the aircraft will be able to defeat adversary air defenses for some time to come. That means that the LRSO would add little capability to the US strategic force mix.

If one were to argue for the redundant capability provided by the LRSO, the number of new ALCMs that the Pentagon proposes to purchase — 1,000 to 1,100 — is difficult to understand. Even allowing for extra cruise missiles for test purposes, the number seems excessively high.

In its 2010 annual report to Congress on implementation of the Strategic Offensive Arms Reduction Treaty (SORT), the State Department advised that, as of Dec. 31, 2009, the United States had 1,968 operationally deployed strategic nuclear warheads. That figure captured the actual number of nuclear warheads atop SLBMs and ICBMs plus the number of nuclear bombs and ALCMs at air bases for use by bombers.

On June 1, 2011, a State Department fact sheet showed the number of deployed US strategic warheads as 1,800 as of Feb. 5, 2011, when the New Strategic Arms Reduction Treaty (New START) went into force. A Dec. 1, 2011, fact sheet provided a more detailed breakdown of US strategic forces. It stated that, as of Sept. 1, 2011, the United States had 1,790 deployed strategic warheads and 125 deployed strategic bombers. Like SORT, New START counts each warhead on a deployed ballistic missile as a deployed warhead. But New START counts bomber weapons differently from SORT. New START attributes each deployed bomber as one warhead, regardless of the number that it can carry or the number of weapons that may be at bomber bases.

The 125 deployed bombers on Sept. 1, 2011, would have counted as 125 under New START’s deployed strategic warhead total. Reducing 1,790 by 125 yields 1,665 — the number of deployed warheads then on US SLBMs and ICBMs.

Comparing the SORT and New START numbers is a bit of an apples-and-oranges comparison, but it gives some idea of the number of bomber weapons at US strategic bomber bases. Unless there was a dramatic increase in the number of warheads on ICBMs and SLBMs between the end of 2009 and September 2011 — and there is no reason to think that there was — comparing SORT’s 1,968 figure (end of 2009) to the 1,665 deployed warheads on ICBMs and SLBMs (under New START counting rules in September 2011) suggests some 300 nuclear bombs and ALCMs were at bomber bases. The B-2s would have been armed with bombs, which indicates a maximum of 200-250 ALCMs. The Federation of American Scientists (FAS) also estimates that there are about 300 nuclear weapons at strategic bomber bases, of which 200 are nuclear-armed ALCMs. FAS believes an additional 375 ALCM airframes are held in reserve.

This comparison raises the question: Why would 1,000-1,100 ALCM airframes be needed to support a couple of hundred deployed ALCMs?

The United States should sensibly modernize its strategic deterrent, particularly in a time of tight defense budgets. The case for the LRSO is demonstrably weak, especially for the planned size of the program. The LRSO should be shelved.

This piece was originally published in Defense News.

      

The Pentagon is embarking on a modernization of U.S. strategic nuclear forces that will cost hundreds of billions of dollars. Much of it makes sense, as key elements of the strategic triad age out and require replacement. As long as nuclear weapons exist, the United States should maintain a robust triad. However, the long-range stand-off weapon (LRSO), a new nuclear-armed air-launched cruise missile, does not make sense.

The U.S. strategic triad consists of intercontinental ballistic missiles (ICBMs), submarine-launched ballistic missiles (SLBMs), and strategic bombers. This mix gives the Pentagon the ability to hold at risk things that a potential adversary values. The inherent ability to destroy those things provides the basis for deterrence.

ICBMs can hold at risk targets 6,000 miles away. As they are based on mobile ballistic missile submarines, SLBMs can reach targets anywhere on earth. The same is true for weapons carried by the B-2 and B-52 and, in the future, the B-21. With aerial refueling, U.S. strategic bombers have global reach.

So the question arises: What unique target set could the LRSO hold at risk that cannot be threatened by ICBMs, SLBMs, or gravity bombs delivered by stealthy strategic bombers? At a recent panel discussion on the LRSO, the best answer to this question was “certain things”—but the proponent could not articulate what those “things” were. That explains much of the questioning about the LRSO. No one seems able to offer a plausible explanation for what the LRSO could do that other strategic nuclear systems cannot.

The weapon’s justification often seems to boil down to: The Pentagon is replacing other strategic systems because they are old, so it should replace the old nuclear-armed air-launched cruise missile (ALCM) as well. Does that logic hold?

The Air Force developed nuclear-armed ALCMs in the 1970s because the B-52 presented a big target on radar screens. Concern grew that the B-52 could not penetrate Soviet air defenses. A B-52 armed with ALCMs could launch its missiles from well beyond the reach of those air defenses.

Today, however, the Air Force has the stealthy B-2 bomber. It is in the process of procuring 80 to 100 B-21 bombers, which reportedly will incorporate stealth and advanced electronic warfare capabilities. The Department of Energy is already well along in the program to modernize the B61 nuclear gravity bomb. The modernized bomb will be highly accurate and have a variable yield. B-2 and B-21 bombers that can penetrate advanced air defenses and deliver B61 bombs against targets make the LRSO redundant.

Some suggest the LRSO hedges against a compromise of the B-21’s stealth. If that argument has merit, Congress ought to reexamine the wisdom of spending $60 to $80 billion—or perhaps $100 billion—on the bomber. Converted KC-46s (military refueling variants of the Boeing 767) with LRSOs would offer a far cheaper option. The Pentagon, however, seems to believe the B-21 will be capable of defeating advanced air defenses.

That being so, the case for the LRSO is weak. It will cost taxpayers $20 to $30 billion. True, that is a relatively small cost compared to what the Pentagon will pay to replace the Ohio-class ballistic missile submarines or build the B-21. But it is not chump change.

Some LRSO proponents cite the relatively “small” cost to argue that the defense budget can afford it. Current Pentagon officials, however, say they have no idea how to pay for everything they want for strategic modernization. Given the rising cost of mandatory spending such as social security and Medicare, and the pressure to hold down the deficit, the budget problem will not become easier in the 2020s, when the “bow-wave” of strategic modernization spending arrives. The Air Force will likely find itself having to choose between B-21s, KC-46 tankers, F-35 fighters, and the LRSO. It also wants to buy a new ICBM then. It is hard to see how all of that will be affordable.

Funding the LRSO now contributes to a budget time-bomb that the current administration and Congress will leave to their successors. The LRSO seems a redundant weapon without a mission. Shelving the program would defuse part of that time-bomb.

       

At the time that the Joint Comprehensive Plan of Action (JCPOA) with Iran was being debated here in Washington, I felt that the terms of the deal were far less consequential than how the United States responded to Iranian regional behavior after a deal was signed. I see the events of the past 12 months as largely having borne out that analysis. While both sides have accused the other of "cheating" on the deal in both letter and spirit, it has so far largely held and neither Tehran nor Washington (nor any of the other signatories) have shown a determination to abrogate the deal or flagrantly circumvent its terms. However, as many of my colleagues have noted, the real frictions have arisen from the U.S. geostrategic response to the deal.

I continue to believe that the Obama administration was ultimately correct that signing the JCPOA was better than any of the realistic alternatives—even if I also continue to believe that a better deal was possible, had the administration handled the negotiations differently. However, its regional approach since then has left a fair amount to be desired:

• The president gratuitously insulted the Saudis and other U.S. allies in his various interviews with Jeff Goldberg of The Atlantic. 
• After several alarming Iranian-Saudi dust-ups, administration officials have none-too-privately condemned Riyadh and excused Tehran in circumstances where both were culpable. 
• Washington has continued to just about ignore all manner of Iranian transgressions from human rights abuses to missile tests, and senior administration officials have turned themselves into metaphorical pretzels to insist that the United States is doing everything it can to assist the Iranian economy. 
• And the overt component of the administration's Syria policy remains stubbornly focused on ISIS, not the Bashar Assad regime or its Iranian allies, while the covert side focused on the regime remains very limited—far smaller than America's traditional Middle Eastern allies have sought. 

To be fair, the administration has been quite supportive of the Gulf Cooperation Council war effort in Yemen—far more so than most Americans realize—but even there, still much less than the Saudis, Emiratis, and other Sunni states would like. 

To be blunt, the perspective of America's traditional Sunni Arab allies (and to some extent, Turkey and Israel) is that they are waging an all-out war against Iran and its (Shiite) allies across the region. They have wanted the United States, their traditional protector, to lead that fight. And they feared that the JCPOA would result in one of two different opposite approaches: either that the United States would use the JCPOA as an excuse to further disengage from the geopolitical competition in the region, or even worse, that Washington would use it to switch sides and join the Iranian coalition. Unfortunately, their reading of events has been that this is precisely what has happened, although they continue to debate whether the United States is merely withdrawing or actively changing sides. And as both Bruce Reidel and I have both stressed, this perception is causing the GCC states to act more aggressively, provoking more crises and worsening proxy warfare with Iran that will inevitably aggravate an already dangerously-unstable Middle East and raises the risk of escalation to something even worse.

U.S. President Barack Obama walks with Saudi King Salman at Erga Palace upon his arrival for a summit meeting in Riyadh, Saudi Arabia April 20, 2016. Photo credit: Reuters/Kevin Lamarque.

Looking to year two

All that said, I wanted to use the first anniversary of the JCPOA to think about where we may be on its second anniversary. By then, we will have a new president. Donald Trump has not laid out anything close to a coherent approach to the Middle East, nor does he have any prior experience with the region, so I do not believe we can say anything reasonable about how he might handle the region if he somehow became president. Hillary Clinton, on the other hand, has had considerable experience with the region—as first lady, senator, and secretary of state—and she and her senior aides have discussed the region to a much greater extent, making it possible to speculate on at least the broad contours of her initial Middle East policy. 

In particular, Clinton has been at pains to emphasize a willingness to commit more resources to deal with the problems of the Middle East and a fervent desire to rebuild the strained ties with America's traditional Middle Eastern allies. From my perspective, that is all to the good because an important (but hardly the only) factor in the chaos consuming the Middle East has been the Obama administration's determination to disengage from the geopolitical events of the region and distance itself from America's traditional allies. The problem here is not that the United States always does the right thing or that our allies are saints. Hardly. It is that the region desperately needs the United States to help it solve the massive problems of state failure and civil war that are simply beyond the capacity of regional actors to handle on their own. The only way to stop our allies from acting aggressively and provocatively is for the United States to lead them in a different, more constructive direction. In the Middle East in particular, you can't beat something with nothing, and while the United States cannot be the only answer to the region's problems, there is no answer to the region's problems without the United States.

My best guess is that our traditional allies will enthusiastically welcome a Hillary Clinton presidency, and the new president will do all that she can to reassure them that she plans to be more engaged, more of a leader, more willing to commit American resources to Middle Eastern problems, more willing to help the region address its problems (and not just the problems that affect the United States directly, like ISIS). I think all of that rhetorical good will and a sense (on both sides) of putting the bad days of Obama behind them will produce a honeymoon period. 

[T]he second anniversary of the JCPOA could prove even more fraught for America and the Middle East than the first.

But I suspect that that honeymoon will come to an end after 6 to 18 months, perhaps beginning with the second anniversary of the JCPOA and occasioned by it. I suspect that at that point, America's traditional allies—the Sunni Arab States, Israel, and Turkey—will begin to look for President Clinton to turn her words into action, and from their perspective, that is probably going to mean doing much more than President Obama. I suspect that they will still want the United States to join and/or lead them in a region-wide war against Iran and its allies. And while I think that a President Clinton will want to do more than President Obama, I see no sign that she is interested in doing that much more. 

Syria is one example. The GCC wants the United States to commit to a strategy that will destroy the Assad regime (and secondarily, eliminate ISIS and the Nusra Front). Clinton has said she was in favor of a beefed-up covert campaign against the Assad regime and that she is in favor of imposing a no-fly zone over the country. If, as president, she enacts both, this would be a much more aggressive policy than Obama's, but as I have written elsewhere, neither is likely to eliminate the Assad regime, let alone stabilize Syria and end the civil war—the two real threats to both the United States and our regional allies (and our European allies). 

Even more to the point, I cannot imagine a Hillary Clinton administration abrogating the JCPOA, imposing significant new economic sanctions on Iran, or otherwise acting in ways that it would fear could provoke Tehran to break the deal, overtly or covertly. That may look to our traditional allies like Washington is trying to remain on the fence, which will infuriate them. After Obama, and after Clinton's rhetoric, they expect the United States to stand openly and resolutely with them. At the very least, such American restraint will place further limits on the willingness of a Clinton administration to adopt the kind of confrontational policy toward Tehran that our regional allies want, and that her rhetoric has led them to expect. 

U.S. Secretary of State Hillary Rodham Clinton (C) speaks with Jordan's Foreign Minister Nasser Judeh (L) and United Arab Emirates Minister of State for Foreign Affairs Anwar Gargash as they participate in the Libya Contact Group family photo at the Emirates Palace Hotel in Abu Dhabi June 9, 2011. Photo credit: Reuters/Susan Walsh.

Reconcile, or agree to disagree?

Let me be clear, I am not suggesting that the United States should adopt the GCC analysis of what is going on in the region wholeheartedly. I think that it overstates Iran's role as the source of the region's problems and so distracts from what I see as the region's real problems—state failure and civil wars—even if the Iranians have played a role in exacerbating both. 

Instead, my intent is simply to highlight that there are some important strategic differences between the United States and its regional allies, differences that are not all Barack Obama's fault but reflect important differences that have emerged between the two sides. If this analysis is correct, then the second anniversary of the JCPOA could prove even more fraught for America and the Middle East than the first. The honeymoon will be over, and both sides may recognize that goodwill and rousing words alone cannot cover fundamental divergences in both our diagnosis of what ails the region and our proposed treatment of those maladies. If that is the case, then both may need to make much bigger adjustments than they currently contemplate. Otherwise, the United States may find that its traditional allies are no longer as willing to follow our lead, and our allies may discover that the United States is no longer interested in leading them on the path they want to follow.

       

       

Bruce Katz presented a speech on demographic shifts in the country's largest 100 metropolitan areas and how various leaders, including those in Seattle, will meet the policy challenges of a changing nation.

Introduction:
Today, I would like to present our findings from a major research initiative at the Metropolitan Policy Program, which is accompanied by an interactive website: the State of Metropolitan America. Our report examines the demographic trends that have affected the top 100 metropolitan areas so far this decade, covering the year 2000 through the year 2008. We find a nation in demographic transformation along five dimensions of change.

Watch video of the speech on the Seattle Channel »

We are a growing nation.  Our population exceeded 300 million back in 2006 and we are now on our way to hit 350 million around 2025.

We are diversifying.  An incredible 83 percent of our growth this decade was driven by racial and ethnic minorities. 

We are aging.  The number of seniors and boomers exceeded 100 million this decade.

We are selectively educating. Whites and Asians are now more than twice as likely to hold a bachelors degree as blacks and Hispanics.

We are a nation divided by income. Low-wage workers saw hourly earnings decline by 8 percent this decade; high wage workers saw an increase of 3 percent.  

With this background, I will make three main points today.

First, America’s top 100 metropolitan areas are on the front lines of our nation’s demographic transformation.  The trends I’ve identified—growth, diversity, aging, educational disparities, income inequities—are happening at a faster pace, a greater scale and a higher level of intensity in our major metropolitan areas.  

Second, the shape and scale of demographic transformation is profoundly uneven across metropolitan America.  This variation only partially reflects the traditional division of our country into regions like New England or the Middle Atlantic or the Mountain West. Rather a new “Metro Map” of the nation is emerging that unites far flung communities by their demographic realities rather than their physical proximity. 

Finally, demographic transformation requires action at both the macro and metro scale.  The federal government and the states need to lead where they must to address the super-sized challenges wrought by fast change.  Metropolitan areas must innovate where they should in ways that are tailored to their distinct challenges and opportunities.  And the geography of transformation at the metro scale requires new institutions and ways of governing.

These policy and institutional changes will not be easy.

But let’s remember one thing.  In the global context, the United States is a demographically blessed nation.  Established competitors like Japan, Britain and Germany are either growing slowly or actually declining; rising nations like China remain relatively homogenous. 

In a fiercely competitive world, our growth and diversity may be America’s ace in the hole.

Downloads

• Full Speech

      

Yesterday the U.S. Economic Development Administration announced the winners of its i6 Green Challenge grant, awarding $12 million to six regions to accelerate clean technology commercialization.  

Of particular note is an energy efficiency gambit being developed in the Puget Sound region.

In that case, a portion of the $1.3 million of federal support that will now flow to Washington’s state’s Clean Energy Partnership will be dedicated towards the building out of BETI, the Building Efficiency Testing and Integration (BETI) Center and Demonstration Network. BETI is of more than passing interest to us because the testing net work was developed by a steering committee of industry experts and community stakeholders as part of the region’s metropolitan business planning effort, spearheaded by the Puget Sound Regional Council in conjunction with the Brookings Institution Metropolitan Policy Program.  

BETI will be a physical living laboratory space for innovators in the energy efficiency field to test their products, designs, and services prior to launching them into the marketplace. When built out, the concept will be an example of a U.S. metropolitan region examining its economic position, assessing needs and gaps, and moving assertively to challenge governments, philanthropists, and private sector to invest in potentially game-changing interventions.    

In that sense, with the prospect of a state match and copious follow-on private investment down the road, the i6 Green win demonstrates the potential power of bottom-up intentional economic development strategies.

      

Over the past two decades, the Puget Sound area’s innovation-driven economy has become a magnet for highly educated people from across the country and around the world. Drawn to the region by some of the nation’s most innovative companies—Microsoft, Boeing, Nintendo, Amazon, Genentech and the Fred Hutchinson Cancer Research Center, to name a few—the Puget Sound region ranks well on measures of educational attainment. Of the nation’s largest 100 metro areas, the Seattle-Tacoma-Bellevue area is 11th in bachelor’s degree holders and 17th in graduate degree attainment.

But for all its brainpower, the region has fallen behind in terms of cultivating homegrown talent, particularly in less affluent school districts located in South Seattle and South King County. Starting from an early age, low-income students and children of color in these communities tend to lag behind on important indicators of educational success. The effects of this achievement gap worsen with time, putting these students at a serious disadvantage that often affects their ability to find jobs and their earning potential. 

In an effort to address this achievement gap, the Community Center for Education Results has teamed up with the city of Seattle, the University of Washington, the Seattle Community Colleges District, the Puget Sound Educational Service District, the Bill & Melinda Gates Foundation and others to form the Road Map Project, a coalition working to double the number of South Seattle and South King County students pursuing a college diploma or career credential by 2020.

What’s innovative about the Road Map Project is its focus on collective action and community engagement. By bringing together key stakeholders to collaborate on shared goals, the project is creating a new model for efforts to reduce inequality in educational attainment. Its cradle-to-college-and-career approach aims to improve student outcomes beginning with access to prenatal care and kindergarten readiness all the way through to elementary and secondary schooling and beyond. Through a combination of community outreach and partnership building, data-driven goal-setting and performance management, the project supports area organizations working to boost student success and close the achievement gap in South Seattle and South King County.

In December, the Project released its baseline report, which provides a detailed snapshot of student achievement in the Road Map region during the 2009-2010 school year. With this initial data in hand, the project will be able to work with area organizations to encourage and track progress on a wide variety of indicators, ranging from birth weight and full-day kindergarten enrollment to proficiency in reading, math, and science, parent engagement to graduation rates and postsecondary enrollment. “Demographics should not determine the destiny of children in this region,” says Mary Jean Ryan, executive director of the Community Center for Education Results. “The children who grow up here deserve as good of an education as the people who show up here.”

      

With the economy still reeling from the effects of the recession, metropolitan areas have become increasingly willing to explore new approaches to economic development. Moving away from traditional one-size-fits-all approaches that emphasized Starbucks, stadium-building, and stealing businesses, metro leaders are instead crafting metropolitan business plans that grow jobs from within, building on their distinct market advantages.

By partnering with private industry, nonprofit intermediaries, universities, civic leaders, research institutions, and other interested parties, regional public sector leaders are working to strengthen their economies by focusing on those industries with the greatest potential for future growth.

For some regions, these efforts have involved helping existing firms make the transition to emerging industries. Northeast Ohio’s long struggle with post-deindustrialization was made worse by the Great Recession and the collapse of the auto sector and the foreclosure crisis.

In response, regional leaders came together to launch PRISM, the Partnership for Regional Innovation Services to Manufacturers initiative. The goal of PRISM is to help small and medium-sized manufacturers in old commodities industries, like steel and automotive, reinvent their products and business models to take advantage of growth opportunities in emerging markets like bio-science, health care and clean energy.

Led by the Manufacturing Advocacy and Growth Network (MAGNET), a regional intermediary organization, PRISM brings together higher education institutions, regional economic development organizations, and Ohio’s Edison Technology Centers to provide market research and business consulting services, increase firms’ access to capital and talent, and foster stronger relationships within growing industry clusters. [Full disclosure: The Brookings-Rockefeller Project on State and Metropolitan Innovation provided initial advisory support to PRISM.]

“Through PRISM, we hope to demonstrate that a growing manufacturing sector is not only possible, but desirable for the region,” says MAGNET president and CEO Daniel Berry. “Reclaiming the legacy of manufacturing innovation in Northeast Ohio will enable the region’s companies to create more well-paying jobs.”

In other parts of the country, partnerships are linking up existing industry strengths to create new growth opportunities. To ensure the Seattle region continues to be a global hub of innovation, public and private sector leaders have formed the Building Energy-Efficiency Testing and Integration (BETI) Center and Demonstration Network to develop new products, services and technologies around energy efficiency for customers around the world. BETI capitalizes and integrates this region’s distinct, competitive advantages – unparalleled software and information technology, strong sustainability ethos, an emerging building energy efficiency sector, and strong post-secondary institutions and talent that can support future demand. This is not a cookie cutter idea but one that can best work with the market formula found in the Puget Sound region.

With financial support from a federal i6 Green Challenge grant and a state match, BETI will help local businesses commercialize innovations in building energy-efficient technologies, platforms, and materials by providing product validation and integration services. In addition, BETI will foster greater collaboration among industry stakeholders, including businesses, entrepreneurs, trade associations, local and state government agencies, state universities, research networks, venture capitalists, and regional utilities.  

Both Northeast Ohio and the Puget Sound region arrived at these collaborative partnerships during the course of their efforts to develop metropolitan business plans. Like private sector business plans, these regional economic development plans are rooted in market dynamics and competitive assets. The metropolitan business planning process offers a framework for regional business, civic, and government leaders to assess their metro’s distinctive market position, identify pragmatic economic development strategies that capitalize on regional assets and set forth detailed implementation-ready plans for economic growth. Once established, these metropolitan business plans will act as roadmaps for metro economies as they drive the nation toward greater prosperity, increased job creation, and a leading position in the next economy.

      

The United States exported and imported $4.0 trillion worth of international goods in 2014, making it the world’s second-largest trader, after China. The responsibility for moving all those products falls to the country’s 400-plus seaports, airports, and border-crossing facilities, though a smaller group does most of the country’s heavy lifting. In fact, ports in just 10 metropolitan areas move 60 percent of all international goods by value.

This level of concentrated port activity creates a spatial mismatch in the country’s trade flows. While a few ports handle a majority of international trade, few of the goods leaving or entering those ports start or end their journey in that port’s local market: 96 percent actually move to or from other parts of the United States. As a result, problems within and outside certain port facilities—whether a labor dispute like the recent West Coast port strike or congestion near Philadelphia’s seaport or airport—quickly become logistical costs borne by the entire country.

The 10 largest metropolitan port complexes represent a wide range of U.S. geographies, modal specialties, and international connections. Total volumes for these port complexes, listed below, are based on an aggregation of imports and exports across all sea, air, truck, rail, and pipeline facilities in each region. All data are from 2010, and you can find more detailed metrics within the Metro Freight interactive.

10. Chicago-Joliet-Naperville, IL-IN-WI

Total Value: $92.8 billion
Local Share: 4.6 percent
Top Trade Region: Asia Pacific ($41.5 billion)

A traditional Midwest powerhouse of production, metropolitan Chicago is home to a variety of industries and infrastructure assets that connect it to the Midwest and global marketplace. The proximity of factories, warehouses, and rail lines to its major port facilities, particularly O'Hare International Airport, places Chicago at a strategic crossroads for goods distribution.

9. San Francisco-Oakland-Fremont, CA

Total Value: $103.9 billion
Local Share: 4.4 percent
Top Trade Region: Asia Pacific ($77.6 billion)

The San Francisco metro area—and the Bay Area as a whole—may be more well-known as a center for tech innovation, but it also contains some of the largest port facilities in the country. The Port of Oakland and the Port of San Francisco  account for the bulk of water traffic ($55.3 billion overall) moving through the area, while Oakland International Airport and San Francisco International Airport help transport nearly $48.6 billion in electronics, precision instruments, and other high-value goods.

8. Seattle-Tacoma-Bellevue, WA

Total Value: $116.9 billion
Local Share: 8.2 percent
Top Trade Region: Asia Pacific ($89.4 billion)

The Seattle metro area plays a critical role cycling goods throughout the Pacific Northwest and the rest of the country, largely owing to the key connections its port facilities have forged with China ($47.9 billion) and Japan ($22.0 billion). Valuable transportation equipment and electronics represent a large chunk of these port volumes ($52.7 billion), although sizable amounts of machinery, textiles, and agricultural products are also processed through area facilities. The Port of Seattle and the Port of Tacoma are especially important in this respect, as they look to partner more closely in years to come.

7. Miami-Fort Lauderdale-Pompano Beach, FL

Total Value: $123.7 billion
Local Share: 2.0 percent
Top Trade Region: Latin America ($97.2 billion)

Miami is the country’s primary gateway to Latin America, especially when excluding petroleum-related trade moving through Gulf Coast ports. And while the region and state have made impressive investments at the Port Miami seaport, it is actually Miami International Airport that generates the most regional trade ($74.8 billion). Miami’s facilities are a key component of Florida’s statewide strategy to use trade and logistics to grow local industries.

6. Laredo, TX

Total Value: $124.4 billion
Local Share: 0.0 percent
Top Trade Region: NAFTA ($121.0 billion)

Laredo may only house 250,000 people, but it might be the most important Texas metro area you’ve never heard of, considering that virtually every international good passing through it heads somewhere else in the U.S. The border town is the southernmost point of Interstate 35—the so-called NAFTA superhighway—and handles almost half of U.S./Mexican surface trade. With automotive and other supply chains continuing to stretch across the binational border, Laredo is poised to grow in importance over the coming years.

5. Anchorage, AK

Total Value: $137.4 billion
Local Share: 0.2 percent
Top Trade Region: Asia Pacific ($136.0 billion)

Anchorage may be thousands of miles from the closest U.S. market, but it has a long legacy as a major connector to the Pacific marketplace, resting less than 9.5 hours by air from 90 percent of the industrialized world. In particular, Ted Stevens International Airport was the cargo hub for Northwest Airlines Cargo, once the country’s largest carrier, and still has a vibrant freight business led by FedEx Express and UPS hubs. Continued growth in high-value, low-weight goods trade with Asia can only benefit Anchorage’s cargo business.

4. Houston-Sugar Land-Baytown, TX

Total Value: $168.1 billion
Local Share: 10.6 percent
Top Trade Region: Latin America ($48.3 billion)

As one of the world’s leading centers for energy and chemical production, the Houston metro area—along with other parts of the Gulf Coast region—depends on an enormous set of seaport facilities to transport these goods. Collectively, $100.6 billion of energy products and chemicals/plastics pass through these ports annually, accounting for about 60 percent of all their international goods. Stretching more than 25 miles in length and situated close to the Gulf of Mexico, the Port of Houston houses many of the area’s marine terminals.

3. Detroit-Warren-Livonia, MI

Total Value: $206.7 billion
Local Share: 4.9 percent
Top Trade Region: NAFTA ($186.6 billion)

Although the Detroit metro area contains a number of freight facilities, such as the Port of Detroit, that unite the Great Lakes region, its land border crossings to Canada make it one of the busiest sites of commerce in North America and beyond. Each year, nearly $175.8 billion in international goods travel by truck and rail between Detroit and Canada—relying almost exclusively on the aging Ambassador Bridge and the Michigan Central Railway Tunnel. The planned New International Trade Crossing (NITC), however, holds promise for expanding capacity at this crucial junction.

2. New York-Northern New Jersey-Long Island, NY-NJ-PA

Total Value: $349.2 billion
Local Share: 9.7 percent
Top Trade Region: Europe ($153.9 billion)

The Port of New York and New Jersey, which spans several marine facilities including the Port Newark-Elizabeth Marine Terminal, is one of the biggest freight assets in the country, cementing the New York metro area’s role as the chief East Coast seaport complex ($185.0 billion). Remarkably, almost the same value of goods ($162.7 billion) flows through the area’s expansive air cargo facilities, including John F. Kennedy International Airport and Newark Liberty International Airport. Combined with New York’s enormous amount of global corporate headquarters, New York is the country’s most globally fluent metro area.

1. Los Angeles-Long Beach-Santa Ana, CA

Total Value: $417.5 billion
Local Share: 6.0 percent
Top Trade Region: Asia Pacific ($362.2 billion)

The Los Angeles metropolitan area not only boasts two of the largest seaports in the Western Hemisphere—the Port of Los Angeles and the Port of Long Beach—but also has one of the busiest cargo airports nationally, Los Angeles International Airport (LAX). Together, these port facilities channel a wide range of international goods like electronics, machinery, and textiles across the country, many of which come from Asian trade partners like China ($211.3 billion) and Japan ($58.5 billion). Still, only a fraction of these goods actually start or end locally (6 percent), speaking to the port complex’s extensive geographic reach in the U.S.

       

As the first decade of the 2000s drew to a close, the two downturns that bookended the period, combined with slow job growth between, clearly took their toll on the nation’s less fortunate residents.

Over a ten-year span, the country saw the poor population grow by 12.3 million, driving the total number of Americans in poverty to a historic high of 46.2 million. By the end of the decade, over 15 percent of the nation’s population lived below the federal poverty line—$22,314 for a family of four in 2010—though these increases did not occur evenly throughout the country.

An analysis of data on neighborhood poverty from the 2005–09 American Community Surveys and Census 2000 reveals that:

After declining in the 1990s, the population in extreme-poverty neighborhoods—where at least 40 percent of individuals live below the poverty line—rose by one-third from 2000 to 2005–09. By the end of the period, 10.5 percent of poor people nationwide lived in such neighborhoods, up from 9.1 percent in 2000, but still well below the 14.1 percent rate in 1990.

Concentrated poverty nearly doubled in Midwestern metro areas from 2000 to 2005–09, and rose by one-third in Southern metro areas. The Great Lakes metro areas of Toledo, Youngstown, Detroit, and Dayton ranked among those experiencing the largest increases in concentrated poverty rates, while the South was home to metro areas posting both some of the largest increases (El Paso, Baton Rouge, and Jackson) and decreases (McAllen, Virginia Beach, and Charleston). At the same time, concentrated poverty declined in Western metro areas, a trend which may have reversed in the wake of the late 2000s housing crisis.

The population in extreme-poverty neighborhoods rose more than twice as fast in suburbs as in cities from 2000 to 2005–09. The same is true of poor residents in extreme-poverty tracts, who increased by 41 percent in suburbs, compared to 17 percent in cities. However, poor people in cities remain more than four times as likely to live in concentrated poverty as their suburban counterparts.

The shift of concentrated poverty to the Midwest and South in the 2000s altered the average demographic profile of extreme-poverty neighborhoods. Compared to 2000, residents of extreme-poverty neighborhoods in 2005–09 were more likely to be white, native-born, high school or college graduates, homeowners, and not receiving public assistance. However, black residents continued to comprise the largest share of the population in these neighborhoods (45 percent), and over two-thirds of residents had a high school diploma or less.

The recession-induced rise in poverty in the late 2000s likely further increased the concentration of poor individuals into neighborhoods of extreme poverty. While the concentrated poverty rate in large metro areas grew by half a percentage point between 2000 and 2005–09, estimates suggest the concentrated poverty rate rose by 3.5 percentage points in 2010 alone, to reach 15.1 percent. Some of the steepest estimated increases compared to 2005–09 occurred in Sun Belt metro areas like Cape Coral, Fresno, Modesto, and Palm Bay, and in Midwestern places like Indianapolis, Grand Rapids, and Akron.

These trends suggest the strong economy of the late 1990s did not permanently resolve the challenge of concentrated poverty. The slower economic growth of the 2000s, followed by the worst downturn in decades, led to increases in neighborhoods of extreme poverty once again throughout the nation, particularly in suburban and small metropolitan communities and in the Midwest. Policies that foster balanced and sustainable economic growth at the regional level, and that forge connections between growing clusters of low-income neighborhoods and regional economic opportunity, will be key to longer-term progress against concentrated disadvantage.

Downloads

• Download the Full Paper

Video

• Concentrated Poverty Grips Communities

       

       

In Pennsylvania, the next major presidential primary state, concerns about the economy loom large as global competition, economic restructuring, and an aging workforce threaten the state’s ability to prosper. Thanks to these assets, the six metro areas generate 80 percent of the state’s economic output even though they house 68 percent of its population. A true economic agenda for the state must speak to the core assets of Pennsylvania’s economy and where these assets are located: the state’s many small and large metropolitan areas. In short, this brief finds that:

• To help Pennsylvania prosper, federal leaders must leverage four key assets that matter today—innovation, human capital, infrastructure, and quality places. These assets help increase the productivity of firms and workers, boost the incomes of families and workers, and can help the state and nation grow in more fiscally and environmentally responsible ways.
• These four assets are highly concentrated in the state’s economic engines, its metropolitan areas. There are 16 metro areas in the Commonwealth, ranging from Philadelphia, the most populous, to Williamsport, the smallest. The top six metropolitan areas alone generate the bulk of the state’s innovation (80 percent of all patenting), contain the majority of the state’s educated workforce (77 percent of all adults with a bachelors degree), and serve as the state’s transport hubs.
• Despite these assets, Pennsylvania’s metro areas have yet to achieve their full economic potential. For instance, Philadelphia and Pittsburgh enjoy strengths in innovation, but they both struggle to convert their research investments into commercial products and real jobs. The Scranton metro area is emerging as a satellite of the New York City region, but it’s hampered by the absence of frequent and reliable transportation connections and inadequate broadband coverage.
• Federal leaders must advance an economic agenda that empowers states and metro areas to leverage their assets and help the nation prosper. To that end, they should establish a single federal entity that works with industry, states, and metro areas to ensure that innovation results in jobs and helps businesses small and large modernize. The federal government should strengthen access and success through the entire education pipeline. They should overhaul and create a 21st century transportation system. And they should use housing policy to support quality, mixed-income communities rather than perpetuating distressed neighborhoods with few school and job options.

Downloads

• Download

      

In Pennsylvania, the next major presidential primary state, concerns about the economy loom large as global competition, economic restructuring, and an aging workforce threaten the state’s ability to prosper. A true economic agenda for the state and its 16 metropolitan areas must speak to the core assets of Pennsylvania’s economy and where these assets are located: the state’s many small and large metropolitan areas. Amy Liu says an effort has to be made to build upon those assets for the future of the Keystone state and the nation as a whole.

Video

• Pennsylvania Metro Areas' Economic Potential

      

Strong Growth and Changing Composition 

External financial flows to sub-Saharan Africa (defined as the sum of gross private capital flows, official development assistance (ODA), and remittances to the region) have not only grown rapidly since 1990, but their composition has also changed significantly. The volume of external flows to the region increased from $20 billion in 1990 to above $120 billion in 2012. Most of this increase in external flows to sub-Saharan Africa can be attributed to the increase in private capital flows and the growth of remittances, especially since 2005 (see Figure 1).

Figure 1. Sub-Saharan Africa: External Flows (1990-2012, in USD billions)

As also displayed in Figure 1, in 1990 the composition of external flows to sub-Saharan Africa was about 62 percent ODA, 31 percent gross inflows from the private sector, and about 7 percent remittances. However, by 2012, ODA accounted for about 22 percent of external flows to Africa, a share comparable to that of remittances (24 percent) and less than half the share of gross private capital flows (54 percent). Also notably, in 1990, FDI flows were greater than ODA flows in only two countries (Liberia and Nigeria) in sub-Saharan Africa excluding South Africa, but 22 years later, 17 countries received more FDI than ODA in 2012—suggesting that sub-Saharan African countries are increasingly becoming less aid dependent (see Figure 2).

Figure 2. Sub-Saharan Africa: Number of Countries Where FDI is Greater than ODA (1990-2012)

But to what extent have these changes in the scale and composition of external flows to sub-Saharan Africa equally benefited countries in the region? Did the rising tide lift all boats? Is aid really dying? Are all countries attracting private capital flows and benefiting from remittances to the same degree? Finally, how does external finance compare with domestic finance? 

The False Demise of ODA

A closer look at the data indicates that, clearly, ODA is not dead, though its role is changing. For instance, middle-income countries (MICs) are experiencing the sharpest decline in ODA as a share of total external flows to the region, while aid flows account for more than half of external flows in fragile as well as low-income countries (LICs) and resource-poor landlocked countries (see Figure 3 and Appendix).

Download the full paper »

       

Executive Summary

Cities are creations of their states. Their boundaries, their powers, and their responsibilities are all substantially prescribed by state law. With the advent of the new federalism—beginning in the 1970s and resurgent today—the devolution of power from Washington to state capitals has increased the importance of state decision making for cities.

Yet, this shift occurred precisely as cities were losing political clout in state legislatures due to population decline within city limits and rampant growth in suburban jurisdictions.

This paper argues that in response to shifting population distributions within states, cities need to build new coalitions to effectively achieve their legislative goals within state legislatures. Case studies—New York City, Chicago, Detroit, and the three largest cities in Ohio (Cincinnati, Cleveland, and Columbus)—are used to more closely examine coalition-building methods.

Overall, the authors find:

• Cities' dependence on state government has increased as the federal government has ceded more power to the states. As cities' populations have declined, they have become weaker in state legislatures that have grown more powerful due to federal policy. In the peak year of 1978, about 15 percent of city revenues came from the federal government. By 1999 that had decreased to 3 percent. Concurrently, the federal government has shifted a number of programs to the states, which control the rules and revenue mechanisms cities operate under.

• Traditional political coalitions cities have used to achieve their state legislative goals are no longer as effective. Partisan (usually Democratic) coalitions are less reliable as focus has shifted to suburban swing districts. Moreover, as their power has decreased, cities' agendas have become more reactive, aiming to preserve the status quo in funding, infrastructure projects, and autonomy.

• Older, inner-ring suburbs are a logical new partner for cities in state legislatures. Increasingly, these suburbs, and some outer ones, have common interests with central cities as they address immigration, fiscal stress, and infrastructure woes. Such alliances would also better address metropolitan-wide issues on a metropolitan basis.

There remain many obstacles to forging such coalitions, however, including longtime distrust among big cities and their neighbors, racial disparities, and in some cases, growing investment in central cities while surrounding suburbs languish. Nonetheless, for cities to effectively influence their state governments more creative approaches to coalition building must be found.

Downloads

• Download