According to an August 2015 survey, 72 percent of Americans find drug costs unreasonable, with 83 percent believing that the federal government should be able to negotiate prices for Medicare. Recently, Acting Administrator of the Centers for Medicare and Medicaid Services (CMS) Andy Slavitt commented that spending on medicines increased 13 percent in 2014 while health care spending growth overall was only 5 percent, the highest rate of drug spending growth since 2001.

Some of the most expensive drugs are covered under Medicare’s medical benefit, Part B, because they are administered by a physician. They are often administered in hospital outpatient departments and physician offices, and most commonly used to treat conditions like cancer, rheumatoid arthritis, and macular degeneration. Between 2005 and 2014, spending on Part B drugs has increased annually by 7.7 percent, with the top 20 drugs by total amount of Medicare payments accounting for 57 percent of total Part B drug costs. While overall Part B drug spending is a small portion of Medicare drug spending, the high growth rate is a concern, especially as new expensive breakthrough cancer drugs enter the market and have a negative effect on consumers’ pockets.

Unlike Part D, the prescription drug benefit, there are fewer incentives built in to Part B for providers to consider lower cost treatments for patients even if the lower cost drug may be clinically equivalent to the more expensive drug, because prior to budget sequestration, providers received 6 percent on top of the Average Sales Price (ASP) of the drug. Larger providers and hospitals often receive discounts on these drugs as well, increasing the amount they receive directly on top of the out-of-pocket cost of the drug.

This leads to more out-of-pocket costs for the consumer, as patients usually pay 20 percent of Part B services. The Government Accountability Office (GAO) estimated that in 2013, among new drugs covered under Part B, nearly two-thirds had per beneficiary costs of over $9,000 per year, leading to out-of-pocket costs for consumers of amounts between $1,900 and $107,000 over the year. On top of these high costs, this can lead to problems with medication adherence, even for serious conditions such as cancer.

A New Payment Model

To help change these incentives and control costs, CMS has proposed a new demonstration program, which offers a few different reimbursement methods for Part B drugs. The program includes a geographically stratified design methodology to test and evaluate the different methods. One of the methods garnering a lot of attention is a proposal to lower the administration add-on payment to providers, from current 6 percent of ASP, to 2.5 percent plus a flat fee of $16.80 per administration day.

Policymakers, physician organizations, and patient advocacy organizations have voiced major concerns raising the alarm that this initiative will negatively affect patient access to vital drugs and therefore produce poorer patient outcomes. The sequester will also have a significant impact on the percentage add on, reducing it to closer to an estimated .86 percent plus the flat fee. But we believe the goals of the program and its potential to reduce costs represent an important step in the right direction. We hope the details can be further shaped by the important communities of providers and patients who will deliver and receive medical care.

Geographic Variation

Last year, we wrote a Health Affairs Blog that highlighted some of the uses and limitations of publicly available Part B physician payment data. One major use was to show the geographic variation in practice patterns and drug administration, and we particularly looked at the difference across states in Lucentis v. Avastin usage. As seen in Exhibit 1, variation in administration is wide among states, even though both are drugs used to treat the same condition, age-related macular degeneration, and were proven to have clinically similar outcomes, but the cost of Lucentis was $2,000 per dose, while Avastin was only $50 per dose.

Using the same price estimates from our previous research, which are from 2012, we found that physician reimbursement under the proposed demonstration would potentially change from $120 to $66.80 for Lucentis, and increase from $3 to $18.05 for Avastin. Under the first payment model, providers were receiving 40 times as much to administer Lucentis instead of Avastin, while under the new proposed payment model, they would only receive 3.7 times as much.

While still a formidable gap, this new policy would have decreased financial reimbursement for providers to administer Lucentis, a costly, clinically similar drug to the much cheaper Avastin. As seen in Exhibit 1, a majority of physicians prescribe Avastin, thus this policy will allow for increased reimbursement in those cases, but in states where Lucentis is prescribed in higher proportions, prescribing patterns might start to change as a result of the proposed demonstration.

Source: Author’s estimates using 2012 CMS Cost Data and Sequestration Estimates from DrugAbacus.org

The proposed demonstration program includes much more than the ASP modifications in its second phase, including:

• discounting or eliminating beneficiary copays,
• indication-based pricing that would vary payments based on the clinical effectiveness,
• reference pricing for similar drugs,
• risk-sharing agreements with drug manufacturers based on clinical outcomes of the drug, and
• creating clinical decision tools for providers to help develop best practices.

This is all at the same time that a new model in oncology care (OCM) is being launched, which could help to draw attention to total cost of care. It is important that CMS try to address rising drug costs, but also be sure to consider all relevant considerations during the comment period to fine-tune the proposal to avoid negative effects on beneficiaries’ care.

We believe CMS should consider offering a waiver for organizations already participating in Center for Medicare & Medicaid Innovation (CMMI) models like the OCM, because financial benchmarks are based on past performance and any savings recognized in the future could be artificial, attributable to this demonstration rather than to better care coordination and some of the other practice requirements that are part of the proposed OCM. Furthermore, because this demonstration sets a new research precedent and because it is mandatory in the selected study areas rather than voluntary, CMS must try to anticipate and avoid unintended consequences related to geographic stratification.

For example, it is possible to imagine organizations with multiple locations directing patients to optimal sites for their business. Also, without a control group, some findings may be unreliable. The proposed rule currently lacks much detail, and there does not seem to be enough time for organizations to evaluate the impact of the proposed rule on their operations. Having said that, it will be important for stakeholders of all types to submit comments to the proposed rule in an effort to improve the final rule prior to implementation.

The critical question for the policymakers and stakeholders is whether this model can align with the multitude of other payment model reforms — unintended consequences could mitigate all the positive outcomes that a CMMI model offers to beneficiaries. Helping beneficiaries is and should be CMS’ ultimate obligation.

      

On February 9, President Obama submitted his FY 2017 budget request to Congress. The proposed international affairs budget is down 1 percent from current funding levels and 12 percent (in constant dollars) since 2010, better than many domestic accounts. In addition, outside the regular budget, the administration is proposing $1.8 billion ($376 million from the international affairs budget account) to meet the latest pandemic—the Zika virus. Given the budget environment, the proposed amounts for the international affairs budget seem reasonable.

But from a long-term perspective, the budget is alarming. It seems unable to take account of global trends, it relies on fractured and ad hoc processes, and it is excessively siloed into pre-determined sectors.

Being satisfied with relatively small budget cuts does not face the reality of far greater and more pressing challenges today than in 2010. Today, Iraq and Afghanistan are still demanding sizable budget resources. We need to respond to Russia’s muscle-flexing by demonstrating our commitment to its independent neighbors. The effort to move HIV/AIDS to a more sustainable model is commendable but showing minimal success, so U.S. funding cannot slip. The Ebola crisis has been succeeded by the Zika virus. The Middle East is unstable and violent, with half the population of Syria killed or displaced. Sixty million displaced persons is the highest level ever reached. The world is addressing four Level 3 humanitarian crises, an unprecedented number. The fear of terrorism is spreading and disrupting rational political dialogue. Domestic violence and civil strife is increasing in Central America. Free expression is under siege in many countries and civil societies are in need of reinforcement.

Many of these challenges reflect an underinvestment in development in the past. We are using a Rube Goldberg budget system that cobbles together funding from multiple sources for a single objective and locks in funding several years before a penny flows, making it difficult to adjust to changing circumstances.

The budgeting system problem

The 2017 budget uses a gimmick that may not be sustainable. To fund the Iraq war, the Bush administration invented an off-budget account (Overseas Contingent Operations, or OCO, a successor to earlier emergency funding) that does not count against the annual budget caps. The State Department and USAID got part of their budgets starting in 2012 from this account. OCO for FY 2017 is proposed at one-quarter of the international affairs budget. The problem is that OCO cannot be counted on in the long-term, and the sustainable base budget for FY 2017 is down 30 percent from FY 2010 in constant dollars.

The budget process is also absurdly long. The Obama administration began planning the FY 2016 budget in the spring of 2014, roughly 18 months before Congressional appropriations. Typically, it could take another six months for agency officials and appropriation committees to agree on country and program allocations. Only then, 30 months later, can U.S. development professionals working overseas get on with the business of putting those resources to work.  

This budget process, with its long timeframes and pre-determined earmarks and presidential initiatives, means that despite best efforts by USAID, it is difficult to respect “local ownership” of development—something that development experience demonstrates is fundamental to successful and sustainable development.

Presidential initiatives have their place as a way to bring along political allies and the American populace. It is also appropriate and constructive for Congress to weigh in on funding priorities. But it can be counterproductive to effective development when presidential initiatives and congressional earmarks dictate at the micro level and restrict flexibility in implementation, especially in a rapidly changing world with frequent crises. 

Another problem with the current budget system is that most but not all sectors are protected by budget accounts or earmarks. Health is protected and the funding divided into various sub-accounts. Education and agriculture get earmarks. New in the FY 2016 appropriations bill is a separate line item for democracy.

Another structural issue is the crisis-reactive nature of our assistance programs. Health, which garners the lion’s share of U.S. economic assistance, has been dominated for nearly two decades by responses to global crises — first massive funding for combatting HIV/AIDS, followed by significant funding to tackle malaria, Ebola, and now the Zika virus. It is funding by individual disease. Crisis galvanizes political and popular support for the here and now. But what if we had focused on building up national health systems for the last 20 years rather than fighting one-off diseases? If we moved to more preventive approaches now, maybe in 10 or 20 years the pandemic of the day could be met less by the U.S. ramping up in a crisis mode and more by the health systems in those countries affected, with the U.S. playing a supportive and technical role rather than the core funding role. 

These issues are examples of why it is imperative for the next administration and congress to engage in a strategic dialogue on the objectives and priorities of foreign assistance programs, both in funding levels and how the funds are used. It is time to move away from the current structure that resembles building a Cadillac from parts of models stretching from 1949 to 1973, as in the Johnny Cash song "One Piece at A Time.”

Figure 1: How we build our budget

Source: Abernathyautoparts, CC BY-SA 2.5

It is not unrealistic to envisage a more strategic approach. One option is to return to the approach in the 1970s, when all development funding was put into one of just five or six functional accounts, and provide some flexibility in moving funds between accounts.

Policymakers who believe that America is an exceptional or indispensable nation and that world problems do not get solved without American involvement need to take a hard look at whether they are providing the U.S. government with the required diplomatic and development tools. It is high time for U.S. policymakers to take a more strategic approach to the level of funding of international affairs and how the U.S. uses its foreign assistance. The inauguration of a new president and Congress in 2017 offers the opportunity to seize this challenge.

      

From a distance, the finger-pointing and the hand-wringing over the seeming demise of plans to build rail to Dulles Airport make it appear that the project collapsed under its own weight.

The Dulles dust-up is not a unique disease, but rather a symptom of a much larger national transportation illness. As hard as it may be to think of a $5 billion mega-transportation project as a “microcosm” of anything, right now that is exactly how one should consider the Dulles rail controversy.

The disagreements about the planned 23-mile Metrorail line through Tysons Corner in Virginia, continuing to Dulles International Airport — stalled now due to ideological differences over the appropriate federal role in transportation — are a subset of a larger battle taking place.

Around the country, metropolitan-based civic and business leaders are constructing 21st-century visions for transit, engaging local governments in true regional decision making and leveraging private funding for infrastructure projects.

Formerly auto-centric metropolitan areas such as Los Angeles and Dallas have made transformative use of new investments in key transit corridors. Metropolitan Denver is embarking on arguably the most extensive transit expansion this nation has ever seen.

These regions have looked to transit to shape future growth, to provide more choices and to at least somewhat mitigate climate changes.

Unfortunately, most of this innovation is happening in spite of — rather than in conjunction with — the federal government.

The sad fact is that our national government takes an impeding and outmoded approach to transportation innovation, establishing starkly different rules that favor highways over transit projects.

This unlevel playing field has profound effects on metropolitan America and, by extension, on the economic competitiveness of the nation.

The federal program that funds new transit projects is totally discretionary and highly regulated by the U.S. Department of Transportation. Projects must prevail through an onerous review before final recommendation is made. Even then, each project is subject to the annual congressional appropriations process.

Clearly, some kind of competitive process is warranted. However, the current bureaucratic rigmarole is so torturous, it is no wonder that some metropolitan areas are forgoing the federal process completely and funding new transit segments on their own.

In addition, this administration’s inexplicably hostile approach to nonhighway projects has compounded the problem, resulting in shortsighted thinking that ignores the realities and challenges of the modern metropolis.

But no such federal gantlet governs highway projects. Simply put, the states do not have to seek federal permission to build them.

More inequity exists in terms of what the federal government is willing to contribute to investments.

Federal law created 50 years ago establishes 80 percent to 90 percent of the funding for highway projects. For transit investments, the contribution is much lower — just 47 percent, according to the Office of Management and Budget. The Dulles share is only 20 percent.

Finally, developers of federal transit projects must demonstrate a long-term ability to operate and maintain the facility.

Makes sense, right? It is one thing to create a project but, as the collapse of the bridge in Minneapolis underscored, maintaining it is entirely another. Yet recipients of highway dollars amazingly are not responsible for this.

All of this brings us back to the Dulles rail project. Understandably, many feel that the Department of Transportation’s lack of clear guidance and direction, astonishing miscommunication, unprecedented heavy-handedness and traditional, road-centric thinking may be too much to overcome.

Yet the hope is that cooler heads prevail. The focus now must be on making Dulles rail a negotiated success rather than a standoff failure, because too many benefits are on the line.

The project promises to transform a congested suburban corridor, contribute toward energy independence and take advantage of a unique private finance and development partnership to accommodate decades’ worth of metropolitan growth. It also will anchor Washington’s status as an international capital.

Right now, though, our outmoded transportation infrastructure, both here and around the country, is ill-served by an outmoded federal partner.

Robert Puentes is a fellow at the Brookings Institution’s Metropolitan Policy Program.

      

It's almost that time: the once-a-decade-moment when the U.S. Census Bureau tries to determine the population.

Counting more than 300 million residents is a complex and costly operation (an estimated $14 billion), but the results yield the basis for how we apportion Congress, distribute more than $400 billion in federal funds and understand basic changes to the number and geographic distribution of U.S. residents.

The largest challenge that the Census Bureau faces is ensuring everyone is counted, regardless of where they live, who they live with and perhaps most controversially, regardless of whether they are authorized to live in the United States.

Most households will receive a census form by mail in mid-March to be filled out as of Census Day, April 1. First results of state counts for redistricting purposes must be delivered by December 31. The rest of the results will be released over a period of time that ends in 2013.

Filling out a census form is mandatory by law. The 2010 Census will have 10 basic questions for each household member, but it is viewed as a burdensome task by some, because they see the questions as too personal or the process too intrusive. Others distrust what the government will do with the information or fear that it may be used against them. Some are hampered by language barriers. Still others have more than one residence.

Every decade, the Census Bureau works hard to make sure everyone is counted once and only once. And it makes an extra effort to count those who have traditionally been hard to count: racial and ethnic minorities, immigrants and the poor.

This coming census -- the largest count of the U.S. population with more immigrants and minorities than ever -- will be complicated further by the economic downturn and foreclosure crisis because many people are "doubling up" or otherwise living in temporary quarters.

The Census questionnaire asks for a count of all people who live and sleep in the household "most of the time," as of April 1, but not those who are living away at college or in the military or those who are living in a nursing home or who are in a jail, prison or detention facility. (They are counted separately from households.)

"Home" may have changed recently for those whose hardship leaves them little choice but to live with relatives or friends, however temporary that may be. "Home" for displaced residents of the Gulf Coast may be miles away from where they lived before the devastation that Hurricanes Katrina and Rita wrought in their communities.

"Home" for some immigrants is in U.S. communities even though they are not legally residing in the United States. And "home" may be in a prison or detention center in a state far away from the inmate's hometown residence.

These are the very residents that the Census will try hardest to enumerate this spring. Abutting the challenges of where to call home are the public debates surrounding them:

• Civil rights leaders, recognizing the unique context of the Gulf Coast region, are working hard to ensure an accurate local census. At the same time, other regional leaders would like to see displaced Gulf Coast residents counted where they lived before the storms.
  
  
• A coalition of African-American leaders is lobbying for inmates to be counted in their place of residence before imprisonment.
  
  
• A tug-of-war has ensued between Latino leaders on one side who are working to get an accurate count of the population regardless of legal status, and those on the other side who are advocating a census boycott by immigrants as a way to put pressure on Congress to move forward with federal immigration reform.
  
  
• A recent amendment introduced in the Senate would have delayed the implementation and hiked up the cost of the Census, had it passed. In an attempt to exclude the unauthorized population from the official count for congressional apportionment purposes, it would have required questions on citizenship and immigration status for each respondent. That data is not collected to encourage participation in the census. The senators missed the deadline by two years to make a change of that order of magnitude.

Given the demands and challenges, it is vital that we bear in mind the importance of achieving an accurate count and the economic, political and policy implications if we fail.

• Understanding our changing population: State and local data on age, race and ethnicity, household size and composition help communities with projections for school enrollment, housing, transportation and health care. Businesses use Census data for decisions about where to locate and for marketing purposes. Information from the census is used to prepare for emergency services, research changes and advocate for various causes.
  
  
• Distributing federal dollars geographically: More than $400 billion a year is at stake, federal funds that go to states and localities to build schools, hospitals, highways and fund programs such as Medicaid.
  
  
• Apportioning Congress: The redistricting and apportionment of Congressional seats is contingent on census results. This is the primary purpose of the Census as written into the U.S. Constitution. States and localities also use the data to redistrict; therefore it is in every state's interest to be accurately represented based on their residents.

One debate that has been resolved: Census 2010 will not use statistical sampling, as many Republican leaders have feared. Sampling has been proposed as one way to mitigate the undercount of minority populations, the majority of whom are assumed to vote Democratic. The U.S. Bureau of the Census does use sampling in its annual American Community Survey that collects more detailed data, including social, economic, and demographic characteristics.

The political and equity arguments will continue to surface as we head into Census 2010. Public officials, advocacy groups, and community organizations will need to work together with census officials to get the most out of what will be a difficult enumeration, but one that sets the stage for the next decade.

      

If you live in a city or suburb, chances are your regional government has tried to get your attention. Did you notice? Many of the issues your regional government is grappling with are actually important to you: the quality of the air you breathe, the quality of public transportation, the availability of green open space, and more.

As important as these issues are, I can almost guarantee that planners from your region have had to work extra hard to convince the press -- not to mention the citizens that live and work there -- to pay attention. The problem is, regional planning is about as exciting to the public as televised bowling and the press don’t seem to find the topic as newsworthy as it should be.

And then there is Paris. In one year, approximately a hundred articles and editorials on Grand Paris, a new regional effort, were printed in the city’s main paper, Le Monde. Grand Paris has also been covered by UK newspapers, such as the Telegraph and The Guardian, and by US newspapers, such as The New York Times and The Christian Science Monitor. In my interviews with Parisian architects, economists, and sociologists, they tell me that it’s not only the press that is paying attention. Ordinary citizens on the streets and cafes are talking about Grand Paris and Paris as a region.

So what happened?

Turns out, President Sarkozy created a political and media frenzy this past year when he announced his intention to design a new Paris that incorporates the suburbs. Looking at his effort from a socio-economic perspective, Sarkozy should be lauded for his effort to reconnect the isolated suburbs to the economic heart of Paris. The 2005 riots by African immigrants in some of these suburbs gave the world a real peek into some of the inequities found here.

His push has been to look past local political boundaries and acknowledge the new Paris that is emerging -- one that is both larger in geography and socio-economically more diverse. In 2007, the metropolitan area produced more than a quarter of France’s GDP, with a Gross Metropolitan Product of $731.3 billion.

Yet, his national government cites that Paris is underdeveloped in important sectors, and that the region’s economic growth has been slowing over the past two decades. Sarkozy also saw this as an opportunity to redefine the region in a post-Kyoto era, where sustainable development is no longer an afterthought.

Sarkozy retained 10 architectural teams with heavy hitters, such as Richard Rodgers, and asked them to “think big” on how to physically redefine the Paris region. In response, they offered lofty ideas for new economic centers, new high density housing hubs, and even a Paris covered with green roofs. For a moment, one could even argue that these teams breathed a new life of possibility for Paris. 

But politics is local—even when the French President is involved. 

As it turns out, Paris already has a plan for their region; one that was formally approved by the local jurisdictions and leaders and is now simply waiting for sign off by Sarkozy’s government. This plan addresses many of the issues Sarkozy argues that the region lacks, such as the need to address the 20 years of underinvestment in public infrastructure.

It also turns out that Grand Paris flies directly in the face of the regional coalition building effort under way. An important number of leaders that comprise the region’s 1,231 jurisdictions are already forging a common agenda on cross cutting issues such as transportation and economic development. These are just two of the several missteps that have made the idea turn sour.

So what seems to have started as a visionary act to physically remake the region has turned into a story on jurisdictional entanglements and hurt egos -- and the press ate it up. Interestingly, this controversy and all the press it generated has actually been an important win for regionalism in the end.

      

On April 2, 2011, Ethiopia embarked upon the construction of what is expected to be the biggest hydroelectric power plant in Africa.  Called the Grand Ethiopian Renaissance Dam (GERD), it will be located on the Blue Nile, 40 kilometers (25 miles) from the border with the Republic of Sudan and will have the capacity to produce 6,000 megawatts of electricity.  The GERD, once completed and made operational, is expected to ameliorate chronic domestic energy shortages, help the country’s households (especially those located in the rural areas) switch to cleaner forms of energy and allow the government to earn foreign exchange through the exportation of electricity to other countries in the region.  Although authorities in Addis Ababa believe that the dam will contribute  significantly to economic growth and development—not just in Ethiopia, but also in neighboring countries, such as Sudan—its construction has been very controversial.  The major controversies revolve around Ethiopia’s decision to fund the building of the dam from its own sources and the potential impacts of the dam on downstream countries, especially Egypt.  

Ethiopia opted to source funds for the construction of the GERD through selling bonds to citizens at home and abroad.  Government employees have been encouraged to devote as much as one or two months of their salaries to the purchasing of the GERD bonds.  Most public workers in Ethiopia earn relatively low wages and face a significantly high cost of living.  Hence, they are not likely to be able to sacrifice that much of their salaries to invest in this national project.  Nevertheless, many of them have been observed purchasing the GERD bonds, primarily because of pressure from the government and the belief that participation in this national project is a show of one’s patriotism.

The government of Ethiopia has also encouraged the private sector to invest in the GERD project.  Specifically, private domestic banks and other business enterprises are expected to purchase millions of Birr worth of these bonds.  The government also hopes that Ethiopians in the diaspora will contribute significantly to this massive effort to develop the country’s hydroelectric power resources.  However, many Ethiopians in the diaspora have not been willing to invest in the GERD project, citing pervasive corruption in the public sector and dictatorial government policies as reasons why they would not commit the resources necessary to move the project forward.  Additionally, Ethiopians living outside the country have argued that the present government in Addis Ababa continues to impede the country’s transition to democracy by making it virtually impossible for opposition parties to operate, using draconian laws (e.g., anti-terrorism laws) to silence legitimate protests and generally denying citizens the right to express themselves.  For these reasons, many of them have refused to invest in the GERD project.  Finally, Ethiopia’s traditional development partners, including such international organizations as the World Bank and the International Monetary Fund, appear to be unwilling to lend the country the necessary funds for the construction of the dam given the controversies surrounding the dam and their policies on the building of megadams.

Egypt has registered its opposition to the construction of the GERD.  In fact, before he was ousted, former Egyptian president Mohamed Morsi made it known to authorities in Addis Ababa that Egypt would not support the project.  The Egyptians, as they have done before, have invoked the Anglo-Egyptian Treaty of 1929, which granted Egypt veto power over all construction projects on the Nile River and its tributaries.  According to Cairo, then, Ethiopia was supposed to obtain permission from Egypt before embarking on the GERD project.

In May 2010, five upstream riparian states (Ethiopia, Kenya, Uganda, Rwanda and Tanzania) signed the Nile Basin Cooperative Framework Agreement (CFA), which, they argue, would provide the mechanism for the equitable and fair use of Nile River waters.  On June 13, 2013, the Ethiopian Parliament ratified the CFA and incorporated it into domestic law.  The other four signatories have not yet ratified the treaty but plan to do so eventually.  Egypt and Sudan, however, have refused to sign the CFA and continue to argue that the 1929 Anglo-Egyptian Treaty, as well as the 1959 bilateral agreement between Egypt and Sudan, represent the only legal mechanisms for Nile River governance.  Recently, however, the government of Sudan has indicated its support for the GERD, and South Sudan, which gained its independence from Khartoum on July 9, 2011, does not oppose the project either.

Significant increases in population in Egypt, the need for the country to expand its irrigated agricultural base, as well as other industrial needs have significantly increased the country’s demand for water.  Unfortunately for Egyptians, the only viable source of water in the country is the Nile River.  Thus, Egyptians, as made clear by their leaders, are not willing to relinquish even one drop of water.  The country’s bitter opposition to the GERD stems from the fact that it will reduce the flow of water into the Nile River and force Egyptians to live with less water than now.  Egyptian leaders are not willing to accept the assertion made by the Ethiopian government that the construction of the dam will not significantly reduce the flow of water from the Blue Nile into Egypt.  Thus, Cairo has hinted that it would employ all means available to stop the construction of the GERD.

The site of the GERD was identified during geological surveys conducted between 1956 and 1964 by the United States Bureau of Reclamation.  Although studies determining the feasibility of a dam on the Blue Nile were completed almost half a century ago, previous Ethiopian governments did not make any attempt to build such a structure on the Blue Nile.  This inaction may have been due to Egypt’s ability to lobby the international donor community and prevent it from providing Addis Ababa with the necessary financial resources to complete the project, Ethiopia’s chronic internal political instability, or Egypt’s military strength and its strong ties with neighboring Sudan (the latter shares the same interests as Egypt regarding the waters of the Nile River).  In fact, the 1929 Anglo-Egyptian Treaty and the 1959 bilateral agreement between Sudan and Egypt granted both countries complete control of all the waters of the Nile River.

Since the ouster of Hosni Mubarak, Egypt has been weakened significantly, politically, economically and militarily.  The struggle between the military and civil society for control of the government has been a major distraction to the Egyptian military, and it is unlikely that it can effectively face a relatively strong and more assertive Ethiopian military.  Hence, it appears that this might be the most opportune time for Ethiopia to initiate such a construction project.  Perhaps more important is the fact that virtually all of the upstream riparian states are no longer willing to allow both Egypt and Sudan to continue to monopolize the waters of the Nile River.  In addition, Ethiopia is relatively at peace and maintains good relations with its neighbors, particularly the Republic of Sudan, which would be critical in any successful attack on Ethiopia by Egypt.  Of course, Addis Ababa has also invoked and relied on the Cooperative Framework Agreement which, besides Ethiopia, has been signed by four other upstream riparian States—the CFA favors the equitable and fair use of the waters of the Nile River.  Authorities in Addis Ababa believe that the GERD will contribute to such fair and equitable use; after all, the Blue Nile (which is located in Ethiopia) provides 86 percent of the water that flows into the Nile River.  Up to this point, Ethiopia has made virtually no use of that water, allowing Egypt and Sudan alone to dictate its usage.

Critics of the GERD, including some Ethiopians within and outside the country, argue that Addis Ababa initiated the building of the dam just to divert public attention away from internal political tensions associated with lack of religious freedom, human rights violations, suppression of the press, and the economic and political polarization that has become pervasive throughout the country during the last several decades. 

Given the economic significance of the Blue Nile for the source country (Ethiopia) and downstream countries (Egypt and Sudan), it is critical that these countries engage in constructive dialogue to find a mutually beneficial solution for the project.  Such negotiations should take into consideration the fact that the status quo, characterized by Egyptian monopolization of the waters of the Nile River and the exclusion of Ethiopia from exploiting its own water resources for its development, cannot be maintained.  Thus, the construction of the GERD should be taken as a given and the three countries—Egypt, Sudan and Ethiopia—should find ways to maximize the benefits of the dam and minimize its negative impacts on the downstream countries.  As part of that negotiation, both Egypt and Sudan should abandon their opposition to the CFA, sign it and encourage their legislatures to ratify it.  The Nile River and its tributaries should be considered common property belonging to all Nile River Basin communities and should be managed from that perspective.