OIC conference: Arab and Muslim aid in Africa

The 57-nation Organization of Islamic Conference got underway Thursday, March 13, in Dakar and the conferees’ first order of business is to find a path to reduce poverty and attempt to reduce the divide between the rich and poor in their countries.

“What is important here is that [the 57 member states of] the OIC are amongst the richest and the poorest in the world,” said Senegalese Foreign Affairs Minister Cheikh Tidiane Gadio, according to a story by IRIN.

Tidiane Gadio explained that conferees won’t be looking for different ways to send charity – zakat – to poorer states, but want to create a new mechanism which Islamic states can donate to other countries. Presently, the OIC-sponsored anti-poverty fund first announced in May 2007 has only $2.6 billion of its $10 billion target.

Emphasis on Africa?
One reason for holding this summit in Senegal is to hope to put an emphasis on African development. “The holding of this summit in Senegal must be remembered as a landmark for [when Islamic countries started seriously getting involved in] Africa, just as the summit held in Malaysia [in October 2003] was a landmark for Asia,” he told IRIN.

In many ways, aid from Arab states resembles larger Western-country aid where a complex system of national and international agencies has been set up to disburse and oversee the assistance. One could make the argument that Arab aid – or Muslim world aid – is a largely parallel structure of Western aid, especially when taking into account multilateral aid from the World Bank and International Monetary Fund. (Although the major Arab donors are members of Bretton Woods institutions.)

Bilateral loans make up the bulk of aid from the Gulf States, which often come at the detriment of the both Western and Arab-based multilaterals and regional aid institutions. A large share of these bilateral loans is channeled to other Arab countries, according to a study from the Chr. Michelsen Institute in Bergen, Norway. Yet the funds to Arab states – mostly Egypt, Morocco and Syria – have recently been dropping in proportion to other states like Sudan, Bangladesh and Pakistan.

Up until 2005, only 15.5 percent of Arab financial aid went to sub-Saharan Africa, while Asia received 23 percent. The countries of Senegal, Mali and Guinea have received a greater share than other African states south of the Sahara. This is the opposite for Western Countries, which spread aid more thoroughly around the continent.

The largest three Gulf State lenders – Saudi Arabia, Kuwait and United Arab Emirates – primarily disburse funds through the states’ finance ministries, making them the most important aid institutions in the region. On the other hand, the Muslim world’s smaller donors like Libya, Algeria and Qatar do not have national aid offices. They prefer to channel money through multilateral groups. It should be noted that Saudi – by far the Gulf State’s most benevolent donor – and Kuwait are among the nations that give the most Official Development Assistance in the world.

A Common Word Between Us and You
While Western government donors may trumpet good governance and economic conditionality as a precondition to receiving aid, the Arab states, like the Chinese, are not very interested in a recipient’s governmental or economic affairs. However, Arab donors do focus on corruption, perhaps as a way to increase efficacy of their investments (and boost the chance the recipient country will pay them back). It should be noted that recipient countries who receive harsh conditions from multilateral lenders like the World Bank have often turned to the Arab world for money.

The Arab countries have also created multilateral organizations to increase the flow of money, like the Arab Fund or the Islamic Development Bank, which can only lend to OIC members. Like the World Bank, these multilaterals lenders have been criticized in the past for a lack of transparency, but (like the World Bank) have moved to make their decisions and work more open to the public. (The finance ministries of Saudi Arabia, Kuwait and U.A.E. have been tightlipped about the amount of aid and donors.)

Finally, like Western-style aid, Arab donors are interested in supporting their own commercial interests, especially as the Arab world has developed a larger manufacturing base.

The prospectus
The underlying issue with Arab benevolence is its volatility, which often follows the ebbs and flows of the world price of oil.

Another aspect of Arab aid is its emphasis on infrastructure like transport, energy and telecommunications, according to a story (from 1979) on Saudi Aramco World magazine. In more developed countries, investors search for businesses ties or the chance to build factories. In countries where infrastructure is poor, Arab states try to steer away from more Western-style “prestige projects,” instead focusing on practical ventures that help the countries develop themselves.

Examples of these projects include building airport terminals (in hopes of increasing tourist trade) in Lesotho, or Gambia, Guinea-Bissau and Tunisia. Dams are also popular, like hydroelectric projects in Cameroon and Ghana and a dam in Mali. Roads have been built in Rwanda, Senegal, Somalia and the Congo. The Kuwaitis built a sugar factor in Tanzania.

Looking at the list, and pointed out in a study by Eric Neumayer published in World Economy, is that in sub-Saharan Africa, Arab states tend to focus on middle-income countries, rather than spending a lot on the very poorest countries. (Niger is a classic example.) However, one complaint about Arab aid is that it doesn’t do much to alleviate poverty, which is a current a cause célèbre (literally) in the West. In fact, stand-alone social projects were pretty much ignored by Arab philanthropists until about a decade ago.

Politics, aid and competence in post-war Sierra Leone

A story from the Concord Times in Freetown (via AllAfrica.com) reports that UNICEF, the World Food Program and the Government of Sierra Leone recently signed a $100 million three-year plan of assistance.

The story quotes UNICEF representative, Geert Cappelaere: "I am particularly happy and proud to witness this joint signing ceremony of Country Programme Action Plans (CPAP) by UN agencies with the government of Sierra Leone. It is a clear demonstration that children are indeed central to the national development agenda. If we are truly committed to addressing the millennium development goals and making a difference in this country, there is definitely the need for stronger partnerships among development partners including the UN system."

The question I always have with these announcements is: will this money be well spent? Perhaps, but the prospects are somewhat dim, according to a recent report from the European Network on Debt and Development, EURODAD, and the Campaign for Good Governance from Freetown. The reason? Aid in Sierra Leone seems neither efficient nor effective and pretty much ad-hoc.

First things first
Sierra Leone is clearly dependent on aid. Cue inspirational music. Rising like a phoenix from the smoky ruins of a bloody 10-year civil war, the government of Sierra Leone has done what it can: presiding over a relatively free and fair election in 2007; continued work on the shattered infrastructure; cleaning out of decades of poor governance and mismanagement.

Now, cue somber music. While the country has undoubtedly become more stable, seven out of 10 people still live on less than a dollar a day. It’s an aid dependency, this country. The government takes in only 57 cents on every dollar budgeted, forcing the international community to come up with the rest for the government to even exist.

Poor conditions aside, the track record of aid and development remains spotty in Sierra Leone. Some of the problems are common shortfalls of aid and development everywhere. How does one tackle the age-old question of priorities: How much more important is it to build government capacity (while at the same time trying to decentralize its institutions) than providing basic needs to the population?

Other common problems persist on ground: Schools get built, but no one is qualified to teach in them. Somebody pays to construct clinics, but they lack medicine and health care professionals.

The war against common sense
Yet some problems seem inherent (or even worse) in Sierra Leone than elsewhere. Donors are currently implementing 265 different aid projects, but most of them are currently unknown to the government, which has a hard time collecting information on competing aid projects. Parallel governance structures seem to spring up everywhere, like the decentralization secretariat (funded primarily by the World Bank), the HIV/AIDS secretariat and Governance Reform Secretariat (funded through Dfid), “as a way of donors pushing their priorities whilst bypassing government structures they do not trust,” the authors note.

At least a quarter of the government’s budget comes from major donors providing direct budget support, which supposedly reduces reliance on these parallel systems. (See our short debate on budget support). One problem, the authors argue, is that this support comes with many a string attached, meaning the government must perform difficult tasks, such as distributing certain amount of bed nets or conducting major civil service reform before it receives any funds. These conditions are a common aid practice, but sometimes they are so onerous, everyone else in the developing world ignores them. For example, the report sites the fight between some donors and the government over the idea of how the government procurement office should work, which Bretton Woods institutions would like all governments to open up to bidding by international firms, a move being resisted everywhere. Because of the fragile nature of Sierra Leone, any suspected conflict with one of its “major partners” puts necessary programs at risk.

Project ownership is another issue. Because national governments have been distrustful in the past, international aid organizations have simply learned to bypass them, fostering an attitude of go-it-alone.

From the report:

Donors are struggling in Sierra Leone to respect the commitments they have made under the Paris Declara­tion on Aid Effectiveness, particularly around “ownership” and the need to relinquish control over allocation of aid resources and the policy agenda. A chicken and egg situation exists with the prevalent lack of trust between the government and the donors and donors’ continued practice of heavily conditioning their aid, setting up parallel project units to control their aid and trying to mould policy-making.

The continuing isolation of citizens and civil society from aid distribution policies is another major problem. (And a pet issue of EURODAD). A fine example: The closed-door negotiations between government ministries and major donors. Perhaps more tellingly, members of civil society were not invited to a discussion regarding the $13.9 million Education for All – Fast Track Initiative.

While a definite lack of transparency exists at the government level, donors are also to blame. Oftentimes they do not provide the public with timely information regarding their work in the field. Report requests from government agencies supposedly overseeing aid are sometimes ignored. NGOs often don’t understand the realities of power on the ground, and local citizens (and groups) are often unable to change the direction of unfeasible or unrealistic projects.

The authors’ underlying argument is this: A more informed citizenry will demand stronger responses to their problems from both development organizations and the government. Perhaps these groups are unwilling to give citizens a decision-making role; or, perhaps they just simply don’t have the capacity themselves to bring other people on board.

Finally, the checks aren’t arriving on time. In 2007, the government received a whopping $26 million less from donors than it had budgeted for, a total that is a few million short of the complete USAID budget for Sierra Leone. The minister of finance complained that these ghost funds were his largest worry because on a daily basis, he does not know how much the government can spend.

If you can’t anything nice…
Even in the most functioning of countries, getting aid to work right is a difficult task. But in Sierra Leone, it must be extremely difficult task. I am somewhat of a cynic, so I am likely find blame in both parties – crooked, incompetent governments and development organizations who care more about selling pretty calendars than poverty reduction and building capacity. Anyway, after reading this report, one finds that both sides appear extremely serious about turning Sierra Leone around. It’s a doubly hard task when the need is so great. However, the country suffers from the nexus of extremely high demand and, as the title points out, a culture where old habits die hard. Thinking outside the box sure has turned into a cliché. But somewhere down the road, it would be nice to find a better way. Here’s hoping they get it figured out.

Development styles: Does general budget support trump project aid?

An official review of Dutch aid to Africa found that money and aid programs are not often reaching the poorest on the continent. The study uncovered two reasons for this: The controversial program of loaning money so governments can purchase Dutch exports and the problems of giving money directly to governments with little oversight.

From Radio Netherlands Worldwide:

The Netherlands gave almost six billion euros to Africa between 1998 and 2006. But that money didn't always go to help those in the most desperate need, concludes the Inspectorate (IOB) of the Ministry of Foreign Affairs. For example, in this period about one billion euros - a sixth of the budget for Africa - was cancelled from the debts of such countries as Congo and Nigeria.

Frans Bieckmann, Editor-in-Chief of The Broker, a magazine about development cooperation, finds this a nasty business.

"It's a very complicated story, but what it comes down to is that a billion euros have been used for the financing of exports from Dutch business. And the big question is whether the poorest have received any benefits. I doubt that very much, especially if it's countries like Nigeria and Congo."

In some African countries, debts exist because the importers couldn't pay the bills for Dutch products. The debts should really be paid by the Minister of Finance and not through development cooperation, deems the Inspectorate.

A further question is how far the poor have profited from the radical changes that have been made to Dutch aid for Africa in recent years. For example, the Netherlands has introduced a system of general budget support. Governments that fulfill certain conditions can get a sack of money that can be spent according to their own wishes. The idea is to give them more say in the aid.

In principle, budget support is a great instrument for the fight against poverty, thinks Paul Hoebink, a development specialist at the University of Nijmegen. But if it's given to the wrong countries, the poor don't get sufficient benefits:

"If you give this sort of support, you have to be sure the country is well governed. There are examples of countries where this clearly isn't the case. For example, Uganda received budget support while the country was carrying out raids into Congo. Human rights were also abused. Those sorts of things should be reason enough to give those countries less."

Here, take my money
There was a time that whenever I heard the term “general budget support,” I instinctively reached for my revolver. As a method of development, handing over sacks of money directly to governments sounds just a tad more efficient than flying over the ocean and throwing the money out the window.

However, I found this attitude can be shortsighted. General budget support can work, if done correctly. In some cases, it works better than money earmarked to a specific project.

To generalize, an IMF study found that general budget support is preferable when the amount is relatively small compared to the resources of the recipient government; conversely, project support works best when the project – and expenditures – is quite large. The reasons are manifold, but singular project aid often gives full power to the donor, who decides which organizations will carry out the work, where the work will take place, etc. Thus, the recipient government has very little “ownership” of the program and will most likely not lend a hand if the project falters. This has lead to the idea that donors and recipients are partners in aid, brushing over the inherent unequal relationship between the two parties. Project aid also does work when the governments are not very committed in carrying out aid of any type.

On the other hand, when governments are handed money on the condition they complete a project, say building schools, it is the various ministries who make major decisions: Where the schools go, who will build them and who will be ultimately responsible for them. This ownership helps to insure the project is completed and builds capacity (a nice buzzword) for large project oversight. States may also make the decision to divert funds from elsewhere to help expand this project. Secondly, and very importantly, when the donor has near complete control, they have less room to negotiate with the government regarding this project or future endeavors. This is rooted in the fact that for the project to work, both the government and the donor must have similar objectives in mind. (I would also argue that the local population’s objectives be taken into account, also.) Because of the conservations and planning involved at the outset, general budget support is one way to ensure goals are harmonized.

A study by OECD found that general budget support, when working well, is more efficient, thus less expensive than project support. That’s because well run governments often use the money to realize the things they do best, for example building water systems or schools. Budget support also works well when the issue at hand crosses multiple sectors, like AIDS.

At the bottom of this debate, of course, is the fear of diverted aid flows. The cynics in us will say that a government will either divert some of the funds to Swiss Bank accounts or houses in the south of France. Or, more subtly, the government will decide to build the schools in the president’s village or region, thus awarding political allies. The underlying use of aid donors is to create a system of checks and balances in the recipient country so regular people can help guide governmental decisions. (However, the OECD study admitted that budget assistance had no discernible effect on the empowerment of the poor.)

Another issue is monitoring. Who should do the testing – and what outcomes they should observe to insure the project is a success – has long been debated. Sometimes donors are stuck in the corner of monitoring “observable” policy measures only, perhaps even earmarking a large share of funds towards these. This is often problematic. Take the example of monitoring the number of children attending new schools, but not the quality of their education due to a different student-teacher ratio.

There’s another overriding factor: the question whether aid is completely altruistic. The IMF researchers admit that outside strategic and political issues sometimes factor into a governmental decisions. I would also add that outside factors influence the decision of development agencies. Some agencies are forced to obey certain political realities of their home country, like taking part in controversial projects like monetization. There is also the fact that some country directors are bent on empire building and scope creep. And finally, there’s the obvious need of finding a use for all those shiny white 4x4s.

Victoria's Secret, improving women's living standards everywhere, purchases organic cotton from Burkina Faso

File this under: Just in time for Valentine's Day.

From Agence France Presse:

The famed US women's wear chain Victoria's Secret last July signed a deal for the delivery this year of 600 tonnes of organic cotton, with the first shipment sent out on December 24.

"They came to us, wanting biological cotton for women's lingerie," recalled Athanase Yara of Burkina Faso's national union of cotton producers, the UNPCB.

He said the arrangement would contribute to "sustained (economic) development."

"It enables women to improve their standard of living, to care for and educate their children. They (the women) are among the most vulnerable segments of the population."

More than half the producers of organically grown cotton in Burkina Faso are women, according to Georg Felber, local coordinator of a cotton project sponsored by Helvetas, a Swiss association promoting international cooperation.

"This is not a fluke or a fad but a genuine trend followed by the big companies."

It is not known whether cheesy Victoria’s Secret catalogs would be made by paper from cotton fiber.

The story points out that organic cotton output in Burkina Faso has increased nearly 10-fold in three seasons since farmers produced 350 tons of it in 2006.

Follow the money: How does Kenya earn so much foreign aid?

What to do with Kenya? In an attempt to force the legally questionable Mwai Kibaki government to the negotiation table, opposition leader Raila Odinga called for donor countries to withhold the country’s foreign aid. The European Parliament followed suit, unanimously adopting a non-binding resolution that called for the government to suspend its five-year €400 million aid package.

There are development cynics who argue that canceling these funds would be the best thing that ever happened to Kenya.

Foreign aid has always been the problem, argues Kenyan economist James Shikwati. In a 2005 interview with Spiegel, he called for donor nations to stop giving aid:

SPIEGEL: Stop? The industrialized nations of the West want to eliminate hunger and poverty.

Shikwati: Such intentions have been damaging our continent for the past 40 years. If the industrial nations really want to help the Africans, they should finally terminate this awful aid. The countries that have collected the most development aid are also the ones that are in the worst shape. Despite the billions that have poured in to Africa, the continent remains poor.

With this, he has a point. According to a little hand book from Economist called A Pocket World in Figures, Nigeria receives $6.4 billion in bilateral and multilateral aid, the second highest amount in the world (but three times less than first-place Iraq). Ethiopia, the world’s fifth leading beneficiary and Africa’s second, receives $1.9 billion. Sudan ranks next, as the world’s seventh highest, at $1.8 billion, right ahead of Congo-Kinshasa. A few “prosperous” Asian countries – China, India and then less well-to-do Pakistan – follow before Tanzania ($1.5 billion), Congo ($1.4 billion), Mozambique ($1.2 billion) and Uganda ($1.19).

Kenya itself lies at the world’s 24^th largest aid recipient at $768 million.

Vote with money
This brings up an interesting point. Most of these African countries are admittedly more “politically important” than their neighbors, but a good portion of them are also relatively more prosperous. Yes, Congo-Kinshasa, Ethiopia and Mozambique score poorly on human development scale, but Sudan, Congo, Tanzania, Nigeria, Uganda and Kenya are all considered Middle Income Countries. (OK, Tanzania and Nigeria are not, but they are close and both represent labor magnets in their regions.)

The world’s poorest countries – Sierra Leone, Burkina Faso, Mali, Niger – all fall well below Kenya in the amount of aid they receive. The money headed towards West Africa is more important, however. Aid for these countries languishing at the bottom of the Human Development Index comprises a greater part of government revenues. (In Niger’s case, the U.S. State dept. estimates aid makes up 40 percent of government spending.)

Aid and development budgets show how donors weigh each country’s significance. The fact that Kenya receives more money says something about its perceived “importance” and the fact it is viewed as a “strategic ally” that has long been hailed as the future of Africa. No matter how bloody its past.

But increased aid budgets targeting this set of countries may say something about the real cost of development. Perhaps raising the standard of living in a medium income country like Kenya is more expensive than increasing human development in statistically lowly Burkina Faso.

Population may play a part – Kenya’s 36 million people far outweighs Burkina’s 13 million. Certainly Kenya is richer on paper than Burkina Faso. Its people are educated. The country benefits from more developed manufacturing and agricultural sectors, and it receives an ungodly amount of foreign currency from its tourist industry. Yet, a large share of Kenyans barely scrape buy.

Donors must calculate the cost to raise the income of this entrenched poor. A better question may be how does one raise the standard of living? Do you target the business class and pray jobs trickle down to Kenya’s poor? (One could do this through better roads, which apparently are awful, or by improving infrastructure.) Or, do you tackle the healthcare and education and sanitation needs of this underclass directly? (Someone suggested the European Union would better spend its money by giving each Kenyan €10 million over then next five years.)

Skikwati, and others like him, have long argued that trade and foreign investment are the only methods that will help countries like Kenya boost its standard of living. As the country remains politically unstable, however, these business prospects dampen. This crisis will most likely delay investment in Kenya by up to a year, predicted the head of the Corporate Council on Africa in the East African. And failure to staunch the bloodshed soon "could kill new investment in Kenya altogether," he warned.

Wards of the state?
Because all arguments lead back to Burkina Faso, let’s talk about aid to the Sahel. A friend who runs a large development organization elsewhere wondered aloud whether governments like Burkina Faso, Mali and Niger would always be too poor and too undeveloped to appropriately care for their own people. Populations in the Sahel are increasing and fertile land is decreasing. This makes it nearly impossible to sustain poverty-defeating economic growth. Will aid always be necessary for these governments to function?

Perhaps it is the goal of aid donors to target countries that stand a better chance of success. Hedge your bets and go with the sure thing. If places like Kenya can get its political house in order, perhaps it can be an oasis of wealth neighboring countries can benefit from. Jobs created. Regional trade increased. Investment possibilities. Providing examples to other governments. (Open speculation: Isn’t this how development has worked in South America and Asia?)

Of course, aid skeptics would say you are throwing money down a hole. Kenya has never been that well run. Better governed countries, however, like Mozambique or Tanzania may prove this theory true.

Boring personal anecdote: In the early 1990s, I spent two years in the former Czechoslovakia. When I returned to Slovakia in 2004, I was astounded at the level of development that had taken place throughout the country since I left a decade before. I could point out a lot of reasons for this new prosperity: education levels, a good infrastructure, blah, blah. I had already been living in Ouagadougou for a few years when I took that trip, and I quickly understood that Burkina may be relatively better developed if it only counted Austria as a neighbor.

Anxiety and transition: Q & A with Robert Zoellick of the World Bank

World Bank President Robert Zoellick sat in for a round of questions from the readers of Daniel Altman’s Managing Globalization Blog in the International Herald Tribune.

Some highlights.

Q. The short term benefits of writing off the African debt having been fizzled out by ever-higher energy prices, what cards does Mr. Zoellick have on the table on capacity-building in Africa?

Richard Mufumbya
Tanzania

…The resources to help all African countries can come from local savings, international aid and private investors, both domestic and foreign.

The World Bank Group recently wrapped up the 15th replenishment of our fund for the poorest countries, the International Development Association (IDA). With a big effort and support from 45 donor countries, we have been able to mobilize $41.6 billion for the next three years (that is a record and a 30 percent increase over the previous replenishment). About half of the IDA countries are in Africa; our allocations to them are based on a formula donors have developed to blend assessments of both need and effectiveness.

In particular, the IDA 15 replenishment gives the World Bank Group more leverage to respond more quickly and more decisively to fragile situations. In addition, the International Finance Corporation (IFC), the private sector arm of the World Bank Group, is increasing its work in Africa and the poorest countries, including with innovative efforts for infrastructure, energy, agribusiness, health care, and trade finance.

Additional resources alone are not enough. We need to customize our work with each country, based on its particular needs. It is also vital that the government has “ownership” of the effort. Working with government partners, we bring expertise and help develop local capacity. For example, we want to support countries to develop capacity to expand the productivity of agriculture and food production. We can help share experience of good natural resource management. We work with countries to put in place sound debt management capacities.

In sum, Africa faces some good prospects and certainly deserves the effort and assistance of its partners around the world. Each country faces unique challenges. And too many are suffering from strife and dangers of weak governance. To help most effectively, we need to encourage the building of local capacity, solutions, responsibility and accountability.

Q. I live in a country with dire discrepancies across its territory in terms of infrastructure, access to water, energy and health care. Can you elaborate on the World Bank experience in assisting governments and leaders that you think display a blatant lack of strategy, let alone vision? And if it is the policy of the World Bank to deal only with government and not criticize them, can you say it is a viable credible institution in a networked economy?

El Aid El Othmani Nabil
Morocco

A. Nabil, this is an excellent question. It highlights both the possibilities and limits facing the World Bank Group. Under our international legal charter, the WBG works with governments and is owned by governments. Unless governments have ownership of reforms and projects supported by the Bank, they will not implement them effectively.

Yet we can also work with the private sector. The WBG’s private sector arm, the International Finance Corporation (IFC), provides equity and loan financing, as well as technical assistance to private investors in our client countries. The IFC is also working with the International Bank for Reconstruction and Development and the International Development Association (the public sector parts of the World Bank Group) to develop public private partnerships in areas ranging from infrastructure and energy to health care and microfinance.

Perhaps the best way to consider how the WBG can help is to see it as offering three complementary services: (i) providing learning and knowledge based on experience from around the globe (a “brain trust” of development experience); (ii) based on this learning, we help develop markets and support institutions so the benefits of the work will extend beyond individual projects; and (iii) providing finance to spur these activities. We customize the mix of these services according to countries’ individual situations and preferences.

We need a constructive two-way dialogue with our partners. We provide advice based on our global experience, testing and technical reviews. But we also need to listen to views from governments and citizens in client countries, so we learn their priorities, constraints and experiences.

We do speak up when we have concerns or perceive mistakes or things going wrong. Yet, to be effective, we need to try to work with countries as partners while being candid and sharing concerns, especially where we see problems of poor governance or corruption. At some point, we may need to revisit our engagement with a particular government or in some sectors of a particular country. We try, however, to consider ways to keep helping the poor and disadvantaged, or position ourselves to do so in the future, so as not to add to their sufferings.

Q. Economist and columnist Paul Krugman has recently opined that trade between rich nations has little malign effect on job displacement, but trade between rich and poor nations does result in malign effects. What do you think?

James Geiger
United States

A. My recollection of Paul Krugman’s point is somewhat different: I believe he said that reduced trade barriers (and subsidies) between developed and poor countries offer opportunities for the people of poor countries. Lots of studies and data support this finding, and many developing countries have used trade to grow and overcome poverty. Furthermore, there are rapidly increasing possibilities for mutual gains through “South-South” trade among developing countries.

In many cases, barriers to trade are designed to protect favored oligopolies and oligarchies. They increase costs for consumers and businesses seeking to compete.

I believe that openness to goods, investments, ideas and even people helps countries maintain a competitive edge, build economic strength, create opportunities and protect liberties.

You may be referring to Professor Krugman’s point that reducing trade barriers may require much better support for workers in developed countries who lose jobs, whether due to technology, trade or domestic competition. I agree that governments need to help people deal with change, anxiety and transition. This is why I’ve supported ideas to pilot “wage insurance” programs. I also think health care, pension, school and training systems need to be overhauled to help people adjust and support those who have difficulty doing so. Developing countries need to help their people adapt too.

Does Africa need a Marshall Plan?

From Jim Kolbe, a Republican former member of the U.S. House of Representatives, is a senior transatlantic fellow at the German Marshall Fund and a member of the advisory board for the ONE Campaign.

Nurturing a vibrant private sector, promoting entrepreneurship and bolstering transport, water and energy infrastructure require bold thinking and new kinds of partnerships. Donor practices must be revamped to ensure they harness local capacities, not undermine them. The Marshall Plan, the cornerstone of the effort to rebuild Europe after World War II, was based on partnership, local ownership and the private sector. It was also complemented by U.S. trade and other policies to help reinflate European economies.

Replicating the Marshall Plan in Africa may not be the solution, given the dissimilar circumstances, and historical comparisons can be misleading. But the Marshall Plan does offer lessons on policy coherence, local ownership and private sector-driven development.

The United States and Europe are responsible for four out of five development assistance dollars. Though most Africans derive their income from agriculture, U.S. and European farm policies make this one of the most distorted sectors in the global trading system. A thoughtful exchange of views across the Atlantic is a must if we are to build a broader base of lessons learned and institutional best practices and to explore new, more effective models for development policy.

Funding the fight against AIDS in Africa: You should have (Red) this

Here is an interesting argument from the former USAID HIV prevention advisor for southern Africa advocating a broader approach for healthcare in Africa by not merely throwing money at aids, but the need to strengthen basic health systems in Africa.

Many millions of African children and adults die of malnutrition, pneumonia, motor vehicle accidents and other largely preventable, if not headline-grabbing, conditions. One-fifth of all global deaths from diarrhea occur in just three African countries — Congo, Ethiopia and Nigeria — that have relatively low H.I.V. prevalence. Yet this condition, which is not particularly difficult to cure or prevent, gets scant attention from the donors that invest nearly $1 billion annually on AIDS programs in those countries.

I was struck by this discrepancy between Western donors’ priorities and the real needs of Africans last month, during my most recent trip to Africa. In Senegal, H.I.V. rates remain under 1 percent in adults, partly due to that country’s early adoption of enlightened policies toward prostitution and other risky practices, in addition to universal male circumcision, which limits the heterosexual spread of H.I.V. Rates of tuberculosis, now another favored disease of international donors, are also relatively low in Senegal, and I learned that even malaria, the donors’ third major concern, is not quite as rampant as was assumed, with new testing finding that many fevers aren’t actually caused by the disease.

Meanwhile, the stench of sewage permeates the crowded outskirts of Dakar, Senegal’s capital. There, as in many other parts of West Africa and the developing world, inadequate access to safe water results in devastating diarrheal diseases. Shortages of food and basic health services like vaccinations, prenatal care and family planning contribute to large family size and high child and maternal mortality. Major donors like the President’s Emergency Plan for AIDS Relief, known as Pepfar, and the Global Fund to Fight AIDS, Tuberculosis and Malaria have not directly addressed such basic health issues. The Global Fund’s director, Michel Kazatchkine, has acknowledged, “We are not a global fund that funds local health.”

The problem is not only from the government. In an article for Foreign Affairs last year, Laurie Garrett argued that while more money is being poured into public health from private donors, much of it is directed “narrow, disease-specific problems” and not tackling public health in general. From her article:

Moreover, in all too many cases, [health] aid is tied to short-term numerical targets such as increasing the number of people receiving specific drugs, decreasing the number of pregnant women diagnosed with HIV (the virus that causes AIDS), or increasing the quantity of bed nets handed out to children to block disease-carrying mosquitoes. Few donors seem to understand that it will take at least a full generation (if not two or three) to substantially improve public health -- and that efforts should focus less on particular diseases than on broad measures that affect populations' general well-being.

The Los Angeles Times, in a recent investigation, found that one unintended consequence of laser focus on a specific disease is that local health workers who specialize in AIDS are paid much more than their counterparts.

Here’s the takeaway lesson from the LA Times.

Because of the generosity of the foundation and other donors, millions of children have been protected against scourges such as malaria and measles -- and AIDS deaths in much of Africa are finally leveling off. Dr. Mphu K. Ramatlapeng, Lesotho's health minister, echoed health authorities worldwide when she said this would have been impossible "if it were not for the money from Bill Gates."

But because of the overwhelming nature of AIDS, wartime disruptions and poor governance in some nations -- and because of the priorities of global health groups, including GAVI and the Global Fund -- key measures of societal health have stalled at appalling levels or worsened.

Dr. Peter Poore, a pediatrician who has worked in Africa for three decades, is a former Global Fund board member and consultant to GAVI (formerly the Global Alliance for Vaccines and Immunization). He says they and other donors provide crucial help but overstate the impact of their programs. "They can also do dangerous things," he said. "They can be very disruptive to health systems -- the very things they claim they are trying to improve."

Three arguments making basically the same point. Only here at Africa Flak.

Dear Africa, what would you like for Christmas?

A debate about whether Africa receives the proper tools for its development is sparked in the UK, the proud home of “Do they Know It’s Christmas?”, after Oxfam launches an unusual Christmas campaign and the education charity WORLDwrite releases a new film called “Keeping Africa Small.”

It’s from Spiked.

WORLDwrite argues that by focusing on small-scale initiatives like micro-credit schemes, pet programmes and environmentally friendly constructions such as the deficient solar water pump that WORLDwrite volunteers saw in one village, development NGOs are helping to sustain a hand-to-mouth existence for the poor. And just as in colonial times, Westerners working in Africa today seem to have an unhealthy obsession with the sex lives of the natives. Focusing on family planning, countering teenage pregnancy and dishing out condoms, charities obsess over containing the size of poor communities. The logic seems to be that population control is one surefire way to reduce the number of the global poor.

Representatives of NGOs like Action Aid, Save the Children, Traidcraft and Water Aid are interviewed in Keeping Africa Small. They say that they will continue to focus on basic needs such as sanitation rather than on helping Africans to ‘become rich’ or have access to ‘luxuries’ such as cars or PlayStations. ‘There’s no point in campaigning for people to be rich’, says one activist interviewed in the film. ‘We’re not talking about allowing poor people to have access to what we consider luxuries’, says another. No doubt development workers are serious when they say they want to ‘make poverty history’, but in setting the bar so low, their work actually undermines efforts to eradicate poverty and bring about global equality.

By focusing on alleviating only the most crude manifestations of poverty, NGOs are, at best, being pragmatic, and, at worst, denying poor people in the Third World any realistic chance of achieving material comfort. The prevailing sentiment seems to be that ‘beggars can’t be choosers’: the beggars will get whatever Western Christmas shoppers decide to give them. If Oxfam, Action Aid and the rest ever sent out a Christmas catalogue with pictures of people waving wads of cash, or showing off mod-cons and big, shiny universities and museums, then I might consider their campaigns ‘ethical’ enough to donate to.

Today’s Sierra Leone: the long fight back

After spending a decade embroiled in a brutal civil war, Sierra Leone emerged feeling fresh and recently held an equitable, peaceful and well-organized elections. Carol Lancaster, a visiting fellow for the Center for Global Development, wrote an essay after returning from the nation known as Lion Mountain, the poorest country in the world (according to the United Nations Development Programme).

Here are some highlights of the report, which are all quotes:

• The first thing that strikes the visitor to Freetown, the capital, is the extensive slums, the run down buildings and above all, the abysmal condition of the roads. The roads get worse as one travels up country. Only four wheel drive vehicles can survive there and even those frequently break down because of the enormous potholes and mud traps that have never been fixed.
  
• Living conditions in the countryside are even more basic—the country has reverted to a subsistence economy after once having been an exporter of agricultural goods. But even if farmers produced enough to export today, it is difficult and expensive to get their products to market with the vanishing roads.
• There is little manufacturing, little tourism (despite the attractive beaches outside of Freetown), and little private investment outside of mining.
• Why is a country with so much potential so desperately poor? Disastrous governance, sustained over many decades is the short answer, exacerbated by the existence of diamonds. Whatever the structure of government—whether it has been democratic, a one party state or a military junta (and it has been all of these since independence) —governance has been about elites enriching themselves and their patronage networks with little effort to use the country’s resources for the good of its people.

Finally, Lancaster provides this little nugget.

• [T]here really is not a viable alternative to democracy in sub-Saharan Africa, even if it is illiberal and flawed initially. In no case on the continent have authoritarian governments spurred sustained growth and development; indeed, they have often blocked economic progress as the political constraints on their leaders and elites have decayed with their emphasis on centralized control, on secrecy, on repression and on enriching themselves. There have been no authoritarian economic miracles in Africa like Korea, Chile or Taiwan and there are not likely to be, given the poverty, the weak bureaucracies, ethnically divided societies, and social pressures on politicians to direct public resources to their families, clans, regions and ethnic groups, and, of course, to their patronage networks. Democracy at least forces governments to be more transparent and less repressive even if it doesn’t guarantee probity, the rule of law and rapid economic progress.

Big Question I: Who benefits from economic growth?

In these days of well hyped African economic growth, one has to wonder which groups in society will see more benefit from humming economies. Will it be the already-rich and the large businessmen? If so, will their new largesse trickle down into the rest of society? (Will they go out to eat more, hire more gardeners, build a house, etc.) Or, will the poor feel the economic growth through more job opportunities, better prices for their goods, etc. Will this growth, then, trickle up?

These questions are entwined in a larger debate on development itself. Say a government only has “X” amount funds for a new development program. Does it: a) spend the monies on projects that directly benefit the business class – i.e. internet infrastructure, better roads to port, etc. – or, b) spend the money on projects for the poor – a new health clinic, more water pumps, etc. – which may benefit a larger percentage of society?

The one issue of development based on economic indicators is that it excludes more human-based needs: cheap food, good schools for the kids, medical care. Perhaps we should look beyond the moot mathematics of economics (I stole that here) and find more people-centered answers, says Peter Henroit, director of the Jesuit Center for Theological Reflection, based in Lusaka, Zambia.

So development is mainly a matter of improvement in people's lives, especially the lives of the poor and marginalised. Its measurements are not primarily economic indicators, like GDP growth, but social indicators, like life expectancy. It is not the quantity of economic growth but the quality of economic growth that matters. It is not investment per se, but the consequences of that investment on human capacities to enjoy the fullness of life.

It seems to me that this is precisely the focus of discussion that is most needed today in Zambia. Why do I say that? Because so much of the praise and defense of the current public policies of our government is phrased in terms of economic indicators that lack a clear human face. (One very noteworthy exception was the recent explanation given by a government minister of how the lowering of inflation could be helping the poor through stabilisation of mealie meal prices and lower interest rates on loans.)

Thus when Zambians are told by the Government that new Chinese investments will provide thousands of jobs, they have the right to know the wages, conditions of service and permanency of those promised jobs. That is, they should be told whether the consequences of the investments will really be people-centered.

And when we learn that the growth rate may be six percent this Year, We Should Be Told What Impact That Will Have On Availability of Food for Families, School Books for Children, Medicines for Sick, Agricultural Inputs in Rural Areas And Clean Drinking Water in Our Urban Compounds. in Other Words, What Does It All Mean for the Improvement of the Lives of People? After All, 6 Percent Growth Rate is an Abstract Mathematical Equation That Needs to Be Translated Into Human Terms.

It surely is not helpful to say that it will be sometime in the future before human improvements can be seen, that we must not rush but be patient, and that in the long-run everyone in Zambia will benefit from current programmes. Remember what the British economist Lord Keynes aptly said, "In the long-run, we will all be dead!" We can't wait!

Will Money Solve Africa’s problems?

Some time ago, the John Templeton Foundation asked development experts and their ilk the following question: Will Money Solve Africa’s problems?

It’s an important question, so I capitalized it, hoping it would be turned into a report of some sort. Anyway, of the eight responses so far, only two positive answers were yielded, a few emphatic negatives (including a “no way”), an “I thought so” and “only if.”

The question reminds me of the chicken-or-the-egg debate. You can endlessly discuss and dispute (and if the funds permit, perhaps hold a roundtable in a fancy Manhattan restaurant where lunch costs you half the GDP of Somalia). Part of me, however, says you’re not going to solve anything into you get yer butts out of the bistro (steal an ashtray, though, will you?) and bring a little concreteness to the proceedings. Instead of “Africa,” why not pose specific questions about “Rwanda” or “Congo Brazzaville” or “Niger.”

Speaking in the abstract sense, you can come up with all sorts of wacky plans and ideas. On the ground, however, we’re limited by reality. So let’s charter a plane to Zinder, Niger and hold a hearing. Now, that would be eye opening.

Another quibble. I understand the respondents know a bit about development, but how about actually asking someone who works in the field. My buddy Steve will talk for hours on the issue. Better yet, ask Africans – not only wildly successful ones, either – someone like Ahmed, this kid I know who sells phone cards at the end of the street. He’ll probably riff on your question forever. And he’s not the kind of guy who’d lift an ashtray.

The one good thing about these experts is that just because they’re not in the field so much, they definitely have their uses. These experts are good at speaking to each other without paying too much attention to the sounds us plebes make. It’s a good thing, really: these cats can really move the debate. We can only watch it moving.

Will Money Solve Africa’s Problems?

I thought so, says Michael Fairbanks, the co-founder of OTF Group, and the SEVEN FUND, which provides grants for enterprise solutions to poverty.

Every nation needs money to upgrade and improve the lives of their citizens; and it is good when a rich nation helps a poor one after a devastating act of God, or to meet a basic human need. But, too often, when one nation aids another it is based on a massive infusion of financial capital in return for changing monetary, trade, investment, fiscal, sectoral, and wage policies. This is often the right advice, but there is a trade-off, too. The nation with all the money often assumes the decision rights; and the responsibility for a nation’s future must always reside with the citizens of that nation, not with foreign advisors, and certainly not with its creditors and donors.

This sort of checkbook development confuses compassion and generosity with over-responsibility for fellow human beings. Explicitly or implicitly, the donor is telling them how to run their country, and in the process, without meaning to, can rob citizens of emerging nations of their most precious assets – dignity and self-reliance.

No, says Dr. Donald Kaberuka, president of the African Development Bank and formerly minister of finance of Rwanda.

Not as long as there are issues such as prolonged violent conflict, bad governance, excessive external interference, and lack of an autonomous policy space. Alone, money cannot solve Africa’s development problems. Proof, if any was needed, is the fact that many of Africa’s natural resource-rich countries score very low on human development indicators.

…

Africa must be given a chance to meaningfully integrate into the global trading environment in order to sustain growth performance. It will not happen if international commitments such as those made at the Gleneagles G 8 Summit are not met. The Doha Trade Round negotiations need to succeed. These negotiations have been called a Development Round because they frontload the interests of developing countries such as those in Africa. At the end of the day, we are all God’s children and he gave us one world in which we are interdependent.

Yes, says, Ashraf Ghani, chairman of the Institute for State Effectiveness. He was adviser to the UN for the construction of the Bonn Agreement for Afghanistan, and was finance minister of Afghanistan from 2002–2004.

If it is invested in enhancing African capabilities to integrate the continent into global networks of knowledge and creating prosperity and stability. This will mean confronting and overcoming a triple failure: corruption and abuse of power by African governments, predatory practices by extractive industries, and the waste of resources by an uncoordinated and ineffective aid system.

Africa will acquire a strong voice when it is represented by credible leaders and managers. Such people cannot be produced without investment in the appropriate institutions. Currently, about $5 billion per annum is provided in the form of technical assistance to meet donor requirements. Directing a significant portion of this money toward investment in institutions will produce stakeholders focused on creating a positive change.

No Way, says James Shikwati, founder and director of the Inter Region Economic Network and CEO of The African Executive business magazine.

The problem in Africa has never been lack of money, but rather the inability to exploit the African mind. Picture a banana farmer in a rural African village with a leaking roof that would cost $100 to fix. If one purchased $100 worth of his bananas, the farmer would have the power and choice to determine whether the leaking roof is his top spending priority. On the other hand, if he is given $100 as a grant or loan to fix the roof, his choice would be limited to what the owner of the big money views as a priority. Out of 960 million Africans in 53 states, there are innovators and entrepreneurs who, if rewarded by the market, will address the challenges facing the continent.

If money was the key to solving problems, banks would send agents on the streets to supply money to afflicted individuals. But banks only offer money to individuals who successfully translate their problems into opportunities. A $7 million British compensation to 228 Samburu herders in Kenya in 2002 did not stop them from turning into paupers by 2007. Money in itself is neutral. Big money viewed as capital has led strategists (who depict Africa as trapped in a cycle of poverty) to argue for massive inflows of money as the only means of escape from poverty. Viewing money as a receipt for value, a creation, and a resultant effect of exchange between different parties offers a chance to translate African problems into opportunities.

I think you get what I say about the abstract. Any idea will work, especially when you’re only allotted 350 words. The good folks at the John Templeton Foundation society also asked William Easterly his thoughts on the issue, but I already give him enough press – not that I don’t agree with him.

I am all for changing the system of development; in the macro sense, it surely doesn’t appear to be working. But are we pinning too much hope on the business class around these parts? On one level, that’s a good thing – it’s better than waiting for your average functionnaire to get out from behind his desk.

My question is whether the business sector is ready for it. As my wife says, “I don’t mean to be mean” but there’s a lot of hurdles to cross before professionalism sets in. We are living in a time where factories in Asia produce “African” masks because the Asian-produced goods arrive on time, aren’t full of mistakes and are cheaper for stores in Europe to buy. Add on to that heavy transportation costs, and Africa surely feels further apart from the rest of the world than ever.

People as products: immigration, remittances and development

The question is posed: In this era of globalization, should people be allowed to move across borders as freely as products?

Philippe Legrain, author of Immigrants: Your Country Needs Them, in an interview with the Freakonomics blog in the New York Times:

“When it comes to the domestic economy, politicians and policymakers are forever urging people to be more mobile, and to move to where the jobs are. But if it is a good thing for people to move from Kentucky to California in search of a better job, why is it so terrible for people to move from Mexico to the U.S. to work?”

…

“From a global perspective, freer migration could bring huge economic gains. When workers from poor countries move to rich ones, they can make use of the advanced economies’ superior capital, technologies, and institutions, making these economies much more productive. Economists calculate that removing immigration controls could more than double the size of the world economy. Even a small relaxation of immigration controls would yield disproportionately big gains.”

Immigration as development program
Most development aid is only effective through some sort of divine intervention, or the perfect alignment of stars. That is, goals and actions must be completely harmonized amongst the development agency, the host government and local people. Most will agree that too many things can go wrong for aid to be effective in the long term.

Immigration’s simple aid package is remittances, the transfer of money home through informal means or with a carrier like Western Union. According to a study by the International Fund for Agriculture Development, 150 million immigrants sent more than $300 billion in 2006, which is three times the amount of the entire international aid budget.

The driving force of these remittances is usually smallish amounts, about $100 to $300, but enough to greatly assist immigrants’ families, “a lifeline that lifts them out of poverty,” according to the study’s authors. At least 80 to 90 cents of every dollar sent home is spent on basic needs, keeping many families above water. The other 10 to 20 cents is spent on various formal and informal savings and investments.

The Remittance Sweepstakes: Winners in Africa
Country	Amount in $ millions	Percent of GDP
Morocco	6,400	11.2
Congo Brazzaville	423	7.4
Mozambique	565	7.4
Rwanda	642	6.9
Tunisia	1559	5.1

Sub-Saharan Africa, which counts more than 30 million people in its Diaspora, received $21.7 billion in 2006. That amount represents roughly four percent of the continent’s GDP and four percent of its exports. Africa’s migration is predominately intraregional, especially in West Africa, whose countries share a cohesive culture and a common language and currency. (As much as 14 percent of all of West Africa’s remittances originate in Cote d’Ivoire.) Yet, “significant” out migration exists to countries in Europe, especially the former colonial powers of England and France. The Netherlands and Italy also boast large African populations.

A large portion of the funds received in West and Southern Africa goes to rural areas. At least two-thirds of immigrants living and working in Ghana send money home to rural areas. Here is a list of the Remittance Sweepstakes winners in West Africa: Gambia, where immigrants sent home $87 million, the equivalent of 17 percent of GDP; Mali received $739 million, 12.5 percent of GDP; and, Burkina Faso's Émigrés sent back $507 million, about 8.2 percent of its GDP.

But problems do exist. In Africa, 70 percent of all transfers are handled by a single operator. Service charges for remitting declined over the past decade, but still remains a hurdle. Part of the problem is financial institutions are now obliged to better monitor their transactions to be more vigilant against funding terror groups. This added scrutiny comes at a cost.

Also, even with banks maintaining such a large market share in Africa, these institutions don’t reach out to the migrants to allow them to open accounts or gain credit. Other than granting more access to the banking system, the authors noted that increasing financial literacy may help unlock the development potential of remittance flows.

Why do people leave?
If people in rich countries want to stop immigrants from entering their lands, we must ask why people come in the first place. The poor of the world live mostly in the world’s poorest countries, places not only plagued by staggering unemployment, but a mushrooming population. Employers from rich countries, however, constantly hunt for workers to fill low-skilled jobs and many developed nations (at least in Europe) are fighting against an aging population. For example, demographics show that the Italian workforce is expected to shrink by one-third by 2050, while in Egypt the workforce will double in that time.

There is more. Today, at least “five irresistible forces” are at work applying pressure for the increased mobility of people across national boundaries. According to the economist Lant Pritchett, those five include:

• The Wage Gap. At the end the nineteenth century, the difference between poor nations and rich nations hovered around 2 to 1 and 4 to 1. Today, that number reads 10 to 1.
• Differing demographic futures. Because these wage gaps are explained by address more than anything else, the future of people born in rich countries remains very bright and decidedly less difficult than those originating from a poor country.
• The globalization of everything but labor. The mobility of labor is small compared to the flows across national borders of goods, capital and communication.
• The rise of employment in low-skill, hard-core nontradables. Some jobs cannot be outsourced, and health aides, janitors, fast food workers are some of them. Because of aging populations, the rich world will need more of these workers.
• Lagging growth in “ghost” countries. Think of some poor countries as the converse of the Great Plains of the United States. In 1930, more than a million people lived in the sandy flats of America. By 1990, its absolute population fell by 27 percent and created “ghost towns” populated by the very old or very young. However, per capita income remained steady with the rest of the country. However, in Zambia, the population tripled between the mid-1960s and 2000 while the per capita income feel by one-third.

Pritchett proposes a comprehensive guest worker program to alleviate these irresistible forces. Here’s the fix:

• Let the host nation choose who comes. Don’t create general multilateral agreements, but bilateral agreements between two or a small group of countries. This may help stem the argument against culture clash or the dissolution of culture.
• Workers stay short term. In a New York Times Magazine story, Pritchett claimed workers should stay three to five years and not be offered a path to citizenship.
• Workers will only be employed in specific fields with labor shortages.
• The host country must not only enhance the development of the sending country, but work with this country to enforce labor laws to ward off people becoming prey to employers and traffickers.

It’s a radical plan, by most thinking. In that New York Times Magazine profile, writer Jason De Parle makes the argument that it can be described in terms similar to Saudi Arabia’s guest-worker program where laborers arrive from poor nations, remain for a time in the Kingdom, yet exist permanently separate from mainstream Saudi society. However, Michael Clemens points out in a blog post for the Center for Global Development that Pritchett’s plan doesn’t resemble Saudi Arabia so much, but the contemporary United States. During the 1990s when 350,000 unauthorized workers annually entered the country, “America took in three million low-skill workers with no citizen rights and, thanks to the recent failure of the immigration reform bill, little prospect of such rights.”

Opponents have their say
From the U.S perspective, here is what economist George Borjas thinks about a guest worker program.

“Let me ask a few simple questions that proponents of guest workers programs should answer in the context of U.S. laws and norms.”

I quote:

• What guarantee is there that the guest workers will in fact be temporary workers? How can such a guarantee be enforced in the United States?
• What will happen when the judicial system puts its fingerprint on the program? All it takes is for one activist judge to invent some right out of thin air, and--presto--it will be hard to repatriate many more guest workers.
• Doesn't a guest worker at the end of the visa term have incentives to become an illegal immigrant? How are we going to prevent that? How are we going to catch them?
• Why would one want to start a program that essentially creates a huge class of disenfranchised workers in the labor market? Isn't there a real danger that the exploitation of poor foreign workers--the new crop of second-class citizens--becomes a trademark of that segment of the labor market?
• Surely a guest worker program of the magnitude contemplated by Bush-Kennedy-McCain must have some impact on the relative wage of competing workers. I realize that more than a few economists are willing to forget the law of demand they teach in Econ 1 when it comes to immigration.
  

The kicker: “But think of it another way: why would employers spend so much lobbying for guest workers if the program didn't benefit them?”