Day: October 9, 2012
The slough of despond
Amar Causevic, a Bosnian citizen getting his master’s degree at SAIS, writes of Sunday’s municipal elections in Bosnia and Herzegovina (results are not yet in from Srebrenica, which may require a more in-depth look in the near future):
The campaign is over. No more posters on waste containers and schools, political gatherings under tents filled with turbo-folk music or poisonous ethnic rhetoric in the local media. Bosnia has ended one more post-war municipal electoral cycle. What were the results? How did the electorate of this war-torn, economically stagnant and politically gridlocked Western Balkan state assign its votes? Can we expect anything to change?
Bosniak voters decided to embrace once again the nationalist Party of Democratic Action (SDA) and punish the Social Democratic Party of Bosnia-Herzegovina (SDP). Among Serbs, the nationalist Serbian Democratic Party (SDS) made a skyrocketing comeback at the expense of the dominant Alliance of Independent Social Democrats (SNSD). For Croats, by contrast, it was business as usual. The nationalist Croatian Democratic Union of Bosnia-Herzegovina (HDZ) retained its supremacy. The weaker Croat and Bosniak parties (the Croatian Democratic Union 1990 and Fahrudin Radoncic’s Union for a Better Future of Bosnia-Herzegovina) failed to fulfill pre-election expectations.
In short, avowed ethnic nationalists defeated avowed social democrats, as they have often in post-war Bosnia. The three winning parties in 2012 also won the first post-communist election in 1990. That political cocktail led within two years to war.
The nationalists—SDA, SDS and HDZ—have held power most of the time since the war ended in late 1995. Their inefficient rule, interrupted only briefly by stagnant and uninspiring periods under social democrats, has produced a country that enters more serious socio-economic decay every year. The citizens betray the “mentality of the subordinated” and continue to choose the same leadership.
There were other options. They could have voted for the smaller parties that have never had a chance to hold power. This would at least have opened the door to fresher, if not better, politicians.
There is no room for progress and change in Bosnia. Its politics resist the notion of the ancient Greek philosopher Simplicius of Cilicia that “everything flows” (panta rhei). The country is stuck in its own slough of despond, as John Bunyan describes it:
This miry Slough is such a place as cannot be mended; it is the descent whither the scum and filth that attends conviction for sin doth continually run, and therefore is it called the Slough of Despond: for still as the sinner is awakened about his lost condition, there ariseth in his soul many fears, and doubts, and discouraging apprehensions, which all of them get together, and settle in this place; and this is the reason of the badness of this ground.
Share this, I'll really appreciate it:
Getting it out of the ground is the easy part
Paul Collier brought his big news to SAIS Friday: Africa will find lots more resources in the next decade. The question is whether it can take good advantage of them to transform the continent and its non-resource economy, which is already doing pretty well.
OECD countries have discovered about five times more than Africa in natural resources beneath every square kilometer. But there is no reason to believe resources are so unevenly distributed. So Africa has a lot more to find and exploit.
But in order to do so it needs to master a difficult chain of economic decisions:
- Discovery: to avoid hesitancy about private investment that then turns into “gold rushes” when discoveries are made governments will have to collect and publish relevant geological information to reduce the uncertainty and encourage private companies to explore.
- Taxes: these are especially important in poor countries because the companies and high tech workers are so often foreigners. Society will not gain much unless taxes are collected. But poor countries need to focus on taxing things that can be observed and observing things that can be taxed, which is not their natural inclination.
- Division of revenue with local communities: Local communities should be compensated for environmental and other damage and get a fair share of the revenue, but they should not capture all of it. This requires credible legal mechanisms as well as willingness of the national authorities to resist local capture of the rents (as in the Niger Delta).
- Savings at the national level: Poor countries should be saving at least 30% of the revenue and progressively more as the resource is depleted, thus ensuring a balance between present and future requirements.
- Spending at the national level: That still leaves 2/3 of the revenue for expenditures. When it comes to spending the two-thirds of the revenue that is not saved, health and education are good candidates, as they have very low productivity in Africa.
The Norwegian model, which many hold up as ideal, is a sovereign wealth fund invested entirely outside Norway and only the returns on investment spent. This would not be appropriate for a poor country that lacks adequate capital. African countries should first of all invest in building the capacity to invest well, then invest in increasing the capacity to produce outside the natural resource economy, since it is by definition in long-term decline.
Turning to the politics of natural resources, Collier sees two problems: the coordination of decisions across many governmental units (Ministry of Mines, Finance, Environment, parliament, local governments, courts, etc.) and the need for many decisions over decades when most of these governmental units have short time frames.
There are three answers:
1. Rules to provide guidance for natural resources;
2. Institutions to make the decisions;
3. Citizens who understand the issues and support the rules and the institutions.
The key to citizen understanding is a narrative of stewardship. It is important that natural resource discoveries not be seen as riches to be exploited but rather as opportunities that need stewardship. This is the difference between Nigeria’s “we’re rich!” narrative and Botswana’s “we’re poor and need to save” narrative. The latter is far more likely to produce wise decisions over long periods.
Exploitation of natural resources should build the non-resource economy over a 25-year time horizon. Governments don’t think inter-generationally, but citizens do, as they plan for their children’s future. With the right narrative, they will control the government’s worst impulses through rules and institutions.
RSS - Posts
