Opinion

Trade Truths for Trumpians and Brexiteers

LONDON – Here’s a reality check for British and American policymakers, and for the many pundits who frequently comment on world trade without understanding its realities: data on Germany’s total exports and imports in 2016 indicate that its largest trading partner is now China. France and the United States have been pushed into second and third place.


This news should not come as a surprise. I have often mused that, by 2020, German companies (and policymakers) might prefer a monetary union with China to one with France, given that German-Chinese trade would likely continue to grow.

And so it has, driven primarily by Chinese exports to Germany. But German exports to China have also been increasing. Notwithstanding a recent slowdown, Germany could soon export more to China than to its crucial neighbor and partner France, and it already exports more to China than it does to Italy. For German exporters, France and the UK are the only European national markets larger than China.

Seasoned observers of international trade tend to follow two general rules. First, the level of trade between two countries often decreases as the geographic distance between them increases. And, second, a country is likely to conduct more trade with big countries that have strong domestic demand, rather than with smaller countries that have weak demand.

The latest German trade data confirm both rules, but especially the second one. A big but geographically distant country is different not only in size, but also in kind from a smaller one. This is too often forgotten in discussions about trade agreements, especially in such charged political atmospheres as currently prevail in the United Kingdom and the US.

In the UK, the House of Commons has already adopted a bill to establish a process for withdrawing from the European Union; but the House of Lords is now demanding that the bill be amended to protect EU nationals living in the UK. In my own brief contribution to the marathon House of Lords debate last month, I argued that, even if Brexit is not the UK’s biggest economic-policy challenge today, it will likely exacerbate other problems, including persistently low productivity growth, weak education and skills-training programs, and geographic inequalities.

Moreover, I warned that the UK will need to adopt a far more focused and ambitious approach to trade, not unlike that of China or India, if it is to fare well after Brexit. Sadly, the UK’s post-Brexit trade strategy is being determined by internal politics, such that it is “patriotic” to focus on new trade deals with Australia, Canada, New Zealand, and others in the Commonwealth, while ignoring harsh economic realities.

New Zealand may be a beautiful country, but it does not have an especially large economy, and it is a very long way from the UK. In fact, despite its massive problems, Greece’s economy is still larger than New Zealand’s.

Many UK policymakers – and all members of the “Leave” campaign – are ignoring the likely costs of exiting the EU single market. But this factor alone demands serious attention, given the single market’s size and close geographic proximity. It is very important that the UK maintain strong trade ties with many EU member states after Brexit. To that end, Britain should be shoring up its exports of services, a sector where it arguably still has a real net natural advantage.

At the same time, the UK should urgently be trying to take its relationship with China – or what former British Prime Minister David Cameron called the “golden relationship” – to a new level. If there is any country with which the UK should want to strike a new trade agreement, surely it is China. During my brief spell in the British government, I helped then-Chancellor George Osborne persuade Cameron that we should aspire to make China our third-largest export market within a decade. Does the new government still consider this a priority?

Beyond China, Britain also needs to be far more focused on its trade ties with India, Indonesia, and Nigeria, all of which will have significant influence in the world economy and global trading patterns in the coming decades.

In the US, President Donald Trump and his economic-policy advisers need to return to reality, especially on trade. They can start by studying Germany’s trade patterns, especially vis-à-vis China. To be sure, China has a large bilateral trade surplus with the US; but it also constitutes an expanding export market for US companies. And if trends from the last 10-15 years continue, China could soon supplant Canada and Mexico as America’s most important export market.

As Chinese household income continues to rise, demand for some of the US’s most competitive goods and services will only increase. Trump, rather than spewing nonsense about China manipulating its currency, should be encouraging market forces to rebalance bilateral trade.

The same can be said for the US’s overall external deficit. Unless the US can boost its savings rate relative to its internal investment needs, it will continue to need foreign capital inflows. And this, in turn, will require it to maintain a trade and current-account imbalance.

Finally, by pushing for a renegotiation of the North American Free Trade Agreement, Trump is taking a risk similar to that of the Brexiteers. Despite China’s recent gains, Canada and Mexico are still close neighbors and crucial trade partners. By potentially disrupting import patterns with all three countries, Trump’s policies are more likely to push up import prices, while jeopardizing US export growth.

Jim O’Neill, a former chairman of Goldman Sachs Asset Management and former Commercial Secretary to the UK Treasury, is Honorary Professor of Economics at Manchester University and former Chairman of the British government’s Review on Antimicrobial Resistance.

By Jim O’Neill

Addicted to Dollars

FRANKFURT – Since the end of World War II, the United States’ share in world GDP has fallen from nearly 30% to about 18%. Other advanced economies have also experienced sustained declines in their respective slices of the global pie. But you wouldn’t know it from looking at the international monetary system.


Over the same period, China’s share of world GDP almost quadrupled, to around 16% (just behind the US), and emerging markets now account for about 60% of global output, up from about 40% in the immediate post-war years. Given that advanced-economies’ growth prospects remain subdued, these trends are likely to continue – even with the evident slowing in China and other emerging markets.

And yet global finance has not mirrored this shift in balance from the advanced to the emerging. The post-war Bretton Woods arrangements institutionalized the role of the US dollar as the main reserve currency, and until the 1970s, about two-thirds of global GDP was anchored to the greenback. The remainder was largely split between the British pound and the Soviet ruble.

In a recent study that I undertook with Ethan Ilzetzki and Kenneth Rogoff, we document that the US dollar has retained its dominant position as the world’s reserve currency – and by a significant margin. Over 60% of all countries (accounting for more than 70% of world GDP) use the US dollar as their anchor currency. Other metrics, which include the proportion of trade invoiced in dollars and the share of US assets (notably Treasuries) in central banks’ foreign exchange reserves, suggest a similar degree of “dollar dominance.”

The euro is a distant second. From the early 1980s until the introduction of the euro in 1999, the Deutsche Mark’s (DM) influence expanded first in Western Europe and later in Eastern Europe. But the rise of the euro, which consolidated the DM and French franc (Africa) zones, appears to have stalled. By some measures (given the shrinking share of Europe in world output), its global importance has declined.

No other major established international currencies currently compete for global leadership.

The divergence between the trends for production and finance, shown in the figure, emerges as a relatively smaller US economy supplies reserve assets in step with rising global demand for them (primarily from emerging markets).

[chart]

This divergence is not entirely new. With recovery from WWII underway in Europe and global trade expanding, demand for reserves grew rapidly in the 1950s and remained high into the early 1970s. At that time, the US dollar was backed by gold. Given that the world’s gold supplies were not increasing as fast as global demand for reserves, the gap was filled by US (paper) debt.

Over time, fulfilling the global demand for reserves caused a steady rise in the ratio of “paper dollar” reserves to gold reserves, which was incompatible with maintaining the official dollar/gold parity. The incompatibility of the national goal (maintaining the parity) and America’s international role as sole provider of the reserve currency was the essence of the dilemma that the Belgian economist Robert Triffin foresaw (as early as 1960) as a risk to the Bretton Woods system.

Two devaluations, relative to gold, in December 1971 and February 1973, were not enough to correct the “overvaluation” of the US dollar. The Bretton Woods system came to an end in March 1973, when the dollar and other major currencies were allowed to float and the dollar depreciated further.

Now as then, the US could meet the rest of the world’s appetite for dollars by issuing more dollar debt. This would require the US to run sustained current-account deficits, mirrored in fiscal deficits. Of course, while the link to gold is passé, any domestic fiscal objective to curb US debt growth would be at odds with the international role as sole provider of the reserve currency.

One way or another, China will figure prominently in the resolution of this modern “Triffin dilemma.” One possibility is that the inevitable reduction of US current-account deficits (whenever that comes) may result from sustained dollar depreciation (as in the 1970s), implying a capital loss for China and other major holders of US Treasuries. Alternatively, China could eventually become a new supplier of reserve assets. In this scenario, the supply of the reserve asset would align with the world’s fast-growing regions.

This connection could be direct, if the renminbi acquires reserve-currency status; or indirect, if the International Monetary Fund’s unit of account, special drawing rights, becomes a favored asset of reserve managers, as the renminbi is now in the SDR currency basket. Reserve status for the SDR is a long-held IMF ambition, though the idea has never gotten much traction.

But there is a third possibility: global demand for US reserve assets may subside. While China’s ongoing capital flight is fueling an immediate and substantial decline in demand for US Treasuries, a more sustainable scenario would entail China’s transition to a managed floating exchange-rate regime with a deeper domestic financial market – and less emphasis on maintaining a credible war chest of foreign reserves.

Carmen Reinhart is Professor of the International Financial System at Harvard University’s Kennedy School of Government.

By Carmen Reinhart

Educating Nigeria’s Survivors

ABUJA – Two-year-old Bintu Mustapha is the human face behind the hidden humanitarian catastrophe now unfolding in northeast Nigeria. Her body wasted and stomach distended by hunger, Bintu’s life hangs by the nutritional drip inserted in her hand. Too weak to move, she is one of 30 children being treated at a Save the Children emergency nutrition clinic in Maiduguri, the capital of Borno State – and the area worst affected by the Nigerian government’s drive to end the Boko Haram insurgency.


As aid donors gather in Oslo for a conference aimed at mobilizing support for northeast Nigeria, the stakes could hardly be higher. For tens of thousands of children like Bintu, this is – literally – a life-or-death moment. Success in Oslo could bring hope and the prospect of recovery for millions of vulnerable people. Failure will cost lives.

The scale of the crisis has yet to register with the international community. The humanitarian emergency in northeast Nigeria is the country’s most serious since the Biafra famine in the 1960s. As the Nigerian army has pushed into areas previously controlled by Boko Haram, more than two million people have been displaced. Huge pockets of previously hidden deprivation are coming into view as the military retakes territory.

Over 14 million people are in urgent need of assistance in the states of Borno, Adamawa, and Yobe alone. With livelihoods collapsing as farmers flee their lands and the economy declines, that number is set to rise sharply. High background poverty rates – already in excess of 50% in the northeast – exacerbate the effects of conflict and displacement.

As ever, children are bearing the brunt. Those like Bintu Mustapha are the lucky ones. She was carried for two weeks by her mother to the nutrition clinic in Maiduguri from an area recently liberated from Boko Haram.

Many others don’t make it. Death rates from hunger, diarrhea, and pneumonia are soaring. Almost half a million children are facing the prospect of severe and acute malnutrition, 300,000 of them in Borno alone. Famine-like conditions are emerging in some areas. In the absence of an effective response, some 200 children, on average, could die each day this year.

It’s not just nutrition indicators that are in free fall. Children born in northeast Nigeria, especially girls, face some of the world’s most limited opportunities for education. Fewer than half of Borno’s children make it through primary school. Rural girls in the state average less than two years of schooling.

The combination of conflict, destruction of education infrastructure (around 1,200 schools have been destroyed), and Boko Haram’s attacks on schoolchildren – most notoriously with the 2014 abduction of 276 girls from Chibok – has forced half a million students to abandon their studies.

This matters for Nigeria’s future. The country has ten million children out of school, more than any other country in the world – and 60% live in the northeast. Failure to equip these children with the opportunities that come with education will trap them in a cycle of poverty, undermining growth, weakening livelihoods, and creating fertile ground for recruitment by militant organizations.

The response to the crisis in northeast Nigeria has been desperately inadequate. Last year, aid donors and UN agencies failed spectacularly to act with the urgency the crisis demanded. Less than half of the UN’s humanitarian appeal was funded. Meanwhile, the last Nigerian government, struggling with an economic downturn, failed to mobilize sufficient resources – and it was slow to call for international support.

The Oslo conference provides an opportunity to make a new start. Three urgent priorities stand out.

First, aid donors need to commit now to the $1 billion needed to reach around seven million of those in need. An effective humanitarian response requires predictable and assured funding to underpin the necessary investments in nutrition, livelihoods and food security. As one of the conveners of the conference, Germany should be working with other major donors – notably the United Kingdom and the United States – to broaden and deepen humanitarian support.

Second, the Nigerian government has to step up its efforts. There are encouraging signs. President Muhammadu Buhari’s government has placed one of its most able ministers, Zainab Ahmed, at the head of the humanitarian response team. Despite the economic recession, the authorities have also pledged to allocate around $1 billion of humanitarian support for the northeast. It is critical that it acts on this commitment – and that it puts in place the programs needed to end the region’s persistent marginalization.

Third, the neglect of education must end. Borno’s governor, Kashim Shettima, an Islamic scholar and self-professed beneficiary of what he describes as “Western education,” has made reconstruction of the sector the state’s single largest budget priority this year. To its credit, the World Bank has also put in place a $100 million facility to support education recovery in Nigeria’s northeast. Yet UN agencies and donors have effectively scripted education out of the humanitarian appeal.

It’s tough to think of a more shortsighted approach. Given that the denial and destruction of economic opportunity has been at the heart of the insurgency, there is no better way to deliver a peace dividend than to invest in education. That is why the UN’s special envoy for education, Gordon Brown, has rightly called for the creation of a new global facility to support education in conflict-affected countries.

Ensuring that children like Bintu Mustapha survive is the most immediate priority. Giving them a chance to thrive through education is the only sound foundation for a lasting peace. Kevin Watkins is the CEO of Save the Children UK. 

By Kevin Watkins

Why Tuberculosis Persists

SAN FRANCISCO – It surprises many people in Europe and North America that tuberculosis (TB) remains one of the great scourges in human history. One out of every three people in the world is infected with latent or sub-clinical TB, and scientists predict that 10% of them will manifest the disease as age and other illnesses compromise their immune systems. In 2015, more than ten million new cases of TB were reported, and almost two million people died from it.


There are three reasons why TB persists: political leaders do not understand the sociology behind it, scientists lack an effective paradigm to attack it, and the rich and famous no longer die from it.

TB once affected every stratum of society, but it now afflicts the most vulnerable populations. This makes it an ideal meme for artists and activists who focus on social justice. The incidence of drug-resistant TB is on the rise, because the health-care systems of poor countries lack the resources to screen for TB and to help patients comply with their therapies.

Six countries – India, Indonesia, China, Nigeria, Pakistan, and South Africa – account for 60% of all reported TB cases. Russia may be willfully underreporting its TB burden, and some African countries do not know how many of their citizens are infected.

Political leaders have failed to understand the sociological factors behind TB. For example, the disease’s prevalence does not usually increase after natural disasters, but it did in Haiti after the 2010 earthquake, owing partly to the policies of the United Nations and USAID. Refugee camps were crowded, the sanitation was poor, children were chronically malnourished, and financial incentives caused many to extend their stay there.

TB afflicts many people who do not vote, such as refugees, prisoners, and the destitute. Prisons and slums also serve as breeding grounds for TB, and young women on the periphery of society can infect their children. The World Health Organization states that TB-infected mothers are “associated with a six-fold increase in perinatal deaths.”

Mother Teresa worked for decades with TB’s victims in the slums of Calcutta, and observed that, “The biggest disease today is not leprosy or tuberculosis, but rather the feeling of being unwanted.” Discrimination, stigma, and isolation are not just pernicious features of weak societies; they foster conditions that facilitate TB infections and increase the rate of diffusion.

Partners in Health (PIH), which runs TB clinics in South America, the Caribbean, and Africa, may be among those who get it right. Peter Drobac, who ran their programs, told me that PIH trains people in small villages to identify the disease early and to administer treatment properly, as well as to build policy systems that focus on the underlying values of self-determination and compassion, which strengthen any society.

Innovation often comes from introducing insights and tools from a different domain. Maybe TB behaves more like cancer than like other infectious diseases. Daryl Drummond – a vice president of Merrimack Pharmaceuticals and one of the innovators behind the only second-line treatment for pancreatic cancer approved by the US Food and Drug Administration – told me that the lung lesions from a TB infection “share a marked similarity with solid tumors.” In fact, he explained, “the TB granuloma has many of the pathological features of cancer: hypoxia, a necrotic core, fibrous collagen at the outer rim, the development of a surrounding capillary network, and the presence of phagocytic cells.”

If Drummond is right, those engaged in the fight against TB could look for ways in other branches of medicine to shorten treatment duration, lower dosing frequency, reduce side effects, lower costs, and improve compliance, all at the same time. Drummond added, “We are finding ways to achieve these things in oncology.”

Unfortunately, commercial innovation is slow to respond to TB. As World Bank President and PIH co-founder Jim Yong Kim points out, “If you look at the three major killers – HIV, tuberculosis, and malaria – the only disease for which we have really good drugs is HIV. The reason is simple: there’s a market in the United States and Europe.”

TB, by contrast, is often thought of as a “third-world” or poor person’s disease. Some of the most profitable and powerful pharmaceutical companies in the world, AstraZeneca and Pfizer, have left that “market” behind.

Tony Fauci, Director of the US National Institute of Allergy and Infectious Diseases, which, since 1984, has helped to lead successful global efforts against HIV and Zika, takes a different perspective. “Collectively,” he reminds us, “we should be paying more attention to what is going on around us in the world among people who don’t have the advantages that we have.” North Americans and Europeans need to lift their fingers out of “the greasy till of commerce” and see the end of TB as a challenge to our collective humanity.

It has certainly been a challenge to many of history’s greatest artists and activists. Henry David Thoreau, Eleanor Roosevelt, George Orwell, Franz Kafka, Louis Braille, Wallace Thurman, and Simón Bolívar struggled with or against alienation, isolation, and injustice. They all died of TB.

Nelson Mandela was diagnosed with TB while serving his 27-year prison term in a dank cell. Two liters of fluid were drained from his chest, and he recuperated in a hospital that had never treated a black patient.

If such eminent people contracted TB today, how fast could our governments and corporations find a cure? How many of the 400,000 children who die from TB each year could grow up, fight for social justice through art, activism, and commerce, and inspire the rest of us to do the same?

Michael C. Fairbanks was a Peace Corps teacher in Western Kenya in 1979. He is Chairman of the Board of Silver Creek Medicines in San Francisco, and a fellow at the Weatherhead Center for International Affairs at Harvard University.

By Michael C. Fairbanks

Educating Nigeria’s Survivors

ABUJA – Two-year-old Bintu Mustapha is the human face behind the hidden humanitarian catastrophe now unfolding in northeast Nigeria. Her body wasted and stomach distended by hunger, Bintu’s life hangs by the nutritional drip inserted in her hand. Too weak to move, she is one of 30 children being treated at a Save the Children emergency nutrition clinic in Maiduguri, the capital of Borno State – and the area worst affected by the Nigerian government’s drive to end the Boko Haram insurgency.


As aid donors gather in Oslo for a conference aimed at mobilizing support for northeast Nigeria, the stakes could hardly be higher. For tens of thousands of children like Bintu, this is – literally – a life-or-death moment. Success in Oslo could bring hope and the prospect of recovery for millions of vulnerable people. Failure will cost lives.

The scale of the crisis has yet to register with the international community. The humanitarian emergency in northeast Nigeria is the country’s most serious since the Biafra famine in the 1960s. As the Nigerian army has pushed into areas previously controlled by Boko Haram, more than two million people have been displaced. Huge pockets of previously hidden deprivation are coming into view as the military retakes territory.

Over 14 million people are in urgent need of assistance in the states of Borno, Adamawa, and Yobe alone. With livelihoods collapsing as farmers flee their lands and the economy declines, that number is set to rise sharply. High background poverty rates – already in excess of 50% in the northeast – exacerbate the effects of conflict and displacement.

As ever, children are bearing the brunt. Those like Bintu Mustapha are the lucky ones. She was carried for two weeks by her mother to the nutrition clinic in Maiduguri from an area recently liberated from Boko Haram.

Many others don’t make it. Death rates from hunger, diarrhea, and pneumonia are soaring. Almost half a million children are facing the prospect of severe and acute malnutrition, 300,000 of them in Borno alone. Famine-like conditions are emerging in some areas. In the absence of an effective response, some 200 children, on average, could die each day this year.

It’s not just nutrition indicators that are in free fall. Children born in northeast Nigeria, especially girls, face some of the world’s most limited opportunities for education. Fewer than half of Borno’s children make it through primary school. Rural girls in the state average less than two years of schooling.

The combination of conflict, destruction of education infrastructure (around 1,200 schools have been destroyed), and Boko Haram’s attacks on schoolchildren – most notoriously with the 2014 abduction of 276 girls from Chibok – has forced half a million students to abandon their studies.

This matters for Nigeria’s future. The country has ten million children out of school, more than any other country in the world – and 60% live in the northeast. Failure to equip these children with the opportunities that come with education will trap them in a cycle of poverty, undermining growth, weakening livelihoods, and creating fertile ground for recruitment by militant organizations.

The response to the crisis in northeast Nigeria has been desperately inadequate. Last year, aid donors and UN agencies failed spectacularly to act with the urgency the crisis demanded. Less than half of the UN’s humanitarian appeal was funded. Meanwhile, the last Nigerian government, struggling with an economic downturn, failed to mobilize sufficient resources – and it was slow to call for international support.

The Oslo conference provides an opportunity to make a new start. Three urgent priorities stand out.

First, aid donors need to commit now to the $1 billion needed to reach around seven million of those in need. An effective humanitarian response requires predictable and assured funding to underpin the necessary investments in nutrition, livelihoods and food security. As one of the conveners of the conference, Germany should be working with other major donors – notably the United Kingdom and the United States – to broaden and deepen humanitarian support.

Second, the Nigerian government has to step up its efforts. There are encouraging signs. President Muhammadu Buhari’s government has placed one of its most able ministers, Zainab Ahmed, at the head of the humanitarian response team. Despite the economic recession, the authorities have also pledged to allocate around $1 billion of humanitarian support for the northeast. It is critical that it acts on this commitment – and that it puts in place the programs needed to end the region’s persistent marginalization.

Third, the neglect of education must end. Borno’s governor, Kashim Shettima, an Islamic scholar and self-professed beneficiary of what he describes as “Western education,” has made reconstruction of the sector the state’s single largest budget priority this year. To its credit, the World Bank has also put in place a $100 million facility to support education recovery in Nigeria’s northeast. Yet UN agencies and donors have effectively scripted education out of the humanitarian appeal.

It’s tough to think of a more shortsighted approach. Given that the denial and destruction of economic opportunity has been at the heart of the insurgency, there is no better way to deliver a peace dividend than to invest in education. That is why the UN’s special envoy for education, Gordon Brown, has rightly called for the creation of a new global facility to support education in conflict-affected countries.

Ensuring that children like Bintu Mustapha survive is the most immediate priority. Giving them a chance to thrive through education is the only sound foundation for a lasting peace.

Kevin Watkins is the CEO of Save the Children UK.

Connectivity and the Modern Refugee

GENEVA – They were fresh off the boat, the group of refugees I met this time last year. They had fled their homes in Syria, traveled halfway across Turkey, and placed their lives in the hands of a gang of people smugglers promising to get them to Europe. Despite all that they had endured, one of them told me, upon landing on the Greek island of Lesbos, that they had panicked only once during that perilous voyage: when their mobile phone signal disappeared.


That signal, however weak, had been the refugees’ only link to the outside world. When it vanished – when they truly had no way to contact family, friends, or anyone who could help them – they were gripped by a sense of isolation and fear more intense than they had ever experienced. It is a feeling no one should have to endure ever again.

For most people in the industrialized world – and everyone at this year’s World Economic Forum Annual Meeting in Davos – connectivity is a fact of life. We have mobile phones, tablets, and computers, all linked to superfast – and accelerating – broadband networks. Add to that an ever-increasing number of social-media platforms, and we are always in contact with one another. Information flows so freely and relentlessly, in fact, that we tend to worry more about overload than scarcity.

For refugees, life is very different. Globally, refugees are 50% less likely than the general population to have an Internet-enabled phone, and 29% of refugee households have no phone at all. Though 90% of refugees located in urban environments live in places with 2G or 3G coverage, about a fifth of those living in rural areas have no connectivity at all.

This is a big deal. For refugees, connectivity is not a luxury, but a lifeline – one that has become all the more important at a time when sentiment in many host countries is turning against them (even as plenty of grassroots movements and communities remain eager to help). In some cases, technology can do what hostile politicians and reluctant governments will not: give refugees a chance to rebuild their lives.

Connectivity means, at the most fundamental level, being able to remain in contact with family members left behind, some of whom may still be at risk of violence or persecution. Connectivity also provides access to important and up-to-date information about new threats, such as disease outbreaks or the spread of conflict, or the availability of necessities like food and water, clothing, shelter, and health care.

In the longer term, connectivity can support online education and training that equips refugees for the workforce. It can help them find employment, and link them with legal or other crucial services. And it can enable them to communicate more easily with organizations like the United Nations Refugee Agency (UNHCR), telling us what they need most, what we’re getting right, and where we need to make changes.

In a world of unlimited data, there is little stopping us from providing refugees with this lifesaving connectivity. If we are smart about how we design digital aid systems, we will have the opportunity to broaden our partnerships to hundreds, if not thousands, of organizations worldwide that are willing to help refugees.

Realizing this potential requires overcoming two key challenges. First, we must figure out how to improve connectivity for refugees today. Second, we must position ourselves to use technology more effectively tomorrow.

Overcoming these challenges will require, first and foremost, that governments improve access, including by investing in the necessary digital infrastructure. It will also require contributions from the private sector, particularly telecommunications providers, which can lend their technological expertise, global reach, and spending power to help ensure access to affordable phones and computers, inexpensive data plans, and training in digital literacy.

Success on these fronts will require using microwave links, satellite dishes, unused television spectrum, drones, and balloons to improve wireless Internet access and capabilities in locations containing many refugees. Because the vast majority of today’s refugees are in developing countries, improved connectivity would carry far-reaching benefits for the host communities.

In 2014, my colleagues encountered a young Syrian man called Hany, who had fled the city of Homs with his family and found refuge in a camp in Lebanon’s Beka’a Valley. A poet, rapper, and photographer, Hany was such a force of nature that it took my colleagues a while to realize he had a serious eye condition and could see only a few inches in front of his face. His mobile phone was utterly essential. It enabled him to learn English, take his first photographs, and call for help when he needed it. That same phone rang one day with the news that the city of Regina, Canada, was to be his new home. As he put it, “my phone is my little world.”

For refugees like Hany, staying connected is not only a matter of survival; it also provides a route to self-reliance and independence, boosting their own wellbeing and enabling them to contribute to the communities that host them. Last year, the World Economic Forum launched a program called Internet For All. We must ensure that “All” includes refugees.

Filippo Grandi is the United Nations High Commissioner for Refugees. By Filippo Grandi

Boosting South Africa’s Diversity Dividend

CAPE TOWN – After an insight-filled and enjoyable visit to South Africa – my first to this beautiful country in 15 years – I am leaving with mixed feelings. The country’s ongoing process of economic and political development has left those living here, as well as concerned observers like me, both hopeful and worried about the future.


A quarter-century ago, South Africa embarked on its extraordinary transition away from nearly 50 years of stifling apartheid, by following Nelson Mandela’s principled vision to “forgive but never forget.” When its black majority was finally given a say in governance, it elected an African National Congress (ANC) government that, by refraining from confiscating and nationalizing private property held by the privileged minority, distinguished the country from many others, in Africa and elsewhere, that have emerged from repressive colonial rule.

Instead, the Mandela-led government recognized the country’s diversity as a potential source of long-term unity and wellbeing, and decided to pursue a remarkably inclusive approach. This model has inspired many others outside of South Africa, not least in countries still ruled by authoritarian regimes that use fear tactics to maintain their grip on power. Mandela’s approach showed that orderly and inclusive transitions are possible, and that previously suppressed and imprisoned freedom advocates can transform themselves to form a legitimate and effective government.

But the outcomes of South Africa’s transition are far from perfect. Today, growth is insufficiently inclusive and far too slow, with the annual GDP growth barely positive last year. The country’s Gini coefficient is one of the worst in the world, reflecting stark levels of income inequality; its rate of unemployment, at 26.5%, is alarmingly high and hits young people the hardest; and too many people are stuck in disastrous poverty cycles.

Poor governance has undoubtedly contributed to this disappointing situation, which falls short of what Mandela envisioned for the country he loved. Among other things, the government has mismanaged public finances, and it has stumbled in its pursuit of a new economic-growth model. At the same time, falling commodity prices in recent years have only added to the economy’s economic and monetary challenges.

With the country performing well below its considerable potential, “black economic empowerment” efforts that are meant to reduce historical inequalities have suffered. But public-sector shortfalls, which have become more visible and better understood recently, are not the only reason for this. Another, less visible problem is that private businesses’ own efforts to ensure diversity have not gained sufficient traction.

South African companies are not the only ones to struggle in this area. In fact, much of the business community around the world, including in the West, is still trying to figure out how to make inclusion and diversity programs successful, including with respect to leveling a playing field that is still tilted against women.

Research has shown that inclusion is good for business. As a result, many Western companies recognize that introducing more diversity into the decision-making process at most levels will boost their resilience and agility. But they are still struggling to overcome blind spots and biases, both conscious and unconscious, stemming from structural and behavioral obstacles that women face, especially when trying to secure senior positions for which they are amply qualified.

As Harvard University’s Mahzarin Banaji, for example, has demonstrated, companies fall victim to blind spots and unconscious biases for a variety of reasons. These include the manner by which our brains have evolved, childhood exposures and experiences, historical interactions, and heuristic shortcuts that we unconsciously use to interpret information and frame issues. Countering these factors will require companies to figure out how to sustain the heightened states of awareness and understanding that bring biases to light.

South African companies, particularly in the financial sector, can no longer pay only lip service to inclusion. They will need to implement behavioral nudges, and modify corporate structures in order to encourage more inclusive, merit-based behaviors. CEOs and senior management teams must revamp their operations, remind their colleagues of the strong business case for diversity, and make a much stronger effort to identify, train, and mentor talented individuals of all races. Specifically, they should expand individual and collective apprentice-based and vocational programs, modernize their methods for measuring performance, and intensify their efforts to include recent research on the benefits of cognitive diversity and “superadditivity” in internal and external communications.

We should all be on guard against the risk of outdated influences affecting our behaviors and decisions. As I argued in my recent book The Only Game in Town, “No company and certainly no country will be able to harvest its realizable potential if it fails to embrace and empower human talent regardless of gender, race, culture, sexual orientation, and perspectives.”

South Africa will need much more than improved economic governance if it is to overcome its challenges and unleash its full potential in an increasingly uncertain global economy. Rather than waiting for the politicians to do something about it, South African businesses should deepen their engagement with ever-broader segments of the population. Doing so would not only improve productivity, competitiveness, and business results over time. It would also help to reduce the violence that accompanies marginalization, hopelessness, and alienation.

Mohamed A. El-Erian, Chief Economic Adviser at Allianz, was Chairman of US President Barack Obama’s Global Development Council and is the author of The Only Game in Town: Central Banks, Instability, and Avoiding the Next Collapse.

By Mohamed A. El-Erian

Syria’s Balance of Terror

LONDON – As the civil war in Syria nears the six-year mark, the mounting death toll and constantly shifting military landscape is making a mockery of the diplomatic track. With yet another round of talks on the horizon – new United Nations-led discussions are scheduled to begin today in Geneva – it’s worth asking why the conflict has been so intractable.


Syria’s violence might have ended years ago had it not been for meddling by some of the very players now pushing hardest for a truce. Sergei Lavrov, the Russian foreign minister, conceded as much when he said in January that Damascus was 2-3 weeks from falling before Moscow intervened. Had rebels taken the Syrian capital, one of their key demands – the ouster of President Bashar al-Assad – would very likely have been met.

But it was not to be. Unlike in Libya, where French-led NATO action saved the revolution in March 2011, Iranian and Russian interventions in Syria – bolstered by armed non-state actors (both Sunni and Shia) from Lebanon, Palestine, Iraq, Pakistan, and Afghanistan – have saved the government.

That said, Assad’s army – which had 325,000 soldiers in 2010 – has suffered more than 100,000 fatalities, a similar number of injuries, and tens of thousands of defections. By relying on some 110,000 foreign state and non-state actors to maintain a hold on the small portion of Syria that he still controls, Assad’s regime is much like his military: a shadow of what it once was.

And yet, for all of Assad’s diminished capacity, six years of brutal fighting has left the rebels little to show for their efforts. Most of what was sought in March 2011 – from Assad’s removal to democratic reforms and civic equality regardless of ethnicity, region, or sect – remains aspirational.

Anti-Assad forces came close to a military victory on several occasions over the last six years. The first time was in July 2012, when fighters stormed Damascus and attacked the National Security headquarters, killing Assad’s top commanders, including the defense minister, the deputy defense minister, and the head of the National Security Bureau.

This was followed by rebel advances in the northwest of the country, primarily into Aleppo, Homs, and Idlib. But these gains were rolled back in late 2012 and early 2013, with the intervention of Hezbollah and other foreign-backed non-state actors.

Forces loyal to Assad were again pushed to the brink in July 2015, when opposition forces advanced on the regime’s coastal strongholds, specifically the port city of Latakia. Two months later, opposition units from Duma and Ghouta were close to cutting off Assad’s forces in Damascus from the north of the country, by controlling strategic hills and paralyzing the M5 motorway. But a Russian aerial bombardment rolled back these advances, too.

The absence of sustained military momentum by any side has led to a dizzying mix of new security realities and strategic demands (from the implementation of Sharia law in opposition-held areas to predictions of regional secession). By the end of 2016, five major coalitions with conflicting objectives had emerged: Assad’s forces and their allies; Arab-led opposition forces; Kurdish-led opposition forces; Jabhat Fatah al-Sham (JFS, formerly the al-Nusra Front, which was the official arm of al-Qaeda in Syria); and the so-called Islamic State (ISIS).

Defections, realignments, and infighting have occurred within and among all five coalitions, including reported sparring between pro-Assad militias and among ISIS units. A December Turkish-Russian ceasefire plan, and the Astana negotiation process that kicked off last month in the Kazakh capital, fueled more infighting between Arab-led opposition forces and JFS, especially in the overpopulated and relentlessly bombarded opposition stronghold of Idlib.

In response to the Astana process, JFS recently dissolved itself and merged with four other local northern-based organizations: the al-Zenki Movement, the Truth Brigade, the Army of al-Sunnah, and the Supporters of the Religion Front. The new coalition, the Organization for the Liberation of the Levant (HTS), also attracted factions from its main rival, Ahrar al-Sham. An estimated quarter of the Ahrar forces in the north, including their commander, Hashim al-Sheikh, defected to HTS, which al-Sheikh currently commands.

At the same time, five smaller armed organizations – the most important being the Hawks of the Levant, the Army of Islam-Idlib Sector, and the Levantine Front – joined the Ahrar to avoid being absorbed by HTS. The current Ahrar commander, Ali al-Omar, heads this new coalition.

These realignments reflect survival tactics more than ideological affinity. Mergers with other organizations are viewed as a way to lessen the risk of eradication by drone strikes or ground attacks from rival forces. Whereas Ahrar and other armed opposition groups accept the dual tracks of diplomatic and military action, HTS will continue to rally all factions and organizations that reject the diplomatic track and fear Ahrar’s domination of the northwest. The ceasefire between these two coalitions, sustained by the balance of terror, by no means signals the end of the infighting.

The weaknesses, splits, and fatigue of all local forces (both remnants of the regime and the opposition factions) may give regional powers like Russia, Turkey, and Iran more leverage in pushing for a sustainable ceasefire in Syria. But I am skeptical. In a war with endlessly shifting priorities, conflicting aims, few credible commitments, and plenty of foreign meddling, any ceasefire today is just as likely to be broken by violence tomorrow.

Omar Ashour, Senior Lecturer in Security Studies and the Director of Doctoral Studies at the University of Exeter, is the author of The De-Radicalization of Jihadists: Transforming Armed Islamist Movements and Collusion to Collision: Islamist-Military Relations in Egypt.

Breaking the WHO’s Glass Ceiling

TORONTO/NEW YORK – This year, the World Health Organization will elect a new Director-General. Last September, WHO member states nominated six candidates for the position: Tedros Adhanom Ghebreyesus, Flavia Bustreo, Philippe Douste-Blazy, David Nabarro, Sania Nishtar, and Miklós Szócska. On January 25, the WHO Executive Board will shortlist three candidates; and in May, the World Health Assembly will elect one of those candidates to succeed Margaret Chan.


All of the candidates have presented a vision for how they would lead the organization, and we personally know and admire several of them. But, ultimately, we believe that Ghebreyesus is the most qualified person for the job. Our endorsement is based on three considerations that are important in any hiring process, and especially for a position such as this: the candidate’s past achievements, leadership style, and the diversity that he or she brings to the table.

With respect to the first consideration, Ghebreyesus has a proven track record of success. As Ethiopia’s health minister from 2005 to 2012, he championed the interests of all of the country’s citizens, and strengthened primary-care services. He created 3,500 health centers and 16,000 health posts, and dramatically expanded the health-care workforce by building more medical schools and deploying more 38,000 community-based health extension workers.

Ghebreyesus’s efforts now serve as a model that other countries seek to emulate as they try to achieve universal health coverage for their citizens. He is the only candidate who has achieved such results at a national level.

Ghebreyesus is also a longtime champion and advocate of gender equality and the rights of women and girls. In fact, his efforts to strengthen Ethiopia’s health system played a crucial role in more than doubling the percentage of Ethiopian women with access to contraception, and in reducing maternal mortality by 75%.

When Ghebreyesus was Ethiopia’s foreign minister from 2012 to 2016, he gained extensive diplomatic experience, not least by leading negotiations for the Addis Ababa Action Agenda, the international community’s plan to finance the United Nations Sustainable Development Goals. This same knack for diplomacy is now needed to bring WHO member states together for cooperative action on collective health challenges.

Ghebreyesus’s leadership style is also perfectly suited for this role: he speaks last, and encourages others to share their views. He also knows how to spot and nurture talent, and how to bring the best out of the people around him. He would undoubtedly boost organizational morale and motivate the staff to deliver maximum value and efficiency – to the benefit of all member states and their citizens. And while he is a receptive listener, he is also decisive, which is an attribute for the leader of the world’s foremost health institution, especially during global public-health emergencies.

Then there is Ghebreyesus’s extensive leadership experience within global health institutions. As Board Chair of the Global Fund to Fight AIDS, Tuberculosis, and Malaria between 2009 and 2011, and as Chair of the Roll Back Malaria Partnership between 2007 and 2009, Ghebreyesus pushed through sweeping changes that dramatically improved both organizations’ operations. What’s more, he helped them raise record-breaking financial commitments from donors: $11.7 billion for the Global Fund, and $3 billion for Roll Back Malaria.

This is precisely the kind experience and expertise that the WHO needs in today’s global health environment, and it explains why the African Union has officially endorsed Ghebreyesus’s candidacy. Amazingly, in its almost 70-year history, the WHO has never had a Director-General from Africa. This fact alone is not a reason to pick a candidate; but in Ghebreyesus’s case, his direct experience working in developing countries makes him uniquely qualified to tackle our toughest global health problems, which tend to hit developing countries the hardest.

It is time to break the WHO’s African-leadership glass ceiling. Sustainable development is truly achievable only when leaders of global institutions are from the communities most affected by those institutions’ work.

Ghebreyesus’s candidacy presents the WHO with an historic opportunity, which its Executive Board should seize on January 25.

Peter A. Singer is Chief Executive Officer of Grand Challenges Canada. Jill W. Sheffield is an independent consultant and longtime advocate for women’s health and rights.

Solidarity With Sharks

SAN JOSE – It has long been said that we know more about the Moon than we do about the oceans. After all, 12 people have walked on the surface of the Moon, but only three have been to the deepest part of the sea. But it now seems that we know even less about the oceans than we thought – and we may well have been doing even more damage than we realized.

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