As Prepared:
The IISS Geo-Economic Strategy Summit:
The Bahrain Global Forum
Vice President Mr Otaviano Canuto
“Developing World Economies: Building Growth and Security”
Your Excellencies, Distinguished Guests, Ladies and Gentlemen. I would like to take this opportunity to thank the Government of the Kingdom of Bahrain for their generous offer in hosting this important Forum, and for the warm welcome that has been afforded to all of us. I would also like to thank the International Institute for Strategic Studies, and in particular Dr John Chipman, Director-General and Chief Executive, for organising the Forum and for extending an invitation to me to share some thoughts with you all on this crucial – and increasingly critical - topic.
It is indeed appropriate that we gather in Bahrain. Bahrain has made exceptional progress in establishing stability and prosperity for its citizens, as indeed have many of the other Gulf States. But whatever our own achievements as nation states - large and small - we are all increasingly bound together in the processes of globalization. We know only too well that none of us can be isolated from global trends and global forces. And this is the subject that I have been asked to speak to today: how developing countries can foster both growth and security in an increasingly uncertain yet interconnected world, and what we in the World Bank Group are doing about it.
Global forces have become all too real in the last couple of years. Some commentators have noted that we now face three major crises. The first is climate change. Climate science has been building an evidence base for a decade. It has taken a while for the full extent of the crisis – and I use the word advisedly – to reveal itself. The world is now trying to catch up. The second is the economic and fiscal crisis from which the world now seems to be slowly recovering. The recent turmoil in the Euro-zone has reminded us that we are not out of the woods yet. The third crisis is perhaps less recognized, but is no less important for that. And that is the crisis of fragile and conflict-affected states. As the president of the World Bank Group, Mr. Zoellick, told the International Institute for Strategic Studies in Geneva in September 2008, “fragile states are the toughest development challenge of our era”.
Much of the world has made rapid progress in building stability and reducing poverty in the past sixty years, but areas characterized by persistent violence and fragile institutions are being left far behind. In the lead up to September’s Millennium Development Review Conference, it is important to underline that no fragile or conflict-affected state has yet achieved any of the Millennium Development Goals and few are on track to do so. When one excludes India, China and Russia from statistics, over two out of every three deaths of infants and children under five, mothers dying in childbirth + and children without access to schooling worldwide are in conflict-affected countries or those recently recovering from conflict. Over sixty years after the founding of the Bretton Woods Institutions, the “R” for Recovery in IBRD still has meaning—fostering recovery and growth in countries from Lebanon and Bosnia-Herzegovina to Liberia,Timor Leste,, Haiti, and Sierra Leone.
As President Zoellick also told the International Institute for Strategic Studies in September 2008, the trauma of fragile states and the interconnections of globalization require our generation to recognize anew the nexus among economics, governance and security. That’s why the World Bank’s annual World Development Report 2011, to be released in January next year, is focused on this challenge.
In today’s world, violence and insecurity is also not a threat to poor countries alone. High and middle income countries are directly affected by forms of crime and political conflict which disrupt developmental relations – country cases for our World Development Report, for example, include Northern Ireland, the Basque region, drugs and gangs in Los Angeles and Germany’s post 45 and post 89 recovery experiences. Of course, the impact of conflict is more severe in countries which do not have the institutional or financial resources to combat it. Yet the impacts of conflict – from poverty and refugee flows, to the spread of epidemic disease and the rise of transnational criminal networks and cross-border trafficking – reverberate across borders. No one is immune: the world’s poorest, middle-income, and richest countries are affected.
The early consultations and analysis made for our World Development Report reveal three aspects of violence which we believe have been under-attended. The first is the rise in violence after formal peace settlements, up fivefold as a percentage of global deaths in battle since the mid-1990s. This confirms what many of us will know to be the case: that many countries which have been labelled as “post-conflict” by the international community are in fact experiencing on-going fighting and insecurity. It is important because we are not attuned to providing economic assistance amidst on-going insecurity, or thinking about peace as long-term process rather than an event.
Second, there is a link between different types of violence – in particular between political conflict, local conflicts over land, international ideological movements who often link in to localised grievances, gang activities, and organised crime and trafficking. Afghanistan is an obvious example, but we see the same linkages and blurring of lines in all regions. This is important because we tend to treat these forms of violent challenges separately, with different government ministries, different communities of experts and different international agencies dealing with each.
The third aspect which we think is under-emphasised is the transnational nature of violence today. What hits the headlines is the high profile terrorist attacks, but there are many other transnational dimensions to violence, including the spread of localised armed movements across borders, and illegal trafficking of drugs, arms, natural resources and human beings which is of great concern to my original region – Latin America - and I know to yours too.
This aspect is important because our instruments internationally still tend to be very much focused on individual national states. We have difficulty in dealing with problems such as the violence linked to transnational illegal trafficking, which easily shifts between countries and requires regional and global approaches to address it. The role of external stresses – whether economic shocks, trafficking or security factors – is one of the issues consistently raised by the leaders of conflict affected countries with whom we have consulted.
What have we learned about addressing the linkages between security and development? Somethingwe know for sure: approaches that rely on security alone have shown a poor track record of success. No matter how strong the law enforcement approach, without economic prospects, it is too difficult to persuade those who see opportunities to profit from violence that they and their families will prosper from following a legal, peaceful path. Growing youth unemployment around the world, including in this region, is a structural risk in this regard which needs urgent attention. Yet economic growth will also be insufficient if some groups are perceived to be significantly excluded from access to power, opportunities and resources. Law enforcement, but also economic prospects and the balancing of power relations and perceptions of justice and inclusion are of the essence.
Furthermore, we have to be realistic and make space for locally-adapted approaches to grow. We have looked at the time it has taken in practice for developed and middle income countries to make some key institutional transformations now facing fragile and conflict-affected countries – political reform, security sector reform, establishing functional bureaucracies, dismantling networks of corruption and patronage and so forth. In all cases, we find that the countries which have achieved the “fastest ever” transformations have still typically taken a generation. Further, they have created approaches and institutions that suit their own local conditions – Germany, Portugal or South Korea, to name three countries which made fast transitions in the 20th century, for example, did not follow the institutions of the US, but invented their own approaches to suit their circumstances.
These days, in hopes of quick fixes, the international community is less patient and tends to import detailed institutional models that are applied regardless of country context – from electoral and constitutional law to procurement laws and anti-corruption commissions. Imported models crowd out local innovation and often overwhelm nascent national and local institutions. This is not to diminish the role of cross-country learning – there is in particular a great potential for south-south learning which remains untapped – but we need to separate the fantastic progress which has been made in developing international and regional consensus on outcomes, from the specific institutional models which countries may adopt to get there.
Let me illustrate this by reference to the recent experience of Medellin, in Colombia, which today is a city transformed. Most of you, who know the region, until some years ago, would hear ‘Medellin” and think “drugs”. I must admit I did once – but no longer. Medellin experienced huge levels of inward migration from the countryside, as a result of which the city’s population grew from 275,000 in the 1950s to 1.3 million in the late 1970s. Informal settlements swelled on the city’s periphery, bringing new levels of crime and violence. The situation was exacerbated by spillover from political conflict and civil war in Colombia, which had made many areas of the territory ungovernable. Municipal government was unable to maintain order, or control the growing trade in marijuana and cocaine. As the drug trade grew, cartels corrupted both national and local institutions, further diminishing the city’s capacity to cope with rapid growth. By the late 1980s, Medellín had a murder rate of 380 per 100,000, perhaps a world record. Drug traffickers, local gangs, guerrilla militias, paramilitary groups, and petty criminals terrorized every sector of the city, often informally supporting each other. This was the base from which convicted drug lord Pablo Escobar ran his empire. This is the Medellin you have read about.
During the 1970s and 1980s, the Colombian government essentially tried a series of security and law enforcement approaches, at times combined with “peace” discussions, to address this: none were successful. However, in the early 1990s, Medellín’s private-sector leaders and emerging networks of civil society organizations, united by their rejection of violence, began to reweave the city’s badly damaged economic and social fabric.
The local government formulated plans for the city’s modernization and for combating violence, and drew on support from the local business community. The private sector showed great civic spirit by bringing investment to innovative and transformative social programs into the city’s marginalized, violent neighbourhoods. The law enforcement agencies switched from an approach of protecting against attacks on state installations and officers to an approach of prioritising citizen security. Multi-sectoral programs of violence prevention emphasised the links between youth employment, rehabilitation and counselling; the physical environment of the city, including access to mass transportation for previously marginalized areas; education systems; reform to the justice sector; and community policing and security. By 2007 Medellín’s homicide rate was 90 percent below its 1991 peak. It was a city transformed.
While social problems undoubtedly remain, the last twenty years experience of Medellin demonstrates clearly that security, economic prospects and justice and inclusion are fundamentally inter-connected.
What are the problems? The first worth underlining is the lack of a regional approach. The concern in Latin America now is that actions in Colombia have pushed part of the problems of drug trafficking elsewhere, and that without a coherent regional approach other countries will suffer spillovers and the problem will backfire, on neighbours and on Colombia itself. The second is with relation to the role of international assistance. The program in Colombia has been criticised for to much reliance on external assistance. For me the benchmark of this is whether the results benefit Colombian citizens in the long-run – this is the test of whether international assistance is well-used.
This example illustrates just why we are taking security and development linkages so seriously at the World Bank. Laying out the issues and individual approaches is relatively straightforward. What is much more difficult of course is to know how to respond at an international level.
The World Development Report will assess gaps in international strategy and financing to support efforts to prevent and recover from conflict. Complex conflict environments require communication across political, security, and development interventions as well as improvements in the speed, duration, and predictability of international assistance. Volatile conflict environments may be best served by high-risk, high-reward entrepreneurial forms of aid that cross institutional and functional boundaries (like the combination of private sector and civil society action in Medellín). However, a rigid aid architecture can sometimes thwart necessary innovation and speed of response. There is also a challenge in targeting international assistance to fill gaps, including bridging institutional and financing deficits, without infringing on sovereignty and national pathways to address conflict threats – how to we best facilitate a dialogue to do this?
Let me conclude by summarising my argument.
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I have suggested that insecurity and conflict constitute the third current global crisis.
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I have argued economic prospects and security are now recognised as being interlinked and interdependent, and there is an important “third pillar” in addressing balancing of power relations: that is, perceptions of justice and inclusion.
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I have explained the ways in which this problem is getting daily more serious, and the ways in which insecurity and conflict have such terrible consequences both in-country and regionally and internationally.
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And I have sketched out some of the early questions and analysis raised in the 2011 World Development Report based on a far-reaching consultative process over the past several months.
I look forward to our discussion and thank you for your kind attention.
