Foreign Policy - #165 COMMING FINANCIAL EPIDEMIC

ISN ETH Zurich It only takes a few steps to find the right information www.isn.ethz.ch Managing information, sharing knowledge The ISN is a leading provider of information and e-learning services for Eidgenössische Technische Hochschule Zürich the international relations and security community. Swiss Federal Institute of Technology Zurich

HOW TERRORISM GOT YOUNGER, SMARTER, AND MORE DEADLY GLOBAL POLITICS, ECONOMICS, AND IDEAS The U.S. Military Speaks Out on What Worries It Most ® MARCH/APRIL 2008 ForeignPolicy.com THE COMING FINANCIAL PANDEMIC Why America’s Economic Crisis Will Infect The World

PREPARING THE WORLD’S LEADERS WITH A GLOBAL PERSPECTIVE INITIATE GLOBAL DIALOGUE INFLUENCE STRATEGIC CHANGE INTEGRATE COLLABORATIVE KNOWLEDGE The Fletcher School prepares the world’s leaders with a global OUR DEGREE PROGRAMS perspective to become the future’s innovative problem solvers Master of Arts in Law and Diplomacy (MALD) in government, international law, international business and international and Master of International Business (MIB) non-governmental organizations. Students are engaged across Master of Arts (MA) disciplines to develop a political, economic, historical, legal and Master of Laws (LLM) cultural understanding of the forces at work in the global arena. Become an Global Master of Arts Program (GMAP) informed citizen of the world at The Fletcher School. Doctor of Philosophy (Ph.D) Executive Education (non-degreed) fletcher.tufts.edu









What Comes Around... How will the U.S. financial crisis travel? Where will it go? What are the routes through which other economies will be affected by America’s financial infirmity? Nouriel Roubini, an economist who has long warned about the coming crisis, sees a mounting financial contagion that cannot be contained. “Not every country will follow the United States into an outright recession,” writes Roubini, “but no one can claim to be immune.” Economic bankruptcies are not the only worry. What if the U.S. military is also stretched to the limit and, in effect, operationally bankrupt? Such a crash would be as trans- formational for the United States and the rest of world as any financial crisis. But how much of a toll have the wars in Iraq and Afghanistan really taken? The only way to find out is to ask those who know—and are free to talk. So, FP teamed up with the Center for a New American Security to conduct a groundbreaking survey of more than 3,400 current and former military officers about the state of America’s armed forces. Their firsthand knowledge of the reality inside the mightiest military machine the world has ever known is as surprising as it is sobering. Surprising our readers with the most rigorous analysis by the most authoritative authors is our obsession. We know our readers are well informed and expect unique perspectives that they can only find in our pages. Or on our Web site. Every day, the magazine’s award-winning Web site, ForeignPolicy.com, offers provocative and original perspectives on the news and trends that are making headlines. You might begin your day on FP’s blog, Passport (blog.foreignpolicy.com), by checking out our Morning Brief, which gives you a quick rundown of all the most important stories of the day. Then, hour by hour, you’ll hear from FP editors on Passport as we unearth the news and views that have people talking. You also don’t want to miss the new, original features we publish online each week. Every Monday, FP’s editors bring you The List, our breakdown of the people, places, and things that are shaping our world. Recent Lists have featured The World’s Top Spy Agencies, the Elections to Watch in 2008, and the World’s Worst Places to Be a Kid. Every Tuesday, we publish a timely, new Web-exclusive argument that raises the level of debate. If you checked recently, you saw economist Thomas Palley argue why you shouldn’t bet against the dollar, or psychologist Randall Collins explain why members of the middle class make the best suicide bombers. Then, on Wednesdays, you can find Seven Questions, our weekly interview with thinkers and decision-makers. Gen. David Petraeus, Martin Feldstein, and Richard Posner are just a few of the people who have recently fielded our questions. We can’t guarantee that they will always have good news, but they will help you make sense of the world. That’s why, when you come around to ForeignPolicy.com, we think you’ll find it hard to resist. As always, we welcome your comments and feedback at ForeignPolicy.com. The Editors March | April 2008 5

C O NTENTS March|April 2008 8 LETTERS Radical thinking about Islam I A textbook case I Reassessing Russia I Investing in women. 22 IN BOX Power Houses I The blurbosphere I Spies for hire I Epiphanies from Lawrence Summers I Smell the CO2 I Plus, FP tests your knowledge of the world. 36 THINK AGAIN Web of terror: How a loose 26 Geneva Conventions They help protect civilians and soldiers network of would-be terrorists hatched an online jihad. from the atrocities of war. But these hard-won rules of battle are falling by the wayside: Terrorists ignore them, and governments increasingly find them quaint and outdated. With every violation, war only gets deadlier for everyone. By Steven R. Ratner PRIME NUMBERS 34 The Plastic Revolution As the rich world knows all too well, credit cards are as dangerous as they are convenient. With millions of consumers from China to Mexico filling their wallets with plastic, the risks are mounting as fast as people can say, “Charge it!” By Ronald J. Mann 50 ESSAYS TOP: HO NEW/REUTERS; BOTTOM: GUANG NIU/GETTY IMAGES Why nationalism could 36 The Next Generation of Terror The world’s most dangerous help the countries who are smart enough to use it. jihadists no longer answer to al Qaeda. The terrorists we should fear most are self-recruited wannabes who find purpose in terror and COVER: ARKO DATTA/REUTERS comrades on the Web. This new generation is even more frightening and unpredictable than its predecessors, but its evolution just may reveal 6 Foreign Policy the key to its demise. By Marc Sageman 44 The Coming Financial Pandemic The U.S. financial crisis cannot be contained. Indeed, it has already begun to infect other countries, and it will travel further before it’s done. From sluggish trade to credit crunches, from housing busts to volatile stock markets, this is how the contagion will spread. By Nouriel Roubini 50 Is Nationalism Good for You? It’s blamed for everything from unruly populism to genocide. But what if nationalism isn’t the unevolved reflex so many assume it to be? In fact, nationalism could help create wealth, fight corruption, and lower crime. By Gustavo de las Casas 57 Will Democracy Make You Happy? For decades, politicians and political scientists have clung to the notion that free nations breed happy people. Now, though, a new ‘science of happiness’ is turning that equation on its head. By Eric Weiner

GLOBALIZATION AT WORK 70 62 A World Enslaved There are now more slaves on the planet than What’s worrying the United States’ top military minds? at any time in human history. True abolition will elude us until we admit the massive scope of the problem, attack it in all its forms, and empower slaves to help free themselves. By E. Benjamin Skinner THE FP INDEX 70 The U.S. Military Index In an exclusive new index, FP and the Center for a New American Security surveyed more than 3,400 active and retired officers at the highest levels of command about the state of the U.S. military. They see a force stretched dangerously thin and a country ill-prepared for the next fight. TOP: MASTER SGT. LANCE CHEUNG/DOD; BOTTOM: PETE PATTISSON ARGUMENTS 80 How Democracies Grow Up Countries with too many young people may not have a fighting chance at freedom. By Richard P. Cincotta 84 Iraq’s 100-Year Mortgage The price tag for caring for the Americans who fight this war could exceed what it costs to wage it. By Linda J. Bilmes REVIEWS 86 IN OTHER WORDS Love in the time of terror By Carlos Lozada I Egypt’s contrite commander By Diaa Rashwan 92 NET EFFECT An iCrime wave I Ringtones charm the locals I 62 Terrorists inside Second Life I Brazil stops playing games I Plus, veteran The price of life: technology executive Linda Stone on the sites that keep her connected. Slavery is illegal, immoral— and more prevalent than ever. MISSING LINKS 96 Can the World Afford a Middle Class? Yes, but it will be awfully expensive. By Moisés Naím March | April 2008 7

[ ]L E T T E R S Moisés Naím Radical Thinking Fuller offers a much-needed reminder to those who continue to view the EDITOR IN CHIEF About Islam world uncritically and reduce global politics and terrorism to Islam, that William J. Dobson Without Islam, the world would be the political and economic ambitions and same. Without Islam, the world would grievances—not religion—are the pri- MANAGING EDITOR be radically different. Graham Fuller mary drivers of conflict and terrorism. (“A World Without Islam,” Janu- Absent Islam, the Middle East still Michael C. Boyer, Christine Y. Chen ary/February 2008) cannot seem to would have experienced forms of West- make up his mind. At first, he argues, ern (Christian) imperialism and con- SENIOR EDITORS “[R]emove Islam from the path of his- flicts stemming from issues related to tory, and the world ends up exactly ethnicity, nationalism, access to Kate G. Palmer where it is today.” In fact, what Fuller resources and markets—and religion. is arguing is a more general proposi- DEPUTY MANAGING EDITOR tion: Remove any religion from the The absence of Islam would not path of history, and the world remains have precluded religious wars, only Preeti Aroon, Carolyn O’Hara the same. Religion, in this view, is sim- changed their nature. As Fuller notes, ply an epiphenomenon, a veil to cover Western Christian expansionism and ASSISTANT EDITORS the deeper cultural and economic real- colonialism, from the Crusades and ities that constitute the real forces of conquistadors to European colonial- Prerna Mankad history. All religions, Fuller argues, ism, reflect what would have been the including Christianity, are equally irrel- tip of the iceberg if Christianity had EDITORIAL ASSISTANT evant. History would have turned out free reign. Absent Islam, Western the same with or without them. Christianity would not have developed Caroline Nobert as the dominant form of Christianity; Yet in the middle of his essay, Fuller it would have been subordinate to ASSISTANT TO THE EDITOR undergoes a significant change of heart. Eastern Orthodox Christianity. Thus, He writes, “In a world without Islam, the dominant form of Christianity Joshua E. Keating, Andrew Kumpf, Western imperialism would have found would have been one with a long his- Lucy Moore, Caitlin Gayle Wall the task of dividing, conquering, and torical record and memory of Western dominating the Middle East and Asia imperialism and one that was therefore RESEARCHERS much easier.” But if Islam—as a reli- sharply suspicious and critical of the gion—has kept the West from achieving West. The religious conflicts between Travis C. Daub its manifest destiny of global hegemony, Rome and the Reformation would then Islam has obviously played a deci- have been but an episode in a much ART DIRECTOR sive and irreplaceable role in history. broader historic warfare between the The obstacle to the global ambitions of Catholic Church in Rome and East- Elizabeth Glassanos Western imperialism, as Fuller sees it, is ern Orthodoxy. the uniquely religious bond by which ART & PRODUCTION ASSISTANT Islam gathers together the different eth- What is the relevance of Fuller’s reflec- nic groups of the Middle East and Asia tions for the modern Middle East and Katherine Yester in a united front. Because of this bond, global politics? As Fuller argues, and the the West is faced with an entire civiliza- Gallup World Polls of 2005 and 2006 PRODUCTION ASSISTANT tion that ferociously resists its claims to confirm, the bottom line is that issues of domination. It is Islam—as a religion— democratization, violence, terrorism, Blake Hounshell that has kept the West from consum- and gender are driven by political, eco- mating its long-desired goal of the End nomic, and social forces—as well as by WEB EDITOR of History. It is Islam that is responsible religion. Absent Islam, the Holocaust, for the clash of civilizations. In short, with its strong Western Christian roots, Thomas R. Stec Fuller ends up offering a powerful argu- the desire and need for a Jewish state, ment for the very thesis he sets out to and ultimately the creation of Israel, WEBMASTER refute. Religions do matter. They are would still have occurred. The victims not merely veils, or rallying cries, or of Israeli occupation and its oppo- Blaine Sheldon potent symbols. They shape and mold nents would not have been Palestinian history, often more decisively than those Muslims and Christians but simply WEB DEVELOPER allegedly deeper social and economic causes that have inordinately engrossed [ ]For More Online CONTRIBUTING EDITORS the attention of modern historians. Graham Fuller’s cover story inspired a Jacques Attali, Paris; Jorge I. Domínguez, Cambridge, Mass.; Yoichi Funabashi, Tokyo; —Lee Harris provocative debate about the relevance Yegor T. Gaidar, Moscow; Andrés Ortega, Madrid; Author of Islam. Read it online at: Gianni Riotta, Rome The Suicide of Reason: Radical Islam’s ForeignPolicy.com/extras/fuller. CONTRIBUTING WRITER David L. Bosco Threat to the West EDITORIAL BOARD Stone Mountain, Ga. Morton Abramowitz, John Deutch, Lawrence Freedman, Diego Hidalgo, Stanley Hoffmann, Robert D. Hormats, Thomas L. Hughes, Karl Kaiser, Jessica T. Mathews, Donald F. McHenry, Cesare Merlini, Thierry de Montbrial, Joseph S. Nye Jr., Soli Özel, Moeen Qureshi, John E. Rielly, Klaus Schwab, Helmut Sonnenfeldt, Lawrence Summers, Strobe Talbott, Richard H. Ullman, Stephen M. Walt PUBLISHED BY Foreign Policy 1779 Massachusetts Avenue, NW Washington, DC 20036 Publishing Office: (202) 939-2230 Subscriptions: (800) 535-6343 ForeignPolicy.com ©2008 by the Carnegie Endowment for International Peace. All rights reserved. Foreign Policy and its logo are trademarks of the Carnegie Endowment for International Peace, which bears no responsibility for the editorial content; the views expressed in the articles are those of the authors. No part of this publication may be reproduced in any form without permission in writing from the publisher. 2007 NATIONAL MAGAZINE ozzie AWARD WINNER GENERAL EXCELLENCE 8 Foreign Policy

“A war of ideas can no more be won without books than a naval war can be won without ships. Books, like ships, have the toughest armor, the longest cruising range, and mount the most powerful guns. I hope that all who write and publish and sell and administer books will rededicate themselves to the single task of arming the mind and spirit of the American people with the strongest and most enduring weapons.” —President Franklin Roosevelt, in a letter to W. W. Norton, chairman of the Council on Books in Wartime, 1942 CELEBRATING the POWERof IDEAS The Washington Institute BOOK PRIZE First Annual DEADLINE for ENTRIES: MAY 1, 2008 Gold Prize: $30,000 Silver Prize: $15,000 Bronze Prize: $5,000 Enq hmenql`shnm nm gnv sn dmsdq+ uhrhs V`rghmfsnmHmrshstsd-nqf

[ ]Letters Lynn E. Newhouse Palestinian Christians. We tend to forget occur in its name, and it is an exercise in that, from the early centuries of Islamic intellectual and analytical dishonesty. ASSOCIATE PUBLISHER & GENERAL MANAGER history, Eastern Orthodox Christians have been among the victims of Western —Tawfik Hamid Annette Munroe Christian imperialism, and among the fiercest opponents of Israeli occupation. Author CIRCULATION DIRECTOR —John Esposito Inside Jihad Gina Falzarano University Professor Washington, D.C. CIRCULATION ASSOCIATE Professor of Religion and International Affairs Graham Fuller replies: Jonathan W. McCloskey Lee Harris is quick to perceive the ele- Georgetown University ment of self-contradiction within my BUSINESS ASSISTANT article on whether Islam had historical Washington, D.C. impact or not. I plead guilty to the Amy Russell charge, and I noted in the essay that it Fuller postulates that removing Islam would be absurd to deny Islam any DIRECTOR OF SALES from the course of history would still role in shaping history. But any hypo- have the world end up exactly where it thetical exercise runs that risk. Maria San Jose is today. However, according to Islamic history books, the people of Arabia My goal was to undermine the reign- ADVERTISING SALES REPRESENTATIVE prior to the existence of Islam enjoyed ing argument that all that is wrong in more religious tolerance than they did East-West relations is the fault of “Islam” Alexia Sagemüller after the religion was introduced. by explaining the impact of other pro- found forces. Religion is obviously more CORPORATE PROGRAMS DIRECTOR Fuller opines that violence in the Mus- than a Marxist phenomenon; it is a lim world is partially a result of anger reflection of diverse human quests for Cristina Hernández Droulers toward U.S. foreign policies and toward meaning. I don’t agree, however, that Israel, yet he fails to prove how these “[i]t is Islam that is responsible for the CORPORATE PROGRAMS ASSISTANT policies have caused brutal and mas- clash of civilizations,” as Harris sug- sive killings among Muslims themselves, gests, any more than Christianity is. It Randolph F. Manderstam such as in Algeria and Iraq. If Islam, is civilizations that are responsible for specifically the militant and political the clash of civilizations. SYNDICATION COORDINATOR ideology of Salafism, did not exist, we would not have seen the Sunni insur- John Esposito introduces an impor- SUBSCRIPTIONS & SUBSCRIBER SERVICES gency in Iraq or Hamas-led terrorism in tant argument that my own article actu- FOREIGN POLICY, P.O. Box 474, Mt. Morris, IL Gaza. If militant Islam did not exist, ally neglects to explore: Without Islam, 61054-8499; ForeignPolicy.com; e-mail: both places would probably have the Western Catholic Church would [email protected]; (800) 535-6343 in U.S.; (815) enjoyed the fruits of democracy that have been much more seriously rivaled 734-1235 outside U.S.; Publications mail agree- have been offered to them. by the Eastern Orthodox Church, and ment no. 40778561. Rates (in U.S. funds): the chances of long-term religious con- $24.95 for one year; $44 for two years. Canada In addition, Fuller fails to note that flict between the two would have been add $9/yr. for postage and handling; other many of the separatist groups that have much higher. countries add $15/yr. For academic rates, go to conducted acts of terrorism in Europe ForeignPolicy.com/education. were also Muslims. And he cannot Tawfik Hamid is quite right that explain why Arab Christians today there are brutal murders today within ADVERTISING & FP commit vastly less terrorism than Arab the Algerian and Iraqi communities, CORPORATE PROGRAMS Muslims, even though they live under but I question whether these murders Call (202) 939-2243. the same socioeconomic and political can be attributed to religion in most circumstances. cases. In Algeria, there is a complex NEWSSTAND AND BOOKSTORE DISTRIBUTION struggle between an old Francophone Curtis Circulation Company, 730 River Road, New If Islam did not exist, we likely still ruling elite and an Arabic-speaking Milford, NJ 07646-3048; (201) 634-7400. would have had a violent world in the underclass that is contesting control past. But it is because Islam exists that of the state. Islam is one of the main BACK ISSUES we have seen the beheading of inno- vehicles today for the latter group, and $10.95 per copy. International airmail add $3.00 per cents in the name of God, barbaric it is exploited by its murderous ele- copy; online: ForeignPolicy.com; e-mail: suicide bombings conducted on a near- ments. In Iraq, there are clearly sec- [email protected]. ly daily basis in the name of religion, tarian murders, but the groups are not and the stoning of women in modern fighting over theology; the communi- MEDIA INQUIRIES times. Most of the world today clear- ties have been deeply entrenched for Call (202) 939-2230; ly rejects these brutal practices—with more than a thousand years and are [email protected]. the exception of Islamic countries. The rivals for control of the state. fact of the matter is that Islam does SYNDICATION REQUESTS indeed exist, and we must face the con- I do not seek to exempt radical jihadis Contact Randolph F. Manderstam (202) 939-2241; sequences. Engaging in a hypothetical from the violence and intolerance [email protected]. examination of a world without Islam that they practice in the name of religion. is an apparent attempt to exempt it But such violence has been practiced OTHER PERMISSION REQUESTS from the atrocities that continue to throughout history by endless groups in Copyright Clearance Center, Inc. (978) 750-8400; www.copyright.com. PUBLISHED BY 10 F o r e i g n P o l i c y

Political Studies Association Setting the agenda for global political science 58th Annual Conference 1–3 April 2008, University of Swansea, UK Democracy, Governance and Conflict: Dilemmas of Theory and Practice For more information, please visit the conference website at: www.psa.ac.uk/2008 JOIN THE Political Studies Association Full membership AS A MEMBER YOU WILL RECEIVE: • Members’ discounts on conference UK/Europe: £70 per year and workshop fees - you will save North America: US$200 • Political Studies 4 times a year more than the cost of your membership Rest of World: £100 per year when you attend our annual conference • Political Studies Review 3 times a year • Access to grants to attend overseas conferences • Politics 3 times a year • Exclusive online members-only • BJPIR: The British Journal of resources at www.psa.ac.uk Politics and International Relations 4 times a year • Access to a network of 40 specialist research groups • Newsletter 4 times a year • Opportunities to compete for annual • Annual Directory - listing all Political Studies Association prizes political scientists in the UK and Ireland by university and • 35% discount on books and journals department from Blackwell Publishing and Polity Press TO FIND OUT MORE, CALL E-MAIL [email protected] +44 (0)191 222 8021 WEBSITE www.psa.ac.uk

NEW WORLD BANK PUBLICATIONS [ ]Letters ON MIGRATION AND REMITTANCES the name of religion, race, secular ide- Migration and Remittances Factbook 2008 ology, and class struggle. As I wrote, I do not believe that any of this would go by Dilip Ratha and Zhimei “Jamie” Xu away if religion or race or class were eliminated. Human beings have always Migration and remittances have increasingly been a major excelled at creating differences between development issue representing both opportunities and risks for themselves and the “other”—and using reducing poverty and enhancing shared growth in developing them to justify terrible acts against countries. For the first time, the World Bank is publishing the other people. Migration and Remittances Factbook, a treasure trove of facts and figures about migration and remittances for all countries, regions, A Textbook Case and income groups of the world. From the top immigration and emigration countries, top remittance-receiving and remittance- Are French and German students being sending countries through to destination countries for refugees, and emigration countries brainwashed to reject capitalism, for physicians and those with a tertiary education, it’s all in the Migration and Remittances despise the entrepreneurial spirit, and Factbook. It contains statistical snapshots for 195 countries and 13 regional and income oppose globalization? Stefan Theil groups. The 200+ tables, each focused on one country, region, or income group, explore believes so (“Europe’s Philosophy of immigration, emigration and skilled emigration, and inward and outward remittance flows. Failure,” January/February 2008). He Summary reports on the top 10 countries in each category are also included. lashes out at the presumably ill- informed and misleading economics February 2008. 220 pages. Stock no. 17413 (ISBN: 978-0-8213-7413-9). US$29.95 curriculum in Europe. He even holds the economics teachers in Europe Remittances and Development responsible for the backward Euro- pean economy. Lessons from Latin America Not only is his unwavering belief Edited by Pablo Fajnzylber and J. Humberto Lopez in the market remarkable but his con- fidence in the powers of teachers and Workers’ remittances have become a major source of financing textbooks is astonishing. As an author for developing countries and are especially important in Latin of a forthcoming economics textbook America and the Caribbean (LAC), which is at the top of the myself—An Introduction to the Eco- ranking of remittances receiving regions in the world. While nomic Conversation (Palgrave Macmil- there has been a recent surge in analytical work on the topic, lan, 2008)—I can only dream about this book is motivated by the large heterogeneity in migration having such influence. Having taught and remittances patterns across countries and regions, and economics for 30 years, I am espe- by the fact that existing evidence for LAC is restricted to only a few countries, such as cially impressed by the ability of stu- Mexico and El Salvador. Because the nature of the phenomenon varies across countries, dents to forget what I taught them, or its development impact and policy implications are also likely to differ in ways that are to twist my lessons toward whatever still largely unknown. This book helps fill the gap by exploring, in the specific context of direction they want to take them. Latin America and Caribbean countries, some of the main questions faced Nonetheless, I agree with Theil’s asser- by policymakers when trying to respond to increasing remittances flows. tion that the way economists speak of the economy influences the way people LATIN AMERICAN DEVELOPMENT FORUM SERIES perceive things. February 2008. 408 pages. Stock no. 16870 (ISBN: 978-0-8213-6870-1). US$30 There are at least two serious prob- ALSO AVAILABLE lems, however, with Theil’s argument. First, he cannot account for the Euro- The International International Migration, pean economy’s positive performance Migration of Women Economic Development & Policy at the moment; in fact, it’s even out- performing the U.S. economy. Should Edited by Maurice Schiff, Andrew R. Morrison, and Mirja Sjoblom Edited by Maurice Schiff and Çaglar Özden the teaching of economics be held responsible? And though his citations TRADE AND DEVELOPMENT SERIES TRADE AND DEVELOPMENT SERIES from European textbooks are dis- A COPUBLICATION WITH PALGRAVE MACMILLAN* A COPUBLICATION WITH PALGRAVE MACMILLAN* turbing, his own take on economics is just as disturbing. It does not account November 2007. 300 pages. June 2007. 320 pages. for the role of governments or society. Paperback. 978-0-8213-7227-2. US$35 Paperback. 978-0-8213-6935-7. US$35 At least some economists are becom- Hardcover. 978-0-8213-7257-9. US$80 Hardcover. 978-0-8213-7028-5. US$90 ing increasingly aware of the role of culture, social formations, and values * Customers in Western Europe and Japan please order from Palgrave Macmillan by visiting their website at www.palgrave.com. in countries’ economic performance. I agree wholeheartedly that the teaching To Order: AFP308 of economics is flawed. But Theil’s Online: www.worldbank.org/publications Phone: 703-661-1580 or 1-800-645-7247 Fax: 703-661-1501 AVAILABLE AT BETTER BOOKSTORES WORLD BANK The reference of choice on development Publications

MASTER OF ARTS IN DIPLOMACY ONLINE Prepare for Global Success Understanding and insight are crucial to foreign relations and global business. Perspective on globalization and knowledge of cross cultural issues will differentiate the leaders and innovators of tomorrow. Influence change, initiate dialogue and foster collaboration with Norwich University’s Master of Arts in Diplomacy. Concentrations available include International Commerce, International Conflict Management and International Terrorism. Earn your degree in 18 months from a fully accredited university with 189 years of academic heritage. Learn more: www.diplomacy.norwich.edu/fpp or call 1-800-460-5597 ext. 3378

[ ]Letters solution—preaching the gospel of lightly veiled implication here, of course, they are receiving moral instruction (dare the market—is equally flawed. is that the economics curriculum taught I say, indoctrination) about how to get in the United States is somehow less ahead in a hypercapitalist society, and —Arjo Klamer biased than those presented to students about why it’s proper to act in ways in Germany and France. Les sciences that reproduce that society. Despite what Professor of the Economics of Art and Culture économiques françaises are treacherous, his rhetoric suggests, Theil isn’t arguing heretical, and fatally flawed; economics for the teaching of economic realities in Erasmus University Rotterdam à la Yankee represents divine truth. But Germany and France. Instead, he’s argu- is the American economics curriculum ing for the teaching in those countries of Rotterdam, The Netherlands really free of bias? a particular ideology—one that more closely aligns with now-sacred beliefs Theil employs rhetorical tactics all too The straightforward economics teach- and entrenched interests of the United common among those pushing the ings that Theil lauds actually rest on a States. orthodoxy of neoclassical economics. series of highly problematic assump- French and German students, he sug- tions concerning human nature and Theil is quite right to suggest that gests, are receiving a dangerous, anti- social life. Among these assumptions are what is taught to a nation’s youth has capitalist indoctrination. They are a notion of the individual as inherently profound implications. His error, being force-fed a worryingly “skewed atomistic, self-interested, and insatiable; though, is in focusing his attention on ideology,” a set of outrageous politi- a belief in the primacy of economic Europe. His sharp lens and critical pen cal and economic ideas and attitudes growth above all else; a conviction that might have been better turned toward that read like the “punch lines to cock- the unfettered market is able to address the economics curriculum in the good tail party jokes.” This biased eco- all social ills; and a faith that ever high- old U.S. of A. nomics curriculum, we are told, is not er levels of individual consumption offer only threatening Europe’s long-term the route to personal and societal well- —Simon Nicholson prosperity, but it is also contributing being. This means that when students in to some of the world’s greatest chal- the United States learn economics, they Instructor and Doctoral Candidate lenges, including anti-Americanism. are also receiving instruction in a par- Quelle horreur! ticular, and incomplete, set of ideas School of International Service about what it means to be human. And Theil proclaims that the preferred alter- American University native is the “straightforward, classical economics” presented to high school Washington, D.C. students in the United States. An ever-so- Theil argues that Europe’s economic UC INSTITUTE ON GLOBAL CONFLICT AND COOPERATION problems can be traced to anticapi- talist ideology in French and German SECURITY POLICY WORKSHOPS high school economics curricula, which he contrasts unfavorably with pro-mar- NUCLEAR THREATS July 6–26, 2008 ket, entrepreneurial American econom- BIOLOGICAL THREATS July 26–August 3, 2008 ics instruction. We disagree. Courses for professionals and graduate students, Consider Theil’s argument that Euro- in residence at UC San Diego in scenic La Jolla pean economies are being “left behind.” Although the United States Multidisciplinary approach bridging science may score better on some counts, and public policy, taught by University of California France and Germany outperform the United States in measures of life faculty, experts from the national labs, expectancy, work hours, infant mor- and policymakers tality, and income distribution. FOR MORE INFORMATION Meanwhile, American high school Nuclear Threats Program instruction is not unbiased, as Theil Biological Threats Program implies, but rather it leans uncritically http://igcc.ucsd.edu/PPNT.php http://igcc.ucsd.edu/PPBT.php toward the ideological right. As we or email [email protected] describe in our book Introducing Eco- nomics: A Critical Guide for Teaching (M.E. Sharpe, 2007), the underfunding of American public education, in con- trast to most European countries, has created a vacuum into which corpo- rate-sponsored foundations have moved. Consider two organizations explicitly endorsed by Theil: Junior Achievement and the U.S. Federal Reserve. Junior Achievement’s finan- cial backers include AT&T, FedEx, General Electric, and United Tech- nologies, and its widely used textbook informs students that, for example,

even the problem of air pollution is CAMPAIGN 2008: “A bridge between the caused by “an absence of private THE ISSUES CONSIDERED world of ideas and the ownership and markets.” Similarly, branches of the U.S. Federal Reserve, Baker Institute Fellows and Guest Experts Examine world of action.” nominally a government organization, Key Policy Issues of the 2008 Presidential Race have partnered with conservative James A. Baker, III economists and foundations to dis- Honorary Chair tribute materials to high school edu- cators. Many are embarrassingly one- MIDDLE EAST CONFLICT sided, with titles such as “Messing RESOLUTION PROJECT with the Market” and “Profits: The Consumer’s Best Friend.” CCC2008 JAMES A. BAKER III INSTITUTE FOR Theil is correct on one point: “What The Conference PUBLIC POLICY a country teaches its young people on Convergence reflects its bedrock national beliefs.” and Connectivity Rather than teaching either pro- or antimarket viewpoints, however, the Wednesday, most important skill we could teach March 26, 2008 our young people is the ability to ana- lyze controversial issues, taking into For more: account arguments from both sides. www.bakerinstitute.org —Mark H. Maier Professor of Economics Glendale Community College Glendale, Calif. —Julie A. Nelson Senior Research Associate Global Development and Environment Institute Tufts University Medford, Mass. Stefan Theil replies: The three responses challenge my asser- tion that the French and German socioeconomic systems underperform, contend that American schools—and I—uncritically preach the gospel of the market, and question the impact of teachers and textbooks. On the first point, France and Ger- many have consistently underperformed on measures of growth, employment, innovation, and the length and depth of downturns, for two decades. Even after recent improvements, unemployment remains significantly higher than in the United States. Their corporatist and anti-entrepreneurial structures, com- bined with their highly regulated labor markets, tend to shut out immigrants and other outsiders. Mark Maier and Julie Nelson also argue that French and Germans work fewer hours than Americans. But a good part of that statistic is the effect of lower labor participation rates, especially among women, immigrants, and the young. Second, though I personally believe the track record of the market economy with modest redistribution is fairly

[ ]Letters clear, especially compared with the political consensus that gets passed assertion that Russia’s economic alternatives, my article makes no such down; otherwise, why should we care growth is entirely due to high oil claims. The subject of the article was what they say at all? I completely agree prices. This is an error I can’t ignore. the depth of antimarket bias and some- with the respondents that balanced, times vicious prejudice in some French unbiased teaching should be the goal. Dynamic economic growth in Russia and German textbooks. Teaching habitual distrust of markets began in 1990 during a period of low oil makes life too easy for illiberal pop- prices. Between 2000 and 2003, growth Do U.S. textbooks suffer from ulists and contravenes European lead- continued, while oil prices in real terms reverse prejudice, indoctrinating chil- ers’ stated intentions of creating more were close to the relatively low rates of dren in hypercapitalism, as Simon open, equitable, and opportunity- 1986 to 1999. This was the environ- Nicholson asserts? Hardly. There exists driven societies. ment surrounding the Soviet Union’s eco- nothing close to a pro-capitalist equiv- nomic collapse. Only from 2004 onward alent of French and German texts, Reassessing Russia did prices in real terms begin to approach which teach that economic growth the abnormally high levels of the late causes cancer, that globalization Lilia Shevtsova (“Think Again: Vladimir 1970s and early 1980s. It is true that regresses society back to the Middle Putin,” January/February 2008) is a Russia’s budget and balance of payments, Ages, and that entrepreneurs create remarkable political scientist. But when just as those of, say, Norway, are strong- chaos and unemployment. U.S. text- a specialist, even one as qualified as ly dependent on the strength of the oil books do not, for example, demonize she, begins discussing the problems of market. But one should also remember civil servants or teach that government another sphere of competence, the risk that the Russian authorities took sever- spreads lethal disease. In fact, the gov- of error is high. I am not simply refer- al responsible steps at the time, including ernment often plays a clear and benign ring to some peculiar expressions such using the “superincomes” from high oil role in U.S. history textbooks, with as, “The proportion of goods and serv- prices to repay government debt. positive coverage of social and eco- ices in Russia’s exports is a mere 1.7 nomic policy during the Progressive, percent” (exports are, as a matter of An honest analysis of economic growth New Deal, and Great Society eras. fact, the transport of goods out of a in Russia proves that oil is by no means country, and nothing else). These are the main engine of economic growth. In The question of the actual impact of trifles. More important is Shevtsova’s 2007, oil-production growth was textbooks is a valid and difficult one. approximately 2 percent, while output Arguably, textbooks and curricula are growth in machine building was 20 per- indicative of a broader social and cent. Against a backdrop of extremely

| |March 2008 Special EU Advertising Supplement eufocus EU Strategy for Trade and Development: Spurring Economic Development and Poverty Reduction “Trade is the engine for growth. The EU has a long history of preferential aid and The successful integration of developing countries It has already lifted millions trade relations with developing countries, particularly into world trade requires more than open access of people out of poverty in the in Africa. Using the potent mix of generous grant aid, to export markets and strengthened international world. We must ensure it can technical assistance, and innovative trade instruments trade rules. To fully exploit the benefits from trade, continue to do so.” over the years, the EU has sought to help some of the developing countries must also remove supply- world’s poorest countries achieve sufficient economic side constraints and address their own structural European Commission President transformation to lift their populations out of poverty. weaknesses. This includes domestic reforms to José Manuel Barroso Development is a fundamental objective of EU trade facilitate trade, including better customs operations, strategy, and together trade and development create a upgraded infrastructure, expansion of produc- inside synergy that aims to support the gradual and equita- tive capacities, and the development of domestic ble integration of developing countries in the world and regional markets. Complementary efforts are 2 EU Trade Policy: economy and the multilateral trading system. required in areas such as macroeconomic stability, Catalyst for fiscal reform, investment, improved labor policy, Development & Historically, trade has always been a part of the capital and product market regulations, and human Equitable Growth EU’s preferential relationship with the developing capital development. These principles, accompanied countries, as exemplified by the EU’s longstanding, by substantial aid for trade, are the foundation for the 5 EU-ACP EPAs: A special relationship with the African, Caribbean, and Economic Partnership Agreements between the EU New Era in Trade for Pacific countries (ACP), and the privileged trade and the ACP countries. Development access granted to beneficiary countries through the EU’s Generalized System of Preferences (GSP) and Aid for Trade (AfT) and Trade-Related Assistance 6 Trade Working for groundbreaking “Everything but Arms” (EBA) trade (TRA)—at both WTO and EU levels—support Development— arrangement introduced in 2001 to benefit the least developing countries in their own efforts to profit Examples developed countries. from improved trading opportunities. Success will generate growth, employment and income, thereby 8 EU Support for Aid and trade are the twin pillars of EU development contributing directly to the first and eighth Millenium WTO and DDA policy, with trade acting as a catalyst for economic Development Goals of reducing the proportion of growth and poverty reduction in developing countries. people living on less than a dollar a day and estab- Trade as an avenue to development is also high on lishing the open trading and financial system that is the agenda of the World Trade Organization—the rules-based and non-discriminatory. international body uniquely positioned to address the particular trade-related needs of the develop- EU FACT ing world in this era of globalization. The current round of WTO trade talks—the Doha Development ■ In 2006, the EU spent 0.43 % of Gross Agenda (DDA)—prioritizes developing countries’ National Income (GNI) on aid, compared to trade needs—a stance fully reflective of the EU’s 0.17 % of GNI for the U.S. own position. Among its objectives, the DDA seeks to further liberalize trade, review and improve existing ■ Together the EU and its Member States are trade rules, and help developing countries build their the world's largest provider of develop- capacity to benefit from freer trade. ment funds, accounting for 57 % of Official Development Assistance (ODA) in 2006, compared to 22 % for the United States. | eufocus 1 |

Special EU Advertising Supplement EU Trade Policy: A Catalyst for Development and Equitable Growth “…trade, while not a magic For decades, the EU has employed trade to advance Syria, and Tunisia) work to promote common politi- wand, can be a powerful tool its development cooperation objectives, particularly cal, economic, and technical interests. Euro-Med for development. Properly in the African, Caribbean, and Pacific (ACP) nations bilateral association agreements provide for the targeted and timed, in a that have been party to the Cotonou (and previously establishment of a free trade area by 2010. More progressive way, flanked Lomé) Convention, but also in Latin America, the recently, the European Neighborhood Policy has with development assistance, Middle East, and Asia. provided additional, complementary support for it is an engine for growth, these Mediterranean nations and six countries on the job creation, and poverty Preferential trade arrangements with the EU, accom- EU’s eastern border: Armenia, Azerbaijan, Belarus, elimination. panied by technical assistance and generous grant Georgia, Moldova, and Ukraine. funding, have contributed to economic develop- As countries around ment, stability, and prosperity in the countries of In Latin America, Chile and Mexico have each the world are showing, central and eastern Europe that benefited from concluded free trade agreements with the EU as part progressive trade opening association agreements, which helped them achieve of more broadly based “mixed” association agree- helps developing countries the economic transition necessary for EU member- ments, and Mexico has successfully used NAFTA chart their way out of ship. These “Europe Agreements,” introduced in the with Canada and the U.S. and the FTA with the dependency — not just 1990s, led to free trade with the EU and helped these EU to become Latin America’s biggest exporter. dependence on a few countries progressively align their laws and practices Negotiations are still ongoing between the EU and basic commodities, but with EU rules in areas including trade, standards, Mercosur (Argentina, Brazil, Paraguay, Uruguay, and dependence on aid and capital movement, competition rules, intellectual and Venezuela) on an association agreement—the first outside donors.” industrial property rights, and public procurement. ever between two regional trading blocs—that will Similar principles were incorporated into a series of lead to the creation of a free trade area. EU Trade Commissioner new association agreements with Mediterranean and Peter Mandelson Latin American countries. Through preferential trade agreements and instru- ments specifically designed to assist beneficiary Southern and eastern Mediterranean countries countries in maximizing trade opportunities, the EU have benefited since 1995 from the Barcelona is doing its part to help developing countries take full Process, a framework within which the EU and nine advantage of the liberal access it makes available to its Mediterranean countries (Algeria, Egypt, Israel, market—the world’s largest single market. Jordan, Lebanon, Morocco, Palestinian Authority, Container port in Mozambique. | 2 eufocus |

Special EU Advertising Supplement EU Instruments Supporting Trade in Developing Countries Aid for Trade (AfT). Trade has long been recog- The European Commission is the single largest donor ©Shoprite nized for its important contribution to achieving the for Trade Related Assistance, and together with MDGs, yet creating market access opportunities alone Member States, the EU provides about 50 percent South African warehouse. is not enough to ensure that the poorest countries of TRA globally. The European Commission, the are able to increase their trade. They need assistance EU’s executive branch, allocated roughly €5.3 billion Objectives: Aid for Trade to remove a wide range of supply side constraints to TRA between 2001 and 2006, a figure excluding ■ enables developing countries, and tackle infrastructure bottlenecks. Aid for Trade support for trade related infrastructure (averaging received particular attention in 2005 when the UN €1.2 billion annually 2001–2006) and productive particularly the least-developed Millenium summit and WTO Ministerial Conference capacity building (averaging €768 million from countries (LDCs) to use trade coincided, and AfT is now recognized as a necessary 2002–2005). more effectively to promote complement to—but not substitute for—a DDA that growth, employment, poverty provides additional trading opportunities. Export HelpDesk for Developing Countries. The reduction, and to achieve their EU’s online Export HelpDesk is a comprehensive development goals; On October 15, 2007, the EU made good on its 2005 and free resource available to enterprises and ■ facilitates access for benefi- pledge to the WTO Hong Kong Ministerial meeting exporters in developing countries to help them ciary countries to international when it agreed to increase its funding for Trade- export their goods to the EU. It includes informa- markets by helping them build Related Assistance (a subset of AfT) to €2 billion tion on GSP tariffs, document requirements, rules and modernize their supply- annually by 2010 (EU + Member States). This of origin, specific EU product import requirements, side capacity and trade-related European Commission pledge (€1 billion by 2007), applicable taxes, and a means to search for business infrastructure; combined with that of the Members States (€1 billion partners. http://exporthelp.europa.eu/ ■ helps these countries imple- by 2010), aims to help developing countries improve ment and adjust to trade reform, their capacity to trade. A Joint EU-Member State Center for the Development of Enterprise (CDE). including through labor market strategy sets the criteria for putting this pledge into This ACP/EU joint institution, provided for in the and social adjustments; practice and improving the quality of EU assistance, Cotonou Convention, supports implementation ■ assists regional integration; focusing on “more, better, and quicker” AfT. of private sector development strategies in ACP ■ supports integration into the countries through non-financial services to ACP world trading system; AfT helps developing countries take advantage of companies and businesses and support for joint ■ assists with implementing trade trade opportunities, for example, by helping improve initiatives launched by economic operators in the agreements in the context of technical facilities in ports, assisting exporters in EU and ACP states. sustainable development, preser- meeting EU health and safety standards, and support- vation of natural resources and ing entrepreneurialism at every level. The aim of AfT Pro€invest. The European Commission set up the environment, and promotion is to lay the foundations for strong business environ- this ACP-EU program to promote investment and of decent work. ments that will attract private investment and aid technology flows in ACP countries. With a budget the integration of developing countries in the global of €110 million over seven years, Pro€invest’s | eufocus 3 | economy. EU Aid for Trade inputs are based on approach is two-dimensional: strengthening the beneficiaries’ own assessments of their strengths and institutional environment for enterprise and weaknesses in the competitive global market, and the supporting key growth sectors. EU’s goal is to ensure that Trade-Related Assistance is mainstreamed into recipient countries’ wider devel- The European Development Fund (EDF) is the opment strategies. main instrument for aid for development coopera- tion in the ACP states and Overseas Countries and Approximately half of the increase in EU Aid Territories (OCTs). The EDF is funded by Member for Trade is specifically targeted toward the ACP States outside the EU’s general budget, subject to countries with whom the EU is negotiating regional its own financial rules, and managed by a specific Economic Partnership Agreements (EPAs) designed committee but operationally administered by the to remove all remaining tariff and quota barriers to European Commission. Funding for 2008–2013 the EU market for ACP exports and to help these is €22.7 billion. In addition, the European developing countries diversify their economies away Commission’s budget has allocated €17 billion for from a handful of basic commodities. development cooperation with non-ACP countries (through its Development Cooperation Instrument) for the 2007–2013 period.

Special EU Advertising Supplement EU Trade Preferences for Developing Countries Trade is an engine for development, and the European Everything but Arms (EBA). Introduced in 2001, Union is the largest trade partner for the world’s the EU’s groundbreaking EBA initiative is a special poorest countries. Roughly 40 percent of EU imports scheme under GSP that eliminates all duties and originate in developing countries, due at least in part quotas for all products except arms and ammunition to the EU’s longstanding array of preferential trade from the 50 least developed countries (as recog- arrangements with developing countries that reduce nized by the United Nations). Transition periods or eliminate duties and quotas and provide unprec- were included for bananas (2006), sugar (2009), and edented market access. The EU is also the world’s most rice (2009). According to World Bank calculations, open market for poor countries—about 80 percent of the EU’s EBA measures will boost the beneficiary countries’ exports to the EU by 15–20 percent. Trade Agreements GSP Plus. This special incentive arrangement under Trade Development GSP Plus GSP is the EU’s key trade instrument supporting Cooperation Agreement Cotonou Agreement (ACP) sustainable development and good governance, Association Agreement including the promotion of basic human and social Everything-but-arms standards in developing countries. Since 2005, GSP Plus has targeted additional tariff preferences for Source: EU Donor Atlas 2006. countries with special development needs, includ- ing poorly diversified economies that render the The Trade Agreements map developing countries’ exports enter the EU either duty countries dependent, vulnerable, and trapped in identifies EU agreements that free or at greatly reduced rates of duty. The EU absorbs poverty. To qualify, beneficiary countries must be able provide countries with lower 85 percent of all of Africa’s agricultural exports. In fact, to demonstrate this status as well as their application tariffs than the standardized it imports more goods from Africa than do the U.S., of key international conventions on issues including Generalized System of Canada, Australia, and New Zealand, combined. sustainable development, good governance, labor and Preferences on at least human rights, and environmental protection. some exports to the EU. Generalized System of Preferences (GSP). The EU’s GSP has been in place since 1971 when GATT, the Cotonou Convention. Signed in 2000 and successor WTO’s predecessor, granted a waiver to industrialized to the longstanding preferential trade and aid agree- countries that wished to apply this non-reciprocal ments covered by the Lomé Conventions, Cotonou’s preferential tariff treatment to benefit developing main objective is to create a new framework for countries. The idea was to reduce or eliminate duties cooperation between the 78 ACP countries and the and quotas on goods originating in less developed EU, with the underlying objective of fighting poverty. countries so they could sell more of their products in In the area of trade, Cotonou provides for an end to the industrialized countries while building up their the non-reciprocal trade preferences benefiting the own industry. The EU’s current GSP is a generous ACP countries, a change necessary to bring the agree- and widely used preferential arrangement under ment into line with WTO rules and enable the ACP which the EU grants duty-free or reduced tariff states to play a full part in international trade. treatment to 7,200 products originating in roughly 180 GSP beneficiary countries. In 2006, the volume EU-South Africa. Trade relations with the EU are of EU imports from developing countries under GSP governed by a bilateral Trade and Development totaled €51 billion. Cooperation Agreement (TDCA) in which the key element is the creation of a Free Trade Area (FTA) between the EU and South Africa. Europe’s largest trading partner (exports + imports) in Africa is South Africa, which accounted for 14 percent of African exports to the EU in 2006. Association Agreements. Bilateral agreements with partners in Latin America and the Mediterranean typically include the progressive establishment of free trade areas and other areas of cooperation. | 4 eufocus |

Special EU Advertising Supplement EU-ACP Economic Partnership Agreements: A New Era in Trade for Development As of mid-January 2008, 35 ACP countries have and institutional capacities. Such support can help EU FACT signed either interim or full Economic Partnership them benefit from international trade and invest- Agreements (EPAs) with the European Commission ment opportunities and broaden their economic The EU is on course to double its (EC), with 32 additional ACP nations receiving full base—essential preconditions for integrating into the Official Development Assistance access to European markets as Least Developed global economy and achieving sustainable growth. (ODA) by 2015, the target date Countries (LDCs) through Everything but Arms. for achieving the United Nations’ The EC intends to maintain the momentum in 2008, EPAs are above all about development and poverty Millenium Development Goals upgrading interim agreements into comprehensive eradication in ACP states. The path to these goals (MDGs), notably eradication of EPAs. Non-LDC ACP countries not yet benefiting entails reaping the advantages of regional integra- extreme poverty. To scale up support from EPAs reverted to standard GSP preferences as tion—economies of scale, economic diversity, for reaching the MDGs, the EU has of January 1, 2008. specialization, more effective resource allocation, committed to increasing ODA to and larger markets. Regional integration is at the core 0.56 % of Gross National Income The EPAs are intended to be broad agreements, of the ACP’s own development strategy—most ACP (GNI) by 2010, and 0.7 % of GNI by helping first to build regional markets and diversify economies are too small to go it alone—and the EU’s 2015, doubling the EU’s collective economies in the ACP countries prior to a gradual own success with regional integration makes it well ODA since 2003. opening up of trade (EU exports to ACP) that will placed to offer assistance. build increased, balanced, and sustainable commerce “For over three decades Europe between the two regions. The relationship will change By eliminating barriers between neighboring has provided many of the ‘bottom from one that offers tariff preferences that are a disin- countries and encouraging good economic gover- billion’ with trade preferences. centive to necessary reform to one that builds lasting nance, regional integration has the potential to boost The result has been to lock them and more efficient regional and international markets local trade and create larger markets to attract trade into yet further dependence on for the ACP. and investment. It provides more open, transparent, a few basic commodities, rather and predictable framework for goods and services to than act as a springboard to EU development strategy also focuses on financial circulate freely, thus enhancing ACP competitiveness greater economic growth. and technical assistance to improve the basic physical and ultimately facilitating ACP states’ full participa- and social infrastructures and productive potential of tion in the global trading system. The Economic Partnership poor nations and to strengthen their administrative Agreements…are an attempt to capture some of the benefits Economic Partnership Agreements most agricultural and many other important of globalization for the African, Non-ACP countries successfully challenged the local products. Caribbean, and Pacific countries EU’s non-reciprocal trade preferences for ACP The EU and the ACP have prioritized the need in a way that the insular system countries in the WTO, making EPAs necessary to shelter growing industry from external of the last thirty years has not. to comply with WTO rules on non-discrimina- competition—sensitive industrial sectors have They will encourage the growth tion. A seven year WTO-waiver ended at the end been excluded and an “infant industry clause” of regional markets in Africa and of 2007. will allow ACP countries to reinstate tariffs in put in place the conditions that An EPA will provide the best access to the EU the future to protect a growing industry. will attract much-needed foreign market of any trade regime. For an ACP country, The EPA process is supported by significant direct investment. All this while an EPA means no duties or quotas for any development assistance. ACP countries will taking a pragmatic approach that products, other than short transition periods receive €23 billion from the EU’s European shields people from sudden and for sugar and rice. EPAs include simplified and Development Fund over the next seven years unwelcome shocks.” improved rules of origin, specifically negoti- and, in addition, be major beneficiaries of ated to encourage more processed exports from Europe’s €2 billion annual expenditure on aid for EU Trade Commissioner ACP countries. trade. These funds will help countries prepare Peter Mandelson Trade liberalization in ACP countries will take new structural reforms and trade policies and place gradually over a very long period. enhance infrastructure and competitiveness to The EU and the ACP retain the flexibility to take advantage of trade opportunities. exclude sensitive products from liberalization— ACP countries have opted not to liberalize | eufocus 5 |

Special EU Advertising Supplement Trade Working for Development “Economically, Europe is not EU-Africa Summit: Trade Aspects. only Africa’s biggest trading The second EU-Africa summit, held in December 2007, brought together leaders from 53 partner but, above all, the African countries and 27 EU Member States to endorse a new strategic partnership between the biggest importer of African two continents designed to overcome the traditional donor-recipient relationship and build on agricultural produce. It common values and goals in the pursuit of peace and stability, democracy and rule of law, progress, accounts for 68 percent of and development. the value of foreign direct The Trade and Regional chapter of the EU-Africa partnership seeks to maximize economic and investment in Africa. But trade opportunities from regional integration, improve production and supply-side capacities, the other unique factor that promote regulatory convergence, and extend and expand the physical infrastructure through the strengthens these ties is the following measures: steadfast support shown by Europe over 40 years as ■ support for the African integration agenda—trade integration is essential to increase both the leading donor of official South-South and North-South trade flows; development assistance, assistance in the form…of ■ improvement in productive capacities so that African countries can move up the value-added grants and not loans.” scale and reduce dependence on raw materials and simple processed products to help avoid a deterioration of the terms of trade and to benefit from the global economy; EU Development & Humanitarian Aid ■ private sector development, supported by foreign investments to bolster the supply side of Commissioner Louis Michel African economies; | 6 eufocus | ■ strengthening African capacities in the area of rules, standards, and quality control; ■ development and strengthening of physical infrastructure networks and related services neces- sary to move persons, goods, and information. A selection of geographically diverse case studies helps bring to life EU policy directed toward making trade work for development. In 2006, the European Commission financed trade related projects worth roughly €940 million, and averaged €880 million annually in funding since 2001. The EC gave an average of €1.2 billion per year for infrastructure (2001–2006). The winning combination of aid, access, and advice will serve these partners well as they become increasingly integrated with the global economy. Case Studies EU supported training in West Africa. ACP ■ An EU funded project helped the countries of the West African Economic and Monetary Union implement a comprehensive quality assurance system at the regional level to enhance trade. The program allowed for a focus on key sectors with high export potential for West Africa, including cotton and fisheries. ■ EU recognition of the Kenya Plant Health Inspectorate Service (KEPHIS) as the compe- tent authority for inspection of horticultural exports to the EU, by allowing local certification, facilitates trade in a key sector of the Kenyan economy. ■ For almost a decade, the EU has supported the development and structuring of the Madagascar lychee trade in such a way as to enhance product quality and ensure that production meets EU food safety requirements.

Special EU Advertising Supplement ■ The EU's €18.3 million investment promo- Latin America Ethiopian coffee beans tion program for the Southern African ■ An EU funded project is combating rural poverty Development Community (SADC) has helped business-support organizations provide effec- and helping Paraguayan subsistence farmers to tive, tailored assistance to local businesses enter the organic cotton sector, which is both wishing to cooperate with other companies in more profitable and environmentally friendly. the SADC region or in Europe. ■ EU funding has helped Mexico to build on a decade of successful experience in international ■ A Fijian family business producing high-end fair trade to convince Mexican and eventually natural body products benefited from CDE EU and U.S. consumers to buy certified fair support for a consultant who helped train trade and organic coffee, honey, corn products village cooperatives to produce world class and handicrafts. paper necessary for the company’s products. ■ An EU fisheries program has enabled Belize to upgrade its sanitary and health system and reach ■ An EU program helped four small bakeries the required standards for fishery exports to in Dominica form a “Collective Efficiency the EU. Group,” relocating equipment to a single bakery, which allowed them to boost produc- Asia tivity, reduce costs, and venture successfully ■ €10 million in EU support to the Bangladesh into new markets. Quality Support Program is helping the country Euro-Med to be globally competitive with its clothing ■ The EU's €20 million Trade Enhancement exports through improved product quality and standards. Program-A is helping to boost Egypt’s export ■ EU funding helped Thailand voluntarily comply potential by providing training and techni- with EU laws on electric and electronic waste and cal assistance to relevant Egyptian bodies to hazardous substances, ensuring that quality Thai help businesses trade more, particularly in products continue to reach European consumers. foreign markets. ■ An EU project has established a business ■ The Syrian European Business Center incubator to support start-ups and expanding helped a family-run Syrian pharmaceutical businesses in the IT sector to strengthen company achieve its goal of manufacturing outsourcing services and software exports and exporting high quality medicine through from Vietnam. 18 new license contracts with major global ■ EU technical assistance helped the Philippines pharmaceutical companies. Bureau of Fisheries and Aquatic Resources ■ To attract investment to Morocco, EU comply with and enforce the sanitary and phyto- assistance focuses on increasing workers’ sanitary standards for fish and aquaculture qualification levels through support for more products exported to the EU. than 100 professional training centers in the ■ The EU's €40 million Border Management public and private sectors. Program in Central Asia helped five former ■ The EU has been involved in port Soviet republics—Kazakhstan, Kyrgyzstan, modernization in Tunisia, particularly in Tajikistan, Turkmenistan, and Uzbekistan— Tunis, supporting measures to create new to establish new infrastructure and re-train freight and passenger terminals. customs officials and border guards to enhance ■ EU support for regulatory convergence, partic- border management and boost trade along ularly for sanitary and phytosanitary standards these frontiers. (SPS), helps countries align their standards, practices, and rules more closely with those of the EU, leading not only to bigger trade flows but also to safer food for citizens. EU twinning projects in 2007 included EU experts sharing their expertise with counterparts in Tunisia, Morocco, and Jordan. | eufocus 7 |

Special EU Advertising Supplement EU Support for the WTO and the Doha Development Agenda: Ensuring an Equitable and Predictable Multilateral Trading System “…the Doha Round is so The European Union is a strong proponent of the WTO Director-General Pascal Lamy. fundamentally important. multilateral trading system and its core—the World Doha could anchor the Trade Organization (WTO). The WTO is about Agenda. Conceptually it is a different kind of trade emerging economies more making trade possible—its primary mission is to deal—one that accepts a decisive voice for the develop- firmly in the WTO and its create trade opportunities through multilateral trade ing world, and one that is accompanied by substantial system of international trade opening and to develop multilateral trade rules that new packages of capacity-building aid and special and rules. A Doha agreement ensure a level playing field. The multilateral trading differential assistance for developing countries. Doha, would enable developing system has two great strengths. The first is economic according to EU Trade Commissioner Mandelson, countries to grow faster, openness and the benefits that flow from it. The “can mark a pivot point in the history of the WTO and open the markets of second is certainty—the openness bound into the in which it turns away from simple mercantilism the emerging economies WTO system is insured and safe from politicking. toward an agenda that sees trade as a means to an further, and lock in the access equitable globalization.” we already have to global As globalization progresses, the WTO is the most markets. This is the best legitimate forum for making globalization equitable, Source: WTO Publications. insurance policy against a removing obstacles to trade, creating and enforc- global recession or resurgence ing global rules, and helping developing countries of protectionism—not just integrate with the world economy. It is an effec- in the U.S., but in growing tive, inclusive, and just means of expanding and middle income economies too.” managing trade, and it represents a unique form of international governance with teeth. EU Trade Commissioner Peter Mandelson In November 2001, WTO members met in Doha (Qatar) and launched a new round of world trade EU Focus is published bi-monthly talks aimed at further liberalizing trade, reviewing by the Delegation of the European existing trade rules, and strengthening the capacity Commission to the United States. of developing countries to benefit fully from the resulting boost in international trade. Known as Anthony Smallwood the Doha Development Agenda (DDA), it has been Spokesman and Head of Press characterized by EU Trade Commissioner Peter Mandelson as a “Round for free” for the poorest & Public Diplomacy developing countries, since they stand to gain from Editor-in-Chief both duty free and quota free market access in Mattias Sundholm developed countries and an Aid for Trade package, Deputy Head of Press & which is essential for them to be able to effectively tap into these new opportunities. According to Public Diplomacy WTO Director-General Pascal Lamy, “We see aid Editor for trade as central to helping developing countries Melinda Stevenson move from making trade possible to making trade Writer/Assistant Editor happen….[by helping developing countries] build ISSN: 1830-5067 the trade capacity they need to take advantage of Catalogue No.: IQ-AA-08-02-EN-C trade opening.” Delegation of the European Despite the lack of recent progress, the EU remains Commission to the United States strongly committed to the Doha Development 2300 M Street, NW Washington, DC 20037 For further information: http://www.eurunion.org/eufocus 202.862.9500 www.eurunion.org email:[email protected] | 8 eufocus |

100-Year-Old San Francisco Mint Gold Saved From Destruction Actual size is 21.6 mm The San Francisco “S” mintmark A century ago in 1906, San Francisco was devastated by a massive earthquake. On that The History of The West In Money-Back Satisfaction Guarantee. date the mint ceased forever production the Your Hands You must be 100% satisfied or return historic Lady Liberty $5 “Half Eagle” gold your purchase via insured mail within piece. It was the end of an era for the coin The history of the American West lives 30 days of receipt for a full refund that had been made of 90% pure gold on in these glittering gold coins. The (less shipping charges). with the famous “S” mintmark since the San Francisco Mint was built from the California Gold Rush. Yet for even those California Gold Rush and minted gold AS LOW AS coins that survived the calamity of the delivered from the miners. San Francisco terrible 1906 earthquake, an even worse and the western states grew out of the gold $329 EACH! fate lay ahead... and silver strikes and the immigrants who came from all across the land to build a ORDER MORE & SAVE Reserved from Massive Meltdown new future. The images of Miss Liberty in 1934 and the American Eagle on each U.S. 100-Year-Old “S” Mint $5 Gold $5.00 gold coin symbolize our nation’s Half-Eagle XF $359.00 + S&H In 1934, U.S. gold coins were officially freedom, strength and faith. These precious recalled by the Federal Government and enduring coins are becoming more $345 Per Coin – SAVE $70! and melted down into 100-ounce and precious and sought-after with each FIVE 100-Year-Old “S” Mint $5 Gold 400-ounce gold ingots. An estimated generation and will become a valuable Half-Eagles XF $1,725 + S&H 95% of all the San Francisco Liberty legacy for you and your loved ones. $5.00 gold coins were lost for forever. Only $329 Per Coin – Save $300! Order Before They Are Gone TEN 100-Year-Old “S” Mint $5 Gold Surviving “S” Mint Liberty gold coins, Half-Eagles XF $3,290 + S&H few and far between, are increasingly The supply of 100-year old San Francisco valued by today’s collectors. Now, “S” Mint $5 Half-Eagle XF gold coins is Toll-Free 24 hours a day GovMint.com has authorized the limited limited. Due to huge changes in the value release of 100-year-old, “S” Mint $5.00 of gold (a 62% increase in the last two 1-888-870-9147 gold “Half Eagles” saved from the San years alone) no one can predict the future Francisco earthquake and subsequent value of this coin. Therefore, listed prices Promotional Code SLG107 official U.S. Treasury meltdown. These cannot be guaranteed and subject to Please mention this code when you call. coins are dated 1866 to 1906 and struck change without notice. Your immediate in .900 fine (90% pure) gold. They are action is requested—Call the toll-free We cTaon oalrsdoeracbcyemptayilocuarlcl hfoecrkdebtyaiplsh.one. collector quality, with a numismatic number 24 hours a day, 7 days a week. grade of Extremely Fine. During this 14101 Southcross Drive W., Dept. SLG107 limited release, these authentic 100 year MONEY-BACK SATISFACTION GUARANTEE Burnsville, Minnesota 55337 old gold coins may be acquired for as little as $329 each (compare with current www.GovMint.com advertisements from retail coin dealers of up to $365 each). Note: GovMint.com is a private distributor of government and private coin and medallic issues and is not affiliated with the United States Government. Prices subject to change without notice. © GovMint.com, 2008 Member Better Business Bureau

[ ]Letters low growth rates in the extraction of mineral resources, production in the manufacturing industries rose by more than 9 percent. Having a fairly strong understanding of the structural problems that the Russian economy faces, I have much to disagree with regarding the eco- nomic policies pursued by the current government. But even if one does not like a policy, it is nevertheless better to stay within the realm of facts when assessing it. —Yegor T. Gaidar Director Institute for the Economy in Transition Moscow, Russia Contributing Editor FOREIGN POLICY Shevtsova has published a remarkable essay and I generally agree with her conclusions. However, her assertion that it is unlikely that Vladimir Putin wishes to forever rule Russia raises some doubt. No one is in a position to read the thoughts of the leader whose actions we are trying to predict. But it is possible to make any number of logical guesses about Putin’s motives; to a greater or lesser extent, they could all be valid. Even if at some point Putin had not planned to rule Russia forever, he has most likely changed his mind. So far, he has not issued a single statement declar- ing his intentions to exit government following the conclusion of his term as president. His close advisors appear to have successfully convinced the Russian people—and most likely Putin him- self—that he cannot be replaced. There- fore, like other authoritarian leaders, Putin may believe that his complete withdrawal from power will lead to national catastrophe. Putin may also be motivated by a second, largely finan- cial, reason. Many observers assert that during his terms in office he has amassed a large amount of wealth, which he obviously intends to keep. This could prove problematic if in the future a new generation of Russian leaders decides to conduct formal inves- tigations into the former president’s financial matters. A third reason may be the Russian elites, who wish to retain their positions in government and busi- ness and who consider Putin to be the only person capable of effectively defending their interests.

Finally, Putin’s personal ambitions will for Modern Russia (Brookings Institution likely lead him to hold on to as much Press, 2007), Gaidar concludes that influence as possible. He cannot rely sole- “Russia’s economy, like the ussr’s ly on protégé Dmitri Medvedev’s feelings before it, is becoming dependent on of personal loyalty or expect continued keeping oil prices at historically anom- subordination from other key govern- alous levels.” That sounds remarkably ment players. It is more likely that fol- like a false bottom to me. Does eco- lowing legal, nonconstitutional changes nomic growth in Russia actually trans- affecting the structure of government, late into development, or is it indeed an Putin will secure another top govern- obstacle to modernization? ment post and will continue to exert control. In any case, he is guaranteed to I also appreciate Gaidar’s definition wield power through his political party of exports. But he still must explain in the Duma, United Russia, and its why, despite the output growth of satellites. Clearly, Medvedev was chosen machine building and manufacturing because he is the weakest member of that he cites, those industries’ share of Putin’s clan, perpetually second in line exports is negligible. throughout his career and lacking a solid base of support within the elite. Finally, Grigoryev may be right to As such, it is possible that he will not argue that Putin would like to rule the be able to serve out his first presiden- country forever. I may have exaggerated tial term. Thus, in a year or two, one Putin’s ability to predict the conse- can imagine Medvedev resigning and, quences—for himself and for Russia— following an election, Putin returning of his ruling indefinitely. The plan to to preside over Russia for another four establish a tandem Putin-Medvedev to eight years. government shows the degree of the Russian elite’s collective and individ- Putin rose out of the kgb having ual insecurity. This team may believe absorbed its distrust of journalists, that it has found the key to the per- politicians, and civil society. He has petuation of power. In reality, how- practically dismantled all independent ever, by establishing such a diarchy, media in Russia and has accused his they will undermine the only viable few public critics of carrying out the political institution in Russia: the pres- orders of enemy intelligence agencies. It idency. But at least it is consistent is hard to believe that all these factors with the way Russia has developed won’t have a role in shaping his plans so far—by hitting rock bottom before for the future. charting a new path. —Aleksander Grigoryev Investing in Editor in Chief Women Washington ProFile Information Agency Although I agree with the premise of Kavita Ramdas’s essay that the next U.S. World Security Institute president can regain moral authority by promoting gender equality (“What Washington, D.C. America Must Do: A Woman’s Worth,” January/February 2008), her assertion Lilia Shevtsova replies: that reaching this goal will not cost a Yegor Gaidar and Aleksander Grigoryev dime is misguided. For the United States do not argue with my key assertions to be effective in repairing its image regarding the trajectory of the Russian abroad, any rhetoric must be backed system; indeed, we have a common plat- with adequate funding for investments form. As for the details, their comments in proven strategies that promote gen- only contribute to the Russian narrative. der equality, including education and skills training. Gaidar disagrees with the assertion that Russia’s “economic gains have a The White House has passionately false bottom—high oil prices.” In his spoken out in support of women’s rights view, the oil price is not the main engine around the world, yet U.S. funding for of economic growth. Fine—I trust international women’s programs has Gaidar’s expertise. But then what is the remained extremely low during the past “main engine” of this growth? Would decade. Achieving gender equality will this engine work without high oil prices, and would it be sustainable? In fact, we can turn to Gaidar himself for some answers. In his brilliant new book, Collapse of an Empire: Lessons

New York is [ ]Letters INTERNATIONAL require a commitment to implement THE NEW SCHOOL effective programs and policies, especially those at the community level. That costs is New York money. New gender policies addressing women’s economic and social vulnera- EARN A MASTER’S DEGREE IN bilities in a number of new initiatives, including the Millennium Challenge INTERNATIONAL AFFAIRS Account, offer promise, but they will need dedicated resources to materialize. Join a community of students from 62 countries—from NGO activists, executives Ramdas rightly points out that invest- of international organizations, and experts in ing in women is the best and most effi- technology, media, and finance, to returned cient investment that can be made toward Peace Corps volunteers and recent college economic development. But more talk graduates—each desiring to effect real change without a financial commitment will only in the world. Here, you’ll combine interdisciplinary further undermine U.S. credibility. There study with practical problem-solving skills, and is no quick—or cheap—fix. gain new perspectives that can only be found in the world’s most international city. —Geeta Rao Gupta I Work directly with international practitioners President and scholars International Center for Research on Women I Explore issues in global economics, poverty Washington, D.C. and development, cities and urbanization, international institutions, NGOs, human rights, Kavita Ramdas replies: conflict and security, and media and culture Geeta Rao Gupta, my esteemed colleague and ally in the fight to promote women’s I Learn from summer fieldwork experiences rights worldwide, is absolutely correct in around the world pointing out that my recommendation to the new American president on pri- To RSVP and for more about the program, oritizing gender equality is misleading if contact admissions at 212.229.5630 or I claim that “it won’t cost a dime.” I did visit us online. not intend to imply that in my article. Indeed, all of us in the global women’s www.ia.newschool.edu movement are tired of the empty prom- ises regarding women’s education and empowerment that are rarely backed by the financial commitment to make those goals realizable. I believe, however, that a true com- mitment to gender equality from the highest levels of leadership in a nation requires political will and moral charac- ter. Unfortunately, the Bush White House, despite its rhetoric on “liberating the women of Iraq and Afghanistan,” has shown neither. It is in that sense alone— demonstrating genuine social awareness and political courage—that my words will hopefully resonate for the presiden- tial candidate who is brave (or foolhardy) enough to step up to the plate. It is, after all, a place where presidents have so far feared to tread. Foreign Policy welcomes letters to the editor. Readers should address their comments to [email protected]. Letters should not exceed 300 words and may be edited for length and clarity. Letters sent by e-mail should include a postal address.

FP De ly Wrestles Today’s Dilemmas... FP is the award-winning magazine of global politics, economics, and ideas. With keen insight and an informed perspective on the grand and grave issues of our time, FP takes you beyond the facts to help you understand how the world truly works. O Ground-breaking reporting O ink-again take on global politics O Easy-to-absorb infographics O In-depth, bonus coverage on ForeignPolicy.com WINNER National Magazine Award General Excellence 2003, 2007 Finalist 2005, 2006 Subscribe online today at ForeignPolicy.com and discover how much of the story you’ve been missing! One Year (6 bimonthy issues) just $24.95. Copy courtesy 2007 National Magazine Award judges. Please allow 4-6 weeks to receive your rst issue by mail. Additional postage required for Canadian and international delivery. Register online when you subscribe to gain immediate online access to the current issue and FP’s 37-year article archive.

IN says Fish, a professor BOX at the University of Power House California, Berkeley. W hen Kenya convulsed with violence “If you have a legis- after its flawed election in late December, many expressed surprise that lature that’s vested one of Africa’s most stable countries could so quickly fall victim to ethnic hatred. with the power to But political scientists Steven Fish and Matthew Kroenig noted something else: stand up to them, a feeble legislature. Despite the opposition winning twice as many legislative seats you can keep democ- as the president’s party, opposition mem- bers still took to the streets. Why? Because racy on track.” they wanted the only office that has any power in the country: the presidency. The title of world’s In a groundbreaking new study, Fish most powerful legis- and Kroenig rank the power of 158 national legislatures around the world, lature is a tie between based on a survey completed by more than 700 country experts. The strength Italy, Germany, and, curiously, Mongolia, where the 1992 con- Who’s the boss: A powerful congress means a healthier democracy. stitution created an especially healthy par- of parliaments and congresses is meas- liament, thanks in part to fears that TOP: PEDRO REY/AFP/GETTY IMAGES; BOTTOM, CLOCKWISE FROM TOP LEFT: ISTOCKPHOTO.COM; LARRY MARANO/GETTY IMAGES; COURTESY OF COUNCIL ON FOREIGN RELATIONS; EVAN AGOSTINI/GETTY IMAGES; AP WIDEWORLD; AP WIDEWORLD; PETER KRAMER/GETTY IMAGES; STAN HONDA/AFP/GETTY IMAGES; ALEX WONG/GETTY IMAGES; ured using four groups of factors: influ- China or Russia could easily manipulate EVAN AGOSTINI/GETTY IMAGES; MARK WILSON/GETTY IMAGES; CLAUDIA DAUT/REUTERS; MARIO TAMA/AFP/GETTY IMAGES; DAVID BRODY/UPI PHOTO; STEPHEN LOVEKIN/GETTY IMAGES; JIM YOUNG/REUTERS ence over the executive (such as pow- a strong president. At the bottom of the ers of impeachment), autonomy (such list sit Burma and Somalia. The U.S. as whether the executive can dissolve Congress is outranked by 40 other parliament), vested powers (such as the national legislatures, scoring poorly in power to declare war), and the capa- part because its laws are not veto proof. bility to get things done (such as hav- Fish and Kroenig believe that coun- ing the resources to hire staff). tries with stronger parliaments may also They find that countries with strong be less prone to civil wars and might legislatures are far more likely to have even be more disposed to economic resilient democracies. Weak legislatures growth. “We haven’t yet found anything often cannot keep executives in check, wrong with having a strong legislature,” especially when autocratic leaders come says Fish. It may be that the best advice to power. “This decade, the great ene- for any young democracy is to make mies of democracy are presidents,” sure not to build a House of cards. 22 F o r e i g n P o l i c y

Spies for Hire L ast October, after years of keep- a room of top military contractors that ing the U.S. intelligence budget they must improve their internal securi- under wraps, the Director of Nation- ty, according to National Defense mag- al Intelligence (dni) revealed just how azine. Foreign spies are getting bits of much the United States spends each information about the U.S. military year on spying and analysis: $43.5 billion. If military intelligence is from defense companies, included, that number likely tops Grimes reportedly said, $50 billion. The revelation came just adding that “our net- a few months after a dni official works are being bled . . . let it slip at a defense industry to folks we don’t want to conference that a whopping be bled to.” 70 percent of the intelli- gence budget goes to pri- Young government ana- vate contractors. With the lysts being poached by 2007 budget nearly double defense companies with the figure in 1998, when far bigger payrolls may it was last officially be partially to blame. “It’s disclosed, spying very troubling that the has become one of next generation has been the fastest-growing raised in a corporate cul- businesses in the United States. ture,” says R.J. Hillhouse, who writes the popular But having so much sensitive intelli- intelligence blog The Spy Who Billed gence work outsourced to private defense Me. “One changes loyalty every few companies raises one obvious fear: With years according to the best offer, as so many people in the know, what’s to opposed to the old timers who [were] in keep state secrets from being leaked to the U.S. government.” After a recent people who shouldn’t know? Apparent- rash of U.S. military technology leaks to ly, not much. The Pentagon’s chief infor- China by rogue defense contractors, it mation officer, John Grimes, recently told may be time for the private sector to get out of the espionage business. Epiphanies: Lawrence Summers TOP: ILLUSTRATION BY ELIZABETH GLASSANOS FOR FP; BOTTOM: JODI HILTON/THE NEW YORK TIMES/REDUX [MY FAMILY] WAS probably more prone to being secretary of the Treasury and being do the program, I went to [U.S. Treasury Secretary] analyze restaurant menus and why some president [of a university]. I gave an answer Bob Rubin and said that I would resign. And he things are more expensive than others than that was, in retrospect, breathtaking in its said two things that have stuck with me. The first your average family. I’m sure most 4-year- naiveté. I said, ‘Washington is so political.’ was, ‘We’re all in this together.’ And the second was that either way, the Earth would still be olds are not led to IF ONE’S GOAL is to bring about real change, I turning a century from now and that I would make ponder what think a university presidency is the most my best contribution if I got some sleep. would happen if difficult job. There are so few levers with they produced which to have influence in an institution where I THINK I would have gotten a lot of pleasure out more of a all the important people have lifetime jobs. of being a professional tennis player. But I don’t particular kind of think that would have happened, even if I had THERE IS probably no higher return on abandoned economics at a very young age. Beanie Baby. investment in the developing world than primary and secondary education for girls. WHAT’S HAPPENING IN ASIA is, in economic WHEN I [BECAME history, an event of equal or greater significance president of] Harvard, WHEN WE LAUNCHED the Mexican support than the Industrial Revolution. program [in 1995], 80 percent of the American I was asked what people opposed it. Immediately after it was Lawrence Summers, former secretary of the U.S. was different launched, it looked like it was failing. And Treasury and former president of Harvard University, about because I had been a driver of the decision to is the Charles W. Eliot University Professor at Harvard. [ ]For More Online Read more of Summers’s Epiphanies, including the key to being influential, at ForeignPolicy.com/extras/summers. M a rc h | A p r i l 2 0 0 8 23

[ ]In Box Smell the CO2 lead to about 21,600 more deaths each on Stanford’s Web site, “Some people year. That’s because, as the world have said that you don’t inhale climate W e’ve all heard the climate-change warms, levels of corrosive ozone gas change. This study finds that you do.” doomsday scenarios: devastat- and toxic particles in the air also Drew Shindell, a climatologist at ing natural disasters, droughts, floods, increase, particularly in places that nasa’s Goddard Institute for Space and widespread crop fail- Studies, calls Jacobson’s ures. It’s easy to assume study “very impressive.” from those troubling pre- He adds that Jacobson’s dictions that higher levels finding, that ozone gas of carbon dioxide emis- increases markedly in sions in the air, blamed for places that are already causing our climate woes, highly polluted, is a first in are probably not the best the field. “That’s a really thing for human health, novel and interesting new either. But there has been piece of information.” no real proof that higher Compared with, say, the co2 levels were actually nearly 2 million deaths killing people—until now. each year from tubercu- For the first time, new losis, 21,600 deaths may research directly links seem insignificant. But increased emissions to an Jacobson’s study reveals increase in human deaths. that climate change’s toxic Using one of the most Fatal fumes: For the first time, science has proven that carbon emissions kill. effects aren’t just dangers sophisticated computer that may strike several climate models ever created, Mark already have a great deal of pollution. decades from now. “It’s not something Jacobson, a professor of civil and Inhaling the ozone gas and particles that’s going to happen in the future; it’s environmental engineering at Stanford leads to more respiratory and cardio- something that’s happening right now,” University, has shown that, for every vascular illnesses, which for many says Jacobson. In other words, when it single-degree Celsius rise in global people will turn deadly. As Jacobson comes to co2 emissions, we can no temperatures, increased co2 emissions explained in a video presentation posted longer breathe easy. What percentage of global Where do most computer TOP: TODD KOROL/AURORA/GETTYIMAGES; BOTTOM, CLOCKWISE FROM TOP LEFT: ISTOCKPHOTO.COM; births go unregistered? hacking attacks originate? ISTOCKPHOTO.COM; JUSTIN SULLIVAN/GETTY IMAGES; ISTOCKPHOTO.COM; ISTOCKPHOTO.COM; ISTOCKPHOTO.COM 10 China Russia United States 20 40 What percentage of European households use a mobile phone Which commodity experienced the greatest price as their only telephone? increase in 2007? 12 18 24 Gold Oil Wheat How many of the world’s 10 largest defense China has what percentage of the companies are American? world’s carbon-reduction projects? 5 79 5 30 60 What percentage of countries Which developing country are net importers of food? was the top recipient of arms transfers in 2006? 47 67 Saudi Arabia 87 Pakistan For the answers, turn to page 94. Venezuela 24 F o r e i g n P o l i c y









Collapse of an Empire Lessons for Modern Russia Yegor Gaidar Translated from the Russian by Antonina W. Bouis 320 pp., cloth, 978-0-8157-3114-6, $29.95 G_fe\\1 /''$,*.$,+/. fi +('$,(-$-0,- =Xo1 +('$,(-$-00/ Global Warming 8mX`cXYc\\ Xk pfli cfZXc Yffbjkfi\\ fi fi[\\i fec`e\\ Xk Looking Beyond Kyoto n n n% Y i f f b ` e ^ j % \\ [ l &g i \\ j j Ernesto Zedillo, ed. Copublished with the Yale Center for the Study of Globalization 240 pp., cloth, 978-0-8157-9714-2, $62.95 paper, 978-0-8157-9715-9, $26.95 China’s Changing Political Landscape Prospects for Democracy Cheng Li, ed. 352 pp., paper, 978-0-8157-5209-7, $29.95 Freedom’s Unsteady March America’s Role in Building Arab Democracy Tamara Cofman Wittes A Saban Center Book 200 pp., cloth, 978-0-8157-9494-3, $26.95 China’s Expansion into the Western Hemisphere Implications for Latin America and the United States Riordan Roett & Guadalupe Paz, eds. 252 pp., paper, 978-0-8157-7553-9, $26.95 Opportunity 08 Independent Ideas for America’s Next President Michael E. O’Hanlon, ed. 380 pp., cloth, 978-0-8157-6464-9, $49.95 paper, 978-0-8157-6465-6, $19.95

THINK AGAIN By Steven R. Ratner Geneva Conventions They help protect civilians and soldiers from the atrocities of war. But these hard-won rules of battle are falling by the wayside: Terrorists ignore them, and governments increasingly find them quaint and outdated. With every violation, war only gets deadlier for everyone. “The Geneva Conventions Are Obsolete” Only in the minor details. The al Qaeda. The conventions were always primarily concerned with wars between states. That can leave laws of armed conflict are old; they date back millen- some of the protections enshrined in the laws feeling nia to warrior codes used in ancient Greece. But the a little old-fashioned today. It seems slightly absurd to modern Geneva Conventions, which govern the worry too much about captured terrorists’ tobacco treatment of soldiers and civilians in war, can trace rations or the fate of a prisoner’s horse, as the con- their direct origin to 1859, when Swiss businessman ventions do. So, when then White House Counsel Henri Dunant happened upon the bloody aftermath Alberto Gonzales wrote President George W. Bush in of the Battle of Solferino. His outrage at the suffering 2002 arguing that the “new paradigm” of armed con- of the wounded led him to establish what would flict rendered parts of the conventions “obsolete” and become the International Committee of the Red “quaint,” he had a point. In very specific—and Cross, which later lobbied for rules improving the minor—details, the conventions have been superseded treatment of injured combatants. Decades later, when by time and technology. the devastation of World War ii demonstrated that broader protections were necessary, the modern But the core provisions and, more crucially, the Geneva Conventions were created, producing a kind spirit of the conventions remain enormously relevant of international “bill of rights” that governs the han- for modern warfare. For one, the world is still home dling of casualties, prisoners of war (pows), and to dozens of wars, for which the conventions have civilians in war zones. Today, the conventions have important, unambiguous rules, such as forbidding pil- been ratified by every nation on the planet. laging and prohibiting the use of child soldiers. These rules apply to both aggressor and defending nations, Of course, the drafters probably never imagined and, in civil wars, to governments and insurgent groups. a conflict like the war on terror or combatants like The conventions won’t prevent wars—they were Steven R. Ratner is professor of law at the University of never intended to—but they can and do protect inno- Michigan. cent bystanders, shield soldiers from unnecessary 26 F o r e i g n P o l i c y

Who will guard the guards? Discarding the rules of war makes conflicts more dangerous for friend and foe alike. harm, limit the physical damage caused by war, and suffering in war, and that gives them a legitimacy for even enhance the chances for cease-fires and peace. The anyone touched by conflict, anywhere and at any fundamental bedrock of the conventions is to prevent time. That is hardly quaint or old-fashioned. “The Conventions Don’t Apply to Al Qaeda” AP WIDEWORLD Wrong. The Bush administration’s position since trials must be conducted by regular courts respecting due process. In a landmark 2006 opinion, the U.S. Sept. 11, 2001, has been that the global war on terror Supreme Court declared that at a minimum Article 3 is a different kind of war, one in which the Geneva Con- applies to detained al Qaeda suspects. In other words, ventions do not apply. It is true that the laws do not the rules apply, even if al Qaeda ignores them. specifically mention wars against nonstate actors such as al Qaeda. But there have always been “irregular” And it may be that even tougher rules should be forces that participate in warfare, and the conflicts of used in such a fight. Many other governments, par- the 20th century were no exception. The French Resist- ticularly in Europe, believe that a “war” against ance during World War ii operated without uniforms. terror—a war without temporal or geographic limits— Vietcong guerrillas fighting in South Vietnam were is complete folly, insisting instead that the fight not part of any formal army, but the United States against terrorist groups should be a law enforcement, nonetheless treated those they captured as pows. not a military, matter. For decades, Europe has pre- vented and punished terrorists by treating them as So what treatment should al Qaeda get? The con- criminals. Courts in Britain and Spain have tried sus- ventions contain one section—Article 3—that protects pects for major bombings in London and Madrid. all persons regardless of their status, whether spy, mer- The prosecutors and investigators there did so while cenary, or terrorist, and regardless of the type of war largely complying with obligations enshrined in in which they are fighting. That same article prohibits human rights treaties, which constrain them far torture, cruel treatment, and murder of all detainees, more than do the Geneva Conventions. requires the wounded to be cared for, and says that any M a rc h | A p r i l 2 0 0 8 27

[ ]Think Again “The Geneva Conventions Turn Soldiers into War Criminals” Only if they commit war crimes. including the United States, have laws allowing foreign- ers to be tried for various abuses of war committed For centuries, states have punished their own sol- anywhere. Yet the risk of prosecution abroad, particu- diers for violations of the laws of war, such as the larly of U.S. forces, is minuscule. Those foreign laws mistreatment of prisoners or murder of civilians. only address bona fide war crimes, and it is rarely in the The Geneva Conventions identify certain violations interest of foreign governments to aggravate relations that states must prosecute, including murder out- with the United States over spurious prosecutions. side of battle, causing civilians great suffering, and denying pows fair trials, and most countries have The idea that the International Criminal Court laws on the books that punish such crimes. The could one day put U.S. commanders on trial is unlike- U.S. military, for example, has investigated hun- ly in the extreme. That court could theoretically pros- dreds of servicemembers for abuses in Iraq and ecute U.S. personnel for crimes committed in, say, Afghanistan, leading to dozens of prosecutions. Afghanistan, but only if the United States failed to do Canada prosecuted a group of its peacekeepers for so first. What’s more, the court is by its charter dedi- the murder of a young Somali in 1993. cated to trying large-scale, horrendous atrocities like those in Sudan. It is virtually inconceivable that this new Yet the idea that ordinary soldiers could be pros- institution will want to pick a fight with the United ecuted in a foreign country for being, in effect, soldiers States over a relatively small number of abuses. fighting a war is ridiculous. Yes, many countries, “The Conventions Prevent Interrogations of Terrorists” ]False. If you’ve seen a classic war movie such as The interrogation tactics are clearly allowed, including good cop-bad cop scenarios, repetitive or rapid ques- Great Escape, you know that prisoners of war are tioning, silent periods, and playing to a detainee’s ego. only obligated to provide name, rank, date of birth, and military serial number to their captors. But the Geneva The Bush administration has engaged in legal gym- Conventions do not ban interrogators from asking for nastics to avoid the conventions’ restrictions, arguing more. In fact, the laws were written with the expecta- that preventing the next attack is sufficient rationale for tion that states will grill prisoners, and clear rules were harsh tactics such as waterboarding, sleep depriva- created to manage the process. In interstate war, any tion, painful stress positions, deafening music, and form of coercion is forbidden, specifically threats, traumatic humiliation. These severe methods have insults, or punishments if prisoners fail to answer; for been used despite the protests of a growing chorus of all other wars, cruel or degrading treatment and torture intelligence officials who say that such approaches are are prohibited. But questioning detainees is perfectly actually counterproductive to extracting quality infor- legal; it simply must be done in a manner that respects mation. Seasoned interrogators consistently say that human dignity. The conventions thus hardly require straightforward questioning is far more successful for rolling out the red carpet for suspected terrorists. Many getting at the truth. So, by mangling the conventions, the United States has joined the company of a host of For More Online unsavory regimes that make regular use of torture. It has abandoned a system that protects U.S. military ]Veteran FBI interrogator Jack Cloonan explains why torture personnel from terrible treatment for one in which the rules are made on the fly. doesn’t work at ForeignPolicy.com/extras/torture. 28 F o r e i g n P o l i c y

U.S. CENTER FOR CITIZEN DIPL MACY Anjali Bhatia is pleased to announce the Kinnelon, New Jersey National Awards Founder, for Citizen Diplomacy Discover Worlds The National Awards for Citizen Diplomacy program Tarik S. Daoud recognizes, honors and benchmarks exemplary work of six U.S. citizen diplomats. Organized by the Bloomfield Hills, U.S. Center for Citizen Diplomacy, this program serves Michigan as an opportunity to “expand the face” of America’s perceptions of citizen diplomacy worldwide, and is a Business leader non-partisan and non-political initiative. and philanthropist The U.S. Center promotes opportunity for Khris Nedam all Americans to become citizen diplomats and affirms the indispensable value of citizen Livonia, Michigan involvement in international relations. Founder, For more information please visit: Kids4AfghanKids www.uscenterforcitizendiplomacy.org Greg Mortenson Bozeman, Montana Co-founder, Central Asia Institute and Pennies for Peace Jillian H. Poole Arlington, Virginia Founder, The Fund for Arts and Culture in Central and Eastern Europe Donna Tabor Granada, Nicaragua Volunteer for Building New Hope

[ ]Think Again “The Geneva Conventions Ban Assassinations” Actually, no. War is all about killing your standard of proof that the target had lost protect- ed status and that capture was impossible. What enemy, and though the Geneva Conventions place standards the United States might be using—such limits on the “unnecessary suffering” of soldiers, as when the cia targeted and killed several al they certainly don’t seek to outlaw war. Qaeda operatives in Yemen in 2002—are highly Assassinating one’s enemy when hostilities have classified, so there’s no way to know how much been declared is not only permissible; it is expect- proof is insisted upon before the trigger is pulled ed. But at the core of the conventions is the “prin- or the button pushed. ciple of distinction,” which bans all deliberate targeting of civilians. The boundless scope of the For European countries and others who reject war on terror makes it difficult to decide who is the idea of a “war” against terrorists to begin with, and is not a civilian. The United States claims that targeted killings are especially abhorrent, as interna- it can target and kill terrorists at any time, just tional law prohibits states in peacetime from extra- like regular soldiers; but the conventions treat judicial killings. There are very specific exceptions to these individuals like quasi-civilians who can be this rule, such as when a police officer must defend targeted and killed only during “such time as they himself or others against imminent harm. To that take a direct part in hostilities” [emphasis mine]. end, a suicide bomber heading for a crowd could The Israeli Supreme Court recently interpreted legally be assassinated as a last resort. By contrast, this phrase to give Israel limited latitude to con- suspected terrorists—whether planning a new attack tinue targeted killings, but it insisted on a high or on the lam—are to be captured and tried. “The Conventions Require Closing Guantánamo” No, but changes must be made. There are several options worth consideration. The prison at Guantánamo could be turned into a The Geneva Conventions allow countries to detain pre-trial holding area where detainees are held pows in camps, and, if someone in enemy hands does before they are brought before U.S. courts on for- not fit the pow category, he or she is automatically mal charges. (The hiccup here is that most of the accorded civilian status, which has its own protections. detainees haven’t clearly violated any U.S. law.) But none of the residents of Guantánamo’s military Alternatively, the U.S. Congress could pass legis- prison qualifies as either, according to the Bush admin- lation installing a system of preventive detention for istration, thus depriving the roughly 275 detainees dangerous individuals. The courts could occasion- who remain there of the rights accorded by the con- ally review detainees’ particular circumstances and ventions, such as adequate shelter and eventual release. judge whether continued detention is necessary and lawful. (The problem here is that such a sys- The possibility that detainees could remain in tem would run against 200 years of American legal limbo indefinitely at Guantánamo has turned jurisprudence.) In the end, closing Guantánamo is the issue into a foreign-relations disaster for the probably the only option that would realistically United States. But let’s be clear—the Geneva Con- restore America’s reputation, though it isn’t ventions don’t require the United States to close up required by any clause in the conventions. It’s just shop in Cuba. The rules simply insist that a working the wisest course of action. legal framework be put in place, instead of the legal vacuum that exists now. 30 F o r e i g n P o l i c y

“As a global citizen, to whom do I pledge allegiance?” NYU’S e traditional state-to-state mindset may be at odds CENTER FOR with the realities of our increasingly globalized planet. GLOBAL AFFAIRS Energy policies set locally impact The NYU Center for Global A airs is Our diverse and motivated student business strategies around a unique institution rooted in lower body is guided by a faculty of the world. An NGO wages a PR Manhattan and located astride the accomplished international battle against a multinational world’s crossroads. We provide a practitioners, whose experience corporation. Ongoing health crises range of exceptional educational is drawn from government, drain a continent’s economic opportunities—including a trade, nance and investments, resources. Today, more than ever Master’s degree, a professional journalism, non-governmental before, an appreciation of the certi cate program, provocative organizations, and more. Careers world’s great challenges and the public events, and numerous with a global dimension have never ability to create meaningful change courses—all designed to help you been more challenging, rewarding, both require a global perspective. grapple with the issues we all face or in demand. Find out how the as global citizens. NYU Center for Global A airs can shape your global future. GRADUATE PROGRAM: CONTINUING EDUCATION includes: PUBLIC EVENTS SERIES include: • Master of Science in Global A airs • Legal Battles in the‘War on Terror’ • Worldly Conversations with Foreign Correspondents SUMMER INTENSIVES: • UN in Geneva Study Program • The Rise and Fall of Global Empires • Politics and Art in Cinema • Summer Institute in Global A airs • The Global Natural Resources Challenge • International Careers: Practical Advice • Iran and the Crisis of Modernization and Real-Life Experience • Micro nance and Social Entrepreneurship • In Print: Author series presented with Foreign A airs magazine Graduate Information Session: Tuesday, April 8, 6-8 p.m. Grand Hyatt, Conference Level, Park Avenue (at Grand Central) Please call 212-998-7200 to RSVP. scps.nyu.edu/x629 1-800-FIND NYU, ext.629 New York University is an affirmative action/equal opportunity institution. ©2008 New York University School of Continuing and Professional Studies

[ ]Think Again “No Nation Flouts the Geneva Conventions More than the United States” That’s absurd. When bullets start flying, consistently opposed the various reinterpretations of the conventions by politically appointed lawyers rules get broken. The degree to which any army in the Bush White House and Justice Department for adheres to the Geneva Conventions is typically a precisely this reason. product of its professionalism, training, and sense of ethics. On this score, U.S. compliance It is enormously important that the United States with the conventions has been admirable, far sur- reaffirms its commitment to the conventions, for passing many countries and guerrilla armies that the sake of the country’s reputation and that of the routinely ignore even the most basic provisions. conventions. Those who rely on the flawed logic that The U.S. military takes great pride in teaching its because al Qaeda does not treat the conventions soldiers civilized rules of war: to preserve mili- seriously, neither should the United States fail to tary honor and discipline, lessen tensions with see not only the chaos the world will suffer in civilians, and strive to make a final peace more exchange for these rules; they also miss the fact that durable. Contrast that training with Eritrea or the United States will have traded basic rights and Ethiopia, states whose ill-trained forces committed protections harshly learned through thousands of numerous war crimes during their recent border years of war for the nitpicking decisions of a small war, or Guatemala, whose army and paramili- group of partisan lawyers huddled in secret. Rather taries made a policy of killing civilians on an than advancing U.S. interests by following an estab- enormous scale during its long civil conflict. lished standard of behavior in this new type of war, the United States—and any country that chooses to More importantly, the U.S. military cares pas- abandon these hard-won rules—risks basing its poli- sionately that other states and nonstate actors follow cies on narrow legalisms. In losing sight of the cru- the same rules to which it adheres, because U.S. cial protections of the conventions, the United States forces, who are deployed abroad in far greater num- invites a world of wars in which laws disappear. bers than troops from any other nation, are most like- And the horrors of such wars would far surpass ly to be harmed if the conventions are discarded. anything the war on terror could ever deliver. Career U.S. military commanders and lawyers have [ ]Want to Know More? For an introduction to the laws of war, Crimes of War: What the Public Should Know (New York: W.W. Norton & Company, 2007), edited by Roy Gutman, David Rieff, and Anthony Dworkin, presents concise explanations and stunning photographs on topics such as mercenaries, Chechnya, and the rights of refugees. Michael Walzer’s Just and Unjust Wars (New York: Basic Books, 1977) remains a defining text on the ethics of war. For the primary texts of the key humanitarian treaties, look no further than the indispensable Documents on the Laws of War (New York: Oxford University Press, 2000). In “What America Must Do” (Foreign Policy, January/February 2008), Desmond Tutu and Jorge I. Domínguez urge the United States to once again respect international laws. Lawrence Freedman reappraises the nature of conflict in the 21st century in “Think Again: War” (Foreign Policy, July/August 2003). Several “Seven Questions” interviews with architects of the Bush administration’s legal response to the war on terror, including John Yoo and Patrick Philbin, can be found at ForeignPolicy.com. »For links to relevant Web sites, access to the FP Archive, and a comprehensive index of related Foreign Policy articles, go to ForeignPolicy.com. 32 F o r e i g n P o l i c y

“For it isn't enough to talk about peace. One must believe in it. And it isn't enough to believe in it. One must work at it.” —Eleanor Roosevelt INSPIRED BY LEADERS OF THE PAST EDUCATING LEADERS OF THE FUTURE TheElliottSchoolof InternationalAffairs | Asian Studies | European and Eurasian Studies | International Affairs | International Development Studies | | International Science and Technology Policy | International Trade and Investment Policy | | Latin American and Hemispheric Studies | Middle East Studies | Security Policy Studies | www.elliott.gwu.edu

PRIME NUMBERS The Plastic Revolution A s the rich world knows all too well, credit cards are as dangerous as they are convenient. With millions of consumers from China to Mexico filling their wallets with plastic, the risks are mounting as fast as people can say, “Charge it!” | By Ronald J. Mann 2004 34 F o r e i g n P o l i c y

SOURCES: AUTHOR RESEARCH; EUROMONITOR INTERNATIONAL Ronald J. Mann is professor of law CHARTS: BY DAVID MERRILL at Columbia Law School and author of Charging Ahead: The Growth and Regulation of Payment Card Markets (New York: Cambridge University Press, 2006). M a rc h | A p r i l 2 0 0 8 35