From Somaliland to Afghanistan: Why States Recover – By Greg Mills

gregmillsThe Somaliland city of Burao, high above the sweaty coastal plain that centres on the port of Berbera, was the site of a remarkable conference nearly a quarter of a century ago that ended the fighting in this Horn of African country.

Somaliland’s democracy was built on five major internal meetings, starting with the Grand Conference of the Northern Peoples in Burao, held over six weeks and concluding with the declaration of Somaliland’s independence from Somalia on 18 May 1991.

Once the capital of British Somaliland, at the time Buroa was, says Mohamud Jama, then a UN official, “a mess – the stench and flies forced us to wear masks over our mouths. The refugee population and the militias had defecated in the buildings, and there were no services at all.’

The declaration was signed in an octagonal tin-roofed building near the colonial governor’s building, without electricity and running water, the white walls outside still pock-marked by bullet holes, the blue inside smeared with dirt and graffiti.

Today children play on its porch, swinging on its pillars, darting around the sandy streets. Burao’s officials are determined to leave the building as is, a memorial to those heady days.

Conferences in Burao and, later, Bomora, were managed and financed by locals, bringing their own food and shelter. These events were “bottom-up, not top-down”, emphasises Mohamed Omar, the Minister of Commerce, “unlike Somalia’s, which has been top-down, driven by donors through leadership and taking place outside the country”.

Somalilanders concentrated on achieving peace, not on acquiring financial rents for delegates from the process, a feature which has continually by contrast blighted Somalia’s attempts to the south, where conflict entrepreneurs have fed off both the fighting and the talking.

While contemporary isolation might impede the consolidation of its development, Somaliland’s home-built steadiness so far exemplifies the limits of external intervention in stabilising countries and the necessity of local ownership. The irony does not end there. The route to reclaiming Somaliland’s independence lies through Mogadishu, in getting its southern neighbour to agree to a divorce; but the Mogadishu government is barely functional, little more than a Western-supported and African-military controlled client state.

Somaliland’s stability illustrates the paradox and limits of aid. The economy is poor, based on livestock farming and exports and remittances.  The Somaliland government budget was just $152 million in 2014. GDP is estimated at $350 per capita annually for its 3.5 million people. Donor funding is just $120 million annually, most of which goes into roads and water infrastructure, and much of the rest into boosting agriculture. By comparison, the European Union alone is spending €25 million each month in Somalia to the south, much of this on those that otherwise would be at war.

The difference between Somaliland and Somalia is the difference between a peace that is locally “˜owned’ and a rent-seeking peace. A lack of aid has meant that Somalilanders have had to find their own way, and the lack of external involvement has left local structures in place. It is a prototype for making peace elsewhere, the lesson for outsiders being: Less is often more. Foreigners cannot after all want peace more than the locals. This is a first of several lessons in understanding why states recover and the role of outsiders in this process.

Getting it right depends on answering the question of why the international community so often gets it wrong in managing transitions, from war to peace, and from poverty to prosperity. Even so, the difference between state recovery and failure involves more than the efficacy of external actors, no matter the attempts to plan and resource a coherent strategy, to achieve better coordination, staffing, commu­nication, and to establish clear pillars, goals, objectives, systems of accountability, and clear priorities.

The drivers of state success include legitimacy, not just stability; soft systemic not just hard physical infrastructure; and the emergence of issue- rather than identity-led political and economic choices, where narrow self-interest is subsumed by national concerns. Transforming states is not just about “˜getting the external formula right’ and resourcing it properly. It’s about the politics, and the political economy, and living with local solutions, however messy they appear.

Security is imperative: indeed, it is the door through which much else follows, including better governance and development. You can’t fix instability without fixing, first, security. To do that effective armed forces are required, including the police.

But security alone offers only a temporary fix. As one US Marine general put it in the headquarters of the International Security Assistance Force in Kabul, “The military is inherently corrosive to development, but necessary too. It’s a bit like treating cancer with the military the chemotherapy. You try and kill the disease – the insurgent – before the patient …”

Experience teaches that back-filling behind the establishment of security with increased economic activity ensures transitions are more likely to stick. Understanding and implementing policies for economic growth is however the bit that many have struggled with, for a whole host of reasons – not least that governments and, from outside, aid agencies don’t understand business well or, worse still, are sometimes ideologically antithetical towards the private sector.

As a result, the international community is very poor at delivering development, especially in post-conflict countries. This should not be surprising since the donors themselves developed through internal rather than external actions. Donor and other forms of external support not only disincentivise normal entrepreneurial activity (with an aid-mothership happily distributing largesse sufficient for the elite) and distorts key economic factors such as overvaluing the currency through large donor inflows, but offers local politicians convenient means to externalise their choices, problems and failures.

The traditional route of an entrepreneur possessing a good idea – borrowing money and starting a business – is lost in the focus on easy money, where talents are diverted to tapping soft donor sources. And there is a deeper and more intractable generational issue that has been exacerbated by conflict and aid regimes. It lies in changing attitudes and ingraining a culture of personal responsibility; that is the biggest challenge to be gripped if Afghans, Liberians, Somalis and Sierra Leoneans, among others, are to ascend the recovery ladder from simply security through peace-building and reconstruction to prosperity.

These failings are inevitably worsened by an inability to stay the course. Countries are quick to respond to emergency situations, or to engage militarily, driven often by their own domestic political considerations. But few have the staying power, as is evidenced by Iraq, whatever the strategic folly in getting involved in the first instance. Thinking things through to the finish, by locals and outsiders, is imperative.

Wherever countries find themselves along the recovery spectrum – emerging from state failure a la Somalia or, at the other extreme, from economic crisis – there is a need to pursue economic policies for success. Development is not a mystery, hence rapid change over decades, especially in Southeast Asia. There are many examples to follow, for big and small countries, and for those both resource rich and poor, and along the full spectrum from outright state collapse and civil war to economic reform and diversification. To not realize this, leadership are epic incompetents, lacking personal courage and political will, obviously somnolent or just uninterested – or all of the above.

Conversely, there is a need to avoid desperate mercantilist, protectionist nationalist measures in trying to recover and grow. There is good reason why such measures were last in vogue during the black-and-white TV era. They don’t work. While short-term booms may be possible, such choices can only ultimately prevent membership of the club of serious economies, especially for African countries, given 97 percent of the global market lies outside the continent.

There are no magic remedies, no silver bullets, no matter how politically attractive such populist policy spasms and combative polemic might be, whether this be Argentina or, for that matter, South Africa. Indeed, if one thing is imperative for all those seeking recovery, it’s to ensure you have a good crisis – use the opportunity to make the right decisions and implement policies for growth, not payback.

The costs of failure and the potential rewards of recovery are enormous. Today the bulk of the world’s poor – totaling 1.1 billion of the planet’s seven billion people – live in failed or failing states. Not only is their lack of development and progress a missed opportunity for all, but their problems are unlikely to remain at home in a world increasingly connected by the flows of people, capital, goods, technology, information and news.

Such statistics have a tragic, human dimension. During 2013, Italian authorities were kept very busy intercepting boats filled to the gunwales with refugees fleeing failure in search of a better life and security. More than 12,000 illegal migrants were detected off Sicily and 8,000 off the island of Lampedusa in the third quarter of 2013 alone, the hazardous Mediterranean passage only one stage in a longer, grueling ordeal for most.

In October, the decomposing bodies of 87 migrants, among them 52 children, were discovered in the Sahara Desert. The two trucks carrying the migrants had broken down while trying to reach Algeria. Their passengers’ corpses were found in groups in a wide radius around a well they were trying to reach. Some had been eaten by jackals. They were fleeing one of the world’s poorest countries, Niger, second from bottom on the United Nations Human Development Index.

The quicker the situations that give rise to such desperate migration can be turned around, the better. History teaches however that the period of recovery for states from failure is at least as long as the period of decline.

Although state failure – or pockets of failure within states – is present in most continents, understanding why states fail and, more importantly, why they recover is particularly pertinent for Africa, since it houses the majority of failed states globally – 23 of 28 at one count.

The imperative for transformation is amplified by the demographic challenges the continent faces. While the world population (at current fertility levels) is anticipated to increase to the nine-billion mark by 2040, Asia and Africa will make up three-quarters of this number, the latter almost topping two billion – twice as many people as today. The problem is not the numbers per se, given that Africa’s population density (27 per sq/km) is little more than half the global average (45), but rather the inability or unwillingness to prepare adequately, hence the chaotic state of Africa’s cities and the paucity of infrastructure. The future, without proper preparation and selfless politics, looks bleak.

Africa’s recent unprecedented economic growth is as welcome as it is necessary in changing these conditions. But it will need to be sustained over generations, and it will give rise to other challenges, especially in the compressed urban setting which will, within a generation, house the majority of Africans, where dearth and excess live cheek by jowl. As De Tocqueville reminds, misery becomes less acceptable when no longer absolute.

State failure, of course, is not just about Somali-style collapse. The strains of fragility – of governance, economics, politics and society – intersect and play out differently in different circumstances. While many states are fragile, there is a group at one extreme that threatens to explode or implode, and is as a result prioritised by external actors. At the other extreme, there are authoritarian democrats; states that might work for now, but whose lack of democratic governance threatens to undermine both their standards of governance and prospects of long-term growth. Think Rwanda.

There is no single reason or tipping point at which a state becomes officially “˜failed’; an imaginary dividing line between success or normality and failure. This explains the difficulty in defining such states, and especially in categorising them. Hence terminology including failed, fragile, weak, collapsed, vulnerable, moribund, straggling, struggling, crisis, quasi-failed, “˜non-state’, broken, invisible, insufficient, stillborn, phantom, or even “˜Potemkin’ states. But these situations should be viewed on a spectrum or continuum rather than a balance sheet of failure.

Countries that work for some, at least for the relatively well-heeled visitor, can work against the locals. Think Kenya. There are those that significantly and continuously under-perform, lurching from crisis to crisis, a roller coaster of political and economic collapse, but do not explode into violence and become the focus of international aid groups, one external metric of failure. Think Argentina.

Yet, there are common features on this spectrum, including the role of policy and personality. Seldom is collapse or failure not in the interests of one group or another – and it can even be a choice, a course of action deliberately and frequently assiduously pursued regardless of the consequences for many citizens. This is a short-term game; while this environment may benefit different groups, the transaction costs are ultimately as ruinous for the privileged elites, if only they knew it, as they are for the nation.

Transformation, to use the former Mozambican finance and Prime Minister Luisa Dias Diogo’s terminology, requires a leadership committed to a “˜national project’, to popular welfare, and intent on putting the country and not their personal interests first.

Popularised by billionaire Warren Buffet, known as the “˜Sage of Omaha’, the term “˜buy and hold’ is synonymous with taking a long-term view; not aiming to enter low and sell high, but rather to build a business over generations. This approach discourages speculative investment and promotes the practice of holding onto shares for years in the belief that the stock is undervalued, and that sound management and patience will not only add value for the investor, but create wealth and jobs in the process. Buy and hold is also the strategy necessary to fix states. Local leaders need to adopt this approach, investing in the future of their countries, and not simply using their power to extract personal wealth.

The paths of reform and recovery are carefully-studied, well-known and available to many; why, we should ask, in a time of peril and possibility, do so few leaders walk them?

Dr Mills heads the Johannesburg-based Brenthurst Foundation. His latest book – “˜Why States Recover’ (Hurst) – based on his assignments in three dozen case-studies across the world, is being launched with the RAS this month.

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