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The level of challenge faced by Jordan and Moldova on refugees and migration is remarkable: while Jordan has welcomed over a million Syrian refugees, Moldova has a migration outflow equivalent to a quarter of its population. Without the option of closing their borders, the scale of these movements not only puts the challenge for developed countries into context, but provides important insights on the importance of planning, and of innovation in policy.
Here we draw out some of those insights from our event at this week’s UN General Assembly (UNGA). The event looked at Commitment to Development, migration’s role, and how developed countries can learn from those countries that have faced massive and contrasting challenges on refugees and migration.
The UN General Assembly and the future of migration
At last year’s UNGA, world leaders instigated work on two new “compacts,” which aim to agree consistent responsibilities and expectations on refugees and migration. This year’s event marked a mid-point in that work. Accordingly, we convened a high-level panel on our Commitment to Development Index and innovations in migration policy.
In her opening remarks, UN Special Representative for International Migration Louise Arbour reminded us about the valuable contribution migrants make, but also that in many societies, migrants are being held back in everyday life which prevents them from contributing fully.
Migration challenges and innovations in Jordan and Moldova
The Commitment to Development Index (CDI) measures 27 rich countries’ policies on migration, and the example of the two developing countries—Jordan and Moldova—provided some policy inspiration.
The Jordanian Minister of Planning and International Cooperation Imad N. Fakhoury described the scale of challenge around hosting more than a million Syrian refugees (over 10 percent of Jordan’s total population), and the new realities that internationally displaced people tend to stay in their host countries long-term (on average almost a quarter of a century). This has required policy innovation in the face of emerging challenges.
For example, should Jordan pay to educate refugee children? Fiscally, this was a significant challenge for an emerging economy. And should refugees be given the right to work given the likely alternative of un-taxed employment with the risk of exploitation? Minister Fakhoury provided an inspirational perspective on how Jordan responded to the challenges of integrating migrants in a both innovative and pragmatic way—issuing labour permits, allowing refugees to integrate in communities (only about 10 percent of all Syrian refugees live in designated camps), and ensuring education for their children. These steps enable refugees to contribute and to lead a self-determined life.
Deputy Minister for Foreign Affairs and European Integration Lilian Darii explained his country’s innovative policies facing a different challenge: how a quarter of Moldovans had emigrated—either permanently or to take up seasonal employment.
For Moldova, this has necessitated taking a long-term approach to migration—harnessing the benefits of remittances which account for almost a quarter of Moldova’s GDP and making the most of potential returners with an active diaspora programme and working to transfer pension rights on their return. A Mobility Partnership agreement with the EU has also helped promote legal mobility.
Two broad lessons for developed countries
The CDI takes a broad and holistic view of developed-countries’ approach on refugees and migrants. Along with the insights form Jordan and Moldova, we suggest the most successful approaches rely on two broader approaches:
Future planning: as obvious as it sounds, being prepared for potential demand for migration is important. In the coming years, growing economic prosperity will give more people the opportunity to move away from the risk of persecution, or if climate or other disasters strike or simply to pursue a better life for themselves and their children. Moldova and Jordan now plan for the reality of migration, and were ready to tackle its challenges.
Innovative policy: international migration is growing and offers huge developmental opportunities, but will require genuinely new and innovative approaches. There are examples of successful policies which benefit host countries, the country of origin and the migrant himself. CGD’s Michael Clemens has highlighted New Zealand’s extremely successful seasonal workers scheme. He also written about the potential of the Global Skills Partnership to simultaneously tackle problems related to aging populations and a lack of skilled workers in developed countries, while enabling training in sending countries—and a better live for migrants.
Investing in migration policy
Rich countries can learn from the experience of Jordan and Moldova on refugees and migrants. The level of challenge faced by these countries has driven them to plan carefully—considering costs against unspent potential of refugees and migrants—and then use innovative policy approaches to achieve the right balance. In different ways, these policies have helped ensure refugees, migrants, and their children can both contribute and benefit.
The words of one of our participants seem an appropriate way to conclude:
“Migration is a challenge that is here to stay. We must invest in ways of dealing with it."
Current president Sir Suma Chakrabarti is seeking a second four-year term as EBRD president, and he faces the challenge of Marek Belka, a former Prime Minister and Finance Minister of Poland and currently president of the country’s National Bank.
Recently both candidates recorded interviews with me, which we have edited together into this edition of the CGD Podcast, allowing you to directly compare their responses. For the sake of brevity, we edited down some of the answers, but in the interests of transparency we have also posted both full interviews with Chakrabarti and Belka. If you want to read the candidates’ CVs and their statements, you can find them via the EBRD’s site here.
Our purpose was to explore each candidate’s ideas for the future of the EBRD, given the changing nature of its work and the landscape of development banking. Established exactly 25 years ago to help post-Soviet countries in Eastern Europe transition to market-based economies, the EBRD’s geographical range now stretches from Morocco to Mongolia. Unique among the multilateral development banks (MDBs), the EBRD has a political mandate to assist only those countries that are ‘committed to and applying the principles of multi-party democracy [and] pluralism.’ In addition, CGD’s current work on the future of multilateral development banking raises further questions for EBRD candidates about the role of MDBs in tackling the growing shared problems the world faces, from climate change to pandemic response.
A note about logistics. The interviews were carried out separately, due to conflicting schedules. Each candidate was asked the same questions, although follow-ups differed, depending on their answers. The questions were grouped into categories as follows:
Scale of EBRD’s operations
EBRD’s political mandate and the nature of its work
EBRD’s relationship with Russia, its biggest client
Relationships with other multilateral development banks (MDBs) including the AIIB
Future of multilateral development banking
Final question: why should you be EBRD president?
Candidates were told the categories beforehand, but not the questions.
We arrived at the list of questions and categories with the help of CGD experts, including president Nancy Birdsall and senior fellow Scott Morris (who are leading our High Level Panel on the Future of Multilateral Banking), and Owen Barder, vice president and director of CGD Europe, in London, where the EBRD is also based. In 2012, during the last EBRD presidential search, Owen conducted podcasts with all the candidates, and the EBRD was only too happy for us to play a similar role this time around.
The EBRD’s governors (comprising its shareholders – 65 countries plus the European Union and the European Investment Bank) will vote for the next president at the annual meeting in London on May 11.
Update (March 25): US Senate Democrats have dropped demands for the IMF reforms to be included in Ukraine aid legislation.
Here’s a fact about the IMF reform package, agreed in 2010 in a negotiation led by the United States and since approved by 158 countries, but (embarrassingly and cavalierly) stalled in the US Congress: It would increase Ukraine’s access to IMF resources to deal with its financial troubles by more than twice the special $1 billion of loan guarantees for Ukraine that the Obama Administration has proposed to the Congress — and potentially almost six times as much — at virtually no cost to US taxpayers.
Huh? For the US to guarantee $1 billion in loans to Ukraine could cost between zero (if Ukraine repays all the loans to all its creditors) and $1 billion (if the US ends up on the hook because Ukraine pays none of its creditors). To take into account the default risk the proposed legislation is “scored” at $350 million, and so requires an appropriation of $350 million.
How does that compare to the potential support for Ukraine in the IMF reform package that is stalled in the Congress? Ted Truman explains in this excellent review (see p.4). Here’s the short version. Because the stalled reform package would double IMF core resources, Ukraine's own “quota” would increase from $2.1 to $3.1 billion ( its quota share declines slightly as some emerging market economies’ shares increase slightly). That would make Ukraine potentially eligible to borrow $6.2 billion rather than $4.2 billion (a country can borrow 200 percent of its quota in any one year) and as much as $18.6 billion over three years (600 percent of its quota).
The Congressional Budget Office also scores the IMF legislation — at $315 million (in fact it involves approving the transfer of previously appropriated funds from one IMF account to another). That’s a small price to pay to unlock more than $18 billion just for Ukraine, and unlike the $350 million in the special legislation, it won’t ever actually have to be paid. Ted explains why the scoring of the IMF quota increase is silly from an accounting and risk point of view—see p. 5.)
The White House hopes the IMF package of reform and new resources for Ukraine and for other future risks to global financial stability can ride the much more expensive but politically compelling coattails of the Ukraine legislation. I hope that turns out to be right. Or just maybe Congress will wake up to the fact that blocking the IMF reform package is a very expensive way to play politics.
Among the international financial institutions (IFIs) now lining up to demonstrate support for the interim government in Ukraine is the European Bank for Reconstruction and Development (EBRD). And its offer of 5 billion euros over six years looks pretty good alongside the 3 billion dollars put on the table by the World Bank for the upcoming year.
The EBRD is the only IFI that has a specific charter mandate to work in countries “committed to and applying the principles of multiparty democracy, pluralism, and market economics.” And what could be more compelling than Ukraine today, where the parliament turned out the old corrupt regime in favor of a new government that has declared itself committed to these very principles? So, fantastic!
Well, not so fast. There are a couple of things that make this whole “democracy” thing uncomfortable for the EBRD at the moment. First, that 5 billion on offer to Ukraine over the next six years—it’s actually a bit less on an annual basis than its level of assistance to Ukraine over the past five years, when bank investments in the country averaged about 900 million euros a year. So much for a democracy dividend when it comes to EBRD financing.
Even more uncomfortable is the bank’s record of assistance for Ukraine’s neighbor. Russia has long been the largest recipient of EBRD support. Last year the bank poured over 20 percent of its resources into the country. Has Mr. Putin’s government demonstrated itself to be committed to and applying the principles of “multiparty democracy, pluralism, and market economics”? Apparently the EBRD thinks so.
Interestingly, the EBRD produces excellent research on the intersection between economic reform and democratization, including the role that the bank’s investments play in promoting economic and political transitions. And within this body of work, the EBRD has sought to justify its heavy support for Russia.
But ultimately, high-level decisions about the EBRD’s investment program are not driven by a research program. They’re determined by the bank’s shareholders, the largest of whom are the United States, the United Kingdom, Germany, France, Italy, and Japan. Will they continue to go along with a Russia-dominated investment program? Current geostrategic interests alone would suggest not.
The bigger question for the EBRD is whether this episode will drive the institution to a more visible approach in support of its democracy mandate, not just in Russia, but in the central Asian countries and in the newly qualified countries in North Africa and the Middle East. In many of these countries, reconciling EBRD investments with the democracy commitment is a challenge.
In the Wall Street Journal this week, Bill Easterly uses Ukraine as a starting point to highlight the problems associated with donors and multilateral institutions pursuing “development” agendas that are indifferent to democratic rights. That’s all the more problematic for a development institution whose charter seeks to promote these very rights.
How long should presidents rule? On Tuesday, Colombia’s senate approved a national referendum to amend the constitution—again—to allow the popular president Alvaro Uribe to stand for election next year to yet another term in office.
You should care because this is representative of a big phenomenon that spans the whole developing world. For good reasons, many developing countries built presidential term limits into their constitutions—the contracts that govern how people agree to be ruled by each other.
Let me be absolutely clear: The reason that these changes are terrible has nothing to do with whether or not any given president is good or bad. Term limits in Colombia have an inherent value that goes far beyond the quality of one person, and I make no judgment whatsoever on Uribe’s presidency in particular when I say that ending that presidency and all others at the constitutionally appointed time is the right thing to do.
Gideon Maltz has explained why term limits are important in developing countries: They help prevent the creation of political machines that guarantee an individual’s longevity in power as surely as a de jure dictatorship, they help prevent an accumulation of power sufficient to encourage its abuse while a longtime president is in office, and they nurture the development of genuine and diverse political parties. James Fearon points out that term limits are preferable when voters use elections to select “good type” politicians up front, but less desirable when voters use elections to punish bad behavior at the back end. Credibly punishing bad behavior is hard in weak institutional environments, suggesting that term limits do more good in poorer countries.
Some research points to the shortcomings of term limits. Early work (pdf) by Timothy Besley and Anne Case based on data from U.S. states suggested that term limits for governors might lessen accountability for profligate spending by “lame ducks”, but more recent work (pdf) by Chiara Dalle Nogare fails to find this pattern in the broader world. U.S. states do not face a crisis of legitimacy of the most basic institutions of governance; many developing countries do, and they need term limits. This is why consensus indicators of governance quality such as the Polity IV project penalize regimes that modify constitutional term limits.
There are rays of hope to build on. Wise leaders have avoided the temptation to negate constitutional term limits, even in very poor countries with tenuous institutions. Nigeria and Zambia, among others, recently considered but then dropped efforts to change their constitutions to lock current presidents into power. The Mo Ibrahim Foundation awards a generous and brilliantly-conceived cash prize to African leaders “who have left office … having served the constitutional term as stipulated when taking office”, and former leaders from Mozambique and Botswana have won it. Moving from carrot to stick, CGD non-resident fellow Nicolas van de Walle has proposed (pdf) that donors agree to cut off all aid to any government whose president lingers in office more than 12 years—a great proposal that deserves to be considered anew.
One of the most poignant public places I have ever seen in the United States is the empty crypt directly beneath the center of the national capitol building. It is empty because, though it was built to hold George Washington’s body, his family declined to transfer it there. This simple act transformed the Capitol from a monument to one man into a monument to open democracy. Washington’s life reflected this same principle: He voluntarily stepped down after two terms, regardless of enthusiastic popularity.
Part of Washington’s success as president was to ensure that a cadre of qualified people was available to run for office when his term ended. One African president who visited CGD years ago was asked at that visit whether the rumors were true that he planned to change his constitution to allow his rule to continue; his two-point response was that “the people want me” and “all my opponents are traitors” (he did end up staying). But one of the most basic tasks of a president is to nurture viable successors, job one for an institution-builder. Any president who truly is the only viable candidate by the end of the constitutionally appointed term has utterly failed as a leader.
In this working paper CGD research fellow David Roodman explains how the four biggest developing countries -- Brazil, Russia, India and China, a group Goldman Sachs dubbed the "BRICs" -- stack up to their rich-country counterparts on the environment component of the annual Commitment to Development Index (CDI). He finds they generally perform well on greenhouse gas emissions, consumption of ozone-depleting substances, and tropical timber imports. Major weaknesses include low gas taxes, Amazon deforestation and heavy fossil fuel use.
In this new book, Bill Cline, a joint senior fellow at CGD and the Peterson Institute for International Economics, provides the first ever estimates of the impact on agriculture by country, with a particular focus on the social and economic implications in China, India, Brazil, and the poor countries of the tropical belt in Africa and Latin America. His study shows that the long-term negative effects on world agriculture will be severe, and that developing countries will suffer first and worst.