Analysis of the third kind
23 March 2018 15:03 (South Africa)

Analysis: Why states recover

  • Greg Mills
    Greg Mills
  • World

Why, and how, do so-called ‘failing’ states recover? Countries are quick to respond to emergency situations, or to engage militarily, driven often by their own domestic political considerations. But the biggest challenge lies in changing attitudes and ingraining a culture of personal responsibility if states are to ascend the recovery ladder from security through peace-building and reconstruction to prosperity – and if they are to stay the course. By GREG MILLS.

General Abilio Kamalata Numa was one of thirteen people present in Dr Jonas Savimbi’s party when the rebel leader was killed near Lucusse in Angola’s Moxico province on 22 February 2002.

From 2000 and, especially after the events of 11 September 2001, “Dr Savimbi,” recalls Numa, “started telling us that there would be trouble ahead”. Even though the sanctions against UNITA had been imposed in 1993, from 2001 especially, the Americans, he says, “saw UNITA as a danger”. Manoeuvres were conducted on a limited basis in Savimbi’s home area of Moxico, which he knew well, and had the hope of finding food. “People by then were dying of hunger, and troops were leaving, going home and defecting. We had no fuel and had to walk everywhere,” remembers Numa.

And then, the inevitable end.

‘Our column, numbering between 300 and 400 men, was being pursued by a very strong FAA [Angolan Army] offensive. It attacked on 18 February and our column divided. Dr Savimbi, and Generals Sammy and Dembo and their families grouped into one, General Kamorteiro into another, and myself into another to guard the rear,” remembers Numa. “The same day, Dr Savimbi’s commando was captured. My group of five met up with Dr Savimbi on 20 February. He told me that his group separated again in the jungle into a group of eight people, including his wife Valentine. On 21 February I left the place we met at to look for the main column. On the evening of the 21st we slept in a small clearing. On the 22nd, very early in the morning, we began our march to the east. At around 7 or 8 o’clock, on the right corner of the Luo River, we felt an attack. It was an attack on the column of General Big Joe. We were obligated to change our path to the north-east. Around 12 we spotted a drone circling, doing recognition, an Israeli plane.

“We stayed seated until about 1 o’clock when we started moving again. I was in the front when I detected footprints. There was a lot of moss there as it had been raining, so we could not exactly work out where it was from, but we could see that it was from military boots. Dr Savimbi said it could be their military or UNITA, and gave orders to go on into the depths of the forest. When we were in a safe place Dr Savimbi told us to camp, and I sent out a mission to scout for the enemy. I stood always in the same tent as Dr Savimbi. From 20–22 February, I always stood in the same tent as him. I asked him if I could use the solar panel to charge my batteries as we wanted to watch the football that night. When I left the tent, I heard screaming and shots, and I saw Dr Savimbi running. We all ran in different directions into the forest. I saw that Valentine, Dr Savimbi’s wife, was wounded in the leg. After 20 minutes of shooting I heard a helicopter coming. I then realised certainly that Dr Savimbi had died. Also when we were running, we heard a fusillade of shooting, presumably the shots that were directed into the body of Dr Savimbi. That was it, the 22nd of February.”

Little over ten years after Savimbi’s death, on 31 August 2012, Angola staged its first presidential election since the abortive 1992 attempt, with President Eduardo dos Santos winning a comfortable victory. The same October, the country launched a $5 billion sovereign wealth fund to channel the country’s oil wealth into infrastructure and other investment projects. This was on the back of an 11% annual growth in the 2000s, which peaked at a salivating 22.7% in 2007. Peace has produced a significant dividend.

Savimbi’s final moment, bereft of materiel and isolated, is a monument to his bad strategic choices, where personal ego, not political patience, dictated. Stability in Angola, as elsewhere, requires however more than just a military victory, even if that was a necessary place to start. It demands inclusive development to avoid building a constituency of losers who have little option but to resort to violence as a means of survival, and a political opposition as a critical check and balance on untrammelled power. It demands a commitment to popular welfare of the sort that has separated Southeast Asian performers from African countries, despite a similar (and at times in Asia, worse – think Vietnam) colonial inheritance of ethnic and religious mosaics and dependence on a few export commodities.

Angola is also an example where external intervention failed to deliver peace, despite myriad UN interventions and international peace-brokering. Foreigners cannot, after all, want peace more than the locals. This is the first of several lessons in understanding why states recover and the role of outsiders in this process.

Getting it right depends on answering 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 chemotherapy, the military. You try and kill the disease – the insurgent – before the patient…” Experience teaches that backfilling 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.

Take Afghanistan, where foreign money has been wasted on a grand scale. Development aid alone peaked at over $10 billion in development aid in 2010, amounting to $333 per Afghan man, woman and child per year. In some areas, such as the restive southern provinces, this concentration has been much higher. Yet given the lack of development impact – as measured by the existence of an economy outside that supported by donor money – it may have been better (and considerably more efficient) if the international community had bombed the country with bundles of money. Of course not every Afghan has received this aid. Much of it goes into just a few hands. And much is spent on consumptive rather than productive areas of investment aimed at expanding business and creating jobs. As one Afghan policeman has noted in this regard, “The return of the international community [on its aid to Afghanistan] has been very poor. I would be very angry if I were them. I would look closely at my partners.”

Mohammed, an ebullient Afghan trader and marketing expert guiding me around the Kabul juicing plant, summarised the country’s problems succinctly if inadvertently. “In the United States,” he said, “you make $100 and keep $20 for yourself. In Afghanistan, you make $100 but keep $90 for yourself. This is the better place to do business.”

author in Afghanistan

Photo: The author in Afghanistan

Yes, Mohammed, but the problem is that the $100 in Afghanistan has come until now mostly from the tax paid by the American. It is hardly sustainable. Here is the key problem with Afghanistan’s economic development. Most Afghans are locked into the politics of survival, a feudal-style system where security depends not on independence but patronage and servitude. This is compounded where the space for entrepreneurs is so limited and moneymaking opportunities are given over, in the main, to political operators.

Combined with a pathological tendency to examine rather than ‘to do’, attempts by aid agencies and their advisers to create jobs in these settings follow a pattern: an idea followed by a scoping study, usually backed up by a consultative process, an evaluation process producing a commission to conduct fieldwork to deliver a detailed report, ‘workshopped’ along the way by various representative constituents and appraised by peer reviewers in ‘deep-dive longitudinal’ processes. The product has to be matched by a business plan, which, usually after a period involving at least one turnover of donor staff, is condemned to a dusty plight on a shelf, forgotten when the idea is revived later and the process started over again.

As Mohammed’s reaction illustrates, 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 realise 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% 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, whether this be Costa Rica after its currency and debt crisis in the mid-1980s; El Salvador’s 22-year civil war that left 75,000 dead and where its GDP fell 20%; Singapore in 1965 with the dissolution of the Malay Federation and internal political and economic turmoil; Colombia in 2000 with the guerrillas moving to a semi-conventional phase of warfare when together they and the Escobarian drug lords had gained the upper hand over the government; or Vietnam in the mid-1980s where its command economy had seen widespread famine and ushered in the period of doi moi reforms, leading to 7% growth for nearly three decades. From 1992, Salvador followed a path of privatisation, tax reform, dollarisation in 2001, and trade liberalisation, reducing poverty in 20 years from 60% to 34%. Costa Rica went quickly from producing bananas as its main export to producing, by 2010, one quarter of the world’s computer chips, where exports rose 10% per annum from $870 million in 1983 to over $10 billion in 2008, built on openness to trade and capital, with brains and common sense as the principal policy tools. In each of these and other cases, governments were successful at reforms when they acted fast, instituted tough reforms, and did not spare their own political constituencies, including in the civil service. Insiders need to admit and identify failures.

The costs of failure and the potential rewards of recovery are enormous. Today the bulk of the world’s poor – totalling 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, gruelling 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 faster 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. It’s also implicit in a government’s failure to discharge its responsibilities towards its citizens, and in instances of democratic failure – or more sinister, the emergence of authoritarian democracies, those with the façade and language of democracy, but the instinct and practices of repressive governments. Examples include Venezuela and Zimbabwe. This is concerning on human rights grounds, of course, but also economically self-defeating. Recent work by Cornell academics Nic van der Walle and Takaaki Masaki substantiates a link between democracy and growth. In their econometric analysis of 43 (of 49) countries in sub-Saharan Africa for the period of 1982–2012, the authors find “strong evidence that democracy is positively associated with economic growth”, and that this “democratic advantage” is more pronounced for those African countries that have been democratic for longer periods of time.

Yet there is no single reason or a 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.

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.

Yet, there are common features on this spectrum, including the role 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.

Failure is therefore not a problem solely for Westerners trying to fix countries in places such as Afghanistan or trying to stop people from reaching their shores. While often politically more palatable, imposed regional solutions are no more useful and likely to succeed if they do not follow the local lead. As recovery success stories from Singapore to Colombia illustrate, the road from state weakness to strength is most likely under decisive domestic leadership that is committed to popular welfare and concerned less with inspiration of grand vision and governance frameworks, and more with the detail of policy content and perspiration of execution.

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.

Just as conflict is the result of poor leadership and politics which have gone bad, solutions demand better leadership at every level, and not only in government but also business and civil society. No rocket science may be required in this regard, but seizing the moment, strengthening your opponent's ability to deliver in negotiations, and managing your own constituencies demands a special set of skills and strategic vision, a dollops of political will – which is why so few seem to get it right.

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.

Foreigners can distort the incentives however to do so, where there is an ‘industry’ specifically to give out assistance and there are high stakes in ensuring short-term stability through a flood of aid. Outsiders letting go of the urge to help and insiders similarly relaxing the levers of state control, allowing the economy to grow and people to prosper, are perhaps not only the hardest but also the best things to do. This highlights the most important aspect of all. Local leadership has to realise that the extractive rent-seeking model of government that lies behind many instances of failure is unsustainable. Corruption is destructive, unproductive and ultimately self-defeating, whether this be on Wall Street, in corporate boardrooms in Europe or in Africa’s presidential palaces. Changing this system and culture demands leadership, in business as in government, taking a longer-term ‘buy, hold, fix’ rather than ‘buy, sell’ care-less view.

Such iron will and firm leadership is increasingly an anathema in a consensus-driven, media-ridden, carefully choreographed world, yet all the more notable when it occurs. What is surprising is how little people do to make a lasting mark on the wellness of all – a community, a country, a world – in their short earthly sojourns, even though they may receive so much more than they risk in return. What holds them back? Why so self-defensive and lacking in imagination? Why so few Trumans, willing to take the tough stand, Thatchers, willing to break the class and glass ceilings, Martin Luther Kings, ready to walk in the valley and suffer, or Gandhis, trodding barefoot to dine one night with Muslim, the next with Hindu?

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? DM

Why States recover

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

Photo: A mechanic assembles motorbikes at a newly opened Piaggio manufacturing plant in Hanoi, Vietnam, 06 July, 2009. EPA/JULIAN ABRAM WAINWRIGHT

  • Greg Mills
    Greg Mills
  • World

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