Opinion

The EU’s Seven-Year Budget Itch

PARIS – It’s theater season in the European Union. The play, called budget negotiations, is performed every seven years. It pits the EU’s spenders against its savers, donors against receivers, and reformers against conservatives. After the actors have exhausted themselves with bluffs, bullying, blackmail, and betrayal, everybody agrees on minimal changes. Each government claims victory and EU public spending is set in stone until the next performance.


Drama aside, however, watching the negotiation of the multiannual financial framework, as it is called, is a deeply depressing experience. All countries view it from the perspective of net balances – how much they receive, less how much they pay – without regard for the intrinsic value of spending. And, because wasting money at home is regarded as better than usefully spending it elsewhere, the composition of expenditures bears no relation to the EU’s stated priorities. In 2003, the Sapir report on Europe’s economic system called the EU budget a historical relic. Things haven’t improved much since then.

Theater season opened on February 23, when EU leaders held their first talks on the 2021-2027 framework. Optimists hope that it will end before the European Parliament election in June 2019. Realists expect it to last until the actors run out of time – that is, the end of 2020.

Seasoned European observers play down the significance of the show. They note that it is not primarily money, but regulatory policies – governing competition, subsidies, consumer protection, financial safety, or trade – that define the EU. Its budget represents about 2% of total public spending in the EU, and it has actually decreased over time, from 1.25% of GDP in the 1990s to about 1% in the current period. The US federal budget, by contrast, amounts to 20% of GDP. So why bother with a budget that remains small and misused? The EU has bigger problems to solve, critics say.

But this time, there are four reasons why the discussions matter, and why complacency would be misplaced.

The first is Brexit. Because the United Kingdom was a net contributor, it will leave a €15 billion ($18.5 billion) funding gap and force the EU to decide whether to substitute missing revenues or to cut spending. Adding to the drama, the misers’ bloc to which Britain belonged has fractured, with Germany indicating a willingness to be generous, while the Netherlands and Sweden are adamant they will not contribute a penny more.

Second, there is a growing gulf between money and politics. Poland’s net receipts from the EU amount to €10 billion annually, making it the leading beneficiary of the EU budget. But the Polish government’s priorities, and even values, are increasingly at odds with those of the EU. It opposes taking in asylum-seekers, it faces a European Commission-initiated procedure for threatening the independence of the judiciary, and it has shocked Europe with a law criminalizing allegations concerning Poles’ complicity in the Holocaust.

These actions have led German Chancellor Angela Merkel to suggest that conditionality be imposed for access to EU funds. This potentially explosive discussion can be avoided only if the EU is willing to shut up and pay, as some in Poland (and also in Hungary) demand. In that case, however, the EU would risk a different explosion. After all, for how long will citizens in the rest of Europe be willing to open their wallets only to be slapped in the face?

The third reason this theater season is so important is that Europe’s strategic environment calls for new priorities. From Ukraine to the Middle East, Libya, and the Sahel, the EU’s immediate neighborhood is either unstable or in turmoil. Meanwhile, the United States no longer provides the reliable shield to which Europeans had grown accustomed. The EU grew up in a world where it could safely concentrate on its own prosperity. That world is gone.

What we are facing is a redefinition of EU public goods, and this must entail deep budgetary consequences. The European Commission has bravely put some numbers on the table. It proposes to spend about €3-4 billion per year more on border security and a still-modest €5 billion per year on defense, as well as increases for research, innovation, and the Erasmus program. It also envisages annual spending cuts for regional aid and agriculture that could reach €30 billion.

Numbers, at this stage, merely flag issues. But the Commission’s boldness is justified. Regional policy and agriculture comprise nearly three-fourths of the EU budget, and both are questionable. Regional policy fueled eurozone booms in the pre-crisis years, but provided little help to struggling countries afterwards. And it is not granular enough to address the consequences of trade opening for local communities. The Common Agricultural Policy is increasingly ill-suited to guide the transformation of a much more diverse EU farm sector. To recalibrate them and thereby finance new priorities would be fully justified.

The last reason why budget issues matter this time around is that French President Emmanuel Macron has opened a new discussion about establishing a specific eurozone budget. The prime justification for creating one is not that certain public goods should be reserved to the EU’s eurozone members, but that a common fiscal instrument would cushion country-specific shocks and complement the European Central Bank’s monetary policy when facing common shocks. Whereas the EU budget performs no significant macroeconomic role in cross-country stabilization or in aggregate terms, as it does not record surpluses or deficits, the opposite would be expected from a eurozone budget.

There is no agreement yet on the contours of such a budget, especially as Germany is wary of creating a channel for cross-country transfers and joint borrowing. But this does not mean that the discussion has no future. If the EU27 prove unable to agree on sensible reforms of their budget, the eurozone’s 19 members (which include neither Poland nor Hungary) could gradually move toward creating their own. The EU budget would eventually morph into it, or become a small relic.

Understandably, citizens do not care much about the EU budget, especially if they do not directly benefit from it. But they do care about the new challenges Europe must confront, its ability to cope with them, and its willingness to devote resources to financing its priorities. The outcome of the budget discussion will tell Europeans what the EU is really up to. That is why this year’s theater season is not to be missed.

Jean Pisani-Ferry, a professor at the Hertie School of Governance (Berlin) and Sciences Po (Paris), holds the Tommaso Padoa-Schioppa chair at the European University Institute and is a senior fellow at Bruegel, the Brussels-based think tank.

By Jean Pisani-Ferry

How Europe’s Band-Aid Ensures Greece’s Bondage

ATHENS – Greece’s never-ending public-debt saga has come to signify the European Union’s inept handling of its inevitable eurozone crisis. Eight years after its bankruptcy, the Greek state’s persistent insolvency remains an embarrassment for Europe’s officialdom. That seems to be why, after having declared the euro crisis over in the rest of Europe, the authorities seem determined to declare final victory on the Greek front, too.


The big moment, it is said, will come in August, when Greece will be pronounced a “normal” European country again. Recently, in preparation for the government’s return to the money markets – from which it has been effectively excluded since 2010 – Greece’s public-debt authority has been testing the waters with a long-term bond issue.

Unfortunately, all the happy talk about impending “debt relief” and a “clean exit” from Greece’s third “bailout” obscures an uglier truth: the country’s debt bondage is being extended to 2060. And, by ossifying Greece’s insolvency, while pretending to have overcome it, Europe’s establishment is demonstrating its dogged refusal to address the eurozone’s underlying fault lines. This augurs ill for all Europeans.

For an EU country to be considered “normal,” it should be subject to the scrutiny facing countries that were never bailed out. That means the standard twice-yearly checks of compliance with the EU’s Stability and Growth Pact, as performed by the European Commission under the so-called European Semester procedure. Nevertheless, for countries like Ireland or Portugal, a tougher “post-program surveillance” procedure was designed following their bailouts: quarterly checks conducted not only by the European Commission but also by the European Central Bank.

It is plain to see why Greece’s road will be much bumpier than Ireland’s or Portugal’s. The ECB had already begun purchasing Irish and Portuguese debt in the secondary markets well before these countries’ bailout exit, as part of its “quantitative easing” program. This enabled the Irish and Portuguese governments to issue large quantities of new debt at low interest rates.

Greece was never included the ECB’s quantitative easing program, for two reasons: its debt burden was too large to service in the long term, even with the help of ECB-sponsored low interest rates, and the ECB was under pressure, mainly from Germany, to wind down the program. Moreover, the post-program surveillance procedure does not give the “troika” of official creditors – the European Commission, the ECB, and the International Monetary Fund – the leverage over Greece that they desire.

In celebrating Greece’s “clean exit,” while retaining its iron grip on the Greek government and withholding debt restructuring, Europe’s establishment is once again displaying its skill at inventing neologisms. Until 75% of Greece’s public debt is repaid – in 2060, at the earliest – the country, we are told, will be subject to “enhanced surveillance” (a term with unfortunate echoes of “enhanced interrogation”).

In practice, this means 42 years of quarterly reviews, during which the European Commission and the ECB “in collaboration with the IMF” may impose new “measures” on Greece (such as austerity, fire sales of public property, and restrictions on organized labor). In short, the next two generations of Greeks will grow up with the troika and its “process” (perhaps under a different name) as a permanent fixture of life.

The celebration of Greece’s return to normality began a few weeks ago with the government’s oversubscribed €3 billion ($3.7 billion) issue of its first seven-year bond in years. What the revelers failed to note, however, was that, to borrow that €3 billion on behalf of its creditors, the Greek state added €816 million in interest payments to its debt repayments for 2025. Germany’s cost for rolling over the same sum, on the same day, was a mere €63 million. Will Greece’s income rise by a similar amount between now and 2025 to make this sustainable?

The official answer is that debt relief will come soon, paving the way for Greece’s smooth return to the money markets. But European officials have ruled out restructuring debt that cannot be repaid. What debt relief really means is that repayment will be shifted from 2022-2035 to 2035-2060, with interest added. In other words, Greece will gain easier medium-term repayments in exchange of 40 years of debt serfdom.

Back in 2015, I was pushing for substantive debt restructuring by means of linking the volume of debt and the rate of repayment to the size of Greece’s nominal GDP and its rate of growth, respectively. Now, it seems that the idea of nominal GDP-indexing will be revived, but only to determine the extent to which medium-term repayment is pushed into the future. Moreover, the easier medium-term payments will be made contingent not only on growth, but also on new “conditionalities” (read: austerity measures) imposed by the (renamed) troika.

According to the authorities’ propaganda, Greece’s creditors are linking debt repayments to growth. In reality, the prospect of recovery will be dealt another blow, because long-term investors will be deterred by the combination of prolonged insolvency and protracted austerity.

What accounts for this implacable determination to leave the Greek wound festering under a flimsily applied Band-Aid? The answer lies in France and Germany, where, a decade after the 2008 financial crash exposed the eurozone’s design flaws, there is still no consensus about how to manage the large-scale insolvencies that are inevitable in a currency union lacking any mechanism to temper financial flows and trade imbalances.

Greece remains the litmus test of the European establishment’s capacity to rationalize the eurozone, and its people have been sacrificed on the altar of an impasse whose repercussions have long since spilled over to the fragmenting political scenery of Central Europe.

Something has to give. Will it be the establishment’s determination to stick to business as usual? Or will it be Europe’s integrity?

Yanis Varoufakis, a former finance minister of Greece, is Professor of Economics at the University of Athens.

By Yanis Varoufakis

Working Toward the Next Economic Paradigm

LAGUNA BEACH – For decades, the Western world put its faith in a well-defined and broadly accepted economic paradigm with applications at both the national and global levels. But, against a background of declining confidence in the ability of “experts” to explain, let alone predict, economic developments, that faith has deteriorated. With a new paradigm having yet to emerge, the world economy faces a heightened risk of fragmentation, with already-vulnerable countries being left even further behind.


The paradigm that, until recently, dominated much of economic thinking and policymaking is embodied in the so-called Washington Consensus – a set of ten broadly applicable policy prescriptions for individual countries – and, at the international level, in the pursuit of economic and financial globalization. The idea, simply put, was that countries would benefit from embracing market-based pricing and deregulation at home, while fostering free trade and relatively open cross-border capital flows.

Deepening the economic and financial linkages among countries was viewed as the best way to deliver durable gains, enhance efficiency and productivity, and mitigate the threat of financial instability. This approach was also deemed to yield collateral benefits, from enhancing internal social mobility to reducing the risk of violent conflict among countries. And it promised to support the positive convergence of developing and developed countries, thereby reducing both absolute and relative poverty and weakening economic incentives for illegal cross-border migration.

Supported by the traditional economic theories taught at most universities, this approach was energized after the fall of the Berlin Wall and the disintegration of the Soviet Union, when the former communist countries, together with China, joined the Western-dominated world order, boosting total production and consumption.

But, at a certain point, confidence in the Washington Consensus turned into something like blind faith. The resulting complacency, among policymakers and economists alike, contributed to the world economy becoming more vulnerable to a series of small shocks that, in 2008, culminated in a crisis that pushed the world to the brink of a devastating multi-year economic depression.

Suddenly, the advantages of globalization paled in comparison to the risks. It didn’t help that the crisis originated in the United States, which had hitherto been the main advocate for the Washington Consensus and unbridled globalization, including through its role in multilateral organizations like the G7, the International Monetary Fund, the World Bank, and the World Trade Organization.

Analytical failures were partly to blame for this. The economics profession did not go far enough to develop a comprehensive understanding of the connection between a rapidly growing and increasingly deregulated financial sector and the real economy. The impact of major technological innovations was poorly understood. And insights from behavioral science were inadequately regarded – if not shunned altogether – in favor of analytically elegant microeconomic underpinnings that were model-friendly, but unrealistic and overly simplistic.

Meanwhile, policymakers overlooked the economic, political, and social consequences of rising inequality – not just of income and wealth, but also of opportunity – thereby allowing the middle class gradually to be hollowed out, a trend that was exacerbated by both technological and non-technological developments. They also underestimated the risks of financial contagion and surges in migration flows. As a result, behavioral norms and rules lagged far behind realities on the ground them, and political polarization intensified.

At the international level, the established post-war order was increasingly challenged by a rising China, whose sheer size, in terms of both geography and population, enabled it to achieve systemic importance, despite a relatively low per capita income and a political system that seemed at odds with a liberal market-based economy. The major global economic institutions struggled to adapt quickly enough.

In fact, notwithstanding a few tweaks, the governance structure of the IMF and the World Bank remained more reflective of past realities, with Europe, in particular, maintaining disproportionate influence. Even the G20, which emerged when the G7 proved too narrow and exclusive to support effective economic-policy coordination, failed to change the game. A lack of operational continuity, together with disagreements among countries, quickly undermined the G20’s effectiveness, especially after the threat of a global depression had passed.

Given all this, it should come as no surprise that enthusiasm for economic and financial globalization has faltered. Indeed, both advanced and emerging economies have long balked at the notion of strengthening regional and international institutions by delegating more national authority to them.

Now, some countries are adopting a more inward-looking approach and/or shifting their focus to bilateral and, in Asia, to regional linkages. Such shifts give larger economies like the US and China a distinct advantage, while some economies and regions – particularly in Africa – face increasing marginalization.

Building consensus around a revised unifying paradigm will not be easy. It will be an analytically challenging, politically demanding, and time-consuming process that will probably entail the consideration and rejection of a few bad ideas before good ones take root. It will also be a more multidisciplinary and intellectually inclusive process – more bottom-up than top-down – than the one that preceded it. It will need to adapt intelligently to innovations in artificial intelligence, Big Data, and mobility.

In the meantime, both economists and policymakers have an important role to play in improving the existing situation. At the international level, the concept of “fair trade” – not to mention social displacement – should be a bigger part of policy discussions. And economies – especially Europe – need to work actively to reform a tired system of multilateral governance that increasingly lacks credibility.

Moreover, feedback loops between the real economy and finance need to be examined in greater depth. Distributional issues, including pressures on the middle class and the predicament of population segments vulnerable to slipping through stretched social safety nets, need to be better understood and addressed. This demands deeper comprehension of technology-driven structural changes, with Big Tech recognizing and adjusting to its growing systemic importance in step with government.

Complacency was a central reason for the last economic paradigm’s loss of credibility. Let us not allow it to do any more damage than it already has.

Mohamed A. El-Erian, Chief Economic Adviser at Allianz, was Chairman of US President Barack Obama’s Global Development Council and is the author of The Only Game in Town: Central Banks, Instability, and Avoiding the Next Collapse.

By Mohamed A. El-Erian

Cold War II

NEW YORK – The Cold War lasted four decades, in many ways both beginning and ending in Berlin. The good news is that it stayed cold – largely because nuclear weapons introduced a discipline missing from previous great-power rivalries – and that the United States, together with its European and Asian allies, emerged victorious, owing to sustained political, economic, and military effort that a top-heavy Soviet Union ultimately could not match.


A quarter-century after the end of the Cold War, we unexpectedly find ourselves in a second one. It is both different and familiar. Russia is no longer a superpower, but rather a country of some 145 million people with an economy dependent on the price of oil and gas and no political ideology to offer the world. Even so, it remains one of two major nuclear-weapons states, has a permanent seat on the UN Security Council, and is willing to use its military, energy, and cyber capabilities to support friends and weaken neighbors and adversaries.

This state of affairs was anything but inevitable. The end of the Cold War was expected to usher in a new era of friendly Russian ties with the United States and Europe. It was widely thought that post-communist Russia would focus on economic and political development. And relations got off to a good start when Russia, rather than standing by its long-time client Iraq, cooperated with the US in reversing Saddam Hussein’s invasion of Kuwait.

The goodwill did not last. Just why will be a matter of debate among historians for decades to come. Some observers will blame successive US presidents, pointing to a lack of economic support extended to a struggling Russia, and even more to NATO enlargement, which, by treating Russia as a potential adversary, increased the odds it would become one.

It is true that the US could and should have been more generous as Russia made its painful transition to a market economy in the 1990s. Nor is it clear that NATO enlargement was preferable to other security arrangements for Europe that would have included Russia. That said, the lion’s share of the responsibility for the emergence of a second Cold War is Russia’s, and above all Vladimir Putin’s. Like many of his predecessors, Putin viewed the US-dominated world order as a threat to his rule and to what he regarded as his country’s rightful place in the world.

Russia in recent years has used armed force to seize, occupy, and annex Crimea, in the process violating the fundamental principle of international law that borders may not be changed by armed force. Putin continues to use military or covert means to destabilize Eastern Ukraine, Georgia, and parts of the Balkans. And Russia employed military force in particularly brutal ways in Syria to prop up Bashar al-Assad’s appalling regime.

Putin’s Russia also went to great lengths, in the words of US Special Counsel Robert Mueller, to carry out “fraud and deceit for the purpose of interfering with the US political and electoral processes, including the presidential election of 2016.” Heads of US intelligence agencies have made clear that they expect further such efforts between now and the midterm congressional elections in November.

As Russia has become a revisionist country, with few if any qualms about overturning the status quo by whatever means it judges necessary, shoring up Europe’s defense and providing lethal arms to Ukraine is a sensible response. But what more should the US do, beyond reducing the vulnerability of voting machines and requiring technology firms to take steps to prevent foreign governments from trying to influence US politics?

First, Americans must recognize that defense is not enough. Congress is right to call for additional sanctions, and Donald Trump is wrong to refuse to implement sanctions that Congress has already passed.

The US government also needs to find its voice and criticize a Russian regime that arrests its opponents and reportedly murders journalists. If Trump, for whatever reason, continues to coddle Russia, then Congress, the media, foundations, and academics should publicly detail the corruption that characterizes Putin’s rule. Circulating such information might increase internal opposition to Putin, persuade him to hold off on further interference in US and European politics, and, over time, buttress more responsible forces within Russia.

At the same time, the objective should not be to end what little remains of the US-Russian relationship, which is already in worse shape than it was for much of the first Cold War. Diplomatic cooperation should be sought whenever it is possible and in America’s interest. Russia may well be willing to stop interfering in Eastern Ukraine in exchange for a degree of sanctions relief, if it could be assured that ethnic Russians there would not face reprisals. Likewise, the Kremlin has no interest in a military escalation in Syria that would increase the relatively modest cost of its intervention there.

At the same time, Russian support is needed to tighten sanctions against North Korea. And maintaining arms-control arrangements and avoiding a new nuclear arms race would be in the interest of both countries.

There is thus a case for regular diplomatic meetings, cultural and academic exchanges, and visits to Russia by congressional delegations – not as a favor, but as a means to make clear that many Americans are open to a more normal relationship with Russia if it acts with greater restraint. The US and its partners have a large stake in greater Russian restraint while Putin remains in power – and in a Russia characterized by other than Putinism after he is gone.

Richard N. Haass is President of the Council on Foreign Relations and author of A World in Disarray.

By Richard N. Haass

America’s Forgotten Allies in Syria

AFRIN, SYRIA – On January 20, Turkey began targeting northern Syria with airstrikes and heavy shelling in a campaign that it claims is designed to neutralize a security threat on its southern border. The area under attack, and Afrin, the city from which I fight, is controlled by the Kurdish People’s Protection Units (YPG).


As a commander in the Syrian Democratic Forces (SDF), which includes the YPG, let me be unequivocal: there is no truth to Turkey’s claims that we are waging war across the border. In fact, the opposite is true; with “Operation Olive Branch,” Turkey is attacking us. And yet, for reasons I cannot comprehend, it is doing so with tacit approval from the international community.

Our forces do not sponsor attacks against the Turkish state. (The YPG has only returned fire against Turkish positions that have shelled us.) Our only war is with jihadists from the Islamic State (ISIS), a fight the United States has supported us in waging. But now, with the fight against ISIS largely over, our international backers have grown quieter – just as Turkey’s rockets have gotten louder.

Ever since the Syrian conflict began in 2011, Turkey has aligned itself with the wrong side. It cooperated closely with the Salafist Ahrar al-Sham rebel group, whose leaders were al-Qaeda members in Afghanistan. Turkey also lent support to jihadists from al-Qaeda’s Syrian affiliate, Jabhat Fatah al-Sham (formerly the al-Nusra Front).

And, until recently, Turkish leaders turned a blind eye to the foreign fighters transiting through their country to join ISIS in Syria. In October 2014, then-US Vice President Joseph Biden told a public audience that Turkish President Recep Tayyip Erdoğan had privately admitted that Turkey had “let too many people through.” Though Biden later apologized for the revelation, it reaffirmed that Turkey has repeatedly mishandled its approach to the conflict.

The SDF, on the other hand, has supported the region’s democratic aspirations by fighting for a Middle East free of jihadists. For more than a year before ISIS became a household name in the US and Europe, our fighters were dying to keep the group at bay. We defended communities and minorities from the jihadists’ wrath, and prevented them from enslaving more women and stoning more dissidents than they did. And, by removing ISIS from the Turkish border, we thwarted the group’s efforts to extend its reach deeper into Europe.

Our campaign against ISIS in Kobanî in 2015 led the US to increase its delivery of weapons, training, and air support. Through this partnership, the SDF brought ISIS to the brink of collapse. But these battles also came at a steep cost to my soldiers, who bore the brunt of the jihadists’ ferocity; ISIS killed thousands of our fighters, while the US military, which suffered some 4,500 casualities during the Iraq War, has lost only four soldiers in Syria.

Now that the fight against ISIS is winding down, the US seems less eager to support us, which has allowed Turkey to fire missiles and artillery at us with impunity. According to the Syrian Observatory for Human Rights, at least 70 civilians – and 21 children – have been killed during the operation, while more than 100 SDF soldiers have perished, including one female soldier whose body was mutilated by Turkish forces. At the moment, we are exposed to the full wrath of a NATO army, without access to even a single helicopter to evacuate our wounded.

Turkey’s leaders claim they are fighting the SDF because we are “terrorists.” I challenge them to present evidence to support these claims. In reality, our biggest threat to Turkey is not our weapons, but our ideas and political organization. Erdoğan fears our democratic values; we have brought freedom to regions ruled by brutal dictatorship for most of five decades. As Erdoğan gives free rein to his autocratic tendencies, he worries that a true democracy on Turkey’s southern border could threaten his own grip on power.

For Erdoğan, the best scenario for Syria would a makeover as a Sunni Arab state, where Kurds and other minorities are sidelined. But, this would be to the detriment of Syria’s great diversity. In contrast, we support Syria’s ethnic and religious mosaic, and envision a future of coexistence among Christians, Circassians, and Yazidis – all groups that Turkey has shunned.

Erdoğan has claimed that he wants “to deliver Afrin to its real owners,” thereby enabling the more than 3.5 million Syrian refugees in Turkey to return “to their own land as soon as possible.” Yet, to many of us, Erdoğan’s true objective in Afrin is to make the region Kurdenrein, turning us into a minority in our own home. Where are we expected to go? Kurds are not squatters in Afrin.

As Erdoğan becomes increasingly erratic and alienates his Western allies, it is the Kurds who are suffering the most. We are willing to be good neighbors and work toward a negotiated settlement. But as long as Turkey continues to target us, drawing no meaningful condemnation for the assault, we will have no choice but to defend ourselves.

Mahmoud Berkhdan is a member of the general command of the Syrian Democratic Forces, based in Afrin, Syria.

By Mahmoud Berkhdan

Africa’s Manmade Water Crisis

SINGAPORE – About a decade ago, at a meeting of South African mayors convened by Lindiwe Hendricks, South Africa’s then-minister of water and environmental affairs, we predicted that an unprecedented water crisis would hit one of the country’s main cities within 15 years, unless water-management practices were improved significantly. That prediction has now come true, with Cape Town facing a shutdown of its piped water network. The question now is whether African leaders will allow our other projection – that, within the next 25-30 years, many more of the continent’s cities will be facing similar crises – to materialize.


Africa has long struggled with urban water and wastewater management. As the continent’s population has swelled, from about 285 million in 1960 to nearly 1.3 billion today, and urbanization has progressed, the challenge has become increasingly acute. And these trends are set to intensify: by 2050, the continent’s total population is expected to exceed 2.5 billion, with 55% living in urban environments.

The challenge African countries face may not be unique, but it is, in some ways, unprecedented. After all, in Western countries, urbanization took place over a much longer period, and against a background of steadily improving economic conditions. In building effective systems for water and wastewater management, cities had adequate investment funds and the relevant expertise.

In Africa, cities’ financial and management capacities are already overwhelmed. As a result, water and wastewater management has often fallen by the wayside, with policymakers focusing on water-related issues only when droughts and floods occur. The Third World Centre for Water Management estimates that only about 10-12% of Africa’s population has access to adequate domestic and industrial wastewater collection, treatment, and disposal.

Given that the construction of the infrastructure and systems required to meet African cities’ water needs is likely to take some 20-30 years, governments’ sustained commitment is essential. A key imperative is the development of more environmentally friendly systems for wastewater disposal, as is cleaning bodies of water within and around urban centers that are already heavily contaminated.

Such an effort must be based on a comprehensive approach to assessing water quality that covers a wide range of pollutants – far more than the 10-40 that most African utilities now monitor – with the expectation that new pollutants will be added as they emerge. Cities like Singapore now regularly monitor 336 water quality parameters to ensure water safety. To that end, Africa will need access to the relevant expertise, adequate funding, and well-run laboratories – all of which are currently in short supply.

Funding such efforts will not be easy. For one thing, official corruption has long undermined investment in the planning, design, and construction of water infrastructure, as well as the effective management of existing infrastructure. For another, the social value of water – including its central role in many African religions – has long limited governments’ ability to create a viable funding model for water utilities.

Though countries are often eager to trade resources like oil, gas, minerals, timber, and agricultural products, no country in the world sells its water to other countries. Canada approved the North American Free Trade Agreement only after its parliament confirmed that the agreement would not apply to water in its natural state. In federal countries like India and Pakistan, even individual provinces refuse to consider giving water to their neighbors.

Countries don’t make much money from water domestically, either. In 2001, South Africa introduced a “Free Basic Water Policy,” according to which all households, regardless of size or income, receive six kiloliters (1,585 gallons) of water per month at no cost. One might argue that this is because water is necessary for survival. But so is food. And while both water and food are guaranteed in South Africa’s constitution, only water is provided for free.

And South Africa is no anomaly. In most urban centers worldwide, water is free or highly subsidized, and politicians are reluctant to change that. Singapore’s water price did not rise at all from 2000 to 2016, and Hong Kong’s water prices haven’t changed since 1996, even as the price of everything else has risen.

While water obviously shouldn’t become an expensive luxury good, governments’ reluctance to charge appropriately for it has undermined their ability to invest in water utilities, including proper wastewater collection and treatment. Far from leveling the playing field, this has made urban water management in most cities less equitable, because the state is unable to provide the necessary services in an efficient, sustainable, or comprehensive way.

When Cape Town’s water network is shut down because reservoirs have become dangerously low – probably on July 9 – residents will have to stand in line at one of 200 water-collection points, in order to collect 25 liters per person per day. That task will be particularly hard on poor and otherwise vulnerable people.

As South Africa’s politicians and media debate the causes of this crisis, they often focus on climate change – a culprit that cannot talk back. But the fact is that the dismal state of urban water management – exemplified by the fact that 36% of the water in South African cities is either lost due to leakage or not paid for, compared to 3.7% in Tokyo and 8% in Phnom Penh – remains a leading reason for the shutdown.

Managing urban water is not rocket science. Solutions have been well known for decades, and the needed technology, expertise, and even funds are available. What has been missing is political will, sustained public demand, and continuous media scrutiny. Cape Town’s crisis should serve as a wake-up call for all of Africa. Unfortunately, like Africa’s water resources, it is most likely to be wasted.

Asit K. Biswas is Distinguished Visiting Professor at the Lee Kuan Yew School of Public Policy, National University of Singapore. Cecilia Tortajada is Senior Research Fellow at the Institute of Water Policy, Lee Kuan Yew School of Public Policy, National University of Singapore.

By Asit K. Biswas and Cecilia Tortajada

In Search of a Global Refugee Strategy

BRASÍLIA – Next week, leaders from Latin America and the Caribbean will meet in Brazil to discuss solutions to the global refugee crisis. Observer countries, international organizations, and representatives of civil society will also take part in the dialogue, which will be co-hosted by the Brazilian government and the Office of the United Nations High Commissioner for Refugees.


The aim of the two-day gathering is to strategize new ways to assist the millions of displaced people in the region and around the world. Our conclusions will help form the regional contribution to a new “global compact on refugees,” which will be presented to the UN General Assembly later this year.

Addressing the plight of refugees is one of the greatest challenges currently facing the international community. With some 65.6 million people forcibly uprooted by violence, natural disasters, and economic hardship, there are more displaced people today than immediately after World War II. But, because no country is immune to the consequences associated with large movements of refugees, only a coordinated response can ameliorate the suffering. Rather than closing borders, as some governments have done, the international community must work together to address the issue of global displacement.

As we search for solutions, it is important to remind ourselves that while refugees may flee for different reasons, they are united by hardship. As UN Secretary-General António Guterres notes, refugees are the “most vulnerable of the vulnerable,” people who have been driven from their countries, families, and friends, not by frivolous impulse, but by persecution and conflict. In other words, no matter where refugees are going, they are running for their lives.

In response to this tragic reality – and despite being saddled by a severe fiscal crisis that has led to austerity measures at home – Brazil’s government has accelerated efforts to protect those arriving on our shores. Through the establishment of new integration and resettlement programs, Brazil is reinforcing an open-door policy toward refugees, the displaced, and the stateless, while also signaling our leadership on this issue.

For example, in January 2012, Brazil established a humanitarian visa program to benefit Haitians forced to flee after the devastating 2010 earthquake. More than 85,000 Haitians migrated to Brazil, and all had their legal status quickly resolved, enabling them to work, study, and use the public health-care system. This effort not only afforded a degree of dignity to the displaced; it also helped insulate refugees from “coyotes,” smuggling networks that prey on the destitute and desperate.

Then, in 2013, another humanitarian visa program was created, this time to benefit people affected by the conflict in Syria; more than 10,000 entry visas were eventually allocated as part of that initiative. Finally, in late 2017, Brazil adopted a new national migration law, which guarantees migrants the same legal protections as citizens, in line with the human-rights principles that inform Brazil’s foreign policy. The legislation also helped simplify the naturalization process for the stateless, virtually eliminating the issue of statelessness in Brazil.

Every country has a responsibility to help those in need. Nevertheless, at the moment, some countries are doing more than others to assist refugees. Of the world’s refugee population, 84% are currently hosted by developing countries. As that figure clearly shows, a new approach, based on shared responsibilities, is urgently needed. That is why the regional meeting that Brazil is hosting next week is so important. Simply put, we want to share what we have learned.

For decades, Latin American and Caribbean countries have pursued a unified approach to aiding the displaced, while our legal frameworks have set the global standard for refugee protection. For example, in 1984, the region’s landmark Cartagena Declaration on Refugees committed signatories to the principle of non-refoulement. Three decades later, regional governments renewed this pledge by adopting the Brazil Declaration and Plan of Action, which aims to end statelessness in the region by 2024, among other goals.

These multilateral agreements are in addition to unilateral policies adopted by countries in the region. Such policies include constitutional protections for asylum seekers, provision of temporary identification documents, and guaranteed access to public education, banking, and health-care services.

As these measures demonstrate, governments in Latin America and the Caribbean have laid the groundwork to strengthen the international response to the world’s refugee crisis. Brazil’s goal is to channel the region’s collective experience into a more equitable, global solution. When the region’s leaders meet in Brasília next week, and then join world leaders in New York later this year, we must inspire one another to ease the suffering of the many millions who have suffered enough. Only through open doors – and open arms – will the world’s refugees find safety.

Aloysio Nunes Ferreira is the Minister of Foreign Affairs of Brazil.

By Aloysio Nunes Ferreira

Three Humanitarian Challenges for Africa in 2018

NAIROBI – In mid-2017, when a cholera outbreak in Somalia threatened to overwhelm local hospitals, health experts feared the worst. With crippling drought, malnutrition, and poverty already endemic, an outbreak of deadly diarrhea seemed destined to paralyze the fragile state. But, despite the dire predictions, institutional paralysis was avoided. Although hundreds died and many more became sick, the collective response managed by governments, NGOs, and local communities, including the national Red Crescent Societies supported by the Red Cross movement, contained the disease.


Somalia’s experience gives me great hope for Africa’s future. But it also serves as a reminder that local capacity is easily inundated during times of crisis. While some parts of Africa have become self-sufficient in terms of public health, others continue to lean heavily on global aid. For these areas, partnership is the best means of minimizing risks.

In particular, three key challenges this year are likely to pose the severest tests of Africa’s ability to manage humanitarian crises.

The first challenge is violence in the Democratic Republic of the Congo. Last year, conflict in the DRC’s central Kasai region displaced some 1.4 million people, bringing the total displaced population to 4.1 million – the largest concentration of internal refugees anywhere in Africa. The violence has exacerbated food insecurity, with more than three million people severely undernourished.

Unfortunately, the Kasai crisis is expected to worsen in 2018. A recent assessment by the Red Cross Society of the DRC warns that the number of people displaced will continue to rise, and with a fast-spreading cholera outbreak threatening the region, a coordinated plan of action is urgently needed.

The second challenge this year is Somalia’s food insecurity, which, according to the Famine Early Warning Systems Network, is expected to intensify this year. Below-average rainfall in 2017 stunted harvests, and most regions have not fully recovered. As humanitarian aid is channeled to the country, efforts must be made to target long-term solutions, such as improving agricultural output, educational access, and economic opportunity. Historically, most aid to the country has been earmarked for emergency relief; even the collective cholera response was narrowly focused on short-term health. But Somalia desperately needs a more holistic, long-term development strategy.

Finally, the very scourge that Somalia contained last year will continue to rear its head elsewhere in the region. Yemen’s cholera outbreak is now the largest in history, having already surpassed one million confirmed cases, and, despite years of international assistance, the threat continues to stalk Africa. In the last four decades, African countries reported over three million suspected cholera cases to the World Health Organization and new cases are cropping up this year in Africa’s east-central and southern regions.

Fortunately, there is hope that Somalia’s containment success in 2017 can be replicated, provided that communities and individuals are well aware of the disease and related risks, and that local actors receive the needed resources. The Global Task Force on Cholera Control, which seeks to build local and international support for improved health care and sanitation, has published a global roadmap for ending cholera by 2030. Although that is an ambitious target, it is achievable if international organizations and local governments work together.

Natural and manmade crises will continue to plague Africa, but organizations like mine are working hard to bring about a brighter future through improved capacity building. To succeed, however, local and international development partners must reorient their thinking; humanitarian aid alone will not solve Africa’s myriad challenges. While money is clearly needed, it must be spent more strategically to improve structural weaknesses that perpetuate instability. For example, if more funding were devoted to community-level health care projects, local organizations would be better positioned to lead when outbreaks threaten.

Put simply, the international development community must do more to invest in grassroots solutions, empowering Africans rather than treating them as subcontractors to their own suffering. Not only are local organizations better positioned to navigate complex cultural and linguistic landscapes; they also have more to lose if they fail.

Last year was devastating for many Africans, as millions suffered from drought, hunger, and violence. But in Somalia, a coordinated response to a serious health threat offered new hope for a more secure future. When local ingenuity and international support align, the cycle of suffering can be broken. For many African countries, the ability to look confidently beyond the next crisis is the first step on the long road to self-reliance.

Fatoumata Nafo-Traoré is Regional Director for Africa for the International Federation of Red Cross and Red Crescent Societies.

By Fatoumata Nafo-Traoré

The World Bank Needs to Return to Its Mission

NEW YORK – The World Bank declares that its mission is to end extreme poverty within a generation and to boost shared prosperity. These goals are universally agreed as part of the Sustainable Development Goals. But the World Bank lacks an SDG strategy, and now it is turning to Wall Street to please its political masters in Washington. The Bank’s president, Jim Yong Kim, should find a better way forward, and he can do so by revisiting one of his own great successes.


Kim and I worked closely together from 2000 to 2005, to scale up the world’s response to the AIDS epidemic. Partners in Health, the NGO led by Kim and his colleague, Harvard University’s Paul Farmer, had used antiretroviral medicines (ARVs) to treat around 1,000 impoverished HIV-infected rural residents in Haiti, and had restored them to health and hope.

I pointed out to Kim and Farmer 18 years ago that their success in Haiti could be expanded to reach millions of people at low cost and with very high social benefits. I recommended a new multilateral funding mechanism, a global fund, to fight AIDS, and a new funding effort by the United States.

In early 2001, UN Secretary-General Kofi Annan launched the Global Fund to Fight AIDS, Tuberculosis, and Malaria, and in 2003 US President George W. Bush launched the PEPFAR program. The World Health Organization, led by the Director-General Gro Harlem Brundtland, recruited Kim to lead the WHO’s scale-up effort. Kim did a fantastic job, and his efforts provided the groundwork for bringing ARVs to millions, saving lives, livelihoods, and families.

There are four lessons of that great success. First, the private sector was an important partner, by offering patent-protected drugs at production cost. Drug companies eschewed profits in the poorest countries out of decency and for the sake of their reputations. They recognized that patent rights, if exercised to excess, would be a death warrant for millions of poor people.

Second, the effort was supported by private philanthropy, led by Bill Gates, who inspired others to contribute as well. The Bill & Melinda Gates Foundation backed the new Global Fund, the WHO, and the Commission on Macroeconomics and Health, which I led for the WHO in 2000-2001 (and which successfully campaigned for increased donor funding to fight AIDS and other killer diseases).

Third, the funding to fight AIDS took the form of outright grants, not Wall Street loans. Fighting AIDS in poor countries was not viewed as a revenue-generating investment needing fancy financial engineering. It was regarded as a vital public good that required philanthropists and high-income countries to fund life-saving treatment for poor and dying people.

Fourth, trained public health specialists led the entire effort, with Kim and Farmer serving as models of professionalism and rectitude. The Global Fund does not stuff the pockets of corrupt ministers, or trade funding for oil concessions or arms deals. The Global Fund applies rigorous, technical standards of public health, and holds recipient countries accountable – including through transparency and co-financing requirements – for delivering services.

The World Bank needs to return to its mission. The SDGs call for, among other things, ending extreme poverty and hunger, instituting universal health coverage, and universal primary and upper secondary education by 2030. But, despite making only slow progress toward these goals, the Bank shows no alarm or strategy to help get the SDGs on track for 2030. On the contrary, rather than embrace the SDGs, the Bank is practically mute, and its officials have even been heard to mutter negatively about them in the corridors of power.

Perhaps US President Donald Trump doesn’t want to hear about his government’s responsibilities vis-à-vis the SDGs. But it is Kim’s job to remind him and the US Congress of those obligations – and that it was a Republican president, George W. Bush who creatively and successfully pursued the battle against AIDS.

Wall Street may help to structure the financing of large-scale renewable energy projects, public transport, highways, and other infrastructure that can pay its way with tolls and user fees. A World Bank-Wall Street partnership could help to ensure that such projects are environmentally sound and fair to the affected communities. That would be all for the good.

Yet such projects, designed for profit or at least direct cost recovery, are not even remotely sufficient to end extreme poverty. Poor countries need grants, not loans, for basic needs like health and education. Kim should draw on his experience as the global health champion who successfully battled against AIDS, rather than embracing an approach that would only bury poor countries in debt. We need the World Bank’s voice and strenuous efforts to mobilize grant financing for the SDGs.

Health care for the poor requires systematic training and deployment of community health workers, diagnostics, medicines, and information systems. Education for the poor requires trained teachers, safe and modern classrooms, and connectivity to other schools and to online curricula. These SDGs can be achieved, but only if there is a clear strategy, grant financing, and clear delivery mechanisms. The World Bank should develop the expertise to help donors and recipient governments make these programs work. Kim knows just how to do this, from his own experience.

Trump and other world leaders are personally accountable for the SDGs. They need to do vastly more. So, too, do the world’s super-rich, whose degree of wealth is historically unprecedented. The super-rich have received round after round of tax cuts and special tax breaks, easy credits from central banks, and exceptional gains from technologies that are boosting profits while lowering unskilled workers’ wages. Even with stock markets’ recent softness, the world’s 2000+ billionaires have around $10 trillion in wealth – enough to fund fully the incremental effort needed to end extreme poverty, if the governments also do their part.

When going to Wall Street, or Davos, or other centers of wealth, the World Bank should inspire the billionaires to put their surging wealth into personal philanthropy to support the SDGs. Bill Gates is doing this, with historic results, for public health. Which billionaires will champion the SDGs for education, renewable energy, fresh water and sanitation, and sustainable agriculture? With a clear SDG plan, the World Bank would find partners to help it fulfill its core, historic, and vital mission.

Jeffrey D. Sachs, Professor of Sustainable Development and Professor of Health Policy and Management at Columbia University, is Director of Columbia’s Center for Sustainable Development and the UN Sustainable Development Solutions Network.

The World Bank Needs to Return to Its Mission

NEW YORK – The World Bank declares that its mission is to end extreme poverty within a generation and to boost shared prosperity. These goals are universally agreed as part of the Sustainable Development Goals. But the World Bank lacks an SDG strategy, and now it is turning to Wall Street to please its political masters in Washington. The Bank’s president, Jim Yong Kim, should find a better way forward, and he can do so by revisiting one of his own great successes.


Kim and I worked closely together from 2000 to 2005, to scale up the world’s response to the AIDS epidemic. Partners in Health, the NGO led by Kim and his colleague, Harvard University’s Paul Farmer, had used antiretroviral medicines (ARVs) to treat around 1,000 impoverished HIV-infected rural residents in Haiti, and had restored them to health and hope.

I pointed out to Kim and Farmer 18 years ago that their success in Haiti could be expanded to reach millions of people at low cost and with very high social benefits. I recommended a new multilateral funding mechanism, a global fund, to fight AIDS, and a new funding effort by the United States.

In early 2001, UN Secretary-General Kofi Annan launched the Global Fund to Fight AIDS, Tuberculosis, and Malaria, and in 2003 US President George W. Bush launched the PEPFAR program. The World Health Organization, led by the Director-General Gro Harlem Brundtland, recruited Kim to lead the WHO’s scale-up effort. Kim did a fantastic job, and his efforts provided the groundwork for bringing ARVs to millions, saving lives, livelihoods, and families.

There are four lessons of that great success. First, the private sector was an important partner, by offering patent-protected drugs at production cost. Drug companies eschewed profits in the poorest countries out of decency and for the sake of their reputations. They recognized that patent rights, if exercised to excess, would be a death warrant for millions of poor people.

Second, the effort was supported by private philanthropy, led by Bill Gates, who inspired others to contribute as well. The Bill & Melinda Gates Foundation backed the new Global Fund, the WHO, and the Commission on Macroeconomics and Health, which I led for the WHO in 2000-2001 (and which successfully campaigned for increased donor funding to fight AIDS and other killer diseases).

Third, the funding to fight AIDS took the form of outright grants, not Wall Street loans. Fighting AIDS in poor countries was not viewed as a revenue-generating investment needing fancy financial engineering. It was regarded as a vital public good that required philanthropists and high-income countries to fund life-saving treatment for poor and dying people.

Fourth, trained public health specialists led the entire effort, with Kim and Farmer serving as models of professionalism and rectitude. The Global Fund does not stuff the pockets of corrupt ministers, or trade funding for oil concessions or arms deals. The Global Fund applies rigorous, technical standards of public health, and holds recipient countries accountable – including through transparency and co-financing requirements – for delivering services.

The World Bank needs to return to its mission. The SDGs call for, among other things, ending extreme poverty and hunger, instituting universal health coverage, and universal primary and upper secondary education by 2030. But, despite making only slow progress toward these goals, the Bank shows no alarm or strategy to help get the SDGs on track for 2030. On the contrary, rather than embrace the SDGs, the Bank is practically mute, and its officials have even been heard to mutter negatively about them in the corridors of power.

Perhaps US President Donald Trump doesn’t want to hear about his government’s responsibilities vis-à-vis the SDGs. But it is Kim’s job to remind him and the US Congress of those obligations – and that it was a Republican president, George W. Bush who creatively and successfully pursued the battle against AIDS.

Wall Street may help to structure the financing of large-scale renewable energy projects, public transport, highways, and other infrastructure that can pay its way with tolls and user fees. A World Bank-Wall Street partnership could help to ensure that such projects are environmentally sound and fair to the affected communities. That would be all for the good.

Yet such projects, designed for profit or at least direct cost recovery, are not even remotely sufficient to end extreme poverty. Poor countries need grants, not loans, for basic needs like health and education. Kim should draw on his experience as the global health champion who successfully battled against AIDS, rather than embracing an approach that would only bury poor countries in debt. We need the World Bank’s voice and strenuous efforts to mobilize grant financing for the SDGs.

Health care for the poor requires systematic training and deployment of community health workers, diagnostics, medicines, and information systems. Education for the poor requires trained teachers, safe and modern classrooms, and connectivity to other schools and to online curricula. These SDGs can be achieved, but only if there is a clear strategy, grant financing, and clear delivery mechanisms. The World Bank should develop the expertise to help donors and recipient governments make these programs work. Kim knows just how to do this, from his own experience.

Trump and other world leaders are personally accountable for the SDGs. They need to do vastly more. So, too, do the world’s super-rich, whose degree of wealth is historically unprecedented. The super-rich have received round after round of tax cuts and special tax breaks, easy credits from central banks, and exceptional gains from technologies that are boosting profits while lowering unskilled workers’ wages. Even with stock markets’ recent softness, the world’s 2000+ billionaires have around $10 trillion in wealth – enough to fund fully the incremental effort needed to end extreme poverty, if the governments also do their part.

When going to Wall Street, or Davos, or other centers of wealth, the World Bank should inspire the billionaires to put their surging wealth into personal philanthropy to support the SDGs. Bill Gates is doing this, with historic results, for public health. Which billionaires will champion the SDGs for education, renewable energy, fresh water and sanitation, and sustainable agriculture? With a clear SDG plan, the World Bank would find partners to help it fulfill its core, historic, and vital mission.

Jeffrey D. Sachs, Professor of Sustainable Development and Professor of Health Policy and Management at Columbia University, is Director of Columbia’s Center for Sustainable Development and the UN Sustainable Development Solutions Network.

By Jeffrey D. Sachs

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