Pakistan’s Persistent Energy Crisis

ISLAMABAD – For almost a decade, Pakistan has lacked the energy it needs, with producers and consumers across the country facing power outages for up to 12 hours per day. At the root of this crisis lies poor governance. Yet the authorities and aid donors alike stubbornly fail to recognize the obvious, and instead continue to pursue costly and ultimately ineffective interventions.

Pakistan’s experience is a case study in how poor countries can often struggle to formulate and implement reforms, including reforms needed to escape poverty. And, indeed, Pakistan’s ongoing energy crisis is undermining its economic development: the Ministry of Finance estimates that energy shortages have reduced annual economic growth by two percentage points, on average, over the last nine years.

And it gets worse. Over the same period, the government has spent more than 10% of GDP to cover the energy sector’s financial losses. This means that, had Pakistan’s energy sector been reformed properly, the country’s economy could have grown significantly faster – by about 4% per year – potentially creating a sufficient number of jobs for a young and growing population.

Over the last nine years, Pakistan has received assistance through two International Monetary Fund programs and numerous World Bank initiatives, as well as from the Asian Development Bank and various donor agencies. In exchange for funding, the IMF demanded huge increases in tax rates on petroleum products, as well as hikes in energy prices. The World Bank, for its part, forced the government to use loan guarantees to spur private investment in energy.

Now, these guarantees are coming back to bite the government. In a recent ad campaign, private power producers once again threatened to invoke them to secure payment of unpaid bills. After some back and forth, including production slowdowns, the government, as usual, has opted to cover the losses.

Despite these huge costs, three successive governments have produced no white paper or policy analysis that sheds light on the issue, much less devised a strategy for preventing further financial losses. No independent commission or task force has been created to examine the problem, either. We are told that the crisis is too urgent to investigate what caused it.

Donors and the government claim that a solution is imminent: several billion dollars of supply are now coming on stream. But simply spending more to supply more energy has been tried before – at huge cost to the country. Meanwhile, energy-sector losses have often been passed on to the consumer through price increases, surcharges, and other taxes. This is not a sustainable approach.

It is time for Pakistan to undertake a more thorough audit of its energy crisis. When I was involved with the energy sector as a senior policymaker, I found it useful to use a systems approach to understand the structure of supply, the quality of regulation, the forces driving prices, and the impact of conservation policies on demand.

As it stands, energy supply and distribution in Pakistan is managed through a centralized government bureaucracy. Private electricity producers and one privatized distribution company function as government contractors with a guaranteed margin. The rest of the production and distribution companies operate as part of the government, with their parent ministry controlling their management, resources, and finances.

In this context, it should be no surprise that the system continues to incur major losses. Despite talk of energy markets, the system is based on administered prices: While consumers pay the same price throughout the country, the regulatory authorities set different prices for production and distribution companies. But whether those prices are determined by a careful balancing of supply and demand is far from guaranteed.

In fact, there is every reason to suspect that the regulatory authority has been captured. While prices and tariffs are determined on a cost-plus basis, it is unclear whether costs are properly scrutinized. Tariffs are set without regard for continuing losses or energy-sector inefficiencies, and the government routinely overrides the price-setting system to force consumers to cover the sector’s losses.

On the demand side, no serious conservation policy has been put in place. On the contrary, systems and regulations seem practically designed for waste. City land and building codes lend themselves to energy-intensive sprawl, as they favor single-family homes over flats. Wide avenues, flyovers, and expressways promote cars, while virtually precluding pedestrians and bicycles.

Moreover, buildings and houses constructed of concrete with thin glass windows are inefficient to heat and cool. And they are equipped with appliances that are not forced to meet energy standards, and therefore can be very energy-intensive, especially when it comes to the use of gas. Yet insulation materials and energy-efficient appliances remain expensive, owing to tariff protections for incumbent producers using outmoded technologies.

There is a clear need for systemic reform of all aspects of Pakistan’s energy system. The country must develop a sensible pricing mechanism, establish fact-based and independent regulation, create an efficient and decentralized supply system, and implement incentives for conservation. To aid in this effort, the World Bank and the ADB must respond to as-yet-unanswered requests to provide Pakistan with competent technical assistance to develop a modern pricing mechanism and conduct a regulatory audit.

After nine years of quick-fix and temporary solutions, Pakistan and its donors need to recognize that its energy crisis can be resolved only through institutional reform. Otherwise, losses will only grow – and not just in the energy sector. If allowed to continue, that accumulation of losses could even destabilize the state, with devastating consequences.Nadeem ul Haque is a former deputy chairman of the Planning Commission of Pakistan and a former senior resident representative of the IMF in Egypt and Sri Lanka.

By Nadeem ul Haque

The Right to Education for Refugees

LONDON – From Fawaz’s home in a makeshift refugee camp just across the border from Syria, where he lives with his now-displaced family, one danger has been traded for another. “There are no schools. There is no education. My children have no toys. They play only with mud,” he says. “Our life was better in Syria.”

The children’s mother, Muna, shudders as she tells of encounters with snakes, rats, and mosquitoes. “We left Syria because of war,” she says. “Our family lost everything, but I am most upset because my children have lost their future.”

Fawaz and Muna’s story is not unique. Their pain is shared by almost every refugee family that once called Syria home – families that take to the seas and deserts in search of opportunity in the form of an education for their children.

Today, about one million Syrian refugee children are out of school. Most of those who are in school will drop out before starting secondary education. In the space of a single primary-school generation, Syria has suffered what may be the greatest education reversal in history. A generation has been lost.

A continent away and 5,000 kilometers (3,100 miles) to the south, the situation is equally desperate.

Displaced by a campaign of terror, more than 950,000 people (soon to exceed one million) have fled across the South Sudan border into northern Uganda. For these South Sudanese refugees, one of the poorest parts of one of the world’s poorest countries has become a sanctuary.

According to a new report by Save the Children, for almost a year, one South Sudanese child has crossed the border, on average, every minute. They have witnessed unspeakable violence. They need shelter. They need care. And they need an education.

The Ugandan government has responded with extraordinary generosity. In marked contrast to far wealthier nations, it has offered a haven and provided refugees with land, seeds, and tools so they can rebuild their livelihoods.

The country has opened its already over-extended schools and health facilities and delivered on the promise to support a more effective response to refugees, pursuant to a 2016 declaration by the United Nations General Assembly. This is one of those rare moments where rhetoric may very well live up to reality.

But will others follow suit? They must.

In a world confronting the largest refugee crisis since World War II, this is not a Ugandan problem but a global one – and global problems demand global solutions. Currently, funding for education in humanitarian crises, while rising nearly a full percentage point since last year, is still woefully insufficient. According to UNESCO, currently only 2.7% of total humanitarian aid is allocated to education.

This must change. Consider that most of the world’s refugees – 86% – are hosted in developing regions, which already struggle with their own education needs. The International Commission on Financing Global Education Opportunity – which I have the privilege to chair – has issued an urgent call for an increase in education funding to a level of 4-6% of total humanitarian assistance. Emergencies and crises could add $9 billion to the cost of education each year. The funds are there. But will we act?

Securing this financing would significantly improve the ability of countries like Uganda and Chad (which is sheltering more than 800,000 refugees from the violence in northern Nigeria and Libya, of which 300,000 are of school-age) to provide refugee children an education. And that would help stem the tide of refugees on the move in search of opportunity, because stability and hope take hold where an education is provided.

We now benefit from the Education Cannot Wait fund, which carries forward the innovative solutions introduced at the World Humanitarian Summit. Under the leadership of Yasmine Sherif, the fund works with humanitarian response partners on the ground to bridge the humanitarian-development divide and develop solutions in real time.

Meanwhile, the Global Partnership for Education is encouraging countries to account for refugees in long-term development planning. The proposed International Finance Facility for Education could also provide a financial lifeline to many countries.

At a time of profound global division, we have the opportunity to forge a different path. Investing in education yields far-reaching returns, and there is solid evidence that quality education gives children a place of safety. What’s more, access to education can reduce child marriage, child labor, exploitative and dangerous work, and teenage pregnancy, while boosting students’ confidence, self-esteem, and job prospects.

Data show that the educational exclusion that refugees experience becomes more pronounced with age. Whereas 91% of children globally attend primary school, only 51% of refugee children do. And it’s even worse for adolescents. Nearly 84% of adolescents around the world attend secondary school, compared to just 22% of refugee adolescents. And while some 34% of youth worldwide go to university, only 1% of refugee youth gain a higher education.

Statistics like these bring us face-to-face with a sobering reality: providing education for all – and securing children’s rights in the process – is the civil rights struggle of our time.

On June 20, World Refugee Day, it is incumbent upon us to deliver a message of hope to the many refugee children caught in the crossfire and deprived of an education. Even when the fighting stops and a country moves toward reconstruction, there can never be true peace unless all children are in the classroom, where they belong.

That is a message that also needs to be carried to world leaders at the G20 summit in Hamburg, Germany, in July. So long as one child is out of school, we fall short of fulfilling that most fundamental promise – and indeed right: an education for all.

Gordon Brown, former Prime Minister and Chancellor of the Exchequer of the United Kingdom, is United Nations Special Envoy for Global Education and Chair of the International Commission on Financing Global Education Opportunity. He chairs the Advisory Board of the Catalyst Foundation.

By Gordon Brown

Africa’s Race Against the Machines

WASHINGTON, DC – By some estimates, automation threatens over half of all jobs in OECD countries. And now that the employment challenge is coming into focus, the scramble for solutions has begun.

For example, Bill Gates has called for a tax on robots, which could slow the pace of automation, and efforts to fund other types of human-centered employment. Former US Treasury Secretary Lawrence Summers, on the other hand, warns that such a tax would impede innovation. Others argue that governments should simply subsidize low-income workers’ wages.

What these perspectives on labor-replacing technologies share is a tendency to focus on advanced economies. But automation poses a very real threat to jobs in developing economies, too. In Africa, in particular, a burgeoning cohort of young people – 11 million entering the job market every year – is compounding the threat. Without careful policy planning, the continent’s anticipated demographic windfall could turn out to be a ticking time bomb.

As the costs of automation fall relative to manufacturing wages, and as global industrial production becomes less labor-intensive, Africa will lose some of the advantages that it is currently counting on. In the future, it may not be able attract manufacturers who are seeking to capitalize on abundant, low-cost labor. Many in the region are now worried that they will reap little from this fleeting period of industrialization, and that current demographic, social, and economic trends could lead to security and humanitarian crises in the future.

Wage competitiveness has long been a catalyst for successful industrialization. Since the Industrial Revolution in the West, Japan, several East Asian countries, and now China have all undergone large-scale industrialization, partly because they had competitive wages. And now that wages in China are rising, labor-intensive manufacturing firms are shifting their operations to other low wage countries such as Bangladesh.

With its ample low-cost labor supply, Africa also could attract these firms. But industry only accounts for about 10% of Africa’s total employment, and the advent of automation has altered its relative cost advantage.

To be sure, Africa owes its lack of industrialization more to structural factors such as unfavorable investment climates, insufficient infrastructure, and wayward industrial policies. But, at this point, even if African policymakers were to accelerate and implement the right reforms, the accelerating pace of automation would still undermine industrialization. Robots are becoming both less expensive and more efficient, while manufacturers need to make up for labor shortages in several advanced and emerging economies.

China and other emerging economies may also lose some jobs as firms in advanced economies reverse outsourcing and move manufacturing operations closer to home. But China has identified automation as a strategic priority, and is now developing its own robotics industry in order to stay ahead of its rising labor costs and aging population. From 2012 to 2015, the number of industrial robots in China more than tripled, to 65,000.

Increased global production and falling technology costs could strike a severe blow to Africa, where economic development is likely to stall without industrialization and the expanding youth bubble shows no sign of deflating. According to current projections, Africa’s working-age population will grow substantially over the next century, while that of the rest of the world shrinks. It will be incumbent on African governments to implement forward-looking labor-market policies to invest in human capital, and, most important, to create jobs in labor-intensive manufacturing. Otherwise, Africa will have the world’s largest population of unemployed and frustrated youths.

The impact is already apparent. As Africa’s workers seek better opportunities, they are flocking to cities faster than those cities can absorb them, leading to the proliferation of slums in urban areas and a flood of illegal migration to the West. As the demand for education, health care, and other public services continues to grow, social pressures will continue to mount. And without economic security, some young people will resort to illegal activities, or fall prey to extremist groups exploiting their desperation.

African policymakers should keep these demographic and economic trends in mind as they formulate their national development plans. The region can still harness its demographic dividend, but it is now in a race against the machines.

The machines are clearly gaining ground. Although taxing them may slow their diffusion, policymakers would be well advised to move beyond stopgap measures and accelerate the implementation of inclusive growth agendas. The rest of the world should support Africa in this race. A successful Africa would be a global good. Failure, on the other hand, would pose a severe threat to our collective security, and to human development generally.

Brahima Coulibaly, a senior fellow and director of the Africa Growth Initiative at the Brookings Institution, was chief economist and head of the emerging market and developing economies group at the Board of Governors of the US Federal Reserve System.

By Brahima Coulibaly

How to Prevent the UK’s Self-Destruction

LONDON – If you were a Briton who had been stuck in Antarctica for the past year and a half, you might be forgiven for wishing you had stayed put. The decisions taken during your absence by British politicians, especially the leaders of the Conservative Party, have called into question your country’s future. The United Kingdom seems to have lost its grip on sanity. But the madness can be reversed.

First, recall that in the May 2015 general election, the Conservatives won an outright parliamentary majority, having previously been in a (surprisingly successful) coalition with the Liberal Democrats since 2010. The Tories clearly didn’t expect their comprehensive victory, and some argue that it was the party’s promise to hold a referendum on European Union membership that made it possible.

I am dubious of that claim. But the salient fact is that by early spring 2016, with the Brexit referendum just three months away, Whitehall and the government had, in essence, lost all sway over policy. I know because I was part of that government, serving as a Treasury minister.

After the “Leave” camp won the referendum, the Conservative Party, split over withdrawal from the EU, responded with a change in leadership from David Cameron to Theresa May and a significant shift in focus for May’s new government. But the Tories still had little sway over policy, because May and her overweening advisers spent most of her time telling the cabinet how things were going to go.

This culminated in May’s disastrous decision to seek a bigger majority. The snap general election she called in April, when the Tories were 20 points ahead in opinion polls, has now left the United Kingdom with a minority government.

But maybe it is not the politicians alone who are mad. Perhaps many voters are, too.

Consider young voters, who in the recent election appear to have gone to the polls in droves, giving huge support to Labour’s far-left leader, Jeremy Corbyn. If young people had participated in the Brexit referendum in similar numbers, the UK would have voted “Remain.” Today’s uncertainty, magnified by signs that the UK economy’s positive momentum is waning, would remain the stuff of nightmares.

So how can this self-destruction be stopped?

For starters, assume that the Conservative Party remains petrified about choosing a new leader or holding another general election. To avoid both, the Tories will need to get past their paranoia and make their next government – possibly involving a formal agreement with Northern Ireland’s Democratic Unionist Party – a sustainable arrangement. That will require greater flexibility and inclusiveness on key policy issues.

On Brexit, for example, while the most vehement Leavers and Remainers will stick to their strong bias, it seems pretty clear that the electorate does not want to bear any economic and social pain. So one clear conclusion of the recent vote is that May will have to consider some “softer” form of Brexit than she was previously willing to countenance. Instead of worrying about whether Parliament will pass future bills related to the UK’s withdrawal from the EU, why not head off impasses by bringing in some Labour figures – and others – as part of a broadened Brexit negotiating team?

Many are now eagerly offering their views as to whether the UK should look again at the “Norway model” of relations with the EU, or some other scheme that maintains UK participation in the single market. Whatever the option, it is now clear that Britain needs a policy that can command broad and genuine support.

A second change for the better would, I hope, be less controversial: reducing the power bestowed in the UK on non-elected Special Advisers, or SPADs, who have become dominant figures in all government departments. During my 17-month experience as a minister, I became convinced that the SPADs’ excessive power – and haughty approach – undermines the UK’s excellent civil service, as well as elected and appointed ministers.

May’s two leading SPADs, Fiona Hill and Nick Timothy, took this danger to worrying levels. They have now paid the price, with May sacking them at the demand of her party. SPADs certainly have a role to play, but not the exalted one they too often abuse.

Third, the UK needs to put today’s political drama into perspective, and get on with policymaking, including in areas that have nothing to do with Brexit. The Northern Powerhouse, designed to revitalize the UK’s economically neglected north, which has shown early signs of success (the Northwest, for example, has been outperforming the rest of the country economically for the past 12-15 months), needs more support from government.

Intergenerational inequality also needs to be addressed. Young people need greater access to a useful and affordable post-secondary education, as well as the chance to afford their own homes. If their demands are not properly represented, they might turn away from voting in the future – and toward less constructive forms of protest.

The UK needs to be far more serious about skills training, embedding it in the country’s educational DNA in the way that apprenticeships are embedded in Germany’s. More generally, the best way to serve today’s young people is to make higher productivity a national priority.

But for any of this to happen, May needs to use the fear of a leadership battle within the Conservative Party, and the party’s dread of anther general election, to get ahead of the coming challenges. After two years of government fecklessness, Britain deserves better.

Jim O’Neill, a former chairman of Goldman Sachs Asset Management and a former UK Treasury Minister, is Honorary Professor of Economics at Manchester University and former Chairman of the British government's Review on Antimicrobial Resistance.

By Jim O’Neill

The Injustices of Zika

SOUTHAMPTON – Outbreaks of communicable diseases in the developing world are bad enough from a health perspective. But they also have serious implications for social justice, because they exacerbate longstanding human-rights crises, including by undermining already-weak public-services provision and deepening existing inequalities.

Like the 2014 Ebola outbreak in West Africa, the Zika outbreak in Central and South America in 2015 hit vulnerable social groups – women and children, ethnic minorities, and the poor – the hardest. Like yellow fever, dengue, and other diseases, Zika is transmitted by Aedes aegypti mosquitoes. But, unusually for a mosquito-borne virus, Zika can also be transmitted sexually. Even more unusual, it is associated with neurological and developmental conditions affecting babies: microcephaly and Guillain-Barré syndrome. Otherwise, its symptoms are often rather mild.

This means that, of the more than 1.5 million people stricken by Zika since the outbreak, the consequences were most worrying for women of child-bearing age, especially those who were already pregnant. Between 2016 and 2017, a total of 11,059 Zika cases in pregnant women were confirmed, producing 10,867 cases of microcephaly and other congenital malformations of their babies’ central nervous systems. Fifty-six percent of those babies were born to poor women and women of color from northeast Brazil.

Clearly, the Zika crisis is not gender-neutral. In addressing its medium- to long-term consequences, a focus on women – especially poor women – is needed. That does not mean more media coverage of the deformities associated with microcephaly or even of the difficulties faced by their mothers. And it certainly does not mean more efforts to police women’s behavior.

To avoid infection, women have been advised to use mosquito repellent; remove standing water around their homes; wear long sleeves; and, if possible, use condoms or avoid sex. The US Center for Disease Control and Prevention advised pregnant women to refrain from traveling to affected countries. Most extreme, health officials in El Salvador and Colombia urged women not to get pregnant until 2018.

Such recommendations, however well intended they may be, are fundamentally flawed. For starters, they emphasize short-term-vector control and surveillance, while delinking the disease from the social and structural determinants of health, including public infrastructure such as running water, proper sanitation, and access to care.

They also place the responsibility for avoiding disease and pregnancy primarily on women, while failing to recognize the lack of control many women have over their bodies and pregnancies. Many of the areas affected by Zika have high rates of sexual violence and teen pregnancy, a lack of sex education, and inadequate access to contraceptives. For these reasons, more than 50% of pregnancies in Latin America are unintended.

Making matters worse, in most Latin American countries affected by Zika, abortion is illegal, or permitted only in exceptional situations. For example, in El Salvador, where more than 7,000 cases of Zika were reported between December 2015 and January 2016, abortions are illegal under all circumstances. Miscarriages, if proven to be self-induced, can even lead to homicide convictions.

The position of the United States hasn’t helped, either. Last year, US President Barack Obama’s administration asked Congress for $1.8 billion in emergency funding to help prepare for and respond to the Zika threat. But abortion politics intervened, as Republican lawmakers, leading a congressional hearing on the Zika outbreak, made the funding conditional on anti-abortion policies in recipient countries.

The problems with the dominant approach to containing the Zika virus – namely, that it saddles women with too much responsibility while giving them too little power – are not lost on everyone. Last year, the United Nations Refugee Agency and the World Health Organization emphasized the need to put human rights at the center of the response to the Zika outbreak.

But, while high-level recognition of women’s sexual and reproductive rights is a positive step, it is far from sufficient. And doing what is needed to protect those rights, particularly among poor and vulnerable women in developing countries, will require deep and sustained political commitment.

In particular, national legislation must be revised to ensure that all women – whether they are carrying a baby with microcephaly or not – have full reproductive autonomy. Women must be able to base their reproductive choices on their own physical and emotional needs and desires, not on the moral judgments of powerful agents or risk of criminal sanctions.

Advocacy groups in Brazil, for example, are already pushing for such an outcome, submitting legal cases to the Supreme Court to secure greater reproductive rights for women, including the right to safe and legal abortion. Those cases tend to lean on the 1988 National Constitution, which guarantees the right to abortion in case of rape, danger to the mother’s life, or anencephaly, another birth defect involving the brain.

In pursuing these changes, campaigns should also recognize and address the links between women’s and disability rights. Indeed, they should advance equality for all marginalized groups.

Zika’s medium- and long-term consequences must be addressed with this in mind. When a woman gives birth to a child with a congenital syndrome deriving from the Zika virus, the response should be grounded in the dignity, value, and rights of each individual. It should acknowledge the processes that keep certain individuals and groups in poverty and that deny them the basic rights of citizens. That is why campaigners must insist that the state be responsible for providing appropriate care and support services for each woman and child – services that both meet their needs and respect their rights. Pia Riggirozzi is Associate Professor in Global Politics at the University of Southampton.

By Pia Riggirozzi

Defending Academic Freedom in a Populist Age

BERLIN – I am the President of Central European University, which is now under attack. CEU is fighting to remain a free institution in Budapest, Hungary’s capital, following the passage of new legislation that would, in essence, require the university to close.

CEU’s battle has become a global cause célèbre. More than 650 colleges, universities, and professional associations have opposed Hungary’s legal moves against CEU. Some 80,000 people marched through the streets of Budapest in our defense. Twenty-four Nobel laureates have lent their prestige to our cause. On June 22, one of them, Mario Vargas Llosa, will join us in Budapest for a conference on the global challenge to academic freedom.

We at CEU know that we are not the only university struggling to repel government attacks. Across Turkey, universities are being padlocked, and professors are being purged. In St. Petersburg, our sister European University struggles against repeated malicious attempts to close it down.

These are but some of the threats that universities now face from without. Yet there are equally worrying threats from within.

At Middlebury College in the US state of Vermont, a crowd recently shouted down the conservative author Charles Murray, preventing him from speaking; in Oregon, a professor was harassed for refusing to join a protest against racism. And Europe is not immune: In Berlin and Dresden, professors have been harassed for their conservative views or for attempting to explain the appeal of the far right.

The people responsible for these episodes don’t distinguish between criticism and harassment. But self-righteousness, especially when couched in the language of anti-sexism, anti-militarism, and anti-racism, closes all of us off from honest self-reflection. Today, it seems, those who are doing freedom the most harm are often those who benefit from it the most.

The best way to understand the double threat that academic freedom faces today – the danger from without and from within – is to step back from these controversies and return to first principles. What is academic freedom?

The Privileged Few

We need to be honest. Outside of university seminar rooms, research labs, and libraries, many people regard academic freedom as a privilege – and a dubious one at that. So let us tackle the issue of privilege head-on.

Those of us lucky enough to work in universities know how privileged we are, but there is a discomfort here. Our salaries are paid by citizens – through taxation, for example, or via tuition support for a son or daughter – who may never have finished secondary school, let alone attended university. We must be able to justify ourselves to them. Our doors must always be open to the public. We must communicate our research in an accessible fashion. And we must remove barriers that exclude our fellow citizens from the chance to learn with us. If we have privileges – and we do – they come with responsibilities, which we must discharge conscientiously.

Academic tenure may be the most conspicuous privilege that needs to be addressed – and defended. If you ask people on the street what academic freedom means, some will say: it means professors have a job for life and no risk of being fired. In a world of pervasive economic insecurity, sinecures for the few look hard to justify.

And yet there is a profound and compelling justification for this rather unique form of job security. Tenure for professors protects the right to pursue unpopular research and take unpopular positions. It is one of the counter-majoritarian bulwarks of a free society, like a free press or an independent judiciary.

Of course, like all privileges, academic tenure can be abused: those who get it, having written one good book, sometimes go to sleep intellectually for the rest of their lives. But others use it magnificently to advance learning and add to the stock of human knowledge. We should be proud of those who use tenure for the benefit of us all and be as vigilant as we can to withhold the privilege from those who are not worthy of it.

Tenure is not the only aspect of university life that is unpopular. Academic freedom is commonly regarded as a kind of license for self-appointed experts to talk a lot of nonsense on television, radio, and social media. As someone who has been called a “public intellectual,” I confess to a few occasions when, through laziness or vanity, I allowed myself to pontificate on issues about which I had no real competence. The moral of my story is simple: stick to what you know. Otherwise, “experts” give expertise a bad name.

The People vs. the Professors

Aversion to “expertise” and rejection of “establishment” authorities is a central element in the politics of populism. The honest, practical, plain-speaking majority is pitted against the complacent, condescending, and entitled mandarins.

The truth, however, is that populism is a politics of bad faith. Our societies would stop functioning without the expertise that comes from academic knowledge. Populist political leaders who win votes by disparaging experts – we can all choose our favorite examples – are bound to find themselves fumbling for the light switch when they come to power. Expertise remains essential to any decent governance whatsoever.

But it’s not enough to defend academic expertise if all the public hears is a defense of our privileges as an elite. The deeper problem that must be confronted is the erosion, in public opinion, of the link between academic freedom and the freedom of all citizens. Those who would say, “Academic freedom is my freedom, too,” are a minority.

Those of us who believe in universities, who love them, for all their faults, who treasure what they have taught us, must proudly affirm that our freedom is not a privilege, but a right that we have earned, when we serve truth and knowledge, on behalf of the societies we serve. But if universities are to regain the democratic support they need, it is vitally important for those of us within academia to respond honestly to outside criticism, instead of wincing in silent complicity when one of our colleagues plays around at being an “expert.”

Likewise, we must also stop jargon from taking over academic discourse entirely. I have attended too many seminars, in some great universities, which degenerated into a closed language game played by a coven of initiates who prized obscure self-referential congratulation over honest engagement with reality. So, yes, the outside world is often right. Some academics give academic freedom a bad name.

But it is equally true that the scholars I have revered all my life – true giants like Isaiah Berlin, Albert Hirschman, David Landes, and Judith Shklar, to choose but four – all had the gift of clarity. Their work expressed a moral obligation to the truth and to their society: to be accessible to their fellow citizens about the problems we face together. These are our great ones, the men and women of deep learning whose use of their academic freedom gives luster to our own.

The Battle in Budapest

Enough said about the threats from within. I put them first, because if we can’t defend the best among us and criticize the worst, if we can’t discharge our responsibilities to our fellow citizens, if we can’t prevent our independence from serving coercive political correctness, academic freedom will perish at the hands of its privileged beneficiaries.

But the threats from without are no less serious. I will not rehearse our “little local difficulty” as the British might call it, in Budapest. Negotiations are underway between the Governor’s office in the state of New York, where CEU degrees are accredited, and the government of Hungary. I want negotiations to succeed, so that my colleagues and I can resume the daily – and now, it seems to us, blessed – life of a normal academic institution.

So the less said in public about the battle with the Hungarian government the better. But I can reflect on what the episode has taught me about the relationship between the freedom of universities and democratic freedom itself.

We have shrunk the scale and scope of academic freedom when we use it to refer only to the private privileges of individual members of a corporate caste. For academic freedom surely also means a community’s collective right to govern itself in order to serve the wider society. We have given so much attention to the meaning of academic freedom for individuals that we have neglected its implications for the organization of society. And yet those implications are essential: unless institutions can defend their right to govern themselves against outside forces, they cannot effectively defend the individual rights of their members within.

As for CEU, we have demonstrated that one common cliché about freedom happens to be true: it is worth what you are prepared to pay for it. Those who do not fight for their freedom will lose it.

But I must emphasize that we have been able to do so because a private endowment gives us the resources to do so. Turkish and Russian academic institutions lack these resources.

Our endowment comes from a single philanthropist: George Soros. No man has done more for Hungary, and no man has been more unfairly traduced. In the battle that we have fought to keep CEU in Budapest, Soros has respected academic freedom a good deal better than the Hungarian government has.

Private Threats

The larger point is that the state is not the only source of external pressure on universities. No academic institution is free if its executive is controlled by its benefactors. No institution will receive authoritative accreditation, as CEU has done – with both New York State and the US Middle States Commission on Higher Education – unless it can demonstrate that it is entirely independent of those who provide it with resources.

So CEU’s academic freedom – and that of any academic institution – must mean both freedom from the state and freedom from any private interest. Neither freedom is unlimited. All rights should be bounded by obligations. In relation to private interests, the university accepts a fiduciary responsibility to account for its use of resources and to use them exclusively for the purposes of teaching and research. In relation to the state, a university, while free to challenge the law and dissent from it, must also obey it.

I come out of the battle for CEU more convinced than ever that financial independence is a critical guarantee of academic freedom. So universities that are exclusively dependent on government funding should diversify their sources of support. Academic freedom is always more secure when it rests on many pillars.

Defending academic freedom successfully means multiplying a university’s network of connections to the wider society. There are, no doubt, both perils and opportunities in a university’s engagement with the private sector. It is good for research and good for our students to welcome partnerships with private companies. We can produce knowledge together, share the income from patents, and train students to be their future employees.

But every contract we write with the private sector must safeguard the integrity of our research agendas, our curricula, and our appointment criteria. Universities are not businesses: we are self-governing non-profit institutions with purposes that are distinct from those of commercial enterprises. When both sides understand the rules of engagement, both can benefit from the knowledge we create together.

Targets of Authoritarian Opportunity

Ultimately, academic freedom depends on the health of democratic institutions. When democracies are weak, when majoritarian populists erode checks and balances, press freedom, and judicial independence, universities are especially vulnerable. That is what has happened in Hungary.

To survive, universities need to do whatever they can to strengthen the democratic institutions that protect them, and they must seek and earn the solidarity of the societies they serve. That is the ultimate guarantee of their freedom.

Democracy, after all, is much more than its machinery. All of its institutions – majority rule, minority rights, checks and balances, independent judiciary, free press – are animated by the noble ideal of self-government, the idea of free communities choosing their aims for themselves, giving themselves rules by consent, and discharging obligations of protection and care to their members.

This ideal first took root in Europe, in the medieval universities of Bologna, Salamanca, Oxford, Cambridge, and the Sorbonne, and the great early modern universities of eastern Europe: Charles University in Prague, Jagiellonian University in Kraków, and Eötvös Loránd University in Budapest. All of them, founded centuries ago, are still self-governing institutions, embodying the ideal of self-rule that is the very core of the democratic faith.

The battle for academic freedom is never over: we must defend it against its enemies from within and without. On both fronts, our success ultimately depends on convincing our fellow citizens that when we fight for ourselves, we are also fighting for them.

Michael Ignatieff, a former leader of the Liberal Party of Canada, is President and Rector of Central European University.

By Michael Ignatieff

Theresa May’s Failed Gamble

BUDAPEST – Six months ago, I predicted that British Prime Minister Theresa May’s government wouldn’t last far beyond May of this year. I expected the British people to have realized by then that the “soft Brexit” they had been promised was impossible. This would so undermine May’s authority, I anticipated, that she would have to resign. Lo and behold, the snap election that May called two months ago has now denied her Conservative Party a majority, resulting in a hung parliament.

To be sure, by last month, I had come around to the conventional wisdom that May’s Conservatives would win. After all, May had cleverly called the election at a moment when it could not be about Brexit: one month after invoking Article 50 of the Treaty of Lisbon, thereby officially initiating the United Kingdom’s withdrawal from the European Union. The real negotiations – which are supposed to take two years, but are likely to take much longer – haven’t even started.

Of course, May did not count on timing alone. She had been executing a political strategy that prevented the Brexit debate from being reopened. That strategy seemed to enable her to avoid public attention to the fundamental lie – that Britain could “have its cake and eat it” – peddled by the now-Foreign Secretary Boris Johnson and former Justice Minister Michael Gove, among others, during the Brexit campaign.

But British voters, it is now clear, weren’t fooled. They understood, even if half-consciously, the audacious dishonesty of May’s ploy. They saw through her “strong and stable” motto, repeated ad nauseum throughout the campaign, to the spurious and shifty reality beneath. They realized that they were being manipulated – and they took their revenge at the polls.

Pundits will say that May lost the election because she performed robotically on the campaign trail, failed to answer journalists’ questions with conviction, and refused to debate Labour leader Jeremy Corbyn, who campaigned with more panache than anyone expected. All of this is true.
But May’s lack of passion was rooted in her own political strategy. To avoid any real debate about the issues Britain faces – in particular, the reality of Brexit – she had to make the election about nothing at all.

May attempted to portray Brexit as essentially a done deal. The big decision had been made in last year’s referendum, when the British voted by a narrow margin to leave the EU. “Brexit,” May declared, “means Brexit.” But what May hoped would seem like a clear, even powerful, stance was actually a vague, fatuous, and rather transparent ploy to avoid the question that voters never had a chance to consider: “What kind of Brexit should the UK pursue?”

Now, May is attempting to form a minority government. But, given the Conservative Party’s history of summarily dethroning its leaders, there is a strong chance that May will have to resign as prime minister well before the Brexit negotiations end.

Even if May remains at the helm of the next government, she will have to negotiate a Brexit agreement that will have little chance of getting through the House of Commons, as all other parties (including even Northern Ireland’s Democratic Unionist Party, on which her next government would have to rely) want a relatively soft Brexit. Even the Conservative Party is split between hard-lineBrexiteers and former Remainers.

And getting the deal through the House of Commons is just the first step. The House of Lords will also resist a Conservative-negotiated Brexit deal – not least because of May’s approach.

According to constitutional convention in the UK, the Lords do not block measures that the government had in its manifesto. But that won’t help May much, because she intentionally ensured that little of substance about Brexit was included in her party’s manifesto. So the Labour and Liberal Democrat majority in the House of Lords – which May cowed into authorizing the start of the Brexit talks in February – can reject the deal that a minority Conservative government produces.

Under these circumstances, the only option left for such a government would be to call a vote – whether a general election or a second referendum – focused on the Brexit agreement that the Conservatives negotiate. It is, of course, impossible to know now whether any such vote would actually give British voters the opportunity to rethink Brexit itself. But it would at least give them what May never would until now: a real chance to choose the kind of Brexit they want. JacekRostowski was Poland’s Minister of Finance and Deputy Prime Minister from 2007 to 2013.

By JacekRostowski

A Better Investment Framework for Africa

BERLIN – Africa’s enormous economic potential is not news. But, until now, policymakers around the world have not successfully defined the political and economic steps that must be taken to enable Africa to realize this potential fully. That is why the German G20 presidency has launched its G20 Africa Partnership initiative.

At the core of this effort to intensify cooperation with Africa lies the G20 Compact with Africa (CWA). The CWA offers interested African countries the opportunity to improve conditions for private investment, including in infrastructure.

The CWA’s structure is straightforward: African countries, together with their bilateral partners and international financial organizations with proven expertise on Africa (such as the African Development Bank, the World Bank Group, and the International Monetary Fund), will jointly develop, coordinate, and implement tailor-made measures. The main aim is to lower the level of risk for private investments, by improving economic and financial conditions and strengthening institutions. Over time, the resulting increase in investment will boost growth and productivity, create jobs, and raise living standards, as envisioned in the African Union’s own Agenda 2063 program.

The CWA stands for a new approach in international development policy. Of course, we are not reinventing the wheel. But the mode of cooperation and coordination among the many bilateral and multilateral players, as well as the commitment of the African countries, is something new.

We view the CWA as a long-term, demand-driven process. It is open to all African countries that are interested in improving their investment environment on a sustainable basis. But, most important, the decision-makers are the African countries themselves. They will determine what they want to do to improve conditions for private investment, with whom they want to cooperate, and in what form. Only if the African countries “own” the initiative will it be a success.

So far, five African countries – Côte d’Ivoire, Morocco, Rwanda, Senegal, and Tunisia – have committed to full participation in the CWA. Ghana and Ethiopia will join this month.

CWA countries, the international financial organizations, and bilateral partners are working closely together on the details of the country-specific compacts. At the G20 meeting in Baden-Baden in March, some members – and also non-G20 countries – indicated that they would like to become bilateral partners. The German government will also contribute via the bilateral framework – called a “Marshall Plan with Africa” – developed by our Federal Ministry for Economic Development and Cooperation.

Our main job, however, is to bring private investors and African countries together. With the upcoming G20 Africa Partnership Conference in Berlin on June 12-13, we will provide a platform for these African countries to reach out to investors in order to enhance the continent’s engagement with the private sector. CWA countries will present the key elements of their investment compacts in a roundtable with investors. They will also outline the key industries and infrastructure projects for which they are seeking private funds.

After the Berlin meeting, the implementation phase of the CWA initiative will start. The country teams will further specify their compact measures and consider the milestones for their implementation. At this point, dialogue with investors will be particularly significant, because such conversations will help African countries to establish which measures and instruments are crucial for engagement with the private sector.

To be successful, this initiative cannot focus on short-term results. It needs to continue beyond Germany’s G20 presidency in 2017/2018 and to be supported by the G20 over the longer term. Germany, of course, will continue to take responsibility for the CWA’s implementation. The G20 will be informed on a regular basis about how the investment compacts develop.

Most important, by sending a signal to other African countries, progress in the participating countries will determine whether the CWA becomes a success for all of Africa. If all parties involved – African countries, international organizations, bilateral partners, and, not least, investors – collaborate closely, the CWA has the capacity to promote sustainable, robust, and inclusive economic growth throughout the continent. Wolfgang Schäuble is Germany’s Federal Minister of Finance.

By Wolfgang Schäuble

The Truth Behind Today’s US Inflation Numbers

BERKELEY – In December 2015, the US Federal Reserve embarked on a monetary-tightening cycle, by raising the target range for the short-term nominal federal funds rate by 25 basis points (one-quarter of a percentage point). At the time, the Federal Open Market Committee (FOMC) – the Fed body that sets monetary policy – issued a median forecast predicting three things.

First, the FOMC indicated that the December 2015 rate increase would be the first of five such increases that it would make within the subsequent year, and the first of nine that would take place by, say, September 2017. Second, the federal funds rate would reach 2.25-2.5% within three months of the December 2015 increase. And, third, the Fed’s preferred measure of inflationary pressure – the core personal consumption expenditures (PCE) price index – would be at 1.9% per year by now.

All told, the FOMC’s forecast has not been borne out. If the Fed actually does increase interest rates this month, it will have undertaken only four of the nine anticipated rate hikes. Moreover, it believed that nine rate hikes before the end of this summer would be necessary to keep inflation below its target of 2% per year. But inflation is expected to rise at an annual rate of just 1.5% for the rest of this year, and next year.

In terms of inflationary pressure, the Fed’s forecast seems to have significantly overstated the strength of the US economy. Even with the Fed’s change of course (it is now pursuing a federal funds rate that is 1.5 percentage points below its December 2015 plan), inflationary pressure is still relatively weak. Indeed, despite the economic boost implied by slower policy tightening, the rate of inflation is still no higher than it was in the 2013-2014 period, when many worried that the Fed wasn’t providing enough stimulus.

We can draw three conclusions about the current situation. First, today’s weak inflation outlook suggests that the Fed’s monetary policies, in combination with fiscal policies, are not providing sufficient stimulus for the US economy – as was the case in 2013. Unfortunately, the FOMC does not appear to be particularly concerned about this possibility. Among FOMC members, Neel Kashkari, the impressive president of the Federal Reserve Bank of Minneapolis, is the only one who has dissented, calling on the Fed to pursue more stimulative policies.

The FOMC’s blind spot stems from the fact that it is relying more on its assessment of the labor market, which it considers to be at or above “full employment,” than on noisy month-to-month inflation data. But “full employment” is a rather tenuous and unreliable construct. It has now been 20 years since economists Douglas Staiger, James Stock, and Mark Watson showed that Fed policymakers should not be so confident in estimates of “full employment.” And yet, for some reason, the Fed community has not let this essential message sink in.

A second conclusion to be drawn from the current situation is that the Fed has now overestimated the strength of the US economy for 11 consecutive years. Elementary mathematics dictates that credible forecasts should at least overestimate half the time and undershoot half the time. If each year of Fed forecasting were a coin toss, we would now have had eleven heads in a row, and zero tails. The odds of that happening are one in 2,048.

The Fed clearly needs to take a deep look at its forecasting methodology and policymaking processes. It should ask if the current system is creating irresistible incentives for Fed technocrats to highball their inflation forecasts. And it should ensure that its policymakers view the 2% target for annual inflation as a goal to aspire to, rather than a ceiling to avoid.

A final conclusion is that the past two years have provided still more data to support former US Secretary of the Treasury Larry Summers’ grave suspicion that the economies of the global North are now trapped in a state of “secular stagnation.” Those who disagree, such as Kenneth Rogoff of Harvard University, tell us that all will soon be well, and that nobody will be talking about “secular stagnation” eight years hence. They may turn out to be right – but only if the Fed can bring itself to pursue stimulus policies that are as radical as they are necessary.

J. Bradford DeLong, a former deputy assistant US Treasury secretary, is Professor of Economics at the University of California at Berkeley and a research associate at the National Bureau of Economic Research.

By J. Bradford DeLong

New Paths for Leadership in International Development

SEATTLE – Official development assistance (ODA) helps to save lives, build more stable and safer societies, and project soft power around the world. That is a point that my boss, Bill Gates, drove home recently, when he addressed the United Kingdom’s leading military and security thinkers at the Royal United Services Institute in London.

Bill had been asked how he would respond to anyone in the UK who felt “demoralized” by the fact that Britain is one of only a few countries that meet the United Nations-mandated commitment to spend 0.7% of its gross national income on development aid. But highlighting the impact of British ODA was just part of the answer; Bill also emphasized the many other countries that are also meeting their aid commitments.

In Europe, Denmark, the Netherlands, Norway, Luxembourg, and Sweden have been meeting the UN threshold for a while, and Germany recently joined their ranks. France is not there yet, but it is increasing its contribution.

Beyond Europe, Saudi Arabia, the United Arab Emirates, and Qatar are also among the world’s largest significant ODA donors – a reality of which not many people are aware. They are all donors to the Lives & Livelihoods Fund, the Middle East’s biggest multilateral development initiative. The fund’s other donors are the Islamic Development Bank, the Islamic Solidarity Fund for Development, and the Bill & Melinda Gates Foundation.

The $2.5 billion Lives & Livelihoods Fund is supporting critical projects targeting disease eradication, primary health care, support for farmers, and basic infrastructure in the poorest communities throughout the Muslim world. It began last year with $363 million in approved funding for six large projects in Arab and African countries. In February, the first initiative, a $32 million project to combat malaria in Senegal, got underway, and another round of projects was approved earlier this month, taking the total authorized funding to more than $600 million.

Aid cannot solve all the problems facing Muslim countries in the Middle East and Africa. But it can support the emergence of more stable, more prosperous, and healthier societies that are less vulnerable to civil war or terrorism. The Gates Foundation believes that donors from the Muslim world, in particular, have an integral role to play in addressing poverty and instability. Far more can be achieved together – by combining resources and sharing expertise – than separately.

Domestic projects can support these countries’ capacity to lead the way on international development. For example, the Shaghaf fellowship program, supported by the King Khalid Foundation and the Gates Foundation, is designed to encourage some of the brightest young Saudis – many of them women – to pursue careers in the non-profit sector that focus on local and global social impact.

But the real key to success in international development is cooperation. By combining resources and sharing expertise, organizations like the Gates Foundation and donor governments, from the UK to the UAE, can achieve far more than would be possible alone.

Fortunately, governments in the Middle East seem to recognize this, and are increasingly seeking development partnerships. And there are plenty of opportunities. The UAE has been a major champion of polio eradication, an endeavor that the UK has funded generously. Qatar has joined recently as a donor to Gavi, the Vaccine Alliance, to which the UK has been the largest donor in recent years. Saudi Arabia is a longstanding donor to the Global Fund for AIDS, Tuberculosis and Malaria, another partnership in which the UK is a significant player.

Observers often point to the soft-power benefits of providing aid to developing countries. But they often fail to notice the advantages brought about by strengthening relationships among donor countries that work together to advance international development. Donor countries would do well to embrace this reality and seize opportunities to build ties with new global partners that share their commitment to fighting poverty. Mark Suzman is Chief Strategy Officer and President of Global Policy and Advocacy at the Bill & Melinda Gates Foundation.

By Mark Suzman

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