“Nation-building” was impossible, it was believed, when the failed state of Somalia was in the global headlines in 1992-3. A decade later, we know much more about “nation-building” and it is the epicentre of the global political debate. Among other trends, the debate is informed by the extraordinarily valuable work of Transparency International (www.transparency.org). There is an increasing consensus about the relationship between rule of law and sustainable prosperity. TI created a benchmark against which performance can be measured and, indirectly, an incentive system for political regimes. In the last decade, abstract political debates about economic development have been increasingly replaced by practical discussions about water purification projects, disarmament of militias, and establishment of entrepreneurship zones. This is an encouraging set of trends. Political scientists understandably tend to look at institutions and constitutions. Investors tend to look at the efficiency of capital markets in directing capital to growth opportunities as well as the resources that are there to be developed (geological, agricultural, intellectual capital). Practitioners of development assistance tend to look at building the infrastructure capacities (roads, mobile telephony, distribution-networks for vaccines and health-care products). In approaching the challenge of accelerated economic development, leadership is required to use all these pieces of software.
Proponents of democratic activism try to find courageous advocates who can lead a transformation to democracy. On a planet with the potential for intimate and instant media communications, these democratic leaders can be backed in the manner which most of the international community has rallied behind Aung San Suu Kyi in Burma, and more effectively, Nelson Mandela.
After the qualifiedly successful experiences of Liberia, Rwanda, Bosnia and the ongoing experiences of Kosovo, Iraq and Haiti, it is possible to talk in concrete terms about “nation-building” or the expansion of the rule of law. Debates about globalization and development have tended to take place in echo chambers with institution-building and economic strategies being discussed as if one could happen without the other.
It is against this backdrop that a spotlight can be put on the current complex realities of present day Somalia. The mix of issues confronting Somali democrats and modernizers creates a perfect challenge for a global community committed to creating the preconditions for sustainable prosperity through advancing the rule of law. Somalia is, at one level, a society which has already had a profound effect on international politics as a result of the period in the early 1990s. In that period, Somalia became the political metaphor for a “failed state. It was used by those who thought nation-building was an impossible objective as an excuse for non-intervention in Rwanda and Bosnia. But Somalia is also in 2005 an historical opportunity, a vibrant society with a tremendously well-educated diaspora. It has an economic network sustained by international cooperation within a complex system of cooperative finance. It has a rich history and a dynamic Islam culture rooted in centuries of distinctive national practices. Because of this, it is an opportunity for proponents of a rule of law based international system to champion Somali nation-building as an historic opportunity.
No country should be considered a laboratory for social theories. Each country is a unique history and culture. Somalia, however, is timed to be an opportunity for a major moving forward in the self-confidence of the global community that the rule of law can take root in previously “failed” states. What is required to do this?
First, there is one obvious but too-often underemphasized precondition for sustainable prosperity and that is the disarmament of private armies. Whether in Kosovo, Liberia, Sierra Leone, Afghanistan or Iraq, the existence of private militias impedes and eventually denies the development of the political culture required to create sustainable prosperity. Independent militias create a world in which, by definition, capital cannot be channeled to growth opportunities and people live with the fear for arbitrary, unaccountable action that affects their basic security. So, without the disarmament of private armies or their integration into a rule of law based police function, experience teaches us that there is sadly no point in discussing economic growth.
Second, the discussion of how social capital is created is an important part of the new democratic theory of economic prosperity. Networks of independently minded people create a communications system which makes possible economic decisions that accelerate growth and sustain prosperity. This is why there can be a competitive advantage for smaller societies, with habits of working together and social market signals about decisions and performance. This is obviously true in smaller countries like Slovenia or Estonia, Finland or Norway, where compatibilities create a natural efficiency. The political systems of smaller democracies can focus on mobilizing for economic growth rather than spending scare resources on mediating between groups and negotiating an acceptable framework for operation. Social capital, described this way can seem to be a synonym for nationalism. But single-language activities do not necessarily make pan-Italian institutions more efficient. Nor do multi-language activities necessarily make Swiss institutions less so. Social capital or the elusive community value called trust is a prerequisite to democratic stability and needs to be nurtured and developed through shared activities. It is difficult to create social capital by design, but one thinks of the Nigerian football team or the Slovakian hockey team as examples of shared experiences which can be leveraged – up to a point. A celebration of Somali national heritage, cultural and philosophical is a form of social capital not always easily replicated.
Third, a well-connected international diaspora can be assistance in developing sustainable prosperity in a global economy. The economic development successes of countries like Poland and Ukraine have been accelerated by access to a Ukrainian or Polish speaking community who can invest and provide strategic advice in their economic development. But having a well-connected diaspora is obviously not a sufficient condition for economic development. If there are no domestic institutions which can create a disciplined capital market, the alchemy of turning investment into sustainable growth will not occur.
What can be developed from this is the beginning of a state-building exercise, applicable perhaps elsewhere, but a starting point in Somalia:
First, disarm the forces of violence and coercion. Without protection and the enforcement of the rule of law, there can be no framework for the development of sustainable prosperity. While obvious, this point is frequently missing from discussions of nation-building. The trajectories of Haiti and Liberia point to the indispensability of international action in providing security infrastructure.
Second, develop social capital. In Somalia, the network of sophisticated financial lending through hawala is significant. Because this is a system of collaborative finance, social capital literally comes about as a result of a culturally specific and potentially socially unifying financial activity. The strength of the Somali tradition and its sustaining power as a strongly defined cultural heritage is an important source of social capital. Celebration of Somali artists and the promotion of Somali culture internationally are not frivolous because appropriately done, it contributes to the growth of social capital.
Third, develop a market allocation to permit entrepreneurially-led commercialization of the resources in Somalia. The idea of a web-connected pool of capital to back entrepreneurs in emerging markets has been germinating for a while. Such a web-syndicated investment vehicle could provide small amounts of capital for the management of investments in Somali entrepreneurs. The framework is a somaliventures.com approach, which would enable a Somali entrepreneur access to capital and management expertise. The corporate governance of somaliventures.com will need to ensure that capital is invested in entrepreneurial projects, that strategic advice and management assistance to new ventures will be available through the web and that these activities will be provided with their own web-sites for both monitoring and strategic assistance. The efficient allocation of relatively small amounts of capital to entrepreneurs is a cornerstone of development and can be done on a much larger scale given the capacity of the global internet to link investment opportunity with source of finance.
Fourth, develop the kinds of capital markets necessary to manage globalization from a position of strength. This means mobilizing all the networks of which Somalia is a nucleus: the diaspora, the relationships with Gulf States and other sources of institutional capital. A Somali Bank for Reconstruction and Development (SBRD) could be created on an investment banking model similar to that of the European Bank for Reconstruction and Development which channeled international capital into market-sensitive investments. An SBRD-style institution could facilitate the creation of a dynamic, internationally-networked capital market which enabled Somalis to invest in their future and to translate the returns that come from resources (tourist, natural resources) in a manner which ensures long-term growth. The capital would come from debt-conversion, international sources and would lead to dividends or pensions being paid to Somali citizens. It speaks to the challenge of making Somalia the fastest-rising country in the Transparency International rankings and to make Somalia analogous to Malaysia, South Korea or Turkey as a society with the capacity to translate its present tense resources into future-oriented investment strategies. Without this kind of growth-oriented capital market structure, sustainable prosperity is a mirage.
Fifth, determine through a democratic framework what form of relationship is desirable in creating regional partnerships. When democratic processes and issues of political integration create cross-border challenges (see The Organizational DNA of Democracy below), the prime directive is to ensure the democratic integrity of the process. All states need a larger economic market and the Northeast Africa zone provides Somalia with a geographical opportunity to create a cross-border investment and trading with Ethiopia, Kenya, Eritrea, and Djibouti. Nation-building cannot take place in a vacuum.
The Somali Economic Prosperity Initiative will involve a group of political activists and policy analysts operating out of Toronto who will try to assist in advising the new Somali government on these and other related steps of nation-building. A conference to discuss rule of law in Somalia and the role of hawala in creating efficient capital markets for longterm growth will be held in late October and will be synopsized on this web-site. For those interested in Somali politics, the following websites are cited:
A useful map to facilitate understanding Somalia: http://en.wikipedia.org/wiki/Regions_of_Somalia
Some websites with an interest in Somalia or hawala
Nation-Building and the Complexities of Creating the Organizational DNA of Democracy – When Should Boundaries be Redrawn if Ever?
The rule of law starts when there is no fear of a guy with a gun. How do we get to a situation where legal force is stronger than arbitrary force? Throughout the world, the DNA of democracy is created a step at a time: creating a market for protecting endangered species that finances an anti-poaching police force and thereby complies with participation in the Endangered Species Act. These are admittedly small steps, but taken together, they create a tapestry of civil society and a set of incentives for non-corrupt individual behavior. This rule of law is a prerequisite for the kind of economic activity which creates sustainable prosperity. How does the rule of law become established? There is obviously a cultural phenomenon, the habits of consensus-building which are part of many traditional societies, the unscripted natural order of a chaotic highway or an English bus-queue, enforced by learned habits and an incentive to create efficient markets. The process is hard, practical work: developing management capacities for the delivery of essential services, organizing compliance with international trading systems and providing a framework for the peaceful resolution of disputes. It is the result of millions of decisions on the ground which translates into a social network of collective decision-making. But it also requires the political will of the international community to ensure that there is no “guy with a gun” who can misappropriate wealth.
Transparency International, an increasingly valuable organization demonstrates (www.transparency.org) a sophisticated approach to assessing levels of corruption and the impact of corrupt governance on economic performance. By simply measuring corruption, it sets a standard for improving behaviour and creates benchmarks and targets for all community to strive for. There are informal tests that we can all use: (a) Are compliance laws, like the endangered species act, enforced? (b) Are serious laws about human rights and due process enforced? (c) Is there widespread petty corruption at the level of bureaucratic transactions?
For political scientists, the issues of creating viable democracies have long been central to the development of a meaningful approach to political theory. The debate over democratic state formation is a constant. The question of homogeneity of culture is one raised frequently in debates about the prerequisites for democracy. As Canadians, we have long a familiarity with managing cross-cultural institutions. As Canadians, we have also developed a predilection for economic integration between culturally distinct regions and an aspiration that we can create the circumstance for win-win deals between these regions. This habit is not, however, one which can be applied to all contexts and situations. Few thoughtful Canadians advocated that Slovenia stay in Yugoslavia or Ukraine in the Soviet Union (although that was the orthodox view of the U.S. State department in both cases). The issues of when restructuring post-colonial boundaries requires the design of new states is one which can only be decided by those involved, but proponents of international rule of law have a stake in HOW it is decided.
Three political analysts have written in the last decade with special insight into this issue. The first, Jeffrey Herbst of Princeton writes about Somaliland and Somalia. The second, the great Nobel laureate in literature, Wole Soyinka, writes about Nigeria. The third, the Israeli political philosopher Shlomo Avineri, writes about Iraq and the possible desirability of “Three Iraqs”. Each is countries is dealing with the remnants of colonialism and the impact of arbitrarily drawn border-lines. These have resulted in extraordinarily complex issues for government. The issue of the remnants of arbitrary colonial decision needs to be explicitly addressed. Whatever decisions are made, it is unrealistic and inappropriate for the Banquo’s ghost of arbitrary colonial decisions made a century ago to linger and simply be ignored. At a minimum, in designing democratic institutions, proponents of the rule of law and sustainable prosperity need to create mechanisms for regional economic integration that compensate for these past colonial decisions. Avineri is right that there is no magic formula for culturally diverse societies. Each case is separate. The importance is that the debate is conducted democratically and the issues are recognized and addressed.
Iraq, Iraqi Kurdistan, Somaliland, Somalia, Nigeria are all complex cases which require different and nuanced discussion. The issues involved here go to the heart of issues of modern security, the creation of “social capital” and economic development. There has been a pattern in U.S. thinking that no matter what the historical circumstances, states should not break up. In this view, partition is always bad in this view and the geographical implications of decolonization are a bit of a lottery. The view was dogmatically enforced until the ending of states called Yugoslavia, Czechoslovakia and the Soviet Union. There has to be renewed interest in designing mechanisms of economic and political integration which allow modern citizens to have multiple loyalties: Quebecois AND Canadian, Catalan, Spaniard AND European, hypothetically Somali-speaking, Ethiopian AND a member of Northeast African Shared Prosperity Zone.
The challenges here are enough to keep political science students busy for a generation. Why should Somali-speaking Djibouti be a separate country because of its colonial heritage and Somaliland not? How does one democratically resolve whether Nigeria should remain a single country, whether Turkish Cyprus had a right to resist a military junta in Athens, whether Kurds and Shia Iraqis should share a state with Sunni Arabs, whether Aceh should remain party of Indonesia? These questions will not disappear conveniently for democratic state-builders and would-be architects of global sustainable prosperity. All we can do to answer it is to suggest that as Canadians, we know something about establishing the rules of democratic disentanglement and the challenges of building win-win economic bargains between culturally diverse regions.
But the issue cannot go away. Understanding the historical context can alleviate much political tension and create first step to forcing the next generation of decision-makers to acknowledge the past and move on, the past having been acknowledged and not ignored.
Geoffrey Herbst on Somaliland and Somalia
Shlomo Avineri on Three Iraqs, not one
Wole Soyinka on the future of Nigeria
The work of the Japanese activist and economic writer, Kenichi Ohmae is of continuing relevance in discussing the increasing importance of regions and the development of many layers of economic alliances. For a discussion of Ohmae’s recent thinking, there is a review by John Heilemann in the July 2005 Business 2.0 http://www.business2.com/b2/web/articles/0,17863,1083383-2,00.html
For a summary of Francis Fukuyama’s views on social capital, see his speech to the 1999 IMF Conference on Second Generation Reforms http://www.imf.org/external/pubs/ft/seminar/1999/reforms/fukuyama.htm#I