Winning the New Cold War on Terrorism:The Democratic-Governance Imperative

March 2, 2002
Singapore Democrats

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Dr. Diamond is a Senior Fellow at the Hoover Institution, Stanford University, and founding co-editor of the Journal of Democracy. He is also co-director of the International Forum for Democratic Studies of the National Endowment for Democracy.

Summary

One of the main sources of terrorism is chronically bad governance. The international campaign against terrorism can thus be characterized as a new Cold War: a strategy for victory requires the creation of regimes that can achieve the universal goals of freedom and development. Political and economic development are founded on five forms of capital: financial, physical, human, institutional and (most importantly) social. Countries that possess abundant social capital (and the strong public institutions and public life that result from it) are ”civic communities;” in contrast, countries that lack such capital and institutions are ”predatory societies.” The starting point for overhauling predatory states is the establishment of institutions of ”horizontal accountability,” whereby some state actors hold other state actors accountable to the law, the constitution and norms of good governance. In turn, this basic reform requires support from three directions: inside (from the state itself), below (from civil society), and outside (from the international community). Toward this end, the United States should not only substantially increase its foreign assistance budget, but also devote a much larger portion of that budget to democracy and good-governance programs.

Introduction

Since September 11, the United States and its allies have been at war against an evil and elusive enemy. That war has vital military and operational components, which will proceed in different ways for months and probably years to come. But force alone cannot win this war. Victory requires a longer-term, political strategy as well. We must rob the new Bolsheviks, masquerading as religious warriors, of the popular support, political sympathy and state sponsorship they need to threaten civilized countries.

Like Lenin himself and most of the key communist revolutionaries of the twentieth century, the leaders and strategists of the Islamic Bolsheviks are well educated and come from middle- or upper-class backgrounds. But they mobilize growing reservoirs of sympathy and commitment among lower-class people who feel deprived, disempowered and humiliated. In their time, Marxists-Leninists were able to convince broad popular followings that the source of their disappointment and suffering, and of the obvious injustices in their societies, was capitalism and capitalist imperialism.

The new Bolsheviks similarly focus their political indictment on the leading capitalist nation, the United States, and the alleged imperialism of Israel, with U.S. and Western support. And like so many communist revolutionaries of the twentieth century, they denounce numerous existing regimes–allies (however superficial) of the United States–as corrupt and exploitative. The problem for the United States is that many of the regimes we now depend on are precisely that. From Morocco to Egypt, from Saudi Arabia to Pakistan and Indonesia, predominantly Muslim populations are increasingly receptive to revolutionary and hateful appeals because they are fed up with the oppression, inequity, (in most cases) poverty, and extravagant corruption in which their societies have been mired. Disgusted with their rulers, despairing of the prospect for peaceful and incremental change within the existing order, they are looking for an explanation of their personal suffering and societal degradation. Like Hitler, Lenin and other charismatic demagogues before him, Osama bin Laden offered an alluring, Manichean explanation: It is the fault of the Jews, of the international capitalist system, and of the United States and the globalizing order it is imposing.

This twisted logic resonates emotionally among large numbers of the one billion Muslims who stretch from Morocco to Indonesia–and even some who live or reside in Europe and the United States. With time, force, vigilance and some luck, we may substantially destroy and disrupt the existing global infrastructure of terrorism. But no amount of military force, law-enforcement vigilance and operational genius can contain an army of suicide bombers that stretches endlessly across borders and over time. We must ultimately undermine their capacity to recruit and indoctrinate new true believers. That requires getting at the root factors that generate breeding grounds for terrorism. And one of the principal factors is chronically bad governance.

The political struggle against international terrorism has many of the features of a new Cold War. If we are to achieve a lasting victory, it must be a war of ideas and ways of life, as much or more than of bullets and bombs. True, the new Cold War is more furtive and decentralized than the previous one. Particularly after the overthrow of the Taliban regime in Afghanistan, no nation will dare to present itself as the international sponsor of a terrorist organization or coalition in anything like the way that the Soviet Union led an international communist movement for seven decades. However, as in the first Cold War, a strategy for victory (and hence enduring peace and security) requires a focus on the character of regimes. Ultimately, what brought down international communism was not just military vigor and vigilance, but a better idea for how to govern society: democratic capitalism.

In form, that idea has spread globally as never before. But in reality, it remains shallow and tenuous. The collapse of the Argentine economy and the forced resignation of its democratically elected president–amid widespread public looting and rioting–in December of last year shows how vulnerable democracy remains even in parts of the world that have firmly identified with ”the West.” We should not assume that the new Cold War will draw its line at the boundaries of the Muslim world. Disillusionment with capitalism and democracy is mounting in much of Latin America, as well as in Asia and the former Soviet Union. Fear and resentment–of ”globalization,” of the democratic West, and of a United States that is portrayed as domineering and contemptuous of global sensitivities–are capable of spreading around the world like a virus. If that virus mutates beyond its current religious boundaries–if a new anti-democratic and anti-globalist ideology takes root in Latin America, Africa and non-Muslim parts of Eurasia–we will be in far greater danger than we already are. The only inoculation against that virus is better and more effective governance.

It is vital to our national security that we comprehend the real causes of the gathering global backlash and respond wisely to them. This is not–or at least not yet–a war between civilizations. It is not simply or fundamentally a clash of values or beliefs. On the contrary, it originates from the fact that peoples around the world share some of the same goals. They want to live in dignity and prosperity. Both as individuals and as members of a group–a nation, and even a religion–they want to be respected as of equal worth. Billions of people want globalization to deliver on the promise of a better life for them and their children. They want freedom and development.

However, the plain and even brutal fact is that some countries are extraordinarily successful and others are miserable failures. Politically, some countries are free, open, stable and democratic. Some are struggling to institutionalize democracy. A few are stable but highly repressive. But many lack any kind of stable political order. They are mired in corruption, repression and violent conflict; and no one can be sure how long the government of the day will last or how it might be replaced. When countries witness the total implosion of social and political order, they are now called ”failed states.” Economically, of course there are the rich, advanced industrial countries (which are all stable democracies except for Singapore) and several dozen extremely poor countries where the average person survives on less than a dollar a day. But the rich countries were not always rich, and even outside the West a number of countries are growing rich and becoming stable democracies as well.

Development and Capital

Why are some countries outside the West succeeding and others failing?

Several types of explanations have been offered. Some point to culture. They argue that economic development and democracy in the West were fostered by such values as individual dignity, responsibility and initiative; social pluralism; economic and political freedom; the rule of law; limited government; and the separation of spiritual and temporal authority.1 From a culturalist perspective, some non-Western countries may employ technology and mobilize resources in a way that modernizes the society, but their values preclude democracy and may also condemn them to underdevelopment. Other theories emphasize economic policies and institutions. Any country that follows the policies and institutional rules of an open, market economy ought to be able to attract capital and invest it to create new wealth. By this logic (or one form of it), if economic development goes on long enough, then democracy will eventually follow, as almost all rich countries sooner or later become democracies.

More recently, there has been a growing focus on institutions of governance, and their importance not just for democracy but also for development. According to this explanation, even market-oriented policies will not work unless there are effective governmental institutions and practices to create an “enabling environment” that secures property rights, guarantees contracts and attracts investment. This includes first and foremost a rule of law and an overall climate of order and predictability in political life.

There was a time when it was fashionable to think that some countries were condemned by fate, culture and geography to be poor and oppressed. Even today, one cannot ignore the evidence of Jeffrey Sachs and others that landlocked countries start with a disadvantage in their prospects for development. Then there is the ”paradox of plenty.” We might imagine that countries with mineral wealth would be greatly advantaged in the quest for economic development, and ultimately for political order and freedom as well. That turns out to be dramatically untrue. Oil has been much more of a curse than a blessing.2 The most successful countries generally are the ones that make it on the basis of human rather than mineral resources.

If it is human resources that matter, then the way that people relate to one another should hold the key to development. This brings us back to the nexus between two key factors–culture and institutions–and to a term that increasingly resonates within every corner of thinking about development: social capital. Before taking up this topic, let us consider the different forms of capital that foster economic growth and development.

There is a growing recognition that countries need several types of capital in order to develop. They need financial capital to make possible the establishment of private enterprises that will expand production, creating jobs and wealth. Historically, some states have mobilized capital from above and force-marched the country to development repressively for some period of time. But ultimately development becomes sustainable and reaches advanced levels of wealth only when private capital in search of profit invests in new production and exchange.

Second, development requires physical capital, and not just for companies but for communities and countries. Here, states must play a crucial role in building the infrastructure–the roads, bridges, ports, power grids and even schools–that enables production and exchange to take place efficiently.

Rising levels of production and services require labor and management with more knowledge and higher skills. This is the third dimension, human capital. While it can emerge in part from experience and practical training, human capital generally requires education, and ever more advanced education. This cannot be produced adequately from the private, uncoordinated efforts of individuals, families and communities. Human capital can be accumulated in the levels necessary for success in increasingly competitive world markets only if states provide effective public education at the mass level.

States must also help to provide other, less tangible public goods that induce private investors to risk their financial capital in search of profits, and that coordinate and restrain the market. These are the institutions that generate a rule of law and a climate of peace, predictability and order:

  • An independent and professional judicial system;
  • a transparent and efficient banking system (including an independent central bank);
  • effective rules, regulations and oversight agencies governing banking, capital markets and commerce (including contract and bankruptcy laws and business codes of conduct);
  • rules and institutions to restrain corruption by monitoring and when necessary punishing the conduct of public officials;
  • a system of domestic policing that enables people to invest, produce and exchange free of extortion from the state or criminals; and
  • a tax system that collects sufficient revenue to finance all of these public goods.

In his seminal book on globalization, The Lexus and the Olive Tree, Thomas Friedman calls these institutions the ”software” that accompanies a country’s basic “hardware” (an economic model, such as capitalism) and its “operating system” (macroeconomic policies).3 In the context of this discussion, we can call this software institutional capital in that it facilitates the creation and efficient application of all other forms of capital.

We come, then, to the fifth and least tangible form of capital: social capital. Social capital is visible in the variety of nongovernmental organizations, associations, clubs and activities in which individuals freely combine to help one another. But social capital is more than visible forms of organization. It is, to quote Robert Putnam, the “features of social organization, such as trust, norms, and networks, that can improve the efficiency of society by facilitating coordinated actions.”4 Social capital encompasses the relations of social trust; the networks of mutual assistance and civic engagement; and the norms of reciprocity, mutual respect, political equality and concern for the collective good that enable people to combine to produce more and accomplish more than they could individually.

Thus social capital can help to build financial capital, as individuals and groups invest in one another’s activities. Putnam offers the example of the rotating credit association as a pure model of social capital, but relations of trust and cooperation facilitate much larger-scale investments as well. Social capital also helps to generate financial capital, physical capital, human capital and institutional capital. When people in a society trust one another, cooperate and view one another as political equals (even if they are of different classes), they will also pay their taxes, obey the law and construct the kinds of public institutions that produce political freedom and order as well as economic freedom and growth. In contrast, a paucity of social capital yields a very different kind of society: one founded on distrust, deceit, domination and exploitation.

Two Models of Society

For twenty years as a social scientist, I have been trying to understand why some countries develop stable democracy and others do not. Like many other social scientists, I have found it necessary to identify numerous factors that explain the differences between countries in democratic development. But in recent years, I have increasingly been struck by one broad factor that unites or integrates most of the important causes. I do not pretend to any particular originality here. That is, most of the insights can be gleaned from the literature on social capital, and particularly from Robert Putnam’s book Making Democracy Work–one of the most important contributions to the study of comparative politics and comparative development in the last several decades.

All countries or societies in the world–indeed all forms of collective life–can be located on a continuum in terms of their quantity of social capital and the quality of public institutions and public life that results from this capital. At opposite ends of this continuum, we can identify two models of society: one Putnam calls the “civic community;” the other I call the “predatory society.” To be sure, these are ”ideal types.” In between the poles there exists a wide range of what Thomas Friedman calls “messy states.” No country or organization is purely civic or purely predatory, for any large collectivity encompasses a mix of people. Even if most people in a civic community are law-abiding, trusting and committed to the public good, there are always at least a few who are not, and perhaps many whose commitment is firm only because there are strong institutions to restrain less civic-minded impulses. Otherwise, there would be no need for policing. And even in the most predatory society, there are at least some people who believe in political equality, justice, fairness and accountability. Otherwise, there would be no hope, and I do not think any society is completely beyond hope.

In the model civic community, there is an abundance of social capital. People generally trust one another, combine in all forms of association and cooperate for larger, collective ends. Where they differ in beliefs and opinions, they mutually respect and tolerate their differences, and they feel some sense of solidarity with the collectivity (the organization, the community or the nation) that transcends their differences. Citizens see one another as political equals and believe in equality of opportunity, even though they recognize that a perfect equality of outcomes can never be obtained. Relations among people in the civic community are primarily horizontal: people come together as individuals with equal dignity, rights and obligations; and this equality is mutually understood, respected and embedded in the laws. People are truly citizens; they have an interest in public issues and care about the welfare and progress of the community. In this sense, they are motivated at least to some degree by public-spiritedness, or what Putnam (quoting Michael Walzer) terms “civic virtue.” This model of the “good society” is not utterly fanciful, but is (like capitalism at its best) potentially quite consistent with the self-regarding impulses in human nature. Putnam writes:

Citizens in the civic community are not required to be altruists. In the civic community, however, citizens pursue what Tocqueville termed ”self-interest properly understood,” that is, self-interest defined in the context of broader public needs,

self-interest that is ”enlightened” rather than ”myopic,” self-interest that is alive to the interests of others.5

It is important to emphasize now that one reason why citizens in the civic community view civic virtue as ”self-interest properly understood” is that they feel confident that most other citizens will behave in a similar way. And this confidence is rooted not just in a civic, trusting, egalitarian culture. They have such confidence because there are strong, effective institutions of governance to enforce and reproduce civic behavior. A culture of trust, cooperation, reciprocity, respect, restraint, tolerance and compromise–in a word, ”civicness”–cannot be sustained on a scale as large as the nation without supportive political institutions. People obey the law, pay their taxes, observe ethical standards, answer the call to jury duty and otherwise serve the public good not simply because they are public-spirited, but also because they believe others will be and because they know there is some penalty for failing to be.

It is very hard to know where culture ends and institutions begin, but they clearly form a dense and eventually almost seamless web. If it is somewhat discouraging to ponder that people would be less pleasant and helpful toward one another without these supporting institutions, there is also a hopeful corollary to this insight. That is, just as the civic culture requires institutional support and nurturing, so a predatory culture thrives in the absence of effective institutions and can be changed through the introduction of them. In a word, culture is not necessarily destiny.

The predatory society is the inverse of the civic community. First, there is no real community, no shared commitment to any common vision of the public good, and no respect for law. Behavior in the predatory society is cynical and opportunistic. People ally with one another in the quest for power and privilege, but not in a horizontal fashion. Rather, relations are steeply hierarchical, as patrons mobilize clients who in turn may serve as patrons to clients at even lower levels of power and status. This is why we speak of ”chains” of patron-client relations in such societies. Blatant inequalities in power and status cumulate into ”vertical bonds of dependency and exploitation,” which constitute the way society is organized. In a predatory society, the powerful prey on the weak. The rich extract wealth from the poor, exploit their labor and deprive them of public goods. In rural societies, landlords may trap the poor in forms of debt peonage that border on slavery. In fact, slavery–which, tragically, is persistent and even resurging in parts of the world–is the purest form of a predatory human relationship.

The masses of ordinary people at the bottom of a predatory society cannot cooperate with one another because they are trapped in hierarchical networks, fragmented from one another, and generally distrustful. Very often, this social fragmentation is reinforced by ethnic, linguistic or other forms of ”identity cleavage” that keep the oppressed from collaborating and enable the privileged to rally ready political support from their ethnic compatriots. All too often, predatory elites mobilize ethnic tension or nationalism in order to redirect the frustration and resentment of their clientelist followings away from their own exploitative behavior. Yet ethnic tensions and nationalist resentments have a basis in social reality, and this is why predatory elites often succeed in inflaming them. It is, then, no coincidence that from Nigeria to the Congo, from Colombia to Kosovo, from Serbia to Sudan, ethnic violence, nationalist bloodletting and civil war are tightly entwined with the corruption of cynical elites.

The predatory society cannot sustain democracy, for sustainable democracy requires constitutionalism and respect for law. Nor can it generate sustainable economic growth, for that requires actors with financial capital to invest it in productive activity. In the predatory society, people do not get rich through productive activity and honest risk-taking. They get rich by manipulating power and privilege, by stealing from the state, exploiting the weak and shirking the law. Thus it is no wonder that predatory societies have weak, porous states that are prone to complete collapse.

Political actors in the predatory society will use any means and break any rules in the quest for power and wealth. Politicians in the predatory society bribe electoral officials, beat up opposition campaigners and assassinate opposing candidates. Presidents silence criticism and eliminate their opponents by legal manipulation, arrest or murder. Ministers worry first about the rents they can collect and only second about whether the equipment they are purchasing or the contract they are signing has any value for the public. Legislators collect bribes to vote for bills. Military officers order weapons on the basis of how large the kickback will be. Ordinary soldiers and policemen extort rather than defend the public. In the predatory society, the line between the police and the criminals is a thin one, and may not exist at all.

In fact, in the predatory society institutions are a fa?de. The police do not enforce the law. Judges do not decide the law. Customs officials do not inspect the goods. Manufacturers do not produce, bankers do not invest, borrowers do not repay, and contracts do not get enforced. Any actor with discretionary power is a rent-seeker. Every transaction is twisted to immediate advantage. Time horizons are extremely short because no one has any confidence in the collectivity and its future. This is pure opportunism: get what you can now. Government is not a public enterprise but a criminal conspiracy, and organized crime heavily penetrates politics and government. In this context, neither democracy nor development can be sustained for long.

Institutions to Control Predation

I have painted an extreme portrait of the predatory society. Countries in trouble in the world fit this portrait to different degrees. But those countries where order is decaying and the economy is stagnating are invariably much more predatory than civic. And the more predatory they are, the more trouble they are in.

Three years ago, then-Secretary of State Madeleine Albright identified four countries that would be priorities for U.S. democracy promotion: Nigeria, Indonesia, Colombia and Ukraine. These four countries are vitally important to the security of the United States. Big and influential, they will affect political stability and democratic possibilities in their regions. But all four have sunk deeply into a predatory state. In these countries today, endemic corruption and crime, widespread abuse of power, social fragmentation and cynicism, and the general lack of public-spiritedness and ineffectiveness of government institutions are precluding investor confidence, obstructing economic development, draining democracy of meaning, and paving the way for its collapse. The same deepening predatory dynamics produced the breakdown of democracy in Pakistan in October 1999 and greatly diminished democracy and economic recovery in Russia during the past decade.

In Africa, the predatory nature of political, economic and social life is the principal obstacle to democracy, development and peace. On the continent, only Botswana has built a civic community–and not coincidentally, it has a stable democracy with the highest economic growth rate in the continent over the last two decades. Only a few African countries–such as Ghana, Mali, Senegal and South Africa–appear to be constructing (or preserving some semblance of) the good governance and public-spiritedness of the civic community. But in every one of these countries, progress is quite tentative and uncertain.

Since the collapse of global communism a decade ago, we have been in a somewhat celebratory mood about the direction of political development in the world. That collapse gave rise to the most dramatic expansion of democracy in history. By 1995, over 60 percent of the world’s regimes were democracies, and that proportion has more or less held since then. But by the logic of the dichotomy I have drawn here, the figures are deceiving. Democracy can be stable–that is consolidated–only where norms, behavior and institutions are predominantly civic rather than predatory.

That is not the case in most of the new democracies that have emerged during the ”third wave” of democratization. Certainly it characterizes the 30 countries in the world that are stable, liberal, advanced industrial democracies. (These are the 24 countries of Western Europe plus the United States, Canada, Australia, New Zealand, Israel and Japan). Even in Italy, where social trust is relatively low and political cynicism high, the country overall is closer to the civic model than to the predatory one. (Particularly after the ”clean hands” reform campaign cracked down on political corruption and Mafia penetration of politics in the early 1990s, Italy drew closer to the civic model). Some other countries (Taiwan and Korea, for example, and several states in Central Europe) are moving at least haltingly toward the consolidation of a liberal democracy with the culture and institutions of a civic community. And many of the very small developing countries may already have achieved that (possibly because civicness may be easier to construct on a smaller scale, where face-to-face relations are more prominent). In most of the developing and post-communist countries (with populations over one million), the norms, social structures, and institutional vacuums and deformities of the predatory society are proving tenacious, and very dangerous. These are at best ”messy states,” and Argentina’s recent trauma shows how rapidly a messy state can unravel when it lacks strong, transparent institutions of economic and political governance.

It is difficult to resist the temptation to think that the problem is rooted in the cultures of these countries, and that there is not much we can do about it. It is true that these countries will neither develop their economies nor consolidate their democracies until their cultures change, but it is wrong to presume that cultural change must lead the way out of the predatory trap. Cultures change only slowly, but institutions can be changed fairly rapidly. And cultures will adapt to new institutional incentives if the institutions work effectively to generate new expectations and norms. We must work, through civic education and organizational efforts, to generate new, more civic norms. But these will be sustainable only if the institutions of a civic community come into place.

Predatory states need to be completely overhauled. A crucial place to begin is with the institutions of ”horizontal accountability.” This is the process by which some state actors hold other state actors accountable to the law, the constitution and norms of good governance. Some of the key institutions in this regard are the judiciary, the central bank and related oversight institutions, and the electoral commission. These institutions must be resourceful, professionally led and staffed, and independent of political manipulation and control if they are to function effectively.6

The most urgently important institutions of horizontal accountability are the ones directly charged with controlling political and bureaucratic corruption. Corruption is the core phenomenon of the predatory state. It is the principal means by which state officials extract wealth from the society, deter productive activity and thereby reproduce poverty and dependency. Outside of the central state, landed elites, corporate oligarchs, political barons and organized crime bosses use corruption to purchase access to resources and immunity from taxes and the law. Politicians use corruption to barricade themselves in power. Patrons distribute the crumbs of corruption to maintain their clientelist support groups. Corruption is to the predatory state what the blood supply is to a malignant tumor. Cut it off and the tumor will shrink and die.

Cutting it off will be a long, contested process. But powerful, well-designed institutions can make a difference. What is needed most of all is an Independent Counter-Corruption Commission. The commission would receive declarations of assets by all significant public officials on a regular basis; and would have the staffing, technology and political will to monitor those declarations and prosecute cases of corrupt accumulation and concealment of wealth before an independent tribunal. Such a commission must vigorously monitor the conduct of public officials in every respect, backed up by a National Audit Commission to audit all public accounts and an Ombudsman’s Commission to receive and investigate public complaints. It must have the authority and resources to prosecute all types of bribery, embezzlement and violation of the public trust. If corruption is really to be deterred and controlled, convictions must bring serious penalties–including forfeiture of corrupt assets and of the right to hold public office; and for the most serious offenses, jail. Again, this requires independent and resourceful courts and prosecutors as well.

The institutions of horizontal accountability form a self-reinforcing web. A counter-corruption commission must rely in part on the audit agency to uncover theft and misuse of public resources, and on the ombudsman to invite and investigate public complaints. Reduction and deterrence of corruption will be reinforced if an electoral commission can produce sufficiently clean elections to enable citizens to turn out of office the most corrupt public officials.

It is a mistake to think that the impoverished masses at the bottom of the predatory system are so fragmented and hoodwinked that they will happily settle for whatever crumbs of corrupt patronage that are dropped their way. People do learn over time that the system is exploiting them, and information about corruption and injustice moves around much more readily than it once did. Or at least it can move around if there is some freedom of information in terms of a pluralistic press and (crucially in poor countries) free access to the radio airwaves.

The importance of free and fair elections and free mass media underscores a fundamental point about controlling corruption and predation. In a predatory society, accountability cannot succeed if the initiative for it comes only from within the state sector. Horizontal accountability must be reinforced by vertical accountability. In addition to competitive elections and the mass media, NGOs play a crucial role in monitoring the conduct of public officials and holding them accountable for their performance in office.

A third type of accountability is external. International actors and donor governments must do much more to monitor the conduct of public officials in states that receive concessional lending and other forms of aid. And they must move vigorously to strengthen norms and institutions of accountability in international banking, so that we can do more to trace and cut off corrupt flows of money across countries. Predatory elites do not keep much of their wealth in their own countries, precisely because they have so little confidence in their societies. They park their money and assets abroad. We need to identify those illegally acquired assets and go after them with new international rules and institutions.

Coalitions for Institutional Reform

Predatory societies are caught in vicious cycles of corruption, exploitation, lawlessness, cynicism and duplicity. Why would elites who benefit from these conditions put in place institutions with the autonomy and resources to change them? Truly predatory elites will fight serious change. But in most of these societies, particularly the ones that are at least formally democratic, there are surely some elites (especially younger ones) in the party system and the state sector who favor better governance. And there is growing sentiment for serious governance reforms in the independent mass media and civil society, as well as in that portion of the business community that is more oriented outward to participation in the global economy than upward to seeking favors from the predatory state. The vibrancy of civil-society actors in countries such as Nigeria and Indonesia shows that these societies are far from purely predatory, and that constituencies for good governance do exist.

The problem is that these constituencies are weak in relation to those who control the state and the political and social system. The only way that this power imbalance can be altered is by more decisive action from the international community. Financial and technical assistance to civil-society advocates for good governance is important, and is helping in some cases to refine and strengthen social demands for reform. But the most urgent initiative is to alter the incentives confronting leaders of predatory states. For too long, they have had a free ride. They and their cronies plunder their societies, and the international community facilitates this plunder with aid and lending. They pretend to be developing, and we pretend to be assisting them. In recent months, many well-intentioned voices have called for a ”jubilee” initiative to write off unconditionally the debts of the poorest countries. Most of these countries are poor not because they are indebted or incapable of developing, but because they have more or less predatory societies with rotten governance. Unless governance is changed, and with it social structures and norms, these countries will remain poor, no matter how much aid and debt relief the West bestows on them.

One potentially powerful lever of change for these predatory societies would be radically changed expectations on the part of the international donor community. We need a new international bargain: debt relief for democracy, and development assistance in exchange for good governance. No country should be relieved of its official international debts if it does not have in place a credible, serious plan to control political corruption. This must include not only appropriate institutions, but also institutional leaders that independent civil-society actors regard as serious. Each country can and should design its own institutions. But some kind of independent body to control corruption is needed, as is an independent judiciary, a free press and (eventually, if not immediately) regular, free and fair elections.

No country that does not meet basic conditions of public accountability and good governance should be relieved of its debts to the United States, to the other donor democracies, or to international institutions like the World Bank. And no state that refuses to institute such conditions should receive official (state-to-state) development assistance. Instead, those countries might receive emergency humanitarian aid, and their civil-society organizations should be generously supported where they demonstrate serious purpose and capacity. But truly predatory states should be cut off from the international flows of finance that sustain them.

In pursuit of these principles, Congressman Frank Wolf has introduced into the U.S. House of Representatives the ”Responsible Debt Relief and Democracy Reform Act.” It makes the cancellation or reduction of debts owed by foreign countries to the United States conditional on freedom of the press and of association, an independent and non-discriminatory judiciary, the establishment of serious institutions and laws to control corruption, free and fair elections, and respect for human rights. The bill also urges the President to instruct the U.S. Executive Directors of multilateral lending institutions to vote and lobby for applying the same requirements to countries seeking relief from debts owed to these institutions.

Such political conditions for debt relief may sound like a tough approach. But international compassion absent clear analysis and principled standards has done little if anything to advance development and human well-being in predatory societies. Africans themselves are increasingly hoping that the international community will apply tough conditions on their own governments. They are weary of the poverty, oppression and violence brought on by the irresponsible, plundering leadership of their own elites.

Change in endemically corrupt and predatory societies comes about as a result of coalitions for reform. A successful coalition must include three elements: pressure from within, from reform-minded elites in the party system and state who at least perceive an enlightened self-interest in institutional change; pressure from below, from civil society; and pressure from outside, the international community.

Strategies for international assistance must take seriously the challenge of improving governance. It is not enough simply to generate the demand for better governance in civil society. We also need a substantially enhanced supply. Where there are state actors ready to embrace reform, this requires new and enhanced programs to improve and professionalize public administration, the judiciary, other agencies of horizontal accountability, the institutions of economic governance and regulation, as well as the military and police. These state institutions need training and resources, patiently invested over a long period of time. So do political parties, which in any developing democracy are an indispensable link between parliament and government on the one hand and the public and civil society on the other. However, investments in political institutions will not pay off unless institutional leaders are committed to improving governance. That is one reason why firm standards and expectations are needed from the international community.

In the international community, the United States remains the indispensable country in the quest for democracy and good governance. People still look to the American example for leadership and inspiration. In many impoverished, conflict-ridden, predatory societies, ordinary people increasingly understand that real change requires better governance and an end to wanton corruption, exploitation and abuse of power. Ultimately, democracy is necessary, but not sufficient. In our own national policies on debt relief and aid, we have an opportunity to help battered societies begin to construct the institutions and norms of a civic community. As a nation, we are the first, and still the leading, civic community. We have an obligation–to our own national security, as well as to the world–to lead the way.

Terrorism and Democracy

Over the past two decades, through the work of institutions like the National Endowment for Democracy (NED) and the U.S. Agency for International Development (USAID), we have learned much about how to foster democratic and accountable governance. But political assistance is labor-intensive to manage and monitor, and it cannot be successful without adequate funding and clear coordination with our other tools of international engagement, such as diplomacy. Currently, we spend about $700 million annually in democracy and governance programs in USAID (as well as the Department of State), and we allocate another $30 to $40 million to NED’s international grant-making program. This may sound like a lot of money, until one considers that more than 100 countries in the world need assistance to improve or generate democracy, and that a respectable program just to strengthen the rule of law in a medium-sized country can easily require several million dollars in itself.

If we are serious about getting at the roots of international terrorism, we must get serious about fostering development that gives people hope and dignity and improves the quality of their lives. That requires dramatic improvements in governance, and these will not come without increased international incentives and assistance. In real terms, levels of U.S. development assistance have fallen dramatically since the 1970s and especially since the end of the last Cold War. It will not work to just throw money at the problem in some new ”Marshall Plan.” No infusion of economic resources, no matter how massive and sustained, will in itself generate development because the problem (unlike in Europe after World War II) is not simply a lack of resources or functioning infrastructure.

The problem is a more fundamental shortage: of the institutions and norms of democracy and good governance. Unless we help to develop states that collect taxes, limit corruption, control crime, enforce laws, secure property rights, provide education, attract investment and answer to their own people, countries will not develop and the rage against the West will not subside. This is why we must not only substantially increase our foreign assistance budget, but also devote a much larger portion of that budget to democracy and good-governance programs (while deploying more career aid officials with expertise in these fields).

We have won a great victory in freeing the people of Afghanistan from the medieval tyranny of the Taliban. We have heavily degraded and disrupted the terrorist infrastructure of al Qaeda. Other military and intelligence challenges lie ahead. But as in the previous Cold War, the challenge we face is as much political as military. It now begins in Afghanistan, with the daunting task of helping to reconstruct a failed state and to construct for the first time a system of government for that country that is decent, responsible, consensual and ultimately democratic.

But we cannot stop there. We must help and induce predatory and messy states around the world to develop civic institutions and norms. Only then will they be able to sustain good governance and development progress, and thereby regain the confidence of their people. Only then can we achieve a lasting victory in the new Cold War.

Notes

1See, for example, Samuel P. Huntington, The Clash of Civilizations and the Remaking of World Order (New York: Simon and Schuster, 1996), pp. 68-72.

2Terry Lynn Karl, The Paradox of Plenty: Oil Booms and Petro-States (Berkeley: University of California Press, 1997).

3Thomas L. Friedman, The Lexus and the Olive Tree: Understanding Globalization (New York: Anchor Books, 2000, paperback edition), pp. 151-152.

4Robert D. Putnam, Making Democracy Work: Civic Traditions in Modern Italy (Princeton: Princeton University Press, 1993), p. 167.

5Ibid., p. 88. This discussion of the _civic community_ draws primarily from pages 87-90 of Putnam.

6Andreas Schedler, Larry Diamond and Marc F. Plattner, eds., The Self-Restraining State: Power and Accountability in New Democracies (Boulder: Lynne Rienner Publishers, 1999).

IGD Policy Paper No. 1 (March 2002)