Valentina Pasquali

On December 10th 2008, the United States Congress passed a legislation establishing that governments involved in the use of children as soldiers may no longer be eligible for major U.S. military assistance programs. The legislation was passed unanimously by both the Senate and the House as part of the Trafficking Victims Protection Reauthorization Act. Sponsored by Senators Richard Durbin (D-IL) and Sam Brownback (R-KS), the legislation restricts the provision of International Military Education and Training (IMET), Foreign Military Financing, Excess Defense Articles, Foreign Military Sales, and Direct Commercial Sales to governments using child soldiers directly in their own armed forces or that support paramilitaries or militias that do so. Center for Defense Information’s Rachel Stohl, an expert on small arms proliferation and children in armed conflict,, is among the people that over a ten year period conducted research and later provided briefings and reports to the U.S. legislators which helped them drafting and passing the bill. The Center for Defense Information (CDI) is a division of the World Security Institute. In her interview with Washington Prism, Stohl talks about the legislation, what it means for the United States and for child soldiers around the world, and the steps ahead.

Valentina Pasquali (VP): Can you explain to us some of the core mandates of the legislation passed by Congress last week?

Rachel Stohl (RS): The legislation limits certain categories of military assistance to governments that are either using child soldiers or that are supporting paramilitary or militia groups that employ child soldiers. This means that the legislation applies even when a certain country’s armed forces might not specifically be using child soldiers, but we might have knowledge that a militia group allied with the government does. The underlying principle is that any military assistance that you give to the government would filter to that militia group.

The countries that are on this list now, are the ones that are receiving U.S. military assistance at the moment and are known to employ child soldiers. As of today, the legislation could affect: Afghanistan, Chad, the Democratic Republic of Congo, Sri Lanka, Sudan, and Uganda. There are two other countries that use child soldiers in their armed forces; Somalia and Burma. But the U.S. doesn’t provide military assistance to them, at least in the way with which the legislation is concerned.

VP: Does this legislation only affect military assistance? Or is there any other form of economic assistance that is also taken into account?

RS: No, it only concerns military assistance. More specifically, it only comprises five specific categories: IMET, Foreign Military Financing, Excess Defense Articles, Foreign Military Sales, and Direct Commercial Sales. The truth is that there are numerous other military aid programs, which the legislation does not affect. Moreover, the bill allows for a waiver for countries that are working to professionalize their militaries. This means that those that are already trying to stop using child soldiers will not be affected.

This legislation is not designed to be a form of punishment. It is an incentive. So it’s a carrot, not a stick. We are trying to get governments to make sure that they are not employing children in their militaries or supporting groups that are. A military of that sort is not a professional military. And it is certainly not a military that the U.S. would want to work in close contact with. I have talked with many in the U.S. Marines and learned that it is very common for them, particularly in Afghanistan, to have to guard a check point with a Afghan soldier who might be fifteen year-old. Many of our Marines have fifteen-year-old children at home.

VP: What do you think is the most immediate and practical implication of the legislation?

RS: Well, for U.S. taxpayers, this means that their money is not going anymore to governments that support the use of child soldiers. It is important because tax payers want to make sure that their money is used according to the values that we uphold in the U.S. I think this is a huge achievement for the legislation.

VP: Do you believe that the law has enough teeth to have an impact on the foreign governments and militaries as well?

RS: As in all legislations, in this one too there are several loopholes and there still exist many ways in which military assistance can be provided in spite of this law. In that sense, this is a very symbolic victory, rather than a final resolution of the problem. However, it is also another tool that the U.S. Government has when encouraging governments like Uganda or Afghanistan to conduct itself in accordance to U.

S. desires. It definitely isn’t the end of it all. One law by itself will not make these governments completely change behavior. But it gives the U.S. one more tool to encourage them to stop this practice.

VP: While conducting the research that supported legislators in their aim to write and pass the bill, did you work with people and organizations from the countries involved?

RS: It depended on the country. We have done significant amount of work with people in Uganda and many organizations I have worked with in the United States have programs there as well. We spoke to many child soldiers and to people that work to rehabilitate them. Afghanistan is a different story.

Some of these countries don’t have a civil society and as a result, they don’t have NGOs that operate on the ground, or in the case they do, they are not free to come to the U.S.

VP: As far as the hope of stopping the use of child soldiers all together, albeit maybe in a distant future, which countries do you consider as the toughest challenges and which ones seem more prone to implement the reforms needed?

RS: Burma has the most child soldiers than any country in the world. There are over 70,000 in the government army. That is an incredibly difficult challenge. Countries like Uganda where conflicts have been raging for over 20 years have developed a culture of this kind, whether it’s on the side of the Lord’s Resistance Army (LRA) or the local militias. Child soldiers have become part of the conflict now. So the challenge is not just stopping the use of child soldiers. It really becomes a matter of changing the context in which these children are living so that the use of child soldiers no longer is a viable option.

In the end, I believe it will vary on a country-by-country basis. In Colombia, for example, the government itself changed its national policies so as to stop using children under eighteen in its military. Yet at first it still supported the paramilitaries that were doing so. However, in the longer term the Colombian government also interrupted its support for these paramilitaries. This is a good example of how things evolve over a long time, that it is definitely not a short term process.

VP: You worked on providing research material for this legislation for ten years. Having followed it for this long, is there anything you wish for that is missing in the bill?

RS: Yes, definitely, there are many things! There is a national security waiver. And a five year waiver that applies to those countries that pledge to professionalize their militaries. The problem with this is, of course, that in the legislation there is no metric to determine whether this ongoing professionalization is actually taking place or if it is only an empty claim. With the latest additions to the bill, it appears now that the U.S. Secretary of State has the authority to determine which countries go on the list of those ineligible to receive military assistance. But we are still unsure about exactly how the process works. It would also be nice if the law applied to some more categories than just those five. Those are indeed the five biggest. But there is a trend now in U.S. military assistance not to provide assistance through those traditional accounts and instead to open new accounts that are not bound by those restrictions.

VP: Where do you go from here; are you going to keep working on this same project or do you consider it over with the passing of the legislation?

RS: No, the program is not over. There are a few things to be done in the near future. We have to decide what those metrics are. We have a meeting scheduled at the State Department for January to discuss precisely that. Then we need to figure out what process will be used to implement this bill. In the longer term, we are going to have to develop new legislations to close some of these loopholes that were snuck in at the last minute, particularly by the Republicans. Although this was a bipartisan bill, in the final moments when people were trying to compromise and get things done, there were changes made.

In short, I believe this is a huge victory. We are only the second country in the world (the only other one is Belgium) that has a legislation of this kind. But there are still many things to do to improve it.

VP: Personally, when and how did you start working on this issue and what have you learned from this 10-year-long process?

RS: I started working on child soldiers when I first came to CDI in 1998 because there had already been an established child soldiers program here. But I didn’t want to work on it from the perspective of children’s rights, because there are already many people that do this. It is a children rights issue, I don’t mean to suggest that it is not, but there are many organizations working on this side of it. So I simply asked myself; what personal contribution can I make to this field? What expertise can I bring to the table that can help improve the situation for the children? The answer was in the weapons connection. Child soldiers are not caused by small arms proliferation, but certainly arms proliferation contributes to the lethality of child soldiers, because it is very easy for them to become effective killing machines with a gun. This legislation was a long term goal that the campaign established back in 1998.

Originally reported and written for Washington Prism

Washington D.C. – From the poor in Haiti and Egypt to wealthier consumers in Europe and the United States, the world’s population has taken a hit this spring because of the rising prices of staple foods such as corn, wheat, rice and milk. A dangerous mix of indigenous troubles and mismanagement at the level of national governments, exposed by an unexpected slowdown in the global economy, are at the roots of a crisis that has spread quickly across the globe. USAID, the agency of the U.S. Government in charge of development, calculated that 37 countries worldwide have been experiencing a brutal combination of lack of food security, lack of access to food, and decreasing food supplies.

The food price index of the Food and Agriculture Organization of the United Nations (FAO) registered a spike of nearly 40% in 2007 and continued rising drastically during the first months of 2008. According to the International Food Policy Research Institute, a research center in Washington D.C., since 2000 the price of wheat has tripled, while those of corn and rice have almost doubled.

As a direct result, a growing number of people are becoming increasingly poor. Approximately 1 billion citizens worldwide earn less than $1 per day. 162 million among these subsist on less than $0.50 per day. “At the household level, increasing food prices have the greatest effect on poor and food-insecure populations, who spend 50 to 60 percent or more of their income on food,” says the USAID website. The World Bank recently published an estimate according to which the doubling of food prices during the past few years could potentially push 100 million people globally into extreme poverty.

The immediate consequence of this general impoverishment of the world’s population is instability. In April, riots spread across Haiti leaving at least six locals and one U.N. peacekeeper dead. In Africa, millions of Zimbabweans are currently threatened with starvation and the United Nations warns that up to 5 million people will need assistance in the coming months. Overall, the World Bank has identified 33 countries, many of which already politically unstable, that are particularly vulnerable to increased unrest as a longer-term ramification of this year’s food crisis. Egypt, where the emergency over the rising prices of wheat and bread turned particularly violent, is among them.

Don’t Make War, Make Bread

“It was a national crisis,” Khalil Al-Anani, a visiting scholar at the Brookings Institution in Washington DC, told Washington Prism in an interview. “Wheat in Egypt is a staple food, it’s a fundamental component of the daily nutrition of the Egyptian people,” Mr. Al-Anani, an expert on Political Islam from Egypt, continued. Egyptians even use the same word — aish — to refer to both bread and life.

While the prices of other commodities were rising this past spring, the already high demand for wheat in Egypt increased steeply, as people had to rely even more than normal on government-subsidized cheap bread. Between the lengthening lines outside of bakeries, the growing anxiety of those queued up for hours, and the protests against the government, 11 people have reportedly died since March in incidents related to the bread crisis. Egyptian President Mubarak even ordered the army and the interior ministry, in charge of the bakeries that make bread for the troops, to increase their production in order to “put an end to the bread crisis,” official newspaper Al-Ahram Daily reported.

“It basically turned into an issue of national security,” Mr. Al Anani told us. According to the Egyptian scholar, although the emergency only broke out this year, the economy of bread has been a problem in Egypt for the last three decades. The government has never been able to guarantee fair distribution of wheat and bread among the people and endemic corruption contributes to making bread an even scarcer good. “In Egypt, wheat is a government subsidized commodity,” Mr. Al Anani explained. Bakers are given wheat by the government at lower than what would be market prices and they are responsible for making bread and selling it to regular Egyptians. “However, because of the disparity between government subsidized prices and black market prices, and because of the lack of oversight on the activities of the bakers, these normally employ only a small portion of the wheat they receive from the government to make bread, while selling the bulk of it on the black market,” Mr. Al Anani told us.

Naturally, Mr. Al Anani pointed out, the global food crisis, a bad drought in Australia compounded by the increase of the price of wheat on the world markets, unleashed the state of emergency and exposed all the other systemic problems.

From Australia to Kansas City

The global upward trend in the price of wheat started in June 2006, when the Australian wheat crop was almost cut in half due to drought. “That was followed by a damaging late frost in the US and a second year of drought in Australia leaving wheat stocks at a 30-year low,” Mary Haffenberg explains. She is the Associate Director for Product Communication at the CME Group of the Chicago Board of Trade, “An even steeper spike took place at the beginning of 2008, when wheat hit $14 a bushel on the Kansas City Board of Trade (KCBOT),” Professor Kim Anderson, a crop marketing specialist at the University of Oklahoma, noted in his conversation with Prism. “It is a historically high price; the last spike of the same kind came in 1996, although at the time the price per bushel only reached about $7.50,” Professor Anderson pointed out.

“The hike in the price of hard, read winter wheat (the kind traded in Kansas City and used to make bread), was so significant that we had to change our daily price limit–the limit of upward and downward variations that we allow in one day,” Jeff Borchard, President and CEO of KCBOT, recalls in a phone interview. “It used to be 30 cents per bushel per day. But we were hitting our price limit so frequently that it was constraining trade and was preventing the exchange to serve its right-price finding role,” Mr. Borchard said. Now the limit has been raised to 60 cents per bushel per day.

The major cause of such increase in the price of wheat on American commodities exchanges was the failure of the harvest of 2007. In particular, Australia, one of the most important exporters of wheat in the world, has been plagued by a severe drought since 2006. An October 2007 media release by the Australian Bureau of Agricultural and Resource Economics (ABARE) warned: “The continued deterioration in seasonal conditions over the critical September–October period means that the 2007-08 national winter crop forecasts have had to be revised down.” ABARE, located in Canberra, is a government economic agency dedicated to independent research and analysis.

The Australian drought, alerting wheat-producing countries world-wide, triggered a series of cascade effects. “China, India, Russia and Argentina, among others, started implementing export bans, set quota limitations and increased tariffs to decrease their export to the advantage of domestic consumption,” Mr. Borchard explained. This, combined with the weaker dollar, left the United States as the only major exporter left, and traders flocked to the US exchanges in Chicago, Kansas City and Minneapolis.

In the meantime, studies on world grain usage forecasted increased demand globally. “A USDA projection from January 11th pointed to heavily growing demand and showed, at the beginning of this year, the lowest world grain stock-to-usage ratio since the 1960s, set at around 16%” Mr. Borchard noted. The stock to usage ratio indicates the amount of current demand that can be met by stock accumulated the previous year.

Additionally, there have been claims that a growing demand for corn as a feed-grain used to produce biofuels, triggered by the increased price of oil, impacted negatively the price of wheat. Farmers, encouraged by the higher returns from corn, reportedly switched some of their cropland from wheat to corn. Oklahoma State Professor Kim Anderson doesn’t fully agree with this view; “What has been reported by some news media on the relations between demand for corn and the price of wheat is inaccurate.” According to him, wheat and corn do not compete for the same cropland. “Wheat is considered a food-grain while corn is traded as a feed-grain,” Professor Anderson explained.

“The corn market has likely not affected the wheat market to any great degree,” Ms. Haffenberg from the CBOT echoes. “In the Midwest where most of the corn and soybeans are grown, wheat is simply part of the routine crop rotation.  In many locations in the South and southern Midwest, wheat can be double-cropped with soybeans and the wheat cycle is typically the winter, before soybeans.  Hardly any Midwestern farmers consider themselves wheat farmers.  In the Great Plains, where significant quantities of wheat are grown, wheat does not compete with corn or soybeans because these locations are too dry to support corn and soybeans.  These farmers will claim to be wheat farmers.”

KCBOT’s Jeff Borchard has a slightly different take; “There was some stress on wheat and a shift to corn of some acreage because of the increasing demand for corn,” he told us on the phone. “It was certainly not the biggest factor, maybe even one of the lesser factors, but it was nonetheless a factor as a few acreage of wheat were lost to corn.”

In any case, experts agree that the rising price of oil has had a major impact on the price of food in a different way. “The price of wheat itself makes up only about 10% of the price of bread once it is sold to costumers,” Professor Anderson noted in his interview with Prism. “For example, the high price of fuel–which increases the costs for transportation–has had a much bigger effect on the price of bread.”

Finally, investors have been accused to contribute to the spike in the price of wheat through speculation. CBOT Ms. Haffenberg doesn’t agree; “The Chicago Mercantile Exchange Group has not seen any evidence of speculation causing price increases; rather, the fundamentals of the markets are driving up prices.”

“Wheat is traded globally; it’s a so-called world market traded commodity,” Professor Kim Anderson explained to Washington Prism; “Everything that happens anywhere in the world, on both the supply and demands side, affects the price of wheat everywhere else.” As a result, Egypt, the world’s second-largest importer of wheat, was dramatically hit by all the events described. “In Egypt,” KCBOT’s Mr. Borchard told us, “the policy normally is that of buying the cheapest wheat available on the market. This year it became a policy of buying whatever wheat still available on the market and that was, mostly, US wheat – further increasing the price of this crop.”

Bread for Strawberries

This is not, necessarily, the only policy available to Cairo, at least according to Brookings scholar Khalil Al Anani. Egypt would have the capacity to grow more wheat domestically, decreasing the country’s reliance on foreign markets. However, “it has never developed the infrastructure to do so because of a traditional understanding that wheat takes more water than fruit to grow, and fruit can be sold abroad in exchange for foreign currencies, increasing Egypt’s foreign reserves,” Mr. Al Anani explained. “The fact that fruit takes much less water than wheat to grow is not a scientific fact. It’d be true for rice but not for wheat,” he continued.

This mistaken belief and outdated approach has resulted in an inefficient economic policy, which has laid the foundations for this year’s crisis. In short, “the crisis is a local issue, triggered by old thinking on the part of the elite combined with the globalization of commodities markets that encourages specialization,” Mr. Al Anani told us.

Thus far, the Egyptian government has adopted a few measures in response to the crisis, including a better monitoring of the system and an effort to separate the distribution of wheat to bakers from that of bread to consumers, in order to increase oversight and fight the widespread corruption. “These measures have only been effective in a few places,” Mr. Al Anani told us. There have also been discussions of launching a new strategy of investment in Sudan, which has large pieces of lands that could be turned into cropland. Egypt would send money and labor to Sudan while getting wheat in return. “I don’t think this strategy will work because of the many political differences between the two countries,” Mr. Al Anani explained to us. “Right now relations are on good terms but it’s hard to predict what will happen in the future.” Moreover, this approach seems to only transfer the problem from the US (Egypt’s most important source of wheat) to Sudan.

While officials keep saying that the crisis was a simple consequence of the global food unrest, Mr. Al Anani suggests a three-point plan for reform; “The government should increase the number of bakers.” At present, there are 23,664 bakeries in Egypt, for a population of 80 million people, or one bakery for every 3,380 citizens. “The government should also monitor the activities of bakers more seriously and it should pass a comprehensive legislation that addresses this as a national security issue, re-organizing the production and distribution of bread in a way that will constraint corruption.” According to the Egyptian scholar at Brookings, this, in the end, is a problem that stems from the general inefficiency of the Egyptian government in the delivery of services. “It won’t be solved until the other structural problems are solved,” Mr. Al Anani believes.

Political Solutions to Economic Downturns

The need for Egypt to re-think some of its policies is even more urgent if one considers the longer-term global outlook for agricultural production. For the moment, the near-term forecast for this year’s harvest is more encouraging, “Since March prices have fallen 40% ahead of the upcoming harvest, which is expected to be decent,” Chicago Board of Trade Mary Haffenberg told Washington Prism. Jeff Borchard of the Kansas City Board of Trade agreed: “The price of wheat has now being declining, especially because the expectations for this year’s harvest are that there’ll be a bigger quantity of wheat produced and even of better quality.” In fact, USDA reported that global wheat production is expected to reach record-levels, up 11% from last year.

ABARE’s Australian Crop Report provides data to back such positive assessment; “While conditions across the Australian grains belt have been variable, there is optimism regarding winter grains production in 2008-09…the area planted to wheat is forecast to rise by 13% to a record 14 million hectares. Total wheat production should grow to 23.7 million tons, well above the previous year’s harvest of around 13 million tons.

Nevertheless, studies predict that exceptional climatic events, such as Australia two-year drought, are likely to become increasingly frequent due to climate change and global warming. The Bureau of Meteorology of the Australian Government recently released the results of a survey on drought occurrences. The analysis shows that the extent and frequency of exceptionally hot years have been increasing rapidly over recent decades and that trend is expected to continue. The same appears to be true for exceptionally low rainfalls years. A correlated study conducted by ABARE indicates that future climate changes may affect global agricultural productivity. “For example,” the study says, “global wheat, beef, dairy and sugar production could decline by 2–6 per cent by 2030 and by 5–11 per cent by 2050, relative to what would otherwise have been the case.” Australian production of these commodities could decline even more dramatically, by an estimated 9–10 per cent by 2030 and 13–19 per cent by 2050. As a result, “Australian agricultural exports of key commodities are projected to decline by 11–63 per cent by 2030 and by 15–79 per cent by 2050,” ABARE predicts.

If this scenario is accurate, continued reliance on wheat grown abroad is a risky strategy to pursue for Egypt. “The scarcity of wheat in Egypt matters to the Egyptians more than it matters to anybody else,” Khalil Al Anani told Prism. “The solution should come from some Egyptian-led initiative.”

Originally reported and written for Washington Prism

In spite of the fact that water covers more than two-thirds of the Earth’s surface, 97.5% of it comprises of salt-water. For the most part, the fresh water supply is either stored as ice at the poles, in underground beds that are inaccessible to humans or retained as soil moisture. As a result, only a small fraction of the planet’s water resources, approximately 1% of the total, is available for human use. With the world population growing exponentially, issues of water scarcity are becoming increasingly pressing.

A UNDP report from 1999 predicted that access to water was likely to be the single biggest cause of conflict in Africa in the following 25 years. Almost a decade later, the global pressure on water supplies has increased due to population growth, continued deforestation and climate change, making water an increasingly scarce and precious commodity. According to the World Bank, 1.1 billion people today lack access to safe water, normally calculated as a minimum of 20 liters per day from an improved source within one kilometer of the home.

“Africa’s Lake Chad,” writes Lester R. Brown, founder and president of the Earth Policy Institute, “once a landmark for astronauts circling the earth, is now difficult for them to locate.” The lake, surrounded by fast-growing countries such as Cameroon, Chad, Niger and Nigeria, has shrunk 96% in 40 years. “The shrinkage of Lake Chad is not unique,” notes Dr. Brown, one of America’s leading environmentalists and author of Plan B 3.0: Mobilizing to Save Civilization. “The world is incurring a vast water deficit.” The flow of the Jordan River is also steadily diminishing – along with those of the Yellow River in China, the Mekong in Southeast Asia, the Amu Darya in Central Asia and the Colorado River in the United States. And, as the Jordan River decreases, the Dead Sea is also shrinking. Over the past 40 years, its water level has dropped by some 25 meters and it is estimated it could disappear entirely by the year 2050.

Moreover, with demand growing, several countries are exploiting their groundwater to the point of exhaustion and water tables in parts of China, India, West Asia, the former Soviet Union and the western United States are dropping. According to Dr. Brown, in the Indian state of Tamil Nadu, with a population of over 62 million, wells are going dry almost everywhere because of the depletion of underground water tables. Similarly, Iran is over pumping its aquifers by an average of five billion tons of water per year, causing “water refugees” to abandon their villages in the eastern part of the country as wells dry up.

Considering the extent of the problem, it shouldn’t be surprising that the 1999 UNDP study forecasts that should water wars occur, they would most likely break out in regions where rivers or lakes are shared by more than one country. Lester R. Brown agrees. “Nowhere is this potential conflict (over water) starker than among Egypt, Sudan, and Ethiopia in the Nile River valley.”

The Nile River Basin

The Nile River Basin is a reservoir of water covering 1.3 million square miles, a surface slightly larger than the territory of India. There are ten riparian countries to the Nile River, the longest running in the world: Egypt, Sudan, Ethiopia, Uganda, Tanzania, Kenya, Democratic Republic of Congo, Rwanda, Burundi, and Eritrea. However, three of them – Egypt, Sudan and Ethiopia – account for 85% of the territory that constitutes the hydrologic boundaries of the basin.

Whereas 95% of Egyptians rely exclusively on the Nile for their water supply and 77% of Sudan’s fresh water comes via the river, the Nile originates in Ethiopia and controls 85% of its headwaters. “Ethiopia is an interesting case,” says an economist with the Ministry of Water Resources in Addis Ababa who asked not to be identified by name, “since its economic fate is closely tied to unreliable rainfall and since 90% of its water resources are ‘trans-boundary,’ which means that rivers flow into other countries that inevitably oppose upstream development that might reduce their own resources.”

The already high demand for water in the region is projected to increase steadily through the next forty years. The population in Egypt, today at 75 million, should reach 121 million by 2050. Sudan is expected to have 73 million people by 2050, almost double today’s 39 million. And the number of Ethiopians is projected to grow from 83 million to 183 million.

Population growth is not the only factor of stress on the region’s water resources. David Shinn, former ambassador to Burkina Faso and Ethiopia and professor of International Affairs at George Washington University, told Washington Prism in an interview, “Irrigation projects are the greatest threat to the future of amicable Nile water usage.  Big irrigation projects simply use so much water that never returns to the river system.”

Deforestation and soil erosion also represent a threat. According to Mongabay, one of the most influential climate and environment websites, Ethiopia lost 14.0% of its forest cover between 1990 and 2005. Fewer trees could result from less rainfall. They could also cause worsening soil erosion, which in turn would increase sedimentation and reduce the lifespan of water storage infrastructure.

Competition vs. Cooperation

“Since there is already little water left in the Nile when it reaches the Mediterranean,” Lester Brown writes in Plan B 3.0 , “if either Sudan or Ethiopia takes more water, then Egypt will get less.” Moreover, international agreements grant Ethiopia only a minuscule share of water. “Given its aspirations for a better life, and with the headwaters of the Nile being one of its few natural resources, Ethiopia will undoubtedly want to take more,” Dr. Brown believes.

Possibly the biggest problem with the Nile River Basin is the lack of reasonable agreements among riparian countries on the equitable share of water rights. The most recent one was signed by Egypt and Sudan in 1959 and resulted in a virtual Egyptian monopoly over Nile water. Based on an annual flow at Aswan of 84 billion cubic meters, it allocated 55.5 billion cubic meters, or three-quarters, of the water to Egypt and 18.5 billion cubic meters, one-quarter, to Sudan. “The 1959 treaty remains in effect but is only accepted by Egypt and Sudan.  This is the big problem,” Ambassador Shinn told Washington Prism. The other eight riparian countries do not accept the agreement, but unfortunately there is no formal structure in place for handling such political contentions. “There are periodic bilateral and even regional discussions on water-related issues, but they have not yet achieved a breakthrough on redistribution of Nile water.  That is why this situation could, not will but could, result in conflict some day,” said Ambassador Shinn.

The one example of an attempt at cooperative development of the Nile is the 10 year-old Nile Basin Initiative (NBI). The World Bank-led NBI provides a framework through which its member states can cooperatively make use of the resources of the Nile Basin to fight poverty and promote socio-economic development in the region. Each member has agreed to share information with other riparian states on the projects it intends to launch and, if possible, to undertake joint studies to ensure the sustainability of such projects. The initiative has been regarded as generally successful and the parties to the NBI appear very committed to it. However, Ambassador Shinn believes that the “NBI is an organization that deals primarily with technical and practical issues and not controversial political ones.  It is easier to cooperate on technical matters than political ones.” What remains to be seen is whether the riparian states of the Nile River can find a way to approach the hard-button issues of water rights and water equitable shares.

Responses

The story of the Nile River Basin illustrates the challenges confronting people and policymakers around the world. Current trends in population growth, deforestation, agriculture and the general inefficiency in the way we use available water signal that conditions of water scarcity are only destined to worsen and suggest that conflicts over water resources are becoming increasingly likely.

According to figures from the U.S. Census Bureau, world population is projected to grow from six billion in 1999 to nine billion by 2042. In the meantime, while more than one-fifth of the world’s tropical forests have been cleared since 1960, tropical deforestation continues at rates averaging about 0.7% per year. As for agriculture, close to 70% of the Earth’s freshwater already go towards irrigation projects. The Food Policy Research Institute projects that irrigated cropland area for grains will grow 11% worldwide between 1995 and 2025. Finally, wasteful consumption of water, especially in developed countries, is also contributing to the gradual depletion of global supplies. For example, a report published by the European Union Commission in 2007 estimates that water usage in the EU alone could be reduced by about 40%. As a result, water becomes a more precious resource each day.

If financial markets are any indication of the value of a commodity, a new movement toward the trading of water reinforces the idea that this will be the next most sought after good. It was recently reported that a wave of water purification companies are going public in hopes of increasing their value. “Water companies have become prized acquisition targets as a result of growing concerns over shortages of clean water, the increased infrastructure needs of developing countries, more stringent regulations and an aging water distribution system in the United States,” wrote Euan Rocha for Reuters.

The British economist Roger Bate, currently a resident fellow at the American Enterprise Institute, a conservative think tank in Washington D.C., explained to Washington Prism: “Water is traded amongst farmers, municipalities and industries in many semiarid countries: Australia, Chile, United States, South Africa. It is either literally transferred or the rights to use the water are transferred, much like a contract for many commodities.” Dr. Bates, an expert on water policy, believes that water trading “improves efficiency by allocating water to the most efficient uses, and as such it is also better for the environment.” The premise is that there is enough water in the world for everyone, but it is being used wastefully almost everywhere. What is needed then is a system for allocating water shares more efficiently and an increasingly large number of experts believe that markets can provide such a system.

Trading in water shares is becoming popular even among small investors. Ronald Saville told Washington Prism in an interview, “Water is already a limited resource just when considering it for consumption. Add into the mix the fact that we are going to rely more on it for energy, and its importance for the future is readily apparent.” Saville is a young professional employed in the field of international education in Washington D.C. “I think water will become the next oil and these companies will stand to make huge profits on it, similarly to the way oil companies are making them now,” said Mr. Saville, who has decided to buy shares of a “water mutual fund” known as Powershares Global Water.

Although markets can help allocate a commodity more efficiently by determining the price at which offer meets demand, questions arise as to how they can help distribute equitably a resource such as water, which is equally indispensable to all human beings independent of income, and as to whether or not finance can help preserve it for the future. Oil will be traded at higher and higher prices until it runs out. Unfortunately, while mankind can survive without oil, the same cannot be said for water.

According to Roger Bate, while oil is only slowly replenished, water is a renewable resource. “Water can be commoditized successfully without it ever having to run out,” Dr. Bate says.. “Water markets are based on tradable quotas calculated on supplies. If you set the quotas at below the total amount you will not run out.”  According to Bate, it is crucial then to set the right quotas. “It often happens that a government sets more quotas then there is water to fulfill,” he concedes. However, he believes that “this is not the fault of the market; it is the fault of the quota allocation, in this case the government”.

Even those like Bate who strongly believe in the efficiency of the market as a system of resource allocation see a role for governments and politics in the process. “Making sure people have the funds to be able to afford water is the job of a government, creating a safety net. It is much better that the poor pay for water and get used to paying for it so its not wasted, but that simultaneously they are subsidized to do so. For too long too many users, and notably farmers, have not paid enough for water and wasted it,” explained Bate.

Ethiopia is a very good example of the need for both investments and a political response. Since at an aggregate level Ethiopia still has an abundance of water, the biggest question for Addis Ababa is how to store it, manage it and, if necessary, transfer it.  The economist with the government’s Water Ministry told us: “This is the major concern, since it requires massive finance which of course is not readily available.  In the medium to long term, if investment keeps coming the improved ability to manage water resources will likely more than offset the reduced total quantity of water due to climate and localized factors.  But that may be a big if.”

Since water is a public good and one of the fundamental sources of life, and since it inherently raises trans-national issues, a concerted global political effort at managing and preserving it may be the best strategy for confronting water scarcity and the conflicts that could potentially arise. “I think that there is not much that can be done at a national level, other than more of the same,” the economist with the Ethiopian government told us. “The major solutions will need to be international.”

Originally reported and written for Washington Prism

Washington D.C. – New trade deals worth $2 billion were signed at a recent meeting of 48 African heads of state gathered in Beijing for the China-Africa summit, organized by the People’s Republic of China (PRC). China’s goal was to assess the status of its flourishing relations with the African continent.

Indicators of trade flows, arm sales, diplomatic ties and cultural exchanges are on the rise. Since 1995, trade between China and Africa has doubled each year. The overall volume rocketed to $39.7 billion in 2005.

Participants to the forum also passed an action plan, laying out cooperative programs from 2007 to 2009 under the framework of the Forum on China-Africa Cooperation (FOCAC). China has already canceled 10. 5 billion RMB Yuan (Chinese currency, about $1.3 billion) in debt to 31 least developed countries in Africa, and has accorded zero-tariff treatment to 190 categories of import commodities from 29 countries. At the forum, China promised to stay the course and pledged to double its current aid by 2009.

The booming relation with Africa is among the brightest examples of the direction of Chinese foreign policy and of Beijing’s rising influence as a global power. China’s overall role on the international scene is marked by significant improvements in many of its bilateral dealings; like with its South and Southeast Asian neighbors, South Korea, and the European Union.

This can in part be attributed to President Hu Jintao’s focus on military and foreign policy issues according to Jamestown foundation fellow Willy Wo-Lap Lam. “Hu wants to be remembered as a foreign policy president, because he knows that domestic problems cannot be as easily solved,” said Willy Lam at a recent conference at the Heritage Foundation, a conservative research center in Washington.

Hu has a good record thus far. “He has exploited successfully the vacuum created by US President George Bush’ single-mind obsession with fighting the War on Terror,” Willy Lam continued.

Contrary to its interactions in other regions, Bejing is one of the first players on the scene in Africa to be pushing for a stronger engagement. “They want to be the first movers, they want to get on the deal,” said international business consultant Walter Kansteiner, former Undersecretary of State for Africa.

The basis of the China-Africa relationship is economic. Beijing looks at Africa as a way to feed its industrial base at home, which needs raw materials, especially timber and iron ore. China is trading in oil, copper, platinum, gold and nickel with Zambia and the Democratic Republic of Congo, in timber with Cameroon, in iron ore with South Africa and Mozambique. Beijing is also assisting in building infrastructures, as like the railroad construction in Angola that is estimated to be employing between 10,000 and 40,000 Chinese workers.

The United States is striving to get a better grasp of the scope and depth of such trends in China’s international economics policy as a way to make better-informed decisions for its dealings with Beijing. Such effort encounters a number of obstacles according to Paul Hare of the US-Angola Chamber of Commerce. “We do not know how much money is really on the table, we do not know how many Chinese are in Angola, we do not know how contracts are awarded, we do not know how many Angolans work for Chinese companies,” said Hare at a Conference in Washington D.C.

In October 2000, Congress established the US-China Economic and Security Review Commission (USCC) under the Floyd D. Spence National Defense Authorization Act. The USCC is intended as a means of monitoring, investigating, and submitting to Congress an annual report on the national security implications of the bilateral trade and economic relationship between the United States and the China.

The commission is also responsible for providing recommendations to Congress for legislative and administrative action. The work of the USCC is centered on eight areas: proliferation practices, economic transfers, energy, U.S. capital markets, regional economic and security impacts, U.S.-China bilateral programs, WTO compliance, and the implications of restrictions on speech and access to information in China.

On Nov. 16, at a press conference for the release of the USCC annual report to Congress the commission’s Chairman Larry Wortzel expressed concern about China’s current stance. “The Commission believes that while China is a global actor, its sense of responsibility has not kept up with its expanding power,” Wortzel said.

The report offers recommendations to the US Congress on six different areas, from US-China bilateral trade relations, to China’s global and regional activities, to domestic issues such as media and its control over flow of information.

The USCC gives a harsh assessment of most of China’s policies. “The Commission hopes that China will use its position on the United Nations Security Council and its growing political influence in Asia, Africa, and elsewhere to address many serious problems. But this has not yet happened,” Wortzel said.

The USCC urges the Bush administration to take action against currency manipulation on the part of the Chinese government, which does not let the RMB Yuan value float openly on international markets. It also calls for the US trade representative to press ahead on property rights issues because of China’s “manifest failures to enforce them.”

The commission further advises the administration to raise the issue of media and Internet freedom and to “remind its counterpart that jailing journalists for publishing information it finds distasteful only draws negative attention from the international community.”

The report also encourages China’s assistance in a resolution of conflict in the Darfur region of Sudan. The Commission further writes that the US needs to secure “a resolution to the conflict that will halt the genocide occurring there and provide security and basic human rights for the affected population.”

Sudan remains the most striking example of concern that China’s approach to Africa creates among US official. At a recent conference in Washington DC, Carolyn Bartholomew, vice-Chairman of the USCC Commission and former Chief of Staff for the incoming Speaker of the House, Rep. Nancy Pelosi (D-CA), said; “China appears willing to deal with rogue states for oil or in order to counterbalance the United States.” She then added that “there is no more destructive bilateral relationship in Africa than that between China and Sudan, as far as US interests and the interests of the people of Sudan are concerned.”

In Washington, many worry about the ease with which China provides Africa with aid that is entirely unattached to any moral quandary. Beijing refuses to link its economic relations with the continent to human rights or democracy as the US and other Western countries want. “Chinese assistance to Africa is sincere, unselfish and has no strings attached,” said China’s Premier Wen Jiabao at the China-Africa Forum.
As China’s growing diplomatic influence approaches the scale of its booming economic importance, the USCC writes that the US should be skeptical of “Beijing commitment to accept its geopolitical responsibilities.” With its increasing power being felt across many regions, the report argues that “China’s posture as a potential counterweight to the United States, and its disposition to support volatile and repressive regimes as its client states is of particular concern.”

Washington D.C. – Last month, the International Monetary Fund (IMF) and the World Bank (WB) held their annual meeting in Singapore, a gathering that witnessed a first step towards the reform of the governance structure of the IMF.

The 184 participating members approved a proposal to increase the quota shares of the four most under-represented countries on the organization’s Board of Directors: China, South Korea, Mexico and Turkey. Quota shares, in IMF jargon, translates into increased voting power, as well as wider opportunities to borrow money from the Fund.

The week prior to the summit, IMF’s Managing Director Rodrigo de Rato, speaking at the Brookings Institution, a research center in Washington DC, said that the proposed reforms will “rectify the most extreme distortions in the representation”.

The plan for change was strongly backed by President George Bush. The reforms, however, have met with the suspicion of two sets of members.
European countries are concerned that the rebalancing of quota shares within the Board of Directors will benefit the four under-represented countries at their expenses. Germany and the Netherlands put forward an alternative formula for reform that would distribute voting rights based more on the openness of the states’ economy rather than on mere economic power.

German finance minister Peer Steinbruck said in an interview to Bloomberg news service, “The one-sided position of the US that a country’s Gross Domestic Product (GDP) should play the predominant role is not in line with our views”.

At the same time a host of developing nations also voiced doubts, although in the end chose to endorse the vote. The group of 24 countries – including Argentina, Brazil, Colombia, Egypt, Iran, Pakistan, Peru, India, Venezuela, South Africa and Nigeria – issued a communiqué in Singapore saying that they welcomed the increases of quota shares for the four countries but that the package did not address “the fundamental issue of the under-representation of developing and low-income countries as groups.”

Such concerns are expected to be tackled in a second round of broader reforms of the IMF structure in a way that would recognize the growing weight of emerging nations. The G24 worries that this second phase is by no means guaranteed, as Brazil, India, Argentina and Egypt pointed out in a joint statement issued during the summit.
India, for its part, seems committed to try to take the two year reform plan on a more equitable path. Prior to the September 18th vote, New Delhi mobilized political dissent to try to stop the implementation of the reform as it was.

Now, after the vote has passed, it still intends to pursue a different strategy for further reform. India’s Finance Minister P. Chidambaram told in an interview to The Hindu that he was now “looking forward to all countries, including the G-7, agreeing to construct a formula based on relevant criteria and reflecting the economic strength of countries in the 21st Century.”
Johannes F. Linn, Director of the Wolfensohn Center at the Brookings Institution, and Colin I. Bradford, a Fellow at the think tank’s Global Economy and Development Program, recently co-authored an analysis of the reform plan in the Washington Post.
In their opinion, although the vote can be deemed as a first step towards making the IMF a more representative and legitimate body, “to truly repair what has become an ailing global financial institution, the members of the IMF should move forward quickly with the managing director’s longer term agenda and even go beyond it”.

The two analysts suggest an action program that would comprise of five steps. First the IMF should increase the “basic” quota allocations for all countries – independent of economic weight – in order to give the smallest and poorest members a greater share in voting and better access to finance. Second, criteria for the allocation of “shares” should truly consider the reality of changing economic and financial weights of countries.
A third important step would be to reduce the total number of IMF Board “chairs” from the current 24 to 20. This could be done by consolidating the European seats on the Board into one representing the European Union as a whole.

The idea is already under consideration in Europe and it has the backing of the president of the European Central Bank, Jean-Claude Trichet as well as the chairman of Euro-zone finance ministers, Luxemburg leader Jean-Claude Juncker. However Germany, the largest European member to the IMF, remains opposed to the plan.

Fourth, the Brookings scholars believe that the selection of the IMF’s Managing Director should become independent of nationality, merit-based and more transparent. In practical terms, this would basically require that the Europeans give up their traditional claim to electing the Managing Director.

Finally, the United States needs to step in, and lead the European Union – the most affected by all of these changes – into accepting the reform of the IMF structure.
This could be done by not claiming, for example, the American increase in shares that would likely follow most revised quota allocation formulas. It could also translate in the US renouncing its claim to select the World Bank’s President. And Washington could also give up the veto power that it exclusively enjoys at the IMF and WB boards.

“The US”, Linn and Bradford write, “has broadly supported the steps suggested above, but it has failed so far to offer up any serious contribution of its own. It is time for the US to show its readiness to take an effective lead in global governance reform and allow the IMF, to more accurately reflect today’s global economy”.

“Unfortunately,” Johannes Linn told Washington Prism in a phone interview, “the current US administration is showing little interest in taking any serious action that would shake the political balance within the IMF Board of Directors.”

Mr. Linn continued, “Certainly Washington is very busy dealing with other issues. At the same time the Bush administration does not appear too interested in strengthening the role of International Institutions.”
Although this might not be the moment for a real opening, “there could be a new momentum in a couple of years, with a new administration that would not necessarily have to be Democrat, but just simply more multilateral in its approach”, Linn said.

In an interview with Fareed Zakaria on the PBS show Foreign Exchange, Zanny Minton-Beddoes, Washington bureau editor for the Economist Magazine also expressed reservations on the willingness of the US to waive some of its influence; “the US is basically prepared to give up something but it’s not prepared to lose its veto power.”
Because of how the planned reform will negatively impact the Europeans and because the US administration seems unwilling to take those steps that could convince the EU to go along, the preoccupation of the G-24 that the second round of reform will not go through seems to be justified. “If pushed too hard,” Johannes Linn told Washington Prism, “the Europeans might walk away.”

The consequences of an eventual EU retreat from the Fund could be felt not only within the IMF itself but could also impact the World Bank; for example if the Europeans decided to retaliate, they could do so by lowering their contributions to the Bank’s programs, Linn pointed out in our interview.

A return to a less multilateral approach towards more significant regionalism is not necessarily a problem, depending on where one stands on the issue. “To me personally,” Linn said, “it would be very unfortunate though”.