[Senate Hearing 115-753]
[From the U.S. Government Publishing Office]


                                                       S. Hrg. 115-753

                 STATE FRAGILITY, GROWTH, AND DEVELOPMENT: 
                 DESIGNING POLICY APPROACHES THAT WORK

=======================================================================

                                HEARING

                               BEFORE THE

                     COMMITTEE ON FOREIGN RELATIONS
                          UNITED STATES SENATE

                     ONE HUNDRED FIFTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 13, 2018

                               __________


       Printed for the use of the Committee on Foreign Relations

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


                   Available via the World Wide Web:
                         http://www.govinfo.gov

                              __________
                               

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
39-808 PDF                  WASHINGTON : 2020                     
          
--------------------------------------------------------------------------------------


                 COMMITTEE ON FOREIGN RELATIONS        

                BOB CORKER, Tennessee, Chairman        
JAMES E. RISCH, Idaho                ROBERT MENENDEZ, New Jersey
MARCO RUBIO, Florida                 BENJAMIN L. CARDIN, Maryland
RON JOHNSON, Wisconsin               JEANNE SHAHEEN, New Hampshire
JEFF FLAKE, Arizona                  CHRISTOPHER A. COONS, Delaware
CORY GARDNER, Colorado               TOM UDALL, New Mexico
TODD YOUNG, Indiana                  CHRISTOPHER MURPHY, Connecticut
JOHN BARRASSO, Wyoming               TIM KAINE, Virginia
JOHNNY ISAKSON, Georgia              EDWARD J. MARKEY, Massachusetts
ROB PORTMAN, Ohio                    JEFF MERKLEY, Oregon
RAND PAUL, Kentucky                  CORY A. BOOKER, New Jersey


                  Todd Womack, Staff Director        
            Jessica Lewis, Democratic Staff Director        
                    John Dutton, Chief Clerk        



                              (ii)        

  
                            C O N T E N T S

                              ----------                              
                                                                   Page

Corker, Hon. Bob, U.S. Senator From Tennessee....................     1
Menendez, Hon. Robert, U.S. Senator From New Jersey..............     2
    Prepared statement...........................................     3
Cameron, Rt. Hon. David, Chairman, Commission on State Fragility, 
  Growth and Development.........................................     4
    Prepared statement...........................................     8


                             (iii)        

 
 STATE FRAGILITY, GROWTH, AND DEVELOPMENT: DESIGNING POLICY APPROACHES 
                               THAT WORK

                              ----------                              


                        TUESDAY, MARCH 13, 2018

                                       U.S. Senate,
                            Committee on Foreign Relations,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 2:40 p.m. in room 
SD-419, Dirksen Senate Office Building, Hon. Bob Corker, 
chairman of the committee, presiding.
    Present: Senators Corker [presiding], Risch, Young, 
Barrasso, Isakson, Menendez, Cardin, Shaheen, Coons, Murphy, 
Kaine, and Booker.

             OPENING STATEMENT OF HON. BOB CORKER, 
                  U.S. SENATOR FROM TENNESSEE

    The Chairman. The Foreign Relations Committee will come to 
order.
    We thank our distinguished witness for being here today. We 
will introduce you more formally in just a moment, but we thank 
you and appreciate the conversation we had in the back about 
the potential Russian involvement in your own country recently 
and the comments made by your Prime Minister.
    We are delighted to have with us today David Cameron, who 
served as Prime Minister of the United Kingdom from 2010 to 
2016 and leader of the Conservative Party from 2005 to 2016. 
Mr. Cameron has devoted himself in the past year to chairing 
the Commission on State Fragility, Growth and Development.
    Successful states depend upon social contracts between 
citizens and their government. When the fundamental legitimacy 
is lacking, traditional approaches to foreign assistance and 
capacity building are not adequate. Each fragile state is 
vulnerable in its own way. They cannot be understood, let alone 
strengthened, if viewed from only a development or political or 
security perspective. Billions of dollars, pounds, and euros 
have been spent over the years in many countries, only to see 
them revert to conflict, instability, and repression.
    One of the core questions I hope to explore with this 
hearing is one that taxpayers here and in the UK are justified 
in asking. Why should we continue to concern ourselves with 
fragile states, and what challenges do they pose to our 
national interests?
    Few conflicts stay within national borders these days. The 
number of refugees displaced and displaced persons around the 
world have never been greater. International criminal 
organizations, human traffickers, drug lords, terrorists, and 
arms dealers thrive on the safe havens afforded by corrupt and 
chaotic regimes. These destabilizing forces reverberate both 
regionally and globally with real consequences for the U.S. 
economy and national security. Our institutions must work 
smarter and they must work together with the right selection of 
tools at our disposal.
    In my experience, efforts like Mr. Cameron's are the most 
effective when they can assemble the best minds and the best 
research to examine problems with fresh thinking and challenge 
conventional solutions.
    With that in mind, I look forward to hearing what our 
distinguished witness has learned and how we can best 
collaborate with our friends in the UK and elsewhere to defend 
our common interest to prevent fragile states from becoming 
failed states.
    With that, I would like to ask our distinguished ranking 
member, Bob Menendez, for any opening comments he may have.

              STATEMENT OF HON. ROBERT MENENDEZ, 
                  U.S. SENATOR FROM NEW JERSEY

    Senator Menendez. Thank you, Mr. Chairman.
    And I also want to welcome the Prime Minister for having 
the opportunity of his insights and his work since he left as 
the Prime Minister and doing very important work on fragile 
states.
    But before we get to that, I would be remiss not to 
acknowledge the President's unceremonious dismissal of his top 
diplomat this morning via Twitter.
    This hearing focuses on fragile states and the importance 
of strong governing institutions that respect the rule of law, 
and maybe we need to take a look inwards. The foreign policy of 
the current administration has been marked by chaos, by 
undermining the very idea of diplomacy, by turning away from 
those values that have made the United States a vibrant, 
prosperous democracy driven by the rule of law. We need stable, 
skilled, seasoned leadership to address the enormous challenges 
fragile states pose.
    Regrettably, that is not the kind of leadership I have 
seen. In fact, we have the opposite, which is placing a severe 
strain on the international order and accelerates the 
destabilization of fragile states and regions. While I 
certainly had my differences with Secretary Tillerson, I cannot 
see the hollowing out of our State Department and remain 
silent.
    I look forward to an opportunity to have a full vetting 
before the committee, Mr. Chairman, of the designee of the 
President to be the new Secretary of State because there is a 
vast difference between being the CIA Director and being the 
Secretary of State. And I look forward to that opportunity.
    Briefly, Mr. Prime Minister, it is an honor to have you 
before the committee on your perspectives on fragile states and 
how we develop strategic policies to address fragile states and 
the failure of states to govern effectively. Broadly speaking, 
we define states as fragile when their governing institutions 
are weak, they do not effectively or equally represent, 
protect, or advocate for all their people, and experience high 
poverty and income inequality. They are less capable of 
responding effectively to conflict and shocks or natural 
disaster, and their citizens are often more susceptible to 
radicalization. Examining instability around the world 
indicates fragile states are increasingly responsible for the 
conflict and misery we see in many parts of the globe.
    So it seems to me that the United States has a vested 
interest in its own national interest and security and making 
investments in how we help build those states from fragile 
states to strong states with democratic institutions and well-
defined governance and rule of law.
    I will just simply say that when Americans wonder whether 
or not it is in our national interest to be engaged in fragile 
states across the globe, I am reminded of the consequences of 
the interconnectedness that we have in the world and that what 
happens someplace else in the world can very often affect us 
here at home and our interests abroad.
    And with that, Mr. Chairman, I ask that the full statement 
I have be included in the record.
    The Chairman. Without objection. Thank you.
    [The prepared statement of Senator Menendez follows:]

             Prepared Statement of Senator Robert Menendez

    Thank you, Prime Minister Cameron, it's an honor to have you before 
the Committee today to share your perspective on fragile states and 
discuss how we can develop strategic policies to address fragile states 
and the failure of states to govern effectively.
    Broadly speaking, we define states as fragile when their governing 
institutions are weak; do not effectively or equally represent, 
protect, or advocate for all their people and experience high poverty 
and income inequality. They are less capable of responding effectively 
to conflict and shocks from natural disaster, and their citizens are 
often more susceptible to radicalization. Examining instability around 
the world indicates fragile states are increasingly responsible for the 
conflict and misery we see across the globe.
    If the United States does not advance smart policies and invest 
wisely in good governance, meaningful development, humanitarian, and 
appropriate security assistance, we will feel the impact here at home. 
Fragility breeds instability which often spills over artificially 
constructed borders. Terrorism, infectious disease, mass migration and 
climate change--these do not respect national borders . . . even walls 
cannot keep them out.
    Fundamentally, the United States must use all of its tools--
diplomacy, development and defense--in a selective, strategic and 
sustained effort to address those fragile states.
    This administration's incoherent approach to foreign policy 
threatens to make these problems even worse.
    Instead of mobilizing resources to address fragile states and other 
challenges, President Trump is gutting America's diplomatic and 
development institutions, as well as critical personnel.
    This administration has proposed a cut of over thirty percent to 
the State Department and USAID budgets, failed to appoint critical 
personnel, and imposed illogical hiring and promotion freezes; 
devastating critical U.S. national security tools.
    We cannot effectively confront these challenges and promote our 
interests without the right tools. This administration's proposed 
budget would decimate our investments into programs and institutions 
that directly support efforts to support fragile states, and result in 
severe damage to any U.S. effort to address fragile states.
    Today, an estimated 1.2 billion people live in countries plagued by 
conflict, poverty and increasingly violent extremism. More than 70 
million people have been driven from their homes by violence, living as 
refugees or internally displaced.
    Many Americans justifiably ask why they should care about war or 
famine in far-flung, hard to pronounce places when we have very real 
concerns here at home. But economic development into fragile states, 
support for refugees, contributions to peacekeeping missions . . . 
these are not charity operations . . .
    We live in an interconnected world where instability and conflict 
anywhere directly affects the safety, security, and prosperity of the 
United States and the American people.
    The United States, working with the international community, can 
and must do better to take seriously the profound challenges fragile 
states pose. We must address the deeper drivers of fragility and 
instability . . . including a lack of credible, transparent, and 
accountable government institutions, failing economies, and weak 
educational systems which leave people susceptible to violent 
ideologies.
    Focusing on preventing conflict and building resiliency ultimately 
reduces the risk of instability creeping further, destabilizing more 
broadly, and the need for more costly--both in financial and most 
importantly human--responses.
    To do that successfully, we must have programs and policies that 
facilitate more capacity for governments to enable their people to 
speak their mind and have a say in how they are governed . . . 
governments that create confidence in the rule of law and equal 
administration of justice. . . . governments that are transparent and 
don't steal from their people. . . . and governments that respect 
universally accepted human rights.
    We cannot do this alone. Bilateral support from the United States 
is critical, but we must also work alongside partner countries, the 
United Nations, and multilateral institutions like the World Bank if we 
are to have a sustainable impact.
    We need experienced, skilled, humane leadership to address the 
enormous challenges fragile states pose. Regrettably, this is not the 
kind of leadership we have from the White House nor the values 
reflected in its budget.
    It is in our strategic interest--to say nothing of a moral 
imperative--to wisely support those people all over the world yearning 
for stable, prosperous lives for themselves, their children and their 
communities . . . and to work with countries to build resilient, 
responsive governing capacities.
    Thank you, Prime Minster Cameron, for your continued focus on these 
critical issues and for being here today. I look forward to hearing 
your views.

    The Chairman. David Cameron served as Prime Minister of the 
United Kingdom from 2010 to 2016. During this time, Mr. Cameron 
addressed significant foreign policy challenges such as the 
Arab uprisings, an increasingly aggressive Russia, and the 
global flight against ISIS. He increased UK aid spending and 
allocated 50 percent of it to fragile states in regions. He 
also co-chaired the U.N. high-level panel that launched the 
sustainable development goals.
    We want to thank you so much for being here. It is 
certainly a treat for us to have you here, and we look forward 
to your report and the questions that come after.
    With that, please begin, and again, thank you. Any written 
materials you have that you would like to have entered into the 
record, we will do so.

 STATEMENT OF THE RT. HON. DAVID CAMERON, CHAIRMAN, COMMISSION 
           ON STATE FRAGILITY, GROWTH AND DEVELOPMENT

    Mr. Cameron. Thank you very much, Mr. Chairman. Thank you 
for the welcome and thank you for this opportunity to talk 
about what I think is an incredibly important issue.
    Thank you, Mr. Menendez, for what you said.
    I suspect today is going to be one day where I will not be 
asked so much about Brexit. Perhaps instead Brexit will be the 
topic that people might want challenge me on.
    But it is very good to be with you.
    As you say, I have been chairing a commission on fragile 
states for over the last year. I have been co-chairing it with 
Donald Kaberuka, the former finance minister of Rwanda. We have 
had a very big academic input from Oxford University, London 
School of Economics, Princeton, Stanford, and some other 
leading U.S. universities. And also we have had input from 
practitioners, policymakers, civil servants from countries as 
diverse as Yemen and Pakistan.
    You asked me to address briefly three things: the nature of 
the problem, the current solutions and whether they are working 
or not, and any other points I want to make. Let me just try 
and do those three things.
    The problem, Mr. Chairman, you put very succinctly. There 
is a set of countries that have weak governments, appalling 
levels of corruption, high levels of conflict, very severe 
poverty that in many ways are either failed or failing states. 
There are a number in Africa, but the problems are not 
restricted to Africa. We can see countries as far afield as 
Haiti or Venezuela that are affected by severe fragility.
    I think one of the reasons for having this commission is 
that the problem is getting worse. The number of fragile states 
is actually increasing. One or two are exiting what you would 
call fragility, but on the whole, the problem is getting worse. 
And I think there are two very big issues there which go 
directly to your introductory remarks.
    One is in these countries, we are very unlikely to meet any 
of the sustainable development goals. Some of them are poorer 
than they were 40 years ago. And so in terms of the things we 
want to see in terms of reducing poverty and better access to 
everything from medicine to clean water, in some cases going 
backwards.
    But secondly--and this goes I think directly to your point, 
Mr. Chairman--these fragile states also affect us in the 
developed world. If we let countries fail, we see whether it is 
health pandemics, mass movement of people, failed states and 
fragile states could often be places where terrorism and terror 
training camps can take hold. And so this is something that 
affects us directly back at home.
    So I think the nature of the problem is quite well 
understood. Our commission is trying to really understand all 
of the elements of being a fragile state.
    In terms of the current approaches, there is a lot of good 
work being done, and I am a supporter of overseas aid. Under my 
prime ministership, we achieved something that no other G7 
country has achieved so far which is getting to the 0.7 percent 
of our gross national income spent on aid. That was a promise 
we all made effectively at Gleneagles. We have met it, and I 
think a lot of good work is done in terms of vaccinations and 
supporting education programs and lifting people out of 
poverty.
    But I think we have to be frank. When it comes to these 
fragile states, the aid may have helped in particular areas, 
but these countries in many ways have not got better. And I 
would say there are three things wrong really with the current 
approaches.
    One is they are unrealistic. We tend to give these 
countries endless lists of priorities about things they should 
achieve and that sets them up for failure. In some ways, we 
have an unrealistic starting point. We almost ask the question 
internationally, what is the opposite of a fragile state? Well, 
it is country that meets all the norms of an OECD country, let 
us say, Denmark. Well, let us try and make everyone like 
Denmark. This is hopelessly unrealistic, and so we set 
ourselves up for failure.
    I think the second issue we have been looking at is a poor 
focus as well. I think in many of these countries, there just 
simply is not the basic governmental capacity. There are not 
basic levels of security. And there has been an insufficient 
focus on the things that matter most to people, which is being 
safe in your bed and being able to put food on the table. So 
security and jobs. And I think that has been lacking.
    But I think the third thing we have been looking at very 
carefully--and a lot of evidence has come through, and this is 
perhaps the most depressing thing--is quite a lot of what the 
international community has been doing has been 
counterproductive and in this way. There are huge, good 
intentions of working with fragile states and working on all 
the things they need to get right. But in many ways, we often 
go around the governments of these countries and try to help 
them without actually assisting the authorities of that 
country. And why that is counterproductive is in the end of the 
day, these countries will only succeed if their governments 
become more legitimate and accepted, if their governments 
become more capable. And in many cases, I think we have 
actually undermined that capability and that legitimacy. So I 
think that is where the current approaches are failing.
    I think the changes, the sorts of things we are looking 
at--but we are still drafting our report and we are very 
interested in the input of other countries perhaps particularly 
the United States with a huge influence in budget that you 
have. The sort of things we are looking at is trying to work 
more on the national priorities that fragile states have, 
backing their program rather than trying to impose our own, I 
think a more hard-headed approach about the importance of 
security, I think this issue of conditionality we are looking 
at. Of course, our taxpayers, our publics, do not want to see 
money endlessly spent that is wasted. And that has led in many 
ways to conditionality where we say we will only support your 
program if you agree to do this, this, this, and this. We do 
policy conditionality. And there is an argument that says 
actually it would be better to say to a fragile state, you have 
your national plan. We will back that national plan, but we 
want governance conditionality instead of policy 
conditionality. If the money is wasted, if aid money is stolen, 
if there is corruption, we will withdraw that support. So we 
will back your plan rather than imposing our plan, but the 
conditionality will be on the governance. That is one of the 
ideas that we have been looking at.
    Another issue is just the focus given to fragile states 
where in the UK we now spend 50 percent of our aid budget on 
fragile states. And I think there is a very strong case for 
others taking a similar route.
    Let me just end with a couple of other points that we have 
been looking at.
    One, peacekeeping. Our peacekeepers do an incredible job in 
some very difficult circumstances. But there is a question mark 
about how long they can really be effective for. Are we doing 
enough to back the basic security of these countries and their 
security organizations rather than just holding it all together 
with peacekeepers?
    Second point and a difficult one, elections. I am a small 
``D'' democrat. I believe in elections. I believe in democracy. 
But there is an argument about whether with some of these 
fragile states, particularly conflict-affected ones, do we rush 
to elections? Do we try and put a sort of Western template of a 
multi-party election in too quickly? Can this lead in some 
cases to the parties to a conflict perhaps having an election, 
the winner of that election then using the political outcome to 
carry on the conflict that they were running in any event? 
I.E., are we going for one person, one vote once in too many 
circumstances? And I think we have to think carefully about 
that.
    I think we have to think about the role of international 
financial institutions. Do they have too much of a one-size-
fits-all approach to different countries? Are they giving 
enough priority to the most fragile states? Are they treating 
them in a realistic way?
    I have read about your own plans here in Congress actually 
to look at the possibility of a new investing institution, U.S. 
institution. I think these are brilliant ideas because from 
what we have seen, there is insufficient support of the private 
sector. There is insufficient equity finance rather than just 
loan finance. And there is insufficient focus on fragile 
states. And all of those things can be helped by well-designed 
institutions.
    Another point we are looking at is resilience. Many of 
these countries--they make some limited economic progress, but 
that can be knocked back very quickly or they tend to suffer 
from climactic or other events. Could we do more to prevent 
rather than respond? Can we do more to help with insurance and 
other mechanisms to help these countries be more resilient?
    The final point I would make is all of this only makes 
sense if it is an agenda of things we want to do together 
rather than just do to fragile states, as I have said. And I 
think there is a strong case for saying that in many cases, 
fragile states, particularly mineral-rich ones, have their 
money stolen by corrupt politicians and often hidden in Western 
countries, including my own. And I think the agenda that I did 
a lot to progress as Prime Minister about making sure we have 
greater transparency, making sure we have registers of 
beneficial ownership so we can see who owns what, making sure 
that tax authorities share tax information so we can stop tax 
avoidance--aggressive tax avoidance and tax evasion. I think 
that agenda should be part of how we help fragile states.
    The final point I would make is I think this whole argument 
about fragile states is one that should be linked to the bigger 
argument about aid. As I said, I am a supporter of continuing 
aid payments. We have seen a massive reduction in global 
poverty. We have seen huge advances in vaccinating children and 
educating young people, in gender equality and other 
development goals. We can only continue to win this argument if 
we do address the problems of the most fragile states where 
this progress is not being made. And I think in an age where 
the taxpayers are quite right--they are asking about value for 
money--we need to link arguments about aid and about fragile 
states to our own safety and security here.
    And I am absolutely convinced that aid is not only a moral 
imperative for us in the West because we should be helping our 
neighbors on the other side of the world, as it were, but it is 
also a security imperative. If we fail, the problems of vast 
migration, of pandemics, of terrorism, of piracy, of criminal 
gangs, of people-smuggling, of modern slavery--they all come 
back and visit us at home. And that is why I spending quite a 
lot of my post-prime ministerial life on this very important 
issue.
    And with that, thank you very much for letting me come.
    [The prepared statement of Mr. Cameron follows:]

                  Prepared Statement of David Cameron

                          why fragile states?
    Countries suffering from conflict, corruption, weak governments, 
insufficient security and too few jobs are said to be affected by 
``state fragility''. In these countries poverty reduction is hard and 
few of the Sustainable Development Goals (SDGs) are likely to be 
achieved. Fragile states are also increasingly linked to terrorism, 
crime, mass migration and pandemics.
                                why now?
    In little more than a decade, half the world's poor will live in 
these countries. Indeed, some countries are poorer than they were 40 
years ago--despite the aid that has been delivered there. Fragility is 
increasing--in 2006, 28 countries scored 90 or higher in the Fragile 
States Index. In 2015, only three of those countries had dropped below 
this level, and an additional 13 countries had joined them.
                 is this an argument for scrapping aid?
    No. Over the last 30 years extreme poverty has been halved. The 
number of children who die before their fifth birthday has halved too. 
This is the fastest progress the world has ever seen. With the rising 
importance of fragile states we don't need to scrap aid--we need to 
change how we do aid.
                      what works and what doesn't?
    Important questions the Commission on State Fragility, Growth and 
Development is asking include:

   Priorities. Do we need to rethink the focus of aid? Have people's 
        basic needs--being safe at home, having enough to eat, and 
        having power and water--been overlooked amid a series of well-
        intentioned, yet second-order, priorities?

   International goals versus local goals. Whose priorities are we 
        following? There is growing evidence that in weak states long 
        lists of western priorities lead to unrealistic expectations 
        and certain failure. At the same time, western imposed agendas 
        can undermine the legitimacy of national institutions on which 
        local people will ultimately depend.

   Aid Conditionality. Is it therefore time to replace policy 
        conditionality--``we won't give you any money unless you do 
        what WE say''--with governance conditionality--``we will back 
        YOUR programme as long as you cut out corruption and stop the 
        theft of aid money''?

   Opportunities for change. How do we do better at breaking the cycle 
        of fragility seizing opportunities for change--when wars end, 
        or a new president arrives? Are there particular times when 
        coordinated international assistance can make a real 
        difference?

   Resolving conflict/Holding elections. What is the evidence for the 
        success of rapid exercises in constitution writing and holding 
        elections, versus longer processes of dispute resolution and 
        power sharing? How much focus should there be on rapid 
        elections versus the other building blocks of democracy/ checks 
        and balances, including rule of law?

   The cancer of corruption/action in the developed world. Some 
        resource rich countries end up permanently poor as their wealth 
        is stolen and hidden in rich countries. So what more can we do 
        to fight corruption, for example with registers of beneficial 
        ownership, swifter return of stolen assets etc?

   Resilience: Prevention is better than cure. Fragile states often 
        lack resilience. How can we ensure hard won economic progress 
        isn't swiftly reversed? How can we help fragile states protect 
        against natural disasters and conflict?

   Role of International Financial Institutions. What role should the 
        range of financial institutions be playing in all this? Do 
        traditional IMF programmes work effectively in the most fragile 
        states? Should the key leading institutions be more focused on 
        fragile states? Is there sufficient focus on risk capital, 
        rather than traditional loans? Are these organisations working 
        together effectively?

   Importance of infrastructure/ Private sectors. How do we help to 
        activate the private sector in the most fragile countries, 
        creating jobs, growth and prosperity for everyone to share in? 
        Is there sufficient emphasis on SMEs? Are we giving enough 
        consideration to legal infrastructure, including property 
        rights, as opposed to physical infrastructure?

   Institution building versus nation building. Institutions in 
        fragile states lack both capacity and legitimacy. To what 
        extent can donor nations help with building institutions? What 
        is the relationship between national identity and successful 
        institutions?
                         is change achievable?
    Countries like Rwanda and Columbia have escaped fragility and are 
now significant success stories. Singapore started life as fragile 
state--and is now one of the richest countries in the world. We can 
help today's most fragile states follow on this path from poverty to 
prosperity--and we need the determination to do so.

    The Chairman. Thank you very much for the testimony.
    And with that, Senator Menendez.
    Senator Menendez. Thank you, Mr. Chairman.
    Thank you, Mr. Prime Minister. A great overview of the 
issues and the work.
    I want to pick up on two of the elements that you talked 
about. Conditionality, governments, and rush to elections as 
you described it.
    So Freedom House's latest annual report said that democracy 
faced its most serious crisis in decades in 2017 as its basic 
tenets, including guarantees of free and fair elections, rights 
of minorities, freedom of the press, the rule of law, came 
under attack around the world. This marked the 12th consecutive 
year of decline in global freedom. And this holds true, for 
example, in Africa where leaders have attempted, some 
successfully, in circumventing obstacles to remaining in power. 
The Democratic Republic of Congo, President Kabila's refusal to 
step down is a good example.
    So my question is, what is our interrelationship, the 
intersection between maybe not rushing to elections but the 
relationship between democratic backsliding and fragility? Is 
there anything that we should be looking at as donors to 
prevent backsliding? Where should we be focusing diplomatic and 
development efforts to address that problem? Because, 
obviously, while one may not want to rush to elections, by the 
same token if there is not a pathway forward towards the very 
essence of democratic principles, rule of law, and 
transparency, then all of the donor effort can come to naught.
    Mr. Cameron. I think this is a really difficult question. 
And as I said, I am a supporter of democracy and elections----
    Senator Menendez. We wait for the Prime Ministers from 
Great Britain to ask those questions.
    [Laughter.]
    Mr. Cameron. I think we will make a mistake if we take a 
fragile state and we say the measure of success is going to be 
how quickly we write the constitution and get to the election. 
In some cases, that is effectively what we have done. And I 
think there are two things we need to think about.
    One is when we think about democracy, we should be thinking 
about the building blocks of democracy, as well as the act of 
holding of an election because we all know that actually the 
rule of law, protection of minorities, a free press, checks and 
balances--these are actually in many ways more important than 
the actual act of holding the election. So do not judge the 
success of a country simply by how fast it has an election.
    The second and, I think, more profound point is if you are 
dealing with a country that is recovering from conflict, if you 
rush to the election, the danger is that the parties to that 
conflict just wait for the election, try and win that election, 
and then complete their victory over their rivals because they 
won the election. And so what is required is a longer process 
of power sharing and trying to deal with the fundamental 
tensions and problems between the conflicted parties before 
getting to the election.
    So I think we bear those two things in mind. It is not 
saying we should be anti-elections or anti-democracy. I think 
it is a more hard-headed approach. It is a more realistic 
approach. It ends with elections and democracy, but it 
recognizes that you cannot go from Afghanistan to Denmark at 
100 miles an hour. You have got to try and resolve the 
fundamental problems in these countries and the power sharing 
that is required to bring people together.
    Senator Menendez. I respect that answer. I look at the 
elections as only one measurement, at the end of the day, of a 
totality of what we want to see in a country in terms of rule 
of law or transparency or respect of minorities. And that may 
not necessarily all be solidified in an election. But are those 
not benchmarks that we should be looking at? Because at some 
point, do you not have to challenge the fragile state to move 
in those directions--even if it is their plan, as you suggest, 
let us support their plan but say we need good governance in 
terms of us continuing to provide those resources. But do we 
not have to call for the elements of what a democracy is about, 
not just elections, in order to be able to see its people 
fulfill what we aspire from them?
    Mr. Cameron. We do, but if that is the main thing we 
measure, we may not really deal with the profound problem.
    I would say this. Take two relatively recent examples: 
Afghanistan and Yemen. In both cases, arguably there was not a 
proper process of power sharing, reconciliation, coming 
together to form what would be an effective provisional 
government before elections became the desired outcome. So in 
Afghanistan, there is a good argument to say we should, after 
2001, have found some way of trying to include conservative 
elements, the Pashtun elements of Taliban in some sort of 
national reconciliation. The same applies in Yemen where the 
Houthi were effectively left out of power sharing.
    Now, that is always going to be more difficult and take 
longer. But if you are dealing with a fundamentally fractured 
country, I would argue it is better to try and get that 
reconciliation, power sharing provisional government together 
and perhaps try and measure the success of that provisional 
government. Is it starting to do the things that will stop the 
state from failing? Is it starting to deliver the public 
services? Is it starting to generate a working private sector 
economy? And the elections, all the elements of Western 
democracy, which I completely support--that needs to follow 
surely--does it not--from the process of reconciliation. And if 
we simply measure speed to election, we are measuring the wrong 
thing.
    I think the reason for making this argument is we have got 
to recognize what we have been doing in fragile states has not 
been working. There are successful examples of exiting 
fragility. Rwanda I think would be a good case in point. In 
1994, hideous genocide, country on its knees, incredible growth 
and recovery story since then. You can go further back in 
history and find countries that might have had a fragile-
looking start, even Singapore, you might way, when it left the 
federation of Malaysia. So there are good examples, but we have 
got a number of countries which have just been failure after 
failure after failure. And that is why I think a slightly more 
patient approach on how you bring together the conflicted 
parties is perhaps one we need to think about.
    Senator Menendez. Thank you.
    The Chairman. Thank you.
    Senator Young?
    Senator Young. Thank you, Mr. Chairman.
    Mr. Cameron, thank you so much for your service in this 
capacity. I certainly regard it as a service to the American 
people, as well as so much of the rest of the world.
    You and I had an opportunity to briefly visit before this 
hearing. You indicated you have visited my home State of 
Indiana. One of the things in visiting Greencastle you may not 
have become aware of is that Indiana is home to the largest 
Burmese-American community in our country.
    I have worked with Senator Merkley and others on this 
committee on some legislative work pertaining to the ethnic 
cleansing by the Burmese Government of the Rohingya population. 
And I would like your assessment of the situation in Burma and 
neighboring Bangladesh with respect to the Rohingya. If you 
have a sense of the path forward, kindly share that with us. 
And what sort of broader lessons might we take away from that 
horrible situation?
    Mr. Cameron. Well, I was very proud to be the first British 
Prime Minister I think in a long time who went to Burma and met 
with Aung San Suu Kyi when she was still effectively in her 
home but was able to travel a bit more freely and things were 
beginning to open up.
    I think we have all got to admit, those of us who have been 
huge supporters of hers and supporters of the democratization 
process in Burma, that what has happened with respect to the 
Rohingya is appalling and that it has been very disappointing--
the response of people who aspire to be democrats and believe 
in democratic societies have tolerated and allowed this to 
happen.
    But I think if we take it back to the bigger question of 
how we deal with fragile states, there is an element of what I 
am saying here I think which is that we all wanted Burma to 
move to democracy. And it is good that it is heading in that 
direction. We all wanted someone who had stood up for democracy 
to have their chance to stand and lead their country and that 
is happening.
    But there was a bigger question we needed to ask at the 
same time which is how are you going to resolve the tensions in 
this country and the ethnic differences. How are you going to 
have a government that represents all of your people, not just 
some of your people? And perhaps we were insufficiently robust 
in asking those questions because there were problems with the 
different ethnicities in Burma, including the Rohingya, and 
what has become apparent is that was not nearly high enough up 
on Aung San Suu Kyi's list of priorities, how to bring the 
government together and how to have a government that could 
represent all of her people.
    And I think that goes to my point. I am a passionate 
believer in democracy and elections. We were very focused on 
getting to those things in Burma. Were we all sufficiently 
focused on how to make sure it was a Burma for everybody? 
Perhaps not.
    Senator Young. Well, thank you. We will continue to, I 
know, collectively work on that situation, do whatever we can 
to be helpful to the people of Burma, the Rohingya population 
most especially.
    I would like to turn now to the importance of effectively 
crowding in, as it were, private investment with respect to our 
development activities.
    Last year, I convened a subcommittee hearing on global 
philanthropy and remittances as it pertains to international 
development. And some of the takeaways from that hearing were 
that the private sector investment of various forms --
increasingly it is so much greater than we see official 
development assistance from whether it is multilateral 
institutions or in a bilateral way from governments.
    According to a 2016 report--this comes from the Indiana 
University Lilly Family School of Philanthropy--84 percent of 
all donors, total economic engagement with the developing 
world, is through private financial flows. Of course, we know 
that official government assistance continues to play a 
catalyzing role, and it is essential to bring in that private 
investment.
    But one of the questions you ask in your testimony is, 
quote, ``how do we help to activate the private sector in the 
most fragile countries, creating jobs, growth, and prosperity 
for everyone to share in?'' I believe that is the right 
question, and I would like to know what your answer is to it.
    Mr. Cameron. Well, first of all, in your point on 
remittances, you are absolutely right. Remittances dwarf 
overseas aid figures, and they should be encouraged. I mean, 
the money flowing back into very broken countries like Somalia 
is hugely important in the economy of that country. We should 
ask ourselves what can we do to help that happen? And there is 
a danger that some of these remittances get caught up in very 
appropriate and well meaning legislation about money laundering 
and what have you. We do need to make sure we are not holding 
back remittances. We should also encourage the use of modern 
digital technology to transfer money because there are lots of 
ways you can save money by doing these things digitally while 
guarding against the dangers that Bitcoin and other mechanisms 
have.
    On your question about the private sector, I think one of 
the things we are finding is--I mean, it is the statement of 
the obvious, but in many of these countries, there just is not 
a functioning or there is a very small functioning private 
sector. And there are problems of security that lie behind 
that. But I would highlight two other things that we need to 
think about very seriously.
    One is that, as I have said, a feature of all these fragile 
states is governments that lack even the basic capacity to get 
things done. And there is an argument that says as they start 
to build that capacity, one of the most important bits of 
capacity is the bit of government that relates to the private 
sector and business, the bit of government that relates to 
licensing and provision of services and all the rest of it. And 
we need to think about how to super charge that, how to make 
that happen more quickly.
    A second thing is we always focus on infrastructure, how 
can businesses get their goods to market, how can they get 
their goods to port, are we helping build the correct road and 
rail and port infrastructure. I think we probably 
underestimated the importance of legal infrastructure, property 
rights. There are plenty of places in Africa you go to where 
you see signs saying this house is not for sale, and the reason 
is that you get is, well, there are not clear property rights. 
There is not a clear property register. People often find that 
what they thought was theirs is being sold by some crook 
without them knowing. So I think that is very important.
    The final point I would make--and I referred to it in my 
introduction--is the big lending institutions do a great job at 
helping promote development in the poorest parts of the world. 
But there is a question mark in our minds writing this report. 
One, are they sufficiently focused on the most fragile states? 
Because if you apply lots of benchmark tests of economic 
return, social return, environmental return, pretty soon you 
will find that you will only back the projects in the slightly 
safer countries, which would probably get the private sector 
backing anyway. We actually need to find ways of really 
focusing them onto the most difficult countries and the most 
difficult projects because that is where we want them to make a 
difference.
    In doing so--I mean, this will seem as British preferring 
our institutions, but one institution, what was the 
Commonwealth Development Corporation, the CDC, has totally 
changed from being one that invested into other funds into 
direct investment into specific projects. And it targets 
fragile states. So it has a whole set of targets to make sure 
it is putting the money into the most difficult and dangerous 
places. And I think that is very helpful. And as I said, I 
think in the Senate you are looking at a potential institution 
that could do this, and I think that would be a very positive 
development.
    Senator Young. Thank you for your thoughtful and fulsome 
response.
    The Chairman. Thank you.
    Senator Shaheen?
    Senator Shaheen. Thank you, Mr. Chairman.
    Thank you, Mr. Prime Minister, for being here.
    One of the things you do not talk about in your remarks 
that I think is very important as we think about fragile states 
and how we can better support them, is the importance of 
empowering women, empowering women economically, improving 
their access to education, making sure that they participate in 
any conflict negotiations. Data shows that that does make a 
difference. You pointed out how well Rwanda has done since 
their civil war. In fact, one of the reasons that they have 
been as successful as they have, I would argue, is because 
women have played an equal role in that society as it has been 
rebuilt.
    So can you talk about what more you would like to see the 
United States and the West do in terms of supporting women in 
fragile countries?
    Mr. Cameron. Well, I think it is absolutely crucial, and 
the sustainable development goals, which I played some role in. 
The committee that Ban Ki Moon set up, which I co-chaired with 
the President of Indonesia and the President of Liberia--I 
thought we gave a much greater priority to gender equality, and 
the whole gender SDG I think is much stronger than what was 
there previously. I think it is absolutely crucial.
    The only reason it is not in the memo I set out is we are 
really looking at what are the things we need to do differently 
in fragile states as compared to other poor countries. We need 
to apply the views that I am sure you and I would share about 
the importance of gender equality and what a massive driver of 
development it can be. We need to provide that everywhere, 
fragile states included. I think what my memo is concentrating 
on, what are the things we need to do differently in these 
states and what is actually failing.
    But in terms of the support that Britain or America gives 
in terms of aid, I think gender should be an absolutely crucial 
part of it, and my plea would be, which I make back at home, 
that we stick with the 0.7 that we have historically delivered 
and we go on doing that. And my plea here--of course, it is not 
for me to tell you what to do--but to keep going with U.S. aid 
programs, which have done an enormous amount for gender 
equality.
    It is often the one thing that can absolutely flip the 
growth rate and progress of a particular country. And those 
countries that are disadvantaging women--they can see that they 
are falling behind. Even in Saudi Arabia, they are beginning to 
realize that disadvantaging half of the talent of the country--
or as my wife would say, considerably more than half of the 
talent of the country--is not a sensible approach.
    Senator Shaheen. Well, I would urge you to add that to your 
list. Even though you are making that distinction, I think for 
people who are just looking at this, it is an important 
reminder about how important that is.
    As you look at countries or regions where you are 
particularly concerned about them deteriorating further or 
where you think intervention in a different way might change 
the outcome, are there particular countries or regions where 
you would urge us to look especially hard at what we are doing?
    Mr. Cameron. I would say, first of all, that I think it is 
worth differentiating between levels of extreme poverty that we 
want to tackle according to the SDGs. It is worth 
differentiating between that and between fragile states. And I 
think it is worth having a focus on fragile states because I 
think when we look at the world's poorest, we can see that 
India and China, still home to a huge percentage of the world's 
poorest, are actually lifting people out of poverty at quite a 
rate. And soon we are going to get to a position where 50 
percent of the world's poorest that is living on less than $2 a 
day--50 percent of them will be in fragile states. So I think 
the focus should be on the fragile states. As I said, Britain 
puts 50 percent of our bilateral aid programs into fragile 
states, and I hope other countries will look at doing the same 
thing.
    In terms of geographically where they are, many of the most 
fragile states would be in Africa, the DRC, Burundi, Liberia. 
You know, there are lots of countries that have suffered from 
conflict, corruption, weak governance, weak capacity, lack of 
resilience, all of those characteristics. But you can also find 
them elsewhere. In every continent there are fragile states.
    I think one of the most remarkable things is that you often 
find countries next door to each other with quite similar 
characteristics but one is a success and the other is not. 
Botswana, massive successive story, a middle income country. 
Neighboring Zimbabwe, disaster. Colombia coming out of 
conflict, economically successful. Venezuela, we all know.
    So what is the difference between these countries? It is 
not geography. It is not climate. It is not ethnicity. It is 
actually governance. It is leadership. It is the decisions they 
have made, the choices they have taken. And I think that should 
reinforce our view that you can do something about fragility. 
You have to focus on governance. As you start focusing on 
governance, you get into some very difficult questions about 
how you help because you cannot have some sort of neo-imperial 
program. As I have said, you have got to try and back their 
programs rather than imposing your own agenda. But if you can 
help with those modest improvement, governance can make a 
difference.
    Senator Shaheen. I know I am out of time, but I think it is 
important to reinforce what you said. It is not just about 
governance. It is also about leadership and who the leaders 
are. So you can have a great government structure, but if you 
do not have a leader who helps lead the country in the right 
direction, that governance structure does not account for what 
we would all like to see.
    Mr. Cameron. I think there is something on that which the 
commission would really appreciate your views, which is I think 
if you look back at countries that have made advances out of 
fragility, it is often because there has been a particular 
moment. It might be a new president elected. It might be the 
end of the war. In the case of Rwanda, it was a national event 
so horrific that it gave a leader a chance to take the country 
in a different direction. And I think that might have an 
implication for how we decide to spend money because if what we 
do is just have continued programs for countries that sometimes 
fail year after year after year, we just keep going, maybe that 
is not a good use of our money. Maybe it would be better if 
actually we said, hold on, here is a country that has got a 
genuine opportunity of change because of one of these events 
and let us actually really put more resources and more effort 
into that.
    And so we might want to think about how we allot money, how 
we prioritize. And there may be some cases where the governance 
in a particular country is so bad that we simply say we are not 
going to help because we cannot have the guarantees that this 
money is not going to be wasted, that the corruption is not 
going to continue because it is not fair on our taxpayers to 
say we are going to go on supporting a country where they are 
not even achieving the basic norms of governance in order to 
make sure this money is not stolen.
    Senator Shaheen. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Senator Isakson?
    Senator Isakson. Thank you, Mr. Chairman.
    Chairman Cameron, thank you for being here and thank you 
for what you are doing.
    I was just thinking. The chairman and I, Chairman Corker 
and I, went to the Sudan and to President Kagame's country that 
you have referred to quite frequently today. And I think both 
those are primary examples of the two ways in which a fragile 
state can exit or stay.
    In the Sudan, al-Bashir's goal to keep power in his hand 
was to keep it a fragile state, and because of that fragility, 
it is kind of what has happened under the Dutch disease where a 
lot of the rich countries with natural resources, the 
leadership keeps the money, does not use it to invest in the 
people. And so they are never going to build their way out of 
the poverty that they have.
    And then you take the opposite example. I mean, Rwanda is 
the example where Kagame came in and ended a horrible genocide 
between the Hutus and the Tutsis. And through economic 
empowerment and team building really, which was his leadership, 
they exited a mass slaughter of each other.
    The National Basket Company of Rwanda is a tin hut where 
every morning Hutu and Tutsi women go to the hut and the divide 
up, and one Hutu and one Tutsi gets in each square on the floor 
that is drawn out in chalk, and they make two baskets a week. 
They sell those baskets to Bloomingdale's in New York. And they 
get the commission on the sales of those baskets. Remember, 
Bob, when we went through there and saw that?
    The Chairman. Sure.
    Senator Isakson. And what they did, they got the Hutus and 
the Tutsis making baskets together instead of cutting each 
other's heads off. They created economic empowerment to the 
women, Senator Shaheen's point. And they built their way into 
what is a right successful country in Africa. Now, I know 
Kagame--there are some issues maybe, but you got to give him 
credit.
    I saw Bob Corker dig a tree out of the middle of a path in 
a little village we were in on Umuganda Sunday. Remember that, 
Bob? He had a strong guy like Bob and a weakling like me out 
there digging a tree up in the middle of an African village. 
And they were watching and clapping and we were digging. But 
that was leadership, and they did those things to improve their 
infrastructure.
    So I think Rwanda is a perfect example of how you can exit 
fragility and go into prosperity or on your way to prosperity 
through economic empowerment and through governance and through 
leadership. It might not be our type of governance or our type 
leadership. But just comparing that to al-Bashir, the people in 
Sudan appear to me to be a captive of a man whose dream is to 
keep them captive in the poverty of fragility rather than the 
opportunity of capitalism.
    Mr. Cameron. I would agree with a lot of what you said, 
sir.
    I think Rwanda is an example of effective leadership. There 
is no doubt that he has been effective at delivering economic 
development. But I think it also goes to this point I am making 
about it was a Rwandan national program. We did not come in and 
impose our ideas and objectives. It was their plan and we 
backed their plan.
    And I was talking to President Kagame about this the other 
day. He said I am very happy for you to say if you find any of 
this money wasted, if you find the budget support you have 
given goes on ministers' Mercedes or is stolen, take the money 
away. So governance conditionality. But it has got to be our 
plan because in the end these countries only escape fragility 
if their institutions grow in both their capacity to get things 
done but also their legitimacy, they are seen as legitimate by 
the people. So I think it is a good example.
    I think also they focused on some pretty important economic 
things, the time it takes to get goods from Rwanda to the port 
in Mombassa. It used to take, I think, three weeks, and they 
have got that down to a number of days. And that was just 
because they totally focused on what you need to get a private 
sector economy going.
    I think South Sudan is a very good example of what goes 
wrong. When the country was divided, Sudan and South Sudan, I 
do not think the international community was sufficiently 
focused on the reconciliation that needed to take place within 
South Sudan. The country started up and elections and all the 
rest of it, but without a proper reconciliation between the 
tribes in South Sudan in terms of how power was going to be 
shared and how checks and balances were put in place--but it is 
possibly an example of where the international community could 
be tougher in terms of conditionality because the economy is 
based on a mixture of oil and aid. And actually those are two 
things over which the international community could exercise 
some leverage in order to try and ensure that there is a proper 
way of sharing power in that country rather than just carving 
it up.
    Senator Isakson. Well, thank you very much for your 
leadership because helping these states to work their way out 
of and establish the goals and the leadership within their 
state to work their way out of fragility into prosperity is 
something all of us could do to help. It would reduce our need 
to have foreign aid or assistance programs, but it would 
improve the lives of those people a hundred times over. So 
thank you for your leadership.
    The Chairman. Thank you.
    Senator Cardin?
    Senator Cardin. Thank you, Mr. Chairman.
    Mr. Prime Minister, it is a real pleasure to have you here. 
I agree with your statements. It is about basic government 
capacity is the key to dealing with the fragile states. And we 
cannot solve that problem by going around the governments. You 
may provide humanitarian assistance to the people that are 
suffering, but it is not going to deal with the stability of 
fragile states. And we do need to have government 
accountability, and that is why conditionality of aid effecting 
government change is the way I think we need to go.
    I want to talk a little bit about what I think is one of 
the major goals, and that is to deal with the corruption that 
we see in fragile regimes. We have a lot of very, very poor 
countries where their leaders are doing extremely well because 
of corruption.
    You mentioned transparency. One of the areas that we have 
been trying to work with here in Congress is transparency in 
the extractive industries because a lot of the fragile states 
have mineral wealth but the mineral wealth is going for 
corruption rather than to the people itself.
    So the United Nations took a major step forward in the 
sustainable development goal number 16, which for the first 
time dealt with governance as part of our major objectives. The 
first round, we had pretty good success under the Millennium 
Development Goals.
    So now under the sustainable development goals, how can we 
coordinate an international effort? I understand the United 
States needs to take a lead and UK take a lead. But how can we 
really mobilize the international effort to focus on 
accomplishing goal 16, which would help us with governance in 
fragile states so that we can have accountability and we can do 
something on a more permanent basis?
    Mr. Cameron. I am so glad you mentioned goal 16 because 
when I chaired that committee with the other leaders, it was 
one of the things I was determined to do, was to get a goal on 
governance and corruption and rule of law and access to justice 
into whatever the world eventually agreed to. And it was--with 
the committee that we had that included countries of all 
different shapes and sizes and political outlooks, if I can put 
it that way, it was something to get that in there.
    And it was there not just because of my prejudices, but 
where we actually went out and asked people what is you most 
want from these goals. Of course, number one was tackling 
poverty, but the second thing was access to justice. And that 
was the cry from the poorest people in the poorest countries in 
the world.
    I think the answer to your question, sir, is that we have 
to lead by example because there are so many cases of money 
stolen from poor countries and hidden in rich ones, that of 
course, we want those countries to be less corrupt. We want 
those leaders to be less corrupt. We want them to have mores in 
place. We want them to have courts that work. We want people to 
go to prison when they steal money and all the rest of it. But 
we will not be able to have that leverage unless we sort our 
own act out.
    And that is why, when I chaired the G8, I put this issue of 
registers of beneficial ownership. We need to have in all of 
our countries a register so you can see who owns what, 
preferably as we are doing in Britain. We are having an open 
one so it can be searched by members of the public, NGOs and 
others. But I think a minimum standard is that everyone should 
have one of these registers so that when you are looking for 
stolen assets, you can look and you can find them wherever they 
are.
    I would combine that with this crucial thing about sharing 
tax information between countries, including between poor 
countries and rich countries. And that might mean we have to 
use some of our aid money to help these countries build their 
own tax capacity and tax inspection because if we do these 
things, there is a chance that we can then have a far bigger 
conversation about how we tackle corruption because we can say, 
look, we are sorting our own situation out. So if the money has 
been hidden in Delaware or in London or in Paris, you can come 
and find it.
    I think the other piece that goes with that is returning 
stolen assets. We have got to make that faster because you 
often find people, whether it is Mubarak or others--vast 
larsony. You know, they are not just stealing small amounts of 
money. It is billions. It would actually make a material 
difference if you divided it up and gave it back to the people 
that they took it from. And we are too slow at that.
    So I think there is a whole set of things and this makes 
this more of a global effort rather than the rich world looking 
at some of the poorest countries in the world and saying we 
have got some ideas to help you do better. If it is a global 
effort because we are doing our bit, I think would hugely help. 
And extractives is a very big part of it.
    Senator Cardin. Let me just add one thing this committee is 
doing. We have passed legislation--it has not been taken up on 
the floor yet--that would use the example of Trafficking in 
Persons report for corruption so that we can start best 
practices and rate countries, but then use that as a guideline 
to our development assistance to try to build capacity to deal 
with corruption in countries. Trafficking has now been taken on 
globally to fight that. We got to take corruption on globally.
    Mr. Cameron. I completely agree. I chaired in London I 
think it was the first purely anti-corruption conference. And 
it set out a whole road map of things that countries needed to 
do. And I hope Congress can maybe help with that to keep up the 
momentum because there is a whole bunch of things that 
countries can do about registers of ownership, about sharing of 
tax information, about returning assets, about making sure that 
people who are corrupt cannot serve in public office, a whole 
bunch of stuff that we can encourage countries to do.
    There is one last thing on extractive industries because 
that can sometimes feel like a very complicated and sort of 
long and lonely battle. But the truth is the world has come a 
huge, long way over 20-30 years. And what was a very unequal 
struggle between big oil companies dealing with governments 
that were, A, weak and, B, corrupt, we are living in a very 
different world now where there is far more understanding about 
what fair deals are and what deals these companies should come 
to. And so while it can seem quite boring and technical and 
hard work, the work of organizations like EITI is absolutely 
crucial.
    Senator Cardin. Thank you.
    The Chairman. Senator Barrasso.
    Senator Barrasso. Thank you very much.
    A pleasure to be with you. Thank you so much for being 
here.
    When you talk about weak and corrupt countries and how we 
can get away from this, it does seem information is helpful at 
all levels. If you think about what cell phones have done and 
electricity to allow people who are just growing crops to not 
just be dependent on knowing the price from the guy that comes 
up with a truck and offers him only so much money, they now 
know what price to ask for. This has helped in terms of 
medicine, in terms of all the technology. You need to make sure 
those people have access to the cell phones, which they 
certainly do, but then the electricity to power them. With the 
last couple trips I was in Africa, it just seemed that 
electricity was a big issue.
    And when you talk about governance in terms of not imposing 
our own views but allowing people to govern, sometimes I see 
the United States trying to make decisions about we will only 
allow you to subsidize this kind of power but not that kind of 
power because we are looking at environmental purity and what 
happens to be a global overview as opposed to what is better to 
put electricity in the hands of the people right there. And you 
see that affecting child birth, death during child birth 
without electricity, in terms of just being able to refrigerate 
food, those things related to our own views versus what is best 
for the people on the ground to give them the information to 
then get out of the situation.
    Mr. Cameron. I think you are right, sir. There is an 
enormous opportunity to use technology to do development 
better. And I would just give a couple of examples.
    One, which I think you were hinting at, is transparency. If 
it is clear how much money USAID is spending in Kenya or 
Tanzania and how much money is going to schools, you should be 
able to publish that money. People should be able to follow 
whether the money has got to their school, whether the school 
has been built, et cetera, et cetera. All of that is now--you 
can publish it. People should be able to look at it on their 
cell phones.
    And I think we should try and make sure that as we work 
with our development institutions, our DFID, your USAID, and 
others, that they should be encouraged to do more that is 
transparent and also work with what I would call the sort of 
dev tech sector, you know, the whole bunch of new businesses in 
development that are trying to do things differently.
    But I think the most important point you made is when it 
comes to electricity and energy, which many of these fragile 
states are woefully provided for in these areas, the temptation 
in the past has been to do the big project, vast finance, big 
loan, government contract, often a lot of corruption involved 
in it, a big national grid being built, big power stations 
being built that either do not work, do not happen, and masses 
of siphoning off of corrupt money. Now it is possible to use 
small solar installations that can provide solutions at a much 
lower cost and at a more local level. It is more difficult for 
the corrupt to get their hands on those things, and so we 
should be looking at those.
    And that goes to the point I was making about working with 
small and medium-sized enterprises, working with the private 
sector, trying to look at equity as well as just loans, and 
recognizing some of these things can be done at small scale 
rather than at very big scale. So just to your point, sir.
    Senator Barrasso. I go back and forth between how do we 
address the cause of the fragility and not just the symptoms of 
the fragility. I just ask that question. Am I really talking 
about the cause or the symptoms, and how do we----
    Mr. Cameron. Well, I think one of the issues is that the 
people who have been addressing this and trying to address 
this, who work valiantly at it--I think there has been this 
sort of search for the single cause of fragility. And I think 
the trouble is that we are not going to find it. They are all 
interrelated. You have a lack of security, and so you do not 
have a proper market economy. You do not have a proper market 
economy, so you do not have any tax revenues, so you do not 
have a capable government. You have got an incapable 
government, so you have got conflict going on. Because you have 
got conflict going on, the institutions of your government are 
not legitimate for half the country. Everything causes 
everything else. So I think the search for the one cause is 
probably not a good use of our time.
    I think what we should be searching for is the mini steps 
you can take as a fragile country and as an international 
community trying to support that country that can slowly make a 
difference and build your way steadily out of fragility.
    Senator Barrasso. If you travel through Africa, as I have 
done with ONE organization, they say we are going to fund one 
project. What is it? Is it the road? Is it the electricity to 
try to help people focus on what is the one thing? They may not 
be able to address all of these that you just pointed to.
    Mr. Cameron. The best thing to do is to ask the people of 
that country and the government of that country what is your 
priority. Now, of course, if they say, well, the priority is 
training jihadists, well, you are not going to support that. 
But it may turn out that the priority they want is not actually 
the priority we might want.
    There was a classic example in South Sudan where one 
particular donor said we are not going to support this country 
until they put in place a specific goal on climate change. 
Well, this is just asking a country that is at a fairly basic 
level of development to start designing programs that it was 
not ready to do. So the most important thing is that it is 
their plan that you are backing and it is something that over 
time will build the legitimacy of that country and that 
government because in the end we do not want to be giving these 
countries aid forever. They do not want to be receiving aid 
forever. And in the end, the answer is effective governments 
that can sort these problems themselves.
    Senator Barrasso. Thank you very much.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Senator Coons?
    Senator Coons. Thank you, Chairman Corker and Ranking 
Member Menendez.
    Thank you, Prime Minister. It is wonderful to have this 
chance to hear from you some well thought out, deep, insightful 
commentary on the significance of fragile states, on the ways 
that we can partner to focus our development investments and 
efforts and financing work in ways that really could 
cumulatively have a significant impact on security and 
stability.
    Let me talk first, if I could, about a bipartisan bill that 
Chairman Corker and I have introduced and that has the support 
of eight members of this committee, on modernizing our 
development finance tools. I think--and I quote--you called the 
ideas in that ``brilliant.'' I can die and go to heaven now.
    [Laughter.]
    Senator Coons. It would provide a whole suite of new tools 
to what is currently known as OPIC. It is called the BUILD Act, 
and it would allow for investment in equities and local 
currencies and a number of other things.
    I would be interested in, given the leadership that you 
have shown in development finance and the ways you have 
referenced its significance, how do you think we might focus on 
prioritizing investing in fragile environments. Do you have any 
recommendations that would focus on development finance 
institutions and how we get them to target better development 
outcomes? And how would you see this revised or strengthened 
U.S. development finance entity partnering better with allies, 
particularly in Western Europe, particularly that share the 
same priorities and world view?
    Mr. Cameron. I think I am right in saying the point about 
OPIC is that it can do loans, but it cannot do equity 
investment. And that is part of your plan.
    Senator Coons. This would allow it.
    Mr. Cameron. But to answer your questions as directly as I 
can, I mean, how to focus on fragile states, I think it is in 
how you set it up and how you incentivize and how you set out 
its plan. What we did with the Commonwealth Development 
Corporation, our CDC was literally given a set of targets that 
deliberately focused on the most fragile states. And so that is 
how they define their success. If you define the success purely 
by returns, then you are always going to be motivated to find 
the least fragile of the states you have been asked to invest 
in. And also you will tend to go to the bigger ones. You know, 
it is easier to find, given that it is going to take a lot of 
management time and all the rest of it--a project in Nigeria is 
always going to be more attractive than a project in Burundi. 
But that is why no one is investing in Burundi. So I think how 
to focus on fragile states is simple, just to focus on them.
    I think in some cases, you may want to look at altering the 
target returns and really significantly lowering them. Some of 
these countries are so short of basic investment, particularly 
in legal and physical infrastructure, that even if--you know, 
if you compare it with aid, once you have spent an aid dollar, 
it is gone. With these equity investments, even if you do not 
lose money, you are actually helping build capacity that is 
going to make a difference to the future of this country. So I 
think focus on them, look at the returns.
    In terms of the outcomes you focus on, again, I think we 
have got to think about how we work with the countries. I have 
not quite worked out how to do this yet. But ideally, if we 
want to make these countries stronger for the future and their 
institutions more legitimate, then the very best thing would be 
if the development financial institutions were helping them to 
set up funds that we are investing in small to medium-sized 
enterprises that would make a real difference in those 
countries because if it is all seen as something being done to 
these countries, it might help with some of the infrastructure, 
but it does not help with the longer-term problem, which is the 
legitimacy and the capacity of their institutions. So I think 
that is worth thinking about.
    I think the SME sector often in these countries, when you 
look at them, what is really missing is what we have in your 
country or mine, vast businesses ranging from two employees to 
200. They have got lots of one man or woman shows, and they 
have got one or two big businesses, and nothing in between.
    How to partner? I think part of this is getting these 
institutions together to try and make sure that they have some 
common agendas. And I think as you look to set up your new 
DFI--I have said it before, but I do think CDC is really worth 
having a good look at, particularly the way they have changed 
over the last five or six years.
    Senator Coons. Thank you for that answer.
    I do think our Millennium Challenge Corporation has moved 
quite a ways for our overall development approach in the 
direction of partnering with a country, responding to its 
development priorities, having accountability mechanisms.
    One thing we have tried to work on here is to give our MCC 
the authority to do regional compacts rather than just 
bilateral. Do you think in combating fragile states--you gave 
the example of Burundi, some that are so small it is difficult 
to prioritize them. Should we be looking at fragility on a 
regional basis as well as bilateral?
    Mr. Cameron. I think there are regional organizations that 
you can work with and that have a good perspective. But at the 
end of the day, I think we do need to work with the countries. 
I think sometimes the development world is a bit dismissive of 
the rights of nation states. And in the end, it was not the 
regional organization that helped sort out Rwanda. It was the 
Government of Rwanda with the assistance of generous aid donors 
that wanted to back a leadership that had a plan for its 
country. That I think is the best answer.
    I think often you will find areas where there is a series 
of fragile countries, in the Sahel, for instance, being the 
classic example. And so initiatives are put together to help 
all of these countries. And that is all to the good. There are 
so many interconnections. But at the end of the day, we need 
the Government of Mali to be more capable and legitimate. We 
need the Government of Niger to be more capable and legitimate. 
These countries are not going to go away. You cannot sort of 
pretend you can go around them. And I think the thrust of what 
we have been looking at is how to work with these countries 
rather than go around them.
    And in doing so, there is one other point we have not 
really talked about. Of course, you are going to help build 
institutions. They need tax collecting authority. They need 
licensing developments. They need education departments. But 
the truth is that you cannot just build these things without, 
at the same time, trying to help that country deliver a 
narrative about what it is trying to do, about what its plan 
is, about what it is for, about what its goals are. And I think 
it is quite interesting when you look at how different states 
have got out of fragility, those ones that have had a sort of 
national story about what they are trying to achieve have 
always done better than the ones who have tried to carve up the 
assets of the country between different tribes trying to keep 
the happy. So if you look, for instance, at what Seretse Khama 
did in Botswana or, to an extent, what was done in Tanzania, 
there was a real attempt to try and build some national 
identity. And I think that can help hugely with trying to make 
these countries have a successful future. So regional 
organizations, yes, you can work with them, but if you are 
trying to go around the country, I do not think it will work.
    Senator Coons. Thank you.
    Let me just close by also offering my condolences on the 
attack in Salisbury. And my thanks to you for being clear-eyed 
about the Russian threat. I do think we have important work to 
do as close allies.
    And if we have a moment afterwards, I would love to talk to 
you more about the Sahel.
    Mr. Cameron. Can I just say I am very grateful for you 
saying that? In Britain, we are absolutely united in seeing 
what has happened as completely horrific, unjustified, 
unjustifiable. I think the Prime Minister's response has been 
very firm, very strong, and quite rightly so. And the special 
relationship, the partnership between our countries is so 
important to us, and knowing that here in the United States you 
are with us in facing down these threats is incredibly 
important.
    And all I would say is that it is so important that a clear 
message is sent by allies about the unacceptability of this 
behavior and that real consequences will follow. And all the 
experience I had over six years as Prime Minister is there are 
some countries and some leaders who will only understand a very 
firm response, and a weak response--they will simply do again 
what they have done before.
    Senator Coons. Thank you, Mr. Prime Minister.
    Mr. Cameron. Thank you.
    The Chairman. We very much appreciate your sharing your 
world experiences and the work you have done on fragile states 
with us today. It has been a great hearing. Obviously, we honor 
your service to the United Kingdom and your great friendship to 
us. We appreciate you taking the time to be here.
    The way our committee hearings work, we allow written 
questions after the fact, and we are going to have those until 
the close of business Friday. And to the extent you can--I know 
you are very busy traveling the world and doing what you are 
doing, but to the extent you could answer those, we would 
appreciate it.
    Again, thank you for your great friendship, your 
outstanding service.
    Mr. Cameron. My pleasure. Thank you. Can I also say that we 
have not finished our report. We are still thinking about it. 
And if there are perspectives and ideas that you have, perhaps 
particularly on this development finance institution, we are 
very keen that this report really generates a change in how we 
deal with fragile states. And so we would welcome your 
perspectives.
    The Chairman. I am sure the brilliant Senator would like 
for you to include that in your reports.
    Mr. Cameron. I will do my best.
    The Chairman. With that, we are adjourned.
    [Whereupon, at 3:50 p.m., the hearing was adjourned.]

                                  [all]