[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
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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
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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
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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.]
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