NEWS

Changing Middle East requires reform incentives and years of commitment

Since the end of World War II, the United States has had a mixed record in dealing with failed or failing states. But why was nation-building so successful in Germany and Japan while most other foreign aid plans were not? In our day, calls for new Marshall Plans target regions that are very different from Europe in the 1940s and 1950s. The Middle East and Africa, for example, are regions that do not share the same economic, cultural and legal history that over centuries led to European prosperity. In contrast, the European countries had been advanced industrialized societies destroyed by war and in need of reconstruction, while much of their endowment of technology, organizational ability and social networks remained intact. In this respect, the Marshall Plan is very different from all foreign aid programs given in the recent past. As former German chancellor Helmut Schmidt has argued, «Marshall aid was successful because Europe possessed a long-standing entrepreneurial heritage, a base of business acumen, a high level of general education, and technological knowledge as well as engineering capabilities. No Marshall Plan can succeed where such prerequisites do not exist.» Ironically, many international players talk about nation-building exercises as if it were a process we could accomplish easily if only we had the resources. In fact, decades of nation-building experience show that aid is neither a necessary nor a sufficient condition for sustained growth and democratic governance. Since the Marshall Plan ended, the United States and international financial institutions like the World Bank spent billions of dollars in large infrastructure projects funneled through existing governments. Yet, even today, recipients of development aid still live in poverty with little hope for a better future. There are shortages not only in physical capital, but also in what economists call human, social and organizational resources, which in the 1960s and 1970s led to a new emphasis in developing policy to promote human capital. In other words, parachuting in money is not enough to turn around a failed or failing state. Institutions and rules have to be in place too: the need for a sound currency, freedom of trade and exchange, and protection of individual rights and especially of property for all citizens. A lesson that clearly emerges from recent nation-building endeavors is that institutions will not be created without a strong internal political demand for reform. Thus, unless political will can be generated from within the society to overcome certain powerful actors, external pressure is hardly ever enough by itself to confront self-interest and corruption. As Francis Fukuyama has argued, «establishing or reforming institutions is almost always more of a political than a technocratic problem.» The case of Greece during the Truman Doctrine and the Marshall Plan is illustrative. Despite the ability to tamper with cabinets and to exercise various forms of leverage over government actions, as an agent of major institutional reform and democratization, the US mission in Greece was to prove most ineffective. As things now stand, history does not hold the remedy to the problems of post-Saddam Iraq. But does that mean the United States should leave the Iraqis to their own destiny? What we can say with certainty is that Iraq is a country that needs help to establish governance and to find a path for development. The experiences of post-war Europe and parts of the developing world in recent decades confirm that all these are long-term goals, well beyond the political horizon of President Bush. Like the transformation of Europe, the transformation of the broader Middle East will require a commitment of many years. If the Bush administration truly wants to implement a major initiative that will transform other parts of the world, it must develop a policy vision for the entire region and one that provides incentives for reform. In the meantime, we had better spend more time and energy debating what is and what is not possible with failed states or rogue regimes and identify the limits to what foreign aid can accomplish. If not, nation-building, peace-building and post-conflict reconstruction strategies, or whatever is the fashionable term, will be nothing but mere charity. (1) Athanasios Lykogiannis received his doctorate from the London School of Economics (LSE). He is the author of «Britain and the Greek Economic Crisis, 1944-1947: From Liberation to the Truman Doctrine» (Columbia, MO: University of Missouri Press, 2002). He is currently conducting research on US policy in post-Saddam Iraq.