The U.S. Should Remake Its Relationship with Bolivia

Author: Bo Carlson, Research Intern (Summer 2020), Center for Strategic and International Studies

Last Sunday, Bolivia’s socialist presidential candidate won in a landslide victory. After a tumultuous year in Bolivian politics, involving electoral manipulation, an alleged coup, and an interim president who overstayed her welcome, President-Elect Luís Arce presents the country with a serious chance of stability. By taking a conciliatory approach toward Arce, the U.S. can best pursue its interests in Latin America.

As in other parts of Latin America, the U.S. has historically aligned itself with conservative forces in Bolivia. In the Cold War, American officials propped up anti-communist hardliners, unburdened by electoral accountability. During the Reagan, Bush, and Clinton years, the U.S. routinely favored politicians on the right, who were more likely to approve market-based reforms recommended by the IMF and World Bank.

The U.S.’ outspoken preference for conservatives frequently backfired. In 2002, when top American officials threatened to withdraw aid from Bolivia if voters selected left-wing Evo Morales for president, Morales rose from fourth in the polls to a second place finish. Morales later joked that the U.S. ambassador was his best campaign manager, and he went on to win in 2006.

Evo Morales oversaw sustained economic growth and greater inclusion of indigenous groups. At the same time, he sought a constitutionally barred fourth term in 2019, and his management of the election was subject to credible accusations of manipulation. After a military official “suggested” that Morales leave office last November, he and his colleagues resigned in quick succession. The role of the U.S. in what many analysts label a coup remains in doubt, and Trump’s steadfast support of interim president Jeanine Áñez has drawn sharp criticism from advocates of human rights.

After Luís Arce’s victory in last Sunday’s election, a new approach is needed for U.S. diplomacy in Bolivia.

First, the U.S. should use its relationships with conservative leaders in Bolivia to guarantee a peaceful transition of power. Secretary of State Mike Pompeo’s statement recognizing the “new, democratically elected government” was a step in the right direction, as was Áñez’s tweet congratulating Arce. However, right-wing politician Luís Fernando Camacho continues to dispute the results, and anti-socialist protests in his home state of Santa Cruz now threaten to turn violent. To the extent that the U.S. diplomats hold sway over Camacho and his supporters, they should urge caution.

Second, American diplomats should encourage the president-elect to preserve Morales’ legacy while avoiding the former president’s excesses. Luís Arce previously served as Morales’ economy minister, simultaneously reducing poverty, curbing inflation, and increasing growth through a mix of market- and state-based policies. His more recent behavior has been encouraging as well. Last Monday, Arce promised a “government of national unity,” and in a subsequent interview, he noted that “If Evo Morales wants to help us, he would be more than welcome; but that doesn’t mean he’ll be part of the government.” By welcoming Arce’s gestures toward the center, the U.S. can preserve political stability in Bolivia while finding agreement on issues of mutual concern.

Third, U.S. policymakers should accept that an Arce government will not agree with their preferences on every issue—particularly in Venezuela. Shortly after his election, Arce noted that he would resume diplomatic relations with the socialist government of Nicolás Maduro. U.S. leaders from both sides of the aisle have recognized National Assembly President Juan Guaidó as Venezuela’s legitimate leader, and a series of sanctions imposed by the Obama and Trump administrations have sought to isolate Maduro’s government. While Arce’s support for Maduro will be a thorn in the side of U.S. policy toward Venezuela, it is neither vital to the Maduro regime’s survival, nor should it eclipse other concerns in the U.S.-Bolivia relationship.

Maduro has powerful backers in Russia, China, Cuba, Iran, and Turkey. Moscow, Beijing, and Havana’s support, and perhaps that of Tehran and Ankara, matters far more to Maduro than approval from a weak and internally divided Bolivia. When dealing with Bolivia, the U.S. should prioritize areas of cooperation, with Venezuela as one of several topics for discussion.

The United States’ diplomatic history in Bolivia is a fraught one, and the U.S. government’s reputation is now even weaker after last year’s political chaos. Arce’s victory presents an important chance for U.S. diplomats to remake their relationship with Bolivia; they should not pass on the opportunity.

Bo Carlson is a contributor to the Project on Prosperity and Development at the Center for Strategic and International Studies, a DC-based think tank. He is a summa cum laude graduate of Duke University, and he previously worked at the Organization of American States.

Curbing Water Scarcity Through Micro Agriculture-Targeted Development

Author: Christopher Daly, Research Intern (Summer 2020), Center for Strategic and International Studies

Today, more than four billion people, nearly two-thirds of the world’s population, live in an area that is water scarce at least one month of the year. This number could increase by an additional 1.6 billion by 2050. More than 1.7 billion people globally live in river basins where water use exceeds recharge, and demand for water has grown by roughly one percent per year for the last twenty years, while the land-areas of wetlands, groundwater tables, and the basins themselves have steadily declined. 37 countries are currently water stressed and, of those, 17 are considered to be under extremely high water stress.

An array of economic and ecological factors contributes to water scarcity, including groundwater and river overdraw, industrial agriculture, lack of infrastructure, and adverse weather events resulting from global heating. Droughts are occurring with increasing frequency around the world and rivers are running dry as glaciers recede and snowpack melts earlier in the year. As ecosystems degrade, the problem of water scarcity increases, as does the stress on existing water infrastructure both natural and manmade.  

22 March 2018 began the UN Decade for Action on Water and Sustainable Development. The objectives of the Decade, which have been set by the UN to coincide with their 2030 Agenda for Sustainable Development and the UN Decade on Ecosystem Restoration (2021-2030), focus on “the sustainable development and integrated management of water resources for the achievement of social, economic and environmental objectives and on the implementation and promotion of related programmes and projects.” The Decade also highlights “the importance of promoting efficient water usage at all levels, taking into account the water, food, energy, environment nexus; and stresses the importance of the participation and full involvement of all relevant stakeholders, including women, children, young people, older persons, persons with disabilities, indigenous peoples and local communities.” Thus, the agenda puts forth a bold plan to integrate the fights for human rights, responsible environmental stewardship, and resource management under a holistic framework which can be scaled and put into practice globally. Integrated land and water management practices are at the heart of this framework.   

Worldwide, half of all habitable land is used for agriculture, and there are 571 million small-holder farmers spread across 161 countries. These small-holder farmers are often among the first to feel the effects of climate and population-driven water scarcity and are uniquely positioned to play a role in regenerating and maintaining degraded hydrological systems. In no small part, they are able to influence those systems because their farming practices can either make or break them—and engagement with small-holder farmers through education and collaboration initiatives can have tremendous outcomes.

Empowering small-holder farmers through various means creates multiple opportunities: to create jobs, to feed populations, and to renew land and water through targeted stewardship practices. It also presents an answer to the challenge posed by industrial-scale agriculture, which degrades soil and consumes 70 percent of the world’s fresh water (of which 60 percent is wasted as a result of poor irrigation). The majority of the world’s soil resources, notably on farmland, are in “fair” or worse condition. Further, the clearing of forests for industrial agriculture and large-scale animal husbandry creates a vicious cycle which puts even more strain on hydrological systems as evaporation and erosion rates increase.

Currently, only 30 percent of global land remains forested, and at least two-thirds of this land is in a degraded state. The function that forests and grasslands play in the hydrological cycle is extensive, though not widely understood. Besides slowing evaporation and allowing water to percolate down into the soil, respiration by flora increases humidity and lowers surface temperatures. Near rivers, forest cover prevents erosion and sedimentation, keeping water which can serve as a drinking or hydro-energy source clean. Similarly, wetlands preserve coastlines by acting as buffers against storms, protecting settlements and providing shelter for the fish and other marine life on which many coastal economies depend.

The recent UN World Water Development Report has put forward Nature Based Solutions (NBS) as one of our most effective tools in the fight against water scarcity. NBS include re-forestation, eco-friendly and diverse agricultural strategies, and preservation of land which contributes to the continuation or stabilization of existing hydrological systems. Funding for successful NBS programs often comes from multiple sources, including public water funds, private philanthropy, or companies, both local and international, whose products depend on the maintenance of the local water supply.

The European Environmental Agency Report on Water Retention in Forests lays out some of the rationale behind NBS. The report highlights the impact that healthy forests have on surface water, in streams and other bodies, as well as on water levels in soil and groundwater. Its findings include how forests retain excess rainwater, moderating run-off patterns and reducing flood damage and how forests release water during the dry season, mitigating the effects of droughts. The report finds that, “In water-basins where the forest cover is 30%, water retention is 25% higher than in basins where the forest cover is only 10%. In basins where the forest cover is 70%, water retention is 50% higher than in basins where the forest cover is only 10%. The results in this report also confirm that water retention in any sub basin (whether it has 80% forest cover, 50% forest cover, or 30% forest cover) is typically about 25 % greater in summertime than in wintertime.”

These findings can be backed up by anecdotal evidence from around the world. The case of a single woman tending a forest on a half-acre plot of land in Kerala, India, is a good example which circulated online recently. Kerala, a state on the Western coast of India, is a narrow strip of land which slopes dramatically. The state’s groundwater levels have been depleted over the last 30 years thanks to deforestation and destruction of wetland, paddy-land, and laterite hills. The net effect of this has been that rainwater is discharged without percolating into the plateau, taking just three days to flow from its highest point to the ocean. The local authorities now recognize the role that forests play in the hydrologic cycle and have begun preserving “sacred groves” which would otherwise be in danger of being razed for development or agriculture. Such groves are often only a few acres, but one grove of six acres can provide water to roughly four ponds and 40 wells. Those who live near the groves report that they do not face water shortages during the summer, as those who live around deforested zones do.

As the World Water Development Report highlighted, public-private partnerships are likely to be a key component of implementing nature-based solutions. There are several non-governmental organizations operating globally which focus on NBS relating to issues of water scarcity, and one of the most active is The Nature Conservancy (TNC). To date, TNC has helped establish more than 35 water funds worldwide which connect governments, local utilities, private partners, and farmers in order to enhance natural hydrological resilience. TNC has also been actively involved in purchasing ecologically vital lands and turning them into conservation areas for several decades.

The first water fund launched by the Nature Conservancy was located in Quito, Ecuador, and was called Fondo para la Protección del Agua (FONAG). There were six founding members of the fund; Quito’s water company, the Metropolitan Water and Sewerage Company of Quito (EMAAP-Q); The Nature Conservancy, Cerveceria Andina Brewery, The Electric Power Company of Quito (EEQ), The Swiss Agency for Development and Cooperation, and Tesalia (a beverage producer). The fund’s sole purpose is the protection of the Páramos, a high-altitude scrub-wetland which absorbs and releases mist and rainwater in the Ecuadorian mountains. The Páramos forms the head of a watershed which extends into four river basins: the Upper Guayallabamba river basin, the Antisana river basin, the Oyacachi river basin and the Papallacta river basin.

FONAG uses interest and income on its investment portfolio, as well as two percent of Quito’s water charges to cover its expenses and build up its reserves. It enables water management, site surveillance and monitoring, restoration of vegetation cover, environmental education, training in Indigenous Water Resource Management (IWRM), community programs, outreach initiatives, and other forms of capacity building. Rather than cash payments, farmers receive support for watershed protection programs and long-term improvements to their operations. Jobs are also created in eco-tourism, habitat management, and lobbying, deepening community involvement and transforming the preservation work into a local affair.

Similar to FONAG, the Upper Tana-Nairobi Water Fund was established in partnership between TNC, Nairobi City Water & Sewerage Company (NCWSC), Kenya Electricity Generating Company (KenGen), and small-holder farmers; also with a notable pilot contribution of USD $150,000 from the Coca-Cola Foundation. Through those organizations’ contributions an endowment of $7.5 million has been set up, from which interest is used to pay for the fund’s programs. The fund is also sustained through an “at-the-tap” tax on downstream, urban water users (a proposal which was embraced by the city’s 4+ million residents, who were eager to adopt a proposal with the potential to increase water availability). Ninety-five percent of Nairobi’s freshwater supply comes from the Tana River, and hydropower from the river generates 50 percent of the city’s electricity.

The highlands around the Aberdare mountains, where the Tana begins, are home to more than 100,000 small holder farmers who rely on the river for irrigation, and before the fund began its operations the impact of their farming practices was being felt downstream, especially in the sediment which accumulated and settled in reservoirs—reducing both drinking-water storage and power generating capacities—requiring expensive interventions by way of municipal filtration. The problem of sedimentation and erosion was being further exacerbated by the Aberdare mountain area’s “new normal,” a shift in rain patterns thanks to climate change which sees an increase in annual rainfall but over fewer days, creating more intense storms and greater storm runoff.

The solution, reached by TNC and its partners, was to provide a package of land-management techniques, hardware, and outreach to farmers in the Aberdare highlands. The hardware comes in the form of water pans—rainwater-retention ponds which hold 6,000 to 26,000 gallons—which reduce dependence on local streams during the dry season. Farmers excavate the pans, while the fund covers 70 percent of the cost of the pans’ heavy plastic liners. The land management techniques involve the planting of trees and bamboo thickets. The trees provide cover for ground crops along with more diversity in the farmers’ market offering, and the bamboo thickets, planted alongside streams, prevent sedimentation and erosion. Outreach includes the fund conducting surveys of farmers practices and needs via text message, and sending technical advice, as well as broadcasting announcements about market events where new crop types will be distributed. Together, the packages “sell themselves” because they simultaneously increase yield, reliability, and profits. As of 2018, the fund has affected the lives of 25,000 farmers, with plans to reach 50,000 by 2022. 

There are numerous funds and trusts set up around the world to tackle issues of water scarcity and to support various levels of sustainable agriculture, economic empowerment for indigenous and impoverished people, and small businesses. In conjunction with efforts including the Bonn Challenge, which builds on regional efforts such as the Initiative 20×20 in Latin America and the AFR100 African Forest Landscape Restoration Initiative , aiming to restore 350 million hectares of degraded ecosystems by 2030,  57 countries, subnational governments and private organizations have committed to bring over 170 million hectares under restoration under the UN Decade on Ecosystem Restoration. Corporate partners such as the Coca-Cola Foundation alongside groups like the Environmental Defense Fund, the UN’s International Fund for Agricultural Development, the Whole Planet Foundation, and others, are already doing this work. What is needed is further investment in such interdisciplinary initiatives by an even more diverse cohort of governments, NGO’s, and private partners.

The challenges to the deployment of these strategies can be both financial and political, as they often require cooperation between multiple stakeholders; including governments, private companies, and individual landowners, and because their success depends on adequate financing, coordination, and local management. These challenges may be compounded by a lack of awareness among policy and business leaders of the hydrological functions of the various ecosystems described in the previous sections.

Now, in the time of Covid-19, the outlines of these challenges are even more distinct. However, the crisis also presents us with a great opportunity to engage with people who were already on precarious footing socially and financially and rapidly expand existing programs as those people seek relief. As public markets have shut down and other sources of income have been severed, water and agricultural funds could serve as a vital lifeline for struggling small-holder farmers and other individuals who could be successful partners once the crisis abates and economies return to normal. Increased investment now will empower communities and create more resilient and fruitful local economies; in terms of the variety and quality of agricultural products, increased social stability as a result of a more reliable water supply, increased jobs in land management and eco-tourism, and other proven benefits. Most importantly, investment can create a springboard on which local and international economies can bounce back better and sooner. Water and land funds should be elevated in the global discourse around development and considered one of the most effective tools available to us in the fight against hunger, thirst, and poverty.

Rethinking the War on Drugs in Colombia

Author: Bo Carlson, Research Intern (Summer 2020), Center for Strategic and International Studies

2016 was a turning point in the two wars that have ravaged the Colombian countryside for over 60 years. The first was a civil war waged between the Colombian government and the Revolutionary Armed Forces of Colombia (FARC, for their Spanish initials), a leftist guerrilla group. After a decades-long insurgency, the FARC finally agreed to lay down their arms in exchange for lenient sentencing, reintegration for ex-combatants, and other reforms.[1] The second, which continues to this day in Colombia, is the War on Drugs. Although the government has reduced its use of controversial forced eradication programs in the last few years, its new voluntary crop substitution program appears to be equally ineffective, resulting in more cocaine exports, not less. Colombia should instead embrace an alternative approach that focuses on long-term development goals and a gradual decrease in cocaine production.

Three Approaches to the War on Drugs

Since the 1980s, Colombia has been a major exporter of cocaine.[2] Coca plants, from which drug traffickers derive the key ingredient for cocaine, grow in the periphery of the country.[3] Most coca plants are located on small plots and grown by smallholder farmers, or campesinos, who have few alternative economic opportunities.[4] Drug cartels, left-wing rebels like FARC, and right-wing paramilitary groups often employ these campesinos, with the implicit threat of violence if they fail to comply.

Violence and insecurity peaked in the 1990s, with the city of Medellín gaining the dubious distinction of “murder capital of the world” in 1995.[5] Since then, Medellín and other urban centers have made remarkable improvements and are now far safer than many U.S. cities thanks to private sector investment, public development projects, and high-profile arrests of drug traffickers.[6] However, the periphery of the country continues to suffer from economic underdevelopment, state neglect, and extortion from criminal groups.

To combat drug trafficking, the Colombian government has at least three strategies at its disposal.

  1. Forced Eradication: Military and civilian personnel can destroy crops by plane, drone, or manual fumigation.
  2. Voluntary Eradication: The government can incentivize campesinos to rapidly substitute their coca plants for legal crops as a prerequisite to receiving government benefits.
  3. Alternative Livelihoods: In this approach, inspired by Thailand’s success in combatting illicit crops, the state could invest in human capital, job creation, and security provision in rural communities.[7] Only after at least five years would farmers be expected to eliminate crops.

After choosing one of these three broad approaches, the Colombian government can tailor the strategy to local conditions. Policymakers can also choose to complement any of these strategies with interdiction—arresting traffickers, destroying labs, and stopping shipments en route to transit and destination markets.

The rest of the blog evaluates whether forced eradication has worked in the past and interrogates the consequences of the current voluntary substitution program.  It then turns toward a program of alternative livelihoods, explaining why this is likely to be the most successful of the three strategies. The blog draws upon Vanda Felbab Brown’s January 2020 report, Detoxifying Colombia’s Drug Policy, for the bulk of the analysis, but it also integrates research from the Bogotá-based Fundación Ideas para la Paz and findings from economists Daniel Mejía, Mounu Prem, and Juan F. Vargas.

Has Forced Eradication Worked?

Prior to 2013, forced eradication was the main component of Colombia’s counternarcotics strategy. On the positive side, forced eradication produces visible, rapid reductions in the number of hectares with coca crops. Between 2007 and 2013, during a sustained aerial eradication campaign, both the U.S. government and the United Nations estimate that coca cultivation in Colombia fell by about 50 percent.[8]

However, forced eradication also comes with problems. In many cases criminal groups simply move from drugs into illegal logging, mining, wildlife trafficking, and extortion. Coca is relatively easy to grow, so they may also plant the crop in a new area.[9] Given criminal groups’ adaptability, most of the harm from forced eradication falls on the individual campesino. Aerial spraying of herbicides can also harm neighboring legal plots and radicalize poor farmers. In 2013, then-President Juan Manuel Santos began to decrease the use of aerial eradication, and in 2015, his government ended it completely after a World Health Organization body identified glyphosate as “probably carcinogenic.”[10] Manual eradication can prevent harm to bystanders, but it too carries major risks. Colombian police report that between 2001 and 2016, 153 manual eradicators have been killed and 500 injured, mostly by land mines and traps planted by criminal groups.[11]

            The Trump administration has pressured Colombian policymakers to resume aerial spraying using both carrots and sticks. In September 2017, President Trump told his Colombian counterparts that he reserved the right to decertify the country as a cooperating partner in the War on Drugs, unless they agreed to return to eradication.[12] After the Colombian government moved toward resuming fumigation, Trump nearly doubled his request for funding from Congress to go toward counternarcotics in Colombia.[13] Russell Crandall, a former NSC Director for Latin America, has warned of narcotization in the U.S.-Colombia relationship, in which U.S. policymakers allow the War on Drugs to outweigh all other concerns.[14] Under Trump, U.S. policy toward Colombia has taken several steps in that direction.

            In the few examples outside of Colombia where forced eradication has worked to sustainably eliminate illicit crop cultivation, governments have had to first reduce conflict in the area, then establish a strong state presence, and finally be willing to use violent repression against civilians. Vanda Felbab-Brown notes that China in the 1950s, Myanmar in the 1990s and early 2000s, and Vietnam and Laos in the 1980s and 1990s are the only potential success stories, but each has its own limitations. The human rights violations that accompanied these cases make them an undesirable model for Colombia today.[15]

Has Voluntary Substitution Worked?

            During peace negotiations in 2014, the government and FARC delegations publicly agreed to a crop substitution program that would provide material incentives to coca farmers who switched to legal crops.[16] The Comprehensive National Program for the Substitution of Crops for Illicit Use (PNIS, for its initials in Spanish) began operating in 2016, and since then, about 100,000 families have registered. 94 percent of enrollees have complied with their part of the agreement, but nearly 90 percent of them have yet to receive full payment from the government.[17]

            While the government’s crop substitution program was well-intentioned, the design and implementation have led to negative outcomes. After coca cultivation fell between 2007 and 2013, the number of hectares planted has steadily increased, reaching an all-time high in 2019.[18] In addition to the usual bureaucratic obstacles—poor funding, lack of coordination with other development agencies, and inadequate evaluation—the very idea of a crop substitution program created perverse incentives for campesinos.[19] When farmers realized in 2014 that they would be rewarded for eradicating a certain number of hectares, they naturally began to plant more coca crops. When three economists at Colombian universities measured the magnitude of this effect, they found that coca-suitable regions doubled their area devoted to coca plants after the announcement.[20] And even when coca farmers cooperate, they must give up all their income at once and then wait for an inefficient government apparatus to provide them with benefits.[21]

What Are the Prospects for an Alternative Livelihoods Approach in Colombia?

            Given the collateral damage of the forced eradication model and the perverse incentives of the voluntary substitution program, Colombia urgently needs another approach. Fortunately, they can learn from Thailand, which took nearly 30 years to combat illicit crops but now stands out as the most durable case of poppy eradication in the world.[22] In Thailand, government officials started by developing education and healthcare access in rural communities, as well as investing in infrastructure and offering land titles and microcredit.[23] After several years of involvement in these development efforts, farmers would be required to reduce their crops in stages.

            By switching from a substitution-first model to an alternative livelihoods approach, Colombia will not only see a long-term reduction in coca cultivation, but also a more general improvement in the security and wellbeing of rural communities.

Recommendations

            The main obstacle to reform may not be a shortage of technical knowledge, but rather the disconnect between politicians’ short-term interests and the long-term requirements of an alternative livelihoods approach. For that reason, I’ll end the blog with three recommendations to advocacy groups, Colombian politicians, and U.S. diplomats who recognize the need for reform.

  1. Advocacy groups should consider embracing an alternative livelihoods model, rather than defending the current voluntary substitution program. Given the dramatic increase in coca cultivation under PNIS and the perverse incentives at the heart of the program, it is increasingly difficult to argue that the current system is the right one. Instead, advocates should press for more dramatic, long-term change and wait for Colombian leaders who are willing to endorse it.
  2. Colombian reformers should expand the conversation around narcotics to include development and security. By drawing urban voters’ attention to the endemic issues in rural areas, they can increase sympathy for campesinos and forge a consensus in favor of development. They should also highlight the ways in which rural development can benefit urban centers through increased tourism and investor confidence.

Officials in the State Department Bureau of Western Hemisphere Affairs and the Embassy in Bogotá should resist pressure to narcotize the U.S.-Colombia relationship. When Colombia attracts attention from the White House, Congress, Drug Enforcement Agency, and State Department Bureau of International Narcotics and Law Enforcement, too often it is because of a sudden increase in cocaine exports. Diplomats who know the region best should push back on demands to immediately halt cocaine production, recognizing that a sustainable counternarcotics approach takes time and there are more issues involved in the U.S.-Colombia partnership than coca production.


[1] Claire Felter and Danielle Renwick, “Backgrounder: Colombia’s Civil Conflict,” Council on Foreign Relations, Jan. 11, 2017, https://www.cfr.org/backgrounder/colombias-civil-conflict

[2] June S. Beitel and Liana W. Rosen, “Colombia’s Changing Approach to Drug Policy,” Congressional Research Service, Nov. 30, 2017, 1, https://fas.org/sgp/crs/row/R44779.pdf.

[3] Ibid.

[4] Nicholas Casey, “After Decades of War, Colombian Farmers Face a New Test: Peace,” New York Times, July 18, 2017, https://www.nytimes.com/2017/07/18/world/americas/colombia-cocaine-farc-peace-drugs.html.

[5] Stanley Stewart, “How Medellín Went from Murder Capital to Hipster Holiday Destination,” The Telegraph, Jan. 4, 2018, https://www.telegraph.co.uk/travel/destinations/south-america/colombia/articles/medellin-murder-capital-to-hipster-destination/.

[6] Ibid.

[7] Vanda Felbab-Brown, Detoxifying Colombia’s Drug Policy: Colombia’s Counternarcotics Options and Their Impact on Peace and State Building (Washington, DC: Brookings Institution, Jan. 2020), 2, https://www.brookings.edu/wp-content/uploads/2020/01/FP_20200106_colombia_drug_policy_felbabbrown.pdf.

[8] Beitel and Rosen, 2017, 11, https://fas.org/sgp/crs/row/R44779.pdf.

[9] Sophia Sadinsky and Ramón Campos Iriarte, “Broken Promises in Colombia’s Coca Fields,” Open Society Foundations, October 23, 2019, https://www.opensocietyfoundations.org/voices/broken-promises-in-colombias-coca-fields.

[10] Since the 2015 WHO report, there have been a number of conflicting studies. For more details, see Ibid., 7; and World Health Organization, IARC Monographs Volume 112: Evaluation of Five Organophosphate Insecticides and Herbicides, March 20, 2015, https://www.iarc.fr/wp-content/uploads/2018/07/MonographVolume112-1.pdf.

[11] Joshua Goodman, “Coca’s Comeback Forces Colombia to Rethink Drug War,” Associated Press, July 18, 2016, https://apnews.com/98dea2d6b485415bb2a5f37f1c0e2685/Coca’s-comeback-forces-Colombia-to-rethink-drug-war#:~:text=That’s%20an%20area%20twice%20the,largest%20supplier%20of%20the%20drug.

[12] June S. Beitel and Liana W. Rosen, “Colombia’s Changing Approach to Drug Policy,” Congressional Research Service, Nov. 30, 2017, Summary, https://fas.org/sgp/crs/row/R44779.pdf.

[13] “Trump pidió más dinero para Colombia si retoma fumigaciones,” El Especatador, March 12, 2019, https://www.elespectador.com/noticias/el-mundo/trump-pidio-mas-dinero-para-colombia-si-retoma-fumigaciones-con-glifosato/.

[14] Russell Crandall, “Explicit Narcotization: U.S. Policy Toward Colombia During the Samper Administration,” Latin American Politics and Society vol. 43, no. 3 (Autumn 2001), 95, https://www.jstor.org/stable/3177145.

[15] Felbab-Brown, 2020, 7, https://www.brookings.edu/wp-content/uploads/2020/01/FP_20200106_colombia_drug_policy_felbabbrown.pdf.

[16] Daniel Mejía, Mounu Prem, and Juan F. Vargas, “The Rise and Persistence of Illegal Crops: Evidence from a Naïve Policy Announcement,” Social Science Research Network, Oct. 7, 2019, https://dx.doi.org/10.2139/ssrn.3466363.

[17] Felipe Puerta and María Paula Chaparro, “A Death Foretold: Colombia’s Crop Substitution Program,” InSight Crime, April 1, 2019, https://www.insightcrime.org/news/analysis/a-death-foretold-colombias-crop-substitution-program/.

[18] Christine Armario, “US report: Colombia coca production still at record high,” Associated Press, March 5, 2020, https://apnews.com/0aa6474b944f4ff8eb9e7e9cffffce87.

[19] Juan Carlos Garzón, Juan David Gélvez, and José Luis Bernal, “En qué va la sustitución de cultivos ilícitos? Desafíos, dilemas actuales y la urgencia de un consenso: Informe 6” Fundación Ideas para la Paz, April 2019, 11-12, http://ideaspaz.org/media/website/FIP_sustitucion_VOL06.pdf.

[20] Mejía, Prem, and Vargas, 2019, 3, https://dx.doi.org/10.2139/ssrn.3466363.

[21] Felbab-Brown, 2020, 10, https://www.brookings.edu/wp-content/uploads/2020/01/FP_20200106_colombia_drug_policy_felbabbrown.pdf.

[22] Ibid., 11.

[23] Ibid., 12.


Lorne W. Craner: A Lifelong Commitment to Democracy Promotion

By Daniel Runde

Lorne W. Craner passed away on July 2, 2020 after a lifelong career dedicated to public service. He was a man of integrity who adhered to the fundamental American principles of individual freedom and equal opportunity. For decades, Lorne toiled in the vineyards of democracy, human rights, and good governance, helping to design and implement meaningful policies that promoted democracy and prosperity on nearly every continent.

Lorne was first exposed to public service at an early age, and he understood better than anyone the value of liberty. His father, Col. Robert Roger Craner, who served in the Air Force, was held as a prisoner of war in the infamous Hanoi Hilton, the same Hỏa Lò prison where Senator John McCain was held for five years. Lorne’s father and Senator McCain forged an intimate bond—they were held in adjacent cells and communicated by tapping on the walls. Col. Craner passed away in 1980 but instilled in his son an unwavering commitment to defending and establishing democracy and freedom throughout the world.

Lorne attended Reed College and received a Masters’ degree in National Security Studies from Georgetown University. He began his public service career on Capitol Hill, where he worked for Congressman Jim Kolbe and Senator McCain. In 1989, he became a deputy assistant secretary of state for legislative affairs, and later served in the National Security Council as director of Asian Affairs for President George H.W. Bush. Between 1993 and 2000, he was vice president, and then president, of the International Republican Institute (IRI), created in 1983 as a response to a call by President Reagan to institutionalize democracy throughout the world.

Lorne, a conservative internationalist, believed in an interconnected world—one in which the United States should lead with its values. He believed that, by instilling respect for human rights and strong democratic institutions abroad, the United States could improve the lives of millions of people. Under his leadership, IRI emerged as a vital institution for establishing good governance, strengthening political parties, monitoring elections, promoting prosperity, and helping governments and civil society around the world “deliver on democracy”. In the 1990s, for example, IRI was instrumental in efforts to establish democracy in Romania. This work enabled the country to host free elections in 1996, ending decades of authoritarianism. During Lorne’s tenure, IRI also monitored the groundbreaking 2000 general elections in Mexico and provided vital support to Indonesian civil society organizations after the fall of the dictatorial Suharto government.

Between 2001 and 2004, Lorne left IRI to serve as Assistant Secretary for Democracy, Human Rights and Labor (DRL), during the peak of the Bush Administration’s Freedom Agenda. DRL made unprecedented advances under Lorne’s stewardship by working to defend, promote, and improve democracy in a vastly diverse set of contexts, ranging from Iraq to Colombia to Belarus to Kenya. Upon his departure from the State Department, he was awarded the Distinguished Service Award, the Department’s highest honor.

He returned to IRI and served as president until 2013, once again leading IRI to new levels of achievement and broadening the organization’s scope to include topics such as the inclusion of women in political processes and the role of digital technology in promoting democracy. In the wake of the Arab Spring, Lorne oversaw IRI’s efforts to foster a robust civil society and establish an accountable political process in Tunisia, paving the way for free elections in 2014. He also strengthened IRI’s efforts in China and Pakistan and cultivated relationships with key democracy-building organizations in the United States and abroad. After retiring from IRI, Lorne served as President of the American Councils for International Education and maintained his positions on the boards of IREX, Internews, the Institute for War and Peace Reporting. the National Committee on U.S.-China Relations, and the Millennium Challenge Corporation where he helped to develop the “good governance” criteria—aid is more effective in countries where there is good governance, personal and economic freedom, and investment in people.

Those who work in the field understand that democracy has been in decline for the past two decades. Freely elected leaders are increasingly encroaching upon the rights of political dissidents and breaking down institutional safeguards. In closed societies, authoritarian leaders are using digital technology to spread disinformation and intimidate political opponents. These trends should not be overlooked. Yet, it is wise to recall that over the last 50 years we have seen remarkable progress in democratic governance, political rights, and accountability. Indeed, the arc of history is bent towards human rights and democracy. This is due, in large part, to people like Lorne Craner, who understood that establishing and safeguarding vibrant democracies would require decades of meticulous work and an unflinching commitment to liberty for all. The world is a freer, safer, and more humane place because of Lorne’s efforts. Ronald Reagan said, “We’ve been blessed with the opportunity to stand for something – for liberty and freedom and fairness. And these are things worth fighting for, worth devoting our lives to.” Lorne Craner lived those words.

Diaspora Investments: A Case Study of Rwanda

Author: Steven Weirich, Research Intern (Summer 2019), Center for Strategic and International Studies

Overview of Remittances and Wealth Investments

Global migration is an ongoing phenomenon for policy professionals to contemplate. By the middle of 2019 the total international migrant stock was nearing 272 million people, which was an increase of around 23 million people from the same time in 2015.[1] These migrants, who leave their home countries for a variety of reasons, are often strongly committed to investing in their countries of origin if they have the resources to do so. If there are actions by which development organizations could encourage these migrants to channel more capital to their home countries, then the development community should certainly pursue them.

These groups, who end up living and putting down roots in places often far away from their home countries, are known as diaspora communities. Historically, the main capital-moving mechanism for these migrants has been remittances to their families and close friends. With improved data collection, there is now a greater understanding amongst scholars and policymakers on the impact remittances can play in global financial flows. The World Bank estimated that for 2018, there was $396.1 billion paid in remittances around the world, and that this number has been rising steadily over time since the 1970s.[2]

Remittances can be used for a variety of purposes by the recipients. Many recipients use the remittances to smooth their budget constraints over time, protecting themselves from economic downturns and providing a potential lift out of poverty. On the macroeconomic side, the flows can be used to replenish critical foreign exchange reserves, which will be useful if there are larger economic downturns or if the recipient nation wants to improve their credit standing for external borrowing reasons.[3] The current COVID-19 pandemic, for instance, has brutalized the balance sheets of many low and middle-income countries. In order to pay off their public debts, the governments of these remittance recipient nations will be looking for any revenue sources possible.

There has been a significant amount of formal research done on the various impacts of remittance flows. Giuliano and Ruiz-Arranz found remittances could play a key role as an alternative to formal investments throughout the developing world when financial sectors were underdeveloped.[4] These remittance payments often led, in turn, to economic growth. The remittances could serve as substitutes to financial instruments in places where banks and other financial institutions did not have the operational capacity. When researchers looked at the African continent specifically, they found comparable results as well. Nyamongo et.al. investigated the effects of remittances on financial development within 36 African nations, and they found evidence remittances acted as a complement to the development of the financial sector.[5] Their other results showed remittances contributed overall to positive economic growth, but the volatility of those financial flows could have a negative impact at the same time.

Outside of remittances, another important source of diaspora financial support comes from their investments. While remittances are based off a migrant’s income, investments are more likely to come from a migrant’s accumulated wealth. Transnational loans and diaspora bonds are two of the more common investment instruments diaspora groups use to leverage their wealth. Transnational loans are used by migrants to invest in home improvement, mortgage lending, and business expansion in their origin countries while they live abroad.[6] Migrants are then able to retain control of the loan from abroad, while simultaneously supplying credit to their families. Various countries have experimented with transnational loans including Mexico and the Philippines, where citizens in both countries were given increased access to mortgage funds and home loans.[7]

Diaspora bonds are sovereign debt instruments that act to provide capital to origin countries for infrastructure investment or other spending goals. To attract the interest of diaspora communities, nations occasionally set lower interest rates for diaspora bonds. Investing in these bonds is often viewed as an act of patriotism by the diasporas, as they allow their origin countries to raise more capital without having to commit massive amounts of government revenue to development projects.[8] There have been large-scale diaspora bond initiatives in Israel, Ethiopia, Ghana, and India. Israel, which has been offering them annually since 1951, has found there is an increase in demand for the bonds when they are being attacked by their neighbors. This is evidence the purchasing of the diaspora bonds can indeed be driven by patriotic sentiment.

Rwanda Case Study

            Rwanda has an incredibly large diaspora community around the world. Driven primarily by the 1994 genocide against the Tutsi people, many Rwandans fled to other countries to seek refuge. Although it is estimated around 3.4 million Rwandans refugees have returned to their country of origin, there are still many who have chosen to live in foreign countries.[9] The total Rwandan diaspora still numbers in the thousands, and the top destinations for the emigrants are France, the United States, the United Kingdom, and Canada.[10]

While lots of developing countries have not been able to take advantage of their diaspora groups, the Rwandan government has taken many concrete steps in order to do so. The diaspora itself has also been committed to pushing for development strategies from their home country and have willingly participated in several of the largest programs targeted at them.

The Agaciro Development Fund (AGDF) is a Rwandan sovereign wealth fund which was proposed at a meeting of the National Dialogue Council in 2011. It was officially implemented a year later. The fund was created as a way to both engage the diaspora group and to protect local Rwandans from external economic shocks, such as the global financial crisis of 2007-2008.[11] It receives its inflows from members of the Rwandan diaspora, as well as citizens within the country and anyone else who wishes to invest in the fund. The AGDF holds most of its investments in the form of equity, fixed income government securities, and term deposits.[12] The fund aims to promote sustainable development in Rwanda by maximizing returns on its investment holdings, while minimizing its risk and exposure to outside economic fluctuations.

Initiatives to spur outside investment have also come from members of the diaspora group themselves. The Rwanda Diaspora Global Network (RDGN) has been managing an investment fund since it was first implemented in late 2014.[13] The fund was designed as a way to build off of the success of remittance payments to Rwanda. Remittances from the diaspora have long been an important resource for poverty alleviation and foreign currency reserves in the country, but the hopes were that larger amounts of capital could be channeled from the diaspora for various development projects.[14] The RDGN was also responsible for creating the One Dollar campaign, which helped to build an orphanage in the capital city of Kigali in 2014.[15]

One of the leading concerns about workers who leave their home countries to work abroad is that they contribute to the “brain drain” problem. It is often argued that even if diasporas are sending remittances or finding other ways to help their home countries, the greatest contribution they may have been able to make was to never leave and become an active contributor to the economic and political health of their nation. In an effort to find a solution to this issue, the United Nations Development Programme (UNDP) started a program with the Rwandan government to help expatriates serve as official UN volunteers. The initiative was called the Transfer of Knowledge Through Expatriate Networks (TOKTEN). They recruited Rwandan nationals with technical backgrounds in areas such as technology, health, and agriculture to work with groups on training and skills transfer.[16] The evaluations conducted after the program was completed demonstrated they met the majority of the objectives. 47 volunteers returned to Rwanda to participate in the program, and nine of them ended up returning permanently when the work was finished.[17]

While it can be a struggle for developing countries to engage effectively with their diaspora groups, Rwanda provides several examples of how this process can be done. There is no one option for accomplishing this goal, but by pursuing a variety of efforts, it is possible for both a national government and the diaspora group at large to make tangible contributions to the development of their origin country.

Recommendations

Development organizations should be using the example of Rwanda as a guide on how to engage with large diaspora groups. Specifically, they should attempt to create channels for investment back into these developing countries using capital from the diaspora. An organization such as the International Finance Corporation (IFC) has tools at their disposal which could work to accomplish this goal. They have a platform called the Managed Co-Lending Portfolio Program (MCCP) which serves to encourage investment by creating portfolios of private sector loans. These loans are then used by groups looking to begin making investments in emerging markets. The portfolios for the investors are the same as the ones maintained by the IFC during the investment process. The partners agree at the start on how exposure and risk will be allocated between the two.[18]Since the first investment partner came on board in 2013, around seven more organizations have entered into partnerships with the IFC through the MCCP. They include Allianz Global Investors, Liberty Specialty Markets, and the Hong Kong Monetary Authority. The capital raised through these partnerships is much more than the IFC could raise on its own for development and market creation projects. According to its data from 2018, the MCCP was able to amass $7 billion in capital.[19]

Although most of the partners in the MCCP have been state banks or large private companies, it is possible an expansive and committed diaspora group could serve as a partner. As the RDGN demonstrated, a highly motivated group is capable of coming together to structure large-scale wealth investments. There are other ways development organizations could channel these capital resources. The United States Agency for International Development (USAID) has also been supporting more innovative forms of impact investing. They have recently pursued ventures like the Utkrisht Impact Bond, which they claim is the first development bond tailored specifically for newborn and maternal health.[20] Much of the up-front private capital backing in this bond originates from USAID’s partner organization the UBS Optimus Foundation. The bond is meant to help improve medical facilities and healthcare services in Rajasthan, India. USAID and another partner, Merck for Mothers, are on the hook to pay back the initial investment only if the implementing organizations meet predetermined targets on improving the health facilities catering to mothers and newborns.[21]

A program similar to the Utkrisht Impact Bond could be an option for a large diaspora group looking to invest in areas more related to human development. The key step, however, is for a development organization such as the ones mentioned above to approach these groups and help facilitate the investment process. If there are substantial amounts of diaspora members out in the world wanting to use their capital more productively, then development agencies should be active in courting their support. Considering all of the positive effects remittances can have on developing countries, the international development community should seek to make greater strides toward facilitating a wave of diaspora wealth investments.

[1] United Nations, “Total International Migrant Stock,” United Nations Department of Economic and Social Affairs, https://www.un.org/en/development/desa/population/migration/data/estimates2/estimates19.asp.

[2] World Bank, “Personal Remittances, paid (current US$),” The World Bank Group, https://data.worldbank.org/indicator/BM.TRF.PWKR.CD.DT.

[3] Gloria Moreno-Fontes Chammartin, “The Effective Use of Remittances in Promoting International Development,” International Labour Organization, https://www.un.org/en/development/desa/policy/publications/general_assembly/eitconference/2aprpm_moreno.pdf.

[4] Paola Giuliano & Marta Ruiz-Arranz, “Remittances, financial development, and growth,” Journal of Development Economics 90, no.1 (September 2009): 144-152, https://www.sciencedirect.com/science/article/pii/S0304387808001077.

[5] Esman Nyamongo, Roseline Misati, Leonard Kipyegon & Lydia Ndirangu, “Remittances, financial development and economic growth in Africa,” Journal of Economic and Business 64, no. 3 (May/June 2012): 240-260, https://www.sciencedirect.com/science/article/pii/S0148619512000021.

[6] Aaron Terrazas, “Diaspora Investments in Developing and Emerging Country Capital Markets: Patterns and Prospects,” Migration Policy Institute, August 2010, https://www.migrationpolicy.org/research/diaspora-investment-developing-and-emerging-country-capital-markets-patterns-and-prospects.

[7] Ibid., 15

[8] Ibid., 16

[9] IOM, “Rwanda,” International Organization for Migration, https://www.iom.int/countries/rwanda.

[10] OECD, “Connecting with Emigrants: A Global Profile of Diasporas,” Organisation for Economic Co-Operation and Development, July 26, 2012, https://read.oecd-ilibrary.org/social-issues-migration-health/connecting-with-emigrants/key-statistics-on-diaspora-from-rwanda_9789264177949-graph171-en#page2.

[11] IFSWF, “Agaciro Development Fund,” International Forum of Sovereign Wealth Funds, https://www.ifswf.org/members/rwanda.

[12] Ibid.

[13] James Karuhanga, “Diaspora group starts investment fund to help fast-track national development,” The New Times, January 6, 2015, https://www.newtimes.co.rw/section/read/184688.

[14] Rwanda Global Diaspora Network, “Remittances,” Rwanda Global Diaspora Network, http://www.rwandaglobaldiaspora.org/diaspora/.

[15] Diane Mushimijimana, “Rwanda: One Dollar Campaign Complex Inaugurated,” allAfrica, October 29, 2014, https://allafrica.com/stories/201411032568.html.

[16] IOM: UN Migration, “Rwandan Diaspora,” International Organization of Migration, September 2018, https://www.iom.int/sites/default/files/country/EEA/info_sheet_diaspora.pdf.

[17] Ibid., 3.

[18] IFC, “Managed Co-Lending Portfolio Program,” International Finance Corporation, https://www.ifc.org/wps/wcm/connect/corp_ext_content/ifc_external_corporate_site/solutions/products+and+services/syndications/mcpp.

[19] Ibid.

[20] USAID, “The Maternal and Newborn Health Development Impact Bond,” United States Agency for International Development, November 30, 2018, https://www.usaid.gov/cii/indiadib.

[21] Ibid.