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Development Channel

The Development Channel highlights big debates, promising approaches, and new research and thinkers addressing opportunity and exclusion in the global economy.

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Mossack Fonseca law firm sign is pictured in Panama City, April 4, 2016.
Mossack Fonseca law firm sign is pictured in Panama City, April 4, 2016. Carlos Jasso/Reuters

Corruption Brief Series: How Anonymous Shell Companies Finance Insurgents, Criminals, and Dictators

The latest paper in the Corruption Brief series from the Civil Society, Markets, and Democracy program at the Council on Foreign Relations was published this month. In the brief, Dr. Jodi Vittori, senior policy advisor at Global Witness, addresses the myriad problems posed by anonymous shell companies – corporate entities with few or no employees and no substantive business, which offer a convenient way to privately move money through the international financial system.

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Development
Welcome to the CFR Special Series on Global Justice
In the coming months, the Development Channel will devote a special series to the theme of Global Justice. We will explore the relationship between written law, access to justice, and the realization of freedom and opportunity for all people. The series will highlight diverse perspectives from practitioners and experts around the world, who will shed light on issues that are often invisible to those not directly affected by injustices. The first piece in the series, from Natalie Bridgeman Fields, founder and executive director of Accountability Counsel, stressed the importance of impartial arbitration of disputes between communities and major global development finance institutions like the World Bank, to ensure that the needs of the worst-off are not ignored in development projects. Upcoming pieces will investigate global justice from a variety of perspectives, examining issues as diverse as land grabs, legal empowerment, and how the international community can better support communities in their struggles for dignity, fairness, and sustainable livelihoods. In my series last year on post-2015 development issues, I argued that justice is fundamental to global development, and that it is feasible, politically possible, and imperative to include governance and human rights in the post-2015 global development agenda. I have since argued that to realize those goals we need not only fair rules on paper, but also empowered people and communities with access to advocates who will work to ensure that justice is made real for the worst-off – a “lawyers without borders” approach. Support is growing for such global justice measures. Just this week, a coalition of civil society organizations issued a call to action demanding that the United Nations include justice in the next round of global development goals. What do you think? How does justice relate to development? Are these concepts inextricably intertwined, or are they distinct policy agendas with inevitable trade-offs, as some of my own research suggests? To submit an Op-Ed for consideration for inclusion in our Global Justice series, email me at [email protected]. Looking forward to hearing from you.
Development
Keep the World Bank Accountable
Emerging Voices features contributions from scholars and practitioners highlighting new research, thinking, and approaches to development challenges. This article is from Natalie Bridgeman Fields, founder and executive director of Accountability Counsel. Here she discusses the implications of proposed changes to the World Bank Inspection Panel. This is the first piece in an ongoing Development Channel series on global justice and development. The World Bank is in the midst of an accountability crisis: over one billion people who live in poverty may lose their right to an independent hearing if they are harmed by a Bank-funded project. The Bank aims to serve the world’s poorest, but their projects can have negative consequences as well. For the past twenty years, the World Bank Inspection Panel has addressed complaints from people harmed by Bank-funded projects and has served as an independent review to determine if projects comply with the Bank’s own social and environmental safeguards. The Bank claims immunity from lawsuits for harm caused by its official operations due to its status as a specialized agency of the United Nations and because it is comprised of sovereign member governments. Therefore, the Panel helps fill in the Bank’s accountability gap, allowing it to operate as a legitimate, rule-based institution. The Panel is often the only way for people harmed by Bank-funded projects – including those forced off their land due to the construction of large dams, or poisoned by industrial facilities – to have their voices heard. If a Panel investigation finds that the Bank has violated its own policies, Bank management must respond with an action plan to bring the project into compliance. The Panel report and action plan then goes to the Bank’s Board of Directors who decide what to do next. In the past, Panel investigations have led to consulting affected communities about development projects, redesigning projects to avoid harmful impacts, and occasionally cancelling projects entirely. As the founder and executive director of Accountability Counsel, I have worked for many years informing communities around the world that the Panel exists and helping them use it effectively. In its current form, the Panel is comprised of three members who serve five-year terms, as well as a permanent secretariat, led by an executive secretary, which supports the Panel’s functions and preserves institutional memory. The secretariat is responsible for fending off Bank management and Board members’ frequent attempts to undermine the Panel and its independence. But this crucial function is now in danger. On February 13, the Bank’s Board of Directors will consider a proposal from current Panel members to change the rules relating to the secretariat’s independence. The proposal is not a public document and has not been subject to any public consultation or debate. Although former Panel members have fought hard to preserve the Panel’s independence, the current Panel members now want the executive secretary to be a Bank employee who would be allowed to work for the Bank after their limited term ends. In other words, the current Panel members are inviting a revolving door between those supporting investigations and those being investigated. Under the proposed changes, a member of the Bank’s legal department could determine that a project complies with Bank policy, then work as the Panel’s executive secretary and weigh in on whether those same projects are in compliance with Bank policy. In addition, they will be termed out after five to seven years, at which point they may want their job back at the Bank’s legal department—a motivation that could further taint their decision-making. The proposal allows no cooling off periods or post-employment bans to ensure independence, and no tenured positions keep institutional memory. Seven highly respected former members of the Panel recently took the unprecedented step of sending a joint letter accusing the current Panel members of undermining the Panel’s independence and effectiveness. The current Panel members’ response demonstrated a lack of interest in the preservation of the secretariat’s independence. If safeguard rules were valued at the Bank, the proposed changes to the secretariat would be quickly rejected. But the Bank has recently adopted a strategy of “smart risk-taking” and “development effectiveness,” paying little attention to the rules established to protect the environment and people’s rights. The problem starts at the top: as many civil society groups have lamented, Bank President Jim Yong Kim has failed to prioritize accountability and has instead pushed forward projects that have a history of abuses, such as constructing large dams and mining. This latest proposal reveals that the Panel is on board with this strategy, and is more interested in maintaining good relations with Bank officials than ensuring accountability and protecting the world’s poorest citizens from future abuses.
Education
Education, Employment, and Youth Today
Last week, the United Nations Educational, Scientific and Cultural Organization (UNESCO) released the eleventh edition of its Education for All Global Monitoring Report, an annual update that reviews the status of access to education around the world and highlights the crucial role that education plays in achieving development goals. This year’s report, titled “Teaching and Learning: Equality Achieved for All,” finds that even after a decade of increased resources and commitments dedicated to achieving universal access to education, many—if not all—of UNESCO’s goals will not be met by 2015. If current trends hold, fewer than half of the 141 countries examined in the report will achieve UNESCO’s goal of 80 percent pre-primary education enrollment rates. As of 2011, there were still 57 million children out of school, with around half of them living in conflict-affected countries and many never expected to re-enroll. In addition, only 20 percent of the world’s low-income countries have achieved gender parity in primary education, and only about 10 percent have equal enrollment for boys and girls in lower secondary school. The stakes are high: education remains one of the most powerful ways to break the poverty cycle. The report estimates that if all students gained basic reading skills, 171 million people could be lifted out of poverty. Education helps inoculate against poverty by providing higher wages and diversifying sources of income. For those already employed, earnings can increase up to 10 percent for each additional year of school. Yet although the number of illiterate adults has fallen 12 percent since 1990, the number has only gone down 1 percent since 2000, leaving 774 million adults without reading and writing skills. In 2012, the World Literacy Foundation estimated that illiteracy was costing the global economy $1.19 trillion. Women comprise two-thirds of the world’s illiterate, which not only limits the status of women and girls, but also hinders economic growth. The benefits of education extend beyond the individuals: families, communities, and future generations benefit as well. In Senegal, for example, UNESCO found that children with educated parents were more likely to find employment and lift themselves out of poverty. And children of educated mothers are more likely to be well nourished, vaccinated, and educated. An educated population is also vital to curbing rising unemployment rates. In its recent Global Employment Trends report, the International Labour Organization (ILO) found that unemployment went up by 5 million people in 2013. Young people were disproportionately affected, with youth unemployment reaching 13.1 percent worldwide and over 50 percent in some countries. Lack of access to education remains a major stumbling block for many young people hoping to enter the labor market. Without proper skills and education, youth are left unemployed or with unreliable jobs in the informal sector. But education, from vocational to university training, can give young people the tools they need to overcome some of these barriers. By prioritizing education at all levels, governments can reduce unemployment rates, inspire entrepreneurship, formalize the job market, and ultimately, build more resilient economies.
  • Asia
    Afghan Women and the Post-2014 Economy
    As discussions about post-2014 U.S. presence in Afghanistan continue, so do concerns about the country’s ability to stand on its own. The Afghan people and their government will determine the direction of the country. And as that future is discussed, so is the question of what will happen to 50 percent of country’s population: women. When the Taliban came to power in 1996, they forbade women from attending school, working in offices, and leaving their homes without a male chaperone. Much has changed in the past decade as many women have worked to make the most of openings created by the international community’s presence. Twelve years ago, there were fewer than 900,000 boys and almost no girls in school. Now there are more than 8.3 million students in school across Afghanistan, and 40 percent of them are girls. As noted in the recent report on Women’s Economic Empowerment in Afghanistan, published by the Afghanistan Research and Evaluation Unit, there are currently sixty-nine women in Afghanistan’s Parliament, and the country aims to have female representation in parliament reach 30 percent by 2020. There are also twelve women in executive government departments, as well as five deputy ministers, one governor, one mayor, and numerous other women serving across the government. Women have even increased their presence in the police force, with an estimated 1,551 women donning police uniforms as of July 2013, according to Oxfam. The country recently saw the first woman appointed as district police chief. Maternal health has also improved. The 2010 Afghanistan Mortality Survey estimated that there are 327 maternal deaths for every 100,000 live births, a drop from the 1,600 per 100,000 estimated in 2008. This progress is thanks to an increase in average age of marriage, higher contraceptive use, lower fertility, and greater access to maternal care, as noted in the 2011 CFR working paper on Maternal Health in Afghanistan. Despite daunting challenges, women have achieved economic gains as well. A recent report funded by the U.S. embassy in Afghanistan found that more women than ever work in formal businesses in Afghanistan as employees, owners, and entrepreneurs. The report, which surveyed more than 1,400 Afghan businesswomen across thirty-four provinces, also found that “views on women at work appear to be steadily evolving, with more segments of the population becoming amenable to and supportive of women’s economic participation.” Nearly all women surveyed said they had their family’s backing. Family support, paired with changing attitudes—such as considering education and employment valuable attributes in a wife—are helping create more opportunities for women in the workplace. Seventy-eight percent of the women surveyed work in small businesses, and 81 percent cited access to financial services as a barrier hampering their economic potential, paralleling trends worldwide when it comes to women’s economic participation. Most respondents also said that they could use more business education, financial management skills, technical support, mentor-mentee opportunities, and support from the Afghan government in accessing these services. Afghan women face the barriers to economic empowerment women struggle with worldwide, in addition to government corruption, deep-rooted cultural norms, and weak institutions and infrastructure that further limit their opportunities. The most fundamental threat to women remains safety and security, especially as the Law on Elimination of Violence again Women in Afghanistan has been implemented inconsistently. Taken as a whole, these challenges make Afghanistan one of the most challenging environments for businesswomen to survive, much less thrive, in. But Afghan women have proven their resilience time and time again. If education rates for girls and women and community perceptions of the value of women continue to improve, women’s presence in the economy will grow. These changes will allow Afghan women to contribute even more to their families and communities, and pave the way for greater prosperity for all.
  • Human Rights
    Understanding Child Marriage: CFR InfoGuide
    This week, the Council on Foreign Relations (CFR) launched a new InfoGuide on child marriage that explores how the practice endangers prosperity and stability in the countries in which it is prevalent and undermines U.S. development and foreign policy objectives. The InfoGuide examines the link between child marriage and poverty, poor health, curtailed education, and violence, and demonstrates how this practice harms not only entire families, communities, and economies, but also U.S. interests around the world. In recent years, Washington has recognized the threat that child marriage poses to U.S. development and foreign policy goals. In 2012, the Obama Administration issued a U.S. strategy to address global violence against women—including the practice of child marriage. That same year, for the first time, the Department of State required all embassies to report on child marriage as part of its annual Human Rights reports, and the U.S. Agency for International Development launched a policy framework to address child marriage through U.S. development programs. And in 2013, Congress enacted a provision under the Violence Against Women Act reauthorization that requires a U.S. strategy to prevent child marriage around the world. On the international stage, the issue of child marriage has been increasingly recognized as a serious obstacle to achieving global development goals. In 2012, on the first-ever United Nations International Day of the Girl Child, UN Secretary-General Ban Ki-moon called global attention to the negative effect child marriage has on stability and prosperity and urged local, regional, and international leaders to address this issue. Last year, the UN Secretary-General’s High-Level Panel on the Post-2015 Development Agenda—appointed to inform the international development agenda that will replace the Millennium Development Goals when they expire in 2015—called for an international commitment to end child marriage. CFR’s Child Marriage InfoGuide explains why ending child marriage has risen in importance on the U.S. and international agenda. As the InfoGuide shows, addressing this practice is not simply a moral issue—it is a strategic imperative to improve global health, education, economic growth, and stability.