Memorandum: Impact of Israeli settlements on the Peace Process

Importance and Reach of the Issue

Israeli settlements in the West Bank and East Jerusalem have become the key impediment to the rehabilitation and successful completion of the Peace Process. Addressing the issue of settlement growth is the pre-requisite for re-engaging the formal negotiating process and will govern the discussions once this process has begun anew. Quite simply: this issue is everything. It is so crucial because settlement expansion undermines the integrity of a Palestinian state - the goal of the Peace Process. (This is the “two-state solution” often heard in the reporting and discussion of this issue.) By continually expanding into the Palestinian territories, Israel is allowing the borders of a future Palestinian state to exist in name only. This, of course, is unacceptable to the Palestinians and the sole reason both they and the U.S. administration seek an agreement to halt expansion as a pre-requisite to re-engaging the Peace Process.

            Without a formal agreement (or the diplomatic equivalent thereof) on the settlement issue the U.S., who is leading the negotiating process, will have effectively conceded too much to Israel. By re-engaging the Peace Process without this agreement the U.S. is sending the message to Israel that its current operations are sanctioned. As negotiations begin Israel will almost certainly increase its expansion into Palestinian territories. They are currently doing so with both pressure from President Obama and persistent violence from the Palestinians most proximate to these settlements. If they are granted a seat at the negotiating table with this action continuing unabated the Peace Process will be futile. After all, if settlements proliferate while negotiations to stop that proliferation are under way the entire process loses credibility and becomes ineffectual. Lastly, Israeli settlers use violence in their expansion campaign while affected Palestinians use violence to repel it. Violence has compounded the settlement issue and has made the Peace Process anything but peaceful. As each settlement is constructed and further bouts of violence appear on the nightly news negotiations are set back. Urgency is imperative.

A Brief Background

            The settlement issue has its roots in the aftermath of the Six Day War. After the war’s completion Israel gained control of a number of areas (via the cease-fire agreement) captured during the operations. Among these were the West Bank and East Jerusalem. Initially, Israel did not expand into these territories. In fact, as settlers attempted to relocate into these areas the Israeli government forcibly evacuated them and destroyed infrastructure that went up during their occupation. However, subsequent years saw no advance in the discussion of what to do we these quasi no-man lands. In response, Israel ceased its restrictions and enforcement of settlement expansion. The result has seen settlers totaling over 280,000 in the West Bank and over 190,000 in East Jerusalem today.

            In 2005, following what was called the Unilateral Disengagement Plan, four settlements in the West Bank (and all settlements in the Gaza Strip – another contested territory) were dismantled following forced evacuations. What was heralded as progress in the Peace Process belied settlement expansion in East Jerusalem. By 2008, even with the land concessions made three years earlier, net settlement expansion was positive. Recognizing the reality on the ground, President George W. Bush (and before him President Clinton) sought to limit settlement expansion by defining specific boundaries in which current and already planned settlements in East Jerusalem and the West Bank could grow into. While this seemingly advanced the Peace Process it ignored another reality on the ground: That Palestinians want East Jerusalem to be the capital of a newly formed state. For a multitude of reasons, not least of which involves the logistics of relocating these relatively entrenched settlements, parts of both East Jerusalem and the West Bank would retain Israeli control in any likely peace agreement. To compensate for this, different tracts of land would be allocated to the Palestinians. That brings us to the Peace Process today.

The Latest Developments

The current Israeli Prime Minister, Benyamin Netanyahu, has become fairly recalcitrant on this issue; Because of this the Peace Process today is in flux. President Obama is seeking an immediate end to settlement expansion in East Jerusalem and the West Bank. In what would prove to be a major diplomatic error, Obama presented this wish using the term “restrain” instead of “freeze”. Though President Obama meant the latter, Netanyahu took his phrasing at face value, claiming he knows the difference between the two terms and their respective calls to action. Because of the President’s language Netanyahu can claim he is abiding by the administration’s wishes, as the definition of restrain can be applied both narrowly and broadly in scope.

Obviously, defining it broadly benefits the Israelis. Unfortunately, this sets the U.S. administration’s efforts to advance the Peace Process back considerably. Further, Netanyahu continuously contradicts himself in the public debate on this issue. At times he claims a two-state solution is absolutely untenable. Other instances present a somewhat discernible acceptance of a Palestinian state and the necessary concessions to get there. This wavering puts the U.S. administration in a bind. They cannot move forward with negotiations until an agreement on settlement expansion has been reached. But, depending on the day, Benyamin Netanyahu implies this to be either ignorant or impossible. In either case, progress is elusive. The U.S. is entirely dependent on changing the Israeli Prime Minister’s mind. The latest set backs were just over a month ago however, leaving the Peace Process once again in flux. Without moving forward on the settlement front that’s where it will stay.


Key Conclusions:

• ·      The settlement issue is the primary impediment to the re-engagement of the Peace Process
• ·      Any agreement on settlement expansion that would be sufficient to continue the Peace Process will most likely not be sufficient enough to finish the Peace Process.
• ·      Time is not on the United State’s side; the logistics of moving settlements as expansion increases will be used to Israel’s advantage.
• ·      The U.S. is dependent on Benyamin Netanyahu’s decision on settlement expansion.

Report: Atlantic Airliners Plot

The Plot

            In “the biggest anti-terrorist surveillance operation ever mounted in the UK”, British intelligence officials uncovered a plot the magnitude of which surpassed even the tragedy of 9/11.[1] The goal was to have terrorists board several US-bound airliners in Britain carrying homemade explosive devices.[2] These explosives would be liquid-based and disguised as standard beverages in plastic bottles. In reality, a concoction of hydrogen peroxide and powdered drink mix would be blended with one another onboard the flight and triggered by a small detonator hidden inside a disposable camera.[3] The terrorists planned to trigger these explosives either mid-flight while over the Atlantic or above each destination city prior to landing. The explosives were designed to emit powerful enough blasts to result in critical fuselage failure.[4] In other words, the devices were intended to rip apart the airplane. According to various reports, between seven and eighteen planes were to be targeted, with no less than 240 passengers on board each.[5]

Behind the Scenes

            The “ringleader” responsible for the plot, Abdulla Ahmed Ali, first became sympathetic to extremist Islamic causes through a charity organization called the Islamic Medical Association, located in East London.[6] This charity raised money and collected various supplies to send to refugee camps on the Pakistan/Afghanistan border.[7] Through his work with the organization Ali elected to travel to the refugee camps himself. Later revealed in the trial of the plot’s conspirators, Ali quickly became dismayed by what he experienced abroad. The conditions in the camps were appalling and instantly changed his view of the world that had been previously shaped solely through Western eyes.[8]

            After his return Ali frequented a decidedly more radical set of Islamic circles. Subsequently, the discourse regarding the situation on the AfPak border took on similarly radical tones. The appropriate response, it seemed, was terrorism. The Islamic organizations Ali was apart of were soon debating whether the UK was a legitimate and/or worthwhile target for such acts.[9] Their anger over the situation witnessed by many of the organization’s followers led them to conclude that it was. All this discussion, however, proved “loud” enough to attract the attention of the kingdom’s security agencies. Soon, Ali was under surveillance by MI5.[10]

            In their operations against Ali the British domestic intelligence service twice contacted a known friend of Ali’s, and future co-conspirator, Arafat Khan.[11]Reaching out came to no avail, however, and Ali made another trip to Pakistan – this time for very different reasons. On his return flight home in June of 2006, investigators clandestinely opened his luggage and found the powdered drink Tang as well as an unusual number of batteries.[12] This finding was the impetus for the massive surveillance undertaking that would follow. An additional 220 officers from other security agencies were pulled onto the investigation immediately.

            Back in the UK, surveillance tracked Assad Sarwar – a senior leader in the plot – “busily” buying items that were both out of step with his regular routine and that, when used in conjunction with one another, could produce deadly results.[13] Further, Sarwar was seen via a store’s security camera purchasing a suitcase, later found to have been used for the burial of bomb components in the woods. Afterwards, he was seen disposing of “empty hydrogen peroxide bottles at a recycling center”.[14] (Hydrogen Peroxide is a common ingredient in the construction of homemade bombs). As suspicious activity increased, the dots began to connect. When Sarwar and Ali were seen meeting outside in East London surveillance teams deemed this a red flag. “Smack[ing] of a counter-surveillance ploy”, meeting outside proved to be at loggerheads with the gentlemen’s standard routines.[15] This was indeed corroborated when MI5 broke into Ali’s apartment and found what they described as a “bomb-making factory”.[16]

            MI5 planted a microphone and a camera in the apartment room and on August 3, 2006, Ali and a gentleman named Tanvir Hussain were seen constructing devices out of plastic drink bottles.[17] Three days later Ali spent approximately two hours at an Internet café searching flight schedules. By now it was obvious an operation was building. Further Internet traffic showed the surveillance team that this operation would include airliners and possible mid-flight explosions over the Atlantic.[18] However, intelligence officers were soon forced to make a move, as the pieces of the case showed an operation could be imminent. Four events led them to this conclusion: A call about the plot was intercepted; Internet traffic relating to the operation had increased markedly; A significant transfer of funds from Pakistan was made to the plotter’s accounts; And finally, two men under surveillance disappeared from the map.[19] It was time to move.

Raids and Arrests

            On Thursday morning, August 10, twenty-four individuals were arrested at homes in London, High Wycombe and Birminghan.[20] By 2 AM the UK’s security threat level was lifted to its highest degree. Airports were sent into chaos as staff tried to respond as quickly as possible implementing the appropriate security measure.[21]In this flurry of chaos, the largest investigation in the UK’s history, extending over the previous twelve months, had come to a close.

            The investigation was lead by Peter Clarke, deputy assistant commissioner of the Metropolitan Police.[22] Along with MI5, Pakistani government officials sought credit due to their own intelligence work and sharing. The case was also monitored by US intelligence, with their involvement becoming most significant in the final two weeks prior to the coordinated raids.[23] During these raids, UK Prime Minister, Tony Blair, called George Bush to inform him that the operation was underway. The following day saw the Department of Homeland Security in the US increase the threat level for incoming flights originating in the UK (the first time a threat level had been addressed for that category of air traffic) and had dispatched further air marshals to Britain.[24] Airliners were not told of the plot until the operation was almost completed. It was hoped that this action would reduce panic and mitigate unintended consequences resulting from potential overreaction.

Results and Information Obtained

            The raids and arrests of the twenty-four suspects yielded a plethora of intelligence. Seven martyrdom videos made by the leaders of the group; A handwritten diary ostensibly defining the constructs of the plan[25]; Several thousand pounds in various accounts[26]; And a plastic bin filled with liquid, batteries, approximately twelve plastic drink containers, rubber gloves, digital scales and a disposable camera were all found in the initial raids.[27] As the investigation continued, the building dubbed by intelligence officers as “the bomb factory” - located in Pakistani-heavy Walthamstow, London – was found to have been paid in cash, equivalent to $260,000.[28]

            Some of the men in the investigation were in Pakistan in 2004 with individuals who helped organize the London bombings of the following year. US officials involved stated that “substantial sums” were wired from Pakistan to two of the ringleaders, alluding to the potential that the Pakistan trip was undertaken for fundraising purposes. Others arrested had been under investigation before for extremist activity or ties to radical networks.[29] All twenty-four suspects ranged in age from seventeen to thirty-five.[30]

            Evidence obtained helped piece together the details of the plot. The explosive devices were to be concealed in plastic drink bottles. A syringe would extract the consumable liquids from the bottom of the container (so as not to break the sealed cap of the bottle, alerting airport security), and would be replaced with a concoction of hydrogen peroxide and powdered drink mix. The detonator would be concealed in a disposable camera and use the flash mechanism to emit a charge, triggering the explosives.[31]These explosives were called HMTD.[32]

            However, the intelligence collected elicited different conclusions from different people. Some were not convinced the plot was imminent. For instance: the bombs found were never fully constructed and airline tickets were never purchased.[33] Further, two of the gentlemen did not yet have passports. Other evidence suggested recruitment for the plot was still underway.[34] Travel plans were discovered though, highlighting destinations that included Boston, Chicago, Washington DC and Los Angeles.[35] Additionally, it appeared as if a dry run of the operation was likely.[36] Ultimately, the twenty-four individuals involved in the plot were held on “suspicion of the commission, preparation or instigation of acts of terrorism” under the 2000 UK Terrorism Act.[37] Twelve of those were charged. Eight with conspiracy to murder and preparatory acts of terrorism, the others with failure to disclose information that would help prevent terrorist acts.[38]

The Trial

            Eight of the suspects were brought to trial. Those included Abdul Ahmed Ali, Ibrahim Savant, Arafat Waheed Khan, Waheed Zaman, Tanvir Hussain, Mohammed Gulzar, Assad Sarwar and Umar Islam.[39] All eight denied the charges brought against them. The trial was held at Woolwich Crow Court in south London. During the proceedings testimony helped not only corroborate evidence discovered during the initial raids and arrests, but alluded to a plot slightly more ambitious in scope.

            Though no tickets had been purchased at the time, seven planes had indeed been selected for the operation. Their destinations were San Francisco, Toronto, Montreal, two for Chicago, Washington DC and New York City. The destinations selected would allow for all seven planes to be in the air within two and a half hours of each other. This was important as the plan called for the bombs to be detonated once all the airliners were in the air simultaneously.[40]

            Ali refuted these claims, stating that they were merely trying to set off a “harmless explosion” that would garner media attention. The chemicals used were to give the publicity stunt the appropriate dose of authenticity and were not intended to inflict critical damage or injury.[41] Ali’s right-hand man, Assad Sarwar, exhibited a less ostentatious defence during his testimony. He admitted that traveling to Pakistan in July of 2006 taught him how to make the HMTD explosives. Somewhat more vague, he claimed that when “whatever incident” they had planned was carried out they intended to contact police immediately to blame al Qaeda.[42] However, when pressed, Sarwar denied any involvement in the plot to blow up airliners.

The Verdict

            Abdul Ahmed Ali, Tanvir Hussain and Assad Sarwar were found guilty of the airliners plot at the second of two trials. The first found them guilty of conspiracy to murder but failed to link them specifically to the larger terrorist operation.[43] Umar Islam was also convicted of conspiracy to murder, short of implication in the airliners plot.[44] Jury’s for the rest either failed to deliver a verdict or found them not guilty.[45] The three who were convicted face life sentences. The Director of Public Prosecutions, Keir Starmer, is seeking a retrial for three of the other men. He hopes to reach a verdict of conspiracy to murder.[46] The Judge in the case found the “ultimate control of this conspiracy [resided] in Pakistan”.[47] What that means for future surveillance programs is hard to say. Current events show that the link between Pakistan and the Western world may exist for more than just those put on trial. Intelligence collection should be tasked as such.

---

[1] Bob Sherwood and Stephen Fidler, “MI5 Tracked Group for a Year,” Financial Times, August 

          10, 2006, Sec. In Depth

[2] BBC News, Dominic Casciani, “Liquid Bomb Plot: What Happened,”

http://news.co.uk/2/hi/uk_news/7564184.stm

[3] Philip Webster, Sean O’Neill and Stewart Tendler, “A Plan ‘to Commit Unimaginable Mass

Murder’,” Times Online, August 11, 2006, Sec. UK News

[4] Ibid

[5] BBC News, “Airliners Plot: The Allegations,” http://news.co.uk/2/hi/uk_news/7329221.stm

[6] BBC News, Dominic Casciani, “Liquid Bomb Plot: What Happened”

[7] Ibid

[8] Ibid

[9] Ibid

[10] Ibid

[11] Ibid

[12] Ibid

[13] Ibid

[14] Ibid

[15] Ibid

[16] Ibid

[17] Ibid

[18] Philip Webster, Sean O’Neill and Stewart Tendler, “A Plan ‘to Commit Unimaginable Mass

Murder’ ”

[19] Ibid

[20] Bob Sherwood and Stephen Fidler, “MI5 Tracked Group for a Year”

[21] Ibid

[22] Ibid

[23] Ibid

[24] Ibid

[25] Don van Natta Jr., Elaine Sciolino and Stephen Grey, “Details Emerge in British Terror Case,”

New York Times, August 28, 2006, Sec. International

[26] Philip Webster, Sean O’Neill and Stewart Tendler, “A Plan ‘to Commit Unimaginable Mass

Murder’ ”

[27] Don van Natta Jr., Elaine Sciolino and Stephen Grey, “Details Emerge in British Terror Case”

[28] Ibid

[29] Philip Webster, Sean O’Neill and Stewart Tendler, “A Plan ‘to Commit Unimaginable Mass

Murder’ ”

[30] Don van Natta Jr., Elaine Sciolino and Stephen Grey, “Details Emerge in British Terror Case”

[31] BBC News, Dominic Casciani, “Liquid Bomb Plot: What Happened”

[32] Don van Natta Jr., Elaine Sciolino and Stephen Grey, “Details Emerge in British Terror Case”

[33] BBC News, Dominic Casciani, “Liquid Bomb Plot: What Happened”

[34] Don van Natta Jr., Elaine Sciolino and Stephen Grey, “Details Emerge in British Terror Case”

[35] Philip Webster, Sean O’Neill and Stewart Tendler, “A Plan ‘to Commit Unimaginable Mass

Murder’ ”

[36] Ibid

[37] Bob Sherwood and Stephen Fidler, “MI5 Tracked Group for a Year”

[38] Don van Natta Jr., Elaine Sciolino and Stephen Grey, “Details Emerge in British Terror Case”

[39] Gordon Rayner and Duncan Gardham, “Airline Terror Plotters Planned Big 9/11,” The Daily

Telegraph, April 7, 2008

[40] BBC News, “Airliners Plot: The Allegations,” http://news.co.uk/2/hi/uk_news/7329221.stm

[41] BBC News, “ ‘Planes Plotter’ Bought Chemicals,” http://news.co.uk/2/hi/uk_news/7446198.stm

[42] Ibid

[43] BBC News, “Airliners Bomb Plot: The Verdicts,” http://news.co.uk/2/hi/uk_news/8233954.stm

[44] BBC News, “ Three Guilty of Airline Bomb Plot,” http://news.co.uk/2/hi/uk_news/8242238.stm

[45] BBC News, “Airliners Bomb Plot: The Verdicts”

[46] BBC News, “Airline Plot Trio Get Life Terms,” http://news.co.uk/2/hi/uk_news/8254156.stm

[47] Ibid

The Value of Iterative Thinking: How Persistent Modeling Informed the United Nation’s Response to Haiti

Introduction

            The disaster in Haiti required an immediate, decisive response. Yet, it was clear that to successfully address the situation a more cautious, nuanced approach would be required. Haiti was treated to a mixture of both. This nexus - between the ideal and the practical - is where relief agents went to work. And so too did the United Nations, simulated by my colleague and I, Terry Gish.

Throughout the tenure of this research seminar our work on Haiti aimed to model the administration of aid in the most realistic fashion. Our goal: To provide relief under the guise of the United Nations without encroaching on the turf of the United States or the Haitian government. With this we set about only to find administering aid to be deceptively difficult. Questions ranging from what kind of aid, to the types of its disbursement, offered a realistic perspective on the practical challenges these disasters generate. Administering aid is anything but simple, immediate or comprehensive.

To navigate the response effort, iterative processes were key. Constant repetition of thought highlighted the most realistic starting point; priorities were questioned and rearranged incessantly; and modeling rendered the final plan comprehendible. All the while the Haitian people were left wondering where their aid was. This point of tension, between the amount of aid demanded and the ability to supply it, was the biggest hurdle of the semester. It was also the most realistic. 

Setting Priorities

            We began by brainstorming the tasks that needed to be accomplished in Haiti. Not surprisingly, our list included most everything but the kitchen sink. (See Appendix A for the complete inventory of ideas.) Through class discussions, and a careful reading of “Value-Focused Thinking”, we came to appreciate the necessity of winnowing the list down. Some tasks we had listed were best suited to specific NGOs - others were to be undertaken by our partners, the United States and Haiti. As we studied the various iterations we had put together it became clear we were off track. To do everything is to do nothing well. Had we moved forward with our first draft, Haiti would likely be in the same shape it was immediately following the quake. By the third iteration we had deciphered what started to look like our fundamental objectives: Reconstruction management, emergency relief, freedom of movement, security and restoration of government capacity.  

            With these objectives in mind it became clear that our ultimate goal – or our strategic objective – was to provide aid to Haitians and their government. It was not to do everything. It was simply to engage the situation by leveraging the United Nation’s resources. Though, even this was discovered to be far from the most prudent approach. The United Nations has enormous capacity in an enormous range of fields. But was it critical that we leverage their expertise in reconstruction management at this stage of the recovery effort? What made more sense was to pick and choose the competencies that would directly improve the lives of Haitians quickly. This required a quick rereading of Maslow. After which, it was concluded that the United Nations would provide: Security, emergency relief and freedom of movement. These became our fundamental objectives. They were collectively exhaustive (the goals covered everything the United Nations could and should do), and mutually exclusive (each one was independent of the others).

We Have Objectives… Now What?

            The primary focus of this class was the use of modeling to inform a constructive relief effort. Our tool - Logical Decisions (LDW) - was critical in visualizing the thought process and guiding progress in the construction of the recovery plan. With LDW Terry Gish and I created what is known as a fundamental objectives hierarchy. (See Appendix B for model). This hierarchy equates to a flow chart, with the strategic objective for the whole operation at the top, leading down to the fundamental objectives and their respective metrics.

            The fundamental objectives shown in the model were chosen for their critical nature and feasibility of immediacy. Nothing was deemed less than 100% integral to the strategic goal of providing aid. Security was determined to be a pre-requisite for any other activity to take root. Similarly, freedom of movement in Haiti – Port au Prince especially - was included to shuttle aid in quickly and prepare the country for medium and long-run recovery efforts. Without transportation moving freely the disbursement of aid would be inadequate at best. Without security, the ability for aid to reach those in need would disintegrate at worst. Thus, these objectives were treated as fundamental to the plan. Lastly, emergency relief was considered fundamental because speed of disbursement, and the types of supplies demanded for basic survival, was key to successfully providing aid.

            Having the right objectives is half the battle, however. Measuring them in an accurate, methodical way is the true aim. Again, we chose the most feasibly immediate and critical metrics to inform the interactions inherent in the model. Choosing these was the subject of much back and forth during the middle of the semester. Class discussions underscored the value specific and easily identifiable metrics have in end decision-making. After many iterations and much scaling down, we selected two metrics for each fundamental objective. Too many, we learned, and decision-making using the model as a reference would be no more valuable than blind choice taking. (See Appendix B for metrics.)

Breaking Down the Metrics

           

The second half of the semester was spent using another software tool titled: Microsoft Belief Networks (MSBN). Its utility derived from the ability to expand individual components of the LDW model, adding another useful iterative layer to decision making. In our case we chose to expand on the “airport operability” metric. (See Appendix D for this sub-model.) A key insight of the course came as we explored this expansion of our metric. For example: My colleague and I thought that airport operability was self-explanatory. If we “had it” things were on track. If we didn’t, we should get it. Simple. Exploring what airport operability actually requires in order to exist in more than name demonstrated the complexity each portion of the model, from the LDW hierarchy to the belief network, could possess if thought out properly.

In our case, it was difficult not to assume certain aspects of airport operability would be in place without specifically outlining them in the new model. After all, runways are, of course, critical, yet we took them for granted. A missing critical link such as runway infrastructure damages the applicability the model can have in any final decision-making process – the entire point of modeling. As we became more discerning in our selection process we started to over think it. From one iteration to the next our model would shrink and grow with no rhyme or reason. Did we include too much this time? Are we thinking of everything? The biggest hurdle with this utility is finding the point best described as “just enough”. For the iterative process can continue ceaselessly.

MSBN also allowed us to assess how each node in our model affected the others. (Find sample assessments in Appendices E and F.) Each node can either feed into other nodes (thus one will be dependent on another), or have other nodes feed into it. In many cases both will prove to be necessary. In our model, “personnel” extended its influence to three other separate nodes. In the assessment of the other fundamental nodes surrounding it, personnel influenced directly the various measurements. Another example is found by looking at the airport operability node itself (in this model it served as the strategic objective). This node was influenced by security, personnel, infrastructure and the maintaining of the airport’s perimeter. Determining airport operability, therefore, was dependent on the functioning of these other four attributes. This interaction - determining if security is truly critical to usable runway infrastructure - guided our thinking on other, more nuanced interactions.

Conclusion

            Value-focused thinking is really iterative thinking. If done correctly, this process will organically uncover a useful model and its metrics. These will hopefully be instructive in making decisions for complex operations. The key is to use the model as an assessment of the available alternatives. Fifty iterations may lead you to the same alternative as the first. But the value lies in being sure. Using those fifty iterations allows a comprehensive and exhaustive survey of the choice landscape. Achieving this perspective is always the goal of the policymaker. Unfortunately, it is too oft not attained. Too frequently choices are made among alternatives inherent in the presentation of the problem, limiting their usefulness. It is by the process of iterative thought that more valuable policy alternatives can be uncovered. For the United Nations in dealing with Haiti, iterative thought helped select more critical ways to help the people, not the most obvious. In a disaster relief scenario nothing is more valuable.

Auxilium pro Nusquam: How Globalization’s Marketplace Keeps Resource Challenged Countries Off the Economic Ladder

While inequality persists among societies the world over, the market system is extremely efficient at institutionalizing it. Nowhere is this more apparent than in the international marketplace. Some countries possess abundant natural resources and easy access to markets, while others are not so blessed with such beneficial endowments. Globalization only increases the trade relationships between the have countries, while the have-nots find it extremely difficult, if not impossible, to place a foot on the lowest rung of the proverbial economic ladder. As quid pro quo continues to incentivize international markets, the have-not’s access to crucial resources remains grossly inadequate in providing basic sustenance for their populations. More succinctly: they are being left behind.

            These initial endowments, what Charles Lindblom calls “prior determinations” (169), decide which countries will successfully navigate the quid pro quo system and which will not. Lindblom states that these initial endowments “at most give participants opportunities to make…decisions on how to use whatever skills and assets have already been allocated them” (172). By applying this concept to our example, we can easily see how countries without these prior determinations fail to compete on equal ground.  Given the mechanisms of trade, this inequality becomes perpetual.

            The negative outcomes of this are obvious – persistent poverty, lack of infrastructure, etc. But there is an upside; the international development community happily injects millions of dollars in aid every year into these countries’ economies. The consequence of lacking self-sufficient income generation? Free income. However, aid does not equate to sustainable economic development, therefore it is hard to see the benefits of this inequality as outweighing the costs. The development community has implicitly agreed. By engaging in massive aid disbursement, the lending countries are telling the global marketplace that the instability and potential violence stemming from this endowment inequality is more costly than whatever benefits may accrue from inaction.

            Of course, it is not as simple as distributing aid to countries in need. Engagements of this sort are redistributions of wealth – policies that run into fierce political opposition. Depending on the priorities and values that guide our foreign policy though, redistribution is one of few economic tools available. For instance, Lindblom states that, “for some tasks the market system is almost wholly out of the picture” (167). Helping a poor country put a foot on the economic ladder is one of those instances. Given the ideological divisiveness of the issue, the amount of aid given, to whom, and through what channels has been restrained.

            It is not hard to see how this could be political in other ways as well. For example, Lindblom states that “through redistributive…transfer payments, market societies can… greatly improve the efficiencies of prior determinations” (175). By allocating resources to economies that would otherwise offer nothing of value – in essence, artificially establishing more useful “prior” determinations – rich countries can set up basic infrastructure and then take advantage of extremely cheap labor pools. While individual politicians might have a difficult time explaining to their constituencies why jobs are being outsourced to far away lands, these policies are ultimately supported by powerful special interests and entrenched bureaucratic establishments.

            Though aid is somewhat beneficial in helping these countries, it fails to address the root cause of the problem. Like many other policy solutions, it mistakes symptoms for the disease. Treating only these symptoms renders aid grossly insufficient. A similar diagnosis has guided our reconstruction efforts in Iraq. The Coalition Provisional Authority’s method of reconstruction establishes small PRTs (Provincial Reconstruction Teams) that are dispersed throughout the different provinces of the country. Each PRT is given a specific area of infrastructure development they are responsible for, and a congruent degree of autonomy to deal with it. The PRTs are small enough to blend in with individual communities or towns as to not draw undesirable attention that could undermine already fragile security. In working with the local residents, these reconstruction teams both help to rebuild what was destroyed in the initial stages of Iraqi Freedom, and teach the communities how to maintain that development.

            A better solution would utilize similar techniques. The main arbiters of aid would set up EDTs (Entrepreneurial Development Teams) and disperse them to individual communities or villages in countries where aid is being implemented. Each team would determine what villages might be good at making and then set up a small manufacturing operation. EDTs would then provide the necessary labor skills training required for the manufacturing of their product, as well the necessary infrastructure development and maintenance.

            Instead of the World Bank or the IMF giving aid to these countries’ governments, they would treat these communities as infant industries and fund their development path as necessary. Aid institutions would shop around their host countries in search of businesses or governments that would be interested in establishing exclusive trading contracts with those manufacturing outposts. This could be coupled with micro financing (or other, more traditional loan vehicles) in hopes of creating a self-sustaining middle class. As these villages became self-sustaining, aid would slowly start to recede, costing much less in the long run. Though currently untested at a meaningful level, this is one of the better options the aid community has in becoming more efficacious.

            As auxilium pro nusquam (aid for nothing) continues dominating our response to this quandary, hard solutions prove elusive. Ironically, this institutional problem requires anything but an institutionalized response. Each country’s inequality, though stemming from the same lack of initial endowments, is inherently different. Thus, each country requires a differential, localized response. While Lindblom is careful to illustrate both the costs and benefits of quid pro quo transactions, he states that, “in practical application the rule would leave millions of people on the globe destitute unless charity or nonmarket processes…come to their rescue” (120). This it seems has become a hard reality of the globalized marketplace. While this issue stirs up fierce ideological debate, we are nonetheless implicitly accepting Lindblom’s claim. The market system is an extremely powerful force, making our commitment to equality both difficult and costly. Some may point to this problem as evidence the market system is inadequate; others merely see this as another market opportunity. 

One Hectare at a Time: How the New Land Grab in Africa Will Affect the EU’s Agricultural Sector

Introduction

            In July of 2008 two authors, Juan Delgado and Indhira Santos, claimed that the “era of cheap food is over.”[1] Ostensibly, the European Union had been thinking much the same thing. Its Common Agricultural Policy (CAP) had been adjusting its policies since 2003 in light of rising world prices and fiscal constraints brought on by the rapid accession of new member states. But 2009 offers a different reality. The Economist, among other voices, has been highlighting a modern “neocolonialism” taking place in Africa.[2] Countries ranging from Saudi Arabia to China are buying up huge tracts of land in poor countries all across the continent for the purposes of securing their domestic food supplies. A contentious issue in itself, this new race for land could potentially, and drastically, alter the world food price equilibrium. It thus presents two important questions: how will the EU’s agricultural sector be affected and how should it respond?

            The CAP reforms proposed in 2003 do a good job of bringing the EU’s agronomy into the future. But some aspects of the proposal have not, understandably, taken into account the new phenomenon of purchasing huge swathes of land in Africa. It is hard to predict whether this trend will continue, or at what pace. However, the EU needs to prepare for marked changes in equilibrium food prices. This calls for a more flexible policy and increased focus on investment. In this paper I intend to lay out the scope of the land grab, what it means for the EU and how the CAP should be adjusted to meet these future challenges. I will give a number of recommendations to hedge against a more uncertain global agronomy. In doing so I hope to start the debate not on whether this land grab should be taking place, but how to adjust to it now that it is.

So What’s Going On Exactly?

            As food prices climbed at a dramatic rate in 2007 and 2008, and export controls became the norm, major countries - Saudi Arabia, South Korea, the United Arab Emirates, China, India, Egypt and Libya - turned their attention to Africa.[3] Their hope? That the large quantity of undeveloped land on the continent could help them secure a stable source of food in order to quell the effects stemmed from increasing world demand. Many countries in Africa all but jumped at the opportunity to garner financial attention that did not come in the form of more aid. In fact, this attention came in the form of massive agricultural investment. The recipients are some of the continents more troubled countries – Sudan, Ethiopia, Algeria, Zimbabwe, Kenya, Tanzania and Uganda.[4]

            Here is how it works. The purchasing countries, through a diverse set of government and private actors, buy or lease land in the seller countries.[5] Depending on the contract drawn up by the negotiating parties, the purchasing countries can export all or most of the harvested crop back home.[6] While full repatriation of foodstuffs is the impetus for this new land grab, the sellers are beginning to make that more difficult. Specifically, the African Union is developing a set of guidelines for the sale of these lands.[7] These guidelines are set up as a list of recommendations including: purchasing countries should help develop local infrastructure, pay local taxes and seek ways to stimulate local job creation.[8] As the scale of these land grabs becomes more immense African countries are beginning to demand more out of the deals. (Negotiations now see Africa determining limits on expropriation and the ratio of foreign to domestic workers.)[9]

            And immense these land grabs are. A typical deal can range anywhere from 400k hectares of land to 700k.[10] However, China “secured the right to grow…on 2.8m hectares of Congo.”[11] A deal of that magnitude (which the Chinese are planning to repeat in Zambia)[12] signals to future buyers that almost anything is possible. It also drew harsh criticism as over 1m Chinese workers have flooded the continent, displacing local jobs. Since 2006, the equivalent of one-fifth of all the farmland in the EU has either been purchased, or discussed being purchased.[13] Conservatively, that’s worth roughly between $20b and $30b – ten times more than an emergency agricultural package put together by the World Bank.[14] This underscores the scale of what is taking place in Africa. As the percentage of purchased land on the continent increases relative to Europe’s finite resources the EU’s ability to influence world food markets will diminish.

            Increasing the percentage of Africa’s agriculture owned by foreign interests will face hurdles though as these deals are anything but uncontroversial. Many call this modern day neocolonialism because of the nature of the contractual agreements. Most are shrouded in secrecy and insulate the seller country from its own lands.[15] Not everyone agrees. Angola said it simply wants to diversify out of mining and industry and welcomes this new business.[16] Further, a recent article in The Atlantic stated that investment in Africa’s agriculture, assuming the continent is more assertive in benefiting from the land grab, could “feed the world and save itself.”[17] For the countries that have done it right the benefits are quite tangible: revenue from land fees, job creation when purchasing countries utilize domestic labor and infrastructure development.[18] All of these benefits incentivize the continuation of this new phenomenon. Ergo, the EU needs to take heed.

Why This Is Relevant To The EU

All this matters to the EU for a few reasons. First, when these lands start producing and exporting crops at full capacity the world food supply and demand equilibrium will shift drastically. Such a large increase in world supply will bring down prices and make the EU’s exports still more expensive relative to market prices. Even if these countries simply export the yield back home in its entirety (therefore, theoretically not adding to world supply) it will represent a congruent decrease in demand and reduce prices by an equal amount. Because of the relative simultaneity of these acquisitions the purchasing countries will act as a single counterbalance to the EU for years to come. This will only make the proposed CAP reforms more difficult. For instance: one of the new objectives set out in 2003 is to “improv[e] competitiveness by gearing agriculture more to the market.”[19] But the effect this new faux economic bloc will have on world prices will force adjustments in EU policy in order to achieve that.

            The June 2003 CAP reforms made headway in this area by decoupling financial aid from production quantities, helping EU agriculture respond to market forces more efficaciously.[20] In other words, production now floats according to world supply and demand. The older forms of subsidies were replaced with fixed single payments designed to stabilize farmers’ incomes;[21] each farmer’s allotment is determined by previously received levels of aid. But if world prices drop precipitously these fixed payments may not offer enough of a safety net to keep farmers in business. Thus, the land grab may render even post reform policies insufficient in scope.

            A second threat the land grab poses to the EU deals with the security of its imports. The EU proudly espouses its status as the number one agricultural importer in the world. Specifically, many of the intermediate agri-goods it requires come from developing countries. These products make up nearly half of all imports.[22] Even though 70% of the EU’s imports come from developing countries[23] its portfolio is still diverse enough to hedge against any immediate supply shocks (especially given the rapid increase in supply brought on by the land grab). But the developing world is quickly acquiring new trading partners. As persistent demand eventually creeps back into line with supply the EU may find it more difficult, and thus more expensive, to satisfy its import needs.

            Third, cross-compliance mandated by the 2003 CAP reforms could lead to further un-competitiveness of EU farmers. This statute makes receiving the single direct payments conditional on meeting certain levels of environment protection, public health and animal welfare.[24] It can be argued, most likely successfully, that these reforms were necessitated by public opinion on the matter. Regardless of their popularity, these reforms exact transaction costs on production. Farmers must now factor in the monetary implications of adjusting their operation in order to comply with the new CAP mandates. These additional costs put EU farmers at a disadvantage when competing against the countries involved in the land grab who place very little importance on these types of issues. Further, increased costs of production lessen the relative compensation the direct single payments provide to farmers. This equates to a universal decrease in income (failing to achieve the goal of income stability) and yields less value to the EU per Euro spent on CAP. To be fair, the Farm Advisory System was designed to help mitigate this financial burden but it is unclear how effective it is in eliminating or reducing transaction costs.[25]

            The last reason why the land grab should matter to the EU is again related to its import sector. Even though the union is a net importer of agricultural goods, the new member states rely on imports to a much greater extent.[26] Not to mention the twelve new member states exhibit a much different economic reality than the EU-15. The disparities between the two regions have led the EU to introduce what is known as cohesion policy.[27] The main objective is to bring the least developed member states up to par economically with the rest of the EU.[28] Given that the main industry in the struggling member states is agriculture, cohesion policy is under threat from the land grab.

            As imports become even cheaper (due to increases in world supply) cohesion policy becomes more expensive to maintain. Investment in the region soon becomes less attractive when compared to the import of much cheaper intermediate goods from abroad. Net importers already, it will simply become more difficult for the poorer member states to alter from the status quo. This will have the effect of setting back crucial development in the region for many years. Looking at the effects of this long term, it is easy to see how this is detrimental to the EU’s security. When food prices climb back up – as they inevitably will, even accounting for an expansion of the land grab – the EU will need alternative sources of supply. As of now they are counting on the new members states’ untapped capacity to fulfill these needs. But without adequately preparing for a rise in import costs, the EU may be facing food shortages and/or inflated prices while the necessary investment in its poorer region catches up.

What CAP Is Already Doing About It

            The CAP reforms of the past decade are already making headway in addressing these issues. The most important aspect of the 2003 reforms was to introduce a more flexible management structure to the policy. Member states can now respond to “a whole series of parameters of the new CAP in…different ways.”[29] This flexibility will reduce the costs of compliance as each member state can adjust to particular CAP requirements by taking its own unique set of constraints into account. This new policy also deregulates the percentage of payments that have to be contributed to the national reserve. With this, the EU has left itself with more room to maneuver whenever faced with short-term price shocks.[30] Liberal use of this feature could undermine long-term financial security however and should be used sparingly.

            Similar to flexible management, the policy of modulation is also a crucial addition to the EU’s toolbox. Modulation allows funds to be transferred between what are known as the two pillars of CAP.[31] The first pillar funds the single direct payments used to subsidize farmers’ incomes.[32]The second pillar is “aimed at supporting rural communities to [help them] develop and diversify.”[33] Although this second pillar is the smaller of the two, it is increasing in funding, scope and importance. It is here where the issue of cohesion is addressed. Modulation allows both the EU and its member states to adjust levels of funding between these two pillars, making the financing of future investment in the poorer member states easier to source. The land grab in Africa will underscore the importance of this policy in two ways. First, as supply increases and prices drop, the EU will have the ability to adjust production in its poorer member states accordingly to offset this effect. Second, as the reliability of future imports becomes more tenuous the EU can substitute current suppliers with ones in its own backyard. This will also work to improve the EU’s trade balance. Modulation is the catalyst for all of this to happen.

            Lastly, the policy of financial discipline - also established during the 2003 reforms – helps to limit the financial burden the first pillar poses on the CAP by freezing its budget growth and imposing annual, “compulsory” ceilings.[34] This serves to both reduce the costs of CAP by further limiting subsidies, and places the focus on investment and development in the new member states. Having the focus shift from the reality of yesteryear to the reality of tomorrow is a major step in the right direction. As mentioned before, these reforms were not, understandably, constructed with the land grab in Africa taken into consideration. Therefore CAP still needs to make adjustments.

Recommendations

            The biggest adjustment it can make is in its investment strategy. The EU needs to focus its attention, resources and development on the new member states. With the global supply and demand equilibrium subject to severe and rapid fluctuations as Africa’s agriculture sector comes online, the EU needs to secure its future. This can happen with a bolder, yet non-crippling, shift of funds from CAP’s pillar 1 to its pillar 2. Cheap imports will continue to create incentives that shift attention away from domestic development but countering this effect will be necessary as the EU takes a longer-term look at its agricultural security. Investment should be focused not only on bringing new member states’ farming capacity online, but should continue to address the perpetual need for increases in productivity all across the union. Such investments will yield quicker returns as CAP’s cohesion policy starts to take effect. The EU must not confuse these measures with protectionism though. Any increase in output need not supply only domestic markets. After all, the developing world’s desire for resources is fueling the land grab in Africa. There is no reason why the EU cannot diversify its export market to include these countries as well. Obviously, demand is there.

            The second recommendation deals with the cost of cross-compliance. Observance of this program makes production more expensive for farmers and reduces productivity across the board. The program is nevertheless both popular and important. The Farm Advisory System was designed to help farmers reduce the transaction costs associated with observing the cross-compliance rules and should be invested in more heavily.[35] This will prepare for an inevitable increase in the demand for its services as farming capacity in the developing member states begins to come online; they will understandably need this service a great deal. The program should also be expanded to research how all farmers can reduce the costs of observing cross-compliance rules. Productivity will increase universally and the EU’s agricultural sector as a whole will become more competitive. Moreover, as each farmer’s individual productivity increases, his or her reliance on the direct single payments will recede. This will reduce CAP’s pillar 1 costs and lessen the strain on the taxpayer.

            Finally, the EU should couple an increase in investment with a larger focus on biofuels. Unfortunately, the cultivation of biofuels is a contentious issue. It has been argued, plausibly, that an increase in the land dedicated to growing these crops helped to contribute to the food crisis experienced in 2007/2008. Regardless, a deal made between China and Congo has China growing biofuels on over 2.8m hectares there. If a second deal goes through in Zambia, China will increase the amount of land dedicated for this type of production to just under 5m hectares.[36] Clearly there is a market for these types of crops. They are also economically rewarding. Due to high demand biofuels have large profit margins. Investing in these higher-value crops would further wean EU farmers off of subsidies. Similarly, higher-value crops would help to reduce the union’s trade deficit.

Conclusion

            The land grab in Africa has uncovered weaknesses in the EU’s agricultural sector. Still dealing with uncompetitive practices and a lack of domestic investment, the EU agronomy is in danger of having its future determined by farmers other than its own. The CAP reforms of the past decade have done a good job of setting the EU up to deal with the future. But these reforms simply formed a foundation for action. Now the EU must do more. Investment in the union’s developing member states must be priority number one. This must be followed by a greater push to reduce costs on all fronts in order to improve the agronomy’s competitive position. And finally, the EU must be more proactive in adopting what the market says are the newest and smartest trends.

It’s not all bad news. On the contrary, the countries purchasing huge tracts of land in Africa are spending dearly to do it. Not to mention some of these countries have already spent billions at home in failed agricultural projects. Africa also has a difficult history in producing sustainable farms and arable land.[37] But this does not mean the EU should become complacent. These new trends show no sign of abating. After all, necessity is the mother of invention. As the developing world wakes up, necessity will not be in short supply. This renders the future of agriculture uncertain. Take heed Europe.

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[1] Juan Delgado, Indhira Santos. The New Food Equation: Do EU Policies Add Up? http://www.euractiv.com/en/sustainability/new-food-equation-eu-policies-add/article-174283

[2] “Buying Farmland Abroad: Outsourcing’s Third Wave,” The Economist, May 21, 2009, http://www.economist.com/world/international/displayStory.cfm?story_id=13692889

[3] Margareto Pagano, “Land Grab: The Race for the World’s Farmland,” The Independent, May 3, 2009, http://www.independent.co.uk/news/business/analysis-and-features/land-grab-the-race-for-the-worlds-farmland-1677852.html

[4] Ibid

[5] International Institute for Environmental Development, Food and Agriculture Organization of the United Nations, International Fund for Agricultural Development, Land Grab or Development Opportunity? Agricultural Investment and International Land Deals in Africa, 2009.

[6] Ibid, 87

[7] Margareto Pagano, “Land Grab: The Race for the World’s Farmland,” The Independent, May 3, 2009

[8] Ibid

[9] “Buying Farmland Abroad: Outsourcing’s Third Wave,” The Economist, May 21, 2009

[10] Ibid

[11] Ibid

[12] Ibid

[13] Ibid

[14] Ibid

[15] Ibid

[16] International Institute for Environmental Development, Food and Agriculture Organization of the United Nations, International Fund for Agricultural Development, Land Grab or Development Opportunity? Agricultural Investment and International Land Deals in Africa, 2009.

[17] Shelburne, Elizabeth Chiles. “The Next Breadbasket? How Africa Could Save the World – And Itself,” The Atlantic, September, 2009, 72-73

17 International Institute for Environmental Development, Food and Agriculture Organization of the United Nations, International Fund for Agricultural Development, Land Grab or Development Opportunity? Agricultural Investment and International Land Deals in Africa, 2009.

[19] “Common Agricultural Policy: Reform of the Common Agricultural Policy.” Fact Sheets on the European Union. European Parliament.

[20] Ibid

[21] Ibid

[22] European Commission. EU Agri-Trade: Moving Through Turbulent Times. 2009.

[23] Ibid

[24] “Common Agricultural Policy: Reform of the Common Agricultural Policy.” Fact Sheets on the European Union. European Parliament.

[25] “Common Agricultural Policy.” The First Pillar of CAP: II. Direct Aid To Farmers. European Parliament. http://www.europarl.european.eu/parliament/expert/displayFtu.do?id=74&ftuld=FTU_4.2.4html&language=en

[26] European Commission. EU Agri-Trade: Moving Through Turbulent Times. 2009.

[27] Barnier, Michel. “EU’s Cohesion Policy Gets Lisbon Agenda Makeover.” http://www.euractiv.com/en/future-eu/eu-cohesion-policy-gets-lisbon-agenda-makeover/article-114810

[28] Ibid

[29] “Common Agricultural Policy: Reform of the Common Agricultural Policy.” Fact Sheets on the European Union. European Parliament.

[30] Ibid

[31] Ibid

[32] Land Use Policy Group. CAP – Pillar II. http://www.lupg.org.uk/default.aspx?page=126

[33] Ibid

[34] “Common Agricultural Policy: Reform of the Common Agricultural Policy.” Fact Sheets on the European Union. European Parliament.

[35] “Common Agricultural Policy.” The First Pillar of CAP: II. Direct Aid To Farmers. European Parliament.

[36] “Buying Farmland Abroad: Outsourcing’s Third Wave,” The Economist, May 21, 2009,

[37] Ibid