by Parag Khanna
The need to tackle HIV/AIDS and other global plagues has given rise to entirely new kinds of mega-diplomatic institutions. The Global Fund to Fight AIDS, Tuberculosis, and Malaria has such a unique structure that the Swiss government had to create a special legal status for it. Its board is made up of donors, NGOs, and companies; half its funding comes from governments and half from foundations. The fund is more a financing instrument than an organization. It has raised more than $10 billion to date to sponsor one million–plus antiretroviral HIV/AIDS treatments and two million tuberculosis treatments, distribute eighteen million insecticide-treated bed nets and twenty-three million anti-malarial medications, and train four million people in health service delivery. The Gates Foundation has also pioneered new models. It not only funded the highly successful Global Alliance for Vaccines and Immunization a decade ago, but more recently founded the Institute for OneWorld Health, the first nonprofit pharmaceutical company devoted to health and vaccine research for poor people, and has spent more in the past decade on neglected-disease research than all the world’s governments put together.
Some believe that direct interventions like those of the Gates Foundation don’t add up to systemic transformation, but is there really another way to achieve the latter without the former? The Gates Foundation has such a staggering budget—$3 billion per year and $67 billion in total assets—that its staff members act like private health diplomats, engaging directly with national ministers of health, commerce, and foreign affairs, while also funding and running local projects within countries worldwide. Botswana was a pioneering case. Thanks to a partnership between Gates and pharmaceutical giant Merck, the country’s population was saved from near extinction through the rapid deployment of more than eighty thousand antiretroviral treatments. Today the Gates Foundation spends over 80 percent of its budget on public-private partnerships. Such partnerships aren’t a substitute for government policy—they are the new public-private way of doing policy.
The same strategy is essential for delivering another human basic: a roof over one’s head. In a rapidly urbanizing world, civil society and social entrepreneurs are the reasons millions of people have homes at all. Habitat for Humanity built 250,000 homes in five years—but could put up one million in the next five with the help of construction companies. It has partnered with InnoVida, an American firm specializing in using nonflammable and hurricane-resistant materials for simple residential properties—even with solar panels—that can be put up in seventy-two hours. It not only sells these homes to companies employing south Asian laborers in the Persian Gulf, but has also donated thousands of them to India while training hundreds of unskilled laborers to erect them on their own. Forty miles outside Nairobi, the Acumen Fund, the world’s first nonprofit venture capital firm, has turned the village of Kaputei into an eco-friendly model town. Acumen confronts the lack of rural housing, urban congestion, and pollution all at the same time by underwriting the construction of modest homes and giving residents jobs in wastewater treatment and recycling plants that serve nearby cities. Acumen is spreading this process to Pakistan, providing loans to investors to develop low-cost housing for the country’s estimated thirty million squatters. When affordable technology, social entrepreneurship, and underutilized citizens come together, far fewer people in the world need be homeless for much longer.
Just like arguments over housing and health care, debating whether the public or private sector should be providing basic education is futile in places where it is hard enough just to legislate universal primary schooling, let alone achieve it. Even with billions of dollars in official commitments, international campaigns such as UNESCO’s “Education for All” have not come anywhere near their goal of universal literacy. Today more than two billion people in the world cannot read. Poor women and children spend hours each day finding and carrying their meager daily water supply, leaving them little time for formal schooling. And the ABCs and 123s aren’t useful if children catch diseases from unsanitary latrines, are malnourished from the lack of nutrient-enriched foods, or contract HIV. Education, in other words, is a health and poverty problem as well—and even a security problem, given the need for secular schooling as a path away from extremism for hundreds of millions of Arab and Pakistani youth who have little or no economic prospects.
The U.S. government has regularly considered abolishing the penny—and if all the pennies currently in circulation were channeled through grassroots education programs, it would be enough to provide basic education for the one hundred million children in the world who don’t get it. It costs less than fifty dollars to provide books, stationery, and pencils for a third world primary school student for a year. Across Africa and southern Asia, private citizens spend up to fifty times per capita what the government does to put their kids in school. In Pakistan, a full one-third of all primary and secondary schools today are privately funded and run, and private schools cost half as much as public ones, so even unskilled laborers can afford them for their children.5 Pratham, an Indian NGO, conducted a survey showing how even most of the children classified as literate still couldn’t read their own languages; now it is responsible for the country’s largest education campaigns.
Again: The best outcomes don’t come from a false choice between public or private, but rather through the union of public and private. Numerous Latin American countries now follow the model of Colombia, where so-called concessional schools (which are private) receive tuition payments from the government in order to educate more students from overcrowded and failing public schools. Arab countries worried about their masses of unemployed youth have partnered with HSBC on a Pan-Arab Youth Training Program to train young people in skills necessary for the region’s manufacturing-starved labor market. Uruguay was the first country to purchase “$100 laptops” for every school-age child through the One Laptop Per Child Association, and Rwanda’s adolescent “Cheetah Generation” is getting there thanks to a similar program by President Paul Kagame. Under the leadership of Ellen Johnson Sirleaf, Liberia has partnered with Nike and the World Bank to set up girls’ vocational schools. And after Google set up a development center in Nairobi to get more Kenyans online, CEO Eric Schmidt mused, “The creativity of the people will take care of the rest.”6
How to Adopt a Country
Get in a taxi in Washington, Frankfurt, or Dubai, and chances are your driver is from Somalia, Nigeria, Turkey, India, or Pakistan. Tip him generously, because you’re paying for his family’s well-being as well as his own. Migration has always been the most visible face of globalization. Three percent of the world’s population (about two hundred million people) are migrants—and there is as much migration between poor countries as there is between poor and rich. Even where migrants live in ghettos, tent cities, or container villages, they still manage to send remittances home in excess of $500 billion per year, more than five times the collective rich world’s foreign aid budgets combined.
As with agriculture, migration policy is development policy. A 3 percent increase in labor mobility to Organization for Economic Cooperation and Development countries would be worth another $300 billion per year to the poor on the other end of the remittance chain, and a mere 10 percent increase in per capita remittances would decrease poverty by over 3 percent across seventy-one countries.7 Encouraging sensible migration policy, however, falls on the shoulders of the voluntarily underfunded International Organization for Migration (IOM), which has no more clout than the hodgepodge of NGOs that make recommendations to rich countries on dealing with legal and illegal migrants, guest workers, refugees, and highly skilled workers. Businesses, labor unions, assimilation facilitation groups, and diaspora lobbies are just some of the players that also have a stake in one of the most sensitive and fundamental aspects of globalization.
Archbishop Desmond Tutu called migration caps “apartheid on a global scale.” But not all rich countries fear hordes of illegal migrants, such as the United States from Latin America or Europe from Africa.
In fact, Japan uses free-trade agreements to lure Indonesians and Filipinos to move there to compensate for its dwindling population. Italy is easing dual citizenship for Brazilians of Italian origin to compensate for its demographic demise as well. The movements of Chinese underscore just how strategic migration can be: With the United States monitoring China’s ports more closely, illegal Chinese migrants now flood into America via Mexico.
Migrants are very smart about financial trends affecting their lot: When the dollar is too weak, they pass straight through the United States to Canada, or head across the Atlantic to earn euros. The reliability of remittance flows has been so substantial that some Brazilian banks use them to underwrite greater capital lending. However, global migration dropped in 2009 for the first time in decades, plunging remittances by up to 30 percent or more from many rich countries. Amazingly, the global financial crisis proved just how important remittances are to the poor. When Indians in the Persian Gulf, Tajiks in Russia, and Nepalis in America lost their jobs, their families at home actually sent them money to help them ride out the recession and hopefully find work again. For good times and bad, some migration relations have become all but permanent. Kharian, a village of thirty thousand near Lahore in Pakistan, is also called “Little Norway” since one-third of its families have at least one member living in Scandinavia, working as repairmen or taxi drivers and sending home up to $1,000 per month, a huge amount for ordinary Pakistanis.
Diasporas represent diplomacy within an ethnic universe. We tend to think of immigrants as struggling to adopt the culture of their new homes, but remittances are the best example of immigrants readopting their native lands: providing continuous help to their families and communities back home. And the easier it gets to care for people overseas, the more likely it is to continue in perpetuity. The emotional durability of kinship and cultural ties makes it a far more reliable vehicle for delivering aid than faddish ideas such as the “vulnerability fund” proposed by the World Bank. Instead, we should take advantage of the spheres of responsibility diasporas represent. What better country to adopt than your own?
Dollar for dollar, remittances have the most direct impact on the quality of life of the poor. Every remitted dollar to Bolivia, Haiti, Somalia, Sri Lanka, Bangladesh, or the Philippines keeps families afloat, and when natural disasters strike Latin America or elsewhere, remittances arrive instantly. Beyond funding basic survival, remittance money has a multiplier effect at home, especially when it’s used to buy goods, pay for school fees, or start small businesses. Over one or two generations, remittances help not just families but entire communities rise out of poverty, as has been the case in Turkey, thanks to its many Gastarbeiter in Germany. Perhaps this is the least that can be offered back to the developing world in exchange for the brain drain of its able-bodied skilled workers and educated elite. Higher up the value chain, diasporas also repatriate first world knowledge around the world as returning migrants replicate their success from their new homes to the old. Taiwanese, Indians, and Israelis who have returned from Silicon Valley to seed high-tech centers are called the “New Argonauts”; China calls them hai gui, or “sea turtles,” who have swum home, reversing brain drain in the process.
India is the world’s top recipient of remittances, which provide 3 percent of its GDP. Especially in the southern state of Kerala, almost every single family is tied to someone in the Persian Gulf. Nonresident Indians are also the leading investors in India, pumping in more capital than foreign investment and portfolio capital combined.8 The Ministry of External Affairs has set up a special Overseas Indian Facilitation Center with a website to ensure hassle-free investment from the diaspora as well as to offer special diaspora passports. With support from the Confederation of Indian Industry’s Indian American Council, a quasi diaspora “peace corps” is emerging whereby young Indian Americans constantly rotate in and out of Indian villages to provide management and technical help in health care, education, micro-finance, and entrepreneurship.
Whether through low-tech hawala or high-tech electronic banking, the remittance market has captured the attention of and sparked competition among banks and credit unions to smooth remittance transfer. Western Union, the telegraph operator many thought would go bankrupt with the rise of the Internet and PayPal, is now a $5 billion company that tracks migration faster than any census bureau, advertises in dozens of languages including Tagalog, and offers discounted rates during holidays in Fiji. The company’s slogan is “If you can’t be there, your money can.” In the Philippines, understanding Western Union’s procedures is as important as having a passport.9 With support from Vodafone, Kenya’s Safaricom has become a mobile banking leader, making lending, borrowing, and receiving remittances virtually free, especially compared to the $700 it can cost to open a bank account in sub-Saharan African countries.
The Philippines and Mexico are the most evolved examples of how remittances are already interwoven into the national political fabric. “Leaving in order to live” has become a way of life, expanding over generations as Filipino sons and daughters follow in their parents’ footsteps—and often change places with them—as expatriate workers in America and the Persian Gulf states. Ten percent of the country’s population lives and works abroad, sending home about $1 billion per month. Not surprisingly, Philippines president Gloria Macapagal Arroyo calls the country’s diaspora members “modern heroes” and welcomes them home with open arms each time they return.10 Similarly, one-tenth of Mexicans live in the United States, often working several jobs to send money home, making migration—and the fences put up to prevent it—one of the top issues (next to drugs) on the U.S.-Mexican agenda. The United States doesn’t give aid to Mexico as such; rather, their “Partnership for Prosperity” program relies heavily on the private sector. Bank of America eliminated all currency exchange and wire-transfer fees for customers with checking accounts, and on Mother’s Day in 2004, Wal-Mart reduced its money-transfer fee by 50 percent.
At the other end of the spectrum is the world’s most notorious failed state. Somalia’s collapse in 1991 meant an abrupt end to simple luxuries such as banks, schools, hospitals, and law enforcement. Infrastructure crumbled and emigration soared. With the country still in a perpetual civil war, remittances from Somali taxi drivers in Minneapolis to students in Finland (where Somalis are one of the largest ethnic minorities) remain a major lifeline for the people—72 percent of Somali GDP in 2006. Almost all reconstruction projects in the country have been privately launched and financially supported by the Somali diaspora. Private remittance companies in Somalia issue ID cards to their customers, serving as registrars for communities in the absence of a government; they even cooperate with anti-money-laundering and anti-terrorist-financing initiatives. It may be years before multilateral organizations know who they’re dealing with in Somalia, but they could already leverage Somalia’s extensive diaspora and remittance networks to rebuild parts of the country not at war.
One of the shining exemplars of adopting communities is the Aga Khan, spiritual father to the fifteen million Ismaili Muslims. The Aga Khan is as much entrepreneur as religious figure. Through the Aga Khan Development Network (AKDN), Ismaili wealth is invested in poor and dangerous areas from East Africa to Tajikistan—wherever Ismailis are—in the name of preserving and protecting their threatened communities. The Aga Khan is perhaps the largest single investor in all of Afghanistan, and he encourages members of the Ismaili diaspora to invest there and in other hotspots. AKDN increasingly partners with official aid agencies around Europe to coach them on small-scale community projects. Most important, perhaps, the Aga Khan’s work is an important role model for the growing Islamic Development Bank based in Jeddah, Saudi Arabia, whose lending is increasing 30 percent per year.
The postcolonial world is full of interesting examples of lingering suspicions turning into fruitful and lucrative partnerships. Italy and Libya have buried their hatchet, with Italy promising $5 billion in compensation for colonialism—but e
armarking the money for counter-migration programs—and Libya’s Muammar Gaddafi using his $70 billion sovereign wealth fund to buy up shares in Italian telecom, construction companies, and football clubs. Former Portuguese colony Brazil has joined with its former master to launch medical exchanges to train doctors in numerous former Portuguese colonies such as Angola and Mozambique. Portugal’s main legacy in Angola today is an estimated ten thousand businesses that have been an important force in reviving the country’s post–civil war economy. Such productive postcolonial relationships abound in today’s world. Spain is the most popular business partner in Latin America, and London-based Standard Chartered Bank earns 90 percent of its profits in former British colonies in Africa, Asia, and the Middle East, where it also supports sixty micro-finance institutions with $500 million in capital. In East Africa, Indians have returned not as British colonial laborers, but as major investors in construction and real estate. The Tata corporation describes its work in Africa as that of a “for-profit development agency.” The new postcolonial adoption is mutual.
