Boston Review Books

Mick Moore

State-Building: Governance and World Order in the 21st Century
Francis Fukuyama
Cornell University Press, $21 (cloth)

8 The End of History and the Last Man, published in 1992, earned Francis Fukuyama a popular reputation as an imaginative, prophetic thinker. Writing for an Anglophone intelligentsia fascinated by globalization, he seemed to easily transcend old phobias and cultural stereotypes about East and West; he could write with equal authority about Japan and China, the United States and Europe. If we were to trust anyone to peer into the future and report back, Fukuyama was a very plausible candidate: a global intellectual for a global world.

Thisimage endures despite the lack of originality in the core idea of TheEnd of History: that grand political contention would fade away asthe nations of the world converged toward liberal democracy.Moreover, that idea itself soon proved to be mistaken. History, asFukuyama defined it, came back with some big bangs at the beginningof the 21st century. Neither in The End of History nor in his laterbooks has Fukuyama demonstrated any special insight into the globalforces shaping today’s world.His genius lies rather in a capacityfor lucid synthesis: the ability to foray into specialized areas andsketch the big picture with great clarity. His second success, Trust(1995), seems to command the greatest respect among academics.Although he said nothing that would have been new to experts in thefield, Fukuyama drew creatively on his Eastern and Western culturalknowledge to illustrate the major contributions of relationships oftrust to the effectiveness of market economies.

As Fukuyama hasincreasingly exploited this capacity for lucid synthesis, his bookshave become shorter, with his latest, State-Building: Governance andWorld Order in the 21st Century, weighing in at 137 small pages oftext. The subject—the consequences of and remedies for contemporarystate failure of various kinds, from Afghanistan to Zimbabwe—is toocomplex for anyone to cover thoroughly in a mere 35,000 words. Butthat is not a complaint: this is a quick and rewarding read. Thechief flaw of the book is not its brevity but Fukuyama’s uncriticalacceptance of the common wisdom that prevails in the foreign anddefense ministries of the rich nations of the world and theinternational organizations they dominate.

Why are there so manyweak states in Africa, the Balkans, the Caribbean, Central Asia,Latin America, and the Middle East? Why are so many governmentsunable to control their frontiers; rein in their police and armedforces; combat HIV/AIDS; provide their citizens with law, education,and health care; and generally provide the kind of legitimateauthority that will edge their countries toward prosperity andprevent them from becoming either breeding grounds or operationalbases for terrorists? These are not easy questions to answer. Butanyone writing a book on solutions to these problems would surely beexpected to inquire into its roots. Not Fukuyama. Except for a fewbrief references to a post–Cold War intensification of the problem,he shows no interest in its origins. This striking neglect mirrorsthe attitudes and policies of most of the international organizationsand the various aid, foreign, and defense ministries of OECDcountries that are currently so obsessed with what is often termed“the problem of weak and failing states.” By failing toinvestigate possible causes, Fukuyama ends up writing about theremedies that are already on the table and have mostly failed—aboveall, the transfer to the poor world of contemporary rich-worldinstitutions of law, public regulation, electoral democracy, andgovernmental accountability.

What are the root causes ofweak and failing states, and why might the problem be so concentratedin the parts of the world that we can generically term the globalSouth and East? Three broad answers suggest themselves. The first isthat this problem is fundamentally cultural: that the various peoplesof the South and East just happen to be ill-suited, by reason ofinheritance or temperament, to working with the institutions ofmodern governance and democracy. They need to be trained carefully tounderstand the virtues of outlawing corruption, allowing freeelections and permitting the winners to take over government, andadministering justice independent of political or personalaffiliation. Fukuyama does not advance this explanation explicitlyand makes only the occasional comment to suggest that he sees somemerit in it. But the evidence does not support such an explanation.Furthermore, any such cultural interpretation conflicts with theinsight that Fukuyama displays, in this book and elsewhere, about howEast Asian governments work in very different ways from those of theUnited States or Europe. If the Chinese and the Japanese are ruledwell through institutions and value systems that differ widely fromthose that prevail here, then what reason could there be for denyingthat Iranian or Ghanaian institutions and traditions might similarlyprovide a basis for distinctive good governance. In the first half ofthe 20th century, China was widely cited as the exemplar ofbadgovernment. If that ugly duckling could become a swan, Iran or Ghanamight do likewise.

A second possible explanation of why badgovernance is so prevalent in the global South and East derives fromthe fact that these countries are also poor. Perhaps poverty leads tobad government because those with power want to grab for themselveswhatever material goodies are available, or because poverty leads tolow levels of education and thus a lack of understanding of the valueof democratic and constitutional processes. Fukuyama rightly avoidsthis argument about the effects of poverty. Several centuries ago,Europeans were at least as poor as most people in contemporaryAlgeria, Colombia, Ecuador, Gabon, Laos, Turkmenistan, or Yemen. Yetmany Europeans enjoyed more security, justice, and rights than do theunfortunate people of these countries today.

The cultural andpoverty-based theories of the prevalence of weak and failing statesfirmly locate the cause out there—in the South and East, in thecountries and cultures that need to be transformed. Fukuyama devotesmost of his book to a discussion of whether and how institutions ofgovernment can be transferred from rich to poor countries in order toeffect that transformation. Despite some welcome and justifiedskepticism about the actual effects of international aid programs onthe quality of government institutions in the South and East, heidentifies himself fully with the conventional views of theinternational establishment: the phenomenon of weak and failingstates is located and rooted in the South and East; we should help ifwe can, for both their interests and ours; and our help will largelytake the form of encouraging the transfer of our institutions tothem.

There is, however, a third explanation that receivesno acknowledgement at all in State-Building. It traces weakgovernance in the South and East to the fact that these poorcountries and their citizens now share the globe with rich andpowerful countries that have created global market institutions andhave a long global reach, economic and political. Can rich countriesbe an important part of the problem? A long tradition of argumentsuggests that they can. Cases and evidence appear frequently instandard history texts, newspapers, official statistics, and even thepages of The Economist. Powerful and rich foreign countries, theinternational institutions they have created, and the rich marketsfor natural resources they provide impinge directly on governance inthe South and East today. The effect is often very adverse forseveral reasons.

First, the temptation for rulers in the South andEast to loot their countries is much greater now that we have a largeand sophisticated set of global financial institutions that cantransfer and stow money safely. So rich elites can stash their cashabroad (in 1999, The Economist estimated that African leaders had $20billion in Swiss bank accounts) and, if things go wrong at home, pickup stakes and start a new and leisured life elsewhere.

Second, rulers who control natural-resource wealth—or astrategic asset such as a busy shipping lane or a well-locatedmilitary base—can generally rely on some global power to help themkeep control of it. Whether that support comes from the UnitedStates, Russia, France, or the United Kingdom, it generally isolatesrulers further from popular support and legitimacy. The stories ofAmerican involvement over recent decades with the Shah of Iran,Saddam Hussein, and the House of Saud illustrate graphically asequence that is repeated with local variations throughout much ofthe South and East.

Third, these rulers can also easily defendthemselves; it does not take many barrels of oil—or many packets ofcocaine, or much foreign aid—to purchase devastating militaryfirepower on international markets. The cost of destructive capacityhas gone down steadily as industrial nations have become richer.Whether that firepower is wielded by governments or by insurgentsmakes little difference: the casualties are not only human lives butalso the prospects of establishing civil, democraticgovernance.

Fourth, trading highly prized exports—forexample, diamonds and narcotics—to lucrative markets in the OECDcountries creates vast, historically unprecedented economicsurpluses. With international criminal networks and “roguestates” harvesting $80 to $100 billion per year in profits fromillegal drug sales (2001 estimates), there is certainly a corrosiveimpact on public affairs and politics from that illegal money and theillegal activity and organized violence that supports it. What chanceof genuine democracy in Afghanistan, Pakistan, Myanmar, Laos,Colombia, Bolivia, Peru, and much of the Caribbean can we expect whenthe political leadership is either financed by narcotics networks orunable to assert government authority over large populationscontrolled by drug gangs? Illegal diamonds, smuggled out to Antwerpor New York, have similar consequences for Angola, the Republic ofthe Congo, Guinea, and Sierra Leone.

The size anddestructive political impact of the illegal trade in narcotics and diamonds is only a small part of what is now termed the “resourcecurse.” The curse most often applies to the impact of the legaltrade in oil, gas, and minerals. These commodities are a source ofenormous profit and temptation for small privileged groups indeveloping countries. Moreover, they have become more profitable overrecent decades, especially with the increased dependence ofindustrial countries on oil. The figures are staggering. During the1990s, when oil prices were relatively low, the surpluses thataccrued to countries exporting oil, natural gas, and minerals, onceall production costs and normal profits had been paid, amounted to 21percent of the gross income of two major regions of the world: theMiddle East and North Africa; and the Caspian Basin (Russia, theCaucasus, Central Asia). Even for impoverished Sub-Saharan Africa,such surpluses amounted to nearly seven percent of income. Thesefigures refer to genuine surpluses: tax or steal these surplusesaway, and it would still be profitable to produce the oil and minethe cobalt. At the extreme, it might cost only $1 or $2 to extractand export the barrel of oil that now commands around $40 oninternational markets. These vast financial surpluses are up forgrabs. And they are grabbed. They end up in the hands of governmentor in the bank accounts of ruling elites. By some estimates a thirdof the total oil revenues ever earned in Saudi Arabia have accrued tothe House of Saud.

The politics of the resource curse arestraightforward. The surpluses constitute a large standing temptationto grab power and to hold onto it at all costs. Take over thegovernment of a country with energy and mineral resources and youbecome fabulously wealthy. Angola’s political elite—comprising afew hundred people—probably gets more material benefit from thecountry’s oil than the other 12 million Angolans. Members of thatelite know that there are plenty of entrepreneurs in the world,including some oil companies, who might be willing to provideup-front financing for a coup, should anything go wrong. Like othersin the same position, they spend a great deal of their wealth onarmaments, political intelligence, and buying the loyalty of thearmed forces and powerful friends overseas. A recent efflorescenceof social-science research provides a compelling case that surplusesfrom energy and mineral resources directly undercut democracy and therule of law, generate civil war, reduce government’s ability to taxin a legitimate fashion, and often lead to lower levels of literacyand nutrition and higher death rates. The analysis demonstrates thatthe Middle East is a uniquely undemocratic region not because it isArab or Muslim, but because it is deeply resource-cursed.

European history has no real parallel to the enormoustemptations aroused in the contemporary South and East by largesurpluses from natural-resource exports. The nearest case is16th-century Spain’s acquisition of large gold supplies from theAmericas. That, too, proved to be curse rather than a blessing.Historians have long argued that this was the cause of the subsequentdecline of Spanish culture and imperial power. Debates about theresource curse are not new. The novelty today lies in the size ofcontemporary natural-resource surpluses relative to the economies ofpoor nations. The change in turn reflects the extraordinary wealth ofrich countries and their populations’ ability to pay hefty sums forsupplies of oil, gas, diamonds, cobalt, cocaine, and heroin. In theSouth and East, ruling groups can sidestep the long and complexprocess of bargaining with organized taxpayers for public revenuethat played such a central role in the establishment of limited,accountable, and, eventually, democratic government inEurope.

The governments and populations of the richcountries are not generally to blame for the weakness of governancein much of the South and East, any more than the extrovert at theparty is to blame for driving the introvert deep into her shell. Butboth the extrovert and the rich countries should be more aware of theeffects of their power. Rich countries could do a great deal tochange the international environment and thus give good governanceand democracy more of a chance in the South and East. Even if wecannot yet desist from supporting vile regimes, as for example incontemporary Uzbekistan, because of oil and strategic military bases,we could make some important policy changes: we could regulate theinternational trade in arms and military skills; monitor and controlinternational financial transactions to deny political looters a safehaven for their cash; strengthen the Kimberley Agreement, designed tosuppress the market for “blood diamonds”; sort out our narcoticpolicies to reduce the massive illegal profits going into politics inthe South and East; better enforce laws against corruption overseason the part of our own companies; and increase the degree oftransparency and influence of the international community over thepayments that national governments receive for their oil, gas, andminerals.

Unfortunately, State-Building does not consider any of these; the book is almost as thin on remedies as on causes. Fukuyama does show, elegantly and incisively, the difficulty with transferring institutions, legislatures, public-service rules, budget practices, etc., from one political and cultural environment to another. His explanation of why organizations are so deeply embedded in culture and context, and may work very differently if copied and pasted into a different environment, has a value far beyond the realm of foreign aid and state building. But these criticisms of institutional transfer only underscore the importance of finding other remedies. Improved regulation of international transactions is probably a better treatment and certainly one that is more within the competence of the rich world. <

Mick Moore is a political scientist, a professorial fellow at the University of Sussex's Institute of Development Studies, and the director of the Centre for the Future State.

Originally published in the December 2004/January 2005 issue of Boston Review