Welcome to the Cornell Policy Review

The outward expression of interest in public administration and public policy denotes an inner desire to understand and improve upon the collective programs and actions that impact us all. By visiting and exploring The Cornell Policy Review, you have taken the first step in joining a community of thinkers and actors at the Cornell Institute for Public Affairs (CIPA). We are constantly striving to evaluate and articulate various approaches to policymaking, and we encourage you to delve deeper into the practice with us by reading on.

In this second edition of The Review, we have the privilege of presenting thoughtful analytical pieces from both former and current CIPA Fellows, as well as some outstanding pieces from our colleagues at peer institutions.

Edward Grodin presents a critique of Theodore Lowi’s Arenas of Power model and contributes a new perspective given the increasingly global context of national politics. Bobby Hall discuses the benefits of distance learning education and encourages increased emphasis on improving educational opportunities for rural populations. Anne-Marie Dao offers a legal rendering of free speech on college campuses, and Tenzin Keyzom Ngodup provides a fiscal policy analysis of the Iraqi financial sector. We are also please to include Santiago Calderon’s counterfactual case study on humanitarian intervention in conflict zones.

This edition also hosts The Review’s first dual perspective interview. Our former Editor-in-Chief, Sean Murphy, was able to interview Grameen Bank founder and Nobel Prize winner Muhammad Yunus and H.I. Latifee about microfinance. Current editors Nicole Majestic, Morgann Ross, and Daniel Nolan then interviewed Indian non-profit leader Dr. R. Balasubramaniam, founder of the Swami Vivekanda Youth Movement (SVYM), who offered an alternative opinion on the merits of microfinance. We are excited to print these interviews with three leading practitioners in the same edition, an hope that their perspective viewpoints will enliven discussions about development theory and fiscal policy in the developing world. Rounding out this edition is a comment from Robyn Ziperstein, who turns a critical eye toward the United States’ school lunch program.

I would like to thank Managing Editor, Marquise Hawkins, along with Editorial Board and entire staff for their hard work in bringing this edition together. Furthermore, it would not be possible to print this journal without the support of the CIPA staff and Cornell University. We hope that this journal educates you about some of the policies and programs that deserve your attention, and encourages you to join the discussion.

– Michael Donovan, MPA 2012, Editor-in-Chief

The Cornell Policy Review: Volume 2, Number 2, Spring 2012

Click here to view a PDF of the Spring 2012 Review

Hyper-Partisan Sorting in the American Electorate, 1976-2008

An Article by Thomas L. Day

Read more

K-12 Distance Education: The Case of Rural Schools

An Article by Bobby Hall

Abstract

The purpose of this study is to inform state policymakers and local districts on the issues surrounding distance education in K-12 schooling and in particular the need for distance education adoption in rural schools. The goal of this study is to assess the effectiveness, advantages, disadvantages and necessity of distance education and to assess any barriers prohibiting the adoption of  distance education. Research shows that schools are adopting distance education platforms to deliver otherwise unavailable coursework to students, which holds especially true for rurally based K-12 schools. The differences in effectiveness between traditional face-to-face and distance education methods are inconclusive. The results of this study show that some schools, such as small rural schools, may not have a choice as to the adoption of distance education, because the benefits of adoption for rural schools far outweigh any cost of failing to do so. In addition, cost and an institutionalized school system are barriers to distance education adoption and expansion. This study recommends that further research be conducted, particularly on effective uses of distance education, that state education agencies work to develop methods which will place both traditional and distance education on equal accountability levels, and that the federal government needs to create a more equitable system of funding so that rural schools will more easily be able to adopt the distance education that they need.

About the Author

Bobby Hall is a second-year fellow with the Cornell Institute for Public Affairs (CIPA) where he is working on his master’s degree in public administration. He also currently serves as a project assistant with the Community & Regional Development Institute at Cornell. Before attending CIPA, Bobby worked for the American Farm Bureau Federation for three years and earned his bachelor’s degree in political science from the University of Oklahoma. Originally from Olustee, a small town in rural Oklahoma, he currently lives in Ithaca, NY with his wife Erika and daughter Bianca.

Introduction

The purpose of this paper is to inform state policymakers and local districts on the issues surrounding distance education in K-12 schooling and in particular the need for distance education in rural schools and any barriers preventing the adoption of distance education in rural schools. The U.S. Department of Education defines distance education as, “the application of telecommunications and electronic devices which enable students and learners to receive instruction from some distant location.”[1] This definition can technically apply to “virtual schools”[2]; however, this study focuses solely on the use of distance education within physical schools. In determining what constitutes a rural school, a U.S. Government Accountability Office (GAO) report used in this paper defines rural schools as those which are 55 miles or farther from metropolitan areas;[3] however, the most widely used definition of rural schools are those schools which are in communities with less than 2,500 people, though these communities are often a great distance away from large metropolitan areas,[4] and the latter is the definition that this paper uses unless otherwise stated.

Distance Education Methods

Distance education classes can originate from a school’s own district, another district or often a postsecondary institution. Methods for distribution of distance education courses can include video (pre-recorded, live via satellite, or two-way instructional television), audio, the internet, or other computer technologies such as CD-ROM.[5] The diagram found in Appendix-1 shows characteristics of each of the major distance education technologies. The diagram classifies each distance education method by instruction mode (instructor-led or text/graphics based instruction), learner type (class or individual), degree of interactivity (full-time two-way audio/video to one-way audio), and spontaneity of two-way communication (synchronous/real-time or asynchronous/delayed). Asynchronous courses are usually self-paced, in which the student learns at a pace agreed upon by both the teacher and student.  Synchronous courses are real-time, using communication tools and integrated video.[6] As seen in Figure-1 below, in an National Center for Education Statistics (NCES) survey of 5,500 public school districts which offered distance education courses during the 2002-2003 school year, Setzer, et al. found that two-way ITV was the most popular method used for the majority of distance education courses at 49 percent, while one-way pre-recorded video was the method least used at 7 percent.[7]

Figure-1. Percentage distribution of district enrollments in the various types of distance education courses during 2002-2003

Source: National Center for Education Statistics (2005) (Setzer, et. al, 2005, pp. 10)

Because two-way ITV and online courses are the most popular distance education methods, they will be the two methods discussed throughout this study.

Two-way instructional television, or ITV, courses involve a form of videoconferencing where students and an instructor located in a different area are able to see and hear one another at all times. ITV is the method most similar to a traditional classroom, with the main exception being that the teacher is not physically located in the same room as the students. Using the ITV method, homework and tests are sent through fax or e-mail by local school distance education facilitators, teachers or aids, but a supervisory adult does not need to be located in an ITV classroom since the remote teacher can hear and see the students.[8]

As seen above in Figure-2, online courses are the second most popular method of distance education. Clark defines an online course as, “one in which 51 percent or more of the course is delivered online with primary instruction…often supplemented by face-to-face meetings or supervision.”[9] Software packages known as learning management systems are the method typically used to distribute online classes. These packages permit teachers to distribute instructional materials, produce content or assignments, and supervise other aspects of the course. The software packages provided to both the teacher and his or her students also often include student tracking tools which can provide snapshots of a student’s progress.[10]

Why Distance Education?

According to the latest NCES data, 37 percent of public school districts reported having students enrolled in distance education courses during the 2004-2005 school year. The total number of students enrolled in distance education courses in the 2004-2005 school year was 506,950. This is an approximately 63 percent increase over the previous school year which reported 317,070 students enrolled in distance education.[11] Figure-2 illustrates a breakdown of these numbers by instructional level. In essence, the use of distance education is becoming more prevalent, and this is particularly the case in rural schools.

Figure-2 Percentage of students enrolled in technology-based distance education courses by instructional level

Source: National Center for Education Statistics (2005)

Distance education is a necessary tool for many rural schools. NCES statistics consistently show that rural areas are the biggest users of distance education. There are over 10 million students in rural schools, and this represents 21 percent of all K-12 students in the U.S. Also, rural areas hold over 55 percent of public school districts and 31 percent of public schools.[12] Figure-3 shows that 45 percent of rural districts had students enrolled in distance education courses during the 2004-2005 school year, compared with 32 percent of suburban districts and 25 percent of urban districts.[13] This is occurring as the number of school districts that are adopting distance education continues to grow.

Figure-3. Percentage of public school districts with students enrolled in distance education courses by metropolitan status
 

Source: National Center for Education Statistics (2005)

Casey lists three reasons why distance education has grown in prevalence: “1) the great distances of citizens from educational institutions, both geographically and socio-economically; 2) the thirst for education; and 3) the rapid advancement of technology.”[14] The argument that distance education has grown out of great geographic and socio-economic distances has particular importance for rural schools. Rice offers a different perspective, stating that the growth of distance education is due to funding shortages and overcrowded facilities.[15] According to Setzer, et al.’s analysis, both Casey and Rice are correct. Budget shortfalls and overcrowded facilities may have created the need for distance education and the geographic distances seen in rural areas of the country also helped to create a need for distance education, but the rapid progression of technology met that need. Setzer, et al.’s NCES survey found that 80 percent of respondents cited access to otherwise unavailable courses as their school’s main reason for adopting distance education.[16] If this survey is representative of the national education system, then one of the reasons for the growing use of distance education is that it provides a great benefit for schools that are more geographically isolated or under-funded, with both characteristics being typical of the majority of rural school districts.[17]

It is also not uncommon for faculty of a particular school to lack the expertise or certification needed to teach advanced or more specialized courses. Schools often find it impractical to offer specialized classes for a small number of students who are eligible to enroll in them, and this is particularly the case in the more geographically isolated, or rural areas, of the U.S.[18] An example is Advanced Placement (AP) courses, which are courses offered to high school students who perform at the college level. Fifty percent of respondents in Setzer, et al.’s survey stated that one reason they adopted distance education was to provide AP courses,[19] thus showing that those schools which are too small and under-funded to provide such courses would benefit greatly from the adoption of distance education technology. Figure-4 below shows reasons for adoption other than to offer unavailable classes. The chart illustrates that addressing growing populations is the least mentioned reason for adopting distance education, and the chart also shows that offering courses that would not have been available and meeting the needs of specific students (such as AP courses) are the top two responses that were given. Thus rural school districts which have difficulty providing necessary coursework are more likely to adopt distance education, and this is in comparison to growing metropolitan areas which might adopt distance education to address a student population that is increasing in size.

Figure-4. Percentage of districts indicating that each reason was very important in deciding to adopt distance education
 

Source: National Center for Education Statistics (2005) (Setzer, et. al, 2005, pp. 56)

 

Effectiveness, Advantages, and Disadvantages of Distance Education

Distance Education v. Traditional Face-to-Face Education

Even though rural schools are finding it necessary to use distance education, there exists a debate about whether distance education is as effective as traditional face-to-face education. There have been a number of studies on this question, including meta-analyses on the large range of distance effectiveness studies. A meta-analysis, also called a quantitative synthesis, evaluates a range of studies which focus on the same problem, estimating how much one conclusion and treatment differs from others and the associated variability. Meta-analyses are able to combine studies with differing sample sizes by extracting an effect from all studies, overcoming the problems of selectivity, of narrative reviews, and conclusions based on test statistics from studies with differing sample sizes.[20] A meta-analysis has the following benefits:

a) it answers questions about size of effect; b) it allows systematic exploration of sources of variability in effect size; c) it allows for control over internal validity by focusing on comparison studies vs. one-shot case studies; d) it maximizes external validity or generalizability by addressing a large collection of studies; and e) it improves statistical power when a large number of studies is analyzed.[21]

One of the most routinely cited studies on distance education, comparing 116 distance education programs of grades 3-12, by Cavanaugh, et al. concluded that there is no significant difference between distance education and traditional face-to-face education in regards to learning effectiveness.[22] If there is no significant difference, then this would mean that rural school districts have no reason not to adopt distance education.

Another often cited meta-analysis by Bernard, et al. found that asynchronous settings, as defined above, favor distance education’s effectiveness, and synchronous settings favor traditional classroom settings. They found that synchronous distance education is not as effective as face-to-face teaching, though they also found better effectiveness levels if the distribution of synchronous distance education was via ITV or if the students were younger due to a younger student’s need for spontaneous feedback and guidance.[23] Bernard, et al. also found that ITV improved effectiveness levels for asynchronous settings.[24] In a third meta-analysis, Zhao, et al. found that the quality of a distance education program is influenced by an identical set of factors which influence the quality of traditional face-to-face programs, such as a student’s attitude, student satisfaction, student participation or instructor quality.[25] This shows little contrast between what influences distance education and what influences traditional education. Zhao, et al. did find that when instructor involvement is high, distance education is slightly more effective, but face-to-face education is slightly more effective when teacher involvement is low.[26] This means that teacher involvement is important for distance education courses. A more recent meta-analysis conducted by the U.S. Department of Education found that, on average, students using the online method of distance education perform slightly better than those enrolled in a traditional course.[27]

The research literature on comparing distance education with traditional education is inconclusive. This has led a number of researchers to call for an end to distance v. traditional classroom comparisons.[28]^{,[29],[30],[31]} Hannum, et al. write that school administrators often do not have a choice between distance education and traditional education because schools that use distance education do so out of necessity, as is the case with rural schools. These schools do not have an instructor available to teach some of the courses needed, or they do not have a large enough number of students eligible for the specific courses to warrant hiring a teacher. Therefore, Hannum, et al. argue research should instead focus on how to develop quality distance education courses.[32] Also, Rice writes that when significant differences are found between traditional and distance education, the dissimilarity is more likely to be due to factors unrelated to education delivery methods, such as disparities between student cohorts or a teacher’s experience.[33] Though some may feel that the debate between distance education and traditional education is important, such a debate is not necessarily pertinent to rural school districts where distance education is essentially the only option. These school districts must adopt distance education if they are to receive the benefits of being able to offer a wide variety of coursework.

Disadvantages and Advantages of Distance Education

In addition to the debate between traditional and distance education, studies often examine the disadvantages and advantages of distance education itself. The majority of research on disadvantages of distance education has to do with online education. Watson writes that one of the biggest problems with online education is that the judgment of quality assurance rests with state-led programs. This takes decisions away from local schools that know what works in their communities better than state governments,[34] and this is especially true for rural schools which are typically located in more isolated communities that are not on the periphery of state agendas.[35] Another disadvantage is that online courses result in a lack of social interaction with peers, which may be particularly harmful to younger students.[36] In addition to the disadvantages of online education, ITV also comes with its own disadvantages. It is the method of distance education that mostly resembles a traditional course, allowing students and teachers to talk with one another as if they are in the same room,[37] but one of its biggest disadvantages is that it ignores a student’s need for face-to-face interactions with his or her teachers and fellow students. Such interactions and relationships are key components in achieving student retention and satisfaction.[38]

For rural schools, however, the benefits of distance education outweigh any potential disadvantages. For instance, in a survey of 126 students enrolled in an online distance education course, the most common response when asked about the benefits of distance education was that the students enjoyed the autonomy and freedom in assignment schedules given by the course.[39] This illustrates that, contrary to any disadvantages, distance education actually does achieve student satisfaction, and this can lead to retention. Perhaps the biggest advantage of all is being able to provide more choices in coursework to enrich the lives of a school’s students. Cavanaugh, et al.’s meta-analysis found that being able to offer a better variety of courses results in “broader educational opportunity for students,…access to resources and instructors not locally available, and increases in student-teacher communication.”[40] Disadvantage or not, if students do not receive the coursework which could have showcased their talents and broadened their knowledge, then they are obviously worse off than without such coursework, and this is more apparent in rural areas where teachers who are certified to teach certain courses, such as foreign languages, are more difficult to recruit and retain.[41] In response to loss of control from the local community, schools have the ability to work out agreements with surrounding schools to ensure that they have a say in what teachers teach.[42] Without distance education, some rural students may never have the opportunity to take a foreign language course, and this is while learning another language is becoming increasingly important.

Distance Education as a Necessity for Rural Schools

The Benefits of Rural Schools to their Communities

Rural schools provide their communities with many benefits. One definition of social capital is, “the aggregate of the actual or potential resources which are linked to possession of a durable network…to membership in a group which provides each of its members with the backing of the collectively-owned capital.”[43] The support contributed by small, rural schools to students and the wider community can overcome shortages of social capital.[44] The small classroom sizes of many rural schools can account for any differences seen in educational achievement between rural schools and their town and urban counterparts. One effect of small schools is that students in poor rural areas do better academically on average than students in poor urban areas.[45]^,[46] Rural schools are also more likely to provide safer atmospheres for their lower-income students than urban schools.[47]

In addition to the above benefits of rural schools, students from rural schools are more likely to state that they are more content with their school, that their teachers are more accommodating, and they feel safer, compared with urban students.[48] The small communities in which a great portion of these schools exist also benefit their schools by providing better community support, often acting as a community center in their districts.[49]^,[50],[51] Rural schools contribute toward more democratic inclusion, a greater ability to overcome the effects of poverty, and they also make their communities more susceptible to positive social change by providing feelings of community.[52] Quality rural schools are a necessity in order for the economy and government of the U.S. to flourish,[53] and rural schools are often their community’s largest employer.[54] All of these benefits demonstrate the importance of rural schools to their communities and the region in which they exist. Children, families and other residents of rural areas benefit greatly from their schools.

Distance Education for Rural Schools

Despite the aforementioned benefits, Carr and Kefalas write that rural schools are not succeeding in preparing their youth to attend college and return with the educational and professional skills necessary for rural communities to survive.[55] Small, rural school administrators often ignore the needs of a handful of students interested in and eligible for advanced courses due to economic efficiency reasons. For example, these administrators often prefer assigning instructors to courses that are able to generate larger, more cost-effective enrollments.[56] In Setzer, et al.’s NCES survey of 5,500 public school districts, 93 percent of small districts stated that using distance education to offer courses which would have otherwise been unavailable is very important to their school’s survival.[57] Distance education gives small, rural schools a method for enhancing their curriculum by being able to provide students with expensive, low-enrollment classes like physics, music theory or calculus as well as AP courses.[58]

Dumas High School, located in rural southeastern Arkansas, is one example of a successful school that uses distance education.[59] When the state of Arkansas mandated that all public schools offer a curriculum which includes more advanced courses in mathematics, such as trigonometry, and advanced courses in science, such as physics, Dumas High School sought help in providing these courses through implementing an ITV form of distance education.[60] After the school fully implemented its distance education program, a study by American College Testing (ACT) found that Dumas High School was able to offer a wide variety of courses compared to similar small schools.[61] The study also found that the school had experienced significant improvements by being able to introduce more courses into its curriculum, and by decreasing the racial/ethnic achievement gap in a majority of subject areas.[62] Also, ACT college readiness exam scores increased in most subject areas, creating a 10 percentage-point reduction in the number of students having to take college remedial courses.[63]

As seen in the case of Dumas High School, rural schools often have difficulty providing certain categories of courses even when a larger number of students desire them. This is often due to a challenge rural schools face in teacher recruitment and retention.  Over 84 percent of rural school district administrators reported experiencing difficulty in filling vacant teacher positions in the results of Dadisman et al.’s 2007 survey from 44 states.[64] Unique teaching conditions cause such difficulty in filling vacant teacher positions.[65] In Schwartzbeck’s survey of over 3,000 rural school superintendents, the results illustrated that out of all the obstacles facing recruitment and retention in rural schools, one of the largest obstacles is low salaries, next to the isolation of rural districts.[66] Distance education is one way to overcome the challenge of having to recruit new teachers. Teachers of distance education courses are able to live in less isolated areas, if they so desire, and their salaries are equivalent to the salaries of traditional education teachers. Most distance education programs join a consortium between several schools, with a specific school that supplies each distance education teacher paying the teacher’s salary. Each school in a consortium typically supplies one distance education teacher to the grouping of schools; therefore, the schools are able to share several teachers for the cost of one teacher.[67] Because traditional and distance education teachers are paid equivalent salaries, teachers unions generally do not fight against distance education adoption. Unions, however, do argue for limiting distance education class sizes so that the teachers are not overwhelmed.[68]

In addition, a major excuse for school consolidation is the challenge in providing a depth of courses, but consolidating can lead to a loss of the aforementioned benefits that rural schools can provide. Distance education can fix the problems rural schools face, such as small numbers of students eligible for certain courses or the challenge of recruiting new teachers, and it allows the positive effects of small, rural schools to continue.[69] Students who reside in rural areas deserve the chance to receive all the benefits of schooling that their urban counterparts receive, though it is clear from the above research that they are not receiving the coursework they need. A solution to this problem is the implementation of distance education. With distance education, rural schools can overcome the challenge of not being able to recruit and retain teachers, rural schools will be able to avoid consolidation and the negative effects that come with it, and rural schools will have the opportunity to provide the variety of coursework of their urban counterparts. Without distance education, none of this would be possible.

Concerns in Adoption of Distance Education

Although rural schools need distance education to overcome their unique challenges, addressing cost and implication concerns is an important step towards creating effective policy. On the bright side, Irvin, et al. write that “as familiar adults and close student-teacher relations are characteristic of small rural schools, it is likely that there are school personnel who could provide the connection and support often absent from [online distance education].”[70] Rural schools must be aware of such possibilities before deciding to adopt distance education courses.

Concerns about Cost

Aside from many of the disadvantages of distance education previously mentioned, Figure-5 shows that cost is a large barrier to expanding distance education.

Figure-5. Percent of districts indicating that various factors were preventing them from expanding distance education courses

Source: National Center for Education Statistics (2005) (Setzer, et. al, 2005, pp. 17)

Online program start-up costs are often high because of up-front costs needed for course development or for purchasing courses from vendors. On top of these up-front costs, online courses need updating regularly,[71] and it is typically suggested that a distance learning facilitator is hired to manage paperwork and troubleshoot technical problems, adding even more cost to a program.[72] The funding source for online education depends on each particular situation. Typical funding for state-led online programs is through state legislature appropriations, while the funding for district-led programs is through each district.[73] Luckily, the federal government does provide discounts for schools wishing to connect to the Internet, with support ranging from 20 to 90 percent of cost depending on urban/rural status or on the level of property.[74] Unfortunately, rural districts often face challenges in receiving federal funding. One reason for this is that the federal government currently measures students in such a way that causes urban students to be worth more funding than rural students. Though rural school organizations have lobbied Congress to change this funding distribution method for over a decade, Congress has yet to act.[75]

ITV programs can also come with high costs. One study on ITV even found that, “some districts would have incurred substantially fewer expenditures if they provided classes in traditional settings, albeit in very small class sizes rather than through ITV.”[76] Up-front costs for ITV can range from $7,000-$28,000, with recurring transmission line costs ranging as high as $3,600 per year.[77] In addition, certain hidden costs often come with the adoption of ITV, such as system malfunctions. Sipple and Brent estimate that around five days each year are lost in using ITV.[78] According to The Rural School and Community Trust, the best option for schools that wish to use ITV is to form a consortium with other schools. Consortiums allow schools to collaborate through shared classes and also share technical support costs and teachers. Strange writes that in an ideal consortium, “no funds exchange hands for instructional costs. All schools and/or districts agree to provide at least one course per year and all are free to enroll students in any ITV class, based on a predetermined set of operational policies.”[79] Still, a potential problem with ITV adoption in rural areas exists in that the required T-1 line may be a challenge to obtain. Not all telecommunications companies are willing to provide such a connection in rural areas, and such a challenge can usually only be overcome through statewide action.[80]

Even with such large cost barriers, Dumas High School proves to be an excellent example of how schools can overcome the high costs of adopting distance education if they use the correct method suitable for a school’s particular area and situation. When confronted with a new state mandate that required the school to offer more coursework than what was available, Dumas High School used the state of Arkansas’s AdVentures program for gifted and talented students to apply for and receive a state grant to run its distance education program. They were able to do so by using the AdVentures program as a reason for offering advanced coursework through distance education, and they were then able to meet the state’s mandate by offering the extra courses.[81] By obtaining the grant from the state, Dumas High School was actually able to offer more advanced courses to the entire student body which helped the school to have significant increases in achievement.[82]

Institutionalism

Another major barrier to the adoption and expansion of distance education has to do with institutionalization “the process by which social processes, obligations or actualities come to take on a rule-like status in social thought and action.”[83] Meyer and Rowan write that, “education is highly institutionalized in modern society. Its categories of students and graduates, as well as its ritual classification of production procedures…are all derived from highly institutionalized rules and beliefs.”[84] In other words, through the process of institutionalization, education has taken on a set of norms which people believe to be “proper education.” Examples would be the way society requires teachers to dress, societal norms for how schools are structured, or even society’s expectations for how a classroom should operate with students receiving lectures from face-to-face teachers in traditional classroom settings.

Meyer and Rowan write, “educational organizations function to maintain the societally agreed-on rites defined in societal myths…Education rests on and obtains enormous resources from central institutional rules about what valid education is”.[85] Distance education violates the societal myths about how classrooms are supposed to operate, and such myths can cause a backlash against alternative programs such as distance education, and this is particularly the case if those who wish to implement alternative programs do not recognize and deal with such barriers.[86] Those who desire to implement distance education must realize that there are core values involved based on these societal myths. Natriello writes that, “distance learning initiatives threaten core values both by creating units based on principles different from those governing traditional programs and by increasing the chances that traditional programs themselves will be re-examined and reformed along the lines of the new initiative.”[87] If a school seeking to implement distance education is to be successful, it must recognize these institutionalized barriers and showcase the distance programs in a way that causes any resistance to change to be broken down.

Though institutionalization barriers can be extremely difficult to overcome, it is possible to overcome them through a strong commitment from those involved in pushing for distance education implementation. One example of a school district that overcame an institutionalization barrier is from the case of Cleveland City, Tennessee. Though the state of Tennessee is largely rural and contains sparsely populated areas that could benefit from distance education, only two school systems in the entire state used distance education at the time of a survey of the school district in 2005. In the survey, school administrators stated that one of the biggest barriers their schools faced to distance education adoption were resistance to change,[88] which is an institutional barrier. Despite little experience of distance education in Tennessee and despite institutionalization barriers, Cleveland City was able to overcome such barriers through a focus on breaking resistance to change through teacher training. In breaking down the barrier of resistance to change from the teachers, Cleveland City adopted an online education program that has had an excellent success rate.[89] As this example shows, a school system can overcome the barriers to distance education if the right methods for the particular area are used. Other school districts could follow the example of Cleveland City by offering a method of teacher training that works to break down any barriers to change, and state governments could fund this training.

Conclusion

For schools that cannot afford to hire the required number of teachers to teach all necessary courses, distance education may be their only option if their students are to receive the benefits of a wider variety of coursework. The same goes for schools which do not have a large enough student population to support advanced courses.[90] All schools must fulfill their responsibility to do all that they can to enhance the lives of their students. Therefore, what this means is that all students must have the same opportunities to gain the knowledge that they will need to pursue their particular interests. As previously mentioned, there are significant barriers to adoption of distance education, but it is possible to overcome these barriers as seen in the cases of Dumas High School and the Cleveland City, TN school district. Dumas High School was able to take advantage of a state grant program for gifted and talented students to fund the costs associated with implementing distance education, and Cleveland City was able to overcome barriers of institutionalization through providing training to teachers that worked to overcome resistance to change.

Further Research

Even though examples of successful implementation of quality distance education programs do exist, it is clear from this study that there is a need for further research from the university and government levels to inform policymakers, particularly state and local policymakers, on the issues surrounding distance education. Schools across the country are implementing distance education, even when such a limited research base exists. Much of the current research on distance education focuses on adult education, while younger learners usually have fundamentally different characteristics than adults.[91] Schools that adopt distance education need further research on K-12 learners and distance education program effects. Though some of the differences in effectiveness between distance and traditional education have been inconclusive in research so far, this is not the only area that future research must focus on. Schools in rural areas may not have any other viable options than to adopt distance education programs. These schools desperately need research on effective and non-effective aspects of distance education, not comparisons of whether distance courses are as good as traditional courses. In addition, rural schools must find ways, through research, to overcome some of the disadvantages of distance education, on cost-saving methods, and on methods to aid schools in implementation of distance programs. Improvements in data collection are paramount to this effort, particularly state and district-level data which identifies schools that may be a good fit for distance education, or those schools that are experiencing challenges in implementation and expansion.

Recommendations

Based on the research presented,  this study shows that the debate between distance education and traditional education over differences of effectiveness is irrelevant to rural schools  that need to adopt distance education because the benefits of doing so far outweigh any costs. This study recommends that that any future research which concerns distance education’s effectiveness should take the special case of rural schools into account. Instead of focusing on the differences of effectiveness between distance education and traditional education, future research should focus on ways to improve the quality of distance education courses. Schools that have a specific need to adopt distance education, such as rural schools, particularly need this.  Another recommendation is that state policymakers work to reduce the barriers to distance education adoption and access, particularly for the districts with a higher need of distance education such as small, rural schools. States typically regulate the amount of distance education courses by mandating that schools can offer a maximum number of courses through distance education. Instead of regulating the quantity of distance education courses, states should regulate the quality of these courses.[92] Though it is possible for individual school systems to overcome many barriers and implement a successful distance education program, such as the case of Cleveland City, TN, policymakers should make it easier for schools to successfully implement distance education, particularly for schools where adopting distance education is a necessity.

This study also recommends that state education agencies work to develop methods which will place both traditional and distance education on equal accountability levels. States and local districts should develop ways to ease the worries of parents that their children may not be getting a quality education if enrolled in distance education courses. The first step in doing this is to ensure quality distance programs. As previously mentioned, one way to do this is to ensure that teacher involvement is high.[93] Kingdon writes that it sometimes takes a dramatic change in a condition before the condition becomes a problem in the minds of people.[94] Talk of school consolidation often attracts the attention of district residents, but by then it might be too late. Kingdon also writes that conditions can become problems in the minds of people through constant feedback.[95]

A final recommendation is that the federal government should end its policy of allocating a disproportionate amount of funding to large, urban schools and away from small, rural school. As referenced above, the way the U.S. Department of Education’s funding formula is currently set, poor students in large school districts, such as Philadelphia, receive three times the amount that an identical student receives in the rural school district of Aliquippa, PA, and this is the case even though there is a higher percentage of students living in poverty in Aliquippa than there are in Philadelphia.[96] Local school districts have an extremely difficult time in coming up with the funding for distance education on their own because the method most widely used for receiving local education funding is through property taxes. This is while property value is more likely to be lower in rural areas because of farmland, forested areas and mining areas which are worth much less than the densely populated business and residential districts that are found in urban areas. Though some rural areas charge higher property tax rates in an attempt to overcome this, they still generate far fewer tax dollars.[97]

In addition to inadequate local funding methods, state education departments in the largely rural states are typically ill-equipped to allocate large amounts of funding to distance education adoption.[98] For these reasons, the federal government should end its discrimination of rural students and equitably allocate funding throughout the nation. Distance education programs can often be expensive, and it may take state aid to achieve the needed adoption and expansion. As stated repeatedly, some schools may have no choice but to adopt distance education if they are to fulfill their obligation to enrich the lives of their students.

In summary, this study recommends that further research be conducted, particularly on effective uses of distance education, that state education agencies work to develop methods which will place both traditional and distance education, on equal accountability levels, and that the federal government create a more equitable system of funding so that rural schools will more easily be able to adopt the distance education that they need. The barriers to adopting distance education can often be very burdensome; therefore, those that have the ability to reduce any barriers also have the responsibility to do so. Rural schools offer many benefits to their communities, and these benefits depend upon the ability of rural schools to provide the coursework that rural students need. Rural schools need distance education, and the benefits of adopting distance education for rural schools far outweigh the costs of failing to do so.

Appendix-1

Characteristics of Major Distance Learning Technologies

Source: The Rural School and Community Trust (2004) (Hobbs, 2004, pp. 27)

 

 

 

The Necessity of Upgrading the Iraqi Financial Sector: Role of the Financial Sector in Spurring Economic Development

An Article by T. Keyzom Ngodup

Abstract

In exploring the positive relationship between financial sector development and economic growth, this paper analyzes a variety of indicators among resource-based economies in the Middle East & Africa (MENA) Region. In doing so, this paper will synthesize and recommend key policy areas towards financial sector deepening for Iraq. This paper demonstrates that achieving economic growth requires focus on market frictions which consist of the information and the transaction costs. The key message for Iraq’s financial sector is to move from marginal providers of liquidity to become an engine for economic growth.

About the Author

T. Keyzom Ngodup is co-founder and Executive Director at Ideas sYnergy, a leading Iraq based development consulting company committed to economic and social development through market-based solutions that help build and scale innovative businesses for sustainable and inclusive private sector development. T. Keyzom Ngodup has worked on financial inclusion and economic development initiatives in India, Ethiopia, and Iraq, and across least developed countries in Africa and South-East Asia. She has authored several publications, including “Inverting the Pyramid: Investment Opportunities in India’s Microfinance Sector 2008,” “State of Iraq’s Microfinance Industry 2010,” and “Islamic Microfinance Al-Murabaha: Iraq’s Experience 2010.” At Ideas sYnergy, Keyzom Ngodup launched Iraq Insights, a monthly flagship publication contributing to policy dialogue on issues affecting inclusive economic development in Iraq. She graduated from Cornell University with a B.A. and M.P.A. and also serves on various boards of microfinance institutions in India and advises the Tibetan Government’s Planning Commission.

The Necessity of Upgrading the Iraqi Financial Sector: Role of the Financial Sector in Spurring Economic Development

Iraq, with the world’s third largest oil reserves, is charting a course for a diversified economy towards an inclusive and robust private sector, supporting long-term economic growth and employment generation. “Sowing the oil” to diversify the economy and create competitiveness is a longstanding goal for all natural resource exporters. A select number of economies have successfully prioritized investments, based on competitive advantages, in a range of productive non-oil sectors. Past and ongoing investments in a strong policy environment, including the financial sector, continue to support growth.

Since 2003, the government of Iraq (GoI) and the people of Iraq have embarked on a challenging transition (1) from a unitary state to a developing parliamentary republic system and (2) from a centralized mixed economy to one where the private sector is increasingly recognized as the engine of growth and employment.[1] Many facets of this complex transition have already been successful, including the adoption of a new constitution in 2005, the provincial election in 2009, the parliamentary election in March 2010, and the formation of a coalition government in November 2010. Iraq broke the world record for time taken to form a government.[2] In many ways, however, some of the most vital elements of public administration and civil service required to meet the long-term aims of successful political, security, and socio-political transitions have yet to be adequately conceptualized. Although all major parties and ethno-sectarian groups are represented in the current Iraqi government, there is only a limited consensus among them on major policy issues, such as foreign affairs, internal security, and oil revenue distribution.[3] The ability of Iraq’s government to function well is severely curtailed by political infighting at a time when the United States is shifting to a civilian-led effort in Iraq. The emphasis on a sustainable and well developed financial sector is imperative to Iraq’s economic development and has been the priority of the United States Agency for International Development (USAID), the State Department, the United States Treasury, World Bank (WB), and International Monetary Fund (IMF).

Current conditions in resource-abundant economies (see Table 1) indicate the level of success and failure of measures taken. Kingdom of Saudi Arabia (KSA) and United Arab Emirates (UAE) rank among the highest in terms of ease of getting credit, with over fifty percent private sector credit as a percentage of gross domestic product (GDP). In addition, the financial sectors in UAE and KSA have performed well in terms of depth and breadth of financial intermediation, with steeper rise in GDP per capita and Human Development Index (HDI). KSA and UAE represent success stories in terms of employing a high level of monetary instruments to facilitate credit intermediation and strong prudential supervision of the private financial sector in order to support the development of local enterprises and reduce dependencies on imports. Despite Libya’s high GDP per capita, Libya falls in the category of low success economies due to its low level of private sector credit as a percentage of GDP, its significantly high liquidity to assets ratio, and high Non Performing Loans (NPL). With this in mind, this paper will analyze and recommend policy improvements and pitfalls to avoid for the private financial sector as a means to support the GoI’s diversification strategy. This paper focuses specifically on the banking sector, which accounts for more than seventy-five percent of the Iraq financial sector, in order to communicate targeted recommendations.

Table 1 – Overview of Social & Economic Indicators in Select MENA Resource Abundant Countries[4]

 

	GDP Per Capita (PPP)(2010, USD)	Type of Legislation	Human Development Index(2010, UNDP)	WTO Membership Year	Ease of Doing Business Ranking (2011)	Unemployment %	Income Category
KSA	22,545	Islamic Law	.752	2005	11	11.6(2009)	HI
UAE	38,089	Islamic & Civil Laws	.815	1996	40	12.7 (2008)	HI
Libya	16,837(2009)	Transition Democracy	.755	No	N/A	20.7 (2009)	UMI
Iraq	3,535	Civil Law	.583(1998)	No	166	18(2009)	LMI

 

While hydrocarbons account for ninety percent of GoI revenues and 55.3 percent of GDP, the services sector as a percentage of GDP has been rising steadily, from 12.2 percent in 2000 to 39.8 percent in 2009.[5] Simultaneously, the agriculture sector, as a percentage of GDP, rose from 3.6 percent in 2008 to 4.8 percent in 2009;[6] however, its current level is far below Iraq’s potential as the ‘fertile crescent,’ a term coined in the 1960s when Iraq was a large agricultural exporter.

With the oil sector employing less than two percent of Iraq’s large labor force and unemployment at eighteen percent,[7] productive employment is a major goal, as well as the need to diversify assets and income in the long run through private sector development.

Access to finance is impeded by weak financial infrastructure, which needs to be strengthened over time in all areas, including credit registry, the collateral framework, judicial systems, and accounting and auditing skills. When analyzing Iraq’s financial system it is important to keep the general political economy in mind. The difficult security situation imposes costs and constraints, the complex political situation impedes decisive policy action, governance issues linger, and the legacy of prevailing state intervention has not been fully addressed. In addition, Iraq ranks 175^th out of 178 countries in Transparency International’s Annual Corruption Index,[8] significantly impeding meaningful development.

Role of Private Financial Sector in Private Sector Development

Developed, well balanced economies have mature financial markets, including a highly active financial sector.[9] Financial sector development is dependent on a multifaceted and multi-discipline process, encompassing not only monetary aggregates and interest rates (or rates of return), but also regulation and supervision, degree of competition, financial openness, and institutional capacity (such as the strength of creditor rights). It also includes a variety of markets and financial products that comprise a nation’s financial structure. An efficient and competitive financial system channels savings and capital inflows to productive investments, stimulating growth and employment. International experience shows that more open and competitive banking systems are associated with better access to finance.[10] Such systems are usually characterized by private ownership of banks (including foreign ownership); strong legal, informational, and financial infrastructure; and regulatory and supervisory frameworks that manage risks and prevent crisis while protecting consumers and ensuring transparency.

The private financial sector reflects a range of services and markets that allow a financial system to fulfill its functions, namely enabling firms and households to raise finance in cost effective ways, mobilizing finance, monitoring managers, and diversifying risk. Financial instruments, the markets, and financial intermediaries are factors of the private financial sector development that can promote private sector development, and subsequently economic growth.[11] Financial sector development indicators have robust, significant, and positive impacts on economic growth, such as the ratio of private sector credit to GDP and the ratio of liquid liabilities to GDP,[12] which are indicators of credit extended to the market. Underinvestment in the financial sector can lead to long-term negative repercussions for economic growth.

Financial sector development is identified as a critical factor in private sector development, and is integral to the advancement of a well-balanced economy. Countries with deeper financial systems in terms of outreach, products, and services, grow faster. According to empirical evidence, the lowest income quintile benefits most from this deepening.[13] Countries with deeper financial systems also experience faster reductions in income inequality and poverty rates. Financial sector development helps industries reliant on external finance grow faster and helps enterprises, especially smaller firms, overcome financing constraints. Focus on private financial sector development contributes positively to the development of the overall structural reforms in the business environment for the private sector through increased competition, improved standards of transparency and governance, and ease of doing business. This focus thereby contributes to inclusive economic growth.[14]

Comparing Iraq to Select Resource Abundant Economies in MENA

In resource-abundant economies, private financial sector development is recognized as instrumental to facilitating economic diversification and private sector growth; however, only those countries above a threshold of institutional development supporting private sector growth as inherent to economic growth are able to reap sustainable benefits from natural resource wealth.[15] The heavy dependence of the financial system on a sound institutional framework, including an effective contractual framework, can hamper financial deepening in countries where natural resource abundance undermines institutional development. Therefore, private financial sector development, and its positive impact on the business environment in itself, can play a pivotal role in mitigating the natural resource curse.

When comparing Iraq to KSA, UAE, and Libya, all of which are resource-abundant economies, it is notable that UAE and KSA have significantly diversified economies and less than fifty percent of GDP is attributed to hydrocarbons, while Libya, at 62.3 percent, represents an economy heavily dependent on its natural resources (see Figure 1).[16] While Iraq’s economy is driven by its hydrocarbon revenues, its economy has been diversifying since 2005.

 

Figure 1 – Diversification as a Percentage of GDP in 2009

Source: UN Statistics Department

Economic diversification and depth of the financial sector are positively correlated. Financial sector development affects per capita GDP mainly through its efficient resource allocation. Resource abundant economies’ financial sector development differs based on individual country strategies and effective prioritization of the financial sector as pivotal to private sector development. Table 2 below provides an overview of the selected countries’ performance across a variety of indicators.

 

Table 2 – Financial Sector Performance Indicators (2009)[17]

	World Bank Ease of Getting Credit Rank	Bank Liquid Reserves to Bank Asset Ratio (%)	Private Sector Credit as a % of GDP	World Bank Credit Depth of Information Index
KSA	46	14.22%	53.04	6
UAE	72	12.32%	93.02	5
Libya	–	235.47%	10.89	0
Iraq	168	156.61%	4.08	0

Source: World Development Indicators

Libya, with over eighty percent of financial sector assets controlled by the government, records a decreasing trend in bank credit to the private sector.[18] As of December 2010, the government of Libya still maintained price, credit, trade, and foreign exchange controls; however, there have been some modest reforms recently, including the partial privatization of two banks and slight liberalization of interest rates. While foreign banks have been operating for many years without restrictions in UAE, KSA re-started licensing of foreign banks in 2004, after a long hiatus beginning in 1976. Both countries have long recognized the need for larger and more sophisticated banking sectors due to their respective oil booms. By allowing foreign banks in the country, UAE and KSA have made significant strides in facilitating capital for investing in the banking sector, whether it is by growing branch networks, implementing new technology and alternative delivery channels, or training human resources. The entrance of foreign banks, both from Gulf Cooperation Council (GCC) and other countries, into UAE’s and KSA’s markets has enhanced competition, supported the transfer of technology, improved financial services in all sectors and created employment opportunities in UAE and KSA (see Figure 2).

 

Figure 2 – Bank Credit to Private Sector (% of GDP)[19]

Source: World Bank

Overview of the Iraqi Private Financial Sector

Iraq’s banking industry was once the pearl of the Middle East. However, it started deteriorating in 1964, after the first Ba’ath regime implemented a policy of nationalization where the Government took over private banks, insurance companies, and a number of industries. The nationalization decree was followed by a series of bank mergers that eventually resulted in two state-owned banks, Rafidain and Rasheed. Private Banks were not allowed to register until 1992, following the Persian Gulf War in 1991, and even then constantly risked being seized by the government if they showed any signs of profit.[20]

Although the banking sector is the main component of the Iraqi financial system, the banks offer few credit facilities, and the credit culture is poor. There is limited extension of credit to the private sector and an asset composition heavily tilted toward government securities. Banks are largely risk averse and lack credit departments, further hampering their lending potential. Additionally, the private banks face interference from Iraq’s Ministry of Finance (MoF), such as the recent ban of government institutions/enterprises doing business with private banks.

As of 2010, there are forty-six banks operating within Iraq, of which thirty-one are private, and seven have significant foreign ownership. In addition, there are eight foreign bank branches.[21] Despite the large number of private banks, the financial sector assets remain controlled by the three state owned banks, Rafidain Bank, Rasheed Bank, and Iraq Trade Bank. However, private bank loans have been growing steadily, representing thrity-two percent of total banks loans in 2008. This growth in the private financial sector contributes significantly to Iraq’s growing diversification of its economy (see Figure 3). For example, Iraq has seen a steep rise in services since 2003, when the private financial institutions began operating.

 

Figure 3 – Economic Sectors as a Percentage of GDP across Years[22]

Source: UN Statistics Department

 

With the help of the World Bank and IMF, regulations governing the Iraqi financial sector have improved significantly since 2003. The Central Bank of Iraq (CBI) does not state any upper limit on foreign participation in local private banks, and seven private banks have substantial foreign ownership.[23] In 2010, CBI set a minimum capital requirement for banks at $214 million to be achieved by 2013.[24] The measure is aimed to help the economy handle the anticipated rise in oil and non-oil development projects, and to encourage local private banks to merge with regional and international partners (see Table 3), in order to avoid ‘off-shoring’ of banking transactions. The capital, paid in three phases, aims to develop the monetary structure of the bank and raise the level of its interaction with other banks.

 

Table 3 – Leading Private Banks with Foreign Ownership   

Private Bank	Foreign Stakeholders	Ownership
Dar Es Salaam Investment Bank	HSBC	70%
Bank of Baghdad	United Gulf Bank	49%
Credit Bank of Iraq	National Bank of Kuwait and International Funding Commission	85%
National Bank of Iraq	Capital Bank of Jordan	49%
Commercial Bank of Iraq	Ahli United Bank	49%
Al Mansour Bank	National Bank of Qatar	23.2%
Dijla & Furat Bank	Aayan Leasing	35%

Source: Iraq Insights, Issue 3, August 2011

 

The foreign institutions that have already entered the Iraqi market through investments in local banks have not yet scaled up their lending operations. In fact, their loan-deposit ratios tend to be lower than those of their wholly  locally owned counterparts. For example, consider the thirteen Iraqi Stock Exchange (ISX)-listed banks. Four private banks with foreign investors had the lowest loan-deposit ratios. Only one of the five had a ratio above twenty percent, while the subsidiary of global giant HSBC ranked last with a ratio of just four percent. While capital adequacy, which was mandated at twenty-five percent until mid-2010, might be a constraint on lending even for banks with large deposit bases, it does not appear to be the explanation for the poor showing of the foreign-invested banks as they do not tend to have less capital. Foreign banks that are not yet present in Iraq, such as Citibank, offer off-shore services through Dubai because clients choose to minimize cross-border risk and counterparty risk, and opt for greater convenience in terms of real-time payments and access to their capital.

The banking system is highly liquid, with total deposits amounting to $US 33 billion in 2009.[25] Bank liquid reserves to bank asset ratio (i.e. Bank’s total ‘idle’ cash) increased from ninety-eight percent in 2004 to 156.6 percent in 2009, compared to fourteen percent for KSA and 12.32 percent for UAE in 2009.[26] According to CBI, total bank loans amounted to $US 5.8 billion as of June 2010.[27] This figure compares to approximately $US 250 billion for KSA.[28] In 2010, the CBI reduced the required reserve ratio from twenty-five percent to fifteen percent, as well as its key interest rate to six percent in order to facilitate future investment and lending in the economy. Without appropriate regulatory incentives or requirements, however, the Iraqi financial sector may remain reluctant to scale-up lending to support private sector development and economic growth.

A simple indicator of the development of the banking sector is the ratio of money in circulation (M2) to GDP.[29] In 2008, broad money totaled just 31.12 percent of GDP, far below the 71.39 percent of KSA, 83.66 percent of UAE, and 54.96 percent of Libya.[30] Progress has been recorded since 2005, when it was 3.71 percent,[31] indicating that improved conditions in Iraq are restoring confidence and expanding the use of local currency in place of foreign currencies. Nonetheless, bank deposits account for less than half of the broad money supply,[32] indicating that banks still have a very limited role in the transactions system.

Iraq’s private financial sector is expected to play a vital role in the country’s private sector development. In its present form, and in the context of international banking standards, the privately owned banking sector is less than ten years old; however, growth has been strong and private bank lending grew by fifty-two percent since 2008, to over $US575 million.[33] Yet private sector growth has been rising steadily from 3.39 percent in 2005 to 5.32 percent in 2008.[34] In addition, Iraqi private banks have increased their capital from $US 30 million in 2004 to $US 1.6 billion in 2009. The overall growth has been significantly hampered by weak macroeconomic policies and poor management and institutional infrastructure at the banks.

Including the state owned banks, Iraq has 774 branches across the country,[35] of which 383 branches represent private banks’ network. While the branch network has been growing steadily, the level of financial intermediation in Iraq remains low. Very few banks offer loans with more than one year maturity, as most banks lack the expertise to offer appropriate credit facilities or assess risks.

In terms of banking innovation and best practices, Iraq has made positive strides, albeit continued improvements remain critical. Until 2003, the entire banking sector remained isolated from technological advances and new business practices. Iraqi banks had no way of processing electronic payments and were using an outdated system for clearing checks. Even documents and correspondence between branches of the same bank had to be carried by hand between buildings. As of 2010, Iraq has nine banks with full electronic funds transfer (EFT) capability, domestic payments systems, and core banking systems. These EFT capable banks have almost 200 branches throughout the country. ATMs and point of sale (POS) terminals are also being put in place across the country, although they are not widespread. The Iraqi Payment System (IPS) needs improvement and an increase in widespread usage.[36] Checks account for ten to fifteen percent of payments across Iraq, but they are not preferred due to potential delays in clearing and settlement.[37]

Other financial institutions are also relatively small and weak. At the end of 2008, ninety-six companies were listed on the ISX, but market capitalization was only two percent of GDP and the turnover rate on listed stocks was just 0.6 percent.[38] One-third of the listed entities are financial institutions, including twenty banks, four insurance companies, and eight financial investment companies.[39]

In 2010, 156 foreign firms, from thirty-four different countries, announced new investments, service contracts and other commercial activities in Iraq, worth $US 0.66 billion.[40] However, it is important to note that multinationals operating in Iraq typically maintain bank accounts in the country for small-value and regulatory payments. Other payments into Iraq are then managed through offshore accounts. Contrary to popular belief, foreign commercial activity in the hydrocarbons sector ranks fifth, as shown in Table 4 below; therefore, it is imperative that the Iraqi private financial sector support the banking needs of the growing foreign commercial activity.

Table 4 – Sector Breakdown of Foreign Commercial Activity[41]

Sector	Million USD	% Total
Real Estate (Residential)	14,107	33.1%
Transportation (Infrastructure)	6,733	15.8%
Electricity	6,074	14.2%
Industry	6,040	14.2%
Oil & Gas	5,443	12.8%
Real Estate (Commercial)	1,829	4.3%
Water & Sanitation	1,317	3.1%
Health	757	1.8%
Agriculture	244	0.6%

Source: Dunia Frontiers Report, 2010

The development of Iraq’s private microfinance industry is favorable in the private financial sector, even though all twelve microfinance institutions (MFIs) currently operate as NGOs because there is an absence of clear regulatory frameworks for non-banking financial institutions serving the poor, who represent twenty-three percent of Iraq’s total population[42]. As of December 31, 2010, the twelve MFIs boosted an outstanding loan portfolio of $US 106.4 million and 75,182 clients, growing by 28.4 percent and 27.7 percent respectively since 2009.[43]

An institutional transformation of NGO-MFI into regulated non-bank financial institutions is globally recognized as one of the most effective strategies for achieving significant scale. This is done by offering a wider range of services, accessing commercial sources of capital, and improving operational efficiency through enhanced systems, controls, and transparency in reporting that would result from links to regulators and other banking expertise.

Iraq enjoys two strong advantages: (1) a natural endowment of oil resources; (2) human capital, which reflects a long tradition of education, scientific and commercial skills; and (3) entrepreneurial spirit. As the security situation improves, the development of sound macroeconomic policies and a business environment conducive to private investment are beginning to create growth and jobs. A well-functioning financial sector is critical to promoting this growth. Enhancing the performance of the Iraqi private financial system and improving its capacity to provide efficient financial services is crucial to creating a competitive financial system capable of enhancing macroeconomic growth and prosperity in Iraq.

To develop a sound and stable financial system, Iraq requires well managed financial institutions with well trained staff, strong prudential supervision, and effective competition in the financial system, as well as a business environment that fosters bankable opportunities for private sector development. Only a stable banking sector can broaden access to finance; however, a stable banking system is not necessarily one that provides improved and open access to credit. Government should remove unnecessary regulations and policies that raise the cost of bank lending to enterprises, while requiring sound risk management practices to be followed. Before planning interventions to correct market imperfections, government must establish the fundamental institutions of the financial sector. If the legal framework for collateral does not ensure creditor security, for example, a costly government-backed guarantee system would not raise bank lending in the long-term. Similarly, credit bureaus will not sustainably raise lending levels and reduce borrowing costs if banks are basing lending decisions on criteria other than risk and return.
 

Recommendations for Scaling-up Iraq’s Access to Finance

Northern Gulf Partners (NGP), one of the few investment and financial advisory firms in Iraq with long-term investment horizon, notes the following: “Iraq currently imports bottled water and other beverages from Saudi Arabia, Kuwait and the UAE—the Biblical ‘Land of Two Rivers’ [i.e. Iraq] forced to bring water from ‘The Empty Quarter.’”[44] This statement signifies the tremendous potential in Iraq which can be realized through the private financial sector. It is widely known that a stable and strong macroeconomic environment, improved business climate, and fast-tracked WTO accession—coupled with a developed financial sector—work symbiotically to create a viable private sector. The first step for economic growth is to focus on market frictions, which consist of the information and transaction costs. Well-developed financial systems reduce the information and transaction costs, and influence saving rates, investment decisions, technological innovation, and long-run economic growth rates. Therefore, GoI stakeholders must strengthen and modernize the private financial sector in order to deploy capital effectively for private sector development.

Broadly, the private financial sector in Iraq needs to exert concerted efforts towards creating a favorable credit market infrastructure. Disclosure and good accounting and auditing practices promote sound credit markets. Financial reports facilitate international commerce, and efficient payment and settlement systems enhance investor confidence in companies and banks’ ability to clear transactions efficiently, whereas proper documentation simplifies tax processes. Good corporate governance frameworks help broaden access while strengthening financial stability and preventing crisis.

Given the Central Bank’s recent successes in managing inflation, remaining major areas of development include its supervisory role, improvements in the coordination and regulatory authority exercised by the Central Bank branches, and data collection. In addition, little progress had been made in the restructuring of the balance sheets of the two largest state-owned banks, Rafidain and Rasheed. This largely reflects a lack of institutional capacity and weak coordination between the various parties involved, including the referenced banks, MoF, and CBI. In addition, MoF has yet to start the process of the aforementioned Banks’ operational restructuring.[45] As noted earlier, significant risk of instability in Libya’s financial systems comes from state-owned banks’ lack of independence and market discipline due to political interference. Such interference often supports insolvent state-owned enterprises, and provides poor services: according to the World Bank surveys, state-controlled banks can take three times longer than private banks to process an application for a line of credit.[46] These countries also have the highest rate of NPLs. This high rate curtails the efficiency of intermediation.

The extent of NPLs is directly related to the prominence of state-owned banks and in some cases connected lending. Historically, governments have maintained state-owned banks to attain socio-economic goals or for connected lending (to state-owned enterprises or to private business with preferential access). The state’s social mandate pushes banks to lend to insolvent borrowers or those likely to default because of their connections or their knowledge of the lack of enforcement. Bank restructuring can claim a sizable share of government budgets. Yet the large outlays to restore financial and operational soundness often do not bring sustained stability to the banking sector due to lack of incentives.

Key Message: Moving from Marginal Providers of Liquidity to an Engine for Private Sector Development

The growth of Iraq’s financial sector has been impressive in the last couple years, especially the positive development of financial intermediaries servicing low-income Iraqis and young entrepreneurs. The following recommendations are integral to the Iraqi financial sector’s capability to instigate private sector growth.

Raising Long-Term Funds [MD1] 

Long-term debt financing remains a critical constraint among the private banks in Iraq. Perceived country risk and weak business environment are major obstacles to both long and short-term lending in Iraq; however, while private banks have short-term lending capabilities and are making strides in the right direction, long-term financing remains weak. Despite strong growth in the telecommunications sector in recent years, Mobile Network Operators (MNOs), including Zain, have difficulty securing long-term financing for their networks from the Iraqi private financial sector. Country risk and a weak business environment are major obstacles to commercial lending. To circumvent those problems, Zain has turned to International Finance Corporation (IFC), the investment arm of World Bank, to help secure alternative financing sources. The $US 400 million long-term debt facility includes a loan of $US 155 million from IFC and an additional $US 245 million loan committed by international banks.[47]

Iraqi internet service provider FastIraq has plans to connect more than 100,000 homes and offices to the internet, following the arrangement of funding with Dar Es Salaam Investment Bank, a subsidiary of HSBC. FastIraq was advised by Northern Gulf Partners, which secured finance based on projected cash-flow.[48] This is a significant departure from the traditional requirement to secure debt against assets. The transaction has widespread implications for other business borrowers in Iraq who seek access to credit, but lack traditional assets such as real estate to provide as collateral for the loan. The loan is historically significant, representing a progressive shift in Iraqi credit culture away from traditional asset-based lending and towards a more innovative, cash flow-based approach to lending.

The Iraqi private financial sector needs to show more commitment to cash-flow-based approach to lending, in both short- and long-term loans; however there are serious concerns with respect to reliability of business and financial data due to lack of internationally accepted accounting standards. Currently, CBI is working on conforming commercial banks to International Financial Reporting Standards. The government, CBI, and donors can play a critical role in leading the way through incentive systems related to advocating long-term financing. Already, the project team and CBI are working together on addressing information asymmetries in the financial sector through the credit information system initiative that will incentivize banks to take informed lending decisions and scale-up access to finance.

Alternative Delivery Channels to Scale-up Financial Intermediary Capabilities

The liberalization of financial markets, the increasing use of new and advanced technology, financial innovation, the change in customer preferences, and the information revolution have put competitive pressure on banking institutions and modified the technology of bank production.[49] Therefore, regulations on mobile banking and Know Your Customers (KYC) norms are extremely important simultaneous developments in the private financial sector.

In June 2010, Amwal Electronic Banking Services entered into a partnership with one of the two largest MNOs with over seventy seven percent penetration rate,[50] Asia Cell, and two Banks (Bank of Baghdad and Ashur Bank) in Iraq and formally launched MobiCash, a mobile banking platform enabling a consumer to purchase airtime directly, buy goods and services from registered merchants, check bank account balances, and make mobile-to-mobile and bank account-to-bank account money transfers.[51] While Iraq’s Central Bank has not issued any regulatory guidelines for mobile banking in Iraq, it is currently in a ‘wait and see’ phase, and has provided Amwal with a ‘no-objection’ letter allowing Amwal to continue operating the mobile-banking platform. In late 2010, Asia cell launched an international payments transfer service, that will enable Iraqis living abroad to send small value transfers to their relatives and friends in Iraq in the form of prepaid top-ups.[52]

Public Credit Registry and Private Credit Bureau to Enhance Risk Assessment Capabilities

While efforts are underway to establish credit financial services in the country through project activities, the pace of dialogue has been mixed mainly due to significant challenges in the broader environment. Experience demonstrates that the Credit Bureau performs better in the private sector, and that the government must play a facilitating role in partnership with the Credit Bureau to scale up reporting. In the absence of a strong credit environment in Iraq, credit histories can serve as a demonstration of a business and/or individual repayment strength. A sound and well-functioning credit market requires better information about borrowers and stronger legal protection for creditors and borrowers, which in turn requires efficient, transparent, and well-governed institutions.

Sharing credit information enhances enterprise access to finance.[53] The extent of information asymmetry is directly associated with increased credit rationing. The amount of credit information available to banks depends on a country’s credit information and payment systems. It also requires institutions such as credit bureaus to collect and distribute credit information,  and ensures that good credit reporting systems promote both financial stability (accuracy of financial institutions’ balance sheets) and access.

Collateral Legislation

Because credit markets have inherent information asymmetries, banks must protect themselves against default risk.[54] International evidence and country-level experience suggest that reform of the legal framework for collateral can improve access to finance by strengthening creditor capacity to take possession of collaterals in cases of default. By reducing the cost to lenders for using collateral (both registering it and subsequently executing claims), the cost barriers to lending to smaller firms can also be lowered. Over-collateralization is explained by creditors’ lack of confidence in the institutions that are supposed to protect their rights, banks’ inability to evaluate credit risks, and creditors’ lack of information on borrowers. Credit guarantee schemes may play an important role, but it is essential to ensure that these schemes are well-designed and cost-effective. Registration and execution of contracts seriously constrains the expansion of access to credit, and countries with a stronger private financial sector adequately protect creditor’s rights, such as in KSA and UAE.

Support Enhancement of Payment Systems – Regulatory and ICT

As mentioned above, Iraq has nine banks with full EFT capability, domestic payments systems, and core banking systems. However, the Iraqi Payment System (IPS) needs improvement and an increase in widespread usage. While banks began to offer Iraq credit cards in 2005, the low growth rate of the Iraqi credit card industry is attributed to lack of infrastructure, including the low number of POS terminals and limited internet connectivity.[55] Credit card products are available only to a very small section of Iraqi citizens, as most people do not qualify for the credit facility. Against this backdrop, businesses such as the popular Iraqi-owned Mredy.com, which has a monthly traffic of over 300,000 unique visitors and people advertising cars to furniture to services, cannot conduct online transactions. Even if Mredy.com was to charge one dollar for each purchase or sale it facilitates over its platform, it cannot monetize its services due to lack of electronic banking and payments infrastructure.

There are tremendous lessons that Iraq can draw upon from the successes and failures of comparable economies’ private financial sectors. The Iraqi private financial sector can grow leaps and bounds, as an astonishing force to support the country’s underdeveloped and underserved private sector. But without a solid legal base and policy packages recognizing private financial sector’s role in stimulating and sustaining diversified economic growth, it will be arduous to create a vibrant and inclusive private sector.

 

“Making the World Safe for Democracy”: UN Security Council Resolution 1373, the International Imposition of Counterterrorism Policies, and the ‘Arenas of Power’ Model

An Article by Edward Grodin

Abstract

In the aftermath of 9/11, collective action, particularly through the United Nations Security Council (UNSC), has emerged as a central tool in the fight against terrorism. UNSC Resolution 1373 (2001) represented a novel way to wield this tool. For the first time, an organ of an intergovernmental organization created what amounts to proactive legislation applicable to all Member States . This paper will use the case of Resolution 1373 to explore the deficiencies of the Arenas of Power model developed by Theodore Lowi, John L. Senior Professor of American Institutions at Cornell University and author of The End of Liberalism, in effectively characterizing such policy made at the international level. As will be argued, a globalized world with a fully-embedded international system has opened the doors for a fundamentally new way to forcibly export and import law, and thus policy, via international institutions.

About the Author

Edward Grodin is a Fellow at the Cornell Institute for Public Affairs at Cornell University, pursuing a Master of Public Administration degree with a concentration in Government, Politics and Policy. He received a Bachelor of Arts in History with a minor in European Union Studies from the University of Florida in 2010. He was inducted into Phi Beta Kappa and received a summa cum laude designation for his senior honors thesis examining the anti-Semitic racial laws promulgated in Fascist Italy.

Introduction

Much has changed in the world since the publishing of Theodore Lowi’s The End of Liberalism in 1969. New threats and challenges hold worldwide consequences like they never have before. In the aftermath of 9/11, perhaps no umbrella policy of the United States government has been as existentially important as the global “war on terrorism.” This approach has fundamentally redefined ‘national security’ as a concept and called into question the United States’ relationship with the rest of the world. Implicated in this shifting notion of security is the issue of collective responses to terrorism at the international level. As the center of such multilateral deliberation, the United Nations (UN) has served as the symbol of international law and norms. The UN Security Council, consisting of five permanent and ten rotating members, has become the hub of international peace and security issues. In particular, Chapter VII of the UN Charter bestowed upon the Security Council the power to act definitively on matters of security. Such action ranges from optional to mandatory, with mandatory powers understood as reactive against a specific state’s behavior (i.e. situational).

That paradigm ended with UN Security Council Resolution 1373. For the first time, an organ of an intergovernmental organization created what amounts to proactive legislation at the international level. In essence, it required all 191 members of the UN to adopt certain prescribed counterterrorism policies. Considering that the creation of international law has traditionally rested exclusively within the purview of nation-states, this development clearly illustrated a novel approach. While other scholars have adeptly discussed the implications of the resolution for public international law, this paper will draw upon this story as a case study in policy analysis. It will explore the potential deficiencies of the Arena of Powers model developed by Theodore Lowi, John L. Senior Professor of American Institutions at Cornell University and author of The End of Liberalism, in effectively characterizing policy made at the international level. Most of all, this paper will seek to answer the question: How should scholars understand policy imposed upon entire countries from above? The answer, as will be shown, attests to the novelty of Resolution 1373 itself; a globalized world with a fully-embedded international system has opened the doors for a fundamentally new way to forcibly export and import law, and thus policy via international institutions. As such, the world is being made safe for democracy, not the other way around.

The Powers [1] 

The United Nations Charter established within the United Nations structure an organ known as the Security Council. Chapter V Article 24 stated that the Security Council shall as its primary responsibility ensure the “maintenance of international peace and security.” Chapter VII, entitled “Action with respect to threats to the peace, breaches of the peace, and acts of aggression,” laid out the Security Council’s power with respect to both determining and responding to such threats or acts. Most pertinently, Article 41 provided the Security Council with the ability to authorize non-military action:

The Security Council may decide what measures not involving the use of armed force are to be employed to give effect to its decisions, and it may call upon the Members of the United Nations to apply such measures. These may include complete or partial interruption of economic relations and of rail, sea, air, postal, telegraphic, radio, and other means of communication, and the severance of diplomatic relations.

Similarly, Article 42 permitted military action should the Security Council deem an Article 41 response inadequate to address an issue. Furthermore, Article 48 made any decision of the Security Council binding upon Member States .[2] Lastly, Article 51 embedded a right to self-defense within the Security Council framework:

Nothing in the present Charter shall impair the inherent right of individual or collective self-defence [sic] if an armed attack occurs against a Member of the United Nations, until the Security Council has taken measures necessary to maintain international peace and security. Measures taken by Members in the exercise of this right of self-defence [sic] shall be immediately reported to the Security Council and shall not in any way affect the authority and responsibility of the Security Council under the present Charter to take at any time such action as it deems necessary in order to maintain or restore international peace and security.

Thus, the Security Council can make binding military and non-military decisions on behalf of all UN Member States . These States are then expected to apply such measures domestically.

The Story: Pre-Resolution 1373          

Prior to 9/11, the UN Security Council’s approach to targeting issues of terrorism was much less compulsory and much more direct. This method adhered to pre-9/11 assumptions about the use of Chapter VII power in that sanctions were clearly intended for a specific state or “concrete security threats.”[3] For example, Resolution 1267 (1999) established a sanctions regime against the Taliban.[4] All states were obliged to freeze assets and refuse entry or arrival of aircraft affiliated with the Taliban government. The Security Council also formed a committee to monitor the implementation of the resolution, including review of reports submitted by each member country. This committee was further empowered to keep a running list of individuals whose assets could be frozen. Building upon this foundation, Resolution 1333 (2000) banned the sale of weaponry as well as the provision of military assistance to the Taliban.[5] Furthermore, states had to ensure the closure of Taliban offices within their jurisdiction. In July 2000, the Security Council approved Resolution 1363, which primarily reinforced its commitment to monitoring progress on Resolution 1267.[6] It is important to note that the Security Council merely “urged” Member States to “enforce and strengthen” domestic legislation aimed at compliance with resolutions 1267 and 1333. As such, the legal language implied a request, not a mandate. Kim Scheppele, Director of the Program in Law and Public Affairs at Princeton University’s Woodrow Wilson School and a primary critic of Resolution 1373, notes that these resolutions typified the pre-9/11 approach: “singling out a particular state for sanctions and only requiring actions from all Member States in order to enforce this narrowly tailored objective.”[7]

When addressing the overall problem of terrorism, the Security Council never imposed broad obligations on all states backed by the threat of sanction. In Resolution 1269 (1999), the Security Council employed the non-binding language of “calls upon” to encourage states to cooperate on matters of terrorism prevention.[8] Even the Security Council’s immediate response to 9/11 did not demand action by all members. Resolution 1368, passed on September 12, 2001, avoided use of the imperative “decides” and instead opted for “calls on.”[9] The called-upon states were persuaded to “redouble their efforts” in terrorism prevention. This was hardly a mandate for action. Therefore, these resolutions served more as lofty statements of principle than legal obligations for all UN members, even though they were not directed at a particular state. This approach accords with the historical usage of Chapter VII powers as described above.

The Law

On September 28, 2001, less than three weeks after the 9/11 attacks, the UN Security Council convened for less than five minutes to pass extraordinary, unprecedented measures in counterterrorism policy under Resolution 1373.[10] Scheppele argues that it represented an “essentially legislative resolution that, for the first time in the Security Council’s history, used binding authority under Chapter VII of the UN Charter to require all Member States to change their domestic laws in very specific ways.”[11] Matthew Happold, Professor of Public International Law at the University of Luxembourg, also asserts that it is “in the form of a legislative act or statute…a unilateral act imposing a series of general obligations binding on all UN Member States .”[12] Finally, Monika Heupel, Research Fellow at the Social Science Research Center Berlin’s program on Transnational Conflicts and International Institutions, emphasizes that the novelty of Resolution 1373 lies in the generic nature of the responsibilities as well as the fact that the Security Council declared “any act of terrorism per se…a threat to international peace and security.”[13]

The shift is apparent from the very beginning of Resolution 1373. Section 1 begins, “[d]ecides that all States shall,” indicating both mandatory language and universal applicability. Four policies follow: (1) preventing and suppressing the financing of terrorist acts; (2) criminalizing terrorist funding (direct and indirect); (3) freezing assets of terrorists and any participants or accomplices; (4) prohibiting citizens from financially aiding terrorists. Section 2 demands even more active participation of all Member States . Section 2(a) implores them to abstain from “any form of support, active or passive” which would benefit a terrorist or affiliated organization, including “by suppressing recruitment of members of terrorist groups and eliminating the supply of weapons to terrorists.” Subsection (b) invoked a vague duty to take “necessary steps to prevent the commission of terrorist acts.” Other subsections required states to deny safe haven to terrorists, prevent them from launching attacks against other states, and make sure that they are “brought to justice.” While these obligations impliedly expect Member States to act, they do not explicitly necessitate a domestic legal transformation.

After laying out these general responsibilities, the “Security Council starts legislating.”[14] In addition to bringing terrorists to justice, the resolution declares that states had to ensure that “such terrorist acts are established as serious criminal offences in domestic laws and regulations” with punishment appropriate to the seriousness of the act. States were also expected to give one another “the greatest measure of assistance in connection with criminal investigations or criminal proceedings relating to the financing or support of terrorist acts, including assistance in obtaining evidence in their possession necessary for the proceedings.” Finally, all countries had to institute immigration reforms through “effective border controls and controls on issuance of identity papers and travel documents, and through measures for preventing counterfeiting, forgery or fraudulent use of identity papers and travel documents.” Scheppele contends that taken together these measures delve “deeply into the domestic laws of states, into the area of criminal justice and procedure which often tend to have constitutional implications.”[15] Furthermore, nothing in Resolution 1373 qualifies these responsibilities with human rights protections.[16] Clearly, such regulations held dire implications for sovereign policymaking.

The remainder of the statute used non-binding language, with one notable exception. The Security Council returned to “calls upon” to urge Member States to cooperate in the prevention of terrorist acts, exchange relevant information, ratify any pending international conventions on counterterrorism matters, and carefully evaluate applications for refugee status. Only in relation to this non-binding wording did any reference to human rights concerns emerge. In section 6, the Security Council returned to its obligatory wording and decided to create a Counter-Terrorism Committee (CTC) to monitor the implementation of Resolution 1373. States had to report to the CTC within 90 days regarding their progress. This committee thus serves as the compliance board for Resolution 1373’s novel imposition of international law upon sovereign states. Yet, like most international organizations, it lacks direct enforcement power and operates under the vague mandate of raising “the average level of government performance against terrorism across the globe.”[17] As a product of Chapter VII, the legally binding nature of the resolution represents the only significant enforcement mechanism outside of ‘naming and shaming’ (i.e. identifying noncompliant members and publicly excoriating them).[18]

A number of definitional problems arise from these mandates. First, what constitutes a “terrorist act?” Even more broadly, what qualifies as “terrorism?” Or better yet, who counts as a “terrorist” or a “participant?” As has been discussed above, prior resolutions of the Security Council targeted a specific country (i.e. Afghanistan) or government (i.e. The Taliban) accused of delinquent behavior. The lack of definitions meant that domestic actors were granted fairly wide latitude in their translation of the resolution into domestic law.[19] Not surprisingly, Scheppele finds that definitions of terrorism came to “reflect the political programs of the individual states.”[20] Another part of the reason may be that “the inevitable politicization of terrorism renders any search for a consensus definition futile.”[21] Accordingly, Eric Rosand, Senior Advisor on Multilateral Counterterrorism Engagement at US Department of State, argues that the sponsors of Resolution 1373 wanted to avoid lengthy, divisive debate on the bill and consciously omitted any definitions in order to get it passed swiftly.[22]

The Story: Post-Resolution 1373

On October 7, 2001, nine days after the passage of Resolution 1373, the US commenced Operation Enduring Freedom in Afghanistan and, in doing so, the Global War on Terror. This strategic vision of the world as one of permanent, transnational, decentralized, and existential threat categorically changed the ways in which the United States and other governments conceived of their power to act. Less than one month later, the Security Council passed Resolution 1377 reaffirming the aims of Resolution 1373. Among other things, the resolution called upon the CTC to assist Member States with its implementation including “the preparation of model laws.”[23]

Clearly, the shock of 9/11 prompted a paradigm shift within the Security Council. Its “legislative” capacity proved durable as its pursuit of international counterterrorism standardization widened. Resolution 1390 (2002) gave observers all the more reason to believe in this new direction.[24] The first clear indication was the prevalent use of the binding “decides” language in the resolution. Moreover, Osama bin Laden (an individual), Al Qaeda (an organization), and any associated group or entity were targeted. This list reflected the continuing expansion of sanctions to non-state actors. States were directed to freeze the assets of those persons or groups placed on the Sanctions Committee list (created under Resolution 1267). They were also expected to prevent the transfer of any form of weaponry, and bar entry into or travel through their territory unless otherwise allowed on a case-by-case basis by the Sanctions Committee. The latter provision holds due process implications as international movement of those on the list now operated at the behest of the Security Council. In one year, the Sanctions Committee would review these measures to decide whether or not to further develop them.

This trend continued as events shaped international responses. Acts of terrorism in 2002 in Bali and Moscow provided occasions to explicitly remind Member States of their commitments under Resolution 1373 through Resolutions 1438 and 1440.[25] Resolution 1455 followed in early 2003. The Security Council encouraged States to not only strengthen domestic laws against citizens on the sanction list, but also refer names of new individuals to the Sanctions Committee for review.[26] The review procedures lacked transparency especially in “standards of evidence generally or in defining the standard of proof that must be met for listing a specific individual more particularly.”[27] Furthermore, in a meeting of the Security Council at the foreign minister level, the Security Council adopted Resolution 1456 (2003).[28] This declaration took a hard line with respect to the CTC’s mandate. In particular, the Security Council admonished States that had not yet reported pursuant to Resolution 1373 and urged the CTC to step up its oversight of country reports. Recognizing such problems with the implementation of Resolution 1373, the Security Council passed Resolution 1535 (2004), directly acknowledging in the preamble the “special nature of Resolution 1373.”[29] This resolution created a new committee known as the Counterterrorism Committee Executive Directorate (CTED) to assist the CTC and address difficulties in monitoring progress on Resolution 1373’s implementation. Thus, not only was the Security Council legislating, but it also assumed a quasi-judicial role in the due process of targeted individuals and quasi-administrative role in the implementation of Resolution 1373.

The Law Redux

As time progressed, Resolution 1373 served as precedent in the ongoing Global War on Terror for another landmark statute: Resolution 1540.[30] Peter Crail, research analyst at the Arms Control Association, notes that, like Resolution 1373, 1540 was a U.S. initiative prompted by President George W. Bush’s speech to the UN General Assembly in September 2003 calling for universal nonproliferation legislation in domestic law.[31] Accordingly, in April 2004, the Security Council sought to tackle this broad issue of weapons of mass destruction (WMDs). Again using its full power under Chapter VII of the UN Charter, the Security Council did not specify a time and space for its action; it required a domestic legal transformation with every country, thus constituting a legislative act. Daniel Joyner, Professor of Law at the University of Alabama, sees the resolution as a “continuation of a distinct change in the Council’s understanding of its role and powers under Chapter VII.”[32] For Roberto Lavalle, Minister Counselor of the Permanent Mission of Guatemala to the United Nations, 1540 stands as “a novel, if awkward, exercise in international law-making.”[33]

Importantly, 1540 should be distinguished from 1373 in that it defined terms, though they are applicable only to the particular resolution.[34] In particular, the definition of “Non-State actor” attempts to delineate a classification of persons not envisioned by previous resolutions. The vague nature of the term is especially problematic given the fact that Resolution 1540 deals almost exclusively with such individuals. Joyner observes that two factors exacerbated the issue. First, a number of Member States remained non-signatories on international treaties addressing the proliferation of WMDs. Second, since such regimes involved States themselves, there existed “no substantive restriction on private parties, including business entities as well as other non-state actors.”[35] Consequently, Resolution 1540 aimed to fill in these gaps.

In the operative sections, Resolution 1540 returned to mandatory language to impose binding legal obligations on all UN Member States . The first paragraph required States to “refrain from providing any form of support to non-State actors that attempt to develop, acquire, manufacture, possess, transport, transfer or use nuclear, chemical or biological weapons and their means of delivery.” Then, the Security Council delved deep into national lawmaking. Paragraph 2 obliged States to “adopt and enforce appropriate effective laws which prohibit any non-State actor” from engaging in the activities listed in the first paragraph, especially when related to “terrorist purposes, as well as attempts to engage in any of the foregoing activities, participate in them as an accomplice, assist or finance them.” Section 3 also invoked a broad obligation to “take and enforce effective measures to establish domestic controls to prevent the proliferation of nuclear, chemical, or biological weapons and their means of delivery, including by establishing appropriate controls over related materials.” Subsections specified that States had to adopt measures to track such weaponry, develop “physical protection measures,” and secure all borders. Moreover, States had to ensure adequate physical and legal methods to prevent trans-shipment of WMDs, including the establishment of civil and criminal penalties for violations of these export laws. Lastly, the Security Council formed a new committee to monitor implementation, with country reporting to be achieved within six months.[36]

The Model

The preceding developments concerning the UN Security Council’s exercise of power lend themselves to a case study for a discussion of Theodore Lowi’s Arenas of Power model. He explained his now-famous formulation, policy causes politics, in Arenas of Power: “If policy determines the mission of each working unit of the state, the mission would be the key determinant of most of the relationships in politics.”[37] In the classic Lowi typology, public policies fall into one (with some exceptions) of four ‘arenas’: distributive, regulatory, redistributive, and constituent. This matrix is divided horizontally by whether the rule is primary (imposes obligations) or secondary (confers powers), and vertically by whether the policy affects micro or macro behavior. However, this vision assumed the state as its central node of analysis. In a globalized world with an established international order, the question of power centers has become more important yet in many ways obscured.

Accordingly, the foreign policies of separate nations cannot simply encompass the relations of their state vis-à-vis another state anymore. To some extent, traditionally sovereign decision-making has been exported to international organizations. For the US, this entails membership in organizations and associations such as the UN, North American Free Trade Agreement (NAFTA), and the World Trade Organization (WTO). These bodies have the ability to enforce treaty obligations and resolve disputes through adjudicative processes with the backing of putative recourse. In doing so, they also maintain ultimate control over certain policy outcomes. The European Union’s level of regional integration (deemed ‘supranationalism’ for its unique transcendence of national sovereignty) poses a far deeper question about sovereignty, the discussion of which has filled volumes. For the purposes of this paper, it is sufficient to say that some international organizations have the power to impose policy for the duration of that country’s membership.

The distribution of competences characterizes the American system as well. In many ways, the federal structure of the United States mirrors the type of multilevel governance outlined in the preceding paragraph. This separation of powers holds consequences for the development of foreign policy. As Lowi has argued, fragmentation represents a “system of politics that is inappropriate for foreign-policy formulation by a major power.”[38] Internal discontinuity in the foreign policy establishment means that actors are “forced to oversell every remedy for world ailments and to oversell each problem for which the remedy might be appropriate” in order to avoid partial decision-making.[39] In fact, Lowi contends that America’s lack of a central foreign ‘ministry’ results in three main features of U.S. foreign policy: “fragmentation; the application of domestic political principles to the international realm; the effort to displace domestic problems onto the world.”[40]

In emergency situations, this institutional design bursts into the limelight. Lowi asserts, “Crisis constitutes a very special condition in the workings of American foreign policy” where exigent decisions are “made by an elite of formal officeholders.”[41] The 9/11 attacks provided a context of crisis through which elites could craft counterterrorism policy with near-unanimous consent. According to Lowi, the constant backdrop of terrorism in American politics allowed for the “conversion of interactions into incidents, incidents into challenges, challenges into threats and threats into crises for the purpose of imposing temporary and artificial cohesion upon the members of the foreign policy establishment.”[42] In the domestic sphere, Congress passed the Authorization for the Use of Military Force against Terrorists (AUMF) as well as the USA PATRIOT Act within a month and a half of the attacks. Both statutes were extremely vague, allowing for wide executive discretion in the implementation to tackle the crisis, a practice Lowi refers to as “legiscide” or “policy without law.”

The Critique

UN Security Council Resolution 1373 stands for the stark proposition that an international organization can legislate. If this is the case, then two conclusions must be taken into account. First, the Security Council seems to be a legislature in this configuration. Legislatures retain the right to lawmaking unless they delegate the power to another institutional branch. Second, if the Security Council does in fact legislate, then Resolution 1373 looks a lot like a case of “legiscide.” Stefan Talmon, Professor of Public International Law at Oxford, proposes that the “hallmark of any international legislation is the general and abstract character of the obligations imposed.”[43] In fact, the Security Council left it to the Member States to translate Resolution 1373’s desired policy outcomes into domestic legislation. Coincidentally, country reports to the CTC regarding implementation show that most States have adopted domestic counterterrorism laws and joined international treaties in accordance with Resolution 1373.[44]

This multilayered, multi-step paradigm shift complicates the practice of policy analysis. Can the Arenas of Power model accommodate Resolution 1373, and if so, how? Going back to the policy objectives outlined in the text itself, the statute predominantly takes regulatory action with a bit of constituent policy. Activities that fall within the realm of regulation include defining and punishing terrorism, preventing and criminalizing funding for terrorists, freezing assets, suppressing terrorist recruitment, and strengthening border controls and identification procedures. The resolution also creates a committee to monitor the implementation of the statute in the Member States, an exercise in constituent policy.

However, there is a clear problem: the United Nations is not a nation-state, and Member States are not individuals. Under Lowi’s model, regulatory policy affects individual conduct and imposes obligations or positions. While Resolution 1373 undoubtedly imposes obligations, it “decides that all States shall…” (emphasis added). Moreover, the model anticipates coalition-driven pluralistic politicking in which bargaining and compromise produce policy outcomes. Such coalitions, by their very rooting in situational circumstances, are supposed to be “too unstable to form a single policy-making elite” with the final product representing the “residue” of the bargaining process.[45] Yet, the U.S.-drafted resolution passed unanimously in less than five minutes through a voting system composed of five veto-wielding and ten rotating political elites (UN Permanent Representatives). Even if the analysis descends upon people targeted by the ensuing national measures, with whom will these coalitions of the affected negotiate in order to impact policy? Decisions are being made at the international level, and States must abide by them.

According to Lowi, elite decision-making occurs in the constituent arena where the state itself becomes the focal point. Unlike regulatory policy, constituent policy deals with the environment of conduct and confers powers or privileges. The creation of the Counterterrorism Committee would serve as a strong example, except that the United Nations represents 191 separate entities without the mechanizations of a government. As such, the Security Council seems to be vicariously governing without the legitimacy of elected government, what Ian Johnstone of The Fletcher School at Tufts University calls a “deliberative deficit.”[46] Thus, it operates at the top of a legal funnel, making broad binding decisions that get progressively narrowed at the national level and ultimately distill the State’s legitimate coercive power into force against individuals. Worse, the elite structure and essentially legislative function of the Security Council allows states to bypass the normal modes of legislating to accomplish policy goals that may be politically unpalatable in the domestic sphere. The crisis of terrorism undergirds the entire process thereby granting legitimacy to an extraordinary act of remote governance.

In reference to the “legiscidal” aspects of Resolution 1373, Lowi’s intellectual sophistication proves quite prescient. In Chapter 14 of Arenas of Power, Lowi discusses the macro dimension of political economy that arises from treaties and regional free trade agreements. He states emphatically that “globalization and its discourse seek a drastic restructuring of government and government authority” which reaches into constitutional matters.[47] Though he predicted this development within the limited case of global economics, it carries equal weight in the notion of political globalization encapsulated by Resolution 1373. As has been shown, the Security Council achieved the creation of an international counterterrorism standard that all States are bound to follow. This explains the upward flow of sovereignty implied by Resolution 1373’s passage. In return, since the resolution directed national governments to take further action, states received a wide degree of latitude in the interpretation of 1373’s obligations. Olivier warns that the delegation of interpretative powers relating to such an abstract and ambiguous statute could lead states to invoke Resolution 1373 in order to avoid obligations under human rights treaties.[48] The concept of “legiscide” captures this concern perfectly, so long as the Security Council takes on the role of legislator and national legislatures assume the role of interpreter. Thus, Resolution 1373 causes an inversion of the legislative process.

So how should scholars understand policy imposed upon entire countries from above? In sum, it calls into question how they conceptualize policymaking. In particular, Lowi’s Arenas of Power model must adapt to new ways of wielding power in international relations. One solution involves a shift in context for the ‘four arenas’ matrix. Rather than delineating relations between an individual or group and the state, this new contextual underpinning would conceive of states as the micro level and the international system as the macro level. This essentially entails the creation of a third dimension to the matrix, accounting for the multiple interactions in a globalized world. It also allows policies to flow from one dimension to the next (i.e. from an international level to the national level, and vice versa).

Yet, even a three-dimensional layout cannot fully explain Resolution 1373. Elite permanent representatives are operating a makeshift legislature out of an organ of an international organization and imposing policy upon national policymakers. These decisions have potentially dire repercussions on individuals inside the nation-state. A policy of regulation invokes the politics of constituent policy. This sort of cross-fertilization is bound to arise again and again (as it already has for Resolution 1540) unless the model changes to accommodate it. As international organizations seek to make the world safe for democracy, the nature of democracy itself has been transformed.

Conclusion

The legacy of Resolutions 1373 and 1540 remains an open question. Without a doubt, Resolution 1373 held precedential value and represented a novel development in international law. Resolution 1540 built off of that foundation to extend broad-based legislative obligations to the subject of WMDs. Taken together, a clear picture emerged of a UN Security Council intent on utilizing its full powers under Chapter VII of the UN Charter. However, a survey of Security Council Resolutions through October 2011 reveals no equally surprising exercises of such power. Sanctioning has been limited to specific states (such as Iran in response to its nuclear program) and references to Resolutions 1373 and 1540 have arisen, primarily concerning the extension of a particular committee’s mandate.

What, then, should observers make of the “legislative” function of the Security Council? There seems to be two take-away messages from the examples laid out in this paper. First, they stand as a testament to an exceptional period of crisis and emergency. In fact, Scheppele refers to the passage of domestic laws in accordance with Resolution 1373 as an “international state of emergency,” as the executive privileges gained from the internationally-imposed national-level measures were tantamount to emergency powers.[49] This argument is highly persuasive, but a second effect can be discerned: Civil libertarians should view the policy implications of these international security “laws” with skepticism. By attempting to make the world safe for democracy, the Security Council largely undermined democracy itself. Fifteen members of a 191 member international organization were able to impose a particular set of counterterrorism policies on every single country in the UN in five minutes. Given the track record of Member State compliance, Resolution 1373 enabled governments to “launch ambitious new anti-terrorism programs while allowing them to say that international law made them do it.”[50] Even if Resolutions 1373 and 1540 remain anomalies in the long-term work of the Security Council, all people should be wary of future attempts to exercise legislative power in an executive organ of an international institution.

 

The Need for Intervention: A Counterfactual Approach to Challenging War Theories

An Article by Santiago Delgado Calderon

Abstract 

This paper explores the nature of humanitarian interventions based on an understanding of how conflicts come to an end. The concept of humanitarian intervention has recently become popular due to the international community’s involvement in Libya and the Ivory Coast.

This has become a contentious issue, particularly at the United Nations Security Council where its permanent members have been unable to reach an agreement regarding the United Nations’ stance on these matters, sparking international debate. In order to better understand the implications of action or inaction, it is important to delve into the complexities of this topic and examine competing viewpoints. By focusing on counterfactual cases of humanitarian interventions in the Democratic Republic of Congo and East Timor, this paper seeks to undermine theories that oppose humanitarian intervention and illustrate several instances where humanitarian intervention was a necessary and successful decision.

Introduction

When, if ever, is it justifiable for the international community to conduct military interventions to protect vulnerable populations from gross human right violations? According to a multinational study conducted by the Chicago Council on Global Affairs and WorldPublicOpinion.org, many political scientists, as well as the general public of 11 surveyed countries, believe that the international community has a responsibility to bring an end to gross human rights violations; however, several critics disagree and even rebuff the idea of humanitarian interventions. [1] These critics claim that the United Nations (UN), as the embodiment of the international community, is not prepared to resolve conflict, and that UN involvement in protracted conflicts may actually fuel hostility and prolong human suffering.  What these critics fail to account for, however, is the surge in the number of UN Peacekeeping missions globally, which suggests that these interventions are necessary. In fact, UN peacekeeping missions have increased by more than 50% over the last twenty years.[2] Certainly, humanitarian interventions are a complex topic, particularly during recent months in which the United Nations Security Council (UNSC) authorized interventions in Libya and Ivory Coast, but not in Syria.  To address these complexities, this paper examines the intricate nature of these operations, and elaborates a framework for policy makers to assist them in determining “when” and “how” to intervene.

In order to build a compelling case for humanitarian intervention, the remainder of the paper proceeds in four sections. The first section presents the rationale of theories opposing humanitarian intervention. The second section identifies the weaknesses of these theories and builds a compelling argument for humanitarian intervention. The third section elaborates a formal, counterfactual approach to humanitarian interventions, focusing on the Democratic Republic of Congo (DRC) and East Timor as case examples. These cases explore whether or not peace in the DRC and in East Timor would be possible in the absence of humanitarian interventions. The final section attempts to introduce a comprehensive framework to assist policymakers in determining appropriate times and measures to conduct humanitarian interventions.

Arguments Opposing Humanitarian Interventions

Scholars and diplomats who subscribe to notions of political realism perceive humanitarian operations – particularly UN Peacekeeping missions – as utterly ineffective and harmful to the process of ending hostilities within or among nations. Those opposing intervention perceive UN Peacekeeping missions as intrinsically ill-conceived, in contradiction with war theories and ignorant of the political and military realities on the ground.[3] Consequently, intervention critics argue, the international community should curtail the deployment of UN Peacekeeping operations because human suffering is compounded by these humanitarian incursions due to an escalation of hostilities.

Edward Luttwak, an American military strategist, stands as a leading critic against humanitarian interventions. Luttwak proposes that the international community should allow war to proceed uninterrupted, based on the premise that wars are an effective instrument if not the sole means to resolve conflict and achieve peace.[4] Luttwak supports the notion that the international community should allow fighting to continue its “natural course” so that peace can be achieved. A conflict comes to an end when one party completely triumphs over the other(s), or when parties engaged in the conflict arrive at a “mutually hurting stalemate;” this is a stage at which both parties realize that neither is in a position to achieve victory, and that the costs of continuing hostilities are too high to sustain.[5]Luttwak posits that it is only under such circumstances that peace is possible.

Luttwak argues that this “natural” path to peace is not possible when the UN intervenes.[6] By conducting humanitarian interventions, the UN interrupts the “natural course” of war, thereby extending the duration of conflicts. It does so by imposing ceasefires, which provide protection for the weaker party in a conflict. Such action makes absolute, clear victory for any party impossible, since the stronger party can no longer decisively dominate over the weaker party. This means that “natural” peace does not unfold as an eventual product of war, and instead an imposed, forced peace ensues, which may not be sustainable.  Furthermore, the construction of refugee camps and the allocation of aid dollars, both typical elements in humanitarian operations, tend to have unintended effects. These actions may allow warring factions to recruit new members, rearm themselves and regroup to continue the fighting. Therefore, Luttwak argues that when the international community becomes involved in humanitarian interventions, conflicts escalate and last much longer. If the international community truly cared about the fate of those trapped in conflict, then it should curtail interventions and let the natural course of war play itself out. According to Luttwak, the international community should avoid the temptation to engage in humanitarian interventions, particularly because they are often driven by “frivolous and disinterested motivations” in response to sustained media coverage and public outcry, or what is known as the “CNN Factor.”[7]

Similarly, former US Permanent Representative to the UN John Bolton takes issue with humanitarian interventions; however, he does condone certain types of intervention. Bolton sees national interests, power and its relative balance as the main elements of foreign policy. Accordingly so, he supports muscular and unilateral interventions. These are solely conducted to protect and advance national interests, as opposed to humanitarian interventions that tend to be multilateral and in response to gross human right violations. Bolton argues that the UN does not have sufficient ability to wield power and authority over countries. For this reason, he sees UN humanitarian missions as utterly ineffective and ill-prepared to engage in modern day conflict, especially without US support and leadership. For Bolton, the UN has no role in bringing conflicts to an end, much less in establishing peace and justice. He writes, “international law applied through multilateralism can never substitute for power and force.”[8]

Bolton advocates for the curtailment of UN humanitarian interventions, except in cases when dominant countries use them to advance their own interests.  Since Bolton argues that sovereignty only yields to power and not to human rights, humanitarian interventions should only be used as a tool at the disposal of the hegemon, or dominant party. Under this lens, the sole purpose of humanitarian interventions is to provide legitimacy and allow the dominant party to share the financial burden when advancing national security interests.[9] In these types of interventions, there are no moral imperatives taking precedence, only national interests. When self-interest sets the agenda, the legitimacy and moral authority of the concept of humanitarian interventions is undermined.

Prior to US intervention in Iraq, the Bush administration presented evidence and a set of arguments justifying the intervention based on the perceived threat to the US posed by Saddam Hussein’s regime. Furthermore, in order to build the case for intervention, the Bush administration framed the operation in terms of human rights, arguing that the US and the international community must hold Saddam Hussein accountable for the gross human rights violations committed against the Kurds in 1988 and 1991.[10] This rhetoric aimed to portray the war as a sort of humanitarian endeavor.  The façade of “humanitarian intervention” began to crumble, however, particularly after the UN refused to authorize this operation based on the fact that there was no clear “humanitarian” concern driving the intervention. In this case, the US attempted to use humanitarian intervention to gain international legitimacy. In the aftermath of this operation, the US lost much of its creditability and diplomatic standing with the UN. Consequently, in the eyes of the international community, and particularly from the perspective of Arab countries, the US had no moral authority when arguing for a legitimate humanitarian intervention in Darfur in 2004.[11] The aftermath of the Iraq war demonstrated the consequence of Bolton’s argument that dominant countries should use humanitarian interventions as a tool of war. The policy to intervene ultimately proved to be incompatible with American interests and it became self-defeating because the US lost critical support of NATO, the EU and the UN, and is now still entangled in a deadly and costly conflict.

Luttwak and Bolton’s respective arguments are controversial because they explicitly seek to undermine the legitimacy of humanitarian interventions. In spite of such critiques, however, there has been a surge in the number of humanitarian missions in the last two decades. Clearly, this trend contradicts theories that view interventions as ineffective and unnecessary. The fact that the international community continues to conduct peacekeeping missions and deliver international assistance at an increasing rate, suggests that such theories do not speak to the realities of the international community.

 

The Crux of the Matter

The crux of the matter is determining whether or not these nonintervention theories are as axiomatic and consistent as they claim. If these are indeed self-evident propositions, why do they suffer from many inherent contradictions and inconsistencies? Specifically, why are these theories unable to explain the surge in the number of UN-led interventions? These theories fail to account for the fact that humanitarian interventions have not only become commonplace in conflict scenarios, but that the international community is increasingly supportive of these interventions by providing resources on an unprecedented scale. UN interventions have grown in size and prominence; the UN Department for Peacekeeping Operations (UN-DPKO) currently manages 14 peacekeeping missions around the world with a total of 98,582 uniformed personnel and a staggering annual budget of $7.83 billion.[12]

Based on the large amount of resources conferred to the UN-DPKO, we can infer that these operations are largely supported by donor countries and are perceived to be a useful instrument of peace and security. Fortna’s study, a quantitative analysis that confirmed the presence of international peacekeeping mission in conflict zones has a positive effect on the likelihood of achieving lasting peace, further supports this claim.[13] The study found that peacekeeping missions are usually effective at preventing further hostilities, suggesting that international presence is an important component in establishing peace in the aftermath of conflict. This stands in contrast particularly to Luttwaks’ assertions that claim the opposite effect. Based on the evidence presented, we can discern a strong case for humanitarian interventions because these operations reduce the length of a conflict and can potentially establish reconciliation.

Several examples exist of successful humanitarian interventions over the past few decades, illustrating that these operations are effective mechanisms to achieve peace. The existence of such operations, such as the intervention efforts in DRC and East Timor, provide clear indication that the international community does not subscribe to Luttwak’s idea of war as the only path to peace.[14] Therefore, it is no surprise that Luttwak’s theory is unable to explain the international community’s refusal to remain indifferent towards human rights violations. If the UN is to maintain a high moral authority, there has to be congruence between its foundational ideals and present day actions. In other words, at times humanitarian interventions will have to be conducted in order to “save succeeding generations from the scourge of war,” as set out in the preamble of the UN Charter.[15]

The idea of inaction in the face of systematic violence targeting national, ethnic, or religious groups is against the international community’s universal notions of justice and fairness, as established in the Genocide Convention, an international treaty providing the moral and legal imperative to act when genocide is planned or underway.[16] When conducting interventions, however, we must consider framing it according to the concept of jus ad bellum, “the right to wage war.” This concept forms part of the doctrine of “just war,” an important public international law instrument advocating for an ethical and political approach in humanitarian interventions.

Further, contributions from legal scholars strengthen the case for interventions and rebuff Luttwaks’ assumptions about nonintervention. For instance, Gareth Evans, a renowned international lawyer, builds upon the “just war” doctrine and argues that humanitarian operations should be framed not as a right to intervene, but rather a responsibility to protect (R2P).[17] R2P is a revolutionary concept because it redefines state sovereignty as a responsibility of states to protect their own citizens. In the case when a state is unable or unwilling to do so, the responsibility to protect falls on the international community.[18]Clearly, this approach opposes Luttwak and Bolton’s respective arguments since both allow the natural course of war to continue while remaining indifferent to gross human rights violations.

Before military force is used to intervene, however, the international community is responsible for preventing deadly conflict and other forms of man-made catastrophe and seeking all possible channels to remedy the situation. Only after diplomatic, political and economic measures have failed should the international community use force to stop mass atrocities. This can be done by invoking Chapter VII of the UN, which provides legal cover for conducting military intervention to stop the commission of mass atrocities.[19] More specifically, Chapter VII authorizes the use of force in response to “any threat of peace, breach of peace, or any act of aggression.[20]” Gross human rights violations threaten peace and compel intervention from the international community, even in conflicts deemed inconsequential to the calculus of interests, as it was the case with the NATO-led multilateral mission, Kosovo Force (KFOR) in the Balkans. KFOR, a purely humanitarian mission, issued a UN mandate to resolve the grave humanitarian situation in Kosovo and use all necessary means to stabilize the region in accordance to Chapter VII of the UN Charter.”[21] This mission was successful because Kosovo now enjoys peace and democratic elections and the intervention demonstrated that international security is best protected by international collective action.

Another issue with Luttwak’s arguments against intervention is that they present no comprehensive framework describing the plethora of factors that bring wars to an end. Luttwak conveniently omits several factors that influence the course of war, particularly those related to- national interests, reputational issues, political dynamics and humanitarian concerns. The absence of these factors intrinsically impairs the ability of the theory to account for conflicts raging for over 40 years in places such as Colombia, Sudan, and Papua New Guinea. Consequently, Luttwak’s theory does not address how long conflicts may continue before “war brings peace” and at what human cost. Furthermore, Luttwak’s assumption of a “natural course war” is simply not realistic in an era where conflicts easily propagate across borders and threaten international peace and security.

With regard to Bolton’s claims, his argument deliberately omits the types of mechanisms that can be used to protect populations from large-scale killings. Bolton does not delve into this matter, and he simply concludes that, based on scant evidence, humanitarian interventions have an overall negative impact. Certainly, many of these operations have failed to achieve their mission as was the case in Somalia. Humanitarian interventions are not a panacea for ending conflicts, but they should not be discounted as a tool for handling conflict, especially since interventions provide a coordinated, international response to stop crimes against humanity. As long as interventions inflict less harm than good, then the existence of humanitarian interventions will remain necessary. This will be the case until the international community, chiefly the Security Council, develops a more efficient mechanism for preventing and addressing deadly intra-state/inter-state conflicts. For this reason, we will have to rely and work to improve humanitarian interventions, similar to the ones that took place in the DRC and East Timor, as instruments for protecting vulnerable populations from the scourge of war.

Humanitarian Interventions

This section elaborates a formal counterfactual approach to humanitarian interventions in the Democratic Republic of Congo (DRC) and East Timor.  Counterfactual cases are used in this paper because of the importance they play in political science as a tool for assessing causal hypothesis, as demonstrated by James Fearon.[22]  Furthermore, because the analysis of individual cases suffers from a small N sample, the degrees of freedom of the study tend to be negative.[23] With such a small sample, it is not possible to statistically test the hypothesis, instead political scientists and researchers resort to adding cases, that is, counterfactual case, which attempt to answer the question; what would have happened if?  In addition, in order to build a credible and legitimate counterfactual case the arguments, this paper count with a robust counterfactual case methodology that draws on assumptions of rational behavior, important theories in the field of conflict studies, and relevant historical facts.

The objective is to further identify the flaws inherent to Bolton and Luttwak’s respective arguments, and build a case for humanitarian intervention by showing where interventions were successful. These cases have been chosen in order to account for the variety of UN interventions and to help answer the following question: Would there have been peace in these situations if the international community had not intervened in these crises?
Intervening in the Democratic Republic of Congo (1999-2010)

Context. Given the scale of violence, the conflict in the DRC ranks as one of the deadliest after WW2. Since the 1990s, the Eastern Region of the DRC has been in conflict and the death toll accruing from violence, disease and hunger stands around 5.5 million.[24] Ethnic hostilities, competition for resources and the state’s failure to curtail violence and prevent further hostilities has fueled conflict in the region. In addition, the presence of spoilers, parties that present an obstacle to peace, tends to perpetuate the cycle of violence.[25]These spoilers include multiple forces: Hutu combatants who participated in the Rwandan genocide and now remain at large in the DRC;  Lord Resistance Army (LRA) cells, a violent military group known for recruiting child soldiers, wreaking havoc;  a plethora of armed rent-seeking militias; and at one time, eight different neighboring countries participated in the conflict*. A recent UN mapping report revealed the extent of the atrocities that took place in the DRC.  There is unequivocal evidence stating that crimes against humanity have been widespread during the conflict. Rape has been systematically perpetrated on a scale amounting to acts of genocide. Furthermore, the report found that all the parties involved in the conflict had committed such crimes.[26]

MONUC (Mission de l’Organisation des Nations Unies en République démocratique du Congo). As a UN Peacekeeping force created in 1999 by resolution 1279 to stabilize the region, MONUC’s initial mandate was twofold. First, MONUC had to enforce the provisions of the Lusaka Agreement – an internationally sponsored cease fire agreement that brought an end to the Second Congo War. This agreement had three objectives: disarming warring factions, ensuring withdrawal of foreign troops and bringing the largest warring factions to a power-sharing agreement with President Kabila.[27] Second, MONUC had the responsibility to protect the civilian population in the DRC.[28] [29]

With such diverse actors involved in the conflict, it is very challenging for MONUC to fulfill its mandate. The mission faces a multitude of obstacles that are compounded by scant resources and a weak UN mandate. It is nearly impossible for MONUC, a force with 20,000 uniformed personnel from 19 different countries, to patrol and accomplish its mission in a territory the size of Western Europe.[30] Even though MONUC finds itself in such a hostile environment, the mission renamed MONUSCO (Mission de l’Organisation des Nations Unies en République Démocratique du Congo) remains active. MONUSCO engages in conflict prevention activities, provides protection for citizens in a large swath of territories in the East, and implements several disarmament, demobilization and reintegration programs.

Counterfactual Case. If humanitarian interventions are to remain relevant and supported by the international community, we must somehow prove their necessity, particularly in the DRC. There is no better way to accomplish this than to present a case depicting what could have happened if there had not been any UN involvement. The UN changed the course of warfare by becoming involved, and as this case illustrates, humanitarian intervention was a necessary and successful decision.

If the UN had not intervened by using preemptive diplomacy, the Lusaka Peace Agreement may not have materialized, leading to escalated hostilities across the region, as well as an increase in the death toll for surrogate forces of foreign countries involved in the DRC resulting from mutual assaults on each other. These casualties likely would have motivated some states to retaliate against the state responsible for carrying out these attacks. Conflict would have propagated across borders. This would have meant full-blown regional war engulfing all of Central and Southern Africa and drawing more than eight countries in to the hostilities.

If MONUC had never intervened, which would have been preferable according to Bolton and Luttwak respective theories, then the conditions in the DRC would have been probably worse. This analysis is supported by the findings of Taylor B.Sebolt from the Stockholm International Peace Research Institute who comes to the same conclusion.[31] It seems unlikely that one single faction, out of so many in the DRC, could have been strong enough to subjugate and coerce others into an agreement. Moreover, a “mutually hurting stalemate” in which the costs become too high for conflict to continue, likely would not have materialized. Since civilians do not provide any significant material or monetary support to warring factions, massive loss of human life does not influence the military and strategic considerations of armed militias in the DRC. Civilian losses do not impose costs on local warlords, since warlords’ ultimate goals are not related to gaining control or influence over civilian populations, but rather maximizing their own utility curve.[32]

These findings suggest that the purpose of war is more nuanced than what Luttwaks’ oversimplified theory states.[33] This theory states that the natural course of war requires the dominant warring party to achieve victory by imposing its will on weaker parties. This practice is not sustainable because as Sergio Vieira de Mello, late UN Special Representative to Iraq points out, under some circumstances such as those in the DRC, rebels do not fight for victory or an ideological cause; rather, they fight because war has become a lifestyle that allows them to profit from plundering natural resources.[34] Since warfare is primarily used as an instrument to keep a firm grip on national resources, the vicious cycle of violence is fueled and perpetuated by warlords seeking to maximize their own profit. Currently, up to 2 million individuals have been displaced; the “natural course” of war likely would have displaced an even larger number of people. [35]

In the absence of a UN humanitarian mission, it is unlikely that the establishment of peace could survive in the DRC. As of now, in spite of the intervention, there is no peace, but the region has been stabilized, democratic elections have been conducted, and the prospect of peace now looms larger. The Rwandan genocide is a case in point of the terrible consequences due to inaction from the international community.

Rwanda: A Tragic Episode of Nonintervention. In the case of Rwanda, the international community failed to prevent and respond to the 1994 genocide, where 800,000 Tutsis and moderate Hutus lost their lives. Inaction compounded the scale of the tragedy and aggravated the crisis, which subsequently transformed itself into a regional conflict. [36]

Regional war imploded when Hutu perpetrators of genocide fled to neighboring DRC after Tutsi forces descended on Kigali to put an end to the bloodshed. Once regrouped in eastern DRC, these militias conducted cross-border raids and prepared plans for a future invasion to depose the newly formed Tutsi government in Rwanda. The inability of Congolese authorities to halt these raids led to the decision of Tutsi Rwandan forces to invade East DRC in order to eliminate the latent radical Hutu threat. This military incursion ignited the First Congo War, causing the loss of thousands of innocent lives.[37] Clearly, the absence of international intervention in Rwanda aggravated the conflict not only within Rwanda- where it developed into genocide- but well beyond Rwanda’s borders as well.
Intervening in East Timor

Context. At the end of Portuguese colonial rule of East Timor, Indonesia occupied the island in 1975 and prevented the East Timorese from exercising their right to self-determination. This was a case of forceful annexation that was not recognized by the UN.[38] However, the international community provided tacit support to Indonesia and avoided bringing up this topic at the Security Council. Support for Indonesia was based on the fact that the Suharto regime was a key partner during the Cold War and no single country was willing to sacrifice its commercial relationship with Indonesia at the expense of recognizing East Timorese sovereignty. These factors, coupled with a lack of media coverage, help to explain why it took so long for the international community to act in East Timor. Support for Indonesia began to shift in the aftermath of the Santa Cruz massacre, where a peaceful East Timorese demonstration was violently put down in front of foreign journalists, sparking international solidarity for the East Timorese cause.

In 1999, following the Suharto fall, a UN- supported referendum forced Indonesia to allow the East Timorese to vote for self-determination or annexation to Indonesia. The election proceeded peacefully, but when the results emerged, they revealed that 80% of the population had voted for independence. These results were met with violence. Indonesian-backed militias wreaked havoc and murdered pro-independence followers. Pro-Indonesia militias initiated a systematic campaign to punish and exterminate the Timorese population, making no effort to disguise their genocidal intent. The days following the election witnessed chaos, wanton violence against civilians, egregious human rights abuses and the destruction of 70% of the infrastructure.[39]

INTERFET/UNTAET. As a result of the ongoing violence and atrocities committed by pro-Indonesian militias supported by the Indonesian army, the UN Security Council authorized the deployment of an Australian-led peacekeeping mission called INTERFET. This mission had the objective of preventing a larger massacre and reestablishing security. Under the Security Council’s resolution 1272, the United Nations Transitional Administration East Timor (UNTAET) deployed in October of 1999 to take over INTERFET’s security component and serve as an interim civil administration.

Counterfactual case. With regards to East Timor, there are few analyses developing a counterfactual case for the presence of the UN in the island. However, there are several counterfactual analysis trying to estimate what would have happened if Indonesia would not have invaded East Timor.[40] [41] This counterfactual case builds up on these previous cases and employs a robust methodology that makes use of conflict theories and rational analysis in order to obtain a credible and legitimate argument justifying the humanitarian intervention in East Timor.

In this case, if the international community had not intervened, it is unlikely that East Timor would have established peace. Even if pro-Indonesian militias or the Indonesian army itself completely destroyed Dili, they probably would not have been able to eliminate opposition, a pre-requisite for achieving stability. For over 30 years, Indonesia had failed to suppress the Timorese revolution military wing, FALINTIL. In the wake of the post-electoral violence, it is highly likely that FALINTIL would have retreated to the mountains in order to regroup and plan revenge against the “occupiers” therefore continuing the vicious cycle of conflict: this holds especially true since, as RFK once said, “violence breeds violence and repressions brings retaliation.”[42] In addition, there is an increased probability that the few communication and negotiation channels between the Indonesian and East Timorese that existed before the elections would have been destroyed in the wake of the Indonesian-led post-electoral massacre.

Nonintervention at the time the Indonesians waged a systematic campaign against ethnical minorities would have set the wrong precedent, inadvertently allowing such atrocities to continue without holding Indonesia accountable. It is likely that after East Timor, the Indonesian army would have employed its newly acquired “Timorese strategy” to put down social turmoil in other regions aspiring for independence such as in West Papua and Banda Aceh. The possibility of the situation being considerably aggravated for the East Timorese population is very high. The lucky ones would have relocated to Australia as part of a massive exodus, whereas, those that were less fortunate would have suffered the occupiers’ fury for having voted in favor of independence. The Indonesians’ desire for punishment likely would have led them to employ starvation as a weapon of extermination. This method had previously been used on the island, particularly during the early years of East-Timorese annexation to Indonesia, as a strategy to decimate the Timorese population.[43]

It seems inconceivable that the international community could have refrained from intervention, given Indonesia’s systematic and deliberate intent to destroy the Timorese population. Yet this is the strategy advocated for by Luttwak. As the case of East Timor demonstrates, allowing the dominant party to decisively win so that peace can be achieved is not only a logically flawed argument, but it is not a justifiable strategy due to the massive human suffering that can incur. Without a doubt, nonintervention undermines our claims to civilization and tarnishes the reputation of the international community for allowing genocide to happen. As the UN secretary general argued, “preventing genocide is a collective and individual responsibility. Rwanda’s survivors have made us confront the ugly reality of a preventable tragedy. The only way to truly honor the memory of those who perished in Rwanda seventeen years ago is to ensure such events can never occur again.”[44] Luttwak and Bolton’s ideas are contrary to this argument, and to subscribe to them amounts to irresponsibility and, in some cases, complicity in violation of human rights.

Justifying Intervention

It is irresponsible for the international community to let the natural course of war continue uninterrupted, as Luttwak argues, particularly in cases of gross human right violations. Both counterfactual cases demonstrate that nonintervention leads to an escalation of hostilities and ultimately causes great human suffering. Inaction in the face of such crimes against humanity certainly amounts to complicity and it should be prosecuted as such.

Humanitarian interventions cannot and should not be applied to every case, however. These operations are context and case-specific, and may not apply to every situation. It is important to disentangle the intricate web of interests inherent to such operations before determining to conduct a humanitarian intervention. Many standards and considerations need to be met before launching a humanitarian operation including just cause, proper authority, right intention and reasonable prospect of success. The process is complex but we need to rely on careful strategic planning in order to effectively respond to atrocities that undermine our very principles and claims to humanity. Even though many UN missions are ill-prepared or under-resourced to tackle the challenges, this is not the fault of the UN, but rather of its member countries. UN country members have considerable leverage in determining the mandates of missions such as MONUC and INTERFET, and in setting the agenda for humanitarian interventions. Member states need to recognize situations where the UN can make a difference and they must be prepare to allow it to do so. They must be prepared to support the UN with all necessary means so that humanitarian interventions can fulfill their stated mission, “to save succeeding generations from the scourge of war.”

Conclusions

Humanitarian intervention is a concept that radically transforms our notion of what the responsibilities of nation states entail. No longer can states use sovereignty to shield themselves from being subject to humanitarian interventions when they have engaged in large-scale killings and other human rights violations. Instead, sovereignty entails a responsibility to protect under emerging international norms, a critical point that Luttwak and Bolton’s theories fail to account for. For this reason, their theories are unable to recognize the importance of humanitarian interventions. Instead their arguments dwell on heuristics and uninformed assumptions, with which they build their cases against humanitarian interventions.

Intervening to end human suffering is an important instrument at the disposal of the international community, as demonstrated in the counterfactual cases.  These scenarios present a compelling argument against allowing the “natural course” of war to continue in certain cases, since wars cannot be relied on to bring hostilities to a definitive end. International inaction in no way contributes to the establishment of peace; instead, inaction compounds the hostilities and aggravates human suffering.

It follows that if a state is unable or unwilling to protect its population from preventable harm, as was the case in the DRC and East Timor, the international community has a responsibility to protect and use any means necessary, including force, to end human suffering.[45] The international community must not and should not stand idle in the face of crimes against humanity. Yet policymakers need to carefully analyze the decision to intervene. The international community should not intervene in every existing conflict around the world. Policymakers need to carefully prioritize intervention missions according to the extent and scale of humanitarian concerns. Interventions should be based on an appropriate analysis of the context accounting for the cost and benefits arising from such operations. Most importantly, before resorting to intervention, the international community needs to exhaust non-violent options such as diplomacy and economic sanctions, as prescribed by public international law.[46]Lastly, if there is no other option but to intervene, then humanitarian interventions need adequate support and resources, and political will to achieve its goals.

Policymakers should only consider implementing an intervention when it is certain that such an operation will do more good than harm. To ensure this outcome, we need to articulate the concept of “jus in bello,” or justice in the conduct of war. This is a framework under the doctrine of “just war” that lays out a set of basic principles dictating acceptable conduct during warfare. This framework provides answers on how a humanitarian intervention should be carried out. This entails two basic guiding principles:

1)      Discrimination, which calls for the discrimination of targets. In other words, this entails the process of identifying who are legitimate targets in war and who are not, since non-combatants are not deemed as parties in the conflict.[47]

2)      Proportionality, which argues for the sufficient use of force to achieve one’s objectives and prohibits the use of unnecessary and disproportionate force.

Based on these concepts, two more factors are included for their importance in fulfilling and achieving humanitarian intervention goals;

3)      Political will, which entails the critical political support necessary to fulfill intervention goals during and after the operation. Political support can be difficult to obtain, so humanitarian operations must always pursue and ensure political support in order to increase the likelihood of success of the mission. Furthermore, humanitarian operations are not finished simply when hostilities come to an end, but actually extend into the process of post-conflict reconstruction. It then becomes apparent that political will is a critical component for the reconstruction of societies. Political will is a key element for fostering national political compromises in the aftermath of conflict to ensure justice, and to facilitate the economic and political development of war-afflicted countries.

4)    Resources complement political will and need to be pledged as long as the mission is deemed viable. Otherwise, fragile countries risk reverting back to hostilities.

The implications for conducting humanitarian intervention are clearly important, however, the issue of “when” to intervene is even more crucial for the outcome of the mission. Policymakers want to avoid having their actions perceived as retroactive or insufficient especially in cases where thousands of lives are at stake. For this reason, it is critical to further improve the mechanism of international collective action to timely respond to gross human right violations. Humanitarian interventions are a legitimate instrument that we must work to improve if we are to avoid another tragedy such as the Rwandan genocide from happening ever again. 

 

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Evans, Gareth J. The Responsibility to Protect : Ending Mass Atrocity Crimes Once and for all. Washington, D.C.: Brookings Institution Press, 2008.

Evans, Gareth and Mohamed Sahnoun. “The Responsibility to Protect.” Foreign Affairs 81, no. 6 (Nov. – Dec., 2002): pp. 99-110.

Fixdal, Mona and Dan Smith. “Humanitarian Intervention and just War.” Mershon International Studies Review 42, no. 2 (Nov., 1998): pp. 283-312.

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The Irvine 11: Let’s Not Make Martyrs Out of Ruffians

An Article by Anne-Marie D. Dao

Abstract

The right to free speech is not an absolute right.  An orchestrated “University of Chicago style” disruption of U.S. Israeli Ambassador Oren’s speech resulted in the arrest of eleven Muslim student activists (the “Irvine 11”).  The subsequent prosecution of the Irvine 11 has become the center of controversy. This paper explores the constitutional soundness and public policy implications of the criminal prosecution. 

Introduction

In February 2010, the University of California, Irvine invited Israeli Ambassador to the United States Michael Oren to the university to deliver a lecture on American-Israeli relations.[1]  UC Irvine’s Department of Political Science, Center for the Study of Democracy, School of Law, Anteaters for Israel, College Republicans, Model United Nations, and the Middle East Studies Student Initiative, among other student groups, co-sponsored the event.[2]  Anticipating a contentious audience,[3] then-Chair of the Department of Political Science Mark Petracca introduced Ambassador Oren with the assertion, “we expect and we relish spirited discussion…but we also have the highest expectation for civility and respect.”[4]  Despite this expectation, disruptions began within seconds of Ambassador Oren taking the stage, and Professor Petracca’s pleas for civility and respect were left unanswered.

“Michael Oren, propagating murder is not an expression of free speech.”[5]  Quickly after a student shouted these words at Ambassador Oren, cheering, jeering, and clapping erupted in support of the disruptive student disruptor.[6]  This happened eleven times during the Ambassador’s speech, despite reprimand from both Professor Petracca and Chancellor Michael Drake.[7]  Professor Petracca even warned students that they were violating university policy and that they would be punished for their continued violation.[8]  After several interruptions that prevented Ambassador Oren from speaking, Professor Petracca again took the microphone to admonish the audience’s behavior: “Shame on all of you. All you did today was embarrass yourself and the university.”[9]

Still, students continued to shout statements such as “Michael Oren you are a war criminal,” “[i]t’s a shame this University has sponsored a mass murderer like yourself,” “[y]ou sir are an accomplice to genocide,” “Michael Oren, murder is not free speech” and chant “Whose University? Our University.”[10]  After each exclamation, the disruptor would walk towards the aisle and allow for exit and arrest by waiting police officers.[11]  When Ambassador Oren left the stage, Chancellor Drake came to the microphone, and stated that, “disruptions of academic freedom of the type that have occurred here earlier today” would not be tolerated.[12]  In toto, after Ambassador Oren was persuaded to come back to the stage to finish his talk, the disruptions consumed half of the event’s scheduled time slot, and the question-and-answer session was cancelled.[13]

Though the disruptive actions occurring on February 8 seemed orchestrated, this belief was not substantiated until the Orange County District Attorney obtained posts, by search warrant, from a Google message board belonging to the Muslim Student Union (“the MSU”).[14]  These clarified that the MSU had meticulously planned and executed the disruption to Ambassador Oren’s speech.  One post read: “[the Muslim Student Union] will be staging a University of Chicago Style disruption of the Ambassador’s speech”[15]  The posts warned not to ask questions, as that would allow the Ambassador to have control of the microphone.[16]  Instead, the objective was to “push the envelope” and to “set a precedent.”[17]  Another post flouted legal ramifications, stating that arrest would result “in nothing permanent, or a misdemeanor, which would be dropped.”[18]  The message board users categorized disruptors into: “those willing to disrupt if there were no consequences,” those “willing to go all the way,” and “reserves.”[19]  In fact, disruptors were given index cards so as to not forget their statements, which they were instructed to yell “VERY LOUD, firm and strong.”[20]

Thus, it seems Professor Petracca’s goal of a civil and respectful discussion, one in which people with opposing viewpoints would pose questions to Ambassador Oren during the question and answer session, would not be achieved.  The MSU had come up with multiple plans to ensure as much.  By the night’s end, eleven students were arrested—eight from UC Irvine, and three from UC Riverside—and cited for disturbing a public event.[21]  At the time, none had been criminally charged.  Almost a year later, the “Irvine 11”—as they have been dubbed—were charged with misdemeanor conspiracy to commit a crime and misdemeanor disruption of a meeting.[22]

In filing the charges, Orange County District Attorney Tony Rackauckas rationalized the prosecution under the premise that the Irvine 11’s actions were, “meant to stop this speech and stop anyone else from hearing his ideas, and they did so by disrupting a lawful meeting.”[23]  It is this prosecution, and the intense debate regarding the freedom of speech which ensued, that is the focus of this paper.  Part I discusses constitutional law principles, including time, place, and manner restrictions on speech.  Part II goes over the California statutes under which the Irvine 11 were prosecuted.  Part III posits the constitutional soundness and public policy implications of the criminal prosecution.

 

I. Time, Place, and Manner Restrictions

The First Amendment states that, “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech.”[24]  Though written as an absolute right, the First Amendment has never been interpreted as such by the Supreme Court.[25]  In fact, the Court has articulated restrictions on free speech, making clear that the right does have limitations.

A.      General First Amendment Principles

Generally, speech is protected by the First Amendment—under reasonable time, place, and manner restrictions—unless it falls into one of the unprotected and lesser protected categories of speech.  Regulations of speech that fall into these lesser or unprotected categories are not subject to strict scrutiny analysis as content-based regulations typically are.  Categories of unprotected speech include speech that incites unlawful or violent conduct, [26]  fighting words and offensive speech,[27] obscenity and pornography.[28]  Additionally, there are categories of lesser protected speech, where the government enjoys a higher ability to regulate.  These include commercial speech,[29] and sexually oriented speech which does not meet the test for obscenity.[30]

Because speech often requires a physical location to occur (assuming one does not have a readily available platform in television, radio, or a newspaper), another First Amendment issue is what property can be used for speech.  The Supreme Court has identified several types of public property and affixed rules as to when the Government can properly regulate each type of public property: public forums, limited public forums, and nonpublic forums.  A fourth type of property—private property—is not subject to the constitutional demands of the First Amendment.

Public schools are obviously not private property, and as such it can be argued that public forum doctrine analysis should apply to speech occurring on public schools.  For the most part, the Court has not relied on forum analysis and has instead articulated a separate set of tests for dealing with speech in public schools.  The leading case in school speech, Tinker v. Des Moines, held that “First Amendment rights, applied in light of the special characteristics of the school environment, are available to teachers and students. It can hardly be argued that either students or teachers shed their constitutional rights to freedom of speech or expression at the schoolhouse gate.”[31]  This being the case, school officials can only regulate speech in the event that the students’ activities would “materially and substantially disrupt the work and discipline of the school.”[32]

This protectiveness of student free speech has been curtailed in recent years, granting more deference to school authorities.[33]  In Bethel School District, a student delivered a speech to nominate a classmate for a student government seat.[34]  The speech was filled with “elaborate, graphic, and explicit sexual metaphor(s).”[35]  The school punished the student and the lower courts held that the punishment violated the student’s constitutional rights. The Supreme Court disagreed, holding that the, “First Amendment did not prevent the School District from disciplining respondent for giving the offensively lewd and indecent speech at the assembly.”[36]  The Supreme Court’s most recent First Amendment case relating to schools held that law students’ right to free speech can be constitutionally curtailed because, “in regulating property in its charge, [schools] may impose restrictions on speech that are reasonable in light of the purposes of the forum and viewpoint neutral.”[37]

Thus, it is clear that public school officials have latitude in regulating student speech on a variety of justifications, including the prevention of disruptive behavior.

B.  Application to the Irvine 11

After the events of February 8, Chancellor Drake issued a statement condemning the group’s behavior as “intolerable.”[38]  Drake continued:

Freedom of speech is among the most fundamental, and among the most cherished of the bedrock values our nation is built upon. A great university depends on the free exchange of ideas. This is non-negotiable. Those who attempt to suppress the rights of others violate core principles that are the foundation of any learning community. We cannot and do not allow such behavior.[39]

The University went on to suspend the MSU for one quarter, ending December 31, 2011.  Additionally, the MSU is required to complete 100 hours of community service and will remain on probation through December 2012.[40]

Some applauded this suspension of the MSU, arguing that it established “an important and appropriate precedent…[sending] a powerful message to other universities across the nation.”[41]  After the suspension decision was reached, the MSU at UC Irvine released a statement claiming the suspension would “create a chilling effect and deprive Muslim students—both current and incoming—of a place where they can develop a sense of community.”[42]

The right to freedom of speech is not an absolute one.  In fact, the Dean of UC Irvine School of Law, Erwin Chemerinsky, opined, “[f]reedom of speech, on campuses and elsewhere, is rendered meaningless if speakers can be shouted down by those who disagree.  The law is well established that the government can act to prevent a heckler’s veto — to prevent the reaction of the audience from silencing the speaker.”[43]  It is not the punishment from the University; however, that has received the most criticism.  Critics met the Orange County District Attorney’s decision to charge the Irvine 11 with fervor as well.

 

II. Criminal Prosecution of the Irvine 11

The Irvine 11 were charged with violating two California Statutes: misdemeanor conspiracy to commit a crime and misdemeanor disruption of a meeting of a public assembly.  Since the charges were announced, many groups, including the American Civil Liberties Union of Southern California have urged the charges to be dropped.[44]  One hundred faculty members from UC Irvine, including Professor Petracca and Dean Chemerinsky, signed a petition asking the District Attorney to drop charges against the Irvine 11.  Opponents to prosecution fear that criminal sanctions are excessive and “[t]he use of the criminal justice system will be detrimental to our campus as it inherently will be divisive and risk undoing the healing process which has occurred over the last year.  It also sets a dangerous precedent for the use of the criminal law against non-violent protests on campus.”[45]  UC Davis Law faculty echoed: “[r]esponding to these non-violent student protests by way of criminal prosecution will have a chilling effect on the students, staff, and faculty of the University of California, and place the principles of free speech and freedom of expression at risk.”[46]

Defending the criminal prosecution, a spokesperson from the Orange County District Attorney’s office asked: “[W]hat if we substituted different groups — what if this were the Klu Klux Klan [sic] who conspired to silence a speech by Martin Luther King?”[47]  What if?  It seems as though the passion felt for the Irvine 11 is driven, at least in part, by personal opinions on Middle Eastern Politics as opposed to strictly Constitutional First Amendment rights.  The issue then, is twofold: first, is the prosecution of the Irvine 11 constitutionally sound?  Second, if the prosecution is constitutionally sound, is it good public policy?  It is my belief that the answers to the questions are yes to the former, and no to the latter.

III. Analysis

A.  Prosecution of the Irvine 11 is constitutionally sound

As briefly mentioned in the Introduction, the Irvine 11 were charged with violating two statutes of the California Penal Code:[48] Section 403 (disturbance of public assembly or meeting) and section 182 (conspiring to commit a crime).[49]  Section 403 provides that: “[e]very person who, without authority of law, willfully disturbs or breaks up any assembly or meeting that is not unlawful in its character, other than an assembly or meeting referred to in section 302 of the Penal Code…is guilty of a misdemeanor.”[50]  If convicted of a misdemeanor, each of the Irvine 11 can be punished by up to six months in jail, and be fined up to one thousand dollars.[51]

Two cases are relevant in analyzing whether prosecution of the Irvine 11 under section 403 is constitutionally sound: In re Kay,[52]  and McMahon v. Albany Unified School District.[53]

In re Kay involved the Fourth of July, a Congressman, and a boycott of grapes.[54]  Coachella, a city in the center of the major grape-producing regions of California, invited Congressman John Tunney to deliver a speech.  Congressman Tunney did not support a widely publicized boycott of non-union table grapes, a position at odds with many of Coachella’s Mexican-American residents, several of whom supported the boycott.[55]  A small number of protesters of Congressman Tunney’s speech “engaged in rhythmical clapping and some shouting for about five or ten minutes.”[56]  At one point during his speech, Congressman Tunney paused to “assure those protesting that they had a right to do so and to urge them to be grateful that they live in a country whose Constitution protects their right to demonstrate in that manner.”  Two weeks later, some of the protestors were arrested and charged with violating section 403.[57]

The Kay Court recognized that although methods of protestation, including “heckling, interrupting, harsh questioning, and booing” can be “impolite,” they “can nonetheless advance the goals of the First Amendment.”[58]  Furthermore, wary of the statute’s ability to infringe upon the First Amendment, the Kay Court established the following test: “that the defendant substantially impaired the conduct of the meeting by intentionally committing acts in violation of implicit customs or usages or of explicit rules for governance of the meeting, of which he knew, or as a reasonable man should have known.”[59]  The Court further requires that criminal sanctions are appropriate only when “the defendant’s activity itself—and Not [sic] the content of the activity’s expression—substantially impairs the effective conduct of a meeting.”[60]  Applying the test to the case, the Kay Court recognized the informality of the public rally, and the customs attached to this sort of meeting.  Because the prosecution failed to show that the protestors’ actions—clapping, flag waving—are not generally accepted at such a meeting, or that their activities substantially impaired the conduct of the meeting, the protestors were not found guilty of violating section 403.[61]

The second relevant case discussing section 403 is McMahon v. Albany Unified School District.[62]  Though the arrestee here was not prosecuted under Section 403, the Court embarked on an analysis of the statute in order to determine if Mr. Mahon was falsely arrested.  The facts of the case are as follows: Mr. McMahon was upset about trash being left around his neighborhood by students attending nearby Albany High School, and spoke at several board meetings to voice his concerns.[63]  At one meeting, he brought a bag of litter he had collected to demonstrate his frustration.[64]  At a subsequent meeting, he brought five 13-gallon bags of trash and placed them around the room prior to the meeting.[65]  After discussion about his intentions with a board member, Mr. McMahon proceeded to empty his bag of trash in front of the Board.[66]  Mr. McMahon was not arrested by police because “no misdemeanor has been committed in police presence.”[67]  However, Mr. McMahon was arrested by the superintendent in a citizen’s arrest for willfully disturbing a public meeting.[68]  Mr. McMahon sued the District, board members, and the superintendent alleging false arrest, among other claims.[69]  The Court dismissed his false arrest claim.[70]  The Court then engaged in a discussion of the Kay case, which stated that section 403 was written “constitutionally infirm” and thus interpreted section 403 in a constitutionally permissible way, articulating the Kay test.[71]  The Court recognized the Kay Court’s emphasis on the nature of the meeting and the role of customary behavior.  Because Mr. McMahon dumped garbage on a cafeteria floor, it was clear that his conduct “exceeded the bounds of constitutionally protected speech and crossed the line into the ‘tumult of license.’”[72]

Applying the holdings in Kay and McMahon to the Irvine 11 case, application of section 403 seems to be constitutionally sound.  This case is easily distinguishable from Kay.  Whereas Kay involved a public, informal talk, the talk here was held inside where people had seats and a designated question-and-answer period.  Furthermore, while the hecklers in Kay clapped in unison, the hecklers at Irvine screamed at the Ambassador so as to impede his ability to deliver an audible speech.  Finally, in the Kay case, the Congressman was able to finish his speech, even stopping to let the hecklers know they were lucky they had the right to protest, whereas Ambassador Oren was unable to get a word in edgewise. This surely “substantially impairs the conduct of the meeting” as required by Kay.  Furthermore, though no criminal charges were filed in McMahon, the Court embarked on an analysis of Kay and section 403 that makes clear Mr. McMahon’s actions were not constitutionally protected—and the disruptive nature of the Irvine 11 was far worse than Mr. McMahon dumping trash in front of a school board meeting.

Accordingly, the answer to the first question posed above—is the prosecution of the Irvine 11 constitutionally sound—is yes.  The next question is whether this prosecution is good public policy.

B.  Criminal Prosecution in this case is bad public policy

Though the criminal prosecution may be constitutionally valid, it is not good public policy.  Put simply, it looks excessively forceful to use a statute which has been used sparingly in the last few decades against a group of students expressing their point of view on a very heated topic: Middle Eastern politics.  Perhaps it is the case that no disruptions rose to this level of incivility, rendering criminal prosecution via section 403 unnecessary, but the taint of selective prosecution in this case will overshadow the lesson—that those who willfully disturb speeches will be punished.

In fact, as Dean Chemerinsky pointed out, prosecution of the Irvine 11 has made it necessary to always criminally punish disturbances like this in the future: “[n]ow, of course, if this happens in the future and the D.A. doesn’t prosecute, then there’ll be claims of unequal justice, of discriminatory prosecution. And I think those would be very powerful criticisms.”[73]  This puts a large burden on the D.A.’s office to constantly monitor happenings at local Universities and colleges, all to ensure that this one criminal prosecution does not bear the taint of selective prosecution.  However, it seems as though this is precisely what D.A. Rackauckas wants.  He reasoned that if the Irvine 11 were not prosecuted in this case, that “we would not be able to proceed on another future case where say the Muslims were shut down in their attempt to give some kind of a speech.”[74]  D.A. Rackauckas’ reasoning is flawed because while prosecuting the Irvine 11 does ensure that future groups creating disturbances must also be prosecuted to avoid the taint of selective prosecution, it does not follow that if the Irvine 11 are not prosecuted here that no other similar cases could be prosecuted.

In other words, not prosecuting the Irvine 11 would not hinder the D.A.’s ability to prosecute others using this statute later, whereas prosecuting the Irvine 11 will create a duty in the eyes of the public to prosecute all similar cases in the future.  The bottom line is that the facts of this case give rise to a taint of selective prosecution in the eyes of the public.  As a District Attorney in a state facing pressing budget issues, it makes little sense to prosecute a case and obligate the office to prosecute all similar future cases in order to preserve the right to prosecute future similar cases—that ability will always be there, regardless of actions taken against the Irvine 11.  The decision to prosecute should be the result of a balancing test, and in this case—because of the state’s budgetary issues, coupled with the strong public sentiment that the Irvine 11 should not be prosecuted, in addition to the fact that the Irvine 11 have been punished by the University—when all the factors are balanced, it makes more sense to not go forward with a criminal prosecution.

In his classic paper, “The Aims of the Criminal Law,” Henry Hart stated that “[i]n the criminal law, as in all law, questions about the action to be taken do not present themselves for decision in an institutional vacuum.”[75]  Hart was making the point that “each agency of decision must take account always of its own place in the institutional system and of what is necessary to maintain the integrity and workability of the system as a whole.”[76]  It would seem as though D.A. Rackauckas has forgotten that the District Attorney’s office is but one part of a whole judicial system in the state of California.  The stated objectives of the D.A.’s office are to: promote a healthy community, build for the future of our community, and protect our community.[77]  Furthermore, community safety is touted as a “first and foremost” objective.  The fact that there are alternative punishments to criminal prosecution that were levied against the Irvine 11 by the University, and that the crime was non-violent should have been reason enough to conserve resources and not criminally prosecute the Irvine 11.

To be clear, the Irvine 11’s actions are reprehensible—they make a farce of freedom of speech and infringed on Ambassador Oren’s right to free speech by drowning him out.  Tyranny by those who are able to shout loudest is not permissible, and should not be permissible.  Because of their efforts in conspiring to shut down Ambassador Oren’s speech, the MSU at UCI deserves to be punished.  However, it is the University’s punishment of suspension and probation that they deserve—not criminal prosecution.

Whether or not criminal prosecution is deserved, it is an ineffective way of deterring others from acting this way in the future.  Criminally prosecuting the Irvine 11 turns the group into martyrs and the Irvine 11 frankly do not deserve that status.  If it is desirable to deter fractious behavior such as conspiring to shut down a speaker with whom one does not agree, turning the Irvine 11 into free speech martyrs is not the appropriate action.  The University of California, Irvine has already punished the MSU (and amongst them the Irvine 11) for their actions.  Only if the Irvine 11’s punishment is not overshadowed by a criminal prosecution tainted with the accusation of selective prosecution will the public grasp the severity of the wrongness of the Irvine 11’s actions.

Additionally, there is the concern that criminal prosecution of the Irvine 11 will bring backlash towards Jewish groups in Orange County for the district attorney’s actions.[78]  In fact, the president of Hillel, the Jewish student group at UCI, said “I am very aware that we had nothing to do with that process, but the line can get blurry in other people’s minds.”[79]  Criminal prosecution is not desirable if it makes conditions between the MSU and Hillel worse at UCI.

The mission of the Orange County District Attorney’s office is to “enhance public safety and welfare and create a sense of security in the community through the vigorous enforcement of criminal and civil laws.”[80]  The role of the prosecutor is to enforce laws in a manner that will improve the lives of Orange County residents.  In this case, enforcement of section 403 will not reach that goal—it will waste valuable funds, create friction, and possibly chill speech.  None of these outcomes is desirable and though District Attorney Rackauckas is well within his purview to prosecute the Irvine 11, this does not serve justice nor does it serve the residents of Orange County.

 

Conclusion

Orange County District Attorney Tony Rackauckas says he filed charges because:

We cannot tolerate a pre-planned violation of the law, even if the crime takes place on a school campus and even if the defendants are college students. In our democratic society, we cannot tolerate a deliberate, organized, repetitive and collective effort to significantly disrupt a speaker who hundreds assembled to hear.[81]

D.A. Rackauckas is right.  But the District Attorney serves the residents of Orange County and has an obligation to listen to what they want—the residents of Orange County want the Irvine 11 to be punished for their actions on February 8, 2010 and they have been by the University.  Using section 403 to criminally prosecute them only makes them martyrs, which is certainly not what the residents of Orange County, or anyone who respects freedom of speech and the First Amendment would desire.

 

An Interview with Nobel Laureate Muhammad Yunus and H.I. Latifee

An Interview by Sean Murphy

 

On March 2, 2011, the Bangladeshi finance regulator, Bangladesh Bank, ordered Muhammad Yunus’s removal as the director of Grameen Bank, an institution he founded in 1983. Grameen appealed the action, but lost as the Supreme Court upheld the decision. On May 12, Yunus resigned as director. While the action was embroiled in political maneuvering, there were also questions about the legitimacy of Grameen’s practices raised.

I worked for Grameen Trust during the summer of 2010 and had the opportunity to interview both Professor Yunus and Professor Latifee. The interviews touched on a variety of topics, including my work at Grameen and my experience in Bangladesh. The subjects covered range from the organization’s operation and the concept of social business to family planning through women’s empowerment. The questions and answers presented here represent a sampling of those interviews.

Grameen Bank is the first licensed microfinance bank. It provides services to rural Bangladesh. Grameen Trust is the international branch of Grameen Bank, operating through partner institutions around the world and in urban Bangladesh.

 

 

In the name of poverty alleviation, Grameen Trust seeks out incredibly difficult places to work, failed states, war torn regions and territories ruled by drug lords. The Trust forms contractual relationships with organizations and governments in countries where other MFIs have failed. Conditions in these places make traditional business indicators unavailable—the type of information that would allow a private company to determine whether or not the local economy could support its business.

I am wondering about the future of this kind of a model. It seems to rely heavily on intuition. Can this continue into the future?

 

Yunus: Basically what we do is see that people need money that other institutions are not providing them. So we see that we can lend them money. We don’t know what the rest of the country is like or what could be done about it. Somebody needs money, and I want to give them money. That is all.

And we feel our way. If it works, fine. If it doesn’t work, sorry it didn’t work. So this is not a guaranteed thing. You cannot always say that you will be successful in every single case. But so far, luckily, it worked. So that gives us encouragement. We didn’t say, “which country? Costa Rica? My god, I don’t want to go there.” We would never say this. We go, wherever it is. Maybe we’ve never heard the name before, but okay, there are people who need this service. We can try. If it works, we will continue, if it doesn’t work, we’ll close down. So far, it has worked. So we will continue.

We don’t take this news about what has happened; is it a dictatorship, is it military rule, are there drug lords? We don’t ask those questions. If people live there, we can live there too.

 

Will this remain the model for Grameen Trust’s operations?

Yunus: So far this has been the strategy. If it stops working, we will figure something else out. Close down, come home. But until that happens everywhere, we will continue this way. When we are invited, we go. We don’t say, no that region is not good, that economy is no good. We don’t ask those questions. We will go and try it out.

 

Questions have been raised as to whether or not microfinance is really responsible for moving people out of poverty. Grameen Bank publishes material stating that there has been growth here amongst its borrowers, and there have been criticisms from researchers that the increase in microfinance lending is correlated with this growth, but is not causing it. How do you respond to these criticisms?

Latifee: I know there are criticisms of microcredit as a whole and also about Grameen Bank borrowers in particular. If you are talking about macro terms, considering the economy as a whole, it is difficult to show or to prove that there is an impact. But if you are considering individuals, families, who have enjoyed these facilities and have access to microcredit, you can come up with some results, the impact. If you look at what has happened in their lives, at their standard of living, definitely you will see a lot of improvement.

In Bangladesh, during past financial crises and during certain times of the year, people used to die of hunger. People used to go without clothes during disasters. People could not rehabilitate themselves after cyclones and devastating floods. Now in Bangladesh, you see that even during this last financial crisis, the poor people could protect themselves because they had access to money. They had their own savings. They are not helpless like before because they have some place where they can go and claim their own money and survive. Things have changed a lot. And I will say that for microfinance borrowers, it is because of microfinance. They had no access to other banking institutions, they have no assets, they have no land, but they still had access to microfinance.

 

The entire model of microfinance can be viewed as a critique on the formulaic processes witnessed in international development. Did you envision microfinance becoming an aid alternative and a phenomenon to this degree?

Latifee: Now we are not only talking about microfinance, but social business as well. What we are saying with these is a very popular proverb; why do you give a person a fish, why not teach him or her how to catch a fish? We are seeing billions of dollars going into development aid, but the result is not as encouraging as it should be. There are so many discouraging things, so much inefficiency and lack of focus. You are giving aid to the poor countries for poverty alleviation, but you end up seeing a certain kind of development, we see modern airports and railroads, but we do not see how this is benefitting the poor people. So in that sense, we said that if you design your program in a way that directly benefits poor people, and help improve their standard of living, that it is more valuable than just giving aid in the name of development. It should be focused.

Maybe your per capita income is rising, but you have to see if that means anything for the poor; is their income rising? If you go through with a specific program and you see that the aid is going directly to these people and they become self-reliant, it is much more valuable than just giving aid and creating some showpieces.

 

In your latest publication, Social Business, you state that, “social business is about making a complete sacrifice of financial reward from business.” And that “in a social business, the investors and investees can gradually recoup the money invested but do not take any dividend beyond that point. The purpose of the investment is purely to achieve one or more social objectives.”

You make a distinction here between your definition of a Social Business and what others might call “social entrepreneurship.” What is the purpose of distinguishing that social businesses do not pay a profit to shareholders?

Yunus: This ensures that I (as a social business owner) am not motivated by personal benefit. I am doing this because I want to solve a problem, so I don’t bring my own interests into the picture. That could corrupt my ability to focus completely on the problem, because I want to make some money out of it. Other businesses are motivated to protect personal interests first, and then make a change. So that way you are limited. I say, open it up. In this business you don’t make any personal profit. So you can fully concentrate on solving the problem—there is no link between the CEO and the profit being generated at all.

In the very design of the business, you can see that this makes a big difference. If you are not worried about making any money off of it, your entire talent and creativity is focused on solving the problem. The company’s whole design is focused on that goal, because this is not where you make money. You can make money somewhere else, but not here.

Latifee: The only difference between social business and other businesses is that in social business, if you are earning profit by giving proper remuneration, proper wage, proper salary, appropriate salary to your employees, and then you are earning profit on top of that, the additional profit will be reinvested in the business. It will not go to the pocket of any individual or group of individuals.

The most talented people should be in social business, so that they can develop something that is at the same time profitable and solving some social problem. You need talented people to do these things, highly talented people.

 

What is the incentive for traditional businesses to get involved with social business ventures? What impact do you hope to have on these businesses?

Yunus: My way of looking at it is that after getting involved in this, their viewpoint will change so much, that they will change the business model for bigger projects. So the impact works in both directions. The question is, are they influencing me or am I influencing them? What will be the ultimate result; we will see. I see a lot of impact, for example, within our Grameen Danone project, because they do it here in Bangladesh. This has a much bigger impact across Danone’s entire company.

So, it’s not that they came and did a social business idea here, and now they can do more business somewhere else. It’s making an impact on the rest of their business. It encourages executives to ask, “why are we making while people are suffering, why cant we redesign this whole thing?” So that might be an outcome too.

 

The practice of microfinance has opened conversation to many difficult subjects, particularly around population control and population growth. Personally, I have found that even starting conversations on the topic can be incredibly difficult because it can incite such strong emotions in people.  How do you feel about your life’s work being associated with such charged debates? 

Latifee: I believe that for any such program where you are connecting with people, you are working with people. You need to develop a communication skill. How to communicate with people. How to talk about difficult subjects. So it is not something like you get in cook books! This skill is developed over time. To frankly and successfully communicate with somebody else, you have to find your own strategy. You can discuss any difficult thing with anyone, provided you create an environment for them. If you understand someone, you should know how to approach them and know at what point of time to ask a question of that nature.

In Grameen Bank, as you know, we have been working with poor women. Our staff is working with women who do not remember their past—what is their birth date, memories of the childhood, memory of adolescence—because they were taught that way. just born and grew to this age. Nothing else. But when you are assigned to have a life history, you try to remember what may be your age, or a memory of childhood. So the strategy is to get acquainted with her; develop a rapport with her. Because you may ask her for a birthdate, but she has never thought about that question. Because she was not born in a family where birthdays were celebrated, she does not know her age. So you try to relate different experiences in her life and gradually you can unfold her mind, she starts thinking about how old she may be, where did she spend her childhood, what kind of treatment she received from her parents, the neighbors, or men. So it is a very difficult question just to ask a woman about her age.

But if you can develop this rapport and she begins to unfold her mind, she tries to go back and remember the history of her childhood, what kind of suffering she faced, and about family planning, which is a very difficult topic. So if you bluntly and directly ask someone about family planning or population control, she may be upset. She may be nervous. But if you start the question another way; are you alone, are you married, how many children do you have? Then you can ask if she can send them to school, able to give them enough food, enough clothing, can you treat them when they become sick, can you go to the doctor? So you talk about problems, and then she can tell you about her situation. And then she can see that many problems are related to having a large family without enough income.

This is all social engineering. There is no cook’s recipe for it. It depends on how friendly you can become and how you can motivate someone to understand these things.

Yunus: Population control is a common issue here. Everyone is in favor of population control; no one is opposing it. The question is how best to do that, whether it is promoting safe birth control measures, or any other form of direct control of population size. There are other indirect ways; if income levels rise, population falls. This is also accepted, so we try to make sure that growth of the economy and income levels go up. This will have an indirect effect on the population size. Another one is education. If you empower women in these ways, population growth will be reduced.

Microcredit indirectly affects population size because it can create empowerment of women. If a woman is better informed she can make decisions for herself about birth control and so on. If all of these things can happen in small instances, they add up. So microcredit can have an impact on population growth.

While the future leadership of Grameen Bank is uncertain, the impact of its legacy is immediately recognizable. Microfinance has become a household term and microcredit lenders have spread to every corner of the globe. The Bank’s success has stimulated new conversation about traditional development practices and has heralded alternative strategies to reduce chronic poverty around the world.

Additional information about Grameen Bank, Grameen Trust and Grameen Danone can be found the organization’s website.

School Food, Inc.: The Contracting of America’s National School Lunch Program and its Nutritional Consequences

An Article by Robyn Ziperstein

“No nation is any healthier than its children or more prosperous than its farmers.”

– President Harry Truman

Introduction

If President Truman’s vision is the goal of the National School Lunch Program (NSLP), then the program is in need of changes. Small farmers are struggling to compete with larger food providers. Government subsidies favor large corporate farms which can achieve economies of scale. These larger producers favor less nutritionally dense foods due to ease of production and cost effectiveness. As a result, one-third of American children are overweight and obese.

The lunch program began with propitious intentions. The federal government began to subsidize school lunches as a way to manage giant farm surpluses, while simultaneously supporting a suffering population. Since then, the school lunch program has become dominated by a few large food contractors designed to feed a population suffering from a lack of resources, without catering to its basic health needs. Without sufficient changes, this nutritional deficit will continue to contribute to childhood obesity and big businesses will continue to dominate distribution of goods.

This paper is constructed in four sections. It begins with an overview of the school lunch program and its changes over time. The discussion will then turn to contracts and how they affect the outcomes of school lunches. Next, problems and controversies surrounding the school lunch program will be examined including financial contract abuses by large companies, nutritional deficiencies, and lack of clean facilities. Lastly, this paper will explore potential solutions to the school lunch programs shortcomings.

 

Overview of the National School Lunch Program

Harry Truman signed the National School Lunch Act in 1946 to provide low cost or free school lunch meals to qualified students through government subsidies and surplus agricultural provisions. The subsidies were intended to safeguard the health and well-being of the nation’s children and encourage the consumption of domestic agricultural commodities.  About 7.1 million children participated in the program by the end of its first year. By 1970, 22 million children participated, and by 1980 there were 27 million participants. Since the program began, more than 219 billion lunches have been served. Nearly all schools participate today. The program began at a time when malnutrition due to poverty was a major concern. While poverty is still an issue inAmerica, underweight children are rare, and overweight children are becoming a majority, especially among the poor. Policies originally designed to ensure adequate food consumption by the poor have instead contributed to obesity rates by encouraging recipient students to eat excessively at school. Overeating occurs because school meals are required only to achieve a calorie target under the NSLP. This provision is called “offer versus serve.” No matter what is served, the food must contain a certain number of calories. This provision allows children to decline certain parts of the meals while dining, but children generally eat the whole meal and consume more calories than they need.

Additionally, regulatory standards specify that school lunches should provide one‐third of the RDA for protein, Vitamin A, Vitamin C, iron, calcium, and calories. However, the meals often do not meet these desired standards. Local school food authorities make decisions about what foods to serve and how those foods are prepared. Ill-defined nutritional guidelines, limited funds, and lack of understanding and motivation contribute to the poor quality of food production and supply in the school economy. Accordingly, some critics say recipients may be better off receiving income rather than food as children have diverse nutritional needs, making implementation and construction of a single policy that benefits everyone difficult.

 

Contracts with the Big Three Companies and their Role in the NSLP

The US food service contracting industry has been centered on three source companies: Aramark, Compass Group, and Sodexo. With a combined annual revenue of about $43 billion in 2009, the school lunch sector is highly concentrated and dominated by these three giant multinational companies. In total, the eight largest companies hold 75 percent of school contracts. These companies do not strictly provide food services to schools.  Aramark is not only the world’s third largest contract food service provider in theUnited States, but also the second largest uniform supplier. Ten percent of school lunch providers have 100 or more employees, compared with two percent of the entire food service industry. The equally concentrated supply chain for food products magnifies the size and power of these companies.

Historical developments in agricultural products have given large agribusiness and foodservice firms most of the power. Global marketing of new agri-chemicals after World War II helped shape emerging industrial markets, particularly for grain companies. The Green Revolution development of special hybrid seeds in the 1960s and 1970s helped globalize agribusiness and standardize the school lunches by providing a solitary supplier of grains to an abundance of schools. Technological achievements by these businesses have reduced the cost of food products, which has in turn made cheap food more abundant. Since the NSLP operates on surpluses, agricultural subsidies have pumped school lunches full of less expensive, less nutritionally dense ingredients. Generally, healthier food tends to be more expensive to produce, and agribusiness makes it easier for contractors to construct unhealthy meals at a low cost.

The food service management company contracted by a school is responsible for the preparation and management of the school meal program. In vended meal contracts, the contractor’s only responsibility is to provide the meals, meaning foods are pre-packaged and pre-plated. This does not include management of the program or final preparation or service of the meals. If the contract becomes a food service management contract (FSMC), it is no longer considered a vended meals contract. Vended contracts are ones in which the contractor manages some aspect of the school food service program, usually preparing and serving the meal and/or managing the school meal programs. The school codes concerning FSMCs vary between states.

When a SFA contracts with a food service management company, the state agency is required to review each contract annually to make sure all regulatory requirements are satisfied. Moreover, each state must conduct a thorough on-site review, once every five years to ensure compliance. The National School Lunch Program allows a SFA to contract with a management company (such as Aramark, Sodexo, or Compass Group) to manage school food service operations; however, it is the SFA’s responsibility to ensure its food service operation complies with the proposed agreement under the program. The SFA is responsible for ensuring that cost limitations are secure, including the use of nonprofit food service funds to pay only allowable costs, verifying eligibility of children for free and reduced price meals, ensuring only reimbursable meals are included on the claim for reimbursement, and not allowing accrual of all income and expenses to the FSMC. Specific procedures must be followed to ensure validity of all meals and claims at the school under the jurisdiction of the SFA.  If the SFA finds any problems, the school must take corrective action, after which the SFA conducts a follow-up to determine if the problem has been resolved. The SFA manages these procedures, regardless of whether the SFA operates food services itself or uses a food service management company.

 

Problems and Controversies: Compliance, Safety and Health Issues

Congress’ Government Accountability Office opened an investigation into potential contract abuses by food service management companies involved with the National School Lunch Program, and found that the process of contracting has several issues. There was concern about possible overcharges and food vendor rebates to contractors that were not given to client agencies, against federal requirements. The investigation probed whether companies carried out their responsibilities and abided by the terms of their contracts. Sodexo agreed to a $20 million settlement in July for failing to pass on rebates to several school districts inNew York. Rosa DeLauro, Representative of Connecticut and Chair of the House Agriculture Appropriations Subcommittee, wrote a letter toUSSecretary of Agriculture Tom Vilsack asking for a general investigation into the National School Lunch Program. She wrote to alert the state education and agriculture agencies that a review of the settlement between Andrew Cuomo and Sodexo for overcharging the New York School districts would reveal questionable practices and corruption by the Sodexo Corporation, which dominates school lunch contracts. The investigation revealed Sodexo had earned rebates from suppliers that were not passed on to schools. Contracts with school districts often require savings to be shared, and withholding them is a violation of federal law. In response, Sodexo hired its first outside lobbyists this year at Gephardt Group Government Affairs and Trammell and Company to help with its troubles. It spent $70,000 on lobbying fees between these two firms, and $470,000 total in 2010.

A 2009 report by USA Today found that the safety standards of the Agricultural Marketing Service (AMS), a part of the USDA that buys meat for school lunches, were lower than the standards of the average fast food restaurant in the country. It found instances where the AMS bought ground beef that retailers and fast-food chains rejected because of high amount of indicator bacteria, which indicates an increased probability that the meat contains insidious pathogens. It also found the AMS testing procedures for ground beef substantially deficient. For 100,000 pounds of ground beef, the AMS may only test one sample. By comparison, many fast food chains take samples of their ground beef every 15 minutes and test each sample every couple of hours. The fast food restaurants test their ground beef ten to fifteen times more often than the USDA tests school lunch beef. The report also revealed that the School Lunch Program purchases chicken for schools that KFC and the Campbell Soup Company would not use. The chicken bought by the USDA would have gone to compost or pet food if it were not being eaten by schoolchildren.

Communication problems with the FDA have resulted in repeated use of suppliers with a long history of food safety violations. As a result of a salmonella outbreak in 2008, hundreds of thousands of pounds of beef from Beef Packer Inc. were recalled. During the recall, the government bought four orders from the company for the school lunch program, one of which tested positive for salmonella. The other three orders were used for school lunches. Since then, Beef Packers Inc. has continued to supply beef for school lunch contracts despite the outbreak and past suspensions because of repeated salmonella contamination. According to the Center for Disease Control, at least 23,000 children were made ill from eating school lunch from 1998 to 2007. One of the problems is that school kitchens are ill equipped for food preparation. Meals are delivered by contractors in prepackaged containers to be reheated and served on site.

Contracts also have direct negative consequences on nutrition. Growing numbers of school districts are entering into exclusive “pouring rights” contracts with soft drink corporations, namely Coca-Cola Company and PepsiCo in exchange for direct payments to support schools funding needs. It is estimated that $12 billion per year is spent on junk food advertisements to school children, as well as products in vending machines that act as school sponsorships. Coca-Cola lobbyists have blocked state bills that prevent their products from being sold in schools and have gained control over most of the school vending market. Consequently, school districts are selling only one company’s products in the vending machines at all school events and during lunch. Contract conditions include prominent display of advertising and marketing paraphernalia on campus, and often, incentive payments for increasing sale of their products at school sites.  One reason for so many of these contracts is because the extra income helps to pay for chronically underfunded basic education and management.

Consumption of soft drinks has tripled in the last seven years among teenagers, and 13 percent of their calories come from carbonated and non-carbonated soft drinks. They contain large amounts of sugar, providing the average 12 to 19 year old boy with 15 teaspoons of refined sugars a day, and 10 teaspoons for girls, the government’s recommended limits of teens’ sugar consumption from all foods. These empty calories are contributing to serious long-term health problems, particularly weight gain and obesity. The sugar and acids in the soda also increases the risk of osteoporosis, tooth decay, dental erosion, kidney stones, and heart disease.  Many soft drinks add caffeine, a mildly addictive, stimulant drug. It increases the excretion of calcium and promotes attention-deficit hyperactivity disorder in some children. The yellow no. 5 can cause hives, asthma, and other allergic reactions.

Food providers do not typically offer full balanced meals for students. As Janet Poppendieck writes in Free for All: Fixing School Food in American Schools, the new paradigm of school lunches is a business model where students are treated as customers whose business is to be won by the top few food corporations selling genetically modified fat laden food.  Typically, fast food operations and vending machines products are provided through exclusive contractual agreement between school districts and food companies. School districts do not have the funds to change the system, and consequently, the system remains the same.

 

Potential Solutions

In order to accomplish the changes necessary to address the nutritional deficit of the NSLP and the negative effect corporate contracts are having on the health of schoolchildren, there must be institutional and lifestyle changes. A key institutional solution is to stop selling soft drinks, candy, and other junk foods in school hallways, shops and cafeterias, in exchange for healthier alternatives. State and local Boards of Education can provide a healthier environment by eliminating marketing contracts between school districts and soft drink companies. The San Francisco Board of Education passed an exemplar policy, the Commercial Free Schools Act, in 1999. The policy prohibits schools from entering into exclusive contracts with a soft drink or snack food company. It also includes a statute for active incorporation of healthy drinks and snacks into student meals.

There are also new initiatives to lay the groundwork protecting children from obesity and diabetes. Whole Foods is now working with the Lunch Box website to help parents design healthier meals through online donations and collaborative support. Revolution Foods Bay Area Company is also one of the emerging companies producing high quality school lunches. They do not focus on local sourcing, but they do focus on organic and highly nutritious food. InNorth Carolina, an organization known as Farmer’s Daughter offers enrollment to parents for daily delivery of natural, organic meals to the school. It does not compete with the on-site food service. It is offered as an optional, waste-reducing choice to parents.

Some states are actively trying to modify school meals. The Florida House of Representatives passed a resolution in 2006 as “Healthy School Lunch Year” inFlorida. The resolution is a response to the fact that one-fourth ofFlorida’s schoolchildren are overweight or obese, and thus recommends a vegetarian entrée option in school lunches each day. Three other states:California,New York, andHawaii, have similar resolutions as well.

Farm to school programs are alternatives that incorporate fresh school lunches, and are unique to each school. These programs have been in existence for the past 10 years, but have recently gained popularity. They afford fresher produce for meal programs, increased opportunities for hands on nutrition education in the classroom, and new markets with stable revenues for local farmers. Not only do they connect schools, from kindergarten through the twelfth grade, with healthy meals, they also provides agriculture, health, and nutrition education, waste management programs, composting, gardens, demonstrations, and farm tours.

Federal nutritional standards for school meals should be updated and the nutritional quality of USDA commodities provided to schools should be improved upon. The USDA needs to revise the requirements for NSLP and Breakfast Programs based on nutritional standards that comply with medical dietary guidelines not government guidelines. Commodity support programs reducing fat, sodium and sugars has helped provide food for schools that are more nutritious than in the past. The USDA continues to implement improvements from commodity suppliers that met updated standards.

The repetitious donations of the same commodities increase and influence food content of the meal. Some studies show, however, that schools can reduce the fat content of meals while maintaining revenue and NSLP participation levels by exposing students to new foods, updating menus, changing the way food is presented, and offering educational resources. The USDA has assisted schools through its Team Nutrition Initiative, including low fat food donations.

A $25 million campaign has been organized to influence kids to eat carrots by branding them like junk food.  The campaign includes repackaging carrots for school vending machines in bags that resemble Doritos chips. Carrots are also being grown naturally in different colors, such as white, yellow, red, and maroon. Additionally, scientists have genetically engineered the new “super carrot,” which has 41% more calcium and could ward off brittle bone disease and osteoporosis. Genetic engineering is also being used to develop potatoes with more starch and less water so they absorb less oil when fried, which will produce healthier chips or fries. These modifications are the beginning of a healthy food makeover.
The USDA’s work with stakeholders combined with behavioral economists’ research to develop innovative ways to encourage students to make healthier choices offers a new strategy for change. The Cornell Food and Brand Lab has already started working on a “Smarter Lunchroom Initiative” under Dr. Brian Wansink to encourage healthier eating in the lunchroom. The lab has made a new tray design with special compartments to fit milk instead of soda, and smaller portions of sides to avoid easy placement of foods like pizza or French fries. The researchers have also encouraged elementary school cafeteria workers to use an apple slicer rather than providing whole apples to students because studies have shown that kids are more likely to eat “apple fries” rather than whole apples. Making children feel like savvy consumers rather than obedient children is a simple strategy to help them make better decisions.
Another effective change would be to reassess the contractual obligations schools have to meet caloric requirements, and instead reform those guidelines to promote nutritional requirements instead. If we cannot change what is served, at the very least we can change how much is served. Students are receiving too many calories and not expending enough energy to compensate. By offering less quantities of food, perhaps we may eventually have the option of providing better quality food for the same cost or even less.

In addition, if schools are given the option of contracting with independent food service contractors, instead of the few major options that are currently available, the quality and price of the food may be modified to a higher standard. Allowing students to become more involved in the creation and preparation of the food they eat makes them more invested in their health and increases their willingness to continue healthier behaviors.

There is no reason to ignore the problems with school lunches. Food service providers are feeling overworked, and children are not happy with the quality of their meals. Lunch programs around the world are providing quality meals for the same cost as the food provided in American cafeterias. Why not use the example of successful providers and try out new strategies that might help make the American School Lunch Program excel and perform at its greatest potential? The program has the potential to succeed, we just have to be willing to change.

 

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