Why the Middle East and North Africa Incentive Fund Won’t Make a Difference

On Monday, the Obama administration released its proposed budget for Fiscal Year 2013, which starts on 1 October 2012. Among the many tidbits buried in that document is a proposal to establish a new Middle East and North Africa (MENA) Incentive Fund, to be managed by the Department of State and the U.S. Agency for International Development (USAID). According to a State Dept. press release, the point of this new $770-million fund would be “to better position the United States to quickly respond to dramatic changes in the region and incentivize reforms.” More specifically, the MENA fund is intended to “incentivize [gack, I hate that word] long-term economic, political and trade reforms—key pillars of stability—by supporting governments that demonstrate a commitment to undergo meaningful change and empower their people.”

On its face, this fund strikes me as smart policy. Since the 1980s, the U.S. government’s efforts to promote democracy abroad have relied heavily on negative incentives–sticks rather than carrots. Democratic and Republican administrations alike have routinely sought to jawbone recalcitrant autocrats into adopting political and economic reforms and funded training for those autocrats’ domestic challengers.

As I’ve argued elsewhere on this blog, I don’t think these hostile approaches are very effective, and they may even be counterproductive. The appearance of an alliance between foreign powers and domestic opposition groups may goad authoritarian rulers into cracking down before that opposition grows powerful enough to pose a serious threat, and it can enhance domestic support for that crackdown by playing on nationalist concerns about foreign meddling. Foreign funding for “civil society” organizations and training  also draws local activists’ energy away from the difficult but crucial work of domestic organizing into the cyclical hunt for overseas grants and attention.

These problems haven’t stopped Western governments from trying, but they also haven’t stopped American policymakers from experimenting with positive incentives, or carrots, too. The single-biggest experiment along these lines is the Millennium Challenge Corporation, created on George W. Bush’s watch, but the proposal of this new MENA fund shows that interest in positive incentives was not unique to that administration.

The more I think about it, though, the more I doubt this MENA fund would have any effect on the odds that regimes in that region will attempt or sustain democracy. I see three major problems.

First, the proposed fund is awfully small. Even if it’s spread across just a handful of the many countries in the region, the proposed budget of $770 million would still represent no more than a few hundred million dollars per country. That’s not a whole lot of incentive to undertake or sustain reforms that will often have powerful domestic enemies in countries as large as Egypt, Jordan, and Tunisia. To have much impact on those governments’ behavior, the fund would have to be big enough to make a real dent in the expected costs of democratization–and, equally important, to bear some resemblance to the expected rewards of sustaining or restoring authoritarian rule.

Second and related, the benefits of that assistance aren’t properly targeted. Specifically, the benefits of the foreign assistance the MENA Fund could offer would be public, while the benefits of sustaining or restoring authoritarian rule are often private, or at least spread across a much smaller pool of beneficiaries. Enticements work by motivating someone to do something. When it comes to political and economic reforms, the “someone” isn’t a country or its population; instead, it’s the small group of elite insiders who control–and benefit most from–the current institutional arrangements. Asking them to destroy those arrangements in exchange for new foreign assistance is kind of like offering a reward for tips leading to the capture of a local crime boss but insisting that the informants share the reward with everyone in the neighborhood. Stacked against the material benefits of keeping the old order going and the risks of ratting out the boss, one’s personal share of the public gain starts to look pretty meager.

Third, there are too many alternatives. Conditional rewards don’t work very well when the targets can get the same benefits somewhere else without the hassle of meeting the conditions. If the U.S. and the were the only source of badly needed foreign financing and assistance, conditional assistance might be more effective. In today’s world, though, governments in need of cash can often shop around for a better deal–from China, from Russia, from the Gulf monarchies, from regional development banks, from wealthy private investors, and so on. The availability of unconditional alternatives further dilutes the drawing power of these already-modest enticements.

If it gets established, the Incentive Fund will add some programs to the roster of U.S. activities in MENA countries “in transition,” and some of those transitions might succeed in producing durable democracies. My guess, though, is that the countries receiving this new assistance will be the ones that would have undertaken the relevant reforms anyway. The Incentive Fund will not transform any dictators into democrats, nor will it have a significant effect on the odds that new democracies in the region will survive.

Assessing Prospects for Democracy in the Arab World

As events in Libya turn for the better, optimism about the trajectory of the “Arab awakenings” is swelling again. Assuming that at least a few of these revolutions lead to governments chosen in mostly free and fair elections, what are the prospects that those new democratic regimes will survive? A few months ago, I wrote a guest post for the Monkey Cage blog that tried to answer this question by looking at patterns from other attempts at democracy around the world in the past five decades. I think that analysis still holds up, so I thought I would post it again here.

The original post follows, but the short version is that I’m a short-term pessimist and a long-term optimist. Some of the revolutions probably won’t lead directly to democratic regimes, and most of the democracies that do emerge will probably revert to authoritarian rule within a decade or so. Even those failed attempts, however, are likely to be an important step forward in a meandering trip that will lead eventually to durable democratic rule.

Prospects for New Democracies in the Arab World: Chronicles of Deaths (and Rebirths) Foretold

Some authoritarian regimes in the Middle East and North Africa will probably survive the flurry of popular uprisings sweeping that part of the world right now, and in some cases where uprisings manage to topple longtime rulers, new authoritarian regimes will probably emerge. Transitional governments might overstay their mandates; political insiders might rig fresh elections in their own favor; security insiders might seize power for themselves; and some states might fragment or disintegrate, leaving no functioning national government behind.

Even with all of these grimmer possibilities on the table, however, at least a few of these uprisings will probably produce new regimes that are at least minimally democratic.* Assuming that happens, what are the chances that those new democratic regimes will endure? Taking patterns from attempts at democracy elsewhere in the world during the past half-century as a rough guide, I would offer four generic predictions.

1. Most attempts at democracy born of the Arab Spring will probably fail. By “fail,” I mean simply that the democratic regime will be replaced at some point in the future by an authoritarian one. According to the data I describe in a book on democratic breakdown and consolidation, the average life span for a democratic regime is just 16 years, and a substantial majority of the democratic episodes that began in the past half-century have ended with a return to some form of autocracy. Unless this region or this moment in history proves terrifically exceptional, we can expect most of the new democracies that emerge in the Middle East and North Africa in the next year or two eventually to suffer a similar fate.

2. Those failures probably will not happen right away. Instead, they are more likely to occur during the second, third, or fourth national election cycle, anywhere from three to 20 years after the start of democratic government. Democracies rarely break down immediately after founding elections. Contrary to theories claiming that democracy is consolidated by habituation, the risks of democracy-ending coups and rebellions actually seem to rise after an initial low point and remain elevated for quite some time. This pattern should serve as a caution to activists and policy-makers who might be tempted to shift their gaze elsewhere after founding elections, assuming that a country of interest is on track for democratic consolidation once it’s pulled off the initial transition.

3. Elected governments may pose a bigger threat to nascent democracy in the Arab world than jilted militaries. During the cold war, democracies were usually killed by military officers who snatched power from elected officials. In the past 20 years, however, the risk of military coups has declined significantly, and executive coups—what Adam Przeworski and his co-authors called the “consolidation of incumbent advantage”—have become the dominant form of democratic breakdown. The reasons behind this shift are too complex and uncertain to belabor here, but this secular decline in the risk of military coups—which shows up in other data sets, too—has important implications for efforts to support new democracies in the region. Civil-military relations will surely be an important and sensitive issue in many new Arab democracies, but concerned parties should also be thinking creatively now about how to tie elected officials’ hands against erosions of civil liberties, abuses of state resources, and dirty tricks in future balloting.

4. On the bright side, the countries where initial attempts at democracy fail will probably try again soon. A study I co-authored a few years ago with Mike Lustik shows that countries which have tried democracy before are more likely to try (again) than comparable countries which have never had a democratic government. We think this pattern exists because the organizations and expectations born from earlier tries do not evaporate when democratic institutions are dismantled. Few Arab countries have ever been led by governments chosen in free, fair, and inclusive elections, so even failed attempts at democracy should help lay the groundwork for longer-term success.

* I consider a regime to be democratic when: (1) National rulers (legislative and executive) have been chosen through competitive, multiparty elections; (2) Those elections involved little or no fraud and little partisan abuse of state resources; (3) No ascriptive groups (e.g., women, or members of certain ethnic groups) were denied the right to vote in those elections; (4) No unelected group or individual (e.g,. a king, military leaders) weilds veto power over a wide range of national policy issue areas; and (5) Freedoms of speech, assembly, and association are broadly respected.

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