Global-is-Asian Issue 12

The Financial Crisis • Crisis Management • Faith and Public Policy

Issue 12 · Oct–Dec 2011

Dean’s Provocations

44 How 9/11 changed disaster response

4

46 How safe is nuclear power?

Global disorder: a temporary crisis or permanent structural change?

In-depth Spectrum 6

Volcker: euro debt crisis is "soluble"

48 Spawning a conducive atmosphere for research and innovation

Managing Editor Claire Leow, claireleow@nus.edu.sg

8

The crisis of liberal democracy

52 Easy economics, hard politics

Editor Benjamin Tan,

12 That crooked carrot is also food

Designer Chris Koh,

benjaminyktan@nus.edu.sg chris.k@nus.edu.sg

Cover Illustrator Paul Lachine

10 Corruption and the crisis of governance in India 13 Lee Kuan Yew reflects on Europe, immigration and politics 14 Singapore and the new normal 16 The roots and reach of inequality

Illustrators Paul Lachine, James Lee, Danny Snell and Cheng Puay Koon

18 China, India and the shifting global order

Editorial Advisory Board Suzaina Abdul Kadir, Eduardo Araral, Preeti Dawra, Darryl Jarvis, Astrid S. Tuminez and Stavros Yiannouka

Focus

Editorial Office Research Support Unit (RSU) Lee Kuan Yew School of Public Policy 469C Oei Tiong Ham Building, Singapore 259772 +65 6516 4301 research.lkyschool@nus.edu.sg To offer feedback on, or contribute an article to Global-isAsian, please email GIAlkyschool@nus.edu.sg Global-is-Asian is available free online at http://www.spp.nus.edu.sg/global-is-asian.aspx

54 Behavioural economics: an introduction to psychological jujitsu Spotlight 56 Faith and policy making in the 21st Century 58 Islam and democracy in Indonesia Executive Education 60 Nurturing sustainable water solutions

21 A return to stability for the euro area

Alma Mater

22 The U.S. unemployment crisis

62 Dispatch from Eastern Afghanistan: building capacity, delivering relief

24 Not much China can do for the world economy this time

63 Outstanding Alumni Award

25 O China, save the world!

27 Lessons for Asia from the global financial crisis

Research Sojourn

29 Living in a world risk society post-3/11

64 Mapping women’s pathways to leadership in Asia

31 Diminished leadership in crisis communications

66 Globalising national energy governance

34 Resolving the Thai political crisis

69 Water governance: an evaluation of alternative architectures

No part of this publication may be reproduced in whole or in part without written permission from the Managing Editor. © 2011, Lee Kuan Yew School of Public Policy, NUS. Global-is-Asian is published quarterly.

36 The health impact of the global economic crisis on Asian countries

The views and opinions expressed in this publication reflect the authors’ point of view only and not necessarily those of the Lee Kuan Yew School of Public Policy, NUS.

38 The Missing Capacities for Mega Disaster Management

Shrink Wrap

ISSN 1793-8902

40 Preparing in advance for disaster recovery

71 Accolades

42 Foresight and crisis preparedness: the Singapore experience

72 Lessons from 9/11: the dangers of spanking the floor

70 Scholars without borders

The threat to liberal democracy • 8

China, saviour of the world • 25

A world risk society? • 29

The leadership deficit • 31

Crisis preparedness, Singapore-style • 42

Faith and policy making • 56

Global disorder: a temporary crisis or permanent structural change?

I

by Kishore Mahbubani

4 · Oct–Dec 2011 ·

happened to be in Paris on October 27, the same day that EU leaders announced at 4am a breakthrough agreement to save Greece, the euro, and possibly the European Union. I was attending a meeting of the 21st Century Council, founded by Nicolas Berggruen, which included global luminaries such as Al Gore, Gordon Brown, Gerhard Schroder, “Mo” Ibrahim, Pascal Lamy, Nouriel Roubini and George Yeo. It was as good a setting as any to reflect on the state of the world.

Most participants of the 21st Century Council meeting reacted positively to the October 27th agreement. There was relief

that the world economy had once again been pulled back from the cliff. Yet, in private, there was also scepticism about whether this agreement provided a long-term solution. Roubini, better known in public as “Dr Doom” for his prediction of the 2008 global financial crisis, was particularly doubtful whether this patchwork agreement provided a solution to the long-term challenge of restoring economic growth to Greece and the other peripheral economies of Europe.

The other participants, especially the senior global statesmen, were more diplomatic and restrained in their responses.

Nonetheless, when they analysed the state

Dean’s Provocations

Image: Danny Snell

of our world, they also suggested that the world faces real structural problems, not just a temporary crisis. Gordon Brown put it bluntly that our global problems require global solutions. He pointed to many global structural imbalances that had arisen in recent times. He said that it was only in the last two or three years that the West had been out-produced and out-traded by the rest of the world. Despite this, the West was still out-consuming the rest of the world. This was clearly not sustainable. It was also not sustainable for all countries to push export strategies if no major countries wanted to import more.

Gordon Brown therefore strongly advocated that the G-20 work out a global growth pact. He said the US and EU should undertake to build more infrastructure to stimulate growth while China and India should consume more and create, in his words, a “self-reinforcing circle”. In short, the world should act in unison. Yet, as several members observed, after the successful G-20 meeting in London, subsequent G-20 meetings in Pittsburgh and Seoul had failed. Ernesto Zedillo, the former President of Mexico, pointed out that the Pittsburgh meeting

had agreed on a mutual assessment process (MAP) to assess whether the fiscal, monetary, trade and structural policies of the G-20 were on a sustainable trajectory. Despite this clear commitment, the Seoul meeting ignored the MAP decision, demonstrating the inability of the G-20 to even abide by its own commitments.

There is a simple reason why global leaders ignore their global commitments. They are not elected by any global constituency.

Instead, they are elected by their local citizens who want immediate attention paid to their local concerns. Virtually no major global leader has the courage to explain to local citizens that the world has changed fundamentally. And how has it changed fundamentally? As I explained in an International Herald Tribune article on 18 August 2011, in the past when the 7 billion citizens of Planet Earth lived in 193 separate countries, it was like living in 193 separate boats. The global order only needed rules to ensure that the boats did not collide and instead promote cooperation among them. However, with the world having shrunk, the 7 billion people no longer live in 193 separate boats. Instead, they live in 193 separate cabins on the same

boat. There is one fundamental problem with this boat. We have captains and crews taking care of the cabins. Yet we have no captain or crew taking care of the boat as a whole.

The world has crossed a significant threshold. None of the major problems we face can be solved by any country alone, whether they are financial crises or pandemics, terrorism or global warming. This was also a point that Al Gore put across forcefully at the Paris meeting. After giving a passionate address on the danger of global warming, he stressed that what the world needed most was a “unified earth theory”.

In short, when retired global leaders meet in private, there is no disagreement in their analysis of the state of our world. They all agree in private that global problems require global solutions. The big tragedy for the world is that they are not able to persuade their successors, who are still in office, to be equally wise globally. If they can succeed in doing this, then we may finally get on to the road of fixing the key global problems we face.

Kishore Mahbubani is Dean of the Lee Kuan Yew School of Public Policy at the National University of Singapore. · Oct–Dec 2011 · 5

Volcker: euro debt crisis is "soluble"

by Benjamin Tan

Image: Michael Seymour-Culme

6 · Oct–Dec 2011 ·

Dr Paul Volcker

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T

he recent collapse of U.S. brokerage MF Global serves as a warning against excessive risk-taking, former Federal Reserve Chairman Paul Volcker said, referring to the U.S. firm that filed for bankruptcy after risky bets on debt from the euro zone scared away clients and investors.

Dr Volcker, who in January stepped down as Chairman of U.S. President Barack Obama’s Economic Recovery Advisory Board, was in Singapore in November for a dialogue session organised by the Lee Kuan Yew School of Public Policy.

He said MF Global’s bankruptcy supported the case for more financial regulation in the U.S. and suggested that Singapore authorities do the same.

“In my view, (banks) should not take part in speculative activity ... I would like to see that rule adopted in Singapore and right around the world,” Dr Volcker said, adding that such speculative activity had played a key role in the 2008 financial crisis.

Dr Volcker said he would like to see the Volcker Rule — which is due to come into force next year in the U.S. as part of the DoddFrank financial reform bill — implemented all over the world.

But the Volcker rule, which aims to prevent American banks from making big bets on markets with their own money or from backing private equity and hedge funds, was criticised by the man whose name backs the new regulation as being “much more complicated than I would like to see”.

He blamed financial industry lobbyists for making the proposed regulation much more complex than it needed to be. “There is no set of lobbyists in the United States bigger, more important, and more rewarded than the financial lobbyists,” he said.

The most important issue in banking reform is how to deal with failures or incipient failures of large financial institutions, Dr Volcker said, adding that it was better to liquidate failed financial institutions so that they could continue to meet their obligations and not upset the market. What was in question, he said, was the political will of governments to enforce such action when “push came to shove”.

On other banking reforms, Dr Volcker said he believed there was still unfinished business with the U.S. mortgage market, the role and structure

of credit rating agencies, and U.S. money market mutual funds regulation.

Asked by the dialogue session’s moderator, Professor Kishore Mahbubani, Dean of the LKY School, what was the way out of the euro zone debt crisis, Dr Volcker said: “I think it’s a soluble problem, but they are solving it inch-by-inch instead of a general dramatic solution.”

The recent ousters of the Greek and Italian prime ministers have not eased pressures as bond yields in Italy and other euro zone countries continue to rise, threatening the ability of some states to repay their debt.

Dr Volcker praised measures taken by European leaders to reduce debt, such as the recapitalisation of banks, providing funds to insure Spanish and Italian financing, and debt relief for Greece.

“But whether they are enough and being implemented forcefully enough is the question, and, in the long run they are going to have to find some means for maintaining better discipline within Europe which requires more integration and policy making. I don’t think they can escape that, and they understand that, but you can’t do that overnight.”

Asked if Europe had the resources to solve its problems, Dr Volcker said: “They have the resources in Europe to get it done. Or they go to the rest of the world for funds. The rest of the world has a big stake in this. Europe as a whole can manage it, but can it manage it? They all have their own political problems.”

Turning to the United States, Dr Volcker lamented that although policymakers knew that raising taxes would produce positive results for the economy, this was not happening because of the unprecedented “deep ideological divisions” between the current administration and the rightwing Republican opposition.

When asked if the United States had fallen into a liquidity trap as Japan did in the 1990s, Dr Volcker said: “We are all caught in a higher debt trap. That’s the problem with Greece, Spain, Italy, Portugal and Ireland. It’s not a very happy situation.” He added the Japanese experience, which saw a bust in the real-estate and stock markets at the same time, provided a valuable lesson to U.S. policymakers as it showed that restoring growth too slowly could result in prolonged unemployment and hardship.

Turning to China, Dr. Volcker noted that it has become a force in the world economy, and at no point in history had a country of its size grown at a rate of 10 per cent a year.

He said: “The emerging world is now as big as the developed world and that is the phenomenon of the last decade and requires a change in thinking. China is out there and wants to have a say in the affairs of the world. In 12 to 15 years, its economy will be as big as the U.S., and it will be a different world politically and a different world economically.”

In this new world, Dr Volcker believed China will be more preoccupied with its own internal affairs but will be called upon to shoulder more responsibilities as a rising power. In light of this, China cannot continue to run big current account surpluses at the expense of other nations. In line with other advanced economies, China will in future need to raise consumption as a percentage of GDP to 50 or 60 per cent, from 35 per cent currently, Dr Volcker said.

Dr Volcker had a few words to say about his profession, too. Economists, he felt, had become overly wound up in creating highly sophisticated Mathematical models so much so that some of their work in forecasting was unwarranted. “An economic system is not a physical system”, and unlike the physical world, human behaviour does not comply with distribution curves, he said, lauding the use of psychology in the work of this year’s winners of the Nobel Prize for Economics.

Asked by a member of the floor if he had any advice for the Singapore civil service, Dr Volcker gave a surprising reply that drew laughter from the audience: “My understanding is that civil servants in this city-state are extremely well paid.

I approve of that. It’s unusual. You have a reputation of running a clean, efficient civil service. That is an advantage. It doesn’t exist in the U.S.” Emphasising the importance of quality public policy education, Dr Volcker said great policies that are not well administered will ultimately come to naught, and hence there will always be demand for an institution like the LKY School, which has made “remarkable progress” in understanding the problems and complexities of public administration.

Benjamin Tan (benjaminyktan@nus.edu.sg) is Editor of Global-is-Asian.

“We are all caught in a higher debt trap. That’s the problem with Greece, Spain, Italy, Portugal and Ireland. It’s not a very happy situation.” · Oct–Dec 2011 · 7

Image: LEON NEALAFP/Getty Images

I

s liberal democracy in the West at risk? This question seems preposterous at a time when people in the Middle East and North Africa are risking their lives to bring down authoritarian governments, in apparent emulation of the West. Yet, the riots that shook London and other major English cities in August are but the latest example of the serious erosion of societal trust in the institutions of government.

As Western governments struggle to contain the spreading carnage of the current sovereign debt crisis, the sense of disillusionment is palpable within the poor and the middle classes. In particular, it has become abundantly clear that governments are prepared to push through painful and unpopular spending cuts, which have adverse effects on the economy as a whole and on the poor in particular, in order to maintain their market ‘‘credibility’’.

Sure, some might counter that the crisis of liberal democracy is only a temporary response to a series of shocks, not least the severe economic crisis in parts of Europe and the United States. There is of course some truth in this argument, but like the global financial crisis, the crisis of liberal democracy has been in the making for decades. To understand why, we need to look at liberal democracy not simply as a set of political and legal institutions, but situate its emergence in a particular historical and social context.

Contemporary liberal democracy developed in Western Europe in tandem with industrialisation. Indeed, social democrats and the trade union movement played a crucial role in agitating for universal suffrage, initially only for men, removing the earlier requirement of property ownership.

But beyond the issue of voting, the economic and social transformations of the Industrial Revolution have underpinned the development of the welfare state, which provided social insurance against the vagaries of capitalism and attempted to mitigate the latter’s inequalities.

The welfare state’s emergence was also promoted by the Communist Revolution in Russia and the Great Depression engulfing the world in the 1930s. With millions out of work, leftist ideology gained ground – even in that bastion of individualism: the United States. In most Western states, the way out of the Great Depression involved not only counter-cyclical spending but a political accommodation between labour and capital, manifest in the political arena of the two-party system – one party for labour and another for capital.

8 · Oct–Dec 2011 ·

Yet a strange thing happened around three decades ago, with serious challenges emerging to the capital and labour accommodation.

The arrival of neo-liberalism – the ideology that replaced Keynesianism with the idea that society should be organised along competitive market lines – rose up in the 1970s and early ’80s ostensibly to counter declining rates of profit in key capitalist countries. One of the main targets of new neo-liberal regimes, perhaps most prominently Margaret Thatcher’s in the UK, was organised labour, with unions derided for their inflexibility and, in an increasingly competitive world, ‘‘holding the country to ransom’’.

Attacks on unions (which were promoted as contributing to ‘‘flexibility’’), were accompanied by other measures that would increasingly enmesh populations into the market in the interests of efficiency and growth. Here, privatisation, deregulation and liberalisation were at the heart of a new agenda which signalled the start of the ‘‘there-is-no-alternative’’ market society.

Within market society, the representation of labour and capital was to give way to a technocratic politics in which key economic decisions were to be managed by bureaucrats who were focused on positioning economies and the states that oversaw them in a generically competitive-oriented manner.

Central banks became ‘‘independent’’ (although the captains of industry were never far away from the boards of central banks).

Exchange rates were floated. Governments became focused on demonstrating fiscal responsibility to markets by running small surpluses. Public services and redistributive measures were redesigned along competitive market principles that were concerned with making sure citizens ‘‘understood their responsibilities’’ within the market society.

The parties of labour (the social democratic and liberal left) moved to the right – in several cases outdoing the parties of capital in their promotion of market society’s requisite institutions.

In the UK and the US, the new right governments of Tony Blair and Bill Clinton, respectively, normalised workfare and ‘‘lifelong learning’’ programmes as the maximum that populations should expect from government in managing the inequalities of capitalism.

In essence, there was nothing left for politicians to do in representing their constituents other than the roll-out of market society.

However, with wages declining in real terms

and families offsetting this decline through the easy provision of credit (which often tapped equity in houses), there were political tensions to manage.

In an often complicated juggling act, parties sold themselves on the basis of being able ‘‘to manage the economy’’ and keep interest rates (servicing costs on debt) low. Parties (including those on the left) also focused on another key threat to the ability to service debt – labour competition in the form of migrant labour.

However, beginning in the US in 2007, the economic and social frictions inherent in this structure came to the fore. Three decades of poor representation and response has led to the mass marginalisation of populations in many

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the crisis of liberal democracy

by Shahar Hameiri and Toby Carroll

Riots broke out in the streets of Tottenham, north London, in August.

countries. All of this has taken place alongside a serious deterioration in the quality of politics in countries such as the US and Britain. Each was rocked by massive scandals illustrating the links between state and capital are tighter than ever – guaranteeing the representation of the interests of one end of town while the other faces increasing desperation.

Of course, the freedoms and rights associated with liberal democracy have always coexisted with capitalism. Yet, the tensions inherent in the liberal democratic state’s promise of

representing all of its citizens with the underlying primacy of ensuring economic growth through capitalism, are becoming impossible to ignore. Without well-organised and popular groups pushing against the interests of the powerful few, the promise of political, let alone economic, equality remains nothing but an empty ideological veneer.

In the 1940s, economic historian Karl Polanyi argued that the dislocations of unrestrained capitalism are often followed by a ‘‘counter movement’’ of social protectionism.

Yet, history has shown that this is not an automatic process. It requires coordinated struggle.

While social forces in the form of trade unions and social democratic labour parties engaged in struggle during Polanyi’s time, this is not the case today.

Instead, the overarching sentiments to have emerged from the unprecedented events of the past few years are despair, cynicism and even nihilism – as witnessed in the UK riots.

None of this bodes well for the future of liberal democracy. The question is: what comes next?

Shahar Hameiri (S.Hameiri@murdoch.edu.au) is an Australian Research Council Postdoctoral Fellow at the Asia Research Centre, Murdoch University.

Toby Carroll (spptjc@nus.edu.sg) is Senior Research Fellow at the Centre on Asia and Globalisation at the LKY School. This is a reprint of an article that first appeared in the Bangkok Post under the title “The Threat to Liberal Democracy”. · Oct–Dec 2011 · 9

corruption and the crisis of governance in India

Image: India Kangaroo @ flickr.com

Anna Hazare (dressed in white in foreground), the face of India's fight against corruption, went on a hunger strike in April that led to nationwide protests against the government.

Corruption has reached such alarming proportions in India that it has undermined all institutions of democracy, precipitating a crisis of governance.

C Raj Kumar casts his critical eye at recent legislative, judicial, institutional and civil society initiatives to combat the scourge.

C

orruption in India is a problem that has serious implications for both protecting the rule of law and ensuring access to justice.

Corruption is pervasive in India, undermining the effectiveness of all institutions of governance. Since independence, successive governments have attempted to take numerous measures to reduce the levels of corruption in the country, including legislative and institutional measures. However, a lack of political will and commitment in taking concrete steps to eliminate corruption has meant most of these measures have fallen short of their intended results. Corruption in India is not merely a law enforcement issue where the existing laws of the state are violated and can be remedied

10 · Oct–Dec 2011 ·

merely by more stringent law enforcement.

Rather, it is a much more fundamental problem that undermines the very social fabric of Indian society. The scourge of corruption has permeated every political and bureaucratic institution, rotting the apparatus of governance from top to bottom.

A cohesive approach At the first level, this would require recognition of a fundamental right to corruption-free governance in Part III of the Constitution. This right is expected to empower Indian citizens to rightfully claim that governmental conduct needs to be free from corruption. If it is not, a violation of their constitutionally recognised

rights has taken place. Constitutional sanctity has acquired legitimacy in the Indian context largely due to the fact that India has been functioning as a constitutional democracy since its independence.

While corruption of all forms — political, administrative, bureaucratic, and corporate — is rampant in India and has steadily increased in the last 60 years, the political system of electoral democracy by and large has been stable.

Even so, this cannot be taken for granted as democracy without the rule of law cannot protect the rights of the people. Corruption in India has affected development policies and the Indian citizenry has been deprived of their economic and social rights.

At the second level, legal and institutional mechanisms need to be formulated to combat corruption. Enforcing the rule of law continues to be the single most important impediment to the effectiveness of anti-corruption laws, and thus the larger issue of establishing a rule-of-law society in India needs to be addressed immediately. This would require progressive efforts towards revamping the

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enforcement machinery, empowering the citizenry, and promoting transparency and accountability in governance.

The third level comprises institutional reforms in the form of strengthening institutions, such as the National Human Rights Commission (NHRC) and the Central Information Commission (CIC), and the right to information. There is a need for the NHRC to revamp its mandate in light of massive institutionalised corruption that has not left any institution in India untouched. All human rights are violated because of corruption. The NHRC must ensure that its investigations take note of the fact that corruption is the root cause of many violations of human rights. The purpose of the NHRC’s new initiatives should be to ensure the protection of human rights and promotion of corruption-free administration as a sine qua non for good governance.

Furthermore, promoting transparency and accountability is an important requirement for corruption-free governance. The Indian experience has demonstrated that recognition of the right to information in India is an important step in ensuring corruption-free service.

Forming an anti-corruption body Fighting corruption has become the most pressing issue for Indian policymakers. While a number of approaches have been used to fight corruption in India, none of them have been effective so far. Given the complexities of multi-layered police and other law enforcement agencies that are working in India, it is important to develop a more focused approach to combating corruption. The proposal to establish an Independent Commission Against Corruption (ICAC) in India recognises the inherent challenges of any institutional approach to reform in India, given the bottlenecks and obstacles for enforcement of the rule of law. A number of institutions entrusted with the responsibility of fighting corruption and to ensure probity in governance have not been successful. Establishing an ICAC in India will not be the panacea for all ills relating to corruption. There has to be a multi-pronged strategy to fight corruption, which will have a legal framework, an institutional mechanism, an investigation and prosecution machinery, a public awareness and education strategy, civil society empowerment approaches and a whistleblower-protection mechanism. The fight against corruption will work only if all the above strategies are formulated, bearing in mind that corruption is a serious problem

of governance that violates human rights and undermines development.

The proposed ICAC in India should be a stand-alone autonomous institution and should not be under any ministry of the government, including the Prime Minister’s Office. The ICAC should be established as an institution akin to the Election Commission of India. In fact, it would be appropriate for its establishment to be made through an amendment to the Constitution of India, which will provide a constitutional status to this commission. If this is not possible, given the political complexities of amending the constitution, it may be established by legislation. But the powers, functions and level of independence of ICAC should be in conformity to the guarantees that are provided to the Election Commission of India. Historically, anti-corruption institutions that have been established in India have not enjoyed institutional independence or functional autonomy. All investigative bodies including the police and law enforcement agencies have come under one or more ministries of the Government of India or the state government. This has made the independent and autonomous functioning of these institutions dependent upon the leadership, integrity and impartiality of the heads of these institutions. While this is necessary and critical to the success of the ICAC, it is important to develop a more sustainable process and procedure-oriented institutional mechanism for ensuring independence.

Restoring faith in governance Recently, Indian civil society activism against corruption has been given a fillip in the form of Anna Hazare’s campaign that proposes the establishment of an independent, powerful and effective institutional mechanism in the form of a Lokpala, akin to the independent commission against corruption (ICAC) in Hong Kong. While this is not the first time that Indian civil society has been galvanised to fight against corruption and seek transparency and accountability in governance, this particular movement has had, unlike the previous ones, a strong acceptance among the citizenry.

People have begun to lose faith in the ability of parliamentary institutions and the political process to ensure good governance. The efforts to establish an independent Lokpal are important not only because of the need to fight against corruption, but also to restore the public’s trust and faith in parliamentary democracy.

There is no doubt that the institutional design of Lokpal as an independent, impartial and effective mechanism will be the sole factor for its success. The social expectations generated not just by the Anna Hazare movement, but also by the human rights violations committed against people on account of corruption

“Enforcing the rule of law continues to be the single most important impediment to the effectiveness of anti-corruption laws, and thus the larger issue of establishing a rule-of-law society in India needs to be addressed immediately.

has left a strong desire among many Indians to fight against corruption. The Lokpal is similar to the ICAC I have proposed, and the current mood in the country only reinforces the pressing need to take concrete steps towards eliminating the malaise of corruption.

Professor C. Raj Kumar is Vice Chancellor of O.P. Jindal Global University and Dean of Jindal Global Law School in India. He was a Rhodes Scholar at Oxford University where he obtained a BCL, and a Landon H. Gammon Fellow at the Harvard Law School where he received the LL.M. He holds a Doctor of Legal Science (S.J.D.) from the University of Hong Kong. He can be contacted at VC@jgu.edu.in · Oct–Dec 2011 · 11

that crooked carrot is also food

O

ctober 16 was World Food Day. There is no question more important than this: If we are failing to feed the world’s 7 billion people, how will we feed 9 billion in 2050?

Last year, more than 925 million people – or nearly 1 in 7 people in the world – were undernourished.

The fact is that the world could feed itself, both now and in 2050. The problem is not that the world grows too little food; there is plenty of food overall. The problem is that while there is too much food in some places and not enough in others, everywhere food is wasted. Each year, 1.3 billion tonnes of food is lost worldwide.

The Londoner who walks home with three bags of groceries will never eat the contents of one of them: One-third of all the food bought in Britain is thrown away every year.

Americans discarded a staggering 33 million tonnes of food in 2009, according to the U.S. Environmental Protection Agency – making food the single largest component of solid waste in U.S. municipal landfills and incinerators. It costs the United States nearly one billion dollars a year to dispose of food waste.

The countries of South and Southeast Asia produce less food per capita than industrialised countries in the West, but they waste roughly the same proportion, 30 to 35 per cent. Although tiny Singapore needs to import more than 90 per cent of its food supply, in 2008 it nonetheless threw out some 570 million kilograms, or one-fifth of the total – mostly edible scraps.

In industrialised countries, much of the loss occurs at the consumer level, after the food has reached supermarkets and stores.

This is partly because food expenses as a percentage of a family’s income have come down significantly in the West, especially relative to transportation and housing costs, which have gone up. People don’t throw away designer clothes or iPhones; these have what economists call “scarcity” value. Food does not.

The issue is different in the developing world. Some 35 to 45 per cent of the food produced is also lost there every year, but typically well before the supplies even reach buyers. Most waste occurs during and just after harvesting and at the distribution stage.

by Asit Biswas and Leong Ching Image: jbloom @ flickr.com

India, the world’s second-largest producer of fruits and vegetables, loses about 40 per cent of that production because of mismanagement, inadequate infrastructure and storage, poor transportation, shoddy supply chain logistics, and underdeveloped markets. It also loses more than one-third of its cereals.

Such local problems are compounded by international economic trends. Farmers in the US and the EU, for example, have an incentive to grow corn, sugar cane, oil seeds or coarse grains for ethanol and other biofuels. In the US, where government subsidies encourage such activities, ethanol production consumes nearly 40 per cent of the corn crop.

If these trends continue, the price of vegetable oils could increase annually between 2013 and 2017 by 35 per cent, that of coarse grains by 13 per cent, and that of oilseeds by 7 per cent. This would further aggravate poverty and hunger throughout the world.

According to the World Bank, during the second half of 2010 “an additional 44 million people fell below the $1.25 poverty line as a result of higher food prices.”

In industrialised countries, reducing food waste will require raising public awareness and changing consumer attitudes. Consider carrots. On farms, photographic sensors scan all harvested carrots and reject those that are crooked, dull, blemished, too thin or too fat.

As a result, 25 to 30 per cent of carrots end up as animal feed even though they pose no health risk to humans. Many other fruits and vegetables are also set aside because supermarket managers believe consumers will not buy them for aesthetic reasons.

In developing countries, the effort to cut

back on waste must focus on building better infrastructure facilities, including for storage, and significantly improving supply chain and marketing systems.

In India, some 35 million people (7.3 per cent of the workforce) earn their living in the unorganised retail sector. But wholesale retailing has been gaining momentum with the entry of Bharti, Wal-Mart, Reliance Industries and Carrefour into the market.

This is contributing to the rise of trade over medium and long distances and the establishment of special production areas, procurement systems and modern food retailing.

Several non-governmental organisations are working with small farmers so that they can meet the quality requirements of these new supply chains. Modernisation could also help reduce food losses by helping India process more of its fruits and vegetables: Currently it processes only about 2 per cent of production, compared with 30 per cent in Thailand and 80 per cent in Malaysia.

The problem of hunger cannot be solved if we continue to seek solutions focused almost exclusively on boosting agricultural production and yields. When one-third of the food produced in the world is never even consumed, limiting waste must be our first priority.

Asit K. Biswas is founder and president of the Third World Centre for Water Management in Mexico and Distinguished Visiting Professor at the LKY School. Leong Ching is a researcher at the LKY School. This is a reprint of an article that was published in The International Herald Tribune, the global edition of the New York Times, on 14 October 2011.

“The problem of hunger cannot be solved if we continue to seek solutions focused almost exclusively on boosting agricultural production and yields. When one-third of the food produced in the world is never even consumed, limiting waste must be our first priority.”

12 · Oct–Dec 2011 ·

lee Kuan yew reflects on Europe, immigration and politics

by Benjamin Tan Image: Michael Seymour-Culme

E

ven as European leaders work round-theclock to resolve the euro zone debt crisis, Singapore’s Former Prime Minister Lee Kuan Yew sounded the death knell for the beleaguered currency union.

At a dialogue session to mark the seventh anniversary of the Lee Kuan Yew School of Public Policy in September, Mr Lee said the collapse of the currency union will be “a very painful business” and European leaders will fight tooth and nail to prevent that outcome as this would be “an admission that their aspiration of one Europe is not achievable”.

Asked whether Singapore would buy the bonds of debt-ridden European countries, Mr Lee said Singapore’s gross domestic product was a fraction of the European Union’s, and thus it was “in no position to rescue the Europeans, nor do I think that buying their bonds will necessarily rescue them”.

Mr Lee singled out the currency union among the 17 EU countries as the problem: “A fundamental problem of the euro is that it makes everybody, every European country, march to the same drummer whereas each country has its own tempo and you cannot expect the Greeks to march like the Germans, so the problem will not go away.”

“A two-tier Europe or even a three-tier Europe is possible but a one-tier Europe with different spending habits, thrift habits and discipline is too difficult to achieve,” the senior statesman said.

The dialogue, moderated by LKY School Dean, Professor Kishore Mahbubani, was attended by about 600 students, faculty members and guests. When Professor Mahbubani said that a strong EU would be in China’s

geopolitical interests, Mr Lee surprisingly disagreed: “No, no, no. It’s easier to deal with 27 weak European countries than to deal with 27 united European countries.”

Mr Lee said good governance alone was not enough to solve problems in troubled times.

“All it means is that you have a system in place … In critical times, it might just tip over,” he said, without suggesting what was needed to supplement good governance.

Singapore Concerns During the 50-minute long dialogue session, the discussion turned towards Singapore and Mr Lee fielded questions ranging from whether the Singapore model would work in a larger nation such as India, to his vision for Singapore’s future.

Addressing the concern about dealing with Singapore’s ageing population after its stopat-two-children policy of the past, Mr Lee welcomed new immigrants as the best solution to the problem. Singapore’s fertility rate has fallen to 1.15, and Mr Lee did not expect to see it going back to 2.1, the rate of replacement, defined as two children per married couple.

Mr Lee noted that ageing populations are seen in developed countries where women are educated and “do not see their future just as bearers of children”.

“So the solution is immigration ... and as we age, and there are not enough young people to look after the old, then maybe the population will be receptive to taking in more immigrants,” he said, adding that Singapore could add between 20,000 and 25,000 immigrants annually to expand the population.

When asked by Professor Mahbubani

what can be done for Singaporeans to understand better the importance of immigration, Mr Lee replied: “I think we have explained it but they just don’t want to see so many foreigners in their midst.” The turning point for Singaporeans to understand the importance of immigrants, he felt, would be in 20 or 30 years’ time when they realise that immigrants are needed desperately and “are hurt by objecting to immigrants coming to Singapore.”

On whether Singapore’s national identity was strong enough to absorb the flow of immigrants, Mr Lee said Singaporeans do not accept the need for immigrants partly because some of them do not speak English. “They’re discomforted when they see the young migrants working at the kopitiam (coffee shop), cleaning the tables, putting our old ladies out of work and unable to speak English,” he said.

It would take a generation for immigrants to “become Singaporean”, as the “accents and speech” of current immigrants have “already been set”, he reckoned.

The Value of an Opposition Turning to politics, the former Prime Minister, who served from 1959 to 1990, was sceptical whether Singapore would be able to sustain a two-party political system. Though the opposition should remain “competitive” in Singapore’s political landscape, Mr Lee felt two-party systems like those in Europe and America were not good for the country. “Amongst other reasons, I don’t believe Singapore can produce two top-class teams. We haven’t got the talent to produce two top-class teams,” he said.

“A generation that grows up in a period of affluence believes that we have arrived, and as the saying goes, a ‘First World Parliament’ must have a ‘First World Opposition’. So the restlessness, whether that leads to better governance, I am not able to say. We will wait and see - how constructive the opposition can be, or will be,” he said.

At the event, Mr Lee unveiled the French editions of his two-volume memoir, L’Histoire De Singapour (The Singapore Story) and Du Tiers-Monde A La Prosperité (From Third World To First).

Benjamin Tan (benjaminyktan@nus.edu.sg) is Editor of Global-is-Asian

“Amongst other reasons, I don’t believe Singapore can produce two top-class teams. We haven’t got the talent to produce two top-class teams.”

· Oct–Dec 2011 · 13

Singapore and the new normal

by Benjamin Tan

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Image: Michael Seymour-Culme

Lord Mandelson gives a thumbs-up to Singapore’s strategic vision.

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he global economy has created a “new normal” based on a diversity of models, rather than a single, Western-influenced blueprint, and Singapore, which has struck the right balance between market competition, individual enterprise and collective investment, could teach the rest of the world valuable lessons, said former British Cabinet minister Peter Mandelson.

The former British secretary of state for business and European Union trade commissioner was in Singapore in September as the 32nd Lee Kuan Yew Exchange Fellow.

At a public lecture organised by the LKY School, Lord Mandelson said Singapore’s pragmatic response to globalisation and its ability to turn its constraints in the post-independence era into opportunities created a “new normal” in politics which could be applied universally.

Lord Mandelson attributed the “new normal” to two factors. First, the economic crisis in the West has led to sluggish growth and leverage for banks when they borrow money, as well as higher oil prices and government borrowing costs.

Secondly, there has been a long-term shift in the balance of economic power from the West to the East, with China and Southeast Asia expected to contribute one-third of global gross domestic product growth in the next two decades.

“One thing we know is absolutely certain is that the new consensus will not be defined in Washington or London or Brussels. I suspect it will not be based on a single abstract model at all, but on a diversity of models, linked not by a common prescription, but by some common principles for success,” Lord Mandelson said.

Spectrum

He lauded Singapore for being an exemplary “mixed model”.

Though it was not unique in its staunch belief in open trade, Singapore distinguished itself by its “pragmatic solutions to weaknesses in laissez-faire models”, Lord Mandelson said, citing the government’s implementation of the Central Provident Fund, which makes saving for retirement mandatory, as an effective safety net that did not burden the state in costly welfarism.

One of Singapore’s success factors, according to Lord Mandelson, is its highly open and globally integrated economy and general disdain for protectionism. But openness is not a pre-requisite for growth or an end in itself, so governments have to put in place an environment conducive to making a liberalised market work well. In this regard, Singapore is well supported by an excellent education system, good infrastructure, strong investment in research and development and the rule of law.

Secondly, the Singapore government has rightly, he argues, “stopped at the edge of the market” and stepped in only in situations where markets would under-invest if left to their own devices, in order to allow space for innovation and dynamism to flourish.

Thirdly, Singapore’s emphasis on transparency and accountability has helped it cope with the ebbs and flows of globalisation. Lord Mandelson noted that the Singapore bureaucracy was powerful but at the same time highly competitive and non-corrupt. It is also “remarkably small” compared with some governments in the West.

Lord Mandelson said a society’s social contract had to be openly debated in a way that kept up with the expectations of its people. If anything, the “activist state” under the new normal had to be even more accountable to its populace, even if this was at times at the expense of efficiency.

As one of the chief architects of Britain’s New Labour movement, Lord Mandelson helped his party sweep to victory in the 1997 elections and remain in power for 13 years. But during his lecture, the veteran politician spoke candidly about Labour’s loss at the polls last year.

It boiled down to emotional connection, Lord Mandelson concluded.

“As a party, we had begun to drift, to misplace our New Labour identity ... We lost what I can best describe as our emotional connection with our voters,” he said.

Lord Mandelson said he chose the word “emotional” deliberately because “policies are rational but politics is emotional”. People are

driven in politics by emotional forces like passion, ambition and ideals, he added – a point that was bound to raise the question in the minds of the audience: will Singapore’s incumbent People’s Action Party (PAP) be able to continue to forge such emotional ties with voters after being more than 50 years in power?

He then drew parallels between his party and the PAP, which saw its share of vote during the May general election slip to 60.1 percent – its lowest level since independence.

After unveiling sweeping changes to his Cabinet after the elections, Singapore’s Prime Minister Lee Hsien Loong said his ministers would have to make “not just policy judgments but political judgments” in crafting policies which are responsive to “real problems” faced by Singaporeans. This would entail appealing to the emotions of the citizenry.

Lord Mandelson noted: “The trick for any party long in power is to recognise that with power comes great responsibility. It must find ways to give away more power to the people, rather than take more power into itself.”

The way forward then for the PAP was to ensure it did not become complacent by becoming its own chief critic, he said, noting that the journey ahead was likely to become bumpier with the growing problems of immigration and an ageing population. The party had to communicate more effectively what it is doing and why, while replenishing its talent pool: “Exclude those who underperform while remembering that policy is the main driver of renewal, not cosmetic changes of faces at the top,” he said.

Indeed, the theme of forging deeper emotional connections between government and people has struck a chord with Singaporeans and focused the minds of politicians. Shortly after Lord Mandelson’s lecture, an extract of his speech appeared on the PAP’s website, igniting much discussion online about the disconnect between rulers and ruled.

When asked by LKY School Dean Professor Kishore Mahbubani what advice he had for politicians, Lord Mandelson’s reply was quick and succinct: “ Under-promise and over-deliver”, or the government “will face an excess of demand of expectations when in fact there is a limited supply of actions it can take.”

Benjamin Tan (benjaminyktan@nus.edu.sg) is Editor of Global-is-Asian.

“The trick for any party long in power is to recognise that with power comes great responsibility. It must find ways to give away more power to the people, rather than take more power into itself.”

· Oct–Dec 2011 · 15

The roots and reach of inequality

by Claire Leow

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n September, a movement in New York called “Occupy Wall Street” to protest against the excesses that brought about the Great Financial Crisis, gathered pace and went “viral”, reaching many corners of the world.

In an interview with Salon.net on 4 October, the originators of the movement, Vancouverbased Adbusters, noted a culture clash behind the financial crisis. The social movement, originally targeted at its 90,000 supporters, has evolved into a global phenomenon largely focused on unequal relationships in societies.

Now, it has grown beyond Wall Street into a broader “Occupy” movement as various countries adapted the strategy to air their grievances.

Social media, facilitated by rapid technological change, has amplified the sense of injustice over rising inequality.

This was the backdrop to a LKY School of Public Policy Roundtable entitled “Rising Asia, Growing Inequality” on 30 September, planned weeks ahead, where T.N. Srinivasan, Yong Pung How Chair Professor at the School, sparked a lively debate with a question from the floor on the nature of inequality. One should examine the impact of wealth acquired unfairly, he said, returning to a theme that resonated with the audience. “Are we focusing too much on inequality without discussing the fairness in bringing it about?” he asked.

One also has to distinguish between shortterm and long-term inequality, and between the notion of inequality increasing at the start of globalisation versus the idea of it being a feature of globalisation, Srinivasan said.

Perceptions of inequality We have witnessed “an attitudinal change” towards inequality, said Professor Kishore Mahbubani, Dean of the LKY School. As the 16 · Oct–Dec 2011 ·

US and Europe grapple with slowing economic growth and potential recession, “inequality is becoming a big theme in the West”, not just in developing countries, said Mr. Gideon Rachman, chief foreign affairs columnist of The Financial Times.

Rachman highlighted a perception that “inequality in the West comes from the rise of Asia due to downward pressures on wages of the unskilled”, as globalisation encouraged employers to scour the world for lower wages, hollowing developed Western economies.

China is their favourite whipping boy, he noted.

But many neglect to give China credit as her flood of cheap exports have lifted generations out of poverty by giving them access to goods and services hitherto unaffordable, he said, citing examples of Africans using cheap made-inChina hand phones to improve rural communications, evaluating global commodity prices to reduce the prohibitive costs of brokers, and facilitating mobile banking.

“People can tolerate rising inequality at the point where everybody was being a little bit better off,” Rachman said. It is when the wealth disparity widens to a point where people feel injustice that problems arise, to the extent of toppling long-serving governments, the panel agreed.

Even in prospering countries such as Singapore and Malaysia, resentment is rising, said Mr. Karim Raslan, a writer and consultant based in Indonesia and Malaysia. Aided by social media, “we see what the rich and powerful are doing and we are not happy. It (equality) is not just a product of societies going through a painful recession. You see it in periods of growth.”

As growth slows and economic troubles mount, “people are falling at the bottom” even in developing countries where there has been extraordinary growth, deepening inequality, said Dr. Judith Rodin, President of the Rockefeller Foundation, which supports the Asian Trends Monitoring programme at the School. Governments cannot merely blame inequality on outsourcing and lower costs that comes with globalisation, but should address structural imbalances, she said.

Structural limitations Indonesia, which underwent dramatic economic re-modelling after the 1997/98 Asian financial crisis, is a case in point, said Dr. Anies Baswedan, President of Paramadina University and one of Indonesia’s leading public intellectuals. Southeast Asia’s largest economy

managed to reduce poverty in the early postSuharto years of restructuring but witnessed a widening gap between rich and poor as easy credit created hot capital flows.

He identified the developmental gap between the urban centre and rural society as a structural problem impeding fair growth and wealth distribution, and recommended a review of the education system. “The economy is developed as an urban-rural model,” he said.

“Our education system is designed to supply urban life”, exposing rural societies to structural deficiencies, he added.

“There needs to be some justice in economic growth,” said Senator Ton Nu Thi Ninh, President, Founding Committee of Tri Viet University, Vietnam. People do not resent the wealthy as much as those who obtained wealth through corrupt means, she noted. Echoing the anger behind the Arab Spring and the frustrations underpinning the nascent Occupy movement, Raslan denounced leadership where socio-economic capital is unfairly used for personal economic gain.

One lesson from the West in dealing with inequality lies in punishment for graft, Rachman noted. “The US and Europe still have an expectation that those who are corrupt and break the law will end up in jail.” This recourse to the law provides an important valve for societal anger. In Asia, there is a perception not only of inequality but of having no legal recourse, he said.

The value of education “Inequality matters now compared to 40 years ago because we were more equal as we were all poor,” Baswedan said. “The challenge in the long run is to ensure everyone is moving up the ladder.’’

“Access to education is key” to mould people’s expectations of government services, he said, so that they expect more public service, and thus change is driven by demands from denizens, rather than dictated by the supply set by governments.

Inequality can in part be addressed by maintaining a “reasonable balance” between state and market forces to generate infrastructure for growth and thereby, services to provide for the fair distribution of wealth to alleviate poverty, said Professor Fu Jun, Executive Dean of Peking University School of Government.

China, the world’s third-largest economy, is grappling with the issue of achieving this balance and what it means for China and the world, he said.

Spectrum

Globalisation should be about the movement of three forms of capital - physical, human and social, Fu said. “In manufacturing, China has neglected human capital,” he said. “Labour is used instrumentally, neglecting aspects of human capital such as education.” And as peasants move to cities, workers lack the support they received in rural areas, which in turn “depresses the income” and exacerbates inequality, he said.

Governments must also improve taxation processes to be able to fund future improvements and achieve the balance between state and market, he said.

In Vietnam’s case, public services such as education and health fell behind amid development, Ton said. “Without clear rules of engagement and a division of roles between the state and market, the savage market wins all the time”, resulting in the worst outcome for the country’s public hospitals and public state-owned schools, she said. “When it comes to the provision of human services, a proper analysis is needed before opening up to market forces.”

In Indonesia, infrastructure building is largely focused on the western islands of the archipelago, Baswedan said. “When we talk about inequality, there is inequality in terms of income but also in terms of geography, which

sets us apart in ASEAN. It’s not just between urban or rural, educated or not educated, working or not working, but those who happen to live in the remote areas across the archipelago, so a different strategy must be adopted.”

Decentralisation in the past decade has both accelerated the provision of services and spread corruption in local institutions, he noted.

Eradicating corruption and enforcing the rule of law is key, he reiterated.

Health and equality On the matter of health and inequality, the findings of Asian Trends Monitoring provoked robust discussion from the panel.

While Vietnam and Malaysia share a similar life expectancy of 64 years, the latter’s rate of obesity has more than quadrupled (45 per cent versus 10 per cent for Vietnam) and it has the worst indicator for diabetes among the ASEAN countries, prompting Raslan to urge the government to intervene more by controlling subsidies for sugar production.

Vietnam also shines in terms of its low rate of maternal deaths, ATM data showed. Ton provided a heartening statistic, noting that coverage of health services is countrywide, resulting in about 95 per cent of births being attended by trained health workers. About 86 per cent of Vietnamese women make pre-natal

visits, while improved access to clean water, sanitation and road networks has helped reduce mortality rates, Ton said, underscoring the importance of infrastructure to public services.

“The doctors are able to come to your aid easily” as a result of good roads, reducing maternal deaths, she said.

Vietnam’s model is a shining light for other developing countries in the region, where the gap between rural and urban women in terms of access to skilled care during childbirth remains wide, particularly in Laos, Cambodia, the Philippines and Indonesia, according to ATM data.

Indonesians have also become dependent on one crop, rice, for protein, Baswedan noted, raising concerns over the potential for widening inequality when availability is threatened.

The impact of climate change should be considered when formulating policies that address inequalities, Rodin said.

In today’s world, there are challenges of inequality for both developing and developed countries, and in an era of globalisation, policies have a greater impact than decision makers may have originally calibrated.

Claire Leow (claireleow@nus.edu.sg) is senior manager for research and dissemination at the LKY School. · Oct–Dec 2011 · 17

Mr Gideon Rachman

Visiting Professor Kanti Bajpai

china, India and the shifting global order

by Uran Bolush

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n 27 September, the LKY School held a dialogue session on “Emerging Powers: Shifts in the Strategic Balance in the Asia Pacific”. The panellists included Mr. Gideon Rachman, chief foreign affairs columnist for the Financial Times, Dr Kanti Bajpai, Visiting Professor at the LKY School, and Dr Huang Jing, Visiting Professor and Director of the Centre on Asia and Globalisation at the LKY School. Two days later, Professor Bajpai and Professor Huang discussed ChinaIndia relations at the Kent Ridge Campus of the National University of Singapore.

Consequences of ascendency Speakers at the dialogue session agreed that emerging powers such as China and India will transform the global order from a unipolar system to a multi-polar one where no single nation has primacy of power in the international arena, and such a shift will bring both uncertainties as well as opportunities.

The growing economic power of China

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and India “will inevitably translate to military power” and both nations could be expected to become more ambitious international players and ultimately change “existing institutions, norms and international order”, predicted Bajpai. China, in particular, will become more assertive in its foreign policy, posing a challenge not only to the US but the latter’s strategic allies such as Japan, Australia and India, noted Rachman. In his recently released book entitled Zero-Sum Future: American Power in an Age of Anxiety, Rachman predicted that China is likely to overtake the US as the world’s superpower in the longer term, heightening rivalry between the two nations.

Huang said the original power balance in Asia built around U.S. dominance, US-Japan and US-Australia alliances, and strong economic relations had changed fundamentally with the rise of China and India, and countries will “have to realign their strategic policies and devise Plan B” since the decline of US power seemed inevitable.

Turning to the rivalry between China and India, Bajpai said both countries were already jostling for resources and influence in Asia, Europe and Latin America. He cited the example of India recently shortlisting European military aircraft over non-European models to upgrade its air force as a symbolic and strategic move aimed at “keeping a geopolitical footprint” in the region.

Contending theories of rising powers Bajpai applied the various schools of thought in International Relations and Indian strategic thinking to analyse the rise of the two powers and the nature of their rivalry.

Despite the Realist school’s contention that emerging powers are likely to collide with each other in their pursuit of power, nations possessing equal power “will also be prone to maintain cold peace by deterring each other”, said Bajpai. Furthermore, confidencebuilding measures, such as arms control pacts, can enable great powers to clarify each other’s

Images: Tharm Sook Wai

Visiting Professor Huang Jing

perceptions, reassure each other and avert “accidental wars”, he said.

According to the Liberal paradigm, nations sharing common democratic values and institutions and extensive trade relations have an interest to uphold peace and promote stability, said Bajpai, noting that China and India did not share many common institutions. However, Constructivist thinkers would argue that China and India view one another not as contenders, but as nations with a long history that have great potential to cooperate. This, according to Bajpai, is evident in India’s “internationalist outlook” in foreign policy, and China’s affirmation of its “peaceful rise”.

Bajpai outlined the three schools of Indian strategic thinking. The Nehruvian internationalist school recognises the presence of mutually binding forces between China and India, such as trade relations spanning centuries, a common history of being victims of Western imperialism, the spread of Buddhism from India to China, and the absence of war until the early 1960s. Both countries also view the US as “the destabilising force in the international order and globalisation”, he said. The Neoliberal camp in India believes that neither the US nor China is an enemy. What matters is growing trade, investment and transfer of technology.

Indeed, China’s economic success in the past several decades is something that India can learn from. Most importantly, the two nations stand to gain more by developing closer trade relations, Bajpai said. Differing

fundamentally, Hyperrealism posits that China is the main threat to India, and “unless India builds fast, and constructs security alliances with other nations, it will be hard to counter a growing China”, he said.

Divergences and similarities Huang analysed the sources of conflict and cooperation between China and India. There are lingering tensions over the border issue with neither willing to make a compromise, but each state understands that it is “a matter of management to ensure it does not escalate”, said Huang. Pointing to China’s “good track record” of solving territorial disputes, as its history with the former Soviet republics demonstrates, Huang was hopeful both powers would reach a solution eventually.

He said the 1962 Sino-Indian war had poisoned relations and though it has largely been forgotten, it remains a stain in their history that has at times been exploited by the rightwing media in India. China’s past political and material support to Pakistan in its war with India is yet another source of friction.

However, both powers are concerned about growing Islamic fundamentalism in Pakistan since 2001 and are trying to work in concert to “integrate Pakistan into regional mechanisms”, said Huang.

Huang said that though China and India are using trade to “integrate into the global economy to drive their own growth”, the fear is that they may become “revisionist” after building strong military forces and competitive economies.

Huang noted that the creation of an Asian market and Asian international currency has become more viable after the 2008 global financial crisis, and both India and China “will have no choice but to collaborate in this matter”. This has been driven by necessity, since both have a “fundamental economic problem and don’t have financial arrangements to sustain their current growth rate in the longer run,” Huang said.

One area that concerned Bajpai and Huang was the rise of nationalism among the Chinese and Indian middle classes.

They said that if the middle classes in both countries felt that their views on international issues were ignored and their countries’ greater role in world affairs was not acknowledged by other powers, or if economic growth faltered and their needs were not adequately addressed by their governments, this could create difficulties for Beijing and New Delhi. Bajpai said the rise in Indian nationalism towards China has been in part spurred by the liberal Indian media, which at times creates “imaginary and invented stories about China”. For instance, some Indian media reports tend to exaggerate India’s defeat and humiliation in the 1962 conflict, which the majority of Indians have little knowledge about.

However, the more two countries integrate, nationalism will be less of a force affecting bilateral relations, he said.

Uran Bolush is a first-year Master of Public Policy student at the LKY School. · Oct–Dec 2011 · 19

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A return to stability for the euro area

by Klaus Regling

Image: Lore & Guille @ flickr.com

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any have accused Europe of being slow to solve its sovereign debt crisis that began early last year in Greece. However, decisive steps were taken at the euro area summit held on 26 October 2011. Decisions were taken on a second rescue package for Greece, the recapitalisation of European banks and the maximisation of resources for the European Financial Stability Facility (EFSF).

In July, the euro area member states increased the firepower of the EFSF by raising its guarantee commitments to €780 billion and bringing its effective lending capacity up to €440 billion. The member states have also increased the scope of activity of the EFSF, authorising it to intervene in the primary and secondary bond markets; to provide loans to euro area member states that are not within a macroeconomic adjustment programme to allow them to recapitalise financial institutions; and to provide precautionary credit lines.

These measures aim to resolve the crisis at the current juncture. The creation of the EFSF and the decision to create a permanent rescue mechanism, the European Stability Mechanism, are important steps in solving this crisis and averting future ones. However, we also need to look at the bigger picture and at the longer-term actions that have been taken to create a better functioning euro area. Although often overlooked in favour of more headlinegrabbing crisis-resolution measures, many other decisions have been taken at the European level over the past 18 months. Progress is being made, though this is not often recognised by

the media and, by consequence, communicated sufficiently to the general public.

The cornerstone of the strategy to move towards closer integration within the euro area is enhanced economic governance. This has been put into place in order to prevent future crises taking place and providing the euro area with an “early warning system” and better tools for enforcing debt levels. The European Semester, which took place for the first time this year, allows the European Commission and member states to review the budgets of all member states on an ex-ante basis to avoid negative spillovers. The reform of the Stability and Growth Pact will mean a faster sanctions procedure and more focus on public debt.

The introduction of the Excessive Imbalances Procedure provides a formal framework for multilateral surveillance to tackle macroeconomic imbalances early. It also has the power to impose sanctions should a country repeatedly fail to reduce economic imbalances.

These measures are complemented by the “Euro Plus Pact”, an additional commitment to improve competitiveness, promote employment and reach debt sustainability. Several member states have already written the tough European fiscal rules into their constitutions.

Another important aspect has been the creation of a real pan-European supervisory architecture. The European Systemic Risk Board is in charge of monitoring macro prudential risks, a very significant feature for countries within a monetary union. If the ESRB had already been in place, it would have been able

to identify asset bubbles (such as the banking sector in Ireland or the property sector in Spain) and take action in time. Furthermore, three new supervisory boards were set up at the beginning of this year – European Banking Authority (EBA), European Insurance and Occupational Pensions Association (EIOPA) and the European Securities Markets Association (ESMA) – to oversee respectively the banking, insurance and securities markets in a pan-European way.

At the national level, too, difficult adjustment measures – both in terms of fiscal and structural reforms - have been voted on and implemented in many member states. The first positive results are becoming visible. Ireland’s current account balance, for example, has moved into surplus and its long-term interest rates have fallen by two-fifths.

Finding a solution to the euro zone debt crisis is an extremely difficult and complicated process; there are no ‘miracle’ solutions.

Although the crisis has not yet been fully resolved, an extraordinary amount of measures have been passed – within a very short space of time when you consider that the euro zone consists of 17 democracies - to improve the functioning of the European Monetary Union. This will put Europe back on the path to financial stability and sustainable growth.

Europe’s monetary union will function better in the future than it did in the past.

Klaus Regling is CEO of the European Financial Stability Facility (EFSF). · Oct–Dec 2011 · 21

the u.S. unemployment crisis

by Arvid Lukauskas and Francisco L. Rivera-Batiz Image: Truthout.org @ flickr.com

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he U.S. unemployment rate was 4.4 per cent in mid-2007, just shy of its average of 4.9 percent over the previous decade. By October 2009, it had reached 10.1 per cent and, though it has declined somewhat, it remains stubbornly over 9 per cent (it stands currently at 9.1 per cent). The U.S. had experienced “jobless recoveries” after the 1990-91 and 2001 recessions, and unemployment had spiked to very high levels during some post-war recessions (up to 10.8 per cent in 1982), but it had not increased so quickly or stayed so high for so very long. What has caused this unemployment crisis and what are its implications?

The deepest financial crisis the country has undergone since the 1930s has, of course, played a critical role. As economists Carmen Reinhart and Kenneth Rogoff argue in their book, This Time is Different: Eight Centuries of Financial Folly, the U.S financial crisis followed the script of previous deep crises, involving a period of intense financial deregulation, massive capital inflows accompanied by deteriorating current account balances, a run-up in housing and equity prices, and the growth of public debt. This mix of unsustainable economic trends and risky financial innovations (e.g. sub-prime mortgages and credit default swaps) is the proximate cause of the output contraction and sharply rising unemployment since 2007. The financial crisis, however, cannot explain why the unemployment rate has not dropped significantly after peaking in 2009.

Why then does the country seem to be unable to lower unemployment? One explanation is an unusual crisis of confidence among both consumers and investors. The Conference Board’s Consumer

22 · Oct–Dec 2011 ·

Confidence Index (CCI) measures consumer optimism about the future state of the economy. The index plunged from a value of 112 in July 2007 to a low of 38.6 in December 2008. Although initially it recovered slightly, it soon declined again, reaching 44.5 by August 2011. This signals a strong and persistent crisis of confidence by consumers that leads them to spend less, a crucial factor sustaining the lack of job creation. For their part, Wall Street and Main Street have been slow to renew investment spending in part due to a lack of confidence. The banking industry has been cautious in its lending and holds $1.6 trillion in excess cash reserves deposited at the Federal Reserve Bank (obtained largely through the central bank’s two rounds of quantitative-easing policies).

Companies also hold billions of dollars in accumulating working capital, indicating an unwillingness to engage in job creation until business conditions improve.

Of course, the severity of the financial debacle itself may explain the confidence crisis and the threat of a “double-dip recession.” The current European economic situation has added another major stumbling block on the way to recovery. Nonetheless, the deep and persistent decline in indicators such as the CCI hints that other factors are at play. One such factor may be the tense political climate that has characterised policymaking in the U.S. during and after the financial crisis. All recent major economic policy measures, whether initiated by Congress or the Executive, have generated enormous controversy, including Bush’s Troubled Asset Relief Program (TARP) in 2008, Obama’s Stimulus Package in 2009, and the largely unsuccessful, repeated efforts to

Focus

reduce the budget deficit culminating in the bitter battle over raising the debt limit. The political gridlock has heightened uncertainty about the future prospects for the economy, which contributes to a lack of spending and investment, ultimately resulting in a poor record of job creation.

Another major factor explaining the unemployment crisis is that the U.S. is suffering from structural forces that have been developing over many years but are now being made more transparent in the aftermath of the financial crisis. Structural unemployment refers to the existence of mismatches between labour demand and supply. Such mismatches can occur because of local labour shortages or because workers are unwilling to take vacant jobs due to their working conditions or low remuneration. They may also be due to an incompatibility between the skills the employer requires and those possessed by available workers.

Labour market mismatches are generally present when employers report difficulties in filling vacancies or unemployment rates vary widely among various categories of workers, whether by location, race/ethnicity, occupation, industry, or education level. In an extensive study of U.S. employers in the first quarter of 2011, the firm ManpowerGroup found that 52 per cent of those surveyed indicated experiencing difficulty filling job vacancies, up from 14 per cent during the same time period in 2010.

The hardest jobs to fill involved highly skilled workers, including professional and technical workers, as well as low-skilled workers, including labourers in agriculture. This pattern, in which labour demand is strong for job seekers at the extremes of the educational distribution (very low and very high) and weak for those at the middle, is termed “polarisation of the labour market” and has been observed by several economists recently, including David Autor, Leonard Katz and Richard Murnane.

Finally, the latest data reveals pronounced regional differences in unemployment, with some areas actually facing labour shortages. The states with the highest unemployment rates in September 2011 were Nevada (13.4 per cent), California (11.9 per cent) and Michigan (11.1 per cent); those with the lowest were North Dakota (3.5 per cent), Nebraska (4.2 per cent), and South Dakota (4.6 per cent).

The U.S. unemployment crisis has affected some groups more than others. The youth (16 to 24 years of age) unemployment rate was 18.1 per cent in July 2011, twice the rate for the overall population (and up from 10.6 per cent in 2007). Among African-American youth, the unemployment rate was 31 per cent in July 2011, three times the national average; for Hispanics, it was 20.1 per cent. The disproportionate unemployment burden suffered by youth is widely observed in other countries affected by the recession. In Spain and Ireland, the youth unemployment rate was 43.7 per cent and 27.9 per cent, respectively, in 2010, compared to 18.2 per cent and 8.9 per cent in 2007. This trend helps to explain the rise of popular protests spearheaded by youth movements from Wall Street to the Puerta del Sol in Madrid.

What can be done? The fact that the increase in unemployment is partly due to a macroeconomic shock means that aggregate demand

policies, such as monetary and fiscal policies, should be part of the answer. Although President Obama recently proposed a jobs plan that relies on fiscal stimulus to spur employment, most of its provisions face fierce Republican opposition and have little chance of being enacted.

In the face of strong criticism, the Federal Reserve is moving towards a third round of expansionary monetary policy in order to stimulate production, perhaps in an effort to compensate for the lack of fiscal stimulus. Nonetheless, insofar as the effectiveness of these policies depends on increased consumer and business confidence, they may have a limited short-run impact unless other fundamental problems, such as the political impasse in Washington and euro zone economic crisis, are resolved.

Policies that deal with the structural component of unemployment are also necessary. To resolve the crucial skills mismatch, a greater proportion of the population, especially among the youth, must increase its educational attainment and complete training in occupations that are in high demand. In the 1980s, the U.S. workforce had the highest educational attainment in the world, but a number of European and East Asian countries now surpass it. Moreover, the U.S. has had lower rates of enrolment in precisely those careers in high demand, pushing many firms – such as those in the IT sector — to fill their labour needs by employing foreign workers.

In addition to investments in higher education, alternative mechanisms of managing the transition from school to work are needed.

Under the Clinton Administration, the U.S. implemented a wide range of policies stimulating linkages between educational institutions and both the public and private sectors. Through apprenticeships, career high schools, and technical community colleges, the goal was to reduce labour market mismatches by providing students with the skills sets demanded by employers. Many of these policies were abandoned despite having been proven successful.

In time the U.S. economy will grow again and the pick-up in economic activity will generate employment. The increase in demand for labour alone is unlikely to bring unemployment back down to previous levels, however. A portion of U.S. unemployment is due to structural factors and must be addressed through policies that correct labour market misalignments. Countries with educational systems that are integrated with the private sector, such as Germany, have had relatively low overall and youth unemployment rates, even during sharp economic downturns. In the past, government policies aimed at creating similar linkages in the U.S. also showed promise. Perhaps it is time to reinvest in them.

At Columbia University, Arvid Lukauskas (ajl7@columbia.edu) specialises in the political economy of finance and trade policy, while Francisco L. Rivera-Batiz (flr9@columbia.edu) is Professor of Economics and Education at Teachers College, Columbia’s graduate school of education.

“All recent major economic policy measures, whether initiated by Congress or the Executive, have generated enormous controversy, including Bush’s Troubled Asset Relief Program (TARP) in 2008, Obama’s Stimulus Package in 2009, and the largely unsuccessful, repeated efforts to reduce the budget deficit culminating in the bitter battle over raising the debt limit. The political gridlock has heightened uncertainty about the future prospects for the economy, which contributes to a lack of spending and investment, ultimately resulting in a poor record of job creation.” · Oct–Dec 2011 · 23

not much china can do for the world economy this time

China’s less than rosy economic outlook puts limits on its ability to prop up the world economy.

Image: melaniedornier.photoshelter.com @ flickr.com

by Yang Mu

I

n the 2008-9 global financial crises China did much to help the world economy.

China’s GDP remained relatively healthier than its other Asian counterparts in the first quarter of 2009, growing 6.1 per cent compared to Singapore, Hong Kong and Japan, which shrank 14.6 per cent, 4.3 per cent and 4 per cent, respectively.

Unlike other Asian countries which are heavily dependent on their exports, China’s domestic demand (investment and consumption) is the main driver of its economy. The Chinese government introduced a series of measures to cool down its overheated economy in the first half of 2008. The stimulus package of RMB 4 trillion unveiled by Beijing only six weeks after the Lehman Brothers collapse was a continuation of the central government’s practice to peg China’s economic growth to the level of fixed investment.

In recent months, growth of exports to the troubled euro zone and the US has suffered a drop. For example, Chinese sales to the EU fell 7.5 per cent in September. Recent news from the Chinese Autumn Export Commodity Fair showed that orders from the US and EU decreased 10 to 20 per cent in the coming season. China’s foreign currency reserves in September fell US$60.8 billion, the first time in the past 16 months. Investment and advisory firm Blackstone and some Western companies started to sell their assets in China.

This has echoes of what happened in the fourth quarter of 2008.

Some sources said the Chinese government would consider an emergency plan if a doubledip recession happened in Western countries.

However, this time round China is a lame duck. First, the country is facing the effects of its own 4 trillion yuan stimulus: the inflation rate was 6.1 per cent in September, housing prices were still at record highs in most cities,

24 · Oct–Dec 2011 ·

local governments had debt of 10 trillion yuan, and the number of social protests increased to 187,000 in 2010 owing to land disputes or increasing income disparity. The highspeed railway, one of the stars of the stimulus package, is riddled with safety problems and financing. Around 80 per cent of its investment projects have been halted or postponed.

Second, China’s economy may stagnate.

Economic expansion slowed to 9.1 per cent in the third quarter from 9.7 per cent in the first quarter of this year. Thirty years of economic development achieved with the aid of cheap labour, capital and land cannot be repeated in the future. China’s economy is still in the midst of urbanisation, and needs to be driven by investment. However, that investment is increasingly less and less efficient in generating employment, income and wealth. When investment is decided by the government but not the market, this could lead to a vicious cycle: more investment creates more bad loans as shown by the Japanese Disease in the 1990s.

Third, after suffering a credit squeeze for two years and a cooling property market, the financing amount from China’s shadow banking has increased to10 trillion yuan (about 6 trillion in credit products and 4 trillion in underground lending), almost 12-15 per cent of China’s loan amount in the market. About RMB400 billion yuan deposited in China’s four largest banks were withdrawn in the last few months. This means that China’s central bank faces a systematic risk which did not exist before.

Owing to the credit crunch, one-fifth of Wenzhou’s 360,000 small- and medium- sized businesses in the south of China have gone bankrupt or stopped operations. A similar situation applies to the Ordos, in the north of China.

The cash flow problems and defaulting could spread from manufacturing to the property

industry, and even to banking in the near future.

Although this does not signal that China will have a hard landing, we cannot expect China to save the world again. With East Asia being one of the few bright spots in the turbulent world economy, China could find support from its neighbouring countries. Trade between China and ASEAN is still expanding steadily at an average annual rate of around 20 per cent. Total trade volumes are expected to rise to US$500 billion in 2013, two years earlier than planned. The Asia-Pacific’s middle classes will grow faster than any other area in the world, with Asia’s share of the world’s middle class estimated to jump from 28 per cent in 2009 to 54 per cent by 2020.

South Korea and Japan agreed on 19 October 2011 while South Korea and China agreed on 26 October to expand their currency swap arrangement and revive efforts to reach a free trade pact.

The three countries have recognised that a bigger pool could boost their ability to survive. In time to come, this kind of cooperation could be extended to the whole of East Asia.

The richer EU is turning to poorer East Asia for help. It is clear that China wants to be a responsible global citizen, but it prefers to do so in a safer way such as through a multilateral route. Japan has purchased around 20 per cent of the debt issued by the European Financial Stability Facility (EFSF). China, South Korea, Hong Kong, Taiwan, Singapore, Thailand, and other East Asia countries could also offer important support (Asia excluding Japan has bought another 20 per cent of EFSF debt). While payback of the money may be in question, what is certain is that an East Asia Group is emerging.

Yang Mu (eaiym@nus.edu.sg) is a Senior Research Scholar at the East Asian Institute, National University of Singapore.

The West has a stake in China’s stability amid the euro zone crisis.

How should China respond to the demands being made on it today?

By continuing to behave responsibly, says John Riady.

H

ow quickly times change. It was only in 2005 that the then-US Deputy Secretary of State Robert Zoellick urged China to become a “responsible stakeholder” in the international system. Six years on, the developed world has become a stakeholder in the Chinese system.

The concept of a responsible stakeholder, as fleshed out by scholars and commentators, is an interesting one. It entails a country interpreting its national interest in such a way that it helps to sustain and maintain the international system. In China’s case, some scholars suggested, domestic political reforms were necessary for it to undertake this interpretation.

Critics of that position disagreed with it for two reasons. The first was that the international system to which China was being asked to subscribe to was not of its making. That system had emerged after World War II and had been shaped largely by the United States. The international system that existed at the beginning of the 21st century was the product of a Cold War that the West had won. Although China had contributed to that victory through its closeness to the United States following the détente of the 1970s, Beijing was not the principal architect

o chInA, SAVE thE WoRlD! of the system. Why, then, should it uphold that system automatically?

This question led to the second reason.

Those asking China to liberalise its political system in order to become a responsible international stakeholder had themselves not done anything of the kind during or after the Cold War. Why should the Chinese do so?

Certainly, Chinese politics would evolve – but from within. China could not, and would not, change as a condition for joining the international system.

The debate over China’s role took off and then fizzled out. Realities took over.

It is unlikely that that debate will be revisited seriously any time soon. This is because the debt crisis in the euro zone and America’s budget woes have turned the spotlight on what China could choose to do for the developed world, not what it would have to do to be given a place at the high table of power and influence. The tables have been turned.

This was apparent at the World Economic Forum’s Annual Meeting of the New Champions, held in Dalian recently. In his keynote speech, Chinese Premier Wen Jiabao diplomatically gave the assurance that “China believes in Europe’s ability to

overcome the difficulties”; he went a step further and declared that it was willing to invest more in Europe.

However, he warned in no uncertain terms that “countries must first put their own house in order”. That was not the tone of an importunate country seeking entry to the international system on terms determined by the leaders of the system. It was the tone of a confident national leader speaking of an international system in which his country was at the heart of the world market. And as my grandfather would say, “No money no talk”. Mr Wen’s call to Europe – and, by extension, the West – to put its economic house in order was an ironic throwback to erstwhile calls asking China to put its political house in order.

The West now has a stake in China’s stability, which gives it the ability to make a difference for the better in world affairs.

How should China respond to the demands being made on it today?

The short answer is: by continuing to behave responsibly.

The best example of responsible behaviour is China’s own record. It behaved responsibly when it eschewed short-term

“China should continue its integration with global structures that promote peace, security and stability. Indeed, it is already a responsible stakeholder, as seen in its willingness and ability to contribute to the creation of international public goods, not least growth, non-proliferation, and regional security.” · Oct–Dec 2011 · 25

Image: James Lee

measures by refusing to devalue its currency during the Asian Economic Crisis. Any such move by a leading exporter would have contributed to competitive devaluation among Asian countries and deepened the region’s economic misery.

Beijing’s sacrifice did not go unnoticed.

At a time when Western observers were lecturing Asian countries, including Indonesia, on the faults and vices in their economic systems, China quietly helped those countries cope with the crisis. Its stance was reciprocated when a recovering Asia turned towards Beijing and embraced its charm offensive.

China had played its hand correctly in the long term.

Today, China can help stabilise the international system by keeping its markets open to imports and by encouraging domestic consumption so as to follow a more sustainable developmental model. Although the Chinese market cannot replace either the American or the European market – and certainly not 26 · Oct–Dec 2011 ·

both together – for most exporters, China, as the second-largest economy on earth, can help them absorb some of the slack in demand in Western markets till the global economy recovers.

At a broader level, China should continue its integration with global structures that promote peace, security and stability. Indeed, it is already a responsible stakeholder, as seen in its willingness and ability to contribute to the creation of international public goods, not least growth, non-proliferation, and regional security. It can improve its human rights situation and should do so, not because of foreign pressure but because the Chinese people deserve a better human rights environment.

All in all, China’s contribution to the world order is indispensable at a time of flux. It was not long ago that people spoke of a Washington Consensus on free markets and democracy as the panacea for the world’s economic ills. Rampant neo-liberalism undermined that so-called consensus in

the developing world; the developed world appears to be headed in that direction.

Democracy does not figure prominently in the Beijing Consensus, which is an alternative plan for the developing world that emphasises the guiding hand of the state.

This consensus is not the only one on offer because democracy is an ingredient of a country’s long-term economic success.

However, the world that emerges from the euro zone debt crisis and America’s budget cuts would do well not to reject the Beijing Consensus merely because it is not a Western product. Just as the China Price changed world markets once, China Inc. will transform the verities of international relations in the years to come.

We all have a stake in China’s ability to give the international system a new lease of life.

John Riady is Editor-At-Large for the Jakarta Globe and lecturer at the Pelita Harapan University School of Law, Indonesia.

lESSonS FoR ASIA FRoM thE GlobAl FInAncIAl cRISIS

by Joergen Oerstroem Moeller

Image: truthout.org @ flickr.com

· Oct–Dec 2011 · 27

Focus

T

he global financial crisis exacerbates the ongoing shift in global economic and financial power from the West to Asia. It does not change the prediction that the Asian economies will gradually take over from the West, but tells another and perhaps more fundamental story. The economic model invented and refined by the West and used by the rest of the world does not function anymore. The so-called Washington Consensus, the plinth of economic globalisation, has effectively gone with the wind.

Asia has one trump card: it sits on the world’s savings and will continue to do so for some time. This is likely to trigger a shift in policymaking, and concomitantly, global investment flows to serve Asia’s interests over that of the West. On the flip side, there is a lack of sufficiently strong financial institutions in Asia. The world’s financial powerhouses are still to be found in Europe and the United States.

Asian banks also need to build up strong reserves and reduce their exposure to the contagion from the West.

The global financial crisis is an opportune moment for Asia to start thinking ahead about the kind of international monetary system it would like to lead and fashion. Asia needs to step up and assume more responsibility in the global system, but it is not enough just to seek influence in international institutions. More fundamentally, Asia needs to decide what it wants to do with its growing influence.

To do this, Asia needs to distil the correct lessons from the current economic crisis.

First, any durable financial system must be part of the productive. Its function is basically simple: to channel savings into investment. To serve the economy properly, the system needs to be able to screen investment projects to determine which ones are profitable and which ones to skip. The more complicated and sophisticated the financial system becomes, the more likely it is that the basic function fades away to be replaced by self-serving operations that shuffle savings around financial instruments instead of channelling them into investments.

The Asian financial crisis of 1997/98, the IT bubble of 2000 and the global financial crisis of 2008 have in common one shortcoming: the financial system did not do its homework. These could all be foreseen but were not, because the lure of short-term profit overshadowed long-term prudence. What were the highly paid rating agencies doing?

Research and development is vital for the dynamism of an economy, but it is also risky. As seen in the United States, venture capital is necessary, but a right balance has to be struck. It is not a good idea to jump into whatever R&D project is put on the table. A good financial system rewards bold entrepreneurs and punishes foolhardy ones.

Asia is going to be the home of the major capital-seeking

multinational companies (MNCs) of the future. The financial system must therefore provide the capital needed for investment and overseas expansion, which calls for an ability to judge overseas operations and understand what is going on in the world.

Second, corporate governance is defined by the strongest economies, so in due course it will be up to Asia, Asian MNCs and Asian banks to sketch a new model for corporate governance. Thought must be given to this now, and if Asia acts wisely, it will achieve a win-win situation whereby governments, corporations and society interact – contributing to the wider development of society – instead of the quest for short-term profit which has only encouraged irresponsible behaviour.

Politically, Asia must play its cards right to maximise its influence. Many observers ponder over the likelihood of China coming to the rescue of the euro zone. China will decide whether to do so according to its own interests, not to save the euro zone per se. From a Chinese perspective, this may be the price worth paying to avoid the U.S. dollar being the only major international currency and to stop China from being boxed in to acquire US treasury bonds as the only financial instrument available.

The three global institutions – the International Monetary Fund, World Bank and World Trade Organisation – are all controlled by the West, with an American at the helm of the World Bank and Frenchmen sitting atop the two other institutions. Many view this as an anomaly, but it should be remembered that Europe and the United States still account for almost half of the global economy. The financial expertise, regardless of the flaws demonstrated when the global financial crisis broke, is still predominantly found there. Over many decades they have amassed tremendous experience in fielding candidates, getting them elected and thereafter running these organisations.

Eventually this will change. How fast it does rests on two issues.

First, how good Asia will be in finding and putting qualified candidates on the table to garner global support. Europe and the United States did not just put their people into the director’s chair, their candidates were elected. Second, will Asia be able to formulate a coherent policy about what it wants to do with these institutions? If Asia is content to be a bit player, it is insignificant whether the top person is Asian, European, or American. But Asia is now at an important crossroad: if it wants to transform the global system, it needs political will and courage to come up with a new paradigm and set of rules to organise the world financial system.

Joergen Oerstroem Moeller is Visiting Senior Research Fellow at the Institute of Southeast Asian Studies. He is also Adjunct Professor at Singapore Management University and Copenhagen Business School.

“The economic model invented and refined by the West and used by the rest of the world does not function anymore. The so-called Washington Consensus, the plinth of economic globalisation, has effectively gone with the wind.”

28 · Oct–Dec 2011 ·

lIVInG In A WoRlD RISK SocIEty PoSt-3/11

Risk transcends geographies.

Japan’s triple blow of earthquake, tsunami and nuclear crisis drew a mixture of cosmopolitan empathy and scare-politics.

How to model and manage such risks properly will pose significant long-term challenges for public policy and the discourse of International Relations.

by Heng Yee Kuang

Image: Paul Lachine

· Oct–Dec 2011 · 29

Focus

T

he 1986 Chernobyl nuclear disaster first spurred German sociologist Ulrich Beck to observe that many Western countries had become “Risk Societies” obsessed with managing all manner of possible risks that could harm human health and security. Exactly 25 years on, the nature of Singapore’s risksensitive responses to the stricken Fukushima plant in Japan highlight the extent to which Beck’s observations are not limited to Western European states. After all, risk in the World Risk Society knows no geographical boundaries. Japan’s triple whammy of earthquake, tsunami and nuclear crisis, in the age of 24/7 global media coverage, generated two particularly identifiable responses that Beck suggests accompanies events of such global risk.

The world initially experienced cosmopolitan empathy from afar as the shared experience of this human crisis and awareness of such risks helped overcome differences between “us” and “them”. A bit more belatedly, however, we have also seen glimpses of the dark side, of the politics of fear as the global risks associated with the tsunami started to spread around the world. What is now known as 3/11 only highlights the central importance of managing risk in public policy and International Relations.

Beginning with empathy, Singapore is an excellent example with its outpouring of goodwill and donations totalling more than 9 million Singapore dollars thus far. What Beck called the “globalisation of emotions” occurred when Singaporeans’ everyday existence became part of an integrated media world dominated by repeated footage of the massive waves crashing into fishing ports. We experienced, sometimes even in real time, the simultaneity of horrors that occurred thousands of miles away. We feel as if we somehow ‘connect’ with towns such as Minami Soma or Kesennuma, and empathise with the “Fukushima 50” nuclear workers. This politics of empathy translated into frenetic “disaster diplomacy” by Japan’s friends and foes alike. Within 24 hours, Singapore sent a rescue team from the Singapore Civil Defence Force’s Urban Search and Rescue (USAR) contingent comprising five search specialists and five search dogs. Within days, the U.S. aircraft carrier USS Ronald Reagan appeared off Japan’s northeast coast, airlifting aid to flattened towns.

China, Tokyo’s erstwhile rival, sent a 15-man rescue team and emergency aid. Such empathy is usually reciprocal. Japan, for its part, had sent aid and rescue teams to help with China’s Szechuan province earthquake in 2008, even deploying a destroyer to southern China for the

30 · Oct–Dec 2011 ·

relief mission, the first visit by a Japanese warship since World War 2.

The agents of globalisation, especially social network sites and global media, have helped foster the politics of empathy. They have also fuelled simultaneously the politics of fear, the evil twin of empathy. While Singaporeans rushed to help Japan’s survivors, some also avoided their favourite Japanese restaurants, for fear of food contaminated by radiation. Countries around the world banned Japanese food imports due to such risks, while China and South Korea urged Tokyo to consult them before venting radiation from the stricken reactors. To put things in perspective, it was reported that one had to consume several hundred kilograms of radiated vegetables to be exposed to the equivalent of one chest X-ray. For those opting for the “precautionary principle”– words acting to avoid serious or irreversible potential harm, despite a lack of scientific certainty as to the likelihood, magnitude, or causation of that harm – many displayed the classic response to an uncertain, invisible, involuntary risk. The continuing uncertainty over radiation risks means that the overriding question here is: whose advice should we follow? The views of one “expert” are contradicted by another the next day. This is typical of a Risk Society. Veteran Japanese journalist Shuntaro Torigoe even suggested that then-Prime Minister Naoto Kan eat Fukushima-grown spinach on TV to attest to its safety, echoing a similar stunt that Kan pulled as health minister when he ate daikon on TV during a food poisoning outbreak in 1996. This eerily mirrors the oft-cited incident in Britain during the “mad cow” disease crisis in the 1990s, when then-Agriculture Minister John Gummer posed for a shot with his daughter, with both munching burgers on TV to prove that British beef was inherently “safe”.

For a country known for its meticulous preparations for disasters, Japan’s experience has highlighted yet again the difficulties of risk assessment and risk management. Nuclear and Industrial Safety Agency spokesman Hidehiko Nishiyama said the tsunami was “beyond the prediction” of risks modelled for the Fukushima plant. The reactors were designed to withstand an earthquake of magnitude 7.9, yet the 3/11 earthquake measured a whopping 9.0. The plant was also designed to survive a 5.7-metre high tsunami but the Tohoku wave height peaked at 14 metres.

It now transpires that Tokyo Electric Power Company (Tepco), which operated the plant, had underestimated the risks. As Kobe University

professor emeritus Katsuhiko Ishibashi noted, Tepco and the regulators had not assessed risk factors more carefully, and “it is critical to be prepared for what might happen even if the possibilities are small”. As a result, other electric companies, such as Hokkaido Electric, have now revised their risk scenarios and tsunami simulations. Clearly, science is increasingly being used to support what are essentially public policy decisions, from new technologies like genetically modified food to nuclear energy infrastructure, infectious diseases and climate change. Yet the very uncertainty of what scientists actually know makes it very difficult for policymakers to decide. To its credit, Singapore has taken a proactive approach to improve modelling of future risk scenarios by establishing a Horizon Scanning Centre, under the auspices of the National Security Coordination Secretariat. Indeed, the UK’s Department for Environment, Food and Rural Affairs states that by establishing a process of acquiring, analysing and communicating information, horizon scanning seeks to improve the robustness of an organisation’s policies and evidence base.

While the spectre of global risks in our interconnected world increasingly looms large in our consciousness, we can be sure the world will experience the twin emotions of empathy and fear much more intensely and frequently than before. There is an ever-growing plateful of global risks the world faces today – from disease pandemics; climate change; terrorism; water and food scarcity; to nuclear power and financial meltdown. The politics of empathy with “distant” victims of such risks can help bring the world closer together to cooperatively manage these shared risks, a loose form of what Beck called “cosmopolitan solidarity”. However, once the politics of fear takes root in society, it can quickly lead to absurd situations where politicians and their offspring consume suspect foods on TV to show they are “safe”. The danger is politicians reinventing themselves to become simply the managers of our worst fears in a World Risk Society, as a 2004 BBC documentary “The Power of Nightmares” once forewarned. What the world needs is visions of hope and sound policymaking based on rigorous assessments of risk, not more cynical manipulation.

Heng Yee Kuang (spphyk@nus.edu.sg) is Associate Professor of International Relations at the LKY School. He has held faculty positions at the University of St Andrews, UK, and Trinity College Dublin, Ireland.

DIMInIShED lEADERShIP In cRISIS coMMunIcAtIonS

by Viswa Sadasivan

Image: Cheng Puay Koon

· Oct–Dec 2011 · 31

The mishandling of crises around the world boils down to a crisis of leadership, and those in positions of responsibility should demonstrate a higher level of integrity, transparency, empathy and compassion.

Images: Leonard John Matthews @ flickr.com

Listen to me when I'm talking to you.

T

he year was 1982. Americans, and indeed the world, witnessed what has since been hailed by corporate heads and scholars alike as the finest example of crisis management.

The company was Johnson & Johnson and the Chairman and CEO was James Burke. The incident: seven people died from consuming extra-strength Tylenol tablets laced with cyanide. Before the crisis, Tylenol was the most successful over-the-counter product in the United States, with over 100 million customers. The successful handling of the crisis resulted in the re-establishment of the Tylenol brand name, in barely a few months, as one of the most trusted over-the-counter consumer products in America. Burke set the tone from the start by making absolutely clear his strategy which was first, “how do we protect the people?” and second “how do we save this product?”

The company’s first actions were to immediately alert consumers across the nation, via the media, not to consume any type of Tylenol product. Even though there was little chance of finding other capsules laced with cyanide, Burke ordered a nationwide recall of the tablets which cost the company about a hundred million dollars. This he did, despite resistance from the board and other members of the top management. Burke saw the value of establishing the moral high ground early.

His crisis response strategy focused on gaining “forgiveness” and “sympathy”, which allowed the company to redeem itself in the eyes of the various publics and create acceptance. This not only allowed Johnson & Johnson to deal with the Tylenol crisis in 1982, but also innoculate the company against fallouts from subsequent crises by strengthening trust.

Burke used the company’s credo crafted by the founder of Johnson & Johnson in 1943 as the moral compass for his campaign. In particular, he cited this paragraph, “…We believe our first responsibility is to doctors, nurses and patients, to mothers and fathers, and to all others who use our products and services …” This spelt accountability first to the users and then to shareholders – exactly what the public wanted and needed to hear. It is not that Burke was commercially naïve. He knew that shareholder value would be safeguarded only if public trust was re-established and enhanced. In other words, sustainable market share comes from strong, positive mindshare.

Two instincts underscore leadership in crisis communication: first, accountability to the public and users of your products/services; and second, commitment to doing the right thing.

32 · Oct–Dec 2011 ·

These values need to be clearly and categorically articulated as strategy guidance to the troops by the head of the organisation, and within minutes of declaring the crisis. Expecting the task to be done by others is super-delegation and an abdication of responsibility.

Sadly, we continue not to learn from history. Since James Burke’s remarkable management of the Tylenol crisis in 1982, we have witnessed too many crises mishandled because of poor or absent leadership.

Barely seven years later, the world witnessed in horror the devastation of one of the most biologically rich places in the world, Prince William Sound in Alaska, USA. Exxon Valdez, a tanker owned by Exxon Corporation ran aground, spilling almost 10 million gallons of crude oil. An official commented: “While viewers (of TV) watched birds and otters die in a river of thick black oil, Exxon was silent.”

The company was inept in dealing with the crisis operationally. For example, it took officials more than 10 hours to deploy booms to contain the spill!

But the primary responsibility for the grossly mishandled crisis must lie with the Chairman and CEO, Lawrence Rawl, who appears to have gone out of his way to do everything wrong. There was absolutely no sense of accountability and he was clearly not committed to doing the right thing. He took six days to make the first statement to the media and when asked to explain the delay, he said that as CEO, he had more important things to do! He visited the site only about three weeks after the incident.

Primarily due to the poor handling of the crisis, Exxon not only ended up paying a whopping US$8 billion (in 1989 value), but also seriously compromised public trust and likeability. Public disgust for the CEO shaped the way Exxon was viewed. It is instructive that 10 years later, in a nationwide survey conducted by PR firm Porter Novelli, 54 per cent of respondents said they were unlikely to buy Exxon products.

More recently, the world witnessed what appears to be an uncanny re-run of the Exxon Valdez crisis, not just in form but also in the sheer lack of leadership. The BP oil spill of April 2010 killed 11 men working on the platform and injured 17 others, and caused extensive damage to marine and wildlife habitats and to the Gulf of Mexico’s fishing and tourism industries.

Yet more than all this, what incurred public wrath globally was CEO Tony Hayward’s uncanny knack for saying the most damning things.

In fact, one wonders if BP would have been better off if Hayward kept

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away from the media, as Exxon’s Rawl did 21 years earlier. Apart from saying he wanted his life back, and justifying going sailing in the heat of the crisis, Hayward said two things that are unforgivable in a crisis of this magnitude.

At the onset of the crisis he said, “I think the environmental impact of this disaster is likely to have been very, very modest.” This not only created suspicion that BP was attempting to conceal the extent of the damage, but was also highly insulting to those affected directly and emotionally. Secondly, he said, “…the responsibility for safety on the drilling rig is Transocean. It is their rig, their equipment, their people, their systems, their safety processes….” Regardless of technicalities, moral responsibility has a premium in crisis management, and when delivered convincingly and responsibly, dividends will come.

This point was well understood by the former CEO of Singapore Airlines, Dr Cheong Choong Kong, when he chaired the first media conference after flight SQ006 crashed in Taipei in October 2000, killing 83 passengers and crew members. Learning from the mistakes in handling the Silkair MI 185 crash three years earlier, Dr Cheong saw the need to gain the moral high ground early.

In his opening statement, he said categorically that it was their aircraft and their pilots and that SIA took responsibility. Such a statement was unprecedented in airline crash history, and explains why it had a profound impact on the public and the media that, in turn, took the pressure off SIA in the weeks following the crash. Clearly, Dr Cheong had taken legal advice to ensure his statement pertained to moral responsibility not amounting to culpability. This, and other trust-building actions

by SIA’s senior management during the crisis, resulted in the company rising many rungs in public esteem.

While these are all high-visibility crises involving commercial organisations, the lessons are equally relevant to public sector organisations. In fact, one could argue that they are even more pertinent in the public sector because there are no shareholder issues, and the expectation of accountability is higher.

The key lessons are that: • technical rectifications are necessary but not sufficient – Standard Operating Procedures (SOPs) help hold the situation in a crisis, but they seldom provide the solution. Increasingly, they are nothing more than a hygiene factor.

• accurate assessment and appreciation of ground sentiment is

critical – Organisations should evaluate this from the ground’s point of view (no matter how illogical or irrational) and avoid defensive rationalisation of actions.

• public engagement, directly or through the media, should focus on moral suasion – This has to be constant and consistent in conveying a well-considered message. How you say it is as important as what you say.

• accountability is a key expectation – The leader has to stand up to the task and without delay to demonstrate honesty, transparency, empathy, and authenticity with a sense of occasion. You don’t need to tell the whole truth, but do not lie.

• being seen to be doing the right thing is as important as doing the right thing – Early-mover advantage in building trust is invaluable in right-conditioning the ground to give you the benefit of the doubt during crisis “aftershocks”.

In conclusion, organisations have to gradually gain the wherewithal to operate in the “faith” paradigm – where questions of accountability, transparency and values are paramount. There needs to be a clear demonstration of commitment to doing the right thing that will build faith in the organisation and pave the way for forgiveness and acceptance. This, in turn, will allow it to focus on rectification measures with minimal distraction. In almost all significant crises, real normalisation is possible only when the emotional bugbears are handled well, and early.

Otherwise, these issues will be an albatross around the neck long after the technical aspects of the crisis are resolved.

Operating in the “faith” paradigm is more challenging as it is often a fine art, not a science, which many technically qualified CEOs are not adept at. A different set of abilities – values-driven – is required from what is taught in the regular MBA curriculum. Given the growing complexity of crises, especially in a connected space with increased scrutiny, there is a dire need for real leaders, not just managers.

We live in a world in turmoil, wrecked by the contagious effects of the various crises that remain mostly unresolved. Repeat mistakes point to an inability, or an unwillingness, to learn from history. This is the ultimate crisis – a crisis of leadership.

Viswa Sadasivan (viswa@strategicmoves.com.sg] is CEO of Strategic Moves Pte Ltd, a strategic and crisis communications training and corporate strategy consultancy.

“There needs to be a clear demonstration of commitment to doing the right thing that will build faith in the organisation and pave the way for forgiveness and acceptance. This, in turn, will allow it to focus on rectification measures with minimal distraction. In almost all significant crises, real normalisation is possible only when the emotional bugbears are handled well, and early.

Otherwise, these issues will be an albatross around the neck long after the technical aspects of the crisis are resolved.”

· Oct–Dec 2011 · 33

Image: Ratchaprasong 2 @ flickr.com

Protesters at a rally pushing for the release of their colleagues and leaders from prison.

RESolVInG thE thAI PolItIcAl cRISIS

by Pavin Chachavalpongpun

How successful newly elected Thai Prime Minister Yingluck Shinawatra will be in resolving her country’s longstanding political crisis depends on the degree to which she has respect for democratic institutions.

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eneral elections in Thailand were held successfully on 3 July 2011, the second time after the 2006 coup that ousted the elected government of Thaksin Shinawatra. In an ironic twist of Thai politics, the party which was accused by the Bangkok elite of masterminding the arson attacks against public property in May 2010 emerged as undisputed winner. And the party that had been endorsed by the Thai military and royalist elements suffered a humiliating loss. The Pheu Thai Party, led by Thaksin’s youngest sister, Yingluck, managed to win a landslide election, making her the first female prime minister of Thailand, while the ruling Democrat Party under Abhisit Vejjajiva failed to hold on to power.

34 · Oct–Dec 2011 ·

But Yingluck has no time to enjoy her honeymoon period. It has been more than four months since her election and there are myriad obstacles waiting for the new prime minister to tackle. How successful she will be in dealing with these obstacles depends on the extent to which she has faith in and respect for democratic institutions. The best conflict management rests on her willingness to exercise the rule of law in finding a solution to the seemingly intractable Thai political crisis.

One of Yingluck’s top priorities is to heal the rift within Thai society. This will be an uphill task since she will not be able to satisfy everyone in the reconciliation process. But if Yingluck wishes Thailand to move forward,

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she must look back to the recent past and “clean up” the wrongdoings of state authorities. Reconciliation must take place alongside justice.

To move this process along, Thai historian Thongchai Winichakul says Yingluck must take several measures resolutely. A key priority is to make changes to the Independent Truth and Reconciliation Commission of Thailand (ITRCT), which was established to investigate a military crackdown on protesters that occurred between April and May 2010 and that left almost a hundred dead and thousands injured.

First, the ITRCT must be empowered to access evidence and materials from all sides, including the army and the police, to investigate military and police personnel, and to have the power to summon them to testify.

The investigations must be done in a transparent manner and attended by independent observers. New members should be appointed to the ITRCT and some old members removed to ensure its impartiality. The ITRCT must also set a fixed timeframe to report its preliminary findings to the public even if the investigation is ongoing.

Yet the most difficult part will be uncovering facts, and ultimately the truth about what happened. This process must be non-negotiable. The next step will be to discuss punishments, which should be negotiable. Officers who acted on orders might be considered for pardon if found guilty. Everyone should receive a fair trial. At the same time, those who were involved in misinforming the public must be severely punished. The targets here are those who made decisions and gave orders.

But Yingluck must understand that it is almost impossible for state authorities to come forward and admit wrongdoing, because they would risk losing their positions of power and privilege by doing so. Therefore, the Pheu Thai government must have the courage to bring to justice those who committed crimes even when this could enrage the powerful elite or open a door for them to intervene in politics.

The other obstacle is the issue of amnesty. Will Thaksin be granted amnesty? If the answer is “yes”, can this lead to another round of unending street protests by the Yellow-Shirt People’s Alliance for Democracy (PAD)? Prior to the election, Thaksin released a series of controversial statements. For example, he said that he planned to return to Thailand in November this year to attend his daughter’s wedding. This immediately infuriated his enemies within the establishment and gave them an opportunity to question the legitimacy of Yingluck and her incoming government. But Thaksin is a cunning politician. To encourage his supporters to vote for Pheu Thai, he sent out a strong message: “If you want me to come home, then vote for Pheu Thai.”

Thaksin might be right; there could not be a better time for him to return to Thailand than when Pheu Thai is in power. However, many political observers believe his provocative statements were just an election campaign tactic. In reality, there are many hurdles for Thaksin

to overcome before he can set foot in Thailand again.

After all, he has been convicted of corruption charges and is still technically running from Thai law. Granting him amnesty and having him return a free man would provoke his enemies to retaliate against Yingluck’s government. Thaksin has remained popular, but he has also been a divisive figure. A similar question must be asked: Why would Pheu Thai want to jeopardise its position by going all out to protect the interests of only one man?

Image: Ratchaprasong 2 @ flickr.com

Thai Prime Mininster Yingluck Shinawatra addresses an election rally.

Amnesty is still a murky issue. Who will receive amnesty? What will amnesty be granted for? There are many interpretations of amnesty. Thaksin might have liked to think that amnesty means wiping the slate against him clean and therefore supported the idea. The Red-Shirt movement might think differently. In fact, it would definitely reject amnesties all round if this means setting free those who killed dozens of demonstrators in Bangkok last year. On the other hand, the security agencies might endorse amnesties if this implies they will get off the hook for their deadly crackdown against the Red Shirts.

Yingluck is at a confusing crossroad and she must find a way to deal with different groups possessing different agendas and interests. If she believes that justice must be respected, then her approach to the Thai solution, including the issue of amnesty, will undoubtedly be legitimate. But she will have little time to prove her determination and leadership. Her adversaries are waiting to see her stumble, and will surely reject her “legitimate approach”.

Pavin Chachavalpongpun (pavin@iseas.edu.sg) is a fellow at the Institute of Southeast Asian Studies. · Oct–Dec 2011 · 35

The health impact of the global economic crisis on Asian countries Economic crises have a negative impact on employment, poverty alleviation, social services and human development. Phua Kai Hong and Kua Ee Hock examine the short- and long-term effects of crises on vulnerable groups in society and suggest how governments and development agencies can be more responsive in dealing with such problems.

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conomics and the health of a community are inextricably intertwined. For the 5 billion people in low- and middle-income countries which the International Monetary Fund says will suffer the brunt of the global financial crisis, the job insecurity and unemployment resulting from the crisis will have a significant impact on the health of workers.

In 2009, the International Labour Organisation predicted that the global unemployment rate had risen from 5.7 per cent in 2007 to between 6.1 and 7.1 per cent in 2009.

This corresponded to an increase in the numbers of the unemployed by between 18 million and 51 million people. In developed countries, unemployed people are protected from absolute deprivation by social security nets, but unfortunately this is not the case in the developing countries of Asia. The full impact of job losses is often felt later – so it may be much later before there are indications of a rise in morbidity.

Past experience The Asian financial crisis of 1997 that engulfed several countries in East Asia, notably Indonesia, Malaysia, Thailand and South Korea, resulted in a sharp currency depreciation and consequently higher costs of imported drugs and supplies, reduced poor people’s access to basic health services and slashed government health budgets just as demand for public sector healthcare increased. Stringent cost-cutting exposed weaknesses in social safety nets and healthcare financing systems.

The Asian Development Bank (ADB) has projected that due to the global financial crisis, 36 · Oct–Dec 2011 ·

Figure 1. The vicious cycle of economic effects on health (From Bhutta ZA, et al. Report of UNICEF conference on Impact of the Economic Crisis on Children, 6-7 January, 2009, LKY School,Singapore.)

64 million people in Asia will remain below the poverty line of US$1.25/day. Consequently, progress in reducing poverty in Asia will be delayed. The social effects of declining affluence in Asia include increased maternal and infant mortality rates, and malnutrition, particularly among the very poor. The ADB recommends that policy interventions and donor assistance should prioritise health, and that national governments and international agencies should tailor their responses to reflect differing circumstances between countries and sectors.

In an economic recession, incomes of the unemployed fall and they lose social protection, including occupational health insurance, resulting in a decline in healthcare utilisation, especially high-cost catastrophic health expenditure, and reduced consumption of essential medical services. There are coping strategies as families cut back on basic expenses. A consequent deterioration in health outcomes and long-term increases in morbidity and mortality in turn negatively impact growth productivity, and reverse earlier gains (see Figure 1).

Analysis of records from the Great Depression of the 1930s reveals serious adverse health effects, including increased morbidity and mortality from heart disease, as well as positive correlations with hypertension and mental health problems, suicides/parasuicides and alcoholism. Similar research on the East Asian economic crisis investigated the sequelae, including paediatric malnutrition, falling levels of immunisation and the re-emergence of infectious diseases. Child mortality in the most severely affected countries spiked in 1997-1998 (see Figure 2) and undernourishment also became more prevalent, only falling to former levels once the crisis abated. Subsequent studies have revealed that vulnerable groups including ethnic minorities, the poor, single mothers, the disabled and the elderly, bear the brunt of cutbacks in public spending on health and social services.

The Asian Financial Crisis saw reduced access to healthcare services and a shift in demand from private health care to public sector health services and non-government organisations. There is evidence that some

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Figure 2. Child mortality during the Asian financial crisis (From Bhutta ZA, et al. Report of UNICEF conference on impact of economic crisis on children, 6-7 January, 2009, LKY School, Singapore)

people delay or forgo care seeking and selftreat instead, and that time-lags in detection and treatment may lead to even worse longerterm physical, social and mental health effects.

A Korean study has shown significantly increased morbidity and healthcare utilisation for mental and behavioural disorders, cardiovascular disease, hypertension and injury in 1998 compared to 1995. In terms of mental health, rates of substance abuse, alcoholism, domestic violence, divorce and family break-up, depression and other mental illness, all increased in step with unemployment, poverty and falling incomes, according to an International Labour Organisation study.

There was also a spike in suicides and attempted suicide at the height of the crisis in Japan, Hong Kong, and Korea which was associated with unemployment.

Many countries in Asia are facing the most rapid rates of population ageing and increasing pressures to consume a greater quantity and better quality of social and health services.

Demographic and epidemiological projections point to an increasing demand for such services in the future, requiring proactive social policies and systems responses on the supply side. Despite past lessons, many Asian economies may even be more vulnerable to future crises. On the one hand, many countries have strengthened their financial systems and built up substantial foreign reserves. On the other hand, with further liberalisation, they have also become less self-sufficient in the production of medical goods and services such as essential drugs (even as the costs of pharmaceutical imports are rising), and are more dependent than ever upon importing new technologies from the developed countries of the

West. As the regional economies restructure themselves, the dependency on exports for economic growth and imports for healthcare development is no longer tenable. Here then is the opportunity to invest in the local health infrastructure to protect and enhance public health and welfare.

Asia still has the largest number of poor people in the world. The proportion of the population employed in the informal sector in most Asian countries continues to be extremely high and social protection programmes are weak or virtually non-existent.

Those working in the informal sector may not necessarily be poor, but they are vulnerable.

When they lose their jobs, there is no safety net, forcing large groups of migrant workers from the poor and rural areas to return to their home countries and prior poverty states.

Effects on health services An economic crisis will have detrimental effects on those in employment too. The fear of losing one’s job and pressures caused by a downturn in business can lead to “recession anxiety”. Many in distress may rely more heavily on alcohol and drugs. The gloomy economic climate can also cause a surge in cases of “recession depression” as unemployment mounts. There may be a rise in suicides in Asia which already has among the world’s highest suicide rates.

The impact of a downturn on health will partly depend on the nature and robustness of healthcare systems. In Asia, health services lag far behind North America, Europe and Australia. Extra demand for services would mostly come from “the working class” as household financial pressures rise along with the unemployment rate.

With a deepening crisis, governments of poorer and emerging economies may reduce health spending in response, and richer donors may also reduce their support. Health will have to compete for funds against other pressing priorities, including education and climate change. Some Asian countries are vulnerable because economic success over the past years has heightened wealth expectations and many would have problems accepting the loss of finance.

An economic crisis means that rather than asking for more money for health, we are going to have to be more careful about how we spend it. There must be more focus on achieving greater efficiency, such as procurement of drugs to negotiate better prices in the developing world, and more sophisticated logistics and supply-chain management to ensure they further improve access and reach remote patients.

Many Asians are ashamed to seek expert help and health problems are often underdiagnosed. Anti-stigma programmes can show the public how to recognise and respond to a person having health issues and where to seek help. Greater emphasis on prevention and early identification of problems could avoid more serious and expensive treatment later.

Involvement of civil society and grassroots organisations may enhance social acceptability with the utilisation of local resources.

Coping with the stresses of economic hardship can have repercussions on the stability of the family. Asian countries are learning that rapid economic expansion must be made with a more solid foundation in health and social well-being. Past policies and investments have contributed to the Asian Economic Miracle. It is high time that we invest more to put the balance into achieving higher states of physical, social and mental health.

Investment in prevention, early detection and treatment of illness is good public policy in times of economic crisis, an urgent priority being to strengthen mental health services in anticipation of the increased demand. The current crisis provides opportunities to implement evidence-based health sector reforms to protect and expand public health budgets, and to avoid longer-term social and economic costs.

Phua Kai Hong (spppkh@nus.edu.sg) is Associate Professor at the LKY School. Kua Ee Hock is Professor at the Department of Psychological Medicine, Yong Loo Lin School of Medicine, NUS. · Oct–Dec 2011 · 37

Image: IFRC @ flickr.com

Haiti earthquake

thE MISSInG cAPAcItIES FoR MEGA DISAStER MAnAGEMEnt Caroline Brassard identifies the missing capacities – political, operational and social – needed for an effective disaster recovery process, and the implications for public policy.

38 · Oct–Dec 2011 ·

M

ega disasters occur when the response to a disaster completely overwhelms the emergency and relief agencies. Examples of inefficient preparation and response are abundant, such as Hurricane Katrina in Louisiana in 2005 and the Haiti Earthquake in 2010.

The Asian continent has been home to most of the world’s recent mega natural disasters,

ranging from tsunamis in the Indian Ocean and Japan, to earthquakes in China, floods in the Philippines and Pakistan and cyclones in Myanmar. Each case illustrates that mega disasters are a result of a combination of factors, such as a lack of preventive measures and prior preparation. In the context of Asian developing countries, the success of

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post-disaster management depends on this prior work as well as the ability to establish a good balance between relief, reconstruction and development.

With so many significant events occurring concurrently and at times simultaneously, appeals for emergency funding by international humanitarian systems often face “charity fatigue”. Yet, a multitude of smaller “natural” disasters can have a greater impact on an economy than a single mega disaster.

The international humanitarian system is often prey to undue competition among and between agencies and a lack of cooperation and coordination. Coupled with the increasingly prominent role of private agents (such as private charities), the proliferation and fragmentation of players presents a serious threat to the efficiency of response.

Political capacity In addressing political capacities for post-disaster management, we need to first remove undue competition across agencies involved in post-disaster management through tighter collaboration and greater transparency. An effective way to achieve this is to set up a framework for databases that can be used for monitoring and evaluating progress of activities by the various agencies. For example, the RAN database for Aceh and Nias (in Sumatra, Indonesia) reconstruction after the Indian Ocean Tsunami in 2004 is still publicly available and can be easily consulted.

Second, mega disasters require long-term preparatory work. This entails strengthening political capacities – and political will – to create new linkages and foster closer dialogue between stakeholders involved in different phases of preparatory work. Perhaps the weakest communication gap is between actors such as scientists involved in the risk identification and assessment phase and the agencies involved in the emergency response. Despite being at the forefront of disaster preparedness and relief, the Japanese government recognises this communication gap.

In Asia, which has seen its fair share of mega-disasters in recent times, there is still no real sense of urgency to collaborate at the regional level. Following the Asian Tsunami, the 10 ASEAN countries signed an Agreement on Disaster Management and Emergency Response (AADMER) work programme for 2010-2015, which includes one section on technical co-operation and scientific research.

However, implementation is notoriously weak,

due to a lack of a sense of urgency, insufficient prioritisation and a low level of awareness.

Social media The de facto decentralised response to mega disasters is also a product of the increasing importance of social media in informing the international community and the speed of resource mobilisation, including volunteers.

The path-breaking speed of development of social media has redefined the way society can access information. In the context of mega disasters, documented evidence shared by survivors can greatly influence potential donors, as seen in the case of the Pakistan floods. Online donation platforms are abundant and donors can select particular organisations, projects and localities. However, some of these pay little attention to the relief, reconstruction and development continuum.

Yet, it is unrealistic to establish an accreditation system to ensure better quality control as these channels can be set up – and dismantled – almost instantaneously. Dealing with a plethora of small private charities or large philanthropic organisations requires not only developing basic guidelines for coordination and clarifying roles and monitoring processes, but also effecting a change in mindset. Multiagency collaboration is necessary in all phases of a disaster management plan, from mitigation, preparedness, response to recovery.

Hence, the focus for operational capacities should be on human resources. For instance, trauma caused by the lack of experience and training of volunteers can be irreversibly harmful. Creating incentives for good performance and disincentives for poor delivery can be a role played by the affected communities.

Social capacity Lastly, Asian countries need to develop social capacities to build on the resilience of affected or vulnerable communities to natural disasters. Encouragingly, the regional progress report of the Hyogo Framework for Action (2009-2011) for Asia Pacific notes that participating countries demonstrate greater understanding of disaster management beyond relief and response, to include risk and resilience considerations. The resilience of communities can be defined as the degree to which affected communities (and its ecosystem) can self-organise, learn and adapt to a new situation.

Whether disaster community response is more likely to be defined by its vulnerability

than by its resilience per se is a matter of debate. Recent responses to mega disasters in Asia have shown that crucial emergency relief is brought first by the affected citizens and the local organisations (formal or informal) already on working site. This was the particularly striking in the case of Cyclone Nargis in Myanmar.

However, social capacities to involve communities in a more meaningful manner are sorely lacking. This includes taking advantage of the social media, providing training to community leaders and volunteer organisations.

The role of citizens and communities is not limited to the immediate response, and should be an integral part of the reconstruction and development phases. For example, a recent study on housing reconstruction in Aceh after the 2004 Tsunami concluded that the use of participatory approaches led to heightened accountability to both donors and beneficiaries if there was multi-directional flow of information; coherence and coordination; inclusive decision-making processes; and ground-level oversight. Too often, critical information including plans, agendas, budgets, sources of funding, time-frames, and expectations are shared only with higher levels. Feedback from affected communities in post-reconstruction points to the need to ensure greater engagement of the victims of disasters in the planning and construction processes.

The international humanitarian system which attempts to centralise post-disaster management is experiencing a host of problems, such as organisations “working in silos” and undue competition between agencies looking for funds and wanting to demonstrate the best results. By focusing on the three types of capacities – political, operational and social – countries in the Asian region will pay attention not just to organisational structures and physical infrastructures but to the social fabric of the affected communities. Public policy advisers for post-disaster management need a paradigm – and mindset – shift, away from “building back better” towards “building back smarter”.

The motivation for this change in thinking has to be driven by vision and foresight prior to the next mega disaster.

Caroline Brassard (sppbc@nus.edu.sg) is Assistant Professor at the LKY School.

She consults with various international organisations, including the United Nations Development Programme, and teaches aid governance, economic development policy and poverty alleviation strategies. · Oct–Dec 2011 · 39

Advance recovery measures assume that a crisis event will occur and cause damage no matter what preparations have been undertaken, and that recovery measures will be necessary.

Douglas Ahlers, Arnold M. Howitt and Herman B. “Dutch” Leonard suggest what can be done to get ready for disaster recovery.

Preparing in advance for disaster recovery I

n the past decade, the world has looked in horror at many heart-wrenching scenes of human suffering and physical devastation in Asia – including the tsunami of 2004, China’s earthquake of 2008, Pakistan’s floods of 2010, and Japan’s earthquake, tsunami, and nuclear accident this year.

Unfortunately, these will not be the last of such tragic events, given Asia’s significant exposure to natural disasters, increasingly complex and interdependent social and economic systems, intensifying urbanisation in risk-exposed locations, and its vulnerability to the impact of climate change.

Facing such threats, many countries and international organisations have given increased attention to disaster preparedness.

Their most common focus is prevention and mitigation, which aim to change the character of the event itself and preparation for post-disaster response to save lives and minimise property loss. While necessary, these steps are insufficient to meet the challenges of major disasters. No matter how effective prevention, mitigation, and preparation for response are, catastrophic events cause widespread physical destruction and disrupt 40 · Oct–Dec 2011 ·

economic and social life. Their impact inevitably lingers on for years. Therefore, governments, the people affected, and international aid givers face difficult, long-term challenges of disaster recovery.

We contend that governments in high-risk areas can take steps in advance of a catastrophe to make rebuilding faster, less expensive, and more complete. Recovery is typically regarded as something that cannot be started until after disaster has struck; but in the aftermath of disaster, it is highly valuable to have in place a basic framework about how to organise, build support for, finance, and carry out recovery operations – so that action can begin quickly and public confidence can be secured. What we call advance recovery, though far less commonly discussed, is a vital, third form of disaster preparedness.

What actions might this entail?

Structures and Capabilities: Disaster recovery will make intense demands on both central and local government authorities, each of which will have to make significant changes in its ordinary ways of organising and carrying out operations. Access to funding for recovery will become a key problem

because at a time of high need for funds, tax revenue is likely to decline and confidence in the credit-worthiness of the government may be very weak. Government budget allocations will likely have to change to funnel funds into restoration and reconstruction, and financial management practices may need to be strengthened in order to handle and account for inflows of funds from international donors. Government structures may need to be adapted to focus and coordinate recovery efforts, perhaps including a new agency to oversee recovery in the disaster zone. Decision-making and management practices will have to be streamlined – for example, for construction project approvals, permitting, and safety inspections, and for government procurement.

These steps can be framed before disaster strikes. Provisions for emergency financing can be developed. Plans can be made for what a post-disaster government would look like and how it would function; and necessary legislation and administrative regulations to allow these procedures to be implemented in a declared emergency can be approved in advance. If they are not, post-disaster action

Focus Image: wu fake @ flickr.com

givers to believe in the future. Otherwise individuals and businesses will hold back in committing their own resources, many may decide to move elsewhere, and recovery will grind on slowly or falter.

To do this, government needs capacity for coordinating public statements by national leaders and local counterparts so that those affected by the disaster as well as other stakeholders inside and outside of the country gain confidence that leadership is committed and effectively mobilised to make recovery work. Government must be prepared quickly to launch recovery by describing in some specificity the steps and structures that will be operating. Special effort must be devoted to communicating with the sources of financing for recovery – banks and international donors – so they will have sufficient confidence in the direction and management of recovery to commit necessary loans and grants. While the details of such communications cannot be devised until after a catastrophic event, the framework for taking these steps and even drafts of communications can be thought through and prepared ahead of time.

Sichuan earthquake

may well be delayed in the midst of complex emergency response operations, disrupted government processes, and grieving.

Generating optimism about the future Steps to instil confidence in the future viability of the disaster area are a crucial element of recovery. In most countries, no matter how generously government or outside donors provide disaster aid, the vast majority of expenditures to rebuild will be made by individuals and businesses, either from savings or by “sweat equity.” But should a family invest savings and effort in restoring their home? Should a business seek to rebuild?

The decisions of any particular family or firm will crucially depend on what they think are the likely decisions of other families or businesses – and such judgments will have to be made without being certain about what others will do. To promote robust recovery in the aftermath of disaster, therefore, government has to create optimistic expectations about the ultimate prospects of recovery; it must be ready quickly to take actions that will convince residents, investors, and aid

Setting goals and managing conflict Inevitably, disasters are political events as well as physical and human tragedies. After a likely initial period of national unity and resolve, individuals or groups may be criticised for perceived failures of preparedness or response; differences are bound to emerge over future choices and actions; authorities may be perceived to be moving too slowly; and disagreements over priorities or financing may emerge within levels of government or between central and local institutions.

These political pitfalls can slow recovery and diminish confidence. To minimise the possibilities of debilitating political disagreements, mechanisms for developing broad recovery goals, mobilising and aligning support for these goals, and managing conflicts about priorities must be thought through.

Plans should be made for providing ample post-disaster opportunities for stakeholders to be heard and participate, for transparent decision-making, and for feedback on implementation as well as in decision-making.

Preparing for recovery in advance of a disaster can be a crucial form of preparedness.

Nothing can eliminate the grim difficulties of recovery from tragic circumstances; but advance recovery steps can make the process

proceed more quickly, more completely, at lower cost, and with less political conflict than would be the case if government gave no thought to this need until after the dust of disaster had cleared.

At Harvard Kennedy School, Douglas Ahlers (Douglas_Ahlers@hks.harvard.edu) is adjunct lecturer in public policy, Arnold M. Howitt (Arnold_Howitt@harvard.edu) is executive director of the Ash Center for Democratic Governance and Innovation, and Herman B. “Dutch” Leonard (Dutch_Leonard@ harvard.edu) is the Baker Professor of Public Management. Howitt and Leonard are co-directors and Ahlers a faculty affiliate of the HKS Program on Crisis Leadership.

“To promote robust recovery in the aftermath of disaster, government has to create optimistic expectations about the ultimate prospects of recovery; it must be ready quickly to take actions that will convince residents, investors, and aid givers to believe in the future. Otherwise individuals and businesses will hold back in committing their own resources, many may decide to move elsewhere, and recovery will grind on slowly or falter.” · Oct–Dec 2011 · 41

Image: mohamed.shaaz @ flickr.com

What if the pipes from Malaysia no longer carry water into Singapore?

Foresight and crisis preparedness: the Singapore experience Foresight tools provide the anticipatory capacity to systematically consider the future, and prepare ourselves for different contingencies. Kwa Chin Lum examines how Singapore’s foresight experience helps to anticipate and prevent crises, and mitigate the consequences when they occur.

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he experience of the past 10 years shows an increasing frequency of crises and other shocks to our systems – 9/11, SARS, natural disasters, financial crises and social uprisings. That the world we live in today is highly inter-connected goes without saying, but its complexity means that cause and effect are not easily determined. A single 42 · Oct–Dec 2011 ·

event can trigger and amplify other events in very unpredictable ways, sometimes leading to catastrophic consequences. An example is the Arab Spring, which, though fuelled by the rise of social media and undergirded by festering political grievances, was triggered by the sudden rise in food prices resulting from poor weather and lower yields.

Foresight and Crisis Singapore has generally been able to deal with crises when they happen. Our compactness and a growing Whole-of-Government culture have enabled us to work together across government agencies and with non-government actors in the private sector and the community. During both the SARS outbreak and financial crisis, the way in which the government worked with business and community partners to respond quickly with implementable solutions helped to contain the impact of the crises and facilitate the recovery thereafter.

The ability to handle crises when they happen is being strengthened by the foresight work of the Centre for Strategic Futures (CSF)in helping to anticipate such crises.

Some crises are more foreseeable, but may have been allowed to happen due to inaction, other cognitive failures or policy mistakes in response. But often, crises, and their timing and impact, are inherently difficult if not impossible to predict. We seek to neither predict the future nor eliminate the uncertainty associated with it, but instead to develop the anticipatory capacity through foresight, and prepare ourselves for different contingencies.

By systematically considering the future, and identifying and assessing possible risks,

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we can avoid or mitigate the risks that lead eventually to such crisis situations. This may not prevent or avert the crisis, but it could certainly help to moderate its impact, and to prepare ourselves better to respond.

Risk Identification and Assessment The CSF and our partners undertake different projects that allow us to identify and assess the risks associated with developing trends better. Through horizon scanning – via the Risk Assessment and Horizon Scanning programme run by the Horizon Scanning Centre (www.rahs.org.sg) – and studies of emergent strategic issues and possible wildcards, we hope to pick up weak signals that could suggest an emerging problem.

By asking the right “what if” and “so what” questions, we curate strategic conversations about the future, provoking thought on possibilities and pushing the discussion towards issues that we would not otherwise have considered. This helps us to identify trends better, understand how developments could lead to stresses, and how these stresses interact, particularly when catalysed by technology.

But good risk identification and assessment cannot be done by central government agencies alone. We need to maintain good networks of diverse views – both international and local – that can help overcome inherent cultural and cognitive biases, and lower the risk of institutional surprise. Equally important is the collaborative approach within the Government that we have adopted. This Whole-of-Government approach towards risk management gives us a fuller appreciation of the risk issues and events, and possible interconnections between them. Through these processes, we can better define for ourselves the weak trends and early warning signals to watch out for, and then monitor these potential developments. This allows us to calibrate our responses as the operating environment evolves.

Risk Communication and Mitigation Beyond risk assessment, a clear communication of assessed risks is arguably even more important, so as to gain acceptance and guide prioritisation of risks, thereby prompting risk response and mitigation. In this “solutioning” process, taking the Whole-of-Government perspective is just as critical, as solutions would inevitably require collaboration among

Figure 1: Climate change-related risks and crises

various agencies, often with resource implications and policy trade-offs. While these risk responses may not be implemented immediately, the process of having thought through possible responses in certain scenarios positions us well to react as the situation develops, and when the risk eventually develops into crisis, with a deeper understanding of the consequences of these actions.

As an illustration, linkages could be made between the effects of climate change and associated risks (see Figure 1), which could eventually lead to weather crises and other catastrophic outcomes. Would shocks to global resource supply chains, coupled with an increased energy demand locally to counter the effects of climate change, increase Singapore’s resource vulnerability?

Would changes in climatic factors such as temperature and humidity increase disease incidence, making pandemic outbreaks more likely, or exacerbate haze situations? What if sea-level rises were to lead to greater flooding, a loss of land space and a threat to freshwater reservoirs? Would our public institutions and critical infrastructure, such as hospitals, ports, electric grids and water utilities, be able to cope with the increased stresses on the system? Each of these outcomes – or worse, in combination – would

impact Singapore’s liveability for our population and our competitiveness.

These risks do not fall within the purview of a single government agency. Naturally then, the responses to these risks require efforts across different agencies looking at various issues, including energy efficiency, drainage infrastructure, resource security and pollution management. Considering the different modes of potential crises also helps policymakers think through possible gaps in capabilities and processes, allowing us to prepare ourselves in time for such events.

Foresight plays a valuable role both in anticipating and preventing crises, and mitigating the consequences when they occur.

By developing an understanding of the factors and potential responses, we can manage the contributory risks, and build the necessary capabilities required to deal with the crisis should it happen. Once the crisis occurs, however, we need to remain adaptable and be responsive to the operating environment as the crisis unfolds, constantly probing and testing the solutions to address the events and issues that arise.

Kwa Chin Lum is Head of the Centre for Strategic Futures, Public Service Division, Prime Minister’s Office, Singapore. · Oct–Dec 2011 · 43

hoW 9/11 chAnGED DISAStER RESPonSE

Image: slagheap @ flickr.com

A firefighter emerging from the smoke and ash of the 9/11 disaster.

Jeannie Straussman shares her professional and personal reflections on disaster mental health post-9/11.

I

n the days and weeks following the tragedy of 11 September 2001, I was a Red Cross responder and Senior Administrator for the New York State Office of Mental Health, working with survivors and families. Coordinating with a multitude of government and international agencies at the Family Assistance Center in New York City, we shared a mission of creating a caring and compassionate environment. The Family Assistance Center was described by The

New York Times as “a new vision of how social services should be delivered”. An entire agency and organisational structure was created overnight with overlapping roles of local, state, federal and international agencies, unclear and constantly changing requirements and expectations that shifted from day to day and sometimes from hour to hour. The scope of work, combined with the large number of providers and services under one roof, was unprecedented.

We thought our lives would never be the same and, for many, the losses and sorrow of that day endure. For many mental health professionals, our professional lives would never be the same either. Crisis response practice changed dramatically based on the

enormity of the mental health emergency at the core of 9/11. In the wake of the attacks, many cities up and down the northeast of the United States prepared to deliver acute medical services with emergency rooms on alert. Sadly, on 12 September, those services were not needed anymore because there were so few physically injured survivors.

Instead of physical injuries, there were the invisible injuries of psychic trauma: anxiety, fear, depression and numbness as families searched for their loved ones and began to absorb the devastating reality. Instead of surgeons and emergency room nurses, there were vast numbers of mental health professionals, social workers, psychologists, psychiatrists and psychiatric nurses who were mobilised or spontaneously converged to volunteer their services.

First, while emergency services at the American Red Cross had included courses on “Disaster Mental Health”, the specialisation was in its infancy. After 9/11, Disaster Mental Health became one of the fastestgrowing services of the American Red Cross. Across the country, mental health professionals were trained with newly refined skills and best practices emerging from 9/11.

Collaborative networks and partnerships were developed or strengthened with local, state and national agencies and professional organisations. Response and mobilisation strategies and drills were scheduled regularly to ensure a consistent level of preparedness even when no large-scale disaster occurred.

On the whole, during the past decade, professionals in the disaster response field have sought to maintain a heightened sense of urgency and awareness that another natural disaster or disaster of human intent might be imminent. There is a natural pull by the general public and public officials to deny that potential future reality and lapse into complacency, with a resulting decrease in allocated resources.

The emerging practice of “Disaster Mental Health” utilises principles of “Psychological

“We thought our lives would never be the same and, for many, the losses and sorrow of that day endure. For many mental health professionals, our professional lives would never be the same either. Crisis response practice changed dramatically based on the enormity of the mental health emergency at the core of 9/11.”

44 · Oct–Dec 2011 ·

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First Aid”, and more fully developed as a practice model after 9/11. It is not psychotherapy. Instead, PFA provides comfort care, helping people to meet their basic needs immediately after a disaster, listening to survivors’ feelings and thoughts, connecting them with support networks, providing reliable and timely information and educating them about anticipated stress responses.

Disaster Mental Health seeks to reinforce the strengths of individuals, families and communities and their positive coping strategies.

Skilled disaster mental health clinicians rely on a blend of clinical skills and training, intuition and experience as well as a keen responsiveness to non-verbal behaviour and cues. The work requires an ability to be with people experiencing unimaginable and intense loss and fluidly move with families within totally unstructured settings and connect readily hour after hour. Disaster mental health workers respond to the normal reactions families have to grossly abnormal events and circumstances and ensure that people are not alone during their worst nightmare.

Disaster Mental Health workers also recognise the very wide range of reactions frequently found within the same family in response to a tragedy. Their role is to be with each person as he or she uniquely expresses grief and loss, and to let them move at their own pace while accepting each other’s differences. Disaster Mental Health provides human connection and warmth, help with tangible needs like water, food and areas to rest and sleep. Acting as personal guides, responders help families through the complex maze of bureaucracy and tasks rendered overwhelming by stress, despair and confusion.

During the most painful ordeals of the families, Disaster Mental Health workers were indispensable escorts and supports.

Family members of all ages were asked to provide DNA samples during the first weeks to assist in the identification of remains.

Later, we were with family members as they received death notifications and accompanied them to the mortuary.

The families of victims made impassioned requests to visit Ground Zero. Two weeks after 9/11, around 50 family members with as many staff from the Red Cross Disaster Mental Health, the New York Police Department and a few clergy walked onto a Coast Guard ferry. Former New York City Mayor Rudolph Giuliani came on board and sat with each family. As we walked through

the massive burial ground, now a shrine, each family member had their own way of mourning and expressing their pain. The taste and smell of acrid air, the painful sting in their eyes and sight of shredded clothing and paper hanging on the trees around Ground Zero, made their loss more palpable and final. Rescue workers took off their hard hats and held them over their hearts as families filed past and all work ceased.

One month after 9/11, we stood with families during memorial ceremonies at Ground Zero. Afterwards, individual services were held, families were presented with an American flag and a small rosewood urn with earth from Ground Zero in a brief respectful funeral with responders at their side. For many families, this was one of the few tangible ways to connect with their loved ones in the absence of recovered bodies.

After 9/11, in addition to training large numbers of mental health professionals in Psychological First Aid, mental health leaders across the United States recognised the need to have specialists trained in treating Post-Traumatic Stress Disorder for more long-term intensive interventions following disasters. PTSD, which is a diagnosis in the “Diagnostic and Statistical Manual” of the American Psychiatric Association, is an intense reaction of fear, helplessness or horror following the direct experience of a traumatic event. People suffering from PTSD may re-experience the traumatic event with intrusive thoughts, vivid and disturbing dreams and flashbacks, and attempt to avoid people, places and things that remind them of the traumatic event.

They may be hyper-vigilant, trying to prevent another event and have difficulties with sleep, concentration and emotional control. First identified during times of war and called “Soldier’s Heart “(Civil War), “Battle Fatigue” and “Shell Shock” (World War I and II), the term and diagnosis of PTSD became a classification of military trauma following the Vietnam War. Research done in the years following 9/11 indicates a positive treatment response from Cognitive Processing Therapy, a structured psychotherapy approach focusing on how individuals process information, interpret and cope with the traumatic event and try to regain a sense of mastery over his or her life.

The goal is to enable the individual to return to their pre-disaster level of functioning by building on their resilience and supports.

Lastly, over the last 10 years, specialised training in Disaster Mental Health has been developed to highlight skills needed with special populations such as children and adolescents, older adults and people with disabilities in the aftermath of a disaster.

Most recently, a new training curriculum on “Response to Radiation Disasters” was taught for the first time through the Institute for Disaster Mental Health at the State University of New York at New Paltz following the nuclear plant tragedy in Fukushima in March 2011. Throughout the decade, there has been a growing understanding of the need to continuously build community resilience using local resources, neighbourhood centres, places of worship and schools to restore them to their pre-disaster strength.

The positive impact of the new expertise following 9/11 was seen in the response to subsequent disasters in the United States. After Hurricane Katrina in 2005, which devastated five states in the United States, skilled trained disaster mental health responders flew in to provide expertise and leadership to areas which had limited health and mental health networks.

Disaster Mental Health both during and after 9/11 is essentially about the power of human connection. For me, it is best encapsulated in an unforgettable moment from my first trip to Ground Zero by ferry with family members two weeks after 9/11. As the ferry approached lower Manhattan, the view of the devastation could be seen through the buildings that still stood. A large and quiet man stood apart from everyone at the railing, evidently alone on the journey. Though his body language indicated that he wished to be left alone, I was cognizant of the force of the images he would soon behold and put my hand over his on the railing. We said nothing.

We pulled into the dock and left the ferry and walked into Ground Zero. Two hours later, on the way back to the Family Assistance Center, we found ourselves walking side by side into the building. He looked down at me and said, “Thanks for the hand.”

Jeannie Straussman (jeannie@nus.edu.sg) is a student support counsellor at the LKY School.

She was previously Clinical Coordinator for Disaster Mental Health and Regional Director for the New York State Office of Mental Health.

She is a consultant with the Institute for Disaster Mental Health, State University of New York at New Paltz. · Oct–Dec 2011 · 45

Image: Hopefoote, Ambassador of the Wow @ flickr.com

how safe is nuclear power?

by William B. Eimicke

Indian Point nuclear power plant

T

he earthquake that struck Japan’s northeast coast on 11 March 2011 was one of the strongest ever recorded. The 9.0 magnitude event impacted an area with 11 nuclear reactors. Even worse, the earthquake triggered a 46-foot high tsunami, knocking out the operating reactors’ backup diesel generators. Three of the 11 – at Fukushima Daiichi – ultimately experienced exposure of its radioactive fuel.

The Japanese government ordered evacuations, urged people within 30 kilometres of the stricken reactors to remain indoors, and banned agricultural shipments from the immediate area.

Since the Fukushima event, nuclear power advocates have sought to reassure the global public that nuclear power is indeed safe and that it is the best energy solution to the problem of carbon emissions and climate change. In the United States, a series of floods, an earthquake, and a major hurricane during the summer of 2011 raised serious questions regarding the safety of nuclear power. In June, the Missouri River floods caused the shutdown of the Fort Calhoun Nuclear Generating Station in Nebraska. A fire caused by a faulty electrical switch forced a partial evacuation of the facility and cooling of the reactor was interrupted for 90 minutes. Two weeks later, the accidental puncturing of a flood bern around the plant forced the switch to backup generators. Another pump fire seriously injured a plant worker one week later. The US Nuclear Regulatory Commission (NRC) gave the plant a “D” rating for its performance during and after the event.

On 23 August 2011, a 5.8-magnitude earthquake centred in Sterling, Virginia was felt at 13 nuclear reactor sites across the eastern United States. The North Anna, Virginia

46 · Oct–Dec 2011 ·

reactor suffered “shaking” in excess of what it was designed for, causing it to lose electricity and immediately shut down. On 27 August 2011, high winds caused siding to fly into the main transformer in a Maryland nuclear plant and a New Jersey plant to go offline as a precaution. Also in August, Hurricane Irene knocked out one nuclear reactor and led to the voluntary shutdown of another.

Based on these events, many nations are questioning their nuclear future. Germany plans to abandon nuclear power by 2022. Even France, with its high commitment to nuclear power and excellent safety record, is studying its nuclear future for 2050 and beyond. In the United States, New York Governor Andrew Cuomo is committed to block the re-licensing of two nuclear power plants at Indian Point, 25 miles north of New York City.

At the same time, more than 50 nuclear reactors are under construction around the world, from Russia to the United States. In Asia, India, South Korea, and China are building new nuclear plants—with 26 new reactors in China alone. And China is experimenting with new technologies such as “fast breeder” reactors and the low-cost “AP 1000” with its single wall containment structure. Given the recent deadly accidents related to construction problems in China’s new High Speed Rail and subway systems, safety in a large, experimental nuclear expansion certainly raised some red flags (pun intended).

The challenge for the world in moving away from nuclear power is finding clean, affordable and safe options that are ready to go. According to a recently released report of the Natural Resources Defense Council (NRDC), there are such options. Addressing specifically the possible retirement of Indian Point in New York, it

suggests a four-point plan based on new energy efficiency measures; additional renewable capacity such as wind and solar power; expansion of transmission lines from centres of generation to population centres; and upgrading existing, older natural gas plants. The numbers are subject to debate, but it cannot be argued that we have no option but to maintain and expand our nuclear power generation capacity.

This is a risk management question for public officials and the people who elect them. Nuclear power is “clean”, and once the enormous capital costs are paid for (not a small issue), relatively cost-effective to operate. But the catastrophic risks are enormous.

Chernobyl remains a wasteland, filled with radioactive wild animals three decades later.

Estimates for the clean-up and compensation for Fukushima range between US$60 billion and US$100 billion. The NRDC estimates that the cost of a similar accident at Indian Point would be much higher, given the high value of industry, real estate and population density of the New York Metropolitan region.

We have options. Governments can use their regulatory powers to place a higher value on safety and a higher cost on accidents.

Government can provide tax incentives to producers and consumers to seek out energy options, such as solar, geo-thermal, wind, and natural gas. And governments can reward energy companies that encourage conservation, efficient appliances and consumer power generation. Our energy future is too important to leave to market forces.

William B. Eimicke is Professor of Professional Practice in International and Public Affairs and Executive Director of the Picker Center of Executive Education at Columbia University.

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· Oct–Dec 2011 · 47

Image: Paul Lachine

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In-depth

Spawning a conducive atmosphere for research and innovation

by T N Srinivasan

O

ne of the most eloquent and pithy articulations of the scientific approach to research can be found in Jawaharlal Nehru’s address to the Indian Science Congress in 1937, some 10 years before India’s independence from colonial rule. He said: “The applications of science are inevitable and unavoidable for all countries and peoples today. But something more than its application is necessary. It is the scientific approach, the adventurous and yet critical temper of science, the search for truth and new knowledge, the refusal to accept anything without testing and trial, the capacity to change conclusions in the face of new evidence, the reliance on observed fact and not on preconceived theory, the hard discipline of mind- all this is necessary, not merely for the application of science but for life itself and the solution of its many problems.”

Nehru was advocating a scientific approach to all human interaction and behaviour, not just to the pursuit and generation of knowledge. Undoubtedly a scientific approach has to be the bedrock on which all research, teaching and training have to rest.

This is particularly the case for institutions such as universities and professional schools as well as research institutes within and outside the formal university system.

There are only a handful of universities in the world that are widely believed to be global research universities. This is no accident. The primary reason is that the process of spawning or creating an atmosphere that encourages and sustains a community of scholars and researchers is both difficult and time-consuming.

Without freedom of thought, discussion and debate, a thriving research atmosphere cannot exist for long. Researchers should have the absolute freedom to pursue what they deem worth doing research on rather being told what to do.

There is a much deeper issue of whether freedom of thought, discussion and debate can exist in research institutions in societies where such freedoms do not prevail in the social and political spheres. Notwithstanding examples of success in research in authoritarian societies and also in secrecy-dominated research establishments in non-authoritarian ones, freedom cannot be kept out of the equation.

Organisational forms Clearly there are no trade-offs for freedom with other desiderata of research atmosphere.

Once the basic necessary condition of freedom is met, there often are alternatives, each with its own strengths and weaknesses for ensuring other desiderata. For example, in some countries research is carried out primarily in universities and in others in research units, including the research departments of private enterprises that cater to the market. At least in practice, research is mostly done at universities, special centres within university departments as well as in private enterprises.

Often how research happens to be organised is a historical legacy and not so much a conscious choice based on a comparison of the merits of alternative organisational forms, including the fact that teaching and research go together in research universities reinforcing their interactions to the benefit of both. Nonetheless the difference among

organisational forms in how they are run and in particular how researchers are recruited, rewarded and promoted and the freedom in choice of research areas and topics do matter both for the research atmosphere they create and for the nature and quality of the research output. A case in point is Yale, an outstanding global research university.

The process of recruitment and promotion of faculty as well as admission of PhD students is very rigorous at all levels. In principle, the pool of potential applicants is global and the availability of a faculty position is made known globally. The goal is to recruit the most qualified candidates in the world and as such the nationality and citizenship of potential candidates are irrelevant. The qualifications of applicants and non-applicants deemed worthy of consideration by the faculty are carefully vetted by a committee of faculty and a few are interviewed. The select few are then invited to give a job talk on campus which is attended by the faculty who evaluate the content, presentation and responses to questions by the candidate.

The faculty meets to discuss the candidates and their performance after their talks and formally vote in a secret ballot on who they would like the department to make job offers to.

When considering an existing faculty member for promotion to a higher rank, the process is also very rigorous. In fact, each junior faculty member from the time of recruitment to the time of consideration for promotion is monitored and encouraged to do well and advised on matters that need improvement. A system of annual reporting to the department chair and higher authorities by each faculty member of his/her research (completed but as yet unpublished as well as published), teaching and other department service, etc. is mandatory. These reports serve as inputs into the annual faculty evaluation process. A promotion committee of the faculty evaluates the work at the time of consideration of promotion and makes appropriate recommendations for the faculty as a whole for their decision. For promotions rather than reappointment for another term in the same position, letters of evaluation of the candidate are also sought from established scholars in the candidate’s fields of research and placed before the evaluation committee. Whether or not a “tenure track system” that assures a position would be available for a faculty recommended for promotion becomes relevant when a faculty member is recommended for promotion and not otherwise. In places · Oct–Dec 2011 · 49

where there is no such system as in Yale’s Economics Department, a candidate deemed qualified for a promotion may still not be promoted if a position is not available.

The process of admission of PhD students is stringent. Major research universities seek to admit the most qualified students from around the globe and provide financial support as needed. Their teaching, including the processes of qualifying for proceeding to the dissertation stage, process of choice of topics for dissertation, supervision of dissertation, and finally the evaluation of dissertation are also rigorous. Last but not the least is the process of placement. A record of placement of its graduates in good academic and non-academic positions is a signal both of the quality of a PhD programme and of its attractiveness to prospective students.

There are many components of atmosphere that are integral to outstanding research. The most obvious is the record of publications in well-established and refereed journals by the faculty. Another is a set of regularly scheduled seminars and workshops during the academic year at which speakers present their completed research or often their ongoing current research. There would also be PhD prospectus workshops for students to present ideas on topics for dissertation they are exploring for comment and suggestions from fellow students as well as faculty. Also important are mutual interactions among students and with faculty, including social interactions. How extensive and active the seminar/workshop series is and how rigorous and deep the set of questions, comments and responses is from participants serves as a good indicator of the health of the research atmosphere.

Evolution of global research universities Leading global research universities emerged after the Second World War, and the advent of the Internet is changing them continually.

Singapore, for instance, has successfully leveraged its historical networks and harnessed information technology to establish and maintain outstanding research facilities both within and outside its university system.

In her book, The Cold War University: The Transformation of Stanford, Rebecca Lowen provides a fascinating account of the transformation of American universities since the end of the Second World War into what she calls ‘Cold War universities’, and 50 · Oct–Dec 2011 ·

“Without freedom of thought, discussion and debate, a thriving research atmosphere cannot exist for long. Researchers should have the absolute freedom to pursue what they deem worth doing research on rather being told what to do.”

cites Stanford as such an example. Similar transformations occurred in major universities in the US and in Europe, though in a far more muted fashion. Lowen notes: “Before World War II, America’s universities were peripheral to the nation’s political economy. They were committed to promoting the scientific method, to allowing academic scientists and scholars to discover and study “truths”, and to developing the character of businessmen who were, for the most part, the sons of the nation’s business and professional elites. While some universities included service to society as part of their mission, none of them conceived this service as direct assistance to the federal government. Autonomy from the federal government was in fact central to the definition of the university as well as of the science and scholarship conducted within it. Similarly, the concept of autonomy, from private industry, and more broadly, the world of commerce, distinguished the university from the mere technical institute. Universities were in their own imaginary ivory towers.”

Universities underwent vast internal changes consistent with the move of leading universities from the periphery to the centre of the national political economy after World War II. Lowen writes: “Large laboratories staffed with myriad researchers having no teaching duties and working in groups with expensive, government-funded scientific equipment became common features of leading universities ...

As the organisation and funding of science changed, so did the kinds of knowledge produced and taught. Universities made room for new fields of study ... which have obvious relevance to nation’s geopolitical consensus. Traditional social science disciplines also shifted their emphasis, stressing quantitative approaches over narrative ones and individual behaviour and cultural studies over sociological ones.

Most commented upon then and now (around 1997) were changes in the education of students and in the role of university preferences … professional advancement in the post war university depended wholly on research and publication [the cliché “publish or perish” was not entirely a caricature], which in turn depended on development of patronage. Thus, undergraduate teaching received short shrift as professors, not surprisingly, showed more interest in and loyalty to their patrons outside the university than to their own institutions and students.

If the university before World War II was a community of scholars and scientists, the post-war university was … a large collection of academic entrepreneurs-scientists and scholars perpetually promoting themselves and their research to potential patrons .”

The tendencies observed by Lowen in 1997 have since accelerated. Even wellendowed private research universities in the US depend significantly on research grants from public and private sources to finance a major share of their annual expenditure rather than on income from their own endowment and from tuition and other fees charged. This dependence could possibly compromise broadly the academic freedom of the universities and their faculty, and also the portfolio of their research.

The changes that came about in American universities were not universally welcomed.

In his widely read Godkin lectures of 1963, Clark Kerr, Chancellor of University of California in Berkeley, a leading state research university, regretted the loss of a

In-depth

sense of community and the emphasis on undergraduate education that had characterised the pre-Second World War university.

He nonetheless appreciated the transformation of the university into a “multiversity” with a strong emphasis on research. Others were not so welcoming of the change.

Six years after the publication of Lowen’s book, David Kirp’s charmingly titled book, Shakespeare, Einstein and the Bottom Line, appeared in 2003, with its subtitle as “The Marketing of Higher Education”. While Lowen’s book focused on the implications for the education and research missions of a university of its dependence on and its active development of patronage both from the government and the private sector, Kirp’s focus was on the impact of market forces and market-based competition, and once again the character and mission of a university. In his words: “Priorities in higher education are determined less by the institution itself than by multiple “constituencies” – students, donors, corporations, politicians- each promoting its vision of the “responsive” (really the obeisant) institution. Strong leadership used to be regarded as crucial in the making of great universities, but nowadays presidents are consumed with the never-ending task of raising money. The new vocabulary of customers and stakeholders, niche marketing and branding and winner-take-all, embodies this shift in the higher education “industry”. This is more than a matter of semantics and symbols, for the business vocabulary reinforces business-like ways of thinking. Each department is a “revenue centre”, each student a customer, each professor an entrepreneur, each party a “stakeholder”, and each institution a seeker after profit, whether in money capital or intellectual capital.”

His book looked at “how the pull and tug of competition plays out across the landscape of American higher education”. He rightly asks whether the narratives in the book “show the benign workings of the invisible hand, the decline of the West, or – like it or not – the shape of things to come?”

Some conclude that universities have learnt to combine the best of academic commons and the market place. Others conclude that universities in fact have struck a Faustian bargain by meeting private demands of the market at the cost of their social missions, a bargain that they will come to rue. The book concludes that the university “might

conceivably evolve into just another profitseeking business. The metaphor of the higher education “industry” was brought to life in a holding company called “Universitas Inc.” Krip cites in his footnote 17 on page 314 an apparently half-in-jest suggestion of Richard Chait, Professor of Education at Harvard University, that the university “become a publicly held firm whose shares are traded on the New York Stock Exchange, its market value rising and falling with the ‘knowledge products’ it develops and the calibre of the ‘knowledge workers’ it recruits”, ignoring the fact that the current US tax laws preclude a non-profit institution such as Harvard taking such a step. But who knows the US Congress in all its wisdom might repeal this provision of laws!

In a rapidly globalising world, what happens or is likely to happen in the future in the marketisation of higher education where research belongs will inevitably have its impact on nations that aspire to build and sustain global research universities. It is of course natural and indeed appropriate that funders of research, be they governments or private foundations, charitable organisations and corporations, have their own preferences and priorities in funding what research and which organisations they fund or contract with in getting the research done. The issue for universities is how to protect their educational missions and above all their pursuit of knowledge wherever it might lead and freedom from being compromised in raising resources for their functioning. Any compromise of academic freedom will inevitably extinguish creative research in the end.

And freedom cannot be compartmentalised – it has to encompass the social and political arena besides academia.

Singapore and NUS in a globalising world Professor Robert Klitgaard, a Visiting Li Ka Shing Professor at the LKY School with whom I had exchanged emails on the issues discussed here, not only brought my attention to Krip’s book but was also extremely generous with his thought-provoking comments. I can do no better than paraphrase his main observations and also his reading of research in Singapore.

First, he notes that Singapore does not organise research almost exclusively into non-teaching research institutes and teaching in universities which do not engage in

research. Since I believe such separation is harmful to both teaching and research, Singapore is wise not to separate the two.

Moreover, in his view, there is a well functioning system of peer review and quality control in research. In India, where universities do not do research, none of the universities were among the top 100 in the world according to one ranking, whereas NUS was ranked 27. However, Klitgaard has concerns about the atmosphere in Singapore for policy-relevant research. Second, he notes that the narratives in Kirp’s book include studies of successful and unsuccessful businessuniversity partnerships. Although he thinks such partnerships do exist in Singapore – not just with the government but with private corporations as well – in his view, a crucial question both in Singapore and elsewhere is how to take advantage of the partnerships to pursue basic and applied research, while guarding against the risks. Lastly, the LKY School’s own research centres seem poorly integrated with the faculty and teaching. I share this last observation and find it unfortunate that a fruitful integration of mainline departments and the LKY School has yet to develop. I have often heard it said that Singapore should take advantage of its strategic location in Asia and lessons of its rare success in transforming Singapore in one generation from being a less developed to developed country to cultivate and promote an “Asian approach” to development.

Whatever the merits of an Asia focus in other areas of policy, pushing it too far in research would, in my view, be counterproductive and lead to some of the worst features of the higher education industry that Kirp warns against. On Klitgaard’s crucial question of making the best use of partnerships to pursue basic research in particular, I am somewhat sceptical of its feasibility, primarily because the very nature of basic research is such that its fruits are more uncertain and their potential applications are not only uncertain but also likely to be in the far future features that are not attractive to most risk-averse and myopic private businesses.

T N Srinivasan is the Yong Pung How Chair Professor at the LKY School. He contributes frequently to the research and debate on India’s economic reforms in a comparative perspective, particularly in relation to China and South Asia. His most recent book is Growth, Sustainability and India’s Economic Reforms. · Oct–Dec 2011 · 51

Both economic and political logic need to be applied at the same time when assessing the viability of public policy proposals, argues Jeffrey D. Straussman.

T

he first time I arrived in Singapore I did what most people do at Changi International Airport. After clearing passport control and getting my baggage, I took a taxi to my destination. Nothing out of the ordinary so far. I noticed that the taxi meter had two portions, the main part and a smaller part in the lower right-hand corner of the meter.

Watching the two was intriguing, especially when the driver drove under a contraption with the big letters, ERP. I later learnt what ERP meant and, after some discussion with my colleague Paul Barter, a specialist in urban transit, I received a primer on how the system worked.

ERP, or Electronic Road Pricing, is Singapore’s version of “congestion pricing”.

The concept is deceptively simple and has its origins in the theoretical work of the late Columbia University economist, William Vickrey, who received the Nobel Prize in Economics for his scholarly contributions to applications of price theory to achieve public policy objectives. People who have been caught in massive traffic jams in large cities, such as Jakarta, Bangkok, New Delhi, Peking, New York, London or Paris can appreciate the simple logic behind congestion pricing. Here is the economics in a nutshell: When you are stuck in traffic in your own car, you do not only expend personal time and money but also increase the cost to others simply by being there at the same time – in other words, you are creating congestion. Economists call this a “negative externality”. So how do we encourage people to change their behaviour? Quite simply, we make it more expensive to use the roads at certain times of the day. In Singapore, this applies to taxis, too, so you, the passenger, will actually pay more during peak times.

The assumption is that the price mechanism – the extra charge during the peak periods (that lower right part of the meter if you are in a taxi) – will encourage some drivers to alter their work times and shift away from the peak period because they do not want (or cannot afford) the extra charge. Some might car-pool and others would use mass transit instead. The whole point is to get drivers to internalise the negative externality cost of congestion and thereby shift their behaviour accordingly.

So if the concept is simple and based on straightforward economic reasoning, why haven’t more cities followed Singapore’s lead? My home town of New York City is instructive. Anyone who has taken a taxi from John F. Kennedy International Airport to central Manhattan and has been stuck in traffic for an hour and a half for a distance that is not very great might wonder why congestion pricing has not been introduced in NYC. While traffic in NYC is nowhere as heavy as Jakarta, it can get quite heavy especially during peak hours. The Mayor of New York, Michael Bloomberg, introduced the idea a couple of years ago and it was a resounding failure. The economics remained simple but the politics was positively brutal. His proposal was heavily criticised by various groups and he was unable to muster enough support from state legislators who were crucial to the proposal’s success. In the end, his proposal died. Simple economics but hard politics.

Consider a much different example of easy economics but hard politics. Obesity is on the rise in many countries around the world including Asia. I am not a health policy specialist but I know that there are many reasons offered to explain rising rates of obesity and

Image: teddy-rised @ flickr.com

one needs to look at which groups in society are especially prone to obesity. Health professionals point out that childhood obesity is especially worrisome. So how does economics help? Consider what many governments do to discourage certain types of consumption – they make the cost of the product more expensive by adding a hefty consumption tax to its price. Tobacco and alcohol immediately come to mind and anyone who has purchased either or both in Singapore would know exactly what I am referring to.

Economists have studied the impact of these taxes on consumption, and while I am sure

“Economics imposes discipline on our thinking so it is necessary and dare I say a crucial part of any policy analyst’s repertoire – but it is not sufficient. Politics is messy, it has rules but they are harder to discern than the simple elegance of a concept such as price elasticity, but this does not make politics less important in the policy process.”

52 · Oct–Dec 2011 ·

In-depth

Easy Economics, Hard Politics

there is some dispute among economists who study this topic, I will assume that very high consumption taxes will dampen demand for the product. But more importantly, the simple economics of using “price elasticity” to influence the demand for tobacco and alcohol has not experienced much political backlash.

Smokers surely grouse about the high taxes and I would certainly prefer a bottle of wine in Singapore to be less expensive, but one does not sense a huge political outcry over these taxes. (Of course, government media campaigns in addition to consumption taxes help the goal of reducing consumption.) So if it works for alcohol and tobacco (and there is still debate about whether it truly does), why not do the same for products that contribute to obesity?

My home state of New York in the United States offers another interesting example. A couple of years ago, the then Commissioner of Health for the State of New York, the late Dr Richard Daines, proposed a tax on sugary soft drinks. Armed with a plethora of data and a top-notch PowerPoint presentation,

the Commissioner proceeded to argue the case for such a tax. His medical science was impeccable, and though no economist, his application of the taxing principle was solid and straightforward. He made two points: First, the tax would, in his estimation, dampen demand for sugary soft drinks which he deemed to be a scourge on childhood obesity, especially among the poor.

Second, the revenues derived from the sugar tax would be earmarked for child obesity prevention programmes. Unfortunately, the Commissioner was better at public health advocacy and even amateur economics than he was at politics. His ideas landed with a big, dare I say it, “fat” thud. The soda lobby lambasted his proposal and sceptical legislators viewed his proposal as government paternalism. Some grumbled, “What will they ban or try to tax out of existence next?” and his proposed tax on sugary soft drinks went nowhere.

But New York isn’t Denmark! Recently, the European country introduced a “fat tax” on products with saturated fats in a bid to

combat obesity – not actually a very serious problem yet in Denmark since only about 10 per cent of Danes are considered to be clinically obese. The tax is about US$3.00 for a kilogram of saturated fat so it adds a modest amount to foods such as butter, pizza, milk, chips or a hamburger. Will it have its intended effect? It is far too early to tell, but like the congestion price and the soda tax, it is based on the simple concept of price elasticity. Unlike those examples, however, it surmounted the more difficult political test. It is now law, and it is generating some interesting commentary if the various blog postings are anything to go by.

So what is the takeaway from these examples? The simple point is that public policy proposals invariably include a mixture of economics and politics. There is an old joke that pokes fun at economists that goes like this: Three people were stranded on a desert island and had no food. One was a chemist, the second a physicist and the third an economist. A can of baked beans floated ashore. The chemist suggested that they rub two sticks together to start a fire which would then cause combustion to burst the can open. The physicist calculated a trajectory that would likely break the can open. The economist countered, “Assume we have a can opener.”

Often the simple elegance of economic assumptions about behaviour is important to sketch out policy options. Students of public policy need to learn the concepts and assumptions and appreciate their power to sharpen their abilities to analyse public policies.

Economics imposes discipline on our thinking so it is necessary and dare I say a crucial part of any policy analyst’s repertoire – but it is not sufficient. Politics is messy, it has rules but they are harder to discern than the simple elegance of a concept such as price elasticity, but this does not make politics less important in the policy process. So our challenge as teachers and practitioners of public policy is to apply the two logics at the same time if we are going to understand why some policy ideas are likely to succeed and when they are more inclined to fail. So, do you think Jakarta is ready for congestion pricing?

Jeffrey D. Straussman is Visiting Professor and Faculty Director (Executive Education) at the LKY School. He was previously Dean of the Rockefeller College of Public Affairs & Policy, University at Albany, State University of New York, USA. · Oct–Dec 2011 · 53

Behavioural economics: an introduction to psychological jujitsu

by Paul Brest

54 · Oct–Dec 2011 ·

T

he classical economic model assumes that humans are consistently rational – that they maximise their utility through choices based on a stable set of preferences and an optimal amount of information. Given these assumptions, people’s behaviour can be influenced rather predictably through taxes, penalties and other economic incentives.

Yet empirical inquiry reveals that people often diverge greatly from the behaviour predicted by the model of rational decision-making. At our best, to use Nobel laureate Herbert Simon’s phrase, we are only boundedly rational, lacking the cognitive capacity to reason about the myriad decisions we make every day. Moreover, we are subject to a number of cognitive biases and employ various heuristics – cognitive shortcuts – that work much of the time but sometimes fail us miserably. Not only our cognitive capacity, but our willpower is bounded.

Adults often manifest the behaviour of many children who, when offered one sweet now, or two sweets if they waited a few minutes before eating the one placed before them, could not defer gratification.

Can such departures from rational behaviour be systematised and combined with an economic model of

decision-making to improve the ways that people go about their everyday lives? This is a central question for the field of behavioural economics, which draws on classical economics, social psychology, and the psychology of judgment and decision-making. Although little progress has been made in improving people’s willpower and capacity to avoid cognitive errors, behavioural economics seeks to mobilise our limitations and biases in order to improve the outcomes of our decisions.

One might think of this approach as psychological jujitsu– a Japanese martial art that uses one’s opponent’s force against himself. By the same token, behavioural economics accepts our cognitive limitations, but builds on their inevitability to try to improve our decision-making.

Consider people’s difficulties in deferring gratification and their pervasive inability to properly discount for the future: Most prefer $100 today over $200 in a year, even though the implied interest rate is unrealistically high. This helps explain why it is so difficult to save money. Yet several programmes have been highly successful in addressing this problem, which is especially

In-depth

devastating for the very poor, for whom even a few pennies spent on non-essential items may have dire economic consequences. The programmes have the common theme of keeping earnings out of reach until needed.

For example, the Savings and Fertilizer Initiative Coupon Programme allows farmers in developing countries to purchase coupons for next season’s fertiliser immediately after being paid for this season’s harvest; participants end up buying 50 per cent more fertiliser as their peers, who spend the money in the intervening period. The Rotating Savings and Credit Association Programme encourages savings by fruit or flower wallahs, by sending around collectors to take daily deposits for a small fee – that is, a small negative interest rate. Yet another programme locks a customer’s savings account until a specified balance has been reached, greatly increasing savings.

While all of these examples involve external interventions, individuals can also engage in personal psychological jujitsu.

Consider how we might use our susceptibility to the sunk-cost fallacy to compensate for our bounded willpower – say, our difficulty in adhering to a resolution to go to the gym several times a week to stay healthy.

Rational economic decision-making ignores sunk costs – expenditures already made that cannot be recovered. Yet humans have a strong tendency to throw good money after bad – to avoid acknowledging to themselves or others that they made an error.

I have heard many U.S. politicians argue against withdrawing from disastrous foreign military engagements because pulling out would mean that lives were lost in vain. On the individual level, once people have paid for something, they want to realise the benefits of their investment. We are far less likely to walk out of a movie theatre for which we have paid $10 admission than to stop watching the same movie free on television.

So how do we use the sunk-cost fallacy to stay healthy? By purchasing a year’s membership in the gym, and allowing the thought of wasting the fees paid to motivate working out on a morning when we would rather stay in bed. Similar commitment schemes have been developed for goals that can’t provide their own cost sinks. There’s a website that allows people to have their credit cards charged for donations to causes they despise if they fail to achieve goals – e.g. stopping smoking – stated in advance on the site.

Let me turn to another pair of human shortcomings – our limited ability to process statistical information and our limited attention span. Under any plausible moral theory, each person’s life is equally valuable, and one million children dying of starvation in Africa is one million times as bad as one child dying. But which charitable appeal is likely to be more effective? (1) “Food shortages in Mali affect more than 3 million children. You can help some of these starving children;” or (2) “Your donation will help Rokia, a sevenyear-old girl from Mali (showing a photo of Rokia). She is desperately poor and faces the threat of severe hunger or even starvation.”

On average, people donated twice as much in the second scenario as in the first.

Stalin remarked: “The death of one man is a tragedy. The death of millions is a statistic.” But it turns out that the phenomenon called “psychic numbing” is true for charitably inclined people as well as tyrants. Large numbers don’t have much meaning for most of us, and the cognitive effort of comprehending them detracts from our empathetic reaction. Unfortunately, the phenomenon manifests itself even with small numbers: people made a smaller net donation when shown photos of both Rokia and another child than when shown only Rokia’s photo.

Non-governmental disaster relief organisations can use their knowledge of this phenomenon in their charitable appeals by forgoing statistics and describing the situation of a single victim. And charities can take advantage of a different psychological phenomenon as well – the fact that we are not very sensitive to a small expenditure bundled together with a larger one in the same transaction. When you check out a $70 bag of groceries at my local supermarket, the credit card display asks if you would care to add $1 for the charity featured this month. Not only is the expenditure insignificant compared to your bill, but the supermarket has made the gift transaction as easy as it could be.

Let me end with another pair of psychological phenomena that can converge to influence people in a powerful way. First, people tend to look to others for cues about how to behave. This phenomenon of “social proof” has been used to promote conservation. Our monthly utility bill compares our family’s electricity usage to our neighbours’ and vividly highlights when our consumption is high. This acts as a strong motivator to be frugal. By the same token, residents who

are informed that their neighbours recycle paper and glass products are much more likely to do so themselves.

Second, people are reluctant to change the status quo when the consequences seem uncertain. This is partly due to social proof and partly to our being more averse to possible losses than welcoming equivalent gains.

As a result, we tend not to deviate from default positions, even when it only takes a stroke of the pen.

These two phenomena – aided by inattention and inertia – come together in explaining the “stickiness” of default conditions.

Consider that when you get a driver’s license in Austria, you automatically consent to donate your organs if you are killed in a crash – unless you opt out; but that in neighbouring Germany, your organs will not be donated unless you opt in. As a result, over 99 per cent of drivers in Austria are enrolled in that country’s organ donation programme, while only 12 per cent of drivers in Germany are enrolled. For another example, in addition to mandated social security, American employees can enrol in a voluntary retirement plan, whose cost is shared by the employer. When enrolment is the default option, many more employees participate than when they need to take affirmative steps to enrol. Also, and a different aspect of the psychology of choice, employees who are offered a relatively small set of retirement plans are more likely to enrol than those offered a large set: many options make the decision seem too complex to handle.

These are just a few examples of how behavioural economics offers a valuable complement to classical economics to improve people’s behaviour for their own benefit and that of society at large.

Behavioural economics also has its limitations. For example, because the effects of climate change seem remote, because of poor feedback loops, problems in deferring gratification, and extravagant future discounting, it is difficult to induce people to take action now to prevent catastrophic global warming. But behavioural economics is still a very young field, with the potential to address problems that seem intractable at the moment.

Paul Brest is President of the William and Flora Hewlett Foundation and Dean Emeritus of Stanford Law School. David Hoffert also contributed to this article. · Oct–Dec 2011 · 55

F

ifty years ago, scholars and politicians alike had come to the conclusion that religion was on the decline. It was inevitable, so the thinking went, that popular religious faith would diminish as societies became increasingly prosperous and equipped with the fruits and insights of science, technology, and medicine.

Yet we know today that this thesis was wrong. Not only has religion persisted, it has flourished. According to the CIA World Fact Book, nearly 77 per cent of the world’s population adheres to Christianity, Islam, Hinduism or Buddhism. Josef Stalin once derisively asked how many military divisions the Pope had. Within half a century, Stalin’s empire was swept away and the Papacy survived.

This discrepancy between received wisdom and reality has created a situation today in which many of us are playing catch-up. Confronted with a world we did not expect – a world increasingly intertwined through the forces of globalisation, filled with religious actors engaged in both constructive and destructive behaviours – we are left struggling to get a handle on how to understand world events which, no matter how far afield they might occur, shape and influence our daily lives.

Slowly but surely, academics are getting the message. The previously entrenched scepticism about religion’s scholarly significance is giving way to an appreciation of the role it plays in shaping our interactions with academic disciplines across the university – from economics and political science to public health and human rights. Though there is much work still to be done, it is clear that religion is being taken more and more seriously on university campuses across the globe.

Policy makers and politicians also are coming to terms with religion’s influence in the globalised world. When I began setting up my Faith Foundation, nearly every politician I spoke with immediately grasped the relevance of religion in shaping effective policy responses to situations both at home and abroad. Yet these policy makers and politicians simply don’t know where to turn to locate the necessary information on religion.

This lacuna is not only lamentable, but also dangerous. Public policies which neither account for the institutional resources presented by religious and faith-based organisations, nor the comprehensive normative traditions adhered to by individual citizens, can never hope to effectively bring about positive change in our societies.

This is why I started the Tony Blair Faith

56 · Oct–Dec 2011 ·

Foundation, which seeks to promote education about religion on university campuses and in secondary school classrooms, as well as social action across religious faiths in the fight to eradicate malaria. In universities, we are facilitating the production of outward-facing research and analysis of religion on university campuses across the world through our Faith & Globalisation Initiative – of which the National University of Singapore is one of our eight Lead University partners. In schools, our Face to Faith programme provides students in 17 countries with the opportunity to interact with one another over video-conferenced discussions on the different ways in which religion impacts and influences their lives. Our Faiths Act programme has volunteers in over 100 countries around the world, all engaged in the fight to eradicate malaria.

These issues are not peculiar to any one place or region. They are global. We live in an interconnected world, and this question will be of critical importance to Singapore and Asia as it is to the West. The notion of an Asian/’Western’ cultural and religious dichotomy has been overdrawn. For instance, it is widely believed in the West that the role of religion has been expunged from China’s public policy discourse. Yet the Beijing Forum, hosted by another of our Faith & Globalisation Lead Universities, Peking University, made the topic of religion’s influence one of the pillars of their 2010 forum and continues to address it in this year’s forum on “Tradition & Modernity, Transition & Transformation”.

My commitment to these questions and issues is a direct result of my experience as Prime Minister of the United Kingdom for 10 years. During my time in office, I was repeatedly faced with situations infused with religious actors and rhetoric, in both productive and divisive ways. The conflict in Kosovo, for example, where the UK and other countries intervened to stop ethnic violence in 1999, was a situation in which the confusion of political identity and religion led to disastrous results.

Serbian President Slobodan Milosevic stoked the flames of ethno-nationalism by evoking the 1389 Battle of Kosovo between the Orthodox Christian Prince Lazar and the invading Ottoman army of Sultan Murad I, subversively using the collective historical memory to mobilise religion in truly nefarious ways.

As Prime Minister, I was also closely involved in the Northern Ireland peace process. The aptly named Good Friday Agreement

paved the way for devolved and inclusive government, the early release of terrorist prisoners and the decommissioning of paramilitary weapons. The Agreement would not have been reached without the inclusion of both religious actors and political leaders such as Ian Paisley, Martin McGuiness and Gerry Adams. And it would not have succeeded without an understanding of the role of religion in the minds of the different leaders.

In 2005, I presided over the Gleneagles G8. The two biggest issues we discussed were Africa and climate change. We agreed to cancel the debts of 18 African countries and to provide US$50 billion in aid. I doubt we would have succeeded without support and effective pressure from faith-based organisations. The Micah Challenge, for example, is a global coalition of Christians holding governments accountable for their promise to halve extreme poverty by 2015. Promoting the eight Millennium Development Goals (MDGs), it seeks to empower Christians to speak out for justice and to turn compassion into action.

Organisations such as Micah Challenge keep governments accountable for their promises.

And as I survey the world today, I find the situation to be much the same as it was during my time in office. The Arab Spring is

Spotlight

Faith and policy making in the 21st century

by Tony Blair

Tony Blair and faith leaders.

challenging our foreign policy assumptions as much as the terror attacks on America on September 11, 2001 did. Will the new governments that are emerging create religion-friendly democracies and will their religious communities champion democracy-friendly religions?

Or take the Mindanao conflict in the Philippines, the world’s second-oldest ongoing conflict. This internecine conflict between Christians and Muslims has resulted in the death of 150, 000 people and the displacement of 2 million citizens. I recently said that we cannot hope to establish peace without accepting that religion is part of the problem, and therefore religious actors must become part of the solution. The Philippines government is prepared to recognise this and help make it happen, in part through a close partnership with my Faith Foundation’s work in schools and universities.

Religious actors from Mahatma Gandhi to Martin Luther King Junior have long played roles in political projects building peace in conflict-ridden societies. Indeed, every religion from the Abrahamic faiths to Buddhism to Jainism has a peace tradition. Archbishop Desmond Tutu of South Africa was both an anti-apartheid leader and a theologian of reconciliation. It is no coincidence that he chaired

South Africa’s famed Truth and Reconciliation Commission (TRC).

I have seen time and time again that it is often a faith-inspired organisation that brings hope to the remotest communities. Take Sierra Leone, a country close to my heart. My Faith Foundation is working with religious organisations to combat the country’s number-one killer: malaria. This easily preventable disease has killed more people than those murdered in the brutal civil war. Our Faiths Act programme is training priests and imams in Sierra Leone on health messaging surrounding the use of bed nets, so as to ensure that their communities understand why and how a bed net can protect a family from malaria – a programme on which we are also working closely with Georgetown University to ensure a productive research output that can inform other governments as to how faith-based organisations and religious communities can serve as useful partners in public health initiatives.

This raises the question of religious actors’ participation in the democratic process. This question is topical in Britain at the moment where, as in America, many interconnected individuals and organisations pursuing a religiously inspired agenda are increasingly punctuating the political landscape. Controversial issues like

abortion and stem cell research are being raised by religious people.

And while many understandably find it troubling for social policy questions to be addressed from a religious perspective, it is inevitable that people bring normative claims derived from their various ideologies – religious and secular – to bear upon such issues.

We would do well to remember that theological justifications can be as inaccessible as political justifications. A brief glance at the current fiscal debate in America illustrates that fundamental and foundational secular disagreements can be just as intractable as those motivated by theology.

This approach to public policy, however, will require an acknowledgement by secularists that people who are religiously inspired may have something to offer and to add to the forum where political debate is conducted.

This also means that someone who is religious must be prepared to acknowledge that the secular can have something of value to say to the religious world. This could be best described as a “healthy separation” between state and religion avoiding an unhealthy exclusion.

The challenge in this century for Singapore and the wider world must be to develop a ‘faith-friendly society’ and ‘society-friendly faith’. In order to achieve this, we will need a combination of the right constitutional framework, the right policy framework and, most importantly, for all of us to exhibit the ‘right’ attitude to those of other faiths in our daily lives. It is an individual’s choice if they decide to ignore the role of religion in the lives of others across the world. Policy makers, however, are not afforded this luxury. Politicians and policy makers have no choice but to take religion seriously if they want to engage with the world as it is today.

Tony Blair was Prime Minister of the United Kingdom from 1997 to 2007, after which he was appointed the official Envoy of the Quartet on the Middle East. The Tony Blair Faith Foundation (www.tonyblairfaithfoundation. org), established in May 2008, aims to promote respect and understanding about the world’s major religions and show how faith can be a powerful force for good in the modern world.

This was followed in July 2009 by the launch of the Faith and Globalisation Initiative with Yale University in the US, Durham University in the UK, and the National University of Singapore to deliver a postgraduate programme in partnership with the Foundation. · Oct–Dec 2011 · 57

Islam and democracy in Indonesia

Image: Heru Seyto H @ flickr.com

by Suzaina Kadir

Praying at Istiqlal Mosque in Indonesia, Southeast Asia's largest mosque

I

ndonesia is a religious society. Some 86 per cent of its 238 million people identify themselves as Muslim. Religion, particularly Islam, was at the centre of the nation’s birth.

Islamic movements shaped the nationalist struggle against the Dutch, and became quickly embroiled in the struggles to define the nature of the nation-state. From the beginning, Indonesia’s political contests centred on whether the nation-state should be defined by religion – Islam – or whether it should remain starkly secular. At the point of independence, Indonesian nationalists compromised with religionists and officially acknowledged God in the nation. The Indonesian state ultimately enshrined God in its ideology of Pancasila.

Religion continues to play an important role in the political and social life of the country. In fact, there are strong arguments that the pace and extent of religiosity is intensifying in the aftermath of Indonesia’s democratisation. Certainly outward symbols of religiosity in the form of the Islamic head dress and attendance at mosques and churches have been on the rise. This is particularly evident among the growing middle 58 · Oct–Dec 2011 ·

classes in Indonesia’s major cities, including Jakarta, Bandung and Surabaya.

Western scholarship remains wary of the impact of religion on democracy and development. The debate has ranged from an extreme view that religion is fundamentally incompatible with democratic development to a milder version that argues for some level of compatibility between certain versions of Christianity and democracy.

This is somewhat understandable since the history of liberal democracy is traced to the Enlightenment, which involved the triumph of reason over religion.

So, what does this mean for Indonesia’s experiment with democracy? Will religion hinder the institutionalisation of a democratic order in Indonesia? Will Indonesia be under constant threat from religionists who want to see the establishment of a theocracy, much like that of the Islamic Republic of Iran or Saudi Arabia? Would religion, and particularly Islam, hinder Indonesia’s progress?

These are valid questions but they point to inherent biases in how Western scholarship views the linkage between religion and politics. Indonesia’s religious landscape is

complex and some of the worries are real.

We cannot deny the rise of extremist ideology with several terrorist bombings linked to Islamic terrorist cells operating in the region.

The Bali and Jakarta bombings in 2005 and 2009, respectively, are a reminder of the dangers that religion can pose to the nation-state.

There have also been reports of violence targeted at religious groups not aligned to the mainstream, suggesting perhaps a growing intolerance in Indonesian society resulting from a deepening attachment to religious beliefs. These include reports of church attacks in residential areas in the greater Jakarta area, as well as the violent clashes over the Ahmadiyah sect, a brand of Islam that is not recognised by mainstream Muslims.

But these incidents mask the complex picture of religion in Indonesia. Indonesia remains one of the more diverse societies in the world. There is a dizzying array of ethnic, cultural and religious identities that cut across each other and intertwine. Where Indonesian Islam is concerned, what we are seeing is increased heterogeneity among the different streams and schools of thought. At independence, Indonesian Islam was roughly

Spotlight

divided into the traditionalist and modernist streams, the latter calling for greater purity in the religion vis-à-vis the synchronistic tendencies of the former. Today there is a far wider range of interpretations of Islam among Muslims in Indonesia. Some brands of Islam are more hardline in their orientation, but they jostle for adherents among groups that are more liberal as well as those that advocate a middle ground, including more popular, modern and middle-class brands of Islam.

These moderate, middle-class versions of Islam are no different from the aspirations of the middle class everywhere that have been central to democratic development. They want greater political and economic participation in the nation-state’s development. They are against corruption and for the rule of law so that they can benefit from the economic pie. These communities do not challenge the fundamental basis of Indonesian society as one that is tolerant and diverse. There is no conflict with Pancasila, and they do centre values in the framework of the nation-state.

Like other faith-inspired communities, the emerging Muslim middle classes in Indonesia would like Islam to have a place in the public domain. This would mean the freedom to practise the religious tenets in their daily lives and to have Islam frame their conduct in society. This does not translate into an embrace of Islamic ideology that will necessitate the imposition of Islamic law and the establishment of a theocracy.

An excellent illustration of this is the growing popularity of International Islamic schools in and around big cities such as Jakarta and Surabaya. These schools offer a modern, integrated curriculum that strives to find accommodation between religious and secular content. Several schools proudly proclaim that they teach science and math infused with religious values. At least one school offers Mandarin as a core language for business. These schools appeal to the Muslim middle class, many of whom are wary of their children growing up without an appropriate value system but who are unlikely to enrol their children in traditional Islamic boarding schools that focus exclusively on Islamic subjects.

The performance of Islamist political parties in the newly established democratic space also does not indicate the movement of Indonesian society to the far right. Instead, the last two general elections showed that while Indonesians generally supported a more openly religious society, they were unwilling to lend their support to overtly Islamic political parties. Parties that campaigned for Shariah law did not do well during the elections. Between 2004 and 2009, the overall percentages for Islamic political parties fell across the board. Instead, the majority of Indonesians voted for secular parties that displayed their positive associations with popular, moderate Islam.

Another interesting example is the case of the Prosperous Justice Party, which failed to

appeal when it campaigned for Shariah law in 1999 and then suffered a setback when it opted to de-emphasise its Islamic credentials in its entirety some 10 years later. It performed well in 2004 when it emphasised values for better governance without overt reference to Islam. If the electoral results are a trend, it appears that Indonesian Muslims want legitimate space for religious values in the public domain but the place for religion remains very much within the ambit of a Pancasila state.

If Islam is to find accommodation with democracy, it is quite likely to occur in Indonesia. This is because of the diversity and tolerance that has been built into the culture and psyche of the Indonesian people. More importantly, religion’s role is acknowledged to have space and importance in the public domain. It is at the heart of the state ideology, and understood as an important partner in the country’s progress.

Religious organisations and institutions are important stakeholders in the nation.

These organisations now have legitimate space, and are acknowledged contributors to development.

With the rising Muslim middle class, Islam is now normalised in a democratic Indonesia, and with this normalisation, comes moderation.

Suzaina Kadir (sppsak@nus.edu.sg) is Assistant Dean (Student Affairs) and Senior Lecturer at the LKY School.

“Like other faith-inspired communities, the emerging Muslim middle classes in Indonesia would like Islam to have a place in the public domain. This would mean the freedom to practise the religious tenets in their daily lives and to have Islam frame their conduct in society. This does not translate into an embrace of Islamic ideology that will necessitate the imposition of Islamic law and the establishment of a theocracy.”

· Oct–Dec 2011 · 59

Executive Education

nurturing sustainable water solutions

by Luana Chow and Pragnya Alekal

A

s Asia experiences unprecedented growth and prosperity, innovation is required to address a health and sustainability issue that is central to the region’s progress - the growing water and sanitation needs of its 3.7 billion inhabitants. While some parts of Asia enjoy clean water and good sanitation facilities, this has not been evenly distributed across the region.

Moreover, water resource development is still not well integrated into the overall national development strategy in most developing countries, and many countries do not make the distinction between water as a resource and water as a service, resulting in the absence of proper institutional and regulatory frameworks in the sector.

With these concerns in mind, the LKY School partnered with the Temasek Foundation and PUB, Singapore’s national water agency, to convene the inaugural Temasek Foundation Water Leadership Programme (TFWLP) in Singapore from 10-21 October, 2011. TFWLP shares valuable insights from Singapore’s much-admired development of its water resources with the rest of the world, showing what is possible with innovative management and thinking despite the country’s resource constraints.

Aimed at building capacity in developing countries in Asia, the programme will train 70 mid-career professionals and upper-level managers in the water industry each year on “best practices” in water utilities governance, effective management of water utilities, and potential strategies to deal with existing and future challenges. Learning aside, the programme is an opportunity for water industry leaders to develop networks with their peers in neighbouring countries. The first course attracted 30 participants from five countries (the Philippines, Sri Lanka, China, Kazakhstan and Indonesia) and the next one will take place in April next year.

In preparation for the programme, teams were required to prepare a project proposal based on a specific water management challenge faced by their city or country, with an action plan that could address the challenge in the year after the programme ended. During the two-week course, participants refined their proposals after several consultations with faculty and practitioners from the LKY School, PUB, and the Asian Development Bank. “This programme inspired me to take a fresh approach towards dealing with water issues in the public utilities,” said Mr. Adolf Tommy Sitompul, Deputy Director (Regulation) at the Ministry of Public Works in Indonesia, adding that he found the sessions on Municipal Water Pricing and Tariff Design, Regulation of Water Utilities as well as the Singapore’s experience in integrated water resource management especially useful.

The programme incorporates highly interactive classroom discussions, case studies, panel discussions, and site visits to PUB facilities such as the Marina Barrage and “Active Beautiful Clean” water projects like the Sengkang Floating Island. Classes were conducted by world-renowned faculty including Professor Peter Rogers of Harvard University and 60 · Oct–Dec 2011 ·

Participants, led by PUB staff, visit MacRitchie Reservoir to understand Singapore’s “Active Beautiful Clean Water Projects”.

Associate Professor Wu Xun co-leads a session with Professor Dale Whittington from University of North Carolina at Chapel Hill.

Professor Dale Whittington from the University of North Carolina at Chapel Hill, and students participated actively in one-on-one discussions with field staff and world-class policymakers.

What distinguishes this programme from others is its emphasis on knowledge transfer. Apart from their projects, participants conduct training workshops for their counterparts in other ministries, statutory boards and local governments after returning to their countries. This helps to facilitate the continuous flow of ideas and research between participants, faculty and practitioners as well as improve water management in various communities.

Luana Chow (luanac@nus.edu.sg) is Assistant Manager, Executive Education, at the LKY School. Pragnya Alekal (sppra@nus.edu.sg) is Manager at the Institute of Water Policy, LKY School.

lKy School Executive Education The School’s Executive Education Programmes are designed to serve the training needs of organisations and working professionals in the public, private and not-for-profit sectors by strengthening the leadership and management capabilities of both organisations and individuals. In addition to customised programmes, we offer Open Enrolment Programmes at the School that cater to the needs of timeconstrained senior managers who wish to refresh their managerial knowledge and skills, or knowledge in certain topics.

The following open enrolment programmes will be offered in 2012. For enquiries, please email us at lkysppep@nus.edu.sg or visit our website at www. nus.edu.sg/executive.aspx

NON-PROFIT MANAGEMENT PROGRAMME FOR THE 21st CENTURY 13 February –7 March 2012

The non-profit sector is becoming larger and more complex all over the world, and Southeast Asia and Singapore are no exception to these broad global trends.

Whether the organisations provide services to the less fortunate, offer arts and sports progammes, produce educational innovations for young people, or serve the elderly, managers of non-profit organisations (NPOs) require the knowledge and skills to do their jobs effectively. The four-week NPM21 Programme, developed in collaboration with the Tote Board, is designed for senior management staff of non-profit organisations in Singapore and the region. This programme will provide participants practical insights about management and leadership in the non-profit sector. It will also enhance managers’ skills in a range of core management competencies, including human resources, managing volunteers, financial management, fund raising and applications of information technology for non-profit organisations.

DELIVERING RESULTS IN THE FIGHT AGAINST CORRUPTION: SINGAPORE’S EXPERIENCE, GLOBAL TRENDS AND THE LEADERSHIP CHALLENGE

SENIOR MANAGEMENT PROGRAMME 2012 4–29 June 2012

Citizens across Asia and in many countries of the world identify corruption as one of the chief problems of governance. Governments respond by loudly proclaiming their commitment to combating corruption, and putting anti-corruption programmes and policies in place. Yet the results can often be disappointing. This five-day open enrolment programme aims to examine the major types of corruption and the international trends surrounding it. Participants will be equipped to diagnose corruption risks and build strong capacities across a governance system for prevention of corruption and to mobilise an effective operational and enforcement response. This programme is organised in collaboration with Corrupt Practices Investigation Bureau (CPIB) of Singapore.

The Senior Management programme (SMP) is our flagship international programme that explores global issues affecting decision-making and leadership.

Jointly developed with the School of International and Public Affairs (SIPA) of Columbia University, this four-week programme brings together senior management professionals from the public, private and not-for-profit sectors to embark on a journey of renewal, aimed at improving their performance as leaders in their respective organisations.

Together with a distinguished team of experienced academics and practitioners, the SMP will provide participants with a holistic learning experience across a host of pertinent topics and equip them with the skills they require to have a positive impact on their organisations and society at large. All participants will benefit from a rigorous study of policies, framework, tools and cases that have succeeded and those that failed.

For more information, please contact Ms. Jenyce Lim at sppljnj@nus.edu.sg

For more information, please contact Mr. Sunny Lim at spplwcs@nus.edu.sg

5–9 March 2012

For more information, please contact Ms. Lynn Zakaria at sppzmz@nus.edu.sg · Oct–Dec 2011 · 61

Alma Mater

Dispatch from Eastern Afghanistan: building capacity, delivering relief Tami Sant gives an account of how the United States Agency for International Development is helping to link the central government of Afghanistan to remote areas and build local capacity to provide services and support to citizens.

Image: Government of the Islamic Republic of Afghanistan

Agriculture training

T

he rains have started in eastern Afghanistan.

The change in temperature is a refreshing break from the relentless summer heat but the storms just bring a different kind of hardship to this rugged landscape. Here in Kunar Province, only about 12 per cent of the land is arable while the ruthless Hindu Kush Mountains dominate the remaining 88 per cent. For the Afghans who have defended this land for centuries, the mountain run-off threatens their crops, livestock and homes. However, this season, the Afghans have a new line of defence to protect their livelihoods.

Institutions that support good governance are increasing their influence and ability to help Afghans provide public services in this mountainous area.

Historically, the reach and effectiveness of local governments in the east have been tenuous. The porous border with Pakistan and the presence of insurgent elements have stifled the area’s economy for decades. Tribal 62 · Oct–Dec 2011 ·

systems dominated by the Safi tribe have been the long-standing method for solving disputes, maintaining order, and providing social welfare. Yet, the increasing complexity of having new powerbrokers and foreign influences has challenged traditional ways and eastern Afghanistan has become a divided land. Now, the growing capacity of government is again uniting villages through its ability to meet their basic needs.

The US government, through the United States Agency for International Development (USAID), has utilised district support teams (DST) in rural communities to help promote this sense of community unity. DSTs work at the most basic level of government to connect villages to their elected Afghan leaders.

As a field programme officer for USAID, I am one of five members of the Khas Kunar DST. Our integrated military and civilian team supports the legitimacy of local government by linking districts to the provincial

level of government. A DST combines the technical expertise of USAID advisers and US Civil Affairs military personnel to implement governance activities.

In Khas Kunar, our DST is embedded with a US Military Infantry Company. We live and work with US military counterparts. The lifestyle is rustic, and the view is stunning.

Our location allows us daily access to district government officials and together we provide transparent linkages to national programmes.

Creating trust in the Afghan system is a crucial milestone to ensure governance and development activities gain a lasting foothold.

The USAID-funded District Delivery Program is an example of this participatory approach to building trust in the national government. Throughout Afghanistan, 45 DSTs are implementing the programme in cooperation with the Afghan Independent Directorate of Local Government. The threeyear project focuses on key sectors, such as administration, health, justice, and agriculture.

Moreover, for the first time, district officials are able to use their own national budgetary process to request for funds for daily operating costs. Officials are trained on the process and systems that empower them to respond to the needs of their communities.

As a DST, we see the success of the District Delivery Program in Khas Kunar. The rainy season has showcased the ability of government agencies to work together and mitigate flood damage. Now that officials have the training and capacity to request regular operating funds, they have used that same system to access emergency relief to assist flood victims.

This small victory will go a long way in building the legitimacy of government and creating long-term stability for the area.

Disclaimer: The opinions expressed in this article are those of the author and do not necessarily represent those of USAID. Tami Sant graduated with a Masters in Public Administration from the LKY School in 2010. This year, she joined USAID as a field programme officer.

Image: Michael Seymour-Culme

Mr Pushpanathan Sundram receives the inaugural Outstanding Alumni Award from Professor Tan Eng Chye, Deputy President (Academic Affairs) and Provost of NUS.

outstanding Alumni Award

by Benjamin Tan

M

r Pushpanathan Sundram, Master in Public Policy (1994), received the inaugural Outstanding Alumni Award. The award honours and recognises alumni who have made a positive contribution to fulfilling the mission of the LKY School through substantive contributions to public policy, humanitarian activities and social entrepreneurship.

Mr Pushpanathan is the Deputy SecretaryGeneral of the Association of South East Asian Nations (ASEAN) responsible for the ASEAN Economic Community (AEC). Described by his referees as “resolute and steadfast in his commitment, notwithstanding the great challenges posed by his job” and as someone who “possesses great people skills and can build consensus and agreement amongst disparate groups and views”, Mr Pushpanathan is amply suited to coordinate and facilitate the strategic and substantive work of ASEAN towards the establishment of an integrated economic community, which includes establishing a competitive single market and production base with equitable development, and forging economic partnerships and free trade agreements with ASEAN’s dialogue partners.

As the first professionally recruited, nonpolitical and youngest Deputy SecretaryGeneral in the history of ASEAN, Mr Pushpanathan is chiefly responsible for building up the institutional capacity of the ASEAN

Secretariat to think and act in terms of the collective interest of ASEAN as a whole.

ASEAN has decided to proceed to the next stage of its integration with the conclusion of the ASEAN Charter, the blueprints for the three pillars of the ASEAN Community and the Master Plan on Connectivity. These key documents, which Mr Pushpanathan was involved in developing, put ASEAN in a strong position to shape the future integration of East Asia.

The AEC will play a vital role in bringing the ASEAN Community together through trade, finance and economic integration, a monumental task no less, given the different stages of development, history, culture and political regimes of ASEAN member states. Under his stewardship, Mr Pushpanathan has helped to achieve consensus among the various stakeholders around a common agenda that will enable the AEC to be established by 2015.

As an institution-builder, Mr Pushpanathan was instrumental in the transformation of the ASEAN Secretariat following the entry into force of the ASEAN Charter to establish the three sub-communities – political-security, economic and socio-cultural — under the broader ASEAN Community. In addition, he established the high-level ASEAN Integration Monitoring Office that monitors the trends, progress and impact of the AEC. Said Secretary-General of ASEAN, His

Excellency Dr. Surin Pitsuwan: “He has provided much needed leadership at the ASEAN Secretariat and in ASEAN to move the economic community building agenda of ASEAN. He is a strong believer of regionalism, having devoted 15 years of his career to ASEAN especially the Secretariat. Needless to say, he has an excellent understanding of ASEAN. He has used his analytical, negotiation, management and leadership abilities for the benefit of building ASEAN regionalism.”

Receiving his award at the 7th anniversary celebrations of the LKY School, Mr Pushpanathan said he was “really humbled by this as I consider my contribution to be a “drop” in the ocean of work that ASEAN is undertaking as it builds its Community by the year 2015”.

He was quick to attribute his career success to the training he had received at the LKY School, crediting the lessons and tools he learnt from the MPP programme for helping him to dissect issues and look at them from the different lenses of the ASEAN member states.

“The most appropriate policy option may not be the ideal option always but one where all stakeholders could rally given their differences.

The work is tedious but the reward of striking a balanced resolution supported by all to move forward ASEAN processes and integration is highly satisfying,” Mr Pushpanathan noted.

Demonstrating his strong public service ethos, Mr Pushpanathan said he is continually guided by the motto of the LKY School – inspiring leaders, improving lives and transforming Asia – in helping to better the lives of the more than 600 million people in ASEAN through the realisation of the AEC. Benjamin Tan is Editor of Global-is-Asian. · Oct–Dec 2011 · 63

Dr Mina Roces (far left) and Dr Claudia Derichs (centre) contributed to the robust floor debate.

Dr Vineeta Sinha responds to a point.

Mapping women’s pathways to leadership in Asia

by Radhika Dhawan Puri

W

ho is Harriet Martineau? When Dr Vineeta Sinha (current Deputy Head of the Sociology Department at the Faculty of Arts and Social Sciences, National University of Singapore) was first asked to co-teach a class on Social Thought and Theory in 1996, she came across a scanty reference to Martineau and found herself becoming increasingly intrigued by this Englishwoman in the 1800s who knew so much about sociology. Thus began a journey of self-education, which ended in Dr Sinha teaching a relatively unknown Martineau, alongside great sociological thinkers, such as Emile Durkheim and Max Weber.

Dr Sinha recounted this anecdote as having an impact on how she has tried to change the “male-domination” of thinkers in mainstream sociological theory. “It is not just about individual skills and authority,” she said. “Systems have to be reconfigured to take this ahead.”

Dr Sinha was among 30 peers, academics and professionals who congregated at 64 · Oct–Dec 2011 ·

the Women’s Pathways to Leadership in Asia workshop jointly organised by the NUS Faculty of Arts and Social Sciences (FASS) and the LKY School on 28-29 September. Dr Sinha’s anecdote about women’s leadership in academia was one of 14 presentations on how women come to positions of leadership, and in turn have an impact on society.

What are the consequences of leaving half your population out of development and economic opportunities? How do you gear your institutions, systems and thinking to ensure that women are guaranteed a chance to contribute to society? What key differences exist in women’s journeys to leadership in the West versus in Asia? These are some of the overarching questions discussed at the workshop with the aim of studying ways to empower half of society to benefit all of society.

The workshop marks the start of a multidisciplinary research project that seeks to understand better how women in Asia navigate legal, cultural, educational, religious, and policy barriers to rise to leadership and

make their mark. The speakers not only included faculty from the LKY School and the NUS FASS but also four other experts on women’s leadership and feminist movements in Asia: Ms Theresa Lund, Associate Director of the Women and Public Policy Program at the Harvard Kennedy School (HKS); Dr Claudia Derichs, Professor at the University of Marburg in Germany; Dr Mina Roces, Associate Professor, University of New South Wales, and Dr Linda Brimm, Emeritus Professor of Organisational Behaviour at INSEAD in Paris.

Professor Kishore Mahbubani, Dean of the LKY School, opened the conference by noting that in recent decades, the world has become more livable with fewer interstate wars and conflicts. This phenomenon coincides with women’s greater access to education and their increased involvement in society. He then asked: are these phenomena correlated and is women’s advancement a contributing factor to a more peaceful world? He elucidated on the need for an

Dr Vivienne Wee argues, “Women can lead but can they mobilise people to follow them?”

inter-disciplinary convergence of knowledge and lauded the workshop’s multi-disciplinary approach to the subject.

Ms. Lund of HKS opened the discussion by acknowledging that “most of what we know today was gleaned from the Western context”. In finance, the gender gap difference — with women having a starting pay that was US$11,000 less than that of men with similar qualifications - resulted in a wealth gap of US$1.6 million over a 35-year work life span, she noted, citing research by Hannah Riley Bowles.

In politics, parents were more likely to consider public service as an option for their children, and for their daughters in particular, after they had been exposed to female politicians, Lund said, citing research in India by Professor Rohini Pande, another HKS faculty member.

What kinds of biases exist in Asia that research can uncover and address?

The speakers mapped the possible scope of research by outlining global research and gaps in the academic and policy literature on the subject of women’s leadership. For example, Dr Astrid Tuminez, Vice Dean (Research) at the LKY School, and Dr Kerstin Duell, a researcher and photographer working on socio-political issues in South and Southeast Asia, introduced data collected from publicly available indices related to women and women’s leadership in Asia. These covered health, population, education, employment opportunities, culture, and other indicators.

The data will be used to publish a “Report Card” to be presented at the Third Women

Leaders of New Asia Summit in Shanghai in March 2012, sponsored by the Asia Society.

Dr Tuminez pointed out the paradox of Japan, the world’s third-largest economy in a state of stagnation, which could easily expand its workforce by 8.2 million people and lift GDP by as much as 15 per cent, according to Goldman Sachs’ calculations, simply by addressing its female employment rate, already among the lowest in the developed world.

Dr Vivienne Wee, a research consultant at the Institute of Women’s Empowerment based in Oklahoma, US and a visiting research scholar at the Chinese University of Hong Kong, recommended a study of agency, empowerment and mobilisation, saying: “Women can lead but can they mobilise people to follow them?” In Southeast Asia, a significant female workforce is found in domestic maids and in the service sector, and principles of leadership should also be applied to them for meaningful data,” she added.

The debate was robust and covered diverse areas. From the Department of Malay Studies at FASS, Dr Suriani Suratman, an accomplished potter, talked of the problems women faced in leadership in the arts, while Dr Maznah Binti Mohamad, a visiting senior fellow from the same department, spoke of women’s leadership in civil society movements. Indeed, this year’s Nobel Peace Prize winners were women who rose from civil society movements.

Dr Barbara Watson Andaya, the Tan Chin Chuan Visiting Professor at the Department of History, FASS, enlivened the floor with a historian’s perspective on women as religious

leaders in Asia. Dr Suzaina Kadir, Assistant Dean of Student Affairs at the LKY School, spoke of the struggle between leadership potential and the traditional demands women face in Islam.

Dr Brimm of INSEAD focused on the call of stories, and including the narrative of women in the workforce, especially at a time when globalisation is creating a breed of “global cosmopolitans” with very distinct skills and personalities hitherto unseen, many of them female.

To date, democratisation in Asia has also focused more on race than on gender, Dr. Tuminez said, prompting Dr Derichs to highlight the “need to rigorously deconstruct the concept of democracy”.

Finally, Dr Wee asked: “Are we arguing for women to have access to leadership or are we arguing about creating new spaces for women leaders to rise?”

A post-workshop session on 19 October, where both LKY School and FASS colleagues met to discuss details of a fuller research proposal, saw diverse interests emerging.

The core group of faculty from the LKY School and FASS will be working on a proposal to continue to map and understand conceptual and practical gaps in women’s pathways to leadership in academia, government, health, religion, sports, media, social movements, and other areas.

Radhika Dhawan Puri (sppv202@nus.edu.sg) is the Project Research Assistant for the Women’s Pathways to Leadership in Asia project · Oct–Dec 2011 · 65

Images: wumai @ flickr.com

GlobAlISInG nAtIonAl EnERGy GoVERnAncE

by Karthik Nachiappan

A severe snow storm, not seen in 100 years, in China at the East Lake near Wuhan University in 2008.

“The ongoing shift to a multi-polar world has increased the number and diversity of countries that must be part of global energy governance institutions. The rise of emerging powers such as India and China and their conspicuous absence from major global energy regimes complicates the representativeness and efficacy of certain global energy institutions.”

66 · Oct–Dec 2011 ·

Research Sojourn

I

n The Prize: The Epic Quest for Oil, Money, and Power, Daniel Yergin tackles some burning global energy questions: Is the world running out of oil? Is natural gas a panacea? Does climate change really pose a threat? How effective is renewable energy? In answering these questions, Yergin largely relied on a combination of history and narrative reporting to arrive at conclusions that should surprise no one: energy policy across the world is a mess and reform is overdue.

Employing different methods, Dr Ann Florini and Dr Navroz Dubash – co-editors of the Global Policy’s Special Issue on Global Energy Governance ( http://www.globalpolicyjournal.com/journal-issue/special-issue-global-energygovernance ) – distil a similar scenario and make a forceful claim for nations to seek greater global engagement in order to institute energy policies and realise energy outcomes that are more efficient, equitable and environmentally conducive.

At a roundtable discussion on the special issue held at the Centre for Policy Research, a leading think-tank in New Delhi, Florini and Dubash elaborated on the global energy paradigm, its leading and emergent actors, and why more robust energy governance that transcends borders is urgently needed. As energy sits at the nexus of several critical global challenges, including security, the environment and the economy, they argue that energy deserves a leading role in global dialogues.

Though energy policy is largely national, it faces several constraints and opportunities beyond sovereign borders that necessitate countries actively engaging with and leveraging the capacity of global energy actors. These include global energy institutions, such as the International Energy Agency (IEA), Organization of Petroleum Exporting Countries (OPEC), International Renewable Energy Agency (IRENA); multilateral arrangements, such as the G-8, G-20, Organisation for Economic Cooperation and Development (OECD), Asia Pacific Economic Cooperation Forum (APEC); multilateral financial institutions like the World Bank and Asian Development Bank; intergovernmental bodies, such as the International Energy Forum (IEF), Energy Charter Treaty (ECT), Generation IV International Forum (GIF); and hybrid mechanisms, such as the Central Asia Regional Economic Cooperation programme (CAREC), Renewable Energy and Energy Efficiency Partnership (REEEP), Global Network for Sustainable Energy Development (GNSED), and the International Network on Gender and Sustainable Energy (ENERGIA).

More engagement is needed because entities that reside outside territorial borders increasingly influence national energy policy in several ways. For example, the IEF unites energy producers and consumers in a common dialogue to reduce the pernicious effects of oil price volatilities. The IEA, among other responsibilities, functions as a focal point on the compilation of energy statistics and information that assists in the smooth functioning of energy markets. The ECT aims to create a level playing field of rules associated

with the trade and investment of energy. Multilateral development banks, such as the World Bank and the Asian Development Bank, determine the development of energy infrastructures through their financing. Other innovative initiatives like the Equator principles establish a set of voluntary standards for determining, assessing and managing the social and environmental risks inherent in energy projects.

The Special Issue identifies and maps this complex and rapidly proliferating global energy governance paradigm that includes some of these actors. In addition, it discerns three broad trends that will underpin shape the future of the energy sector and eventually, how national energy policies achieve trade-offs between energy sustainability, energy security and energy access.

First is the ongoing shift to a multi-polar world, which has increased the number and diversity of countries that must be part of global energy governance institutions. The rise of emerging powers such as India and China and their conspicuous absence from major global energy regimes complicates the representativeness and efficacy of certain global energy institutions. Second, the resurgence of the statist mode of energy governance and its tussle with the market has vital implications for the effective, efficient and accountable provision of energy. And third, the emergence of climate change as a global issue has intensified the need to turn mainstream climate concerns into energy policy.

The importance of these broader trends has been amplified because of one critical global development – the rise of Asia. And the Special Issue, perhaps uniquely, employs the rise of Asia as a prism through which to view and interpret some of these shifts in the energy sector. Dovetailing this theme with the venue of the roundtable, the discussion gradually veered towards the Indian energy landscape.

India’s current energy situation is precarious. Nearly one-third of India’s energy comes from non-commercial sources like firewood and biomass that are not transacted via markets. Around 400 million Indian citizens do not have access to electricity. Oil usage is expected to treble and coal usage quadruple in the next three decades. Though India has a relatively low per-capita carbon footprint, it is now the fourth-largest absolute greenhouse gas emitter. And as its population continues to grow, it will have to contend with these challenges simultaneously. But can it?

India has no choice but to do so. It does not have the luxury of hiding under the radar anymore. Alleviating energy poverty will in all likelihood attain precedence over sustainability. Energy supply security concerns will be increasingly negotiated through bilateral and regional channels as New Delhi scours the globe for energy resources. Climate change will be woven with the energy security narrative through the energy efficiency rubric. Ultimately, the fact that India has to concurrently deal with these bewildering set of challenges will prod it to leverage the global energy system where synergies are present. But it will do so in a way that does not compromise its sovereign right to shape its energy policy.

Karthik Nachiappan (karthiknach@nus.edu.sg) is a Research Associate at the Centre on Asia and Globalisation at the LKY School. · Oct–Dec 2011 · 67

Special Issue Global Energy Governance Guest Editors: Ann Florini (NUS) Navroz K. Dubash (CPR, Delhi)

Volume 2 . Special Issue . September 2011

68 · Oct–Dec 2011 ·

Research Sojourn

Water governance: an evaluation of alternative architectures

by Asanga Gunawansa and Sonia Ferdous Hoque

Water scarcity and the unequal distribution of water resources, coupled with the inequality in the capacity of nations to develop water-related infrastructure, have turned water governance architecture into a major challenge for most countries.

W

hile water is an essential element for life on earth, approximately 884 million people worldwide lack access to safe drinking water. It is not surprising, therefore, that the United Nations in 2006 recognised access to clean drinking water as a human right and the UN Human Rights Council made that legally binding in October 2010. However, scarcity of water as a natural resource and the unequal distribution of available water resources, coupled with the inequality in the capacity of nations to develop water-related infrastructure, have turned the effectiveness of governance architecture for water into a major challenge for most countries.

There is a direct correlation between the lack of access to water services and poor water governance structures. Typically, the provision of water, as well as the development and management of related infrastructure functions, fall under three different types of governance mechanisms: concessions, statutory boards and direct government control.

The dominant role of the state in water management is increasingly challenged at the local, national and international levels due to the poor performance of public water utilities, which is attributable to several factors. These include (but are not limited to) low service coverage, high unaccounted-for water, over-staffing, and financial problems due to a combination of low or no tariffs, poor consumer records, and inefficient billing and collection practices. As a result, there has been a general shift towards increased private sector participation in the water sector for the last few decades.

Where urban water supply is concerned, the shift involves more decentralised management, an emphasis on demand-based provision (and differentiated levels of service) and a greater degree of cost recovery. However, in some countries, certain legal developments, such as the judicial emphasis on treating water as a public good and in trust for the people, have excluded the private sector from the provision of water supply in urban areas. Another interesting new trend in some countries relates to the re-appropriation or re-municipalisation of privatised water to the public domain, either due to the voluntary withdrawal of the private companies or political and/or social mobilisation. Finally, in some countries, the public sector entities have decided to address their limitations instead of turning to the private sector.

While it is easy to hypothesise that governance architectures depend on the peculiarities of the country/region/city, researchers from the Institute of Water Policy of the Lee Kuan Yew School of Public Policy involved in the project, “Water Governance: An Evaluation of Alternative Architectures”, and partners from several universities, research institutions and multilateral agencies have discerned a paradigm shift in urban water governance from supply-driven, infrastructure development solutions towards demand-based approaches with greater emphasis on the role of institutions and economic and social instruments. However, despite attempts to ensure fair access to water, it remains challenging to tailor services to the needs and priorities of all sections of society, particularly the urban poor. There is little attention paid to raising awareness of and

building popular consensus around user financing as a corollary to improve services.

The researchers agree that it is neither possible nor desirable to develop one model of water management to be implemented everywhere. Instead, responsible ways of handling water need to be developed around existing local structures.

However, the presence of certain features is imperative. These include adequate democratic structure and control, the political independence of water utilities, strong commitment to universal service and capacity to meet the commitment, an emphasis on the qualitative aspects of drinking water, high awareness of the necessity of sustainable water management, and water tariffs relating to the individual financial situation of consumers. Further, there is no inherent reason why either public or private sector water governance should be preferred except where public financing and technical and management skills within the public sector are inadequate to cater to the demand for water infrastructure facilities.

Given the diversity of service providers and end-users, as well as varying social, economic and political contexts at the national, regional and local level, the researchers argue that rather than focusing on any one governance mechanism, it is important to consider a combination of the existing mechanisms for successful water governance in most jurisdictions.

This research study commenced in July 2011, with a core team comprising Dr. Asanga Gunawansa, Assistant Professor, Department of Building, School of Design and Environment at the National University of Singapore and Ms. Loveleen Bhullar, former Research Associate, Institute of Water Policy, LKY School. The first phase focused on completion of a comprehensive literature review and development of a database of public-private partnership projects to evaluate the legal, policy and financing aspects of developing successful partnerships between the public and private sectors. The findings were shared and debated at a February 2011 workshop. A second workshop took place on 25 October 2011 in collaboration with the Public Utilities Board (PUB) of Singapore. The research findings will be published in a book by Edward Elgar Publishing House in 2012.

Asanga Gunawansa (bdgasan@nus.edu.sg) is Assistant Professor, Department of Building, School of Design and Environment, National University of Singapore. Sonia Ferdous Hoque (soniahoque@gmail.com) is Research Associate at the Institute of Water Policy, LKY School. · Oct–Dec 2011 · 69

70 · Oct–Dec 2011 ·

Accolades

Faculty achievements Huang Jing Visiting Professor

Vu Minh Khuong Assistant Professor

Published a chapter entitled “Hu Jintao’s Pro-Status Quo Approach in Cross-Strait Relations: Building Up A One-China Framework for the Eventual Reunification” in The Changing Dynamics of the Relations Among China, Taiwan, and the United States, Cal Clark (ed.), Cambridge Scholars Publishing, 2011.

Co-published an article entitled “The Rise of Developing Asia and the New Economic Order” (with Dale W. Jorgenson), Journal of Policy Modelling, September-October, 2011.

Scott Fritzen Associate Professor

Published an article entitled “Sources of Singapore’s Economic Growth, 1965–2008: Trends, Patterns and Policy Implications”, in ASEAN Economic Bulletin, December 2011.

Co-published an article entitled “From Information to Indicators: Monitoring Progress In The Fight Against Corruption in Multi-project, Multi-stakeholder Organizations” (with S. Basu) in Handbook of Global Research and Practice in Corruption, Adam Graycar and Russell Smith (eds), Edward Elgar, London, 2011.

Presented a paper entitled “Challenges for Economic Governance in Vietnam” at the Workshop on Challenges for Economic Governance in Southeast Asia, jointly organised by the Konrad Adenauer Foundation of Germany and the Institute for South East Asian Studies, Singapore on 4 November 2011.

Co-published an article entitled “The Strategic Use of Information in AntiCorruption Agencies: Evidence from the Asia-Pacific Region’ (with S. Basu) in the forthcoming issue of International Journal of Public Administration, 2011.

Boyd Fuller Assistant Professor

Phua Kai Hong Associate Professor

Awarded a Global Asia Institute-NIHA research grant of $125,800 for a two-year project on “Comparative Healthcare and Social Policies for Ageing Populations in Asia”. Principal Investigator with NUS collaborators Dr Yap Mui Teng (IPS), Prof Goh Kee Gan (Medicine), Prof Thang Leng Leng (Japanese Studies) and Dr Mika Toyota (Sociology)

Published comment entitled “Power, Adaptive Preferences and Negotiation: Process Specifics Matters” in forthcoming issue of Planning Theory & Practice.

Ira Martina Drupady Research Associate Co-published an article entitled “Evaluating Energy Security Performance from 1990 to 2010 for 18 Countries” (with B Sovacool, I Mukherjee and AL D’Agostino), Energy, October 2011.

Dodo J. Thampapillai Associate Professor Published an article entitled “Assessment of Fiscal Intervention Measures in China: Perspectives From Environmental Macroeconomics”, (with S. Tan) to appear in Critical Issues in Environmental Taxation Volume VII, Lye, L.H., Milne, J., Ashiobar, H., Kreiser, L., and Deketelaere, K (Eds), Edward Elgar, 2011.

· Oct–Dec 2011 · 71

Shrink Wrap

Lessons from 9/11: the dangers of spanking the floor

by Jonathan Marshall

I

f World Bank predictions come true, we face the return of a 2008-type financial meltdown, soaring food prices, and millions in Africa dying if they do not receive urgent assistance.

Ten years ago, the world was focused on a different set of issues, primarily, the tragedy of 9/11. The event left thousands dead and millions more traumatised. Today we have a good idea of how multiple leaders failed to respond effectively to the 9/11 crisis and, hopefully, those lessons will guide our current leaders as they navigate the dangerous times ahead.

“In times of crisis, it is natural for human beings to regress to a child-like state.”

In times of crisis, it is natural for human beings to regress to a child-like state. When a child falls on the floor and grazes her knee, she may cry out, “Mummy and Daddy, where are you? Help me!”

And if they do not help swiftly, the child may lose control and throw an inconsolable tantrum. When a nation is in a state of fear, it makes the same cry for help to its leaders. If leaders do not respond swiftly by feeling our pain, calming us down, and giving us promises of future protection, they face the rising fear and desperation of their people and run the risk of losing of their respect and, ultimately, their authority. After witnessing a child fall, I saw her parent instruct her to spank “the bad, bad floor” – so that the child would feel strong and vindicated for the pain caused by her fall. While the act seems silly, leaders frequently provide similarly useless plans of action aimed at satisfying the population’s need to feel in control – even though the response may have no other positive effect, or worst still, be expensive and deadly. This may seem a tad far-fetched but the events after 9/11 quickly come to mind.

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In the wake of the attacks, America was frantic. Americans could not believe they were no longer safe and demanded a powerful response from their leader. George W. Bush gave them the clearest show of power a president could: he declared a War on Terror. The war on Afghanistan that ensued was fought apparently to give consolation to the American people and bring peace to Afghanistan. Ten years on, with more than 40,000 reported deaths (and many unreported deaths according to Wikileaks) and an estimated cost that runs into the hundreds of billions, America’s longest war to date could be described as an unmitigated disaster. Bush’s retaliation seems to have been a classic case of a very big spanking of the floor. It had the desired effect of galvanising the nation behind a cause to help the populace feel strong and proud again, while temporarily shoring up support for the then still-new administration of Bush Jr. In hindsight, the war was a knee-jerk response to a problem that demanded a far more sophisticated approach.

Rudolph Giuliani, the mayor of New York at the time of the attacks, did a magnificent job in giving people what they wanted, but he failed to exercise any real leadership. Before the attacks, his career was in the doldrums. He had three months left of his term as mayor, he had dropped out of the US senate campaign, his race relations with the people of New York were in a poor state, and he had just used the TV to tell his wife that he was divorcing her. When the attacks occurred, he quickly went to the scene of the events. He gave people the sense that he felt their pain and assured them that normality would soon return to their lives. “Don’t worry. You don’t need to do anything. We will get the bad guys” was part of his message. And it was the kind of soothing message we all want to hear. Before the end of his term, it was said that Giuliani had more political capital than anyone in the US had for over a hundred years. He certainly had a lot more of that than his president. Unfortunately, despite his remarkable

achievement, he did little to promote the real, necessary changes that the US needed to face.

He failed to use the crisis to encourage people to examine what changes the US might need to make given clear evidence it was out of step with other parts of the world. It is not clear what that conversation might have revealed.

By jumping into the limelight and saying to people what they wanted to hear rather than what would have actually benefited them in the long run meant his nation lost the opportunity of using the crisis to change in a substantive way. I am not saying that his calming presence was unhelpful. It was important – but it was not enough. If he had pushed for change, he would have lost some of his popularity – no one wants to be told they have to make changes. He did not want to jeopardise his chances of becoming president – an ambition he never realised due to other factors. Giuliani squandered the vast political capital he had and became focused on personal gain instead. He tried to extend his term as mayor, squashed an investigation into why New York was not more prepared for what had occurred, and wrote a book on leadership.

This tendency to find useless technical fixes for problems that require challenging, nuanced work is the most common mistake of leaders in crises. But the alternative requires moral courage – the guts to push people to change for the better – even when it hurts. There are indeed no easy answers to how we are to handle the looming crisis. For a start, leaders would do well to take a leaf out of Mr Lee Kuan Yew’s book. Singapore’s former Prime Minister practises meditation as a means to stay collected and centre himself. What better way to prepare for the times ahead?

Jonathan Marshall (jmarshall@nus.edu.sg) is Assistant Professor of Leadership Studies at the LKY School. A psychologist and executive coach, he heads the School’s coaching project and maintains a consulting, coaching and counselling practice.

Asian Perspectives on Water Policies

by Cecilia Tortajada and Asit K. Biswas (eds)

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n this collection of essays, staff from the Lee Kuan Yew School of Public Policy, National University of Singapore, analyse the water-related problems of various Asian countries. The essays show how different water issues and their solutions vary from one Asian country to another, and the problems and their policy implications are studied from the perspectives of different disciplines.

Satisfying the demands for water of appropriate quantity and quality for various uses is a key social and economic consideration for all Asian countries.

Rapid urbanisation, population growth, uneven economic development, migration between and within countries, industrialisation, and increasing societal expectations have imposed demands not only on national water resources but also on the institutional capacity to respond to such needs. The net result has been the misuse and overexploitation of water in nearly all Asian countries.

There is an urgent need to strengthen public institutions responsible for planning and managing water resources, substantially improve water governance practices, increase investments in water resources, encourage the use and transfer of appropriate technologies, and train the next generation of policymakers.

This unique and authoritative text would be of interest to academics, practitioners, government officials and NGOs.

Through The Eyes of Tiger Cubs

by Mark L. Clifford and Janet Pau

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here their parents’ lives too often were characterised by hunger, war, and revolution, Asia’s youth have grown up in the midst of the biggest economic boom in history. Today’s young Asians are better-fed, better-educated, and have access to the world through the Internet in a way that would have been unthinkable to the previous generation.

While Asia is hailed by Western media as a continent of promise and possibility, the region is also facing unprecedented long-term challenges. To stimulate discussion about the larger issues of the day affecting Asia’s youth, the Lee Kuan Yew School of Public Policy, the Asia Business Council and Time sponsored a contest asking young Asians to identify the region’s most pressing problems and suggest solutions. Nearly 400 contestants from 21 countries took answered the call. Through the Eyes of Tiger Cubs combines selected excerpts from these essays by young Asians with additional research to analyse is unique in analysing Asia’s challenges through the eyes of the generation that will take over the reins of power.

All royalties from the sale of this book will be donated to charity.

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The 2011 General Election was a watershed in Singapore’s history, casting new light on how challenges have been perceived and new ways they must be handled against a backdrop of tumultuous change in the region and the world.

The forthcoming January–March issue of Global-

is-Asian will examine the challenges facing Singapore, in particular, hot-button issues such as the widening income gap, the affordability of housing and healthcare, the problems of an ageing society, and the rising demands of a more vocal citizenry. With public engagement reinvigorated to new heights after the elections, Global-is-Asian will take stock of Singapore’s domestic politics, foreign relations, economy, social development and culture with a fresh pair of eyes.

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