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Hitting the Pause Button on the Military

Steve Saideman | February 24, 2014

Last week, I attended the Ottawa Conference on Defence and Security.  The two days provided a huge contrast.  The retired politicians on day one, Jean Charest of Quebec and Kevin Ruud of Australia, were engaging, insightful, and informative.  The incumbents on day two, Rob Nicholson, the Minister of National Defence, and Diane Finley, the Minister of Public Works, were none of these things.  Indeed, they were incredibly disappointing.1

Before moving on, I need to be clear.  This will read like an anti-Conservative screed, but I am not a huge fan of the defence stances of the any party.  But because the Conservatives are in power, I have higher expectations—with great power comes great responsibility. More …

Back to the Conference: Nicholson’s speech was about as bland and as uninformative as a Ministry of Industry tweet that had been vetted through a 12-step process.  I could take few notes and write few tweets as the material he uttered was pretty empty.  A later panel, defence analyst Dave Perry quickly demolished most of Nicholson’s speech by noting that the government is spending less on defence now, controlling for ordinary inflation (which was being generous since military equipment’s inflation is far higher), than when it released the Canada First Defence Strategy.

Chief of the Defence Staff Tom Lawson was put in a difficult position as he followed Nicholson’s talk.  Because the government has not made any decisions, Lawson could only be vague about potential tradeoffs—cutting x to pay for y.  However, just the mere utterance of “tradeoff” was a huge improvement, a recognition that Canada cannot have it all, that there will be some choices that must be made.

Diane Finley’s talk was not as inaccurate, perhaps, as Nicholson’s, but was chock full of contradictions.  My favourite one is that the new procurement strategy will provide bonus points to proposed programs that provide jobs to Canadians (which is swell, especially for courting voters) AND will be aimed at exporting weapons abroad.  That is, the new strategy will try to engage in protectionism, favouring Canadian-produced military equipment, and expect that other countries will not respond in kind but instead will buy up these systems (which are likely to be more expensive than alternatives).  This is basic trade politics—if you raise barriers to trade, others will do so, too. 

The reality is that everything is going to be more expensive than estimated, so Canada is going to have to make choices, and make do with less.  The Navy will become smaller, as former Chief of the Navy Paul Maddison indicated later.  The Air Force is likely to have to cut back on its F-35 (or whatever) order.  The Army is already spending far less on practicing war.

The government should be, dare I say it, honest about where things stand.  Yes, it is in a difficult spot because the Liberals botched years of defence procurement.  There should have been enough planning so that the government would not have to replace the entire fleet and entire set of fighter planes at the same time.  I tried to sequence my car purchases so that I don’t have to pay loans on two cars at once (except my plans were disrupted by car thieves and poorly driven buses).  So, yes, they can blame the Liberals.  And they should do so.  But the Conservatives have been in government for about eight years, so it is time for them to bear some responsibility and make choices.

Let me propose a stance that could potentially work: Canada is going to have an operational pause, given the stresses of the Afghan mission (and others before it).  For a short time, Canada will spend less on readiness (maintenance and training), which will entail some risks but given the pause, the risks will be manageable.  We will have to cut the size of the force (since personnel costs represent 50 percent of the defence budget), but responsibly so—instead of sticking to a symbolic 100k that is entirely unrealistic.  We will focus on buying a bit less of what we had hoped, given the escalation in costs of 21st century military kit.  Once we make it through this period, we can “re-balance” again and focus on readiness. 

This makes sense because Prime Minister Harper has learned that significant operations overseas is costly at home and interferes with the priority of the day—message management.  He wants a long operational pause so why not justify it via responsible stewardship of the defence establishment.  Just as only Nixon could go to China, the Conservatives are best-positioned to make the hard choices on Defence.  Can the New Democrats gain votes by trying to be more supportive of the military?  Can Justin Trudeau?  Probably not.

Of course, the fact that the Ministers could not answer questions at a forum full of active and retired military personnel and other government officials suggests that the Conservatives, for all of their bluster and for all of their negative politics (see the Leslie mess), are actually incredibly insecure.  Sure, all politicians are running scared, always seeking votes, but, in this case, the Conservatives could take action and it would make them appear to be responsible.  I am sure that most Canadians would be okay with balancing the budget via cutting the military.  Just be honest about it and own it.  Or not.

1. Of course, it could have been worse—the lunchtime speaker on the second day was disgraced former Minister of Defence of Germany Karl Zu Guttenberg, who lost his job due to a plagiarized dissertation.  His talk was about the internet with much concern about the relationship between Google and national governments. No one seemed to notice the irony or contradiction in all of this since it was online crowd-sourcing of Guttenberg’s dissertation that brought him down.

The G20 Can’t Govern Itself, Let Alone the World Economy

John Hancock | February 21, 2014

You have to admire the confidence of the G20. As finance ministers and central bankers gather in Sydney this weekend for the group’s semi-annual meeting, Australian Treasurer Joe Hockey, the host, is aiming for nothing less than a “global growth plan” backed by binding “growth targets.” Unfortunately, that’s the same thing G20 leaders promised in St Petersburg six months ago—in fact, it is the same thing the group has promised at practically every meeting since 2009—yet still the IMF warns that world growth remains lacklustre and international cooperation inadequate. What explains the G20′s serial failure to provide global economic leadership? More …

One problem is that its members can’t seem to agree on how to go about promoting global growth. Australia’s new government—faced with a slowing economy after decades of resource-fuelled expansion—wants to use its G20 chairmanship to demonstrate decisive leadership on economic growth and job creation. But not everyone thinks more government action—let alone a binding growth target—is the answer. The Germans, always the most sceptical and parsimonious of the group, have already dismissed Australia’s idea as a “slightly antiquated form of economic planning.”

Another problem is that—even if the G20 could agree on the solutions—there’s no immediate crisis to galvanize collective action. One reason the 2009 London summit presented at least a semblance of shared resolve to tackle unemployment, trade protectionism, and financial reform was that the Great Recession focused the G20′s collective minds and underscored their interconnected problems. But now that a recovery—albeit anemic—is underway in the US, Japan, and parts of Europe, the idea that “we’re all in this together” looks both vaguely inconvenient and out of date.

Rocked by recent financial turmoil and stalling growth, India, Brazil, and other once-dynamic developing countries are arriving in Sydney demanding that the US pay more attention to the global impacts of its unilateral decision to cut the Federal Reserve’s stimulus this year. Last month, Raghuram Rajan—the  beleaguered Governor of India’s Reserve Bank—warned that advanced countries can’t just “wash their hands off and say we’ll do what we need to and you [developing countries] do the adjustment.” But with US policy-makers focused on keeping America’s fragile recovery on track—and not entirely displeased to see some of the wind taken out of the BRICS’ sails—that is precisely what Janet Yellen, the new Chair of the Federal Reserve, will be saying to her erstwhile partners over the weekend.

Then there’s the problem of the sprawling, amorphous character of G20 itself. Created to give voice to emerging economic giants like China and India shut out of an increasingly anachronistic G8 club, the new group soon faced intense lobbying for additional seats at the head table. Italy and Canada got in because no one was prepared to freeze out a G8 member. Australia got in because Canada was in. Argentina and Mexico got in because Brazil was in. And Turkey, Saudi Arabia and South Africa got in because… well, no one really knows why they got in. But while the G20 may be more representative of the 21st century global economy, it’s also more unwieldy—less an exclusive club and more an angry crowd. With finance ministers, central bankers, and legions of officials from nineteen countries plus the EU squeezed around the same table, it’s hard enough to organize a speaker’s roster and photo-op, let alone a concerted plan for global growth.

But there’s a deeper problem. The idea that an elite group of political leaders can somehow fine tune the world economy looked ambitious enough when the French, so enamoured of dirigiste planning, first proposed a G6 meeting at Rambouiette in 1975. It now looks positively utopian in this anarchic era of market-driven, technology-fuelled globalization. No doubt officials will labour into the early hours of Sunday on a carefully crafted communiqué outlining all of the good things that G20 countries plan to do to bolster international markets. But today’s global economy is simply too complex and fast-paced to be managed by anyone, even the most powerful ministers and leaders. The G20 is not in charge of the world economy; the G-7 billion is.        

Does this make the G20 a mere “talking shop”, as the critics claim? Yes.  But talking, discussing, sharing information is no bad thing, especially if it restrains governments from acting impulsively and precipitously—by, for example, launching trade wars or other beggar thy neighbour acts. And who knows, the spectacle of these wizards of Oz drawing up their global action plans may even be comforting to some in these uncertain, turbulent, out-of-control times.  

Sisi: Egypt’s Drug of Choice

Bessma Momani | February 20, 2014

The Egyptian people are in a state of hysteria—mixed with nationalistic fervour—that makes it difficult to have a rational conversation about the state of affairs with many in the country. Indeed, the June 30, 2013 overthrow of a democratically-elected Islamist president—Mohamed Morsi—was a moment of national pride for many Egyptians.

To deny the many Egyptian people the hope and pride they feel is akin to being a buzz-killer—though coup critics have been called worse, specifically a terrorist-sympathizer who is undermining the security of the great Egyptian revolution. Egyptian prisons are full of these buzz killers; their crime was nothing more than to report, criticize, tweet, or offend the current regime. More …

Following his coup, the Egyptian Army’s chief, Abdel Fatah al-Sisi, asked the Egyptian people to demonstrate to the world that the overthrow of Morsi was not a coup, but a populist demand of the people. In a soft spoken voice, with words of love and images of honour and valour, Sisi told his people that coming to show their support of the military overthrow would return Egyptian dignity. He would, in his words, selflessly serve the people because they were after all “the light of his eyes.

After three years of violence and uprisings, the Egyptian people needed a fix. Sisi would be the drug of hope to soften the pain of a country that on so many socio-economic and institutional measures is quite simply failing.

Its education system boasts two Egypts: a highly educated group that fills the Middle East and the West’s university corridors with some of their best technical minds; and another group sporting a 40 percent illiteracy rate from predominantly rural areas of the country.  Its official unemployment rate is 13.4 percent while over 70 percent of the unemployed are aged between 18 and 29 years old, its GDP per capita has fallen to less than that of Syria, and it relies upon the support of a massive influx of Gulf money to shore up its liquidity lest its currency crashes due to slacking exports and outflows of capital.

In the near term, Egypt’s economic problems appear unlikely to disappear as a violent insurgency plagues the peripheral region of Sinai and bombings in Cairo continue. With some 25 percent of the Egyptian economy linked to its tourist sector, fewer holidaymakers have signed up for the “Egyptian experience.” In combination with the economic problems noted above, the Egyptian people continue to see their real income per capita fall and many are feeling what was once considered an economic pinch turn into a vice.

For now, it seems, the Sisi drug is still working to blunt the pain of economic despair. The Egyptian people continue to celebrate “revolutionary” milestones and adore their new leader. Meanwhile, the coy Sisi teases his people on whether he will run for President. Testing the waters, ever so slightly, he releases rumours that he will run. The Russian media even quotes Putin as a reliable source that Sisi will run.

Of course, many of the Egyptian people respond with glowing praise and call for him to save Egypt. After all, only in Egypt would the sitting Prime Minister say that Egyptian women adore Sisi because of his handsome stature. Only in Egypt would  a popular TV station broadcaster say on air that Sisi could have any woman he wanted. Only in Egypt, could you find Sisi cookies at bakeries and countless images of his face superimposed on a lion’s body.

The Egyptian people are on a high, and the drug of choice is Sisi. Only a fool would bet that Sisi is not going to run for President in the upcoming “elections.” If optics were anything on his recent trip to Russia, boarding his plane in a suit and not military uniform was a way to signal to the Egyptian people that he is a statesmen and not just a soldier.

Sisi’s trip to Russia was not to soak in the Winter Olympics in Sochi (Egypt doesn’t have any participants in the Games), but instead to signal his reorientation from the United States to Russia for arms and military support. But then here is another optical illusion as Russia will never match the United States’ $1.5 billion in military and development aid given annually to Egypt that began in1979. Moreover, Egypt would face the unenviable task of reconciling 30 years worth of U.S.-manufactured military hardware with Russian military technology.

Few military experts credibly believe Egypt is reorienting its military and security relationship to Russia. But many of Egypt’s 85 million people don’t need to know that. For many in Egypt, their soon-to-be President Sisi will shun the Americans, save them from American hegemony, and return Egypt to its former glory days with support from an alternative superpower.

Without the restructuring of the Egyptian economy, society, and culture, however, there is little hope for survival or success in a globally competitive and modernizing world. Sadly, Egyptians on this high will crash and rock bottom will be a deep hole indeed. As Egypt  descends into economic failure and a violent insurgency, the Egyptian body politic will search for a new fix and Sisi will, ironically, be the next target of mass protest.

How Much Aid is Required to End Extreme Poverty?

John McArthur | February 18, 2014

Amid the growing global consensus around a target of “zero” extreme poverty for 2030, there is renewed debate around the role of official development assistance (ODA) and how much will be required to achieve the goal.  The ideal way to assess this question would be through country-specific, bottom-up costing assessments that account for general equilibrium price dynamics and allow for the possibility of shocks, whether positive (e.g., technology) or negative (e.g., conflict or fuel price spikes). In the absence of such rigorous scenario-based analysis, some back-of-the-envelope calculations help inform the approximate orders of magnitude of aid required. More …

Two conceptually distinct approaches can help inform deliberations on the issue:

  • The first is to estimate the cost of essential services for extremely poor people and the amount of public expenditure required to finance them. 
  • The second is to estimate the dollar value of the extreme poverty gap, i.e., the amount of transfers theoretically required to bring each person in the world up to a living standard of $1.25 a day.

1. Essential Services Budget Gap

A budget gap for basic services can be estimated through some simple arithmetic.  Assume the following:

  1. A full package of basic public services for health, education, infrastructure, agriculture and public administration costs $200 per capita per year, including roughly $100-140 for Millennium Development Goal-type public investments (in line with the bottom-up estimates of the U.N. Millennium Project, 2005). 
  2. A low-income country with strong tax collection systems is able to mobilize 15 percent of gross domestic product (GDP) towards domestic government expenditures. 
  3. The difference between each country’s per capita public expenditure requirements and national tax collection is covered by ODA. Thus, countries graduate from the need for basic service ODA when GDP per capita reaches $1,333 (=200/.15).
  4. All developing countries continue their 2005-2011 real per capita growth rates straight through to 2030.
  5. All developing countries are considered to have equal per capita merit in receiving ODA. 
  6. Service delivery costs in fragile state contexts are the same as in other contexts.

Under this calculation, the basic service budget gap in 2012 works out to approximately $200 billion globally (in constant 2011 USD), roughly similar to today’s total aid flows from all sources, even if much less than all of today’s ODA is targeted to ensuring basic services for those living in extreme poverty. 

Figure 1 shows the long-term trends in implied needs since 1990, alongside a calculation of current trajectories through to 2030.  The estimated total need has dropped dramatically over the past two decades, declining nearly 40 percent over the past 10 years alone.  However, the rate of decline is on course to slow down in the years after 2015, since a significant number of the poorest countries face a long road to crossing the $1,333 per capita income threshold.  By 2030 the aggregate need figure is estimated to be roughly $125 billion (again, in constant 2011 USD).  

Figure 1: Rough estimation of ODA amounts required to meet basic services for extreme poor


These expenditure calculations can also be estimated as a share of high-income countries’ national incomes, as shown in Figure 2. If we assume that ODA is provided by all countries classified today as high-income (i.e., not just OECD countries), the implied ODA flows are equivalent to around 0.44 percent of donor income in 2012.  Notably, the rate of decline since 1990 is even faster in Figure 2 than in Figure 1, since the denominator (donor incomes) grew significantly while the numerator (ODA for basic services) rapidly declined. In the early 1990s the implied ODA requirement was more than 1.5 percent of rich country GDP. By 2005 the ratio fell below the politically salient 0.7 percent threshold for the first time. 

Looking forward, one can assume that the high-income countries experience real aggregate growth of 1.5 percent per year through to 2030.  Even though the numerator in the ODA/GDP ratio is on a trajectory to decline more gradually post-2015, long-term growth in the denominator means that the ratio drops to approximately 0.2 percent in 2030.

Figure 2: Rough estimate of ODA gap for basic services as share of high-income countries’ GDP



2. Dollar Value of Extreme Poverty Gap

A different conceptual approach to thinking about aid requirements for extreme poverty is informed by considering the total dollar value of the extreme poverty gap. Laurence Chandy and colleagues have recently presented scenarios for $1.25 a day extreme poverty reduction through to 2030.  Under their baseline trajectory, the dollar value of the total gap in 2012 is equal to $62 billion.  In other words, direct transfers of $62 billion would be enough to bring everyone in the world up to the $1.25 a day living standard—this implies that someone living at $0.50 per day receives $0.75 per day and someone living at $1.24 per day receives $0.01 per day. Note that this includes people living in extreme poverty across all developing countries, including middle-income countries. The corresponding extreme poverty gap for 2005 was much higher, on the order of $100 billion. (Earlier equivalent figures are not available at the time of writing this blog, but we hope to update those soon.)  The gap is on course to decline to $26 billion by 2030. 

It is important to stress that, conceptually, the implied direct transfers underpinning a poverty gap calculation would represent only one component of “solving the poverty problem,” since they do not provide public services such as health clinics or roads, and they would have an ambiguous links to economic growth, which forms the most robust path out of poverty.  Moreover, in practice there would need to be some form of means testing and transfers would likely need to be given in lumpy amounts. For example, it is unlikely that a program would succeed by giving only 2 cents per day to someone estimated to be living at $1.23 per day and 9 cents per day to another person estimated to be living at $1.16 per day. 

Nonetheless, recent evidence outlining the potential benefits of unconditional cash transfers (UCTs) draws new attention to the possibilities and prompts policymakers to think more precisely about the strengths and limitations of social protection through direct income support.  The advent of mobile money systems has also helped decrease transaction costs of administration, such as through the work of the nonprofit organization GiveDirectly

There are no clear guidelines to inform estimates of UCT transactions costs, but one might assume that they are on the order of 50 percent of every dollar given. By 2030 these might come down to 20 percent.  Figures 3 and 4 assume a linear rate of decline in these transactions costs and add them to Chandy and colleagues’ extreme poverty gap figures.  The graphs show how the practical cost of UCTs would drop from slightly more than $90 billion in 2012 to roughly $30 billion in 2030.  This works out to 0.21 percent of high-income country income in 2012, declining to 0.05 percent by 2030. 

Figure 3: Estimated trajectory of global extreme poverty gap to 2030

Fig3(includes declining transaction costs) 

Figure 4: Extreme poverty gap trajectory as share of high-income countries’ income

Fig4(includes declining transaction costs)

3. Implications

To stress, these rough calculations are only intended to highlight structural trends.  They do not pretend to offer precise point estimates or to map out the entire range of ODA needs.  Nonetheless, the calculations do offer a few key implications: 

  1. ODA is still essential through to 2030, even if it targeted only to the narrowest problems of extreme poverty.  The end of extreme poverty should not be confused with the end of aid.
  2. If countries continue on current trajectories of progress, and relevant aid flows are adequately targeted, significantly less ODA will be required to meet basic needs by 2030 compared to today.
  3. Given the large and growing share of extreme poverty located in fragile states, a more careful estimation and segmentation is needed for relevant service delivery costs.

The above estimates focus only on problems linked to extreme poverty and basic needs. It remains to be decided the extent to which the global community will focus aid towards tackling higher standards of poverty, inclusion, and service delivery, including those linked to $2 a day or national poverty lines.  Nor do the calculations include the costs of other key aid priorities, including global public goods like disease control, public safety, oceans management, biodiversity protection, research for agriculture and health, climate change mitigation and adaptation, and other activities for which significant public international investment will also be required.  These important priorities could easily guide the focus of a next generation of “0.7” ODA commitments. 

This piece was originally posted by the Brookings Institution where the author is a visiting fellow in Global Economy and Development program and the Africa Growth Initiative.

Why the Central African Republic Could Be the Next Rwanda

Kyle Matthews | February 12, 2014

Most people would probably have a lot of difficulty identifying the Central African Republic on a map. That might all be about to change though as the country is mired in a downward spiral of sectarian violence. One of Africa’s poorest nations, earlier atrocities committed by the Muslim-majority Seleka rebels has pitted the Christian majority against the Muslim minority. The idea of peaceful coexistence has been shattered between these two groups.

In response, humanitarian organizations are beginning to ring alarm bells warning that the country is heading down a path that has the potential to transform into a blood bath of a scale not seen since the 1994 genocide in Rwanda. More …

The Executive Director of Doctors without Borders Canada, having just returned from the Central African Republic on an emergency humanitarian mission, believes the international community and national governments could be doing more before it is too late. “Many of history’s greatest inter-communal humanitarian atrocities were known and often publicized in advance. There are chilling parallels here for anyone taking notice,” he argued.

Marcus Bleasdale, a world renowned photographer who is not a stranger to war zones made similar comments in a recent interview with National Geographic. “But it’s the most violent and hateful environment I’ve ever documented in 16 years. And I’ve covered every conflict in Africa over that time, but I’ve never documented anything this bad.” he explained.

How bad are things on the ground? Earlier this week the International Criminal Court announced it would open a case to begin investigating war crimes and crimes against humanity alleged to have taken place in the country. Just yesterday, The United Nations’ envoy to the country, General Babacar Gaye, condemned the assassination of the local politician Jean-Emmanuel Ndjaroua, who had spoken out against the human rights abuses committed by militia groups in the country. Even political leaders are no longer safe.

Despite the presence of French and African troops, most of the Muslim minority in the capital city of Bangui have fled north, seeking protection in the northern part of the country and neighbouring Chad.

While people tend to vote with their feet because of well-founded fears of violence, Canada and other countries need to support France and the United Nations in containing the violence. The situation could worsen. The reputable organization Human Rights Watch reported that peacekeepers from Chad, who are in the Central African Republic as part of the African Union force, have been supporting the movement of the Seleka rebels north of the capital. What are they doing?

Even more frightening is that jihadists, including those affiliated with Nigeria’s Boko Haram or Somalia’s al Shabaab, might travel to the Central African Republic to fill the security vacuum, rendering the environment more hostile to aid workers and making life difficult for civilians.

Inaction is not a good policy option. Western countries, Canada included, should take this crisis much more seriously.

The Nationalist Games

Steve Saideman | February 11, 2014

Every two years, alternating summers and winters, we go through this pretense that the Olympics are supposed to be about overcoming differences among countries, and then we are shocked, shocked that we see a heap of nationalism.  As always, the games themselves become the target of nationalist exuberance (our games our bigger and better than previous ones – if more expensive means better) and of nationalist sniping (the Russians cannot get anything right).  None of this is very surprising or very new.  As long as the athletes wear national uniforms, identity dynamics will kick in. More …

That is, we identify with some folks and not others.  This is the nature of identity – to place oneself into a group that seem like oneself and distance oneself from others. Donald Horowitz, borrowing from social psychology, explained how the logic of invidious comparison drives ethnic conflict.  Our emotions rise and fall based not just on how we are doing but how well those we identify with are doing and how poorly our “Others” are doing.  The Canadians feel great with every win and even more so when it means defeating… the Americans.  The Americans feel great with every win and even more so when defeating the Russians or the Chinese.  Yep, one of the enduring Canadian frustrations is that their relevant Other, the Americans, do not see the Canadians as such.  Perhaps the greatest frustration is that the most memorable Olympic hockey moments revolve around a country where hockey is the fourth most visible sport (see, there is my nationalist dig at Canadians). 

The number of people who have anything to do with the success of the Olympians is quite small: family, friends, coaches, and donors of cash.  Buying some mittens helps on the margins, but we are largely taking pride in something for which we really cannot take credit.  But that is the nature of identity. 

We could be rooting for all of the athletes because they are so amazingly talented, hard-working, gutsy, and attractive.  And we kind of do, except when one of ours is in the race or in the competition, then we root for that person or that team, and hope that the competitors slip, fall, or otherwise mess up.

And this is good for politicians because Olympic nationalism is the simplest form of nationalism.  Nearly every Canadian can agree to support the Canadians at the Games (well, some other stuff can come into play), nearly every American can identify with the Americans in the games, nearly every Swede can identify with the Swedish athletes, and so on.  The nationalism here really is about the flag and little else.  In most countries, there is not just one nationalism but competing definitions of who is Us, who is the relevant Other, and how tolerant we are of this Other.

In Switzerland, there was just a referendum that was quite divisive about who belongs in Switzerland.  A bare majority voted for restricting individuals from EU states from easily immigrating.  In contrast, the Swiss are far more united this week in rooting for their curlers, skiers, and so on. 

In Canada, Stephen Harper and the Conservatives have been trying to emphasize certain strands of Canadian nationalism at the expense of others – its military history including the somewhat questionable use of the War of 1812 (pre-Canada, right?) versus the peacekeeping, multicultural nationalism espoused by the Liberals.

Again, this happens everywhere because there are always multiple meanings of each and every nationalism where various strands or themes are emphasized at the expense of others.  The Olympic nationalism, “woot, Canada!” is the simplest, most unifying nationalism. 

Which helps to explain why Russia was willing to burn $50 billion or so on a two week event.  We learned long ago that these events are not about profit (right, Montreal?), but about national pride.  Which is why the Russians are really hurt when we notice that the hotels are pretty messed up or when outsiders use the games to protest Russia’s policies on a variety of issues such as its treatment of the LGBT community.  President Putin wants these games to go well because it helps Russians feel better about their country and, by extension, their president.

Of course, there is one thing that we can all agree on that unifies all of us as we watch these games: that the American coverage is just a bit lame.

Pesky Neighbours

Civil War and Regional Actors in South Sudan and the Central African Republic
David Hornsby | February 11, 2014

In recent months, I have examined the ongoing civil conflict in the Central African Republic (CAR) and how interconnected it is with regional politics. In particular, I find it intriguing that as the conflict in CAR breaks out, we also see its neighbour, South Sudan, descend into civil war.  To be clear – these civil conflicts are not related and have very different roots, but what is striking in each circumstance, beyond the geographic proximity, is the international dimension of each with neighbouring countries appearing to reinforce tensions in each circumstance as opposed to helping resolve them. More …

For example, in the CAR crisis, the role that Chad has played and is playing needs to be interrogated. In the early days of the conflict, it was believed that Chad was acting as an agent provocateur having initially supported the Seleka rebels in ousting the Bozzize government in July 2013.  Since then, Chad’s forces have played an important element in the African Union (AU) peacekeeping forces despite wide-spread concerns and protests by Christians that Chadian soldiers share allegiances to former Seleka fighters. Indeed, Chad has seemingly led regional and AU responses to the crisis having most recently hosted an international summit in early January 2014. This conference virtually forced the resignation of CAR’s President Djotodia – who came to power via a coup.  Whether or not this resignation was a good thing, it is surprising that one state is as influential in crafting regional responses to the ongoing problems in CAR as Chad.  After being replaced in Bangui by French and Rwandan forces, Chad’s troops are now playing an extraction role evacuating the Muslim population in the country from Bangui.  This action is a response to daily attacks on Muslim’s by Christian’s.  Many of these attacks appear to be in retribution for the atrocities that the largely Islamic Seleka rebels (supported by Chad) perpetrated in the preceding months.  It is sad to think that the once stable peace between these Christian and Muslim groups has been so irrevocably damaged that Muslims are now forced to flee or face brutal deaths at the hands of citizen vigilantes.  Now, I don’t mean to place all of the blame for the conflict in CAR at Chad’s doorstep.  It is a complex situation with many causal factors, but it appears that Chad has been and will likely remain an important player in this conflict.

In South Sudan, where negotiations for a peace agreement between warring factions that support the president and the former vice-president are set to resume in the coming days, the role of Uganda in taking sides leads to a number of questions regarding its role in this newly-minted country.  Ugandan President Yoweri Museveni has confirmed that Ugandan troops are fighting alongside South Sudanese government forces loyal to President Salva Kiir. Whilst the root of the South Sudanese conflict rests in problems associated with internal political party factions, the role of Uganda in actively engaging in combat as opposed to brokering peace is both surprising and concerning.  Some analysis has explained Uganda’s action based on concern for losing out on lucrative trade links with South Sudan, whilst others note the potential for an influx of refugees fleeing the violence.  Either way, the decision of Uganda to take sides and intervene in such a manner is confusing, particularly as Museveni was always supportive of South Sudan’s creation.  Question’s need to be asked about whether Uganda’s action has been proportional and really helpful in bring stability or preventing the commitment of atrocities in South Sudan.  

The fact that neighbours have such an influence in each of these civil conflicts speaks to the fragile nature of these states and of the region. Indeed, the CAR and South Sudanese central governments have struggled to consolidate control or contain conflict in their respective territories.  The history of this problem is far longer in the CAR than in South Sudan primarily as the latter is the world’s newest state.  But both face similar challenges in that they lack the conventional means and institutions to address problems within their sovereign borders that might diffuse civil conflict and that might counteract or negate the intervention of outside parties or regionally dominant states. 

The conflicts in CAR and South Sudan, whilst of different origins and certainly different histories, highlight the tragedy of fragile states and the challenges of state-building.  Indeed, they reinforce the importance and necessity of building structures and institutions that can consolidate the ability of a government to ensure peace and security within its own borders by finding alternative means to violence. All of which can work towards deterring meddlesome neighbours from contributing to internal instability.

Has Canada Finally Discovered Digital Diplomacy?

Roland Paris | February 7, 2014

After years of sitting on the sidelines, Canada finally seems to be taking social media seriously as tool of diplomacy. Foreign Minister John Baird delivered a speech on Friday – appropriately in Silicon Valley, the world’s capital of technological innovation – embracing digital diplomacy in stronger terms than ever before. “The closed world of démarches, summits, and diplomatic dinners,” he said, “is no longer sufficient to project our values and interests.”

In a report last year, I documented how far Canada had fallen behind its closest allies in the use of social media tools. The United States and Britain recognized the importance of digital diplomacy years ago, encouraging their ambassadors and missions to engage directly through social media with the public and policy leaders of other countries. More …

Crucially, both the Americans and British understood that this meant giving individual diplomats greater freedom to communicate – and that the fluidity and informality of social media increased the risks of miscommunication and mistakes. The United States and U.K. accepted these risks as the price of getting their voices heard in new media, which are increasingly shaping and driving events.

By contrast, until recently, Canada’s foreign ministry used its relatively small number of social media channels to primarily broadcast press releases, not to engage in real-time exchanges that are the currency of new media.

Canada’s Department of Foreign Affairs, Trade, and Development (DFATD) now uses social media as a virtual “listening post” to analyze political patterns in foreign societies and movements. In addition, it partnered with the Munk School at the University of Toronto to create the Global Dialogue on the Future of Iran, which uses social media technology to circumvent Iranian government censorship, thus permitting Iranians, both inside and outside Iran, to freely communicate with each other.  Although some questioned whether such an initiative belonged at a university—and wondered if the Munk School had allowed itself to become a de facto instrument of the government’s Iran-obsessed foreign policy—the initiative nevertheless represented a creative use of digital tools to promote the maintenance of an open Internet.

What was still missing in the Canadian approach, however, was the recognition that digital diplomacy involves, at its core, a willingness to engage in two-way communications between government officials and interlocutors of various types. This requires, in turn, both a social media presence (i.e., accounts with followers) and a policy framework allowing diplomats to communicate in the relatively informal and rapid style of these media.

In his speech today, John Baird suggested that Canada is belatedly getting into the digital diplomacy game. He told his audience that diplomacy may never live up to the Silicon Valley mantra of “move fast and break things,” but that in the “environment of instant communication and social media, we do have to move faster and not be afraid to try new things or to make mistakes.” Further, Baird’s office reports that in the last six months, the foreign ministry has launched 60 new accounts on Twitter and another 50 on Facebook.  Clearly, the push is on.

But whether the Harper government will really “not be afraid…to make mistakes” in digital diplomacy remains to be seen. Relations between Canada’s foreign service and the minister’s office have been strained for years. Neither side fully trusts, respects, or even understands the other. In this climate, Baird’s avowed willingness to let Canadian diplomats take chances and make mistakes will need to be demonstrated, not just stated.

Nor is it clear that the youthful apparatchiks in the Prime Minister’s Office who control the government’s communications will look kindly on such experiments, regardless of what Baird might want in his department.

Even more fundamentally, new public diplomacy strategies do nothing to address the principal deficiency of Conservative foreign policy: the fact that the Harper government has burned more bridges than it has built over the past eight years.  A country in Canada’s position – of middling size, yet open and vulnerable to global forces – must cultivate constructive relationships with a broad array of actors and deftly leverage these relationships–including in multilateral institutions – if it hopes to shape the course of events in its favour. Shouting from the sidelines does nothing but make our partners and adversaries, alike, want to shut out the noise.

In spite of all this, Baird deserves credit for finally acknowledging that a genuine embrace of digital diplomacy is necessary – and that it involves a greater acceptance of risk-taking from his own control-freak government. Of course, the meat and potatoes of diplomacy will always be private state-to-state communications. However, unless our diplomats are permitted to engage with governmental and non-governmental interlocutors in real-time, Canada will remain on the margins of the biggest technological revolution to hit the practice of public diplomacy in a generation.

Not for Beginners: Should Small Players Go to Fast-Growth Markets?


Several Canadian business and policy commentators have argued for more businesses to export beyond the U.S. and for larger businesses to mentor smaller businesses to succeed in export markets. The federal government’s 2013 Global Markets Action Plan also makes a similar case for a larger number of smaller companies to be active in emerging markets and particularly in developing countries whose combined markets now represent fully half of the global economy. More …

We agree with a refocusing on high-growth emerging markets, but they may not be for everyone. The actual experience of Canadian small- and medium-sized businesses suggests that while fast-growth markets offer tremendous rewards, they can be extremely challenging and risky. Conference Board of Canada research shows that smaller companies are unlikely to last long in global markets – particularly in fast-growing, developing economies – without a strong set of capabilities, products, and strategies.

Our briefing, Not for Beginners: Should SMEs Go to Fast-Growth Markets?, examined how Canadian companies with fewer than 500 employees performed when their companies expanded globally. As the first to examine the performance of Canada’s smaller players in fast-growth markets, this study provided a fresh perspective. Rather than examining the experience of a sample of Canadian SMEs, we examined the experience of all Canadian SMEs, and over a long period (1994 to 2008).

A group of smaller players has successfully penetrated these highly challenging markets. Top performers stayed in these markets and almost doubled their sales in fast-growth markets every year.

Moreover, the operating characteristics of these successful small and medium-sized companies are clear. When the impact of company size and other factors is removed, we see that companies had a greater chance of boosting their sales and staying in fast-growth markets if they:

  • gained experience in Canada or other advanced economies first, rather than trying to make their first sales in fast-growth markets;
  • introduced new products frequently to these markets (a sign of innovation);
  • paid higher wages (a sign of higher productivity and higher-skilled  employees);
  • exported to a larger number of markets;
  • had greater access to financing.

Unfortunately, only a tiny group of small- and medium-sized exporters accounts for most of Canada’s SME exports, as measured by value (dollars of revenue earned). Most of the exporters in this group remain in the U.S. market rather than in fast-growth markets.

Moreover, our analysis shows that there was a wide gap between the best- and worst-performing firms. For the weakest performers, sales to fast-growth markets dropped by 70 per cent annually after initial success, and they exited these markets after less than a year.

With the right capabilities, a world-leading technology, product, or service, and constant innovation, some of Canada’s smaller players are able to experience tremendous success in rapidly growing markets beyond the United States. Smaller businesses without these strengths may need to pursue other strategies to take advantage of fast-growth developing economies. These strategies could include selling into U.S. or Canadian multinationals that are active in global markets, or building up capabilities in Canada or other advanced markets first.

In short, companies that have strong capabilities should look to emerging markets to improve their company performance. But governments and larger businesses should aim to ensure that companies have strong capabilities first, instead of giving blanket advice for all smaller businesses to go global or to fast-growth markets.

A 21st Century Military Doesn’t Start at Home

Steve Saideman | February 5, 2014
Canadian Leopard 2 tank

Today, the Ministers of National Defence and of Public Works announced a new approach to Canadian defence procurement.  Given the track record of the recent (and not so recent) past, it is clear that Canada desperately needs to reform how it buys equipment for the Canadian Forces.  The efforts to “re-capitalize” the CF have thus far produced more controversy than new planes, ships, vehicles, and other kit.  Since the Department of National Defence has not worked so well in this area, it does make some sense to move it to Public Works although it is not clear that Public Works has a stellar record.  Subsequently, more oversight from a team of Ministers makes a great deal of sense.  More …

To be clear, this is not just a Canadian problem.  Every advanced democracy is having problems buying arms and equipment for their militaries.  The decisions facing procurement officers are incredibly hard:

  • as inflation in this sector far out-paces every other;
  • given that competition is hard to generate within countries as there are few firms that can produce advanced weapons;
  • and that civilian expertise is not quite as strong as the military’s so the latter can sometimes “game” the former.

It would be fantastic if Canada tried to learn from other democracies what works and what does not work best both in terms of how to buy defence equipment and what equipment is best to buy.  Perhaps this will be part of the job of the new “Defence Analytics Institute, which will provide expert analysis to support the objectives of the Defence Procurement Strategy (DPS) and its evaluation.”

But I am a skeptic of this reform because it adds something that really has nothing to do with efficiency: “leverage our purchases of defence equipment to create jobs and economic growth in Canada.”  That sounds great as it makes defence purchases more appealing – we get some new equipment and it creates jobs in Canada.  But the reality is again the basic problem that insisting on purchasing at home means more expensive ships, planes, helicopters, and other necessary military equipment.  Efficiency means buying the best quality at the lowest price.  Insisting on buying Canadian-made material means that when Canada is not the most efficient producer, Canadian-based firms will still be chosen.  In the past, apparently acceptable ten percent markups became something closer to thirty percent increases in the costs of building domestically.

This is a real problem since Canada is often not the most efficient producer, given the economies of scale (that Canada does not buy as much as other countries so the costs cannot be averaged out over large production runs) and given that Canada simply has not been in some businesses for a long time so startup costs remain expensive (ship-building!), and so on.  This would be fine if DND had money to burn, but we are living during a period of defence cuts, so the added expenses of building within Canada logically means that Canada will have to buy fewer planes, ships, and other military equipment.

Obviously, domestic political imperatives are at work here – and that is to be expected.  The problem is that this move elevates playing to domestic audiences and providing jobs to key ridings, as a priority in the decision-making process.  Domestic politics will always matter unless we build a non-partisan institution to make the decisions. This is unlikely to happen with such a big chunk of the government’s money.  This “reform” is a mistake because it legitimates job creation as one of the key reasons for buying defense equipment.  Given how capital intensive this sector of the economy is, it is hardly an “efficient” or effective way to create new jobs.  A better way to do that would be (he says, self-servingly) to invest in higher education which has long proven to be a better job creator/economic multiplier than defence spending. 

Of course, there is a larger problem in Canadian defence procurement that is entirely unaddressed with this reform: the refusal to make choices.  Canada has not revised its defence strategy despite the fact that so many of the assumptions of the Canada First Defence Strategy have been overcome by events.  Canada cannot afford to “re-capitalize” all of its military at once, and has to prioritize which parts of the Canadian Forces most need new equipment, which parts will have to settle for being less advanced, and which parts might need to be cut entirely. 

Reforming the process of defence procurement is needed, but Canada’s understanding of what it needs to buy in the 21st century is in greater need of reform.  That would require some hard decisions and significant transparency – and unfortunately these are not the strengths of this government.

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