U.S. Foreign Assistance and Failed States

Susan E. Rice
Susan E. Rice Former Brookings Expert, Distinguished Visiting Research Fellow - School of International Service, American University

November 25, 2002

President Bush’s recently released National Security Strategy (NSS) brings renewed focus to the issue of failed states. The President is wise to draw attention to the significant threats to our national security posed by failed and failing states. Such states can and often do serve as attractive safe-havens and staging grounds for terrorist organizations. They afford terrorists easy access to valuable resources, such as diamonds and narcotics, that help finance these activities. Failed states create environments that spur wider regional conflicts with significant economic and security costs to neighboring states. They pose serious challenges to U.S. interests in terms of refugee flows, trafficking in illicit goods, peacekeeping and humanitarian assistance, and in terms of lost trade and investment opportunities.

Despite the welcome emphasis in the NSS on the security threats posed by failing states, the Strategy does not offer any vision, policies or new resources to counter these threats. Missing from the NSS, as well as from current Administration policy, is a credible policy framework and foreign assistance strategy to mitigate the risks attendant to failed and failing states. A new U.S. strategy should combine improved intelligence collection with more aggressive efforts at conflict resolution and post-conflict “nation-building” in global crisis zones. Creating pockets of improved development and security would help limit the operating space of international outlaws. To this end, the United States must go beyond focusing its foreign assistance on recipients that are high-performing or reforming states. Instead, the United States should devise innovative ways to assist failed and failing states through targeted development and counter-terrorism assistance as well as improved trade access to the U.S. market.

New Emphasis on Failed States

From its first page, the National Security Strategy focuses attention on the dangers posed by failed states: “America is now threatened less by conquering states than we are by failing ones.” In his letter introducing the NSS, President Bush elaborates: “The events of September 11, 2001, taught us that weak states, like Afghanistan, can pose as great a danger to our national interests as strong states. Poverty does not make poor people into terrorists and murderers. Yet, poverty, weak institutions, and corruption can make weak states vulnerable to terrorist networks and drug cartels within their borders.”

President Bush is correct to focus on the problems posed by failed and failing states. The NSS also represents a new direction for this Administration, which had not previously emphasized concerns about failed states in explications of the U.S. national interest. During his campaign, President Bush disparaged “nation-building.” In this new NSS, the Bush Administration strikes a note of continuity with President Clinton’s last NSS (issued in December 1999), which identified failed states as among the threats to U.S. interests. President Bush has taken this concept a step further, stressing the direct threat such states pose to U.S. national security.

Failed states are countries in which the central government does not exert effective control over, nor is it able to deliver vital services to, significant parts of its own territory due to conflict, ineffective governance or state collapse. Current examples include Afghanistan, Somalia, Democratic Republic of Congo, and Sudan. Failing states, too, pose a serious threat. These are those in which the central government’s hold on power and/or territory is tenuous. They are often countries emerging from, or on the brink of, conflict such as Angola, Bosnia, Sierra Leone, Zimbabwe, Liberia, Burundi and Cote D’Ivoire. Others, like Colombia, have relatively strong central governments but are cause for concern, due to their lack of control over parts of their territory. Still others, including Pakistan, Georgia, Albania, Yemen, Nigeria and Indonesia, are weak, if not yet clearly ‘failing’ states.

Previously, the ranks of the world’s failing states have included Cambodia, Lebanon, parts of the former Yugoslavia, East Timor, and Mozambique, all of which remain fragile but are now in various stages of recovery. At present, the preponderance of state failures is in Africa. While the problem is not exclusively African, the prevalence of failing states there suggests the need for Bush Administration policies to help stabilize African states as a strategic interest of the United States, and to allocate resources accordingly.

The Threat Posed by Failed States

Why are failed and failing states significant threats to U.S. national security?

First, these states provide convenient operational bases and safe-havens for international terrorists. Terrorist organizations take advantage of failing states’ porous borders, of their weak or non-existent law enforcement and security services, and of their judicial institutions to move men, weapons and money around the globe. They smuggle out precious resources like diamonds and narcotics that help fund their operations. Terrorist organizations may also recruit foot soldiers from local populations, where poor and disillusioned youth often harbor religious or ethnic grievances.

Africa offers several cases in point. Sudan has served as a sanctuary and staging ground for Al Qaeda and other global terrorist organizations. Its radical Islamist government is identified by the U.S. Government as a state sponsor of terrorism. Somalia, lacking any effective central government, has afforded safe operational space to affiliates of Al-Qaeda. Al-Qaeda and other terrorist organizations have also been active throughout much of Africa with known cells in Egypt, Tunisia, Algeria, Kenya, Tanzania, Uganda, South Africa, Cote D’Ivoire, Mauritania and elsewhere. Terrorist organizations have hidden effectively in various African states and from these places have planned, financed, trained for, and sometimes successfully executed terrorist operations against American targets. International terrorists have also sought uranium and other precious minerals from such places as Niger, Congo and Sierra Leone. They have sought chemical weapons components from Sudan as well as the expertise of renegade nuclear, chemical and biological weapons scientists coming not only from parts of the former Soviet Union and South Asia but also from Libya and South Africa.

A second reason, not mentioned in the NSS, why failed states represent a threat to U.S. national security is that they often spawn wider regional conflicts, which can substantially weaken security and retard development in their sub-regions. The conflicts in Sierra Leone, Congo and Sudan, each largely internal in nature, have also directly involved several other states. In some extreme cases, these conflicts have exacerbated conditions in neighboring countries, accelerating, though rarely precipitating, their failure. Examples include the impact of the Sierra Leone conflict on Guinea, and Congo’s on Zimbabwe.

The costs of such conflicts to the United States are substantial. They include: refugee flows that can reach American shores; conventional weapons proliferation that exacerbates regional instability and strengthens international outlaws; billions spent on humanitarian and peacekeeping assistance; the opportunity costs of lost trade and investment; and the exportation by criminal elements of precious, portable resources including diamonds, coltan, narcotics and tanzanite that failing states often possess. Failing states can also harm U.S. national security and cost our society in other ways, notably, through their occasionally active role in narcotics production and trafficking. Colombia and Afghanistan are key examples.

Right Focus; Insufficient Response

Despite the important focus on failed and failing states in the President’s NSS, neither the Strategy itself nor existing Administration policies or programs offer sufficient vision, tools or resources to confront effectively the threats these states pose. In fact, the NSS itself suggests the Administration does not intend to address substantially the problem of failed states: “The United States should be realistic about its ability to help those that are unwilling and unready to help themselves. Where and when people are ready to do their part, we will be willing to move decisively.”

Yet in other parts, the NSS is replete with ambition, such as the declaration that “A world in which some live in comfort and plenty, while half the human race lives on less than $2 a day, is neither just nor stable. Including all the world’s poor in an expanding circle of development—’and opportunity—is a moral imperative and one of the top priorities of U.S. international policy.” Such impressive rhetoric is welcome, so long as it is backed by substantive policies that bring us closer to such goals. Unfortunately, when it comes to concrete plans to deal effectively with failed and failing states, the Administration thus far comes up short.

Missing Elements

Resource Flows: Much of what the Administration offers the developing world could over the long term help improve growth prospects in a number of countries, but not in failed and failing states. The much-heralded Millenium Challenge Account (MCA), if fully funded by Congress, would provide at least $10 billion in new assistance to developing countries by 2006, and $5 billion each year thereafter. However, it is available only to countries that “…govern justly, invest in their people, and encourage economic freedom,” which clearly excludes weak or failed states.

The criteria, still under development, for MCA country eligibility are, according to Administration officials, likely to be so stringent as to exclude other important states that are taking steps in the right direction but are not yet exemplary performers. This limitation reflects a contradiction in Administration strategy, since it is often to these same big countries that it looks to prevent or resolve conflicts in neighboring failing states and to serve as regional partners in the war on terrorism. The NSS cites Nigeria, South Africa, Kenya and Ethiopia as “anchors for regional engagement and require focused attention.” Yet, given the high bar being considered for MCA eligibility, most, if not all, of these countries may not benefit from the MCA.

Despite acknowledging their importance, the Administration does not propose to direct any new resources to failing states. Indeed, with a few important exceptions (e.g. in Colombia, parts of the Former Yugoslavia, and now Afghanistan), most such states, especially those in Africa, receive little from the United States except emergency humanitarian assistance. While there are many reasons for taking great care with expenditures in failing states, it is difficult, if not impossible, to meet serious threats with no additional resources.

Trade: The NSS devotes substantial attention to the benefits of trade for the world’s developing nations, stating: “Economic growth supported by free trade and free markets creates new jobs and higher incomes. It allows people to lift their lives out of poverty, spurs economic and legal reform, and the fight against corruption, and it reinforces the habits of liberty.”

However, the goals and tools for spurring economic growth outlined in the NSS do not apply to failing states. References to an eventual “world in which all countries have investment grade credit ratings” are out of step with the near and even long-term realities of failed states. Neither trade promotion authority, offers to negotiate new free trade agreements with various parts of the developing world, nor even the rather broadly available, non-reciprocal benefits of the African Growth and Opportunity Act (AGOA) apply to failed states. Yet some failing states are positioned at present to export at least modest quantities of agricultural products, minerals, and even light manufactured goods to the United States.

Conflict Resolution: A prerequisite for addressing the threats posed by failed and failing states is resolution of the conflicts that precipitate or exacerbate their failure. The Administration’s approach to regional conflict resolution is notably cautious, suggesting a reluctance to lead efforts at regional conflict resolution, or to engage in peacemaking where the conflicting parties are not clearly ready for peace. If this posture were adhered to consistently, it would all but rule out concerted U.S. efforts at conflict resolution in failing states, few of which at present evince sufficient will to end the conflicts that plague them.

In fact, the Administration has been only selectively reluctant to engage. It has worked assiduously to avert wider conflict between India and Pakistan. In Africa, by contrast, the Administration’s efforts have been more mixed. The NSS devotes several paragraphs to challenges of conflict resolution in Africa and notes that “Together with our European allies, we must help strengthen Africa’s fragile states…..” Yet, the Administration has largely limited its active diplomacy in Africa to efforts to end the long war in Sudan. Elsewhere, as in Somalia and Liberia, the Administration has done relatively little. The same is true in the more urgent cases of Burundi and Cote D’Ivoire, where security is deteriorating with serious negative consequences for their respective sub-regions. In Congo and Sierra Leone, the Administration has perhaps wisely ceded the diplomatic initiative to regional states and to the UN but should offer more robust and timely support to their mediation and peacekeeping efforts.

Nation-building: While anathema to some, “nation-building” is an essential task for the United States if we are to deal decisively with failed states by succeeding at post-conflict rehabilitation. Yet, nation-building is a requirement about which the Bush Administration remains ambivalent. In April 2002 at Virginia Military Institute, President Bush invoked George Marshall’s vision as he spoke of the need for extensive U.S. efforts to “give the Afghan people the means to achieve their own aspirations.” However, the NSS itself is silent on the subject of nation-building.

As a practical matter, the United States has been comparatively generous in helping meet Afghanistan’s emergency requirements. Yet, along with other donors we will have to increase our assistance to Afghanistan and sustain it over the long term. Equally important is the need to bring greater security to the country. The Bush Administration’s decision to devote more U.S. military forces to helping stabilize and reconstruct areas outside of Kabul should improve security and thus conditions for development.

Other post-conflict challenges, such as Haiti, Angola and Sierra Leone, seem to have fallen almost entirely off Washington’s radar screen. In each case, however, important nation-building tasks remain undone ranging from reintegration and re-training of ex-combatants to institution-building.

Counter-Terrorism Assistance: The Administration seemingly has few plans to provide much counter-terrorism assistance to failing countries, where, arguably, it is most needed. The NSS maintains that: “Where governments find the fight against terrorism beyond their capabilities, we will match their will-power and their resources with whatever help we and our allies can provide.” In practice, the United States has made only a few commitments to back this broad pledge in failing states. Colombia is among them, as a recipient of the generous Plan Colombia program as well as of greater military assistance. Afghanistan also now receives significant security support from the United States.

In Africa, the Bush Administration has stated its eventual intent to provide a few selected countries, such as Kenya, Tanzania and Ethiopia, with increased counter-terrorism assistance. Yet, with the exception of Somalia, for which the Administration requested $1.2 million in counter-terrorism assistance in its Fiscal Year 2003 budget (down from $1.4 in FY 2001), those failing African states that are most incapable of policing their borders and tracking resource flows are not slated to receive such U.S. support.

Towards a New Approach

To address credibly and effectively the threats to U.S. national security spawned by failed and failing states, the United States needs to move beyond rhetorical acknowledgement of the problem to a more strategic approach characterized both by preventive action and innovative responses to state failures in progress. Many traditional development tools require adaptation, and specific attention needs to be paid to limiting the potential for failed states to serve as havens for, or resource-suppliers to, terrorist organizations.

The specific programs crafted should take account of the particular circumstances of the recipient country, and some countries will merit more resources than others. Nevertheless, there are common, initial elements of an invigorated U.S. approach to failed and failing states that should be incorporated into a broad strategic framework, and linked to the extent possible to the efforts of such multilateral organizations as the UN, World Bank and African Union.

Improve Intelligence Collection: First, the United States must understand better the specific risks inherent in each failing state. In this regard, we are severely under-resourced. With the exceptions of Afghanistan, Bosnia, Pakistan and Colombia, where U.S. forces are deployed, U.S. intelligence collection and analytical resources devoted to failing states remain woefully inadequate. In Africa, for instance, intelligence collection has steadily diminished since the end of the Cold War. The loss is particularly severe in the realm of human intelligence following the closure of a number of CIA stations. While collection increased somewhat after the U.S. Embassy bombings in 1998 and, again, presumably, after September 11, 2001, there is little evidence of sustained efforts to improve collection and analysis in most parts of Africa. As the Administration obtains additional funding for intelligence activities in the context of the war on terrorism, it should direct the Intelligence Community to elevate the importance of, and resources dedicated to, collection and analysis in Africa and in other areas prone to state failure. Collection ought to focus particularly on transnational security threats, such as terrorism, smuggling of precious minerals, proliferation (both conventional and WMD), crime, narcotics flows and disease.

Take Risks for Peace: To deal seriously with failed and failing states, the Administration must overcome its reluctance to prevent conflicts and attempt to broker peace, even where peace is elusive. There are no guarantees of success in conflict resolution, but there is also little face to be lost in failing, where credible effort has been exerted. On the contrary, where a threat is identified, as in the case of failing states in the NSS, and little effort is made to address it, there is far more ground for faulting the policy and its makers.

The Administration should engage early and aggressively across the board when conflict is imminent or persistent—from the Middle East to South Asia to Africa. The United States should continue its active efforts to defuse tensions between India and Pakistan and to resolve the conflicts in Colombia and Sudan. However, it should also resume urgently energetic involvement in the conflict in Burundi, which, lapsed after the Clinton Administration left office. There, the regionally-led peace effort is faltering while the security situation is deteriorating due in part to the return of armed rebels in the wake of Rwandan withdrawal from Congo. The risk of massive killing is increasing, and the United States risks facing the consequences of its recent diplomatic neglect. At the same time, the United States should provide substantial logistical and financial support to buttress the UN peacekeeping mission as well as disarmament and demobilization requirements in the Congo. In West Africa, the Administration needs to recognize the significant risks posed by political fragility in Nigeria, and to act to buttress the flawed but democratic government through such tools as debt relief, rather than by keeping it at arm’s length. In Cote D’Ivoire, the Administration should intercede diplomatically to support regional mediators and forge agreement with France and the EU on incentives and pressures to press the conflicting parties and their external supporters to achieve a comprehensive political settlement.

Finally, the complex and difficult situation in Somalia now merits increased attention from Washington. Somalia’s warring factions recently signed what could be the most promising peace agreement in a decade. Credit for this achievement goes mainly to Somalia’s neighbors. The U.S. and EU served as witnesses and have pledged “smart sanctions” against any violators. If the agreement holds, the U.S. should also pledge generous economic assistance to Somalia and join with the EU to provide command, control, communications, intelligence and logistical support to regional states, should they deploy peacekeepers to monitor the cessation of hostilities. At the same time, the United States could employ targeted economic incentives to help secure more stable parts of Somalia, like Somaliland, with the aim of making them off-limits for terrorist and criminal organizations.

Help Failed States Regenerate: Where tenuous peace agreements offer the potential to revive weak or failing states, the United States, working with others in the international community, should be prepared to make sustained and large-scale commitments to post-conflict reconstruction, including nation-building. Despite negative perceptions of nation-building, there are several cases where strong U.S. or UN leadership has yielded largely positive, if far from perfect results. Examples of relative success include Mozambique, East Timor, Kosovo, Cambodia and Lebanon.

Effective nation-building requires substantial investments in: disarmament, demobilization, reintegration and resettlement of ex-combatants; skills training and food for work programs; and, building transparent, accountable government institutions, particularly in law enforcement, the judiciary, the legislature and economic ministries. U.S. and other resources are also required to strengthen civil societies, foster press freedom and professionalize militaries. Without sustained U.S. commitment to see nation-building through to its eventual conclusion, one cannot expect lasting progress in reducing the number of, and dangers posed by, failed states.

However costly and long-term, these investments are essential to securing fragile peace. The donors’ bill for Afghanistan alone is estimated to be $10 billion over the next five years. The cost of dealing effectively with the post-conflict challenges of Sierra Leone and Angola, and possibly with those of Congo, Somalia and Sudan, could range from perhaps $3 bill. to $15 bill. over the same period, depending on how many of these conflicts reach lasting resolution. The U.S. share of the total cost could be expected to be approximately 25% (our traditional share of international financial obligations), or between $750 million and $3.75 billion over five years. Such funds would require an additional appropriation in the Foreign Operations Account separate from the proposed Millenium Challenge Account.

Nevertheless, the successful rehabilitation of these failed states would pay considerable security dividends to the United States. At the same time, the United States would likely reap longer term economic benefits in the form of reduced humanitarian assistance and significantly increased trade and investment opportunities, especially in oil-producing Angola, Congo and Sudan.

Provide Aid, Trade and Debt Relief: Current development strategies leave little place for significant, non-humanitarian expenditures in failing states, much less in those that have already gone into the abyss. There are occasional exceptions in high-profile cases where the U.S. military is employed, as in Afghanistan and Bosnia, but these are rare. While the bulk of U.S. assistance should continue to be targeted to viable countries well positioned to benefit from development resources, new approaches are needed to help spur long-term recovery in failed states and to assist in the rehabilitation of weak states, especially those emerging from conflict. The resources for such programs should not be sought within the MCA but rather in the form of debt relief for countries emerging from conflict and enhanced country programs with flexible programming authorities, such as the Economic Support Fund (ESF).

Limited and well-targeted assistance could be usefully employed in parts of failed states, but rarely is. Helping to establish zones of relative security and economic opportunity within these states would make such areas less attractive to potential smugglers, criminals or terrorists. An augmented ESF account for countries in transition, funded at approximately $200 million per year, could provide valuable seed monies for a range of high-impact investments in failed and failing states. Even as conflicts continue, the United States could invest such funds in micro-enterprise, education, sanitation and health projects in the more stable parts of Somalia and Congo; it could also increase assistance in parts of rebel-held Sudan. In these and many other relative no-go zones, U.S. resources could also be wisely directed under UN or NGO auspices to helping fight infectious diseases such as HIV/AIDs. The benefits of such interventions for the local populations are clear. However, given the transnational nature of health threats and the toll they take on development, scaling up such programs in conflict zones would also benefit neighboring countries.

In post-conflict states, the same pool of U.S. resources could be used to help build viable governmental institutions, particularly those that foster the rule of law and social and economic development. This has been the U.S. aim, if not yet the outcome, in Bosnia and Afghanistan. It should likewise be a priority in countries, where conditions are relatively favorable, as in Angola and Sierra Leone.

Trade benefits should also be utilized to aid the rehabilitation of failing states. The United States has opened its markets to 36 African countries under AGOA, but the eligibility criteria clearly are intended to reward satisfactory political and economic performers. Excluding failing states was logical, given the objectives of AGOA, but consideration should now be given to new ways to spur trade and investment in failing states as one of several means to assist in their long-term recovery. Subsequent legislation could afford at least partial or temporary market access to several failing states. Congo, Burundi, Angola, Sierra Leone, and parts of Somalia could benefit from increased access for certain agricultural products and value-added, light manufactured goods to the U.S. market. Special trade provisions should also be implemented for other weak states in which we have a substantial security stake, including Pakistan, Afghanistan, Bosnia, and Colombia, with the aim of improving stability through accelerated growth and development.

Build Counter-Terrorism Capacity: At present, the bulk of U.S. counter-terrorism assistance goes to relatively stable states that are already active partners in the war on terrorism. This makes good sense. The United States should aim to provide more generous counter-terrorism assistance, especially to partners situated in tough neighborhoods. Equally, the Administration is wise to increase assistance to such countries as Colombia and Pakistan.

At the same time, limited and carefully directed additional resources could be provided to certain failing states that are presently unable to be effective partners in the war on terrorism, but whose territory is prone to exploitation by terrorist organizations. In selecting potential recipients, we must take account of their will to work with the United States, and not just of their weakness. For instance, it makes little sense to provide such assistance to the Government of Sudan until the United States determines it is no longer a state sponsor of terrorism, or to Liberia, with which we presently have a hostile bilateral relationship.

While human rights issues must be considered, Burundi and Cote D’Ivoire could usefully benefit from U.S. counter-terrorism assistance. It would also be wise to assist the governments of Sierra Leone, Angola and Congo to secure their borders and their diamonds from potential terrorist infiltrators and smugglers. Instituting effective international regimes (e.g. the Kimberley Process to curb trafficking in illicit diamonds) to minimize smuggling of the precious resources used to finance terrorist activities should become an even higher priority. Finally, the U.S. should also seek more active controls over uranium sources in Congo and in other weak producer states.