Enterprise Resilience Management Blog

WiMAX and the Evernet

As a so-called "road warrior," I spend more time traveling annually on business than I get to spend at home with my family. On the road, however, keeping in touch with my company is critical. Mobile phones are crucial to my connectivity, but so is the ability to receive and send email. Sometimes that can be a problem; especially in areas I have labeled the Edges of Globalization. In these areas, the infrastructure necessary to support a robust broadband system either doesn't exist or remains in its nascent state. Many people, including my colleague Tom Barnett, believe the day will come when we will live in an "always on, always connected" world. Tom calls the infrastructure that supports this vision the Evernet. I have written a couple of posts about technology being developed to support the Evernet [Ubiquitous Sensors and the Evernet and The Economist and the Evernet]. As I wrote yesterday, other developed countries are connecting to faster broadband connections and at a quicker rate than is the U.S. Cliff Edwards, writing in BusinessWeek magazine, discusses U.S. wireless broadband efforts focusing on WiMAX ["The Road to WiMax," 3 September 2007].

Edwards' article explains how Intel Executive Vice-President Sean M. Maloney worked to create a coalition around WiMax and how it should unfold. WiMax stands for Worldwide Interoperability for Microwave Access. For any road warrior, the two most important words in that title are "worldwide" and "interoperability." Anyone who follows this weblog knows that I am a big proponent of globalization and standardization. According to the article, when Maloney first received his charge from Intel to make broadband access a priority, he immediately envisioned a world connected via fiberoptic cable -- the route Japan is taking. Early meetings with telecom companies, who Maloney envisioned as partners in this venture, put a chill in such plans. Edwards reports that the telecom companies claimed that cable would cost $300/foot to install throughout the U.S. and that the landscaping bill for burying all that cable in established neighborhoods would top $90 billion in addition to the baseline installation cost. Ouch!

Good solutions generally come from answers to good questions. In this case, the $90 billion question came from Intel's then-chairman Andy Grove who asked, "Can we do it with wireless?" No reason to replace all that fancy shrubbery if you can bypass it altogether! That started Maloney's search for the right technology.

"Today, the answer [to Grove's question] is clearly yes, and that's largely thanks to Maloney. He has led an industrywide effort to develop and market what was in 2002 an obscure wireless broadband technology only a few hundred engineers had heard of. Indeed, after logging hundreds of thousands of air miles, he has rounded up a remarkable coalition of chip, PC, consumer electronics, networking, and software companies in an effort to radically reshape the future of broadband with what's now called WiMAX. Intel faced withering criticism from tech analysts when it first cast its lot with WiMAX, but the critics have toned down their rhetoric. That's because dozens of wireless telecom operators around the globe have also placed bets on WiMAX and plan to spend $13 billion over the next few years to build 300 such networks."

Unlike those sometimes-hard-to-find Wi-Fi hot spots, WiMAX holds the promise of wide area coverage with Internet speeds 50 times faster. That is music to anyone whose work keeps them away from a traditional office setting.

"WiMAX technology and businesses built upon it still have a lot to prove. But once these networks are finished, WiMAX will be poised to deliver video entertainment and voice telephone services that will compete with traditional telecom and cable-television services. It also will extend the range of wireless e-mail and Web-surfing services in mobile computers. Beginning next year, stores will stock new laptop computers equipped with Intel's WiMAX-capable chips, code-named Echo Peak. Intel's role as head WiMAX cheerleader makes sense. WiMAX is similar to Wi-Fi, which was embedded in Intel's Centrino line of chips, but it offers dramatic improvements. Wi-Fi extends traditional wire-based broadband networks for just a few hundred feet, and Internet access speeds slow to a crawl when lots of people are online in the same area. Meanwhile, high-profile schemes for blanketing whole cities with cheap or free Wi-Fi networks aren't working out.
WiMAX provides superfast connections for up to 30 miles. You could stroll from your house conducting a conference call, pause to exchange hefty data files, and later dial in to your TiVo to download an episode of CSI. WiMAX avoids digital traffic jams by using licensed radio waves that guarantee each customer a certain level of service."

According to Edwards, Maloney deserves credit for almost single-handedly bringing WiMAX to the threshold of operability. Edwards notes that Maloney had lots of help, including the Korean giant Samsung, but his vision and will seem to have been the driving forces that kept things moving when obstacles were encountered.

"After Maloney had his revelation about the potential of wireless broadband in 2002, he set up a small group to explore alternatives. At first, nothing seemed too wacky to consider—even using giant blimps as airborne radio transmitters. But after meeting with Martin Cooper, considered the father of the cell phone, Maloney became convinced the most economical idea was to emulate cellular networks and send wireless signals from fixed transmitters. AT&T had tried that approach, using a precursor of WiMAX, in Project Angel, an ill-fated effort in 2000 to provide wireless broadband connections to homes. The project was a non-starter because there was no industry standard at the time, thus no assurance that equipment made by different companies could work together or be produced cheaply. Maloney studied Project Angel and concluded that WiMAX could work because of its range and bandwidth, but only if he could line up industry support. Maloney's first hurdle was Intel itself. WiMAX was so lightly regarded that when he raised it as a possibility to a group of top managers, all he got were blank stares. His pitch: Intel and allies could create a standard technology for long-range wireless transmissions, much as Intel and Microsoft had created the so-called Wintel standard for the personal computer. With a lot of companies building products based on the same ground rules, economies of scale in manufacturing could be achieved quickly. Intel would build tiny radios into laptops that could connect easily to a worldwide WiMAX network. Also, he proposed, the chipmaker should lay the groundwork for a mammoth WiMAX ecosystem by investing more than $1 billion in carriers and other companies. The proposal provoked hot debate within Intel. In developing countries, WiMAX seemed like a sure winner. Governments there were grappling with massive costs of building fiber-optic or wire-based networks; a cheap, powerful wireless infrastructure was just what they needed. But in North America, the source of much of Intel's business, many consumers were becoming connected by other means—including fiber-optic cable to the home and high speed cellular networks."

All of that has a familiar ring for me. Enterra Solutions' Development-in-a-Box™ approach is based on the same logic trail followed by Maloney. Establish standards, implement them widely, and quickly gain economies of scale. As Edwards' notes, in developing countries this approach seems like a sure winner. The road to WiMAX, however, has become a classic head-to-head battle like the one going on between HD DVD and Blu-ray Disc. The alternative in this case is one created by Qualcom and Kyocera.

"Qualcomm remains the chief opposition to WiMAX. No surprise there. It banked more than $6 billion in 2005 from sales of wireless chips and royalty fees on its technologies. Qualcomm took the battle to a committee of the IEEE that was reviewing proposals for technologies that could deliver high-speed Internet access for laptop computers and other mobile products. Intel and Samsung presented their WiMAX proposal in late 2005 but were voted down repeatedly in favor of a rival wireless broadband technology backed by Qualcomm and Kyocera Corp. Intel and its allies suspected foul play and complained that Qualcomm had stacked the committee with people on its payroll, including engineers flown in from a Russian paper mill who had little knowledge of wireless issues. Those allegations weren't proven, but the standards body in mid-2006 replaced four members, including its chairman, Jerry Upton, who was a paid Qualcomm consultant. After that, the committee approved WiMAX as a mobile communications standard. ... Qualcomm suffered another blow in July, 2006, when Intel, Motorola, and Bell Canada teamed up to invest more than $1 billion in Clearwire, the biggest holder worldwide of spectrum that could be used for WiMAX. The company, founded in 2004, was backed by 'the wizard of wireless,' Craig O. McCaw, who started the first major U.S. mobile phone service company, McCaw Cellular."

Edwards asserts that the battle is far from over, even though Sprint/Nextel has also signed on with the Intel/Samsung team. Eventually, there will be a clear winner even if both systems survive. The Microsoft/Apple rivalry has survived for decades despite Microsoft's clear dominance. For developing countries, adoption of the winner's system means that it will get a jump start when it comes to creating a nationwide broadband system that ties to the international economy. The battle will be interesting to watch, but I'm guessing that smart money is going to go with the Intel/Samsung team because those two companies routinely find themselves atop the list of the world's most innovative companies.

America Remains in the Broadband Slow Lane

Last November I posted a weblog about America's slow progress towards better broadband connectivity [Broadband Bound]. According to a Washington Post article by Blaine Harden, things have not improved much since then, especially in comparison to other developed countries like Japan ["Japan's Warp-Speed Ride to Internet Future," 29 August 2007].

"Americans invented the Internet, but the Japanese are running away with it. Broadband service here is eight to 30 times as fast as in the United States -- and considerably cheaper. Japan has the world's fastest Internet connections, delivering more data at a lower cost than anywhere else. ... Accelerating broadband speed in [Japan] -- as well as in South Korea and much of Europe -- is pushing open doors to Internet innovation that are likely to remain closed for years to come in much of the United States. The speed advantage allows the Japanese to watch broadcast-quality, full-screen television over the Internet, an experience that mocks the grainy, wallet-size images Americans endure."

The key to success in the information age in large measure depends on the reliability and speed of the connections that can be achieved. Neither individuals nor most companies can increase connection speeds on their own. They must rely on the infrastructure put in place by the telecom sector. Therefore, it is a bit alarming to see the U.S. falling behind so early in the game. The Japanese have pursued an aggressive strategy of "wiring" the country that has been pushed by government policy.

"Japan has surged ahead of the United States on the wings of better wire and more aggressive government regulation, industry analysts say. The copper wire used to hook up Japanese homes is newer and runs in shorter loops to telephone exchanges than in the United States. This is partly a matter of geography and demographics: Japan is relatively small, highly urbanized and densely populated. But better wire is also a legacy of American bombs, which razed much of urban Japan during World War II and led to a wholesale rewiring of the country. In 2000, the Japanese government seized its advantage in wire. In sharp contrast to the Bush administration over the same time period, regulators here compelled big phone companies to open up wires to upstart Internet providers."

The U.S. is taking a much different course to faster broadband -- opting to go wireless rather than wired (I'll have a post on WiMAX in the near future). Japan's "wired" solution provides speeds faster than either U.S. DSL or cable modem connections.

"At first, [Japan] used the same DSL technology that exists in the United States. But because of the better, shorter wire in Japan, DSL service here is much faster. Ten to 20 times as fast, according to Pepper, one of the world's leading experts on broadband infrastructure. Indeed, DSL in Japan is often five to 10 times as fast as what is widely offered by U.S. cable providers, generally viewed as the fastest American carriers."

Japan didn't stop with copper connections, it has moved ahead with fiber-optic connections.

"Competition in Japan gave a kick in the pants to Nippon Telegraph and Telephone Corp. (NTT), once a government-controlled enterprise and still Japan's largest phone company. With the help of government subsidies and tax breaks, NTT launched a nationwide build-out of fiber-optic lines to homes, making the lower-capacity copper wires obsolete. ... [NTT] now offers speeds on fiber of up to 100 megabits per second -- 17 times as fast as the top speed generally available from U.S. cable. About 8.8 million Japanese homes have fiber lines -- roughly nine times the number in the United States."

In the information age, if you're not progressing you're falling behind. There is a lot of talk about a digital divide between the developed and developing world, but a digital divide could also be opening within the developed world and the U.S. is on the wrong side of that gap.

"Japan's leap forward, as the United States has lost ground among major industrialized countries in providing high-speed broadband connections, has frustrated many American high-tech innovators. 'The experience of the last seven years shows that sometimes you need a strong federal regulatory framework to ensure that competition happens in a way that is constructive,' said Vinton G. Cerf, a vice president at Google. Japan's lead in speed is worrisome because it will shift Internet innovation away from the United States, warns Cerf, who is widely credited with helping to invent some of the Internet's basic architecture. 'Once you have very high speeds, I guarantee that people will figure out things to do with it that they haven't done before,' he said. As a champion of Japanese-style competition through regulation, Cerf supports 'net neutrality' legislation now pending in Congress. It would mandate that phone and cable companies treat all online traffic equally, without imposing higher tolls for certain content. The proposed laws would probably save billions for companies such as Google and Yahoo, but consumer advocates say they would also save money for most home Internet users. U.S. phone and cable companies, which control about 98 percent of the country's broadband market, strongly oppose the proposed laws, saying they would discourage the huge investments needed to upgrade broadband speed. Yet the story of how Japan outclassed the United States in the provision of better, cheaper Internet service suggests that forceful government regulation can pay substantial dividends."

When it comes to building infrastructure, governments have historically been intimately involved. The lessons of the past shouldn't be lost as we sit on the cusp of a new future. Harden notes, however, that even as NTT moves toward a monopolistic position in the fiber-optic business regulatory battles over the future of broadband in Japan are still being fought. His article was accompanied by some interesting figures that demonstrate how the U.S. is falling behind in the broadband race. They are worth examining.

The Beginning of the End of Cheap Labor in China

There have been several articles over the past few months noting that China's economy has progressed so rapidly that it is running out of skilled labor despite the millions of people in its work force. This development seems to have shifted power from employers to employees and, as a result, working conditions in China should improve and wages should increase. The latest article to address this subject is by Keith Bradsher ["Wages Rise in China as Businesses Court the Young," Washington Post, 29 August 2007].

"Chinese wages are on the rise. No reliable figures for average wages exist; the government’s economic data are notably unreliable. But factory owners and experts who monitor the nation’s labor market say that businesses are having a hard time finding able-bodied workers and are having to pay the workers they can find more money."

This trend represents both good news and bad for the U.S. On the up side, higher wages and better working conditions means that workers in developed countries will eventually be able to compete on a more level playing field with Chinese workers. That good news must be tempered by the fact that when Chinese wages rise high enough manufacturing will move to some other low cost country not back to the United States. The news won't really be good until a majority of the world's workers can compete on a level playing field -- and that is beyond the current forecast horizon. The bad news is that higher wages means higher prices.

"[H]igher wages in China are likely to lead to higher prices in the United States — at the mall, at the grocery, even at the gas pump. Chinese companies are already passing along some of their higher costs to overseas customers. Prices for goods from China, after years of gradual decline, have risen 1.2 percent since February, according to the Labor Department. July’s increase was the biggest yet: 0.4 percent compared with June. Chinese companies and contractors are also passing on the cost of the rising value of their currency, the yuan, up 8.8 percent against the dollar in the last two years."

The most interesting aspect of the article is that it points out that past assumptions about a bottomless pool of cheap labor in China and elsewhere must now be reexamined.

"For decades, many labor economists said that China's vast population would supply a nearly bottomless pool of workers. So many people would be seeking jobs at any given time, this reasoning went, that wages in this country would be stuck just above subsistence levels. As recently as four years ago, some experts estimated that most of the perhaps 150 million underemployed workers in the countryside would be heading to cities. Instead, sporadic labor shortages started to appear in 2003 at factories in the Pearl River delta of southeastern China. Now those shortages have spread to factories up and down the Chinese coast, specialists say. This summer, Mary Gallagher, a Chinese labor specialist at the University of Michigan, visited five sportswear factories near Shanghai and Guangzhou. She found them all struggling to hire and retain workers. One had shut one of its two main production lines because it had nobody to sew shirts and other garments."

That the labor pool is now seen as a resource that can be drained should slowly help workers improve their lot around the world. It is a trend we should all be able to applaud. The power shift from employers to workers is underscored by the statement of Chinese officials that indicate that openings are not a result of a lack of people, but a lack of people willing to work for poor wages.

"Chinese officials are quick to say that there is no overall shortage of labor — rather, there is a shortage of young workers willing to accept the low wages that prevailed in the 1990s. Factories in cities like Guangzhou advertise heavily for young workers, even while employment offices consider it a success if someone over 40 can find any job in less than a year."

China, like so many other countries, is "graying," which makes age discrimination in hiring a bit of a puzzle. Bradsher goes on to note that even for young people who are highly sought after, China is not yet a workers' paradise.

"Factory wages remain extremely low by Western standards: roughly $1 an hour for better-paid workers near the coast, compared with as little as 50 cents early this decade. The pay looks especially low in dollar terms, partly because China has intervened in the currency markets to hold down the value of the yuan and keep exports competitive. The cost of living is low in dollar terms for the same reason; entrees at an air-conditioned restaurant three blocks from the bicycle factory here start at 50 cents for a large plate of fried rice. Moreover, labor regulation is weak in China, as shown most vividly this year by the discovery that brick kilns in the north of the country had kidnapped and enslaved hundreds of children and mentally disadvantaged adults, working them under brutal conditions with little or no pay. And wages are stagnating in the middle of the labor market — workers who consider themselves too educated for entry-level jobs in a garment factory, but lacking the skills or experience to command a premium salary elsewhere."

China has passed some labor laws and the Economist reports that many companies are going to be caught by surprise by them when they start hiring new workers ["Red flag," 28 July 2007]. The new laws are specifically aimed at limiting firms hiring temporary workers.

"For the 2008 Olympics in Beijing, big foreign companies are planning to add swarms of temporary employees. They had better think again. A sweeping new labour law passed on June 29th intended to enhance workers' rights makes this and many other common practices illegal. The change has received little notice so far, possibly because it does not go into effect until January 1st 2008."

According to the article, the new laws are aimed at improving labor conditions and give greater power to Chinese labor unions.

"The new law replaces one put into place in 1995, when early efforts at economic reform in southern China were bearing fruit and the country was eager to attract foreign companies. Since then China has emerged as an attractive manufacturing base, but concerns have grown over poor labour conditions. Hence the new law that, on its face at least, dramatically changes the balance of power between workers and employers, says Lesli Ligorner, a lawyer in Beijing with Paul Hastings, a big law firm. Companies will need written contracts with all full-time employees, and anyone who works for more than four hours a day is likely to be considered a full-time employee. Once they are full-time, employees who are laid off must be bought out at a multiple of their average monthly salary. Making more than 20 employees or 10% of the workforce redundant is allowed, but must be done on the basis of seniority not merit. China's trade unions could be transformed by the law. Previously they focused on social welfare; now they will be able to act more like Western trade unions, weighing in on discipline, safety, remuneration and working hours. The new law also grants them the right to litigate."

The Economist notes that Chinese labor law remains a tangle, with some of the new laws conflicting with older laws, but it also notes that some real good should come from these new laws, if -- and it is a big if -- they are enforced honestly.

"Perhaps the best aspect of the new law is that it provides protection for people on the bottom rung of the ladder. That is good news not only for workers, but also for firms with high (or at least modest) standards which put them at a competitive disadvantage to more ruthless operators. But the law also imposes burdens on companies, and so increases the incentive to bribe corrupt officials to look the other way."

Chinese political, business, and labor leaders still have to learn the lesson that Chinese goods will be viewed with suspicion until they have built a tradition of trust. It means adhering to internationally recognized standards and best practices. It means treating workers fairly. And it means governing with integrity and decreasing corruption through properly enforced regulation. Unfortunately, China is learning most of these lessons the hard way -- which generally means losing trust rather than gaining it. They need to become proactive rather than reactive (and that means doing more than trying to point fingers elsewhere). It will happen, however slowly.

Looking Forward to "New Sudan"

Some people are surprised when they learn that the Kurdish region of Iraq is booming while the rest of the country remains embroiled in a civil war. They might also be surprised to learn that an analogous situation could develop in Sudan. Most people have heard about the turmoil and genocide taking place in the Darfur region of Sudan, but few people know about what's happening in the rest of the country, especially in the south. Southern Sudan, like the Kurdish region of Iraq, is ethnically different than the north. It is also religiously different. As a result, people living there are looking to forge a new identity as an independent country. They may get that chance in a couple of years. An article in The Economist magazine discusses how the next few years might unfold and what people living in southern Sudan hope to achieve ["Looking for a new identity," 28 July 2007].

"In many respects, south Sudan is already its own country. It issues its own visas, decides most its own policies and mishandles its own budget. Of course, tricky deals over the ownership of oil and the Nile waters must be negotiated before full independence. And there is always a small chance that the Sudan People's Liberation Movement (SPLM), which runs the south, may do well enough in elections for all of Sudan (due to be held in 2009) to alter the shape of Sudanese politics overall, the north included. But as things stand, almost all southerners believe that, after a referendum promised by the central government in Khartoum, south Sudan will become a sovereign country by 2011."

With the south already acting autonomously, even success in national elections is unlikely to stop the push for independence. People living in the south consider themselves more African than Arab and see their futures tied to eastern African more than northern Africa, the Mediterranean region and the Middle East.

"That raises new questions. For one thing, what would the new country be called? The betting is on New Sudan, the name favoured by John Garang, the SPLM's charismatic leader killed in a helicopter crash in 2005. But establishing the new country's identity will be harder. Even SPLM zealots accept that the largely Christian and animist south cannot define itself just negatively, in opposition to the Muslim north. Many leading lights in the south Sudanese government, including the president, Salva Kiir, want the new country, whatever it is called, to become part of east Africa rather than a southern spin-off from the rest of Sudan, which is mainly Arab and Muslim and looks more to the Arab world. South Sudan's economy would tilt to the south and east."

As the situation is developing, the nascent country -- New Sudan -- is setting itself up as a good candidate for Enterra Solutions' Development-in-a-Box™ approach. It will begin life having a relatively secure environment, leaders with a clear vision, natural resources (mostly in the forms of oil and natural beauty), and a population eager to embrace the future. What it won't have is experience, infrastructure, and the connectivity required to maximize its positive attributes. It will be an economy begging for a jump start. Seeking stronger ties with east Africa makes sense.

"Most trade goes via Uganda. In Juba, the southern capital, the most-used mobile-phone network operates from Uganda with a Ugandan code and Ugandan local rates, while calls to Khartoum are deemed international. There is also talk (in South African and German circles, among others) of building a railway from Juba, south Sudan's capital, to Gulu in Uganda, to connect with the main east-African network. Most of south Sudan's diplomatic links are through Kenya. Some schools are already replacing Arabic with English. Another new way to nudge south Sudan into east Africa is through wildlife and tourism, especially after a recent discovery that south Sudan's wild game is far more abundant than had previously been reckoned. Earlier this year, the Wildlife Conservation Society, an American outfit, uncovered one of the world's biggest animal migrations in south Sudan. Conservationists flying low over uncharted territory discovered a vast array of wildlife, especially in Boma, along the border with Ethiopia. Paul Elkan, the Kenya-based Wildlife Conservation Society's main man for south Sudan, says the scale of migration may exceed that of Tanzania's Serengeti."

If New Sudan is going to succeed as an independent state, it needs to start now putting the pieces in place that will strengthen its chances. That is what Development-in-a-Box does. It provides a framework upon which an economy can be successfully built. It doesn't dictate how that development must progress. It's about interfaces not content. The current leadership of southern Sudan appears to have a vision -- to preserve its natural beauty and extract oil without damaging the environment. One of the reasons they want independence is so that they can take control of that vision, which is currently being undermined by Chinese oil exploration.

"'It is a paradise not yet lost,' says an ecstatic Mr Kiir, who has already signed agreements with the conservationists. An immediate goal is to limit the destruction caused by the oil business. Thanks to graft and negligence, Chinese and other contractors have installed massive and polluting infrastructure across the south with no environmental oversight. In the long run, Mr Kiir hopes to set up a national parks system to protect the Boma migration, improve land management and provide jobs for former fighters as rangers and guides. A grander hope is that it could bolster New Sudan's new identity—and its claim to be part of east Africa."

Like so much of Africa, Sudan was a country cobbled together by colonial powers with little regard to traditional boundaries. South Sudan probably won't be the last new country that emerges to correct this situation, but it will probably be the next one. With good planning and the proper approach, New Sudan has a real chance of becoming a successful and prosperous state.

The Economist Discusses the Dark Continent

Earlier this month I wrote a post about power generation problems across the African continent [Africa Remains the Dark Continent -- Literally]. That post was prompted by a New York Times article by Michael Wines. The Economist has now weighed with an article of its own ["The dark continent," 18-24 August 2007]. When I wrote about the dark continent being literally dark, I was thinking about how the continent looks from space at night. The Economist article is accompanied by a great picture that makes that point quite plainly. The article begins by describing what the camera sees:

"Seen from space, Africa at night is unlit—as dark as all-but empty Siberia. With nearly 1 billion people, Africa accounts for over a sixth of the world's population, but generates only 4% of global electricity. Three-quarters of that is used by South Africa, Egypt and the other countries along the north African littoral. The need for more power stations in the rest of the continent has long been recognised, but most of the attempts at electrification in the 1970s and the 1980s failed."

As I noted in my previous post, development requires, in addition to security, access to reliable electrical power. The sub-title of the Economist article says it all. "Power shortages have become one of the biggest brakes on development" in Africa. The article covers much of the same territory as Wines' New York Times' article (that is, reviewing the lack of progress in generating power and the reasons for it).

"In some countries, dictators pillaged power stations for parts and fuel. In others, power stations were built but not maintained. Turbines were run at full capacity until they broke, then were abandoned. By some counts, only 17 of Nigeria's 79 power stations, many dating from this period, are still working; the country's demand for power is an estimated 7,600 megawatts, against an actual operating capacity of 3,500MW. The World Bank reckons that 500m sub-Saharan Africans are without what it calls 'modern energy'. The situation is bound to get worse as the demand for power continues to grow."

Leaders in developed countries meet together and agree that they want to see African economies strengthen, but as long as power shortages serve as an anchor keeping them at the bottom of the pyramid there will be no economic tide that can help these countries rise.

"For now, the continent remains largely dependent on hydropower: 13 countries use it for 60% or more of their energy. But Africa's rain falls more variably than, say, Norway's, and its dams often operate below capacity. Still, many new dams are being planned. Ethiopia has staked its development on damming the Blue Nile and other rivers. In west Africa dams are due to be built on the Niger, the Volta and Bandama. Some of these projects will be held up by financial and environmental disputes, just as Uganda's 250MW Bujagali dam on the White Nile has been. But most will get built."

Like Wines' earlier article, the Economist article singles out Nigeria because it has the continent's largest population and, therefore, its greatest energy needs. The country, however, that could answer many of the continent's power requirements is the Democratic Republic of the Congo. That answer comes in the form of the Congo River. The river's energy remains untapped because of nagging instability in the region. Stability is the bedrock upon which development efforts must build and the Congo, like many surrounding countries, is currently trying to build on the sandy soil of instability. The article notes:

"The river with the biggest hydro potential is the Congo. The potential demand, too, is huge. Only 6% of Congolese have access to electricity and more power will be needed to get at the country's trove of minerals. A grand project to build a series of dams along the Congo's fast-flowing stretches could theoretically supply 39,000MW, enough to power the entire continent. But that will probably remain a dream. Congo has a terrible reputation among investors, and distributing the electricity across thousands of kilometres, much of it jungle, would pose formidable problems."

Those who understand that Africa needs electrical power to progress are hoping that it primarily develops alternative (i.e., non-carbon-based) sources of energy to power its generation plants. The article reports that coal and natural gas nevertheless remain candidate power sources. There are other efforts, however, that could make an impact and they are backed by the World Bank.

"Many African governments are looking at alternative sources of energy to make up their projected shortfalls. Hydropower is clean, from the point of view of greenhouse-gas emissions, but most of the easy alternatives, notably coal, are dirty. Donors committed to cutting global carbon emissions are unlikely to favour more dirty coal-fired power stations of the sort that predominate in South Africa, although the government there claims that it wants to clean them up. Some fossil fuels, however, are less damaging than coal. A pipeline planned for west Africa, which will carry gas that is now flared off in oilfields, could stabilise electricity supply in coastal cities. Few Africans in rural areas have access to electricity. Connecting them to national grids will be slow and expensive. Yet Lilliputian windmills, water mills, solar panels and biomass furnaces could have a big collective impact. The cost of lighting a shack takes 10% of income in the poorest households and the kerosene lamps are highly polluting. In response, the World Bank has rolled out 'Lighting Africa', an ambitious effort to get 250m of the poorest Africans on clean-energy lighting by 2030. Talk of the mass production of biofuels in Africa is premature, but advances have been made. Some investors are backing jatropha, a plant whose seeds produce an oil for burning in generators. There is also an effort to tap geothermal energy. The Great Rift Valley, from Eritrea to Mozambique, could produce 7,000MW. Kenya hopes to get 20% of its energy from geothermal sources by 2017. Engineers think they can also use the steady winds in Africa's mountain ranges for power production. And if the costs of using the sun's warmth can be reduced to 30% below its present cost, vast solar farms could offer cheap, clean energy for African cities and in doing so boost incomes in rural areas. Egypt, which relies mostly on natural gas, is looking hard at solar power. Other remedies for Africa's power shortages are more familiar but just as urgent: more efficient appliances, such as LED lighting, more deregulation, better use of existing resources by, for instance, improving the quality of power lines, and pooling power into regional grids. Otherwise Africa will remain in the dark."

If there is ever going to be a place where alternative fuels can prove their worth, it will be in Africa. As both Wines and the Economist make plain, the continent is a vast blank landscape that has resources, people in need, and little infrastructure. Since most African states are going to need help to develop their infrastructure, visionary leaders and resourceful groups should seize the opportunity to demonstrate how power generation's future should unfold. Africa has nearly every landscape, almost every climate, and just about every challenge that could be faced elsewhere; making it a great testbed for new technologies. Working together development groups could set the course for the rest of the world. Africa could be a model instead of an afterthought. This will not be easy, cheap, and/or quick, but the effort seems worth it.

Rising with the Tide: Chile, Brazil, and Mexico

It takes a lot to impress the folks at The Economist, but in the 18-27 August 2007 issue, one of the leaders contains the following the sentence: "Something rather exciting is happening in Latin America." ["Up from the bottom of the pile"] Although the article makes passing mention of Hugo Chavez and his socialist revolution and anti-American rhetoric, it notes that "many countries in the region, and especially in Brazil and Mexico, Latin America's two giants, things are in fact going better today than they have done since the mid-1970s." Even more exciting than the economic boom is the accompanying social transformation.

"Financial stability and faster growth are starting to transform social conditions with astonishing speed. The number of people living in poverty is falling, not only because of growth but also thanks to the social policies of reforming democratic governments. The incomes of the poor are rising faster than those of the rich in Brazil (where income inequality is at its least extreme for a generation) and in Mexico. In both these countries a new lower-middle class is emerging from poverty. Low inflation, achieved through more disciplined public finances and trade liberalisation, has brought falling interest rates. Credit has at last returned. So these new consumers are buying cars and DVD players or taking out mortgages. No wonder Latin Americans are in an optimistic mood: earlier this year a poll by the Pew Global Attitudes Project found a greater increase in personal satisfaction in Brazil and Mexico over the past five years than in any of the other 45 countries it surveyed."

The article notes that even though Latinos enjoy watching Chavez poke repeatedly at the Colossus to the north, they haven't jumped on his economic strategy bandwagon.

"Out of a dozen presidential elections in the region in the 13 months to last December, the [radical populists and leftists] won only four. Moderate governments, of centre-left or centre-right, are in charge in most countries."

The poorer the country, the more likely it is to lean toward the socialist policies that Chavez espouses. The article notes that such policies may be helpful to get people started toward a better life, but at some point more conservative policies are required to keep the dream alive. Fifty years of socialism in Cuba certainly hasn't achieved a state worthy of emulation. The article concludes that most of Latin America still has a long row to hoe, but now is the time to do the tough work.

"Latin America remains a long way from enjoying widespread affluence. In the region as a whole, some 38.5% of people remain poor according to national definitions. The gains are still fragile. But the lessons for governments are clear. To bolster the new middle class, it is crucial to keep inflation low. So is improving the shoddy education imparted in the region's schools and universities. And businesses in the region are still held back by lack of transport infrastructure and an excess of red tape."

In a companion article ["Adiós to poverty, hola to consumption"], the magazine discusses the emergence of a new middle class in Brazil and Mexico. The story begins in the Brazilian town of Montanhão. The article notes that nagging problems there persist but ...

"... signs of progress are all around. New tower-blocks, of the kind ubiquitous in the smarter parts of São Paulo, now jut up from among the houses of what still resembles a favela, or shantytown. Public services are improving fast: nearly everyone has electricity, piped water and sewerage. Smart new school buses run by the municipal government ply up and down the hillsides. And the mood of optimism is palpable. 'Each year has been better than the last,' says Mrs Jozina de Arruda. Between the profit from the kiosk and her husband's wages as a security guard at a bank, they earn $900-1,200 a month. They are members of a new middle class that is emerging almost overnight across Brazil and much of Latin America. Tens of millions of such people are the main beneficiaries of the region's hard-won economic stability and recent economic growth. Having left poverty behind, their incipient prosperity is driving the rapid growth of a mass consumer market in a region long notorious for the searing contrast between a small privileged elite and a poor majority. Their advent also promises to transform the region's politics."

The main focus of the article is on why and how this middle class emerged. It isn't Latin America's first middle class, but it is different than the one that rose and nearly disappeared late last century. In addition, it wasn't government programs but private investment and market forces.

"The middle class that is emerging now is ... more accurately described as a lower-middle class. Fernando Henrique Cardoso, a former president of Brazil who is also a sociologist, points out that this class is related more to the market than the state. Many of its members have small businesses, like Mr Gonçalves. Others act as consultants to larger concerns. José Roberto Mendonça de Barros, an economist in São Paulo, points to a plethora of small service companies which advise large Brazilian farms on computing and biotechnology. ... In Mexico, argues Jorge Castañeda, a political scientist, some of the new middle class come from the informal economy, others from new industries or service businesses. The class is less concentrated in Mexico City and is rougher-edged, culturally and socially, as well as darker-skinned, shorter and more Mexican-looking than its predecessor, he says. These trends are furthest advanced in Chile. But they are most dramatic in Brazil and Mexico, which between them account for more than half of Latin America's 560m people. In Brazil between 2000 and 2005 the number of households with an annual income of $5,900 to $22,000 grew by half, from 14.5m to 22.3m, while those receiving less than $3,000 a year fell sharply to just 1.3m (see chart 2). In Mexico, according to Alejandro Hope of GEA, a consultancy in Mexico City, the number of families with a monthly income of between $600 and $1,600 has increased from 5.7m in 1996 to 10.7m in 2006."

Similar trends are being seen in Colombia, Peru, and Argentina.

"In Latin America as a whole, according to calculations by Banco Santander, a Spanish bank, some 15m households ceased to be poor between 2002 and 2006. If the trend continues, by 2010 a small majority in the region will have joined the middle class, with annual incomes above $12,090 in purchasing-power-parity terms. In Mexico some 15m out of 27m households could have middle-class incomes by 2012."

Even though progress has been achieved primarily through private sector investment, government programs have contributed.

"In both Mexico and Brazil, one family in five now receives a small monthly stipend from the government, provided they keep their children in school and take them for health checks. Lastly, in some countries remittances from Latin Americans who have migrated help their poorer families back home. The result is that in both Brazil and Mexico the incomes of the poorest half of the population are growing faster than the average. In both countries poverty is falling steadily, and income distribution is becoming less unequal."

For more about the program in Mexico, see my post Oportunidades At Home and Abroad. The article ends on a mixed note of wariness and optimism.

"All these positive trends are recent and remain fragile. Mr Mendonça de Barros notes that in Brazil, until very recently, a university graduate could expect to earn less than 2,000 reais a month in his first job—roughly the same wage as a bus driver. Many of those who have clawed their way out of poverty could be knocked back down again if there were a repeat of the financial collapses the region suffered in the 1980s and 1990s. The new middle classes have more schooling than their parents; some have gone to mushrooming private universities. But they are less educated than the old middle class that benefited from elitist public universities—and that makes moving into the upper-middle class hard. Nevertheless, the direction of change is clear."

In a final related article ["Destitute No More"], the magazine notes how well Chile has been doing.

"Poverty has fallen further, faster, in Chile than anywhere else in Latin America. Sustained economic growth and job creation since the mid-1980s are the main explanation, though it helps that poorer Chileans are having fewer children than in the past. In recent years public policies, such as Chile Solidario, have played a bigger role. In the 1990s poverty dropped by half a percentage point for each point of economic growth, but now it falls by one-and-a-half points, according to Clarisa Hardy, the planning minister. Chile Solidario aims to help the poorest support themselves, by ensuring they take up various social benefits and keep their children healthy and at school, and by offering training and a grant to set up a small business. It is too soon to tell whether it will be a long-term success: the first of 250,000 very poor families enrolled in the scheme are only just graduating from it. Even so, Chile has a chance of all but abolishing poverty in the next few years. ... The fact that alternative ways of measuring poverty are now being discussed is a sign of how far Chile has come in the past two decades. It is also an indication of the tasks that still lie ahead in creating a middle-class society."

For readers who have been reading about our Development-in-a-Box™ approach, they should recognize why we are so encouraged by it. Countries that have done well have adopted international standards and best practices, have emphasized educating their citizens, have created jobs, and encouraged the emergence of a middle class by fostering private development. The results, as you can see, are encouraging.

China in Africa: The Ups and the Downs

Anyone who has scanned international headlines over the past couple of years knows that China has made big inroads on the African continent. Many of its efforts have been in search of oil. Chinese companies have shown a willingness to go where companies from other developed nations have not. Such a place is Chad. Howard W. French, Lydia Polgreen, and Fan Wenxin, in a New York Times article, discuss China's efforts in Chad and elsewhere in Africa  ["China, Filling a Void, Drills for Riches in Chad," 13 August 2007].

"Chad is as geographically isolated as places come in Africa. It is also among the continent's poorest and least stable countries, the scene of recurrent civil wars and foreign invasions since it gained independence from France in 1960. None of that has put off the Chinese, though. In January, they bought the rights to a vast exploration zone that surrounds this rural village, making the baked wilderness here, without roads, electricity or telephones, the latest frontier for their thirsty oil industry and increasingly global ambitions. The same is happening in one African country after another. In large oil-exporting countries like Angola and Nigeria, China is building or fixing railroads, and landing giant exploration contracts in Congo and Guinea."

The article points out that oil isn't the only natural resource on which China has its eye.

"In mineral-rich countries that had been all but abandoned by foreign investors because of unrest and corruption, Chinese companies are reviving output of cobalt and bauxite. China has even become the new mover and shaker in agricultural countries like Ivory Coast, once the crown jewel in France's postcolonial African empire, where Chinese companies are building a new capital, in Yamoussoukro, paid for by Chinese loans. Surging Chinese interest in this continent has helped bring about what many Africans believe is the most important moment since the end of the cold war, when democracy was spreading in Africa and Western nations spoke of a 'peace dividend' that might ease African poverty."

The authors indicate that Western interest in Africa has waned. Although they don't indicate why there was a precipitous fall in the interest given to Africa, perhaps it was a result of the conflict in Iraq. Certainly the amount of resources being poured into Iraq has affected how much the U.S. Government believes it can spend in Africa. Without Western government interest and pressure on African leaders to reform, investors have turned a blind eye on most African countries.

"Westerners complain about chronic corruption and ineffective government, while Africans lament broken promises on aid and a hostile international economic system. The Chinese have stepped into this picture, coming to struggling countries like Chad with deep pockets, fewer demands on how African governments should behave and an avowed faith in everyone's ability to prosper. To help make that happen, China plans to build the country's first oil refinery, lay new roads, provide irrigation and erect a mobile telephone network, for starters. With such intensive efforts across the continent, China's trade with Africa topped $55 billion in 2006, up from less than $10 million in the 1980s. To achieve this growth, it has bypassed multinational institutions like the World Bank and the International Monetary Fund and flouted many of their lending criteria, including minimum standards of transparency, open bidding for contracts, environmental impact studies and assessments of overall debt and fiscal policies."

While corrupt governments welcome investment with few strings, as the article notes, not everyone in the development community believes it is a good thing [see my post on Rogue Aid]. Many critics are asking, "Are we seeing the future or the past?"

"In some ways, the new Chinese model of doing business in Africa is a throwback to an earlier era of Western involvement that is now widely seen as disastrous. In that era, borrowing countries typically had to work with companies from the lending nation, limiting competition and giving priority to business over development. Today, China takes things even further, signing long-term deals for rights to natural resources that allow countries otherwise unworthy of credit to repay their debt in oil or mineral output. 'In what manner has Africa progressed, in what sector?' said the Chadian president, Idriss Déby, referring to decades of close ties to the West. 'Whatever the good will of Africa's old friends and the old partners in its development, it has not progressed at all.' Still, major doubts hang heavily in the air. Will China's hunger for raw materials enable this continent to take off? Or will Beijing's willingness to spend whatever it needs in Africa, without regard to fiscal prudence, democracy, honest business practices and human rights, produce a replay of booms past, enriching local elites but leaving the continent poorer, its environment despoiled and its natural resources depleted?"

The article notes that Chad is a test case. It is already at the bottom of the pyramid and has nowhere to go but up. Chad is still rife with all the problems that have beset so many African countries and kept them entrenched in grinding poverty.

"There are few better places than Chad to watch for signs of how China's African gambit will pay off. Chad ranks just four places from the bottom on the United Nations scale of human development, yet it is emerging as a critical piece in China's economic push in a broad swath of sub-Saharan Africa, beginning with Sudan and extending in virtually every direction. Despite advanced prospecting by French and other Western firms dating back to the 1970s, Chad's oil had never been tapped. The nation was simply too unstable and the price of oil too low to justify investing much here. The oil that had been found was of low quality, and there was no practical way to get it out. That changed in 2000, when the World Bank agreed to help finance a $4.2 billion, 665-mile pipeline connecting Chad to Cameroon on the condition that oil revenues be used to fight poverty. Chad's revenues quickly outstripped expectations, but have not gone into quelling its immense poverty. Mismanagement and fraud have beset the World Bank plan from the start. Beyond that, Chadian rebels with bases in Sudan have been trying to depose Mr. Déby, so he pressed the World Bank to relax its rules on how to spend the country's oil money. A compromise was reached, and he went on a military spending spree, buying guns, aircraft and armored vehicles for his troops, along with a fleet of armored Humvees that stop traffic as they zoom about Ndjamena's dusty, potholed streets."

The article contains an assessment by Dou Lirong, the general manager of China National Petroleum Company International in Chad, that the Chinese presence in Chad is a win-win situation. The article concludes, however:

"Chinese officials almost invariably describe their relationship with African countries as a win-win -- based on mutual respect, aimed at joint prosperity and free of the overtones of exploitation and paternalism that critics worldwide say have governed much of the West's postcolonial relationship with Africa."

Not all African countries see China's presence as a win-win situation. In a more recent article, Polgreen and French report how a flood of low cost Chinese products has affected the African manufacturing sector ["China's Trade in Africa Carries a Price Tag," New York Times, 21 August 2007]. They begin their story in the courtyard in front of the once bustling Zambia China Mulungushi Textiles factory.

"The factory used to roar. From the day it opened more than 20 years ago, the vast compound had shuddered to the whir of rollers and the clatter of mechanical weaving machines spooling out millions of yards of brightly colored African cloth. Today, only the cotton gin still runs, with the company’s Chinese managers buying raw cotton for export to China’s humming textile industry. Nobody can say when or even if the factory here will reopen. 'We are back where we started,' said Wilfred Collins Wonani, who leads the Chamber of Commerce here, sighing at the loss of one of the city's biggest employers. 'Sending raw materials out, bringing cheap manufactured goods in. This isn't progress. It is colonialism.'"

The article does reaffirm that China is spending lots of money in Africa, including Zambia, but the basic point is that China is primarily pursuing raw materials to keep its own factories open.

"China is also exporting huge volumes of finished, manufactured goods — T-shirts, flashlights, radios and socks, just to name a few — to those same countries, hampering Africa's ability to make its own products and develop healthy, diverse economies."

African countries will not experience sustainable economic growth by relying on the export of natural resources. One of the reasons that Tom Barnett and I came up with the idea for Development-in-a-Box™ was to break this cycle of reliance and help countries develop the diverse economic base and create the jobs they need to prosper. Until China understands which of their programs are helpful and which are harmful, their ventures in Africa will continue to bear the rogue label.

"On the one hand, Chinese imports give Africans access to goods and amenities that developed countries take for granted but that most people here could not have dreamed of affording just a few years ago — cellular telephones, televisions, washing machines, refrigerators, computers. And cheaper prices on more basic items, like clothing, light bulbs and shoes, mean people have more money in their pockets. ... But across Africa, and especially in the relatively robust economies of southern Africa, there are clear winners and losers. Textile mills and other factories here in Zambia have suffered and even closed as cheap Chinese goods flood the world market, eliminating jobs in a country that sorely needs them. The Chinese investment in copper mining here has left a trail of heartbreak and recrimination after one of the worst industrial accidents in Zambian history, a blast at a Chinese-owned explosives factory in Chambishi in 2005 that killed 46 people, most of them in their 20s."

While China points to the creation of jobs, many of them are driven by China's need for resources to fuel its own economic boom. If China's demand for resources decreases, many, if not most of those jobs could disappear. In the meantime, the manufacturing sector continues to suffer. China has learned that Africa, despite its poverty, can be a good market. Hopefully, China's investment strategy in Africa will help create middle classes in countries that now lack them and their rise will help stimulate a more sustainable economic pattern. The debate will continue to rage.

"Many African scholars and political leaders say Africa has no need for the colonial baggage and paternalism of the West, and they welcome the Chinese approach of cowboy capitalism. 'Let the Chinese come,' said Mahamat Hassan Abakar, a lawyer in Chad, a former French colony in central Africa with deepening ties to China. 'What Africa needs is investment. It needs partners. All of these years we have been tied to France. Look what it has brought us.' In South Africa, dozens of clothing and textile companies closed, according to trade organizations representing manufacturers. Tens of thousands of jobs were lost because of Chinese imports, and in response the government negotiated temporary voluntary restraints on some items. But Iqbal Meer-Sharma, deputy director of South Africa's Department of Trade and Industry, said that the clothing industry was ultimately less valuable to South Africa than the other benefits of its growing relationship with China."

Regardless of which way Chinese/African relations turn, it is clear that the West is missing an opportunity to help develop the continent. Western countries lament how China is pursuing its African strategy, but they have offered little to counter China's approach and help countries develop much needed infrastructure. To be sure, African leadership has a long way to go to rid their administrations of graft and corruption and establish conditions necessary to help attract investment from other countries. It can be done, and there are several good examples sitting "across the pond" in Latin America. Chile, Brazil and Mexico are undergoing economic booms and creating middle classes that will help sustain their future economic growth. More on those countries in a later post.

The Coming Water Wars?

Earlier this month, I wrote a post about potential water problems in the Middle East (Turkey, Kurdistan & Water). Almost all books or articles about possible strategic futures mention potential water crises somewhere in their pages. Not all water problems are interstate. This year's weather patterns have created very different water problems within the United States. The west and southeast are suffering in hot and dry weather while the middle of America has been awash in rainfall that has caused devastating flooding and ruining crops just as surely as the drought affecting other areas. Doug Struck, writing in the Washington Post, once again raises the specter of transnational water wars ["Warming Will Exacerbate Global Water Conflicts," 20 August 2007]. Struck begins his article by relating the water woes that have engulfed California, especially its breadbasket Central Valley. For Struck, California reflects the water problems that are going to be seen increasingly on the global stage.

"As global warming heats the planet, there will be more desperate measures. The climate will be wetter in some places, drier in others. Changing weather patterns will leave millions of people without dependable supplies of water for drinking, irrigation and power, a growing stack of studies conclude."

Scientist Stephen Schneider, editor of the journal Climatic Change and a lead author for the Intergovernmental Panel on Climate Change, notes in the article that as the earth warms there will be more moisture in the atmosphere (from all those melting ice caps and glaciers). Unfortunately, as noted above, it won't fall evenly across the globe.

"According to the [Intergovernmental Panel on Climate Change], that means a drying out of areas such as southern Europe, the Mideast, North Africa, South Australia, Patagonia and the U.S. Southwest. These will not be small droughts. Richard Seager, a senior researcher at Lamont-Doherty Earth Observatory of Columbia University, looked at 19 computer models of the future under current global warming trends. He found remarkable consistency: Sometime before 2050, the models predicted, the Southwest will be gripped in a dry spell akin to the Great Dust Bowl drought that lasted through most of the 1930s."

There are a number of big problems associated with such uneven distribution of water. The first challenge is dislocations of large numbers of people -- so-called climate refugees. Those familiar with American history (or the novel The Grapes of Wrath) understand how devastating such dislocations can be. It is a challenge that many African countries have been dealing with for decades. Too much water can be as bad as too little water. The recent monsoons in South Asia and flooding in North Korea displaced tens of millions of people, most temporarily but some permanently. The second challenge is the inevitable conflicts that will arise when those downstream feel they are not getting their fair share.

"Global warming threatens water supplies in other ways. Much of the world's fresh water is in glaciers atop mountains. They act as mammoth storehouses. In wet or cold seasons, the glaciers grow with snow. In dry and hot seasons, the edges slowly melt, gently feeding streams and rivers. Farms below are dependent on that meltwater; huge cities have grown up on the belief the mountains will always give them drinking water; hydroelectric dams rely on the flow to generate power. But the atmosphere's temperature is rising fastest at high altitudes. The glaciers are melting, initially increasing the runoff, but gradually getting smaller and smaller. Soon, many will disappear. ... 'What do you think is going to happen when this stops?' [Ohio State University Lonnie] Thompson mused of the water. 'Do you think all the people below will just sit there? No. It's crazy to think they won't go anywhere. And what do you think will happen when they go to places where people already live?' The potential for conflict is more than theoretical. Turkey, Syria, and Iraq bristle over the Euphrates and Tigris rivers. Sudan, Ethiopia and Egypt trade threats over the Nile. The United Nations has said water scarcity is behind the bloody wars in Sudan's Darfur region. In Somalia, drought has spawned warlords and armies. Already, the World Health Organization says, 1 billion people lack access to potable water. In northern China, retreating glaciers and shrinking wetlands that feed the Yangtze River prompted researchers to warn that water supplies for hundreds of millions of people may be at risk."

The trick, as it has always been, is getting the right amount of water to the right place at the right time. Southern California gets water from northern California. England has considered getting water from Scotland. Coastal nations have tried to draw water from the ocean. Dams and reservoirs have been built to control, collect and distribute water. Struck reports that such attempts have not always been successful or welcomed:

"Humans have long attempted to reconcile nature's inconstancies with giant plumbing: reservoirs and dams that hold back floodwaters for more gradual release; dikes and other barriers to protect developed areas; canals and pipelines to take water from wet areas to dry. But that kind of infrastructure is expensive, especially for Third World governments. Environmentalists decry the impact on wildlife. And building dams in earthquake zones tempts disaster."

It seems to me that wildlife is affected either way. Floods and droughts affect plants and animals as much as they affect humans. Even so, Struck reports, that some researchers believe that humans should bend with nature rather than trying to bend it. Such a laissez-faire attitude, however, is unlikely to win the day considering current population distributions. Like other global problems, dealing with water control, collection and distribution is going to take global leadership, global vision, and global solutions. Failing to deal with such problems is likely to lead to the water wars suggested by Struck.

Soap Operas in Afghanistan

I'm curious where Abraham Maslow would have put soap operas on his hierarchy of needs. Escapism, be it watching soaps or movies, listening to the radio, or reading Harry Potter novels, seems to be an itch that needs to be scratched once individuals have achieved a certain level of needs. That level is probably somewhere in the middle of the pyramid in the "Love/Belonging" strata [for more on the hierarchy of needs, see my post Applying Maslow to Development-in-a-Box]. People apparently long to connect with one another and seem to have unending curiosity about how others live. Closed societies rush to purchase cell phones and televisions once they are opened up to the larger world. Afghanistan, apparently, is no exception ["Amid War, Passion for TV Chefs, Soaps, and Idols," by Barry Bearak, New York Times, 1 August 2007].

"Since the fall of the Taliban in late 2001, Afghanistan has been developing in fits and starts. Among the unchanging circumstances that still leave people fitful: continuing war, inept leaders, corrupt police officers and woeful living conditions. According to the government's latest surveys, only 43 percent of all households have nonleaking windows and roofs, 31 percent have safe drinking water and 7 percent have sanitary toilets. But television is off to a phenomenal start, with Afghans now engrossed, for better or worse, in much of the same escapist fare that seduces the rest of the world: soap operas that pit the unbearably conniving against the implausibly virtuous, chefs preparing meals that most people would never eat in kitchens they could never afford, talk show hosts wheedling secrets from those too shameless to keep their troubles to themselves. The latest national survey, which dates from 2005, shows that 19 percent of Afghan households own a television, a remarkable total considering not only that owning a TV was a crime under the Taliban but that a mere 14 percent of the population has access to public electricity. In a study this year of Afghanistan's five most urban provinces, two-thirds of all people said they watched TV every day or almost every day."

We shouldn't be too surprised that escapism is popular, especially during trying times. People living during the Great Depression managed to scrape together enough money to go the movies and families found themselves huddled around the radio listening to dramas and comedies hoping to forget just how bad conditions really were. Conditions in Afghanistan reflect other similarities to those during the Great Depression, including the fact that many people have nothing else to do.

"'Maybe Afghanistan is not so different from other places,'' said Muhammad Qaseem Akhgar, a prominent social analyst and newspaper editor. 'People watch television because there is nothing else to do.' Reading is certainly less an option; only 28 percent of the population is literate. 'Where else can one find amusement? Mr. Akhgar asked. Each night, people in Kabul obey the beckoning of prime time much as they might otherwise answer the call to prayer. 'As you can see, there is truth on the television, because all over the world the mother-in-law is always provoking a fight,' said Muhammad Farid, a man sitting in a run-down restaurant beside the Pul-i-Khishti Mosque, his attention fixed on an Indian soap opera that had been dubbed into Dari."

Bearak points out that there are cultural differences when it comes to watching television.

"Women, whose public outings are constrained by custom, most often watch their favorite shows at home. Men, on the other hand, are free to make TV a communal ritual. In one restaurant after another, with deft fingers dipping into mounds of steaming rice, patrons sit cross-legged on carpeted platforms, their eyes fixed on a television set perched near the ceiling. Profound metaphysical questions hover in the dim light: Will Prerna find happiness with Mr. Bajaj, who is after all not the father of her child?"

Although Bearak makes light of the popularity of soap operas in Afghanistan, there is a deeper social change reflected in television's popularity. Having experienced isolation under the Taliban, people are opting in large numbers to get connected.

"Kabul has eight local television stations, including one feebly operated by the government. 'The key time slots are from 6 to 9 p.m. because that's when people switch on their generators for electrical power,' said Saad Mohseni, who runs Tolo, the channel that dominates the market in most of the country. 'People love the soap operas. We've just bought the rights to "24," the American show,' he said. 'We had some concerns. Most of the bad guys are Muslims, but we did focus groups and it turns out most people didn't care about that so long as the villains weren't Afghans.' Mr. Mohseni, a former investment banker, and his three siblings started Tolo TV (Tolo means ''dawn'' in Dari) in 2004, assisted by a grant from the United States Agency for International Development. After living most of their adult lives in exile in Australia, the Mohsenis returned to post-Taliban Kabul looking for investment opportunities and discovered a nearly prehistoric television wilderness ready for settlement. A used color TV cost only $75. But what did they want to watch? Afghan tastes had not been allowed to gestate over decades, passing from Milton Berle to Johnny Carson to Bart Simpson. Everything would be brand-new.'We let ourselves be guided by what we liked,' Mr. Mohseni said."

Having lived in Australia, the Mohseni's tastes have more of a Western bias than other station owners, but the fact that "what they like" can rub off on others demonstrates the power of media, especially television and radio in countries where illiteracy is the norm. They don't simply show reruns of old Western shows, they adapt old show ideas to local circumstances.

"Tolo has harvested the hackneyed from television's vast international landscape. True-crime shows introduce Afghans to the sensationalism of their own pederasts and serial killers. Reality shows pluck everyday people off the streets and transform them with spiffed-up wardrobes. Quiz shows reward the knowledgeable: how many pounds of mushrooms did Afghanistan export last year? A contestant who answers correctly earns a free gallon of cooking oil."

This new openness and connectivity, as you can imagine, is not being greeted enthusiastically by all sectors of society.

"Whatever the constraints, some observers consider TV a portal to promiscuity. 'Forty million people are living with H.I.V.-AIDS, and television is finally helping Afghanistan contribute to those figures,' the Ayatollah Asif Mohseni said with sarcasm. He is an elderly white-bearded man, and while he is not related to the family who runs Tolo TV, he, too, has entered the television business, starting a station more inclined to showcase Islamic chanting. 'We have an economy that is in ruins,' Ayatollah Mohseni said. 'Do you think rubbish Indian serials with half-naked people are the answer?' But the strongest complaints against Tolo have come from politicians, including members of the government. Tolo's news coverage, while increasingly professional, is very often unflattering and even irreverent. Members of Parliament have been shown asleep at their desks or in overheated debate throwing water bottles. One lawmaker was photographed picking his nose and then guiltily cleaning his finger. In April, when Attorney General Abdul Jabar Sabet thought he had been quoted out of context, he sent policemen to Tolo's headquarters to arrest the news staff. The ensuing contretemps had to be mediated by the United Nations mission in Kabul."

Given time, Afghanis will learn to deal with this new openness. Societies that try to control upstream content (i.e., censor information) always find themselves fighting a losing battle. Societies that successfully deal with connectivity (and, therefore, are more resilient) concern themselves with downstream behavior. Afghanistan still has a long and difficult road to travel until it fully joins the rest of the world, but, all things considered, soap operas are sign that things are changing -- hopefully for the better.

Fighting the Wolves at the Door in Kurdistan

The recent attack against the Yazidi sect in northern Iraq (the worst terrorist attack inside the country since Saddam Hussein was overthrown) put the wolves trying to derail Iraq's economic recovery at Kurdistan's door [see my post Tragedy Knocks on Kurdistan's Door]. If Kurdistan's economic boom is going to continue, the wolves are going to have to be kept at bay. During my first visit to Kurdistan, the wolves managed to sneak in long enough to set off a truck bomb in very close to the hotel in which I was staying. This was a wake up call to the region –- reinforcing to the average Kurd and foreign visitor –- that Kurdistan is not immune to the violence of southern Iraq. For the most, however, the Kurdistan Regional Government has managed to maintain a peaceful and secure environment within its autonomous borders.

It has several things going for it that the rest of Iraq doesn't:

• First, it is fairly homogenous. Longstanding clashes between Kurds and Arabs have forced the Kurds to gather in the mountainous area of northern Iraq for safety. Ethnic diversity, however, can't be used as an excuse elsewhere in Iraq, which is mostly made up of ethnic Arabs.

• Second, the Kurds enjoy a religious tolerance that is missing elsewhere in Iraq. It is sectarian violence between Sunnis and Shi'ites that is ripping the rest of Iraq apart. Years of Sunni discrimination against the Shi'ite majority has prompted revenge rather than reconciliation. This type of internecine conflict, left unchecked, can rage for centuries. I'm sure the Kurds hold deeply felt anger against those who have persecuted them for decades. They seem to be moving beyond this anger, however, replacing destructive actions with productive actions.

• Third, the Kurds have elected a government that is functioning much better than the Iraqi central government. Kurd leaders have a vision for their part of Iraq and are actively pursuing it.

• Fourth, they have resources (water and oil), which means they are not a subsistence state.

• Fifth, they have people willing to learn and who are flexible enough to try new things.

• Finally, they have functioning and effective military and constabulary forces. Development begins with security.

All this sounds great for Kurdistan … but … the attack against members of the Yazidi sect and recent attacks in Kirkuk (which the Kurds hope will soon fall under their administration) underscore the fact their success is going be tested. Those trying to tear Iraq apart cannot tolerate a successful economic system in their midst. Kurd leaders know this and want to do all they can to protect their citizens without having to turn Kurdistan into a police state. They had enough of that treatment under Saddam Hussein. They already have put in place extensive border checks and plan on beefing up security.

As America has learned, security doesn't come cheap. Insecurity, however, is much more costly. An economy cannot be sustained, let alone grow, in an unstable environment. Viewed from that perspective, investments in security are also investments in the economy. We strongly believe that a condition precedent to significant Foreign Direct Investment (FDI) flows is a stable security environment. That is why we believe that Kurdistan has to invest substantial resources in protecting the autonomous region from the violence in the south moving northward. This will increasingly be a challenge (as it is in most developed and developing societies) because Kurdistan increasingly will be opening itself up to trade, commerce and travel –- it will be creating critical infrastructure and expensive commercial developments -- and as such, will increasingly be making itself more target rich and vulnerable to attack. Therefore, Kurdistan is in need of evolving its security environment to a higher level to reach an integrated and more sophisticated capability. I hope that Kurdistan will take that step forward to allow us to draw FDI into the region and make Kurdistan the Singapore of the Middle East.

At the start of the Iraq War, Tom Barnett talked about the "Big Bang" theory that seemed to be one of the motivating forces behind the Bush administration. That theory posited that establishing a prosperous, democratic regime would cause a chain reaction of reform across the Middle East. That seems like wistful thinking looking back at how events have unfolded -- except in Kurdistan. If not a foothold, Kurdistan at least represents a toehold on that vision. The vision, however, will only spread when it is embraced by political leaders as well as populations of nearby countries. Anthony H. Cordesman, a security analyst with the Center for Strategic and International Studies (CSIS) opined in a recent op-ed piece that we shouldn't expect democracy to take hold across the region, especially in Saudi Arabia, but that shouldn't diminish hopes of reform ["Weapons of Mass Preservation," New York Times, 16 August 2007]. Good governance (more than representational government) is required to foster security and prosperity. If Kurdistan can demonstrate that security and prosperity are the fruits of good governance, then at least a "little bang" would have been accomplished. The point is that the developed world has a stake in helping make Kurdistan the model region that could spark the little bang it hopes to achieve.

We are working on projects where we see the Kurdish people and government taking their first important steps to transparency and internationally recognized standards for economic development. They are seeking to understand and find systemic means of complying with the Rules of Engagement necessary to be a new and integrating member of the international community. This is the core of Enterra Solution's Development-in-a-Box™ approach that we are beginning to execute in Kurdistan. As I have mentioned before, Development-in-a-Box™ is a highly flexible framework for post-conflict reconstruction and development. The process is often initially supported by the Pentagon (as in Iraq) and the State Department (primarily through USAID), whose programs work as a catalyst for attracting private sector investment which is necessary to sustain economic growth. Think of it as a Marshall Plan-in-a-Box -- that firstly creates a wireframe for understanding the international standards for compliance, security, and management efficiency that are requirements for any emerging market country to integrate into the global economy. Secondly, it delivers, in a standardized push package, pre-configured technology solutions that can be radically adapted to meet the specific historical, socio-economic, cultural as well as other unique requirements of that nation or region. This adaptive push package allows a country to jump start itself in the industry segments on which it is focusing. Thirdly, it embeds the electronically delivered Rules of Engagement into the information system. That is, it automates processes in order to reduce human errors, improve effectiveness, and generate trust in those processes both locally and internationally. Lastly, local personnel are trained, educated and function as apprentices who learn the international practices and standards of that industry sector –- allowing them to have the capability transferred to their operation after a 3-year training period. Supporting this effort is a public information campaign that attempts to educate the population as to critical components of economic development.

The chances are that if Kurdistan's success is going to catch on elsewhere in Iraq it is probably going to have spread out from the north and move south. Kurdistan would be safer if its current security were extended outward, creating as it were a buffer zone between its territory and instability further south. The Peshmerga, of course, would not be providing that security, but Iraqi military and constabulary forces. Kurdistan would be wise in helping train, equip, and position such forces within a buffer zone around its autonomous region. This kind of cooperation would also begin to improve Kurd-Arab relations -- a reconciliation that must take place if peace is going to be sustained.

The repercussions of failure include a spillover of violence into Turkey, Syria, and Iran. As I've written before, I'm an optimist. I get excited every time I visit Kurdistan and speak with political and business leaders there. I'm determined to help make their visions a reality and I hold out hope that once achieved their success will inspire other leaders to adopt similar visions for their people.

Aid Abroad and Rules at Home

Official Development Aid (ODA), more commonly known as foreign aid, seems like it should be a straight forward matter -- aid is provided where people need help. Nothing, however, is quite that simple. ODA must be budgeted for and, as we know, the budget process is a political process. Farmers in Kenya know that all too well ["Kenyan Farmers' Fate Caught Up in U.S. Aid Rules," by Celia W. Dugger," New York Times, 31 July 2007]. In the past, food aid was provided by sending U.S. raised products to areas in need. There is certainly nothing sinister about that. U.S. agricultural products are world class. We have them in abundance (we even subsidize farmers to limit production so that crop prices don't fall). It makes perfect sense to send surpluses of U.S. crops to feed hungry people in areas of need. But as I said earlier, nothing is quite that simple. Dugger writes:

"As the United States Congress debates an omnibus farm bill, it is considering a small change that advocates say could make a big difference to the world’s hungriest people: allowing the federal government to buy some food in Africa to feed the famished, rather than shipping it all overseas from America. The Bush administration, with odd-bedfellows support from liberal Democrats, has called for allowing the purchase of some food in poor countries to quicken responses to emergencies."

That, too, sounds like a good idea. Hungry people should be fed as quickly as possible. But there is a fear among U.S. farmers that such programs will take much needed money out of their pockets and send it overseas. And farmers vote. Farmers in other countries vote as well. In Kenya, the hungry are the people caught in the middle of politics.

"[Last year] the Kenyan government objected to the importation of American corn because the country was awash in a bumper harvest that had caused corn prices to plunge. The result: American officials, prohibited by law from buying the corn locally, could not deliver it. As the impoverished families waited in vain for sustenance from the American heartland, malnutrition among the youngest children worsened and five people died of hunger-related causes. ... Across Africa, the United States is more likely to give people a fish — caught in America — that feeds them for a day than to teach them to fish for themselves. Since last year, for example, the United States has donated $136 million worth of American food to feed the hungry in Kenya, but spent $36 million on agricultural projects to help Kenyan farmers grow and earn more."

The irony, of course, is that almost every American child can recite the old proverb, "Give a man a fish; you have fed him for today. Teach a man to fish; and you have fed him for a lifetime." It would be easy to point fingers, therefore, and say, "Practice what you preach." Again -- nothing is that simple. Dugger's story is not about good guys and bad guys. In fact, in this case there are no bad guys. Politicians in both the U.S. and Kenya were trying to do the right thing by their own citizens, but rules got in the way. The Bush administration and the Democratic Congress deserve credit for recognizing the dilemma and trying to do something about it.

When I write about development, my primary focus is on Foreign Direct Investment (private investment) not Foreign Aid (government investment). One of the reasons is that ODA continues to shrink in importance compared to FDI when it comes to development. Dugger reports, for example, that the U.S. Agency for International Development (USAID) is dropping Kenya from the countries it is going to help because there are other countries in even greater need. Development-in-a-Box™ focuses on "teaching a man to fish" not providing him a fish. It is not an aid program, but business development process. Of course, the most effective aid programs have the same focus. There are times, however, when relief is much more important than development -- like at the height of a famine or following a natural disaster. Dugger's story is about the latter -- relief as the precursor to development. She tells the story of those who benefited from an irrigation project.

"Ikai Moru, 19, still recalls the hunger that gnawed at her and her mother as they chopped down thorny acacia trees on their tiny plot, hoping one day to reap a bountiful harvest from the parched earth. She watched her mother grow thinner and paler, and finally sicken and die. 'My mother was a very hard worker,' Ms. Moru offered in a brief epitaph. Through sheer grit, the 2,000 families finished the irrigation system last year and are successfully farming. But long-term projects to help Africa's rural poor feed themselves are chronically underfinanced, charities say. ... Such efforts are dwarfed by the epic scale of the need. Viewed from a prop plane buzzing like a mosquito overhead, the irrigated land here shimmers as a tiny oasis in a vast, dun-colored landscape. With the guidance of the Christian charity World Vision, which implemented the project, the families hacked an irrigation system from the barren landscape with machetes, hoes and shovels, clearing 1,000 acres and digging 99 miles of canals along the Kerio River. Ms. Moru will soon be feeding her four younger brothers and sisters with an abundance of sorghum and corn harvested from their half-acre farm, fulfilling her mother’s dream. ... Their success was all the more extraordinary given this desiccated region's history as a graveyard for well-intended foreign aid efforts to help the Turkana tribe, mostly nomadic herders, escape punishing cycles of drought, hunger and death. The participants themselves credit a man who gave them fortitude when they faltered: Daniel Mwebi, a Kenyan engineer who managed the