YOU CAN'T TELL THE PLAYERS WITHOUT A PROGRAM: THE MOST IMPORTANT INTERNATIONAL FINANCIAL GROUPS

 

In the past month three significant international groups have met: the G7, G20 and BRICS. For most of us the "G this and the G that" " could just as easily be Gee Whiz and Gee Willikers and BRICS might as well be the Pink Floyd lyric, "all in all, you're just another BRICS in the wall." But these groups actually do matter because they affect the international economic system and over time can affect the prices we pay for everyday goods and the jobs of many Americans.

In this blog I'll focus on who these groups are and what they are trying to do. In another entry I'l try to shed light on the structure of the international economic system and the forces that may lead to major changes in the next decade or so.

 

T he Group of Seven  (a short enough name you'd think they wouldn't really need an acronym) is the "Big Rich Guys" club -- the seven largest advanced capitalist economies: Canada, France, Gernany, Italy, Japan, the UK and the United States -- and the European Union as a "non-enumerated member." Since 1975 the G7 has held two meetings a year, one with heads of state, and the other with finance ministers. The major goal is to coordinate economic policies to try to stabilize the international, economic system. It has been a major force supporting economic liberalization, the spread of open markets and liberal democratic values. For example, the G7 played a major role in preventing the 2008 international financial crisis from becoming a global depression. The G7 members (other than Japan and the non-enumerated EU)) were present at the creation of the contemporary international order and remain its strongest advocates.

The G7 accounts for over half of global net worth, 35-40% of Gross World Product, and 10% of the world's population.

 

In the 1980's and 1990's sustained economic development fueled in part by international borrowing moved several large countries from the ranks of the less developed into middle income status. But the reliance on loans to kick start growth led to problems that threatened not just the debtor countries but the wealthy G7 group. The problems of excess debt and sporadic economic crises led to the creation of an organization that included both the very rich and large middle income countries in hopes of coordinating policies and stabilizing the global economy. The group started with 19 countries and the European Union in 1999 and then added the African Union (perhaps because all the stationary and business cards and email accounts said "G20" it seemed easier to leave it at that rather than re-brand everything as the G21.)

The G20 meets once a year in a three day session featuring heads of state and finance ministers. The emphasis of the meetings has typically been reforms to the international economic system to improve terms of trade and access to international finance for the middle income members of the group. Recent meetings have also addressed climate change and some global political issues. The meetings have typically ended with a consensus joint communique that more often than not offers lip service to shared values and goals but no concrete commitments to specific changes. This year's meeting chaired by India's Prime Minister Modi was more contentious than most, in part because of the Russian invasion of the Ukraine. The 2022 joint communique condemned the invasion and expressed support for Ukraine but this time Russia and China strongly opposed any statement and several members, including host India, Turkey and the African Union were ambivalent. This year's final communique avoided explicitly criticizing Russia while proclaiming support for territorial integrity of states and expressing a desire for peaceful resolution of conflicts.

The G20 accounts for 80% of the Gross World Product, 75% of international trade and two-thirds of the world population

 

Was initiated by diplomats from Brazil, Russia, India and China who met during the UN General Assembly session in 2006, taking its name from an article by an American economist about large emerging economies. It held its first summit in 2009 and added South Africa (making BRIC into BRICS) the following year. BRICS countries account for about 27% of the Gross World Product and 42% of the world's population. The group has become increasingly tight knit and aspires to serve as an alternative to the dominant international financial institutions like the IMF and the World Bank which are seen as biased against them as well as the rest of the global South.

Using "North" to refer to the advanced capitalist countries-- all of whom are in the northern hemisphere -- and 'South" to refer to everyone else, or sometimes just the leas developed countries, not all of whom are in the southern hemisphere, is more of a rhetorical device implying good guys and bad guys than a useful categorization of stages of economic development.

The International Monetary Fund (IMF) and World Bank are at the center of "the liberal international order" created by the United States and Western Europe after World War II. An analysis of the current state of the global economic institutions will have to wait for the next blog.

China and Russia have been the most vocal advocates of creating a powerful counter weight to the dominance of the G7 and Western capitalist, liberal democratic values but the other BRICS share the sentiment. In an attempt to bolster the power of BRICS, the 2023 summit in South Africa invited six emerging market group countries (Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates) to join the bloc.

So What?

The G7 has been the most successful of the three blocs in coordinating policy and actions among its members. The 2008 financial crisis could have been much worse if the G7 members had focused on their own narrow and immediate self interest. Instead they managed to coordinate their responses and avoid the worst potential damage to the global economy. In a host of more mundane and seemingly trivial ways, the G7 have synchronized and coordinated policies to prevent problems. Cooperation that prevents bad things from happening does not make news nor does it make us feel good. (An example of the broader principle that the satisfaction from a gain is less than the pain from a loss.)

The G20 has been far less successful in getting the already rich global actors and the middle income, rising powers on the same page on any key issues. That is in part because of dissatisfaction with the way the IMF, World Bank and other institutions like the World Trade Organization make decisions and in part because the non-G7 members are quite diverse and often have conflicting interests. It is nonetheless, I think, useful for two reasons. First, it provides a venue for the developing nations to articulate their interests and be heard. For example, its meetings have been an opportunity to advocate for compensation and assistance in coping with the consequences of climate change for less well off countries that have not been emitting tons and tons of CO² for the past two centuries. Secondly, it is an opportunity for national leaders to meet on the sidelines for private discussions and negotiations without the glare of publicity and extensive preparation that a state visit or summit requires.

BRICS has an ambitious long range goal of creating a set of new international financial institutions to rival the western dominated IMF, World Bank and the central position of the U.S. dollar in trade and finance. As the BRICS see it, the world today is bipolar -- the global North (the rich G7 countries) on one side and the global South (everyone else) on the other. The BRICS, particularly Russia and China, aspire to a multipolar world in which the rising middle income countries are the third side in the global economy. In particular they would like to see currencies other than the dollar used as the international standard in trade, loans for development projects that don't come with environmental or social strings, and less emphasis on capitalist and democratic values. Optimists see the addition of six more members next year as a major step toward a multipolar world, comparing it to the Bandung Conference of 1955,* Skeptics point to the great disparity of national interests, economic systems and international trading patterns that would make actually implementing a new scheme extremely difficult.

*The Bandung Conference was the first meeting of post-colonial Asia and African countries that launched the non-aligned movement as a counterweight to the Cold War US-USSR conflict. It is doubtful that the non-aligned movement had a significant impact.

The international financial system is not something we think about every day (at least I don't, perhaps you do) but it impacts our lives every day. For example, the IMF is central to world trade, using the U.S. dollar as the basis for setting prices for imports and exports. So when a store in California wants to order blouses form Bangladesh (taka), jeans from Viet Nam (dong), tv sets from Samsung (South Korean won), or Polish hams (zlotys) it does not have to worry about how much a taka or zloty is worth in "real" money or come up with a big wad of dongs to pay for the goods. The factory in Bangladesh or Korea sets its prices in dollars and accepts dollars in payment. That makes the imported goods less expensive than if buyers and sellers had to go physically exchange one currency for the other and pay an exchange fee. The impact on the price of a car, with parts produced from several countries around the world would be even more noticeable.

For us in the United States, the fact that the current system rests on the dollar as the common currency means that there is a large and consistent market for U.S. Treasury bonds which funds the national debt.

The current system does at times impose our values on other countries. The G7 countries dominate the World Bank and often insist that loans for development projects include environmental protections or promote educational or economic opportunities for women and girls.

That is not to say that this is the best of all possible worlds or that there are not some valid points raised by critics of the current system. We will try to look at some of those in a future blog post.

Sudan's Suffering

 

On April 15 of this year the 5.7 million residents of Khartoum woke up in the middle of a vicious pitched battle between two heavily armed military forces. Tanks rumbled through normally quiet suburbs, artillery shells rained down on informal settlements, fighter jets roared overhead and soldiers raided the food and medical supply warehouses of international aid agencies and wandered the streets looting whatever they could find.  The road from the city to Port Sudan on the Red Sea was closed, cutting the city off from supplies and making escape from the city impossible.

To understand how the largest city in Sudan, its political, economic and social center turned into a battlefield with no escape and nowhere to hide, we need to revisit Sudan's recent history.

We can skip over some 5,000 years of recorded history by noting that the Blue Nile flowing from Ethiopia and the White Nile flowing from Tanzania meet at Khartoum and then flow north to create Egypt. The 1884 Berlin Conference on Africa "gave" Egypt to the United Kingdom although the British always had to pretend that they were really just guests of the Kingdom of Egypt. It also gave Britain control of the territory south of Khartoum through the Sahara desert down into sub-Saharan Africa and for good measure, the British territory extended far to the west. The arbitrary lines on a map lumped together a majority population that had been influenced by the Arab and Islamic invasion of the 8th and 9th centuries and is largely semi-nomadic camel and sheep herders, some of whom had been key middlemen in transporting Black African slaves across the Sahara. A significant minority of the people included in the south and west of Sudan are Black African subsistence farmers who were Christians or traditional animists. A final segment of the population are the urbanized citizens of Khartoum, linked to Egypt historically, culturally and economically.

A Hopeful Future

When Sudan gained independence in 1956, there was immense optimism that the waters of the Blue and the White Nile could be used to create an enormous agricultural area. There were dreams of Sudan as "The Bread Basket of the Middle East." But instead Sudan endured 40 years of political instability with weak and inept civilian governments alternating with equally inept military regimes. That ended in 1989 when Omar al-Bashir led yet another military coup but managed to consolidate power and create an increasingly repressive regime. Despite the facts that a significant minority of Sudanese were not Muslim and Islam as practiced in Sudan was tolerant and relaxed, al-Bashir forged an alliance with conservative Islamist clerics and announced plans to "Islamicize" Sudan. That led to two major revolts, one in the South and the other in the western province of Darfur. The brutal and bloody civil war in the South dragged on until 2011 when the al-Bashir regime gave up and a poplar referendum ratified the creation of the new nation of South Sudan. With the regular army preoccupied with the fighting in the South, the rebellion in Darfur was opposed by a series of militias from the semi-nomadic camel herders. The various militias were quickly organized into a single force by Mohamed Hamdan “Hemedti” Dagalo with direct support from al-Bashir as the "Janjaweed" and began a rampage of arson, rape, murder and looting against the Black African farming villages that resulted in an estimated 400,000 deaths and over 2 million refugees in camps dependent on international aid organizations. [The atrocities perpetrated in Darfur became an international cause celebre in the early 2000's and led the International Criminal Court to indict Omar al-Bashir for crimes against humanity.] al-Bashir worked with Hemedti to reorganize and re-brand the Janjaweed as the Rapid Support Force (RSF) as an important counter weight to the Sudanese military and additional prop for his rule.

Hopes Dashed Again

By 2021 Sudan was increasingly isolated and the foreign aid that was a major element of the economy was drying up. The government's response to shortages of food and supplies and spiraling inflation was so inept that a coalition of Khartoum civilian elites and senior military officers ousted al-Bashir and installed a transitional government with a strong civilian presence and both army chief Abdel Fattah al-Burhan and the RSF's Hemedti. It seemed Sudan was on the verge of a democratic future. That dream did not last and al-Burban and Hemedti took power in (yet another) coup with al-Burban the ostensible number 1 and Hemedti as number 2. They oversaw the indictment and conviction of al-Bashir on bribery and corruption charges and put him in jail for two years but refused to turn him over to the International Criminal Court.

Almost immediately the pair began arguing over plans to integrate Hemedti's RSF forces into the Sudanese Armed Forces. Once the RSF disappeared into the regular army, Hemedti would be without a power base and source of income. The three years al-Burban offered was hardly enough time to prepare for a comfortable retirement; Hemedti figured ten years would be about right.

This was not an abstract argument about personnel and organizational flow charts. Most of the roughly 100,000 RSF fighters had come to the Khartoum area to support Hemedti's role in the coup leadership and it was not clear how long he could find the money to support them. Not surprisingly there were very tense relationships between the RSF fighters and the Sudanese soldiers as they patrolled the streets of Khartoum.

WAR 2023

It is not clear what ignited the violence between the two armed groups in April but much of the violence was aimed at controlling international aid agencies, medical facilities and food warehouses as well a civilian infrastructure like electricity generation, roads into and out of Khartoum, and the airport.

There is no easy escape for the millions of people caught in the fighting in the capital. The airport is a battleground and there are no flights. The United States, the United Kingdom and Saudi Arabia manged to broker a brief cease fire to allow the evacuation of international aid workers and embassy personnel overland to Port Sudan on the Red Sea and on to Egypt. But the ceasefire evaporated and the highway from Khartoum to Port Sudan was closed again. Even when sporadic cease fires are negotiated to allow shipments of food and medical supplies into Khartoum, civilians are unable to leave since they lack transport and the all-important exit visas they need to leave Port Sudan.

The explanation for the attacks on international aid agencies, medical facilities and food storage sites lies, I think, in the nature of the RSF forces. The typical recruit is a young man from rural northern Sudan with little education and not much future beyond semi-nomadic camel herding. Joining a militia means getting a regular paycheck, meals and housing, a group to belong to and the thrill of firing an assault rifle. It is just plain cool to put on your camo fatigues and ride around in the back of a Toyota pickup with your gun and buddies. It also offers the chance to extort money or goods from villagers or even to attack and loot hapless farmers who are the traditional enemies of nomads. The RSF troops have the equipment and weapons of a modern army and some military training (from Wagner group mercenaries and others) but they do not have the discipline and focus of professional armies which puts civilians who cross their path in grave danger of robbery or worse. I do not know where the RSF gets its funding, but suspect it comes from oil-rich conservative Islamist individuals in Saudi Arabia and the Gulf.

In Khartoum, aid organizations and medical centers are attacked because they have things that are worth taking and civilians in their houses are attacked because city dwellers are resented and scorned for their Westernized ways and they have things worth taking. Once fighting broke out in the capital, it meant the government and regular army could no longer control the rest of the country and the RSF unleashed a furious assault in Darfur, resurrecting the nightmare of rape, mass murder and pillage of 2003 -2005. The fortunate ones will be able to make it to refugee camps in Chad which still shelter thousands of people from the horrors of 20 years ago.

Perhaps because of the limits on my knowledge of the situation and the key players, it is difficult to see and quick or easy solution. For the two major players: the Sudanese Armed Forces' al-Burban and the RSF's Hemedti, this is both business and personal. The business part is straightforward -- controlling the government presents opportunities to skim and divert foreign aid funds and tax revenues and to collect a little something for approving plans for construction or mining operations. (When al-Bashir was accused and convicted of bribery and corruption, his long time cronies in the government and military and Khartoum's civilian elites were shocked, yes, shocked and appalled to think that such things were being done ...) That might allow for some sort of power (and revenue) sharing agreement but the conflict is also personal. The two men neither like nor trust each other and any attempt to integrate the RSF into the regular forces means the end of Hemedti's career as player in Sudanese politics. There is no way to split the difference.

As I mentioned, the United States, the UK and Saudi Arabia, along with Egypt, are playing the central role in trying to end the violence. Sudan's neighbors, such as Chad and Libya, are greatly concerned about Sudan's impact on their own stability and internal conflicts. I think the only hope for at least a temporary solution is the withdrawal of RSF forces from Khartoum and Darfur. As long as the fighting continues the 5.7 million citizens of Khartoum are trapped in their homes with dwindling food supplies, limited access to water and non-existent medical services. Thousands of Darfur citizens are reported on the move from their villages to the comparative safety of refugee camps in Chad amid rumors and reports of atrocities evoking the agony of 20 years ago.

Israel's Winter of Discontent

 

The term "existential crisis" has been so over used it has become a tired cliche. But sometimes issues do pose fundamental challenges to the physical or political survival of a country. The controversy in Israel over the judicial "reforms" and other items in the package of concessions Benjamin Netanyahu made to extreme ultra-Orthodox and settler parties to cobble together a ruling coalition is one such issue. What is at stake is not just the relationship between the judiciary and the Knesset (Israel's parliament) but the future of Israeli society.

Governmental Structure

Israel, like the United Kingdom, does not have a written constitution that limits the scope and power of the government. But there are 13 "Basic Laws" passed from 1950 to 1992 that the High Court of Israel has declared to be the equivalent of a written constitution and empower the Court to review and reject laws passed by the Knesset.

In Israel, as in the United Kingdom and all other parliamentary systems, a majority of the members of the Knesset select the Prime Minister and senior government officials. The tension between the executive and legislative branches that is a central feature of the Untried States constitution is absent. The only check on a Prime Minister is the necessity to keep a majority of the Knesset happy. Israel, unlike the United States or United Kingdom, has a single chamber legislature so there is no tension between an upper house (like the U.S. Senate with a Democratic majority) and lower house (like the U.S. House of Representatives with a Republican majority.) And in Israel, as in the United Kingdom and other parliamentary systems but quite unlike the United States, local provincial or state governments are not independent and in tension with the national government.

Israel uses a proportional representation system to allocate the 120 Knesset seats and a party with as little as 5% of the vote may have several seats. As a result Israeli politics can be highly fragmented and a government formed from a coalition of parties, sometimes proving the old adage that politics makes strange bedfellows. In a coalition government that has only a narrow majority, where every vote counts, a party with as few as four or five seats can wield disproportionate power and influence.

The changes the Netanyahu government proposed earlier this year would negate the High Court's role as arbiter of the unwritten constitution embodied in the Basic Laws, replacing judicial review of Knesset legislation with Knesset review of judicial decisions and giving the government of the day exclusive control of judicial appointments. The basic rationale for the changes is that unelected judges should not be able to override the actions of the democratically elected parliament.

The triggering incident for the reform agenda seems to have been the decision last January regarding Aryeh Deri, leader of the ultra-Orthodox party Shas whose 11 votes are critical to the ruling coalition. Netanyahu appointed Deri health and interior minister despite Deri's conviction for tax evasion. When that was challenged on the grounds that Israeli law forbids convicted felons from serving in the cabinet, the Knesset passed a new law stating that as long as the conviction did not involved jail time, it did not disqualify the person. The High Court declared that bit of legislation unconstitutional and Deri was fired from the cabinet (but not the Knesset.) The fact that Netanyahu himself is currently on trial for bribery and corruption is an important part of the context.

The deep divisions in Israeli society make the consequences of this crisis even more serious and explain the depth of the passion and commitment of the hundreds of thousands of protesters. This battle, serious as it is, is seen as only the first episode in a series of events that could change the fundamental nature of Israeli society.

Divisions in Society and Politics

The founding generation of Israeli leadership was marked by social democratic ideals of Western European Zionism and the Utopian socialism of many of the Jews who immigrated to Palestine in the 1920's and 30's. Well before independence in 1949 there was a well-developed system of support for new arrivals to meet their physical needs and to integrate them into the emerging society. The first arrivals after the end of World War II were Holocaust survivors and refugees from Central and Eastern Europe known as "Ashkenazim" or European Jews. The next wave, after Independence, were Jews from the Middle East and North Africa (known as Sephardim) who were culturally and socially more like their former Arab and Muslim neighbors than the Ashkenazim. Despite the best efforts of the settlement agencies, the differences in education and culture meant that many Sephardim and their children ended up with lower levels of education, income and social status.

The different perspectives and experiences of Ashkenazim and Sephardim led to the emergence of political movements opposed to the Labor Party which had dominated Israeli politics. The opposition coalesced around the Likud party. The party's base was Sephardic and its ideology placed more stress on Jewish identity and nationalism than social democratic values. In 1976 it eclipsed Labor in the Knesset and made Menachim Begin Prime Minister. Likud, the party of Benjamin Netanyahu, remains the single largest party in Israel with 32 of the 120 Knesset sets, while Labor has dwindled to a paltry 4 and its adherents have splintered into several centrist parties.

The Ultra-Orthodox

Haredi Judaism, often referred to as ultra-Orthodox, emerged in Eastern Europe in the early 20th Century alongside the earlier Hasidic movement. Both reject the intellectual, social and material transformations that began with the Enlightenment and define modern Europe and North America, as well as the large majority of Israelis. Religious, social and economic behavior is based on a very literal reading of the Torah. The rules and prescriptions in the book of Leviticus for example, are taken at face value.

Because its adherents wore distinctive traditional clothing and most lived in small towns, they were exceptionally vulnerable to being swept up in the Holocaust. Most of those who did survive arrived in Israel in the wave of post-war immigrants (others came to the United States.) But unlike other new arrivals, they had no interest in being assimilated into the emerging Israeli society, regarding themselves as the only authentic Jews and the only ones living a truly righteous life. In addition the ultra-Orthodox believe that a Jewish state will not be established until the Messiah comes which makes the Zionist vision of a modern state illegitimate and justifies refusal to comply with governmental regulations.

Successive Israeli governments have been generally tolerant of ultra-Orthodox views and concerns. Two of the concessions made to ultra-Orthodox communities are particularly significant (and irritating to many other Israelis): military service and education. All Israeli citizens are obliged to serve in the Israeli Defense Force (IDF) (24 months for women; 32 for men) and then in the active reserve for at least ten years. (Active reserve means that you may be writing code for the latest killer app one day and driving an Abrams tank across the desert the next.) Ultra-Orthodox men and women are exempt. Ultra-Orthodox children may attend religious schools instead of secular state schools and ultra-Orthodox men usually continue their education in a yeshiva studying the Torah and rabbinic commentaries, often until they marry, often with a subsidy from the government. (Women do not go to school beyond the equivalent of high school but are expected to marry and have children as soon as possible.) Ultra-Orthodox and other conservative communities are much more common and influential in Jerusaled than most other cities, such as Tel Aviv.

Because of their narrowly religious education and traditional social roles, ultra-Orthodox men (women do not work outside the home) are usually confined to low paying jobs even as they are trying to support large families. Ultra-Orthodox communities have some of the highest poverty rates in Israel.

Despite deep reservations about the legitimacy of the state, ultra-Orthodox Israelis do participate in politics and there are several ultra-Orthodox parties in the Knesset. These parties have become increasingly important in the ruling coalitions Netanyahu has put together, wielding far more power than their 13% of the population would suggest. Over the past few decades they have become increasing important in social policy, from definitions of who is a Jew and thus entitled to a right of return, to increasing subsides for religious students.

Settlers

In the 1990's the demise of the Soviet Union freed Russian Jews to emigrate and some 190,000 came to Israel. The agencies charged with socializing new immigrants were not equipped to handle such a large number and many new arrivals quickly moved on to West Bank settlements. This major increase in settlers has led to rapid growth in new settlements (often despite High Court rulings that they are illegal,) increased the militancy of settlers' leadership and led to contentious, often violent interactions between settlers and Palestinians. Itamar Ben-Gvir is the leader of one of the most militant pro-settler parties in the current cabinet. He is proud of the fact that he has been indicted over 50 times for hate speech and inciting violence; only one of those indictments resulted in a conviction. One of the concessions Netanyahu made to get the settlers' parties into his coalition was to create a "national guard" to serve under Ben-Gvir's Interior ministry. The guard's vaguely defined mission would be to focus on unrest and violence in the West Bank, on the grounds that the IDF, Shin Bet (equivalent of the FBI), and the regular police force are too busy with other duties and issues.

The threat of a radical change in the role of the courts in Israeli politics, the proposal for a national guard outside the established security system, promises of increased support and benefits for the ultra-Orthodox have driven tens of thousands of Israelis to the streets in recent weeks. A particularly telling clue about how deeply disturbed many middle-of-the-road, moderate Israelis are about the issues is the fact that several hundred reserve officers signed a letter stating that they would not serve in the IDF if the judicial proposal went through. (This is more than 1960's "Hell no, I won't go" Vietnam resistance. The IDF is a proud symbol of Israeli strength and national pride. It is one of the most respected institutions in the country.

The protesters are clear: These proposals are a direct, existential threat to a democratic Israel. Netanyahu has agreed to delay consideration of his judicial program until the end of Passover, on April 13. There is undoubtedly some very serious discussions and negotiations going on behind the scenes, we may soon know if they will succeed.

Some Thoughts on Afghanistan

The start of understanding Afghanistan begins, I think, with a question: Which Afghanistan are we talking about?

There is largely urbanized Afghanistan with a significant population of well educated young women and men working in jobs directly or indirectly supported by international aid groups or foreign aid. And a larger group of city dwellers working in small shops and factories or involved in an informal economy of street vending and hustles. Mobile phones are omnipresent, internet access is available, there are multiple TV channels and movie theaters. There is also a large expat population including military personnel, diplomatic staff and people working for international organizations such as Oxfam, Doctors Without Borders and a number of United Nations agencies. That's about a quarter of the Afghan population and it is concentrated in Kabul.

And there is rural Afghanistan, home to about 70% of all Afghans, making the country one of the least urbanized in the world. Half of the people in rural areas fall below the UN's definition of poverty, struggling to get by on subsistence farming. In some parts of the country opium poppies provide a cash crop although most of the profit goes to middlemen and local tribal leaders (or the Taliban). The best guess is that 43% of the people can read and write in their native languages; there are only four countries with lower rates. The sex disparity is striking: 54% male literacy; 30% female. Most people live in small villages in hilly and mountainous areas where communication between villages is challenging and communication with the outside world rare. Despite what has been the world's highest infant mortality rate, rural families tend to be large. Large families, limited arable land and persistent poverty mean that there is a large number of young men available for recruitment by local bandit groups, militias or the Taliban.

In much of the world the push of poverty and the pull of opportunity and excitement lead to young men and women leaving their traditional villages for the city. In Afghanistan, even among the young, the city remains an alien, threatening place.

I think the 2001 invasion of was justified by our self interest in protecting us from terrorist attacks. When the Taliban regime refused to cooperate with us to act against Al Qaeda after 9/11, we and our NATO allies joined forces with groups inside Afghanistan who were waging an insurgent struggle against the regime. The initial goal was to work with the Taliban's Afghan opponents and create a stable government that could exert enough control over the country to prevent it from again becoming a base for attacks on us or our friends. The recent suicide bombing in Kabul is a pointed reminder of how critical control of the Afghan countryside, once and future home to terrorist groups, is to American security.

Afghanistan has never had a unified national government that exercised control over the diverse ethnic, regional and local groups. Traditional monarchs with hopes of modernizing the country were swept aside by more impatient young reformers whose attempts at highly coercive reforms led to the popular uprising that provoked the Soviet invasion. The Taliban, with a lot of support from Pakistan and the United States, emerged as the most powerful of the several groups that composed the mujaheddin resistance to the Soviets. The Taliban absorbed or defeated the other militias and controlled the government from 1996 to 2001.

The Taliban was based in the ethnically Pashtun parts of rural Afghanistan. The leadership used a particularly harsh and punitive variant of Islam to express and justify a puritanical and repressive patriarchal regime. The regime's excesses provoked armed resistance in those parts of Afghanistan populated by one of the 12 major ethnic groups other than the Pashtuns. By 2001 the Taliban had lost control of much of the country, had alienated many Afghans, was faced with a collapsing economy and was ripe for replacement.

But replacement with what? The Afghan opponents of the Taliban were not a unified force and as a collection of largely rural, non-Pashtun factions had little credibility in the cities or most of the countryside. There was no national elite or political parties that could provide leadership and no national institution that could provide security, justice, education or medical care. In a country where about three quarters of the population were subsistence farmers living in small villages in isolated valleys separated by towering mountains, there were few economic resources to support the widespread desire for a better life. And the hundreds of thousands languishing in refugee camps in Pakistan who had fled the Taliban included large proportion of the few Afghans who had modern educations and skills.

Establishing a government that can effectively rule a country involves development along three inter-related dimensions: economic, social and political.

Frank Zappa would add a fourth essential precondition: a national beer. If that's true Afghanistan is doomed since alcohol is illegal.

The human toll of the past includes 8,000 U.S. and NATO soldiers, contractors and aid workers, and as many as 240,000 Afghans. The United States, Europe, the United Nations and non-governmental agencies have spent more than two TRILLION dollars on aid projects. What has been achieved?

Economic development: Afghanistan remains one of the poorest countries in the world. The largest single component in the national economy is foreign aid. The lack of easily exploitable resources, difficult geography and physical insecurity make it unattractive to foreign investment. There are some wealthy Afghans but some have gotten rich by exploiting poor farmers and many by siphoning off aid money and extorting bribes from aid organizations. That wealth has been parked in bank accounts and assets outside the country. On the whole, Afghanistan is not any better off than it was twenty years ago.

Social development: This is an area where there has been demonstrable change for the better. The country has a long way to go but literacy rates, especially for women, have improved. Twenty years ago the infant mortality rate in Afghanistan was the highest in the world. That rate has been cut in half. Especially in Kabul, a significant number of well educated, highly skilled young men and women have begun to create a contemporary social, intellectual and artistic culture. (Since many of them have worked for or with American forces and international aid agencies they have been among the most desperate to flee the Taliban.)

Political development: The internationally backed regime that evolved over the past twenty years did not have the kind of popular support that makes a regime legitimate. Popular support is based on two things: a belief that the regime and its leaders have a right to rule and the regime's ability to deliver the goods. In Afghanistan the right to rule is rooted in tribal and Islamic tradition and seriously undermined by the perception of foreign involvement. And none of the governments installed after 2001 could deliver even the most basic goods: physical security, economic improvement, honest local administration.

The U.S. and NATO military contingents did not develop an effective strategy for keeping villagers safe from local bandits, the remnants of the Taliban and other insurgent groups. No matter how well intentioned or "culturally sensitive" western military units and the Afghan forces they trained were, they were seen as an alien army that might storm in during the day but went home at night. That left villagers, local police and government officials, at the mercy of whomever was lurking in the dark. The lack of physical security doomed attempts to link villages to larger markets or diversify into cash crops other than opium. From top to bottom many government employees routinely supplemented their income by demanding bribes and kickbacks. The message to ordinary citizens was clear: we are not here to make your life better, we're here to make money for ourselves. This pattern marked the national army, as well. While some officers were dedicated and professional, others were siphoning off money meant for payrolls and equipment.

Most Afghans were well aware of what the Taliban did when they were in power in a village or region and were not supporters. But the national government was no better and, in the countryside, tainted by association with foreign invaders and evils of city life. The Afghan army depended on American trainers, logistical support and air strikes. When that disappeared, large numbers of soldiers saw no reason to fight to defend a corrupt government based on urban elites.

As Yogi Berra reportedly said, "It's tough to make predictions, especially about the future." Nonetheless:

Humanitarian disaster: Drought, Covid, warfare, and inflation have already created a dire situation with half the population relying on food aid from the outside. Food and medical supplies have been coming into the country through the Kabul airport and four border crossings with Pakistan. Once the U.S. military leaves the airport will there by anyone left to run it? Will it be safe, or even possible for large scale shipments to arrive? Will the truck convoys be allowed to continue and will they be safe from bandits and hijackers? Some foreign aid workers, especially UN personnel and international non-governmental organizations have decided to stay in Afghanistan, but will they be able to maintain the distribution networks? The UN World Food Programme's supplies in the country will be exhausted by the end of September and it does not have sufficient cash on hand to buy enough food to get through the winter. Medical personnel were already scarce in Afghanistan and many Afghan doctors and nurses have left the country, as have international medical workers.

Economic collapse: One quarter of the Afghan Gross Domestic Product is foreign aid. The United States and European Union countries are not going to send money to a Taliban regime in the near future. A large proportion of the money sent to Afghanistan in the past is physically held by international banks or embedded in national budgets. The United States has already frozen several billion dollars that the new government cannot spend. We will probably try to use the promise of aid to to induce the Taliban to refrain from doing the sorts of things that are central to their stated principles and beliefs. Add in the billions of dollars diverted from past aid by corrupt officials that ended up in foreign bank accounts. Most of the hundreds of thousands of Afghans fleeing the country by airlift or crossing into Pakistan are arriving with only a few possessions. Some, like ex-President Ghani, are headed to the Gulf or Europe with very large bank accounts.

Anarchy: The Taliban is not a unified, hierarchical organization, There are distinct factions who have been able to coordinate their military activities but have differing views on what should be done now and clashing personal ambitions. The leaders who negotiated with the Trump administration and have been in contact with the Biden administration are veterans of the anti-Soviet war who have spent a considerable amount of the past twenty years outside the country. Even if they had been fully committed to the promises they made in exchange for U.S. withdrawal, they did not have the power to carry them out. It is not clear that the senior military leaders in the various Taliban factions can always control the fighters on the streets. You have spent much of your life, and lost many comrades, fighting to rid the country of foreigners and their corruption. And now you're supposed to be polite and respectful to immoral women and men?

The Taliban may be able to establish a degree of control and stability in Kabul and the provincial capitals despite the fact that it is not seen as legitimate or desirable by a large proportion of the citizens because it has a large coercive capability. But the suicide bombing at the Kabul airport focused attention on the fact that Taliban does not control much of the countryside and is itself under attack by armed groups.

This is one of those situations where you desperately hope you are wrong, but I think the suffering of Afghanistan is just beginning.