In association with the International Commission of Jurists

Author: Kenneth Anderson

20 Nov

I have done a fair amount of work in microfinance and closely related areas (development finance involving business clients with larger-than-microfinance loans) in the developing world, and am overall a big fan.  As many people are.  The question that has long loomed, however, is whether it can or should scale upwards to become a full-fledged part of the global capital markets, or whether it should remain a highly subsidized development activity for very poor people or, most plausibly, some of both.  I wrote about this problem in an article in 2002 — asking whether sufficient attention had been given in the conceptualization of microfinance to the question of whether it was supposed to serve as:
  • a genuinely economic connection between very poor people and the capital markets, or instead
  • a kind of “faux-market” in which the tools of the market were deployed as a form of artificially sustained discipline over the efficient use of resource, but nonetheless massively subsidized and, in that sense, never genuinely part of the global capital markets but instead always some sort of philanthropy.
I, like everyone else I have known in this field, have wanted to see some of the first, some of the second and, most crucially, some kind of “venture philanthropy” merger of the two that would somehow combine:
  • the discipline of genuine capital markets to induce efficient use of capital to promote geniune economic growth;
  • access to much larger pools of capital than are available to government aidagencies or NGOs, through the commercial capital markets;
  • subsidies or guarantees to facilitate the entry of for-profit entities into the sector, in order to help them gain experience with loan-making, monitoring, default, and other costs of microfinance, and to overcome the problem of microfinance’s problematic diseconomies of scale compared to other commercial lending;
  • the many social benefits of microfinance for both very poor people and not-so-poor but still poor people as separate groups; and above all,
  • scalability.
So, back in the 1990s, I proposed internally to the Open Society Institute structures of credit guarantee facilities that would allow a consortium of philanthropic and government aid agencies to offer part-guarantees to banking institutions seeking to enter the sector, with the aim of doing all the above good things.  At the time — and in most situations in which I’ve inquired about this since, with the very particular exception of India — the response from the microfinance organizations was, well, that’s nice — but as a matter of fact, at this point we don’t suffer from a general lack of capital.  We can get capital at a zero or negative capital cost in the form of interest free loans from governments or straight out donations.  We don’t need to tap the capital markets, even in a subsidized form at this point, thanks very much.  Maybe someday; not now. The reasons why this is so are important.  The microfinance providers with whom I was speaking were generally in the business of microfinance for poor people in which the transaction costs were clearly extraordinarily high for the size of the loan and possible rate of return, if one took into account all the monitoring and active involvement with the borrowers, etc., etc.  And that was leaving aside completely the transaction costs of the foreign donors and any other upstead costs; it was just the narrow cost of a local NGO engaging in microfinance loans.  Everyone likes to tout — or anyway did like to tout — the fantastic repayment rates of these microloans as evidence of client creditworthiness .  But within the sector, practitioners have always been very clear that this is on account of large investments at the front end of monitoring and reliance upon the heavy hand of social stigma and joint and several liability (as a substitute for material collateral) of other members of a “lending circle” as disciplinary mechanisms to ensure repayment. This is nothing new; microfinance practitioners, although sometimes evangelical in their zeal for it as a development tool, have a pretty decently practical streak, and recognize that this is a subsidized — heavily subsidized — activity when it comes to most clients.  It is another instance of the problem that much of development, as William Easterly tirelessly points out and Jeffrey Sachs seems gradually to be acknowledging, is not a scalable activity.  It takes place at the capillaries, and the blockages are not the mass flows of capital — it is what happens in the “last mile.”  Talking with a finance academic who has decided to start teaching in this area — he remarked somewhat ruefully, I can’t get my students interested in this because the whole point of finance is scalability.  But there are many extraordinarily bright and experienced finance experts, people who perhaps made some money on Wall Street and decided to do something more personally satisfying in the last fifteen years, who have been bringing an immense amount of sophistication to the problem of applying finance to development.  Parts of it have worked, and parts of it are showing the problems, which is a somewhat understated way of stating the current banking for the poor crisis in India.
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19 Nov

China has been moving to catch up with the US and Israel in production of military UAV drones, reports the Wall Street Journal today, in an article by Jeremy Page (Friday, Nov. 19, 2010, A11).   The article says that the uptick in drone output has surprised the West: Western defense officials and experts were surprised to see more than 25...

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18 Nov

Tod Lindberg, editor of the Hoover Institution's Policy Review, reports in the Weekly Standard on a blunt message delivered by Senator Lindsey Graham (R-NC) at a discussion meeting of senior transatlantic policy makers, the Halifax International Security Forum.  It's not a forum that would attract a lot of attention, but the attendees are very senior in transatlantic relations and NATO....

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10 Nov

Probably many readers have seen this over at Lawfare, but Ben Wittes has a very interesting account of the oral argument from a few days ago on the Al-Aulaqi targeted killing lawsuit.  A snippet: Judge Bates was deeply engaged with counsel for both sides throughout the argument. At the hearing’s end (shortly after I had left), he made clear that his...

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08 Nov

News services are reporting that President Obama, speaking to the Indian Parliament, has endorsed India receiving a permanent seat on the UN Security Council.  The AP story adds that this was the biggest applause line in the speech, fully consonant with the rise of Indian nationalism within India, and its rapidly increasing sense of importance in the broader world.  What of this nationalism?  And the rise of national pride of place among the newly rising great powers, not just India? I continue to find mystifying the Western academic international law world's infatuation with the ideals of the dimishining importance of states and membership in states.  Particularly when that mostly seems to refer not to a universal aspiration, but only to the inability of the leading Western-states-in-decline to persuade themselves to exercise the coherence that makes states socially useful - and that largely through the cultural and class predilections of the political classes of those societies.  When are we going to see proper analytic attention to the Globalized New Class as a phenomenon?  In any event, the rising new powers understand that states are about coherence, and that the constant struggle of most states, most of the time, is to remain coherent and prevent "disaggregation" of the state into internal groups of power and "public choice" struggles for primacy and the resources of politics to economic ends. Disaggregation is attractive to many Western intellectuals, I'd suggest, however, because our species-being, so to speak, has gradually come to be purely contractual free agency.  We gave up on any kind of "fiduciary professional" model of the intellectual when we discovered that we could leverage our knowledge skills, at least until China and India caught up, across a needy global economy.  It required freeing ourselves from the strictures of local communities; but the opportunities for globally marketizing our professional expertise being very large, we have moved a long, long way from RH Tawney's post-war British model of the professional as community leader through expertise. That's not how we academics pronounce the disaggregation of the state.  Our favored trope is to declare disaggregation of the state as an enabler of individual freedom.  We mean by that, of course, particularly market freedom of the academic free agency market (best of both worlds: free agent competition as academics and tenure).  The coherence of states is seen by us as an inhibition to individual freedom in some cosmopolitan, fully-marketized, free-agent status for every individual in the world.  
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29 Oct

I spent the day at Georgetown University Law Center, at a seminar put on by Georgetown and the Queen's University Belfast School of Law, on Professor Vicki Jackson's splendid new book, Constitutional Engagement in a Transnational Era.  Fabulous small discussion seminar with comparative constitutional law scholars from around the planet, and a fine discussion of the book.  This book partly...

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26 Oct

Interest in targeted killing and drone warfare is not letting up in intensity to judge by the pace of events on the topic. Right on top of my debate with Mary Ellen O'Connell on this at Washington University two weeks ago, Mary Ellen and Ben Wittes undertook another one, this past Saturday at International Law Weekend in New York.  It was considerably more testy than the Washington University debate.  Some in the audience were unhappy with the confrontational nature of the exchange; some thought it refreshingly direct; my view is the latter and congratulations to Vincent Vitkowsky for an excellent job of moderating the debate.  I'm sure it will generate a lot of interest and a lot of pushback in several directions.  Ben has posted up video of the event at Lawfare. Ben has also added a second post with some transcription, specifically on the question of whether, if one takes Mary Ellen's statements at what they say, Barack Obama is not therefore a "serial killer" for having directly ordered the CIA to carry out what Mary Ellen characterizes as "crimes" and Harold Koh at the least an aider and abetter.  Ben has in mind, for example, statements in Mary Ellen's widely noticed article, "Unlawful Killing with Combat Drones," which among other things declares that "members of the CIA are not lawful combatants and their participation in killing—even in an armed conflict—is a crime."  One might argue Ben's choice of provocative words in the debate - serial killing - or one might argue various technical points over whether it is murder or not murder, whether or not there can be the proper intent given the presumed opinions of many lawyers advising inside the government (many of those questions came up, of course, in the detention-interrogation-rendition arguments as well).  His fundamental point is to say, as far as I understand it (and if I do, I agree), if you declare that CIA participation is a crime, then it follows that somewhere there is a perpetrator.  Not to go after him or her is to permit impunity; it is not a matter of saying, well, you are committing crimes, but all we want to do is persuade you to change your policies going forward to bring you into compliance with international law.  Crime is a charge of more than mere non-compliance.  If there is a crime, someone must be responsible for doing it, whether you call it murder, criminal extrajudicial execution, what have you. And whether one calls these crimes serial killing, murder, extrajudicial execution, etc., they are still a large number of killings. It's not the kind of crime that just happens to be a tort or civil infraction criminalized, but for which as a regulatory matter one can simply agree not to do it any more, like various of the lesser environmental "crimes" for which corporations routinely pay criminal fines in the domestic United States.  Killing is not like that, presumably, at least not when it's systematic, systemic, large-scale, and under direct orders. The article by Mary Ellen specifically says who commits a crime - members of the CIA.  Yet they are not acting as rogues in this, but rather under direct orders of the President.  If it is correct to call the acts a crime, then it is correct to identify the criminals, and those criminals will have to include those who ordered them to do the crimes.  So what is it to be?  I think it a salutary reminder that one ought to be careful in cranking up the machinery of international criminal law over contested interpretations of international law. One risks either over-invoking it or trivializing it or both.  I take it that was Ben's larger point in seeking to force the question onto the table by insisting on using an ordinary, non-legal term like serial killing.
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23 Oct

Although everyone is justly excited about International Law Weekend, I wanted to mention another conference in New York that took place yesterday at Brooklyn Law School, Governing Civil Society: NGO Accountability, Legitimacy and Influence.  Congratulations to Professors Claire R. Kelly and Dana Brakman Reiser at BLS for putting it together.  I was on one of the panels at this one day session and there were many other terrific people who represented a quite fascinating and too-rare mingling of the international law and nonprofit law worlds.  As someone who cuts across both, I thought this was a great conference. The issue that drove it was to ask (this is my summary) whether there is a way to bring together two basic questions about non-governmental organizations and nonprofit organizations in the international world, the transnational world, the global space: accountability in the sense of large political legitimacy, and accountability in the sense that is usually meant in non-profit and charitable organization law.  So one panel addressed the interactions of NGOs and international organizations; a second addressed models of governance and regulation of NGOs; and the last panel asked whether and how legitimacy and accountability might be linked. One of the takeaways for me was that the question of the legitimacy and governance function of international NGOs, global civil society, is still a salient question.  I have long criticized (very sharply) the suggestion that international NGOs ought to have a legitimacy function within the international system, which is to say, a role in governance, even if you think, as I do not, that liberal international global governance is a good idea.  But I had mostly stopped writing on this theme, except when specifically invited (here and here, for example), because I had thought that the idea had died away.  That was something I thought I had learned from Anne-Marie Slaughter's impressive A New World Order; she specifically rejects the global civil society-international organization partnership in governance as failing basic tests of legitimacy (I discuss this in a long review of the book).  Instead, focus seemed to have shifted to the also important question of NGO accountability with respect to the performance of their own missions - internal governance of international NGOs, their relationships with governments in their operational work, and questions that implicate accountability and governance about them as institutions, not global governance. More recently, however, I have realized that something that I thought had faded away as a model project in global governance is still around, somewhat incorporated into some of theories of global constitutionalism that have been a staple of European academic writing on global governance for many years.  But definitely active once again as a proposed theory of global governance and legitimacy.  So I guess I am back writing about it again.  I am no more in favor of it than I ever was, I'm afraid.  Of the academic international law writers in this area, the one who seems to me the most important is Steve Charnovitz of GW, who presented a very interesting paper at this conference.  Steve always offers a careful and measured view, and this paper was exactly that, but also exceedingly interesting not just in the critique of critics like me, but in offering a step forward in a positive account of NGOs in governance.  Indeed, in some respects it was quietly the most audacious of the papers at the seminar, because Steve set out the form of an argument for asking how anyone could propose to leave the NGOs out.  I will very much look forward to reading the essay when published in the symposium issue.
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15 Oct

I am currently underwater with some things and won't be posting much, despite my interest in the debates over drones, targeted killing, and much else besides.  However, I wanted to suggest that, for those trying to make sense of US actions in AfPak - including the overt strikes by NATO against safe havens in Pakistan, the sharply increased public pressure...

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