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State-Building

Francis Fukuyama is the author of the hugely influential international bestsellers, The End of History and the Last Man, Trust, The Great Disruption and Our Posthuman Future. He is professor of international political economy at the School of Advanced International Studies, Johns Hopkins University. He lives near Washington DC with his wife Laura Holmgren and their three children.

ALSO BY FRANCIS FUKUYAMA

Our Posthuman Future:
Consequences of the Biotechnology Revolution

The Great Disruption:
Human Nature and the Reconstitution of Social Order

Trust: The Social Virtues and the Creation of Prosperity

The End of History and the Last Man

FRANCIS FUKUYAMA

STATE-BUILDING

GOVERNANCE AND WORLD ORDER IN THE TWENTY-FIRST CENTURY

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First published in Great Britain in 2004 by
PROFILE BOOKS LTD
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First published in the United States in 2004 by
Cornell University Press

Copyright © Francis Fukuyama, 2004, 2005

The moral right of the author has been asserted.

All rights reserved. Without limiting the rights under copyright reserved above, no part of this publication may be reproduced, stored or introduced into a retrieval system, or transmitted, in any form or by any means (electronic, mechanical, photocopying, recording or otherwise), without the prior written permission of both the copyright owner and the publisher of this book.

A CIP catalogue record for this book is available from the British Library.

ISBN 978 1 8476 5377 2

To Marty Lipset

CONTENTS

Preface to the paperback edition

Preface

I     The missing dimensions of stateness

The contested role of the state

Scope versus strength

Scope, strength, and economic development

The new conventional wisdom

The supply of institutions

The demand for institutions

Making things worse

II    Weak states and the black hole of public administration

Institutional economics and the theory of organizations

The ambiguity of goals

Principals, agents, and incentives

Decentralization and discretion

Losing, and reinventing, the wheel

Capacity-building under conditions of organizational ambiguity: policy implications

III   Weak states and international legitimacy

The new empire

The erosion of sovereignty

Nation-building

Democratic legitimacy at an international level

Beyond the nation-state

IV   Smaller but stronger

Bibliography

Notes

Index

PREFACE TO THE PAPERBACK EDITION

In the four years since the American-led invasion of Afghanistan, the United States has learned some painful lessons about state-building in both Afghanistan and Iraq. The US approach to the two countries represented different models of occupation, with Afghanistan constituting a light-footprint approach, and Iraq a much heavier one.

In Afghanistan there was an early return of sovereignty to an interim government led by Hamid Karzai, as established by the Bonn Accord in December 2001. The United States deposed the Taliban with strong local allies in the form of the Northern Alliance, and had a wider range of international partners from the start. The United Nations and its representative, Lakhdar Brahimi, played a significant role in organizing and legitimizing the transition, and other NATO allies were given specific roles and missions early on (such as the Germans taking responsibility for police training). While the United States remained the predominant outside military power in Afghanistan, the overall size of US military forces remained capped at a relatively small number and did not, for the most part, seek to provide domestic order anywhere but in Kabul. The long-term political goal was modest, moreover: the US never promised that it would turn Afghanistan into a model democracy; the objective, rather, was ending the country’s role as a haven for terrorists and bringing a modicum of stability to its population. The fact that Hamid Karzai was elected president on October 9, 2004 with impressive voter turnout for a country that had never before elected a president was simply the icing on the cake.

The situation was much different in Iraq, where the goals were more ambitious, and the footprint much heavier. President Bush had stated before the war that Iraq was to be made a democracy, and that the war would be the opening phase of a much larger plan to transform the politics of the greater Middle East. Military operations were conducted primarily by US and British forces, without the help of any indigenous allies as in Afghanistan. With the fall of Saddam Hussein’s regime, the Coalition Provisional Authority (CPA) became the sovereign authority in Iraq, and the US held that authority for more than 13 months until its transfer back to an interim Iraqi government on June 28, 2004. The CPA was to provide soup-to-nuts government for Iraq, and symbolically moved into the old Republican Palace once occupied by Saddam Hussein. Although the US established a 25-member Iraqi Governing Council in the summer of 2003, Iraqi participation in the actual governance of the country was minimal for the first year of the occupation.

Afghanistan and Iraq thus represent two very different models for managing a reconstruction. The first used modest means in pursuit of relatively modest objectives (though foreign contributions accelerated considerably by 2004), and sought wherever possible to offload responsibility onto local actors (such as the Northern Alliance), as well as other international partners like the UN or NATO allies. The Iraqi model put very substantial US resources in the service of very ambitious objectives, with an emphasis on US control of as much of the reconstruction effort as possible. Although the US sought to involve more outside countries in the Iraq reconstruction, particularly as its costs began to escalate, they were not willing to assume the same sorts of responsibilities that the allies had in Afghanistan.

There were many disadvantages to proceeding in this fashion. The CPA was in effect a massive new bureaucracy, created on the fly and in the field, under very adverse and, it was to prove, deteriorating security conditions. Unlike an embassy/country team, which was the more typical manner of organizing a US-led nation-building operation, there was no existing cadre of professionals ready for this kind of overseas duty. The entire staff had to be recruited as individuals, many on 90-day assignments that limited their effectiveness and relations with local Iraqis. Throughout its entire existence the CPA was understaffed, and had to spend considerable energy building up its own organization rather than providing governmental services to Iraqis. Given the novelty of this organization, lines of authority were very confused. While Ambassador Paul Bremer nominally worked for and reported to Defense Secretary Donald Rumsfeld, he increasingly dealt directly with the White House staff and bypassed the Pentagon bureaucracy in Washington.

Relationships with the local US military command, Combined Joint Task Force 7, were reportedly both strained and confused. The heavy US military presence and its role in providing law and order was regarded as increasingly oppressive by the Iraqi people, and played a role in stimulating violent resistance to itself. And then, with the transfer of sovereignty in June 2004, this entire large bureaucracy had to be dismantled, and its functions handed back either to Iraqi ministries or to the new embassy/country team. This once again created substantial confusion as roles and missions were reassigned to a different bureaucracy.

The other big problem with this heavy-footprint approach was the matter of ownership. Development practitioners have come to recognize that without local ownership, institutions will simply not work on a long-term basis. The CPA model clearly delayed the return of ownership of the Iraq government to the Iraqis themselves. While this might have seemed inevitable in the immediate aftermath of the war, given the seeming absence of trustworthy local actors, it should seem obvious in retrospect that the occupation authorities should have made finding such actors their first priority.

The return of sovereignty to Iraq, the dismantling of the CPA, and its replacement with a regular embassy (albeit the largest US embassy in the world) led initially by Ambassador John Negroponte, was a tacit admission by the Bush administration that it had made major mistakes in its initial approach to the reconstruction of Iraq. Negroponte took a much lower profile than did Ambassador Bremer, working in the background to boost the authority of interim Iraqi prime minister Iyad Allawi and quietly coordinating efforts to stage the first election on January 30, 2005.

That election, with high voter turnouts in the Shiite and Kurdish parts of Iraq, was a clear success for American policy. While most Sunnis were too resentful or intimidated to vote, the two largest communities in the country for the first time were able to elect legitimate leaders who could then begin the long, painful process of writing a constitution and negotiating a power-sharing modus vivendi. It remains to be seen whether the Sunnis can be enticed back into the political process, and whether the Kurds and Shia can work out their differences concerning the nature of federalism in Iraq or property rights in places like Kirkuk. But a start at least has been made.

The United States thus moved, in effect, from its initial heavy-footprint approach to a somewhat lighter one, demonstrating that it was capable of learning to some degree from past mistakes. Whether this mid-course correction will be enough to rescue the situation from Washington’s initial miscalculations remains to be seen. The US in effect lost a year at the outset of the occupation, as Iraq’s governmental infrastructure crumbled or was deliberately dismantled (for example, through the disbanding of the Iraqi army). This lost year was precisely the period during which the insurgency of former Ba’athists, Sunni nationalists, and foreign terrorists got organized and started a vicious guerilla war against the occupation and the new Iraqi government.

In the longer run, the challenge of state-building for the US will be one of long-term commitment. The United States has always had problems with attention-span in its nation-building efforts: Congressional and public interest tends to flag after an initial burst of activity following a crisis; media attention falls; and there are calls for reduced levels of casualties and spending. The danger of declaring premature victory undoubtedly exists in Iraq: there are clear domestic political points to be won by an early exit of American troops, reinforced by the ambivalence of the newly elected Iraqi government to their prolonged presence. But the long-term state-building task is only now beginning, of which writing a new constitution will only be a small part.

Ironically, the long-term prospects for Afghanistan look brighter. This in part stems from the light-footprint approach initially taken, which, besides giving greater ownership to the Afghans themselves, economizes on American taxpayer resources and is therefore more politically sustainable over the long haul. The Afghan people have endured, over the past generation, the moral equivalent of what the Germans and Japanese suffered by the end of the Second World War; their exhaustion has provided a propitious backdrop to the slow creation of a new political order.

Afghanistan and Iraq are only small parts of a much larger set of problems that I sought to address in State-Building. Whatever difficulties the US and its partners have experienced in either country, the reconstruction efforts there are at least problems with known solutions. The problem is different in the case of weak rather than failed states, which none the less have weak governance and serious political obstacles to economic reform and growth. In these cases, the issue is not one of the relationship between an outside occupation authority and a local post-conflict government, but rather between a sovereign state and the international community, represented by multilateral or bilateral donors or the NGO community. Here the problems of fostering institutional reform remain substantial. There is by now a long literature on the limitations of conditionality as a means of generating demand for institutional reform, and on how aid itself can weaken institutional development. Many of these problems are ones that exist on the side of the donors, and their own incentives to produce measurable short-term results with their assistance rather that patiently awaiting long-term institutional development. Trying to adjust these incentives and come up with new approaches to institutional reform (such as the concept of shared sovereignty) constitute an important area for new research into the problems of political development.

Washington
May 2005

PREFACE

State-building is the creation of new government institutions and the strengthening of existing ones. In this book I argue that state-building is one of the most important issues for the world community because weak or failed states are the source of many of the world’s most serious problems, from poverty to AIDS to drugs to terrorism. I also argue that while we know a lot about state-building, there is a great deal we don’t know, particularly about how to transfer strong institutions to developing countries. We know how to transfer resources across international borders, but well-functioning public institutions require certain habits of mind and operate in complex ways that resist being moved. We need to focus a great deal more thought, attention, and research on this area.

The idea that state-building, as opposed to limiting or cutting back the state, should be at the top of our agenda may strike some people as perverse. The dominant trend in world politics for the past generation has been, after all, the critique of “big government” and the attempt to move activities from the state sector to private markets or to civil society. But particularly in the developing world, weak, incompetent, or nonexistent government is the source of severe problems.

For example, the AIDS epidemic in Africa has infected more than 25 million people and will take a staggering toll of lives. AIDS can be treated, as it has been in the developed world, with antiretroviral drugs. There has been a strong push to provide public funding for AIDS medicine or to force pharmaceutical companies to permit the marketing of cheaper forms of their products in Africa and other parts of the Third World. While part of the AIDS problem is a matter of resources, another important aspect is government capacity to administer health programs. Antiretroviral drugs are not only expensive, they also are complex to administer. Unlike a one-shot vaccine, they must be taken in complex doses over a long period of time; failure to follow the regimen may actually make the epidemic worse by allowing the human immunodeficiency virus to mutate and develop drug resistance. Effective treatment requires a strong public health infrastructure, public education, and knowledge about the epidemiology of the disease in specific regions. Even if the resources were there, the institutional capacity to treat the disease is lacking in many countries in sub-Saharan Africa (though some, like Uganda, have done a much better job than others). Dealing with this epidemic thus requires helping afflicted countries develop the institutional capacity to use what resources they may acquire.

Lack of state capacity in poor countries has come to haunt the developed world much more directly. The end of the Cold War left a band of failed and weak states stretching from the Balkans through the Caucasus, the Middle East, Central Asia, and South Asia. State collapse or weakness had already created major humanitarian and human rights disasters during the 1990s in Somalia, Haiti, Cambodia, Bosnia, Kosovo, and East Timor. For a while, the United States and other countries could pretend these problems were just local, but September 11 proved that state weakness constituted a huge strategic challenge as well. Radical Islamist terrorism combined with the availability of weapons of mass destruction added a major security dimension to the burden of problems created by weak governance. The United States has taken on major new responsibilities for nation-building in Afghanistan and Iraq in the wake of military actions there. Suddenly the ability to shore up or create from whole cloth missing state capabilities and institutions has risen to the top of the global agenda and seems likely to be a major condition for security in important parts of the world. Thus state weakness is both a national and an international issue of the first order.

This book has three main parts. The first lays out an analytical framework for understanding the multiple dimensions of “stateness” – that is, the functions, capabilities, and grounds for legitimacy of governments. This framework will explain why, in most developing countries, states are not too strong but rather too weak. The second part looks at the causes of state weakness, particularly why there can be no science of public administration despite recent efforts by economists to establish one. This lack sharply limits the ability of outsiders to help countries strengthen their state capacity. The final part discusses the international dimensions of state weakness: how instability is driven by state weakness, how weakness has eroded the principle of sovereignty in the international system, and how questions of democratic legitimacy on an international level have come to dominate disputes between the United States, Europe, and other developed countries in the international system.

This book is based on the Messenger Lectures I delivered at Cornell University in Ithaca, New York, February 18–21, 2003. I am very grateful to Cornell, my undergraduate alma mater, and its former president, Hunter Rawlings, for inviting me to return and deliver this prestigious series. I particularly appreciate the efforts of Victor Nee of the Sociology Department at Cornell to facilitate the lecture series and host me at the newly formed Center for the Study of Economy and Society and those of the Center’s associate director, Richard Swedberg.

Parts of Chapter 3 were given as the John Bonython lecture in Melbourne, Australia, and the Sir Ronald Trotter Lecture delivered in Wellington, New Zealand, both in August 2002. I am grateful to the Centre for Independent Studies and its director, Greg Lindsey, and to Roger Kerr and Catherine Judd of the New Zealand Business Roundtable for helping bring my family and me to their part of the world. Owen Harries, former editor of The National Interest, also provided valuable comments on the lecture.

Many of the ideas in this book came from a graduate course on comparative politics that I taught with Seymour Martin Lipset over a period of several years at the School of Public Policy at George Mason University. I have learned an enormous amount from Marty Lipset over the years, and it is to him that this book is dedicated.

I received helpful comments and advice from a number of friends and colleagues, including Roger Leeds, Jessica Einhorn, Fred Starr, Enzo Grilli, Michael Mandelbaum, Robert Klitgaard, John Ikenberry, Michael Ignatieff, Peter Boettke, Rob Chase, Martin Shefter, Jeremy Rabkin, Brian Levy, Gary Hamel, Liisa Välikangas, Richard Pascale, Chet Crocker, Grace Goodell, Marc Plattner, and Karen Macours.

Parts of the lectures on which the book is based were also given at the Inter-American Development Bank and the U.S. Agency for International Development; I would like to thank Enrique Iglesias, president of the IDB, and Ann Phillips of USAID’s Bureau for Policy and Program Coordination for facilitating these events. Presentations of parts of Chapter 3 were also made at the Miller Center at the University of Virginia, the Carr Center at Harvard’s Kennedy School of Government, the Transatlantic Center at SAIS, the Maxwell School at Syracuse University, and the German Marshall Fund.

My research assistants Matthias Matthijs, Krisztina Csiki, Matt Miller, and particularly Björn Dressel provided great assistance in putting together materials for the book. My assistant, Cynthia Doroghazi, was helpful in many different phases of the project.

As always, I thank my family for their support through the writing of this book.