Special Report

The Failed States Index

Democracy may be spreading, but is the world more stable? In the second-annual Failed States Index, FP and the Fund for Peace track the countries on the edge of collapse.

By most accounts, 2005 should have been a good year for many fragile and developing states around the world. A slew of countries -- including many with limited democratic experience, such as Afghanistan, Egypt, Iraq, and Kazakhstan -- held elections. The number of serious armed conflicts worldwide continued to fall. The world's richest countries agreed to forgive billions in developing-country debt. Robust world trade aided China's rise as an exporting powerhouse. And yet, trends that should have been boons for stability have often been busts.

There are few quick fixes on the path to stability. Elections might give voice to the disenfranchised, but they don't necessarily translate into effective governance. High oil or commodity prices may fill government coffers, but they don't build strong institutions. By contrast, steps that capture few headlines -- the appointment of independent judges, the development of a competent civil service, and the implementation of anti-corruption campaigns -- are often the key to improving a country's foundations.

For all the talk about technology and globalization, basic governance remains a huge challenge for many states. International institutions such as the United Nations, the World Bank, and the International Monetary Fund can help, but large-scale state-building by outsiders is complex and costly. There have been successful U.N. peacekeeping operations in East Timor, Mozambique, Namibia, and Liberia, which recently elected Africa's first female head of state. However, the continuing U.S. struggles in Iraq and, to a lesser extent, Afghanistan have highlighted the hazards of relying on armed intervention to promote stability.

Most states will be on their own, and they run the gamut from strong and secure to weak and vulnerable. Some, including giants such as Nigeria and Pakistan, remain acutely vulnerable to internal conflict and social disintegration. A larger number, including Egypt, Russia, and even China run a substantial risk of decay. Predicting exactly when and how the next episode of state failure will happen is a fool's errand. But it is essential for policymakers to understand the vulnerabilities and weaknesses that create the conditions for state failure.

To paint a more precise picture of the phenomenon of state instability, the Fund for Peace, an independent research organization, and Foreign Policy present the second-annual Failed States Index. Using 12 social, economic, political, and military indicators, we ranked 148 states in order of their vulnerability to violent internal conflict and societal dysfunction. The 60 most vulnerable states are listed in the rankings, and full results are available at www.ForeignPolicy.com and www.fundforpeace.org.

The scores in the index are based on data from more than 11,000 publicly available sources collected from July to December 2005. The period used for data gathering means that some events, including Iraq's tip toward sectarian strife in February, are not included. Other events, including the massive October earthquake in Pakistan, occurred in the middle of the analysis window and had a significant impact on the results. Inevitably, the index is an extended snapshot rather than a continuing analysis. For that reason, comparisons with last year's results have been made whenever possible; future results will yield more long-term trends as the index tracks these countries year after year.

The category of "failed states" has become part of the strategic vernacular, and it has many definitions. For the purposes of this index, a failing state is one in which the government does not have effective control of its territory, is not perceived as legitimate by a significant portion of its population, does not provide domestic security or basic public services to its citizens, and lacks a monopoly on the use of force. A failing state may experience active violence or simply be vulnerable to violence. The great majority of the states listed in the index are not presently failed states. The index measures vulnerability to violent internal conflict. It is an index of country risk, not of countries that have already failed.

Last year offered several good illustrations of what might be termed "pockets of failure" within otherwise strong and stable states. In the United States, Hurricane Katrina exposed gaping holes in the country's disaster preparedness. Viewers around the world watched in astonishment last August and September as the world's superpower left thousands of its citizens stranded for days. Two months later, violent riots in France paralyzed swaths of the country and exposed deep fissures between Muslim immigrants and the rest of French society. Partially as a result of these events, the United States and France have a worse score than other rich, industrialized countries (Finland, Sweden, and Norway emerged as the most stable).

Symptoms of state failure can appear in any country in any region of the world, but there are several neighborhoods with concentrations of weak states. As in last year's index, Africa produces the largest number of unstable states. This year, Sudan appears as the world's most vulnerable country because of its poor ratings in the areas of group grievance and human rights. Sudan is followed closely by the Democratic Republic of the Congo and the Ivory Coast, whose governments still do not control huge portions of their territory. Six of the 10 most vulnerable states and 11 of the top 20 are in Africa.

Yet the rankings also demonstrate the inadequacy of regional generalizations, even for countries in close proximity to each other. Zimbabwe, struggling under poor governance and endemic corruption, saw its stability ranking fall by 12 percent, whereas neighboring South Africa maintained its strong showing. Nigeria, despite its wealth in resources, continued to unravel even as nearby Ghana remained one of the most promising states in all of West Africa. Kenya managed to improve despite corruption scandals and a porous border with Somalia. In Southeast Asia, Burma tumbled, while neighboring Thailand, even with unrest in its own southern provinces, remained one of the most stable states in the region. Ultimately, it is clear that leadership, not location, matters most.

Special Report

Long March to Nowhere

Three of these four critics share a common belief— -- they see China rising, uninterrupted. For Albert Keidel, China is ruled not by a decaying Communist Party, but an "agile, energetic government." Cheng Li recognizes the extent of the government's decay, yet nevertheless believes China's leaders are taking bold steps to stop the rot. Bruce Gilley argues that China may be in for a massive shock, but there's no need to worry, because China's future looks bright. Only Roderick MacFarquhar sees a regime in peril, though he appears hopeful that China's leaders will eventually embrace democratic change.

Of these four, Keidel offers the most compelling, and optimistic, case for China. Sadly, the Chinese government he describes is not one I recognize. So we are arguing about facts, not just an interpretation of facts. For example, Keidel asserts that China has undertaken land reform. True -- sort of. Although China abolished collective agriculture in the late-1970s and early 1980s, it has not implemented any land-ownership reforms, which is directly responsible for the rampant land grabs that local officials are committing today. Keidel also insists that corruption is "vigorously prosecuted" in China. If that's true, why does corruption remain so rampant? His belief that "freedom of speech and assembly … are widespread" is simply false. In reality, the Chinese government maintains tight controls on the media, and it forbids nearly all forms of assembly. Keidel cites a long list of economic factors on his way to arguing that China's fast-paced growth can continue in perpetuity. But any country that is experiencing rising income inequality, increasing social unrest, and severe environmental degradation (three indisputable facts we all agree on) is more likely to falter than succeed.

Li thinks China's current leadership is responding boldly and effectively to the country's social problems. He is only partially right. The new leaders have spewed populist rhetoric and announced additional spending on health and education in rural areas. But these promised policy adjustments are inadequate in light of the huge buildup of social problems over the past 15 years, and the government's strategy of throwing money at such problems is treating the symptoms, not the root causes. If Beijing wanted meaningful reform, it would change the current land-acquisition system, the main source of rural injustice, discontent, and inequality in China. It would also require administrative and political reforms in the countryside to make local governments more accountable. One can bet that the bulk of the new spending that Li celebrates will benefit rural bureaucrats, not peasants.

Should China experience a massive shock, Gilley thinks the country will land on its feet. He incorrectly says that I predict a new authoritarianism or even anarchy if the current regime folds. I purposefully refrained from making these kinds of hazardous predictions. Nevertheless, I sympathize with Gilley's optimistic outlook should China succeed in ending its 2,000-year-old authoritarian political system. Based on other democratic transitions in large developing nations, including Indonesia, Mexico, and the Philippines, the odds that China can make a peaceful transition from neo-Leninism to democracy are good. But history also shows that a seismic shock to China's political system could cause a lot of pain for its people, without leading to lasting change. Here, the Russian experience comes to mind. The fall of communism there has brought not a liberal democracy, but a soft authoritarianism.

The most unpleasant possibility is that political stagnation in China will continue for many decades to come. The Chinese Communist Party has been quick to adapt and make tactical adjustments. These crisis-management skills may help it survive even repeated shocks while maintaining its grip on power. Whatever happens, one thing is certain: a regime so burdened by corruption, cynicism, and decay will hardly turn China into the next great superpower.