Still Going Nowhere Man

A brutally frank memo from a high-ranking Norwegian diplomat to the United Nations leaked this week, ripping Ban Ki-moon's performance to shreds. The evidence against the U.N.'s feckless leader is mounting.

A scathing confidential memo by a senior Norwegian diplomat leaked to the press yesterday has taken public what up until now has been the quiet and increasingly despairing concern at the United Nations about Secretary-General Ban Ki-moon. Indeed, Ban might now be facing what must have seemed unthinkable only a few months ago: a single term as the head of the United Nations.

In her damning memo, Deputy U.N. Ambassador Mona Juul called Ban -- the South Korean foreign minister elected secretary-general in 2007 -- "spineless," "charmless," and, most importantly, "incapable" of setting an agenda. Her critique echoed a series of pieces in the international press -- in The Economist, The Times of London, and by yours truly in Foreign Policy -- that in recent months have called Ban out for his miserable performance, citing his lack of vision, leadership, or policy prowess. Of course, Ban and his staff have aggressively tried to combat this emerging image. My own article drew an outraged letter from Ban's chief of staff, who claimed my criticisms were part of some unnamed "political agenda." I doubt he can say the same of Juul's.


Nowhere Man

The Jacob Heilbrunn argument that started it all.

The Mona Juul Memo

The Norwegian diplomat's leaked report on the "Nowhere Man."

At the United Nations, she represents Norway, which traditionally wields great influence in the organization (and is a disproportionate funder). Her criticisms were, to say the least, cutting. "Ban's voice on behalf of the G-172 and the poor is barely being registered," she wrote. He has been "absent on the issue of disarmament and non-proliferation." He has a burdensome "lack of charisma" and an "omni-present chef de cabinet" who obfuscates the policy process.

To her credit, Juul spoke out loud what many of her colleagues have been saying privately: Ban hasn't been a bad secretary-general. He has been a horrendous one, as feckless as he is inept. At a moment when global change is more imperative than ever, Ban has been AWOL. Indeed, in recent months, Ban's feverish attempts to disprove his numerous detractors have simply highlighted that ineptitude. In trying to refurbish his battered image, he has only further injured it.

When Ban visited Sri Lanka, for example, he failed to secure any relief for the Tamil refugees who the government had herded into camps by waging an indiscriminate bombing campaign. In Burma, Ban essentially offered the ruling military junta political cover by meeting with it, while failing to win any concessions on human rights generally or in the case of Aung San Suu Kyi in particular. Quite the contrary. The junta has recently extended her illegal confinement. Ban's tenure, in short, has been a prolonged exercise in ignominious failure.

Ban's first response to his critics has been that he is practicing quiet diplomacy. But there is a distinction between quiet diplomacy and quiescence. Ban has become a connoisseur of the latter, an accomplice to dictators, which is why Juul wrote that "Ban and the UN are conspicuous by their absence" when it comes to dealing with global crises. This, in fact, is the true paradox of Ban: His very attempts to turn himself into a cipher as head of the United Nations have been what has attracted him international attention and scorn.

The second line of defense is that the powers of the U.N. secretary-general are limited and that Ban should not be drubbed for failing to adopt a more vigorous line toward the world's bad guys. The first point is true, but it does not mean that the latter point follows the former. In the past, secretaries-general, such as Kofi Annan, managed to stake out a position by exercising the moral authority of their position. Ban has managed to accomplish the very opposite. He has squandered what little influence he ever had. Even on management issues -- one of the things that absolutely do fall directly under the purview of the secretary-general -- Ban has continued the old tradition of cronyism and nepotism.

Now that Juul has amplified the complaints about Ban's performance, he and his claque will surely protest that they're being singled out unfairly and that he should be given more time to demonstrate real accomplishments. No, he shouldn't. The problem with Ban isn't simply that he should be denied a second term, but that he should never have been appointed in the first place. Perhaps the forthright Juul can even launch a movement to accomplish the unprecedented and remove this unnatural catastrophe from office immediately before he can do any further damage.



A $9 Trillion Question: Did the World Get Muhammad Yunus Wrong?

As Yunus receives the Medal of Freedom and Nobel rumors swirl around Hernando de Soto, it is time to give these two poverty-fighting visionaries another look.

In the development world, Muhammad Yunus and Hernando de Soto are considered saints.

In 2006, Yunus and the Bangladeshi microbank he founded, Grameen, won the Nobel Peace Prize for their pioneering work in microfinance -- a means of providing small loans to the very poor. Last week, U.S. President Barack Obama awarded him the Presidential Medal of Freedom, the country's highest civilian honor, commending him for "[unleashing] new avenues of creativity and [inspiring] millions worldwide to imagine their own potential."

In the 1990s, de Soto played a key role in the World Bank's remaking of Peru's economy; today, he serves as the head of Lima's Institute for Liberty and Democracy. He is an intellectual of global importance, perennially on the Nobel shortlist for his advocacy of property rights for the impoverished.

But the brilliant ideas advanced by Yunus and de Soto have had limited real-world impact, and in practical terms, neither of their economic notions has the capacity to remake the world, as is often claimed. Sadly, the honors they have received often hide this hard truth, limiting vital criticism of their work. But, by looking critically at de Soto and Yunus, a way to combine the best of their ideas and solve a multitrillion-dollar poverty problem suggests itself.

De Soto's widely heralded 1986 book The Other Path describes the poor as small entrepreneurs, stuck in a poverty trap because their wealth is informal. In The Mystery of Capital, published in 2000, he estimated that the world's poor held roughly $9 trillion in frozen savings, locked up in unregistered assets, such as homes and businesses.  

De Soto's proposed solution was to formalize these untitled homes and other assets. But this policy prescription requires a strong central government, substantial public funding, an efficient apolitical bureaucracy, and major legal changes. In virtually all poor countries -- perhaps except China, with its command economy and centralized government -- this would create opposition from business and government elites that would derail the program, even if such changes were in their long-term interest.

For his part, Yunus has shown that the poor benefit from and can learn how to use credit. Most importantly, he and Grameen Bank demonstrated that the poor do repay their loans. But his ideas have not proven easy to implement -- at least with the massive scale that would be required for them to make more than a symbolic difference for the world's poor.

As of 2004, loans provided by microfinance organizations amounted to just $17 billion worldwide. This is a pittance compared with the potential credit requirements of de Soto's 4 billion poor, most of whom are small-scale entrepreneurs. All capitalists need capital -- but the current system will never provide an adequate amount.

Moreover, most of the existing microfinance credit is subsidized. Very little comes from private, profit-seeking capital markets (as of 2004, just $2.7 billion, or about 60 cents per poor person per year). This is because development banks do not really require collateral for their microloans. They often use subsidized credit, as they generally aren't profit-seeking. But banks backed by private capital markets require collateral. This means that their loans are too expensive for most of the long-term needs of the poor.

For instance, the private Mexican microbank Compartamos charges 100 percent annualized interest -- which, to be fair, reflects the real risk of providing an unsecured loan. But such long-term interest rates cannot encourage capital investment in projects that need time to gestate. And though shorter-term loans with 25 or 50 percent annualized rates beat the street rate, such debt cannot be carried for any length of time. As a result, the pool of global capital is largely inaccessible to poor people. And the solutions proposed by Yunus and de Soto for formalizing the economy of the poor and thus lifting them from poverty prove only marginal.

But there is viable market-based approach that would create a deep pool of capital the poor could tap: the provision of micromortgages, or secured, long-term, low-interest rate microloans. Such loans would not require governments to change their civil codes. They would only have to make narrowly focused legal and regulatory changes; then, they would have to establish registries, licensing private firms to prepare applications for the registration of informal property. In this way, the micromortgage process could become self-funding, helping grow the pool of credit.

How would it work? Let's consider a poor individual living in a house without a title or even an address in Mexico. He hopes to formalize his house. So, he visits a local bank to apply to register his property. To the bank, he represents potential demand for credit -- the bank has incentive to research his claim, help him map his land, assess any improvements, and submit his information to the registry.  The bank would do this in return for his loan business and a fee to cover costs.

The bank would then submit the individual's information to the government, ready for entry into an official national digital registry. Were the application accepted for processing, he could take out a form of title insurance from the bank, which could then safely extend credit to the applicant. The modest application fee would be added to his loan principal, allowing him to immediately use the balance for, say, a long-term micromortgage to finance a business.

De Soto estimates that the poor in Mexico already hold well over $300 billion in frozen savings. Modern registries would facilitate micromortgages and so prove to be an enormous economic boon to both businesses and the poor -- all at no great risk or cost for poor governments. 

Yunus and de Soto offer us real insights into how the poor can, finally, work themselves out of poverty: Yunus shows they need credit and de Soto shows they need to join the formal economy. But we must build on their ideas and combine them in order to develop a more viable way to realize their inherent promise.  If the world's poor can gain access to private capital via their formal titles, then we will have a real solution to a $9 trillion problem.

Win McNamee/Getty Images