The List

The Price of Failure

How much has the collapse of Somalia cost the world? $55 billion -- and here's where it went.

On the morning of Oct. 4, a truck bomb exploded on a well-trafficked street outside the Ministry of Education in the Somali capital of Mogadishu, killing upwards of 80 bystanders, many of them university students. The attack brought an end to the relative lull that had held in Mogadishu since August, when fighters for the al-Shabab guerrilla forces withdrew from the city, and offered a stark reminder that the world's most notorious failed state remains just that.

Somalia's ruin can't simply be chalked up as a case of Western neglect. For decades, the United States and international organizations have poured money into Somalia despite its relative geopolitical insignificance -- first as a Cold War bulwark, then as a humanitarian emergency, and now as an effort to contain crime and terrorism. Just how much has Somalia cost us? To figure out the true financial burden that Somalia's conflict has imposed on the world since 1991, we used a variety of official and unofficial sources, combined with some educated guesswork, and came up with an estimate of $55 billion. That figure includes everything from aid supplied by the Red Cross and defaulted World Bank loans to naval patrols off Somalia's piracy-plagued coast and CIA-run detention facilities within the country.

$55 billion may be modest in comparison with the cost of the interventions in Iraq and Afghanistan -- which together are likely to end up costing the United States more than $1 trillion, according to the Congressional Budget Office -- but what's remarkable is how little we have to show for it. For all the treasure expended there, Somalia is no closer to stability than it has been at earlier points in its two-plus decades of chaos. The country is currently experiencing the worst famine the world has seen in two decades, with more than three-quarters of a million people at grave risk of starvation, and remains riven by civil conflict, piracy, and extremism.

The world's approach to Somalia has long been trapped in an unhappy middle: It has been insufficiently robust and well-designed to resolve the country's conflicts but far too heavy-handed and frequent to allow the country to resolve its own problems. An entire generation of Somalis now views the "state," whether it is the Transitional Federal Government or al-Shabab, as a largely predatory institution to be feared, not as a source of stability. Perhaps more than anything, the spending on Somalia demonstrates how the world -- and Washington in particular -- keeps groping for quick tactical fixes while failing to embrace the sensible diplomacy and the kinds of patient engagement that might help Somalia achieve peace.

Humanitarian and development aid: $13 billion

Somalia's tilt into chaos has been first and foremost an enormous human tragedy. According to the United Nations High Commissioner for Refugees and relief agency data, between 450,000 and 1.5 million Somalis have died due to the turmoil since 1991, more than 800,000 have fled as refugees, and another 1.5 million are internally displaced. One in four Somalis is either displaced or a refugee. Humanitarian aid has thus constituted a sizable chunk of spending on Somalia, and this figure is sure to grow sharply given the horrifying famine now under way; the United States alone has offered up $500 million to stem the tide of starvation in the Horn of Africa this year, and the United Nations estimates that a worldwide contribution of at least $2 billion will be needed to address the situation in the horn this year alone.

But although $13 billion is a lot of money, aid experts note that Somali refugees and internally displaced persons receive far less aid per capita than their counterparts elsewhere in the world. The average annual cost of assisting a single refugee from Somalia is just over $300, and the average Somali internally displaced probably receives half that amount in aid, according to estimates prepared by Mercy Corps International for our report. The amount of aid reaching those displaced within southern Somalia remains strikingly low, in part because insecurity, al-Shabab obstructionism, and U.S. terrorism restrictions have made access to these populations incredibly difficult.

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Peacekeeping, military responses, military aid, counterterrorism, and diplomacy: $7.3 billion

The international community has tried just about every trick in the book to contain and mitigate Somalia's instability, ranging from peacekeeping to military aid, counterterrorism efforts, and even Predator drone attacks. The initial U.S.-led international military intervention in Somalia in December 1992 began as an effort to protect food aid shipments from looters, only to quickly morph into an ill-conceived effort to oust the powerful warlord Mohamed Farrah Aidid. After the "Black Hawk Down" incident in 1993 that brought a sudden and tragic end to the last U.S.-led intervention, the United States has largely exerted force through proxies, including Ethiopia, Uganda, and Burundi. African Union peacekeepers have made some progress in recent months as al-Shabab has retreated from Mogadishu. But it's clear that Somalia's Transitional Federal Government would collapse without this outside support.

Spending on arms transfers and military approaches has dwarfed the resources invested in diplomacy or institution-building. Indeed, our research indicated that only about $42 million was spent on extraordinary diplomacy -- i.e. not including embassy staffing and other normal costs -- related to Somalia, most of it on crisis monitoring and a series of poorly planned peace conferences. This is a shame because heavy diplomatic spadework is precisely what is needed to help Somalia's clans reconcile and establish a functioning central government. The Transitional Federal Government, which countries including the United States continue to strongly back, remains incredibly corrupt and broadly unrepresentative.


Piracy: $22 billion

The rise of Somali piracy is a fairly recent phenomenon, and an incredibly expensive one. Somali pirates attacked over 154 ships in the first half of 2011 alone, almost 50 percent more attacks than in all of 2008. The average ransom paid per released ship in 2010 was $5.4 million. But ransom costs are only part of the story, with insurance rates, rerouting, international naval deployments, and added security measures all adding to the bill.


International criminal investigations: $2 billion

Somalia's lawlessness has made it an attractive base of operations not only for terrorist organizations and arms traffickers but for a range of other illegal activities as well, including drug trafficking. Costs in these areas are particularly challenging to track with a high degree of accuracy, but drug interdiction efforts, illicit financial flows, and sprawling law enforcement investigations into everything from smuggling to terrorism have added another $2 billion to spending over the last two decades.

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Remittances: $11.2 billion

Somalia, like much of the developing world, is incredibly dependent on remittances, money earned by Somalis living and working abroad and sent to relatives in the country. As one aid agency has observed, remittances in Somalia "often make the difference between whether a family survives or not." Even counting only the portion of remittances that have likely gone toward lifesaving aid for Somali families and friends, the total still comes to $11.2 billion.

This incredible level of support from expatriate Somalis does much to explain the country's resiliency despite repeated calamities and long periods of relative neglect by the international community; indeed, for all the money the world has poured into Somalia, the World Bank argues that "the major inflow of 'aid' has come from Somalis themselves."


The List

The Top 10 Unicorns of China Policy

Unicorns are beautiful, make-believe creatures. But despite overwhelming evidence of their fantastical nature, many people still believe in them. Much of America's China policy is also underpinned by belief in the fantastical: in this case, soothing but logically inconsistent ideas. But unlike with unicorns, the United States' China-policy excursions into the realm of make-believe could be dangerous. Crafting a better China policy requires us to identify what is imaginary in U.S. thinking about China. Author James Mann captures some in his book, The China Fantasy.

Here are my own top 10 China-policy unicorns:

1. The self-fulfilling prophecy. This is the argument that has the most purchase over the United States' China policy. Treat China like an enemy, the belief goes, and it will become an enemy. Conversely, treat China like a friend, and it will become a friend. But three decades of U.S.-China relations should at least cast doubt on this belief. Since the normalization of relations with China, the aim of U.S. policy has been to bring China "into the family of nations." Other than China itself, no nation has done more than the United States to improve the lot of the Chinese people and welcome China's rise peacefully. And, rather than increase its deterrence of China -- a natural move given the uncertainty attendant to the rise of any great power -- the United States has let its Pacific forces erode and will do so further. The United States may soon go through its third round of defense cuts in as many years. Here is just one example of how unserious the United States is about China: As China continues to build up its strategic forces, the United States has signed a deal with Russia to cap its strategic forces without so much as mentioning China. Unless Beijing was insulted by this neglect, surely it could take great comfort in an anachronistic U.S. focus on arms control with Russia. But despite U.S. demonstrations of benevolence, China still views the United States as its enemy or, on better days, its rival. Its military programs are designed to fight the United States. The self-fulfilling prophecy is far and away the most fantastical claim about China policy and thus the No. 1 unicorn.

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2. Abandoning Taiwan will remove the biggest obstacle to Sino-American relations. Since 2003, when President George W. Bush publicly chided then-Taiwanese President Chen Shui-bian on the White House lawn with Chinese Premier Wen Jiabao at his side, the United States has been gradually severing its close links with Taiwan. President Barack Obama's Taiwan policy has been the logical denouement. Arms sales have been stalled, no cabinet members have visited Taiwan since Bill Clinton's administration, and trade talks are nonexistent. There is essentially nothing on the U.S.-Taiwan policy agenda. The reaction from China? Indeed, it has moved on. But rather than bask in the recent warming of its relationship with Taiwan, China has picked fights with Vietnam, the Philippines, Japan, South Korea, and India. It does not matter what "obstacles" the United States removes; China's foreign policy has its own internal logic that is hard for the United States to "shape." Abandoning Taiwan for the sake of better relations is yet another dangerous fantasy.

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3. China will inevitably overtake America, and America must manage its decline elegantly. This is a new China-policy unicorn. Until a few years ago, most analysts were certain there was no need to worry about China. The new intellectual fad tells us there is nothing we can do about China. Its rise and America's decline are inevitable. But inevitability in international affairs should remain the preserve of rigid ideological theorists who still cannot explain why a unified Europe has not posed a problem for the United States, why postwar Japan never really challenged U.S. primacy, or why the rising United States and the declining Britain have not gone to war since 1812. The fact is, China has tremendous, seemingly insurmountable problems. It has badly misallocated its capital thanks to a distorted financial system characterized by capital controls and a non-market based currency. It may have a debt-to-GDP ratio as high as 80 percent, thanks again to a badly distorted economy. And it has created a demographic nightmare with a shrinking productive population, a senior tsunami, and millions of males who will be unmarriageable (see the pioneering work of my colleague Nick Eberstadt).

The United States also has big problems. But Americans are debating them vigorously, know what they are, and are now looking to elect the leaders to fix them. China's political structure does not yet allow for fixing big problems.

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4 (related to 3). China is America's banker. America cannot anger its banker. In fact, China is more like a depositor. It deposits money in U.S. Treasurys because its economy does not allow investors to put money elsewhere. There is nothing else it can do with its surpluses unless it changes its financial system radically (see above). It makes a pittance on its deposits. If the United States starts to bring down its debts and deficits, China will have even fewer options. China is desperate for U.S. investment, U.S. Treasurys, and the U.S. market. The balance of leverage leans toward the United States.


5. America is engaging China. This is a surprising policy unicorn. After all, the United States does have an engagement policy with China. But it is only engaging a small slice of China: the Chinese Communist Party (CCP). The party may be large -- the largest in the world (it could have some 70 million members). The United States does need to engage party leaders on matters of high politics and high finance, but China has at least 1 billion other people. Many are decidedly not part of the CCP. They are lawyers, activists, religious leaders, artists, intellectuals, and entrepreneurs. Most would rather the CCP go quietly into the night. America does not engage them. U.S. presidents tend to avoid making their Chinese counterparts uncomfortable by insisting on speaking to a real cross-section of Chinese society. Engagement seen through the prism of government-to-government relations keeps the United States from engaging with the broader Chinese public. Chinese officials come to the United States and meet with whomever they want (usually in carefully controlled settings and often with groups that are critical of the U.S. government and very friendly to the Chinese government). U.S. leaders are far more cautious in choosing with whom to meet in China. The United States does not demand reciprocity in meeting with real civil society -- underground church leaders, political reformers, and so on. China has a successful engagement policy. America does not.

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6. America's greatest challenge is managing China's rise. Actually, America's greatest challenge will probably be managing China's long decline. Unless it enacts substantial reforms, China's growth model may sputter out soon. There is little if nothing it can do about its demographic disaster (will it enact a pro-immigration policy?). And its political system is too risk averse and calcified to make any real reforms.

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7. China's decline will make our lives easier. China's decline may make the challenge for the United States more difficult for at least a generation. It could play out for a long time, even as China grows more aggressive with more lethal weaponry (e.g., what to do with surplus males?). Arguably, both Germany and imperial Japan declined beginning after World War I and continuing through the disaster of World War II. Russia is in decline by all useful metrics. Even so, it invaded a neighbor not too long ago. A declining, nuclear-armed nation with a powerful military can be more problematic than a rising, confident nation.

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8. America needs to extricate itself from the "distractions" of the Middle East and South Asia to focus on China. This is a very popular unicorn among the cognoscenti. But how would this work? As Middle Easterners go through a historic revolution that could lead to the flowering of democracy or the turmoil of more extremism, how does America turn its attention elsewhere? Is it supposed to leave Afghanistan to the not-so-tender mercies of the Taliban and Pakistani intelligence? This view is particularly ironic given China's increased interests in the Middle East and the U.S. need for a partnership with India to deal with China. The United States has no way of creating the kind of order it wishes to see in Asia without exerting a great amount of influence over the oil-producing states in the Middle East and by allowing India to become tied down in a struggle in South Asia. America is the sole superpower; its foreign policy is interconnected. "Getting Asia right" means "getting the Middle East and South Asia right."


9. America needs China's help to solve global problems. This is further down on my list because it is not really a fantastical unicorn. It is true. What is a fantasy is that China will be helpful. The United States does need China to disarm North Korea. It does not want to, and North Korea is now a nuclear power. The same may soon be true with Iran. The best the United States can get in its diplomacy with China is to stop Beijing from being less helpful. It is a fact that global problems would be easier to manage with Chinese help. However, China actually contributing to global order is a unicorn.


10. Conflict with China is inevitable. A fair reading of the nine "unicorns" above may lead to the conclusion that America is destined to go to war with China. It may be a fair reading, but it is also an inaccurate one. Sino-American relations will be determined by two main drivers -- one the United States can control, one it cannot. The first is the U.S. ability to deter aggressive Chinese behavior. The second is how politics develop in China. The strategic prize for Washington is democratic reform in China. Democracy will not solve all Sino-American problems. China may be very prickly about sovereignty and very nationalistic. But a true liberal democracy in China in which people are fairly represented is the best hope for peace. The disenfranchised could force their government to focus resources on their manifold problems (corruption, misallocated resources, lack of a social safety net). The United States and the rest of Asia will certainly trust an open, transparent China more, and ties would blossom at the level of civil society. Historically, the United States has almost always been on China's side. It is waiting patiently to do so again.