|
During
your recent visit to the Middle East you asked me for a brief statement
of why, with Foundation budgets going sharply downward, we should
continue to work in an area which has recently so greatly benefited from
increased oil revenues. I found it necessary to review the broader
questions of why the Foundation works anywhere abroad and what our
comparative advantage in overseas work is, as compared with other people
in the development field. These are familiar questions so they are
treated rather summarily in what follows. Then I address why the Middle
East is important to Foundation objectives, and finally what the
Foundation can seek to accomplish in working with the wealthier states
of the region.
I.
Why do we work anywhere abroad?
This
question has been dealt with recently in the paper on “The Foundation
in the Less Developed Countries - Decade of the 70’s,” Mr. Bundy’s
statement in the 1972 Annual Report and your own memo to Mr. Bundy of
May 14, 1974. One could summarize that the Foundation, in seeking to
increase human welfare, has decided to work to alleviate a number of
problems that are international in nature, particularly:
- the
world food supply;
- the
rapid increase in world population;
- the
deterioration of the world’s environment;
- various
aspects of international order, such as international economic
institutions and the rate of arms build- up;
- development.
There
is a definitional or at least a semantic difficulty here. Development is
a process that involves food production, population curtailment,
environmental issues and much else. Work on these three fields is part
of our development program. In addition to our interest in them as part
of the development process, we have a worldwide concern for these
issues: they concern us in developed countries, and they would concern
us in underdeveloped countries even if we had no overseas development
program. They are conceptually distinct program objectives, but
operationally the line is generally not visible. Nevertheless, the
fact that these objectives are distinct affects the amounts allocated to
those subjects under our development program, and sometimes it affects
the form of program adopted.
The
development problem is generally characterized as a concern for poor
people of the world and this, in turn, raises the question which prompts
this paper: Why should the overseas development program continue to
use resources in countries which are no longer poor? I am rather
uncomfortable when the development process is described largely in terms
of increasing wealth or alleviating poverty. A satisfactory definition
of development has not yet been written, however, so I hope you bear
with me through one more attempt to define my own credo.
As
population densities surpass the carrying capacity of the land used for
subsistence agriculture, and later as demand increases for devices
offering greater security and personal convenience, societies require
the ability to invent and employ new technologies. Technologies can be
classed according to their source of power, for example, human power,
animal power, electric power, steam power, nuclear power, etc. Each form
of technology requires a corresponding form of social organization in
order to produce and make use of it.
When
a society adopts a new form of technology, either through its invention
or transfer from elsewhere, it is obliged to alter many of its social
institutions. This change, involving as it does a redistribution of
status, wealth and occupation, is a rather difficult process. The
difficulty involved is a function of at least three factors and probably
more: the strength and rigidity of the existing culture, the size of the
technological leap, and the rate at which the new technology is
introduced.
The
society that invents a new technology may have less difficulty in
adjusting to its use than a society that adopts the technology from
elsewhere. This is because the introduction of an invented technology is
likely to be gradual, while transferred technology is often introduced
with a suddenness that creates havoc within many basic social
institutions. In the present era, western technology has been found to
be irresistible. At the same time it is incompatible with the existing
institutions of many of the world’s peoples. It requires, for example,
a much higher mass educational level than has ever been possible (or
even desirable) before in world history. Mass education in turn creates
pressures for forms of government more responsive to popular demands
than have existed in traditional societies. More fundamentally, modern
technology requires a change in traditional beliefs systems. The
supernatural played a much greater role in earlier societies than is
compatible with a modern society.
Much
attention has been paid to the initial requirements for the introduction
of modern technologies to countries still using animal-powered
technology. In the agricultural field, for example, remarkable success
has been achieved in adapting western cereals technologies to the
agro-climatic conditions of other parts of the world. Some attention has
been paid to the institutional change required to implement these new
technologies. For example, institutions have had to be devised which can
supply the necessary ingredients like fertilizer, pesticides and
knowledge to the farmer, and markets have had to be created so that he
can sell his produce and buy other items of interest to him with the
proceeds.
Scholars
are beginning to study the income distribution effects of the new
technologies, but little work has so far been done in seeking to
understand many of the other inevitable side effects of this remarkable
change in production patterns. These side effects, not just from altered
agricultural technology but from the other machines and processes
imported from the West, will involve changes in the most fundamental
human institutions, including family structure and the framework of
individual beliefs. Indeed, they are so far-reaching that one is
forced to consider whether the best strategy for the Foundation is to be
concerned with the adaptation and introduction of the technology itself
or rather, recognizing the inevitability of its introduction, to look
ahead to the impact of its coming on fundamental social institutions.
All
this is a long way of expressing my discomfort with the tendency to
define the Foundation’s development program objectives in terms of
poverty. Poverty is a social condition that occurs when a growing
population has been unable to invent or assimilate a form of technology
that will allow them to produce more for their own needs or more which
can be marketed to others. An organization devoted to increasing human
welfare could not ignore the plight of people living in poverty, but
only in some circumstances can we hope to do much about that condition.
Our efforts may be better directed to achieving a greater understanding
of the development process, to devising means of reducing institutional
obstacles to development, and to alleviating the inevitable conflicts
that accompany it.
II.
Comparative advantage of the Foundation in overseas activities
Our
three main advantages with respect to others in the international
development field seem to me to be time perspective, professionalism and
operational flexibility.
A.
Time Perspective
The
Foundation has a great advantage in being able to concern itself with
problems of the middle distance rather than the immediate or the
eternal. One of the characteristics of governments is the necessity that
they deal with problems of the moment, often in ways that ignore
longer-term interests of their society. And one of the prominent
characteristics of underdevelopment, in both the personal and societal
senses, is the difficulty of deferring gratification. The economists
deal best with this subject by using the concept of the social discount
rate, which varies largely in accordance with the urgency of a
society’s needs. This is an inadequate concept for broader use,
however, because it does not explain the individual behavioral patterns
of people in underdeveloped countries, which generally tend toward
short-run gratifications. In my opinion, an understanding of the reasons
for this phenomenon would itself repay intensive study. But my concern
here is with the Foundation’s value as an institution inclined to take
the longer view.
Our
time perspective is revealed, of course, in our concentration on
research, planning and training activities. These are all forms of human
activity akin to saving in the economic sense, that is, deferring
consumption in hopes of greater future usefulness.
B.
Professionalism
Some
other international institutions support similar functions. Our
advantage with respect to them lies in our ability to resist the more
immediate demands of our client governments and our parent government.
We are not, in other words, merely responsive to what others wish us to
do but are able to maintain a certain critical distance from even the
most compelling of immediate human and social needs. The accumulation of
experience over the past two decades, and our association with most of
the thought and action institutions seeking to deal with the problems of
developing countries, have given the Foundation a strong comparative
advantage in working in this field. This subject has been well
articulated in the several program documents referenced above, under the
term “networking.” A good deal more could be done in my opinion to
exploit our knowledge and experience (c.f. my memo of April 1, 1974 on
the need for a Ford Foundation Development Research Institute), but I
believe our record is far better than that of bilateral or U. N.
agencies in this regard.
C.
Operational Flexibility
These
characteristics of the Foundation’s pattern of work have been rather
thoroughly discussed elsewhere. They have to do with such things as the
Foundation’s ability to make a timely response to project
opportunities, to take decisions in field offices, to command a high
level of staff quality, to stay in or get out of projects on a basis of
objective judgments, and to be relatively free from political pressures.
It need only be said here that the first two of these assets have shown
signs of erosion in the past few years and that process should not be
allowed to get out of hand.
III.
Why work in the Middle East?
First,
it is important to get some sense of the magnitude of the oil wealth in
the Middle East and its dispersion among the countries of the region.
Jared Hazleton has prepared a useful paper with statistical annexes on
the rise in the oil revenues and the implications for the Foundation’s
program; it is attached. Of particular interest is the speed with which
oil wealth is rising. In 1960 the seven Middle Eastern OPEC countries
(Abu Dhabi, Iran, Iraq, Kuwait, Libya, Qatar, Saudi Arabia) realized
only 1.4 billion dollars from petroleum exploitation. By 170 this had
increased to 5.3 billion dollars and last year this went up to 16
billion dollars. In 1974, revenues are expected to rise to 62.4 billion
dollars and by 1980 they are likely to be in the range from 111 to 156
billion dollars. The per capita incomes of these seven states will be
high, and in some cases extraordinarily high, but it may be noted that
in 1972 they tended to be in the middle range. Saudi Arabia and Iran had
a per capita income of around $600 level, Iraq around $300.
In
general, the more populous Arab states in the region do not benefit
directly from petroleum revenues. Egypt, with its 35 million people, has
a per capita income of around $200, the Sudan, with 17 million, and the
tiny but overcrowded Yemen, with 7.5 million, are close to the $100
income per person level.
The
flow of resources across national boundaries in the Middle East is a
complex subject, but it can safely be said that the increased financial
reserves of the oil states do not automatically redound to the advantage
of the less fortunate states in the region. Egypt, for example, will
need to overcome a legacy of nationalization and non-payment of loans
before wealthier states will be prepared to invest or loan major capital
there. On the other hand, Kuwait has been both generous and responsible
in making its funds available to other Arab states for the past several
years through the Kuwait Fund for Arab Economic Development. The size
of this fund has increased recently from $300 million to $3 billion. A
new Arab Economic Development Bank, also based in Kuwait but with funds
subscribed from other sources as well, has sprung up and promises to be
a significant source of capital for the states of the region. Other
initiatives less well advanced include an Islamic Development Bank, and
Arab contributions to the African Development Bank.
The
Arab states have been less successful in finding mechanisms to devote
their wealth to regional social and cultural purposes, such as
university development, research, and training. The Arab League was
created shortly after the Second World War and has a set of specialized
agencies paralleling U. N. development agencies, but these are not in
good repute throughout the region, partly because of persistent Egyptian
domination of the League and partly because of the dismal track record
of its organizations. In 1972, President Sadat publicly called on the
oil-rich states to establish funds for social purposes and cited the
Ford Foundation as a model, but to date this idea has not been acted
upon.
The
case for working in Egypt and the other poor countries of the region is
thus the same as that for working in Asia or Africa, but there remains
to be made the special case for working with the wealthy oil states and
the middle-income countries such as Lebanon, Jordan and Syria. It seems
to me there are three arguments to be made here, having to do a) with
international peace and stability, b) with development and c) with the
opportunity in this situation to learn about development.
A.
International Peace and Stability
In
1974 one need not dwell on the impact of Middle Eastern events on peace
and progress in other parts of the world. This has always been a
strategically important region because of its geographical location.
Now, in addition to being a crossroads of the world, the Middle East is
also the site of the Arab-Israeli conflict, one of the most intractable
problems of our times, and the source of supply of a staggering
proportion of the world’s energy resources. An organization devoted to
human welfare could hardly ignore this part of the world at the present
time, but that does not, of course, mean that it should automatically
concern itself with the development problems of the wealthy states.
B.
Development
If
the earlier comments on development problems are accepted, it may be
seen that the oil-rich countries are themselves embarking on one of the
most dramatic and difficult developmental periods of modern times. The
pace of economic growth and the importation of the latest technology,
occurring now and accelerating in the immediate future, is unparalleled
in history. At the same time, the countries in which this growth is
occurring were until very recently peopled largely by nomads who were
sustained in their arduous existence by the most rigid and doctrinaire
schools of Islamic thought. The Wahabis of the Arabian Peninsula and the
Sanusis of Libya are renowned for the tenacity with which they have
clung to the literal words of the Prophet, as well as for their
qualities of survival in a desert habitat. Surely the stage is set for
the most profound engagement of the forces of tradition and
modernization that we have yet seen. It would be a subject of
fascination even if the international economic institutions of the world
were not so likely to be deeply affected by its outcome.
The
Foundation should, in my opinion, strive to bring all the experience and
wisdom at its command to aid the development process in Saudi Arabia and
in the other oil-rich states. Nowhere is it more important that the
development process be an orderly one. Operationally, it will not be
easy to be effective in contributing to development in these areas,
however. These governments do not wish to be the objects of philanthropy
and they have only a partial understanding of the objectives and the
abilities of an organization such as ours. We are separated by a vast
cultural and language gap, and bridges across that chasm need to be
grounded in the kind of political trust that is difficult at present for
an American organization to establish in Arab countries.
C.
Opportunity to Learn
This
memo began with the lament that the development process is still so
little understood. Generally, the human misery present in underdeveloped
countries has compelled primary attentions to the basic human needs for
food, clothing, shelter and health. Educational and organizational
competence required to meet these pressing needs receive due attention,
but many underlying social and cultural factors affecting the
development process have tended to be ignored.
The
oil-rich states present us with an opportunity to observe the
complexities of the development process when the financial constraint is
removed. Observation of this phenomena could well lead us to alter our
priorities even in the poorest developing countries.
IV.
What can the Ford Foundation seek to accomplish by working in
the wealthy Middle East states?
We
are really only beginning to work with the rich states of this region.
It is true that for eight years we had a large-scale jointly funded
public administration program in Saudi Arabia, but it did not really
yield a model for our future activities. That project was largely an
attempt to transfer administrative structures and techniques directly
from American governmental experience to Saudi Arabia. After eight years
and $6 million, $5 million of which came from the country itself, some
accomplishments not unexpectedly can be found, but the major
opportunities inherent in that project to adapt, innovate and learn were
for the most part missed. The legacy that remains, insofar as current
operations are concerned, are a few valuable Saudi contacts, one good
public administration training center, and a reputation for fiscal
integrity. The University Rector still tends to think more about what we
can do for his accountants than for his professors, but that perception
will presumably change with time.
Starting
nearly from scratch, therefore, we can talk more about what we seek to
do than about what has so far been accomplished. It seems to me there
are four main themes on which we should be working:
- To
reduce wastage of the world’s resources in the internal
development processes of the rich states;
- To
help focus attention on problems of the middle distance;
- To
find ways of making use of the financial resources of the wealthy
states for the development of the poorer countries of the region and
of the world;
- To
foster communications and understanding between the wealthy Arab
states and the international community.
These
are, of course, directions in which to work and are not attainable or
even measurable objectives. We have moved somewhat beyond the wishful
thinking stage, however, and can cite examples of the type of activities
we are embarking upon under each heading.
A.
Reduction of Wastage
The
diseconomies of small scale are likely to typify development efforts
in the Gulf States and Saudi Arabia, because their populations are
small and in the Saudi case scattered, and because they have little hope
of producing anything other than oil very cheaply. In addition to the
scale problem, newly wealthy people of the peninsula have difficulty in
choosing among those who would offer services and goods. On the other
hand, the purveyors of services and goods generally know so little about
their would-be clients that they may in all honesty not recognize that
their recommendations may be extravagant or unsound.
The
net result of this situation is a waste of the world’s resources
that seems likely to grow in importance. One pattern of waste is
frequently observed. Because it is relatively easy to let contracts for
construction and equipment, major investments are being made in fancy
buildings and the latest gadgets, with little thought given to the
availability of staff to man the facilities once completed.
Consequently, fully equipped hospitals and modern researeh laboratories
sometimes stand empty, never used.
The
Foundation can sometimes help to rescue such investments. Haradh, a
$20 million irrigation scheme, built in the desert to be turned over to
the Bedouins, was completed after six years’ engineering work in 1971.
The Bedouin recipients of this beneficence had not been consulted or
studied, so they did not show up and volunteer to become peasants. The
Foundation helped the government recruit a manager from the United
States and turn the scheme at least temporarily into a large-scale
commercial farm with state ownership.
In
another case several of us were shown through a new $6 million
agricultural laboratory with the latest equipment and asked for
suggestions not only of who might staff it, but to what use it might be
put. The facility was constructed on the recommendation of an
international agency and not of equipment merchants. We were regrettably
unable to offer a solution to that conundrum. It appeared most likely
that a solution to most of the problems that could be attacked with this
fine facility would not be worth staff costs, even if the building and
equipment were considered sunk costs and not a charge on operations.
These
are extreme examples, but obviously the savings can be considerable if
reliable professional advice is available in the planning stages of a
project. In the past six months, the Foundation has provided
pre-investment consultation on the following:
1)
Educational Television. The Saudi Government contracted for a
feasibility study of the introduction of ETV into the educational system
on a pilot basis. An American firm recommended a five-year pilot project
that would cost between $20-25 million to implement. Through the good
offices of David Davis, specialists from several countries screened the
feasibility study; as a result the contracting company was asked to go
back and make modifications in its report.
2)
The University of Riyadh requested a review of its arehitectural
drawings for a new University library about to be constructed. A
librarian from the University of Colorado and an arehitect from the
University of Jordan conducted this review, with the result that the
original drawings have been rejected and the University now has a better
idea of what it needs from a library building.
3)
Pre-selection testing for study abroad. The Ministry of Education
in Saudi Arabia has been accustomed to selecting candidates for overseas
study on the basis of position and personal recommendation rather than
objective testing. The Foundation arranged for a demonstration of
selection tests by the Office of Tests and Measurements at AUB,
following which the Ministry offered AUB a contract for the testing of
250 candidates. The Ministry has agreed to contract with AUB for this
service annually.
B.
Middle-distance Problems
This
subject is much related to the preceding one in that the best way to
avoid waste is, of course, to plan. In the Gulf, the Foundation has
had a manpower-planning specialist based in Bahrain for a year. It was
hoped that he would contribute not only to the rational development of
Bahrain’s training institutions but would also participate in
Gulf-wide planning for shared facilities. He has to date succeeded in
compiling a comprehensive survey of the manpower situation in Bahrain,
in having his methodology replicated in two other Gulf states, and in
being invited to participate in planning a conference on manpower
utilization in the Gulf, which will be sponsored by the United
Nations-supported Arab Development Institute of Kuwait next February.
Gulf-wide cooperation depends more on political factors than on
technical knowledge, of course, but to date the pattern has been
distinctly optimistic.
In
Saudi Arabia, the Foundation’s Assistant Representative cum Project
Specialist is helping to design and install a reliable unified
information system for planning and management purposes in the Ministry
of Education. He has been assisted in this process by local consultants
selected by the Foundation in Cairo. The Saudi Government will meet
development costs for this system through a contract with the American
University in Cairo.
Next
October an economist with a background in environmental work will join
the Beirut office staff. High among his priorities will be to find ways
of inducing investment planners on the peninsula to consider the
environmental impact of their decisions.
C.
Using Oil Funds for Regional Purposes
The
anticipated accumulation of large sums by the governments of the
peninsula leads one to hope that a modern version of the Islamic
tradition of charitable trusts called “Awqaf” will be revived for
secular purposes. Of primary importance to the Foundation is the
investment by Saudi Arabia and Kuwait in meeting the recurrent costs of
a new international agricultural researeh center for the semiarid
lands. Such investments could indirectly, but almost immediately,
relieve the Foundation of a research cost and reinforce our belief that
our work in agriculture is desired and demanded by the governments of
the region.
In
addition, the Foundation has suggested to the Government of Saudi Arabia
that it could consider establishing inter-Arab special funds for such
purposes as financing large-scale translations of scholarly works,
library development throughout the Arab world, pre-school children’s
educational programs on television, and scientific research on solar
energy. The first of these items is to be presented immediately to King
Faisal for his concurrence and the others are under consideration at a
lower level.
The
limiting factor in these cases may well be the shortage of managerial
manpower in Saudi Arabia and the other wealthy states. They may not wish
to create a large fund and have it managed by nationals of other Arab
states, even if they would accept an inter-Arab board of directors.
Another
way in which the oil states can benefit regional institutions is to
make use of their services on an institutional contract basis, rather
than to contract for services with a European or American firm or hire
specialized personnel away from the Arab institutions on individual
contracts. We have recently brought the Ministry of Education in Saudi
Arabia together with the Science and Mathematics Education Center at AUB,
a center set up with Foundation funds, with the result that a one-year
$90,000 contract has been offered and accepted. It is anticipated that
this will be expanded and renewed for the next three years. SMEC will
not only perform a service under this contract but will continue to
broaden its experience with the educational systems of the Arab world
and hence deepen its own knowledge and expertise.
D.
International Communication
It is
of great importance that communications on many levels between the
wealthy Arab states and the West remain open. It is, of course, also
important that the contacts yield acceptable results in so far as
possible; that is, that they are not plagued by too frequent disappointments.
It seems to me there are two reasons why disappointments are likely to
be frequent. The first is that the Arabs have little basis on which to
discriminate among western institutions so they are likely to get hooked
up with the wrong people. The second is that the cultural gap between
the United States and Saudi Arabia is so great that even with the best
connections the U. S. has to offer, there are bound to be frustrations
and disappointments on both sides.
The
Foundation can be useful in steering Saudi officials into the right
channels when seeking American services, and can perhaps on some
occasions helpfully suggest other sources of expertise that would come
closer to filling the bill.
Several
examples of the first type of opportunity have already arisen this year.
Fahad Dughaither, Director of the Institute of Public Administration,
wants assistance in establishing a management training program of very
high quality. In Ted Smith and Frank Sutton we have two of the world’s
most up-to-date experts on the field, so we have asked their help in
designating contacts for Dughaither when he visits the States this
summer.
The
Saudi Ministry of Education is also interested in identifying an
American institution that can assist in the revision of curricula and
the production of materials and technical teaching aids in the fields of
science, mathematics and the English language. Here again, with Champ
Ward’s help, we may be able to steer them to the most competent people
in the States for this purpose; but we will also be looking for a way to
relate the experience and expertise of SMEC and the English Language
Institute at AUC to Saudi needs. Having helped to develop these
institutions over the past five years we are, of course, interested in
seeing their skills utilized throughout the region; but beyond that we
believe that these regional centers, with Arabic-speaking staff, have
more relevant experience and accessibility to Arab problems than have
American institutions, however high their quality. SMEC and ELI have a
limited capacity to meet Saudi needs for assistance, given their limited
staff numbers, but we will try to build them into any package of
external assistance which results.
The
Arab Cities Organization is a regional association of city governments,
which has survived for fifteen years with modest budgets. The Government
of Saudi Arabia is now prepared to put up $ 2 million for a research and
training center and the ACO is very interested in securing outside
guidance in setting up a program for this new center. We are helping to
arrange a trip for three ACO officials so they can visit centers in
Europe and the United States to get some idea of the state of the art.
The ACO will of course, finance any continuing relationship that
emerges.
V.
Summary
This
memo seeks to make the case for working in the oil-rich Arab states and
to offer examples of a few initiatives already taken. In our kind of
business it is difficult to draw up a balance sheet to show the
profitability of one course of action as compared with another. But it
seems to us in the Middle East that the social stresses and strains of
the development process in the newly wealthy Arab states will be as
great or greater than in any region in which the Foundation works; that
the importance to world peace and international order of the resolution
of these development problems is as great or greater in these countries
as elsewhere; and that the Foundation’s principal assets of
experience, competence and linkages can be used with as great effect and
at less cost in these states as elsewhere.
We
do not believe it will be operationally as easy to function effectively
in these countries as it is with less affluent clients, because of
political and cultural differences and the fact that they have no real
need for our money. Nor will our activities be without cost to the
Foundation. We will often need to support exploratory ventures and to
pay our own way in terms of staff, salary and support costs.
Currently,
we are not spending very much in these countries. We have one man in
Riyadh and one in Bahrain. They are performing useful professional
services, serving as conduits to the rest of the Middle East staff, and
establishing the credibility of the Foundation as a development agency.
In time greater expenditures should be anticipated, especially if it
becomes possible to assist these countries to use some of their funds to
help poorer countries. As Hazleton points out, we may find opportunities
to provide technical assistance to both donor and recipient countries in
the Middle East, assisting the donor to manage an aid program, and the
recipient to utilize the funds. But, lest this heady vision bemuse us,
it is wise to end with Hazleton’s important caveat:
“We
should not over emphasize the amount of ‘leverage’ that the
Foundation can exercise over the funds of the oil-rich countries (or,
for that matter, over any external funds). Our efforts to improve
managerial performance, administrative mechanisms, and development
policies take place, by necessity, at a level within government which
prevents our having access to the principal decision-makers. Our modest
funds are insufficient to buy us a seat at the table for the melon
cutting! In short, we can
assist in seeing that the funds allocated to domestic development or
external assistance get used more effectively and more efficiently than
they would have been used in our absence. However, we are unlikely to
play any significant role in making the initial allocation decisions.
The justification for our activities is, and I believe should be, not
that they permit us to influence vital decisions, but rather that they
play an important role in assisting countries to fulfill their own
aspirations for development.”
|
