We were honored to have Harald Leibrecht, coordinator of transatlantic cooperation of the German government, speak recently to DCFR and American Council on Germany members. His topic of discussion was Germany’s energy policy and its transition to renewables. Nuclear power had been a sore spot with the German people for some time, but a renewed disapproval swept the country after the Fukushima nuclear plant meltdown in post-tsunami Japan.

Germany understands the tradeoffs of abandoning nuclear power completely after 2022, in just ten years. And Leibrecht acknowledged it is harder to actually decommission a plant versus building one anew. Part of the German rationale for embracing more renewable energy is to promote energy independence and hedge against their position as an importer of energy resources, save the brown coal supplied by the eastern part of the country. Another motivation for their pro-renewable stance is to reduce carbon emissions’ burdens for future generations as part of their climate strategy. This complements their pact with greater Europe on cleaning up and as a major global economic powerhouse with responsibilities beyond their borders. Germany also plans to raise its profile as a global green-energy tech leader, with expectations to be one of the most energy efficient countries. It’s a green-growth, low-carbon energy strategy.

This German energy experiment is “unchartered territory” as Leibrecht mentioned but they have managed to keep the lights on thusfar. If anyone can do this, it’s the Germans.

Urbanization is a significant driver of future economic opportunities and growth in developing countries. Many developed-country cities have GDP as high as entire countries. This brief explores the underlying chacteristics of cities and their growth prospects given the emerging science and theory of cities. Dr. Geoffrey West of the Santa Fe Institute offers insights about his breakthrough research revealing the “universals” of cities and how we should be positioning cities in the future.

Download the brief. 

DCFR was fortunate to host Council on Foreign Relations Senior Fellow for Middle Eastern Studies Dr. Steven Cook, yesterday. He came to discuss his body of work on Egypt and his latest book, “The Struggle for Egypt: From Nasser to Tahrir Square.” One amazing point that pretty much summed up his authority: He was there. Dr. Cook was in Tahrir Square during the events that brought down the Mubarak regime. It’s not just that he was there the day many thousands defied the authoritarian regime, Cook also has a long-standing history with and first-hand knowledge of Egypt. Cook is an expert on Egypt, that just seems to have this uncanny penchant for being in the right place at the right time, from what we learned of his dealings and adventures in Egypt.

A few of his cautionary words were striking. First, he projects a long good-bye between the U.S. and Egypt, as the U.S. is not particularly popular in Egypt after supporting Mubarak for many decades. A new relationship will have to be forged with a delicate hand by the U.S. Second, the Egyptians are about to write a new constitution — just one year after 60 years of authoritarian rule. This is 4G fast by any standards, considering the country and its leadership very recently collapsed. And finally, with Egypt’s economy collapsing, current power brokers will need to find a vision for the development path of Egypt that makes sense. They do not currently have a Deng Xiaoping pro-development champion, as one DCFR member noted.

Dr. Cook also writes the blog, “From the Potomac to the Euphrates” at CFR.

After months in preparation for DCFR’s second Series “D” program, the panel on “Prospects for Cities” with Santa Fe Institute’s Geoffrey West and SMU Cox’s Maria Minniti concluded and left many realizing that this work on cities has only just begun. Essentially Dr. West’s quest is to develop a theory on cities — their structure, dynamics and growth. In a post-program interview, West commented that cities seem so individual but they have many universal fundamentals, as his research revealed. But at their core, ‘cities are the people, not the buildings, companies or roads,’ though they are often identified as such. Cities are also not arbitrary. Those planning for their growth or wishing for change need to understand the fundamentals which underly cities. This was what we attempted to decipher from the panel presentations.

Several ideas, to date, stand out:

• Innovation is moving much faster than in era’s past. With life moving at a faster pace than ever before, innovations come faster. But this cannot continue in perpetuity. Systems break down.

• Changing directions for a city requires decades, which is not the usual tenures of elected officials.

• Cities, as a socio-economic phenomenon, are a physical manifestation of the very networks which comprise human activity and interactions.

• Cities are facilitators of human interaction.

• West suggested we needed to be thinking about cities in a structured way about 75 years ago.

• Cities are a great lesson in economies of scale.

• Entrepreneurs are a vital part of economic growth, and the necessary conditions (and lack of obstructive policy) must exist for their activity to take-off.

• Urbanization on a global scale will present opportunities and problems. Well-run and well-planned cities can be a solution, but understand and plan for the dark side of growth, such as crime, pollution, and health issues.

West’s research can be seen as ground zero for the many institutes, think tanks, and government initiatives attempting to understand and harness the growth of cities. Slides from the panel are coming soon, as well as a Global Themes brief. Check on DCFR’s slideshare page.

Yesterday, DCFR had the honor of hosting Senator John Cornyn. A frequently asked question from several members was about Iran and its nuclear capabilities. The Senator responded to one question about the U.S.-Europe relationship; he affirmed that our economic and foreign policy interconnectedness is and will remain an important fact for the U.S. The ties that bind us are unequivocal. 

Also cited were statistics about U.S. competitiveness relative to China. On several leading competitiveness lists, the U.S. topped China. He noted projections that China’s labor costs for manufacturing in the future may be on par with the rural factory in America.

In Cornyn’s framing of his foreign policy speech, he alluded to four key myths that are driving many Americans’ (and others’) perceptions of the U.S’s leadership role in the world. His remarks were sobering and poignant. He correctly highlighted the distinction between what media will cover because of the story factor versus what is happening in reality. He reminded us to pay attention to the facts of America, a pretty good economic and foreign policy tale in itself.

Dallas’ metropolitan GDP is roughly the size of Argentina’s economy. The GDP of New York is a few hundred billion dollars less than Canada’s. Chicago is likened to Switzerland, and so on, according to an Atlantic article. The growth of cities is somewhat predictable according to Professor Geoffrey West of the Santa Fe Institute. When West first analyzed the economic productivity of American cities, he and fellow researcher Bettencourt found that cities become more efficient as they grow. For example, as a city doubles in size, on virtually every measure of productivity —construction spending or bank deposits— measures of economic activity increase by approximately 15% per capita. (Perhaps this explains why certain types of firms overbuild and/or over-expand when they believe growth is go, go, go. They are ignoring these scaling laws.)

The expansion of cities leads to expanding economies. Ever-increasing urban growth is capturing the imaginations of academia and government. In early 2009, the White House established the first Office of Urban Affairs. There is much that policymakers, firms and planners can learn from the laws that govern the growth of cities. But the expansion of cities creates a tension between growth and resources. This story is much deeper and complex. What is the impact of innovation, knowledge sharing, and how people behave to threats and opportunities? How fast is life in the city moving?

This program is part of Series “D” focusing on development issues of developed and developing countries.

Peace on Earth

CFR’s Stewart Patrick, director of the International Institutions and Global Governance program, spoke to DCFR Monday about fragile states, global threats, and international security. He said that failed states are considered by many to be the source of major security threats, but study really shows that they create misery mainly for their own people. A deep study of failed states shows that most transnational problems have their origin in wealthier states (like Russia and Venezuela). Patrick sought to go beyond common misconceptions about “failed or failing states” in his new book. (Though Patrick prefers the term “fragile state” over “failed,” a nuance highly appreciated by DCFR members. ‘Failed’ carries many negative connotations and creates its own political baggage and discord for those who might lend a helping hand.)

One member had this takeaway from his talk: ‘Many states that would not be considered failed states, like Pakistan and Mexico, have geographic areas within them that are essentially autonomous, ungoverned, and perhaps ungovernable.’ Also suggested was that perhaps, the post-cold-war era can be called the “era of the failed state” since old models of state sovereignty are increasingly being found wanting. While the external trappings of state sovereignty, like borders, flags, pomp and circumstance, are relatively easy to create, the inner structures that make states real — like central banks, a strong civil service, a strong sense of cultural/national identity—can take decades or centuries to evolve.

For more about Patrick’s new book, “Weak Links: Fragile States, Global Threats, and International Security,” please go here. Gareth Evans, former foreign minister of Australia says, ”Stewart Patrick’s brilliantly researched book is an overdue corrective to some of the overwrought claims about the problems posed by failing, failed, and phantom states. He shows that every state situation is different, demanding its own analysis and its own policy solution. Meticulously and impressively argued.”
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Where else but DCFR can a program accommodate duel topics such as global economy and peace. Last night, we received a global financial leader, Richard Fisher, and an international humanitarian and social activist, Cristal Montanez Baylor. In his keynote address, Mr. Fisher was optimistic about the U.S. economy’s prospects but cautioned members about the need for Washington to “do the right thing” (with references from Martin Luther King and Churchill). This may not be the popular thing to do, especially in light of upcoming elections. He suggested that the social unrest in the U.S. such as the “occupy” movements are the result of people being unemployed too long, economic unjustices from the recent financial crisis, and the feeling of desperation. But ultimately, Fisher is a believer in the American Dream. He is fighting the good fight for Americans.

Our special guest Cristal Montanez, executive director of Hashoo Foundation USA, was recognized for her work as a humanitarian. Cristal leads initiatives to promote women’s empowerment, particularly through a farming project, known as Plan Bee. This initiative was the winner of the prestigious BBC/Newsweek World Challenge Competition and a Clinton Global Initiative Featured Commitment. The project empowers women in the most remote and isolated areas of Northern Pakistan by expanding employment opportunities and generating a stable source of income through the sale of high-quality honey. Girls from the families must also attend non-extremist schools as a condition.

This former Miss Venezuela is an international social activist. Cristal works in defense of Venezuelan human, political, and civil rights, and has been distinguished as one of Latin American’s most prominent humanitarians.

Our annual holiday program kicked off the season of giving in a proper way for a foreign affairs organization: recognizing outstanding individuals overseeing the U.S. economy, and by extension the global economy, and someone on the frontlines of foreign policy.  Cristal’s work impacts family’s lifetime opportunities, helps deter extremism in a practical way, and makes strides toward peace.

We also say a sad farewell to four directors that have tirelessly served DCFR: Patrick Jenevein, Ed Blessing, Lynne Novack and Tim Powers.

Last week, Technoserve CEO Bruce McNamer visited DCFR to speak about alleviating poverty through private business. In existence since 1968, Technoserve has a business model that connects local entrepreneurs in emerging and developing countries to the global economy.

McNamer says, “Our approach is novel. Our programs are initiatives that many organizations have not attempted to tackle. This particular approach to poverty is fundamentally about markets, opportunities and entrepreneurship.” Ninety-five percent of Technoserve’s employees are ‘on-the-ground’ locals, working in South America, Africa and certain Asian countries.

In a budget-constrained era, the first budget item cut is development assistance.  The U.S. government funds about 25% of Technoserve’s activities; otherwise, it is donor-funded. “Even in what are really tough times, many companies are still making pretty good money,” cites McNamer. “Profits are up for many firms. There is an increasing trend within corporations and large multinationals, in spite of the economy, toward more participation in the types of programs that Technoserve facilitates and executes.

Part of the challenge for development in some very poor countries is their inability to access the global economy. “Part of our job is to connect these entrepreneurs of the various countries to the global economy,” states McNamer. “Many of the emerging economies in which we work have weathered the financial crisis better than developed countries. In fact, you do see continued growth in countries such as Ethiopia, Tanzania, and Mozambique, growing at 6, 7, or 8% a year.” With the financial crisis however, another trend has emerged, a global spike in commodity prices. “This has both good and bad effects for the populations we work with,” McNamer explains. “Even very poor, subsistence farmers purchase food, and this negatively affects them. However, the growing global market for food ultimately will benefit the type of clients we work with. It will represent an opportunity for them to sell to global markets with products, either raw or finished, or value-added products on a scale that hasn’t before been possible. “

Their approach to private sector development is focused in a more grassroots way. McNamer concludes, “We are focused on the private sector and at the enterprise level of a particular segment of the economy, such as agri-business. With a hands-on approach, we are thinking about the scalability of our activities and how many people can be helped. It has to start with one enterprise, one entrepreneur. We start building the sector from that point—one business at a time; one farm at a time; one co-op at a time, with aspirations of sector-wide impact.”

McNamer believes the development “market” as organized today is an inefficient one for allocating resources. Comparable metrics are hard to come by among and between organization types, he remarks. Technoserve performs rigorous business analysis of its impact however.

In a new brief, the issues which intersect demographic trends are highlighted — China’s aging, growth challenges, urbanization, security in Africa and more. Eminent demographer Jack Goldstone of George Mason University leaves few place on the globe untouched in a recent interview, coinciding with the kickoff of DCFR’s 2011-12 Series “D” programs. Download the brief.