Saturday, July 2, 2016

Stateless And For Sale In The Gulf

Stateless Kuwaiti Bedouin women hold up signs in their tent camp near the Iraqi-Kwaiti borders

Last year, the United Arab Emirates (UAE) handed Semira, 19, a passport for the Comoro Islands, one of the poorest nations on earth, and told her she had 11 months to leave. Although she had been stateless all her life, Semira was born and raised in Dubai and had fully embraced its cosmopolitan culture. She has never stepped foot on the tiny, tropical islands that were to become her homeland, nor did she want to, as she has no roots or family there. She doesn’t have much of a choice, though. Since she isn't even a citizen of the UAE, she is pretty much powerless to fight the government, which is paying the cash-strapped Comoros to take stateless people like her off its hands.

Semira became stateless as a result of the UAE’s confounding policies on birthright. As she understands it, her mother came to Dubai from India to work as household help but became pregnant after her employer raped her. He then denied paternity and turned her over to the police when she was near term. In the UAE, it is illegal to have sex out of wedlock, no matter the circumstance.

After giving birth, Semira’s mother served a one-year prison sentence, which ended with her deportation to India. But because citizenship passes through the father in both India (at the time Semira was born) and the UAE, which doesn’t recognize birthright citizenship, Semira’s mother was unable to procure a passport for Semira to bring her to India. She had to leave Semira behind.

If it were not for a prison guard whom Semira’s mother had befriended while in jail, Semira may have ended up at the local orphanage and would have faced a life of poverty. Instead, the guard suggested sending her to a family member of Zayed bin Sultan Al Nayan, the former president of the UAE. According to the director of one of the orphanages in Ras al-Khaimah, with whom I spoke, some 30 percent of children from the orphanages are raised at the royal palaces and provided education, food, housing, and support. The royals consider it an act of Islamic charity and these children are commonly called “children of the Emir.” At this time, it is unclear whether Semira’s connections shielded her from deportation. She has been unreachable for the last two months, which means she could either be laying low or already in Comoros.

In my recently published book, Crossing the Gulf, I document the stories of stateless people like Semira in the Arabian Peninsula, which includes some of the largest migrant-receiving countries in the world. In the UAE, migrant workers make up 80 percent of its population. In neighboring Kuwait, migrants outnumber citizens three to one. But most Gulf States refuse to offer citizenship rights and protection to them, even to those born within their borders. It is estimated that there are over 100,000 stateless individuals in the UAE alone and over 130,000 in neighboring Kuwait.

In the past decade, the Gulf has seen an increase in female migrants from Asia and Africa who take up jobs as domestic workers, nannies, beauticians, and service workers. Under the kefala system, used by many Gulf states to govern guest labor, workers are forbidden to engage in sexual relations for the duration of their contracts. Since pregnancy gives them away, it is often only the women who are punished for breaking Kefala rules and sharia law, which criminalizes zina or sex outside of marriage. Because most women who migrate to the Gulf do so during their most fertile years, and may spend five to ten years in their host countries, this form of contractual sterilization is impossible to abide by. And although some women find themselves in consensual relationships, others are exploited and raped by abusive employers.

As a result, it is sadly common for women such as Semira’s mother to give birth in jail and then have their babies sent to an orphanage after the women are deported. Not helping matters is that both the UAE and a number of sending countries only allow citizenship to transfer through the father. But if no father claims paternity—and this is often the case because coming forward would mean facing punishment for breaking zina—the child becomes stateless. With hundreds of thousands of migrants coming to the Gulf every year, dating back to the 1980s, from places such as Bangladesh, India, Nepal, Pakistan, and Sri Lanka—countries that up until recently only permitted paternal citizenship transfer—hundreds and sometimes thousands of children are born to migrant women and left behind.
The children of migrant women are not the only ones who experience the perils of statelessness. 

There are over 100,000 stateless persons known as bidoon in Kuwait, who do not have citizenship either because of bureaucratic hiccups when Kuwait became a nation state in 1961 (a portion of them failed to register as citizens) or long-standing discrimination against those who were once nationals of neighboring countries but were absorbed by Kuwait after the borders changed. As far as she knows, Rania, 21, who is a bidoon, was born in Kuwait City to a domestic worker from Ethiopia who may have been deported shortly after giving birth. She has spent her entire life living in an orphanage in the city's outskirts, but as a stateless person, she has been unable to find a job or rent an apartment. Still, Rania sees Kuwait as her home. And she was devasted when she received a Comoro Islands passport last month and was told to settle there within a year.

“This is the ultimate in unfair,” Rania told me. “I couldn’t go with my mom to her home, and now I can’t stay in the place I call home? Why don’t people even ask me what I want?”

Semira and Rania are part of deals that UAE and Kuwait signed with Comoros in 2008 and 2016. In exchange for building roads and providing development aid to the poverty-stricken island nation, Emiratis and Kuwaitis are “buying” citizenships for their undocumented residents. Initially, these deals involved only issuing new passports without requirements for holders to physically move out of the Gulf. In recent months, however, it became clear that a growing number of them will have to move to Comoros. Although the official policy remains unclear, some officials say that Comoros began asking that these new "Comorians" move to the islands, while others believe that the Gulf countries are simply trying to get rid of their stateless population.

Regardless, activists have condemned the practice, likening it to slavery—the selling of a person and the economizing of what is a human right. As the Universal Declaration of Human Rights says, “[e]veryone has the right to a nationality” and “[n]o one shall be arbitrarily deprived of his nationality nor denied the right to change his nationality.” Comorians have protested, too, feeling that the government is essentially selling their nation’s soul, while populations in the Gulf argue that this is a solution that fails to resolve the thorny issues of statelessness or citizen transfer.

On the other hand, the Philippines, from which a number of people move to the Gulf for work, has come up with alternative laws to prevent statelessness. In 1987, its government passed a law allowing Philippine citizenship to pass through both the mother and father. That allows most of the Filipina women I interviewed in the Gulf to take their children home with them if and when they have to leave. The Philippine embassy in both Kuwait and the UAE also offer shelter to children whose mothers are incarcerated or are on trial for zina and they make sure to provide passports for these new citizens.

Instead of shipping their problems off to Comoros, Gulf countries could at the very least negotiate citizen transfers with sending nations or encourage them to follow the example of the Philippines, as a start. After all, their tactic of offshoring their stateless population is unsustainable in the long run. Comoros will realize at some point that this is a bad bargain. There are nearly one million stateless people in the Gulf and the population of Comoros is only 730,000 (and the island nation is about the size of Rhode Island). It is ill equipped to deal with dramatic increases to its population and in a few years time, the Gulf countries may find themselves back to square one.

* PARDIS MAHDAVI is Associate Professor and Chair of Anthropology at Pomona College. She is the author of Passionate Uprisings: Iran's Sexual Revolution and Gridlock: Labor, Migration, and Human Trafficking in Dubai.

- This article was published first by Foreign Affairs on 30 June 2016

Friday, July 1, 2016

Economic Implications of Brexit

By Ben S. Bernanke*

Image result for brexit poll

After several days of market upset, a few reflections on last week’s momentous vote in Great Britain.

Even more obvious now than before the vote is that the biggest losers, economically speaking, will be the British themselves. The vote ushers in what will be several years of tremendous uncertainty—about the rules that will govern the U.K.’s trade with its continental neighbors, about the fates of foreign workers in Britain and British workers abroad, and about the country’s political direction, including perhaps where its borders will ultimately lie. Such fundamental uncertainty will depress business formation, capital investment, and hiring; indeed, it had begun to do so even before the vote. The U.K. economic slowdown to come will be exacerbated by falling asset values (houses, commercial real estate, stocks) and damaged confidence on the part of households and businesses. Ironically, the sharp decline in the value of the pound may be a bit of a buffer here as, all else equal, it will make British exports more competitive.

In the longer run, the uncertainty will dissipate, but the economic costs to the U.K. still will exceed the benefits. Financial services and other globally oriented industries, which depend on unfettered access to European markets and exchanges, will come under pressure. At the same time, the purported gains from freeing the U.K. from the heavy regulatory hand of Brussels will be limited, because Britain will likely have to accept most of those rules (without ability to influence them) as part of restructured trade agreements. Immigration is unpopular in the U.K., and slowing it was a motivation for some “leave” voters, but a more slowly growing labor force likely would also reduce overall economic growth.

The rest of Europe will also be adversely affected, even though Frankfurt and a few other cities may gain finance jobs at the expense of London. The biggest risks here are political, as has been widely noted: In particular, markets are already beginning to price in the risk that other countries or regions will press for greater autonomy from Brussels. Even those sympathetic to such demands should worry that attempts to unwind existing trade and regulatory arrangements could be highly disruptive, as they will likely be for Great Britain. A move toward exit by a member of the euro zone would be particularly destabilizing, as even the possibility that a country might leave the common currency could provoke bank runs and speculative attacks on the country’s sovereign debt and on other countries that might be thought to be next in line. The challenge for European leaders will be to keep the overall integration process on track, while finding ways to meet the concerns of potential leavers. One issue that could be revisited is the EU’s commitment to the absolutely free movement of people across borders, which seems more a political than an economic principle; the perception that the U.K. had lost control of its borders was one of the most effective arguments for “leave,” and secessionist movements elsewhere have also seized on the issue. [1]

Globally, the Brexit shock is being transmitted mostly through financial markets, as investors sell off risky assets like stocks and flock to supposed safe havens like the dollar and the sovereign debt of the U.S., Germany, and Japan. Investors are perhaps more risk-averse than they otherwise would be because they know that advanced-economy central bankers have less space than in the past to ease monetary policy. Among the hardest hit countries is Japan, whose battle against deflation could be set back by the strengthening of the yen and the decline in Japanese equity prices. In the United States, the economic recovery is unlikely to be derailed by the market turmoil, so long as conditions in financial markets don’t get significantly worse: The strengthening of the dollar and the declines in U.S. equities are relatively moderate so far. Moreover, the decline in longer-term U.S. interest rates (including mortgage rates) partially offsets the tightening effects of the dollar and stocks on financial conditions. However, clearly the Fed and other U.S. policymakers will remain cautious until the effects of the British vote are better sorted out.

Although bank stock prices are taking hits, especially in the U.K. and Europe, a financial crisis seems quite unlikely at this point. Central banks are monitoring the funding and financial conditions of banks, and so far serious problems have not emerged. (It helps that the date of the referendum has been known for months, giving authorities time to prepare. Also helpful is the substantial buildup in bank capital in recent years.) Through its currency swap lines, established during the global financial crisis, the Fed is making sure that other major central banks have access to dollars. As I’ve already suggested, the biggest risks to financial stability at this point appear to be political—specifically, the risk of further defections or breakdown in the European Union—rather than economic. The story may not be over yet.

[1] Britain has substantial immigration from both EU and non-EU countries. The debate over Brexit sometimes seemed to confound the two, even though only the former is protected by the EU treaties.
·         Ben S. Bernanke is a Distinguished Fellow in Residence with the Economic Studies Program at the Brookings Institution and also serves as a Senior Advisor to PIMCO and Citadel. From February 2006 through January 2014, he was Chairman of the Board of Governors of the Federal Reserve System.

·         This article was published first on the Brooking Institute Web on 28 June 2018

Tuesday, June 28, 2016

The Paradox Of Higher Education In MENA

By Shanta Devarajan*

Image result for american university of beirut
American University in Beirut 

The Middle East and North Africa (MENA) was the cradle of higher education.  The three oldest, still-functioning universities in the world are in Iran, Morocco, and Egypt.  The University of Al-Karaouine in Fes has been granting degrees since 859 A.D.  The Ancient Library of Alexandria, in addition to being repository of books and manuscripts, was a center of learning during the Ptolemaic dynasty, with scholars traveling to there from all around the Mediterranean and beyond.  And scholars such as Ibn Khaldoun discovered fundamental economics four centuries before Adam Smith and others. In short, all of us who have benefited from a university education owe a debt to the MENA region.

Yet, today the quality of higher education in MENA is among the lowest in the world. Only two or three Arab universities are in the list of the top 500 universities in the world (and none are in the top 200).  Employers in the region complain that university graduates lack the skills needed to work in the global marketplace. Many are not trained in science, mathematics, engineering, and other technical subjects where the jobs are. Furthermore, these graduates lack the “soft skills,” including creativity and teamwork, partly because their training has emphasized memorization and rote learning. In Egypt, despite an unemployment rate of over 10 percent, some 600,000 jobs remain unfilled. About 40 percent of university graduates in MENA are unemployed; the labor force participation of women, most of whom are better educated than the men, is the lowest in the world.  Worse, violent extremist groups have used universities as one of their sources of recruitment.

How could this have happened? How could the same region that created higher education have a system that is so dysfunctional that it’s contributing to, rather than alleviating, the problems facing MENA?  And how can the situation be turned around, so that the universities are once again the best in the world?

We can start by seeking the reasons behind the current problems of the region. To be sure, the reasons for the high unemployment rate among university graduates are manifold and have mostly to do with the investment climate and the (lack of) growth of the private sector. But there is one feature that is common to all the countries in the region:  The majority of university graduates received jobs in the public sector. The state was the employer of first and last resort.

This feature had an impact on the quality of university education:

 The subject of specialization didn’t matter as much in the public sector, so students didn’t choose to study science and engineering; they chose somewhat “easier” subjects such as literature and history.
The public sector was not demanding of soft skills. 

The nature of the curriculum, with its emphasis on memory, repeating what the professor says without questioning or debating, may have been acceptable for the public sector—but it didn’t help the private sector, which is looking for creative minds who will invent the next Uber, for example.  This curriculum may have also made it easier for radicalized groups to recruit students. 

The second, more controversial, reason has to do with the pricing of university education. Almost all the universities provided education free of charge, based on the notion that poor people should have access to higher education as a means of escaping poverty. Unfortunately, the result has been that the overwhelming majority of students in universities come from the richest parts of the population. The pattern is not unique to MENA: It is found in Asia and Africa. And the reason has to do with economics.  Whenever something is provided for free, there is excess demand. Universities ration the excess demand by requiring students to pass an entrance exam. The rich can afford to send their children to the best secondary schools to prepare them to pass the entrance exam. As a result, the universities are full of students from the richest strata of society. Put another way, free higher education confers a huge rent to those who have access to it. And the rich are better placed to seize those rents than the poor.

In fact, the problem is worse because free education gives weak incentives to improve the quality of university education. The university has little to gain by investing in improving the curriculum (since more students doesn’t mean more revenue). Meanwhile, students don’t demand better quality as much as they would if they were paying for the education and needed to recoup their investment. The experience of Tribhuvan University in Nepal is instructive. When they started charging tuition fees in their institute of engineering, the quality improved so much that they started attracting students from all over South Asia. Moreover, the reforms spread to the rest of the higher education sector in the country.

To be sure, simply charging for higher education will not solve the problems of universities in MENA.  For one thing, poor people should still be able to afford tertiary education, but this should be addressed by providing means-tested scholarships, rather than an across-the-board subsidy that, as we noted, the rich can take advantage of. For another, the transition needs to be managed because such shifts are likely to elicit a political reaction. However, the principle has to be that universities should be given incentives to invest in higher quality education, and students should have an incentive to demand higher quality instruction.

If we can bring about these two changes—a shift in the focus of higher education away from public-sector jobs and a system of financing that aligns incentives with quality—we can go a long way towards restoring the grandeur of higher education in MENA.  As I mentioned at the beginning, the whole world owes the MENA region a huge debt for having created and nurtured university education a millennium ago. It is time to repay that debt.

·         Shanta Devarajan is the Chief Economist, Middle East and North Africa, World Bank

Note: This is an English version of the keynote speech given by Shanta Devarajan at the recent MENA conference on “Paradigm Shifts in Tertiary Education” in Algiers on May 30-June 2, 2016.