Image

This year’s 27 Stanford Summer Fellows on Democracy and Development—outstanding civic, political, and economic leaders from developing democracies—were selected from more than 500 applicants to take part in the program, which FSI’s Center on Democracy, Development, and the Rule of Law (CDDRL) hosted July 30–August 17, 2007. They traveled to Stanford from 22 countries in transition, including Iraq, Afghanistan, Iran, Pakistan, China, Russia, Egypt, Nigeria, Kenya, and the Democratic Republic of the Congo. And like their academic curriculum during the three-week program, which examines linkages among democracy, economic development, and the rule of law, their professional experiences and fields of study center on these three areas, assuring that each fellow brings a seasoned perspective to the program’s discussions.

“Should the United States promote democracy? Can the United States promote democracy?” The curriculum for the first week focused on defining the concepts of “democracy,” “development,” and the “rule of law” and identifying institutions that support democratic and market development. Using selected articles and book chapters as starting points for discussion, CDDRL Director Michael A. McFaul and Marc Plattner, National Endowment for Democracy vice-president for research and studies, began the weeklong module with an examination of what democracy is and what definition or definitions might apply to distinguish electoral democracy, liberal democracy, and competitive authoritarianism. Another question discussed was whether there was such a thing as Islamic democracy, Asian democracy, Russian democracy, or American democracy.

Faculty including Diamond, CDDRL associate director for research Kathryn Stoner, Stanford president emeritus and constitutional law scholar Gerhard Casper, Stanford Law School lecturer Erik Jensen, and economists Avner Greif and Seema Jayachandran “team-taught” individual sessions as the week progressed. Fellows and faculty discussed how to define and measure development, the role and rule of law in societies, how legal systems affect democratic development, constitutionalism, electoral systems, parliamentary versus presidential systems, horizontal accountability, and market development. Fellows worked in groups to discuss and present their conclusions about an issue to their colleagues, comparing experiences and sharing insights into how well political parties and parliaments constrained executive power and how civil society organizations contributed to democratic consolidation.

Image

This component grounded the classroom discussions in a practical context. “It was important for our visiting fellows to interact with American practitioners, both to learn about innovative techniques for improving democracy practices but also to hear about frustrations and failures that Americans also face in working to make democracy and democracy promotion work more effectively,” explained McFaul. “We Americans do not have all the answers and have much to learn from interaction with those in the trenches working to improve governance in their countries.”

As the program’s curriculum shifted to democratic and economic transitions for week two, McFaul and Stoner-Weiss balanced the structure of the classroom with guest lecturers, a documentary film premiere, and field trips to Google headquarters and San Francisco media organizations to put into practical context the components discussed theoretically in the classroom. The field trip to San Francisco included a session with KQED Forum executive producer Raul Ramirez, a briefing with the editorial board at the San Francisco Chronicle, and a discussion of links between violence against women and children and poverty, health, and security at the Family Violence Prevention Fund.

“We are building an extraordinary community of democratic activists and officials who have a deeper understanding of the types of institutions that secure freedom, control corruption, and foster sustainable development.” The third week’s curriculum looked at international and domestic efforts to promote democracy, development, and the rule of law. This integrative module drew on the teaching caliber of Stephen D. Krasner (FSI senior fellow), Peter B. Henry (Graduate School of Business), Allen S. Weiner and Helen Stacy (Stanford Law School), and Nicholas Hope (Stanford Center for International Development) as well as Casper, Jensen, McFaul, and Stoner-Weiss. Through case studies and, in particular, comparison of successes and failures in the fellows’ own experiences, faculty and fellows explored and assessed international strategies for promoting rule of law, reconciliation of past human rights abuses, democracy, and good governance. The discussions, occasionally contentious, circled in on a set of central questions: Should the United States promote democracy? Can the United States promote democracy? What are the links between democracy and increasing the rule of law, controlling corruption, rebuilding societies shattered by massive human rights violations, and promoting good governance?

Despite the intellectual rigor of the coursework and discussion, and the exploration of practical applicability with guest speakers and field trips, the Stanford Summer Fellows on Democracy and Development Program was designed as much to stimulate connections among field practitioners and to provide a forum in which to exchange ideas. “Through the summer fellows program, we are building an extraordinary community of democratic activists and officials who have a deeper understanding of the types of institutions that secure freedom, control corruption, and foster sustainable development, and who are keeping in touch with us and with one another,” said Diamond. “When I meet our ‘alumni’ fellows in subsequent years, they speak movingly of the bonds they formed and the insights they gained in these three fast-paced weeks.”

To ensure they fulfill their goal of building a small but robust global network of civic activist and policymakers in developing countries, CDDRL launched a Summer Fellows Program Alumni Newsletter. The newsletter is based on an interactive website that will allow the center to strengthen its network of leaders and civic activists and facilitate more groundbreaking policy analysis across academic fields and geographic regions, the results of which will be promptly fed back to its activist alumni in a virtual loop of scholarship and policymaking. “We envision the creation of an international network of emerging political and civic leaders in countries in transition,” said Stoner-Weiss, “who can share experiences and solutions to the very similar problems they and their countries face.”

SSFDD ALUMNI FOCUS: VIOLET GONDA
A producer and pre s ent er for SW Radio Africa (London), Violet Gonda was a Stanford Summer Fellow on Democracy and Development in 2006, the same year her station was named the International Station of the Year by the Association of International Broadcasters. "CDDRL brings together a cross-section of people from different backgrounds, different careers," Gonda said. "Politicians, lawyers, activists ... all in the same room. It is an amazing group of people."

Banned from returning to her home country because of her journalism work at the radio station-"we are welcome in Zimbabwe but only in the prisons"-Gonda "literally eat[s], breathe[s], and dream[s] Zimbabwe." The summer fellows program, she said, gave her a broad perspective on what's going on in other countries; "it is so intensive ... you can really compare and contrast democracy on every continent." One thing Gonda found is that "when you look at these leaders, you'd think they all were born of the same mother ... and the ways people respond to these crises are the same."

Gonda had such a positive experience at Stanford that she decided to apply for, and was accepted to, the prestigious John S. Knight Fellowships for journalists for the academic year 2007-08. "It's always been Zimbabwe, Zimbabwe, Zimbabwe," she said. "Now I finally have time to sit down and read a book, write an article, go to seminars, sharpen my skills." She is not exactly sitting still however. In December she gave a presentation on Zimbabwe's political situation for the Center on African Studies, and will also be discussing Zimbabwe at the Palo Alto Rotary Club and the Bechtel International Center. "Media in America does not have a lot of international news, particularly on Africa," Gonda said. "So it's a good opportunity to talk about Zimbabwe, and I will take advantage of it."

She is also working on developing new content for SW Radio Africa and plans to interview FSI scholars she met through the summer fellows program so "We are building an extraordinary community of democratic activists and officials who have a deeper understanding of the types of institutions that secure freedom, control corruption, and foster sustainable development." that Zimbabweans can understand what is going on in different countries. Close contact with program alumni means that she has friends and colleagues in other parts of that world who can be called on for their perspective on situations. While SW Radio Africa's mission is "to record and to expose" developments in Zimbabwe, Gonda explained, "it's good to compare, to show people we are not alone, that this is happening elsewhere."

Every day, the United States burns through 20.7 million barrels of oil. China, the world's second largest consumer, uses about 6.9 million barrels a day. Although the United States is the third leading oil producer in the world (behind Saudi Arabia and Russia), its appetite is so enormous that it overwhelms the country's production capacity. Its known reserves, about 21 billion barrels, would supply only enough to keep the country running at full speed for about three years.

So when STANFORD gathered five faculty members to talk about the implications of U.S. dependency on foreign oil, we expected grave declarations of alarm. But their concern did not square with the growing chorus of citizens and elected officials about why reducing this dependency is so important.

On the next five pages, faculty from political science, economics, law and engineering explain why the debate about energy security is missing the point, and what they think needs to be done.

STANFORD: How would you frame the issue of dependency on foreign oil? What should we be concerned about?

David Victor: The problem is not dependence per se. In fact, dependence on a world market produces enormous benefits, such as lower prices. Nor is the problem that energy's essential role in the economy means that dependence must be avoided. The real problem is that energy - oil, especially - doesn't operate according to normal market principles. Something like 75 percent of the reserves of oil and gas are controlled by companies that are either wholly owned or in effect controlled by governments, and there's enormous variation in how those companies perform. Some of them are just a disaster, like [Mexico's state-owned oil company] Pemex, and others can work at world standards, like Saudi Aramco or Brazils Petrobrás. Some of these governments, such as Venezuela, use oil revenues for political purposes that undermine U.S. influence. High prices do not automatically generate new supply or conservation, partly because suppliers can drop prices to undercut commercial investment in alternatives. Second, we have what has become known as "the resource curse." There'sa lot of evidence that the presence of huge windfalls in poorly governed places makes governance even worse. Revenue that accrues to oil-exporting governments is particularly prone to being misspent, often in ways that work against U.S. interests.

Scott Sagan: I agree that calling the problem "energy dependence" and therefore seeking energy independence is the wrong way to think about this problem. Talking about energy independence feeds the xenophobic impulse that occurs all too easily in American politics. And it suggests to other countries that they should seek independence rather than a more cooperative approach. I see very negative consequences politically in the signal that attitude sends. Think about the current nuclear crisis with Iran. Iran claims that it needs independent uranium enrichment capabilities to have "energy sovereignty." Such uranium enrichment production could be used, however, for civilian nuclear power or for making a bomb, creating enormous nuclear weapons proliferation problems. We're feeding into that kind of thinking when we use the same language about independence when referring to oil. And it produces uncooperative effects elsewhere. The Chinese, for example, cut a deal with Sudan as a means of creating energy security for themselves. It inhibits efforts of the international community to encourage that government to behave responsibly.

John Weyant: There is a distinction between dependence, meaning how much of the oil the United States consumes is imported, and vulnerability, meaning how at risk our economy and our social order are to oil-supply disruptions. That vulnerability is defined by how much of the total supply of oil in the world market comes from unreliable sources. So you have to look at oil supply on a global scale, not just in the United States. It's the instability of the supply that affects price.

Victor: I like John's term "vulnerability," and it leads us to various kinds of actions to reduce our vulnerability to the market rather than trying to make us completely independent. One of them has been around since the '70s - building and coordinating strategic stockpiles so that they are supplied into a single world market. Traditionally that could be done by the major Western countries because they were the major oil consumers. One of the big challenges for policy makers today is how to get India and China to think about the operation of this world market in the same market-based way that we think about it, and to get them to build up those stockpiles and coordinate them with our own. There's some evidence that that kind of coordination can reduce our vulnerability.

Weyant: There's this fallacy among the public that if we don't import so much oil, other oil-exporting countries are going to be hurt and we will be unaffected if oil supplies are cut off. But these countries are sometimes major trading partners of allies, and asking those allies to take a hit on our behalf just leads to other economic problems. If the economies in China and Europe and Japan, who are all major trading partners, go down, it affects how much they can buy from us. It's another reason we can't be xenophobic and just look inward on an issue like this. You get these international trade flows outside the energy sector that could be pretty devastating.

STANFORD: Last summer we saw crude oil prices hit $70 a barrel and gas prices went well above $3 per gallon nationwide. That momentarily changed consumer behavior, and reduced demand. Are high prices a good thing?

Michael May: The key factor in normalizing market conditions is assuring the market that high prices are here to stay. Major oil companies like Exxon and bp have been putting their money to other uses than exploration. They have been buying back shares and increasing returns to stockholders because that's the way Wall Street drives them. That might change if prices stayed high. It probably won't be $70 a barrel, but even $50 a barrel as a base price is almost twice the historic average. The extent to which investors become convinced that that's going to be the future average will have some bearing as to how much money they spend on exploration. Toyota and General Motors and others can make hybrids or much more efficient cars, but it takes billons of dollars of investment, and if the price of gasoline goes down, they have less incentive. When gas is cheap, driving an SUV is not such a big deal.

Victor: The reason some of these companies are buying back the shares is not just because of Wall Street but because they don't have a lot of truly attractive opportunities for investing in new production. Most of the oil reserves are either legally off limits for the Western oil companies or international oil companies generally, or they're de facto off limits because they're in places where it's so hard to do business. Although the public is seized by the high price of energy, the major energy companies are seized by concerns that prices are going to decline sharply. If there is a recession, which would dampen demand for energy, or the capacity to produce oil around the world improves, then prices will decline. It has happened in the past. That fear really retards a lot of investment because these investments have a very long capital lifetime, and you need to protect them against low prices over an incredibly long time horizon.

Michael McFaul: It's very important to understand that oil companies owned and operated by governments are not necessarily profit-maximization entities. Take Gazprom, the gas company of Russia. It is closely aligned with state interests, so profit isn't its only motivation. It will use its money for strategic purposes as defined by Vladimir Putin, not as defined by the shareholders of Gazprom. For instance, early in 2006, Gazprom cut off gas supplies to Ukraine, mostly for geopolitical reasons. Why is Hezbollah so well armed? Because of Iran, which uses oil revenue for strategic purposes; it is not used for investing in a company or investing in the market per se. This is part of the problem of the "resource curse" David referred to. If oil is discovered in a country before democratic institutions are in place, the probability of that country becoming democratic is very low. In countries where the state does not rely on the taxation of its citizens for its revenues, it doesn't have to listen to what its citizens want to do with that money. So instead of building roads or schools or doing things that taxpayers would demand of them, they use their money in ways that threaten the security of other countries, and, ultimately, their own.

Victor: It's important that we not overstate the extent to which users of energy are going to respond automatically to high prices, and the personal vehicle is a great example. Fuel accounts for about 20 percent of the total cost of operating a vehicle. Traditionally it's only been 10 or 15 percent, but we are much wealthier today than we were three decades ago when we had the [first OPEC oil embargo]. I think that helps explain a lot of the sluggishness in response in the marketplace. People are buying smaller, more fuel-efficient cars, but that trend will only go so far because there are other factors that determine what kinds of vehicles people purchase. In the United States and most advanced industrialized countries, most oil is used for transportation, where oil products have no rival. It is hard to switch. In most of the rest of the world, oil gets used for a variety of other purposes, including generating electricity. Those markets are probably going to be more responsive to the high price of oil because they're going to have opportunities to switch to other fuels. The United States used a lot of oil to generate electricity in the early 1970s and when that first oil shock came along, essentially all of that disappeared from our market. That's part of the reason why the U.S. energy system responded fairly quickly to the first oil shock, and why changes in behavior are harder to discern in the current crisis. There is no easy substitute for gasoline.

May: If we generally agree that high oil prices, on the whole, are a good thing because they cause investment in more production and more efficient uses of oil, then it would follow that the rapid growth in consumption in China is also a good thing and we should welcome it, right?

Victor: I disagree with that. In effect what we have right now is a "tax" that's been applied to the oil market due to the various dysfunctions of the way it operates and to unexpectedly high demand in the United States and China. The revenue from that tax is accruing to the producers, and if we think about how to get out of the mess here, then what we want to do is in effect apply a tax to the oil products. If we raise the price of these products to reflect the real total cost of our vulnerability to the world oil market, those companies have an incentive to go off and look for alternatives.

May: So you're saying the same thing: that high oil prices, whether from this tax or otherwise, are a good thing.

Weyant: It depends significantly on who is collecting the tax.

McFaul: Yes, the fundamental question is how the money is being spent. If I had high confidence that the money was going to reinvestment, then I could agree that high prices are good, but that's not what is happening. The Soviet Union's most dangerous adventures in the Third World correlated with the high oil prices in the 1970s. You can see the direct effect. And when the prices came down, the Soviet Union collapsed. The same is true with Iran today. They are being very aggressive in the region - in Iraq, in Lebanon, in Afghanistan - trying to become the Middle East hegemon. This would not be happening if they didn't have all these clients - Hezbollah, Hamas, their friends in Iraq - that they can support with millions of dollars. Going back a few decades, where did Osama bin Laden come from? Where did support for the Taliban come from? It came from this tax that David is talking about. If we're talking about security issues and oil, this is much more serious than supply disruption to the United States.

Victor: I agree with Mike 100 percent. If you look at where the revenues are going from Iran, Venezuela and so on, there's a long list of folks who are doing things that are contrary to our interests with the money that ultimately is coming out of the pockets of American consumers. Dealing with that is job one.

STANFORD: So how would you counsel American policy makers? What needs to happen to reduce our vulnerability over the long term?

Sagan: The vulnerabilities we have today should provide an incentive to make some critical investments and to change our thinking, but we're not really doing that. I was quite surprised at how much I agreed with one aspect of the second Bush inaugural address. [He said] let's start talking about our addiction to oil and all the problems associated with that, but I've been completely disappointed with the lack of follow-through. And part of the problem is this notion of energy independence. We need diversity in our research and development spending across the board, on a variety of technologies. We're going to produce energy security to a large degree by finding cooperative solutions that are efficient and secure for many countries working together. We need to see our national security as being very dependent on others and that's not entirely a bad thing.

Victor: There is one cluster of technology that's going to be exceptionally important - electric vehicles. The all-electric vehicle has been kind of a disaster. We tried to do that in California without much success at all. The new set of pluggable hybrid vehicles, which you plug in at night and charge up, are more promising. If such technologies make it feasible to reduce some of the transportation dependence on oil, then markets will be forced to become more "normal" and more responsive. Electric cars and other technologies can help to keep prices lower and ultimately help make the transition completely away from oil over a period of 30 or 50 years.

Weyant: We only think about energy as a nation when prices are high, and so there's a short attention span on the issue. That makes it really hard to sustain a policy that would be rational over the long term. If we're going to have a big R&D program, for example, you need to invest in technologies and sustain the investment over a long time horizon. If you couple this short attention span with our aversion to taxes, at least historically, you end up with policies that are almost designed from the outset to fail. The political tide is turning a little bit so a well-designed tax might be possible. Maybe you don't raise taxes now but you assure that the price of a [hybrid] car won't go below a certain level and that'll help create a little more confidence with the marketplace. If you just focus on research and development without getting the economic incentives right, you come up with all kinds of great gizmos that no one will actually make or use.

McFaul: We've been talking mostly about how to manipulate the market to change people's behavior and I think that's quite right. I can't tell you how many people I saw come out of a Palo Alto theater after seeing Al Gore's movie [An Inconvenient Truth] and jump into their gas-guzzling machines. I would like to tax those machines; use economic tools to change people's behavior in a way the movie didn't. This has to become a public policy issue. It's not right now. Think about the way the market for cigarettes worked in this country 50 years ago, and think of how it is structured now. We have not just taxes but regulation - they can't be advertised on television - and a national campaign trying to educate people about the health concerns. We need a similar effort on this issue.

Sagan: When you watch the Super Bowl you don't see advertisements for cigarettes, but you do for Hummers. There's no attempt at all to educate people about the relationship between these longer-term problems and what you do individually. And that takes decades.

Victor: One of the acid tests for whether the nation is pursuing a coherent energy policy is our policy on ethanol. Ethanol is important because it is a partial substitute for oil-based gasoline. In this country, almost all of the ethanol that is delivered to the marketplace is made from corn, which is economically inefficient. But we do that because the corn grows in the heartland, such as Iowa - an important state electorally. There have been lots of proposals to, for example, erase the tariff on imported ethanol. Brazil produces ethanol from sugar cane and it's much cheaper and more efficient. But the farm lobby always intervenes and these proposals languish, with the result that the U.S. ethanol industry never faces the rigors of world competition. So long as energy is bouncing around lower on the list of priorities, it will be difficult to have a coherent policy.

Weyant: It would be far better if people were willing to bite the bullet and say this is a problem and it's not going to be painless to solve it, but if we play our cards right it's not going to reduce our standard of living much. Convincing the public is really one thing that might be worth some more effort. It's a cacophony to them.

STANFORD: What is your greatest hope and your worst fear with regard to demand for oil?

Victor: My greatest hope is that inside the Chinese government and inside the Indian government people know that this independence view of the world energy market is completely wrongheaded. Maybe that will create an opportunity for the United States and India and China along with other major oil consumers to collectively manage this issue, and the consequences of doing that will spill over onto other areas of cooperation. My greatest fear, in addition to the things we've already discussed, is that the United States will use the oil issue to beat up on the Chinese and the Indians, and that our relationship with those countries, which is already fragile, will make it harder to work together on other things that also matter.

May: My greatest hope is that the United States, China, India and other major countries work together towards a more hopeful future, including improving the global environment, providing a counterbalance to mischief in the Middle East, and promoting a transition to modernization and away from extremism. My greatest fear is that the little termites who are nibbling at what is currently a somewhat sensible Chinese policy will have their way, either because the country's economy slows down - which it will inevitably - or for some other reason, and we'll wind up fighting each other or destroying each other's capabilities.

McFaul: My greatest sense of optimism comes from this discussion, and about what my colleagues in this discussion said about China, because from the surface it looks like there's a much more pernicious policy of China going its own way. I've learned today that in fact there are very reasonable voices within the Chinese government, and I hope that there will be in my own government. My greatest fear is that there will continue to be politicians who control oil revenues who do things that do not serve international security, and I'm speaking not only of Iran. My nightmarish scenario is that 10 years from now Iran, Iraq and, God forbid, Saudi Arabia are controlled by hostile governments that want to use the revenues that we pay them for their oil to harm us. I give that a low probability, but in terms of things that worry me about our security, it's the instability of those oil-exporting regimes.

Sagan: The hope is that this current crisis will provide the right set of incentives to encourage investment in a diverse set of energy R&D programs across the board, and will encourage cooperation between countries in energy research and development. That would help educate and change the culture of the United States away from a gas-guzzling, governor-in-the-Hummer culture. The fear is that this will become yet one more excuse to move to a more xenophobic policy that discourages cooperative international policies.

Weyant: Remember David Stockman, the erstwhile head of the Office of Management and Budget? I ran into him in Washington and he literally said to me, "Don't worry about oil security and disruptions or any of that stuff. We've got battleships to take care of this problem." That shocked me to no end, and my response was "Do you really want to be in that position, where that's your only option?" Your whole response is "We're best in the battleship field and you shouldn't mess with us?" This type of attitude is what worries me the most.

Sagan: We were earlier talking about the resource curse, and this strikes me as an example of the hegemon's curse. To not take the necessary steps on economic policies or energy policies because you think you've got a military backup solution. If our military strength causes us to be passive or uncooperative on the economic or energy front, it will have a boomerang effect that will really hurt us.