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Access to finance, particularly credit, is widely recognized as problematic for small and medium enterprises (SMEs), hampering their growth and development. To address this challenge, many governments around the world intervene in SME credit markets through credit guarantee schemes (CGSs). A CGS offers risk mitigation to lenders by taking a share of the lenders' losses on SME loans in case of default. CGSs can contribute to expand access to finance for SMEs. Yet they may bring limited value added and prove costly if they are not designed and implemented well. There have been efforts in recent years to identify good practices for CGSs, but the international community still lacks a common set of principles or standards that can help governments establish, operate, and evaluate CGSs for SMEs. The Principles for Public Credit Guarantees for SMEs are filling this gap. The Principles provide a generally accepted set of good practices, which can serve as a global reference for the design, execution, and evaluation of public CGSs around the world. The Principles propose appropriate governance and risk management arrangements, as well as operational conduct rules for CGSs, which can lead to improved outreach and additionality along with financial sustainability. Developed through extensive consultations with stakeholders, the Principles draw from both the literature on good practices for CGSs and sound practices implemented by a number of successful CGSs around the world.

The paper examines severance pay programs around the world by providing the first ever overview of existing programs, examining their historic development, assessing their economic rationale and describing current reform attempts. While a significant part of the paper is devoted to a comprehensive 183 cross country review of existing severance arrangements and their characteristics, the paper goes beyond a mere description. It develops and empirically tests three hypotheses about the economic rationale of the program, namely severance pay being: (i) a primitive income protection program, (ii) an efficiency enhancing human resource instrument, and (iii) a job protection instrument. The paper also reviews the recent reforms of Austria, Chile, Italy, and Korea.

This Technical Note was prepared in the context of a joint World Bank-IMF Financial Sector Assessment Program mission in Bosnia and Herzegovina during October-November 2014. Financial inclusion in Bosnia and Herzegovina performs relatively well compared to peers, but gaps remain for selected market segments. Financial sector development and access to finance for firms is constrained by weak domestic demand, high collateral requirements and inadequate credit enforcement mechanisms.

Demand is also fueled by other factors: in many emerging economies a 'demographic dividend' of young people, the product of significant reductions in child and infant mortality rates—is poised to enter education and work. And, according to the 2014 Millennium Development Goals report, nearly 90 percent of children in developing regions are on track to complete primary education. The shift from agricultural to knowledge-based economies also plays a significant role in creating demand for higher learning. The purpose of the study was to identify key success factors in private sector student lending in order to support IFC in understanding, and potentially making investments, in student lending across a range of emerging markets. The study examined 70 student lending models globally as well as a range of innovative financial models. Detailed case studies were developed for eight compelling and diverse private sector student lending models. The study also highlighted a range of innovative financial models including crowd funding, big box banking, social impact bonds, and other mechanisms. The purpose of this investigation of innovative financial models was to see what leading-edge methods might be at work in other sectors and to see if they might offer inspiration to student lending.

Two years after the Russian attack on Ukraine, it is clear to everyone that the European Defence Technological and Industrial Basis (EDITB) was ill-equipped to face the consequences of a large-scale, high-intensity conflict on the Old Continent. The war changed three decades of procurement policies, production and technological trends that had previously shaped (not only) Europe's approach to defence hardware.
From the 1990s onwards, the preference for fewer, precise, highly advanced weapon systems over the massive employment of low-medium tech solutions had a double effect on the EDITB. First, it led European markets to partially consolidate, and individual companies to strive for increased efficiency. This meant not investing/maintaining redundant production sites, divesting from relatively low profitable and low demand segments such as the manufacturing of artillery shells and pursuing research and development (R&D) investment in high-end products. Second, the emphasis on technological prowess also shaped the way the European Union tried to jumpstart defence cooperation and integration among member states, first and foremost through the European Defence Fund (EDF) and Permanent Structured Cooperation (PESCO).A shift to joint production and procurement
The war and Ukraine's boundless need for ammunition, modern equipment and NATO-standard weaponry have changed the picture. The European Union has provided more than 5.6 billion euro in military aid to Ukraine by financing transfers of equipment from member states with the European Peace Facility (EPF),[1] an off-budget fund gradually increased to 12 billion euro that was rapidly repurposed as the main instrument through which Brussels backs Ukraine's war effort (Figure 1).[2] Europe's shallow defence stocks have, however, proven insufficient to provide enough resources to support Ukraine's needs, particularly in the land domain. First and foremost, Ukraine's extensive use of artillery (both 155mm rounds and missile systems) has put a significant strain on the European and transatlantic productive capacities.[3] Recognising the risks associated with uncoordinated, national responses to the surging demand for defence items, the EU has crafted new tools to guarantee military aid to Ukraine and that the replenishment of national stockpiles does not lead to crippling competition between member states on the European market, a further decrease of systems interoperability and an overreliance on non-EU suppliers and technologies.

Figure 1 | EU defence programmes (2018 prices, billion euro)



Note: the EPF Financial Ceiling is made up of national contributions, determined by the GNI.
The EDF Budget comes from the Commission's Multiannual Financial Framework.

The first measure put forward by the EU was the so-called European Defence Industrial Reinforcement through Common Procurement Act (EDIRPA), designed to support member states in establishing joint procurement mechanisms for defence goods.[4] The earmarking of 500 million euro should have covered additional administrative and technical costs incurred when engaging in multinational procurement processes.[5] The successive political agreement axed EDIRPA's budget to a meagre 300 million euro.[6] After almost one year of discussions, the involved parties finally found a compromise on the potential eligibility of non-EU companies and actors, thus allowing for some limited exceptions for allied countries such as the US.[7] EDIRPA should be substituted in the long term by a permanent instrument, not limited to ammunition and missiles, to be included in the European Defence Investment Programme (EDIP).
EDIRPA, which should be voted on by the EU Parliament before the 2024 elections, is a package of structural measures which required extensive negotiations and is expected to have long implementation times. As such, in 2023, the Council decided to complement the Act with a so-called "three-track approach" to boost ammunition production and immediately raise the level of support for Ukraine.[8] Track 1 consists of an invitation to member states to transfer part of their ammunition stocks to Ukraine,[9] reimbursed with funds from the EPF, while Track 2 parallelly foresees the joint procurement by member states of 1 million ammunition rounds.[10] Track 3 represents the most consistent step, and has materialised through the so-called Act in Support of Ammunition Production (ASAP), which allocates 500 million euro to financially support and boost related production capacities.[11]Consequences for existing programmes and policies
It may be too soon to talk about a shift of focus from R&D projects to joint procurement and production. First of all, it is noteworthy that most of the initiatives, and certainly the majority of allocated funds, mainly pertain to the supply side of the defence markets (Table 1). By reimbursing transfers and acting on bottlenecks and production capacities, the EU essentially tries to decrease the cost of military aid to Ukraine for member states, while only a few measures actively try to shape the overall demand for military goods (such as changing the incentives that shape procurement decisions). This may turn out to be problematic if one considers that the core issue at the heart of European defence expenditure is precisely fragmented demand.[12] Even worse, current supply-side measures are short-term and do little in terms of rationalisation and aggregation of productive capacities, as little is done to streamline value chains, optimally allocate resources and foster economies of scale.[13]

Table 1 | EU measures to boost defence production after 24 February 2022



[14], [15], [16]

However, it is clear that without an increase in the EU's resources, every new instrument will require a remodulation of existing defence initiatives. To a certain extent, this has already happened: ASAP will be financed with resources previously allocated to EDIRPA and EDF (Table 2).

Table 2 | Sources of financing of appropriations under the ASAP (millions euro)



Source: European Commission, Proposal for a Regulation on Establishing the Act in Support of Ammunition Production, cit.

Implications for European defence integration
The measures launched by the EU in the wake of the war have a series of implications for the European defence integration process. The emergency measures undertaken after February 2022 are naturally aimed at a very specific task: boosting the output of artillery shells and missiles to replenish depleted stocks and provide long-term sustainable aid to Ukraine. Nevertheless, one should remember that, as mentioned, these policies are essentially aimed at the supply side of the equation and do not contribute to a long-term consolidation of demand. Moreover, ammunitions are far easier to produce than complex weapon systems. As such, a mechanism of reimbursements and targeted financing would not necessarily bring EU defence integration forward when it comes to more advanced systems.
From a demand-side perspective, measures designed to aid Ukraine and increase the production of ammunition do not necessarily help the integration of European defence, on the contrary. Only structured institutional measures that bundle and rationalise European demand for defence goods, such as the development of the European Defence Capability Consortia (EDCC) and full implementation of the recommendations included in the Coordinated Annual Review of Defence (CARD), can lead to structural optimisation of available production capacities.
From a supply-side perspective, delays in the negotiation of EDIRPA also show disagreements between individual member states on the opportunity to keep European defence markets reasonably open to companies from third countries. Indeed, given that weapons systems have, on average, long service time spans, their current acquisition often discourages the procurement of alternative goods due to the complexity of maintaining multiple logistical chains and support systems.[17] While Eastern and Northern member states discount this issue due to the urgency of rapidly rearming, as demonstrated in the European Sky Shield controversy, countries like France and Italy advocate for a long-term approach to improve the competitiveness of the EDTIB and the level of (shared) technological sovereignty over advanced systems. There should be a different approach on one hand for short-term, with short-span initiatives coping with urgent requirements, and on the other hand for long-term and permanent measures. When the latter have to be addressed, it is reasonable that EU financial incentives should benefit the EDTIB.
Squaring the circle requires a robust backing of EDF and EDIP, as they can structurally rationalise the demand side of European defence markets and move the debate beyond a simple question of market access, putting the question of synchronisation and coordination of procurement policies at the centre of European defence affairs.The limits of the intra-European market
Finally, the achievement of economies of scale also requires a comprehensive re-examination of the 2009 defence market directives,[18] which do not properly address the distortions of the European market structure. On one hand, under directive 2009/81/EC,[19] European cooperative projects are subject to the same competition rules as national or third-country products. This provision has become obsolete since the EU has decided that defence cooperation, both in procurement, research and development, is a priority in its own right. This political choice should be reflected by favouring hardware developed within EU collaborative projects in procurement processes.
On the other hand, directive 2009/43/EC[20] does not enable European defence products to become truly competitive due to heterogeneous and burdensome rules still existing on intra-European transfers, including for IP and immaterial goods. Current rules do not allow for the development of a truly European market when it comes to components, spare parts and subsystems, all of which still need to comply with customs clearings and national certification procedures, thus keeping productive capacities and supply chains fragmented along national borders. Abating such non-tariff barriers should be a priority for the near future.Michele Nones is Vice President of the Istituto Affari Internazionali (IAI). This commentary is a revised and updated version of a chapter written by the same author for the study Russia-Ukraine War's Strategic Implications, edited by Alessandro Marrone, Rome, IAI, February 2024.[1] Kiel Institute for the World Economy, Ukraine Support Tracker, updated on 16 February 2024, https://www.ifw-kiel.de/topics/war-against-ukraine/ukrainesupport-tracker.[2] Council of the EU website: European Peace Facility, https://europa.eu/!3jNYwR.[3] Léo Péria-Peigné, "Military Stockpiles: A Life-Insurance Policy in a High-Intensity Conflict?", in Focus stratégique, No. 113 (December 2022), https://www.ifri.org/en/node/26801.[4] European Commission website: Act in Support of Ammunition Production (ASAP), https://defence-industry-space.ec.europa.eu/node/453_en.[5] Sebastian Clapp, "European Defence Industry Reinforcement through Common Procurement Act (EDIRPA)", in EPRS Briefings, November 2023, https://www.europarl.europa.eu/thinktank/en/document/EPRS_BRI(2023)739294.[6] European Commission, European Defence Industry: Commission Welcomes Political Agreement on Support for Common Procurement Between Member States, 28 June 2023, https://ec.europa.eu/commission/presscorner/detail/en/ip_23_3554.[7] Council of the EU, EU Defence Industry: Council and European Parliament Agree on New Rules to Boost Common Procurement, 27 June 2023, https://europa.eu/!7Dr9TN.[8] Alexandra Brzozowski, "EU Proposes Three-Track Approach to Secure Ammunition for Ukraine, Support Industry", in Euractiv, 2 March 2023, https://www.euractiv.com/?p=1888130.[9] By July 2023 donations reached a total of 1 billion euro.[10] Council of the EU, Delivery and Joint Procurement of Ammunition for Ukraine, 20 March 2023, https://europa.eu/!4jfxJp.[11] European Commission, Proposal for a Regulation on Establishing the Act in Support of Ammunition Production (COM/2023/237), 3 May 2023, https://eur-lex.europa.eu/legal-content/en/TXT/?uri=celex:52023PC0237.[12] See Lucas Hellemeier and Michelangelo Freyrie, "Leaving Defenselessness Behind", in International Politics and Society, 16 June 2023, https://www.ips-journal.eu/topics/european-integration/leaving-defenselessness-behind-6775.[13] Gaspard Schnitzler, "EDIRPA/EDIP: Risks and Opportunities of Future Joint Procurement Incentives for the European Defence Market", in Ares Policy Papers, No. 81 (March 2023), https://www.iris-france.org/wp-content/uploads/2023/03/ARES-81-Policy-paper.pdf.[14] European Commission, Defence: €500 Million and New Measures to Urgently Boost EU Defence Industry Capacities in Ammunition Production, 3 May 2023, https://ec.europa.eu/commission/presscorner/detail/en/ip_23_2569.[15] Council of the EU, Ammunition for Ukraine: Council Agrees €1 Billion Support under the European Peace Facility, 13 April 2023, https://europa.eu/!grhNB9.[16] Council of the EU, EU Joint Procurement of Ammunition and Missiles for Ukraine: Council Agrees €1 Billion Support under the European Peace Facility, 5 May 2023, https://europa.eu/!nTfjjD.[17] Michele Nones, "The Risks to European Defence of Non-coordination", in Alessandro Marrone et al., The Russia-Ukraine War, Security in Europe and European Defence, Rome, IAI, November 2022, p. 29-32, https://www.iai.it/en/node/16243.[18] For a deeper analysis, see: Alessandro Marrone and Michele Nones, "The EU Defence Market Directives: Genesis, Implementation and Way Ahead", in Documenti IAI, No. 20|18 (September 2020), https://www.iai.it/en/node/12156.[19] European Parliament and Council of the EU, Directive 2009/81/EC of 13 July 2009 on the Coordination of Procedures for the Award of Certain Works Contracts, Supply Contracts and Service Contracts by Contracting Authorities or Entities in the Fields of Defence and Security, http://data.europa.eu/eli/dir/2009/81/oj.[20] European Parliament and Council of the EU, Directive 2009/43/EC of 6 May 2009 Simplifying Terms and Conditions of Transfers of Defence-related Products within the Community, http://data.europa.eu/eli/dir/2009/43/oj.

The Silicon Valley Bank failure strikes me as a colossal failure of bank regulation, and instructive on how rotten the whole edifice is. I write this post in an inquisitive spirit. I don't know the details of how SVB was regulated, and I hope some readers do and can chime in. As reported so far by media, the collapse was breathtakingly simple. SVB paid a bit higher interest rates than the measly 0.01% (yes) that Chase offers. It attracted large deposits from venture capital backed firms in the valley. Crucially, only the first $250,000 are insured, so most of those deposits are uninsured. The deposits are financially savvy customers who know they have to get in line first should anything go wrong. SVB put much of that money into long-maturity bonds, hoping to reap the difference between slightly higher long-term interest rates and what it pays on deposits.  But as we've known for hundreds of years, if interest rates rise, then the market value of those long-term bonds fall. Now if everyone comes asking for their money back, the assets are not worth enough to pay everyone back.  In sum, you have "duration mismatch" plus run-prone uninsured depositors. We teach this in the first week of an MBA or undergraduate banking class. This isn't crypto or derivatives or special purpose vehicles or anything fancy. Where were the regulators? The Dodd Frank act added hundreds of thousands of pages of regulations, and an army of hundreds of regulators. The Fed enacts "stress tests" in case regular regulation fails. How can this massive architecture fail to spot basic duration mismatch and a massive run-prone deposit base? It's not hard to fix, either. Banks can quickly enter swap contracts to cheaply alter their exposure to interest rate risk without selling the whole asset portfolio. Michael Cembalist assembled numbers. This wasn't hard to see. Even Q3 2022 -- a long time ago -- SVB was a huge outlier in having next to no retail deposits (vertical axis, "sticky" because they are insured and regular people), and a huge asset base of loans and securities. Michael then asks .. how much duration risk did each bank take in its investment portfolio during the deposit surge, and how much was invested at the lows in Treasury and Agency yields? As a proxy for these questions now that rates have risen, we can examine the impact on Common Equity Tier 1 Capital ratios from an assumed immediate realization of unrealized securities losses ... That's what is shown in the first chart: again, SVB was in a duration world of its own as of the end of 2022, which is remarkable given its funding profile shown earlier.Again, in simpler terms. "Capital" is the value of assets (loans, securities) less debt (mostly deposits). But banks are allowed to put long-term assets into a "hold to maturity" bucket, and not count declines in the market value of those assets. That's great, unless people knock on the door and ask for their money now, in which case the bank has to sell the securities, and then it realizes the market value. Michael simply asked how much each bank was worth in Q42002 if it actually had to sell its assets. A bit less in each case -- except SVB (third from left) where the answer is essentially zero. And Michael just used public data. This is not a hard calculation for the Fed's team of dozens of regulators assigned to each large bank. Perhaps the rules are at fault? If a regulator allows "hold to maturity" accounting, then, as above, they might think the bank is fine. But are regulators really so blind? Are the hundreds of thousands of pages of rules stopping them from making basic duration calculations that you can do in an afternoon? If so, a bonfire is in order. This isn't the first time. Notice that when SBF was pillaging FTX customer funds for proprietary trading, the SEC did not say "we knew all about this but didn't have enough rules to stop it." The Bank of England just missed a collapse of pension funds who were doing exactly the same thing: borrowing against their long bonds to double up, and forgetting that occasionally markets go the wrong way and you have to sell to make margin calls. (That's week 2 of the MBA class.)  Ben Eisen and Andrew Ackerman in WSJ ask the right question (10 minutes before I started writing this post!) Where Were the Regulators as SVB Crashed? "The aftermath of these two cases is evidence of a significant supervisory problem," said Karen Petrou, managing partner of Federal Financial Analytics, a regulatory advisory firm for the banking industry. "That's why we have fleets of bank examiners, and that's what they're supposed to be doing."The Federal Reserve was the primary federal regulator for both banks.Notably, the risks at the two firms were lurking in plain sight. A rapid rise in assets and deposits was recorded on their balance sheets, and mounting losses on bond holdings were evident in notes to their financial statements.moreover, "Rapid growth should always be at least a yellow flag for supervisors," said Daniel Tarullo, a former Federal Reserve governor who was the central bank's point person on regulation following the financial crisis...In addition, nearly 90% of SVB's deposits were uninsured, making them more prone to flight in times of trouble since the Federal Deposit Insurance Corp. doesn't stand behind them.90% is a big number. Hard to miss.  The article echoes some confusion about "liquidity"SVB and Silvergate both had less onerous liquidity rules than the biggest banks. In the wake of the failures, regulators may take a fresh look at liquidity rules,...This is absolutely not about liquidity. SBV would have been underwater if it sold all its securities at the bid prices. Also Silvergate and SVB may have been particularly susceptible to the change in economic conditions because they concentrated their businesses in boom-bust sectors...That suggests the need for regulators to take a broader view of the risks in the financial system. "All the financial regulators need to start taking charge and thinking through the structural consequences of what's happening right now," she [Saule Omarova] saidAbsolutely not! I think the problem may be that regulators are taking "big views," like climate stress tests. This is basic Finance 101 measure duration risk and hot money deposits. This needs a narrow view! There is a larger implication. The Fed faces many headwinds in its interest rate raising effort. For example, each point of higher real interest rates raises interest costs on the debt by about $250 billion (1 percent x 100% debt/GDP ratio). A rate rise that leads to recession will lead to more stimulus and bailout, which is what fed inflation in the first place. But now we have another. If the Fed has allowed duration risk to seep in to the too-big to fail banking system, then interest rate rises will induce the hard choice between yet more bailout and a financial storm. Let us hope the problem is more limited - as Michael's graphs suggest. Why did SVB do it? How could they be so blind to the idea that interest rates might rise? Why did Silicon Valley startups risk cash, that they now claim will force them to bankruptcy, in uninsured deposits? Well, they're already clamoring for a bailout. And given 2020, in which the Fed bailed out even money market funds, the idea that surely a bailout will rescue us should anything go wrong might have had something to do with it. (On the startup bailout. It is claimed that the startups who put all their cash in SVB will now be forced to close, so get going with the bailout now. It is not startups who lose money, it is their venture capital investors, and it is they who benefit from the bailout. Let us presume they don't suffer sunk cost fallacy. You have a great company, worth investing $10 million. The company loses $5 million of your cash before they had a chance to spend it. That loss obviously has nothing to do with the company's prospects. What do you do? Obviously, pony up another $5 million and get it going again. And tell them to put their cash in a real bank this time.) How could this enormous regulatory architecture miss something so simple? This is something we should be asking more generally. 8% inflation. Apparently simple bank failures. What went wrong? Everyone  I know at the Fed are smart, hard working, honest and dedicated public servants. It's about the least political agency in Washington. Yet how can we be seeing such simple o-ring level failures? I can only conclude that this overall architecture -- allow large leverage, assume regulators will spot risks -- is inherently broken. If such good people are working in a system that cannot spot something so simple, the project is hopeless. After all, a portfolio of long-term treasuries is about the safest thing on the planet -- unless it is financed by hot money deposits. Why do we have teams of regulators looking over the safest assets on the planet? And failing? Time to start over, as I argued in Towards a run free financial systemOr... back to my first question, am I missing something? ****Updates: A nice explainer thread (HT marginal revolution). VC invests in a new company. SVB offers an additional few million in debt, with one catch, the company must use SVB as the bank for deposits. SVB invests the deposits in long-term mortgage backed securities. SVB basically prints up money to use for its investment! "SVB goes to founders right after they raise a very, very expensive venture round from top venture firms offering:- 10-30% of the round in debt- 12-24 month term- interest only with a balloon payment- at a rate just above prime For investors, it also seems like a no-downside scenario for your portfolio: Give up 10-25 bps in dilution for a gigantic credit facility at functionally zero interest rate.If your PortCo doesn't need it, the cash just sits. If they do, it might save them in a crunch. The deals typically have deposit covenants attached. Meaning: you borrow from us, you bank with us.And everyone is broadly okay with that deal. It's a pretty easy sell! "You need somewhere to put your money. Why not put it with us and get cheap capital too?"Update:1) Old Eagle Eye's comment below is fascinating. I am getting the sense that the rules actually preclude putting 2+2=4 together here. Copied here in totoSIVB did have a hedge put on during 2022, but it was limited to its available-for-sale securities ("AFS"). It was precluded from hedging its interest rate risk in held-to-maturity securities ("HTM") by U.S. GAAP rules. [My emphasis] Here is the explanation found at PwC:[PWC Viewpoint Commentary: "The notion of hedging the interest rate risk in a security classified as held to maturity is inconsistent with the held-to-maturity classification under ASC 320, which requires the reporting entity to hold the security until maturity regardless of changes in market interest rates. For this reason, ASC 815-20-25-43(c)(2) indicates that interest rate risk may not be the hedged risk in a fair value hedge of held-to-maturity debt securities." "ASC 815-20-25-12(d) provides guidance on the eligibility of held-to-maturity debt securities for designation as a hedged item in a fair value hedge."][Extracted subsection:"Chapter 6: Hedges of financial assets and liabilities. "6.4 Hedging fixed-rate instruments"6.4.3.4 Hedging held-to-maturity debt securities"ASC 815-20-25-12(d)"If the hedged item is all or a portion of a debt security (or a portfolio of similar debt securities) that is classified as held to maturity in accordance with Topic 320, the designated risk being hedged is the risk of changes in its fair value attributable to credit risk, foreign exchange risk, or both. If the hedged item is an option component of a held-to-maturity security that permits its prepayment, the designated risk being hedged is the risk of changes in the entire fair value of that option component. If the hedged item is other than an option component of a held-to-maturity security that permits its prepayment, the designated hedged risk also shall not be the risk of changes in its overall fair value."]Source: PWC Viewpoint (viewpoint.pwc.com) Publication date: 31 Jul 2022https://viewpoint.pwc.com/dt/us/en/pwc/accounting_guides/derivatives_and_hedg/derivatives_and_hedg_US/chapter_6_hedges_of__US/64_hedging_fixedrate_US.htmlUpdate 2: Thanks to anonymous below for a pointer to a good New York Times article about SVB, what the Fed knew and when. Apparently the bank's supervisors knew about problems for a long time before the bank failed. Whether this is good or bad news for the regulatory project I leave to you. 

The Pacific island countries (PICs) are some of the most exposed to frequent natural disasters and climate shocks, and their vulnerability is increasing due to mounting effects of climate change as well as demographic and economic forces. Natural disasters hit the poorest hardest and have long-term consequences for human development. Social protection programs and systems have an important role in helping poor and vulnerable populations cope with the impacts of shocks as well as build long-term resilience. This paper discusses the potential role of social protection for disaster and climate risk reduction and management in PICs. It presents evidence and lessons from other regions, providing examples of tools and entry points for the development of climate, and disaster, responsive social protection interventions and context-specific recommendations for PICs.

The housing finance market in Mali remains small and under developed. Few banks currently offer a full mortgage product with Banque Malienne de Solidarite, Mali Housing Bank (BHM), Bank of Africa, and EcoBank being the main lenders although at minimal levels. The total annual housing need in Mali based on the household formation rate amounts to 82,500, split between 51,100 urban units and 31,400 rural units. Overall some social housing is constructed and support is provided by the state for low income housing through the Office Malienne de l'Habitat (OMH), but the numbers remain small. The Malien authorities have been working to strengthen financial sector stability which includes measures to stabilize the BHM and put it in a position where it begins to fulfill its mandate of providing credit for the housing sector. A strategy was approved by the council of Minister for a strategic disengagement by the state from the share capital of BHM. Initially the agreed plan was for BHM to be privatized. Overall progress in delivery of affordable housing will require a concerted effort among all stakeholders both in public and private sector. This should be supported through establishment of stakeholder coordination group to oversee change across the housing value chain.

Beginning in 2003, Turkey initiated a series of reforms under the Health Transformation Program (HTP) that over the past decade have reshaped the health system. Understanding the political economy of this process is important for the future of Universal Health Coverage (UHC) in Turkey, and also for many other countries and the development agencies that assist them. This report analyzes the historical context and complex political economy challenges of the reform. Our findings are based on stakeholder interviews and a review of literature. First, we identified five contextual factors that were important in bringing health reform to the policy agenda in Turkey, and were helpful in sustaining the reform during adoption and implementation: (1) a long history of reform plans and attempts; (2) fiscal pressure to reform the social sectors; (3) public support for health reform; (4) strong economic growth; and (5) favorable demographic conditions. Second, we assessed four political economy challenges central to the reform and the strategies used by the Ministry of Health (MoH) to overcome them. First, the MoH built public support for reform among the broad base of beneficiaries by focusing on highly visible and fast changes. Second, the MoH overcame well-organized interest group opposition to the reforms by splintering their support or delegitimizing their views. Third, Turkey asserted its own domestic priorities over those of the IMF and World Bank in cases of direct conflict. Fourth, the MoH circumvented potential political and institutional opposition to the large expansion of benefits and coverage through a carefully sequenced adoption and implementation plan that could be executed mostly without requiring the support of other ministries. This analysis also highlights important trade-offs made by the MoH with respect to the redistribution of resources, quality of care, financial sustainability, and physician satisfaction, which will all have to be considered as Turkey enters its next phase of health system development.

This is a first for Indonesia: Program Keluarga Harapan (PKH) is the only household-targeted social assistance initiative to have designed randomized impact evaluation into the initial allocation of the program. This brings three major benefits for policymakers: 1) the evidence available for evaluating the impacts of the PKH program on household welfare is extensive and sound; 2) the program design and the impact analysis design have generated additional excitement, both nationally and internationally, about the program, its goals and social assistance initiatives in general; and 3) the results and underlying data will be made publicly available, which has already spurred interest in additional evaluations that will stock the shelves of social assistance policy research libraries. PKH's success in delivering real benefits to the very poor and in changing behaviors deserves further support and encouragement. PKH's initial weaknesses in implementation and delivery deserve continuing attention and thoughtful solutions for greater effectiveness. The Government of Indonesia (GOI) plans on expanding the PKH program to as many as three million households; while it is doing so, it should continue to refine implementation, coordinate and collaborate with affiliated service providers in health, education, and local government services, and continue developing a corps of organized, enthusiastic, and skilled facilitators who can assist very poor households in achieving healthier behaviors.

Social funds represent a diverse universe of World Bank projects. Social funds are defined as agencies or programs that channel grants to communities for small scale development projects. Social funds typically finance some mixture of socio economic infrastructure (e.g. building or rehabilitating schools, health centers, water supply systems,), productive investments (e.g. micro?finance and income generating projects), social services (e.g. supporting nutrition campaigns, literacy programs, youth training, support to the elderly and disabled), and capacity building programs (e.g., training for community based organizations, nongovernmental organizations, and local governments). Social Fund programs are demand driven and aim to involve the active participation of several local actors, often using a community driven development approach. The main goal is usually to address the needs of poor and vulnerable communities while building social capital and empowerment at the local level. Social funds have several features that place them in the social protection (SP) realm. They typically target poor communities and/or vulnerable households. They finance social risk management interventions like temporary employment generation and expanded access to basic services by the poorest. Social funds are often employed to address immediate post?conflict needs and responses to natural disasters.

Donald Trump casts a long shadow over the upcoming presidential – and congressional – elections in the United States. It is a menacing shadow, not only for what the former president could do if he returned to office but also because the political and institutional balances of the United States are threatened by the repercussions of his many legal troubles, the latest of which could even see him excluded from the race for the White House.Finished before starting
Opinion polls credit the former president with a staggering advantage (up to 63 per cent) in the race for the Republican nomination[1] and have him slightly ahead of Democrat Joe Biden in the general election.[2]
The idea that another candidate could gain such momentum from a victory in the early Republican primary season in Iowa or New Hampshire that they can go on to beat the former president seems remote. State-level polls show Trump leading everywhere, starting from Iowa, often with gaps not too dissimilar from the national data. After Super Tuesday on 5 March 2024, when sixteen states will select their delegates to for the Republican convention in Milwaukee in July, the former president should have closed the nomination file.[3]
After candidates endorsed by Trump performed poorly in the 2022 midterm elections,[4] the expectation was that the Republican Party would shift towards less controversial (though no less radical) figures, such as Governor of Florida Ron DeSantis, fresh from a triumphant re-election.[5]
In the following months, however, it became clear that this assumption rested on shaky ground. Rather than emphasising his greater electability based on his economic record and resistance to anti-Covid-19 regulations (very much unpopular amongst US right-wing voters), DeSantis doubled down on a fierce anti-progressive culture war, often taking more extreme positions than Trump himself on issues such as abortion.[6] Other candidates, like the entrepreneur Vivek Ramaswamy, followed suit.[7] Their strategies do not seem to have paid off: their combined support amounts to a miserable 15 per cent (11 and 4.5 per cent respectively) of the conservative electorate.[8] Clearly, right-wing voters prefer the original to the copy.
Non-Trumpian or openly anti-Trump Republican candidates – from Trump's former Vice-President Mike Pence to New Jersey's ex-governor Chris Christie – are little more than footnotes in the primary book. The only apparent exception is the great hope of mainstream conservatives, former Governor of South Carolina and former US Ambassador to the UN (under Trump) Nikki Haley.
Yet, despite impressing the press with her strong debating skills[9] and gaining growing financial support from a number of wealthy donors,[10] Haley is not a strong candidate – in fact, she is quite weak. After all, she languishes at a meagre 11 per cent in national polls.[11] In Iowa, where the assault on the former president should begin, she hovers around 16 per cent, a whopping 35 points below Trump and even below DeSantis.[12] In New Hampshire she fares somewhat better (25 per cent) but still trails Trump by around 20 points.[13]The phantom Republican opposition
The Republican primary season opening next week seems to have a foregone conclusion. Once the nomination is secured, any residual opposition to Trump amongst conservatives will fade away, and the entire party and right-wing electorate will rally around the former president, as most of them have largely done already in recent years.
After the 2020 election, when Trump's attempts to overturn Biden's victory culminated in the 6 January 2021 assault on Congress by a crowd of his supporters, a number of exasperated Republicans counted on Trump being finished. The fact that most expressed those feelings behind closed doors was telling, though.
Indeed, it did not take Republicans long to show that their love affair with Trump was anything but over.
On the very night of the attack on Capitol Hill, in which five people were killed,[14] 139 Republican representatives and eight senators still refused to certify Biden's victory,[15] with no other justification than to maintain support in a conservative base convinced that the election was rigged, despite evidence to the contrary.[16] Shortly thereafter, Republican opposition prevented Trump's second impeachment from resulting in his formal removal from office.[17]
Only two Republicans, both subsequently forced to leave the party, later participated in the House inquiry into the 6 January events,[18] which concluded with the recommendation to indict the former president for insurrection.[19] And when the indictments did come, Trump did not lose support among conservatives. If there was an effect, it seems to have been that of galvanising the right, persuaded that Trump is a victim of politically motivated charges.
The former president is under investigation by a federal special counsel[20] and a Georgia district attorney[21] for attempting to overturn the 2020 election. He has also been indicted for illegally keeping classified documents in his private residence by the federal special counsel[22] and for violating campaign finance laws by the Manhattan district attorney.[23]Biden is weaker than Trump is strong
Nearly certain of securing the nomination, Trump can look to November with some optimism. The former president remains an extremely controversial candidate in light of his legal troubles, increasingly extreme rhetoric[24] and authoritarian instincts.[25] Nevertheless, he has gained support in key demographic constituencies for Democrats, such as Black and Latino males.[26]
His winning card is Biden's unpopularity, with the president struggling to break away from the 40 per cent approval mark.[27] Despite the economy growing at a robust pace[28] and unemployment at historic lows,[29] Biden is grappling with the effects of inflation (now back under control but from the highest levels since the early 1980s), ongoing anxieties over immigration and, above all, the perception that he is too old for another term. This opinion is widespread among Democrats too.[30]
In contrast to 2016, this time Trump can rely on an organisational infrastructure – the so-called Project 2025, created by the conservative think tank Heritage Foundation – to implement a radical government agenda.[31] The plan includes an effort to hollow out the federal administration and replace career officials (at least in key positions) with individuals selected on the exclusive basis of their absolute loyalty to Trump. The Department of Justice would thus be subordinated to the White House and used to eliminate legal threats (Trump could even pardon himself from federal crimes if convicted) and prosecute political opponents. It is no wonder that even conservative analysts openly speak of America's impending authoritarian drift.[32]Rule of law vs the will of the people
A second Trump presidency is not guaranteed. Biden could regain ground and defeat the former president, as he did in 2020. Crucially, a possible conviction in one of the four criminal trials could erode his support among independents and even Republicans (a third of whom claim they would not support him in this case).[33]
Alternatively, Trump could be pre-emptively excluded if the Supreme Court were to uphold the verdict by which the highest court in Colorado declared Trump ineligible (as did Maine's secretary of state) due to his guilt in the insurrection.[34]
The Supreme Court's verdict, not expected before Super Tuesday, is perhaps the most important – certainly the most anticipated – in the history of the United States. In essence, the nine justices – six conservatives (half of whom appointed by Trump) and three progressives – face the question of whether, in a constitutional democracy, the judgment on the eligibility of a citizen as president ultimately descends from the law or the electorate.
Regardless of the outcome, a portion of the citizens will perceive the verdict as illegitimate, further widening the divisions in the already ultra-polarised American electorate.
Law or politics? Rule of law or the will of the people? The history of the United States (and not only) has also been a constant attempt to reconcile them, making them complementary parts of an organic whole. Today, they are separated and indeed in conflict with each other. Even before it concludes in a year or five from now, the political saga of Donald Trump has already left a weighty and damaging legacy for American democracy.Riccardo Alcaro is Research Coordinator and Head of the Global Actors Programme at the Istituto Affari Internazionali (IAI).[1] Shane Goldmacher, Ruth Igielnik and Camille Baker, "Trump's Legal Jeopardy Hasn't Hurt His G.O.P. Support, Times/Siena Poll Finds", in The New York Times, 20 December 2023, https://www.nytimes.com/2023/12/20/us/politics/trump-cases-poll-2024.html.[2] RealClearPolling website: General Election: Trump vs. Biden, accessed on 5 January 2024, https://www.realclearpolling.com/polls/president/general/2024/trump-vs-biden.[3] A full schedule of the Republican primary is available in the 270toWin website: https://www.270towin.com/2024-presidential-election-calendar.[4] Aaron Blake, "How Bad the 2022 Election Was for the GOP, Historically Speaking", in The Washington Post, 10 November 2022, https://www.washingtonpost.com/politics/2022/11/10/republican-losses-2022-midterms.[5] Myranda Bryant, Martin Pengelly and Hugo Lowell, "Trump Branded Midterms' 'Biggest Loser' as DeSantis Win Fuels 2024 Talk", in The Guardian, 9 November 2022, https://www.theguardian.com/p/mjpfy.[6] Rotimi Adeoye, "Ron DeSantis' Dumb, Failed Strategy to Campaign on Culture War Bullshit", in The Daily Beast, 9 July 2023, https://www.thedailybeast.com/ron-desantis-dumb-failed-strategy-to-campaign-on-culture-war-bullsht.[7] Andi Ortiz, "'Morning Joe' Says Vivek Ramaswamy Is Just 'Doing an Impersonation' of Trump: 'All Style and No Substance'", in The Wrap, 31 August 2023, https://www.thewrap.com/morning-joe-vivek-ramaswamy-doing-trump-impersonation.[8] RealClearPolling website: 2024 Republican Presidential Nomination, accessed on 5 January 2024, https://www.realclearpolling.com/polls/president/republican-primary/2024/national.[9] Jazimine Ulloa, "For Haley, Rise in Polls Feeds Voter Enthusiasm on Trail", in The New York Times, 29 November 2023, https://www.nytimes.com/2023/11/29/us/politics/nikki-haley-campaign.html.[10] Fredreka Schouten, "Nikki Haley Draws Growing Interest from Deep-Pocketed Donors as GOP Presidential Field Shrinks", in CNN, 16 November 2023, https://edition.cnn.com/2023/11/16/politics/nikki-haley-donors/index.html.[11] RealClearPolling website: 2024 Republican Presidential Nomination, cit.[12] RealClearPolling website: 2024 Iowa Republican Presidential Caucus, accessed on 5 January 2024, https://www.realclearpolling.com/polls/president/republican-primary/2024/iowa-caucus.[13] RealClearPolling website: 2024 New Hampshire Republican Presidential Primary, accessed on 5 January 2024, https://www.realclearpolling.com/polls/president/republican-primary/2024/new-hampshire.[14] Jack Healy, "These Are the 5 People Who Died in the Capitol Riot", in The New York Times, 13 October 2022, https://www.nytimes.com/2021/01/11/us/who-died-in-capitol-building-attack.html.[15] Karen Yourish, Larry Buchanan and Denise Lu, "The 147 Republicans Who Voted to Overturn Election Results", in The New York Times, 7 January 2021, https://www.nytimes.com/interactive/2021/01/07/us/elections/electoral-college-biden-objectors.html.[16] Alison Durkee, "Republicans Increasingly Realize There's No Evidence of Election Fraud—But Most Still Think 2020 Election Was Stolen Anyway, Poll Finds", in Forbes, 14 March 2023, https://www.forbes.com/sites/alisondurkee/2023/03/14/republicans-increasingly-realize-theres-no-evidence-of-election-fraud-but-most-still-think-2020-election-was-stolen-anyway-poll-finds.[17] "Here's How Senators Voted on Trump's Second Impeachment", in Politico, 13 February 2021, https://www.politico.com/interactives/2021/trump-second-impeachment-senate-vote.[18] Ivana Saric, "Trump: McCarthy Should've Put Republicans on Jan. 6 Committee", in Axios, 22 June 2022, https://www.axios.com/2022/06/22/trump-mccarthy-republican-jan-6-committee.[19] US Congress Select Committee to Investigate the January 6th Attack on the United States Capitol, Final Report, 22 December 2022, https://www.govinfo.gov/app/details/GPO-J6-REPORT.[20] Charlie Savage and Adam Goldman, "The Trump Jan. 6 Indictment, Annotated", in The New York Times, 1 August 2023, https://www.nytimes.com/interactive/2023/08/01/us/politics/trump-jan-6-indictment-2020-election-annotated.html.[21] Hannah Grabenstein, "Read the Full Georgia Indictment against Trump and 18 Allies", in PBS NewsHour, 15 August 2023, https://www.pbs.org/newshour/politics/read-the-full-georgia-indictment-against-trump-and-18-allies.[22] Charlie Savage, "The Trump Classified Documents Indictment, Annotated", in The New York Times, 27 July 2023, https://www.nytimes.com/interactive/2023/06/09/us/trump-indictment-document-annotated.html.[23] Hannah Grabenstein, "Read All of the Charges against Trump in the New York Hush-Money Case", in PBS NewsHour, 4 April 2023, https://www.pbs.org/newshour/politics/read-all-of-charges-against-trump-in-the-new-york-hush-money-case.[24] Michael Gold, "Trump, Attacked for Echoing Hitler, Says He Never Read 'Mein Kampf'", in The New York Times, 19 December 2023, https://www.nytimes.com/2023/12/19/us/politics/trump-immigrants-hitler-mein-kampf.html.[25] Charlie Savage, Jonathan Swan and Meggie Haberman, "Why a Second Trump Presidency May Be More Radical Than His First", in The New York Times, 7 December 2023, https://www.nytimes.com/2023/12/04/us/politics/trump-2025-overview.html.[26] Aaron Blake, "Trump Hits New Highs with Black, Hispanic Voters. What to Make of It?", in The Washington Post, 19 September 2023, https://www.washingtonpost.com/politics/2023/09/19/trump-poll-support-black-hispanic.[27] RealClearPolling website: President Biden Job Approval, accessed on 5 January 2024, https://www.realclearpolling.com/polls/approval/joe-biden/approval-rating.[28] Abha Bhattarai, "The Economy Is Booming, But Inflation Continues to Sour Americans", in The Washington Post, 13 November 2023, https://www.washingtonpost.com/business/2023/11/13/biden-economy-inflation-gdp-unions.[29] Louis Jacobson, "Fact Check: Did Biden Set a Modern Record for Low Unemployment Rates?", in WRAL News, 7 July 2023, https://www.wral.com/story/20940134.[30] Aaron Blake, "Biden's Age May Be a Growing Problem for His Reelection", in The Washington Post, 5 September 2023, https://www.washingtonpost.com/politics/2023/09/05/biden-age.[31] See the Project 2025 website: https://www.project2025.org. For a short introduction, see Spencer Chretien, "Project 2025", in Heritage Foundation Commentaries, 31 January 2023, https://www.heritage.org/node/25154496.[32] Robert Kagan, "A Trump Dictatorship Is Increasingly Inevitable. We Should Stop Pretending", in The Washington Post, 30 November 2023, https://www.washingtonpost.com/opinions/2023/11/30/trump-dictator-2024-election-robert-kagan.[33] Shane Goldmacher, Ruth Igielnik and Camille Baker, "Trump's Legal Jeopardy Hasn't Hurt His G.O.P. Support, Times/Siena Poll Finds", cit.[34] Jenna Russell, Ernesto Londoño and Shawn Hubler, "Maine Joins Colorado in Finding Trump Ineligible for Primary Ballot", in The New York Times, 28 December 2023, https://www.nytimes.com/2023/12/28/us/maine-trump-ballot.html; Maggie Astor, "Trump Is Disqualified from 2024 Ballot, Colorado Court Says in Explosive Ruling", in The New York Times, 19 December 2023, https://www.nytimes.com/2023/12/19/us/politics/trump-colorado-ballot-14th-amendment.html.

Most post-modern societies are being challenged by a widening gap that divides their populations by the classic cleavages of age, class, region and religion. Exacerbated by the forces of globalization and the immediacy of technology, they result in constant clashes that cause an exponential increase in social tensions and insecurity. Even if the Norwegian killer was insane and can not be used as example, he was still a member of the dominant culture failing to accommodate to post-modern circumstances. In the United States this gap is vividly evident in the current debt ceiling debate, which is only a symptom of much serious divisions that threaten the country's social unity and political future.A brief look at recent headlines in the United States can give outsiders and idea of the country's social and political environment.On Sunday July 24th, a new law approving gay marriage came into effect in New York, making it the sixth and largest state in the nation (plus the District of Columbia) to have legalized same-sex marriage. In Manhattan, people celebrated on Fifth Avenue, singing and dancing to the music and well-suited lyrics of New York, New York ("If we can make it here, we'll make it anywhere…"). On July 0th, Republican candidates Michelle Bachman and Rick Santoro a "Marriage Vow" swearing fidelity to their spouses, promising they would "vigorously oppose any redefinition of marriage" and would take steps to amend welfare legislation that did not reinforce conventional marriage. This is only a sample of the extreme polarization the country is facing both economically and socially. It is a critical moment in United States history, one that may require a deep reflection on the basic principles the nation was founded upon and a renewal of the social compact.Prodded by the Tea Party leaders, who presently wield an amount of power disproportionate to their numbers, Republican candidates have been signing pledges on an array of different topics in order to prove their conservative credentials. Both Michelle Bachman and Mitt Romney also signed a no-new-taxes pledge, together with a "cut, cap and balance pledge" to amend the Constitution to require a balanced budget and congressional super majorities to raise taxes. These two pledges, albeit non-enforceable and thus largely symbolic, are now the single most important obstacle to reach a deal in Congress about balancing the budget and avoiding default on the national debt. Tea Party Nation leader Judson Phillips has threatened to recruit candidates to mount primary challenges against any GOP member that votes for a compromise on the debt ceiling that involves any type of revenue increases to balance the budget. The GOP Congressional leadership has been hijacked by intransigent ideologues, represented in the House by 87 freshmen with disproportionate power over the more established professional politicians who understand that democratic governance requires give and take, and that politics in a pluralistic society is the art of the achievable.This country was founded on the premise of compromise, negotiation and cooperation, as it is evident from the history of the Constitution and the layers of governmental power devised mainly to counterbalance one another: states versus federal, legislative versus executive, Senate v. House, and an independent judiciary. It was clear even then, that solutions in what promised to be a huge, diverse society with deep regional and religious cleavages would require compromise. But today, in the "worst Congress ever" as Norman Ornstein calls it in his recent article in Foreign Policy, compromise is a bad word. The House is controlled by a GOP freshmen class that owes its seats to Tea Party ideologues and is refusing to raise the debt ceiling even as President Obama has agreed to cuts in spending that include cuts in entitlements, in exchange for ending subsidies on ethanol and other corporate subsidies (he has even given up on the expiration of the Bush era tax cuts he had included in his first proposal). This package that would represent over 3 trillion dollars in cuts from the federal budget, including reductions in Medicare and other social programs, would have allowed the debt ceiling to be raised so that the US could avoid defaulting on its debt by August 2nd. It was on the table last week and close to being signed on by House Speaker John Boehner but he refused it at the last minute because of pressure from his own caucus. The Tea Party is pushing professional legislators toward the abyss, and with them, the whole country. The Tea Party is a social movement that was born out of frustration and disappointment with government spending over the last twelve years. President George W. Bush inherited a budget surplus from the Clinton-Gingrich years. But that surplus quickly vanished as Bush proposed and got passed serious tax cuts on the wealthy and then embarked on two wars that are still going on today. In response, a large coalition of Independents, Republicans and a few former Democrats formed a protest movement that defines itself for what it is against: big government, big media, big banks, unsustainable deficits and intrusive federal regulation. In spite of some evident intrinsic contradictions in their philosophy (for example some the new regulations they so vehemently oppose such as the Dodd-Frank legislation are meant to constrain the actions of "big banks" they so strongly abhor), the Tea Party has been very successful in focusing the public's attention on the federal budget deficit and on the federal debt that has ballooned in the last two decades. Those are its core concerns, together with a deep-seated contempt for and rejection of, everything the well-educated elites are for the most in favor of: environmental sustainability, a foreign policy based on multilateralism, gay rights and immigration reform legislation that recognizes the realities of the estimated twelve million undocumented workers in the country. After two months of wrangling, neither side has managed to get what it wanted, the US credit rating is about to be downgraded (with the subsequent increase in interest rates and damaging effects on an already slow economy) and the vitriolic Washington environment is alienating people on the Right and on the Left. Pressured by the Tea Partiers and their anti-tax obsession, Republicans have refused to compromise to avoid a default, and in so doing they are sabotaging their own chances for 2012. Most Americans are appalled at the GOP's refusal to endorse Obama's proposal that would cut the deficit by $3.7 trillion through a mix of spending cuts, entitlement reform and ending some corporate subsidies and tax deductions. In so doing, the GOP is alienating independent voters that want to avoid default and are ready for a deal. A new political center of gravity is forming. The number of registered voters that identify themselves as Independent is growing (40% in latest poll), while the numbers of Republicans and Democrats are sinking and there is a new online movement from the grassroots to form a third party.Paradoxically, out of all this Byzantine intrigue in the hallways of Congress, and given the outcome of no deal announced on Monday night, President Obama may come out as the winner. To the dismay of his most progressive base, Obama, intent on finding some common ground with the opposition has shifted to the center-right of the political spectrum on his proposals, daring to sacrifice some cuts on entitlements in exchange for revenue increases, only to see them rejected by the Republicans. He is close to winning a stand-alone debt ceiling increase while having proven to be the only reasonable adult in this struggle. This would gain him the support of many independents and help him avoid a confrontation within his own party. It would also allow him to focus on unemployment, the real immediate crisis that most directly impacts people's lives. However, Democrats in the House and Senate are afraid that concessions on reducing some Medicare benefits, for example, or postponing the eligibility age, would ruin the clarity of their message to seniors during the election. Conversely, Tea Partiers see a compromise involving any sort of revenue increases by the government, even non-tax measures such as ending corporate subsidies, as a betrayal of their principles. The Tea Partiers have brought into focus the spending crisis that has been growing unchecked for a long time, and one the country cannot obviously tax its way out of. Some facts cannot be denied: debt is the result of spending not backed by revenue. Total government spending at all levels has risen to 37% of the GDP today from 27% in 1960. It could reach 50% by 2038. The debt-to-GDP ratio has reached 100% today, from 42% in 1980. The big moral struggle is still ahead. There is no question that the government is spending too much, but the real debate is about priorities and the philosophies that underlie those priorities. The President has recognized that the budget deficit is important to voters, most of which have come to the conclusion that since the stimulus spending did not solve the problem of unemployment, deficit reduction appears to be a better way to improve the economy than investing in education, infrastructure and new energy technologies. Obama must acknowledge this, and make it part of his discourse.But the President must also continue to make a case for the common good ("there are things we can still do together", he said in his last speech), the social safety net and America's future. He can do this by personalizing the budget battles the way Clinton did. Are budget battles about choices or necessities? Why give more tax cuts to the wealthy if their wealth has grown through the recession while the rest saw their wealth diminish? Why subsidize corporate agriculture and ethanol production? Social programs like Medicare serve all Americans, why focus on cutting it while giving a pass to the upper income- and- wealth echelon? General elections are won from the center. Strong strident advocates make for weak candidates. Undoubtedly, the 2012 election will be about money, about fiscal discipline, but it will also be about a more equal distribution, and it will require strong leadership from the two respective philosophical corners to come to a consensus. That is why the Republican establishment is so worried about the lack of gravitas in their field of candidates. That is why some yearn for budget whiz Paul Ryan, or Governor Chris Christie or Rick Perry….or anybody really, that looks and sounds as if he can take on Obama in the intricacies of the budget, the debt ceiling, and social programs reform. That may also be why Jeb Bush was asked on Fox News about his intentions to run for President again two days ago. This time his response was more nuanced: he said that while he doesn't anticipate it, he hasn't ruled it out ("but, he added, "I haven't ruled out being in Dancing with the Stars, either").In the meantime, the Wall Street Journal today announced that, based on the Pew Research Center tabulations of SIPP and Census date, the wealth gap between America's whites and its two largest minorities, Blacks and Hispanics, has widened to unprecedented levels due to the housing crisis and the Great Recession. Alan Greenspan, former President of the Federal Reserve has said repeatedly that the wealth gap that has grown consistently for the last decade is a threat not only to our country but to capitalism itself. Poverty and unemployment are a combustive mix: if fiscal responsibility ends up being based on the back of the poor, social conflict will erupt. It is unconscionable, for example, to think that hedge fund managers pay significantly less taxes than their secretaries.Some Republicans want to abolish every piece of social legislation and re-litigate every progressive judicial decision since the New Deal. As part of pledge game, Michelle Bachman and four other candidates also signed the "Susan B. Anthony pledge "promising to appoint abortion opponents to their cabinets and to deny all funding for Planned Parenthood when they become presidents. The bizarre "Marriage Vow "pledge signed by Bachmann and Santoro not only opposes same-sex marriage and includes a personal promise to be faithful to their spouses, but (most peculiarly yet redundantly) it also rejects Sharia Law (which, by the way, like Bachman, also opposes gay marriage and female adultery, which it punishes by death!)The only candidate that has refused to sign any pledge is Jon Huntsman, who understands the perils of siding too closely with the rebellious Tea Party. Even if some of its main points have successfully brought into focus the deficit issue, the Tea Party is still supported by a minority and resented by most Republicans. Its anti-technocratic, anti-Washington message has resonance, but it may have pushed the GOP too far into a corner. Its message is also becoming blurred when it steps into the social arena: its racist and homophobic overtones do not reflect the spirit of the times and are offensive to the "millenials", the youngest generation of voters born in the 80s and 90s, which Republicans still hope to attract in 2012. Social movements are major vehicles of participation and can re-energize a worn out party. They reflect the spirit of the times, often in an extremist way that is what gives them prominence: their passion for the cause, their original approach, are all important, but their message has to resonate with the public if they are to succeed. They emerge, coalesce, grow and achieve some successes. However, once their main point is made, three things can happen: they can become a party, their main ideas can be incorporated into mainstream politics, or they dissipate and be quickly forgotten. The Tea Party brought into focus the issue of fiscal responsibility, it infused conservatism with new energy and found a natural home in the Republican Party, which had become profligate, and will have to prove from now on that it is sincere about austerity. Its impact is undeniable: it has also attracted Independents and in so doing, has per force moved the Democratic Party to the center-right. Mimicking the "big tent" approach of Republicans, the Tea Party has lately been focusing strategically on fiscal responsibility, limited government and free markets and its main groups have avoided divisive social issues when speaking to the general public. But their demands of ideological purity from their candidates, their emphasis on returning to the strict meaning of the Constitution and the values of the Founding Father, their defense of states rights and gun rights, belie their claims of inclusiveness for all Americans; in its coded language, its contempt for immigrants and its not-so- veiled racism, one senses a strongly reactionary sentiment bordering on uncontainable fanaticism which is completely out of step with most Americans and which will make it very difficult to widen its appeal beyond what it has already achieved.To paraphrase deceased Republican leader Barry Goldwater, the Tea Party's aim isnot to streamline government or make it more efficient, but to get rid of every piece of social legislation and economic regulation passed since the New Deal. Their purpose is not to share the burden of the weakest members of society, nor to educate their children so they can have equality of opportunity, but to defend the individual freedoms of those who can stand on their own. In sum, they are extremists for whom tolerance and moderation are vices, not virtues, and therefore they have no place in a democracy.Senior Lecturer, Department of Political Science and Geography Director, ODU Model United Nations Program Old Dominion University, Norfolk, Virginia

This report explores the potential financing mechanism options that can be employed to catalyze more private sector investment in clean energy (renewable energy and energy efficiency) in the small island developing states (SIDS). Various financial instruments that have been used successfully to date are described and placed in the context of the issues and constraints of the SIDS, with suggested options for discussion and follow up. Green infrastructure finance, as defined in the report, makes the important point that is the combination of financial and nonfinancial interventions and instruments that can make green investments in infrastructure more affordable and less risky to private sponsors, financial markets, and governments. The objective of this report is to identify and assess options that can help increase investment in renewable energy and energy efficiency in SIDS through the adoption and funding of financing mechanisms by SIDS and development partners with special attention given to the role that the private sector can play. Many renewable energy technologies are characterized by high initial capital costs with relatively low operating costs compared to thermal alternatives. By providing an analysis of options for a financing facility to catalyze renewable energy and energy efficiency, this work is intended to inform the discussions among SIDS and development partners interested in actions to stimulate investment in renewable energy and energy efficiency. This report summarizes the results of the two stages. The assessment and selection of options identifies a number of measures that will be needed to stimulate increased private sector participation - project sponsors and developers, equity funds, lending institutions - for energy efficiency and renewable energy. The background material reviewed for this report has been summarized in the annexes.

This Poverty and Social Impact Analysis (PSIA) is part of a broader dialogue on energy tax reform and strengthening social safety nets in Djibouti. As part of a possible reform of energy taxes in Djibouti, the government of Djibouti has sought the support of the World Bank to better understand how such a policy reform can be pro-poor. The study was designed and implemented by a multisectoral committee composed of various stakeholder institutions, including the Ministry of Economy and Finance, the Ministry of Budget, the Secretary of State responsible for National Solidarity (SESN), the Department of Statistics and Demographic Studies (DISED), the Ministry of Energy, and the Ministry of Transport, with whom the teams of the Bank and the IMF collaborated throughout the process of preparation of the study. Technical meetings were held on January 30, February 2, May 25, May 28, and May 29, 2014, in Djibouti to discuss the various scenarios of reform, obtain additional information, and present preliminary quantitative results. Consultation meetings were held on July 2 and November 15, 2014, to present the findings and discuss possible reform options. This executive summary condenses the main findings of the study. The study is available as a separate report with more analyses and background information. The study is based on data from a representative household survey which includes detailed information on household expenditures and receipt of certain cash and in-kind benefits (EDAM 3-2012). The tables in this executive summary show 2014 prices, with inflation rates of 2.5 and 2.9 for 2013 and 2014, respectively.