Jobs and security for those displaced by ISIS

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by Stephen Hollingshead and Lotta Moberg
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As the Trump administration convenes leaders in Baghdad to discuss reconstruction of the Christian and Yazidi areas of Northern Iraq devastated by Islamic State genocide, we should focus above all on employment for the displaced.

Globally, 20 new people are displaced every minute, 28,300 every day, and the duration of displacement is climbing dramatically. It is impossible to address this human scandal without a relentless focus the conditions for job creation.
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Our nation-building in Iraq has failed. Instead of imagining we can know how to build an entire economy, we should focus on small, defined areas. If our efforts bear fruit, they can then be transferred to the whole country. This approach has worked in several countries, lifting hundreds of millions of people out of poverty.

There are more than 4,000 Special Economic Zones in the world—special jurisdictions with lower tax and regulatory burdens and focused infrastructure investment. These zones provide a body of evidence that can guide the rebuilding of areas ravaged by genocide. Restoring security first is fundamental to economic activity. Therefore, we propose Secured Special Economic Zones for the minority areas of Northern Iraq. SEZs can attract foreign direct investment and create employment. China’s Shenzhen, one of the oldest and largest modern SEZs, increased its real income per capita fortyfold from 1980 to 2008.

The blockbuster economic success of neighboring Hong Kong functioned as a de facto SEZ. Developing under the protective aegis of British empire, it owed much to its integration and employment of refugees. Dubai’s use of British law and judges in its financial district SEZ attracted enormous investment, creating thousands of jobs. Zones can also prosper by attracting immigrants.

Until recently, Jordan’s King Hussein bin Talal Development Area was only 10 percent occupied. This large SEZ was built at a cost of $140 million to attract business. But Jordanians would not work there because the Syrian war raged across the border. Meanwhile, 83,000 refugees sat on their hands for four years in a camp only 15 minutes away. Visiting scholars turned practitioners Alexander Betts and Paul Collier saw an opportunity, and pushed a policy to put displaced people to work to help themselves and their host society. Now, thousands of refugee families in Jordan can regain their sense of dignity by earning a living. In their 2017 book Refuge: Transforming a Broken Refugee System, Betts and Collier showed what a contribution refugees can make to the broader economy.

For example, 70,000 refugees live in Nakivale, Uganda’s largest and oldest camp. With 74 villages across 50 miles and three administrative areas, Nakivale has employed a remarkable plurality of ethnicities to become a beacon of economic flourishing in Uganda. Thriving SEZs foster private-sector investment, and provide a proven strategy for returning displaced families to the dignity of productive work.

It is often unrealistic in developing countries to hope for countrywide economic reforms. But we can create jobs in small localized areas with adequate levels of security and infrastructure. These zones can also provide jurisdictions unhampered by corruption, by introducing new rules and judges within these defined areas.

In Iraq, the employment problem first requires solving the the security problem. The strategic flaw in the Iraqi security apparatus is its lack of local legitimacy. Christians from Alqosh or Yazidis from Sinjar can join the security forces, but they are not currently allowed to police their own villages. Moreover, the mayors of their towns are selected hundreds of miles away in Baghdad.

There is no quick fix for Iraq’s dire nationwide security problem. But it is possible to create local legitimacy and security in limited areas. All the competing security units should be united under a single Iraqi Security Forces uniform and chain of command. And the Global Coalition to Defeat ISIS already has members willing to train local police and judges to secure the property rights necessary for economic activity. Rep. Barbara Comstock, R-Va., was an early champion of the House’s unanimous declaration that ISIS war crimes against minorities in Iraq and Syria constitute genocide. She strongly supports this approach. “The SSEZ proposal puts policy legs on our call for safe zones in Iraq and Syria for those displaced by ISIS,” she has said.

Iraq currently fails to attract foreign direct investment and support its homegrown entrepreneurs due to its lack of security and abysmal climate for business. The World Bank’s latest Doing Business report scores Iraq zero for resolving insolvency, zero for access to credit, and ranks it 154 out of 190 countries for starting a new business.

Changing the whole country overnight is not feasible. But small, defined SSEZs with local legitimacy can help fragile minority communities recover from ISIS. This is the best hope for Iraq and its thousands of displaced families.

Stephen Hollingshead is CEO of ChangeInEx, a Blockchain/biometric financial inclusion hub for the unbanked, and founder of Lotta Moberg is a macroeconomist, author of The Political Economy of Special Economic Zones, and a founding team member of Refugee Cities.

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