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Another paper referencing my work.

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Proud to be referenced in other papers. 


Governance, Fragility, Peace Building and Civil Society – limitations 

The biggest limitation for this review is a lack of models which look comprehensively at the question of governance and civil society in the context of fragility and peace building, and also apply this to the Palestinian context. Current models, which are also used in Palestine, focus either on 

  • the definition, function and typology of civil society, their internal and external governance
  • the types of relationship between the state and civil society  
  • the role of the actors, civil society and the state, in a situation of fragility and in peace building

Very seldom is a governance perspective on both, civil society AND the state employed. Cangas for example has a more comprehensive approach and suggests an enhanced governance structure:

 Edit   
Cangas in his model focusses here on the shared ideal governance values of civil society and the state, which employ different approaches to ultimately achieve similar goals. Perhaps in the future a coherent model and analysis to define where programs make distinct contribution to a wider governance structure within fragility and conflict could be helpful. 

In full knowledge of these limitations, the paper will focus more on the role of Palestinian civil society within fragility and as an actor to promote good governance.
Status of peace building discourse in Palestinian civil society, non-violent resistance, relevancy of currently defined Peace Building Needs

The role of Palestinian civil society in the peace building process such as 

  • Peace education
  • People to people projects
  • Track two diplomacy and problem solving workshops

… especially together with Israeli civil society, are currently under harsh criticism by many civil society actors and activists up to the level of rejection. In many case peace building and conflict resolution are perceived by Civil Society as synonymous to “normalization”, a term coined to define common strategies, partnerships and projects with Israeli civil society, which in turn are seen as being exploited by the Israeli state and civil society to demonstrate that the situation is “normal” and that military occupation and an active policy of denial of national aspirations, citizenship and human rights does not exist. “Normalization” is seen as playing into the Israeli narrative that the status of the occupied Territories is merely “contested” and the Israeli regime a benign form of stewardship. Instead, most Palestinian activists and NGO-leaders believe that Israeli civil society should first influence their own government to give up occupation and grant national aspirations, rather than enter dialogue projects with Palestinian civil society. 

There appears a tiny window of opportunity with leftist Israeli NGO which vehemently oppose occupation such as Adalah, Coalition of Women for Peace, Physician for Human Rights, etc.. But although Palestinian NGO leaders are willing to work with these organizations, the communication of such cooperation to their constituencies is difficult and even dangerous to the reputation and thus legitimacy to individual Palestinian NGO. 

Peace building within Palestinian civil society thus focusses either on local non-violent conflict resolution or an non-violent resistance, such as international advocacy, demonstrations, challenging actively the permit regime in Area C by building without permits, calling of Boycott, Divestment and Sanction of all Israeli institutions or of settlements and their products. These avenues are seen as the only credible options by Palestinian civil society how to either deal with inner Palestinian conflicts (the use of mediation and conflict resolution) or on how peacefully oppose further colonization and occupation of land and denial of international human rights, ongoing violations of international law and cases of perceived war crimes.  

Alternative and dissenting discourse on how to achieve “Peace Building Needs”, that is of how to achieve a life within peace, safety, security and justice is seldom practiced within Palestinian civil society, which also excludes public discussions on one or two state solutions. In informal discussions the two state solution is seen as “dead”, more or less based on the assumption that the state of Israel has no interest in this kind of resolution. However in the opinion of Palestinian civil society, without the fulfillment of national aspirations, no peace can be accomplished in the long term. Palestinian civil society is more or less sidelined from this process and thus resorts to national and international advocacy, providing services where the PA does not fulfill its function, and entering into negotiation processes with the PA and international donors on developmental or humanitarian concerns and needs for marginalized groups and how best to address these.  

German development policy and thus development cooperation policy distances itself from the BDS movement due to Germany’s historical obligations and special relationship to Israel, and furthermore stands firmly by the policy of a two state solution and building the Palestinian institutions to be ready to fulfill that function.   

What resonates within Palestinian civil society, apart from seeking permanent justice and peace for its constituencies, is that it continuously DOES struggle for social justice for marginalized groups such as women, youth and people with disabilities and through service provision alleviates economic and social disparities. It DOES strive to overcome territorial fragmentation through shared social values and beliefs and actions and it IS in constant dialogue with the PA, which in turn increases its legitimacy. 

The Palestinian state project within the context of fragility and legitimacy

If the PA constitutes state is internationally contested. It does not hold full control over the territory which it has claims to, it cannot provide security for its citizens and its input legitimacy is eroding due to the absence of national elections and the ongoing political split between Fatah and Hamas. However the PA has proclaimed itself a state and Palestinian civil society has not opposed this proclamation, but generally supports actions taken within the UN, the ICJ and accession to and actions in multilateral institutions. One can safely say that Palestinian civil society as a whole, although critical of PA policy and the Oslo process in many cases, does not oppose the definition of the PA representing a state and thus also positions itself vis a vis the current Palestinian state, just as civil society does in other countries. This might seem at odds with the private opinion raised by many civil society representatives in the “end” of the two state solution, and probably can only be reconciled by the observation of a general sense of lack of alternatives, but also the fact that open opposition to the PA as a state would also undermine the legality of the NGO operating under the regulation of the PA. A hypothesis is that in the current conflict scenario international unilateral moves (International recognition as a state, BDS, cases to the ICJ) are seen as only options to secure statehood in the future, or at least oppose further colonization and occupation.  

According to the OECD there four distinct sources of legitimacy, especially relevant in the context of fragility:

  1. Input or process legitimacy, which is the mechanisms by which those who appropriate and use public power are held accountable
  2. Output or performance legitimacy: here mainly security as a basis for providing any other state service and as “raison d’etre”, but also social service (health, education), infrastructure and a framework to support economic activity. The state is ultimately responsible for the governance of these services and organizing the contributions of other actors (NGOs, international as agencies, etc). 
  3. Shared beliefs, such as traditions, religious beliefs, collective identity. 
  4. International legitimacy

As opposed to other states in situations of fragility and conflict, with suffer from legitimacy due to the states weak performance to deliver adequate output, especially security, the main weakness of the PA is that it cannot deliver on the promise of national liberation built on the institution building process and that this can be considered from a Palestinian perspective as the main source of erosion of legitimacy. Furthermore the PA has failed to bring international legitimacy through the recognition of the veto players of Israel and the US. Here is the main and most severe and sensitive critique of civil society of the PA, which also explains the PA more and more authoritarian crackdown on dissidents and journalists. Civil society has been careful to voice these opinions publicly, especially and also in the Gaza Strip. This criticism goes to the core of the legitimacy of the PA, challenged already due to the same reasons by Hamas, and can be seen as a “ticking time bomb” if these opinions further proliferate within younger, frustrated population groups which could resort to violence to challenge the regime of the occupation or that of the PA. The lack of international legitimacy is to be seen as the main source of fragility for the situation in Palestine and as the main threat to the state building process as a whole.  

Input or process legitimacy has been deficient since absence of national elections and continuation of political infighting. Palestinian civil society has on one hand called for national reconciliation, but has been more influential in the past when addressing and lobbying PLC-members for reform processes or educating potential PLC members but also voters. This influence now only takes place in policy dialogue either at the national or local level. In specific sectors this is mainly been up to the responsible line ministry to what degree and what form civil society has been included in planning, monitoring and evaluation of the state performance. Civil society has been part in planning commissions with varying degree of success. 

Shared beliefs and collective identity also has been continuously been shifting towards a more conservative and religious society, a purely secular state is no longer the option on the table as religiously motivated civil society and groups and also Hamas enjoy more and more credibility and popularity. 

Output legitimacy is constrained in those areas where the PA does not have reach, these are predominately Area C, East Jerusalem but also the Gaza Strip. In the Gaza Strip, due to a renewed humanitarian crisis, civil society at the moment focusses mainly on emergency response and humanitarian efforts, which are coordinated through the UN cluster system in which the PA is a part. However the reconstruction efforts where negotiated in the absence of civil society, and this as sidelined again the population and civil society as an important actor to rebuild Gaza. In Area C the situation on the ground is well documented, the PA has an Area C strategy and the PA and civil society does a mix of service provision how ever limited the effects might be to counter further displacement. The unchanged permit regime still prevents planning and the building much needed infrastructure, which would allow the Palestinian population within Area C to remain. Within East Jerusalem, the PA is not allowed to operate and Palestinian civil society remains the only Palestinian service provider in East Jerusalem. While the Ministry of Jerusalem support Palestinian civil society in East Jerusalem, very little is known on the actual deficiencies of social service provision in East Jerusalem and how best counter this in partnership with the PA.  

As mentioned before the PA cannot guarantee safety and security to many its citizens which are affected by violence through settlers and Israeli military, and also civil society cannot fulfill this function, although active in covering human rights abuses and following these through legal support. Although many services of the PA have been improved in the past years, this does little to alleviate political frustration, since this seems to do nothing to end occupation in any near future. Further exclusion of the population, especially visible now in the reconstruction of the Gaza Strip in which the population neither has voice nor influence, further compounds these frustrations. 
Current state of legitimacy of Palestinian civil society

The developments of civil society in the last twenty years has been marked by fundamental tensions. To build a pluralistic state of citizens, donors have heavily supported formally incorporated civil society, namely Non Governmental Organizations (NGO) especially in the development of its capacity. These mid-size to large NGO can now be seen as fairly professional in planning, resource development and service delivery. But this phase of professionalization is now exactly which now being seen as development of an “NGO-elite”, since well educated staff is necessary to meet donors high demands in management and accountability. This cannot be said for smaller, grassroots Community Based Organizations (CBO), which are constituted mainly by volunteers and work on an ad hoc project basis with very small funds, but which at the same time cannot access larger funds due to a lack of capacity or even registration. CBOs are therefore limited in their ability to fulfill donor requirements, especially in terms of transparency and accountability, and very dependent on NGO intermediaries.  

CSOs have been accused of corruption or mismanagement of funds or lack of internal good governance, and this has been countered by the development of a Palestinian “NGO Code of Conduct”. But in effect from a Palestinian perspective legitimacy of CSOs springs most often from the fact if they actively pursue a policy of national liberation or popular resistance, rather than well-managed projects or programs. The conundrum being the same as with the PA: Do these civil society institutions really serve the ultimate goal of achieving a Palestinian state? Or are they creating elites benefitting from ongoing occupation? The same question can also be addressed to international NGO and agencies and poses a real threat to the credibility of such agencies. 

Other actors also consider certain Palestinian CSOs illegitimate, but for other reasons. The Israeli state considers Palestinian Civil Society “illegitimate” or illegal, especially if the work within East Jerusalem or Israel on openly political issues such as ending occupation or define themselves as “Palestinian”, or if they are considered to take funding by, or have ties with “terrorist organizations”. The US lets grantees sign the “anti-terror” clauses, which again is viewed by some CSOs as conditional and thus illegal funding.   

The challenges are therefore multi-facetted: If development cooperation policy is continuing to focus on institution building, how can this been done without further eroding the legitimacy of the actors involved? How can one build democratic structures under occupation? And how can in such a complex context civil society be strengthened?

State-Civil Society relationships in Palestine within the context of fragility

Craissati (2005) has developed three models of state-civil society relations:

  1. ‘Integration’ – is based on liberal theory and stipulates that there is no competition between the state and civil society
  2. ‘Rejection’ – is drawn from the socialist democracy model and posits that the role of civil society is to attain political rights through class struggle and confrontation with the state.
  3. Third model – ‘Challenge’ – derives its principles from ’radical politics’ and suggests that civil society must retain its distinct identity in order to push the state for progressive change

The “Rejection” model can actually be observed already within Palestinian civil society vis a vis the Israeli state. It rejects completely occupation policies and the legitimacy of the occupation regime. Thus includes also the rejection of “normalization” and the call for BDS. In some cases CSOs even reject the legitimacy of the Israeli state as whole. Rejection of the legitimately of the PA, also leads to further conflict, be it by a political party like Hamas, or violence and imprisonment inflicted on Palestinian dissidents who question the PA.  

“Integration” insinuates a model of co-optation in which civil society supports state policies and executes mutually agreed on programs. In a sense integrations also implies budget integration in which the state supports commissions civil society for an array of services which is already being practiced by the Ministry of Social Affairs. On the other hand in such a “subsidiary” system, there is strong regulation which obligated the state to do so and civil society can challenge the state in court on funding decisions. While better public services are needed in many areas, the relationship between the PA and civil society is still far from the point where such integration would be possible. A broad social consensus and extensive legal reform would be necessary to accomplish this. 

The “Challenge” model and the push for progressive change appears to be the most promising venue, due a variety of reasons. In the absence of elections, there is no apparent legitimate opposition to current PA policies, which become more and more authoritarian. First and foremost new ideas how to end occupation, how to attain national liberation, how to govern can only be brought to the attention of duty bearers by civil groups and civil society. The collective bargaining process is not done in representation of voters based on party programs but at the time only in specific forums between the state and civil society. Specific attention should be given here to the ideas and interests of popular resistance movements, smaller CBO, but also civil society in East Jerusalem and Area C. Especially younger people should be given the chance to participate politically and be able to voice their opinion and ideas. Important is the visibility and effectiveness of such actions. 

Recommendations for supporting civil society in Palestine in situation of fragility 

To summarize: 

Development cooperation in Palestine faces a dilemma. Technical support, even where much needed, can be quickly turn into, or be interpreted as, support for an elite disinterested in the suffering of a population under occupation, thus enhancing tension and potential conflict. Fragility and the absence of a state is also a result of the absence of a two-state solution. Further altercations, future violence is to be expected. In a mid-term scenario, even without violence, the situation will deteriorate. Since the involved Palestinian actors (Government, civil society and private sector), appear all on the same page when it comes to the causes of fragility and more disagree on how to counter this, it appears that development should more focus on the improvement and maintenance of relationships within the set-up of relevant Palestinian governance actors, rather than the capacity building of a certain group of actors. 

Recommendations could therefore be: 

  • To focus on a rights based approach, as a means to an end to liberation from occupation and supporting national aspirations, to clearly make this visible in external and internal communication and to tie this to the program structure and proposed outcomes. 
  • To leverage development cooperation in its role  as a intermediary and facilitator between the state and civil society, between CBOs and NGOs, between Gaza and the Westbank and between national and international actors. For example to support mediation efforts of civil society between political factions, to support networks in their ability to engage with international actors and the PA across the geographic divisions.
  • To mainstream Do No Harm into Civil Society programmming, policies and objectives to avoid increasing tensions between the PA and civil society, but also between NGO and CBOs, between religious and secular actors, between the popular base and civil society. 
  • To empower socially motivated grassroots organizations in their popular and non-violent resistance strategies and rights-based initiatives. For example support to CBOs to address workers rights in settlements and coordination and legal support to challenge demolition orders, means and support for communication and international advocacy and connect and mediate between CBOs and NGOs. 
  • To support Palestinian civil society in its role as a policy dialogue partner with the PA to represent authentically interests of communities and especially young people. Which on one hand would mean better access to information for civil society but on the other also to bring continuous attention to decisions makers the grievances of marginalized population groups. To strengthen civil society as a policy actor.
  • To support civil society in its international advocacy efforts.
  • To continuously lobby for the inclusion of civil society and grassroots groups in donor forums and negotiations between donor governments and the PA.
  • To allow for and open space for discussions, deliberations on alternative political models and strategies on how to achieve statehood. 
  • To include a “Plan B” for a rapid deterioration, such another war on the Gaza Strip, and build the resilience of partners for such scenario. 

Sources:

OECD (2010) “The State’s Legitimacy in Fragile Situations – unpacking complexity”

Craissati, Dina (2005) New Social Movements and Democracy in Palestine: A Model for the Politics of Civil Society in the Arab World. Edison, NJ: Transaction Publishers 

Cangas, Alisa Herrero (2004), The good governance agenda of civil society: Implications for ACP-EU cooperation, InBrief, European Centre for Development Policy Management, Accessed on 22.3.2014 http://www.ecdpm.org/Web_ECDPM/Web/Content/Download.nsf/0/6C3028A59691DED9C1257995003E39AC/$FILE/Inbrief_12_e_AHC.pdf

Introduction and limitations

This paper does not claim to be a sound academic exercise nor claims to be a desk review of all academic literature available. Rather it is a summary of different sources such as policy briefs, academic articles, summaries of round table discussions, etc. which are publicly available. One has to be aware that many academic papers or policy briefs also look at a certain set of countries and not at ALL countries in the MENA region.
Furthermore the paper looks at the time starting with the “Arab Springs” in the MENA region. Also in light of the fact that civil society is much older than this point and has well documented history. Although the term MENA region is used, it has to be clear that every country in this region has a completely different framework and historical background in which civil society operates. Also the variety, number and density of civil society varies from country to country. Even when talking about the “Arab Spring”, one should talk of “Arab Springs” or to denote the differences of the societal changes in each country. Thus any attempt to search for relevancy of civil society, one must also look at the country specific environment. To add, this paper also only looks at the role of civil society in the democratization process in the region, not at the role of service provider.

Civil Society and Good Governance

The definition of Civil Society, its functions, roles and position within the societal framework is being elaborated elsewhere. Here this discussion paper briefly recapitulates its importance vis a vis governance and democracy.

Cangas (2004) points out that good governance can be regarded as a moral stance: a supreme value that maximizes the common good and is therefore to be pursued in public and private spheres, including in civil society. In this framework, civil society organizations that claim to be credible change agents are obliged to operate according to specific civic norms. As a result, the credibility of civil society organisations depends much on the perception that they uphold the values they claim to represent, such as democracy, social justice, equity, transparency, accountability, effectiveness and the rule of law. All of these values are key components of the wider good governance institutional agenda.

Furthermore civil society as a source of social capital has distinct added values in a democracy and democratic processes. Boix and Posner (1998) in an extensive theoretical elaboration demonstrate how civic associations and strong memberships in them promote:

The existence of rational voters and competitive elites
For citizens to make informed decisions on the policy performance of actors, citizens must have public information which is not readily available to them. Their only access to political information can be obtained through the activities of civic networks that are capable of assessing the behavior of the state and thus make citizens “sophisticated consumers of politics”. As citizens expectations or norms of governance are relayed to the state actors, political actors have to respond to them or risk being voted out of office in the next electoral cycle. This nurtures a sense of competition among political elites, ensuring the passing of legislation that ensures good governance.

Rule compliance
Governments have the burden of enforcing regulations, a cost which could be better spent on delivering goods and services or drafting new legislation. According to Boix and Posner societies which have a dense network of civic associations reduce this burden, because it is anticipated that that citizens will have a transparent overview of citizens behavior, and thus behavior against the norms of the community will be exposed and identified easily.

A durable civic culture
Rather than being interested in self promotion or wealth acquisition, societies with dense civic networks become more concerned with the material needs of the community. As this cultural transformation happens, community expectations for good governance are more clearly articulated and hence produce a culture of accountability.

Bureaucratic efficiency
Because the eyes of the collective are focused on the good performance of bureaucrats, there is an expectation that they will perform according to mass expectations. Also societies with a dense civic network tend to obviate the “principal-agent” dilemma, primarily because agents (lower level bureaucrats) will tend to develop higher level of civic obligations. As lower level bureaucrats are likely to be engaged in other civic obligations, they are also prone to develop higher levels of trust and norms of reciprocity. Thus, societies with dense civic associations are more likely to have agents that do not have to be constantly watched or regulated.

Elite accommodation
Boix and Posner believe that societies with dense civic networks and a high threshold of social capital may produce citizens that do not solely identify with their own kin, group or community – but may seek or extend their social network ties to others who are unlike themselves. Accordingly there are societies which allow for accommodative behavior. These societies emphasize social networks that can facilitate norms of compromise, consensus-seeking and conciliation even with the out-group.

However there are also other academic voices which see civil society in its societal function as overrated or at least beg to differ. Carothers (1999) in his paper “Think again: Civil Society” points out that it is more trade unions and religious organizations and other groups, not NGO have the popular base and local funding which enable them to exert pressure for change. Also not all civil society groups are democratic and peaceful and some have single issue agendas, an example being the National Rifle Association. So although civil society claims to speak for the public interest, its is highly contested even within civil society what this might be. Carothers also cites the case of the Weimar Republic which was rich in associational life, but which could not stem the Nazi rise to power and the subsequent demise of democracy. Carothers further provides the Ruanda example in a which a plethora of civil society organizations were not able to build enough social capital to prevent the genocide.

In theory civil society appears to be a fixed norm in a democracy: providing stability, transparency and accountability to the democratic and bureaucratic institutions and processes. However individual historic cases demonstrate that civil society is not a panacea to good governance and democracy. Country cases can defy theory and best intentions.

Civil Society and Transition

The opinions and conclusions, if a strong civil society supports a transition process, or can even harm it has been discussed widely. Also the question if a strong state is the precondition for civil society to take up constructive state-society relations has been highlighted. Boose (2009) for example in his comparative study of Tunisia and Libya comes to the conclusion that Tunisia will be a success in the transition process, while Libya is more likely to fail. He bases his assumption on the observation that it needs both a robust civil society and strong state institutions to master the transition process. While Tunisia has both, Libya however lacks both.

According to Gill (2000), the presence of a strong and independent civil society increases the prospects that a political transition will lead to the establishment of democratic institutions, rather than a mere change of top-level leadership or an authoritarian reversal.

It is argued that during the transition process when political authority and institutions are at their weakest that a strong civil society can play its most important role.

This appears to be relevant in the Arab world, where the future political order remains contested and previous institutional and legal structures, as far as they existed, have collapsed. As a result, there is a risk of internally or externally fuelled crises threatening the transition.

Bussard (2003) claims that a strong and independent civil society can help to guard against these transitional risks in various ways.

First, civil society can act as an agenda-setter by drawing attention to particular flaws in the transition process and demanding greater transparency and reform.

Second, civil society can educate people about how democratic processes function and inform them about their rights and duties as citizens.

Third, CSOs can work with and advise government and state institutions in order to increase their accountability and recreate much-needed public trust in the functions of the state.

Finally, civil society can provide a source for new alternatives, by spawning new political parties and providing political leaders that are untainted by the corruption of the old regime and able to provide new leadership.
In his Book “Civil Society in Transitional Democracies”, Rollin Tusalem (2009) finds evidence to suggest that transitional states that have higher levels of civic asssociationalism are more likely to have better governance. States with strong civic associationalism are also more likely to produce policy outputs that seek to improve democratic quality. States with strong civil societies are also more likely to consolidate their democracies. Furthermore Tusalem also claims that even among states with weak state capacity but with strong civil societies, civic groups have continued to push for democratic reforms ranging from effective land distribution, curbing income equality, the harnessing of economic development, effective accountability checks on state institutions, and protecting the human rights of the marginalized.

Beinin (2013) however remains skeptical and points out that the Arab uprisings of 2011 had very little to do with NGOs and “building civil society”. Rather he claims, they were the consequence of converging vectors of diverse social protest movements over the previous decades involving urban intelligentsias, disaffected educated youth, blue and white-collar workers and professionals (Egypt, Tunisia, Bahrain, Morocco, Jordan), disaffected tribes (Libya, Yemen, Jordan), religious communities (Bahrain, Yemen), and regions (Tunisia, Syria, Yemen, Jordan). According to Beinin in no case did the initiative for pro-democracy demonstrations come from “civil society organizations.” The outcomes of the uprisings likewise had little to do with the degree of development of civil society. Beinin reminds us that the priorities for Egypt remain what revolutionaries demanded in 2011: “Bread, Freedom, Social Justice.” And that radical reform and reeducation of the security and judicial apparatus can ensure that Egyptians enjoy personal and collective freedoms. This is, as Beinin writes, “first-and-foremost a political project, not the remit of NGOs, whether chess clubs or human rights advocacy groups.” Abd el Wahab (2012) and Halasah (2012) take it both a step further and argue that young people had to resort to forming their own movements and communicate via social media, since they found no opportunities to express their political views within or through existing civil society organizations, also because of older age cohorts dominating these organizations. However both, Hasalah and Abd el Wahab, expect the formation of new associations by the activists spearheading the aforementioned movements.

The dissent of the effects of a strong civil society in the transition process remains contested. In general the proponents that civil society is beneficial in a transition process still seem to outweigh those who see civil society as a bane. However the discourse gives warning that blind enthusiasm for civil society in the MENA region will not produce the desired effects. A specific importance seems to be attributed to trade unions. Donors and development agencies will have thus to be very diligent in programming and designing interventions in how to support civil society to promote the democratization process.

Civil Society in the MENA Region – Policy Analysts and their Recommendations

The policy trends cannot be seen as holistic here, but only give a snapshot insight into the current discussion, however in the recommendations there are some interesting commonalities on how to support civil society in the democratization process. As part of the berleymont paper, Missiroli (2012) reiterates in the section “Arab Springs: Transition, Democratisation and Civil Society – Lost and Found” that five interconnected and mutually reinforcing conditions must also exist (or be crafted) for a democracy to be consolidated:

  • the development of a free and lively civil society
  • a relatively autonomous political society (parties and organized groups);
  • rule of law to ensure legal guarantees for citizens’ freedoms and independent associational life;
  • a state bureaucracy usable by the new democratic government;
  • an institutionalized economic society.

However Missiroli also warns that “political Islam” can become a distinct factor in shaping this wave of democratization and can become a make or break factor.

There are also other warning signs on the horizon:

The Cairo Issue Brief (CCDP 2013) explores the challenges faced by Tunisian and Egyptian civil society in the ongoing political transitions, namely:
The reduction in the influence of civil society on political transition;
An insufficient focus on people’s economic and social needs; and
The limited effectiveness of foreign support.
When speaking about the waning influence of civil society on transition in Egypt and Tunisia two points deserve highlighting here:

  1. The mounting influence of political parties

According to the CCDP, since the transition phases have entered a new stage that is focused more on constitutional processes, the center of gravity of the debate in both countries has shifted from civil society to political parties.

2. Weak inclusion in existing transition mechanisms

Civil society actors have shown a lack of awareness regarding the variety of roles they can adopt in the transition process. They therefore overlook a range of other functions that they could engage in, such as protection, advocacy, providing expertise, civic education, social cohesion or facilitation. In failing to envisage the multiplicity of roles they could adopt, civil society groups demonstrate a lack of knowledge about different types of potential inclusion mechanisms in participatory processes.

Furthermore the deficiencies of the constitution-making process in Egypt are a strong case in point. According to the CCDP, the mechanisms designed by the Constituent Assembly did not allow for a broad and systematic participation of civil society groups, which consequently remained outsiders rather than contributing partners to the process.

The Cairo Issue Brief comes to the conclusions that civil society in Tunisia and Egypt has failed to contribute to the transition process in a significant way. In order to regain influence on the transition process, civil society in both countries should push for all-inclusive dialogues on the future of the state, economy and society that does justice to the people’s needs. Civil society groups should act on a number of factors in order to have an impact on key processes building the new social contract between the state and society. Mobilizing these processes in Tunisian and Egyptian civil society would help to address the root causes of the growing disconnect between the elites and the wider population.

Vallianatos, (2013) in a neighborhood policy paper entitled “Arab Civil Society at the Crossroad of Democratization: The Arab Spring Impact” is on the other hand very optimistic in his assumptions. In his view Arab civil society came out of the Arab Spring victorious, establishing itself as a major and complex ‘player’ in the democratization process, which not only can form a counterweight to state power, but also shape both government policy and social attitudes. In the opinion of Vallianatos, for civil society to play its role effectively, a critical mass of organizations and movements must maintain or develop the key attributes of autonomy, liberal norms and values, and a protective legal framework. It also needs to function collectively and build coalitions with other sectors and forces. He sees the setting as promising, notwithstanding the presence of obstacles, such as autocratic habits and the predominance, among the Islamists, of non-liberal groups. Vallianatos points out that the West is highly supportive and less arrogant about its moral and political superiority and accordingly more knowledgeable of Arab societies. Additionally the experience of the former Communist bloc carries a significant experience of political transformation which could be of relevance to the Arab states and creating here links could be very beneficial. Just as the CCDP, Vallianatos emphasizes that CSOs should maintain their autonomy – political parties in democracies are linked to state power, therefore, the relevant NGOs should maintain their autonomy not only vis-à-vis the state but also vis-à-vis the political parties, without being isolated.

In their research paper for the Finnish Institute of International Affairs, Behr and Siittonen (2013) in a rare case also look at the character of the emerging of state-civil society relations, particular after analyzing the situation in Egypt, Tunisia and Libya. They point out that both state and civil society face a difficult choice over whether they should pursue greater cooperation or autonomy between each other. While a strategy of inclusion or co-optation might strengthen the perceived legitimacy of the government, it could also create new social divisions and limit the countervailing powers of civil society, especially if selective. Exclusion, on the other hand, might create new state-society divisions and limit the effectiveness of the new institutional structure.

Behr and Siittonen conclude that donors ought to encourage an effective and balanced relationship between state institutions and civil society and that today state weakness has become an equally great challenge. The authors see weak state structures in Libya, Yemen and eventually in Syria, due to the strength of “traditional society”. Furthermore there appears to be a similar challenge in Egypt and Tunisia to strike a new accord between the newly empowered social actors and the state. While there are good reasons for donors to emphasize the “watchdog” function of civil society, Behr and Sittonen encourage donors to promote a cooperative relationship between state and society that contributes to the legitimacy of the new political order.

However there are also other voices. In his Policy Brief for INEF, Jan Hanrath (2011) describes the need of change in German foreign policy and that the past support for authoritarian regimes and the rise of civil society in the MENA region now obligates Germany to put a higher priority on the rights of citizen and human rights and to take local civil society serious as actors in the policy arena. Hanrath explicitly states that Germany should support Arab civil society in its consolidation process from decentralized movements to structured organizations, to support them in their demands in the transition process. Especially in the light of continuing authoritarian structures, civil society should be supported in their function as watchdogs and agents of accountability.

According to Ioannides (2012) the EU recognizes that civil society plays a vital part in promoting greater social justice and democracy, including the respect of minorities, the equality of the sexes, women’s rights, environmental protection and efficient management of resources. The recently reviewed European Neighborhood Policy puts cooperation with civil society organisations (CSOs) at the heart of the EU approach. It aims at giving to CSOs a greater political role, by enhancing their capacity building; reinforcing the dialogue on the human rights; and supporting freedom of the press. The Communication of 12.09.2012 by the European Commission (EC 2012) puts forward three priorities for EU support:

  1. To enhance efforts to promote a conducive environment for CSOs in partner countries.
  2. To promote a meaningful and structured participation of CSOs in domestic policies of partner countries, in the EU programming cycle and in international processes.
  3. To increase local CSOs’ capacity to perform their roles as independent development actors more effectively

Currently “Roadmaps for Engagement with CSOs” at the country level are being drafted, which will be signed off by all Heads of Missions of EU member states. This strategic document is designed to ensure structured dialogue and strategic cooperation, increasing consistency and impact of EU actions. The GIZ in Palestine is part of the task force of designing this document for Palestine and can observe that specifically in Palestine the EU is moving away from service delivery and focusing on policy dialogue and promoting an enabling environment.

Ioannides (2012) and Behr & Siitonen (2013) capture the EU response to the transitions in the MENA region and its forms of support to civil society as follows:

The EU plans to promote media freedom by supporting civil society organisations’ unhindered access to the internet, the use of electronic communications technologies, and independent media in print, radio and television. This will be available through the European Instrument for Democracy and Human Rights (EIDHR), additional tools may be developed to further strengthen EU contribution in this area. The EU doubled EIDHR funding for the region to €11.5 million in 2011, launching a total of 54 new EIDHR projects during this year alone. Many of these included innovative new projects, such as a small grants facility to defend human rights defenders, the EU’s No Disconnect Strategy (NDS) and some 11 confidential country projects.

Furthermore the EU plans to establish partnerships in each neighboring country and make EU support more accessible to CSOs through a dedicated Neighborhood Civil Society Facility and to promote an inclusive approach of reforms that includes non state actors in national policy dialogue and the implementation of bilateral programs. The Neighborhood Civil Society Facility was launched in 2011 with a budget of €26 million for 2011 and €21 million p.a. for 2012-2013 in order to strengthen Arab CSOs and enable them to promote reform and increase public accountability along the lines outlined in the civil society strategy.

In addition, the EU launched an autonomous European Endowment for Democracy (EED) with the explicit aim of promoting “deep and sustainable change” in societies. Modeled on the US-based National Endowment for Democracy (NED), the EED will be able to more flexibly support civil society actors in the neighborhood that have no access to EU funding, such as journalists, bloggers, non-registered NGOs and political movements. In November 2012, the European Commission provided the EED with €6 million in start-up funding, while additional funding will be drawn from the voluntary contribution of EU member states and foundations. It will be designed to complement the European Neighbourhood Policy Instrument (ENPI) and the EIDHR.

While Behr and Siitonen (2013) laud the strategic approach of the EU, they still have criticism:

The EU strategy (….) skirts the issue of religious, traditional, and tribal organizations that are playing a key role in the transition processes. Nor does it provide a clear agenda on how the EU might be able to engage the loose and broad-based social movements that have received so much attention. The considerable emphasis the EU places on the “watchdog” function of CSOs might also unbalance state-society relations and weaken the credibility of fragile new state institutions. Finally, the EU’s determination to check Salafi funding by focusing its engagement on liberal and Western-style NGOs may inadvertently serve to heighten social fragmentation and increase competition with Islamic NGOs that are more and more active across the region.

Summary and Recurrent Themes

The role of civil society in the transition process in the MENA region is seen as an important, even a crucial factor, according to most policy analysts. The EU is already ramping up considerably its support of civil society through a variety of instruments. There remain doubts on the effectiveness of civil society, usually due to the restrictive legal environment, the lack of forums for civil society to engage in, but also in regards to the competency and capacity of civil society themselves. Loose movements and informal groups pose question marks. So does the secular-religious divide. However, where possible, these constraints are seen often as entry points for development.
To document it clearly, these are the recurrent themes in the discussion on civil society in the MENA region:

  • The general need to improve legal frameworks for NGOs to operate in (Ahmed 2012, BEPA 2012, EC 2012, FIM 2012, CCDP 2013, Behr & Siitonen 2013, Simon 2013, Vallianatos 2013)
  • A general warning not to deepen the already existing divide between religious and secular civil society groups, but rather build bridges (Cavatorta & Durac 2011, Hanrath 2011, Behr & Siitonen 2013, CCDP 2013)
  • The recommendation that Western donors and Arab donors should work together (Behr & Siitonen 2013, CCDP 2013)
  • The expectation of informal groups and decentralized movements now consolidating to new organizations with structures and hierarchies. (Hanrath 2011, Kienle 2011, Behr & Siitonen 2013, CCDP 2013, Abd el Wahad 2013, Halaseh 2013)
  • The importance of movements and informal groups rather than NGOs (Altan-Olcay & Icduygu 2012, Behr & Siitonen 2013)
  • The need for civil society actors to connect locally, regionally and globally (FIM 2012, Halaseh 2012, Simon 2013, Vallianatos 2013)
  • The need to support all inclusive dialogue forums (Hanrath 2011, CCDP 2013)
  • The suggestion to establish civil society resource and support centers supported by a nation-wide network mechanism, that will be offering training and advice (BEPA 2012, Vallianatos 2013)
  • The suggestion to develop and apply NGO code of conducts (EC 2012, Vallianatos 2013)
  • That the bulk of civil society organizations are focusing on service delivery, less on social or political change and don’t fulfill their roles in advocacy or policy change and that there is a need for capacity building (Vallianatos 2013)

It terms of programming it will be up to the specific country what form of intervention to chose. Tunisia appears at the time being the most promising arena to engage with civil society. Legal reform shows itself as a paramount need. On top of this the field of civil society is highly complex and needs a well targeted and coordinated approach in programming. In any case GIZ with its Human Capacity Development approach, its regional and global network and its variety of instruments, appears to be well equipped to design effective support to civil society. Interventions can be manifold: either as a stand alone program to build civil society capacity, as a program for building state capacity, in a bridging function between the state and civil society or as an open fund to support interaction and dialogue between state actors and civil society.

 

 

References

Ahmed, Nahla Mahmoud (2012), “The civil society and democracy in Gulf and Maghreb countries (A comparative study)” AUC, Cairo, Accessed on 22.03.2014 https://dar.aucegypt.edu/handle/10526/2751

Abd el Wahab, Ayman (2013), “The January 25th Uprisings: Through or in Spite of Civil Society?”, IDS Bulletin Vol 43 Nr 1, Blackwell Publishing Ltd, Oxford

Altan-Olcay, Ozlem & Icduygu, Ahmet (2012) Mapping Civil Society in the Middle East: The Cases of Egypt, Lebanon and Turkey, British Journal of Middle Eastern Studies, 39:2, 157-179

Behr, Timo & Siitonen, Aaretti (2013), Building bridges or digging trenches? Civil society engagement after the Arab Spring, The Finnish Institute of International Affairs, Accessed on 22.03.2014 https://www.google.ps/url?sa=t&rct=j&q=&esrc=s&source=web&cd=9&cad=rja&uact=8&ved=0CGQQFjAI&url=http%3A%2F%2Fwww.fiia.fi%2Fassets%2Fpublications%2Fwp77.pdf&ei=uIotU4qjJMGxtAb65ICADg&usg=AFQjCNE-_MnEZEEbD2-Ya3ma0MNKPxi_DQ&bvm=bv.62922401,d.Yms

Beinin, Joel (2013), “Civil Society, Social Movements, and the Arab Uprisings of 2011”, Accessed on 16.3.2014 https://www.academia.edu/5139263/Civil_Society_Social_Movements_and_the_Arab_Uprisings_of_2011

BEPA (2012), “Engaging civil society in the Southern Mediterranean: Seminar Summary and Conclusions” in: Arab Springs and Transitions in the Southern Mediterranean The EU and Civil Society one year on, belaymont paper, Bureau of European Policy Advisers (BEPA), Accessed on 22.3.2014 http://ec.europa.eu/bepa/pdf/publications_pdf/brief-policy/berl_papers_issue_1_bis.pdf

Beinin, Joel (2009), “Civil Society, Social Movements, and the Arab Uprisings of 2011” Accessed on 22.3.2014 https://www.academia.edu/5139263/Civil_Society_Social_Movements_and_the_Arab_Uprisings_of_2011

Boose, Jason William (2009), “Democratization and Civil Society: Libya, Tunisia and the Arab Spring” International Journal of Social Science and Humanity, Vol. 2, No. 4, 310-3015, Accessed on 22.3.2014 http://www.ijssh.org/papers/116-CH317.pdf

Boix, Charles & Posner, Daniel (1998), “The Origins and Political Consequences of Social Capital” British Journal of Political Science 28:686-693.

Bussard, Caroline (2003), Crafting Democracy: Civil-Society in Post-Transition Honduras, Lund University, Lund Political Studies 127.

Cangas, Alisa Herrero (2004), The good governance agenda of civil society: Implications for ACP-EU cooperation, InBrief, European Centre for Development Policy Management, Accessed on 22.3.2014 http://www.ecdpm.org/Web_ECDPM/Web/Content/Download.nsf0/6C3028A59691DED9C1257995003E39AC/$FILE/Inbrief_12_e_AHC.pdf

Carothers, Thomas (1999), Think again: Civil Society. Carnegie Endowment for International Peace. Accessed on 16.2.2014 http://carnegieendowment.org/pdf/CivilSociety.pdf

Cavatorta, Francesco & Durac, Vincent (2011), Civil Society and Democratization in the Arab World: The Dynamics of Activism, Routledge New York.

The Centre on Conflict, Development and Peace Building, CCDP (2013), Cairo Issue Brief, Civil Society in Transition: Facing Current Challenges in Tunisia and Egypt, Accessed on 22.3.2014 http://graduateinstitute.ch/files/live/sites/iheid/files/sites/ccdp/shared/6305/Cairo_IssueBrief%2004042013.pdf

European Commission (2012) “The roots of democracy and sustainable development: Europe’s engagement with Civil Society in external relations”, Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, accessed on 29.03.2014 http://www.enpi-info.eu/library/content/roots-democracy-and-sustainable-development-europes-engagement-civil-society-external-relati

FIM – Forum for Democratic Global Governance (2012) Civil Society in the Middle East and North Africa Democratizing Governance: From the Local to the Global, FORUM REPORT, Accessed on 22.3.2014 http://fimforum.org/custom-content/uploads/2012/06/Stockholm-Forum-report-march-8-2012.pdf

Gill, Graeme (2000), The Dynamics of Democratization: Elites, Civil Society and the Transition Process. NewYork: St. Martin’s Press.

Halaseh, Rama (2012), “Civil Society, Youth and the Arab Spring” in: Change and Opportunities in the Emerging Mediterranean”, Calleya, Stephen & Wohlfeld, Monika, eds. Malta

Hanrath, Jan (2011), Umbrüche im Nahen Osten – Hintergründe und Handlungsoptionen für westliche Politik und Zivilgesellschaft. INEF Policy Brief. Institut für Entwicklung und Frieden, Accessed on 22.3.2014 http://inef.uni-due.de/cms/files/policybrief09.pdf

Ioannides, Isabelle (2012), “EU Responses to Transitions in the Southern Mediterranean” in: Arab Springs and Transitions in the Southern Mediterranean The EU and Civil Society one year on, berlaymont paper, Bureau of European Policy Advisers (BEPA) , Accessed on 22.3.2014 http://ec.europa.eu/bepa/pdf/publications_pdf/brief-policy/berl_papers_issue_1_bis.pdf

Kienle, Eberhard (2011), “Civil Society in the Middle East” in: The Oxford Handbook of Civil Society, Edwards, Michael, ed. Oxford

Missiroli, Antonio (2012), “Arab Springs: Transition, Democratisation and Civil Society – Lost and Found” in: Arab Springs and Transitions in the Southern Mediterranean The EU and Civil Society one year on, berlaymont paper, Bureau of European Policy Advisers (BEPA) , Accessed on 22.3.2014 http://ec.europa.eu/bepa/pdf/publications_pdf/brief-policy/berl_papers_issue_1_bis.pdf

Simon, Alex (2013), “Civil Society in the Middle East and North Africa: Emerging Trends and Enduring Challenges”, Foundation for the Future & Friedrich Naumann Stiftung, accessed on 16.3.2014 http://foundationforfuture.org/en/Portals/0/PDFs/PDF%202013/FFF%20Civil%20Society%20Trends%20Final.pdf

Tusalem, Rollin (2009), Civil Society in Transitional Democracies. Saarbrücken: VDM Verlag Dr. Müller Aktiengesellschaft & Co. KG.

USAID (2011), The 2011 Civil Society Organization Sustainability Report for the Middle East and North Africa, Bureau for the Middle East, Accessed on 22.3.2014 http://www.usaid.gov/sites/default/files/documents/1866/2011_MENA_CSOSI.pdf

Vallianatos, Stefanos (2013), Arab Civil Society at the Crossroad of Democratization: The Arab Spring Impact, Neighborhood Policy Paper, Center for International and European Studies (CIES) and The Black Sea Trust for Regional Cooperation, Accessed on 22.3.2014 http://www.khas.edu.tr/cms/cies/dosyalar/files/NeighbourhoodPolicyPaper(10)(2).pdf

Is it me or is a sign of the times, that sense making and meaning tend to appear more often in academic literature? I had immersed myself into the subject of CSR and was surprised by  Hanke & Stark (2009) “Strategy Development: Conceptual Framework on CSR”. A concept which very simply states that CSR strategy development  has two main elements: Legitimization and sense making, where sense making here again is understood as “active, ‚negotiating expectations’ in collective and interactive processes”.

A CSR framework

If we look again at the model by Lips-Wiersma and Morris (2009) it could be very easy to avoid what Calvano (2008) calls “Stakeholder Perception Gaps” usually created by stakeholder power inequality. Stakeholder dialogues logically should be part of a viable CSR strategy process. The corporation “makes sense” to its internal stakeholders such as employees and management, but also to external stakeholders, such as the community or NGOs. One could even argue that this is a process of social integration. But what stakeholders should be approached and to what extend should their concerns be incorporated into the overall business practice without endangering the economic success of the company?

The Trade and Investment Division of UNESCAP writes 2009 in their STUDIES IN TRADE AND INVESTMENT 68 to ask the following questions:

• To whom do legal obligations exist?
• Who might be positively or negatively affected by the organization s activities?
• Who has been involved when similar issues needed to be addressed?
• Who can help the organization address specific impacts?
• Who would be disadvantaged if they were excluded from the engagement?
• Who in the value chain is affected?

Mitchel et al 1997 defined attributes of key stakeholders or salient stakeholders as being powerful, legitimate and urgent. However Calvano (2008) warns that stakeholders such as communities or NGO which might not be seen as powerful in the CSR strategy conception can develop certain dynamics when their interests are being infringed.  Longo et al, 2006 propose the following grid to what values stakeholders expect from the corporation:

The grid of values

Although the above values appear to be a bit anticipated, they very much demonstrate again how stakeholders make sense of a corporations action in the light of their own expectations. Above grid also shows how norms, values and culture of an organization impact CSR strategy. Corporate culture is thus in an interrelated web with values of the stakeholders, emphasizing that CSR is an activity which builds social capital.

The values web

The Values Web (McBain 2010)

This idea of a value web also demonstrates the necessity of the CSR effort to be authentically grounded in the organizational culture and be well linked with its core competencies to allow other actors to actually allow themselves to be associated with the corporation. Any sort of CSR effort should thus start with a careful audit of the company culture.

Sources:

Calvano, L. (2007) Multinational Corporations and Local Communities: A Critical Analysis
of Conflict, Journal of Business Ethics (2008) 82:793–805
CREATING BUSINESS AND SOCIAL VALUE: THE ASIAN WAY TO INTEGRATE CSR INTO BUSINESS STRATEGIES, STUDIES IN TRADE AND INVESTMENT 68, United Nations publication
Hanke, T. & Stark, W. (200) Strategy Development: Conceptual Framework on Corporate Social Responsibility; Journal of Business Ethics (2009) 85:507–516Copyright © United Nations 2009
Longo, M., M. Mura and A. Bonoli: 2005, ‘Corporate Social Responsibility and Corporate Performance: The Case of Italian SMEs’, Corporate Governance 5(4), 28–42.
Mitchell, R. K., B. R. Agle and D. J. Wood: 1997, ‘Toward a Theory of Stakeholder Identification and
Salience: Defining the Principle of Who and What Really Counts’, Academy of Management Review 22(4), 853–886.

My stay in Ramallah is almost over and I cannot refrain from writing something about it, let us say about economy, because in a wider sense it fits into this blog on leadership, management and consulting. When I arrived here I talked to my former landlord, a pharmacist, who lives across from the Muqata and after we had chatted for a while he said: “Honestly Luke, I don’t know where all the money is coming from. They are building there and there (pointing) and we don’t know who is behind it!” “And the building across the street is empty!” his wife interjected.  “It’s strange!” he exclaimed “And you know what, all people we know are in debt, it’s really scary!”.

One of the bigger construction projects

Yes, the economic activity and especially the real estate boom in Ramallah has been covered extensively by the press, some articles claiming that there was a raise of real estate prices in the last two years of 30%.  So I would be  fortunate, had I a house in Ramallah. Some articles hail this as sign of the successful Fayyad government reforms and others, being more cautious, pointing towards the continued dependency of regular aid inflows. The Jordan Times writes:

But experts warn that Ramallah’s new-found wealth does not in any way reflect the state of the economy in the occupied West Bank or the impoverished Gaza Strip.

Economic growth in the West Bank did reach 8.5 per cent last year, but much of that was the result of generous international aid, according to the International Monetary Fund.

In fact my brother-in-law said simply: “If the donors cut off the funding, everything will go down the drain within weeks. But this time things will be worse, because people will not wait, they will fight each other. They say we have a service economy! Hah!” It seems we have a lot of capable economists here in the West Bank, because the following graph by the IMF seems to support his viewpoint:

In my quest to understand where the money is coming from, I had read that the donors now provide credit guarantee funds to back local banks in lending to to small medium enterprises. Just like the Middle East Investment Initiative with its Loan Guarantee Facility:

Since the LGF provides $160million in guarantees, backing 70% of possible loan amount, over the medium term, LGF will guarantee $228 million in loans, generating tens of thousands of local jobs.

Some people I talked to could not believe this, but it really happening. “It is golden times for banks in Palestine!” I thought in my mind. Making more with less risk. And the Portland Trust seems to agree:

Palestinian banks recorded $42m of profits in the first quarter of 2010. This is over 50% higher than the same period last year ($25m profits in Q1 2009) and 5% higher than the previous quarter ($40m profits in Q4 2009).

At the same the supply of credit available was increased, because according to the IMF:

the Palestine Monetary Authority (PMA) lowered the limit on bank deposits placed abroad from 65 percent to 55 percent of total deposits.

And of course, as Haaretz points out these loans are not only given to SME but also for consumers:

Palestinian and Arab banks in the West Bank are offering loans making it easier than ever to own a new car. Anyone who has a job can pay 10 percent down and borrow 90 percent of a new car’s cost from the bank, payable with interest over five to six years.

The World Bank concurs:

Credit facilities to non-government resident customers at the end of December 2009 were almost 23 percent higher than in 2008.

And ho is now doing all that construction? Perhaps some international investment funds are involved in the bigger buildings, but I could not find any documentation. Perhaps some reader would like to help out? The Jerusalem Post , relying also on the World Bank report, writes:

The biggest jump in private business activity has been in the construction and real-estate sectors, with PA civil servants and nongovernmental organization employees forming the “backbone” of the market, the report said.

So going back to the beginning and trying to answer that question of my former landlord:  Where is the money coming from? It is coming from tax payers and banks and we could be witnessing some sort of speculative mini-bubble here, which could mean that for the next two years it would be good to invest in real estate in Ramallah, but let us not forget, this mini boom is fueled by easy access to credit, which reminds me lot of the trigger of the financial crisis.

Sources:

The Jordan Times: Ramallah property boom belies fragility of Palestinian economy Friday, August 6th, 2010

Fox Business, Ramallah building boom symbolizes West Bank growth, August 02, 2010, Reuters

Haaretz Mess Report / In the West Bank, new cars signal the good life, Published 02:20 16.07.10

The Jerusalem Post, World Bank report: PA economy needs more private investment, Bloomberg 04/13/2010

The Portland Trust, Palestinian Economic Bulletin, July 2010

IMF, Macroeconomic and fiscal framework for the West Bank and Gaza, Madrid, April 13, 2010

World Bank, Towards a Palestinian State:Reforms for Fiscal Strengthening WORLD BANK report April 2010

I had the pleasure of recently giving a training at the Palestine Securities Exchange and also introduced the below model of “Communicating the gap”, which I had mentioned in a previous post.   Of course I could not just let the  theory speak for itself – it appears to be very abstract – so I was happy to find a study by the University of St. Gallen and the German Association for Investor Relations (DIRK), very helpful people,  who also have a range of studies published on IR. Unfortunately most of the material is in German, so I see it as adding value to present main points of their joint study here in English, since it generated great interest in the PSE training. Back to meaning creation and “communicating the gap”:

The study emphasizes that the calculated value of an organization by mathematical models is not identical to the valuation of the capital markets, so other value drivers must be taken into account. In the study interview partners state that they take the quantitative data and correct by using qualitative data. However, they also state that – and this is important for IR practitioners – that relevant qualitative information is hard to come by and that

corporate communication delivers elementary information as input of “sense-making” efforts of investors.

As stated before, I had expanded on the sense-making process and was glad to see the concept in action. The study goes on to show that the perception of a public company on the capital market decides on its value and thus also on its strategic options. Qualitative factors of the corporation

  • are used to contain risk
  • allow a realistic assessment
  • form “capital markets reputation”
  • and shape the collective judgment of actors on capital markets

The study, which rests on qualitative interviews with European analysts and institutional investors. identified seven main categories of qualitative data  which are relevant to the respondents:

  1. Corporate Communication
  2. Quality of Management
  3. Corporate Strategy
  4. Corporate Culture
  5. Corporate Governance
  6. Customer- and Industry Relations
  7. Public Affairs

The study goes on to identify another 46 sub-factors of above categories, and created a weighted ranking of all these. I do not want to give the comprehensive list of all the weighted factors and categories, but in the training we created a “Top Ten List”, which I want to present here, and which showed some remarkable results

  1. Longterm  Strategy (Strategy)
  2. Implementation of Strategic Plans (Quality of Management)
  3. Complete Disclosure (Corporate Communication)
  4. Shareholder Value (Strategy)
  5. Comprehension of Top Management of Business (Quality of Management)
  6. Leadership (Quality of Management)
  7. Approachability of IR (Corporate Communication)
  8. Attainment of Prognosis (Quality of Management)
  9. Pro-active Theme Setting (Corporate Communication)
  10. Continuity of Corporate Communication (Corporate Communication)

What was surprising to me, was that Leadership ranked so high with all factors, in fact “Quality of Management” is pretty dominant in the top ten as well with “Corporate Communication”.  It was good to see “Strategy”  in the top ten, after reading so much on the demise of strategy.Iit was good to see that analysts and investors  apparently see it as very relevant for their recommendations or decisions.

Of course the other 34 factors are also important and relevant for IR. Another common interest in  the course that an identical study for the Arab region would be of great interest and help to IR practitioners in the region. Would be an interesting survey to work on.

Source: DIRK Deutscher Investor Relations Verband e.V.  &  Universität St. Gallen (2007) Corporate Perception on Capital Markets