Does Size Really Matter?

1. Does Size Really Matter?

2. Theme • An exploration of the significance of the relationship between scale and governance. • Does size inhibit small countries from playing the “regionalization” game?

3. Tuvalu—Pop. 8,000 An Examination of Small States • Three areas of interest: • Where do small states fit in a world of increasing globalization, regionalization and scaling up? • Is there some relationship between scale and governance? • Are small states “Vulnerable?”

4. Republic of Nauru —7,000 Global Trends • Everything is pushing for greater scale of operation: Acquisitions and Mergers • Is there some “optimal” size for a country, either independently or in partnership? • Is there some “critical mass” argument so that countries below a certain size cannot cope with the duties of statehood in the modern world? • What should we do about it?

5. Vatican City State 1 Square Mile. Small is Beautiful. • Yes, but is it manageable? • Anyway, what is small? • Not a question of area, but of population. • A frequently-used figure is < 1 million • Which would give us more than 50 members of the UN. • Some are rich (Qatar) some are poor (Kiribati)

6. Saint Vincent and the Grenadines 117,193 Saint Lucia 164,213 Samoa 177,714 Sao Tome and Principe 181,565 Vanuatu 202,609 Western Sahara 267,405 Belize 272,945 Maldives 339,330 Brunei 365,251 Malta 396,851 Cape Verde 415,294 Suriname 436,935 Luxembourg 462,690 Djibouti 466,900 Equatorial Guinea 523,051 Solomon Islands 523,617 Comoros 651,901 Bahrain 677,886 Guyana 705,803 Cyprus 775,927 Qatar 840,290 Fiji 880 874 HALF THE SIZE OF INDIANAPOLIS country and 2004-07-01 estimated population. Holy See (Vatican City) 921 Tokelau 1,405 Tuvalu 11,468 Nauru 12,809 Palau 20,016 Cook Islands 21,200 San Marino 28,503 Monaco 32,270 Liechtenstein 33,436 Saint Kitts and Nevis 38,836 Marshall Islands 57,738 Antigua and Barbuda 68,320 Dominica 69,278 Andorra 69,865 Aruba 71,218 Man, Isle of 74,655 Northern Mariana Islands 78,252 Seychelles80,832 Grenada89,357 Kiribati 100,798 Micronesia, Federated States of 108,155 Tonga 110,237 ABOUT THE SIZE OF BLOOMINGTON

7. Parliament Building, Tuvalu The “Threshold” Argument • Is size linear, or quantum? • That is, should a small country simply, in terms of governance, be a small version of a big country? • Or does the “Weberian” model stop working at some critical mass? • Economically there is no difference, except that small countries have much more Open Economies—i.e. are much more trade dependent

8. Typical (not proven) Attributes of Small States • Very vulnerable to vicissitudes in world trade because of their open nature • Remoteness from major arteries of commerce • Limited domestic resource/market base • High levels of emigration

9. The Critical Mass Argument • How can you have a career structured, professional public service, when the total c.s. may be tiny? • How do you prevent “personalizing” the civil service? I.e. you cannot make a decision as a post-holder on a professional basis, because everybody knows that the decision-maker is you.

10. The Critical Mass Argument • Does this mean that we should think of small countries more in terms of local government? • No. Because local governments do not have the competencies of sovereignty (printing money, trading in arms, conducting relations with other countries on an equal basis). There is an intimate relationship between state and society

11. Another Characteristic • About two-thirds of the small countries are also developing countries with capital constraints of poverty as well as smallness • So, resources may be small in two senses: in total and per capita

12. Consequences of Smallness • Cannot have any leverage in world trade • Small pool of skilled people • Heavy burden of cost of sovereignty spread over few people • Skilled local people are saleable anywhere, and probably for a higher salary—exacerbated by the UN’s quota system. • Little countervailing power with companies negotiating terms

13. Vulnerabilities • They have, as their most valuable asset, sovereignty, which is worth a lot of money to a lot of shady people • For instance: the limited ability to provide oversight for: bank scams, money laundering, arms deals, drug operations, illicit financial transfers. • The influence of bribery

14. Small is Dangerous • Small countries can initiate BIG problems: • Grenada • Kuwait • Solomon Islands • The Falkland Islands (though this is not strictly a country) From CIA comic Dropped over Grenada

15. Big Neighbors • It is very difficult to consider small states in isolation, as they are usually in the orbit of large neighbors.

16. These are some of the very small countries The Caribbean and Central America The South Pacific Africa

17. Vulnerability • Open economy may make these countries particularly susceptible to changes in the world economy. • Their weak oversight capacity makes them targets for money laundering, banking scams, drug smuggling and arms transfers. This brings them into conflict with their neighbors.

18. VULNERABILITY • Small capital base makes them dependent on international aid and banking for their capital budget (often through aid) • Thus, it is difficult to organize their own capital-development priorities because the WB and bilateral donors overwhelm them. • Problem of overhead costs on small projects.

19. Vulnerability (2) • The personalization of responsibility may make it easier to corrupt individuals, and there are few checks on those doing the oversight. • There are even attempts to take over these countries completely, e.g. Equatorial Guinea and the Comoro Islands. All about oil.

20. Responses • Collective action among small states • The South Pacific Forum, or the University of the South Pacific • Caricad, Caricom, and other common services organizations of the Caribbean (inc. Belize and Guyana.)

21. Options • World Bank tells them that they need to find their niche economies, but what are the options beyond tourism? • Mainly the “gray area” operations, like undisclosed banking, which makes the drug trade possible.

23. How it works • Then they are brought in quietly to the US—often a distance of only 90 miles • The vast amount of cash collected is taken to the banks of C. America and the Caribbean • They move to the thousands of small islands of the Caribbean by boat and light plane • From here the money, now “legitimate” can move back to the States, or indeed, anywhere Drugs originate in S. America