National breakups don’t work like corporate ones

June 13, 2012

By Martin Hutchinson

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The recent attempt by Malian rebels to split their country is not wrong in principle. With good will and support from the rest of the world, some national partitions – not unlike corporate breakups – produce smaller, better-governed and more prosperous nations. But military force makes such results rare and disasters all too common.

Europe and Asia have witnessed several successful country divisions. The “velvet divorce” between the Czech Republic and Slovakia has produced two relatively successful countries committed to market economies. The 1991 breakup of Yugoslavia, while initially bloody and painful, has produced two successful countries, Slovenia and Croatia, and a third, Macedonia, more market-friendly than its former parent or neighbors.

Even the Soviet Union’s chaotic splintering has allowed a few states, like those in the Baltic, to achieve success in the EU. Taiwan has proved a beacon of economic development to its erstwhile gigantic parent. In these cases, the analogy with corporate divorce is a good one; greater homogeneity and “strategic focus” can produce good results.

The failures, however, overwhelm the successes. Bosnia and Kosovo are economic basket-cases. Serbia is troubled. The Austro-Hungarian and Ottoman breakups impoverished their successor states, as trade barriers were erected where none had existed before. Neither Pakistan nor Bangladesh has been entirely successful and both partitions involved bloodshed. In Africa, country splits like Congo, Ethiopia/Eritrea and Rwanda/Burundi have led to destructive wars and subsequent impoverishment.

Like many African boundaries, Mali’s were designed by distant colonial administrators, so an independence movement is natural. The existing government has done a competent job, producing growth above the country’s high 2.6 percent population growth rate. Yet Mali ranks 146th on the World Bank’s Ease of Doing Business index, giving any breakaway state lots of room for improvement in economic matters.

The inability of Malian rebels to agree exactly what kind of state they’d like to rule is not a good sign, even by the standards of impoverished African nations. As in business, breakups can work, but only after proper management techniques have run their course. In Mali’s case, governance reforms would be a better place to start.

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