NELSON INSTITUTE DIRECTOR’S COLUMN DISCUSSES “MORAL HAZARD” OF INDEPENDENCE FOR KOSOVO

July 5, 2007

HARRISONBURG—In his biweekly “Conservative Columnist” feature for National Interest online, the web edition of the foreign policy journal The National Interest, Dr. J. Peter Pham, Director of the Nelson Institute for International and Public Affairs at James Madison University, discusses the “overwhelming impact on the international community” that recognition of independent statehood for Kosovo would have.

Reviewing the history of the Balkan province as well as the conflict of the 1990s, Dr. Pham writes:

Thus the perversion which threatens global order arises out of the international community’s inadvertent fumbling. Generally peaceful ethnic Albanian nationalist activism was largely ignored, but the violent attacks of [the Kosovo Liberation Army]—and the brutal response it provoked—succeeded in attracting Western interest, NATO military intervention and, prospectively, recognition of Kosovo’s independence. The lesson was that in a world where conflicts exceed both the political will and the material resources of the international community, the path to success for any stateless group fighting against a stronger state opponent is to initiate an armed conflict in which the latter’s counterinsurgency effort will attract criticism and, if one is lucky, create the perception of a humanitarian crisis grave enough to threaten international stability…

 The problem is ultimately the one which the Nobel Prize-winning economist Kenneth Arrow analyzed in his pioneering work on insurance and risk-bearing which pointed out that the redistribution of costs increased risk of problematic behavior and thus negative outcomes. The solution in these cases is to reduce the "moral hazard" either by not paying claims arising purely from the provision of coverage or at least curbing financial incentives to make such claims through deductibles or co-insurance.

Noting the failure the summit meeting earlier this week between President George W. Bush and Russian President Vladimir Putin to arrive at a “grand bargain” that would pave the way for the birth of an independent Kosovo, the column concludes:

In a world where demand for diplomatic and military resources for conflict resolution exceeds supply, ethical realism requires us to diminish incentives to violence. While granting statehood to Kosovo appears to be a self-evident exit strategy from an otherwise interminable (and expensive) international administration of the province by an increasingly intervention-weary and overtaxed America, charting a consistent and principled course that ensures internal security and regional stability, while respecting the requirements of global order as well as U.S. national interest, will take much more time and effort than a summer fishing expedition off Walker’s Point.

The text of Dr. Pham’s essay, “The Moral Hazard of Kosovo’s Independence”, can be accessed by clicking here.