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Your fine working paper has convinced me of the need to achieve good institutions in dysfunctional states, and touches on some of the issues, but doesn't mention the most promising modern method. To my personal disappointment, this is not a visit from the 101st Airborne Division, but the possibility of admission to the European Union.
Consider: this method has already transformed governance/institutions not only in Spain, Portugal and Greece, but also in most of the ex-Communist countries, and is well on the way to doing the same in Bulgaria, Romania, Turkey and the Ukraine. The details are interesting too - not only are there big carrots (free trade within the EU, CAP against the rest of the world, free movement of labour, this-motorway-built-for-you-by-Swedish-taxpayers) but also the duty to accept a lot of highly specific law and to submit to tiresome Brussels oversight on its enforcement.
Obviously there are specific reasons why this has worked so well (contiguity, ethnic similarity, not-hopelessly-backward accession countries) - and it's very hard to see how one could implement the idea everywhere. The WTO isn't the answer - it's too easy to get in.
My very modest suggestion would be that "we" (OECD) begin EU accession talks with Tunisia. (We would need a paper explaining that "Europe" is really a Roman concept, and that Tunisia was a key part of the Roman Empire. We would also need to explain to the French that if you're going to have Tunisians around anyway, it's better to have oversight of Tunisia than not.) Tunisia on its own isn't remotely important - but I can see a route from it to sorting out the most troubled continent, and I can't see any other.
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