Corrupt elites will fight hard to stop the dismantling of the looting machines from which they draw their vast wealth

States that get all their revenues from selling their oil, gas and minerals could easily turn into kleptocracies where the majority stay poor

Patrick Cockburn in The Independent

A shooper at the Olaya mall in the Saudi capital of Riyadh. Ordinary citizens may be hit by efforts to tackle global corruption and patronageGetty


Can corruption be controlled by reform or is it so much the essential fuel sustaining political elites that it will only be ended – if it ends at all – by revolutionary change?

The answer varies according to which countries one is talking about, but in many - particularly those relying on the sale of natural resources like oil or minerals - it is surely too late to expect any incremental change for the better. Anti-corruption drives are a show to impress the outside world or to target political rivals.

The anti-corruption summit in London this week may improve transparency and disclosure, but it can scarcely be very effective against politically well-connected racketeers, busily transmuting political power into great personal wealth.

This is peculiarly easy to do in those countries in the Middle East and Africa which suffer from what economists call “the resource curse”, where states draw their revenues directly from foreign buyers of their natural resources. The process is described in compelling detail by Tom Burgis in his book, The Looting Machine: Warlords, Tycoons, Smugglers and the Systematic Theft of Africa’s Wealth. He quotes the World Bank as saying that 68 per cent of people in Nigeria and 43 per cent in Angola, respectively the first and second largest oil and gas producers in Africa, live in extreme poverty, or on less than $1.25 a day. The politically powerful live parasitically off the state’s revenues and are not accountable to anybody.

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Burgis explains the devastating outcome of a government acquiring such great wealth without doing more than license foreign companies to pump oil or excavate minerals. This “creates a pot of money at the disposal of those who control the state. At extreme levels the contract between rulers and the ruled breaks down because the ruling class does not need to tax the people – so it has no need for their consent.”

He writes primarily about Africa south of the Sahara, but his remarks apply equally to the oil states of the Middle East. He rightly concludes that “the resource industry is hardwired for corruption. Kleptocracy, or government by theft, thrives. Once in power, there is little incentive to depart.” Autocracy flourishes, often same ruler staying for decades.

Most, but not all, of this is true of the Middle East oil producers. A difference is that most of these have patronage and client systems through which oil wealth funds millions of jobs. This goes a certain way in distributing oil revenues among the general population, though the benefits are unfairly skewed towards political parties or dominant sectarian and ethnic groups.

In Iraq there are seven million state employees and pensioners out of a population of 33 million who are paid $4bn a month or a big chunk of total oil income. Often these employees don’t do much or, on occasion, anything at all, but it is an exaggeration to imagine that Iraq’s oil money is all syphoned off by the ruling elite.

I remember in one poor Shia province in south Iraq talking to local officials who said that they had just persuaded the central government to pay for another 50,000 jobs, though they admitted that they had no idea what these new employees would be doing.

Reformers frequently demand that patronage be cut back in the interests of efficiency, but a more likely outcome of such a change is that a smaller proportion of the population would benefit from the state income.

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This could be the result of Deputy Crown Prince Mohammed bin Salman’s radical plans to transform the way Saudi Arabia is run and end its reliance on oil by 2030. He may well find that the way Saudi society works has long gelled and face strong resistance to changing a system in which ordinary Saudis feel entitled to some sort of job and salary.

The “resource curse” is not readily reversible, because it eliminates other forms of economic activity. The price of everything produced in an oil state is too expensive to compete with the same goods made elsewhere so oil becomes the only export. Migrants pour in as local citizens avoid manual labour or employment with poor pay and conditions.

A further consequence of the curse is that the rulers of resource rich states – like many an individual living on an unearned income – get an excessive and unrealistic idea of their own abilities. Saddam Hussein was the worst example of such megalomania, starting two disastrous wars against Iran and Kuwait. But the Shah of Iran was not far behind the Iraqi leader in grandiose ideas, blithely ordering nuclear power stations and Concorde supersonic passenger aircraft.

Muammur Gaddafi insisted that Libyans study the puerile nostrums of the Green Book, and those failing that part of the public examinations about the book, were failed generally and had to re-take all their exams again.

Can “the looting machine” in the Middle East, Africa and beyond be dismantled or made less predatory?

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Its gargantuan size and centrality to the interest of ruling classes probably makes its elimination impossible, though competition, transparency and more effective bureaucratic procedures in the award of contracts might have some effect. The biggest impulse to resistance locally to official corruption has come because the fall in the price of oil and other commodities since 2014 means that the revenue cake has become too small to satisfy all the previous beneficiaries.

The mechanics and dire consequences of this system are easily explained though often masked by neo-liberal rhetoric about free competition.

In authoritarian states without accountability or a fair legal system, this approach becomes a license to loot. Corruption cannot be tamed because it is at the very heart of the system.

Offshore finance: more than £12tn siphoned out of emerging countries

Analysis shows £1.3tn of assets from Russia sitting offshore, as David Cameron prepares to host anti-corruption summit.

 

Russian banknotes. A detailed 18-month research project has uncovered a sharp increase in the capital flowing offshore from developing countries, in particular Russia and China. Photograph: Maxim Zmeyev/Reuters


Heather Stewart in The Guardian


More than $12tn (£8tn) has been siphoned out of Russia, China and other emerging economies into the secretive world of offshore finance, new research has revealed, as David Cameron prepares to host world leaders for an anti-corruption summit.

A detailed 18-month research project has uncovered a sharp increase in the capital flowing offshore from developing countries, in particular Russia and China.

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The analysis, carried out by Columbia University professor James S Henry for the Tax Justice Network, shows that by the end of 2014, $1.3tn of assets from Russia were sitting offshore. The figures, which came from compiling and cross-checking data from global institutions including the International Monetary Fund and the United Nations, follow the Panama Papers revelations of global, systemic tax avoidance.

Chinese citizens have $1.2tn stashed away in tax havens, once estimates for Hong Kong and Macau are included. Malaysia, Thailand, and Indonesia – all of which have seen high-profile corruption scandals in recent years – also come high on the list of the worst-affected countries.

Henry, a former chief economist at consultancy McKinsey, told the Guardian his research underlines the fact that tax-dodging is not the only motivation for using tax havens – criminals and kleptocrats also make prolific use of their services, to keep their wealth secret, and their money safe. He said the list of users of offshore jurisdictions is like the cantina scene in Star Wars, where a motley group of unsavoury intergalactic characters is assembled. Henry said: “It’s like the Star Wars scene: you have the tax dodgers in one corner, the arms dealers in another, the kleptocrats over here. There’s also those using tax havens for money laundering, or fraud.”

Oil-rich countries including Nigeria and Angola feature as key sources of offshore funds, the research finds, as do Brazil and Argentina. Henry said the owners of this hidden capital are often so keen to secure secrecy and avoid their wealth being appropriated back home, that they are willing to accept paltry financial returns rather than investing it in ways that might promote economic development. Charging just 1% tax on this mountain of offshore wealth would yield more than $120bn a year — almost equivalent to the entire $131bn global aid budget.

The TJN is urging Cameron to push for agreement on a series of issues at this week’s summit, including a tougher crackdown on the banks, lawyers and other professionals who facilitate financial secrecy; and an obligation on all politicians to make their personal financial situation transparent.

The prime minister published a summary of his tax affairs last month, after the Panama Papers leaks revealed that his father had set up an investment fund, Blairmore, based in the offshore jurisdiction of Panama.

Henry argued that when senior figures in authoritarian states such as China use tax havens to guard their money safely, they are effectively free-riding on the legal and financial systems of other countries. “All of these felons and kleptocrats are in a way essentially dependent on the rule of law when it comes to protecting their money,” he said.

He said it was not just exotic locations such as the Cayman Islands where money can effectively be hidden, but also some US states, such as Delaware, where it is possible for foreign investors to start up and run a company without making clear its ultimate ownership – something all UK firms will have to do from later this year.

Muslims must be honest about Qur’an

“We Muslims are caught in a conundrum. If the Arab general bin Qasim is our hero for enslaving non-Muslim women in India in the eighth century, how could Boko Haram be judged wrong for doing exactly the same in Nigeria today?”

May 21, 2014

Tarek Fatah
The Toronto Sun

In the aftermath of Islamic jihadis — the Boko Haram — enslaving Christian school girls in Nigeria, the Muslim intelligentsia, instead of doing some serious introspection, has chosen to exercise damage control.

Columns by my co-religionists have appeared in newspapers ranging from the Toronto Star to The Independent in London and on CNN.com, where they avoid any reference to Sharia laws that permit Muslims to take non-Muslim female prisoners of war as sex slaves.

The fact is Muslim armies throughout history have been permitted under Islamic law to make sex slaves of non-Muslim prisoners.

Here is chapter 33, verse 50 of the Qur’an:

“O Prophet! We have made lawful to thee thy wives to whom thou hast paid their dowers; and those whom thy right hand possesses out of the prisoners of war whom Allah has assigned to thee.”

When asked for a clarification, A Saudi cleric issued a fatwa permitting sex slavery. He said:

“Praise be to Allaah. Islam allows a man to have intercourse with his slave woman, whether he has a wife or wives or he is not married … Our Prophet (peace and blessings of Allah be upon him) also did that, as did the Sahaabah (his companions), the righteous and the scholars.”

In the eighth century, when Arab armies invaded India, they took thousands of Hindu POWs as slaves back to the Caliph Walid in Damascus, who distributed the women as gifts to the newly emerging Arab nobility.

The ninth-century Persian historian al-Baladhuri writes in his book The Origins of the Islamic State that when the Arab general Muhammad bin Qasim invaded India in the year 711AD, the non-Muslim prisoners taken were given a choice of death or slavery.

Sixty thousand captives were made slaves in the city of Rur, among whom were “thirty ladies of royal blood.” One-fifth of the slaves and booty were set apart for the caliph’s treasury and dispatched to Damascus, while the rest were scattered among the “army of Islam.”

The nineteenth century Indian Islamic scholar Abdullah Yusuf Ali, whose translation of the Qur’an is considered the most authentic, had the courage to be honest when he put a footnote to the Quranic verse mentioned above:

“The point does not now arise as the whole conditions and incidents of war have been altered and slavery has been abolished by international agreement.”

But courage to face facts is rare among many Muslims today. I asked the writers of the Toronto Star and The Independent columns why they had not addressed the passages of the Qur’an that permit Muslims to take slaves. They did not answer.

I wrote to a woman who told Christiane Amanpour of CNN that “Boko Haram do not understand Islam.” I asked her why she had not addressed Sharia law that permits taking non-Muslim females as POWs. She too, did not respond.

We Muslims are caught in a conundrum. If the Arab general bin Qasim is our hero for enslaving non-Muslim women in India in the eighth century, how could Boko Haram be judged wrong for doing exactly the same in Nigeria today?

All we Muslims need do today is to echo Abdullah Yusuf Ali by saying, “what was permitted in the seventh century, is no longer applicable in the twenty-first.” But alas, neither honesty nor courage comes easy.

Islam is not the real issue we are facing in Africa

Christians and Muslims have co-existed here for centuries. Corruption and climate change are much more pressing problems

• 
• • Eliza Griswold
  • The Guardian, Friday 8 February 2013

Algerian firemen carry a dead hostage from the gas plant at Amenas. At least 38 civilians and 29 militants died during the crisis. Photograph: Rex Features

 

Stretching from west to east across Africa – from the Atlantic Ocean to the Red Sea – the Sahel today is a militant's dream. Despite the French military's recent routing of al-Qaida in the Islamic Maghreb and its allies in northern Mali, the threat of safe haven for the west's enemies is not going to end there any time soon.

Although, for the moment, the militia have melted from sight, the latest battles in Algeria and Mali are harbingers of a larger catastrophe: the Sahel, the vast grassland north of the equator, has become the latest battleground in the west's war against Islamist militants.

France's plans to withdraw its 4,000 troops from Mali in late March are premature. From the air, US surveillance drones and French fighter planes will not be enough to keep peace in the Sahel – which includes Mauritania, southern Algeria, northern Mali, Chad and Sudan, as well as Somalia, where a 2006 Ethiopian invasion, tacitly backed by the US, looked at first like an utter defeat for the Islamists. Six months later, the militants returned to wage exactly the kind of war Ethiopia and the US had feared.

So how does the west avoid repeating the pattern? By understanding the root causes of the troubles that plague the Sahel.

First, many of its states are weak, if not utterly failing. Ethnic and religious allegiances are much more binding than those of national identity. Exploiting these ties – as well as the growing importance of a global Islamic identity – foreign fighters have decamped from the drone zone of Afghanistan and Pakistan to melt into the lands of North Africa.

All of these factors sharpen the longstanding religious divide that runs along the southern edge of the Sahel, 700 miles north of the equator – the tenth parallel where, thanks to geography, weather and centuries of human migration, most of North Africa's 500 million Muslims meet the 500 million Christians of sub-Saharan Africa. There is nothing new about the co-existence of Muslim and Christian communities at this latitude – it dates back to the seventh century. There's not so much that's new, even, about the emergence of a political form of Islam that sparks conflict with both Christians and more traditional Muslims. Since the Mahdi Muhammad Ahmad launched a 19th-century jihad against the British in Sudan, Islam has gone through periods of revival and rebellion in Africa.

What might be emerging more clearly into public consciousness is a sense that Africa is a zone of strategic concern for the west. Rather than being a place that crosses our radar because of famine, civil war or the legacies of colonialism, we're entering an era in which it becomes a place where western powers directly intervene to protect their interests. So what might this mean for the continent, for some of those key countries, to be placed in this position? And how will it affect our perception of Africa and Africans?

One of Africa's vital interests, which is linked to the rise in militancy, is climate change. Nowhere is this a more urgent issue than in the Sahel, where both flash floods and droughts – which contribute to the Sahara desert's southern spread – are growing more extreme. In Africa, there are now more people fleeing the weather than fleeing war.

Many of these environmental refugees are nomads whose itinerant way of life is in peril. In North Africa, most are Muslims. Since water and grasslands are being replaced by sand dunes, nomads of the Sahel are being forced into different means of survival, such as smuggling cocaine and cigarettes to Europe along ancient salt routes, or joining up with one militant outfit or another.

Another disastrous pattern is that across the continent, Muslim nomads are pushing south into settled land, which tends to belong to Christian farmers. In many places, what begins as a local fight for land and water becomes a globalised battle for religion. In Sudan, for example, the Islamist regime of the north has armed paramilitary Muslim nomads to push south for the sake of their cattle's survival. Deep beneath the surface, that push allows Khartoum to secure its rights to oil.

Oil underlies much of the Sahel – and its well-known curse leads to that curious paradox in which governments such as Nigeria's or Chad's, which receive billions in revenue each year, impoverish their citizens. Despite vast wealth, these states don't safeguard most people's rights to the basic infrastructure of roads, water, electricity or education. Once again, both Muslims and Christians turn to their local mosque or church to help them survive. The resulting corruption on behalf of governments across the region also feeds rebellion in the name of Islam.

Militants use the notion of a return to an idealised Islamic past to control populations from Sudan to Somalia to Nigeria to Mali. This rallying cry for Islamic law, which is reduced to its most extreme measures, is an outgrowth of the rising role of religious identity, but it's also the most expedient means to terrify a population in the name of religion. In many cases, fellow Muslims are the first to suffer at the hands of militants. This is especially true in North Africa, where most Muslims practise Sufism, a mystical strain of the faith that many hardliners see as heretical.

During the cold war, the west fought proxy battles against the Soviets across Africa. In some ways, the vacuum the cold war left behind has left room for a new political contest between Islam and the west. The west's greatest mistake would be to do nothing but militarise this conflict and to shore up corrupt leaders just because they parrot the right kind of western-friendly speak, as we have done in the past.

Far more important – and more daunting – is the need to address the underlying causes of this burgeoning conflict. Corruption and climate change top the list. Until then, American surveillance drones are going to fly over a growing desert that's increasingly hospitable to its enemies.