Funding Graft in Russia and Africa

Washington Times, November 22, 1999.>
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Shed no tears for the Clinton administration's pain over the Russianmoney-laundering scandal. This largely self-inflicted pain stems from theadministration's reluctance to learn from its own blunders elsewhere,particularly in Africa. It invested massively in the rhetoric andcharisma of "leaders," thereby setting itself up to be duped by crackpot democrats.

The administration seeks out an "Abraham Lincoln," and develops a warm, cozy personal relationship -- or "partnership" with him to transform his country. Thus, so much faith was invested in Boris Yeltsin and a small cadre of "reformers," led by Viktor Chernomyrdin. Western aid dollars flowed. Staggering from a hangover, the administration now finds itself swindled by gangster bureaucrats, who, during the party, engaged in a massive heist of Russian assets for transfer overseas.

Similarly, during his historic trip to Africa in March 1998, PresidentClinton hailed the presidents of Congo, Uganda, Rwanda, Ethiopia andEritrea as the "new leaders of Africa" and spoke fondly of the "new Africanrenaissance" sweeping the continent. But barely two months after Mr. Clinton's visit,Ethiopia and Eritrea were at war, the "new African renaissance" in tatters andthe rest of the "new leaders" were at each others' throats in the Congoconflict. Were this not enough, the administration's other African"partners" turned out to be reform acrobats and crocodile liberators.

Like Russia, huge sums have fled Africa. According to the UnitedNations, $200 billion or 90 percent of sub-Saharan Africa's GDP was shipped toforeign banks in 1991 alone. Yet, this kamikaze plunder, which occurred under thewatchful eyes of Inspector Clousseau and the Keystone Cops (the IMF andthe World Bank), elicited no outrage from the Western media and the Clintonadministration for reasons of political correctness.

The administration's policies toward Russia and Africa are fundamentallyflawed. The near-fatal obsession with an "Abraham Lincoln" encourages allsorts of charlatans and hucksters to project themselves as such to win Westernfavors and recognition. They parrot "democracy" and "capitalism" by rote, not somuch out of conviction nor with the will to implement them, but because sucheuphonious utterances please Western aid donors.

Second, the starry-eyed belief -- in the teeth of abundant evidence to thecontrary -- that a "government" exists in the recipient country, that caresabout and responds to the needs of its people, is astonishing. What is nowproven to exist in many African countries and Russia is a gangster state -- a"government" hijacked by a phalanx of vagabonds who use the machinery of the state todevelop their own pockets. The chief bandit is often the head of state himself.As the director of the World Bank's own Poverty and Social Policy Department,Ishrait Husain, himself observed: " Market reform is failing in many Africancountries precisely because their governments misappropriate funds. They spend largesums of money promoting their own interests, building airports in their hometowns, increasing military spending, and buying more fashionable cars.

The third flaw is the persistent failure to distinguish between outcomesand the processes or institutions required to achieve those outcomes. Ademocratic Russia or Africa, based on the free market system, are outcomes of oftenlong and arduous processes. Most critical are the transparency of theprocesses, the fairness of the electoral rules, mechanisms for peaceful resolution ofelectoral disputes, among others. By focusing almost exclusively on the outcomesand paying scant attention to bothersome details of the processes, Westernleaders often become, by default, complicit in the commission of egregiouselectoral frauds that produce a pirate democracy.

In Africa, the democratization process has been stalled by politicalchicanery and strong-arm tactics. Incumbent autocrats appoint their ownelectoral commissioners, empanel a fawning coterie of sycophants to writethe constitution, massively pad the voter's register and hold fraudulentelections to return themselves to power.

The record on market liberalization is even more dismal, despite therosy portrait the Clinton administration, the World Bank and the IMF paint ofAfrica. More than $50 billion has been poured into Africa by USAID, the World Bankand the IMF since 1990 to support market reform in Africa. Yet, the prospectsremain bleak. Ghana, Lesotho, and Uganda, for example, were all the ragetwo years ago. Not any more.

A market economy cannot be established without secure property rights,free flow of information, the rule of law and mechanisms for contractenforcement. Since these processes or foundations are missing in Russia and mostAfrican countries, the free market economies the Clinton administration hopes toestablish in these countries are pies in the sky, regardless of assurancesby Mr. Yeltsin and the "new African leaders."

A new approach that emphasizes institution-building or processes isimperative. Leaders come and go but institutions endure. Four arecritical:

  • An independent central bank -- vital for monetary and economic stability, as well as stanch capital flight.
  • An independent judiciary - -crucial for the enforcement of rule of law, protection of property and to end rapacious plunder.
  • An independent and free media -- to facilitate the free flow ofinformation, to expose criminal wrongdoing, and to disseminate ideas.
  • Neutral and professional armed or security forces -- to protect life and property and ensure law and order. Witness East Timor.

At the minimum, Western aid should be made contingent upon theestablishment of these institutions, which are established by civil society, notleaders. An implicit conflict of interest is involved when leaders are asked to set upthe very institutions that would limit their power or the arbitrariness bywhich it is exercised.

Re-channeling existing aid programs to reach the people or civil societywould have much greater impact in transforming Russia and Africa thanplacing unwarranted faith in Lincoln wannabes.

George B. N. Ayittey

George Ayittey, an adjunct scholar at the Cato Institute, is an Associate Professor of Economics at American University and president of The Free Africa Foundation, both in Washington. His new book is Africa In Chaos.