Dead Men Left

Monday, June 13, 2005

It'll only encourage them: debt relief and corruption

Gavin Capps has an article forthcoming for the International Socialism Journal on Africa's debt. It'll be online in the next week or so, with a focus on the G8 and Make Poverty History. A common argument against debt relief and increases in aid is that African countries are simply too corrupt to deal with the extra cash; an echo of the White Man's Burden, frankly, but often repeated with best of intentions. Gavin tackles the issue head-on, and I reckon what he writes is worth reproducing:

...All of this would seem to support the claim of Blair’s Commission for Africa that corruption is the single biggest problem facing the continent. Certainly, the private appropriation and reinvestment of loan funds by senior state officials and politicians reached extraordinary heights. Best known is Mobutu Sese Seko, the then dictator of Zaire (now Democratic Republic of Congo), whose personal assets reportedly peaked at $4 billion in the mid-1980s. But simply attributing capital flight to the greed of African politicians hides more than it reveals.

First it was, of course, the great powers who propped up African dictators like Mobutu because they guaranteed Western strategic interests during the cold war. Mobutu was installed in mineral rich Zaire following the CIA-backed assignation of the popular, radical nationalist leader, Patrice Lumumba, and feted by Western governments, corporations and banks for much of his thirty two year reign . Mobutu and others like him were, then, the creatures of exactly the same people who now cry foul about the endemic corruption of Africa’s ‘political class’.

Secondly, the ‘corruption argument’ badly misunderstands the nature of the state in general, and that of Africa in particular. In all post-independence African ountries, the state quickly emerged as a site, if not the site, of capital ccumulation. Those groups in charge of the state were thus not simply ‘politicians’ and ‘bureaucrats’, they were also capitalists. In other words, they were also an economic class and, ultimately, one subject to the exactly same logics and forces as capitalists located in the private sector.

This point is well illustrated by the case of Apartheid South Africa. While the likes of Mobutu were shifting capital North in the early 1980s, so too was big South African business. Ben Fine and Zav Rustomjee have estimated that on average as much as 7 percent of GDP per annum left South Africa as capital flight between 1970 and 1988; an equivalent of 25% of non-gold imports . This was entirely due to the transfer activities of the major corporations like Anglo-American and the Rembrandt Group. And their behaviour was no less illicit than that of the dictators. Shifting private funds out of South Africa in the 1980s not only defied local capital controls but broke the international sanctions regime on Apartheid. As such, the neo-liberal pathologisation of the corrupt black African state, simply does not hold. The private ‘white’ capitalists of South Africa were busy engaging in capital flight as well.

Finally, the ‘corruption argument’ tells us nothing about the wider processes that were driving African capital flight. Fine and Rustomjee argue that the South African corporations shifted their resources in response to a combination of declining opportunities for local investment, particularly following the domestic economy’s descent into crisis, and the new opportunities for financial and other investment opening up in the North . This captures the greater truth. Whether Africa’s capital exporters were located in the public or private sectors, they too were reacting to the deepening crisis of their economies and the gravitational pull of increasingly liberalised money markets located in major financial centres like New York, London or Paris. As such, they were doing no more than chasing profits – the essence of the entire capitalist system.