Mineral Assets and Corruption in the DRC: Israeli “businessman” Dan Gertler linked to Och-Ziff bribery convinction

What does Dan Gertler and his business associates think of term limits in the DRC?

This piece from The Globe and Mail has some answers:

The cellphone message from the Israeli businessman was blunt and vulgar: The Canadian mining company must be “screwed and finished totally,” he told an associate as they negotiated a massive bribe to Congolese court officials to guarantee that the Canadian company would lose control of its copper mine.

dan-gertler-3

President Joseph Kabila and Dan Gertler 

Within hours of that 2008 message, the businessman and his associate had arranged a bribe of $500,000 (U.S.) to judges and other officials in the Democratic Republic of the Congo, according to court documents released in a U.S. corruption case.

A day later, the Israeli businessman obtained assurances that Congolese officials would ensure the Canadian company would lose its court fight against a local takeover of the copper mine, the U.S. documents say. Then, a week later, the Israeli won majority control of the company and the valuable asset.

The documents were released on Thursday in the settlement of a corruption case against Och-Ziff Capital Management, a U.S. hedge fund that manages $39-billion.

Och-Ziff agreed to pay $412-million in criminal and civil penalties, one of the biggest payments ever approved under the U.S. Foreign Corrupt Practices Act.

The U.S. documents show the hedge fund paid more than $100-million in bribes to officials in Congo, Libya, Chad, Niger and Guinea – including Congolese president Joseph Kabila – to gain corrupt influence and mining assets.

……. The hedge fund, Och-Ziff, went into partnership with the Israeli businessman and was involved in using intermediaries and business partners to funnel large bribe payments to officials in Congo and other African countries, according to the U.S. Securities and Exchange Commission. Och-Ziff was directly involved in financing the businessman’s acquisition of Africo, including his “legal expenses” in the case, the U.S. documents say.

As I have noted here and here, the DRC is a cherished playground for thieves foreign investors who do not give a rats behind about the political, institutional, and economic consequences of their actions.

That said, Gertler would be advised to talk to Benny Steinmetz. There is a precedent of a change in leadership leading to repossession of a fraudulently obtained concession.

Kabila will not be in power in Kinshasa forever.

More on the Och-Ziff story here.

Why isn’t the East African Community doing more on Burundi?

The situation in Burundi is deteriorating, fast.

Armed-forces-in-Burundi-340x230There are strong signs of ethnic violence. More than 300 people have been killed since President Pierre Nkurunziza successfully violated term limits to stay in office for a third term early this year. The ensuing violence has forced over 220,000 to flee the country, while scores remain displaced internally. Over the last week alone more than 80 people have been murdered in what is increasingly looking like a civil war rather than mere civil unrest met with heavy-handed repression. The African union has used the word “genocide” in reference to the Burundian situation.

For a background on the current Burundian crisis see here, here, here and here.

So given the clear evidence that things are falling apart in Burundi, why isn’t the East African Community (EAC) doing more to de-escalate the situation?

The simple answer is intra-EAC politics (which serve to accentuate the body’s resource constraints).

The EAC is a five-member (Burundi, Kenya, Tanzania, Rwanda and Uganda) regional economic community (REC) that is arguably the most differentiated REC in Africa. Based in Arusha, Tanzania, it is a relatively robust institution replete with executive, legislative and judicial arms.

Like is the case for most African RECs, the EAC member states conceded precious little sovereignty to Arusha. For example, the  EAC treaty does not directly empower the REC to intervene in a member country even in cases of gross violations of human rights (like is currently happening in Burundi). So far regional cooperation within the EAC has mainly focused on economic issues that do not pose substantial threats to sovereignty. It is for this reason that the EAC has avoided any kind of direct intervention in Burundi to end what is a singularly political crisis — both within Burundi and at the regional level.

That said, Article 123 of the EAC treaty provides a loophole for intervention.

The Article stipulates that the purpose of political cooperation among EAC member states is to, among other things: (i) strengthen the security of the Community and its Partner States in all ways; and (ii) preserve peace and strengthen international security among the Partner States and within the Community. In my view these clauses mandate the EAC to protect both the internal security of Burundi as well as intra-EAC security.

It is important to note that so far the norm has been to treat vagueness in African REC treaties as a call to inaction. But vagueness also provides willing interveners with a fair amount of latitude over interpretation. Furthermore, since 2000 the trend within African RECs has been to dilute the infamous OAU non-intervention clauses (see the AU treaty, for example) especially with regard to security matters.

It is not hard to see how the conflict in Burundi poses a clear and present danger to both Burundi’s internal security as well as peace and security within the EAC.

We know from history that an all out civil war in Burundi would threaten the security of the region. Burundi’s ethnic make up roughly mirrors that of Rwanda. Ethnic conflict in Burundi would inevitably elicit an intervention from Rwanda, thereby regionalizing the conflict (with an almost guaranteed knock on effect in eastern DRC). In addition, even though Kagame may not be a fan of Nkurunziza, he lacks the moral authority to criticize him given recent moves to scrap term limits in Rwanda.

If Rwanda (overtly) intervenes in Burundi, it is not clear which side Tanzania — a critical player — would take (especially because of the implications for the stability of eastern DRC). Kigali and Dodoma do not always see eye to eye. In addition, the new Tanzanian president, John Magufuli, is not particularly close to his Kenyan counterpart on account of his closeness to Kenyan opposition leader Raila Odinga. This may limit the possibility of collective action on Burundi by the EAC’s two leading powers.

And then there is Uganda. President Yoweri Museveni is currently the designated mediator in the Burundian negotiation process. But he is currently preoccupied in his bid to win an nth term in office (who’s counting?) His legitimacy as a mediator is seriously in question on account of his political record back home. Recall that the proximate cause of the current crisis in Burundi was Nkurunziza’s decision to violate term limits. Museveni scrapped term limits in 2005 and has systematically squeezed the Ugandan opposition into submission through heavy handed tactics that are direct violations of human rights.

Sadly for Burundians, the current state of inter-state relations within the EAC is strongly biased against any robust intervention to stop the violence that is increasingly becoming routine. Nkurunziza knows this, and will likely try to make an end run on his perceived political opponents before the wider international community begins to pay closer attention.

Lastly, the other possible interveners — the  UN and the EU — are also not likely to intervene in Burundi any time soon, despite the country’s heavy dependence on foreign aid. Europe is hobbled by the ongoing refugee crisis and the war on ISIS. As for the UN, it increasingly launders its interventions through region or sub-regional IOs (see for example AMISOM in Somalia, under the AU). This kind of strategy requires a willing regional partner, something that is lacking in the case of the EAC (or the AU for that matter).

In the next few weeks there will probably be attempts at mediation and calls for a ceasefire. But my hunch is that things are likely to get much worse in Burundi in the short term.

The Anatomy of Tax Evasion in Africa

Africa Confidential has a great piece analyzing leaked documents from PwC, the professional services firm, showing the various arrangements that enable multinational companies to evade taxes in Africa. You can read the whole piece here (gated).

  • One of the measures PwC advised multinationals to take was to create a wholly-owned Luxembourg-based subsidiary which would hold the rights to intellectual property used by the rest of the group. The rest of the group would then pay licensing fees to the Luxembourg-based subsidiary which, by agreement with the authorities, would be granted tax relief of up to 80%……
  • A second tax avoidance mechanism simply involved the companies becoming incorporated in Luxembourg. In 2010, Luxembourg concluded an agreement with several companies of the Socfin (Société financière) agribusiness group, which was founded during the reign of Belgian King Leopold II by the late Belgian businessman Adrien Hallet. The companies chose Luxembourg as their base and made an agreement under which their dividends were subject to a modest 15% withholding tax, a lower figure than those in force where their farms are located (20% in Congo-K and Indonesia, 18% in Côte d’Ivoire).
transfer-pricing

The art of hiding profits

Altogether, Socfin subsidiaries in Africa [in Sierra Leone, Nigeria, Liberia, Cote d’Ivoire, and Cameroon] and Indonesia produced 123,660t. of rubber and 380,770t. of palm oil in 2012. The combined turnover of its main African subsidiaries reached €271 mn. in 2013. The list also includes the 100%-owned Plantations Socfinaf Ghana Ltd. (PSG) and Socfin-Brabanta (Congo-Kinshasa). Socfin also holds 88% of Agripalma in São Tomé e Príncipe and 5% of Red Lands Roses (Kenya).

  • A third mechanism involves cross-border lending within a group of companies. Companies registered in Luxembourg are exempt from tax on income from interest.

According to the Thabo Mbeki High Level Panel report between 1980 and 2009 between 1.2tr and 1.4tr left Africa in illicit flows. These figures are most likely an understatement. Multinationals, like the ones highlighted by Africa Confidential, accounted for 60% of these flows.

Alex Cobhan, of the Tax Justice Network, has a neat summary of the various components of illicit financial flows (IFFs) and how to measure them. He also proposes measures that could help limit IFFs, including: (i) eliminating anonymous ownership of companies, trusts, and foundations; (ii) ensuring that all bilateral trade and investment flows occur between jurisdictions which exchange tax information on an automatic basis; and (iii) making all multinational corporations publish data about their economic activity and taxation on a country-by-country basis.

Alex Cobham blogs here.

On Bad Roads (in pictures)

Even presidents get stuck on bad roads when it rains. Here is President Joseph Kabila of the Democratic Republic of Congo. The DRC has a landmass of 2,267,048 sq km, and 2,794 km of paved roads.

kabila1

kabila2

kabila3

kabila4

What can be done to increase road access in the DRC? Big projects like this will definitely help. But a big accelerator of the process will probably be urbanization. Kinshasa is the second largest city in Sub-Saharan Africa, after Lagos. Many of you probably have never heard of Mbuji Mayi, a city of about 1.7 million people (Other big cities in the DRC include Lubumbashi, Kisangani, Bukavu, and Kananga, and Tshikapa).

The projected rapid urbanization rate in Africa, and much of the developing world, is often depicted as a disaster waiting to happen (largely due to poor infrastructure and lack of jobs). But urbanization can also be seen as an opportunity to take advantage of economies of scale to provide public goods at a lower cost. It might even have a positive impact on agricultural productivity – by creating reliable concentrated markets in urban areas and possibility through greater levels of land consolidation to take advantage of scale. That said, governments will still have to build major highways linking cities, and farms with markets.

Understanding Uganda’s Military Adventurism Under Museveni

On January 15th 2014 President Yoweri Museveni finally admitted that Uganda People’s Defence Force troops are engaging in combat operations within South Sudan. Right after the political fallout in Juba and escalation of hostilities between forces loyal to President Salva Kiir and those behind his former deputy Riek Machar, Mr. Museveni threatened Machar with military action if he did not come to the table to negotiate with Kiir. Museveni’s military involvement in the conflict has caused concern in Nairobi and other capitals in the region. For one, Uganda’s military intervention in the conflict may yet jeopardize the ceasefire agreement that was signed on January 23, 2014 in Addis Ababa. The regional body IGAD (Intergovernmental Authority on Development) is supposed to be a neutral arbiter and monitor in the conflict. Museveni’s clear leanings towards the government in Juba may bring to question IGAD’s neutrality in the mediation effort.

For historical reasons (see below) Khartoum fears Kampala’s military involvement in South Sudan. But this time the situation is slightly different, and a little more complex. Bashir has already shown his hand in support of Juba against Machar, possibly for two reasons: (i) Khartoum needs Juba’s help in weakening the rebellion by the rump SPLA (SPLA-North) that is still active in Blue Nile and South Kordofan, regions that border South Sudan; and (ii) Bashir needs to keep the oil flowing in order to ward off internal turmoil within Sudan due to rapidly deteriorating economic conditions (see here). Kiir’s willingness to throw SPLA-N under the bus comes as no surprise since it is an offshoot of the “Garang Boys” (mostly PhDs) who occupied a special place, unlike Kiir and others, in John Garang’s SPLA. SPLM-N’s leader Malik Aggar, shared Garang’s vision of one united reformed Sudan, as opposed to secession by the South. At the same time, however, Khartoum does not want a super strong South Sudan free of rebels. Total cessation of conflict in South Sudan would rob Khartoum of proxies to keep Juba in check. Uganda’s involvement could tip the balance in Juba’s favor vis-à-vis potential Bashir allies.

Meanwhile in Nairobi and Addis Ababa concern is growing over Uganda’s claim that the IGAD should foot the bill of UPDF’s adventures in South Sudan. Both Ethiopia and Kenya prefer settling the conflict at the negotiating table, partly because both have their security forces stretched by domestic armed groups and bandits and the war in Somalia. Kenya has said categorically that it will not send troops to South Sudan, even under IGAD. The wariness in Nairobi and Addis to send troops or cash for a military cause in South Sudan contrasts sharply with Kampala’s choice of military action from the moment the current flare up started in Juba. This despite the fact that Uganda also has troops serving in Somalia.

Which raises the question: What explains Uganda’s international military adventurism under Museveni? The answer lies in the confluence of history, international geopolitics, and Uganda’s internal politics.

Uganda is one of the more militarized states in Africa, with the military having direct representation in parliament (10 seats). It is also interventionist, with a history of combat engagement and support for rebel groups in six neighboring states – Burundi, the Central African Republic (CAR), the Democratic Republic of Congo (DRC), Rwanda, Somalia, and South Sudan. More recently, the nation has been a key advocate for greater integration within the East African Community (EAC). Indeed, Ugandan President Yoweri Museveni fancies himself as a possible head of an EAC political federation should it ever materialize. Uganda is also a key player in the African Capacity for Immediate Response to Crises (ACIRC), a proposed standby force with capacity to rapidly deploy troops to trouble spots in Africa (other key supporters include South Africa, Chad, and Tanzania).

Museveni and his kagogo (little) soldiers

Museveni and his kadogo (little) soldiers

President Yoweri Museveni’s military adventurism and internationalist outlook have deep roots. As a young student in Tanzania, Museveni was involved in exile organizations opposed to Iddi Amin. Indeed, Museveni’s National Resistance Army (NRA), started off as the Popular Resistance Army (PRA) in Tanzania (As testament to its Tanzanian roots, NRA borrowed the idea of political commissars from the Tanzanian military to educate civilians in “liberated” Luweero Triangle). In Tanzania and even after returning to Uganda Museveni made regional connections that he maintained even after he ascended to power in 1986 – including Rwanda’s Paul Kagame, Sudan’s John Garang’, and leaders of Mozambique’s FRELIMO. Before rebelling against Kigali, Kagame was Museveni’s Chief of Military Intelligence. Museveni supported Garang’s Sudan People’s Liberation Army (SPLA).

Once in power, Museveni styled himself as the guarantor of peace and stability in Uganda. Many (both at home and abroad) evaluated his performance relative to the disastrous years under Amin and the ensuing civil war. The resulting peace dividend (albeit restricted to the south of the country) was marked by relative macro-economic stability, with growth averaging about 6% for much of the 1990s. This made Museveni a darling of Western donors and international financial institutions. However, Museveni’s record with regard to democracy and human rights remained dubious. This put him in awkward position vis-à-vis the West, especially since the 1990s was the zenith of Western promotion of liberal democracy.

To this Museveni reacted cleverly, and worked hard to position Uganda as a strategic player in the wider region’s geopolitics. In order to maintain his international stature and secure his position domestically, Museveni labored to bolster Uganda’s relevance to the West.

Museveni enters Kampala (Source)

Museveni enters Kampala (Source)

Beginning in the early 1990s, Uganda got militarily involved in a number of neighboring states. Support for Garang’s SPLA drew the ire of Khartoum, which in turn supported the Lord’s Resistance Army (LRA) in northern Uganda. Subsequently, the Ugandan military conducted raids against LRA bases in Sudan while also offering combat assistance to the SPLA. For instance, the 1997 battle at Yei featured Ugandan soldiers alongside the SPLA against the Sudan Armed Forces (SAF). It is around this time that the seed was planted for future military involvement abroad at the turn of the century (this time in Somalia under the Western-funded AU mission, AMISOM, to help stabilize the country). After US President Bill Clinton designated Sudan as a state sponsor of terror, Uganda positioned itself as an ally in the frontline of “Global War on Terror.” Kampala served as an intermediary for US aid to SPLA, thereby further strengthening US-Uganda military ties. It is telling that in 2003 Uganda was among only a handful of African states that supported the US-led Iraq War. About 20,000 Ugandans worked in US military bases in Iraq (this was also an excellent job creation tool; and a way of earning Forex).

So far Uganda’s most complex military adventure was in the Democratic Republic of Congo (DRC). A mix of strategic geopolitical positioning, the need to secure markets for Ugandan goods, private greed and domestic politics drove Uganda’s invasion of the DRC. The first Congo War (1996-97) was swift, aimed at helping Laurent Kabila oust Mobutu Seseseko (Rwanda and Angola also helped). Soon after Uganda and Rwanda fell out with Kabila, occasioning the Second Congo war (1998-2003), which involved four other African states. It is then that the façade of intervention for regional stability completely broke down. Ugandan and Rwandan commanders exploited existing and new cross-border smuggling and semi-legitimate trade networks to orchestrate massive pillaging of natural resources in eastern DRC (Competition between the two militaries later intensified, resulting in the “Kisangani Wars.”)

For instance, in the year 2000 despite only producing 0.00441 tonnes of gold, Uganda exported 11 tonnes. A UN report indicates that well-connected generals (including Museveni’s half-brother) created entities headquartered in Kampala to facilitate the illicit trade. It’s important to note that Museveni’s tolerance of the semi-autonomous activities by his generals was strategic (it generated revenue through Kampala-based entities and kept the generals happy) and did not lead to fracturing within the military. Indeed, many of those involved were later promoted.

Museveni meets Somali President, Shayk Sharif Ahmed in Mogadishu in 2010

 

Incidentally, the present involvement in South Sudan also reflects the multifaceted logic of Ugandan international military adventurism. Historical alliances with the SPLA against the LRA and SAF make Kampala and Juba natural bedfellows. But the intervention is also about securing markets for Ugandan goods. According to figures from the Bank of Uganda, in 2012 the country’s exports to South Sudan totaled an estimated USD 1.3 billion. About 150,000 Ugandan traders operate across the border, not to mention countless more primary producers in agriculture who benefit from cross-border trade with their northern neighbor.

The above account explains Museveni’s efforts in the recent past to build an image as the regional powerbroker: heading peace talks between the DRC, Rwanda and eastern DRC rebels; intervening in Somalia to prop up the government in Mogadishu; and in the latest episode siding militarily with President Salva Kiir in South Sudan’s domestic political cum military conflict. Domestically, Museveni’s grip on power is as strong as ever. Recent reshuffles in the military removed powerful Historicals (the original “bush war heroes”) thereby leaving Museveni (and his son) firmly in control of Uganda’s armed forces. There is no end in sight for Uganda’s international military adventurism.

In many ways Uganda’s international adventurism has been a case of agency in tight corners. The country is a landlocked; has neighbors with sparsely governed borderlands that provide rear-bases for Ugandan armed groups; and Kampala needs Western aid to maintain the regime, a situation that necessitates acts of geopolitical positioning – especially with regard to the “Global War on Terror” and maintenance of regional peace and stability. Furthermore, oil discovery along the conflict-prone DRC border on Lake Albert and the need for pipelines to the sea to export Ugandan oil will necessitate even greater regional involvement. So while Uganda’s present outward adventurism is primarily because of Museveni’s peculiar personal history, it is correct to say that even after Museveni (still far into the future) the country will continue to be forced to look beyond its borders for economic opportunities, security, and regional stature.

RIP Tabu Ley (1937-2013)

The Rhumba legend Tabu Ley has passed on. For Kenyans of my generation his songs are a reminder of a childhood marked by our parents’ great love of Congolese music (dominated by Tabu Ley and Franco Luambo Makiadi). Back then Kinshasa seemed like the most fun place on the planet (and probably is/was, as I have never been) and a bustling centre of cultural production. We didn’t know what the songs were about, but we knew the lyrics (or what we imagined them to be). I particularly grew to love “Muzina.”

[youtube.com/watch?v=J2GCPUArIwI]

 

Africa’s newfound love with creditors: Bond bubble in the making?

I know it is increasingly becoming not kosher to put a damper on the Africa Rising narrative (these guys missed the memo, H/T Vanessa) but here is a much needed caution from Joe Stiglitz and Hamid Rashid, over at Project Syndicate, on SSA’s emerging appetite for private market debt (Africa needs US $90b for infrastructure; it can only raise $60 through taxes, FDI and concessional loans):

To the extent that this new lending is based on Africa’s strengthening economic fundamentals, the recent spate of sovereign-bond issues is a welcome sign. But here, as elsewhere, the record of private-sector credit assessments should leave one wary. So, are shortsighted financial markets, working with shortsighted governments, laying the groundwork for the world’s next debt crisis?

…….Evidence of either irrational exuberance or market expectations of a bailout is already mounting. How else can one explain Zambia’s ability to lock in a rate that was lower than the yield on a Spanish bond issue, even though Spain’s [which is not Uganda…] credit rating is four grades higher? Indeed, except for Namibia, all of these Sub-Saharan sovereign-bond issuers have “speculative” credit ratings, putting their issues in the “junk bond” category and signaling significant default risk.

The risks are real, especially when you consider the exposure to global commodity prices among the ten African countries that have floated bonds so far – Ghana, Gabon, the Democratic Republic of the Congo, Côte d’Ivoire, Senegal, Angola, Nigeria, Namibia, Zambia, and Tanzania.

In order to justify the exposure to the relatively higher risk and lending rates on the bond market (average debt period 11.2 years at 6.2% compared to 28.7 years at 1.6% for concessional loans) African governments must ensure prudent investment in sectors that will yield the biggest bang for the buck. And that also means having elaborate plans for specific projects with adequate consideration of the risks involved.

Here in Zambia (which is heavily dependent on Copper prices), the Finance Minister recently had to come out to defend how the country is using the $750 million it raised last year on the bond market (2013-14 budget here). Apparently there was no comprehensive plan for the cash so some of the money is still in the bank awaiting allocation to projects (It better be earning net positive real interest).

“They are fighting each other. By the time they have projects to finance, they will have earned quite a lot of interest from the Eurobond money they deposited. So, all the money is being used properly,” he [Finance Minister] said.

Following the initial success the country’s public sector plans to absorb another $4.5b in debt that will raise debt/GDP ratio from current ~25% to 30%. One hopes that there will be better (prior) planning this time round.

Indeed, last month FT had a story on growing fears over an Emerging (and Frontier) Markets bond bubble which had the following opening paragraph:

As far as financial follies go, tulip mania takes some beating. But future economic historians may look back at the time when investors financed a convention centre in Rwanda as the moment that the rush into emerging market bonds became frothy.

The piece also highlights the fact that the new rush to lend to African governments is not entirely driven by fundamentals – It is also a result of excess liquidity occasioned by ongoing quantitative easing in the wake of the Great Recession.

I remain optimistic about the incentive system that private borrowing will create for African governments (profit motive of creditors demands for sound macro management) and the potential for this to result in a nice virtuous cycle (if there is one thing I learned in Prof. Shiller’s class, it is the power of positive feedback in the markets).

But I also hope that when the big three “global” central banks start mopping up the cash they have been throwing around we won’t have a repeat of the 1980s, or worse, a cross between the 1980s (largely sovereign defaults) and the 1990s (largely private sector defaults) if the African private sector manages to get in on the action.

African governments, please proceed with caution.

The 2013 Resource Governance Index

The 2013 Resource Governance Index (published by the Revenue Watch Institute) is out. The top performing African countries include Ghana, Liberia?, Zambia and South Africa, with partial fulfillment. The bottom performing countries are Equatorial Guinea, Zimbabwe, South Sudan, the Democratic Republic of Congo and Mozambique.

The 58 nations included in the report “produce 85 percent of the world’s petroleum, 90 percent of diamonds and 80 percent of copper.” Ghana, where we are doing some evaluation  work on extractive sector transparency initiatives, is the best performing African country on the list. Image

More here. 

And in related news, The Africa Progress Report was released last week. The report details the massive loss of revenue by African governments through mismanagement – either by commission and/or omission – of extractive resources. For instance:

The report details five deals between 2010 and 2012, which cost the Democratic Republic of the Congo over US$1.3 billion in revenues through the undervaluation of assets and sale to foreign investors. This sum represents twice the annual health and education budgets of a country with one of the worst child mortality rates in the world and seven million pupils out of school.

The DRC alone is estimated to have 24 trillion dollars worth of untapped mineral resources.

The most bizarre case of resource management in Africa is Equatorial Guinea, a coutnry that is ranked 43rd on the global per capital GNI index but ranks 136th on the Human Development Index (2011).

Below is a map showing flows related to Africa’s vast resources:

RESOURCE-MAP

Museveni: UN missions stifling state capacity development in Africa

The Daily Nation reports:

Ugandan President Yoweri Museveni has said UN peacekeeping missions [especially in the DRC] are derailing efforts by African governments to end conflicts.

He criticised the UN system of peacekeeping saying: “External support by the UN makes governments lazy and they don’ t focus on internal reconciliation.”

“The mistake is internal actors with no correct vision and the UN which does not focus on internal capacity building but instead focusing on peace keeping all the time. Without the internal solutions, you can’t have peace, ” Mr Museveni said in a statement on Thursday.

Some Congolese and experts on the DRC may disagree with Museveni’s analysis but it has some truth to it. As I pointed out in an African Arguments post several months ago, there is no short cut to fixing the Congo. State capacity development must be THE overriding concern (for more on this see here and here).

Also, The International Crisis Group has a nice piece on the recent takeover of the mining town of Lubumbashi by Mai-Mai fighters. The writer notes:

Since President Joseph Kabila’s controversial election victory in November 2011, government control over DRC territory has been in drastic decline. Beyond the fall of Goma to the M23 rebellion, Kinshasa has failed to repel the activities of various other armed groups: the Mai-Mai Morgan in Province Orientale, the Ituri Resistance Patriotic Front (FRPI) and the Mai-Mai Yakutumba in South Kivu, Rayia Mutomboki in North and South Kivu, as well as the Mai-Mai Gédéon in Katanga. (On the eastern Congo armed groups, see the October 2012 briefing Eastern Congo: Why Stabilisation Failed. On the Katanga armed groups, see the report Katanga: The Congo’s Forgotten Crisis.)

State-building is not a walk in the park

 “Mauritius’s state building success came on the backs of relentlessly exploited slaves and indentured labourers. Sugar planters compelled the government to ignore mistreatment on sugar estates, implement unreasonable fines and annual passport fees in the name of preventing ‘vagrancy,’ and harass those workers who tried to search for a better life in urban professions. Planters’ actions were expressly designed to subjugate and repress the politically powerless in order to maximise their economic power. Moreover, the fact that class divides coincided with racial difference meant that economic and political contention between elites and labourers on Mauritius became imbued with what was, at times, virulent racism. The worst of these endeavours were related to the planters’ quest to secure an adequate labour supply in the four decades after 1825. Later initiatives, such as railway construction and research and development programmes, were fairly benign. Together, these undertakings transformed the island’s economy and governmental capabilities. In Mauritius, then, one finds something of a developmental paradox: although the long- term consequences of state building have led to a regional ‘miracle’, the way in which the island’s elite and government laid the groundwork for it was normatively reprehensible.”

That is Ryan Saylor writing in the latest edition of Review of African Political Economy.

The paper mostly focuses on the success story that was Mauritian state (capacity) building. But this paragraph is a reminder to those who imagine a whiggish history for much of the developing world to go take a hard, honest look at history.

Throughout most of history, in order to have barons that successfully limited the power of the king or his equivalent (thus creating the roots of post-enlightenment democracy) you needed barons who could extract the life out of peasants. Wars that made states killed lots of young conscripts, confiscated private property and led to the demise of whole peoples’ ways of life (Not all French had French speaking ancestors, for instance). And speaking of the French, they went through lots of republics and dictatorships to become what they are today. Further afield, following its own civil war the institutions of government designed to protect human rights in the US had to look the other way until the 1960s in order to preserve its democracy. In the 20th century, decades of intolerant Kemalist ideological orthodoxy laid the foundation for the Islamic world’s most resilient democracy in Turkey.

Source Wikipedia. Darker shades indicate state failure.

Source Wikipedia. Darker shades indicate state failure in 2011.

Will Egypt, Rwanda, Kenya and the rest escape these patterns if they are ever to become Denmark, the supposed paragon of liberal democracy?

How does one go about state-building in a modern world with sacrosanct borders and a saner human rights regime?

Recent events in the DRC and CAR confirm the urgency with which we ought to address the question of state-building in the developing world in general, and in Sub-Saharan Africa in particular (see map).

Wars of conquest (which probably would have resulted in Rwanda, Angola and Uganda carving up the DRC) are no longer kosher. Add to that the demands of a tighter and saner human rights regime and you are left with little room to maneuver if you are trying to create an effective state (which occasionally may involve curtailment of political rights). Unless you can somehow insulate yourself from the so called stakeholders, including the International Bleeding Hearts Industrial Complex – like much of east Asia did through the 70s and 80s – you are left with a rather tricky situation of trying to forge a unified state with a million and one centrifugal forces with communal rights backed by threats of donor sanctions. The same system ensures that every rebel group that can cobble together a few guns gets to sit at the table (see Sudan, Mali, Burundi, DRC, CAR, Chad). The UN or some Nordic state pays the hotel bills. Western observers and their sponsoring organizations write reports. Some of them meticulously document human rights abuses by rebels and government troops alike.

Meanwhile censuses are never taken. Taxes are never collected. Little economic activity takes place. And millions of people continue to live just a little bit better than they would in some stateless state of nature.

The present international consensus appears to be one that believes in state-building through democracy and institutions. Lived reality for much of world history appears to contradict this consensus. In most cases democracy and the phantom great institutions appear to lag state-building.

The challenge for those of us interested in state-building is to think of ways to go about the effort in a manner that is sensitive to the present human rights regime and structure of the international system. The present urgency, occasioned by widespread human suffering in the less governed spaces of the globe, requires that all reasonable options (including some uncomfortable ones) be put on the table.