Fleecing the G-20 – Alemayehu G. Mariam

April 2nd, 2009 Print Print Email Email

The Sky is Falling!

British Prime Minister Gordon Brown wants the G-20 (or Group of Twenty Finance Ministers and Central Bank Governors of the world’s largest economies) to help cash-strapped African countries manage their balance of payments (more…)

The Sky is Falling!

British Prime Minister Gordon Brown wants the G-20 (or Group of Twenty Finance Ministers and Central Bank Governors of the world’s largest economies) to help cash-strapped African countries manage their balance of payments (money going from one country to all others) as their incomes from foreign investments and aid, remittances and commodities prices vanish in with the collapsing global economy. In mid-March, Brown invited a number of African leaders to meet with him in anticipation of the scheduled G-20 meeting in London on April 2. The hype preceding the G-20 meeting was full of hectoring moralism by the designated panhandler-for-Africa, the dictator in Ethiopia:

“Africa was beginning to stand up and now it is being knocked down again by this crisis, which is not of Africa’s making. That is one of the biggest tragedies. They [G-20] should care about Africa because it is in their interests. Some African countries could go under and that would mean total chaos and violence. In the end the cost of violence is going to be much higher than the cost of supporting Africa… We are talking about the range of money that is being spent on the mid-sized banks [in the U.S.]. Consider Africa as one of those banks… Any stimulus money spent in developed countries is going to have less global impact than if the same amount of money were to be spent in Africa… One of the problems at the moment is that the situation is so volatile… It keeps changing every week. It destabilises everything, including one’s thinking. If we knew where the bottom was we could start thinking as to how to get out of it….”

Not long ago the same dictator triumphantly proclaimed a 12.8 per cent annual growth rate in Ethiopia, and casually dismissed the effect of the global economic turmoil: “The crisis will more or less have little effect on the [Ethiopian] economy since our financial sector is not attached to the global system. Had it been the case, we would have suffered much.”
Others were parroting the same theme of impending African gloom and doom. Egyptian finance minister Youssef Boutros-Ghali mournfully warned, “In the case of Africa, people are going to die. We are talking about lives, not just somebody who will have to drive a smaller car.” Tanzanian president Jakaya Kikwete was quick to shift the blame: “This is a very unprecedented problem. Africa is a victim. We are not responsible for its genesis but all of us are suffering.” Even the sober Kenyan prime minister Raila Odinga joined the verbal joust by invoking the specter of marching African hordes: “When there are problems in Africa, Africans will vote with their feet by coming to Europe.” It was like a chorus of African Chicken Littles clucking: “The sky is falling! The sky is falling! We must go and tell the king!”
Will Accept Cash, Check, Credit Card or Gold to Bailout Africa!

The G-20 claims to be “an informal forum that promotes open and constructive discussion between industrial and emerging-market countries on key issues related to global economic stability.” The G-20 money men and the chiefs of the International Monetary Fund (IMF) and the World Bank will be discussing ways of helping the poorest counties in the world, while coordinating strategies to alleviate their own deepening economic crises. Pleading the African case for more money will be the dictator in Ethiopia. His message is a simple one: Africa needs more money. That money is readily available in the form of gold bars stashed at the IMF. Sell the gold stash and hand over the cash to African governments to cushion the effects of the global economic downturn. As of this past January, the IMF held 3,217 metric tons of gold (valued in excess of $43 billion), according to the World Gold Council. “Gold prices are doing well now so a slight correction to mobilise resources for Africa would not be that difficult,” suggested the dictator in Ethiopia. If the G-20 takes the bait, Africa’s “leaders” will be standing ready with pick and shovel in hand to dig into the IMF pot of gold and dig themselves out of economic trouble.

But in Ethiopia’s case there is something creepy — a weird feeling of de ja vu — about all of the gold talk and bailout metaphor of “considering Africa as one of the mid-sized banks”. Exactly a year ago we were shocked by the revelation that gold bars worth over 16 million dollars had simply walked out of the bank vaults in Ethiopia in broad daylight.[1] The official story was that unsuspecting Ethiopian bank “officials” were bamboozled by a gang of crooked international gold dealers who literally sold them spray-painted lumps of iron as 24-carat gold bars. The bank “officials” got ripped off because they made the common mistake of believing “all that glitters is gold.” According to the “Anti-Corruption Commission” of the ruling regime, some 26 suspects are in custody. No one has been prosecuted for this spectacular crime (and the matter has been quietly swept under the rug for the past year). Now they are talking about “mid-sized banks”, selling billions of dollars worth of IMF gold and sharing the loot among African dictators. It feels like a set up for another bank job.
In the Hole and on the Dole

African governments have been in the hole and on the dole for years. Since the 1970s, they have been sucking up massive amounts of economic aid and loans from the West and the international lending institutions. Much of that money has been lost to corruption. According to a 2008 World Bank study, it is estimated that “25 percent of GDP of African states is lost to corruption every year [in excess of one-half trillion dollars], with corrupt actions encompassing petty bribe taking done by low level government officials to inflated public procurement contracts, kickbacks, and raiding the public treasury as part of public asset theft by political leaders. Some $20 billion to $40 billion in assets acquired by corrupt leaders of poor countries, mostly in Africa, are kept overseas.” [2] Massive corruption has given rise to a parasitical ruling class in Africa – a “pluto-kleptocracy” (government of rich thieves). The World Bank and the IMF complain in their so-called confidential reports that specific African countries have used loans made available to them as “mechanisms for regime maintenance,” allowing the ruling parties to set up “slush funds” to pay for patronage and a military buildup. By 2005, Africa had a debt of $295 billion after repayments of $550 billion for loans it had received over the preceding three decades. Under the Heavily Indebted Poor Countries Initiative, thirty-three African countries were eligible for debt relief of about $80 billion by 2006.

But the corruption situation in Ethiopia is more acute. In 2007, when Ethiopia’s auditor general, Lema Aregaw, reported $600 million in public funds missing form regional coffers, the dictator fired Aregaw and publicly defended the regional administrations’ “right to burn money.” When Gebru Asrat, a former top official and party member of the of the ruling regime made the accusation that “the people are sick of the corruption, about the lack of government services, and they only support Meles out of fear,” he was swiftly excommunicated from the regime’s officialdom. When the IMF, the World Bank and other donors demanded privatization, the regime leaders sold off some of the most profitable state enterprises to their friends, relatives, henchmen and cronies.

Bailing Out the People of Africa v. Bailing Out Toxic African Dictators

The basic argument African dictators are making for a G-20 bailout package is a moral one: Unless G-20 taxpayers assume the responsibility for Africa’s economic problems by selling IMF gold and increasing aid, Africans will die by the millions and violence will consume African societies. This is a manifestly false and self-serving moral dilemma manufactured by African dictators to save their own skins. They know that economic problems often trigger social upheavals which result in the sweeping away of corrupt dictatorships.

The G-20 have a superior moral counter-argument to make: It is immoral for G-20 taxpayers to finance African dictators who persecute their people, trample on their human rights and mismanage their economies while keeping themselves and cronies filthy rich from stolen loan and aid money. If African governments want aid and loans from the G-20, they must agree to be held accountable for their acts and omissions in upholding the rule of law, protecting the human rights of their people, institutionalizing democratic practices and processes, releasing all political prisoners, allowing the free functioning of civic institutions and the independent media and ensuring judicial independence. Giving more money to morally, economically and politically bankrupt African dictators without the strings of democratization, human rights and accountability attached is like giving blood transfusions to a corpse whose blood has been sucked dry by vampiric brutes. African economies will remain on life support so long as the G-20 member countries blindly support African dictators and remain willful accomplices to their crimes and corruption.

Can’t Do Structural Adjustment When You are Shackled to Debt and Poverty

Multilateral lending institutions and Western donor governments providing aid need to re-think the way they do business in Africa. The IMF and World Bank must be transparent themselves in their loan programs. They must provide honest accounting of the success and failure of the programs they support in Africa. It is reprehensible for them to praise African dictatorships in public for their economic policies, and in their confidential reports rip these same governments for massive corruption, mismanagement, fraud, waste and abuse of “development funds”. The fact of the matter is that for many African dictatorships piling up billions in debt is like walking to the neighborhood kiosk and getting cigarettes on credit from the store keeper. They will pay it back in nickels and dimes if they get the money; if not, the store keeper will be stiffed. Their mentality is that IMF and World Bank loans are “free money”. Get as much free money as possible, and let someone else in the future worry about paying it back.

The G-20 and the multilateral lending institutions need to reform and fix what is a manifestly callous lending system. They need to re-examine the devastating consequences of their misguided policies that elevate organized greed over individual need. For decades, they have been preaching the gospel of “structural adjustment” (requiring loan recipients to privatize, deregulate, reduce trade barriers and adopt one-size-fits-all free market policies) which places a much higher premium on constructing shiny glass buildings, fancy urban highways and export-oriented industries than meeting the survival needs of ordinary people (food, medicine, clean drinking water, etc.). Millions of Africans die from starvation, preventable diseases, environmental contamination and abysmally poor governance as the international money lenders tether African economies to their structural adjustment policies.

Fleecing the Golden Twenty?

The whole IMF gold sale thing may be a touchy affair for Gordon “Golden” Brown, who as Chancellor of the Exchequer a decade ago sold well over 60 per cent of U.K.’s gold reserves at fire sale prices and earned his nickname. At the time, his actions were roundly criticized as a “disastrous foray into international asset management”. The simple message for Golden Brown and the G-20 financiers should be: “Give Africans a strong hand in establishing democracy and getting rid of dictatorships, and you will never have to worry about giving them handouts!”

The proposed quick sale of IMF gold as a magic elixir to fix Africa’s current economic troubles is snake oil gimmickry. Any such sale requires approval of 85 percent of the 185 IMF member countries. The U.S. alone has 17 percent of these voting rights (enough to veto any decision), and there is no realistic chance that President Obama or Congress will approve a daylight fleecing of the IMF to support dictatorships in Africa. As the U.S. faces a budget deficit forecast of $1.8 trillion in 2009 and $1.4 trillion in 2010, it is unlikely that the U.S. will provide significant direct bailout money (not even in the “range of money that is being spent on the mid-sized U.S. banks”) to African dictators. There are proposals currently floating around the G-20 to infuse the IMF with bailout money for developing economies in the range of one-half trillion dollars, but that may be a pipedream as the world’s largest economies struggle to manage their own problems. Against this background, the plea for deliverance on the G-20 stage, to paraphrase Shakespeare in King Lear, is a farcical demonstration of the excellent foppery of dictators who after plundering the riches of their nations, make guilty of their disasters the sun, the moon, and stars.
[1] http://www.ethiomedia.com/abai/all_that_glitters_is_gold.html
[2] http://siteresources.worldbank.org/INTPROSPECTS/Resources/334934-1110315015165/wps4609_BeyondAid.pdf

  1. DEMIS
    | #1

    I wish my best to our ETHIOPIA.
    fROM 22 MAZOGIA.

  2. yikerbelen
    | #2

    Every leader of the G-20 has joined with some sorts of money or some positive new idea , but the agame criminal came and joned the meeting with his empty hea and pocke, and with empty hand for begging. beggars are always ready for begging. shame on britian. shameon president Obama to sit with adolf hitler [ melese zenawi] Shameon Pm. shame on the deathcapitalism. shameon an evile capitalism

  3. banda
    | #3

    You are one stupid creature. Before calling names you have to open your eyes and think.

  4. Belew
    | #4

    Gaggle-20 preparation cost is too much.The family photo is amazing
    PM,Melse smile is supper “the lion is roaring” was funny.
    he was very happy with the result 50 billion for Africa the question is
    How many Africans need it? What is the proportion Ethiopia will get?
    25% as usual or more? Do really this money will solve the problems we are facing right now? or just we were there for show?
    One single rich country Canada pledge 1.9billion to Afghanistan but 20
    richest countries helping 50billion for whole continent and are we happy? PM,Melse Interview was interesting(..) when The Ethiopia and Sudan fertile land dispute said Ethiopians always they believe
    “mine is mine let share yours” Sudan’s are victims.
    But here PM,Melse was asked about the corruption the answer was
    “we are here for the money that will be solved internally. WOW !!!!
    begging by the name of innocent people no problem but to listen people
    crying is we take care of it??? It is deception.

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