The Power and the Money

The Democratic Republic of Congo

  These are honestly the best series of posts from Doug yet, and that is setting a rather high bar.  All they lack are representative photographs.

Here Doug visits Katanga.  The post details the province's problems, covers some colonial history, and shows why visits to Africa often produce wistfulness and confusion regarding the European empires even among people who hold no emotional attachment to them.  In Doug's case, quite the reverse.

This post explores a practical question:  how do central banks manage to get currency into the hands of people who need it?  Money as a unit of exchange is worthless if people with wealth can't convert their stores of wealth into units of exchange.  But that turns out to be much more complicated than it might seem.  Latin American countries have at times encountered problems of small change --- Argentina recently went through one such episode, and I lived through another in Mexico in the early and mid 1990s --- but I know of nothing on the scale of the problems Doug describes.  He also describes a minor miracle in which millions of dollars in cash sits undisturbed and barely protected in a place where one would not expect it to last.

Doug also investigates past and present plans to dam or make navigable (these are different) the lower reaches of the Congo River.  Mobutu, it turns out, built a massive long-distance power line to move electricity from one of the dams on the Congo (the last of which was built in 1958) to Katanga, in order to make the province dependent on the central government.  It didn't work out too well.  The whole mess makes me wonder.  Did decolonization in Congo have to be such a mess?  Was a better outcome at all possible?  I know not.  But Mozambique suggests that it might have been better.

And in the latest, he asks the question:  how bad is Congo's government?  You won't like the answer, nor the paradoxically Pollyannish (but almost certainly correct) explanation.

Also, in recognition of my co-blogger, we now have a Finland tag!  Enjoy. 

Magersfontein, December 11th

  Eighty-five years and one-day ago, on December 11th, 1924, the Republic of Finland celebrated a very special anniversary.  The state and the military establishment hosted it at the Officers’ Casino Building in the Katajanokka neighborhood of Helsinki. The celebration commemorated the 25th anniversary of the Battle of Magersfontein, part of the Anglo-Boer War of 1899-1902.

The conservative newspaper Uusi Suomi (New Finland) advertised the event on its front page, and the periodicals of the Finnish Civil Guard published articles on the conflict between the Boer republics and the British Empire.  The celebration opened with the the Finnish Naval Orchestra’s performance of “Kent gij dat volk,” the South African anthem. Among the guests of honor were Lauri Malmberg, the minister of defense, and Per Zilliacus, the chief of staff of the Civil Guard. The Finnish Civil Guard also sent a wreath tied with blue-white ribbons to South Africa, where it was laid at the monument on the battlefield of Magersfontein. 

Why did independent Finland celebrate a battle fought in a British colonial conflict in South Africa?  Simple:  Finnish volunteers had fought in the battle as soldiers of the Scandinavian Corps of the Boer forces.  The Scandinavian Corps was founded in Pretoria on September 23rd, 1899, supposedly as a testimony of loyalty felt by the Scandinavian immigrants towards the South African Republic. It included 118 men; 48 Swedes, 24 Danes, 19 Finns, 13 Norwegians and 14 other miscellaneous nationalities, mainly Germans and Dutch. In addition, three Swedish women served as nurses in a separate ambulance unit. The Scandinavians fought in the siege of Mafeking and the battles of Magersfontein and Paardeberg; of these, Magersfontein was the most significant.

After the war, a special Scandinavian monument was constructed on the battlefield. The monument consisted of four cornerstones, representing the four Nordic countries, each decorated with the Scandinavian valkyrie and national symbols of each country. The verse is from Johan Ludvig Runeberg’s March of the Pori Regiment, these days the ofificial Finnish presidential march: “On valiant men the faces of their fathers smile.”

The names of the fallen soldiers are engraved on the shield. Emil Mattsson died in Magersfontein; he’s buried in the field. The British captured Henrik Hägglöf, who died from his wounds at an infirmary near the Orange River. Johan Jakob Johansson — whose name is mistakenly written “Jakobsson” — died at the prison camp on St. Helena and is buried in grave number 18 at the Knollcombe cemetery. The name of Matts Laggnäs, another Finnish volunteer who died in captivity on St. Helena, is missing.

My very first peer-reviewed academic article concerned this very topic, and it was published in the Finnish Journal of History a few years ago. Afterwards, I was delighted to note that an Afrikaner fluent in Finnish had read my article and discussed it in his own blog. Reading my own text translated in Afrikaans was an interesting experience. The term “Boer War” was translated as Tweede Vryheidsoorlog, the “Second War for Freedom.”  The official term in the Afrikaner historiography for the wars against the British Empire in 1880-1881 and 1899-1901 were the First and Second War for Freedom, and the terms seem to still be in use.  Non-Afrikaner South Africans do not seem to use the phrase, understandably enough.

The history leaves us with three obvious questions.  What significance does the Anglo-Boer War have today, eleven decades after the war broke out?  What is the significance of the Finnish Republic’s 1924 commemoration of its citizens’ participation in that war?  And what are we to make of the fact that an event considered highly significant in 1924 has been almost forgotten in 2009?

Doug in Congo, first days

   My good friend Doug Muir is in Congo, and as usual he has some interesting things to say.  So I’ll post some links below.  The fact that it never ever ever occurs to Doug to do likewise on either of the blogs that he regularly posts on, regarding either this blog or serious academic work, is not relevant.  

Here is a brief discussion of Congo’s bizarre borders, or at least the poor country’s lack of an Atlantic coast.  Congo is effectively land-locked, what with the eponymous river being impassable in its lower reaches.  I am surprised to hear that the railroad from Mabadi still works at all.  Doug tells you why the border was drawn so that Congo cuts the Cabinda enclave off from the rest of Angola, and how this weird geography sparked a long secessionist battle against Luanda. 

The unmentioned wrinkle is that Cabinda rests on a sea of oil, first discovered in 1962, late in the colonial era.  (It says something about the Portuguese desire to get the hell out of Africa that they didn’t set up Cabinda as a separate neocolonial enclave; it’s what Charles de Gaulle would have done.)   Cabinda’s Block Zero produces about 22% of the country’s production.  Block 14 produces another 3%, but it’s production is set to rise from 55,000 bdp to 340,000 by 2010.  Onshore exploration in the portion of Cabinda labeled “CN” on the map is underway. 

Currently the provincial government gets 10% of the oil revenues from its territory, which has done a lot to en ... uh ... lower the intensity of the insurgency.  Or at least get it down to a level where government ministers can credibly declare an end to the organized rebellion.  A Chinese company is supposedly developing a highway-bridge combo that will provide a direct link over Congo to the rest of Angola; I have my doubts, but it will be cool if it gets built.  (Note:  the article at the other end of the link was paid for by the government of Angola; it is not a real news report.) 

Meanwhile, here and here are some of Doug’s early impressions of Kinshasa; the place seems to make Tegucigalpa seem lively, Caracas seem safe, Maputo feel orderly, and Jalalabad seem ... well, it is probably better than Jalalabad.  Maybe.  That secret police story creeps me out, more so since they don’t seem to be a very effective secret police at creating a, you know, police state.  I eagerly await more reports.  Even if the jerk never bothers to link to me.

End it, don’t MEND it

  So it appears as though the Nigerian government may have finally negotiated an end to the MEND rebellion.  MEND stands for Movement for the Emancipation of the Niger river Delta, and it has caused both the Nigerian government and the world oil industry major headaches over the past decade.  This success produced a lot of breathless hyperventilating about the unstoppable postimperial chaos overtaking the world ... only a matter of time before they blow up the Lincoln Tunnel!  Or something. 

 
The Yorkshire Ranter (who sometimes comments as Alex on this blog) summed it up pretty well.  MEND was not an amorphous group interested only in chaos, a sort of budget version of SPECTRE.  John Robb runs a website called Global Guerrillas, which postulates that the future lies with such unstoppable nihilists, who will use what he calls systempunkts to bring down our complicated economic systems.  (Calling Ashton Kutcher!)  Posts like this one assumed that MEND’s main goal, like SPECTRE, is chaos.(His math, I’ll add, is pretty fuzzy.  1.4 billion barrels disrupted?  Huh?  The increase in the oil price engendered by MEND attacks was a loss?  Wha?  The money was, what, burnt?)   

Rather, MEND in fact had specific goals that it wanted to accomplish and a specific set of tools to accomplish them.  Once the Nigerian government realized this, and got its act together sufficiently to deploy a rational set of carrots and sticks, the rebellion ended.  Now, the Nigerian government needs to follow through on its promises ... but MEND and the like seem to be standard guerrillas.  Inasmuch as they slid into criminality, they were standard criminals. 

Maybe I’m too much of a small-c conservative, or maybe I’ve just seen the movie before with good old General Manuel Peláez, who wrote the playbook later followed by Jomo Gbomo et al.  (God, that Wikipedia article is terrible.  Ni modo.)  But the Yorkshire Ranter is neither, and he saw through it. 

Which bring me to a question.  Why the resonance of all the “chaos is upon is!” mongering, when that is pretty clearly not the case?  Brazilian drug gangs notwithstanding.

Back to Angola

  The Portuguese empire collapsed in Africa under the worst possible conditions.  After 15 years of bloody conflict, a military coup in Lisbon replaced the existing government with one that wanted to get the hell out of Africa yesterday.  The result was a chaotic flight of a half-million Portuguese settlers back to the metropole.  Over the subsequent decades, Portugal attracted some immigration from its former colonies, but other the Cape Verde (a country that almost certainly would have preferred to remain united with the metropole) it was never great.  As of 2007, only 33,000 Angolans lived in Portugal.  The reasons were simple.  First, it cost a whole lot of money to get to Portugal from Angola, and most Angolans were poor and getting poorer.  Second, Portugal shut the door to the citizens of its former colonies.  Third, Portugal itself wasn’t exactly a glowing destination for immigrants. 

But now it looks like the Portuguese are headed to Angola.  And not in small numbers, either.  Something like 17,000 people moved to Angola in 2006, followed by 24,000 in both 2007 and 2008.  So far this year they’re moving at an annual rate of 31,000.  Of course, 31,000 people is only 0.3% of Portugal’s population and 0.2½% of Angola’s, but still.   

The question is whether they’ll stay.  I tend to doubt it.  First, while Angola’s economy is exploding, it is pretty much all due to oil.  Most of the growth pulling in Portuguese expats (and Portuguese capital) is construction-driven and paid for out of government revenues.  To be frank, I would bet that the boom will last for a while, but the challenge for Angola is making the growth permanent.  Not that Gabon is a terrible outcome, but turning into Gabon is something that happens once, after which the foreigners who came in to help build stuff turn around and go home. 

Second, some of the movement is driven by a crappy economy in Portugal.  That could also turn around.

Finally, it isn’t all clear that Angola will be that welcoming.  Expats from the developed world go to all sorts of places.  Relatively few of them settle down and raise families outside their home, and even then mostly in other developed countries.  (Right, Doug?)  The French in Gabon, for example, are clearly an expat community and not part of the local fabric.  In Côte d’Ivoire they’ve mostly gone home.

So while this is a neat story, I’ll bet that it won't have much lasting effect on Angola.  I would like to be wrong.  Thoughts?

Chinese oil expansion

  What are Chinese state firms doing in Africa?  Among other deals, last year the CNPC agreed to get the right to the Agadem oil field in Niger in return for the construction of a 20,000 bbd oil refinery in the country.  It will also build a pipeline to export whatever it finds, although the route is still unclear.  And now the Chinese government has announced that it might start to subsidize the acquisition of natural resources even more.  Well, there are economic reasons to think that such subsidies don't make all that much sense.  So what is China doing?

I think there is an answer.  In reverse order:

(1)  Price hedging.  China wants to hedge against another oil spike.  Inasmuch as the Chinese will be able to push around African states, and keep them from expropriating the surplus, this would work.  And China might be able to do it.  States aren't unitary actors.  Bribing individuals within them brings value; recently the Chinese were involved in a bribery scandal in Namibia.  That one wasn't energy-related, but leaders can be bought, and so can influential actors within weak states.

(2)  Mad Max insurance.  What if the global trading system collapses?  Well, if the Chinese government has control of the marketing tools,and can plausibly threaten to destroy or interdict them, then it may have the ability to insure that its consumers have access to oil.  Moreover, it may be assuming that foreign states won't have the ability to find alternate markets in the event of such a collapse.  The rub?  I'm trying to picture such a collapse, short of a third world war.  It isn't coming to me.  Maybe a war that China isn't involved in?  I don't know.    

(3)  Production.  Maybe Chinese officials believe that oil investment won't increase as much as they need it to.  Oil companies sell project management skills more than anything else, but are subject to political risk.  Perhaps (1) is wrong, and the Chinese assume that African governments will hose them in the event of oil price spikes ... and perhaps they don't care, because the more oil that Chinese state firms can bring on line, the less likely such spikes will be.  If rational private actors won't make the investments, then the Chinese government will.

I'm leaning towards (3), but I don't know.  Thoughts?

More Doug in Senegal, and why you shouldn’t worry about the deficit

  It seems as though I start a lot of posts with the words “it seems.”  I will try to rectify this in the future. 

Ditto, “so,” a verbal tic I blame on my unbridled admiration for Doug Muir, who has, by the way, written a little more about Senegal.  He tells us about the Mourides, a powerful Muslim sect of which I am embarrassed to say I knew nothing.  He bemoans the crappy state of Dakar’s airport, and receives in turn a useful warning from Bernard.  Finally, he wraps his trip with a discussion of W, railroads, France, birds, the CFA franc (e.g., France yet again, although he doesn’t say so), the weather, the expats, and the clothes.  I am pretending not to be annoyed at not getting a shout-out on the France tip, which means that pique is not the reason why I am not explaining the story of the Senegalese railroads under French colonial rule. 

Which brings us to the U.S. federal deficit.  You hear a lot of worring about how interest rates are going to rise from all this wild borrowing.  Where will the money come from?  We are doomed, doomed!!  No links, because I actually like and respect many of the people doing the worrying.  But they need not.

I just had a colleague in my office with the latest BEA numbers, worrying about just that.   Where will the money come from?  So I pulled out a spreadsheet and showed him.  In the first quarter of 2009, annualized personal savings came to $620 billion, or 5.7% of personal income.  Total savings (again, annualized) came to $1,273 billion, or 9.1% of GDP. 

Personal savings is only going up.  If we assume that nominal GDP growth is flat in 2010 (meaning, most likely, that real GDP keeps falling), a rise in the personal savings rate to 10% will produce $468 billion of additional savings.  Retained earning are also likely to rise, say from 4.6% to 5.0% of GDP.  That’s another $47 billion.  Total of $515 billion in new savings ... just as the federal deficit is projected to fall by $393 billion.  Plenty of wiggle room should private investment rise (one can hope) or the current account deficit fall (which seems likely).  A rise in real interest rates does not seem like something we need to worry about.

Rather, what we need to worry about is a continuing shortfall in demand.  What if Americans don’t substitute domestic consumption for imports?  Final demand will fall.  What if domestic investment doesn’t quickly rebound?  (It was $2 trillion in 2008, a full 25% higher than in the beginning of 2009.)  Final demand will fall.  In that situation, we might be wishing for another round of stimulus, rather than worrying about the deficit. 

UPDATE:  The May numbers just came out from the BEA.  Looks like the personal savings rate hit 6.9% that month.  We are on track to exceed 10 percent in 2009, and in my opinion the country will permanently return to 1970s savings levels.  That said, past performance does not always predict future results.  Any counterarguments?

Doug in Senegal part 5

  Doug is now in Goree, a small island off the Senegalese coast.  I don't have much to add at the moment, unfortunately.  (Or not.)

Doug in Senegal parts 3 and 4

  My friend Doug Muir is in Senegal.  He is visiting a city that I am deeply ashamed to admit that I had never heard of.  His reports from Kaolack are here and here.

Read the posts.  They pose an interesting question, about infrastructure, trade, and prosperity.  How much would an improvement to Kaolack's port reduce transport costs?  How much would a reduction in transport costs increase peanut production?  (In other terms, are there increasing returns in peanut production?)  These are unanswered questions; it isn't a sure thing that fixing Kaolack will promote growth.  After all, a declining peanut economy could provoked the city's decline, rather than the other way around. 

Which isn't to say that Doug is wrong; he probably isn't.  Just that any and all development quick-fixes deserve careful stress-testing before they are implemented. 

Hopefully we'll hear more from him soon.

Domingo flojo, and Doug in Senegal parts 1 and 2

  ¡Domingo flojo!  Despierta tarde en el mediodía, llama al tren, pa’ver q pasaría ... Narnia?  No no no no no. 

So I line up a trip to the deep-pit copper mine.  Chido!  At which it point it starts to hail around here, and the company cancels.  (Liability issues.  Chile is not Mexico, it seems.)  So I figure, hey, Chile has restarted passenger train service, why not chill in Chillán?  Metro to the train station, thin attractive woman a little older than me and wearing this cute little neo-hippy snoopy hat sells me a ticket with just the right amount small talk to remind me why I like this country so much.  Only ... she realizes that the return trips are all sold out.  I debate taking the bus back, decide no, and now regret it.  WTF am I going to do in Santiago on a rainy lazy Sunday?  Work in my hotel room?  Too depressing! 

I'll figure something out.  Meanwhile, Doug Muir is in Senegal, with details here and here.  I, of course, am fascinated by the French influence.  As always, don't expect pictures from Mr. Muir, but do expect lots of information, historical detail, and very good analysis about what it all means. 

You can also go here and here on this blog, where we discuss another part of the French not-empire in West Africa, or here, where you find out how Burundi got a handle on infectious disease.

I'll be back with more about regional inequality, copper, and the effect of the Panama Canal on Chile, but right now I'm going to go brave the rain and wander aimlessly around Santiago for a while.  I will, however, take requests for any Chile-related topics you might want to know more about.  (Randy has one pending on regional inequality.)  Hasta pronto, mis cuates desconocidos. 

The great socialist scramble for Africa

  So, China is trying to get into the Nigerien uranium business, for reasons known only to the China National Uranium Corporation.  (Although I will guess later in this post.)  Here's the story to date.  On June 5, 2007, the Nigerien government formed the Société des Mines d'Azelik (Somina) a mining enterprise intended to exploit the Azelik uranium deposit way up in the north.  Niger got a 33% stake in the enterprise, with China getting 67%.   On July 6, Toureg rebels kidnapped a Chinese national for four days.  On November 9, Somina got an official license to work at Azelik.  On November 11, the Toureg rebels declared that China's contracts were "invalid."  At which point the Nigeriens accused Areva (the French state-owned nuclear company) once again of funding the rebels.  The same rebels, that is, who attacked Areva in April.

So the Chinese suspended work.  And the Nigerien government started to hem and haw and stall and delay.  So much for all those Chinese plants to build 50 MW of (conventional) power plants in the country and a €27.3 million bridge over the Niger river.  On the other hand, the Chinese didn't want to lose their options, so on April 30, 2009, they agreed to lend the Nigerien government $95.22 million at 2% over ten years, with the loan explicitly (but vaguely) tied to the stalled Azelik project.  China, meanwhile, sold 5 percentage points of its interest in the mine to a state-owned Korean company, which promised the Nigerien government that it would buy 400 tons per year once (if) the 700 tons-per-year mine gets up and running.  The president of Niger has just visited the site, in order to show his seriousness about getting the project back on track. 

The hitch is that as the Chinese project in Azelik stalled, France was on the move. In January 2009, Areva signed a deal to open the largest uranium mine on the continent, and President Sarkozy visited Niger in March to give it his full-throated support.  That's a problem for the Chinese.

Now, the Chinese still have a good project if they can get it running.  After all, they have gotten the Korean government to implicitly promise to buy the uranium at whatever price the Chinese charge, which will be quite a coup if the mine opens.  Not a terribly bad plan.  That said, the overall impression is that the Chinese really don't yet know how to play this game.  

So what exactly is the game?  Suggestion below the fold.

On the edge of the French energy empire

  In 1965, the French discovered uranium in Niger.  Here is what the New York Times had to say about it in 1969, right before production began.  It makes for fascinating reading.  

The paved road comes to an end in this isolated, dust-colored market town on the southern shore of the sand sea known as the Sahara.  About 300 miles farther north, along an ill-defined track, lies the town of Agadez.  About 150 miles beyond that, near the jumbled boulders of the Air Mountains, the village of Arlit is rising.  Where nothing more than tumbledown mud huts stood two years ago, French and African workmen are building cement-block houses, shops, an electrical generating plant big enough for a city of 40,000 — and two uranium processing plants. 

The uranium will be produced by a company in which the government of Niger holds 20 percent, German groups 10 percent, and the French Atomic Energy Commission and two French mining companies 70 percent ...

In a country where the per capita income runs about $75 a year ($351 in 2008 dollars), peanuts and bony steers constitute the only significant exports, where fuel is so scarce that technicians once tried and failed to make a power plant run on peanut husks, the discovery of uranium was an extraordinary event.

Niger will receive about 40 percent of the company’s profits ... Niger is counting on only $4 million a year in revenues by 1975 — about a tenth of the current national budget.  “Even with this strike,” said a local economist this week, “this is never going to be a rich country—unless they find a market for sand.” 

Imperialism can pay ... the imperialized

  The French empire in Africa never really ended.  In 1960, the autonomous territories of the “French Community” got seats in the United Nations, but for most the change was less than dramatic.  Only Mali dropped the use of the old colonial currency.  The new African governments increased trade restrictions, bit by bit, and the French market closed to their exports, bit by bit, but Paris fought hard to keep the European market open for a very long time.  The Yaoundé and Lomé conventions granted the “associated” states preferential access to what later became the E.U. 

Empire didn’t go away in another more visible manner:   French troops remained on the continent, French nationals staffed the governments and newly-created armies, French companies (often state-owned) dominated the export industries, and France knocked over more than a few recalcitrant governments while propping up others. 

Niger, where the French found uranium, made for a particularly egregious example.  In 1963, French troops rescued the government of President Hamani Diori from a coup.  In 1969, the French discovered uranium, and two French companies got exclusive rights.  In March 1974, French, Nigerien, and Gabonese representatives meant in Niger’s capital to discuss Diori’s insistance that the country’s uranium contracts be renegotiated.  Coincidentally, Diori fell to a coup the next month.  It seems that all of Diori’s French military advisors had gone on vacation and no one picked up the phone in Paris when news of the violence arrived.  The New York Times went so far as to accuse France of abetting the coup because Diori wanted to give uranium concessions to Exxon.  The next guy kicked French troops out of the country, but the French remained in control of the mines ... and their troops came back in 1981 anyway.

So what did the combination of continuing French intervention and French uranium mining mean for Niger?  An unexpected answer below the fold. 

Canadian policy on captured pirates: let ‘em go. ¿¿De veras??

  As our few readers know, we've been covering piracy for some time on this blog.  Our first post on the topic, in fact, took on the myth that European navies refused to enforce the law against pirates.  Only now Robert Farley tells us that the Canadian and Dutch navies went ahead, captured pirates, and released them.  Er?

Well, NATO is not the problem.  It is true that NATO, which is not a sovereign state, does not have arrest powers.  But the national navies operating under NATO command do have such powers.  Now, I'd be happy with giving an international organization arrest powers, but I can see why some politicians might be reluctant to take that step.  That said, the truth is that not only do national militaries have the power to arrest pirates on the high seas, since December they've had the ability to do the same thing anywhere in Somali territory, sea or land.

So if this and this story are correct, something isn't working.  In the Dutch case, it seems to have been a low-level screw-up.  Ships under European command have standing orders to turn captured pirates over to Kenya for prosecution and punishment; ships under NATO do not.  There was a deputy from the justice ministry on board the Dutch ship (for precisely this reason), but whoever it was decided to let the pirates go.  Parliament appears to be annoyed.  At some point, I suppose, we'll find out who made the decision and why.  We might even find that circumstances made it a wise choice.  But it isn't Dutch policy, and it seems to be causing the government some headaches at home.

Canada seems to have a deeper problem.  The Globe and Mail has deeply misinformed its readers by reporting, contrary to fact, that “Canadian sailors, like their NATO allies, lack the authority to make arrests in international waters.”  Of course, the Globe and Mail is parroting what seems to be Ottawa's official line.  After all, the Prime Minister said in Port-of-Spain that the Winnipeg did the right thing by releasing the pirates.  “Those were the appropriate measures under the circumstances.”  Elsewhere, a Canadian admiral alluded to mysterious legal difficulties.  “There's the rule of law that needs to be applied, so we're not currently regularly detaining them, no. There are all kinds of challenges with that.” 

Now, I can understand why a country would fear becoming a dumping ground for pirates ... but it isn't as though hundreds or thousands of them are being captured every year.  Nor is organizing a piracy trial under normal criminal rules all that difficult.  (And they have, by definition, been caught red-handed.) 

So, Canadian readers, I ask you, what the hell?

Pirates and convoys

  I clearly need a new tag.  What should it be?  “Pirates” is too specific for my taste.  “Failed states” is a possibility, but seems a bit, well, anodyne given the rather horrible reality of just what happens when a state fails in the modern world.  “Empire” is another, but might be too ... whatever the opposite of anodyne is.  I'm looking for a short pithy one or two-word phrase that covers places and situations in which the writ of the local state does not apply (or at the very least is not the sole source of authority) and in which other states or institutions might have to substitute for the local government.  Ideas?  Reasons to pick either “failed states” or “empire”?  C'mon, help me out. 

Returning to the topic of the day, in theory there is a way to make policing the sea lanes leading to the Suez Canal much easier.  For reasons which I do not yet fully understand (help?) the Suez Canal authority organizes transits in three daily convoys.  The implication is that, in theory, such convoys could be organized not at the Canal entrance, but at some point in the Indian Ocean.  Naval vessels could then shadow the three daily convoys.  This would require far fewer ships than the impossible 180-vessel armada. 

The organizational details, however, seem rather daunting.  Still, it might be possible for an enterprising contractor to organize convoys around their protective vessels.  It would be more expensive than simply hiring out a security vessel, because the convoys would need to be managed, but it would allow the security firm to enjoy economies of scale from the point of view of the companies that hired its services:  the more clients, the less cost-per-client. 

Thoughts?

More thoughts about pirates

  Pirates attacked 11 vessels in the Gulf of Aden in November.  They attacked an additional 6 in the Indian Ocean off the Somali coast.  Of the 11 incidents in the Gulf, all occurred right outside Yemenese territorial waters, which passing ships have taken to hugging as they head to and from Suez.  Of the 11 attacks in the Gulf, the pirates took their targets six times.  NATO warships stopped three and a tanker crew managed to avoid the tenth.  Of the attacks in the Indian ocean, the Indian navystopped one (sinking the pirate vessel involved), the crews involved evaded three (two by outrunning the pirates and one by turning firehoses on them as they tried to board, knocking their shoulder-held RPGs into the water), and two took their targets. 

I can't link to the source; it's what I was told by intel officers in the U.S. Coast Guard.  Don't worry, it's unclassified.  Another good data source is here, and a third here.

So what is the scale of the problem?  Well, in 2006 roughly 51 vessels passed through the Suez Canal each day.  Given the length of the Gulf of Aden, the fact that the pirates seem to be able to range about 450 miles beyond that, and an average ship speed of 22 knots, that would mean approximately 90 ships within pirate range every day.  (This assumes that vessels headed around Cape Horn could fairly easily re-route to remain out of pirate range.) 

The implication is that a rotating flotilla of 180 armed vessels could probably deal with the problem.  Djibouti may no longer be a French territory, but it hosts several thousand French troops and at least 450 American ones at Camp Lemonier, and it has a (relatively) modern port.  In other words, it isn't right to think that stabilizing Somalia is the only solution.  Of course, the pirates use swarming tactics, where they attack with multiple boats, which poses a very serious tactical problem for the escort vessels.  (Under the current rules of engagement, there is maybe a 15-minute window to attack a pirate ship.)  Alternate strategies are possible; the real point is that the problem is manageable even without any attempt to stabilize Somalia or, alternatively, a smash-up of the pirates' coastal havens.  (The human cost of the latter would not be low.)  One could imagine alternative operations involving continuous aerial patrols of the effected areas, although speaking as someone with some experience, managing such a thing would not be easy and the chance of a major cock-up would be high. 

The big problem?  See below.

Imperialism can really pay

So there's Panama.  Well, what about Suez?

The Suez Canal started under very different political conditions, inasmuch as the Egyptian government was on-board with the project.  So on board, in fact, that it not only put in 45 percent of the initial capital (£1.5 million), it promised the Compagnie de Suez the free use of forced labor to build the thing. 

That wasn't nada.  In 2007 pound sterling, the Egyptians put in £149 million.  But as I've mentioned elsewhere, the world was poorer then:  relative to the growth of the British economy since then, that would be equivalent of plonking in £4.3 billion today.  That would be a lot of scratch for the current Egyptian government; it was an amazing amount of scratch for 1854's. 

So far, so non-imperialistic.  Awful for the poor people who had to live under Cairo's despotism, but that'd be like blaming Russia for the shortcomings of the Kazakh government.  (Wait ... no, I'll leave that to those who know more.)

The story gets better, though.  It's an amazing bit of imperial skullduggery ... and perhaps the coolest thing about it is that it could easily happen today.  I mean, it's not like world powers scarf off strategic parts of nearby states for strategic gain these days.

So, with the caveat that what I'm about to tell you is pieced together from primary sources and could well be wrong, the story is below.

Doug leaves Burundi

Doug should be back in Germany by now.  He spent his last day in Burundi by the shores of Lake Tanganyika, thinking about tourist potential and the mind-boggling idiocy of the Belgian empire.

I wish him an easy trip home and a wonderful time with his growing family.

Doug in Burundi, Part 9

Doug discusses three separate Burundian issues in his penultimate post in the Burundian series.  The first topic concerns the country's ethnic divide.  It's pervasive, but considering recent history the story is remarkably positive. 

The second topic concerns customs duties.  Burundi, like many African countries (and a few Central American ones) relies heavily on trade taxes for a quarter of its government revenues.  This is the unheralded elephant in the room during free trade discussions.  These countries have a pressing need for more public revenue, to build infrastructure and pay judges and carry out very basic state functions.  Yet they lack the administrative capacity to collect high levels of internal taxes.  Borrowing to build a state could square that circle, in theory; in practice, that hasn't worked out so well.  So what to do?

One possibility is to make like Angola or Mozambique, both of which have effectively handed control over their customs administration to foreigners.  (British foreigners, at that.  Crown Agents, whose flag is pictured above, specializes in running revenue collection in other countries.) 

That sort of empire-by-invitation doesn't seem to be on the table in Burundi, however, although one might think that the French government might be able to play a more pro-active role, if it wanted to.

The third and final topic concerns an issue I find fascinating:  how do banks function in an environment where the politics is unstable and the rule-of-law close to nonexistant?  I wrote my first book about that, and it's fascinating to watch a Togolese (or is it Nigerian?) bank and Burundian politicos deal with the same issues today.  Ecobank is an institution that bears further watching.   

Doug in Burundi, part 8

Here Doug discusses what cheap labor really means on the ground.  And he means cheap labor.  According to the U.S. State Department, workers in Burundi received on average 1,500 francs per day, or $1.40.  Since a 12-hour day wouldn't surprise me, Doug's estimate of 20 cents per hour might even be high.

You don't need to go to Western Europe to see just how poor that is.  To give an example with which Americans are familiar, production workers in Mexican maquiladoras cost US$2.64 per hour in 2006.  Production workers in all Mexican manufacturing cost US$2.75.  Total hourly direct pay for all employees (including benefits but not taxes and other social charges) averaged US$3.32 per hour.  (That'd be 5,752 pesos per month.)  Even farmworkers in the country's northern states make about US$1.50 an hour.  In short, Burundi is impoverished compared to Mexico.

Anyone who spends time in Latin America can see some of the effects of cheap labor, but nothing on the scale of what Doug describes.

Doug in Burundi, part 7, time for some coffee

Doug discusses the Burundian coffee economy here. 

A decade ago (or thereabouts) I got involved with an NGO that advised Chiapan villagers in the area off Mexico-199 between Paleque and Ocosingo. To get there, you had to leave the paved road, travelling along dirt paths maintained (and unofficially tolled) by the locals.  The agricultural areas were served by little "towns" barely worthy of the name, usually consisting of a church (often Protestant — there had been a great deal of religious fighting in the area, and towns tended to be segregated) and a general store.  Electricity was scarce, although cellphones worked fine in some surprising places — the Mexican army made sure of that.

The chief cash crops were cacao and coffee.  More below the fold.

Doug in Burundi, part 6, with hope and vaccines

Vaccination has made an astounding improvement in Burundian public health, even in the midst of civil war.  The question is how Burundi vaccinated so many in the midst of so much instability.  Below is a graph of disease incidence, indexed so that the number of cases in 1980 is set equal to 100.

There is some sad information in the data:  most of the improvement occurs before the outbreak of civil war in 1993.  (The Buyoya regime killed its opponents with impunity, but the state still functioned.  Mostly.)  Then there are disease outbreaks until 1997, which happens to be around the time the fighting started to trail off, right before the '98 peace agreement.  After that, disease resumes its downward trend, save for an outbreak of measles in 2000.

Burundi has not been peaceful since 1998, but nor has it been the scene of full-fledged civil war.  The state functioned.  In 2002, the vaccination program went into high gear, with many rebels even agreeing to respect the “Days of Tranquility,” during which the government set up 990 different vaccination sites around the country.    Here is a brief discussion of the logistics of vaccination campaigns in Africa.  Things were slightly easier in Burundi, where 77 percent of the population had access to health services in 2002 and foreign aid workers operated relatively freely. 

None of this is to minimize the accomplishments of the Burundian public officials who travelled off into the hinterlands to vaccinate the population.  It is simply to say that Burundi is not the worst of the worst in Africa, and the civil war was a terrible setback in a place where public health had been improving.  Backsliding is still a real worry.  Chronology here.

Doug, I would very much like to know more about the role of foreign officials in managing Burundian affairs.  There are countries (like Liberia and Afghanistan) where you can't turn around without encountering a foreign manager or a foreign agency carrying out state functions.  That happens even in Angola and Mozambique.  Elsewhere, foreigners are advisers, facilitators, and funders, but not managers.  What's the situation in Burundi?

Doug in Burundi, part 5

More about Burundi, starting with the presence of the African Union, moving on to the rebels, and ending with a discussion of the country's really really bad transport problems.  It appears to still be raining in Bujumbura.

One point that I'll repeat on Doug's comment page:  narrow gauge isn't a problem.  Narrow gauge railroads can be upgraded to carry similar loads and operate at close-to similar speeds as standard gauge.  They simply lose most of their initial cost advantage.

Doug in Burundi, parts 3 and 4

Looks like it's rainy in Bujumbura.  It's been weirdly tropical in Massachusetts this summer:  black downpours so heavy that you can't see across the street followed by bright actinic sunshine.  Thankfully, that seems to have ended here; let's hope it ends soon in Burundi.

Over here, Doug explains why there's a Greek deli in the middle of Bujunbura.  It seems as though there was a small community that came down the Nile from Alexandria with the British; some kept going and wound up in Burundi, where they helped administer the place and played a role in commerce.  The messiness of independence, though, drove most of them back to Europe (I assume), leaving a big consulate and what seems to be a very nice deli.

Doug in Burundi, part 2

Catch it here.  Although I dunno why it's on AFOE instead of HDTD.

Doug in Burundi, part 1

Available here.

Piratas atacan la madre patria

Newsflash:   pirates just captured a Spanish fishing boat off the coast of Somalia.  A Spanish frigate has been dispatched from the Red Sea and Madrid has requested assistance from NATO countries with a naval presence in the area. 

Considering as I just posted about pirates, I figured that it'd be remiss not to mention that the French raid doesn't seem to had an immediate deterrent effect.  Not that there's anything surprising about that.

Pirates!

In a scene of most superior uber-cool, the French military arrested the Somali pirates who’d captured a cruise vessel returning from the Seychelles on April 4th. 

So, of course, the New York Times would take the opportunity to publish an op-ed blaming namby-pamby British cupcakes for failing to enforce international law by arresting Somali pirates.  Why did the author claim that the Brits were wussing out? Because they were all worried that these scurrilous lawbreakers might claim asylum if they were brought back to the U.K.  Worse yet, the Somali government might violate their human rights if they were turned over to Mogadishu.   

“The British attitude has come a long way since the days when pirates were chained to pilings at Wapping and left there until the tidal water of the Thames ebbed and flowed over the bodies three times. So much for Britannia ruling the waves.”

Sounds good, right?  Fits a whole narrative of European decline, although, well, the part about French military prowess doesn’t quite fit.   

Too bad it’s all complete crapola.  Details below the fold.