Category Archives: industry

Japan’s Industrial Pollution in 1897

From Emperor of Japan: Meiji and His World, 1852–1912, by Donald Keene (Columbia U. Press, 2005), Kindle pp. 532-534:

Another internal matter that disturbed the emperor in 1897 and would have future ramifications was the copper poisoning caused by the mines at Ashio. On March 24 a cabinet committee was established to investigate the situation. The extent of the harm to the environment and the suffering of the inhabitants of the region could hardly be exaggerated. Fish had disappeared from the Watarase River and its tributaries. Innumerable dry and wet fields had been ravaged. In recent years there had been frequent flooding, and the damage increased each year. At every session of the Diet, [early environmental activist] Tanaka Shōzō (1841–1913), a member of the House of Representatives, described the terrible damage, appealing for preventive measures and relief. However, neither the government nor the mine owners did anything to help the people of the region, and it was feared they might stage a march on Tōkyō to appeal directly to the government.

Shortly before the investigating committee was established, the minister of agriculture and commerce, Enomoto Takeaki, traveled to Ashio in mufti to observe the effects of mineral poisoning. He was so shocked by what he saw that he resigned his post, taking blame for the disaster. The emperor was much upset when he was informed of conditions in Ashio, and on April 7, at his request, Tokudaiji Sanetsune sent letters to the governors of Gumma, Tochigi, Saitama, and Ibaraki Prefectures asking if they thought that the sudden spate of public criticism was occasioned by the damage caused by the flooding of 1896 or if it went back to 1892 and 1893 when the frightening effects of pollution were first discovered.

At the time some observers blamed the disasters on the indiscriminate felling of trees, resulting in landslides that filled the riverbeds. The rivers, unable to flow freely in their normal courses, had broken through the embankments and spread the poison in their water over the land. The governors were requested to reply without concealing anything and appending relevant documents.

As a result of the reports received from the cabinet committee, on May 27 [“Copper King”] Furukawa Ichibei, the operator of the mines, was issued a set of thirty-seven orders requiring him to provide settling ponds, filter beds, and similar facilities to prevent the mine water from overflowing and to eliminate smoke pollution. He was told that these improvements must be completed within 150 days and that mining operations would be halted until the settling ponds and filter beds were ready. In the event that Furukawa disobeyed these orders, he would be forbidden to engage in further mining.

On November 27 the cabinet, satisfied that the work of the committee investigating the mineral poisoning at Ashio was more or less completed, relieved the committee of its functions, and assigned to the appropriate ministries the supervision of preventive measures and restoration of affected land. Judging from the persistence into the late Meiji era of the issue of copper poisoning, it is obvious that the pollution controls ordered by the government at this time were not strictly enforced. The desire to build a modern, rich country was so strong that the Japanese tended to tolerate environmental pollution, even when it was as extreme as at the Ashio copper mines.

Eleven years earlier, in 1886, Suehiro Tetchō had published Setchūbai (Plum Blossoms in the Snow), a work often praised as the finest of the Meiji-period political novels. It is set in 2040, the 173rd year of the reign of Emperor Meiji, and opens with the sounds of cannons and bugles blowing to celebrate the 150th anniversary of the proclamation of the constitution. The accompanying illustrations depict the Tōkyō of the future. It is a city of grim rows of brick buildings from which innumerable tall chimneys emit black smoke. Tetchō wrote enthusiastically, “Telegraph wires spread like spiders’ webs, and trains run to and fro to every point of the compass. The electric lamps are so bright that even at night the streets look no different than in broad daylight.”

A reader today may shudder at the thought of a city so devoid of amenities and so tainted by industrial pollution, but Tetchō undoubtedly believed that his readers would be delighted by a future rich with the progress represented by chimneys belching smoke; he seems to have thought that the more Tōkyō resembled London, the greatest of the Western cities, the happier the Japanese would be. The chamberlain Hinonishi Sukehiro recalled:

Whenever His Majesty made a journey in the Kansai region, a little before the train passed Ōsaka he would say, “We’re getting close to the smoke capital…. Now we’re in the smoke capital.” Whenever we approached Ōsaka, he would look out of the window at the landscape. When he saw a great deal of smoke rising, he would be extremely satisfied.

For Emperor Meiji, no less than for Suehiro Tetchō, the “smoke capital” was a term of praise; but the copper mines at Ashio served as a grim reminder of the cost to the environment and to human lives of such progress.

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Amur River Boom and Bust

From The Amur River: Between Russia and China, by Colin Thubron (Harper, 2021), Kindle pp. 265-268:

The enormous silence of the river, its shrinking human populace and its virgin forest, give the illusion of return to some primeval Arcadia, of recoil from a stricken present. But to its inhabitants it means desolation. For almost four centuries the Amur has been the stuff of dreams, but also of promise forever delayed. In the mid-nineteenth century, especially, there arose in Russia a grand and delusive exhilaration. Just as in the seventeenth century the Cossacks were lured south by rumours of a Daurian river valley spread with wheat and sable-filled forests, even silver and precious stones, so the accession of the initially liberal Czar Alexander II, in an empire that had been stagnating for thirty years, released a groundswell of intoxicating hope. Momentarily Russia turned her back on Europe, with its old humiliations, and found a visionary future in Siberia’s east.

Suddenly the immense but little-known Amur loomed into brilliant focus. Here would be Russia’s artery to the Pacific, a titanic waterway flowing, as if by providence, from the belly of Siberia into an ocean of infinite promise. The trading concessions wrenched from China by the British and French, the prising open of Japan, and above all the arrival of a young and vigorous America on the opposite coast, would surely transform the Pacific into an arena of world commerce. Russians had watched the American advance westward with awe. It seemed to mirror their own headlong drive across Siberia to the same ocean, and now the two countries might flourish together in a shared oceanic commonwealth. There was even heady talk, in Siberia, of a political alliance.

With Muraviev-Amursky’s seizure of the Amur from a helpless China in 1858, the vision of an eastern destiny became euphoria. The Amur, it was declared, would become Russia’s Mississippi, and Muraviev was hailed, without irony, as ‘one courageous, enterprising Yankee’. Such dreams climaxed in the energies of the American entrepreneur Perry McDonough Collins, quaintly named his country’s ‘commercial agent’ on the Amur. ‘Upon this generous river shall float navies, richer and more powerful than those of Tarshish,’ he announced, and at its mouth ‘shall rise a vast city, wherein shall congregate the merchant princes of the earth’.

Even before Muraviev’s land grab, St Petersburg was rife with reports of foreign merchant ships making for the Amur. Soon a lighthouse at De Castries was raised to guide them. A fleet of steamboats began plying the once-quiet waters. The lower river valley was declared a free trade zone. And the fulcrum of these hopes was the newly founded port of Nikolaevsk at the Amur’s mouth, which Alexander and I were approaching on the lonely Meteor. For a few years German and American trading firms went up here, housed in stout log cabins with iron and zinc roofs. A library of over four thousand books was assembled, with recent Paris and St Petersburg newspapers, happily uncensored. The officers’ club flaunted a dining hall and ballroom. Life was reported delightful. The Nikolaevsk stores were selling Havana cigars, French pâté and cognac, port and fine Japanese and Chinese furniture. Susceptible minds twinned the town with San Francisco. And Perry Collins, of course, went further, looking forward to the day when St Petersburg itself would be replicated on the Amur.

Then, within a decade, harsh realities broke in. Far from being a riverine highway, the Amur was revealed as a labyrinth of shoals, shallows and dead ends, and for seven months of the year was sealed in ice or adrift with dangerous floes. Even cargo boats of low draught might not reach Khabarovsk, let alone Sretensk. And the river mouth offered no simple access. The straits between the mainland and the obstructing island of Sakhalin made for hazardous steering, especially from the tempestuous Okhotsk Sea. Ships sank even in the estuary. As for the Amur shores, for hundreds of miles they were peopled only by a sprinkling of Cossacks, natives and subsistence farmers, many forcibly settled on poor land, and open to the floods that still ravage it. For its inhabitants, this became a cursed river: not the ‘Little Father’ of Russia’s affection, wrote a dismayed naturalist, but her ‘sickly child’. The structures of commerce that worked elsewhere – the trading houses, the shipping agents, the free zones – had been imposed upon an indifferent wilderness. In the simple, brutal realization of those most disillusioned, there was nobody to trade with and nothing to trade. Within a few years the agents and flotillas were gone, transferring first to De Castries and then to the ice-free harbour of Vladivostok.

As for Nikolaevsk, even Collins had expressed misgivings. Its waterside was so shallow that ships had to drop anchor half a mile offshore, and their cargo was transported by lighters to a swampy coast. In winter the town was blasted by Arctic blizzards and lay sometimes six feet deep in snow. Even the reports of foreign commerce were exposed as delusion. The shipping had never been significant. Within a few years Nikolaevsk became a byword for boredom, immorality and petty scandals. In its celebrated officers’ club, remarked a worldly sea captain, the newspapers were few and several months old; it compared poorly to a low German beer house. The great explorer Nikolai Przhevalsky equated the whole place with Dante’s hell.

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North Korea’s Masters of Money

From The Great Successor: The Divinely Perfect Destiny of Brilliant Comrade Kim Jong Un, by Anna Fifield (PublicAffairs, 2019), Kindle pp. 147-148:

Private property ownership is still technically illegal in North Korea, but that hasn’t stopped the emergence of a vibrant housing market. Sometimes people lease out the right to live in the apartments assigned to them by the state; at other times, masters of money sell the apartments they’ve been allocated in these new developments for substantial profits.

As a result, real estate prices have soared, with prices in Pyongyang increasing as much as tenfold. A decent two- or three-bedroom apartment in the capital costs up to $80,000, but a luxury three-bedroom apartment in a sought-after complex in central Pyongyang can fetch $180,000. It is an unimaginable sum in a country where the official government salary remains at about $4 a month.

Another reason for the real estate boom is the almost complete lack of a banking system. The masters of money can’t stash their cash in an interest-bearing account or investment fund, so they channel it into bricks and mortar.

Ri Jong Ho’s entrepreneurial good fortune began in the mid-’80s, when he began working for Office 39. By earning money for Kim Jong Il’s slush fund, he was enabling the Dear Leader to buy all that cognac and sushi. That made Ri an important person to the regime, and he lived a good life as a result.

His last job was in the Chinese port city of Dalian, not far from the border with North Korea, where he was the head of a branch of Taehung, a North Korean trading company involved in shipping, coal and seafood exports, and oil imports. He had previously been president of a ship-trading company and chairman of Korea Kumgang Group, a company that formed a venture with Sam Pa, a [notorious] Chinese businessman, to start a taxi company in Pyongyang. Ri showed me a photo of him and Pa onboard a private jet to Pyongyang.

As head of the Dalian branch of the Taehung export business, Ri would send millions of dollars in profits—denominated in American dollars or Chinese yuan—to Pyongyang. In the first nine months of 2014, until his defection in October that year, Ri said he sent the equivalent of about $10 million to the regime. Despite all the sanctions, the US dollar is still the preferred currency for North Korean businessmen since it is easiest to convert and spend.

It didn’t matter that there were supposedly stringent international sanctions in place. Ri’s underlings simply handed a bag of cash to the captain of a ship leaving from Dalian to the North Korean port of Nampho or gave it to someone to take on the train across the border.

But Uncle Jang’s downfall at the end of 2013 spooked many masters of money, including Ri. He and his family escaped from Dalian to South Korea and then eventually to the United States.

He clearly made a tidy sum of money for himself on the sidelines of his official job. The family lived a comfortable life in the Virginia suburbs. But even in the United States, Ri was cagey about meeting me and careful about what he said. “There are so many other stories, but I can’t tell you all them. Do you understand?”

He gives occasional public speeches about the North Korean regime—and much more private advice to the American government—while his children work on their English and study to go to an American university. They want Ivy League or, failing that, Georgetown.

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North Korea’s Caste System

From The Great Successor: The Divinely Perfect Destiny of Brilliant Comrade Kim Jong Un, by Anna Fifield (PublicAffairs, 2019), Kindle pp. 120-123:

Why, then, if so many North Koreans know about the outside world, and know that the regime is lying to them, has the system survived? The answer lies in the unparalleled brutality of the regime, which has no compunction in meting out severe punishments for the smallest hint of disaffection.

To enforce the lie that he’s the best man for the job, Kim Jong Un has perpetuated North Korea’s political caste system with zeal, rewarding those deemed most loyal to him and ruthlessly punishing those who dare question him.

This caste system is another legacy of his grandfather. When he was creating his ideal state, Kim Il Sung borrowed some of the feudal practices of the Chosun Dynasty, which had ruled Korea for five centuries until almost 1900. He adopted the Chosun-era system of guilt by association. It is this system that, even now, can lead to three generations of an entire family being imprisoned, sometimes for life, for one person’s wrongdoing.

He also stole the discriminatory class system called songbun from the Chosun era, dividing North Korea into fifty-one different categories that fall into three broad classes: loyal, wavering, and hostile.

To this day, in Kim Jong Un’s North Korea, the loyal are given every advantage. They are the 10 to 15 percent of the population who are considered the most politically committed to the system and have the most interest in it continuing. They get to live in Pyongyang and receive better schooling, including the possibility of attending Kim II Sung University. They are set up for plum jobs and have a head start on Workers’ Party membership. The loyal caste live in better apartments, wear better clothes, eat better and more food, and are more likely to be able to visit a doctor who actually has medicine.

At the bottom are the hostiles: the Japanese collaborators, the Christians, the skeptics. They comprise about 40 percent of the population and are generally banished to the inhospitable mountains of the north, where winters are unbearable and food is scarce even by North Korean standards.

These “undesirables” have no social mobility and no hope of advancement. Their lives revolve around a collective farm or factory—an assignment that, for the last few decades, has meant fending for themselves.

In between the loyal and the hostile is the wavering class, the ordinary people who make up about half the North Korean population. They exist in a kind of limbo. They have no chance of going to college or having a professional job, but if they’re lucky, they might secure a good assignment during their military service that will help them work their way to a slightly better standard of living.

Someone born with bad songbun has no hope of moving up the social hierarchy. The upper levels, however, can plummet all the way to the bottom if they put a foot wrong. Through this system, and the constant threat of being demoted down the classes, Kim Jong Un has been able to maintain power.

If you’re a member of the loyal class—living in Pyongyang and able to earn some money on the side of your ministry job to send your children to university—you would think twice before openly questioning whether the leader could really drive a car at age five or criticizing the decision to spend millions on nuclear weapons instead of on hospitals and schools. There is always someone to keep an eye on you and report if you’re not sufficiently devoted to the regime. At the grassroots level, it starts with the inminban, literally “people’s group,” a kind of neighborhood watch system. Each neighborhood is broken down into groups of thirty or forty households, with a leader who is always an interfering middle-aged woman. It is her job to keep an eye on what people in her assigned households are up to. North Koreans like to say that the leader of their neighborhood group is supposed to know how many chopsticks and how many spoons each house has.

She is responsible for registering overnight visitors—in North Korea, a person can’t stay at a friend or relative’s house without notifying the authorities—and often, together with the local police, conducts dead-of-night raids to ensure there are no forbidden guests or that residents like Man-bok or Jung-a are not watching South Korean movies. She inspects everyone’s state-issued radio to make sure they haven’t tuned it to anything other than the state station. She checks cell phones to make sure they don’t contain unauthorized music or photos from the outside world.

She also encourages neighbors to report on one another. If a family is thought to be eating white rice and meat suspiciously often, people might wonder how they’re making their money.

North Koreans live in a system where every aspect of their lives is monitored, where every infraction is recorded, where the smallest deviation from the system will result in punishment. It is ubiquitous, and it keeps many people from even raising an eyebrow at the regime. The neighborhood leader needs to report transgressions in order to stay in good stead with the higher authorities, especially the two main security agencies.

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Negative Human Development in Resource States

From The Looting Machine: Warlords, Oligarchs, Corporations, Smugglers, and the Theft of Africa’s Wealth, by Tom Burgis (PublicAffairs, 2016), Kindle pp. 211-212:

In 1970, the year the Olympic movement expelled South Africa, the government passed legislation formally stripping blacks of their citizenship and restricting them to destitute “homelands,” and the authorities appointed a barbaric new commanding officer at Robben Island prison to watch over Mandela and his fellow inmates, South Africa produced some 62 percent of the gold mined worldwide. From the early 1970s to 1993 gold, diamonds, and other minerals accounted for between half and two-thirds of South Africa’s exports annually.

South Africa’s gold and diamonds provided the financial means for apartheid to exist. In that sense white rule was an extreme manifestation of the resource state: the harnessing of a national endowment of mineral wealth to ensure the power and prosperity of the few while the rest are cast into penury and impotence. None of Africa’s resource states today come close to the level of orchestrated subjugation of the majority that the apartheid regime achieved. Neither do they employ apartheid’s racial creed, even if ethnicity has combined poisonously with the struggle to capture resource rent in Nigeria, Angola, Guinea, and elsewhere. But as their rulers, in concert with the multinational corporations of the resource industry, horde the fruits of their nations’ oil and minerals, Africa’s resource states have come to bear a troubling resemblance to the divisions of apartheid.

While the children of eastern Congo, northern Nigeria, Guinea, and Niger waste away, the beneficiaries of the looting machine grow fat. Amartya Sen, the Nobel Prize–winning Indian economist who has examined with great insight why mass starvation occurs, writes, “The sense of distance between the ruler and the ruled—between ‘us’ and ‘them’—is a crucial feature of famines.” That same reasoning could be applied to the provision of other basic needs, including clean water and schooling. And rarely is the distance Sen describes as wide as in Africa’s resource states.

Many of Africa’s resource states experienced very high rates of economic growth during the commodity boom of the past decade. The usual measure of average incomes—GDP per head—has risen. But on closer examination such is the concentration of wealth in the hands of the ruling class that that growth has predominantly benefited those who were already rich and powerful, rendering the increase in GDP per head misleading. A more revealing picture comes from a different calculation. Each year the United Nations ranks all the countries for which it can gather sufficient data (186 in 2012) by their level of human development, things like rates of infant mortality and years of schooling. It also ranks them by GDP per head. If you subtract a country’s rank on the human development index from its rank on the GDP per head index, you get an indication of the extent to which economic growth is actually bettering the lot of the average person in that country. In countries that score zero—as Congo, Rwanda, Russia, and Portugal did in 2012—living standards are roughly where you might expect them to be, given that country’s GDP per head. People in countries with positive scores enjoy disproportionately pleasant living conditions relative to income—Cuba, Georgia, and Samoa top the table with scores of 44, 37, and 28, respectively. A negative score indicates a failure to turn national income into longer lives, better health, and more years of education for the population at large. Of the ten countries that come out worst, five are African resource states: Angola (–35), Gabon (–40), South Africa (–42), Botswana (–55), and Equatorial Guinea.

Equatorial Guinea’s score (–97), comfortably the worst in the world, is all the more remarkable because its GDP per head is close to $30,000 a year, not far below the level of Spain or New Zealand and seventy times that of Congo.

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How Multinationals Dodge Taxes

From The Looting Machine: Warlords, Oligarchs, Corporations, Smugglers, and the Theft of Africa’s Wealth, by Tom Burgis (PublicAffairs, 2016), Kindle pp. 165-167:

Two-thirds of trade happens within multinational corporations. To a large extent those companies decide where to pay taxes on which portions of their earnings. That leaves ample scope to avoid paying taxes anywhere or to pay taxes at a rate far below what purely domestic companies pay.

Imagine a multinational company making rubber chickens, called Fowl Play Incorporated. Fowl Play’s headquarters and most of its customers are in the United States. A subsidiary, Fowl Play Cameroon, runs a rubber plantation in Cameroon. The rubber is shipped to a factory in China, owned by another subsidiary, Fowl Play China, where it is made into rubber chickens and packaged. The rubber chickens are shipped to Fowl Play’s parent company in the United States, which sells them to mainly US customers.

Fowl Play could simply pay taxes in each location based on an honest assessment of the proportion of its income that accrues there. But it has a duty to its shareholders to maximize returns, and its executives want the bonuses that come from turning big profits, so its accountants are instructed to minimize the effective tax rate Fowl Play pays by booking more revenues in places with low tax rates and fewer revenues in places with high tax rates. If, for example, Fowl Play wanted to reduce its tax liability in Cameroon and the United States by shifting profits to China, where it has been granted a tax holiday to build its factory, it would undervalue the price at which the rubber is sold from the Cameroonian subsidiary to the Chinese one, then overvalue the price at which the Chinese subsidiary sells the finished rubber chickens to the parent company in the United States. All this happens within one company and bears scant relation to the actual costs involved. The result is that the group’s overall effective tax rate is much lower than it would have been had it apportioned profits fairly. Many such tax maneuvers are perfectly legal. When it is done ethically “transfer pricing,” as the technique in this example is known, uses the same prices when selling goods and services within one company as when selling between companies at market rates. But the ruses to fiddle transfer pricing are legion. A mining company might tweak the value of machinery it ships in from abroad, or an oil company might charge a subsidiary a fortune to use the parent’s corporate logo.

Suppose Fowl Play gets even cannier. It creates another subsidiary, this time in the British Virgin Islands, one of the tax havens where the rate of corporation tax is zero. Fowl Play BVI extends a loan to the Cameroonian subsidiary at an astronomical interest rate. The Cameroonian subsidiary’s profits are canceled out by the interest payments on the loan, which accrue, untaxed, to Fowl Play BVI. And all the while Fowl Play and the rubber chicken industry’s lobbyists can loudly warn Cameroon, China, and the United States that, should they try to raise taxes or clamp down on fiddling, the company could move its business, and the attendant jobs, elsewhere. (The BVI company is only a piece of paper and doesn’t employ anyone, but then there is no need to threaten the British Virgin Islands—its tax rate could not be lower.)

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New African Infrastructure for Whom?

From The Looting Machine: Warlords, Oligarchs, Corporations, Smugglers, and the Theft of Africa’s Wealth, by Tom Burgis (PublicAffairs, 2016), Kindle pp. 147-149:

It is too simplistic to see China’s quest for African resources as a Manichean struggle for nature’s treasure between East and West. There is competition, but there is also cooperation in the business of resource extraction. And for all its increased attractiveness to rival investors from overseas, much of Africa remains locked at the foot of the global economy.

Ibrahim Iddi Ango, the industrialist who headed Niger’s chamber of commerce, told me that Niger’s rulers had sold the country short in their negotiations with the Chinese. “They need strategic resources. You must say, ‘You are interested in that? These are the conditions. First, you must use local labor. Second, all the needs you have—for example, the transit—you must use at a minimum 50 percent local operators.’ But when they came the government said none of this. The state took a percentage of the businesses and let the Chinese do what they want.” A brief window of opportunity to use China’s desire for African minerals to insist on securing for Niger the skills and infrastructure that might help to salve the resource curse by broadening the economy was closing. “To diversify, it’s central,” Iddi Ango said—and with good reason. Niger is among the African states most acutely dependent on a handful of raw commodity exports, their economic fortunes yoked to the whims of far-off consumers. On the African Development Bank’s index, where a higher score indicates a more diversified economy, relatively wealthy countries not shackled to the resource trade such as Mauritius and Morocco score 22 and 41, respectively. The average for the whole of Africa, including more prosperous North Africa, is 4.8. The most oil-dependent states, Angola and Chad, record the lowest scores, 1.1. Niger does only marginally better, with a score of 2.4.

“But if you let China do what it wants—as many African countries have—they pay for the oil or the resources and use Chinese labor, Chinese trucks. It’s a big problem,” Iddi Ango said. “They are coming because the resources are here. This moment will not be repeated. We can’t miss it. When the uranium or the oil is finished, they will leave.”

The fall of Tandja demonstrated the limits of China’s readiness to get involved in domestic politics to protect African allies. But Xia Huang, the Chinese ambassador in Niamey, encapsulated how China’s readiness to spend and build allowed Beijing to gain a foothold sufficiently strong that its interests could withstand a coup against an ally. “Today there is a bridge between the two sides of the River Niger,” he told me. “But there is also a bridge that links China and Niger.”

Yet the true value of China’s offer to guide Africa on a path to economic diversification and industrialization—the road that led the rich world to prosperity—rests on whether its construction spree is geared primarily toward cultivating the rulers who govern access to resources or toward broadening the opportunities of the population at large. Neither railways that simply connect Chinese-owned mines to Chinese-built ports for the export of commodities nor vanity projects of great cost but little economic usefulness will lift resource states’ inhabitants from their poverty. Martyn Davies, the chief executive of a South African consultancy called Frontier Advisory who has worked as an adviser on Chinese deals in Africa, told me, “When you have a commodity-driven economy, where a lot of people are excluded, it’s a silo economy. It’s very difficult to build infrastructure that supports inclusive growth. Is Chinese-financed infrastructure going to provide diversification? Which comes first?” He added, “African governments should never assume that responsibility for the development of our continent has been outsourced to Beijing.”

Beijing appears to be undercutting its side of the deal. Chinese goods like the counterfeit textiles flooding into northern Nigeria drown out hopes for industrialization, regardless of how many roads and railways Chinese companies lay. Lamido Sanusi, governor of Nigeria’s central bank from 2009 to 2014, put it well: “So China takes our primary goods and sells us manufactured ones. This was also the essence of colonialism. The British went to Africa and India to secure raw materials and markets. Africa is now willingly opening itself up to a new form of imperialism.”

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Nigeria’s Smuggled Economy

From The Looting Machine: Warlords, Oligarchs, Corporations, Smugglers, and the Theft of Africa’s Wealth, by Tom Burgis (PublicAffairs, 2016), Kindle pp. 61-62, 65:

Weapons and unwilling human traffic cross Nigeria’s northern border covertly. But the flow of counterfeit Chinese-made textiles has grown so voluminous that it would be impossible to keep it secret even if secrecy were required to ensure its safe passage. All the same, most of the shipments go through under cover of darkness. Those who control the trade engage in highly organized “settling,” or bribing, of the border officials, smoothing the textiles’ transit.

The Nigerian stretch is just the final leg of a 6,200-mile journey. It begins in Chinese factories, churning out imitations of the textiles that Nigerians previously produced for themselves, with their signature prime colors and waxiness to the touch. By the boatload they arrive in west Africa’s ports, chiefly Cotonou, Benin’s biggest city, a tiny country beside Nigeria that has, like Montenegro in Europe or Paraguay in South America, become a state whose major economic activity is the trans-shipment of contraband. At the ports the counterfeit consignments are loaded onto trucks and either driven straight over the land border between Benin and western Nigeria or up through Niger and round to the border post with its taciturn chief. The trade is estimated to be worth about $2 billion a year, equivalent to about a fifth of all annual recorded imports of textiles, clothing, fabric, and yarn into the whole of sub-Saharan Africa.

Smuggling is a long-established profession here. Before colonial cartographers imposed the frontier, today’s smuggling routes were the byways of legitimate commerce. The border marks a delineation of what used to be British and French territory in west Africa, but no natural division of language or ethnicity exists. People on both sides speak Hausa, a tongue in which the word for smuggling, sumoga, strikes a less pejorative note than its English equivalent. The textile smuggling bosses are the oligarchs of the northern borderlands. For those in their pay, they can be generous benefactors.

The cheaper price of smuggled garments relative to locally produced ones was good news, superficially at least, for the traders’ hard-pressed customers but less so for the employees of Nigeria’s textile industry. “It is a pitiable situation,” said Hillary, apparently oblivious to his and his colleagues’ role in their compatriots’ downfall. “All the [textile factories] we have here have shut down. The workers are now on the streets.”

In the mid-1980s Nigeria had 175 textile mills. Over the quarter-century that followed, all but 25 shut down. Many of those that have struggled on do so only at a fraction of their capacity. Of the 350,000 people the industry employed in its heyday, making it comfortably Nigeria’s most important manufacturing sector, all but 25,000 have lost their jobs. Imports comprise 85 percent of the market, despite the fact that importing textiles is illegal. The World Bank has estimated that textiles smuggled into Nigeria through Benin are worth $2.2 billion a year, compared with local Nigerian production that has shriveled to $40 million annually. A team of experts working for the United Nations concluded in 2009, “The Nigerian textile industry is on the verge of a total collapse.” Given the power crisis, the near-impassable state of Nigeria’s roads, and the deluge of counterfeit clothes, it is a wonder that the industry kept going as long as it did.

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Congo’s Tantalum Wealth

From The Looting Machine: Warlords, Oligarchs, Corporations, Smugglers, and the Theft of Africa’s Wealth, by Tom Burgis (PublicAffairs, 2016), Kindle p. 30:

The Congolese are consistently rated as the planet’s poorest people, significantly worse off than other destitute Africans. In the decade from 2000, the Congolese were the only nationality whose gross domestic product per capita, a rough measure of average incomes, was less than a dollar a day.

Tantalum’s extremely high melting point and conductivity mean that electronic components made from it can be much smaller than those made from other metals. It is because tantalum capacitors can be small that the designers of electronic gadgets have been able to make them ever more compact and, over the past couple of decades, ubiquitous.

Congo is not the only repository of tantalum-bearing ores. Campaigners and reporters perennially declare that eastern Congo holds 80 percent of known stocks, but the figure is without foundation. Based on what sketchy data there are, Michael Nest, the author of a study of coltan, calculates that Congo and surrounding countries have about 10 percent of known reserves of tantalum-bearing ores. The real figures might be much higher, given that reserves elsewhere have been much more comprehensively assessed. Nonetheless, Congo still ranks as the second-most important producer of tantalum ores, after Australia, accounting for what Nest estimates to be 20 percent of annual supplies. Depending on the vagaries of supply chains, if you have a PlayStation or a pacemaker, an iPod, a laptop, or a mobile phone, there is roughly a one-in-five chance that a tiny piece of eastern Congo is pulsing within it.

The insatiable demand for consumer electronics has exacted a terrible price. The coltan trade has helped fund local militias and foreign armies that have terrorized eastern Congo for two decades, turning what should be a paradise into a crucible of war.

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Africa’s Resource Curse

From The Looting Machine: Warlords, Oligarchs, Corporations, Smugglers, and the Theft of Africa’s Wealth, by Tom Burgis (PublicAffairs, 2016), Kindle pp. 4-6:

The sheer number of people living in what are some of the planet’s richest states, as measured by natural resources, is staggering. According to the World Bank, the proportion of the population in extreme poverty, calculated as those living on $1.25 a day and adjusted for what that wretched sum will buy in each country, is 68 percent in Nigeria and 43 percent in Angola, respectively Africa’s first and second biggest oil and gas producers. In Zambia and Congo, whose shared border bisects Africa’s copper-belt, the extreme poverty rate is 75 percent and 88 percent, respectively. By way of comparison, 33 percent of Indians live in extreme poverty, 12 percent of Chinese, 0.7 percent of Mexicans, and 0.1 percent of Poles.

The phenomenon that economists call the “resource curse” does not, of course, offer a universal explanation for the existence of war or hunger, in Africa or anywhere else: corruption and ethnic violence have also befallen African countries where the resource industries are a relatively insignificant part of the economy, such as Kenya. Nor is every resource-rich country doomed: just look at Norway. But more often than not, some unpleasant things happen in countries where the extractive industries, as the oil and mining businesses are known, dominate the economy. The rest of the economy becomes distorted, as dollars pour in to buy resources. The revenue that governments receive from their nations’ resources is unearned: states simply license foreign companies to pump crude or dig up ores. This kind of income is called “economic rent” and does not make for good management. It creates a pot of money at the disposal of those who control the state. At extreme levels the contract between rulers and the ruled breaks down because the ruling class does not need to tax the people to fund the government—so it has no need of their consent.

Unbeholden to the people, a resource-fueled regime tends to spend the national income on things that benefit its own interests: education spending falls as military budgets swell. The resource industry is hardwired for corruption. Kleptocracy, or government by theft, thrives. Once in power, there is little incentive to depart. An economy based on a central pot of resource revenue is a recipe for “big man” politics. The world’s four longest-serving rulers—Teodoro Obiang Nguema of Equatorial Guinea, José Eduardo dos Santos of Angola, Robert Mugabe of Zimbabwe, and Paul Biya of Cameroon—each preside over an African state rich in oil or minerals. Between them they have ruled for 136 years.

From Russia’s oil-fired oligarchs to the conquistadores who plundered Latin America’s silver and gold centuries ago, resource rents concentrate wealth and power in the hands of the few. They engender what Said Djinnit, an Algerian politician who, as the UN’s top official in west Africa, has served as a mediator in a succession of coups, calls “a struggle for survival at the highest level.” Survival means capturing that pot of rent. Often it means others must die.

The resource curse is not unique to Africa, but it is at its most virulent on the continent that is at once the world’s poorest and, arguably, its richest.

Africa accounts for 13 percent of the world’s population and just 2 percent of its cumulative gross domestic product, but it is the repository of 15 percent of the planet’s crude oil reserves, 40 percent of its gold, and 80 percent of its platinum—and that is probably an underestimate, given that the continent has been less thoroughly prospected than others. The richest diamond mines are in Africa, as are significant deposits of uranium, copper, iron ore, bauxite (the ore used to make aluminum), and practically every other fruit of volcanic geology. By one calculation Africa holds about a third of the world’s hydrocarbon and mineral resources.

Outsiders often think of Africa as a great drain of philanthropy, a continent that guzzles aid to no avail and contributes little to the global economy in return. But look more closely at the resource industry, and the relationship between Africa and the rest of the world looks rather different. In 2010 fuel and mineral exports from Africa were worth $333 billion, more than seven times the value of the aid that went in the opposite direction (and that is before you factor in the vast sums spirited out of the continent through corruption and tax fiddles). Yet the disparity between life in the places where those resources are found and the places where they are consumed gives an indication of where the benefits of the oil and mining trade accrue—and why most Africans still barely scrape by. For every woman who dies in childbirth in France, a hundred die in the desert nation of Niger, a prime source of the uranium that fuels France’s nuclear-powered economy. The average Finn or South Korean can expect to live to eighty, nurtured by economies among whose most valuable companies are, respectively, Nokia and Samsung, the world’s top two mobile phone manufacturers. By contrast, if you happen to be born in the Democratic Republic of Congo, home to some of the planet’s richest deposits of the minerals that are crucial to the manufacture of mobile phone batteries, you’ll be lucky to make it past fifty.

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Filed under Africa, Angola, Cameroon, Congo, democracy, economics, education, energy, Equatorial Guinea, industry, labor, migration, Zimbabwe