Category Archives: U.S.

Origin of North Korea’s Nuclear Program

From The Great Successor: The Divinely Perfect Destiny of Brilliant Comrade Kim Jong Un, by Anna Fifield (PublicAffairs, 2019), Kindle pp. 232-234:

In 1962, the Soviet Union and the United States were locked in a thirteen-day standoff over the installation of nuclear-armed Soviet missiles in Cuba, less than one hundred miles from the US coastline. For those two weeks, the world teetered on the edge of nuclear war. But the conflict was resolved diplomatically when Soviet leader Nikita Khrushchev agreed to remove the missiles as long as President John Kennedy agreed not to invade Cuba. A deal was done.

Kim Il Sung viewed this deal as a capitulation by the Soviet Union to the United States, a sign that Moscow was willing to sell out an ally for the sake of its own security. The Great Leader apparently learned from this that North Korea should never entrust its national security to any other government. This injected new momentum into his drive for nuclear independence. Within a few months, Kim Il Sung’s regime had started to explore the possibility of developing a nuclear deterrent of its own. The leader who had espoused a need for a stronger agricultural policy was soon standing before the cadres in Pyongyang to hammer home the importance of putting equal emphasis on economic growth and national defense. This was the first “simultaneous push” policy. The proportion of the national budget devoted to defense rose from only 4.3 percent in 1956 to almost 30 percent within a decade.

The nuclear scientists who returned home from the Soviet Union set about building, about sixty miles northeast of Pyongyang, a similar complex to the one they’d worked at in Dubna. This would eventually become the Yongbyon Nuclear Research Complex.

More impetus came in the early 1970s, when it emerged that North Korea’s other main ally, China, had secretly started to forge relations with the United States, an effort that led to President Richard Nixon’s historic visit to Beijing in 1972.

Meanwhile, in South Korea, the strongman Park Chung-hee, a general who’d seized the presidency through a military coup, was secretly pursuing nuclear weapons of his own. When this news emerged, it was an unbearable blow to Kim Il Sung’s personal vanity and sense of national pride.

Another key factor that must have been weighing on Kim Il Sung’s mind was his own mortality. He was in his sixties by this time and was starting to prepare his son to take over. He thought that having nuclear weapons would make it easier for his son to keep a grip on the state. In lieu of charisma, Kim Jong Il should at least have nukes.

In the late 1970s onward, the North Koreans had built more than one hundred nuclear facilities at Yongbyon alone. American intelligence agencies were alarmed. In the space of about six years, a country with no previous experience had built a functioning nuclear reactor. Three years later came unambiguous proof that the reactor’s purpose was military, not civilian; the country had built a major reprocessing facility that would enable it to turn the fuel from the reactor into fissile material.

But its efforts were not going unnoticed among allies either. The Soviet Union pressured Kim Il Sung into signing the Nuclear Non-proliferation Treaty at the end of 1985. It took seven years for North Korea to allow in the inspectors required under that treaty, and when they got in, they found numerous signs that the regime was secretly working on the very kind of nuclear program it had pledged against. In 1993, Kim Il Sung threatened to withdraw from the treaty, triggering an alarming standoff. North Korea and the United States came the closest to war in forty years.

Talks to resolve the impasse were ongoing when Kim Il Sung suddenly died in the summer of 1994, propelling both sides into unknown territory. They did, however, manage to sign a landmark nuclear disarmament deal called the Agreed Framework, under which North Korea agreed to freeze and eventually dismantle its nuclear weapons program and a US-led coalition agreed to build two civilian nuclear reactors that could be used to generate electricity for the energy-starved country.

Pyongyang had no intention of abiding by this agreement either. Signing the deal was all about buying the Kim regime time to work on its program while maintaining the appearance of cooperating.

North Korea had developed a close relationship with Pakistani nuclear scientist Abdul Qadeer Khan. In the 1990s, while North Koreans were dying of starvation and while Kim Jong Un was watching Jackie Chan movies in Switzerland, the regime was building a uranium-enrichment program. Uranium enrichment wasn’t technically covered under the Agreed Framework. And North Korea loves technicalities.

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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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Revealing the Successor to Kim Jong Il

From The Great Successor: The Divinely Perfect Destiny of Brilliant Comrade Kim Jong Un, by Anna Fifield (PublicAffairs, 2019), Kindle pp. 63-64:

BACK HOME, KIM JONG UN PREPARED TO JOIN HIS OLDER brother at Kim Il Sung Military University, North Korea’s equivalent of West Point. It was their mother’s idea to send them to the military academy, a way to bolster her sons’ claims to succession.

His mother’s ambitions were evident. One of the few photos of them together shows her leaning over the boy she called the Morning Star King as he colored. He is about six years old and dressed in a general’s uniform with four stars on his shoulders.

Kim Jong Un had entered the university named after his grandfather in 2002 and began studying juche-oriented military leadership, the idea that North Korea could act alone to defend itself. It was an important ideological lesson even if it had no basis in reality. North Korea was entirely dependent on China for its stability.

That year was pivotal both for the heir apparent and for the regime.

First, it marked a new chapter for relations between North Korea and the United States—for the worse. At the start of 2002, President George W. Bush labeled North Korea part of an “axis of evil.” Bush declared that, together with Iran and Iraq, North Korea was “arming to threaten the peace of the world.… All nations should know: America will do what is necessary to ensure our nation’s security.”

Just a couple of weeks after that speech, Kim Jong Il officially turned sixty. His birthday was always celebrated with great fanfare in North Korea, but this one was even more important than usual. In Korean culture, a man’s sixtieth is a major milestone. It marks the completion of one sixty-year cycle of the Chinese Zodiac observed in many Asian countries.

In the meantime, Kim Jong Il’s one-time consort, and the mother of Kim Jong Nam, died in Moscow that year. Between that and his milestone birthday, Kim Jong Il’s mortality was clearly on his mind. There were signs of nascent preparation for succession.

For starters, there was a new “mother of the nation,” a name previously reserved for Kim Jong Il’s mother, in the propaganda. The Korean People’s Army issued a sixteen-page pamphlet that year called “Our Respected Mother Who Is Loyal to Our Beloved Supreme Commander Is the Most Loyal among Loyalists.” Songs about “Our Respected Mother” soon began to echo across the North Korean airwaves.

These did not explicitly name Ko Yong Hui, but the cadres could read between the lines and see it was her. She elevated to become the next mother of the nation, an early indication that one of her sons was next in line for the leadership.

So efforts to crown one of her sons were well underway even before Kim Jong Nam’s ill-fated trip to Tokyo Disney, although Ko took advantage of his embarrassing gaffe to push her sons’ case.

Ko Yong Hui knew that she did not have long to lobby for her sons. She was losing her fight against breast cancer.

Kim Jong Un, meanwhile, was throwing himself into his studies at the academy, according to official North Korean accounts. The young man was such a natural at military strategy that he was instructing the instructors rather than learning from them, the state media reported.

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What Aid to Afghanistan Bought

From No Good Men Among the Living: America, the Taliban, and the War through Afghan Eyes, by Anand Gopal (Henry Holt, 2014), Kindle pp. 271-274:

Not long after, I returned to Afghanistan. President Obama’s plan to withdraw US troops was well under way, with bases closing and equipment being destroyed. Could the war’s true winners be found in what we were leaving behind? I traveled through Uruzgan, and on the KandaharTirin Kot highway I could see Matiullah’s men everywhere, as they had been during my last visit. But the road north of Tirin Kot, heading into Ghilzai country, was now dotted here and there with new militia outposts not adorned with Matiullah’s photo or the Afghan flag. I stopped at one, a small wooden trellis with a canopy of leaves as cover, and met the fighters. They were under the control of a local strongman, who was being paid by a private company to protect a road construction project. Every mile or so I came upon another such militia, each run by a different strongman.

Later, I arrived at the home of Daud Khan, a leader of the local Barakzai tribe and one of the key militia commanders in the province, perhaps second only to Matiullah himself. He was heavily invested in protecting road construction crews against Taliban attacks, and the impending US withdrawal was hurting his business prospects. “We need money,” he told me. “We need money because life is hard out here. We’ve got a lot of expenses—I need weapons, RPGs, trucks, we want body armor. I keep asking the Americans for body armor but they won’t give it to me. They expect us to fight with nothing.”

I asked him if he had gotten into firefights with the Taliban recently. He clasped his hands together and laughed. “The Taliban? My mother can fight the Taliban. They just put bombs in the ground. They won’t be a problem after the Americans leave.”

Then why the need for all the weapons?

“Matiullah,” he said. “He’s worse than the Taliban. After the Americans leave, we’ll need to protect ourselves.” Tirin Kot was now caught in a cold war between Daud Khan’s and Matiullah’s forces. By my count there were more than thirty pro-American armed groups operating in central Uruzgan alone, some aligned with Matiullah, some against.

Later that afternoon I visited Daud’s uncle, a militia commander named Shah Muhammad. We sat in a field overlooking his poppy plantation, surrounded by nearly a dozen fighters. “There’s something I want to tell you,” he said, looking at me keenly. “There’s only one force that can save Afghanistan. The Americans. And I want you to know how much I despise the Taliban. Even if my father was a Talib, I’d kill him.” He shifted to sit next to me, nearly whispering in my ear. “I’m in trouble. You’re an American. I need your help. I want to fight the Taliban, I just need contracts. If the Americans give me some contracts, I can bring security. I can turn this war around. I just need money.” He begged me to pass on the message to politicians in Washington.

Such jockeying for patronage was nothing new. From its earliest days, the Karzai government was tethered to American aid, incapable of surviving on its own. It was reminiscent of the Communist regime of the 1980s, which lived and died by Moscow’s patronage—except that now there was a twist. Of the $557 billion that Washington spent in Afghanistan between 2001 and 2011, only 5.4 percent went to development or governance. The rest was mostly military expenditure, a significant chunk of which ended up in the coffers of regional strongmen like Jan Muhammad [Khan]. In other words, while the United States paid nominal amounts to build the Afghan state, it fostered a stronger and more influential network of power outside the state.

These were no conditions for nation building. Instead, as journalist Matthieu Aikins has pointed out, a weak Karzai administration found itself competing with strongmen of the countryside for funds. With warlords like JMK developing their own business and patronage relationships with the United States, the tottering government in Kabul had no choice but to enter the game itself. As a result, the state became criminalized, one of the most corrupt in the world, as thoroughly depraved as the warlords it sought to outflank. So corrupt, in fact, that nearly every metric that US or Afghan officials pressed into service to show progress unravels upon inspection. “Under Taliban rule, only 1.2 million students were enrolled in schools, with less than 50,000 of them girls,” a US forces press release stated in 2011. “Today, under the government of Afghanistan, there are 8.2 million students, of which nearly 40 percent—or 3.2 million—are girls.” But these were largely phantom figures. In the central province of Ghor, for instance, independent investigators discovered that of the 740 schools listed by the education ministry, 80 percent were “not operating at all.” Nonetheless, over four thousand teachers were on the government payroll. The vast majority of them, investigators found, simply collected paychecks and stayed at home, giving a cut to local officials, who in turn funneled a portion to warlords as a way to purchase influence. The story was similar around the country. Traveling through Wardak Province, I came upon one long-abandoned school after another that was still included on the much-touted government tally.

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Wardak No-Man’s-Land, 2009

From No Good Men Among the Living: America, the Taliban, and the War through Afghan Eyes, by Anand Gopal (Henry Holt, 2014), Kindle pp. 235-236:

The summer of 2009 saw an increase in infighting among Wardak’s Taliban, and growing tensions with their co-insurgent allies in Hekmatyar’s faction. At the same time, because the Taliban leadership paid units a “bonus” for outstanding attacks, the number of fake assaults, staged for video, surged. Akbar Gul played the game as well as anyone, but as the days went on he slid into despair. He hated those men in Quetta, he hated the ISI, and, most of all, he hated Ghulam Ali and his success. But he kept it all to himself. It was a dangerous new world, and you couldn’t trust anyone, even your own allies.

Countrywide, his movement was losing steam. The Taliban were now responsible for more civilian deaths than were the Americans. In some communities, roadside bombs, assassinations, and summary executions had come to take their place alongside Guantanamo and the door-kicking night raids of US troops in the pantheon of fears that kept villagers awake at night. Meanwhile, the insurgency was spreading from marginalized, cut-off communities into those that had fared better in the post-2001 years, whether it was welcome there or not.

In Chak, many of the commanders Akbar Gul knew had been killed in night raids, leaving Ghulam Ali’s crew and a smattering of independents, most younger than he, with no memories of the old Taliban days. It became increasingly difficult to defend their actions—which included, in one case, beheading a schoolteacher—to the village elders. He turned inward, planning operations on his own, without other commanders, and keeping away from Pakistan. Then, one day, he received a surprising phone call. It was the government’s new chief of police for Chak, an old war buddy from his Hizb-i-Islami days. They had ended up on opposite sides through chance more than anything else. The man spoke of a government program that invited fighters to switch sides in return for money and a guaranteed job. Akbar Gul listened and wondered where such a program had been years earlier, when he would have given anything for a normal life. But things were different now, more complicated. He realized that it had been a long while since the Taliban meant anything to him. But he couldn’t imagine himself openly joining forces with the government either. In fact, he knew that friends who’d gone down that route were languishing in a dangerous political no-man’s-land: Karzai’s government had not fulfilled its promises, and for the Taliban they were now marked men.

“What are you fighting for? The Americans are going to leave anyway,” the police chief said. “We are building Afghanistan.” The Taliban, he added, were terrorists, enemies of the country, stooges of Pakistan.

Akbar Gul was unmoved. “There are no good men among the living, and no bad ones among the dead,” he replied, reiterating one of his favorite Pashtun proverbs. This war had left no group, Afghan or foreign, with clean hands. You had to be careful to survive. Today, the government said the Taliban were terrorists—but what about tomorrow? Would the Taliban be venerated, as the mujahedeen were now venerated? Would the Americans change their allegiances, as it seemed they had done after the 1980s, and brand the Karzai government as their enemy? It was too much for Akbar Gul to grapple with just then. He knew only that to trust the categories put forth by the Americans or the government was to go down the road to ruin.

He told the police chief that he wasn’t interested. He said he was satisfied with his life as it was, thanked him for his call, and hung up.

The next morning, with new presidential elections looming, with American patrols crawling here and there, with Taliban groups erecting their usual checkpoints to hunt for spies and possible kidnap targets, he hopped on his motorcycle, headed for the low hills behind the village, and began another day of [resistance] work.

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Using U.S. Troops to Settle Afghan Feuds

From No Good Men Among the Living: America, the Taliban, and the War through Afghan Eyes, by Anand Gopal (Henry Holt, 2014), Kindle pp. 130-131:

As winter settled across Uruzgan and people marked the first full year since the Taliban’s downfall, tit-for-tat killings and feuds over access to the Americans continued. But a new political order was slowly, undeniably crystallizing, unwittingly enforced by American forces.

Away from the Pashtun south, the story was different. In the northern province of Balkh, for example, two warlords—Rashid Dostum and Muhammad Atta—jockeyed for control, leading to multiple small-scale skirmishes. The possibility of open warfare seemed all too real, but things never came to a head. Instead, United Nations negotiators were able to preserve the peace, as Atta accepted a governorship and Dostum a post in Kabul. I asked Eckart Schiewek, then a political advisor with the UN mission to Afghanistan, why the outcome was so different, why the southern pattern of killings had never taken hold. “There were no American troops,” he replied, pointing out that almost the entire US military presence was concentrated in the Pashtun south and east near the Pakistani border. “You couldn’t call on soldiers to settle your feuds.”

Anthropologist Noah Coburn found a similar dynamic in his study of Istaliff, a district near Kabul similar in size to Khas Uruzgan but with no regular US troop presence. “International military forces,” he wrote, had “little interest in involving themselves in local politics” in Istaliff. Because none of the various Afghan factions competing for power enjoyed privileged access to foreign troops, no group could outmuscle the other, and no one “seriously considered trying to establish hegemonic control over town politics.” The result was a tenuous, fragile stability—but stability nonetheless. No communities were severed from state access, nor were there cycles of bloody revenge. And, to this day in Istaliff, there is no anti-American insurgency.

In southern Afghanistan, the mix of American boots on the ground and strongmen itching to outflank their rivals prevented such détentes. Day by day, marginalized southern communities from one valley to the next were slipping out of the government’s orbit. The Americans were beginning to wear out their welcome—and it was only going to get worse.

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Flexible Loyalties in Afghanistan

From No Good Men Among the Living: America, the Taliban, and the War through Afghan Eyes, by Anand Gopal (Henry Holt, 2014), Kindle pp. 104-105:

Within a month of its military collapse, the Taliban movement had ceased to exist. When religious clerics in Pakistan launched a fund-raising campaign to get the Taliban back on their feet and waging “jihad” against the Americans, it was roundly rejected by the Talib leadership. “We want to tell people the Taliban system is no more,” Agha Jan Mutassim, finance minister of the fallen regime and Mullah Omar’s confidant, told reporters. “They should not give any donations in the name of the Taliban.” He added: “If a stable Islamic government is established in Afghanistan, we don’t intend to launch any action against it.”

Khalid Pashtoon, spokesman for the new Kandahar government, declared: “Ministers of the Taliban and senior Taliban are coming one by one and surrendering and joining with us.” The list included the Taliban ministers of defense, justice, interior, vice and virtue, information, health, commerce, industry, and finance—in effect, the entire Taliban cabinet; key military commanders and important governors; diplomats; and top officials who had worked with Mullah Omar. The avalanche of surrenders knew no bounds of ideology: leaders of the notorious whip-wielding religious police were among the earliest to defect. A group of former Taliban officials even announced that they were forming a political party to participate in future democratic elections. “We are giving advice to Hamid Karzai,” said their leader. “We support him.”

By surrendering, the Taliban were following the pattern that had marked Afghan politics for much of the previous two decades. After the Soviet withdrawal, many Afghan Communists had rebranded themselves as Islamists and joined the mujahedeen. During the civil war, factions shifted loyalties based on nothing more than bald pragmatism. Upon the Taliban’s entry onto the scene, warlords across the Pashtun belt had either retired, fled, or joined them. Now it was the Taliban’s turn, and as one member of the movement after another submitted to the authority of the Karzai administration, there emerged the possibility of a truly inclusive political order.

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Afghanistan Civil War, 1992-1996

From No Good Men Among the Living: America, the Taliban, and the War through Afghan Eyes, by Anand Gopal (Henry Holt, 2014), Kindle pp. 63-65:

All around him, families were crumbling. There seemed to be no rhyme or reason to it—it didn’t matter what you thought, whether you supported the mujahedeen or the Communists. The only households surviving unscathed, he knew, were the neighborhood’s few Uzbek families, members of the same ethnic group as Gelam Jam.

He wasn’t interested in this war, but the war seemed interested in him. There were no more innocents, no more neutrals, only sides already chosen for him. The choice was clear: pick a side, or end up like his brothers. It would have been unthinkable before the war, but now he felt he could trust only his fellow Pashtuns. They had borne the brunt of Gelam Jam in his neighborhood, it seemed. At first, they had hidden their ethnicity, speaking only Farsi in public, but soon they were getting plucked from their vehicles to have their pronunciation checked—and if their speech sounded Pashtun, they were often killed on the spot. This was a war against people who spoke like him, who looked like him, and if that’s what the enemy had decided, then he’d play by their rules. So one morning he went to a camp of Hizb-i-Islami, a Pashtun-heavy militia, and sought out an acquaintance. “I want to do jihad,” he announced. The man broke into a broad smile. “Welcome,” he said.

* * *

Thousands of young men, many of them now orphans and widowers, flocked to the various factions feuding for power in the civil war. There were no heroes; each group proved as responsible for the bloodshed as the next. Broadly, the factions were organized along ethnic lines—not so much due to ethnic nationalism but because in the face of perpetual instability, with a weak or absent state, you allied with those you knew and trusted. In fact, it was often unclear what ideological differences, if any, divided the men fighting each other on Kabul’s streets. Still, the struggle for power and survival was imbued with meaning: more than simply a battle of wills, for many the war was “jihad.”

The West responded to the civil war by simply ignoring it, and after the 2001 invasion the years from 1992 to 1996 were all but stricken from the standard narrative. It was dangerous history, the truths buried within it too uncomfortable and messy. If the mujahedeen had been no better than the Taliban or al-Qaeda, any attempt to bring the principal actors of that period to account could only lead to the highest echelons of Hamid Karzai’s government, and, by extension, to American policy over the previous thirty years.

Yet it isn’t difficult to uncover this history, for every Kabuli has a story to tell. Deadly roadblocks, disappeared neighbors, and decaying bodies were woven into the fabric of daily life, like going shopping or saying your prayers. Every day brought fresh destruction; any date picked out of the calendar is the anniversary of some grisly toll.

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Afghanistan’s Year Zero: 1979

From No Good Men Among the Living: America, the Taliban, and the War through Afghan Eyes, by Anand Gopal (Henry Holt, 2014), Kindle pp. 52-53:

As with Mullah Cable and Jan Muhammad, I was interested in Heela’s experience in the new American-backed order. But to start her story with the US invasion would be like “watching a movie from the middle,” as she put it. In truth, Afghanistan’s real Year Zero was 1979, the year of the Soviet invasion, and nothing—not the Taliban, or the American invasion, or the trajectory of Heela’s life—makes much sense without first coming to terms with the Russian occupation and its aftermath.

In the veritable Afghan prehistory of peace and anonymity, the era before the Soviets, there lies a world lost and yet to be recovered. In 1972, the year that Heela was born to a family of journalists and professionals, Kabul was a quaint, relaxed mountain town. An important stop on the “hippie trail”—a well-trodden route for Western stoners and flower children often heading to India—the town had reinvented itself in a few short generations. A wave of progressive reforms had rippled through Afghanistan in the 1950s, resulting in a government decree that veiling was optional for women. In 1964, they were granted the franchise. Photographs from the era show besuited men accompanied by women in short skirts and beehive hairdos; there are movie theaters, broad paved roads, and tree-lined sidewalks.

Out in the heavily tribal Pashtun countryside, however, conservatism still reigned and women lived cloistered in their homes. The state was largely absent, and civil society nonexistent; politics worked through kinship and patronage, leaving clan leaders and landlords to run their own fiefdoms. If you managed to make it out to Kabul and attend university, you came away with a tantalizing taste of what your country could become, and a stark, unremitting sense of the inadequacies of the world you’d left behind. As with so many other developing nations of that era, this disjuncture spawned a crisis of modernity, and the disillusioned urban intelligentsia struggled to articulate a response. Two rival currents emerged: one embracing Communism, which looked to the Soviet Union and third-world liberation movements, and the other, Islamism, which took inspiration from the Muslim Brotherhood and related trends in the Arab world.

For many years these were merely undercurrents, but they rushed to the surface in the late 1970s.

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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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