Corrupt elites will fight hard to stop the dismantling of the looting machines from which they draw their vast wealth
States that get all their revenues from selling their oil, gas and minerals could easily turn into kleptocracies where the majority stay poor
Can corruption be controlled by reform or is it so much the essential fuel sustaining political elites that it will only be ended – if it ends at all – by revolutionary change?
The answer varies according to which countries one is talking about, but in many - particularly those relying on the sale of natural resources like oil or minerals - it is surely too late to expect any incremental change for the better. Anti-corruption drives are a show to impress the outside world or to target political rivals.
The anti-corruption summit in London this week may improve transparency and disclosure, but it can scarcely be very effective against politically well-connected racketeers, busily transmuting political power into great personal wealth.
This is peculiarly easy to do in those countries in the Middle East and Africa which suffer from what economists call “the resource curse”, where states draw their revenues directly from foreign buyers of their natural resources. The process is described in compelling detail by Tom Burgis in his book, The Looting Machine: Warlords, Tycoons, Smugglers and the Systematic Theft of Africa’s Wealth. He quotes the World Bank as saying that 68 per cent of people in Nigeria and 43 per cent in Angola, respectively the first and second largest oil and gas producers in Africa, live in extreme poverty, or on less than $1.25 a day. The politically powerful live parasitically off the state’s revenues and are not accountable to anybody.
Burgis explains the devastating outcome of a government acquiring such great wealth without doing more than license foreign companies to pump oil or excavate minerals. This “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 – so it has no need for their consent.”
He writes primarily about Africa south of the Sahara, but his remarks apply equally to the oil states of the Middle East. He rightly concludes that “the resource industry is hardwired for corruption. Kleptocracy, or government by theft, thrives. Once in power, there is little incentive to depart.” Autocracy flourishes, often same ruler staying for decades.
Most, but not all, of this is true of the Middle East oil producers. A difference is that most of these have patronage and client systems through which oil wealth funds millions of jobs. This goes a certain way in distributing oil revenues among the general population, though the benefits are unfairly skewed towards political parties or dominant sectarian and ethnic groups.
In Iraq there are seven million state employees and pensioners out of a population of 33 million who are paid $4bn a month or a big chunk of total oil income. Often these employees don’t do much or, on occasion, anything at all, but it is an exaggeration to imagine that Iraq’s oil money is all syphoned off by the ruling elite....MORE
