Reading on the resource grab, corruption

The New Yorker published an excellent story, “Buried Secrets — How an Israeli billionaire wrested control of one of Africa’s biggest prizes”

The Western world has always thought of Africa as a continent to take things from, whether it was diamonds, rubber, or slaves. This outlook was inscribed into the very names of Guinea’s neighbor Côte d’Ivoire and of Ghana, which was known to its British masters as the Gold Coast. During the Victorian period, the exploitation of resources was especially brutal; King Leopold II, of Belgium, was so rapacious in his pursuit of rubber that ten million people in the Congo Free State died as a result. The new international stampede for African resources could become another grim story, or it could present an unprecedented opportunity for economic development.

Guinea has an iron ore deposit that may be worth up to US$140 Billion. The mining rights, which had been granted to Rio Tinto, were mysteriously rescinded and granted to an Israeli company with no mining experience — under more than dubious circumstances. Read the story for an international thriller as the new, (more) democratic government of Guinea seeks to find the evidence of corruption that would allow them to claim the resources back. Read it also for a glimpse of just how difficult uncovering corruption can be.

Many Sub-Saharan African countries are in a tight spot: they are far poorer than they should be, and many are sitting on a vast wealth of resources that they don’t have the capital to extract. The Chinese are happy to help, and so are others. The question around these deals is always whether the nations in question get a fair share. Often, it seems, most of the benefit goes to élites and of course the foreign countries so generously providing funding.

But the alternative?

It’s not like those countries are going to act selflessly and just provide capital that African nations can use to extract the resources they own for the benefit of their own people. That would be nice. Almost like reparations. Which wouldn’t be unfair, given that, you know, the continent was kind of screwed up by a couple hundred years’ worth of exploitation in all its forms. Don’t get all Niall Ferguson on me here, the empire did not develop Africa. Look! :

Our conclusions are that the case for the pessimists about the impact of colonialism on development is far stronger than the case for the optimists. There are clear cases, such as the settler colonies or colonies which coincided with established pre-colonial centralized states, where the preponderance of evidence and plausible argument supports the idea that colonialism retarded development. Other cases are more ambiguous, but even there we argue that it is dicult to come up with convincing scenarios under which colonialism promoted development

Heldring, Leander, and James A. Robinson. Colonialism and economic development in Africa. No. w18566. National Bureau of Economic Research, 2012. PDF here.

As far as economic papers go, that’s pretty straightforward no?

But we’re not getting reparations, and so all we can do is try and strike a balance with the resources; using all the leverage we have to get the best deal for our people. That’s pretty shitty, but then the continent as a whole has dealt with worse and is still going. We’ll find a way.


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