Global Criminal and Sovereign Free Economies and the Demise of the Western Democracies

Robert J. Bunker, Pamela Ligouri Bunker

• Publisher: Routledge
• Year: 2014
• ISBN:
  9781317623588
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Politics
• Index: Politics & International Relations

Much has been written about the many economic benefits of globalization and the triumph and spread of democratic liberalism with the end of the Cold War, following the demise of the Soviet Union.

This work takes issue with such "wine and roses" perspectives about the future of the Western democracies and their faith-based views on the moral purity of a globalized marketplace. It also questions many of the assumptions found in the status quo reinforcing discipline of international political economy (IPE)—a discipline that focuses on the formal and legitimate economies and the façade they present that international relations and commerce is still dominated and dictated solely by the old Westphalian state centric system.

Having highlighted these concerns, this book looks at two major themes. The first theme focuses on the theoretical perception that a "Dark Renaissance" is taking place globally—one in which the Western liberal democracies and its citizens are ill prepared to respond because it exists at the trans-civilization level, bridging the modern to the post-modern world. The second theme focuses on the actual process of state deconstruction that is taking place. This process is leading to what may become the very undoing of the democracies.

Drawing together experts from a variety of backgrounds, this work explores the increasing shift away from formal based capitalism and evaluates through case studies how different states are responding to the challenges they face. This work will be of great interest to students and scholars of international political economy.

1 Introduction

Kleptocracies, warlords and mafias in uniform

Mark Galeotti

The term “kleptocracy” is surprisingly new. According to the Oxford English Dictionary, its first use was in 1819, but then this term for a “government by thieves” languished until 1968, when it seems to have been revived for discussion of Mobutu Sese Seko’s Zaire (Congo). Of course, Mobutu deserves particular opprobrium given the extravagant scale of his plunder of his own country, but can it be true that kleptocracy as a phenomenon has only really been around for the past half-century?

The answer, of course, is no. Instead, the emergence of the term kleptocracy essentially reflects changing norms, different expectations in the relationship between rulers and ruled, governors and the governed. This has been a long-term process, from the end of patrimonialism and the development of a sense that there was some distinction between the assets of the state and those of the monarch, through to a modern concept of equality before the law and a clear sense of a division between legitimate and illegitimate ways of enriching oneself through one’s position. In other words, what once was—to a greater or lesser extent—the norm, has become the sinful exception.

But just how exceptional an exception? Terms such as kleptocrat (and warlord, and Mafioso …) are widely and loosely used, for everything from Wall Street executives to well-paid civil servants. Beneath this rather banal point is what may prove to be a growing dissatisfaction, especially since the 2008 financial crisis, with a global system seemingly underpinned by the self-interest of relatively small, wealthy and powerful elites, eager to maintain governance regimes that work to their advantage. True kleptocrats, though, are rulers and national elites who plunder countries and territories under their control for their personal gain. In the process, they distort or ignore institutions and cultural norms intended to protect the commonweal, typically resorting to coercion when necessary to maintain and retain their ability to steal. Kleptocracy and coercion are thus inextricably linked, but what distinguishes the kleptocrat from the bandit is the third element: at least partial legitimacy, the result of occupying a position within a government or pseudo-governmental structure. Ruling kleptocrats, local warlords and criminal organizations within military and security apparatuses are thus three main expressions of this combination of predation, coercion and legitimacy.

Kleptocracy

Kleptocracy takes many forms, from dictatorships to pseudo-democracies. Indeed, it should not be considered a form of governance in its own right so much as a particular pathology especially prone to afflict regimes with weaker cultures and institutions of accountability and transparency. Susan Rose-Ackerman (1997) has conceptualized four kinds of corrupt states, based on the number of bribe-givers and bribe-takers:

In her typology, a kleptocracy is a state in which a single ruler or a small circle exploit resources for their personal gain, exploiting the many. Classic examples would be Mobutu, Haiti’s “Papa Doc” Duvalier or Indonesia’s Suharto. This is different from a Competitive-Bribery State, where numerous corrupt officials prey on large numbers of ordinary citizens, such as in modern China, Russia or Nigeria. Conversely, a Bilateral Monopoly State is shaped by the relationship of a single corrupt ruler and a single major briber, such as Guatemala under Colonel Castillo Armas (1954–1957), who was closely aligned with the United Fruit Company. At the other extreme, a Mafia-Dominated State is characterized by a weak and disorganized state in which many officials seek to access a relatively small number of major bribe-givers, typically organized crime syndicates.

In practice, though, a kleptocracy is not—cannot be—purely for the benefit of one individual, or even one small ruling family. Power needs to be maintained, enemies spied on or eliminated, rebellions put down, money moved and managed. In the process, access to plundered resources must be spread around. The true mark of kleptocracy is thus the systematic and widespread extra-legal (or borderline extra-legal, perhaps observing the letter of the law but certainly breaking its spirit) exploitation of a country for financial gain by a ruling elite.

The kleptocrats may still be a relatively small circle, a dominant or uncontrolled segment of society, or a government elite as a whole. In Equatorial Guinea, for example, the ruling Obiang family has maintained a tight control over the potential profits of power. In 2011, the US government launched a campaign to seize $70.8 million in property owned by Teodoro Nguema Obiang Mangue, son of president Teodoro Nguema Obiang Mbasogo and at the time his agriculture and forestry minister. According to the case, unresolved as of writing, on an official salary of less than $100,000 per year, he accumulated a personal fortune of more than $100 million (USDOJ, 2011). What can one do with such a sum? The answer appears to have been to buy more than $1.8 million worth of Michael Jackson memorabilia, a $30 million Malibu mansion, a Ferrari and a Gulfstream personal jet. These centralized kleptocracies are often tightly-controlled autocracies. In Central Asia, for example, Turkmenistan’s dictatorial Saparmurat Niyazov set the bar: Global Witness (2006) estimated that he embezzled some $3 billion from his impoverished country’s gas exports. He was, however, a rank amateur compared with Suharto, whom The Economist (2007) dubbed “king of the kleptocrats.” His 31-year rule (1967–1998) was marked not only by the zealous plunder of the country—Transparency International (2004) estimated that he and his family embezzled some $35 billion, just under 4 percent of the country’s GDP—but also for most of this time by a tightly-controlled militaristic government.

Table 1.1 Rose-Ackerman’s typology of corrupt states

	Multiple bribers	Few bribers
Few recipients, concentrated at upper levels of government	Kleptocracy	Bilateral monopoly state
Multiple recipients at lower levels of government	Competitive bribery state	Mafia-dominated state

Source: Rose-Ackerman, S. (1998) “Corruption and Development.” Pleskoric, B. and Stiglitz, J., eds., Annual World Bank Conference on Development Economics.

In other cases, the true beneficiaries of kleptocracy are segments, sub-sets of the elite, or the elite as a whole (albeit with some clearly doing better for themselves than others). This shades into what Rose-Ackerman would call the Competitive Bribery State: although the usual assumption is that kleptocracy is very much directed from above, it can simply be that the ruler(s) are willing to sanction illicit exploitation by the elite in return for continued service. In this respect, corruption and kleptocracy, corrosive to the state in the long-term, become tools of governance by the regime in the short-term. In Azerbaijan, for instance, where power became in effect hereditary as president Heidar Aliyev handed his office to his son Ilham, control of the country’s oil wealth proved crucial to this succession and the subsequent maintenance of Ilham’s power, as he “distributes rents from oil exports through a patronage network in order to ensure the support of allies and various clientelist groups” (Guliyev, 2009: 2).

Whoever they may be, broadly speaking, the kleptocrats illegally enrich themselves in four ways:

Plundering state assets

This is often the easiest for kleptocrats who have managed to establish their control at a national or local level, using their control of, or influence over, government apparatuses simply to divert revenues or assets into private hands, creating a rentier state. This could be directly into their own, or it could take the form of transferring assets to a third party, which, in turn, pays off the kleptocrats. In 1990s Russia, whole swathes of former state assets, especially oil, gas and metals, ended up controlled by a handful of oligarchs thanks to their connections. Conversely, under president Jose Eduardo dos Santos, Angola’s extensive oil reserves have been exploited by Western corporations, with his personal oil account allegedly receiving a contribution for every barrel sold (Malaquias, 2001: 528).

Plundering private assets

Those able to deploy the power of the state can also use it to expropriate private assets. This could be as crude a process as Idi Amin’s seizure of the businesses of expelled Ugandan Asians through to the modern Russian practice of reiderstvo, “raiding”—taking control of companies through the use of the courts and banks, often by presenting spurious but officially-validated “proof” of their sale (Firestone, 2008).

Rent-seeking

Corruption often rests upon charging “rent” to those wanting license to carry out activities, from building houses to sending their children to university. In this respect, the power to approve (or deny) can be monetized. This also extends to criminal operations, as officials may be in a position to turn a blind eye to underworld activities or, conversely, to use the power of the state against them. This need not be incompatible with economic growth—China is a classic case—but more usually it is associated with stagnation, sometimes masked by favorable export opportunities, such as in Nigeria (Anugwom, 2011; Ihonvbere, 2011).

Criminalizing state assets

Finally, kleptocrats may be in a position to divert state assets to specifically criminal purposes, either directly running underworld enterprises or selling or leasing them to the gangsters. Panamanian dictator Manuel Noriega allowed the Medellin cartel to use his country as a cocaine staging post, for example (Dudley, 2011) while the appointment of Henry Rangel Silva—a man designated by the US government as a “drug kingpin” in 2008—as Venezuela’s defense minister marked a similar opening of the door to narcotics traffickers (Naim, 2012). As will be discussed later, those pseudo-state violent entrepreneurs we call warlords likewise often “rent” out territory under their control to criminal organizations. In Tajikistan, Gaffor Mirzoev went from being a field commander in the civil wars of the 1990s—in other words, a warlord—to commander of the Presidential Guard and then head of the State Antidrugs Agency, even while being a known drug kingpin himself (Marat, 2006: 106–108).

As Acemoglu et al. (2004) have noted, kleptocracies tend to rise in weakly-institutionalized states where rulers can tap into substantial resources and deploy tactics of divide-and-rule. The resources permit kleptocrats to maintain just enough state spending while still enriching themselves and their main allies, as well as providing a dowry, making themselves appealing allies and clients for foreign governments and corporations. Meanwhile,

Members of society need to cooperate in order to depose a kleptocrat, yet such cooperation may be defused by imposing punitive rates of taxation on any citizen who proposes such a move, and redistributing the benefits to those who need to agree to it.

(Acemoglu et al., 2004: 162)

In short, kleptocrats can often flourish—so long as there is enough for them to steal, to maintain and buy off what de Mesquita and Smith (2011) would call the “winning coalition.” In short, so long as the money lasts.

Warlords

Some of the most infamous kleptocrats are often warlords, local strongmen who are able to exploit conditions of state weakness to establish themselves as the rulers of states-within-states. For what it may be worth, the term “warlord” has a relatively recent pedigree, too, having emerged in Ralph Waldo Emerson’s 1856 essay on the rise of central power in England, as he noted how “the war-lord [gave way] to the law-lord” (Emerson, 1902: 142). However, conceptually there is again an understanding that they have a rather longer history. Indeed, Emerson’s use evokes a traditional view, that warlords should be considered potential state-builders, following parallels perceived especially by Charles Tilly (1985) in the emergence of medieval states from the protean chaos of post-Roman Europe. Of course, the “dark ages” were never really so dark and brutish and the difference is usually that in the modern world warlords are often empowered by external forces who are less interest...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• List of figures
• List of tables
• Notes on contributors
• List of abbreviations
• Editors’ note
• Foreword: the twin insurgency—facing plutocrats and criminals
• Overview: Dark Renaissance—crime, corruption, and global class warfare
• 1 Introduction: kleptocracies, warlords and mafias in uniform
• Part I Energy, economics and war
• Part II Criminal and sovereign free change and conflict
• Part III Demise of the Western democracies
• Index