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Kickback Planet

26 February 2015 By Rob Cox

It seems about impossible to find a corruption-free corner of the earth. Scandals involving business and political elites have struck from Sao Paulo to Beijing, Virginia to Santiago and Madrid to Mexico, and seem to unfold daily. Welcome to a new, global Tangentopoli.

That term, meaning “Kickback City,” was what Italians called the massive bribery scandal of the early 1990s. It started as a series of investigations into public contracts in Milan and ultimately discredited the whole political establishment. The winner was Silvio Berlusconi, whose own pernicious governance arguably led the country into a long decline.

Let a hundred Kickback Cities bloom. Scandals are a global phenomenon today, eroding faith not only in public officials and institutions, but in capitalism more broadly. What’s more, with wealth inequality returning to pre-World War Two levels in much of the industrialized world, the repercussions could be dramatic and cross national borders.

When disparities of income and opportunity are seen as the product of a rigged system, corruption becomes the accelerant of radicalism, even revolution, argues Sarah Chayes in a compelling new book, “Thieves of State: Why Corruption Threatens Global Security.” Though the author, a former journalist-cum-entrepreneur in Afghanistan turned consultant to the U.S. military, focuses on the world’s most glaring kleptocracies, the lessons she draws are applicable to developing and developed countries alike.

Chayes combines her own experiences in Afghanistan and elsewhere with case studies from Egypt, Nigeria, Tunisia and Uzbekistan. She adds historical context to these contemporary sovereign failures by examining the works of advisers to kings and despots, people like Machiavelli and Erasmus in Europe and Nizam al-Mulk, a Persian who served as chief minister to two Muslim sultans in the 11th century.

Her conclusion is “that acute, abusive government corruption prompts extreme responses and thus represents a mortal threat to security.” To wit, the emergence of Islamic State as a rejoinder to the brutal cronyism of Bashar al-Assad in Syria and the thieving incompetence of Nuri al-Maliki’s Iraq.

Chayes reserves her harshest criticism for Hamid Karzai’s Afghanistan, where she arrived as a reporter for National Public Radio and, in May 2005, “armed with a book on the chemistry of soap making, a precision-cast seed-oil press, and $25,000 from Oprah Winfrey” founded a soap factory. Running a business, she saw first hand the systemic bribery of Karzai’s government, which she labels “a crime syndicate in disguise.”

When she later went to work for General Stanley McChrystal she found that the U.S. government effectively enabled the rot. “We were affording venal officials near-perfect impunity,” she writes. “The corruption networks were just too vertically integrated: any move against any official, no matter how lowly, would reverberate all the way up the chain to Karzai.”

By abetting a rotten system, the United States failed to win over the Afghan people and fueled the sort of extremism that American soldiers had been sent to liberate the country from in the first place. It is the same dynamic that emboldens other radical groups: Ennahda in Tunisia, the Egyptian Brotherhood and Boko Haram in Nigeria.

Indeed, according to Chayes, Boko Haram, best known recently for kidnapping schoolgirls, isn’t primarily engaged in a battle against Christianity. Rather its target is the Muslim elite for whom Western education is a tool wielded for the benefit of corruption and oppression.

It would be a mistake to dismiss the examples Chayes includes in her book as isolated cases, troubles found only in war-torn or failed states. Corruption also threatens the political institutions of established and developed democracies.

Look at the headlines: Brazil’s Petrobras “Car Wash” scandal; the 86 politically connected Caja Madrid officials who received “phantom” credit cards; the ex-governor of Virginia in prison; bribery charges against Sheldon Silver, one of New York’s top politicos; a “cash for access” row engulfing two former UK foreign ministers; a loan imbroglio involving Chile’s presidential family; the homes Mexico’s president bought from, and had financed by, a government contractor; and so on.

In China, President Xi Jinping sees corruption as a serious threat to the legitimacy and longevity of the ruling Communist Party. His drive against it churns out new scandals practically every week, from the lowest to the highest levels of the administration.

Some inequality of wealth and income is an unavoidable, even necessary, byproduct of free-market capitalism. The wild success gained from genius, hard work or pure luck creates incentives for others. But when a small minority acquires most of the fruits of a nation’s labors through graft, cronyism and bribery, history suggests revolution often follows.

 

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