Corruption

Among his supporters, Indonesian President Joko “Jokowi” Widodo raised expectations so high, before he was actually elected, that he was bound to disappoint them. Somewhat like U.S. President Barack Obama, Jokowi seemed to fulfill different images of hope for different supporters, even if Jokowi himself did not try to actually cultivate all of these images. So, it was inevitable that some aspects of Jokowi’s early months as president would be a letdown. The new president ran on the Indonesian Democratic Party of Struggle (PDI-P) ticket, so to some extent he had to reward key members of the party after his election. Thus, there was the appointment of Puan Maharani, the daughter of PDI-P leader and former President Megawati Sukarnoputri, to a senior government post, as well as the attempt to appoint Budi Gunawan as police chief despite allegations of corruption against him—he too is close to Megawati and other PDI-P leaders. Budi Gunawan and Megawati’s daughter are but two of the PDI-P–backed officials Jokowi has tried to put into high positions despite their lack of qualifications. One could also list among those unqualified for their posts Jokowi’s defense minister, Ryamizard Ryacudu, who has been linked to past human rights abuses in outlying provinces like Aceh and Papua, and Rini Soewandi, the state-owned enterprises minister. Jokowi cannot divorce himself from the reality of Indonesian politics. Still, after his election he could have drawn on his sources of legitimacy—his popularity with ordinary Indonesians, his own personal ground network of supporters, his massive following on social media, his support among many liberal opinion leaders—to keep to a minimum the number of Megawati allies he had to stick into cabinet positions. In addition, he could have used the legitimacy provided by his election, which showed that the PDI-P needed him more than he needed the party, to at least place Megawati loyalists in less important cabinet positions. As it is, the appointment of so many Megawati loyalists, with such dubious backgrounds, badly undermines Jokowi’s pledge to build a cleaner and less politicized national government. Since corruption remains probably the biggest obstacle to higher growth, and since fighting corruption rests on signals from the top of the government, Jokowi’s decisions could seriously impede the anti-corruption battle in Indonesia. The fact that the new president will try to strengthen the corruption eradication commission, that Jokowi himself is known to be personally clean, and that the president also has appointed capable and clean ministers to other posts, may not be enough to outweigh the signal sent by bad appointments. In addition, Jokowi’s economic policy remains muddled in some key areas. Cutting fuel subsidies is critical to fostering growth, as is Jokowi’s plan to improve Indonesia’s physical infrastructure, which badly lags that of competing nations in the region. But Jokowi needs someone to pay for all his planned infrastructural improvements, since Jakarta certainly does not have the money to do so. Yet Jokowi’s administration has demonstrated a mixed, and somewhat discouraging, approach to foreign investment. On the one hand, Jokowi has met with a range of foreign investors and used multiple speeches at high-profile venues to promise to implement the kinds of reforms investors long have craved in the country. He also has enlisted the strong backing of the Asian Development Bank for his plans to upgrade the country’s infrastructure and for his other economic development projects. On the other hand, Jokowi’s signals on corruption are not exactly welcome news for foreign investors. And while the president’s policy of blowing up trawlers fishing illegally in Indonesian waters is popular at home, it is an over-the-top means of enforcing Indonesia’s territorial rights, one that threatens to further alienate investors from countries like China, whose boats are in danger of being destroyed. In addition, the president has issued mixed signals on resources investment in Indonesia. Like the previous government, Jokowi’s government reasonably wants to keep more value from its minerals in the country, and has pressured foreign investors to build processing facilities in Indonesia or else be forced to abandon their investments. But there remains the real threat that Jakarta will make deals with the big resources investors, receive pledges that foreign companies will build processing plants, and then tear up the deals before their terms are up. In a country where investment in resources is highly unpopular, particularly among many of Jokowi’s core supporters, the president has not shown that he, too, could fall into this trap of failing to honor contracts.

This is a guest post by Allen Grane, research associate for the Council on Foreign Relations Africa Studies program. Home to the world’s largest rhino population, South Africa saw 1,155 rhinos illegally killed in 2014. That is a 15 percent increase on 2013’s 1004 poached rhinos. More than 4.6 percent of an approximate total of 25,000 rhinos in Africa were killed this past year in South Africa alone. According to one non-profit organization, Saving the Survivors, the true number of rhinos that die due to poaching may even be 30 percent higher, which would put the 2014 number at over 1,500. This increase would account for rhinos that were shot but did not have their horns removed and the calf’s of poached rhino cows, who likely die without their mothers (these animals are not included in poaching statistics). This figure does not include rhinos that were legally hunted. Over the last seven years there has been an explosion of rhino poaching in South Africa. From 2000 to 2007, the yearly average of poached rhinos was twelve. By 2009, the number reached 122 and by 2012 the number had reached 663. In the past two years this figure has nearly doubled. At this rate many conservationists fear that African rhinos may soon go extinct. This severe increase has been driven by international demand. Buyers in Vietnam and China are known to pay over $65,000 a kilogram for rhino horn. In order to meet this demand international crime syndicates have begun working on the ground in Africa. By using middlemen to pay and supply local hunters, these syndicates have encouraged impoverished locals in South Africa and Mozambique, who can easily cross the national border into South Africa, to poach South Africa’s rhinos. In order to end this poaching epidemic the South African government may have to reevaluate its policies regarding conservation. When working with local communities the government should emphasize both the ecological and economic affects that rhinos have on South Africa. (Recent research conducted in Kruger National Park concluded that the rhino is a keystone species and tourism brings in roughly 8 percent of South Africa’s GDP; much of this is due to eco-tourism and benefits local communities.) By doing this, the government can increase the incentives for locals not to poach. When working with foreign governments, Mozambique in particular, the South African government needs to strive towards better border control, to include inter-agency patrols, to locate poachers and protect the rhinos. While the rhino population in South Africa is on a downward spiral, there is hope. After the near extinction of the white rhino (which now accounts for nearly eighty percent of all African rhinos) in the early 20th century, South Africa’s is a testament to what conservation programs can do to save wildlife. By implementing the appropriate programs and policies the South African government can disrupt the poaching epidemic and save its rhino population.

This is a guest post by Allen Grane, research associate for the Council on Foreign Relations Africa Studies program. On December 8, the Duke of Cambridge, Prince William, announced the creation of the United for Wildlife Task Force at the World Bank in Washington, DC (you can see the full speech below). The task force aims to work with the private sector to reduce illegal wildlife trafficking globally, it hopes to “identify ways that the sector can break the chain between suppliers and consumers.” video platformvideo managementvideo solutionsvideo player The vast majority of consumers of African wildlife products, like ivory and rhino horn, are based outside of the continent. As such, it is likely that the task force’s goal of tightening restrictions on the supply chain could put an end to the illicit trade. A recent report, Out of Africa: Mapping the Global Trade in Illicit Ivory, released by Washington-based nonprofits Born Free USA and C4ADS, may help assess how achievable the task force’s objective is. The report sheds light on the two main flows of the illicit international ivory trade: seaborne and airborne. By disrupting trafficking at major hubs specified in the report, it may be possible to achieve the task force’s goal and break the chain between suppliers and consumers of African wildlife products. According to the report the airborne flow of ivory accounts for the majority of ivory seizures and in turn trafficking incidents. However, most of the airborne flow is conducted on a relatively small scale. Typically, seizures involve small, finished pieces and weigh less than 10kg (22 lbs). Most airborne ivory flows through four airports in Africa: Kenya’s Jomo Kenyatta International Airport, Ethiopia’s Bole International Airport, South Africa’s OR Tambo International airport, and Angola’s Quatro de Feveiro Airport. All of these airports have direct flights to Asia, the largest consumer of ivory. Ivory not transported through these African hubs often flies through two other international airports on their way to China: France’s Charles de Gaulle Airport and the United Arab Emirates’ Dubai International Airport. The task force could help improve the screening of material transported through these airports. With better screening, airports could prevent these products from crossing national borders and interdict much of the international trade in wildlife. The report also documents the size and scale of the seaborne flow. Between January 2009 and December 2013, 72 percent of seized ivory by weight was seaborne. There are three major seaborne points for the international transport of ivory: the port of Mombasa in Kenya, the port of Dar es Salaam in Tanzania, and the port of Zanzibar off the coast of Tanzania. (The Biera and Pemba ports in Mozambique are the largest hubs for rhino horn and could serve as hubs for ivory transport as elephant poaching increases in southern Africa.) It is estimated that all seaborne ivory is transported in less than 200 cargo containers a year, each container carrying an estimated one to two tons of ivory. Until 2013 most ivory seizures were made in east Asia. Historically, traffickers have counted on African ports being porous. Enforcing stricter screening procedures at African ports could stem the tide of the illicit ivory and rhino horn trade at the source. The Out of Africa report shows that the illicit trade nests itself within licit patterns of trade. Traffickers have not developed separate trade routes. Instead, the report suggests that traffickers have primarily made use of Africa’s busiest trade networks. Based on this information, it would appear that by working with the transport industry, airlines to shipping lines, and improving the inspection process in African trade hubs Prince William’s task force has the opportunity to strike a significant blow to the illegal wildlife trade.

In the BBC News Letter from Africa series, Nigerian writer and novelist Adaobi Tricia Nwaubani analyzes a nexus between politics, culture, and corruption. She shows that political office confers “a knife with which to cut the national cake.” But, an office holder in Nigeria is under obligation to share his good fortune with his kith and kin—“preferably through contracts, appointments, and jobs.” Failure to do so means ostracism that persists long after he leaves office, indeed, “long after his funeral, the bitter tongues will continue wagging.” As she says, “in many parts of the world, it requires years of steady progress for one’s economic circumstances to radically transform. Here, in Nigeria, all it takes is an election, and a new political appointment.” She concludes that “voracious kith and kin are the main force behind Nigeria’s corruption problem.” I would add that the social realities Nwaubani so clearly and succinctly describes also contributes to Nigeria’s “winner-take-all” political culture, which in turn can foster violence. They also show how what “corruption” means in Nigeria (and elsewhere) is very different from what it means in the United States. As a Nigerian friend said to me once, if as a holder of political office he fails to get his brother a government job, he is a failure to his family and to the larger society of which he is a part. In the U.S. government, if an official gets his brother a government job, he is liable to go to jail for corruption. Plenty of Nigerians have the same view of corruption as Americans do, and they understand well how the traditional network of obligations to kith and kin can be a brake on development and good governance. But, changing the way family obligations are perceived and practiced can take a long time.

Ashlyn Anderson, Lauren Dickey, Darcie Draudt, William Piekos, Ariella Rotenberg, and Sharone Tobias look at the top stories in Asia today. 1. Liu Tienan sentenced to life in prison. Liu Tienan, former deputy head of the National Development and Reform Commission and former head of the National Energy Administration, was convicted of bribery and sentenced to life in prison. He was one of the first officials to be singled out by President Xi Jinping’s anticorruption campaign and is among the highest-ranking officials to be imprisoned. Liu admitted to accepting bribes valued at 35 million yuan (approximately US$5.7 million) from 2002 to 2012. During his trial in September, Liu pleaded guilty and was quoted as stating, “having done so much damage to the country and the party, I have no defense.” 2. Modi and Putin meet, sign twenty pacts. Russian President Vladimir Putin met with Indian Prime Minister Narendra Modi in New Delhi at an annual bilateral summit to discuss expansion of ties in a range of crucial sectors. At this year’s summit—which has been taking place since 2000 in alternating capitals—the two sides inked a total of twenty agreements. Among these deals, the two sides agreed to establish a joint investment fund of US$1 billion for Indian infrastructure and hydroelectric projects. Moscow also offered to help India set up ten more nuclear reactors, jointly manufacture light-utility helicopters, increase oil and gas supply, and acquire US$2.1 billion in diamond sales. 3. Japan secrecy law takes effect amid protests. The strict state-secrets law, which passed a year ago and took effect this past week, mandates prison terms of up to ten years for civil servants who leak state secrets, while journalists or others who encourage such leaks could face up to five years in prison. Hundreds of protesters took to the streets to protest the law, which critics fear will help conceal government misdeeds and limit press freedom. Prime Minister Shinzo Abe claims that the law is necessary to convince allies (especially the United States) to share intelligence, and he has stated that, “If the law prevents films from being made, or weakens freedom of the press, I’ll resign.” 4. Vietnamese brides missing in rural China. More than one hundred Vietnamese brides have vanished in Hebei province after marrying Chinese bachelors. The women disappeared in late November, along with a Vietnamese matchmaker who had introduced the brides to local Chinese men in exchange for 105,000 yuan (US$17,000) per introduction. As police have begun to investigate the mass disappearance, there is speculation that an “organized ring” helped the brides flee. For many men, a gender imbalance in favor of women and the material expectations of Chinese brides—men are expected to provide a house, car, appliances, and a steady income—mean that paying for a bride from Vietnam or elsewhere can be a cheaper option for Chinese bachelors. Such transactions further perpetuate regional human trafficking problems. 5. Uber encounters speed bumps across Asia. Fast-growing ride sharing app Uber and other app-based taxi services have been temporarily banned in New Delhi after a twenty-seven-year-old female passenger alleged she was raped by one of its drivers in New Delhi. The company does not conduct its own background checks in India, instead relying on the state’s less scrupulous system; for example, in this case the accused driver had been arrested for rape (though not convicted) and other criminal activities in the past. The company had previously encountered problems in India when the country’s central bank reprimanded it for violating the country’s credit card regulations. Uber’s problems in Asia aren’t limited to India: Thailand, Vietnam, and Singapore are examining the service’s legality under current regulations, and Thailand’s transportation minister said that the government would ask Uber to cease its operations because of regulatory concerns. All is not lost, however; Chinese internet giant Baidu is set to invest up to $600 million to establish the firm in China. BONUS: Singapore’s airport will sport world’s largest indoor waterfall. Singapore’s Jewel Changi Airport, rated the world’s best airport by many, is building the world’s largest indoor waterfall in a new terminal to open in 2018. The terminal will have one of the largest indoor collections of plants in Singapore and a five-story garden filled with local trees and plants as well as a 130-foot “Rain Vortex.” See pictures here.

Ashlyn Anderson, Lauren Dickey, Darcie Draudt, Andrew Hill, Will Piekos, and Sharone Tobias look at the top stories in Asia today. 1. Zhou Yongkang arrested. Former head of China’s domestic security Zhou Yongkang was expelled from the Communist Party and arrested earlier today on charges including accepting bribes, helping family members and associates access government assets, disclosing state secrets, and leaking official secrets, Chinese state news service Xinhua announced. The decision was made by the Communist Party Politburo, comprised of the twenty-five most powerful officials in China, meaning that it is very likely that Zhou will be convicted. Zhou held a seat on the Politburo Standing Committee, the country’s top decision-making body, until Chinese President Xi Jinping came to power in November 2012. The party has been formally investigating Zhou for corruption since July as part of Xi’s promise to tackle high-level corruption in China. A New York Times investigation earlier this year documented that several of Zhou’s relatives held assets worth about 1 billion yuan, or $160 million. Zhou has not been seen in public for more than a year. 2. Opposition party wins big in Taiwan local elections. Taiwan held elections for nine categories of elected office last Saturday. With a total of 11,130 seats up for grabs, the opposition Democratic Progressive Party (DPP) trounced the incumbent Kuomintang (KMT), in what has since been deemed “black Saturday” for the KMT. The Taipei mayoral vacancy, one of the island’s most coveted political seats, went to Mr. Ko Wen-je, an independent who’s political views generally align with the DPP, which advocates an independent Taiwan. Premier Jiang Yi-huah resigned after the heavy losses, and President Ma Ying-jeou stepped down as chairman of the KMT party. Taiwan’s new Premier, Mao Chi-kuo, has since unveiled his new cabinet, reappointing most members to their previous roles. The impact of Taiwan’s local elections, and its utility as a barometer for the remaining Ma years, suggest that Beijing would benefit from learning to work with the DPP. 3. Sony hacked; North Korea suspected. Sony Pictures suffered a major cyberattack late November that rendered many of its computer unusable and resulted in leaked information, including employees’ personal information and full-length movies. Some experts believe that North Korea is responsible in part because it has tried to stop Sony from releasing “The Interview,” a film about two American journalists who are recruited by the CIA to assassinate North Korea leader Kim Jong-Un. An unnamed U.S. national security official said that North Korea is the primary suspect, though Pyongyang has denied any involvement, and other experts believe that the attack does not fit North Korea’s usual pattern of cyberattack. The film, starring James Franco and Seth Rogen, will still be released on schedule, even though Pyongyang has called it “an act of war.” 4. Hong Kong democracy protestors weigh options. With public support for street protests flagging and government forces encroaching on the remaining camps, protests leaders are divided over how to proceed with their pro-democracy demonstrations. Violent clashes occurred in Mong Kok last week during and after a police takeover of the area, and over the weekend protestors attempted to blockade the city’s legislative offices in Admiralty, resulting in dozen of arrests. With seemingly little hope of government concession, the three leaders of Occupy Central, a more tempered faction of the protest movement, surrendered themselves to police; they were soon released with no charges. Student protestors, however, are as yet undecided on how to proceed—some have suggested that it is time to retreat from the streets, while others are still hopeful that they can convince the Hong Kong government to negotiate. Joshua Wong, the leader of Scholarism, one of two main student protest groups, along several other students, began a hunger strike on Monday, swearing to continue until he is granted an audience with Leung Chun-ying, Hong Kong’s chief executive. 5. Indian “superbugs” lead to increased infant mortality. Indian infants born with antibiotic-resistant bacterial infections are on the rise; more than 58,000 cases were reported last year. Nearly one-third of all newborn deaths occur in India (800,000 every year), and these “superbugs” will lead to more higher mortality rates. Pediatricians in India report that such cases were nearly non-existent five years ago. The superbugs’ genetic code have since been found in cases around the world, including France, Japan, Oman, and the United States. Bonus: China gets punitive on puns. China’s policies seem begging for puns in the United States, but China’s media regulators have banned puns and “irregular wordplay” from television and advertising. The regulator’s website claims the puns could lead to “cultural and linguistic chaos,” by misleading young audiences in a way that is contradictory to traditional Chinese culture. Ease of communication via the Internet has led to a proliferation of perversions of traditional four-character idioms. No word yet on what the pun-ishments for offenders might be.

On November 13, the deputy commissar of the People’s Liberation Army Navy, Vice Admiral Ma Faxing, committed suicide by leaping from a building at a naval complex in Beijing. In the same month, at least two other important officials took their lives. They were among the more than forty officials who have killed themselves since January 2014, more than double the total in all of 2011. These numbers are small compared to the number of officials that killed themselves during the Cultural Revolution (estimated to be 100,000-200,000) or the total suicide deaths each year in China (estimated to be 287,000). Still, the rapid increase of officials who commit suicide is occurring when the overall suicidal rate in China has seen a significant drop since the 1990s. A New York Times report found that the suicide rate among this segment of the population—6.9 per 100,000 officials—is 30 percent higher than the overall suicide rate in urban China. What accounts for the spate of suicides by Chinese officials? Given the lack of transparency in China’s officialdom, it is difficult to pin down any specific cause. Most of the suicide deaths were officially attributed to depression or high pressure. This is in sharp contrast to the views of the general public and China scholars, who tend to connect the deaths to corruption scandals. Depression or high pressure might be factors behind the deaths of many Chinese officials, but they cannot fully explain the increase in suicides by Chinese officials in recent years—as early as 2005, a survey of 200 middle-aged government officials found that nearly 50 percent of them were “mentally unhealthy.” Indeed, of the thirteen officials who killed themselves in 2014 and for whom official explanations of the cause of death were available, only five were said to have suffered from depression or high pressure, and at least six of them were associated with corruption-related investigations. An examination of the suicide cases clearly pinpoints the impact of the anticorruption campaign launched by the new leadership (which took over in November 2012). During the period 2011-12, a total of forty officials reportedly killed themselves. But since 2013, at least eighty-eight officials have done the same. The officially publicized suicide cases also suggest the growing extent and intensity of the antigraft investigations under the leadership of Chinese President Xi Jinping. Between 2003 and 2013, for example, there were no reports of high-ranking military officials who committed suicide. But in 2014, in the span of three months two senior naval officers (a vice admiral and a rear admiral) jumped to their deaths. In addition, between August 2003 and April 2014, around three officials at and above the bureau and prefectural level killed themselves annually. Since April 2014, however, there has been a rise in both the frequency and the rank of official committing suicide. Within two and half months, more than ten officials at and above the bureau and prefectural level killed themselves. As the new leadership gears up its antigraft campaign, officials are facing greater pressure, especially those who are already under investigation. Still, why do these officials throw away their lives so easily? One explanation is that the campaign put undue pressure on officials who feel they have no choice but to kill themselves to escape their distress. In most cases open to the public, officials appear to kill themselves without experiencing apparent coercion and duress. Another possible explanation is that the growing pressure associated with the campaign exacerbates the depression of some officials, leading them to commit suicide. But again, a majority of officials in publicized cases did not suffer from depression before they killed themselves. A more convincing explanation treats suicide as a means to escape seemingly inevitable punishment. On the one hand, the antigraft campaign, with its unprecedented intensity and breadth, sends a strong signal to venal officials that this time they can no longer expect to be let off the hook. In a political hierarchy where cadres can only be promoted but not be demoted, being caught and sentenced to jail (or even death) for corruption would mean not only public humiliation but also the forfeiture of all titles and illicit gains. On the other hand, under the existing law once the guilty party dies, prosecution is terminated and the party no longer bears legal responsibilities. This presents an institutional opportunity for the corrupt officials. If they commit suicide, not only would they retain their rank and reputation, but their illegal gains would not be confiscated. Furthermore, by taking his or her own live, the individual official sacrifices for the greater good of other members on the same corruption chain, and the latter usually would take care of the victim’s family members. This “altruistic suicide” (as proposed by sociologist Emile Durkheim) therefore has the potential to undermine China’s anticorruption efforts.

Nearly two months ago, forty-three student teachers were murdered in Iguala, Guerrero, Mexico. It was later discovered that the city’s corrupt mayor had had the students arrested and then turned over to a local criminal organization. In this piece published last week in Spanish in El Financiero, I lay out what the federal government can and should do to tackle corruption. You can read the piece in English below:  The news in Mexico is moving from bad to worse. The search for forty-three missing student teachers in Iguala, Guerrero ended tragically, with a few remains found in garbage bags dumped in a nearby river. During the desperate search investigators discovered no fewer than eleven other mass graves, holding dozens of poor unnamed souls, many likely subject to the same ruthless lawlessness, as well as the negligence of if not direct abuse by local and state political powers. As potentially worrisome are the allegations over the “White House,” a seven million dollar abode seemingly controlled by the Peña Nietos, but not claimed by the president when he released a list of his assets during the electoral campaign. The house is legally owned by Grupo Higa, whose owner Juan Armando Hinojosa Cantu is close with the president and a beneficiary of a recently awarded—and then quickly cancelled—$3.6 billion contract to build a high speed train between Mexico City and Queretaro, home of Mexico’s expanding aerospace industry. The only way to quell the rising dissatisfaction and unrest in Mexico is to take on, finally, corruption. If the opacity, silence, and fear that enables these abuses continues, Mexico’s economic and global potential will falter and fade. Until these last weeks, government officials seemed to believe that their economic transformation could occur without a more fundamental shift in underlying incentives and practices. That is no longer the case. So what can the federal government do? First, it needs to pass stronger anti-corruption legislation. Tackling corruption was part of the original 2012 political pact between the three main parties. Yet in the press to successfully pass education, telecom, financial, antitrust, and energy reforms, addressing deep-seated governmental dysfunction got lost. Also undone are necessary changes to the juicio de amparo law, which has become a means for the suspected wealthy to ward off charges rather than a protection from true state overreach. Next, the federal and local governments need to invest in earnest in the transition to the new justice system. The initial 2008 reforms gave the government until 2016 to implement the sweeping changes, which introduce oral trials, alter the roles of judges, prosecuting attorneys and defense lawyers, and strengthen due process among other measures. So far, change has been excruciatingly slow. Only in March did the federal government pass a new penal code, setting the ground rules to which Mexico’s thirty-one states now need to conform. A functioning new system that protects the innocent and convicts the guilty will likely require billions of dollars to retrain the nearly forty-thousand current court officials, to revamp the law school curriculums guiding the next generation of lawyers and judges, and to build forensic labs to examine evidence and court rooms to try cases. As Mexico’s citizens await a new anti-corruption agency and a new justice system, they need immediate concrete actions. The attorney general’s office must try and convict prominent wrongdoers. This can start with just a handful of cases, and Mexico’s reporters and other independent investigators have valiantly provided numerous options. Using Mexico’s decade old freedom of information law along with other tools, the press has exposed alleged bad behavior by governors from all three parties, business leaders, union heads, among many others, any of which could be pursued. The government does not have to try and convict them all—a tall order for a transitioning attorney general’s office and justice system more generally. But it does need to demonstrate that those within the Hermes ties and scarf wearing set can end up behind bars: that malfeasance can carry real costs. Finally, the Mexican government needs to engage directly with citizens. In every recent case of progress against crime and violence—Monterrey, Ciudad Juarez, and Tijuana among them—the involvement of local organizations has made the difference. Business owners, social leaders, heads of victims and human rights groups, along with others, partnered with federal authorities, and at times local ones, to demand and create change. And as these cases show, local governments do respond to federal authorities’ lead. A national level openness to cooperation with civil society groups will be as, if not more, important in places such as Guerrero, due to the already weaker economic and social fabric upon which to begin stitching together a functioning rule of law. This Mexican government has yet to do these things, and in particular, to engage directly and extensively with society, creating watchdog organizations and other accountability mechanisms to tie its own, others, and future hands from corrupt acts. But that is what is needed for a different Mexico. This article appears in full on CFR.org by permission of its original publisher.  You can read the piece as it appeared in Spanish on El Financiero here.   

Boko Haram is rightly notorious for its barbarism: whole-sale murder of adolescent boys in schools, the kidnapping of hundreds of girls, beheadings, throat-slittings, and stonings all captured on video for propaganda purposes. There is evidence that Boko Haram is imposing amputations and other cruel and unusual punishments allegedly mandated by Islamic law in the territories it controls. It is revolting that Boko Haram claims that through such methods it is establishing God’s kingdom on earth through justice of the poor by means of the strict application of Islamic law. Nigerian media is now reporting that last week the Nigerian military killed forty-one alleged Boko Haram operatives in a firefight. Following the firefight, members of the Civilian Joint Task Force (CJTF, irregular militia that assist the security services) beheaded the corpses. They displayed the severed heads on sticks in local villages. The purpose, according to a member of the CJTF, was to demonstrate that Boko Haram operatives “are human and not beasts and so people should not fear them.” There have also been earlier reports of security service members making “trophy videos” of their abuse of alleged Boko Haram operatives. At least the CJTF beheadings were of those already dead. Nevertheless, their actions are particularly reprehensible because they are established instruments of the Nigerian state, which is ostensibly democratic and acknowledges the rule of law. The CJTF beheadings are altogether beyond the law and probably constitute war crimes. Such actions erode the distinction between a legitimate Nigerian state and a fanatical organization that does not hesitate to use terror to advance its agenda.

This is a guest post by Allen Grane, research associate for the Council on Foreign Relations Africa Studies program. On October 17, Suni, a northern white rhino, was found dead in his enclosure at Old Pejeta Conservancy in Kenya. Suni who died of natural causes was one of only two breeding males left of his subspecies. He was born in the Czech Republic, and at thirty-four he was the youngest male northern white rhino. There are now only six northern white rhinos left. Due to extreme difficulties in breeding, it would seem that his death signals the end of the northern white. Unfortunately, this is becoming an all too familiar trend. In 2011, two different subspecies of rhino were declared extinct: the Javan rhino in Vietnam, and the western black rhino once found throughout central and western Africa. The black rhino, originally consisting of four subspecies, numbered over a million at the beginning of the twentieth century. By 2001, there were only 2,300 left. The black rhino population dropped by 98 percent between 1960 and 1995. Poaching is largely responsible for this drastic decrease in the population. The blame for this tragic situation is often laid entirely at the feet of China, and the use of ivory from rhino horns in many traditional Chinese medicines (in Asia rhino horn sold for approximately $65,000 per kg last year). However, the United States is not free of guilt, as it is home to a large rhino horn market (it is also the world’s second largest retail market for elephant ivory). In February, the U.S. Fish and Wildlife Service (FWS) issued an order aimed at banning the trade of elephant ivory, this law also restricts the trade of items made from rhinos, including rhino horn. However, there is contention that the law is too broad and should not include antiques and animal material used in musical instruments (which affects musicians traveling to the U.S.). To this end, a bill was introduced in the House of Representatives in July to loosen the ban on the ivory trade and other animal related items. On May 15, 2014, the FWS revised the law to allow an exemption on the use of ivory for traveling exhibitions and musicians. The last remaining argument for the legal trade of ivory and rhino horn is that it limits the trade of antiques. However, it is nearly impossible to tell the difference between antiques and new rhino horn/ivory. This often leads to illegal animal items being traded right alongside antiques. Any legal market for ivory or rhino horn has shown to and will continue to create an incentive for poachers of mega fauna like the northern white rhino. As such it is important that the U.S. government continues to ban the trade of any and all rhino horn/ivory. Note: The Wildlife Conservation Society has launched a petition to prevent the bill supporting the legal ivory trade from passing. If you are interested in signing this petition, you can find it here.

The investigation of GlaxoSmithKline’s corruption scandal ended last Friday with China fining the British drug maker nearly $500 million. The verdict revealed three important messages that multinational pharmaceuticals do not want to miss. First, the cost of relying on giving bribes and other illicit tactics to increase product sales in China can be quite high.  It is an open secret that multinational pharmaceuticals operating in China are caught in an inherent dilemma. Under the pressure of fierce competition, big pharma may be left with no choice but to bribe government officials, hospital administrators, and doctors in order to boost sales and expand market share.  But doing this would violate not only the company’s governance and compliance procedures, but also, more troublingly, the laws of its home and host countries. As a middle-ground alternative, many choose the indirect, seemingly legal means of funneling money to third parties (e.g., travel agencies) who can then pay bribes to doctors and regulators in China.  Excessive use of this approach by its local executives made Glaxo the lightning rod for China’s massive government anti-corruption campaign. The fine (three billion yuan, or nearly $500 million), allegedly the exact amount that the firm paid as bribes, was the biggest fine ever imposed by a Chinese court. Indeed, based on the Chinese courts’ previous verdicts in similar cases, a European investment bank predicted that Glaxo would only pay a $5-10 million fine. Furthermore, the scandal has caused a serious setback for Glaxo’s market expansion strategy in China. As the government probe continued, competitors grabbed its market share. Glaxo’s  product sales in China slumped earlier this year, resulting in a 25 percent decline from the previous year.  In addition, since Glaxo has admitted to its wrongdoing in China, its overseas practices face investigations by U.S. and British authorities, which potentially will lead to further stiffer penalties. Glaxo has already been slapped with hefty fines in the United States—in 2012, it paid $3 billion for fraud settlement. Second, in a country where rule of law is still good only in theory, multinationals too can be victims of the capricious and arbitrary Chinese politics. Glaxo’s bribery practices, while serious, would not automatically trigger the high-profile government investigations. After all, Chinese pharmaceutical firms are more brazen than their multinational counterparts in using bribes and other illegal tactics for commercial gains. Also, despite the rise of economic nationalism, Chinese leaders, driven by development and stability considerations, still have incentives to attract and keep pharmaceutical-related foreign direct investment. People close to the situation attributed the scandal to an internal control problem within GSK China. As reported by The Sunday Times last year, an anonymous email was sent to several Glaxo top executives, which not only made allegations about GSK China’s commercial bribery practice, but also included a sex tape of the company’s top China manager, which was shot in his bedroom without his knowledge. Viewing this as a serious security breach, the company authorized an investigation, which reportedly had focused on a well-connected businesswoman who previously headed GSK China’s department of government relations. But in a statement of apology issued last week by GSK, the company apologized for “the harm caused to individuals who were illegally investigated by GSKCI.” In a strange twist of events that underscores the murkiness and danger in the officialdom, the lead investigator was arrested by Chinese police and later sentenced to 2.5 years in prison for acquiring personal information about Chinese citizens. That, according to The Sunday Times, led to the beginning of a formal probe into Glaxo in July. Third, Chinese healthcare reform is now in a critical juncture where almost all the low hanging fruits have been picked. It has been more than five years since China kicked off its “new” round of healthcare reform.  The reform led to increased state commitment to healthcare and expanded health insurance coverage.  But these efforts were not joined by significant measures to reform the public hospitals, which still provide 90 percent of healthcare services in China.  Chinese scholars have suggested that vested interests of public hospitals and health bureaucrats are to blame for the lack of progress on this front.  Premier Li Keqiang seemed to be keenly aware of the challenge when he said “stirring vested interests may be more difficult than stirring the soul”.  In absence of meaningful public hospital reform, hospital workers continue to follow the hidden rules to take bribes and illegal kickbacks from pharmaceutical companies. The cost of corruption (estimated 20-30 percent of the drug prices) has not only sustained the overreliance on drug sales for revenues in China’s healthcare sector, but also made it next to impossible to bring the healthcare cost under control. The GSK corruption scandal, according to a Chinese scholar, provided an excellent opportunity for China to rectify its chaotic pharmaceutical market. While the government verdict serves as a warning to other pharmaceutical companies, it also signals the lack of further progress in China’s healthcare reform. The failure to kick off critical reform measures means that Chinese regulators have no other choice, but to rely on extraordinary measures to force big pharma to cooperate in the healthcare reform. It is noteworthy that GSK in its statement of apology promised to “establish itself as a model for reform in China’s healthcare industry” and “increase access to its products…through greater expansion of production and through price flexibility.” One year ago, when the scandal came to light, I noted that big pharma’s go-go years in China were over.  The verdict last week further highlighted the risk of them doing business in China.  Successful operation in the country requires lower expectations and improved management, but it is equally important for top pharmaceutical executives to have the political acumen to swim with the political tide, not against it.

Ashlyn Anderson, Lauren Dickey, Darcie Draudt, Andrew Hill, Will Piekos, and Sharone Tobias look at the top stories in Asia today. 1. China fines GlaxoSmithKline nearly $500 million for bribery. A Chinese court fined British pharmaceuticals firm GlaxoSmithKline (GSK) 3 billion yuan ($489 million) after the one-day, closed-door trial ended, finding the company guilty of bribery. Several officials of the company, including Mark Reilly, the former head of GSK in China, were also given suspended jail sentences. GSK said that it remained committed to operating in China despite the ruling. The company is also being investigated in the United States under the Foreign Corrupt Practices Act, and has been accused of corrupt practices on smaller scales in Poland, Syria, Iraq, Jordan, and Lebanon. By some estimates, GSK’s actions in China led to over $150 million in illegal revenues. 2. Tension flares at the disputed border during Xi-Modi meetings. Chinese President Xi Jinping arrived in Ahmedabad, Gujarat, on Wednesday--Indian Prime Minister Modi’s sixty-fourth birthday--to sign a slew of agreements, including a pact to make Ahmedabad the sister city to Guangzhou in China. Xi pledged $20 billion in Chinese investment, significantly lower than the expectations in the media, but still substantial. Despite the cordiality of the meetings, around a thousand Indian troops were mobilized on Thursday to face an equivalent number of Chinese troops near the Line of Actual Control. Modi hinted that a transformation of China-India relations depends upon a border resolution. 3. China injects $81 billion into top banks. The Chinese central bank, the People’s Bank of China, is injecting 500 billion yuan into the country’s top five banks in an effort to combat slower-than-expected growth in the Chinese economy. Those five banks—all state controlled—account for three-fifths of the market and are well positioned to make loans to the government’s favored industries. The injection will be in the form of a three-month, low-interest-rate loan to the banks, and it is predicted to have an impact similar to that of a 0.5 percent cut in the reserve requirement ratio. Cutting the reserve rate, however, would be a broader and longer-lasting move and would not allow the government to dictate where the money goes. 4. Report cites ‘modern slavery’ in Malaysian factories. According to a report released this week, nearly one in three migrant workers in Malaysia’s electronics industry suffer from conditions of modern-day slavery. The monitoring group, Verité—which conducted the survey on commission by the U.S. Department of Labor—also found that 92 percent of the migrant workers in Malaysia’s electronics industry had paid recruitment fees in excess of legal or industry standards. Other migrant workers were employed in forced situations because their passports had been taken away. While no companies were singled out, the findings could prove troublesome for consumer electronics companies if the United States and others move to adopt standards to eliminate indentured servitude from the global supply chain. 5. Japan’s Noguchi elected president of space explorers’ group. Japanese astronaut Soichi Noguchi was elected president of the Association of Space Explorers (ASE), a Houston-based association of current and former astronauts from thirty-five nations at their annual planetary congress. The meeting was held in Beijing for the first time, and at a press conference Noguchi said that he would seek greater Chinese inclusion in international space cooperation. Noguchi is the first Asian to assume the post, and his election comes at a time of growing interest and investment in space among Northeast Asian nations. Japan’s Ministry of Defense recently announced that it wants to establish a new unit to track space debris; China’s military has plans to establish a space force; and South Korea is investing heavily in satellite technology. Bonus: Beijing hosts first-ever all-electric car race. The race, which included Formula E race cars, is the first of ten such races to take place through June next year. Team Audi, driven by Brazil’s Lucas di Grassi, took first place. There are fewer safety concerns because the cars do not carry petroleum-based fuel. The series is designed to drum up interest in electric cars.

It remains unclear whether mounting public anger and flagging growth can catalyze India to address widespread official corruption.

This is a guest post by Sarah Madden, volunteer intern for the Council on Foreign Relations, Department of Studies. Sarah is currently a student at Santa Clara University studying business economics and entrepreneurship. Her interests are in Africa, economic development, and emerging markets. In December 2012, the U.S. Department of Justice levied a $1.9 billion fine against HSBC Holdings PLC. The bank’s failure to enforce money laundering controls had allowed illegal organizations to maneuver around U.S. banking laws to launder money for decades. HSBC’s fine and the recent tightening of international finance restrictions have led several financial institutions to reevaluate the security of accounts (many in Latin America and Africa) that do not have the “proper checks in place to spot criminal activity and could therefore unwittingly be facilitating money laundering and terrorist financing,” according to a Barclays’ statement. This development will have a particularly serious impact on Somalia. Money transfer operations (MTOs) and access to accounts held with multinational banks are particularly important in Somalia, where MTOs are used for remittances, the “financial lifeline” for many Somalians. Remittances in Somalia channel almost $2 billion, making up over a third of the counry’s GDP with 80 percent of new business ventures in Somali territories funded or supported by remittances. For a country still struggling to recover from a decades-long civil war, famine, and continuing violence, Somalia lacks any form of banking or institutionalized financial system. In effect, MTOs with accounts through Barclays, Moneygram, and Western Union are the financial system. Following in the footsteps of several large banks, Barclays announced in May 2013 that by July 10, the company would shut down accounts to almost two hundred and fifty MTOs in North and East Africa. Dahabshiil, Barclays’ premier partner in East Africa and largest MTO in the Horn of Africa, brought Barclays to the British High Court to protest the closures that would effect millions of their clients. In April 2014, Dahabshiil won an injunction to delay the account closures until October 2014. Barclays’ precautionary actions to avoid inadvertently channeling money for illegal activity will have devastating effects on Somalia’s already “fragile economic recovery.” The closure of these MTO accounts will destabilize any progress made over the past decade. With the injunction’s expiration date rapidly approaching, and few viable options for Dahabshiil, the money transfer industry might soon be pushed underground, where it will be nearly impossible to monitor or track illegal activity. OxFam International claimed it was “a bleak day for Somalis” when Barclays announced their closures last May. In Somalia, 4.2 million citizens rely on money transfers as a substantial portion of their income for basic needs like food, clothing, shelter, education, and medical care. Annually, the amount of transferred remittances from displaced Somalians far exceeds the amount of international aid sent by foreign governments to Somalia. International aid organizations and NGOs rely on MTOs for their finances. If they cannot receive their funds or can only access capital at a higher cost, the need for humanitarian aid will skyrocket. It is likely that nations with high Somalian populations (United States and United Kingdom) will burden taxpayers with the cost of dispensing foreign aid to address education issues, food security, and economic growth. The humanitarian, academic, and political outcry all reiterate—“Somalia is different.” The country cannot afford to lose the Barclays partnership. Barclays, and other enormous institutions are positioned to promote transparency and stability in the Somalian financial system. With the cooperation of many African nations and Western governments, these banks have the opportunity to not only strengthen money transfer channels and bolster the African financial system. Achieving that would ensure the livelihood of an estimated 40 percent of Somalians who rely on MTOs as the country “begins to see the light at the end of the tunnel.”

This blog post was authored by Timothy F. Higgins, a graduate of the University of St. Andrews with an MA in political philosophy. The recent presidential victory of Joko Widodo (popularly known as “Jokowi”) has the potential to be a watershed moment in Southeast Asian politics. For the first time in Indonesia’s (albeit short) history as an independent nation, control of its government will pass from one democratically elected leader to another in relative peace. This is encouraging for two reasons. First, the electorate has not been seduced by the burly militarist narrative of rival candidate Probowo Subianto. In a region that sits in the shadow of an increasingly aggressive China, it would be tempting to opt for Subianto, the nationalist strong-man, over Jokowi, the pragmatic governor of Indonesia’s economic hub, Jakarta. Second, it shows that the framework exists in Indonesia for a politician to rise through the ranks based on merit as a public servant rather than pedigree and political connections. Subianto is the optimal characterization of Indonesia’s political elite: he made his career leading the special forces units that carried out brutal anti-Suharto crackdowns, and later marrying the then-president’s daughter. By contrast, Jokowi grew up in the slums of Surakarta (also known as “Solo”) before building and running his own furniture business, and ultimately winning the race for mayor of his hometown. Jokowi owes much of his political success to the decentralized structure of Indonesia’s democracy. Born partly out of necessity—Indonesia is sprawled across more than 17,000 islands—and partly in reaction to a history of Jakarta-based dictatorships, this decentralization has given local governors greater autonomy, and thus the opportunity to excel. This is exactly what Jokowi did when he was in charge of his home-city of Solo, and later in Jakarta, where he made a point of tackling generally populist issues. Advocating improved quality of life for the average Jakartan, he oversaw a boost in healthcare and education spending, and initiated construction on long-defunct public transit systems. In a pointed effort to make Jakarta’s bureaucracy more transparent, he published records of government hirings complete with test scores and salaries. But now that Jokowi sits at the head of the government apparatus, he may find this decentralization to be his biggest challenge. If every politician in Indonesia shared his scruples, the country would be a fairer and more efficient place. Unfortunately, graft and government cronyism are deeply embedded in politics across the archipelago. Corruption is like a cancer; it is easier to address when contained in one area. Cutting these practices and practitioners out of the political process will be a massive challenge across Indonesia’s sprawling two million square kilometers, particularly since Jokowi cannot count on much cooperation from the police or the military, given his recent presidential adversary. Apart from the traditional methods of fines, firings, or imprisonments, the strongest deterrent against corruption may be the example set by Jokowi himself. The fact that a public servant can win Indonesia’s highest office through honest, results-driven governance provides encouragement to politicians with good intentions, but who are uncertain about whether sticking to the straight and narrow is worth it. This message is spreading more easily, too: internet users have more than double in the last four years, increasing from 6.9 percent in 2009 to 15.8 in 2013 (Indonesia still lags well behind the global average, which was at 38.1 percent last year). Ultimately, it is unrealistic to expect Jokowi to excise government corruption and inefficiencies across Indonesia in only five years. The country is too vast, too disjointed, and too populous to make that kind of fundamental change in such a short period of time. But Jokowi’s ability to win the presidential election is, in itself, a victory over corruption, and hopefully his example will serve as a guide and inspiration to others looking to emulate his accomplishment.