Corruption

This is a guest post by Diptesh Soni. Diptesh is a master’s degree candidate at the Columbia University School of International Public Affairs (SIPA) studying economic and political development. You can read more by him at: https://dipteshsoni.contently.com/. The latest Afrobarometer poll is a strong indication that corruption is a growing concern throughout Africa. The poll ranks African countries from worst to best with respect to citizens’ perceptions of their government’s efforts to control corruption. (Note: it measures popular perception of corruption, not corruption itself.) The best performers – considered least corrupt – included Malawi (28 percent answered that the government was doing fairly/very badly in combatting corruption), Lesotho (also 28 percent), and Botswana (29 percent). The worst were Nigeria (82 percent), Egypt (82 percent), and Zimbabwe (81 percent). Overall, Africans are highly critical of government efforts to reign in corruption. The public opinion survey, conducted in thirty-four countries using nationally representative samples, was published November 13. It found that nearly one in three Africans say they have paid a bribe in the past year, with respondents broadly ranking their police forces as the most corrupt institutions. Moreover, the Afrobarometer highlights the disproportionate effect of corruption on the poor: respondents who had gone without enough food to eat one or more times in the past year reported higher incidences of bribery for police, medical treatment, and school placement than their better-off compatriots. The authors warn that the poor’s daily interactions with corruption risk exacerbating inequality and worsening the position of the impoverished in society. Corruption is also detrimental to Africans’ perception of democracy. The authors cite that “only 36 percent of those who perceive high levels of corruption in the office of the presidency are satisfied with democracy.” The weak performance of a number of countries stands out. In Nigeria, for example, while the perception of corruption amongst public officials has shown a modest improvement, 82 percent of respondents said their government was handling the fight on corruption “very or fairly badly.” In Zimbabwe, negative ratings for the government went from 38 percent in 2002 to 81 percent in 2012. Stories from other countries are more optimistic. The number of Malawians with a negative perception of the government dropped significantly since 2002 – from 68 percent to 28 percent. Corruption appears to have decreased in Lesotho, Botswana, and Senegal, too, but overall the report concludes that the very high profile fight against corruption over the last decade has been insufficient. How corruption is defined and how it manifests itself of course varies from country to country. Nevertheless Africans know it when they see it. And they are increasingly critical of its continued prevalence in society and politics.

In the wake of one of the most powerful storms ever to hit Southeast Asia, Typhoon Haiyan, the Philippines is counting its dead and assessing the massive damage to infrastructure from the storm, particularly in Leyte province. The scope of the devastation in Leyte was, on Sunday, being compared by some disaster specialists to the destruction wrought by the 2004 Asian tsunami, which completely leveled parts of Aceh in Indonesia and other parts of Southeast Asia, like the Thai coast around Phuket. The typhoon was more powerful than most, but the Philippines has, sadly, become used to this type of devastation: the country is right in the path of the most dangerous Asian typhoons, and was hit by another deadly storm only a few weeks ago. The Philippines suffers from bad luck, and as one of the poorest countries in East Asia, it could not be expected to have the storm warning systems and storm-safe infrastructure of countries like Japan or Singapore. Still, the horrific quality of infrastructure in the Philippines—even worse than countries in the region with similar levels of economic development—certainly has made these storms deadlier. Because the Philippines is one of the most unequal and corrupt countries in Asia, funds for housing projects, roads, and seawalls and other public monies routinely vanish into the pockets of political dynasties; before the typhoon the country was riveted by a high-profile case involving massive slush funds amassed by several prominent politicians. Several news reports about Typhoon Haiyan already have noted that the horrendous, ramshackle nature of storm protection and houses in Leyte contributed to the high death toll and property damage. Although President Benigno Aquino has made some inroads into fighting corruption, his administration still faces an uphill battle, and many areas, including Leyte, remain dominated by patronage networks and a few political clans. The continuing feudalism has made it hard to attract investment in infrastructure, and the country certainly has not helped the cause of infrastructure upgrading by alienating China, whose state-owned companies have been busily building infrastructure for most other countries in Southeast Asia. The most recent high-profile corruption scandal appears to have catalyzed middle-class Filipino sentiment, potentially leading to the type of public outcry against corruption that could actually turn the country’s political course. In the terrible aftermath of Typhoon Haiyan, public pressure to reduce graft in construction projects, and to focus more intensely on upgrading infrastructure, would be at least one positive outcome.

Afrobarometer is a research project coordinated by institutions in African countries and with partners in thirty-one countries. It recently conducted a survey of public opinion across thirty-four African countries that showed popular skepticism about the “Africa Rising” narrative. This, despite relatively high growth rates. In a report released on October 1, Afrobarometer data indicates that 20 percent of Africa’s population often goes without food, clean water, or medical care. More than half of those surveyed think that economic conditions in their country are bad or “very bad.” Some three quarters thought their government was doing a bad job in closing the gap between rich and poor. John Allen, writing on AllAfrica.com, suggests that the results indicate that higher benefits of growth are going to a wealthy elite or that official statistics are overstating growth, or possibly both. Morten Jerven, in his recently book Poor Number, has shown the shortcomings of African statistics. In its report on the Nigerian economy, the World Bank observed that Nigeria’s high growth statistics could not be squared by increasing rates of poverty. These, and other inconsistencies, make Allen’s hypothesis on where the majority of Africa’s wealth is directed, look credible.

Mamphela Ramphele’s new political party, AgangSA is making high level corruption a political issue in the run-up to South Africa’s 2014 national elections. Her party has called for a minimum sentence of fifteen years for any public official convicted of corruption, and the same for any member of the public convicted of corrupting a public official. She is also calling for new legislation that would prohibit government officials and their families from doing business with the government. In her travels around the country, she is visiting townships and “informal” (shack) settlements, where she highlights the fact that the principal victims of corruption are the very poor. She is emphasizing that corruption in South Africa starts at the very top of the African National Congress (ANC), the ruling party. She has repeatedly called on South African president Jacob Zuma to make public his personal assets. He has declined to do so. In August, she published her net worth as R55,436,063 (US$5.6 million), and said that her salary for the tax year ending in February 2013 was R346,000 (US$35,000). This is down from previous years, she said, because she had resigned from various corporate boards to prepare to contest the 2014 elections. However, the Mail and Guardian reports that two years ago, Forbes estimated her wealth at over US$50 million, ten times as much as she now claims. AgangSA is calling on Forbes to explain its estimate while Forbes is sticking to its story. The Mail and Guardian is asking why Ramphele did not deny the Forbes estimate when it first appeared. Taking at face value Ramphele’s U.S.$5.6 million figures, as I do, it is still clear that she is wealthy. In her public statement, she noted that like Nelson Mandela, she was a liberation leader who was not born poor. She has been a medical doctor, an academic, an entrepreneur, and has served on many boards. President Zuma is tarred with unresolved accusations of personal corruption. Ramphele and AgangSA are running on a “good government” platform and seek to attract the votes of South Africa’s black consumer class that is increasingly concerned about corruption within the ANC.

The Tuareg rebels and the Malian government reached a peace agreement in June that allowed Mali’s August elections to go forward. They–generally regarded as free and fair–resulted in the election of President Ibrahim Boubacar Keita, who has now been inaugurated. At the end of September, however, three separatist Tuareg groups announced that they are suspending their participation in the peace process with the government. They accuse the Bamako government of failing to live up to promises made in June. They provide no specifics, and neither the Keita government nor the UN peacekeeping mission has commented on the suspension. Post-independence Mali has had difficulty integrating the northern Tuaregs and the southern, more ethnically diverse, ethnic groups. Numerous failed agreements between successive Bamako governments and northerners have led to widespread dissatisfaction and disillusionment, punctuated by revolt. In 2012, such a revolt in the north morphed into a jihadist attack that was driven back by French and other African forces. Now, with the suspended talks, Mali’s friends must ask if history is repeating itself. Keita’s rhetoric calls for justice and democracy, but the political-economic structures that provoked the latest round of northern rebellion are still in place. Joris Levernik in Think Africa Press places contemporary events in a wider Malian context. He suggests that Mali’s essentially false reputation as a democracy made it a donor darling. Foreign assistance flowed in, freeing the political class from accountability. Over time, an economy based on donor assistance and the export of gold, cotton, and other primary commodities acquired an enlarged criminal dimension, including smuggling, the kidnapping of Westerners, and the narcotics trade. The profits were so huge in a very poor country that more and more of the political class participated and was compromised. Meanwhile, he argues, marginalization of the north continued. The rest, as it were, is history: a 2012 rebellion in the north that initially seemed to follow the traditional pattern, a coup in Bamako when the government responded incompetently, and the emergence of a radical Islamic jihad that was reversed by French and other foreign troops. The donors, Levernik continues, wanted early elections to restore ostensibly democracy that would permit the renewal of assistance flows. Hence the donors led by the French and the Americans, pressed for early elections. But, Levernik concludes, “elections do not equal democracy, aid does not equal economy, an end to the fighting does not equal peace, and promises do not equal development.” The jury must still be out on Mali. It is very early days for the Keita administration, though thus far other than rhetoric there is little indication that the “system” that led to the current crisis has much changed.

I have to give Beijing credit. When the Chinese leaders put Wang Qishan in charge of the anti-corruption effort, they knew what they were doing. Widely believed to be one of the most competent of the new leadership, he has ensured that no policy arena has as much energy behind it as his anti-corruption campaign. Other priorities such as building a social welfare net, protecting the environment, and reforming the economy are still in the familiar planning and blueprint stages. Wang, in contrast, has spearheaded campaigns against multinationals, Chinese companies, individual Chinese officials, and businesspeople. Scarcely a week goes by when one corruption case or another does not make Chinese headlines. Alongside the anti-corruption campaign, a crackdown against Chinese netizens is also in full-swing. Nominally designed to limit online rumor-mongering—people may be charged with defamation if their rumors are read by 5,000 users or forwarded more than 500 times—the crackdown has landed squarely on the shoulders of some of China’s most popular, politically outspoken businessmen bloggers: venture capitalist Wang Gongquan has been detained on charges of “gathering a crowd to disturb order in public places”; Chinese-American investor Charles Xue was arrested on prostitution charges; and billionaire real estate investor Pan Shiyi has not been arrested or detained but appeared on television to say that it was important for those with large followings to “tweet responsibly.” Each of these prominent business personalities has boasted well over a million Weibo followers at one time or another. Beijing’s strategy—while widely heralded by the official Chinese media—seems like one destined for short-term gain but long-term pain. First, by accusing and arresting people before the judicial system has been reformed, the Chinese leadership runs the risk of undermining much of the purpose of the anti-corruption campaign—restoring the legitimacy of the Communist Party. People are already suspicious about why certain officials and businesspeople are being targeted while others are not. Moreover, as attacks are levied against leading bloggers, the anti-rumor campaign begins to look like an effort not to push forward on the rule of law but rather to reintroduce fear among intellectuals and other reformers à la the Anti-Rightist Campaign of the 1950s, which targeted those whose voiced independent opinions. Limiting the voices of public intellectuals also will hamper the Party’s objective of spurring creativity and innovation within Chinese cultural, social, and economic life. If there is no questioning, there is no change and no progress. Had it not been for Pan Shiyi leading the netizen charge for greater transparency in Chinese air quality statistics, the Chinese public would likely still be waiting to understand why official blue sky days are not actually blue. And as my colleague Adam Segal remarked, the crackdown against outspoken liberal business leaders is reminiscent of Putin’s message to the oligarchs: get with the program or get out. The danger, of course, is that in fact, they will get out—leaving China without much needed intellectual, creative, and financial firepower. And then there is the ever-present effort by Beijing to exert its soft power. No matter how often Chinese officials hear it, they seem unwilling to accept that soft power begins at home, with the values, culture, and opportunities the Chinese people, themselves, experience. If these fail to attract the rest of the outside world—and who is going to be attracted to a regime that silences its best and brightest—no amount of Chinese media blather will compensate.

This is a guest post by Eric Silla. Eric has PhD in African history from Northwestern University and is the author of "People are not the Same: Leprosy and Identity in Twentieth Century Mali" (Heinemann, 1998). The recent crises in Mali have sparked discussions that are, unfortunately, often riddled with misinformation and misrepresentation of the country’s  history and current predicament. A recent example is The New Yorker’s “Letter From Timbuktu.” As a scholar of Mali who has lived and worked there, I read it with disappointment. This article, and others like it, give readers a false understanding of the factors that led to the conflict in northern Mali. The statement that slavery has dominated Mali’s history with “lighter skinned Arab descended peoples of the north” in control of “darker skinned Arab descended peoples of the south” is entirely wrong. Modern Mali encompasses a geographic area about the size of Texas and California combined. North of Timbuktu lies the Sahara desert where nomadic Tuareg and Arab tribes have circulated for centuries. Tuaregs are not Arabs; they are linguistically and culturally related to North African Berbers. Neither they nor Arab tribes have ever controlled southern Mali, though they occasionally encroached into the border areas. Mali south of Timbuktu is more ethnically diverse; parts have been controlled by a succession of polities, none of which were Tuareg or Arab. Mali’s present borders correlate with none of those polities. At its peak in the 14th century, the tributary state commonly called the “Mali Empire” dominated an area encompassing parts of present day Burkina Faso, Ivory Coast, Guinea, Mauritania, Senegal, and Guinea. Its power never extended far into the desert much beyond Timbuktu. Between the 15th and 17th centuries, the Songhay Empire controlled parts of present day Mali and Niger. Its capital was Gao, situated at the northern bend of the Niger River. Between the late 17th and mid-19th centuries, a state known as the “Bambara Empire” controlled the areas around the Niger River roughly between Bamako and Mopti. In the mid-19th century, a religiously inspired figure named Umar Tall launched a jihad from present day Senegal and established a polity that, at its peak, encompassed parts of present day Guinea, Mauritania, and Senegal in addition to parts of Mali extending to Timbuktu. Another figure from southeastern Guinea, Samori Toure, led a military campaign that gained control of Mali’s southeast, in addition to northern Guinea and the Ivory Coast. Mali’s “northern problem” originated at independence in 1960 when the inhabitants of the Sahara feared subjugation under a postcolonial government that would be dominated by southerners, who far outnumbered the northerners and dominated the civil service and military. Some Tuareg claimed that France had promised them their own state, which also would have included parts of Algeria and Niger. Though there had been millennia of interaction between Saharan and sub-Saharan peoples, there was no historical or cultural basis for unity other than a few decades of shared colonial subjugation for their amalgamation into a modern nation state. Post-independence Mali has seen numerous rebellions beginning with the first in 1962-64, which was crushed. Another rebellion in 1990 was precipitated in large part by the droughts and famines of the 1970s and 1980s that had decimated Saharan livelihoods and dislocated its people. Throughout, the corrupt, southern-dominated military government in Bamako neglected northern development and concentrated international assistance in the south. Libyan leader Qaddafi was simultaneously recruiting and training Saharan Tuareg and Arab militants as part of his larger effort to foment revolution across Africa. Mali’s military government began to weaken under pro-democracy activism in the south and finally collapsed in 1991. Saharan militants took advantage of the instability to launch attacks on government installations in the north, invoking northern economic and political grievances as justification. After a succession of short-lived peace agreements with the newly elected civilian government, militants signed a more durable deal in 1995. This agreement formally lasted until 2006 but gradually became irrelevant as the political and security environment in the Sahara changed. Mali’s government lacked the capacity to provide the development and security needed for long-term stability in such a vast and desolate region. Some militants, most likely in connivance with corrupt government officials, took to smuggling, particularly in cigarettes, weapons, and illicit drugs. Remnants of Algeria’s failed jihadi movement also found refuge in the Sahara, joining in the smuggling, providing training to aspiring jihadis from the region, and earning multimillion dollar ransoms from European tourists who had disregarded travel warnings and became their hostages. Periodic militant raids against military patrols and government installations gradually escalated into a full fledged “third” rebellion that lasted from 2006 to 2009. A combination of military pressure, factional splits among militants, and diplomatic involvement of Libya and Algeria led to still another peace agreement in 2009. Like its predecessors, this agreement failed to undo the underlying sources of conflict and insecurity, and the Malian government lacked any capacity to enforce it. The escalation in fighting that began in late 2011 and precipitated the present crises resulted in large part from the collapse of Qaddafi’s regime in 2011. For three decades, Qaddafi’s patronage of militants and vast financial resources enabled him to play power broker across the Sahara. His demise created a power vacuum and unleashed weapons and militants across the region. The results are now seen not only in Mali’s instability, but Niger’s, Northern Nigeria’s, and the Central African Republic’s as well. The strains of renewed conflict also exacerbated tensions within Mali’s military and led to the coup in the capital Bamako in March 2012. The current conflict and the ones that preceded it are largely about Saharan peoples fighting each other and their governments for dominance over Saharan trade (licit and illicit) routes and the towns and communities that dot the region, not conquering “dark skinned” sub-Saharan African peoples and states. The lines of conflict have correlated with tribal affiliation and social hierarchy, not race in the American sense, and even these lines are often blurry. External actors such as Qaddafi and now Algerian and other international jihadis have also exploited these conflicts to project their own influence, but their agenda has never been racial subjugation. The reductionist interpretation, using Western notions of racial politics and slavery, misleads analysis on the situation in Mali. It dates to the 19th century when the phenomenon of Arab slave raiding was hyped to justify European colonization and rally support for Christian missionaries. However, slavery was rampant across southern Mali well into the French colonial period, and “black” Africans held slaves. In fact, the “Bambara Empire” mentioned above was built largely on a slave economy. Moreover, for Saharan peoples, the American notion of skin color is not a determinant of social status or identity. One can have “noble” status with black skin, or "inferior" social rank with light skin. Using misplaced racial divisions to explain Africa’s problems can misguide activism and policymaking. I recommend readers consult “Mali: Beyond Counterterrorism” by two thoughtful experts with extensive research experience in the region and deeper connections to its people.

Will Piekos and Sharone Tobias look at the top stories in Asia this week. 1. The SEC probes JPMorgan amid allegations that it hired Chinese princelings. The U.S. Justice Department and Securities and Exchange Commission (SEC) has begun an investigation into whether JPMorgan Chase hired the children of senior Chinese officials to help secure business in a now-defunct program called "Sons and Daughters." The scrutiny began in Hong Kong and now has spread through the bank’s Asia offices; the bank has flagged more than 200 hires for review. JPMorgan has not yet been accused of any illegal acts, but they might have violated the U.S. Foreign Corrupt Practices Act, which forbids granting personal favors to government officials in exchange for business. One example included the son of Tang Shuangning, chairman of a state-run financial conglomerate, who was hired and retained even after other employees questioned his financial expertise. 2. Chinese government begins massive campaign against online “rumormongering.” The Chinese government wants citizens to adhere to the “seven base lines” of proper internet conduct and curb “rumormongering” online. After the Beijing Internet Conference last week, the government released "seven base lines" for proper Internet conduct. State-run media has released a flurry of op-eds and run prime-time TV spots about the issue [links in Chinese]. Multiple people have been arrested for spreading rumors through microblogging accounts, and yesterday, twenty-seven people were arrested for operating 312 microblogging accounts with millions of followers [Chinese]. Xinhua also released an op-ed saying that government officials should not be exempt from anti-rumormongering laws, giving four examples of recent rumors spread by officials. 3. Filipino businesswoman at center of corruption scandal detained. Janet Lim-Napoles, a wealthy Manila businesswoman, was arrested for the "illegal detention" of a witness who claims she diverted billions of pesos from poverty-reduction programs for her personal gain. The money was allegedly diverted to lawmakers and their associates in a corruption scandal that has sparked protests in Manila; more than 700,000 gathered on Monday to demand tougher action. 4. North Korea rescinds invitation to U.S. envoy. Pyongyang cancelled its invitation to U.S. diplomat Robert King, ambassador for North Korean human rights issues, who planned to travel to Pyongyang on Saturday in hopes of securing the release of ailing American missionary Kenneth Bae. Bae has been held in North Korea since November of last year, when he was detained for committing "hostile acts." It is as yet unclear why Pyongyang cancelled the visit. 5. China opposes Syria strike. Official Chinese media and think tanks are warning strongly against Syrian strikes, insisting no action should be taken until a UN investigation determines the origin of the chemical attacks. China is a signatory to the Organization for the Prohibition of Chemical Weapons but is highly unlikely to support any international military action in Syria. China has quietly funded Bashar al-Assad’s military, supplying $300 million worth of arms between 2007 and 2010. Since the civil war began, the United States imposed sanctions on the China Precision Machinery Import and Export Corporation for allegedly providing arms to the Syrian army. As a veto-holding member of the UN Security Council, any UN action taken in Syria would have to have China’s approval. China’s insistence on "non-interference" in other countries’ affairs, coupled with its previous trade with the Syrian military, means that this is highly unlikely to happen. Bonus: North Korea on "ice." A recently released study in the North Korea Review has brought attention to significant phenomenon: the common use of methamphetamine in North Korea. According to one researcher, 40 to 50 percent of the population are "seriously addicted" to "bingdu," or "ice." (This estimate is thought to be high, but the DPRK’s drug addiction has been documented before.)

Oby Ezekwesili on August 19 in Abuja said that Nigeria spent over one trillion naira on National Assembly members since 2005. That is about U.S. $6.2 billion. Mrs. Ezekwesili is a former minister of education, former minister of solid minerals, and World Bank vice president for the African region. She went on to say that 82 percent of Nigeria’s budget goes for “recurrent expenditure;” essentially keeping the doors open. She noted a recent UK report that identified Nigerian legislators as the highest paid in the world. Her remarks were made in the keynote address at a conference on the “Cost of Governance in Nigeria.” The conference was organized by the Civil Society Legislative Advocacy Center (CISLAC), a Nigerian non-governmental organization, with help from the Federal Public Administrative Reform Program in the UK. Ezekwesili’s remarks also contained thoughtful observations about Nigerian governance and her service in the Obasanjo administration that are well worth reading. She offers suggestions for moving forward that are thought-provoking. One of the latter is to move to part-time legislators as a way to bring down costs. She observed that to be a part-time legislator, “you must have means of livelihood so that you won’t have to depend on public funds.” That might also help address the endemic problem of corruption. Predictably, some members of the National Assembly are utterly rejecting Ezekwesili’s remarks and dismiss her figures out of hand. Others, in effect, claim that the executive is worse than the legislative branch. One legislator accused her of “blackmail, the sole aim is to seek headlines.” Ezekwesili has long campaigned for improved governance in Nigeria. Often the response has been vicious personal attacks against her. Ezekwesili’s basic point seems to me to be irrefutable. The costs of Nigerian governance are exceptionally high, and the benefits of that governance accrue to a small number of elites who demonstrate too little concern for the welfare of the Nigerian people. Ezekwesili brings impeccable credentials to a discussion of the costs of governance. She is a chartered accountant who trained with Deloitte and Touché, the international accounting firm. She has a Masters of Public Administration from the Kennedy School at Harvard. She is a confounder of Transparency International. She has also worked with Prof. Jeffrey Sachs at the Center for International Development at Harvard. Her ministerial tenures in the Obasanjo administration were genuinely reformist. She is a senior economic adviser to George Soros’s Open Society Foundation. Among the boards she sits on is a telecommunications firm, the World Wildlife Fund, and the Center for Global Leadership at Tufts.

William Piekos and Sharone Tobias look at the top stories in Asia this week. 1. Bo Xilai defiant in trial. Standing trial on charges of bribery, embezzlement, and abuse of power, former Communist Party official Bo Xilai was surprisingly defiant during his two days in court. The trial, which began on Thursday, was expected to be simply another piece of scripted Chinese political theater—albeit one with much more press and its own official microblog—but Bo put on a spirited defense, refuting testimony and casting doubt on his wife’s mental state. Some analysts have postulated that Bo might have agreed to a predetermined prison sentence in exchange for the opportunity to express himself at the trial. 2. U.N. criticizes Australia over asylum policy. The United Nations Human Rights Committee called Australia’s indefinite detention of refugees “cruel” and “inhuman” after reviewing complaints of forty-six recognized refugees. The committee called on Australia to release the refugees, many of whom have been held for more than two years, and offer compensation. Prime Minister Kevin Rudd announced last month that refugees arriving to Australia by boat will be sent to refugee processing centers in Papua New Guinea and will be considered for asylum there; none who arrive in Australia by boat without a visa will be granted asylum. The majority of the detained refugees are Sri Lankan Tamils; there are also Rohingya Muslims from Myanmar and a Kuwaiti. 3. High levels of radiation detected near Fukushima water tanks. Tokyo Electric Power Company detected high levels of radiation coming from two water tanks containing contaminated water from the Fukushima Daiichi nuclear power plant that suffered three core reactor meltdowns in 2011 after an earthquake and a tsunami. Approximately 300 tanks are currently being used to store contaminated water, and about 300 tonnes of highly contaminated water leaked from one such tank this week. Japan’s Nuclear Regulation Authority declared the power company and inspectors "careless" for allowing the water tanks to operate in such poor conditions. 4. China attacks Western values. The New York Times published a report this week on China’s Document Number Nine, a secretive directive issued by the leadership of the Communist Party warning against the dangers of Western ideas. The document warns against seven perils, including "Western constitutional democracy," "universal values" of human rights, media independence and civic participation, and pro-market "neo-liberalism." Economic reform, aimed boosting stagnant growth, has been at the top of Beijing’s agenda for some time; political reforms, argue some liberals, might logically follow. If Document Number Nine is any indication, it seems President Xi Jinping has other ideas. 5. South Korea and U.S. negotiate troop presence. South Korea and the United States remained polarized after a third attempt to negotiate sharing the cost of U.S. troop presence in the country. The negotiations are an attempt to renew the five-year Special Measure Agreement  which will expire in 2013. Washington wants Seoul to contribute $89.6 million more than it is willing to pay. Bonus: Inflation concerns plague underworld, too. Trillions of dollars will be burned in the next few weeks for this year’s Hungry Ghost festival, when Chinese burn "ghost money" and other paper luxuries for their ancestors in the afterlife. "What we have right now is hyperinflation," said one University of Hong Kong economist. "It’s like operating in Zimbabwe." Closely mirroring the real world, those in the afterlife need money to buy houses and cars, and even pay off corrupt officials.

Doctors Without Borders announced that it is leaving Somalia. The French-founded, Nobel prize winning non-governmental organization, known by its French acronym MSF, provides medical care in war zones. It has operated in Somalia since 1991. In 2012, MSF “provided 624,000 medical consultations, admitted 41,100 patients to hospitals, cared for 30,090 malnourished children, vaccinated 58,620, and delivered 7,300 babies” according to its August 14 statement. It is leaving Somalia because of accelerating attacks on its staff “in an environment where armed groups and civilian leaders increasingly support, tolerate, or condone the killing, assaulting, and abduction of humanitarian workers.” In Somalia, MSF negotiated with war lords and other “actors” for the “minimum guarantees to respect its medical humanitarian mission.” On that basis, MSF was willing to accept very high levels of risk. However, the same “actors” with whom MSF negotiated agreements have been directly involved in violence against its personnel–so much so that the organization, which is famous for its willingness to tolerate risk, judged that the situation has “created an untenable imbalance between the risks and compromises our staff must make and our ability to provide assistance to the Somali people.” This is a tragedy all the way around: for the Somali people and for MSF, which is rightly celebrated for the effectiveness of its humanitarian interventions. What happened? Only a few months ago there was optimism that Somalia had turned around, that the jihadist terrorist group al-Shabaab had been driven out of Mogadishu and Kismayo by Kenyan and Uganda troops (part of an African Union mission) and a new Somali civilian government was establishing itself. Abdihakim Ainte provides an overview in his African Arguments article, “Reorganization and Rebranding Make Terrorist Group a Force to be Reckoned with Again.” He concludes that a reorganized al-Shabaab under the leadership of Ahmed Godane is internally more united and operationally more diffuse. He argues that al-Shabaab is “dialing up its domestic attacks and dialing down its external operations.” He also highlights the recruitment of youths with Western exposure, and cites an al-Shabaab video that features three Somali-Americans: “The Path to Paradise: From the Twin Cities to the Land of Migration.” He also highlights the continuing fiscal and military weakness of al-Shabaab, concluding that it still needs al-Qaeda support. But, as he says, the Somalia government is also very weak. The lesson here may be an old one: failed states in an environment of religious fanaticism fueled by clan and other rivalries, take a long time to recover.

In the wake of Zimbabwe’s elections on July 30, the African Union (AU) and the Southern African Development Community (SADC) have declared the elections, which gave Robert Mugabe’s Zanu-PF party a landslide victory, “free and fair.” Others, however are less convinced of the elections’ credibility. Botswana’s government sent an election observation team of eighty to Zimbabwe. Based on its observations, Gaborone questions whether the electoral process and its result “can be recognized as having been fair, transparent, and credible” in the context of SADC’s guidelines and principals. Gaborone goes on to say that SADC “should never create the undesirable precedent of permitting exceptions to its own rules." The Botswana statement concludes by calling for an independent audit of the elections and recommends that the issues arising from the elections be placed on the agenda of the next Summit of SADC Heads of State and Government. Using SADC’s stated principles as its standard of judgment, Botswana finds the Zimbabwe elections wanting. But, South Africa’s president Jacob Zuma, Nigeria’s former president Olusegun Obasanjo, the AU, and SADC election observers and numerous other African governments have all looked the other way and endorsed the Zimbabwe elections. Botswana, once again, is the democratic exception. Sisonke Msimang, a South African journalist, provides a thoughtful, if also polemical, answer to the question of what the Zimbabwe elections mean for Africa: “This is what you call ‘an African Solution’?” She characterizes the AU and SADC reactions to the “shambolic” Zimbabwean elections that have rigged in Robert Mugabe and his Zanu-PF party as a “stark and embarrassing illustration of how wrong-headed the African solution to the Zimbabwean crisis has been.” The problem is not the principles, it is in their implementation. She recalls that the Zimbabwe Global Political Agreement with Zanu-PF and MDC-T, the power sharing solution to the post-electoral violence in 2008, was made in Pretoria and by SADC. The diplomacy at the time made good sense. But for her, South Africa, SADC, and the AU have failed to follow through and enforce and implement those agreements and therefore to ensure democratic elections. And, she observes, this failure cannot be blamed on Washington or London. “African solutions for African problems” was coined by former South African president Thabo Mbeki.

Party operatives in Robert Mugabe’s ZANU-PF party are claiming victory in yesterday’s elections. According to some observers, ZANU-PF swept constituencies that have consistently voted in the past for the opposition MDC by huge margins. Similarly, well-known and popular opposition figures have been allegedly defeated by unknown ZANU-PF candidates. Such a massive shift toward Mugabe and ZANU-PF is not credible. The Zimbabwe Elections Support Network (ZESN) is an indigenous coalition of civil society organizations formed to observe the elections. Its chairman, Solomon Zwana, summed it up to the media: “The credibility of the 2013 harmonized elections is seriously compromised by a systematic effort to disenfranchise urban voters. Up to a million voters were disenfranchised.” He continued, “when compounded by the massive bias in the state media, the campaign of intimidation in rural areas, the lack of meaningful voter education, the rushed electoral process, and the harassment of civil society leaves the credibility of these elections severely compromised.” Morgan Tsvangirai, the leader of the opposition and longtime rival of Robert Mugabe, issued a statement: “This election has been a huge farce. Its credibility has been marred by administrative and legal violations which affect the legitimacy of its outcome.” He called it a sham election “that does not reflect the will of the people.” Meanwhile, according to the media, Africa Union and Southern African Development Community (SADC) election observers are being quoted saying the elections were credible. (Mugabe prohibited any western election observers.) This should be no surprise. African election observers are reluctant to criticize elections in other African countries. The head of the AU observers, former Nigeria president Olusegun Obasanjo, was himself involved in three rigged elections at home, as some Zimbabweans observed when the AU announced his appointment. South Africa dominates SADC; as I blogged earlier, South African president Jacob Zuma threw over his Zimbabwe point person, Amb. Lindiwe Zulu, when Mugabe demanded it. It looks like SADC and the AU wanted the elections to “go away,” rather than insist that they be credible. Both organizations are likely to experience further issues of credibility with respect to elections in the future. The question is what will Tsvangirai and the MDC-T do now. Will there be protests and/or violence, or will MDC-T supporters simply switch off from the political process and wait until the eighty-nine year old Mugabe leaves the scene.

There is a Chinese saying, Yi Ye Zhi Qiu, which means “Knowing that autumn is coming by seeing a single leaf fall.” This expression is fully applicable to the current business environment for foreign pharmaceutical firms in China.  Indeed, the recent investigation of pharmaceutical giant GlaxoSmithKline’s involvement in commercial bribery in China should send a chilly signal to all multinational pharmaceuticals aspiring to make big money in the China market: the go-go years are over. On the surface, China is still the dream land for multinational pharmaceuticals. It is the world’s third largest pharmaceutical market with sales of $71 billion and with an annual growth rate between 15 and 20 percent—approximately twice that of the United States—is poised to become the second largest pharmaceutical market by 2015. Robust economic growth and the new round of healthcare reform have generated tremendous demand for more and better healthcare. Health spending in China is projected to almost triple by 2020 to $900 billion. Multinationals have additional reasons to be enthusiastic about China.  In order to attract pharmaceutical-related investment, China has been a laggard in promoting the flexible use of global intellectual property regime on public health. For a long time, Beijing has also allowed foreign firms to have independent pricing powers and exempted them from several regular rounds of government price reduction. Thanks to the government policy support and a consumer culture that favors foreign products over indigenous ones, drugs made by foreign firms are usually sold for a much higher price than those of their Chinese counterparts. At present, almost half of the drugs used by major urban health centers in China are manufactured by foreign firms. That might explain why in 2011 the top ten multinational pharmaceutical companies saw an average growth in Chinese sales of over 27 percent. Meanwhile, foreign firms operating in China could tap the lower cost base and rising expertise of Chinese scientists and engineers. The decreasing willingness of people in the West to participate in clinical trials and India’s move to issue compulsory licenses on drugs developed by multinational pharmaceuticals have only made China a more attractive destination for bio-pharmaceutical R&D investments. Not surprisingly, big pharmas like GSK and Pfizer have been busy shifting key operations, like manufacturing and R&D, to China. But a crisis is already in the making. China’s healthcare reform has also led to stricter government regulation to rein in the unbridled healthcare costs. In November 2010, China’s top economic planning agency, National Development and Research Commission (NDRC), abolished the independent pricing powers of 16 drugs, 14 of which are made by foreign companies, while capping the retail prices of 174 medicines, 61 percent of which are produced by 40 foreign companies. These heavy-handed measures shrank profit margins for foreign drug makers in China, and, in conjunction with strong competitive pressures from domestic Chinese drug makers, forced local executives of multinational pharmaceuticals to act more aggressively in marketing their products. Indeed, just days before the GSK scandal came to light, news came out that NDRC was investigating 27 companies for costs, including foreign drug-makers GSK, Merck, Novartis, and Baxter International. The problem is that government power has permeated almost every aspect of the approval, manufacture, pricing, and marketing of a pharmaceutical product, and, in absence of transparency, foreign firms find it hard to do business without bending rules and bribing healthcare providers and government officials in China. As the arrested operations manager for Glaxo China admitted, in addition to hospital administrators he had to bribe officials of NDRC, China FDA, Ministry of Human Resources and Social Security, and local public tendering offices. Against this backdrop, the rapid growth of noncommunicable diseases (e.g., cancer and cardiovascular diseases) has generated further demand for affordable patented drugs and “self-developed medicines,” drugs that were developed by a pharmaceutical company but the patent has expired. In June 2012, a Chinese newspaper reported that China had become over reliant on expensive foreign drugs to treat serious conditions and called for government measures to level the playing field. The same month, China revised its patent law, allowing eligible companies to produce generic versions of patented drugs under compulsory license. These efforts serve to develop a robust homegrown pharmaceutical industry. Indeed, the 12th Five-Year Plan (2012-17) explicitly identifies the life sciences and pharmaceutical industry as one of the strategic emerging industries that the government intends to develop domestically. This raises concerns that China may increase the pressures for international pharmaceuticals to trade market access for technology transfers. By targeting only foreign drug makers, the high-profile business bribery investigation may reinforce the perception that China is using selective enforcement of rules to create a competitive advantage for domestic drug makers. While big pharmas still enjoy an edge in terms of size, technology, and R&D investment over their Chinese counterparts, it is clear that they will face a much tougher and more complex business environment in the years to come.