Northern Nigeria is in turmoil. Last week’s attacks in the main northern city of Kano, which left at least 180 dead, are the latest in a series of bombings and shootings by the Islamist terror group Boko Haram, which demands the imposition of sharia law across the country.
There is a risk that the violence will spread southwards. A Boko Haram assault on the United Nations building in Abuja killed 21. Southern Christians have avenged their northern counterparts by burning mosques and Islamic schools. A Yoruba militia group last month marched through Lagos threatening to fight back if the south is targeted. The writer Wole Soyinka has said the nation is heading for civil war.
Nigerian president Goodluck Jonathan has responded to the escalation in violence by declaring a state of emergency in the north and announcing a massive increase in the security budget. So far this has proved fruitless, for it is not just policing that the north needs – mistrust of the security forces is so entrenched, indeed, that a response based on strengthening their power is likely to aggravate discontent.
Young northerners’ anger, whose most extreme manifestations have fuelled the unrest, is rooted less in religious sentiment than lack of opportunity. A polytechnic student I talked to in Kano in 2009 said that ‘the violence in the north is not because of religion but frustration about poverty and corruption.’ A Kano University professor agreed. ‘If we have a crisis or violence that they call religious,’ he said, ‘it’s really about poverty. It’s the poor who are easily recruited.’
Northern Nigeria lags behind the south. All ten of the country’s poorest states are in the north. The north has the lowest school attendance, lowest vaccination rates, highest infant and child mortality, and highest maternal mortality. In some instances the differences are stark. Under-5 mortality in the North West region is double that in the South East. Vaccination rates in the South East are seven times higher than in the North East. And while 90 percent of births in the South East are attended by skilled personnel, only 12 percent of northern mothers receive such care. These disparities, as the recent violence has proved, are unsustainable. In the face of glaring regional inequality, a burgeoning northern youth population will not remain placid; even if Boko Haram is defeated, others will come forward to take its place.
To neutralise the threat and dilute the appeal of extremism, Nigeria’s government needs a program for northern development – only by closing the north-south divide will deep-seated resentments be quelled. Enhanced policing in the short-term must be combined with sustained commitment to social and economic reforms. A long view is important – decades of underdevelopment will not be reversed overnight – but quick wins are also needed, to show that the government means what it says and that new promises, unlike old ones, have substance. An Agenda for the North should be based on five principles:
- An honest assessment of the problem: Goodluck Jonathan must publicly admit that the north has been left behind. He must be candid about the gaps in wealth, education and access to services, and accept that his government and its predecessors have done too little for the region. Northerners, of course, know all this already, but their cynicism will only be blunted if past errors are acknowledged.
- A grand plan for change: To begin to regain ground in the propaganda war with Boko Haram, big and well publicised commitments are needed. Raising school attendance to southern levels, matching southern infrastructure, and equalising employment rates and incomes nationwide are daunting challenges, but nothing less will be acceptable to young northerners. The north needs its own Development Goals, with ambitious deadlines, milestones and concrete investment plans.
- Youth involvement: Development Goals in obvious improvement areas like transport and power can be announced immediately, but other objectives should be developed in consultation with northern youth. The latter too want electricity and roads, but what are their other priorities? Research among young people for the British Council and Harvard’s Next Generation Nigeria project threw up widely varying demands, from agricultural extension programmes to support for small businesses to teacher training and school toilets. But unless the government engages systematically with young northerners it will not know what the region needs. Nigerian politicians have cut themselves off from the wider society – giving angry young people an outlet other than violence will help diffuse tensions and make reforms relevant.
- Small wins: Northerners, understandably wearied by years of broken promises, will have no faith in grand Development Goals unless they quickly see their fruits. While the federal government announces overarching objectives, state governments must spell out which roads will be built and when, how many teachers will be trained, how they will engage with young people, and so on. Then they must take prompt action – begin work on that road, equip a hundred schools with fans, achieve small, quick wins to show that a start has been made.
- Accountability: When they make targets, federal and state governments must stick to them. Those who fail to deliver must be held to account, making it clear that business as usual will not be tolerated. Next Generation Nigeria argued for the creation of a national youth forum that would hold regular discussions with policy makers. A Northern Forum could be charged with monitoring compliance with the Agenda for the North, and given free rein to demand action when progress slows.
Goodluck Jonathan is floundering – yesterday he feebly pleaded with Boko Haram to identify themselves and spell out their demands. He has run out of ideas. An Agenda for the North, desirable and necessary even without the emergence of the terror group to give it urgency, has the potential to break the impasse. It might be Mr Jonathan’s best hope of proving the doomsayers wrong.
January 27, 2012 at 11:07 am | More on Africa, Conflict and security | 1 Comment
Guinea-Bissau is one of the world’s unluckiest countries. Ravaged by the slave trade, stifled by Portuguese colonisers (when the latter were forced out, only one in 50 Guineans could read), and then saddled with a series of inept, corrupt post-independence leaders, the decision of South American drug traffickers to use its offshore Bijagos islands as a staging post on the cocaine route to Europe was a devastating blow (for analysis of the latter, see here). The advent of the drug gangs brought chaos, as politicians, police and the military jostled for a share of the spoils. The assassination of Nino Vieira, who had ruled the country for much of the last thirty years, was the most visible of its impacts, but the repercussions show no signs of abating.
Last week saw the foiling of an alleged coup attempt by navy chief, Bubo Na Tchuto (for more on his colourful past, see here). Taking advantage of the president, Malam Bacai Sanha, being out of the country for medical treatment, Bubo had apparently resolved to take charge of the country – and by extension the cocaine trade – before army boss and former friend Antonio Indjai could lay his hands on it.
Some observers believe the arrest of Admiral Bubo was a positive development, as he has for long been suspected of being in cahoots with the South Americans (this analysis ignores the possibility that Indjai himself, who two years ago released Bubo from United Nations custody, is similarly implicated). But the death in hospital of Malam Bacai Sanha today has shaken things up yet again. Instead of settling down, there is now likely to be a new tussle for power. Indjai is likely to be either king or kingmaker, the prime minister Carlos Gomes, whom Indjai described two years ago as a “criminal” but who is now seemingly an ally (alliances in the cocaine era are extremely fluid), will want a slice of the pie, and former president, the disastrous Kumba Yala, may make another bid for the top job. The stakes are high, the power struggle unlikely to result in anything resembling stability as long as the traffickers remain in the country. The death of the president could barely have come at a worse time. Once again, fortune has frowned on Guinea-Bissau.
January 9, 2012 at 5:26 pm | More on Africa, Conflict and security | Comments Off
To find out how world peace was coming along I rose early this morning (not easy after a New Year’s Eve engaged in one of the marathon rakı and cards sessions of which middle-aged Turks are so fond) to attend mass at the local Armenian church.
That it is possible to write such a sentence is a small miracle. A century ago, the port town of Iskenderun in southern Turkey had a thriving population of Armenians. Today there are just one hundred left – ten of them joined me, bleary-eyed, at mass. Their church, founded in the late nineteenth century, reopened in 2011 having been closed for decades due to the absence of a priest. It owes its resurrection to an earnest young member of the community who, fearful that without a focal point the old traditions would die out, decided to fill the gap, and went to Lebanon and Jerusalem to be trained as a priest. He now ministers to the small church of Iskenderun and the even smaller chapel of a nearby village, the last Armenian settlement in Turkey.
During a break in the three hour-long service, the elderly man sitting next to me introduces himself and asks my business. Within a minute or two, unprompted, he remarks that ‘this country has done terrible things to Christians.’ In 1916, he tells me, his parents had been forced to flee to Iskenderun from the interior. Turkish soldiers were killing Armenians in the surrounding region, and in anticipation of the troops’ arrival the people of his village had begun to join in. This was the beginning of a series of events described by Armenians and most of the world as genocide and by Turks, unconvincingly, as war. At least a million people are thought to have died in the ensuing months. Iskenderun itself was not immune to the killings, the old man says, but because it was a French protectorate at the time it provided a safer haven than much of the rest of the country.
Today the town continues to be a welcoming home to its small Armenian population. The priest tells me that he and his congregants have no problems with their fellow townspeople, nearly all of whom are Turks, and that Iskenderun is a fine place for Armenians to live. In recent months the oafish political posturing of Sarkozy has dominated the Armenia-Turkey debate, but as we enter what is likely to be a turbulent new year the resilience and endurance of Iskenderun’s Armenian community tells a more positive, constructive story. A Happy New Year to all.
January 1, 2012 at 5:55 pm | More on Conflict and security, Middle East and North Africa | Comments Off
Posted without comment:
December 19, 2011 at 11:04 am | More on East Asia and Pacific | 1 Comment
Doug Saunders of Canada’s Globe and Mail has an interesting post on whether the economic boom that lasted from the early 1990s to the late 2000s was worth it. He concludes, on the basis of incomes, home ownership rates and household debt in the US, Canada and Europe, that ‘in the countries that kept a lid on consumer and mortgage lending, the economic boom was worth all the hype. Everywhere else, it was like a bad dream.’ By this analysis, only France, Canada and Germany have reaped sustainable rewards.
But what if we take a wider view? In a globalised world, it is not only recessions and financial crises that cross borders, but also goods, money, people and knowledge. As global trade, aid and migration have increased in the past two decades, at least some of the economic benefits of the boom are likely to have had impacts beyond the borders of North America and Europe.
So how are things looking on a global scale? Was the boom worth it for the world as a whole? Well, so far, emphatically yes. Take poverty for example. As David showed on here a few weeks ago, world poverty has plummeted - from over 40% of the population in 1990 to just over 20% today. Or look at life expectancy – another key aspect of quality of life and one which you would expect to improve as economic growth helps people and countries pay for health care and better diets. That too has improved, by a massive five years worldwide since 1990. And in education, increases in which will help countries to maintain in the long-term their advances in other areas, the number of children who are out of school worldwide has shrunk by a third in the past two decades.
Of course, it’s much too early to predict whether all or any of these improvements will survive the current crash (let alone the environmental damage that has gone hand in hand with growth), and it’s difficult to disentangle the effects of the boom from the effects of, say, better governance in poor countries. But it’s also too early to say the boom wasn’t worth it. The world is a much wealthier, healthier and more knowledgeable place today than it was before the boom started, and even if stagnation takes hold and there are no further improvements in the imminent future, many people will still be in a better place than they were 20 years ago. It seems unfashionable to be pleased about anything in today’s gloomy atmosphere, but taking a global perspective is a cause at least for temporary cheer.
November 30, 2011 at 3:57 pm | More on Economics and development | 1 Comment
Spain’s general election campaign, which concludes next Sunday, has been a pretty dull affair. The Partido Popular, led by Mariano Rajoy, has maintained but failed to widen its substantial opinion poll lead over the governing (I use the word loosely) PSOE. A televised debate between the two main candidates – Alfredo Perez Rubalcaba is the PSOE’s chosen lamb to the slaughter – produced few fireworks. And the general apathy towards politics has been accentuated by the apparent predictability of the result.
Fortunately, there have been a few moments of levity. For it turns out that Mr Rajoy, generally a grey, awkward figure whose strategy is based not on enthusing the electorate as a whole but on avoiding statements that might give PSOE supporters a reason to get off their sofas and vote, is something of a ladies’ man. While he lacks the smooth charm of a Clinton – your average cricket bat is less wooden than Mr Rajoy appeared in last week’s debate – and the filthy lucre of a Berlusconi, Spain’s Prime Minister in-waiting has developed an idiosyncratic but highly effective method of appealing to the fairer sex: the Rajoy Head-Clamp.
Mr Rajoy has learned quickly. In order to avoid embarrassing rejections like this -
- the candidate has taken matters – literally – into his own hands. When I was at school, a fellow pupil who had little success in love was often accused by scurrilous peers of grabbing girls by the head in order to obtain a kiss. Mariano Rajoy uses a similar technique. Hardly a day goes by without some new picture appearing in the newspapers showing his vicelike grip on any woman who crosses his campaign trail. Here is an early example, in which he embraces a supporter despite her attempts to push him away:
And here he is – his grip firmer this time – with one of his party’s candidates for a local election:
You can see the evolution of the technique in this shot of Mr Rajoy with another supporter. This poor woman, her neck seized, has very little prospect of escape:
Even those closest to him – Mr Rajoy claims that most of his most valued advisers are women, and has said he is “comforted” that “they” [women] are playing an increasingly important role in public life – cannot escape his clutches. Here he is about to land a smacker on Esperanza Aguirre, the President of Madrid and one of his staunchest allies. Again, the Head-Clamp is deployed to devastating effect:
You might be surprised to hear that despite his easy way with women, Mr Rajoy’s gender policies have sometimes been criticised. He seems likely to take a firm line against abortion, for example, a policy many see as a denial of women’s rights. Some women are worried that he might repeal the PSOE’s gender equality laws. Here, too, however, the Head-Clamp has come in handy, for Mr Rajoy, obviously growing in confidence as more and more women succumb to his new seduction technique, has begun to use it to win round opponents. Celia Villalobos, for instance, is a rare Partido Popular figure who is in favour of abortion (and of gay marriage too, which her party strongly opposes). When Mr Rajoy met her in Málaga last week, this champion of feminism, undaunted by her radical stance, did not shrink from trying out the Head-Clamp:
There is only one line Mr Rajoy will not cross, having evidently concluded that some audiences are not yet ready for the trusty Head-Clamp. When he shows his tolerance of other religions by kissing Muslim women, he keeps his hands firmly behind his back:
Mariano Rajoy once said that “When a Spanish woman kisses, she really kisses.” In the Head-Clamp method, which it must be said gives the Spanish woman little choice, he has found a reliable tool for testing his theory.
November 14, 2011 at 10:41 am | More on Europe and Central Asia, Off topic | Comments Off
Yesterday’s El País carried what to me was an extraordinary story about repossessions of Spanish homes. The recession has seen the number of repossessions in Spain rising to 100,000 per year, but far from suffering for making dumb loans, the country’s mortgage laws allow banks to profit from their clients’ failure to pay.
Repossession policy dictates that if a propert has to be handed over to a bank because its owner cannot keep up with mortgage payments, the bank must endeavour to sell it at auction, and use the proceeds to reduce the amount owed. In the current, stagnant environment, however, nobody is buying, even at repossession auctions, and much of what is on offer goes unsold. Such an eventuality does not perturb the banks, however – indeed, they are probably delighted not to sell – for in the event that a property fails to attract a buyer at auction, the bank gets to keep it for 50% of what it is adjudged to be worth.
Let us say, therefore, that someone has taken out a €100,000 mortgage on a house which at the time the bank judged to be worth €100,000 (many banks, of course, made 100% loans during the boom), and that after paying, say, €10,000 plus interest of that loan the debtor loses his job – not uncommon in a country with 23% unemployment – and can no longer make his monthly payments. The debtor now owes €90,000. The bank tries to sell the house at auction, with a reserve of €75,000 (the Bank of Spain says official house prices have fallen 17%, and the bank knocks off a bit extra to make it look like it is keen to sell). Nobody is interested. The house goes unsold. The bank acquires the house for €41,500 (50% of the official value of €83,000), and the debtor, who is now homeless and jobless, still owes it €48,500, plus interest.
It won’t have escaped your notice that this is a remarkably good deal for the bank. First, it received €10,000 plus plenty of interest – let’s estimate a further €10,000 – from the hapless debtor before he lost his job. Second, it is still owed nearly €50,000 plus interest. And third, it has acquired a house worth perhaps €60,000 (if we ignore the overoptimistic official figures) for just over $40,000. Even if the debtor now does the sensible thing and tells the bank where it can put the rest of the debt, therefore, the bank will have lost just 20% of the loan. Most debtors, however, will not be so bold, and will attempt to pay back the rest of the loan for fear of losing their hard-won creditworthiness. In the latter cases, the bank will have made a profit on the original €100,000 loan of €20,000 plus several additional tens of thousands in interest, so unless significantly more than half of debtors tell the bank where to go it cannot lose on these deals.
Of course, the above example is theoretical and the actual figures are likely to vary somewhat – the bank might sell the house for €70,000, adding another ten grand to its haul, and there are costs of selling to account for too. But unless I have miscalculated it does not seem too far-fetched. Under the current policy, banks benefit by making bad loans. Since most people will try to pay back the loan even though they no longer own their property, banks can easily withstand a few bad debtors, and it is not surprising in an industry where profit rules that their vetting policy is less than rigorous. A couple of commentators in the El País article recommend raising the 50% of the value at which the bank acquires the property to 70% – this would seem a bare minimum to avoid the moral hazard created by the current law. The protesters in the 15-M movement rightly blame the banks for causing the housing crisis, but where policy puts them in a no-lose situation it is inevitable that many will take advantage.
June 27, 2011 at 11:52 am | More on Economics and development, Europe and Central Asia | 3 Comments
A trial that has just got under way in New York looks likely to provide some interesting insights into how South American drug traffickers are going about their business in West Africa, which for several years now (as detailed here and here) has been used as a transit point on the cocaine route to Europe and the US.
A prosecution witness in the trial has claimed that Fumbah Sirleaf, son of Liberian president Ellen Johnson Sirleaf and former director of Liberia’s National Security Agency, agreed to pose as a corrupt official (not too difficult a disguise for most West African politicians) to help the US Drug Enforcement Agency in a sting operation.
As the Canadian Press reports, Sirleaf and a colleague allegedly met a pair of Colombians representing a South American drug trafficking organisation, and extracted from them a promise to give them $1m and 50 kilos of cocaine in return for letting them use Liberia as a hub. ‘What these defendants did not know,’ said the witness, a DEA agent, ‘was that Liberian officials had not put their country up for sale. The Liberians had been pretending to be corrupt.’ Sirleaf recorded the conversations with the Colombians, and handed the tapes to the DEA. Defence lawyers say their clients were entrapped. Watch this space for updates.
April 11, 2011 at 11:47 am | More on Africa, Conflict and security | Comments Off
This piece from yesterday’s Africa Review contains much that is spurious. That coalition forces are ‘taking their lead from the US,’ that Libya will become ‘a basket country’ after Gaddafi goes, that African leaders see Gaddafi as a ‘benevolent godfather,’ and that in the Ivory Coast there is ‘little difference’ between Gbagbo and Ouattara are all at the very least arguable.
But these claims pale into insignificance compared with the article’s overarching point, which is that the West wants to remove Gaddafi because he is a ‘dangerous African likely to cause a united front against neo-colonialism in Africa.’ According to the Africa Review, the kindly dictator ‘identified himself with sub-Saharan Africa, championing a united Africa and showing the continent how if they formulated a collective vision, they would be able to stand on their own feet.’
The basis for this claim is unclear, for when one thinks of Gaddafi and sub-Saharan Africa, unity and self-reliance are very far from the first things that spring to mind. Was Gaddafi championing a united Africa when he armed Charles Taylor in Liberia and Foday Sankoh in Sierra Leone, enabling them to kill tens of thousands of sub-Saharan Africans and maim, rape and torture many more (even Taylor’s defence lawyer at the Hague has asked why Gaddafi is not in the dock)? Was he formulating a collective vision when he sent Libyan troops to help the mad cannibal Idi Amin crush a popular uprising, or when he gave Amin arms to massacre sub-Saharan Africans in northern Uganda? Was he helping Africans stand on their own feet when he sent weapons to a rebel leader in the Democratic Republic of Congo who is now on trial for war crimes? The list goes on and on; with friends like these, as sub-Saharan Africans reading the Africa Review must surely be asking themselves as they splutter over this morning’s cornflakes, who needs enemies?
April 5, 2011 at 9:57 am | More on Africa, Conflict and security | 1 Comment
Last week, a pro-Gaddafi protest in predominantly-Muslim Guinea was banned. This week, a similar event in Niger has been outlawed, with the head of the apparently moderate Islamic Association of Niger describing the attacks as a ‘crusade against the Islamic world.’
Al Qaeda in the Islamic Maghreb – the terrorist organisation’s West African branch – is already gaining strength thanks to ransom payments it has received in return for releasing Western hostages. There must be a risk that what is happening in Libya will push new recruits into its arms.
April 1, 2011 at 4:40 pm | More on Africa, Conflict and security | Comments Off
A joke told to me by an unemployed Spanish friend today:
Three government ministers go on a tour of Europe. One is from Britain, one from France, and the other from Spain. In London, the British minister takes his European colleagues to see the new lighting system that has been put in place to illuminate Big Ben. ‘You see our new lighting system?’ the minister says proudly. ‘It uses all the latest technology – solar power, lasers etc, and tourists love it. We invested £500,000 in it.’
In Paris the French minister takes his colleagues to see the new irrigation system which is watering all the capital’s parks. ‘You see our new irrigation system?’ the minister beams. ‘It’s ultra-modern. It recycles all the water it sprays out, and works a treat. It cost us a million euros.’
Finally they go to Spain. The Spanish minister takes his colleagues to the countryside outside Madrid. ‘You see our new motorway over there?’ he says, pointing straight ahead. The French and British ministers peer into the distance. ‘No, we can’t see anything,’ they reply, confused. ‘Aaaahh,’ the Spanish minister says with a satisfied wink. He pats his trouser pocket: ‘That’s because it’s all in here.’
March 31, 2011 at 7:22 pm | More on Europe and Central Asia, Off topic | Comments Off
A depressing piece in yesterday’s El País reports that Raymond McDaniel, CEO of the disgraced ratings agency Moody’s, who presided over the company’s devastating involvement in the financial crisis, took home $9.2 million in 2010, a 69% rise on the previous year. The justification for this? Apparently Mr McDaniel has “helped restore confidence in Moody’s ratings by improving knowledge of the role and function of ratings.”
The restoration of confidence was undeniably needed. After all, Mr McDaniels’s company it was that gave triple-A ratings to thousands of the sub-prime mortgage loans whose deterioration triggered the global recession. Triple-A, it should be noted, means a bond has less than a 1 in 10,000 chance of defaulting – in Moody’s’ estimation, as Michael Lewis points out in The Big Short, the sub-prime loans were as safe as US Treasury bonds (83 per cent of the triple-A ratings his firm gave to mortgage bonds in 2006 were subsequently degraded). McDaniels’s company, too, was still awarding triple-A ratings to Bear Stearns, Lehman Brothers and AIG shortly before – in part because they believed the ratings and invested heavily in sub-prime bonds – they all went bust and almost brought the whole financial system down with them. Mr McDaniels, as Lewis reports, told an investor in 2007: ‘I truly believe our ratings will be accurate.’
A restoration of confidence is also needed in light of the congressional Financial Crisis Inquiry Commission’s damning verdict on the ratings industry, published in January. The rating agencies, the Commission concluded, ‘abysmally failed in their central mission to provide quality ratings on securities for the benefit of investors…The rating agencies placed market share and profit considerations above the quality and integrity of their ratings.’ The Commission selected Moody’s as its case study for bad practice in the industry.
The sheer ineptness of the companies is documented in embarrassing detail in The Big Short. In one of many examples of their incompetence, Lewis shows how they rated floating-rate mortgages, whereby borrowers would spend two years on a low, “teaser” rate before the rate rose sharply for the rest of the term, more highly than steadier fixed-rate loans. The ratings remained the same even when the interest payable on the loans soared: ‘The rating agencies simply assumed that the borrower would be just as likely to make his payments when the interest rate on the loan was 12 per cent as when it was 8 per cent.’
That floating-rate loans received higher ratings meant that more people were able to take them out – the proportion of US sub-prime mortgages with floating rates rose from 40 to 80 per cent in the five years to 2007. Buoyed by the lively trade in mortgage securities, lenders persuaded tens of thousands of people who could not afford it to saddle themselves with these loans. As Lewis notes, ‘sub-prime borrowers tended to be one broken refrigerator away from default – few, if any, should be running the risk of their interest rate spiking up,’ but Moody’s couldn’t get the loan ratings out of the door quickly enough: the agency went from spending six weeks assessing the credit-rating of a single security to issuing thirty new triple-A ratings on mortgage bonds every day (the Commission called the company a “Triple-A factory”).
But it was not just stupidity that threatened the system; it was also a complete – and sometimes suspicious – lack of transparency. Another passage from The Big Short relates what happened when two investors, Danny and Vinny, went to meet a woman from Moody’s to ask how she went about rating sub-prime bonds:
The woman from Moody’s was surprisingly frank. She told [the investors] that even though she was responsible for evaluating subprime mortgage bonds, she wasn’t allowed by her bosses simply to downgrade the ones she thought deserved to be downgraded. She submitted a list of the bonds she wished to downgrade to her superiors and received back a list of what she was permitted to downgrade. “She said she’d submit a list of a hundred bonds and get back a list with twenty-five bonds on it, with no explanation of why,” said Danny.
…
“Here’s what I don’t understand,” said Vinny, hand on chin. “You have two bonds that seem identical. How is one of them Triple-A and the other one not?”
“I’m not the one who makes those decisions,” said the woman from Moody’s, but she was clearly uneasy.
“Here’s another thing I don’t understand,” said Vinny. “How could you rate any portion of a bond made up exclusively of subprime mortgages Triple-A?”
“That’s a very good question.”
It’s a question the ratings agencies prefer to duck. Ray McDaniel, of course, is not alone in benefiting from the mess he helped cause – most of the heads of the investment banks that conned or bullied the agencies into upgrading sub-prime ratings (Moody’s complied not just because it didn’t understand the complex bond packages but because of the threat that the banks would go to its rival, S&P, if the rating wasn’t high enough to sell the securities on to pension funds and insurance firms), or that bet on the dodgy bonds themselves, are still in their jobs, and still raking in obscene bonuses.
Those banks are again making profits, thanks to being bailed out by the US taxpayers they had already shafted once. Moody’s net annual profit, on the other hand – despite the alleged restoration of confidence in the company – was 10% lower in 2010 than it was in 2005 when McDaniels took the helm. During that time, according to El País, the salaries of top staff have doubled. Why there hasn’t been a revolt against these people (not least from the shareholders who are so obviously being taken for a ride) is a mystery, but as with the Middle Eastern dictators they resemble, who are finally being punished after years of pillaging their countries, the day of judgement is surely only deferred.
March 28, 2011 at 9:17 am | More on Economics and development | 1 Comment
A man from the British government rang me up the other day and asked what I thought would happen in the next five years in West Africa (the advantage of being interested in an obscure subject: you don’t need to know that much for people to think you’re an expert). This is like asking someone to predict which lottery numbers will come up this week but, having prefaced all comments with the get-out clause that the only thing certain in such an unstable part of the world is uncertainty, I ventured a few guesses.
The first thing to note if you’re a Western government is that of the five really key countries in the region – Nigeria, Senegal, Ivory Coast, Ghana and Guinea (in order of importance based on the impact of what happens in them on other countries) – four have quite serious internal divisions to deal with. Nigeria faces rebellion in the Delta and increasing unrest in the middle belt and north; Senegal has the long-running Casamance rebellion; in the Ivory Coast there is a dramatic north-south divide which is threatening to explode (again) into war; and Guinea has the disaffected Forestiere region and simmering resentment among some sections of the large Fula community. In other words, four of the region’s five most important countries are bedevilled by internal instability. This complicates policy-making and means Western governments, businesses and civil society organisations taking an interest in the region cannot be sure who will be in charge next month, let alone five years down the line. You only need to look at the recent elections in these five countries to see how shaky are their foundations: few would have predicted that Guinea’s elections would go off peacefully, but they did; elections in Ghana, the beacon of good governance in the region, looked tense for a while before a result was called; and the Ivory Coast, which had enjoyed a few years of peace after a brutal civil conflict, now has two self-declared presidents who may soon declare war on each other.
Elections in West Africa are a tinderbox – nobody knows whether they will result in peaceful change, uneventful stasis, or devastating civil war. Two of the three pillars that have not held recent elections – Nigeria and Senegal – have ballots coming up in the next twelve months. Goodluck Jonathan looks like winning in Nigeria (and stability is generally much more likely if the incumbent wins), but what if he loses? Will he try to cling to power at all costs? Will he look across to the defeated Laurent Gbagbo in the Ivory Coast and see that he doesn’t need to stand down if he loses? It’s unlikely, but nothing is impossible, and some of Jonathan’s recent pronouncements suggest a growing taste for power. And in Senegal, where Abdoulaye Wade plans to bulldoze the constitution and stand for a further term in power in 2012 (ignoring the official two-term limit), will the opposition manage to mount a defence of legality? If not, will others take it into their own hands and turn to violence to oust the increasingly unpopular president? If the octogenarian Wade wins and then hands over to his son, this could trigger even greater resentment (a Senegalese friend I spoke to in Spain a few days back said his people would rise up if they thought their country was being turned into a kingdom, and since I started writing this post, the country has already experienced its first day of rage).
There are external threats, too, of course. South American cocaine dealers are strengthening their foothold in Guinea-Bissau, and are likely to take advantage of any signs of weakness or instability in neighbouring Senegal or Guinea to broaden their operational base. The drug dealers appear to have already linked up with another external threat – Al Qaeda in the Islamic Maghreb – which is branching out from kidnappings to assaults on governments and foreign interests in the region (the US government has just warned of an imminent attack on its embassy in Bamako, Mali). AQIM has made overtures to Islamists in northern Nigeria, suggesting a pan-West African terror network is the goal. The governments of Mauritania, Mali and Niger are most vulnerable to the extremists, but they could also have destabilising effects on Nigeria and Burkina Faso as they spread south.
It is not all bad news, however. Ghana is at peace, and if it can use its new oil revenues effectively and fairly it will act as a motor for the surrounding economies. Guinea is stable, and if it can avoid contagion from the Ivory Coast troubles has the potential to achieve rapid development as prices of minerals continue to rise. And if Senegal and Nigeria can get through their elections without drama, four of the five regional pillars will be well placed to confront internal and external threats.
This would leave the Ivory Coast as the basket case. I have argued before that a power-sharing deal is the least bad solution, and it still looks better to me than civil war. If the country does slide back into conflict, the domino effect will first imperil its fragile neighbours Guinea and Liberia (where elections are due this year), before possibly rippling to Sierra Leone (elections next year) and Burkina Faso, which has problems of its own.
Underlying all this instability is the fact – and this part is not a guess – that West Africa has too many young people and not enough resources or jobs. Climate change, which is triggering desertification, the drying up of boreholes and drought, is speeding the rush to the cities, where services are mostly absent and living conditions often unbearable (Burkina Faso may be an unlikely venue for a revolution in the short-term, indeed, simply because it is less urbanised than most of its neighbours). Climate change is also increasing food prices, and even the strongest governments are unlikely to be able to withstand a prolonged and violent protest campaign by the young urban-dwellers who are hardest hit by price rises.
The more pernickety amongst you will have noticed that I have cleverly avoided making any actual predictions in the foregoing – the region is so unstable that anyone doing so is likely to end up with egg on his/her face. But if forced to pin my colours to a mast, I’d very tentatively put the following possibilities forward for discussion:
- increasing urban unrest, sometimes boiling over into serious conflict as the combination of hordes of young urban men, poverty, corruption and repression of dissent proves as explosive as it has in the Middle East;
- strong mineral prices to boost economic growth in mineral-rich countries while widening the gap between rich and poor;
- Nigerian elections to go off relatively peacefully, though unrest in the Delta and particularly the north will gradually intensify over the next five years; Senegalese elections to confirm Wade in power (sparking violent protests);
- an escalation in activity by South American drug dealers, who may overrun Guinea-Bissau and then use that country as a base for expansion into Senegal;
- Al Qaeda in the Maghreb to join up with Nigerian Islamists and target the weaker governments of the Sahel.
Interestingly, the man from the government didn’t ask me what he thought Britain could do to help West Africa, but I told him anyway. In the short-term, we should promote peace at all costs in the Ivory Coast, admitting that its democracy is imperfect (who is to say that Ouattara wouldn’t do the same as Gbagbo in a few years time if he loses the next election?), but that another civil war would be a whole lot worse and could lead to an irreparable rupture between north and south. And we should hold our businesses to the same standards in Africa as we would expect of them at home (of the $37 billion siphoned illegally out of Nigeria in 2008 according to this Center for International Policy report, about half was stolen by Western oil companies dodging local taxes). In the longer-term, we should stop subsidising our uncompetitive farmers so that West Africans can surf the tide of rising food prices rather than be drowned by it; work to prepare our populations to accept more West African immigrants; and begin to make the case for legalisation of drugs. The latter are obviously far-off goals, but if we continue to turn away its people and encourage illicit drug trafficking, we will be hindering the region rather than helping it.
March 24, 2011 at 8:42 pm | More on Africa, Conflict and security, Economics and development | 3 Comments
The Dark Side:
I have recently moved to Spain. In order to buy anything official like insurance, a flat, a car or a bank account – you have to pay for your bank accounts here – the foreign resident needs what is known as a NIE (a “foreigner’s identification number”). A month ago my wife and I made our first attempt to obtain one. Getting up early, we drove the forty-five minutes to the nearest NIE office in Marbella and arrived at 8.45, fifteen minutes before the office opened. When I asked the policeman who was guarding the queue of supplicants about the procedure, he told me we had arrived too late, that we should have acquired a ticket before 8.30, and that to be sure of a ticket it was advisable to arrive no later than 6.30. Needless to say, none of this was on the relevant website, which merely told the reader the opening hours and the forms he needed to fill out.
Today we tried again, this time in Málaga. We rose at 6.45 and arrived at the office at 7.30. The queue was short, and the duty policeman told us to wait until 9, when the office opened, before asking any questions. We stood with the others, outside, buffeted by a cold wind. By the gate was a poster, advising all those waiting that they needed photocopies of every page of their passports. Even the empty pages. This is apparently a new policy, as it does not yet appear on any of the relevant websites. Perhaps it is a job creation strategy, although even in as dire a recession as Spain finds itself in I find it hard to imagine how desperate you would have to be to apply for a position as a reader of empty passport pages. The Venezuelan behind us in the queue had not seen this poster by the time we started chatting to him at 8.45 – panicked that he would lose his place in the line, thereby condemning himself to returning another day (and taking another morning off work in a job market where employers call all the shots), he sprinted off to find the photocopy shop that I had located when the queue was in its infancy, and arrived back just in time to avoid ejection.
Gradually the queue filled up with North and West Africans, South Americans and a few Eastern Europeans. At around nine the doors opened, and those of us at the front were promoted to a wooden bench in the office yard. Half an hour later we were inside. There was one official dealing with the entire queue of around a hundred applicants – his colleagues were apparently all still at breakfast (my Venezuelan friend told me that the last time he had done this, five years ago, anyone not inside the building by twelve had had no chance of being seen that day: the office closed at two sharp and those still outside at midday were told to leave).
Of the half dozen people in front of us in the line, three – an African and two Moroccan women – left the office shaking their heads in despair; they had presumably not seen the new poster or had filled in the wrong forms or the right forms wrongly. At 10.15 we saw an official. We stood in front of his desk like errant schoolchildren summoned before the headmaster – there were no chairs. He did not look up as I handed over my documents. ‘Wrong office,’ he grunted (fortunately I understand Spanish). ‘Huh?’ ‘If it’s your first time, it’s another office.’ Still he did not look up. It wasn’t my first time – I had lived in Spain in the early nineties – but I doubted this would make any difference so instead asked him where the correct office was. ‘Ask the security guard.’ ‘Can’t you tell me yourself?’ ‘No, ask the security guard.’ It was as if he was being docked part of his salary every time he uttered a word. The ritual humiliation of any immigrant seeking assistance or even just politeness seemed to be an intrinsic part of his job.
The security guard was no better. ‘I don’t know what you want,’ he said. ‘Fill out this form and bring it back.’ ‘I can tell you what I want,’ I replied: ‘A foreigner’s identification number.’ ‘Are you both from the European Union?’ ‘Yes.’ ‘Go to the police station then.’ ‘Is it too late to do it today?’ ‘No idea. Ask at the police station.’ We trudged off, shaking our heads, three hours of life wasted.
The Bright Side:
At the police station we were greeted with a smile by the guard on the door. He showed us to the room we needed, and a friendly woman there processed our application within twenty minutes of our arrival. We received the numbers we sought there and then.
We had evidently gone to the wrong place initially. This was dumb, but none of this was made clear on any website. The experience, however, gave us a glimpse of what non-EU citizens must go through to renew their permits to stay in Europe (one dreads to think what first-timers have to endure). Although there is no explanation for the rudeness, our Venezuelan friend suggested that the slowness of the process is probably deliberate. ‘If they did their job efficiently,’ he said before we left him to battle with the hostile official, ‘there would be too many people getting through.’
March 22, 2011 at 2:05 pm | More on Cooperation and coherence, Europe and Central Asia | Comments Off
The convulsions in North Africa have in the past three weeks found an echo south of the Sahara.
The death in custody of a student in Burkina Faso has sparked a series of student protests against the brutality of Blaise Compaoré’s regime. At first these protests were limited to Koudougou, where the student died. Koudougou is traditionally a hotbed of Burkinabe agitation, and the government assumed it could confine the protest within the city boundaries by closing schools and clamping down on demonstrators.
But by extending school closures to the whole country, the government seems to have fanned the flames. The protests have spread to at least seven other cities, with police stations burned down, prisoners freed from jails and in one city the headquarters of the ruling party set on fire. The students, moreover, have been joined by hawkers and ordinary citizens.
Compaoré, as is his wont, has responded forcefully. When early concessions did not work – the Koudougou chief of police and regional governor were fired to placate the students – his security forces opened fire on protesters, killing four so far, with one policeman lynched in return. A peaceful march is planned for today in Ouagadougou, the capital, with student unions demanding the removal from office of the minister of security as a condition for halting the demonstrations.
There are many similarities between Burkina Faso and her Middle Eastern counterparts. Compaoré, like Mubarak, Ben-Ali, and his close friend Gaddafi, runs a dictatorial government that brooks no dissent (Western governments count Burkina as a democracy because it holds occasional rigged elections, but few in the country share that view). There are hordes of underemployed young men whom the population explosion has deprived of a livelihood (and if war breaks out in the Ivory Coast their numbers will be swollen by many of the three million Burkinabes currently living there). Food price rises are exacerbating hunger and poverty (the main cities were rocked by food riots in 2008). And the older generation has sequestered the nation’s resources, creating great resentment among the youth.
So far, the protests have focused on police brutality rather than on the repressive government as a whole (in a similar way to Saudi Arabia’s day of rage yesterday and the early rallies in Tunisia and Egypt), but they may become more wide-ranging. Compaoré assuaged the 2008 food riots by subsidising staple foods, but his latest concessions have not been so effective. It would be a stretch to predict that the discontent will harden into a revolutionary movement, but it is not impossible, and given the underlying conditions in the country (and indeed in West Africa as a whole), Compaoré might have to get used to a rougher ride.
March 11, 2011 at 12:18 pm | More on Africa, Conflict and security | Comments Off
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