Capital Flight

May 12, 2009

Foreign Policy has an interesting (if brief) essay by Khadija Sharife on the problem of keeping African money in Africa.  She downplays the standard interpretations of endemic corruption of African elites or the theft of resources from war-torn countries (although she mentions both of these problems.)

Instead, Khadija’s essay focuses on the use of tax havens, mostly in Europe, that facilitate the transfer and dispersal of tax revenues and cash from Africa.  As she writes:

The numbers are staggering. Each year, more than $1 trillion exits developing countries, and more than $140 billion of comes from Africa. That’s almost four times as much as the continent gets in official development aid. Sub-Saharan Africa may be the world’s poorest region, but it’s also its leading net creditor.

She’s right.  Those numbers are staggering.  Staggering and enlightening and depressing.  $140 billion dollars, which by all rights should remain in Africa for spending, investment and savings, is basically disappearing in a massive swap to support the lavish Swiss economy or some accountant on the Channel Islands.

International capital flows are usually beyond my understanding (and the scope of this blog), but even a financial retard like myself can see that this is an untenable situation.  For every dollar in aid that goes into Africa, almost four more are spirited out to various tax havens and corporate accounts.  Generally speaking, I take a fairly libertarian view of government regulation, especially given that the law of unintended consequences seems to apply especially strongly to new financial legislation.  However, in this case, I can’t help but wonder if some readjustment of either the international financial system or local European tax laws might make more of a difference for Africa than all the aid that is currently pumped into the place.



May 9, 2009

The newswires are abuzz lately with the word that an ISAF airstrike killed over 50 people in Azizabad, Farah Province.  Exact numbers are still to be determined, but it looks at this point like approximately 30 civilians and another 20 or Talibs.  Not particularly good odds for a supposedly “population-centric” COIN campaign.

Still, it’s worth pointing out that at least some of the early reports (including the ones coming out of ISAF and CJTF-101) state that the Taliban intentionally took refuge in civilian residences after ambushing a combined ISAF/ANA unit, and that at least some of these civilians were then prevented from leaving the area by the insurgents.  In other words, the Taliban went looking for a fight, found one and then did everything they could to ensure that the local population got caught in the crossfire.  No telling if these allegations will turn out to be true this time, but it wouldn’t be the first instance of this sort of thing.

The usually-respectable Free Range International seems to blame the civilians for allowing the Taliban to operate out of their village in the first place (certainly a no-no by any standards).  However, I’m mildly more sympathetic to the dilemna of the locals in this instance.  The chance of being incinerated by an ISAF airstrike pales in comparison to the near-certainty of being shot by the insurgents for resisting.  The fact that (apparently) the Taliban was willing to sacrifice several dozen local villagers to accomplish their mission indicates that they had little regard for the locals well-being, a idea which would have been abundantly clear to said locals at the time.

More important in my mind is the differing approaches to Information Operations (IO) which come out of this incident.  ISAF is conducting a full inquiry, with teams of investigators on the ground, sifting through the rubble and attempting to determine the truth.  Eventually, I’m sure they’ll figure it out, and I’m fairly confident that ISAF will be at least partially vindicated.

The Taliban on the other hand did not conduct any investigation.  This however did not stop them from making numerous public statements in the immediate aftermath, including the first public acknowledgment of civilian casualties.  That makes sense if your goal is a) to discredit ISAF for their overly agressive use of airpower, b) take the moral high ground and claim that it wasn’t your fault, or c) both.  The interesting thing for me was a story I heard the next day from a member of my staff.  This officer, an Afghan and a medical doctor, has a brother who works in Farah Province for the ICRC.  He claimed that within hours of the strike, the Taliban had called the ICRC (one of the few NGOs with decent relations with the insurgents) and reported the casualties and requested aid.  An ICRC convoy of medical supplies and personnel was dispatched almost immediately, which is pretty good reaction time for an NGO.

So, while the wounded were still bleeding out and the ruins were still smoldering, the Taliban had already put into motion a sophisticated IO campaign involving public denouncements of the action, cooperation with a respected international NGO and detailed claims as to the causes and effects.  True or not, the first mover advantage is hard to overcome. 

Meanwhile, the PAOs at ISAF were still in the “Wait a minute, we did what……….!?” stage of their reaction to the public and international press.  No wonder most of the Muslim world has the good guys and bad guys mixed up.