Seid Hassan- Murray State University
February 13, 2016
In addition to the senseless killings of protesters by the ruling party against the Oromos, the latest video clips and news reports also indicate that the same protests in Oromia region have led to the burning/destruction of properties, foundations, etc. There is an ongoing and raging debate among Ethiopians, residing both in and outside of the country, in regards to this debacle. Some members of the diaspora link (and rightly so in this regard) the burnings/destructions to the innumerable atrocities and endemic corruption committed by the ruling party. Their condoning seems to emanate from the fact that a good portion of the destroyed properties are owned by corrupt elites and foreign companies (individuals). The owners of these properties and structures are reaping what they have sown, they argue. Folks who echo these sentiments seem to consider riots as antidotes to unending pillaging and a necessary evil. There are others, particularly those who consider themselves as soldiers of the peaceful struggle, which includes those who participated in and organizing of the protests, who argue against the burning and destruction of properties. The observed destructions and burnings, they say, were perpetrated by saboteurs of peaceful struggle and repercussions of the ruling party’s uncalled for brutalities on peaceful protestors. The burnings and destructions also seem to have put a large portion of Ethiopians in a quandary and deep dilemma. They really seem to be between a rock and hard place (that is, unable to either condemn or condone the destructions).
As a soldier of non-violent resistance, I also do not condone the observed burnings/destructions. But contrary to our wishes, I acknowledge and fret the fact that burnings and destructions of greater magnitude may be inevitable. In fact, I saw this debacle coming, long ago. And I have raised this possibility, on several occasions, with friends, such as Professors Minga Negash, Messay Kebede and Berhanu Mengistu, every time we discussed the cunning nature of Ethiopian corruption. As we discussed the magnitude of Ethiopian corruption, it seemed as though our heads have become dizzy and our voices trebled, for the unfathomable destructions could reach epic proportions. Why do Ethiopians consider the government supported investment structures and properties as not belonging to them but instead as “foreign” assets and even vehicles of exploitation and oppression?
Now, if you want to understand why the protesters failed to understand that foreign direct investment (FDI) creates wealth (which it does), but they instead consider even the “domestically” (political-party and elite-owned) “investments” as alien/foreign owned, why foreign direct investment is considered as a “fancy word for stealing” and as highly exploitative and accessory to evil, etc., and why they even venture for their destructions, I urge you to read on. If you want to understand the nature of Ethiopian corruption, its ramifications- how it has been and continues to irreparably damage the social and institutional fabrics of the country, and most importantly, if you really want to be thinking of designing strategies for combating it and forestall potentially devastating destructions, please allow me to elaborate.
This commentary is designed to implore you (the reader) understand the intractable nature of Ethiopian corruption and then think about potential “solutions.” This is because designing strategies and finding “solutions” require a good grasp of the type of corruption found in a specific country- in this case, Ethiopia.
State Capture – a Form of Garand Corruption as the Root Cause of the Problem
As I have shown on several occasions before, what we have been witnessing in Ethiopia is the most pernicious and intractable form of corruption known as State Capture. This form of corruption needs to be distinguished from what is known in the corruption literature as Administrative (Bureaucratic) Corruption. The latter is the type of corruption defined and observed in the traditional manner, almost all countries, save post-communist (transition) countries. In particular, Administrative (Bureaucratic) Corruption deals with the extent in which the bribe payer uses the existing laws, rules, and regulations to tip the balance in his favor. In general, administrative (bureaucratic) corruption is known to take place at the implementation level of the bureaucracy while the political (grand) corruption of it takes place at the highest level of political authority. Examples of variants of administrative corruption may include: impeding the implementation of justice; getting involved in the forgery and/or destruction of documents; delaying and/or procrastinating on executing high level official (assigned) duties; using official hours for personal gains; misrepresenting one’s authority; getting involved in partisan favors (nepotism); misusing public property; engaging in absenteeism; getting involved in kickbacks from developmental programs; pay-offs for legislative support, diversion of public resources for private use; overlooking illegal activities; common theft/embezzlement; overpricing, establishing non-existing projects and tax collection and tax assessment frauds, etc.
Even though it may be difficult to completely eradicate it, fortunately, nations could minimize the damage done by Administrative (Bureaucratic) Corruption by ensuring transparency, accountability and openness in governmental activities. This is done, for example, by (a) Establishing independent power centers outside the bureaucracy; (b) Establishing independent electoral boards and developing and allowing competitive party politics; (c) Using the independent media, which in turn enables interest groups, members of civic society, NGOs, etc.; (d) Using the investigative powers of the parliament; (e) Setting up of independent anti-corruption boards and commissions; and (f) Using the independent judiciary system.
However, what we have been witnessing in Ethiopia is a different kind of corruption known as State Capture, which is known to have manifested itself in transition (formerly socialist) countries. It is a phenomenon in which powerful groups exert their corrupt and undue influence in order to shape the institutions and policies, laws and regulations of the state for their own benefit rather than for the public good. State capture could arise and be practiced in several ways: it could result from powerful individuals, groups or firms using both non-transparent provisions as well as legitimate and transparent channels to deny competing groups have access to state officials and resources. It could also arise from the exploitation of the “unclear boundaries between the political and business interests of state officials” by specific groups and state officials for their mutual benefits at the expense of the society in question (Hellman: 1998:3). According to Broadman and Recanatini (2001), state capture is harmful corruption that subverts the entire political process designed to ensure that policies and regulations favorable to specific groups and business interests are implemented.
State Capture may differ from country to country. In some countries, state capture could clearly be seen as a variant of a corruptive practice known as crony capitalism in which powerful groups, individuals and oligarchs shape and manipulate the formation of new policies- the “rules of the game”- to their own advantages. The phenomenon could be observed whenever state officials pass decrees and/or legislative votes favoring the organized business groups, oligarchs or powerful individuals. It could also be observed by huge “concentration of economic and political power” and economic inequality arising from self-interested actors gaining and controlling over the state and its resources. The State Capture phenomenon could also be observed by the collusive activities of powerful leaders (regional or national), ministers, and legislative and judiciary executives, corporate executives of state institutions/agencies and party-owned companies. In some cases, state capture is a result of weakened legal and political institutions. In some other instances, captors purposely weaken the country’s legal and political institutions so that they would be susceptible to capture and exploitation. It is also manifested by the failure of economic reforms and the stripping of public assets by some powerful individuals or organized groups using the “privatization” process. In some instances, state capture could be observed when organized groups clandestinely create a state within a state (“parallel state”) in order to influence the state structures, including the judiciary, the security apparatus, the military, and even the media. In some countries where state capture has occurred, the line between what is private and what is public, what is official and non-official, what is state and what is market are totally blurred. As you can observe from the above descriptions, under state capture, a country’s laws, regulations, legalities, and ultimately its institutions are part of corrupt transactions. Such corruption features are quite different from the Administrative/Bureaucratic Corruption described above.
In some countries such as Ethiopia (Hassan, 2013) (and to a limited extent, countries such as Uganda and Rwanda), the entire political, economic, legal and military structures are under the control of powerful cliques or ethnically organized groups. Corruption of this type is pernicious because these same organized groups, in collaboration with owners of powerful firms and/or oligarchs, happen to dominate the vital sectors of all institutions (economic, social, legal and military). In some cases, as manifested in countries such as Russia in the 1990s and in some countries in Africa, Ethiopia included, the practice of capture is highly organized and predatory. The captors are known to use, among other things, violence and intimidation. They are known to have created their own monopolies (oligarchies) and cartels in order to monopolize the vital sectors of the economic system while at the same time disabling the ongoing market reforms. In short, this kind of corruption resembles a modern version of organized crime.
Country Specific Characteristics of Captors
The corruptive activities of the captors are largely similar but they may differ by country or origin and type of captors. In post-communist countries, Hellman et al (2000:3) make distinctions between private “captor firms (i.e. firms that make private payments to public officials to affect the rules of the game) and influential firms (i.e. firms that have influence on those rules without recourse to private payments to public officials).” The captors in general are the nomenklatura – a group of former managers and bureaucrats of state-owned enterprises under the old Soviet system and other Eastern Bloc (estimated to be about 1.5 percent of the population) who were “engaged in ceaseless political maneuvering among themselves while maintaining total power, as a privileged class, over all the others.” They could also be public officials who “may use their positions to capture enterprises,” or a group of actors such as the members of parliament, the executive, ministers and judiciary acting in unison (the ruling party leaders acting prosecutor, judge, and jury).While largely similar, state capture in developing countries such as Ethiopia, differs from those in post-communist countries in some important ways: For one, unlike their Russian and East European counter parts, the Ethiopian captors do not exclusively belong to the nomenklatura (higher officials of the communist parties), since a large portion of them were rag tag guerrilla fighters who had marched all the way out from the bushes to seize power and enrich themselves. Secondly, in countries such as Ethiopia, the state capture phenomenon is highly parochial (and quasi-feudal and ethnic-based) in nature. Unfortunately, patronage infested Ethiopian corruption has a strong tendency for both envy and tolerance – such a tolerance for vice emanating from those whose ethnic affiliation with the ruling clique. This tendency is known to have permeated the Kenyan society (Michela Wrong, 2009: “It is Our Turn to Eat.”)
One also observes a very strong patron- clientelistic and neo-patrimonialistic nature of corruption in these countries (Ethiopia, in particular). Thirdly, unlike in some post-communist countries such as Eastern Europe, in which some oligarchs were forced out of political power, the Ethiopian captors continue to hold both political and economic power. The Russian oligarchs made their fortunes through wheeling and dealing and by committing all kinds of economic crimes including buying Russian assets at throw away prices (so did their Ethiopian counter-parts). Mr. Putin did not like the political meddling of some of them and hence used his scorched earth tactics to put some of them behind bars and sending some of the others into exile while at the same time stripping off their assets (while leaving alone those who did not venture to politically challenge him). The captors in Eastern and Central Europe gradually lost their political clout partly due to the desires and efforts of those countries to join the European Union and fulfill the EU’s conditions and the latter’s assistance in fighting and eradicating state capture. Fourthly, state capture in countries such as Ethiopia is unparalleled in that it is a stronger form than one finds elsewhere in that it encompasses the seizure of the political apparatus and the commanding heights of the national economy –the seizure extending to the military, security, foreign policy and judicial system and even the media. In Ethiopia, the predatory oligarchs’ appetite for controlling the commanding heights of the country’s economy, misappropriating its resources and accumulating wealth using a network of political power continues unabatedly, thereby exacerbating the gaps between the haves and the have-nots. The elite predation has led to a virtual criminalization of the state to the extent that mafia type of criminal activities pop up occasionally. Another peculiar characteristic of State Capture in Ethiopia is its high level ethnocentric nature. Moreover, the lines between what is official and what is private are totally blurred, and the party and the state have become almost indistinguishable. It is for this reason that many are tempted to label the Ethiopian corruptive system as highly kleptocratic. As a result, they say, this captured economy is trapped in a vicious cycle in which any policy reforms designed to improve governance are doomed to fail due to the constant collusions between the powerful groups operating from outside and within the government.
What Has Transpired in Ethiopia?
What is being witnessed in Ethiopia is the establishment of shell companies in contravention of the country’s commercial codes, such as establishing “share companies with only 2-5 “shareholders”, most of these “shareholders” being party leaders. As Gennet Mersha explains, parallel existence of political party-owned businesses has led to “leakage of resources in the form of capital flight, the granting and manipulation of licenses, (c) use of inside information pertaining to privatization, competition for state contracts and bids and awards of project contracts such as road and building and other construction works, (d) lack of competition, and, (e) systematic discrimination of businesses and professionals.”
What we have observed is “favouritism and clique building [which] flourished around the privatization boards (Minga Negash). What the Ethiopian people witnessed were improper handling of the restructuring and privatization process (Mersha: 2010), Young (1998), Vestal (2009), and Negash (2010). What Ethiopians have witnessed is large-scale systemic state capture through the rise of suffocating political-party owned companies (“endowments”), such as EFFORT and the numerous companies subsumed under it. What we know is the refusal of the members of the ruling clique (TPLF) to return the country’s assets that they looted when they were guerrilla fighters. What we know is party hacks presiding “over top-level corporate boards of party-owned businesses and major government enterprises including banks” and their funneling of easy bank loans to regional party-owned companies. What has transpired is the disfranchisement of “other” Ethiopians and the stifling of completion through the awarding of contracts to those connected with the ruling party, such high level nepotism being very high particularly in the construction sector (see, World Bank’s Diagnosing Corruption in Ethiopia, Chapter 6, for example.) What we have witnessed on the daily basis, twenty five years and counting, is the currying of favor to these same conglomerates and cadre-owned and favored companies resulting in the distortions of competition and lack of competitive marketplace. What we have witnessed, much like countries which were under the influence of the Soviet Union, is the seizure and control of the financial sector by a specific group. What we are witnessing is suffocation through the use of the so-called new press and anti-terrorism laws. What we observe in Ethiopia is, the passage and adoptions of new laws such as the one prohibiting of opposition parties from receiving funds from abroad, while at the same time the ruling party benefiting immensely from it. What has developed is a culture of zero-sum mentality and practice, a powerful leadership with deaf ears that is “too rigid, arrogant and disconnected” with high level of patronage. What Ethiopians have witnessed is the constant attack and dismantling of opposition political parties, the weakening of the country’s institutions – be they the dismantlement of independent civic organizations, the watering down of the quality of education, constant violation of the rule of law, etc. What is being observed is the creation of toothless anti-corruption commission to hoodwink donors and the hijacking of anti-corruption efforts-to the extent of using it to attack and imprison political opponents. Just like in Russia and elsewhere, the ruling party of Ethiopia has captured the legislature, the executive, the judiciary and practically all regulatory agencies- all distinguishing caricatures of State Capture- the highest form of corruption that is “directed toward extracting rents.
These are just a few.
State Capture and (mafia type) criminal oligarchy, accompanied with an unbelievable arrogance and repression has resulted in deep disillusionment, cynicism and polarization in the country. It has resulted in once upon a time rag-tag guerrilla fighters and poor taxi drivers, not known for their ingenuity or something else that is good, becoming extremely wealthy, almost overnight. It has led to the setting ablaze of property, in which local businesses happen to bear the brunt of the destructions. Riots do not take place in a vacuum. The causes are the nauseating greed on the part of the ruling party, the eviction of tens of thousands of people from their ancestral lands and the transfer of these same lands, with little or no compensations, to the ruling party owned companies, elites and foreigners. The causes of the riots are, no doubt, outright nepotism and organized crime committed by the ruling elites. Corruption riddled land transfers have resulted in a transfer of resources from the people into the hands of the very few. Those whose lands have forcedly been taken away and displaced and those who have been oppressed seem not to be taking the abuse any more. As an economist, I see the ruling clique’s overreach (of forced displacements, arrogance, insatiable greed and suffocating corruption) having lasting collateral damages. Thanks to the overreaches of the government and criminal activities of party elites, foreign direct investment is now considered a fancy word for deceit and exploitation. Indeed, people-centered and properly compensated urban development projects would have been win-wins for all those involved. Thanks to the land-related rampant corruption, the ruling clique’s dirty tricks have undermined future legitimate development projects. No doubt these overreaches will be big time setbacks to future development.
Allow me to elaborate the fraud infested and predatory land grabs which sparked several unrests, a little more. Just like North Korea and China, land belongs to the Ethiopian government, which in turn created a space for a frenzy of uncompensated land grabbing, rent-seeing and nepotism. Using several endless land proclamations as their tools, Ethiopian officials and land grabbers might have copied Chinese practices of forcefully expropriating land. It appears that land grabbers in Ethiopia have failed to understand the problems associated with such a practice. For one, forced evictions have resulted not only in human rights abuses and the violations of the international covenant forced evictions that China has ratified, but the scheme has contributed to a growing income inequality. Ethiopian authoritarian rulers should have known that growing inequalities have consequences. Secondly, a large portion of the eviction in China was largely done by local officials and against the wishes of the central government. In Ethiopia, both the re-zoning and demolition plans and executions are done by the directives and order of central government authorities, contributing to the rising resentments. Thirdly, both the central and local governments of China were able to create factory jobs which absorbed a significant portion of the evicted peasants, resulting in indirect compensations to the lost properties for those who have been displaced. In Ethiopia, local communities hardly get any benefits from the “investments” despite promises of creating jobs. Fourthly, contrary to what is largely observed in Ethiopia, it appears that Chinese local authorities and developers compensated evictees even though the compensations were nowhere equal to the market value of the properties. Fifthly, in the Ethiopian case, those who benefit from land –related corruption (which includes forced evictions and demolitions) happen to be the top echelons of the ruling party. Sixthly, unlike the Chinese case, the Ethiopian population is highly divided along ethnic lines, such divisions exacerbated by the policies of the regime itself. Last but not least, unlike the Ethiopian land grabbers, the Chinese authorities never use live ammunitions against protesters whose lands have been seized illegally. That must be why other ethnic groups, the Oromos, in particular, consider the so-called federal police (repeatedly observed brutally beating students) and the military only belonging to and used as a killing paramilitary squad of the TPLF. The Ethiopian people have repeatedly witnessed that the ruling party have never been accountable to the atrocities it committed. Witness the tortures, disappearances, mass arrests and massacres the regime committed in 1995, 2005/6, 2014, and now 2015/16, the genocide committed against the Anuak people in 2003, the killing of university students in 2001, just to name a few. The Ethiopian people have been traumatized by the endless atrocities. It is these and numerous other atrocities that have forced the Ethiopian people to think that this is not their government. It the lootings and the extreme corruptive activities which have led the Ethiopian people to think the properties and investment as not belonging to them but to a parasitic group who are not one of them. Consequently, it is not hard to imagine corruption that is committed by “others,” – and in a lot of cases, orchestrated by those who claim to be representing one ethnic group – to be viewed with great envy and anger thereby escalating the polarization. No wonder it results in extreme discontents and riots.
State Capture, together with oppression, arrogance and brutality is leading the country to experience an accelerating socio-politico-economic breakdown and to potentially ethnic/sectarian conflicts- all contributing to the unravelling and possible disintegration of the rotting system. Unfortunately, the collapsing system will have collateral and innocent victims.
“Solutions”: Where do we go from here?
As I indicated above, State Capture is anathema to reforms. In the Ethiopia of today, there is no independent judiciary that can uphold the rule of law since the rule of law gets subverted by top level officials on a constant basis. There are no checks and balances. All we have is a rubber-stamping “parliament. All we have is a toothless anti-corruption agency which is saddled by the lack of resources and incompetence. Nearly all independent and privately owned newspapers have been forcefully shuttered and many of the journalists sent to jail or exiled. These brutal measures have deprived the country (and the ruling clique itself) from using an independent media to expose the rampant corruption. Civil society organizations have been either decimated or captured. What we have is an executive body which fires auditor generals when the auditors expose corruption and the disappearance of billions of birr. In today’s Ethiopia, every regulatory agency is captured, to the extent that Mr. Sibant Nega, the founder, architect and now revered figurehead of the TPLF, boldly and unashamedly admitting the obvious: that corruption in Ethiopia is so bad that it has permeated even the religious institutions. The Ethiopian oligarchy lacks a Vladimir Putin (that is, Meles Zenawi) who could have served as an anti-corruption czar and used his unparalleled power and Machiavellian tactics to trap and quell his distractors and possibly extend the political life of the oligarchy. The paranoia riddled and heavy handed measures taken against the Oromos by the ruling clique clearly indicate not only the ruling party has become headless but it also indicates a lack of command and control.
What we are left with is three relatively powerful groups, who could potentially allay the pains inflicted upon the Ethiopian people by rampant corruption – their measure having the potential to extend the political life of the kleptocratic regime. Even though these groups may be able to extend the political life of the regime, they would not, however, save it from eventual collapse since corruption of this magnitude cannot be saved from within. What I am thinking about are (a) Multinational institutions, such as the IMF, World Bank and others; (b) Donor nations, particularly the United State and the EU; and (c) Pressure from stakeholders who are a part of and closer to the regime, that is, ‘custodians of the status quo’ (Berhanu Mnegistu, 2016-“Mediating Political Space…”). The first two are holders of strong arms – capable of putting immense pressure on the clique. For one, these institutions and donors know how aid dependent the regime is- so aid dependent just “[like] a patient addicted to pain killers.” The United States and members of the EU, the U.K. in particular, along with the aid institutions, know the “aid” they provide was and still is the source of corruption, be it via illicit financial outflows, used to recruit and pay millions of cadres, used to fund forced villagization or other means. As I have shown elsewhere, donor nations know that part of the seeds of capital for party-owned conglomerates are the “aid” they provided. Should the wish to do so, donor nations can bring the TPLF leaders to their knees by suing them for their misuse of foreign aid and money laundering. As to the third group, according to Professor Berhanu Mengistu (2016), the effectiveness of the ‘custodians of the status quo’ depends not only on their ability to “convince the narrow stakeholders” that change is in their best interests but also their ability to direct those changes. One may legitimately ask: Would the custodians of the status quo be able to control their own greed and selfishness when in fact the entire ruling party, top-to-bottom, being so repugnantly corrupt? Well, if they failed to do so, then they will lose all that they have amassed!
So, why did Oromo protesters burned down properties and investment structures located within their own neighborhoods? Well, it is because of the resentments which have been running deep against overbearing party elites who scoop up lands that don’t belong to them – the grabbed lands making them to become very wealthy almost overnight. All that the people see is wealth following senseless corruption, party affiliation, bloodlines, but not hard work or original access to one’s ancestral land. The protesters are not only pushed out of their ancestral land but they also do not have jobs, money or even prospects. As the rioters’ selective attack targets indicate, the burnings/destructions and boycotting seem to be directed at those owned by the TPLF and its supporters. Unfortunately, resentments of this kind are harbored by other ethnic groups. Such practices may indeed be repeated in other regions, even though Ethiopia does not really have lots of resources to burn and destroy.
Unfortunately, the Ethiopian people continue to be traumatized by TPLF’s economic gangsterism and government-led violence. Traumatism leads to hopelessness, extreme anger and frustration, to the extent of being self-destructive. The burnings of properties, therefore, are byproducts of the traumas that the Oromos have suffered. I have my deep fears that someday such destructiveness may repeat themselves in the other regions of the country and possibly in a large scale. Let’s pray and hope that appropriate measures, capable of forestalling the looming dangers, would be taken.