Wednesday, March 22

The 7% Maskirovka

Maskirovka "is a Russian military term which means a set of processes designed to mislead, confuse, and interfere with accurate data collection regarding all areas of plans, objectives, strengths, and weaknesses (of a force, organization or nation)."

The practice of maskirovka was the equivalent of mass produced art during the Soviet era and there were entire departments of the KGB that were financed to the tune of billions to carry it out worldwide - often with great success.

The Ethiopian government is still up to the same tricks by its own custom and nature while generally trying to trick or bogart cash from anyone that is handy. This is often done with help from news sources who should know better.


Reuters reports some really big news that although edited quite adequately for grammar and punctuation displays vanishingly little to do with reality.
Ethiopia, one of the world's most needy countries, said on Wednesday it could end extreme poverty if it kept up the healthy 7 percent economic growth of the last three years.

Finance Minister Sufian Ahmed told journalists that sub-Saharan Africa's second most populous nation could jump to the ranks of middle-income nations if current growth was sustained through coming decades.
The Ethiopian government's style of 7% growth would have to be sustained for several centuries worth of 'decades' to pull off that trick. Too bad none of this makes sense except as a bit of what can only be understood as an altogether successful cooperative propaganda effort.

Gross National Product (GNP) / Gross Domestic Product (GDP) / Gross National Income (GNI) are the value of national income and output used to estimate the value of goods and services produced in an economy and are for all practical purposes the same. Per capita GNP is that value divided by the population of a country that gives a crude but usually revealing picture of relative poverty and wealth between nations.

GNP rises when an economy is growing and GNP falls when an economy is shrinking. Per Capita GNP also rises and falls accordingly with the extra added wrinkle of population growth to consider. Population growth can all by itself increse the size of an economy by virtue of increasing the number of participants but population growth can also drag Per Capita GNP down if GNP growth is not adequate to keep up or exceed it.

There is also inflation to deal with but we will get to that much later on.

Let us consider the report from the Ethiopian government, faithfully broadcast worldwide by Reuters with absolutely no filter for truth or common sense in evidence. The word 'says' in the headline "Ethiopia SAYS may end poverty at current growth rate" does not let them off of the hook either.

Unless Reuters sees itself simply as vessel for passing on the claims of such regimes it is duty bound to analyze and be critical. Otherwise one is forced to the conclusion that Reuters does not see Ethiopian news as worthy of analysis or criticism - perhaps because so little is expected from Ethiopian anyway.

EXCEL is a spreadsheet program that usually comes bundled with Windows and probably some version of it comes with Apple as well, so it is probably on every computer out there - except for maybe the ones at Reuters.

Let us plug into EXCEL, Ethiopia's 2005 population of about 77 million, a generous figure for current per capita GNP of about $100, an unrealistically steady economic growth rate of 7% (from the Reuters piece) and a population growth rate of 2.33% from 2005-2015(from the Globalis Database) to see what happens.

Ten years from now our figures show a per capita GNP $156 and the total GNP about $15 bn for a nation nearing 100 million souls. All figures are in current prices but even if the numbers are eventually inflated by inflation all prices will be higher by the same factor as well - that illusion of growth provided by increased prices is a trap for the unwary.

For example, the $100 per capita GNP of the mid 1970s in Ethiopia is actually far higher than the $100 dollar per capita figure today. Similiarly the annual $500 million income from coffee in the mid 1970s is about $2 billion at today's prices and far above the $340 million in today's prices from coffee reported in the 2004/5 'boom year'.

Ethiopia's gold reserves in 1974 were worth almost $1 billion in today's prices while today there is not enough hard currency on hand to fund more than a few month's of imports - if even that. The current Ethiopian government has accomplished all of this with tens of billions of dollars in aid with little accountability that no other government enjoyed.

Ethiopians have been getting steadily poorer for thirty years and even 7% growth (if true) is not adequate to raise that standard 'to that of middle income countries' either unless as we said you are talking about centuries of decades to do it. One reason beyond the simple math that it won't be raised is that it is not true anyway.

We read that for the first time that three years of 7% growth were achieved but the government usually claims double digits every year in economic growth just as next year will be the year agriculture will take off or investment will explode or gold will fall from the sky.

Did Reuters think to check on any of this freely available information before spreading mendacious propaganda around the globe in the service of a dictatorship's eternal rule? Not at all. Reuters, which is too careful to call Osama bin Laden a terrorist and too careful to take the word of the American, British or Israeli or current Iraqi democratic governments at face value seems to have no problem repeating the words of assorted dictatorships like Ethiopia on economics and Sudan on slavery as though they were gospel.

What happens then is that unwary bits of the fourth estate lose touch with reality in what amounts to a mass LSD trip in the media with headlines like End to poverty in sight for Ethiopia from the New Zealand Herald. What utter and absolute nonsense! But as far as the world is concerned Reuters said it so it is OK.

The Ethiopian government controls all media in the country through a variety of public and private guises owned by the interchangeable party / government / crony business apparatus while it simply lashes out brutally at independent journalists who are brave enough to function as such. Leaders of the nearly free press who assumed protection from Western guarantees are like the leaders of the opposition and civil society all on trial for their lives on trumped up charges.

Those charges really amount to just the apparent crime of holding assumptions that Ethiopians deserve accountable government.

The regime has legions of consultants, lawyers and agents abroad including diplomats and even fake blogs sponsored by its intelligence agencies to influence opinion abroad. In Ethiopia, Western journalists (the few who bother to go there in person) are under constant threat of expulsion if they report the way they would in America, Britain, Israel or Iraq and they are intensely monitored by security services to make sure they don't stray beyond acceptable bounds.

Others prefer the Reuters brand of uncritical repetition journalism above or the Washington Post brand of surfing the internet journalism that drone on and on about lost cheetahs while a whole nation is dying and that requires no acutal presence or knowledge in the country to do one's alleged job. At that point why shouldn't they just repeat the government's propaganda since they have abandoned every concept of journalism they learned in school or under the tutelatge of their harder working elders.

That is why we see endless pieces on the Fistula Clinic in the world press. Don't get us wrong - it is a wonderful organization run and supported by admirable people. But ... is it really the center of the Ethiopian experience and universe? Seriously, that clinic and an outline for the very same human interest article we all have read dozens of times over the years must be on the front page of some secret journalistic 'Cliff Notes for Ethiopian Reporting' or 'Reporting from Ethiopia for Dummies' that is shared around that exclusive club.

If journalists made the slightest effort to be familiar with their subjects they would be so much more useful in serving the vital purpose that the press should serve on a global basis. We expect Bush and Blair to coddle their pet dictator in the Gibee for their own (wrong) short term interests but why should journalists from independent news organizations do the same when they are so aggressive in other matters?

The whole purpose of the government statement is to put forward a number of lies, most of them obvious to the minimally inquisitive mind, for dissemination by legitimate news organizations. The truth is that Ethiopians are getting poorer every year and that they are far poorer than they were during the reign of Haile Selassie and even poorer than during the rule of Mengistu Haile-Mariam.

The purpose of this statement in particular is to make it seem like all is well in Ethiopia and that the government is just peachy keen so that foreign aid which allows the government to make ferenjis its constituents instead of actual Ethiopians can keep rolling in.

All of those tens of billions in aid wasted on Ethiopia's kleptocracy in a poverty generating system with no private property rights and government / ruling party OWNERSHIP of all land and more than 3/4 of THE WHOLE ECONOMY has to be justified. Especially when the same government is cracking down on human rights and even the illusion of democracy it tried to maintain.

You see, the ultimate donors are US, EU and Japanese taxpayers whose earnings are passed, without their consent, through bureaucracies and every manner of agency. If they start getting ideas about their money going to waste - well then everyone's gravy train is likely to get upset and every manner of geopolitics along with it.

So from the press, to governments, to aid agencies at every level there is a quiet complicit policy amongst those who are normally not allies to cover up third world malfeasance and hide the ugly truth. Essentially it is all based upon assumptions that people like Ethiopians can't really do any better for themselves and that if all those taxpayers are allowed to find out that they would, in their ignorance, cut off the World Bank, IMF, a massive grab bag of NGOs and their own national aid bureaucracies.

The nonsense in the article about how Ethiopia only needs aid for roads etc. that its government is already working hard on ignores that much of the government budget comes directly from aid so that it all costs the regime nothing. Most development projects are not only financed by the West but also proposed by the West while the regimes lets them be carried out as long as it and its own 'private' companies get a fat cut of the resulting contracts.

Essentially, the whole article and statement are part of a chronic propaganda effort as well as a specific acute one to deal with sanctions from the EU for the conduct of the fake election and its bloody aftermath. It translates along with all other government press efforts as the following
Hey we're already doing a fine job sorting out this lot over here - don't you worry just keep sending money and ignore the fine print of the Ethiopian Civil Contract between ferenjis and Meles Inc. that leaves out all those bothersome Ethiopians and all will be well.

Oh and in the meantime could you please stop filling up their minds with strange ideas about democracy and freedom. We will be forced to hurt them even more and you know damn well we will do it right in front of you. Anyway, since those Ethiopians are all a bunch of tribalist genocidal primitives anyway, they need tough enlightened realpolitik sorts like us to keep them under control.

So just be good sports about it all and send money, a whole lot of money all the time and remember we are sending plenty of it back to numbered accounts and investments right where it came from so it won't be gone long.

Oh and did we mention this - send even more money - someone has to keep all these Ethiopians under control and fed and we are sure you don't want it to be you - directly anyway.

P.S. send more money - we will kill as many Ethiopians as we need to stay around so you might as well send us all the cash you can.
No amount of aid will develop or help Ethipia in the end just as no amount of dreamed of oil will do that job either. Both ultimately bring corruption and social disintegration as sources of unaccountable easy money that ultimately benefit a few while decoupling normal society and reponsibility.

Social, political and economic development are about social trust, institutions and accountability. All concepts long ago abandoned or always ignored by Ethiopia's rulers as personal threats to their rule.

In that vein one of our favorite blogs, Jewels in the Jungle in a post titled ' Global Business Reports: A Stewpot of Corruption' points out some fascinating things about why certain poor nations are poor and remain so. The links there all go a long way to explaining why Ethiopia is among the poorest nations on earth and why things are likely to get worse.

The Index of Economic Freedom 2006 describes itself thus "Wealth comes from the actions of people, not the actions of government, and the freer people are to direct their efforts to where they are most productive, the greater the wealth created" and notes that Ethiopia's overall score is WORSE than it was ten years ago
corruption is widespread, bureaucracy is burdensome, and much economic activity occurs in the informal sector. In addition, taxation is unevenly enforced, the judiciary is overwhelmed, and key sectors of the economy remain closed to foreign investment.
Fewer than 35 foreign firms are active [IN THE WHOLE COUNTRY there are only 35 foreign firms active!!]
The judicial system does not offer a high level of property protection.
Ethiopia's cumbersome bureaucracy deters investment. According to the Economist Intelligence Unit, "Corruption in Ethiopia poses various problems for [the] business environment, as patronage networks are firmly entrenched and political clout is often used to gain economic prowess."
The EIU reports that corruption imposes a serious burden on economic activity.
The Forbes Capital Hospitality Index describes itself as a one stop shop for investment information in a globalizing world compiled by
seeking out several of the world's top institutions of sociological and economic theory, we gathered the results of surveys, statistical studies and socio-economic data on each of the 135 countries in our index, assigning relative percent-rankings for each of the chamber's largely qualitative principles. We then aggregated scores across ten separate categories to develop the first Forbes Capital Hospitality Index.
There Ethiopia is listed at 120th out of 135 economies as a place where people with money to invest are likely to invest. The Capital Hospitality Index has an Interactive Map Guide that is worth visiting that places Ethiopia among the worst in attracting investment and therefore actual economic good news and not by coincidence news of freedom as well.

None of this is because poverty and suffering are native to Ethiopians but because her government places its security and ideology far above the interests of her citizens.

The Economist Magazine is deservedly critical of Meles Inc. for its bloodthirstiness but then provides a fake economic cover up where the movement of a flower company from Kenya is a big sign of economic movement
The government's repressive tactics have proved embarrassing to outsiders. Mr Meles has won international plaudits for reducing poverty and for managing the economy.

European governments regard his regime as one of Africa's least corrupt, and Mr Meles has become an aid darling. Entrepreneurship is at last starting to flourish in Ethiopia. For example, the country has lately managed to win some of the lucrative flower-exporting business away from neighbouring Kenya.
While better informed than the simple Xerox operation over at Reuters, the Economist shares the same tendency of the press to repeat good economic news which simply does not exist. Kenya with all of its reputation for corruption is at number 90 on the list of Capital Hospitality far above Ethiopia.

One flower factory does not make a trend but does make for supposed 'deep' analysis from journalists too lazy to do more than surf around the web for the first headline on Ethiopian economics rather than think about economics and actual growth every now and then. If Mr. Meles has won international plaudits for his handling of the economy it is because of rank ignorance on that issue among the circles who hand out those plaudits or because they figure the truth about Ethiopia is not worth dealing with.

Transparency International's
annual TI Corruption Perceptions Index (CPI), first released in 1995, is the best known of TI’s tools. It has been widely credited for putting TI and the issue of corruption on the international policy agenda. The CPI ranks more than 150 countries in terms of perceived levels of corruption, as determined by expert assessments and opinion surveys.
The TI report for 2005 lists Ethiopia solidly within the 'highly corrupt' category at the bottom of the list grouped near a number of oppressive and poor regimes. You may have noticed by now that all these factors are always found together.

Thus Ethiopia is one of the most corrupt countries on earth and is one of the least favorite places on earth to invest in. This is not determined by the nation's character or by God but by men who have made it so and who expect others to pay the bill for them to do it.

Agricultural production and the absence of private property rights go along with corruption and kleptocracy to forever deny domestic sources of capital from coming forth to change that downward economic trajectory.

Foreign aid can never make up the difference and foreign investment is essentially unwelcome. The last actual figure for Foreign Direct Investment was about $60 million and most of that came from one generous source.

Yet and still, ignorance and laziness produce and reproduce fake good economic news that is not simply a matter of interpretation but is simply a matter of repeating lies put forth by the Ethiopian government. The circle of those who benefit from such bad news and the dire straits of Ethiopia's fortunes not being widely know want us all to ignore the cause and effect of despotism and poverty.

Who knows? Maybe the economy did grow by 7% although it is not likely but it sure as hell did not grow by any of the reported, usually double-digit percentages any other year so why should any of it be believed? In the meantime Ethiopians get poorer and poorer every year and most international sources just repeat the numbers from the Ethiopian government with no critical or reasonable input at all.

One problem with this whold subject of economics is that the World Bank, the IMF, foreign governments and the media all turn to the Ethiopian government for news of how it is governing. It is hard to imagine a less reliable source.

7% growth over even decades will not change the fortunes of Ethiopians if true or if not especially when one loan, one foreign investment or simply cooking the books is enough to get everyone to believe it is happening. We can only marvel at the ability of the regime to get folks to believe its nonsense or to wonder at the capacity folks have for not giving a damn for the truth in favor of their own scripts.

The US Department of Agriculture maintains an "International Macroeconomic Data Set [that] provides data from 1971 through 2014 for real (adjusted for inflation) gross domestic product (GDP), population, real exchange rates, and other variables for the 31 countries and 34 regions that are most important for U.S. agricultural trade."

It is a fascinating resource that shows that Ethiopians have a lower per capita GNP now than they did in 1971 although unlike other sources it shows improvement since the Dergue era. What Meles Inc. and the Dergue have in common are similiar attitudes towards corruption, human rights and the free market while what they don't have in common is a willingness on the part of the West to send billions in aid today to provide for an illusion of economic growth.

The rates of economic growth nowhere matches the wild claims of the Ethiopian government that Reuters and the Economist are so enamored of. We at ethiopundit have obsessively made this point before but we must repeat DON'T BELIEVE THE HYPE no matter where it comes from.

Above all remember - no matter what you hear - that no country that does not respect private ownership of land has ever had normal economic growth or developed democratic social institutions. If you know that you are already far ahead of the reporters and assorted bureaucrats everywhere who don't know or pretend to not know that universal fact.

If you don't run prison camps, kill people who disagree with you or run the entire economy of a poor country as though it was your own private checking account - then you are already far ahead of the Ethiopian government in moral terms.

One thing Meles Inc. knows clearly is the harm it is doing. They would just rather stay wealthy and in control for as long as possible at any cost to others. In the meantime whatever absurdities they use to justify themselves are repeated everywhere by their effective journalistic allies in the ongoing misery of Ethiopians.

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