Friday, February 10

The World Is Yours V - Capo di tutti Capi

If history has taught us anything,
it's that you can kill anybody.

Michael Corleone, facing his first murder
, waxes all philosophical like about how killing for business is somehow justified by the mention of history, conveniently ignoring that it is rather personal for the rest of non-psycopathic humanity. From The Godfather


Opposition leader Merera Gudina on the 'election':
"The EPRDF would not give into defeat because without the power all its investments and luxurious life would be at risk."

With the kind permission of the author, we are serializing over a number of posts, Chapter 16: The Economy of "Revolutionary Democracy" from Dr. Theodore Vestal's remarkable book Ethiopia: A Post-Cold War African State.

This entry continued from The World Is Yours III - The Commission.

One point to remember always is the essentially corrupt worldview of tribal opportunism and divide and rule cherished by the government. The TPLF and Meles Inc. serve the interests of the Tigrayan people just about as much as the EPRDF serves the interests of all Ethiopians.

Keep in mind that despite the insidious efforts of the Politburo to associate its activities with the good name of Tigrayans it is clear that a very few permanent professional feudal revolutionaries rule for their own benefit - NOT that of Tigrayans in general - whose potential estrangement from other Ethiopians they are dedicated to.

More on this in the post In Whose Name?.


The Economy of "Revolutionary Democracy"


As part of the party organization activity, Front cadres collect "voluntary contributions" from farmers, civil servants, factory workers, and the business community--most of whom fear economic reprisals against them should they be niggardly in "donating." The funds so contributed for both political organizations and the ethnic-based "development" associations affiliated with them are at the disposal of the parent party.

In theory, the development associations are NGOs that mobilize local resources for the development of small-scale infrastructure and social services for their ethnic constituencies. In reality, no one, other than the political organizations that control the associations, knows how the money is spent, and the parent groups make good use of this arrangement to gain additional revenues. The Front's NGOs also put pressure on non-EPRDF economic actors which might pose a threat to the hegemony of the party.

"Non-profit" relief organizations set up by EPRDF member parties, such as REST, are exempt from paying taxes on revenues and import taxes, and through agreements with international donor agencies receive aid in foreign currencies. The lack of transparency in their operations makes it possible for party-sanctioned NGOs, while posing as benevolent ethnic self-help groups, to directly serve the political and economic interests of the EPRDF.

A classic example of this strategy was the TPLF's establishment in 1995 of Tikal Igri Mitkal Tigray ("Rehabilitation of Tigray"), a profit-making NGO with over a million dollars in paid-up capital. This entity came into being through the "donation" of shares of party-controlled companies to the "Endowment Fund For the Rehabilitation of Tigray" (EFFORT). Such donations are exempt from sales taxes and thus provide the Front with a fiscally painless reallocation of capital of some of its companies. EFFORT then made its resources available to Tikal Igri Mitkal Tigray, the center of large-scale investment in Tigray Region.

While Front-affiliated NGOs are used to bolster support of the party and to control the economy, NGOs of political organizations not affiliated with the EPRDF either have been banned or severely restricted. When the AAPO attempted to form a famine relief organization in 1994, the government denied its request on the ground that aid agencies "must be free from political affiliation." Holding the AAPO to such a test while looking the other way at political affiliations of REST and the rest of the EPRDF-endorsed aid associations is typical of government partisanship of the politically correct.

Well-established and reputable relief groups, such as the Gurage People's Self-Help Organization, the Oromo Relief Organization, the Gonder Development Association, and the Wollo Development Association have been the targets of debilitating harassment by the EPRDF. Rival ethnic aid associations affiliated with the Front, however, are encouraged by the government to operate in the areas vacated by those non-EPRDF groups.

The Political Party Registration Proclamation provides another example of a two-track system used to deny other organizations the benefits accruing to the Front. Under the law, "a political party which has attained legal personality may not directly or indirectly engage in commercial and industrial activity." Before and after the proclamation was issued in 1993, individuals, "revolutionary democratic forces," and NGOs had set up income-generating business companies in behalf of the EPRDF. The acts of the Front to the contrary not withstanding, the proclamation makes it illegal for any non-Front political organization to get funds from such sources.

Through the establishment of million dollar companies, smaller businesses, and profit-making NGOs, the EPRDF is carrying out its strategic objective of dominating the economy. The power of party-owned companies especially is felt in such sectors as construction, industrial production (including textiles, cement, marble, and pharmaceutical drugs), agricultural production (with special focus on livestock and cash crops), transport (both public and freight), consultancy, publishing, advertising, import- export,wholesale trade and distribution, and transit services.

Many of the private companies that are not associated with the party have been marginalized, and even some state enterprises are not able to successfully compete with Front concern. As a result, Ethiopia is now a free- market kleptocracy run directly or indirectly by the Woyane.

One of Ethiopia's most admired businesses has not done well under EPRDF management, however. In 1997, Ethiopian Airlines acknowledged a decline in income which had been dramatically exceeded by expenditures. The low morale of employees was purportedly reflected in the deterioration of work efficiency and poor quality of service provided customers.


Beginning in 1997, the Woyane expanded the scope of its economic activities by setting up joint ventures with non- Front individual businessmen and companies and organizations (with EPRDF companies maintaining majority ownership). The Front also became more active in the financial sector, and created the nation's largest "private" bank, Wegagen, with working capital of Birr 60,000 million.

The increase in the number of banks, the expansion of the banking system, and the introduction of regulatory changes could reduce the costs of banking, encourage savings, attract investment funds, and stimulate economic growth--all a part of the liberalization of the financial system, a course of action advanced by the IMF and the World Bank. Critics of the EPRDF maintain that the Front has contorted objectives of financial liberalization and other structural adjustment programs to

1) prove its compliance with the recommendations of international lending institutions and Western donor countries to obtain further loans,

2) as a Western-sanctioned economic weapon to attack non-Tigrayans [see In Whose Name for a short primer on how the party / government does not speak for or act on the behalf of Tigrayans], and

3) as an instrument to enrich its supporters, cadres, and leaders.

In January 1998, the EPRDF leadership announced three significant changes in the Front's development strategy "to benefit the rural people." The telecommunications sector, the production of hydroelectric power, and the defense industry were opened to foreign investors. Party leaders were willing to allow private investments in the construction of infrastructures of these sectors, but they stressed that distribution activities linked with these infrastructures would remain in the state's hands.


In its fight against poverty, an overarching goal of the FDRE is to increase agricultural production. With 80 percent of the population in farming, agriculture accounts for over half of Ethiopia's Gross Domestic Product and 85 percent of export earnings. Prime Minister Meles avers that "no government can impose its will on peasants" and believes that the nation's agriculture will improve under a governmental policy of "hands off the peasants." The peasantry are free to make their own decisions about what crops to plant and when and where to sell them.

Apparently agricultural production did improve, for in early 1997, Meles announced that Ethiopia had achieved self- sufficiency in grain production. [This claim has been a regular one and has always been a lie - every time within weeks there is a major call for emergency aid to feed anywhere from 15-25% of the population with anger expressed that the world was not acting sooner.]

Furthermore, the country had produced more than 500,000 tons of surplus grain for export, including 1,246 metric tons of maize sent as relief aid to some 40,000 drought victims in northern Kenya. The optimistic report of the nation's improved agricultural output was diminished, however, when in December 1997, the Disaster Prevention and Preparedness Commission appealed to foreign donors for food aid amounting to over half a million metric tons to feed over 4 million food deficient Ethiopians.

The unpredictable rains of the highlands again raised problems in the agricultural sector that tarnished the government's claim that agricultural output had increased by 50 percent over the previous two years. The maize that was shipped to Kenya traveled through the Borana and Bale zones of the Oromo killil, parts of Ethiopia where hundreds of thousands of people were suffering from food shortages.

Agricultural production, of course, is tied closely to land tenure, and the various regional administrations have leeway under the constitution to implement land policies in different ways according to traditional local practice. Peasants are guaranteed access to land, their only social security, but they cannot sell it. The land that is left after reallocation to peasants will be available to be leased by commercial farmers. Experiments under the new regime may bring improvements, but skeptics worry that the lack of land alienation through sale or mortgage may stymie agricultural production.


Because of the dominant role played by the TPLF in the EPRDF, it is not surprising that the Tigray Region has received the lion's share of economic benefits from Front activities. Tigray has become the center for new factories manufacturing, among other things, pharmaceutical products and cement and other building materials. The infrastructure of the region is being improved by the construction of irrigation dams, roads linking different woredas, airports in the main towns, schools, special vocational training centers, colleges, clinics and hospitals, and water supply systems. Electricity and telephone services are available in many of the towns.

The massive Tiss Abay Hydro-Electric Power Project, now under construction on the Blue Nile, primarily will benefit Tigray when completed. The outpouring of economic benevolence on Tigray at the expense of other parts of the nation is described by Assefa Negash as "the pillage of Ethiopia."

The marked imbalance between the reconstruction activities in Tigray and in the other regions was justified by Prime Minister Meles as a function of the constitutional division of power between the Federal Government and the Regional States. Since each regional state is responsible for the overall development of its domain, according to Meles, the dynamic economic growth in Tigray is attributable to the successful efforts of the Tigray Regional State. The Prime Minister failed to note that the Central Government has provided Tigray with more development resources than have been available to other regions and that Tigray was receiving 85 percent of all international aid to Ethiopia.


For public consumption, the EPRDF extolls the virtues of economic liberalization, a free market, and the privatization of state-owned enterprises. Behind the scenes, however, most of the Ethiopian economy is under state ownership or control. Rural land belongs to the state and not to the farmers and is parceled out by the Front to secure political support of the peasants. Key sectors of the economy, including banking, manufacturing, foreign trade, mining, and transportation are either dominated by EPRDF-owned companies or controlled by the state.

Enterprises that have been privatized have been "sold" at low prices to the party faithful, frequently Tigreans and Eritreans, in what has been termed unfair bidding competitions. Included in the nationalized businesses and assets sold are buildings, factories, and houses confiscated by the Derg and never returned to their former owners. The government has announced plans for additional privatization of 115 state companies, with an estimated value of 40 billion birr, during the next few years.

The Front, with its nuevo conversos and crony capitalists, comfortably occupies "the commanding heights of the economy." The EPRDF has devised an encyclopedic stock of anticompetitive weapons, and they have adroitly found ways to restrain trade, rig markets, and suppress competition. According to international financial institutions, the EPRDF controls or owns more than 80% of the Ethiopian economy.


The Prime Minister on economics:
"Unlike in [Western Style] Liberal Democracy, in [Ethiopia’s] “Revolutionary Democracy,” there is no economic area that is outside its preserve. Only available capital and procurable management can limit its investment capacity.
This will be another long series from numerous sources detailing the essentially corrupt system that Ethiopians suffer under. A system that simultaneously wastes billions in aid dollars and euros while impoverishing millions:

The World Is Yours I
The World Is Yours II - The Syndicate
The World Is Yours III - The Commission
The World Is Yours IV - "An Offer They Can't Refuse"
The World Is Yours V - Capo di tutti Capi
The World Is Yours VI - Our Thing
The World Is Yours VII - Wise Guys
The World Is Yours VIII - Don't Hate the Player, Hate the Game
The World is Yours IX -

You get the idea.

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