Connect with us

Op-Eds

Fake It Till You Make It Nations and Bling Bling Economics: Debt, Dictatorship and Underdevelopment

8 min read.

Once upon a time, financial recklessness was the preserve of resource-rich nations. Now, resource-poor African nations, their thoughtless leaders seduced into taking printed money circulated by the US Federal Reserve after the global financial crisis a decade ago, have become the new sultanates of debt distress. DAVID NDII ponders a different path.

Published

on

Fake It Till You Make It Nations and Bling Bling Economics: Debt, Dictatorship and Underdevelopment
Download PDFPrint Article

Not too long ago, Angola opened an embassy in Nairobi on a quite well-appointed address on Redhill Road in the diplomatic suburb of Gigiri, a road I use frequently. You couldn’t miss it. It had an outlandish gate and a black granite signboard with gold lettering. I was rather intrigued that Angola would need such a large embassy in Kenya. I have made a point of observing how much activity was going on there— very little. I passed there the other day and lo and behold, the outlandish gold lettered black granite signboard was gone, replaced by a more modest one announcing the Botswana High Commission. The Angolan foray would have cost no less than $10 million, and I would imagine that Kenya was not the only country that Angola had spread its diplomatic footprint. What has changed?

Angola has squandered the oil bonanza of the last decade. Angola is Africa’s second-biggest oil producer after Nigeria, with a daily output of 1.6 million barrels of crude and 18 million cubic metres of natural gas. There is an economic principle that windfall earnings should be saved. Angola did not save. Instead, it leveraged the oil boom to pile up debt. Angola is China’s biggest debtor in Africa, owing US$ 23 billion accounting for about a fifth of Africa’s debt to China.

If Angola had set a windfall benchmark at $50 per barrel, its nest egg for the five and a half year oil boom (April 2009 to May 2014) would have been in the order of $100 billion on crude oil alone ie. excluding natural gas. A conservative investment yielding 5 percent a year would be earning Angola $5 billion a year to invest in infrastructure or whatever else it chooses. This is how Norway got rich on oil. Norway’s sovereign wealth fund, the worlds largest, is now worth a trillion dollars. If Norway was to pay dividends from the fund to its 5.2 million citizens, each would get US$9,000 a year.

There is an economic principle that windfall earnings should be saved. Angola did not save. Instead it leveraged the oil boom to pile up debt. If Angola had set a benchmark of $50 per barrel of petroleum, its windfall for the five and a half year oil boom (April 2009 to May 2014) would have been in the order of $100 billion on crude oil alone… A conservative investment yielding 5 percent a year would be earning Angola $5 billion a year to invest in infrastructure or whatever else it chooses.

They say once bitten twice shy. Not Zambia. When I was a college student eons ago, Zambia was a case study on how not to manage an economy. Zambia rode the post independence commodity boom into middle income status by the early seventies. At $600, Zambia’s income per person was one-third higher than the Sub-sahara Africa average. In Nairobi, Zambia’s heydays are represented by its well-appointed embassy property on Nyerere Road, overlooking Uhuru Park. When commodity prices receded from the late seventies, Zambia plugged its finances by borrowing – and borrowed itself into poverty. Over the next decade, Zambia’s foreign debt increased seven-fold, from one to seven billion dollars. By the mid-90s when it got HIPC (Highly Indebted Poor Countries) debt relief, average income adjusted for inflation was half of the mid-1970s level.

Zambia rode the post independence commodity boom into middle income status by the early seventies. When commodity prices receded from the late 1970s, Zambia plugged its finances by borrowing – and borrowed itself into poverty.

Copper prices surged again in the 2000s peaking in 2011 at $4.60 a pound, about the same in inflation-adjusted terms, as at the 1970s peak. In 2012, against the backdrop of retreating copper prices, Zambia debuted in the Eurobond market, borrowing $750 million. It also borrowed heavily from China. Copper prices have fallen again and Zambia is in debt distress. The eurobonds are now trading at around15 percent yield, almost three times the debut bonds 5.6 percent yield at issue. What this means is that the bonds for which investors paid $94 are now trading at $34. It means that Zambia is now effectively locked out of any more borrowing in the sovereign bond market. Will Zambia turn around its finances before the bonds are due for re-financing? Doubtful.

Zambia is only slightly less dependent on copper now than it was in the 1970s. Copper still accounts for two-thirds of exports. Zambia has no shortage of low-hanging fruit in terms of diversification options: it has plenty of idle arable land and underexploited tourism potential. Chile was once as copper dependent as Zambia. In fact, copper still accounts for half of Chile’s exports. But Chile has diversified its economy and worked its way up to being the first Latin American country to be admitted to the OECD club of rich countries. Interestingly, Chile has become a wealthy country without following the Asian Tiger holy grail of export manufacturing, but rather by diversifying to services and agricultural exports. Its other key exports are agricultural including horticulture, wine and fish, especially farmed salmon.

Chile was once as copper dependent as Zambia. Copper still accounts for half of Chile’s exports. But Chile has diversified its economy and worked its way up to being the first Latin American country to be admitted to the OECD club of rich countries. Interestingly, Chile has become a wealthy country without following the Asian Tiger holy grail of export manufacturing, but rather by diversifying to services and agricultural exports.

Historically, financial recklessness on this scale was the preserve of resource-rich African countries. But the disease has spread all over the continent. Resource-poor countries such as Ethiopia and Kenya are now just as reckless as the resource-cursed. In the past, resource-poor countries simply did not have access to the money to steal or finance megalomania. When they tried to do so by domestic borrowing and printing money, the macroeconomic feedback loop quickly kicked in and wreaked financial havoc. Moi learned this lesson. Mugabe did not. He ended up with a hyperinflation for the ages, and the demise of the Zimbabwe dollar.

There are two reasons why resource-poor countries have also caught the disease: the 2008 global financial crisis, and China.

Since the global financial crisis, which began in 2007 and properly set in the next year, the financial markets have been awash with money churned out by the US Federal Reserve and other central banks, thereby depressing interest rates to near zero, prompting money managers to go looking for better returns in emerging markets in what is known in market lingo as “hunting for yield”. Aggressive salesmen were everywhere scouting for and massaging the egos of potential borrowers. When Kenya set out to debut in the Eurobond market it indicated that it would raise a $500m “benchmarking” bond whose proceeds were to retire a syndicated bank loan borrowed two years before, and which was the only foreign loan in Kenya’s books at the time. By the time the issue was going to the market, it had grown fourfold to $2 billion. By the time it closed, the government had borrowed $2.8 billion.

Within weeks of the successful debut, the treasury mandarins were talking of Sukuks (Islamic bonds) and Samurais (Japanese Yen denominated bonds), like children accidentally locked inside an ice cream parlour. Other than the syndicated loan repayment of $600 million there is no trace of anything financed with the money.

Since the global financial crisis, the financial markets have been awash with money churned out by the US Federal Reserve and other central banks, thereby depressing interest rates to near zero, prompting money managers to go looking for better returns in emerging markets. Aggressive salesmen were everywhere scouting for and massaging the egos of potential borrowers. Africa Rising.

China is getting more than its fair share of flak for Africa’s debt distress. The fear of the Dragon is over the top. Unlike the Western banks and markets which are embedded in the Western power structure, China will have little recourse when countries default. It cannot run them through the mill we saw “the troika” run Greece when it went into debt-distress in 2009. The head of China Export and Credit Insurance Corporation, known as Sinosure was recently quoted lamenting the poor quality of China’s infrastructure loans abroad. He went on to disclose that the agency is already a billion dollars out of pocket on Ethiopia’s new railway, whose preparation he termed “downright inadequate”. “Ethiopia’s planning capabilities are lacking, but even with the help of Sinosure and the lending Chinese bank it was still insufficient.”

It has also been reported that China may offload its infrastructure loans to the secondary market. The plan is to sell the loans to the Hong Kong Mortgage Corporation which will in turn repackage them, dice them up and sell them to investors, thereby releasing liquidity back to the primary lenders such as China Exim Bank to make more loans.   This is not funny. First, the lenders admit that they have made dud loans. Then they follow this with an announcement that they will sell the same to investors. It is a scheme such as this, which mixed up low risk and high risk (a.k.a sub-prime) mortgage loans into securities known as Collateralized Debt Obligations (CDOs) that precipitated the erstwhile mentioned global financial crisis. More poignantly, the Dragons debt trap diplomacy as it’s been called, begins to look uncannily like hunting for yield.

That is the supply side. On the demand side, you have African leaders who have no ideas of their own. From import substitution industrialization, to neoliberal orthodoxy in the 80s, to poverty reduction strategies and now infrastructure-led growth, they wander thoughtlessly from one aid paradigm to the next, all the while living up to Fanon’s prediction that they were destined to become “a transmission line between the nation and capitalism.”

The bigger problem is delusions of grandeur. Seemingly every one of these African big men has a Lee Kwan Yew complex. Even Uhuru Kenyatta, a man who couldn’t run an orderly kindergarten in a children’s park if his life depended on it, is prone to bouts of megalomania during which he comically dons military fatigues and goes around doing General Park Chung-hee skits.

On the demand side, you have African leaders who have no ideas of their own. From import substitution industrialization, to neoliberal orthodoxy in the 80s, to poverty reduction strategies and now infrastructure-led growth, they wander thoughtlessly from one aid paradigm to the next, all the while living up to Fanon’s prediction that they were destined to become “a transmission line between the nation and capitalism.

Africa has its economically successful nations: Botswana, Namibia, Mauritius, Cape Verde and the Seychelles. What do these successful African nations have in common? First, they are all small. Three of them are small island nations. Namibia is large geographically, but its population is only 2.5 million people. Second, they are also successful democracies. The five are consistently the highest ranked African countries in democracy league tables such as the Economist’s Democracy Index and the Freedom House Index.

Why are Africa’s small countries more politically and economically successful than the big ones?

Size matters. It is easier to build a small nation than a big one. Small islands are natural nations, hence it should not surprise that all the small island nations are successful. Madagascar is Africa’s sole big island nation, and it is not successful at all.

The big African countries are almost invariably very ethnically diverse. Recently, someone on social media asked me why benevolent dictatorship cannot work in Africa the way it worked in South Korea. My answer was a question: what tribe will the dictator be? He has not responded. Proponents of developmental autocracies fail to recognize that the East Asian countries are old nations, not the arbitrary colonial creations that African countries are. Korea is a culturally homogenous society with unified dynastic rule going back to 900 AD, and a political history, known as the Three Kingdoms, going back another millennium. The Thai Kingdom dates back 700 years.

Proponents of developmental autocracies fail to recognize that the East Asian countries are old nations, not the arbitrary colonial creations that African countries are. Korea is a culturally homogenous society with unified dynastic rule going back to 900 AD, and a political history, known as the Three Kingdoms, going back another millennium. The Thai Kingdom dates back 700 years.

Ethiopia is Africa’s oldest nation-state, and the only one that is not a colonial creation. It is also one of the largest and most diverse(100 million people, over 80 officially recognized ethnic groups). After the Derg’s reign of terror, Ethiopians adopted a constitution based on a loose ethnic federation. But Meles Zenawi could not resist the allure of the developmental autocrat. He borrowed and built like a man possessed but the economic miracle did not materialize, and Ethiopians, tired of autocracy without prosperity, took to the streets. The edifice has unravelled. The leadership is coming to terms with a historical fact that the rest will be reckoning with sooner or later: political development precedes prosperity.

Support The Elephant.

The Elephant is helping to build a truly public platform, while producing consistent, quality investigations, opinions and analysis. The Elephant cannot survive and grow without your participation. Now, more than ever, it is vital for The Elephant to reach as many people as possible.

Your support helps protect The Elephant's independence and it means we can continue keeping the democratic space free, open and robust. Every contribution, however big or small, is so valuable for our collective future.

By

David Ndii is a leading Kenyan economist and public intellectual.

Op-Eds

Unlike the Rest of the UN, Is WHO (Finally) Taking Sexual Abuse Seriously?

A disturbing report on the sexual exploitation and abuse of women and children in the DRC has laid bare the failure of UN agencies to protect vulnerable populations.

Published

on

Unlike the Rest of the UN, Is WHO (Finally) Taking Sexual Abuse Seriously?
Download PDFPrint Article

It is extremely unfortunate that at a time when the World Health Organization (WHO) is spearheading a campaign to get people vaccinated against COVID-19, and pushing rich countries to donate their vaccines to low-income countries instead of hoarding them, it is confronted with revelations that suggest deep systemic failures within the global health agency that have allowed its employees to get away with sexual exploitation and abuse of vulnerable populations.

Last month, WHO released a report that confirmed that there was sexual abuse of women and children by WHO employees in the Democratic Republic of the Congo (DRC) during an outbreak of Ebola in the country’s North Kivu and Ituri provinces between 2018 and 2020. This report was the result of an independent commission’s investigations following an exclusive media report last year that found that dozens of women in the DRC had been sexually exploited by aid workers, including WHO employees.  The most disturbing revelation was that some of the perpetrators were medical doctors. Many of the abused women were offered jobs in exchange for sex; others were raped or coerced into having sex against their will. There were also stories of women being forced to have abortions after they were sexually abused. The independent commission stated that its findings showed that 21 of the 83 alleged perpetrators were WHO employees, and that “individual negligence” on the part of WHO staff may have amounted to “professional misconduct”.

This is not the first time that sexual abuse and exploitation of women and children by UN employees has been reported in the DRC. In 2004, UN Secretary-General Kofi Annan ordered an investigation into sexual abuses by UN peacekeepers in the country after it became apparent that such abuse was widespread in this mineral-rich but conflict-ridden country.  The investigation detailed various forms of abuse, including trading sex for money and food. It was in the DRC that the term “peacekeeper babies” first emerged. Women who had given birth after being raped by UN peacekeepers spoke about being abandoned by both their families and the peacekeepers who had impregnated them. However, the report had little impact on the UN’s peacekeeping mission in the DRC – none of the perpetrators were brought to book nor were the victims compensated.

Sexual abuse of vulnerable populations, especially women and children, is particularly rampant in UN peacekeeping missions.  In 2017, the Associated Press revealed in an exclusive report that at least 134 Sri Lankan UN peacekeepers had exploited nine Haitian children in a sex ring from 2004 to 2007. Many of the victims were offered food or money after they were sexually violated. (These “sex-for-food” arrangements have also been reported in other countries experiencing conflict or disaster.) Although 114 of these peacekeepers were sent home after the report came out, none of them were prosecuted or court-martialled in their countries.

One reason why UN peacekeepers evade the consequences of their actions is that under the Status of Forces Agreement negotiated between the UN and troop-producing countries, UN peacekeepers fall under the exclusive jurisdiction of the country they come from. When cases of abuse are reported, they are either ignored by the countries, or the perpetrators are sent home—no questions asked.

Unfortunately, civilian UN staff who commit crimes such as rape also evade any legal action because the UN accords the UN and its employees immunity from prosecution. This immunity can only be waived by the UN Secretary-General, but the Secretary-General hardly ever waives this immunity even when there is overwhelming evidence against a UN staff member. This means that cases brought against UN employees cannot be tried in national courts, nor can the perpetrators be detained or arrested by national law enforcement agencies.  

At a press conference held last month, WHO’s director-general, Tedros Adhanom Ghebreyesus, apologised to the victims of the abuse in the DRC at the hands of WHO employees and promised to take action to prevent such abuse from happening again. “I am sorry for what was done to you,” he said. “What happened to you should not happen to anyone.”

The head of WHO has also promised to review the organisation’s emergency response measures and internal structures and to discipline those staff members who fail to report cases of sexual exploitation and abuse. WHO member states have also called for an “immediate, thorough and detailed assessment of what went wrong”.

I have no doubt that Mr Ghebreyesus is serious about fixing a problem that has plagued the UN for decades. In fact, his response to the sexual abuse allegations is much more honest and sincere than the responses of other heads of UN agencies whose employees have been accused of allowing sexual exploitation and abuse to occur under their watch. One, he established an independent commission to look into the sexual abuse allegations, which rarely happens. (Most UN agencies either ignore the allegations or order an internal investigation, which invariably determines that the allegations “could not be substantiated”.) Two, he has publicly committed to undertake wholesale reforms in WHO’s structures and culture that allow sexual exploitation and abuse of vulnerable populations to go undetected, unreported and unpunished. Three, he has agreed to the independent commission’s recommendation that an independent monitoring group be set up within two months to ensure that the commission’s recommendations are enforced.

“What happened to you should not happen to anyone.”

Most UN agencies would not welcome such intense scrutiny of their operations by independent bodies, so WHO’s efforts in this regard are laudable.  WHO’s actions could also be attributed to the fact that, unlike other UN agencies that report to the General Assembly, WHO reports to the World Health Assembly that comprises delegates that have technical competence in health matters and represent their governments’ ministries of health. Because it is a specialised UN agency not governed by the General Assembly, WHO can establish its own rules without deferring to the General Assembly. In this sense, WHO enjoys relative autonomy from the UN system’s gargantuan and highly opaque bureaucracy.

Cover-ups and impunity 

WHO’s response is a far cry from the normal tendency of UN bosses to cover up cases of sexual abuse and exploitation taking place under the UN’s watch.  In 2014, for instance, when a senior UN official reported to the French government that French peacekeepers operating in the Central African Republic were sexually abusing boys as young as eight years old, his bosses at the Office of the UN High Commissioner for Human Rights (OHCHR) responded by asking him to resign. When he refused to do so, they suspended him for “unauthorized disclosure of confidential information”, and, in a typical case of “shooting the messenger”, they directed their internal investigations towards him rather than towards the peacekeepers who had allegedly abused the children. This case, which received wide media coverage, did not lead to significant changes in how the UN handles sexual abuse cases. On the contrary, Anders Kompass, the UN official who reported the abuse, was retaliated against, and eventually left the organisation in frustration.

Cases of UN employees sexually abusing or harassing their colleagues are also brushed under the carpet. In 2018, for example, when an Indian women’s rights activist accused the United Nations Population Fund (UNFPA)’s India representative of sexual harassment, the UN agency said that its preliminary investigations showed that her allegations could not be substantiated. The Code Blue Campaign, which tracks instances of sexual harassment and exploitation by UN employees, dismissed the findings of the investigation, calling them a “cover-up.” (Soon after the activist made her allegation, UNFPA evacuated the accused from India, which further muddied her case.)

This is not an isolated case. In 2004, when a staff member at the UN’s refugee agency accused the head of the organisation of sexual harassment, the UN Secretary-General, Kofi Annan, dismissed her claims. Recently, a woman working at UNAIDS lost her job soon after she filed a complaint of sexual harassment against UNAIDS’ deputy executive director. This was after Michel Sidibé, the then head of UNAIDS, told a staff meeting that people who complain about how the agency was handling sexual harassment “don’t have ethics.”

The UN’s highly patriarchal and misogynistic culture allows such abuse to continue unabated. In 2018, the UN conducted an internal survey that found that one-third of the UN employees surveyed had experienced sexual harassment. It revealed that the most vulnerable targets were women and transgender personnel aged between 25 and 44. Two out of three harassers were male and only one out of every three employees who were harassed took any action against the perpetrator. About one in ten women reported being touched inappropriately; a similar number said they had witnessed crude sexual gestures.

Another survey by the UN Staff Union found that sexual harassment was one among many abuses of authority that take place at the UN. Results of the survey showed that sexual harassment made up about 16 per cent of all forms of harassment. Forty-four per cent said that they had experienced abuse of authority; of these, 87 per cent said that the person who had abused his or her authority was a supervisor. Twenty per cent felt that they had experienced retaliation after reporting the misconduct.

The UN’s highly patriarchal and misogynistic culture allows such abuse to continue unabated.

Since then, the UN has established a new sexual harassment policy and a hot line for victims of sexual harassment. However, remedial actions spelled out in the policy appear to be mediation or counselling exercises rather than disciplinary ones. The emphasis is on psychosocial support and counselling (for the victims, of course) and “facilitated discussions” between the “offender” and the “affected individual”. Disciplinary measures include physical separation of the offender from the victim, reassignment, and temporary changes in reporting lines. Official internal investigations are permitted, but as I have tried to illustrate, most internal UN investigations into cases of sexual harassment and other kinds of wrongdoing inevitably conclude that the sexual harassment or wrongdoing “could not be substantiated.” This leaves victims vulnerable to retaliation.

Perhaps WHO can lead the way in showing the rest of the UN system how to tackle sexual exploitation, abuse and harassment by UN employees. WHO has already terminated the contracts of four of its employees who were accused of sexually exploiting women in the DRC. However, a true test of WHO and the UN’s commitment to end such abuses would be if they reinstated all those who were fired for reporting such cases. I for one am eagerly awaiting the independent monitoring group’s findings on whether or not WHO has taken tangible and impactful measures to protect people from being sexually abused and exploited by its employees and to safeguard the jobs of those who report such abuses.

Continue Reading

Op-Eds

The Retrospective Application of Constitutional Statutes: Notes From the High Court of Kenya

Katiba Institute adds to the growing comparative discussion around constitutional statutes and therefore ought to be keenly studied by students of comparative constitutional law.

Published

on

The Retrospective Application of Constitutional Statutes: Notes From the High Court of Kenya
Download PDFPrint Article

Previously, I have discussed the concept of constitutional statutes. Recall that a constitutional statute is a law that is “enacted in pursuance of the State’s positive obligation to fulfil a constitutional right.” While certain constitutional rights are self-enforcing (such as, for example, the right to free speech ipso facto prohibits the State from engaging in arbitrary censorship), others – by their very nature – require a statutory framework to be made effective. For example, the right to vote cannot be made effective without an infrastructure in place to conduct free and fair elections, including the existence of an independent, non-partisan Election Commission. Insofar as such a legislative framework is not in existence, the state is arguably in breach of its positive obligations to fulfil the right in question. Thus, to refine the definition further, a constitutional statute is a statute that “provides a statutory framework towards implementing a fundamental right, thereby fulfilling the state’s positive obligation to do so.”

What follows from the finding that a particular law is a constitutional statute? On this blog, we have discussed constitutional statutes in the context of amendments to the Right to Information Act, which have sought to undermine the independence of the Information Commissioners. We have argued that, insofar as constitutional statutes stand between the individual and the State, mediating the effective enforcement of rights, legislative amendments that prevent them from fulfilling this function, are thereby unconstitutional. Furthermore, once a constitutional statute has been enacted, the principle of non-retrogression applies – that is, the legislature cannot simply repeal the law and go back to a position where the right in question was unprotected. Another example discussed on this blog is the recent judgment of the Kenyan Court of Appeal in David Ndii, where it was held that the implementation of the Popular Initiative to amend the Kenyan Constitution required a legislative scheme, as also its discussion of the previous judgment in Katiba Institute, where an attempt to reduce the quorum for resolutions of the Independent Electoral and Boundaries Commission was held to be unconstitutional.

The judgment of the High Court of Kenya of 14 October 2021 – also titled Katiba Institute – provides an additional, fascinating implication that flows from the finding that a law is a constitutional statute. Katiba Institute arose out of the efforts of the Government of Kenya to implement a national biometric identification system called NIIMS, and the judgment of the High Court with respect to a challenge to the constitutionality of NIIMS (Nubian Rights Forum), which we discussed on this blog back in 2019. Recall that in Nubian Rights Forum, after a detailed analysis, the High Court struck down a part of NIIMS, and allowed the government to go ahead with the rest of the programme subject to the implementation of an effective data protection law. Therefore, as I had noted in that post:

The High Court’s decision – at least in part – is a conditional one, where the (legal) future of the NIIMS is expressly made dependant on what action the government will take. Thus, there remain a significant number of issues that remain open for (inevitable) litigation, even after the High Court’s judgment.

Notably, Kenya had enacted a data protection law in between the hearings and the judgment, but the High Court – in its verdict – was insistent that until the point of effective implementation, the continued rollout of NIIMS could not go on. And this was at the heart of the challenge in Katiba Institute: the applicant argued that NIIMS had been rolled out, in particular, without complying with Section 31 of the Kenyan Data Protection Act, which required a Data Impact Assessment as a pre-requisite to any data collection enterprise. In response, the state argued that the data collection in question had already been completed before the passage of the Data Protection Act, and that therefore – in accordance with the general principle that statutes are not meant to apply retrospectively – Section 31 was inapplicable to this case.

Engaging in impeccable constitutional statute analysis, Justice Jairus Ngaah noted that the Data Protection Act was “enacted against the backdrop of Article 31 of the Constitution.” Article 31 of the Constitution of Kenya 2010 guarantees the right to privacy. As the learned Justice noted, in its very preamble, the DPA stated that its purpose was to “give effect to Articles 31(c) and (d) of the Constitution.” Justice Ngaah then rightly observed, “The need to protect the constitutional right to privacy did not arise with the enactment of the Data Protection Act; the right accrued from the moment the Constitution was promulgated.”

The judgment of the High Court of Kenya provides an additional, fascinating implication that flows from the finding that a law is a constitutional statute.

It therefore followed that, on the balance, an interpretation that gave the DPA retrospective effect was to be preferred over one that did not. A contrary interpretation would mean that the state was entitled to collect data and infringe the right to privacy even in the absence of a legislative scheme. Or, in other words, having failed to implement its positive obligation to enact a constitutional statute to give effect to the right to privacy, the state could then take advantage of its own failure by nonetheless engaging in data collection enterprises anyway. This, naturally, could not be countenanced. And in any event, given that Article 31 had always existed, it followed that:

. . . there was always the duty on the part of the State to ensure that the Bill of Rights . . . is respected and protected. Section 31 of the Act does not impose any more obligation or duty on the state than that which the state, or the respondents . . . have hitherto had to bear.

On this basis, Justice Ngaah therefore held that NIIMS had been rolled out in breach of Section 31, and therefore, first, quashed the rollout itself, and secondly, issued a mandamus restraining the State from rolling it out again without first complying with Section 31.*

The judgment in Katiba Institute does not, of course, answer the number of questions that still remained to be resolved after the Nubian Rights Forum judgment, including some problematic aspects of the DPA itself. Those questions were not, however, before the court in this instance; on the other hand, the court’s finding that constitutional statutes apply retrospectively – and the reasons for that finding – make it a landmark judgment. Katiba Institute adds to the growing comparative discussion around constitutional statutes, Fourth Branch bodies, and “Guarantor Institutions”, and therefore ought to be keenly studied by students of comparative constitutional law.

* One cannot, of course, help comparing this with the judgment of the Indian Supreme Court in the Aadhaar case, where despite the fact that Aadhaar data was collected for more than five years without any law whatsoever, it was retrospectively validated by the Supreme Court.

Continue Reading

Op-Eds

The Pandora Papers Reveal the Dark Underbelly of the United Kingdom

Through its network of tax havens, the UK is the fulcrum of a system that benefits the rich and powerful.

Published

on

The Pandora Papers Reveal the Dark Underbelly of the United Kingdom
Download PDFPrint Article

There’s the role, for instance, played by the British Virgin Islands, an overseas territory of the UK that functions as a tax haven. Czechia’s multimillionaire prime minister used the territory to hide his ownership of a chateau in France. Others, including the family of Kenyan president Uhuru Kenyatta and Vladimir Putin’s PR man, have made similar use of the islands to conceal wealth – while Tony and Cherie Blair reportedly saved £312,000 in stamp duty when they bought a London property from a company registered in the British Virgin Islands in 2017.

Then there’s London itself. The leaked documents show how the King of Jordan squirreled personal cash away in the capital’s property market, as did key allies of Imran Khan, Pakistan’s president.

More details will emerge in the coming days. But one thing is already clear. This isn’t a story about countries on the periphery of the world economy. It is a story about how the British state drives a global system in which the richest extract wealth from the rest.

British through and through

The British Virgin Islands were captured by England from the Dutch in 1672. By then, the indigenous population had already gone – either slaughtered in an unrecorded genocide or fled for fear of one. The islands have been a haven for pirates of various sorts ever since.

But this is just one part of Britain’s offshore network. There are around 18 legislatures across the globe that Westminster is ultimately responsible for. These include some of the worst offenders in the world of money laundering, tax dodging and financial secrecy. The Cayman Islands are British. So is Gibraltar. So are Anguilla and Bermuda.

These places aren’t just British in an abstract sense. Under the 2002 British Overseas Territories Act, their citizens are British citizens. They operate under the protection of the British diplomatic service. And, when need be, they can rely on Her Majesty’s Armed Forces: in the last 40 years, Britain has twice gone to war to defend Overseas Territories. Once was when Argentina tried to claim back the Falklands/Malvinas. The other time was the invasion of Iraq, when the British government claimed that Saddam Hussein’s weapons programme threatened its military bases at Akrotiri and Dhekelia on the island of Cyprus.

This complexity is no accident

In total, experts estimate, Britain and its overseas territories are responsible for facilitating around a third of the total tax dodged around the world. And that’s before we consider money stolen by corrupt rulers, or the proceeds of crime. Not to mention the way that billionaires’ hidden wealth allows them to influence our political systems in secret.

This complexity is no accident. The UK, unlike almost any other country on earth, lacks a written constitution. The rules about how the rules are made are set through ‘convention’, an endless fudge that ultimately amounts to them being made up by our rulers as they go along.

We see this most clearly in how the domestic territories of the British state are governed: Scotland, Wales, Northern Ireland, Greater London and the City of London each has its own arrangements, each absurd in its own way. Each of these messes leaves a different tangled thicket in which the crooks of the world can hide their cash.

Seen from the perspective of international capital, though, it is the Overseas Territories, as well as the Crown Dependencies of Jersey, Guernsey and Mann, which form the most significant part of this complex. They use the malleability of the British constitution to form a network of safes in which the rich can hide their cash.

A new era

Although no one knows for sure how much money is hidden in tax havens, of which the British territories make up a significant chunk, the figures involved are so vast that academics at the Transnational Institute in the Netherlands have described them as “the backbone of global capitalism”.

Seen this way, the constitutional flexibility of the British state isn’t just some post-medieval hangover. It’s a hyper-modern tool in an era of global surveillance capitalism, where the rich can flit around offshore while the rest are forever trapped by borders.

Through its empire, the British state played a key role in inventing modern capitalism. Now, the UK is helping reinvent capitalism once more, by extending the protection of a constitution designed by the powerful, for the powerful, to the billionaires, oligarchs and criminals of the world.

Adam Ramsay is openDemocracy’s main site editor. You can follow him at @adamramsay. Adam is a member of the Scottish Green Party, sits on the board of Voices for Scotland and advisory committees for the Economic Change Unit and the journal Soundings.

This article was  first published by Progressive International

Continue Reading

Trending