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Brexit, Little Britain and the Empire Politics of the End

12 min read. Why has the UK establishment so farcically mismanaged Brexit? The answer has eluded her politicians because it lies deep within a political system no longer fit for current purpose.

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Brexit, Little Britain and the Empire Politics of the End
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The decade-long death march of Western capitalism continues to reap yet more victims. The latest is the British political establishment and the remnants of the Empire that created it.

The problem for the key actors, dwarfed as they are by a venerable political system they inherited from the time of their great-great grandparents when it yielded exclusionary benefits, is their inability to grasp that Brexit, the current crisis with which it is grappling, does not signal a change. It is an ending. Misreading the situation, the said actors continue to dream up remedies and strategies based on the vain assumption that the economic crisis will somehow be resolved by political initiatives.

The lone survivor may well end up being Jeremy Corbyn, leader of the official opposition Labour Party, and then only because he never believed in the virtues of western capitalism to begin with. He sees his mission more in terms of how to cater to the needs of all capitalism’s damaged survivors.

The problem for the key actors, dwarfed as they are by a venerable political system they inherited from the time of their great-great grandparents when it yielded exclusionary benefits, is their inability to grasp that Brexit does not signal a change. It is an ending.

The vast majority of British people are not wealthy. They merely live within a rich economy that provides them access to credit. For at least 350 years, the British economy expanded through the ruthless exploitation of resources and people from many parts of the world. The big question then, as now, was: who benefits, and how?

In his 1964 book, The Sins of the Fathers, James Pope-Hennessey explains that:

“Shipbuilding in Liverpool was gloriously stimulated by the slave trade, and so was every other ancillary industry connected with ships…… People used to say that ‘several of the principal streets of Liverpool had been marked out by the chains, and the walls of the houses cemented by the blood of the African slaves.’ The Customs House sported carvings of Negroes’ heads…”

The most contentious question at the core of British politics has always been the question of the domestic distribution of the proceeds of that global trade.

In particular the history of the social democratic movement in the UK, which culminates in the formation in 1900 of the Labour Party, has been the history of developing more efficient ways of systematically redistributing Empire’s wealth as it comes in. These initiatives culminate in the establishment of the provision of mass housing (1935), education (1944) and health (1946) as a clear statutory requirement, after the 1939-1945 war, and the economic crisis that preceded it. These three policies alone immeasurably changed the quality of life for ordinary British people, and are now the site of the ideological battleground between the main parties, regarding how best to “fix” the country’s crisis.

For at least 350 years, the British economy expanded through the ruthless exploitation of resources and people from many parts of the world. The big question then, as now, was: who benefits, and how?

Since the failure to recover from the 2008 economic crash, politics seems to have become an exercise in which everyone questions the legitimacy and role of every other participant. Empire’s redistributive template is being challenged from all angles: ordinary citizens challenge the corporate world regarding the rates of tax it pays to keep public services running; the corporate world in turn challenges the logic of ordinary people continuing to expect that such services should be provided for free and on demand; indigenous people begin to question why immigrants have the right to move in and partake of such services; the provincial regions begin to question why major infrastructural development tends to be focused on the major urban centres, and so on.

The history of the social democratic movement in the UK, which culminates in the formation in 1900 of the Labour Party, has been the history of developing more efficient ways of systematically redistributing Empire’s wealth as it comes in.

The latest development in these establishment contestations is the resignation of seven MPs from the Labour Party, and declaring themselves “independent”. They were soon joined by an eighth Labour MP, and then by four members of the ruling Conservative Party. There is every indication that there will be more resignations from both parties; some of these MPs will likely join the new group. This attempted re-alignment of Britain’s 150-year-old effectively two-party system may amount to little in itself, but will in the long-term, prove to be hugely significant.

Empire’s redistributive template is being challenged from all angles: ordinary citizens challenge the corporate world regarding the rates of tax it pays to keep public services running; the corporate world in turn challenges the logic of ordinary people continuing to expect that such services should be provided for free and on demand; indigenous people begin to question why immigrants have the right to move in and partake of such services…

This is in fact a debate about the future, paralysed by the past.

Britain sidestepped an obligation to undertake a principled and genuine retreat from Empire. Such a retreat would have entailed a costly reckoning with history. Empire’s unravellng came with huge costs: there was the risk of being forced into making material reparations to the colonies and descendants of those enslaved in the Trans-Atlantic trade; downsizing and restructuring her global corporate reach would have meant a significant reduction in income; and weaning her domestic population off the proceeds of Empire’s profits could have led to sharp political disruptions. Instead, Britain embarked on a series of pretend “withdrawals” and resorted to all manner of skullduggery so as to maintain back-channel influence and continue profiteering.

By postponing this decision, Britain now faces a stark question: how does she retain her economic pre-eminence? Is it by cleaving unto an ever-tighter embrace with the European Union, or independently returning to her own stall in the global marketplace, which first gave her pre-eminence?

Britain sidestepped an obligation to undertake a principled and genuine retreat from Empire. Such a retreat would have entailed a costly reckoning with history.

This is the dilemma expressing itself as the Brexit crisis, essentially the failure by the entire political leadership to manage the consequences of the 2016 referendum, in which UK citizens — by a small margin, it should be noted — voted to end their country’s 45-year membership of the European Union.

That referendum itself only came about as a consequence of then UK Prime Minister David Cameron’s bungling attempts to end dissent in his ruling Conservative Party. He sought to outflank growing voices from the Tory right wing insistent that a new type of Conservative Party was necessary to make Britain “great” again, not least by severing its links with the European Union, which they characterized as the source of unwanted immigrants, and a drain on the UK’s “hard-earned” Empire wealth. Cameron, shocked by the unexpected referendum result, resigned immediately, leaving the problem to his successor, current PM Theresa May.

The referendum itself only came about as a consequence of then UK Prime Minister David Cameron’s bungling attempts to end dissent in his ruling Conservative Party. He sought to outflank growing voices from the Tory right wing insistent that a new type of Conservative Party was necessary to make Britain “great” again…

The referendum result has had an equally damaging impact on the opposition Labour Party, already adrift from its ideological moorings, following its many years in opposition after its 1979 defeat by the Conservatives under Margaret Thatcher. Originally, Labour was committed to the goals of a form of socialism: nationalisation of key sectors of the economy; widespread provision of social services and amenities as well as a safety net; and protection of workers’ rights to organize, assemble and agitate. Following a second defeat to Thatcher in 1983, a number of reformist party leaders like Neil Kinnock, began to reshape the party’s orientation while still in opposition. “Socialist” policies were progressively abandoned over the following decade and a half, as they became increasingly unsellable to the electorate, not least because of the pernicious influence of a corporate media hostile both to the Party and its policies, and the victory of Thatcherite neoliberalism as the dominant policy mantra across the political establishment. This paved the way for Tony Blair to emerge as a new type of Labour leader, and lead the reformed party — now freed of its previous ideological commitments and Trade Union obligations — back into power in 1997.

The referendum result has had an equally damaging impact on the opposition Labour Party, already adrift from its ideological moorings, following its many years in opposition after its 1979 defeat by the Conservatives under Margaret Thatcher.

Despite this, the ideological debate within Labour never completely ended. Many radicals blamed the party’s inability to recover quickly from the loss of the 1979 election on the narrow defeat of the radical Tony Wedgewood Benn in the deputy party leadership vote, in 1981. With the collapse of neoliberal economics after 2008, some of the old “socialist” ideas have experienced a resurgence. It is this that has brought current leader Jeremy Corbyn, a veteran of the futile 1980s battles to keep the party “socialist”, to the leadership. In fact, a number of the key actors in Corbyn’s camp — including Corbyn himself — were active pro-Tony Benn youth wingers back then.

Despite all those struggles, such “progressive” politics, directed from this “distributionist” framework never quite explained where the wealth to be distributed would come from, especially if Empire’s global resources were no longer available.

With the collapse of neoliberal economics after 2008, some of the old “socialist” ideas have experienced a popular resurgence. It is this revival that brought Jeremy Corbyn, a veteran of the futile 1980s battles to keep the party “socialist”, to Party leadership.

In a UK Guardian article of September 22, 2011, British Admiral Lord Alan West was quoted criticising proposed cuts to the UK defence budget:

“We are probably, depending on what figures you use, the fifth or sixth wealthiest nation in the world. We have the largest percentage of our GDP on exports … we run world shipping from the UK, we are the largest European investor in south Asia, south-east Asia [and] the Pacific Rim, so our money and our wealth depends on this global scene.”

This is why retaining a presence in the European Union is important to the UK establishment, which believes it would offset any contraction of the Empire economy as it tries to deliver on its redistributive “socialist” ideals. Even this may not work, as it is a strategy still premised, however indirectly, on the wealth generated by Empire.

Progressive politics, which operate from within this “distributionist” framework never quite explained where the wealth to be distributed would come from, especially if Empire’s global resources were no longer available.

Leaving or remaining in the European Union is therefore an argument represented by factions within each of the dominant political parties, not just the Conservatives. Whichever party finds itself in power in this period will simply implode, as is happening to the Conservative Party at the moment.

The central question, that is, the question concerning a long-term post-Empire economic strategy, goes back over 30 years, and has never been settled. It was only temporarily resolved by the rule of Margaret Thatcher. Faced with an EU demand then for greater economic integration against a growing domestic chorus to double-down and go it completely alone, the British, being British, attempted to do both. This left the UK with a somewhat hybridized EU membership. Unlike the rest of the Union for example, Britain kept her own currency.

Leaving or remaining in the European Union is therefore an argument represented by factions within each of the dominant political parties, not just the Conservatives. Whichever party finds itself in power in this period will simply implode.

Now the matter has returned to centre stage, not least due to the economic hardships bedevilling the EU’s 500 million citizens. The crisis has arrived at a time when politics in Britain is being managed by a generation of people dwarfed by their own legacy. Since at least the time of Gladstone in the 1860s, the British political system has been premised on managing the proceeds of an empire-based economy. The crisis therefore, goes to the heart of how British economics, and therefore politics, is constituted.

The end of Empire has been a prolonged period of discomfort, and left a wrong political fit. Those days, and the formations they spawned, are now over. The whole construct and edifice — the buildings, institutions, traditions, imperatives — are not fit for current purpose. So, the government system, which includes the official Opposition, is obsolete. Those were Empire-level political initiatives to keep the masses happy with their share of the spoils.

The current leaders on all sides seem incapable of understanding the full meaning of the weight of all that history, and so what is happening in the UK parliament is a splintering of the old order, but one which carries the misconceptions of that old order into the new.

In particular, Empire’s racial politics that played out in the colonies and was previously viewed with a certain metropolitan hauteur from London, became increasingly domesticated after decolonisation. At home, racial politics spawned a new lexicon, and new hitherto unfamiliar actors, both of which ended up in Empire’s parliament pursuing identity politics as a new dimension to the aforementioned politics of redistribution.

But real change will not come through thinking and speaking from the platform of Empire’s institutions. It cannot be re-ordered, or have its wrongs put right, from those pedestals.

The truth is that the 2016 referendum was not a decisive outcome. For a matter of that magnitude, a nearly 50/50 result cannot be said to be a clear “rejection” of anything. By the same token, neither can it be said to be an acceptance of the status quo.

The logical thing on paper would be to hold another referendum. However, given the polarized nature of the debate, as well as the real economic pain ordinary British people are experiencing, this would likely split both main parties internally. There is a strong suspicion that step three for the recently resigned MPs will be an attempt to create a new party, that would move to displace the current official opposition, in anticipation of the looming internal splits.

The truth is that the 2016 referendum was not a decisive outcome. For a matter of that magnitude, a nearly 50/50 result cannot be said to be a clear “rejection” of anything.

This, however, is to still miss the point.

What was important was the spread of the result. England, by far the most populous of the three national regions, voted most clearly to leave the EU. But again, this was outside the main urban concentrations (where a lot of non-indigenous minorities are to be found). While Wales voted alongside England, Scotland voted solidly to remain.

Instead of dealing with the implications of the result, all the other political factions appear strangely to have perceived their immediate task as being to prevent a Corbyn-led Labour Party from taking power. Corbyn espouses a fundamentally different agenda than the conventional mainstream: he wants a redistribution of the wealth of the country among a much wider demographic, through nationalization, and the massive expansion of social services. For Corbyn therefore, the issue of Brexit is secondary. He intends to pursue his programme regardless of whether Britain remains in the EU or not. But such economic plans are inimical to the now 40-year orthodoxy established by Margaret Thatcher, and injected into the Labour party by Neil Kinnock and Tony Blair.

Instead of dealing with the implications of the result, all the other political factions appear strangely to have perceived their immediate task as being to prevent a Corbyn-led Labour Party from taking power.

The fault line in this political quagmire is both factions of the Conservative Party, plus the Tony Blair remnants (and they are many) in the Labour party being on one ideological side, against Jeremy Corbyn’s faction of the party.

This will be a battle huge and distracting in equal measure.

First, it will keep British politics bogged down in a debate about the best distribution of Admiral West’s Empire proceeds, a lot of which is backstopped through the European Union’s “Economic Partnership Agreements” signed with much of the so-called “developing” world – that is, the old colonial world of Africa, the Caribbean, the Pacific and Asia. The EPAs are basically the modern form of the unfair trade treaties of the last five centuries. Their most disruptive feature was ‘conditionality’: the overweening donor influence on where and how ‘aid’ is spent, and a heavy focus on private sector participation in ‘development’.

On the domestic political front, the threat of Corbyn implementing his redistribution agenda after the UK exits the EU,, would profoundly disrupt established corporate interests.

Third, given the historical economic pressure created by the emergence of other global economic players, it is inevitable that the UK will see her share of the spoils progressively decline. The reality of this permanent decline will then be used to drag the likes of Corbyn into a jingoistic debate about British “greatness” (which, incidentally, is built on a fallacious premise: what right does the UK have to global pre-eminence, and how is that pre-eminence to be kept in place anyway?).

Many of the current round of EPAs (negotiated for twenty-year periods), are due to expire between 2020 and 2025. Would a Corbyn government design their renegotiation to better reflect the principles of fair trade, a condition of staying in the EU? If so, would the EU want the UK back as a member?

Being in the EU has failed to suppress the UK establishment’s nostalgic fantasies of the return of Empire. Understanding this is to recognise that the nature of Britain’s current politics has no answers for the future. To confront the future would first require a recognition that the global Empire economy, which the EU also feeds off of, must be restructured in favour of a global fair trade regime, whether the UK in all or in part remains inside the EU.

Whether within the EU or out of it, Britain remains the fifth richest country in the world due to a legacy of malfeasance. Britain’s current political order is being dismantled by the force of this legacy; the current leaders know neither how to maintain their global advantage, nor how to make an orderly withdrawal from it.

To confront the future would require a recognition that the global Empire economy, which the EU also feeds off of, must be restructured in favour of a global fair trade regime, whether the UK in all or in part remains inside the EU.

This essentially means that the 2016 referendum produced three or four outcomes, not one.

For the British people then to be able to speak, the creation of an ENGLISH parliament is imperative. This is a call that comes up from time to time, but is then ridiculed and silenced.

However, before England became “the first, and the most deeply penetrated of all the British colonies” to quote Oscar Wilde, England’s Kingdoms did often have their own parliaments, such as the Anglo-Saxon Witangemot that operated between the 7th and 11th centuries.

Only after this democratisation process can Britain have a meaningful referendum in which each region decides for itself and negotiates to stay or go independently of the others.

Whether Britain were to have become a full member of the EU, or to have completely broken away from it, a central truth remains: this is actually the end of an epoch. The unravelling of the UK’s political system is part of it.

Only after Britain democratises her politics can she have a meaningful referendum in which each region decides for itself and negotiates to stay or go independently of the others.

THIS is ending.

The world will go on.

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Kalundi Serumaga is a social and political commentator based in Kampala.

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No Country for Muslims? Modi Underestimated Indians’ Tolerance for Diversity

7 min read. What India’s Prime Minister forgets – and what the mass protests in Indian cities demonstrate – is that India’s secularist democracy has survived more than 70 years because Indians decided that religion was too personal and too precious to be left to the whims of the state.

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No Country for Muslims? Modi Underestimated Indians’ Tolerance for Diversity
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Just before Christmas, when thousands of Indians – both Hindus and Muslims – were protesting against a controversial new law that discriminates against Muslims, a court in Pakistan handed down the death sentence to Junaid Hafeez, a 33-year-old university professor who was found guilty of blasphemy. Hafeez had been accused of posting derogatory comments about the Prophet Mohammed on social media. His case is one among many in Pakistan where harsh sentences have been handed out to those perceived to be insulting Islam.

That same week, a court in the Kingdom of Saudi Arabia – Islam’s holiest land – sentenced five men to death for the murder of the journalist Jamal Khashoggi. Critics believe that the trial was a farce and the real perpetrators of the crime, including Saudi Prince Mohamed bin Salman, have got away scot-free. Khashoggi’s brutal murder in a Saudi consulate in Istanbul in October 2018 shocked the world and led many to point fingers at the repressive Saudi monarchy, which is known to torture and detain those opposed to it – and which seems to suffer no consequences for its inhumane treatment of dissidents, not even from Western nations that advocate democratic ideals to the rest of the world

There were no mass protests or riots in either Pakistan or Saudi Arabia – or even outside these countries – against what are undoubtedly flawed and extremely unfair justice systems. On the contrary, the Trump administration congratulated Saudi Arabia for the verdict against Khashoggi’s alleged killers, thereby whitewashing what was clearly a miscarriage of justice.

So the fact that Indians of all religions have risen against the Citizenship Amendment Act (CAA) is perhaps on indication of how resilient India’s democracy and secularist traditions are. The CAA is being opposed because it allows Hindus, Sikhs, Christians, Jains and Parsees who are in India illegally to acquire Indian citizenship if they can prove that they are being persecuted in Bangladesh, Pakistan or Afghanistan, all of which are predominantly Muslim countries. This privilege, however, is not extended to Muslims from these countries. This is viewed by many as grossly discriminatory and contrary to India’s constitution, which was founded on the principle that religion should not determine citizenship.

At least 25 people have been killed by security forces since the protests began, but Prime Minister Narendra Modi has shown no signs of reconsidering the wisdom of the Act; on the contrary he has become more defiant. This could be because, like Donald Trump, he believes he has a strong base that will support him and his policies no matter what. But that base, it seems, is crumbling in Modi’s case. The protests have not stopped; on the contrary, they are getting louder.

Moral high ground

Since independence in 1947, India has prided itself for not being like its neighbour Pakistan, which insisted on forming an independent state for India’s Muslims rather than being part of a united India where both Hindus and Muslims could co-habit peacefully. India held the moral high ground with respect to its neighbour, often boasting that despite being a Hindu-majority country, it had no issue with its sizeable Muslim minority. (There are currently roughly 200 million Muslims in India – almost the same number as the total population of Pakistan.) In fact, until Narendra Modi’s right-wing Hindu nationalist party took over in 2014, successive Indian governments have made it a point to woo and accommodate the nation’s Muslims.

The fact that Hindus in India are fighting to preserve Muslims’ rights is itself a testament to Indians’ tolerance and maturity – even among those who have historical grievances against the Muslim community. Although Muslims have lived in India before the advent of the Mughal Empire, which ruled over India from the 16th century to the mid-18th century, the Islamicisation of India is often attributed to the Mughal invaders/conquerors and their proselytising mission.

There is no doubt that Mughal culture has contributed enormously to the arts, architecture, culture and cuisine of India. Architectural marvels like the Taj Mahal, biriyani, kebabs, and the Urdu language are a legacy of India’s Mughal/Muslim heritage. But the Mughal Empire (which lost power after the East India Company and later the British Empire controlled large swathes of India) is also associated with atrocities, including forced conversions, which India’s Sikhs are acutely aware of as their religion is founded partly on resistance to Mughal hegemony.

Although Sikhism is often viewed as a reaction against Hinduism’s stifling and oppressive caste system, and its first guru, Nanak Devji, is remembered for fusing Islam with Hinduism, thereby creating a monotheistic religion that shunned the worship of gods and goddesses and that bequeathed more rights to women, Sikhs’ resistance to Islam has come to define their religion.

Distrust of Muslims is an instinct that is inculcated in Sikhs and Hindus from childhood, much like the way Kikuyus are taught to distrust Luos. When I was a child, my grandmother reminded me that many Sikh gurus, such as Guru Tegh Bahadur, were tortured or put to death by Mughal emperors for resisting forced conversions to Islam. The sons of Sikhism’s last guru, Govind Singh, were buried alive by the sadistic Emperor Aurangzeb in the late 17th century. Govind Singh formed the “Khalsa” (a militant group of disciples) to wage war against the Muslim rulers.

Northern India’s Sikhs and Hindus thus have an instinctive fear of Muslims that is based on a history where they – not the Muslim/Mughal invading armies – were the persecuted ones, a fact that neither the left nor the right in India is comfortable addressing, but which Prime Minister Narendra Modi and his Bharatiya Janata Party (BJP) have cynically tapped into.

What is happening in India is not your garden variety Islamophobia that emerged after 9/11 but a much deeper instinctive reaction that has its roots in Indian history. While the Mughal period in India is often seen as a golden age when beautiful buildings, poetry, dance forms such as kathak and other fine arts flourished, it is also viewed as a period of intense violence and cruelty. While Mughal emperors like Akbar the Great (who married a Hindu woman) are lauded for fostering harmony between the sub-continent’s largely Hindu population and the Muslim rulers, the atrocities committed by some Mughal emperors has also marred their reign. These atrocities shaped the formation of religions like Sikhism. Yet, the Sikh community’s religious leaders were among the first to oppose the CAA.

A “pure” India

The violence that characterised the Mughal Empire, especially in the 17th century, was reenacted again in 1947 when India attained independence and when millions died or were displaced when the new country Pakistan was born and the Indian subcontinent was partitioned. My ancestral family home in Lahore became part of Pakistan. This is a wound that my great grandparents and grandparents harboured for years.

And yet, India’s Muslims who did not cross the border to live in Pakistan in 1947 have rarely felt like they do not belong to India. Hindu temples sit comfortably next to mosques in most Indian cities as do cathedrals and synagogues. That was the beauty of India…until Modi came along, and told Hindus that India belongs to them and them only.

Modi and his BJP party exploited Hindus’ instinctive distrust of Muslims. The Rashtriya Swayamsevak Sangh (RSS), a militant Hindu organisation formed in 1925 and which Modi belongs to, has an agenda to “purify” India, much like Adolf Hitler sought to “cleanse” Germany. In the 1940s, as World War II was raging in Europe, the RSS leader MS Golwalker spoke of an exclusively Hindu nation: “Ever since that evil day, when Moslems first landed in Hindustan [India], right up to the present moment, the Hindu Nation has been gallantly fighting to take on these despoilers. In Hindustan, land of the Hindus lives and should live the Hindu Nation…”

He then went on to extol the virtues of Nazism: “To keep up the purity of its race and culture, Germany shocked the world by her purging the country of the Semitic races – the Jews. Race pride at its highest has been manifested here, a good lesson for us in Hindustan to learn and profit by.”

In January 1948, five months after India’s independence, Nathuram Godse, a member of the RSS, assassinated Mohandas (Mahatma) Gandhi, who the RSS viewed as being sympathetic towards Muslims.

In an article published in The Caravan and adapted from a lecture she gave in New York last year just before the protests in India began, the Indian activist and writer Arundhati Roy stated:

If Nazi Germany was a country seeking to impose its imagination onto a continent (and beyond), the impetus of an RSS-ruled India is, in a sense, the opposite. Here is a continent seeking to shrink itself into a country. Not even a country, but a province. A primitive, ethno-religious province…That it will self-destruct is not in doubt. The question is what else, who else and how much else will go down with it.”

To understand the depths of Modi’s fascist tendencies, we need not go very far in time. In the six years he has been Prime Minister, he has taken the country down a path that will not go down well in history.

A few recent examples: In November last year, Modi’s government revoked the overseas citizenship of journalist Aatish Taseer on the pretext that Taseer’s father was a Pakistani. Taseer, who grew up in India with his Sikh mother, but who is now a British citizen, had written a cover story in May 2019 for TIME magazine that described Modi as “India’s Divider In Chief”. The revocation of his overseas citizenship (which is extended to individuals who can prove that they have Indian ancestry or who once held Indian citizenship, and which allows one to travel visa-free to India) was clearly an act of retaliation by a leader who does not take criticism lightly.

In August 2019, Modi’s government annexed Jammu and Kashmir by repealing Section 35A of the Indian constitution, which gave the former princely state semi-autonomous status. This act was viewed by the state’s Muslim majority as a direct attack on them and their territory, akin to what Vladimir Putin did in Crimea. Jammu and Kashmir has been a front line state caught between the crossfire between Indian and Pakistani armies for years. The current and previous governments have often viewed it as harbouring terrorists sympathetic to Pakistan, even though the residents have argued that they have no desire to be part of either India or Pakistan.

Violence against Muslims has also risen under Modi’s regime. According to news reports, more than a hundred Muslims have been killed by Hindu mobs since 2015.

What Modi forgets – and what the mass protests in Indian cities demonstrate – is that India’s secularist democracy has survived more than 70 years because Indians decided that religion was too personal and too precious to be left to the whims of the state. Most Indians recognise that their country’s strength lies in its religious and cultural diversity. If India had gone the Pakistan way, there would be rivers of blood everywhere, like those that flooded the India-Pakistan border at independence when Muslims, Hindus and Sikhs crossing the border were slaughtered in the hundreds of thousands in revenge attacks. Few Indians want to go down that road again.

What Modi and his government have done may appeal to the anti-Muslim instincts of India’s non-Muslim majority, but it goes against the grain of how Indians (except members of the RSS and its offspring the BJP) perceive themselves and their country. With economic growth rates sharply dropping in India currently, it is only a matter of time before the protestors’ anger against the government’s anti-Muslim stance turns into widespread disaffection.

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Of Tigers, Debt Merchants and 2020 Vision

8 min read. The former president of the African Development Bank, Donald Kaberuka, has dismissed as “nonsensical” any suggestion that Africa may have over-borrowed, saying instead that with better debt management and higher domestic revenue mobilisation, the continent can take on more debt. But Kaberuka fails to make the link between the increased borrowing and the revenue problem.

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Of Tigers, Debt Merchants and 2020 Vision
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The public debt burden has dominated economic debate in 2019. Public debt is likely to be even more topical in 2020, both domestically and globally. As at end November 2019, 31 out of 70 countries in the IMF’s roster of low-income countries are listed as either in or at high risk of debt distress. Another 26 are listed as being at moderate risk, leaving only 13 that are still at low risk. Last week, the IMF approved a $2.9b bailout for Ethiopia, one of the high distress risk countries.

I first called out the Jubilee administration’s borrowing binge six years ago. Up until two years ago, the IMF and the World Bank were still giving it the thumbs up. (Very often we forget that these institutions are lenders and therefore conflicted on matters debt.) A few weeks ago Donald Kaberuka, the immediate former president of the African Development Bank (AfDB) and erstwhile Finance Minister of Rwanda, dismissed as “nonsensical” any suggestion that Africa may have over-borrowed:

“The idea that Africa is drowning in debt is nonsensical . . . If we can improve on our own domestic revenue mobilization, if we can improve on our public debt management and if we can improve on our debt management capabilities, the continent is able to take a bit more debt, especially at this time when the markets are looking for yield.”

This is an interesting argument. You may also have heard it from the Jubilee administration—the problem is not too much debt; it is the Kenya Revenue Authority (KRA) that is failing to meet revenue targets.

Kaberuka, who I gather is an economist, wittingly or otherwise, fails to make the connection between the borrowing binge and the revenue problem. Only a most incurious economist would look at revenue and debt trends such as ours (see chart) and conclude that they are completely unconnected. Although I have written about the connection on more than one occasion, it is worth recapping. There are two dimensions to the connection: an accounting one and an economic one.

Let’s start with the accounting. Let’s say we start with a GDP of Sh10 trillion which is 80 per cent private economy and 20 per cent government. Let’s then say the government is raising Sh2 trillion, which is 20 per cent of GDP, in tax revenue. Suppose the government goes to China and buys a railway worth Sh500 billion on credit. The GDP will now be Sh10.5 trillion. We will be told that the economy has grown by 5 per cent. But the railway has not added anything to the economy, and nor is it paying tax, so the government still collects Sh2 trillion, but which is now 19 per cent of the Sh10.5 trillion GDP. If this is repeated every year, by year five, the GDP will have expanded to Sh12.8 trillion and the tax revenue-to-GDP ratio will be down to 15.7 per cent.

This is a purely accounting view, which assumes that government investment is neutral, neither helping nor harming the economy. This is not as far-fetched as it might at first appear. For example, it could simply reflect government investments with long gestation periods. Indeed, we have been told that the new Standard Gauge Railway (SGR) is one such long-term visionary project whose benefits will be realised by our grandchildren. But for no harm to occur, two conditions need to obtain. First, all the borrowing needs to be foreign. Use of domestic resources means diverting these from the private economy, and that is harmful. We call this crowding out. Second, there are no repayments, because repayment of foreign debt amounts to sucking money out of the economy, also harmful. Neither obtains.

Let us start with repayments. This year, we have budgeted to pay Sh139 billion ($1.39 billion) in foreign interest, a tenfold-plus increase from Sh11b ($130m) in the 2012-2013 financial year, the last year of the Grand National Coalition government. And this does not include the hefty payments of the principal on the SGR loans that kicked in this year. The use of domestic resources is also a very significant factor. Half the debt that the Jubilee administration has accumulated is domestic. The crowding out extends beyond credit. With so much money to spend liberally, trading with the government becomes the most profitable business, diverting other economic services away from, and inflating the costs for the private sector. This could not be better demonstrated than by the case of Kenya’s banking industry.

Chart 2Last year, the industry made a consolidated profit of Sh110b, and Sh119b in interest from government securities. Considering that lending to government is virtually costless and risk-free, this implies that banks made all their profits from the government, and lost Sh9b on the business they did with the rest of the economy. The contribution of interest on government securities has increased steadily from 37 per cent in 2013 to 108 per cent in 2018 (see chart). But we also see that the banks’ profitability has declined. Profits declined by 40 per cent in 2017, following the capping of interest rates in late 2016. In 2018 profits were 14 per cent lower than in 2013. If banks are not making money from the private economy, it stands to reason that government revenue will also take a hit.

How much public debt is too much?

Debt experts have sophisticated models that are supposed to tell us. These models are built around “present value.” Present value is the sum of a forecast, such as a cash flow, and in this case annual debt repayments, discounted by a rate of interest or other relevant discount factor, used to give an estimate of current worth. If two similar countries borrow the same amount of money on similar terms, one invests wisely, and the other plunders it all, the net present value of the debt will be the same. It should not surprise then that the IMF’s models were giving the Jubilee borrowing binge the thumbs-up even as the Eurobond went walkabout and one Josephine Kabura was mocking us with tall tales of cash stuffed in gunny bags.

Chart 3For the financial health of a country, a simple rule of thumb is to ensure that debt service does not grow faster than government revenue for too long. If the debt is invested productively, the investments expand the economy, the government generates more tax revenue from the expanding economy, which it then uses to service the debt. How long is too long? That is a matter of exercising sound judgement. As John Maynard Keynes famously quipped, in the long run, we are all dead. But the question becomes moot when the trend looks like what we see in the chart—debt service heading north, revenue heading south. You do not need present value calculations to see that this trend cannot go on for much longer. Sooner or later, something will have to give.

Expect to hear a lot about fiscal consolidation in 2020.

Fiscal consolidation is defined as policy measures that aim to reduce the deficit and stop the accumulation of debt. The substance of it is what we used to call structural adjustment but, following the 2007 financial crisis, it became necessary to invent a new name—it just wouldn’t do to speak of Spain, or the UK for that matter, as implementing structural adjustment.

A fiscal consolidation strategy is predicated on the expectation that governments can find ways of bringing down deficits without hurting growth. Budget deficits are, in essence, the pumping of money into the economy, which ought to stimulate growth. Conversely, fiscal consolidation amounts to withdrawing money from the economy, which would dampen growth. The problem is that economic slowdown hurts revenue, meaning that the government has to constrain expenditure even further to meet its deficit reduction targets.

The first strategy entails counteracting the contractionary effect of fiscal consolidation with expansionary monetary policy. Simply put, what the government takes away, the Central Bank puts back in circulation. The Central Bank has a couple of tools to do this, principally by buying bonds and lowering the cash ratio and liquidity requirements for the banks (the percentages of assets that banks are required to have in cash and near-cash assets such as Treasury bills and bonds). Shovelling money out of the door is also expected to reduce interest rates, which besides making borrowing attractive for businesses and consumers, can substantially lower the interest cost of domestic debt. But unlike fiscal stimulus where the government is the spender, monetary stimulus depends on market response. The policy makers hope the money will stimulate production, but it could just as well suck in imports, or leave the country to seek higher returns elsewhere, thereby depleting foreign exchange reserves and putting pressure on the currency.

The second strategy is to find “off-balance sheet” financing of public investment. The default alternative these days is the so-called public-private partnerships (PPPs). Simply put, PPPs are the public equivalent of equity financing. Instead of the government borrowing to build a hospital for instance, a private investor builds, and the government leases it. But PPPs have their drawbacks. First, to make them attractive to private investors, PPP projects are usually structured in such a way as to ensure that the investors cannot lose money—“de-risked” in financial lingo.

Second, PPPs are seldom commercially viable so, more often than not, the Government usually has to part-finance the project in order to achieve an attractive rate of return for investors. Third, PPP financing cherry picks projects with commercialisation potential, which typically will be projects that benefit more developed areas or better-off people in society. In economics, we call such policies “regressive”, meaning they transfer resources from the poor to the rich. Fourth, PPPs have a very high corruption risk—we need look no further than the stink that is the medical equipment leasing scheme known as the Managed Equipment Services (MES) project.

Another scheme is to shift debt and deficit financing from the national government’s books to quasi-government agencies, such as has recently been done by amending the law to allow the Kenya Roads Board (KRB) to issue bonds leveraged on the fuel levy revenues that are earmarked for road construction. Assuming an interest rate of, say, 12 per cent, each shilling of fuel levy revenue can be leveraged to borrow 8 shillings. Already, the KRB has published an expression of interest for transaction advisors to raise Sh150 billion. Suffice it to say that Greece used financial gymnastics of this nature to first be admitted into the Eurozone and to subsequently fake compliance.

PPPs have a very high corruption risk—we need look no further than the stink that is the medical equipment leasing scheme known as the Managed Equipment Services (MES) project

How much public finance does development require? There is perhaps no better place to benchmark than with the Asian Tigers.

Chart 4In the 70s, Thailand and South Korea were raising 13 and 15 per cent of GDP in tax revenue, well below Kenya’s 18 per cent, while Malaysia and Singapore were doing better at just over 20 per cent (see chart). But where the East Asians stand apart is that each of them was able to put at least a third of their revenue into investment. The real miracle here is how they managed to keep their recurrent budget to a maximum of 10 per cent of GDP, out of which they were also heavily investing in education. As economists Mahbub ul Haq and Khadija Haq observed, beneath the East Asian economic miracle lay an education miracle.

Chart 5It is also a miracle of public finance, specifically, public thrift. We hear a lot about the high saving and investment rate part of the story. What we do not hear about is the role of government in that story. In the early seventies, East Asian and African countries had similar national savings rates, but even then East Asian governments were contributing more to national saving and investment, although African governments’ contribution was also significant (see chart). A decade later, East Asian governments were still contributing over a third of national investment, while for African and other LDC governments this contribution fell to 11 and 6 per cent respectively. Consequently, we turned to foreign resources. By the early 80s, Africa was investing 20 per cent of GDP more than half of which was foreign-financed, while the East Asians were investing 30 per cent, 90 per cent of which was domestically financed.

In the 70s, Thailand and South Korea were raising 13 and 15 per cent of GDP in tax revenue, well below Kenya’s 18 per cent, while Malaysia and Singapore were doing better at just over 20 per cent

The East Asian experience is telling us that when people were too poor to save much, it is the government, and not foreign resources, that closed the gap between private savings and investment requirements. In economics, we postulate that saving is determined primarily by income, and investment by rate of return. As these public investments paid off, they boosted private income and consequently private saving. When countries save more, they need less, not more foreign resources to finance investment. Donald Kaberuka is telling us that we need to raise more revenue to enable us to borrow more. Is he ignorant or dishonest?

During his tenure, the AfDB became the lightning rod for infrastructure-led growth, a fallacy that this column has discussed before. In fact, the nonsensical comments echo sentiments in the AfDB’s 2018 Africa Economic Review, to wit:

“For much of the past two decades, the global economy has been characterised by excess savings in many advanced countries. Those savings could be channeled into financing profitable infrastructure projects in developing regions, especially Africa, to achieve the G20’s industrialisation goal. That this mutually profitable global transaction is not taking place is one of the biggest paradoxes of current times.”

You may want to note that the objective is to “meet the G20’s industrialisation goal.” The irrepressibly prescient Franz Fanon read in the tea leaves:

“The national bourgeoisie will be quite content with the role of the Western bourgeoisie’s business agent, and it will play its part without any complexes in a most dignified manner.”

And therein lies the rub.

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From the Handshake to the BBI Report, Hope to Disillusionment: My Side of the Story

9 min read. During the political standoff that followed the 2017 presidential election, the National Super Alliance (NASA) espoused a road map that would lead to a political settlement through the formation of a transitional government that would have spearheaded the process of building a national consensus on political reforms. But in place of a Jubilee-NASA institutional engagement came the Handshake, a commitment by Uhuru Kenyatta and Raila Odinga in their personal capacities, which has culminated in the recently released Building Bridges Initiative Report, an underwhelming document that underscores the failure of the two principals to deliver the new political dispensation they had promised.

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From the Handshake to the BBI Report, Hope to Disillusionment: My Side of the Story
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The much-anticipated release of the Building Bridges Initiative (BBI) report two weeks ago was to be the crescendo of the detente—popularly known as the Handshake—between Raila Odinga and Uhuru Kenyatta after the failed 2017 presidential election. It underwhelmed.

Soon after its release, the rumor mill put its cost at the very unlikely figure of Sh10 billion, which the pundits calculated to be a whopping Sh64 million for each of the 156 pages of the badly drafted, poorly edited rehash of existing documents. In a satirical column, literary scholar Evan Mwangi calls it a reflection of the “low intellectual capacity of the clowns in charge of our country’s affairs,” while Wandia Njoya, another literary scholar, calls it a declaration of war by the political elite on the people. Both Mwangi’s and Njoya’s reading of the political psychology of the report leads them to a similar conclusion—it is a cynical political fraud.

Mwangi: “The report’s aim is to discourage us from seeking fundamental political or social change by pretending to offer avenues for transformation. It suggests that we should continue assuaging demagogues among our political class, so unlike in 2007 they don’t burn us alive in churches, stoke ethnic violence in political rallies in the run-up to the polls, or organise retaliatory attacks by youths who would then be all snuffed out to cover up crimes against humanity.”

Njoya: “Statements from the government and those pundits that slavishly support it often trace the source of any disaster to the public—especially the victims—and to democracy. Government insiders and supporters portray the state as blameless, and fault Kenyans for wanting to participate democratically in the making of decisions that affect them, because by doing so, Kenyans put delays on the good work of the government. If every social challenge we face is caused by us, the people, then the response to the challenge must be to fix the behaviour, the values and the soul of the people. This “fix the people” approach to social problems is the very essence of the Building Bridges Initiative (BBI) document released by the government this week.”

A Swahili tabloid summarised BBI thus: “Ni msitu mpya, nyani ni wale wale.” (same monkeys, different forest). From the ivory tower to street level, the verdict is the same.

How did we get here?

In January 2018, three months into the 2017 presidential election standoff, it was rumored that the formation of a government was being delayed by behind-the-scenes power-sharing negotiations. The National Super Alliance (NASA) issued a statement and held a press conference to refute the suggestion, during which this columnist stated that:

“NASA is not interested in boardroom deals which have not delivered for Kenyans like the 2007 power sharing agreement. We don’t recognise this illegitimate government and we will not give it legitimacy . . . Our nation is deeply divided between two irreconcilable political values namely authoritarian rule and democracy. They (Jubilee) have in fact stated that a benevolent dictatorship is better than a democracy. The way out for the country is to embark on an urgent, honest and far reaching conversation sooner rather than later.”

The key words here are “boardroom deals.” Indeed, I recall belabouring the pledge by analogy, stating that NASA would not go into a “come-we-stay” marriage with Jubilee. Internally, we were developing a more elaborate negotiating strategy. Our preferred road map to a political settlement was a transitional government with a limited mandate, to be established by a constitutional instrument along the lines of the National Accord that established the Government of National Unity (GNU) after the 2007/8 failed election.

The transitional government would have spearheaded the process of building a national consensus on political reforms that would have culminated in what we hoped would be an uncontested constitutional amendment referendum, if one were required, followed by a free and fair election. We had also suggested that Uhuru and Raila commit publicly to retiring, so as to strengthen their hand as honest brokers and the midwives of a new political dispensation, and by so doing, insulate the process from succession politics. This was a reasonable proposition since Uhuru would be retiring anyway, and Raila had signed a one-term deal with the NASA co-principals.

Our preferred road map to a political settlement was a transitional government with a limited mandate, to be established by a constitutional instrument

It therefore came as a bit of shock that Raila had gone ahead and cut a backroom deal with Uhuru, the very thing we had pledged not to do. But in the rough and tumble of politics, you learn to roll with the punches. We saw that the letter of the deal was in the spirit of the road map we envisaged, the main difference being that in place of the Jubilee-NASA institutional engagement we had prepared for, the handshake was a commitment by Raila and Uhuru in their personal capacities. In what was to be our last press release as the People’s Assembly Committee, we applauded this commitment but also pointed out the dangers:

“The memorandum is an initiative of the two leaders in their individual capacities. In the memorandum, they describe themselves not as presidents or leaders of political formations which they are, but as friends and compatriots. The two leaders have acknowledged the historical origins of our current crisis, and the many opportunities over the years that leaders have missed to right the ship. They recognise that they too have a historic opportunity to set the country on the right course, and they do not want to be remembered as another generation of leaders that did not rise to the occasion…We must commend and congratulate the two leaders for this meeting of minds. Acknowledging a problem is the first step towards solving it. The two leaders have asked us to give them an opportunity to spearhead this process. We have been assured that this initiative will be about the people, will involve the people, and will be validated and owned by the people. But we are alive to the painful history of political betrayal. We know that once [crises] subside, leaders can get comfortable and allow the issues of the people to fade into the background. That is how we have ended up where we are.”

This was the spirit as we set about implementing the handshake. But as days went by, it became evident that what was said was not what was intended. The discordance was brought into sharp relief by disagreements on whether or not to gazette the BBI Task Force. The handshake MOU was explicit that the initiative was a personal political undertaking. Gazetting the task force would make it a state project that would be bureaucratised and watered down. And as one colleague opined, it would amount to “kicking the ball into the long grass.” Those pushing for gazettement could not argue a cogent case, but in one conversation, one colleague, in a fit of exasperation, blurted out: “But there is money!”. The cat was out of the bag.

In the corridors, the conversation was dominated by talk of an impending cabinet reshuffle. Indeed, within no time at all, Raila Odinga’s Capitol Hill office had become a beehive of activity with, so I gathered, people bringing their CVs, others seeking help with tenders, pending bills and corruption cases. By end April, the frenzy had reached fever pitch. Week after week, confident predictions were made that the reshuffle would be announced on Thursday, then Monday, then Thursday again. My vehement protestations about these under-the-table dealings elicited a quiet word of advice that I should tone down as my name was on the appointments list.

We had also suggested that Uhuru and Raila commit publicly to retiring, so as to strengthen their hand as honest brokers and the midwives of a new political dispensation

There were two other issues that I found troublesome. The first was the anti-corruption crusade that was mounted immediately after the handshake. My concern was that corruption cartels were the last adversary that the BBI needed, especially as it appeared to be a one-sided assault on Deputy President Ruto’s patronage network. Secondly, I was persuaded that the country was headed into an economic crisis (that is now unfolding). By embracing Uhuru Kenyatta, Raila Odinga was in essence sanitising Jubilee’s economic delinquency, and jumping into a sinking ship. In fact, I postulated that by the time of his departure from office, Uhuru Kenyatta would be more unpopular than Moi was in 2002.

Raila dismissed both concerns. I was particularly bemused by his prognosis that an economic crisis would not hurt because Zimbabwe’s Mugabe seemed to have survived a much more severe one (Mugabe was still in office then). It was not long before it became apparent that an economic storm was brewing and an urgent discussion was convened. At the end of my presentation, Raila came back with what to me was a bolt from the blue: he wanted to know how the president could be helped and went as far as to request that I write a paper that he would discuss with Kenyatta. That is the moment it dawned on me that, in his mind, Raila was already in government, or, as we say in Swahili, tumewachwa kwa mataa (we had been abandoned at the traffic lights). I did not respond and needless to say, no such paper was forthcoming. Looking back, Kenyatta had all along been banking on a personal deal with Raila. Two anecdotes will suffice to illustrate the point—they are by no means the only ones.

On the eve of the declaration of the official results of the August 8 presidential election, the NASA presidential campaign team was holding a quiet vigil of sorts when a muted drama, that went unnoticed by most of the people in the room, played out. A wheeler-dealer known to have business links with the Kenyatta family walked up to Raila and said that “mama is waiting.” Although spoken in low tones, colleagues within earshot became curious and sought to know who “mama” was. The awkward silence that ensued gave the game away. A statement unequivocally rejecting the election results was quickly drafted for Raila to issue; it had not been on the evening’s agenda. It is unlikely that we will ever know whether Raila was in on the plan to meet “mama” and what the rendezvous would have engendered. History oftentimes turns on chance.

The second one was in late November, shortly after we launched the protest movements that included a consumer boycott of Brookside Dairy products, among others. I received a call from a colleague alerting me that he had directed to me a “foreign journalist” who was frantically looking for Ida Odinga (she was out of the country at the time). The name of the “foreign journalist” was Christina Pratt (née Kenyatta). It would seem Ms. Pratt had presumed name recognition as she did not see fit to introduce herself or give her reason for calling and so, not recognising the name, my colleague had brushed her off for a couple of days; he responded once I told him who the caller was. Such was the urgency that Ms. Pratt even sought to know whether she could travel to where Ida Odinga then was, which proposal was declined. I gather that contact was eventually made and a home visit, of the kind we call itega in Gikuyu (gift giving), was arranged.

As observed, the point of these anecdotes is that Kenyatta had been banking on resolving the election impasse privately with Odinga, kinyumbani (domestically) as we say in Swahili; the handshake was the actualisation of Kenyatta’s desire. But by having chosen to personalise a political crisis, Uhuru and Raila would seem to have overestimated their personal power and underestimated their adversaries.

Uhuru and Raila seemed not to realise that refusing to categorically rule themselves out of the 2022 contest was guaranteed to frame the BBI initiative as succession politics. It did not help that the anti-graft war was increasingly being perceived as a political takedown of William Ruto. Economic hardship also began to bite, making the ground less than enthusiastic, particularly in Kenyatta’s central Kenya political base. Raila’s contention, as cocky as it was self-serving, that Kenyatta’s political clout would shrug off the economic distress has not aged well. Week after week, no sooner would the joint nationwide meet-the-people engagements they had promised be announced but they would fizzle out.

The BBI Report is the product of these missteps. What many Kenyans will not know is that the BBI task force was not constituted to produce a technical report. Rather, it was initially envisaged as a team of political advisors to the two principals, in line with the principals’ commitment that they would be personally leading the engagements with the people. It would seem that once the ground became hostile, the task force was repurposed to collect views and write a report—a task that it was clearly neither suited for nor prepared for. Suffice it to say that, given the depth and wealth of talent and experience in governance reform that we have gained in our two-decade constitutional reform struggle, the BBI task force is not in the country’s first or even second eleven.

Uhuru and Raila seemed not to realise that refusing to categorically rule themselves out of the 2022 contest was guaranteed to frame the BBI initiative as succession politics

In the midst of the debate about the flaws of the report, we risk losing sight of the fact that the handshake was a product of a failed presidential election. The real problem is one of incumbents who, sensing defeat, monkey-wrench the election to the point where it is impossible to get an outcome. Without a clear outcome, a power-sharing settlement is negotiated and the incumbent gets to stay in power. This model of retaining power was invented by the Mwai Kibaki administration in 2007 and has quickly gained currency, being copied in Zimbabwe, Madagascar and Togo to name a few countries.

How does the BBI report propose to end this? It makes no mention of the problem, let alone offering proposals; there is, in fact, no mention of free and fair elections in the entire report. There is perhaps no greater indictment of the handshake than the fact that we are now hurtling towards another toxic, high-octane, do-or-die election. Had Uhuru and Raila stuck to the path of honest brokers committed to midwifing the new political dispensation that they had promised instead of the political intrigues and self-aggrandisement that we are now witnessing, things on the ground could have been very different.

A while back, this columnist enumerated four critical historical junctures at which nation-building opportunities were squandered through a failure of leadership. Make that five.

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