by Suketu Mehta
Meanwhile, in Congo, Belgium’s King Leopold went looking for rubber and ivory and ended up murdering 10 million people. Congolese who could not meet their quota of rubber for their Belgian masters had their children arrested, and their hands and feet chopped off in front of the parents. In fifty years of Belgian rule, from the 1870s to the 1920s, the population of Congo halved.
Congo’s political situation since has been chaotic, and remains so today. It has suffered from a combination of chronically bad governance and wholesale looting by Western multinationals. But Portland State’s Gilley is of the opinion that “maybe the Belgians should come back.”
All told, in the colonial period, Europeans increased their share of global GDP from 20 to 60 percent, Hickel points out. “Europe didn’t develop the colonies. The colonies developed Europe.” The Scottish comedian Frankie Boyle sums it up: “We fear the arrival of immigrants that we have drawn here with the wealth we stole from them.”
6
THE NEW COLONIALISM
Of course, the colonizers aren’t responsible for every bad thing that is now happening in the former colonies; some of it is our own damn fault. Many of the issues that make people emigrate are homegrown: corruption, malfeasance, and mismanagement by local rulers; and inherent societal issues that preceded colonialism, such as the treatment of women.
When the colonialists left, they set up structures of governance that worked some of the time, not so well at other times. After the British left the subcontinent, Pakistan and Bangladesh cycled through a series of military governments and corrupt civilian politicians. The army stayed out of Indian politics, but many of the democratically elected politicians failed the country miserably.
There’s a backlash against secular intellectuals in India these days, and the favorite canard that’s leveled at them by the Hindu nationalists is that they’re imposing Western values on Indian civilization. As with the neo-nationalists in Poland or Hungary, there’s a wholesale rejection of Western liberal democratic values as a foreign intervention—whether the agent is George Soros or Greenpeace.
So, it’s complicated. The colonizers did not practice these liberal values when they ruled our countries; but they are certainly worth adhering to in principle—whether they come from within or without. Yet the sorry history of colonialism renders anything associated with them suspect, and the baby gets thrown out with the bathwater.
In any case, colonialism isn’t over. It is, like Faulkner’s definition of the past, not even past yet. Corporate colonialism is the new colonialism. When the colonial regimes withdrew their soldiers and viceroys, they replaced them with their businessmen. You see them in the five-star hotels in the capitals, and in the foreigners’ compounds, living exactly as their imperial forebears did, except there are a few black and brown faces in the country club these days, creamed off from the population that they now rule over jointly.
I realized this when I went to Bhopal in 1995 to report on what had happened to the Indian city eleven years after the made-in-America catastrophe. A pesticide plant owned by the American-headquartered chemical company Union Carbide blew up and sent a massive poisonous-gas cloud floating over the city, shortly after the company had switched off safety mechanisms to save money. The gas cloud killed more than twenty thousand people and maimed another half a million, with genetic defects in the children of the survivors continuing into the present generation.
Carbide got away with murder because it was a multinational. It claimed its Indian operation was responsible, and then simply folded it up. It could not be sued in America, and the United States refused to extradite Carbide’s president, Warren Anderson, who was wanted on manslaughter charges in India. He lived a long life in the Hamptons and died peacefully in Vero Beach, Florida, while his victims continued to try to survive with damaged lungs and eyes in the slums of Bhopal.
If the United States bombed India, India could take it up with the United Nations. But if an American or a British or a Dutch corporation killed twenty thousand Indians, what court or international body could the victims appeal to? A multinational corporation is impervious to liability precisely because it operates in multiple nations; cut off a limb in one, and it grows another somewhere else. The head is protected by the laws of the country it’s headquartered in. The Socialist International and libertarian economists dreamed of a world without borders for human beings. Instead, what we have is a border-free world for multinationals.
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They looted us for centuries, they took whatever was worth taking, and they continued taking after we became “independent”—of their governments, but not of their corporations. The numbers are indisputable; colonial countries enriched themselves at the expense of the subject nations, and there’s a case to be made for reparations to be paid. There is a giant program of reparations under way, but it’s reverse reparations, by the poor of the world to the rich: to the oil companies, the chemical companies, the mining companies, which have figured out how to corrupt the governments of the developing countries and continue stealing.
The history of the multinational corporation is inextricably linked with the onset of colonialism. The world’s first multinationals were chartered by European countries to administer their colonies: the East India Company, the Dutch East India Company, the Royal Africa Company. Today’s multinationals are bigger than entire countries; if Walmart were a country, it would have the twenty-fifth largest GDP in the world. A multinational company has only one allegiance: to its shareholders, who tend to be in the rich countries. So it can enter or leave a variety of countries as suits its purpose: whether it is for commodities, cheap labor, or a captive market. It can take advantage of weak or corrupt governments, or lax labor or environmental laws for its factories—and then play one weak country off against another if local activists raise a fuss. Most of all, because of the global, amorphous structure of a multinational, it can move money around countries with very little oversight.
There are multiple ways in the global financial system to funnel money upward from those who have little to those who have a lot. Often, this is dark money, secret money, blood-tinged money that shrinks from sunlight and prefers to dwell in its own “haven,” where corrupt corporations and despots and oligarchs can safely park the billions they’ve amassed. More than a tenth of all the world’s GDP is hidden from Caesar in these tax havens—some used to hide personal wealth, others to avoid corporate taxes.
The City of London effectively operates as the biggest tax haven in the world. It is a corporation, with its own Constitution, a separate legal entity from London and even the U.K. Even Queen Elizabeth, when she wishes to enter the City, is met at the border by the Lord Mayor, who engages her in a ritual of entry. The City of London has a curious voting system, with some nine thousand votes assigned to the human beings living there, and more than twice that number given to the corporations that have set up shop in the square mile.
“When the British Empire crumbled in the mid-1950s, London replaced the cozy embrace of gunboats and imperial trading preferences with a new model: tempting the world’s hot money through lax regulation and lax enforcement,” writes the journalist Nicholas Shaxson. “There was always a subtle balance, involving dependable British legal bedrock fiercely upholding U.K. domestic rules and laws while turning a blind eye to foreign law-breaking. It was a classic offshore-tax-haven offering that tells foreign financiers, ‘We won’t steal your money, but we won’t make a fuss if you steal other people’s.’”
The U.K. and its overseas territories host one in five of the world’s tax havens, more than any other country. They hold a combined pile of £1.4 trillion that’s sheltered from taxes, according to a recent study by the University of California, Berkeley, economist Gabriel Zucman. “We have, to put it provocatively, a second British empire, which is at the very core of global financial markets today,” says Ronen Palan, a professor of international political economy at City University in London.
Devel
oping countries lose three times as much to tax havens as the $125 billion in aid that they receive. There are some sixty tax havens in the world, most of them controlled by the West. Money being smuggled out of sub-Saharan Africa and into them is growing by 20 percent a year. In 2011, tax havens held $4.4 trillion of the wealth of developing countries. This is wealth that should be used to grow crops, educate children, and develop cities in the poor countries. Instead, it’s sitting in Luxembourg and the City of London.
Max Bearak of The Washington Post summarized an ActionAid report about how this works and what it costs a country like India:
In 2007, Vodafone, one of the world’s biggest telecom providers, moved to buy Hutchison Essar Ltd, an Indian subsidiary of a Hong Kong–based company. But Hutchison Essar, despite only operating in India, was not based there—rather, it was registered as a business in the Cayman and British Virgin Islands, tax havens in the Caribbean, and Mauritius, another, this time in the Indian Ocean. Vodafone bought the company through a subsidiary of its own—registered in the Netherlands, also a tax haven. None of those places levy a capital gains tax, and so India was not able to claim the $2.2 billion it otherwise would’ve earned had tax havens not been an option for the companies. That sum is worth almost the entire annual budget for subsidized meals for school-going children in India.
In 2016, a full 40 percent of the profits of global multinationals were promptly moved to tax havens, according to Zucman. And because multinationals have figured out ways to avoid paying tax in developing countries whose tax authorities aren’t up to the complexity of the job, those countries increasingly rely on revenue sources such as sales taxes, which disproportionately hurt the poor.
Massive leaks such as the Panama Papers and Paradise Papers have shown the scale of the problem, and that it is a global problem. Of the world’s GDP, 11.5 percent ($8.7 trillion) is being held in overseas tax havens by a handful of the richest—the households owning more than $50 million in assets, including such eminences as Queen Elizabeth. If the rich countries were serious about fighting tax havens, they would agree to a world financial registry. This would benefit them, too, since we’d finally know who exactly owns all those $100 million apartments overlooking Central Park or Hyde Park.
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Trillions of dollars a year in net resource transfers (NRTs) make their way from the poor to the rich countries, according to a landmark 2016 report from Global Financial Integrity, an American think tank, and the Centre for Applied Research at the Norwegian School of Economics. Unlike previous studies, this report includes outflows of illicit or unrecorded money.
Since 1980, at least $16.3 trillion has gone from the developing to the rich countries—an amount equal to the annual GDP of the United States. The report breaks it down: $13.4 trillion in “unrecorded capital flight”—what Indians call “black money”; and $4.2 trillion in interest payments. In 2012 alone, poor countries lost $700 billion in “trade misinvoicing,” a practice whereby corporations falsify invoices to take money out of the country and into tax havens. An equal amount was lost through “same-invoice faking,” where a multinational fakes invoices between two of its subsidiaries in different countries, to shift profits to a lower tax jurisdiction.
“If we add theft through trade in services to the mix, it brings total net resource outflows to about $3 trillion per year,” The Guardian noted in a summary of the report. “That’s 24 times more than the aid budget. In other words, for every $1 of aid that developing countries receive, they lose $24 in net outflows.”
This has a direct bearing on the ethics of immigration. Between 1970 and 2010, Mexico lost $872 billion in illicit financial outflows, and most of the money ended up in American banks. Around this time—from 1965 to 2015—16 million Mexicans immigrated to the United States. They weren’t doing anything wrong; they were just following the money. Their money.
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The philosopher Joseph Carens points out the greatest inequality of today’s world: that of citizenship.
Citizenship in Western democracies is the modern equivalent of feudal class privilege—an inherited status that greatly enhances one’s life chances. To be born a citizen of a rich state in Europe or North America is like being born into the nobility (even though many of us belong to the lesser nobility). To be born a citizen of a poor country in Asia or Africa is like being born into the peasantry in the Middle Ages (even if there are a few rich peasants and some peasants manage to gain entry to the nobility).
Or as the economist Michael Clemens, of the Center for Global Development, puts it:
How much money can you ever hope to make in your lifetime? I can make a decent guess without knowing your education level, race, or social class. I just need to know what country you live in. If you live in the United States, by far the biggest reason you will earn vastly more than a typical person in, say, Mali or Haiti is not because they have less perseverance, intelligence, or talent. It’s primarily because that person lives in Mali or Haiti. What country you live in is more important in determining your life outcomes than anything else about you. In fact, what country you live in is more important than everything else about you, combined. This inequality of opportunity is driving the current migration crisis. It means that economic opportunity and personal security are handed out mostly by lottery: a lottery of birthplace.
According to the economist Angus Maddison, in 1960, when states were just beginning to emerge from colonialism, citizens of the world’s richest country were 33 times wealthier than people in the poorest country. By 2000, in a globalized world that was supposed to lift all boats, they were 134 times wealthier. The structure of the World Trade Organization keeps poor nations poor. It forces them to open their markets to multinationals. The WTO demands free movement of goods but not of labor.
It is also true, as the economist Branko Milanovic points out, that if you ignore national boundaries, global inequality among the world’s individuals has dipped since 2000, principally because of the rise of the middle class in India and China, at the same time that inequality within countries has risen. “Most people believe that inequality is rising—and indeed it has been rising for a while in a number of rich countries,” says Milanovic. “It’s harder to understand that at the same time, you can actually have global inequality going down. Technically speaking, national inequality can increase in every single country and yet global inequality can go down. And why it is going down is because very large, populous, and relatively poor countries like India and China are growing quite fast.” Global capitalism has underdeveloped some countries while allowing others to grow.
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The British Labour leader Jeremy Corbyn, in a December 2017 speech at the UN’s Geneva headquarters, enumerated the four biggest threats facing humanity: the concentration of wealth and power in the hands of a tiny corporate elite; climate change; “the unprecedented numbers of people fleeing conflict, persecution, human rights abuses, social breakdown and climate disasters”; and the use of military power over diplomacy to resolve disputes.
The day following his speech would be International Anti-Corruption Day, Corbyn noted. “Corruption isn’t something that happens ‘over there.’ Our government has played a central role in enabling the corruption that undermines democracy and violates human rights. It is a global issue that requires a global response.”
The problem isn’t so much the taxation; it’s the reporting. In our world, we have no idea who owns what. Corbyn demanded that multinationals be required to undertake country-by-country reporting. He also noted that tax authorities in the developing world lack the expertise to figure out how the rich, with their legions of highly paid lawyers and accountants, rob them of billions of dollars of tax revenue.
Corbyn brought up the extortionate debt payments that many poor countries find themselves in thrall to. He cited Thomas Sankara, the president of Burkina Faso, a few months before he was assassinated in a French-backed coup in 1987: “The debt cannot be repaid.
First because if we don’t repay, lenders will not die. But if we repay … we are going to die.” Sankara gained a reputation as “the African Che Guevara”; he openly defied the International Monetary Fund and the World Bank. The coup plotter, Blaise Compaoré, said that he had to kill his former friend because “he jeopardized foreign relations with former colonial power France.”
As soon as Compaoré assumed power, he quickly moved to reverse Sankara’s nationalizations of companies and crawl back to the IMF. In 2014, the BBC noted that Compaoré “had become the strongest ally to France and the US in the region.” And what did the country get for its reversal of Sankara’s policies? Today, Burkina Faso is among the least developed countries in the world; in the UN Human Development Index, it ranks seventh from the bottom in a list of 189 countries. So the logical thing for the Burkinabe to do is to get up and move. The country has 19 million people; 1.5 million Burkinabe have moved to the Ivory Coast, which is as poor as Bangladesh. But wages there are twice as high as in Burkina Faso, and Burkinabe in the Ivory Coast send $350 million in remittances home every year. Ordinary heroes, surviving against extraordinary odds.
7
WAR
“Do you know what happened in Central America in the eighties?” a Border Patrol agent at Friendship Park named Joseph Sanchez asks me and his partner Payam Tanaomi.
Sanchez has been with the Border Patrol for thirty-one years. His family is from Mexico, and he likes to read. He has some ideas about how to stop the flow of migrants that he has spent three decades trying to stanch. “If we spend trillions of dollars in wars, we can spend some money to help our neighbors.” Sanchez is distinctly a minority in Border Patrol, whose union endorsed Trump early and often. “Trump is the worst president in history,” declares Sanchez, who is unafraid to air his views. “I’m a Border Patrol agent, but I’m also a citizen.” He gives a little history lecture to Tanaomi, a heavily built agent of Iranian Mexican ancestry who is charged with being the public face of the Border Patrol for the families who enter the park.
