Looting Africa

The Looting Machine: Warlords, Smugglers and the Systematic Theft of Africa’s Wealth

Tom Burgis

Harper Collins (2017)

Book Review

This book centers around something global economists refer to as the “Dutch curse.” In 1959, the discovery of oil in the Netherlands led to massive unemployment outside the oil industry. A big increase in dollars generated by oil exports caused major inflation in the local currency. This made imports cheaper than locally produced goods, shutting down hundreds of Dutch businesses and putting thousands out of work.

It’s typical of mineral and oil/gas mining everywhere (including here in New Plymouth) that these industries require vast capital investment but employ only small numbers of workers. According to Burgis, it was the “Dutch curse” that resulted in Russian’s oil-fueled criminal oligarchy prior to the rise of Putin. As the continent richest in natural resources, Africa, which has been ruthlessly exploited by multinational corporations, has a severe case of the “Dutch curse.”

Although multinationals pay far less than market value for oil, gas and precious minerals, they pay corrupt puppet dictators enough that they don’t need to tax their citizens. Burgis maintains this absence of taxation results in a lack of accountability to their citizenry. Instead of holding leaders to account for their failure to provide basic infrastructure, citizens of “resource states” are far more likely to angle for their share of the loot. Retaining power becomes a simple matter of maintain elaborate patronage (payoff) systems and harsh military/security networks.

Burgis also refutes the myth that Africa’s multiple civil wars stem from tribal and religious conflict. Most African wars are pure resource wars (often triggered by CIA and French and British intelligence), with the conflict used as a cover for resource smuggling and even lower net cost to multinationals.

The US government has attempted to crack down on its own corporations via stricter enforcement (since 2000) of the 1977 Foreign Corrupt Practices Act and a section of the 2010 Dodd Frank Act that prohibits the the purchase of Coltan* from armed rebel groups. The new law, which has done little to reduce Coltan smuggling, has opened the door to a Chinese monopoly on the Coltan market.

The Looting Machine presents a detailed country by country analysis, as well as an examination of the Chinese company responsible for most private investment in Africa (there’s less publicly available information about investment by state-owned Chinese companies). Both engage in far more infrastructure development than Western agents do.

  • Angola – principle export oil, with 70% of oil ventures owned by Hong Kong billionaire Sam Pa, operating as Queensway Group or Chinese International Fund. Half of Angolan residents get by on less than $1.25/day.
  • Congo – second most important produce of Coltan outside of Australia, also gold, tin, tungsten and diamonds. Residents live on less than $1.00/day.
  • Nigeria – oil and gas. Cotton/textile industry that flourished in 1980s shut down (causing mass unemployment) by continuous flood of smuggled Chinese counterfeit textiles. Sam Pa and the French oil company Total have teamed up to challenge Shell’s longstanding monopoly on Nigerian oil.
  • South Africa – rich gold, diamond and platinum exports financed the creation of the apartheid state, in which a tiny white minority controlled the entire economy. Since the fall of apartheid in 1994, this minority has been joined by a handful of Black entrepreneurs.
  • Botswana – diamonds. Somewhat protected from “Dutch curse” by the creation of value added industries that cut and polish their diamonds prior to export.
  • Guinea – among world’s richest reserves of iron and aluminum. Bought out by Sam Pa as a result of Western sanctions.
  • Niger – rich in uranium and the world’s poorest country. France previously held monopoly on Niger’s uranium industry, being replaced by Queensway group based on agreement to invest in infrastructure development and employ local labor. (In most countries, Chinese investors import Chinese labor.)
  • Ghana – gold. Financed by Chinese Investment Fund after IMF tried to impose structural adjustment conditions** to refinance a World Bank Loan.
  • Zimbabwe – diamonds, platinum, nickel, gold. Mugabe used revenues from export industries to finance particularly brutal security force. Diamond industry bought out by Queensway as direct result of Western sanctions.

*Coltan is a rare precious metal in high demand for cellphones and laptops.

**IMF structural adjustment conditions typically require debtor companies to privatize state owned industries, legislate deep cuts in social services and accept extensive foreign investment as a condition of receiving World Bank loans.

 

 

 

 

12 thoughts on “Looting Africa

  1. ” Most African wars are pure resource wars (often triggered by CIA and French and British intelligence), with the conflict used as a cover for resource smuggling and even lower net cost to multinationals.”

    Why can’t they throw the entire lot out? The Africans are still paying a ‘slavery tax’ to France. This doesn’t even make any sense. And then to allow the Chinese and Americans and anyone with two legs to just go over there and rape, pillage and plunder is just beyond belief while Africa’s people are living in conditions that wouldn’t even keep a squirrel in feed.

    Okay! That’s it! I’ve had enough for one day. I’m out!

    Liked by 1 person

  2. I agree, Lara. The CIA definitely deserves the lion’s share of the credit. One of the things, though, that surprised me about this book was how active the French military and French intelligence are in Africa – protecting French corporate interests.

    Like

  3. Pingback: Looting Africa

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