Category Archives: economics

by | 13 March 2012 · 10:44 am

The Financial Ascent of the Dutch VOC

From: The Ascent of Money: A Financial History of the World, by Niall Ferguson (Penguin, 2008), Kindle Loc. 1780-1831:

The campaign for a reform of what would now be called the VOC’s corporate governance duly bore fruit. In December 1622, when the Company’s charter was renewed, it was substantially modified. Directors would no longer be appointed for life but could serve for only three years at a time. The ‘chief participants’ (shareholders with as much equity as directors) were henceforth entitled to nominate ‘Nine Men’ from among themselves, whom the Seventeen Lords were obliged to consult on ‘great and important matters’, and who would be entitled to oversee the annual accounting of the six chambers and to nominate, jointly with the Seventeen Lords, future candidates for directorships. In addition, in March 1623, it was agreed that the Nine Men would be entitled to attend (but not to vote at) the meetings of the Seventeen Lords and to scrutinize the annual purchasing accounts. The chief participants were also empowered to appoint auditors (rekening-opnemers) to check the accounts submitted to the States-General. Shareholders were further mollified by the decision, in 1632, to set a standard 12.5 per cent dividend, twice the rate at which the Company was able to borrow money. The result of this policy was that virtually all of the Company’s net profits thereafter were distributed to the shareholders. Shareholders were also effectively guaranteed against dilution of their equity. Amazingly, the capital base remained essentially unchanged throughout the VOC’s existence. When capital expenditures were called for, the VOC raised money not by issuing new shares but by issuing debt in the form of bonds. Indeed, so good was the Company’s credit by the 1670s that it was able to act as an intermediary for a two-million-guilder loan by the States of Holland and Zeeland.

None of these arrangements would have been sustainable, of course, if the VOC had not become profitable in the mid seventeenth century. This was in substantial measure the achievement of Jan Pieterszoon Coen, a bellicose young man who had no illusions about the relationship between commerce and coercion. As Coen himself put it: ‘We cannot make war without trade, nor trade without war.’ He was ruthless in his treatment of competitors, executing British East India Company officials at Amboyna and effectively wiping out the indigenous Bandanese. A natural-born empire builder, Coen seized control of the small Javanese port of Jakarta in May 1619, renamed it Batavia and, aged just 30, duly became the first governor-general of the Dutch East Indies. He and his successor, Antonie van Diemen, systematically expanded Dutch power in the region, driving the British from the Banda Islands, the Spaniards from Ternate and Tidore, and the Portuguese from Malacca. By 1657 the Dutch controlled most of Ceylon (Sri Lanka); the following decade saw further expansion along the Malabar coast on the subcontinent and into the island of Celebes (Sulawesi). There were also thriving Dutch bases on the Coromandel coast. Fire-power and foreign trade sailed side by side on ships like the Batavia – a splendid replica of which can be seen today at Lelystad on the coast of Holland.

The commercial payoffs of this aggressive strategy were substantial. By the 1650s, the VOC had established an effective and highly lucrative monopoly on the export of cloves, mace and nutmeg (the production of pepper was too widely dispersed for it to be monopolized) and was becoming a major conduit for Indian textile exports from Coromandel. It was also acting as a hub for intra-Asian trade, exchanging Japanese silver and copper for Indian textiles and Chinese gold and silk. In turn, Indian textiles could be traded for pepper and spices from the Pacific islands, which could be used to purchase precious metals from the Middle East. Later, the Company provided financial services to other Europeans in Asia, not least Robert Clive, who transferred a large part of the fortune he had made from conquering Bengal back to London via Batavia and Amsterdam. As the world’s first big corporation, the VOC was able to combine economies of scale with reduced transaction costs and what economists call network externalities, the benefit of pooling information between multiple employees and agents. As was true of the English East India Company, the VOC’s biggest challenge was the principal-agent problem: the tendency of its men on the spot to trade on their own account, bungle transactions or simply defraud the company. This, however, was partially countered by an unusual compensation system, which linked remuneration to investments and sales, putting a priority on turnover rather than net profits. Business boomed. In the 1620s, fifty VOC ships had returned from Asia laden with goods; by the 1690s the number was 156. Between 1700 and 1750 the tonnage of Dutch shipping sailing back around the Cape doubled. As late as 1760 it was still roughly three times the amount of British shipping.

The economic and political ascent of the VOC can be traced in its share price. The Amsterdam stock market was certainly volatile, as investors reacted to rumours of war, peace and shipwrecks in a way vividly described by the Sephardic Jew Joseph Penso de la Vega in his aptly named book Confusión de Confusiones (1688). Yet the long-term trend was clearly upward for more than a century after the Company’s foundation. Between 1602 and 1733, VOC stock rose from par (100) to an all-time peak of 786, this despite the fact that from 1652 until the Glorious Revolution of 1688 the Company was being challenged by bellicose British competition. Such sustained capital appreciation, combined with the regular dividends and stable consumer prices, ensured that major shareholders like Dirck Bas became very wealthy indeed. As early as 1650, total dividend payments were already eight times the original investment, implying an annual rate of return of 27 per cent. The striking point, however, is that there was never such a thing as a Dutch East India Company bubble. Unlike the Dutch tulip futures bubble of 1636-7, the ascent of the VOC stock price was gradual, spread over more than a century, and, though its descent was more rapid, it still took more than sixty years to fall back down to 120 in December 1794. This rise and fall closely tracked the rise and fall of the Dutch Empire. The prices of shares in other monopoly trading companies, outwardly similar to the VOC, would behave very differently, soaring and slumping in the space of just a few months.

Leave a comment

Filed under Britain, economics, Indonesia, Netherlands, piracy, Portugal, Spain, Sri Lanka, war

by | 11 September 2011 · 8:21 am

Rosa’s Route to Apostasy

From Looking for History: Dispatches from Latin America, by Alma Guillermoprieto (Vintage, 2001), pp. 33-35:

[Rosa’s] family was well off by the standards of the provincial backwater she was brought up in, but her father, a devout Catholic, had strong sympathy for the labor movement. One of her first memories is of learning the songs of the Fifth Regiment of the Spanish Republican Army from activist priests who taught at her school. They told her about Dolores Ibarruri, “La Pasionaria,” the Basque miner’s daughter who during the Civil War exhorted the Republican troops to fight for liberty and face down death. Rosa was barely a teenager when she took to singing the Civil War hymns herself, to cheer on workers during strikes. At university, swept up in the radical fervor of the times, Rosa and her friends were soon helping campesino organizations coordinate invasions of privately owned ranches, set up roadblocks, and stockpile whatever weapons they could find for the coming revolution.

Although the FARC already existed, it was seen by many as old hat and insufficiently idealistic, and new guerrilla groups, and what used to be called “preparty formations,” multiplied. The Ejército de Liberación Nacional, or ELN, as well as the Quintín Lame, an armed Indian rights group; the Partido Revolucionario de los Trabajadores; the M-19—all came into being. By the late seventies Rosa was closely identified with another of the groups to emerge from the university crucible, the Ejército Popular de Liberación, or EPL. The group was strong in the area of Cordoba, where in those days the population was fairly clearly divided between poor campesinos and the people with money who owned cattle ranches and farms where bananas and oil palms were grown.

How Rosa’s destiny took her from the EPL to the heart of paramilitary power is, in her telling, a long, breathtaking, and not always reliable story, but she is only one of many defectors from the fanatic left to join the ranks of the murderous right. The autodefensas claim that fully one-third of their troops are former guerrillas, and even if one disputes the figures, there is no doubting the general trend. Rosa’s life, however, is unusual even in Colombia, where reality always seems to flow out of someone’s dream, or nightmare.

The first thing that bothered Rosa about her leftist associates was what one might describe as their impact on the political ecology of the departamento of Córdoba. At the height of the revolutionary ferment, there were six different guerrilla organizations prowling around the hills in Rosa’s region, each one demanding that the campesinos pay “taxes” to finance their coming liberation. “If a campesino had five cows, he had to give up one,” Rosa says. “The guerrillas were eating up all the money from the NGOs [nongovernmental organizations]. They were hijacking mules. They were emptying out the community stores.”

None of these organizations, however, was capable of defending the campesinos when the ranchers—including many drug traffickers turned aspiring landed gentry—began organizing assassination squads to deal with guerrilla collaborators. “Those people were terrible masacradores,” Rosa says. “The rank and file were ranch guards, ranchers, drug traffickers, and everything you’ve heard about the [murders committed with] chainsaws, axes, and machetes is true.” Although the guerrillas could not defeat the paramilitary squads, they did rather well when it came to turning on each other. One guerrilla group, the ELN, tried to dispute the EPL’s local hegemony, Rosa recalls. “The ELN wanted to rule,” she says. “And they killed whoever didn’t obey.”

One day the campesinos decided they’d had enough of multiple taxes and the conflicting, deadly demands on their political loyalties. The first one to rebel was a fisherman who turned on an ELN patrol that had approached him for money. In Rosa’s description, the fisherman hacked a young man and a young woman guerrilla to death. “Campesinos don’t know how to kill,” Rosa observes dryly, having dwelt on the scene in some detail. “And when someone kills who doesn’t know how to do it, he kills monstrously.”

As for her own apostasy from the revolutionary cause, Rosa says it took place sometime after she was kidnapped in 1991 by one of the leaders of the antiguerrilla squads, the paramilitares. She had already decided by then that her commitment was to the campesinos and not the guerrillas, she says. Then came the kidnapping. She was abducted, she told me, after participating in a land invasion of a ranch owned by a well-known paramilitar. Her captors took her to a camp where “a fat man” was put in charge of torturing her to get information about the guerrillas. He broke off her teeth with pliers. (She paused in her narrative to show me that all her upper teeth had caps.) She was tied down while the fat man jumped on her stomach. She was forced to stand, bleeding, through the rest of the night, wondering when her execution would take place. At dawn, she was told to start walking. The bullet in the back she was expecting never came (“maybe because I never gave them the information they wanted, and they got tired of torturing me”). She kept walking and eventually found her way to her parents’ house.

The lesson she appears to have drawn from this episode is not what one would expect. “After that time,” Rosa explains, she and her kidnapper respected each other. “Me on this side, you on that one, we both agreed.” “It’s funny how life is,” she said, in conclusion to her narrative. “Because the guy who ordered the fat man to torture me and I are now pretty good friends.” Presumably, this is because a few months after her abduction she crossed over to her enemy’s side.

By then, Rosa says, a majority of the guerrilla group she was involved with, the EPL, had decided that a revolutionary war could not successfully be fought in Colombia, and had turned their weapons in, changing their organization’s name, but not its initials, to Esperanza, Paz y Libertad (Hope, Peace, and Liberty). Peace was not forthcoming, however, because the FARC guerrillas soon appeared with their own guns and tried to establish control in the void they perceived had been created by the despised pacifists. The FARC began executing former EPL guerrillas. The survivors and their campesino supporters felt they had no option except to join forces with the right-wing paramilitary leaders who had tortured Rosa and murdered many other comrades.

This dispatch was dated April 13, 2000.

Leave a comment

Filed under Colombia, drugs, economics, education, military, NGOs, war

by | 8 September 2011 · 9:19 pm

The Making of Evita Duarte

From Looking for History: Dispatches from Latin America, by Alma Guillermoprieto (Vintage, 2001), pp. 6-8:

The facts of Evita’s early life coincide nicely with those of the poor she came to represent: she was, like so many others, born of a destitute woman who found it expedient, and possibly gratifying, to take a wealthy and powerful lover. (Juan Duarte was a landowner and small-town caudillo, or political boss, in a rural area about ninety miles west of Buenos Aires, and he was properly married. Juana Ibarguren was a woman he spent many nights with and was the mother of five of Duarte’s children, of whom Eva Maria, born in 1919, was the youngest.) Like so many children born of these arrangements in a country where upper-class snobbery reaches extremes of refinement and viciousness, Eva was humiliated by her bastard status. (Juana Ibarguren and her children, who lived in a one-room house, were kept away from Juan Duarte’s elegant funeral, but were allowed to say a quick farewell to the corpse at the wake.) Eva migrated on her own from the sticks to Buenos Aires at age fifteen, and, like so many of the expanding capital’s other new residents, she looked for opportunity and found it lacking. She shared with her class a gnawing, all-encompassing resentment that was the precise counterpart of the seething contempt the ruling class cultivated for the plebes. Most important, neither she nor her fellow poor were inclined to be fatalistic. The Argentina that Eva Duarte grew up in was a nation of recent immigrants—Italian anarchist farmers, Spanish socialist shopkeepers, conservative German merchants—who had brought their politics with them when they migrated, and who firmly believed that they deserved the better life they were willing to work so hard for.

Perón—himself born out of wedlock, and pursuing upward mobility through an army career—was their catalyst. He was a cynical politician who systematically played off his followers against one another, often with tragic results, and his authoritarian approach to government probably grew out of his intense admiration for Franco and Mussolini. It may well be the case that he (and Eva) provided shelter for Nazis fleeing Europe after the Axis collapse, in exchange for a significant part of the Third Reich’s treasure—Dujovne works hard to try to prove it in her biography—but generations of Argentines have remained impervious to these accusations, because of what Perón gave them: a political movement that legitimated and ennobled the working poor, and a decisive restructuring of the state which—by nationalizing key resources, establishing generous social-welfare programs, and institutionalizing a crony relationship between organized labor and the government—transformed Argentina from a sugar daddy for the rich into a sugar daddy for the poor. Perón was only one of several upstart colonels when Evita thanked him for existing, and his speeches did not then, or ever, reveal the kind of substantial political thinking that gets translated into lasting programs or gets used to interpret reality in other parts of the world, but he cannot simply be written off as a demagogue. He had a vision of a free Argentina: a nation that under his verticalista guidance would steer clear of both sides in the Cold War, and in which law and order would prevail, government would be responsive to the needs of its citizens, and workers would get the respect their efforts deserved. In that sense, he was revolutionary, and Eva Duarte, like millions of others, responded instantly to his appeal. As for his aloof, diffident personality (he liked to describe himself as “a herbivorous lion”), it, too, was a virtue, for it turned him into an empty vessel that Evita could fill with her faith.

Eva Duarte’s role in history was determined within months of her first encounter with the colonel. One day she was a source of hilarity for upper-class women, who made a point of tuning in to her “Famous Women” broadcasts. (“What a daily pleasure, this nasal voice who played [Catherine of Russia] with rural tango accents!” one said.) The next, she had secured her movie role in Circus Cavalcade, because she was already the established mistress of Juan Perón, a man not known for passion, who had nevertheless rented an apartment in Eva’s building so that he could be near her without violating the moral code. His new lover was not easy or pleasant to live with—she threw tantrums, demanded in public that he marry her, and soon displayed her contempt for all but his most slavishly devoted political associates—yet despite these defects she was the perfect woman for him, because she pushed him beyond his own apathy.

This book was one of my last two purchases from my local Border’s before it went out of business. My favorite history shelves were still much fuller than many of the other shelves in the sad-looking store.

Leave a comment

Filed under Argentina, biography, democracy, economics

by | 7 July 2011 · 8:53 pm

Breadlines in the U.S. and Ukraine, 1933

Bloodlands: Europe Between Hitler and Stalin, by Timothy Snyder (Basic Books, 2010), Kindle Loc. 533-575 (pp. 21-22):

Nineteen thirty-three was a hungry year in the Western world. The streets of American and European cities teemed with men and women who had lost their jobs, and grown accustomed to waiting in line for food. An enterprising young Welsh journalist, Gareth Jones, saw unemployed Germans in Berlin rally to the voice of Adolf Hitler. In New York he was struck by the helplessness of the American worker, three years into the Great Depression: “I saw hundreds and hundreds of poor fellows in single file, some of them in clothes which once were good, all waiting to be handed out two sandwiches, a doughnut, a cup of coffee and a cigarette.” In Moscow, where Jones arrived that March, hunger in the capitalist countries was cause for celebration. The Depression seemed to herald a world socialist revolution. Stalin and his coterie boasted of the inevitable triumph of the system they had built in the Soviet Union.

Yet 1933 was also a year of hunger in the Soviet cities, especially in Soviet Ukraine. In Ukraine’s cities—Kharkiv, Kiev, Stalino, Dnipropetrovsk—hundreds of thousands of people waited each day for a simple loaf of bread. In Kharkiv, the republic’s capital, Jones saw a new sort of misery. People appeared at two o’clock in the morning to queue in front of shops that did not open until seven. On an average day forty thousand people would wait for bread. Those in line were so desperate to keep their places that they would cling to the belts of those immediately in front of them. Some were so weak from hunger that they could not stand without the ballast of strangers. The waiting lasted all day, and sometimes for two. Pregnant women and maimed war veterans had lost their right to buy out of turn, and had to wait in line with the rest if they wanted to eat. Somewhere in line a woman would wail, and the moaning would echo up and down the line, so that the whole group of thousands sounded like a single animal with an elemental fear.

People in the cities of Soviet Ukraine were afraid of losing their place in breadlines, and they were afraid of starving to death. They knew that the city offered their only hope of nourishment. Ukrainian cities had grown rapidly in the previous five years, absorbing peasants and making of them workers and clerks. Ukrainian peasant sons and daughters, along with the Jews, Poles, and Russians who had inhabited these cities for much longer, were dependent upon food they obtained in shops. Their families in the country had nothing. This was unusual. Normally in times of hunger city dwellers will make for the countryside. In Germany or the United States the farmers almost never went hungry, even during the Great Depression. Workers and professionals in cities were reduced to selling apples, or stealing them; but always somewhere, in the Altes Land or in Iowa, there was an orchard, a silo, a larder. The city folk of Ukraine had nowhere to go, no help to seek from the farms. Most had ration coupons that they would need to present in order to get any bread. Ink on paper gave them what chance to live that they had, and they knew it.

The proof was all around. Starving peasants begged along the breadlines, asking for crumbs. In one town, a fifteen-year-old girl begged her way to the front of the line, only to be beaten to death by the shopkeeper. The city housewives making the queues had to watch as peasant women starved to death on the side-walks. A girl walking to and from school each day saw the dying in the morning and the dead in the afternoon. One young communist called the peasant children he saw “living skeletons.” A party member in industrial Stalino was distressed by the corpses of the starved that he found at his back door. Couples strolling in parks could not miss the signs forbidding the digging of graves. Doctors and nurses were forbidden from treating (or feeding) the starving who reached their hospitals. The city police seized famished urchins from city streets to get them out of sight. In Soviet Ukrainian cities policemen apprehended several hundred children a day; one day in early 1933, the Kharkiv police had a quota of two thousand to fill. About twenty thousand children awaited death in the barracks of Kharkiv at any given time. The children pleaded with the police to be allowed, at least, to starve in the open air: “Let me die in peace, I don’t want to die in the death barracks.”

Hunger was far worse in the cities of Soviet Ukraine than in any city in the Western world. In 1933 in Soviet Ukraine, a few tens of thousands of city dwellers actually died of starvation. Yet the vast majority of the dead and dying in Soviet Ukraine were peasants, the very people whose labors had brought what bread there was to the cities. The Ukrainian cities lived, just, but the Ukrainian countryside was dying. City dwellers could not fail to notice the destitution of peasants who, contrary to all seeming logic, left the fields in search of food. The train station at Dnipropetrovsk was overrun with starving peasants, too weak even to beg. On a train, Gareth Jones met a peasant who had acquired some bread, only to have it confiscated by the police. “They took my bread away from me,” he repeated over and over again, knowing that he would disappoint his starving family. At the Stalino station, a starving peasant killed himself by jumping in front of a train. That city, the center of industry in southeastern Ukraine, had been founded in imperial times by John Hughes, a Welsh industrialist for whom Gareth Jones’s mother had worked. The city had once been named after Hughes [Yuzovka (Юзовка)]; now it was named after Stalin. (Today it is known as Donetsk.)

Leave a comment

Filed under democracy, economics, food, U.S., Ukraine, USSR

by | 19 June 2011 · 8:04 am

Congo’s War for Mining or Peace for Mining?

From Dancing in the Glory of Monsters: The Collapse of the Congo and the Great War of Africa, by Jason Stearns (Public Affairs, 2011), Kindle Loc. 5014-5042 (pp. 288-289):

The Congo is often referred to as a geological scandal. This is not an exaggeration. In the late 1980s, it was the world’s largest producer of cobalt, third largest producer of industrial diamonds, and fifth largest producer of copper. It has significant uranium reserves—infamous for having contributed to the Hiroshima bombs—as well as large gold, zinc, tungsten, and tin deposits.

Like so many of the country’s problems, the mismanagement of these assets dates back to colonial times. In 1906 already, the Belgian government gave the Société générale de Belgique, a powerful trust affiliated to the state, a mining tract of 13,000 square miles in Katanga, the size of Belgium. Under the exceedingly favorable terms of the deal, the company would get a ninety-nine-year monopoly over any mineral deposits it could identify in the next six years. It was also granted the management of the state railroad line that would help export the copper and cobalt ore, for which the colonial state would provide local labor. Société générale set about creating the three most powerful companies in the Belgian Congo: the Upper Katanga Mining Union, the Bas-Congo to Katanga Railroad Company, and the International Forest and Mining Company. Mineral and agricultural exports from the Congo fueled the creation of some of the biggest Belgian conglomerates and personal fortunes, developing the Antwerp port and creating a copper smelting industry.

Mobutu nationalized the Upper Katanga Mining Union in 1967 and rebranded it Gécamines, while other mining companies in the Kivus and Katanga were also converted into state-owned enterprises. The government proceeded to use the mining company as a cash cow, systematically milking it for money to fund Mobutu’s patronage network instead of reinvesting earnings in infrastructure and development. In order to carry out this scheme, the autocrat forced all mineral exports to be sold through a state mineral board, which would then hand over its revenues to the state treasury. Nonetheless, thanks to rising world copper prices, Gécamines remained the country’s largest source of employment and income, providing over 37,000 jobs at its peak, running thirteen hospitals and clinics, and contributing to between 20 and 30 percent of state revenues.

A confluence of factors brought about Gécamines’ demise in the 1990s. Copper prices plunged as low-cost producers such as Chile stepped up production and world demand dipped. The army pillages of 1991 and 1993, along with the ethnic purging of Kasaians from Katanga in 1993, drove much of the experienced expatriate staff out of Gécamines and contributed to the cutting of foreign development aid that had helped prop up the ailing mining sector. Finally, the years of mismanagement took their toll. In 1990, the huge underground Kamoto mine collapsed, leading to an abrupt drop in production of 23 percent. Exports declined from a high of 465,000 tons in 1988 to 38,000 tons just before the war, while cobalt production slipped from 10,000 to 4,000 tons in the same period. Similar trends affected all other mineral exports, leading to a vertiginous contraction of the country’s GDP by 40 percent between 1990 and 1994.

Pressured by donors to relinquish the state’s grip on the economy and desperate for revenues, Mobutu allowed his prime minister, Kengo wa Dondo, to begin gradually privatizing the mining sector in 1995. Most of the contracts that were later negotiated with the AFDL, including the American Mineral Fields and Lundin agreements, were amendments to and confirmations of deals that had already been struck with Mobutu’s government in 1996. The notion that the war was fueled by international mining capital eager to get its hands on the Congo’s wealth does not hold water; the war slowed down privatization of the sector by a decade, as insecurity and administrative chaos prevented large corporations from investing. It was not until 2005 that major new contracts in Katanga were approved and investors began to invest significant funds.

I hadn’t realized the extent to which Canadian companies have dominated mining in the Congo.

Leave a comment

Filed under Belgium, Canada, Congo, economics, industry, nationalism, war

by | 10 June 2011 · 7:05 am

Yet Another Personality-cult Liberation Movement

From Dancing in the Glory of Monsters: The Collapse of the Congo and the Great War of Africa, by Jason Stearns (Public Affairs, 2011), Kindle Loc. 3896-3936, 4050-4054 (pp. 225-226, 233):

It was in the midst of this Kigali–Kampala catfight that the Movement for the Liberation of the Congo (MLC) was born. Bemba, who had been working for several months with friends from the Congolese diaspora on drafting statutes and a political program, quickly called the BBC radio service to announce his new rebellion.

The MLC’s beginnings were shaky. Applying himself to the rebellion with the same tenacity as he did to his business empire, Bemba managed to recruit a hodge-podge of young men and women from the business and political class of Kisangani. Of the founding members of the MLC, there was a journalist for the state radio station, the local manager of Bemba’s phone company, a territorial administrator, two former Mobutu officers, and several businessmen. None of them was over forty years old. For the most part, they were political unknowns.

Slowly, Bemba began to take over control of the military wing of the MLC from the Ugandans. He leveraged his contacts among Mobutu’s former officers to rally some of the most capable around him, making sure to stay away from the most infamous and corrupt. It had not been for lack of experience and knowledge that Mobutu’s army had lost the war, and hundreds of officers, marginalized or in exile, were eager to get back into the fray. Bemba handed the military command over to Colonel Dieudonné Amuli, the former commander of Mobutu’s personal guard and a graduate of several international military academies. Other officers’ résumés included stints at Fort Bragg and Fort Benning (United States), Sandhurst (United Kingdom), Nanjing (China), Kenitra (Morocco), and academies in Egypt and Belgium. Although the Ugandans continued to provide military support, in particular through artillery, training, and logistics, by early 1999 the Congolese were largely the masters of their own rebellion, expanding their rebel force from 150 to around 10,000 troops within two years.

Slowly, on the back of the MLC’s growing reputation, a second wave of political figures began to board flights from Europe to join up. Their pedigree was as impressive as those of the military officers. This time it was the well-heeled diaspora, the members of the Kinshasa elite, educated in Europe and the United States. There were the young and westernized, like Olivier Kamitatu, the son of a founding father of the Congo who had been Bemba’s inseparable friend in business school in Brussels. Then there were the Mobutists-turned-opposition-activists, including former prime minister Lunda Bululu and two other former ministers, and the businessmen, such as the erstwhile heads of the Congolese business federation and the Congo-Belgian chamber of commerce. In groups of two or three, they arrived on Ugandan military planes in Gbadolite [“Versailles of the Jungle”], which by mid-1999 had become command central of the rebellion. They walked around the pillaged town dumbstruck.

Then came the luck, and with it the birth of the Bemba myth. From the early days of rebellion onwards, the portly MLC leader, who had had less than a month of formal military training in his life, was present along the front lines and insisted on participating in military operations. When the Chadians and Kabila’s troops tried to attack the MLC base in Lisala, Bemba flew into town under gunfire and drove around in a pickup truck, rounding up and regrouping his scattered soldiers. “If you have to believe in miracles, that wasn’t the only one,” he later wrote. A day later, a rocket-propelled grenade whistled by him, missing him only by several feet. The day after that, amid a shower of gunfire, a Ugandan transport plane landed, unloaded, and took off again without major damage. “It was incredible,” a friend, who had been in touch with Bemba on a monthly basis by satellite phone, recalled. “It was as if he was blessed with special powers.”

The MLC leaders began constructing a myth around Bemba’s exploits, a panegyric that fit well into the Congolese tradition of praise singing. The youths called him “Baimoto,” a dazzling diamond that blinds the enemy. Radio Liberté, the MLC radio station, began transmitting programs infused with Bemba’s legend. It was supposed to provide the glue to keep the disparate elements of the MLC together: Bemba the soldier, Bemba the liberator, always on the front line, always with the troops. “It did the trick,” a former MLC commander told me and then laughed: “The problem was he began to believe it himself.”

Bemba adopted the title of Chairman of the MLC, in part reference to his business upbringing, in part a wink to Chairman Mao’s cult of personality. Progressively, his ego became more and more bloated, even as he himself put on more weight. “Bemba was the MLC,” said José Endundo, the MLC’s former secretary for the economy. “He was an incredible egomaniac.” His commissioners and counselors couldn’t just go and visit him in his house in Gbadolite; they would have to wait to be called. At the entrance to his house, soldiers would frisk the MLC leaders, even the frail professor Lunda Bululu, Zaire’s former prime minister, who was in his sixties. Inside, officials sprawled on Bemba’s leather couches, but even there, they were obliged to call him Mr. President or Chairman. For some of the leaders, who had boozed and danced with Bemba in high school or had known him when he was still in diapers, this treatment grated.
…
Nonetheless, during its heyday, the MLC was as good as it gets for a Congolese rebel movement. Although supported by Uganda, it was run by Congolese under a more or less unified command, supported by the local population, and relatively disciplined. But the MLC also shows us the limitations of rebellion in the Congo. Like most rebellions, it was run by an educated elite, while all of its foot soldiers were local peasants. There was little ideology that took hold at the grassroots level other than opposition to the enemy and tribal loyalty.

Leave a comment

Filed under Congo, economics, military, nationalism, Rwanda, Uganda, war

by | 5 June 2011 · 5:33 pm

Congo War Realignments, 1998

From Dancing in the Glory of Monsters: The Collapse of the Congo and the Great War of Africa, by Jason Stearns (Public Affairs, 2011), Kindle Loc. 3298-3323:

With a mutiny festering in the slums of Kinshasa, and rebels advancing rapidly from the west, Kabila knew that he would not be able to hold out without the support of the region. A regional summit of the South African Development Community was quickly called, and Rwanda, Uganda, Congo, Angola, and Zimbabwe glowered at each other across a table without coming to a conclusion.

It was a decisive moment in the war. In 1996, almost the whole region had jumped on the bandwagon against Mobutu, while world powers looked the other way. It had been a continental war, inspired by security interests but also by ideology. In 1998, the odds were stacked differently. The region split down the middle, with Rwanda, Uganda, and Burundi on one side and Angola, Namibia, Chad, and Zimbabwe on the other.

This time, the motives for deployed troops were less noble. Zimbabwe’s president, Robert Mugabe, for example, was of the same generation as Laurent Kabila and had provided arms and money for the first war effort; Kabila still owed him somewhere between $40 and $200 million dollars for this first engagement. More importantly, his own besieged government was fraying at the edges after eighteen years in power. A mixture of corruption, poor economic management, and the expropriation of 1,500 white farms had prompted food riots, a fiscal crisis, and international opprobrium. As expensive as the military adventure in the Congo was, it also offered many much-needed business opportunities for Mugabe’s inner cabal. Shortly after toppling Mobutu, his state ammunition factory obtained a $500,000 contract from Kabila’s government, a Zimbabwean businessman extended a loan for $45 million, and businessmen close to Mugabe began negotiating potentially lucrative transport, food, and mining deals with the Congolese. When Rwanda attempted anew to overthrow the regime in Kinshasa, this time without rallying a regional alliance around them, Mugabe saw his investments in jeopardy.

Angola’s interests were much more related to its twenty-three-year-old civil war with UNITA. For decades, the rebels had maintained rear bases in Kinshasa, where Savimbi had frequently met with Mobutu and CIA operatives and had sold tens of millions of dollars of diamonds. In May 1998, Jonas Savimbi’s rebels had scuppered a peace process that they saw as increasingly biased toward the government. They launched attacks throughout northern Angola, close to the border with the Congo. In addition, another Angolan rebel movement, the Front for the Liberation of the Enclave of Cabinda (FLEC), appeared to be making inroads in Cabinda, a tiny Angolan enclave just north of the Kitona airbase, where around 60 percent of Angola’s oil is drilled, providing it with about half of all national revenues. According to French government officials, FLEC had been in touch with the Rwandan government before the Kitona airlift.

The diplomatic tug-of-war continued for several days, with South African president Nelson Mandela attempting to mediate between the two sides to prevent a continent-wide war breaking out. His attempt earned him the scorn of Mugabe, who told him to shut up if he didn’t want to help defend the Congo. Kabila’s office was equally blunt, suggesting that “age had taken its toll” on the venerable African leader.

1 Comment

Filed under Angola, Chad, Congo, economics, nationalism, Rwanda, South Africa, Uganda, war, Zimbabwe

by | 30 May 2011 · 3:48 pm

The Hutu Jacobin Revolution, 1959

From The Shadow of the Sun, by Ryszard Kapuscinski, trans. by Klara Glowczewska (Vintage, 2002), Kindle Loc. 2251-2292:

The Tutsis are not shepherds or nomads; they are not even breeders. They are the owners of the herds, the ruling caste, the aristocracy.

The Hutus, on the other hand, constitute the much more numerous and subordinate caste of farmers (in India they are called Vaisyas). The relations between the Tutsis and the Hutus were authentically feudal—the Tutsi was the lord, the Hutu his vassal. The Hutus lived by cultivating land. They gave a portion of their harvest to their master in exchange for protection and for the use of a cow (the Tutsis had a monopoly on cattle; the Hutus could only lease them from their seigneurs). Everything according to the feudal order—the dependence, the customs, the exploitation.

Gradually, toward the middle of the twentieth century, a dramatic conflict arises between the two castes. The object of the dispute is land. Rwanda is small, circumscribed, and densely populated. As often in Africa, a battle erupts between those who make their living raising cattle and those who cultivate the land. Usually, however, the spaces on the continent are so great that one side can move onto unoccupied territory and the sparks of war are extinguished. In Rwanda, such a solution is impossible—there is no place to go, nowhere to retreat to. Meantime, the Tutsis’ herds increase and need ever more grazing land. There is but one way to create new pastures: by taking land from the peasants, i.e., by ejecting the Hutus from their territories. But the Hutus are already cramped. Their numbers have been swelling rapidly for years. Making matters worse, the lands they farm are poor, for all intents and purposes infertile. The mountains of Rwanda are covered with a very thin layer of soil, so thin that when the rainy season comes each year, the downpours wash away large stretches of it, and in many places where the Hutus had their little fields of manioc and corn, naked rock now glistens.

So, on the one side, the powerful, expanding herds of cattle—the symbol of Tutsi wealth and strength; and on the other the squeezed, huddled, increasingly displaced Hutus. There is no room, there is no land. Someone must leave, or perish. Such is the situation in Rwanda in the fifties, when the Belgians enter the picture. They have suddenly become highly involved: Africa is just then at a critical juncture, there is a surging wave of liberation, of anticolonialism, and there is pressure to act, to make decisions. Belgium is among those powers whom the independence movement has caught most by surprise. Thus, Brussels has no game plan, its officials do not really know what to do. As is usual in these circumstances, their response is to delay finding real solutions, to stall. Until now, the Belgians ruled Rwanda through the Tutsis, leaning on them and using them. But the Tutsis are the most educated and ambitious sector of the Banyarwanda, and it is they who now are demanding freedom. And they want it immediately, something for which the Belgians are utterly unprepared. So Brussels abruptly switches tactics: it abandons the Tutsis and begins to support the more submissive, docile Hutus. It begins to incite them against the Tutsis. These politics rapidly bear fruit. The emboldened, encouraged Hutus take up arms. A peasant revolt erupts in Rwanda in 1959.

In Rwanda, alone in all of Africa, the liberation movement assumed the form of a social, antifeudal revolution. In all of Africa, only Rwanda had its siege of the Bastille, its dethronement of the king, its Gironde and its terror. Groups of peasants, enraged, inflamed Hutus armed with machetes, hoes, and spears, moved against their masters-rulers, the Tutsis. A great massacre began, such as Africa had not seen for a long time. The peasants set fire to the households of their lords, slit their throats, and crushed their skulls. Rwanda flowed with blood, stood in flames. A massive slaughter of cattle began; the peasants, often for the first time in their lives, could eat as much meat as they wished. At the time, the country had a population of 2.6 million, including 300,000 Tutsis. It is estimated that tens of thousands of Tutsis were murdered, and as many fled to neighboring states—to the Congo, Uganda, Tanganyika, and Burundi. The monarchy and feudalism ceased to exist, and the Tutsi caste lost its dominant position. Power was now seized by the Hutu peasantry. When Rwanda gained its independence in 1962, it was members of that caste who formed the first government. At its head was a young journalist, Grégoire Kayibanda. I was visiting Rwanda for the first time then. My memories of Kigali, the capital, are of a small town. I was unable to find a hotel; perhaps there wasn’t one. Some Belgian nuns finally took me in, letting me sleep in the maternity ward of their neat little hospital.

The Hutus and the Tutsis awoke from such a revolution as from a bad dream. Both had lived through a massacre, the former as its perpetrators, the latter as its victims, and such an experience leaves a painful and indelible mark. The Hutus have mixed emotions. On the one hand, they vanquished their masters, cast off the feudal yoke, and for the first time attained power; on the other hand, they did not defeat their lords in an absolute way, did not annihilate them, and this consciousness, that the enemy was painfully wounded but still lives and will seek vengeance, sowed in their hearts an insuppressible and mortal fear (let us remember that fear of revenge is deeply rooted in the African mentality, that the immemorial right of reprisal has always regulated interpersonal, private, and clan relations here). And there is a lot to be afraid of. For although the Hutus seized the mountainous fortress of Rwanda and established their rule there, a Tutsi fifth column, numbering around 100,000, remains within its borders; furthermore, and perhaps even more dangerously, the fortress is encircled by the encampments of Tutsis expelled from it yesterday.

4 Comments

Filed under Belgium, democracy, economics, nationalism, Rwanda, war

by | 24 May 2011 · 6:10 am

Africa’s New Leaders vs. Mobutu, 1996

From Dancing in the Glory of Monsters: The Collapse of the Congo and the Great War of Africa, by Jason Stearns (Public Affairs, 2011), Kindle Loc. 993-1030:

By mid-1996, Museveni [of Uganda] and Kagame [of Rwanda] had stitched together an impressive alliance of African governments behind their drive to overthrow Mobutu. The war that started in Zaire in September 1996 was not, above all, a civil war. It was a regional conflict, pitting a new generation of young, visionary African leaders against Mobutu Sese Seko, the continent’s dinosaur. Never had so many African countries united militarily behind one cause, leading some to dub the war Africa’s World War. Unlike that war, however, the battle for the Congo would not be carried out in trenches over years, leading to millions of military casualties. Here, the battles were short and the number of soldiers killed in the thousands, figures dwarfed by the number of civilians killed. Unlike World War II, the African allies banded together not against aggressive expansionism, but against the weakness of the enemy.

The leader of this coalition was its youngest, smallest member: Rwanda. It was typical of the RPF, who had played David to Goliath several times before and would do so again later. At the outset, it seemed to be the perfect embodiment of a just war: Kigali was acting as a last resort based on legitimate security concerns.

What seems obvious in hindsight—that Mobutu’s army had been reduced to a mockery of itself, that Mobutu’s hold on power had crumbled—was a vague hypothesis in RPF intelligence briefings at the time. When Kagame told his officers that they would go all the way to Kinshasa, they nodded politely but in private shook their heads. That was a journey of over 1,000 miles, through unknown terrain, similar to walking from New York to Miami through swamps and jungles and across dozens of rivers. They would have to fight against 50,000 of Mobutu’s soldiers as well as perhaps 50,000 ex-FAR and Interahamwe. It seemed impossible. “We never thought we could make it all the way to Kinshasa,” Patrick Karegeya, the Rwandan intelligence chief, told me.

It is easy to forget, now that greed and plunder claim the headlines as the main motives for conflict in the region, that its beginnings were steeped in ideology. The Rwandan-backed invasion was perhaps the heyday of the African Renaissance, riding on the groundswell of the liberation of South Africa from apartheid, and of Eritrea, Ethiopia, and Rwanda from dictatorships. It was an alliance motivated in part by the strategic interests of individual governments, but also by a larger spirit of pan-Africanism. Not since the heyday of apartheid in South Africa had the continent seen this sort of mobilization behind a cause. For the leaders of the movement, it was a proud moment in African history, when Africans were doing it for themselves in face of prevarication from the west and United Nations. Zimbabwe provided tens of millions of dollars in military equipment and cash to the rebellion. Eritrea sent a battalion from its navy to conduct covert speedboat operations on Lake Kivu. Ethiopia and Tanzania sent military advisors. President Museveni recalled: “Progressive African opinion was galvanised.”
…
Absent from these talks, however, were the Congolese. Their country was to be liberated for them by foreigners who knew little to nothing of their country. And of course, these foreigners would soon develop other interests than just toppling Mobutu. Within several years, the Congo was to become the graveyard for this lofty rhetoric of new African leadership as preached by Mbeki, Albright, and many others. Freedom fighters were downgraded to mere marauding rebels; self-defense looked ever more like an excuse for self-enrichment. Leaders who had denounced the big men of Africa who stayed in power for decades began appearing more and more like the very creatures they had fought against for so many decades.

In 1996, however, the future remained bright.

Leave a comment

Filed under Congo, democracy, economics, Eritrea, Ethiopia, nationalism, Rwanda, South Africa, Tanzania, Uganda, war, Zimbabwe

by | 21 May 2011 · 7:05 am

From Clan and Class to Ethnicity in Rwanda

From Dancing in the Glory of Monsters: The Collapse of the Congo and the Great War of Africa, by Jason Stearns (Public Affairs, 2011), Kindle Loc. 387-420, 431-40:

Ethnic-based violence, the most extreme form of which was the genocide, is so often associated with the Congolese and Rwandan wars that it is worth trying to understand its causes. We tend to see the history of Rwanda as the history of a struggle between two ethnic groups, the agriculturist Hutu and the cattleherding Tutsi. An honest interrogation of the past, however, would require us to throw most of these crude concepts out the window, or at least to deconstruct them. The Rwandan state in its current geographical and political form did not come into existence until the twentieth century, after centuries of fighting between competing kingdoms and princely states.

Ethnic identities behind the rift between Hutu and Tutsi are being constantly contested and redefined with the changing political, cultural, and economic landscape. Until the eighteenth century, for example, ethnicity was less important than class and clan-based identities, which themselves coexisted alongside several layers of regional and social identities. Thus, each of the twenty major clans in Rwanda includes both Hutu and Tutsi, and among each ethnic group one can find poor, landless peasants as well as wealthier princes. To label someone a Hutu and leave it at that neglects that she may, depending on the social context, see herself more as a southerner, a member of the Abega clan, or a follower of the Pentecostal church. This is not just hair-splitting; much of contemporary Rwandan politics has been shaped by these competing and overlapping identities.

The polarization of Rwandan society into Hutu and Tutsi increased with King Rujugira’s consolidation of the Rwandan state in the eighteenth century. He expanded his armies and began subjugating much of what is today Rwanda, including areas where these ethnic distinctions previously had little traction. His armies’ long military campaigns required more revenues and deeper administrative penetration of society. The military, which was led by Tutsi, became the basis for a bureaucracy that administered land and collected taxes. Progressively, the loose distinctions between Hutu and Tutsi tightened and became more hierarchical. By the late nineteenth century, when the first colonizers arrived, many Hutu depended on Tutsi chiefs for land to farm and had to pay tithes as well as provide free manual labor. Still, ethnic identity remained fluid, with intermarriages between ethnic groups and the possibility, albeit rare, for rich Hutu to become “promoted” to Tutsi if they owned many cattle and had power in society. At the local level, Hutu remained influential, in particular in the administration of land. Still, social arrangements varied greatly between different regions, with some, like Gisaka in eastern Rwanda, not showing much ethnic polarization until much later.

The conquest of Rwanda—first by Germans, then Belgians—radically altered social structures. A tiny group of white administrators was faced with ruling a complex, foreign country they barely understood. As elsewhere in Africa, the new rulers chose to rule through what they thought were well-established, existing structures. They thus empowered the Tutsi monarchy, which they saw as the “natural” elite, abolished checks and balances on the royal family, and streamlined the local administration by ousting Hutu chiefs and vesting all power in a Tutsi-dominated administration. At the same time, they helped the royal court double the territory under its control, conquering kingdoms and princely states around its periphery. The delicate social balance between the farmers and the pastoralists, the royal elite and the peasantry, the rich and the poor was brutally disrupted. Whereas Hutu peasants had previously been able to appeal to their relatives in case of abuses by the government, or at least play different chiefs off against each other, now they were left at the mercy of a Tutsi administration.

The European rulers grounded their rule in an ideology and ethnography heavily influenced by racial theories popular in the United States and Europe at the time. John Hanning Speke, one of the first British explorers in the region, had written in 1863 about a distinct “Asiatic” sophistication among some of the people, presumably Tutsi, he encountered. “In these countries,” he wrote, “government is in the hands of foreigners, who had invaded and taken possession of them, leaving the agricultural aborigines to till the ground.” Speke, dabbling in history and religion, conjectured a link between these tribes and Ethiopia and proposed a “historical” basis for what he claimed to observe: “The traditions of these tribes go as far back as the scriptural age of King David.”
…
The first German governor of Rwanda, Count von Goetzen, theorized “the Tutsi are Hamitic pastoralists from Ethiopia, who have subjugated a tribe of Negro Bantus,” while Catholic prelate Monsignor Le Roy put it differently: “Their intelligent and delicate appearance, their love of money, their capacity to adapt to any situation seem to indicate a Semitic origin.” Armed with rulers and measuring tape, craniometric Belgian administrators went about rigidifying with physical measurements the previously more fluid boundaries between Tutsi and Hutu identities. These colonial fantasies soon became engraved on the consciousness of the colonized, as well. The Tutsi elite, long favored under the Belgians, seized on the myths to justify their continued superiority, imbibing the stereotypes of Hutu—as espoused by a Belgian priest—as “the most common type of black, brachycephalic and prognathous, with agronomic taste and aptitudes, sociable and jovial … with thick lips and squashed noses, but so good, so simple, so loyal.” Hutu dissidents, in the meantime, appropriated the stereotypes of Tutsi as a race of crafty herders from Ethiopia to rally support against “the foreigners.”

Leave a comment

Filed under Belgium, economics, Germany, nationalism, Rwanda