EDITOR’S NOTE: The beggar regime in Ethiopia led by Meles Zenawi pays the Washington DC-based DLP Piper lobby and law firm $50,000 per month. On top of that, officials of the regime and their partners take hundreds of millions of dollars (hard currency) out of the country to buy homes and other properties in the U.S. and other developed countries. I urge the author of the following report, Carol Leoning of Washington Post, and other media to investigate the flight of capital out of countries like Ethiopia. They can start with Samuel Tafesse, a business partner of Meles Zenawi and wife. — Elias Kifle

By Carol D. Leonnig | Washington Post

Over the past five years, the authoritarian regime of the Congo Republic has leaned on Washington lobbyists to help with an image problem.

Gen. Denis Sassou-Nguesso, the president of the country – one of the world’s poorest – had been accused in court and in lawsuits of diverting tens of millions of dollars in national oil profits to hidden bank accounts and then using the money to buy mansions in France and to finance spending sprees in Paris, Dubai and New York. His main antagonist was a New York investment firm that had accused him of misspending money in a lawsuit seeking repayment of an old debt.

Sassou-Nguesso reached out for help on Capitol Hill. In 2006, the Congo Republic began a Washington lobbying campaign that has now cost about $9 million and involved more than 100 conversations and meetings with members of Congress, their staffs and African advocacy groups, according to lobbying disclosure reports.

A main focus of the effort was to persuade Congress to stop the profitable business of investment funds like the one that had embarrassed Sassou-Nguesso.

Experts on the Congo Republic and African debt say the lobbying effort financed by the small nation in central Africa has been unusual in its cost and intensity. Impoverished countries struggling to provide food, water and medical care to residents rarely pay out millions to retain the services of high-powered D.C. lobbyists.

The Congo Republic made clear that its legislative priorities included “responding to allegations of misconduct directed at President Sassou-Nguesso by creditors of the Republic of Congo,” according to reports filed in Washington.

The Congo Republic’s lobbyists took the lead among African nations in pushing for Congress to enact “vulture fund” legislation that would prevent foreign investors from reaping windfall profits by buying up at basement prices the debts of poor countries and then suing the countries to repay in full. The Congo Republic, which settled most of its outstanding debts to investment firms in a confidential 2008 agreement, said it was seeking protection for all poor African nations, such as Rwanda, Ethiopia and Sierra Leone.

In the House, Maxine Waters (D-Calif.) stepped forward to sponsor a bill that won support from 33 co-sponsors, including many members of the Congressional Black Caucus. She introduced it in 2008 and reintroduced it in 2009.

Waters told the British news media a year ago that she was unaware that the Sassou-Nguesso government had been involved in pushing the legislation. Last week, she acknowledged that lobbyists for the Congo Republic submitted proposed language for the legislation to her office in 2007 and met with her and her staff to shape the final bill. Records show that the Congo Republic’s lobbying team has met or spoken with Waters’s office 40 times since 2006, including two meetings with the lawmaker.

Waters said the legislation is part of her long-standing effort to help impoverished African nations. She said the Congo Republic’s lobbying against these investors, paid for by state oil revenue, may well be in the interest of the Congolese people.

“Poor countries have the same right to hire lobbyists and lawyers as more affluent countries,” she said.

To groups that support the legislation, such as TransAfrica Forum and Jubilee USA, Waters and her colleagues are taking on a powerful segment of the financial industry and preserving scarce African resources for their people. Every year, African nations p ay about $14 billion in debt costs to wealthy nations and international institutions while receiving less than $13 billion in international aid, advocacy groups estimate.

But John Clark, a professor at Florida International University and an expert on the Congo Republic, said members of Congress should be wary of lobbyists for Sassou-Nguesso.

“The purpose of the lobbying is to cover up this nasty reality of authoritarian politics and to protect the leadership’s personal finances,” Clark said.

The trail of Congo Republic money was exposed by Elliott Management, a New York hedge fund that sued the country for repayment of an estimated $100 million in debt. The firm declined to discuss the dispute.

In 2005, it alleged in court that it found that the Sassou-Nguesso regime had diverted money into shell companies secretly owned by a top presidential deputy. (A British court agreed that the country had oil assets in hidden accounts.) Serge Mombouli, the Congo Republic’s ambassador to the United States, said embezzlement charges are unproved.

Other groups then alleged that Sassou-Nguesso used oil profits for his personal benefit. A lawsuit brought by French humanitarian organizations claimed that three African leaders, including Sassou-Nguesso, misused state money for personal luxuries. A preliminary French police investigation in 2007 found Sassou-Nguesso family holdings that included five mansions in or near Paris and a car worth $224,492.

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In France last year, Sassou-Nguesso said the assets were typical for a world leader.

“All the leaders of the world have castles and palaces in France, whether they are from the gulf, Europe or Africa,” he said.

In 2006, the Congo Republic retained the D.C. law firm Trout Cacheris to handle several assignments, including working with the International Monetary Fund to win impoverished-nation status and dealing with charges made against Sassou-Nguesso. For help, Trout Cacheris hired the Livingston Group, run by former congressman Bob Livingston (R-La.); Chlopak Leonard Schechter and Associates; the former Amani Group, led by former congressman William H. Gray III (D-Pa.); and the communications firm Public Private Solutions.

John Richards, the main Congo Republic lobbyist, said Sassou-Nguesso properly sought to stop “a global smear campaign against the Congolese government.”

Lobbyists for the Congo Republic worked closely with Waters as well as a coalition of U.S.-based religious, human rights and environmental groups.

Melinda St. Louis, a deputy director of Jubilee USA, a coalition of religious and human rights groups, said the organization relied on Richards for expertise. But she said her group has tried to “keep an arm’s-length relationship” with the Congo Republic government.

In an interview last year, Waters said poor nations need protection from vulture funds. At that time, she said that she would not seek legislation to shield dictators who are “known to be stealing” from their people and that she was not aware that the Congo Republic’s lobbying team was involved in the push for legislation.

Waters, who is facing an ethics charge on a separate matter before the House ethics committee, now says her comments did not accurately describe her staff’s dealings wit h the lobbying team.

In a statement last week, she confirmed that lobbyists had submitted proposed legislation and were consulted in vetting her measure.

By Fekade Shewakena

Poverty is Ethiopia’s persistent reality and has long been the country’s definer. The country’s mainstay, agriculture, is predominantly subsistence and is still only one drought season away from a multimillion killer famine unless we beg in time. Meles Zenawi often talks of poverty as being the number one problem of the country. I have yet to meet any Ethiopian who disagrees with this. But there are disagreements on the kinds of approaches, economic and political governance and accountability and the kind of policy tools we must use to fight poverty. Had we been a lucky, vibrant and freely debating country, these disagreements and debates should have been considered healthy and encouraged.

There are a number of people outside of the government, including myself, who doubt the double digit growth claim and the validity of the coming five year plan that promises ‘cows in the sky’. Many including non-Ethiopians believe it is exaggerated at best or fabricated at worst for political purposes. Obviously, the regime and its cronies have the motive of justifying their proposed authoritarian nanny-state solution, the so called developmental state, which is to be led by a vanguard party – the EPRDF with Mr. Zenawi at the helm. Mr. Zenawi’s recent argument against the neoliberal and market fundamentalist boogeyman which he created out of thin air may be laughable but indicates how much he failed to wrench himself off of his long held but debunked Marxian authoritarian methods. I haven’t heard any Ethiopian politician who argues the state should not intervene in the country’s economic development or anyone who argues to leave the economy to market forces. There may be argument in the level and kind of intervention. This has even ceased to be an argument in developed democracies anymore let alone in Ethiopia. But as increases in accusations about human rights violations and closure of democratic space become intensified, Mr. Zenawi, his officials and supporters seem to keep clinging to non existing challenges and phantom statistics as a means of offsetting that.

In my view, there is no more disgusting sin than playing politics with Ethiopia’s massive and obscene poverty. Ethiopia’s poverty is too grim, too widespread, too sad and tragic to play political propaganda games with it. The exaggeration and in many instances the fabrication of the growth statistics is not making any dent on the lives of the millions of Ethiopians — as much as 90% of them who are absolutely poor as some recent estimates put it.  Nor is it creating any hope for the mass of young people who concluded that their best bets for improving their lives is to leave the country in droves by taking risky journeys to foreign lands. A recent survey by Gallup shows nearly half the adult population of Ethiopia wants to leave the country. This doesn’t sound like coming from a country that is growing at the rate claimed by the government, fool of hope and great promise. We have enough to suffer from real poverty, we will only add to our misery if we pile lies on to that.

There are some striking independent evaluations that shade light into the amount of data manipulation and exaggeration by the government. Some are expatriate independent scholars who cannot be accused of having any Ethiopian political axe to grind. If you want an illustration of how the Ethiopian authorities play games with statistics to create an illusion of stratospheric economic growth, read this study by experts Stefan Dercon and Ruth Vegas Hill from Oxford University who collaborated with DFID of the UK to evaluate the performance of Ethiopia’s agriculture and checked the official numbers. The experts who made the study concluded that:

“The scale of output expansion in Ethiopia in the last 10 years is unprecedented. According to the data, it involved dramatic increases in areas cultivated with cereals, up 44 percent in the last 10 years, without any clear record or reporting on the process by which more land was obtained.  Yields increased by 40 percent in the same period, with most of this growth in the last 5 years, but without any sign of intensification via fertilizer, improved seeds or irrigation and limited increases in land under the extension program. As yield growth has fast outpaced the experience elsewhere in Africa or during the Green Revolution in Asia but without input intensification, the sources of yield growth should be understood to restore trust in the current data. In general, more effort should be expanded to ensure the auditing of these key data sources on the Ethiopian economy”.

One of the major recommendations of the authors of this study states, “New, targeted data collection, and independent verification and auditing procedures are required to allow the necessary confidence in the current data”. In fact, they sound even more puzzled as to how these exaggerations were made since the crop- cutting method using a statistical sampling design that often generate superior data to other methods was used. The ferenjis seem to have been so polite not to use the word lie.

Using the official data and comparing it to international experience, the authors have found out that the Ethiopian government claimed to achieve in 10 years far more than what countries in East Asia achieved in longer years of the Green Revolution. At the end of the Green Revolution in the case of the Asians, we know that they overcame their food insecurity and started to fund their industrialization. On the contrary in Ethiopia’s case, the number of people on food handouts has grown to one in ten, the number of the absolute poor has increased and the structure of the economy remains basically unchanged. No official or expert of the Ethiopian government has so far attempted to explain these discrepancies. As the authoritarians that they are, they have the luxury of unaccountability and never feel responsible to explain it. In tragic Ethiopia, often it is the critic that gets in trouble than those who do the blunder. When you catch them with their hands in the cookie jar, they get angry and accuse you of some malicious intent.  Some years ago Meles promised that he will shortly create an economy where all Ethiopians will have three meals a day.  He never told us why that prediction failed miserably.  With this propensity for exaggeration and unaccountability, I am surprised why they promised us only a 15% GDP growth during the next five-year plan that they just announced.

An Ethiopian economist who lives in Ethiopia whose comments I often value told me recently that anyone who would come up with a finding of 9.9% growth would be in trouble in Ethiopia today. It has to be double digit to sound mouthful and of propaganda value for the donors to like it. Most objective experts I talked to say the growth is anywhere near five or six percent which, of course, doesn’t mean it is not remarkable. I am sure any World Bank and IMF expert will not give you more than a 6% rate, if they talk to you in private and promise them you will not disclose their name. (By the way the IMF and the World Bank do not collect their own data or replicate the official survey, but Meles keeps claiming they agree with him). It is simply a pity.

The truth of the matter is that Ethiopia is still a predominantly subsistence farming agricultural country that depends heavily on rainfall. Good old coffee and other agricultural products are still the products that fetch hard currency as they did during the Emperor’s time. Thanks to our dispersal around the world we in the Diaspora send a lot of money home every year. Yes, a lot construction of roads and buildings has taken place and a few people have stricken it filthy rich in the service and construction sectors. Most of them, we are told, are the well connected and the powerful. Yet, we have more poor people than at any time in our history. Little of this growth is trickling down to the tragically destitute.

Meaningful economic development and ending or reducing poverty requires looking at and affecting a web of interacting variables and factors. It is not as easy as making some linear extrapolation.  True, there has been growth in the economy over the past several years.  But we also know that this growth has made little dent on the lives of the mass of the suffering people.   We also know that none of this increase is due to any innovative work or advance in technology or structural changes in the economy as the government wants us to blindly believe. We know exactly which sectors of the economy have shown growth and why. It is also important to note that Ethiopia is not the only country in Africa that has achieved considerable increase in GDP.  Many African countries, most of our neighbors to the south and west, recorded considerable growth numbers during the same period.  It is a result of part good weather, part foreign aid, part local effort.  You can apply enough chemical fertilizer and grow the yield per unit area if the rains are good. Or you can play nice with donors and be their darling and get billions of dollars in aid, as the Ethiopian authorities successfully did, and can register considerable quantitative increase in GDP.  But then again this is not a sustainable way of fighting endemic poverty or basing your future forecasts on.

The only way out of Ethiopia’s poverty is the prevalence of the rule of law and democracy.   It is the making of a confident people in the institutions of the country and the accountability of the government.  There is no country that has prospered without resolving outstanding political and other conflicts within themselves through a democratic and lawful way. The models Meles often loves to cite have done that. They have reduced their conflicts to manageable levels through tolerance and the rule of law and not by trying to crush them through the use of force. Even China couldn’t have done it without allowing a level of diversity of views and dissent inside the communist party.  All emerging economies are those that have liberalized themselves and achieved at least a patriotic unity of their people.

Some supporter of the government recently told me boastfully that the number of universities in the country has grown more than ten times.  I asked him if he knows that the research output from these universities is less than when we had only two, and if he knows more than 50% of the instructors are first degree holders and in some cases undergraduate senior students and asked him to define a university for me. My friend, who was happy to play the numbers game could not say a word about any of the substance.

Let me leave you with an example of how people play games with numbers and statistics that my Indian professor once told me. He told me about a 100 people who were trying to cross a river. They all couldn’t swim and were afraid of drowning as they did not know the depth of the river. Finally there was some mathematically endowed person among them who set out to measure the depth of the river and the height of all hundred of them. He made the necessary calculations and found that the average height of the people was above the river’s depth. He then told all of them that everybody can cross on the average. Unfortunately the 25 of them who were very tall have influenced the average. Seventy five of them drowned. There wasn’t even a mistake on the mathematical computation. It was a failure of thinking.

Ethiopia has a herculean challenge of getting out of poverty. Its rapidly growing population, the environmental degradation, and the challenges of plugging in to a globalized world, to mention just a few, are not easy. Yes, poverty is the number one problem of the country that all of us seem to agree on. But you cannot solve a number one problem by making it secondary to absolute political control. Those who tried that it in the past have failed miserably. I pray for my country and for wisdom.

(The writer can be reached at [email protected])