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Ethiopia: The Fakeonomics of Meles Zenawi

Posted on , Updated on by Alemayehu G. Mariam

There is the economics of Adam Smith, the intellectual father of capitalism. There is Levitt & Dubner’s freakonomics of weird stuff. Then there is the fakeonomics (economics by gimmickry) of  Meles Zenawi, the dictator in Ethiopia and author of the five-year “Growth and Transformation Plan” (GTP). Zenawi forecasts a “not unimaginable” 14.9 percent economic growth for Ethiopia over the next five years after devaluing the currency by 20 percent, slapping price controls on many food items and watching from the sidelines annual inflation galloping at 34.7 percent. He has accused the country’s business community of price gauging and hoarding and threatened to shut them down, jail them and literally cut the hands of any business person caught in the illicit trade of coffee.

The GTP is a make-a-wish list of stuff. It purports to be based on a “long-term vision” of making Ethiopia “a country where democratic rule, good-governance and social justice reigns.” It aims to “build an economy which has a modern and productive agricultural sector with enhanced technology and an industrial sector” and “increase per capita income of citizens so that it reaches at the level of those in middle-income countries.” It boasts of “pillar strategies” to “sustain faster and equitable economic growth”, “maintain agriculture as a major source of economic growth,” “create favorable conditions for the industry to play key role in the economy,” “expand infrastructure and social development,” “build capacity and deepen good governance” and “promote women and youth empowerment and equitable benefit.”

In my regular weekly commentary on May 5, I observed:

The ‘economic plan’ (“GTP”) itself floats on a sea of catchphrases, clichés, slogans, buzzwords, platitudes, truisms and bombast. Zenawi says his plan will produce “food sufficiency in five years.” But he cautions it is a “high-case scenario which is clearly very, very ambitious.” He says the ‘base-case’ scenario of ‘11 percent average economic growth over the next five years is doable” and the ‘high-case’ scenario of 14.9 percent is ‘not unimaginable’. The hype of super economic growth rate is manifestly detached from reality. The Oxford Poverty and Human Development Initiative Multidimensional Poverty Index 2010 (formerly annual U.N.D.P. Human Poverty Index) ranks Ethiopia as second poorest (ahead of famine-ravaged Mali) country on the planet. Six million Ethiopians needed emergency food aid last year and many millions will need food aid this year. An annual growth rate of 15 percent for the second poorest country on the planet for the next five years goes beyond the realm of imagination to pure fantasy. The IMF predicts a growth rate of 7 percent for 2011, but talking about economic statistics on Ethiopia is like talking about the art of voodoo.

It seems the International Monetary Fund (IMF) has come to the same conclusion. In a May 31, 2011 statement, the IMF artfully asserted:

Strong growth has continued in 2010/11 that the mission estimates at 7.5 percent (compared to an official estimate of 11.4 percent)….  The mission sees lower growth for 2011/12, at about 6 percent, on account of high inflation, restrictions on private bank lending, and a more difficult business environment… The growth and investment objectives of the new five-year Growth and Transformation Plan (GTP) are ambitious. The mission urged the authorities to the pace implementation of the plan to avoid any further overheating of the economy. Success will also hinge on allowing room for the private sector to thrive and maintaining a low risk of debt distress…

On June 8, Ken Ohashi, the World Bank’s (WB) country director for Ethiopiacandidly stated:

Ethiopia’s dependence on foreign capital to finance budget deficits and a five-year investment plan is unsustainable… I can’t see it’s sustainable short of discovering huge oil reserves, essentially an unexpected windfall… I don’t see how they can sustain such an aggressive investment plan without getting into serious problems… If you’re not as a nation saving enough, you are dependent on foreign capital or other means of financing investment in an unhealthy, unsustainable way… That’s the sort of trap they seem to be falling into… On debt there is a danger… If this public investment-led growth at some point really stumbles or stagnates for a while then all these debt equations could unravel. …  I do worry that without the private sector expanding much more vigorously then rapid growth is not likely to be sustainable and if that’s the case then all these debt balances could go out of control.

On June 6, Zenawi’s finance chief said the WB and IMF are all wrong. He insisted the GTP will “double economic growth by registering 14.9 percent growth on average”. He proclaimed that in the next five years there will be “fast and sustainable economic growth,” and “food security at household and national level.” There will be “more than 2000 km of railway networks would be constructed” and power generation will be in the range of “ 8,000 to 10,000 MW from water and wind resources during the next five years.”

On June 9, Zenawi’s deputy, Hailemariam Desalegn, offered assurances that “economic expansion won’t drop below 9 percent in the fiscal year to July 7, 2012, from 11.4 percent this year.” He boasted that “the whole community has mobilized to buy bonds. This huge savings and mobilization is used for infrastructure development… We are getting loans from China, India, Turkey and South Korea, so all these foreign savings are also mobilized… So I think we can perform on the ambitious plans that are in place.”

Cutting Through the Diplomatic Bull

For the last several months, Zenawi has been staging one farcical political theatre after another to distract attention from his brutal repression and to pretend that he is the one immovable object in the Sub-Saharan universe come the gusting southerly winds of change from Tunisia, Egypt and Libya or high water. He has been engaged in belligerent talk of regime change in Eritrea, inflammatory water war-talk with Egypt, wild allegations of terrorist attacks, proclamations for the construction of an imaginary dam over the Blue Nile, vicious attacks on international human rights organizations and wholesale jailing and intimidation of opponents.

Now Zenawi is shifting from political to economic theatre. As the country convulses in spiraling inflation Zenawi says, “It’s all good. Not a problem.” But the verdict of the big time bankers is in: Zenawi’s GTP is pure fantasy, a figment of his imagination. Of course, bankers like diplomats avoid straight talk and prefer to tip-toe and tap-dance around the truth. When they can say the GTP has as much chance of success as a snowball in hell, they would say the plan is “ambitious,” “unhealthy” and “unsustainable.” Instead of saying the plan is manifestly doomed to failure, they hedge on absurd contingencies that the plan will work only if “huge oil reserves are discovered” or the country gets an “unexpected windfall”. When they can say the Ethiopian economy has collapsed, they hem and haw about their concerns that the plan could “further overheat the economy”. They twiddle their thumbs and “worry about the private sector not thriving,” and express concern over Ethiopia’s “dependence on foreign capital”, the “unraveling of debt  equations” and “debt balances getting out of control.”

Fakeonomics 101

As I have demonstrated in a previous commentary, Zenawi’s economic planning is based on juggled figures, massaged statistics and irrational exuberance about overrated and illusory economic development. Systematic falsification of economic data, fraudulent statistics and creative accounting in economic reports have largely gone unchallenged for years by the learned economists. The lack of systematic and sustained critique by Diaspora economists is all the more surprising and baffling given the fact that the economic swagger and wind-bagging about stratospheric economic growth and development comes from a regime not known for its economic “literacy”. The Economist Magazine in its November 7, 2006 editorial, in the context of the Starbucks coffee row, bluntly stated: “The Ethiopian government, one of the most economically illiterate in the modern world, would do well to take Starbucks’s advice.”  The same observation was repeated in 2009 at a high level meeting of Western donor policy makers in Berlin where, according to a Wikileaks cablegram, a German diplomat suggested that Ethiopia’s economic woes could be traced to “Meles’ poor understanding of economics”. Today, to the surprise of many observers, the IMF and WB who have previously swallowed whole the regime’s preposterous economic claims are openly echoing the views of the German diplomat and the  Economist Magazine.

Deceit, chicanery, paralogy and sophistry are the hallmarks of Zenawi’s regime. For many years, that regime has managed to scam the multilateral bankers and donors by talking about “sustainability,” “double-digit growth”, “renaissance” and “accelerated development in the developmental state”. It has even sought to shame and intimidate Western banker and donors by moral hectoring of the  evils of “neoliberalism”. Zenawi seems to follow the old principle that “If you tell a lie big enough and keep repeating it, people will eventually come to believe it.” In the Information Age, if you tell one big lie and embellish it with little lies every day, you will end up fooling yourself and no one else. (That obviously does not apply to Ethiopia which is hopelessly stranded and trapped in the Censorship and Disinformation Age).

The economic facts about Ethiopia are plain for all to see: The economy is in the stranglehold of organized racketeers and regime cronies. Regime-affiliated businesses and enterprises control “freight transport, construction, pharmaceutical, and cement firms receive lucrative foreign aid contracts and highly favorable terms on loans from government banks.” According to the regime’s data, by the end of the 2009 fiscal year, Ethiopia’s  outstanding debt stock was pegged at a crushing USD$5.2 billion. Remittances by Diaspora Ethiopians were the mainstay of the economy, and in 2008 Ethiopians in the U.S. alone sent  $1.2 billion.   “Ethiopia is Africa’s largest recipient of foreign aid (at $3.3 billion in 2008 and rising).” The regime has auctioned off  millions of hectares of the country’s best land for less than pennies. “For £150 a week (USD$245), you can lease more than 2,500 sq km (1,000 sq miles) of virgin, fertile land – an area the size of Dorset, England – for 50 years, plus generous tax breaks.”

According to the regime’s data, Ethiopia’s year-on-year rate of inflation jumped to 34.7 percent in May (2011) from 29.5 percent a month earlier; and food prices rose 40.7 percent during the year. Every year, Zenawi’s regime runs up the SOS flag begging for emergency humanitarian aid . So far in 2011, humanitarian pledges, commitments and contributions to the regime exceed USD$212 million. To get a government job or higher education, one has to be a member of Zenawi’s party. Ethiopia’s current population of some 80 million is expected to double in the next thirty years. It is mind-numbing to imagine the number of people who will be living in abject poverty without access to health care, education and employment in Ethiopia in three decades.  The regime has failed to implement any policy aimed at controlling population growth.

One has to assume that those in the inner circle of the regime are aware of the massive economic crises in the country despite their manifest lack of “economic literacy.” But that assumption may be questionable given the fact that the regime appears to be in denial and has used its modest economic ingenuity to pin the blame for Ethiopia’s galloping inflation and the rest of that country’s economic problems on global market forces.   Zenawi now offers the GTP  as a “pie in the sky” plan that will not only provide food security but also catapult Ethiopia into becoming a middle income country like Malaysia in five years. The fact of the matter is that the regime’s self-centered short-term interests in accumulating wealth for its members and determination to cling to power forever have trumped the long-term strategic interests of the country.

Zenawi now is not only having difficulty persuading its bankers that it has the right economic policy, but the bankers are looking at his plan with increasing derision and cynicism. Ohashi says the GTP will work if Ethiopia “discovers huge oil reserves” or gets “an unexpected windfall.” Ohashi might as well have said the plan will work if manna falls from the sky.

Zenawi’s fakeonomics is nothing new. The old communist regimes in Eastern Europe used to pull the same types of political and economic stunts. They would hold “elections” and declare they won it by 99 percent (to their credit not by 99.6 percent). They also had their “five-year economic plans” in which they predicted and “achieved” incredible economic growth. For instance, they would set a production target of ten thousand tractors a year and actually produce five thousand. They would publicly report they produced fifteen thousand tractors and give the factory bosses increased wages and bonuses for exceeding the production target. The communist regimes would even say they did not have inflation just high prices and deny high quality food items and other amenities to the masses while the nomenclatura (party bosses) and their cronies wallowed in luxury. The reality in Ethiopia is that basic necessities are unavailable and unaffordable to the vast majority of the people, and even those who could afford the inflated prices must have the right connection to get an adequate supply. A regime incapable of providing sugar, cooking oil and other basic staples to the people now boasts of making Ethiopia a middle income country in five years.

Are Ethiopians better off economically today than they were five years ago? The answer to that question will be the answer to what they will be five years from now!

In the final analysis, it is not about the plan. It’s about the man. As George Ayittey said, “Africa is poor because she is not free.” I say Africa is poor because of dictators who cling to power like ticks on a milk cow.

Previous commentaries by the author are available at: www.huffingtonpost.com/alemayehu-g-mariam/ and http://open.salon.com/blog/almariam/

 

We Went, We Saw, We Got Chased Out…

Posted on , Updated on by Alemayehu G. Mariam

Alemayehu G. Mariam

Following the Battle of Zela in 47 B.C. (present day Zile, Turkey), Julius Caesar claimed victory by declaring: “I came; I saw; I conquered.” In 2011, Caesar Meles Zenawi, the dictator-in-chief in Ethiopia, scattered his top henchmen throughout the U.S. and Europe to declare victory in the propaganda war on Diaspora Ethiopians. But there was no victory to be had, only {www:ignominious} defeat at the hands of Zenawi’s {www:tenacious}, resolute and dogged opponents. No victory dances; only a speedy shuffle back to the capo di tutti capi (boss of all bosses) to deliver the message: “We went; We saw; We got chased the hell out of Dodge!”

The purpose of the recent official travelling circus was to introduce and generate support among Diaspora Ethiopians for Zenawi’s five-year economic program pretentiously labeled “Growth and Transformation Plan”. In city after city in North America and Europe, Zenawi’s crew received defiant and pugnacious reception. Ethiopians made the various meeting venues and sites virtual mini-Tahrir Squares (Egypt). Ethiopian men and women, Christians and Muslims, young and old, professionals and service workers, students and teachers and members of various political groups and parties showed up in a united front to confront and challenge Zenawi’s henchmen. One need only view any one of the numerous videotapes online to appreciate the intensity, depth and strength of Diaspora Ethiopian opposition to Zenawi’s regime.

In Washington, D.C., Los Angeles, Las Vegas, Atlanta, Dallas, Seattle, New York, Toronto, London and various other cities, Ethiopians came out in full force and tried to gain admission into the meetings.  Many were singled out and turned back. In a widely-disseminated and cogently argued “open letter”,Fekade Shewakena, a former professor at Addis Ababa University, wrote Girma Birru, Zenawi’s official representative in the U.S., complaining about his discriminatory treatment in being refused admission at the meeting held on the campus of Howard University:

I was formally invited by an [Ethiopian] embassy staffer… I faced the wrath of the protestors as I was crossing their picket lines [to attend the meeting]. Then I met the people who were deployed by the [Ethiopian] embassy to man the gate, and do the sad job of screening participants and deciding what type of Ethiopian should be let in and what type should be kept out. I was told I was ineligible to enter and saw many people being returned from entering. One screener told me… “ante Tigre titela yelem ende min litisera metah” [Tr. Do you not hate Tigreans? What business do you have here?…]

The ethnic stripe test was the last straw for many of the protesters who denounced Zenawi and his crew as “murderers”, “thieves” (leba) and “opportunists” (hodams). Inside the meeting halls, those who asked tough questions were singled out and ejected by the organizers, often violently. Some were physically assaulted requiring emergency medical assistance. Nearly all of the meetings were disrupted, cancelled, stopped or delayed. To sum it up, those who made peaceful dialogue impossible, made angry verbal exchanges inevitable.

Zenawi in September, His Troops in April?

It will be recalled that in September 2010 when Zenawi came to the U.S. to speak at the World Leader’s Conference at Columbia University, he set off a firestorm of opposition among Ethiopians in the U.S. Busloads of Ethiopian activists descended on New York City to confront Zenawi, but they were kept away from the campus. A massive campaign (reminiscent of the anti-war protest days at Columbia in the late 1960s) was undertaken to mobilize Columbia students, faculty and staff to put pressure on the university administration to disinvite Zenawi.

Zenawi’s invitation also provoked strong reaction among non-Ethiopians. Prof. Ted Vestal, the distinguished and respected scholar on Ethiopia, outraged by Zenawi’s invitation wrote Columbia President Lee Bollinger: “The only way you can redeem the damaged reputation of the World Leaders Forum is by publicly making known the shortcomings of Prime Minister Meles and his government in your introductory remarks–a refutation similar to what you did in introducing President Mahmoud Ahmadinejad of Iran in 2007.”

World-renowned Columbia economist Prof. Jagdish Bagwati wrote in disgust: “It seems probable that the President’s [Bollinger] office was merely reproducing uncritically the rubbish that was supplied by one of these Columbia entrepreneurs [Columbia Professors Joseph Stiglitz (Zenawi’s sponsor) and  Jeffrey Sachs] whose objective is to ingratiate himself with influential African leaders regardless of their democratic and human-rights record, to get PR and ‘goodies’ for themselves at African summits, at the UN where these leaders have a vote, etc.”

I vigorously defended Zenawi’s right to speak at Columbia because I believed the opportunity could offer him a teachable moment in the ways of free people:

I realize that this may not be a popular view to hold, but I am reminded of the painful truth in Prof. Noam Chomsky’s admonition: ‘If we don’t believe in freedom of expression for people we despise, we don’t believe in it at all.’ On a personal level, it would be hypocritical of me to argue for free speech and press freedoms in Ethiopia and justify censorship or muzzling of Zenawi stateside. If censorship is bad for the good citizens of Ethiopia, it is also bad for the dictators of Ethiopia.

Following the Columbia episode, one has to wonder why Zenawi would send hordes of his top officials to the U.S. and elsewhere to evangelize on behalf of his regime. It is logical to assume that Zenawi conducted a “vulnerability analysis” of Diaspora Ethiopians before sending out his crew. It is likely that he studied Diaspora attitudes and perceptions toward his regime and the current situation in the country, the ethnic and political divisions and tensions in the Diaspora, the strength of Diaspora elite cooperation and intensity of conflict among them, etc. and decided to make his move. He likely concluded that any potential opposition to the meetings could be handled by utilizing an “ethnic filter” at the door of the meeting halls.

But what are Zenawi’s real reasons for sending his top cadre of officials to North America and Europe? There could be several answers to this deceptively simple question.

Zenawi’s Arsenal of Weapons of Mass Distraction

Careful evaluation of Zenawi’s propaganda strategy shows that the dispatch of officials to the to the U.S. and Europe is part of a broader integrated campaign to undermine opposition in the Diaspora, energize supporters and reinforce favorable perception and action by  foreign donors and banks. Manifestly, the mission of the crew sent to “dialogue” with the Ethiopian Diaspora was to divert attention from the extreme domestic economic, political and social problems in the country and to exude public confidence in the fact that the upheavals in North Africa are of no consequence in Ethiopia. The other elements in this propaganda campaign of mass distraction include belligerent talk of regime change in Eritrea, {www:inflammatory} water war-talk with Egypt, wild allegations of terrorist attacks, wholesale jailing and intimidation of opponents, proposals for the construction of an imaginary dam, attacks on international human rights organizations that have published critical reports on the regime (just a day ago, Zenawi’s deputy said he “dismisses” the 2010 U.S. Human Rights Report as “baseless”) and so on.  The hope is that the more Diasporans talk about the manufactured issues, the less they will talk about the real issues of stratospheric inflation, food shortages, skyrocketing fuel costs, massive repression, information and media suppression, etc. in Ethiopia.

By alternating propaganda topics from day today, Zenawi hopes to keep his opponents and critics talking reflexively about his issues and off-balance. The more outrageous his claims, the more reaction he is likely to elicit from his opponents and critics, and be able to better control the debate and the minds of those engaged in it. To be sure, by sending his travelling circus to the U.S., Zenawi has succeeded in angering, inflaming and riling up his Diaspora opponents. He knows just how to “get their goat”. He manipulates that outpouring of anger, rage and frustration to keep his opponents’ eyes off the prize.

The Propaganda Value of “In-Yo’-Diaspora-Face” Confrontation

By sending a large delegation into the Ethiopian Diaspora, Zenawi is also sending an unmistakable message: “In yo’ face, Ethiopian Diaspora! I can do what I am doing in Ethiopia just as easily in your neck of the woods.” It is a confrontational propaganda strategy tinged with a tad of arrogance. Zenawi seems to believe that the Ethiopian Diaspora is so divided against itself and inherently dysfunctional that it is incapable of mounting an effective opposition to his regime or even his crew’s visit. By unleashing swarms of regime officials in the Diaspora, Zenawi likely intended to further degrade the Diaspora’s ability to conduct or sustain opposition activities, {www:demoralize} and disconcert them and confuse their leadership. On the other hand, if he can muster a successful foray with his crew, he could establish his invincibility and spread pessimism and despair in the Diaspora. But the whole affair proved to be a total failure as have all previous efforts to stage “in yo’ face” confrontation with Diaspora Ethiopians. The Diaspora may be divided but not when it comes to Zenawi’s regime.

Effective Propaganda Tool Against the “Extreme Diaspora”

The other less apparent side of “in yo’ face” confrontation is to make a record of the “extreme Diaspora”. Zenawi will no doubt use this episode to show American and European  policy makers that he is reasonable and statesman-like while the opposition, particularly in the Diaspora, consist of an assortment of wild-eyed, hysterical, fanatical, intolerant, irrational, hateful and mean-spirited extremists. He will argue to American policy makers that he sent his top leaders to engage Diasporan Ethiopians in civil dialogue only to be attacked, insulted and berated. He will hand them copies of  well-edited videotapes of agitated protesters titled: “Behold the Ethiopian Diaspora!” In short, Zenawi will use the protest videos as Exhibit A to demonize, discredit, dehumanize, marginalize, categorize and sermonize about the Evil Extreme Ethiopian Diaspora. At the end, he will offer American policy makers a simple choice: “I am your man! It’s me or these raving lunatics.” Based on historical experience and empirical observations, some American policy makers may actually buy his argument.

Pandering to the U.S., IMF, E.U.

A third objective of the dog and pony show about the “Growth and Transformational Plan” is to please (hoodwink) the U.S., the International Monetary Fund, the European Union and others. It is an elaborately staged drama for this audience to show that Zenawi has a real economic plan for Ethiopia that exceeds the “Millennium Goals” (e.g. eradicate extreme poverty, reduce child mortality, fight AIDS, form global partnership, etc. by 2015). By making gestures of engagement with the Ethiopian Diaspora, Zenawi is trying to build credibility for his “economic plan” and that it has broad support within and outside the country. He deserves billions more in in loans and economic aid. Zenawi knows exactly what buttons to push to get the attention and approval of donors and loaners.

The “economic plan” itself floats on a sea of catchphrases, clichés, slogans, buzzwords, platitudes, truisms and bombast. Zenawi says his plan will produce “food sufficiency in five years.” But he cautions it is a “high-case scenario which is clearly very, very ambitious.” He says  the “base-case” scenario of “11 percent average economic growth over the next five years is  doable” and the “high-case” scenario of 14.9 percent is “not unimaginable”. The hype of super economic growth rate is manifestly detached from reality. The Oxford Poverty and Human Development Initiative Multidimensional Poverty Index 2010 (formerly annual U.N.D.P. Human Poverty Index) ranks Ethiopia as second poorest (ahead of famine-ravaged Mali) country on the planet. Six million Ethiopians needed emergency food aid last year and many millions will need food aid this year. An annual growth rate of 15 percent for the second poorest country on the planet for the next five years goes beyond the realm of imagination to pure fantasy. The IMF predicts a growth rate of 7 percent for 2011, but talking about economic statistics on Ethiopia is like talking about the art of voodoo.

Dialogue, Like Charity, Begins at Home

Like charity, dialogue begins at home. Zenawi should allow free and unfettered discussion of his economic plan as well as human rights record within Ethiopia first before sending his troupe into the Diaspora.  Conversation is a two-way street. If Zenawi wants to talk about his economic plan to Diaspora Ethiopians, he must be prepared to listen to their human rights concerns.

There is not a single Ethiopian who will oppose food sufficiency in that hungry country by 2015 or decline to contribute to the prosperity and development of Ethiopia. Reasonable people could disagree on Zenawi’s “growth and transformation plan”. History shows that similar schemes based on foreign agricultural investments in Latin America have produced Banana Republics. Whether Zenawi’s economic plan will produce a Barley or Rice Republic in Ethiopia is an arguable question. But there can be no development without freedom. There can be no development in a climate of fear, loathing and intimidation, and one-party, one-man domination. Most certainly, there can be no development without respect for fundamental human rights and the rule of law. Though it is very possible to pull the wool over the eyes of people who have very little access to information, it is impossible to fool a politically conscious, active and energized Ethiopian Diaspora community by putting on a dog and pony show.