FDI shoots up in West Africa

Defying the global financial crisis, Guinea-Bissau, Gambia and Guinea have recorded sharp rises in foreign direct investment in recent months. Trouble is, according to the United Nations Office on Drugs and Crime, most of the increase is drug money. “Foreign direct investments in these (three) countries, unexplained so far by their economic performance, have exploded. Remittances have grown. Even the currencies of the region are being revalued,” says the beleaguered head of the organisation, Antonio Maria Costa. “This is a form of money laundering, it comes in as foreign direct investment, it goes into rural real estate, purchase of land, hotels, tourism,” he told West African leaders in Cape Verde, who are meeting to discuss the problem.

As well as the above three countries and Sierra Leone, which I wrote about in July, a researcher who works for Kofi Annan claims that Ghana has become another hub for the drug deluge, which he believes will affect the country’s current election campaign. Here’s a helpful map of West Africa’s Cocaine Coast – expect Liberia and Cote d’Ivoire, which like Sierra Leone and Guinea-Bissau are struggling to rebuild after devastating wars and which are surrounded by drug havens, to be next.

Prohibition, insurgency and state failure

Daniel’s a hundred per cent right to call for an end to some of the more stupid measures taken in Afghanistan in the name of counter-narcotics work.  Take aerial spraying off the table? Absolutely. Avoid alienating farmers in order to avoid swelling the insurgents’ ranks?  Sign me up.

But I think we need to go much further than this.  Daniel argues that coalition forces in Afghanistan should focus on:

…arrests and the prosecution of drug lords and their backers in government. Unless these “narcotics entrepreneurs” are targeted, arrested and prosecuted, little will change. 

As he noted yesterday, the FT’s recent leader on this subject agrees with him, arguing that:

…while crop eradication and locking up bad guys may be an important part of addressing the crisis, they are not by themselves a solution. That can only come over years of a sustained and consistent strategy to develop a real market economy which would provide a better livelihood for farmers than the dangerous and volatile drugs business.

That will, it is true, require security and a role for the military. It will mean targeting the middlemen, smugglers and, yes, chemists who operate the infrastructure of the drugs business, hitting their finances and improving co-operation with Afghanistan’s neighbours.

Above all, it will mean that while the small poppy farmer escapes the attentions of the authorities, the big drug barons do not. That demands ending the de facto impunity enjoyed by some Afghans, a move that can be sanctioned by only the president.

I hate to be a sceptic, but, well, I’m a sceptic.  Targeting the big drug lords, the middlemen and smugglers is certainly preferable to targeting small farmers from a development point of view. But it’s still pretty pointless.  Just look at Colombia, where massive resources to the war on drugs have made negligible impact. True, interdiction efforts can influence the street price a bit – maybe even quite significantly, as in the aftermath of the destruction of the Medellin Cartel in 1989 – but the effects never seem to last much beyond a year.  For all the hullabaloo about the war on drugs,  the long term price trend for most illegal narcotics has been downwards. 

What’s more, we all know that this emperor has no clothes.  When I worked in the government, I used to ask the Afghanistan experts I came across what assessment had been made of what effect even a best case scenario on counter-narcotics in Afghanistan would have on the street price of heroin in the UK, or how we could be sure that production wouldn’t just be displaced to Turkmenistan instead.  The answers I got back were never very encouraging.

None of this, of course, is to dispute the underlying point about just how corrosive organised crime is to the legitimacy and effectiveness of states (c.f. Mark’s recent post on Guinea-Bissau, or mine on Italy and Mexico).  But the point is that if we want to halt that process of corrosion, the it’s not Helmand, or even Kabul, that’s the front line.  The real front line is with our policy of Prohibition, and the fantastically profitable economic opportunities that it introduces.

The war on drugs will never, ever be won on the supply side.  And until we figure that out and internalise it in our policies, the margins on illegal drugs will remain astronomical, the incentives for organised crime and insurgent movements will stay irresistible, and states will keep failing. After all, we can all see that Prohibiton in America created and sustained Al Capone.  So which bit about sustaining his inheritors at the global level is it that we don’t get?

The value of democracy?

I was doing a little research for my upcoming book on West Africa yesterday, and came up with the following factoid: since 1960, the top five countries on the United Nations’ Human Development Index (that is, the countries with the best quality of life in the world – Iceland, Norway, Australia, Canada and Ireland) have had 44 changes of government following peaceful democratic elections. The total for the bottom five countries? Two. Yes, in a total of two hundred and forty years, there have been just two peaceful handovers of power that have respected the will of the people. One in Sierra Leone, one in Mali. Burkina Faso, Guinea-Bissau and Niger have had none. Doubters of the economic value of democracy, take note.

Men with queer accents

West Africa’s drug problem is spreading beyond the borders of Guinea-Bissau, which I wrote about a few months back. The UN has warned that her nextdoor neighbour, Guinea, is vulnerable too, although in last month’s mutiny by soldiers all the records of the country’s counter-narcotics unit were, rather suspiciously, destroyed. And in Guinea’s nextdoor neighbour, Sierra Leone, police have just arrested eight “white people with queer accents” who were attempting to smuggle 600 kilos of cocaine into Lungi airport in a plane disguised with a Red Cross logo. Sierra Leone’s clued up police spokesman has worked out from their accents that they might be South Americans. Not surprisingly in the light of the destroyed narcotics records in Guinea, a number of police and airport staff were also arrested, including the chief of airport police and the airport manager. The haul was worth 33 million Euros, and it wouldn’t take a very large share of that to persuade a few poor Sierra Leoneans to pull some strings and smooth your path into the country.

Guinea-Bissau, Guinea and Sierra Leone are all fragile states which, like tottering companies, are vulnerable either to complete collapse or to takeover. Guinea-Bissau is in the process of being taken over by the drug cartels – the trouble is, unlike in business where being bought up can sometimes calm the waters, in the world of the resource curse takeover and complete collapse often go hand in hand.

West Africa’s new resource curse

A few weeks back the Guardian noted the transformation of Guinea-Bissau, a tiny, jungly and desperately poor country on the tip of West Africa, into the world’s first “narco-state.” Presumably this phrase means that its economy relies on drugs, though it has never been clearly defined and Guatemala and Afghanistan have also laid claim to the title in the recent past. No matter, what is not in doubt is that Guinea-Bissau, which had hitherto relied for survival on a meagre harvest of cashew nuts and fish (at least those fish that are not plundered by European Union trawlers), has found its diamonds/oil/gold/coltan substitute: cocaine.

The traditional route for exporting the drug from Colombia to Europe – Britons and Spaniards are the world’s biggest cokeheads – is via the Caribbean, but the American crackdown (no pun intended) has made that option both risky and expensive. Guinea-Bissau, which is the nearest point of Africa to South America, has no prisons and a police force that owns no handcuffs or vehicles, presents an alluring alternative. A few years ago, therefore, Colombian drug cartels began flying consignments of the drug to airstrips (left over from a recent civil war) in the remote jungles of the Bijagos islands. From there, having paid off local police, they move it north across the Sahara to Europe. (more…)