Monday, October 15, 2012

NEVIS Review No 2, Section II; Ref #2.2

NEVIS Review Series No 2
 Section  II
 Ref #2.2
October 15, 2012

Lessons From Meles Zenawi
By Charles Abugre

We believed that Ethiopia was crucial to this for several reasons: it is the largest country by population in the region; relatively the most stable; relatively the most democratic; with the most dynamic economy; with a lot to lose if war broke out across several boundaries and the most to gain with peace; and relatively the most trusted by international powers.

Above all, the person of Meles commands the most respect internationally for his intellect and negotiating ability and not least because he is seen as a person whose word you can trust- love him or loath him.

He could afford more magnanimity, more patience and more sacrifice relative to the rest.

So initially we spoke about dialogue, bringing young people together across boundaries, making overtures to belligerent neighbours, avoiding the use of Ethiopia as a centre for organized opposition for regime change of neighbours etc.

All well and good, but how in the long run can peace be sustained and entrenched?

Does peace and the lack of thereof depend on individuals in power or is there more to it? Is armed conflict sustained merely by political motives or is there an economic motive?

Do people fight simply because they hate each other or is there more to it?

As we mauled over these issues over time, one thing became increasingly clear – we need to think about peace and security in our continent in a long term manner.

Relative peace is ultimately built on shared prosperity, shared opportunity, mature institutions, greater choices and effective voice for people and a serious attention to inequalities especially geographical and group-based inequalities.

Meles argued that sustaining peace and security in Ethiopia and the region will require us to think about how to shape the economy to provide enduring benefits for all the people and address poverty, how to shape politics to make it inclusive of all the diversities and how to build institutions that promote genuine democratic inclusion.

This calls for a clear understanding of the structural realities of economies and the institutions in it (public and private); the nature of political organisation and the attitude towards genuine democracy and inclusive and dynamic economies, and how these issues interlink.

The task is to simultaneously build institutions for both genuine democracy and genuine development.

He believed that the Ethiopian state is at risk of disappearing unless these tasks are accomplished. This task is daunting for a poor economy because poverty itself results from and contributes to weak institutions necessary to provide and regulate.

• The Ideological Imperative

To square these brackets Meles argues for a clear ideology, contrary to Susan Rice’s assertion that Meles was merely pragmatic, not ideological.

Indeed he believes that not only should the state be guided by a clear ideology but that ideology should he hegemonic in Gramscian context.

The ideology, he calls “democratic developmentalism” (DD) – the task is to build a democratic developmental state.

To make this ideology hegemonic requires a political vehicle – a party totally committed to the ideology and driving it through society through education, policy and organisation.

Meles believes in his party, fights within it, survives it and sees himself as an integral part of it.

He is clear that the economic development task of DD is to build a capitalist economy based on the reality of the Ethiopian economy – an essentially agricultural economy dominated by smallholder farmers facing unstable and hostile local and international markets and small modern sector benefitting largely from unproductive and “pervasive rent-seeking”. By rent-seeking he means economic agents seeking ways to maximise returns in ways that are unconnected with efforts to add value.

This includes corruption in public and private places but it also means kick-backs, land speculation, tax dodging, asset price manipulation, speculative activities etc.

The task is to guide economic agents towards value added activities, including innovation and productive investments and to discourage unproductive rent seeking activities.

But some economic rents are high not simply because of manipulation and bad behaviour of economic agents but arise from low competition (few entrants into sectors at relatively low cost and high returns).

In these areas, he believed that the role of the state is to participate in these markets to share the returns or redirect them through taxation.

To be able to guide the private sector towards value addition necessitates a degree of independence of the state from the private sector. But it means actively discouraging political leadership from also being enmeshed in private business, in order to minimise conflict of interest.

This does not of course preclude jointly investing, as is the case of the burgeoning shoe industry.

It is in this context that the Ethiopian state actively participates in or even dominates late corporations such as the telecommunications, heavy industry and the thriving EFFORT (the Endowment Fund for the Rehabilitation of Tigray) group of companies and areas they consider necessary to stimulate or to capture and redirect rents.

It is also the reason why Ethiopia refuses to establish a stock market, seeing them largely as instruments for speculation.

Ethiopia also does not open its banks to foreign participation.

This approach is largely derived from the practice of the middle income countries of Asia and Latin America, and to some extent South Africa.

• The Road to Capitalism

Meles did not come to accept a version of capitalism lightly. He was after all a Marxist Leninist.

He came to this view from a pragmatic standpoint – the world has moved on and a smatter strategy is required.

“You need to pick your fights cleverly” he will say, conscious of the relative powerlessness of Ethiopia as an aid and food dependent economy.

Clever picking of fights has enabled Meles to basically effectively manage aid inflows even during times of political tensions and policy disagreements especially with the World Bank, the IMF and some bilateral donors, although it must be said that over the past two decades Ethiopia’s aid receipt has been below the Sub-Saharan African average in per capita terms.

Yet, many would say that they (together with Rwanda) have made the best use of aid of any country – another reason for keeping aid flowing.

Meles would severely critique aid not in order to reject it but in order to soften the terms and access more.

Meles is comfortable with foreign direct investment although he will argue that development is not about capital accumulation but innovation, technology and organisation. Indeed, with the financial crisis leading to low investment absorption in matured economies and average wages rising in China, Meles has been arguing strongly for foreign capital flows to Africa, presenting it as the next source of global demand capable of lifting the global economy.

And he has not failed in his pursuit.

Sixty percent of Chinese and Turkish investments to Ethiopia are in manufacturing and these investments are growing.

• Practical Human Rights

Meles passionately believes in democracy and human rights – both civil/political and social economic rights – contrary to popular belief.

Two things are critical for democracy in a democratic developmental state: the need to address the powerless of the “atomised peasant” by enabling the peasants to organise not for organising sake but to acquire economic power, for example through co-operatives in order to access technology or to address pricing problems.

Organised wealthy peasants are crucial not only for the fight against poverty but for effective voice in political contestation – the avoidance of elite capture of politics.

The second task, he would argue is the need for a hegemonic party not only to support this process of organising for economic participation and value-added growth but also to educate in order to advance the hegemonic ideology not by force but by gradual internalisation of its tenets.

In the context of electoral politics, such a strategy – linking political organisation with economic power – cannot escape the charge that the ruling party is using incumbency and the monopoly over state resources to entrench the party in power.

Meles does not contest this charge per se, merely arguing that this is what needs to be done.

Besides theory, Meles also emphasises the quality of practice: when you think and plan big, then be sure to deliver: when you promise be sure to fulfill; when you decide, be sure to stick by your decision.

The evidence of these dictums are clear for all to see – poverty is reducing at one of the fastest rates in the world, Ethiopia is industrialising; rural incomes are rising; revenue allocation to ethno-linguistically divided states, using distributive justice as the main principle is helping convergence among nationalities and providing services that some communities had never afore experienced.

The economics of democratic developmentalism has clear fruits in Ethiopia.

South Africa declared itself as a developmental state partly thanks to the friendship between Thabo Mbeki and Meles and co-operation between their respective parties.

The Economic Commission for Africa has taken the first steps to encourage intellectuals discourse on DD.

Time will tell if they will sustain it. Ethiopia may well sustain the programmatic dimensions of DD. Only time will tell where the politics of DD will go, with new leadership.
Meles may well have been dictatorial.

Even that, Africa has lost an intriguing, even enigmatic leader and spokesperson. This loss will be hard to replace.

• Charles Abugre works for the United Nations in Africa. The views contained in this article are entirely his own and do not necessarily reflect those of his employer
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