Wednesday, April 02, 2008

Why not a golden parachute for the Mugabes of the world?

As the Zimbabwean electoral soap opera continues to unfurl, I am led more and more to wonder why "we" (Western governments and IFIs) don't simply buy out corrupt dictators? The World Bank has loaned a lot of money to Zimbabwe, all of it seemingly wasted judging by current conditions there. From the Bank's Zimbabwe page:

Between 1980, when Zimbabwe joined the Bretton Woods Institutions, and 2000 when the country fell behind in its payments on World Bank loans, the Bank funded a total of 33 projects worth US$1.6 billion. Bank support concentrated on infrastructure, agriculture, health support, and community and local government programs, financed from both International Development Association (IDA) Credits (42%) available to low-income countries, and International Bank for Reconstruction and Development (IBRD) loans (58%) available to middle-income countries. Zimbabwe’s arrears to the World Bank were estimated at US$521 million as of September 13, 2007. The arrears to the IMF stood at US$134 million at end-July 2007 and to the AfdB at US$359 million as of end-April 2007.

So why not "buy the rascals out"? Go to Mugabe in 2002 and offer him $500 million cash to go live in Canada. Is it that his expected profits from being in power are too large for us to afford the buyout? Is it because of moral hazard? Is it because of the moral outrage such a scheme would create?

Or is it because if the institutions of the country don't change, the new president will simply become the next Mugabe?

9 comments:

Gabriel said...

Commitment problems. How can he be sure that once he's out of the country, he won't fall down the stairs or his plane won't land at the Hague?

It should be fun to look at dictators that actually retired (Pinochet?) and see under what circumstances retirement is a viable strategy.

And then there's this point... Many of these people are not motivated by money. History is filled with politicians that would be willing to sleep on wooden boards, endure whatever hardships and care only about pure power.

The feeling of control and paranoia are as good of a way to get high as any.

Lastly, the Western governments might not have any interest in such schemes, quite the contrary at times. Befriending dictators is easier, I suppose, than charming public opinion.

Anonymous said...

What about ensuing moral hazard? Having a credible buy-out program for dictators might just encourage powerful players to go down the autocratic route in the first place.

Robert S. Porter said...

I'd prefer that he didn't come to Canada. I still have to live here.

Anonymous said...

I bet we could have bought ourselves a new government in Iraq for less than $3 trillion.

Not sure why you believe the US (or any foreign government) values Mugabe's leaving Zimbabwe at $500 million (or even $1 million). In the case of Mobutu, we attached negative value to his leaving (at least until 1990) and thus quite willingly subsidized his presence in Zaire.

Seems that the only actors who do value the departure of autocrats are the citizens, and they lack the ability to buy them out.

Angus said...

to anon 1:20

I was basing the west's willingness on the fact that they'd put a ton of money into Zimbabwe for development purposes and was suggestings / wondering if that money wouldn't have been better spent "buying out" Mugabe.

Shawn said...

...what is it with econ blogs and anonymous posters? Is it just because there's 'older' people interested in economics, and so less likely to have blogs of their own?

Or is it a professional liability to be seen posting on KPC/MR?


I jest, of course...

Anonymous said...

why not? it might create a time consistency problem

Tom said...

His leaving is worth $50M?!?

I'll shoot him for half of that. Success or it won't cost a dime.

Chris Lawrence said...

I do think it's a combination of moral hazard (on the why it's not offered side) and the World Criminal Court (on the why it wouldn't be accepted anyway side); the Pinochet and Milosevic examples would definitely make the Mugabes, Castros, and Husseins of the world think twice. (Had Marcos not quickly kicked the bucket in exile, he'd have probably found himself on trial somewhere too.) That said I'm surprised the French didn't at least offer to buy Hussein out just to avoid their losing face (e.g. getting publicly steamrolled by the US and UK, who probably would have accepted a Saddam+Uday+Qusay -> Corsica/Brunei deal).

But that doesn't apply to everyone; I doubt there's price that would get Kim Il-Song out of North Korea; the Kims aren't on a power trip, they're on a human degradation and suffering trip.