Poisoned Wells: The Dirty Politics of African Oil
Treasure Islands: Tax Havens and the Men who Stole the World
Nicholas Shaxson
The
FINANCE CURSE
How Global Finance Is Making Us All Poorer
Copyright © 2018, 2019 by Nicholas Shaxson
Cover design by Michael Patrick Dudding
Cover illustration © David Plunkert
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Originally published in Great Britain by The Bodley Head in 2018, this edition has been revised for American publication.
Published simultaneously in Canada
Printed in Canada
First Grove Atlantic hardcover edition: November 2019
This book was set in 11-pt Janson Text by Alpha Design & Composition of Pittsfield, NH
Library of Congress Cataloging-in-Publication data is available for this title.
ISBN 978-0-8021-2847-8
eISBN 978-0-8021-4638-0
Grove Press
an imprint of Grove Atlantic
154 West 14th Street
New York, NY 10011
Distributed by Publishers Group West
groveatlantic.com
19 20 21 22 10 9 8 7 6 5 4 3 2 1
For Emma, Oscar, and George
Contents
Also by Nicholas Shaxson
Introduction
CHAPTER ONE: Sabotage
CHAPTER TWO: Neoliberalism without Borders
CHAPTER THREE: Britain’s Second Empire
CHAPTER FOUR: The Invisible Fist
CHAPTER FIVE: The Third Way
CHAPTER SIX: The Celtic Tiger
CHAPTER SEVEN: The London Loophole
CHAPTER EIGHT: Wealth and Its Armor
CHAPTER NINE: Private Octopus
CHAPTER TEN: Big Hog
Conclusion
Acknowledgments
Notes
Index
In the early 1990s I was the correspondent for Reuters and the Financial Times in mineral-rich Angola in west Africa, which was then supplying more than 5 percent of all US oil imports and which the United Nations reckoned was suffering the world’s worst civil war. Angola was, on paper, one of Africa’s wealthiest countries, but on standard measures of human development it was almost the poorest. As UNITA rebels rampaged across the countryside, digging up diamonds to pay for their war machine, I flew into besieged cities in the interior in corkscrew dives to avoid antiaircraft fire, to try to make sense of what was going on. In the government-held capital of Luanda I remember the sight of upside-down legs kicking and wriggling from the tops of stinking hot garbage Dumpsters, as scab-encrusted war orphans in diesel-soaked clothes dived for food and other treasures discarded by the beneficiaries of the oil wealth. These kids, some of whom slept at night in sewers to hide from robbers and the police, would surround me on street corners, tickling my elbows, wheedling for cash, crooning “Amigo! Amigo!” to try to establish a friendship with the white man. Often, though, they used two different words: “Chefe!” or “Patrão!” the Portuguese words for “boss” or “patron.” This would, they reasoned, oblige me to fulfill my assigned role and look after them as my loyal underlings. Most days, I’d donate something to Kwanza and the boys, six or seven cheerful rascals who lived on my hotel’s street corner, and they defended me fiercely against all comers. Sometimes, I felt as if they would have fought to the death to protect me.
These kinds of relationships were woven into the country’s economic and political tapestry, especially in the hierarchy of political power, where the rich and influential handed out goodies to their underlings in exchange for their support. At the time, oil and diamonds made up more than 99 percent of Angola’s exports, and it was quickly obvious to me that economic theories about supply and demand and interest rates that were being taught in Western schools made no sense here. To begin to understand an economy so extremely dependent on minerals, it helps to picture it as a swollen river, which fans out into a widening delta system of ever more numerous rivulets. Flotillas of boats loaded with treasure—meaning the oil wealth, in Angola’s case—glide downstream, and gatekeepers extract tolls from the passing boats. The big diversions occur far upstream, and as the river flows onward and splits and branches, there is steadily less to go around. These street children lived out at the furthest end of the river delta, where all that was left for them lay at the bottom of a bug-infested dumpster.
Every Western visitor to Angola had a version of the same question: How could the people of a country with such vast mineral wealth be so shockingly destitute? War and corruption were part of the answer, of course. A venal leadership in Luanda was stealing the oil money, eating lobster and drinking champagne on Luanda’s beaches, while its ragged and malnourished compatriots slaughtered each other out in the dusty provinces. But something else was going on too. I didn’t know it then, but I was getting a frontline view of a grand new thesis that academics were just starting to put together, now known as the “resource curse.”
Many countries