If You’re Surprised By This You Shouldn’t Be

Really, much as I would like to see a marked and rapid improvement in the democratic climate in Iraq, forgive me if I can’t help considering most of the discussion about the possibilitiesof this occuring in the near future a bit like a contemporary revamp of ‘innocents abroad’. At the end of the day all these endless ‘corruption indexes’ that you see published from time to time in the press do actually mean something. Having lived in a society that was relatively less corrupt (the UK) and one that is relatively more (Spain), I do get to note some important differences. One of these relates to the social standing of politicians.

Now many may feel that in the UK, the US, France, Sweden etc, politicians don’t have the highest of reputations. This is undoubtedly true: but if you come to Spain, Italy or Greece, you will find that things get markedly worse. There is an interesting piece on the ChinaBiz website about Guanxi, or informal trust, in China, and the role it plays in the context of an institutional structure that few have confidence in. The more corrupt the society the less important is the official framework for information transit, and the more important are the informal ones. Crooked Timber blogger Henry Farrell has some interesting material which relates to the role of informal trust in the packaging machinery and textile manufacturing industries in Northern Italy, where, as is probably well known, outsourcing into small efficient units has been both speedy and effective. The curious detail is that Italy is the European society that regularly gets the lowest score when it comes to general confidence in the public administration. The interpretation that has normally been put on this is that such micro-social informal networks normally blossom in precisely these circumstances. This I can also confirm from my work with Bulgarians. So when you get down to Iraq, you can imagine: how little credence is given to secular politicians (this may indeed provide some of the explanation for the robustness of the religious networks) and how important the alternative apparatus is. Any realistic strategy would need to start from this reality. When you think about it the German post WWII example which is so often cited in connection with reconstruction may well be badly flawed. It may have been something about the very nature of German civil society that made this type of transition possible. If we do a compare and contrast exercise with Japan, the point should be obvious. I don’t know yet just exactly where this argument is leading me, but the short term conclusion isn’t exactly an optimistic one. Unfortunately the dynamic impetus provided by Guanxi in China, and the presence a thoroughly undemocratic institutional structure, only serve to reinforce the point.

US authorities in Iraq have put on hold hundreds of millions of dollars worth of mobile telephone contracts, while they investigate allegations that the bidding process was hijacked by associates of the new Iraqi governing council.

When the Iraqi Ministry of Communications last month awarded three Middle Eastern consortia two-year licences to build and operate wireless phone networks, the deals were heralded as a breakthrough for regional operators willing to invest in the new Iraq.

But the US-led Coalition Provisional Authority in Iraq has been advised to postpone signing the contracts, according to a US administration official speaking on condition of anonymity. CPA lawyers in Iraq made the recommendation to delay signing the contracts for 10 days to allow time to investigate claims of cronyism by the Iraqi authorities in awarding the licences, the official said.
Source: Financial Times

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About Edward Hugh

Edward 'the bonobo is a Catalan economist of British extraction. After being born, brought-up and educated in the United Kingdom, Edward subsequently settled in Barcelona where he has now lived for over 15 years. As a consequence Edward considers himself to be "Catalan by adoption". He has also to some extent been "adopted by Catalonia", since throughout the current economic crisis he has been a constant voice on TV, radio and in the press arguing in favor of the need for some kind of internal devaluation if Spain wants to stay inside the Euro. By inclination he is a macro economist, but his obsession with trying to understand the economic impact of demographic changes has often taken him far from home, off and away from the more tranquil and placid pastures of the dismal science, into the bracken and thicket of demography, anthropology, biology, sociology and systems theory. All of which has lead him to ask himself whether Thomas Wolfe was not in fact right when he asserted that the fact of the matter is "you can never go home again".

2 thoughts on “If You’re Surprised By This You Shouldn’t Be

  1. Yeah – hold on.

    This actually is a good piece and it’s an important point about why nation-building can be easy in one place and hard in another. An independent Quebec, Catalonia or Scotland would still be a place with police, courts, civil codes and anti-corruption laws. Nation building there would be a piece of cake. An independent Kurdistan – for example – probably wouldn’t.

    This sort of thinking at once undermines many of the ideas behind national liberation movements and at the same time makes a strong point for European federalism. Why should Scotland want to separate from the UK if there will still be freedom of movement, free trade and a common currency? What point is there to doing it if economic polices are written in Brussels and the final court of appeal is in Strasbourg? Scotland already basically controls its own schools and language policies (and they are really crappy language policies too), and isn’t likely to change its tax structure much even if it is independent. So, why separate and impose the cost of government reorganisation on the people? The same argument applies to Catalonia and Quebec.

    On the other hand, why should Kurdistan be independent if it means replacing short-sighted Turkish and Iraqi autocrats with corrupt Kurdish officials? It is justified when (as has been and may still be true in Kurdistan) the level of oppression targeted at the affected population is so great that their own corrupt leadership is still better than what they’ve got. But, national liberation is hard to justify otherwise.

    At the same time, if France and Germany both have basically functional governments and social structures, comparable standards of living, and similar notions of law, why should there be any sort of barrier between the two countries?

    My second point is that what makes guanxi different from, say, contract law is mostly a matter of cultural anthropology. As Marx said, property is a social relation. So is guanxi. We have built one set of institutions around the set of social relations that our culture recognises. In China, they’ve done the same. Calling one corruption and the other fairness misses some important content. Eliminiating guanxi networks in China probably requires a social revolution as great as 1792, and another century after that to really solify the alternative. It isn’t a short term solution. I’d give Italy another century or two before informal trusts become a thing of the past – after all, it was a fascist state less than 60 years ago. In the meantime, you can still have rising standards of living if you can find competent people who know how to make the system work. Even in places like the US, government at least is still very much based on informal networks that, under other circumstances, would qualify as corrupt. Congress is built on horse-trading, and the last US President to really make a mark as a legislator, Lyndon B. Johnson, was so effective precisely because he knew how to mobilise these networks, and because he had a whole lot of guanxi from his many years in the Senate.

    A final point: The orthodox anthropological interpretation of “magic” – as I understand it anyway – is that it represents a kind of formalised guanxi network in the societies where it operates. This puts the traditional Christian taboo against magic in a different light, and also makes “anti-magic” laws like Swaziland’s relatively comprehensible. Instead of being about competing religous faiths, deals with the devil, or even superstition per se, it is about competing power structures.

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