Author: Amy Chua
Published: William Heinemann, London
Globalisation can be about the technological revolution exemplified by the Internet and satellite TV – the interconnectedness of the world through new systems of communication. Others would highlight its economic dimension – a global capitalism that allows the switching of capital and labour from one country to another. The intertwining of technology and free market economics has had a multiplier effect: global communication systems enable an unprecedented volume of international monetary transactions and the ability to reconfigure the supply chain, switching jobs from one country to another with relative ease.
Efficient markets and communications are not in themselves objectionable. The problem with contemporary globalisation are the inequities and disparities coming in its wake, rewarding some countries over others, and nurturing new social injustices within already fragile societies. She observes that “Globalisation generates not only new opportunities and hopes, but also new social desires, stresses, insecurities and frustrations. The spread of global markets in recent decades have been distributed extremely unequally, both across and within countries. Today, the richest 1 percent of the world’s population own as much as the poorest 57%. Half of the world’s population live on less than 2 dollars a day; more than a billion people live on less than one dollar a day. Meanwhile, the top 20 percent of those living in high-income countries account for 86 percent of all of the world’s private consumption expenditures”.
Jonathan Sacks has remarked how “the average supermarket in the West sets before consumers a range of choices that, a century ago, would have been beyond the reach of kings”. Amy Chua’s contribution to the debate is to highlight the impact outside the West: how “the global spread of markets and democracy is a principal, aggravating cause of group hatred and ethnic violence throughout the non-Western world”. Her thesis is that globalisation in the form of public sector privatisation and cosmetic democratisation has served to strengthen the hand of certain ‘market-dominant minorities’, causing social upheaval and ethnic conflagration – hence the title of her book.
She states that it is an economic world order championed by the United States and operationalised through institutions like the World Bank. “Back in the early nineties,” she writes, “I believed that the proceeds of privatization, as a World Bank official put it, would go to roads, ‘potable water, sewerage, hospitals, and education to the poor.’ Like many in the 1990s, however, I was viewing emerging market privatization through a rose-colored lens.” Later, she adds, “Even assuming that free market democracy is the optimal end point for most non-Western countries, in the short run markets and democracy are themselves part of the problem.”
In support of her theses Amy Chua examines the dominance of Chinese businesses in Southeast Asia – she herself is a Chinese-Filipino – the Lebanese in West Africa, the white elite in Brazil, and in particular detail, the rise of the ‘oligarchs’ in post-communist Russia. The latter has the subtitle ‘The Jewish Billionaires of Post-Communist Russia’ because, she notes, “six out of seven of Russia’s wealthiest tycoons are Jewish”.
The author is herself a Yale professor and her husband is Jewish, so her account is unlikely to be tainted by anti-semitism: “The six Jewish businessmen most frequently called oligarchs are Roman Abramovich, Pyotr Aven, Boris Berezkovy, Mikhail Friedman, Vladimir Gusinksy and Mikhail Khodorkovsky. Together, these men came over the course of the 1990s to wield mind-boggling political and economic influence. The height of their oligarchic influence was reached in 1996, when the Yeltsin government hung on the verge of political and financial collapse. Among other problems, Yeltsin had suffered a heart attack; his approval ratings hovered between 5 and 8 percent; the Russian treasury was strapped for cash; and in the parliamentary elections the Communists and Vladimir Zhirinovsky’s extreme nationalists had captured two-thirds of the seats of the lower house, paralyzing the government. Already wealthy by that time, the oligarchs collectively put forth the so-called ‘loans-for-shares’ deal – now notorious, but at the time grudgingly endorsed by Western advisors and Russian economists as well as England’s ‘The Economist’. Essentially, the oligarchs offered loans and political support to the government in exchange for majority shares – at a fraction of their potential market value – in the behemoths of the Russian economy, a half dozen massive enterprises breathtakingly rich in nickel, gold and oil deposits….with Yeltsin’s victory, the loans-for-shares deal was finalized, catapulting the oligarchs fro a small group of millionaires to a small group of billionaires. A few years later the oligarchs ‘guaranteed’ that Vladimir Putin, like Yelstsin before him, would get elected in Russias’s 2000 presidential election”. Amy Chua traces the careers of the oligarchs from their early days, demonstrating how their own acumen – and shady deals – led to quick success. Short cuts were made on the way – as one said, “we all have done things that we would not like to tell our children”. Khodorkovsky’s story is particularly interesting, not least because of the murky events surrounding Russia’s biggest oil company, Yukos, and the coverage received in the UK press. In June 2005, the oligarch was jailed for nine years for tax evasion and fraud. The Private Eye has reported that the Yukos tax debts of up to $25bn: “Khodorkovsky and his friends manipulated the theft of Yukos from the Russian taxpayer for just $300m in the mid-90s under the Yeltsin-approved loans-for-share scam. Within a few years Yukos, almost half-owned by Khodorkovsky and friends, was worth $30bn. Khodorkovsky stole Yukos from the state, now the state is stealing it back. It may not be capitalism – but for Russians it might just be justice”. The murky tale includes the death of a British lawyer who was Khodorkovsky’s ‘keeper of secrets’, Stephen Curtis, in a helicopter crash in April 2004. Amy Chua notes that “after his Menetap Bank collapsed in 1998, Khodorkovsky transferred its good assets to a different entity, leaving its creditors empty-handed. A court-appointed manager was unable to trace the transactions, as a truck carrying most of Menatep Bank’s records mysteriously drove off a bridge into the Dybna River. At Khodorkovsky’s sentencing the Russian deputy prosecutor noted that some Yukon executives even had “blood” on their hands. A Moscow court has issued an arrest warrant for Leonid Nevzlin, a key shareholder in Yukos, who has fled to Israel.