Congo Copper, the Three Gorges Dam, and America's $6.6 billion Imperial Rounding Error in Iraq

My piece in Asia Times this week is China plays long game on Congo copper.

For students of the IMF vs. Chinese theories of economic development, I think the details of the Chinese struggle to keep this project going in the teeth of Western disapproval strikingly illustrates some conspicuous and interesting differences.

For people who like a good anti-imperialist horse-laugh, there's this excerpt:

United States Secretary of State Hillary Clinton took a swipe at China in a June 11 press conference in Zambia, urging African nations to resist "new colonialism" and for foreign investors to practice "good governance".

    "We saw that during colonial times, it is easy to come in, take out natural resources, pay off leaders and leave," Clinton said in Lusaka, the Zambian capital, before flying off to Tanzania. "And when you leave, you don't leave much behind for the people who are there. We don't want to see a new colonialism in Africa."

    Although she didn't mention China by name, officials traveling with Clinton said she wanted to stress that African countries should hold Chinese investors to the same standards that they apply to Americans and Europeans. Clinton said the United States didn't want any foreign governments or investors to fail in Africa, but wanted to make sure that they give back to local communities. "We want them to do well, but also we want them to do good," she said. [1]

This declaration appeared at the same time that America's most conspicuous post-colonial initiative in Africa - the bombing of Libya - was entering its third month with a cost approaching US$1 billion and no end in sight.

It was the same week that the world got another look at the US exercise of good governance in Iraq, courtesy of the Special Inspector General for Iraq Reconstruction. The George W Bush administration had airlifted $12 billion in cash into post-conquest Iraq. $6.6 billion - more than half - cannot be accounted for. It is now assumed that it was stolen, perhaps "the largest theft of funds in [US] national history".

The LA Times reported:

    U.S. officials often didn't have time or staff to keep strict financial controls. Millions of dollars were stuffed in gunnysacks and hauled on pickups to Iraqi agencies or contractors, officials have testified.

    House Government Reform Committee investigators charged in 2005 that U.S. officials "used virtually no financial controls to account for these enormous cash withdrawals once they arrived in Iraq, and there is evidence of substantial waste, fraud and abuse in the actual spending and disbursement of the Iraqi funds."

    Pentagon officials have contended for the last six years that they could account for the money if given enough time to track down the records. But repeated attempts to find the documentation, or better yet the cash, were fruitless. [2]

In the requisite ironic coda, it turns out that the billions weren't even American taxpayers' money. The US government pulled the cash from the Development Fund for Iraq administered by the Federal Reserve Bank of New York. The fund accumulated the proceeds from Iraq's energy exports during the Saddam Hussein oil-for-food sanctions years for eventual disbursement for the benefit of its true owners: the citizens of Iraq.

Tough luck, Iraqi citizens.

If China decides to take the US fiduciary meltdown in Iraq as precedent for its overseas activities, the bar for "doing good" and "giving back" to the local community is going to be extremely low.

For those keeping score, $6.6 billion is 66 million $100 bills. It is 72 tons of shrink-wrapped cash. It is the payload of three C-130 Hercules transports.

It is also the stated value of the Sino-Congolese infrastructure-for-copper agreement, trumpeted as the "deal of the century".

The much-touted neo-colonialist Chinese penetration of the Democratic Republic of Congo , in other words, is roughly equivalent to an American imperialist rounding error.

My article of the week before, Three gorges dam crisis in slow motion, looks at some of the TGD's highly publicized problems.

The dam is something of an overpriced fiasco.  The reservoir is starting to demonstrate a lot of the unattractive characteristics of a stopped-up toilet.  Billions of dollars will have to be spent in Sichuan dealing with the consequences of the dam: building more dams upstream to trap silt; constructing pollution-treatment facilities; stabilizing the reservoir banks to prevent landslides and dangerous, tsunami-esque wave surges; and maybe finding a new home for the port of Chongqing if China's hydrologists are outmaneuvered by the masses of silt marching upriver to the city's port.

The TGD is also a metaphor for big, bad China.  The PRC forged ahead and built the dam in the teeth of post-Tiananmen criticism of the regime, its leadership style, and its economic policies as symbolized by the TGD. 

So, international critics tend to pile on whenever some problem crops up in the vicinity, even when the link to the dam is tenuous at best.

In my piece, I take issue with accusations that the TGD was cause of the prolonged drought in the Yangtze River basin.  Long story short, holding water behind the dam was probably a factor in the dramatic but temporary drying-up of the shallow floodplain lakes Dongting and Poyang.  However, the dam did not cause the droughts.  More importantly, with an apparent trend toward longer droughts broken by brief, severe rainstorms, the big dams will play a big role in alleviating rather than exacerbating droughts.

As I complained in my piece on the misreporting of the Dalai Lama's statements on the death of Bin Laden , there seems to be a tendency toward laziness blogginess in the major news outlets.  Please, MSM, leave lazy blogginess to lazy bloggers!

...some outlets decided to use the Yangtze basin drought as a news hook for the story. As the Washington Post reported, "Amid severe drought, Chinese government admits mistakes with Three Gorges Dam." [1] CNN pitched in with "Has the Three Gorges Dam created Chinese drought zone?" [2] Associated Press: "China drought renews debate over Three Gorges Dam." [3]

In example of the bloggy "it would be irresponsible not to speculate" writing that news outlets increasingly turn to in order to fill their pages and attract readers, Elaine Kurtenbach of AP reported the allegation that "many villagers and some scientists suspect the dam ... could also be altering weather patterns, contributing to the lowest rainfall some areas have seen in a half century or more."

A modicum of research - ie recollecting that the Yangtze experienced one of the biggest floods in its history in the not-too-distant past, that is to say 10 months ago - casts doubt on this particular exercise in empirical inquiry.

The Yangtze River basin historically has a surplus of water, not a dearth, and this situation is likely to persist. Research on the effects of climate change on the Yangtze River basin predicts that global warming - not the TGD - will bring more rainfall in brief, more intense episodes from the summer monsoon. It was therefore undoubtedly a matter of considerable but not unexpected relief to the government as Xinhua reported that the drought broke under torrential rains - as much as 10 inches in some localities.