The Dictator's Handbook (27 page)

The prevalence of master thieves among world leaders is striking. Some succeed on a relatively small scale like Alberto Fujimori, Peru's president from 1990–2000 (including a so-called self-coup in 1992, in which he suspended his own Congress and constitution). He probably didn't take more than a few hundred million. And with Peru's return to democracy, Fujimori, who went into self-imposed exile, found himself extradited, returned to Peru, put on trial, and convicted of murder, human rights violations, bribery, and a host of other crimes for which he was imprisoned. He just did what any small-coalition leader does, but he had the misfortune of being removed following popular discontent with his corruption and being replaced by a large-coalition regime.

Others do considerably better considering the meager means of their society. Serbia's Slobodan Milosevic, for instance, is believed to have accumulated $1 billion in a country where per capita income fell by 50 percent during his rule. He followed key political principles: his
coalition was small; he taxed heavily, allowing him to make a fortune on the backs of the poor Serbs; and he made sure to keep the people downtrodden. Reliable reports indicate that he precipitated food shortages and massive unemployment for Serbs who opposed him, leaving millions in desperate circumstances while enriching 10,000 influential supporters.

Moving up the ladder of success when it comes to treating the national treasury as one's personal account, we come to Iraq's Saddam Hussein. He built billion-dollar palaces for himself while his country's infants died of easily treated diseases. Other notable national thieves distinguished by their relative take given the impoverishment of their societies are such figures as Uganda's Idi Amin, Haiti's Papa Doc Duvalier, and then his son, Baby Doc Duvalier, and the list goes on. They all typify the rule of successful autocrats—they know how to build, manage, and finance tight coalitions while enriching themselves. But they are all—except for Mobutu—little leaguers when compared to the champion
haul
of famers.

When it comes to the crème de la crème of kleptocrats, some of the greats include Indonesia's Suharto (president from 1967 to 1997), Zaire's Mobutu (president from 1965 to 1997), the Philippines Ferdinand Marcos (ruled from 1965 to 1986), and perhaps the current incumbent front-runner, Sudan's Omar al-Bashir. He came to power in 1993 and still is in office as of this writing, despite indictment by the International Criminal Court for human rights violations, war crimes, and genocide.

Mr. Suharto, referred to by
The Economist
magazine as the king of kleptocrats, is alleged by Transparency International to have stolen up to $35 billion from his country.
¹⁸
His late wife, Madame Tien, was often known as “Madame Tien percent.” Of course we cannot know what the true amount captured by his family was but we do know that he depended on a small coalition, he had lots of discretionary power, he survived in office for more than thirty years, and he lived out his life as a free man in Indonesia (he died in 2008). Apparently he was considered too ill to prosecute.

Like Suharto, Zaire's Mobutu lasted in power for more than thirty years, ousted only once he was known to be suffering from terminal
cancer. Mobutu stole billions and lived the high life, whereas Suharto lived more modestly considering his alleged means. Mobutu owned villas in the Swiss Alps, Portugal, the French Riviera, and numerous residences in Brussels. In addition he had a presidential palace in just about every major town in Zaire, including a palace in his home town of Gbadolite. With a population of about 114,000, one would not have thought the town needed an airport that could handle the supersonic Concorde, but then one of the 114,000 sometimes residents was Mobutu. He apparently rented the Concorde from Air France for his personal use and, needing a proper airfield for it to land and take off, he built one for himself.

Ferdinand Marcos, like Suharto, seemingly ran a successful economy. The growth rate during many of Marcos's years was quite good, but then the Philippine population was growing faster than the economy. Whereas Suharto had been successful at controlling population growth, Marcos did not do so well. But he certainly did well through his so-called crony-capitalism system in enriching his coalition and himself. Transparency International estimated that Marcos looted billions from his country. His wife, Imelda, notorious for her enormous shoe collection, was brought up on charges related to the family's theft of Philippine wealth and the government succeeded in recovering $684 million, a relatively small portion of the total allegedly taken by Marcos and his family. Despite their alleged thievery, the Marcos family, remarkably, is making a political comeback in the Philippines. It seems money really makes the world—of politics—go round!

Omar al-Bashir, Sudan's president, stands accused of having taken $9 billion, so far, from his country. This was one of the revelations that came to light when Wikileaks released US diplomatic cables in late 2010. The claim, made by Luis Moreno Ocampo, chief prosecutor for the International Criminal Court, includes the allegation that Bashir's money is held by Lloyd's of London. They deny it, and, of course, so does Bashir. Indeed, the
Guardian
newspaper reports that Khalid al-Mubarak, government spokesperson at the Sudanese embassy in London, said, “To claim that the president can control the treasury and take money to put into his own accounts is ludicrous—it is a laughable claim by the ICC prosecutor.”

Our way of thinking tells us that it is not only not ludicrous, it is the way small-coalition petty dictators choose to govern, and it works for them. What would be ludicrous from a political survival perspective is if Bashir does not “control the treasury and take money to put into his own accounts.” Bashir has been in office for seventeen years so far, and despite his external legal problems he continues to hold on to power and the country's not inconsiderable purse.

Discretion means leaders have choices. So far we have looked at leaders who use their discretion to enrich themselves but we do not mean to suggest that people in power
must
be greedy louts like Marcos, Mobutu, Suharto, and Bashir. It is entirely possible for autocrats to be civic-minded, well-intentioned people, eager to do what's best for the people they govern. The trouble with reliance on such well-intentioned people is that they are unconstrained by the accountability of a large coalition. It is hard for a leader to know what the people really want unless they have been chosen through the ballot box, and allow a free media and freely assembled groups to articulate their wishes. Without the accountability of free and fair elections, a free press, free speech, and freedom of assembly, even well-intentioned small-coalition rulers can only do whatever they and their coalition advisers think is best.

We close by reflecting on exemplars among well-intentioned leaders of what we call the hall of shame and the hall of fame—that is, those who wanted to do well and didn't, and those who wanted to do well and did. The Soviet Union's Nikita Khrushchev well illustrates a member of the hall of shame.

Khrushchev visited the United States in 1959 and announced a new agricultural policy. He asserted that the USSR would overtake the United States in the production of meat, milk, and butter. He neither knew much about agriculture nor was he directly accountable to the people who did and who would be burdened with trying to achieve his goals. There is no reason to believe that Khrushchev hoped to gain personally from his ill-conceived agricultural policies. Indeed, there is no evidence that he socked away public money for his personal use. Rather, he seems genuinely to have wanted to improve the lot of the Soviet people.

Good intentions notwithstanding, his agricultural program and its implementation were a disaster. Local officials, wishing to please Khrushchev and sensitive to the potential political consequences of failing to meet his expectations, committed to fulfilling his demand for increased production. Their pledges to meet his goals, of course, could not be met with the primitive farming technology available in the Soviet Union. The upshot of Khrushchev's civic-minded ideas was that farmers had to slaughter even their breeding cattle to meet the meat quotas to which they were committed. They even went as far as to buy meat from state stores, pretending later that they had produced it when they sold it back to the government. This created both a false sense of improved production and subsequent increases in prices as the slaughter of the breeding herds reduced the size of future herds.

A few short years into his program, food prices skyrocketed, leading to mass movements against the government. Official Soviet reports indicate that 22 people were killed, 87 wounded, 116 demonstrators were convicted, and 7 were executed in response to the people taking to the streets.
¹⁹
Two years later, with the Soviet economy in shambles, rife with food shortages, and with the nation humiliated in the Cuban Missile Crisis, Khrushchev was overthrown in a peaceful coup. A bit more than twenty years later, Mikhail Gorbachev followed in Khrushchev's footsteps, introducing economic reforms to mobilize the economy. His programs also failed to have the effect he desired, but in his case they not only led to his ouster but also to the end of the Soviet Union.

Mao Zedong and Deng Xiaoping in China mirrored Khrushchev and Gorbachev, but with an important difference. All of these leaders seem to have been initially motivated by the sincere desire to improve their economy. All seemed to have recognized that failing to get their economy moving could pose a threat to their hold on power. But unlike Mao, Mikhail, and Nikita, Deng belongs squarely in the hall of fame. Like them, he was not accountable to the people and, like them, he was not hesitant to put down mass movements against his rule. The horrors of Tiananmen Square should not be forgotten. But
unlike
his fellow dictators, he actually had good ideas about how to improve economic performance.

Deng and Singapore's Lee Kwan Yew are surely among the contemporary world's two greatest icons of the authoritarian's hall of fame. They did not sock fortunes away in secret bank accounts (to the best of our knowledge). They did not live the lavish lifestyles of Mobutu Sese Seko or Saddam Hussein. They used their discretionary power over revenue to institute successful, market-oriented economic reforms that made Singaporeans among the world's wealthiest people and lifted millions of Chinese out of abject poverty. Nothing about their actions contradicts the rules of successful, long-lasting governance. They were brutal when that served their interest in staying in power, Deng with murderous violence and Lee Kwan Yew through the power of the courts to drive his opponents into bankruptcy. Lee's approach was vastly more civilized than Deng's, but nevertheless it was the arbitrary and tough use of power dictated by the logic of political survival. And that, in the end, is what politics is all about.

Most people think that reducing corruption is a desirable goal. One common approach is to pass additional legislation and increase sentences for corruption. Unfortunately such approaches are counterproductive. When a system is structured around corruption, everyone who matters, leaders and backers alike, are tarred by that corruption. They would not be where they were if they had not had their hand in the till at some point. Increasing sentences simply provides leaders with an additional tool with which to enforce discipline. It is all too common for reformers and whistle-blowers to be prosecuted for one reason or another. It is rumored that Yasser Arafat kept a record of all the corrupt activities of the cabinet members in his government in the Palestinian Authority. Increasing the punishment for corruption only increases the leverage people like Arafat and others have over their cronies. Arafat effectively induced loyalty to him both by allowing and monitoring crony-corruption within his inner circle. And, while claiming that the Palestinian Authority was bankrupt, he allegedly personally socked away a vast fortune, between $4.2 billion and $6.5 billion, according to Al-Jazeera.

Legal approaches to eliminating corruption won't ever work, and can often make the situation worse. The best way to deal with corruption is to change the underlying incentives. As coalition size increases, corruption becomes a thing of the past. As we proposed for the IOC and FIFA, increasing the number of members responsible for choosing the site of the games could end graft. The same logic prevails in all organizations. If politicians want to end massive bonuses for bankers then they need to pass legislation that fosters the restructuring of corporate government, so that chief executive officers and board chairs really depend on the will of their millions of shareholders (and not on a handful of government regulators). As long as corporate bosses are beholden to relatively few people they will provide those few key supporters with fat bonuses. Big bonuses might not be popular with the public or even with their many shareholders, but the public and unorganized shareholders can't simply depose them. Insiders at the bank can. Legislating limits on compensation will simply force CEOs to resort to convoluted and quasi legal means. Such measures cannot improve corporate transparency or make balance sheets easier to understand.