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The Cost of Corruption

Thursday, January 3, 2008

It is visible today in Thailand and Kenya, writes ROGER BATE.

1-3-08-Thai electionsAs the world comes to grips with the assassination of Benazir Bhutto, two significant elections, corrupt in different ways, have largely been ignored by the American media.

The first, and far more tragic, was the fraudulent election win of incumbent Mwai Kibaki in Kenya. The opposition believes—probably correctly—that it has been robbed of a victory, and tribal factions are threatening to throw the country into chaos. According to journalists on the ground, there is even the possibility of tribal civil war. The post-ballot death toll is now over 300 and rising. 

The other election was in Thailand, where, 15 months after a military coup, the opposition party surprisingly won the most seats in parliament. The coup was supposed to have been welcomed by the Thai people because it rid the country of their corrupt prime minister, Thaksin Shinawatra. Yet the coup leaders and their interim government soon became so unpopular that they lost the election—to Thaksin’s party, no less, which has been renamed the People’s Power Party (PPP). Thaksin himself remains in exile in Great Britain. He has somehow managed to accumulate a fortune that exceeds $2 billion, and is almost certainly guilty of corrupt acts; yet apparently Thai voters considered his party preferable to the current regime. 

It is uncertain whether a new PPP-led government can be formed, since the party does not control an outright majority of parliamentary seats. It is trying to form a coalition with various smaller parties; but even if the PPP maintains short-run agreements with its two potential partners, the durability of such a coalition would be uncertain. 

But in the event that the PPP can forge and manage a lasting coalition, it would almost certainly be good news for the United States and the pharmaceutical industry. Sources in Bangkok tell me that a PPP-led government is far more likely to welcome a stronger working relationship with Western businesses. When it comes to Asia’s ongoing patent wars, in which Western patents are being overthrown by populist regimes, a PPP-led regime would probably negotiate drug prices with Western companies rather than simply abrogate patents (as the incumbent government has done). 

In Kenya, the Kibaki government was elected to root out corruption, but threw out its anti-graft czar, John Githongo. Githongo says the government has never taken corruption seriously at the highest levels.

According to several recent newspaper articles, the Thai people, who have long been persuaded that their healthcare system is among the world’s best and that patent-breaking is justified, are coming to realize that their country ranks below many sub-Saharan African nations in terms of per capita health spending and access to doctors. Hopefully the next government, whatever its makeup, will honor patents and pay more attention to Thailand’s real health woes. 

In Kenya, the concerns are more immediate. The Luo tribe—which forms the backbone of the political opposition—and the Kikuyu—the largest Kenyan tribe and a bulwark of the incumbent party—are waging ethnic violence that is disturbingly reminiscent of Rwanda. A friend of mine trying to get home to his village outside Nairobi told me he had now witnessed “ethnic cleansing” first hand. The BBC reports that a church filled with at least 30 Kikuyu was burned to the ground, and estimates that at least 200 Kenyans have died so far in the fighting. The Wall Street Journal puts the death toll at over 300. 

Although the Kibaki government was elected in 2002 to root out corruption, it threw out its anti-graft czar, John Githongo, three years ago. Githongo told me that the government has never taken corruption seriously at the highest levels: indeed, senior politicians have been implicated in crooked deals worth hundreds of millions of dollars. Githongo now lives in exile in Britain, and his life would be at risk if he returned home. Thanks to Kibaki’s corrupt government machine, which undoubtedly wants to hold power in order to extract more money, Kenya has plunged into the worst spate of violence it has seen in 20 years. 

The bloodshed has implications beyond Kenya’s borders. With so many dysfunctional or dangerous neighbors—notably the Democratic Republic of the Congo, Sudan, and Somalia—Kenyan stability is vital for the region. Perhaps it was to ensure stability that the U.S. government initially accepted the election result. As the violence increased, Washington backtracked from that position; but in general the European Union has been louder and more consistent in denouncing the obvious fraud. One EU observer reportedly claimed that 25,000 votes in favor of the incumbent government were added at the last minute in one constituency alone. 

Thailand’s corruption is worrying. It caused the fall of one government and may have toppled another. Over the long term, it will impede economic growth and prolong the patent wars, leading to the deaths of hundreds of Thais from poor quality drugs and dodgy healthcare. But the corruption in Kenya could lead to an actual war; it already has triggered horrific bloodletting. The next time someone tells you that corruption is an acceptable price to pay for “progress,” remind him of Kenya and Thailand. And when donors, especially the World Bank, ignore corruption and prop up corrupt leaders, such as Kibaki, they deserve a slice of the blame for the ugly result. 

Roger Bate is a resident fellow at the American Enterprise Institute.

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