“A Libyan rebel fighter smokes a cigarette next to an improvised multiple rocket launcher in the back of a pickup truck, as the rebels prepare to make an advance, in the desert on the outskirts of Ajdabiya, on April 14.” (AP Photo/Ben Curtis)”

Libyan Rebel Council Forms Central Bank to Replace Qaddafi’s
by Bill Varner  /  Mar 22, 2011

Libyan rebels in Benghazi said they have created a new national oil company to replace the corporation controlled by leader Muammar Qaddafi whose assets were frozen by the United Nations Security Council. The Transitional National Council released a statement announcing the decision made at a March 19 meeting to establish the “Libyan Oil Company as supervisory authority on oil production and policies in the country, based temporarily in Benghazi, and the appointment of an interim director general” of the company.

The Council also said it “designated the Central Bank of Benghazi as a monetary authority competent in monetary policies in Libya and the appointment of a governor to the Central Bank of Libya, with a temporary headquarters in Benghazi.” The Security Council adopted a resolution on March 17 that froze the foreign assets of the Libyan National Oil Corp. and the Central Bank of Libya, both described in the text as “a potential source of funding” for Qaddafi’s regime.

Libya holds Africa’s largest oil reserve. Output has fallen to fewer than 400,000 barrels a day, Shokri Ghanem, chairman of the National Oil Corp., said on March 19. The country produced 1.59 million barrels a day in January, according to estimates compiled by Bloomberg. Exports may be halted for “many months” because of sanctions and unrest, the International Energy Agency said. Brent crude for May settlement on the London-based ICE Futures Europe exchange fell 0.3 percent to $114.62 as of 8:50 a.m. It surged to a 2 1/2-year high of $119.79 on Feb 24 as geopolitical tensions spread throughout the Middle East and North Africa. The European benchmark will average $109 a barrel this year, up from a previous forecast of $98, on expectations of an “extended shutdown” of Libyan oil supplies, Societe Generale SA said in a monthly review dated yesterday.

The statement by the Transitional National Council also said the rebels would “urgently prepare a file on the referral of Qaddafi and his gang and his associates involved in the killing of Libyans to the International Criminal Court.” The Security Council referred allegations of human rights violations by the Qaddafi regime to the court in a resolution adopted on Feb. 26. The statement said the council would begin choosing ambassadors to foreign countries. The UN said yesterday that Deputy Ambassador Ibrahim Dabbashi, who broke with the regime last month and said he was then representing the rebels, was no longer Libya’s accredited ambassador. Ambassador Mohammed Shalgham, who also broke with the regime, similarly lost his accreditation when Qaddafi appointed former UN General Assembly President Abdussalam Treki as envoy to the world body. Treki hasn’t presented his credentials yet to Secretary- General Ban Ki-moon, a prerequisite for officials taking the post.

“A convoy of Libyan rebels deploy around the western gate of Ajdabiya on April 19.” (AP Photo/Nasser Nasser)


the Interim Transitional National Council

“Meeting Outcomes of the Interim National Council held on 19 March 2011 BENGHAZI, LIBYA – The Interim National Council met on Saturday, 19 March 2011, and discussed a number of important national issues on the current circumstances of the country and the importance of taking necessary actions. The outcome of the meeting is summarized as follows:

First: The Council discussed all the developments on the ground, including the crimes committed by the Qadhafi regime against the Libyan people the Libyan people as well as the report submitted on the implementation of Security Council Resolutions 1970 and 1973 decided accordingly the following:

1-      To welcome the mentioned resolutions and urge the international community to expedite the initiative to implement the resolutions in order to protect the Libyan people and assist them in achieving the legitimate demand.

2-      To call upon the Libyans throughout the country to be cautions and to continue to demonstrate peacefully in order to achieve their legitimate demands by going out to the streets and peaceful sit-ins, particularly after the international community ensured the protection of Libyan civilians in accordance with Resolution 1973 and demanding the international community to ensure the safety of Libyan civilians.

3-      To urgently prepare a file on the referral of Qadhafi, his gang and his associates involved in killing of Libyans, to the international Criminal Court and entrusting a technical and legal team to complete the procedures.

4-      To intensify contacts with brotherly and friendly countries for the recognition of the Transitional National Council and welcome the positive response of many countries to deal with the Transitional National Council and urge other nations to an early recognition of the Council and urge other nations to an early recognition of the Council as the sole legitimate representative of Libyan People.

5-      To choose a number of ambassadors and representatives of Libya to foreign countries, according to proposal submitted by Foreign Affairs submitted for approval.

Second: The Designation of the Central Bank of Benghazi as a monetary authority competent in monetary policies in Libya and appointment of a Governor to the Central Bank of Libya, with a temporary headquarters in Benghazi.

Third: The establishment of Libyan Oil Company as supervisory Authority on oil production and policies in the country, based temporarily in Benghazi and appointment of an interim Director-General for the Libyan Oil Company.”

“A rebel fighter rests on a weapon mounted on the back of a pickup truck on the front line between them and Muammar el-Qaddafi forces, 30 km south of Misurata, on May 27.” (AP Photo/Rodrigo Abd


As analysts debate possible motives behind President Obama’s United Nations-backed military intervention in Libya, one angle that has received attention in recent days is the rebels’ seemingly odd decision to establish a new central bank to replace dictator Muammar Gadhafi’s state-owned monetary authority — possibly the first time in history that revolutionaries have taken time out from an ongoing life-and-death battle to create such an institution, according to observers. In a statement released last week, the rebels reported on the results of a meeting held on March 19. Among other things, the supposed rag-tag revolutionaries announced the “[d]esignation of the Central Bank of Benghazi as a monetary authority competent in monetary policies in Libya and appointment of a Governor to the Central Bank of Libya, with a temporary headquarters in Benghazi.”

The Gadhafi regime’s central bank — unlike the U.S. Federal Reserve, which is owned by private shareholders — was among the few central banks in the world that was entirely state-owned. At the moment, it is unclear exactly who owns the rebel’s central bank or how it will be governed. The so-called Interim Transitional National Council, the rebels’ self-appointed new government for Libya purporting to be the “sole legitimate representative of Libyan People,” also trumpeted the creation of a new “Libyan Oil Company” based in the rebel stronghold city of Benghazi. The North African nation, of course, has the continent’s largest proven oil reserves. The U.S. government and the U.N. have both recently announced that the rebels would be free to sell oil under their control — if they do it without Gaddafi’s National Oil Corporation. And the first shipments are set to start next week, according to news reports citing a spokesman for the rebels.

But the creation of a new central bank, even more so than the new national oil regime, left analysts scratching their heads. “I have never before heard of a central bank being created in just a matter of weeks out of a popular uprising,” noted Robert Wenzel in an analysis for the Economic Policy Journal. “This suggests we have a bit more than a rag tag bunch of rebels running around and that there are some pretty sophisticated influences.” Wenzel also noted that the uprising looked like a “major oil and money play, with the true disaffected rebels being used as puppets and cover” while the transfer of control over money and oil supplies takes place. And other analysts agreed. A popular blog called The Economic Collapse used sarcasm to express suspicions about the strange rebel announcement. “Perhaps when this conflict is over those rebels can become time management consultants. They sure do get a lot done,” joked the piece, entitled “Wow That Was Fast! Libyan Rebels Have Already Established A New Central Bank Of Libya.” The blog also commented, sarcastically again, on the possibility of outside involvement. “What a skilled bunch of rebels — they can fight a war during the day and draw up a new central bank and a new national oil company at night without any outside help whatsoever. If only the rest of us were so versatile! … Apparently someone felt that it was very important to get pesky matters such as control of the banks and control of the money supply out of the way even before a new government is formed,” read the piece.

Even mainstream news outlets were puzzled. “Is this the first time a revolutionary group has created a central bank while it is still in the midst of fighting the entrenched political power?” wondered CNBC senior editor John Carney. “It certainly seems to indicate how extraordinarily powerful central bankers have become in our era.” But some observers are convinced that the central bank issue was actually the primary motivation for the international war against Libya‘s dictatorship. In an article that has spread far and wide across the web, entitled “Globalists Target 100% State Owned Central Bank of Libya,” author Eric Encina maintains that the world’s “globalist financiers and market manipulators” could not stand the Libyan monetary authority’s independence, explaining:

Currently, the Libyan government creates its own money, the Libyan Dinar, through the facilities of its own central bank. One major problem for globalist banking cartels is that in order to do business with Libya, they must go through the Libyan Central Bank and its national currency, a place where they have absolutely zero dominion or power-broking ability. Hence, taking down the Central Bank of Libya (CBL) may not appear in the speeches of Obama, Cameron and Sarkozy but this is certainly at the top of the globalist agenda for absorbing Libya into its hive of compliant nations. And when Gadhafi is gone and the dust has settled, according to Encina, “you will see the Allied reformers move in to reform Libya’s monetary system, pumping it full of worthless dollars, priming it for a series of chaotic inflationary cycles.” The future of Libya’s vast gold stockpiles could also be in jeopardy, he noted.

Numerous other analysts and experts have also pointed to the central banking issue as one of the top factors leading up to the Western backing of Libyan rebels. Monetary historian Andrew Gause, for example, recently shared his concerns about the matter publicly. Other points made in the rebels’ odd announcement last week included preparations to send Gadhafi to the U.N.’s International Criminal Court for trial, the selection of diplomats to send abroad, and the desire for other governments to recognize the Transitional National Council as the legitimate new rulers of Libya. France has already done so, and other governments may soon follow suit.

Of course, the U.S. government claims to have very little knowledge about who the rebels actually are. But the U.S. Commander of NATO forces recently admitted to the Senate that hints of al Qaeda involvement have been detected among the rebels. The terror group was created, armed, funded, and trained by the U.S. government decades ago, as Secretary of State Hillary Clinton admitted even recently. But since then, it has targeted American embassies and other U.S. targets. As The New American reported over the weekend, elements of al Qaeda and affiliated terror groups are indeed among the leadership of the revolution. But despite that fact, the U.S. government and the international coalition are providing air support and weapons for the new central-bank-creating rebels. Where the conflict goes from here is uncertain, but Western regimes have vowed not to let Gaddafi remain in power.

“A rebel poses with an armful of rocket-propelled grenades taken from an armored personnel carrier captured from forces loyal to Libyan leader Muammar el-Qaddafi on the outskirts of the town of Zliten, west of the rebel-held port city of Misurata, on June 10.” (Reuters/Abdelkader Belhessin)


July 16 (Bloomberg) — Muammer Qaddafi has at least $100 billion of assets abroad and Libya’s Transitional National Council expects a portion of the frozen funds to be released or to obtain borrowing against them. “To be safe we’re saying there’s over $100 billion,” spokesman Mahmoud Shammam said today by telephone from Istanbul, where the U.S. and its allies recognized the council as the sole legitimate governing authority in Libya at a meeting yesterday. “We need some necessity expenses and to get loans against a percentage.” The council requires $3 billion over six months to cover the budget and expects to get a $100 million loan from Turkey in the next three days, Shammam said. Kuwait has pledged $180 million, while Italy and other governments said yesterday that Libyan assets held by their countries “will be released or we’ll get loans against them,” he said. The TNC is saying the unfrozen funds won’t be spent, rather used as collateral to cover borrowing until an elected government is in place, Shammam said.

Seeking to free funds, U.S. recognizes Libya rebels
by Andrew Quinn / Jul 15, 2011

(Reuters) – The United States Friday recognized Libya’s rebel National Transitional Council (TNC) as a legitimate government, a diplomatic boost which could unlock billions of dollars in frozen assets. U.S. Secretary of State Hillary Clinton said Washington would extend formal recognition to the Benghazi-based TNC until a fully representational interim government can be established. “The TNC has offered important assurances today, including the promise to pursue a process of democratic reform that is inclusive both geographically and politically,” Clinton said in prepared remarks. “Until an interim authority is in place, the United States will recognize the TNC as the legitimate governing authority for Libya, and we will deal with it on that basis.”

Clinton’s announcement came as the Libya Contact Group, meeting in Istanbul, formally recognized the opposition as the representative of the Libyan people — sealing its diplomatic status as the successor government to embattled leader Muammar Gaddafi. The contact group, made up of more than 30 governments and international and regional organizations, also authorized U.N. special envoy Abdul Elah Al-Khatib to present terms for Gaddafi to leave power in a political package that will include a ceasefire to halt fighting in the civil war. Clinton said any deal “must involve Gaddafi’s departure” from power and a halt to violence. “Increasingly the people of Libya are looking past Gaddafi. They know, as we all know, that it is no longer a question of whether Gaddafi will leave power, but when,” she said. U.S. officials said the decision on formal diplomatic recognition marked an important step toward unblocking more than $34 billion in Libyan assets in the United States but cautioned it could still take time to get funds flowing to the cash-strapped Benghazi council. “We expect this step on recognition will enable the TNC to access additional sources of funding,” Clinton told reporters after the meeting, saying Washington would discuss with allies “the most effective and appropriate method” to do this. They also said no decisions had been made on upgrading U.S. representation in Benghazi — now a small office headed by special envoy Chris Stevens — or on bringing the TNC into the United Nations and other international organizations. Clinton acknowledged that the United States had “taken its time” in deciding on formal recognition of the TNC, but now firmly believed this was the way forward. “We think they are have made great strides and are on the right path,” she said.

U.S. President Barack Obama signed an executive order on February 25 freezing the assets of Gaddafi, his family and top officials, as well as the Libyan government, the country’s central bank and sovereign wealth funds. Most of the frozen assets are liquid in the form of cash and securities. U.S. officials have pledged to free up some of the money for the TNC, which has run dangerously short of cash to pay for salaries and basic services even as it takes on more of the responsibilities of government. But discussions with Congress on mechanisms to free up the money ran into legal complications — some of which could be swept away by U.S. recognition of the TNC as Libya’s legitimate government. “Our hope is that in a relatively short time frame we will be able to make progress (on funds) but there’s a lot of moving pieces here,” one senior State Department official said. The United States could direct banks to transfer frozen funds directly to the TNC, but this might still run foul of U.N. financial sanctions in place on Libya. A second option would be for the United States to establish a line of credit backed by the frozen assets as several other countries have done.

Clinton’s announcement formally recognizing the TNC marked the end of a process which began in February when Obama declared that Gaddafi had lost his legitimacy as Libya’s leader because of his brutal response to anti-government protesters. “We wanted to send a very clear signal to Gaddafi and the people around him that we are looking past Gaddafi to a future without him,” the senior U.S. official said. “We felt that taking this step today sends that message loud and clear.” The United States closed its embassy in Tripoli in February and withdrew its diplomatic staff, but maintains embassy staff working in Washington to develop ties with the TNC. The United States and Gaddafi’s government have been estranged for most of the past four decades, and only resumed contacts in 2003 when Tripoli gave up its pursuit of weapons of mass destruction and took responsibility for its role in the 1988 bombing of Pan Am flight 103 over Lockerbie, Scotland.

Central Bank of Libya offices in Tripoli

“The Central Bank of Libya (CBL) is 100% state ownership and represents the monetary authority in The Great Socialist People’s Libyan Arab Jamahiriya and enjoys the status of autonomous corporate body.”

May 17 2011 : “Farhat Bengdara was, until he defected, at the heart of the Libyan regime as central bank governor. As rebels began the uprising against Muammer Gaddafi, Bengdara flew to Turkey and began to help the other side. In this revealing interview with the FT’s Middle East editor Roula Khalaf, he describes where Libya’s gold is kept, how Gaddafi may have foreign reserve cash hidden in the desert and the powerful effect of western sanctions.” (video 8m 44sec)

Globalists Target 100% State Owned Central Bank of Libya
by Patrick_Henningsen / Mar 28, 2011

Eric V. Encina writes: One seldom mentioned fact by western politicians and media pundits: the Central Bank of Libya is 100% State Owned. The world’s globalist financiers and market manipulators do not like it and would continue to their on-going effort to dethrone Muammar Muhammad al-Gaddafi, bringing an end to Libya as independent nation. Currently, the Libyan government creates its own money, the Libyan Dinar, through the facilities of its own central bank. Few can argue that Libya is a sovereign nation with its own great resources, able to sustain its own economic destiny. One major problem for globalist banking cartels is that in order to do business with Libya, they must go through the Libyan Central Bank and its national currency, a place where they have absolutely zero dominion or power-broking ability. Hence, taking down the Central Bank of Libya (CBL) may not appear in the speeches of Obama, Cameron and Sarkozy but this is certainly at the top of the globalist agenda for absorbing Libya into its hive of compliant nations. When the smoke eventually clears from all the cruise missiles and cluster bombs, you will see the Allied reformers move in to reform Libya’s monetary system, pumping it full of worthless dollars, priming it for a series of chaotic inflationary cycles.

The CBL is currently a 100% state owned entity and represents the monetary authority in The Great Socialist People’s Libyan Arab Jamahiriya. The financial structure and general operation procedures of a state bank is of course much different than that of an American or European based central bank. Form starters it is not privately owned, for-profit bank with a undisclosed list of private shareholders like the US Federal Reserve and the Bank of England are. Libyan constitutional law establishing the CBL stipulates that its central bank maintains monetary stability in Libya and promotes sustained growth of its national economy. Libya also holds more bullion as a proportion of gross domestic product than any country except Lebanon, according to the London-based World Gold Council using January data from the International Monetary Fund. The value of gold is based on the March 25 close of $1,429.74 an ounce. Will this gold remain in Libya once Allied forces have taken control of Tripoli, or will it lost, or exchanged for pallets upon pallets of paper aka US dollars?


There is no denying at least one very popular achievement of the Libyan government: it brought water to the desert by building the largest and most expensive irrigation project in history, the US$33 billion GMMR (Great Man-Made River) project. Even more than oil, water is crucial to life in Libya.  The GMMR provides 70% of the population with water for drinking and irrigation, pumping it from Libya’s vast underground Nubian Sandstone Aquifer System in the south to populated coastal areas 4,000 kilometers to the north. The Libyan government has done at least some things right.

Another explanation for the assault on Libya is that it is “all about oil”, but that theory too is problematic. As noted in the National Journal, the country produces only about 2% of the world’s oil. Saudi Arabia alone has enough spare capacity to make up for any lost production if Libyan oil were to disappear from the market. And if it’s all about oil, why the rush to set up a new central bank?

Another provocative bit of data circulating on the Net is a 2007 “Democracy Now” interview of US General Wesley Clark (Ret). In it he says that about 10 days after September 11, 2001, he was told by a general that the decision had been made to go to war with Iraq. Clark was surprised and asked why. “I don’t know!” was the response. “I guess they don’t know what else to do!” Later, the same general said they planned to take out seven countries in five years: Iraq, Syria, Lebanon, Libya, Somalia, Sudan, and Iran. What do these seven countries have in common? In the context of banking, one that sticks out is that none of them is listed among the 56 member banks of the Bank for International Settlements (BIS). That evidently puts them outside the long regulatory arm of the central bankers’ central bank in Switzerland.

The most renegade of the lot could be Libya and Iraq, the two that have actually been attacked. Kenneth Schortgen Jr, writing on Examiner.com, noted that “[s]ix months before the US moved into Iraq to take down Saddam Hussein, the oil nation had made the move to accept euros instead of dollars for oil, and this became a threat to the global dominance of the dollar as the reserve currency, and its dominion as the petrodollar.”  According to a Russian article titled “Bombing of Libya – Punishment for Ghaddafi for His Attempt to Refuse US Dollar”, Gaddafi made a similarly bold move: he initiated a movement to refuse the dollar and the euro, and called on Arab and African nations to use a new currency instead, the gold dinar. Gaddafi suggested establishing a united African continent, with its 200 million people using this single currency.

During the past year, the idea was approved by many Arab countries and most African countries. The only opponents were the Republic of South Africa and the head of the League of Arab States. The initiative was viewed negatively by the USA and the European Union, with French President Nicolas Sarkozy calling Libya a threat to the financial security of mankind; but Gaddafi was not swayed and continued his push for the creation of a united Africa.  And that brings us back to the puzzle of the Libyan central bank. In an article posted on the Market Oracle, Eric Encina observed: “One seldom mentioned fact by western politicians and media pundits: the Central Bank of Libya is 100% State Owned … Currently, the Libyan government creates its own money, the Libyan Dinar, through the facilities of its own central bank. Few can argue that Libya is a sovereign nation with its own great resources, able to sustain its own economic destiny. One major problem for globalist banking cartels is that in order to do business with Libya, they must go through the Libyan Central Bank and its national currency, a place where they have absolutely zero dominion or power-broking ability. Hence, taking down the Central Bank of Libya (CBL) may not appear in the speeches of Obama, Cameron and Sarkozy but this is certainly at the top of the globalist agenda for absorbing Libya into its hive of compliant nations.”

Libya not only has oil. According to the International Monetary Fund (IMF), its central bank has nearly 144 tonnes of gold in its vaults. With that sort of asset base, who needs the BIS, the IMF and their rules? All of which prompts a closer look at the BIS rules and their effect on local economies. An article on the BIS website states that central banks in the Central Bank Governance Network are supposed to have as their single or primary objective “to preserve price stability”.

They are to be kept independent from government to make sure that political considerations don’t interfere with this mandate. “Price stability” means maintaining a stable money supply, even if that means burdening the people with heavy foreign debts. Central banks are discouraged from increasing the money supply by printing money and using it for the benefit of the state, either directly or as loans.

In a 2002 article in Asia Times Online titled “The BIS vs national banks” Henry Liu maintained: “BIS regulations serve only the single purpose of strengthening the international private banking system, even at the peril of national economies. The BIS does to national banking systems what the IMF has done to national monetary regimes. National economies under financial globalization no longer serve national interests. FDI [foreign direct investment] denominated in foreign currencies, mostly dollars, has condemned many national economies into unbalanced development toward export, merely to make dollar-denominated interest payments to FDI, with little net benefit to the domestic economies.” He added, “Applying the State Theory of Money, any government can fund with its own currency all its domestic developmental needs to maintain full employment without inflation.” The “state theory of money” refers to money created by governments rather than private banks.

The presumption of the rule against borrowing from the government’s own central bank is that this will be inflationary, while borrowing existing money from foreign banks or the IMF will not. But all banks actually create the money they lend on their books, whether publicly owned or privately owned. Most new money today comes from bank loans. Borrowing it from the government’s own central bank has the advantage that the loan is effectively interest-free. Eliminating interest has been shown to reduce the cost of public projects by an average of 50%.  And that appears to be how the Libyan system works. According to Wikipedia, the functions of the Central Bank of Libya include “issuing and regulating banknotes and coins in Libya” and “managing and issuing all state loans”. Libya’s wholly state-owned bank can and does issue the national currency and lend it for state purposes.  That would explain where Libya gets the money to provide free education and medical care, and to issue each young couple $50,000 in interest-free state loans. It would also explain where the country found the $33 billion to build the Great Man-Made River project. Libyans are worried that North Atlantic Treaty Organization-led air strikes are coming perilously close to this pipeline, threatening another humanitarian disaster.

So is this new war all about oil or all about banking? Maybe both – and water as well. With energy, water, and ample credit to develop the infrastructure to access them, a nation can be free of the grip of foreign creditors. And that may be the real threat of Libya: it could show the world what is possible.  Most countries don’t have oil, but new technologies are being developed that could make non-oil-producing nations energy-independent, particularly if infrastructure costs are halved by borrowing from the nation’s own publicly owned bank. Energy independence would free governments from the web of the international bankers, and of the need to shift production from domestic to foreign markets to service the loans.  If the Gaddafi government goes down, it will be interesting to watch whether the new central bank joins the BIS, whether the nationalized oil industry gets sold off to investors, and whether education and healthcare continue to be free.

{Ellen Brown is an attorney and president of the Public Banking Institute, http://PublicBankingInstitute.org. In Web of Debt, her latest of eleven books, she shows how a private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Her websites are  http://webofdebt.com and http://ellenbrown.com.}



Clooney-backed satellite project to monitor volatile Sudan
by Pete Spotts / December 29, 2010

In what may be the most ambitious project of its kind, the United Nations and human rights advocates in the US are turning to satellite images and the Web to monitor the border between northern and southern Sudan, as the south prepares for a referendum on Jan. 9 that could split the country in two. The concern: If the referendum in southern Sudan supports independence for the oil-rich, largely Christian region, the country once again could dissolve into a brutal civil war. By combining on-the-ground reports with a nearly daily review of commercial-satellite images, the project’s participants say they hope to head off potential large-scale human rights abuses, should a conflict break out. “We want to let potential perpetrators of genocide and other war crimes know that we’re watching,” said actor George Clooney, a co-founder of Not on Our Watch, a human rights group funding the effort, in a statement. “It’s a lot harder to commit mass atrocities in the glare of the media spotlight.”

National intelligence services in the United States and for other major countries are widely acknowledged to have access to more-detailed images than remote-sensing companies can provide. But those images tend to remain classified and out of the public spotlight. The new effort announced Wednesday – the Satellite Sentinel Project – will post its images on a publicly available website, in hopes of mobilizing public opinion in ways that pressure governments to respond to any abuses the effort detects, participants say. The notion of using commercial-satellite images to document destruction of villages, forced migrations, and even inequities in government support for housing across ethnic or religious divides is relatively new. Five years ago, the MacArthur Foundation gave a grant to the American Association for the Advancement of Science to develop ways to help human rights groups monitor conditions in hard-to-access countries and regions. Since then, the science organization has worked on several smaller-scale projects with groups such as Amnesty International (AI), notes Lars Bromley, who spearheaded the effort for the AAAS and now heads similar efforts at the UN’s Operational Satellite Applications Program.

In 2007, the AAAS worked with AI on a project known as Eyes on Darfur, monitoring 12 villages. Over the duration of the project, he says, nine remained untouched, while the other three were affected by violence but not as badly as villages elsewhere. “Whether that was due to our project or not we can’t say,” Mr. Bromley acknowledges. “But it was a positive experience.” Indeed, gauging the effectiveness of a project like this can be difficult, acknowledges David Yanagizawa-Drott, an assistant professor of public policy at Harvard University’s Kennedy School of Government. Dr.Yanagizawa-Drott will be evaluating the Satellite Sentinel program’s results under the aegis of the Harvard Humanitarian Initiative, which also is contributing satellite-analysis expertise to the effort. “To address the big question – whether or not the existence of Satellite Sentinel prevents a genocide – is going to be very hard to show,” he says. Still, there are other tests that can address the project’s effect on public awareness and perhaps on public policy, he adds. One key difference between Satellite Sentinel and past, smaller scale projects is its attempt to prepare in advance and work with nearly “real time” images. Many of the early efforts involved comparing images whose before and after views are separated by a span of several years. With the Satellite Sentinel Project, analysts will have access to fresh images every 24 to 36 hours.

Not On Our Watch is providing $750,000 to get the effort going. Web giant Google and website builder Trellon are providing the Web interface and mapping information. Bromley’s office at the UN and researchers with Harvard’s Humanitarian Initiative will be analyzing the images. Not On Our Watch and a second human rights group, the Enough Project, are serving as clearinghouses for on-the-ground information coming in from Sudan – information that will help in interpreting the images. And the two groups will spearhead efforts to bring information the project garners to public attention. “Deterrence is our objective,” says John Pendergast, co-founder of the Enough Project. “We want to contribute to the prevention of war between North and South Sudan. If war does ignite, we want to hold accountable those responsible, and hopefully deter human rights crimes that would be committed in the context of war.”

by Ariel Zirulnick / January 6, 2011

What is South Sudan’s referendum about?
Sunday’s referendum is a vote on whether to make the semiautonomous region of South Sudan fully independent from the rest of the country. After decades of war between the Arab-dominated government in the north and southern rebels, a 2005 peace deal between laid out a plan for powersharing between the north and the south and also a provision for a significant degree of southern autonomy, culminating in Sunday’s referendum on whether the South wants to officially secede. On Sunday, South Sudanese are expected to vote for their homeland to become the world’s newest country.

Why is there going to be a referendum? Why not stay unified?
Fundamentally, the desire to separate comes from deep religious and ethnic divides between the North and South of Africa’s biggest country. Northern Sudan is mostly Arab and Muslim, while South Sudan is predominantly non-Arab with a mix between Christian and animist faiths. The tensions boiled over into a brutal two-decade civil war that began in the 1980s and officially ended with the Comprehensive Peace Agreement in 2005. There is still great enmity between North and South and distrust over how oil revenues from the oil-rich south are being split.

Who votes in the referendum?
Only South Sudanese who registered during the registration period can vote in the referendum. Most South Sudanese live in the south, but some remain in northern Sudan and many live in other countries as refugees. Registration took place in the following countries: Australia, Canada, Egypt, Ethiopia, Kenya, Uganda, the UK, and the US. South Sudanese living in those countries may also vote. In the US, there are polling places open from Jan. 9-15 in Seattle, Dallas, Chicago, Nashville, and Boston.

Is this likely to end peacefully?
Journalists, politicians, and international observers were making dire predictions for the outcome of the referendum for a long time, but opinions have been increasingly optimistic lately. It seems more likely now that the south will be allowed to secede if it votes in favor of independence (an outcome that is highly likely). However, a vote also slated for Jan. 9 in oil-rich the border region of Abyei on whether it would join North or South Sudan (if South Sudan votes for independence) has been postponed. The region seemed too unstable for such a vote to happen safely and peacefully. Another point of contention is oil. The vast majority of Sudan’s oil resources are located in South Sudan. The oil revenues are supposed to be split 50-50 between the north and the south, but southern Sudanese and transparency watchdog groups have long complained the figures are not transparent and that northern officials may be taking more than its fair share. Oil export has been a boon for northern Sudan, and it is unlikely the government will cede control of South Sudan’s oil resources easily.

How long will it take to know the results?
The referendum will begin on Jan. 9 and voting will remain open until Jan. 15. A preliminary tally at the county level will happen once the polls close on Jan. 15. Those tallies will be sent to the South Sudan Referendum Commission offices in the South Sudanese capital of Juba and the Sudan’s capital, Khartoum. Final preliminary results from South Sudan, northern Sudan, and outside the country are estimated to be ready by Feb. 1. If the final results are not appealed, they are expected to be made official by Feb. 6.

How can we trust the results?
The South Sudan Referendum Commission will be tallying ballots. The SSRC is a body independent of both the South Sudanese or northern Sudanese governments.

Will Using ‘Live’ Satellite Imagery to Prevent War in the Sudan Actually Work?
by Patrick Meier / December 30, 2010

The Satellite Sentinel Project has hired private satellites to monitor troop movements around the oil-rich region of Abyei during the upcoming Sudanese referendum and prevent war. The images and analysis will be made public on the Project’s website. George Clooney, who catalyzed this joint initiative between Google, UNOSAT, the Enough Project, Trellon and my colleagues at the Harvard Humanitarian Initiative (HHI), calls this the anti-genocide paparazzi: “We want them to enjoy the level of celebrity attention that I usually get. If you know your actions are going to be covered, you tend to behave much differently than when you operate in a vacuum.”

The group hopes that they can deter war crimes by observing troop buildups and troop movements in advance. If successful, the project would accomplish an idea first proposed more than half-a-century ago  by US President Dwight Eisenhower during a US-Soviet Summit in Paris at the height of the Cold War. Eisenhower announced his plan to “submit to the United Nations a proposal for the creation of a United Nations aerial surveillance to detect preparations for attack.” Interestingly, Eisenhower had crafted this idea five years earlier as part of his Open Skies Proposal, which actually became a treaty in 2002: “The Treaty establishes a regime of unarmed aerial observation flights over the entire territory of its participants. The Treaty is designed to enhance mutual understanding and confidence by giving all participants, regardless of size, a direct role in gathering information about military forces and activities of concern to them. Open Skies is one of the most wide-ranging international efforts to date to promote openness and transparency of military forces and activities.” If you want to find out more about Eisenhower’s efforts, please see my blog post on the subject here.

So there is some precedence for what Clooney is trying to pull off. But how is the Sentinel project likely to fare as a non-state effort? Looking at other non-state actors who have already operationalized Eisenhower’s ideas may provide some insights. Take Amnesty International’s “Eyes on Darfur” initiative, which “leverages the power of high- resolution satellite imagery to provide unim- peachable evidence of the atrocities being committed in Darfur–enabling action by private citizens, policy makers and international courts.”

According to Amnesty, the project “broke new ground in protecting human rights by allowing people around the world to literally ‘watch over’ and protect twelve intact, but highly vulnerable, villages using commercially available satellite imagery.” The imagery also enabled Amnesty to capture the movement of Janjaweed forces. Amnesty claims that their project has had a deterrence effect. Apparently, the villages monitored by the project have not been attacked while neighboring ones have. That said, at least two of the monitored villages were removed from the site after reported attacks.

Still Amnesty argues that there have been notable changes in decisions made by the Bashir government since “Eyes on Darfur” went live. They also note that the government of Chad cited their as one of the reasons they accepted UN peacekeepers along their border. In my blog post on Eisenhower’s UN surveillance speech I asked whether the UN would ever be allowed to monitor and detect preparations for attack using satellite imagery. I now have my answer given that UNOSAT is involved in the Sentinel Project which plans to “deter the resumption of war between North and South Sudan” by providing an “early warning system to deter mass atrocities by focusing world attention and generating rapid responses on human rights and human security concerns” (Sentinel). But will these efforts really create an effective deterrence-based “Global Panopticon”? French philosopher Michel Foucault has famously written on the role of surveillance as an instrument of power. “He cites the example of Jeremy Bentham’s ‘Panopticon,’ an architectural model for a prison enabling a single guard, located in a central tower, to watch all of the inmates in their cells.  The ‘major effect of the Panopticon,’ writes Foucault, is ‘to induce in the inmate a state of conscious and permanent visibility that assures the automatic functioning of power.’”

According to Foucault, the Panopticon renders power both “visible and unverifiable”: Visible: the inmate will constantly have before his eyes the tall outline of the central tower from which he is being spied upon. Unverifiable: the inmate must never know whether he is being looked at at any one moment; but he must be sure that he may always be so. But potential perpetrators of the violence in the Sudan do not actually see the  outline of the satellites flying overhead. They are not being directly harassed by high-powered “cameras” stuck into their faces by the anti-genocide paparazzi. So the power is not directly visible in the traditional sense. But who exactly is the inmate in or connected to Abyei in the first place? There are multiple groups in the area with different agendas that don’t necessarily tie back to the Sudanese government in Khartoum. The Arab Misseriya tribe has thus far remained north during this dry season to avert confrontation with the Ngok Dinka in the Southern part of Abyei. These nomadic tribes typically carry Kalashnikovs to guard their cattle. So distinguishing these nomads from armed groups prepared to raid and burn down villages is a challenge especially when dealing with satellite imagery. Using UAV’s may be more useful and cheaper. (Note that monitoring the location and movement of cattle could be insightful because cattle issues are political in the area).

If armed groups who intend to burn down villages are the intended inmates, do they even know or care about the Satellite Sentinel Project? The ICC has already struggled to connect the chain of command back to the Sudanese government. Besides, the expected turn-around time to develop the satellite imagery is between eight to twenty-four hours. Getting armed men on a truck and raiding a village or two doesn’t take more than a few hours. So the crimes may already have been committed by the time the pictures come in. And if more heavy military machinery like tanks are rolled in, well, one doesn’t need satellite imagery to detect those. As scholars of the panopticon have noted, the successful use of surveillance has to be coupled with the threat of punishment for deviant acts. So putting aside the issue of who the intended inmates are, the question for the Sentinel Project is whether threats of punishment are perceived by inmates as sufficiently real enough for the deterrence to work. In international relations theory, “deterrence is a strategy by which governments threaten an immense retaliation if attacked, such that aggressors are deterred if they do not wish to suffer great damage as a result of an aggressive action.”

This means that official state actors need to step up and publicly pledge to carry out the necessary punishment if the satellite imagery collected by Sentinel provides evidence of wrong-doing. The ICC should make it crystal clear to all inmates (whoever they are) that evidence from the satellite imagery will be used for prosecution (and that they should care). There also need to be armed guards in  “the tower” who are proximate enough to be deployed and have the political will to use force if necessary. Or will the anti-genocide paparazzi’s many eyes be sufficient to keep the peace? It’s worth remembering that the Hollywood paparazzi haven’t exactly turned movie stars into alter boys or girls. But then again, they’d probably get away with a whole lot more without the paparazzi.

US spy satellites have no doubt monitored conflict-prone areas in the past but this  hasn’t necessarily deterred major crimes against humanity as far as I know. Of course, the imagery collected has remained classified, which means the general public hasn’t been able to lobby their governments and the international community to act based on this information and shared awareness. The Sentinel Project’s open source approach changes this calculus. It may not deter the actual perpetrators, but the shared awareness created thanks to the open data will make it more difficult for those who can prevent the violence to look the other way. So the Satellite Sentinel Project may be more about keeping our own governments accountable to the Responsibility to Protect (R2P) than deterring actors in the Sudan from committing further crimes. How will we know if Clooney succeeds? I’m not quite sure. But I do know that the Sentinel Project is a step in the right direction. More evidence is always more compelling than less evidence. And more public evidence is even better. I have no doubt therefore that Eisenhower would back this Open Skies project.

Omar al-Bashir visits south Sudan ahead of independence vote
by Xan Rice / 4 January 2011

In his last visit to southern Sudan before Sunday’s independence referendum, President Omar al-Bashir promised voters that he would “congratulate and celebrate with you” should they choose secession. Amid intense security, Bashir was warmly welcomed today in the southern capital, Juba, by its president, Salva Kiir. The Khartoum leader donned a traditional blue robe over his suit as a mark of respect. His convoy left the airport, passing hundreds of people holding southern Sudan flags and waving placards featuring an outline of an open hand – the symbol that will signify separation on the ballot paper. The message was surprisingly polite – Bashir is despised by many here – but it was also clear: “Bye bye”. At Kiir’s presidential palace, Bashir made one final plea to southern voters to choose unity, but appeared resigned to an alternative outcome, which he pledged to respect. “Imposing unity by force doesn’t work,” he said. “We want unity between the north and the south but this doesn’t mean opposing the desire of the southern citizen.”

An overwhelming vote for secession is a near-certainty, splitting Africa’s largest country in two to create the world’s newest state. The referendum is the culmination of the comprehensive peace agreement (CPA), signed in 2005 between Bashir and John Garang, the late leader of the rebel Southern People’s Liberation Army, which ended 22 years of war. Given that conflict, along with earlier wars and decades of marginalisation by the Arab government in Khartoum, there was always little chance that the south would choose unity after the six-year interim period. During that time the region has governed itself, and any lingering doubts about choosing independence that may have existed have disappeared. “We are gone,” said Nhial Bol, editor of the Citizen newspaper, in Juba. “Once a dog is let out for a night in the market it will not return home.” But there have always been questions over whether Bashir would allow southern Sudan to depart peacefully, especially given that the south holds about three-quarters of the country’s oil reserves. Since the CPA his government has obstructed or delayed implementation of key parts of the agreement.

While for many months Juba residents have been counting down the days, hours and minutes to the vote with the help of a huge clock in the centre of the city’s main roundabout, excitement has been tempered with real fears that the referendum would be delayed, raising the threat of violence. But the poll is now destined to go-ahead as scheduled, with voting materials delivered to all the southern states. Justice Chan Reec Madut, deputy chairman of the Southern Sudan Referendum Commission, declared yesterday that the body was “100% prepared for the great day”, while the information minister, Barnaba Marial Benjamin, said there was little chance of trouble. “If you’re in Ivory Coast, run away. If you work for WikiLeaks, run way. But if you are here, there is no need to run,” he told reporters.

Southerners’ confidence in the process has been boosted by Bashir’s recent statements when, for the first time, he started publicly acknowledging Sudan might split. He has even pledged to support the new country. In Juba today Bashir reiterated that vow, offering “anything you need” from Khartoum. “We will come and congratulate and celebrate with you … we will not hold a mourning tent,” he said. “We will be happy to achieve the real peace and final peace for all citizens in the north and the south.” While meeting ministers from the southern government, Bashir discussed the problems in Abyei, a border area whose separate referendum this Sunday was postponed owing to disagreements over voter eligibility. He also asked the ministers not to provide any support for rebel groups in the western Darfur region, which remains volatile. With Juba in a state of lockdown – southern officials were terrified that something might happen to Bashir, threatening the vote. But the president departed in the early afternoon for Khartoum, where he faces a tricky future. Already under pressure owing to his arrest warrant from international criminal court over alleged war crimes in Darfur, he is also blamed by many in the north for the imminent breakup of Sudan. His political foes aim to take advantage, with Bashir’s former mentor and ally, Hassan al-Turabi, saying yesterday that opposition groups were working on peaceful strategies “to overthrow the regime right after the results of the referendum are announced”.

Independence day
Registrars have recorded 3,930,816 southern Sudanese eligible to partake in the referendum, 51% of them women. Voting centres will also be open to southern Sudanese in the north of Sudan, and in eight other countries, including the UK, the US, Canada and Australia. Voting will take place over seven days, starting on Sunday, and will be observed by monitors from numerous states and regions, including the US, the EU and China. Official results are expected within 30 days of polls closing. For the verdict to be legitimate, 60% of registered voters must have cast their ballots. If not, the referendum will have to be rerun within 60 days of the results announcement. A separate ballot over the future of Abyei, an oil-producing region on the north border, was also supposed to have taken place this weekend, with residents choosing whether to join the north or the south. But the Khartoum government’s insistence that Arab nomads from the Misseriya tribe be allowed to vote has caused it to be postponed.



Begin forwarded message:

From: Apple Press Relations
Date: November 16, 2010 9:36:39 PM EST
To: cindy-wetlands-preserve.org
Subject: Alert: Fraudulent Conflict-Free iPhone Hoax Originating from Apple Address
Reply-To: press@apple-cf.com


Contact: Caroline Hemmerskjold, Apple
Tel. (408) 676-7923
Email: caroline@apple-cf.com

Nov. 16, 2010

Apple wishes to inform the public that the so-called “conflict-free” iPhone, promoted today outside the Apple Store at Fifth Avenue in New York City, featured on the non-Apple website http://www.apple-CF.com, and noted in a spoofed media advisory to numerous New York City reporters, is fraudulent and fictitious, and entirely the imagination of the group of pranksters who created it.

To be perfectly clear, this product does not exist, and Apple has no connection to the group that promoted it. Furthermore, although Apple does have plans to certify its materials as conflict-free, this will by no means be any sort of solution to the situation of conflict in the Congo, nor in any way help bring an end to that conflict. Rather, the solution must be based in diplomacy.

In this regard, there is a law on the books – the “Democratic Republic of the Congo Relief, Security, and Democracy Promotion Act,” Public Law 109-456, introduced by then-Senator Obama in 2005 – that demands, among other things, the appointment of a special envoy to the Great Lakes region. As of now, four years later, this has still not happened, and the Congolese continue to die by the tens of thousands.

There are various possible solutions to this problem, but it is up to you, not Apple, to accomplish them. Here are some things you can do:

Report the violation of Public Law 109-456 to the FBI. Visit tips.fbi.gov to do so, or call 1-800-CALLFBI (225-5324). Culpable parties involve not only the President and the White House, but the Secretary of State, who is in charge of enforcing that portion of this law that demands the withholding of aid to destabilizing nations.

You might consider performing a citizen’s arrest against the above parties. Any citizen can arrest someone committing a crime, if the crime is sufficiently grave. Millions of deaths in the Congo are, Apple believes, a very grave crime.

You might also consider performing a citizen’s arrest against shareholders and officers of the mining companies that have been implicated in pillaging the resources of the Congo and fueling the conflict in the Congo over the past 14 years. Why not start with John Paulson, the majority shareholder of AngloGold Ashanti, the mining company most responsible for financially supporting rebel groups and furthering the Congo conflict. His office is located at 1251 Avenue Of The Americas (at 50th Street), Floor 50.

We at Apple have acknowledged in the past that the conflict in the Congo, which has claimed many millions of lives, is fuelled in part by the provision of minerals that go into consumer electronic products, and not only Apple’s. However, so-called “conflict-free” certification is not a real solution, merely a very tiny part of a real solution. Regardless of whether Apple or other companies produce “conflict-free” products, the Congo conflict will not end until the U.S. government chooses to enforce its own laws.



Citizen’s dividend or citizen’s income is a proposed state policy based upon the principle that the natural world is the common property of all persons (see Georgism). It is proposed that all citizens receive regular payments (dividends) from revenue raised by the state through leasing or selling natural resources for private use. In the United States, the idea can be traced back to Thomas Paine’s essay, Agrarian Justice[1], which is also considered one of the earliest proposals for a social security system in the United States. Thomas Paine best summarized his view by stating that “Men did not make the earth. It is the value of the improvements only, and not the earth itself, that is individual property. Every proprietor owes to the community a ground rent for the land which he holds.”

This concept is a form of basic income, where the Citizen’s Dividend depends upon the value of natural resources or what could be titled as “common goods” like seignorage, the electro-magnetic spectrum, the industrial use of air (CO2 production), etc. The State of Alaska dispenses a form of citizen’s dividend in its Permanent Fund Dividend, which holds investments initially seeded by the state’s revenue from mineral resources, particularly petroleum. In 2005, every eligible Alaskan resident (including their children) received a check for $845.76. Over the 24-year history of the fund, it has paid out a total of $24,775.45 to every resident.


MM: What are the origins of the concept?
Widerquist: Some people trace the idea back as far as ancient Greece. The idea started appearing gradually in different times and places in the modern era. Thomas Paine mentioned something like it in his pamphlet “Agrarian Justice” in the 1790s. Bertrand Russell articulated the idea in 1915. Economists started talking about the idea in the 1940s. The idea gathered a great deal of attention in the United States in the 1960s and 1970s, when people began to think of it in very diverse ways: as the scientific solution to poverty, as a streamlined yet more effective alternative to the welfare state or as a way to empower the least advantaged people. At one point, it seemed like the inevitable next step in social policy. People as diverse as Martin Luther King and Richard Nixon endorsed it. Groups as diverse as chambers of commerce and grassroots welfare rights campaigners endorsed it. But the diversity of its appeal was matched by the diversity of its opposition. A watered-down version of it called “the Family Assistance Plan” passed narrowly in the House of Representatives in 1972, but was defeated in the Senate by a coalition of people who thought it went too far and people who didn’t think it went far enough. Interest in the idea dropped off in the United States in the late 1970s, but then interest began to grow in Europe. The academic debate has continued to grow ever since and it has translated into popular movements in places as diverse as Ireland, Namibia, Finland, Brazil, South Africa, Belgium, Germany and Italy.

MM: Are there examples of policies being enacted? How have they turned out?
Widerquist: Yes, there are a few small things around the world and one big example in Alaska. Brazil recently voted to combine several of its anti-poverty programs into a program called the Bolsa Familia, which is supposed to be the first step. A private NGO is currently conducting a pilot project in Namibia with great success. The Alaska Permanent Fund (APF) has been in place for 25 years. The “basic” in basic income guarantee is meant to indicate that it is enough to cover your basic needs. The APF isn’t that large, but it is one of the most popular government programs in the United States today. They had a referendum proposing to get rid of it a few years ago, and people voted something like 85 percent in favor of keeping it. Few government programs have that kind of support. The APF is another outgrowth of the NIT movement in the United States in the 1970s. Jay Hammond was governor when the Trans-Alaska Oil Pipeline was proposed. He had learned about BIG during the NIT debate, and he saw the opportunity to connect the two. Usually when businesses want to take publicly owned natural resources and make them into private property, they just pay off the right politicians and they get the resources free or at a nominal fee. But Hammond decided that this oil belonged to all the people of Alaska, and if the corporations wanted to buy it, they had to pay into a fund that would pay a yearly dividend to every citizen in Alaska. The APF dividend varies year-to-year depending on the fund’s returns. It’s usually somewhere between $1,000 and $2,000. Last year the dividend was a record high of $3,200. Of course, $3,200 isn’t enough to meet anybody’s basic needs, but it can make a huge difference for people at the margins. Suppose you’re a single parent with four children living on an Indian reservation somewhere in Alaska. Last year’s APF Dividend was worth $16,000 to you and your family. You can’t live on that all year, but imagine the difference it makes. You might worry that people who get a check from resource revenues might be more accepting of resource exploitation. But other factors, I believe, more than counteract any such effect. Remember that today companies are taking control of natural resources all over the planet and paying no compensation at all to the rest of humanity. If you want people to do less of something, taxation is a very good way to start. If you tax resource extraction, you not only discourage people from doing too much of it, you also establish the precedent that natural resources belong to everyone — not just to the first corporation to get permission from the government. That precedent would be enormously valuable to the environmental movement.


Afghanistan’s big deposits of lithium, copper and gold have some economists worried. As we noted earlier this week, the discovery of natural resources often leads to conflict and corruption, which in turn hurt economic growth. But a handful of economists are pushing an idea they say could break the natural resource curse. Take all money that comes in from foreign companies — for lithium in Afghanistan, oil in Nigeria, natural gas in Bolivia — and give it to the citizens. Literally have a government official sit down with piles of cash, maybe with some international oversight, and divvy it up. That system would create a strong incentive for the people to keep on eye on what the government’s doing, says Todd Moss of the Center for Global Development. “If you received $500 last year, and this year it’s only $400, you’re going to ask some pretty hard questions,” he says.

But there are a few key barriers to putting the plan into action. The first is logistics. Lots of resource-rich countries don’t have national databases, clear census records or strong banking systems. That makes it tough to hand out billions of dollars to millions of people, year after year. The second is the fact that money is power. A government that’s getting lots of money by selling natural resources may be reluctant to share the wealth. Arvind Subramanian, an economist with the Peterson Institute, recently traveled to Nigeria to pitch the idea of giving oil revenues directly to the people. The government wasn’t interested. “If the current guy in power does not want to give up power, my idea has no hope of succeeding,” Subramanian said.

Afghanistan’s resources could make it the richest mining region on earth
by Kim Sengupta / 15 June 2010

Afghanistan, often dismissed in the West as an impoverished and failed state, is sitting on $1 trillion of untapped minerals, according to new calculations from surveys conducted jointly by the Pentagon and the US Geological Survey. The sheer size of the deposits – including copper, gold, iron and cobalt as well as vast amounts of lithium, a key component in batteries of Western lifestyle staples such as laptops and BlackBerrys – holds out the possibility that Afghanistan, ravaged by decades of conflict, might become one of the most important and lucrative centres of mining in the world. President Hamid Karzai’s spokesman, Waheed Omar, said last night: “I think it’s very, very big news for the people of Afghanistan and we hope it will bring the Afghan people together for a cause that will benefit everyone.” In Washington, Pentagon spokesman Colonel David Lapan, told reporters that the economic value of the deposits may be even higher. “There’s … an indication that even the £1 trn figure underestimates what the true potential might be,” he said. According to a Pentagon memo, seen by The New York Times, Afghanistan could become the “Saudi Arabia of lithium”, with one location in Ghazni province showing the potential to compete with Bolivia, which, until now, held half the known world reserves.

Developing a mining industry would, of course, be a long-haul process. It would, though, be a massive boost to a country with a gross domestic product of only about $12bn and where the fledgling legitimate commercial sector has been fatally undermined by billions of dollars generated by the world’s biggest opium crop. “There is stunning potential here,” General David Petraeus, the US commander in overall charge of the Afghan war, told the US newspaper. “There are lots of ifs, of course, but I think potentially it is hugely significant.” Stan Coats, former Principal Geologist at the British Geographical Survey, who carried out exploration work in Afghanistan for four years, also injected a note of caution. “Considerably more work needs to be carried out before it can be properly called an economic deposit that can be extracted at a profit,” he told The Independent. “Much more ground exploration, including drilling, needs to be carried out to prove that these are viable deposits which can be worked.” But, he added, despite the worsening security situation, some regions were safe enough “so there is a lot of scope for further work”.

The discovery of the minerals is likely to trigger a commercial form of the “Great Game” for access to energy resources. The Chinese have already won the right to develop the Aynak copper mine in Logar province in the north, and American and European companies have complained about allegedly underhand methods used by Beijing to get contracts. The existence of the minerals will also raise questions about the real purpose of foreign involvement in the Afghan conflict. Just as many people in Iraq held that the US and British-led invasion of their country was in order to control the oil wealth, Afghans can often be heard griping that the West is after its “hidden” natural treasures. The fact US military officials were on the exploration teams, and the Pentagon was writing mineral memos might feed that cynicism and also motivate the Taliban into fighting more ferociously to keep control of potentially lucrative areas.

Western diplomats were also warning last night that the flow of money from the minerals is likely to fuel endemic corruption in a country where public figures, including Ahmed Wali Karzai, the President’s brother, have been accused of making fortunes from the narcotics trade. The Ministry of Mines and Industry, which will control the production of lithium and other natural resources, has been repeatedly associated with malpractice. Last year US officials accused the minister in charge at the time when the Aynak copper mine rights were given to the Chinese, Mohammed Ibrahim Adel, of taking a $30m bribe. He denied the charge but was sacked by President Karzai. But last night Jawad Omar, a senior official at the ministry, insisted: “The natural resources of Afghanistan will play a magnificent role in Afghanistan’s economic growth. The past five decades have shown that every time new research takes place, it shows our natural reserves are far more than what was previously found. This is a cause for rejoicing, nothing to worry about.”

According to The New York Times, the US Geological Survey flew sorties to map Afghanistan’s mineral resources in 2007, using an old British bomber equipped with instruments that offered a 3-D profile of deposits below the surface. It was when a Pentagon task force – charged with formulating business development programmes and helping the Afghan government develop relationships with international firms – came upon the geological data in 2009, that the process of calculating the economic values began. “This really is part and parcel of General [Stanley] McChrystal’s counter-insurgency strategy,” Colonel Lapan said yesterday. “This is that whole economic arm that we talk about but gets very little attention.”

by John Stuart Blackton

The ” discovery” of Afghanistan’s minerals will sound pretty silly to old timers. When I was living in Kabul in the early 1970’s the USG, the Russians, the World Bank, the UN and others were all highly focused on the wide range of Afghan mineral deposts. The Russian geological service was all over the North in the 60’s and 70’s. Cheap ways of moving the ore to ocean ports has always been the limiting factor. The Russians were looking at a northern rail corridor. Take a look at this little bibliography of Afghan mineral assessments. This one is mostly Russian, but pre-dates the DoD/USG “discovery” period by 30 years. In my day we did a joint USG/Iranian study of a potential rail line from Afghanistan to several of the Iranian rail hubs. This was predicated on mineral exploitation in a way that would thwart the Russian’s northern rail corridor plans. In the early 70’s the USG had an old FDR New-Deal planner/economist/brains-truster – Bob Nathan – working with the Afghan Ministry of Plan to work out a fifty year mineral exploitation program. When the Russians took over they picked up Bob’s plans and extended them. So this is anything but a “new discovery”. Low cost, long haul transport infrastructure remains the constraint.

{John Stuart Blackton, who has shaken more Helmand River sand out of his shorts than most Americans in Afghanistan have walked on, provides some background. By the way, before running USAID in Afghanistan, John attended Stephens College of Delhi-as did Pakistan’s Gen. Zia.}

The General Mining Act of 1872
by Robert McClure & Andrew Schneider / June 11, 2001

Gold, silver, platinum and other precious metals for free. Land for $5 an acre or less. That’s the deal mining companies get from the U.S. government when miners turn their explosives and earthmovers toward public land in the West. It’s pretty much the same deal miners have had for 129 years, ever since Congress approved the General Mining Law in 1872. Modern mining methods have left the West pockmarked by huge craters, some so large that they are visible from space. Whole mountainsides are ground to dust and doused with cyanide, teasing out enough gold for a single wedding ring from several tons of rock and soil. And tens of thousands of abandoned mines scar the landscape, many emitting an orange-red, acid-laced runoff called “yellow boy.” These mines have poisoned more than 16,000 miles of Western streams. When a mine goes bankrupt, taxpayers sometimes get stuck with the costs of cleaning up the mess — more than $275 million for three mines alone in Colorado, South Dakota and Montana that closed in the 1990s. Under terms of the antiquated law, miners cart away everything from gold to kitty litter from public lands — minerals worth about $11 billion in the last eight years alone. Not only does the U.S. Treasury get nothing, Congress has granted miners a tax break worth an estimated $823 million in the coming decade. Over the years, public lands the size of Connecticut have been made private under terms of the 1872 law, all for $2.50 to $5 an acre, though not all of it has been used for mining. Some claims became ski resorts, housing subdivisions, hotels and even a brothel, in Nye County, Nev.

Congress has acted over the years to rein in some abuses allowed under the act, but problems persist, and the debate over the future of Western lands continues. New mining regulations designed to protect taxpayers and the environment went into effect just hours before George W. Bush became president — and he soon moved to get rid of them. A watered-down version of the rules or a full suspension is expected next month. The controversy over the new regulations for administering the old law is just one more battle in a land-use war that has raged for generations. It’s a complex subject, rich in history. But the issues boil down to three broad areas of disagreement: To what degree mining harms the environment, whether the jobs it produces are worth the damage, and whether the public interest is being subverted by the miners and their friends in Washington, D.C.

Opening the West
Complaints about a taxpayer rip-off started just about as soon as miners arrived in the vast American West. Trying to establish order amid the chaos of the California gold rush in 1848, an Army colonel named Mason sent a dispatch to headquarters warning: “(T)he government is entitled to rents for this land, and immediate steps should be devised to collect them, for the longer it is delayed the more difficult it will become.” Nearly two decades later, Congress adopted the Lode Law of 1866 — a troubled bill that won passage because it was attached to unrelated legislation. The 1866 law, updated in 1870 and in 1872, probably wasn’t what Colonel Mason had in mind. It simply legitimized what miners were already doing: Find a bit of federal land that appears to contain gold, silver or other “hard-rock” minerals, pound stakes at its corners to warn off others, dig, and — if you guessed right — cash in.

Like the better-known Homestead Act, which offered free land to anyone willing to farm it, the mining law was intended as an incentive to those willing to push West and settle the frontier. That frontier was closed long ago, but the mining law remains on the books and very much in use — even where mining would harm an increasingly settled region. The new mining regulations targeted for repeal by the Bush administration give the government the right to reject a proposed mine if it would cause “substantial irreparable harm.” Currently, federal officials must administer a law they say promotes mining as the best use of millions of acres of federal land, even in sensitive places such as Top Of The World, Ariz., a wide spot in the road 70 miles from Phoenix. There, a Canadian company called Cambior wants to dig copper where wild boars roam and the hedgehog cactus blooms brilliant red in the spring. The sulfuric acid, trucks, noise and dust from a 24-hour-a-day mine would be plopped down just upstream from a lush, tree-shaded canyon — a rarity there.

Cambior, which also ran a mine in Guyana where 300 million gallons of a cyanide-bearing solution spilled, wants to dig three pits covering nearly a square mile, reaching a depth of 600 feet. The hundreds of millions of tons of earth removed would be piled into heaps covering an additional square mile-plus. The ore, the material that bears copper, would be doused with 400 tons of sulfuric acid per day. To do this, the company would reroute more than two miles of streams, some through channels constructed of a concretelike material. The Canadian firm and its subsidiary, Carlota Copper Co., will pay no more than $1,700 for the public portion of the land it would mine. The company expects to mine some 478,000 tons of copper worth about $728 million at current prices. Even a federal lawyer trying to defend the government’s approval of the mine had to admit, “The circumstances here include a proposed project that is so invasive to the forest that it would never be considered, much less approved, were it not for the mining law of 1872.” And a federal judge handling a suit by environmentalists who tried to stop the project ruled that the mining law trumps their concerns. “Because mining has been accorded a special place in the national laws related to public land, the development of mineral resources in the national forests may not be prohibited or unreasonably circumscribed,” U.S. District Judge Paul Rosenblatt wrote. “The Forest Service consequently has no authority to categorically reject an otherwise reasonable mining plan of operations.”

Bob Walish, manager of the Cambior project, said it is misleading to consider only the $5 per acre the company will pay the government. He said the company spent about $61 million prospecting, obtaining permits and fighting lawsuits. Echoing the industry’s supporters in Congress, Walish said the government should follow through with the intent of the mining law — to privatize land in the West. More than half of some states are still owned by the government, he noted. “The debate in our mind isn’t that we’re stealing this from the public,” he said. “It’s ‘Why is there (still) all this public land?'” Stephen D’Esposito, president of the Mineral Policy Center, an environmental group dedicated to mine-law reform, points to Top Of The World and places like it when asked what’s wrong with the 1872 law. “It’s time for a new deal that keeps our water clean, protects our public lands from destructive mineral development, eliminates corporate subsidies and gives the taxpayer a fair return,” D’Esposito said. “What’s needed are three common-sense reforms: the right of the public to say ‘no’ when mining isn’t the best use of our public lands; a requirement that mining companies pay to clean up their messes as a cost of doing business; and a provision that mining companies pay taxpayers a fair price for mining on public lands.”

An economic savior
Though less of an economic force than in the past, mining remains an economic savior of some rural areas in the West, where more than 100 hard-rock mines are operating. And those who run the international corporations that have replaced the pick-and-shovel prospectors of the 1800s say the public still benefits from their hard work and willingness to risk a fortune to develop mines that might not return one. They point out that mining still pays better than most jobs in the rural West, and they note that mining firms and their employees pay taxes, too. And society gets something it can’t live without, they argue: metals. U.S. manufacturers get about half their metals from right here at home. “Mining makes our civilization…. Everything you do today depends on mining,” Rep. Jim Gibbons, R-Nev., a former mining geologist, said at a recent congressional hearing. Before another hearing, Gibbons said that efforts to crack down on mining companies “may relegate us to a Third World status.”

The miners say they are regulated enough. The government already has put about 165 million acres off-limits, and on an additional 182 million acres, the U.S. Forest Service or the Bureau of Land Management can reject mining permits. That leaves about 350 million acres of the West open to mining. And miners note that the law doesn’t excuse companies from having to abide by more-recent federal laws such as the Clean Water Act and the National Environmental Policy Act. “We can’t mine in parks. We can’t mine in sensitive areas,” said Jack Gerard, president of the National Mining Association. “The government every day makes public lands/public policy decisions.”

Yet exercising this power can be expensive. In 1995, President Clinton proposed a ban on mining in an area near Yellowstone National Park. A Canadian firm, Crown Butte Mines Inc., already had applied to privatize some land in the area and planned to use land already patented — that is, converted to private property by others who paid a small fee. The government had to pay $65 million to stop the mine. The money went to Battle Mountain Gold, which had bought Crown Butte. Battle Mountain Gold wants to open Washington state’s first major open-pit gold mine, the Crown Jewel project in Okanogan County. The 1872 Mining Law has been under fire for decades, but the industry has been able to head off countless attempts at reform. One of its bedrock arguments is that overhauling the law would risk national security. “Destroying the mining law will risk the lives of our sons and daughters, for many will surely die in battle on some foreign shore because of it,” said Richard Lawson, a retired four-star Air Force general who until recently headed the National Mining Association. “Without the protection of the mining law, America cannot get the minerals it must have to remain free and secure, and we will go to war to get those precious metals.” But some Western communities pay a high price for this freedom.

Superfund sites abound
Signs near Spokane carry an ominous warning: “This health advisory is posted to alert you to the presence of elevated levels of lead and arsenic in soils along the shorelines and beaches of the upper Spokane River…. Swallowing or breathing loose shoreline soils may be an increased health risk to people, especially infants, small children and pregnant women.” The signs, posted by the Spokane Regional Health District, warn that children shouldn’t play in muddy soils along the river and should be closely supervised to ensure that they don’t put dirt in their mouths. Toxic goop is spilling into Washington fully 50 miles downstream from the Silver Valley, where North Idaho miners dug silver, lead and other metals from the earth for more than a century. The Spokane flows from Coeur d’Alene Lake, which the Environmental Protection Agency says holds some 70 million tons of mining waste — enough to cover a football field 4.7 miles high. And rivers all across the West are tainted by old mines, including the Columbia and the Okanogan in Washington.

The U.S. Environmental Protection Agency’s roster of the nation’s worst industrial contamination hot spots, the so-called Superfund list, includes more than 25 mines, a handful still active. Cleaning them up will cost billions of dollars. Whole towns in Montana and Idaho have been swallowed by Superfund sites, their stream banks and hillsides denuded of plants. In Idaho’s Silver Valley, the source of the mine waste in the Spokane River, tests show that one in six children under age 6 have enough lead in their bodies to affect learning and other functions. While much of the damage done by mining in the West happened decades ago, environmental problems continue: Near Deadwood, S.D., a small Canadian firm went bankrupt and left taxpayers a $40 million cleanup bill. At Montana’s Fort Belknap Indian Reservation, another bankrupt Canadian company stuck taxpayers with an estimated $33 million in cleanup costs. In southern Colorado, yet another bankrupt Canadian concern created a mess that will cost more than $200 million to clean up, while 17 miles of the Alamosa River were left devoid of fish and most other creatures for about eight years. In central Idaho, Hecla Mining Co.’s Grouse Creek mine, hailed as a marvel of modern mining when it opened in 1994, has slowly leaked cyanide into the ground and into a nearby creek. Near San Luis, Colo., Battle Mountain Gold’s self-proclaimed “environmentally friendly” mine experienced a large and unexpected buildup of cyanide within a year of opening. Near Whitehall, Mont., the Golden Sunlight mine, run by Placer Dome, a Canadian company, contaminated wells of two nearby ranchers. There’s a big difference between mines envisioned by Congress in 1872 and those operating today. Modern mines are far bigger, and many employ deadly cyanide to leach precious metals from rock. The leaching technique was used in small measure by miners in the early 1900s to draw gold and copper out of ore so low in mineral content that large-scale operators would have tossed it out as waste.

In the old days, leaching was done by misting cyanide over a barrel or large vat filled with crushed ore. The cyanide dissolved microscopic specks of gold from the rock, much as water dissolves sugar. As gold soared to $850 an ounce in the early 1980s, mining companies brought back the leaching technique in a big way, wringing more gold from long-closed mines and developing new ones where the ore had been considered too poor to bother. Miners still mix cyanide and water and slowly trickle it over piles of ore, but the piles are much bigger. Now they blast away entire mountains of rock, pile the ore in heaps the size of a football field and apply a river of cyanide, leaving behind hills of tailings and waste rock. Environmentalists cringe at the technique, not just because of the hazard of an accidental cyanide release, but also because of a long-term risk related to exposure of rock to the weather. The ore is often high in sulfides, and water passing through the rock and soil creates sulfuric acid, which in turn leaches poisonous heavy metals into runoff water, with iron in the rock turning streams an orange-red.

Forest Service, BLM decide
Environmental Protection Agency officials estimate that 40 percent of Western watersheds are affected by mining pollution. And sometimes EPA officials have advised against allowing a mine to open. But the EPA’s concerns are sometimes ignored since the ultimate go-ahead comes from the Forest Service or the BLM. The Grouse Creek mine in central Idaho, for example, won Forest Service approval even though the EPA warned that a strikingly beautiful high-elevation wetland valley would be destroyed. “Let the fun begin!!!!!” Forest Service mining engineer Pete Peters wrote in jest to a supervisor as he tried to figure out how to manage millions of gallons of muddy runoff water at the mine. Today, Peters acknowledges that he was unprepared for the enormity of his task of regulating the mine. “There’s no textbook. You have to hope you can stay ahead of it,” he said. “It was like nothing I’d ever dealt with.” The mine, leaking cyanide, closed after three years without making a profit. Signs posted by a nearby creek for a time warned, “Caution — do not drink this water.”

Mining industry officials acknowledge that there have been environmental problems, even with modern mines. But they say that the industry generally does a good job of policing itself, and that state regulators also keep an eye on miners. “The mining industry is not perfect, and mining has risks and it has impacts,” said Laura Skaer, director of the Northwest Mining Association. “Over the years, the industry has developed the practices and the techniques, coupled with regulations, to mitigate those impacts. It doesn’t mean there aren’t going to be accidents; that there isn’t going to be an occasional bad actor.” Accidents started to happen as soon as the Summitville mine opened in southwestern Colorado. Within six days, cyanide was leaking. The mine operator, Galactic Resources Ltd. of Canada, later went broke.

Galactic was one of a series of small mining companies, often financed through the loosely regulated Vancouver Stock Exchange, that rose to prominence during the mining boom before crashing in bankruptcy. Like other Canadian companies, it was allowed to mine on U.S. federal land even though Congress in 1872 specifically limited the privileges of the General Mining Law to “citizens of the United States and those who have declared their intention to become such.” The reason: In 1898, the U.S. Supreme Court ruled that corporations have the same legal rights as people. So today, a Toronto-headquartered firm such as Barrick Gold Corp. can set up a subsidiary in Nevada and privatize nearly 1,950 acres for less than $10,000. Last year, Barrick hauled away nearly 2.5 million ounces of gold worth more than $600 million on the open market. “We have concluded, and the U.S. has concluded and many countries around the world have concluded that it is in their interest to provide an incentive to cause people to search for a mineral that otherwise isn’t know to exist in that ground,” said Pat Garver, Barrick’s head lawyer. Yet another Canadian firm, with offices in Spokane, Pegasus Gold, left three failing mines in Montana, including one that will cost taxpayers $33 million to clean up. Most Pegasus staff members kept working for the company as it reorganized, continuing to operate more profitable mines. Some even got bonuses.

Nothing for U.S. taxpayers
Not all critics of the 1872 law call for reform because of environmental damage. Some are galled by the fact that the law, breaking with tradition, allows miners to dig a fortune from public land without giving a share to the American citizens who own it. Europe’s royal families demanded a portion of all minerals taken from their New World colonies. And in the 18th century, Congress passed a law requiring a third of the profits from mines on federal lands go to the Treasury. “Even the early miners in the West followed local mineral laws modified from German and British traditions which required a portion of the minerals to be returned to the community,” said Carol Russell, mining specialist in the EPA’s Denver office. “However, it appears that in the rush of the gold rush, royalties were forgotten, and haven’t surfaced yet.” In 1920, Congress removed oil, natural gas and other minerals that could be used for fuel from the 1872 Mining Law. Instead, the government would lease the rights. And in 1977, Congress decreed that miners of coal on federal land would have to pay a royalty of 8 to 12.5 percent, and clean up after themselves. The government in the past decade has collected $11.08 billion from companies taking coal, oil, and natural gas, plus $35.8 billion in rents, bonuses, royalties and escrow payments for offshore oil and gas reserves.

Still, hard-rock miners pay nothing for the gold, silver, platinum, copper and other minerals they get. Walish, the manager of Cambior’s Top of the World project, joins many in the mining industry in warning, “If massive royalties are put on federal land, you’re going to see a lot less mining.” Critics are even more agitated about the mining companies’ ability to transform public land into private land for no more than $5 an acre — close to the fair market value for ranch and farmland in the West in 1872. Since 1964, more than 289,000 acres have been privatized, or patented, for mines. Congress has temporarily prevented additional land from being privatized, but applications already in the pipeline are eligible to continue with the process. About 73,000 acres could eventually be privatized this way. In 1872, Congress sold the land cheap because it wanted the West to be settled. That’s why a typical claim of 20 acres cost $100 — about three months’ rent in a Seattle boardinghouse. Now, critics ask, why should the government continue to sell public land for a pittance when the frontier is closed, and the West largely settled?

‘Why are they tearing it up?’
Years ago, a young man growing up in northern Arizona was surprised to see a big hole being scooped from the flanks of the picturesque San Francisco Peaks near his home. The mountains are considered sacred by the Hopi, the Navajo and 11 other tribes. “They started ripping the side of this mountain open, and I remember asking early on: ‘Who owns this land? And why are they tearing it up and carting it away?'” he recalled. Decades later, “it’s expanded into a gigantic scar on these sacred mountains. … One of the most unspeakably beautiful places in the Southwest is being carted away, truckload by truckload.”

The man is Bruce Babbitt, former Arizona governor and Interior secretary in the Clinton administration. For eight years, Babbitt administered the 1872 Mining Law. Babbitt hates the 1872 Mining Law. What was being mined near Flagstaff was pumice, a light volcanic rock. Today most of it is used to give denim that soft, “stone-washed” look. “It’s not like it’s being mined for some metal that’s necessary,” Babbitt said in an interview before leaving office. “It’s being mined to make blue jeans look old. It’s just a scandalous commentary on the Mining Law of 1872.” (The Los Angeles Times reported last week that Babbitt is helping The Hearst Corp., owner of the Seattle Post-Intelligencer, broker a deal worth $200 million or more that will determine the fate of Hearst’s seaside ranch at San Simeon in central California.)

Babbitt never forgot the San Francisco Peaks, and last year the government agreed that federal taxpayers would give the mine’s operators $1 million to stop digging. He also worked hard to overhaul the law that allowed them to do it in the first place, calling it “a license to steal.” His case was bolstered by the General Accounting Office, the investigative arm of Congress, which issued numerous reports critical of the 1872 law, saying it “runs counter to other national resource policies” while allowing valuable land to be sold at nominal amounts. Facing stiff opposition from a Republican-controlled Congress, Democrat Babbitt switched gears in early 1997, pushing for more modest reforms through a rewrite of his agency’s own rules for administering the law.

Opponents in Congress moved to block even that reform. They ordered Babbitt to stall the rewrite of the rules until a panel appointed by the National Academy of Sciences could study the issue and report back. The NAS panel concluded that mine regulations “are generally well coordinated, although some changes are necessary.” It listed seven “regulatory gaps,” including “financial risks to the public and environmental risks to the land” because companies sometimes post inadequate bonds to pay for reclamation after mining ends. Likewise, the EPA’s inspector general concluded that “critical gaps” in bonding programs “could result in environmental problems and sizable cleanup costs for the federal taxpayers.”

These criticisms stemmed from a system that allowed local Forest Service and BLM officials to negotiate a financial guarantee with a mining company to cover cleanup costs. Those “guarantees” can prove uncollectible after a bankruptcy. Cleanup bonds posted by some miners were often inadequate to cover the true cost of fixing the environmental damage associated with huge modern mines. They also assumed the company would save money by doing much of the work itself, while bankrupt firms often simply abandon mines. Babbitt went further than the NAS panel suggested, though. The new regulations set minimum environmental standards for mines and, for the first time, gave federal land managers authority to deny a mining permit if it would cause “substantial irreparable harm … that cannot be effectively mitigated.”

As for reclamation bonds, the new rules assume a worst-case scenario: The company goes bankrupt, and the government has to take over. Some forms of bonds that have proven difficult to collect were forbidden. The rules were published in the Federal Register in November, and went into effect at 12:01 a.m. on Jan. 20 — just hours before George W. Bush was sworn in as president. The mining industry has characterized the rules as “burdensome, complex, counterproductive … onerous and misguided regulations rushed through during the waning days of the Clinton administration.” Jack Gerard of the National Mining Association said that “the Clinton administration took a sledgehammer to deal with a mosquito.”

Among those to challenge the rules in court were his association and the state of Nevada, home of most of America’s gold mines. Environmentalists, too, have been critical of the new regulations. Alan Septoff, legislative director of the Mineral Policy Center, said miners are still allowed to harm the environment, so long as they “effectively mitigate” the damage elsewhere. “Even though the stronger mining rule is monumentally better than the old rule, that’s a testament to the inadequacy of the old rule,” Septoff said. In March, Babbitt’s successor as U.S. Interior secretary, Gale Norton, ordered a reconsideration of the rules. Next month, the BLM is expected to issue a watered-down version of Babbitt’s rules or revert to old regulations adopted in the Carter administration. At the EPA, this prospect causes concern — particularly if rules on cleanup bonds are to be weakened. “The vast majority of these (mining Superfund) sites were historic sites, but in recent years we’re finding sites that are inadequately bonded, and the government is getting saddled with the cleanup costs,” said Nick Ceto, mining coordinator at the EPA’s Seattle office. “There are others that are coming up.”

Afghanistan to Delay Awarding Concessions for Mineral Deposits
by Matthew Rosenberg / January 27, 2010

Afghanistan plans to delay awarding concessions for a major iron ore deposit and sizeable oil and gas reserves as part of a broader effort to stamp out corruption, the country’s finance minister said. The move by Afghanistan could upend the plans of Total SA, Swiss-based Addax Petroleum Corp. and Canada-based Nations Petroleum Co., all of which were among the seven finalists selected last year for oil and gas blocks in the country’s northwest. Of particular concern, said Finance Minister Omar Zakhilwal in an interview Tuesday, is a major iron ore deposit in central Afghanistan that last year attracted bids from smaller Chinese and Indian companies. “We’ve put a hold onto to the bidding process; it will have to be re-bid,” he said.

Mr. Zakhilwal would not directly say whether he believed bidding for any of the projects – the iron ore deposit, the oil and gas reserves and scores of other smaller mineral deposits — had been marred by bribery, kickbacks or other forms of corruption. He spoke in general terms about the need to root out corruption and ensure Afghanistan gets the best deals when bringing in foreign firms to exploit its natural wealth. Afghanistan is rich in minerals and gemstones, with huge copper and iron ore deposits and reserves of emerald and rubies. Exploiting those reserves could help provide the country with much of the money it needs to wean itself from the massive infusions of foreign aid on which it new depends.

Putting the Afghan economy in order is one of the major issues to be addressed at a conference Thursday in London on Afghanistan’s future. Foreign ministers from 56 countries along with representatives from the United Nations and other international organizations involved in stabilizing Afghanistan are to attend, and European diplomats have in recent days said they are keen to hear Mr. Zakhilwal’s economic plans for the coming years. Mining could be a major economic contributor. But the Mines Ministry has long been considered among Afghanistan’s most corrupt government departments, and Western officials have repeatedly expressed reservations about the Afghan government awarding concessions for the country’s major mineral deposits, fearful that corrupt officials would hand contracts to bidders who pay the biggest bribes — not who are best suited to actually do the work. Mr. Zakhilwal said those concerns are shared by many inside the Afghan government, too. “I was among those who have been opposed to opening up new bids,” he said. “It was not just the issue of corruption – but that is a real issue. We also need to do a review of how contracts are awarded, what lessons we’ve learned, what kind of transparency is needed to make the next best step.” Mr. Zakhiwal that process is now underway with the appointment of a new minister, Wahidullah Sharani.

Still, he said there was no evidence of corruption in the awarding of the one major concession given out in recent years, a copper mine being set up by two Chinese firms, China Metallurgical Group and Jiangxi Copper Group. That project attracted bids from all over the world, and there have been persistent reports of bribes being paid to secure it. Mr. Zakhilwal termed those reports “rumors” and held up the deal – under which the companies agreed to build schools, clinics, markets, mosques and a power plant — as a model for how Afghanistan could award future concessions.

History and background of the pilot project

At the end of 2006, the understanding in the BIG Coalition grew that the BIG campaign needs to be taken a step further by starting a pilot project of the BIG in Namibia. The background is that a pilot project might be able to concretely show that a BIG can work and will indeed have the predicted positive effects on poverty alleviation and economic development. Spearheaded by Bishop Kameeta this idea has been inspired by the concrete (or from a theological perspective “prophetic”) examples, like e.g. English medium schools or township clinics during the apartheid era. In fact, also more recently, this has happened with a project run by the Treatment Action Campaign and ‘Doctors without borders’ and the provincial government in Cape Town. They started a treatment project in a township in Cape Town at a time when it was said that a rollout of Antiretroviral (ARV) therapy is good but certainly not practical in a developing country. The pilot project was successful and has subsequently changed the opinion on ARV rollouts in developing countries. The BIG Coalition argues that while it is the ultimate goal to lobby Government to take up its responsibility to implement such a grant, the Coalition should lead by example. The BIG Coalition fundraised in order to pay a Basic Income Grant in one community. Thereby it set an example of redistributive justice through concrete action to help the poor, and to document what income security means in terms of poverty reduction and economic development. The BIG Coalition hence at the end of 2006 to implement a BIG pilot project. The BIG pilot project started in January 2008 and was the first of its kind, to concretely pilot an unconditionally universal income security project in a developing country. The BIG Coalition implemented a BIG in one Namibian community, namely Otjivero – Omitara settlement (about 1,000 people, some 100 km to the east of Windhoek) for a limited period of time (2 years, from January 2008–to December 2009) to practically prove that income security indeed works and that it has the desired effects.

A Popular Idea: Give Oil Money to the People Rather Than the Despots
by John Tierney / September 10, 2003

Few Iraqis have heard of the ”resource curse,” the scholarly term for the economic and political miseries of countries with abundant natural resources. But in Tayeran Square, where hundreds of unemployed men sit on the sidewalk each morning hoping for a day’s work, they know how the curse works. ”Our country’s oil should have made us rich, but Saddam spent it all on his wars and his palaces,” said Sattar Abdula, who has not had a steady job in years. He proposed a simple solution instantly endorsed by the other men on the sidewalk: ”Divide the money equally. Give each Iraqi his share on the first day of every month.”

That is essentially the same idea in vogue among liberal foreign aid experts, conservative economists and a diverse group of political leaders in America and Iraq. The notion of diverting oil wealth directly to citizens, perhaps through annual payments like Alaska’s, has become that political rarity: a wonky idea with mass appeal, from the laborers in Tayeran Square to Iraq’s leaders. American officials have projected that a properly functioning oil industry in Iraq will generate $15 billion to $20 billion a year, enough to give every Iraqi adult roughly $1,000, which is half the annual salary of a middle-class worker.

No one suggests dispensing all of the money — and some say the government cannot afford to give up any of it — but there have been proposals to dispense a quarter or more. Leaders of the American occupying force have endorsed the oil-to-the-people concept and said recently that they plan to discuss it soon with the Iraqi Governing Council. The concept is also popular with some Kurdish politicians in the north and Shiite Muslim politicians in the south, who have complained for decades of being shortchanged by politicians in Baghdad. ”Giving the money directly to the people is a splendid idea,” said one member of the Governing Council, Abdul Zahra Othman Muhammad, a Shiite from Basra who leads the Islamic Dawa party. ”In the past the oil revenue was used to promote dictatorship and discriminate against people outside the capital. We need to start being fair to people in the provinces.”

When oil wealth is controlled by politicians in the capital, one result tends to be the resource curse documented in the last decade in academic works with titles like ”The Paradox of Plenty,” ”Does Oil Hinder Democracy?” and ”Does Mother Nature Corrupt?” Among the many researchers have been Jeffrey Sachs of Columbia University and Paul Collier of Oxford University, both economists, and Michael L. Ross, a political scientist at the University of California at Los Angeles. The studies have shown that resource-rich countries in the Middle East, Africa and Latin America are exceptionally prone to authoritarian rule, slow economic growth and high rates of poverty, corruption and violent conflict.

Besides financing large armies to fight ruinous wars with neighbors, as in Iraq and Iran, oil wealth sometimes leads to civil wars over the sharing of the proceeds, as in Sudan and Congo. ”Governments tend to use mineral revenues differently from the revenues they get from taxpayers,” said Dr. Ross, who found an inverse relationship between natural resources and democracy. ”They spend more of it on corruption, the military and patronage, and less of it on basic public services. Oil-rich governments don’t need to tax their citizens, and taxation forces governments to become more representative and more effective.”

On April 9, the day Saddam Hussein’s statue was toppled in Firdos Square, a plan to end Iraq’s resource curse was published by Steven C. Clemons, executive vice president of the New America Foundation, a centrist research group. He proposed using 40 percent of Iraq’s oil revenue to create a permanent trust fund like the one in Alaska, which has been accumulating oil revenue for two decades. That capital is invested and each year a share of the income is distributed — more than $1,500 to each Alaskan in recent years. ”A fund like Alaska’s is the best way to prevent one kleptocracy from succeeding another in Iraq,” Mr. Clemons said. ”It would go a long way to curbing the cynical belief that Americans want Iraqi oil for themselves, and it would give more Iraqis a stake in the success of their new country. It would be the equivalent of redistributing land to Japanese farmers after World War II, which was the single most important democratizing reform during the American occupation.”

In America, Mr. Clemons’s idea was quickly embraced by many foreign aid experts, editorial writers, Bush administration officials and politicians of both parties. Some experts, though, have faulted the trust fund, saying it would be expensive to administer and would pay out small dividends at first, perhaps only $20 per Iraqi adult, until more capital was amassed. As an alternative, some have suggested skipping the individual payments in the early years and dedicating the money to economic development or social programs. Money could be invested in a long-term pension program, as Norway does with some of its oil revenue. Another alternative would be to make bigger payments up front by giving the money directly to citizens instead of putting it into a trust fund. Thomas I. Palley, an economist at the Open Society Institute, proposed dividing a quarter of the oil revenue each year among all adults in Iraq. That could amount to $250 per adult, assuming that the administration’s hopes for oil production prove accurate.

Oil companies would not be directly affected by an oil fund, since they would be paying the same taxes and fees no matter what the government did with the money. But they could benefit indirectly if citizens eager for higher payments pressed the government to increase production and open the books to outside auditors. ”The oil industry likes working in countries with dedicated oil funds and transparent accounting, because there’s less loose money to corrupt the government,” said Robin West, chairman of PFC Energy, an American consulting firm to the oil industry. ”Corruption is bad for business,” Mr. West said, ”because it creates instability. In places like Alaska and Norway, people support the oil industry because they see the benefits. In places like Nigeria, they see all this wealth that doesn’t benefit them, and they start seizing oil terminals.” Iraq’s civilian administrator, L. Paul Bremer III, has praised the idea of sharing ”Iraq’s blessings among its people,” and suggested that the Governing Council consider some kind of oil fund. Iraqi politicians, of course, have no trouble understanding the appeal of handing out checks to voters.

The chief argument against an oil fund is that Iraq’s government cannot afford to part with any oil revenue for the foreseeable future. It faces a large budget deficit this year, and sabotage to the oil industry has reduced oil production far below projections. ”There isn’t that much money now, and we need every penny for rebuilding the country,” said Adnan Pachachi, a member of the Governing Council and former foreign minister of Iraq. ”Giving away money would be politically popular,” he said, ”but we should not gain popularity at the expense of the long-range interests of the country. By giving away the money you may sacrifice building more schools and hospitals.”

Some have suggested letting the government keep all of the revenue until oil production increases well beyond current levels, then putting the extra money into a fund. But the oil-to-the-people advocates say that now is the time to at least establish the framework for the fund, before a permanent government gets addicted to the revenue. If experience is any guide, that government would probably not be devoting the money to schools and hospitals. ”There is a direct proportional relationship between bad government and oil revenue,” said Ahmad Chalabi, the current chairman of the Governing Council and the leader of the Iraqi National Congress. ”If the government performs well or badly it doesn’t matter, because the oil revenue continues to flow. The government will use the oil revenue to cover up mistakes.”

Mr. Chalabi pointed to a precedent: a trust fund that existed in Iraq during the 1950’s, when part of the oil revenue went not to the government’s budget but to a development fund whose disbursements were directed by Iraqi and foreign overseers. ”The fund worked very well,” he said. ”Iraq’s economy in the 1950’s and 1960’s was relatively good.” Back then, Mr. Chalabi said, oil revenue was a relative pittance, adding up to less than $10 billion in the four decades preceding the Baath Party’s rise to power in the late 1960’s. But then came the resource curse. During a single decade, the 1980’s, Iraq’s oil revenue amounted to more than $100 billion. ”What happened to it?” Mr. Chalabi asked. ”Iraq was a much better country in every aspect before it got that money.”

Hammond advocates dividend for Iraq
by Sam Bishop / February 22, 2004

Former Alaska Gov. Jay Hammond said Saturday that President George Bush should make an Alaska-like dividend for Iraqis a central element of his re-election campaign. Hammond made the remark after delivering a history and defense of the Alaska Permanent Fund dividend to the annual conference of the U.S. Basic Income Guarantee Network. The organization wants governments to offer all citizens, regardless of their own means, enough money to live. It says the Alaska dividend, which Hammond helped create while governor, is “the only example of an existing basic income guarantee in the world today.” Hammond, 81, warmed up the audience of about 100 at the Capitol Hyatt Hotel by reflecting on the U.S. BIG Network’s warm praise and on other accolades received in recent years. Honors have recently come from such diverse sources as sportsmen, environmentalists and developers, he marveled. After recently receiving an honor from his old nemesis, the Teamsters Union, he said he wondered “what can I expect next … an award for my contributions to public morality, co-sponsored by Jerry Falwell and Larry Flynt?” Hammond has been on a sort of moral crusade recently as he has perceived a growing threat to the dividend program. Earlier this month Hammond crashed the Conference of Alaskans, a 55-member group Gov. Frank Murkowski convened to talk about the permanent fund’s future, and diverted the participants into a discussion of income taxes as well. Saturday, Hammond recited a detailed history of his dividend advocacy, starting with his attempts in the 1960s as mayor of the Bristol Bay Borough to capture some of the salmon dollars that “hemorrhaged” out of that region. He reviewed his advocacy of a pre-permanent fund idea called “Alaska Inc.” in the mid-1970s as a Republican governor, then used the current Alaska dividend debate as a segue into the international arena.

“Without a permanent fund dividend program,” Hammond said. “Alaska will face the same fate as Nigeria.” There, the World Bank estimates that $296 billion flowed in and out of the government’s treasury during its oil boom, “leaving them worse off than they were before,” Hammond said. The Economist magazine appropriately called such mismanaged oil wealth, “the devil’s excrement,” Hammond said. The pattern has been repeated around the globe where countries have come into an oil windfall, he said. “Absent something like our dividend program and ensuing public interest, those windfalls simply inflated a grab bag for special interests. Once deflated, the average citizen was left holding that empty bag,” Hammond said. “Iraq is but the latest example.” He noted that Alaska Sen. Ted Stevens, at his request, proposed to President Bush that the U.S. push for an Alaska-style dividend program after the Iraq war. “Ted, incidentally, wrote me back after that and said ‘I talked to the president. He’s very much interested. Stay tuned,'” Hammond said.

He said he hasn’t heard much since, but intends to seek an audience with the president to push the idea. Hammond noted that he met the president’s father, former President George Bush, years ago in Alaska before the elder Bush was well known nationally. The elder Bush helped with his fund-raising and even wrote a blurb for his autobiography, Hammond noted. “I owe George Junior at least this–to convey to him how he could make this the centerpiece of his national campaign, thereby hopefully propelling the other candidates into the same arena to compete to see who can do more to propel or promote the concept in Third World countries, Iraq or wherever,” Hammond said. “If George Bush is out front, I think he’ll capture a lot of attention. I think his opposition certainly are not going to oppose it. “What better way to induce a capitalistic, democratic mindset among Iraqis? Far better than a few privileged kleptocrats living in opulent splendor while others grovel in squalor,” Hammond said.

To give some credentials to the idea, Hammond quoted 2002 Nobel-laureate in economics Vernon Smith, a professor from George Mason University in Arlington, Va., who spent much of 2003 at the University of Alaska Anchorage. “This is the time and Iraq is the place to create an economic system embodying the revolutionary principle that people’s assets belong directly to the people and can be managed to further individual benefits and free choice without intermediate government ownership,” Hammond quoted Smith as saying. Brazilian Sen. Eduardo Suplicy, who also spoke at the U.S. BIG Network conference, read a portion of a letter he wrote recently to the U.S. administrator in Iraq, Paul Bremer, also advocating an Alaska-style dividend plan. The idea has been endorsed by a variety of people, including a top United Nations official killed in a bombing last summer, Suplicy said.

In Iraq, the economist Smith recommended following Alaska’s precedent but avoiding Alaska’s mistakes, Hammond noted. Those mistakes were two-fold: Not putting all public resource wealth into the fund, and not reserving the income solely for dividends unless approved by a vote of the people. “Since this is precisely what I wanted but failed to do first with Bristol Bay Inc. with fish and later with oil and Alaska Inc., I find that comment vindicating,” Hammond said. “The following, however, I find truly rapturous. “Beware of giving governments drawing rights on the value of public assets,” Hammond quoted Smith as saying. “Public resources should belong directly to the public through mechanisms such as Alaska’s permanent fund … It is a model governments all over the world would be well-advised to copy.”

In questions after his speech, though, Hammond sensed that he and some of his association audience members may differ on a fundamental. Hammond’s pro-dividend philosophy rests upon the public ownership of the resources feeding the Alaska Permanent Fund. So when asked whether he thought an income tax should also be used to bolster the dividend, he balked. “People resent having their hard-earned income taken from them and redistributed,” he said. He said he sympathizes with that idea and on that score may differ from the ideas advocated by the U.S. BIG Network, he said. “Our program doesn’t contemplate taking income made by the public.” So what happens to those residents of places in the world unlucky enough to have neither “salmon nor oil,” another member of the audience asked. Hammond said he didn’t really know. He said he had recently been intrigued by proposals to auction rights to pollute the air, as a publicly owned resource, and distribute the proceeds as dividends.

‘Guaranteed income’ plan finds support
by Bartholomew Sullivan / January 18, 2010

Dr. Martin Luther King Jr. wrote: “I am now convinced that the simplest approach will prove to be the most effective — the solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income.”

Dr. Martin Luther King Jr. had another dream: the guaranteed income. Those careful about his legacy say the $120 million monument to him that’s finally nearing construction on the National Mall is all well and good. But as the nation commemorates King’s 81st birthday today, they say he should best be remembered for his career-long focus on the poor. A year before his 1968 death in Memphis, in his “Where Do We Go From Here: Chaos or Community,” King wrote: “I am now convinced that the simplest solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income.”

The idea was to guarantee that no one lived in poverty by having the government provide a financial floor, pegged to median — not low — incomes, beneath which no one could fall. King talked about the psychological benefits of a widespread sense of “economic security.” Economists John Kenneth Galbraith, Paul Samuelson and Milton Friedman endorsed the idea of guaranteed incomes, as did Lyndon Johnson’s Labor Secretary and later New York Sen. Daniel P. Moynihan. Advocating the proposal was the official debate resolution for public high schools in 1973. It was a mainstream idea that has since faded from view.

But a movement to spur a guaranteed income plan is reawakening in academic and anti-poverty circles as the nation looks at 15.3 million people seeking work and the prospect of large-scale and long-term unemployment. The Basic Income Guarantee movement (USBIG.net) is based on the belief that increased mechanization and labor efficiencies, coupled with the export of industrial and manufacturing jobs to low-wage countries, means there just isn’t enough work available. Once robots can understand speech, even more jobs in the service industries will disappear, they say.

And yet people will still need to live even without work. Advocates say a redistribution of some anti-poverty program funding for direct subsidization of adequate incomes would solve the poverty problem while stimulating consumption. University of Tennessee-Knoxville sociology professor Harry F. Dahms, a member of the U.S. Basic Income Guarantee Network, said when he talks about the idea in the South “audiences seem rather baffled, first, that such an idea even exists.” Their second response is surprise “that some people would entertain it seriously.”

In a class on social justice and public policy, Dahms, originally from Germany, discusses guaranteed incomes as a way for the work force to take advantage of growing efficiencies by having more people work fewer hours. In Memphis, efforts to enact a living wage for Shelby County and city employees and contractors were a step in the direction of raising the income bar. But Rebekah Jordan Gienapp, director of the Workers Interfaith Network, said King called for raising the minimum wage to a level that could raise working people out of poverty. She noted that, adjusted for inflation, it’s lower now than in 1968.

Tennessee and Mississippi don’t have state minimum wage laws and the minimum in Arkansas is lower than the current federal minimum wage of $7.25 per hour. “What does that tell us about how we’ve really, in a lot of ways, moved backwards since the civil rights movement in some of these economic ways?” she asks. “Particularly on Dr. King’s birthday, he tends to be held up as just someone who advocated diversity or integration, but his message was much broader and more radical than that …”

Supporters of a guaranteed income acknowledge the solution sounds radical but point to the subsidy every citizen of Alaska receives each year from the state’s oil revenue. The share-the-wealth program in one of the most Republican-leaning states is so popular that efforts to repeal it have failed. Congress actually considered a slimmed-down variant of a guaranteed income plan when U.S. Rep. Bob Filner, D-Calif., proposed the Tax Cuts for the Rest of Us Act in 2006 in response to Bush tax cuts for upper-income taxpayers. It would have made the standard income tax deduction into a refundable tax credit.

Basic income
Main article: Basic income
A basic income is granted independent of other income (including salaries) and wealth, with no other requirement than citizenship. This is a special case of GMI, based on additional ideologies and/or goals. While most modern countries have some form of guaranteed minimum income, a basic income is rare.

Examples of implementation
Portugal is by far the closest a country has come to actually having fully implemented such a system. This is because the Portuguese government made a guaranteed minimum income a legally enshrined right for the entire population in 1997. The policy remains at present. However, the country’s income security policy is rather residualist, with an amount guaranteed well below the poverty line, and other income security policies such as the minimum wage are thus still in place as a consequence. The system also forces participants to attend social integration sessions.

The U.S. State of Alaska has a system which guarantees each citizen a share of the state’s oil revenues (see Alaska Permanent Fund Dividend). The city of Dauphin, Manitoba, Canada had an experimental guaranteed annual income program (“Mincome”) in the 1970s.[1] Many other countries have political parties that advocate such a system, such as the Green Party of Canada, Green Party of England and Wales, the Canadian Action Party, the Anarchist Pogo Party of Germany, the Danish Minority Party, Vivant (Belgium), both the Scottish Green Party and recently the Scottish National Party, and the New Zealand Democratic Party.

In 1972, members of the American Democratic Party wrote a proposal for a GMI into their official platform. However, that particular plank, along with numerous others, was removed following the landslide defeat of Senator George McGovern, the party’s candidate in that year’s presidential election. One proposed method of offsetting the cost to the Treasury of this tax expenditure lies in its coupling with a flat tax, a type of federal income tax in which all taxpayers are subject to a single tax rate. The current model of progressive income taxes used throughout the western world could be eliminated, but the system would still be progressive, since those at the lower end of the wage scale would pay less in taxes than they would receive in guaranteed income. For the most wealthy members of society the few thousand dollars of the guaranteed income would only make a small dent in the taxes they have to pay. Also, the USA has the Earned income tax credit for low-income taxpayers. The citizen’s dividend is a similar concept, but the payment made to individuals is based upon the revenues that the government can collect from leasing and selling natural resources (such a dividend in fact exists in the state of Alaska).

Modern advocates include Hans-Werner Sinn (Germany) and Ayşe Buğra (Turkey). Other advocates are winners of the Nobel Prize in Economics, including Paul Samuelson, James Tobin, Herbert Simon, Friedrich Hayek, James Meade, Robert Solow, and, depending on how one regards his negative income tax proposal, Milton Friedman. In his final book Where Do We Go From Here: Chaos or Community? (1967) Martin Luther King Jr. wrote[2] “I am now convinced that the simplest approach will prove to be the most effective — the solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income.” – from the chapter entitled “Where We Are Going”

Many different sources of funding have been suggested for a guaranteed minimum income:
Income taxes
Sales taxes
Capital gains taxes
Inheritance taxes
Wealth taxes, e.g. property tax
Luxury taxes
Elimination of current income support programs and tax deductions
Repayment of the grant at death or retirement
Land and natural resource taxes
Pollution taxes
Fees from government created monopolies (such as the broadcast spectrum and utilities)
Collective resource ownership
Universal stock ownership
A National Mutual Fund
Money creation or seignorage
Tariffs, the lottery, or sin taxes
Technology Taxes
Tobin Tax

by Philippe Van Parijs

Entering the new millennium, I submit for discussion a proposal for the improvement of the human condition: namely, that everyone should be paid a universal basic income (UBI), at a level sufficient for subsistence. In a world in which a child under five dies of malnutrition every two seconds, and close to a third of the planet’s population lives in a state of “extreme poverty” that often proves fatal, the global enactment of such a basic income proposal may seem wildly utopian. Readers may suspect it to be impossible even in the wealthiest of OECD nations.

Yet, in those nations, productivity, wealth, and national incomes have advanced sufficiently far to support an adequate UBI. And if enacted, a basic income would serve as a powerful instrument of social justice: it would promote real freedom for all by providing the material resources that people need to pursue their aims. At the same time, it would help to solve the policy dilemmas of poverty and unemployment, and serve ideals associated with both the feminist and green movements. So I will argue.

I am convinced, along with many others in Europe, that–far from being utopian–a UBI makes common sense in the current context of the European Union.1 As Brazilian senator Eduardo Suplicy has argued, it is also relevant to less-developed countries–not only because it helps keep alive the remote promise of a high level of social solidarity without the perversity of high unemployment, but also because it can inspire and guide more modest immediate reforms.2 And if a UBI makes sense in Europe and in less developed countries, why should it not make equally good (or perhaps better) sense in North America?3 After all, the United States is the only country in the world in which a UBI is already in place: in 1999, the Alaska Permanent Fund paid each person of whatever age who had been living in Alaska for at least one year an annual UBI of $1,680. This payment admittedly falls far short of subsistence, but it has nonetheless become far from negligible two decades after its inception. Moreover, there was a public debate about UBI in the United States long before it started in Europe. In 1967, Nobel economist James Tobin published the first technical article on the subject, and a few years later, he convinced George McGovern to promote a UBI, then called “demogrant,” in his 1972 presidential campaign.4

To be sure, after this short public life the UBI has sunk into near-oblivion in North America. For good reasons? I believe not. There are many relevant differences between the United States and the European Union in terms of labor markets, educational systems, and ethnic make-up. But none of them makes the UBI intrinsically less appropriate for the United States than for the European Union. More important are the significant differences in the balance of political forces. In the United States, far more than in Europe, the political viability of a proposal is deeply affected by how much it caters to the tastes of wealthy campaign donors. This is bound to be a serious additional handicap for any proposal that aims to expand options for, and empower, the least wealthy. But let’s not turn necessity into virtue, and sacrifice justice in the name of increased political feasibility. When fighting to reduce the impact of economic inequalities on the political agenda, it is essential, in the United States as elsewhere, to propose, explore, and advocate ideas that are ethically compelling and make economic sense, even when their political feasibility remains uncertain. Sobered, cautioned, and strengthened by Europe’s debate of the last two decades, here is my modest contribution to this task.

UBI Defined
By universal basic income I mean an income paid by a government, at a uniform level and at regular intervals, to each adult member of society. The grant is paid, and its level is fixed, irrespective of whether the person is rich or poor, lives alone or with others, is willing to work or not. In most versions–certainly in mine–it is granted not only to citizens, but to all permanent residents. The UBI is called “basic” because it is something on which a person can safely count, a material foundation on which a life can firmly rest. Any other income–whether in cash or in kind, from work or savings, from the market or the state–can lawfully be added to it. On the other hand, nothing in the definition of UBI, as it is here understood, connects it to some notion of “basic needs.” A UBI, as defined, can fall short of or exceed what is regarded as necessary to a decent existence.

I favor the highest sustainable such income, and believe that all the richer countries can now afford to pay a basic income above subsistence. But advocates of a UBI do not need to press for a basic income at this level right away. In fact, the easiest and safest way forward, though details may differ considerably from one country to another, is likely to consist of enacting a UBI first at a level below subsistence, and then increasing it over time.

The idea of the UBI is at least 150 years old. Its two earliest known formulations were inspired by Charles Fourier, the prolific French utopian socialist. In 1848, while Karl Marx was finishing off the Communist Manifesto around the corner, the Brussels-based Fourierist author Joseph Charlier published Solution of the Social Problem, in which he argued for a “territorial dividend” owed to each citizen by virtue of our equal ownership of the nation’s territory. The following year, John Stuart Mill published a new edition of his Principles of Political Economy, which contains a sympathetic presentation of Fourierism (“the most skillfully combined, and with the greatest foresight of objections, of all the forms of Socialism”) rephrased so as to yield an unambiguous UBI proposal: “In the distribution, a certain minimum is first assigned for the subsistence of every member of the community, whether capable or not of labour. The remainder of the produce is shared in certain proportions, to be determined beforehand, among the three elements, Labour, Capital, and Talent.”5

Under various labels–”state bonus,” “national dividend,” “social dividend,” “citizen’s wage,” “citizen’s income,” “universal grant,” “basic income,” etc.–the idea of a UBI was repeatedly taken up in intellectual circles throughout the twentieth century. It was seriously discussed by left-wing academics such as G. D. H. Cole and James Meade in England between the World Wars and, via Abba Lerner, it seems to have inspired Milton Friedman’s proposal for a “negative income tax.”6 But only since the late-1970s has the idea gained real political currency in a number of European countries, starting with the Netherlands and Denmark. A number of political parties, usually green or “left-liberal” (in the European sense), have now made it part of their official party program.

UBI and Existing Programs
To appreciate the significance of this interest and support, it is important to understand how a UBI differs from existing benefit schemes. It obviously differs from traditional social-insurance based income-maintenance institutions (such as Social Security), whose benefits are restricted to wage workers who have contributed enough out of their past earnings to become eligible. But it also differs from Western European or North American conditional minimum-income schemes (such as welfare).

Many, indeed most West European countries introduced some form of guaranteed minimum-income scheme at some point after World War II.7 But these schemes remain conditional: to receive an income grant a beneficiary must meet more or less stringent variants of the following three requirements: if she is able to work, she must be willing to accept a suitable job, or to undergo suitable training, if offered; she must pass a means test, in the sense that she is only entitled to the benefit if there are grounds to believe that she has no access to a sufficient income from other sources; and her household situation must meet certain criteria–it matters, for example, whether she lives on her own, with a person who has a job, with a jobless person, etc. By contrast, a UBI does not require satisfaction of any of these conditions.

Advocates of a UBI may, but generally do not, propose it as a full substitute for existing conditional transfers. Most supporters want to keep–possibly in simplified forms and necessarily at reduced levels–publicly organized social insurance and disability compensation schemes that would supplement the unconditional income while remaining subjected to the usual conditions. Indeed, if a government implemented an unconditional income that was too small to cover basic needs–which, as I previously noted, would almost certainly be the case at first–UBI advocates would not want to eliminate the existing conditional minimum-income schemes, but only to readjust their levels.

In the context of Europe’s most developed welfare states, for example, one might imagine the immediate introduction of universal child benefits and a strictly individual, noncontributory basic pension as full substitutes for existing means-tested benefit schemes for the young and the elderly. Indeed, some of these countries already have such age- restricted UBIs for the young and the elderly. Contributory retirement insurance schemes, whether obligatory or optional, would top up the basic pension.

As for the working-age population, advocates of a universal minimum income could, in the short term, settle for a “partial” (less-than-subsistence) but strictly individual UBI, initially pitched at, say, half the current guaranteed minimum income for a single person. In US terms, that would be about $250 per month, or $3,000 a year. For households whose net earnings are insufficient to reach the socially defined subsistence level, this unconditional and individual floor would be supplemented by means-tested benefits, differentiated according to household size and subjected, as they are now, to some work requirements.

UBI and Some Alternatives
While the UBI is different from traditional income maintenance schemes, it also differs from a number of other innovative proposals that have attracted recent attention. Perhaps closest to a UBI are various negative income tax (NIT) proposals.8

Though the details vary, the basic idea of a negative income tax is to grant each citizen a basic income, but in the form of a refundable tax credit. From the personal tax liability of each household, one subtracts the sum of the basic incomes of its members. If the difference is positive, a tax needs to be paid. If it is negative, a benefit (or negative tax) is paid by the government to the household. In principle, one can achieve exactly the same distribution of post-tax-and-transfer income among households with a UBI or with an NIT. Indeed, the NIT might be cheaper to run, since it avoids the to-and-fro that results from paying a basic income to those with a substantial income and then taxing it back.

Still, a UBI has three major advantages over an NIT. First, any NIT scheme would have the desired effects on poverty only if it was supplemented by a system of advance payments sufficient to keep people from starving before their tax forms are examined at the end of the fiscal year. But from what we know of social welfare programs, ignorance or confusion is bound to prevent some people from getting access to such advance payments. The higher rate of take-up that is bound to be associated with a UBI scheme matters greatly to anyone who wants to fight poverty.

Second, although an NIT could in principle be individualized, it operates most naturally and is usually proposed at the household level. As a result, even if the inter-household distribution of income were exactly the same under an NIT and the corresponding UBI, the intra-household distribution will be far less unequal under the UBI. In particular, under current circumstances, the income that directly accrues to women will be considerably higher under the UBI than the NIT, since the latter tends to ascribe to the household’s higher earner at least part of the tax credit of the low- or non-earning partner.

Third, a UBI can be expected to deal far better than an NIT with an important aspect of the “unemployment trap” that is stressed by social workers but generally overlooked by economists. Whether it makes any sense for an unemployed person to look for or accept a job does not only depend on the difference between income at work and out of work. What deters people from getting out to work is often the reasonable fear of uncertainty. While they try a new job, or just after they lose one, the regular flow of benefits is often interrupted. The risk of administrative time lags– especially among people who may have a limited knowledge of their entitlements and the fear of going into debt, or for people who are likely to have no savings to fall back on–may make sticking to benefits the wisest option. Unlike an NIT, a UBI provides a firm basis of income that keeps flowing whether one is in or out of work. And it is therefore far better suited to handle this aspect of the poverty trap.

The Stakeholder Society
UBI also differs from the lump-sum grant, or “stake,” that Thomas Paine and Orestes Brownson–and, more recently, Bruce Ackerman and Anne Alstott–have suggested be universally awarded to citizens at their maturity in a refashioned “stakeholder society.”9 Ackerman and Alstott propose that, upon reaching age 21, every citizen, rich or poor, should be awarded a lump-sum stake of $80,000. This money can be used in any way its recipient wishes–from investing in the stock market or paying for college fees to blowing it all in a wild night of gambling. The stake is not conditioned on recipients being “deserving,” or having shown any interest in contributing to society. Funding would be provided by a 2 percent wealth tax, which could be gradually replaced over time (assuming a fair proportion of recipients ended their lives with enough assets) by a lump-sum estate tax of $80,000 (in effect requiring the recipient to pay back the stake).

I am not opposed to a wealth or estate tax, nor do I think it is a bad idea to give everyone a little stake to get going with their adult life. Moreover, giving a large stake at the beginning of adult life might be regarded as formally equivalent–with some freedom added–to giving an equivalent amount as a life-long unconditional income. After all, if the stake is assumed to be paid back at the end of a person’s life, as it is in the Ackerman/Alstott proposal, the equivalent annual amount is simply the stake multiplied by the real rate of interest, say an amount in the (very modest) order of $2,000 annually, or hardly more than Alaska’s dividend. If instead people are entitled to consume their stake through life–and who would stop them?–the equivalent annual income would be significantly higher.

Whatever the level, given the choice between an initial endowment and an equivalent life-long UBI, we should go for the latter. Endowments are rife with opportunities for waste, especially among those less well equipped by birth and background to make use of the opportunity the stake supplies. To achieve, on an ongoing basis, the goal of some baseline income maintenance, it would therefore be necessary to keep a means-tested welfare system, and we would be essentially back to our starting point–the need and desirability of a UBI as an alternative to current provisions.

The main argument for UBI is founded on a view of justice. Social justice, I believe, requires that our institutions be designed to best secure real freedom to all.10 Such a real-libertarian conception of justice combines two ideas. First, the members of society should be formally free, with a well-enforced structure of property rights that includes the ownership of each by herself. What matters to a real libertarian, however, is not only the protection of individual rights, but assurances of the real value of those rights: we need to be concerned not only with liberty, but, in John Rawls’s phrase, with the “worth of liberty.” At first approximation, the worth or real value of a person’s liberty depends on the resources the person has at her command to make use of her liberty. So it is therefore necessary that the distribution of opportunity–understood as access to the means that people need for doing what they might want to do–be designed to offer the greatest possible real opportunity to those with least opportunities, subject to everyone’s formal freedom being respected.

This notion of a just, free society needs to be specified and clarified in many respects.11 But in the eyes of anyone who finds it attractive, there cannot but be a strong presumption in favor of UBI. A cash grant to all, no questions asked, no strings attached, at the highest sustainable level, can hardly fail to advance that ideal. Or if it does not, the burden of argument lies squarely on the side of the challengers.

Jobs and Growth
A second way to make the case for UBI is more policy-oriented. A UBI might be seen as a way to solve the apparent dilemma between a European-style combination of limited poverty and high unemployment and an American-style combination of low unemployment and widespread poverty. The argument can be spelled out, very schematically, as follows.

For over two decades, most West European countries have been experiencing massive unemployment. Even at the peak of the jobs cycle, millions of Europeans are vainly seeking work. How can this problem be tackled? For a while, the received wisdom was to deal with massive unemployment by speeding up the rate of growth. But considering the speed with which technological progress was eliminating jobs, it became apparent that a fantastic rate of growth would be necessary even to keep employment stable, let alone to reduce the number of unemployed. For environmental and other reasons, such a rate of growth would not be desirable. An alternative strategy was to consider a substantial reduction in workers’ earnings. By reducing the relative cost of labor, technology could be redirected in such a way that fewer jobs were sacrificed. A more modest and therefore sustainable growth rate might then be able to stabilize and gradually reduce present levels of unemployment. But this could only be achieved at the cost of imposing an unacceptable standard of living on a large part of the population, all the more so because a reduction in wages would require a parallel reduction in unemployment benefits and other replacement incomes, so as to preserve work incentives.

If we reject both accelerated growth and reduced earnings, must we also give up on full employment? Yes, if by full employment we mean a situation in which virtually everyone who wants a full-time job can obtain one that is both affordable for the employer without any subsidy and affordable for the worker without any additional benefit. But perhaps not, if we are willing to redefine full employment by either shortening the working week, paying subsidies to employers, or paying subsidies to employees.

A first option, particularly fashionable in France at the moment, consists in a social redefinition of “full time”–that is, a reduction in maximum working time, typically in the form of a reduction in the standard length of the working week. The underlying idea is to ration jobs: because there are not enough jobs for everyone who would like one, let us not allow a subset to appropriate them all.

On closer scrutiny, however, this strategy is less helpful than it might seem. If the aim is to reduce unemployment, the reduction in the work week must be dramatic enough to more than offset the rate of productivity growth. If this dramatic reduction is matched by a proportional fall in earnings, the lowest wages will then fall–unacceptably–below the social minimum. If, instead, total earnings are maintained at the same level, if only for the less well paid, labor costs will rise. The effect on unemployment will then be reduced, if not reversed, as the pressure to eliminate the less skilled jobs through mechanization is stepped up. In other words, a dramatic reduction in working time looks bound to be detrimental to the least qualified jobs–either because it kills the supply (they pay less than replacement incomes) or because it kills the demand (they cost firms a lot more per hour than they used to).

It does not follow that the reduction of the standard working week can play no role in a strategy for reducing unemployment without increasing poverty. But to avoid the dilemma thus sketched, it needs to be coupled with explicit or implicit subsidies to low-paid jobs. For example, a reduction of the standard working week did play a role in the so-called “Dutch miracle”–the fact that, in the last decade or so, jobs expanded much faster in the Netherlands than elsewhere in Europe. But this was mainly as a result of the standard working week falling below firms’ usual operating time and thereby triggering a restructuring of work organization that involved far more part-time jobs. But these jobs could not have developed without the large implicit subsidies they enjoy, in the Netherlands, by virtue of a universal basic pension, universal child benefits, and a universal health care system.

Any strategy for reducing unemployment without increasing poverty depends, then, on some variety of the active welfare state–that is, a welfare state that does not subsidize passivity (the unemployed, the retired, the disabled, etc.) but systematically and permanently (if modestly) subsidizes productive activities. Such subsidies can take many different forms. At one extreme, they can take the form of general subsidies to employers at a level that is gradually reduced as the hourly wage rate increases. Edmund Phelps has advocated a scheme of this sort, restricted to full-time workers, for the United States.12 In Europe, this approach usually takes the form of proposals to abolish employers’ social security contributions on the lower earnings while maintaining the workers’ entitlements to the same level of benefits.

At the other extreme we find the UBI, which can also be understood as a subsidy, but one paid to the employee (or potential employee), thereby giving her the option of accepting a job with a lower hourly wage or with shorter hours than she otherwise could. In between, there are a large number of other schemes, such as the US Earned Income Tax Credit and various benefit programs restricted to people actually working or actively looking for full-time work.

A general employment subsidy and a UBI are very similar in terms of the underlying economic analysis and, in part, in what they aim to achieve. For example, both address head-on the dilemma mentioned in connection with reductions in work time: they make it possible for the least skilled to be employed at a lower cost to their employer, without thereby impoverishing workers.

The two approaches are, however, fundamentally different in one respect. With employer subsidies, the pressure to take up employment is kept intact, possibly even increased; with a UBI, that pressure is reduced. This is not because permanent idleness becomes an attractive option: even a large UBI cannot be expected to secure a comfortable standard of living on its own. Instead, a UBI makes it easier to take a break between two jobs, reduce working time, make room for more training, take up self-employment, or to join a cooperative. And with a UBI, workers will only take a job if they find it suitably attractive, while employer subsidies make unattractive, low-productivity jobs more economically viable. If the motive in combating unemployment is not some sort of work fetishism–an obsession with keeping everyone busy–but rather a concern to give every person the possibility of taking up gainful employment in which she can find recognition and accomplishment, then the UBI is to be preferred.

Feminist and Green Concerns
A third piece of the argument for a UBI takes particular note of its contribution to realizing the promise of the feminist and green movements. The contribution to the first should be obvious. Given the sexist division of labor in the household and the special “caring” functions that women disproportionately bear, their labor market participation, and range of choice in jobs, is far more constrained than those of men. Both in terms of direct impact on the inter-individual distribution of income and the longer-term impact on job options, a UBI is therefore bound to benefit women far more than men. Some of them, no doubt, will use the greater material freedom UBI provides to reduce their paid working time and thereby lighten the “double shift” at certain periods of their lives. But who can sincerely believe that working subject to the dictates of a boss for forty hours a week is a path to liberation? Moreover, it is not only against the tyranny of bosses that a UBI supplies some protection, but also against the tyranny of husbands and bureaucrats. It provides a modest but secure basis on which the more vulnerable can stand, as marriages collapse or administrative discretion is misused.

To discuss the connection between UBI and the green movement, it is useful to view the latter as an alliance of two components. Very schematically, the environmental component’s central concern is with the pollution generated by industrial society. Its central objective is the establishment of a society that can be sustained by its physical environment. The green-alternative component’s central concern, on the other hand, is with the alienation generated by industrial society. Its central objective is to establish a society in which people spend a great deal of their time on “autonomous” activities, ruled by neither the market nor the state. For both components, there is something very attractive in the idea of a UBI.

The environmentalists’ chief foe is productivism, the obsessive pursuit of economic growth. And one of the most powerful justifications for fast growth, in particular among the working class and its organizations, is the fight against unemployment. The UBI, as argued above, is a coherent strategy for tackling unemployment without relying on faster growth. The availability of such a strategy undermines the broad productivist coalition and thereby improves the prospects for realizing environmentalist objectives in a world in which pollution (even in the widest sense) is not the only thing most people care about.

Green-alternatives should also be attracted to basic income proposals, for a UBI can be viewed as a general subsidy financed by the market and state spheres to the benefit of the autonomous sphere. This is in part because the UBI gives everyone some real freedom–as opposed to a sheer right–to withdraw from paid employment in order to perform autonomous activities, such as grass-roots militancy or unpaid care work. But part of the impact also consists in giving the least well endowed greater power to turn down jobs that they do not find sufficiently fulfilling, and in thereby creating incentives to design and offer less alienated employment.

Some Objections
Suppose everything I have said thus far is persuasive: that the UBI, if it could be instituted, would be a natural and attractive way of ensuring a fair distribution of real freedom, fighting unemployment without increasing poverty, and promoting the central goals of both the feminist and the green movements. What are the objections?

Perhaps the most common is that a UBI would cost too much. Such a statement is of course meaningless if the amount and the scale is left unspecified. At a level of $150 per month and per person, a UBI is obviously affordable in some places, since this is the monthly equivalent of what every Alaskan receives as an annual dividend. Could one afford a UBI closer to the poverty line? By simply multiplying the poverty threshold for a one-person household by the population of a country, one soon reaches scary amounts–often well in excess of the current level of total government expenditure.

But these calculations are misleading. A wide range of existing benefits can be abolished or reduced once a UBI is in place. And for most people of working age, the basic income and the increased taxes (most likely in the form of an abolition of exemptions and of low tax rates for the lowest income brackets) required to pay for it will largely offset each other. In a country such as the United States, which has developed a reasonably effective revenue collection system, what matters is not the gross cost but its distributive impact–which could easily work out the same for a UBI or an NIT.

Estimates of the net budgetary cost of various UBI and NIT schemes have been made both in Europe and the United States.13 Obviously, the more comprehensive and generous existing means-tested minimum-income schemes are, the more limited the net cost of a UBI scheme at a given level. But the net cost is also heavily affected by two other factors. Does the scheme aim to achieve an effective rate of taxation (and hence of disincentive to work) at the lower end of the distribution of earnings no higher than the tax rates higher up? And does it give the same amount to each member of a couple as to a single person? If the answer is positive on both counts, a scheme that purports to lift every household out of poverty has a very high net cost, and would therefore generate major shifts in the income distribution, not only from richer to poorer households, but also from single people to couples.14 This does not mean that it is “unaffordable,” but that a gradual approach is required if sudden sharp falls in the disposable incomes of some households are to be avoided. A basic income or negative income tax at the household level is one possible option. A strictly individual, but “partial” basic income, with means-tested income supplements for single adult households, is another.

A second frequent objection is that a UBI would have perverse labor supply effects. (In fact, some American income maintenance experiments in the 1970s showed such effects.) The first response should be: “So what?” Boosting the labor supply is no aim in itself. No one can reasonably want an overworked, hyperactive society. Give people of all classes the opportunity to reduce their working time or even take a complete break from work in order to look after their children or elderly relatives. You will not only save on prisons and hospitals. You will also improve the human capital of the next generation. A modest UBI is a simple and effective instrument in the service of keeping a socially and economically sound balance between the supply of paid labor and the rest of our lives.

It is of the greatest importance that our tax-and-transfer systems not trap the least skilled, or those whose options are limited for some other reason, in a situation of idleness and dependency. But it is precisely awareness of this risk that has been the most powerful factor in arousing public interest for a UBI in those European countries in which a substantial means-tested guaranteed minimum income had been operating for some time. It would be absurd to deny that such schemes depress in undesirable ways workers’ willingness to accept low-paid jobs and stick with them, and therefore also employers’ interest in designing and offering such jobs. But reducing the level or security of income support, on the pattern of the United States 1996 welfare reform, is not the only possible response. Reducing the various dimensions of the unemployment trap by turning means-tested schemes into universal ones is another. Between these two routes, there cannot be much doubt about what is to be preferred by people committed to combining a sound economy and a fair society–as opposed to boosting labor supply to the maximum.

A third objection is moral rather than simply pragmatic. A UBI, it is often said, gives the undeserving poor something for nothing. According to one version of this objection, a UBI conflicts with the fundamental principle of reciprocity: the idea that people who receive benefits should respond in kind by making contributions. Precisely because it is unconditional, it assigns benefits even to those who make no social contribution–who spend their mornings bickering with their partner, surf off Malibu in the afternoon, and smoke pot all night.

One might respond by simply asking: How many would actually choose this life? How many, compared to the countless people who spend most of their days doing socially useful but unpaid work? Everything we know suggests that nearly all people seek to make some contribution. And many of us believe that it would be positively awful to try to turn all socially useful contributions into waged employment. On this background, even the principle “To each according to her contribution” justifies a modest UBI as part of its best feasible institutional implementation.

But a more fundamental reply is available. True, a UBI is undeserved good news for the idle surfer. But this good news is ethically indistinguishable from the undeserved luck that massively affects the present distribution of wealth, income, and leisure. Our race, gender, and citizenship, how educated and wealthy we are, how gifted in math and how fluent in English, how handsome and even how ambitious, are overwhelmingly a function of who our parents happened to be and of other equally arbitrary contingencies. Not even the most narcissistic self-made man could think that he fixed the parental dice in advance of entering this world. Such gifts of luck are unavoidable and, if they are fairly distributed, unobjectionable. A minimum condition for a fair distribution is that everyone should be guaranteed a modest share of these undeserved gifts.15 Nothing could achieve this more securely than a UBI.

Such a moral argument will not be sufficient in reshaping the politically possible. But it may well prove crucial. Without needing to deny the importance of work and the role of personal responsibility, it will save us from being over-impressed by a fashionable political rhetoric that justifies bending the least advantaged more firmly under the yoke. It will make us even more confident about the rightness of a universal basic income than about the rightness of universal suffrage. It will make us even more comfortable about everyone being entitled to an income, even the lazy, than about everyone being entitled to a vote, even the incompetent.

{Philippe Van Parijs directs the Hoover Chair of Economic and Social Ethics at the Catholic University of Louvain.}

1. Many academics and activists who share this view have joined the Basic Income European Network (BIEN). Founded in 1986, BIEN holds its eighth congress in Berlin in October 2000. It publishes an electronic newsletter (bien@etes.ucl.ac.be), and maintains a Web site that carries a comprehensive annotated bibliography in all EU languages (http://www.etes.ucl.ac. be/BIEN/bien.html). For a recent set of relevant European essays, see Loek Groot and Robert Jan van der Veen, eds., Basic Income on the Agenda: Policy Objectives and Political Chances (Amsterdam: Amsterdam University Press, 2000).
2. Federal senator for the huge state of Sao Paulo and member of the opposition Workers Party (PT), Suplicy has advocated an ambitious guaranteed minimum income scheme, a version of which was approved by Brazil’s Senate in 1991.
3. Two North American UBI networks were set up earlier this year: the United States Basic Income Guarantee Network, c/o Dr Karl Widerquist, The Jerome Levy Economics Institute of Bard College, Annandale-on-Hudson, NY 12504-5000, USA (http://www.usbig.net); and Basic Income/Canada, c/o Prof. Sally Lerner, Department of Environment and Resource Studies, University of Waterloo, Waterloo, Ontario, Canada N2L 3G1 (http://www. fes.uwaterloo.ca/Research/FW).
4. See James Tobin, Joseph A. Pechman, and Peter M. Mieszkowski, “Is a Negative Income Tax Practical?” Yale Law Journal 77 (1967): 1-27. See also a recent conversation with Tobin in BIEN’s newsletter (“James Tobin, the Demogrant and the Future of U.S. Social Policy,” in Basic Income 29 (Spring 1998), available on BIEN’s web site).
5. See Joseph Charlier, Solution du problème social ou constitution humanitaire (Bruxelles: Chez tous les libraires du Royaume, 1848); John Stuart Mill, Principles of Political Economy, 2nd ed. [1849] (New York: Augustus Kelley, 1987).
6. See the exchange between Eduardo Suplicy and Milton Friedman in Basic Income 34 (June 2000).
7. The latest countries to introduce a guaranteed minimum income at national level were France (in 1988) and Portugal (in 1997). Out of the European Union’s fifteen member states, only Italy and Greece have no such scheme.
8. In the United States, one recent proposal of this type has been made in Fred Block and Jeff Manza, “Could We End Poverty in a Postindustrial Society? The Case for a Progressive Negative Income Tax,” Politics and Society 25 (December 1997): 473-511.
9. Bruce Ackerman and Anne Alstott, The Stakeholder Society (New Haven: Yale University Press, 1999). Their proposal is a sophisticated and updated version of a proposal made by Thomas Paine to the French Directoire. See “Agrarian Justice” [1796], in The Life and Major Writings of Thomas Paine, P. F. Foner, ed., (Secaucus, N.J.: Citadel Press, 1974), pp. 605-623. A similar program was proposed, independently, by the New England liberal, and later arch-conservative, Orestes Brownson in the Boston Quarterly Review of October 1840. If the American people are committed to the principle of “equal chances,” he argued, then they should make sure that each person receives, on maturity, an equal share of the “general inheritance.”
10. For a more detailed discussion, see Philippe Van Parijs, Real Freedom for All (New York: Oxford University Press, 1995).
11. One can think of alternative normative foundations. For example, under some empirical assumptions a UBI is also arguably part of the package that Rawls’s difference principle would justify. See, for example, Walter Schaller, “Rawls, the Difference Principle, and Economic Inequality,” in Pacific Philosophical Quarterly 79 (1998) 368-91; Philippe Van Parijs, “Difference Principles,” in The Cambridge Companion to John Rawls, Samuel Freeman ed., (Cambridge: Cambridge University Press, forthcoming). Alternatively, one might view a UBI as a partial embodiment of the Marxian principle of distribution according to needs. See Robert J. van der Veen and Philippe Van Parijs, “A Capitalist Road to Communism,” Theory and Society 15 (1986) 635-55.
12. See Edmund S. Phelps, Rewarding Work (Cambridge, Mass.: Harvard University Press, 1997).
13. In the US case, for example, the fiscally equivalent negative-income-tax scheme proposed by Block and Manza, which would raise all base incomes to at least 90 percent of the poverty line (and those of poor families well above that), would, in mid-1990s dollars, cost about $60 billion annually.
14. To fund this net cost, the personal income tax is obviously not the only possible source. In some European proposals, at least part of the funding comes from ecological, energy, or land taxes; from a tax on value; from non-inflationary money creation; or possibly even from Tobin taxes on international financial transactions (although it is generally recognized that the funding of a basic income in rich countries would not exactly be a priority in the allocation of whatever revenues may be collected from this source). But none of these sources could realistically enable us to dispense with personal income taxation as the basic source of funding. Nor do they avoid generating a net cost in terms of real disposable income for some households, and thereby raising an issue of “affordability.”
15. Along the same lines, Herbert A. Simon observes “that any causal analysis explaining why American GDP is about $25,000 per capita would show that at least 2/3 is due to the happy accident that the income recipient was born in the U.S.” He adds, “I am not so naive as to believe that my 70% tax [required to fund a UBI of $8,000 p.a. with a flat tax] is politically viable in the United States at present, but looking toward the future, it is none too soon to find answers to the arguments of those who think they have a solid moral right to retain all the wealth they earn.’” See Simon’s letter to the organizers of BIEN’s seventh congress in Basic Income 28 (Spring 1998).

1970s’ Manitoba poverty experiment called a success / March 25, 2010

A controversial government experiment in the 1970s in which some households in a Manitoba town were given a minimum level of income improved the community’s overall health, a professor at the University of Manitoba says. A controversial government experiment in the 1970s in which some households in a Manitoba town were given a minimum level of income improved the community’s overall health, a professor at the University of Manitoba says. From 1974 through 1978, about 30 per cent of the population of Dauphin was provided with a “mincome,” as the guaranteed level of income came to be called. “We found that, overall, hospitalizations in Dauphin declined relative to the control group,” said Evelyn Forget, professor of community health science at the University of Manitoba. “We also looked at accidents and injuries, and they also declined. You can argue that accident and injury hospitalizations are strongly related to poverty.”

The goal of the program, which cost $17 million, was to find out whether a guaranteed income would improve health and community life. If a household’s income dropped below a certain amount, the program would top it up to an income equivalent to the welfare rates at the time. The participants who worked had their supplement reduced 50 cents for every dollar they earned in an attempt to encourage people in the program to look for work. Forget has spent three years comparing the administrative health care records of Dauphin’s citizens between 1974 and 1978 with those of a control group of people living in similar Manitoba communities at that time. She said her research suggests that people appear to live healthier lives when they don’t have to worry about poverty. “Hospitalizations for mental health issues were down significantly,” she said, adding that teenagers stayed in school longer as a result of the initiative.

The initiative, which started in 1974, was terminated in 1978 as political support for the experiment faded. “Politically, there was a concern that if you began a guaranteed annual income, people would stop working and start having large families,” Forget said. Ron Hikel, the executive director of the Mincome project, is delighted Forget is taking a fresh look at the project’s impact. “As somebody who devoted three or four years of his life to making this happen, I was disappointed that the data were warehoused,” Hikel said. Forget has not yet been given access to the 2,000 boxes of data collected by the original Mincome researchers, which contain copies of questionnaires participants filled out and, she believes, transcripts of interviews with the families who took part. Hikel, who is now legislative director for U.S. Rep. Eric Massa, said Forget’s research is immensely relevant in Canada and the United States. He said he intends to use her analysis as part of the current health-care debate. “It has to do with the impact that larger social conditions have on one’s health condition and the need for health care,” Hikel said.

Mongolia Fund to Manage $30 Billion Mining Jackpot
by Bloomberg News / September 11, 2009

The Mongolian government will set up a sovereign wealth fund using mining royalties and tax revenue, and distribute part of the income to citizens to alleviate poverty, said Finance Minister Sangajav Bayartsogt. The fund, to be run by professional managers from 2013, will disburse part of its annual income to every Mongolian in cash or non-cash securities to let them own stakes in the country’s mining wealth, Bayartsogt said. Initial capital will be drawn from Ivanhoe Mines Ltd.’s $4 billion Oyu Tolgoi copper- gold mine project, estimated to generate $30 billion in tax revenue over 50 years, he said. “We’re drafting the idea to implement the proposal, and we’re studying examples like the Alaskan Permanent Fund,” Bayartsogt said in a Sept. 9 interview in the capital Ulaanbaatar, declining to specify the size of the proposed fund. Mongolia, whose 2.7 million citizens depend on mining and agriculture for half the nation’s 2008 economic output, is banking on Oyu Tolgoi and about 6,000 other mineral deposit sites to lift average annual income, which at $1,680 per person last year was ranked 151st in the world by the World Bank. “If the government can pull this off, we can expect lasting stability and growth in Mongolia, because this fund can help stabilize the economy and help fend off the boom and burst of the commodity-price cycles,” said Erdenedalai Choinkhor, an economist at Frontier Securities Co. in Ulaanbaatar.

Oil, Gas Money
The $40 billion Alaska Permanent Fund, created in 1976 with state revenue from oil production, has constitutionally protected capital that can’t be spent. Most of its earnings are reinvested, and a dividend is returned each year to eligible Alaskans. The fund reported a $6.3 million loss in 2001 after buying 685,600 shares in Enron Corp. Norway’s sovereign wealth fund, the 2.47 trillion-krone ($410 billion) Government Pension Fund – Global, derives money from taxes on oil and gas and ownership of petroleum fields. The oil and gas money is invested abroad to avoid stoking domestic inflation. Mongolia also wants to diversify the economy’s reliance on animal husbandry and mining to avoid the so-called Dutch Disease, where a commodity boom sucks in foreign exchange, raises the currency’s value and makes manufacturing less competitive. “If mining is booming, the rest of the sectors will slow down because people are expecting to receive work and revenue from mining,” Bayartsogt said. “We will use revenue from mining to develop the processing industry, invest in outsourcing, education, science and technology to move up the value chain and transform the economy.”

Transforming Mongolia
Bayartsogt’s Democratic Party and the opposition Mongolian People’s Revolutionary Party pledged during May general elections to distribute as much as $6 billion, or up to 1.5 million tugriks ($1,060) for every citizen, from the country’s mining wealth. To fulfill the election pledge, the government may use a $250 million pre-payment from Oyu Tolgoi to seed its distribution program, Bayartsogt said. The final accord to develop the Oyu Tolgoi deposits may be signed this month, Minister of Minerals and Energy Dashdorj Zorigt said this week. “The transformational power of the Oyu Tolgoi mine cannot be understated,” said Peter Morrow, chief executive officer of the Khan Bank in Ulaanbaatar. Investments in Oyu Tolgoi are projected at almost 80 percent of Mongolia’s $5 billion economy, he said.

Oyu Tolgoi Deposits
Oyu Tolgoi may hold as much as 32 million tons of copper and 1,200 tons of gold, according to government estimates. Annual output when the mines are excavated may top 450,000 tons of copper with 330,000 ounces of gold, Zorigt said. “The ordinary people are expecting something” to be distributed to them as soon as Oyu Tolgoi is signed, Bayartsogt said. “The expectation is too high. Economics is always connected to politics.” The Oyu Tolgoi deposits, discovered by Ivanhoe in 2003, have gone through a sometimes tumultuous development process. Mongolia’s government on Aug. 25 passed laws allowing companies to carry forward their losses for eight years, build private roads and let Oyu Tolgoi developers use water they find on their land. The parliament will also repeal from Jan. 1, 2011, a 68 percent windfall profit tax on copper and gold. The nation’s 6,000 known mineral deposit sites include reserves of coal, uranium, silver, zinc and molybdenum. “It’s the beginning, an experiment in how to structure a large mining-exploration agreement with the world,” said Terence Ortslan, managing director of TSO & Associates, a Montreal, Canada-based research firm focusing on mining. “Five years from now, Oyu Tolgoi will be in operation, and other projects will be under way.”

Basic income in Brazil
By Chandra Pasma / July 14th, 2009

While Alaska is the only place in the world with an ongoing basic income program, they are not the only jurisdiction to have shown interest. Brazil actually has a law mandating the progressive institution of a basic income program. The law was introduced by Senator Eduardo Suplicy of the Brazilian Workers’ Party in 2001. He had previously introduced a bill to create a Negative Income Tax model of a guaranteed livable income, but that bill failed to pass. This second bill called for a universal basic income program to be progressively instituted, beginning with those most in need. The bill was approved by the Senate in 2002 and by the Chamber of Deputies in 2003. It was signed into law by President Lula da Silva in 2004. The bill leaves implementation in the hands of the President. No progress has been made toward implementing a basic income since then.

However, Brazil does have an interesting, albeit conditional, income security program for the poorest Brazilians. The Bolsa Familia, or Family Grant, was created in 2003 by merging 4 existing cash transfer programs. It could be used as a stepping stone to a basic income program, even though it was not created with that intention. The Bolsa Familia is paid to 11 million of Brazil’s poorest families, which means that the money reaches 46 million people. It has contributed to a reduction in inequality, although it is not the only factor. Brazil, one of the most unequal countries in the world, has made astonishing progress in reducing inequality since 2001. In the last five years, the incomes of the poorest Brazilians have risen 22%, compared to only 4.9% for the richest Brazilians. The program has also had a significant positive effect on the number of children in school, while decreasing the number of children in child labour.

The program has two aspects. Extremely poor families, those with a monthly per capita income of 60 reais or less (R$2 is equal to approximately US$1), receive a basic benefit of R$62 per month. They also receive variable benefits for their children, R$20 per month per child for their first three children, plus R$30 per month per 16 or 17 year old, to a maximum of two. Meanwhile, poor families – those with a monthly per capita income of R$120 or less, receive only the variable benefits for their children. The grants are based on a number of conditions. Children must be in school, attending at least 85% of school days, and they must receive all of their immunizations. Pregnant women must receive pre-natal care. The program currently includes 85% of Brazil’s poorest families. Some are excluded because they repeatedly failed to meet the conditions, while other poor families struggle with the issue of identification. This is one of the reasons why Senator Suplicy is still campaigning tirelessly to see the Bolsa Familia turned into a true basic income program.

Earlier this year, President Lula announced that an additional 1.3 million families will be added to the program in response to the recession. Senator Suplicy is also hoping to start a basic income pilot project, similar to Namibia’s, in Brazil. The project would begin next July, when the Basic Income Earth Network’s biannual conference takes place in Brazil. President Lula has already accepted an invitation to speak on the opening day of the conference.


Senator Suplicy may be the highest-ranking political figure in the world to dedicate himself to promote the basic income guarantee. A U.S.-trained economist, he was elected to the Brazilian Senate in 1990, and he has been promoting the basic income guarantee at the national level ever since. He will be the keynote speaker at the First Congress of the U.S. Basic Income Guarantee Network. Last month, I asked him a few questions about his quest to introduce BIG in Brazil. –Karl Widerquist


After completing my bachelor’s degree (1964) in Business Administration, at the Fundação Getúlio Vargas, in São Paulo, Brazil, and after working with my father for a year or more, I decided to become a Professor of Economics at that same institution were I had studied, and so I decided to work on my Master’s (1966-68) and on my Ph.D in Economics (1970-73) at Michigan State University, with a period of 15 months (1971-1972) of graduate studies at Stanford University. It was my main purpose to understand the mechanisms of the economic system and why were we having so much inequalities and poverty in Brazil. Since I lived in a family with deep sense of fraternity and Christian values, I wanted to know why were there so many conflicts and injustices beyond the walls of my house. I wanted to know the characteristics of the socialism and the capitalism system, and if it would be possible to build a system were we could at the same time eradicate poverty, promote more equality, efficiency and freedom. I had learn from the history of the main scientists such as Galileo Galilei, Nicolau Copernico and Albert Einstein that one should always search for the truth, because willing to know the truth is part of the human nature. The first time I remember to be presented to the negative income tax concept was in my Economic Theory course about the Price System, with Doctor John Moroney, using as a reference the text Microeconomics by Charles Fergunson. I also became acquainted with Capitalism and Freedom (1962) by Milton Friedman and the articles by James Tobin on the topic. Abba Lerner was also teaching at Michigan State University, and I remember José David Langier, a Brazilian Ph.D. student at MSU during the late sixties that was very found of him. After all, Lerner was one of the first to propose a negative income tax in a lump some tax form, that is, a fixed sum to all, in The Economics of Control (1944). I also started to read the books and conferences of John Kenneth Galbraith that once gave a lecture at MSU. During the late sixties and early seventies I also followed with much interest the Civil Rights movement, the speeches of Martin Luther King Jr., the Black Panthers, Angela Davis, the presidential candidates such as Eugene J. McCarty, Robert F. Kennedy, George Mc Govern, Richard Nixon, and others. I remember that in my preliminary exam in Economic Theory I developed a model were we would have all the conditions of efficiency in the economy but that at the same time people would be persuaded to offer conditions of survival with dignity to everyone in the society. At that time I was not acquainted with the writings of Thomas Paine, Bertrand Russell, August Cournot and so many others about whom I refer in my book Renda de Cidadania. A Saída é pela Porta. Cortez Editora e Editora Fundação Perseu Abramo, 2002, São Paulo, or Citizen’s Income. The Exit is Through the Door. During the seventies I interacted with some Brazilian economists that had an interest on the negative income tax concept such as Antonio Maria da Silveira, Edmar Lisboa Bacha and Roberto Mangabeira Unger. When I was elected a Federal Representative of the Worker’s Party, during the eighties, with Paul Singer and others economists, we started to say that it would be important that we defend the concept of a guaranteed income to all Brazilians. It was only when I was elected a Senator in 1990, that I decided to present a legislative proposal to institute a Guaranteed Minimum Income Program through a Negative Income Tax to all adults with 25 years or more with monthly income below US$ 150. They would have the right to receive a complement of income that would be 30% or up to 50% of the difference between that some and his or her level of income. On December 16, 1991, after a long debate, all parties decided to approve that proposal, including the PSDB lead by the present President of Brazil, Fernando Henrique Cardoso. During that day, Senator Cardoso said that the proposal was a realistic utopia. The initiative went to the Chamber of Deputies, where it received a favorable report in the Finance Committee. It is waiting for its approval until today. Some important developments occurred since there were economists such as José Márcio Camargo and Cristovam Buarque, Governor of the Federal District, as well as Mayor José Roberto Magalhães of Campinas, that started to defend the idea of a guaranteed income to poor families as long as they have children in school age that are really going to school. Programs along these lines developed all over the country and are now object of the efforts of the Federal, State and Municipal governments. By the end of 2002, almost all municipalities of Brazil, with the support of the Federal Government will have implemented a guaranteed minimum income program related to educational opportunities, named also as Bolsa-Escola program. The monetary values for families with monthly income below R$90 (US$37.2) or half the minimum wage per capita, however, R$15 (US$6.2), R$30 (US$12.4) or R$45 (US$18.6) if the family has one, two, three or more children up to 14 years of age going to school, are very modest.


It was in 1992 that I became acquainted with the concept of an unconditional basic income, talking with some economists that recommended Arguing for a Basic Income: Ethical Foundations for a Radical Reform (London, Verso, 1992), edited by Philippe Van Parijs. My first reaction was that we should first be guaranteeing a minimum income to those who have little or nothing. More and more, since then, I started to interact with the members of BIEN, the Basic Income European Network. I decided to participate in theirs International Congress in London (1994), Vien (1996) and Berlin (2000). Although I had planned to be there, I was not able to go to the Amsterdam Congress (1998) because I had to be campaigning for my reelection to the Senate. I was reelected Senator for the 1999-2006 term. It is true that I was much influenced by Philippe Van Parijs, Claus Offe, Guy Standing, Tony Atkinson, Sean Healy, Walter Van Trier and so many others that have participated in those congresses and seminars over the subject. Today I am also convinced that the basic income is a common sense solution. Accordingly I presented a new legislative initiative in the Brazilian Senate, on December 4, 2001, saying that from 2005 on, a citizen’s income will be instituted to all Brazilians that live in Brazil as well to all foreigners who are living for at least five years in this country, no matter his or her socioeconomic condition. The citizen’s income will be equal to all, paid in monetary terms. Its value will be determined by the Federal Government taking into account the vital needs of each one, the level of economic development and the budget capacity of the nation. If the initiative is approved by the National Congress, in the October elections of 2004 a popular referendum will be called to confirm the approval of the proposal.


I can understand that the basic income is another way to introduce a negative income tax, as Milton Friedman has replied. But I believe that we would have some advantages if we may have the determination and courage to cut some steps and move forward as soon as possible to the basic income. I can visualize that more and more people will know about their right that will be really universal without a complex bureaucracy that would otherwise be asking all the details about how much each person has gained in the formal as well in the informal market. To have a basic income will be regarded as a right similar to the one that any Brazilian has to walk, play and swim in any of the beaches of our country. Of course the Internal Revenue Service would still have to collect taxes from those with reasonably high incomes to help finance the citizen’s income. Its existence and its fairness, in my view, will help the creation of an attitude of good will from the contributors in favor of a more just and civilized society.


On the 17 of March, 2002, for the first time in the Brazilian History, a political party, the Worker’s Party, will provide the opportunity to all its affiliates, more than 800 thousand in our case, to choose among two different alternatives, Luiz Inácio Lula da Silva, our Honour President and myself, who is going to be the presidential candidate. It is already defined in our Outlines for a Government Plan, approved by the National Encounter of the Partido dos Trabalhadores, PT, held in Recife last December 2002, and that is common for both candidates, the following text:
“It is relevant, in this picture, the institution of a minimum income, related to education, such as in the Bolsa Escola programs, all over the national territory, as an ingredient of complementing the family income. The Bolsa Escola national program of Fernando Henrique Cardoso Government – in spite of the increase of the resources that previously were allocated, in which the PT had important role – is still too timid with respect to the size of the benefits and is based on a limited, incomplete and stagnated vision of the social exclusion problem. The minimum income that we propose, articulated with the social inclusion program, should be viewed as a step towards the implementation – when the social conditions are existent – of a citizen’s basic income as a right of all the Brazilian population.”
It was in the meetings of the economists of the PT along 2001 that I have made efforts for them to include the vision that we should be in favor of a basic citizen’s income as soon as possible. As you may see, the idea was accepted. During the Recife Encounter before 560 delegates I have used the word for 20 minutes to explain this evolution. Right now, with the publication of my book, I am traveling to many cities in several regions of Brazil saying that if I am the chosen candidate I will give high priority to this point.
Let me explain that Lula is a very strong candidate who has been our presidential candidate in 1989, 1994 and 1998, when he got very good results as the second most elected. For more than a year he is leading the polls with 26 to 34% of the national preference. It won’t be easy for me to win, although I do not discard the possibility of a surprise. But I have been telling my friend Lula, for whom I have much respect, and the party, that more important than I becoming the president is that the one who does will really put in practice the ideas that I have been defending.


The Brazilian Constitution says in its Article 14, that the popular sovereignty will be exercised by universal election as well by plebiscite, referendum and popular initiative. Article 49 says that the National Congress may authorize the referendum. That is why the legislative initiative that I presented last December proposes a referendum to be held in October 2004. I believe that the citizen’s basic income will be much more accepted if discussed in depth by the whole population.


Brazil was one of the last nations to abolish slavery in 1888. It will be proper if Brazil becomes one of the first nations to introduce a basic income.


It will be a very difficult task to persuade people both in developed as well in developing nations to introduce a basic income. Every time that I have had the opportunity to explain the concept and its fundamentals in my lectures all over Brazil, in general the proposal is accepted by most people as a good solution. It is important to have the support of institutions such as the labor unions, religious associations, entrepreneurial entities, civil organizations and so on. It is very encouraging the movement in favor of a basic income that has been developing in South Africa with the support of the Alliance for Children’s Entitlement to Social Security, Black Sasc, Child Health Policy Institute, Congress of South African Trade Unions, Development Resources Centre, ESST, Gender Advocacy Programme, Community Law Centre (UWC), Southern African Catholic Bishop’s Conference, South African Council of Churches, South African NGO Coalition and Treatment Action Campaign. South Africa and Brazil are both developing industrialized nations that with respect to income distribution are among the most unequal in the World. Therefore, it is important that the theme is being debated with much interest in both nations.


According to the 2001 Report about the Human Development Index of the United Nations only Swaziland (60.9 in 1994), Nicarágua and South Africa present Inequality Gini Coefficients higher than those of Brazil (59.1 in 1997). According to the 2000/2001 World Bank Development Report, Brazil is third among the nations with most unequal distribution of income, with a Gini Coefficient of 60.0, in 1996, coming after Sierra Lioa (62.9 in 1989) and Central African Republic (61.3 in 1993). In 1999, the one percent richest got 13.9% of the National Income, a higher proportion than the 13.5% obtained by the 50% poorest of the Brazilian population. Under these circumstances, to guarantee a basic income to the whole population becomes most relevant.


The integration of the South American countries must be seen mainly from the point of view of the human being, that differs from the point of view of the owners of capital. The more the social and economic rights of people in countries of the same region are similar the better are the chances of a healthy integration. It was very difficult for Argentina to maintain a fixed parity exchange rate system for a long time whereas Brazil, since 1999, had started a more flexible exchange system. Since February 2002 a more homogeneous form of dealing with the exchange system will help the integration of the economies. If Brazil implements a basic income as a citizen’s right it is most likely that Argentina and other South American countries will start studying how to apply it in their nations. It is interesting to know that a growing number of economists, social scientists and members of the parliaments in several Latin American countries are debating the issue, mainly in Argentina, Colombia and Brazil. See, for example Vuolo, Rubén Lo (org.) (1995). Contra la exclusión. La propuesta del ingresso ciudadano. Buenos Aires, CIEPPP/Mino y Dávila. It will be important to study the effects in the labor market of each nation of the introduction of the basic income. It is my view that it will make the economies consistently more efficiently and competitive, at the same time that will be presenting a higher degree of equity. In Latin America, we should be aware that when in the United States the government introduced in 1975 the EITC, that was significantly expanded in 1993, the Earned Income Tax Credit, a partial negative income tax, has made the American economy relatively more competitive than without that instrument. The American Society had decided to pay an additional amount to all workers receiving less than certain level, making their firms more competitive than in the absence of that instrument of economic policy.


It is true that the South American economies are having to dedicate a large portion of their resources to pay for the services of their debt. The Brazilian public sector, for example, including the municipalities, the states and the Union, paid respectively, in 1999 and 2000, R$86billions (US$35.5 billion) and R$70 billions (US$ 28.9 billion) of interest on internal and external debt. Suppose we were to pay a quite modest basic income to start with of R$40 (US$16.5) per month or R$480 (US$198.3) per year to all 170 million Brazilians. This would sum up to R$80.6 billions (US$33 billions). Since our 2002 Gross Domestic Product will be around R$1.3 trillion (US$537.1 billions) and our Federal Annual Revenue around R$350 billions (US$144.6 billions), to use R$80.6 billions (US$33 billions) to pay a modest citizen’s income to all Brazilians is a huge sum considering that there are so many other urgent needs. When we compare, however, that the Brazilians are also paying an equivalent amount of interest to the owners of titles of the public internal and external debt, it is reasonable to think that a dialogue with them should take into account the principles of justice and equity. When priorities are defined in very clear and transparent terms, greater respect among all parts, including creditors, tend to prevail.


The small conditional guarantee for families with school-age children who remain in school has been spreading to reach around 6 million families or 11 million children in this first semester of 2002. In some municipalities such as São Paulo, the benefit is more substantial, due to a more generous municipal law: the families with monthly income below R$90 (US$37.2) or half the minimum wage per capita with children up to 14 years of age going to school have the right to receive a complement of income that is a proportion (2/3) of the difference between R$90 (US$37.2) x number of members of the family and the family income. There are also other designs. In general the results have been considered positive, although there are strong recommendations to improve the value of that modest benefit. I believe that those programs are an important step towards the implementation of a basic income.


The idea of a citizen’s basic income has much to do with the values of solidarity that have characterized the Indian communities since their origin. It also has to do with the values of the black communities in their struggle against slavery. All communities in Brazil, no matter how far from the cities, need some money for their defense, health assistance, education, housing improvement and so many things. Their members will have the same citizen right as any other Brazilian. They will be able to choose whether to use their respective basic income in a more individual or in a more communal way.


I spent seven days in Alaska in 1995 asking the people all over the places about the Alaska Permanent Fund dividend system. I was quite impressed that although in 1976 the result of the referendum was 76.000 yes to 38.000 no, or almost 2 to 1, nowadays almost everyone is quite enthusiastic about the system. A few with very high income told me that the dividend did not make great difference to them. But they did not oppose the idea. I believe that the Alaska example is nice because it has permitted that people is accompanying the pros and cons of the system, allowing the annual dividend to gradually reach the point of being equal to the survival needs of a person in Alaska. It would be very difficult to start in Brazil with a full BIG.
I believe that we may start with a modest amount such as R$40 (US$16.5) per month per capita, on R$480 (US$198.3) per year. In a family of six, this would mean R$240 (US$99.2) per month. If the husband and wife knows that for the next 12 months they will be able to count for sure with that amount, that in the following years this amount will increase with the nation’s economic growth, this will make a tremendous difference for their condition of life, freedom and dignity. In a few years the monthly amount per capita will more than double as it happen in Alaska.


A basic income in Brazil may be financed by a combination of both national resource taxes as well as taxes on all kinds of wealth that are created in society, taking also into account a principle of progressivity, that is, that those that have greater wealth and income should contribute relativity more.


In 1999 I presented in the Senate a legislative initiative proposing the creation of Citizen’s Brazilian Fund that would have the purpose of financing a citizen’s guaranteed minimum income. The main sources of this fund would be:
I. Resources consigned in the General Budget of the Country.
II. 50% of the resources received in cash, bonds and credits including the ones, which are originated from specific agreements in the scope of the National Program of Privatization.
III. 50% of the resources originated from the concession of public services and public works, as well as from permit or authorization of public services.
IV. 50% of the resources originated from activities foreseen by the 1st paragraph of art. 176 of the federal constitution *
V. 50% of the resources originated from the contracts states or private enterprises, the development of the activities foreseen by the items I to VI of the art. 177 of the federal constitution**
VI. 50% of the resources originated from real estate that belongs to the country assets.
VII. Other properties, rights and assets of the country as well as credits and transferring operations, which are awarded to them.
VIII, Income of any nature issued as payment resulted from application of assets that belong to the citizenship program.
IX. Donations in cash, values, real state and other properties received by them.
Sole paragraph: The balances checked at the end of each fiscal year will be obligatorily transferred to citizenship program of the following year.
* These resources are originated from the exploitation of mines and the potential of hydraulic energy.
** These resources are originated from the research, exploitation, importation, and transportation of the petroleum and natural gas
This legislative initiative has been approved in February 2000 by the Justice Commission of the Senate.
I believe that we should always take into account that the nation’s natural resources should not be used only for the maximum benefit of the present generation, but with a balanced view of befitting future generations and always taking care for not allowing the predatory depletion of the nation’s natural resources.


This is a question that is always present in the discussions about the basic income. It’s important to distinguish the basic income guaranteed form the income that someone gets from his on her work effort. The basic income, as so well explained by Thomas Paine in Agrarian Justice (1795) must be seen as a right, that every individual has to participate in the wealth of a nation.

The Brazilian Constitution, as well as that of other nations, recognizes the right of private property. It recognizes that the proprietors of farms, factories, banks, real state, bonds and stocks may receive their income in the form of profits, rents or interest. Without the obligation of doing any work. If we guarantee the right of capital owner’s to receive their income without any labor effort, why should we not extend the same right to receive a modest income sufficient for his or her basic needs to everyone, rich and poor? When I explain this argument, that we may find in Bertrand Russell’s Proposed Roads to Freedom: (1918) normally all audiences agree that the citizen’s on basic income makes much sense.

A Basic Income to Democratize and Pacify Iraq
by Eduardo Matarazzo Suplicy

Last March, 2007, when Ibrahim al-Jaafari, the ex-Prime Minister of Iraq (02/23/05-05/20/2006) visited Brazil, I had the opportunity to have a conversation with him in Brasília as well as in São Paulo. I told him that in April 2003, shortly before the Brazilian Sergio Vieira de Mello was nominated as the United Nations representative in Iraq, I had written to Mr. de Mello suggesting that the Iraqis could consider following the example of the Alaska Permanent Fund Dividend system, a pioneer and successful example of a Citizen’s Basic Income. Because of the country’s huge oil reserves, Iraq could follow this path. I explained him how Sergio Vieira de Mello wrote back to me on April 30, 2003, saying that he considered the proposition a very positive one and that he would take it to the administrative authorities of Iraq. On June 23 of that year, in the Reconciliation Summit of A’mman, Ambassador J. Paul Bremer III who was responsible for administering Iraq after the fall of Saddam Hussein, said that Iraqis could follow the Alaskan example so that all of them could feel as having a stake in the wealth of the nation. On August 1st, Vieira de Mello called me from Baghdad saying that the proposal was being positively considered and that the World Bank mission had deemed it to be viable. Unfortunately he was a victim together with 21 more persons in the attack of the UN Office in Baghdad on August 19 of that year. Ibrahim al-Jaafari today is a member of the National Assembly of Iraq and leader of Islamic Dawa Party, the main political party of the United Iraqi Alliance coalition that supports the government. He is a Shiite and was previously one of the two vice-presidents of Iraq under the Iraqi Interim Government in 2004. I also told him that the Brazilian National Congress had approved the Law 10.835 that institutes an unconditional Citizen’s Basic Income, sanctioned by President Luiz Inácio Lula da Silva in January 8, 2004. The law says that it will be established step-by-step, under the Executive Power’s criteria, starting with those most in need, as the present Bolsa Família Program does, until the day when everyone in Brazil will have that right. As the proponent of the bill, and Co-Chair of the Basic Income Earth Network, BIEN, since 2004, I had been ready to go to Iraq to explain to their government and parliament how this instrument could contribute to the democratization and pacification of the Nation. Other economists and political thinkers such as Steve Clemons, Guy Standing, Steven Schafarmam and the ex-Governor of Alaska, Jay Hammond, had also made the same proposal.

As a result, last April I received an official invitation from the President of the Iraqi National Assembly to visit Baghdad. I considered going in April and later in July. But the Brazilian Foreign Minister Celso Amorim and his Executive Secretary, Ambassador Samuel Pinheiro Guimarães made an appeal to me to postpone my trip because it would be too risky. If something happened to me it would cause a serious problem for the Brazilian government. Even in the so-called “Green Area” of Baghdad, under control of state-of-the-art security forces, the situation was not considered to be safe. In fact, on the same day of their recommendation, the United Nations Secretary-General, Ban Ki-moon, was forcefully shaken by an explosion that took place 50 meters away from him, which killed several people in that building, also inside the Green Area. I agreed that I should go when conditions of security would be improved.

Last October, the Brazilian Ambassador to Iraq, Bernardo de Azevedo Brito, -who, for security concerns, works out of A’mman, Jordan- told me that he just returned from a three-day trip to Baghdad, and that the overall situation had improved significantly. Therefore he was ready to accompany me for an official visit to Iraq for three days in January 2008. I would have the support of the Brazilian government who would secure the services of a private British security firm from our arrival to Baghdad International Airport and throughout our whole stay, up to our departure back to A’mman.

I was convinced that this would be one of my most significant trips of my 66 year’s life. Of course my family, my colleagues at work, and friends were worried.  Yet I explained them that I was so convinced that Iraq could effectively implement a Citizen’s Basic Income unconditionally to all 30 million inhabitants in order to pacify this nation after so many years of wars, violence and deaths, that it would be worthwhile embracing the challenge and being there. I felt honored by the invitation made by the Speaker of the Iraqi Council of Representatives, Mahmoud Dawud al-Mashhadani, – elected on April 22, 2006 to the speakership, receiving 159 votes against 97 spoilt and 10 abstentions as part of the Sunni Arab-led Iraqi Accord Front list-, to enlighten to them how they have all the conditions to introduce this instrument of economic policy.

Two of my countrymen were on the same trip since Brazil: Nawfal Assa Mossa Alssabak, vice-president of the Brazil-Iraq Chamber of Commerce and Industry, born in Iraq but since the early eighties living in Brazil, where he got married and has 3 sons and one daughter, who served as an interpreter in several occasions, and Sergio Kalili, an independent journalist who filmed 7 hours worth of all the important events of the trip. From A’mman to Baghdad, the Brazilian Ambassador was also accompanied by two members of the Brazilian Embassy’s staff, Safana Sallooum and Valdir Guimarães. As soon as we arrived in the airport of Baghdad at around 10 am of January 16, we were surrounded by six security people with semi-automatic machine guns who were to guide us, attentively screening throughout all taking place in the big airport hall. We were instructed to wear a 15-kg flak jacket and a helmet, to yield us on the way from the airport until Baghdad’s green zone. I had earlier granted the Brazilian Ministry of Foreign Affairs that I would not venture outside the agreed-on Green Area. Once there, we were all accommodated at the security company’s compound. Each very basic dormitory was protected from potential mortar fire by piled-up sandbags sitting by the windows as well as above the roof. After leaving our reduced luggage there, we embarked straight into a very efficient and productive agenda of meetings.

One thing impressed very much during this visit.  Mr. Alssabak, member of the Brazil-Iraq Chamber of Commerce and Industry, had been born in Baghdad, was raised and came of age in the city, and was returning for the first time to his hometown after so many years living abroad.  Despite well-traveled and versed in so many cities in Europe, the US, and Latin America, he earlier had confessed to me that he still considered Baghdad the most beautiful capital in the world.  Now, his disappointment was blatant in his face.  He could no longer recognize his surroundings: in every avenue and street (especially in the Green Area which I saw, but from what I heard a scene that repeats itself in many parts of Baghdad) there are concrete walls of about 3-5 meters height, sometimes crowned with barbwire, shouldering both sides of many avenues. It is impossible from the road to actually see the buildings behind the walls, and upon arrival to a building, there is always a large steel door, which opens regrettably to the presence of security guards, especially when those buildings pertain to official activities.  I understood that as a sign of how divided Iraq is today.  What came to my mind is that in a such separated society, the Iraqis are having to spend so much money to build walls and security instruments that for sure won’t be of any need when the principle of justice and solidarity would become a reality in this nation.

The first meeting was with the Special Representative of the Secretary-General of the United Nations to Iraq, Staffan de Mistura, a Swedish-Italian who is the successor of Sergio Vieira de Mello. I told him that just before I left São Paulo, Carolina Larriera, Sergio’s widow who was in the Canal Hotel working at the UN headquarters a few meters from him on August 19, 2003 when a truck exploded with a bomb that killed him, told me that she was very moved in knowing that someone was continuing to defend the proposal that he had embraced. She had asked me to take a small bag of Brazilian soil to sprinkle in the Canal Hotel were he died. Regrettably, this was outside the Green Area. De Mistura told us about how much all the UN staff admired so much Sergio’s efforts for peace. He took us to the tribute plaque set-up in his memory. There I left a copy of my book: The Citizen’s Basic Income. The Answer is Blowin’ the Wind (L&PM 2006). To all Irakian authorities that I met in this travel I gave a copy of the Woodrow Wilson International Center for Scholars English publication (March 2007) of this book, as well as its translation into Arab made by Mr. Walthik Hindo, of the Brazil-Iraq Chamber of Commerce and Industry, to whom I am grateful.

The second meeting was with the President of the Consulting Commission to the Prime Minister, Thamir A. Ghadhban, who was also ex-Minister of Oil. I explained to him how Iraq could follow Alaska’s example in conditions even better than Brazil’s who had recently approved a Law to implement an incremental Citizen’s Basic Income. He gave me even more reasons. He stated that Iraq had surpassed Saudi Arabia and is now the first country in the world in terms of known oil reserves. From the top 12 places in the world where higher quantities of oil are found, 9 are in Iraq, he emphasized.

The third meeting was with the Minister of Planning, Ali Ghalib Baban, a key man in elaborating policies for the future, according to Ambassador Brito. In our one-hour conversation, I explained about the rationality of an unconditional basic income, its fundamentals and how economists, philosophers and social scientists in a very wide spectrum today are in favor of it, as well about how Alaska had decided to separate 50% of the royalties coming out of the exploitation of natural resources to build a fund that pertain to all inhabitants. Since the early eighties those resources have been applied in US bonds, stocks of Alaskan, other American, and international companies, and real state investments. The Alaska Permanent Fund has evolved in value since then from US$ 1 billion to around US$ 40 billion today. Each resident in Alaska, as long as he or she is living there for a year or more – today they are around 700 thousand – has the right to receive an equal dividend, which has evolved from around US$ 300, in the early eighties, to US$ 1,654 per year per capita in 2007. This system has made Alaska the most equal of all 50 American States. In 1976, when Alaska had 300 thousand inhabitants, 76,000 voted “yes” and 38 thousand voted “no”, in a referendum about the idea. Today, as I could personally observe in 1995- when I visited Alaska for 7 days – and from what Professor Scott Goldsmith, from the University of Alaska, observed in his speech to the BIEN Conference in 2002, it would be considered political suicide for any leader in that US state to propose the end of the Alaska Permanent Dividend System.

Minister Baban mentioned that they are now examining the several experiences in all major oil producing countries. They are looking at how they use the proceeds of oil and discussing the matter within the government and the parliament. Due to the serious destruction of the infrastructure, including extracting oil, they decided first to use much of the resources on the rebuilding of what was destroyed by the war. I emphasized in all of the meetings that we Brazilians, Iraqis and people from the developing world must be aware of the effects of the several kinds of income transfers – such as the Earned Income Tax Credit in the US or the Family Tax Credit in the UK – that exist in the developed world that make their economies more competitive than ours if we don’t do the same or even better. I tried to show that an even better tool for this purpose is the unconditional basic income.

The Minister of Planning also mentioned that he was very fond of the micro credit experience of Professor Muhammad Yunus and the Grameen Bank in Bangladesh and that the Iraqi government was expanding the micro credit operations. I told him of my interaction with Professor Yunus during 2007. First, in Germany, last June, when we both were invited by Professor Gotz W. Werner for a Conference at the University of Karlsruhe on “Micro Credit and Basic Income as instruments to eradicate absolute poverty and to promote entrepreneurship”; second in my visit to Dacca, last July; and third, in November, in Yunus’ visit to Florianópolis, Brazil. On those occasions, I have explained him my strong belief on how both instruments, Micro Credit and Basic Income, can be well harmonized to attain the objectives of promoting development together with the practice of justice.

From the information that we gathered, Ambassador Bernardo de Azevedo Brito told me that I was visiting Iraq at the appropriate time for the purpose of presenting the proposal of what to do with the proceeds of the oil and natural resources, since they were exactly in the process of examining different alternatives in order to decide which will be the best one. We have learned that in the past twenty years Iraq has developed a Public Distribution System that has a universal character. Several kinds of basic items, including food and domestic needs, are distributed “in-kind” by the State through a net of hundreds of trucks and stores all over Iraq. After 2003, they have considered the distribution in monetary terms, but until now the banking system is still not sufficiently mature or developed to allow for this alternative.

Our next appointment was one of the most meaningful and very special. The ex-Prime Minister and leader of the main coalition in the Iraq Council of Representatives, Ibrahim al-Jaafari, received us for a conference and a dinner at his residence in the Green Area. I was quite surprised because I had no idea of what would happen. He came to the main door exactly at 19:30 pm to receive us and conducted us to the main hall where more than 40 authorities were already waiting for the conference. He introduced me to each one of five ministers of the present government, the President of the High Court of Justice, several ministers of the previous government of which he was the Prime Minister, including the Minister of Justice, his own previous Deputy in Chief, and about 30 members of the Council of Representatives, both men and women. Then he spoke for about 25 minutes in Arab translated into Portuguese by Mr. Alssabak about the importance to Iraq of my visit and the proposal that I was going to present. Then I had the word for about 50 minutes, which were sufficient to explain the fundamentals of the basic income idea, its evolution along the history of mankind and the advantages that the proposal could have for promoting a sense of solidarity among all Shiites, Sunnis, Kurds, Christians, Jews and other society groups.

I emphasized that the basic income was consistent with the Qur’an and the writings of its followers, and that the teachings of the principles of justice and equality in Islam are similar to those of Christianity. In the Book of Hadith, Omar, the second of the four caliphs that followed Muhammad, recommended to the citizens with large properties or gains that they should reserve a portion to those with less or nothing. The roots of the idea can be found in ancient history. Writing in the six century before Christ, Confucius observed that “uncertainty is even worse than poverty”. And “can anyone go out from his home except through the door?”. In fact, when we study the rationality of the Citizen’s Basic Income we conclude that it is such a common sense solution as going out from one’s home through the door.

I also reminded of Aristotle’s definition of Politics as the science of to attain the common good. In order to establish a fair life to all the people we need political justice, which must be preceded by distributive justice, making more equal those that are so unequal. Karl Marx presented similar ideas when he wrote of man’s mature form of behavior in society: “from each according to his ability, to each according to his need”, in his 1875 Critique of the Gotha Program. The same principle can be found in the most frequently quoted word in the Old Testament of the Bible, “Tzedakah” in Hebrew, that means social justice, or justice in society. A clear defense of the basic income project was made by Saint Paul in the Second Epistle to the Corinthians, in the New Testament: he recommended that the Macedonians follow the example of Jesus, who had decided to join the poor and live among them. As it is written, in order to have justice and equality: “He that gathered much had nothing over; and he that gathered little had no lack”. The defense of a minimum income is also clearly defended by Buddhism, as we can see in the assertions of the Dalai Lama in Ethics for the New Millennium: “If one accepts the luxurious consumption of the very rich, it is first necessary to ensure the survival of all humanity.”

I spoke about the main thinkers in History that developed the proposal of a guaranteed minimum income such as Thomas More, Juan Louis Vives, Thomas Paine, Bertrand Russell and the most wide spectrum of economists like Joseph Charlier, Dennis and Mabel Milner, Joan Robinson, John Maynard Keynes, Friedrich Von Hayek, James Edward Meade, George Stigler, Milton Friedman, James Tobin, Robert Theobald, John Kenneth, until the founders of BIEN such as Philippe Van Parijs, Guy Standing and Claus Offe that could be invited to speak to the Iraqis about how the Basic Income would help a society to provide dignity and freedom for all.

I explained how in Brazil a Guaranteed Minimum Income Program related to educational and health opportunities, the Bolsa-Família Program and other government initiatives, such as the Bolsa Escola, which preceded it were developed since the mid-nineties. Today around 45 million Brazilians, or one fourth of the 189 million inhabitants, are beneficiaries of the Bolsa Família Program that has been recognized as quite efficient in the fight against poverty and promoting equity. Then I announced the good news that the Brazilian National Congress became the first in the world to approve a law that, although gradually, will introduce an unconditional basic income.

I underlined that the Iraqis love soccer and that they have great admiration for the Brazilian players. I told that I had recently read in the Brazilian Press the interview of the Brazilian soccer coach, Jorvan Vieira, of the National soccer team of Iraq that was responsible for the Championship of the Asian Games. He said that in the beginning it was difficult for the Shiites to pass the ball to the Sunnis, then to the Kurds and so on. But once he managed to harmonize the team they were able to become the champions. When I was leaving Brazil for Iraq I asked Pelé whether he would sign two T-shirts: one of Santos Football Club and the other of the Brazilian National Team, respectively with the messages: To Iraq, all the best, Pelé; and I wish peace to Iraq, Pelé. So I gave the first one to al-Jaafari together with the DVD Eternal Pelé about his history and his best games.

They were all very enthusiastic both about the proposal and the idea that soccer can bring people together. The women who are members of the Council of Representatives asked me to present in a more complete form the Citizen’s Basic Income to the Commission of Human Rights on Friday, January 18. They would especially like to discuss the proposal from the point of view of women. I immediately accepted to do it in the first available hour, 9 am of our third programmed day. After my presentation, partly in Portuguese, translated into Arab, partly in English, (since many of them understood English, we moved to the large table with available seats for more than 40 people to have an Arab dinner. During the informal conversation I had the opportunity to learn more about Iraq and to answer questions about the viability of the basic income.

After the dinner, around midnight, we had the news that due to the religious festivities of the next two days, the Ashura, -when more than 10 million Iraqis all over the country go out to the streets- there would be a curfew. During the 18th and 19th of January it would be impossible for us to move from the compound and nobody would be able to go from their residence to meet us. We would only be able to fly again out of Baghdad on Sunday, January 20. I wanted very much to stay until Sunday, but Ambassador Bernardo de Azevedo Brito explained to me that it would cost a lot more and it wouldn’t be productive. Therefore we wouldn’t be able to do some of the already set meetings as the conversation with the Catholic Cardinal Emmanuel Delly III, nominated by Pope Bento XVI in 2007; with the President of the Economic, Investment and Reconstruction Commission of the Council of Representatives, Yonadam Kanna and his colleagues; with the Commission of Human Rights and with the Dean of the University of Baghdad, Mousa al-Musawi and his colleagues. Since we were reducing by one day the previously planned three-day-visit, the security company reduced part of what would be the cost of the third day. The costs of my trip were paid by the Council of Representatives of Iraq, although advanced by the Brazil-Chamber of Commerce and Industry. There were no expenses paid by the Brazilian Senate.

On January 17 we were received at the residence of the Speaker of the Council of Representatives, Mahmoud al-Mashhadani. Unlike the custom of receiving in formal attire authorities in the Council of Representatives, at home he was dressed with the Arabic traditional attire. He said that normally during the past two years he received authorities in his office in the Parliament. At home he receives only his family and close friends. In my case, however, he was receiving me at home because I came from a very friendly country, Brazil, that is an example for Iraq of how people from so many different origins were able to live in harmony and because we were able to have a peaceful democratization of the political system. Also, he added, because I had come to Baghdad to explain a relevant proposal to the benefit of Iraq knowing that there were some risks involved in that trip. Therefore he was receiving me as a true friend of Iraq.

I gave to him the Brazilian National soccer team shirt with Pelé’s message, I wish peace to Iraq, as well as the Pelé Eterno DVD, produced by Anibal Massaini, for the Iraqis to learn how to play even better. Again I made the parallel between how important for the players of the team to harmonize their behavior with how a basic income could help all the people to have a sense of living with solidarity based on the applications of the principles of justice with the existence of an unconditional basic income.

But would the Basic Income be paid to all citizens? Including President al-Mashhadani in Iraq, Pelé, Senator Suplicy and the most successful entrepreneurs both in Iraq as well in Brazil? Yes, I explained. But why, he continued, if we don’t need it for our survival? Because we will contribute relatively more for ourselves and for everybody else in society to receive the Citizen’s Basic Income.

Which are the advantages? We will eliminate all the bureaucracy involved in having to know how much is earning in the formal, as well in the informal market; we will eliminate the stigma or feeling of shame of anyone having to say: I receive only that, so I need a complement of income; we will also eliminate the dependency phenomena that results from a system that says that one will receive a complement of income if his or her income doesn’t attain a certain level. Then the person evaluates that if he or she starts some work and looses what the government was giving in that program, then the person might decide not to work anymore, and you produce the unemployment or poverty traps. Mainly, from the point of view of dignity and freedom of anyone it will much better to know beforehand that in the next period and more and more, with the progress of the nation, you and all members of your family will have the right to receive a Basic Income as a citizen’s right to participate in the wealth of the nation. Once more, I tried to explain how Iraq was in an excellent position to follow the example of Alaska of using the proceeds of oil exploitation to build a fund that would pertain to all 30 million Iraqis and more in the future.

In the final part of our friendly conversation, I told President al-Mashhadani about my speech from the Brazilian Senate tribune on September 2002, when the US Government was considering to attack Iraq to put an end to Saddam Hussein’s regime. Taking into account the popular movements for peaceful actions all over the world I started my speech quoting The Bomb, a beautiful poem by our great poet Carlos Drummond de Andrade in which after speaking about the horrors of the war he concludes saying of his hope that finally man will destroy the bomb. Then, I asked President George W. Bush to pay attention to the recommendations of Martin Luther King Jr. in his I Have a Dream speech of 1963, where he recommended his people not to accept to drink the tea of gradualism of those who say that things will become better with time, because if we don’t do the necessary changes, as soon as possible, America would live another sweltering Summer. But he also said that we should never drink from the cup of violence, hate, vengeance and war; that we should always confront physical force with the force of the soul.

President Bush didn’t listen to my appeal, although I had argued that we Brazilians had shown that we were able to finish a dictatorship through peaceful demonstrations. I could feel that he was really moved. He told me that the Iraqis want very much the American and foreign occupation to finish very soon. He said very assertively that the Council of Representatives, where there are many young people, will approve a proposal of a Basic Income, and that he wanted me to return again to Iraq to help in this process. He asked me to tell the family of Sergio Vieira de Mello that the Iraqi people feel that they are in debt with this Brazilian that lost his life when helping to pacify Iraq. That they have great respect and admiration for him and that soon there will be a special homage by Iraq for Sergio.

Our last meeting was with the Minister of Foreign Affairs, Hoshyar Zebari, as well with the Vice-Chancellor Labeed M. Abbawi. They mentioned how happy they were to receive a Brazilian Senator and that they want very much to increase Iraqi-Brazilian relations in all fields. In fact, the Minister of Commerce of Iraq is expected to visit Brazil soon.

Ambassador Bernardo de Azevedo Brito told me the he considered our journey very productive, in spite of becoming shorter than initially planned. He is continuing to work on the matter of our conversations with the Iraqi authorities. The President of the Economic, Investment and Reconstruction Commission, Yonadam Kannan visited him in A’mman in the following week.. The President and the Vice President of the Iraq-Brazil Chamber of Commerce and Industry, Jalal Jamel Dawood Chaya and Nawfal Assa Mossa Alssabak considered the trip “a great success, with an excellent repercussion all over in Iraq with the real interest of the several parts in approximating both countries”, as expressed in the attached letter of January 30, 2008.

Near us we did not see any menace or sign of violence during the time we were in Bagdad. Anyway it is relevant to mention that the Iraqian press registered on the 18th of January that one day before the reception at Mr. Al-Jaafari’s residence two mortars fell at a 1km distance from the place. Also, in the following week, unfortunately, due to suicide women, two bombs exploded at one popular market in Bagdah killing 73 persons and injuring more than 100 people. I have heard from the Irakians that in general those that are responsible for these violent attacks know exactly who they are trying to hurt and that they are very precise. I might have been somehow optimistic, but I was sure of not being the target of any kind of violence since the motive of this trip was exactly to propose an instrument that may contribute to more justice in that nation.

An Invitation to Present the Basic Income to East Timor
A few days after my return to Brazil, Carolina Larriera invited me for a reception in Rio de Janeiro for the 1966 Nobel Peace Prize, President of East Timor. On the occasion he gave his testimony about Sérgio Vieira de Mello contribution for peace during the transition period between Independence, the election of the Constitutional Assembly and the elections in this new Nation born in 2002 and about his own efforts to normalize de political situation in East Timor after the turmoil period of 2006 when episodes of violence occurred. I explained to him about my trip to Irak. He invited me for breakfast on the next morning.

For almost one hour I explained to him what the Citizen’s Basic Income was. That a new nation like East Timor with 1.1 million inhabitants that is now having a monthly revenue of around US$ 100 million from oil and gas exploitation may also build a fund that, with time, starting modestly, will be able to pay a basic income to all the people. He classified the idea as fascinating and said that he would like me to be in East Timor to explain it to the Prime Minister Cabinet as well as to the Parliament. On the next day, January 30, just before leaving Brazil back to East Timor, he called me confirming the invitation saying that the best hour would be at the end of March during a meeting in Dili with representatives of all donor countries. I said that I was honored by the invitation and would be happy to accept it.

Unfortunately, on February 10, President José Ramos Horta was victim of a violent attempt. As I write this article he is recovering from a very serious surgery that extracted from his stomach and lung two bullets. Here I express my deep solidarity for his family and the people of East Timor, wishing and praying for his prompt recovery. For example: please note how long it takes for me to explain the Bolsa Familia Program that exists in Brazil since October 2003, considering the values in effect since September 2009. Every family in Brazil with a monthly income per capita below R$ 140 has the right to receive a benefit that starts with the monthly amount of R$ 68, if this family has a monthly family income per capita below R$ 70. (In April, 24, 2010, US$ 1.00 was equal to R$ 1.76). This family also has the right to receive R$ 22, R$ 44 or R$ 66, if the family has, respectively, one, two, three or more children up to 16 years of age, more R$ 33 for each adolescent, from16 to 18 years of age, up to a maximum of two. So, the Bolsa Familia Program pays a minimum of R$ 22 and a maximum of R$ 200 per month. The average amount of the benefit is R$ 95 per family. The expenditure with the Bolsa Familia Program for 2009 was R$ 12.1 billion. The budget estimated for 2010 is of R$ 13.6 billion.

The average size of the Brazilian family is 3,5 persons. It is a little higher, around 4, for the families that are beneficiaries of the program. There are obligations to be fulfilled. If the mother is pregnant, she should go to the public health network – a health post or the municipality hospital – for exams and health conditions follow-up. Parents should take their children up to six years of age to be vaccinated according to the calendar of the Ministry of Health. The children from 7 to 16 years of age should go to school, with at least 85% attendance. The adolescents from 16 to 18 years of age should attend school, with at least 75% attendance.

Now let me explain the Basic Income. Let us suppose that, starting from next January the government announces that the Citizen´s Basic Income will be launched, even with a modest amount, higher than what is paid to the people granted with the Bolsa Familia Program. So the government would declare: Starting from next January, everyone in Brazil, including the foreigners living here for more than five years, regardless his/her social or economic condition, will receive R$ 40 per month. In a family with six members, the total will be R$ 240. With the progress of the country, this amount will be raised, we shall say to R$ 100, someday to R$ 500, R$ 1,000 and so on. It will not be denied to anybody. It will be unconditional. Isn’t it much easier to understand?

And which are the other advantages in paying the same amount to everyone? First, the elimination of all bureaucracy involved in knowing each person’s income in formal or informal market. That is, in the working card of the worker, public servant or in the payment made to anyone in any activity. Or in not registered payment, as those paid to people who take care of cars in the streets, to a neighbor who does your laundry or takes care of your children, while you go to work, or to the market or to street vendors. Elimination of any stigma or shame for a person to reveal: I earn only this much, so I need a complement of income for my survival. Elimination of the dependency phenomenon that occurs when there are programs that say: if a person does not receive up to that amount, he or she has the right to receive a complement of income. But if the person receives such a sum for the job and then the government cancels that much from him from that program then the person might decide not to do that job. And so he or she gets into the unemployment or the poverty trap. If all of us, meanwhile, know that from now on, everyone and all the members of our families have the right to a Citizen’s Basic Income, any work that we do will mean an addition to our income. Thus, there will be always an incentive for progress.

The most important advantage of the Citizen’s Basic Income is that it raises everyone’s level of dignity and freedom. In the sense that the Nobel Prize Winner Amartya Sen says, in “Development as Freedom”, that development, to be worthwhile, should mean higher degree of freedom for everyone in the society. It is the case, for example, of a girl who does not have another alternative for her survival than selling her body. Or a young man who, to support himself and his family is forced to work for the drug traffic gangs. Or even a rural worker who can only get jobs in slavery conditions. If there is a Citizen’s Basic Income in effect for these people and for everybody in their families, they can certainly refuse those alternatives, and wait a little while until an opportunity comes more in accordance with their propensity or vocation. They might even attend a professional course and get better chances to find an opportunity.

Some of you could think: would the Basic Income stimulate idleness? What should we do with those who have a strong tendency to vagrancy? Are there really a lot of them? Let us think a little bit. We, human beings, love to do a lot of things. And we feel responsible for doing different activities, even without being paid by the market. For example, mothers who breastfeed their children with lots of love; us, parents, when we take care of our children, to be well nourished, not to be hurt, and to grow up well; when our parents or grandparents need our support; in the local organizations, churches, academic associations where many of us have done voluntary works, because we feel helpful to the community. When the great painters, Vincent Van Gogh and Amedeo Modigliani painted their works, they went to the streets, trying to sell them for their survival, without any success. Both of them became ill and died early. Today their works are worth millions of dollars.

Furthermore, our Constitution assures the right to private property. That means that the owners of factories, farms, hotels, restaurants, banks, real estate and financial bonds have the right to receive the capital revenues, that is, the profits, rentals and interests. Do the Brazilian laws or of most other countries mention that to receive those revenues, the capital owners must demonstrate that they are working? No, and they usually work, and many of them also dedicate a good part of their time in voluntary works. Do they need to demonstrate that their children are going to school? No. Nevertheless, their children usually attend the best schools.

So, if we assure to those who have more resources the right to receive their revenues without conditions, why not extending to everyone, rich and poor, the right to participate in the nation’s wealth as our right for being Brazilians? Let’s consider certain aspects of our history. For more than three centuries, people were pulled away from Africa to come and work as slaves in Brazil, helping to accumulate capital of many families. Or, as President Lula has said, it seems that God is Brazilian, helping Petrobras to find oil reserves at the pre-salt layer in the depth of the Atlantic Ocean. Do you consider a good idea that all the Brazilians should participate in this wealth through a modest income that allows their survival, the same amount for everyone, as a citizen’s right?

It is a good sense proposal. Its bases were elaborated along the history of the human being and they are present in all the religions and in the thinking of a large spectrum of great philosophers, economists and thinkers. When you left your home today, did you pass through the window or any other way? Through the door? Well, as Confucius Said, 520 years before Christ that “uncertainty is even worse than poverty” and that “can anyone leave his home except through the door?” We want to demonstrate that, if we want to eliminate absolute poverty, becoming a more equal and fair society and assuring dignity and real freedom to everyone in the society, instituting the Citizen’s Basic Income is a solution as simple as leaving home through the door.

300 years before Christ, in the book “Politics” philosopher Aristotle taught that politics is the science that shows how to reach a fair life for everyone – the common good. For this, it is necessary political justice, which must be preceded by distributive justice that makes more equal those who are so unequal.

Which is the most cited Hebraic word in the Holy Bible, 513 times in the Old Testament? It is Tzedaka, which means social justice, justice in the society, which was the great longing of the Jewish people, as well as the Palestine people. In the New Testament, in the Acts of Apostles, we observe that they decided to join all their possessions, to live in solidarity, so as to provide to each one according to his/her needs. In Jesus’ parables, like in the Vineyard Landlord, we find similar principles. He hired several workers along the day. With each one he agreed what both considered fair. At the end of the journey he began to pay, starting with the last ones that had arrived, giving to everyone the same amount. When he reached the first peasant this one complained; you are paying the same to me as the last one that arrived here and I worked much more than he did. And the vineyard landlord answered; so, didn’t you realize that I’m paying exactly what we both considered fair, and that the last one that arrived here also has the right to receive enough for the needs of his family? In the Second Epistle of Saint Paul to the Corinthians, he recommends everybody to follow Jesus’ example. Despite being very mighty he had decided to join the poor people and to live among them. As it is written, in order to have justice and equality: “He that had gathered much had nothing over; and he that gathered little had no lack”.

Also the followers of Muhammad, the Qurán and the Islamism, in this aspect, adopt the similar principles. In the Hadith Book, the second of the four caliphs, Omar, said: Everyone that had big properties should separate a part for the ones who had little or nothing. In Buddhism, the Dalai Lama, in “Ethics for the New Millennium”, affirms that if we accept the luxurious consumption of the very rich we should ensure before the survival of all humanity.

If we advance in the History, in the beginning of the XVI Century, we will find the teachings of a great humanist, Thomas More. In 1516, he wrote a very nice book, “Utopia”, a place where everything works well. The story contains a dialog about capital punishment that, after being introduced in England, did not contribute to the reduction of violent crimes. So, the character commented that much better than inflicting these horrible punishments to whom does not have another alternative of becoming first a thief and then a corpse, is to assure everyone’s survival. Based on this reflection, a friend of Thomas More, Juan Luis Vives, wrote to the mayor of the Flemish city Bruges, a subvention treaty for the poor in which, for the first time, he proposed the guarantee of a minimum income.

Two centuries later, Thomas Paine, considered one of the greatest ideologues of the French and American revolutions, explained to the National Assembly of France, in 1795, in “Agrarian Justice”, that poverty is originated by civilization and private property. In America, where he had been before the independence, he didn’t see such deprivation and poverty as in the European villages and cities. But he considered a good sense that the person who cultivates the land and makes some improvement should have the right to receive the outcome of that cultivation. However, he should separate a part of this revenue to a fund that belongs to all. This fund, once accumulated should pay a basic capital and income to each resident in this country, not as a charity, but as a right of everyone to participate in the wealth of the nation that was taken away when private property was instituted. This was a proposal for all countries.

Another Englishman, an elementary school teacher, Thomas Spence, in a pamphlet published in London under the title “The Rights of Infants“(1797), proposed that each city should have auctions to cover all public expenditures including the building and the maintenance of real estate, as well as taxes paid to the government, that will distribute quarterly equal parts of the surplus among all residents ensuring their subsistence.

In 1848, Joseph Charlier, in “Solution du problème social”, stated that everybody has the right to enjoy the usufruct of natural resources created by the Providence to meet all their needs. In “Principles of Political Economy” (1848), the English economist and philosopher John Stuart Mill defended that a minimum for survival should be assured to everyone with or without capacity to work.

In the XX century, philosophers and economists of several tendencies, after examining several ideologies and proposals, reached for a common conclusion, as expressed by Bertrand Russel, in 1918, in “Roads to Freedom: socialism, anarchism and syndicalism”:

The plan we are advocating amounts essentially to this: that a certain small income, sufficient for necessaries, should be secured to all, whether they work or not, and that a larger income, as much larger as might be warranted by the total amount of commodities produced, should be given to those who are willing to engage in some work which the community recognizes as useful.

In 1920, in “Scheme for a State Bonus”, the couple Dennis e Mabel Milner proposed that: All individuals, all the time, should receive a small sum of money from a central fund that would be sufficient to maintain their life and freedom, should all else fail; that all people should receive a part of a central fund, in a way that all would have some sort of income to contribute proportionality to their capacity.

In 1937, the great economist Joan Robinson in “Introduction to the Theory of Full Employment”, suggested distributing to everybody on Saturdays, one pound sterling. Her fellow at the University of Cambridge, in England, who also had acquaintanceship with John Maynard Keynes and that, in 1977, was honored with the Nobel Prize in Economics, James Edward Meade, was one of the defenders of Citizen´s Income. Since when he elaborated the “A Guide of Economic Policy for a Labor Government”, in 1935, until the works in more matured way in his trilogy about Agathotopia, in 1989, 1992 e 1995, he developed a beautiful argumentation.

Meade related his long journey in search of Utopia. No matter how much he sailed, he did not succeed in finding it. On the way back, however, he came across Agathotopia. An economist, who became his friend told him the Agathopians knew where Utopia was, but they would not tell him because they were different from the Utopians, perfect human beings who lived in a perfect place. The Agathopians were imperfect human beings that committed foolishness and perfidies, but that after all, had succeeded in building a good place to live.

Meade observed that in Agathotopia they had built institutions and social arrangements that were the best to attain simultaneously the objectives of freedom, in the sense that each one is able to work in his/her vocation and is able to spend what he/she receives on the goods that he/she wants; equality, in the sense that there are no great differences between income and wealth; and efficiency, in the sense to reach the highest possible life pattern with the resources and the technology in effect.

And what were the arrangements? Flexibility in prices and wages to reach the efficiency in resource allocation: forms of association between the entrepreneurs and the workers so that the workers were hired not only for wages, but also for output participation; and finally, a social dividend that provides a guaranteed income for everyone. Meade proposed the achievement of these objectives by stages, but with firm steps.

The greatest economist of the 20th century, John Maynard Keynes, in 1939, in “How to Pay for the War?”, published in “The Times”, tried to convince his compatriots, before entering into the war, that they should get ready for the defense, and also, to separate around 2% of the Gross National Product, thus 100 million sterling pounds from a total of 5 billion to ensure everyone a basic income.

Abba Lerner, who worked with Oskar Lange in “On the Economic Theory of Market Socialism”, in 1944, published “The Economics of Control: Principles of Welfare Economics”, containing the proposition of institution of a fixed sum as a negative income tax for everybody.

Other economists honored with the Nobel Prize in Economics, defenders of the market system, argued in favor of the guaranteed minimum income for those who do not have the necessary for survival. So did Friedrick Hayek, in “The Road to Serfdom”, in 1944. George Stigler, in “The Economics of Minimum Wage Legislation”, in American Economic Review, 36, of 1946, observed that if we want to eradicate absolute poverty and promote employment, better than a minimum wage, should be the institution of a negative income tax, which should provide a minimum income to those who do not reach the necessary with his/her income. The same subject, was popularized in a very didactic way by Milton Friedman, in “Capitalism and Freedom”, in 1992. Also the Nobel Prize James Tobin made a great effort in the elaboration and defense of a guaranteed minimum income through a negative income tax during the sixties and seventies. James Tobin in many aspects was different than Friedman, because he was a defender of the Keynes propositions. In 1972, James Tobin helped the democrat candidate George Mc Govern in the elaboration of the proposition of one “Demogrant” of US$ 1.000 per year for all Americans, exactly the concept of a basic income.

James Tobin, Paul Samuelson, John Kenneth Galbraith, Robert Lampman, Harold Watts and 1200 economists, in 1968, sent a manifest to the U.S. Congress in favor of the adoption of a complement and guaranteed income. In 1969, President Richard Nixon invited Daniel Patrick Moynihan, an architect of social programs of the governments of John Kennedy and Lyndon Johnson, to design the Family Assistance Plan, which institutes the guaranteed minimum income through a negative income tax. It was approved by the House of Representatives, but obstructed by the Senate. On that time, one who made a great effort in the defense of a guaranteed income was Martin Luther King Jr, as we can observe in his several essays in “Where Do We Go From Here: Caos or Community?”, of 1997, where he affirms, “I am now convinced that the simplest approach will prove to be the most effective – the solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income”.

In 2005, while I was in USA, I called on ex-Senator Mc Govern, who had lost the presidential elections for Richard Nixon, in 1972, to tell him that Brazil had approved the institution of the Citizen’s Basic Income, a similar concept to what he defended in 1972. He was very happy and told me, “People say that I was a man with ideas before my time”.

In 1974, the US Congress approved a proposal of a partial negative income tax, only for those who work and do not reach a certain level of income, under the name of Earned Income Tax Credit, which had an important development. Today more than 23 million families receive this income complement that amount more than two thousand dollars per year in average. This scheme is added to the Aid for Families with Dependent Children, replaced in 1996, by Temporary Assistance for Needy Families, to Unemployment Security, to Food Coupons, and to Social Security. In the last decades, almost all European countries created income guarantee and transference schemes, like the Minimum Income of Insertion, in France, Minimum Familiar Income, in Portugal, and child benefits in a very general way. In the Latin-American countries, conditional income transference schemes spread out, like Oportunidades in México, Chile Solidario, in Chile, Jefes and Jefas del Hogar, and more recently,Asignación Familiar, in Argentina, Avancemos in Costa Rica and Ingreso Ciudadano in Uruguai.

In 1986, in Louvain, Belgium, a group of social scientists, economists and philosophers, among them Philippe Van Parijs, Guy Standing, Claus Offe, Robert van der Veen, created BIEN, Basic Income European Network, to constitute a debate forum of forms of income transference in several countries, and to propose that in every country an Unconditional Basic Income should be instituted. Since then, every two years BIEN has held international congresses. In 2004, during the congress held in Barcelona, as there were researchers from the five continents, they decided to change BIEN into Basic Income Earth Network. During the 12th BIEN International Congress, in Dublin, in June 2008, a question was asked to us, Brazilians, whether we could host the next 13th BIEN International Congress. So it was defined that the 13th Congress will be held at the Faculdade de Economia, Administração e Contabilidade da Universidade de São Paulo, FEA-USP, in June 30th, July 1st and 2nd, 2010. President Luiz Inácio Lula da Silva accepted to deliver the inaugural speech of the event.

In the early sixties, in a fishermen’s village, the mayor observed that a huge amount of wealth under the form of fishing was produced, but many of its inhabitants were still poor. So he told its inhabitants about creating a tax of 3% on the value of fishing for the institution of a fund which belongs to everybody. He faced a great resistance: “Another tax? I´m against it”.

It took five years to persuade the community. Once instituted, it was so well succeeded, that ten years later he became the governor of the State of Alaska, where they discovered a large oil reserve in the late sixties. In 1976, Governor Jay Hammond told his 300 thousand co-citizens: “We should think not only about this current generation, but about the forthcoming one. Oil, like other natural resources is not renewable. So let us separate a part of the royalties originated from the natural resources for the constitution of a fund that shall belong to all residents in the state of Alaska. By 76 thousand votes for and 38 thousand opposed, 2X1, the proposal was approved. The law separates 25% of the revenue coming from the natural resources exploitation and invested in US bonds, Alaska´s companies stocks, contributing to diversify its economy, USA and international companies stocks, including some of the 30 most profitable companies from Brazil, like Petrobrás, Vale do Rio Doce, Itaú and Bradesco, which means we Brazilians are contributing to the success of this system, and real estate. The equity of the Alaska Permanent Fund increased from US$ 1 billion, in early eighties to US$ 40 billion recently. In 2009 it decreased because of the economic crisis, but is already in recovery.

Each person living for one year or more in Alaska could filled a one-page form, between January 1st to March 31th, that included his/her business and home address, if he/she lived there for one year or more, even if he/she had travelled, the number of people in the family up to 18 years of age, not being necessary to inform his/her income or possessions, a few more data and the witness of two persons about the veracity of the information. Who did that, since the early eighties, every year until the beginning of October, received in his bank account, by electronic transfer, or by a check sent to his house, first around US$ 300 and gradually more, up to US$ 2.069 per person in 2008. In 2009, the sum decreased to US$ 1305, because of the economic crisis that affected the economy and reduced the oil and stock prices in the New York Stock Exchange.

As shown by Professor Scott Goldsmith’s, of the University of Alaska, in Anchorage, in his paper presented in the IX BIEN International Congress, in 2002, in Geneve, the FPA has distributed around 6% of the Gross Domestic Product during the last 27 years to all its inhabitants – presently, there are about 700 thousand, among which 611 thousand complied with the requirements in 2008 – and has made Alaska the most equalitarian of the 50 American states. If in 1976 a referendum approved the proposal in the ratio of two to one, Goldsmith observes that, presently, proposing the end of the dividend system of the Permanent Fund of Alaska is political suicide for any leadership.

During the period 1989-99, while the per capita family income of the 20% richest families in USA increased 26%, the per capita income of the 20% poorest families increased 12%. In Alaska, due to the dividends paid equally to all its inhabitants, the increase of the per capita family income of the 20% richest families was 7%. The increase of the per capita family income of the 20% poorest families was 28%, thus 4 times more. This means that for the objective to reach a more fair society, the experience has been very successful. These results were shown by Scott Goldsmith in his lecture to the XI International Congress of BIEN, in Geneva, 2002. He mentioned that today it is political suicide for a political leader to propose the end of the Alaska Permanent Fund Dividend system.

In 1999, professors Bruce Ackerman and Ann Alstott, from the University of Yale, published the book “The Stakeholder Society”. Based on the proposal of Thomas Paine, they proposed that everyone in USA when turning 21 should have the right to receive a sum of US$ 80 thousand to start his/her adult life with the possibility to spend in anything that he/she wants, to conclude his/her studies, to start an enterprise or any other thing. One of his post-graduate students, member of the Fabian Society presented the idea to his personal friend, the former First Minister Tony Blair. When Blair announced that his wife Cherie was pregnant of their fourth son, Alexander, he said that from that time on every child born in England would receive a bank deposit when the child is born and completes 6, 11 and 16 years of age, respectively the amounts of 250, 50, 50 and 50 sterling pounds. If the child’s family had an annual familiar income below a certain level, near to 17 thousand sterling pounds, those amounts should be 500, 100, 100 and 100 pounds sterling respectively. As these deposits earn interests, when the person turns 18, he/she would have an amount near to 4 thousand or 5 thousand pounds sterling, as a right to participate in the wealth of the nation. Under the name of “Child Fund Trust”, this law was approved by the United Kingdom Parliament on May 13th, 2003. Finally, in his birthplace, the proposition of Thomas Paine, formulated in 1795, was applied, even modestly.

In Brazil, we could consider the institution of the Citizen’s Basic Income as consistent with the values defended by the indigenous living in community, by the fighting “quilombolas” and abolitionists for the slavery abolition and by all those researchers and scientists who fight for the creation of a fair nation in Brazil. Among those we can cite Caio Prado Junior, Milton Santos, Josué de Castro and Celso Furtado. In 1956, as the federal deputy of PTB, in a speech in the Chamber of Deputies about the income unevenness, the author of “Geografia da Fome” and “Geopolítica da Fome”(Hunger Geography and Hunger Geopolitics), Josué de Castro, affirmed:

I defend the need of giving the minimum to each one, according to the right that all Brazilians should have the minimum for their survival.

It was during the years of 1966-68, when I studied for my Master´s Degree in Economics at the Michigan State University, USA, that I came across with the concept of the income guarantee through the negative income tax. When I did my Doctorate in Economics at the MSU, with 15 months of studies at the University of Stanford, USA, I became more acquainted with the concept. When I went back to Brazil, I interacted with professor Antonio Maria da Silveira, who, in 1975, in Revista Brasileira de Economia, proposed the institution of negative income tax in Brazil in the article “Moeda e redistribuição de renda” (Currency and Income Redistribution).. When I was elected Senator by PT-SP, for the first time in 1990, I called Professor Antonio Maria to collaborate in the proposition of the Guaranteed Minimum Income Scheme, PGRM. Every adult person, of 25 years or more, who does not earn at least 45 thousand cruzeiros per month, should have the right to a complement of 30% to 50%, under the criterion of the Executive Power, of the difference between that level (in that time, about US$ 150 per month) and the income level of the person. The project was approved by the Federal Senate, by consensus of all parties, on December 16th, 1991. It went to the Chamber of Deputies, where, at the Committee of Finance and Taxation, received an enthusiastic written opinion from Deputy Germano Rigotto (PMDB-RS).

Then, the debate on the subject flourished in Brazil. In 1991, during a debate among approximately 50 economists with affinity to PT, held in Belo Horizonte, where, invited by Walter Barelli, Antonio Maria da Silveira and I presented the proposal of the PGRM. Professor José Márcio Camargo, from PUC-Rio de Janeiro, observed that the guarantee of a minimum income is a good step, but should be granted to needy families, with children in school age attending school regularly. So, they would not be forced to work early to help their family maintenance. He wrote two articles about the subject in the newspaper “Folha”, in December 3rd, 1991, and in March 10th, 1993. In 1986, Professor Cristóvam Buarque, from Universidade de Brasília, developed a similar proposal.

So in 1995, taking into consideration these thoughts, Mayor José Roberto Magalhães Teixeira (PSDB), in Campinas, and Governor Cristóvam Buarque (PT), in Distrito Federal, started their minimum income schemes associated to education opportunities, the Bolsa-Escola. Every family that, at that time did not receive up to half minimum wage monthly per capita, that is 70 reais, would have the right to receive the difference to complete the 70 reais per capita, in Campinas, or one minimum wage, in Distrito Federal. Those experiences spread out by several municipalities, such as Ribeirão Preto, Piracicaba, Jundiaí, São José dos Campos, Belo Horizonte, Belém, Mundo Novo etc.. In the National Congress, several bills of law were presented, requiring the support of the Federal Government for the municipalities that were going towards this direction.

In 1996, I took Professor Philippe Van Parijs, philosopher and economist who has defended very well the Citizen´s Basic Income, for an audience with President Fernando Henrique Cardoso and the Minister of Education, Paulo Renato Souza, attended also by Representative Nelson Marchezan, one of those proponents. Van Parijs expressed that unconditional basic income should be a better objective, but starting a minimum income guarantee associated with education opportunities was a good step, because it was related to human capital investment. It was then when President Fernando Henrique Cardoso gave the positive sign for the National Congress to approve the Law 9.533, of 1997. The law authorized the federal government to grant a financial support of 50% on the amount spent by the municipalities with minimum income associated to social and education actions schemes.

In March 2001, the National Congress approved and President Fernando Henrique Cardoso sanctioned a new law, of his initiative, Nr. 10219/2001, authorizing the federal government to celebrate agreements with the government of all Brazilian municipalities to adopt the minimum income associated to education al opportunities, or Bolsa Escola. The President gave the name José Roberto Magalhães Teixeira to the law, in homage to the Mayor of Campinas who had passed away. Later on, the government instituted the Bolsa-Alimentação and the Auxílio-Gás programs. In 2003, the government of Luiz Inácio Lula da Silva instituted the Vale – Alimentação program.

In October 2003, the government of President Lula decided to unify and rationalize the several programs such as Bolsa Escola, Bolsa Alimentação, Cartão Alimentação and Auxílio Gás in the Bolsa Família Program, which had 3.5 million families registered in December 2003. The number increased to 6.5 million families in December 2004, 8.5 million families in December 2005 and 11 million families in December 2006, and 12.5 million families in December 2009.

The Bolsa Família Program, among other economic policy instruments, contributed for the reduction of absolute poverty and inequality degree in Brazil. According to the studies of IPEA, Instituto de Pesquisa Econômica Aplicada number 30, PNAD 2008, First Analysis, of September 24th, 2009, the Gini coefficient of inequality of domestic income per capita, which reached 0.599; in 1995, 0.581, in 2003; decreased gradually every year, reaching 0.544 in 2008. The proportion of families under extremely poor line, with income per capita below R$ 93.75 which was 17.5% in 2003, decreased to 8.8% in 2008. The proportion of poor families, with income per capita below R$ 187.50, decreased from 39.4% in 2003, to 25.3%, in 2008.

This favorable result can also be shown by the following way. The 20% poorest families had an income per capita increase 47% faster than the income of the richest 20%. While in 2001, the average income of the 20% richest families was 27 times in relation to the 20% poorest families, in 2008 it was 19 times, a reduction of 30% in inequality in 7 years.

Brazil, despite the achieved progress, is still one of the countries more unequal in the world. While the poorest 40% live with 10% of the national income, the richest 10% live with more than 40%. The income appropriated by the 1% richest is the same as of the 45% poorest. The creation and expansion of the Bolsa Família Program, preceded by Bolsa Escola, Bolsa Alimentação and others, had positive effects. To advance towards a more efficient and direct eradication of the absolute poverty and greater equality and the guarantee of greater real freedom for all is the reason for the application of the Citizen´s Basic Income.

During the nineties, more and more I interacted with the researchers who founded BIEN, participating in the bi-annual congresses. I was convinced that better that an income guarantee through a negative income tax, or conditioned forms, should be an unconditional Basic Income for all the population. For this reason, in December 2001, I presented a new bill of law to the Senate for the institution of the Citizen´s Basic Income, CBI. The designed committee reporter, Senator Francelino Pereira (PFL-MG), after having studied the proposition, told me: Eduardo, it is a good Idea. But you have to make it compatible with the Fiscal Responsibility Law, where for each expenditure, it is necessary to have the correspondent revenue. Would you accept a paragraph saying that it will be instituted step by step, under the criterion of the Executive Power, starting with the most in need, as it is done by the Bolsa-Escola, and then the Bolsa Família Programs, until it is extended to everyone someday? I thought that it was a good sense, I remembered the recommendation of James Meade, and I accepted. Due to this aspect the bill of law was approved by consensus by all parties in the Senate, in December 2002, and in December 2003, by the Chamber of Deputies. In January 2004, the Minister of Finance, Antônio Palocci when consulted by President Luiz Inácio Lula da Silva, said that since it is to be instituted gradually, it was feasible, so he may sanction it. Therefore, on January 8th, 2004, the President sanctioned the Law 10.835/2004, creating CBI. On this day, he received the following message from economist Celso Furtado:

At this moment when Your Excellency sanctioned the Citizen’s Basic Income Law I want to express my conviction that, with this measure, our country puts itself in the vanguard of those that fight for the building of a more harmonious society. Brazil was frequently referred as one of the last countries to abolish slave labor. Now with this act which is a result of the principles of good citizenship and the wide social vision of Senator Eduardo Matarazzo Suplicy, Brazil will be referred as the first that institutes an extensive system of solidarity and furthermore, it was approved by the representatives of its people

In the same way as the first minimum income associated to education programs started locally, in Campinas and in the Federal District, it is possible to start the Citizen’s Basic Income in communities or municipalities.

Among the developing countries, a significant experience started in Namíbia, in the village Otjivero/Omitara, 100 km from the capital Windhoek, in January 2008. All its 1000 inhabitants of this rural village, since then, started to receive 100 Namibia dollars, or about US$ 12, per month for each citizen. The initiative was taken by the Coalition in Favor of Basic Income of Namibia, which has one of its enthusiasts, Bishop Zephaniah Kameeta, from the Lutheran Church, and who collected voluntary contributions from several sources, including from the Workers Union in the Federal Republic of German, to get the necessary fund. The magazine Der Spiegel of August 2009, published an extensive report about “How A Basic Income Scheme Saved a Namibian Village”, where it stressed lots of positive effects of the experience. The economic activity improved, lots of micro entrepreneurial initiatives started, absolute poverty diminished, the frequency of children in schools increased, the nutrition degree improved, the self esteem of the people increased, and there was a great interest of the society in the pioneer experience.

In Brasil, Recivitas – Instituto pela Revitalização da Cidadania, after having created in Vila de Paranapiacaba, on Serra de Mar, with 1.200 inhabitants, a Free Library and a Free Toy Center, so that people could have access to books and toys for their usufruct, decided to propose to its inhabitants the creation of the Citizen’s Basic Income. The President, Bruna Augusto Pereira and the coordinator Marcus Brancaglione dos Santos are waiting for the steps of the Mayor of Santo André, where the village is located, to carry on the project. While waiting, they started a pioneer experience in the village Quatinga Velha, in Mogi das Cruzes, where, since the beginning of 2009, they have paid R$ 30 per month to 61 persons.

Another propitious experience is taking place in Santo Antonio do Pinhal, in Serra da Mantiqueira, 177 km from São Paulo, on the way to Campos de Jordão. There, on October 29th, 2009, the Municipal Chamber, by consensus of its nine councilmen, approved the Municipal Bill of Law for a Basic Income, proposed by Mayor José Augusto Guarnieri Pereira, from PT, elected in 2004 by 55% of the votes and reelected in 2008, by 79.06% of the votes. The law was sanctioned by the Mayor on November 12th, 2009. It is the first, among the 5.564 Brazilian municipalities which approved a law instituting the CBI. Its first article declares:

With the purpose to turn Santo Antonio do Pinhal into a Municipality that harmonizes sustainable social and economic development with the application of justice principles, meaning the solidarity practice among all its inhabitants, and, above all, to grant a higher level of dignity to all its inhabitants, the Citizen´s Basic Income of Santo Antonio do Pinhal – CBI is instituted, consisting in the rights of all registered residents or residents in the Municipality for at least 05 (five) years, regardless of their social and economic status, to receive a monetary benefit.

Exactly as the federal law, it will be the same amount for everyone and sufficient to meet the minimum vital needs of each person, taking into account the development level of the municipality and its budgets possibilities. It will be attained by stages, upon the criterion of the Conselho Municipal de RBC, giving priority to the most needed segments of the population.

To finance the payment of the CBI, a Municipal Fund will be created with the following sources: 6% of the tax revenues of the municipality; donations from individuals or corporations, public or private, national or international; money transfers from the State of Federal Government; yields generated by the investment of the available funds and other resources. Santo Antonio do Pinhal, with 7.036 inhabitants (in 2008, according to IBGE), a half in the rural area and another half in the urban area, has 60 lodging houses, corresponding to 1,300 beds, 32 restaurants, small and medium farmers, artisans and several activities in the commerce and industry. There are good schools and low criminality index, zero homicides.

It is perfectly possible that the visitors, who on season holidays fill up the lodging houses and restaurants, feel enthusiastic to contribute for the pioneer achievement of the CBI and the principles of justice elaborated by philosopher John Rawls in “A Theory of Justice” (1971). According to Professor Philippe Van Parijs, in “Real Freedom for All” What (if anything) may justify capitalism?” (1995) Oxford, the CBI is one of the instruments that contribute for the realization of these three principles:

1. Each person is to have an equal right to the most extensive system of equal basic liberties compatible with a similar system of liberty for all (the principle equal liberty);

2. The inequalities of social and economic advantages are justified only if (a) they contribute to the improvement of the less advantaged of the society (the principle of difference), and if (b) they are linked to positions that everybody has equal opportunities to occupy (the principle of equal opportunities).

To turn the CBI feasible, it would be necessary to obtain a great amount of resources. If we want to give a farther better than the Bolsa Família, even modest, we should begin with at least an amount higher than the average paid by this scheme, R$ 95 per family, what means something like R$ 31.66 per person in a family of three members. So, if we think about a CBI of R$ 40, it would be R$ 240 per month in a family of 6 members. In 12 months, the yearly amount would be R$ 480 per person. If we multiply to consider 192 million of Brazilians in the beginning of 2010, we would need R$ 92.160 billion, something around 3.5% of the Gross National Product of R$ 2.6 trillion in 2009, about 6.7 times the Bolsa Familia budget of R$ 13.6 billion for 2010, a considerable leap.

R$ 40 per month is a modest amount, but along the time, with the progress of the country and the growing approval from the population, the CBI could turn into somewhat as 100, someday R$ 1.000 and so on. A way to make it feasible is the creation of the Citizen’s Brazil Fund, according to the Bill of Law nr. 82/1999, which I presented to the Senate. It was already approved by consensus by the Senate, and is in legal procedures in the Chamber of Deputies, where it was already approved by the Committee of Family and Social Security and is waiting for the written opinion of Deputy Ciro Gomes (PSB-CE), at the Committee of Finance and Taxation. This Fund is constituted by 50% of the resources generated by authorization or concession of the natural resources exploitation; 50% of the revenues from rentals of the Government real estate, which belong to all the population; 50% of the revenues generated by the concession and services and public works and other resources. The output generated by the investments of the Fund resources, like the Alaska Permanent Fund, will be used to pay CBI to all the Brazilian residents

Especially when more people understand how CBI could contribute for the construction of a fair and more civilized Brazil, more voices will be saying to the President of the Republic, to the Governors and Mayors: It is a good proposal. Let’s put it into practice right away. How are the 2010 election presidential candidates and their parties viewing the perspective of the CBI?

During the IV National Congress of the PT in Brasilia, February 19-21 of this year, by the unanimous vote of the 1.350 delegates, the following point was added to the National Program of Dilma Rousseff who was acclaimed Presidential candidate by consensus:

“The Great Transformation

The accelerated growth and the fight against racial, social, regional inequalities and the promotion of sustainable development will be the axis of the economic development structure.

19) The expansion and the strengthening of the popular consumption goods, that produces strong positive impact over the productive sector system, will be attained by:


f) permanent improvement of the income transfer programs such as the Bolsa Família, to eradicate hunger and poverty, to facilitate access of the population to employment, education, health and higher income;

g) transition from the Bolsa Família Program towards the Citizen´s Basic Income, CBI, unconditional, as a right of every person to participate in the wealth of the nation, such as set by the Law 10.853/2004, a PT initiative, approved by all parties in the National Congress and sanctioned by President Luiz Inácio Lula da Silva in January 8, 2004.”

In July 2008, after visiting Iraq, under the invitation of the President of the National Assembly, and before attending the invitation of President José Ramos Horta from East Timor, to propose the CBI for them, I asked for an audience to Minister of the Civil House, Dilma Rousseff. For one hour and 45 minutes I had the opportunity to explain to her all the development and the advantages of the CBI, In conclusion, she said that it was very interesting. In December of that year, I told her that I understood well her personnal merits that had made President Lula to choose her as his candidate for succeeding him. And since she had shown herself in favor of the CBI, I would support her mainly to help her in implementing it.

Senator Marina Silva, the PV candidate, informed me that she is also in favour of the CBI and that she told of the main formulators of her program to consider it among the socio environmental policies. Therefore, Professor José Eli da Veiga, from the University of São Paulo, wrote in the Marina Silva´s presidential program:

Both the uses of natural resources as well as the negative impacts over the ecosystems – in its various forms – may generate contributions to a Fund that allows the distribution of an annual dividend to all Brazilians and foreign residents for an year or more. It is a form of effective participation in the wealth generated by the nation as a citizen’s right.

[1]Work for the XIII International Congress of BIEN at FEA/USP, June 30, July 1st and 2nd, 2010. This is a relatively simple text, summarizing what I explained in deeper detail in my books “Renda de Cidadania. A Saída é pela Porta” (Cortez Editora e Ed. Fundação Perseu Abramo, 6th. ed. 2010) and “Renda Básica de Cidadania. A Resposta dada pelo Vento” (L&PM, 3rd. ed. 2008). You may find a more complete bibliography in both books.

[2]Eduardo Matarazzo Suplicy is Senator from PT-SP, Professor in Economics at the Escola de Administração de Empresas e de Economia de São Paulo, from Fundação Getúlio Vargas, Ph.D. in Economics by Michigan State University, USA, author of the Bill of Law that originated Law 10.835/2004 which institutes the Citizen´s Basic Income in Brazil and Honorary Co-President of BIEN, Basic Income Earth Network.

Eduardo Suplicy
email : eduardo.suplicy [at] senador.gov [dot] br

The Hidden Shame in the Global Industrial Economy
by Ed Ayres / December 15, 2003

Where do the raw materials to build our paneled offices, airplanes, and cell phones come from? Maybe you really don’t want to know. A lot of them come from plunder, of a kind we’d like to think came to an end long ago. In the 16th century, Hernando Cortez sailed to Mexico seeking gold for the Spanish empire. He found a lot of it, and seized it without compunction, killing any Aztecs who stood in his way. Today, that kind of plunder may seem antiquated-abhorred by the community of nations. Of course, we still suffer the depredations of various transnational criminal cartels and mafias. But those are the exceptions, the outlaws. Today, no self-respecting nation or corporation would engage in the kind of brutal decimation of a whole culture, simply to seize its treasure, that Cortez did. Or would it?

In fact, the plundering of precious metals and other assets is far more prevalent today than in centuries past, and on a larger scale. Now it’s not just Spain and a few other military powers seeking global dominance, but scores of nations seeking cell phones and teak furniture, that are seizing materials from native cultures-some of these materials in quantities that the conquistadors could never have imagined. Now it’s not just silver and gold, but coltan (for those cell phones), copper, titanium, bauxite, uranium, cobalt, oil, mahogany, and teak. And now, in place of the extinguished Aztecs and other now decimated cultures, it’s hundreds of still surviving cultures that are being overrun, in perhaps a hundred countries. And most significantly, while the looting is still done by invaders from across the oceans, it is often sanctioned and facilitated by the victimized peoples’ own national governments.

But while the plunder is greater now, it is in some respects less openly pursued and less visible than it would have been for Cortez, had the technology to observe it been available in his day. The conquistadors would likely have reveled in seeing their exploits shown on TV. Today such publicity is avoided, for compelling reasons: First, plunder usually entails invasion, and in the centuries since Cortez the world’s nations have moved toward nearly unanimous condemnation of unprovoked invasion-as reflected in their widely shared shock at the U.S. invasion of Iraq. There has been parallel progress in recognizing the wrongness of enslaving other people or simply killing them for their property. There’s an evolving appreciation of human diversity, and of the idea of a global (as opposed to European, or nationalist) community. Yet the incentives for seizing the wealth of others are as economically irresistible today as they ever have been, and the means of doing so are now far more widely available. So the seizing continues, but not necessarily by military assault. That’s not to say there aren’t still places where the job is done with outright killing, as the following pages will detail. In Indonesia, Sierra Leone, and Nigeria, there have been cases in which people who opposed extractive operations on their land were given Cortez-style removals from the discussion. But where the scrutiny of the global media is present, the means are more indirect, and appear to be accidental. People living near uranium mines that have left piles of radioactive waste on their land die of cancer in unusual numbers, and their children have unusual numbers of birth defects. Indians whose land has been taken over by oil-drilling operations are slowly poisoned by petrochemical contamination of their water and soil. Those living downstream from large gold mines find their drinking water laced with cyanide. Food sources are destroyed, as are sacred places-and people die of spiritual, as well as physical, deprivation. Those kinds of dying don’t make the evening news.

Second, the plunder is less visible now because it rarely need be witnessed by the people who end up with the wealth-the major purchasers of gasoline or gold chains or tickets to fly on aluminum-bodied planes. In gold rush days, the lucky miner who found a nice nugget could buy a fancy watch. In the modern economy, the man with the Rolex has likely never been anywhere near a gold mine. The big extractive industries are far from the urban centers where most of the affluent live. In poorer countries from which much of the world’s mineral and forest wealth is taken, the extractive operations are often in remote jungles or subsistence farming regions-homelands to people who are largely left out of the global dialogue and trade.

Finally, there is the unspoken disincentive of the world’s media giants to expose the exploitative nature of the industries that provide the raw materials of the economy that pays their way. Nearly all media, whether print or electronic, are funded by advertising for consumer goods that too often originate with raw materials largely taken from indigenous land or from ostensibly protected parkland. It would perhaps be unfair to say the media are part of a conspiracy of silence, because in all likelihood most media executives rarely stop to think about what fuels the economy that allows them to profit. But it’s fair to suggest that there’s a reluctance to undermine the foundations of the economy on which their whole business rests.

Not all extractive industries operate in the shadows. Many are honest businesses, run by people who are attentive to the human and environmental impacts of their operations. But those businesses are far too few. By some estimates, for example, some 80 percent of the logging done in Indonesia-one of the largest producers of wood in the world-is illegal. Some of the largest mines in the world, dumping thousands of tons of deadly poisons into their surroundings each day, are operating without the consent of the people whose land they have taken over.

Big Footprints
Mining and logging operations-the “extractive industries”-aren’t just small pin-pricks in the Earth’s skin, though they may appear that way on maps. Apologists may think of them as small holes discreetly drilled in large territories, for which small compensations to the impoverished inhabitants of those territories may be sufficient. But in fact, extraction has far-reaching impacts and costs. Because nature is not static but involves continuous movement of wind, water, and wildlife, contaminants released by mines can cause Pandora-like destruction. One of the most alarming forms of contamination is that of heap-leach gold mining, a modern technique that involves pouring rivers of cyanide on huge piles of low-grade ore to extract the gold. Cyanide is extremely poisonous: a teaspoonful containing a 2-percent cyanide solution can kill an adult. In February 2000, a dam holding heap-leach waste at a gold mine in Romania-the Baia Mare gold mine owned by an Australian company, Esmeralda Exploration-broke and dumped 22 million gallons of cyanide into the Tisza River. The poison flowed more than 500 kilometers downstream into Hungary and Serbia, wreaking what some called the worst environmental disaster since the Chornobyl nuclear explosion in 1986. Unfortunately, this event could not be written off as the last gasp of an outmoded technology. Heap-leach gold mining is on the increase. In Peru, the Yanacocha gold mine-second largest in the world-sits atop the South American continental divide, from which any similar breech would run all the way to both the Atlantic and Pacific Oceans. And in Tanzania, the Geita mine has just been sited on the Nyamelembo River, which drains into Lake Victoria. One of the largest and most valuable fresh-water lakes on the planet, Victoria is essential to the economies of Kenya and Uganda as well as Tanzania. A Kenyan environmental professor, Wangari Maathai (now the country’s environment minister), described the Geita mine as “the most insensitive economic undertaking I have ever come across,” explaining that “it is not just a matter of poisoning people. Very soon, the European Union will ban all fish exports from East Africa just because some toxic elements have found their way into the fish, and it will be a great economic loss to the local people whose life depends entirely on fishing.”

The kinds of spills produced by modern mines shouldn’t be compared to the relatively petty crime that occurs when someone dumps dry cleaning fluid into the sewer drain, or drops his old batteries into the garbage. Mine waste sends huge plumes of poison into the world’s rainforests, groundwater, and food. In Zortman, Montana, in 1982, the Zortman-Landusky gold mine spilled 52,000 gallons of cyanide into the local groundwater, and it was discovered only when a local mine worker smelled cyanide in his faucet at home. Cyanide was the agent used to kill Jews in Hitler’s gas chambers. Today, in West Papua, Indonesia, a gold mine owned by the U.S. company Freeport McMoRan dumps 120,000 tons of cyanide-laced waste into local rivers every day. In Papua New Guinea, the Ok Tedi copper mine, which was built on the local people’s land without their consent, dumps 200,000 tons of waste per day into the Fly River and has brought the once biologically rich region to ruin.

There are other means, besides rivers, by which damage from extraction can be spread. Wind, in particular, can be as dangerous a factor with big mines as with broken nuclear plants. Uranium mines produce huge piles of crushed ore waste, or tailings. According to the Center for World Indigenous Studies, the most common health risk associated with uranium mining is breathing radon-222 gas, which will continue to seep from the tailings for thousands of years to come. In Australia, the tailings dam of an abandoned uranium mine was burst by monsoon rains, and subsequent dispersal of the waste by river and wind has polluted an area of 100 square kilometers of land-driving out the Aboriginal people who lived there. In the U.S. Southwest, radioactive waste from an abandoned uranium mine owned by El Paso Natural Gas Company has blown toward an area used by Navajo Indians for shepherding.

In some cases, the extraction is not at a single point at all, but takes place over a wide area. Logging operations have decimated some of the world’s most biologically valuable forests. Many of these operations are either illegal or are sanctioned by corrupt national governments over the desperate objections of indigenous inhabitants. In Bolivia, in the late 1990s, the government granted logging concessions covering 500,000 hectares of Guarayo Territory and 140,000 hectares of Chiquitano de Monte Verde Territory. In Cambodia, illegal logging has led to severe deforestation, flooding, and destruction of rice crops-and to the displacement of people who depended on those forests for subsistence. In Liberia, in the year 2000, some $100 million worth of timber was cut down and sold, mainly to European consumers, to enrich the dictator Charles Taylor and to buy arms for his henchmen. In Indonesia, the looting of forests has reached new levels, with about 2 million hectares disappearing every year.

Buying Silence
Cortez did not have to worry about bad PR. Companies like Shell Oil or Freeport McMoRan may do their extraction in remote places, and with the tacit acceptance of the global media, but they can no longer escape the attention of activists and groups like Amazon Watch, Rainforest Action Network, and the Mineral Policy Center. Shell was burned badly when it was accused of collusion with the Nigerian government in the murder of the Ogoni activist Ken Saro-Wiwa, who had dared to protest Shell’s ruination of his people’s homeland. So, the major extractive industries have learned to become more discreet about how they take what they want. One of the most common strategies is to offer employment in the mines to indigenous people who are not well informed about the hazards, and to develop a dependency that the workers and their families are unable to break even when their health begins to break-a contemporary form of indentured servitude. An Aborigine writer, Vincent Forrester, describes how this dependency was established at the Ranger uranium mine in his people’s region of Australia. Mining royalties are paid to the government, not to the local people. (Most mining companies don’t pay royalties to anyone at all.) The government then supplies the community with essential services, but does not inform the people about the effects of the mining on their land and health. “This dependency, I believe, is a form of ransom,” writes Forrester. “White Australia says to the under-serviced, fledgling outstation movement, ‘You can have money for Toyotas, for bores, to help you set up, but if mining stops the money stops too.'”

A more hardball way of buying acquiescence is simply to find individual members of the local community who are willing to publicly support a proposed mining project in exchange for a small payment, which in an impoverished area can be a large inducement. The offers open rifts in the local community, causing enough disarray to allow the project to gain a foothold. In the late 1990s, for example, the Navajo Times reported that the HRI corporation, which wanted to open a uranium mine near the Navajo community of Crownpoint, New Mexico, had arranged to give lease payments to some of the Indian landowners living in the community. According to a report by Chris Shuey of the Southwest Research and Information Center in Albuquerque, the total amount of the payoff came to $367,000. The population of Crownpoint at that time was 2,700, which meant HRI was paying $136 per citizen to begin a process that would use the community’s underground water-bearing strata as a medium for “in situ leach” processing of uranium-turning the water into a “pregnant solution” from which the uranium would be extracted within one-half mile of several churches, schools, businesses, and most of the homes in the community.

In Madagascar, the Anglo-Austrialian mining giant Rio Tinto has tried to buy off the natives for even less. Rio Tinto wants to mine 40 kilometers of coastal dunes, bulldozing an indigenous homeland that is also a habitat for numerous rare and endangered plant species. The company’s strategy has been to invite the villagers to dinners at which they can eat and drink while watching PR films that extol the proposed operation but make no mention of likely damage. In hundreds of mining or logging operations around the planet, the main economic incentive for capitulation is the lure of jobs. Where people are poor, that lure of short-term cash can easily blind young workers to the long-term impacts of the project on their culture and health-and on the long-term sustainability of their local economy. In the Arctic, Inuit communities are now divided about whether to welcome more intensive oil drilling. Those who see a threat to their traditional way of life have put up strong resistance, but it’s rarely enough to fend off the incursions, especially when their own national governments have been bought off. In a globalized economy, the buying-off of governments has become widespread. A few years ago in India, for example, the indigenous Bhagata, Khond, Konda Reddi, and Samantha communities found themselves targeted by foreign companies interested in the bauxite (aluminum ore) deposits on their lands. Indian constitutional law protects indigenous peoples from unwanted exploitation of this kind, but that did not stop the state of Andhra Pradesh from secretly inviting the companies-and giving them leases-to begin mining. The opposing parties have been litigating ever since.

Is There Really No Alternative?
When economists talk about “extractive industries” they’re usually referring to mining, oil or gas drilling, or logging-essentially, the use of heavy machinery to cut raw materials from the planet. The concept could easily be broadened to include pumping water from aquifers, hauling fish from the oceans, shooting monkeys for bushmeat, or collecting honey from wild bees. We focus here on mining, oil drilling, and logging because they have been so heavily concentrated in places that are both the homelands of the world’s marginalized peoples and the habitats of the most threatened ecosystems. These industries are therefore the most direct-and least regulated-assaults of industrial society on the Earth’s cultural and biological stability.

To some extent, the lack of restraint in these industries may reflect an implicit belief, in the governments of industrial nations, that the genie long ago exited the bottle, and that trying to undo any damage it has done now is as unrealistic as trying to undo the damage done by the seizing of Indian territories by Europeans two or three centuries ago. But the idea that redressing past injustices is now “unrealistic,” too, makes a questionable assumption-that the descendants of the conquered Indians have long since been assimilated into the modern industrial economy and share the same benefits as the descendants of their conquerors. Yet, the reality of places like the Navajo reservations in the U.S. Southwest belies that assumption. Native American communities are far more impoverished, with far higher rates of disease, unemployment, and suicide, than the rest of the country. And it’s on Native American lands that the most blatantly exploitative extractive operations are concentrated. A similar observation can be made of the oil-rich Ogoni lands of Nigeria, or the Guarayo territory of Bolivia, among scores of others.

The political inertia that has allowed colonial-era racial distinctions to be perpetuated in the twenty-first century economy has also allowed outmoded assumptions about industrial productivity to be perpetuated. The prevailing belief is that if we want to continue having the rich lifestyle to which we are now accustomed, we have no choice but to keep on drilling and digging in the places where we already are-and, indeed, to commence new drilling in any place where more resources can be found. If the Inuit are hunting caribou in the Alaska National Wildlife Refuge (ANWR), but the war on terror and the fueling of American Hummers and Expeditions demands oil and there’s oil under ANWR, sooner or later the Inuit will have to step aside-will have to forget their antiquated ways, learn to speak English, head south, and find jobs at Exxon gas stations or Wal-Mart.

Such assumptions have been amply discredited, though you might never know it from following the mainstream news media and its conservative-dominated commentary. The discrediting takes several forms, each of which involves the exploding of a persistent myth about the materials economy: “Economic growth requires increasing materials and energy consumption.” In other words, population momentum (the unavoidable population growth of the coming years even with maximum stabilization policies), plus rising standards of living across the planet, will necessarily drive up demand for raw materials. Historically, economic growth has meant soaring material consumption. But the idea that this link must continue assumes that the efficiency of materials use must remain constant, which it need not. If cities were redesigned to be more compact, for example, the quantities of materials required to provide housing and transport per capita could be greatly reduced while actually improving the quality of urban life. As asphalt and gasoline use declined, so would the psychic and physical ravages of traffic congestion, auto accidents, air pollution, and suburban isolation. At the same time, growing efficiency in energy use, both from technological advances and from changes in consumer behavior (how about trading in your Expedition for a Prius, or your leaf blower for a rake?) could vastly reduce the per capita demand for oil or aluminum without compromising the pursuit of happiness. For the 2 billion people who are poorest, hopes for a better life do not have to require further impoverishment for those of their indigenous counterparts whose land is being mined or deforested.

“Meeting the need for increased supply of materials requires taking more out of the ground.” When the benefits of more efficient design and use have been exhausted, we may indeed need to increase the supply, at least until population has stabilized. But to assume that the increase must come from the ground falsely assumes that the new materials must be virgin. In the long-term ecology of the planet, nearly all materials are eventually recycled, and now we need to do that in the short term as well. The mines of the future will be, increasingly, the cities rather than the rainforests. Already, in some areas, aluminum recycling has reduced the need for bauxite mining by half.

“Mining or timbering in indigenous areas is cheap.” This argument is similar to the one employed by Wal-Mart, which says it’s economical to get poor people, who have few alternatives, to clean toilets and wash floors for cheap wages. That thinking is just one expression of the more general myth that industry can profit by not paying the externalities, or social and environmental costs, of production. But while economic practice remains entrenched in reactionary doctrine, moral consciousness has come a long way since the days when few people had any qualms about slavery. Exploiting cheap labor is a form of quasi-slavery, and the hundreds of organizations dedicated to raising public sensitivity to that have long since brought us past the point where social costs can be ignored. The true costs of extractive industries will inexorably become more internalized-for example, in requiring oil companies to bear the medical costs of diseases brought by their polluting of indigenous water supplies. As that happens, the prices of oil and other raw materials will rise, and there will be more incentives to develop sustainable substitutions-of renewable energy for oil, of recycled metals and wood for virgin, and of more efficient use for more supply.



History of Basic Income, Part One
The idea of an unconditional basic income has three historical roots. The idea of a minimum income first appeared at the beginning of the 16th century. The idea of an unconditional one-off grant first appeared at the end of the 18th century. And the two were combined for the first time to form the idea of an unconditional basic income near the middle of the 19th century.

1. Minimum income: the humanists More (1516) and Vives (1526)
Raphael’s cure for theft – The idea of a minimum income guaranteed by the government to all the members of a particular community is far older than the more specific and radical idea of an unconditional basic income. With the advent of the Renaissance, the task of looking after the welfare of poor people ceased to be regarded as the exclusive preserve of the Church and of charitable individuals. Some of the so-called humanists started playing with the idea of a minimum income in the form of public assistance. In Thomas More’s (1478-1535) Utopia, published in Louvain in 1516, the Portuguese traveller Raphael Nonsenso, walking on the central square of the City of Antwerp, narrates a conversation he says he had with John Morton, the Archbishop of Canterbury. Such a scheme, he argued, would be a more astute way of fighting theft than sentencing thieves to death, which had the unpleasant side effect of increasing the murder rate.

“I once happened to be dining with the Cardinal when a certain English lawyer was there. I forgot how the subject came up, but he was speaking with great enthusiasm about the stern measures that were then being taken against thieves. ‘We’re hanging them all over the place’, he said. ‘I’ve seen as many as twenty on a single gallows. And that’s what I find so odd. Considering how few of them get away with it, how come we are still plagued with so many robbers?’ ‘What’s odd about it?’, I asked – for I never hesitated to speak freely in front of the Cardinal. ‘This method of dealing with thieves is both unjust and undesirable. As a punishment, it’s too severe, and as a deterrent, it’s quite ineffective. Petty larceny isn’t bad enough to deserve the death penalty. And no penalty on earth will stop people from stealing, if it’s their only way of getting food. In this respect, you English, like most other nations, remind me of these incompetent schoolmasters, who prefer caning their pupils to teaching them. Instead of inflicting these horrible punishments, it would be far more to the point to provide everyone with some means of livelihood, so that nobody’s under the frightful necessity of becoming, first a thief, and then a corpse.” [1]

A pragmatic theological plea for public assistance – It is, however, Thomas More’s close friend and fellow humanist, Johannes Ludovicus Vives (1492-1540), who should be regarded as the true father of the idea of a guaranteed minimum income, as he was the first to work out a detailed scheme and develop a comprehensive argument for it, based both on theological and pragmatic considerations. Juan Luis Vives was born in Valencia in a family of converted Jews. He left Spain in 1509 to escape the Inquisition, studied at the Sorbonne but soon got fed up by the conservative scholastic philosophy that was prevailing in Paris at the time and moved on to Bruges in 1512, and in 1517 to Louvain, one of the main centres of the humanist movement, where he was appointed professor in 1520. He taught more briefly at Corpus Christi College, Oxford, but spent most of his adult life in the city of Bruges, where his statue can still be seen on the bank of one of the main canals. In a memoir addressed to the Mayor of Bruges in 1526 under the title De Subventione Pauperum (On the Assistance to the Poor), he proposed that the municipal government should be given the responsibility of securing a subsistence minimum to all its residents, not on grounds of justice but for the sake of a more effective exercise of morally required charity. The assistance scheme would be closely targeted to the poor. Indeed it is because of their ability to target them more efficiently that public officials should be put in charge of poor relief. To be entitled to the latter, a poor person’s poverty must not be undeserved, but he must deserve the help he gets by proving his willingness to work.

“Even those who have dissipated their fortunes in dissolute living – through gaming, harlots, excessive luxury, gluttony and gambling – should be given food, for no one should die of hunger. However, smaller rations and more irksome tasks should be assigned to them so that they may be an example to others. […] They must not die of hunger, but they must feel itspangs.” Whatever the source of poverty, the poor are expected to work. “Even to the old and the stupid, it should be possible to give a job they can learn in a few days, such as digging holes, getting water or carrying something on their shoulders.” The point of requiring such toil from the beneficiaries of the scheme is in part to make them contribute to the funding of the latter. But it is also to make sure that “being busy and engrossed in their work, they will abstain from those wicked thoughts and actions in which they would engage if they were idle”. Indeed, this concern should consistently extend to those born rich: Emperor Justinian was right, according to Vives, “in imposing a law that forbade everyone to spend his life in idleness”. If the poor cannot be parasites, why could the rich? [2]

At two junctures, Vives anticipates some insights that will drive later thinkers in the direction of a basic income. “All these things God created, He put them in our large home, the world, without surrounding them with walls and gates, so that they would be common to all His children.” Hence, unless he helps those in need, whoever has appropriated some of the gifts of nature” is only a thief condemned by natural law, because he occupies and keeps what nature has not created exclusively for himself”. Further, Vives insists that relief should come “before need induces some mad or wicked action, before the face of the needy blushes from shame… The benefaction that precedes the hard and thankless necessity of asking is more pleasant and more worthy of thanks”. But he explicitly discards the more radical conclusion that it would be even better if “the gift were made before the need arose”, which is exactly what an adequate basic income would achieve.

From Vives to the Poor Laws – Vives’s plea explicitly inspired a scheme put into place a few years later by the Flemish municipality of Ypres. It also contributed to inspiring incipient thinking and action about forms of poor relief, from the School of Salamanca of Francisco de Vitoria and Domingo de Soto (from 1536 onwards) to England’s Poor Laws (from 1576 onwards). Less well remembered than his friends and protectors Erasmus and More, Vives’s pioneering thinking on the welfare state has been recently rediscovered. [3]

He is also still remembered in his Alma Mater, the University of Louvain: A stone from his house has been incorporated in the wall of the “Universitaire Halle”, which houses the rectorate in the old town of Leuven. And the meeting room of the Chaire Hoover in the new town of Louvain-la-Neuve, where the Collectif Charles Fourier met in 1984-86 to discuss basic income and organise the founding meeting of the Basic Income European Network, has been named “Salle Vives”.

Vives’ s tract is the first systematic expression of a long tradition of social thinking and institutional reform focused on the public exercise of compassion through government-organised means-tested schemes directed at the poor. Despite the difficulties and doubts aroused by the operation of the poor laws, the thinkers of the nouveau régime made public assistance an essential function of the government. Thus, Montesquieu (L’Esprit des Lois (1748), section XXIII/29, Paris: Flammarion, Vol.2, p. 134): “The State owes all its citizens a secure subsistence, food, suitable clothes and a way of life that does not damage their health”. This line of thought eventually led to the setting up of comprehensive, nationally-funded guaranteed minimum income schemes in a growing number of countries, most recently, France’s RMI (1988) and Portugal’s RMG (1997).

2. Basic endowment: the republicans Condorcet (1594) and Paine (1596)
Condorcet on social insurance – However, towards the end of the 18th century, a different idea emerged that was to play an even greater role in the alleviation of poverty throughout Europe. The first known person to have sketched the idea is the first-rate mathematician and political activist, Antoine Caritat, Marquis de Condorcet (1743-1794). After having played a prominent role in the French revolution, both as a journalist and as a member of the Convention, Condorcet was imprisoned and sentenced to death. While in prison, he wrote his most systematic work, the Esquisse d’un tableau historique des progrès de l’esprit humain (published posthumously by his widow in 1795), whose last chapter contains a brief sketch of what a social insurance might look like and how it could reduce inequality, insecurity and poverty.

“There is therefore a necessary cause of inequality, of dependency and even of misery, which constantly threatens the most numerous and most active class of our societies. We shall show that we can to a large extent removing it, by opposing luck to itself, by securing to those who reach old age a relief that is the product of what he saved, but increased by the savings of those individuals who made the same sacrifice but died before the time came for them to need to collect its fruit; by using a similar compensation to provide women and children, at the moment they lose their husbands or fathers, with resources at the same level and acquired at the same price, whether the family concerned was afflicted by a premature death or could keep its head for longer; and finally by giving to those children who become old enough to work by themselves and found a new family the advantage of a capital required by the development of their activity and increased as the result of some dying too early to be able to enjoy it. It is to the application of calculus to the probabilities of life and to the investment of money that one owes the idea of this method. The latter has already been successfully used, but never on the scale and with the variety of forms that would make it really useful, not merely to a handful of individuals, but to the entire mass of society. It would free the latter from the periodic bankruptcy of a large number of families, that inexhaustible source of corruption and misery.” [4]

This distinct idea, which will end up inspiring, one century later, the birth and development of Europe’s massive social insurance systems, starting with Otto von Bismarck’s old age pension and health insurance schemes for the labour force of unified Germany (from 1883 onwards). Though not targeted to the poor and involving massive transfers to the non-poor, these systems soon started having a huge impact on poverty as their development quickly dwarfed public assistance schemes and relegated them to a subsidiary role. In one way, social insurance brought us closer to basic income than public assistance, as the social benefits it distributed were not prompted by compassion, but by an entitlement, based in this case on the premiums paid into the insurance system. But in another way, it took us away from basic income, precisely because entitlement to the benefits is now based on having paid (or having had one’s employer paying) enough contributions in the past, typically in the form of some percentage of one’s wage. For this reason, unlike the most comprehensive versions of public assistance, even the most comprehensive forms of social insurance cannot provide a guaranteed minimum income.

Condorcet and Paine on basic endowment – However, it is the very same Marquis de Condorcet who was the first to briefly mention, in the context of his discussion of social insurance, the idea of a benefit restricted neither to the poor (deserving of our compassion) nor to the insured (entitled to compensation if the risk materialises), namely the idea of “giving to those children who become old enough to work by themselves and found a new family the advantage of a capital required by the development of their activity.” Condorcet himself is not known to have said or written anything else on the subject, but his close friend and fellow member of the Convention Thomas Paine (1737-1809) developed the idea in far greater detail, two years after Condorcet’s death, in a memoir addressed to the Directoire, the five-member executive that ruled France during most of the period separating the beheading of Robespierre and the rise of Napoleon.

“It is a position not to be controverted, he writes, that the earth, in its natural, uncultivated state was, and ever would have continued to be, the common property of the human race.” As the land gets cultivated, “it is the value of the improvement, only, and not the earth itself, that is in individual property. Every proprietor, therefore, of cultivated lands, owes to the community a ground-rent (for I know of no better term to express the idea) for the land which he holds; and it is from this ground-rent that the fund proposed in this plan is to issue.” Out of this fund, “there shall be paid to every person, when arrived at the age of twenty-one years, the sum of fifteen pounds sterling, as a compensation in part, for the loss of his or her natural inheritance, by the introduction of the system of landed property. And also, the sum of ten pounds per annum, during life, to every person now living, of the age of fifty years, and to all others as they shall arrive at that age”. Payments, Paine insists, should be made “to every person, rich or poor”, “because it is in lieu of the natural inheritance, which, as a right, belongs to every man, over and above the property he may have created, or inherited from those who did.” [5]

From Paine to the Stakeholder Society – This idea of an equal basic endowment given to all as they reach adulthood, has reappeared now and then, for example in the writings of the French political philosopher François Huet. In his attempt to combine liberalism and socialism, he proposed that young people should all be given an endowment financed out of the taxation of the whole of that part of land and other property which the bequeather has himself received (see esp. Le Règne social du christianisme, Paris: Firmin Didot & Bruxelles: Decq,1853, pp. 262, 271-3).
The same endowment idea, combined as it was by Paine with a basic pension, has been more recently revived and developed in great detail by two Yale Law School Professors, Bruce Ackerman and Anne Alstott (The Stakeholder Society, New Haven: Yale University Press, 1999). The justification for this $80.000 unconditional grant, however, is no longer common ownership of the earth, but more comprehensive conception of justice as equality of opportunities. [6]

3. Basic income: the utopian socialists Charlier (1848) and Mill (1849)
Charles Fourier’s right to subsistence – What equal ownership of the earth justifies, in Paine’s view, is an unconditional endowment for all, not a guaranteed income. A number of 19th century reformers, such as William Cobbett (1827), Samuel Read (1829) and Poulet Scrope (1833) in England (see Horne, Thomas A. “Welfare rights as property rights”, in Responsibility, Rights and Welfare. The theory of the welfare state, Boulder & London: Westview Press, 1988, 107-132, for a useful survey), have rather interpreted it so as to give guaranteed income schemes a firmer basis than public charity. Most famous among them is the eccentric and prolific French writer Charles Fourier (1836: 490-2), one of the radical visionaries Marx contemptuously labelled “utopian socialists”. In La Fausse Industrie (1836), Fourier argues that the violation of each person’s fundamental natural right to hunt, fish, pick fruit and let her/his cattle graze on the commons implies that “civilization” owes subsistence to everyone unable to meet her/his needs, in the form of a sixth class hotel room and three modest meals a day.

“Le premier droit, celui de récolte naturelle, usage des dons de la nature, liberté de chasse, cueillette, pâture, constitue le droit de se nourrir, de manger quand on a faim. Ce droit est dénéié en civilisation par les philosophes et concédé par Jésus-Christ en ces mots: (…). Jésus, par ces paroles, consacre le droit de prendre quand on a faim, son nécessaire où on le trouve, et ce droit impose au corps social le devoir d’assurer au peuple un minimum d’entretien: puisque la civilisation le dépouille du premier droit naturel, celui de chasse, pêche, cueillette, pâture, elle lui doit une indemnité. (…) Si l’ordre civilisé enlève à l’homme les quatre branches de subsistance naturelle, chasse, pêche, cueillette, pâture, composant le premier droit, la classe qui a enlevé les terres doit à la classe frustrée un minimum de subsistance abondante, en vertu du neuvième droit (subsistance abondante). Mais voici de nombreux obstacles à la concession de ce droit: D’abord, il faudrait chercher et découvrir le mécanisme sociétaire d’industrie combinée qui, donnant quadruple produit, fournirait de quoi satisfaire en minimum. D’autre part, comme la multitude assurée d’un minimum abondant ne voudrait que peu ou point travailler, il faudrait découvrir et organiser un régime d’industrie attrayante qui garantirait la persistance du peuple au travail, malgré son bien-être.” [7]

Fourier, however, is as clear about the non-universality of the delivery of this income in kind (only a minority would be accommodated in those sixth class hotels) as he is about the absence of a work test: it is an unconditional entitlement for the poor by way of compensation for the loss of direct access to natural resources. His disciple and leader of the Fourierist school, Victor Considérant (Exposition abrégée du système Phalanstérien de Fourier, Paris, 1845) makes a step in the direction of a genuine basic income when emphasizing that, when work will have been made attractive thanks to the Phalansterian system, “one will be able to forward a minimum income to the poor members of the community with the certainty that they will have earned more than the expenditure by the end of the year”. But despite the nature of the underlying justification, poor relief is still not being turned into a universal income.

“La distribution des travaux par groupes et séries ayant la propriete de les rendre attrayants, toutes les classes de la société recherchent avec ardeur des places dans toutes les branches infiniment variées de fonctions sociales. Il n’y a donc plus de paresseux: on pourra faire aux sociétaires pauvres l’avance d’un minimum, avec la certitude qu’ils auront gagné plus que leur dépense à la fin de l’année. Ainsi, l’établissement du régime sociétaire extirpera la misère et la mendicité, fléaux des sociétés basees sur la concurrence anarchique et le morcellement. Il serait impossible aujourd’hui de faire au peuple l’avance du minimum: il tomberait aussitôt dans la fainéantise, attendu que le travail est répugnant. Voilà pourquoi la Taxe des pauvres, en Angleterre, n’a fait qu’élargir la plaie hideuse du paupérisme. – L’avance du minimum, c’est la base de la liberté et la garantie de l’émancipation du prolétaire. Pas de liberté sans minimum; pas de minimum sans attraction industrielle. Toute la politique d’émancipation des masses est là.” [8]

Joseph Charlier’s territorial dividend – In 1848, however, while Karl Marx was finishing off the Communist Manifesto in another neighbourhood of Brussels, the Fourierist author Joseph Charlier (1816-1896) published in Brussels his Solution du problème social ou constitution humanitaire (Bruxelles, “Chez tous les libraires du Royaume”, 1848, 106p.), which can be regarded as containing the first formulation of a genuine basic income. Undoubtedly inspired by the Fourierist tradition, he saw the equal right to the ownership of land as the foundation of an unconditional right to some income. But he rejected both the right to means-tested assistance advocated by Charles Fourier himself and the right to paid work advocated by his most prominent disciple Victor Considerant. The former, he reckoned, only dealt with the effects, and the latter involved too much mingling by the state. Under the labels “minimum” or “revenu garanti” (and later “dividende territorial”), he proposed giving every citizen with an unconditional right to a quarterly (later, monthly) payment of an amount fixed annually by a representative national council, on the basis of the rental value of all real estate. In a later book, in which he further develops his proposal, he relabels it “dividende teritorial” (La Question sociale résolue, précédée du testament philosophique d’un penseur, Bruxelles, Weissenbruch, 1894, 252p.). Such a scheme, he argues, would end “the domination of capital over labour”. Would it not encourage idleness? “Hard luck for the lazy: they will be put on short allowance. Society’s duty does not reach beyond securing each a fair share of the enjoyment of what nature puts at his disposal, without usurping anyone’s rights.” Anything above the minimum will have to be earned. [9]

Mill’s most skillfully combined form of socialism – Charlier’s obstinate plea was hardly heard, and he was himself quickly forgotten. This is not quite what happened to another admirer of Fourierism: John Stuart Mill. The relevant passage is the sympathetic discussion of Fourierism which he added to the second edition of his Principles of Political Economy, published the year after Charlier’s first book. This discussion unambiguously ascribes to the Fourierists the proposal of a non-means-tested basic income:

“The most skilfully combined, and with the greatest foresight of objections, of all the forms of Socialism, is that commonly known as Fourierism. This System does not contemplate the abolition of private property, nor even of inheritance; on the contrary, it avowedly takes into consideration, as elements in the distribution of the produce, capital as well as labour. […] In the distribution, a certain minimum is first assigned for the subsistence of every member of the community, whether capable or not of labour. The remainder of the produce is shared in certain proportions, to be determined beforehand, among the three elements, Labour, Capital, and Talent.”

The idea is clearly there, and under the pen of one of the most influential political thinkers of the century. But it will take another six decades before something like a real discussion arose for the first time. [10]

1. Thomas More, Utopia (1st Latin edition, Louvain, 1516), English translation by Paul Turner, Harmondsworth: Penguin Classics, 1963, p. 43-44.
2. Juan Luis Vives, De Subventione Pauperum, Sive de humanis necessitatibus, 1526; Dutch translation on behalf of the Magistrates of Ypres: Secours van den Aermen, Antwerp, 1533, reprinted by Valero & Fils, Brussels, 1943, 114p.; French translation by Ricardo Aznar Casanova: De l’Assistance aux pauvres, Brussels: Valero et Fils, 1943, 290p; English translation of part II only by Alice Tobriner: On the Assistance to the Poor. Toronto & London: University of Toronto Press (“Renaissance Society of America Reprints”), 1998, 62p.
3. Vives’s impact on social policy thinking has been emphatically recognised in Spain, for example, through the creation (in 1987) of the Fundacion Luis Vives, a foundation supporting Spanish NGO’s in the area of social policy with seats in Madrid and Brussels (http://fundacionluisvives.recol.es/quienes.asp), or through the creation (in 1998) of the Instituto de Seguridad Social Juan Luis Vives, a research institute on the welfare state at Madrid’s Universidad Carlos III (http://www.uc3m.es/uc3m/inst/IUSS/dpiuss.html).
4. Condorcet, Esquisse d\’un tableau historique des progres de l’esprit humain (1st edition, 1795), Paris: GF-Flammarion, 1988, p. 273-274.
5. Thomas Paine 1796, p. 611; 612-613.
6. For discussions of basic endowment proposals in connection with basic income, see The Ethics of Stakeholding, Keith Dowding, Jurgen De Wispelaere, and Stuart White eds., Basingstoke: Palgrave/Macmillan, 2003; and “Rethinking Distribution”, Erik O. Wright ed., special issue of Politics and Society, 2003.
7. Charles Fourier, La Fausse industrie (1836), Paris: Anthropos, 1967, p. 491-492.
8. Victor Considrant, Exposition abrege du systeme Phalansterien de Fourier, Paris, 1845, section “Plus de paresse – extinction de la misere et de la mendicite – armees industrielles”, p. 49.
9. For more details, see Cunliffe, John & Erreygers, Guido, “The Enigmatic Legacy of Charles Fourier: Joseph Charlier and Basic Income”, History of Political Economy 33(3), Fall 2001, 459-484. Note that this idea of equal ownership of the value of natural resources justifying a universal basic income is not restricted to the Fourierist tradition. It later appears, for example, in the early Herbert Spencer’s (Social Statics, London: J. Chapman, 1851) writings on land reform, in Henry George’s (Progress and Poverty (1879) London: The Hogarth Press, 1953) advocacy of a “single tax”, in the normative writings of Leon Walras (Etudes d’economie Sociale (1896), Lausanne: Rouge; Paris: Pichon & Durand-Auzias, 1936.), one of the founding fathers of mathematical economics, and, most rigorously, in the writings of the Canadian left-libertarian political philosopher Hillel Steiner (An Essay on Rights, Oxford: Blackwell, 1994).
10. J.S. Mill, Principles of Political Economy, 2nd ed. 1849, New York: Augustus Kelley, 1987, pp. 212-214, Book II, chapter 1.

History of Basic Income, Part Two.
The 20th century saw three periods when discussion about basic income was particularly intense. Firstly, under names like “social dividend”, “state bonus” and “national dividend” proposals for a genuinely unconditional and universal basic income were developed in inter-war debates in England. Secondly, after some years of silence this type of ideas was rediscovered and gained considerable popularity in debates about “demogrants” and “negative income tax” schemes during the 1960s and 70s in the United States. Thirdly, a new period of debate and exploration emerged as basic income proposals were actively discussed in several countries in North-Western Europe from the late 70s and early 80s. Quite independently, this century also saw the introduction of the world’s first, full-blown basic income scheme through the birth of the Alaska Permanent Fund, providing annual dividends to all the inhabitants of Alaska.

1. From militancy to respectability: England between the wars
Russell’s combination of anarchism and socialism – Things start waking up in Britain in 1918, towards the end of the First World War. In Roads to Freedom, a short and incisive book first published in 1918, the mathematician, philosopher, non-conformist political thinker, militant pacifist and Nobel laureate in literature Bertrand Russell (1872-1970) argues for a social model that combines the advantages of socialism and anarchism. One central component of it is a UBI “sufficient for necessaries”.

“Anarchism has the advantage as regards liberty, Socialism as regards the inducement to work. Can we not find a method of combining these two advantages? It seems to me that we can. […]

Stated in more familiar terms, the plan we are advocating amounts essentially to this: that a certain small income, sufficient for necessaries, should be secured to all, whether they work or not, and that a larger income – as much larger as might be warranted by the total amount of commodities produced – should be given to those who are willing to engage in some work which the community recognizes as useful…When education is finished, no one should be compelled to work, and those who choose not to work should receive a bare livelihood and be left completely free.” [1]

Milner’s State Bonus – In the same year, the young engineer, Quaker and Labour Party member, Dennis Milner (1892-1956), published jointly with his wife Mabel a short pamphlet entitled “Scheme for a State Bonus” (1918). What they argued for, using an eclectic series of arguments, was the introduction of an income paid unconditionally on a weekly basis to all citizens of the United Kingdom. Pitched at 20% of GDP per capita, the “State bonus” should make it possible to solve the problem of poverty, particularly acute in the aftermath of the war. As everyone has a moral right to means of subsistence, any obligation to work enforced through the threat of a withdrawal of these means is ruled out. Milner subsequently elaborated the proposal in a book published by a respectable publisher under the title Higher Production by a Bonus on National Output. Many of the arguments that played a central role in later discussions can be found in this book — from the unemployment trap to labour market flexibility, from low rates of take up to the ideal complement of profit sharing, but the emphasis is on the “productivist” case: the state bonus can even be vindicated on grounds of efficiency alone. Milner’s proposal was enthusiastically backed by fellow Quaker Bertram Pickard, supported by the short-lived State Bonus League — under whose banner Milner took part in a national election —, discussed at the 1920 British Labour Party conference and definitively rejected the following year [2].

Major Douglas and the Social Credit movement – It did not take long, however, for another English engineer, Clifford H (“Major”) Douglas (1879-1952), to take up the idea again with significantly greater impact. Douglas was struck by how productive British industry had become after World War I and began to wonder about the risks of overproduction. How could a population impoverished by four years of war consume the goods available in abundance, when banks were reticent to give them credit and their purchasing power was rising only very slowly? To solve this problem, Douglas (1924) proposed in a series of lectures and writings, often quite confused, the introduction of “social credit” mechanisms, one of which consisted in paying all households a monthly “national dividend”. The social credit movement enjoyed varying fortunes. It failed to establish itself in the United Kingdom but attracted many supporters in Canada, where a Social Credit Party governed the province of Alberta from 1935 to 1971, although it rapidly dropped the idea of introducing a national dividend.

Cole and Meade on social dividend – While the popularity of the Social Credit movement was first swelling and next shrinking in broad layers of the British population, the idea of the UBI was gaining ground in a small circle of intellectuals close to the British Labour Party. Prominent among them was the economist George D.H. Cole (1889-1959), the first holder of Oxford’s Chichele Chair of Social and Political Theory (later held by Isaiah Berlin, Charles Taylor and G.A. Cohen). In several books, he resolutely defended what he was the first to call a “social dividend” (Cole, 1935). “Current productive power is, in effect, a joint result of current effort and of the social heritage of inventiveness and skill incorporated in the stage of advancement and education reached in the arts of production; and it has always appeared to me only right that all the citizens should share in the yield of this common heritage, and that only the balance of the product after this allocation should be distributed in the form of rewards for, and incentives to, current service in production.” (Cole 1944: 144) In his presentation of J.S. Mill in History of Socialist Thought (1953), Cole also seems to have been the first to refer to the idea of a UBI by using the English expression “basic income”, which quickly spread as the discussion became international in the 1980s [3].

Politically less active, but with a far wider international reputation than Cole, another Oxford economist, the Nobel Laureate James Meade (1907-1995), defended the “social dividend” with even greater tenacity. The idea of a social dividend is present in his Outline of an Economic Policy for a Labor Government (1935) and in several other early writings (Meade 1937, 1938) as a central ingredient of a just and efficient economy. And it was to become a crucial component of the Agathatopia project, to which he devoted his last writings (1989, 1993, 1995): partnerships between capital and labor and a social dividend funded by public assets are there offered together as a solution to the problems of unemployment and poverty. Around the same time and place as the notion of “social dividend” appeared in the writings of James Meade, it also surfaced in a famous discussion on market socialism by two professors at the London School of Economics Oskar Lange (1904-1965) and Abba Lerner (1903-1982): in reply to a remark by Lerner (1936), Lange (1937) made clear the expression “social dividend”, which he used to refer to the return on collectively owned capital, had to be understood as contribution-independent.

It is on the background of this inter-war discussion that the liberal peer Juliet Rhys-Williams (1943) proposed a “new social contract”, whose central element consisted in a basic income. Universal, but not quite unconditional, as it made availability for work a necessary counterpart for the uniform grant. Payment of the grant is suspended during strikes, for example. However, it was the alternative proposal for a national minimum income (tied to a broader program of unified national child benefit and social insurance) made in 1942 by another liberal peer, William Beveridge, director of the London School of Economics, that prevailed in Britain — and soon started spreading elsewhere in Europe —, thus relegating UBI-type proposals to the fringe of the UK’s policy-relevant debate.

2. Short-lived effervescence: the United States in the 1960s
Three American approaches to the guaranteed minimum – It is in the turbulent America of the 1960s, at the peak of the civic rights movement, that a real debate on universal basic income resurfaced, with three main sources of inspiration. Firstly, Robert Theobald (1929-1999) and his Ad Hoc Committee on the Triple Revolution (1964) defended in various publications a vaguely specified guaranteed minimum income on grounds reminiscent of Douglas, such as the belief that “automation is rendering work for pay obsolete, and that government handouts are the only way to give the public the means to buy the immense bounty produced by automatons”. Secondly, in his popular Capitalism and Freedom (1962), the American economist and Nobel Laureate Milton Friedman (1912-2006) proposed a radical simplification of the American Welfare State through the introduction of what he there called a “negative income tax”. Friedman’s proposal of a linear negative income tax would fully integrate the income tax and transfer systems. It was offered as a simple and radical alternative to the patchwork of existing social welfare schemes. And it was itself meant as a transitional stage on the way to an ideal, transfer-free capitalist society (For Friedman’s own account of where he got the idea from and relevant references, see the Suplicy-Friedman exchange in BIEN NewsFlash 3, May 2000). Finally, and most importantly, James Tobin (1918-2002), John Kenneth Galbraith (1908-2006) and other liberal economists started defending in a series of articles the idea of a guaranteed minimum income more general, more generous and less dependency-creating than the existing assistance programs.

Tobin’s demogrant – Tobin, Pechman and Miezkowski published the first technical analysis of negative income tax schemes in 1967, where they came out in favor of a variant involving an automatic payment to all citizens – a genuine UBI which Joseph Pechman proposed calling a demogrant. In contrast with Friedman’s proposal, Tobin’s demogrant scheme was not meant to replace the whole system of social assistance and insurance schemes — let alone to help extinguish the welfare state altogether —, but only to reconfigure its lower component so as to make it a more efficient and work-friendlier instrument for raising the incomes of the poor.

Under Tobin’s proposal, more generous than Friedman’s and more precise than Theobald’s, each household was to be granted a basic credit at a level varying with family composition, which each family could supplement with earnings and other income taxed at a uniform rate. (For relevant references and Tobin’s own account of how his demogrant proposal evolved, see the Suplicy-Tobin exchange in BIEN NewsFlash 11, September 2001)

Nixon’s Family Assistance Plan and McGovern’s support for the demogrant – In this lively and promising context, a petition was organized in the Spring of 1968 calling for the US Congress “to adopt this year a system of income guarantees and supplements”. It was supported by James Tobin, Paul Samuelson, John Kenneth Galbraith, Robert Lampman, Harold Watts and over one thousand more economists, though not by Milton Friedman. In a context in which dependence on the existing means-tested welfare system was increasing dramatically, this petition contributed to creating a climate in which the administration felt it had to move ahead. This led to the Family Assistance Plan (FAP), an ambitious social welfare program prepared by the democrat senator Daniel Patrick Moynihan (1927-2003) on behalf of Republican President Richard Nixon’s administration. The FAP provided for the abolition of the aid program targeting poor families (AFDC) and incorporated a guaranteed income with financial supplements for workers which came close to a negative income tax scheme. It was publicly presented by President Nixon in August 1969, adopted in April 1970 by a large majority in the US House of Representatives, rejected by the relevant Commission of the US Senate in November 1970, and definitively rejected in 1972, despite several amendments meant to assuage the opposition, owing to a coalition between those who found it too timid and those who found it too bold. A more ambitious “demogrant” plan was included on James Tobin’s advice in democrat George McGovern’s platform for the 1972 presidential election, but dropped in August 1972. Combined with McGovern’s defeat by Nixon in November 1972, the beginning of the Watergate affair in March 1973 and Nixon’s resignation in November 1974, the defeat of the FAP in the Senate marked the end of the short but strong appearance of UBI-type ideas in the US debate. The discussion continued however in a more academic vein, on the basis of five large-scale experiments with negative income tax schemes (four in the USA and one in Canada) and controversies over the results.

3. New departure: North-Western Europe in the 1980s
The first initiatives: Debates in Denmark and the Netherlands – Towards the end of the 1970s, while the demogrant debate was virtually forgotten in the United States, a debate on a UBI started up from scratch in a number of European countries, in near total ignorance of previous discussions, whether in Europe or in America. Thus, in Denmark, three academics defended a UBI proposal by the name of “citizen’s wage” in a national best-seller later translated into English under the title Revolt from the Center (Meyer et al, 1978). But it is above all in the Netherlands that the new European discussion on UBI took off. The first voice to be heard in this discussion was that of J.P. Kuiper, a professor of social medicine at the Free University of Amsterdam. Struck by how sick some people were able to make themselves by working too much while others were making themselves sick because they could not find work, he recommended uncoupling employment and income as a way of countering the de-humanizing nature of paid employment: only a decent “guaranteed income”, as a called it, would enable people to develop independently and autonomously (Kuiper, 1976). In 1977, the small radical party (Politieke Partij Radicalen), grown out of the left of the Dutch Christian-democratic party, became the first European political party with parliamentary representation to officially include a UBI (basisinkomen) in its electoral program. The movement grew quite rapidly, thanks to the involvement of the food sector trade union Voedingsbond, a component of the main Trade Union Confederation FNV. With its exceptionally high proportion of women and part-time workers among its members, the Voedingsbond played a major role in the Dutch debate throughout the 1980s. It initiated a series of publications and actions defending a UBI combined with a drastic reduction in working time and hosted the Dutch UBI association on its premises. In 1985, the Dutch discussion reached a first climax when the prestigious Scientific Council for Government Policy created a sensation by publishing a report in which it recommended unambiguously the introduction of a so-called “partial basic income”. Such a partial basic income is a genuine UBI, but at a level insufficient to cover the needs of a single person and hence not meant to replace the existing conditional minimum income system.

Developments in Britain and Germany – Around the same time, the debate began to take shape in other countries too, albeit more discretely. In 1984, a group of academics and activists gathered around Bill Jordan and Hermione Parker under the auspices of the National Council for Voluntary Organizations formed the Basic Income Research Group (BIRG) – which was to become in 1998 the Citizen’s Income Trust. Despite the consistent support of independent minds such as the assistant editor of the Financial Times Samuel Brittan and the sympathy shown for the idea by liberal-democrat party, the UBI did not manage to reach mainstream politics — except in the very attenuated form of a baby bond — in Blair’s New Labour era any more than under Thatcher’s neo-liberalism. In Germany, Thomas Schmid, an eco-libertarian from Berlin, got the discussion going with his Liberation from False Labor (Schmid ed. 1984). Several collective volumes emanating from the green movement pursued and developed this first initiative (Opielka & Vobruba 1986; Opielka & Ostner 1987). At the same time, Joachim Mitschke (1985), professor of public finance at the University of Frankfurt, began a long campaign in favor of a citizen’s income (Bürgergeld) administered in the form of a negative income tax. However, the fall of the Berlin wall (1989) and the consequent reunification of Germany (October 1990) stopped this incipient public discussion for many years, despite the support it enjoyed from reputed academics like Claus Offe (1992, 1996), close to the greens, and to a lesser extent Fritz Scharpf (1993), close to the social democrats. It is only around 2005, after reunification was more or less digested, that a surprising convergence generated a rich national debate.

The basic income debate in France – In France, the debate got off the ground more slowly. The influential left-wing sociologist and philosopher André Gorz (1923-2007) initially defended a life-long basic income coupled to a universal social service of 20,000 hours (Gorz 1985). However, his fear of social life getting entirely colonized by paid employment drove him towards the defence of an unconditional income (Gorz 1997). In a very different vein, Yoland Bresson (1984, 1994, 2000), self-described as a “left Gaullist” economist, offered a convoluted argument for a universal ”existence income” supposed to be pitched at a level objectively determined by the “value of time”. Alain Caillé (1987, 1994, 1996), leader of the “Movement against Utilitarianism in the Social Sciences” (or MAUSS) advocated an unconditional income as the expression of society’s fundamental trust in those excluded from the labor market and in their ability and willingness to invest in activities of collective interest. And Jean-Marc Ferry (1995, 2000), a political philosopher in the Habermas tradition, developed a plea for a UBI as a right of citizenship at the level of the European Union, in a context in which he reckons full employment, conventionally understood, is forever out of reach and in which a “quaternary” sector of socially useful activities needs to be developed.

The birth and expansion of BIEN – These modest national debates emerged independently from one another and the intellectual contributions that fed them were unaware of most of the history of the idea, if not the whole of it. However, they gradually came into contact with one another thanks to the creation of BIEN. In March 1984, a group of researchers and trade unionists close to the University of Louvain (Belgium) published a provocative UBI scenario under the collective pseudonym “Collectif Charles Fourier”. The scenario was entered in a competition on the future of work earning the Collectif a prize with which it organized in Louvain-la-Neuve (Belgium) in September 1986 the very first meeting gathering UBI supporters from several countries. Pleasantly surprised to discover how many people were interested in an idea they thought they were almost alone in defending, the participants decided to set up the Basic Income European Network (BIEN), which published a regular newsletter and organized conferences every two years. The birth of similar networks in the United States, South America and South Africa, the intensification of contacts with pre-existing networks in Australia and New Zealand, and the presence of an increasing number of non-Europeans at the BIEN conferences, led BIEN to re-interpret its acronym as the Basic Income Earth Network at its 10th congress, held in Barcelona in September 2004. The first congress outside Europe of the newly created worldwide network was held at the University of Cape Town (South Africa) in October 2006.

4. Modest but real: Alaska’s dividends
The introduction and development of the only genuine universal basic income system in existence to this day took place many leagues from these debates. In the mid 1970s, Jay Hammond, the Republican governor of the state of Alaska (United States) was concerned that the huge wealth generated by oil mining in Prudhoe Bay, the largest oilfield in North America, would only benefit the current population of the state. He suggested setting up a fund to ensure that this wealth would be preserved, through investment of part of the revenue from oil. In 1976, the Alaska Permanent Fund was created by an amendment to the State Constitution. In order to get the Alaskan population interested in its growth and continuity, Governor Hammond conceived of the annual payment of a dividend to all residents, in proportion to their number of years of residence. Brought before the United States Supreme Court on grounds of discrimination against immigrants from other states, the proposal was declared in contradiction with the “equal protection clause”, the fourteenth amendment of the Federal Constitution. The proposal was modified in order to overcome this objection, and transformed into a genuine universal basic income. Since implementation of the program in 1982, everyone who has been officially resident in Alaska for at least six months – currently around 650,000 people – has received a uniform dividend every year, whatever their age and number of years of residence in the State. This dividend corresponds to part of the average interest earned, over the previous five years, on the permanent fund set up using the revenue from oil mining. The fund was initially invested exclusively in the State economy, but later became an international portfolio, thus enabling the distribution of the dividend to cushion fluctuations in the local economic situation instead of amplifying them (Goldsmith, 2004). The dividend stood at around $300 per person per annum in the early years but was close to reaching $2000 in 2000, when the stock market plummeted and cut the dividend in half in the course of a few years. In 2008, however, the size of the annual dividends reached a new all-time high with payments of $2069 per person. Alaska’s oil dividend scheme has repeatedly been proposed for other parts of the world, but still remains unique — and helps make Alaska the most egalitarian among US states.

“The history of basic income” is based on chapter 1 of L’allocation universelle by Yannick Vanderborght and Philippe Van Parijs (expanded English version in progress, to be published by Harvard University Press). The web version has been edited and abridged by Simon Birnbaum and Karl Widerquist. For the full list of references, see Vanderborght, Yannick & Van Parijs Philippe (2005), L’allocation universelle, Paris: La Découverte.

1. Bertrand Russell, Roads to Freedom. Socialism, Anarchism and Syndicalism, London: Unwin Books (1918), pp. 80-81 and 127.
2. On the Milners, Bertram Pickard, Major Douglas, James Meade, G.D.H. Cole and other aspects of this first public emergence of the UBI proposal, see Van Trier (1995).
3. The term basic income appears in the following context:”Mill did, however, regard as much nearer practicability those forms of socialism which, at a sacrifice of idealism, accepted a moderate degree of economic inequality. On this score he praised the Fourieristes, or rather that form of Fourierism which assigned in the first place a basic income to all and then distributed the balance of the product in shares to capital, talent or responsibility, and work actually done.” (p. 310). The Dutch equivalent (basisinkomen) had already been used in 1934 by Nobel laureate Jan Tinbergen, in the context of discussions about the program of the Labour Party (PvdA) in his own country, the Netherlands.


Somali sea gangs lure investors at pirate lair
BY Mohamed Ahmed / Dec 1, 2009

In Somalia’s main pirate lair of Haradheere, the sea gangs have set up a cooperative to fund their hijackings offshore, a sort of stock exchange meets criminal syndicate. Heavily armed pirates from the lawless Horn of Africa nation have terrorized shipping lanes in the Indian Ocean and strategic Gulf of Aden, which links Europe to Asia through the Red Sea. The gangs have made tens of millions of dollars from ransoms and a deployment by foreign navies in the area has only appeared to drive the attackers to hunt further from shore. It is a lucrative business that has drawn financiers from the Somali diaspora and other nations — and now the gangs in Haradheere have set up an exchange to manage their investments.

One wealthy former pirate named Mohammed took Reuters around the small facility and said it had proved to be an important way for the pirates to win support from the local community for their operations, despite the dangers involved. “Four months ago, during the monsoon rains, we decided to set up this stock exchange. We started with 15 ‘maritime companies’ and now we are hosting 72. Ten of them have so far been successful at hijacking,” Mohammed said. “The shares are open to all and everybody can take part, whether personally at sea or on land by providing cash, weapons or useful materials … we’ve made piracy a community activity.”

Haradheere, 400 km (250 miles) northeast of Mogadishu, used to be a small fishing village. Now it is a bustling town where luxury 4×4 cars owned by the pirates and those who bankroll them create honking traffic jams along its pot-holed, dusty streets. Somalia’s Western-backed government of President Sheikh Sharif Ahmed is pinned down battling hard-line Islamist rebels, and controls little more than a few streets of the capital. The administration has no influence in Haradheere — where a senior local official said piracy paid for almost everything. “Piracy-related business has become the main profitable economic activity in our area and as locals we depend on their output,” said Mohamed Adam, the town’s deputy security officer. “The district gets a percentage of every ransom from ships that have been released, and that goes on public infrastructure, including our hospital and our public schools.”

In a drought-ravaged country that provides almost no employment opportunities for fit young men, many are been drawn to the allure of the riches they see being earned at sea. Abdirahman Ali was a secondary school student in Mogadishu until three months ago when his family fled the fighting there. Given the choice of moving with his parents to Lego, their ancestral home in Middle Shabelle where strict Islamist rebels have banned most entertainment including watching sport, or joining the pirates, he opted to head for Haradheere. Now he guards a Thai fishing boat held just offshore. “First I decided to leave the country and migrate, but then I remembered my late colleagues who died at sea while trying to migrate to Italy,” he told Reuters. “So I chose this option, instead of dying in the desert or from mortars in Mogadishu.”

Haradheere’s “stock exchange” is open 24 hours a day and serves as a bustling focal point for the town. As well as investors, sobbing wives and mothers often turn up there seeking news of male relatives missing in action. Every week, Mohammed said, gang members and equipment were lost to the sea. But he said the pirates were not deterred. “Ransoms have even increased in recent months from between $2-3 million to $4 million because of the increased number of shareholders and the risks,” he said. “Let the anti-piracy navies continue their search for us. We have no worries because our motto for the job is ‘do or die’.” Piracy investor Sahra Ibrahim, a 22-year-old divorcee, was lined up with others waiting for her cut of a ransom pay-out after one of the gangs freed a Spanish tuna fishing vessel. “I am waiting for my share after I contributed a rocket-propelled grenade for the operation,” she said, adding that she got the weapon from her ex-husband in alimony. “I am really happy and lucky. I have made $75,000 in only 38 days since I joined the ‘company’.”


A basic piracy operation requires a minimum eight to twelve militia prepared to stay at sea for extended periods of time, in the hopes of hijacking a passing vessel. Each team requires a minimum of two attack skiffs, weapons, equipment, provisions, fuel and preferably a supply boat. The costs of the operation are usually borne by investors, some of whom may also be pirates.

To be eligible for employment as a pirate, a volunteer should already possess a firearm for use in the operation. For this ‘contribution’, he receives a ‘class A’ share of any profit. Pirates who provide a skiff or a heavier firearm, like an RPG or a general purpose machine gun, may be entitled to an additional A-share. The first pirate to board a vessel may also be entitled to an extra A-share.

At least 12 other volunteers are recruited as militiamen to provide protection on land of a ship is hijacked, In addition, each member of the pirate team may bring a partner or relative to be part of this land-based force. Militiamen must possess their own weapon, and receive a ‘class B’ share — usually a fixed amount equivalent to approximately US$15,000.

If a ship is successfully hijacked and brought to anchor, the pirates and the militiamen require food, drink, qaad, fresh clothes, cell phones, air time, etc. The captured crew must also be cared for. In most cases, these services are provided by one or more suppliers, who advance the costs in anticipation of reimbursement, with a significant margin of profit, when ransom is eventually paid.

When ransom is received, fixed costs are the first to be paid out. These are typically:
• Reimbursement of supplier(s)
• Financier(s) and/or investor(s): 30% of the ransom
• Local elders: 5 to 10 %of the ransom (anchoring rights)
• Class B shares (approx. $15,000 each): militiamen, interpreters etc.

The remaining sum — the profit — is divided between class-A shareholders.


BY Ryan Hagen / April 20, 2009

The crew of the Maersk Alabama, having survived an attack by pirates in Somalia last week, has returned home for a much-deserved rest. But with tensions ratcheting up between the U.S. and the rag-tag confederation of Somali pirates, it’s worth looking to the past for clues on how to tame the outlaw seas. Peter Leeson, an economist at George Mason University (and an occasional Freakonomics guest blogger), offers a brisk and fascinating look at old-school piracy in his new book The Invisible Hook: The Hidden Economics of Pirates. Leeson agreed to sit down and answer some important piratical questions for us:

Q: The Invisible Hook is more than just a clever title. How is it different from Adam Smith’s invisible hand?
A: In Adam Smith, the idea is that each individual pursuing his own self-interest is led, as if by an invisible hand, to promote the interest of society. The idea of the invisible hook is that pirates, though they’re criminals, are still driven by their self-interest. So they were driven to build systems of government and social structures that allowed them to better pursue their criminal ends. They’re connected, but the big difference is that, for Adam Smith, self-interest results in cooperation that generates wealth and makes other people better off. For pirates, self-interest results in cooperation that destroys wealth by allowing pirates to plunder more effectively.

Q: In the book, you write that pirates had set up their own early versions of constitutional democracy, complete with separation of powers, decades before the American Revolution. Was that only possible because they were outlaws, operating entirely outside the control of any government?
A: That’s right. The pirates of the 18th century set up quite a thoroughgoing system of democracy. The reason that the criminality is driving these structures is because they can’t rely on the state to provide those structures for them. So pirates, more than anyone else, needed to figure out some system of law and order to make it possible for them to remain together long enough to be successful at stealing.

Q: So did these participatory, democratic systems give merchant sailors an incentive to join pirate crews, because it meant they were freer among pirates than on their own ships?
A: The sailors had more freedom and better pay as pirates than as merchantmen. But perhaps the most important thing was freedom from the arbitrariness of captains and the malicious abuses of power that merchant captains were known to inflict on their crews. In a pirate democracy, a crew could, and routinely did, depose their captain if he was abusing his power or was incompetent.

Q: You write that pirates weren’t necessarily the bloodthirsty fiends we imagine them to have been. How does the invisible hook explain their behavior?
A: The basic idea is, once we recognize pirates as economic actors, businessmen really, it becomes clear as to why they wouldn’t want to brutalize everyone they overtook. In order to encourage merchantmen to surrender, they needed to communicate the idea that, if you surrender to us, you’ll be treated well. That’s the incentive pirates give for sailors to surrender peacefully. If they wantonly abused their prisoners, as they’re often portrayed as having done, that would have actually undermined the incentive of merchant crews to surrender, which would have caused pirates to incur greater costs. They would have had to battle it out more often, because the merchants would have expected to be tortured indiscriminately if they were captured.

So instead, what we often see in the historical record is pirates displaying quite remarkable feats of generosity. The other side of that, of course, is that if you resisted, they had to unleash, you know, a hellish fury on you. That’s where most of the stories of pirate atrocities come from. That’s not to say that no pirate ever indulged his sadistic impulses. But I speculate that the pirate population had no higher proportion of sadists than legitimate society did. And those sadists among the pirates tended to reserve their sadistic actions for times when it would profit them.

Q: So they never made anyone walk the plank?
A: There was no walking the plank. There’s no historical foundation for that in 17th- or 18th-century piracy.

Q: You write about piracy as a brand. It’s quite a successful one, having lasted for hundreds of years after the pirates themselves were exterminated. What was the key to that success?
A: There was a very particular type of reputation that pirates wanted to cultivate. It was a very delicate line to walk. They didn’t want to have a reputation for wanton brutality or complete madness. They wanted to be perceived as hair-trigger men, men on the edge, who if you pushed, if you resisted, they would snap and do something horrible to you. That way, the captives they took had an incentive to be very careful to comply with all of the pirates’ demands. At the same time, they wanted a reputation as being very brutal, as meting out these brutal, horrible tortures to captives who didn’t comply with their demands. Stories about those horrible tortures were relayed not only by word of mouth, but by early 18th-century newspapers. When a former prisoner was released, he would oftentimes go to the media and provide an account of his capture. So when colonials read these accounts in the media, that helped institutionalize the idea of pirates as these men on the edge. That worked marvelously for pirates. It was a form of advertising performed by legitimate members of society that again helped pirates reduce their costs.

Q: What kinds of lessons can we draw from The Invisible Hook in dealing with modern pirates?
A: We have to recognize that pirates are rational economic actors and that piracy is an occupational choice. If we think of them as irrational, or as pursuing other ends, we’re liable to come up with solutions to the pirate problem that are ineffective. Since we know that pirates respond to costs and benefits, we should think of solutions that alter those costs and benefits to shape the incentives for pirates and to deter them from going into a life of piracy.

Peter Leeson
email : pleeson [at] gmu [dot] edu






“We don’t consider ourselves sea bandits. We consider sea bandits
those who illegally fish in our seas and dump waste in our seas and
carry weapons in our seas. We are simply patrolling our seas. Think of
us like a coast guard.”

Somalia’s pirates flourish in a lawless nation
BY Jeffrey Gettleman / October 31, 2008

Boosaaso, Somalia: This may be one of the most dangerous towns in
Somalia, a place where you can get kidnapped faster than you can wipe
the sweat off your brow. But it is also one of the most prosperous.
Money changers walk around with thick wads of hundred-dollar bills.
Palatial new houses are rising up next to tin-roofed shanties. Men in
jail reminisce, with a twinkle in their eyes, about their days living
like kings. This is the story of Somalia’s booming, not-so-underground
pirate economy. The country is in chaos, countless children are
starving and people are killing one another in the streets of
Mogadishu, the capital, for a handful of grain. But one particular
line of work – piracy – seems to be benefiting quite openly from all
this lawlessness and desperation. This year, Somali officials say,
pirate profits are on track to reach a record $50 million, all of it
tax free.

“These guys are making a killing,” said Mohamud Muse Hirsi, the top
Somali official in Boosaaso, who himself is widely suspected of
working with the pirates, though he vigorously denies it. More than 75
vessels have been attacked this year, far more than any other year in
recent memory. About a dozen have been set upon in the past month
alone, including a Ukrainian freighter packed with tanks, antiaircraft
guns and other heavy weaponry, which was brazenly seized in September.
The pirates use fast-moving skiffs to pull alongside their prey and
scamper on board with ladders or sometimes even rusty grappling hooks.
Once on deck, they hold the crew at gunpoint until a ransom is paid,
usually $1 million to $2 million. Negotiations for the Ukrainian
freighter are still going on, and it is likely that because of all the
publicity, the price for the ship could top $5 million. In Somalia, it
seems, crime does pay. Actually, it is one of the few industries that

“All you need is three guys and a little boat, and the next day you’re
millionaires,” said Abdullahi Omar Qawden, a former captain in
Somalia’s long-defunct navy. People in Garoowe, a town south of
Boosaaso, describe a certain high-rolling pirate swagger. Flush with
cash, the pirates drive the biggest cars, run many of the town’s
businesses – like hotels – and throw the best parties, residents say.
Fatuma Abdul Kadir said she went to a pirate wedding in July that
lasted two days, with nonstop dancing and goat meat, and a band flown
in from neighboring Djibouti. “It was wonderful,” said Fatuma, 21.
“I’m now dating a pirate.”

This is too much for many Somali men to resist, and criminals from all
across this bullet-pocked land are now flocking to Boosaaso and other
notorious pirate dens along the craggy Somali shore. They have turned
these waters into the most dangerous shipping lanes in the world. With
the situation clearly out of control, warships from the United States,
Russia, NATO, the European Union and India are steaming into Somalia’s
waters as part of a reinvigorated, worldwide effort to crush the
pirates. But it will not be easy. The pirates are sea savvy. They are
fearless. They are rich and getting richer, with the latest high-tech
gadgetry like handheld GPS units. And they are united. The immutable
clan lines that have pitted Somalis against one another for decades
are not a problem here. Several captured pirates interviewed in
Boosaaso’s main jail said that they had recently crossed clan lines to
open new, lucrative, multiclan franchises. “We work together,” said
Jama Abdullahi, a jailed pirate. “Good for business, you know?”

The pirates are also sprinkled across thousands of square miles of
water, from the Gulf of Aden, at the narrow doorway to the Red Sea, to
the Kenyan border along the Indian Ocean. Even if the naval ships
manage to catch pirates in the act, it is not clear what they can do.
In September, a Danish warship captured 10 men suspected of being
pirates cruising around the Gulf of Aden with rocket-propelled
grenades and a long ladder. But after holding the suspects for nearly
a week, the Danes concluded that they did not have jurisdiction to
prosecute, so they dumped the pirates on a beach, minus their guns.
Nobody, it seems, has a clear plan for how to tame Somalia’s unruly
seas. Several fishermen along the Gulf of Aden talked about seeing
barrels of toxic waste bobbing in the middle of the ocean. They spoke
of clouds of dead fish floating nearby and rogue fishing trawlers
sucking up not just fish and lobsters but also the coral and the
plants that sustain them. It was abuses like these, several men said,
that turned them from fishermen into pirates. Nor is it even clear
whether Somali authorities universally want the piracy to stop. While
many pirates have been arrested, several fishermen, Western
researchers and more than a half-dozen pirates in jail spoke of
nefarious relationships among fishing companies, private security
contractors and Somali government officials, especially those working
for the semiautonomous regional government of Puntland.

“Believe me, a lot of our money has gone straight into the
government’s pockets,” said Farah Ismail Eid, a pirate who was
captured in nearby Berbera and sentenced to 15 years in jail. His
pirate team, he said, typically divided up the loot this way: 20
percent for their bosses, 20 percent for future missions (to cover
essentials like guns, fuel and cigarettes), 30 percent for the gunmen
on the ship and 30 percent for government officials. Abdi Waheed
Johar, the director general of the fisheries and ports ministry of
Puntland, openly acknowledged in an interview this spring that “there
are government people working with the pirates.” But, he was quick to
add, “It’s just not us.”

What is happening off Somalia’s shores is basically an extension of
the corrupt, violent free-for-all that has raged on land for 17 years
since the central government imploded in 1991. The vast majority of
Somalis lose out. Young thugs who are willing to serve as muscle get a
job, albeit a low-paying one, that significantly reduces their life
expectancy. And a select few warlords, who have sat down and figured
out how to profit off the anarchy, make a fortune. Take Boosaaso, once
a thriving port town on the Gulf of Aden. Piracy is killing off the
remains of the local fishing industry because export companies are
staying away. It has spawned a kidnapping business on shore, which in
turn has scared away many humanitarian agencies and the food, medicine
and other forms of desperately needed assistance they bring. Reporting
in Boosaaso two weeks ago required no fewer than 10 hired gunmen
provided by the Puntland government to discourage any would-be

Few large cargo ships come here anymore, depriving legitimate
government operations of much-needed port taxes. Just about the only
ships willing to risk the voyage are small, wooden, putt-putt
freighters from India, essentially floating jalopies from another era.
“We can’t survive off this,” said Bile Qabowsade, a Puntland official.
The shipping problems have contributed to food shortages, skyrocketing
inflation and less work for the sinewy stevedores who trudge out to
Boosaaso’s beach every morning and stare in vain at the bright
horizon, their bare feet planted in the hot sand, hoping a ship will
materialize so they will be able to make a few pennies hauling 100-
pound sacks of sugar on their backs.

And yet, suspiciously, there has been a lot of new construction in
Boosaaso. There is an emerging section of town called New Boosaaso
with huge homes rising above the bubble-shaped huts of refugees and
the iron-sided shacks that many fishermen call home. These new houses
cost several hundred thousand dollars. Many are painted in garish
colors and protected by high walls. Even so, Boosaaso is still a
crumbling, broke, rough-and-tumble place, decaying after years of
neglect like so much of war-ravaged Somalia. It is also dangerous in
countless ways. On Wednesday, suicide bombers blew up two government
offices, most likely the work of Islamist radicals trying to turn
Somalia into an Islamist state. Of course, no Somali government
official would openly admit that New Boosaaso’s minicastles were built
with pirate proceeds. But many people, including United Nations
officials and Western diplomats, suspect that is the case.

Several jailed pirates have accused Muse, a former warlord who is now
Puntland’s president, of being paid off. Officials in neighboring
Somaliland, a breakaway region of northwestern Somalia, said they
recently organized an antipiracy sting operation and arrested Muse’s
nephew, who was carrying $22,000 in cash. “Top Puntland officials
benefit from piracy, even if they might not be instigating it,” said
Roger Middleton, a researcher at the Royal Institute of International
Affairs in London. Actually, he added, “all significant political
actors in Somalia are likely benefiting from piracy.” But Muse said he
did not know anything about this. “We are the leaders of this
country,” he said. “Everybody we suspect, we fire from work.”

He said that Puntland was taking aggressive action against the
pirates. And Boosaaso’s main jail may be proof of that. The other day,
a dozen pirates were hanging out in the yard under a basketball hoop.
And that was just the beginning. “Pirates, pirates, pirates,” said
Gure Ahmed, a Canadian-Somali inmate of the jail, charged with murder.
“This jail is full of pirates. This whole city is pirates.” In other
well-known pirate dens, like Garoowe, Eyl, Hobyo and Xarardheere,
pirates have become local celebrities. Said Farah, 32, a shopkeeper in
Garoowe, said the pirates seemed to have money to burn. “If they see a
good car that a guy is driving,” he said, “they say, ‘How much? If
it’s 30 grand, take 40 and give me the key.’ ”

Every time a seized ship tosses its anchor, it means a pirate shopping
spree. Sheep, goats, water, fuel, rice, spaghetti, milk and cigarettes
– the pirates buy all of this, in large quantities, from small towns
up and down the Somali coast. Somalia’s seafaring thieves are not like
the Barbary pirates, who terrorized European coastal towns hundreds of
years ago and often turned their hostages into galley slaves chained
to the oars. Somali pirates are known as relatively decent hosts,
usually not beating their hostages and keeping them well-fed until
payday comes. “They are normal people,” said Said. “Just very, very

Somali Pirates Tell Their Side: They Want Only Money
BY Jeffrey Gettleman / October 1, 2008

Nairobi, Kenya — The Somali pirates who hijacked a Ukrainian freighter
loaded with tanks, artillery, grenade launchers and ammunition said in
an interview on Tuesday that they had no idea the ship was carrying
arms when they seized it on the high seas. “We just saw a big ship,”
the pirates’ spokesman, Sugule Ali, said in a telephone interview. “So
we stopped it.” The pirates quickly learned, though, that their booty
was an estimated $30 million worth of heavy weaponry, heading for
Kenya or Sudan, depending on whom you ask.

In a 45-minute interview, Mr. Sugule spoke on everything from what the
pirates wanted (“just money”) to why they were doing this (“to stop
illegal fishing and dumping in our waters”) to what they had to eat on
board (rice, meat, bread, spaghetti, “you know, normal human-being
food”). He said that so far, in the eyes of the world, the pirates had
been misunderstood. “We don’t consider ourselves sea bandits,” he
said. “We consider sea bandits those who illegally fish in our seas
and dump waste in our seas and carry weapons in our seas. We are
simply patrolling our seas. Think of us like a coast guard.”

The pirates who answered the phone call on Tuesday morning said they
were speaking by satellite phone from the bridge of the Faina, the
Ukrainian cargo ship that was hijacked about 200 miles off the coast
of Somalia on Thursday. Several pirates talked but said that only Mr.
Sugule was authorized to be quoted. Mr. Sugule acknowledged that they
were now surrounded by American warships, but he did not sound afraid.
“You only die once,” Mr. Sugule said.

He said that all was peaceful on the ship, despite unconfirmed reports
from maritime organizations in Kenya that three pirates were killed in
a shootout among themselves on Sunday or Monday night. He insisted
that the pirates were not interested in the weapons and had no plans
to sell them to Islamist insurgents battling Somalia’s weak
transitional government. “Somalia has suffered from many years of
destruction because of all these weapons,” he said. “We don’t want
that suffering and chaos to continue. We are not going to offload the
weapons. We just want the money.” He said the pirates were asking for
$20 million in cash; “we don’t use any other system than cash.” But he
added that they were willing to bargain. “That’s deal-making,” he

Piracy in Somalia is a highly organized, lucrative, ransom-driven
business. Just this year, pirates hijacked more than 25 ships, and in
many cases, they were paid million-dollar ransoms to release them. The
juicy payoffs have attracted gunmen from across Somalia, and the
pirates are thought to number in the thousands. The piracy industry
started about 10 to 15 years ago, Somali officials said, as a response
to illegal fishing. Somalia’s central government imploded in 1991,
casting the country into chaos. With no patrols along the shoreline,
Somalia’s tuna-rich waters were soon plundered by commercial fishing
fleets from around the world. Somali fishermen armed themselves and
turned into vigilantes by confronting illegal fishing boats and
demanding that they pay a tax. “From there, they got greedy,” said
Mohamed Osman Aden, a Somali diplomat in Kenya. “They starting
attacking everyone.”

By the early 2000s, many of the fishermen had traded in their nets for
machine guns and were hijacking any vessel they could catch: sailboat,
oil tanker, United Nations-chartered food ship. “It’s true that the
pirates started to defend the fishing business,” Mr. Mohamed said.
“And illegal fishing is a real problem for us. But this does not
justify these boys to now act like guardians. They are criminals. The
world must help us crack down on them.” The United States and several
European countries, in particular France, have been talking about ways
to patrol the waters together. The United Nations is even considering
something like a maritime peacekeeping force. Because of all the
hijackings, the waters off Somalia’s coast are considered the most
dangerous shipping lanes in the world.

On Tuesday, several American warships — around five, according to one
Western diplomat — had the hijacked freighter cornered along the
craggy Somali coastline. The American ships allowed the pirates to
bring food and water on board, but not to take weapons off. A Russian
frigate is also on its way to the area. Lt. Nathan Christensen, a Navy
spokesman, said on Tuesday that he had heard the unconfirmed reports
about the pirate-on-pirate shootout, but that the Navy had no more
information. “To be honest, we’re not seeing a whole lot of activity”
on the ship, he said.

In Washington, Geoff Morrell, the Pentagon press secretary, declined
to discuss any possible American military operations to capture the
ship. “Our concern is right now making sure that there’s a peaceful
resolution to this, that this cargo does not end up in the hands of
anyone who would use it in a way that would be destabilizing to the
region,” Mr. Morrell told reporters at the Pentagon. He said the
United States government was not involved in any negotiations with the
pirates. He also said he had no information about reports that the
pirates had exchanged gunfire among themselves.

Kenyan officials continued to maintain that the weapons aboard were
part of a legitimate arms deal for the Kenyan military, even though
several Western diplomats, Somali officials and the pirates themselves
said the arms were part of a secret deal to funnel weapons to southern
Sudan. Somali officials are urging the Western navies to storm the
ship and arrest the pirates because they say that paying ransoms only
fuels the problem. Western diplomats, however, have said that such a
commando operation would be very difficult because the ship is full of
explosives and the pirates could use the 20 crew members as human

Mr. Sugule said his men were treating the crew members well. (The
pirates would not let the crew members speak on the phone, saying it
was against their rules.) “Killing is not in our plans,” he said. “We
only want money so we can protect ourselves from hunger.” When asked
why the pirates needed $20 million to protect themselves from hunger,
Mr. Sugule laughed and said, “Because we have a lot of men.”

“The pirates adopt names like the National Volunteer Coast Guard,
which is used by a group that intercepts small boats and fishing
vessels in southern Somalia. Another of the four main piracy groups
along the coast calls itself the Somali Marines. Organized like a
military unit, with admirals, vice admirals and the like, the group
operates around Mogadishu.”

Q. & A. With a Pirate: “We Just Want the Money”
BY Jeffrey Gettleman / September 30, 2008

Somali pirates in small boats hijacked the Faina, a Belize-flagged
cargo ship owned and operated by Kaalbye Shipping Ukraine, on Sept.
25. Sugule Ali, the spokesman for the Somali pirates holding hostage
the Faina, a Ukrainian freighter loaded with weapons, spoke to me by
satellite telephone today from the bridge of the seized ship. In the
holds of the Faina, which the pirates seized on Thursday, are 33
Russian-built battle tanks and crates of grenade launchers, anti-
aircraft guns, ammunition and other explosives. American officials
fear that the weapons could fall into the hands of radical Islamist
insurgents who are battling Somalia’s weak government. My questions
were translated into Somali, and Mr. Ali’s responses into English, by
a translator employed by The New York Times.

Q. Tell us how you discovered the weapons on board.
A. As soon as we get on a ship, we normally do what is called a
control. We search everything. That’s how we found the weapons. Tanks,
anti-aircraft, artillery. That’s all we will say right now.

Q. Were you surprised?
A. No, we weren’t surprised. We know everything goes through the sea.
We see people who dump waste in our waters. We see people who
illegally fish in our waters. We see people doing all sorts of things
in our waters.

Q. Are you going to sell the weapons to insurgents?
A. No. We don’t want these weapons to go to anyone in Somalia. Somalia
has suffered from many years of destruction because of all these
weapons. We don’t want that suffering and chaos to continue. We are
not going to offload the weapons. We just want the money.

Q. How much?
A. $20 million, in cash. We don’t use any other system than cash.

Q. Will you negotiate?
A. That’s deal making. Common sense says human beings can make deals.

Q. Right now, the American Navy has you surrounded. Are you scared?
A. No, we’re not scared. We are prepared. We are not afraid because we
know you only die once.

Q. Will you kill the hostages if attacked?
A. Killing is not in our plans. We don’t want to do anything more than
the hijacking.

Q. What will you do with the money?
A. We will protect ourselves from hunger.

Q. That’s a lot of money to protect yourselves from hunger.
A. Yes, because we have a lot of men and it will be divided amongst
all of us.

Q. [There are 20 crew members, most of them Ukrainian, being held
hostage.] How are you interacting with the hostages? Eating with them?
Playing cards?
A. We interact with each other in an honorable manner. We are all
human beings. We talk to one another, and because we are in the same
place, we eat together.

Q. What if you were told you could leave peacefully, without arrest,
though without any ransom money. Would you do it?
A. [With a laugh] We’re not afraid of arrest or death or any of these
things. For us, hunger is our enemy.

Q. Have the pirates been misunderstood?
A. We don’t consider ourselves sea bandits [”sea bandit” is one way
Somalis translate the English word pirate]. We consider sea bandits
those who illegally fish in our seas and dump waste in our seas and
carry weapons in our seas. We are simply patrolling our seas. Think of
us like a coast guard.

Q. Why did you want to become a pirate?
A. We are patrolling our seas. This is a normal thing for people to do
in their regions.

Q. Isn’t what you are doing a crime? Holding people at gunpoint?
A. If you hold hostage innocent people, that’s a crime. If you hold
hostage people who are doing illegal activities, like waste dumping or
fishing, that is not a crime.

Q. What has this Ukrainian ship done that was a crime?
A. To go through our waters carrying all these weapons without

Q. What is the name of your group? How many ships have you hijacked
A. I won’t say how many ships we have hijacked. I won’t talk about
that. Our name is the Central Region Coast Guard.


“Our crew, who had been well trained and prepared, used water cannon, self-made incendiary bombs [Molotov cocktails or petrol bombs], beer bottles and anything else that could be used to battle with them. Thirty minutes later, the pirates gestured to us for a ceasefire. Then the helicopter from the joint fleet came to help us.”

Somali pirates in stare-down with global powers
BY Elizabeth A. Kennedy / Oct 15, 2008

Nairobi, Kenya — With a Russian frigate closing in and a half-dozen
U.S. warships within shouting distance, the pirates holding a tanker
off Somalia’s coast might appear to have no other choice than to wave
the white flag. But that’s not how it works in Somalia, a failed state
where a quarter of children die before they turn 5, where anybody with
a gun controls the streets and where every public institution has
crumbled. The 11-day standoff aboard the Ukrainian MV Faina begs the
question: How can a bunch of criminals from one of the poorest and
most wretched countries on Earth face off with some of the world’s
richest and well-armed superpowers?

“They have enough guns to fight for another 20 years,” Ted Dagne, a
Somalia analyst in Washington, told The Associated Press. “And there
is no way to win a battle when the other side is in a suicidal mind
set.” In Somalia, pirates are better-funded, better-organized and
better-armed than one might imagine in a country that has been in
tatters for nearly two decades. They have the support of their
communities and rogue members of the government — some pirates even
promise to put ransom money toward building roads and schools. With
most attacks ending with million-dollar payouts, piracy is considered
the biggest economy in Somalia. Pirates rarely hurt their hostages,
instead holding out for a huge payday. The strategy works well: A
report Thursday by a London-based think tank said pirates have raked
in up to $30 million in ransoms this year alone. “If we are attacked
we will defend ourselves until every last one of us dies,” Sugule Ali,
a spokesman for the pirates aboard the Faina, said in an interview
over satellite telephone from the ship, which is carrying 33 battle
tanks, military weapons and 21 Ukrainian and Latvian and Russian
hostages. One Russian has reportedly died, apparently of illness. The
pirates are demanding $20 million ransom, and say they will not lower
the price. “We only need money and if we are paid, then everything
will be OK,” he said. “No one can tell us what to do.”

Ali’s bold words come even though his dozens of fighters are
surrounded by U.S. warships and American helicopters buzz overhead.
Moscow has sent a frigate, which should arrive within days. Jennifer
Cooke of the Center for Strategic and International Studies in
Washington said hostage-taking is the key to the pirates’ success
against any military muscle looming from the U.S. and Russia. “Once
you have a crew at gunpoint, you can hold six U.S. naval warships at
bay and they don’t have a whole lot of options except to wait it out,”
Cooke said. The pirates have specifically warned against the type of
raids carried out twice this year by French commandos to recover
hijacked vessels. The French used night vision goggles and helicopters
in operations that killed or captured several pirates, who are now
standing trial in Paris. But the hostages are not the bandits’ only
card to play. Often dressed in military fatigues, pirates travel in
open skiffs with outboard engines, working with larger mother ships
that tow them far out to sea. They use satellite navigational and
communications equipment and an intimate knowledge of local waters,
clambering aboard commercial vessels with ladders and grappling hooks.

They are typically armed with automatic weapons, anti-tank rocket
launchers and grenades — weaponry that is readily available throughout
Somalia, where a bustling arms market operates in the center of the
capital. They also have the support of their communities and some
members of local administrations, particularly in Puntland, a
semiautonomous region in northeast Somalia that is a hotbed for
piracy, officials and pirates have told the AP. Abdulqadir Muse Yusuf,
a deputy minister of ports in Puntland, acknowledged there were
widespread signs that Puntland officials, lawmakers and government
officials are “involved or benefiting from piracy” and said
investigations were ongoing. He would not elaborate. Piracy has
transformed the region around the town of Eyl, near where many
hijacked ships are anchored brought while pirates negotiate ransoms.
“Pirates buy new luxury cars and marry two, three, or even four
women,” said Mohamed, an Eyl resident who refused to give his full
name for fear of reprisals from the pirates. “They build new homes —
the demand for construction material is way up.” He said most of the
well-known pirates promise to build roads and schools in addition to
homes for themselves. But for now, Mohamed says he has only seen
inflation skyrocket as the money pours in. “One cup of tea is about
$1,” he said. Before the piracy skyrocketed, tea cost a few cents.

Piracy in Somalia is nothing new, as bandits have stalked the seas for
years. But this year’s surge in attacks — nearly 30 so far — has
prompted an unprecedented international response. The Faina has been
the highest-profile attack because of its dangerous cargo. The U.S.
fears the arms could end up in the hands of al-Qaida-linked militants
in a country seen as a key battleground on terror. The United States
has been leading international patrols to combat piracy along
Somalia’s unruly 1,880-mile coast, the longest in Africa and near key
shipping routes. In June, the U.N. Security Council passed a
resolution that would allow countries to chase and arrest pirates
after attacks increased this year. But still, the attacks continue.
Dagne, an analyst in Washington, said that unless the roots of the
problem are solved — poverty, disease, violence — piracy will only
flourish. “You have a population that is frustrated, alienated, angry
and hopeless,” Dagne said. “This generation of Somalis grew up
surrounded by abject poverty and violence.”

Pirates die strangely after taking Iranian ship
BY Andrew Donaldson / Sep 28, 2008

A tense standoff has developed in waters off Somalia over an Iranian
merchant ship laden with a mysterious cargo that was hijacked by
pirates. Somali pirates suffered skin burns, lost hair and fell
gravely ill “within days” of boarding the MV Iran Deyanat. Some of
them died. Andrew Mwangura, the director of the East African
Seafarers’ Assistance Programme, told the Sunday Times: “We don’t
know exactly how many, but the information that I am getting is that
some of them had died. There is something very wrong about that ship.”

The vessel’s declared cargo consists of “minerals” and “industrial
products”. But officials involved in negotiations over the ship are
convinced that it was sailing for Eritrea to deliver small arms and
chemical weapons to Somalia’s Islamist rebels. The drama over the Iran
Deyanat comes as speculation grew this week about whether the South
African Navy would send a vessel to join the growing multinational
force in the region. A naval spokesman, Lieutenant-Commander Greyling
van den Berg, told the Sunday Times that the navy had not been ordered
by the government to become involved in “the Somali pirate issue”.

About 22000 ships a year pass through the Suez Canal and the Gulf of
Aden, where regional instability and “no-questions-asked” ransom
payments have led to a dramatic rise in attacks on vessels by heavily
armed Somali raiders in speedboats. The Iran Deyanat was sailing in
those waters on August 21, past the Horn of Africa and about 80
nautical miles southeast of Yemen, when it was boarded by about 40
pirates armed with AK-47s and rocket-propelled grenades. They were
alleged members of a crime syndicate said to be based at Eyl, a small
fishing village in northern Somalia.

The ship is owned and operated by the Islamic Republic of Iran
Shipping Lines, or IRISL, a state-owned company run by the Iranian
military. According to the US Treasury Department, the IRISL regularly
falsifies shipping documents to hide the identity of end users, uses
generic terms to describe shipments and operates under various covers
to circumvent United Nations sanctions. The ship set sail from
Nanjing, China, at the end of July. According to its manifest, it was
heading for Rotterdam where it would unload 42500 tons of iron ore and
“industrial products” purchased by a German client. At Eyl, the ship
was secured by more pirates — about 50 on board, and another 50 on

But within days those who had boarded the ship developed mysterious
health trouble. This was also confirmed by Hassan Allore Osman,
minister of minerals and oil in Puntland, an autonomous region of
Somalia. He headed a delegation sent to Eyl when news of the toxic
cargo and illnesses surfaced. He told one news publication, The Long
War Journal, that during the six days he had negotiated with the
pirates, a number of them had become sick and died. “That ship is
unusual,” he was quoted as saying. “It is not carrying a normal

The pirates did reveal that they had tried to inspect the ship’s cargo
containers when some of them fell sick — but the containers were
locked. Osman’s delegation spoke to the ship’s captain and its
engineer by cellphone, demanding to know more about the cargo.
Initially it was claimed the cargo contained “crude oil”; later it was
said to be “minerals”. And Mwangura has added: “Our sources say it
contains chemicals, dangerous chemicals.” But IRISL has denied that —
and threatened legal action against Mwangura. The company has
reportedly paid the pirates 200000 — the first of several “ransom
instalments”, but that, too, has been denied.

‘Toxic waste’ behind Somali piracy
BY Najad Abdullahi / October 11, 2008 / 12:21 Mecca time

Somali pirates have accused European firms of dumping toxic waste off
the Somali coast and are demanding an $8m ransom for the return of a
Ukranian ship they captured, saying the money will go towards cleaning
up the waste. The ransom demand is a means of “reacting to the toxic
waste that has been continually dumped on the shores of our country
for nearly 20 years”, Januna Ali Jama, a spokesman for the pirates,
based in the semi-autonomous region of Puntland, said. “The Somali
coastline has been destroyed, and we believe this money is nothing
compared to the devastation that we have seen on the seas.”

The pirates are holding the MV Faina, a Ukrainian ship carrying tanks
and military hardware, off Somalia’s northern coast. According to the
International Maritime Bureau, 61 attacks by pirates have been
reported since the start of the year. While money is the primary
objective of the hijackings, claims of the continued environmental
destruction off Somalia’s coast have been largely ignored by the
regions’s maritime authorities.

Dumping allegations
Ahmedou Ould-Abdallah, the UN envoy for Somalia confirmed to Al
Jazeera the world body has “reliable information” that European and
Asian companies are dumping toxic waste, including nuclear waste, off
the Somali coastline. “I must stress however, that no government has
endorsed this act, and that private companies and individuals acting
alone are responsible,” he said. Allegations of the dumping of toxic
waste, as well as illegal fishing, have circulated since the early
1990s. But evidence of such practices literally appeared on the
beaches of northern Somalia when the tsunami of 2004 hit the country.

The UN Environment Programme (UNEP) reported the tsunami had
washed up rusting containers of toxic waste on the shores of Puntland.
Nick Nuttall, a UNEP spokesman, told Al Jazeera that when the barrels
were smashed open by the force of the waves, the containers exposed
a “frightening activity” that has been going on for more than decade.
“Somalia has been used as a dumping ground for hazardous waste
starting in the early 1990s, and continuing through the civil war
there,” he said. “European companies found it to be very cheap to get
rid of the waste, costing as little as $2.50 a tonne, where waste
disposal costs in Europe are something like $1000 a tonne. “And the
waste is many different kinds. There is uranium radioactive waste.
There is lead, and heavy metals like cadmium and mercury. There is
also industrial waste, and there are hospital wastes, chemical wastes
– you name it.”

Nuttall also said that since the containers came ashore, hundreds of
residents have fallen ill, suffering from mouth and abdominal
bleeding, skin infections and other ailments. “We [the UNEP] had
planned to do a proper, in-depth scientific assessment on the
magnitude of the problem. But because of the high levels of insecurity
onshore and off the Somali coast, we are unable to carry out an
accurate assessment of the extent of the problem,” he said. However,
Ould-Abdallah claims the practice still continues. “What is most
alarming here is that nuclear waste is being dumped. Radioactive
uranium waste that is potentially killing Somalis and completely
destroying the ocean,” he said.

Toxic waste
Ould-Abdallah declined to name which companies are involved in waste
dumping, citing legal reasons. But he did say the practice helps fuel
the 18-year-old civil war in Somalia as companies are paying Somali
government ministers to dump their waste, or to secure licences and
contracts. “There is no government control … and there are few
people with high moral ground … [and] yes, people in high positions
are being paid off, but because of the fragility of the TFG
[Transitional Federal Government], some of these companies now no
longer ask the authorities – they simply dump their waste and leave.”

Ould-Abdallah said there are ethical questions to be considered
because the companies are negotiating contracts with a government that
is largely divided along tribal lines. “How can you negotiate these
dealings with a country at war and with a government struggling to
remain relevant?” In 1992, a contract to secure the dumping of toxic
waste was made by Swiss and Italian shipping firms Achair Partners and
Progresso, with Nur Elmi Osman, a former official appointed to the
government of Ali Mahdi Mohamed, one of many militia leaders involved
in the ousting of Mohamed Siad Barre, Somalia’s former president. At
the request of the Swiss and Italian governments, UNEP investigated
the matter. Both firms had denied entering into any agreement with
militia leaders at the beginning of the Somali civil war. Osman also
denied signing any contract.

‘Mafia involvement’
However, Mustafa Tolba, the former UNEP executive director, told Al
Jazeera that he discovered the firms were set up as fictitious
companies by larger industrial firms to dispose of hazardous waste.
“At the time, it felt like we were dealing with the Mafia, or some
sort of organised crime group, possibly working with these industrial
firms,” he said. “It was very shady, and quite underground, and I
would agree with Ould-Abdallah’s claims that it is still going on…
Unfortunately the war has not allowed environmental groups to
investigate this fully.”

The Italian mafia controls an estimated 30 per cent of Italy’s waste
disposal companies, including those that deal with toxic waste. In
1998, Famiglia Cristiana, an Italian weekly magazine, claimed that
although most of the waste-dumping took place after the start of the
civil war in 1991, the activity actually began as early as 1989 under
the Barre government. Beyond the ethical question of trying to secure
a hazardous waste agreement in an unstable country like Somalia, the
alleged attempt by Swiss and Italian firms to dump waste in Somalia
would violate international treaties to which both countries are

Legal ramifications
Switzerland and Italy signed and ratified the Basel Convention on the
Control of Transboundary Movements of Hazardous Wastes and their
Disposal, which came into force in 1992. EU member states, as well as
168 other countries have also signed the agreement. The convention
prohibits waste trade between countries that have signed the
convention, as well as countries that have not signed the accord
unless a bilateral agreement had been negotiated. It is also prohibits
the shipping of hazardous waste to a war zone. Abdi Ismail Samatar,
professor of Geography at the University of Minnesota, told Al Jazeera
that because an international coalition of warships has been deployed
to the Gulf of Aden, the alleged dumping of waste must have been

Environmental damage
“If these acts are continuing, then surely they must have been seen by
someone involved in maritime operations,” he said. “Is the cargo aimed
at a certain destination more important than monitoring illegal
activities in the region? Piracy is not the only problem for Somalia,
and I think it’s irresponsible on the part of the authorities to
overlook this issue.” Mohammed Gure, chairman of the Somalia Concern
Group, said that the social and environmental consequences will be
felt for decades. “The Somali coastline used to sustain hundreds of
thousands of people, as a source of food and livelihoods. Now much of
it is almost destroyed, primarily at the hands of these so-called
ministers that have sold their nation to fill their own pockets.” Ould-
Abdallah said piracy will not prevent waste dumping. “The intentions
of these pirates are not concerned with protecting their environment,”
he said. “What is ultimately needed is a functioning, effective
government that will get its act together and take control of its

‘We consider ourselves heroes’ – a Somali pirate speaks
Asad ‘Booyah’ Abdulahi, 42, describes himself as a pirate boss,
capturing ships in the Gulf of Aden and Indian Ocean.
Interview by Xan Rice and Abdiqani Hassan / November 22 2008

“I am 42 years old and have nine children. I am a boss with boats
operating in the Gulf of Aden and the Indian Ocean. I finished high
school and wanted to go to university but there was no money. So I
became a fisherman in Eyl in Puntland like my father, even though I
still dreamed of working for a company. That never happened as the
Somali government was destroyed [in 1991] and the country became

At sea foreign fishing vessels often confronted us. Some had no
licence, others had permission from the Puntland authorities but did
not want us there to compete. They would destroy our boats and force
us to flee for our lives. I started to hijack these fishing boats in
1998. I did not have any special training but was not afraid. For our
first captured ship we got $300,000. With the money we bought AK-47s
and small speedboats. I don’t know exactly how many ships I have
captured since then but I think it is about 60. Sometimes when we are
going to hijack a ship we face rough winds, and some of us get sick
and some die.

We give priority to ships from Europe because we get bigger ransoms.
To get their attention we shoot near the ship. If it does not stop we
use a rope ladder to get on board. We count the crew and find out
their nationalities. After checking the cargo we ask the captain to
phone the owner and say that have seized the ship and will keep it
until the ransom is paid. We make friends with the hostages, telling
them that we only want money, not to kill them. Sometimes we even eat
rice, fish, pasta with them. When the money is delivered to our ship
we count the dollars and let the hostages go.

Then our friends come to welcome us back in Eyl and we go to Garowe in
Land Cruisers. We split the money. For example, if we get $1.8m, we
would send $380,000 to the investment man who gives us cash to fund
the missions, and then divide the rest between us. Our community
thinks we are pirates getting illegal money. But we consider ourselves
heroes running away from poverty. We don’t see the hijacking as a
criminal act but as a road tax because we have no central government
to control our sea. With foreign warships now on patrol we have
difficulties. But we are getting new boats and weapons. We will not
stop until we have a central government that can control our sea.”

Somali pirates strike again / November 19, 2008 / 09:02 Mecca time

Somali pirates have struck again in the Gulf of Aden, hijacking
another ship a day after seizing a Saudi oil supertanker with a cargo
worth $100m. The Delight, a Hong Kong-registered vessel carrying
33,000 tonnes of wheat, was sailing to Iran with 25 crew members when
it was seized, Chinese state news agency Xinhua said. A spokesman for
the US Navy’s Fifth Fleet in the Gulf confirmed on Tuesday that the
Delight had been hijacked. A Hong Kong government spokesman said
“this could be a serious matter for us. We will deal with it”.

Saudi tanker anchored
News of the latest hijack came as the hijackers of the Saudi Sirius
Star – the biggest vessel ever hijacked – anchored the vessel off
Somalia. The vessel was seized in the Indian ocean off East Africa on
Sunday in the boldest attack by pirates operating from lawless
Somalia. “We can confirm the ship is anchoring off the Somali coast at
Haradheere,” Lieutenant Nathan Christensen, a spokesman for the US
Fifth Fleet, said on Tuesday. Haradheere is situated roughly in the
centre of Somalia’s coastline.

The supertanker had been heading for the US via the Cape of Good Hope
at the southern tip of Africa, instead of heading through the Gulf of
Aden and the Suez Canal. The hijacking occurred despite an
international naval response, including from the Nato alliance and
European Union, to protect one of the world’s busiest shipping areas.
US, French and Russian warships are also off the Somali coast. The
pirates have driven up insurance costs, forced some ships to go round
South Africa instead of through the Suez Canal and secured millions of
dollars in ransoms. Last week, the European Union, in its first-ever
naval mission, launched a security operation off the coast of Somalia
to combat growing piracy and protect ships carrying aid agency

Outrageous act
Prince Saud al-Faisal, Saudi Arabia’s foreign minister called the
hijacking of the Sirius Star an outrageous act and promised to back an
EU-led initiative to step up security in shipping lanes off Africa’s
east coast. “This outrageous act by the pirates, I think, will only
reinforce the resolve of the countries of the Red Sea and
internationally to fight piracy,” he told reporters in Athens. The
vessel owned by Saudi oil giant Aramco was fully loaded when it was
attacked on Sunday more than 450 nautical miles southeast of Mombasa.
The standoff comes as another ship is seized off the coast of Somalia.
According to the International Maritime Bureau (IMB), a Thai fishing
boat with 16 crew members has been hijacked. Noel Choong, head of the
IMB piracy reporting centre, based in Kuala Lumpur, said the ship was
seized in the Gulf of Aden on Monday. Eight ships have now been
hijacked in the past two weeks.

‘Hitting the jackpot’
Andrew Mwangura, co-ordinator of the East African Seafarers’
Association, said: “The world has never seen anything like this …
The Somali pirates have hit the jackpot.” The association, based in
the Kenyan port city of Mombasa, has been monitoring piracy for years.
Mwangura said he thought a hijacked Nigerian tug was a “mother-ship”
for the November 15 seizure. “The supertanker was fully loaded, so it
was probably low in the water and not that difficult to board,” he
said, adding that the pirates probably used a ladder or hooked a rope
to the side.

Pirates are well organised in the Horn of Africa, where Somalia’s
northeastern tip juts into the Indian Ocean. Somalia has had no
effective government since the 1991 overthrow of Mohamed Siad Barre,
the former president, touched off a bloody power struggle that has
defied numerous attempts to restore stability. This year, Somali
pirates have attacked 90 ships, more than double the number in 2007,
according to the International Maritime Bureau, and are still holding
16 ships and more than 250 sailors.

Somali Pirates Keep Hundreds of Hostages in Pirate City of Eyl
Heres a list of ten of the biggest vessels still in pirates’ hands.

1. Sirius Star / Hijacked November 17
Cargo: 2 million barrels of oil, value $100 million
Crew: 25 men

2. MV Karagol / Hijacked November 12
Cargo: 4,000 tons of chemicals
Crew: 14 Turks

3. MV Stolt Strength / Hijacked November 10
Cargo: Phosphoric acid
Crew: 23 Filipinos

4. CEC Future / Hijacked November 7
Cargo: Unknown
Crew: 11 Russians, one Georgian, one Lithuanian

5. MV Yasa Neslihan / Hijacked October 29
Cargo: Iron ore
Crew: 20 Turks

6. MT African Sanderling / Hijacked October 15
Cargo: Unknown
Crew: 21 Filipinos

7. MV Faina / Hijacked September 25
Cargo: 33 T-72 Russian battle tanks
Crew: 17 Ukrainians, 2 Latvians, one Russian

8. MV Captain Stefanos / Hijacked September 21
Cargo: Unknown
Crew: 17 Filipinos, two other nationals

9. Centauri / Hijacked September 18
Cargo: 17,000 tons of salt
Crew: 25 Filipinos

10. MV Great Creation / Hijacked September 17
Cargo: Chemical fertilizer
Crew: 24 Chinese, one Sri Lankan

Somali pirates transform villages into boomtowns
BY Mohamed Olad Hassan and Elizabeth Kennedy / 11.19.08

MOGADISHU, Somalia (AP) — Somalia’s increasingly brazen pirates are
building sprawling stone houses, cruising in luxury cars, marrying
beautiful women — even hiring caterers to prepare Western-style food
for their hostages. And in an impoverished country where every public
institution has crumbled, they have become heroes in the steamy
coastal dens they operate from because they are the only real business
in town. “The pirates depend on us, and we benefit from them,” said
Sahra Sheik Dahir, a shop owner in Harardhere, the nearest village to
where a hijacked Saudi Arabian supertanker carrying $100 million in
crude was anchored Wednesday.

These boomtowns are all the more shocking in light of Somalia’s
violence and poverty: Radical Islamists control most of the country’s
south, meting out lashings and stonings for accused criminals. There
has been no effective central government in nearly 20 years, plunging
this arid African country into chaos. Life expectancy is just 46
years; a quarter of children die before they reach 5. But in northern
coastal towns like Harardhere, Eyl and Bossaso, the pirate economy is
thriving thanks to the money pouring in from pirate ransoms that have
reached $30 million this year alone. “There are more shops and
business is booming because of the piracy,” said Sugule Dahir, who
runs a clothing shop in Eyl. “Internet cafes and telephone shops have
opened, and people are just happier than before.”

In Harardhere, residents came out in droves to celebrate as the
looming oil ship came into focus this week off the country’s lawless
coast. Businessmen gathered cigarettes, food and cold bottles of
orange soda, setting up kiosks for the pirates who come to shore to
resupply almost daily. Dahir said she even started a layaway plan for
them. “They always take things without paying and we put them into the
book of debts,” she told The Associated Press in a telephone
interview. “Later, when they get the ransom money, they pay us a lot.”
Residents make sure the pirates are well-stocked in khat, a popular
narcotic leaf, and aren’t afraid to gouge a bit when it comes to the
pirates’ deep pockets. “I can buy a packet of cigarettes for about $1
but I will charge the pirate $1.30,” said Abdulqadir Omar, an Eyl
resident. While pirate villages used to have houses made of corrugated
iron sheets, now, there are stately looking homes made of sturdy,
white stones. “Regardless of how the money is coming in, legally or
illegally, I can say it has started a life in our town,” said Shamso
Moalim, a 36-year-old mother of five in Harardhere. “Our children are
not worrying about food now, and they go to Islamic schools in the
morning and play soccer in the afternoon. They are happy.”

The attackers generally treat their hostages well in anticipation of a
big payday, hiring caterers on shore to cook spaghetti, grilled fish
and roasted meat that will appeal to Western palates. And when the
payday comes, the money sometimes literally falls from the sky.
Pirates say the ransom arrives in burlap sacks, sometimes dropped from
buzzing helicopters, or in waterproof suitcases loaded onto skiffs in
the roiling, shark-infested sea. “The oldest man on the ship always
takes the responsibility of collecting the money, because we see it as
very risky, and he gets some extra payment for his service later,”
Aden Yusuf, a pirate in Eyl, told AP over VHF radio.

The pirates use money-counting machines — the same technology seen
at foreign exchange bureaus worldwide — to ensure the cash is real. All
payments are done in cash because Somalia has no functioning banking
system. “Getting this equipment is easy for us, we have business
connections with people in Dubai, Nairobi, Djibouti and other areas,”
Yusuf said. “So we send them money and they send us what we want.”

Despite a beefed-up international presence, the pirates continue to
seize ships, moving further out to sea and demanding ever-larger
ransoms. The pirates operate mostly from the semiautonomous Puntland
region, where local lawmakers have been accused of helping them and
taking a cut of the ransoms. For the most part, however, the regional
officials say they have no power to stop piracy. Meanwhile, towns that
once were eroded by years of poverty and chaos are now bustling with
restaurants, Land Cruisers and Internet cafes. Residents also use
their gains to buy generators — allowing full days of electricity,
once an unimaginable luxury in Somalia.

“Pirate Jama Shino in the Somali town of Garowe, threw the most lavish
wedding party for his second marriage and invited hundreds of people
from the local authorities and among citizens,” Hussameddin wrote.
“The bride and the young women who attended the party, said: “Marrying
a pirate is every Somali girl’s dream. He has power, money, immunity,
the weapons to defend the tribe and funds to give to the militias in
civil war,” – from an op-ed in the Egyptian paper, Al Ahram.

Somali pirates living the high life
BY Robyn Hunter / 2008/10/28

“No information today. No comment,” a Somali pirate shouts over the
sound of breaking waves, before abruptly ending the satellite
telephone call. He sounds uptight – anxious to see if a multi-million
dollar ransom demand will be met. He is on board the hijacked
Ukrainian vessel, MV Faina – the ship laden with 33 Russian battle
tanks that has highlighted the problem of piracy off the Somali coast
since it was captured almost a month ago. But who are these modern-day
pirates? According to residents in the Somali region of Puntland where
most of the pirates come from, they live a lavish life.

“They have money; they have power and they are getting stronger by the
day,” says Abdi Farah Juha who lives in the regional capital, Garowe.
“They wed the most beautiful girls; they are building big houses; they
have new cars; new guns,” he says. “Piracy in many ways is socially
acceptable. They have become fashionable.” Most of them are aged
between 20 and 35 years – in it for the money. And the rewards they
receive are rich in a country where almost half the population need
food aid after 17 years of non-stop conflict.

Most vessels captured in the busy shipping lanes of the Gulf of Aden
fetch on average a ransom of $2m. This is why their hostages are well
looked after. The BBC’s reporter in Puntland, Ahmed Mohamed Ali, says
it also explains the tight operation the pirates run. They are never
seen fighting because the promise of money keeps them together.
Wounded pirates are seldom seen and our reporter says he has never
heard of residents along Puntland’s coast finding a body washed
ashore. Given Somalia’s history of clan warfare, this is quite a feat.
It probably explains why a report of a deadly shoot-out amongst the
pirates onboard the MV Faina was denied by the vessel’s hijackers.
Pirate spokesman Sugule Ali told the BBC Somali Service at the time:
“Everybody is happy. We were firing guns to celebrate Eid.”

Brains, muscle and geeks
The MV Faina was initially attacked by a gang of 62 men. BBC Somalia
analyst Mohamed Mohamed says such pirate gangs are usually made up
of three different types:
* Ex-fishermen, who are considered the brains of the operation
because they know the sea
* Ex-militiamen, who are considered the muscle – having fought for
various Somali clan warlords
* The technical experts, who are the computer geeks and know how
to operate the hi-tech equipment needed to operate as a pirate –
satellite phones, GPS and military hardware.

The three groups share the ever-increasing illicit profits – ransoms
paid in cash by the shipping companies. A report by UK think-tank
Chatham House says piracy off the coast of Somalia has cost up to $30m
(£17m) in ransoms so far this year. The study also notes that the
pirates are becoming more aggressive and assertive – something the
initial $22m ransom demanded for MV Faina proves. The asking price has
apparently since fallen to $8m.

Calling the shots
Yemen, across the Gulf of Aden, is reportedly where the pirates get
most of their weapons from. A significant number are also bought
directly from the Somali capital, Mogadishu. Observers say Mogadishu
weapon dealers receive deposits for orders via a “hawala” company – an
informal money transfer system based on honour. Militiamen then drive
the arms north to the pirates in Puntland, where they are paid the
balance on delivery. It has been reported in the past that wealthy
businessmen in Dubai were financing the pirates. But the BBC’s Somali
Service says these days it is the businessmen asking the pirates for

Such success is a great attraction for Puntland’s youngsters, who have
little hope of alternative careers in the war-torn country. Once a
pirate makes his fortune, he tends to take on a second and third wife
– often very young women from poor nomadic clans, who are renowned
for their beauty. But not everyone is smitten by Somalia’s new elite.
“This piracy has a negative impact on several aspects of our life in
Garowe,” resident Mohamed Hassan laments.

He cites an escalating lack of security because “hundreds of armed
men” are coming to join the pirates. They have made life more
expensive for ordinary people because they “pump huge amounts of US
dollars” into the local economy which results in fluctuations in the
exchange rate, he says. Their lifestyle also makes some unhappy. “They
promote the use of drugs – chewing khat [a stimulant which keeps one
alert] and smoking hashish – and alcohol,” Mr Hassan says.

The trappings of success may be new, but piracy has been a problem in
Somali waters for at least 10 years – when Somali fishermen began
losing their livelihoods. Their traditional fishing methods were no
match for the illegal trawlers that were raiding their waters. Piracy
initially started along Somalia’s southern coast but began shifting
north in 2007 – and as a result, the pirate gangs in the Gulf of Aden
are now multi-clan operations. But Garowe resident Abdulkadil Mohamed
says, they do not see themselves as pirates. “Illegal fishing is the
root cause of the piracy problem,” he says. “They call themselves

‘Pirates Are Stronger Than Us’ – Eyl Mayor / 23 August 2008
“The mayor of a small coastal town in northeastern Somalia has
declared that local authorities are unable to stop pirates. Abdullahi
Said O’Yusuf, the mayor of Eyl in Puntland region, confirmed Radio
Garowe during a Saturday interview that four hijacked ships are being
held hostage near the town’s shores. “They are stronger than us,”
Mayor O’Yusuf said, while speaking of the pirates. He condemned
continued attacks on foreign ships traveling across the Indian Ocean,
while underlining that local authorities “cannot do anything” to stop
piracy. The Associated Press has reported that four ships – with
owners in Malaysia, Iran, Japan and Germany – and a total crew of 96
people are being held hostage by Somali pirates. Mayor O’Yusuf said
the pirates who hijacked the ships “are the same ones who received
ransom payments before,” referring to previous pirate attacks in the
region. According to the Mayor, pirates use ransom payments to “buy
houses in big cities” in different parts of the country.”

“Eyl is a town in the northern Puntland region of Somalia. The
prominent clans in the Eyl district are the Majeerteen and Leelkase
sub-clans of the Darod. Eyl is near the Hafun peninsula, the location
of most of Somalia’s casualties from the 2004 Indian Ocean Tsunami. As
of 2008 Eyl has become a pirate haven, with more than a dozen ships
being held captive by pirate crews. The Puntland government has
acknowledged that they are relatively powerless to stop pirate
activities. French commandos decided a hostage rescue in Eyl was too
dangerous, and carried out a rescue of two French sailors before they
could be taken there.”

Life in Somalia’s pirate town
BY Mary Harper / 18 September 2008

Whenever word comes out that pirates have taken yet another ship in
the Somali region of Puntland, extraordinary things start to happen.
There is a great rush to the port of Eyl, where most of the hijacked
vessels are kept by the well-armed pirate gangs. People put on ties
and smart clothes. They arrive in land cruisers with their laptops,
one saying he is the pirates’ accountant, another that he is their
chief negotiator.

With yet more foreign vessels seized off the coast of Somalia this
week, it could be said that hijackings in the region have become
epidemic. Insurance premiums for ships sailing through the busy Gulf
of Aden have increased tenfold over the past year because of the
pirates, most of whom come from the semi-autonomous region of
Puntland. In Eyl, there is a lot of money to be made, and everybody is
anxious for a cut.

Entire industry
The going rate for ransom payments is between $300,000 and $1.5m
(£168,000-£838,000). A recent visitor to the town explained how, even
though the number of pirates who actually take part in a hijacking is
relatively small, the whole modern industry of piracy involves many
more people. “The number of people who make the first attack is small,
normally from seven to 10,” he said. “They go out in powerful
speedboats armed with heavy weapons. But once they seize the ship,
about 50 pirates stay on board the vessel. And about 50 more wait on
shore in case anything goes wrong.”

Given all the other people involved in the piracy industry, including
those who feed the hostages, it has become a mainstay of the Puntland
economy. Eyl has become a town tailor-made for pirates – and their
hostages. Special restaurants have even been set up to prepare food
for the crews of the hijacked ships. As the pirates want ransom
payments, they try to look after their hostages. When commandos from
France freed two French sailors seized by pirates off the Somali coast
in September, President Nicolas Sarkozy said he had given the go-ahead
for the operation when it was clear the pirates were headed for Eyl –
it would have been too dangerous to try to free them from there.

The town is a safe-haven where very little is done to stop the pirates
– leading to the suggestion that some, at least, in the Puntland
administration and beyond have links with them. Many of them come
from the same clan – the Majarteen clan of the president of Somalia’s
transitional federal government, Abdullahi Yusuf.

Money to spend
The coastal region of Puntland is booming. Fancy houses are being
built, expensive cars are being bought – all of this in a country that
has not had a functioning central government for nearly 20 years.
Observers say pirates made about $30m from ransom payments last
year – far more than the annual budget of Puntland, which is about
$20m. When the president of Puntland, Adde Musa, was asked about
the reported wealth of pirates and their associates, he said: “It’s more
than true”.

Now that they are making so much money, these 21st Century pirates
can afford increasingly sophisticated weapons and speedboats. This
means that unless more is done to stop them, they will continue to
plunder the busy shipping lanes through the Gulf of Aden. They even
target ships carrying aid to feed their compatriots – up to a third of the
population. Warships from France, Canada and Malaysia, among others,
now patrol the Somali coast to try and fend off pirate attacks.

An official at the International Maritime Organisation explained how
the well-armed pirates are becoming increasingly bold. More than 30%
of the world’s oil is transported through the Gulf of Aden. “It is
only a matter of time before something horrible happens,” said the
official. “If the pirates strike a hole in the tanker, and there’s an
oil spill, there could be a huge environmental disaster”.

It is likely that piracy will continue to be a problem off the coast
of Somalia as long as the violence and chaos continues on land.
Conflict can be very good for certain types of business, and piracy is
certainly one of them. Weapons are easy to obtain and there is no
functioning authority to stop them, either on land or at sea.


“We want pre-emptive action against the mother ships before the
pirates carry out a hijacking,” said Captain Pottengal Mukundan,
director of the London-based International Maritime Bureau, which
monitors international piracy, referring to the ships pirates use as
bases from which to launch attacks. “The positions of the mother ships
are generally known. What we would like to see is the naval vessels
going to interdict them, searching them and removing any arms on
board. That would at least force the pirates to go back to Somalia to
pick up more arms before they could come back again,” he told Reuters
in an interview.

But the laws governing what navies can do to take on the pirates are
complex. Only if pirates are caught in the act of piracy — actually
boarding a ship and seizing it — can a naval ship intervene with the
full force of international law. Arriving 30 minutes after a vessel
has been boarded, when there is a degree of uncertainty over whether
those on board are pirates or not, is often too late, experts say.
Denmark recently had to return some suspected pirates to Somalia
because it couldn’t prove they were pirates after they were seized.

Mr. Mukundan said there were currently about four ‘mother ships’ —
seized dhows or other larger fishing boats anchored near international
waters — being used by pirates. The pirates live on the mother ships,
storing arms, fuel and other supplies on board, and then target ships,
which can include fuel tankers, by catching up to them in high-speed
boats and boarding them with rope ladders while heavily armed. Mr.
Mukundan acknowledged the legalities of taking on ‘mother ships’ were
tricky, but said it could be done if governments gave their naval
forces instructions to do it.”


“Piracy is an international crime consisting of illegal acts of
violence, detention, or depredation committed for private ends by the
crew or passengers of a private ship or aircraft in or over
international waters against another ship or aircraft or persons and
property on board. (Depredation is the act of plundering, robbing, or

In international law piracy is a crime that can be committed only
on or over international waters (including the high seas, exclusive
economic zone, and the contiguous zone), in international airspace,
and in other places beyond the territorial jurisdiction of any nation.
The same acts committed in the internal waters, territorial sea,
archipelagic waters, or national airspace of a nation do not
constitute piracy in international law but are, instead, crimes within
the jurisdiction and sovereignty of the littoral nation.

Sea robbery is a term used to describe attacks upon commercial
vessels in ports and territorial waters. Such attacks are, according
to international law, not true acts of piracy but rather armed
robberies. They are criminal assaults on vessels and vessel crews,
just as may occur to truck drivers within a port area. Such attacks
pose a serious threat to trade. The methods of these attacks have
varied from direct force using heavy weapons to subterfuge in which
the criminals have identified themselves on VHF radio as the national
coast guard.

These maritime criminals are inclined to operate in waters where
government presence is weak, often lacking in both technical resources
and the political will to deal effectively with such attacks.
International law permits any warship or government vessel to repress
an attack in international waters. In a state’s territorial waters,
such attacks constitute an act of armed robbery and must be dealt with
under the laws of the relevant coastal state. These laws seldom, if
ever, permit a vessel or warship from another country to intervene.
The most effective countermeasure strategy is to prevent criminals
initial access to ports and vessels, and to demonstrate a consistent
ability to respond rapidly and effectively to notification of such a
security breach.

Acts of piracy can only be committed by private ships or private
aircraft. A warship or other public vessel or a military or other
state aircraft cannot be treated as a pirate unless it is taken over
and operated by pirates or unless the crew mutinies and employs it for
piratical purposes. By committing an act of piracy, the pirate ship or
aircraft, and the pirates themselves, lose the protection of the
nation whose flag they are otherwise entitled to fly.

To constitute the crime of piracy, the illegal acts must be
committed for private ends. Consequently, an attack upon a merchant
ship at sea for the purpose of achieving some criminal end, e.g.,
robbery, is an act of piracy as that term is currently defined in
international law. Conversely, acts otherwise constituting piracy done
for purely political motives, as in the case of insurgents not
recognized as belligerents, are not piratical.

International law has long recognized a general duty of all
nations to cooperate in the repression of piracy. This traditional
obligation is included in the 1958 Geneva Convention on the High Seas
and the 1982 LOS Convention, both of which provide: “[A]ll States
shall cooperate to the fullest possible extent in the repression of
piracy on the high seas or in any other place outside the jurisdiction
of any State.””


Lucrative Piracy Business Thrives Off Somali Coast / November 18,

The seizure Monday of a supertanker carrying $100 million of crude oil
off the coast of Somalia is one of many ship hijackings by pirates of
late. A cargo ship flying a Hong Kong flag also was taken over in the
Gulf of Aden on Tuesday — the seventh hijacking in the area in 12
days, according to The Associated Press. The magnitude of recent
piracy attacks is rising, and an interactive map maintained by the
International Chamber of Commerce shows where these attacks are
taking place. Many are focused around the eastern Horn of Africa, but
piracy in the waters around Indonesia also has been frequent. J. Peter
Pham, director of the Nelson Institute for International and Public
Affairs at James Madison University, says the recent spikes in piracy are
“a crime of both opportunity and expediency.”

“Somalia has lacked a government, effectively, since 1991 and the
current interim government — the 14th of its kind in a decade and a
half — is tottering on its last legs, so there is very little control
to prevent lawlessness,” he says. “There is also the fact that
increasingly commerce is moving in this direction — the demand for oil
and other resources. Roughly 11 percent of the world’s petroleum flows
through these waters.” For Somalis, Pham says, “this is really the
best thing they have going for them economically. Piracy and ransom
this year will exceed more than $50 million — it’s Somalia’s largest

“The ship owners and insurers have found that it’s more cost-effective
to pay ransoms. They are currently averaging slightly over $1 million
per vessel, and that’s cheaper than buying a new ship,” Pham says.
“The Saudi tanker that was seized [Monday] was just launched six
months ago and cost $150 million to build and the cargo on board is
worth $100 million, so I suspect the ship owners will be willing to
pay some fraction of that to get it back.” Pham says that most tankers
of that size are not armed, or if they are, they have small side arms.
The pirates come in fast speed boats, circle the vessel and threaten
to blow it out of the water with rocket-propelled grenades or shoulder-
launched missiles. “Faced with that prospect, most captains — to save
the life of their crew and save the vessels — will surrender control
of the vessel to the pirates,” Pham says.

The world’s most utterly failed state / Oct 2nd 2008

Tipped off by friends in ports from Odessa to Mombasa, Somali pirates
captured a Ukrainian freighter, the MV Faina, in the Gulf of Aden and
steered it to Somalia’s coast. At first they demanded $20m for the
release of ship and crew. The captain died, apparently of
“hypertension”, and several pirates may have then killed each other
after a quarrel. This recent incident was only the latest in a long
list of similar outrages and highlights the growing menace caused by
the total failure of the state of Somalia, the ultimate cause of the
virus of piracy in the region.

The ship was carrying 33 T-72 Russian tanks, anti-aircraft guns and
grenade launchers. Lighter weapons may have been offloaded on the
Somali shore before an American warship arrived on the scene. Kenya
claimed ownership of the cargo but the manifest suggests its
destination was south Sudan, with Kenya’s co- operation in its
delivery to be rewarded in the future with cheap south Sudanese oil.
At midweek, a Russian warship was steaming to the scene to take
responsibility for its citizens on the ship.

The attack was only one of at least 60 off Somalia this year. Foreign
navies can intercept vessels captured by pirates, but the desolation
and length of Somalia’s coastline give them little chance of stamping
out piracy without much larger and better co-ordinated forces. In
cahoots with gangs in Yemen, Somali pirates look set to go on hitting
vessels heading into or out of the Red Sea or passing through the Gulf
of Aden: about 10% of the world’s shipping.

It is big business. The pirates are increasingly sophisticated,
handsomely bankrolled by Somalis in Dubai and elsewhere. They are not
yet directly tied up with the Islamist insurgents in Somalia, though
they may yet have to pay cash to whoever controls their coastal havens
in return for uninterrupted business, thus assisting the purchase of
weapons and fuelling the violence. The nabbed ships are mostly
anchored off the village of Eyl in Puntland in the north-east or the
pirate town of Haradheere farther south (see map) until a ransom is
paid, which is usually within a month of capture. The average ransom
has tripled since 2007, as has the number of ships taken. Some $100m
may have been paid to pirates this year. By comparison, the United
Nations Development Programme’s annual budget for Somalia is $14m.

Piracy is a symptom of the power vacuum inside Somalia. The country’s
“transitional federal government”, headed by a warlord president,
Abdullahi Yusuf, and a bookish prime minister, Nur Hussein, is
powerless to stop its citizens raising the Jolly Roger, just as it
cannot halt the resurgent jihadists, some with al-Qaeda connections,
who have taken control of much of southern Somalia, including the port
town of Kismayo. Hundreds of thousands have fled street fighting in
the north of Mogadishu to camps outside the city; some head south to
refugee camps in Kenya. About 9,000 civilians have been killed in the
insurgency in the past year, according to human-rights groups.

The UN’s envoy to Somalia, Ahmedou Ould Abdullah, a former foreign
minister of Mauritania, is overseeing peace talks in nearby Djibouti
between the transitional government and the moderate wing of the
Alliance for the Reliberation of Somalia (ARS), an Islamist group
headed by a former teacher, Sharif Ahmed. The aim is to create a
genuine government of national unity before elections next year.

A condition of any agreement is the withdrawal of the 7,000-odd
Ethiopian troops now in Somalia. Mr Ould Abdullah wants to replace
them and a separate 2,200-strong African Union force of Ugandan and
Burundian troops with 8,000 UN peacekeepers. Ethiopia, which is losing
men and money, would be happy with that, if the peacekeepers were
somehow shoehorned in without the jihadists taking advantage of a
hiatus. America agrees, but only if the deployment of blue helmets is
matched by an effort to build a new Somali national army. Mr Ould
Abdullah is also keen for the International Criminal Court in The
Hague to indict some of the worst warlords, to show they cannot murder
their opponents with impunity. But it is unlikely, in present
circumstances, that UN peacekeepers will ever arrive. If the UN cannot
produce half its promised force for Darfur, despite a detailed plan
for one, Somalia stands little chance of getting any blue helmets at

Feuding among Somali leaders makes matters worse. “Somalia is a victim
of its political, business and military elite,” says Mr Ould Abdullah.
“They’ve taken the country hostage.” A slender hope, backed by Britain
and some other EU countries, is that ordinary Somalis will eventually
force their leaders to put national interest above self-interest and
sign the proposed agreement in Djibouti. In any event, says another
diplomat, “There is no Plan B.”

As the peace talks limp on, the insurgency is getting stronger. It is
led by the Shabab (Youth), the armed wing of the Islamic Courts Union,
which ran Somalia with some success for a few months in 2006 until it
was smashed, at the end of that year, by the invading Ethiopians, with
American backing. The Shabab has since reconstituted itself, making
ground with tactics copied from Iraq: roadside bombings, the kidnap
and murder of foreigners, local aid-workers and peace campaigners, and
grenade attacks on video shacks showing films or football.

My enemy’s enemy is my friend
Its fighters come under the leadership of a wily red-bearded 70-year-
old jihadist, Hassan Dahir Aweys, and a former deputy commander of the
Islamic Courts, Mukhtar Robow. They are backed by Eritrea, which has
offered sanctuary to the radical rump of the ARS in its capital,
Asmara. Eritrea’s interest is not to help Somalia but to hurt its
bitter enemy, Ethiopia. The Shabab is also backed by fighters from the
Hawiye clan and by hungry young freelance gunmen who represent
Somalia’s huge lost generation. Half the population, 10m-odd before
the exodus, was born after Siad Barre’s regime fell in 1991. Since
then, it is guessed, only 10% have had even rudimentary education;
health care barely exists.

Few foreign governments have shown much interest in trying to end
Somalia’s woes. Diplomats charged with trying to do so are frustrated
and depressed. Meanwhile the suffering is mounting. The UN reckons
3.2m Somalis now survive on food aid. The piracy means that warships
have to escort ships bringing food. If fighting intensifies, that will
be harder—and manipulating food aid could become a weapon, as it was
during fighting in 1991 and 1992, when 300,000 Somalis starved to

BY Hari Jagannathan Balasubramanian / October 06, 2008

…as I now read Richard Dowden’s Africa: Altered States, Ordinary
Miracles, the political outline is becoming clear: one man rule from
1969-1991; then civil war; a failed American rescue attempt; and then
no government; and more recently, Ethiopia meddling in its affairs.
The excerpts I’ll present here, though, are images of a modernizing
Somalia, of how in the absence of a government, a free market thrived
in the 90s and filled the void.

“In 1999 I went back to Somalia to see what had happened.
Considering there was no state and civil war sputtered on, life was
not as bad as I had expected. In some ways it was a lot better. Those
few aid agencies that stayed on were no longer run by expatriate
overlords but staffed by Somalis. Not many foreign aid workers wanted
to be there. Somalis had also managed to get the economy going –
without a single cent from the World Bank or IMF. The new economy was
largely built around a worldwide telephone banking system – a truly
free market system and , at the time, by far the world’s cheapest and
most efficient. Several Somalis who had worked in telecoms in America
bought dishes and telephone equipment and set up phone booths in small
towns. From here, for a dollar a minute, people could call cousins and
aunts and uncles all over the world.”

And how the cell phone is the perfect device for the wandering Somali
herder wanting to learn market prices:

“Somali herders move around in a yearly pattern. In the dry
season, towards the end of the year, they go down to the coast as they
have done for centuries to sell some of their animals to traders who
take them across the Red Sea to the markets of Saudi Arabia. I have
watched them at the port of Berbera, herds of camels and sheep driven
to holding areas where herders have to buy fodder for them and pay for
water at the trough markets. These herdsmen are at a big disadvantage
while they wait to sell their animals. But the mobile phone has
rescued them. They can call up traders in Jeddah directly to find out
the market price of animals there. They now know when to come down
out of the mountains and sell. A week later I watch a herdsman on the
outskirts of Berbera driving his herd towards the port with herding
stick in one hand and in the other a mobile phone – perfect technology
for the nomad.”’

Telecoms thriving in lawless Somalia
BY Joseph Winter / 2004/11/19

Rising from the ruins of the Mogadishu skyline are signs of one of
Somalia’s few success stories in the anarchy of recent years. A host
of mobile phone masts testifies to the telecommunications revolution
which has taken place despite the absence of any functioning national
government since 1991. Three phone companies are engaged in fierce
competition for both mobile and landline customers, while new internet
cafes are being set up across the city and the entire country. It
takes just three days for a landline to be installed – compared with
waiting-lists of many years in neighbouring Kenya, where there is a
stable, democratic government. And once installed, local calls are
free for a monthly fee of just $10. International calls cost 50 US
cents a minute, while surfing the web is charged at 50 US cents an
hour – “the cheapest rate in Africa” according to the manager of one
internet cafe. But how do you establish a phone company in a country
where there is no government?

No monopoly
In some respects, it is actually easier. There is no need to get a
licence and there is no state-run monopoly which prevents new
competitors being established. And of course there is no-one to demand
any taxes, which is one reason why prices are so low. “The government
post and telecoms company used to have a monopoly but after the
regime was toppled, we were free to set up our own business,” says
Abdullahi Mohammed Hussein, products and services manager of
Telcom Somalia, which was set up in 1994 when Mogadishu was still
a war-zone. “We saw a huge gap in the market, as all previous services
had been destroyed. There was a massive demand.” The main airport
and port were destroyed in the fighting but businessmen have built
small airstrips and use natural harbours, so the phone companies are
still able to import their equipment. Despite the absence of law and
order and a functional court system, bills are paid and contracts are
enforced by relying on Somalia’s traditional clan system, Mr Abdullahi

Mobile target
But in a country divided into hundreds of fiefdoms run by rival
warlords, security is a major concern. While Telcom Somalia has some
25,000 mobile customers – and a similar number have land lines – you
very rarely see anyone walking along the streets of Mogadishu chatting
on their phone, in case this attracts the attention of a hungry
gunman. The phone companies themselves say they are not targeted by
the militiamen, even if thieves occasionally steal some of their
wires. Mahdi Mohammed Elmi has been managing the Wireless African
Broadband Telecoms internet cafe in the heart of Mogadishu, surrounded
by the bustling and chaotic Bakara market, for almost two years. “I
have never had a problem with security,” he says and points out that
they have just a single security guard at the front door. Mr Abdullahi
says the warlords realise that if they cause trouble for the phone
companies, the phones will stop working again, which nobody wants. “We
need good relations with all the faction leaders. We don’t interfere
with them and they don’t interfere with us. They want political power
and we leave them alone,” he says.

Selling goats on the net
While the three phone companies – Telcom, Nationlink and Hormuud – are
engaged in bitter competition for phone customers, they have co-
operated to set up the Global Internet Company to provide the internet
infrastructure. Manager Abdulkadir Hassan Ahmed says that within 1.5km
of central Mogadishu, customers – mostly internet cafes – can enjoy
service at 150Mb/second through a Long Reach Ethernet. Elsewhere, they
can have a wireless connection at 11Mb/s. He says his company is able
to work anywhere in Somalia, whichever faction is in charge locally.
“Even small, remote villages are connected to the internet, as long as
they have a phone line,” he says. The internet sector in Somalia has
two main advantages over many of its Africa neighbours. There is a
huge diaspora around the world – between one and three million people,
compared with an estimated seven million people in Somalia – who
remain in contact with their friends and relatives back home. E-mail
is the cheapest way of staying in touch and many Somalis can read and
write their own language, instead of relying on English or French,
which restricts internet users to a smaller number of well educated
people. Just two days after it was opened, the Orbit internet cafe in
south Mogadishu’s km5 was already pretty busy, with people checking
their e-mail accounts, a livestock exporter sending out his invoices
and two nurses doing medical research.

Video calling
And Somalia’s telecoms revolution is far from over. “We are planning
to introduce 3G technology, including live video calling and mobile
internet, next year,” says Mr Abdullahi. But despite their success,
the telecoms companies say that like the population at large, they are
desperate to have a government. “We are very interested in paying
taxes,” says Mr Abdullahi – not a sentiment which often passes the
lips of a high-flying businessman. And Mr Abdulkadir at the Global
Internet Company fully agrees. “We badly need a government,” he says.
“Everything starts with security – the situation across the country.
“All the infrastructure of the country has collapsed – education,
health and roads. We need to send our staff abroad for any training.”
Another problem for companies engaged in the global telecoms business
is paying their foreign partners. At present, they use Somalia’s
traditional “Hawala” money transfer companies to get money to Dubai,
the Middle East’s trading and financial hub. With a government would
come a central bank, which would make such transactions far easier.
Taxes would mean higher prices but Mr Abdullahi says that Somalia’s
previous governments have kept taxes low and hopes this will continue
under the regime due to start work in the coming months. Somalia’s
telecoms companies are looking forward to an even brighter future with
the support of a functioning government – as long as it does not
impose punitive tax rates or state control in a sector which obviously
needs very little help to thrive.

Ayn Rand Comes to Somalia
In the absence of government bureaucracy and foreign aid, business is
starting to boom in Mogadishu.
BY Peter Maass / The Atlantic Monthly / May 2001

The headquarters of Telecom Somalia is filled with the sights and
sounds of Mogadishu-style success. Customers pour through the
entrance, funneling past machine-gun positions that flank the front
doors. After a pat-down by security guards, who take temporary
possession of any guns and knives, they enter the lobby and line up at
the appropriate counters to pay their bills or order new service.
Clocks on a wall display the time in New York, Paris, London, Sydney,
and Karachi—reminders of an outside world that has pretty much left
Somalia for dead. Computer keyboards clatter as workers punch in
information. Customers chat and argue with one another in a gregarious
manner that makes the lobby feel like a town square—all the more so if
a goat that’s being herded down the street happens to stray inside.

Telecom Somalia is the largest company in Mogadishu. It has 700
employees, and it offers some of the best and cheapest phone service
in Africa. It also provides a clue to the possible resuscitation of
the world’s most famous failed state. In 1995, when the international
community decided to wash its hands of Somalia and the last United
Nations peacekeepers left the country, Mogadishu was a Hobbesian
horror show. It remains a miserable and unstable place, a city where
taxi drivers ruin their own vehicles, denting the body work and
smashing the windows, so that thieves will not bother to steal them.
But it is less dismal than it used to be, and better times may be on
the way, owing to a new generation of businessmen who are determined
to bring the lawless capital back to life.

Prime among the city’s entrepreneurial leaders is Abdulaziz Sheikh,
the chief executive of Telecom Somalia. When I visited him last
summer, in a small office on the fourth floor of the company’s
headquarters, he was being blasted by a hurricane-force air-
conditioner that nearly drowned out the constantly ringing phones on
his desk. “You need to be here twenty-four hours a day,” he said,
explaining that he lives as well as works on the premises. Sheikh had
the running-on-fumes look of a campaign chairman in a never-ending
race, but at least he appeared to be winning. Anyone can walk into the
lobby of his building, plunk down a $100 deposit, and leave with a
late-model Nokia that works throughout the city, in valleys as well as
on hilltops, at all hours. Caller ID, call waiting, conference
calling, and call forwarding are available. There are two other
cellular-phone firms in town, and the three recently entered into a
joint venture and created the first local Internet-service provider.
Not all battles here are resolved by murder.

Mogadishu also has new radio and television stations (one night I
watched the Somali equivalent of Larry King Live, in which the
moderator and his guest, one of the city’s leading Islamic clerics,
fielded questions from callers), along with computer schools and an
airport that serves several airlines (although these fly the sorts of
airplanes that Americans see only in museums). The city’s Bekara
market offers everything from toilet paper, Maalox, and Colgate
toothpaste to Viagra, sarongs, blank passports (stolen from the
Foreign Ministry a decade ago), and assault rifles. The international
delivery company DHL has an office in Mogadishu, where its methods can
be unorthodox: if a client has an urgent package that cannot wait for
a scheduled flight out of the country, the company will dispatch it on
one of the many planes that arrive illegally from Kenya every day
bearing khat, a narcotic leaf that is chewed like tobacco but has the
effect of cocaine.

Mogadishu has the closest thing to an Ayn Rand-style economy that the
world has ever seen—no bureaucracy or regulation at all. The city has
had no government since 1991, when the much despised President
Mohammed Siad Barre was overthrown; his regime was replaced not by
another one but by civil war. The northern regions of Somaliland and
Puntland have stabilized under autonomous governments, but southern
Somalia, with Mogadishu at its core, has remained a Mad Max zone
carved up by warlords for whom fighting seems as necessary as oxygen.
The prospect of stability is a curious miracle, not simply because the
kind of business development that is happening tends to require the
presence of a government, but because the very absence of a
government may have helped to nurture an African oddity—a lean
and efficient business sector that does not feed at a public trough
controlled by corrupt officials.

Similarly, the lack of large-scale (and often corrupting) foreign aid
might have benefits as well as drawbacks. Somali investors are making
things happen, not waiting for them to happen. For example, on the
outskirts of town, on a plot of land the size of several football
fields and surrounded by twenty-foot-high walls, workers recently
completed a $2 million bottling plant. Everyone refers to it as “the
Pepsi factory,” even though Pepsi is not involved. The project’s
investors say the plant will become a Pepsi factory: they figure that
if they begin producing soft drinks, Pepsi or some other international
company will want to get in on the market.

Many of the larger companies in Mogadishu, including the bottling
plant, have issued shares, although there is of course no stock
exchange or financial authority of any sort in the city. Everything is
based on trust, and so far it has worked, owing to Somalia’s tightly
woven clan networks: everyone knows everyone else, so it’s less likely
that an unknown con man will pull off a scam. In view of Somalia’s
history, this ad hoc stock market is not as implausible as it may
sound. Until a century ago, when Italy and Britain divided what is
present-day Somalia into colonial fiefdoms, Somalis got along quite
well without a state, relying on systems that still exist: informal
codes of honor and a means of resolving disputes, even violent ones,
through mediation by clan elders.

Of course, the lack of a government poses problems, especially with
respect to the warlords. Sheikh and his fellow businessmen have kept
them at bay by paying them protection money and by forming their own
militias. Those manning the machine guns outside Telecom Somalia are
employees of the company, and when the firm’s linemen go out to lay
new cables (they used to string overhead lines, but those got shot up
by stray gunfire), they, too, are protected by company gunmen. All of
this is costly, so the business leaders have taken steps to bring
about a new government—one that will keep its hands out of their
pockets and focus on providing security and public services. The
process began two years ago, when Sheikh and other entrepreneurs got
fed up with the blight of checkpoints, at which everyone was required
to pay small tributes to armed teenagers affiliated with various
warlords. The businessmen decided collectively to fund a militia to
get rid of the checkpoints, resulting in an armed force that is
overseen by the city’s Islamic clerics. Having succeeded in its main
mission, the militia now serves as an informal sort of police force,
patrolling the streets in an effort to stop petty crime.

With the checkpoints gone and the warlords weakened by the loss of a
key source of income, the business elite is bankrolling a transitional
government that was appointed at a peace conference last August. The
government does not yet control much more than the heavily guarded
buildings that are its temporary headquarters, but it has begun
deploying its own policemen in some parts of the city. The businessmen
are pooling their company security forces to bolster the government
and are trying to lure the warlords’ gunmen to its side with cash
incentives. In February one of the leading warlords, Mohamed Qanyareh,
agreed to support the government in exchange for ministerial posts for
himself and his allies.

If the business community succeeds in returning Mogadishu to something
resembling normalcy, it will have shown that a failed state, or at
least its capital city, can get back on its feet without much help
from the outside world. This would constitute not an argument against
outside intervention but, rather, a lesson that intervention doesn’t
have to be of the UN-led, billion-dollar variety. Before leaving the
city I met with Hussein Abdullahi, a well-educated businessman who
fled Mogadishu in 1991 and wound up in Toronto, driving a taxi. Three
years ago, during a return visit, he was struck by the fact that his
Somali friends were living better at home than he was in Canada, at
the bottom of the immigrant ladder. He decided to move back and now
manages a thriving pasta factory, a bread factory, and a medical
clinic. Sipping an ice-cold Coke in his office, Abdullahi offered to
share a secret that, he promised, could make me rich. A chubby man
with a beatific smile, he leaned forward conspiratorially. “Everything
is possible in Mogadishu now, everything,” he said. “If you have the
money and the knowledge, you can do whatever you want. It is virgin
here.” Perhaps so, but only in the way of scorched earth.

BY Tatiana Nenova and Tim Harford / 11/1/2004

Telecommunications: networks link up
Many local companies have teamed up with international giants such as
Sprint (U.S.) and Telenor (Norway), providing mobile phones and
building new landlines. Vigorous competition has pushed prices well
below typical levels in Africa, and Somalia now has 112,000 fixed
lines and 50,000 mobile subscribers, up from 17,000 lines before 1991.
Yet not all is well. Calling every phone subscriber in Hargeisa, in
the Northwest, would require connections from four telephone firms.
But firms in Mogadishu have now agreed on interconnection standards,
and those in Hargeisa appear to be following suit. The negotiations
were brokered by the Somali Telecom Association, set up with the help
of the United Nations and International Telecommunication Union (ITU)
and head-quartered in Dubai.[1]

Electricity: simple solutions yield results
Entrepreneurs have worked around Somalia’s lack of a functioning
electricity grid, payment systems, and metering. They have divided
cities into manageable quarters and provide electricity locally using
secondhand generators bought in Dubai. They offer households a menu of
choices (daytime, evening, or 24-hour service) and charge per

Water: access but not cheap or safe
Public water provision is limited to urban areas, but a private system
extends to all parts of the country as entrepreneurs build cement
catchments, drill private boreholes, or ship water from public systems
in the cities. Prices naturally rise in times of drought.
Traditionally, destitute families have not had to pay for water, while
the slightly better-off borrow funds from relatives. Nevertheless,
after several years of drought the United Nations estimates that many
families in the Eastern Sanaag have debts of US$50–100 for water.
Moreover, access to safe water is low even by African standards
because neither regulators nor the market have been able to persuade
merchants to purify their water.

Air travel: outsourcing safety
In 1989 the national carrier (partly owned by Alitalia) operated just
one airplane and one international route.[2] Today the sector boasts
about 15 firms, more than 60 aircraft, 6 international destinations,
more domestic routes, and many more flights. But safety is a concern.
Airports lack trained air traffic controllers, fire services, runway
lights, and a sealed perimeter against stray animals, and checks on
aircraft and crew are inadequate. The makeshift solution:
international outsourcing. Somali carriers lease planes, often with
crews from Eastern Europe (the largest, Daallo Airlines, leases a
Boeing from the United Kingdom, to boost customer confidence). And
they operate out of Djibouti, Dubai, and Nairobi, using the facilities
there to check aircraft safety.

Private courts: quick but limited
A recent effort to endow Mogadishu with a functioning court collapsed
when the court tried to levy taxes and take over the privately run
port of El Ma’an. In any case Somalia lacks contract law, company law,
the concept of limited liability, and other key pillars of commercial
law. In some cases Somalis have used offshore registration of
businesses to import legal concepts and services. More commonly,
disputes are settled at the clan level, by traditional systems run by
elders and with the clan collecting damages. Such measures are free—
and fast by international standards. In a case involving the
oppression of minority shareholders in a large livestock company, out-
of-court talks were preferred, the company continued to operate
successfully, and the dispute was settled amicably. But clan-based
systems deal poorly with disputes outside the clan. In a dispute
involving the telecommunications company Aerolite, the interclan
committee of elders awarded the plaintiff from a weaker clan an
unfairly small settlement, and since it was not enforced, he received

Currency: perfect competition for dollars [2001]
Sharp inflation in 1994–96 and 2000–01 destroyed confidence in three
local currencies. U.S. dollars are harder to forge, do not need to be
carried around in large fragile bundles, and, most important, retain
their value. The feeble capabilities of the central bank have allowed
free entry into the currency exchange business, which is as close to
perfectly competitive as is ever likely to be possible.

International fund transfers: hawala system
The hawala system, a trust-based money transfer system used in many
Muslim countries, moves US$0.5–1 billion into Somalia every year. A
person in New York wishing to send money to his family in Tog-waajale
gives the hawala agent in New York the sum in cash, paying a 5 percent
commission. The agent deposits the cash in a local bank account to be
transferred to the company bank account in Djibouti or Dubai, then
alerts the clearinghouse in Hargeisa, which passes details on to Tog-
waajale. When the recipient shows up, the local agent quizzes him
about his clan lineage using questions provided by the relative
overseas as security against fraud. The transaction is usually
completed within 24 hours. Hawala networks are unregulated and do not
always keep records of transactions, but they are coming under
pressure from efforts to combat money laundering.[3]

Savings accounts and traveler’s checks
Somalia has adopted the widespread African institution of rotating
credit associations, which rely on clan links for enforcement and
provide a safe haven for savings. More innovative is the system of
traveler’s checks for the pilgrimage to Mecca, or hajj. Nobody would
accept Somali checks, so Somali firms set up accounts in Saudi banks
and write checks to pilgrims that can be cashed in any branch.

Gaps in private sector provision
In some areas the private sector has made little progress. The Somali
road system, for example, is limited and in poor condition. For a
private supplier to build a road and collect fees to cover the costs
is apparently too hard, partly because of prohibitive transaction
costs and partly because fee-paying users are not the only ones who
benefit from roads. Primary education is another disappointing story.
Some 71 percent of primary schools are privately owned (typically by
parents or communities), but enrollment is just 17 percent. By
contrast, it is 82 percent in West Africa, where countries are richer
and more stable and the government is much more heavily involved in
the economy. Ideally, benevolent government would sort out both
problems. But government that is merely stronger might not help. Where
municipal governments along the Berbera–Hargeisa road have the power
to collect tolls, they do not spend them on maintenance. The failings
of the education system are partly because half of Somalis are nomads.
It is not clear that government would do much better, especially since
the private schools are locally acknowledged to be superior to those
run by local government. Rather than try to create a government system
from scratch, a better policy would be to improve the network of
higher-quality private schools.

The achievements of the Somali private sector form a surprisingly long
list. Where the private sector has failed—the list is long here too—
there is a clear role for government interventions. But most such
interventions appear to be failing. Government schools are of lower
quality than private schools. Subsidized power is being supplied not
to the rural areas that need it but to urban areas, hurting a well-
functioning private industry. Road tolls are not spent on roads.
Judges seem more interested in grabbing power than in developing laws
and courts. A more productive role for government would be to build on
the strengths of the private sector. Given Somali reliance on clan and
reputation, any measures allowing these mechanisms to function more
broadly would be welcome; credit and land registries would be a good
start. And since Somali businesses rely heavily on institutions
outside the economy, international and domestic policies supporting
such connections would help. For governments and aid agencies, the
capability of some business sectors to cope under the most difficult
conditions should give hope and guidance in other reconstruction
efforts. It may take less encouragement than is commonly thought for
stripped-down systems of finance, electricity, and telecommunications
to grow.

1. “Somalia Telecoms Boom without Government,” Somaliland Times, July
22, 2004.
2. United States Institute for Peace, Removing Barricades in Somalia:
Prospects for Peace(Washington, D.C., 1998).
3. Abdusalam Omer, “Supporting System and Procedures for the Effective
Regulation and Monitoring of Somali Remittance Companies
(Hawala)” (United Nations Development Programme, Nairobi, 2003).

Somaliland’s addict economy
BY Tristan McConnell / July 17, 2009

Somalia’s economy is dominated by trade in khat, a narcotic banned in the U.S. and much of Europe. Eye-popping, head-buzzing khat is loved by Somali men who chew the leaves for their stimulant effect. While most of war-torn Somalia’s economy is moribund, khat does a bustling trade estimated at well over $50 million annually. Doctors warn, however, that the drug is not only a drain on limited Somali resources but is also destroying lives.

Hargeisa is the capital of Somaliland, the northern territory nominally independent from Somalia which maintains peace and economic activity, especially the khat trade. Lounging on a rug on the second floor of an ostentatious glass and stone mansion overlooking Hargeisa, Mohamed Yusuf Moge, aptly known as “The Fat Mohamed,” lit up another cigarette. In front of him was a pile of leafless khat twigs. His eyes were wide and red-rimmed, a symptom of the leaves that have been chewed. “We bring in 80-tons of khat every day,” he said. “We have many vehicles and two airplanes for transporting our produce. We control the market: We are the De Beers of the khat industry!”

“We” is “571 Allah Amin,” a family business started 15 years ago that has grown to become Somaliland’s biggest khat importer. Moge is 571’s country rep. Although he would not reveal how much the company makes, it is estimated that its revenue is $320,000 a day. Downtown at the company depot, the second of the day’s trucks arrives from the highland farms of neighboring Ethiopia mid-morning. Thursday is the busiest day of the week because, as one man explained, Friday is the Muslim day of rest so everyone can sleep off their khat hangover.

As the khat truck pulled in, barrow boys and vendors crowded round the tailgate to unload the 70 kg sacks of khat wrapped in hay to keep it fresh. Inside are small bundles of shoots that are bought wholesale for $1 and sold retail for $1.50. “Business is good!” shouted Omar Hersi Warfa, 571’s depot manager, over the clamor. “We are working hard and people are chewing!” Khat vendor Shamis Abdullahi Nur, 50, squatting on the ground nearby, agreed. “Business is very good because of our security and peace,” she said as she directed a sack of khat to be loaded into the back of a beat-up station wagon for the drive across town to her stall. Others pushed smaller consignments away in wheelbarrows. “I’ve been selling khat for over 30 years and now is the best time. There was a time of war, a time when I was a refugee, but now you can see I am sitting here eating my mango,” she said with a sticky, happy smile

Street prices are highest in the early afternoon because this is gayiil time when most men chew the khat and shoot the breeze. They can be found sitting on carpets in shady spots close to khat kiosks, with an ashtray, a flask of sweet tea and a jug of water at their feet. Women often sell khat but are not invited to chew. But increasingly men are also chewing in the morning, the evening and throughout the night. The stoned man in a cotton wrap tottering in a daze along a crumbling potholed road with a fistful of green stems is a common sight. Some warn the national habit does psychological damage. In the mental wing of Hargeisa’s main hospital, a staff member walked past the patients, many of whom were chained to a bed or a post or sat staring vacantly on the floor. “The majority of the men here are affected by chewing khat, most are schizophrenic,” said Faisal Ibrahim.

Dr. Yassin Arab Abdi, the hospital’s chief doctor, said: “Chewing is part of it although there are many reasons for mental illness. Before they used to chew at a certain time for a few hours now there are four sessions 24-hours a day. These people are addicts.” Back at the khat mansion, “Fat Mohamed” Moge and his colleagues, however, extolled the virtues of the drug. “Khat plays a great role in our society. If there’s conflict people have to sit down, chew, talk about it,” Moge said. “It is not like a drug which destroys the mind. It is a stimulant. If you chew khat in the right manner it doesn’t affect you.” But, he admitted, “There are some guys who are addicted, this is because they are jobless and have nothing to do.”

Unfortunately this description applies to many Somali men. The last national government — a military dictatorship — collapsed in 1991. Since then the unrecognized state of Somaliland has declared itself independent while Somalia has descended deeper into war and chaos. Isolation on the one hand and war on the other have left the formal economy shattered with many surviving on remittances sent from relatives abroad. Yet it is not unusual for men to spend $5 or $10 a day on khat, making the habit a huge drain on very limited resources. The government’s entire annual budget is less than $50 million, around $14 a head for each of Somaliland’s 3.5 million citizens. Such is the love of khat that to outlaw it would be political suicide. Nevertheless a senior Somaliland politician, Musa Behe of the opposition Kulmiye party, said, “The Somali man works less because he chews khat. We won’t ban it but we need to raise awareness of the harm khat does.”

Profile : Somalia

Somalia has been without an effective central government since
President Siad Barre was overthrown in 1991. The self-proclaimed state
of Somaliland and the region of Puntland run their own affairs.
* Population: 8.7 million (UN, 2007)
* Capital: Mogadishu
* Area: 637,657sq km (246,201 sq miles)
* Major languages: Somali, Arabic, Italian, English
* Major religion: Islam
* Life expectancy: 47 years (men), 49 years (women)
* Monetary unit: 1 Somali shilling = 100 cents
* Main exports: Livestock, bananas, hides, fish
* GNI per capita: n/a

President: Abdullahi Yusuf Ahmed
Abdullahi Yusuf Ahmed, a former leader of the semi-autonomous Somali
region of Puntland, was chosen by Somalia’s interim parliament as
president of the Transitional Federal Government in October 2004. The
election took place in Kenya because the Somali capital was regarded
as being too dangerous. A former army officer and faction leader, Mr
Yusuf led a guerrilla movement in the 1970s aimed at ousting the
Somali dictator Siad Barre. In the 1990s he emerged as the pre-eminent
leader of his native Puntland region; he declared the territory
autonomous in 1998. He is said to have an authoritarian approach to

Somalia’s disintegration is reflected in its media, which is
undeveloped, fragmented and often partisan. Broadcasters and
journalists operate in an atmosphere which is hostile to free
expression, and often dangerous. In spite of this, diverse and more
professional media outlets have emerged in recent years – in
particular, FM radio stations with no explicit factional links. The TV
and press sectors are weak and radio is the dominant medium. There are
around 20 radio stations, but no national, domestic broadcaster. Many
listeners tune to Somali-language media based abroad, in particular
the BBC Somali service. In secessionist Somaliland and Puntland the
authorities maintain a tight hold on broadcasting.




“Due to its unrecognized status, The Republic of Somaliland has no
official contacts with any other nation. The current foreign policy of
Somaliland is to try to secure international recognition as a
sovereign, stable country, so that international aid can be more
readily secured. Somaliland was independent for a 3 day period in
1960, between the end of British colonial rule and its union with the
former Italian colony of Somalia which status then continued until the
unilateral declaration reestablishing its independence in 1991.
Somaliland’s claims to sovereignty rests on its former independent
status. In addition, the fact that the rest of Somalia is in a state
of chaos while Somaliland is under stable government also lends
credence to its claim. The attitude of the United Nations and the
African Union on the preservation of existing national borders has so
far prevented recognition of Somaliland, despite the examples of the
former status of British Somaliland, and the fact that Eritrea
successfully broke away from Ethiopia and became a recognized country.
An African Union fact-finding mission that visited Somaliland in early
2005 recently published a report that recommended favorable
consideration for recognizing Somaliland’s independence.”

“The population of Somaliland is estimated at around 3.5 million. The
average population growth rate is 3.1%. Population density is
estimated at approximately 25 persons per sq. kilometre. Fifty-five
percent of the population is either nomadic or semi-nomadic, while 45%
live in urban centres or rural towns. The average life expectancy for
the male is 50 and for females it is 55.

The Republic of Somaliland known as the Somaliland Protectorate under
the British rule from 1884 until June, 26th 1960 when Somaliland got
its independence from Britain. On July 1st 1960 it joined the former
Italian Somalia to form the Somali Republic. The union did not work
according to the aspirations of the people, and the strain led to a
civil war from 1980s onwards and eventually to the collapse of the
Somali Republic. After the collapse of the Somali Republic, the people
of Somaliland held a congress in which it was decided to withdraw from
the Union with Somalia and to reinstate Somaliland’s sovereignty.

The country has a republican form of government. The legislative
assembly is composed of two chambers – an elected elder’s chamber, and
a house of representatives. An elected President and an elected Vice-
president head the government. The President nominates the cabinet
which is approved by the legislature. There is an independent

One of the provisions of the National Constitution of the Republic of
Somaliland is the establishment of a Bank to carry out Central Banking
functions. The bank of Somaliland (Baanka Somaliland) was thus
inaugurated in 1994 together with appropriate Banking Laws, to insure
that Banking regulations are carried out to the letter. Board of
Directors has accordingly been appointed together with a Governor of
the Bank, Vice-governor, and a Director General. In addition, the Bank
of Somaliland besides its functions as Central Bank, runs the
activities of Commercial sector.

The Bank’s main objectives are detailed in Article 3 of the
Constitutive Law of Somaliland Bank as follows: Fostering Monetary
stability maintaining the internal and external values of the
Somaliland Currency and promoting credit and exchange conditions
conductive to the balanced growth of the economy of the Republic and
within the limits of its powers, it shall contribute to the financial
and economic policies of the state.”








“Our foreign service hang-ups about recognition are getting in the way
of us… to build adequately on the efforts of the Government of
Somaliland to create a modern, democratic state. In effect, we are
putting the interests of the warmongers in the south ahead of those of
the peace-builders in the north.”

Democracy comes of age in Somaliland
BY Stefan Simanowitz / Contemporary Review / Dec 2005

The rising sun reveals two long lines of people snaking towards a
small concrete polling station in Gabiley, a town in rural Somaliland.
Many of them have walked considerable distances and queued all night
in order to vote in these, the first parliamentary elections held in
the territory for nearly forty years. But although voters across the
country have turned out in force, and although the election is deemed
free and fair by international observers, the result will not be
officially recognised beyond its territorial borders. Indeed, in the
eyes of the international community, Somaliland is a country that does
not exist.

Since its unilateral proclamation of independence in 1991, Somaliland,
an area the size of England and Wales in the north of Somalia, has
struggled to gain international recognition. Whilst neighbouring
Somalia has all but ceased to function as an administrative, judicial
and territorial entity, Somaliland has taken important steps towards
creating a stable working democracy in one of the poorest and most
dangerous regions of the world. A new constitution was adopted in 2001
following a referendum. In 2002 local elections passed off peacefully,
and in 2003 free and fair presidential elections took place. Having
thus laid the foundations of a functioning democracy, the
parliamentary elections of 29th September 2005 were seen as the final
step in the democratisation process and an important milestone in the
transition from a traditional clan-based, single-party-dominated
political structure to a stable multi-party democracy. Many
Somalilanders also regarded them as the final prerequisite for
international recognition.

However, despite the fact that Somaliland may fulfil the requirements
necessary for recognition as a sovereign state, the question of
recognition will be determined by a number of external geo-political
factors. These factors include the African Union’s position on the
sanctity of colonial borders and Somaliland’s role in the so-called
‘war on terror’.

Somaliland was a British Protectorate for over eighty years during the
colonial period. In 1960, it gained independence but formed a hasty
union with the former Italian Somaliland to create the Somali
Republic. In 1969 Mohamed Siad Barre’s military coup brought Somalia’s
flirtation with democracy to an end and planted the seeds of a
secessionist struggle in Somaliland. This struggle culminated in a
brutal three-year civil war in which 50,000 people were killed and
half a million refugees fled. Between 1988 and 1991, Barre’s forces
massacred civilians, laid over two million mines and reduced cities to

In 1991, the overthrow of Barre’s regime plunged Somalia into a state
of anarchy from which it is yet to emerge. Somaliland, however, was
quick to declare independence and, over the years, it has managed to
establish itself as a model of stability, good governance and economic
discipline. Rival militias have been demobilised, mines have been
cleared and refugees have been repatriated. The war-ravaged
infrastructure has been rebuilt and Somaliland now boasts modern
airports, hospitals, ports, power plants and universities. There is a
free press and the central bank manages an official currency with
relatively stable exchange rates. An unarmed police force and
independent judiciary maintain order.

What is most remarkable about this progress is that it has been
achieved with virtually no external help. Whilst economic development
has been heavily supported by Somalilanders in the Diaspora, lack of
international recognition has meant that Somaliland does not qualify
for bilateral aid or support from international financial
institutions. This international isolation has not, however, resulted
in isolationism. Lack of access to external aid has forced this
country of 3.5-million people to become more self-reliant than many
other African states. This self-reliance is reflected in what is
perhaps the most significant of Somaliland’s achievements: its system
of government.

Rather than having a Western democratic model of governance imposed
on them from outside, Somaliland has managed to fuse Western-style
institutions of government with its own traditional forms of social
and political organisation. Its bi-cameral parliament reflects this
fusion of traditional and modern, with the Senate consisting of
traditional elders, and the House of Representatives consisting of
elected representatives.

However, with its history of ‘tribalism’ and internecine fighting, the
key challenge for Somaliland’s new parliament is to try and replace
clan-based politics with party politics. For its first twelve years,
Somaliland had no political parties but instead followed more
traditional clan-based forms of political organisation. Political
parties were introduced during the presidential elections and it was
hoped that the recent parliamentary elections would help to usher in a
representative system without allowing representation to be overtly
clan-based. Clearly, if clan loyalties were to take precedence over
party loyalties, parliament would be seriously weakened. The
traditional clan-based political system had resulted in an under-
representation of some clans and it was hoped that having just three
non-clan-based parties would reduce the extent to which clan
allegiance affected the selection of candidates and the way in which
people voted. A limited number of political parties would force
alliances between clans to develop thereby increasing integration and

In the traditional clan system it is the male elders who make
decisions, and during the nomination process, many candidates were
indeed selected by elders along clan lines. The male-dominated nature
of the selection process was reflected in the fact that only seven of
the 246 candidates were female. There was also evidence that political
parties often chose candidates based on their perceived popularity and
support base. Whilst the absence of voter registration makes it hard
to analyse voter patterns, it would seem from the results that there
is some evidence that regional voting patterns reflect clan
preferences. There is also evidence however, that alliances were
sought between subgroups of different major clans across regions under
the different party umbrellas. This would indicate that, although
tribalism inevitably played some part in the election, it has been

The election itself was very tightly fought. At one stage it seemed
inevitable that the president’s Democratic United National Party
(UDUB) would lose to the Solidarity Party (Kulmiye). However, UDUB was
able to use its powerbase as the governing party to maintain its
percentage of the popular vote, while Kulmiye lost considerable ground
to the Justice and Welfare Party (UCID). The close nature of the
result means that parliament will not be dominated by clan or party,
but will require much greater consensus-building coalitions. It will
nevertheless be interesting to see how party loyalties will be
negotiated against clan interests in the new parliament.

Election Day
Lack of international recognition meant that Somaliland was not able
to access forms of governance support commonly received by post-
conflict areas such as Iraq and Afghanistan. Nevertheless, the
elections were well organised and successfully conducted with over
800,000 voters turning out to the country’s 985 polling stations to
elect 82 members of parliament. This represents a turnout of over 90
per cent.

Like all elections in infant democracies there were some inevitable
teething problems of a practical, administrative and logistical
nature. The absence of a census and voter register meant that a
decision was made to allow voters to vote in any of Somaliland’s six
regions: the only requirements for voting being that voters were 16
years of age and spoke Somali. Inevitably, this led to widespread
attempts at underage and multiple voting. Due to the tradition of
women decorating their hands with henna it was decided that invisible
ink (and black lamps) should be used instead of indelible ink. This
generally proved an effective barrier to multiple voting; however
punishment for those caught varied. In some polling stations those
attempting to vote more than once were merely turned away, often only
to rejoin the queues. In other polling stations people had their shoes
and belts taken away and were made to sit outside the polling station
awaiting detention by the police. Whilst the fact that 30 per cent of
the population are nomadic makes census taking and voter registration
more difficult, there is confidence that both will be in place before
the local elections in 2007.

With illiteracy rates as high as 80 per cent and with many people
having had little or no experience of voting, substantial voter
education was attempted prior to the elections. In addition, ballot
papers had symbols beside the name of each candidate to make it easier
for those that could not read. On the day however, many voters, not
even knowing which way up to hold the ballot paper, chose to announce
their choice to the local chairperson, who marked the paper for them.
Whilst this compromised the secrecy of the voting process, it did not
seem to bother voters who were generally eager to talk about whom they
had voted for.

Shadow of Terror
The shadow that hung over the elections and continues to darken
Somaliland’s future is that cast by the threat of terrorism. On 25th
September the atmosphere in Hargeisa, Somaliland’s impoverished but
relaxed capital, changed. With the elections only days away, several
suspected Islamic militants were arrested following a shoot-out with
police. The following day a cache of arms, including heavy anti-tank
weapons, was discovered in the city. According to the Interior
Minister, one of the men arrested was a senior al-Qaeda operative
allegedly in the region to organise attacks on local leaders and
foreigners. This incident heightened fears of violence especially as
it coincided with the arrival of 76 international election observers
including potentially high-profile targets such as parliamentarians
from South Africa and Europe as well as a former US Ambassador. It
also provided a stark reminder of Somaliland’s precarious position in
the global war on terror.

Whilst Somaliland has managed to avoid the violent lawlessness and
extremism of Somalia, the discovery of Islamic militants in Hargeisa
does not come as a great surprise. Over the last two years, extremists
have murdered four foreign aid workers in Somaliland. Last month four
men were sentenced to death for murdering a British couple in 2003 in
a school they had built. Although the predominantly Sufi form of Islam
practised in Somaliland does not lend itself to extremism, concerns
have been raised by the presence of an increasing number of radical
clerics as well as the porous nature of the border with Somalia.
Mogadishu has become something of a haven for al-Qaeda-affiliated
fighters and Somalia was used as a transit point for the terrorists
who carried out the 1998 attacks on the US embassies in Kenya and
Tanzania, as well as the 2002 suicide bombing in Mombasa.

Whilst the threat of terrorism is clearly a problem for Somaliland, it
also presents an opportunity. Ironically, the discovery of al-Qaeda
operatives in the territory might do more to make Western governments
take notice of Somaliland than the free and fair conduct of their
elections. Somaliland is strategically positioned on the Gulf of Aden
and is also home to what could be an important navel base in Berbera.
Currently the only location in Africa where the US has a military base
is neighbouring Djibouti, and Somaliland is seen by the Americans as a
potentially important ally against the spread of extremism.

Somaliland is conscious that too close a relationship with the
Americans might not be popular with its population, but it also
recognises the advantages that collaboration with the US could bring
in terms of finance, security and long-term stability. By promoting
itself as a non-threatening strategic partner in the ‘war on terror’,
Somaliland could fast-track its entry into the international

Recognition and beyond
Even if the US were to support Somaliland’s right to self-
determination, it is unlikely that they or any other country will
recognise Somaliland without the approval of the Organisation of
African Unity. One of the OAU’s central principles is that African
colonial borders should not be redrawn. This is based on a well-
grounded fear that recognition of ‘separatist’ states could cause the
continent to descend into chaos. However, there is a strong argument
that by breaking a union that it had entered into as an independent
state, Somaliland would be reverting to, rather than redrawing its
colonial borders. It is also worth noting that despite its reluctance
to acknowledge secessionist states, the OAU has recently recognised
the newly formed nations of Eritrea and Western Sahara. It is also
important to note that thirty new countries have been internationally
recognised since 1990, although most of these emerged from the
dissolution of the USSR and Yugoslavia.

Despite OAU intransigence, Somalilanders remain optimistic about the
possibility of recognition and the benefits it will bring. As well as
giving Somaliland access to bilateral aid, recognition would finally
give access to the mining and oil companies eager to exploit
Somaliland’s proven natural resources. Large-scale extraction of oil,
coal, gemstones and minerals could transform this country where 43 per
cent of the population are living in extreme poverty. Whilst
international recognition is not a panacea that will lift Somaliland
out of poverty or eradicate its problems with health, education, food
insecurity, water supply, and HIV/AIDS, it would undoubtedly speed

Although there is still a distance to travel, Somaliland’s
accomplishments are impressive. It has created effective institutions
of state and attained a level of political maturity well beyond its
years. Somaliland provides a useful model of democracy that offers
lessons to us all. It reminds us that democracy is not a static,
prescriptive system but a living idea that is constantly adapting and
taking new forms. In Hargeisa, reminders of how far this small nation
has come are all around. When the rains come, a mass grave beside the
river is exposed. Bones protrude from the red earth, some still tied
at the wrist. Beside the airport road, a rusting Russian tank is
plastered with election posters: a reminder of Somaliland’s war-
ravaged past and a symbol of hope for a democratic future.

{Stefan Simanowitz is a writer and researcher. He was part of the
International Election Observer mission to Somaliland in September


“Following the pattern of the Booroma National Charter, which
formalized the birth of Somaliland during 1993, a new entity – the
Puntland State of Somalia – was established in July 1998 out of a long
Constitutional process that lasted more than two months. The
institutional recognition of the role played by the traditional
leadership in Puntland in the seven-year period of peaceful self-
government in a stateless situation, has come only at the end of this
process. However, the mediation role of the elders has not been so
successful in other regions of Somalia for several reasons. Generally
speaking, outside the Majeerteen context, Somali society lacks a
stable hierarchy of paramount chiefs, and it follows that mediation
can achieve only a local dimension. Nevertheless, in the northwestern
regions (Somaliland) a regionalist feeling has widely spread in the
last thirty years. In this part of Somalia, after the collapse of the
State, the elders have collectively expressed this feeling better than
the SNM, frequently paralyzed by leadership competition.

The local concept of State sovereignty does not naturally match with
the rigid concept of State territory. Instead, it should expand in the
‘official’ territory of other countries in a flexible way and wherever
members of its community are found. This is exactly one of the options
offered to end the conflict and to reconstruct Somalia by the LSE
consultant to the European Union during 1995. Today, is effectively
put into effect in all Somali regions without respect of internal and
external borders. From another point of view, it is a slide back to a
legal status of the community group, confirmed by a citizenship which
corresponds to kinship. These are new elements of extreme importance
to those who are directly or indirectly committed to developing
alternative solutions in the African context, split up between State
sovereignty and ethnic allegiance. What is advancing in Somalia is a
more flexible and a more restricted idea of what the State is and
means in Africa (and elsewhere).”


Badhan, Somaliland, August 18, 2007 – The semi-autonomous regional
state of Puntland (Majeerteenya) declared this week that the recent
formation of `Makhir state’ by eastern Sanag residents is `a load of
hoo ha and a dream’. In a press statement, The Puntland Minister of
Information, Mr Abdirahman Banga in recent press statement strongly
condemned last week’s declaration of a new state in eastern Sanag. Mr
Banga said that the people behind the declaration of Makhir State are
dreaming because it doesn’t exist.

The minister stressed that this area is 100% in the hands and control
of Puntland, though the area recently saw bloody clashes between
forces loyal to Puntland and Somaliland. Soon after the minister’s
statement, the self-appointed President of `Makhir’ state, Mr Jibril
Ali Salad, who used to be a Somaliland parliamentarian, spoke to the
local media in response to the minister’s statements. Mr Salad said,
“Puntland has no business to talk about our new state, and they are
powerless to stop us, and do not have the ability to even come here”.

“Makhir state is acknowledged by its people as a fully-fledged state
independent of Puntland and Somaliland,” added Jibril Ali Salad.
Makhir state was established last week in the Badhan district of
eastern Sanag and its president is Jibril Ali Salad, who up to early
this year was a member of Somaliland’s parliament House of
Representatives. Somaliland’s government has not made any comment
regarding this newly-established enclave inside its border.

http://www.dhahar.com/article.php?articleid=3583 [PHOTOS]
Environmental Protection Corps in Maakhir State of Somalia

The roots of the destructive nature of the charcoal trade in Sanaag
region was due to lack of rules and regulations stemmed from the
collapse of the central Somali Government. This finally came to an end
since the declaration of Maakhir State. The Environmental Protection
Corps (EPC) of Maakhir State is growing in numbers and contributing to
a larger slowdown of charcoal trade and illegal gaming of wild

The authority in Maakhir State has banned charcoal trade because of
the environmental destruction and desertification that it does to the
fragile Somali environment. Traders drastically cut entire swaths of
forests, and as a result the trade was flourishing due to the high
demand for charcoal in the Arab Gulf States and other countries in
Asia. These are the reasons why the Environment Protection Corps are
confronting the charcoal profiteers and their militia that have been
menacing the Gebi Valley and Sool Plateau.

It is important to highlight that the newly established Maakhir
Authority did not receive any international aid for this effort. This
largely local effort has made an immediate impact on preserving and
protecting the environment in the Gebi Valley and Sool Plateau. As
indicated by the President of Maakhir Jibril Salad in last Thursday’s
press release; ” Maakhir Administration used traditional conflict
resolution methods to stop the traders and their militia, however
these militia are heavily equipped with automatic firearms who would
not cooperate, but the most effective and successful method for
limiting the harmful distress of our environment was creating and
using the EPC forces.”

The EPC in Maakhir apprehended more than 80 criminals over the past 4
months and jailed them in the district of Dhahar. The administration
constructed a new program of materials, structures, and training to
educate militia while they are held in jail. Jama Dahir Kodah, one of
the program directors of the EPC, told the media that their next
sustainable occurring project is to implement a plantation program in
the region.

The EPC is divided into three forces in the following areas of Maakhir
State and the main base is in city of Dhahar, the capital city of
Boharo region, the new region in Sanaag that Maakhir created:
1) The first battalion is responsible for the protection in vast areas
which stretches from Baragaha-Qol in Southern Sanaag to Eilbuh in
Central Sanaag.
2) The Second Battalion is responsible for an area which stretches
from Dhahar to Western Part of Bari region of Somalia near Boosaaso.
3) The Third and most important battalion have bases along the highway
that links Maakhir to Puntland and does stop and search in suspected




African Union replaces dictators’ club
BY Paul Reynolds / 8 July, 2002

A new wind of change is blowing through Africa. The move from OAU
(Organisation of African Unity) to AU (African Union) is supposed to
be more than the dropping of one letter. It is supposed to represent a
shift from a “dictators’ club” to a people-based grouping. Everything
of course depends on implementation. And given the sad record – and
current problems, such as AIDS – there must be doubts about how much
can be achieved. AIDS alone is reducing life in some countries,
especially in southern Africa, to nothing more than an existence. Life
expectancies are being cut to levels unknown since the 19th Century.
The OAU was set up to develop Africa after colonialism – and to help
liberate Southern Africa from white rule.

The African Union reflects the developments in many parts of Africa in
recent years, as democracy has started to take hold and a new emphasis
has emerged which concentrates less on the battles of the past and
more on the need to improve the lives of ordinary people. The key
shift is that the principle of state sovereignty has been abandoned.

It was the central belief of the OAU that nobody should interfere in
anyone else’s business. That was especially convenient for dictators.
Now the AU has as one of its aims the promotion of “democratic
principles and institutions, popular participation and good
governance.” It will have the right to initiate a so-called “peer
review” of a country’s record, intervene if there is genocide and war
crimes and impose sanctions. Everything of course depends on

High hopes
Nobody is mourning the end of the OAU. Yet when it was founded in
Addis Ababa in 1963, Africa was full of pride and hope. Its leaders
were giants of their day. Africa was coming out of colonial rule and
many had led their nations to independence. It was a time to be bold.
One of the key figures was Dr Kwame Nkrumah, President of Ghana which
became independent (and dropped its colonial name the Gold Coast) in
1957. He believed that the African continent should be “united.” But
defining that unity was the problem. The OAU solved the problem by
praising unity in its language, but avoiding it in its practice. The
differences across the continent were just too many and the principle
which the OAU adopted, of non-interference and non-intervention,
simply meant that member states turned a blind eye to their

When one of the founding members, Emperor Haile Selassie of Ethiopia
gave a speech to the OAU, he was praised in its formal thanks for his
“wisdom.” When the man who overthrew him in 1974 (and later murdered
him and buried him under a latrine), Colonel Mengistu Haile Mariam,
subsequently welcomed delegates back to Addis Ababa, he was thanked
for his “warm and generous hospitality.” Colonel Mengistu went on to
declare his “red terror” in which tens of thousands of opponents were
slaughtered by his neighbourhood committees. It was one of the
tragedies of the OAU that all that happened in the city where it was
founded. There were coups all over the place – including Nigeria
(which had been the jewel in the British colonial crown in Africa and
the hope for parliamentary democracy), Libya (which brought Colonel
Gaddafi to power) and Uganda (in which Idi Amin rose to fame). Kwame
Nkrumah was overthrown in a coup himself. It symbolised the problems
Africa was having in developing stable government. The OAU could say
little and did nothing.

Even after the recent elections in Zimbabwe, it was still bringing
forth its usual kind of statement when it objected to possible
American sanctions: “We are dismayed by this report, which amounts to
interference in the internal affairs of a member state.” It was more
successful over the years in trying to mediate in conflicts between
states. It helped mediate a border dispute between Algeria and Morocco
and between Somalia, Ethiopia and Kenya. One of the ironies was that
the OAU insisted on preserving the borders drawn by the colonial
rulers which often reflected spheres of influence rather than natural
divisions. The view at the time was also that Africa needed time to
settle down. And after all, it was achieving good economic growth of
about 5% a year in the 1960s. And the crisis in Southern Africa, where
white rule was being confronted, was regarded as more of a priority
for the OAU.

Faith lost
But Africa began to fail. Economic growth gave way to debt repayments;
the pioneering efforts to improve public health were swamped by AIDS,
wars were unending and famine stalked the land. The people lost faith
in governments and governments lost interest in the people. According
to Bernard Otabil of West Africa magazine: “The people did not feel
that the OAU satisfied their aspirations. It did not involve people on
the ground. It was top heavy.” The Secretary General of the OAU, Amara
Essy, who has helped to bring the new African Union about, was
scathing about the old grouping: “The OAU is the most difficult
organisation I have ever seen”, he told New African magazine. Mr
Otabil believes that the African Union is on the right course because
it is less grandiose and hopes to be more community based. It is also
offering an economic dimension and seeks African integration into the
world economy. One of the main tasks for the AU will be to push
forward with Nepad, the New Partnership for Africa’s Development. This
offers a bargain with the West – you give us aid and we will put our
house in order. It is a long way from 1963.

African Union supports Somali split
BY Jean-Jacques Cornish / Feb 10 2006

Hopes of recognition for Somaliland’s 15-year independence have been
raised by the favourable report of an African Union mission that
visited the territory last year. The report, a copy of which the Mail
& Guardian has obtained, comes at a time when signs of a new
flexibility in African thinking on boundary issues are emerging. It
suggests that official African aid be tapped by this country of
3,5million people that was effectively destroyed by the Somali
dictator Siad Barre. With the fall of Barre in 1991, the former
British colony broke its union with southern neighbour, the former
Italian colony of Somalia. Since Barre’s departure, Somalia has been
without an effective government.

But Somaliland has pulled itself up by its bootstraps. It has had a
referendum to adopt a democratic Constitution and has organised
presidential and parliamentary elections. Independent international
observers have endorsed all of these. The Organisation of African
Unity refused to recognise Somaliland’s independence, citing the maxim
that there would be chaos if colonial boundaries were not observed in
post-independence Africa.

Unions between Senegal and Gambia, and Egypt and Sudan, among
others, have been broken without affecting the recognition of these
countries. The AU mission accepts this, stating in its report that
Somaliland’s “case should not be linked to the notion of ‘opening a
Pandora’s box’. As such, the AU should find a special method for
dealing with this outstanding case. “The lack of recognition ties the
hands of the authorities and people of Somaliland, as they cannot
effectively and sustainably transact with the outside to pursue the
reconstruction and development goals.

“Furthermore, given the acute humanitarian situation prevailing in
Somaliland, the AU should mobilise financial resources to help
alleviate the plight of the affected communities, especially those
catering for the internally displaced persons and the returnees.
Finally, given also the high potential for conflict between Mogadishu
and Hargeisa, the AU should take steps to discuss critical issues in
the relations between the two towns. That initiative should be taken
at the earliest possible opportunity.”

Iqbal Jhazbhay, an Africa analyst at the University of South Africa,
says the report illustrates a new mood in the AU, an organisation
Somaliland has officially applied to join. “The AU-sponsored peace
deal in Sudan allows for a referendum, five years from now, on whether
the south wants to go it alone. This could not have happened if it
were business as usual. The AU now goes for results, and takes account
of subjective facts and practical realities,” says Jhazbhay. “The AU
clearly recognises the stability created in Somaliland and the
infrastructural development. It is determined to bring peace to the
horn. It is looking at post-conflict reconstruction and it has the
capacity to handle these issues.”


Millions to enter banking system through mobile phone system.
BY Drew Hinshaw / May 28, 2009

Accra, Ghana — Most working people here do not exist, at least not in the records of any trustworthy bank: The taxi drivers stash their salaries beneath floor mats and the market women tie their earnings up in the waistlines of their wrapper-skirts. They are the “un-banked” — potential customers but for now invisible, lost among the 80 percent of Africans who do their banking in tin cans and fanny packs. They do not keep the sort of accounts one can present to a loan officer.

Africa’s economy of cash handovers and stowed-away savings has long been a hindrance to the continent’s economic growth, as well as a cause and excuse to deny credit to its poor. But now, at a time when 10 million Ghanaians own a phone, the world’s banks, cell phone networks and aid agencies are coming here to flip one thing into the other — to tweak a few features on a sim card, circumvent some regulations, and voila: The ordinary pre-paid cell phone becomes something not unlike a checking account — a way to text money from person to person throughout this intricate economy. “It’s the next big gold rush,” said Michael Amankwah, CEO of CoreNet, a Ghanaian ATM manufacturer whose business, the chief executive freely admits, “is going to take a big hit,” when cell phone banking takes hold. “It’s the future of transactions and payments here.”

Already, telecom companies in Kenya and South Africa are shuffling millions of dollars in rands and shillings a day, as customers text along their excess income — perhaps to help an ailing but faraway relative buy medicine, or to pay workers harvesting a distant farm. In March, the continent’s largest cell phone network, MTN, announced plans to bring their Mobile Money service to 21 nations — they’ll even throw in an MTN-branded debt card. In Cote d’Ivoire, French telecom giant Orange is hammering out a similar program, and in eight East African nations, including the Democratic Republic of the Congo, the British firm Monitise, which is not a telecoms firm, will do the same. “This is a way to include quite a number of people who are outside the reach of the financial system,” said David Andah, executive secretary of Ghana’s Microfinance Institutions Network. “I’m talking about that woman on the beach selling fish. People who are not linked up at all.”

Analysts expect similar programs to take off in most African countries within a year. They forecast that several hundred million of Africa’s least connected traders, farmers and laborers will be brought into the banking system within three to five years. For the small towns and unreachable villages that have sent generations of talented youths and natural resources to the booming cities, this is an especially big deal. The technology should ease the path of remittances home, and make it easier for agriculturalists to operate multiple, far-apart farms. Those lucky enough to procure a micro-loan will be able to receive payments without traveling for hours. Those hopeful enough to apply for a loan will be able to bring to the counter some evidence of their income, if only in text messages. And in the capitals of each new country where mobile banking takes off, governments face the enticing option of taxing millions more petty purchases a day, in all the impractical corners where bureaucrats seldom go. “As the cash-less society grows, the consequences are going to be pretty heavy,” said Ghana Manager Kofi Kufuor, of Afric Xpress, a company that helps Ghanaians pay their bills and transfer money via text messages. “This is a lot of money we are talking about.” And a lot of people: “You have 6.1 billion people on this planet, out of which only one and half, two billion have an account,” said Prateek Shrivastava, head international strategist for Monitise. “Billions are going to be interested.”

Yet, out of those billions of people — whose infinitesimal transactions were once so extraneous to the world’s financial institutions — nobody stands to benefit quite like Africa’s increasingly powerful telecom companies, the conglomerates who built this continent’s cellular towers and enable its calls. “These guys are going to be more powerful than Google, more powerful than Microsoft, within the locality in which they operate,” Amankwah said. “Already, telecoms move more money than the banks. And they have control over the channels — it’s their sim card. You’re using their network. “These guys are going to be kings.”

Mobile Plus and FE-Mobile enter the M-Banking and Remittances Phenomenon
BY Ana Escalante / August 30, 2007

Mobile banking seems to be the new way to “bank the poor.” There are a growing number of companies working with these new technologies, some of which have been featured on NextBillion in the past. Schemes vary from those operating with standard in-country banking transactions to those with foreign remittances. Mobile banking is taking off because it is convenient, fast, simple, and secure – money can be transmitted almost instantly. That, and many people in developing countries now own or have access to a phone.

Recently, NextBillion got an e-mail from Mobile Plus and FE-Mobile telling us about their new venture: enabling low-value payments and remittances through mobile phones. Mobile Plus is a small group of entrepreneurs that have built secure payment mechanisms and low value cross border mechanisms for developing countries. According to their press release:

Mobile Plus Ltd provides low-cost international call credit and remittance services using a dual purpose card. FE Mobile Ltd provides the SecureLink™ mobile security platform…Consumers will purchase pre-paid vouchers in denominations £20, £50 and £100 and transmit the voucher number to the recipient who has a choice: either to make low cost calls or to redeem the voucher (less a small fixed service charge) for cash at a local participating outlet.

Mobile Plus and FE Mobile are not the first companies to provide these types of services, but I still think the whole idea behind m-banking is very interesting. I recently blogged about a similar venture from ISI, and Rob also blogged about ARYTY earlier this year – both companies provide similar services. I think it’s excellent that these services are becoming available to the people living in the BOP, because it gives them access to financial services and the ability to receive money from relatives abroad without the costly punitive fees and charges of incumbent remittance providers.

Although there is no one “global” company for m-banking, those I have found so far cover either one country, a small group of countries or a specific region- such as the case of ARYTY, G-Cash and Smart Money in the Philippines; WIZZIT and MTN Mobile Money in South Africa; M-Pesa in Kenya; Celpay in Zambia and the Democratic Republic of Congo.






“WIZZIT is a cellphone-based banking facility whose target market is the estimated 16 million unbanked or underbanked South Africans – about 60 percent of the country’s population. Unlike its competitors (FNB and MTN), WIZZIT does not require users to have a bank account and is compatible with early generation cell phones popular in low-income communities. The facility even works with customers who use pay-as-you-go cellphones – another distinction. In addition to being able to conduct cellphone-to-cellphone transactions, WIZZIT account holders are issued Maestro debit cards that can be used at any ATM or retailer. WIZZIT charges per-transaction fees that range from 99c (USD 0.15) to R4.99 (USD 0.78) and does not charge a monthly fee nor require a minimum balance. There are no transaction limitations – the service is purely pay-as-you-go. WIZZIT employs over 800 “Wizz Kids” – typically unemployed university graduates from low-income communities – to promote the product and help unbanked customers open accounts.”


[ From the archive, originally posted to spectre Mar 30, 2007 ]

Kenya sets world first with money transfers by mobile
BY Xan Rice in Nairobi / March 20, 2007

The ping of a text message has never sounded so sweet. In what is being touted as a world first, Kenya’s biggest mobile operator is allowing subscribers to send cash to other phone users by SMS. Known as M-Pesa, or mobile money, the service is expected to revolutionise banking in a country where more than 80% of people are excluded from the formal financial sector. Apart from transferring cash – a service much in demand among urban Kenyans supporting relatives in rural areas – customers of the Safaricom network will be able to keep up to 50,000 shillings (£370) in a “virtual account” on their handsets.

Developed by Vodafone, which holds a 35% share in Safaricom, M-Pesa was formally launched in Kenya two weeks ago. More than 10,000 people have signed up for the service, with around 8m shillings transferred
so far, mostly in tiny denominations. Safaricom’s executives are confident that growth will be strong in Kenya, and later across Africa. “We are effectively giving people ATM cards without them ever having to open a real bank account,” said Michael Joseph, chief executive of Safaricom, who called the money transfer concept the “next big thing” in mobile telephony.

M-Pesa’s is simple. There is no need for a new handset or SIM card. To send money you hand over the cash to a registered agent – typically a retailer – who credits your virtual account. You then send between 100 shillings (74p) and 35,000 shillings (£259) via text message to the desired recipient – even someone on a different mobile network – who cashes it at an agent by entering a secret code and showing ID. A commission of up to 170 shillings (£1.25) is paid by the recipient but it compares favourably with fees levied by the major banks, whose services are too expensive for most of the population.

Mobile phone growth in Kenya, as in most of Africa, has been remarkable, even among the rural poor. In June 1999 Kenya had 15,000 mobile subscribers. Today it has nearly 8 million out of a population of 35 million, and the two operators’ networks are as extensive as the access to banks is limited. Safaricom says it is not so much competing with financial services companies as filling a void. In time, M-Pesa will allow people to borrow and repay money, and make purchases. Companies will be able to pay salaries directly into workers’ phones – something that has already attracted the interest of larger employers, such as the tea companies, whose workers often have to be paid in cash as they do not have bank accounts.

There are concerns about security, but Safaricom insists that even if someone’s phone is stolen the PIN system prevents unauthorised withdrawals. Mr Joseph said the only danger is sending cash to the wrong mobile number and the recipient redeeming it straight away. The project is being watched closely by mobile operators around the world as a way of targeting the multibillion pound international cash transfer industry long dominated by companies such as Western Union and Moneygram. Remittances sent from nearly 200 million migrant workers to developing countries totalled £102bn last year, according to the World Bank. The GSM Association, which represents more than 700 mobile operators worldwide, believes this could quadruple by 2012 if transfers by SMS become the norm. Vodafone has entered a partnership with Citigroup that would soon allow Kenyans in the UK to send money home via text message. The charge for sending £50 is expected to be about £3, less than a third of what some traditional services charge.

{The following correction appeared in the Guardian’s Corrections and clarifications column, Saturday March 31 2007 : The claim in the article above was wrong. The mobile banking system may be the first in Africa but two companies, Globe Telecom and Smart Communications, have been operating money transfers in the Philippines since around 2005.}




GCASH, Globe’s flagship M-Commerce service, was born from a simple goal of transforming a mobile phone into a wallet. With its launch in October 2004, GCASH has effectively given Globe and TM subscribers access to a cashless and cardless method of facilitating money remittance, donations, loan settlement, disbursement of salaries or commissions, and payment of bills, products and services, with just a text message. GCASH requires only a mobile phone and a one-time registration, with a minimal charge of P1.00 per GCASH transaction. GCASH dramatically expands the menu of mobile commerce transactions, and has provided the low income economic class and overseas workers access to the relevant services below:
Domestic and International Remittances : Sending of money via GCASH as supported by a wide cash-handling network, including leading local and international remittance companies backed by reputable settlement banks
Micro-Payments : Payments for purchases from the growing list of merchant partners, including essentials such as government taxes, medicines, boat fares, food, mobile prepaid credits (load), and schools and office supplies
Micro-Credit Payments : Allows disbursement of loan principals and payment of loan interest and amortization payments to lower income consumers with limited access to banks
Bills & Tuition Fee Payments : Allows payment of bills of various utility companies, internet service providers, insurance companies, as wella s schools and universities
Donations : Provides a quick and safe processing of GCASH donations to different institutions

“This video profiles the use of G-Cash in Cantilan, a Filipino farming and fishing community 5 hours away from the nearest operational airport. The video features interviews with customers (there are 8,900 in Cantilan) and agents from a few of the 60+ small businesses, including pharmacies, bakeries, restaurants, who accept G-Cash as a payment method.”


RBAP (Rural Bankers Association of the Philippines)
Globe Telecom Philippines Joins with Microfinance Providers in the Rural Bankers Association of the Philippines (RBAP) to Supply Mobile Banking Services to the Rural Poor
BY Brett Rudder / September 16, 2008

“The Rural Bankers Association of the Philippines (RBAP) and Globe Telecom Inc, the Philippines’ second largest telecommunications provider, have partnered to extend mobile banking services to rural banks, allowing their customers to conduct transactions using mobile phones. The effort brings the mobile banking service G-cash, managed by Globe Telecom’s subsidiary G-Xchange Inc, to 375 participating branch locations. Microfinance institutions under this program become “cash in” and “cash out” outlets that are accredited to convert actual money into electronic money and vice versa.

RBAP is a consortium organization of approximately 700 rural banks in the Philippines. Its Microenterprise Access to Banking Services (MABS) assists its members in increasing access to banking services for the microenterprise sector. The US Agency for International Development has supported MABS since 1998. The central bank of the Philippines Bangko Sentral ng Pilipinas (BSP) has approved G-cash and expects the market for these services to grow by at least 20 percent over the next year. RBAP reports that the gross loan portfolio of MABS microfinance institutions is equivalent to USD 41.1 million and that their savings deposits total USD 36.6 million.”


“XacBank, Mongolia’s largest microfinance institution recently launched its partnership with Kiva, the world’s first person-to-person micro-lending website. XacBank’s clients are now featured on Kiva.org, and individual lenders from around the world can make small loans of $25 over the Internet to micro entrepreneurs in Mongolia. These small loans help businesses such as butcher shops, furniture stores and beauty salons to succeed while enabling hardworking Mongolians to provide food and education for their families.”

Bank ATMs soon may be used for sending cash person-to-person
By Gail Liberman and Alan Lavine / 11.11.2008

If you’re without a bank account, you soon could have a low-cost way of sending cash to others — using your cell phone and a bank ATM. Amid criticism that banks aren’t doing enough to attract those who lack bank accounts, a Charlotte-based company, Privier Inc., is courting financial institutions to provide this service. Privier’s patented “ATMSend” would let the so-called un-banked transfer cash without requiring the sender or recipient to have a bank ATM card or bank account. The system would use bank ATMs that permit cash deposits, said Charles Polanco, chief executive of Privier.

Western Union Co. in Englewood, Colo., and MoneyGram International, in Minneapolis, currently dominate the money transfer business. Combined, the two companies have 22% of the market, according to a report in June by Marketdata, a Tampa, Fla. market research publisher. However, new competition is rapidly emerging from Visa, MasterCard, Wal-Mart — and the latest mobile technology allowing for financial transactions using cell phones.

Privier would equip screens of participating bank ATMs with icons reading “Send Cash” and “Pickup Cash.” A cash sender and recipient would press appropriate buttons to automatically activate the ATM for an “ATMSend” transaction, Polanco said. Each bank would determine limits regarding how much cash could be transferred. The sender first would have to register a cell phone through a participating bank either online or via telephone, entering a name, address, birth date, Social Security number and cell phone number. Privier would verify the user’s identity and check information against the Office of Foreign Assets Control list of terrorists.

At a participating bank ATM, the sender could then click “Send Cash” and enter the cell phone number. A 10-digit withdrawal number automatically would be text-messaged to the cell phone number provided. The sender could follow prompts at the ATM to enter cash into the machine and provide the recipient with the authorization code along with the amount sent. With that information, the recipient could obtain the cash at an ATM within the participating bank’s network. All funds must be picked up at once, and if funds go unclaimed, senders would be notified to pick up the funds at an ATM location after 30 days.

‘The Grameen-Obopay Bank A Billion Initiative’ / August 05, 2008

Obopay, Inc., the pioneering service provider for payments via mobile phones, and Grameen Solutions, the company globally recognized for promoting economic and social development through information and communications technology, today announced a unique, first-of-its-kind alliance to use mobile technology to deliver banking services to a billion of the world’s poorest people by 2018. The Grameen-Obopay Bank A Billion Initiative will provide access to affordable financial services, including cross-border remittances, money transfer, payments, savings and credit accounts. By empowering life and work endeavors with mobile technology that is ubiquitous even in the most impoverished and remote corners of the world, Grameen-Obopay is bringing the full power of banking to those who need it most. “I was inspired to found Obopay when I was volunteering in Africa and saw that while people in remote corners of the world often lacked access to the most basic financial services, they almost all had mobile phones,” explained Ms. Carol Realini, CEO of Obopay. “We are thrilled to embark on a partnership with Grameen Solutions, and look forward to working with them to bring truly powerful mobile banking services to people everywhere.”

With more than 3 billion connections to GSM mobile communications networks currently active globally and emerging markets responsible for 85 percent of new connections today1, mobile technology can effectively deliver financial services to billions of underserved people on every continent. Until now, even the most basic financial services have been unavailable to the world’s poor because they are physically inaccessible and/or far too expensive to be practical. Using mobile technology to deliver banking services overcomes previously limiting restrictions of space and time by using existing infrastructure to give even the most underprivileged access to financial services.

Grameen Solutions’ CEO Mr. Kazi Islam explained, “We carefully evaluated globally available mobile money service providers with a view to identifying a partner that fits with our vision and mission. Obopay is clearly that partner, and we look forward to maximizing the global potential of mobile financial services with them. By using a technology that is already pervasive — the mobile phone — we will clearly be able to have a dramatic impact on global poverty.”

Working initially in Mumbai, India and in Bangladesh, The Grameen-Obopay Bank A Billion Initiative will begin delivering services in October, 2008. Commenting on the association, Mr. Aditya Menon, Executive Director and CTO, Obopay India, said, “Obopay’s partnership with Grameen Solutions is a clear and powerful validation of Obopay’s ability to have a dramatic and transformational global impact on personal finance.” Grameen was founded by Professor Muhammad Yunus, the founding father of the microfinance movement and recipient of the 2006 Nobel Peace Prize. Prof. Yunus commented that, “Mobile based financial services will bring more power to poor people. I’m excited about the partnership that Grameen Solutions and Obopay have created.”





‘Coltan is the colloquial African name for columbite-tantalite, a
metallic ore from which is extracted the elements niobium and
tantalum. Tantalum from coltan is used in consumer electronics
products such as cell phones, DVD players, and computers. Export of
coltan from the eastern Democratic Republic of the Congo to European
and American markets has been cited by experts as helping to finance
the present-day conflict in the Congo, with one aid agency asserting
that “much of the finance sustaining the civil wars in Africa,
especially in the Democratic Republic of the Congo, is directly
connected to Coltan profits.”’



Inside Africa’s PlayStation War
BY John Lasker / 08 July 2008

In the rugged volcanic mountains of the Congo the conflict known as
Africa’s World War continues to smolder after ten grueling years. The
conflict earned its name because at the height of the war eight
African nations and over 25 militias were in the combatant mix. But
more recently the conflict was given another name: The PlayStation
War. The name came about because of a black metallic ore called
coltan. Extensive evidence shows that during the war hundreds of
millions of dollars worth of coltan was stolen from the Democratic
Republic of Congo (DRC). The UN and several NGOs claim some of the
most active thieves were the Rwandan military, several militias
supported by the Rwandan government, and also a number of western-
based mining companies, metal brokers, and metal processors that had
allegedly partnered with these Rwandan factions.

After it is refined, coltan becomes a bluish-gray powder called
tantalum, which is defined as a transition metal. For the most part,
tantalum has one significant use: to satisfy the West’s insatiable
appetite for personal technology. Tantalum is used to make cell
phones, laptops and other electronics made, for example, by SONY, a
multi-billion dollar multinational based in Japan that manufactures
the iconic PlayStation, a video game console. And while allegations of
plundering coltan from a nation in desperate need of revenue seem bad
enough, the UN also discovered that Rwandan troops and rebels were
using prisoners-of-war and children to mine for the “black gold.”

“Kids in Congo were being sent down mines to die so that kids in
Europe and America could kill imaginary aliens in their living rooms,”
said British politician Oona King, who was a Member of Parliament from
1997 to 2005. Most of the fighting from Africa’s World War ended in
2003 following a peace accord. But reports of troop tension,
instability and rampant sexual violence against women continue to
emerge from where the war was at its most intense: the eastern portion
of the DRC, near the city of Goma and in the DRC province of North
Kivu. This is a region where millions of Congolese live among active
volcanoes and endangered Mountain Gorillas.

But even if many have put down their guns, a London-based non-
government office called Rights and Accountability in Development
(RAID) continues to fight its own battle against scores of Western-
based mining companies that continued to work in the DRC, or purchase
minerals and metals allegedly stolen from the DRC, as the war raged
on. These companies, such as Eagle Wings Resources International of
Ohio, Cabot Corporation of Boston, Mass., and Chemie Pharmacie Holland
of the Netherlands, were charged with having stolen millions of
dollars worth of resources out of the DRC, or made millions processing
stolen resources from the DRC, namely coltan.

When the war started in 1998, the UN and others believed that one area
of the conflict was the product of tribal and ethnic rivalries. The
Rwandan government, for instance, told the world they invaded the DRC,
their neighbor to the West, to go after those who committed atrocities
during the 1994 genocide that killed over 800,000 people. Yet,
according to the UN, the Rwandans were shedding blood for something
far cheaper; they were shooting it out for the mines that pockmarked
the volcanic mountains of DRC’s eastern regions. These mines contained
deposits of cobalt, uranium, gold and, of course, coltan.

A UN Panel of Experts investigation would expose the resource war in
2001, releasing several reports entitled “The Illegal Exploitation of
Natural Resources and Other Forms of Wealth of the DRC”. The reports
made disturbing charges against scores of multinational mining
companies, like Eagle Wings Resources International and Chemie
Pharmacie Holland. The UN alleged the mining companies directly and
indirectly fueled the war, paralyzing the DRC government, and using
the conflict to keep the coltan flowing cheaply out of the Congo. Some
companies were also accused by the UN of aligning with elements of the
warring parties.

Fast forward to 2008, and RAID, which is funded by the Queen Elizabeth
House, remains determined to convince several of the world’s most
powerful governments to investigate the UN’s allegations. Stealing
natural resources amidst the chaos of a war violates guidelines set-
forth by the Organization for Economic Co-operation, which administers
these ethical standards endorsed by over 30 nations, says RAID. The
International Criminal Court has also started its own investigation,
and RAID is calling on all named governments to cooperate with the

But there’s one major problem: nearly all of the governments,
including the US State Department, have essentially brushed RAID off.
They’re refusing to initiate an investigation despite the assurance,
for example, of Richard S. Williamson, who was US Ambassador to the UN
at the time. He told the UN Security Council “the United States
government will look into the allegations against these companies and
take appropriate measures [and] not turn a blind eye to these

Not long after the report from the UN Panel of Experts went public,
the UN exonerated all US companies. RAID says diplomatic pressure from
the US and other governments made the UN cave. “The US government
was one of the most determined to quash the UN Panel’s reports but this
is also true of Canada, the UK and Belgium,” says Tricia Feeney,
executive director of RAID. “All (US companies) were exonerated. The
UN Panel said the cases had been resolved.”

Feeney says just because the UN laid down, doesn’t mean the companies
are innocent. “Essentially the UN was forced to drop the case but as
they explained (in their reports), ‘resolved’ didn’t mean that the
initial allegations were unsubstantiated,” she says. “The (US)
companies have tried to hide behind the technicality of ‘resolved’ but
the UN itself made clear that this classification didn’t mean that the
companies had not behaved in the way described in the UN reports.”

The UN said it stands by the report, but added it is up to the
governments to make their own investigation and prosecute if need be.
RAID says the UN has cowered because if Western-based mining
companies are prosecuted out of Africa, China may step in. It is widely
known the West grows more concerned by the day as China continues to
sign more and more resource concessions with African nations, such as
Sudan and Nigeria.

In interviews over the phone, several of the named companies insisted
they were not involved with any wrongdoing in the Congo. The CEO of
Eagle Wings Resources International, for instance, who did not offer
his name for publication, swore “on the Bible” he was unaware his
company may have been acting unethical. Both a mining company and
coltan broker, Eagle Wings was one of a handful of US companies
accused of using child labor in one of their mines in eastern DRC.
Eagle Wings was also an alleged business partners with an “elite
network” of Rwandan military officers, politicos and businessmen.
Accusations of child labor have bankrupted Eagle Wings, said the CEO.
After finding out his company had been charged by the UN, his
customers abandoned him.

But even if the mining companies take the brunt of the blame from RAID
and the UN, some experts say there’s a whole other dynamic when it
comes to blame for the “The PlayStation War”. When the war began in
1998, the race for every adult in the West to have a cell phone was
well past the starting line. A computer in every household was also
becoming a reality. And by the end of 2000, millions of Americans were
still waiting for a PlayStation 2, a second-generation video game
console, which SONY says was having manufacturing issues.

To fulfill the personal-tech desires of hundreds of millions of
consumers, SONY and other manufacturers needed electric capacitors.
These capacitors were made with tantalum, which is able to withstand
extreme heat. So as multiple technological revolutions occurred in
unison at the end of the 1990s, the worldwide demand for tantalum
began to boil. Like today’s demand for oil, this fever puts tremendous
stress on tantalum’s supply chain. From the beginning of 1999 to the
beginning of 2001, the world price of tantalum went from US $49.00 a
pound to $275.00 a pound. At the same time, the demand and price of
coltan also began skyrocketing; coltan is needed to make tantalum.

By 1999, the Rwandan army and several closely linked militias had
swarmed over the hills of eastern DRC and took many coltan mines by
force, said the UN. The Rwandan army that year would eventually make
at least $250 million by selling DRC coltan with the help of mining
companies and metal brokers. The estimates of the war’s dead range
from hundreds of thousands to several million. A couple million
Congolese are believed to have been displaced.

American-based Kemet, the world’s largest maker of tantalum capacitors
would eventually swear off coltan from the Congo because of human
rights violations, making suppliers certify origins. “But it may be a
case of too little, too late,” stated the UN Panel of Experts. “Much
of the coltan illegally stolen from Congo is already in laptops, cell
phones and electronics all over the world.”

David Barouski, a researcher and journalist from Wisconsin, says it is
certain that the coltan from this conflict is also in SONY video game
consoles across the world. “SONY’s PlayStation 2 launch (spring of
2000) was a big part of the huge increase in demand for coltan that
began in early 1999,” said Barouski, who has witnessed the chaos of
eastern DRC firsthand. “SONY and other companies like it, have the
benefit of plausible deniability,” he said, “because the coltan ore
trades hands so many times from when it is mined to when SONY gets a
processed product, that a company often has no idea where the original
coltan ore came from, and frankly don’t care to know.” He adds, “But
statistical analysis shows it to be nearly inconceivable that SONY
made all its PlayStations without using Congolese coltan.”

SONY still uses tantalum in some of its parts, Satoshi Fukuoka, a
spokesperson SONY from Japan, said in an e-mail. He said they are
satisfied with responses from suppliers the tantalum they use is not
“illegally mined Congo coltan”. This also goes for past purchases of
tantalum parts as well, he said, but he did not specify how far back
they began demanding parts without Congo coltan. Fukuoka said the
PlayStation 2, PSP and PlayStation 3, “are manufactured mostly from
independent parts and components that manufacturers procured

“The material suppliers source their original material from multiple
mines in various countries. It is therefore hard for us to know what
the supply chain mix is,” he said. “I am happy to state to you that to
the best of our knowledge, (SONY) is not using the material about
which you have expressed concern.” Like the war in the Congo itself,
the price of coltan has since cooled and is being priced at levels
pre-1999, as the demand for the “black gold” declines. Nevertheless,
experts such as Barouski say another Congo resource will take its
place as the next “hot commodity”, and the emergence of another
African resource war will not be far behind.



Blood on Your Phone? Unlikely It’s ‘Conflict Coltan’
Tales of coltan—tantalum ore—derived from exploitation in the Congo
seem mythical. But only a new tracking test could prove it
BY Jack Ewing / November 17, 2008

It sounded like a compelling story. During a visit to South Africa in
October, I saw a news report in which a refugee from the Democratic
Republic of the Congo described in wrenching terms how demand for a
metal used in consumer electronics is fueling a new outbreak of
bloodshed in the mineral-rich region.

A bit of searching on Google supported the notion that mobile-phone
users are helping create a humanitarian catastrophe because they make
a market for illegally mined coltan ore from the war zone in eastern
Congo. “Is there blood on your mobile phone?” asked Danish relief
group DanChurchAid on a Web page that dates back to 2006 but is still
available. But when I began investigating, the truth turned out to be
more nuanced—providing a lesson in how difficult it can be to know
whether your buying habits are socially responsible. In fact, the
story demonstrates how difficult it is for companies to be socially
responsible even if they try.

A Tantalum Shortage in 2000
The mineral in question is known as coltan, which is actually African
slang for ore that contains tantalum, a metal prized for electronics
use because of its resistance to corrosion and heat. In fact, mobile
phones do contain tantalum, as do a host of other products, including
MP3 players, gaming consoles, and even aircraft engines. A typical
Nokia handset has a tantalum capacitor, a component that temporarily
stores electrical charges, according to the Finnish handset maker.

The electronics industry is clearly sensitive to charges that it uses
“conflict coltan,” which was a big issue several years ago. In 2000,
during an earlier round of fighting in the Congo that killed millions
of people, fears of a global tantalum shortage—not related to the
conflict—pushed the price of the refined product to as high as $300
per pound, according to the U.S. Geological Survey. That’s at least
four times the current price. Tantalum became one of a host of minerals
—including gold, tin, and cobalt—exploited by various factions in the
Congo to purchase weapons or enrich themselves.

If you live in a lawless corner of the Congo, coltan might seem like
an attractive business, at least compared to subsistence farming. The
ore lends itself to so-called artisanal mining: Local people can dig
it up and concentrate it using homemade sluices, similar to how
California pioneers panned for gold. Guerilla factions in the Congo,
as well as their government backers in countries such as Rwanda or
Uganda, make money by controlling the coltan mines directly or by
extracting payoffs from small-scale miners and dealers.

Not So Much Congolese Tantalum
The coltan trade was even lucrative enough to attract the
international arms mafia. According to a 2003 U.N. report, one coltan
smuggler was Viktor Bout, a notorious former KGB agent now being held
in a Thai jail as he fights extradition to the U.S. on charges he
supplied weapons to terrorist groups. Bout used a fleet of cargo
planes to haul loads of illegally mined coltan and other minerals from
the Congo to foreign buyers, according to the U.N. “There are profits
to be made because it can be moved relatively easily,” says Jason
Burkitt, a partner at PricewaterhouseCoopers in London who follows the
mining industry. “It lends itself to entrepreneurial types, whether
they’re local business people or warlords.”

But does that mean your mobile phone is helping General Laurent
Nkunda— whose ethnic Tutsi militia recently overran swaths of eastern
Congo— buy AK-47s and land mines? That would be a stretch. As it
happens, the Congo is not a major source of tantalum. Most comes
from Australia, followed by Canada and such African countries as
Ethiopia and Mozambique. The U.S. Geological Survey groups the
Congo under “other” tantalum sources that together account for just
2% of world production. Recycled tantalum also is available. Even
tantalum from the Congo isn’t necessarily tainted: Foreign and
domestic companies mine it legally in some areas, providing an
important source of livelihood.

In addition, the earlier tantalum controversy inspired companies to
take steps to ensure their metal comes from legitimate sources. German
metals company H.C. Starck, which buys ore and refines it into
tantalum powder for industrial use, says it gets most of its raw
material from Australia and none from Africa.

Impossible to Be Certain
Nokia says it requires component suppliers to certify that none of
their tantalum comes from the Congo and it periodically checks
compliance. In any case, Nokia says that the mobile-phone industry
accounts for 2% of total tantalum demand and that each mobile phone
contains only 40 milligrams of the stuff.

The odds that your phone contains conflict coltan are pretty long. But
activists say the point is that even the relatively small amounts of
coltan coming from the Congo are providing revenue for the warring
factions. “I agree that a small percentage of coltan is coming from
the Democratic Republic of the Congo, but this small percentage is
very important to the DRC,” says Esther de Haan, a researcher at Dutch
activist group makeITfair, who notes that unsafe working conditions
are also a huge concern. “Companies are responsible for going down the
supply chain and finding out where [their supply] is coming from.”

London-based humanitarian group Global Witness has also revived the
conflict coltan issue, on Nov. 14 calling on companies to ensure they
are not buying coltan or other minerals such as tin ore or gold from
the North and South Tivu regions of the Congo, where the fighting is
taking place. But it is nearly impossible for companies to say with
absolute certainty that no tantalum of dubious origin makes it into
the supply chain. Shady operators have an incentive to buy black
market ore, which is cheaper because it avoids the costly customs-
clearance process that legitimate importers must undergo. Most
developed countries have strict controls. But some Chinese ports wave
shipments through, industry sources say. Once the ore has been refined
to nonradioactive tantalum powder, it’s impossible to trace.

Tracking Coltan Fingerprints
There may be a new way to keep illegally mined coltan and other
valuable metals off the market. Frank Melcher, a scientist at
Germany’s Federal Institute for Geosciences and Natural Resources in
Hanover, leads a team that has devised a way to identify where ore
comes from. Every coltan mine has its own geological history and
composition. Melcher’s team has already catalogued 600 unique coltan
“fingerprints,” and can tell precisely where ore comes from, even when
batches from different locations are mixed together.

With backing from the German government, Melcher is pushing to set up
a system in which legitimate mines would register their coltan
fingerprints. An independent organization would spot-check ore and
reject any that isn’t in the approved database. “Our goal is to
establish a certified trading chain between traders and consumers,”
Melcher says. Such a system could also be used to ensure that mines
provide decent working conditions and meet environmental standards.
The problem is that the testing procedure is costly and time-
consuming. But Melcher sounds optimistic that companies that use
components containing tantalum will support his plan. “They don’t want
to be in the news again,” he says.

Frank Melcher
email : F.Melcher [at] bgr [dot] de

Congo, Democratic Republic: Cell phones, forest destruction and death

Could anyone imagine that cell phones are tainted with the blood of
3.2 million deaths since 1998? Also, that the same thing happens with
some children’s video games? And that mega-technologies contribute to
forest depredation and spoliation of the rich natural resources of
paradoxically impoverished peoples?

In the case of these new high techs, it is Coltan that is at stake —
the minerals columbium and tantalite, or Coltan for short. Tantalite
is a rare, hard and dense metal, very resistant to corrosion and high
temperatures and is an excellent electricity and heat conductor. It is
used in the microchips of cell phone batteries to prolong duration of
the charge, making this business flourish. Provisions for 2004 foresee
sales of 1,000 million units. To these properties are added that its
extraction does not entail heavy costs –it is obtained by digging in
the mud– and that it is easily sold, enabling the companies involved
in the business to obtain juicy dividends.

Even though Coltan is extracted in Brazil, Thailand and much of it
from Australia –the prime producer of Coltan on a world level– it is
in Africa where 80% of the world reserves are to be found. Within this
continent, the Democratic Republic of Congo concentrates over 80% of
the deposits, where 10,000 miners toil daily in the province of Kivu
(eastern Congo), a territory that has been occupied since 1998 by the
armies of Rwanda and Uganda. A series of companies has been set up in
the zone, associated to large transnational capital, local governments
and military forces (both state and “guerrilla”) in a dispute over the
control of the region for the extraction of Coltan and other minerals.
The United Nations has not hesitated to state that this strategic
mineral is funding a war that the former United States Secretary of
State, Madeleine Albright called “the first African world war” (and we
understand by world wars, those in which the great powers share out
the world), and is one of its causes.

In August 1998, the Congolese Union for Democracy (Rassemblement
Congolais pour la Démocratie-RCD), launched a rebellion in the city of
Goma, supported by the Rwanda Patriotic Army (RPA). Since then, in a
struggle in which, behind the myth of ethnic rivalries, are hidden the
old colonial powers that continue to ransack the wealth of post-
Colonial Africa, the war has been rife between two, loosely defined
parties. On the one hand the RDC and the Governments of Rwanda and
Uganda, supported by the United States, relying on the military bases
such as that built in Rwanda by the United States company Brown &
Root, a branch of Halliburton, where Rwandese forces are trained and
logistic support is provided to their troops in the DRC, together with
United States combat helicopters and spy satellites. The other party
is made up of the Democratic Republic of Congo (led by one of Kabila’s
sons, after his father was assassinated by the Rwandese), Angola,
Namibia and Zimbabwe.

However, behind these states are the companies sharing out the zone.
Various joint companies have been set up for this purpose, the most
important one being SOMIGL (the Great Lakes Mining Company), a joint
company set up in November 2000, involving Africom, Premeco, Cogecom
and Cogear, (the latter two are Belgium companies –it should be
remembered that DRC, formerly the Belgium Congo, was a Belgium
colony), Masingiro GmbH (a German company) and various other
companies that ceased their activities in January 2002 for various reasons
(a drop in Coltan prices, difficult working conditions, suspension of
Coltan imports from DRC) and are waiting for better conditions: Sogem
(a Belgian company), Cabot and Kemet (U.S.) the joint United States-
German company Eagles Wings Resources (now with headquarters in
Rwanda), among others.

The transport companies belong to close family members of the
presidents of Rwanda and Uganda. In these virtually military zones,
private air companies bring in arms and take out minerals. Most of the
Coltan extracted is later refined by a small number of companies in
Germany, the United States, Kazakhstan and the Far East. The branch of
Bayer, Starck produces 50% of powdered tantalite on a world level.
Dozens of companies are linked to the traffic and elaboration of this
product, with participation of the major monopolizing companies in
Belgium, Germany, the Netherlands, Switzerland, and the United States.
As if this were not enough, the Trade, Development and Industry Bank,
created in 1996 with headquarters in the capital city of Rwanda,
Kigali, acts as correspondent for the CITIBANK in the zone, and
handles large amounts of money from Coltan, gold and diamond
operations. Thirty-four companies import Coltan from the Congo, among
these, 27 are of western origin, mainly Belgium, Dutch and German.

The Belgium air company, Sabena is one of the means of transporting
the mineral from Kigali (capital city of Rwanda) to Brussels, and
associated to American Airlines, announced last 15 June the suspension
of the service, under strong pressure from the world campaign “No
blood on my cell phone!” (or: “Pas de sang sur mon GSM”), exhorting
people not to buy cell phones containing Coltan due to its
repercussion on the prolongation of the civil war in the Congo. As a
result of this campaign, the Belgium research institute International
Peace Information Service (IPIS) produced a document in January 2002
“Supporting the War Economy in the DRC: European Companies and the
Coltan Trade,” which documents the leading role played by the
companies in promoting the war through their cooperation with the
military and exhorting that the international consideration of the
Coltan trade be given priority over its local aspects.

The main zones where Coltan is extracted are located in forest zones,
such as the Ituri forest (see WRM bulletin No. 67). The entry of
military commandos and workers (many of them farmers who have been
dispossessed of their lands and resources, seeking the promise of
better income), the installation of mining camps, the construction of
routes to reach and take out the coveted mineral, all this goes to
conspire against the forest as a whole. Formerly fulfilling functions
for the region and the neighbouring peoples, the forest, once the
traditional lands of the hunting and gathering indigenous peoples,
such as the Mbuti and a reserve for gorillas and okapis –a relative
of the giraffe– the habitat of elephants and monkeys, has become the
scenario for war and depredation.

The African journalist, Kofi Akosah-Sarpong has even stated that
“Coltan in general terms is not helping the local people. In fact, it
is the curse of the Congo.” He has revealed that there is evidence
that this material contaminates, pointing out its connection with
congenital deformations in babies in the mining zone, which are born
with bandy legs. Far from clean and innocent, these technologies, on
which the concentration of capitals is based and built, have acquired
through their “globalisation” their highest expression, contaminating
and breaking up the web of life in its multiple and rich
manifestations. In the meanwhile, over the tombs of the 2000 African
children and farmers who die every day in the Congo, can we
absentmindedly continue to use our cell phones?

{Article based on information from: “Supporting the War Economy in the
DRC: European Companies and the Coltan Trade” and “European
companies and the Coltan Trade: an Update”, International Peace
Information Service, http://users.skynet.be/ipis/tnewpubsnl.htm ;
“Basta de matanzas y saqueo en el Congo”, Solidarité Europe-Afrique,
Belgium, http://www2.minorisa.es/inshuti/extracto.htm ; “La fiebre
del coltan: el imperialismo continúa”, Ramiro de Altube, Observatorio
de Conflictos, correo electrónico: obserflictos@yahoo.com.ar ,
http://www.nodo50.org/observatorio/coltan.htm ; “La fiebre del
coltan”, Ramón Lobo, El País Spain, 2/09/2001,
http://www.elpais.es/suplementos/domingo/20010902/1fiebre.html; “UN
report accuses Western companies of looting Congo”, Chris Talbot,
26/10/2002, http://www.wsws.org/articles/2002/oct2002/cong-o26.shtml ;
“The Trouble With Coltan”, Kofi Akosah-Sarpong,
http://www.expotimes.net/issue020116/AAbusiness2.htm }


Coltan and Gorillas
The main area where Coltan is mined, also contains the Kahuzi Biega
National Park, home of the Mountain Gorilla. In Kahuzi Biega National
Park the gorilla population has been cut nearly in half, from 258 to
130 as the ground is cleared to make mining easier. Not only has this
reduced the available food for the Gorillas, the poverty caused by the
displacement of the local populations by the miners has lead to
Gorillas being killed and their meat being sold as “bush meat” to the
miners and rebel armies that control the area. Within the Dem. Rep. of
Congo as a whole, the U.N. Environment Program has reported that the
number of eastern lowland gorillas in eight Dem. Rep. of Congo
national parks has declined by 90% over the past 5 years, and only
3,000 now remain.

Due to the damage caused to the Gorilla population and their natural
habitat, companies that use Coltan are now starting to demand that
their Coltan only comes from legitimately mined sources and is not a
byproduct of the war. American-based Kemet, the world’s largest maker
of tantalum capacitors, has asked its suppliers to certify that their
coltan ore does not come from Dem. Rep. of Congo or from neighbouring
countries. Such moves could lead to “Gorilla Safe ” cellphones being
marketed, much in the same way that Tuna meat is now sold as “Dolphin

Other sources
There are few alternative sources of Coltan apart from the Dem. Rep.
of Congo, although the University of St Andrews geologist, Dr Adrian
Finch recently reported that he has found Coltan inside extinct
volcanoes in the remote North Motzfeldt region of Greenland. Dr Finch
has now received a two year funding plan from the Carnegie Trust and
Gino Watkins Fund to investigate the commercial viability of mining
the volcanoes.

What to do ?
There is very little the “man on the street” can do to prevent Coltan
exploitation as it is not a “visible” component of cellphones that can
be differentiated when shopping, but continuing pressure on circuit
board manufacturers has lead to many demanding that their Coltan
supplies only come from legitimate sources. Similar pressure on other
users of Coltan can also help to ensure that only legitimately mined
and sold Coltan is used in circuit boards. At a government level,
pressure on local politicians to drive awareness of the ongoing civil
war in the Dem. Rep. of Congo and help to secure a resolution will
help to prevent the extinction of the Mountain Gorilla.

The Tantalum-Niobium International Study Center (T.I.C.), the industry
organisation representing producers, processors and consumers of
tantalum and niobium around the world, said that it deplores the
reported activities of illegal miners in the Kahuzi-Biega National
Park and the Okapi Wildlife Reserve in the Democratic Republic of
Congo. It was agreed at the T.I.C. Executive Committee meeting in
Brussels on April 3rd 2001 that the organisation would take a stand
regarding the use and production of coltan mined in these World
Heritage Sites.




Every year, an estimated 400 million units of obsolete electronics are
scrapped. Four billion pounds of electronic waste, or e-waste, was
discarded in the United States in 2005, accounting for between 2% and
4% of the municipal solid waste stream. As much as 87.5% of this was
incinerated or dumped in landfills. Of the remaining 12.5% collected
for “recycling,” industry sources claim that about 80% is exported to
developing countries where it is processed in primitive conditions,
severely endangering the environment, workers and communities.
Pollution created by irresponsible e-waste processing can also come
back to haunt those in the exporting countries as well in the form of
air pollution fallout via long-range transport.

The world faces an e-waste crisis because of the following factors:
* Huge volumes: The dual forces of rapid obsolescence of
electronic gadgetry combined with astronomically burgeoning use have
created mountains of e-waste—the largest growing waste stream our
economy produces.
* Toxic design: Electronic equipment contains some of the most
toxic substances known: mercury, lead, cadmium, arsenic, beryllium,
and brominated flame retardants, among others. Thus, when this
equipment becomes waste, it is toxic waste. When burned, even worse
toxins can be formed such as dioxins and polycyclic aromatic
hydrocarbons that can cause cancer and birth-defects. Until recently,
far too little emphasis has been placed by manufacturers on
eliminating toxic materials.
* Poor design and complexity: e-waste is full of many different
materials (such as multiple kinds of metals, plastics and chemicals)
that are mixed, bolted, screwed, snapped, glued or soldered together.
This makes separation for recycling difficult. Further, little
attention has been paid to designing equipment for recycling.
Therefore, recycling either requires intensive labor or sophisticated
and costly technologies.
* No financial incentive to recycle: There’s usually not enough
value in most electronic waste to cover the costs of responsibly
managing it in developed countries unless laws require such management
as a service industry. For this reason it is exported to countries
where workers are paid low wages and the infrastructure and legal
framework is too weak to protect the environment, workers and
* Reuse abuse: Sending equipment and parts for reuse – an
important solution – can easily be abused by falsely labeling scrap as
reusable or repairable equipment. Often this “reusable” equipment ends
up getting dumped in countries lacking any infrastructure to properly
manage it.
* Policy of “free trade in toxic waste”: In the U.S. and Canada,
the laws governing export of trade in hazardous electronic waste are
tragically inadequate, and thus these two countries are the primary
sources of the global crisis. The U.S. is the only developed country
in the world that has failed to ratify the 1989 Basel Convention, an
international treaty controlling trade in hazardous waste from richer
to poorer countries. In 1995, that treaty adopted a full ban on
exports from rich to poorer countries. Both the U.S. and Canada
actively oppose this prohibition. In Canada, the Basel Convention is
not properly implemented, allowing almost all e-waste to flow abroad
freely. In both countries, then, it is perfectly legal for businesses
to maximize profit by exporting toxic electronics to developing
countries, even when this export is a violation of the laws of
importing countries. The export of toxic electronic waste to
developing countries disproportionately burdens them with a toxic
legacy and allows for externalization of real costs.
* Prison laborers employed to process e-waste: Unlike other
countries in the world, the U.S. sends much of its hazardous e-waste
to U.S. prisons to process in less-regulated environments without the
worker protections and rights afforded in the private sector.
Moreover, such operations amount to government subsidies, undermining
the development of responsible private-sector recycling infra-
structure and distorting the economics of recycling.
* Private data is imbedded in electronic devices: Computers, PDAs,
mobile phones and even printers and fax machines hold private data
such as social security, bank account and credit card numbers and
private emails. These can be used by criminals involved in identity
theft to hijack bank accounts and conduct blackmail and extortion if
this data is not completely eradicated. Loss of confidential data is
another form of liability and irresponsibility stemming from improper
e-waste disposal.
* Lack of regulation requiring proper management: U.S. regulations
mostly exempt the electronic waste stream from environmental laws and
active OSHA oversight. Further, according to the laws of Canada and
the U.S., most toxic electronic waste is still perfectly legal to
dispose of in non-hazardous waste landfills and incinerators.

Documented harm
In 2002, the Basel Action Network (BAN) and the Silicon Valley Toxics
Coalition released the ground breaking report and film Exporting Harm:
The High Tech Trashing of Asia, that exposed the toxic “recycling” of
discarded electronics in China. A second film and report released in
2005 by BAN, The Digital Dump: Exporting Reuse and Abuse to Africa,
showed similar tragic results happening in Africa, this time in the
name of ‘reuse’ and ‘bridging the digital divide.’ Images of men,
women and children burning tons of toxic circuit boards, wires, and
plastic parts exposed the fast-cheap-and-dirty side of our consumption
of computers, televisions, faxes, printers, etc. Furthermore, BAN
analyzed hard-drives from exported computers collected in Africa and
found massive amounts of private data freely available for criminal
exploitation. We have also discovered that when U.S. prisoners are
used as cheap labor, they are exposed to these poisons as well. The
Federal Prison Industries’ UNICOR, which processes much of the e-waste
in the US, is now the focus of a Department of Justice investigation
for the toxic exposures prisoners suffer. Finally as much as 87
percent of discarded toxic e-waste is simply dumped in municipal
landfills or incinerators, ill equipped to contain or destroy such
toxic waste.

Unfortunately this grossly irresponsible waste mismanagement and toxic
trade is the norm in the North American recycling industry. It is
still all too commonplace for recyclers and even electronics
manufacturers, aided by the inadequate or non-existent policies of the
Canadian and U.S. governments, to leave the dirty and dangerous work
of managing our toxic waste to the poorest of the poor in developing
countries. The resulting environmental hazards and social injustice
ravage the land and people in these developing nations. Furthermore,
these poisons come back to our shores and into our bodies via long-
range air and ocean pollution, toxic imports and contaminated food.
Government failure: externalizing our toxic impacts

To date, unlike the 27 member countries of the European Union, the
United States and Canada have failed to create legislation providing a
national system to finance and responsibly deal with toxic e-waste.
Instead, an e-waste anarchy is sanctioned, where we can exploit the
cheap and dirty ‘solutions’ that ‘externalize’ (or pass on) the real
toxic impacts and their costs to others – poor communities in
developing countries, disempowered prisoners in this country, or local
municipalities and taxpayers who suffer from this material getting
dumped in local landfills or incinerated, polluting soil, air and
water. Further, the U.S. and Canada have failed to ratify or properly
implement the Basel Convention that prescribes international rules to
prevent such toxic waste trade.

US Congress’ watchdog agency, the Government Accountability Office
(GAO) recently published a report entitled, “Electronic Waste: EPA
Needs to Better Control Harmful U.S. Exports through Stronger
Enforcement and More Comprehensive Regulation.“ [http://www.gao.gov/
new.items/d081044.pdf] The GAO report describes, in no uncertain
terms, the complete inadequacy of legislation to control e-waste
exports and the lack of EPA enforcement of the minimal regulations
that do exist, resulting in a flood of toxins to the developing world.

Instead of properly regulating electronic waste management and trade,
the EPA has tried to bring interest groups together to create
voluntary solutions. These efforts have ended in failure or have
produced little more than minimalist, ‘lowest-common denominator’
standards, which seemingly please everyone, including waste exporters,
but result in continued abuse to the environment and human health. One
of these efforts is the recently released “R2” Standard for
Responsible Recycling.

Meanwhile, in lieu of an appropriate federal response, states and
municipalities must cope with the national failure by passing a
variety of local laws and state laws. However, the U.S. Constitution
forbids these local governments from legislating international trade,
so states and municipalities are helpless to prohibit the flood of e-
waste leaving our shores. It is in this unregulated landscape, that
responsible electronics recycling companies are challenged to compete
against unscrupulous brokers, and exporters and those who deceptively
call themselves “recyclers.” These bad actors simply load up seagoing
containers and ship U.S. hazardous electronics to the highest bidders
globally. Almost always, this results in the wastes shipped to a
developing country to be processed by cheap, unprotected labor to
maximize profits. These “low road” operators are thriving while the
responsible companies, with their safer, more expensive methods,

Toxic “E-Waste” Gets Cached in Poor Nations, Report Says
BY Ben Harder / November 8, 2005

Reduce, reuse, recycle. This familiar environmentalist slogan outlines
an approach to minimizing how much trash ends up in landfills,
incinerators, and waterways. The concept is being employed to cope
with one potentially hazardous form of waste—electronic junk such as
old computers, cell phones, and televisions. But the process for
managing this so-called e-waste may get coopted for unscrupulous
purposes more often than it’s legitimately used, a recent report
suggests. “A lot of these materials are being sent [to developing
nations] under the guise of reuse—to bridge the digital divide,” said
Richard Gutierrez, a toxics policy analyst for the Seattle, Washington-
based Basel Action Network. Last month the activist organization
issued a report titled “The Digital Dump.” The paper concludes that
three-quarters of the supposedly reusable electronics shipped to
Africa’s largest port are broken.

One of the problems is that no one certifies whether donated machines
work before they hit the seaways. Because of this, the report says, e-
waste is a growing problem in Lagos, Nigeria, and elsewhere in the
developing world. Much of the waste ends up being discarded along
rivers and roads. Often it’s picked apart by destitute scavengers, who
may face dangerous exposure to toxic chemicals in the broken

Traders in places like Lagos are willing to receive this cast-off
junk, though many of their governments officially forbid it, Gutierrez
said. The importers sell the working machines. Then they pay workers a
pittance to burn the plastic casings and wire insulation in broken
machines and strip out sought-after materials such as gold and copper.
The low-tech recovery process could expose workers and the local
environment to lead, cadmium, mercury, and other hazardous materials
used to build electronics. Workers can also be exposed to carcinogenic
compounds called dioxins that are byproducts of incinerated plastics.

“Green Passport”
According to Gutierrez, this shadow economy exists because the guise
of recycling and reusing electronics gives dealers “a green passport”
to ship waste around the globe. Most of the waste comes from developed
nations that should know better, he said. “Forty-five percent of the
junk that’s coming in [to Lagos] is coming from the United States,” he
said. “Another 45 percent comes from Europe, and the other 10 percent
from Japan and Israel.” The European Union, Israel, Japan, and the
United States have signed the Basel Convention, which forbids
countries from exporting hazardous waste, including electronics.
“There is some responsibility that the developing nations must take
upon themselves,” Gutierrez said. But, he added, “a greater element of
this responsibility should fall on the exporting state.”

China, for example, has become a cache for vast amounts of e-waste.
The nation is beginning to take action to stem the flow of hazardous
material across its borders. “The Chinese government, after many years
of denial, is finally beginning to take the helm,” said Ted Smith,
founder and senior strategist of the Silicon Valley Toxics Coalition.
Gutierrez noted that even if China enforces its existing laws and
keeps e-waste out, “it will flow to the next country with lax
environmental standards.” E-waste, he said, “follows the path of least
economic resistance.”

“That’s why we need to regulate this at the source end,” Smith agreed.
Laws should prevent e-waste exportation and require manufacturers to
shoulder the responsibility of recycling their products in the most
cost-effective manner, he said. Such a shift would make electronics
more expensive in the short term, he acknowledged, but environmental
damage and health hazards would be minimized. Gutierrez added that as
many toxic compounds as possible should be banned from new
electronics. Europe has already banned lead, cadmium, and a half dozen
other materials still permitted in U.S. products.

Problems Ahead
Gordon Davy, an engineer with technology firm Northrop Grumman in
Baltimore, Maryland, said such regulation would be coercive. Consumers
in developed countries would have to pay more for new electronics, and
poor laborers elsewhere would lose the income they now get from
stripping apart dead electronics. Davy also questions whether e-waste
is harming people. “Pollution in the third world is clearly
deplorable,” he said. “But as far as health consequences [of e-waste
is concerned], the environmental activists need to provide supporting
evidence. They need to identify and count their victims.” Gutierrez
countered, “We’re dealing with toxic substances that have been studied
to death. We need not come up with further studies. It would be an
overanalysis of an obvious problem.”

“The e-waste crisis is relatively young,” he said. “The problems [that
people] are being exposed to will germinate for years.” By the time
chronic diseases such as cancer arise, it will be too late to avert a
public-health disaster, he said. Smith, of the Silicon Valley Toxics
Coalition, concurred. “Right now [e-waste] doesn’t seem to be causing
any enormous environmental hazards. But over the next several
generations it’s going to create a problem.” University of Maryland
student Haibing Ma is planning ahead. The graduate student from China
aims to develop a framework that could help his homeland deal with its
e-waste problem.

While working toward a solution, Ma is loath to add to the problem, so
he purchased his computers from Hewlett Packard. That manufacturer is
one of several that have announced so-called takeback policies,
promising to safely dispose of obsolete equipment returned by
consumers. “I mailed one monitor back to HP last semester,” Ma said.
“But the [shipping] charge … we pay ourselves.” With other
electronics, manufacturers provide no such choice. “The television is
the problem,” Ma said. “We have so many different producers, and none
of them have a clear takeback policy.” When his TV dies, Ma says,
he’ll put it in the waste bin. “We don’t know where it will go.”

Following The Trail Of Toxic E-Waste / Nov. 9, 2008

60 Minutes is going to take you to one of the most toxic places on
Earth – a place government officials and gangsters don’t want you to
see. It’s a town in China where you can’t breathe the air or drink the
water, a town where the blood of the children is laced with lead.

It’s worth risking a visit because much of the poison is coming out of
the homes, schools and offices of America. This is a story about
recycling – about how your best intentions to be green can be
channeled into an underground sewer that flows from the United States
and into the wasteland. That wasteland is piled with the burning
remains of some of the most expensive, sophisticated stuff that
consumers crave. And 60 Minutes and correspondent Scott Pelley
discovered that the gangs who run this place wanted to keep it a
secret. What are they hiding? The answer lies in the first law of the
digital age: newer is better. In with the next thing, and out with the
old TV, phone or computer. All of this becomes obsolete, electronic
garbage called “e-waste.”

Computers may seem like sleek, high-tech marvels. But what’s inside
them? “Lead, cadmium, mercury, chromium, polyvinyl chlorides. All of
these materials have known toxicological effects that range from brain
damage to kidney disease to mutations, cancers,” Allen Hershkowitz, a
senior scientist and authority on waste management at the Natural
Resources Defense Council, explained. “The problem with e-waste is
that it is the fastest-growing component of the municipal waste stream
worldwide,” he said. Asked what he meant by “fastest-growing,”
Hershkowitz said. “Well, we throw out about 130,000 computers every
day in the United States.” And he said over 100 million cell phones
are thrown out annually.

At a recycling event in Denver, 60 Minutes found cars bumper-to-bumper
for blocks, in a line that lasted for hours. They were there to drop
off their computers, PDAs, TVs and other electronic waste. Asked what
he thought happens once his e-waste goes into recycling, one man told
Pelley, “Well my assumption is they break it apart and take all the
heavy metals and out and then try to recycle some of the stuff that’s
bad.” Most folks in line were hoping to do the right thing, expecting
that their waste would be recycled in state-of-the-art facilities that
exist here in America. But really, there’s no way for them to know
where all of this is going. The recycling industry is exploding and,
as it turns out, some so-called recyclers are shipping the waste
overseas, where it’s broken down for the precious metals inside.

Executive Recycling, of Englewood, Colo., which ran the Denver event,
promised the public on its Web site: “Your e-waste is recycled
properly, right here in the U.S. – not simply dumped on somebody
else.” That policy helped Brandon Richter, the CEO of Executive
Recycling, win a contract with the city of Denver and expand
operations into three western states. Asked what the problem is with
shipping this waste overseas, Richter told Pelley, “Well, you know,
they’ve got low-income labor over there. So obviously they don’t have
all of the right materials, the safety equipment to handle some of
this material.”

Executive does recycling in-house, but 60 Minutes was curious about
shipping containers that were leaving its Colorado yard. 60 Minutes
found one container filled with monitors. They’re especially hazardous
because each picture tube, called a cathode ray tube or CRT, contains
several pounds of lead. It’s against U.S. law to ship them overseas
without special permission. 60 Minutes took down the container’s
number and followed it to Tacoma, Wash., where it was loaded on a
ship. When the container left Tacoma, 60 Minutes followed it for 7,459
miles to Victoria Harbor, Hong Kong.

It turns out the container that started in Denver was just one of
thousands of containers on an underground, often illegal smuggling
route, taking America’s electronic trash to the Far East. Our guide to
that route was Jim Puckett, founder of the Basel Action Network, a
watchdog group named for the treaty that is supposed to stop rich
countries from dumping toxic waste on poor ones. Puckett runs a
program to certify ethical recyclers. And he showed 60 Minutes what’s
piling up in Hong Kong. “It’s literally acres of computer monitors,”
Pelley commented. “Is it legal to import all of these computer
monitors into Hong Kong?”

“No way. It is absolutely illegal, both from the standpoint of Hong
Kong law but also U.S. law and Chinese law. But it’s happening,”
Puckett said. 60 Minutes followed the trail to a place Puckett
discovered in southern China – a sort of Chernobyl of electronic waste
– the town of Guiyu. But we weren’t there very long before we were
picked up by the cops and taken to City Hall. We told the mayor we
wanted to see recycling. So he personally drove us to a shop. “Let me
explain what’s happening here,” Pelley remarked while in Guiyu. “We
were brought into the mayor’s office. The mayor told us that we’re
essentially not welcome here, but he would show us one place where
computers are being dismantled and this is that place. A pretty tidy
shop. The mayor told us that we would be welcome to see the rest of
the town, but that the town wouldn’t be prepared for our visit for
another year. “So we were allowed to shoot at that location for about
five minutes,” Pelley explained further. “And we’re back in the
mayor’s car headed back to City Hall, where I suspect we’ll be given
another cup of tea and sent on our way out of town with a police
escort no doubt.” And we were. But the next day, in a different car
and on a different road, we got in.

“This is really the dirty little secret of the electronic age,” Jim
Puckett said. Greenpeace has been filming around Guiyu and caught the
recycling work. Women were heating circuit boards over a coal fire,
pulling out chips and pouring off the lead solder. Men were using what
is literally a medieval acid recipe to extract gold. Pollution has
ruined the town. Drinking water is trucked in. Scientists have studied
the area and discovered that Guiyu has the highest levels of cancer-
causing dioxins in the world. They found pregnancies are six times
more likely to end in miscarriage, and that seven out of ten kids have
too much lead in their blood. “These people are not just working with
these materials, they’re living with them. They’re all around their
homes,” Pelley told Allen Hershkowitz. “The situation in Guiyu is
actually pre-capitalist. It’s mercantile. It reverts back to a time
when people lived where they worked, lived at their shop. Open,
uncontrolled burning of plastics. Chlorinated and brominated plastics
is known worldwide to cause the emission of polychlorinated and
polybrominated dioxins. These are among the most toxic compounds
known on earth,” Hershkowitz explained. “We have a situation where
we have 21st century toxics being managed in a 17th century

The recyclers are peasant farmers who couldn’t make a living on the
land. Destitute, they’ve come by the thousands to get $8 a day.
Greenpeace introduced us to some of them. They were afraid and didn’t
want to be seen, but theirs are the hands that are breaking down
America’s computers. “The air I breathe in every day is so pungent I
can definitely feel it in my windpipe and affecting my lungs. It makes
me cough all the time,” one worker told Pelley, with the help of a
translator. “If you’re worried about your lungs and you’re burning
your hands, do you ever think about giving this up?” Pelley asked.
“Yes, I have thought of it,” the worker said. Asked why he doesn’t
give it up, the worker told him, “Because the money’s good.”

“You know, it struck me, talking to those workers the other day, that
they were destitute and they’re happy to have this work,” Pelley told
Puckett. “Well, desperate people will do desperate things,” Puckett
replied. “But we should never put them in that situation. You know,
it’s a hell of a choice between poverty and poison. We should never
make people make that choice.” Pelley, Puckett, and the 60 Minutes
team passed by a riverbed that had been blackened by the ash of burned
e-waste. “Oh, man, this is – it’s unbelievably acrid and choking,”
Pelley said, coughing. “This is an ash river. This is detritus from
burning all this material and this is what the kids get to play in,”
Puckett explained.

After a few minutes in the real recycling area, we were jumped.
Several men struggled for our cameras. The mayor hadn’t wanted us to
see this place, and neither did the businessmen who were profiting
from it. They got a soil sample that we’d taken for testing, but we
managed to wrestle the cameras back. What were they afraid of?
“They’re afraid of being found out,” Puckett said. “This is smuggling.
This is illegal. A lot of people are turning a blind eye here. And if
somebody makes enough noise, they’re afraid this is all gonna dry up.”

Back in Denver, there’s no threat of it drying up. In fact, it was a
flood. And Brandon Richter, CEO of Executive Recycling, was still
warning of the dangers of shipping waste to China. “I just heard
actually a child actually died over there breaking this material down,
just getting all these toxins,” he said. Then Pelley told him we’d
tracked his container to Hong Kong. “This is a photograph from your
yard, the Executive Recycling yard,” Pelley told Richter, showing him
a photo we’d taken of a shipping container in his yard. “We followed
this container to Hong Kong.”

“Okay,” Richter replied.
“And I wonder why that would be?” Pelley asked.
“Hmm. I have no clue,” Richter said.
“The Hong Kong customs people opened the container…and found it full
of CRT screens which, as you probably know, is illegal to export to
Hong Kong,” Pelley said.
“Yeah, yep,” Richter replied. “I don’t know if that container was
filled with glass. I doubt it was. We don’t fill glass, CRT glass in
those containers.”
“This container was in your yard, filled with CRT screens, and
exported to Hong Kong, which probably wouldn’t be legal,” Pelley said.
“No, absolutely not. Yeah,” Richter said.
“Can you explain that?” Pelley asked.
“Yeah, it’s not – it was not filled in our facility,” Richter said.

But that’s where 60 Minutes filmed it. And we weren’t the only ones
asking questions. It turns out Hong Kong customs intercepted the
container and sent it back to Executive Recycling, Englewood,
Colorado, the contents listed as “waste: cathode ray tubes.” U.S.
customs x-rayed the container and found the same thing. 60 Minutes
showed Richter this evidence, and later his lawyer told us the CRTs
were exported under Executive Recycling’s name, but without the
company’s permission. “I know this is your job,” Richter told Pelley.
“But, unfortunately, you know, when you attack small business owners
like this and you don’t have all your facts straight, it’s
unfortunate, you know?”

But here’s one more fact: the federal Government Accountability Office
set up a sting in which U.S. investigators posed as foreign importers.
Executive Recycling offered to sell 1,500 CRT computer monitors and
1,200 CRT televisions to the GAO’s fictitious broker in Hong Kong. But
Executive Recycling was not alone. The GAO report found that another
42 American companies were willing to do the same.

Who Was Following Whom?
BY Solly Granatstein / Nov. 11, 2008

It was clear from the outset that this was a place with something to
hide. We had come to southern China to set up a TV shoot, but we were
the ones being filmed. A slim Chinese man, in his early 30’s, with
short-cropped hair, was taking our picture with his cell phone. He was
standing about 20 yards from me and our fixer, Lamy Li. It’s hard to
say what gave it away, but there was no doubt he was an undercover
cop. When I turned toward him, he walked briskly in the opposite

Lamy and I had been walking through the grim town of Guiyu attempting,
with marginal success, to speak with workers. The skies were low and
grey. Plumes of dank smoke rose from salvage workshops and piles of
burning waste. Guiyu is a community of 60,000 where most of the people
are employed in the mining of precious metals from electronic waste,
also known as “‘e-waste.” E-waste is junked old computers, TV’s, cell
phones, printers, most of it toxic, and much coming to this shabby
corner of China from wealthier environs like America.

What we saw in Guiyu was gut-wrenching. I had read in scientific
journals that given all the toxic compounds contained in electronic
products, breaking them down is hazardous work. But that was nothing
like witnessing it in person. The place was a hell on earth of acrid
smoke and noxious smells. The pungent air scorched the back of our
throats. On my way to Guiyu, a scientist in Hong Kong had said, “Every
part of Guiyu has a different, terrible smell.” Now I knew what she

Through the smoke, workers could be seen dismantling electronic
components by hand, or melting them down over coal fires, for the tiny
bits of precious metals inside. Some were clearly underage, and most
were working with little protection, with neither gloves to protect
their hands nor masks to shield their lungs. The salvage operations
took place in the same shanties where the workers and their children

Just before we encountered the undercover cop who took our picture, we
had a run-in with one of the owners of the salvage works. He was
overseeing gold extraction from circuit boards. His workers dipped the
boards into large drums of hydrochloric and nitric acid, using a
technique, known as aqua regia, that dates from the Middle Ages.
Plumes of orange smoke rose from the drums and doubtlessly seared the
lungs of the workers. The whole operation took place on the edge of a
river. The acid leeched into the water, which had long since become
undrinkable. As if to advertise where he worked, the boss wore a
prominent gold medallion that swung from a gold chain around his neck.
When he saw the two of us, he started yelling at Lamy. “Get out of
here! You’re not welcome here! Get out!” We did just that.

This visit was just a reconnaissance mission, to know what we would be
filming upon the arrival of our correspondent, Scott Pelley, and the
camera crews. I figured there was no point in drawing any more
attention to ourselves than I already had simply by being a non-
Chinese person walking around in this remote town. So when I saw our
picture being taken by the cop with the cell phone, I suggested to
Lamy that we leave.

It was gloomy and wet when we came back to town the next morning.
Lamy had arranged to meet a man who would be able to introduce us to
some workers. We drove our small car to an appointed corner, he jumped
into the back seat, and we drove off. The worker liaison was a small, wiry
fellow in a tan rain slicker. He had scarred, dark skin with handsome
features and a wary smile. As we rounded a corner and parked against
the edge of a building, he told us that the town authorities had
recently warned workers that they would spend 30 days in jail if they
spoke with foreign reporters. Lamy explained to me that the workers
are migrants from other parts of China. Since they’re not official
citizens of this province, they have no right to health care or other
protections. “I keep thinking that they are totally vulnerable” she

A short distance in front of the car, I noticed a man standing under
an umbrella in an alley way. “Isn’t that the same dude who was taking
our picture yesterday?” I asked Lamy. It was difficult to tell. His
face was partially obscured. Not wanting the worker liaison to be
discovered, we drove away and out of town. Our driver, a local, was
rattled and refused to drive for us again.

That evening, Lamy and I were in front of our hotel in Shantou, the
big city that’s a couple hours away from Guiyu. We hailed a taxi to
take us to a meet a local scientist who’s studied the effects of e-
waste operations on Guiyu’s children. I had read the studies. Seven
out of ten kids have blood lead levels in the Centers for Disease
Control’s danger zone. Then: There he was again, or so it seemed. The
same plainclothes cop was walking up the hotel driveway. I said, “Hey,
look! Isn’t that him?” Lamy said, “Stop! Now you’re scaring me!” But a
second look confirmed it. It was the same guy, two days later and a
hundred miles away from where we had first seen him. Suddenly, things
seemed serious. All the more so for Lamy who lives and works in Hong
Kong, under the authoritarian cloud of Chinese rule.

Not knowing what else to do, we proceeded with our original plan. We
hopped into a cab and headed across town. The cop jumped into a large
black sedan and followed close behind us. He had seen that we had
noticed him and dropped any pretense that he wasn’t trailing us. Our
taxi driver was a young guy whose hair was bleached at the ends and
who seemed more excited than scared when we told him that we were
being followed. He hit the accelerator, while the sedan fell behind
and got stuck in traffic. We managed to make a U-turn and whooped as
we saw our pursuers watch helplessly as we sped past in the other
direction. A minute later, we stopped congratulating ourselves. There
was a black sedan, a different one, right on our tail.

“I’ve lived in Shantou all my life,” our taxi driver proclaimed. “I
know the back streets. I’ll be able to lose them.” We sped around a
highway ramp and made a quick turn down a side street. The sedan
behind us took the same turn. We cut into an even smaller street and
plowed through a crowd of pedestrians. Three more turns in quick
succession. We came to a stop in an alley and waited. Several minutes
passed. The coast was clear. We made our way out of the neighborhood
back onto a main road. Within seconds, a third black sedan was close
behind us.

Our taxi driver stopped chattering. Lamy said he was probably scared
by the fact that our pursuers had so many vehicles and resources-that
is, they couldn’t be anyone other than a powerful security force. Lamy
was frightened herself. Part of her unease had to do with the fact
that we didn’t even know exactly who was following us. Were they Guiyu
town police or the provincial security services? Could they be agents
of some national intelligence directorate? There was even an off-
chance that they were local Mafiosi, the hired muscle of e-waste
businessmen who wanted to keep outside scrutiny away from their black
market operations. And how much did these people know about us and
our plans? Had they bugged our hotel room or our phones? Anything
seemed possible.

We gave up evasive maneuvers and went to the meeting. In a local
restaurant, while we spoke to the scientist and took notes, the
corners of our eyes tried to keep track of all the plainclothes
security men lounging in the street outside keeping track of us. At
the end of the evening, after being trailed back to our hotel, Lamy
marched straight up to one of the van that had been following us and
motioned for the driver to roll down the window. “Who are you? Why are
you following us?” she demanded. Fearlessly. “We’re going to call the
police if you don’t cut it out!” The driver panicked, had not expected
this. “I wasn’t! It’s not true!” he kept saying, and drove off.

Lamy and I talked late into the night. If we were followed night and
day, how were we going to be able to film this story, to document what
we had seen in Guiyu? The cops could shut us down as soon as our
cameramen started shooting. Was it even worthwhile to bring the rest
of our team to China? And if we were being constantly surveyed, how
could we possibly interview e-waste workers without putting their
lives in danger? Was there a way we could avoid being followed?

I called Scott Pelley, who was on a different shoot in northern
Canada, and discussed the situation with him at length. It was
agonizing. There was a decent chance that he would fly halfway around
the world and that we would not emerge with a story. Finally, we
decided. Though we agreed that there were no guarantees, we knew we
had to give it a try. Lamy and I figured that the only way to lose our
security escort was to leave the province altogether. We had to
convince the authorities that we were done with the place. The next
morning, Lamy flew to Hong Kong to meet the rest of our team. I had a
single entry visa and wouldn’t be able to return if I left the
Mainland. I flew an hour away to the city of Guangzhou, then hopped on
a bus to the city of Shenzhen. These were evasive maneuvers in the

A day later, our entire team gathered in Shenzhen. In addition to me
and Lamy, our full contingent included correspondent Scott Pelley; our
wonderful and efficient associate producer Nicole Young; two exemplary
cameramen, David Lom and Brad Simpson (who is also the CBS News
Beijing bureau chief); and assistant cameraman Jackie Chen. There were
also two non-journalists we’d invited along: Jim Puckett, the founder
of a toxic waste watchdog group called the Basel Action Network; and
Jamie Choi, a specialist in corporate environmental responsibility
with Greenpeace-Beijing. Very early the morning after that, we set off
on the 5-hour drive to the wasteland of Guiyu. Since we were now with
our camera crews, most of what happened next was deftly captured on
videotape. Much of that is in the 60 Minutes story.

We managed to speak with a group of workers in a location far from
Guiyu where, thank goodness, our gathering was not discovered. They
told us about the conditions of their work. They guessed, judging from
the script on the components, that much of the waste came from faraway
English-speaking countries like ours. Later, after we had left the
workers, our vehicles were stopped by the Guiyu police, and we were
brought to City Hall. The mayor prohibited us from filming in his
town. His police escorted us to the city limits.

We returned the next day nonetheless and began committing to
videotape the atrocious scenes we had come to document. Very quickly,
a gang of about a dozen men materialized and started roughing us up,
trying to grab the cameras that had recorded their dirty secret. Swinging
a tripod from side to side, I fought off two men who had grabbed either
end of David Lom’s camera. These men were enraged. One of them
clambered atop a mound of dirt, shouting, and threw fist-sized
batteries at us. Our situation was all the more perilous because our
drivers had driven away, fearing that they would be beaten up or that
their cars would be wrecked by the gang.

As a group, we walked away from the recycling area toward the center
of town. We were followed by men on motorbikes and in cars who waved
taxis away and beckoned us to into their vehicles so we could all
return to the mayor’s office. “Come with us. You’re not safe here,”
said these men who had just attacked us. In the end, we waited them
out. Scott came up with the brilliant and effective line that if they
took us back to the mayor’s office, we would consider it an arrest and
let the Foreign Ministry in Beijing know what had happened. “Oh no,
you’re not being arrested!” they assured us nervously. Suddenly, not
only were we free to leave the town, but the mayor and his men gave us
a lift for the two-hour ride to Shantou.

Somehow we had managed to escape with only a few scrapes and
bruises. Nicole Young, our AP, suffered the gravest injury: a sizable florid
bruise on her hip where she had pressed the tripod that a large man
tried to wrest from her. Most important, we got away with the tapes we
had shot. We had only been able to film for about 10 or 15 minutes
before we were attacked. But the wasteland was so awful, even that was

A day earlier, the workers we had secretly interviewed summed up their
experience of the wasteland. They had been peasant farmers, unable to
eke a living from the land. Now they spent their days melting circuit
boards, burning their hands, enduring headaches and shortness of
breath. They realized the work was hazardous, but felt they had little
choice. They were, as Lamy said, utterly vulnerable-both to the toxic
work and to the gangs who run this place. “The people in Guiyu have no
consideration for laws,” one of them said when asked why they
preferred to remain anonymous. “They treat people who come here to
work like thieves. And if someone from another province gets beaten
up, nobody in the government will take care of them. It’s totally
okay. You give a bit of money to the officials, and everything is
taken care of. The people there are very savage-like. And we don’t
want to be hurt.”

BY Luca Gabino / 9/2007

For years, I’ve heard fables and legends about a mysterious cemetery
somewhere in China. I heard whispers on the internet and from Chinese
friends about mountains of broken computers, heaps of chips,
motherboards, and printer cartridges virtually filling the streets of
a South Asian village. But it was kept quiet by the notoriously tight-
lipped Chinese government. It was kind of like the elusive elephant
graveyard, but with technological offal and guarded by mean
communists. I decided that I would make it my mission to go there.

I slowly discovered that 80 percent of all the electronic toxic waste
collected around the world ends up in Guiyu, a small town in the
southern China province of Guangdong. The town imports more than 1
million tons of this stuff every year. Almost 90 percent of Hong
Kong’s computers end up there, but 60 percent of the total waste
originates in the USA. The exact location of Guiyu has been kept
secret by the authorities, but I already knew that Shenzhen was the
biggest city in Guangdong and that it was just an hour and a half away
from Hong Kong.

Even with Hong Kong being Chinese again, we had to go through customs
to get into Shenzhen. We boarded the bus to Cheng Dian, guessing it
was the nearest city to Guiyu. On the bus the situation got even
creepier when the hostess pulled out a video camera and started
filming each passenger for “security reasons.” I was the only
Westerner on board. During the three-hour bus ride the same advert
looped on the in-bus televisions. It showed Shenzhen as a city of fun,
happiness, and luxury. Looking out the window at the gray factories,
the sea of cement, and the columns of smoke I had to ask myself if any
of the other passengers were falling for it. Toward the end of the
journey I found a university student who spoke a little English.
Taking a chance, I asked her where Guiyu was. She acted quite
perplexed at first and replied that no such place existed. But I could
tell she knew something, so I begged her until she scribbled
directions on a piece of paper.

We arrived in Cheng Dian at night and I took a room in a cheap hotel.
I spent the next day trying to find someone who would tell us more
about Guiyu. The locals denied its existence. Fortunately I found a
taxi driver who was willing to take me there for the relative mountain
of cash that is 40 euros. I handed him the directions that the girl on
the train had written for me, and we set off in almost total darkness.
The driver eventually dropped me off at the only hotel in the
proximity of Guiyu. From the car, all I could see was a big white
block of cement surrounded by garbage. I stepped out into the most
surreal landscape I have ever seen.

It was a sea of garbage. The heaps of trash began accumulating next to
the hotel walls and did not stop for as far as the eye could see. The
whole town was a construction site, with the old wooden barracks being
replaced by unfinished houses. You can still spot Guiyu’s rural past
in the barracks that once clearly constituted most of the town, but
the e-waste economy required more accommodation for the 200,000
migrant workers who moved to Guiyu in the past six years. Everywhere
around us people were busy carrying or unloading computer parts. Huge
piles of outer shells lay next to construction sites, layers and
layers of motherboards and CD players were dumped in the courtyards,
and thousands of bags of chips spilled inside and outside, forming
massive mountains between the tiny dwellings. Children were dividing
tiny chips by color in the street.

Adults were grilling circuit boards on barbecue grills. They melted
the soldering and removed the chips, and then the women would
separate the parts in different bags and wash them with water. After
the circuit boards were soaked in acid to recuperate bits of gold, they
were finally either burned or buried.

I witnessed kids between the ages of five and ten working in barracks
with no ventilation, with people all around them burning everything
from the metal components of computers to wires to extract the copper.
When the PVC and the brominated flame retardant around the wires
burn, they emit high levels of chlorinated dioxins and furans, two of the
most persistent organic pollutants. As a result, the local river is so
contaminated that the levels of acidity are almost total. The water
contains an estimated 2,400 times the recommended levels of lead, and
it’s not hard to notice: The river is literally black from the toner
of printer cartridges and from washing the burned motherboards. The
toner contains carbon black, a known carcinogen, but the locals wash
themselves, their clothes, and their food with this water. It’s so
toxic that even boiling it doesn’t come close to purifying it. Above
the water, the air was thick with smoke. Around it, the land is so
irreparably poisoned that nothing can grow. All the food and drinking
water is imported from out of town.

On my third day in Guiyu, I managed to get to the main dump. The
mountains of computer parts I had seen so far were nothing compared
with what awaited. The roads were in a constant state of traffic jam
with trucks, motorbikes, and even mules carrying parts to be
“recycled.” It was hell. Thick smoke hung like storm clouds. It hurt
to breathe.

As I stopped to take pictures, a furious woman came out of nowhere,
charging me with her broom, trying to grab my camera. Not wanting to
cause trouble in an illegal toxic-waste dump in southern China, I ran
back to the car. She followed, waving her broom around like a baseball
bat, banging on the windows. She broke the windshield. She was blind
with rage, trying to break the remaining bits of glass off with her
bare hands. When she saw she couldn’t do it she stuck her broom
through the hole she’d made and started smacking me in the head.

Then the police showed up to—I naively thought—rescue me from the
crazy woman. I was very wrong. They ordered me to wait in the car
while they interrogated all the witnesses except for the woman, whom
they let calmly walk back to her barrack. People crowded around the
car and stared at me as if I were an exotic animal in a cage. After an
hour the police told my driver to follow them to the station, where I
was interrogated for an hour with the aid of a translator. I told them
I was a university student on vacation. I had previously hid the
better rolls of film, so I could hand them the ones that were no good
to me. They let me go back to my hotel, chauffered by the poor driver
whose car had been beaten up by the crazy old woman.

A few days later there was a knock at my hotel door. It was the cops
again. They took me back to the station, where I was questioned by six
cops. I thought they were going to beat the shit out of me. After an
hour of repeating myself, I convinced them that I was merely a student
on holiday. They believed me! That is, until they got the owner of the
hotel to show them the ID card I’d used to sign in. Under job
description, it said “photographer.” Whoops. The interrogation started
again. I played it dumb, hung my head, and told them I was just a
silly student who takes amateur pictures and has no idea what is going
on in their town. Three hours later they finally released me and I
hightailed it right the fuck out of Guiyu. I will never go back.