Beating Around the Bush

When the TPLF leader Meles Zenawi was promoted by Tony Blair as a progressive leader we thought the statement was too dishonest and reflected negatively on the British Prime Minister’s character. As we continue to learn more about how Meles operates however, we are starting to feel that maybe we were a little too harsh on poor Mr. Blair. We had totally underestimated Meles’ capacity to intimidate not only Ethiopians but also those whom he begs. It seems the theory works both ways; if Ethiopians can be used to beg westerners for money why not use the same people to intimidate westerners as well.

Almost any rational person already knows that the recent explosions in Ethiopia were orchestrated by the TPLF. This would be completely in line with how TPLF has historically threatened to disintegrate the country and start inter-ethnic strife if forced out of power. No political force that would like to come to power in Ethiopia would have an incentive to blow up civilians riding in Taxis. It would be the worst PR campaign ever waged by such a force.

It is clear that all western officials on the Ethiopian scene also understand this from the various statements that they have made in the previous few years. That Meles can go from simply threatening westerners with the destruction of Ethiopia to actually acting it out seems to have rattled many of these officials who are now speaking his propaganda like parrots. Tony Blair recently helped Meles to reinstate all the aid that he had lost under the same old guise of fighting poverty, and now elements in the more powerful and principled US government seem to be cowering under Meles’ threats too.

We do not know much about the new political alliance, the AFD, that was recently created. But we do know that its stated objectives and tasks are far from the accusations implied in a recent news piece published by the State Department. We also know that a pretentious CUDP was created by Meles – this is not the first time that TPLF has created duplicate parties in order to fight legitimate political forces. Deputy Assistant Secretary of State for African Affairs Donald Yamamoto’s recent surprising statements about AFD being bad and Meles-CUDP being good are starting to sound very similar to Tony Blair’s old mistakes. With Blair it became obvious that there was some personal friendship and the stated intimidation to motivate him to blunder, but we have yet to determine if Yamamoto is reacting to intimidation by Meles contrary to his own beliefs.

The message is simple and clear. It is time for western officials to stop beating around the bush due to intimidation by Meles. It is evident that he remains with no more legitimacy to rule Ethiopia. Making TPLF’s inevitable demise take a few years longer can only hurt western interests by creating more TPLF induced violence. It is time to support political forces that understand that Ethiopia needs change immediately and are getting together to achieve it.

To Ethiopians inside and outside the country this is the time to give courage to Ethiopians and western leaders by writing more, demonstrating more and informing all concerned that we are behind all peaceful political forces that are trying to stop TPLF's intimidation campaigns. No privilege can be more important than a safe and democratic Ethiopia.

Meles' Fuzzy Math

In view of Prime Minister Meles’ recent interview on the economic condition of Ethiopia, and his derogatory comments about people who complain about it, we thought we would educate ourselves in some economics and analyze his teachings just a little.

To begin, it is obvious that his statements about hydroelectric power production investments and their impact on the government are false. If Meles’ logic holds true, we should all go out and secure the loans of all our acquaintances without any worry of repercussions incase they default on repayment. What we found more interesting however were his comments on inflation and his assertion that only the economically unlearnt would think Ethiopia’s rising inflation was bad for the economy.

It seems the origin of this statement is the Prime Minister’s in depth knowledge of modern industrialized economies and how they stimulate their economies in times of economic downturns by making use of monetary and fiscal policies that create inflation. In other words, their central banks expand the monetary supply [print money] and generally lend it to the governments, which in turn spend it buying goods and services in the economy and stimulating expansion while creating inflation.

It does not take a genius to realize that Ethiopia’s economy is far from a modern industrialized one and operates on completely different principles. As an example one can take the five year period between 1997 and 2002. This period is selected due to data availability and because it marks the beginning of Ethiopia’s reorientation towards an aid economy – which we expect to continue into the foreseeable future. For the purpose of simplicity we need only look at two parameters, the GDP and Aid trends and what they imply.

In the given period, foreign Aid to Ethiopia increased at an annual average rate of approximately 25% while real GDP grew at an average of 4%. These values and future forecasts can be found at various web sites that are openly available to the public(*). Aid in fact increased from 10% to 24% of GDP in these five years indicating a major policy change by the government as well as donors. Conservatively ignoring inflation, simple calculations from these values shows that while Aid accounted for 65% of the growth in 1997, it accounted for 144% of growth by 2002 indicating a contraction in the rest of the economy.

This implies a 1.78% growth in the non-Aid component of Ethiopia’s economy by 1997 but a decline of 2.3% in that sector by 2002. Since this analysis does not account for temporary shifts in GDP growth rates, the implication of this is frightening. By all accounts it is becoming evident that in the future Aid growth rates will far outstrip GDP growth rates in Ethiopia indicating a contracting non-Aid economic base in the country. Even if the above numbers are slightly off, it is becoming clear that people who live in countries that receive little aid and have no GDP growth will be more productive than Ethiopians.

The Prime Minister’s understanding of economics thus comes into question when his primary growth industry is the Marketing of a poverty brand associated with the country but he plans to expand the economy through inflation. If, as the above calculation implies, the production base in which Ethiopians are involved is actually shrinking – and there are strong indications that it is in the exploding number of farmers who are aid dependent and not productive any longer – then there is no useful inflationary stimulus that the government can apply as is the case in productive economies.

This leaves two possible explanations for the recent increase in inflation. One is that the Prime Minister is printing money to buy political support and this is getting out of control or that Ethiopians are on a buying spree – of goods and/or foreign currency – due to the political instability in the country and keeping less cash with them. Despite Meles’ economic lecture, neither one has anything to do with an economic stimulus. The present condition is further evidence of the negative economic impact of illegitimate governance and it would behoove donors to take note of this impending disaster. As for Ethiopians, well the struggle continues.

* http://www.imf.org/external/pubs/ft/fandd/2005/09/andrews.htm