Exploitation of Emerging Economies by Western Civilizations

Case Study:

Sierra Leone vs Britain

In order to investigate the exploitation of today’s emerging economies such as Sierra Leone, one must first start from a historical perspective and analyze some of its earliest beginnings. Originally, the British went to Sierra Leone to send freed slaves in the late 1700s and early 1800s, at a time when they had agreements with local chiefs and tribes and only stayed in area of Freetown. During the scramble for Africa in the later 1800s they attempted to colonize, rule over the rest of Sierra Leone and use it for a valuable trade post and exploit its resources.  The British intentions were to exploit is people and labor in order to gain control of the land in terms of trade and strategical vantage points due to high tensions between rival European nations such as France. They also later went on to further exploit its rich reserves of natural resources bauxite, diamonds and gold.

British Rule implemented policy referred to as “Divide and Rule” explicitly designed for the exploitation of the native country and its population mainly through the taxing and persecution of its people.

In Jarred Diamond’s Guns, Germs and Steel: The Fates of Human Societies he discusses how the Spanish explorer Pizarro captured the Inca’s King Atahualpa and demanded a ransom after he had already massacred thousands of the Inca men. Diamond explains how, “Atahualpa’s people brought mountains of gold to ransom him, but Pizarro had him executed anyway.” By, “Depriving the indigenous defenders of leadership,” Pizarro was implementing his, ““divide and conquer” strategy.”

Furthermore, in alignment with this strategy the Inca ruling family was ravaged by a disease epidemic, which originated from Europe, immediately creating a succession crisis. Civil war broke out within the Inca empire where, “Atahualpa led one side and is Brother Huascar the other. The witty Pizarro was able to play the two sides against each other, achieving the ultimate victory for himself. Each side in the Inca civil war saw the other as the greatest threat.” This is exactly what happened in Sierra Leone where the British divided the country based on its two largest ethnic groups, the Temne and the Mende, feeding on the already strong rivalries and playing each group against each other to gain the overall advantage and power over the region. Once divided they also had to pay extremely heavy taxes and were forced into labor maintaining roads which left them no time to engage in subsistence farming, thus threatening their livelihood and survival. As a result, each chief was left with no choice but to rebel.

 In response not only did the British resist against the rebel armies but opted for a “scorched earth policy” which meant burning entire villages, farmlands and terrorizing communities. Eventually the native population gave in and granted Britain full control of the territory. Their misrule and exploitation of the land, and its people to gain control of valuable territory and resources set a strong negative tone and has had lasting negative impacts in terms of political tensions, conflict and hate. It ultimately gave birth to multiple military coups and an eleven year civil war broke out in 1991, which devastated the country, leaving 50,000 people dead and displacing approximately half of the five million population. (This was well represented in Leonardo’s epic movie Blood Diamond, where he nailed the Zimbabwean/ South African accent.)

In the past, many emerging economies have especially been exploited on account of their land and large reserves of valuable natural resources, such as diamonds and gold, as in Sierra Leone’s particular case. More recently, Sierra Leone has been exploited by foreign mining companies such as the British companies London Mining and African Minerals mainly for their iron ore reserves. London Mining and African Minerals are carrying out the actions that are being practiced all throughout resource rich developing nations by western companies seeking to make large profit margins. Minerals are being stripped from the country and going overseas, with no reinvestment back into the country of its origin.

In 2010 the Sierra Leone government gave two big leases to London Mining and African minerals. Both Deals violated the Minerals and Mine Act introduced in Sierra Leone in 2009 which was specifically drawn up with international support to prevent mineral exploitation. The act was brought forward to prevent the reoccurrence of previous cases such as, in which Siaka Stevens, former Sierra Leonean Prime Minister, made secret extraction deals for his own benefit, leading to a rebellion, which was supported by Liberia and lead to a mass amount of Sierra Leone’s diamonds being pilfered, smuggled and sold in Liberia.

London Mining and African Minerals not only took advantage of these corrupt governments to strike deals that benefit themselves, they manipulated and squeezed all that they could from the government, the land and the country. London Mining and African Minerals claimed that without the generous support from the government they would not have invested in Sierra Leone and would have taken their business elsewhere. Unfortunately, due to the Sierra Leonean government being corrupt, economically unstable and desperate for investment this leaves them in no position to bargain and do what they can to attract foreign investment, despite its limitations. Therefore, the foreign British mining companies took advantage of them and use their power as multinational corporations and exert large amounts of pressure onto the Sierra Leonean government to sign contracts that highly favor these multinational mining companies.

There are three major concerns in regards to these new deals between the two British mining companies and the Sierra Leonean government, with the first being that Government has ignored the fact that mining companies must always pay royalties, as London Mining has been exempt from paying when it is in a tax-loss position. The second is that the Government has severely lowered tax rates of both companies, while simultaneously introducing a tax on goods and services that has led to an increase in consumer prices. Not only does this put more pressure on the already struggling 60% of the population living below the national poverty line, but it result in huge outflows from the country and its economies. With the low tax rates and failure of these companies to reinvest into Sierra Leone large amounts of money are not being invested back into the country’s economy and instead leaking out to the British and global markets, thus depriving Sierra Leone of potential stimuluses that could be used to improve the country’s standard of living and overall well-being.

In doing an analytical analysis we can see the amount money being lost to these power and money driven multinational corporations. After lowering the taxes as well as violating the Minerals and Mining Act of 2009, as mentioned earlier, London Mining negotiated a 6% corporate income tax rate for its first three years of operations in Sierra Leone compared to the required 30% as stated in Sierra Leone’s Tax legislation. Both London Mining and African Minerals have also been granted full exemption from goods and services tax, as well as taxes implemented on imported capital goods, vehicles and equipment or Customs tax. The National Revenue Authority has estimated that these exemptions accumulate to a total loss of approximately $US224million in 2012 which was about 8.3% of the country’s GDP. Christian Aid, who maintains a high presence in Sierra Leone, estimated that between 2014 and 2016 the government would have lost a total of $US131million in revenue, which is an average of $US44million per year. This $US44million can be used to education 2.9million children which could educate ¾ of the total population of children under18. As it is extremely evident and is well summarized by Christian Aid worker Joseph Ayamba, “The granting of tax incentives to mining companies, especially African Minerals and London Mining in the country has resulted in massive revenue losses to the government and largely hinder the government capacity to support its development priorities such as health, education and agriculture.” These companies are clearly manipulating their own power, exploiting the country’s resources and leaving a long term trail of poverty and devastation.

 Finally, the third concern is that specifically with African Minerals, it is not clear if government is enforcing the section of the mining act, demanding that all extractors are required to setup an independent fund to rehabilitate the environment. This has already led to detrimental effects on the environment and the populations in the surrounding areas. Mining has caused massive dust pollution which has affected many communities, and created vital health problems. There have also been accounts of flooding which have crippled communities in the Lunsar townships which are located in the Northern Province of Sierra Leone. The mining itself and some of these affects have also had detrimental impacts on farmlands which have had repercussions for an already starving population. Along with decades worth of reckless diamond mining these companies are destroying the Sierra Leonean natural environment. Mining has led to soil erosion, deforestation, and the complete breakdown and loss of whole ecosystems, which also forced populations to relocate. This can be connected to the work of Pope Francis in Laudato Si where he discusses many ecological issues that our ever-changing world is facing. He mentions in his first chapter the loss of biodiversity which is exactly what the companies such as London Mining and African Minerals are doing, after striking corrupt deals with the government that exempt them from certain environmental restrictions. Pope Francis also commented further on the issue of water, noting that mining companies are not only causing flooding, threatening people’s lives, because of their minimal restrictions deforestation and land degradation, resulted in heavily polluted water systems and created large amounts of stagnant bodies of water. These specific conditions, especially the stagnate bodies of water, very similar to what was seen in the movie we watched about the Zika virus epidemic in South America, prove to play lethal roles in the spreading of epidemics such as malaria. Sierra Leone saw approximately 1.7million cases in 2013, in a country consisting of a total population of approximately six million. Collectively, this all contributes to one of Pope Francis’s last major issues which is the decline in the quality of human life and the breakdown of society. Unfortunately everything is connected and one lapse in the chain-link fence, can cripple the whole system. Despite many of these issues such as malaria and environmental degradation already existing in countries like Sierra Leone poor government policies allow these foreign companies to enter the country of their choosing, cut special deals, exploit the country’s resources, destroy it’s environment, and have a overall negative impact on the population’s well-being and country’s economic standing. They take advantage of these poorly - structured emerging economies, who actually need help and assistance, rather than attempt to create a positive long-lasting impact, seek to benefit from large profit margins. As said in the words of a London Mining Supervisor when interviewed by a reporter for the London School Economics Newspaper, “Exploit and go love, that’s all we’re here to do, exploit and go.”

I believe that the exploitation of Sierra Leone and its resources can also be analyzed with in relation Karl Polanyi’s The Great Transformation: The Political and Economic Origins of Our Time(1944). Polanyi believed that a market economy must include markets for all resources including labor, land and money. Polanyi discusses how the one of the two major developments of the 19^th century was the rise of market capitalism and how the market society in which industrialization was situated, was the key for disaster, as a result of the fictitious commodities of labor, land, and money.  He further exclaims how a commodity as in regards to labor, land and money is, ““entirely fictitious,” and that this fiction, “supplies a vital organizing principal, which is that anything that inhibits the functioning of these markets as if they are commodity markets should be prohibited.” Polanyi defines a commodity as something that is for sale in markets and explains that, “labor is an essential human function that is not always intended for sale, land is nature and therefore is not produced for sale and finally money is produced at all except by banks.” Polanyi argues how large-scale production and the investments needed to provide the conditions necessary for a capitalistic market created new risks and as a result required businesses to secure supplies of labor, land, and credit. This was only possible if these resources, land, labor and money, could be purchased in markets, but as defined by Polanyi, these commodities are fictious and cannot be produced for sale in markets. Therefore, attempting to trade them in markets and allocating them through the price system is an unnatural development leading to the destruction of society. Labor cannot be exploited or underutilized without affecting the nature of the person or population, and land similarly cannot be exploited without harm to the environment, if commodified these consequences are inevitable. Therefore, in reaction to the rise in market capitalism and protection of economies and societies Polanyi discusses the reality of the double movement which was, “the widespread expansion of “real” commodity markets accompanied by protective actions to limit the consequences of commodifying land, labor, and capital – the “fictitious” commodities.”

      This is unfortunately exactly what went wrong in Sierra Leone. In its early history Sierra Leone was just conquered by the British and therefore there wasn’t much to be done, but that isn’t the case amongst recent matters. Since Sierra Leone gained independence in 1961 they have partaken in a capitalistic market and although having commodified the fictious commodities they have placed prevention measures to prohibit the exploitation of its economy, resources and people. A perfect example of this is the Mineral and Mining Act of 2009 which prevents environmental and economical exploitation of the country and its resources. Consequently, due to a weak economy, corrupt government and multinational company pressures the Sierra Leonean government by passed these protective measures on behalf the British companies. Therefore, allowing for the exploitation and degradation of Sierra Leone’s resources, environment, and economy and as stated by Polanyi, the ultimate deterioration of the whole society, thus preventing any form of human development.

The manipulation of emerging economies by western civilization is unfortunately still a reality in today’s world. Through the impact of colonization, globalization, and the capitalistic market system, without any protective measures, developing countries are continually exposed to high risk of further exploitation.

Bibliography

1.      "British Mining Companies' Exploitation in Sierra Leone." ONE. ONE, 07 Nov. 2014. Web. 24 Apr. 2016. <https://www.one.org/international/blog/british-mining-companies-exploitation-in-sierra-leone/>.

2.      "British Mining Companies Exploitation of Sierra Leone." Africa at LSE. N.p., 23 Dec. 2013. Web. 24 Apr. 2016. <http://blogs.lse.ac.uk/africaatlse/2013/12/23/british-mining-companies-exploitation-of-sierra-leone/>.

3.      Chasteen, John Charles. "Born in Blood and Fire." Google Books. W. W. Norton & Company, n.d. Web. 25 Apr. 2016. <https://books.google.com/books?id=fC90B5xkYyIC&pg=PA51&lpg=PA51&dq=Pizarro%27s%2Bdivide%2Band%2Brule&source=bl&ots=XorpxEy12Z&sig=Jdsug85Xe7iv8GwQwLojisJQaXY&hl=en&sa=X&ved=0ahUKEwiPtMTrrbDMAhUCMj4KHfguBy8Q6AEIPTAF#v=onepage&q=Pizarro's%20divide%20and%20rule&f=false>.

4.      Diamond, Jared M. Guns, Germs, and Steel: The Fates of Human Societies. New York: W.W. Norton, 1998. Print.

5.      Francis, Pope. "Laudato Si' Study Guide: Chapter One - The Tablet." The Tablet. N.p., 25 June 2015. Web. 29 Apr. 2016. <http://thetablet.org/laudato-si-study-guide-chapter-one/>.

6.      "Malaria: Fighting the Other Epidemic in Sierra Leone." MSF USA. N.p., 23 Jan. 2015. Web. 25 Apr. 2016. <http://www.doctorswithoutborders.org/article/malaria-fighting-other-epidemic-sierra-leone>.

7.      "Malaria: Fighting the Other Epidemic in Sierra Leone." MSF USA. N.p., 23 Jan. 2015. Web. 26 Apr. 2016. <http://www.doctorswithoutborders.org/article/malaria-fighting-other-epidemic-sierra-leone>.

8.      Mosselmans, Bella. "Stop British Mining Companies’ Exploitation of Sierra Leone." WE ARE RESTLESS. N.p., 25 Sept. 2014. Web. 29 Apr. 2016. <https://wearerestless.wordpress.com/2014/09/25/stop-british-mining-companies-exploitation-of-sierra-leone/>.

9.      "Sierra Leone: The Agonizing Experience of a West African State under British Colonial Domination." Standard Times Press. N.p., n.d. Web. 25 Apr. 2016. <http://standardtimespress.org/?p=6223>.