Thank your stars that India is not more richly endowed with natural resources. We have a bit of oil and a bit of gas, a few hillsful of iron ore and a few beachfuls of thorium sand, some bauxite under a forest in Odisha and a nice new vein of diamonds in Madhya Pradesh; also, apparently, at least Rs 186,000 crore’s worth of coal in the ground — though that coal is not of the very best quality.
This means that we have to ship our cash abroad to buy the resources we need. This can be a good thing. Presumably, when we pay for oil and gas, gold and precious stones, that money does not enrich Indian evildoers. The countries that sell us these commodities, on the other hand, and receive the gush of our money and the world’s money, cannot but be ruined.
Look at the major resource-exporting countries and you will see that, with a few exceptions like Australia and Botswana, their wealth is a curse. In some cases the rulers are corrupt and fearful of their own people. In others, legitimate governments function in such a way as to allow politicians, bureaucrats and some businessmen to funnel money from the sale of their nation’s resources into their own bank accounts, with just the merest veneer of legality.
That money, if “white”, has to be invested; if black, has to be made white and invested. Since the sums are very big, the world is open to them. Illegal gains from one corner of the world — say, $2 billion from the sale of Turkmenistan’s gas to Western Europe via Russian pipelines across Ukrainian territory operated by mysterious companies based in small towns in Florida or the Czech Republic with lawyers who lurk in Israel — are spread across the globe and distort economies everywhere. Everyone profits, except taxpaying citizens and the legitimate economy.
For an explanation of the above case, please refer to Chapter 4 of British journalist Misha Glenny’s knee-weakening book McMafia: Seriously Organised Crime (The Bodley Head, 2008). Glenny has spent a career reporting from Eastern Europe and the former Soviet Union. His perspective on the multinational criminal networks that operate across Eurasia and Africa from Mumbai to Prague, and indeed far beyond, is new and extremely frightening. There is no line, he shows, between the crooks and the state.
In one respect India is safe from that sort of criminal takeover. India is not awash with unemployed soldiers and paramilitaries, as Eastern Europe was in the early 1990s after the fall of Communism. Many of those ex-officers were naturally recruited to crime; at first in protection rackets, then to protect the trade in untaxed cigarettes (a big business in the Balkans), later in drugs and human trafficking, and so on.
President Yeltsin’s government in Russia at the same time kept controls on domestic prices of raw materials while allowing them to be exported at the market rate — the difference was so huge that the oligarchs grew incredibly rich very fast. That money funded the rest of the violent tamasha.
The human cost, as Glenny describes it, has been terrible. But somehow the most poignant story in his book, to me, is the saga of caviar. You could view it as a parallel to the trade in Indian animal parts: elephants, tigers, rhinos.
Instead of culturing sturgeon, the fish whose tiny eggs caviar is, criminals in post-Soviet Kazakhstan simple drag ever more fish out of the Caspian Sea. Most of that haul goes through the town of Atyrau. The poor fishermen outside the town are paid $3 a fish. In town the price rises to $175 a kg. The customs officer will wave you through at the airport if you mention your dealer’s contact. By the time it is served in New York, caviar can cost $7,000 a kg. You have to ask, if you buy caviar, where all the money you pay is going. In the meantime, as Glenny says, the only one paying and paying is the poor sturgeon.
It’s like that with the small fry. When the state goes to the dogs, we pay.
