Failed States

Why Bad Guys Matter

They put the failed in failed states.

There are bad leaders, good leaders, and great leaders. Let's start with one very bad one.

When I met Sani Abacha in 1997, the Nigerian dictator struck me as uninterested in matters economic, his eyes glazing over as I sketched Nigeria's untapped opportunities. But I later realized how badly I had misjudged him: In his short five years in office, he reportedly succeeded in amassing some $4 billion in private bank accounts overseas. It was only his country's economy that bored him. Good thing for Nigeria that he passed away when he did, in 1998. During the subsequent oil boom, more scrupulous leaders enabled Nigeria to accumulate $70 billion in reserves. Just think how much of that Abacha would have squirreled away.

Leaders matter, for better or, more likely, for worse. Sure, some of Asia's "benign" autocrats have turned their ambitions to building strong national economies. But not in Africa and many of the other countries that I call the bottom billion -- quite a number of which crowd the upper reaches of the Failed States Index. There, the most common form of autocracy is anything but benign. These leaders not only neglect to build the economy, they actively avoid doing so. The best-known instance is President Mobutu Sese Seko's order to "build no roads" in the vast country then known as Zaire. Why? Because without roads, it was harder for opponents to organize a rebellion against him.

The world, unfortunately, has many Mobutus. When I asked Kenya's autocratic president, Daniel arap Moi, why he had banned food imports from neighboring Uganda, his answer so tortured common sense that one of his aides had to take me aside and tell me the real story: Some of the president's businessman friends had stocks of food warehoused and wanted prices to rise. In Angola, I once asked a finance minister why, in defiance of economic logic, his country operated multiple exchange rates. The president used the dual system to siphon off money, he whispered. Until last year, Zimbabwe's Robert Mugabe did the same.

Bad guys matter, and when they rule, they make weak states weaker. And the countless anecdotes are backed up by numbers: In a celebrated study, economists Benjamin Jones and Benjamin Olken looked at whether the death of a country's leader altered economic growth. It did, sometimes for better and sometimes for worse. Recently, an Oxford colleague, Anke Hoeffler, and I sifted through their results again, distinguishing this time between democrats and autocrats. We found that in democracies, changing the leader does not change growth -- all leaders are disciplined to perform tolerably. But in autocracies, the growth rates are as unpredictably varied as the leaders' personalities. Here lies the difference between good leaders and great ones: Good leaders put right the policy catastrophes of bad leaders; great leaders, like the men who shaped the U.S. Constitution, build the democratic checks and balances that make good leaders redundant.

So much for the good and the great -- now back to the bad. Like Tolstoy's unhappy families, leaders can be bad in many different ways, and the extremes of their badness matter out of all proportion to their frequency in the population. At the extreme of greed are kleptocrats. At the extreme of insensitivity to the pain of others are psychopaths. At the extreme of preference for getting their own way are tyrants. Although people with such characteristics are rare, they have a knack for getting themselves into precisely those positions where their traits are most damaging. Kleptocrats do not aspire to become monks; they want to be bankers. Psychopaths do not dream of being nurses; they strive to be soldiers. Tyrants do not plead to be social workers; they scheme to become politicians.

At the core of all successful societies are procedures for blocking the advancement of such men. The safety mechanisms are often rather mundane. Britain, for example, transformed the 19th-century civil service from corruption to efficiency by replacing promotion by patronage with competitive examinations.

The weakest states utterly lack such defenses. There, as extremely bad people of all three varieties infiltrate a wide range of key positions, countries are brought to their knees -- and not just by politicians. Banks are routinely run by thieves who bankrupt them by "lending" the deposits to themselves. Rebel armies are led not by liberators, but by people more suited for a mental hospital. Take Liberian commander Prince Johnson, who filmed himself calmly sipping a beer while his captive, President Samuel Doe, was tortured to death.

But among the many varieties of badness, political tyranny is surely the most destructive. Politically ambitious crooks do not just fritter away the money they make from corruption; they invest it in future power. And that should frighten us most of all.

NEXT: The Worst of the Worst

Illustration by Sean McCabe for FP

Failed States

Watch List

Four countries in big trouble.

GUATEMALA AND HONDURAS

"Every time I go to Guatemala, I find a dead body," says Manuel Orozco, a Central America analyst at the Inter-American Dialogue in Washington. "Anyone can be a target for any reason."

Over the last three years, narcotrafficking in Guatemala and Honduras has gotten a lot worse. A mere 1 percent of South American cocaine went through Central America as recently as 2007; today, somewhere between 60 and 90 percent does. Cartels from Mexico, feeling squeezed by President Felipe Calderón's war against them, have moved south, while Colombian traffickers have moved north.

And as the newcomers fight with homegrown cartels in Guatemala and Honduras, the result has been bloodshed. The U.N. Office on Drugs and Crime estimates that in Guatemala, "some provinces along key trafficking routes have the highest murder rates in the world." The only place where the violence might be worse? Neighboring Honduras, where drug traffickers had a field day while the country was distracted by last year's coup. In October, the country's drug-trafficking czar, Julian Aristides González, expressed his concern, noting that 10 aircraft full of drugs had landed in the past month -- compared with just 14 from January until the June coup. By December, González had been assassinated. He's not the only one; the country of just 7.3 million sees 15 murders per day.

Both countries' utter inability to combat organized crime has only exacerbated the situation. "In Honduras and Guatemala, the state has very limited control over entire chunks of the territory," says Kevin Casas-Zamora, a former vice president of Costa Rica now at the Brookings Institution. "That's what makes them so attractive to organized crime: They are very weak states by almost any indicator." In Guatemala, 15.7 tons of cocaine were seized in 2009 alone, and the drug economy is estimated to be worth twice the country's GDP. Money laundering is commonplace, and in April, the U.S. Treasury extended its sanctions war on drug cartels from Mexico to Guatemala, blacklisting a key family with alleged links to the Sinaloa cartel.

Meanwhile, two Guatemalan chiefs of police have been removed from office in the past year for their alleged involvement in the drug trade. There's a new commission set up to investigate and prosecute high-level infiltration, but with a docket of just 15 cases at any one time, it will take years to make a dent. Down the road in Honduras, the task is equally daunting because, as Casas-Zamora puts it, "a lot of people in the Honduran elite are doing business with drug traffickers."

Things could get worse before they get better. A particular concern is that Central American cartels will move into the production of methamphetamines, following in the footsteps of their Mexican peers. "Part of this incidence of violence and turf wars has to do with securing new facilities," Orozco says. "That's the part that worries me most."

Johan Ordonez/AFP/Getty Images

NIGERIA

After effectively going missing for six months of medical leave in Saudi Arabia, Nigerian President Umaru Yar'Adua finally passed away this May. But while the ambiguity about his condition has come to an end, the political crisis churned up in his absence is far from over. The shake-up exposed gaping social rifts in what was already one of Africa's most troubled countries. Intercommunity violence struck the country's middle belt; rebels in the Niger Delta grew agitated and impatient; and old debates about the regional distribution of resources among the country's 151 million people were revived. Today, the country is in a perilous state as Yar'Adua's successor, the optimistically named President Goodluck Jonathan, takes over.

What happened during Yar'Adua's absence was nothing -- which was precisely the problem. Since the president was still technically alive, his political cadre was loath to replace him, not least because of an unwritten rule in Nigerian politics that the presidency must rotate every eight years between the North and the South, lest the country descend into political infighting or worse, split in two. Yar'Adua was a Northerner; his vice president, Jonathan, was from the South. Jonathan was at last sworn in as acting president in February, but his authority was thrown for a loop just days later when Yar'Adua arrived back in the country in the middle of the night on Feb. 24.

While the politicians were haggling and protesters took to the streets in growing numbers, the country was falling into disarray. A nascent amnesty deal for militants in the oil-rich Niger Delta threatened to fall apart. As many as 500 people were killed in March, when Muslim pastoralists clashed with Christian farmers outside the city of Jos. And all this came in the aftermath of a Nigerian financial crisis that exposed profligate lending by and lax regulation of the country's banks.

With a new president at last in place, Nigeria watchers are hoping for a period of calm. But with a presidential election looming in 2011, the political jockeying is far from over. Jonathan's identity as a Southerner, as well as his more audacious sackings, have taken a toll, and the ruling People's Democratic Party shows signs of splitting. While people fight over the political spoils, the country could easily slip away. The worst-case scenario? A renewed insurgency in the Niger Delta, more religious violence in the country's center, and -- in the most unlikely but still occasionally rumored outcome -- a military coup. Regardless, life for the average Nigerian is getting worse, not better. After years of just muddling through, even that might no longer be an option for Nigeria.

Pius Utomi Ekpei/AFP/Getty Images

IRAN

In 2009, the Islamic Republic faced perhaps the greatest challenge to its existence since its inception in 1979. Between January and June, President Mahmoud Ahmadinejad went from being an uncontested presidential favorite to a widely opposed incumbent. The country's first real opposition movement in decades sprang up, internal power struggles rocked the governing class, and the very foundations of the Islamic Republic were called into question. And the ensuing turmoil is still playing out a year later.

Behind the public unrest was not simply a widespread feeling that the election had been stolen but a growing disillusionment with the government's mismanagement of the economy. Extra cash from the 2007-2008 oil windfall could have been put back into the economy. Instead, the benefits stayed confined to the ruling elite. The result has been economic stagnation, a banking system threatening to collapse, and rising unemployment just as a youth bulge is beginning to reach working age. It will take half a million new jobs every year to absorb the young Iranians entering the job market.

Much of this helps explain the surprising emergence of the Green Movement, which draws heavily from the third of Iran's population that is concentrated in major cities (another third live in midsize cities and towns). For now, the protests have died down and the regime seems to have the upper hand. But Iran's politics are notoriously volatile, and analysts say the unrest of 2009 will have lasting effects. Elections had helped legitimize the Islamic regime in the past, but that's a role they can no longer play, says the International Crisis Group's Robert Malley. Even more destabilizing, he notes, "the supreme leader, rather than being above the fray -- the person who balances various political factions -- is now viewed as an actor in an internal regime struggle."

What happens next could depend on events outside Iran, such as the strength and scope of international sanctions. Ordinary Iranians will undoubtedly feel some economic pain. But perhaps even more important will be the political impact if the sanctions draw the support of not just the West, but also China, Brazil, and others who have been willing to work with Ahmadinejad up until now.

Many hope that such a moment could be the game-changer in Iran -- when a majority of the country's people cease to buy into Ahmadinejad's portrayal of his regime. But the alternative scenario seems equally likely: that turmoil within the ruling cadre will simply seep down, squeezing dissidents and democracy advocates harder. Sanctions might even offer Ahmadinejad cover, as there would be a clear "enemy" to blame for economic pain. Then again, Iran could easily surprise the world one more time.

Amir Sadeghi/AFP/Getty Images

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