The Corruption Formula: Why is the world corrupt? – long read analysis

The Corruption Formula: Why is the world corrupt? – long read analysis

Why should I read this?

 

This article is really a multi-part analysis of a huge problem effecting the world today, including all Muslim majority countries. That problem being, corrupt governments. This article breaks down the origins of all corrupt governments, why corrupt governments are enabled and designed to exist and gives Muslims crucial perspectives of how to view these corrupt governments.
We at islamiclens.com feel this is a must-read critical issue.

After reading “The Corruption Formula”, it will help you look at the news in a different and more educated way, for example, read this article by the New York Times, “Women in Tunisia Tell of Decades of Police Cruelty, Violence and Rape”. [/highlight]

 

Old Strategy, New Tactics: The Corruption Formula

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Why is the world so corrupt?

[Disclaimer:  This is the first part of a 3 part blog post series. Given the nature of the topic and vast amounts of information available on it, we’ve tried to condense some of the most pertinent and relevant information to help you the reader to better see and understand our perspective on it.  Please take the time to go through the links as well as the videos and references.  As always, comments, suggestions, and questions are most welcome. ]

Introduction

Do you read the news?  Many try to.  Sometimes it is hard to read, because the news is always so depressing, and we mean always, but as concerned citizens and Muslims we should be aware of what is going on in the world.  After all, how can we as Muslims claim to care for the plight of others, especially our Muslim brothers and sisters around the world, when our knowledge of how they live only comes via filtered news, which is often limited and in many cases missing much detail?  Therefore, over the last few months we’ve expanded our research to include a more detailed look at the history and politics of many countries, especially Muslim-majority countries.  We have focused on material that helps us to understand just how many of the countries in the world today were first created, underwent political transition and the change of power, and how they continue to exist and function.  In other words, how did we get to where we are today?

Our goal was to connect this knowledge to news of current events.

Now, why are we boring you, the reader with the origin and journey of our research?  Because after months of careful reading, one question keeps popping up in our minds, namely:

“how is it possible that most of the world is living under a “corrupt government”?”

Dozens and dozens of different countries throughout the planet, all with different cultures, religions, and types of government setups, yet all share one common denominator, corruption!

Just to be clear, when we say “corrupt government”, we don’t mean the type of government that the countries claim to have on paper.  For instance, take the countries of Egypt or Argentina, they both claim to be some form of a “Democratic Republic”, which may or may not be true, but this doesn’t describe how the leaders actually run the country.  Also, we are not referring to corruption in general terms, because every country in the world has corruption.  If there’s a law on the books, there will always be bad actors that will try to break that law for some type of gain.

What we are referring to is a government whose corruption is purposeful, systematic, and pandemic.  A government whose endgame and sole existence is corruption, and most importantly, whose corruption serves the interests of those in power as well as those of a foreign power.  In other words, a government whose role is NOT to serve its people, but rather to allow the family or clique in power to steal the country’s wealth, as well as multitude of foreign companies to come in and do the same.  Some refer to this type of government as a kleptocratic government.

Another common characteristic that all these ‘corrupt governments’ have, is that the money in the county flows up, rather than down, just like a mafia.  In a normal or healthy government the country’s resources in all its forms are usually drawn from the population to the center, but then are largely distributed back downwards within the system, in the form of patronage, infrastructure, public services, decent salaries for public officials, and so on. [1]   Most importantly, the overall money in the country, stays in the country.

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On the other hand, in these ‘corrupt governments’, the people not only pay taxes, but they also pay a barrage of extorted bribes and fines for everything you can think of.  This money then moves up the ladder, i.e. everyone is paying someone else off, until it reaches the top.  But by far, the biggest characteristic of this type government is that the money moving upwards within the system is largely sent outside the country altogether (that’s where offshore financial havens come into play).  In addition, the corrupt leadership is getting large amounts of money from donors, but that money doesn’t stay in the country either.  Overall the net gain that people living in these countries get is: minimal public services (if any), a gun to the face if you get too unhappy about it, a substandard living, and an overall life of acute injustice and lack of dignity. [2]

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To further understand how “corrupt” this type of systemic, widespread, and purposely executed corruption can be, we will provide several different examples at the end of this post, so you the reader, can see and feel in detail what these people are living under.

Now that you, the reader, understand a little clearer just what we mean by a “corrupt government”, we must ask the question again, how is it possible that the overwhelming majority of all the counties in South America, the Middle East, Africa, Eastern Europe, and Asia etc.…all have governments that fall into this category?  Really think about this — these five areas are all very different: different cultures, people, resources, politics etc.… yet they all share this horrible trait.  Or ask yourself the question in reverse, how is it that Western countries (i.e. US, France, U.K. Germany, etc.) avoid this fate?  Of course, they have corruption too as many are well aware and as already mentioned, but not purposely instituted pandemic corruption built from the ground up, where money flows up instead of down.  Is it a coincidence or this by design?

Well to answer this properly we must look at a little history, in particular the history of colonization.

Colonization – Old School

The first wave of colonization began in the early 15th century when the Portuguese conquered the city of Ceuta (Northeast tip of Morocco) in 1415. [3]  This wave of Europeans using their superior ships and canons to exploit others for profit continued into the first half of the 19th century with British, French, Portuguese, Spanish, and the Dutch conquered Latin America, the Caribbean, the Middle East, and parts of Asia, Africa, & the Americas. [4]  Some refer to these centuries’ as the ‘Age of Discovery’, but a more proper label would be the ‘Age of Wicked Profiteering’.  These centuries are marred with heinous crimes against humanity in which whole populations were decimated and cultures were destroyed, for the sole goal of getting rich by controlling foreign maritime trade. [5]  [Good Video Here]

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The second wave of colonization is often referred to as the ‘Age of New Imperialism’ and began during the second half of the 19th century.  This is when European powers, the United States, and the Empire of Japan used advanced military technology to begin an unprecedented pursuit of territorial conquest.  Their goal was to make their empires bigger through conquest and the exploitation of resources to feed each of their industrial revolutions.  This is the era in which the ‘Scramble for Africa’, America’s ‘Manifest Destiny’ and ‘The Great Game’ in Asia all took place. [6] [7]  This wave was equally brutal to humanity, and resulted in a transition from direct control via political and military occupation to indirect control usually through “puppet” proxy rulers. [ibid] [Good Video Here]

In general, the overall purpose of colonialism was to control land, labor, natural resources, and markets to fuel the empire of the growing colonial economy.  These industrial nations forcibly pushed their way upon developing nations, and then extracted value from these developing nations, just as one would from a mine or a field that you own. [8]

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Colonization – New School

The mad dash to expand and exploit the world’s resources was very chaotic, so much so that by 1898 rival imperial countries finally collided in what is known as the Fashoda Incident between Britain and France. [9]

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War here was barely avoided, but this new fear lead to new alliances, and these new alliances were one of the main causes that eventually lead to the outbreak of World War I in 1914.  This four year global war originated in Europe and was the first time weapons of mass destruction were developed and used.  Over 38 million military and civilians were killed worldwide. [10] [Good Video Here]

After the devastation of WWI, all the world powers agreed that war in the new modern and industrial world was too costly and therefore must be avoided.  Therefore, in 1920, the League of Nations was created.  The League was the first international organization whose goal was to maintain “world peace”.  However, the League had many flaws and more importantly it did not get United States support.  Ultimately the League proved incapable of preventing aggression by the Axis powers (Germany, Italy and Japan) in the 1930s, and by 1939 the world powers were yet again entrenched in a world war over resources. [11]  WWII was more widespread and brutal than WWI, and by its’ end in Sept 1945, the war had claimed (by some estimates) the lives of over 60 million people. [12] [Good Video Here and Here]

The winners of WWII were the Allied powers (Britain, France, Soviet Union, China, and the US), who defeated the Axis powers, but by far the biggest winner was the United States.  Throughout the war the US financed the other Allied powers, supplying them with billions worth of planes, tanks, food, clothing, and strategic resources, which tremendously helped the US economy.  Also, aside from the attack on Pearl Harbor, the US was the only major power to avoid any domestic homeland bombing and the only power that possessed (and used) nuclear weapons. [13]  Thus, by the end of WWII, the US had graduated to the unchallenged number one superpower on the planet.

On the other hand, the other powers were decimated by the war.  Their homeland infrastructures were in shambles, their economies were now heavily indebted to the US, millions of their citizens were killed, and they no longer had the resources to keep control of their imperial colonies. [14]

The end of WWII also gave birth to a new international “peacekeeping” organization, the United Nations. [15]  After four years of intense negotiations, the Allied victors designed the UN to replace the League of Nations and to secure their future interests, that is why only the US, China, France, UK, and the Soviet Union possess veto power on the United Nations Security Council. [Good Videos explaining UN here: ABC]

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It’s important to note, that without the US, the UN would not exist, or would have failed just as the League of Nations did.  The other powers were well aware of this, because they needed US leadership, military might, and money for the UN to achieve its primary goal of maintaining international peace and security.  Additionally, unlike the League, this time around all US leaders of both political parties, pushed for the UN too, most likely because they saw the UN as a mechanism to take a leadership role in world affairs, maintain peace among the other world powers, and to extend their reach and influence to the former European colonies and beyond.  As the saying goes, “To the victor, go the spoils”.

In addition to the UN, the US also helped create both the IMF and World Bank to help manage the global economy and to aid in the post WWII reconstruction.

The last event during this time worth highlighting was the creation of the US’s more robust and centralized intelligence service, the CIA, to replace its predecessor the OSS (Office of Strategic Services).

Now why is all of this important? How does it tie into what we’ve dubbed, “new school colonization”?  What we are putting forward and the whole purpose of this blogpost, is to show that the US came up with a new method of colonization.  A new formula if you will, whose end result is similar to old school colonization, but without the mad scramble and direct confrontation among world powers.  Thus, since the end of WWII, the US (as well as other powers) has been practicing and applying this new formula to secure third world resources, strategic interests, and extend their global influence and power.  But before we dive deep into this new ‘formula’, we must expand and understand the instruments and symbols of this formula — namely the important roles that the IMF/World Bank and the CIA have.

The CIA’s role

If you do a simple Wikipedia search for CIA, you get is this vanilla definition that states, “The Central Intelligence Agency (CIA) is a civilian foreign intelligence service of the United States federal government, tasked with gathering, processing and analyzing national security information from around the world, primarily through the use of human intelligence” [16].

While it is of course true that some of the CIA’s actions involve gathering and analyzing data, i.e. espionage type work, this definition (or any online for that matter) doesn’t even begin to scratch the surface of the true extent and purpose of their work.

In a must read book titled “Legacy of Ashes: The History of the CIA”, author Tim Weiner provides an in depth look at the true nature of the CIA’s work.  In this book he details dozens and dozens of examples of how each US president uses the CIA to try to accomplish one main goal, namely, overthrown and replace a country’s leadership.  Or the politically correct term that US politicians love to us, ‘regime change’.  Therefore a more proper definition should be, the CIA is a tool of the United States federal government whose role is to secretly intervene in the internal affairs of all other countries for the sole benefit of the American’s political and economic goals, by any means necessary.

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Besides simply collecting intelligence through cunning and secrecy as most Hollywood movies portray, here is an abridged list of some of the more common tactics the CIA uses to take control of a country’s leadership and maintain sway over this leadership with the overall goal of granting the US access to the country’s resources.  Just to be clear, resources could be material like oil or a valuable metal like copper (used in supply chains of multiple industries), or it could be geostrategic as in control over a channel or strait.

So how does the CIA “overthrow” a leader towards the US camp?

  • Use of bribery with cash, coercion, and in many cases brute force to support rivals. [17]
  • Hiring and use of street gangs to start rallies in favor of the local actor they wanted. [ibid]
  • Paying off religious leaders to denounce the current leadership. [ibid]
  • Again, liberally paying off and bribing anyone!  Senators, senior military officers, editors, publishers, etc. [ibid]
  • Making fake pamphlets, posters, paraphernalia to help sway public opinion. [ibid]
  • They use of “democracy” to flip the political leadership by subsidizing desired political parties while withdrawing funds from others, giving/withholding money to individual politicians or political actors, subsidizing publication of books & media, subsidizing journalists, and of course blackmail — the backup ace in the hole. [ibid]

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In a nutshell, they basically follow 3 steps when trying to overthrow a leader:

1) They wage political warfare, economic warfare, psychological warfare, cyber warfare, sabotage, propaganda, counterintelligence, and of course they throw enough money at everyone to induce the change to happen. [ibid]

2) If that fails, the US usually ends up condemning the country to harsh sanctions to impose poverty, thus forcing the current leader to adopt the harsh features of a police state to keep the population under control.  While at the same time, covertly provoking a popular uprising until the change occurs. [ibid]

3) Finally, if all else fails they look to support some type of military coup, either using the existing military apparatus of the country or they just use the global juggernaut that is the US military. [ibid]

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One might say that the CIA’s work is ugly, but it is necessary, because the US is simply trying to overthrow a bad leader or “keep the peace”.  Or perhaps one could say these things had to be done during the Cold War with Russia (from 1947 – 1991) to stop the spread of virulent forms of Socialism and Communism.  Or even more recently the US must use these tactics to intervene in the Middle East and beyond to stop the spread of Islamist terrorism, al-Qaeda, and ISIS (or whatever other names these fools choose to call themselves these days).

That’s fine, and we might personally agree in some cases, but what truly shows the ugly side of  their underbelly and exposes the US’s true intentions, is what the CIA does after they “help” the new leadership come to power.  In all the cases that we’ve researched (see case examples below), and we mean all of them, the new leadership ended up running a “corrupt government”, as defined earlier above.  In other words, the US helps to put bad actors/criminals in power deliberately and then helps maintain them in power despite their massive corruption.  One could ask, Why? The answer simply put is because bad actors will aggressively act to carry out and serve US economic and political interests, i.e. enable the US to dominate the country’s resources.

So how does the US (via the CIA) support these Kleptocratic governments?

  • Liberal use of tons of ‘cold-cash’ to support leaders.  The corrupt leader in turn uses the money to buy votes during staged election times – and yes, we choose the word ‘staged’ on purpose. [ibid]
  • Use of warlords to run guns.  This is because corrupt leaders will need weapons to use over their own people as popular discontent grows. [ibid]
  • Building powerful radio stations and media outlets for these corrupt governments, because the corrupt leadership must try to subdue and brainwash their own people from rising up. [ibid]
  • Empowering and strengthening these corrupt leaders by training and equipping them with private police and officers.  The US spends millions annually training and building up foreign police and military forces. [18]
  • Now this point is particularly interesting.  If the US is essentially teaching these foreign police and security officers how to run their countries, then how do all these countries end up with a ‘corrupt government’?  Is the US deliberately teaching these people how to be corrupt, or is it that the US only seems to be picking the most corrupt individuals to teach?
  • Finally, the biggest form of ‘help’ they provide these corrupt leaders, is that they connect them to American military and economic aid, which is an enormous prize for these bad actors, because it means getting really powerful and rich.

As a noteworthy mention, some CIA actions not listed above include the use of torture at what they refer to as “black sites” as well as drug dealing to finance and raise cash for some of the actions listed above.  One can simply ask Pablo Escobar’s son how the CIA financed all the horrible coups in Latin America. [19] [20] It is no wonder the director of the National Security Agency under Ronald Reagan – Lt. General William Odom once wrote:

“Because the United States itself has a long record of supporting terrorists and using terrorist tactics, the slogans of today’s war on terrorism merely makes the United States look hypocritical to the rest of the world.” [21]

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To sum up this section, it’s extremely important to highlight, that the CIA is not a rogue US entity.  In other words, the CIA is not out in the world doing these things on its own.  The CIA is one of the many tools of the United States, and the US uses this tool when she sees fit.  In addition, the CIA is not the only US intelligence apparatus, currently the US has seventeen intelligence agencies [22].  So, you can imagine how much brainpower, bandwidth, and resources goes into making sure this formula works.

Speaking of formula, we must now look at the next symbol; economic aid.

The role of the IMF & Western Aid

Initially after World War II, the IMF was charged with overseeing the international monetary system to ensure exchange rate stability to facilitate orderly international trade.  Likewise, the original purpose of the World Bank was to lend money to Western European governments to help them rebuild after World War II. [23]  But since the early 1970’s the IMF and World Bank have morphed to take on a much different role.

According to the IMF’s website, their purpose is to“foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.” [24]  This is also referred to as “Multilateral Aid”.

The IMF’s work consists of 3 steps: [25]

  1. conducting economic surveillance
  2. providing loans to needy countries
  3. providing technical assistance & training

On paper it sounds fairly innocent, right?  But as the saying goes, never judge a book simply by it’s cover, and when you open the IMF/World Bank’s book the facts on the ground are anything but innocent.

We are not going to list all the reasons as to why banks like the IMF and World Bank are so bad for the planet.  There are literally hundreds of publications and websites devoted to exposing this. We’ll just highlight some salient facts that expose its role in the formula:

  • The IMF is a very powerful and secretive institution with practically no accountability. [26]
  • Rich countries dominate IMF decision-making because each vote is determined by the amount of money that each country pays into the IMF’s quota system. The US, of course, has the highest voting stake and is the only nation with the power to veto all major decisions. [27] A 2004 study by  the University of North Carolina concluded that “American policy makers regularly shape the specific content of IMF conditionality agreements.  When the US has interests at stake for its respective transnational corporations, the IMF offers larger loans. When the US has fewer interests at stake, the IMF offers smaller loans.” [28]
  • The IMF has spent decades propping up some of the most corrupt and repressive regimes in the world.  So far, there has been No correlation between IMF loans and growth.  Even a Clinton administration task force acknowledged that,

“despite decades of foreign assistance, most of Africa and parts of Latin America, Asia and Middle East are economically worse off today than they were 20 years ago.” [27]

  • The leadership of the IMF knows exactly what it is doing.  A 2011 Joint Economic Committee study found “evidence suggesting that the IMF knowingly makes loans to corrupt governments while recognizing that some of its loan conditions and procedures can create circumstances promoting additional corruption … thus, IMF lending operations may be consistent with subsidizing corruption.” [ibid]
  • The World Bank plays a different role than the IMF, but works tightly within the stringent SAP framework imposed by the IMF.  It focuses on development loans for specific projects, such as the building of dams or roads, but their only concern is private corporate profit. [29] For example, if a project ends up destroying the local food supply or results in thousands of people being displaced, who cares? Local community concerns are rarely taken into consideration. Profits and return on investments (ROI) are paramount.

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Therefore, we feel that a more proper definition that helps describe the IMF’s role would be the following:

The IMF is a tool for wealthy countries to support and enable ‘corrupt governments’ to play ball. Their ‘work’ consists of 3 steps:

  1. They have a team of people that study a country’s economy and resources inside out, and figure out what is the best way to maximize a country’s worth, for the benefit of the wealthy countries (who see themselves, as opposed to its citizens, as its shareholders).
  1. They provide these ‘corrupt governments’ all forms of different loans that are tied to structural adjustment policies (SAP’s), — all designed to foster “growth” — a fancy term for sucking the country dry (i.e. cutting spending on health and education, eliminating basic food subsidies, privatizing national assets, etc.).
  1. Finally, they provide the gangsters in power with an economic expert that trains and teaches these thugs how to suck the country dry.

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Besides loans provided by the IMF and World Bank, there are also other types of “aid” that wealthier countries like the US provide.  One odious visual example involves the straight-up delivery of shrink-wrapped $100 bills.

Pallets_of_cashIraq.jpgRemember the $12 Billion dollars of US cash that “vanished” in Iraq [30]

Sometimes it’s project based aid, where funds are given to finance a project that the country needs, such as a school or a hospital (which by the way either never gets built or is built using the most substandard or cheapest materials possible because most of the money allocated or given goes to the ‘corrupt leadership’, i.e. they take their cut).

Then don’t forgot the mother of all aid, military aid.

At this point, you might ask yourself, why do rich countries like the United States fuel and enable these ‘corrupt governments’ via these loans and aid?  In other words, what do they get out of it?  In a recent Guardian report, Jason Hickel says it best when he discusses a study that was published by the US-based Global Financial Integrity (GFI) and the Centre for Applied Research at the Norwegian School of Economics.

He writes, the research “tallied up all of the financial resources that get transferred between rich countries and poor countries each year…As far as I am aware, it is the most comprehensive assessment of resource transfers ever undertaken.

What they discovered is that the flow of money from rich countries to poor countries pales in comparison to the flow that runs in the other direction.

In 2012, the last year of recorded data, developing countries received a total of $1.3tn, including all aid, investment, and income from abroad. But that same year some $3.3tn flowed out of them. In other words, developing countries sent $2tn more to the rest of the world than they received.

What this means is that the usual development narrative has it backwards. Aid is effectively flowing in reverse. Rich countries aren’t developing poor countries; poor countries are developing rich ones.” [31]

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OK, thus far everything we’ve described has been flowing in one direction from rich countries to poor ones.  The US for instance is spending money via the CIA to flip a leader, once the leader is flipped the US is spending money training and equipping the corrupt leadership, then the US is spending money via “foreign aid” which incentivizes and implants the corruption.  So, what is Jason Hickel of the Guardian talking about?  How does all this money, resources, and wealth flow out of these countries?  Well that’s where the last symbol of formula comes into play, where powerful multinational corporations, wealthy investors, and secret offshore accounts lie.

The role of Corporations & Tax Havens

This section is simple to explain; once the “new leader” stabilizes his power, large multinational corporations are given the green light to come in and ‘make deals’.  Every country and deal is different, but they all share six common characteristics:

  1. All these deals are extremely complex and are shrouded in layers of secrecy.
  1. The corporations work closely with the IMF & World Bank, (remember it is these banks that initially set up the ‘economic surveillance’ and the SAP’s).  So closely in fact, that these banks have three specialized institutions that specifically support private corporations:
  1. The International Finance Corporation (IFC),
  2. Multilateral Investment Guarantee Agency (MIGA), and
  3. the International Centre for the Settlement of Investment Disputes (ICSID). [32]
  1. Under direction via these banks, companies can come in and buy up everything. The biggest beneficiaries are generally transnational corporations whose focus is in sectors such as water, energy, oil & gas, telecommunications, automobiles, agribusiness, and luxury hospitality. [ibid]
  1. These deals all result in even more money going to the ‘corrupt government’ in the form of bribes, payments, or ‘gifts’ depending on the country. [ibid]
  • These deals are marketed as good for the country under the guise of words like ‘trade liberalization’, ‘privatization’, ‘economic growth’ and ‘free trade’.
  1. These companies profits are for the most part protected by the World Trade Organization (WTO), which was created in 1994 as a successor organization to the General Agreement on Tariffs and Trade (GATT).  On paper the WTO is a world court of trade where mega-buck arguments on everything from trade restrictions on imports and e-commerce issues are debated and settled, and globals trading rules are made.  The reality of this court is that rich countries set the rules to allow their corporations to dominate developing countries resources and economies by opening up these countries to foreign investment and thereby making it easier for production to go where the labor and environment are easily exploited. [33]  For example:
  1. The WTO has ruled it illegal for a government to ban a product based on the way it is produced, such as as goods produced with child labor. [ibid]
  1. The WTO has protected pharmaceutical companies’ patents against governments seeking to produce lifesaving medicines in their countries, such as areas in sub-Saharan Africa, where thousands die every day from HIV/AIDS. [ibid]
  1. WTO policies have allowed dumping of heavily subsidized industrially produced food into poor countries, which undermines local production (if any) and  has resulted in increased unemployment and hunger. [ibid]

Overall WTO rules have created a world where the richest 20 percent of the world’s population consumes 86 percent of the world’s resources, according to the United Nations Development Program [ibid].  Worse of all, if a country’s government (corrupt or otherwise) doesn’t comply with the WTO rules, then the WTO has the power to punish rule violators with sanctions.  Again, corporate profits are protected above all.  [more on WTO here and here]

  1. Most importantly the overall society hasn’t really gained anything.  This is mainly because most (if not all) of the profits generated from any of these schemes are sent abroad.  Actually, it’s the opposite, the society doesn’t get zero, they get a net negative.
  • Think about it…the first thing these companies demand is that: subsides for the poor are cut, protection for workers be eliminated, unrestricted access be granted onto the land, environmental safeguards be overridden, and social programs be drastically cut back. [ibid] And of course the ‘corrupt leadership’ agrees, because remember that’s their role and why they were originally put into that position.
  • The result?  The people get no windfall from corporate profits cause all the money leaves the country, jobs (if any) are low paying and unstable, their environment gets run down and in many cases destroyed, and on top of this citizens in these countries are now stuck with a mafia-style government that steals money from them and the public funds.

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The only question left to answer, is where does all the money generated in profits go?  Part of the answer is that some of the money leaves the country in the form of reported corporate profits that go back to the country of origin these corporations are from (returns for shareholders overseas).

On the other hand, the rest of the answer is not so straightforward.  Enormous sums of money disappears via illegal capital flight, this money often ends up in secret offshore accounts, western tax havens, and in investments outside the country from where the profits were generated.  For example, much of the illicit financial outflows from Latin America undoubtedly finds its way into fine art, blue chip corporate stocks, ritzy property and mansions in Miami and New York, as well as in offshore accounts in the Bahamas, Panama, or Switzerland.

Also, prior to last years infamous ‘Panama Papers’ leak, it was generally thought that these offshore tax havens were the rogue side of the global economy only used by shady people, but the Panama leak exposed to the world that in fact these offshore accounts ARE the global economy.  In that, trillions of dollars are being routed through and stashed in these secret untraceable accounts; by some estimates anywhere between 7.6 trillion to over 30 trillion dollars.  With everyone using this method to move and hide money, from politicians, prime ministers, presidents, supreme court justices, AND shady people. [34] [must listen to podcast about Panama Papers here]

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Whether it’s a corporation or individual hiding the true value of all the wealth they have sucked out of a country or it is the ‘corrupt leadership’ doing the same, all the money that leaves the country is “laundered through a labyrinthine system of offshore corporate networks, and finally secured in high-value assets in the West.” [35]

Nate Sibley of the Hudson Institute details it best, he writes:

“The Panama Papers gave the public an unprecedented glimpse behind this corporate veil into a vast shadow economy concealed safely offshore…At every stage of this process, the primary mechanisms for transferring stolen cash are ‘anonymous’ companies, trusts, and other financial instruments whose true ownership is obscured. They may appear to be owned by a string of other (equally opaque) companies, or are perhaps fronted by middlemen while real control is exercised elsewhere. Whatever the structure, the intention is the same: to conceal the true owner’s identity so they can move ill-gotten gains around the world, without any questions being asked by law enforcement agencies.” [ibid]

Today there are more than 60 to 80 tax havens in the world, and the vast majority of them are controlled by a handful of western countries, with the US leading the pack for hiding and legitimizing stolen wealth. [ibid] [good video here]  The irony here is that most of the countries that love to boast in the media about their foreign aid contributions are the same ones enabling this mass theft from developing countries.  For example, the US is actually the one of the easiest countries in the world to open up a shell (secret) company to start the process of hiding money. [see video here]

Now that we have explained all the pieces, let’s look at this formula again in its entirety.

The Corruption Formula – Visual Overview

https://1.bp.blogspot.com/-tA5-_OpDbVQ/WL8Rx3mH09I/AAAAAAAAASY/phEgs668yGUDkXJ8ey9dSPLYpq4bAvZLwCLcB/s1600/formula.gif

Thus far, all of our reporting has solely focused on the United States, namely because the US is the architect and leader of this new form of colonization, but to be fair all wealthy colonizing countries today are playing by this new formula.  For example, the United Kingdom has its own intelligence service, it funds and uses the services of the IMF, it provides countries with foreign aid, it has it’s own multinational companies that go abroad and extract the wealth, and London (before Brexit) is considered the financial capital of Europe as well as one of the biggest tax havens in the world today.

Case Studies

To really feel the impact of this ‘formula’, we must look at some examples.

Exa: #1: Indonesia – Over a million-dead due to the formula

  • Prior to World War II, Indonesia was a European Colony.
  • After WWII, a power vacuum arose and Indonesia finally gained ‘independence’ under a nationalist movement. [36]
  • From 1945 to the 1960s, the nationalist Sukarno government rejected IMF and World Bank interference. This resulted in an economic blockade by the US and aggressive interference CIA and British intelligence. [ibid] [37]
  • The goal of the American and British governments was to put General Suharto in power via a military coup; this was done under the guise of combating communism. [ibid]
  • Once in power, General Suharto was given means to kill anyone who got in his way. [ibid]

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  • Reports estimate that Suharto killed up to a million ‘alleged’ communist sympathizers [ibid]
  • Shortly after, Suharto was offered a drove of economic and military aid. [36]
  • Then of course, the Corporate deals were made.  John Pilger of the Guardian describes these deals perfectly:

Indonesia under Suharto would offer up what Richard Nixon had called “the richest hoard of natural resources, the greatest prize in south-east Asia”. In November 1967, the greatest prize was handed out at a remarkable three-day conference sponsored by the Time-Life Corporation in Geneva. Led by David Rockefeller, all the corporate giants were represented: the major oil companies and banks, General Motors, Imperial Chemical Industries, British American Tobacco, Siemens, US Steel and many others. Across the table sat Suharto’s US-trained economists who agreed to the corporate takeover of their country, sector by sector. The Freeport company got a mountain of copper in West Papua. A US/European consortium got the nickel. The giant Alcoa company got the biggest slice of Indonesia’s bauxite. American, Japanese and French companies got the tropical forests of Sumatra. When the plunder was complete, President Lyndon Johnson sent his congratulations on “a magnificent story of opportunity seen and promise awakened”. Thirty years later, with the genocide in East Timor also complete, the World Bank described the Suharto dictatorship as a “model pupil”. [38]

  • A 2004 study done by Transparency International, estimates that Suharto and his family had salted away up to $35 billion dollars. [39]
  • Today General Suharto is gone, but Indonesia is still a model ‘corrupt government’: money still flows up like a mafia, everything from business deals to the traffic cops demand bribes and kickbacks, powerful international companies control the economy and each employs a local partner who is tied to the Suharto children, all the countries resources are being sucked out at record numbers, and of course the separation between the rich and the poor here is enormous. [ibid] [40]

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Exa: #2:  Egypt – The Military Kleptocratic Government

  • Egypt is a country consumed and controlled by its military, and we use the word military here loosely, because since the Camp David Accords of 1978, Egypt’s military is just another big corporation sucking the wealth out of the country. [41]
  • The Egyptian Military has overtaken up to 40% of the country’s economy, making everything from jeeps, cooking oil, spaghetti, major construction projects, etc.; and 40% range is vague because the military’s real economic depth is a state secret. [42]
  • These state run companies are not designed to promote broader economic development that would help and enrich the society, rather they are strictly run for profit.  In other words, more wealth leaving the country. [ibid]

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  • These companies get free land, enjoy tax forgiveness and exemptions from labor laws, and immunity from public oversight since everything the military does is classified as a national secret.  Thus, their products are made very cheap and likewise are sold very cheap, eliminating the competition. [ibid]
  • The irony regarding this setup is that the average people of Egypt either don’t really know how corrupt the military is because the corruption is hidden, or because the people look up to the nationalistic myth of the military, which is constantly maintained by the controlled media. [ibid]
  • To make matters even worse and more corrupt for the country, when Gamal Mubarak (The former Egyptian president’s son) came into the fold in the mid 1990’s, he and his clique started changing everything that was outside of the military’s reach.  He essential sold off the country’s resources and non-military companies to foreign investors & large corporations.  The result of this wave of privatization was thousands of Egyptians lost their jobs, the clique amassed a staggering fortune, and again all the profits from the companies and the clique was sent overseas. [ibid]
  • But the biggest bane of millions of Egyptians’ existence is the auxiliary police, who have their fingers into everything (with government approval of course).  At the airport, they collude with taxi drivers to rip off tourists.  In the streets, they allow vendors to clog the pavement in exchange for bribes. Of course, they set up ‘checkpoints’ everywhere to shake people down.  And if business is slow, they arrest people on fake charges, just to get a bribe at the police station. [ibid]
  • In Egypt, everything is up for sale:  building permits for illegal construction – no problem.  Licensees to import illicit goods – no problem.  Tax deferrals and rebates for the rich – no problem.  Again, everything has a price.  But remember these bribes and kickbacks don’t solely go into the pockets of the ones committing these extortion tactics; everyone takes a cut and the money moves up the corruption supply chain. [ibid]

If you’re the ‘police’ officer operating a checkpoint, you have a quota to make, and then you pass some of the quota to your supervisor, who in turn does the same all the way up. If you’re a teacher in school, you have a quota, so you hold back kids grades until the parents pay a bribe, then some of that bribe goes to your supervisor, who in turn does the same. [ibid]  Starting to get the picture?

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  • As far as what the corrupt military controlled government gets from the outside, that is simple. Today Egypt is still receiving billions in US military and economic aid, and billions more in IMF and WB loans.  In exchange the US gets 3 main things:
  1. continued commitment to the Camp David Accords,
  2. a prime and lucrative market for US defense contractors to sell their outdated equipment [43], and
  3. most importantly, preferential, and expedited passage for US ships through the Suez Canal (a perfect example of a strategic resource). [44]

Exa: #3:  Nigeria – The curse of too many resources

  • Nigeria, like most of Africa, is an extremely resource rich land.  They are the largest producer of oil in all of Africa and has the 8th largest supply of natural gas in the world. The US alone imports some 40 percent of the country’s oil production.  In all, this wealth is worth billions upon billions of dollars (even when the price of crude oil is low).  But of course, despite all this wealth 62 percent of the people live on less than $1.25 per day and barely anybody has electricity. [45]  How? Because most the wealth leaves the country.
  • Officially oil revenues are supposed to go into the Nigerian national budget, which then gets split up and spread throughout the country.  This downward distribution usually doesn’t exist in these kleptocratic governments.  Usually provinces receive almost no share of the national budget, but get carte blanche to extract wealth at their own level’s however they want as long as they pay their quotas up the chain, like in Afghanistan.  But of course, not all the oil revenues make it to the official national budget, it was reported that between January 2012 and July 2013 close to $20 billion dollars was ‘missing’. [46]
  • Like Egypt, the Nigerian ‘police’ are a nightmare for the people.  Their corruption is infamous. Locals say that “the police are like flies that settle on your arm”.  The police are clearly not protecting anything, they are just fetching money for the corruption supply chain.  For example, they frequently impound cars and motorcycles, they make-up fake arrest, checkpoint shake downs, they’ll even torture people if they are stubborn and don’t pay the bribe. [ibid]

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  • Nigeria also is a good example of a much deeper problem with these ‘corrupt governments’, and that’s purposeful neglect!  Because the IMF in collusion with these corrupt leaders only cares about maximizing wealth, other valuable parts of the country that can help the overall society gets neglected on purpose.  For instance, look at these 3-areas:
  • Electricity:  Even though the ‘government’ assigned billions of dollars to fix the rundown power stations and received World Bank loans specifically to fix the energy sector, the funds have been squandered or pilfered. [ibid] [47] But somehow the electricity that runs the oil sector or the rich areas of Nigeria never lose electricity.  It’s because the IMF SAP’s and the ‘government’ only care about keeping the money flowing — that’s neglect.
  • Agricultural:  Nigeria is an area of the world where rains lash much of the territory for half the year and seeds need merely to be scattered to grow, they are the envy of other parched places in the world.  In the 1960’s Nigeria was a strong agricultural exporter; now it imports all basic foodstuffs.  This is a direct result of under-investment in agricultural needs and transportation infrastructure. [48] Because quite frankly, the only thing the corrupt government and their backers care about is the oil, that’s why oil generates over 95% of Nigeria’s export revenue. [49]
  • Textiles:  Also like Egypt before privatization, Nigeria used to manufacture textiles and clothing, but now Nigeria is a hub of counterfeit Chinese-made textiles.  The rub is that officially the Nigerian government has banned imported textiles, but somehow the market is flooded.  This is because corrupt governments like Nigeria got their hands into everything including the cross-border smuggling racket.  These truckloads of counterfeit textiles have wreaked the Nigerian economy because the overwhelming majority of textile companies can’t compete with these cheap counterfeits, so they closed, resulting in thousands of lost jobs. [50]

Exa: #4: Afghanistan – criminal syndicate disguised as a government

The reason we choose Afghanistan as one of our examples, is because it’s a very fresh example. The US invasion of Afghanistan was only in October 2001 and the first president (Hamid Karzai) didn’t take power until 2002.  In other words, this US instilled ‘government’ is still relativity new, and unlike our previous example’s or other parts of the world like South America, they haven’t had decades to cement and perfect their corruption yet.  So, essential we’re getting a bird’s eye view of how these types of governments are built from the ground up.

  • That being said this corrupt government is fairly easy to describe.  At the top, you have the Afghan government leaders that report to the ‘President’.  Below them you have an array of smaller groups spread out throughout the country that represent the subordinate officials — governors or provincial chiefs of police (once again the word ‘police’ here is used very loosely like in Nigeria).  Then at the bottom you have the people of Afghanistan.  In this setup, the government’s main role is to provide two things, first, unrestrained permission to subordinates to extract wealth and resources for gain in any way possible (as long as they pay their due up the chain), and second, protection from repercussions. [51]  In other words, the government is actually a crime syndicate in disguise, the kind that would make Al Capone jealous.
  • Sarah Chayes, in her book Thieves of State, describes this system perfectly, she writes: “The whole system depended on faithful discharge, by senior officials, of their duty to protect their subordinates. The implicit contract held, much as it does within the Mafia, no matter how inconsequential the subordinate might be. Every level paid the level above, and the men at the top had to extend their protection right to the bottom.” [ibid]

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  • As far as actual “governing” is concerned, the government purposely leaves the east of the country for the U.S. (where the US military is busy hunting Taliban), because the government’s only concern is siphoning the country’s riches, that’s why most their operations are based around Kandahar, a city situated in the heart of the opium fields, near billions of dollars’ worth of minerals (marble, alabaster, iron, etc…), and a major node of entry into southern Afghanistan and trade routes. [ibid]
  • In Afghanistan, the people/farmers don’t grow poppy because they want to, or because of Taliban coercion, or because the price of poppy pays more (growing pomegranate and apricot sells higher than poppy), it’s because the ‘corrupt government’ doesn’t help farmers with credit for equipment to grow fruit or assistance in the event of a drought.  Rather the government allows the opium dealers to come in and provide loans in exchange for payment in opium (for a cut to the ‘government’ of course).  [ibid]
  •  In case you’re wondering, this gangster Afghan government is drowning in IMF & World Bank loans, because the US must support their creation.  In fact, a September 2016 report by the U.S. special inspector general for Afghanistan reconstruction (SIGAR) “strongly criticized Washington for pouring billions of dollars into Afghanistan with so little oversight that it fueled a culture of rampant corruption”. [52]
  • An outsider might see a failing state here, failing because the average person is poor and the leaders are obviously corrupt, but it’s the opposite.  This setup is technically serving its purpose; it has very little if anything to do with governing, it’s enriching the ruling clique, and it’s allowing the US with its companies and military to do whatever it wants. [53]

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Exa: #5:  Similarities that all ‘corrupt governments’ share

  • It goes without saying, that the gap between the rich (those connected to the ‘government’) and the poor in these countries is enormous!  That’s why these countries have constant protests, but just to be clear, it’s not simply poverty pushing people over the edge, it’s poverty with acute injustice and lack of dignity imposed by these ‘corrupt governments’ [54]
  • In order to get a good paying job in these countries, like a secure ‘government’ job, you must be part of one of the big families connected to the ‘government’, and likewise, even a private sector job with one of the international corporations is hard to find.  They also usually only hire from within the connected families because these companies plan on breaking the law and looting too. [ibid]
  • Which explains why it’s so hard to find honest people to serve in these “governments”.  Since these instilled governments are really criminals and thieves, the system self-selects for criminality.  Violation of the law turns into a rite of passage and it rewarded.
  • As far as the “Armies” of these countries, their role is NOT to defend the country’s borders or to help in the times of natural disasters.  Their roles are to protect big business, build mansions for the generals, facilitate the corruption, and silence the people. [ibid]
  • Another common theme is the corruption country’s infrastructure industries, or the lack thereof.  For example, if the country needs a bridge or public housing or a road, they get the money for these types of projects from World Bank loans, then the government auctions off the project to the lowest bidder, of course for half the money that was originally allocated/loaned, because the other half goes to their pockets.   The winner bidder then sells off some of the project, if not all, to more lower bidders, resulting in more people taking a cut of the funds.  Finally, the winner bidder at the end of the chain has the use the cheapest materials possible because barely any money is left and usually brings in their own labor, so no jobs were even created. (Common theme when the winner bidder is a Chinese company) The result is a poorly built project just to shut the people up. [55]
  • When thugs control the country, nothing is off limits.  Besides the usually wealth being sucked out and sold-off, and the more common extortion and bribe tactics imposed on the people, dark underground industries are allowed and encouraged to prosper as well.  Industries such as human trafficking, sex slavery (which is foolish called sex tourism in the media), regular slave labor, and child workers are a big source of income in many of these ‘corrupt governments’. [56]
  • In majority Muslim countries, these corrupt governments are extra harsh to any Muslim that dares speaks against this corruption.  There’s a commonly known cliché in these countries: “The pen is more dangerous than a gun”.  In other words, the jails in these countries are full of peaceful Muslim activists, whose only crime is speaking (publicly or privately) about the corruption.  And the word jail is not like you see on an episode of “Locked Up”.  These jails are secret medieval torture facilities, designed to strike fear into the population.  [57]
  • The biggest gangster of all is the finance departments.  These governments use audits to subjugate the people.  Nonpayment of taxes is used as a kind of welfare program to secure obedience, or to punish someone who grew to be too independent. Essential the result is that every business must pay a kickback to operate.  If you hesitate, someone in ‘the family’ is sent to attack.  If you refuse, they get your loans called in, or cancel your permits, or audit your taxes, or just flat out close your business. [58]  But worst of all is how these ‘government’ leaders misappropriate funds.  Just Google the Kabul Bank scandal of 2010 where over $925 million dollars of people’s deposits just went missing [59], or the look up the 2015 1Malaysia Development Berhad (1MDB) scandal were more than 3.5 billion in funds went missing [60], or simple Google ‘corruption’, cause the examples are endless.
  • To make things worse, technology (in particular remote cameras) have made these Kleptocratic governments even stronger.  The top now monitors the bottom to ensure the corruption is maximized. [61]
  • Paying bribes is an unfortunate part of life under types of governments.  In a 2016 survey conducted by Transparency International, they generated 11,000 individual responses across nine countries (Algeria, Egypt, Jordan, Lebanon, Morocco, Palestine, Sudan, Tunisia and Yeman), in which they found that “one in every three adults had paid a bribe in return for an ostensibly free public service.  One in three had paid at a court. One in four to a police officer. One in five reported doing so to a higher authority, but of them, almost half said they feared retaliation.”  The report goes on to say that “the persistence of corruption and bribery in the region is a testament to its history of repressive governments, often installed by foreign powers, which were more concerned with maintaining power and stability than creating structures of legal accountability” [62]

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To recap…

In the past, Western European countries would get the resources they desired by directly invading, conquering, and ruling a weaker area (old school colonization).  The result was always the destruction of the local culture, deaths of thousands upon thousands of people, and the ruling invaders would take everything they wanted.

Unfortunately, today the story is not very different.  Powerful countries use their enormous wealth, influence, intelligence, and military superiority to “intervene” (instead of invade) into the affairs of a weaker countries that are rich in the resources they desire and indirectly sway the country by proxy (new school colonization).  The end result is similar: the local cultures are still in ruin and in some cases worse off because now they’re being bombarded by more corrosive ideas such as nationalism, liberalism, feminism, etc..  Thousands upon thousands of deaths still occur, and the powerful country that sponsors this method just “buys” (instead of takes) anything they want.

The US has given the world many amazing things; unbelievable achievements in science, media, and technology just to name a few.  But instead of using the tremendous competitive advantage they gained post World War II to rid the world of oppressive and unnecessary colonial practices, the US just re-wrote the formula that all powers now use (in their favor of course).

So What?  What can we do?

We at iSiyasah.com don’t claim to have all the answers, on the other hand we do believe that  Muslims (along with all others interested on this issue) are in dire need of at least small intellectual steps towards revival.  For starters we would humbly propose the following:

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-Education:  As the saying goes, “it’s better to know than to not know.” The main objective of this analysis was knowledge.  The more we know about our history, the more we study our Islamic literature, the more we keep up with current news events, only then can any of this knowledge lead to positive intellectual revival.

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-Delegitimize Ruling Cliques:  Clarify to people that the leadership in these countries is not politically legitimate. Knowing what we now know about the elites that oversee these Muslim majority countries (i.e. Yemen, Saudi Arabia, Uzbekistan, etc.…) we all need to mentally detach ourselves from these people.  Essential point, they are not our leaders, they just happened to be the viceroys and gangsters put in charge now.  This means that when they speak, we know it’s nonsense, when they organize their fake rallies in their favor, we don’t attend, when one of their “representatives” visits our areas, we don’t honor them, but rather call out their corruption and their role in corrupt systems of governance and exploitation.

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-Defang Nationalism:  This is a big topic in and of itself, but if you really strip it down to its core, the poison that is nationalism is not that complicated.  Think about it.  If we mentally reject the people that were put in power by this corruption formula, then by extension we must mentally reject everything they stand for and stand on.  Which means we don’t fly or represent the flags that they’ve given to us, we shouldn’t sing their patriotic national anthems, and we should abstain from proudly labelling ourselves x, y, or z.  These labels and flags were designed to separate us; you know the old political proverb…divide and conquer.

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-Suspend Naivety:  Collectively we Muslims need to get smarter about how the world actually works.  For instance, next time you hear the slogans that the United States is the “beacon of hope for the world”, you should question this publicly with others.  Or when you read the word “foreign aid” in the news, you must ask yourself and try to investigate as to what strings are attached or deals are going to be made for that aid?  Don’t simply accept half truths and learn to look deeper behind slogans.

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-Interaction: These corrupt governments and their donors depend on our constant ignorance to keep the formula in operation so as to keep the money flowing.  Therefore, at the very least try to raise and spread awareness amongst your circle of family, friends, neighbors, and colleagues.  Share this analysis and make it a point of discussion to try to get people to see that corruption is not simply an individual failing but is an entire profitable group enterprise, one that relies on fear and ignorance of its existence to keep going.  With increased knowledge and awareness try to make people realize that another world outside of this systematic corruption is possible.

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[1]         Chayes, Sarah. Thieves of State: Why Corruption Threatens Global Security. New York: W. W. Norton, 2016. Print, pp. 213 – 218.

[2]        Chayes, Sarah. Thieves of State: Why Corruption Threatens Global Security. New York: W. W. Norton, 2016. Print.

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[46]        Chayes, Sarah. Thieves of State: Why Corruption Threatens Global Security. New York: W. W. Norton, 2016. Print, pp. 122.

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[61]        Chayes, Sarah. Thieves of State: Why Corruption Threatens Global Security. New York: W. W. Norton, 2016. Print, pp. 113.

[62]        Bearak, Max. “1 in 3 People in the Arab World Had to Pay a Bribe for Basic Needs, Survey Reveals.” The Washington Post. WP Company, 04 May 2016. Web. 07 May 2017.

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