Open Letter to Prof. Joseph Stiglitz

Ethiopian economists | 17 February 2011

Professor Joseph Stiglitz
University Professor
Economics Department, Columbia University
814 Uris Hall, MC 3308
420 West 118th Street
New York, NY 10027

Dear Professor Stiglitz,First, we Ethiopian economists and scholars express our sincere admiration for and recognition of your distinguished work in advancing the frontiers of economic thinking and your world renowned contributions to the theory of information which earned you and your colleague (Professor Grossman) the highest esteem, the award of the Nobel Prize in economics.

In light of your stature, it will not come as a surprise to you that those of us who hail from developing countries follow what you say very closely. In this regard, we kept a keen eye and learned a great deal of your interest and involvement in matters of development in the Third World over the past few years. You will agree with us that all people—irrespective of race, religion, age or other attribute– aspire to be free of oppression, poverty and corruption. The monumental changes that are taking place in Tunisia and Egypt which are now raging in the rest of North Africa and the Middle East are illustrative of the human passion for freedom and dignity. Given this emerging trend, we were astonished by your recent interview with Bloomberg (2. February 2011, “Real Risk of Spillover from Egypt Unrest”), in which you discussed the situation in Egypt.[1] When the journalist asked what advice you would provide to the Egyptian Government you said that, “at this point they have to open up and democratize; I think there’s just no choice; I think they’ve been very slow at doing this […] they ought to follow what’s going on in Tunisia”. We would like to inform you how elated we were to hear your unconditional support of the democratic aspirations of the Egyptian people. The first important step toward democratization took place on February 11 when a peoples’ led popular revolution forced President Hosni Mubarak to step down from power after ruling Egypt with an iron fist for 30 years.

What we find baffling is the contradictory signals you voice. Your appreciation of the importance of democratization in Egypt clashes with your long-held posture with regard to the application of the same principles in Africa in general and Ethiopia in particular. On a closer look, your critical approach to repressive governance does not appear to be applicable to Africa. We say this with justification and with the hope that you will reconsider your stand. In the past two decades you lent incalculable support, through your words and your actions,[2] to Ethiopia’s minority dictator, Meles Zenawi, who has ruled Ethiopia for 20 years. We would like to draw your attention to Peter Gill’s book Famine and Foreigners. This insightful analysis provides the world with a detailed account of how you developed a warm and intimate friendship with the ruler of Ethiopia, and how you and Mr. Meles became brothers-in-arms against the operations of the International Monetary Fund (IMF) in the country. Our concern does not about personal friendship but about the policy implications the friendship implies. We are talking about the legitimacy that your warm friendship and endorsements gave to the head of one of the most repressive regimes in Africa today.

The Ethiopian ruler to whom you lent your undivided attention and support is the same person who has inflicted untold brutality and pain on innocent civilians, communities and the country through acts of] alleged genocide, crimes against humanity and human rights violations. Mr. Meles Zenawi has stolen elections repeatedly; massacred hundreds and mass-detained over 40,000 citizens in Addis Ababa and other cities in 2005/06. Genocide Watch, Human Rights Watch, Amnesty International, the New York Times, the State Department’s annual human rights reports and many other media, public, and human rights agencies have given careful account of these and other atrocities. The independent Global Financial Integrity group has documented billions of dollars of illicit outflow of funds under his watch.

You will agree with us that there are real consequences when internationally known intellectuals with power and influence provide legitimacy to dictators such as Mr. Meles Zenawi. On the ground, the lives of ordinary Ethiopians who are denied livelihoods, suffer from unemployment, live with hunger and face the indignities of living under a repressive system each and every day tell the real story. These Ethiopians have been caught up between your policy/ideological preference on the one hand, and your delight in finding an African ruler who is happy to play the African anti-neoliberal Robin to your Batman. Don’t you think this is unfair and unjust? We regret to say that, in your ideological and intellectual battles with the IMF in collaboration with Mr. Meles, you gave a dictator the benefits of your global status as a leading economist. He has used this to polish his international image. The cost to the Ethiopian people has been high. African intellectuals, academics and fair minded leaders find this kind of affinity with African dictators regrettable and unbecoming of leading economist like you. What saddens and amazes us is your endorsement of Mr. Meles Zenawi’s knowledge of economics and his intellectual acumen. This, we find utterly irresponsible and intellectually dishonest. Ethiopia has many intellectual leaders scattered around the globe. Mr. Meles Zenawi is not one of them. This disservice to the Ethiopian people and to the rest of Africans is contained in your book, Globalization and its Discontents, in which you state that Mr. Zenawi demonstrated knowledge of economics—and indeed a creativity—that would have put him at the head of any of my university classes. You speak highly of the way he rules the country, saying “Meles combined these intellectual attributes with personal integrity: no one doubted his honesty and there were few accusations of corruption within his government.” .[3]

How do we reconcile your assessments and conclusions with other experts and global institutions such Human Rights Watch, Transparency International, Global Financial Integrity, Mo Ibrahim, Oxford University and even the World Bank? . As far as we are concerned he has several times failed his economics tests miserably. His economic policies and programs have brought untold suffering to the Ethiopian people. In the event you are not aware of his many failures, we would like to identify a most recent one. Recently he imposed price caps on a dozen or so goods. When imposing his ill-fated price caps measure, Mr. Zenawi told us that he was doing it in order to curb the month-to-month double-digit inflation that the country was experiencing. As any student who has taken principles of economics course would have predicted, the colossal failure of the price cap measure has not only backfired on his regime; it has also brought untold suffering to the Ethiopian people. As we predicted, every negative and secondary effect of price caps that any economist would theorize has been realized in Ethiopia. Mr. Zenawi’s price caps measures qualify to be cited as lessons in how to mismanage an economy. As if this is not enough, Mr. Zenawi tried to shift the blame on the Ethiopian entrepreneurs and merchants. A few days before imposing the ill-fated price caps measure, he gathered about 584 businesspersons and accused them of price gauging, hoarding and engaging in unhealthy competition. He told them that he would “cut their fingers” unless they cooperate with him. For anyone who watched the entire taunting process (and the ones before it) and Mr. Zenawi’s rants and the stunned faces and silence of the 584 businessmen and women, it was clear that the attendees were scared and did not know what to say. He met with and freighted the business community despite the fact that he had been informed (see, for example, http://www.pambazuka.org/en/category/features/67399) that the root causes of the price hikes and runaway inflation were the supply rigidities brought about by the opaque system that he imposed on the country. These include the creation and support of party-owned conglomerates which have dominated the vital sectors of the country’s economy, expansionary monetary policy (accompanied by negative real interest rates) and government spending- both of which have played their part in injecting liquidity into the system; lack of productivity; continuous devaluation of the birr – the latest one being the 20% devaluation announced on September 1st, 2010. To make matters worse, the latest information we have indicates that Mr. Zenawi’s government is contemplating to expand the price caps. The piling of mistakes continues unabatedly despite the fact that some of us had illustrated the negative ramifications of price caps (see, for example, http://gadaa.com/oduu/7573/2011/01/12/the-futility-and-damaging-effects-of-ethiopian-price-caps/.) The world knows Mr. Zenawi as articulate when speaking with foreigners. Ethiopians know him as sinister and cunning, brutal and repressive. For these reasons, we are puzzled by your unreserved praise of his economics. It is a disservice to the majority of Ethiopians for you to give legitimacy to a leader whose family, party and endowments control the economy with an iron fist. He runs a party owned and controlled business empire through his wife, decimates the private sector, and instills fear into farmers of losing their land, and access to inputs. Worse, if they complain about unfairness in rural service provision they will be punished.[4] Like us, the Economist magazine strongly differs with your assessment about Mr. Meles’ economics acumen, stating that the Ethiopian Government is “one of the most economically illiterate in the modern world”.[5] A Wikileaked cable from the US Embassy to Berlin also stated: “Germany reported addressing Ethiopia’s economic situation, namely hard currency and the poor investment climate, with Meles directly and being struck by what they described as Meles’ poor understanding of economics”.

In no small part to your contribution, Mr. Zenawi’s appearance at Columbia University on 22, September, 2010, shocked the Ethiopian community in the Diaspora and in the country.[6] His speech, the essence of which was the condemnation of neo-liberalism, was preceded by your warm welcome and introduction. You invited Mr. Zenawi to speak at World Leaders Forum at Columbia despite the fact that you were amply informed of his regime’s atrocities by many people of Ethiopian origin. Letters were sent to your institution via Lee C Bollinger, President of Colombia University, the student paper at Columbia, Columbia Spectator, and through several faculty members at Columbia.[7] Your University’s website initially carried the following scandalous statement about the visit. We presume that you were not unaware of the statement.

“Under the seasoned governmental leadership of Prime Minister Meles Zenawi, now in his fourth term, and vision of the Tigrai Peoples Liberation Front (TPLF) and Ethiopian People’s Revolutionary Democratic Front (EPRDF), Ethiopia has made and continues to make progresses in many areas including in education, transportation, health and energy.”

In light of the above and the ample reliable documentation of repression, gross human rights abuses, alleged genocide, single party and endowment command and control of the national economy, massive unemployment, land grab and mismanagement of the national economy, we urge you to no longer give legitimacy to the dictatorial regime led by Mr. Meles Zenawi. We believe that you’re past support and endorsement may have overlooked the real facts on the ground. As a Nobel Prize winner and a reputed leading economist you have provided Mr. Zenawi status and legitimacy he and his regime do not deserve. He is universally identified as one of the worst dictators in Africa today. The democratic wave that brought down dictators in Tunisia and Egypt is not likely to stop there. Foreign Policy magazine reported that the Tunisian and Egyptian ex-presidents are not alone. It provided a line-up of the eight worst dictators that fall into this category. Meles Zenawi makes this membership. (“America’s Other Most Embarrassing Allies”.)[8] Your video of February 2, 2011 has shown that you are able to see the downfall of autocratic rulers who choke their country and economy.

We urge you to be part of a legacy of prominent voices around the globe who believe in human freedoms and possibilities. At the end of the day, economic development is about people. You will agree with us that the nexus between economic development and good governance is so compelling that any form of dictatorship can’t be acceptable in North Africa, the Middle East or Sub-Saharan Africa.

We thank you in advance for your attention.

Ethiopian Development Policy Focus Group

  1. Getachew Begashaw, Ph.D. Professor of Economics, W.R. Harper College, Chicago, IL (Member).
  2. Aklog Birara, Ph.D. Senior Advisor (recent retiree, World Bank) and Adjunct Professor, Trinity University of Washington D.C. (Member).
  3. Seid Hassan, Ph.D. Murray State University, Murray, KY (Member).

[1] http://www.youtube.com/watch?v=B0DakQcKEMc&feature=youtube_gdata
[2] http://www.ethiopianreview.com/content/29379
[3] http://www.ethiopianreview.com/content/29379
[4] http://www.hrw.org/node/93605
[5] http://www.economist.com/node/8129387?story_id=8129387
[6] http://www.worldleaders.columbia.edu/events/prime-minister-ethiopia-meles-zenawi
[7] http://www.ethiopianreview.com/content/29391
[8] http://www.foreignpolicy.com/articles/2011/01/31/americas_other_most_embarrassing_allies?page=0,3

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