THE BLOG
07/07/2010 11:44 am ET Updated May 25, 2011

Sustainable Corruption: Proving Biggie Smalls Wrong

The world breathed a collective sigh of exasperation last week as it was discovered that Zimbabwe hosts a sizable diamond depository. So sizable in fact that Zimbabwe could become one of the largest suppliers of diamonds in the world, according to UN experts. Not only would this help prop up the Mugabe government, so the story goes, but the discovery might further destabilize an already precarious state. This in turn could destabilize the region as a whole given the proclivity to fight for control of these precious stones. I have two problems with this resource curse narrative.

First is common sense: since when has extreme wealth in and of itself ever been a problem? With the Gleneagles aid-assistance promises still left unsatisfied, the discovery of a valuable resource on the continent should be met with excitement, not exasperation.

My second problem with the resource curse argument is that it is not universally true. Corruption abounds in the US, for example. However, the discovery of off-shores oil reserves in the Gulf of Mexico did not set off social unrest and conflict (though the subsequent spill just might). As it turns out, Notorious B.I.G. may be wrong: Mo' money does not necessarily mean mo' problems.

I have long entertained the idea (and I'm not alone in this) that perhaps there is such a thing as a sustainable level of corruption. Skim just enough off the top to still provide a healthy environment for investment and social stability and you'll likely get away with it. I'm not condoning corruption at any level, I'm merely pointing out the fact that corruption is an endemic global problem, however, for some countries, it is not an impetus for war or famine. Have non-warring states unwittingly achieved a sustainable level of corruption? Or are conditions for conflict brewing, awaiting an impetus for armed action?

One IMF economist recently published a paper about oil extraction and corruption. He found that when production was at its highest -- meaning where the highest rents could be extracted from the state's oil profits -- the government would repress political rights but oddly enough expand civil liberties . As it turns out, doling out civil liberties distracts a duped electorate, allowing the governing elite to continue their pillaging of state resources without worrying about being voted/overthrown out of office. The Mugabe government is characterized by civil liberty repression. If President Mugabe opened up the channels of public dialogue, could he get away with increasing the estimated $600 million that he allegedly has stashed away in Western banks?

It is worth investigating this approach, if only to dismiss it outright. Advantages offered by such a sustainable corruption approach are two-fold. First, sustainable corruption is arguably an easier political sell than outright eradication, especially for a repressive government looking for international credibility while trying to keep illicit funds flowing -- hello Mugabe. Moreover, in the case of expanding civil liberties to mask graft, at least civil liberties would be available. Such an expansion could lead to long-term political reform, among them the expansion of political rights. Once people get a taste for political participation, it is difficult to get rid of their appetite.

The mining companies are already lining up their bids to get into Zimbabwe's mines, time is ticking.