13 February 2010

Wrong people are filthy rich, U.S. deputy says

KABUL, Afghanistan--Deputy Treasury Secretary Neal Wolin showed up at our university last week pitching a non-military U.S initiative he said was designed to strengthen Afghanistan’s financial management system. Wolin acknowledged that the Afghan system’s inadequacies, including corruption, are the reason why the “large majority” of international assistance bypasses the government. (Pres. Hamid Karzai claims the figure is 80 percent.)

This initiative, which comes more than eight years after the U.S.-led western forces toppled the Taliban, claims to expand the capacity of the Afghan financial management apparatus so it can assume control and direct the spending of a larger share of the international aid. Wolin interacted comfortably with students, staff, faculty, board members, administrators, press, guests while extolling the virtues of transparent, above the board financial management. He even got me a little misty-eyed when he explained that a national budget accessible to the public is “a powerful democratic document.”

But let’s back track a minute. Mr. Wolin’s boss is Timothy Geithner, one of the engineers of the recent transfer of hundreds of billions of U.S. taxpayers’ dollars to some of the richest banking and finance houses on the planet. Yes, the same Tim Geithner who is dodging investigators who want to know details of his e-mails with those deemed “too big to fail,” like AIG. Many of the same firms that he helped with TARP funds have enjoyed record profits. Many of those CEOs and top administrators are getting paid obscene bonuses while the rest of nation wrestles with the greatest economic collapse since the Depression.

The Deputy Secretary, it seems, can take some personal credit for one of the pillars of the legislative architecture that allowed this rapacious plundering of the commons. “In 1999, Wolin supervised a team of Treasury lawyers that drafted a version of the Gramm-Leach-Bliley (GLB) Financial Modernization Act that allowed banks, insurance companies and brokerage firms to merge. Economists largely agree that while the merger may not have directly led to the current recession, it opened the door to the creation of large financial institutions,” reports WhoRunsGov.com. Wolin, by the way, also did stints with the National Security Council and the Central Intelligence Agency before joining the Obama administration, according to the web site.

Devastated Afghanistan has a legal economy that is on life support, while warlords, drug lords, money launderers, and private armies are sustained by the illegal economy. There is no effective Afghan state. For whatever the Geithner-Wolin paradigm claims to represent, it has been a blueprint for capital consolidation with few regulations that succeeded in diverting spectacular riches into the pockets of criminals in business suits. How can anyone representing the U.S. Treasury Department lecture any nation on constructing financial management systems that serve political democracy?

Photo: Looking out a second-floor window at the Kampa Museum in Prague.


  1. May I link to this? It's damned good analysis, amigo!

  2. The fact is that states fail if corruption is endemic at the highest levels. Outside assistance is wasted as it ends up in overseas private bank accounts.
    There are many states that fall into that category; i.e., Pakistan, KYRGYSTAN, Sudan, and, in my opinion, Russia.
    How are you feeling these days?