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"Our Most Dangerous Export"--A Commentary by Prof. Amy Chua


(This essay was originally published in the February 28, 2004, edition of the Guardian.)

Our most dangerous export: Imposing free market democracy on Iraq has unleashed ethnic hatred
By Amy Chua, professor of law

In May 1998, Indonesian mobs swarmed through the streets of Jakarta, looting and torching more than 5,000 ethnic Chinese shops and homes. A hundred and fifty Chinese women were gang-raped and more than 2,000 people died. In the months that followed, anti-Chinese hate-mongering and violence spread throughout Indonesia's cities. The explosion of rage can be traced to an unlikely source: the unrestrained combination of democracy and free markets - the very prescription wealthy democracies have promoted for healing the ills of underdevelopment. How did things go so wrong?

During the 80s and 90s, Indonesia's aggressive shift to free-market policies allowed the Chinese minority, just 3% of the population, to take control of 70% of the private economy. When Indonesians ousted General Suharto in 1998, the poor majority rose up against the Chinese minority and against markets. The democratic elections that abruptly followed 30 years of autocratic rule were rife with ethnic scapegoating by indigenous politicians and calls for the confiscation of Chinese wealth. Today, the Indonesian government sits on $ 58bn worth of nationalised assets, almost all formerly owned by Chinese tycoons. These once productive assets lie stagnant, while unemployment and poverty deepen, making Indonesia a breeding ground for extremist movements.

Conditions in the developing world make the combination of markets and democracy much more volatile than when western nations embarked on their paths to market democracy. The poor are vastly more numerous, and poverty more entrenched, in the developing world today. In addition, universal suffrage is often implemented wholesale and abruptly, unlike the gradual enfranchisement seen during western democratisation.

But the most formidable problem the developing world faces is one the west has little experience with. It's the market-dominant minority - ethnic minorities which - for widely varying reasons - tend under market conditions to dominate economically impoverished "indigenous" majorities. They are the Chinese in south-east Asia; Indians in east Africa, Fiji and parts of the Caribbean; Lebanese in west Africa; Jews in post-communist Russia; and whites in Zimbabwe, South Africa, Bolivia and Ecuador, to name just a few. In free-market environments, these minorities, together with foreign investors, tend to accumulate starkly disproportionate wealth, fuelling ethnic envy and resentment among the poor majorities.

When sudden democratisation gives voice to this previously silenced majority, opportunistic demagogues can swiftly marshal animosity into powerful ethno-nationalist movements that can subvert both markets and democracy. That is what happened in Indonesia, Zimbabwe, and most recently Bolivia, where weeks of majority-supported, Amerindian-led protests resulted in the resignation of the pro-US, pro-free-market "gringo" President Gonzalo Sanchez de Lozada. In another variation, recent confiscations by the Russian president, Vladimir Putin, of the assets of the "oligarchs" Boris Berezovsky, Vladimir Gusinsky and Mikhail Khodorkovsky - all well-known in Russia to be Jewish - were facilitated by pervasive anti-semitic resentment among the Russian majority.

Iraq is the next tinderbox. The Sunni minority, particularly the Ba'aths, have a large head start in education, capital and economic expertise. The Shiites, although far from homogeneous, represent a long-oppressed majority of 60-70%, with every reason to exploit their numerical power. Liberation has already unleashed powerful fundamentalist movements which, needless to say, are intensely anti-secular and anti- western. Iraq's 20% Kurdish minority in the north, mistrustful of Arab rule, creates another source of profound instability. Finally, Iraq's oil could prove a curse, leading to massive corruption and a destructive battle between groups to capture the nation's oil wealth.

Given these conditions, rushed elections could well produce renewed ethnic radicalism and violence; an anti-market, pro-nationalisation economic policy; and an illiberal, Islamist regime in which women can be murdered by relatives for the crime of being raped - already happening in Shiite Baghdad.

Meanwhile, an analogous dynamic is playing out at the worldwide level. In the past 20 years, the US has come to be perceived as a global market-dominant minority, wielding wildly disproportionate economic power. In the eyes of many across the globe, the US is the ultimate crony capitalist, ruthlessly using its minority economic power to dominate the politics and policies of other countries. From this perspective, it is not surprising that despite Saddam Hussein's barbarous record, international public opinion was overwhelmingly against the US going to war with Iraq. This opposition to the US was closely bound up with deep feelings of resentment and fear of American power and cynicism about motives.

Unfortunately, latest developments seem only to be fuelling these suspicions. Neither weapons of mass destruction nor clear links between Saddam Hussein and al-Qaida have been found and it has become clear that, at best, the Bush administration was operating on an oversimplistic view. Instead of a gratitude-filled Iraqi people cooperating with the US in a rapid transition to multi-ethnic free-market democracy (which ideally would produce a domino effect across the Middle East), Iraq teeters on the brink of lawlessness, and attacks on coalition troops are rampant.

I recently received an email from an Arab-American woman working for a human rights NGO in Baghdad. In her words: "Deep ethnic and religious divisions certainly remain in Iraq, but ironically the one theme unifying the Iraqi people at the moment is their intensifying opposition to American and British occupation. Meanwhile, the vast majority of Arabs in the neighbouring countries are perched at the edge of their seats waiting for the US to fail. Many Arabs feel that any work in Iraq now - even humanitarian relief work - is feeding into the occupation of one of the strongest Arab nations."

What is to be done? Retreating from democracy in Iraq is not an option. Democracy and market-generated growth, in some form, offer the best long-term hope for developing countries. But there are many different versions of free-market democracy and the US has been exporting the wrong version - a caricature. There is no western nation today with anything close to a laissez-faire system. Yet for the past two decades, the US, along with international institutions like the World Bank and IMF, has been pressing poor countries to adopt a bare-knuckle brand of capitalism - with virtually no safety nets or mechanisms for redistribution - that the US and Europe abandoned long ago.

The same has been true of democracy. Since 1989, the US has been pressing developing countries (with the glaring exception of the Middle East) to implement immediate elections with universal suffrage. This is not the path to democratisation that any of the western nations took. Further, British and American democracy started locally, not nationally.

Most important, even today democracy in the west means much more than unrestrained majority rule. It includes protection for minorities and property, constitutionalism and human rights. A lot more is needed than just shipping out ballot boxes.


Amy Chua is professor of law at Yale University and author of World on Fire: How Exporting Free-Market Democracy Breeds Ethnic Hatred and Global Instability