Contents

       Cover

      Also by Nicholas Shaxson

       Title Page

       Copyright

       Dedication

      Introduction

      CHAPTER ONE: Sabotage

      CHAPTER TWO: Neoliberalism without Borders

CHAPTER THREE: Britain’s Second Empire

CHAPTER FOUR: The Invisible Fist

       CHAPTER FIVE: The Third Way

       CHAPTER SIX: The Celtic Tiger

       CHAPTER SEVEN: The London Loophole

       CHAPTER EIGHT: Wealth and Its Armor

       CHAPTER NINE: Private Octopus

       CHAPTER TEN: Big Hog

       Conclusion

       Acknowledgments

       Notes

       Index

       Back Cover

       Introduction

      In the early 1990s I was the correspondent for Reuters and the Financial Times in mineral-rich Angola in west Africa, which was then supplying more than 5 percent of all US oil imports and which the United Nations reckoned was suffering the world’s worst civil war. Angola was, on paper, one of Africa’s wealthiest countries, but on standard measures of human development it was almost the poorest. As UNITA rebels rampaged across the countryside, digging up diamonds to pay for their war machine, I flew into besieged cities in the interior in corkscrew dives to avoid antiaircraft fire, to try to make sense of what was going on. In the government-held capital of Luanda I remember the sight of upside-down legs kicking and wriggling from the tops of stinking hot garbage Dumpsters, as scab-encrusted war orphans in diesel-soaked clothes dived for food and other treasures discarded by the beneficiaries of the oil wealth. These kids, some of whom slept at night in sewers to hide from robbers and the police, would surround me on street corners, tickling my elbows, wheedling for cash, crooning “Amigo! Amigo!” to try to establish a friendship with the white man. Often, though, they used two different words: “Chefe!” or “Patrão!” the Portuguese words for “boss” or “patron.” This would, they reasoned, oblige me to fulfill my assigned role and look after them as my loyal underlings. Most days, I’d donate something to Kwanza and the boys, six or seven cheerful rascals who lived on my hotel’s street corner, and they defended me fiercely against all comers. Sometimes, I felt as if they would have fought to the death to protect me.

      These kinds of relationships were woven into the country’s economic and political tapestry, especially in the hierarchy of political power, where the rich and influential handed out goodies to their underlings in exchange for their support. At the time, oil and diamonds made up more than 99 percent of Angola’s exports, and it was quickly obvious to me that economic theories about supply and demand and interest rates that were being taught in Western schools made no sense here. To begin to understand an economy so extremely dependent on minerals, it helps to picture it as a swollen river, which fans out into a widening delta system of ever more numerous rivulets. Flotillas of boats loaded with treasure—meaning the oil wealth, in Angola’s case—glide downstream, and gatekeepers extract tolls from the passing boats. The big diversions occur far upstream, and as the river flows onward and splits and branches, there is steadily less to go around. These street children lived out at the furthest end of the river delta, where all that was left for them lay at the bottom of a bug-infested dumpster.

      Every Western visitor to Angola had a version of the same question: How could the people of a country with such vast mineral wealth be so shockingly destitute? War and corruption were part of the answer, of course. A venal leadership in Luanda was stealing the oil money, eating lobster and drinking champagne on Luanda’s beaches, while its ragged and malnourished compatriots slaughtered each other out in the dusty provinces. But something else was going on too. I didn’t know it then, but I was getting a frontline view of a grand new thesis that academics were just starting to put together, now known as the “resource curse.”

      Many countries