Welcome to While You Weren’t Looking, Foreign Policy’s weekly newsletter focused on non-coronavirus news.
Here’s what we’re watching this week: Africa is losing 3.7 percent of its GDP to illicit financial flows, an Amnesty International report details “hellish conditions” for Ethiopian migrants stranded in Saudi prisons, and a proxy war is brewing in the Caucasus as Armenia and Azerbaijan fight over disputed territory.
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Africa’s $90 Billion Problem
An estimated $90 billion flows out of Africa each year through illegal and corrupt practices, according to a report released this week by the United Nations Conference on Trade and Development (UNCTAD). The money lost annually through illicit financial flows is equivalent to 3.7 percent of Africa’s collective GDP—and almost as much as the continent receives in development assistance and foreign direct investment annually.
“Illicit financial flows rob Africa and its people of their prospects, undermining transparency and accountability and eroding trust in African institutions,” said UNCTAD Secretary-General Mukhisa Kituyi.
Illicit capital flows—money that is illegally generated, used, or transferred abroad—deprive countries of capital and tax revenues that could be invested by governments in other public spending. The U.N. report found that countries with high levels of illicit capital flight also had drastically reduced spending on health care and education. Women and girls are disproportionately affected by the stolen money as they are the primary beneficiaries from such investment.
If illicit financial flows out of Africa were curbed altogether—a highly unlikely prospect given the complexity of the problem—it could reduce by almost half the $200 billion annual funding gap required for African countries to meet their Sustainable Development Goals, according to the U.N.
Extractive industries such as gold, diamond, and platinum supply chains are particularly vulnerable to illicit finance: In 2015, they accounted for an estimated $40 billion in illegal outflows, according to the report. Tax evasion often motivates illicit capital flows and is often enabled by tax havens in some of the world’s wealthier countries. In 2014, Africa lost an estimated $9.6 billion to tax havens, or 2.5 percent of the continent’s total tax revenue.
“In many ways addressing illicit financial flows is a matter of ethics, and civil society organizations, whistleblowers, and investigative journalists have played a critical role in revealing the magnitude of [these flows] and the mechanisms that support them in Africa and beyond,” said Paul Akiwumi, the UNCTAD director for Africa and least developed countries.
The report comes just after the International Consortium of Investigative Journalists, BuzzFeed News, and 108 media organizations around the world published a mammoth investigation on global illicit finance based on thousands of leaked documents from the U.S. Treasury’s Financial Crimes Enforcement Network.
The 16-month investigation revealed that some of the world’s biggest banks moved more than $2 trillion in payments that they believed to be suspicious over an 18-year period, enabling kleptocrats, crooked tycoons, and drug cartels to launder their cash and dodge the taxman.
What We’re Following
“Hellish conditions.” Thousands of Ethiopian migrant workers are being held in squalid prisons in Saudi Arabia after they were expelled from neighboring Yemen at the beginning of the coronavirus pandemic, according to a report released on Friday by Amnesty International. The detainees including pregnant women and children.
Detainees interviewed by Amnesty described being held in overcrowded cells with inadequate access to health care, food, and water. Several had experienced or witnessed others beaten or electrocuted by guards for complaining about the conditions. Ethiopian State Minister Tsion Teklu told The Associated Press that as many as 16,000 Ethiopians could be held in Saudi prisons, adding that the foreign ministry was working to repatriate 300 people each week.
Last year, an estimated 150,000 migrants arrived at ports in Yemen, most seeking to cross the border into Saudi Arabia in search of work as laborers, housekeepers, or drivers. The migration route has been described as one of the most dangerous in the world. Before the pandemic, some 10,000 Ethiopians were deported from Saudi Arabia each month. A shortage of quarantine space has hamstrung Ethiopia’s efforts to repatriate its citizens from Saudi Arabia.
Proxy war in the Caucasus. French President Emmanuel Macron said on Thursday that he had evidence that militants from Syria had traveled to disputed Nagorno-Karabakh, where fighting erupted between Azerbaijan and Armenia on Sunday. This week, Armenia accused Turkey of dispatching Syrian mercenaries to fight alongside its ally Azerbaijan.
Skirmishes between Azerbaijan and Armenia have occurred periodically over the years, but this time the localized conflict risks drawing in Russia and Turkey, already at loggerheads in Syria and Libya. While Moscow has sold weapons to both sides of the conflict, Armenia has close military ties to Russia and is part of a Russian-led military alliance of former Soviet states.
Foreign Policy’s James Palmer explains how the collapse of the Soviet Union unleashed the brutal conflict.
Maduro looks to crypto. In a speech this week, embattled Venezuelan President Nicolás Maduro floated the idea of using cryptocurrencies to skirt U.S. sanctions. The announcement came as Maduro unveiled a new anti-sanctions bill, which will examine the possibility of using cryptocurrencies in both foreign and domestic trade. In 2018, the Venezuelan government became the first in the world to launch a cryptocurrency, the oil-backed petro, as a way to evade sanctions.
Also this week: An Iranian tanker carrying much-needed oil arrived in Venezuelan waters on Monday as the two countries have teamed up to undermine their mutual foe, the United States. The shared experience of punishing U.S. sanctions has only driven the regimes together. Tehran is now sharing its lessons in resilience with Caracas, as Esfandyar Batmanghelidj and Francisco Rodríguez wrote in Foreign Policy.
Keep an Eye On
The burning Amazon. The Amazon rainforest is experiencing the worst fires in a decade, according to satellite data gathered by the Brazilian space research agency INPE. September saw a 61 percent increase in the number of hot spots compared with the same month last year, as satellites detected 32,017 fires in the rainforest, which plays a vital role in preventing climate change.
In a rare mention of foreign policy in Tuesday’s presidential debate, Democratic nominee Joe Biden said countries should join together to give $20 billion to Brazil to stop deforestation of the Amazon, warning of economic consequences if the destruction continued.
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Blue Homeland. As Turkey becomes increasingly assertive in the Mediterranean, facing off against Greece and Cyprus over undersea energy reserves, Turkish officials have dusted off an irredentist maritime doctrine known as Blue Homeland developed more than a decade ago by Adm. Cem Gurdeniz. Ankara’s embrace of the doctrine is likely to fuel tensions between Turkey and its NATO allies.
The Washington Post interviewed Gurdeniz, who after eight years in retirement has suddenly found himself in Turkey’s national spotlight.
That’s it for this week.