Oligarchy

Hello, and welcome to Oligarchy. We are tracking how Covid-19 and the world’s response to it is affecting the super-rich — and what that means for power and politics.

CRACK OPEN THE BUBBLY

It’s good news for the world’s kleptocrats with word that the UK has chosen to abolish its Department for International Development (DFID) and merge it with the Foreign Office (FCO). DFID was the only department in the British government that appeared to appreciate that propping up corrupt regimes may help in the short term, but makes the world far worse if you raise your eyes past the next six months.

Why should you care?

• The DFID money is devoted to ending poverty and securing sustainable development. Britain is one of only five countries that gives the 0.7 percent of gross domestic product recommended by the United Nations. 
• If its annual aid spend of $18 billion (£14.5 billion) starts going to governments that prove friendly, rather than to people who need helping, that will be a big boost for the powerful at the expense of the powerless.
• Before 1997, when aid spending was controlled by diplomats, Britain faced a series of scandals in which it linked aid to arms spending. The concern is that could happen again.
• “This merger will make it easier to siphon off aid spending to prop up foreign security partners, as maintaining these alliances will be prioritized over DFID’s mandate to end extreme poverty. We’ve already seen FCO officials approve overseas spending to foreign security bodies like torture prisons in Bahrain,” said Dan Dolan, deputy director at Reprieve, a charity that fights to end the death penalty. 

Is this a done deal?

• Prime Minister Boris Johnson’s chief adviser, Dominic Cummings, who makes all the important decisions, won’t care about the criticism. He wants something to rally the government’s right-wing supporters, who have long hated giving so much money to foreigners, and are rattled by the country’s poor record tackling Covid-19.
• But Johnson has a record of changing his mind when faced with strong opposition. Perhaps he’ll realize that a total reorganization of the world’s third largest aid budget during a global mega-crisis is an absurd idea. 

GOOD NEWS FOR DERIPASKA

There’s more good news for Russian billionaire Oleg Deripaska, whose lawyers managed to fight off an attempt by a former Russian government minister to have him jailed in London for breaching a court commitment. Vladimir Chernukhin, whose wife Lyubov is a regular donor to Boris Johnson’s ruling conservative party, has been battling Deripaska through the courts for years over a Moscow property investment.

• Businessmen from the former Soviet Union love bringing legal cases in countries with honest courts, which allows them to circumvent the crooked legal systems at home.
• There had been hopes that Unexplained Wealth Orders – a legal tool obliging wealthy foreign politicians to justify the origin of their money – might stop the owners of dodgy fortunes from coming to the UK, but the failure of a case against the daughter of Kazakhstan’s ex-president earlier this year suggests it’s still business as usual.

BAD NEWS FOR ELITE CHINESE WOULD-BE STUDENTS  

It looks like a technical announcement from China’s ministry of education, setting new regulations on how exactly foreign nationals can apply to Chinese universities. But in reality, it’s a blow to the children of the country’s elite, who had taken to buying foreign passports then gaining access to top Chinese universities via the easier route available to fee-paying foreigners.

• Popular passports for Chinese applicants include those of Dominica and St Kitts and Nevis, neither of which require you to visit their country before awarding you citizenship, but cost a minimum of $100,000 (there are wholesale reductions, for a family that buys in bulk).

BAD NEWS FOR WESTERN UNIVERSITIES

Thanks to the novel coronavirus, Chinese students were already due to be missing out on popular courses in the United States, the UK, and Australia. Hundreds of thousands of Chinese students have taken to studying in Western countries, and their absence will be a huge blow to university budgets. 

BUT SOME ARE REAPING COVID-19 REWARDS

Malaysia has gained two new billionaires, thanks to the world’s soaring demand for rubber gloves. One is Thai Kim Sim – also known as Stanley Thai — of Supermax, whose net worth hit $1 billion, according to Bloomberg, thanks to a near-quadrupling in the company’s share price.

• Malaysia makes more than half of the world’s rubber gloves, and the world isn’t going to stop wanting its products.

THIS WEEK I’M READING

I got an advance copy of Sarah Chayes’ Everybody Knows and as a result have had the Leonard Cohen song stuck in my brain for the last few days. I’m a few pages in and it already looks like it’ll be as good as her Thieves of State. She’s an expert on foreign corruption, but has turned her gaze on what’s happening in Washington DC, and exposes some very disturbing trends.

Sign up to get Oligarchy in your inbox each week.

And, please, consider supporting Coda’s work. The news business is ever more obsessed with the splashes and ripples on the surface of the sea, but Coda analyses the ocean currents.

See you next Wednesday,

Oliver