by Amy Chua
In postindependence Burma, U Nu, the country’s first democratically elected prime minister, openly sought to “Burmanize” the economy through nationalization. “The wealth of Burma has been enjoyed firstly by big British capitalists, next the Indian capitalists, and next the Chinese capitalists,” U Nu declared in a famous tract from 1949. “Burmans are at the bottom, in poverty, and have to be content with the left-over and the chewed-over bones and scraps from the table of foreign capitalists.” In the sixties and seventies, Gen. Ne Win’s expropriations of over fifteen thousand commercial enterprises again expressly targeted Westerners and the despised market-dominant Indian and Chinese minorities.12
In Pakistan, Zulfikar Ali Bhutto won the support of the impoverished masses (as well as members of his own, landowning zamindaar class) through rousing public speeches that accused “Twenty-Two Families”—almost all Mohajir immigrants from India—of stealing the nation’s wealth. It was intolerable, he campaigned, that Pakistan’s indigenous majority (comprising four major ethnic groups: the Punjabi, Sindhi, Baluchi, and Pashtuns) should remain at the mercy of a tiny minority of “outsider” Mohajir industrialists and bureaucrats.
After sweeping to power, Bhutto’s “socialist” Pakistan People’s Party showed itself to be not socialist at all, but deeply ethnonationalist. Bhutto left almost completely intact the massive estates of the wealthy Sindhi zamindaar families, including his own. As late as the 1970s the Bhutto family’s own estate was measured in terms of miles rather than acres, extending across several successive train stops. Nor did Bhutto ever try to nationalize all private business. Instead, Bhutto aggressively targeted firms owned by the market-dominant ethnic Mohajirs. Thus, in January 1972, along with a few Punjabi businesses, Bhutto nationalized thirty-one heavy industrial firms, representing almost all of the hated Twenty-Two Families’ industrial wealth. Bhutto’s 1974 nationalizations of banking and insurance attacked any remaining Mohajir holdings. Through ethnically targeted nationalizations, Bhutto successfully undercut the Mohajir minority’s stark dominance of Pakistan’s industrial and commercial sectors.13
The nationalization movements that swept across Latin America in the first half of the twentieth century present a somewhat more complicated picture. Nationalizing politicians in Latin America undoubtedly mobilized mass support for their movements with class-based appeals and Marxist rhetoric. Nevertheless, the conventional wisdom that sees these nationalization movements as solely or even principally Marxist overlooks the core of ethnic nationalism that often gave them force.
Nationalization in Latin America was in a surprising number of cases fueled by the desire to reclaim the wealth of the nation for its true, ethnically defined owners. In country after country, revolutionary leaders sought to reverse the historical obsession with white superiority, either by glorifying Amerindian blood or by celebrating “mixed-bloodedness.” Indeed, in the early twentieth century the resentment engendered by Latin American racism, always interwoven with the struggle between rich and poor, was a powerful engine of revolutionary change throughout the region.
In Bolivia in 1951, for example, Victor Paz Estenssoro, head of the revolutionary party Movimiento Nacionalista Revolucionario (MNR), won the presidential elections by mobilizing the largely mestizo middle class with slogans like, “The land to the Indians, the mines to the State.” Properly terrified, the distinctly “non-Indian” mining elite supported a military takeover. After the MNR recaptured power in a bloody coup in 1952, one of Estenssoro’s first acts was to extend universal suffrage and free education to the Indian majority, consciously seeking to reverse the ethnically based disdain that had imbued Bolivian society at every level since the colonial period. The government then nationalized all major mines and expropriated six thousand vast estates from the “illustrious-blooded” hacendados, redistributing them in family-size plots among the landless Amerindian majority.14
But revolutionary as they were, Bolivia’s nationalizations were not really Communist: They did not seek to abolish private property in any thoroughgoing fashion. Rather, they were majority-supported confiscations directed at a market-dominant minority. The nationalization movements in Mexico, Peru, and elsewhere similarly targeted, along with “foreign imperialists,” the wealthy “white” elite with their links to foreign capital and vast latifundia landholdings.15
There are many more examples, from all parts of the developing world. Not all nationalizing leaders were democratically elected (although many were). But virtually all were supported with wild enthusiasm by the indigenous majority when they expropriated the riches of the market-dominant minority.
After 1989, many proclaimed that nationalization was a thing of the past. The Soviet Union had fallen, Communism had been discredited, and developing countries would never again be moved to nationalize. Unfortunately, all this is true only if nationalization in the developing world genuinely rested on Communist ideology. But as I have tried to show, this is not the case. To a far greater extent than has been recognized, nationalization movements in the developing world have been fueled by popular resentment among abjectly poor majorities against market-dominant minorities. Thus it should be no surprise that nationalization and confiscation persist today, even after the collapse of the former Soviet Union. Indeed, almost everywhere market-dominant minorities exist, post-1989 democratization has generated a volatile combination of anti-market sentiment and ethnic scapegoating. As a result, in a striking number of countries, even as markets triumphantly swept the world in the 1990s, a backlash of nationalization and confiscation began.
These nationalizations and confiscations have been anti-market, but only in a limited sense. They target not the institution of private property itself, but rather the wealth of a hated ethnic minority. They are based not on an ideal of a Communist utopia, but rather on a deluded vision in which the indigenous masses somehow step into the capitalist shoes of the minority so that they, “the true owners of the nation,” can be the market’s prosperous beneficiaries. In Zimbabwe, the ongoing mass seizures of white-owned farmland are hardly motivated by socialist thinking. On the contrary, these confiscations are quintessential expressions of ethnic nationalism directed at a deeply resented “outsider” market-dominant minority. The recent anti-Chinese confiscations in newly democratic Indonesia provide another vivid illustration.
Post-Suharto Indonesia:
Markets Plus Democracy Equals Ethnic Confiscation
As discussed earlier, market-oriented policies in Indonesia during the 1980s and 1990s led to the astounding economic dominance of the country’s 3 percent Chinese minority along with widespread, seething hostility among the pribumi majority against both General Suharto and the country’s “greedy Chinese locusts.”
After Suharto’s fall, Indonesians were euphoric. After the words “free and fair elections” hit the U.S. headlines, Americans were euphoric. Democratic elections, it was thought, would finally bring to Indonesia the kind of peace and legitimacy perfect for sustaining free markets. Indeed, Thomas Friedman has suggested that this is “one of the real lessons of globalization’s first decade”—that democratic processes give the public a sense of ownership in market reforms, thus making the majority more patient and tolerant of the inevitable “pain of globalization reforms.”16
That’s not what happened in Indonesia. The fall of Suharto’s autocracy was accompanied by an eruption of ferocious anti-Chinese violence in which delirious, mass-supported Muslim mobs burned, looted, and killed anything Chinese, ultimately leaving two thousand people dead. (Many of the dead were non-Chinese Indonesians trapped in blazing shopping malls.) Overnight democratization in the midst of all this naturally gave rise to ethnic scapegoating and demagoguery by opportunistic, vote-seeking politicians. The Islamic right, recalls Clifford Geertz, attacked the frontrunner candidate Megawati Sukarnoputri “as not really a Muslim but some sort of Javanist Hindu, beholden to Christians and Chinese. . . .” Megawati, meanwhile, assured frenzied crowds that she was speaki
ng daily with her dead father, Indonesia’s nationalist hero and founding president, Sukarno.17
Tarred by having been Suharto’s vice president, presidential candidate and interim president Bucharuddin Jusuf Habibie played brilliantly on both anti-market and anti-Chinese sentiment. To screaming crowds, Habibie and his right-hand man Adi Sasono preached their vision of a New Deal for Indonesia: a true “people’s economy” to be achieved by breaking up Chinese conglomerates and redistributing them to “the long suffering masses” in the form of indigenous cooperatives. “It’s a matter of economic justice,” Sasono declared. “One race cannot control 90 percent of the economy!” yelled adulating supporters.18
While president, Habibie expropriated the Chinese-controlled rice industry by canceling rice distribution contracts with hundreds of ethnic Chinese businessmen and awarding them instead to members of the Indonesian majority—most of whom hadn’t the foggiest idea what to do. The results were disastrous, part of a food crisis in which tens of millions of Indonesians were at one time reportedly eating only one meal a day. The new state-run rice cooperatives were immediately saturated with corruption, inefficiency, and scandal (one official was accused of trying to export illegally nineteen hundred tons of rice to Malaysia while his own constituents were starving). Predictably, indigenous officials and businessmen began to secretly subcontract work out to Chinese traders again. Still, the anti-Chinese and anti-market campaign rhetoric continued—and didn’t stop until most of the wealthiest Chinese Indonesians had left the country, along with $40 to $100 billion of Chinese-controlled capital. It was only when the World Bank and IMF realized that this capital was gone that they started to be concerned about ethnic conflict in Southeast Asia and to urge the Indonesian government to come to an “accommodation” with the country’s Chinese business community.19
Today—as a result of what one Jakarta-based consultant calls “Asia’s largest nationalization since the Communist takeover of China in 1949”—the Indonesian government sits on roughly $58 billion in industrial assets consisting of equity stakes in over two hundred companies ranging from automobile production to cement. Most of these nationalized assets were formerly owned by Chinese tycoons. For several years now these nationalized companies—once immensely productive Chinese “money making machines” as one government official described them—have simply stagnated while the country descends further into frustrated poverty. (As of last year, a frightening 40 million pribumi Indonesians were unemployed or underemployed.)20
Although there may have been economic justifications for the state takeovers of Indonesia’s failing, corruption-soaked banks, it is telling that most of the vast nationalized holdings have not been reprivatized despite the availability of buyers, the ongoing massive economic waste, and the government’s repeated assurances that the assets will be sold. Apart from bureaucratic incompetence and infighting, the explanation is that the potential buyers are typically ethnic Chinese or foreign investors, and the government has been paralyzed by fear that sales to such groups will trigger another violent nationalist backlash. As a result, Indonesia is “now like a communist country,” one observer recently lamented, “where the government owns, controls or manages almost 80 percent of productive assets.” Four years after Suharto’s fall, intense ethnic resentment and xenophobia continue to drive Indonesian economic policy. Among the pribumi majority there is a pervasive dread that ethnic Chinese and other “foreigners” will “swoop in like vultures” to carry off the nation’s resources. These “vultures” include the hated ethnic Chinese Salim Group, which is rumored to be making a rebid for its former companies from Singapore.21
Anti-Semitism and Nationalization
in Democratic Russia
In Russia, economic and political liberalization has unleashed widespread—and in parts of the country like Cossack-dominated Krasnodar, virulent—anti-Semitism. As chapter 3 discussed, many of the Yeltsin government’s most reviled market reformers—including “shock therapy” champion Yegor Gaidar and “privatization tsar” Anatoly Chubais—are well known to be part Jewish. Moreover, the principal beneficiaries of Russia’s chaotic transition to capitalism were also disproportionately Jewish.
To repeat, it would be preposterous to suggest that Russian anti-Semitism is caused by either markets or democracy. Anti-Semitism has poisoned Russia since long before 1989. Over a century ago, for example, Fyodor Dostoyevsky, in his self-published magazine A Writer’s Diary, blamed the “Yids” for their exploitation of the noble Russian peasant:
And so the [tsar] liberator came and liberated the native People [the serfs]; and who do you think were the first to fall upon them as on a victim? Who was foremost in taking advantage of their weaknesses? Who, in their eternal pursuit of gold, set about swindling them? Who at once took the place, wherever they could manage it, of the former landowners—with the difference that though the landowners may have thoroughly exploited people, they still tried not to ruin their peasants, out of self-interest, perhaps, so as not to wear out the labor force, whereas the Jew doesn’t care about wearing out Russian labor; he takes what he can and he’s gone.22
The point, however, is that the combined effect of post-perestroika marketization and democratization has been to galvanize anti-Semitism in Russia (as well as in Ukraine, Belarus, and the Baltic republics) in highly predictable fashion. Markets have generated starkly visible Jewish wealth—Forbes in 2002 listed Jewish oligarchs Mikhail Khodorkovsky, Roman Abramovich, and Mikhail Friedman as Russia’s three richest billionaires, with Vladimir Potanin in fourth place—while democracy has made anti-Semitism a political force with a strength not seen in Russia since Stalin.
Since perestroika, the new democratic rights of free speech and free association have given rise to eighty nationalist political parties and organizations, including three that have openly adopted neo-Nazi symbols and rhetoric. At the same time, politicians all over the country, including powerful elected officials, publicly engage in anti-Semitic baiting.
In October 1998, for example, Gen. Albert Makashov, a Communist Party representative in the Russian Parliament, accused Jews of ruining the country’s economy. “Who is to blame?” railed Makashov in recorded testimony before the Duma. “The executive branch, the bankers, the mass media are to blame. Usury, deceit, corruption, and thievery are flourishing in the country. That is why I call the reformers Yids.” A “Yid,” he elaborated in an editorial in the newspaper Zavtra, is “a bloodsucker feeding on the misfortunes of other people. They drink the blood of the indigenous peoples of the state; they are destroying industry and agriculture.” Makashov subsequently led two fiery rallies in which he shouted, “I will round up all the Jews and send them to the next world!” A few months later, Viktor Ilyukhkin, Communist chairman of the Russian Parliament’s security committee, blamed Jews in Yeltsin’s government for effecting “a genocide against the Russian people.”
When asked by Yeltsin to censure Makashov and Ilyukhkin, Gennadi Zyuganov, head of Russia’s still powerful Communist Party, endorsed them instead. In a letter to the Ministry of Justice and the national security chief, Zyuganov declared that Zionism is among the “most aggressive imperialist circles striving for world domination.” “Communists . . . rightly ask how it can be that key positions in a number of economic sectors were seized by representatives of one ethnic group. They see how control over most of the electronic media—which are waging a destructive campaign against our fatherland and its morality, language, culture and beliefs—is concentrated in the hands of those same individuals.” Zyuganov has also said, “Too many people with strange sounding family names mingle in the internal affairs of Russia.”
Anti-Semitism is moderate in Moscow compared to other parts of Russia. “At least in Moscow there’s some regulation,” explained the distressed leader of the local Jewish Association in the Siberian city of Novosibirsk, where a synagogue was recently vandalized and the name of the neofascist group, Russian National Unity, painted on the walls. Aleksandr
Barkashov, the leader of the group, subsequently told a rally in Yekaterinburg (Sverdlovsk) that he was changing the name of his organization to “Movement Against the Jews.” Anti-Semitism is probably most intense in Krasnodar, a city along Russia’s southern border that is home to numerous Cossacks. Since his coalition’s landslide election in 1996, Communist-Nationalist governor Nikolai Kondratenko has openly spewed anti-Semitic hatred. “What is the result of Zionism?” boomed Kondratenko’s deputy governor in 1998. “The result is the collapse of Russia. Native Russians never would have allowed all these reforms to happen.” And the governor himself recently proclaimed to cheering crowds: “Why haven’t we revolted against that scum, a bunch of people for whom Russia, Russians, patriotism, the land of Russia is something alien? Their policy is the losing one, and those who will continue torturing Russia will burn more than just their tongues.”23
During Russia’s 1998 election campaign, calls for renationalization of the oligarchs’ holdings—widely viewed as “stolen” from the Russian people—were everywhere.24 Like Yeltsin before him, Vladimir Putin most likely would not have won the presidential election without the oligarchs’ massive funding and media support. Not surprisingly, Putin did not campaign on a renationalization or anti-Semitic platform. Once in power, however, Putin made sweeping promises to “bring the house in order” and “move the oligarchs away from power,” gaining popularity with every new attack on the oligarchs.