The three states that I place within the donor-dependent orthodoxy type have been heavily reliant upon aid and concessional finance from international financial institutions and bilateral donors since at least the 1990s, even if the share of aid as a percentage of gross domestic product has tended to decline somewhat since the early 2000s. Since none of these states had access to international capital markets until recently, this aid dependence, in a context of high levels of debt, constituted the main channel of transnational influence over their political-economic orientations during the neoliberal era. This is not to suggest that neoliberalizing policies were simply foisted upon helpless and unwilling states and societies. Indeed, there is considerable variation in the governments’ receptiveness to liberalizing measures—both among the cases and within them, over time, and at different levels of power. Most of the postsocialist Mongolian governments, for example, were enthusiastically committed to a neoliberal program, even if this support has become more ambivalent over the period of the commodity boom. Laos, conversely, no doubt influenced by events in China, has pursued neoliberalizing reform reluctantly and only after sustained pressure from IFIs.¹

Nevertheless, even as levels of aid dependence have lessened among the DDO states in recent years, the long-running ability of donors and IFIs to set the parameters of policy orientation, particularly through so-called participatory processes, has left a lasting legacy for the political economies of the DDO states. Ruling elites sit atop systems that employ post–Washington Consensus types of institutional structures and policy orientations while allowing for the maintenance of patron–client networks that reach down from the central state. With direct donor influence waning and booming natural resource sectors offering the possibility of greatly enhanced government revenues, a turn away from neoliberal orthodoxy might be expected—at the very least, in pursuit of further opportunities for elite predation, if not necessarily in the form of a full-fledged alternative development agenda. Such moves have occurred, in largely opportunistic and piecemeal fashion, though there is little evidence of any full-scale reorientation away from neoliberalism.

In the extractivist-oligarchic case of Angola, after decades of civil war, the regime was essentially presented with the option of embracing neoliberalism in 2002. The offer was rejected, with the help of rising oil revenues, and, drawing on a range of influences, Angola carved an independent political-economic path that looked rather different from the donor-led neoliberalism observed in most of its neighbors. DDO states, by contrast, entering the commodity boom with such neoliberalism as a default setting, deviated from this path—which, for the most part, allowed elites to retain their privileged positions—only cautiously, and with isolated policies. With no strong domestic capitalist class or unified popular classes present—save for the partial exception of Zambia—no local group had the means and motivation to force the issue. Thus, while political competition may well have occurred, this tended toward a battle for control of, inclusion in, and perhaps expansion of, networks of patronage distribution rather than for a reconfiguration of political-economic orientation overall.

I first will discuss the circumstances that led IFIs and donors to reform their structural adjustment programs, even if the resulting changes lay mainly in the domain of implementation rather than in policy or underlying ideals. The new so-called participatory agenda set the tone for donor and IFI-led neoliberalization during the late 1990s and into the 2000s, particularly for low-income states, where aid usually accounted for a large share of the national budget, limiting the scope for policy choice. I then note that a trend of declining aid dependence among DDO states would seem to have lifted this constraint during the 2000s, and yet, with the commodity boom arriving at the same time, the fact that none really attempted a full departure from a neoliberal agenda appears to be something of a puzzle. Here, I point to the salience of class formation, or the lack thereof. An absence of unified social interests opposed to neoliberalism resulted in few pressures on DDO governments to change tack from a status quo that largely benefited their ruling elites.

Next, I will move to show how the China-prompted commodity boom, as in the other types, presented an opportunity for DDO states to increase their resource revenues in a manner that would have laid the groundwork for any post-neoliberal turn, although this opportunity was largely passed over by states of this type. In this and the subsequent sections on domestic politics, I focus particularly on Zambia, which is used as the exemplar of the DDO type. Zambia, in fact, is an important case in terms of demonstrating my argument for a correspondence between lack of class formation and lack of social pressure against a government’s preexisting neoliberal orientation, since here, in a departure from the ideal type, a limited degree of class formation helped bring to power a government that moved, if tentatively, further from neoliberal doctrine than seen in either of the other cases.

Aid Dependence and the Ideotypical Trajectory of the Donor-Dependent Orthodoxy Type

Though tending to decline in recent years, official development assistance has long provided a large proportion of government revenues in many of the poorest states of the global South.² Given these states’ aid dependence, conditionality on the part of bilateral and multilateral donors has been a powerful lever through which to facilitate the adoption of a broadly liberalizing set of policies—at least in letter, if not, sometimes, in spirit. The packaging, scope, and emphasis of these programs has evolved since their original formulation, in the 1980s, as World Bank and International Monetary Fund structural adjustment programs. This shift, involving conditionalities which appear to be more flexible and to give more space to poverty alleviation but which require greater levels of commitment in an expanded number of policy areas, marks the DDO type as different from the homegrown orthodoxy cases I will discuss in chapter 9. In homegrown orthodoxy cases, a continuing neoliberal course is driven primarily by domestic capitalists, with correspondingly less attention paid to the concerns of international development professionals and no real need to demonstrate country ownership of or participation in the program.

For IFIs and donors, however, “ownership” and “participation” have become paramount concepts around which a more acceptable means of demanding adherence to policy conditionality has emerged since the late 1990s, in response to an incipient crisis of legitimacy in the SAP process.³ In the first place, IFIs began to face growing criticism—even from some influential mainstream economists, most famously Stiglitz (2002)—of their “boilerplate” approaches, whereby structural adjustment programs tended to be viewed as an insistence upon a fixed set of policies derived from neoclassical assumptions, while paying no attention to particular country circumstances. Second, once signed up, governments of all political stripes found it exceedingly difficult to change course, at least at the policy level, even in response to increasing incidences of what became known as IMF riots, in dozens of states.⁴ SAPs not only looked undemocratic but also seemed to create the prospect of social instability significant enough to interfere with their implementation.

The response from the IFIs was to adopt the participatory approach, involving consultations with local civil society groups, that was already used by most bilateral donors. This culminated in the replacement of SAPs with Poverty Reduction Strategy Papers, along with a shift toward somewhat longer-term development goals and general budget rather than project support. A high degree of policy continuity with the pre-PRSP era, however, suggested that these new procedures allowed little added room for host governments to pursue strategies deviating from the liberalizing norm (Zack-Williams and Mohan 2005).

In policy terms, IFI and donor thinking evolved somewhat over the past four decades, with the post–Asian financial crisis years seeing an increasing interest in institutional reform, greater nods toward poverty alleviation, and a renewed focus on infrastructure development. Nonetheless, all of these tended to be seen as adaptations necessitated by the realization that SAPs were not applied in a vacuum but instead encountered local circumstances, which often seemed to lead to some combination of incomplete implementation, social instability, or, most importantly, disappointing economic performance. Rather than question the appropriateness of the underlying model, however, IFIs tended to understand these failures in terms of local barriers to the smooth functioning of a liberal market economy (Babb 2013).⁵ Since ignoring these factors had largely proved unsuccessful, they were to be engaged with and corrected for. The ensuing “good governance” agenda, encapsulated by the World Bank’s Country Policy and Institutional Assessments (Pushak and Foster 2011), conflated Weberian notions of bureaucratic institutional quality and neoliberal policies into an expansive, depoliticized agenda for reform.⁶ Hence, lowering import tariffs was presented as equally representative of unarguable best practice as meritocratic recruitment in the civil service.

Poverty alleviation, also bound up within this technocratic framework, was acknowledged as a sort of market externality, requiring palliative action in the form of social safety nets or, more recently, conditional cash transfer schemes.⁷ These approaches certainly may be interpreted as efforts to promote participation of the poor in both consumer and labor markets (Cammack 2004). At least as important, however, seems to have been a concern with the riots and resistance prompted by the original SAPs and the difficulties these revealed in terms of pursuing a neoliberalizing policy agenda within a democratic framework (Fraser 2005). Though they were no doubt reflective of a sincere overall desire to promote development and reduce poverty, IFI and donor programs of the era reveal a perceived need to build “reform coalitions,” drawn from all levels of society, which would embrace the liberalization process, thereby forestalling the possibilities of social instability or reluctant implementation that would threaten its success.⁸

Beyond their antipoverty measures, the introduction of PRSPs represented an attempt to build reform coalitions as much through process as through policy, particularly in the primacy afforded to the new watchwords of ownership and participation. These terms were often taken to mean a greater voice for recipient country governments and societies, since they denoted a much larger role for local actors in the preparation of the PRSP (Cornwall and Brock 2005). It seems quite clear, however, that this held true only to the extent that domestic contributors agreed with the fundamental assumptions of the IFIs.

That participation of this sort mostly involved a selective inclusion of those civil society groups able and willing to articulate their perspectives in a form palatable to Northern nongovernmental organizations, bilateral donors, and IFIs has been ably demonstrated elsewhere (Craig and Porter 2003; Ruckert 2007; Harrison 2004). Participants were aware that the final document produced was subject to IFI approval, meaning that the bounds of what constituted acceptable participation were well understood. The result was to undermine the notion of ownership—domestic actors “owned” a program in the narrow sense that they were involved in its production. In so doing, government and civil society demonstrated a commitment to the aims of the PRSP, which forestalled any accusations of external imposition upon an unwilling host. The paradox here is that the PRSP process actually demanded more of governments than did the old SAPs—under the PRSP system they were required to express their own enthusiasm for the program rather than simply acquiesce to its demands.

All of this is made explicit in IFI documentation. An IMF report from the early stages of the participatory era, for example, understands ownership as “a situation in which the policy content of the program is similar to what the country itself would have chosen in the absence of IMF involvement. This is because the country shares with the IMF both the objectives of the program as well as an understanding of the appropriate economic model linking those objectives to economic policies … The country ‘owns’ the program in the sense that it is committed to the spirit of the program, rather than just complying with it” (Khan and Sharma 2003).⁹

Given the evolution of IFI and donor process and, to a much lesser extent, policy, within the parameters of a fundamentally unchanging liberalizing orientation, it is hardly surprising that aid-dependent states have remained committed to this agenda. However, since the early 2000s, Laos and Mongolia have seen a huge expansion in their previously marginal natural resource production, and Zambia’s existing but stagnant copper sector has been reinvigorated. These industries have powered rapid growth—and rising government revenue—as a whole, meaning a significant reduction in ODA as a proportion of gross national income over the past decade.

As the weight of ODA has declined, the increasing proportion of government revenue and national budget expenditure not subject to approval by external actors has increased. Such changing circumstances would seem to hold out the possibility for these states to break with IFI and donor preferences and to pursue more nationally defined, non-neoliberalizing policy orientations. Indeed, this is exactly what has occurred in the case of Bolivia, examined in chapter 6. As shown in table 8.1, Bolivia was somewhat less aid dependent at the beginning of the commodity boom that any of the DDO type states. Nevertheless, ODA as a percentage of GNI in Bolivia on the eve of Evo Morales’s election in 2006 stood at 7.7 percent, which clearly did not represent an insurmountable obstacle for the implementation of a relatively radical program that ran counter to the agendas advanced by donors and IFIs. All the DDO states had lower ODA dependence rates than this by 2010, at the latest, suggesting that aid dependence alone cannot account for their continued adherence (for the most part) to a neoliberal agenda. However, no departures from this path were likely to occur without powerful domestic voices demanding such a change of course—whether this came from domestic capitalists, popular movements, or state managers themselves. With the partial exception of Zambia, these voices have remained largely unheard in each of the DDO type states, in stark contrast to the mobilizations that preceded Morales’s election in Bolivia.

TABLE 8.1

Official development assistance received (percentage of gross national income), 2002–2012

Source: World Bank, World Development Indicators.

In explaining these divergent outcomes, the most consequential difference between Bolivia and the DDO cases appears to lie in the strength of domestic social forces outside the state. Though Bolivia has the lowest per capita GDP in South America, capitalist social relations are more fully developed than in the DDO cases. The neoliberal era in Bolivia represented, fundamentally, an alliance between the highland mining capitalist fraction and transnational capital, which usurped the formerly dominant lowland agro-industrialists (Kaup 2013c).

The other product of neoliberalism in Bolivia was a growth in popular mobilizations, which began locally but were increasingly stitched together at national level by Morales’s Movimiento al Socialismo (Kohl 2010; Albro 2005). Though appeals to ethnicity had some salience in this process, the core of the movement (including large numbers of individuals who did not identify as indigenous) was built from the informal urban sector and rural peasants and revolved around perceptions of exclusion (Ellner 2012). As Kaup (2013c) shows, by the time of Morales’s election, the intracapitalist struggle had taken enough out of both the highland and lowland elites to allow the MAS to gain power, with the commodity boom providing the fiscal resources needed for the new government to stabilize and to address many of the demands of its social movement base.¹⁰

By contrast, capitalist development in the DDO states surveyed here is less deeply rooted. This has had three major impacts on the ways in which neoliberalization has played out in these cases. First, in the absence of any significant domestic capitalist class, state managers and allied elites leverage access to the state—and thus connections to networks of international capital—as the main means of domestic accumulation (and rent-seeking). Second, without large inward flows of transnational capital, aid (or ODA) has been the main source of rent and profit for state-connected elites during the neoliberal era, and the major channel through which neoliberalizing discipline has been transmitted to governments.¹¹ Third, the persistence of vertical patronage relations has resulted in segmentation and atomization of popular class groups, making the building of a MAS-like national movement infeasible.

As a result of these characteristics, with the coming of the commodity boom, any change of course away from a liberalizing trajectory would need to come not as a response to popular pressure or to pressure from powerful domestic capitalist groups, as in other types, but from the state managers themselves. Such moves were certainly possible during the boom—as in Zambia’s renationalization of telecommunications and railways—when state elites perceived a likely benefit, whether in terms of accumulation, rent-seeking, or increased patronage resources. However, without national popular movements to apply pressure, and with generally low levels of state capacity, the articulation and implementation of any coherent alternative vision of development is extremely difficult, meaning that those changes that do occur are likely to be unprogrammatic, partial, and piecemeal. The case of Zambia is extremely useful in demonstrating this claim, since it stands as a partial exception to the DDO type’s lack of capitalist class formation, together with a corresponding partial exception to continued neoliberalization.

External Market Conditions

By 2012, the exports of Zambia, Laos, and Mongolia were heavily concentrated in mineral sectors, as can be seen in table 8.2. Copper has long been the dominant Zambian export, even during the lean periods of the 1990s, when a combination of low prices and mismanagement meant that the mines of the Copperbelt ran at a loss. In the other two cases, major extractive projects only really began in the 2000s, meaning that these sectors became progressively more important over the course of the decade.

TABLE 8.2

Natural resources as a proportion of total exports

State	2005	2012
Laos	18%	52%
Mongolia	41%	89%
Zambia	78%	79%

Source: Observatory of Economic Complexity.

Mongolia’s and Laos’s status as relative newcomers to resource export has somewhat ambiguous implications for their bargaining power with extractive firms. On the one hand, the two states begin with a blank slate, in contrast to the Zambian situation, where altering levels of mining taxation—effectively close to zero percent in many cases—required the repudiation of agreements signed by previous governments. On the other hand, the long-established Zambian mines are still viable and need little extra investment beyond maintenance and renovation, whereas entirely new ventures require investor commitment to developing large-scale projects from scratch in an untested and unfamiliar environment that is most likely lacking in necessary infrastructure. Certainly, the multiple rounds of struggle between successive Mongolian governments and Rio Tinto over the ownership and revenue split relating to the huge Oyu Tolgoi copper deposit, discovered in 2001, is indicative of some of these issues (Reuters 2015; Neems 2015; Mining Journal 2019).

The 2009 Oyu Tolgoi deal, however, under which the Mongolian government assumed an ownership share of 34 percent, is indicative of the improved terms that transnational mining firms were prepared to offer under commodity boom conditions, particularly when contrasted to the terms of Zambia’s copper sector privatization during the 2000s, which provided little in the way of direct benefits for the treasury and included so many loopholes and concessions that tax avoidance on the part of mining firms was made easy. Royalty payments on extracted ore were set at 0.6 percent in secret agreements with individual companies—well below the official 3 percent rate. The privatization had only reluctantly been agreed to by the government, after donors withheld $530 million in aid and the IFIs raised the prospect of debt relief upon success of the process (Dymond 2007).

When the commodity boom kicked in, only three years after privatization, Zambian exports took off, driven by copper. As I detailed in chapter 1, Chinese consumption accounted for more than two-thirds of the growth in demand for copper during the years 2002 to 2007, and then, kick-started by its postcrisis stimulus package, single-handedly kept the world market for copper buoyant until the end of the boom, in spite of declining demand elsewhere. Export destinations for Zambian copper are difficult to determine, since large quantities are, for example, officially exported to Switzerland as part of a transfer-pricing tax avoidance scheme, even if none of this copper is physically transported to its supposed destination.¹² Nevertheless, while the proportion of Zambian copper that found its way into Chinese infrastructure and manufacturing cannot be ascertained, it is clear that the People’s Republic of China has altered the prospects for the Zambian mining industry beyond recognition, compared to the dark days of the 1990s.

In spite of these favorable conditions, successive Zambian governments have made only tentative steps toward capturing a share of these spiraling export revenues. Over the 2000–2007 period, hamstrung by the terms of the privatization process, mineral revenues provided just 0.3 percent of government totals, despite extractives making up more than 70 percent of exports and 20 percent of GDP (International Monetary Fund 2012). With the rise of the Patriotic Front (PF) applying pressure to the Movement for Multiparty Democracy (MMD) government, the royalty rate was raised, which, together with production and price increases, resulted in a 50 percent increase in mineral revenues from 2009 to 2010, followed by a near-doubling in 2011 (Moore Stephens 2014). While undoubtedly positive, the improvements came from a very low base and represented a major downscaling of ambition from the 25 to 75 percent variable windfall profits tax proposed in 2008 (Lungu 2008a).

Although the subsequent PF government raised the royalty rate again, to 6 percent, measures beyond this change to the taxation regime focused on effective auditing of mining companies in an effort to make sure that current liabilities were paid in full. This has been a major problem in the past, with one report estimating a total of $4.9 billion in illicit capital flight, mostly from mis-invoicing of copper sales, from 2000 to 2010 (Global Financial Integrity 2012). The tax initiative was facilitated by technical assistance from Norway, which provided staff to improve the capabilities of the underresourced Zambian Revenue Authority.¹³

As with Zambia’s membership in the Extractive Industries Transparency Initiative, this focus on transparency and full collection of existing taxes, rather than any attempt to more fundamentally shift the relationship between the Zambian state and extractive firms, is illustrative of the continuing influence of donors in Zambia. But it also points to one of the major hurdles faced by all three DDO states in attempting to harness the potential of the commodity boom: the problem of state capacity. In addition to a tradition of reliance upon donors, DDO states are all relatively small, impoverished, and often face shortages of skilled personnel. The circumstances that led to the abandonment of the copper windfall tax offer a revealing example here.

In 2007, Norway funded a team of consultants to examine the dubious individual agreements with mining firms that had been signed at privatization, with the recommendation of gradual and moderate reform, for fear of legal repercussions. When the Zambian government rejected these proposals and attempted to act independently by instead instituting the windfall tax the following year, mistakes in the design of the new system meant that, in some circumstances, firms could be liable for tax rates of more than 100 percent. This provided grounds for mining companies to protest and launch challenges, which, combined with the impact of the 2008 crisis, led the government to back down and abandon its plans.¹⁴ Though the comparison is of course not exact, it is interesting to note that Zambia’s GDP in 2014 amounted to $27 billion (World Bank n.d.), while Glencore, just one of the transnational mining firms with which the government must negotiate, reported revenues of more than eight times this amount during the same year (Hulme and Wilson 2014). Similarly, the equivalent figures for Mongolia and Rio Tinto are $12 billion and $47.7 billion, respectively.

Clearly, a similar mismatch arises in a case such as Angola (belonging to the EO type) when it deals with even larger oil giants, such as Chevron or the China National Petroleum Company. However, as discussed in chapter 7, Angola entered the commodity boom with the advantage of Sonangol, an apparently efficient and well-run state-owned oil enterprise, which leaves the country less than completely dependent upon transnational firms for resource extraction. Perhaps equally important, however, although Angolan administration may rely heavily upon foreign consultants for technical expertise—and likely wastes large sums in doing so—these engagements are very different in character from initiatives such as the Norwegian tax assistance in Zambia, which tend to proceed according to donor priorities. Added to this, of course, a lack of historical aid dependence in Angola has left little in the way of a neoliberal imprint on the local bureaucracy, whether in terms of administrative structures or ideological norms. Any potential departure from neoliberal policy orientation in the DDO cases thus faces greater obstacles, as is evidenced by the struggles of both Mongolia and Zambia to complete even the first necessary stage of this process—leveraging the conditions of the commodity boom toward significantly increased resource revenues.

Zambia

In September 2011, Michael Sata and his Patriotic Front swept to power in the Zambian general election, ending two decades of neoliberal MMD rule. After twenty-five years of decline, Zambia had returned to strong growth as the price of copper, its major export, surged, on the back of ever-increasing demand from China and others. Sata seemed to articulate the politics of the Zambian urban poor, who had largely missed out on the fruits of the new boom.

After more than seven years of PF government, however, under Sata and his successor, Edgar Lungu, there is no sign of any comprehensive reversal of neoliberalism in Zambia. Sata’s government did marginally increase its take from the copper industry and demonstrated a capacity to break with neoliberal orthodoxy by reversing privatizations of the national telecommunications and rail industries, among other moves. Despite these piecemeal changes, though, Sata showed little desire to alter Zambia’s relationship with the global copper industry or to offer a coherent alternative vision of national development. Lungu, coming to power in 2015 following Sata’s death, has offered even less of a clear economic orientation, raising and then lowering copper royalties while turning increasingly authoritarian in the face of a postboom debt crisis.

I will briefly sketch Zambian postcolonial history as a means of illustrating the connections between the copper industry, the limited process of class formation that has sprouted around mining, and political change. While the strength and unity of the mineworkers has varied over the years, they have remained the one group able to mobilize a coalition of sufficient force to push for political change. On two occasions (in 1991 and 2011) they contributed to the downfall of the government of the time, but they failed to advance an agenda favorable to their interests. Understanding the nature of their complex coalition, based on overlapping networks of both urban-class and rural-kinship ties, is vital to grasping the reasons for the PF’s failure to develop a more thoroughgoing development strategy or to move more decisively to break with the neoliberal status quo.

The circumstances of Zambia’s insertion into the world economy have been connected to the state of global copper markets since large-scale mining began, during the colonial era. Development of the mines brought industrialization and migration to the Copperbelt in the early twentieth century, giving rise to one of the very few substantial urban working classes in sub-Saharan Africa. When independence, in 1964, ushered in one-party rule under Kenneth Kaunda’s United National Independence Party (UNIP), copper revenues were seen as a cornerstone of a nationalist-developmentalist agenda (Fraser 2010, 5–6).

Given the extent of Zambian industrialization and resource wealth, Kaunda’s “humanism” initially appeared to be one of the most promising development projects to emerge from African decolonization. At the peak of copper production, in 1969, Zambia boasted a per capita GDP twice that of Egypt, and higher than even the likes of Brazil or Turkey (Lungu 2008b). Though the early postindependence years did bring some advancements in health and infrastructure provision (Shaw 1976), Zambia’s overall economic fortunes have since mirrored changes in global copper markets, meaning a long decline since the mid-1970s, which has only been arrested by the commodity price boom of the past decade (Jepson and Henderson 2016).

As in many postcolonial experiences, a lack of domestic private capital left the Zambian state as the locus of economic power in the country. A tiny “true” capitalist class of white settlers and emergent black farmers and traders was present at independence, though, by the 1970s, the incorporation of many enterprises as parastatals stunted already weak private capital and strengthened the state capitalist model as the centerpiece of Kaunda’s humanism (Scaritt 1983). Thus, political power meant access to economic power, and a dominant elite, comprising the upper levels of government/UNIP structures plus the security forces and the managers of parastatals, cemented its position (Ollawa 1979, 55–56).¹⁵ Nationalizations (including of the copper sector) increased the resources that flowed through the party/state and allowed the state elite to strengthen networks of patronage (Szeftel 2000), prompting the entirely unironic slogan “It pays to belong to UNIP.”¹⁶

Though the presence of an elite whose rule depends substantially on vertical networks of patronage is feature common to all the states of both the DDO and EO types, Zambia is unique among these states in also possessing an organized and often militant formal labor sector centered on the copper mining unions. During one-party rule, the Zambian Congress of Trade Unions essentially functioned as the de facto opposition to Kaunda. Mining labor formed the organizational core as this opposition became more open and morphed into the MMD during the 1980s, involving Catholic churches and civil society organizations with ties to the miners but also including prominent support from the small private capitalist sector, which was moving toward a neoliberal orientation (Handley 2008, 221–23). As the MMD won its campaign for the restoration of democracy and reconfigured itself into a political party in order to contest elections in 1991, these neoliberal ideas formed a key plank of the MMD manifesto. Since mineworkers and the broader urban population around which the campaign had revolved tended to identify the state capitalist apparatus as the main enemy (rather than transnational capital or the global economic system), a program of economic reform that would apparently undermine the dominant class power base was certainly acceptable to this core base of MMD support.

With MMD victory in 1991, the ensuing neoliberal program attacked the unions through privatization, widespread layoffs, and casualization, driving down membership.¹⁷ Those who remained were left understandably divided between continued loyalty to “their” government and resistance to its policies. Meanwhile, in the context of the collapse of state socialism in Europe, Zambia acquired new importance as a purported African example of dual transition to both liberal democracy and a free market economy. Multilateral support aimed at buying the MMD an extended honeymoon poured into Zambia and, with no revival in the copper sector, IFIs and donors became the most powerful political actors on the domestic political scene. As in Eastern Europe, these agencies were mostly interested in the broad outlines of a swift political-economic transformation, with relatively little attention paid to the details of how this was to be implemented.¹⁸ Who became owners of newly privatized companies, and how, was of far less concern to IFIs than the fact of privatization.

When it came to implementation, the levers of power provided by access to the domestic state proved more than a match for the private business sector, which was in any case weak and now found itself internally divided over its approach to reform.¹⁹ Individual businesspeople certainly benefited greatly from the liberalization program, but those who did so relied upon their entanglement with and access to state patronage rather than upon the institutional strength of a private capitalist class in general. As Handley (2008, 237) argues, a core of genuine support for neoliberal ideals was, in the end, outweighed by influential figures who saw in the reform process little more than a variety of new opportunities for personal enrichment—through asset stripping, privatization, and government procurement, for instance.

Another important source of funding was the flow of aid and loans, which were used to support the MMD government and were tied to Northern governments’ fervent wish that the political-economic transformation of Zambia register as a success. There have been points, such as in 1996, when significant aid to Zambia has been temporarily suspended, owing to donor worries over corruption. Nevertheless, aid flows to Zambia have generally tended to “nourish” the informal patronage system in recent decades (Rakner 2012). Thus, the capacity for state elites to use access to an externally oriented copper sector as the linchpin of clientelism may have diminished with the industry’s decline (and finally privatization), but, after 1991, new avenues opened up that were no less dependent upon access to different networks of foreign financing.

The privatization and liberalization process, therefore, did little to change structures of power and control in the Zambian economy, which continued to rely substantially upon a web of patronage ultimately emanating from the state. Handley (2008, 207), for instance, quotes former MMD agriculture minister (later PF vice president and briefly acting president after Sata’s death) Guy Scott, speaking in 2000, as describing private business in Zambia as being “quasi-parastatal,” both supplying and borrowing money from the government. Undoubtedly, some of the personnel making up the state and business elite changed between the UNIP and MMD eras, though, even here, Szeftel (2000) notes the continuities—a significant number of the MMD leadership during the 1991 election were former members of UNIP, having been cast out at some point in the past, with more switching sides over the following years.²⁰ The turnover that did occur, then, simply served to promote individual businesspeople to the ranks of the elite, to bind them more closely to it, or to return marginalized fractions of the dominant elite back to central positions—a shuffling of the pack which left the rules of the game unchanged, as Szeftel puts it (paraphrasing Upton Sinclair).

The continued dominance of a state elite dependent on its ties to transnational capital (whether extractive, financial, or donor) is also evident in the eventual sale of the copper industry. The government had resisted privatization of the copper industry for as long as it could, but in the end it was persuaded by the prospect of large-scale debt relief under the World Bank/IMF Heavily Indebted Poor Country Initiative, first presented in 1996. Previously, conditionality had involved debtor government commitments to reform before the release of funding. Now, the implementation of a program of reforms over several years prior to securing debt relief was demanded.

At this point, the MMD government gave up trying to promote the neoliberalization agenda to a domestic audience as good policy and simply presented it as a series of sacrifices demanded by the IFIs, which would result in the lifting of most of Zambia’s onerous debt burden and therefore offer a chance to finally put the economy back on track (Fraser 2007). Portions of the industry were sold individually, between 1997 and 2000, under a process that was far from transparent, was almost definitely corrupt (Larmer 2005a), and involved the signing of secretive “development agreements” between the government and new investors, which resulted in the investors often paying effective tax rates of zero percent (Lungu 2008a). The sales themselves also failed to generate any great revenue. Privatization did help to recapitalize and refurbish aging mines, though at the expense of practically all resource rents, which now flowed overseas. The timing of the change was extraordinarily unfortunate, as well, coming just before the new copper boom, which began around 2003, mirroring the nationalization, which had occurred on the cusp of the long decline.

By the early 2000s, the diminished union movement had recovered much of its unity, which it directed against the MMD government, generally, and specifically against further casualization and loss of benefits and the handling of the eventual privatization of the mines. This sowed the seeds for a new mass movement against the government, with the mining unions at its heart. In 2011, this movement succeeded in removing the party that had been itself installed on the back of the same networks and resources, two decades previously. Grasping the workings of these networks is the key to understanding both the power of labor-centered social movements in contemporary Zambia and their inability to represent and advance the cause of popular classes on a national scale, in contrast to contemporary movements in Bolivia.

A complex social structure, spanning rural and urban zones,²¹ has given rise to an enduring postindependence political coalition comprising three concentric layers. At the center are the mineworkers themselves, along with other formal sector workers, who often are also unionized.²² This group, especially the mining sector, is well organized and has historically displayed an ability to agitate successfully for higher wages and improved conditions (Burawoy 1972), even though its power (and size) certainly waned during the neoliberal period (Heidenreich 2007).

The next layer is made up of the wider urban community—principally dependents and informal workers, such as street vendors, casual laborers, or domestic workers. As Larmer (2005b) points out, relatively high wages in the formal sector often have been used to support urban relatives through education or to finance informal ventures.²³ Furthermore, the state of the mining industry in general helps to determine opportunities in the informal sector. The urban investment that accompanied the latest commodity boom prompted a reversal of the large-scale migration from the Copperbelt to the countryside that had occurred over the course of the lean 1990s (Resnick and Thurlow 2014).

The outer circle consists of the rural Bemba speakers in Northern and Luapula Provinces.²⁴ Though colonial-era mass migrations to the Copperbelt drew from several areas, more came from these two Bembaphone areas than from elsewhere (Cheeseman and Hinfelaar 2010), evident in the enduring use of Bemba as a lingua franca in the Copperbelt today. There are extensive ties of kinship, cyclical migration, and remittances between the Copperbelt and the original two Bembaphone provinces, melding the economic interests of all three and promoting the spread of political ideas to the countryside.

Of course, movement among all three groups is likely—as miners retire to their home village, for example—and it is probable that this has intensified during the past two decades, with large population movements out of and then back into the Copperbelt as a result of neoliberalization and then the recent boom. The politics of these three groups and of the three provinces are thus intertwined, evidenced by the fact that these areas have a history of shared voting patterns. Despite Posner’s (2005, 87–88) claim that, in the absence of class consciousness outside the Copperbelt, tribal and linguistic affiliations constitute the only basis for political coalition, this clearly is not simply a Bembaphone voting bloc. Since the Copperbelt, like all urban areas of Zambia, is ethnically heterogeneous, political strategies based on appeals to ethnicity have little salience there, and, in this sense, the province cannot be considered a “Bemba” region.

If Copperbelt voters cannot be mobilized around ethnicity and yet tend to vote in a bloc with the other two provinces, then the reason for the existence of this bloc surely cannot relate to ethnic solidarity.²⁵ Instead, shared economic interests seem to offer a more plausible explanation. Importantly, the two postindependence changes of ruling party in Zambia, in 1991 and 2011, came about through campaigns that were rooted in the structures of organized labor and expressed the concerns of the urban poor. With so many in Northern and Luapula Provinces being onetime—or sometime—Copperbelt residents or recipients of remittances from the cities, urban-focused economic appeals possessed an extended reach into the Bembaphone heartlands, which saw these provinces line up in support of the Copperbelt.

In 1991, for instance, the MMD relied heavily on mining union branch structures but was also backed in both Northern and Luapula Provinces. By the 2006 election, these same union branches had been taken over by the Patriotic Front and were the basis for their victories in these areas, once MMD heartlands, with the role played by retired miners in the two rural provinces apparently being of great importance (Cheeseman and Larmer 2015). Though the PF narrowly lost both the 2006 and 2008 elections, a larger majority in the three Bembaphone provinces, combined with winning Lusaka (still amounting to a minority of the nine provinces), was enough to lead them to victory in 2011.²⁶

Nevertheless, the majority of Zambians are to a large extent reliant upon subsistence farming (Resnick and Thurlow 2014), most of which exists outside of the urban–rural network. This segmentation of Zambia produces a dual political logic—an urban Bemba group responsive to class-based (or populist-based) appeals, contrasted with the rest of the countryside, in which clientelism and patronage generally hold sway. The enduring result in Zambian politics has been a lack of push, on the part of the urban Bemba grouping, for a truly national developmentalist or redistributive agenda, combined with an absence of alternative coalitions with the requisite organization or consciousness to make these demands.

This, in my view, fundamentally explains the lack of any significant break with neoliberalism on the part of the PF government after 2011, despite an international environment that would seem to have permitted such a course, at least in its first few years. These points are best understood by tracing the rise of the PF as the populist fulcrum of a renewed politicization among mineworkers. Here, the intention is to highlight the urban Bemba coalition’s contradictory centrality in Zambian politics; it is a force with sufficient power to topple governments but apparently not to advance the kind of coherent policy program that might otherwise have led Zambia to break with neoliberalism during the boom.

The Patriotic Front in Opposition

The PF came of age as a political force in the 2006 election, the first in which it attempted to plug into the coalition outlined here, by utilizing both the mineworkers’ organizational networks and a populist discourse attuned to the urban poor, in the context of rising copper prices. The door had been opened to some extent by the actions of the MMD, which, worried about the solidity of its base in Copperbelt, Northern, and Luapula Provinces, even before the PF challenge emerged, had begun to concentrate on building an alternative rural political alliance with links to areas in all nine provinces. This is revealing, in that the resources used to build this support network—fertilizer distribution, authority over traditional chiefs, and the shift of patronage toward the co-opting of local leaders who would be able to deliver the loyalty of rural constituencies (Cheeseman and Hinfelaar 2010)—suggest an entirely different form of politics at work than that which is required to activate the support of the organized labor/urban/Bembaphone coalition.

The 2011 election brought this contrast into focus. Although the PF itself doubtless offered various giveaways at rallies, it also campaigned on the slogan of “Donchi kubeba” (Don’t tell), an attempt to undermine the government’s efforts to secure votes through patronage. Donchi kubeba, which also became the title of an extremely popular song, encouraged Zambians to accept any gifts proffered by the MMD, without revealing their intention to vote for the PF.²⁷ This move seems to have been viewed with outrage by MMD and other party leaders, seen as a dishonorable repudiation of the quid pro quo inherent to patron–client arrangements.²⁸ The centrality to the PF campaign of the rejection of patronage politics, in spirit if not always in deed, is illustrative of the divide between the vertical clientelistic networks used to mobilize votes in most of rural Zambia and the populist class politics that found far greater purchase among PF supporters. In turn, this schism reflects highly uneven levels of class formation and consciousness between, on the one hand, urban areas—and, indirectly and by extension, the rural Bemba hinterland—and, on the other hand, the countryside in general.

The PF finished a surprise second in the 2006 election, before losing by fewer than forty thousand votes in 2008, amid allegations of fraud and vote buying on both sides.²⁹ It seems clear that, as the incumbent, the MMD had considerable advantages (Rakner 2012), including influence over the electoral commission, which, in refusing to update the electoral roll between elections, deprived the PF of much of the urban youth vote, which was overwhelmingly in favor of the PF. Sata’s initial rise to prominence before the 2006 election had hinged partly on strong and attention-grabbing rhetoric that especially targeted foreign investors (“infesters”), particularly the Chinese,³⁰ as well as growing competition from Chinese immigrants in local markets and informal trade (Fraser 2007).³¹ This struck a chord among the urban poor in the context of an apparent boom in which the benefits seemed to be flowing largely upward and outward.³²

There certainly was a large element of classically vague anti-elite (and nationalist) populism to Sata’s campaign, but the PF did target substantive issues that were of importance to workers and the informal sector. For example, in addition to a focus on wages, conditions in the mines, and the creation of new formal job opportunities, the PF also stressed housing. Schemes relating to urban housing were included in the MMD government’s Fifth National Development Plan in 2006. The development plan was a replacement for the previous Poverty Reduction Strategy Paper, reflecting a move on the part of the World Bank to stress “ownership” by encouraging governments to name their own development plans. In this case, the title of the document connected it with the four successive five-year plans instituted during the UNIP era, giving it a developmentalist sheen. In practice, the plan became a wish list of initiatives from which donors picked priority areas to fund, leaving the rest as commitments in name only (Kragelund 2014).

The development plan identified housing as “a pre-requisite to national development” and a “basic social need after food and clothing” (Government of Zambia 2006, 197, cited in Kragelund 2014) and promised house-building programs and the upgrading of urban compounds (slums). Since no donors chose to fund these efforts, however, they were not implemented, and indeed the MMD continued its policy of demolishing slum housing. Meanwhile, PF members of parliament came out in support of those dispossessed by the demolitions and pressed the issue of service access for the compounds, first in Parliament and then on the campaign trail (Resnick 2012).

In 2008, while maintaining the anti-elite discourse and stressing his concern for the conditions of labor, Sata sounded a more conciliatory note on foreign investment. This appears to have gained him the support of elements of a nervous urban middle-class constituency benefiting from the knock-on effects of the copper boom (Cheeseman and Hinfelaar 2010). Combining this approach with a redoubled focus on mobilizing his base after a low turnout in 2008 was enough for a PF victory in 2011, despite the MMD winning most rural seats. The question now was whether the PF government would follow through with a comprehensive program that was independent of donor priorities.

The Patriotic Front in Power

Early on, Larmer and Fraser (2007) noted parallels (as well as differences) between the PF and various populist Latin American parties that had come to power in, for instance, Venezuela, Ecuador, and Bolivia.³³ In each case, these governments, whose core support was similar to that of the PF, leveraged rising commodity rents in support of substantial policy departures from the neoliberal orthodoxy promoted by IFIs and donors. Facing a similarly favorable international environment, and with a new populist government, would Zambia demonstrate a similar deviation from the path of neoliberalization? My view is that the Patriotic Front did enough to demonstrate, during Sata’s presidency at least, that they were capable of such, though change was not widespread and does not seem to have been grounded in any overarching strategy. Those policy changes that did occur suggest a rather different direction from those taken in the Latin American cases, which in turn reflects the significantly different makeup of the political and economic forces in Zambia.

Two years into Sata’s administration, donor representatives expressed nostalgia for the days of the MMD and complained that the PF government paid them little attention.³⁴ As one interviewee acknowledged, this is significant, given the widespread complaints about corruption during the final years of MMD government, which led to donors such as Canada and the Netherlands pulling out of Zambia completely. With aid accounting for 5 percent of the budget in 2013 and 6 percent in 2014, down from 53 percent in 2001 (Kragelund 2014), it is not surprising that the government began to exercise more independence in setting policy priorities.

One example is the trend toward limited renationalizations. Though most Zambian privatizations occurred in the 1990s, further state divestment continued to be part of the donor agenda much later, as with the reluctant sale of national telecom company Zamtel to a Libyan consortium, in 2010. Alleging corruption, the new PF government unilaterally reversed this deal. Zambia Railways (principally a freight railway that carries copper out of the country) was also nationalized and has received heavy investment. Additionally, a large-scale road-building scheme was embarked upon.

In the key mining sector, reforms were timid overall. After the PF’s surprise showing in 2006, which was significantly boosted by public revelations about the secretive development agreements that offered mining concessions with little or no tax liabilities, the MMD government of Levy Mwanawasa responded to the new threat by unveiling a populist measure of its own—a windfall tax on copper mining firms. This was a variable tax, to be applied at a rate of between 25 and 75 percent of revenues, but only when the global price of copper hit certain price thresholds (Lungu 2008a).³⁵

Once again, though, as with both the nationalization and the privatization of the mining industry, the timing of change was unfortunate for the Zambian Copperbelt. In 2008, the effects of the global financial crisis began to be felt and the price of copper fell precipitously (though temporarily, as it turned out). Several investors suspended production or pulled out of the copper sector,³⁶ and the government, perhaps scarred by an earlier generation’s experience—when a dip that was assumed to be temporary became a twenty-five-year slump—backed off. With the huge investment stimulus package in China that followed, copper prices rebounded, and though the proposed increase of royalty rates from 0.6 percent to 3 percent was retained from the tax reform plan, it seemed as though Zambia had missed an opportunity.

Mining taxes and royalties have continued to be a controversial topic since 2009, with “so many changes in taxation that Zambia had acquired an unofficial world record in mining tax instability” (Lundstøl and Isaksen 2018), partly in response to copper price movements and partly reflecting a split within PF ranks on the issue. Nevertheless, there were no further attempts to impose a windfall tax or to up the state’s take to the extent seen in some other resource-exporting states over these years.³⁷ Though this is a systemic issue rather than one of individual corruption, it is interesting to note that a U.S. diplomatic cable made public by Wikileaks reports that an unnamed mining company had established “strong ties” with Sata and had begun writing his public statements on foreign investment (U.S. Embassy Lusaka 2008).³⁸ This was during the run-up to the 2008 election, when Sata indeed significantly toned down his anti–foreign investor rhetoric.

While higher prices, increasing production, and somewhat higher taxes helped the cause of budgetary independence in Zambia, they did not allow the fiscal space for a Latin America–style redistributive agenda.³⁹ PF policy, nevertheless, did seem to be following its election slogan of “More jobs, lower taxes, and more money in your pocket,” which, at least to some extent, was directed principally at the urban poor. The income tax threshold was increased, to the frustration of donors who had recommended reducing this in order to broaden the tax base.⁴⁰ Formal sector minimum wages also were substantially hiked, especially for civil servants, but there were problems with enforcing the new rates.⁴¹ With the economy growing at 6.8 percent in 2011 and 7.2 percent in 2012 (International Monetary Fund n.d.), jobs were undoubtedly created in both the formal and informal sectors under Sata, some directly by the government’s road-building schemes.⁴²

The government also intervened more forcefully at times, though in a somewhat piecemeal manner. In 2013, the state took control of Collum Coal Mine in Southern Province, citing a poor record of environmental, safety, and labor conditions and the nonpayment of royalties. This mine had become infamous, both domestically and internationally, for incidents in 2010, when Chinese supervisors opened fire on protesting miners, and in 2012, when one manager was killed and another injured during another protest (Lusaka Times 2012; Okeowo 2013). Also in 2013, the London-listed but predominantly India-based company Vedanta Resources announced plans to mechanize its Konkola Copper Mines, involving the dismissal of 1,500 workers. This met with a furious reaction from the government, which threatened to suspend Vedanta’s operating license and canceled the work permit of the CEO while he was out of the country, prompting an apology from the company (Mfula 2013).

Throughout Sata’s presidency and certainly now under Lungu, Zambia has never appeared likely to return to a state capitalist economy. PF governments have no longer seemed so beholden to donors but have been ideologically rudderless, channeling the interests of political elites while also responding in an ad hoc fashion to the demands of the urban constituency that had been key to their electoral success. Recently, and following the end of the boom, Lungu has in some ways mirrored the earlier shift of the MMD away from its urban base, with the PF incorporating key former MMD figures such as former president Rupiah Banda (Ismail 2017). In some senses, these maneuvers all look very similar to those seen under Kaunda: efforts to stabilize and maximize the potential for accumulation and consumption among the dominant elite while outflanking, co-opting, or repressing potential threats from organized labor and the cities.

Viewed from one angle, the ascendancy of the current government is simply another shuffling of the cards, the triumph of a formerly marginalized faction of the political elite.⁴³ The continuation of patronage politics is not hidden; in various by-elections since 2011,⁴⁴ Sata more or less explicitly offered voters a choice between impoverishment with the opposition or access to development funds if they were to install a government candidate.⁴⁵ Patronage politics has become even more obvious under Lungu (Africa Confidential 2016).

Meanwhile, mineworkers themselves have continued to show an impressive capacity to organize and demand improved pay and conditions. Lee’s (2009) important paper demonstrates that workers in the Chambishi mine, owned by China Nonferrous Metal Mining, were aware of both the high price of copper and their relatively low wages in comparison with other Zambian miners during the first years of the boom. This led to successful industrial action, resulting in a 23 percent pay increase and a reversal of the casualization of the workforce. In a postscript to a later version of the paper, Lee (2010) discusses China Nonferrous’s acquisition of the Luanshya mine, which had been shut down in 2009 as a result of the temporary drop in copper prices.⁴⁶ As with Chambishi, there were concerns about the Chinese approach to labor relations, but workers were again able to negotiate a blanket adoption of permanent, pensionable contracts and wage increases.

However, these struggles, along with the minimum wage increases instituted by the government, had little resonance for the huge numbers of Zambians who were subsistence farmers. For these sections of the populace, the major result of the PF in power has been a recalibration of vertical patronage networks. In this sense, the PF’s coming to power on the back of the urban-Bemba coalition has not resulted in the kind of national project seen in a case like Bolivia, where frustration among the urban poor over the inequitable distribution of the proceeds from natural resources produced a nationwide movement, leading eventually to the election of Evo Morales.⁴⁷

Cox and Negi (2010) draw on a number of authors who discuss rural Africa in general, and they conclude that a limited process of peasant differentiation is under way as wages are reinvested in small-scale agricultural production for market and the informal purchase or rental of customary land. Nevertheless, in their classical Marxist version, they assert that the lack of separation of the rural population from the means of production in most of Africa means that the accumulation process and thus class formation cannot begin in earnest, leaving noncapitalist social relations intact.⁴⁸ In the Zambian case, the persistence of these social relations means that most rural areas continue to be dominated by vertical structures of authority interwoven with patronage networks flowing down from the central state, and those networks, in turn, are dependent upon the access of the central state to international networks of capital. Such structures contrast sharply with the more horizontal though complex linkages between organized labor and the urban poor, extending to some degree to the rural Bembaphone provinces.⁴⁹ These differences make the construction of the kind of national popular coalition that is seen in Bolivia exceedingly difficult, since the politics of the urban poor has little resonance in most of the Zambian countryside.⁵⁰ Even if mining labor, as the organizational core of the urban constituencies of Zambia, has proved its strength time and again, it most probably lacks both the numerical and geographic potential to lead and define, rather than simply participate in, a national movement along the lines of the MAS in Bolivia.

The occasional adoption of measures contrary to the views of donors illustrates that the PF was operating in an environment where a broader assertion of policy independence was possible, as the economy grew and donor dependence declined. The first obvious step here would have been a thorough reassessment of the mining tax and royalty regime, which in turn could have provided sufficient revenue to finance a more ambitious vision of development. Given that the previous attempt to impose a mining windfall tax, in 2008, had been overtaken by volatile copper markets, however, caution on the part of PF governments is perhaps understandable here. Such caution, however, is reinforced through the immediate interests of state elites. Having won the 2011 election on the back of a popular movement calling for a more equitable share of the mining bonanza, the PF found itself inheriting and slotting into a system that afforded them control of the reins of power sufficient for personal gain and relative political stability. Lacking any strong policy agenda or vision of development, there was little chance of a concerted effort to shift the neoliberal status quo emanating from within the state under Sata, and likely no social forces with the requisite strength and reach to force the issue.

Following Sata’s death (and then a brief interregnum under Guy Scott), Edgar Lungu has maintained PF rule in the context of falling copper prices via a creeping authoritarianism, including the temporary jailing of his main political rival on trumped-up treason charges (Mfula 2017). While GDP growth has recently rebounded somewhat, the government has begun struggling to cover debt repayments, after both raising funds on capital markets and increasing its loans from Chinese state-owned banks during the boom (Africa Confidential 2019). In a situation that may well be come to be repeated in many other countries, it seems that the IMF (as of mid-2019) has refused to agree to a loan package because of concerns over the scale of debts and the lack of transparency around Zambia’s Chinese loans. Some (disputed) reports have even suggested that the debt owed to China is much greater than official figures suggest and that these loans are secured against the state electricity company, ZESCO (Africa Confidential 2018; Beardsworth 2018).

Laos

In some senses, Laos seems an unlikely candidate for inclusion in the DDO type, given that it is still governed by the Lao People’s Revolutionary Party (LPRP) and is still, at least officially, committed to state socialism. In contrast to the high degree of neoliberalization seen in states such as Zambia or Mongolia, liberal reform in Laos has tended to be slow and reluctant—private ownership of land was only made legal in 2003, for example. Liberalization, however, at least began relatively early, with the New Economic Mechanism, a program meant to institute a market economy, in 1986.

Rather than a process mandated by IFIs and Northern donors, the New Economic Mechanism constituted a domestic response to the end of aid flows from the Soviet Union. It was drawn up under the influence of Vietnamese and Soviet advisers, though no doubt with some attention also paid to contemporary events in China. From the perspective of the LPRP, and based on the experiences of Laos’s larger neighbors, liberalization was seen as a means through which economic growth might be achieved, not as an end in itself but as a way of enhancing the legitimacy and prolonging the rule of the governing party (Stuart-Fox 2005).

Following the 1997–1998 Asian financial crisis, attitudes toward liberalization among the upper echelons of the party cooled. Nevertheless, the combination of a narrow tax base (even by least developed country standards), large debt obligations from the Soviet period, and persistent trade deficits have made Laos increasingly aid dependent, with ODA making up an average 39 percent of government revenue in the 2000–2010 decade (Bird and Hill 2010). This meant that neoliberalization continued, albeit more slowly and in the face of greater government intransigence, than prior to 1997. Externally, accepting donor conditionality was the price to be paid for the continuing budget support that underwrote both short-term stability and access to patronage resources.⁵¹ Internally, demands from younger midlevel bureaucrats for neoliberal reform were balanced by a fear that marketization may, as in 1997, engender instability or create new groups powerful enough to challenge LPRP rule.

Large-scale copper and gold production began in 2003 and was expected to contribute 110 percent of 2007 GDP over the period 2007 to 2020 (Bird and Hill 2010). New mining investment, however, did little to shake up the political equation. Resource revenues and associated growth certainly were a significant factor in the substantial decline seen in aid as a percentage of GNI since the beginning of the boom. However, extremely low levels of state capacity mean that the prospect of Laos completing what in other cases was a necessary condition for a departure from neoliberalization—a favorable renegotiation of the state take from extraction—seemed out of reach over the boom years. Goldman (2006, 176), in his study of the World Bank’s participatory process relating to the Nam Theun 2 dam project, noted that most governmental departments with responsibility for natural resources were funded by the donors themselves, with donors also managing training of staff. Stuart-Fox (2005) mentions that many Laotian laws are drafted in English and French and may remain untranslated into local languages even several years after coming into force. Given this environment, it is hardly surprising that both the will and the capacity to strike a better bargain with extractive capital, let alone to formulate any comprehensive alternative vision of national development, was lacking.

Mongolia

Mongolia, like Laos, is a postsocialist state profoundly affected by the decline and collapse of the Soviet Union. Unlike Laos, though, Mongolia’s political and economic transition was relatively rapid and extensive. In 1990, following the withdrawal of Soviet troops and officials from Ulaanbaatar, the new Mongolian authorities regarded the United States and European countries as the best potential defense against feared Chinese intervention.⁵² This factor, combined with support and training for the most free market–oriented among the emerging political elite by the German Konrad Adenauer Foundation and the U.S. International Republican Institute (Rossabi 2005, 37–39), led to an early adoption of shock therapy, following World Bank, IMF, and Asian Development Bank recommendations.⁵³ Unfortunately, the reforms had rather disastrous effects across a range of social indicators (Wade 2004), with the decline of urban industry prompting a return to traditional pastoralism among large numbers of the newly unemployed⁵⁴ and the collapse of government revenues leading to an increasing dependence on foreign aid. With a relatively vibrant democracy, Mongolia has seen several changes of government since 1990, though, in terms of neoliberalization, the only difference among incumbents has been in the degree of enthusiasm with which conditionalities from donors and IFIs have been accepted.

Economic circumstances in Mongolia, however, changed rapidly during the boom, with an average annual GDP growth rate of 8.7 percent from 2004 to 2013 (International Monetary Fund n.d.), coinciding with a rush to exploit largely untapped reserves of copper, gold, and coal. The largest extractive project is Oyu Tolgoi, a huge copper mine close to the Chinese border, which at peak production will be the world’s third largest and was predicted, prior to delays in a planned expansion, to account for one-third of Mongolia’s GDP by 2020 (Hill 2011). The mine is jointly owned by Turquoise Hill Resources (in which the Anglo-Australian firm Rio Tinto holds a majority share) and the Mongolian state, with the government borrowing from Rio Tinto the capital for its 34 percent stake, which would then be repaid out of subsequent dividends. As costs exceeded original estimates, government liabilities correspondingly increased, leading to budget shortfalls in the face of rising public expectations from the boom, while successive governments have been through multiple rounds of disputes with Rio Tinto over Oyu Tolgoi terms and taxation (Zand 2013; Readhead and Mihalyi 2018). More broadly, mining’s huge economic importance has made it a highly salient political issue in Mongolia, tied to questions of development, environmentalism, nationalism, and fear of foreign—especially Chinese—domination (Jackson 2015; Jackson and Dear 2016). Understandably, then, mining often dominates Mongolian politics.

Given Mongolia’s small size, even the low proportion of the extractive surplus that the state recoups is significant. It is in the management of these flows that the first evidence of the Mongolian state’s ability to make decisions independently of donor conditionality may be glimpsed. In line with donor recommendations, in 2008 Mongolia created a Human Development Fund, based partly on the Chilean model, that would save a proportion of resource revenues during times of high prices and then release them during commodity depressions (Isakova, Plekhanov, and Zettelmeyer 2012). The Human Development Fund was to be used to fund social spending, but it also was to be employed for the direct distribution of commodity revenues to all adult citizens. This second aspect of the plan had been inspired by the Alaska Permanent Fund, set up by Republicans to provide an incentive to the local population to resist any future government attempts to appropriate or direct the state’s oil surplus.⁵⁵

In the Mongolian case, however, the amount drawn from the fund was not mandated as a percentage of revenues but was left open as a value to be set by Parliament each year. The result was that directly distributed funds became the source of a bidding war between the government and the opposition during the 2009 presidential election campaign. Though the transfer that actually occurred was around one-tenth of the promised $1,000, this and continuing transfers of $15 per month were condemned by the World Bank as inflationary. Though no government in Mongolia over the boom years articulated a desire to break with a neoliberal development model, the persistence of direct distribution of cash from the Human Development Fund is evidence that a revenue base independent of donor and IFI flows presented a basis for at least some tentative steps toward such a departure.

Conclusion

It is clear that, during the commodity boom, DDO states largely continued to follow the donor-driven agenda, which constitutes a particular form of neoliberalization that had been adopted as a means of addressing some of the more obvious contradictions of the early structural adjustment programs. This is perhaps surprising, given that the potential for domestically derived changes in political-economic direction did open up during the boom. Export prices rocketed, aid dependence declined, and DDO states’ natural resource endowments came to seem ever more attractive to transnational extractive firms. As with the other types, it is the nature of state–society relations in Zambia, Laos, and Mongolia that best explains this otherwise puzzling inertia on the part of their governments.

The typology of extractive regimes is premised on the overall argument that, with the path largely cleared of neoliberalizing pressures by China-driven changes in resource export markets, the approach taken by each state depended upon the nature of the particular social coalition that was able to gain control over the state and to set policy in a manner that favored its interests. In two senses, the DDO type may be said to stand as a variation upon this basic theme. First, as with the EO type discussed in chapter 7, in the absence of widespread class formation, it was the state managers themselves, along with allied elites, who constituted the dominant social sector. Although they were not, for the most part, engaged in large-scale accumulation, their position at the pinnacle of the state allowed them access to distributional resources that far outweighed any private sources of capital within the domestic sphere. In the (relative) absence of local capitalists or organized popular classes, political elites (though sometimes internally fractious) lacked serious challengers to their rule and were able to co-opt and absorb any nascent threats through control of patronage networks—as, for instance, in the regular defection of Zambian political figures to the current party of government.

Since rising extractive prices would seem to constitute an obvious source of increased resources for patronage, though, a turn to increase the state’s take in these sectors might be expected, even if this were unaccompanied by any coherent political-economic agenda, as is arguably the case in a state like Angola. In fact, to some extent, this did occur, with Zambia and Mongolia both experiencing wrangles over extractive ownership and taxation regimes. That these efforts tended to be rather ad hoc and unsystematic, though, points to a second key variation seen in the DDO type that sets it apart from its EO counterpart. This is the legacy of aid dependence, which, in addition to effects on independent state capacity and bureaucracy, meant that DDO states, unlike those of EO cases, entered the commodity boom with a significant preexisting source of allocative resources, in the form of official development assistance. As aid levels dropped, there was clearly has been more room to challenge donor priorities; this was most obviously seen in Zambia under the PF. With ODA totals still relatively substantial, though, it is not surprising that state elites in DDO cases were generally reluctant to rock this particular boat, lacking pressure from other social groups to do so and in the apparent absence of any coherently articulated opposition to neoliberalism from within their own ranks.