By Patrick Bond
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Imperialism’s African Helpers

This article is over 16 years, 7 months old
Africa needs to break immediately from the most destructive circuits of global capital, and its leaders are on the wrong side.
Issue 297

Paul Wolfowitz is a ‘wonderful individual’. He is ‘perfectly capable’. This judgment of the Iraq war architect’s anointment as World Bank president came from Africa’s most prominent finance minister, Trevor Manuel. The former grassroots anti-apartheid leader offered the comments at a 17 April press conference of the World Bank/IMF Development Committee, which he has chaired since 2002.

Undemocratic selections of the Bretton Woods Institutions leadership – Wolfowitz follows the 2004 European prerogative, in which Gordon Brown shepherded the extreme right wing Spanish finance minister Rodrigo Rato into position as IMF managing director – were probably mitigated, for Manuel, by the fact that George Bush had at least consulted his boss, Thabo Mbeki, along with four other key national leaders from the OECD.

In contrast, everyone disgusted by the US/British occupation, 100,000 Iraqi civilian deaths, prisoner torture and reconstruction corruption scorned Bush’s choice for the World Bank job. But the South African rulers typically seek some momentary advantage, currying favour for a future contingency. While Pretoria has borrowed less than $100 million from the World Bank, Wolfowitz will oversee the deployment of more than $20 billion in Third World loans each year, and seek even tighter ideological control over debtors’ economic policy and geopolitical orientation.

The weakness of resolve was not only obvious in Pretoria. Any notion that imperial power had fragmented due to qualms in Paris and Berlin about the looting of Iraq was put to rest with the unanimous appointment of Wolfowitz by the World Bank board. France was pulled into line presumably because of Washington’s support for hardnosed negotiator Pascal Lamy as World Trade Organisation director-general. Adding European Union trade commissioner Peter Mandelson, the Third World faces a formidable flank of exploitative economic managers. It is inconceivable that, notwithstanding a few gestures of patrician concern at Gleneagles, Bush and this group will make the concessions in power relations, processes and institutions that are required to slow and reverse Africa’s decline, or to meet the Millennium Development Goals of halving poverty by 2015.

Under the circumstances, the G8 conference in Gleneagles hosted by Tony Blair in early July will need to pretend that Africa’s problems can be ameliorated within the context of the skewed rules of global capitalism. The gathering again throws into sharp relief capital’s need to legitimate its shaky rule over all corners of the globe, even Africa. For five years – as hosting duty shifted from Japan to Italy to Canada to France to the US – visits by Mbeki and a few other African leaders have decorated the charade.

Hence no one attending the coming anti-G8 protests in London and Edinburgh need harbour illusions about power politics, about who is on what side of the international class struggle. Mbeki’s periodic rhetoric against ‘global apartheid’ is contradicted by his New Partnership for Africa’s Development (Nepad), a status quo project launched in November 2001, filled with now embarrassing political promises. Zimbabweans, Swazis and Sudanese, among others, must shake their heads incomprehendingly, reading in Nepad that ‘African leaders have learnt from their own experiences that peace, security, democracy, good governance, human rights and sound economic management are conditions for sustainable development.’

Robert Mugabe’s dubious electoral victory in late March was, after all, immediately endorsed by Mbeki’s openly biased observation team (Mbeki himself predicted the elections would be free and fair a month before they were held). US ambassador to South Africa Jendayi Frazer explained the Washington-Pretoria relationship to the Financial Mail in early May: ‘In Africa our interests coincide almost entirely – Zimbabwe being one exception insofar as we have the same interest but different strategy and tactics for pursuing that interest.’ Both Bush and Mbeki apparently want from Mugabe an elite deal incorporating the Movement for Democratic Change’s Morgan Tsvangirai, followed by debt repayments, severe currency devaluation, relaxation of exchange controls, restoration of the rule of property, an IMF austerity programme, and an opening to foreign capital to snap up state assets.

If Frazer subconsciously means that the US and South Africa work closely together to amplify Africa’s crisis of combined and uneven development, the evidence is abundant. Moreover, there is no prospect that matters will change because of potential G8 concessions: slightly lower US and European Union agricultural subsidies (in exchange for yet more market opening on non-agricultural goods), a bit more debt relief (in exchange for more privatisation), or slightly better access to brand-name anti-retroviral medicines to fight Aids (after all, only a tiny fraction of those who need the medicines will get them).

Imperial accumulation from Africa

African elite acquiescence is important in maintaining neo-liberal ideology, Western power and market-driven economic processes that keep the continent impoverished. Those processes include financial flows, trade and direct investment. Africa’s debt crisis worsened during the era of globalisation. From 1980 to 2000, sub-Saharan Africa’s total foreign debt rose from $60 billion to $206 billion, and the ratio of debt to GDP rose from 23 percent to 66 percent. Hence Africa now repays more than it receives. In 1980 loan inflows of $9.6 billion were comfortably higher than the debt repayment outflow of $3.2 billion. But by 2000 only $3.2 billion flowed in while $9.8 billion was repaid, leaving a net financial deficit of $6.2 billion.

African access to portfolio capital flows has mainly taken the form of ‘hot money’ (speculative positions by private-sector investors) in and out of the Johannesburg Stock Exchange (as well as Harare, Nairobi, Gabarone and a few others on occasion). In 1995, for example, foreign purchases and sales were responsible for half the share trading in Johannesburg. But these flows have had devastating effects upon South Africa’s currency, with 30 percent-plus crashes over a period of weeks during runs in early 1996, mid-1998 and late 2001. In Zimbabwe the November 1997 outflow of hot money crashed the currency by 74 percent in just four hours of trading.

Meanwhile, donor aid to Africa dropped 40 percent in real terms during the 1990s, in the wake of the West’s Cold War victory. Most such aid is siphoned off beforehand by bureaucracies and home-country corporations, or is used for ideological purposes instead of meeting genuine popular needs.

An important source of financial account outflows from Africa that must be reversed is capital flight. University of Massachusetts economists James Boyce and Léonce Ndikumana argue that a core group of sub-Saharan African countries whose foreign debt was $178 billion had suffered a quarter century of capital flight by elites that totalled more than $285 billion (including imputed interest earnings): ‘Taking capital flight as a measure of private external assets, and calculating net external assets as private external assets minus public external debts, sub-Saharan Africa thus appears to be a net creditor vis-à-vis the rest of the world.’

Africa’s underdevelopment through unbalanced trade is also a major problem. The continent’s share of world trade declined over the past quarter century, but the volume of exports increased. The ‘terms of trade’ between Africa and the rest of the world deteriorated steadily, thanks in part to the artificially low prices of crops subsidised by G8 countries. The UN Conference on Trade and Development argues that if the terms of trade had instead been constant since 1980 Africa would have twice the share of global trade it actually did in the year 2000; per capita GDP would have been 50 percent higher; and annual GDP increases would have been 1.4 percent higher.

Foreign direct investment in sub-Saharan Africa fell from 25 percent of the world’s total at its peak during the 1970s to less than 5 percent by the late 1990s, and those small amounts were devoted mainly to extracting minerals and oil, mainly from extremely corrupt regimes in Nigeria and Angola in which transnational corporate bribery played a major role. The only other substantive foreign investment flows were to South Africa for the partial privatisation of telecommunications and for the expansion of automotive-sector branch plant activity within global assembly lines. This was by far offset by South Africa’s own outflows of foreign direct investment, in the forms of delisting and relocation of the country’s largest corporations’ financial headquarters to London, not to mention the repatriation of profits and payments of patent and royalty fees to transnational corporations. Moreover, official statistics ignore the long-standing problem of transfer pricing, whereby foreign investors underpay taxes in Africa by misinvoicing inputs drawn from abroad.

Imperialism also benefits when ever-weakening African states adopt inappropriate neo-liberal economic policies imposed by the World Bank, IMF and WTO. From the beginning of the neo-liberal era budget cuts depressed economies’ effective demand, leading to declining growth. Often the alleged ‘crowding out’ of productive investment by government spending was not actually the reason for lack of investment, so the budget cuts were not compensated for by private sector growth. Privatisation often did not distinguish which state enterprises may have been strategic in nature, was too often accompanied by corruption, and often suffered from foreign takeover of domestic industry with scant regard for maintaining local employment or production levels (the incentive was sometimes simply gaining access to markets).

Women and vulnerable children, the elderly and disabled people are the primary victims, as they are expected to survive with less social subsidy, with more pressure on the fabric of the family during economic crisis, and with damage done by HIV/Aids closely correlated to the tearing of safety nets by structural adjustment policies.

Notwithstanding their failures, the World Bank and IMF pushed ahead in 1996 with the Highly Indebted Poor Countries Initiative (HIPC) instead of genuine debt cancellation. HIPC was accompanied by a renaming of the structural adjustment philosophy in 1999 as Poverty Reduction Strategy Papers (PRSPs). These have proven inadequate across Africa, and are regularly condemned by civil society groups.

One reason is the maldistribution of power within the multilateral agencies, including the US veto (with just over 15 percent of the institutions’ ownership). But internal reform proposals to raise developing country voting power from 39 percent to 44 percent and add one new African director were rebuffed in the institutions’ Development Committee in mid-2003, with Manuel quietly going along. The same month Ethiopian president Miles Zenawi poignantly implored an Economic Commission on Africa meeting, ‘While we will not be at the high table of the IMF, we should be at least in the room where decisions are made.’

Nepad to neo-liberalism’s rescue?

One reaction was the spread of dozens of ‘IMF Riots’ by angry African survivors, leaving neo-liberalism with a severe legitimacy crisis. A home-grown variant was required. In early 2001 South Africa’s President Thabo Mbeki first publicly introduced the core outline of what would be the 67-page document at a telling site: the Davos World Economic Forum.

In areas of economic reform, such as financial flows, foreign investment and privatisation, Nepad is explicitly neo-liberal. Instead of promoting debt cancellation, the Nepad strategy is to ‘support existing poverty reduction initiatives at the multilateral level’ including HIPC and PRSPs. In mid-2003 Institutional Investor magazine quoted the US government’s chief Africa bureaucrat, Walter Kansteiner: ‘Nepad is philosophically spot on.’

What, in contrast, was the reaction by Africa’s myriad popular organisations? In late 2001 and early 2002 virtually every major African civil society organisation, network and progressive personality attacked Nepad’s process, form and content. Until April 2002 no trade union, civil society, church, women’s, youth, political-party, parliamentary, or other potentially democratic progressive forces in Africa were consulted by the politicians or technocrats about Nepad. Tough critiques emerged in mid-2002 from intellectuals such as Jimi Adesina, Dani Nabudere and Adebayo Olukoshi, and from the Council for Development and Social Research in Africa (Codesria) and Third World Network-Africa. The latter two groups held a 2002 conference to consider Nepad, and concluded that:

(a) the neo-liberal economic policy framework at the heart of the plan repeats the structural adjustment policy packages of the preceding two decades and overlooks the disastrous effects of those policies;

(b) in spite of its proclaimed recognition of the central role of the African people to the plan, the African people have not played any part in the conception, design and formulation of Nepad;

(c) notwithstanding its stated concerns for social and gender equity, it adopts the social and economic measures that have contributed to the marginalisation of women;

(d) in spite of claims of African origins, its main targets are foreign donors, particularly in the G8;

(e) its vision of democracy is defined by the needs of creating a functional market…

African anti-capitalist resistance

It is because of such experiences that Codesria intellectuals, Jubilee anti-debt activists and allied groups within the Africa Social Forum have become as radical as any activists across the world when it comes to strategies addressing international economic relationships. For example, in mid-May a meeting of several dozen economic justice organisations hosted in Johannesburg by the Southern African Centre for Economic Justice resolved to protest at Wolfowitz’s upcoming initial African visit as World Bank president.

Not only do they try to kick the World Bank and IMF out of their countries and persuade their finance ministers to default on the illegitimate foreign debt, but these are also intent, strategically, on abolition of the Bretton Woods Institutions, and have developed at least one potentially devastating tactic: the World Bank Bonds Boycott. US-based solidarity organisations at launched the campaign with Jubilee South Africa and Brazil’s Movement of the Landless, among others, to ask of their Northern allies, is it ethical for socially-conscious people to invest in the World Bank by buying its bonds (responsible for 80 percent of the institution’s resources), hence drawing out dividends which represent the fruits of enormous suffering? Huge successes have been recorded among investors from pension managers, social-responsibility funds, churches and municipalities, reminiscent of the anti-apartheid disinvestment movement.

As another example of what is being termed ‘deglobalisation of capital’, the African Trade Network and the Gender and Trade Network in Africa put intense pressure on the continent’s delegates to reject the World Trade Organisation’s 2003 Cancun proposals. This approach proved effective when the Africa-Caribbean-Pacific group led the walkout that ended the Cancun meeting. The US and EU offered no concessions on matters of great importance to Africa (such as the decimation of West African cotton exports due to subsidies, or the halting of grain dumping), and instead rigidly insisted on moving the corporate agenda forward with other so called ‘Singapore’ issues. Bilateral or regional trade deals – such as EU Economic Partnership Agreements and the US Africa Growth and Opportunity Act – are also being resisted from both social movements and African countries which are manifestly losing out.

On a more localised level, inspiring anti-neoliberal struggles for what might be termed ‘decommodification’ are under way in Africa, especially South Africa. Here independent left movements have partially succeeded in translating demands for basic needs into genuine human rights: free anti-retroviral medicines to fight Aids and other health services; free lifeline water (at least 50 litres per person per day); free lifeline electricity (at least 1 kilowatt hour per person per day); thoroughgoing land reform; prohibition on services disconnections and evictions; free education; and even a ‘Basic Income Grant’, as advocated by churches and trade unions. Because the commodification of everything is still under way in South Africa, this is the sort of potentially unifying agenda that can serve as the programmatic basis for a widescale movement for dramatic social change, once dissatisfaction with the ruling party reaches levels approximating those just north in Zimbabwe.

Foremost among the problems that must be addressed, simultaneously, is how to engage those embryonic world-state institutions – even the United Nations – overly influenced by the aggressive neo-liberal US administrations. The decommodification principle is an enormous threat to their interests, whether in the forms of liberated intellectual property (such as Aids medicines), African agricultural systems protected against genetic modification, nationalised industries and utilities, or less pliant and desperate labour markets. To make any progress, deglobalisation from the most destructive circuits of global capital will also be necessary. Those circuits – finance, direct investment and commerce – rely most upon the three multilateral agencies, and hence a strategy and tactics are urgently required to close the World Bank, IMF and WTO.

Beyond that, the challenge for Africa’s progressive forces, as ever, is to establish the difference between ‘reformist reforms’ which stabilise neo-liberal capital, and more radical strategies. Some struggles have more obvious possibilities to advance a ‘non-reformist’ and forthrightly socialist agenda, such as for generous social policies stressing decommodification, and for capital controls and inward-oriented industrial strategies allowing democratic control of finance and ultimately of production itself. These sorts of non-neoliberal reforms would strengthen the democratic movements, directly empower the producers, and perhaps, over time, open the door to the contestation of capitalism, of which neo-liberalism is only a contemporary symptom.

Meanwhile, at least a few African elites stand in the way. In a comment following the 2002 Kananaskis G8 meeting, Mbeki set the tone by describing the gathering as ‘the end of the epoch of colonialism and neo-colonialism’. As Gordon Brown then brazenly remarked in January during his East African tour, ‘The days of Britain having to apologise for its colonial history are over.’

Patrick Bond is the author of Talk Left, Walk Right: South Africa’s Frustrated Global Reforms (Merlin £14.95).

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