I have just read a fascinating article, "Africa's Eastern Promise" in Foreign Affairs, published by the Council on Foreign Relations (http://www.foreignaffairs.com/articles/65916/deborah-brautigam/africa%E2%80%99s-eastern-promise). I hear people groaning already, as most activists view the CFR – consisting of corporate executives and their favorite politicians, academics and media personalities – as the promotional arm of the ruling elite. I wouldn’t want it to become widely known that I sometimes read Foreign Affairs.
However to my surprise, the article contrasts US development policy in Africa quite unfavorably with what the Chinese are doing. It refers to US policy as "trade liberalization (free trade)" policy. Whereas strictly speaking, US policy in Africa is a combination of free trade/CIA covert destabilization/overt military strategy. America’s free trade policy – which consists of dumping cheap US products on African markets – happens to be extremely unpopular, in Africa and elsewhere. For putting thousands of local farmers and companies out of business.
Divisions in the Ruling Elite About US Foreign Policy
While this particular article doesn’t directly address America’s use of full spectrum military dominance in securing access to oil and other strategic resources, it does point to clear advantages (such as guaranteeing China access to energy and mineral resources, while simultaneously aiding development, expanding the Chinese economy and building strong trade and potential military alliances). Which suggests to me that there are clear divisions among the ruling elite about US foreign policy.
"African’s Eastern Promise" indicates that the Chinese are pursuing a resource driven development strategy in Africa – similar to their strategy in Pakistan (see my Sept 23 blog "Iran, China and the Gwadar Port") – but on a far grander scale.
Chinese policy in Africa consists of a dual approach – resource-backed loans and a Chinese initiative to establish special trade and economic cooperative zones within various African countries.
Chinese Resource-backed Loans
Africa is quite resource rich (mainly oil, copper and other minerals). Thus far Chinese has initiated loans to seven African countries, which have pledged oil and resources as collateral.
- Angola – three oil-backed loans to fund the construction of roads, railways, hospitals, schools, and water systems.
- Nigeria – two oil-backed loans to finance projects to convert natural gas to electricity
- Congo – oil-backed loan for a Chinese-built hydropower plant, as well as a projected $3 billion copper-backed loan
- Ghana – infrastructure loan to be repaid in cacao beans
Some of the benefits of such loans include extremely competitive interest rates (1.25 to 1.75% – in contrast to Western loans charging 6 – 6.5% interest or more) – as well as a kind of insurance African leaders will use the loans to fund infrastructure rather than palaces and yachts. The main drawback has been a tendency for Chinese companies to import Chinese workers and to pay really low wages when they do employ local workers. However African countries are wising up and setting stricter conditions about employing local contractors and treating workers fairly.
Special Trade and Economic Cooperation Zones
Thus far, China has set up Special Trade and Economic Cooperation Zones in Egypt, Ethiopia, Mauritius, Zambia and Algeria. Their purpose is to create a favorable environment for Chinese companies to move to African to set up business For the most part these have proven very effective in promoting industrialization, employment and infrastructure development in very disadvantaged areas of the continent.
Chinese Investment in African Farm Land
"Africa’s Eastern Promise" doesn't cover the issue of Chinese farmers and agricultural companies buying up and leasing African farm land. However a number of other sources (see below) suggest that while China was a pioneer in this area – which enabled them to establish key relationships that made their innovative trade deals possible – Chinese investment in African farm land is greatly surpassed by other players (mainly Indian, South Korean, UAE, Saudi Arabian, European and US Companies)