28 October 2005

There is a timeless line of argument from Walter Rodney’s 1973 book How Europe Underdeveloped Africa: ’The question as to who and what is responsible for African underdevelopment can be answered at two levels.
Firstly, the answer is that the operation of the imperialist system bears major responsibility for African economic retardation by draining African wealth and by making it impossible to develop more rapidly the resources of the continent.’

’Secondly, one has to deal with those who manipulate the system and those who are either agents or unwitting accomplices of the said system.’

Sub-Saharan Africa today still suffers the dispossession of wealth, along two trajectories: South-North resource flows, and adverse internal class
formation. In the former case, the central processes are associated with
exploitative debt and finance, phantom aid, capital flight, unfair trade,
distorted investment, ecological exploitation and the ’brain drain’.

In the latter case, instead of accumulation and class formation via an
organic middle class and productive capitalist class, Africa has seen an
excessively powerful ’comprador’-oriented ruling elite whose income is based
upon financial-parasitical accumulation and political-bureaucratic patronage
power, which in turn is then subject to vast capital flight.

Although remittances from the Diaspora now fund development and even a
limited amount of capital accumulation, capital flight is far greater. At
more than $10 billion/year since the early 1970s, collectively, the citizens
of Nigeria, the Ivory Coast, the DRC, Angola and Zambia have been especially
vulnerable to the overseas drain of their national wealth. A major factor
during the late 1990s was the relisting of the primary share-issuing
residence of the largest South African firms, from Johannesburg to London.

In Washington, perhaps the most highly regarded of African elites is South
African finance minister Trevor Manuel, who until late last month served as
chair of the World Bank/IMF Development Committee. Having failed for four
years to get even partial democratisation of the Bretton Woods Institutions
onto the committee’s agenda, Manuel gloried in the return of attention to
Africa: ’Right now, the macroeconomic conditions in Africa have never been
better. You have growth across the continent at 4.7%. You have inflation in
single digits. The bulk of countries have very strong fiscal balances as
well.’

These statements are true only if we take misleadingly narrow economic
statistics seriously. Fortunately we don’t need to because even the Bank is
occasionally compelled to confess how Africa is drained of ’genuine savings’
through depletion of minerals and forests, and other eco-social factors
w! hich ostrich-like economists invariably ignore.

Manuel’s riff sounds impressive. Indeed, because of structural adjustment
austerity, African states reduced their early-1990s deficit rates of around
6% of annual output, to just under 4% today. However, the fastest growing
economies actually increased their deficits by a full percentage point over
the last decade, suggesting that Keynesianism still works as well for
African elites as it does for George Bush.

Meanwhile, monetary policy was tightened, interest rates soared and African
central banks - typically run by IMF or ex-IMF staff - were discouraged from
printing money (which sometimes fuels inflation). Price increases were
reduced from double-digit rates prior to 2004 to an average of 9% this year.
However, that level is far too low for a developmental trajectory, former
Bank chief economist Joseph Stiglitz argued in his ’Post-Washington’
critique of economic orthodoxy.

Bank president Paul Wolfowitz - architect of the Iraq War - was in a
sporting mood at Manuel’s Development Committee press conference on
September 25: ’The path has been cleared to complete debt relief, and at the
risk of a dangerous metaphor, I think Trevor has given us the ball right in
front of the goal, and the goalie has tripped, and all we have to do now is
kick it in.’

A dangerous move indeed, for Manuel warned of at least one more hurdle: ’a
legal challenge because countries may feel that some have been favoured
against others. My understanding is that both Rodrigo [Rato, IMF managing
director] and Paul will go before their boards, sort out what the equality
of treatment principle would be in each of the instances, and ensure that
there is equality of treatment.’

It seems the InterAmerican Development Bank and Asian Development Bank won’t
participate in the debt relief pantomime. So 14 African countries favoured
by the G8 - and four others in Asia and Latin America - will get a few
crumbs of relief, costing the G8 less than $2 billion per year to service
(on $40 billion in outstanding debt).

But because their leaders have ceased putting up a fuss, the debt of these
18 is reduced: not to nothing, but to levels where the Bank and IMF retain
macroeconomic control, so that capital flight and ultra-cheap commodities
can continue their outward flow.

None of the trade reforms proposed for the Hong Kong WTO meeting in December
will alter the basic calculus of long-term decline for their (non-oil)
primary commodity prices. Christian Aid recently estimated the damage done
to African countries by trade liberalisation at $272 billion since 1980.

Even in the face of those ’internal contradictions and conflicts’ -
including vast overcapacity, wars, real estate bubbles, hurricane repairs,
debt crises and balance of payments problems - men like Wolfowitz can afford
to make small concessions. After all, Third World repayments of $340 billion
each year flow northwards to service the $2.2 trillion debt. This is more
than five times the G8’s development aid budget (and ten times the level of
Northern donations once we subtract the ’phantom aid’ which never reaches
the masses).

As Brussels-based debt campaigner Eric Toussaint concludes, ’Since 1980,
over 50 Marshall Plans worth over $4.6 trillion have been sent by the
peoples of the Periphery to their creditors in the Centre’.

Consider, as well, the South as ecological creditor. According to ecologist
Joan Martinez-Alier, ’The notion of an ecological debt is not particularly
radical. Think of the environmental liabilities incurred by firms under the
United States Superfund legislation. Although it is not possible to make an
exact accounting, it is necessary to establish orders of magn! itude in order
to stimulate discussion.’

Martinez-Alier and Jyoti Parikh of the UN International Panel on Climate
Change argue that based upon the Third World’s role as a carbon sink, an
estimated annual subsidy of $75 billion flows South to North. Africans are
most exploited because non-industrialised economies have not begun to
utilise more than a small fraction of what should be due under any fair
framework of global resource allocation such as carbon emissions.

The amounts involved would easily cover financial debt repayments. Instead,
the G8 Gleneagles scam keeps poor countries down in several ways. According
to Jubilee South: ’The multilateral debt cancellation being proposed is
still clearly tied to compliance with conditionalities which exacerbate
poverty, open our countries further for exploitation and plunder, and
perpetuate the domination of the South. Even if the debt cancellation were
without conditionalities,! the proposal falls far too short in terms of
coverage and amounts to demonstrate a bold step towards justice by any
standard.’

However, almost by accident another Bank document began to do the rounds
just prior to the Bank/IMF Annual Meetings: ’Where is the Wealth of
Nations?’ Here at least, World Bank environmental staff recognise that
foreign investors may diminish overall wealth and savings, once resource
depletion and pollution are factored in.

(To be sure, the Bank adopts a minimalist definition based upon current
pricing - not potential future values when scarcity becomes a more crucial
factor, especially in the oil sector. Nor do Bank economists yet deign to
calculate the damage done to local environments, to workers’ health/safety,
and especially to women and vulnerable people in communities around mines.
And unpaid household and community work is still left out of national
statistical accounts, reducing women! ’s labour to a nil value.)

What investments are most important, then? Dating to the mid-1990s, foreign
direct investment has flowed mainly into oil rigs in the West African Gulf
of Guinea and Angola’s offshore Cabinda field, aside from an ill-fated South
African privatisation spree in 1997.

Meanwhile, corrupt host regimes waged war against their people, not only in
Angola (where formal conflict ended after a rightwing Unita guerrilla
movement faded following Jonas Savimbi’s death). In addition, as Amnesty
International pointed out last month, the Bank was meant to finance the
multi-billion dollar Chad-Cameroon pipeline to add human rights sensitivity,
but deepening repression is the actual result.

Other Africans suffering oil depletion under dictatorial or militarised
conditions include citizens of the Republic of the Congo, Equatorial Guinea,
Gabon, Nigeria and Sudan.

South Africans are also implicated in a kind of subimperial looting of oil.
At the country’s annual Political Science Association conference in
KwaZulu-Natal last month, senior government researcher John Daniel shifted
from claiming in 2003 that ’non-hegemonic co-operation has in fact, been the
option embraced by the post-apartheid South African state.’

After reviewing the record of the African National Congress (ANC) in the
continent’s energy sector, especially Sudan and Equatorial Guinea, he
conceded, ’The ANC government has abandoned any regard to those ethical and
human rights principles which it once proclaimed would form the basis of its
foreign policy.’

Big Oil celebrated this state of power relations at the World Petroleum
Congress in Johannesburg last month. Opponents also came together, invited
by the excellent NGO groundWork. The Ogoni people, for example, demanded
reparations not only for the thorough destruction of their Delta habitat,
but also for the depletion of what economists call ’natural capital’.

How much natural capital value is removed from Africa? In South Africa, the
value of minerals in the soil fell from $112 billion in 1960 to $55 billion
in 2000, according to the UN, while Africa as a whole suffers negative net
annual savings.

Adding not just oil-related depletion but other subsoil assets, timber
resources, nontimber forest resources, protected areas, cropland and
pastureland, the Bank calculates that Gabon’s citizens lost $2,241 each in
2000, followed by people in the Republic of the Congo (-$727), Nigeria
(-$210), Cameroon (-$152), Mauritania (-$147) and Cote d’Ivoire (-$100).

In addition to mineral depletion worth 1% of national income each year, the
Bank acknowledges that South Africans lose forests worth 0.3%; suffer
pollution (’particulate matter’) damage of 0.2%; and emit C02 that causes
another 1.6% of damage. In total, adding a few ot! her factors, the actual
’genuine savings’ of South Africa is reduced from the official 15.7% to just
6.9% of national income.

These analyses, documents and calculations are new and fresh, and should
shame those who claim international integration can enrich Africa. The
opposite is more true.

Unlike Trevor Manuel, African justice activists like those who met at groundWork’s conference know it. They wrote to officials of the World Petroleum Congress: ’At every point in the fossil fuel production chain
where your members “add value” and make profit, ordinary people, workers and
their environments are assaulted and impoverished. Where oil is drilled,
pumped, processed and used, in Africa as elsewhere, ecological systems have
been trashed, peoples’ livelihoods have been destroyed and their democratic
aspirations and their rights and cultures trampled.’

The letter concluded, ’Your energy future is modeled on the interest! s of
over-consuming, energy-intensive, fossil-fuel-burning wealthy classes whose
reckless and selfish lifestyles not only impoverish others but threaten the
global environment, imposing on all of us the chaos and uncertainty of
climate change and the violence and destruction of war. Another energy
future in necessary: yours has failed!’

Indeed the Southern African Social Forum in Harare earlier this month
generalised this sentiment to the entire set of economic relations that
dispossess Africa of all kinds of wealth.

Patrick Bond
The author is based at the University of KwaZulu-Natal Centre for Civil Society. This work is part of a larger study carried out in collaboration with the Johannesburg-based Southern African Centre for Economic Justice and Harare-based Equinet, and participants at their 10-12 October workshop in Harare are thanked for feedback. Comments are welcomed, at pbond at mail.ngo.za