09 May The Corporate Swamp: a New G20 Strategy for Africa
By Patrick Bond
The World Economic Forum (WEF) – Africa conference in Durban just hosted some of the world’s most controversial politicians: not just Jacob Zuma and his finance minister Malusi Gigaba plus regional dictators Robert Mugabe, Yoweri Museveni, King Mswati and Edgar Lungu, but also the most powerful man in Europe, the notoriously-corrupt neoliberal German finance minister, Wolfgang Schäuble.
At a public lecture on 4 May hosted by the University of KwaZulu-Natal, Schäuble undiplomatically threatened Britain’s Prime Minister Theresa May, in the midst of her election campaign: “The [Brexit] negotiations will become terribly difficult for the UK. They will see it.”
The next day at the WEF-Africa summit, Schäuble sold his plan for reviving multinational corporate investment in Africa. It is a priority, he said, because “In Europe, we have come to understand that Africa represents one of the most important issues for the growth and stability of the global economy.”
Africa as an ‘issue’ for global economic ‘growth’ – managed by imperialist elites – dates to an earlier Berlin project: the infamous “Scramble for Africa” in 1884-85. The continent’s dysfunctional borders were drawn then in order to facilitate property rights for colonial extractive industries, all the better to ensure infrastructure investment. Roads, railways, bridges and ports needed to withdraw resources have been cemented into place ever since, and now require refurbishing and expansion.
In addition to imperialist aspirations, another explanation arises: Germany’s national election is in September. Schäuble’s boss Angela Merkel needs a rhetorical device to explain to voters how the million African refugees who entered Germany over the last dozen years can be kept at bay in future. Hence the ‘Compact’ with African elites.
Schäuble was speaking on behalf of a G20 bloc that will hold its annual meeting in Hamburg in two months’ time. Amongst the world’s largest economies plus multilateral financial institutions, South Africa – with only the 3rd largest African economy and sixth most populous society – represents a continent glaringly absent from view.
The ‘C20’ group of civil society critics has expressed concern not only about Schäuble’s top-down process, but about “higher costs for the citizens, worse service, secrecy, loss of democratic influence and financial risks for the public… … and the multinational corporations involved demand that their profits be repatriated in hard currency – even though the typical services contract entails local-currency expenditures and revenues – and that often raises African foreign debt levels, which are now at all-time highs again in many countries.”
In contrast to Berlin, Donald Trump’s Washington regime has proposed cutting the USAID budget dramatically and diverting $54 billion in state funding to the military. But while once preaching isolationism, Trump has already expanded ‘low-profile’ “Africa Command” interventions from the Maghreb across the Sahel to the Horn, according to researcher Nick Turse who last week analysed newly-declassified Pentagon data.
On June 12-13, more Compact details will be shared with G20 finance ministers at a Berlin meeting reportedly to be co-chaired by Schäuble and Gigaba. In spite of the latter’s occasional leftist rhetoric and widespread praise for his WEF-Africa diplomacy, Gigaba’s record of white-elephant infrastructure promotion when he was State Enterprises minister suggests how prone Pretoria remains to offering massive public subsidies to construction and mining corporations. That tendency overlaps precisely with Schäuble’s aims.
In addition to South Africa, five countries have initially signed up to the Compact with Africa – Côte d’Ivoire, Morocco, Rwanda, Senegal and Tunisia – with many more anticipated to join, so as to maintain aid and political favour with the European Union.
Schäuble’s Compact was released in March in the German resort of Baden-Baden without substantive African input (in contrast to Tony Blair’s 2004-05 Commission for Africa which co-opted a comprador elite including Finance Minister Trevor Manuel). Schäuble not only side-lined the more generous ‘Marshall Plan’ strategy advanced by Merkel’s development ministry, he also insisted that African governments provide more public subsidies – and take on much more risk – for ‘Public Private Partnership’ infrastructure. This typically amounts to profits, pilfering and – for consumers of commercialised infrastructure – pain.
In his new autobiography and a Guardian article, former Greek finance minister Yanis Varoufakis described Schäuble as a hypocritical financial dictator who privately confessed that his ongoing squeeze of the Syriza government and Greek people – on behalf of the Euro – should really have been rejected by Athens. The very day Schäuble spoke in Durban, he was also busy imposing more austerity on Greece and rejecting a previously promised bail-out.
Varoufakis regrets trusting Europe’s “Deep Establishment” in 2015, and indeed he should have known better. Fifteen years earlier Schäuble had been expelled as leader of the Conservative Party for accepting and then publicly denying a cash bribe – the equivalent of US$56 000 – from arms dealer Karlheinz Schreiber (whose generosity also wrecked the once-invincible Helmut Kohl’s reputation.) A comeback thanks to Angela Merkel’s generosity gave Schäuble first the German Home Affairs and then Finance portfolios.
Likewise, IMF managing director Christine Lagarde is a close Schäuble collaborator and endorser of the Compact with Africa. Less than six months ago, she too was convicted in French courts for a €403 million payout to a major conservative party contributor, Adidas owner Bernard Tapie, when she was finance minister. Her comeback was far faster than Schäuble’s: she continues in her present job, even gaining a re-endorsement on the day of her Paris conviction by IMF directors including those representing the Brazil-Russia-India-China-South Africa bloc.
Meanwhile African infrastructure has failed to attract anywhere near the investment in the manner envisaged in the African Development Bank 2010 Programme for Infrastructure Development in Africa and the wildly overoptimistic 2012 Southern Africa Development Community regional master plan.
But this is not only a function of weak local systems – including widespread corruption in Africa’s construction sector – but another factor for which Schäuble, Lagarde and other elite financial managers are partly responsible: an utterly unreformed, chaotic world economic system. Africa faced commodity price hikes of 380% from 2002-11 and then crashes by more than 50% in 2014-15, to unprofitable levels. And no Compact with Africa aiming to incentivise multinational corporate investment merely with state supply-side subsidies can reverse those inherent crisis conditions within global capitalism.
Patrick Bond teaches political economy at the University of the Witwatersrand in Johannesburg and directs the University of KwaZulu-Natal Centre for Civil Society in Durban. Bond is on the International Advisory Board of ROAPE. A version of this blog was published in the South African paper Mail and Guardian.
Featured Photograph: Jacob Zuma, President of South Africa, at World Economic Forum on Africa 2009 in Cape Town, South Africa.