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War, Imperialism and Libya: After the War, the War (part 2)

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In the second part of his blog on Libya, Gary Littlejohn looks at Gaddafi’s plans to establish a pan-African currency independent of the French ‘African’ franc (CFA). It was these plans, he argues, that posed a serious threat to Western interests on the continent; Gaddafi’s elimination quickly became an ambition of the intervention in Libya in 2011.

By Gary Littlejohn

An email to Hillary Clinton, citing a sensitive source, stated that ‘Qaddafi’s government holds 143 tons of gold and a similar amount in silver… This gold was…intended to be used to establish a pan-African currency based on the Libyan gold dinar.  The plan was designed to provide the Francophone African Countries with an alternative to the French franc (CFA).’  For those not aware of this, the CFA ensures that France has considerable influence on the monetary policy of its former colonies in Africa, an arrangement that has now existed for decades (see Sylla Ndongo here).

However, this replacement for the CFA was only intended to be the first stage of this Libyan initiative. From early this century, Gulf Arab OPEC countries had begun to invest their petro-dollars in sovereign wealth funds, rather than entrust them to US and UK money markets. This meant a loss of control of a huge amount of liquidity (trillions of dollars) that the London and New York money markets relied upon. 

In the months and even years prior to the US decision to destroy the Gaddafi government, Gaddafi had been proposing that Africa adopt the ‘Gold Dinar’. It was to include Arab OPEC countries for their sales of oil on the world market. Gaddafi seems to have forgotten about or been unaware that Saddam Hussein’s decision to use the Euro instead of the US dollar to sell oil was a factor in the decision to invade Iraq in 2003.

As President of the African Union in 2009 Gaddafi had already called upon African oil producers to sell oil in Gold Dinars. Angola and Nigeria were also at this time moving to create their own sovereign wealth funds, and so the threat to the US dollar and Western financial markets was clear. It should not be forgotten that this was at a time when these financial markets were still trying to recover from the financial crisis of 2007-08.  Establishing a common gold-backed currency for such trade would have seriously weakened the position of the IMF and World Bank. It would also have implemented an earlier decision of the Pan-African Parliament in 2004 to create an African Economic Community with a gold-backed currency by 2023.  Writer  F. William Engdahl has written that it was little ‘wonder that French President Sarkozy, who was given the up-front role in the war on Qaddafi by Washington, went so far as to call Libya a “threat” to the financial security of the world.’

If there was any doubt that the military intervention in Libya was always intended to result in regime change, then Wikileaks has provided documentary evidence from Hillary Clinton’s email files.  One of the most important documents is an email from Hillary Rodham Clinton (HRC) forwarding an email from one of her staff which lists Clinton’s ‘Libya’ activities before and after the beginning of the military intervention. It is dated 2 September 2011, and describes activities starting in February 2011.  The staffer’s email text opens with the statement:

HRC has been a critical voice on Libya in administration deliberations, at NATO, and in contact group meetings — as well as the public face of the U.S. effort in Libya. She was instrumental in securing the authorization, building the coalition, and tightening the noose around Qadhafi and his regime.

A clear indication of Clinton’s intentions comes from the remarks about her visit to Geneva on February 28 2011, over two weeks before the military intervention started:

February 28 — HRC travels to Geneva, Switzerland for consultations with European partners on Libya. She gives a major address in which she says: “Colonel Qadhafi and those around him must be held accountable for these acts, which violate international legal obligations and common decency. Through their actions, they have lost the legitimacy to govern. And the people of Libya have made themselves clear: It is time for Qadhafi to go — now, without further violence or delay.” She also works to secure the suspension of Libya from membership in the Human Rights Council.

Libya in the aftermath of 2011: the ‘benefits’ of chaos

While the spread of Libyan arms across North Africa has been subject to comment and analysis, there has been a series of allegations on various websites that the USA has organized the transfer of some of the captured arms from Libya to Syria via Turkey. Indeed, it is claimed in some quarters that the death of the US Ambassador to Libya Christopher Stevens and three other Americans in Benghazi was connected to dealings with those involved in such arms transfers.  Ambassador Stevens and others died in an attack on the US Consulate in Benghazi on September 11 2012.  If true, such allegations suggest that the failure to develop a proper arms reduction and reconstruction process was as much a product of this hidden agenda as it was a result of lack of foresight. Such a conclusion would contradict the results of 8 official investigations into the US deaths at Benghazi in this attack, including one lasting two years and costing about $7 million.

Christine Lamb in The Sunday Times of London on 9 December 2012 claimed that the US was running a covert programme to arm Syrian rebels with heavy weapons from Libya and that State Department officials were in daily contact with Syrian rebels using Skype. Among the Libyan weapons mentioned were SA-7 missiles.  On 9 May 2013 Washington’s Blog made a series of claims about the US arming the rebels and explicitly linked this to the death of Ambassador Stevens and others in Benghazi.  

If such allegations have any validity, then they illustrate that the ongoing chaos in Libya had great benefits for the US in facilitating support of rebels in Syria. An additional benefit was a financial one: sovereign wealth funds, if not frozen, could be managed by Western financial institutions. During 2016 there was a court case in London concerning the management of such a fund by Goldman Sachs. The Libyan Investment Authority’s case was that the fund had been mismanaged, and compensation was claimed. The case was notable for the fact that 98 per cent of $1.3 billion had been lost, and also because unconventional methods including prostitutes had allegedly been used to secure the contract to manage this fund. 

Unintended Consequences

One of the potential benefits from ousting the Gaddafi government might well have been increased Western participation in, or even control over, the Libyan oil industry. By and large this has not happened, owing to the ongoing military conflict, and indeed Libyan oil output has suffered as a consequence of the difficulties of producing and exporting oil.  General Khalifa Haftar – an important player in current military efforts to control Libya’s oil, and a leading commander of Gaddafi who then broke with him and spent the twenty years prior to March 2011 in suburban Virginia – has managed to make himself relevant to Western governments by controlling access to the major oil fields and providing many of the ground troops that ousted so-called Islamic State (IS) from Sirte early in December 2016.  IS had grown rapidly in the chaotic conditions following the overthrow of Gaddafi and had come to pose a serious threat to the major oil fields. Haftar’s effectiveness in driving IS back has meant that he could not be ignored as a key player in Libya. This proved to be most inconvenient because he was a leading figure in the Tobruk administration that formed a rival government to the Government of National Accord (GNA) which is sponsored by the UN.

The result has been that various governments, including the USA, France, the UK, Italy and even Germany have sent troops into Libya with varying degrees of public acknowledgement of their presence, and they have evidently cooperated with Haftar’s forces in driving IS out of Sirte. There is even radio traffic evidence of Western air support for Haftar’s forces including air strikes.  Given that the GNA has had great difficulty during 2016 in establishing itself in Libya, the support for Haftar’s forces has been kept ‘low profile’ insofar as this is possible. This is because the very countries supplying such military support are officially strongly supportive in public of the GNA. Meanwhile Haftar paid two visits to Moscow in the autumn of 2016, managing to play Russia off against the EU which is now keen to gain Haftar’s support for the GNA in Tripoli.  Russia now feels that through Haftar it may manage to regain some influence in Libya.

Conclusion

The ongoing foreign military involvement in Libya clearly shows that Libya is seen as merely an object to be controlled for financial and mineral resource purposes, and probably for arms transfers.  The welfare of Libyans has always been secondary for those countries that have continued meddling.  This is not to claim that foreign perceptions of Libya are in any way an adequate explanation of events there.  The activities of Khalifa Haftar, for example, indicate that Libyan agency produces outcomes that are not those intended or wished for by the intervening, imperial powers. Rather these blogs have indicated that the reasons for foreign intervention were not those publicly claimed. Lack of knowledge or forethought on the part of the intervening countries does not explain the ongoing difficulties now faced by Libya. These difficulties are in part the result of trying to use Libya to increase control of both financial and mineral assets. With new interests and players, the imperial scramble for riches on the continent continues.

Gary Littlejohn was Briefings and Debates editor of the Review of African Political Economy from 2010 to 2015. He is the author of Secret Stockpiles: A review of disarmament efforts in Mozambique, Working Paper 21, Small Arms Survey, Geneva, October 2015.

Featured photograph: Egypt’s president Nasser receiving Libya´s leader Muammar Gaddafi between September 1969 and September 1970.

They are Deceiving Us: Economic Growth, Ideology and Africa

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In a recent Debate piece, published in our journal and available to roape.net readers here, Franklin Obeng-Odoom looks at the debates on growth in Africa. He argues that most of the models in economics were formulated based on experiences outside Africa, raising questions about their relevance to the continent where conditions are markedly different to those inspiring these models. For too long growth has not been seen for what it is: an ideology invented to defend capitalism. In this blog based on his longer Debate article, Obeng-Odoom looks at the consequences for Africa of this deception.

By Franklin Obeng-Odoom

Growth is an ideology invented, among others, to make certain nations appear stronger than others. With the identity of nations tied to it and the very survival of capitalism dependent on it, growth is defended and promoted even at the expense of human life and the destruction of our planet. Neoclassical economics, in particular, is its chief intellectual toolbox. It justifies growth in whichever way it can – from offering unconvincing explanations for biodiversity loss through providing misleading analyses of global inequalities and development, to promoting a particular form of urban development that is centrally about property-based growth rather than orientated to people or planet. With a devoted group of economists as its chief advocate, ‘growthism’ has found much support in Donald Trump’s America and in recent discussion about Africa, often centred on the idea that ‘Africa is on the rise’.

Africa: Why Economists Get it Wrong

In Africa: Why Economists Get it Wrong, Morten Jerven demonstrates concretely that economists are entirely mistaken in their analyses of what is happening in Africa. Not only is their statistical information contrived, but also their description is wrong, their explanation is worse, and their policy advice is grotesquely awry.

For Jerven, economists get Africa wrong because, although they pick ideas from history, they cherry-pick this narrative and as a consequence do not really understand the totality of history. They seek, instead, to use shortcuts to become African experts and depend on downloaded data sets often without knowing either the contexts within which the data was generated or the processes that are captured in the data. Relying on unreliable data, the models pushed by these so-called experts are also ahistorical. They ignore detailed, long-term studies ask the wrong questions and, as a result, they are unable to accurately interpret economic phenomena. Even worse, these problems cannot be remedied because they are structural to the field: unless economists are prepared to abandon years of perfecting a flawed approach, the problems can only get worse.

Indeed, for Jerven, addressing the problem is only possible if the ‘grand question’ asked about Africa changes. The question needs to be reformulated from why Africa has not grown/has grown slowly, to how Africa grows and why Africa first grew, declined, and has regained growth. This reframing has two advantages: it gets the history right but also leads to a focus on the correct contemporary policy issues. So, Jerven argues, the focus for this new approach should be that Africa as a continent has experienced recurrent growth, not newly occurring growth.

Critical assessment

For non-economists, this book gives the reader confidence to judge economists; question their assumptions, their evidence, their interpretations, and allows them to ascertain the plausibility of their ‘technical’ economic advice. Economists too will gain from reading this book, especially if they take the author’s advice seriously: ‘a bit more humility among …economists would be useful; in particular, a better understanding of the limits of their own data sets and statistical testing is needed’.

Political economists may well say, ‘we told you so,’ however, they will cringe at the near total absence of ‘the political economy of growth’ in the book. The book gives little attention to whether social progress is, in fact, accurately measured by GDP. For example in what ways GDP actually leads to a devaluation of labour in the huge informal economies in Africa, or the widespread existence of social enterprises whose activities are devalued by a ‘growth’ measure, and the direct link between GDP addiction and the brazen destruction of natural resources in Africa.

More profoundly, the book overlooks the invention of GDP as a springboard to enhance the power of Western countries and to force Africa to open its doors to plunder by transnational corporations. This ‘imperialist’ element to the promotion of ‘growthmania’ was an idea developed at length in E. J. Mishan’s classic 1967 book, The Costs of Economic Growth. In addition there is little discussion of growing inequality in Africa and much less discussion of inequality between Africa and the global economy as a whole. Indeed, even within Jerven’s own, narrow framework of technical, data-based analysis of GDP, neither the stagnant contribution of Africa to global GDP nor its implications for society, economy and environment are analysed.

In fact, the real history of GDP says something completely different. There is nothing African about the manipulation of GDP. This political statistic has always been manipulated to win wars, to maintain imperial power, to include and exclude countries from powerful clubs and to distract attention from pressing issues that confront power structures, as Lorenzo Fioramonti discusses in his 2015 book Gross Domestic Problem.

In contrast Jerven seeks a paradigmatic change on the basis that better quality technical power and numbers alone can save economics.  The evidence, however, shows that growth – indeed the entire economics establishment – owes its success not to its superiority of ideas or methodology at all. Economics has attained its imperial status not because of strong and rigorous methodology or even its better use of data, but, largely, because it serves an ideological role. It is this ideology that sustains the position of ‘economic science’. As Michel De Vroey famously noted in 1975 ‘in a class society, the ruling class cannot be indifferent to the type of social science developing in the society in which it holds power.’ More recently, John Weeks in his 2014 book, The Economics of the 1% emphasises the materialist nature of measurement and economics.

Conclusion: Get Reading

Jerven’s study, its technical detail, its forthright critique of the flaws of GDP measurement is brilliant, but technical acuteness cannot be fully understood without an analysis of the political economy of measurement or of ideas more generally. Therefore, my recommendation to readers is to immediately get a copy of Jerven’s vital work, study it, but then to read recent books, especially Lorenzo Fioramonti’s, to better contextualise the ‘world’s most powerful number’, and seriously ponder the ecological limits to growth.

Franklin Obeng-Odoom is a Fellow of the Ghana Academy of Arts and Sciences. His books include Oiling the Urban Economy: Land, Labour, Capital, and the State in Sekondi-Takoradi, Ghana and Reconstructing Urban Economics: Towards a Political Economy of the Built Environment. Franklin is based at the University of Technology Sydney, School of Built Environment, Australia (Franklin.Obeng-Odoom@uts.edu.au).

Featured Photograph: Former US Secretary of State Hillary Clinton delivers opening remarks at the 2012 African Growth and Opportunity Act (AGOA) Forum to mark Global Economic Statecraft Day at the U.S. Department of State in Washington on June 14, 2012.

The Fierce Urgency of Now: Africa’s Capitalist Cul-de-Sac

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By John Smith

Mainstream academia and the liberal media in Europe and North America  propound the myth that, however slowly, Africa is ‘rising’ and converging with high-income countries; that capitalist development is lifting millions of Africans out of poverty; and that whatever obstacles African countries face in moving further along this path, they are either internal (poor governance, corruption, conflict etc.) or contingent (temporary ‘headwinds’ resulting from China’s deceleration, volatile commodity prices, ‘natural disasters’ – e.g. Ebola, droughts, desertification etc, whose connection with capitalist plunder of nature is not acknowledged) and have nothing to do with the unjust, exploitative and oppressive nature of their insertion into the global capitalist political economy.

This blogpost argues that these propositions are false; ‘alternative facts’ as distant from the truth as anything emanating from President Trump’s various orifices, even though they are promulgated by the sagest academics and the most respected liberal media. Our responsibility to the peoples of Africa and what Martin Luther King called the fierce urgency of now—the global, systemic crisis inaugurated by the 2008 financial crash is now sucking sub-Saharan Africa and other so-called developing regions into its vortex—don’t allow for mincing of words. Far from promoting development in Africa, capitalism is wrecking the continent; the owners of financial and non-financial transnational corporations based in imperialist countries and governments and international financial institutions under their control are guilty of plunder on a colossal scale and responsible for immense suffering; and the super-rich, westernised capitalist elite with whom they share power, from Pretoria to Rabat, have betrayed their peoples, are unfit to rule, and must be overthrown. This is not extremism, it is a statement of harsh, uncomfortable facts.

The first instalment of this three-part blogpost summarises evidence supporting the first of the above assertions, showing that, during the neoliberal era, African poverty has increasing both absolutely and relative to the income and wealth of the average person in Europe and North America, notwithstanding the much-hyped rise of Africa’s middle class. Future blogposts will examine the role of and relation between Africa’s capitalist elites and their imperialist patrons in producing these negative outcomes, before concluding with a reflection on the need for a return to theories of imperialism and neo-colonialism if the new generation of African youth and international solidarity is to achieve genuine national liberation and sustainable human development in Africa.

Is convergence being attained? Is poverty being overcome?

In her keynote address to the IMF’s ‘Africa Rising’ conference in Mozambique in 2014, IMF Managing Director Christine Lagarde said, “Sub-Saharan Africa is clearly taking off—growing strongly and steadily for nearly two decades and showing a remarkable resilience in the face of the global financial crisis. Economic stability has paid off. More than two-thirds of the countries in the region have enjoyed ten or more years of uninterrupted growth.”[1] This hyperbolic optimism was also evident in the IMF’s April 2015 Regional Economic Outlook a year later: “with growth at 4.5 percent, sub-Saharan Africa will remain among the fastest-growing regions of the world.”[2] Eighteen months later, in its October 2016 Regional Economic Outlook, the IMF struck a much more sombre note: “weighed down by 15 countries where per capita growth will be negative, including the three largest (Angola, Nigeria, and South Africa), the region’s average per capita GDP will contract, by 0.9 percent, for the first time in 22 years… these developments… adversely affect social outcomes, potentially reversing past improvements in living standards for a wide range of the population.”[3]

Yet even this newfound realism contains a generous dose of sophistry. What ‘past improvements’? How wide is the ‘wide range of the population’? Between 1980 and 2000, average per capita GDP in sub-Saharan Africa (SSA) declined by an average of 1.00% per year, according to World Bank data, compared to an average growth of 2.11% in ‘high-income’ countries. During the entire period from 1960 to 2015, per capita GDP in ‘high-income’ countries advanced by an average of 1.78%, but by 0.83% in SSA. This data, of course, takes no account of the grotesque and increasing income inequality in African countries, greater even than in high-income countries, which means that data on average per capita GDP conceals more than it reveals. For example, according to the African Development Bank, in 2010 60% of Africans were surviving on less than two dollars per day, or $730 per annum, yet average per capita GDP stood at $3237. [4]

Lending flimsy support to claims of convergence and of ‘Africa Rising’, between 2000 and 2015, SSA’s per capita GDP grew by an average of 2.25%, compared to 1.30% in rich countries. But, in the same way that rosy cheeks can indicate fever not good health, the high rates of growth experienced by African nations in the half-decades before and after the 2008 crash were less a sign of their own vitality than of the malaise gripping the imperialist economies. Well before the outbreak of the crisis, interest rates in the imperialist centers were already unusually low, causing ‘hot money’ to flow into African and other emerging markets in the quest for higher rates of return. The first years of the new millennium also saw the beginning of the so-called commodities super-cycle, an anomalous decade of rising world prices of oil and of metals, food and other primary commodities, partially reversing their long downward trend. The super-cycle was driven by China’s insatiable demand for raw materials, amplified by the speculative hot money flows mentioned earlier, and was extended for several years beyond the 2007-8 crash by Chinese leaders’ efforts to rescue their economy from its jaws, via an enormous debt-financed infrastructure investment programme, equivalent to 34% of GDP, that saw China pour more concrete in 2011 and 2012 than did the United States in the whole of the 20th century. [5] As The Economist in 2015 observed, “The credit boom in emerging markets was in large part a response to the credit bust in the rich world. Fearing a depression in its richest export markets, the authorities in China brought about a massive increase in credit in 2009. Meanwhile a flood of capital escaping the paltry yields on offer in developed countries took them to ever more exotic places.” But the wind has changed direction, and “The gush of global capital that flowed into their economies in the six years since the 2008-09 financial crisis is in most countries now either slowing to a trickle or reversing course to find a safer home back in developed economies;” in 2015 SSA’s average per capita GDP grew by 0.27%, compared to 1.15% in the high-income countries, and turned sharply negative (-0.9%, as reported above) in 2016. [6]

There are many reasons to be disdainful of arguments that reduce ‘development’ to economic growth and that measure this by gross domestic product (GDP). Two reasons, in particular, stand out. Data on GDP growth says nothing about how the fruits of this growth are shared: sharply rising inequality implies that those most in need of development get the least of it, and that many are in fact regressing. And GDP has an exceedingly narrow focus: it only measures the monetary value of goods and services that are sold, assuming this to be equal to the wealth generated in their production, and it ignores ‘externalities’, such as pollution, depletion of natural resources and destruction of traditional communities.[7]  We therefore make a big concession to capitalism’s apologists by accepting, to begin with at any rate, their criteria for convergence and poverty alleviation, yet we find that, even according to their criteria, capitalist globalisation has not brought any meaningful development for the majority of Africa’s people, and far from convergence, the already-extreme gap between Africa and rich nations is widening, both absolutely and relatively.

These conclusions are greatly reinforced when we move from examining the distribution of income to the distribution of wealth. According to Credit Suisse, in 2000 the median wealth of European adults was 11.2 times greater than the median wealth owned by African adults.[8] By 2016, this ratio had increased to 27.5. Comparison of the median wealth of Africans with North Americans reveals an even starker disparity: the ratio rose from 74.1 in 2000 to 120.3 in 2016. And this dramatic widening of the wealth gap occurred during a period when Africa’s economy was experiencing unprecedented growth! Closer examination reveals that the biggest contribution to the widening wealth gap between the average African and the average European and North American arose from sharply increasing inequality within Africa. It should be recalled that ‘median wealth per adult’ is the wealth owned by the average adult, whereas ‘mean wealth per adult’ is the average wealth owned by adults. If the richest decile of adults increase their wealth and other deciles do not, median wealth remains the same but mean wealth increases. So, if the wealth gap between the average European and the average African nearly tripled between 2000 and 2016, while mean wealth ‘only’ increased by nearly 50%, this means that a large part of the increase in the wealth of Africans during these boom years was captured by the elite. And so Credit Suisse reports (not shown in the table) that the ratio of mean wealth to median wealth in Africa jumped from 7.8 to 10.4 over this period, while this ratio slightly declined in both Europe and North America.

Credit Suisse’s data on wealth distribution brings the deepening inequality between Africa’s super-rich elite and their middle-class hangers-on and the mass of the people on the other into sharp focus, as well as revealing the wide and deepening inequality between the average African person and the average person in the imperialist countries. Unfortunately, World Bank data on income distribution discussed earlier does not make it as easy to unpack average per capita income, but we can be sure that the same effect is taking place here as well. In other words, even during the past one and a half decades of anomalously-high growth across sub-Saharan Africa, the lion’s share of this increased income has been captured by the elite while the wretched poverty of the majority has not improved and, for many if not most, has got worse.

Having established that Africa as a whole is not converging with rich nations, it is diverging, and that extreme poverty is growing, not diminishing, the next blogpost examines the agency of those in charge of Africa’s development—transnational corporations, imperialist governments and International Financial Institutions under their control, and Africa’s capitalist elites; while the final post moves from the criticism of facts to the criticism of concepts, and considers why we need to return to, and critically develop, theories of imperialism if we are to understand why the world is as it is, how it may be changed for the better, and who will be the agents of this change.

John Smith received his PhD from the University of Sheffield and is currently self-employed as a researcher and writer. He has been an oil rig worker, bus driver, and telecommunications engineer, and is a longtime activist in the anti-war and Latin American solidarity movements. Winner of the first Paul A. Baran–Paul M. Sweezy Memorial Award for an original monograph concerned with the political economy of imperialism, John’s Imperialism in the Twenty-First Century is a seminal examination of the relationship between the core capitalist countries and the rest of the world in the age of neoliberal globalization. 

Featured Photograph: Valhalla Park, in Cape Town, South Africa. Rising unemployment and the increasing gap between rich and poor is a dominant feature of life across the continent.

Notes

[1] Christine Lagarde, 2014, Africa Rising – Building to the Future, Keynote Address to the African Rising Conference http://www.imf.org/external/np/speeches/2014/052914.htm

[2] IMF, 2015, Regional Economic Outlook Apr 15 Sub-Saharan Africa – Navigating Headwinds, p2

[3] IMF, 2016, Regional Economic Outlook Oct 16 Sub-Saharan Africa – Multispeed Growth p8

[4] John Burn-Murdoch and Steve Bernard, 2014, “The Fragile Middle: millions face poverty as emerging economies slow,” in Financial Times, April 13, 2014. It is often forgotten that the World Bank’s $2 per day benchmark uses PPP-adjusted dollars; accordingly, I have used the PPP-adjusted figure for average per capita GDP.

[5] By way of comparison, Donald Trump’s much-trumpeted debt-financed infrastructure programme, which might take until 2018 to show up, is equivalent to 5% of US GDP.

[6] Kynge, J. and J. Wheatley, 2015a. Emerging Markets: The Great Unravelling.  Financial Times, April 1, 2015.

[7] See John Smith, 2012, “The GDP Illusion,” Monthly Review 64/3:86–102. http://monthlyreview.org/2012/07/01/the-gdp-illusion, and chapter 9 of John Smith, 2016, Imperialism in the Twenty-First Century: Globalization, Super-Exploitation, and Capitalism’s Final Crisis, New York: Monthly Review Press, http://monthlyreview.org/product/imperialism_in_the_twenty-first_century/

[8] ‘Europeans’ includes central Europeans as well as west Europeans; numbering 550 million adults in 2000.

Imperialism in Africa: China’s Widening Role

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By Lee Wengraf

China’s presence in Africa has grown dramatically in the twenty-first century. Neoliberal privatization and trade agreements opened up investment opportunities not only for the West but also for China, heightening rivalries between the two. China has emerged as a dominant powerhouse in Africa, not only securing drilling and mineral rights across the continent, but cementing political allegiances with African regimes through development projects such as dams, roads and bridges. Chinese leaders have very actively cultivated these relationships with frequent high-profile visits since the start of the African “boom” in the early 2000s. Loans from China to poor countries, mainly in Africa, have surpassed those from the World Bank.

African oil-rich nations have been happy to embrace these alliances, welcoming “infrastructure for oil” deals. African leaders and business elites have sought out this foreign investment while attempting to secure favorable contracts requiring “local content,” that is, compelling manufacturers to invest locally, transfer technology and employ local staff. However, a number of reports describe Chinese companies importing Chinese labor and equipment, conveniently side-stepping “local content” provisions.

With their emphasis on such barter arrangements, the economic and political character of the Chinese projection into Africa differs from that of the U.S. and the former colonial powers. But China is no kinder, gentler imperial option: just like 19th century colonialists, when the Chinese build roads and schools, the goal is to facilitate resource extraction and build allegiances. Chinese investment and infrastructure-building has reproduced the inequality and exploitation that likewise accompanies imperialism in its Western form.

The scale of China’s economic involvement in Africa has grown enormously in the twenty-first century. Chinese foreign direct investment (FDI) in Africa has been massive, and more than 2,200 Chinese enterprises are currently operating in sub-Saharan Africa, most of them private firms.[1] During the global economic crisis of 2008-2009, Chinese capital successfully sought outlets for investment overseas in the face of a failing domestic market and excess capital, while the European Union (EU) and U.S. floundered.

The U.S. and the former colonial powers of Britain and France together represent approximately two-thirds of the total FDI in Africa, with the value for each country’s stock approximately double that of Chinese companies.[2] However, where the stock of FDI in sub-Saharan Africa from the EU, China, Japan and the U.S. grew by nearly five times between 2001 and 2012, this growth was primarily driven by China: FDI from China outstripped that from the U.S. by 53 percent compared to 14 percent.[3]

South Africa has received the bulk of Chinese investment, approximately one-third of the investment total.[4] Other prominent areas for Chinese FDI include Nigeria, Sudan, and Zambia, while its reach encompasses most of the continent. Oil and mining have captured the bulk of Chinese investment, but as with Western FDI, there has been movement into the financial services, construction, and manufacturing sectors, including technology, media and telecommunications.[5] Howard French, author of China’s Second Continent, suggests that rising labour costs and ecological concerns in China have pushed light manufacturing to turn to Africa.

From Kenya’s Thika Superhighway to a new $200 million African Union headquarters in Addis Ababa, Ethiopia, infrastructure-building has been a high-profile component of deepening Chinese involvement in Africa. Two-thirds of Africa’s infrastructure has been funded by China.  Chinese leader Xi Jinping committed to a new round of loans and aid totaling $60 billion in 2015, with a large portion of the funds directed at South African infrastructure, Zimbabwean projects and other initiatives. Xi also announced drought relief for the continent. All told, if Chinese pledges materialize, $1 trillion in project funding will arrive in African countries by 2025.[6]

Trade between Africa and the rest of the world has increased by 200% since 2000. China surpassed American trade with Africa in 2009 to become Africa’s single largest trading partner. Europe’s share of total trade with Africa fell by approximately one-quarter during the millennium’s first decade, while China’s share increased by approximately 40%. As described by the World Bank, “One-third of China’s energy imports come from SSA, a vital trade link, especially as energy consumption rates in China have grown by more than twice the global average over the past 10 years.”[7]

Yet, they continue, despite the deeper “involvement” of China, industrialization has failed to advance in much of Africa. Tunde Oyateru has pointed out, despite the relative growth of FDI into Africa, within the wider global economy, the bulk of investment flows largely bypass the continent altogether, remaining concentrated between the advanced economies. Africa thus represents “one percent and 3.4 percent of the total percentage of FDI by the US and China respectively; numbers that barely constitute a skip let alone a scramble for Africa.”[8]

China’s involvement has generated hypocritical hand-wringing from Western investors who claimed that China’s loans to Africa would pave the way for economic crisis down the road. The Financial Times commented at the height of the boom that China’s operations in Africa, “draws comparisons with Africa’s past relationship with European colonial powers, which exploited the continent’s natural resources but failed to encourage more labor-intensive industry.”[9] Yet missing from such comments are a reality check on the central role that Western colonialism and structural adjustment have themselves played in that deindustrialization process that set the stage for a renewed round of debt and crisis.

Intensified competition in the present era has driven a new militarization on the part of both the U.S. and China. China’s priorities reflect both concerns over investments, but also a wider interest in projecting its own preeminence. In the decade up to 2014, China’s official military budget grew an average of 9.5 percent per year.[10] In fact, China’s infrastructure investment can be partly understood as a precursor to a military footprint on the continent. As reported by The New York Times:

China announced [in late 2015] that it would establish its first overseas military outpost and unveiled a sweeping plan to reorganize its military into a more agile force capable of projecting power abroad. The outpost, in the East African nation of Djibouti, breaks with Beijing’s longstanding policy against emulating the United States in building military facilities abroad. The Foreign Ministry refrained from describing the new installation as a military base, saying it would be used to resupply Chinese Navy ships that have been participating in United Nations antipiracy missions. Yet by establishing an outpost in the Horn of Africa — more than 4,800 miles away from Beijing and near some of the world’s most volatile regions — President Xi Jinping is leading the military beyond its historical focus on protecting the nation’s borders.[11]

As J. Peter Pham of the Africa Center at the Atlantic Council commented, “U.S. global leadership is predicated heavily on the U.S. role in protecting and to an extent controlling sea lanes of communication. If China establishes itself as a fellow protector of the global commons, then it certainly increases its stature.”[12]

The foundation for this decisive turn was laid in the preceding decade, with smaller scale operations marking China’s widening military presence. Francis Njubi Nesbitt writes that “China has also participated in peacekeeping operations, anti-piracy campaigns, and post-war reconstruction efforts around the continent…. It is the third-largest exporter of conventional and small arms to Africa after Germany and Russia. China also provides training for military officers and maintains military-military exchanges with a reported twenty-five African countries.”[13]

The rise of China in Africa has heightened militarization by the U.S., with major increases by the previous Obama administration for arms sales and military training in African countries.  Meanwhile, when commodity prices crashed worldwide in early 2016, China announced that imports from Africa had fallen by a full 40 percent and currencies in the two largest economies, Nigeria and South Africa, plummeted to their lowest levels ever. These falls have created a new round of crises for African nations needing to repay Chinese infrastructure loans, an outcome of the precarious nature of Africa’s resource-driven growth. With the very real danger of economic downturn, an arms race on the African continent is an ominous sign of volatility ahead.

Lee Wengraf writes on Africa for the International Socialist Review, Counterpunch, Pambazuka News and AllAfrica.com. Her new book Extracting Profit: Neoliberalism, Imperialism and the New Scramble for Africa will be published by Haymarket in 2018.

Featured Photograph: Kofi Annan, Africa Progress Panel, Monhla Hlahla, Industrial Development Corporation of South Africa, and Gao Xiqing, China Investment Corporation, at the Africa in the World Economy, Addis Ababa, Ethiopia, 9-11 May, 2012.

Notes

[1] Miria Pigato and Wenxia Tang, China and Africa: Expanding Economic Ties in an Evolving Global Context, World Bank Publication, March 2015, p. 1.

[2] Biodun Olamosu, “Africa rising? The economic history of sub-Saharan Africa,” International Socialism, Issue 146, April 12, 2015. See also United Nations Conference on Trade and Development, World Investment Report 2016, p. 38.  http://unctad.org/en/PublicationsLibrary/wir2016_en.pdf

[3] African Economic Outlook 2015: Reginal Development and Spatial Inclusion, http://www.africaneconomicoutlook.org/fileadmin/uploads/aeo/2015/PDF_Chapters/Overview_AEO2015_EN-web.pdf

[4] EY Attractiveness Survey Africa 2015, p. 20

[5] EY Attractiveness Survey Africa 2015, p. 20.

[6] Jeremy Frost, “China inks $6.5bn worth of deals with South Africa,” International Business Times, December 4, 2015

[7] Miria Pigato and Wenxia Tang, China and Africa: Expanding Economic Ties in an Evolving Global Context, World Bank Publication, March 2015, http://www.worldbank.org/content/dam/Worldbank/Event/Africa/Investing%20in%20Africa%20Forum/2015/investing-in-africa-forum-china-and-africa-expanding-economic-ties-in-an-evolving-global-context.pdf, p. 1

[8] Tundé Oyateru, “Africa: The Scramble for Africa – A Continuing Narrative,” AllAfrica, February 12, 2015

[9] William Wallis and Geoff Dyer, “Wen calls for more access for Africa,” Financial Times, May 16, 2007.

[11] Jane Perlez and Chris Buckley, “China Retools Its Military With a First Overseas Outpost in Djibouti,” The New York Times, November 26, 2015

[12] Kristina Wong, “China’s military makes move into Africa,” The Hill, November 24, 2015

[13] Francis Njubi Nesbitt, “America vs China in Africa,” Foreign Policy in Focus, December 1, 2011

Che Guevara in the Congo

By
ROAPE
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Jointly published by Jacobin and ROAPE, David Seddon writes about Che Guevara’s doomed, heroic mission to the Congo in 1965.

By David Seddon

The death of Fidel Castro in November 2016 prompted me to re-visit the extraordinary history of the Cuban Revolution, and in particular the diplomatic recognition, political support, and military  assistance  provided by Cuba under Castro to national liberation struggles and independent states all over Africa — from Algeria and Western Sahara, to Eritrea, Ethiopia, Zanzibar, and the Portuguese colonies of Guinea-Bissau, Angola, and Mozambique. Cuban soldiers’ victories against South African forces in Angola in 1975–76 and again in 1987–88 played a crucial role in the successful struggles against white rule in Namibia and in South Africa itself.

The earliest Cuban aid effort went to the 1961 Algerian liberation movement when Castro sent a large consignment of American weapons captured during the abortive Bay of Pigs invasion. After the Algerians won independence in July 1962, they reciprocated by helping train a group of Argentinian guerrillas, even sending two agents with the guerrillas from Algiers to Bolivia in June 1963. Two years later, Cuba provided systematic support to a potentially revolutionary movement by sending an elite group of volunteer guerrillas, the vast majority of them black, to the eastern Congo. Che Guevara was among them.

Congolese Independence

Following independence from Belgium in June 1960, the Congo elected left-wing prime minister Patrice Lumumba. Soon after, the army mutinied; the mineral-rich Katanga province, under Moise Tshombe, seceded; the Belgian troops returned; and, finally, at Lumumba’s request, United Nations peacekeeping forces arrived to protect the country’s territorial integrity and his new regime.

When Lumumba asked for additional military assistance from the Soviets, President Kasavubu — supported by Commander-in-Chief Joseph Mobutu — deposed him. After Lumumba’s murder and UN Secretary General Dag Hammarskjold’s death in a plane crash, the Congo descended into further chaos.

By early 1964, Cyrille Adoula, weak and unpopular, was trying to lead the country. As the UN withdrew, four different rebellions broke out, most operating under a leftist umbrella group called the National Liberation Council. Since Adoula had shut down the official parliament, this opposition coalition had effectively replaced it.

Gaston Soumaliot led the movement in the country’s northeast — his lieutenant Laurent Kabila orchestrated a related group further south. For a few weeks in mid-1964, these forces controlled much of the Congo’s eastern region. One of Lumumba’s former colleagues, Christophe Gbenye, had taken control of much of the rest of the country with backing from China and the Soviet Union.

In March 1964, President Lyndon Johnson sent Averell Harriman to the capital, Leopoldville-Kinshasa, to assess the situation. With Cyrus Vance, the deputy defence secretary, Harriman drew up plans for an American airlift, which began May. In July, Moise Tshombe seized power, replacing the ineffective Adoula, and called for help from the United States, Belgium, and South Africa.

They heeded his call, and Belgian officers and white mercenaries from Rhodesia and South Africa reinforced the Congolese military. Its immediate task was to crush Gbenye’s rebellion, which had established a government in Stanleyville-Kisangani. In November, the United Kingdom joined the effort, allowing Belgian paratroopers to be flow in by US planes from its South Atlantic base on Ascension Island. The newly elected Labour government under Harold Wilson approved the action. Paratroopers landed on Stanleyville at the same time the white mercenaries arrived.

Guevara Looks to Africa

In response to these Western interventions, a group of radical African states, led by Algeria and Egypt, announced that they would supply the Congolese rebels with arms and troops. They called on others for help, and the Cuban government announced it would oblige.

In December, Guevara — already one of the most internationally oriented members of the Cuban leadership — gave an impassioned speech at the UN General Assembly. He referred to the “tragic case of the Congo” and denounced the Western powers’ “unacceptable intervention,” referring to “Belgian paratroopers, carried by U.S. planes, who took off from British bases.”

Guevara then embarked on a tour of African states, visiting Algeria, then Mali, Congo-Brazzaville, Senegal, Ghana, Dahomey, Egypt, and finally Tanzania. In Dar es Salaam, he met Laurent Kabila, who sought his help maintaining the liberated areas in the Congo’s east and southeast; in Cairo, he met Gaston Soumaliot, who wanted men and money for the Stanleyville front; and in Brazzaville, he met Agostinho Neto, who requested Cuban support for the Angolan liberation army, the MPLA. Guevera was excited by these potentially effective liberation struggles and the role Cuba could play in them.

In February 1965, he flew to Beijing to see what help the Peoples’ Republic of China might provide for the Congolese rebellions. There he met Chou en Lai, who had taken his own tour of ten African countries between December 1963 and February 1964. Soon after meeting Che, Chou made a second visit to Algiers and Cairo, where he may have met the Congolese rebel leaders. In June, he flew to Tanzania, where he certainly had an audience with both Kabila and Soumaliot.

In the meanwhile, Guevara himself went back to Cairo to discuss his plan to lead a group of guerrillas with Colonel Nasser. According to an account of the meeting from Nasser’s son-in-law Mohammed Heikal, the Egyptian leader advised Guevara “not to become another Tarzan.” “It can’t be done”, he said. Guevara did not heed the warning; he was already fully committed to applying his experience with the Cuban Revolution’s success to movements all over the world. He returned to Cuba, where he was greeted by Castro. This was the last time he would be seen again in public until after his death two and a half years later in Bolivia.

Before leaving Cuba, Che wrote a farewell letter to Castro – which was read out in public in Havana six months later, in October – declaring he would extend the Cuban Revolution’s influence: “other nations are calling for the aid of my modest efforts. . . . I have always identified myself with the foreign policy of our Revolution, and I continue to do so.” He now felt that his destiny called for him to export the revolution and lead a guerrilla movement in Africa.

Disorder on the Front

The decision to intervene in the Congo had already been made before Che returned to Havana. An elite group of volunteers, all black, had been recruited at the beginning of the year and underwent training at three different camps in Cuba. The plan was for one contingent of Cubans to travel in small detachments to Tanzania and across Lake Tanganyika into North Katanga; a second contingent  — named the Patrice Lumumba Battalion — would fly to a base near Brazzaville, just across the Congo River from Leopold-ville-Kinshasa, the capital of Congo.

Captain Victor Dreke — a Cuban of African descent — would lead the smaller eastern column, which comprised 150 guerrillas, including Guevara himself. Che later wrote to Castro that his captain “was . . . one of the pillars on which I relied. The only reason I am not recommending that he be promoted is that he already holds the highest rank.” Jorge Risquet Valdes Santana, a member of the central committee of the Cuban Communist Party, was to head up the Patrice Lumumba battalion.

On April 1, 1965, after a final meeting with Castro at the guerrilla base in Havana, Guevara flew with a small advance guard first to  Moscow and then to Cairo, and on to Dar es Salaam.  The new Cuban ambassador, Pablo Rivalta, greeted Guevara and his soldiers at the airport outside Dar es Salaam. Guevara worried that their arrival would draw the CIA’s notice, but the Americans had just withdrawn their ambassador from Tanzania and were otherwise occupied. Unfortunately, the Congolese rebel leadership also paid them little attention. Kabila and Soumaliot were meeting other leaders in Cairo to try and reduce the political divisions within their movement, and only relatively junior personnel were available to Guevara.

Cuba’s preparations for their intervention were – as we have seen – thorough; but they clearly underestimated the level of cooperation they would receive from the rebel leadership itself. Nevertheless, on April 22, 1965, Guevara and his comrades set off from Dar es Salaam for Lake Tanganyika, drove south and established a supply base in the lakeside town of Kigoma, near the village of Ujiji — where Dr David Livingstone and Mr Henry Stanley had met nearly a century before. We don’t know whether Guevara was aware of Ujiji’s place in the history of African imperialism when he established his anti-imperialist base in Kigoma.

After crossing the lake, the Cubans met a well-armed detachment of the People’s Liberation Army and started a seven-month campaign in what pro-Tshombe mercenary leader Colonel Mike Hoare named “the Fizi Baraka pocket of resistance,” an area that covered over sixteen thousand square miles. More Cubans arrived in dribs and drabs between April and October. During this period, the Cubans and the Congolese explored the terrain, and the Cubans began assessing their enemies’ and their allies’strengths and weaknesses.

They noted that the enemy’s forward bases were well defended, supported by small aircraft and white mercenaries; they also noted that the Cogolese rebels were suffering from low morale. They regarded their leaders, including Kabila, as strangers — or, more pejoratively, as tourists. The local commanders “spent days drinking and then had huge meals without disguising what they were up to from the people around them. They used up petrol on pointless expeditions.” On June 7, in an unexplained accident, Leonard Mitoudidi, the most senior rebel leader present — Kabila was still in Dar es Salaam — drowned in Lake Tanganyika.

Soon, instructions came down from Kabila that the Cubans should organize an attack on the Bendera garrison, which was defending a hydroelectric plant. Guevara did not agree with the plan but decided to go ahead anyway. On June 20, a combined force of Cubans, Congolese, and Tutsis (some of whom originally came from Rwanda) set off and carried out the attack, as requested. Many of the Tutsis ran away, the Congolese refused to take part, and four Cubans were killed, revealing to the enemy that Cuba was now involved in the rebellion on the ground. The Cubans considered this operation to be not only a failure but a disaster. Mercenary leader Mike Hoare, on the other hand, was impressed. In his memoirs, he noted:

[O]bservers had noticed a subtle change in the type of resistance which the rebels were offering the Leopoldville government. . . . The change coincided with the arrival in the area of a contingent of Cuban advisers specially trained in the arts of guerrilla warfare.

At this point, the Cubans felt depressed and disillusioned. They had all now been ill at one time or another since their arrival; Guevara himself suffered from bouts of asthma and malaria. Their small military successes — like the ambush of a group of mercenaries in August — seemed negligible, and the political climate was undoubtedly deteriorating.

Differences between the rebel factions and their leaders seemed to be coming to a head, and a coup d’etat in Algeria changed the balance of forces. Ben Bella, one of Guevara’s principal supporters, was replaced by army commander Houari Boumedienne, who wanted to reduce the international community’s commitment to the Congolese rebellion.

Although Guevara noted the low morale, the lack of progress, and the shifting political climate, he kept his concerns to himself. When Soumaliot went to Havana early in September 1965, he convinced Castro the revolution was going well. Cuban guerrillas contined to arrive in Tanzania. Also, despite the odds, the Cuban training must have counted for something. As Hoare recorded later:

The enemy were very different from anything we had ever met before. They wore equipment, employed normal field tactics, and answered to whistle signals. They were obviously being led by trained officers. We intercepted wireless messages in Spanish . . . and it seemed clear that the defence . . . was being organised by Cubans.

But, by October, the Cubans and their Congolese allies found themselves on the back foot. The combined forces of the white mercenaries and Tshombe’s troops were advancing in a counter-offensive. Guevara retreated to their base camp at Luluabourg and expected a long, last resistance. Events, however, proved as unpredictable as ever.

Changing Ground

President Kasavubu began to recognize that he would never get approval from the Organisation of African Unity (OAU) if Tshombe continued as prime minister, so he replaced him with Evariste Kimba.

For a moment, it looked like the revolution would be saved. In reality, however, the end of  Tshombe’s regime presaged a political reconciliation effort that would eventually undermine the rebellion, ending the support it had been receiving from African states. On October 23, 1965, Kasavubu attended a meeting of African heads of state in Accra, presided over by Ghana’s Kwame Nkrumah. Kasavubu announced that the rebellion was virtually over and that he would be sending the white mercenaries home. This sufficed to convince many African leaders. It also represented a signal defeat for the radical African states, allowing a more conservative alliance to coalesce within the OAU.

On November 11, 1965, sensing that the climate now favored him, Ian Smith, the White Rhodesian leader, unilaterally declared independence from the United Kingdom. In South Africa, a renewed attack on the African National Congress effectively crushed the mass movement against apartheid for half a decade, and the Portuguese were encouraged to maintain their grip on Angola, Mozambique, and Guinea-Bissau for another decade. Meanwhile, Ben Bella had already been overthrown; Nkrumah was removed from power while on a visit to China in early 1966; and Ben Barka — the radical Moroccan leader who had been organizing Cuba’s Tri-Continental Conference, a gathering of international revolutionary movements to be held in Havana in January 1966 — was kidnapped and murdered.

Back in the Congo, Mike Hoare heard about Kasavubu’s speech and flew to Leopoldville to see Mobutu in person. “The general was furious,” he recalls, “he had not been consulted . . . and felt bitter in consequence.” The new prime minister, Evariste Kimba Muondo,  had to make a  statement explaining that no mercenaries would go home until the Congo was thoroughly pacified.

Guevara was also struggling with the turning political tide. On November 1, 1965, he received an urgent message from Dar es Salaam warning him that the Tanzanian government had decided to end the Cuban expeditionary force. President Nyerere, all too aware of the feuds within the Congolese leadership and concerned about its implications, felt he had little choice.

In the final weeks of the campaign, Guevara considered staying behind “with twenty well-chosen men,” continuing the fight until the movement developed or until its possibilities were exhausted. He asked for help from China, and Chou en Lai advised him to continue building resistance groups but not to enter combat himself. Guevara himself entertained the idea, at the end, of making a forced march across the Congo to join forces with Mulele’s rebels in Kwilu, but he did not receive backing for such a wild notion.

On November 20, Guevara organized the crossing of Lake Tanganyika back into Tanzania. “All the Congolese leaders,” he wrote, “were in full retreat, the peasants had become increasingly hostile”. He recognised that such a situation made the continued presence of the Cuban guerrillas pointless. Others agreed. e recognised Years later, Castro would say:

[I]n the end it was the revolutionary leaders of the Congo who took the decision to stop the fight. . . . In practice, this decision was correct; we had verified that the conditions for the development of this struggle, at that particular moment, did not exist.

Whether that was indeed the case remains debatable. In any case, after a few days in Dar es Salaam, most of the Cubans flew home via Moscow.

To Another Front

Victor Dreke returned to Cuba to head a military unit preparing internationalist volunteers; in 1966, he led the Cuban military mission to Guinea-Bissau/Cape Verde, where he served alongside Amílcar Cabral. He performed a similar function in the Republic of Guinea. He returned to Guinea-Bissau in 1986, heading Cuba’s military mission there until 1989.

Jorge Risquet became head of the Cuban Civil Internationalist Mission in the People’s Republic of Angola between 1975 and 1979, eventually leading 55,000 Cuban troops against the CIA-supported South African Defence Forces. Other members of Guevara’s guerrilla force also returned to Africa to fight.

Che Guevara did not return to Cuba with his comrades. He remained in the Cuban embassy in Dar es Salaam to write his account of the Congolese campaign. Early in 1966, he traveled to Prague, where he stayed for several months. He finally returned to Cuba, where he secretly helped prepare the expeditionary force that would establish itself in eastern Bolivia in November 1966. While in the eastern Congo, Guevara formally accepted the number-three position, in Bolivia, he insisted on openly leading the force. This – combined with the fact that the revolutionary left in Bolivia was deeply divided as a result of the Sino-Soviet dispute – meant that his guerrillas received little support from the largely Moscow-aligned Bolivian Communist Party, leaving them desperately isolated.

In March 1967, only three months after they had arrived, the Bolivian government forces discovered the Cubans and their local allies and obliged them to fight. With virtually no external support, the band slowly dwindled in numbers, and its morale ebbed away. In October 1967, Guevara was captured and shot.

From one perspective, we might see Che’s decision to fight on against hopeless odds in Bolivia as evidence that he learned nothing from his experiences in the Congo. From another, we might argue that he had already planned something like this back in the Congo, when he considered staying behind. He even may have made up his mind back in April 1965, when he wrote his letter to Castro renouncing his positions in the party leadership, his ministry post, his rank of commandante, and his Cuban citizenship. He was, after all, an Argentinian and had always been, to a certain extent, an outsider.

He was also an idealist who had traveled widely on his motorbike in Latin America as a young doctor, becoming familiar with how poor people lived. He believed that revolutionary action could improve their lives, and his participation in the Cuban Revolution’s extraordinary success showed him what a few determined people could achieve. Before he left for the Congo, Guevara wrote to his parents: “once again I feel under my heels the ribs of Rocinante.”

This image of Guevara — as a twentieth-century Don Quixote, setting out on his ancient horse to revive chivalry, undo wrongs, and bring justice to the world, who, against all odds and despite a series of disastrous encounters, survives with spirit undiminished until the very end — appeals to the romantic in all those who see themselves as revolutionaries. But the Cuban intervention in the Congo was not undertaken lightly, or without serious preparation; and the divisions within the various Congolese movements and the failings of their leadership, although very real, did not seem to the Cuban leadership, at least at first, to be insurmountable.

Whatever the situation on the ground in the Congo, it was, arguably, the changing political environment in Africa as a whole, and particularly the withdrawal of support by President Nyerere of Tanzania for the Cuban expeditionary force, that adversely affected the situation facing Guevara and his guerrillas. Furthermore, it is clear that the decision to abort the mission was not taken by Guevara alone. As Castro remarked years later, “in practice, this decision (to withdraw) was correct; we had verified that the conditions for the development of this struggle, at that particular moment, did not exist’.

Guevara, however, remained heroically, if tragically, optimistic regarding his capacity to contribute to revolution elsewhere. Representatives of Mozambique’s independence movement, the FRELIMO, reported, for example, that they met with Guevara in late 1966 in Dar es Salaam regarding his offer to aid in their revolutionary project, an offer which they ultimately rejected. As Guevara secretly prepared for Bolivia, he wrote a last letter to his five children to be read upon his death, which ended with him instructing them: ‘Above all, always be capable of feeling deeply any injustice committed against anyone, anywhere in the world. This is the most beautiful quality in a revolutionary’.

David Seddon is co-author (with David Renton and Leo Zeilig) of Congo: Plunder and Resistance, Zed Books. He is also the co-ordinator of a series of essays on ‘popular protest, social movements and the class struggle’, under the project of the same name, published on roape.net. This article draws heavily on the Introduction by Richard Gott to Che Guevara’s The African Dream: the diaries of the Revolutionary War in the Congo.

Featured Photograph: Che Guevara participating in an guerrilla insurgency in the Congo in 1965.

The Rise of Trump: An Opportunity for African Industrialisation?

By
ROAPE
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This blogpost is part of a series composed by Masters students on the African Development course at the London School of Economics and Political Science. They represent the views of an emerging body of critical young scholars interested in structural transformation and growth in African economies. The series will be featured over the coming months on roape.net, Africa@LSE and ID@LSE blogposts.

By Tinhinan El Kadi and Avelino Chimbulo

Industrial policy is making a comeback in both mainstream and heterodox literature as noted by Pádraig Carmody in this blog series. For years, critical political economists have been sceptical about the future prospects for African industrialisation considering the restrictive policies put in place by neoliberal institutions such as the World Trade Organization (WTO). After briefly discussing what form industrial policy should adopt today, we suggest that the current crisis in neoliberal globalisation, best represented by Donald Trump’s election as the US president, may result in an unintended increase in policy space for African nations to engage in industrial policy, upgrade their economies and move up into global value chains.

From 18th century Britain to the more recent East Asian miracle, development has been synonymous with ‘industrialisation’. While sub-Saharan Africa has grown at an average rate of 5% over the past 15 years, this was largely driven by a boom in commodity prices, and Africa’s industrial sector remained underdeveloped. Falling commodity prices have already fallen and Africa’s growth rates in recent years reflect this – expected to be just about 3% in 2017. This short lived growth symbolises Samir Amin’s concept of ‘development of underdevelopment’ whereby growth does not translate into broader economic transformation and poor countries remain in their peripheral position in the global economic order (see the ROAPE interview with Samir Amin here).

Industrialisation, defined here as the deliberate process of introducing large-scale manufacturing, advanced technical enterprises, technological upgrading and an overall shift from low productivity activities to high productivity ones, is argued to be critical for Africa to improve the living realities of millions of its residents. The Prebisch–Singer thesis for example suggests that industrialisation is the most promising process to free developing nations from their subordinate status in the global economy in the long run.

East Asia’s remarkable economic rise was characterised by a significant increase in the share of manufacturing and dirigiste policies including the promotion of certain sectors over others, the control over state’s finances and the implementation of disciplinary measures to private capital for the creation of competitive industries; the so called ‘carrots and sticks approach’. This model succeeded in not only lifting millions out of poverty but it also allowed ‘late-comers’ to catch-up with early industrialisers and compete with them, defying the deterministic assumptions of dependency scholars. Two important points to note. Firstly, East Asian countries transformed their economies using industrial policies that explicitly rejected the neoliberal paradigm that became the dominant, fashionable development strategy from the late 1970s. Secondly, this developmental story came with violent processes including large scale land grabbing, a rise in inequalities and serious environmental damage, and extremely harsh forms of authoritarianism.

Industrialisation, like any major transformation, creates winners and losers, yet future industrial strategies do not necessarily have to be as socially and environmentally devastating as they were elsewhere. African nations could engineer a comprehensive set of social and environmental policies to balance the negative impacts of industrialisation and ensure more inclusive and sustainable forms of growth.  However, analytical caution should be applied: despite achieving significant growth rates, of around 8% between 2004 and 2014, with an increase in the share of manufacturing since 2012, Ethiopia’s acclaimed growth is accompanied by persistent popular protests and the permanent risk of large scale popular uprising. The failure of the government to address mounting social demands and inclusively distribute the gains of the country’s growth, represents a real challenge to the sustainability of Ethiopia’s developmental model.

A comment by Ray Bush on Carmody’s blog on roape.net suggests that industrial policy should be accompanied with a broader set of transformative measures including the use of agricultural policies, the redefinition of the relationship between town and country and the establishment of sovereign surplus funds, which would distribute surpluses democratically to citizens. Indeed, we would argue along that the challenge today is in shaping developmental institutions that have the potential to create long-term growth and structural transformation while creating social institutions that ensure inclusiveness and abide by democratic rules that respect the human rights. These are some of the considerable challenges of industrialisation on the continent today.

Over the past forty years the majority of African nations have seen their policy space constrained by International Financial Institutions (IFIs) to engage in industrial policy or to ‘learn by doing’. Internal factors such as the given country’s political settlement, state-capitalists’ relations, the distribution of power across classes, and the exposure of the country to internal and external threats, these ‘systemic vulnerabilities’, are all critical factors in understanding the dynamics behind industrial policy in previous experiences of rapid industrialisation. However, we must focus on global structural factors which have largely limited African states’ ability to adopt industrial policy.

Breaking from Neoliberalism?

Despite the strong theoretical and empirical evidence behind the effectiveness of industrialisation in transforming economies, for decades, African nations have been restricted from engaging in comprehensive industrial policies by IFIs. Rooted in the neoliberal paradigm, IFIs have often advised African nations to focus on their ‘comparative advantage’ in natural resources and agriculture while staying away from industrial programme. According to the neo-classical theory of comparative advantage activities that ensure rapid gains in order to engage in expensive scale ups or the establishment of backward and forward linkages, can harm growth. This policy orthodoxy has been a disaster for the continent.

These restrictions have resulted in a significant wave of deindustrialisation across the continent over the past three decades. According to World Bank Data, from 1983 to 2009 the contribution of sub-Saharan Africa’s manufacturing to the economy dropped from 15.2% to 9.8%, the lowest share in any developing region. Not surprisingly, Ethiopia, the so called new ‘African industrial powerhouse’ is a non-WTO member. In fact, many of the instruments used by the Ethiopian government in its development strategy—tariffs, direct state subsidies, non-tariff barriers, are restricted by the WTO, several bilateral trade agreements and other forms of conditionality.

However, if norms and regulations in international trade have made it difficult for African nations to upgrade their economies and move up global value chains in the past, some recent shifts, mainly the weakening of the intellectual legitimacy of the neoliberal paradigm and the election of nationalist leaders with protectionist agendas in developed nations, may unintentionally provide African nations with more policy space for the adoption of industrial strategies.  The 2008 financial crisis represents an important shift in this direction. Rich nations, it’s worth recalling, which had long advocated for free trade and the restriction of state intervention in the economy, undertook massive bailout plans to protect and rescue their industries. For instance, in 2008 the US spent $17.4 billion to bailout its automobile industry alone.

Moreover, the overall failure of structural adjustment programmes to deliver sustainable and transformative growth and the sharp increases in inequality levels across the African continent have raised serious concerns about the ability of so-called free-trade to respond to the developmental needs of the continent. This concern seems to have penetrated the structures of the IMF, which published in June 2016 a report entitled Neoliberalism: Oversold? in which the notorious institution of globalisation expressed scepticism regarding the benefits of unfettered markets.

The recent election of Donald Trump, a vocal advocate for the revival of the American manufacturing industry, as the president of the US, has the potential of accelerating the intellectual erosion of free-trade globalisation. Within his two first months in office, President Trump has called for the adoption of protectionist measures such as high tariffs on imports to achieve what he called a “new industrial revolution” for the United States. He has also announced the removal of the US from the Trans-Pacific Partnership and has promised to revise some major free-trade agreements. Similarly, Theresa May’s government in the UK has announced a return to industrial policy on several occasions and has drafted an industrial strategy which promises new ‘sectoral deals’ and large scale infrastructural projects. From the world’s two most powerful champions of free trade, these statements – even if still at the level of rhetoric – are extremely significant. Can these rhetorical shifts make industrial policy more acceptable for African nations?

Indeed, Donald Trump’s Trade Policy Agenda, publically released in late February 2017, signals an important break from the previous U.S. approach to international trade. The policy agenda announced that the US will ignore WTO rulings if these are judged to go against its interests. The 336-page report also mentions that the US will consider leaving the WTO, if the international institution attempts to infringe with its sovereignty.

The vocal criticism of the US of the widespread damages caused by free-trade and global integration significantly undermines the hegemonic position that neoliberalism has enjoyed so far. Protectionist measures and industrial policy severely weakens the ability of the WTO to impose a different set of prescriptions on low income and middle income nations. Hence, the current backlash against unrestrained globalisation represented by the Brexit vote and the election of Donald Trump, and the consequent shift in rhetoric and action regarding free-trade, will surely impact power dynamics within the WTO and increase African nations’ bargaining power within the institution.

While Trump’s policies include massive cuts to public spending and tax-breaks for the wealthiest – the global 1 % –  an unintended consequence of his ‘America First’ policy is to widen space for African states to engage in industrial policy. These are potential opportunities. Yet we should not ignore the fact that the Trump’s ‘America First’ strategy could see the repeal of AGOA which provides trade preferences and duty-free entry into the US market for certain goods coming from sub-Saharan Africa.

We do not intend to suggest that the paradigm of neoliberal globalisation is over, far from it. However, the failure of structural adjustment programmes, the sharp increase in social inequalities, the 2008 financial crisis and the election of a free-trade skeptic at the head of the US, pose serious challenges to the legitimacy of the current paradigm. In 1962 the philosopher Thomas Kuhn argued that ‘paradigm shifts’ in scientific development emerge in reaction to mounting anomalies in dominant models and the development of new paradigms. The task is to frame a comprehensive alternative to the current order, one that does not only deliver economic transformation to the continent, but also ensures equality and justice.

Tinhinan El Kadi and Avelino Chimbulo are Master students in Development Studies at the London School of Economics and Political Science. Their interests are the political economy of social policy and industrial reform for development in Africa.

Featured Photograph: section of the Addis Ababa Light Rail completed in 2015, Ethiopia.

Faking the Poor: Counterfeits and Class

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By Dave Johnson                                                  

Previous ROAPE contributors have highlighted that today’s global economy is characterized by a significant and rising level of fraud. In the UK for instance, the cost of economic fraud in 2016 rose above £1 billion for the first time in five years. Fraud and anti-fraud measures are thus timely research topics, with this blog based on desk research on anti-fraud measures in India, Pakistan and Sri Lanka.

Earlier research from Nataliya Mykhalchenko on the dynamics of anti-fraud initiatives in Africa identified some of the key measures taken to combat this phenomenon. Usually, they take the form of arrests; seizure and elimination of products; awareness raising and sensitization campaigns; wide applications of anti-fraud technology; task force formation of various state and non-state actors; and cross-border partnerships that are usually led by states in the Global North. These mechanisms were all found in the countries studied in this research too.

However, two things were striking from my own research. First, in all sampled countries, government reports, news articles and corporate investigations highlighted that instances of fraud have increased since the liberalisation of their respective economies. In the words of one Indian think tank, a liberal economy has become the driver for a “parallel economy” (FICCI-CASCADE, 2012). In response to this dynamic, the Indian Central Bureau of Investigation was forced to establish a separate Economic Offences Wing in 1994 due to an “increased work load relating to Securities Scam cases and [a] rise in economic offences with the liberalization of [the] Indian economy” (CBI, 2005; emphasis added). The relationship between neoliberal economic policies and a rise in fraud cases is echoed by a recent working paper by the Indian Institute of Management, which reports that “although banking frauds in India have often been treated as cost of doing business, post-liberalisation the frequency, complexity and cost of banking frauds have increased manifold resulting in a very serious cause of concern for regulators, such as the Reserve Bank of India” (Singh et al, 2016: 3; emphasis added).

This concern has manifested itself through the proliferation of state and non-state anti-fraud actors, and the prevalence of an entire anti-fraud industry. However, as Mykhalchenko has noted, many of these anti-fraud initiatives “may be only addressing the symptoms rather than the root causes” of fraud, i.e. are emphasising for instance technological fixes rather than changes to the deeper power structure in the (political) economy of concern. The link between the liberalisation of economies and the rise in fraud identified at the level of analysis in official reports is thus regularly ignored or marginalised at the level of actual response to fraud (i.e. policy and programme).

Furthermore, the well-financed and more prevalent measures are, perhaps unsurprisingly, mainly focused on financial frauds: those affecting core business interests, profits, intellectual property rights and domestic revenues. In awareness raising campaigns by the likes of Indian think-tank FICCI-CASCADE, the impact of counterfeit and substandard goods were framed around a breakdown on Indian tax revenues – in 2012 this was estimated to stand at around US $582 million. Thus, even when discussing counterfeit goods in which consumers are the main victims, the impact of fraud is generally assessed mainly in aggregate monetary terms and framed around revenue loss for the powerful, i.e. states, businesses, and copy rights holders; only after this (if at all) losses experienced by (ordinary) consumers come into the equation. In other words, the wider social harm of consuming and using fraudulent goods (particularly by the subaltern classes) seems low on the official anti-fraud agenda. This discourse has been upheld when considering that fraudulent goods, services and practices in everyday life that directly affect wide sections of the population have until recently hardly been given priority of international aid organisations and donors, who instead have for years rather focused on political corruption (Whyte & Wiegratz, 2016).

The second, and interrelated, issue to highlight from my research is that the sale of substandard and counterfeit goods seems to disproportionately target and affect low-income households and consumers. This raises questions such as: How are low-income consumers affected by fraud? What anti-fraud initiatives are taken to combat this? And do they differ to those of financial frauds that affect rather large players? When investigating the prevalence of counterfeit goods, there is a link between a very high cost of living that the subaltern face and the potential for subsequent exploitation from fraudulent companies, distributors and merchants as people attempt to get by; hence buying the ‘cheapest’. There are also those consumers that willingly and knowingly purchase counterfeit goods in order to “keep up with the Jones’”; in effect keeping up with the norm of conspicuous consumption in (global/national) society but employing counterfeit goods as a replacement for ‘original’ goods. However, it is the former group that is more concerning here.

Echoing this sentiment, Sri Lanka’s Director of Consumer Affairs argued recently that the framing of counterfeit goods as a domestic problem for the economy and rights holders ignores that “it is a global problem fuelled by socio-economic variables such as poverty, ambivalent consumer attitudes towards…[intellectual property rights], the involvement of criminal networks and easy-access to [and affordability of] illegal goods”. This acknowledgement – of poverty as a driver of counterfeit goods and the link between fraud and the state of wider societal structures – is somewhat of an exception from any type of establishment spokesperson.

The real-world consumers of many counterfeit products, such as illicit alcohol, tobacco and pharmaceuticals are usually those with lower incomes. In Sri Lanka rural pharmacies “seeking quick profits” have been accused of perpetuating the availability of counterfeit medicines in these areas; and counterfeit alcohol in India has been deemed a business that thrives on poverty. One dynamic to this is that, according to Sayeed (2014), more than the concern for public safety, officials in India have been particularly alarmed about recent incidents stemming from counterfeit alcohol, tobacco and pharmaceuticals discrediting the image of India abroad. This is a common theme throughout the researched countries – that the image, of both country and rights holders (e.g. to attract tourism and foreign investment), is more of a priority (at least in official discourse) than public safety in the anti-fraud fight.

In 2013, the Pakistani media were tasked by the Anti-Counterfeit and Infringement Forum (ACIF) – a group of multinational and local corporates that have been hit by locally manufactured fake or counterfeit smuggled products – with doing more to raise awareness of the “menace of counterfeiting and piracy” for consumers and investors. Here, it was argued that “counterfeiting, piracy, substandard production and smuggling are barriers to innovation and economic progress of a country”, again not actually prioritising the wider detrimental social impact (e.g. deaths from alcohol, or adverse health impacts from pharmaceuticals). Private organisations are seen here to frame debate and coverage of counterfeit goods around the loss to the economy. Furthermore, intellectual property rights are the issue for multinationals and governments as it is simultaneously a barrier to investment and domestic economic growth. However, other evidence disputes this. In the US for example, testimony submitted to the US Senate Committee on Homeland Security and Governmental Affairs found that foreign direct investment to China was actually one reason for the proliferation of domestic counterfeiting and international export of counterfeit goods from China to the US (Chow, 2004).

I see here, two interrelated political-economic aspects of the prevalence of fraud and anti-fraud initiatives. First, the proliferation and normalisation of fraudulent activities that stems from liberalised economies (Wiegratz, 2015) has created a steep rise in initiatives that combat the concerns of major business actors that actually benefit from neoliberal policies. So, the concerns of the already powerful are tackled and underpinned by orthodox economic measures and framing that allow a prioritisation of anti-fraud measures that address these issues over the effect on the wider population (much the same as poverty reduction and inequality are subordinated to GDP growth). Second, this concern has led to a dynamic that sees low-income households disproportionately targeted and affected by sellers of counterfeit goods, while the initiatives, investments and research needed to understand who is affected by fraud, it seems, have not been forthcoming at an appropriate level. This seems driven by a lack of funding and commitment from governments and donors to address these types of fraud, reinforced by the prioritisation of financial frauds. The research reveals some of the unequal power relations between those producing counterfeit goods in a “parallel economy”, those leading the anti-fraud discourse and those who are (often unknowingly) on the receiving end of these goods.

Dave Johnson studies international development at the School of Politics and International Studies (POLIS), University of Leeds. His research on the political economy of anti-fraud measures in the Global South is informed by ongoing work into anti-fraud measures conducted with Jörg Wiegratz.

Featured Photograph: Counterfeit bags for sale in public.

Notes

CBI (2005) CBI Crime Manual – Chapter 4 (http://goo.gl/9JxzwM)

Chow, P (2004) Counterfeiting In China And Its Effect On U.S.

Manufacturing, HSGAC (https://goo.gl/49xNC2)

FICCI-CASCADE (2012) Socio-Economic impact of counterfeiting, smuggling and tax evasion in seven key Indian industry sectors – Executive Summary (http://goo.gl/Z4a9Ev)

Sayeed, A (2014) Know Your India: “Turn a New Page to Write Nationalism”, Delhi, Vij Books

Singh, C et al (2016) Working Paper 505: Frauds in the Indian Banking Industry, Indian Institute of Management, Bangalore (http://www.iimb.ernet.in/research/working-papers/frauds-indian-banking-industry)

Whyte, D & Wiegratz, J (2016) Neoliberalism, moral economy and fraud in Whyte, D & Wiegratz, J (Eds.) Neoliberalism and the Moral Economy of Fraud, London, Routledge.

Wiegratz, J (2015) ‘The New Normal: Moral Economies in the ‘Age of Fraud’.’ in Whyte, D (Ed.) How Corrupt is Britain?, London, Pluto

Libya’s Plunge: Gaddafi, Western Intervention and Imperialism

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Since the revolt in 2011, Libya has been overwhelmed by chaos, plunging into civil war in the summer of 2014 when Libya Dawn, an alliance of Islamist and Misratan militias, took the capital Tripoli. Meanwhile tribal forces opposed to Libya Dawn have emerged in eastern Libya, grouping around Khalifa Belqasim Haftar’s Libyan National Army, who supports the national parliament in Tobruk.

Last year the UN installed a Government of National Accord in Tripoli, but this government does not have the backing of Haftar, or even the full control of the capital. Militias continue to fight each other in sporadic street battles in the city.

For every side in the conflict, the struggle for oil is central – each attempting to control oil fields with the support of foreign backers and multinationals. In the first part of a two part blog-piece, Gary Littlejohn looks at the issues behind western intervention in Libya in 2011. It is part of a long history of Western involvement, he writes, within and beyond Libya and the MENA region.

By Gary Littlejohn

In this two part blog-post for roape.net I examine the Western motives for the NATO military intervention in Libya in 2011, arguing that the real objective was not to protect civilians. I argue that its timing and results can be better understood as a means of protecting the predominant international financial institutions, with a secondary opportunistic outcome being a clandestine flow of arms from Libya to Syria.

Introduction                                                                                                            

It is now over five years since the government of Muammar Gaddafi was overthrown by a multinational coalition in which the USA, France and the UK predominated.  In the Western media, this intervention was greeted as a success initially, although the aftermath has been ongoing conflict that has seen renewed military intervention by the US and EU countries including the UK, France, Germany and Italy. This blog-post raises questions about the dominant narrative concerning these events, which claims that the initial goal was to protect civilians in Benghazi, arguing instead that regime change was always the goal, and that the countries intervening have benefitted in various ways from the ongoing chaos.

I intend to examine the stated reasons for the intervention and offer an alternative understanding of its timing and outcome.   In doing so, the focus is on the motives of external actors rather than on the internal social problems, or the political and economic dynamics of Libyan development during the Gaddafi years.  Such an analysis is most definitely necessary, but this does not claim to be it.  While it is true that on various measures the Libyan economy improved during the period prior to 2011, this does not mean that macroeconomic management was faultless; nor does it imply that one should ignore corruption, human rights abuses including torture, or unwarranted interference in the affairs of neighbouring countries.  I hope that this piece might elicit a response that concentrates much more on the importance of internal Libyan dynamics, including where appropriate major policy failures, which rendered Libya vulnerable to foreign intervention despite its evident comparative resilience to UN sanctions.

I argue that it was fairly easy for Western agencies to play on existing grievances, and to run a media campaign to ‘justify’ a military intervention using the spurious doctrine of ‘Responsibility to Protect’ as a cover for the start of a process of regime change.

Context for Libyan Regime Change

Whatever his failings, Gaddafi’s time in office was characterised by the investment of oil revenues in vital infrastructure and services for Libya, resulting in  significantly improved health and living standards.  For example, substantial underground aquifers were tapped for the ‘Great Man Made River’ (a huge concrete pipeline network) that brought clean water to cities.  Gaddafi also supported various initiatives that were designed to increase the autonomy of African governments and/or Arab governments. These included the African Union and various liberation movements, including the South African, African National Congress. Such activities constituted an important motive for the demonization of Libya, which was one of the countries that US General Wesley Clark had mentioned in 2007 as being a future target for regime change. He had listed seven countries: Iraq, Syria, Libya, Somalia, Sudan, Iran and Yemen.

The claim that the invasion was prompted by a ‘Responsibility to Protect’ (R2P) citizens in Benghazi who were being threatened by Gaddafi is questionable when one considers the evidence that has recently emerged from Wikileaks and elsewhere, evidence that the Western Mainstream Media (MSM) has basically ignored.

The recent report into the Western intervention in Libya in 2011 published by the UK House of Commons Foreign Affairs Select Committee on 14 September 2016 raises important questions. The report, Libya: Examination of intervention and collapse and the UK’s future policy options, argues that the shift from R2P to regime change was basically initiated by France and that the UK did not manage to persuade other allies to keep to the original terms of the intervention.  The decision to go along with this change of objectives is laid at the door of the then Prime Minister David Cameron, who had decided not to cooperate with this inquiry and who resigned as an MP not long before the report was published. It is worth looking at the report in some detail.

UK Parliamentary Select Committee on Foreign Affairs Report

The opening Summary of this report states that the intervention led by the UK and France, and supported by the USA, was to protect civilians from attacks by forces loyal to Muammar Gaddafi, but that this policy was not informed by accurate intelligence.  This is the same narrative that was used for the invasion of Iraq in 2003.  Yet in that case we know from Hans Blix’s public testimony and from Frank Chikane (2013) that prior to the invasion Tony Blair had received two independent detailed briefings – from Hans Blix and from then South African President Thabo Mbeki – indicating that there were no Weapons of Mass Destruction (WMD) in Iraq.  In the case of Libya, the deployment of SAS troops early in the operation, rather than peacekeeping troops who could have been stationed in or near Benghazi in defensive positions, already suggests that the motive was regime change.

The report Summary goes on to say that the drift to the opportunist policy of regime change was not supported by a strategy to shape and support post-Gaddafi Libya. ‘The result was political and economic collapse, inter-militia and inter-tribal warfare, humanitarian and migrant crises, widespread human rights violations, the spread of Gaddafi regime weapons across the region and the growth of ISIL in North Africa.’ It places the blame for the failure to develop a coherent Libya strategy on the then Prime Minister David Cameron. These are scathing conclusions.

The alleged intelligence failures, if true, would be a damning indictment of the work of the joint French/American/British intelligence office in Paris, which had been in place at least five years before. It is notable that there is no reference in the report to internet sources of evidence and analysis, when presumably the committee could have employed a researcher to analyse relevant material. Instead, it took evidence from a fairly limited number of people without any indication of the criteria by which they were chosen.  Only one academic researcher from outside London was called as a witness.

Still the report overall is damning in its assessment as given in its Conclusions and Recommendations. The UK government failed to identify the extremist element in the rebellion. The report rightly points to the lack of formality in decision making in the UK National Security Council, and fairly explicitly sees this as a continuation of the ‘sofa government’ style introduced by Cameron’s predecessor Blair – a style that protects senior politicians from proper accountability because crucial decisions are not properly recorded.  One could see the effect of this from the Chilcot Inquiry into the Iraq invasion of 2003, which failed to find documentary evidence that Blair had been fully informed about the lack of WMD in Iraq.  The Select Committee report specifically draws attention to the Chilcot Inquiry in recommending how the National Security Council should operate in future.

With regard to reconstruction resources, it is only recently that sequestrated overseas funds of the former Libyan government have been partially released, and this will not be fully resolved until there is an effective functioning government. Given that there are two rival administrations at the moment in Libya, this will not happen quickly. I shall argue in the second blog that the UK government’s approach to this issue of securing an effective legitimate government shows an ongoing disconnect between rhetoric and reality. The same seems to be true of the USA.

The failure to secure weapons and establish security on the ground after the overthrow of the Gaddafi government is rightly criticised by the report. The ongoing conflicts in Libya and the growth in migration from Libya to the EU by people from other African and Middle East countries are the obvious direct results of this.  The report supports the arms embargo on Libya, and condemns the dispersal of arms from Libya into other parts of North Africa, but does not ask if that is all that has been taking place – with arms being transferred from Benghazi to Syria via Turkey.  But there are some other issues that should be discussed first.

Libya’s Brief Rehabilitation

Some years before 2011 Libya was welcomed back into the ‘international community’, sanctions imposed for the country’s alleged involvement in the Lockerbie bombing were dropped and various countries started to court Libya in the hope of securing lucrative contracts in the newly re-opened economy. Leading these efforts was Tony Blair who went out of his way to personally accept Gaddafi ‘into the international community’.  This is unsurprising because in the interval Libya had built up a sovereign wealth fund worth about US$60 billion and the higher living standards in Libya also offered other market opportunities for foreign governments.  So as part of the competition for contracts in the newly accessible Libya, Gaddafi family members were courted by various Western institutions. In addition, it is alleged that the UK was involved in ‘extraordinary rendition’ to Libya of opponents of the Gaddafi government.

This ‘international acceptance’ probably helps to explain why in March 2011 Gaddafi was so slow to understand that the R2P operation could constitute a threat to his government. Unrest alleged by Gaddafi to have been stirred up by a group of Al Qaeda militants would not have seemed much of a problem for the international community, given that they were vocally opposed to precisely such terrorists.

Yet the real reason for the intervention in 2011, and hence its timing which required a rapid reversal of the ‘rehabilitation’ of Libya, can be seen from the Hillary Clinton emails released in 2016.  As discussed by the well-known author F. William Engdahl on the New Eastern Outlook website in March 2016, the ‘problem’ with Libya was its proposed use of its wealth to establish a ‘Gold Dinar’.   Libya was becoming a threat to the current international financial architecture. This will be the focus of the second part of this blog-post.

Gary Littlejohn was Briefings and Debates editor of the Review of African Political Economy from 2010 to 2015. He is the author of Secret Stockpiles: A review of disarmament efforts in Mozambique, Working Paper 21, Small Arms Survey, Geneva, October 2015.

Featured Photograph: Muammar Gaddafi road poster near a Libyan frontier 2007.

Between Repression and Resistance: Egyptian Workers’ Struggles

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MAHALLA, EGYPT - APRIL 7, 2008: Tens of thousands of protestors took to the street to protest rising food prices and government attempts to privatize state-owned factories. The group became known as the April 6 Movement and played a major role in Egypt's 2012 revolution. (James Buck / PBS)

By Mostafa Bassiouny and Anne Alexander

Only two years after Abdelfattah el-Sisi welcomed international investors to a glitzy development conference showcasing opportunities in Egypt, his regime’s promises of a brighter economic future are looking threadbare to millions of Egyptians. Reforms demanded by the International Monetary Fund as the price of a $12 billion Extended Fund Facility loan have led to spiralling inflation, and despite repression, rising levels of frustration are spilling onto the streets and workplaces in a new wave of social protest. At the end of last year the Sisi regime managed to force through some of the most painful changes – such as last November’s currency devaluation, the imposition of a new Value Added Tax, and further cuts to subsidies on fuel – without significant protest on a national scale reflecting repression on an unprecedented scale, rather than a genuine indicator of acceptance of these policies. Although fragmented and spontaneous, levels of grass roots economic and social protests are high, and the workers’ movement in particular has remained relatively resilient in the workplaces. Crucially, the regime’s success in implementing the IMF’s conditions for the loan is also contributing to the draining away of its popular support.

In this blog-post we will assess the current state of the Egyptian workers’ movement and the potential for its revival. The workers’ movement remains, we will argue here, the most important potential location for effective popular resistance to the neoliberal policy agenda, reflecting organised workers’ capacity to paralyse sections of the economy and the state apparatus itself and the legacy of over a decade’s sustained experience in self-organisation. Despite the regime’s efforts to break this tradition, current levels of strike action and attempted strike action suggest that it has not succeeded.

Two competing pressures are operating on the workers’ movement, and it is not yet clear which will prove decisive. One the one hand, the intensity of the economic and social crisis for Egypt’s impoverished majority is pushing workers and wider layers of the poor into taking collective action. On the other hand however, levels of direct repression of worker activists in particular have significantly increased over the past year, as we will outline below. This targeted repression takes place in a context marked by intense state brutality, including an unprecedented campaign of enforced disappearances, endemic torture and extrajudicial killings by the security services.

The economic measures taken by the state in order to meet the conditions of the IMF loan of $12bn over 3 years have imposed unprecedented burdens on the poorer classes and in particular the working class. These measures have included cutting fuel subsidies by more than 40 percent for the 2016-7 budget, leading to a wave of strong inflation, combined with the new inflationary burdens resulting from the imposition of a new VAT of 13 percent on goods and services. And with the decision to liberalise the Egyptian currency on 3 November 2016, these inflationary pressures increased even further as the result of the Egyptian’s pounds collapse to half its previous rate against the dollar, leading to the rise in the price of a number of goods and services, including basics such as medicines, health services and education services.

On the other hand, any rise in wages was very weak, for example the allocated portion of the state budget for wages rose by 7.6 percent in 2016-7, while inflation was at least 11.5 percent according to official figures, meaning that the six million state employees faced at least a 4 percent pay cut. In reality the wage cut has been more than the estimate in the state budget, because of the rise in inflation was in reality much higher. The Central Bank of Egypt announced in February this year that the annual inflation rate was 33 percent, up from 28 percent in January, and 24 percent in December 2016, with the expectation that it will have report  a rise further in the last quarter of the financial year 2016-7.

An attempted strike by textile workers at the giant Misr Spinning company in the Delta town of al-Mahalla al-Kubra on 7 February this year is a tell-tale sign of rising anger in industrial workplaces. Workers in a number of the Misr Spinning company factories organised a strike on that day, with around 4,000 workers taking part. The action was concentrated in the ready-made garments factory, the sheets factory and the towels factory, which have the greatest concentration of women workers. Their leading role recalls the strike of December 2006, which was begun by women workers, who raised the famous slogan, “Where are the men? Here are the women!” The same chants were raised again during the attempted strike in February.

In 2006 the women’s action triggered a strike which brought out the rest of the factory and marked a turning point in the development of the workers’ movement across Egypt, unleashing a wave of strikes across the textile sector and beyond. In this case, management was able to abort the action before it could take off, but the general picture over the past year is one of rising levels of social protest, including hundreds by workers. These are a direct response to the worsening of economic and social conditions for the poor, reflecting the weakening of the social security net and the decrease in the value and impact of subsidies on goods and services and the state’s reduction of its social role.

Just a few weeks after the attempted strike at Misr Spinning demonstrations took place in seven governorates across Egypt in protest at the reduction in the subsidised bread ration. In 2016, according to a report by the Egyptian Centre for Economic and Social Rights, there was a noticeable increase in protest levels, and in particular protests by workers, with more than 1700 protests recorded in 2016, of which 700 were workers’ protests and a further 600 were of a social character. This indicates a transformation in mood compared to the period from 2013-2015, when the frequency of workers’ protests dropped noticeably. This likely reflected a number of factors, including on-going repression, the impact of official propaganda under the slogan “war on terror”, and the expectations raised by the regime of new economic projects following the Sharm el-Sheikh conference, and the widening and development of the Suez Canal and the surrounding area.

The rise in the frequency of workers’ strikes and social protests in 2016 has been accompanied by another rise in the level of repression and crushing of strikes. A significant development was the referral of the Alexandria Shipyard workers to a military trial on charges of incitement to protest, and the arrest of workers’ leaders from the Public Transport Authority in Cairo on charges of incitement to strike, while workers from the IFFCO food plant were also hauled before the courts on charges of striking.

This is the context in which we must evaluate the attempted strike in Misr Spinning in February this year, which sparked such hopes on its announcement, but it cannot be separated from the general conditions which the workers’ movement is experiencing. The development of security prosecutions of striking workers casts a long shadow on the workplace and makes any steps towards the organisation of a strike fraught with danger. However the conditions in the Misr Spinning factory itself have also played an important role. As it was this company which led the rise of the workers’ movement from the end of 2006, it has also experienced a heavier degree of repression than many other workplaces, both in terms of security prosecutions and management victimisations. This has had the effect that most of the workers’ leaders who played a significant role in previous years are no longer able to do so, because they have been sacked from the company or transferred to sections of the company where they are unable to have an impact on the workers, while those that remain are under constant surveillance by management, making the possibilities of organising a successful strike much more difficult than previously. This however, also makes the fact that between 2500 and 4000 workers did join the strike all the more important.

The events in Mahalla in early February are thus another confirmation of the interplay between the two competing pressures on the workers’ movement: the whip of worsening economic conditions and the truncheons of the police. The number and scope of protests over the past year suggests however that the effectiveness of the second of these in inhibiting the rise of the workers’ movement has begun to weaken. It is also significant that 2016 saw a new wave of important political protests over the agreement to hand over the Tiran and Sanafir Islands to Saudi Arabia.

And behind these immediate pressures on the Sisi regime, other factors are also at work. The longer-term effects of the recent round of neoliberal reforms are likely to further undermine the regime’s viability. For the past four decades (despite pursuing previous programmes of ‘structural adjustment’), successive Egyptian regimes have relied on mechanisms to ensure continued social stability inherited from the state capitalist policies of Gamal Abdel Nasser. These do not only include the system of state subsidies which the IMF’s managers are so keen to dismantle, but also the wages of millions of civil servants. Over the same period, both Sadat and Mubarak continued to depend on barely-modified versions the corporatist ruling party and state-run ‘trade unions’ which Nasser also created to manage discontent. Sisi’s economic policies mark another wave in the neoliberal assault on the public sector. Yet beyond the febrile atmosphere of the ‘war on terror’ and the white heat of repression in aftermath of the 2013 coup, Sisi’s regime has not found anything stable to fill the gap left by the hollowing out of the old ruling party and the state-run union apparatus.

The action by women workers in Mahalla on 7 February thus cannot simply be written off as a failed attempt at a strike. Rather, considered in this wider context, it may be a harbinger of a new rise in the workers’ movement and a sign of possibilities for greater resistance to come.

Mostafa Bassiouny has more than a decade’s experience as a reporter and editor in the Egyptian and regional press. He was industrial correspondent for the Al-Dustour newspaper between 2005 and 2010, reporting on the uprising which rocked the town of Mahalla in 2008. He reported on the overthrow of Ben Ali in Tunisia in January 2011 before returning to Egypt to participate in the uprising against Mubarak. Between 2011 and 2014 he was Head of News for liberal daily Al-Tahrir and is currently Egypt correspondent for the Lebanese daily Al-Safir. Anne Alexander is a research fellow at the Centre for Research in the Arts, Social Sciences and Humanities (CRASSH) at the University of Cambridge. She has published widely on Middle Eastern politics, social movements and digital media, and is the author of Nasser, a biography of Gamal Abdel-Nasser (2005). Mostafa and Anne are co-authors of Bread, Freedom and Social Justice and contributors to Where are the Unions?

Featured photograph: Egyptians demonstrate in Mahalla on April 7, 2008, these protests took place after the 6 April strike. The 6 April Movement, as it became known, was formed in the wake of the uprisings in Mahalla and help to generate revolutionary energy that eventually fed into the 2011 revolution.

Cashless Banking: Fraud in Nigeria

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By Nataliya Mykhalchenko

2015 was the first year where cash was used for less than half of all payments made by customers in Britain. Moreover, the use of contactless cards rose 250% in the country in that year. The UK, along with other European countries such Denmark, Norway and Sweden are leading the way towards cashless societies. The arguments being made for such a transition include simplifying the way we spend and save, improving security of transactions and eliminating the black economy. However, another major argument for the adoption of technologies in the banking sector is helping the ‘’unbanked’’ and ‘’underbanked’’ to enter the club of online banking users. This position is also prominent in emerging economies, for example in Nigeria. Yet, electronic fraud related to e-payments, online banking and card use, for example, is rising in Nigeria, the UK and elsewhere.

This blog looks at Nigeria as an example of a country that is rapidly adopting new technologies in its banking sector. It highlights both the phenomenon of rising fraud in this sector as well as the adoption of new technologies to counter this in various anti-fraud initiatives. The blog also explores the question raised in my previous blog on whether the ‘technological fix’ is a solution to the rising levels of fraud in sectors such as banking.

One of the trends that has emerged as part my research on ‘The political economy of anti-fraud measures in Africa’ (led by Jörg Wiegratz) is the increasing adoption of technology in the Nigerian banking sector both by state and commercial actors.  

One example of such initiatives is the adoption of automatic biometric identification system by 23 Nigerian banks and the Central Bank of Nigeria supplied by the German company Dermalog. Customers are given a Bank Verification Number and are identified using their fingerprints and face recognition before they open or access their account. In another similar initiative, biometric information is used to roll-out National Electronic Identity card in collaboration with the American corporation MasterCard. The card can be used as a form of payment and a travel document. According to the division president for sub-Saharan Africa at MasterCard ‘by giving every Nigerian of 16 and older an identity card with payments functionality, the government can effectively eliminate financial exclusion in Nigeria, and help citizens to improve their livelihoods’ (see BBC News, ‘The card aiming to end Nigeria’s fraud problem’).

Another example is a wider initiative ‘Cashless Nigeria’’ that was introduced by the Central Bank of Nigeria (CBN) in 2012. As part of the initiative, a levy was introduced on cash withdrawals and deposits exceeding a certain daily limit. This initiative is in line with the country’s’ Payment System Vision 2020 – aimed at enhancing financial inclusion, reducing incidents of fraud related to handling of cash and helping the country to ‘modernise’. According to CBN, ‘an efficient and modern payment system is positively correlated with economic development, and is … key … for economic growth’. Sensitisation campaigns, by companies such as Visa – the United States-based global payment technology company – are also part of the trend to encourage people to use credit and debit cards. Last year in Nigeria, this year in Senegal and Kenya, such campaigns have become regular and are spreading across the African continent. The official goal is to raise awareness of the benefits that the EMV chip cards bring to fraud prevention in banking. The economic imperative in rolling out hi-tech solutions to fraud (as well as in working with countries such as Nigeria to match the ‘near-cashless’ economies of the North) is apparent in the involvement of global players such as Visa, MasterCard and others. Present and future profits are on the line.

The growing penetration of internet access and new technologies in Nigeria, smart phones in particular acts as one of the enabling factor in growth of usage of remote banking and contactless payments. According to some estimates, mobile phone penetration has hit 94% in Nigeria, with smartphones making 30% of the figure. However, one issue stands out prominently and that is the growing level of electronic fraud, particularly in the banking sector. According to the Annual report of the Nigeria Deposit Insurance Corporation fraud on e-payment platforms of the Nigerian banking sector increased by 183%, between 2013 and 2014, while it is estimated that Nigeria loses N127 billion to cybercrime on the whole, which represents 0.08% of the country’s GDP.

The above echoes the global trend of rising levels of fraud in different sectors of the economy. As was outlined in my previous blog, a number of initiatives are being increasingly put in place across African countries, many of which rely on technology as a solution. However, a number of commentators suggested that perhaps the introduction of alternative payment systems is in fact fuelling new forms of fraud, thus, having a negative effect on addressing fraud. Moreover, there is a sense that ever more sophisticated technology (in banking and in other sectors) is needed to counteract these emerging methods of fraud, which poses a question: does the ‘technological fix’ offer a sustainable solution to the growing levels of fraud?

In the case of Nigeria and the banking sector, another interesting phenomenon emerges. There is a sense that technological advancement in the banking sector (and hence sophisticated fraud protection) is one of the prerequisites towards a more beneficial integration of the country into the global economy. Last year’s Cybercrime Act, which outlines measures for prohibiting, preventing, detecting, responding, investigating and prosecuting of cyber-related crimes, including, for the worst offences, the death penalty ‘for an offence committed against a system or network that has been designated critical [to the] national infrastructure of Nigeria that results in the death of an individual’ (Techcabal, 2015). These ‘harsh’ measures have been framed as an initiative that will help to ‘clean’ Nigeria of fraud. According to some commentators: ‘’it [preventative measures] will not only prevent the billions lost to cybercrime in past times, it will also drive revenue generation as it will encourage local and foreign investment’ (Nigerian Tribune, 2016). This optimism about a bright fraud-free future, i.e. that technology can indeed provide the fix, is notable.

However, this type of fraud is not characteristic of emerging economies only. In the UK for example, the overall financial fraud saw a 25% increase in 2015 when compared to 2014, with remote banking fraud leaping by 72%, causing the loss of more than £168m. Internet banking fraud growing 64%, and telephone banking fraud jumping to 92% according to a report by Financial Fraud Action UK. Moreover, the UK seems to be leading the way in card fraud among European countries. It is interesting that in a country where the IT industry is one of the most advanced in the world, this type of fraud is on the rise. This suggests that the issue is deeper than the availability of the latest anti-fraud technology, and rather points to the engrained social and political conditions brought about by global capitalism that are proving to be fraud-conducive, in both tech-rich and -poor countries.

The fact that countries in the Global South, in this case in the banking sector, adopt anti-fraud measures to match those in the countries in the Global North, which, it is suggested are unlikely to be sustainable, reflects a common pattern in the global order: ‘solutions’ are drafted in the North. As always, watch out for the links between commercial, slick tech-solutions on one hand and hard interests, both economic and political on the other.

Nataliya Mykhalchenko graduated from the University of Leeds in 2016 with a BA in International Development. She now works in London for a company that helps education, research, healthcare, non-profits and civil society institutions. Nataliya started researching anti-fraud initiatives in 2015 as part of a five week ESSL Summer Research Internship Scheme, funded by the alumni Footsteps and Q-steps project. The research included looking at six countries on the African continent, identifying and analysing various drivers, characteristics and repercussions of the anti-fraud measures. In 2016 Nataliya (supported by ROAPE), continued the research by looking at three more countries, including Nigeria. The above study is informed by an ongoing research project titled ‘The Political Economy of anti-fraud measures in the Global South’ (Jörg Wiegratz, University of Leeds, British Academy/Leverhulme Small Research Grant).

Featured Photograph: Finger-tip identification is a Biometric Security application that can be used to secure online login to bank accounts.

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For 50 years, ROAPE has brought our readers pathbreaking analysis on radical African political economy in our quarterly review, and for more than ten years on our website. Subscriptions and donations are essential to keeping our review and website alive.
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