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Washington fuels Africa's crisis

Lee Wengraf explains why neoliberal policies will only mean more crushing debts and militarization for Africa's future.

By Lee Wengraf
August 17, 2009 -

BARACK OBAMA made his first visit to sub-Saharan Africa as president in July, speaking in Accra, Ghana, on the heels of the G8 Summit in L'Aquila, Italy. The G8 meeting highlighted--like last year's summit in Hokkaido, Japan--the continued failure of the world's wealthiest nations to live up to their promises of aid to Africa.

This failure is all the more glaring in light of the brutal impact of the global economic crisis on the world's poorest continent. And Washington's agenda holds more crushing debt and militarization in store.

The 2005 G8 meeting at Gleneagles was dubbed the "100 percent debt relief summit," embraced by Tony Blair and George W. Bush alike. Pledges were made to double aid to Africa by 2010 and to forgive Third World nations' debt. But according to the Organization for Economic Co-operation and Development (OECD), G8 leaders will fall short of their 2005 promise by as much as $23 billion. And as the European Network on Debt and Development notes, any debt forgiven was cut from those nations' aid packages.

This betrayal is in keeping with 40 years of empty promises. In 1970, developed nations voted on a UN resolution to devote 0.7 percent of their national incomes to foreign aid. European nations such as Denmark, the Netherlands, Norway, Sweden and Luxemburg have exceeded this target, but no G8 country has come close. Today, U.S. aid is only 0.16 percent of gross national income, the lowest percentage among donor nations.

The L'Aquila summit touted a $20 billion aid package, but as Pambazuka News points out, this sum is for three years, to be shared between 53 African countries. This total amounts to an average of about $132 million each, a drop in the bucket by any measurement.

Pointing out that past G8 pledges--not yet delivered--could save more than 3 million lives, Oxfam's Emma Seery denounced these failures, saying, "The Africa discussion was relegated to an insultingly token session. How can we take the G8 seriously when all they offer Africa is broken promises and photo opportunities?"

In a statement on the L'Aquila meeting, the organization predicted that Africa would lose $245 billion in revenue this year--almost seven times the amount it receives in global aid--as a result of the global economic crisis, but will receive only about $5 billion in additional support. AIG's executive bonuses alone, they concluded, could pay for enough teachers for 7 million children in Africa.

Aid for Africa has been shortchanged across all areas. For example, the G8 proposed 2010 as a target date for universal access to HIV/AIDS treatment. According to Africa Action, at the current rate of progress, less than half of all people on the continent needing medication will be receiving it by 2010. Nearly 70 percent of Africans living with HIV or AIDS lack access to treatment.

The Global Fund for AIDS, Tuberculosis and Malaria's HIV/AIDS initiatives in Africa are under-funded by the U.S., despite high-profile declarations of support by both Bush and Obama.

Despite the decades-long trail of broken-promises, Obama's speech in Accra was marked by finger-wagging and reprimands, by an insistence that African nations' own mismanagement and lack of democracy are to blame for their economic and social problems.

Obama told the Ghanaian parliament:

Yes, a colonial map that made little sense bred conflict, and the West has often approached Africa as a patron, rather than a partner. But the West is not responsible for the destruction of the Zimbabwean economy over the last decade, or wars in which children are enlisted as combatants...No person wants to live in a society where the rule of law gives way to the rule of brutality and bribery. That is not democracy, that is tyranny, and now is the time for it to end.

Obama's comments turn the reality of African poverty and its root causes on their head. Decades of International Monetary Fund (IMF) and World Bank loans and structural adjustment policies have placed an economic stranglehold on African and other Third World nations.

Hobbled by the underdevelopment of the colonial era--when Africans were stripped of their land and livelihoods, and Africa's rich resources and labor were exploited mercilessly for the profits of a handful of foreign investors backed by military force--post-colonial nations scrambled to compete in the world economy. New African states were compelled to accept harsh terms for loans, including low tariffs, privatization, single-commodity export production and cuts to domestic spending.

Using the IMF/World Bank as a battering ram, neoliberal policy forced its way across Africa and the rest of the globe, leaving in its wake decimated social programs, a debt crisis, and conditions favorable for U.S. investment. Each Ghanaian, for example, owes approximately $350 to international financial institutions. And pious calls for "good governance" notwithstanding, from the post-colonial era to the present, the U.S. has historically relied on political forces in the best position to back their economic and strategic interests, be they dictatorial regimes or proxy forces.

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BEHIND THE rhetoric of "democracy," deeper economic penetration drives U.S. interest in Africa. The past decade has witnessed a boom in the oil and minerals industries, many of them U.S.-based. In 2008, the United States imported 24 percent of its oil from Africa, and that figure is expected to rise.

In addition, 80 percent of the world's supply of coltan, a key component in cell phones and electronic goods, and 80 percent of the world's supply of cobalt, used for batteries in hybrid cars, comes from Africa. A surge in the price of oil and other commodities earlier this decade led to record growth rates on the continent.

Today, however, prices have fallen drastically. Food production geared for an export market has created shortages, exacerbated by IMF bans on subsidies for African farmers imposed as a condition for loans.

The Carnegie Endowment predicts that African economies will likely suffer about $578 billion in lost export earnings over the next two years--five times the aid to the region over the period--concluding, "At this pace, many countries will not be able to afford even basic commodity imports such as food, medical supplies and agricultural inputs."

Oil-exporting nations will suffer the biggest revenue decline: 42 percent in 2009 and 43 percent in 2010, a whopping total of $420 billion in revenue over the next two years. Meanwhile, investment funds have dried up and unemployment has risen. All told, the continent's growth rate is expected to fall from around 6 percent in 2008 to approximately 1 percent for this year, according to the IMF.

In recent years, investment in extraction industries have fueled a new scramble for African resources, and some of the largest global firms like Exxon-Mobil, Chevron-Texaco and Freeport-McMoRan are major players in Africa. China is now the United States' main competitor, and trade between Africa and China grew to more than $100 billion by 2008.

But the global economic crisis has undermined China's involvement as well. As the New York Times put it,

Just a year ago China appeared to be upending the decades-old order in Africa, stepping into the void left by large Western companies too timid to invest in the continent's resource-rich but fragile states as the market for copper, tin, oil and timber soared to new heights...

Today, China's quest for commodities has not stalled. State-owned companies are bargain hunting for copper and iron ore in more stable places like Zambia and Liberia. But Chinese companies are now driving harder bargains and avoiding some of the most chaotic corners of the continent. African governments facing falling revenues are realizing that they may still need the West's help after all.

Tough-love talk of "responsibility" aside, U.S. policy will only destabilize and further impoverish Africa in this global recession. Obama is turning to the World Bank and IMF to help spur economic growth in Africa. At this year's G8 meeting, Treasury Secretary Timothy Geithner's proposed tripling the International Monetary Fund's resources from their current level of about $250 billion, with $100 billion coming from the U.S.

From 1970–2002, Africa received some $540 billion in loans, yet paid back $550 billion in principal and interest. Even with the level of urgency on the rise, debt forgiveness "ha[s] not been translated into Obama administration policy," as Foreign Policy in Focus (FPIF) puts it. Rather, the latest dose of neoliberal medicine will spell disaster for many in Africa.

"The situation will be exacerbated through these new loans by the IMF," says Michael Stulman of Africa Action. "The loans still carry conditions that have the potential to subvert economic growth, and urgent action is needed more than ever to see that all debt is canceled to Africa as it faces this current financial crisis."

While the IMF has directed industrialized nations to enact stimulus plans and bank bailouts, Africa and other Third World regions are compelled to accept spending cuts and other harsh conditions for loans. In fact, says Neil Watkins of Jubilee USA Network, "Because the money promised...for poor countries is in the form of new loans, rather than grants or debt relief, the IMF may be contributing to a renewed Third World debt crisis."

The financial crisis is already undermining the fight against AIDS, for example. Currently, many nations on the continent have less than one health worker for every 1,000 people, well below the World Health Organization (WHO) minimum. Yet typically, the IMF has barred nations from hiring doctors and nurses while privatizing public health programs.

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DESPITE THE economic crisis, the Obama administration has had no difficulty funding another prong of Bush's Africa policy: militarization. Next year's congressional budget doubles the budgets for the new military command center for Africa, AFRICOM and for counterterrorism initiatives on the continent, with $500 million for AFRICOM operations alone. Horn of Africa nations--a region with both high levels of instability and critical strategic U.S. interests--are slated to receive hundreds of to fight "Islamic terrorists."

New funding will be used for everything from naval operations off the Gulf of Guinea--near the oil-rich Niger Delta region--to arms sales and computerized watch list systems for easy identification of terrorist group members.

Obama's recent high-profile announcement allocating $10 million to back up Somalia's government against al-Shabab Islamist forces will only fuel a conflict that has driven 160,000 people from the capital, Mogadishu, since May, 2009, alone. Driven by the U.S.-backed Ethiopian invasion of late 2006, more than one million people now live in refugee camps and the UN estimates that more than 3.25 million people currently need food aid.

Obama's plans for Africa are by no means identical to his predecessor's. He also aims to strengthen "soft power" approaches by increasing support for the State Department and programs such as the U.S. Agency for International Development (USAID) worldwide. Foreign assistance will jump from $1.5 billion to $2.73 billion in the coming year, with $450 million for Africa.

But these numbers pale in comparison to the $800 million "security" budget for Africa, according to FPIF estimates. The global economic crisis will only heighten imperial competition and military conflict in the region. The Gulf of Aden off the Horn of Africa, for example--a crucial shipping lane to the Suez Canal--is now the site of U.S., Chinese, Indian and Japanese naval patrols, all seeking to protect their investments from Somali pirates.

Other regional conflicts--from battles for the mines in the Congo to the insurgency in the Niger Delta oilfields– are superpower wars for resources, and millions of ordinary Africans are paying the price.

The new scramble for Africa has immiserated millions while enriching a tiny minority, both African and foreign powers alike. Oxfam predicts that by 2015, oil revenues in African oil-exporting countries will exceed the amount needed to meet key social development goals by $35 billion a year. The resources exist to more than meet human need. The biggest obstacle is a global system built on profit.

This article first appeared in the International Socialist Review.

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