The Threat of a Water War Egypt and Sudan to Stand Together

Egypt and Sudan draw battle lines with upstream nations over access to the Nile

NATIONS FIGHT over water, especially when access is curtailed or threatened, and there are the ingredients for a battle over the 4,100-mile long Nile River. Egypt and Sudan have counted on the abundance of the Nile’s life-giving flow. Now upstream nations want to keep more of the abundance for themselves. Ethiopia, Uganda, Kenya, Tanzania, Congo, Burundi, and Rwanda are asserting their rights to more of the river’s relentless flow. Washington needs to intervene to forestall hostilities between the countries.

Britain conquered Uganda and Kenya in the 19th century in part to protect the precious Nile waters from being diverted away from their critical possession of Egypt, the Suez Canal, and the Red Sea route to India. Without the yearly sustaining floods of the Nile, agriculture and settlement in the valley of the river from Luxor to Cairo and Alexandria would have been impossible.

When Britain in the 1920s controlled all of the waters of the Nile, bar those sluicing down the Blue Nile from Ethiopia, it signed a pact that gave Egypt and Sudan rights to nearly 75 percent of its annual flow. This 1929 agreement was confirmed in 1959, after Egypt and the Sudan had broken from Britain but while the East African countries were still colonies.

A new 2010 Cooperative Framework Agreement, now signed by most of the key upstream abutters, would give all riparian states (including the Congo, where a stream that flows into Lake Tanganyika is the acknowledged Nile source) equal access to the resources of the river. That would give preference to large scale upstream energy and industrial, as well as long-time agricultural and irrigation uses.

Egypt and Sudan have refused to sign the new agreement, despite years of discussions and many heated meetings. Given climate change, the drying up of water sources everywhere in Africa and the world, Egypt, which is guaranteed 56 billion of the annual flow of 84 billion cubic meters of Nile water each year, hardly wants to lose even a drop of its allocation. Nor does Sudan, guaranteed 15 billion cubic meters.

About 300 million people depend on the waters of the Nile. The upstream countries, with still growing populations, believe that their socio-economic development has long been unfairly constrained by Egypt’s colonial-era lock on the river. Ethiopia and Uganda have not been able to support agricultural schemes. Nor have they been able fully to harness the river or its tributaries for industry and power. Both have suffered from major hydroelectric shortages in recent years.

Egypt has declared the continued surge of the Nile waters a “red line’’ that affects its “national security.’’ There is discussion in Egypt about the use of air power to threaten upstream offenders, especially if Ethiopia becomes too demanding. In theory, Ethiopia could divert much of the Blue Nile to its own uses. Or Ethiopia and others could charge Egypt for water that has largely escaped modern pricing.

Egypt is sufficiently disturbed by Ethiopia’s potentially aggressive water designs that it has recently made friends with Eritrea, Ethiopia’s arch enemy. In 1998, Ethiopia and Eritrea went to war over slices of insignificant mountainous territory. Although the shooting ended in 2000, a peace settlement handed down by the World Court in 2006 has still not been observed by both sides. If Egypt attacks Ethiopia, Eritrea might join in. Egyptian generals claim that Israel is on the other side, helping the upstream nations by encouraging their thirst for water and by financing the construction of four hydroelectric projects in Ethiopia.

All these issues provide conditions for a war over water. Washington, Egypt’s largest donor, has significant leverage to de-escalate tensions and mediate between the haves and have-nots. After all, Washington supports both Egypt and Ethiopia lavishly and militarily. It needs to demand that all sides stand down.

China’s Identity Crises looms in the Rank and File Party Members

Where does Capitalism begin and Socialism and the party end… or where is the overlap. One beast many heads….

whereas many urbanites devour Chinese editions of Western magazines likeCosmopolitan, GQ, and Vogue, some officials still peruse weightier titles. In December a dozen Communist Party officials gathered in the eastern city of Hangzhou to celebrate the first anniversary of an alluring journal, Party Construction in Non-State-Owned Enterprises. In its inaugural year, said one of them, the magazine had “struck a beautiful pose”. The journal in question, as its title suggests, is engaging with the tricky issue of how the Communist Party can maintain influence within a growing private sector.

The subject exposes some of the deepest contradictions that now lie at the heart of Chinese society. How can the party maintain control over a place that, in ideological terms, is no longer communist? The closure in the 1990s of vast numbers of state-owned enterprises shattered the party’s grassroots base. Over the past decade a priority of the party’s secretive Organisation Department (it handles personnel issues for the 80m-strong party, yet has no listed telephone number) has been to form party cells in private businesses, or “new economic organisations” as the official literature calls them. In 1999 only 3% of private businesses had party cells. Now the national figure is nearly 13%. Coastal Zhejiang province claims all private firms with more than 80 employees have a branch.

As party officials see it, setting up branches in the private sector is about more than just proving that a once-revolutionary party is still in touch with the masses. At a time of rapid social change and outbreaks of unrest, officials hope the new party branches will reinforce stability and keep the party abreast of potential trouble. Some bosses of private firms encourage the formation of cells, in which at least three party members are required. They do so in order to curry favour with local officialdom. But others have misgivings. They worry that the “red-collar” workers, as party-member employees are sometimes called, might interfere in the running of the company.

In state firms, party committees once controlled workers’ lives, monitoring everything from their ideological rectitude to their reproductive cycle. Now the party appears less clear about exactly what the cells should be doing, though it often tries to present them as exemplars of do-gooding in a boy-scout vein.

Xinhua, the state news agency, reported without irony last July that Communist Party branches in foreign-invested firms in Shanghai had acted as a “red impetus” to growth in the wake of the global financial crisis of 2008. It said one such branch in a British marine-equipment company wrote to the firm’s headquarters in London suggesting that the company take advantage of strong local demand by moving more of its operations from Britain to China. On receiving this suggestion, “light filled the eyes” of the top British management, and the firm carried out the party’s plan.

In practice, party cells are most unlikely to be debating ideology with company management. Even within the party, few people believe in Marxism any longer. The tension between an attractive private-sector career and allegiance to the Communist Party is always there for the new breed of party members: 20-somethings who tote iPhones and tweet furiously. Many of them joined the party in the first place only because they were top of their college class and they saw it as a way to earn a lot more money.

In some parts of the country, the government levies a tax, usually 0.5% of payroll, to pay for private firms’ party activities. Few openly complain, but some resist the party’s embrace. Non-governmental organisations—known in party-speak as “new social organisations”—have proved particularly difficult to penetrate. The party, fearful that some might evolve into opposition groups, tries to keep them small. But in December a report published by a government think-tank warned that “party leadership” over NGOs needed to be strengthened. Otherwise, the report warned, they might become tools of “hostile foreign forces”.

In a crisis, the party expects its grassroots cells to help dissuade people from staging public protests and to feed information to the authorities about possible unrest. In the far-western region of Xinjiang, where the authorities are on high alert against separatist unrest among Muslims, at least some party cells in private firms are expected to report on potential troublemakers. Last year the authorities in Jimsar county selected 39 party members from private firms to act as gatherers of public opinion and intelligence on “the enemy situation”. A local party report in August said nine pieces of “valuable information” had been collected this way. Clearly some red-collar workers are still putting the party first.

Dated Case Study on the Nile River Water Conflict

 Case Background

1. Abstract

The Nile river is the main source of water for the nine nations which make up the Nile basin. As is, the water provided by the river is barely enough to satisfy the enormous water demands of the region. By the year 2000, it is expected that at least six of the nine nations which share the Nile’s water will experience acute water stress (Ohlsson, 50). Access to the Nile’s waters has already been defined as a vital national priority by countries such as Egypt and Sudan. It is an issue over which the two nation’s have professed themselves willing to got to war over. Current tensions between Egypt and Sudan, its neighbor to the south, are merely a continuation of a two thousand year-old struggle over who will control the regions scarce water resources. As more of the nations in the Nile valley develop their economies, the need for water in the region will increase. And while the demand for resources increases, the supply is likely to remain unchanged, drastically increasing the chances for armed conflict over the waters of the Nile river. In addition, development projects that are aimed at increasing the flow of the Nile remain endangered by tension and instability in the region, as well as by environmental and financial concerns.

2. Description

The Nile probably gets its name form “nahal” which means “river valley” in Semitic, later “neilos” in Greek and “nilus” in Latin. It is the world’s longest river, stretching 4,187 miles from its source in the mountains of Burundi. The source of the river is so far from the Mediterranean that it took man until the middle of the 20th century to find it (Adv, 1). For centuries, the most accurate source of knowledge on the location of this source were the writings of Herodotus (Greek Historian, 460 BC), who wrote that the Nile’s source was a deep spring between two tall mountains. When Nero ordered his centurions to follow the flow of the river in order to find its source, they got no further than the impenetrable valley of the Sudd. John Henning Speke thought that he had finally found the source when he reached Lake Victoria in 1862, only to be later proven wrong and forgotten by history. In 1937, the source was finally stumbled upon by the little known German explorer Bruckhart Waldekker (Collins, 4-8). 

The Nile is formed by three tributaries, the Blue Nile, the White Nile, and the Atbara. The White Nile rises from its source in Burundi, passes through Lake Victoria, and flows into southern Sudan. There, near the capital city of Khartoum, the White Nile meets up with the Blue Nile which has its source in the Ethiopian highlands, near Lake Tana. Over 53% of the Nile’s waters come from the Blue Nile. The two flow together to just north of Khartoum, where they are joined by the waters of the Atbara, whose source is also located in the Ethiopian highlands (Ody, 1).

The river then flows north through Lake Nasser, the second largest man-made lake in the world, and the Aswan Dam before splitting into two major distributaries just north of Cairo. The two distributaries are the Rosetta branch to the west and the Darneita to the east. In ancient times, the number of distributaries was much greater, but slow water flow, human interference, and the accumulation of silt had led to the disappearance of all the other major distributaries. This has effectively led to the desertification of large stretches of Egyptian land.(Ody, 1)

The Conflict

In ancient Egypt, the Nile, and its delta, were worshiped as a god. The god Hapi, who came in the shape of a frog, represented the Nile delta. Several times throughout history, Egyptians have tried to unify the Nile valley under their rule by conquering the Sudan. The lands to the south of them that bordered the river were in constant danger. The Sudan was invaded during the reign of Queen Sheba, during the Roman rule of Nero, and countless other times. This is because the Egyptians have always feared that one day the Nile’s waters would no longer reach their country. People believed, that since the flow of the Nile was so unpredictable, something had to have been affecting it. A legend says that during one particularly bad famine in Egypt, the Egyptian Sultan sent his ambassadors to the king of Ethiopia in order to plead with him not the obstruct the waters. A Scottish traveler in the 18th century recounted a story that the King of Ethiopia had sent a letter to the pasha in 1704 threatening to cut off the water. Given this fear it is quite natural that the Nile countries desire to secure their water supplies.(Collins, 3-4)

The modern history of the Nile conflict began with the 20th century. The English were quick to realize the importance the river would have for their colonies. Over the centuries, in the swamps of the Sudd, strong winds and the force of the river had created natural dams made up of plants and soil, similar to those made by beavers. These dams had made all navigation up the Nile past a certain point completely impossible. Soon after Sudan was reconquered in 1898, the English began to free the Nile of the vegetation which was obstructing the passage of ships. By the time enough blockages had been removed to clear a path through the Sudd in 1904, the English had already begun drawing up massive alternative drainage plans in order to ameliorate the flow of the Nile. However, the British did not control the Ethiopian portions of the Nile, from which over 80% of the Nile’s waters come. Therefore, they had to sign an agreement with the Ethiopians in 1902 in order to assure themselves that the Nile would not be interfered with. They also had to assert a significant amount of pressure on the Italians and the French so that they would not interfere with the french dominance of the Nile basin (Collins, 67-100). This approach worked well with the Italians, but a little less well with the French. The Egyptians caused the most problems for the English as planned developments on the Nile became a disputed matter between the two governments. In 1929, Great Britain sponsored the Nile Water Agreement, which regulated the flow of the Nile and apportioned it use (Glassman, 150).

After World War II, the British government commissioned a complete hydrological study to be made of the Nile Basin as a whole. Unfortunately, the study was not able to include the Ethiopian portions of the Nile due to political problems. The rest of the Nile valley was included. The study was finally released in 1958 as the Report on the Nile Valley Plan. It was the culmination of 50 years of study. The report suggested various ways to increase the amount of water which reached Egypt. The most important of these suggestions was the construction of the Jonglei canal, which would divert the flow of the Nile in southern Sudan (in the Sudd) to avoid the enormous evaporation losses which occur there. The report, however, treated the entire Nile Basin as a single unity, which was unacceptable to the newly independent African states, especially since it was published just two years after the Suez Canal incident (Ohlsson, 31-34)

Furthermore, the Egyptians had already planned a major construction which would significantly improve the flow of the Nile in their territories. They had decided to build the High Aswan Dam in order to control the yearly floods of the Nile and in order to harvest the hydroelectric power of the river. However, this project was to have major repercussions on the lands of northern Sudan. Building this dam would mean that whole sections of northern Sudan would be inundated by what was to be Lake Nasser. There were also severe environmental concerns as to how the dam would change life on the banks of the Nile. To deal with this problem, the two nation signed an agreement on the “full utilization of the Nile waters” in 1959. This agreement stipulated that Sudan’s yearly water allotment would rise from the 4 billion cubic meters stipulated in the 1929 agreement to 18.5 billion cubic meters. The Sudan would also be allowed to undertake a series of Nile development projects, such as the Rosieres Dam and the Jonglei Canal. In exchange, Egypt would be allowed to build a huge dam near the Sudanese border which would regulate the flow of the river into Egypt and provide water during droughts. The result of this dam, however, would be the inundation of over 6,500 square kilometers of land. The treaty also formed a joint committee which would be in charge of supervising and directing all development projects which affected the flow of the river (Ohlosson, 35-40).

This agreement was only bilateral and did no include any of the other riparian countries of the Nile despite the fact that it portioned out all of the Nile’s water. Ethiopia, from which 80% of the water comes from was not even consulted and no water was even allotted for future usage by any upstream country except Sudan. All of the Nile’s average water flow is divided between the two most downstream countries. Nevertheless, this 1959 agreement is still the most comprehensive agreement ever signed on the use of the Nile’s waters.

Apparently, the residents of northern Sudan and southern Egypt were not consulted on the treaty either. In the 1960′s, over 100,000 Nubians lost their homes due to development projects stemming from that treaty.(Pearce, 29) Some of these same people had to be moved again in the 1990′s in order to build another dam, this time near the border with Ethiopia. The government of Sudan says that these people will be compensated, but the overwhelming feeling amongst the villagers is that they will not be. One villager claimed “We were not informed when the government decided… to build a dam in our area. They just sent tractors with a large number of strangers. These strangers were surveyors.” (Nhail, 1-3). 

Construction of the High Dam at Aswan began in 1959 — as soon the agreement with Sudan was signed. When it was finally finished in 1970, the dam was more than 17 times the volume of the Great Pyramid at El Giza. It now stretches 4 kilometres across the river’s path, rises over 100 meters for its base, and is almost a kilometer thick. Behind it, the waters have formed Lake Nasser, which is 600 kilometers long and 50 kilometers wide in some places. This reservoir is the second largest man-made lake in the world. The Aswan Dam is arguably one of the great architectural accomplishments of the 20th century. To build it, Egypt had to obtain outside funding, because it was to cost over one billion dollars to build. Rebuffed by the United States and the World Bank, Nasser had to turn to the Soviet Union, which was only too glad to help (Pearce, 28-29)

In the 1970′s Sudan and Egypt began the joint construction of the Jonglei Canal, which would have increased the flow of the Nile waters by diverting the Nile away from an area where a great deal of water is lost to evaporation. Unfortunately, construction was stopped in 1983 one hundred kilometers short of completion due to “rebel action”. The civil war in the Sudan has taken its toll on the development project, which was funded in large part by the World Bank. The failure of this project was a great failure for both the Sudanese government and the World Bank. Over 100 million dollars were spent on the Jonglei Canal project (Pearce, 31).

The most complete agreement on the use of the Nile waters remains the 1959 agreement between Sudan and Egypt. This agreement, however, did not put an end to the conflict over the rights to the Nile waters. A strong tension still exists between the Nile basin countries whenever a new Nile development project is proposed. The water needs of all of these countries are barely being met now and will probably not be met in the future, especially in view of the development plans in Ethiopia and Sudan. In addition, Egypt, as the country most in danger of losing access to the Nile waters by development projects in other countries, remains willing and able to intervene militarily in order to keep the status quo.

In August 1994, it was reported that Egypt had planned and subsequently canceled an air raid on Khartoum, in Sudan, where a dam is being built. This is in addition to the tensions between Sudan and Egypt over the attempted assassination of President Muhbarach in the summer of 1995. Border clashes became common between the two neighbors and conflict seemed probable. The tensions have now seemed to subside, but there is no telling when and if they will resume.(El-Kohdary, 1-3)

Egypt has also acted against Ethiopian development on the Nile in the past. In the early 1990′s, it is believed that Egypt blocked an African Development Bank loan to Ethiopia for a project which might have reduced the flow of the Nile’s water into Egypt. This behavior is not unwarranted given predictions by USAID that Egypt will experience a 16 to 30 percent water deficit by the end of the century. This will probably be further increase by further Egyptian development projects planned for the Nile. (El-Kohdary, 1-3)

In 1997, Egypt is to begin the construction of a new valley of the Nile, but creating a new, self-sustaining, river which would flow through the Western Desert. To do this they would cut a canal, called the New Valley Canal, which would connect a series of oases to one another. This would allow Egypt to settle a large number of people far from the Nile; something which has proven impossible up until now. Over 62 million people live on just 4% Egypt’s land. This project would allow Egyptians to take advantage of the good soil quality which is prevalent throughout the country. However, the estimated cost of the project is 2 billion dollars, which Egypt does not have. However, the real problem remains that of where Egypt will find the water to fill the canal and to keep it flowing as it already its full allotment of the Nile’s water (Daniszewski, A1, A16)

3. Duration: In Progress (1904 to now)

4. Location

Continent: Mideast

Region: Mideast Africa

Country: Egypt

5. Actors: Egypt, Sudan, Ethiopia, Tanzania, Burundi, Zaire, Rwanda, Uganda, and Kenya

The main actors, for the moment, are Sudan, Egypt and Ethiopia. However, as populations continue to grow and water needs increase in the region, all of the countries in the Nile Basin will be affected.

II. Environment Aspects

6. Type of Environmental Problem: WATER

In Northeastern Africa, water is a scarce commodity. Yet it is also a vital one, as it is needed for irrigated agriculture, industrial expansion, and human consumption, In the Nile basin, the river remains the only reliable source for renewable water supplies. Underground water supplies, or aquifers, an only ba harvested once and will eventually run out. This place the Nile basin countries in a position of reliance on the waters of the Nile. (Postel, 1-23) 

The waters, however, do not flow in sufficient quantities to satisfy the future water requirements of all these nations. The nations are barely satisfied by what they now receive and it is foreseen that their needs will increase as populations rise, industrial growth takes place, and more land is irrigated with Nile water for agricultural use in nations besides Egypt. Egypt’s cropland is already 100% irrigated, fostering an amazing reliance on the flow of the Nile. It is estimated that Ethiopia and Sudan could achieve high levels of food production if they chose to irrigate as much land as possible.

Water stress is present when nations find themselves with less than 2000 cubic meters per person of renewable water supplies. By the end of the century at least five nations in the Nile basin expect themselves to be suffering from water stress. This figure does not include the water that would be needed to feed the citizens of the Nile countries. It is unlikely that the flow of water in the Nile could be increased without the completion of the Jonglei Canal, which, given Sudan’s internal problems, seems highly unlikely in the near future. (Ohlosson, 178-194)

In addition, the environmental situation is further complicated by the problems surrounding the Aswan Dam. Even though the environmental damage to Egypt’s environment caused by the Dam has been much less than originally predicted, it is still quite significant. One major problem is that the silt from the river which for millennia fertilized Egypt’s cropland is no longer being allowed to flow down the river. This means that more chemical fertilizers are being used. It is also causing erosion along the banks of the Nile, which were previously replenished by the silt carried down the river. Much of the Nile delta is now being swept into the Mediterranean. In fact, if barriers near the Nile’s outlet continue to erode, much of low lying Egypt could find itself in the sea, as the sea slowly advances. The Nile is also bringing more salt to the fields of Egypt because of the increased evaporation which takes place in Lake Nasser. (Pearce, 32)

This evaporation also presents a severe problem. Over 2 metres of water evaporate from the surface of Lake Nasser every year. this is because or its location in the middle of the desert. For this reason many opposed the construction of a dam in that location. A similar dam in the highlands of Sudan or Ethiopia would lose much less water. However, if the dam were located elsewhere, Egypt would lose out on the hydroelectric power the dam provides (roughly one third of Egypt’s electricity) (Pearce, 31-32).

7. Type of Habitat: DRY

8. Act and Harm Sites:

Act Site       Harm Site           Example

Egypt          Sudan               Plans for diversion of the Nile

III. Conflict Aspects

9. Type of Conflict: INTERSTATE

Although war has not yet broken out between the nations involved, some believe growing demands may eventually lead to armed conflict. Signs of this trend are already surfacing. There have been numerous skirmishes between Sudanese and Egyptian troops as well as a number of statements made. The nations of the Nile basin have also classified access to the waters of the Nile river as a vital national interest over which they would be willing to go to war.

For now, there has been enough water to satisfy most of the nations’ needs, but in the near future those resources which have been left top them will cease to suffice.

10. Level of Conflict: THREAT

11. Fatality Level of Dispute: >10

III. Environment and Conflict Overlap

12. Environment-Conflict Link and Dynamics: DIRECT

The dynamics are the result of feedback between water resources and development needs, especially water. The internationalization of the issue adds another element.

Causal Diagram

              /--------------------(+)----------------\

              |                     +                 |

           ___V_              _____________          _|__________ 

         /     \ ---(-)->   /             \ -(+)-> /            \ 

        [ Dev't ]     -    [  Water Supply ]  -   [ Agriculture  ] 

         \_____/   <-(+)----\_____________/ <-(-)- \____________/ 

             \                 /\       |               /\        

              \----------------|---(+)--|---------------/

                               |        |

                              (-)   -  (-)

                               |        |

                               |        V

                             ______________

                            /              \

                           [  Int'l Tension ]

                            \______________/

13. Level of Strategic Interest: REGION

14. Outcome of Dispute: YIELD

IV. Related Information and Sources

15. Related ICE and TED Cases

TED Cases
EGYPT Case
ATATURK Case
DANUBE Case
MARSH Case
DEADSEA Case

ICE Cases
BLUENILE Case
LITANI Case
CAUVERY Case
JORDAN River Case

16. Relevant Websites and Literature

1. Ohlosson, Lief. Hydropolitics: Conflict Over Water as a Developmental Constraint. Zed Books; New Jersey, 1995
2. Bol Nhail. “Sudan-Environment: Eviction Threat Over New Dam”, Interpress Service, Feb. 28, 1995 as quoted by
3. El-Kodary, Nabil.”Sudan-Environment: Eviction Threat Over New Dam: Response” March 3, 1995 as quoted byhttp://Sun.nlib.ee/other/infoterra/1995/03/meg00036.html
4. Glassman, Johnathon, “Nile Waters” Journal of African History. Vol 33, iss 1, pg. 149-150
5. Postel, Sandra Last Oasis: facing water scarcity. WW Norton and Co., NY, 1992
6. Collins, Robert O. The Waters of the Nile. Clarendon Press, Oxford: 1990
7. Abu-Zeid and Saad “High Dam, 25 Years On” UNESCO Courrier. May 1993, p.37
8. Daniszewski, John. ” Egypt Plans a New Valley to Rival the Nile” L.A. Times, Nov. 18, 1996, A1
9. Pearce, Fred. “High and Dry in Aswan.” New Scientist. May 7, 1994, pg 28-32

10. Relevent Web Sites

Odyssey Down the Nile
Egypt Page 

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China NET Exports Fell in 2011

China’s Currency reserves are no longer raising and the ATA points sometimes change faster than debating points. It is conventional wisdom that China’s export-led growth squeezes consumers at home and competitors abroad, even as it adds inexorably to the country’s huge foreign-exchange reserves. But figures released this month complicate these arguments.

China still runs a sizeable trade surplus. But its net exports fell in 2011 (in absolute terms) for only the third time since 2000, subtracting 0.5 percentage points from its growth. Thanks to home-grown spending, China’s economy still managed to expand by 9.2% in 2011, remaining surprisingly strong even in the fourth quarter. This growth owed an unusual amount to consumption (both public and private), which contributed over half for the first time since 2001. As a consequence, the share of consumption in China’s GDP edged up in 2011 after falling for ten years in a row.

The mainstay of China’s growth remains investment, on which its economy remains worryingly dependent. Indeed, when China’s critics are not bashing it for overexporting, they bash it for overinvestment in property. Its housing boom is, however, slowing markedly. China this week reported that the price of new homes fell in 52 out of 70 cities across the country in December, compared with the month before. Households are struggling to obtain mortgages; developers are finding it almost impossible to obtain a loan. The drying up of foreign funds is particularly dramatic, points out North Square Blue Oak, a research firm based in London and Beijing. Foreign capital fell by 65% in December, compared with a year earlier.

The flight of foreigners from property partly explains another unusual twist in the China story. Its foreign-exchange reserves fell in the fourth quarter for the first time since the height of the Asian financial crisis in 1998. The drop was small, from $3.2 trillion to $3.18 trillion, but also a little mysterious. China still exports more than it imports, and attracts more foreign direct investment than it undertakes. These two sources of foreign exchange must, then, have been offset by an unidentified drain.

The worry is that China’s capital controls have sprung a leak. “Hot money”, attracted by the country’s growth, may be flowing out as the property market falters. Some even speculate that China’s rich may begin to smuggle their new-found wealth out of the country en masse.

These fears are overblown, for now. Some of the drop probably reflects a change in the value of China’s euro holdings. Some does represent the departure of short-term money, but an ebb and flow of hot money is not unusual. Moreover, some kinds of hot money are more scalding than others, says Stephen Green of Standard Chartered. At one end of the thermometer, an exporter might delay the conversion of his legitimate foreign-exchange earnings. In other, warmer cases, an importer might illegally overstate the size of his purchases, so as to remit more money out of the country. Capitalists eager to take their money out also have other cards to play. Mr Green estimates that last year about $185 billion might have passed from mainland China through the VIP rooms of Macau’s casinos.

Victor Shih of Northwestern University reckons that China’s richest 1% hold $2 trillion-5 trillion in liquid wealth and property. If they were ever to smuggle that money out, the outflow would dent even China’s reserves. That would be a disaster for China’s economic management, putting heavy downward pressure on the yuan. At least China’s critics could no longer trot out another familiar accusation—that it undervalues the exchange rate.

THE GREAT AMERICAN RIFT

THE GREAT AMERICAN RIFT

3 years ago I said that as far as our economy was concerned it did not matter who won the presidential race because we were in for very difficult times… I just never realized myself HOW difficult those times would become.

Across the country Americans are still in shock that they are so much worse off than they were in 2006… and most do not see it getting better although the all hope it will… but in reality I see nothing to indicate it will get better… OHH yes I see SOME economic reports that show this thing or that thing  is getting better…  only to find out  later that  it as not as great as reported originally… This makes most of us think that we cannot trust the economic data being provided anymore.

Let’s take the rate of inflation… for most of us that means the CPI or the Consumer Price index… most of us see greater inflation in our household budgets than what the government reports… this is not new… in fact the government over the past 30 years or so has CHANGED how this inflation figure is calculated 19 times.. . Yes, you read that correctly, that is not a typo…..  NINETEEN times, each and every time decreasing the actual inflation that a normal household really experiences. Don’t believe me… look at your utility bills that last few years… or see how much your food Costs are… and the size of the package your food is in… it may not appear smaller… but if you look at the actual weight on the package it is… you are paying the same or MORE for less.

Gasoline, food, utilities insurances (Health and auto and homeowners) and much more that are most of the actual budget of a home are sky high and wages are not up… and taxes have risen in some areas like the so called penny tax School taxes in many places are HIGHER than property taxes… and we are not getting the bag for our buck there… but I will save education issues for a later post. Even my cable bill with Comcast or the new name X-finity is outrageously high… and like most Americans I am fed up, frustrated and feel helpless when my elected officials are getting good paychecks and NOT helping the people who they were elected to serve… Politics which was always a dirty word has become so bad that I fear some people will cause physical harm to me if I bring it up in a conversation….

OK so I hope most of us can agree with the into here… now for what I see as the GREAT AMERIAN RIFT.

No surprise that Politics is to blame for where we are… the only difference we may have is WHO or Which Party you feel is responsible… and to tell you the truth I don’t care which side you’re on… it is bad. Politics used to be negotiating from an ideological viewpoint the ways in which to make this country great and keep it great… NOW however I see it as just an argument on Ideology… and the polarization of this country has never been so great since the Civil War that tore this country apart and took decades to recover economically and more than a entry to mostly heal the social divide (which unfortunately still exists in areas of racism, homophobia, religion, women’s rights,  and the Right to Life movement, etc) we are a nation divided to the point that if we could  see one state on one side of the issue I would not be surprised if a succession movement evolved again. But geographical divides will never be tolerated… and so, because of politicians, we find ourselves involved and on the brink of another civil war in this country… the GREAT RIFT will cause a great divide that may never heal under our current form of government.

The squeaky wheel gets the grease… or so they say… but Politics has become a situation of such Ultra extremists in both parties controlling the entire party and hence setting an agenda that is not in keeping with the actual real beliefs of those in that party…. And WORSE… not being honest loyal Americans FIRST.  IF they were good Americans I believe they would want and FIGHT for is best for the PEOPLE of America….  It is PEOPLE who make America great… and sadly we are losing that greatness because of cowardly politicians. They bow to those motivated to vote… so I say with a loud voice the GREATEST THREAT TO THE AMERICAN WAY IS VOTER APPATHY

Children of parents who constantly fight and call each other names and LIE never fare well in life Citizens of a country whose politicians are so intransient in their positions suffer from that as well…  Unless your party gets 80% of a vote where at least 80 percent of the registered voters voted… THEN YOU DO NOT HAVE A MANDATE FROM THE AMERICAN PUBLIC…you simply won an election… so get over your self-grandioseing and get on with helping America… you incessant BS is aggravating to most Americans to say the least.

Someone needs to come out and speak for the SILENT MAJORITY and the loud mouths and liars are in control lately… I believe 80 percent of Americans are not happy with either party the way they are behaving… and this polarization of America MUST STOP. Am I angry?? DAMN right I am.

I am a lifelong Republican… and quite frankly I am pissed off at my party… and the Tea Party in particular … for what they are doing to America today. BACHMAN… oh for crying out loud… Spineless politicians who will not say the truth about her obvious ignorance in the things she says… WHY… “OH well… She is a Republican and we can’t call her out on false statements!”… Most of America knows what you our LEADERS are afraid to say and would welcome honesty and straight talk for a change… at least I know I would… you lose my respect every day when you allow this type of behavior in OUR party…

I voted for Obama… why?? Because I tough he was better then what you put up for President… I like John McCain… but Sarah Palin… come on guys did you intentionally want to lose??

Taxes.. Can any republican say with all honesty that it is right for a Hedge Fund manager to make millions… sometimes hundreds of millions and only pay 15% taxes when his staff pays 30-40 percent in taxes.  And don’t give me the BS that he creates jobs with lower taxes… he creates NOTHING but profits a leach on society…. Shaving pennies from hundreds of trades a day in rapid computer generated trades… the Stock market is no longer a free and fair market with these types of shenanigans going on.

I would LOVE less regulation from Government… but greed and corruption exists and Corporations cannot be trusted to do what is right… they incentivized by one thing and one thing only profits… and who can blame them when you have corrupted the system so much as to let them fail the people of this country and demonize anyone who dares speaks up for the human condition in this country… instead encourage them to do what is right with financial incentives if need be… and then and only then will I support a reduction on regulations.. I said it above and I will repeat it again now: PEOPLE make America Great.. NOT businesses or corporations… we have the most creative and innovative collection of minds in this world… yet it appears they get sucked into how to maximize profit and to disregard the human condition.  I cannot begin to say how ashamed I am sometimes for being Republican… but yet I will not become a Democrat… for they are besieged with equally distasteful ideas… and will drive their party into the ground unless they learn to compromise and negotiate for the benefit of the American public … even if it is at the expense of some of their pet projects.  Simply put.. BOTH of your parties are more damaging to AMERICA then IRAN… because you have lost your souls for your ideology to the detriment of this country

China: China is NOT our friend,, and dependence on them for the benefit of business has NOT helped America.. Ohh yes it may have reduced some costs to the American Public… but in reality we lost more in jobs and wages and disposable income and reduced our GDP by doing so. And WHAT DID WE GAIN.. Corporate profits at the expense of our country… the same for NAFTA and other free trade agreements.. And now in our current situation we have no ability to create jobs for our unemployed as there are fewer factories to employ the people we need to give jobs to. WTO is basically a fare to the Hourly wage earner in the industrialized world.

Government is NOT the same as Households or business… and it not the same at FEDERAL level as it is on the state level… IN Economic down times like these GOVERNMENT NEEDS TO SPEND MORE TO HELP CREAT JOBS AND BRING BACK A TAX BASE OF EMPLOYED PEOPLE (Do I have to remind you of Roosevelt’s initiatives that helped bring us out of the Great depression) … Cutting Corporate taxes does NOT create jobs as you have told people or by extending the tax cuts last time around you have not seen a real increase in hiring… and why is that.. Well Mr. Politician… our economy is more than 70% consumer driven: no jobs, no spending… no spending then no company wants to invest in plant, equipment or hiring… so where do the jobs come from…ONE word… INFRASTRUCTURE  as these projects are critical in America today when our infrastructure is crumbling and jobs are just not available anywhere else… and they have to be paid for by our government through HIGHER taxes on those that can afford and on corporations…

Why is it so hard for you to understand BASIC economics and tell the truth instead of pandering to a minority base of zealots who will destroy this country?

SO… what is the RIFT we are facing in America today? It is Class Warfare… based in steep and entrenched Ideology that is not often based in reality or honesty. It is the division in America not just between political parties but in the haves and have-nots… It is politically driven and fueled by greed and fear and is clouded by lies and distortions of truths… it is the worst of all types of warfare.. it is the kind that fuels revolutions in other countries… and destroys nations… it is  the warning bell to the fall of America as   great nation and we will not even know until we have fallen so low as  to not be able to pull ourselves up.  And it seems to be savored not only by our enemies and countries jealous of our success…. But also by the Media who likes conflict and sound bites and lacks the same courage to set things straight and to further polarize this country based on ideology.

So as this election season now seems to be starting and we have 15more months of this slander and false statement season and cowardly politicians on both side.. Remember this… WE are ultimately responsible for what is about to happen.. WE the SILENT MAJORITY… who has failed to speak up… who accepts  the media on face value… who blindly believes their parties rhetoric… and then the PEOPLE who FAIL to VOTE… as I said above the GREATEST threat to America today is Apathy.. a failure to vote and to make your voice head at the voting booths.. WE are responsible for the future of this Country….

Who among you will raise to the occasion and do the simplest thing to help it by voting… and who among you will just lay down and accept whatever happens… From the Primaries where you will select your candidate (*where I fear the most for my party in getting a BAD candidate again because the radicals get their supports to the polls and the majority of republicans just sit back and watch and then find out they have a  fool for a candidate)… to the General election where you should vote for the BEST person for President as opposed to your Party’s CANDIDATE FOR PRESIDENT…. WILL YOU STAND UP FOR AMERICA??

A final note to my Republican Party.. If you give me someone like Bachman as  our candidate I will NOT vote for her… but I will vote. Republican or not I am an American first… and that woman has no business even being in Congress let alone holding the office of President of the United States. Until you  my fellow republicans find your backbone and speak truth and care for the AMERICAN people I will not be able to vote Republican .

Greetings Ms Shelly, Whoever and wherever you are.

Ravings of a Radical Republican

<em>This post is so important to me I am putting on at least 2 of my blogs. it is a work in-progress and NOT complete... my emotions and passions are so great on this that I  want to jump into the computer and bad some gigabytes into bits and bytes...  I can not reasonably finish my diatribe   at this time.. but this should give a good indication as to  what I am going to say</em>

<em>This post is so important to me I am putting on at least 2 of my blogs. it is a work in-progress and NOT complete… my emotions and passions are so great on this that I want to jump into the computer and bad some gigabytes into bits and bytes… I can not reasonably finish my diatribe at this time.. but this should give a good indication as to what I am going to say</em>

I have been a Republican my entire life. I have disagreed with my party on things like NAFTA and other trade related issues because I believed it was not good for the COUNTRY and would hurt employment.. which I think I an safely say it has. AS part of the global economy we have catered only to big business and said what we are doing was good for the consumer… OK we had lower prices because other countries could produce cheaper then we could.. but that has left this country vulnerable to things like a housing bubble and financial shenanigans that have brought this country to its knees.

I could be labeled a liberal Republican.. but more like a ultra conservative Democrat…. I guess because I believe in fairness and the human condition too much for my fellow republicans.. and that this country is not a conglomeration of BUSINESS.. but in fact a nation of PEOPLE. This COuntry is being driven into a civil war of the classes and the only thing we talk about is political positioningI am shoked that many of my fellow Republicans an be so bllind to the social problems faing this country. and I am surprised that many of the politiccians and republican pundents have not had their toungs turn black and fall out of their mouths for the lies they insist on telling to American people
to wit: 2 trillion dollars held by corportions ar not being spent because of concern over taxes.. that is utter BS… Theyy say cutting taxes will incentivize people to invest and hire more people.. THAT IS BS

over 70 percent of the US Economy is CONSUMER spending.. but if the unemployed/underemployed now at 16 PLUS perent ar not spending there is no demand for goods and services hence no company will hire even if you cut the tax rate to zero for everybody.

What this country needs more than anything right now is JOBS.. and historically in economic times like these those jobs are created by the FEDERAL government (not state Governments as they have a different role) Federal government is NOT like a household or a business… it does not operate under the same principals..

but with the federal debt soo high how an the federal government generate jobs if it is already broke.. the answer is heresy to Republicans .. well SOME (the most vocal) Republicans. we NEED MORE revenues!!

THE ONE PLACE THE vast MAJORITY OF Americans AGREE ON IS THAT A HEDGE FUND MANAGER WHO DOES nothing TO CREATE JOBS OR BUILD COMPANIES BUT MAKES MONEY solely ON TRADING IS not ENTITLED TO BE TAXED AT 15% WHILE MAKING HUNDREDS OF MILLIONS OF DOLLARS. while the staff employees are paying 30-40 percent in taxes.

We need to differentiate between types of Capital Gains .. ONE year investment gets lower taxes.. and short term investments pay the most taxes.. Short term investment for MOST things produces nothing (one notable exception being housing flippers who refurbish the houses to resell.)

The stock market is soo volatile BECAUSE of these hedge fund managers flipping stocks all day long and on trading platform not available to the average individual investor. UNLESS you are buying an IPO you are not helping the company whose stock you buy and sell.. you are helping yourself or the person you are buying from.. you are contributing NOTHING to the greater society. Hene you should have no tax breaks or special rewards for doing that.

Had the recent Washington Fiscal Fiasco and BS over what should have been a straight up clean bill on the debt ceiling (we are only one of 2 countries in the WORLD hat have a debt ceiling ) but had these “supposed negotiations” included REVENUES and the JOB creation by investing in the Infrastructure projects we so desperately need in this country I have no doubt that S&P would NEVER HAVE DOWNGRADED THE CREDIT Worthiness if the United States. I BLAME the TEA Party for our problems today.. and fault the Republicans for allowing a minority to shove BS down our throats and for not having the courage to do what was RIGHT.. instead my fellow Republicans catered to these radicals and did what was politically convient for them. I have no respect for my Republican Politicians who subjugated themselves to such antics and who failed the UNITED STATES and the Amerian People they are sworn to represent and defend.. and for what benefit … for political advantage? …and at what cost the least of which is your soul . .

Sorry Fellow Republicans but it is the United States GOVERNMENT and ONLY the United States Government that can start to truly bring this economic boondoggle to and end and start a real and true path to prosperity.. although I caution each and every reader.. we cannot go back to the 4-5 6 or 7 years or even longer.. those days are over UNLESS we do ONE more thing… and that will have to be a separate post… but that other thing will both help us, the housing market (BUT NOT NECESSARILY NEW HOME CONSTRUCTION) AND WILL FIX OUR DEBT PROBLEM FOR A TIME BEING WHILE WE GET REVENUES TO SUPPORT OUR OBLIGATIONS. One thing is for sure however.. what I propose is nothing less than heresy and against most Republican ideal solution

I have been a Republican my entire life. I have disagreed with my party on things like NAFTA and other trade related issues because I believed it was not good for the COUNTRY and would hurt employment.. which I think I an safely say it has. AS part of the global economy we have catered only to big business and said what we are doing was good for the consumer... OK we had lower prices because other countries could produce cheaper then we could.. but that has left this country vulnerable to things like a housing bubble and  financial shenanigans that have brought this country to its knees.

I could be labeled a liberal Republican.. but more like a ultra conservative Democrat.... I guess because I believe in fairness and the human condition too much for my fellow republicans.. and that this country is not a conglomeration of BUSINESS.. but in fact a nation of PEOPLE.  This COuntry is being driven into a civil war of the classes and  the only thing we talk about is political positioning

I am shoked that many of my fellow Republicans an be so bllind to the social problems faing this country. and  I am surprised that many of the politiccians  and republican pundents  have not had their toungs turn black and fall out of their mouths for the lies they insist on telling to American people

to wit: 2 trillion dollars held by corportions  ar not being spent because of concern over taxes.. that is utter BS... Theyy say cutting taxes will incentivize  people to invest and hire more people.. THAT IS BS

over 70 percent of the US Economy is CONSUMER spending.. but if the unemployed/underemployed  now at 16 PLUS perent ar not spending there is no demand for goods and services hence no company will hire even if you cut the tax rate to zero for everybody. 

What this country needs more than anything right now is JOBS.. and historically in economic times like these those jobs are created by the FEDERAL government (not state Governments as they have a different role) Federal government is NOT like a household or a business... it does not operate under the same principals.. 

but with the federal debt soo high how an the federal government  generate  jobs if it is already broke.. the answer is heresy to Republicans .. well SOME  (the most vocal) Republicans. we NEED MORE revenues!!

THE ONE PLACE THE vast MAJORITY OF Americans AGREE ON IS THAT A HEDGE FUND MANAGER WHO DOES nothing TO CREATE JOBS OR BUILD COMPANIES BUT MAKES MONEY solely ON TRADING IS not ENTITLED TO BE TAXED AT 15% WHILE MAKING HUNDREDS OF MILLIONS OF DOLLARS. while the staff employees are paying 30-40 percent in taxes.

We need to differentiate between  types of Capital Gains .. ONE year investment gets lower taxes.. and short term investments pay the most taxes.. Short term investment for MOST things produces nothing (one notable exception being housing flippers who refurbish the houses to resell.) 

The stock market is soo volatile BECAUSE of these hedge fund managers flipping stocks all day long and on trading platform not available to the average individual investor. UNLESS you are buying an IPO you are not helping the company whose stock you buy and sell.. you are helping yourself or the person you are buying from.. you are contributing NOTHING to the greater society. Hene you should have no tax breaks or special rewards for doing that. 

Had the recent Washington Fiscal Fiasco  and BS over what should have been a straight up clean bill on the debt ceiling (we are only one of 2 countries in the WORLD hat have a debt ceiling ) but had these "supposed negotiations" included REVENUES and the JOB creation  by investing in the Infrastructure projects we so desperately need in this country I have no doubt that S&P would NEVER HAVE DOWNGRADED THE CREDIT Worthiness if the United States.  I BLAME the TEA Party for our problems today.. and fault the Republicans for allowing a minority to shove BS down our throats and for not having the courage to do what  was RIGHT.. instead my fellow Republicans catered to these radicals and did what was politically convient  for them. I have no respect for my Republican   Politicians who subjugated themselves to such antics and who failed the UNITED STATES and the Amerian People they are sworn to represent and defend.. and for what benefit ... for political advantage? ...and at what cost the least of which is your soul  . . 

Sorry Fellow Republicans but it is the United States GOVERNMENT and ONLY the United States Government that can  start to truly bring this economic boondoggle  to and end and start a real and true path to prosperity.. although I caution each and every reader.. we cannot go back to the  4-5 6 or 7 years or even longer..  those days are over UNLESS we do ONE more thing... and that will have to be a separate post... but  that other thing will both help us, the housing market (BUT NOT NECESSARILY NEW HOME  CONSTRUCTION) AND WILL FIX OUR DEBT PROBLEM FOR A TIME BEING WHILE WE GET REVENUES TO SUPPORT OUR OBLIGATIONS.  One thing is for sure however.. what I propose is nothing less than heresy and against most Republican ideal solution

Special report: The “shorts” who popped a China bubble – Yahoo! News

Special report: The “shorts” who popped a China bubble – Yahoo! News.

China has engaged in economic warfare for many years now. Fraud in these companies should not be a surprise. Africa has been a prize for China in its economic policies and now Brazil is seeing such huge activity by China it is overwhelmed by them and will take years to see how China has hurt them more then helped them in growth.

This Article only touches the tip of the iceberg that is China.

Although I have been silent on economics and China the last 2 years I believe NOW is an appropriate time for me to bring more posts on where we are and what the USA in particular should do… and why it may never get done thus prolonging this economic boondoggle we are in.

Stay tuned for more in the near future.

2009 Economic Predictions by Craig Eisele

2009 Economic projections by Craig Eisele

Note: the following is MY opinion and how I see the economy… it should not be considered investment advice or factual as to the actual performance of the US and Global Economies in 2009.

If you do not want to hear bad news I strongly suggest you stop reading at this point and read a good fiction book….or watch Kudlow on CNBC who is more of a cheerleader then as realist…. Although a caution as to the rest of the CNBC team as they seem to realize more the current economic realities.

One of the greatest threats we face is Deflation during this recession… WHY?? Because the economic definition of a DEPRESSION is Recession accompanied by Deflation… BUT do not expect the government to say we are in a Depression until it is either over or is so evident that denying it would be fruitless. The government is afraid to start any panic as to the true severity of this crisis we are in and as such will try to protect the citizens as long as possible from the hard realities.

Before this economic crises is over I believe that we will see history actually show that we have or will have had entered into a Depression…. The only question is: for how long.

In the United States approximately 70 percent of our economy is based upon Consumer spending…  as such Particular attention will be paid to that segment of the economy.

Estimates so far are that at least 70,000 retail locations are expected to close in 2009. Personally I see that number even higher and expect over 100,000. Thus higher unemployment will occur.

Personal savings rate will continue to be negative throughout the year with rare occurrence of it turning positive.

Over all the consumer is being hit with rising prices from the Summer 08 Oil Prices and those prices have not come down in tandem with Oil. Corporations are struggling to meet cash flow needs and turn profits for their shareholders and as such are reluctant to lower prices.

Credit will not loosen very much in 2009… Credit card companies will continue to reduce credit limits (2 Trillion dollars so far) and will raise interest rates on balances even for the slightest blemish or down grading of your credit. Keeping your credit cards in the back of a drawer and NOT canceling them is advisable.

Expect Congress to address these issues in Credit Card operations and policies in 2009 in an attempt to protect consumers a bit better… but high expectations for relief should be discouraged because of the powerful lobbying teams of Banks and other financial institutions. Result Consumers will and should pay down more of their debt and spend less thus creating Consumer slow down in spending in 2009.

Oil Prices will NOT stay low for long. Oil Producing Countries need the revenue for their own countries economies…. Demand may be down globally but the minimum necessary price is 45 dollars a barrel while countries like Venezuela, Iran, Russia etc require upwards of 70 dollars a barrel to keep their domestic programs going and to maintain their economies. Expect Oil close to or above 100 dollars a barrel by the end of 2009 based upon the needs of the Oil Producing Countries.

Job Loss and fear of Job Loss with hamper Consumer Spending even farther. This includes areas like housing and Auto sales as well.

Credit availability for Housing will be tight for many years to come. Impeccable credit and a hefty down payment  of 20 percent or more,will be required as it was over a decade ago. The result will be a continuing deflation in Housing prices and no bottom expected until mid 2010. These expectations of losing money on a new home purchase will also keep many buyers on the sidelines.

Credit will also suffer because of continued required write-downs by Mortgage holders and those holding the Mortgage backed securities. Expect the Foreclosure rate to keep high thus flooding the market with additional homes. This credit problem will be further exacerbated by rises in Commercial Mortgage defaults. Particularly in Retail Commercial properties.

The measure of companies with retail locations in terms of profitability will be changed. MOST leases no Commercial Property like retail are triple net… meaning that the tenants are responsible to paying a pro rated share based upon occupancy of leased space for Utilities, Taxes and maintenance. The additional burden placed upon them buy the loss of other retailers coupled by decreasing sales will cause more stores to close. Currently the VACANCY rate in retail locations is at 8.2%. That will continue to rise throughout 2009.

Commercial Mortgages are often done with long amortization rates meaning 10 to 30 years mortgage payment rates, with a balloon payment (the full balance of the Loan) due after 5 years. As properties increased in value and occupancy rates were high and credit was readily available this was not a concern. Today, however, those criteria for refinancing can no longer be met by most mall operators or owners of other retail properties. Even the Commercial office space Market will be effected.

Loss of retail also usually has a negative effect in Commercial Office space… and even the A class properties are now feeing the potential problems growing. Expect an increase in “services” oriented companies across the USA and several hundred thousand jobs lost as a result, many of which do not and will not qualify for unemployment compensation to help them.

The stock markets will continue to act in a volatile and irrational way. Over reaction to perceived good news and bad news will move the market in triple digits and randomly. If you are brave and can wait 10 years or more for profits then now is the time to buy select companies that may recover faster as the economy bottoms and flattens in 2010.

Federal funds rate will not be increased for the first half of 2009, but may have a slight increase of 0.25 to0.50 in the second half of 2009 and into 2010 as the dollar weakens and the need to strengthen the dollar increases.

The need to have safety for cash will continue to hold the Treasury Bonds yield down to hover at or near zero as banks are not considered safe enough and consumers are fearful.

Bank Write offs will continue and the biggest shocks to the market will be in Commercial backed mortgages as well as increased Credit Card default rate as climbing interest rates and lack of credit availability will force consumers into decisions that will not factor most creditors.

Housing prices will continue to decline throughout 2009. Lack of demand and increased inventories by those underwater on their mortgages and those foreclosed upon homes, and the lack of credit and the return to the requirements of old with 20 percent or more down and verifiable rations of income to mortgage payments as well as HIGH credit scores… all combined will be a continued drag in the housing market and will even affect places like New York City on 2009 through at least the first half of 1020.

Retirees will delay their retirement and the “equity” they thought they had in their homes and the devastation to their retirement funds will be so bad as to force more people to work longer and will contribute to the lack of available jobs for younger people.

Unemployment will rise to double digits…. Most likely to around 11 percent official and 17 percent unofficial Unemployed people will number more than 18 million people.  Currently the Unemployment are has gone over 7.2%. I expect that before we flatten out that number will grow to close to 11 percent. Currently the number of those unemployed is over 6 million…. but those numbers a skewed to those who qualified for unemployment and or are seeking employment actively.  The REAL number of unemployed is substantially higher if the number of those underemployed, working only part time, or who have given up looking for work are included. The number of long-term unemployed (those jobless for 27 weeks or more) rose to 2.6 million in December and was up by 1.3 million in 2008.

Bankruptcies will hit all time highs both for individuals and Businesses.

The Auto Industry: This is the hardest to predict in some ways. BUT… Knowing that credit is hard to get to purchase an automobile, and that demand is down because individual consumers are feeling the economic pinch and are concerned about their declining home and retirement values, and compounded by job uncertainty will make any recover of the Auto Industry in general almost impossible in 2009. While most of us abhor the idea that the “Big Three” in Detroit may declare bankruptcy. I see no choice especially given the legacy costs of pensions and health care that hurts their price competitiveness. Premium prices for things like the Chevy VOLT or other fuel-efficient cars will not me tolerated by a price sensitive consumer market in these economic times. Therefore the demand that Auto Makes produce these cars, while admirable, is not productive to the automotive industry recovery at this time.

The result of the above will be continued declines and flattening of the Auto sales, which of course, contributes considerably to the GDP of the United States. A downward spiral that cannot be stopped without bankruptcy to protect those companies and jobs till the economy flattens out and hopefully and gradually raises enough to spur more automobile sales.  Bottom line…. expect one or more of the Detroit 3 to declare bankruptcy in 2009.

GDP Contraction 5 % or more: I hope this is self evident given what I have already written…. the ONLY way this will not happen in 2009 is if we devalue our dollar by printing more money…. but that results in hyper inflation and higher prices which would artificially make our GDP that much higher.

Federal budget deficit of 1 trillion and growing to possibly 2 TRILLION as the need for spending like the years of Roosevelt in the New Deal Era increases and as the concession to business for tax rates being the same or even lower taxes are made and the revenue for the US Government continues to decline from Lower profit, less payroll tax income and growing social programs to assist the impoverished. The NATIONAL DEBT will run higher than 12 trillion dollars UNLESS the government prints more money…. but that will further weaken the value of the US dollar. A delicate trade off that has to be dealt with in 2009.

LOWER corporate taxes and/or Capital Gains in a declining economy will NOT spur employment or Investment in Pant or equipment. The only people who will possibly benefit are those who own stocks in those companies. And even then the benefits will be minimal. Worse the Down side is lower revenue for the government in a time when spending must be increased to spur economic recovery.

Globally expect more instability in under-developed countries. Poverty, starvation and generally declining conditions in these countries will give rise to radical idealists who will create chaos and instability in those countries. Antagonistic behavior towards those industrialized countries that are seen as culprits in this economic crisis will be the most villianized. Terrorism abroad will increase in response to the frustration and need to blame someone increases.

Currency fluctuations will be as common as weather changes during 2009. 30-day moves can exceed 15 percent and daily moves may be as much as 5 percent. Thus this will make international business more volatile and difficult to conduct.

Parity with Euro and British Pound is possible given the currency fluctuation at this time only a 10 percent difference exists between the 2 currencies. Briton will continue to decline as the full effects of their new economy that was built on the financial sector and debt continues to play out.  France and Germany have yet to feel the real impact of what is happening globally and as such have been the prop to the Euro over the last year. The EU’s efforts to prop up Eastern European Counties with bailouts will have little effect on the full impact of the global recession. Ultimately the Euro will have to decline in value.

Weaken of the dollar … then strengthen and weakening. The Japanese Yen, the Euro, and the British Pound with fluctuate so much that any stability for the dollar will have to come from the USA itself. However that appears unlikely until the USA takes drastic steps to stem the bleeding and ultimately devalues the dollar.

EU predictions Italy and possibly Spain: I expect al least Italy to go back to the Lira and to try an peg the Lira to the Euro to allow it to re-enter the EU Euro denomination Currency in a few years. This will be necessary as the Italian economy and the EU regulations are in conflict and Italy cannot meet the EU demands for economic reform to satisfy the EU regulations. Spain faces the same situation.

France and German Social programs will be the downfall of these economies. With a global recession and decline in local economies the demand for these generous programs will go to an all time high and will send them into a deeper recession as they struggle to balance budgets and stem spending.

China will see continued decline in growth based upon the global economy. It is unclear if their domestic consumption can make up for the downturn. It may now feel the effect of the lack of a substantial Middle class and sustainable consumer base

India is just now feeling the effects, and as global outsourcing to India shrinks, and the allegations that the financial accounting is being doctored by some to keep showing profits surface. The “middle class” is mostly dependent on the global outsourcing in areas of IT and calling centers, which are declining rapidly. India will experience a recession that is severe and has potentially serious consequences on its economic stability.

It seems inevitable that the United States Government will be forced in 2009 or early 2010 to print more Dollars, to buy its own debt and to pay for spending programs as debt is not being bought by most companies or countries or even individuals. Hence a devaluation of the dollar… expect Euro and Pound to follow and a period of hyper inflation accompanied by higher interest rates when that happens.

I was reluctant to write this piece as I hoed to see more indications that things would improve…. However, that has not happened and the result is a significant delay in my predictions.

I hope I am just a pessimist.. however at this time I think I am more of a realist in how things are at this point in time. Things CAN change.. and my predictions can be totally wrong. But for that to happen requires political will and individual determination….And I see no signs of that at this time.

Regardless of whether you agree or disagree with my assessments made her.. YOU must decide for your self what you need to do if this scenario does take place… or if it does not. These are things the way I see them and should NOT be taken as factual or advice to anyone.

Craig Eisele

2009 Economic projections by Craig Eisele

Note: the following is MY opinion and how I see the economy… it should not be considered investment advice or factual as to the actual performance of the US and Global Economies in 2009.

If you do not want to hear bad news I strongly suggest you stop reading at this point and read a good fiction book….or watch Kudlow on CNBC who is more of a cheerleader then as realist…. Although a caution as to the rest of the CNBC team as they seem to realize more the current economic realities.

One of the greatest threats we face is Deflation during this recession… WHY?? Because the economic definition of a DEPRESSION is Recession accompanied by Deflation… BUT do not expect the government to say we are in a Depression until it is either over or is so evident that denying it would be fruitless. The government is afraid to start any panic as to the true severity of this crisis we are in and as such will try to protect the citizens as long as possible from the hard realities.

Before this economic crises is over I believe that we will see history actually show that we have or will have had entered into a Depression…. The only question is: for how long.

In the United States approximately 70 percent of our economy is based upon Consumer spending…  as such Particular attention will be paid to that segment of the economy.

Estimates so far are that at least 70,000 retail locations are expected to close in 2009. Personally I see that number even higher and expect over 100,000. Thus higher unemployment will occur.

Personal savings rate will continue to be negative throughout the year with rare occurrence of it turning positive.

Over all the consumer is being hit with rising prices from the Summer 08 Oil Prices and those prices have not come down in tandem with Oil. Corporations are struggling to meet cash flow needs and turn profits for their shareholders and as such are reluctant to lower prices.

Credit will not loosen very much in 2009… Credit card companies will continue to reduce credit limits (2 Trillion dollars so far) and will raise interest rates on balances even for the slightest blemish or down grading of your credit. Keeping your credit cards in the back of a drawer and NOT canceling them is advisable.

Expect Congress to address these issues in Credit Card operations and policies in 2009 in an attempt to protect consumers a bit better… but high expectations for relief should be discouraged because of the powerful lobbying teams of Banks and other financial institutions. Result Consumers will and should pay down more of their debt and spend less thus creating Consumer slow down in spending in 2009.

Oil Prices will NOT stay low for long. Oil Producing Countries need the revenue for their own countries economies…. Demand may be down globally but the minimum necessary price is 45 dollars a barrel while countries like Venezuela, Iran, Russia etc require upwards of 70 dollars a barrel to keep their domestic programs going and to maintain their economies. Expect Oil close to or above 100 dollars a barrel by the end of 2009 based upon the needs of the Oil Producing Countries.

Job Loss and fear of Job Loss with hamper Consumer Spending even farther. This includes areas like housing and Auto sales as well

Credit availability for Housing will be tight for many years to come. Impeccable credit and a hefty down payment opf 20% or more, will be required as it was over a decade ago. The result will be a continuing deflation in Housing prices and no bottom expected until mid 2010. These expectations of losing money on a new home purchase will also keep many buyers on the sidelines.

Credit will also suffer because of continued required write-downs by Mortgage holders and those holding the Mortgage backed securities. Expect the Foreclosure rate to keep high thus flooding the market with additional homes. This credit problem will be further exacerbated by rises in Commercial Mortgage defaults. Particularly in Retail Commercial properties.

The measure of companies with retail locations in terms of profitability will be changed. MOST leases no Commercial Property like retail are triple net… meaning that the tenants are responsible to paying a pro rated share based upon occupancy of leased space for Utilities, Taxes and maintenance. The additional burden placed upon them buy the loss of other retailers coupled by decreasing sales will cause more stores to close. Currently the VACANCY rate in retail locations is at 8.2%. That will continue to rise throughout 2009.

Commercial Mortgages are often done with long amortization rates meaning 10 to 30 years mortgage payment rates, with a balloon payment (the full balance of the Loan) due after 5 years. As properties increased in value and occupancy rates were high and credit was readily available this was not a concern. Today, however, those criteria for refinancing can no longer be met by most mall operators or owners of other retail properties. Even the Commercial office space Market will be effected.

Loss of retail also usually has a negative effect in Commercial Office space… and even the A class properties are now feeing the potential problems growing. Expect an increase in “services” oriented companies across the USA and several hundred thousand jobs lost as a result, many of which do not and will not qualify for unemployment compensation to help them.

The stock markets will continue to act in a volatile and irrational way. Over reaction to perceived good news and bad news will move the market in triple digits and randomly. If you are brave and can wait 10 years or more for profits then now is the time to buy select companies that may recover faster as the economy bottoms and flattens in 2010.

Federal funds rate will not be increased for the first half of 2009, but may have a slight increase of 0.25 to 0.50 in the second half of 2009 and into 2010 as the dollar weakens and the need to strengthen the dollar increases.

The need to have safety for cash will continue to hold the Treasury Bonds yield down to hover at or near zero as banks are not considered safe enough and consumers are fearful.

Bank Write offs will continue and the biggest shocks to the market will be in Commercial backed mortgages as well as increased Credit Card default rate as climbing interest rates and lack of credit availability will force consumers into decisions that will not factor most creditors.

Housing prices will continue to decline throughout 2009. Lack of demand and increased inventories by those underwater on their mortgages and those foreclosed upon homes, and the lack of credit and the return to the requirements of old with 20 percent or more down and verifiable rations of income to mortgage payments as well as HIGH credit scores… all combined will be a continued drag in the housing market and will even affect places like New York City on 2009 through at least the first half of 1020.

Retirees will delay their retirement and the “equity” they thought they had in their homes and the devastation to their retirement funds will be so bad as to force more people to work longer and will contribute to the lack of available jobs for younger people.

Unemployment will rise to double digits…. Most likely to around 11 percent official and 17 percent unofficial Unemployed people will number more than 18 million people.  Currently the Unemployment are has gone over 7.2%. I expect that before we flatten out that number will grow to close to 11 percent. Currently the number of those unemployed is over 6 million…. but those numbers a skewed to those who qualified for unemployment and or are seeking employment actively.  The REAL number of unemployed is substantially higher if the number of those underemployed, working only part time, or who have given up looking for work are included. The number of long-term unemployed (those jobless for 27 weeks or more) rose to 2.6 million in December and was up by 1.3 million in 2008.

Bankruptcies will hit all time highs both for individuals and Businesses.

The Auto Industry: This is the hardest to predict in some ways. BUT… Knowing that credit is hard to get to purchase an automobile, and that demand is down because individual consumers are feeling the economic pinch and are concerned about their declining home and retirement values, and compounded by job uncertainty will make any recover of the Auto Industry in general almost impossible in 2009. While most of us abhor the idea that the “Big Three” in Detroit may declare bankruptcy. I see no choice especially given the legacy costs of pensions and health care that hurts their price competitiveness. Premium prices for things like the Chevy VOLT or other fuel-efficient cars will not me tolerated by a price sensitive consumer market in these economic times. Therefore the demand that Auto Makes produce these cars, while admirable, is not productive to the automotive industry recovery at this time.

The result of the above will be continued declines and flattening of the Auto sales, which of course, contributes considerably to the GDP of the United States. A downward spiral that cannot be stopped without bankruptcy to protect those companies and jobs till the economy flattens out and hopefully and gradually raises enough to spur more automobile sales.  Bottom line…. expect one or more of the Detroit 3 to declare bankruptcy in 2009.

GDP Contraction 5 % or more: I hope this is self evident given what I have already written…. the ONLY way this will not happen in 2009 is if we devalue our dollar by printing more money…. but that results in hyper inflation and higher prices which would artificially make our GDP that much higher.

Federal budget deficit of 1 trillion and growing to possibly 2 TRILLION as the need for spending like the years of Roosevelt in the New Deal Era increases and as the concession to business for tax rates being the same or even lower taxes are made and the revenue for the US Government continues to decline from Lower profit, less payroll tax income and growing social programs to assist the impoverished. The NATIONAL DEBT will run higher than 12 trillion dollars UNLESS the government prints more money…. but that will further weaken the value of the US dollar. A delicate trade off that has to be dealt with in 2009.

LOWER corporate taxes and/or Capital Gains in a declining economy will NOT spur employment or Investment in Pant or equipment. The only people who will possibly benefit are those who own stocks in those companies. And even then the benefits will be minimal. Worse the Down side is lower revenue for the government in a time when spending must be increased to spur economic recovery.

Globally expect more instability in under-developed countries. Poverty, starvation and generally declining conditions in these countries will give rise to radical idealists who will create chaos and instability in those countries. Antagonistic behavior towards those industrialized countries that are seen as culprits in this economic crisis will be the most villianized. Terrorism abroad will increase in response to the frustration and need to blame someone increases.

Currency fluctuations will be as common as weather changes during 2009. 30-day moves can exceed 15 percent and daily moves may be as much as 5 percent. Thus this will make international business more volatile and difficult to conduct.

Parity with Euro and British Pound is possible given the currency fluctuation at this time only a 10 percent difference exists between the 2 currencies. Briton will continue to decline as the full effects of their new economy that was built on the financial sector and debt continues to play out.  France and Germany have yet to feel the real impact of what is happening globally and as such have been the prop to the Euro over the last year. The EU’s efforts to prop up Eastern European Counties with bailouts will have little effect on the full impact of the global recession. Ultimately the Euro will have to decline in value.

Weaken of the dollar … then strengthen and weakening. The Japanese Yen, the Euro, and the British Pound with fluctuate so much that any stability for the dollar will have to come from the USA itself. However that appears unlikely until the USA takes drastic steps to stem the bleeding and ultimately devalues the dollar.

EU predictions Italy and possibly Spain: I expect al least Italy to go back to the Lira and to try an peg the Lira to the Euro to allow it to re-enter the EU Euro denomination Currency in a few years. This will be necessary as the Italian economy and the EU regulations are in conflict and Italy cannot meet the EU demands for economic reform to satisfy the EU regulations. Spain faces the same situation.

France and German Social programs will be the downfall of these economies. With a global recession and decline in local economies the demand for these generous programs will go to an all time high and will send them into a deeper recession as they struggle to balance budgets and stem spending.

China will see continued decline in growth based upon the global economy. It is unclear if their domestic consumption can make up for the downturn. It may now feel the effect of the lack of a substantial Middle class and sustainable consumer base

India is just now feeling the effects, and as global outsourcing to India shrinks, and the allegations that the financial accounting is being doctored by some to keep showing profits surface. The “middle class” is mostly dependent on the global outsourcing in areas of IT and calling centers, which are declining rapidly. India will experience a recession that is severe and has potentially serious consequences on its economic stability.

It seems inevitable that the United States Government will be forced in 2009 or early 2010 to print more Dollars, to buy its own debt and to pay for spending programs as debt is not being bought by most companies or countries or even individuals. Hence a devaluation of the dollar… expect Euro and Pound to follow and a period of hyper inflation accompanied by higher interest rates when that happens.

I was reluctant to write this piece as I hoed to see more indications that things would improve…. However, that has not happened and the result is a significant delay in my predictions.

I hope I am just a pessimist.. however at this time I think I am more of a realist in how things are at this point in time. Things CAN change.. and my predictions can be totally wrong. But for that to happen requires political will and individual determination….And I see no signs of that at this time.

Regardless of whether you agree or disagree with my assessments made her.. YOU must decide for your self what you need to do if this scenario does take place… or if it does not. These are things the way I see them and should NOT be taken as factual or advice to anyone.

Craig Eisele

Craig’s Diatribe on the USA and Global Economy (# 2)

June 6, 2008

This blog entry (number 2 in a series) is to try and express my viewpoints on the current state of the USA Economy, my predictions for the future and how we are no longer a localized economy but now are part of a GLOBAL economy.

Where are we NOW? Commodity Prices:

Before I go into the Global Economy for Commodities and Fuel/power Prices I need to say that a LOT (maybe as much as one third in some cases) of the increase of Costs is from the weak dollar … as such, most of this post is dedicated to the supply and demand issues of the global econony.

The has been great interest in Oil prices… as well as there should be… I talked about Oil being in our everyday life before… as a commodity…. But I need to address some misconceptions about what the general public believes about the Price of Oil today.

First: OIL IS A COMMODITY… that means the prices are subject to supply and demand…. There is NO QUESTION that China and India play a significant role in the new use of oil… as a fuel and as a commodity for other applications…. This is a result of the rest of the world using those countries for lower prices thus bring in more Currency (Money) into those countries and lifting them out of the poverty (and to satisfy our own greed for more at lower prices and greater profits) that we saw them suffering from… now that we have awoken the sleeping giant, so to speak, there is no putting them back to sleep. They will continue to demand oil and other commodities at an ever increasing rate of consumption.

We have been duped into believing that “Speculators” are to blame for higher prices… if South West Airlines is a speculator then you are right… but the reality is that it is GLOBAL DEMAND that pays these exorbitant prices we are seeing… and as I said before… there is NO GOING BACK.

IF we produce more oil it will only keep up with the demand worldwide. While it may make us less dependent on oil for our own needs the prices we will pay in the USA will be based upon WORLD PRICES… not our domestic (USA) production. To believe otherwise is just foolish. Additionally, currently we are importing only about 30 percent of our domestic needs.

We are not entitled to lower fuel prices… it is what it is and we will not sell for less than the world price unless we become a socialist society and subsidize our oil… and that will never happen… or at least I hope we will never become a socialist country. Our sense of entitlement is what is causing a great many problems for us in this country today… and it needs to be put into proper perspective.

Many Americans want to know why China or India Consumption of oil is hurting us here… it is simply business…. I business you do not want to hear about but at least need to understand….The companies that drill for oil are not federal Government Oil Companies… they are in the business to make money… the basic model of Business is that thing called supply and demand… Because I drill and pump crude oil in the USA does not mean that I am obligated by any law to sell it in the USA… as a businessman when I get something out of the ground I can sell it to the highest bidder…. If the USA does not want my product but someone in another country wants it… then I am entitles to sell it to any country (with few exception) I want to … THAT IS BUSINESS. To expect that I should sell it to you at any cheaper price is unreasonable… and bad business… and since these companies that do pump crude oil have other people who own stock (real ownership) of their companies… then they have a legal (fiduciary) obligation to maximize profits for their owners… remember again… we are NOT a socialist Country. Additionally to punish me for selling at the market price with a windfall profits tax is unreasonable… you may not like my profits… but they are legitimate and are mine… additionally I will increase prices to compensate for the “surcharge” tax on my profits.

If we really want Oil Companies to become energy companies then we need to develop incentives to foster the Oil Companies to become “Energy Companies” release in the Fall of 2008….

As I said you did not want to hear that… but those are the basic facts of life today, as we know them! Painful is it not?? Yet this has been the standard model of capitalism for hundreds of years and is not going to change anytime soon.

The same is true of cheap food and household energy use and even in other commodities like gold and Steel and copper (used in your wiring I might add) (I will address health care in another post… and you will NOT like what I have to tell you there either).

The ONLY way of getting a better price is to strengthen the dollar… but our past practices in our country have caught up with us and now we have financial troubles with Credit availability (after years of easy credit) and even with interest rates low we are not able to get the benefits of those cheap rates. Yet is we raise interest rates to fight the higher costs (also known as inflation) we will cause greater harm to the overall economy… the government and the Federal Reserve are in quite a conundrum and there is no quick fix to this problem of a stringer dollar… so do NOT anticipate things getting better quickly.

As bad as things are now they will get better based upon what has already happened… and I fear for many Americans with the Winter Heating Season just ahead (yes we are actually almost there and it is only the beginning of summer) as any American who drives to work and makes less than 40,000 per year per household will find themselves financially in the red (to me this is the new Poverty level in the USA). Elderly Americans on fixed incomes will suffer the most and the Cost of Living adjustments are not accurately reflection the actual increase of cost on the average family… and how can they when the supposed US Index for the Average hourly wage is over 17 dollars an hour…. That shows how skewed the Inflation indexes are by the number of “high wage” earners there are in this country… it is, simply, out of control.

In a future post I will give the bad news … I NOW expect oil to reach 250 dollars a barrel by sometime in 2010… unless the dollar gets better fast…. However with the choices for president and the policies I see coming down the road… that may not be able to be done (remember the discussion on Fiscal and Monetary policy and the effects). Hence 5 dollar a gallon gas will be cheap by comparison…

Corn Prices :

When we find other uses for Commodities outside the normal and regular use we create a demand for additional supply of that commodity. Corn, however, has had a double whammy effect. Yes I am talking first about Global Demand… Most of us think of corn as a food product for our table in many different forms…. Many of us forget that beef and chicken and even pork is raised for slaughter through the use of “feed corn” for them to consume to get these products…. Now also remember that farmers have limited amount of land to use… they also want to get the most out of every acre of land they farm… and currently feed corn is a great provider of revenue.

AS we increased the standard of living for impoverished countries like India and China… they consumption patters changed…. Meaning they now eat more of the Meats I described above…. Those meats also require the feed corn to produce. …Hence demand for feed corn went up and farmers produced more feed corn as a result.

The second whammy was the production (and subsidy by our government) of Ethanol. This non-food use for Corn drove the demand beyond the normal supply and demand curve and as we have seen dramatically increased prices… while the effectiveness of using Ethanol is being debated and alternatives are being developed this demand will not come down and prices will remain high.

What has surprised me about this is, that it was not expected by so many people…. Using a food in a way that is not a food product would naturally increase the demand for that product. As a note…. using Sugar Cane for ethanol will also raise food prices… yet the government may be more willing to do this because of the health consequences of sugar (yes gaining weight).

Corn prices are a direct result of GLOBAL DEMAND and the traditional supply and demand pricing but in a global context.

Energy Costs:

Generally we think of energy as the gasoline we put into our cars. This is true but we consume electricity in ever greater quantities then ever before. Heating, Air-conditioning, lighting TV’s Computers… ALL requiring Energy…. Energy is derived from many sources… Nuclear is being touted as a future provider of energy to wean us off of fossil fuels… but the COST to produce which is said to be low… will NOT reflect in lower prices to the Consumer…. The pricing index will show that they will sell this energy at lose to the same price as Coal or Diesel or natural gas plants… this seems to be the case with Hydro electric now. OLD power plants, are increasing prices, because of consumption, they are not lowering them. Yes the prices of oil and Coal have a lot to do with the international (Global) demand… and the prices have been going up dramatically…. So while we like to think we are better off with “alternative Fuels” and Alternative generation facilities” we are kidding ourselves if we think that will reduce our costs by very much at all… Making electricity… the production of power is a business and as such they obligation is to get the highest price for the product as possible. WE are not entitled to lower power costs!

Electricity is a produced commodity from a natural resource commodity…. At least for now.

Post #3 will be about credit, housing prices and maybe the stock market and Global Currencies

If you have been reading these posts… I will eventually get to the part where I make recommendations for the future… but I still need to explain more about where are are and how we got here.

Craig Eisele

African Aid… Is It Really Aid Or Just Makes Us Feel Good??

African Aid… a study in inefficiency

OK… maybe I am not going to actually do a study… most of my data is allegoric (from stories). But it is a reality that Aid to Africa is not efficient for many reasons that are solvable.

When aid is given with strings attached such as the mandated use of the donor counties personnel or equipment and supplies then it is not aid to Africa it is aid to the Donor Countries’ manufacturing or consulting firms. Expert costs can be triple or even quadruple the cost of the same services in the Donor Countries because of travel, housing (to the donor countries standards) and high salaries of Donor country employees sent to Africa.

I have traveled to Africa frequently and have been in approximately 20 countries in the continent. While Greed, fraud and corruption do exist, it is the cost of goods and services that donor countries provide that takes a great deal of the AID that is supposedly given. Cash sent to most African Countries is subject to redistribution because of other more pressing needs. And sometimes the Strings on the aid have profound negative effects on other parts of the recipient African Countries economy and existing farming or manufacturing enterprises. There is an article in this blog about Namibia and Angola and the Cattle ranching that has been devastated by some of those strings to aid there.

I understand that Donor Countries want to try and maximize benefits to their domestic enterprises when giving aid… but competition for those aid funds can significantly reduce costs and maximize the benefit of the AID to the recipient countries.

Let me move to a different part of this issue… the raising of funds for Aid Organizations. Former President Bill Clinton has stated (paraphrased) that if there was profit to be made in solving global poverty then there would be no global poverty…. But that statement is based upon a false premise… that global poverty can be solved… I am adamant on this.. GLOBAL POVERTY CANNOT BE SOLVED…. Not in my life time… and not even in this century… poverty will always be with us as long as we are a society that functions on money… someone will always be at the bottom of the scale and hence we will always have poverty. This is a fact of life that cannot be dismissed out of hand. (Please note I am not tackling the issue of the measurement of poverty or its definition at this time… maybe later)

What we can do is significantly reduce poverty by revamping and reorganizing the AID that is given and the manner in which it is given.

People think that AID is free… it is not… every aid organization has to raise funds.. that take time, personnel and money… however we can make guidelines on how much of the aid given is actually used for those ongoing fund raising and strategizing efforts as well as the Organizations basic operations and expenses.. For this I am in favor of a sliding scale ranging from 3.5% to 20% depending on the total amount raised per year. This is not include the actual administration of the project (for which I feel not more than 20 % should be allocated to non-resident administration of the ACTUAL Project)

From personal experience:

I have been forming a new NGO (Non-Government Organization) and NPO (Not for Profit Organization) called the Africa Genesis Project. The mission is to “rehabilitate” the sub Saharan “trade routs” in this region. The studies have already been done showing the benefit in trade for the respective countries (a cost benefit analysis). But it does not even begin to show the increase in employment, local economies and the attraction to FDI (Foreign Direct Investment) that would accompany such a project.

The Cost for this is fast approaching 50 BILLION US Dollars. Is that a lot of money?? Yes it is… but in comparison to the 60 Billion dollars in aid for AIDS in Africa than this is smaller and brings more advantages (in my opinion) and allows the aid for AIDS to be delivered more effectively and efficiently to a greater number of people. I agree with the need for AIDS assistance… but I also know that the people of Africa need more.When it costs only 1,000 dollars to send a container to a Kenya Port but 10,000 dollars to take it inland at twice the time and takes 5 days to repair the truck afterwards,… this is an abomination and the extra costs are something the Africans cannot afford.

Roads bring JOBS, and jobs bring economic prosperity and that in turn brings peace and stability to Africa!!!

But how can we raise such amount of funds for the overall rehabilitation of Africa?? If ANYONE expects that Africa can finance this with its current economic situation and with the Debt that it already has, then that person is not fathoming the realities of the condition of Africa and worse is dismissing the prolonged suffering of hundreds of millions of people in Africa. Further it has allowed countries like China to take advantage of this situation to give “no string” loans that continue to exacerbate the problems in Africa.

The ONLY way to really help Africa is one MASSIVE injection of Aid that can transform most of Africa into a productive society. That aid can ONLY come from Governments around the world. That raises a major problem in how to even start such a fund raising effort to implement this project.

My calculations indicate I need 50 million dollars to START this project and 500 Million Dollars to continue to promote and administer the Africa genesis Project over 7 years.

Why so much?? One word answer… POLITICS!!!

I cannot even get an appointment with my own congressional or senate representative in the United States to present this project… and the form in which I presented is not in “proper form” with the relevant brochures and packages needed to promote such a massive project. Multiply that effort with my need to approach the governments of the United Kingdom, France and the rest of the EU, Japan. Australia, Canada, and the Middle East as well as many other countries, (as this is a global issue requiring a global solution) then you start to see not only the massive size of the Africa Project in Rehabilitating these trade routes, but the Global Efforts needed to see it though. And the ONLY way is to hire (at a significant cost) “Consultants” (lobbyists) who can effectively get this project into the hands of those who can make it happen in their respective Governments.

The Africa genesis Project will Guarantee that 96% of ALL money raised for the project will be spent directly on the project and not on fundraising, promotion or administrative expenses of the organization itself. Further that NO Distribution will be to any government organization UNLESS that Organization has actually performed or is performing real work on this roads project. Simply ONLY those actually working on the Road Project will be paid and 80 percent of ALL work must be by Local African Companies and using African employees.

We realize that a lot of Equipment must be purchased for this project. It is expected that Caterpillar and John Deer will receive about 500 million dollars each for equipment and spare part orders… HOWEVER WE MUST be able to negotiate process to reduce costs and maximize benefits to AFRICA. We will NOT tolerate paying even list, let alone OVER list as Caterpillar and John Deer have indicated in my limited discussions with them. The same for every other manufacture and supplier of other equipment, materials and supplies… COSTS will be PARAMOUNT in our vigilance to assure that this work can be done UNDER BUDGET. It is though our “lobbying” efforts that we will make sure that any “strings” attached to the aid given by donor countries for domestic purchases allow us to make bidding and negotiations fair practice in our efforts to supply this project. We cannot allow unfair profits (windfalls) to accrue to anyone on the backs of Africa and its people.

And yes, even I need to get paid, as I am not independently wealthy. So for those of you questioning that, I assure you I am NOT working for free and expect compensation that is reasonable for a project of this size. However I will note that I already know that there are many problems and issues that will need to be addressed on a project this size that will NOT be in the budget … hence my “compensation” will mostly be used for the resolution of those issues and to support the Africa Genesis Organization in its endeavors. Fist Aide Stations, water well drilling, education assistance and the like are just some of those things that are NOT in the Budget for this project and need to be taken care of but NOT from the 96% of the funds that were donated and are to be used ONLY for the Road rehabilitation project as already identified.

If you are a regular reader of this blog you know I have proposed creating a “backbone” infrastructure project that would transverse Africa as well as circumnavigate the Entire Continent, that would end up being approximately 70,000 Kilometers in length. This “backbone would have a 4 to 6 lane modern highway, an Electric Power line transmission, a railroad, and Fiber Optics and Oil and Gas and water pipelines, ALL TO BE FINANCED AND OPERATED BY PRIVATE (non governmental) INVESTMENT. This Investment could approach 1 trillion dollars over 10 to 15 years.

My plans for Africa my be grandiose to some… but a real vision was needed to solidify the continent for economic, and political and peace issues and the overall heath and welfare of the people of Africa… this is my mission… to transform Africa into a place where aid is not needed as much as it is now, and to improve the human sprit of all Africans.

Craig Eisele

China Encounters Labor Relations Troubles in Africa

Chinese beaten up in Zambia mines

A Chinese manager at a copper smelter in northern Zambia has been admitted to hospital after being assaulted by workers demanding better conditions. An estimated 500 workers at the Chinese-owned Chambishi mine site started throwing stones at the managers as they attempted to hold talks.

Police came in to restore order and rescue the Chinese who had taken refuge by locking themselves in their offices. Several buildings were burned in the violence and a protester was injured.

Last year, China’s president cancelled a visit to Chambishi fearing protests.

A blast at the copper mine killed 50 people in 2005.

Holiday rumours

Chambishi Smelter, which is under construction, is part of a huge multi-million dollar Chinese investment in the area.

The Chinese are not respecting Zambian labour laws Teddy Chisala Workers’ representative

The BBC’s Boyd Chibale in Kitwe says a kitchen for Chinese workers and a guard’s house were set alight and hostel windows smashed in the violence.

Our correspondent says the workers have now gone home, and the Chinese management are in talks with the unions.

The protest was sparked by rumours that members of the Chinese management team were about to go on holiday, which workers feared would delay negotiations to improve their conditions of service.

“The Chinese are not respecting Zambian labour laws,” workers’ representative Teddy Chisala told the AFP news agency.

In recent years, China has emerged as one of the biggest buyers of Zambian copper.

But correspondents say Chinese investment in mining and manufacturing has not been without controversy – with constant industrial disputes amidst allegations of poor working conditions.

In elections in 2006, opposition candidate Michael Sata ran on an anti-China ticket, calling for “Zambia for Zambians”.

Story from BBC NEWS:

http://news.bbc.co.uk/go/pr/fr/-/2/hi/africa/7277006.stm

Published: 2008/03/04 13:46:24 GMT

© BBC MMVIII

Africa Becoming Estranged from EU.

EU, Africa open new chapter after no-hold-barred summit

by Amelie Bottollier-Depois

EU and African leaders pledged Sunday to create a new partnership of equals at a summit marked by rows over trade and Darfur and a vitriolic attack by Zimbabwe’s Robert Mugabe on European “arrogance.”

After two days of what hosts Portugal described as a no-holds barred debate, leaders of the two continents put their names to an “Africa-EU Strategic Partnership” agreement to take their relationship to “a new, strategic level.”

They vowed “to move away from a traditional relationship and forge a real partnership characterised by equality and the pursuit of common objectives” and which “capitalises on the lessons of the past.”

And in a post-summit address to his guests, Portugal’s Prime Minister Jose Socrates said the often troubled history between the continents had entered a new era at the first such summit in seven years.

“What is important is that we met each other face-to-face, on an equal setting, in a new spirit,” said Socrates.

“I think I can say the idea that has been expressed most often is that this summit represents the turning of a page in history.”

Ghana’s President John Kufuor, the African Union’s current president, agreed the summit had witnessed frank exchanges but on an equal footing.

“We met at this summit talking plainly and directly as equals,” said Kufuor whose country was the first in Africa to gain independence from a European colonial power, Britain, exactly 50 years ago.

But despite the declaration on a “shared vision” for the future, the shadow of colonialism prevented any real warmth in a summit where starkly different views on issues such as immigration and human rights were on display.

German Chancellor Angela Merkel accused Mugabe on Saturday of “harming the image of the new Africa” with his rights record.

Mugabe hit back on Sunday, charging British Prime Minister Gordon Brown, who boycotted the summit over his presence, was behind criticism of Zimbabwe.

“Yesterday, we heard four countries — Germany, Sweden, Denmark and the Netherlands — criticise Zimbabwe for lack of human rights for non-observance of the rule of law..,” the Zimbabwean president said at a closed door session.

“Does the German chancellor and the pro-Gordon gang of four of yesterday really believe that they have a better knowledge of Zimbabwe” than African bodies? “It is this arrogance that we are fighting against.”

Sudanese President Omar al-Beshir received a similar carpeting from a delegation of European leaders, including Portugal’s Socrates and French President Nicolas Sarkozy who implored him to allow the rapid deployment of a UN-led peacekeeping force to stem the bloodshed in the western Darfur region.

“We told him it is in Sudan’s best interests … that there is a halt to the massacres on its territory and that in order for the massacres to stop, the hybrid (UN-AU) force needs to be deployed as soon as possible,” said Sarkozy.

Wary of China’s growing push into Africa, the European Union has been keen to nail down new trade agreements before the expiration of existing deals at year’s end.

But while the message from Europe was no one would be pressured into agreement, African Union Commission chief Alpha Oumar Konare warned EU negotiators to “avoid playing certain African regions off against each other.”

“No one will make us believe we don’t have the right to protect our economic fabric.”

EU Development Commissioner Louis Michel condemned the comments.

“I think that it was excessive and unjustified and that it was not the best way to defend the interests of Africa,” he said.

Asked how negotiations on the Economic Partnership Agreements (EPAs) were going, Italian Prime Minister Romano Prodi told reporters: “Not easy.”

“The African countries are more and more afraid to be in some way pushed down by sudden competition, so they are asking for guarantees.”

EU’s Michel says summit should bring fundamental change to EU-Africa relations

From the International Herald

Tribune

EU’s Michel says summit should bring fundamental change to EU-Africa relations

The Associated Press

Friday, November 30, 2007

 

 

BRUSSELS, Belgium: The European Union’s top development official said Friday he hoped next week’s Europe-Africa summit would lead to a “fundamental shift” in bilateral relations and allow the EU to reclaim ground lost to China.

EU Development and Humanitarian Aid Commissioner Louis Michel said that while colonial history remains on Europe’s conscience and “Africa will probably still exploit it for some time,” the two sides must structure their future partnership as one of equals.

“The donor-recipient mode has led to attitudes on both sides. We must get rid of the give-and-take attitude,” Michel said in a speech to the European Policy Center think tank. “I hope the summit is going to lead to a fundamental shift in relations.”

The Dec. 8-9 summit will focus on five main issues: governance and human rights, peace and security, migration, energy and climate change, and trade.

Portugal, which holds the EU’s rotating presidency, wants the Europe-Africa summit to herald a period of closer cooperation between the 27-nation EU and the 53-member African Union and counter the influence of China, which has invested billions of euros (dollars) in developing African countries in recent years.

“In Europe we don’t always realize that, but African countries, which used to be out there with a begging bowl, are becoming quite popular, and they’re taking advantage,” Michel said.

The protracted spat between Britain and Zimbabwe over the presence of Zimbabwean President Robert Mugabe is threatening to overshadow the summit. British Prime Minister Gordon Brown has said he would stay away from the summit because of Mugabe.

But Michel said he didn’t think the summit would fall hostage to the spat.

“At the bottom of this is colonial history, you can’t rewrite history … but if you don’t offer them a new framework they will always work with this historical memory,” he said.

China Defends Its Presence in Africa

China Defends Its Presence in Continent
The New Times (Kigali)

NEWS
4 November 2007
Posted to the web 4 November 2007

By Magnus K Mazimpaka And Ignatius Ssuuna
Kigali
A Chinese Diplomat has defended his country’s increasing presence in Africa. The Chinese Acting Ambassador to Rwanda, Wang Xinm.Li said China is not motivated by the continent’s resources but sincere support.”Our friends will continue making noise but this will not stop us from supporting African states and improving people’s standards of living,” he said.

He insisted no one will stop China’s engagement in Africa’s economic and political fields. “You cannot expect no noise from other causes of the world,” Wang Xinm Li said but added that, “Nobody will silence us.”

The US and European governments have tried to link the 2008 Beijing Olympics with Chinese policy in Darfur, saying they run counter to the Olympic spirit.

Mid this year, reports said, a group of 108 members of the US House of Representatives sent a letter to the Chinese government warning that the Beijing Olympics could be endangered if China did not revise its foreign police, citing Sudan as a case in point.

Some American entertainment figures have raised threat of an Olympic boycott unless China moves more forcefully to use its influence in Sudan with which it has profound economic and military ties.

Hollywood actress and activist Mia Farrow, who was in Rwanda recently, said China, Sudan’s main oil customer and arms supplier has a lot of influence in blocking the deployment of a United Nations and African Union peacekeeping force.

“China’s responsibility to play a constructive role in ending this Genocide extends beyond their relationship as Sudan’s primary economic partner and diplomatic protector,” Mia Farrow was quoted as saying.

“Mia Farrow was here (Rwanda) doing a lot of propaganda against China but she should go to Iraq and do the same,” Wang Xinm. Li told reporters on Friday.

He added that the campaign against China is a “political motive” of other powerful states yet China enjoys a normal relation with Sudan as it has with other African countries.

Sudanese President Omar Hassan al-Bashir has accepted the 3,500-member reinforcement team to bolster the African Union force.

He blocked the deployment of the 20,000-strong peacekeeping force envisioned in a plan worked out by the former U.N. secretary general, Kofi Annan.

“Since the breakout of the crisis of Darfur, China has done much in that regard and has used its influence and unique position and relations between the two countries to alleviate the crisis in Sudan,” the Chinese Diplomat said.

He said China has diplomatic missions in all African countries except five- Burkina Faso, Swaziland, Malawi, Gambia, Sao Tome and Principe.

This has raised concerns of other World Powers about China’s engagement in economic and political relations with Africa.

Last year, Beijing held a Summit of the Forum on China-Africa Cooperation (FOCAC), and China pledged to offer $5 billion in preferential loans and credits, and double aid to Africa by 2009, while announcing a package of assistance, investment, trade and other key projects for public health and education in Africa.

About 41 heads of state and senior officials of 48 African countries took part in the diplomatic event which was held under a theme “Friendship, Peace, Co-operation and Development.”

Wang said there is a need to promote a balanced, co-ordinated and sustainable development of the global economy to enable all countries to share its benefits and realize common development and prosperity.

Last year, China and Rwanda recorded a total trade turnover of more than US$34million.

Rwanda exports to China have increased by more than 80% between 2004 and last year.

Also a number of Chinese companies have started investing in Rwanda.

A Chinese based company recently launched a subsidiary in Rwanda to provide digital Pay-TV and broadband Internet services.

Rwanda’s Foreign Affairs Minister Charles Murigande in the recent past said China’s investment shows its commitment to strengthen cooperation between the two countries.

China is actively involved in infrastructure construction, finance, technology and communications, education, Health and road construction in Rwanda.

China to Help Africa Breed Fish

China to Help Continent Breed Fish

The New Times (Kigali)
NEWS
14 November 2007
Posted to the web 14 November 2007

By Kabona Esiara And Agencies
Kigali
China has promised to work with the New Partnership for Africa’s Development (Nepad) to develop the fishing industry in Africa.

Through the Chinese Academy of Fisheries Sciences (CAFS) and the WorldFish Centre, Chinese agreed to work on a scientific research programme on aquaculture-fish growing.

They particularly focus on fish breeding and to co-host future Forums on Fisheries Science and Technology, according to a Nepad Dialogue, a monthly online publication.

The development comes at a time when fresh water fish stocks in African are dwindling but the local and international markets for the fish are steadily growing.

To mitigate against the shortages, Rwanda government is encouraging the private sector to invests in fish farming. The country mostly depends on fish supplies from Uganda, Burundi and Tanzania to feed her population.

According to The Nepad Dialogue, an online publication, the agreement was announced at a luncheon hosted for the Nepad and WorldFish Centre delegations by the president of CAFS, Prof. Zhang Hecheng.

This was during the 2007 Chinese Forum for Fisheries Science and Technology held in Qingdao, the capital city of Shandong province.

Nepad was represented by Dr. Sloans Chimatiro, Nepad fisheries advisor, and WorldFish by Dr. Raul Ponzoni. Under the agreement, WorldFish will mobilise international scientists, particularly fisheries scientists from Africa to give them an opportunity for wider scientific exposure.

In addition, the Chinese Academy of Fisheries Sciences, through its cooperation with the WorldFish Centre will explore opportunities to collaborate with African partners in fisheries and aquaculture research and technology development under Nepad.

The National Fisheries Technology and Extension Centre in the Ministry of Agriculture also pledged to work with Nepad to assist African partners in the field of fisheries and aquaculture.

The Forum was co-sponsored by Shanghai Fisheries University, WorldFish Centre, Fisheries Research Agency of Japan, National Fisheries Research and Development Institute of Korea, Ocean University of China and Institute of Oceanography and Yellow Sea Fisheries Research Institute of the Chinese Academy of Fisheries Sciences.

It is reported that during the Forum, Dr. Chimatiro presented a paper entitled “NEPAD action plan for the development of African fisheries and aquaculture: seeking new partnerships in fisheries and aquaculture science”.

Improving China’s Image

Improving China’s Image
Business Daily (Nairobi)

OPINION

28 November 2007
Posted to the web 28 November 2007
By Calestous Juma

China’s ability to respond rapidly to requests for investment in new areas such as infrastructure has emboldened many African leaders who are under pressure to meet their electoral promises.

But such rapid responses have seen China establish its presence in many African countries and made it vulnerable to unfavourable diplomatic exposure.

In Darfur, for example, rebels are demanding that China be excluded from peacekeeping efforts. They argue that China’s role is compromised by the fact that its oil revenues are supporting the Sudanese government.

China needs to rethink its image in Africa so that it can be an effective player in a broader international alliance for Africa’s development. New diplomatic efforts that involve partnerships with other nations around the world would make China’s interest in Africa better. In other words, Africa’s development interests should be seen as the basis for defining China’s diplomatic policy on Africa.

Africa’s capacity to develop and become a major player in the global economy will depend largely on the extent to which it is able to train a large section of its population in science, technology, engineering and mathematics.

China could make significant contributions to Africa if it joined other nations around the world to help Africa build up its scientific and technical competence. Much of this is going to involve creating a new generation of technical and entrepreneurial universities.

There is considerable disquiet over China’s economic relations with countries that have poor governance records. Most of the governance challenges are a result of weak democratic institutions as well as access to opportunities for professional training.

China could contribute to improvements in the situation by supporting the establishment of training programmes in development management in particular and governance in general.

In addition, China could work with African countries in expanding and in responding to their needs to move into emerging technological fields such as information technology, biotechnology and nanotechnology.

Many of these technologies can be used to promote alternative development approaches that reduce ecological damage.

For example, China’s experience in biotechnology could be used to promote sustainable agriculture in Africa as recommended in Freedom to Innovate: Biotechnology in Africa’s Development, the report of the High Level African Panel on Biotechnology prepared for the African Union.

Other fields could include expanding critical infrastructure such a wireless broadband which can help to extend communications capabilities on the continent. Finally, emerging fields such as nanotechnology could be used to develop ecologically-sound products that can enable Africa to pursue sustainable development paths.

Chinese enterprises will continue to be a visible part of the African landscape. It will be critically important for them to cultivate a good image of corporate citizenship and to work closely with local communities. If the enterprises do not adopt an outlook of good citizenship, they attract local resentment.

The work to build a positive image must start now and China’s presence in Africa will need to go beyond the current connections with governments and more engagement with the public, including support to non-governmental development efforts.

Many of the transactions between China and Africa are kept confidential and little is known about their terms. Promoting greater transparency and mutual learning from those arrangements will help to improve the image of Chinese businesses in Africa.

Prof Juma teaches at Harvard University’s Kennedy School of Government

World Grows Jealous as China Courts Africa

China Courts Africa – Who is Jealous Now?

The New Times (Kigali)
EDITORIAL
5 November 2007
Posted to the web 5 November 2007
Kigali
The Chinese Acting Ambassador to Rwanda, His Excellency Wang Xinm Li, has said that China’s increasing interest in Africa is not motivated by wanting to exploit the continent’s resources, but mostly to lend sincere support to the struggling African population.

He took a swipe at Western countries that have expressed concern at the great speed at which China is getting involved in Africa, and declared that nobody will stop them.

As this most interesting development plays out, Africa is watching the old colonial masters and current development partners, and the new entrants in the struggle for Africa’s improperly exploited and sometimes virgin natural resources, with a bit of amusement.

On the one hand, there is the age-old political game that has been played in Africa and might be playing out now. This is the pegging of development aid to whatever whim the givers may want, but mostly attaching it to the parameters of democracy as the Western world knows it. Any African leader wants aid but does not play ball, fails to meet the standards set for that aid support and therefore no aid.

In fact, the fast developing China, long isolated from the mainstream world politics, has also been threatened with a boycott of its 2008 Beijing Olympics if it does step up bettering its human rights record. At last, the west seems to say to China, we have them where we want them. China wants the 2008 Olympics to be a smashing success, so one might expect it to be bending over with the desire to impress. But wait

The economic success that has placed China at the adventuring end of world economics, has made it a direct competitor with the west for any resources that will make it grow even stronger. So it looks around, sees an Africa that is rich but still tottering, and decides to go the whole way. Right now China has just completed an investment deal in South Africa, buying 20 percent of Standard Bank, which translates into $5.5 billion. And this, without first demanding that South Africa should, say, increase its efforts to fight HIV/ Aids first before any deal is concluded.

Where does Africa stand in all this? Investments leading to economic emancipation, what else? Regardless where it is coming from. South Africa has taken the lead.

The Western Nations Concerns Over China’s Role in Africa is Starting to Show!!

West’s Concern Over China’s Role on Continent Starts to Show

The Nation (Nairobi)
OPINION
11 November 2007
Posted to the web 12 November 2007
Nairobi

Give it to Robert Mugabe: he has this remarkable ability to make Europe tie itself in knots. The upcoming Africa-European Union summit of Heads of Government hosted by Portugal is already steeped in controversy after British Prime Minister Gordon Brown warned he would not attend if the Zimbabwean leader were invited.

This has put everybody in a bind, no less the Europeans themselves.

But in an unusual reversal for Mr Brown, key European states from Germany to Portugal have intimated they don’t agree with the British government’s reasoning on this matter. Of course, the issue is being argued along the familiar and patronising line that one man should not jeopardise a vital discussion on trade and investment that is to be in Africa’s benefit.

If truth be told, it is Europe that needs the summit more than Africa does. The European Union bloc has traditionally been Africa’s most important and valuable trading partner. But in recent years, China booming economy has seen her rise to be the number two foreign economic player on our continent.

A year ago China organised the first Sino-Africa summit in Beijing, which was highly successful. Europe, as did many of Africa’s other would-be suitors, watched the event with keen interest.

Equal note has been taken of the fact that China has the largest number of embassies and consulates on the African continent, and that includes all the British and the French missions as well.

Actually the whole charade is about Africa’s vast, untapped resources. Everybody is fighting for a share of these under the polite guise of discussing investment at well-appointed summits.

Outside her interests in oil imports from Nigeria, Angola and other oil-producing African countries, the United States has been a comparatively lesser economic player in the continent despite her global omnipotence.

But America is certainly not keeping aloof from this intensifying competition for Africa’s enormous resources. And as is the case with Europe, it is China’s commercial inroads on the continent that have put the superpower on full alert.

Earlier this year Washington announced the creation of a new American military command it is calling Africom (for Africa Command).

It has been shopping around on the continent for a permanent headquarters for this command, so far unsuccessfully. For understandable reasons, hardly any African country would be comfortable offering this Africom a base, though Liberian President Ellen Johnson-Sirleaf looks like she could succumb to George W. Bush’s recent charm offensive that saw her receive America’s highest decoration, the Congressional Medal of Honour.

The rationale advanced for Africom is, ostensibly, to network with African countries in matters of counter-terrorism, which means stalking terrorists from the Indian Ocean seaboard and the Horn of Africa up to the Sahel.

But those familiar with geopolitical strategies have no illusion that the time will come when, assuming China manages to crowd out the others from Africa’s resource pie, Africom will abruptly cease to be the benign force it is being purported to be.

Mr Brown’s stubborn insistence on the old British vendetta against Mr Mugabe has irritated other European countries who think he is failing to see the bigger picture. And it is not as if the Brits (or for that matter the French) are any longer the last word on matters African.

Ghanaian President John Kuffuor, who rarely reacts emotionally, has complained of countries introducing matters that are “extraneous” to the Lisbon summit. Mr Kuffuor’s remarks have been widely digested because he is not just any African. He is the serving Africa Union chairman, and hence our global voice. Mr Mugabe’s neighbour, Zambia’s Levy Mwanawasa, who currently chairs the Southern African Development Community (SADC), has gone a step further and made it clear that he (and certainly others) will not be in Lisbon if the Zimbabwean leader is not invited.

Mr Brown is first and foremost playing to a gallery. The British have turned Mr Mugabe into such an ogre that they themselves have become hostage to their own propaganda.

The Prime Minister is already lagging behind in the polls to the opposition Conservative Party, and much as he can understand that his fellow Europeans are talking sense, he has already put himself in a political bind. That is Western “democracy” for you.

There was this interesting encounter last week between Mr Kalonzo Musyoka and the CEO of the Steadman Group, Mr George Waititu. Reportedly, the presidential aspirant was demanding to know Steadman’s polling methodology.

This is the same fellow who said he didn’t care about Steadman and that they could give him zero for all it mattered.

I don’t know what transpired, but (tongue in cheek!) I happily note that Mr Musyoka has gained three more points in the latest Steadman poll.

Commemorating 1st Anniversary of China-Africa Summit

Commemorating China -Africa Summit 1st Anniversary

The Times of Zambia (Ndola)
NEWS
15 November 2007
Posted to the web 15 November 2007

By Cecilia Lubumbashi-Mulenga

THE first ever China-Africa summit was held from November, 1 to 4, 2006 in the Chinese capital Beijing.

It is now one year since that landmark summit where, at the invitation of Chinese President Hu Jintao, 48 African heads of state and government, among them President Mwanawasa, converged to draw up a blue-print for the development of Sino-Africa relations and adopted the Beijing Declaration and Action Plan for 2007 to 2009.

The Chinese government through its embassy in Lusaka on November 2, 2007, commemorated the first anniversary of the summit to underscore the strong and cordial relations existing between that country and Africa.

Present at the function was first Republican president Kenneth Kaunda whose successful visit to China in September was also being commemorated. Dr Kaunda was at the event to authenticate the Zambia-China relations. As the man who pioneered ties between Zambia and China since the country’s political independence, ‘KK’ knows too well what a friend Zambia and Africa has in China.

During the celebrations, Dr Kaunda added colour to the occasion with his popular song, Tiyende Pamodzi a legendary tune composed in the early days of Zambia’s independence which urges unity among people regardless of colour, tribe, creed or station in life.

“China has been our all-weather friend for time immemorial. She supported our struggle for self determination and independence. Today, we can look back with a deep sense of satisfaction that our relations with China have been and continue to be on solid ground. Indeed these relations are continuing to grow from strength to strength,” said Dr Kaunda.

“From the time of our independence in 1964, we adopted a one China policy, a decision we based on principle as Taiwan is a province of China. That is why we campaigned vigorously for the readmission of China into the United Nations, an issue which was resolved in 1971,” he said.

Addressing a gathering which included Chinese ambassador to Zambia, Li Qiangmin, Foreign Affairs Minister Kabinga Pande, Information and Broadcasting Services Minister and chief government spokesperson Mike Mulongoti among others, Dr Kaunda noted that the China-Africa relations should be nurtured and preserved at all costs.

“Today the countries of Africa are free of colonialism and apartheid. We have achieved political independence which in some cases came at a very high price. We are now engaged in another struggle for economic and social development. China is already playing a very important role to enhance our efforts. China is therefore our valued partner in development. Let us do everything possible to enhance these relations in the interest of our future generations,” said Dr Kaunda.

Others in attendance at the ceremony were opposition United National Development Party (UNDP) President Hakainde Hichilema, Education Minister Geoffrey Lungwangwa, other senior Government officials, freedom fighters and business men and women.

Chinese Ambasador to Zambia Li Quiangmin echoed KK’s sentiments noting that China and Zambia enjoyed a long standing traditional friendship. He was happy to note that the relations have continued to grow from strength to strength much to the disappointment and shame of some critics who have accused China of having a hidden and selfish agenda on Zambia and Africa at large.

The Chinese envoy was glad that the Zambian Government under the leadership of President Mwanawasa has consistently and roundly condemned such critics.

Said ambassador Quiangmin: “the politician who is attacking the Chinese investment and economic cooperation between China and Zambia, is only a ‘hired gun’ working to defame China for the purpose of getting money from Taiwan authorities”.

The ambassador vindicated China’s name by pointing out that its relations with Zambia had nothing to do with looting of local resources.

“For example, in 2006, Zambia’s total output of copper was 400,000 cubic tonnes out of which the total output from the Chinese mining companies in Zambia was less than 40,000 cubic tonnes and almost all the products from the Chinese mining companies were sold to the London Metal Exchange and China buys copper from the international market”.

The ambassador added that investment in Zambia stood at US$650 million (about K2.6 billion), accounting for over 12,000 job opportunities. He refuted claims that 80,000 Chinese nationals were in Zambia saying the correct figure was 3, 000.

During the China-Africa summit in Beijing, an eight point cocktail of measures was announced by Chinese president Hu Jintao aimed at enhancing cooperation between China and Africa. These included doubling China’s assistance to Africa, setting up the China-Africa Development Fund worth about US$5 billion (about K20 trillion) to encourage Chinese companies to invest in Africa and provide support to them and establish trade and economic cooperation zones in Africa in the next three years.

President Jintao followed up the China-Africa summit with a visit to a number of African countries last year top among them Zambia during which time he held one-on-one talks with President Mwanawasa on a wide range of issues of mutual interest.

Mr Pande who represented the Zambian Government at the commemoration, said Zambia was extremely pleased to note that the Beijing Plan of Action has not been empty words.

The minister recalled that shortly after the summit in November 2006, His Excellency President Hu Jintao paid a state visit to Zambia in February 2007. During the visit, President Jintao outlined concrete actions to be undertaken in Zambia under the spirit of the Beijing Plan of Action.

The plan entailed among other measures partially cancellation of Zambia’s debt owed to China, establishment of a Chinese economic and trade zone in the country, construction of a sports stadium and provision of 800 million yuan between 2007 to 2009 for projects mutually by Zambia and China.

Recounting progress so far made in establishing the Chambeshi Multi-Facility Economic Zone,, MFEZ, Mr Pande said a number of deliverables have been achieved including the investment in the west ore body which will create 1,500 jobs. The masterplan of the MFEZ itself has been finalised. In the meantime, the two governments have been speaking to potential investors from China to invest in the Zone.

The minister added that construction of houses for workers in the MFEZ is scheduled to start next year and the Zambian government has already provided land for the project.

On the ultra-modern stadium to be constructed in Ndola off the Ndola-Kitwe carriageway on the Copperbelt, Mr Pande said design works had reached an advanced stage. Recently, a local company won a tender to clear the area where the modern stadium will stand and work has since commenced.

Mr Pande expressed gratitude to the Chinese government for its responsiveness to Zambia’s development needs and the impressive speed with which action is being taken on issues agreed upon.

“I wish to re-assure your Excellency that Chinese investors, as any other investor from any other part of the world, are free to invest in Zambia. This is an open country that hosts people from Europe, America, the Middle East, Asia and even neighbouring African states,” said Mr Pande.

Mr Pande however, advised investors to obey the laws of the land even though some of them bearing in may not be conducive to the modern day business environment.

“As government, we are aware that some of our laws and regulations may not be conducive to the modern investor, but we are continuously upgrading and updating them with a view to making Zambia an attractive and conducive investment destination,” said Mr pande.

Mr Pande cautioned Zambians against falling prey to some people who are bent on painting a negative picture about the Chinese investors in preference to the Taiwanese investors saying the impact and benefits of the Chinese investment was there for all to see.

And acknowledging Dr Kaunda’s presence at the event, Mr Pande observed that the former Head of State occupies a special place in the Zambia – China relations as he and his Chinese counterpart the late late Chairman Mao and others like Zhou Enlai, were architects of the friendship which has continued to flourish over the over the years.

“This required courage then because Zambia had just attained its political independence and also because of the cold war politics of the day when friendship communist China was frowned upon. As we intensify cooperation between China and Zambia, it is important that we bear in mind that the economic benefits which Zambia is reaping today is largely because of the political dialogue established by our founding father KK,” said Mr Pande.

Zimbabwe’s High Commissioner to Zambia Lovemore Mazemo also hailed the longstanding relations between China and Africa.

“China has stood with Africa in its political liberation and it has continued to stand with the continent in its efforts in economic liberation,” said High Commissioner Mazemo.

In its quest for economic emancipation, Zambia needs genuine and all-weather friends like China who are keen and ready to assist the country and the continent at large to develop with no strings attached.

Over the years, China has demonstrated its commitment to help Zambia develop as can be seen in many investments the country has devoted to Zambia such as the Tanzania Zambia Railway Authority, TAZARA and other infrastructure littered all over the country too numerous count.

During his visit to China, President Mwanawasa when asked by journalists why he valued Chinese investment, replied jokingly: “refusing Chinese investment ‘ukakana no buchi,’ meaning to refuse Chinese investment, is to refuse honey.

As the old adage goes, ‘a friend in need is a friend indeed. Zambia and China are friends indeed.-ZANIS

China Signals a New Day for Africa

China Signals a New Day for Continent

BuaNews (Tshwane)
NEWS
11 November 2007
Posted to the web 12 November 2007

By John Battersby
Johannesburg
The recent acquisition by China’s largest bank of 20 percent of South Africa’s Standard Bank is a watershed event in the growing relationship between China and the development of the African continent.

China is an emerging global power and the sheer scale of its economy is already beginning to dwarf anything that has come before it, reports Southafrica.info.

The Industrial and Commercial Bank of China (ICBC), which made the move on Standard Bank, recently overtook Citigroup as the world’s largest bank, with a market capitalisation of $254 billion (R1.4 trillion).

Its $5.5 billion (R36.7 billion) stake in Standard Bank, the bank with the largest presence in Africa, is the largest ever inward investment in South Africa, as well as the biggest Chinese financial acquisition ever.

It further consolidates the uniquely strategic relationship between China and South Africa, its major partner on the African continent, and marks the moment at which South Africa can look to the new “BRIC” global economic powers – Brazil, Russia, India and China – as the source of foreign direct investment which has fallen short of expectations in the case of traditional trading partners Britain, France, the United States and Japan.

China has in the past decade or so become the fastest growing investor in African infrastructure, one of the major source of soft loans to African states, one of the largest consumers of African oil and steel and the largest exporter of cheap manufactured goods to the continent.

Bilateral trade between China and African nations has increased a staggering tenfold to $55.5 billion (R350 billion) in less than a decade. In the six years from 2000 to 2006, China pumped $6.6 billion (R43 billion) in foreign direct investment into Africa.

China’s state financial institutions, such as the Chinese Export-Import Bank, are advancing soft loans for developing African infrastructure, which run into $25 billion (R152 billion) over the next three years or so in four countries alone: Nigeria, Angola, Ethiopia and the Democratic Republic of Congo (DRC).

China’s strategic approach in building a long-term relationship with Africa to serve its own economic interests has opened up opportunities for African countries which were unthinkable even a decade ago.

The Chinese approach of doing business without preconditions based on human rights and good governance has presented the continent’s traditional trading partners, and multilateral bodies such as the World Bank, with a major challenge.

China-Africa Relations – What is Next??

China-Africa Relations – Celebrating 1st FOCAC Anniversary
Leadership (Abuja)

ANALYSIS
23 November 2007
Posted to the web 23 November 2007

By Stanley Nkwocha
Abuja
The impact of trade and bilateral relation between countries and across continents has no doubt impacted positively as countries have benefited immensely from the various relationship that have been established and existed between partner countries.

Developing countries in Africa have no doubt benefited through this scheme as through it, technical, infrastructural, educational, agricultural, economic, health and various strides of development has been recorded.

The Chinese government under the prime ministership of Wen Jiabao has actually been at the fore-front of establishing bilateral trade between it and other countries/continents of the world. Needless to say that the revolution of the Chinese economy, which has made it the 2nd largest economy of the world, has positioned it to be the bride being wooed by many suitors.

On June 21, 2007, China and Africa initiated the Forum of China Africa Cooperation (FOCAC), to, in light of the aspiration and needs of African countries, as well as the level of China’s economic development, promote China-Africa practical cooperation towards increasing African countries capability for self-development and achieving common development. A further aim is to deepen the traditional friendship and the advancement of the practical cooperation between China and Africa.

Against this background, at the June 21 summit of FOCAC in Beijing, eight policy measures were adopted. These include sincere friendship and consultation on an equal footing, aimed at cementing sincere friendship through many channels. To realize this, the Chinese government sent out five missions to 15 African countries. So far this year, four ministerial level officials from China’s ministry of commerce have visited nine African countries to follow up on specific projects,just as 16 working groups of the ministry were sent to Africa to study relevant associated projects.

Adopted, also, was the need for careful planning and sharing of benefit. This is said to be in the respect that all countries whether big or small, rich or poor, are equal, just as the Chinese are determined that every country and widest segments of the Africa population stand to gain.

The third policy that is that of feasibility and clear focus. The China -Africa partnership is based on reality and particular condition of the countries involved. It is opined that for these measures to produce desired results in economic and social terms, they should be in line with actual needs and conditions of Africa countries and within the capacity of China.

The doubling of China’s 2006 assistance to Africa by 2009 was also amongst the policy measures reached at the Beijing summit. The assistance will mainly be used for the following:

1. Infrastructure projects and complete sets of projects

2. Provision of hospitals, stadia, schools and other social, cultural and public facilities

3. Capacity building for self-development of African countries

4. Disease prevention and treatment, as up till 2007, China has signed bilateral assistance agreements with 44 African countries.

Furthermore, $3 billion of preferential loans and $2 billion of preferential buyer’s credits to Africa in the next three years was equally provided for in the policy measures adopted.

With no specific requirements on criteria in terms of recipient countries and quotas, companies from China and relevant African countries shall first discuss and agree upon the scale of the project and investment needed and submit the project proposal to the import and export of China for evaluation. The Chinese have signed a framework agreements on preferential loans with five countries and announced the provision of $100m preferential buyer’s credit to Namibia.

Other policies include building a conference centre for the Africa Union (AU) to support African countries, canceling debt in the form of all the interest-free government loans that matured by the end of 2005 owed by the heavily indebted poor countries and increasing from 190 to over 440 the number of export items to China receiving zero-tariff treatment for the least developed countries in Africa having diplomatic ties with China. Others include the establishment of 3 to 5 trade and economic cooperation zones in Africa in the next three years, just as strengthening cooperation in fields of human resources development, agriculture, medical care, social development and education will be enhanced.

One bottleneck which has come to be identified as a major obstacle, hampering the success of bilateral relations is the poor, and in-most cases lack of follow-up actions.

In FOCAC, however, this may not be the case as both China and its counterpart African countries have braced up, putting follow-up work immediately after the Summit.

While China put forward the plan for cooperation in following up the summit and formulated the general plan with detailed schemes on delivering the eight policy measures, based on the principle of mutual benefits, win-win results, friendly consultation, and efficient and practical cooperation, the African side has seen leaders and governments put forward a number of useful suggestions on carrying out the cooperation. A number of countries have set up special-cross developmental committees or coordination mechanisms headed by their leaders. The African Diplomatic Corps in China have held a number of meetings on the implementation work.

Chinese foreign minister, Li Zhaoxing, has visited seven African countries in 2007, kick-starting the implementation of the outcome of the summit. An in-depth exchange of views with African leaders on the way to advance the new type of strategic partnership between China and Africa, aimed at expanding the practical cooperation and promoting common developments also held. With the leaders reaching new and extensive consensus, more than 70 agreements on bilateral cooperation have been signed, showing the seriousness of the Chinese, aftermath of chairman Jia Qinglin and NPC chairman, Wu Bangguo visits to separate countries of Africa.

According to FOCAC Beijing Action Plan (2007-2009), the two sides will set up a mechanism of regular political dialogue between Chinese and African foreign ministers within the FOCAC framework.The two sides are busy preparing the first regular political consultation of their foreign ministers on the sidelines of this year’s UN general assembly. China and Egypt, the host countries of the next FOCAC ministerial conference, have already agreed on the preliminary proposal for the consultation.

Indeed the China-Africa partnership under FOCAC has indeed proven to be worthy of emulation and a hope-raiser for African countries-highly underdeveloped

How far-reaching these relationships would benefit the two partners as well as the cueing of other countries in this most commendable scheme is what most Africans look forward to.

EU Will Be the Main Beneficiary of the EPAs

‘EU Will Be the Main Beneficiary of the EPAs’

Inter Press Service (Johannesburg)
NEWS
15 November 2007
Posted to the web 15 November 2007

By Francis Kokutse
Accra
If Ghana’s government used civil society protests as guideline as to which way to go in the negotiations with the European Union (EU) on the economic partnership agreement (EPA), the talks would have been terminated.

The message to the government has been clear: the EPA will not improve trade between the country and its European trading partners. Unfortunately, governments do not always consult their people in such matters.

Civil society has shown clearly where it stands when it comes to the EPA currently being negotiated between the EU and, among other groupings, the Economic Community of West African States (ECOWAS).

In its present form, the EPA will lead to the loss of livelihood for most peasant farmers, Mohammed Adam Nashiru, president of the Ghana Trade and Livelihood Coalition Campaign (GTLCC), told a recent meeting of peasant farmers organised by the GTLCC in Tamale in the north of the country.

Some 60 percent of Ghana’s workers are in the agricultural sector, which is the main source of livelihood for Ghanaians and supplies 35 percent of the country’s gross domestic product (GDP).

Nashiru referred to a study by the United Nations Economic Commission for Africa which has estimated that Ghana would lose revenue equal to eight percent of its GDP. He identified the poultry industry and tomato factories as those most at risk to be negatively affected if the EPA were to be implemented.

The country’s industrialists, organised under the auspices of the Ghana Association of Industries, are also applying pressure on the government.

The executive director, Cletus Kosiba, told IPS in an interview in Accra that “we are not opposed to trade liberalisation. We are aware that liberalisation has its positive side. However, our main concern is the way liberalisation is being handled under the EPA negotiations”.

Kosiba said Ghanaian industries are not in any position to compete with their European counterparts because of the challenging conditions under which they operate.

“There is a need to improve the competitiveness of the country’s industries. This would help us benefit from any liberalisation regime. This would require some support to the local industries to expand their capacity,” he added.

Kosiba said the negotiations should be postponed for three years. This extra time should be utilised to create structures that would help build the capacity of industries and improve conditions. This will enable African countries to take advantage of the opportunities that the EPA liberalisation regime may offer.

“Until this happens, any attempt to impose wholesale liberalisation, as envisaged under the EPAs, will only kill infant industries,” Kosiba said.

He mentioned the fruit processing industry as an example. In its present form, there is no way that the exporters of processed pineapple could compete with their European counterparts because of their cost structure. Pineapples are one of Ghana’s top exports.

Kosiba also cited the influx of Chinese goods into the country and said this has posed a significant threat to the survival of the country’s industries. The government has not been able to do anything about this, he said. “Therefore, any further opening of the Ghanaian market will amount to nothing less than killing struggling industries.”

In spite of these protestations, Ghana’s President John Kufuor seems unsure as to which position to adopt on the EPA. He has given mixed signals about the country’s position on the negotiations.

Addressing the United Nations General Assembly in September in New York, Kufuor asked the EU to give Africa enough time to think through the EPA before appending their signatures.

The one exception has been cocoa exports. Cocoa is Ghana’s main export and any upset in cocoa production would greatly affect the country. Thus, in an address in Accra on October 12, Kufuor told cocoa producers to unite against the imposition of tariffs on cocoa products to the European countries.

Addressing a meeting of ministers from countries that belong to the Cocoa Producers Alliance (COPAL) he said, “speaking against the imposition of tariffs would be one of the surest ways of ensuring sustainability of the cocoa industry”.

If the EPA were not signed by Ghana, 30 percent of the country’s exports, including cocoa butter and paste, would face stiff tariffs, according to a report written by Oxford University researcher Mayur Patel for the Realizing Rights Ethical Globalisation Initiative.

The Trade Union Congress has asked Kufuor to state his position clearly. Secretary general Kwasi Adu-Amankwa said Ghanaian workers do not want any agreement with Europe that would further devastate an already ailing industrial sector.

Adu-Amankwa does not regard the EPA as an answer to the continent’s problems. “Rather, it is a tool for re-colonising us.” The main beneficiary of the EPAs would be the EU and “the people of Africa would lose even the little that they have achieved so far,” he added.

He has used every opportunity over the past few months to call on the government to resist “EU pressures and manipulation to sign the agreements”. For Adu-Amankwa, the EPA holds far-reaching negative implications for domestic production.

He warned that Ghana and, for that matter, Africa as a whole, stands to lose when the EPA comes into force.

Among other concerns, the EU has been pushing for the inclusion of government procurement in the EPA to enable their suppliers to outbid local suppliers and further bleed the ailing West African economy, Adu-Amankwa argued.

The deputy minister of trade, Kwaku Agyeman Manu, has said that the EPA should provide a mechanism to enable Africans achieve their development goals.

“We need an EPA with true development provisions built into it to ensure that the EU’s promises of making the EPAs function as development tools, are translated into commitments that can be fulfilled.”

Manu said Africans “can only take advantage of the market opening opportunities and ensure that the EPA, indeed, becomes a development tool,” if the final outcome of the negotiations is the building of “our productive capacity, competitiveness and industrial upgrading as well as the enhancement of our integration process”.

African Union Chairman Konare Says Lisbon Summit ‘A Test’

Konare Says Lisbon Summit ‘A Test’

Business Day (Johannesburg)
NEWS
19 November 2007
Posted to the web 19 November 2007

By John Kaninda
Johannesburg
AFRICAN Union (AU) commission chairman Alpha Oumar Konare said that the upcoming European Union (EU)-Africa summit would be a measure of the bloc’s willingness to enter an “equitable and equal” partnership with the continent, regardless of Zimbabwean President Robert Mugabe.

The prospect that Mugabe, widely accused of abusing human rights and suppressing political opposition, could attend an EU- Africa meeting in Lisbon next month has threatened to derail the gathering.

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Africa’s insistence that Mugabe be invited was a matter of principle and not a sign of support for the Zimbabwean leader or his government, Konare said in his opening speech at the AU African Diaspora conference in Midrand on Friday.

“We will not let ourselves be bullied or pressurised regarding who (from Africa) should attend the summit or not. That is why we as Africans had insisted that everyone (including Mugabe) should be present. “

Konare said the “strength” of European delegations sent to Lisbon would provide a “clear indication” of whether the EU was willing to enter an “equitable and equal” partnership with the continent.

He said anything less than full participation would point at the bloc’s willingness to perpetuate the colonial “slave trade economy” of the past.

Since British Prime Minister Gordon Brown confirmed he would not be attending the talks due to Mugabe’s presence , observers said there was a strong chance that other EU countries would send “weakened” delegations.

“We will assess (the EU’s) commitment from the line-up of their delegations. If (delegations) are made up of high-ranking civil servants rather then leaders, then we know where we stand.”

Later Konare said that concentrating on Mugabe rather than on negotiating a fair and reciprocal EU-Africa partnership could derail the Southern African Development Community mediation in the Zimbabwe crisis, led by President Thabo Mbeki.

During his talk, Konare turned from the podium to face Mbeki and, speaking in French, said there was an “urgent need to help our brothers in Zimbabwe to solve their problems”.

“Some of our European partners should look at the progress made by Mbeki’s mediation. The ruling Zanu (PF) party and opposition Movement for Democratic Change (MDC) have established dialogue, which should be encouraged.”

Konare said crucial talks between MDC and Zanu (PF) could break down should Mugabe miss the Lisbon gathering under the weight of European displeasure.

Konare said his comments did not mean that the AU member countries approved of Mugabe’s destructive policies but that the principle of open attendance be upheld.

“Each member of the AU has got its own opinion on Zimbabwe’s disastrous internal policies but the principle agreed upon is that they should attend the EU summit.”

Konare said that seven years had been “wasted” since the last EU-Africa summit in Cairo because of the Zimbabwe issue, but that in the meantime strategic agreements had been signed between China and Africa. “We are negotiating similar agreements with Japan and India, and Russia is also looking at Africa as an opportunity.

“So our European partners should look seriously at the December summit as an excellent opportunity to put things in motion (regarding an EU-Africa partnership).”

The summit is intended to focus on areas requiring closer co-operation between Europe and Africa, notably trade, migration and an energy partnership.

Mugabe , who sparked international outrage earlier this year when his police arrested and beat dozens of political opponents, became persona non grata in Europe after winning a 2002 election, described as rigged by international observers. With Reuters

Africa Stands to Gain From New Sources of Credit

Continent Stands to Gain From New Sources of Credit

The East African (Nairobi)
OPINION
12 November 2007
Posted to the web 12 November 2007

By Jean-Michel Severino

This will come as a surprise to none at this year’s edition of the World Bank IMF annual meetings: Economic growth is back on the African continent. GDP has increased 5 per cent annually over the past six years, and the Fund’s Economic Outlook anticipates rates over 6 per cent for 2007 and 2008.

There are many reasons to believe that this growth is here to stay, and will not be the sole privilege of resource-rich countries, as experienced especially in East African countries, whose terms of trade have declined over the past few years.

As one would expect, this budding metamorphosis has triggered fast-paced changes in the financing of African economies, in nature and in scale, both in the public and the private sectors. There is no doubt that the increasing attention to Africa among creditors worldwide is good news for the continent’s development, after decades of socio-economic crisis and chronic underinvestment.

Three simultaneous (r)evolutions have impacted the structure of sovereign debt on the continent over the past few years, as African countries sought to diversify their sources of funding.

As debt relief improves many states’ solvency, new international creditors have resolutely come forward in Africa – as exemplified by China’s announcement of a $5 billion loan to the Democratic Republic of Congo. Their presence has been largely welcomed by Africans, and justly so – it constitutes an unprecedented opportunity for the continent to anchor itself to the new motors of world growth.

Yet Africans, Indians, Chinese and Europeans alike perceive the intrinsic risks that these new loans contracted outside of any multilateral framework represent with respect to hard-earned (and dearly paid) debt sustainability. Every new relationship involves a learning phase, in which dialogue and transparency are vital.

It is crucial that the international donor community enters into sustained dialogue with these new creditors, who are increasingly mindful of their reputation in Africa and the world. Triangular (South-South-North) co-operation can be one of the useful channels through which common objectives are identified and pursued.

ALTHOUGH MOST public attention has focused on the emergence of new sovereign lenders, this may not be the most important change undergone by African finance. The improving macroeconomic environment and the renewed capacity for many African countries to issue debt have also led to a boom of local-currency government bonds. East African countries, especially Kenya, have a long experience of this new type of financing from which we can learn best practices on domestic public borrowing.

When it is conducted under favourable circumstances, local-currency commercial borrowing can bring multiple benefits to developing economies. Beyond the obvious advantage of avoiding exchange rate risks, the emission of public bonds tends to facilitate the development of national financial markets by providing stable benchmarks for private debt, greater liquidity, and by building financial capacity among national actors.

At a suitable level, it stimulates local saving, which is traditionally scarce in sub-Saharan economies – partly for lack of worthwhile investments – but if excessive, it can compete with the financing of the domestic private investment.

Public bond issues increase ownership of the resources mobilised by governments, and carry built-in incentives for greater transparency, improved budgetary discipline and better governance. However, a suitable trade-off should be found between all these benefits and the additional cost of this type of financing, notably compared with the concessional financing extended by international development banks. Given the multiple vulnerabilities of African economies, this evolution carries a number of risks that need to be strictly managed.

Excessive volatility of this type of credit can be a concern when a large share of this debt is held by foreign investors – who tend to pull out abruptly and thus propagate exogenous financial crises.

Local currency denominated debt sometimes suffers from the shallowness and lack of liquidity of domestic markets, and the excessively short maturity of the bonds issued.

International development banks can play an important role in deepening these markets in countries where they are nascent, prolonging maturities and broadening the pool of investors, as well as by offering sound debt sustainability analysis and encouraging transparency.

IN A very recent evolution, several African countries have also gained access to international capital markets: in a context of low interest rates, global investors have moved to “frontier markets” such as African debt in search of higher yields.

Here too, the emission of bonds on international capital markets by countries just emerging from debt relief – such as Ghana, whose ratio of debt service to GDP has fallen from 10.8 per cent in 2000 to close to 1 per cent today – has been sometimes a source of concern.

The sustainability of this commercial debt should remain a top-priority and be subject to consultation with international financing institutions; moreover the cost-benefit of these opportunities should be analysed in depth. The role of international development actors should be to address the real risks of volatility and vulnerability, while using to the maximum the levers that these new financing options offer for Africa’s development. This implies stepping up national and international efforts to fight corruption and money-laundering practices, and for the IMF to broaden the scope of its ever-more crucial monitoring programmes.

But focusing excessively on these three changes to Africa’s public debt would be missing half of the equation, ie, the radical transformations of private-sector activity on the continent, which contains its own share of opportunities and potential pitfalls.

For example, 2007 has seen the creation of several richly-endowed investment funds dedicated to sub-Saharan Africa; stock exchanges have flourished in African capitals, on which over 1,000 firms are now listed; foreign direct investment is on the rise and workers’ remittances flows have doubled in the space of five years. Official development assistance has clearly lost the monopoly in financing the continent’s growth.

Innovative tools, such as insurance against exchange rate fluctuations, mechanisms to cover first losses on SMEs or loans whose yearly payments are adjusted according to commodity prices on international markets – products recently developed by AFD and its private-sector entity Proparco – can help reduce the risk for investors and local businesses in need of protection.

Capital markets can be strengthened by building institutional, financial and prudential capacity in the emerging stock exchanges, as well as by providing the up-to-date and authoritative information that markets need. The lack of sectoral diversification of FDI flows and the relative dearth of equity in Africa can be addressed by creating risk capital investment funds specialised in under-financed sectors. Such public-private partnerships could mobilise adequate resources and should respond to the stringent norms of ethical finance.

THE PRESENCE of investors committed to high social and environmental standards can contribute to diffusing corporate and social responsibility practices in Africa. Such initiatives can also help plug the gap between micro and hedge-fund finance, thereby supporting the small-scale private sector activity of which much of Africa’s economy is made.

More fundamentally, by working side-by-side with African states to improve regional infrastructures and build commercial capacity, development banks can increase the productivity of African economies and their integration into world markets – one of the fundamental motors of growth.

For those who have spent a large part of their careers addressing the challenges of African economies, the formidable transformations at work on the African continent are a welcome sign of hope.

It is with caution and optimism that we should approach this new era of Africa’s development, and focus on four priorities: addressing the structural vulnerabilities of economies and financial systems; preventing excessive volatility of resources through surveillance and insurance, ensuring that the new resources irrigate more sectors of the African economy, and creating efficient redistribution mechanisms so that these new opportunities can be shared as widely as possible. Such is the challenge of translating finance into development.

Jean-Michel Severino is chief executive officer of the Agence Française de Développement.

Why China Beats Its Competitors in Africa

Why China Beats Its Competitors

Posted by AllAfrica.com

16 November 2007
Posted to the web 16 November 2007

By Helen Kilbey
Cape Town
Low costs give Chinese investors in Africa a competitive advantage over their counterparts from other countries, a Chinese analyst told the U.S.-Africa Business Summit in Cape Town.

Professor Yang Guang, director-general of the Institute of West-Asian and African Studies of the Chinese Academy of Social Sciences, was addressing an audience of mostly American and African business leaders.

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“They [China] possess low-cost technology for resource development,” he said. “They enjoy a low cost of labour – not only unskilled labour but also… engineers and managers; they employ cheap ‘Made in China’ electrical machinery, and they earn the support of the government.”

Yang was speaking at a plenary session of the summit focusing on Chinese and American perspectives on investing in Africa.

Ambassador Princeton Lyman of the U.S. Council on Foreign Relations told the same session that the U.S. could not compete with China’s offerings:

“China is able to package their government programmes, their state-owned enterprises, their aid programmes in ways that the United States can’t,” Lyman said.

“We can’t assist an oil company in making a deal by saying if they win [a contract with an African country] we’ll build a road [for that country], and it’s a challenge for those of us who do things differently.”

China’s rapidly growing economic presence on the continent has been taking up more and more space on the agendas of a range of entities interested in African business, including governments, local industries, and foreign companies operating on African soil.

The Council on Foreign Relations, the Chinese Academy of Social Sciences, the Leon H. Sullivan Foundation of the U.S. and the Brenthurst Foundation of South Africa have been running a trilateral dialogue on how China-United States relations can benefit African economies.

Giving feedback on the dialogue to the summit, Lyman described China’s recent activities in Africa as “almost breathtaking. They’ve come with such vigour and such energy and resources.”

Yang backed Lyman’s observations with evidence. China now has more than 800 companies operating in Africa in a wide variety of sectors, he said. About 100 are state-owned and the rest are private but still supported by the Chinese government.

In monetary terms, Yang added, the cumulative value of Chinese investment in Africa totalled 11.7 billion U.S. dollars by the end of 2006.

“We began by investing heavily in the resource development industries,” he said, “but nowadays Chinese investment is widespread in industries such as textiles, agro-industries, electricity, road construction, tourism, and telecommunications…”

Africa has had a mixed response to China’s increased presence on the continent.

Sindiso Ngwenya, assistant secretary-general of the Common Market of Eastern and Southern Africa (COMESA), told the summit Africa should focus on its own interests at the same time as trying to meet China’s needs.

“There’s nothing wrong with them [China] being after resources – everybody is after resources,” he said, “but the issue is… what is it that they bring to the table?”

He cautioned that China was “awash with cash, and they are looking for investment opportunities,” adding that “we need to engage them with open eyes [and] ensure that it is a win-win situation.”

South African trade minister Mandisi Mpahlwa agreed: “Africa, your problem is not the self-interest of the Chinese. Your problem is… how do you leverage this growth, this demand, for maximum benefit?”

CRAIG’S NOTE: While Helen Kilby is correct in her reporting … AND that the facts are basically true… USA, EU and other Industrialized countries CAN compete… but because of myopic views and failure to see OTHER Options that Trans-African Development Company has been promoting, these countries will not be able to compete effectively in the current environment. I encourage these industrialized countries to see that there are ways to compete effectively and industries should be the driving force behind this change in strategy in doing business in Africa.

Africa meanwhile must take EXTREME Caution in its dealings with China and the undue influence this may have upon them and the future generations of Africans. 

US Companies losing in Africa

Yes, The headline is correct. Companies in the USA are losing out on major business opportunities in Africa… as are European Companies… and they are losing to China!!

But do not take my word for it, google “China Africa” and you will see for yourself. China is not only winning in Africa they are moving at an ever increasing pace and will dominate African trade and be the primary “investor” in Africa because of the “west’s” inability to effectively coordinate investment strategies.

What do I mean by coordinated investment strategy…. it is not a complicated idea…. it is the working with other companies in a form of horizontal integration to assure the success of the investment.

For example: If the US Company is interested in Mining. then transportation becomes an important issue… yet the availability of efficient roads or rail transport is limited at best.

The coordination becomes searching for partners who wish to build a Trans-African Railroad or who are interested in highway/road development such as Trans-African Development Company.

Telecommunications and Internet is similarly available by numerous companies wishing to justify their investment and looking for “customers” to make their network affordable.

Electricity or other power sources also lend themselves to partnering with such companies.

Simply: Since no “company” has the ability or resources of a COUNTRY… like China…. then Companies interested in investing in Africa MUST find a way to compete NOW…. by affiliating with other Companies, Groups or Organizations that can facilitate their Investment into Africa.

This Article is somewhat self serving… yet it should also help Companies interested in investing in Africa, a Strategy for making such investments.

Self-serving because Trans African Development is looking to rehabilitate the road infrastructure that could make their investment economic model look better and increase the feasibility of such investments. HOWEVER, Trans African Development is NOT looking for investors to rehabilitate the existing road infrastructure in Africa… Yes, we are looking to raise the 50 million Euro to jump start our efforts in Africa… BUT, the real money to rehabilitate MUST come from those Governments of the Industrialized world to rehabilitate the basic road infrastructure in Africa.

DRC (Democratic Republic of Congo) has but 300 miles of PAVED roads… yet it’s land mass is that of ALL of Western Europe. It is not enough to get a concession for the development of Natural resources in DRC… it must be transported to global markets.

Trans African Development is looking for sponsors to implement a strategy of marketing and promotions and PR to raise the funds for this Road rehabilitation that will not only bring African gratitude to those countries (and therefore those countries Companies) but will help hundreds of millions of Africans as well as give these “traditional” Western Companies access to those resources and be able to effectively compete with China for those resources and markets.

Sadly I believe that the “traditional” Western Companies may be too late already as their existing strategists have lacked the ability to think beyond their industry and their standard business models. But I welcome feedback form those “Companies” who wish to find alternatives to their current models and who are willing to seek markets outside the black box of traditional thinking that will only cause them to lose out to China in the long run especially in Africa.

Sensitive China, Defends it’s “Co-Operation” With African Countries.

China Defends Cooperation With Continent
The Nation (Nairobi)

NEWS
12 September 2007
Posted to the web 11 September 2007
Nairobi
The Chinese government has defended its cooperation with African governments from what it termed propaganda peddled by the western media.

Chinese ambassador to Kenya Zhang Ming accused the western media of likening the cooperation between China and Africa to neo-colonialism.

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“The allegations are groundless and reflect a negative and unhealthy mentality,” said Mr Ming during Chinese Day celebrations at the Egerton University.

Fair judgement

“Whether China’s economic development and China-Africa cooperation are opportunities or threats to Africa, we believe that the African countries and their people are in the best position to make comments, objective and fair judgement with their own mind.”

He reiterated that China will offer economic assistance “in a selfless, sincere and in the purpose of helping African countries in development.”

“We do not attach any political conditions to our assistance nor do we impose our will upon others. Chinese firms who invest in Africa abide by local laws and regulations and win credits for adhering faithfully to commercial contracts.”

He said the ties had helped China to safeguard its sovereignty and integrity on international affairs.

The diplomat noted that China runs 800 major projects in Africa.

Let’s Help China Speak English

Let’s Help China Speak English
East African (Nairobi)

OPINION
11 September 2007
Posted to the web 11 September 2007

By Oscar Kimanuka
Nairobi
Writing about China from Africa is one thing but visiting this vast country is an experience worth writing home about, literally.

China’s relation with Africa stems from shared historical experiences, especially decolonisation and the fact that China is the largest developing country in the world – never mind that it is actually a developed nation by any yardstick.

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When I first visited China in 1997, Beijing was a fast growing city with thousands of motorists and skyscrapers just like New York and other Western metropolises. Today it has more complex skyscrapers, flyovers and vehicles.

The Chinese believe in first delivering their people from the bondage of poverty and deprivation before embarking on democratisation. After all, the West did not achieve democracy overnight; it was a long-term process.

China’s phenomenal economic growth and development is what everyone is talking about today. Few questions, if any these days, are asked on democratisation and human-rights observance in China.

THE REASONS are all too clear. The more economically powerful you are as a country, the more clout you have and, therefore, the less the world can ask of you on democratisation, for you could ask: “Who are you to define democracy for me?”

THE CHINESE example demonstrates that when a country chooses its own path of development and takes charge, the rest of the world, including critics, come round to accepting it and even begin to admire the efforts.

Despite criticism of China, visitors to this country continue to multiply by the day. Come next year, China will host the Olympics, despite murmurs of discontent on its human-rights record and support for Sudan.

One of the problems a visitor to China is likely to encounter is language. You would be lucky to get someone who really understands you. I thought we could help our Chinese friends by dispatching Africans to teach them English, French and other languages spoken internationally.

This is one area that could be explored in the interest of the Sino-Africa relations. Why not start with the Beijing 2008 Olympic Games?

Oscar Kimanuka is a commentator on social and economic issues based in Dar.

Summary of Africa-China-U.S. Trilateral Dialogue

Summary of Africa-China-U.S. Trilateral Dialogue
Council on Foreign Relations (New York)

DOCUMENT
13 September 2007
Posted to the web 13 September 2007

The following is a summary of the Africa-China-U.S. Trilateral Dialogue, co-sponsored by the Brenthurst Foundation, the Chinese Academy of Social Sciences, the Council on Foreign Relations, and the Leon Sullivan Foundation.

Introduction

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Over the course of the last thirteen months, delegates from Africa, China and the United States have met three times in an effort to identify strategies of cooperation among their respective nations with the goal of accelerating economic development in Africa.   The meetings were held in Tswalu, South Africa in August 2006, in Beijing, in March 2007 and in Washington in September 2007.

The Trilateral Dialogue is a unique initiative.   The purpose of this paper is to summarize the discussions which have taken place.

The Trilateral Dialogue process is in no way complete.There are issues that are still under discussion and there are other issues on which we have noted areas of divergence. Nevertheless, there has been a great deal of convergence, and that is what we want to share at this time in the hopes that we might stimulate other initiatives that will benefit Africa.

Areas of Agreement

• There is no strategic conflict between the U.S. and China in Africa, and there is no zero-sum dynamic between the two countries.
• Closely related to this is the African perspective that it is essential to avoid another scramble for Africa.
• There are divergent interests between the U.S. and China in Africa and they can be reconciled to Africa’s benefit.   It was also noted that there is no reason that China and the U.S. will cooperate automatically.
• Business competition between the U.S. and China will take place in Africa but that by definition is not necessarily a negative, especially when new technologies are shared with Africans, skills are imported into Africa and jobs are created.
• There was agreement that the U.S. and China are important commercial partners for Africa and that both can be helpful in the mobilization for capital and debt relief.
• When it comes to energy, there was agreement on the need for the security of supply and stability of price.   There was also a general consensus that Africa could benefit from all partners, especially the U.S. and China, agreeing on a framework to ensure that the revenue from these resources genuinely contributes to economic development and stronger institutions.
• Africa will have to rely on exploiting its natural resources and using the revenues from these resources more productively for social and economic development.   China and the U.S. can best assist by strengthening institutions to ensure that these resources are accounted for and invested in human and national development.
• There was also agreement that we have to be careful not to look at Africa exclusively through the lens of energy production and consumption. At the same time, it was noted that the global interest in Africa has never been higher, and that it is vital that this attention is seized for Africa’s long-term benefit.
• Related to this point was the comment made by the Chinese delegation that not all have benefited equally from globalization. It is the responsibility of the world to support Africa but, at the same time, Africa has to adapt to increased globalization.
• Given the increased international attention on Africa and the democratic and economic reforms that have taken place across the continent, it was agreed that African countries have a unique opportunity to “own” their decisions over development.
• All delegations agreed that peace and security are prerequisites for stability and economic development.
• There was also agreement that all countries affirmed their “responsibility to protect” against genocide and crimes against humanity, and that there are a number of UN and African Union (AU) conventions and principles which need to be observed.
• All delegates welcomed that Africa has taken great strides forward in the area of democracy, as illustrated by the success of the AU, the New Partnership for Africa’s Development, and the African Peer Review Mechanism.   The refusal by the AU to recognize unconstitutional seizures of power is another significant development underscoring the trend to democracy.

Areas of Discussion

• There was considerable discussion over the degree to which China can be seen as a model of economic development.   China is a developing nation that has brought a very significant number of people out of absolute poverty.   China has also attracted a significant amount of foreign investment and in a generation has gone from the 30th largest nation in global trade to number three.
• At the same time, one aspect of China’s path to development was predicated on the emergence of an extremely competitive light manufacturing sector.There is a difference of opinion over whether African nations will be able to ascend the industrial ladder over the next generation in the same way.
• There was much conversation about whether there can be a genuine convergence of objectives among China, the U.S. and Africa on how best to promote development in Africa. For example, the Chinese delegation identified their objectives as promoting peace and development. The African delegation noted that their governments want development and poverty alleviation as their first priority. The U.S. delegation emphasized policies that focus on improved governance, accelerated growth and enhanced peace and security. At the same time, the American delegation noted that it is important to strengthen the role of African entrepreneurs and civil society organizations as a stimulus to development, and that corruption and crime impose the largest obstacles, or taxes, on development.
• It was also noted that Africa is projected to be the only region in 2030 in which absolute poverty will still exist. With a growing threat posed by climate change and global warming and a decline in per capita food production, there was discussion of the appropriate agricultural and scientific technologies for Africa.
• The African delegation submitted a paper on business principles for a stronger Africa, which has become one of the bases for our continuing discussion. (The paper has been distributed separately in full.)

Areas of Divergence

Some Chinese scholars pointed out that there is no consensus on a definition of good governance. Therefore, China does not pre-condition its assistance on the existence of democracy and places more emphasis on a balance among reform, stability and development.

• The American delegation noted that the U.S. tends to condition assistance on the existence of democracy and provides direct assistance for democracy-building.
• Similarly, as it concerns peace and security, the African delegation challenged the U.S. and China to do more to help resolve the situation in Darfur. Whether or not there can be agreement among the delegations on actions for recommendation remains to be seen. The crisis of governance and economy in Zimbabwe and Somalia would also fall in this category.
• On the issue of transparency and how best to use revenues generated from commodities, there was a difference of emphasis as it concerned external codes such as the Extractive Industry Transparency Initiative, the Global Sullivan Principles, the Equator Principles and others. There is a long way to go to get governments and companies to adhere to these codes and there is not agreement among the delegations on how to achieve this.
• Finally, on several occasions in Beijing, the Chinese delegates underscored their government’s commitment to the principles of non-interference and mutual reciprocity. How this plays out in the area of conflict resolution and the responsibility to protect remains to be seen.

Strategies on the Way Forward

There is agreement among the three delegations that the initial three meetings of the Trilateral Dialogue started a process that has great potential.   In terms of the longer-term objectives, there are several:

• Influence the African Union and the governments of China and the United States to establish an official trilateral mechanism that will address key issues pertinent to the interests of nations in Africa as well as China and the U.S.
• Provide a forum to generate ideas about American and Chinese cooperation in Africa that would be of benefit to policymakers, researchers and analysts throughout the world who are engaged in African investment, development and peace and security issues.
• Bring together stakeholders in working groups in sectors such as agriculture, health and energy who have the resources and institutional capacity to train Africans, introduce new technologies and create expanded opportunities in these sectors.
• Maintain and possibly expand the existing mechanism that there be a regular dialogue among the delegates of the Trilateral Dialogue and officials from government, international organizations, corporations and non-governmental organizations with the objective of leveraging resources, technologies and expertise on behalf of African development.
• Recognizing that peace and security are essential to African development, continue to discuss how to increase AU and UN peacekeeping capabilities.

To achieve these objectives, the Trilateral Dialogue could well continue in its current form or in an agreed alternative form.   At the same time, it could establish issue-based working groups that would have specific agendas that would meet more frequently in an effort to achieve agreed upon goals.

PARTICIPANTS IN THE TRILATERAL DIALOGUE PROCESS

Chinese Delegation

Professor Yang Guang, Chair, Director-General, Institute of West-Asian and African Studies

Professor Wang Rongjun, Deputy-Director of American Economic Studies, Institute of American Studies

Professor He Wenping, Director of African Studies, Institute of West-Asian and African Studies

Dr. Zhang Yongpeng, Deputy Director of International Relations Studies, Institute of West-Asian and African Studies

Ms. Zhang Qiaozhi, Program Officer, Bureau of International Cooperation, Chinese Academy of Social Sciences (CASS)

Professor Tao Wenzhao, Institute of American Studies

Professor Yu Yongding, Director, Institute for World Economic and Political Studies

Professor Li Zhibiao, Institute of West-Asian and African Studies

Professor Yang Lihua, Institute of West-Asian and African Studies

Professor Ru Xin, former Vice President, CASS

Professor Zhang Hongming, Deputy Director-General, Institute of West-Asian and African Studies, CASS

Professor Cui Yongqian, former Ambassador to African countries

Professor Xu Weizhong, China Institute of Contemporary International Relations

Professor Wang Hongyi, China Institute of International Studies

African Delegation

Dr. William Lyakurwa, Chair, Executive Director, Africa Economic Research Consortium, Kenya

His Majesty King Letsie III, King of Lesotho

Professor Stephen Chan, School of Oriental and African Studies, University of London

Ambassador Joe Mollo, CEO, Corporate Diplomats and Former High Commissioner of

Lesotho to the United Kingdom, Denmark and Canada

Mr. Michael Spicer, CEO, Business Leadership, South Africa

Hon. Patrick Mazimhaka, Vice Chair, African Union Commission, Addis Ababa, Ethiopia

Hon. Sydney Mufamadi, Minister of Local and Provincial Government, South Africa

Hon. Lopo do Nascimento, Former Prime Minister of Angola

Hon. Neo Moroka, Minister of Commerce, Government of Botswana

Dr. Greg Mills, Director, Brenthurst Foundation, South Africa

R. Adm. Steve Stead, Brenthurst Foundation, South Africa

American Delegation

Ambassador Princeton Lyman, Co-Chair, Adjunct Senior Fellow, Council on Foreign Relations

Ambassador Andrew Young, Co-Chair, Chairman of the Board, Leon H. Sullivan Foundation

Dr. Witney Schneidman, Senior Adviser, Leon H. Sullivan Foundation, former Deputy Assistant Secretary of State for African Affairs

Ambassador Thomas Pickering, Hills & Co., former Under Secretary of State for Political Affairs

Professor Chester Crocker, Georgetown University, former Assistant Secretary of State for African Affairs

Ambassador Nancy Soderberg-Bistrong, former U.S. Ambassador to the United Nations

Hon. David Goldwyn, CEO, Goldwyn International Strategies, former Assistant Secretary of Energy Mr. Stephen Hayes, President and CEO, Corporate Council on Africa

Ambassador Howard F. Jeter, President and CEO, Leon H. Sullivan Foundation

Ambassador J. Stapleton Roy, Kissinger Associates, Inc.

RELATED:

Business Principles for a Strong Continent

The Perennial LIE About Agreeement Between US, China and Africa

Trialogue Identifies Agreement and Divergence on Chinese and American Approaches
allAfrica.com

NEWS
19 September 2007
Posted to the web 19 September 2007

By Courtney Hess
Washington, D.C.
The “divergent” interests of the United States and China “can be reconciled to Africa’s benefit,” according to representatives from Africa, China and the United States who took part in a trilateral exchange of views over the past year.

However, stark differences in approach can also produce diplomatic and economic complications that need to be regularly addressed, according to participants in the trialogue process, which was launched in August 2006 to promote conversation on the differing American and Chinese approaches to investment and aid on the African continent.

Participants in the discussions included academics, policy analysts and current and former government officials. They met in South Africa in August 2006, in China in March and last week in Washington, DC for their third and final gathering.

China’s rapidly expanding economy has fueled a growing interest in Africa’s natural resources, which has pushed up prices of raw materials Africa produces and has led to massive increases in Chinese trade and investment throughout the African continent. China has also become one of Africa’s largest aid donors – all but two countries have been Chinese aid recipients. In November 2006, during a summit with African leaders, the Chinese government pledged to double its aid to Africa by 2009, matching a similar pledge made at the 2005 G8 Summit, where leaders of the largest developed countries promised to double aid to Africa by 2010.

Among the conclusions trialogue participants shared during sessions at the Council on Foreign Relations and the American Enterprise Institute (AEI) was the hope that Africa can benefit economically from growing competition between the two majors powers. The African delegation introduced a set of principles [aimed at ensuring that growth produces benefits for Africa. “More and more democratic and peaceful, Africa today battles not against colonialism or neo-colonialism, but against exclusion from the global economy, diseases and poverty,” the African delegation’s document says. The principles address how business should act, how international assistance should be managed and how African governments should respond to globalization.

Participants in the trialogue made clear that they did not reach consensus on all the issues they discussed. “We sometimes had to agree to disagree,” Princeton Lyman, a former U.S. ambassador and policymaker and co-chair of the American delegation said, adding that the process nevertheless produced invaluable insights into policy thinking for all the parties involved. The summary document lists areas of agreement, areas of discussion and areas of divergence. During the presentation of the trialogue process at AEI, Patrick Mazimahaka, deputy chairman of the African Union Commission, criticized Beijing’s policy of aiding African governments without pre-conditions, citing China’s cooperation with Sudan. “In terms of democratization and good governance in Africa,” he said, “we have been asking China to review its policy of noninterference.”

China is also facing criticism over labor standards and environmental concerns along with product safety and quality control for corporations working in Africa. However, AEI conference participant Deborah Brautigam, a professor at American University, believes China may be instituting higher corporate standards, citing Beijing’s recent consultations with the International Finance Corporation. Brautigam called on African countries to insist upon these standards when negotiating with the Chinese.

Several Trilateral Dialogue participants said they favor the creation of an official forum for Chinese, African, and American dialogue on interests and challenges in Africa. Many see American and Chinese interest in Africa as a positive opportunity. According to Michael Spicer from Business Leadership South Africa, “There is a feeling of new beginning, a dawn of a new era – there’s optimism,”

DOCUMENTS:

Summary of the Africa-China-U.S. Trilateral Dialogue

Business Principles for a Strong Continent

Mandelson Continues to Alienate in EPA Talks

Mandelson Urges Final Push in EPA Talks

Ghanaian Chronicle (Accra)
NEWS
13 September 2007
Posted to the web 13 September 2007

By Joseph Coomson

EU Trade Commissioner Peter Mandelson on Tuesday urged ACP governments to join a final burst of negotiations to successfully complete Economic Partnership Agreement negotiations by the end of 2007.

He warned that there would be no legal basis for the extension of existing preferential trade terms between the EU and the 78 African, Caribbean and Pacific countries if the two sides do not initial new Economic Partnership Agreements before the end of 2007.

In the absence of such agreements, Mandelson said, the EU and the ACP would have no legal alternative but to switch to the EU Generalised System of Preferences which would mean less-generous tariff preferences for many ACP countries.

Speaking to the European Parliament’s International Trade Committee, Mandelson said: “I have no hat and no rabbit to pull out of it If we have no new trade regime in place by the end of this year the Commission has no legal option but to offer the region concerned [less generous] GSP preferences.

“This deadline is not a bluff or some negotiating tactic invented in Brussels. It is an external reality created in the WTO in Geneva. We are committed to replace Cotonou trade preferences with a new trade regime that does not discriminate against non-ACP developing countries. We have to do this by 1 January 2008″.

Mandelson said the European Commission was committed to a successful negotiation.

Noting that the EU has offered to eliminate all tariffs and quotas on all exports from ACP countries as part of an agreement, Mandelson said: “In the time we have available, we will do everything we can to ensure the ACP regions get the best legally secure EU market access available. I believe that EPAs remain attainable for every region, and we will continue to work for success”.

China’s Appetite for African Forests Grows!!

Forests Must Be Very Afraid of China’s Appetite

The Nation (Nairobi)
OPINION
13 September 2007
Posted to the web 13 September 2007

By Charles Onyango-Obbo
Nairobi
NAIROBI LAWYER FRANCIS Okello, who is also chairman of the board of directors of Barclays Bank (fine, just to get the conflict of interest issues out of the way here, we shall report that he is a Nation Media Group director too), this week presented a paper at the Commonwealth Law Association conference in Nairobi.

It’s not an easy paper to read if, like this writer, you are only a scribbler who didn’t spend any time at law school. And, also, you need a whole quiet Saturday afternoon to plough through it.

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However if you survive the experience, you will be surprised how much eye-popping stuff is in the paper.

In recent days, the Chinese have come out fighting, following the recall of a range of their goods in the Western markets because they were dangerous or shoddy.

Chinese diplomats have said that’s just a jealousy-fuelled campaign by Western businesses, which are being beaten out of world markets by products from its red-hot economy.

One man who thinks China’s performance is impressive is Okello. He notes, for example, that between 1995 and 2005, China’s imports of iron ore surged by 570 per cent, copper by 738 per cent, cobalt by 4,145 per cent, and aluminium by 2,247 per cent.

Like many people on the continent, Mr Okello also thinks this good for Africa. He says in the paper: “In order to fuel this surging demand for natural resources, the Chinese Government has concentrated on acquisition of natural resources from African countries.

At first sight, China’s appetite for natural resources has come as a blessing for Africa. Indeed, it has benefits; after all, China’s demand for raw commodities has contributed significantly to Africa’s exports.”

I guess because of his views, the Chinese Embassy cannot say he is a jealous competitor when he notes with a heavy tone of concern that despite its good works, China pays very scant attention, if at all, to such issues as sustainable development, democratic governance or human rights, and that: “This has been greatly debated recently in relation to China’s complicity in the Darfur conflict in Sudan.

“This opportunistic ambivalence also exists with regard to the practice of Chinese mining and logging companies abroad”.

The paper notes, for example, that approximately 70 per cent of China’s timber import from sub-Saharan Africa is illegal. In Gabon and Cameroon, it is estimated that the Chinese evade taxes on 60 per cent of the area allocated as forest concessions.

In the Democratic Republic of Congo, Chinese companies are reported to clear three times more trees than allowed. Then, they also don’t live up to the obligation to process a part of their exports in the country of origin.

TO PROMOTE EMPLOYMENT, THE Gabonese government decreed in 2001 that 85 per cent of the cut trees should be sawn or transformed before being shipped to overseas markets. In reality, however, more than 80 per cent of Gabonese forest products arrive in China as round wood.

“In the absence of such value addition activities in the countries of origin,” he argues, “China helps in perpetuating such countries as warehouses from which to source raw materials; a position that has traditionally impeded rather than facilitated Africa’s economic growth and development”.

There’s little connection between what China is doing, and the crimes of Duan Yihe, a former chairman of the Standing Committee of the People Congress of Jinan, the capital of China’s eastern Shandong province.

Duan was executed last Wednesday, along with his policeman nephew who helped him blow up his troublesome mistresses. Duan had something going with Miss Liu Haiping, 31, who was 30 years his junior.

He gave her money to buy two cars and four apartments, one in a very fashionable part of town. In the normal world, you would think Liu would have been pleased with that, but, apparently, in the world of dangerous liaisons, that wasn’t enough.

As the years passed, Liu’s demands for marriage and more money began to grate on Duan. So, with the help of his nephew, in July he planted explosives in Liu’s car, and detonated the bomb by remote control as she drove down a busy street.

The blast was so powerful that Liu’s car was ripped apart, her lower body was destroyed, and her torso landed 30 metres away. Two bystanders were injured.

It seems that Liu had also obtained evidence linking Duan to corruption, and might have been blackmailing him. In any event, Duan was also convicted for taking bribes worth $120,000 (Sh8 million), and he had been unable to explain another $1.3 million (Sh87m) in assets.

So prevalent is the keeping of mistresses in China that investigators have found that 90 per cent of the most senior officials brought down by corruption in recent years kept them.

We certainly do not recommend the Duan approach to handling a difficult mistress. We deplore the way China is pillaging West African forests. But when it comes to dealing with crooked officials, China’s approach is one we highly recommend to the corruption-bedeviled African countries.

China WINS as EU Bullies Africa on EPA’s

Europe Cautions Africa to End Trade Impasse

Business Daily (Nairobi)
NEWS
13 September 2007
Posted to the web 13 September 2007

By Allan Odhiambo
Nairobi
The European Union has blown the whistle on Kenya and its African Caribbean and Pacific (ACP) counterparts over ongoing market access negotiations with a warning that it will not extend existing preferential trade terms should the talks fail to beat the December 31 deadline.

Mr Peter Mandelson, the EU Trade Commissioner, said there was be no legal basis for extending existing preferential trade terms saying ACP nations should prepare for less generous market access terms in the new year.

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“I have no hat and no rabbit to pull out of it…if we have no new trade regime in place by the end of this year the commission has no legal option but to offer the region [less generous] GSP preferences.

This deadline is not a bluff or some negotiating tactic invented in Brussels. It is an external reality created in the World Trade Organisation in Geneva.

We are committed to replacing Cotonou trade preferences with a new trade regime that does not discriminate against non-ACP developing countries. We have to do this by January 1,” Mr Mandelson told the European Parliament’s International Trade Committee on Tuesday evening.

Analysts said extension of the preferential trade terms would have provided a safety net for most ACP nations struggling to land new Economic Partnership Agreements (EPA) before expiry of the deadline.

This latest stand by EU puts to rest any hopes of possible extension because such a move would require the EU to apply to the World Trade Organisation for a waiver to extend the preferential trade arrangement with ACP member states.

Mr Mandelson said though negotiations with ACP countries were on course, concern was rising over progress in a number of regions including East Africa where issues of regional groupings and the platform of negotiating the new EPA remain unresolved.

“It is disappointing that a few weeks from the effective deadline for concluding an EPA these difficulties continue to hinder progress,” Mr Mandelson said.

“I have spoken recently to those concerned and all I can do today is to reiterate my plea that these issues need to be resolved now. It will not serve the interests of any country to be seen to be holding up the region as a whole.”

Mr Mandelson’s plea came as senior Government officials from the East African Community (EAC) arrived in Arusha for a two-day meeting meant to make a final decision on what platform would be used to sign a new EPA with the EU.

“We hope to reach a common ground on EPA. We are optimistic something tangible will come out of it,” said Mr David Nalo, the Trade permanent secretary.

EPA negotiations have slowed down in East Africa mainly because of Tanzania’s membership in Southern African Development Community (SADC) to the exclusion of other East African Community member states.

EAC member states have been negotiating new trade deals with the EU under the Eastern and Southern Africa (ESA) platform that is backed by the Common Market for Eastern and Southern Africa (Comesa) that Tanzanian abandoned four years ago.

Provisions of the WTO treaty, however require EAC member states to sign new deals with the EU as one Customs Union, meaning that all the five members have to provide a joint text for negotiations.

This requirement is what forced Tanzania to return to the regional fold and demand that new talks start under the EAC platform- a scenario that didn’t augur well with Kenya and other EAC members who maintained with less than three months to the December deadline, it would be impossible to land new deals if the negotiations were started afresh as a regional bloc.

They proposed that they build on the progress already attained under ESA- a path that Tanzania seems uneasy to walk.

EAC Heads of States last month ordered that officials explore possibilities of landing a joint EPA with the EU.

Mr Nalo however took issue with the EU for delaying responses to development texts presented to it for comment under the ESA platform, saying it had substantially pulled back progress.

“It is wrong for the EU to lambast us lump some because they have for instance delayed feedback on the development text forwarded to them for comment. They should stop posing gimmicks of negotiation to paint us negatively,” he said.

Projections by Kenya show that it stands to lose close to Sh114 billion in trade and investment should it fail to land new EPA with the EU largely because some of the products which it has been exporting to this key market at zero duty would now attract duty ranging between 8.5 per cent and 15.7 per cent.

Mr Mandelson however said despite the time pressure, the EU remained committed to ensuring they had new and favourable trade deals with all regions.

“In the time we have available, we will do everything we can to ensure the ACP regions get the best legally secure EU market access available. I believe that EPAs remain attainable for every region, and we will continue to work for success,” he said.

The official stated they will prepare for the rapid implementation of the various legislative and procedural steps needed to put EPAs into place in time to avoid a WTO challenge.

EU Warns Continent On Bilateral Trade … Pushes Africa Closer to China Trade

If the EU continues this line of negotiations I personally believe that ONLY China will benefit!..

Article below: 

EU Warns Continent On Bilateral Trade

Business Day (Johannesburg)
NEWS
13 September 2007
Posted to the web 13 September 2007

By Mathabo Le Roux
Johannesburg
THE European Union (EU) this week issued a stern warning to African countries negotiating economic partnership agreements (EPAs) with the union, saying that if negotiations were not completed by the end of the year, bilateral trade conditions between tho se countries and the EU would revert to the General System of Preferences (GSP), a more onerous trading regime. This would result in countries now enjoying favourable terms under the Cotonou agreement to lose those preferences.

The EU is negotiating EPAs with African, Caribbean and Pacific countries to replace the Cotonou agreement, which is incompatible with World Trade Organisation (WTO) rules.

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A waiver on the agreement expires at the end of the year.

The implications of the EU’s warnings for Southern African Customs Union countries are mixed. However, trading under GSP would not affect SA, as the country’s trade relationship with the EU is governed by a separate agreement – the trade, development and co-operation agreement.

Lesotho, as a least-developed country, is also shielded, as its trade with the EU would switch to an EBA. However, Botswana, Namibia and Swaziland are vulnerable. Disconcertingly, the EU cited SA’s “deeply negative” stance as holding up the crucial trade talks.

“Botswana and Namibia’s situation is most precarious and Swaziland is also vulnerable. Their trade with the EU will have to revert to GSP terms, which has slightly more onerous rules of origin terms, but more importantly also does not cover all products as favourably, for example beef and table grapes,” said Eckart Naumann, an economist and associate of the Trade Law Centre for Southern Africa.

Briefing the European parliament’s international trade committee this week, EU trade commissioner Peter Mandelson said there will be no legal basis for the extension of existing preferential trade terms if the EPAs are not finalised.

“This deadline is not a bluff or some negotiating tactic invented in Brussels. It is an external reality created in the WTO in Geneva.”

While talks with the Caribbean and Pacific regions are well advanced, prospects for concluding a deal before year-end with some of the African blocks are dim.

Mandelson singled out the negotiations with southern Africa as being of concern and in particular SA’s role. He said the ability to deliver an EPA with southern Africa largely depended on the region’s powerhouse.

Should EU’s EPA Trade Minister be REPLACED??

See  article below! It make me wonder if the EU should replace Peter Mendelson as their negotiator… the result of this man’s position could mean that Africa will move even closer to China for trade. This seems to be supported by what seems to be a 5 Billion Dollar deal between Congo (DRC) and China last week.

Power Struggle Continues With Unbalanced EPA Talks
Inter Press Service (Johannesburg)

NEWS
21 September 2007
Posted to the web 21 September 2007

By David Cronin
Brussels
African nations have been reduced to “begging” in negotiations on their future economic ties with the European Union (EU) in what has turned into exercise “assaulting democracy,” according to trade unionists and policy analysts from both north and south.

Trade talks have intensified in recent weeks between the EU’s executive, the European Commission (EC), and representatives of African, Caribbean and Pacific (ACP) governments. The Commission wants ACP countries to sign market-opening deals known as Economic Partnership Agreements (EPA) with it by the end of this year.

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Timothy Kondo from the trade union umbrella group Alternatives to Neoliberalism in Southern Africa (ANSA) said that the Commission has not been taking the concerns of poor countries seriously in the talks. Instead, it has been concentrated on reducing obstacles faced by western firms wishing to do business abroad.

“The attitude of the EU has to change,” Kondo told IPS. “Our governments in Africa have not been negotiating in the proper sense of the word. They have not been involved in what we trade unionists call collective bargaining. They have been involved in collective begging.”

“That is not to blame our governments. You shouldn’t blame the weak. The level of development between Europe and Africa is not the same. But the focus of the EPAs has been on removing barriers to trade between partners that are not equal,” Kondo continued.

Kondo took part in a Sep. 18 conference on the EPAs organised by left-wing members of the European Parliament.

He complained that suggestions put forward by ACP governments during the talks have been rejected by EU officials.

ACP countries have long argued, for example, that the talks should not cover such topics as competition, investment and government procurement. Yet the draft EPAs prepared by the Commission in the past few months have contained provisions on these issues, which primarily relate to the access that foreign firms would have to ACP markets.

Marc Maes, a trade campaigner with the Belgian anti-poverty group 11.11.11, said that most of the six ACP regional configurations with which the EU has been negotiating have refused to accept the Commission’s drafts. “West Africa has been very explicit on that,” he noted.

Nonetheless, the Commission has decided to keep its proposals on the table. “The texts that the Commission has tabled have reflected the Commission’s approach to global trade,” said Maes. “They do not reflect the interests and needs of ACP countries.”

The Commission has threatened to impose punitive tariffs on ACP exports bound for Europe if their governments do not sign EPAs by Dec. 31.

Earlier this month, the European commissioner for trade Peter Mandelson told members of the European Parliament (MEPs) that he would not consider offering more preferential treatment to ACP countries than the EU’s general system of tariffs if the Dec. 31 deadline cannot be met.

London Green MEP Caroline Lucas said that she had become accustomed to Mandelson’s “very blunt manner” from his involvement in British politics during his time the closest confidant to former UK Prime Minister Tony Blair. “But even I was shocked by the aggressive and bullying tone he adopted (in ruling out alternatives to the EPAs),” she said.

Addressing the European Parliament’s international trade committee on Sep. 11, Mandelson said it was “irresponsible” for anti-poverty activists to claim that tariffs would not have to be imposed on ACP countries if they do not sign the EPAs by the end of this year.

Mandelson maintained he has “no legal option” other than imposing tariffs in such an eventuality under rules set by the World Trade Organisation. A waiver to WTO rules applying to current EU-ACP trading arrangements will expire on Jan. 1 2008.

“I have no hat and no rabbit to pull out of it,” Mandelson said.

Mamadou Cissokho, president of the Network of Peasant Organisations and Producers in West Africa (ROPPA), said that ACP governments “are not negotiating, they are simply reacting to proposals put to us by Europe.” “European Union documents have been taken as the basis of our negotiations,” he said. “And all of the negotiation meetings have been funded by the EU.”

He pointed out that the EU spends 130 billion dollars per year on agricultural subsidies, even though farmers comprise just 4 percent of the Union’s population. Despite the huge competitive advantage enjoyed by European farmers, the Commission has urged ACP governments to reduce, and in many cases eliminate, the tariffs they apply to food imports from Europe.

Such trade liberalisation will have profound implications for small-scale African farmers and “jeopardise” the continent’s ability to feed itself, according to Cissokho. “Opening up markets willy-nilly means the traditional production methods we have in Africa are not going to be guaranteed or maintained,” he said.

Italian MEP Vittorio Agnoletto said that the Commission is trying to “claim that David and Goliath are equal” in the EPA talks.

“Frankly, this is a farce,” he added. “In this case Goliath – that is, the EU – is playing a false hand because it is not removing agricultural subsidies aimed at its exports.”

Agnoletto voiced concerns, too, over how the Commission has suggested that the EPAs commit the ACP side to a robust protection of intellectual property rights. By doing so, he contended, countries would be impeded from circumventing patents on drugs by importing cheap generic versions of treatments for AIDS and other major diseases. Some 30 million people in Africa are HIV positive.

Alexandra Strickner from the Institute for Agriculture and Trade Policy (AITP) in Austria argues that there had been a lack of debate in both Europe and in developing countries about the likely implications of the EPAs. It is particularly vital, she said, that parliaments should be given a formal role in scrutinising the accords.

“Mandelson is saying he would like to have the EPAs implemented immediately, without any ratification process in the ACP or in Europe,” she explained. “This is an incredible assault on democracy.”

African Nations QWorking with China on Media Enterprises.

Continent Has Its Bright Side, Too

East African (Nairobi)
COLUMN
18 September 2007
Posted to the web 18 September 2007

By Oscar Kimanuka
Nairobi
A group of Africa’s media practitioners have been in China to assess how Africa can relate with China in the exchange of information and experience but most importantly how perceptions about both can be changed in the challenging era of globalization.

In Chengdu city, Sichuan province, an important seminar took place a few days ago to promote Sino-Africa friendship and co-operation.

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A senior journalist from the Beijing Review set the tone of the meeting when he observed that the Chinese view Africa today from three perspectives.

SO WHEN a Chinese is asked about Africa he or she thinks of pyramids, the Safari or Nelson Mandela, the symbol of Africa’s humanity. Mandela has increasingly come to salvage Africa’s battered image, which has often been seen through the Western media as a continent of famine, hunger, disease, ignorance and conflict.

But fewer Chinese know that Africa is a continent of diversity in cultures, languages and hospitable people.

From Africa’s perspective, China is a huge country with the largest population in the world – 1.3 billion – rapid economic growth and development, and a friendly people.

Africans have consistently shown their admiration for China’s increasingly important role in world affairs.

But that is only one side of the story. China too has many serious challenges.

There is evident disparity between the haves and the have-nots. There are also serious environmental challenges, arising from the rapid industrialisation.

More than 150 million people live below the poverty line but the Chinese have proudly managed to feed themselves.

THIS ASIDE, there is a need to change negative perceptions about Africa in China and about China in Africa by increasingly exchanging information through the mass media.

Thus the launch by the South African Broadcasting Corporation of an international news programme that will focus on Africa’s real stories that portray our development and less on hunger, disease and poverty must be welcome by all.

Rwanda too, is hosting an international telecommunications summit, with about a dozen heads of state and government as well as senior executives in the private sector expected to address issues of digitisation and how this can contribute to poverty alleviation and prosperity.

East African Leaders Interested in African People or African Markets?? Scathing Op-Ed Piece

East African Leaders Go Into Slow Motion

Weekly Trust (Kaduna)
OPINION
4 September 2007
Posted to the web 4 September 2007

By Dr. Tajudeen Abdulraheem
Kaduna
At the historic summit of the AU in Accra in July President Yoweri, Kaguta Museveni of Uganda, was one of the surpriseed pro-gradualism leaders who made it easy for the other leaders principally led by South Africa’s Thabo Mbeki, who are only interested in Africa and Africans as markets rather than peoples, to gain their pyrrhic victory.

His reasons for becoming a latter day gradualist at the continental level while he had been a faster-faster unionist and ardent promoter of the political federation of East Africa was that regional integration needed to be consolidated because there was more likelihood of convergence on economic, social, political and even historical non state linkages that would make this possible. That was the mantra of all leaders in Accra. Many of them not known for caring much about their people’s wishes also became listening leaders in Accra, arguing that the bulk of the people have not been consulted. How one wishes that this love for consulting the people was genuine! How many of them bother to even consult their own cabinet, parliament or political parties before signing away the future of their countries to foreigners in the name of encouraging investment? Did any one of them subject their neo-liberal policies to the masses’ consent?

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The main political gain in Accra for those of us who believe in immediate political union was that nobody, no head of state argued against political union. What they lacked was just the courage to agree to concrete steps towards it, instead they heed behind ‘step by step’ and the need to consolidate regional economic communities (RECs) which was a very seductive argument but used to subvert the African Unity agenda. For instance, if indeed post apartheid South Africa had been interested in regional integration in the SADC region instead of just expanded markets for South African goods and services that region could have been more integrated with full freedom of movement by now. Confronted with the prospects of African Union, President Mbeki suddenly discovered the virtue of regional integration!

President Museveni must be reflecting over his Accra opportunistic switch now that his pet dream of faster political integration and federation of East Africa has been deferred at the recent summit of the East African states.

How can you argue for gradualism at the continental level and not concede the same at the regional level and also at the national level? That is the ridiculous but logical conclusion of the gradualist argument on Pan Africanism. They will never be ready.

In the 1960s, they used to argue that the nations newly liberated from colonialism were too young, needed consolidation therefore, could not go for political union continentally. More than four decades for most of them not many of them have been united. If gradualism is the route we should all be one happy family in the various countries but are we? So now they have shifted the goal post to ‘let us unite the region first’. And even that they want to do gradually!

Even those of us who believe in immediate union have no illusions that it would happen over night, but if we agree that destination the way we approach it will be radically different. We will give the required political authority and financial resources to the AU to carry out clearly defined functions on our behalf and align our regional and national policies accordingly. The RECs route would have been more sensible if there are not many of them wrecking any prospects of unity. We declare them to be the building blocs of the Pan African Enterprise but for more than four decades we have remained at the foundation level!

Actually, we keep building new foundations. Hence our states belong to more than one regional economic groupings. If you have so many foundations, when are you going to finish the building?

There are practical reasons why the East African Federation timeliness needed to be changed given its recent enlargement with the ascension to full membership by Rwanda and Burundi but these are not enough to halt the match towards political union. The presidents must stop looking at these issues as either/or.

How can the EAC leaders expect to negotiate the European Union dictated Economic Partnership Agreements (EPAS) regionally or form custom unions when they all belong to more than one regional economic block? Tanzania which ironically is now the most reluctant regional integrator ( Nyerere must be turning in his grave because he even offered to delay Tanzania’s independence for the sake of greater East Africa!) is in SADC in addition to all of them being in EAC and COMESA. The same is true among West African States and in the SADC countries.

They are talking about aligning economies that they do not control. The Chinese, Asians and globalisation are already aligning us forcibly and you can see them across this continent. Our only leverage is to have the political will to act together instead of being picked one by one to the slaughter house! These African leaders have to stop treating African unity as an ala carte menu. They are either committed to it in total and take necessary steps including abandoning their narrow ‘big man in Africa’ complexes which they conveniently interpreter as ‘sovereignty issues’ or quit deceiving us with a unity agenda that in effect mean ‘NOT IN MY LIFE TIME.’

African Oil… China Drills for Oil in Chad

August 13, 2007

China, Filling a Void,

Drills for Riches in Chad

By HOWARD W. FRENCH and LYDIA POLGREEN

KOUDJIWAI, Chad — The small plane flew in low over a scorched, peppercorn scrubland, following a broad, muddy river that was all elbows on its run to the southeast.

The first hint of humanity came with the appearance of an immense grid for seismic testing, laboriously traced through the brush. Finally, a lonely, hulking steel drilling platform popped into view.

Chad is as geographically isolated as places come in Africa. It is also among the continent’s poorest and least stable countries, the scene of recurrent civil wars and foreign invasions since it gained independence from France in 1960.

None of that has put off the Chinese, though. In January, they bought the rights to a vast exploration zone that surrounds this rural village, making the baked wilderness here, without roads, electricity or telephones, the latest frontier for their thirsty oil industry and increasingly global ambitions.

The same is happening in one African country after another. In large oil-exporting countries like Angola and Nigeria, China is building or fixing railroads, and landing giant exploration contracts in Congo and Guinea.

In mineral-rich countries that had been all but abandoned by foreign investors because of unrest and corruption, Chinese companies are reviving output of cobalt and bauxite. China has even become the new mover and shaker in agricultural countries like Ivory Coast, once the crown jewel in France’s postcolonial African empire, where Chinese companies are building a new capital, in Yamoussoukro, paid for by Chinese loans.

Surging Chinese interest in this continent has helped bring about what many Africans believe is the most important moment since the end of the cold war, when democracy was spreading in Africa and Western nations spoke of a “peace dividend” that might ease African poverty.

That blush of interest in Africa quickly faded, though, as did several of the new democracies, and Africans and Westerners have regarded each other warily ever since. Westerners complain about chronic corruption and ineffective government, while Africans lament broken promises on aid and a hostile international economic system.

The Chinese have stepped into this picture, coming to struggling countries like Chad with deep pockets, fewer demands on how African governments should behave and an avowed faith in everyone’s ability to prosper.

As Beijing’s ambassador to this country, Wang Yingwu, said at his residence in Ndjamena, Chad’s capital, where the electricity repeatedly failed, “We are exempting Chadian goods from import duties.” When the interviewer noted that Chad produced almost nothing besides oil, Mr. Wang was undaunted, saying, “If they don’t produce things today, they will tomorrow.”

To help make that happen, China plans to build the country’s first oil refinery, lay new roads, provide irrigation and erect a mobile telephone network, for starters.

With such intensive efforts across the continent, China’s trade with Africa topped $55 billion in 2006, up from less than $10 million in the 1980s. To achieve this growth, it has bypassed multinational institutions like the World Bank and the International Monetary Fund and flouted many of their lending criteria, including minimum standards of transparency, open bidding for contracts, environmental impact studies and assessments of overall debt and fiscal policies.

In some ways, the new Chinese model of doing business in Africa is a throwback to an earlier era of Western involvement that is now widely seen as disastrous. In that era, borrowing countries typically had to work with companies from the lending nation, limiting competition and giving priority to business over development. Today, China takes things even further, signing long-term deals for rights to natural resources that allow countries otherwise unworthy of credit to repay their debt in oil or mineral output.

“In what manner has Africa progressed, in what sector?” said the Chadian president, Idriss Déby, referring to decades of close ties to the West. “Whatever the good will of Africa’s old friends and the old partners in its development, it has not progressed at all.”

Still, major doubts hang heavily in the air. Will China’s hunger for raw materials enable this continent to take off? Or will Beijing’s willingness to spend whatever it needs in Africa, without regard to fiscal prudence, democracy, honest business practices and human rights, produce a replay of booms past, enriching local elites but leaving the continent poorer, its environment despoiled and its natural resources depleted?

A Test Case for China

There are few better places than Chad to watch for signs of how China’s African gambit will pay off. Chad ranks just four places from the bottom on the United Nations scale of human development, yet it is emerging as a critical piece in China’s economic push in a broad swath of sub-Saharan Africa, beginning with Sudan and extending in virtually every direction.

Despite advanced prospecting by French and other Western firms dating back to the 1970s, Chad’s oil had never been tapped. The nation was simply too unstable and the price of oil too low to justify investing much here. The oil that had been found was of low quality, and there was no practical way to get it out.

That changed in 2000, when the World Bank agreed to help finance a $4.2 billion, 665-mile pipeline connecting Chad to Cameroon on the condition that oil revenues be used to fight poverty.

Chad’s revenues quickly outstripped expectations, but have not gone into quelling its immense poverty. Mismanagement and fraud have beset the World Bank plan from the start.

Beyond that, Chadian rebels with bases in Sudan have been trying to depose Mr. Déby, so he pressed the World Bank to relax its rules on how to spend the country’s oil money. A compromise was reached, and he went on a military spending spree, buying guns, aircraft and armored vehicles for his troops, along with a fleet of armored Humvees that stop traffic as they zoom about Ndjamena’s dusty, potholed streets.

Seeking an even freer hand with the country’s oil bonanza, Mr. Déby’s government also hinted that it could find other partners willing to invest in Chad, especially with the price of oil so high.

Then, in 2006, Chad ended a relationship with Taiwan and recognized mainland China, and the floodgates opened. China bought the rights to several oil exploration zones in the country from a Canadian company and has gone from bit player to center stage in Chad’s affairs, confident that it can wring smart profits from the most inhospitable conditions.

“The Canadians and the Americans are only interested in really big finds,” said a veteran Western oil production engineer who works under contract here for the China National Petroleum Company, the C.N.P.C. “Anything else they think is not worth their time. The Chinese have a different approach. They are happy with the smaller finds, just lots of them. “They seem to have a different time frame, too,” the engineer added. “They plan to be here for a while.”

Indeed, the Chinese dream in this region consists of making finds here and there, using the World Bank financed pipeline to transport the oil and eventually building new pipelines to connect with a Chinese-built grid in Sudan.

This vision requires not only finding more oil, but establishing peace between Chad and Sudan. Darfur, the chaotic western Sudanese region where at least 200,000 people have died and 2.5 million been displaced in a government-backed counterinsurgency campaign, lies next to China’s exploration zones. Human rights groups maintain that Chinese weapons have played a major role in the carnage in Darfur.

Beijing’s recent diplomatic activity in the region may be explained by these Chinese oil interests as much as by American pressure on China to help stop the killing in Darfur.

“It used to be that when we had problems with our neighbor sending mercenaries to invade us that none of our complaints before the United Nations would pass, because China blocked them,” said President Déby. Since breaking relations with Taiwan and opening the door to Chinese investment, he added, “we have been able to raise our concerns without taboo.”

One topic that neither side was willing to say much about was the World Bank’s foundering efforts to ensure that petroleum revenues were well spent here. “I know the current pipeline is part of a project involving the World Bank and Esso,” said Dou Lirong, the general manager of C.N.P.C. International in Chad, calling the authority over revenues “a very complicated” matter. “I don’t know too much about it,” Mr. Dou continued, “but I’ve read a little bit on the Web.”

In fact, the very idea of the World Bank project is anathema to China’s deeply held noninterference policy, which has for decades governed China’s foreign policy and development. Underlying both is a kind of golden rule — China considers other countries meddling in its affairs unacceptable, and it assumes its friends feel the same way.

Cao Zhongming, deputy director of the Department of African Affairs, in the Chinese Foreign Ministry said: “China won’t interfere with Chad’s internal affairs. As a policy, that doesn’t change. If C.N.P.C., World Bank and Chad reach an agreement, it’s between them.” But, he added, if Chad does not accept the World Bank arrangement, “neither C.N.P.C. or the Chinese government would impose it.”

“The Chinese government,” he said, “won’t enforce something that Chad thinks interferes with their internal affairs.”

To China’s new African allies, this notion is a breath of fresh air. After years of hewing to the latest fads in international development doled out by the World Bank, the International Monetary Fund, Western donors and the United Nations, African governments have grown weary of the strings attached to foreign aid.

Thérèse Mekombe, vice chairwoman of the committee that monitors Chad’s oil money to make sure it is used properly, expressed surprise about the Chinese executive’s uncertainty about how oil revenues would be handled. Brandishing a copy of the law, she said all of the country’s oil earnings fell under the control of the World Bank arrangement. “The Chinese need to understand that they cannot arrive in a country and just impose their way of thinking,” Ms. Mekombe said.

A ‘Win-Win’ Business Plan

Chinese officials almost invariably describe their relationship with African countries as a win-win — based on mutual respect, aimed at joint prosperity and free of the overtones of exploitation and paternalism that critics worldwide say have governed much of the West’s postcolonial relationship with Africa.

China plans to build a petroleum refinery and a cement factory in Chad, both desperately needed in a landlocked country forced to import basic goods. Indeed, lowering gas and cement prices, which are among the highest in Africa, could do more to reduce poverty than the efforts of the World Bank and other donors combined, Mr. Dou suggested. “We can make a contribution to Chad,” he said.

Asked for an example of what win-win relationships look like, Mr. Dou offered what might seem an unlikely choice: Sudan. In its capital, Khartoum, he said, signs of China’s impact are everywhere.

“If you go to Sudan, you see paved roads,” he said. In the past, “the cars in Sudan had no turn signals, they point directions by hand. Now there are many good cars.”

Asked whether the oil money was really benefiting the Sudanese people, not just their rulers, Mr. Dou replied: “It is difficult for me to say. I am an engineer.”

To some critics, the answer is clear. “China’s no-strings-attached approach is problematic, particularly if its effect, if not its intent, is to undermine others’ efforts to change situations on the ground,” said Kenneth Roth, executive director of Human Rights Watch. “Often what is happening,” he added, “is underwriting of repression.”

Few Benefits for the People

Even with binding arrangements governing the use of oil revenues, Chad’s people have largely missed out.

In the Mayo-Kébbi region, where much of China’s feverish oil exploration is happening, the city of Bongor hardly looks like the capital of the booming oil region it is set to become. Along its tree-fringed main avenue, the briskest business is preparing the city’s signature dish — a chicken so scrawny it can be grilled whole in a few minutes.

At the lone hospital, a moldering colonial-era structure, a handful of workers tended to dozens of patients suffering from the classic ailments of poverty: hunger, diarrhea, malaria, tuberculosis, AIDS, pneumonia. Civil servants were on strike, seeking to force the government, which according to World Bank estimates will collect $1.2 billion in oil money this year, to increase their meager salaries.

Pauline Maratangou, a 53-year-old midwife, did show up to work, and it was a good thing. Half a dozen pregnant women with bellies fit to burst patiently awaited her services.

“Vas-y, vas-y, vas-y!” she cooed, urging an 18-year-old mother to push. The maternity ward had only a padded bench for deliveries and no stirrups. The floors and walls were caked with dirt — the orderlies were on strike. Ms. Maratangou worked with quick, efficient motions, pouring iodine over the crown of the baby’s head as it emerged, trying to keep mother and child free of infection.

At last a little boy popped out, his head slightly misshapen, like a peanut shell.

“Ah, he’s a handsome boy,” she said, holding him aloft, feet first, waiting for his first bellowing cries. There was only time to snip his umbilical cord, weigh him — five and a half pounds, not too bad for this part of the world — and swaddle him in rags before the next mother, also 18, was ready to hop on the table still slick with afterbirth slime.

The grim conditions help explain why Chad has among the highest maternal and infant mortality rates in the world. One of every five children will die before age 5.

“We hear that our country has oil, but we see no evidence of it here,” said Ms. Maratangou, the midwife.

Officials in Bongor say money from Chinese investments could fix schools and hospitals, or provide jobs and new roads. Under Chadian law, 5 percent of the oil revenue is supposed to go back to the community where the oil was drilled.

“We have very high hopes,” said Khalifa Malloum, the secretary general of Bongor’s regional government. “If the West does not want to invest in us, let the Chinese come. We welcome them. They don’t tell us what to do and they bring development. They are good partners.”

But Limassou Saleh, a community organizer in Bongor, said he was deeply skeptical. “Chad is maybe the most corrupt country in the world,” Mr. Saleh said. “We have a long history of human rights violations, of lack of transparency, of exploitation. China has a reputation for corruption. They are one of the worst human rights abusers. They have no record of transparency. What would we want with a country like that? Only to make our own problems worse.”

Fan Wenxin contributed reporting from Shanghai.

http://www.nytimes.com/2007/08/13/world/africa/13chinaafrica.html?ei=5088&en=8a01b7af1a7904c1&ex=1344657600&partner=rssnyt&emc=rss&pagewanted=print

Copyright 2007 The New York Times Company

The Global Quest For Oil Now Makes Its Way to Africa

The Global War On Oil Now Makes Its Way to the Continent
ANALYSIS
25 August 2007
Posted to the web 24 August 2007
Earlier this month, a revitalised Russia sent a submarine to plant a flag on the frozen seabed of the North Pole, and symbolically lay claim to a large chunk of the vast Arctic ice.

A few days later, Canadian Prime Minister Stephen Harper trekked up the same frozen north and declared that “our government has an aggressive Arctic agenda,” while announcing plans to build a military base, as well as patrol boats to keep out land grabbers.

Denmark, another country that shares these icy shores has also recently sent scientists whose findings it hopes, will prove once and for all, that there is some underwater connection between the Nordic country and the North Pole.

This jingoistic posturing, with potential for full-scale wars is over just one thing: petroleum. It’s been said that there are great reserves of oil and natural gas buried beneath the unforgiving snow of the North Pole, and the countries whose rear ends face it have been keen to claim them as their own in a world of dwindling fossil fuels.

It’s just over 10 years ago when crude oil cost all of US $10 (Sh680) per barrel. Today, the same barrel routinely goes for around US $70 and the way India and China are guzzling the stuff, it might not be long before it nudges US $100! Which brings us to Uganda, the Democratic Republic of Congo and the discovery of oil in Lake Albert.

Beating chests

These days, if Uganda government officials are not issuing statements about the upcoming Commonwealth Heads of Government Meeting in Kampala, or the stalled peace talks in northern Uganda, they are beating their chests about the latest “spectacular” oil find around and the exciting new world of being an oil producer.

But like the Russians, Canadians and the Danes at the North Pole, Uganda has to deal with its immediate neighbors to the west; for Lake Albert is not entirely theirs. The stakes are high enough that just over two weeks ago, the dispute broke into a fight – with guns – in which a British oilman became the first, but certainly not the last man, to be killed.

It doesn’t help either that oil appears to bring out the worst in anyone with a gun. In Washington for example, the politicos convinced themselves and others that they were invading Iraq (which incidentally has the world’s second largest proved oil reserves) to remove Weapons of Mass Destruction, and later that bad man Sadam Hussein. But only the truly naïve believed them.

African standards

In Nigeria and Angola, oil has been a source of internecine warfare and mafia-type crime on a massive scale even by African standards. In less troubled oil producing countries like Gabon, Guinea and Cameroon, national affairs are conducted by boisterous kleptomaniacs who use the proceeds only for personal gain.

Meanwhile, the oil strike in Lake Albert, while decent, is nothing compared to even the big boys in Africa like Libya; not to mention Russia or Saudi Arabia.

Nevertheless, the reserves (estimated at less than 100.000 barrels a day for about 10 years when production starts), are still significant enough to guarantee future conflict between Uganda and the DRC.

For the current leadership in Uganda, oil would just be another excuse to cling to power. President Yoweri Museveni is rounding on his 22nd year and needs an umpteenth wind of relevance, while projection of strength abroad gives Joseph Kabila’s countrymen something to rally around beyond their political squabbles.

Oil is the latest gold card for finding traction with energy-hungry China (and India), whose future seems to have arrived; as well as with the traditional big powers in the West and Japan. African leaders are aware that as long as one has oil, one need not necessarily be a democrat.

In fact one can even be a despot and still be welcome in Western capitals. That might explain the cosy ties between the West and Saudi Arabia.

African Development Bank’s (AFDB) Donald Kaberuka: Africa’s unique window of opportunity

African Banker June 2008 edition Interview Donald Kaberuka: Africa’s unique window of opportunity Africa is poised for an exciting new era in its economic and social transformation. In this interview with African Banker editor, Anver Versi, African Development Bank President, Donald Kaberuka explains how the Bank has taken the leadership role in driving African economies forward. African banker: Why is the AfDB holding its annual meeting in Shanghai? KABERUKA : The Bank responded favourably to an invitation from the Chinese government to hold its Annual Assembly in Shanghai. China has been a nonregional member of the Bank Group since the opening up of the Bank’s capital to non-regional countries. This will be the second time that the Bank goes outside the region to hold its Annual Meeting. We were in Valencia, Spain, in 2001. The theme of the Shanghai Meeting is ‘Asia and Africa: Partners in Development’; it is therefore quite appropriate that we are able to have this discussion in China. As you know, we in Africa are very keen to see and learn first hand, how China has succeeded in achieving tremendous growth over a fairly short period of time and also to promote trade and investment between Africa and China which is mutually beneficial. What is the state of Africa’s economies today? At its best in 30 years. We’re seeing, for the sixth year running, sustained economic growth across Africa at 5.5%. The economies with extractive industries such as oil and gas are leading, but even countries not endowed with such natural resources are growing. After many years of policy gains and reforms, macroeconomic stability is now anchored in most parts of the continent. And the external environment continues to be benign. But let me add a rider. First, not all countries are growing above the rate of the population increase. Second, this rate of growth would have to be sustained for many years for it to have any real impact on poverty. Third, in some regions the situation is fragile and the risk of reversal is always lurking around the corner. What we are doing as an institution is to try to consolidate this progress in order to open up further possibilities for Africa. To the frequently asked question: if the economies are growing, why is there so much poverty? The answer is in two parts. Firstly, as I have just mentioned, we would have to sustain this rate of growth for a long time for us to see the impact on poverty and secondly, if economies were stagnating, it would mean that real per capita incomes would be declining given the increasing demographic pressure and therefore deeper and more widespread poverty. You are in the midst of a major reform process within the AfDB. You also appear to have taken on the leadership role in driving Africa’s economy forward? First of all I must underline the following: The AfDB is a very solid financial institution. It has got the highest possible ratings. Its risk bearing capacity is very solid. What we are trying to do is to move to the next stage; build on this bedrock of financial soundness to  increase our operational effectiveness and get results on the ground. That is the purpose of the current reforms: becoming result oriented, focused and selective; having greater decentralisation; aligning strategically with partners and developing excellence in a number of areas such as infrastructure, regional integration, water and sanitation and be a strategic counsellor to our member countries on development. As I mentioned earlier, the internal and external conditions have never been better and we see Africa’s own Bank playing a bigger role as a channel of choice for the international efforts and also able to respond much more effectively to the demands of our countries. This is of course a medium term process but we are on track. At one point, the World Bank was sitting on almost $10bn of un-disbursed resources for Africa. Why is there such a gap between approvals for projects and their implementation? It is a challenge for all multilateral institutions including the AfDB. The real measure of our effectiveness should be actual results on the ground. How many children we are able to get into school? How many kilometres of roads have been constructed? How are we doing in increasing energy availability? These are the results which count, not the volume of approvals. This said, problems of absorption capacity are real. There are many factors responsible for the gap between approvals and disbursements. If, for example, a country receives a loan from the Bank and then for some reason a conflict breaks out, the chances are, we will suspend disbursements because our operations cannot proceed and the country will, in all probability, fall into arrears. Sometimes it is due to the delays to ratify the loans on time and fulfil other conditions of effectiveness. With increased decentralisation, greater presence in the field, we’ll be able to steadily close the gap between approvals and disbursements. We have opened 22 out of 25 offices in different parts of Africa and I am already seeing encouraging results on the ground; where conditions for effectiveness, including ratification are faster. There are a number of things we also need to do internally here, especially in streamlining conditionalities in accordance with the “Paris Delegation” on Harmonisation and Development effectiveness. Does this call for greater harmonisation of efforts? It calls for greater harmonisation among partners and better dialogue with member countries, better understanding of the countries’ priorities, their institutions, capacity issues so that we can provide a kind of response appropriate to each country’s concerns. That is why field presence is critical. You are undertaking major reforms to bring about precisely what you’ve talked about, that is. Streamlining operations. But you also work with many bilateral and multilateral partners. Do you see a movement on their part to streamline their operations as well? We have all signed up to the “Paris Delegation” on Harmonisation and Development effectiveness. The real challenge is implementation. Progress is being made but is far too slow. Over the last 30 years, the international aid architecture has changed considerably with the number and nature of development agencies vastly increasing – multilateral, bilateral agencies, benevolent foundations such as the Bill Gates Foundation as well as the so called “vertical funds” like the Global Fund for HIV/AIDS. The risk of fragmentation, stretching and overloading national capacities is high, hence the need for greater harmonisation of efforts. Progress has been made but we need to move faster. That leads us naturally to the next question. Despite the massive fanfare and the generous pledges made to African countries at Gleneagles, the level of aid has actually contracted. How can this be explained? It is true that “core” ODA levels, that is, excluding debt relief and humanitarian operations, have actually declined. That is a fact. While we are aware of the budget constraints and limitations, which are real, it is critical that commitments made are kept. The political will and momentum mobilised at the Millennium Summit, Gleneagles, must not be lost. Debt cancellation for many eligible countries was a good beginning and has already been realised. As for the next engagement which was to double aid to Africa and improve its effectiveness, all I can say is that it is work in progress. Both we and the World Bank are currently in dialogue with our partners on the future replenishment of our concessional windows which are principal instruments for transferring soft loans and grants to low income countries. We are only a few years to the MDG target and that “big push” is as urgent as ever. Beyond the declining aid levels, we are also disappointed by the slow progress on trade negotiations. We are not underestimating the challenges of an ambitious round such as Doha, but the prize is within reach if the political will is there. Africa, like Asia before, will prosper only by effective participation in world trade. That can happen on two conditions. First, that we have to have a fair international trade regime which frontloads the interests of low income countries. That is why it is called a “Development Round”. The second condition is that we are able to remove the bottlenecks on the supply side and build our trading capabilities. I am referring to the quality of infrastructure, transport, communications, energy and expanding the trading space within Africa by more effective regional integration. I feel that the window of opportunity which exists today is unique. It is the first time there is such a large global consensus on what needs to be done. In the overarching agenda to fight poverty, it is critical that despite political constraints and other realities, this Multilateral Trade Round negotiations should not be allowed to fail. How critical, in your opinion, is leadership and governance in accelerating growth in Africa? Economic growth is all about investment and that requires confidence and stability. Good leadership, sound institutions are essential preconditions for economic growth, as clearly articulated in NEPAD. Today, much of Africa is at peace and under democratic rule, institutions are strengthening, leaders are regularly elected via competitive elections; this has gone a long way to create an era of stability and confidence which is a major contributor to the current positive economic growth. Africa’s fortunes are still largely tied to the global demand for its raw commodities. Can Africa wean itself away from this pattern of exchange? You are right to note the problem of dependence on primary commodities. It is true that the current bullish conditions in the global economy and the increase in Asian imports of minerals, oil and other soft commodities has indeed given a boost to some of our economies. Two things are important here. We should use this window, the terms of trade gains, for greater diversification and moving up the value chain. But we will do so if the Doha trade negotiations succeed in dealing with issues such as tariff escalation. We should also seize the opportunity to invest in infrastructure, skills and capacity so that we gradually become less reliant on raw commodities. There is encouraging progress in some countries where services such as finance and IT are fast growing, bypassing commodities. This is what the African Development Bank is trying to encourage and promote. What is the Bank’s relationship with the private sector? The AfDB has a private sector window which supports our countries with different instruments: direct lending, guarantees, lines of credit to local finance institutions, promotion of local currency lending and public private sector partnerships etc. We have almost doubled our private sector operations this year, and I expect this trend to continue. We are gearing ourselves to that by increasing our internal capacity to understand and manage risk. The private sector is the future for Africa. That is why the AfDB is also supporting our countries in improving the business climate by reducing the costs of doing business and creating greater confidence. You do take equity positions? We are investing in a number of equity funds and the experience so far is encouraging. We are also participating in the Pan-African Infrastructure Fund. Is the investment commercially-oriented? We have dual objectives; to get a good return on our investment and to promote development. Our objective is to help the funds and business grow, and our exit strategy is in the region of under 10 years. How far should privatisation of the public sector go in your opinion? Can development and profits go hand in hand? Let me rephrase your question. What is the right balance between the state and the private sector? It is no longer the state on one side and the private sector on the other. It is more a partnership between the two. In the first 30 years of Africa’s post-independent period, the public sector became very dominant; the pendulum swung too far. This caused large fiscal imbalances and efficiency losses. Making progress on privatisation is still important but the right balance varies from country to country and therefore it benefits of greater efficiency, reduced fiscal imbalances, are beneficial and the negative impacts temporary. In a number of countries there have been transactional difficulties especially in the aviation and utilities domain such as electricity and water. These are complex transactions requiring careful attention; but the principles remain the same. This said, I think the greatest challenge in Africa is the promotion of the private sector. In some countries, the sector is young and nascent and has to be nurtured. This requires not only the right business environment, but sometimes transitional direct supportive measures. With the opening up of the 25 field offices as you mentioned, the ADB appears to be firmly on course to decentralisation. How much central authority are you prepared to relinquish? We are moving away from a rigid centralised system to an agile, responsive one. We aim at tailoring and customising our field presence, depending on the challenges we face on the ground. Countries are different. We are decentralising while maintaining accountability and strong fiduciary controls. Decentralisation resolves some issues but also creates other problems. We are addressing them as we gather experience. But I have no doubt it is the way to go. This is not true just for the AfDB, it is also the same for other similar organisations. The action is in the field. But I once again emphasise the importance of strong fiduciary controls, accountability and seamless links between the field and headquarters. Are you happy with the level of capacity you have at the moment? It is an optimisation issue. The demands on the Bank are always increasing as Africa’s expectations on the institution grow. We are aware that we will never have all the financial and human resources we need, no organisation ever does. This is why it is important to be focused, to be selective, to optimise all the resources you have. We are, at this time, engaged in an exercise to increase our staff capacity both in Tunis and in the field offices and we are working assiduously to mobilise additional resources. How can you encourage and assist national financial institutions to mobilise domestic savings for investment? By promoting local capital markets and strengthening appropriate local financial institutions, consolidating reforms in the Bank and non-bank financial sectors as well as developing appropriate instruments for each country, depending upon the degree of financial depth. When you were growing up, did you see yourself as a banker?  What subjects interested you the most while at school? Like all young boys I wanted to be a pilot! Now, I am a pilot, not of an aeroplane but of Africa’s premier development institution! This said, Africa has always been a passion for me from a very young age and I am glad to be contributing in a modest way in the position I occupy today. Who, in your opinion, past or present, do you admire the most? [laughs]. Madiba, Nelson Mandela, the icon of modern day Africa. What do you wish to achieve before the end of your tenure at the Bank? I have a job to do here and I am determined to get it done. As for the legacy, I will leave that to historians. This said, I would like, at the end of my tenure, to have consolidated the strong financial position of the Bank and a more focused, effective institution, a channel of choice of support to Africa that is truly Africa’s Premier Development Bank. I would like to see Africa at peace with itself, expanding and diversifying economically, making faster progress at regional integration, moving up the value chain, and taking its rightful place in the world trade and investment flows. It’s a challenging agenda to which I would like to make my modest contribution during my tenure at the AfDB. What do you do in you do in your spare time? I play squash on and off, but less and less these days because of the demands on my time; and I listen to classical music.

Source: http://www.africasia.com/africanbanker/afbnk.php?ID=1320