Governmental Austerity Does NOT Work In Times Like These

Paul Krugman Calls it:  The Austerity Debacle  And he is right AGAIN! Unfortunately Politics and ideology trump basic economics and common sense.

Last week the National Institute of Economic and Social Research, a British think tank, released a startling chart comparing the current slump with past recessions and recoveries. It turns out that by one important measure — changes in real G.D.P. since the recession began — Britain is doing worse this time than it did during the Great Depression. Four years into the Depression, British G.D.P. had regained its previous peak; four years after the Great Recession began, Britain is nowhere close to regaining its lost ground.

Nor is Britain unique. Italy is also doing worse than it did in the 1930s — and with Spain clearly headed for a double-dip recession, that makes three of Europe’s big five economies members of the worse-than club. Yes, there are some caveats and complications. But this nonetheless represents a stunning failure of policy.

And it’s a failure, in particular, of the austerity doctrine that has dominated elite policy discussion both in Europe and, to a large extent, in the United States for the past two years.

O.K., about those caveats: On one side, British unemployment was much higher in the 1930s than it is now, because the British economy was depressed — mainly thanks to an ill-advised return to the gold standard — even before the Depression struck. On the other side, Britain had a notably mild Depression compared with the United States.

Even so, surpassing the track record of the 1930s shouldn’t be a tough challenge. Haven’t we learned a lot about economic management over the last 80 years? Yes, we have — but in Britain and elsewhere, the policy elite decided to throw that hard-won knowledge out the window, and rely on ideologically convenient wishful thinking instead.

Britain, in particular, was supposed to be a showcase for “expansionary austerity,” the notion that instead of increasing government spending to fight recessions, you should slash spending instead — and that this would lead to faster economic growth. “Those who argue that dealing with our deficit and promoting growth are somehow alternatives are wrong,” declared David Cameron, Britain’s prime minister. “You cannot put off the first in order to promote the second.”

How could the economy thrive when unemployment was already high, and government policies were directly reducing employment even further? Confidence! “I firmly believe,” declared Jean-Claude Trichet — at the time the president of the European Central Bank, and a strong advocate of the doctrine of expansionary austerity — “that in the current circumstances confidence-inspiring policies will foster and not hamper economic recovery, because confidence is the key factor today.”

Such invocations of the confidence fairy were never plausible; researchers at the International Monetary Fund and elsewhere quickly debunked the supposed evidence that spending cuts create jobs. Yet influential people on both sides of the Atlantic heaped praise on the prophets of austerity, Mr. Cameron in particular, because the doctrine of expansionary austerity dovetailed with their ideological agendas.

Thus in October 2010 David Broder, who virtually embodied conventional wisdom, praised Mr. Cameron for his boldness, and in particular for “brushing aside the warnings of economists that the sudden, severe medicine could cut short Britain’s economic recovery and throw the nation back into recession.” He then called on President Obama to “do a Cameron” and pursue “a radical rollback of the welfare state now.”

Strange to say, however, those warnings from economists proved all too accurate. And we’re quite fortunate that Mr. Obama did not, in fact, do a Cameron.

Which is not to say that all is well with U.S. policy. True, the federal government has avoided all-out austerity. But state and local governments, which must run more or less balanced budgets, have slashed spending and employment as federal aid runs out — and this has been a major drag on the overall economy. Without those spending cuts, we might already have been on the road to self-sustaining growth; as it is, recovery still hangs in the balance.

And we may get tipped in the wrong direction by Continental Europe, where austerity policies are having the same effect as in Britain, with many signs pointing to recession this year.

The infuriating thing about this tragedy is that it was completely unnecessary. Half a century ago, any economist — or for that matter any undergraduate who had read Paul Samuelson’s textbook “Economics” — could have told you that austerity in the face of depression was a very bad idea. But policy makers, pundits and, I’m sorry to say, many economists decided, largely for political reasons, to forget what they used to know. And millions of workers are paying the price for their willful amnesia.

….. PAUL KRUGMAN 1/29/12

Spain’s Difficult Task Ahead May Prove TOO Difficult

MADRID (Reuters) – Spain’s new government will push ahead within weeks on labor reform aimed at tackling the European Union’s highest unemployment rate after unions and employers failed to meet a deadline for agreeing how to modernize a rigid system that harms them both.

It is difficult to see how the reforms can help Spain’s immediate battle with a chronically-weak economy and a jobless rate that has soared to 23.5 percent in recent months, leaving some 5.4 million out of work.

But Prime Minister Mariano Rajoy drove home the need for action by releasing the latest unemployment figures two weeks early this week and says he will do what is needed to loosen up the system and enable freer job creation.

To do so the government will have to take aggressive measures to worsen wages and conditions for employees that unions warn could prompt a national strike. From what signs the government has given on the shape of the reform, on the other hand, economists say it may also fail to please employers and risks not doing enough to generate meaningful improvement.

In a speech in Malaga on Saturday, Rajoy called the headline unemployment number – equivalent to almost one in four of the economically active population – “astronomical” and said his government would “wage war” on unemployment lines.

“This is in keeping with the change of government,” Santiago Sanchez, chief economist at Juan Carlos III university in Madrid, said.

“The previous government looked for positive statistics to highlight its management (of the economy) .. and this one is rooting out the worst ones to justify its tough austerity measures.”

Elected in a landslide in November, Rajoy gave worker and employer representatives until last Friday to agree on a broad sweep of reforms as he tried to draw a line under some 18 months of largely fruitless talks. They missed the deadline.

The government also faces credit agency pressure, with Standard & Poor’s warning it could cut Spain further this year or next following Friday’s two-notch downgrade if reforms were delayed or “insufficient to reduce the high unemployment rate.”

‘GOLDEN OPPORTUNITY’

Job creation in Spain has been crippled by a stagnant economy, a tough austerity program and exceptionally generous redundancy deals. Critics say the labor market is shackled by complex and rigid agreements on collective bargaining, statutory redundancy payments and temporary contracts.

“The (labor) reform has to be thought of as a golden opportunity to change the structure of the way the Spanish labor market operates and to be a major force for higher productivity and to reduce structural unemployment,” Antonio Garcia Pascual, chief southern European economist at Barclays in London, said.

Unemployment rates were likely to rise further given Spain’s economy was set to shrink this year, he said, but reforms making it easier and cheaper for companies to hire and fire as well as giving more workers better protection would promote jobs growth once the upturn comes.

Terms and conditions for Spanish workers tend to be agreed at regional level and sometimes across industries, giving unions strong negotiating powers that they will battle to protect.

But generous permanent contracts mean firms are more inclined to hire workers on temporary ones that offer little protection.

“Collective bargaining .., is something we are particularly sensitive about,” said a spokesman for the country’s biggest union, the blue-collar CCOO, warning that major changes could provoke a general strike.

Garcia Pascual said the government could “probably” live with that. “I suspect that with 23 percent unemployment the response (to a strike call) may not be so enthusiastic.”

Gilles Moec, analyst at Deutsche Bank in London, said he expected the new laws to give firms greater freedom to opt out of collective contracts. “My understanding is that the government is ready to go there,” he said.

The government will also scale back redundancy payments for permanent staff that are among the highest in the world, favoring contracts offering a statutory minimum of 33 days’ pay for each year worked, Treasury Minister Cristobal Montoro said.

Unions are demanding 45 days’ pay and employers 20, but even the lower figure dwarfs payoffs in other countries.

In Germany, at least half a month’s pay is usual and in France a fifth, while in the United States there is no statutory requirement to award severance pay.

The heavy extra potential burden on employers in Spain means many are prepared to offer only temporary contracts that give workers little if any protection against dismissal.

A SINGLE CONTRACT

According to the national statistics institute, 26 percent of all Spanish employment contracts were temporary as of last September, and the proportion has almost certainly risen since.

For Barclays’ Garcia Pascual, the labor market will not revive until that trend is reversed.

“I think they should be bold and think about a single contract where the firing cost increases with seniority. (But) that is not easy to sell to unions or employers.”

“The best way forward would be to reduce the level of protection on permanent contracts and improve (it) …on temporary ones,” added Deutsche Bank’s Moec.

The labor reform draft is expected to be ready by early February and Treasury Minister Cristobal Montoro said it would be pushed through without a broader consensus if necessary.

The government would however “keep lines of communication open” with unions and employers in the run-up to the new legislation, a labor ministry spokeswoman said.

While angering unions, more flexibility would please domestic employers and would-be foreign investors.

“What most people want is more flexibility and collective bargaining agreements” tailored to individual companies and sectors, said U.S. ambassador Alan Solomont.

He cited the U.S. practice of linking work hours to productivity cycles, for instance in auto plants. General Motors Co operates a large assembly line in Zaragoza.

The strategy also worked well during the 2008/9 economic crisis for Germany, where unemployment fell in December to its lowest level since the country’s reunification two decades ago.

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

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

Road reflects why $568 billion in aid to Africa has largely failed

    

Road reflects why $568 billion in aid to Africa has largely failed : http://www.pr-inside.com/road-reflects-why-568-billion-in-r354701.htm

 

Wednesday, December 19, 2007

Road reflects why $568 billion in aid to Africa has largely failed

By CHRIS TOMLINSON Associated Press Writer
NAIROBI, Kenya (AP)

To judge how far aid has helped Africa along the road to prosperity, just look down at the pavement _ or the lack of it.
The most important highway in East Africa starts at the Indian Ocean port of Mombasa. Tens of thousands of trucks every year carry food, fuel and other goods to 100 million people in east and central Africa up a bone-jarring two-lane road.
Despite millions of aid dollars spent on roads, the wear and tear is so bad that journeys take weeks. And the cost makes it cheaper to have a container of corn shipped from Iowa than to truck it 500 miles (800 kilometers) to western Kenya.
In the 50 years since the first African countries won independence, the world has spent US$568 billion (euro394 billion) on Africa. Yet Africans are poorer now than a quarter century ago, and much of the money has ended up on the road to nowhere. This dismal record is sparking a vigorous debate on how best to help the world’s poorest continent, and to what degree aid is the answer.
A growing chorus of Africans is saying what they need is not handouts, but investment so they can rebuild on their own.
“Africans….are tired. They are tired of being the subject of everybody’s charity and care. And what is happening in many African countries now is the realization that nobody can do it but us,” said Ngozi Okonjo-Iweala, a World Bank managing director and former finance minister of Nigeria, at a talk on a changing Africa. “We can invite partners who support us, but we have to start.”

___

Roads are the lifeblood of an economy, the delivery system for agriculture, mining, tourism and other mainstays of African industry. But roads in Africa are few and bad. When foreign companies calculate the price of doing business on the continent, they look at figures like the cost of transportation and decide to go somewhere else.
“No one would ever have 100 million people in the rich world along a broken-down, two-lane, undivided road as we do here,” said leading economist Jeffrey Sachs about Nairobi. “If the donors were thinking about what would really provide development, it’s a proper, divided highway on which truck traffic could go.”
Truth is, they did think of it _ and almost built it _ 40 years ago. But today, the east-west Trans-African Highway exists only on maps. On the ground, it turns into a muddy footpath in the jungles of eastern Congo.
The story of the highway shows why aid to Africa has largely failed in the past, and what can be learned for the future.
Back in 1969, the Japanese government proposed extending the Mombasa Highway to Lagos, Nigeria on the Atlantic Ocean. The four-lane, 4,400-mile (7,080-kilometer) paved highway would be slightly longer than Interstate 90 running from Boston to Seattle across the United States. It was to bring modern trade to six African countries.
By 1971, the deal had the support of the six countries, nine other rich countries and six international aid agencies. They hoped to have at least two lanes of all-weather road open by 1978.
It did not take long for problems to emerge. Dictator Idi Amin took control of Uganda and threatened neighboring Kenya, which then closed the highway.
The fight reflected a constant plague for foreign aid to Africa _ corrupt dictators, and donors who gave them money to protect political and economic interests. Nowhere was this exchange clearer than in Zaire, now known as Congo.
Zaire needed to build roads from scratch. But the Central African country was ruled by Mobutu Sese Seko, one of the most brutal dictators in African history.
Mobutu took power during the Cold War, at a time when the United States and the Soviet Union were scrambling for influence in Africa. In the mid-1970s, he was a funnel for arms flowing to anti-communist rebels.
And so billions of dollars poured into Zaire to keep him happy, and to maintain the flow of Zairean gold, diamonds and copper to the West. Western nations largely looked the other way as the aid money disappeared into his offshore bank accounts and into the pockets of dozens of corrupt leaders.
Mobutu stopped plans for the highway in 1974, after stealing the money Belgium gave him for initial surveys. In a well-known African joke that reflects the thinking of the time, a young African dictator calls Mobutu for advice after coming under rebel attack.
“Did they come by sea?” Mobutu asks.
“No,” the younger ruler would reply.
“Did they come by air?” Mobutu asks.
“No, they came by road,” the protege answers.
“Tsk tsk, my son, I always told you,” Mobutu says. “Never build roads.”

___

Despite Mobutu in Zaire, the highway was in good condition in Kenya. In the 1970s, the East African country’s economy was booming, with trucks filled with valuable coffee and tea running downhill from mile-high (1.6-kilometer-high) Nairobi and across breathtaking African savanna to the port of Mombasa.
But roads do not last forever. The average African highway is designed to last 15-20 years, if properly maintained, says Andrew Gitonga, the Kenya roads project officer for the European Union. Since 1983, the European Union has spent US$200 million (euro139 million) to repair Kenya’s section of the highway and has about US$120 million (euro83.2 million) more of road projects planned this year.
Gitonga says the road needs to be completely rebuilt.
“There has been no standard maintenance program for 15 years, so the roads are falling into disrepair until they collapse,” he says. “Some government contracts in the past were given in an untransparent manner to unqualified contractors without clear standards.”
The transition between good road work and bad is painfully obvious when you hit a pothole at 50 mph. A close examination of the hole will show that whoever built it skimped on the thickness of the rock bed and the asphalt surfacing, pocketing a little extra profit.
Almost every day road workers can be seen patching the holes. One man sprays in some tar, a second shovels in a little asphalt and a third goes over it twice with a compactor. Within five minutes the lane is open, with hundreds of cars every hour driving over a repair that will probably last less than six months, or until the seasonal rains wash it away.
The same neglect for maintenance has led to the slow deterioration of thousands of donor-funded projects over the years.
Just off the Mombasa highway in Nairobi, the International Committee of the Red Cross maintains its distribution hub for eastern Africa. Trucks loaded with food and supplies set off to deliver aid to some of the world’s most desperate people.
The biggest obstacle: The roads.
“The roads are in a desolate state and they are not getting any better,” says Bent Korsgaard, logistics director for the Kenya office.
A University of Minnesota study determined that big trucks cost about 43.4 cents a mile (1.6 kilometers) to operate on normal roads. In Africa, the cost for Red Cross trucks is US$2.88 (euro2) a mile (1.6 kilometers).
A truck that follows the Trans-African Highway for the 1,500 mile (2,400-kilometer), 21-day roundtrip to Butembo, Congo requires five days in the workshop when it gets back. It’s cheaper to hire a Russian cargo plane than to drive a truck to some cities within 620 miles (1,000 kilometers).
That doesn’t even count the bribes truckers have to pay on African roads. A recent survey in West Africa found they range from about US$3.33 (euro2.3) per 60 miles (97 kilometers) in Togo to US$25 (euro17) in Mali.

___

Roads are hardly the only aid fiascos. Kenya alone is littered with dozens of half-baked, half-built projects funded by wealthy countries, monuments to good intentions gone awry.
Often donors did not understand Africa or talk to Africans. The Norwegian government built a fish processing plant on Lake Turkana in the 1970s to provide jobs for nomadic cattle herders _ soon doomed in part because the local community had no fishing culture.
In a self-assessment in 1987, the World Bank found 106 out of 189 African development projects audited _ almost 60 percent _ had serious shortcomings or were complete failures. African agriculture projects failed 75 percent of the time.
The World Bank did better when it worked more closely with communities and better monitored projects. But a recent report on aid from the World Bank’s private arm, the International Finance Corporation, found only half of its Africa projects succeed.
Aid is also hampered because it is often determined not just by what poor countries need but by what rich countries want to give to boost their own economies.
Much so-called foreign aid never leaves the country that promised it, because donor governments spend it to buy domestically-produced products or hire its own citizens as consultants. The World Bank estimates that throughout the 1980s, more than half of all aid was tied to what donor countries wanted to export, often at higher prices than could be found on the market. This practice reduced the value of aid by anywhere from 11 to 30 percent.
Under the Buy American Act, the U.S. Agency for International Development must spend aid money to buy products and services from U.S. suppliers whenever possible, and then deliver them aboard expensive U.S.-flagged ships or planes.
“Foreign assistance is far from charity,” J. Brian Atwood, the USAID director under former President Bill Clinton, told Congress in 1995. “It is an investment in American jobs, American business.”
Other rich nations do the same. Japan, one of the largest donors to Africa, provides a lot of aid in the form of four-wheel-drive vehicles _ despite the roads.
Sachs, the Columbia University professor, argues past aid failed because not enough was invested at every level, in every sector. In 2004, Sachs and the United Nations started the Millennium Project experiment to supply 12 African villages with all they need, all at once, and see if they can be self-sufficient in five years.
“The speed of results is astounding and the point is that if the resources are there, the rate of improvement is wonderful,” Sachs says. “I believe that we’re at the cusp of that now.”
Sachs’ nemesis, economist William Easterly of New York University, retorts that Sachs’ results are on a very small scale. He says only a free market can lift a nation out of poverty, and wants to see far more limited aid for specific programs with good track records, such as health care.
Easterly argues that aid bureaucracies are now rewarded for giving money that never reaches those who need it.
“It’s just not possible for outsiders with their experts to create economic development and prosperity in another country,” he says. “We should say: `There are a lot of problems and as rich outsiders we can’t fix everything, but where can we do the most good for the most people?”’
The stakes are high. The outcome will decide if _ and how _ the world spends another US$568 (euro394) billion on Africa.

___

The dream of a world-class road network for Africa is still alive, at least on paper. The African Union has a plan to build it, but it would take tens of billions of dollars that could come only from rich countries.
The east-west Trans-African Highway is still missing about 1,826 miles (2,939 kilometers). But West African states are building a regional network that will run from landlocked Chad to the Western port of Dakar in Senegal, and from Mauritania to Nigeria. Kenya is also building a road to neighboring Ethiopia.
Aid to Africa is going up again to about US$37 (euro26) per capita, from a low of US$24 in 1999. But this time the world has learned something. Aid to countries with more democratic systems has tripled at the expense of those whose leaders have unchecked power, according to the World Bank.
These days, when a new road is under construction in Kenya, white cars with European Union flags on the doors visit every day to make sure every inch of the highway is built to specification.
And a maintenance contract comes with it.

The Cost of Poor Infrastructure: Yet Another Example:

http://www.3plwire.com/2007/12/20/the-cost-of-poor-infrastructure-yet-another-example/

 

To judge how far aid has helped Africa along the road to prosperity, just look down at the pavement or the lack of it.

The most important highway in East Africa starts at the Indian Ocean port of Mombasa. Tens of thousands of trucks every year carry food, fuel and other goods to 100 million people in east and central Africa up a bone-jarring two-lane road.

Despite millions of aid dollars spent on roads, the wear and tear is so bad that journeys take weeks. And the cost makes it cheaper to have a container of corn shipped from Iowa than to truck it 500 miles to western Kenya.
————————————————–
“Africans do not want to be viewed as a charity case,” adds Okonjo-Iweala, a World Bank managing director. “Ninety-nine point nine percent of Africans are people who are getting on with their own lives. All they are asking for is….a set of tools.”

Roads are the lifeblood of an economy, the delivery system for agriculture, mining, tourism and other mainstays of African industry. But roads in Africa are few and bad. When foreign companies calculate the price of doing business on the continent, they look at figures like the cost of transportation and decide to go somewhere else.

“No one would ever have 100 million people in the rich world along a broken-down, two-lane, undivided road as we do here,” said leading economist Jeffrey Sachs about Nairobi. “If the donors were thinking about what would really provide development, it’s a proper, divided highway on which truck traffic could go.”

Truth is, they did think of it and almost built it 40 years ago. But today, the east-west Trans-African Highway exists only on maps. On the ground, it turns into a muddy footpath in the jungles of eastern Congo.

In conversations with some colleagues and a few so-called friends, I’ve often been the subject of strong criticism for my view that aid money would be better spent on infrastructure and institutions that facilitated the free flow of business and international trade as opposed to food shipments. It’s hard for non-supply chain/logistics people to understand that if you don’t have the necessary infrastructure in place it doesn’t matter how much you throw at the system, it simply isn’t going to move well and all your money is going to be eaten up in logistics costs. It’s no different than looking at international trade – countries with poor infrastructure make trade difficult and expensive. It’s no different with aid logistics. And I think this article is accurate in stating that what most Africans want is not a handout, but simply the means to stand on their own two feet and support themselves. This guy gets it. Although to get Africa’s infrastructure off the ground will take more than micro-credits the concept is still there.

 

Published on Taipei Times http://www.taipeitimes.com/News/editorials/archives/2007/12/22/2003393678 Trans-African Highway mirrors failure of Africa aid Africans are poorer now than a quarter century ago, despite the US$568 billion in aid poured into the continent in the past 50 years. Many say what is needed is investment, not more aid By Chris Tomlinson AP, NAIROBI Saturday, Dec 22, 2007, Page 9 ILLUSTRATION: MOUNTAIN PEOPLE To judge how far aid has helped Africa along the road to prosperity, just look down at the pavement — or the lack of it. The most important highway in East Africa starts at the Indian Ocean port of Mombasa. Tens of thousands of trucks every year carry food, fuel and other goods to 100 million people in east and central Africa up a bone-jarring two-lane road. Despite millions of aid dollars spent on roads, the wear and tear is so bad that journeys take weeks. And the cost makes it cheaper to have a container of corn shipped from Iowa than to truck it 800km to western Kenya. In the 50 years since the first African countries won independence, the world has spent US$568 billion on Africa. Yet Africans are poorer now than a quarter century ago, and much of the money has ended up on the road to nowhere. This dismal record is sparking a vigorous debate on how best to help the world’s poorest continent, and to what degree aid is the answer. A growing chorus of Africans is saying what they need is not handouts, but investment so they can rebuild on their own. “Africans … are tired. They are tired of being the subject of everybody’s charity and care. And what is happening in many African countries now is the realization that nobody can do it but us,” said Ngozi Okonjo-Iweala, a World Bank managing director and former finance minister of Nigeria, at a talk on a changing Africa. “We can invite partners who support us, but we have to start.” LIFEBLOOD Roads are the lifeblood of an economy, the delivery system for agriculture, mining, tourism and other mainstays of African industry. But roads in Africa are few and bad. When foreign companies calculate the price of doing business on the continent, they look at figures like the cost of transportation and decide to go somewhere else. “No one would ever have 100 million people in the rich world along a broken-down, two-lane, undivided road as we do here,” said leading economist Jeffrey Sachs about Nairobi. “If the donors were thinking about what would really provide development, it’s a proper, divided highway on which truck traffic could go.” Truth is, they did think of it — and almost built it — 40 years ago. But today, the east-west Trans-African Highway exists only on maps. On the ground, it turns into a muddy footpath in the jungles of eastern Congo. The story of the highway shows why aid to Africa has largely failed in the past, and what can be learned for the future. Back in 1969, the Japanese government proposed extending the Mombasa Highway to Lagos, Nigeria on the Atlantic Ocean. The four-lane, 7,080km paved highway would be slightly longer than Interstate 90 running from Boston to Seattle across the US. It was to bring modern trade to six African countries. By 1971, the deal had the support of the six countries, nine other rich countries and six international aid agencies. They hoped to have at least two lanes of all-weather road open by 1978. It did not take long for problems to emerge. Dictator Idi Amin took control of Uganda and threatened neighboring Kenya, which then closed the highway. MOBUTU The fight reflected a constant plague for foreign aid to Africa — corrupt dictators, and donors who gave them money to protect political and economic interests. Nowhere was this exchange clearer than in Zaire, now known as Congo. Zaire needed to build roads from scratch. But the Central African country was ruled by Mobutu Sese Seko, one of the most brutal dictators in African history. Mobutu took power during the Cold War, at a time when the US and the Soviet Union were scrambling for influence in Africa. In the mid-1970s, he was a funnel for arms flowing to anti-communist rebels. And so billions of dollars poured into Zaire to keep him happy, and to maintain the flow of Zairean gold, diamonds and copper to the West. Western nations largely looked the other way as the aid money disappeared into his offshore bank accounts and into the pockets of dozens of corrupt leaders. Mobutu stopped plans for the highway in 1974, after stealing the money Belgium gave him for initial surveys. In a well-known African joke that reflects the thinking of the time, a young African dictator calls Mobutu for advice after coming under rebel attack. “Did they come by sea?” Mobutu asks. “No,” the younger ruler would reply. “Did they come by air?” Mobutu asks. “No, they came by road,” the protege answers. “Tsk tsk, my son, I always told you,” Mobutu says. “Never build roads.” REPAIRS, REBUILDING Despite Mobutu in Zaire, the highway was in good condition in Kenya. In the 1970s, the East African country’s economy was booming, with trucks filled with valuable coffee and tea running downhill from 1.6km-high Nairobi and across breathtaking African savanna to the port of Mombasa. But roads do not last forever. The average African highway is designed to last 15 to 20 years, if properly maintained, says Andrew Gitonga, the Kenya roads project officer for the EU. Since 1983, the EU has spent US$200 million to repair Kenya’s section of the highway and has about US$120 million more of road projects planned this year. Gitonga said the road needs to be completely rebuilt. “There has been no standard maintenance program for 15 years, so the roads are falling into disrepair until they collapse,” he said. “Some government contracts in the past were given in an untransparent manner to unqualified contractors without clear standards.” The transition between good road work and bad is painfully obvious when you hit a pothole at 80.5kph. A close examination of the hole will show that whoever built it skimped on the thickness of the rock bed and the asphalt surfacing, pocketing a little extra profit. Almost every day road workers can be seen patching the holes. One man sprays in some tar, a second shovels in a little asphalt and a third goes over it twice with a compactor. Within five minutes the lane is open, with hundreds of cars every hour driving over a repair that will probably last less than six months, or until the seasonal rains wash it away. MISGUIDED DONORS The same neglect for maintenance has led to the slow deterioration of thousands of donor-funded projects over the years. Just off the Mombasa highway in Nairobi, the International Committee of the Red Cross maintains its distribution hub for eastern Africa. Trucks loaded with food and supplies set off to deliver aid to some of the world’s most desperate people. The biggest obstacle: The roads. “The roads are in a desolate state and they are not getting any better,” says Bent Korsgaard, logistics director for the Kenya office. A University of Minnesota study determined that big trucks cost about US$0.434 per 1.6km to operate on normal roads. In Africa, the cost for Red Cross trucks is US$2.88 per 1.6km. A truck that follows the Trans-African Highway for the 2,400km, 21-day roundtrip to Butembo, Congo requires five days in the workshop when it gets back. It’s cheaper to hire a Russian cargo plane than to drive a truck to some cities within 1,000km. That doesn’t even count the bribes truckers have to pay on African roads. A recent survey in West Africa found they range from about US$3.33 per 97km in Togo to US$25 in Mali. Roads are hardly the only aid fiascos. Kenya alone is littered with dozens of half-baked, half-built projects funded by wealthy countries, monuments to good intentions gone awry. GOOD INTENTIONS Often donors did not understand Africa or talk to Africans. The Norwegian government built a fish processing plant on Lake Turkana in the 1970s to provide jobs for nomadic cattle herders — soon doomed in part because the local community had no fishing culture. In a self-assessment in 1987, the World Bank found 106 out of 189 African development projects audited — almost 60 percent — had serious shortcomings or were complete failures. African agriculture projects failed 75 percent of the time. The World Bank did better when it worked more closely with communities and better monitored projects. But a recent report on aid from the World Bank’s private arm, the International Finance Corp, found only half of its Africa projects succeed. Aid is also hampered because it is often determined not just by what poor countries need but by what rich countries want to give to boost their own economies. Much so-called foreign aid never leaves the country that promised it, because donor governments spend it to buy domestically-produced products or hire its own citizens as consultants. The World Bank estimates that throughout the 1980s, more than half of all aid was tied to what donor countries wanted to export, often at higher prices than could be found on the market. This practice reduced the value of aid by anywhere from 11 to 30 percent. Under the Buy American Act, the US Agency for International Development must spend aid money to buy products and services from US suppliers whenever possible, and then deliver them aboard expensive US-flagged ships or planes. “Foreign assistance is far from charity,” J. Brian Atwood, the USAID director under former President Bill Clinton, told Congress in 1995. “It is an investment in American jobs, American business.” Other rich nations do the same. Japan, one of the largest donors to Africa, provides a lot of aid in the form of four-wheel-drive vehicles — despite the roads. MILLENNIUM PROJECT Sachs argues past aid failed because not enough was invested at every level, in every sector. In 2004, Sachs and the UN started the Millennium Project experiment to supply 12 African villages with all they need, all at once, and see if they can be self-sufficient in five years. “The speed of results is astounding and the point is that if the resources are there, the rate of improvement is wonderful,” Sachs says. “I believe that we’re at the cusp of that now.” Sachs’ nemesis, economist William Easterly of New York University, retorts that Sachs’ results are on a very small scale. He says only a free market can lift a nation out of poverty, and wants to see far more limited aid for specific programs with good track records, such as health care. Easterly argues that aid bureaucracies are now rewarded for giving money that never reaches those who need it. “It’s just not possible for outsiders with their experts to create economic development and prosperity in another country,” he said. “We should say: `There are a lot of problems and as rich outsiders we can’t fix everything, but where can we do the most good for the most people?”‘ The stakes are high. The outcome will decide if — and how — the world spends another US$568 billion on Africa. DREAM STILL ALIVE The dream of a world-class road network for Africa is still alive — at least on paper. The African Union has a plan to build it, but it would take tens of billions of dollars that could come only from rich countries. The east-west Trans-African Highway is still missing about 2,939km. But West African states are building a regional network that will run from landlocked Chad to the Western port of Dakar in Senegal, and from Mauritania to Nigeria. Kenya is also building a road to neighboring Ethiopia. Aid to Africa is going up again to about US$37per capita, from a low of US$24 in 1999. But this time the world has learned something. Aid to countries with more democratic systems has tripled at the expense of those whose leaders have unchecked power, according to the World Bank. These days, when a new road is under construction in Kenya, white cars with EU flags on the doors visit every day to make sure every inch of the highway is built to specification. And a maintenance contract comes with it.

http://en.wikipedia.org/wiki/Trans-African_Highway_network

Capetown to Nairobi
Nairobi to Lagos
Lagos to Dakar
Dakar to Kano
Kano to Algiers
Algiers to the 21st century.

 

Would you try to off-road?

http://en.wikipedia.org/wiki/Image:Map_of_Trans-African_Highways.PNG

http://www.expertafrica.com/

Andrew Maykuth, The Inquirer’s Johannesburg bureau chief, and photographer Michael Wirtz journeyed through East Africa, accompanying a food aid truck into rebel-held territory in Sudan. Their odyssey through Kenya and Uganda into Sudan is chronicled here in articles, photos, and multimedia presentations.

http://www213.pair.com/maykuth/odyssey/pages/start.html

Andrew Maykuth, The Inquirer’s Johannesburg bureau chief, and photographer Michael Wirtz journeyed through East Africa, accompanying a food aid truck into rebel-held territory in Sudan. Their odyssey through Kenya and Uganda into Sudan is chronicled here in articles, photos, and multimedia presentations.

Trans African Highway 1 on Flicker Photo Sharing: http://www.flickr.com/photos/11707386@N06/2201934782/

 

---

Start the year off right. Easy ways to stay in shape in the new year.

TOO Many Committies May DOOM a “Trans-African Highway” System

The below are a reason why a “TRANS-AFRICAN HIGHWAY”  is so difficult to realize. How many committees are necessary?? Would it not be better to handle ALL of these from the AU (African Union)???

Lagos-Mombasa Trans-African Highway Authority

Coordinating Committee of the Dakar-Ndjamena Highway

Algiers-Lagos Trans-Saharan Coordinating Committee

Tangiers-Lagos Trans-African Highway Coordinating Committee

Ndjamena-Masawa-Djibouti Trans-Sahelian Highway Coordinating Committee

Tripoli-Windhoek Highway Coordinating Committee

Beira-Lobito Trans Southern African Highway Coordinating Committee

Tangiers-Cairo Trans-African Highway Coordinating Committee

More Proof of the Need for a NEW Paradim for African “Aid” in Infrastructure Development

Published on Taipei Times http://www.taipeitimes.com/News/editorials/archives/2007/12/22/2003393678 Trans-African Highway mirrors failure of Africa aid Africans are poorer now than a quarter century ago, despite the US$568 billion in aid poured into the continent in the past 50 years. Many say what is needed is investment, not more aid By Chris Tomlinson AP, NAIROBI Saturday, Dec 22, 2007, Page 9

To judge how far aid has helped Africa along the road to prosperity, just look down at the pavement — or the lack of it.

The most important highway in East Africa starts at the Indian Ocean port of Mombasa. Tens of thousands of trucks every year carry food, fuel and other goods to 100 million people in east and central Africa up a bone-jarring two-lane road.

Despite millions of aid dollars spent on roads, the wear and tear is so bad that journeys take weeks. And the cost makes it cheaper to have a container of corn shipped from Iowa than to truck it 800km to western Kenya.

In the 50 years since the first African countries won independence, the world has spent US$568 billion on Africa. Yet Africans are poorer now than a quarter century ago, and much of the money has ended up on the road to nowhere. This dismal record is sparking a vigorous debate on how best to help the world’s poorest continent, and to what degree aid is the answer.

A growing chorus of Africans is saying what they need is not handouts, but investment so they can rebuild on their own.

“Africans … are tired. They are tired of being the subject of everybody’s charity and care. And what is happening in many African countries now is the realization that nobody can do it but us,” said Ngozi Okonjo-Iweala, a World Bank managing director and former finance minister of Nigeria, at a talk on a changing Africa. “We can invite partners who support us, but we have to start.”

LIFEBLOOD

Roads are the lifeblood of an economy, the delivery system for agriculture, mining, tourism and other mainstays of African industry. But roads in Africa are few and bad. When foreign companies calculate the price of doing business on the continent, they look at figures like the cost of transportation and decide to go somewhere else.

“No one would ever have 100 million people in the rich world along a broken-down, two-lane, undivided road as we do here,” said leading economist Jeffrey Sachs about Nairobi. “If the donors were thinking about what would really provide development, it’s a proper, divided highway on which truck traffic could go.”

Truth is, they did think of it — and almost built it — 40 years ago. But today, the east-west Trans-African Highway exists only on maps. On the ground, it turns into a muddy footpath in the jungles of eastern Congo.

The story of the highway shows why aid to Africa has largely failed in the past, and what can be learned for the future.

Back in 1969, the Japanese government proposed extending the Mombasa Highway to Lagos, Nigeria on the Atlantic Ocean. The four-lane, 7,080km paved highway would be slightly longer than Interstate 90 running from Boston to Seattle across the US. It was to bring modern trade to six African countries.

By 1971, the deal had the support of the six countries, nine other rich countries and six international aid agencies. They hoped to have at least two lanes of all-weather road open by 1978.

It did not take long for problems to emerge. Dictator Idi Amin took control of Uganda and threatened neighboring Kenya, which then closed the highway.

MOBUTU

The fight reflected a constant plague for foreign aid to Africa — corrupt dictators, and donors who gave them money to protect political and economic interests. Nowhere was this exchange clearer than in Zaire, now known as Congo.

Zaire needed to build roads from scratch. But the Central African country was ruled by Mobutu Sese Seko, one of the most brutal dictators in African history.

Mobutu took power during the Cold War, at a time when the US and the Soviet Union were scrambling for influence in Africa. In the mid-1970s, he was a funnel for arms flowing to anti-communist rebels.

And so billions of dollars poured into Zaire to keep him happy, and to maintain the flow of Zairean gold, diamonds and copper to the West. Western nations largely looked the other way as the aid money disappeared into his offshore bank accounts and into the pockets of dozens of corrupt leaders.

Mobutu stopped plans for the highway in 1974, after stealing the money Belgium gave him for initial surveys. In a well-known African joke that reflects the thinking of the time, a young African dictator calls Mobutu for advice after coming under rebel attack.

“Did they come by sea?” Mobutu asks.

“No,” the younger ruler would reply.

“Did they come by air?” Mobutu asks.

“No, they came by road,” the protege answers.

“Tsk tsk, my son, I always told you,” Mobutu says. “Never build roads.”

REPAIRS, REBUILDING

Despite Mobutu in Zaire, the highway was in good condition in Kenya. In the 1970s, the East African country’s economy was booming, with trucks filled with valuable coffee and tea running downhill from 1.6km-high Nairobi and across breathtaking African savanna to the port of Mombasa.

But roads do not last forever.

The average African highway is designed to last 15 to 20 years, if properly maintained, says Andrew Gitonga, the Kenya roads project officer for the EU. Since 1983, the EU has spent US$200 million to repair Kenya’s section of the highway and has about US$120 million more of road projects planned this year.

Gitonga said the road needs to be completely rebuilt.

“There has been no standard maintenance program for 15 years, so the roads are falling into disrepair until they collapse,” he said. “Some government contracts in the past were given in an untransparent manner to unqualified contractors without clear standards.”

The transition between good road work and bad is painfully obvious when you hit a pothole at 80.5kph. A close examination of the hole will show that whoever built it skimped on the thickness of the rock bed and the asphalt surfacing, pocketing a little extra profit.

Almost every day road workers can be seen patching the holes. One man sprays in some tar, a second shovels in a little asphalt and a third goes over it twice with a compactor. Within five minutes the lane is open, with hundreds of cars every hour driving over a repair that will probably last less than six months, or until the seasonal rains wash it away.

MISGUIDED DONORS

The same neglect for maintenance has led to the slow deterioration of thousands of donor-funded projects over the years.

Just off the Mombasa highway in Nairobi, the International Committee of the Red Cross maintains its distribution hub for eastern Africa. Trucks loaded with food and supplies set off to deliver aid to some of the world’s most desperate people.

The biggest obstacle: The roads.

“The roads are in a desolate state and they are not getting any better,” says Bent Korsgaard, logistics director for the Kenya office.

A University of Minnesota study determined that big trucks cost about US$0.434 per 1.6km to operate on normal roads. In Africa, the cost for Red Cross trucks is US$2.88 per 1.6km.

A truck that follows the Trans-African Highway for the 2,400km, 21-day roundtrip to Butembo, Congo requires five days in the workshop when it gets back. It’s cheaper to hire a Russian cargo plane than to drive a truck to some cities within 1,000km.

That doesn’t even count the bribes truckers have to pay on African roads. A recent survey in West Africa found they range from about US$3.33 per 97km in Togo to US$25 in Mali.

Roads are hardly the only aid fiascos. Kenya alone is littered with dozens of half-baked, half-built projects funded by wealthy countries, monuments to good intentions gone awry.

GOOD INTENTIONS

Often donors did not understand Africa or talk to Africans. The Norwegian government built a fish processing plant on Lake Turkana in the 1970s to provide jobs for nomadic cattle herders — soon doomed in part because the local community had no fishing culture.

In a self-assessment in 1987, the World Bank found 106 out of 189 African development projects audited — almost 60 percent — had serious shortcomings or were complete failures. African agriculture projects failed 75 percent of the time.

The World Bank did better when it worked more closely with communities and better monitored projects. But a recent report on aid from the World Bank’s private arm, the International Finance Corp, found only half of its Africa projects succeed.

Aid is also hampered because it is often determined not just by what poor countries need but by what rich countries want to give to boost their own economies.

Much so-called foreign aid never leaves the country that promised it, because donor governments spend it to buy domestically-produced products or hire its own citizens as consultants. The World Bank estimates that throughout the 1980s, more than half of all aid was tied to what donor countries wanted to export, often at higher prices than could be found on the market. This practice reduced the value of aid by anywhere from 11 to 30 percent.

Under the Buy American Act, the US Agency for International Development must spend aid money to buy products and services from US suppliers whenever possible, and then deliver them aboard expensive US-flagged ships or planes.

“Foreign assistance is far from charity,” J. Brian Atwood, the USAID director under former President Bill Clinton, told Congress in 1995. “It is an investment in American jobs, American business.”

Other rich nations do the same. Japan, one of the largest donors to Africa, provides a lot of aid in the form of four-wheel-drive vehicles — despite the roads.

MILLENNIUM PROJECT

Sachs argues past aid failed because not enough was invested at every level, in every sector. In 2004, Sachs and the UN started the Millennium Project experiment to supply 12 African villages with all they need, all at once, and see if they can be self-sufficient in five years.

“The speed of results is astounding and the point is that if the resources are there, the rate of improvement is wonderful,” Sachs says. “I believe that we’re at the cusp of that now.”

Sachs’ nemesis, economist William Easterly of New York University, retorts that Sachs’ results are on a very small scale. He says only a free market can lift a nation out of poverty, and wants to see far more limited aid for specific programs with good track records, such as health care.

Easterly argues that aid bureaucracies are now rewarded for giving money that never reaches those who need it.

“It’s just not possible for outsiders with their experts to create economic development and prosperity in another country,” he said. “We should say: `There are a lot of problems and as rich outsiders we can’t fix everything, but where can we do the most good for the most people?”‘

The stakes are high. The outcome will decide if — and how — the world spends another US$568 billion on Africa.

DREAM STILL ALIVE

The dream of a world-class road network for Africa is still alive — at least on paper. The African Union has a plan to build it, but it would take tens of billions of dollars that could come only from rich countries.

The east-west Trans-African Highway is still missing about 2,939km. But West African states are building a regional network that will run from landlocked Chad to the Western port of Dakar in Senegal, and from Mauritania to Nigeria. Kenya is also building a road to neighboring Ethiopia.

Aid to Africa is going up again to about US$37per capita, from a low of US$24 in 1999. But this time the world has learned something. Aid to countries with more democratic systems has tripled at the expense of those whose leaders have unchecked power, according to the World Bank.

These days, when a new road is under construction in Kenya, white cars with EU flags on the doors visit every day to make sure every inch of the highway is built to specification.

And a maintenance contract comes with it.

African Continent in the Dark

Continent in the Dark

The Monitor (Kampala)
NEWS
29 January 2008
Posted to the web 28 January 2008
Kampala
THE signing of a 92 million euro ($136 million) loan from the European Investment Bank (EIB), last week, to finance the construction of the 250 megawatt Bujagali hydro-electric power project is a shot in the arm for Uganda’s efforts to attract increased direct foreign investments.

This project, slated for completion in 2011, gives Uganda an edge over Africa’s economic powerhouse, South Africa, which is reeling from continued daily power cuts following generation and other operational problems at Eskom, the country’s power company. Eskom generates 95 per cent of the electricity used in South Africa.

(shortage of) power to neighbouring countries because of acute domestic shortages. Zimbabwe, which imports about 40 per cent of its electricity from South Africa, and Mozambique are the worst affected.

Eskom Enterprises has operations on the African continent with its head office being located in Johannesburg, South Africa, and other offices in Uganda, Nigeria and Mali.

Although the power cuts have affected the whole country, the commercial capital, Johannesburg, has been worst hit and Eskom says it would be foolhardy to attract major industrial projects until the situation has been resolved by the middle of next decade.

Eskom’s finance director, Bongani Nqwababa, was quoted by Business Day last week as saying “it is a question of supply and demand. It would be irresponsible now to aggressively pursue energy-intensive businesses.”

Investments

Though these may not be the kind of businesses that the Ugandan Investment Authority (UIA) is gunning for at the present stage of the country’s industrial development, there can be little doubt that there are plenty of other related investments that UIA can pick up as a result of the crisis in South Africa.

Small and Medium sized businesses (SMEs) have been hit hardest by the power cuts with dozens forced to shut and more closures expected if the crisis continues, says South Africa’s black business umbrella body, the National African Federated Chamber of Commerce and Industry (NAFCOC).

Nafcoc President Buhie Mthethwa says the body, which has 300000 members, will approach the government soon with requests for compensation for small enterprises which had lost perishable goods during the blackouts and cannot afford to buy generators to protect their remaining stocks.

Dozens of Nafcoc members, who represent black, coloured and Indian enterprises, are forced out of business by the chronic power outages which add to problems they already face from rising interest rates and restricted access to credit.

Growth in the economy has steadily accelerated since democracy was introduced in 1994 and the government wants to boost the pace to a sustainable rate of 6 per cent from 5.4 per cent in 2006 -a 25-year peak. It also aims to halve unemployment and poverty by 2014.

But now, there is mounting concern that power shortages will put more constraints on a growth rate hampered by a global slow-down as well as higher interest rates.

Credit Guarantee economist Luke Doig says the impact of the power cuts will lead to an escalation in liquidations and debt insolvencies. It will hit Small and Medium-scale Enterprises (SMEs) hard as they didn’t have many resources.

Jeff Osborne, the chief executive officer of Retail Motor Industry Organisation, says power shortages were hitting used car dealers, petrol stations, motor mechanics and panel beaters, which were mainly SME).

These are the same mid-term, long-term knock-on problems Uganda is attempting to avoid or mitigate with the construction of the Bujagali power project; problems that its detractors seem oblivious to.

According to an economic and financial evaluation study carried out three years ago by an independent consulting firm Power Planning Associates Limited (UK), Uganda’s electricity demand is expected to grow by 7.6 per cent per year on average between 2005 and 2020.

To help meet this demand, between 2006 and 2010, Uganda is expected to lease and commission 150 MW of oil fueled power generation as well as some generation from bagasse, a sugar-cane derivative used for renewable power generation, and from small hydro-power plants.

Private generation

Last week’s announcement that Electro- Maxx, an indigenous private power company, will start producing 10 megawatts (MW) of thermal power by June this year is part of the planned exercise to add capacity to Uganda’s power sector.

Electro-Maxx was granted a power generating licence from the Uganda Electricity Authority (ERA). ERA’s decision was communicated in a letter to the company dated January 21 following public hearings last December in Tororo where local leaders and the community gave the project the go ahead.

The $32 million project to be erected at the Tororo power substation will use Heavy Fuel Oil (HFO). And is expected to feed into the national grid.

A power purchase agreement has been executed between Electro-Maxx and the Uganda Electricity Transmission Company to supply power for 18 hours daily.

According to ERA, heavy-fuel oil is much cheaper than light diesel oil and Electro-Maxx will not require additional subsidies.

The government currently pays out billions of shillings in subsidizing expensive power to consumers.

Uganda’s current power demand is estimated at 380 MW while the maximum supply capacity stands at 251MW leaving a gap of about 129 MW.

“The 10 MW heavy-fuel project by Electro-Maxx is therefore highly needed to contribute towards reduction of the current deficit,” ERA said.

Currently, Uganda has a thermal installed capacity of 100 MW but it’s all generated through burning of diesel whose price has continued to rise.

Electro-Maxx chairman Patrick Bitature said the company would later apply to double or triple its capacity.

The plant was originally planned to be built in Mbarara but was shifted to Tororo to lower the cost of fuel transportation through Kenya.

Bujagali

The power supply generated from Bujagali would also enable 50-100 MW of expensive oil fueled thermal generation capacity to be retired. It is also expected that the commissioning of Bujagali in 2011 would help reduce the average cost of supply to end-users by up to 10 per cent compared to prevailing prices in constant terms.

The study found that the commissioning of Bujagali will have a small but positive impact on economic growth, balance of payments and the fiscal balance.

Uganda’s workforce is expected to double over the next 15 years, making the creation of jobs through expanded industry, tourism, and commercial services critical.

Removal of Trade Tariffs Not Solution for Continent

Removal of Trade Tariffs Not Solution for Continent

New Vision (Kampala)
OPINION
28 January 2008
Posted to the web 29 January 2008

By John Ssempebwa
Kampala
REFERENCE is made to the article titled “African Governments Should Remove Trade Tariffs”, published in The New Vision, January 9. Removing trade tariffs is no solution to Africa’s problems; it cuts government revenue, worsens trade deficits and poverty. In May 2007, the Uganda Revenue Authority (URA) collected sh228b of which sh122b was from imports.

Without import duties levied, especially on finished goods that are also produced in Uganda and ostentatious goods, how will government fund roads, hospitals, drugs and arms without donors?

Whereas Europe can depend on indirect domestic taxes levied on red light districts, casinos, tobacco and alcohol, Uganda cannot remove import duties because its per capita income is less than $400 meaning that less than 1% of all Ugandans have entered a casino.

Uganda has an increasing trade deficit of sh$1.4b. Trade deficits cause massive lay offs as imported goods subject domestically produced goods to competition, forcing sub-optimal capacity utilisation and laying off workers.

This malignant tumour in the Ugandan economy is the reason why impressive growth rates have not translated into better welfare for many Ugandans (Gross Domestic Product is an inverse function of the trade deficit).

Removal of import duties will encourage consumption of imports, worsen the trade deficit, jobs will be lost and markets for agro produce will dwindle. Poverty will worsen.

Before import duty is removed, consumers should have sufficient purchasing power to spend and pay indirect taxes without the consumer feeling the tax burden. This requires industrialisation. In fact, Europe’s industrial development was shaped by fierce protectionism called “Fortress Europe” during which Britain levied an average tariff of 32%, France developed its current agricultural protective system, Bismarck dumped the German Free Trade Policy and average industrial tariffs stood at 19% in Europe.

More so, Intra-African trade liberalisation needs a cautious approach since the EU has already signed free trade areas with leading African economies such as South Africa and Egypt.

Removing tariffs on goods from South Africa in the absence of appropriate rules of origin means offering the EU duty free market access to Uganda yet “EU” has no offensive trade interests in Uganda. Why offer a lift to a rich man who has several Rolls Royces?

The principle of asymmetry has to come into play when discussing removal of trade tariffs and any other trade controls in Africa. Some countries are at higher levels of development because of advantages bestowed upon them by European colonial masters. Full and immediate liberalisation of trade with such countries can only mean jobs lost in Uganda.

In lieu of liberalising Africa’s trade, if the EU is interested in enabling Africa to benefit from world trade, the EU must compensate Africa for the damaging effects of liberalisation implied in the Economic Partnership Agreements.

Africa’s true allies will not be those who impose liberalisation but those who help Africa adjust to the liberalisation by solving its supply side constraints, for example, building the big dam in neighbouring Congo (The dam could reduce the cost of power in Central and Eastern Africa by 50%), building an alternative route for Uganda’s imports through Tanzania.

These projects have been identified by Africa and are contained in the development matrix of the Economic Partnership Agreements Negotiations.

It is unfortunate that the EU agrees to the development matrix but hates a detailed one that identifies the costs and exact projects. Africa seems to know its problems better now. Liberalisation is surely not the solution to our problems.

The writer is the Director of Trade at the Private Sector Foundation

Senegal’s Wade Blasts EU

Europe, Africa stuck on key issues

By BARRY HATTON, Associated Press Writer

The first summit between Europe and Africa in seven years came to an acrimonious end Sunday with leaders squabbling over human rights and no progress on a looming trade pact deadline.

Old divisions surfaced at the two-day summit as leaders swapped accusations over the crises in Zimbabwe and Darfur, and postcolonial tensions deepened over free trade deals.

The World Trade Organization has ruled that the EU’s 30-year-old preferential trade agreement with Africa was unfair to other trading nations and violated international rules. New deals are meant to be finalized by Dec. 31.

Senegalese President Abdoulaye Wade said most African leaders had rejected the European Union’s free trade proposals, known as Economic Partnership Agreements, and wouldn’t discuss them further.

The proposals “aren’t in Africa’s interest,” Wade said in angry comments at a news conference.

Negotiations on the pacts — meant to replace colonial-era trading systems between Europe and its former colonies — have lasted five years and officials had hoped the summit would bring a breakthrough.

The EU is offering African governments unrestricted access to its 27-country market if they in turn grant tariff reductions for European goods — a measure Africans fear will make their less competitive local companies vulnerable.

African Union Commission President Alpha Oumar Konare said the EU had to give up its “colonial approach.”

“The riches of Africa must be paid for at a fair price,” he said.

During previous talks, African governments have said the agreements would do little to boost their access to European markets. They also viewed the conditions as an EU attempt to meddle in African affairs.

Friction between the continents comes as many African countries are developing strong trade ties with China, whose influence has soared on the back of billions of dollars in aid and investment.

The EU is concerned that the search by China and other rising powers for oil and other resources across Africa comes with no demands for democracy and human rights. Africans, though, say the Chinese come willing to negotiate as equals.

Officials from both continents said the presence of more than 70 heads of government at the summit showed leaders on both continents wanted better relations. But they left the Portuguese capital with only a broad statement of intentions.

Human rights and aid groups expressed exasperation. Save the Children said in a statement the summit was “a high-profile exercise of little substance.”

Differences over the human rights record of Zimbabwean President Robert Mugabe and measures to help end the conflict in the western Sudanese region of Darfur dogged the event.

Asked what was his message to Europe as he arrived at the summit venue Sunday, Mugabe said nothing but raised his arm and made a fist.

German Chancellor Angela Merkel said Saturday the EU was “united” in condemning Mugabe for what they view as his economic mismanagement, failure to curb corruption and contempt for democracy. British Prime Minister Gordon Brown stayed away from the summit in protest against Mugabe’s attendance.

Mugabe was reportedly scathing toward his European critics in his speech at a closed session.

“He said criticisms were trumped-up charges against Zimbabwe and the result of arrogance from the EU,” according to a European official who attended the summit, but who spoke on condition of anonymity because she was not authorized to discuss the details publicly.

Ghanian President John Kufuor, current chair of the AU, said the organization supports mediation efforts among Zimbabwe’s main political parties being led by South African President Thabo Mbeki and aimed at political reform. But he insisted that meddling from outside Africa would be unhelpful.

“We want to encourage a homegrown solution so there will be a restoration of normalcy and good governance for the people of Zimbabwe,” Kufuor said.

Measures to help end the conflict in the western Sudanese region of Darfur were another point of contention.

Sudanese President Omar al-Bashir has so far refused to allow non-Africans into a 26,000-strong U.N.-A.U. peacekeeping force planned for Darfur. EU nations, meanwhile, have failed to come up with the needed military hardware to support the operation.

Sudan and United Nations envoys met on the sidelines of the summit. They said in a brief joint statement there had been “clarification” of some issues but gave no details.

On trade, European Commission President Jose Manuel Barroso acknowledged the difficulty of reaching free-trade deals between wealthy European countries and poor African nations.

“It is a challenge for both Africans and Europeans and will require time,” Barroso said in a speech to the gathering.

The World Trade Organization has ruled that the EU’s 30-year-old preferential trade agreement with Africa was unfair to other trading nations and violated international rules. New deals are meant to be finalized by Dec. 31.

The two sides will press ahead with talks on interim accords with individual African countries to assure they continue to enjoy privileged access to European markets, he said.

“We are nearly there and we now need to focus all of our energy to achieve this priority objective,” Barroso said.

___

Associated Press writers Daniel Woolls, in Lisbon, and David Stringer, in London, contributed to this report.

If West Gets Agricultral Subsdies WHY can’t Africa?? WTO to Blame??

Farmers in Africa, West rethink subsidy

By CHRIS TOMLINSON, Associated Press WriterFarmer Loi Bangoti picks corn by hand on the lush, cool slopes of his land, nestled under the cloudy shadow of Africa’s highest mountains.

Half a world away, farmer Tim Recker drives his combine through the famously flat, open corn fields that stretch out in the sun across the plains of Iowa.

For all their differences, both men rely on a complex global food market that decides how much their corn is worth and who will buy it. And the lives of both — along with millions of other farmers — will be affected by a growing movement to change one of the biggest forces shaping the market: subsidies.

Many experts agree farmers need help to grow food year in and year out, but Western farmers may get too much and African farmers too little. Western farmers receive billions of dollars in subsidies every year, which makes their food cheap to grow and sell. African farmers are left on their own because of decades of anti-subsidy policies pushed by the World Bank and others as a condition for aid money.

Now Africans are fighting back.

Some African countries are considering subsidies for their own farmers — Malawi has started providing discount vouchers for seed and fertilizer to farmers and is seeing such a bumper crop that it now sends emergency corn to neighboring Zimbabwe. African nations have also joined in lawsuits opposing American subsidies, resulting in a World Trade Organization ruling in October that the U.S. could face billions of dollars in sanctions.

At the same time, subsidies are facing more scrutiny than ever within the United States. A farm bill before Congress — the first in five years — was once a shoo-in, but now faces the threat of a veto from President Bush. He has called for an end to farm subsidies by 2010 to avoid trade conflicts.

The complexities of the subsidy debate play out far from the courts and the chambers of power in the daily lives of farmers like Bangoti and Recker.

Bangoti’s story shows how a little help can go a long way. He points with pride to his two acres of corn, beans and potatoes, stretching up the slopes of Mount Meru in a mosaic of various greens dotted with the brown of a few fallow fields.

Back in 1992, Bangoti lived in a mud hut, worked as a day laborer, herded skinny cows and harvested barely enough corn and beans to feed his family. Then scientists came to his farm as part of an agricultural aid program.

They looked at his soil, found the right seed and gave him his first batch of chemical fertilizer. They showed him how to get as much milk from two dairy cows as from his 20 traditional cattle. The techniques were simple, yet rare in Africa, where few labs analyze soil samples and few companies develop improved seed.

By 1993, Bangoti had tripled his output — and profits. At the time, he was profiled in an Associated Press story on African farming. His success since proves it was no accident. He is still farming, and still thriving.

“I built my own modern house,” Bangoti, 50, says proudly, sitting under a shiny tin roof surrounded by dark blue concrete walls. “I was able to send my children to school. … A long time ago, you could have a lot of cows, and have nothing. Now, with this modern way of living, you can have a few cows, but produce more.”

Bangoti says all it would take is a little training and a few supplies for Africans to grow all the food they need.

They once did, in the 1960s. Now, Africans import 25 percent of what they eat. Their share of the global agricultural market is down from 8 percent to 2 percent. And theirs is the only continent where food production per capita has fallen — roughly 22 percent since 1967, according to the World Resource Institute.

One reason, experts say, is the loss of subsidies. In exchange for foreign aid, debt-saddled African countries agreed to cut subsidies. Less than 4 percent of government spending in sub-Saharan Africa now goes to agriculture.

But without a safety net, a single bad season can bankrupt a farmer, and often does. And without help, African farmers are too poor to pay for the good seed and fertilizer that bring land to life.

There are signs of change. The World Bank is rethinking its stance on subsidies after a scathing internal review last month, and it made agriculture the center of its agenda this year for the first time in more than two decades. About 70 percent of Africans live off the land, and agricultural reform — from seed to market — is the surest way to lift the continent out of poverty.

African governments have promised to double their spending on agriculture. And the Gates Foundation and former U.N. Secretary-General Kofi Annan are leading an effort to bring to Africa the green revolution that swept through Asia.

As Bangoti leafs through a photo album of the experts who have visited his farm, he says the training and the aid have changed his life.

“Now I am always moving forward,” he says. “I never go backward.”

Bangoti says he could grow even more — if he could sell it. But he is competing against farmers in the richest countries of the world who get a lot more help, such as Recker.

The corn fields Recker sees through the glass patio doors of his modest ranch house have supported his family for generations. Recker followed his father and grandfather into farming, and works 1,500 acres in northeastern Iowa with his brother.

Today, the price of corn is at a record high because it is in demand to make ethanol. Recker’s business revolves around the timing of the markets as much as the seasons. As he sits at his breakfast table in his overalls and baseball cap, his mobile phone beeps to announce the arrival of the opening commodity prices at his local mill.

It was a different story when Recker started out in the mid-1980s, during one of the country’s worst agricultural crises. He says he could never have survived it without subsidies.

Subsidies kick in when prices are low. But they are given for each bushel, which creates an incentive for farmers to grow as many bushels as they can. The torrent of food then drives down world prices and makes it next to impossible for African farmers to compete.

Some of the extra food ends up in Africa. Most Iowa corn floats down the Mississippi River on barges to become feed for livestock or grist for ethanol. But at some point Recker’s corn has almost certainly gone to Africa for food relief, which experts say destroys local markets.

The United States — the largest donor to the U.N. World Food program — sends Africa corn, wheat, sorghum and soybeans. Aid agencies then have to hand out free or cheap American food instead of buying from African farmers. The cheap imported grain keeps Africans poor, and dependent on cheap imported grain.

The crisis is such that Atlanta-based CARE International, one of the world’s largest charities, announced in August that it would walk away from $45 million in American food to avoid disrupting the economies of the people it wants to help.

The subsidy system makes it hard for African farmers to compete on the world market. Western farmers get 29 percent of their income on average from their governments, according to the Organization for Economic Cooperation and Development. So they can sell their food for far less than Africans who get no subsidies.

African farmers may get help from an unexpected source — American corn and wheat farmers.

A new generation of corn and wheat farmers is arguing that the current subsidy system no longer meets the needs of their rapidly changing business. Instead of subsidies per bushel, they want the guarantee of a minimum level of revenue for each farm.

The change seems small, but it could result in farmers growing far less — and dumping far less extra corn and wheat on global markets. So Recker, the president of the Iowa Corn Growers Association, goes to Washington every three weeks to make a case that will benefit Bangoti, quite by accident.

“I think we have an opportune time to make sweeping changes in farm policy,” Recker says. “We need to have a program that is designed to supplement the farmer only when he needs it, and when he needs it most.”

Other farmers are not so sure. Peanut and cotton farmers want to keep the current subsidy system but get more money from it.

American cotton farmers receive $3 billion a year in subsidies — sometimes more than half their income, said Daniel Sumner, an agricultural economist at the University of California at Davis. He calculates that African cotton farmers — who pick each bud by hand and dig furrows with plows and oxen — lose $250 million a year because of the U.S. subsidies. That’s enough for each of those farmers to feed two children and pay all school fees for a year.

Cotton farmers in the U.S. say that the impact of subsidies on Africans is overstated, and that African farmers face internal challenges such as productivity and low yields.

Back in Tanzania, Loi Bangoti is not waiting for the outcome of the subsidy debate. In fact, he has never heard of subsidies for Western farmers, and he has no idea how they might affect his business.

But he is thrilled with his own success. His four sons have embraced the new ways he learned, and one even teaches modern dairy farming in a new program in neighboring Uganda.

He is especially proud of one thing: He no longer needs or takes handouts.

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.

Africa-Europe – Alternative Parallel Summit

European and African CSOs and social movements will debate alternatives in Lisbon

 

 

 

European and African civil society organizations will meet in Lisbon on 8 to 9 December, in parallel with European Union / African Union Summit.

They will alert political leaders and public opinion of the two continents to the disasters caused by trade competition, economic exploitation of ecosystems, restrictive migration policies and contempt of the most fundamental economic and social rights.

 

 

The second European Union / African Union Summit will be held in Lisbon on 8 – December 2007.

 

 

 

 

In the words of the European Commission this Summit should sanction the transition from a “European strategy in Africa” towards a “Euro-African strategy” based on real partnership. On the program (although the final agenda has not yet been revealed): climate change and energy issues, governance and human rights, and migrations, mobility and employment. So far as Africa is concerned, the main priorities for discussion are agriculture and food sovereignty.

 

 

 

 

The issue of the Economic Partnership Agreements, initially swept under the carpet by the Portuguese Presidency which did not want such a sensitive question to endanger the success of “its” Summit, has recently become come to the fore and will, in fact, be a core stake of the debates. Given the contentious course of the negotiations, in particular the disintegration of the regional blocks, Lisbon could well be the theatre of disruptive discussions.

 

 

Words face to face with a cruel reality

 

EPAs directly threaten the survival of the majority of the African populations and are provoking an unprecedented opposition throughout the continent ; at the same time, the “fortress – Europe” does not unveil any alternative and intensifies its violation of fundamental rights.

 

 

 

Treated as a reservoir of raw materials and/or a market of new potential consumers, the African continent’s wealth is coveted by international economic actors, its local markets are under attack by foreign exporters and its populations are relegated to the position of recipients of miserly international assistance which perpetuates their dependence.

 

 

Far from shouldering Europe’s responsibility to develop real solidarity with Africa, the European Union’s policies regarding Africa are all inspired by a strategy which directly threatens the economic, social, environmental and cultural rights of the African populations. Underwritten by the European transnational firms in perpetual search for new markets, the EU strategy in Africa weaves together aggressive trade agreements with facilities for exploitation of revenue for European companies and increasing restrictions on the movement of the people, to the detriment of ecosystems and equitable redistribution of local resources.

 

 

 

What can Europe propose to its African partners in alternative to the so-called “pro-development” trade agreements? How to formulate a migration policy which respects the international human rights conventions and provides meaningful support for development processes in Africa?

 

 

 

It is to communicate these concerns and propose responses to them that European and African international solidarity organizations, social movements NGOs, farmers’ organizations and trade unions will gather together in Lisbon on 8 to 9 December.

 

THE ORGANIZATIONS INVOLVED

 

 

PORTUGAL: AJP/ ATLA/ATTAC/ Bacalhoeiro/ Cores do Globo/ FDLI/Fundo de Apoio Social de Cabo Verdianos em Portugal/Gaia/ Khapaz/Moinho da Juventude/ Panteras Rosa /Solidariedade Imigrante/ SOS-Racismo/ UMAR/ZDB

 

 

 

Europe : Seattle To Brussels Network/ActionAid International/Attac Europe and its national membership/ AITEC-IPAM/Cordaid/Ecologistas en accion/Terra Nuova/Friends of the Earth Europe/IATP, Migreurop network/Transnational Institute/War on Want/Via Campesina Europe/11.11.11/WIDE, World Development Movement/No Vox Network/Nova Terra/Survie France, CCFD, Secours Catholique-Caritas, Zimbabwe Watch.

 

 

 

AFRICA : African trade network/ACORD Kenya/Alternatives Niger/Seatini/Mouvement des Sans-Voix- Mali/ People Parliament/ROPPA/Eastern and Southern African Small Farmers Federation/National Smallholders Farmers Association of Malawi/CADTM Maroc/Plate-forme sous-régionale des organisations paysannes d’Afrique Centrale/Publish what you way Congo/Jubilee Zambia/Eastern African Farmers Federation.

 

 

PROGRAM

 

Friday 7th December

15h00 Press Conference

19h-22h00 Cultural events in various sites of Lisbon

 

 

Saturday 8th December

 

Venue: Fac. de Belas Artes – Chiado (College of Fine Arts – in Chiado)

 

09h00 Opening of the meeting: Welcome and plenary session

10h30-13h30 Discussions in parallel sessions

 

 

Theme 1- Ecology, Natural Resources, Agriculture and Food Sovereignty

 

Theme 2 – Migrations

14h30–17h30 Discussions in parallel sessions

 

Theme 3 – Economic Development and Trade

 

Theme 4 – Human Rights

17h30 – 19h30 Self-organized workshops

 

 

 

Sunday, 9th December

 

Venue: Fac. de Belas Artes – Chiado (College of Fine Arts – in Chiado)

10h00 – 12h00 Joint Strategy Meeting: Campaigns and common struggles

12h00 – 13h00 Final Plenary and Final Joint Statement

Afternoon: Demonstration

 

 

 

Venue Address:

 

Faculdade de Belas Artes

 

Largo da Academia Nacional de Belas Artes – Lisbon

 

By underground, please take the blue or red line and exit in Baixa-Chiado

 

 

PRESS AND contacts

 

 

Nuno Mendes: +351 962501351 / africa.europa.alternativas.press@gmail.com (Portuguese, English and Spanish)

 

Amélie Canonne (AITEC) : +33 (0) 143712222 / amelie.aitec@reseau-ipam.org (French and English)

 

Alexandra Strickner (IATP/Attac-Austria): +43 13174014/ a.strickner@iatp.org (English, German, French and Italian)

 

More Info: http:// africa-europa-alternativas.blogspot.com

EU Trade “Deals” for Africa under Attack

Oxfam Warns Continent About EU Trade Deal
Business Day (Johannesburg)

NEWS
28 November 2007
Posted to the web 28 November 2007

By John Kaninda
Johannesburg
LONDON-based charity Oxfam has warned African countries not to rush into signing the European Union (EU) Economic Partnership Agreements (EPAs) in their present form as this would result in opening up the continent’s markets to EU trade “too fast and too deeply”.

The institution feared that the move would at the same time expose vulnerable African farmers and fledgling industries to unfair — often subsidised — competition from Europe, said Luis Morago, head of Oxfam’s EU Advocacy Office.

The call was made after Botswana, Lesotho, Mozambique and Swaziland on Friday initialed a free trade agreement with Europe. SA and Namibia are yet to sign the agreement.

Morago fears that in the next few weeks other regions could give into pressure from the European Commission to sign deals before the end of the year .

“Countries are being placed under enormous pressure to sign deals before the end of the year that could cause significant damage to their economic prospects.”

Morago said: “They are being asked to trade off the interests of their exporters — who will see a hike in tariffs from January 1 if no deals are signed — against the livelihoods of some of their most vulnerable subsistence farmers and industries.”

He said the latter would face competition from Europe if the tariffs were taken down.

“It suits the commission to spread the impression that regions are falling into line and others should do so too.

“But we would urge developing countries to take heed of the range of voices raised against these deals — from the World Bank to trade lawyers to civil society and trade unions — and resist the pressure .”

If African countries remove the majority of tariffs on imports, they will face massive losses of government revenue, potentially jeopardising spending on health and education, Oxfam said.

The body also believed that the negotiations were undermining critical regional integration processes. The EU Commission has said that it was obliged to finalise free trade deals by next month according to the World Trade Organisation (WTO) rules.

However, Oxfam has argued that the existing preference scheme, known as GSP+, could be extended to ACP countries to guarantee continued access to EU markets in the absence of a new deals, or the waiver granted by the WTO could be extended.

GSP+ is a new single scheme that covers — for the period 2006-08 — approximately 7200 products that can enter the EU duty free from vulnerable countries. However, these are reserved for countries whose governing principles accept the main international conventions on social issues, human rights, environmental protection and good governance.

The deal initialed between southern Africa on Friday covered trade in goods only.

It lacked a lot of significant information, including how many tariff lines would have to be cut, by how much and the percentage of trade that could be exempt . The full offers are due to be exchanged on December 6 and the deal will need to be signed by ministers and then ratified before it is final.

Last week, there were suggestions that East Africa had signed a deal. This turned out to be untrue but countries are under a lot of pressure to agree to sign before the end of the year to protect their existing export business .

What is Expected on EU-Africa Summit (Opinion)

Need to Face Facts On EU-Africa Summit

Financial Gazette (Harare)
COLUMN
29 November 2007
Posted to the web 29 November 2007

By Mavis Makuni
Harare
THE Africa File instalment in the November 15-21 issue of The Financial Gazette elicited a response from Herald columnist, Godwills Masimirembwa, who seemed to have missed the point I was making when I said British prime minister Gordon Brown could be vindicated if Zimbabwe carried out its threat to cause a “showdown” when the European Union-Africa Summit is held in Lisbon in just over a week’s time.

This, however, did not surprise me as the columnist’s penchant for classifying ideas into pre-determined categories extended even to my person. In his lengthy article, he referred to me no less than three times as “my sister, Mavis” or “Mavis, my sister.” He, however made sure to cite himself as “this writer” and his Herald colleague simply as Caesar Zvayi, without resorting to any indulgent terms to imply a superior-subordinate situation.

In a patriarchal society with a political culture of intolerance for divergent views, such condescending references are repugnant and are a barrier to objective communication and debate. I therefore, hereby give notice to Masimirembwa that I express views in my columns as your equal, as a Zimbabwean with as much right as yourself to comment on events in my country. In doing so, I do not defer to you on the basis of gender or any other reason and you should not patronise me as your “sister” to be preached to or talked down to. With that clearing of the air out of the way, let me now return to the main issue.

The diplomatic row over whether or not Zimbabwe should be invited to the summit in Portugal erupted after Brown had threatened to boycott the event because he believed the presence of Zimbabwe’s head of state, President Robert Mugabe, would turn the meeting into a media circus. My observation that this could indeed happen was made after a story had been published in the official press quoting government officials threatening that there would be a repeat of the public display witnessed at the Earth Summit in South Africa in 2002 when the Zimbabwean head of state blasted Tony Blair in particular and the West in general for meddling in the affairs of African countries.

Masimirembwa took this observation to mean that I had advocated that Zimbabwe should be “put on trial”, which I deny categorically.

Yes, I argued, and still argue that if Zimbabwe has nothing to hide, there should be no trepidation about explaining its position convincingly without any grandstanding, with respect to the accusations of repressive governance and human rights abuses consistently levelled against it. It is a deliberate misinterpretation, in my opinion, to say that any country about which issues are raised at international gatherings at which it is an equal partner is on trial.

Masimirembwa says: “Who will ask questions about Zimbabwe’s human rights record, about governance issues in Zimbabwe” in the same breath as he rails against the “illegal sanctions” imposed on the country’s leadership by the selfsame EU. Does he want readers to believe he has forgotten the reasons the EU and the United States have advanced for resorting to the travel bans and other restrictions imposed on those on the targeted sanctions list?

My argument is that it does not make sense to make all the noise that has been made about regime change and illegal sanctions at home and then recoil at the prospect of presenting the crafters and imposers of these measures with convincing facts to show why they are wrong in maintaining and renewing the embargoes.

The Herald columnist knows as everyone does that the ruling party has made the lifting of sanctions one of the conditions for its participation in the talks between it and the Movement for Democratic Change (MDC), which are being mediated by South Africa’s President Thabo Mbeki. ZANU PF has insisted that the MDC should call for the lifting of sanctions although the opposition is not the government of the day. It, however, would presumably have to appeal to the very same EU that is hosting the Lisbon summit.

The apparent unwillingness of the government to fight its own battles when the need or opportunity arises, gives the unfortunate impression that it would prefer to use the MDC as a “shield” instead. If the government is sincere in claiming that it wants sanctions lifted because they are hurting the ordinary person, it should be prepared to prove once and for all that it is falsely being accused of the abuses the EU and its allies have cited for imposing the bans. These blocs have spelt out the improvements they want to see before lifting the targeted sanctions. These improvements will not benefit the EU and its allies but the people of Zimbabwe.

It has to be said that when you declare a war as Zimbabwe says it has done against the West, it is unrealistic to insist that you will fight it on your own terms because you are bound to encounter all types of terrain. Those you are supposed to be fighting will respond, justifiably or not, as they deem fit. It is therefore important to know when to hold fire, retreat or advance. Unless a war is waged purely for its own sake, without regard to national interests, I submit it is neither astute nor practical to have one stock answer such as sovereignty, to fit all eventualities. Solutions to problems should be designed to fit specific situations.

Masimirembwa paid tribute to President Mugabe for articulating African causes on the international arena. He will agree that doing this entails questioning and denouncing the policies and actions of other countries and their leaders. The President would not be able to make speeches such as the one at the Earth Summit and those he delivers at the United Nations if regular targets of his attacks like United States President George Bush and Tony Blair’s successor Gordon Brown complained that such scrutiny meant their countries were being put on trial.

EPAs Under Fire From European Parliamentarians

EPAs Under Fire From European Parliamentarians
Inter Press Service (Johannesburg)

NEWS
30 November 2007
Posted to the web 30 November 2007

By David Cronin
Brussels
No fanfare was made in Brussels in the past week over European Union officials’ breakthrough in the trade talks on economic partnership agreements (EPAs) with almost 80 African, Caribbean and Pacific (ACP) countries.

For, while interim deals have been reached with nine countries, doubts persist over whether a full range of accords can be secured before a December 31 deadline set by the European Union (EU).

Five East African countries – Kenya, Uganda, Rwanda, Burundi and Tanzania – signed an agreement with the EU on November 27. A few days earlier, the Southern African states of Botswana, Lesotho, Swaziland and Mozambique gave their assent to a similar deal.

The EU’s executive, the European Commission, claims that its offer in the EPA negotiations is the most generous ever proposed as part of trade talks. The ACP, it says, would be allowed to sell their goods free of duties or quotas to the EU from next year. Sugar and rice would be the only exceptions.

This has done little to assuage the concerns of anti-poverty activists, who point out that any gains from greater exports to the EU could be eclipsed by the damage done by the largely reciprocal market openings that ACP countries would have to undertake.

These would allow subsidised European food products, with which local producers would be in no position to compete, to effectively swamp the ACP markets. Under the interim deals with East Africa, for example, taxes on two-thirds of imports from the EU would be eliminated.

Although the Commission has given assurances that the EPAs will be a tool for promoting regional integration in Africa, its critics argue that its tactics could be undermining that objective.

The interim agreements with Southern Africa have been reached, without South Africa or Namibia yet on board, although Angola has signalled it could soon join an agreement.

And in negotiations with a West African regional grouping, the EU side has indicated it may sign a separate deal with Ivory Coast without its neighbours. Both the West and Central African groupings in the talks have not yet presented the Commission with formal offers on questions of market access.

Glenys Kinnock, a veteran member of the European Parliament (MEP), said she had “never encountered the kind of pressure that the ACP has faced during these negotiations”.

Accusing the Commission of “intransigence and lack of flexibility”, she argued that it is “threatening regional integration and causing regional tensions”.

Ján Figel, a member of the European Commission, said this week that EU officials have taken “a pragmatic and flexible approach”. Nonetheless, Figel, who was deputising for Trade Commissioner Peter Mandelson, warned ACP governments that they risk having considerably higher taxes imposed on their exports to the EU if they do not conclude EPAs by the end of the year.

But Marc Maes, a trade specialist with Belgian anti-poverty group 11.11.11, said that the Commission had hardened its position during the negotiations.

Whereas it had indicated that ACP countries would be allowed a 25-year transition period for opening up their markets to most European imports, this period has been shortened to a maximum of 15 years in many cases. “The Commission has been moving the goalposts,” he told IPS.

He noted that EU governments earlier this month issued a call to the Commission to display flexibility in the talks. “The Commission has not offered maximum flexibility,” he said. “It has been constantly raising the stakes.”

The international non-governmental organisation Oxfam’s Luis Morago said: “The way these negotiations have been conducted so far is inimical to development.

“Countries that are massively dependent on the EU as a market for their goods and as a major aid donor are being told they must either sign deals now that involve drastic liberalisation or face an increase in tariffs from January next year that would devastate their export industries. This is not fair negotiation but brinkmanship.”

All of the deals signed this year are expected to be limited to trade in goods. Negotiations aimed at expanding the EPAs to cover investment, competition, services, public procurement and intellectual property could continue into 2008.

Although many ACP countries have been opposed to having negotiations that cover such an extensive range of issues, the Commission only agreed in October to restrict discussions for the remainder of this year to trade in goods.

In an exchange of views with Figel, the German Green MEP Frithjof Schmidt said: “It is astonishing to hear you talking about the negotiations as though everything has gone well for the Commission.

“In truth, the negotiations have been overburdened by the Commission. The ‘goods only’ announcement was a confession of the Commission’s failings and it was too little, too late. Your strategy has been a mistake,” Schmidt said.

French Socialist Harlem Désir argued that the EU threat of increasing tariffs on ACP goods in the absence of agreements is a “type of blackmail”.

Helmuth Markov, a German left-wing MEP, branded the EU’s tactics as “a catastrophe”, arguing that the overriding concern of officials was to prise open ACP markets to Western businesses.

“Partnership means respect,” he said. “When we Europeans can still have an attitude of ‘take it or leave it’, it has nothing to do with partnership.”

EU Gets NO DEAL On EPAs in Kigali Round

No Deal On EPAs in Kigali Round
The Monitor (Kampala)

NEWS
27 November 2007
Posted to the web 26 November 2007

By Robert Mukombozi
Kigali
THE 14th Kigali round of the African, Caribbean and Pacific and European Union members concluded with nothing tangible over the controversial issue of Economic Partnership Agreements.

After nine days of intensive negotiations, ACP countries maintained that they needed more time to negotiate a deal on the ACP-EU EPAs for which a World Trade Organisation waiver expires at the end of 2007.

The EU has been asked to urgently consider shifting deadlines.

“We urge the European commission to acknowledge that more time is needed for ACP states to assess the implications of the agreements proposed, given that negotiations have only taken place in earnest for the past to years,” reads the Kigali declaration adopted by the ACP-EU Joint Parliamentary Assembly.

The ACP states also declared on November 22 that they have been put under pressure by the European Commission to sign an EPA and that this was against the spirit of the two blocks partnership.

HITCH: The Manager of Legal and Bonds Customs Department, Mr Nicholas Kanabahita (R), and Comesa Senior Insurance Expert Berhane Giday (L) at a recent ceremony. File photo

Actually they have made their position clear on the matter that agreements reached whether interim arrangements of full EPAs, must ensure that no country is left worse off after the expiry of the negotiation deadline.

While the ACP group rallies for the future consideration of the deal, the EU says its signing is timely.

Amidst the protests, Ms Glenys Kinnock, the co-president of the ACP-EU Joint Parliamentary Assembly said a new deal was possible.

Ms Kinnock says that the attempts to frame such agreements had proven difficult, largely because the commission negotiators had approached the talks on EPAs as if they were conventional free trade negotiations focused on market opening, rather than as tools for development.

However, the ACP declined to bow to the EU’s “coated plea”.

In fact, the Commission threatened to cut aid extended to these “notorious states”.

The EC Commissioner for development and humanitarian aid, Louis Michel told participants at the closure that they needed to be more careful because they are ready to invest all there is to move the EPA.

He also said that Europe would concentrate on “promoting sustainable development” using “substantial means to accompany the EPA process”.

In this regard, Mr Michel indirectly implied that they would finance under the European Development Fund (EDF) package to influence the ACP states to comply.

The EU has committed funds amounting to over two billion Euros as aid for developing countries would be tailored to governance programmes and economic reforms in their interest.

But the ACP was not moved.

The member states ignored the EU threats and unanimously agreed to suspend further negotiations on the matter of signing the EPA deal, probably, until when EU is ready to listen to their demands.

This declaration follows the Cape Town agreement of 2002, adopted at the start of the EPA negotiating process.

Meanwhile some developing countries have warned at this Kigali round that they will never sign EPAs in their current form. The official position of most countries, however, is-that development -friendly EPA- is the objective and so far there has been no real discussion about alternatives to EPAs. It was a job abandoned for NGOs among other trade activists on the sidelines.

Africa Questions WTO and Meaning of FREE Trade With EU and EPA’s

There is No Need for the Continent to Sign EPA
The Monitor (Kampala)

COLUMN
26 November 2007
Posted to the web 26 November 2007

By Teddy Sseezi Cheeye

Europe is pressurising its former colonies to sign an enslaving trade agreement known as EPA. In my view African countries especially poor ones like Uganda should not be rushed into signing the so-called EPA agreement.

To start with the WTO has ruled existing preferential trade arrangements between poor countries and developed countries illegal. In other words, both WTO and multinational companies in Europe find the present preferential trade arrangement discriminatory.

The underlying economic principle is that by removing trade barriers like preferential trade arrangements, both human and material resources should be able to maximise their comparative advantages and be able to move freely across the global, leading to Adam Smith’s theory of specialisation, efficiency and affordability of both production of goods and provision of services which is good for everyone. There are three fundamental economic issues, which must be resolved before rushing into signing the EPA:

Global Competition

First of all, I agree with President Yoweri Museveni’s position, that there is nothing wrong to subject every one to the economic laws of competition. In other words, if both the WTO and multinational companies in Europe have decided that preferential trade arrangement with former colonies hinders global competition and is therefore considered illegal, fair enough. Let the preferential trade arrangements be terminated.

But this does not necessarily mean that former colonies should be coerced into signing new trade arrangements since by implication the new trade arrangements (EPA) will not be any better than the previous preferential trade arrangements.

It is vexing for Europe and WTO to rule preferential trade arrangements illegal and at the same time agitate for another form of neocolonial trade binding agreements, which after all have not been publicly disclosed and discussed in detail up to local community levels in order to get the much needed consensus.

Liberalisation

The second intriguing economic issue which needs to be resolved is liberalisation, the platform for free trade. The underlying principle as stated above is that with free movement of both human and material resources, enterprising individuals should be able to deploy both resources any where in the world, unhindered, which would lead to specialisation, efficiency and affordability.

In other words Europe is correctly saying that it has comparative advantage in production of goods and provision of services, in which it has specialised, in which it is efficient and which are affordable.

However there is an omitted case that must also be urged in the same breath. African countries too have economic comparative advantages within the global framework of free trade. While Europe giant companies like Nestle may want to sell food products in Africa and at the same time access raw milk and coffee, African entrepreneurs too want to sell their products and offer their services to Europe as well. But in order to carry out this free global trade, Africans too must be free to enter Europe as and when they want, just like the way Europeans enter African countries freely.

We cannot have a tilted free-trade arrangements where Europeans enjoy global free movements to any country in the world while Africans are restricted access to Europe, where they are supposed to go and search for markets or offer services on the basis of comparative advantage of affordability.

Affordability

One of Africa’s comparative advantages is in the area of offering cheep labour in developed countries, which has led to the emergence of remittances as the leading sources of finances to developed countries. For example while according to World Bank (as cited by President Museveni) remittances to developing countries last year amounted to $120 billion financial aid to developing countries was only $13 billion in the same period.

Similarly while last year IMF and WB gave peanuts to East Africa, (less than $500 million), remittances to EA hit an astronomical $37b. In other words, while Europe wants to take advantage of its comparative advantage, it is silent on granting easy access to Africans to go to Europe and offer cheap labour, which is our comparative advantage. We cannot have free trade without free trading men and women.

In my view the above and many other issues need to be resolved before we enter into disadvantageous agreements like the ones done during colonial period..

The writer is the Director of Economic Monitoring in the President’s Office

EU – African EPA Trade Negotiations Extended

Citizens Need a Fair Deal in EU Trade Treaty
The New Times (Kigali)

NEWS
29 November 2007
Posted to the web 29 November 2007
Kigali
The East African Community (EAC) clinched a deal with the European Union (EU) which allows for a continuation of negotiations on trade partnerships between the blocs.

This gesture comes just weeks after member states within the Africa Caribbean and Pacific (ACP) grouping met here in Kigali and asked for more time to study the new trade deals known as the Economic Partnership Agreements (EPAs).

Unfortunately member states within the ACP have only a month to decide whether to adopt the EPAs or the Europeans would impose higher tariffs as a consequence.

There is a feeling among many African negotiators that Europe is using the excuse of the World Trade Organisation (WTO) rules to rush the negotiations.

While we appreciate the urgency with which EAC handled the matter by signing a provisional deal with the EU on Tuesday, our leaders in the regional community should not hurry to bow to the mounting pressure.

An analysis done on the potential impact of the EPAs prepared by the United Nations Economic Commission for Africa (UNECA) shows that the proposed opening up of 80 per cent of trade of the EAC with Europe, will result in loss of tariff revenue of up to $130m per year.

Rwanda and a number of other African countries have already introduced 100 percent customs tariff waivers on commodities originating from certain regional communities. Already billions of Francs are being lost through this process although there are certainly significant benefits that accrue from regional communities.

Now with EPAs, it means that the already struggling African producers will have to compete directly with their European counterparts who hitherto enjoy subsidies.

Any hurried commitment by developing nations would subsequently see our economies undergoing significant dislocations with regional trade losing ground at the expense of European imports.

It is equally important to note that Africa’s exports to Europe are nowhere close to match what Europeans export to Africa.

That is why leaders of developing countries shouldn’t scatter their efforts by splitting themselves into geographical locations, but rather devise a common approach in their negotiations with the EU.

As our leaders travel to Lisbon next month for the EU-Africa Summit, they should be able to advocate for a poor African producer whose efforts could be shattered in the face of stiff unfair competition.

Anyim-Osigwe Gives Lecture on “Can Europe Aid Continent’s Development? “

Anyim-Osigwe Lecture – Can Europe Aid Continent’s Development?
Vanguard (Lagos)

NEWS
26 November 2007
Posted to the web 26 November 2007

By Bolade Omonijo

What has Europe to do with the level of poverty ravaging the African continent?

There is a big debate about the part played by the Europeans, both in keeping Africa down and thus facilitating the development of their continent.

The seminal work by the late Dr. Walter Rodney traced the underdevelopment of Africa to the slave trade and the consequent and subsequent colonialism during which, he contended, African development was not only arrested but deliberately reversed.

Africa remains the poorest of all the continents.

Tony Blair: Advocates funds for Africa’s development

Poverty remains at grinding level and the future for most of the people remains bleak. Many of the children are out of school, extreme or grinding poverty, including squalor, starvation, diseases and malnutrition is increasingly on the increase.

The only thing that sustains the poor and helps many keep their sanity is the hope of a better tomorrow. But, the statistics are quite frightening and, as many scholars have observed, poverty is a trap.

These, according to Mr. Michael Anyiam-Osigwe, Coordinator-General of the Anyiam-Osigwe Foundation, informed the choice of the theme and speaker for this year’s Anyiam Osigwe Lecture. At a press briefing organized in October to unveil the lecture, Mr. Michael Anyiam-Osigwe said: “This year, the central theme of the 9th lecture series, harnessing

Africa capital that the people may have life and live it more abundantly. The President of the Czech Republic, His Excellency, Professor Vaclav Klaus, is the keynote speaker. His topic, which derives from the central theme, is titled, “Europe as a Strategic Partner in Harnessing African Capital.”

Explaining further the rationale for the choice of both theme and topic, Mr. Anyiam-Osigwe said: “On the central theme of the lecture, “Harnessing African Capital That The People May Have Life and Live It More Abundantly”, various views, theories and measures have been put forward in an effort to unravel the complexity of Africa ‘s poverty problem. Anyiam-Osigwe’s perspectives on this critical subject, premised on his fundamental principle of a holistic approach to human existence and development, penetrates the heart and essence of the problem.

He holds the views that the key to unravelling the crisis of poverty in Africa resides in articulating, identifying and effectively harnessing African capital in all its ramifications. In this connection, the ninth session focuses on the Anyiam-Osigwe’s espousal on the need to harness what he identifies as Africa’s meta-physical capital alongside the conventional ones, as only such a mix could provide the selfless and disciplined leadership for controlling and optimally utilising resources for development in the interest of the people.

Given our present circumstances, I must underline that the objective of the session is to encourage identification and adoption of value-guided conduct among some of the ruling elite who harness our common-weal in the name of the people for development but misappropriate it for themselves, their families, friends and cronies.

In this regard, we wish to emphasise that one of the aims of the Foundation is the entrenchment of principle-centred leadership and good citizenship in the continent. We are, therefore, delighted and gratified by the personal example demonstrated through the unprecedented determination and willingness at the highest level of our present administration to enthrone value-guided leadership in our national life.”

Why was President Klaus of Czech Republic chosen to deliver the lecture? The Foundation pointed out: “In inviting President Vacalav Klaus, a renowned intellectual, an accomplished economist and former professor of finance at the Prague School of Economics, the Foundation is maintaining its tradition which ensures that the principal participants at its lecture series are, indeed, esteemed authorities whose invaluable perspectives and vast knowledge would lend profound insights into and deepen understanding on the subject under discussion.

“The presence of the President of the Czech Republic at the 9th Session of the Foundation’s lecture series, reflects the Foundation’s continuing efforts to seek international goodwill for our country and also establish meaningful bridges with organisations and citizens across countries and continents.”

What is at the heart of the underdevelopment of Africa? As the Anyiam-Osigwe Foundation has pointed out, the debate continues to rage. Is Africa’s development almost five decades after most of the countries had been set free from the strangle-hold of colonialism to be blamed on the colonial powers of Europe or on the quality of leadership that has been the lot of most of the countries?

Why have the countries failed, so far, to turn their natural endowment to wealth? Is there a conspiracy by the West to keep Africa down and her people reserved the role of hewers of wood and drawers of water? How are the experiences of the Asian tigers and India to be explained?

These are questions begging for answers. At a conference on African development challenges in the new millennium held in Accra in April 2002 under the aegis of the Third World Network and CODESTRIA, it was observed that, “the uneven progress of democratization and in particular of the expansion of space for citizen expression and participation.

The conference also acknowledged the contribution of citizens’ struggles and activism to this expansion of the political space and for putting critical issues of development on the public agenda.

“The meeting noted that the challenges confronting Africa’s development come from two inter-related sources: (a) constraints imposed by the hostile international economic and political order within which our economies operate; and (b) domestic weaknesses deriving from socio-economic and political structures and neo-liberal structural adjustment policies.”

On the new global order and its deleterious effect on African development, the conference observed that, “the main elements of the hostile global order include, first, the fact that African economies are integrated into the global economy as exporters of primary commodities and importers of manufactured products, lead-ing to terms-of-trade losses. Reinforcing this, secondly, have been the policies of liberalization, privatization and deregulation as well as an unsound package of macro-economic policies imposed through structural adjustment conditionality by the World Bank and the IMF. These have now been institutionalized within the WTO through rules, agreements and procedures which are biased against our countries.

“Finally, the just-mentioned external and internal policies and structures have combined to generate an unsustainable and unjustifiable debt.”

The debate has assumed a new significance following the initiative of the immediate past Prime Minister of Britain Mr. Tony Blair, to rally support and capital needed for the development of Africa. Nigeria’s President, Umaru Yar’Adua, too, at a recent meeting in Germany, called on the rich countries of Europe and America to pump the needed capital for the development of the African continent through an initiative akin to the Marshal Plan by which the United States of America resuscitated after the European countries’ eco-nomies had been crippled by the Second World War.

This year’s Anyiam-Osigwe lecture is the ninth in the series. Last year, the lecturer was Mr. Kwasniewski of Poland who spoke on “Synthesis for Africa’s socio-political and economic development”. Others who had spoken at the usually well attended lecture series in the past eight years include Nigeria’s professor Bolanle Awe, South Africa’s Mr. Fredrick De Klerk, former British Prime Minister, John Major, former German Chancellor, Helmut Kohl and America’s former Vice Presi-dent Al Gore, among others.

It is expected that this year’s lecture, being delivered by a serving President, would promote greater understanding between Europe and Africa and present both continents as partners.

EU-Africa Summit – British PM Brown Could Be Vindicated

EU-Africa Summit – Brown Could Be Vindicated

Financial Gazette (Harare)
EDITORIAL
15 November 2007
Posted to the web 15 November 2007

By Mavis Makuni Own Correspondent
Harare
The controversy over the presence of President Robert Mugabe at the Europe/Africa summit to be held in Lisbon on December 8 and 9 seems set to rage on right up to the day of the conference.

The row, which was sparked by new British prime minister, Gordon Brown’s threat to boycott the summit if the Zimbabwean head of state was invited, has taken many turns during which threats and counter-threats to boycott the event have been made by the different blocs. In response to Brown’s threat, both African Union (AU) and Southern African Development Community (SADC) leaders threatened to stay away from Lisbon unless their Zimbabwean counterpart was invited.

European and African ministers met in Accra, Ghana, towards the end of last month to decide whether to risk sparking a diplomatic storm by insisting that the Zimbabwean leader should be invited. In the end the meeting, which was attended by Portugal’s foreign minister, Luis Amado, decided that President Mugabe should be invited to attend the summit. Portugal has insisted that a bilateral dispute between Zimbabwe and its former colonizer should not be allowed to derail next month’s summit. The last Europe/Africa summit was held in Cairo in 2000. The next one, which was scheduled to be held in 2003 was cancelled because of disagreements over the Zimbabwean leader’s attendance.

Member countries of the European Union have adopted different positions with regard to President Mugabe’s presence in Lisbon . Some Nordic countries including Sweden have opposed the President’s participation but indicated they would not boycott the summit if he attended. Germany’s Chancellor Angela Merkel insisted from the outset that the Zimbabwean leader should be allowed to attend so that his peers could engage him openly over the persistent allegations of undemocratic governance and human rights abuses levelled against his government. “Criticism of Mr Mugabe can be levelled at him when he is there”, she said in a press interview last month. Merkel said Africa was too important for her country to boycott the summit because of squabbling over Zimbabwe’s presence.

A headline in yesterday’s issue of the state daily, The Herald, which announced in bold letters; “Zimbabwe prepared for showdown” proved the diplomatic row was far from over. The headline was over a story in which government officials accuse Britain and some Nordic countries of plotting to have Zimbabwe placed on the agenda of the Lisbon summit and stress that President Mugabe’s government is “prepared for any showdown.” In the report, the Swedish Ambassador to Zimbabwe, Sten Rylander is accused of spearheading a “plot” with other Nordic diplomats to “build up” allegations that the government perpetrates violence against its opponents .The press story says the plot also involves reviving calls for the prosecution by international courts of those responsible for atrocities in the 1980s when 20 000 civilians are believed to have been killed in Matabeleland and the Midlands.

Rylander is accused of having embarked on an anti-Zimbabwe campaign while on holiday in Europe in July and to have continued his onslaught at a meeting of the Zimbabwe United Nations Development Assistance Fund in Nyanga last month.The Swedish envoy is slammed for making political allegations against the government at a development forum. “For him to throw his salvo at the government of Zimbabwe in a development forum is not only discourteous but also undiplomatic,” the Secretary to the President and Cabinet, Misheck Sibanda, is quoted as saying.

Another government official is quoted as saying Zimbabwe was not afraid to defend its sovereignty and reputation and would not shy away from a fight, especially where it is right. “If they dare play Britain’s cat pawl, they are likely to get one outcome, namely a repeat of the 2002 Johannesburg World Earth Summit”. This is where the Zimbabwean leader told then British prime minister Tony Blair to ” keep your Britain and I will keep my Zimbabwe.” The irony of this continuing war of words is that it could prove Brown’s fears that Zimbabwe’s presence in Lisbon could turn the Europe/Africa summit into a media circus and detract from the main agenda to be valid after all.

Zimbabwe’s combative mood and its dark warning about a repeat of the spectacle in South Africa in 2002 when President Mugabe was joined by former Namibian president Sam Nujoma in blasting and ridiculing Blair from the podium cannot be re-assuring to the organizers of the Lisbon summit. The vitriolic tirades against Rylander show that Zimbabwe is spoiling for a fight. Observers will have noted that Zimbabwe is threatening to fight so as to avoid defending its governance and human rights record, and ensuring that these issues are off limits during the summit. Why?

Questions will be asked why, if it has nothing to hide, the Zimbabwean government is not keen to seize the opportunity afforded by the summit to prove convincingly once and for all that the allegations of human rights abuses and repressive governance persistently levelled against it are baseless.This is the ideal platform from which to prove Rylander, his alleged co-conspirators and any other detractors wrong. It would be a contradiction for Zimbabwe, which has fought so relentlessly to assert its right to go to Lisbon as an equal partner , to then flinch at the prospect of facing scrutiny and criticism from its peers. It is Zimbabwe’s insistence on attending international gatherings only to defend its sovereignty and blast other countries while insisting that discussion of its own shortcomings is taboo that has won the country notoriety as a rabble-rouser.

Surely, if the Zimbabwean government is prepared to use international gatherings to defend its sovereignty and to attack the leaders of other countries, it should be willing to face criticism of its track record at the same fora. After all, according to an EU-Africa Strategic Partnership document titled “From Cairo to Lisbon”, democratic governance is expected to be one of the issues on the agenda. The others are climate change, energy, migration, mobility and employment. The African Union Executive is reported to have insisted that the agenda of the summit should take into account “Africa’s development needs including agriculture and food security.”

The first EU-Africa summit held in Cairo in 2000 resulted in the formulation of the Declaration of Cairo and a joint EU-Africa Cairo Plan of Action. Both address political and peace building issues, debt, conflict prevention and development.

OXFAM Warns Africa about Pending EU EPA Deals

EU Deal Will Hurt East Africa, Oxfam Warns
The New Times (Kigali)

NEWS
30 November 2007
Posted to the web 30 November 2007

By James Munyaneza
Kigali
A British international organisation has warned that the recent free trade agreement between the East African Community (EAC) and the European Union (EU) could result in unemployment and loss of revenue for countries in the African economic bloc.

Oxfam International urged in a statement sent to The New Times yesterday that other developing countries should ‘take heed of the range of voices raised against these deals and continue to ask the (European) Commission for more time to negotiate a pro-development deal, and for feasible alternatives to be considered.’

Luis Morago, Head of Oxfam International’s EU Office said in the statement: ‘Developing countries have been placed under enormous pressure to sign. Despite concerns raised by many, including the IMF, African civil society, trade unions, and academics, the Commission has ignored possible alternatives and insisted on the deadline.

‘They have essentially forced the East Africans to choose between guaranteeing markets for their agricultural exports today, and maintaining a degree of protection to promote future industrial growth – which all developed countries have done in the past.’

He said that the deal signed in Kampala, Uganda on Tuesday will oblige the ‘East African region to remove 80% of its tariffs on EU goods over 15 years, possibly more quickly, which could lead to unemployment and loss of vital government revenue that might otherwise be spent on health and education.’

‘It suits the Commission to spread the impression that regions are falling into line and the rest should do so too. But we would urge other countries to take heed of the range of voices raised against these deals and continue to ask the Commission for more time to negotiate a pro-development deal, and for feasible alternatives to be considered,’ he was quoted as saying.

The Goods-only trade agreement covers mainly industrial inputs and capital goods.

About one fifth of EAC trade will be completely excluded from any market liberalisation requirements.

The deal is seen as an interim step towards agreeing a full Economic Partnership Agreement (EPA) by mid-2009.

The EAC signed the agreement with the EAC to proceed with negotiations on EPAs beyond the initial deadline on December 31. A number of international and national groups have discouraged a rushed signed on the EPAs.

State Minister for Industry and Investment Promotion Vincent Karega represented Rwanda at the ceremony. The other EAC member states are Burundi, Kenya, Tanzania and Uganda.

There are worries that waiving tariffs on imports from EU would seriously hurt the already struggling economies of developing countries, adding to the already existing unfairness on the world market due to the highly subsidised western products.

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.

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.

Africa Ponders Question… “What If There Were No Fish?”

And Then There Were No Fish
UN Integrated Regional Information Networks

NEWS
21 November 2007
Posted to the web 22 November 2007
Johannesburg
In the not-too-distant future, several African countries will face the reality of collapsed fisheries and the permanent degradation of their marine environment, a new report has warned.

“This in turn will continue to adversely impact on food-security and economic development, with coastal communities dependent on fishing being the hardest hit,” noted The Crisis of Marine Plunder in Africa, published by the Institute for Security Studies (ISS), a regional think-tank.

Poaching and overfishing in a number of African countries could lead to collapsed stocks and cause permanent damage to the marine environment, according to Andre Standing, author of the new ISS study. Some of these are issues also highlighted in the UN Environment Programme’s (UNEP) Global Environment Outlook 4 (GEO-4).

“While the demise of marine biodiversity is not a peculiar problem for underdeveloped countries, there are strong reasons to suspect that once abundant fish stocks and marine biodiversity situated in the Exclusive Economic Zones (EEZ) of African countries are threatened,” said Standing.

Exploitation of West Africa’s fish resources by European Union (EU), Russian and Asian fleets “increased sixfold” between the 1960s and 1990s, the GEO-4 report noted. “Much of the catch is exported or shipped directly to Europe, and compensation for access is often low compared to the value of the landed fish.”

Standing told IRIN that the problem did not “stem largely from rogue fishing companies who evade laws and break regulations with impunity”, but “vested interests” that allowed this situation to occur, and that these “vested interests span not only foreign governments and inter-governmental organisations, but also African elected leaders and public officials”.

The UNEP report points out that fish is a critical source of animal protein in poor countries; globally it provides more than 2.6 billion people with at least one-fifth of their average per capita animal protein intake. “Fish accounts for 20 percent of animal-derived protein in Low-Income Food Deficit (LIFD) countries, compared to 13 percent in industrialised countries, with many countries where overfishing is a concern also being LIFD countries.”

Standing cited the 2005 British Marine Resources Assessment Group, which “provided a conservative estimate that illegal, unreported and unregulated fishing in Africa could be valued at approximately US$1 billion every year”.

“It was estimated that in Somalia the total annual value of illegal fishing in only the tuna and shrimp industries amounted to $94 million. In Angola illegal fishing was measured in the sardine and mackerel fisheries to be roughly $49 million annually, which equates to 21 percent of the total value of Angolan fish exports. In Mozambique, illegal fishing in the tuna and shrimp industry was set at approximately $38 million.”

These quantities were “comprehensible”, Standing wrote, “when one considers that in South Africa, for example, over a two-year period in the early 2000s some 320,000 tonnes of Patagonian Toothfish were harvested, whilst the annual Total Allowable Catch was set by the government at only 450 tonnes.

“Likewise, in 2001, in one single incursion, long-line fishing vessels from Taiwan illegally entered Tanzania’s EEZ and took approximately $20 million worth of tuna.”

Trade liberalisation

Fisheries access agreements, which allow foreign vessels into local fishing grounds, adversely affect fish stocks, reduce artisanal catches, and affect the food security and well-being of coastal West African communities, according to the GEO-4. Many of these agreements came into effect after the countries were pressured to liberalise trade.

Much of the catch is exported or shipped directly to Europe, and compensation for access is often low compared to the value of the landed fish

In Mauritania the fisheries sector is predominantly influenced by the terms of the Cotonou Agreement, which binds the 79-member African,Caribbean and Pacific (ACP) group to the EU. “Cotonou provides for all ACP exports a customs-free entry to the European market. This has led to an export-oriented development of the fisheries sector,” said Anja von Moltke, of UNEP’s Division of Technology, Industry and Economics, in a study on Mauritania.

“Mauritania’s trade liberalisation measures are primarily characterised by a dismantling of customs duty on imports and exports, state redrawing of both public fisheries processing facilities, and numerous bilateral fisheries agreements with Algeria, Japan, Morocco, Russia, Senegal, Tunisia and the EU.”

The increased export revenue brought by trade liberalisation has helped reduced the national debt, but it has had a negative impact on food consumption and poverty reduction, “resulting in a situation of high dependence of the fisheries sector on these foreign financial payments,” von Moltke said.

Studies have also shown the environmental costs: a large number of Mauritania’s main fish stocks have decreased significantly over the past years, with many already being overexploited or close to overexploitation, the author commented. “The octopus stock, for example, is currently being overexploited by 24 to 40 percent.”

Job losses

Economically, the biggest repercussions in developing countries have been lost job opportunities and hard currency revenues, said the GEO-4 report. “After processing in Europe, the end value of seafood products from these resources is estimated at about $110.5 million, illustrating a huge disparity in value of the resources taken by EU companies and the licence fee paid to the countries, which is only 7.5 percent of the value of the processed products.”

The case study on Mauritania found that it processed only 12 percent of its catch. “This has several far-reaching impacts. First, it leads to a real disconnection between the production system under access agreements and the Mauritanian system. Second, there is no investment in Mauritania’s processing facilities, remaining uncompetitive.

Increased exports have lead to a lack of fish in local markets, particularly high-value fish, which has affected prices and led to the substitution of fish for poultry, which was now cheaper than fish. Von Moltke also found that traditional fish species were being replaced by new types of lower value species.

The GEO-4 report pointed out that overexploitation of fish was having a long-term impact on livelihoods and had forced artisanal fishers from coastal West Africa to migrate to some of the regions exploiting their resources. “Senegalese fishers emigrating to Spain claim the reason for leaving their homes is the lack of their traditional fisheries livelihood.”

Action needed

Standing said, “Although the solution to overfishing requires action on an international level, it does seem clear that African countries can do much more to improve the situation; it is not simply the case that African states lack the capacity to do more to protect their marine resources, although this is a major problem.

“What seems important to understand is that overfishing and some forms of illegal fishing flourish due to corruption and expediency by those in public office or government,” he claimed.

Mauritania processes only 12 percent of its catch

Von Moltke said there was a need for more transparency during negotiations for access to fisheries, which should be reflected in the design of the agreements.

“In this context it is important to recognise that government-to-government access agreements, although under scrutiny for their social and ecological impacts, could provide channels for developed countries to contribute to effective fisheries management (including support for effective monitoring, control and surveillance systems) and to sustainable development of host countries more easily than government-to-private access deals.”

The GEO-4 report said further action would be needed to induce governments to increase their political commitment to reduce fishing efforts globally, and to provide funds for regional fish-management bodies.

Lesson from extractive industry

Analysts have suggested emulating the Extractive Industries Transparency Initiative (EITI) by a coalition of governments, companies, civil society groups, investors and international organisations, which aims to strengthen governance in the extractive sector by improving accountability.

The ISS was trying to involve civil society in achieving this, said Standing. “Efforts by civil society to improve transparency in the extractive industries and logging industries should be a source of inspiration here. In particular, the Publish What You Pay Campaign has helped put pressure on governments and companies to address corruption.”

[ This report does not necessarily reflect the views of the United Nations ]

Should Europe Be Relied on to Aid Africa’s Development

Can Europe Aid Continent’s Development?
Vanguard (Lagos)

OPINION
26 November 2007
Posted to the web 26 November 2007

What has Europe to do with the level of poverty ravaging the African continent?

There is a big debate about the part played by the Europeans, both in keeping Africa down and thus facilitating the development of their continent.The seminal work by the late Dr. Walter Rodney traced the underdevelopment of Africa to the slave trade and the consequent and subsequent colonialism during which, he contended, African development was not only arrested but deliberately reversed.

Africa remains the poorest of all the continents. Poverty remains at grinding level and the future for most of the people remains bleak. Many of the children are out of school, extreme or grinding poverty, including squalor, starvation, diseases and malnutrition is increasingly on the increase.

The only thing that sustains the poor and helps many keep their sanity is the hope of a better tomorrow. But, the statistics are quite frightening and, as many scholars have observed, poverty is a trap.

These, according to Mr. Michael Anyiam-Osigwe, Coordinator-General of the Anyiam-Osigwe Foundation, informed the choice of the theme and speaker for this year’s Anyiam Osigwe Lecture. At a press briefing organized in October to unveil the lecture, Mr. Michael Anyiam-Osigwe said

“This year, the central theme of the 9th lecture series, harnessing Africa capital that the people may have life and live it more abundantly. The President of the Czech Republic, His Excellency, Professor Vaclav Klaus, is the keynote speaker. His topic, which derives from the central theme, is titled, “Europe as a Strategic Partner in Harnessing African Capital.”

Explaining further the rationale for the choice of both theme and topic, Mr. Anyiam-Osigwe said: “On the central theme of the lecture, “Harnessing African Capital That The People May Have Life and Live It More Abundantly”, various views, theories and measures have been put forward in an effort to unravel the complexity of Africa ‘s poverty problem.

Anyiam-Osigwe’s perspectives on this critical subject, premised on his fundamental principle of a holistic approach to human existence and development, penetrates the heart and essence of the problem.

He holds the views that the key to unraveling the crisis of poverty in Africa resides in articulating, identifying and effectively harnessing African capital in all its ramifications. In this connection, the ninth session focuses on the Anyiam-Osigwe’s espousal on the need to harness what he identifies as Africa’s meta-physical capital alongside the conventional ones, as only such a mix could provide the selfless and disciplined leadership for controlling and optimally utilising resources for development in the interest of the people.

Given our present circumstances, I must underline that the objective of the session is to encourage identification and adoption of value-guided conduct among some of the ruling elite who harness our common-weal in the name of the people for development but misappropriate it for themselves, their families, friends and cronies.

In this regard, we wish to emphasise that one of the aims of the Foundation is the entrenchment of principle-centred leadership and good citizenship in the continent. We are, therefore, delighted and gratified by the personal example demonstrated through the unprecedented determination and willingness at the highest level of our present administration to enthrone value-guided leadership in our national life.”

Why was President Klaus of Czech Republic chosen to deliver the lecture? The Foundation pointed out: “In inviting President Vacalav Klaus, a renowned intellectual, an accomplished economist and former professor of finance at the Prague School of Economics, the Foundation is maintaining its tradition which ensures that the principal participants at its lecture series are, indeed, esteemed authorities whose invaluable perspectives and vast knowledge would lend profound insights into and deepen understanding on the subject under discussion.

“The presence of the President of the Czech Republic at the 9th Session of the Foundation’s lecture series, reflects the Foundation’s continuing efforts to seek international goodwill for our country and also establish meaningful bridges with organisations and citizens across countries and continents.”

What is at the heart of the underdevelopment of Africa?

As the Anyiam-Osigwe Foundation has pointed out, the debate continues to rage. Is Africa’s development almost five decades after most of the countries had been set free from the strangle-hold of colonialism to be blamed on the colonial powers of Europe or on the quality of leadership that has been the lot of most of the countries?

Why have the countries failed, so far, to turn their natural endowment to wealth? Is there a conspiracy by the West to keep Africa down and her people reserved the role of hewers of wood and drawers of water? How are the experiences of the Asian tigers and India to be explained?

These are questions begging for answers. At a conference on African development challenges in the new millennium held in Accra in April 2002 under the aegis of the Third World Network and CODESTRIA, it was observed that, “the uneven progress of democratization and in particular of the expansion of space for citizen expression and participation.

The conference also acknowledged the contribution of citizens’ struggles and activism to this expansion of the political space and for putting critical issues of development on the public agenda.

“The meeting noted that the challenges confronting Africa’s development come from two inter-related sources: (a) constraints imposed by the hostile international economic and political order within which our economies operate; and (b) domestic weaknesses deriving from socio-economic and political structures and neo-liberal structural adjustment policies.”

On the new global order and its deleterious effect on African development, the conference observed that, “the main elements of the hostile global order include, first, the fact that African economies are integrated into the global economy as exporters of primary commodities and importers of manufactured products, lead-ing to terms-of-trade losses.

Reinforcing this, secondly, have been the policies of liberalization, privatization and deregulation as well as an unsound package of macro-economic policies imposed through structural adjustment conditionality by the World Bank and the IMF. These have now been institutionalized within the WTO through rules, agreements and procedures which are biased against our countries.

“Finally, the just-mentioned external and internal policies and structures have combined to generate an unsustainable and unjustifiable debt.”

The debate has assumed a new significance following the initiative of the immediate past Prime Minister of Britain Mr. Tony Blair, to rally support and capital needed for the development of Africa. Nigeria’s President, Umaru Yar’Adua, too, at a recent meeting in Germany, called on the rich countries of Europe and America to pump the needed capital for the development of the African continent through an initiative akin to the Marshal Plan by which the United States of America resuscitated after the European countries’ economies had been crippled by the Second World War.

This year’s Anyiam-Osigwe lecture is the ninth in the series. Last year, the lecturer was Mr. Kwasniewski of Poland who spoke on “Synthesis for Africa’s socio-political and economic development”. Others who had spoken at the usually well attended lecture series in the past eight years include Nigeria’s professor Bolanle Awe, South Africa’s Mr. Fredrick De Klerk, former British Prime Minister, John Major, former German Chancellor, Helmut Kohl and America’s former Vice President Al Gore, among others.

It is expected that this year’s lecture, being delivered by a serving President, would promote greater understanding between Europe and Africa and present both continents as partners.

ACP States Reject EU Trade Ultimatum

ACP States Reject EU Trade Ultimatum

The New Times (Kigali)
NEWS
15 November 2007
Posted to the web 15 November 2007

By Edwin Musoni
Kigali
The 10th ordinary session of the parliamentary assembly of African, Caribbean and Pacific (ACP) countries has rejected the European Union’s call for the group to sign the Economic Partnership Agreements (EPAs) by December 31.

In a meeting in Kigali yesterday, ACP member states decided not to bow to the EU pressure, insisting that they were not ready to enter a new trade agreement.

Consequently, they drafted a document titled ‘Draft Kigali Declaration” which is due to be presented to the 14th session of the ACP-European Union joint parliamentary assembly in Kigali on Friday.

The declaration urges the European Commission to give the ACP countries more time to assess the implication of deal before signing.

Rwanda’s Senate Vice President, Prosper Higiro, said that ACP countries still need more time to study the deal before endorsing it.

“The EU is putting us under pressure to sign this agreement before we are ready for it but we have decided to reject it until all ACP countries are ready,” Higiro said.

He added: “The EU is under pressure from the World Trade Organisation to have these agreements, so they have decided to transfer the pressure on us; members have agreed not to sign the agreement until all ACP states are ready for a new trade deal with the EU,” he said.

The EU has threatened to increase tariffs of its export goods by January 1, 2008 should ACP members refuse to comply.

The declaration indicates that such a threat would affect lives on millions in ACP countries.

Meanwhile, the ACP co-chairperson, Senator Jean Marie Everistus, said: “There is a big possibility that the EU will reject our report but if they do, then will we have to elect and go by the vote of the majority.”

Everistus, who is also the Deputy President of Saint Lucia Senate, however added that majority of MPs in EU member states understand the position of ACP states.

But the Kigali declaration hails the European Commission’s decision in April this year for quota free market access that waived residual market barrier to ACP exports.

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”.

EU Fragmenting Regional Blocks With EPA’s

EPA Fragmenting Regional Blocks
Ghanaian Chronicle (Accra)

NEWS

26 November 2007
Posted to the web 26 November 2007

By Joseph Coomson

Rather than promoting regional integration, the Economic Partnership Agreements (EPAs) is rather fragmenting Africa and breaking its front as some regional blocks are signing the agreement without key countries.

The SADC region signed it last Friday without South Africa and Namibia whiles EU is pushing West Africa to sign without big brother Nigeria.

Indications from East Africa indicate that five countries from the block are ready to sign the agreements whilst Central African countries are confused about the agreements.

This situation has been described by Mr. Tetteh Hormeku of the Third World Network as chaotic and an affront to the unity of Africa both politically and economically.

“These negotiations were to strengthen regional integration but is now ended up in chaos and regional fragmentation,” he added.

The alleged agenda of EU to rather disintegrate Africa and the whole ACP was captured in a statement made by the Directorate General for Trade European Commission on November 12, 2007. The statement said “We fully appreciate that some countries may not feel able or ready to take this course, and at the end of the day if you don’t agree the choice is of course yours.”

These remarks were made during the weekend when Civil Society Organizations from Africa met in Accra to discuss the topic ‘Gender and EPAs’ from November 24 to 26, 2007.

EPAs are a scheme to create a free trade area (FTA) between the European Union and the ACP countries. They are a response to continuing criticism that the non-reciprocal and discriminating preferential trade agreements offered by the EU are incompatible with WTO rules. The EPAs are a key element of the Cotonou Agreement, the latest agreement in the history of ACP-EU Development Cooperation and are to take effect as of 2008.

However, the negotiations for the EPAs have faced stiff opposition from Civil Society Organizations and some governments from Africa because they see it as a way of liberalizing totally the service and investment sectors of the ACP countries

As there is strong indication that the EPAs will not be signed at the set date of 31st December 2007, several alternatives have been suggested by governments, civil society and the EU.

Ghana and Third World Network have proposed “Generalized System of Preferences (GSP) -plus” as a temporary stop-gap solution. By resorting to the GSP+, the EU could still easily offer to all ACP countries good access to the markets for their exports at very similar levels to the access offered within the framework of the Cotonou agreement, while remaining compatible with WTO rules as long as the regime remains open to other developing countries on the basis of objective and transparent development criteria.

However, EU has rejected the GSP+. They are considering “EPA-light” as an interesting possibility.

An “EPA-light” means an EPA proposal which is reduced to what in substance would be acceptable for West Africa (WWA) and the EU and, in the mean time, would be compatible with WTO requirements. The “EPA-light” would be a stop-gap solution, whilst WA and the EU will continue negotiating the comprehensive pro-development EPA which remains the ultimate objective.

But Mr. Hormeku thinks otherwise. He says, “The in built agenda of EPA Light could even be bigger than the EPAs”.

EU Makes New Commitments, in Words

EU Makes New Commitments, in Words

Inter Press Service (Johannesburg)
NEWS
14 November 2007
Posted to the web 14 November 2007

By David Cronin
Brussels
The European Union’s latest annual report on how it promotes human rights states that the 27-country bloc is “determined to work towards the prevention of crimes of international concern and the ending of impunity for perpetrators of such crimes.”

According to campaigners, that determination has not been on display in the EU’s response to the alleged genocide in Darfur.

In April, the International Criminal Court (ICC) issued warrants for the arrest of Ahmed Haroun, Sudan’s minister for humanitarian affairs, and Ali Kosheib, a leading figure in the Janjaweed bandits who are accused of carrying out widespread killings with the backing of the Khartoum government.

Both men face 51 counts of crimes against humanity and war crimes, including murder, rape, forcing people from their homes, and persecution.

The EU’s human rights report mentions that it recently appointed a special envoy to deal with the Darfur crisis, which has claimed the lives of 200,000 and uprooted 2.5 million people in the past four-and-a-half years. Danish diplomat Torben Brylle has been given a mandate that includes responsibility for fighting against impunity, the report adds.

But since the ICC’s arrest warrant was issued, Ahmed Haroun has been appointed chairman of a committee monitoring security in Sudan, including the western province of Darfur. As part of his new responsibilities, he can assess complaints of human rights abuses in Darfur.

Lotte Leicht, Brussels director with Human Rights Watch, says it is “frankly inexplicable” that EU governments have responded to Haroun’s new appointment with “utter silence”.

She points out that Haroun is now in charge of investigating the kind of war crimes he himself is alleged to have carried out. As the minister responsible for Darfur’s security four years ago, he reportedly recruited and armed Janjaweed forces that killed hundreds of civilians, raped girls and women, and caused widespread damage to property in the villages of Bindisi, Arawala, Kodoom and Mukjar.

Leicht is urging EU foreign ministers meeting next week (Nov. 19-20) to formally warn Sudan that they will introduce sanctions against its government if it continues to ignore the arrest warrants against Kosheib and Haroun.

An innovative approach could be taken to sanctions in this case, she believes. Officials in the Khartoum government could be banned from travelling to Europe and have their financial assets frozen for a 12-month period. Yet the application of these measures could be suspended for three months and then automatically applied if Khartoum has not complied with this requirement within that time.

A similar approach was taken recently with Uzbekistan. Eight Uzbek officials were banned from travelling to Europe in October 2005, in response to Tashkent’s refusal to permit an international investigation into the Andijan massacre in May that year, during which Uzbek forces killed hundreds of mostly unarmed protesters. Even though little progress has been detected on human rights, the EU agreed to suspend the sanctions last month, but has warned that they could be re-imposed if insufficient action is taken by Tashkent.

Initially, Human Rights Watch criticised the easing of restrictions on Uzbekistan, yet it argues now that the general approach can have merits. If applied to Sudan, it would be “a good way of using the stick and the carrot at the same time,” Leicht told IPS.

Despite the desperate humanitarian situation caused by the conflict in Darfur, officials from Portugal, the current holder of the EU’s presidency, have confirmed that it does not figure on the agenda for foreign ministers next week. The Union’s assistance to an African-led peacekeeping force in Sudan is likely to be discussed at a related meeting involving EU defence and development aid ministers, a spokesman for the Lisbon government added.

Nick Grono from the International Crisis Group, an organisation focused on resolving conflicts, argued that “sanctions do matter in Sudan.”

He noted that President Omar al-Bashir has only made concessions to international opinion when he has felt isolated. For example, Bashir agreed that a joint United Nations and African Union peacekeeping force may be deployed in Darfur after the U.S. and Britain had threatened to impose a no- fly zone over the province, Grono added.

“We do believe pressure works,” said Grono. “It has just not been tried in Sudan.”

Ulrich Delius, an Africa specialist with the German Society for Threatened Peoples, said it is “most disturbing” that Europe has not taken a firmer stance on Darfur.

It is wrong, he feels, to shy away from sanctions out of fear that they could have negative consequences for peace talks between Khartoum and a variety of rebel groups.

“It’s fine that the peace process is starting but it might take years before there is any meaningful result of that,” he told IPS. “We are seeing no real change of mind by the Sudanese government in the direction of peace, human rights and democracy. When we are talking to (European) politicians, most of them share more or less our analysis of the situation. Yet they are making no efforts to put more pressure on the Sudanese government. This is really worrying.”

Victory for Africa in EU Trade Deal (EPA’s)

Victory for Continent in EU Trade Deal

The East African Standard (Nairobi)
NEWS
15 November 2007
Posted to the web 14 November 2007

By Benson Kathuri
Nairobi
Africa, Caribbean and Pacific won a major trade battle with the European Union after a deal was brokered to push the stalled negotiations to December, next year.

The EU has agreed to establish a framework arrangement that would ensure trade is not interrupted between January and December next year to give a one-year extension before a new pact is reached.

The latest pact deflates growing tension between the EU and the African, Caribbean and Pacific (ACP) countries over the trade arrangement, which gives the latter free market access to Europe.

Trade ministers and negotiators from the region met their counterparts from the European Commission on Monday in Brussels who agreed to push the deadline from the expected December 31, this year.

The EU and ACP countries are negotiating the Economic Partnership Agreements (EPAs) to guide trade between the two blocks.

Local exporters, mainly horticultural exporters had expressed fears that they would lose their market access should the two parties fail to sign a deal by next month.

Efforts to conclude the talks before the World Trade Organisation (WTO) imposed December deadline had become elusive, forcing the parties to seek a new deadline.

African nations had also accused the EU of attempts to blackmail them into signing the deal.

“They decided to conclude the negotiations of a comprehensive EPAs by the end of December next year that will replace the Framework Agreement,” said a statement released by the Comesa secretariat that is the technical arm of the ESA group.

“In this respect, the parties will put in place the necessary regulations and procedures, including the adoption of transitional arrangements by the EC, in order to avoid any trade disruption,” said the statement.

The Framework Agreement will be applied provisionally from January, next year.

Mr Felix Mutati, the Zambian minister of Commerce, Trade and Industry led the ESA delegation while EU commissioner for Trade, Mr Peter Mandelson and his Development counterpart, Mr Louis Michel represented the EU.

Sources confirmed said the two groups agreed to form a comprehensive EPA as a tool for sustainable development and the promotion of regional integration.

The two parties agreed that it was unrealistic to conclude a comprehensive EPA within the remaining period.

“They, therefore, agreed to work towards a Framework Agreement of an EPA that will comprise trade in goods, development cooperation, fisheries and any other sectors on which negotiations would have been concluded,” adds the statement.

“The framework will comprise a number of rendezvous clauses for the continuation of the negotiations beyond December.”

They agreed that a new regional protocol on rules of origin would be negotiated in the context of the full EPA.

The groups mandated experts to continue to work on the conditions for market access for sugar for the ESA group taking note of the proposals already submitted.

“Work should continue on trade defense measures for the EU market, including outermost regions, with a view to finding common agreement on outstanding issues in the Framework Agreement,” says the statement.

How Africa May Be Hurt by EPA Trade Deals

EPA Trade Deals Might Harm Continent
New Vision (Kampala)

OPINION
21 November 2007
Posted to the web 22 November 2007

By Yash Tandon
Kampala
IN the next few days, our leaders will decide whether to sign a new trade agreement with Europe. It will be a tough judgment call. The decision they make will weigh heavily on the course of our region’s development for decades to come. For this reason, the proposed agreement needs very careful scrutiny.

We have a long history with Europe in the light of which we must interpret current events. The proposed agreement by Europe will change the nature of our relationship from cooperation to one based on purely mercantile considerations. The EU and the ACP “partners” will be bound by the same rules. However, when unequal partners play by the same rules, the outcome is always in favour of the stronger side. With the proposal on the table, it is not difficult to see who is likely to win.

Analyses on the potential impact of the agreements prepared by the United Nations Economic Commission for Africa (UNECA) show that the proposed opening up of 80% of trade of the Eastern Africa Community (EAC) with Europe, will result in loss of tariff revenue of up to $130m per year. Furthermore, as African producers have to compete directly with those of Europe, their economies will undergo significant dislocations with regional trade losing ground at the expense of European imports. Success stories such as the growth of our regional markets for value added produce and manufactured goods could be undermined, threatening our farmers’ livelihoods and factory workers’ jobs.

Europe is using the excuse of the World Trade Organisation rules to speed up the conclusion of the negotiations. Indeed, the use of the December 2007 deadline is the single most important negotiating instrument in Europe’s favour. However, this deadline is more self-imposed than a legal reality since the Commission has options at its disposal to address the current situation which it is not willing to acknowledge. Europe is thus keeping on the deadline pressure because it chooses to do so. We can and we must turn the negotiating dynamics around if we are to reach a negotiated agreement that benefits Africa.

As the deadline approaches, individual EU members will surely assess the implications of maintaining firm the deadline for the future of the strategic relationship with the African, Caribbean and Pacific (ACP) countries. This is especially true for Africa in the context of the upcoming EU-Africa Summit in Lisbon in the first week of December.

Our leaders should capitalise on this political opportunity. On November 15, President Abdoulaye Wade of Senegal, in an open letter in Le Monde, seriously questioned the proposed agreement among others, due to its potential implications for Africa’s integration. Equally, other African leaders should join efforts to turn the negotiations with Europe into an opportunity for a better future instead of hastily accepting the agreement proposed as it stands now.

Europe has turned this into a game of high stakes and pressing panic buttons. In such games, he who moves first, loses. It is time for our leaders to hold strong, and not to panic.

The writer is a national of Uganda and the Executive Director of the South Centre (Geneva), the only intergovernmental think tank of the South

EU’s EPA Negotiator Mandelson Continues to Antagonize Africa

The following Article exemplifies how NOT to approach Africa. Mr. Mandelson has consistently tried to force Africa to accept trade agreements that are not only unfavorable to Africa but are actually harmful to Africa. His methodology can only be construed as bullying Africa into submission. Attempting to dismiss or worse, to silence any criticism of the current negotiations is counter productive. Mr. Mandelson should OPEN his ears to really hear the concerns of many Africans and even NGO’s over the current position of the EU in the EPA talks.
I urge Mr. Mandelson to go back to read the philosopher Emannuel Kant and the approach that can best be used to strike FAIR trade deals. If Mr. Mandelson continues his current approach there will not be any party happy with the results. The EU should reconsider Mr. Mandelson’s position these talks (as they are not currently negotiations anymore) and to consider an unbiased arbitrator to bring the two sides together in a fair manner. What Mr. Mandelson has fostered can only be considered as an atmosphere of contention between all parties.

Craig Eisele

THE ARTICLE:

Mandelson Attacks South Africa and Nigeria Over EPAs
Inter Press Service (Johannesburg)

NEWS
20 November 2007
Posted to the web 21 November 2007

By David Cronin
Brussels
Africa’s largest nations are trying to block the signing of the economic partnership agreements (EPAs) with the European Union (EU), Peter Mandelson, EU trade commissioner, claimed today.

Speaking to members of the European Parliament, Mandelson strongly criticised the positions taken by Nigeria and South Africa in the EPA negotiations between the EU and nearly 80 African, Caribbean and Pacific (ACP) countries.

He alleged that the larger African countries are preventing their counterparts in the regional EPA-defined groupings from signing deals by an end-of-year deadline.

The EU has threatened to impose punitive tariffs on Europe-bound exports from about half of the ACP countries if they do not enter into EPAs by December 31.

As the remaining 39 ACP participants are classified as least developed countries (LDCs), they qualify for a seven-year-old EU trade scheme, known as Everything-But-Arms, under which they would enjoy duty and quota-free access to the Union’s markets for most of their goods.

“If you go to West Africa, the regional group is dominated by Nigeria, which wouldn’t touch an EPA with a barge pole,” Mandelson said. “That’s okay for West Africa if you are relatively rich like Nigeria. But what about Côte d’Ivoire and Ghana? They are not rich, nor are they LDCs. They need an EPA to avoid disruption to trade at the end of the year.”

Similarly, he argued that South Africa, which already has a trade agreement with the EU, “does not have as much at stake” as its neighbours. He raised the possibility that EPAs could be signed with other southern African countries, if South African president Thabo Mbeki’s government rules one out.

“Am I – because of South Africa’s inability finally to commit — to say there should be no EPA for southern Africa; that there should be a disruption of trade with Botswana, Lesotho, Namibia and Swaziland?” he asked.

Mandelson’s combative stance was condemned by anti-poverty activists, who are perturbed by indications that the EU is attempting to drive a wedge between African countries, putting pressure on them to conclude deals that would prevent them from cushioning their farmers and nascent industries from an influx of European goods.

Karin Ulmer from Aprodev, an umbrella group for Protestant aid agencies, said it is “not fair” that the EU is trying to pull poor countries into an “unequal relationship”.

“Maybe it is not even the intention (to create divisions between ACP countries) but, de facto, that is what the European Commission is doing,” she told IPS.

Oxfam campaigner Luis Morago noted that Senegal’s President Abdoulaye Wade recently commented on how EU-Africa relations are “out of order” because of differences on trade. This does not bode well for the summit between European and African heads of state and government, scheduled to take place in Lisbon, Portugal, next month.

“The EU-Africa summit is meant to herald the start of a new partnership,” Morago said. “Most African countries are not convinced that what the EU has put on the table is worth signing. European and African leaders should take this opportunity to step back, rethink their approach and focus on creating a truly development-focused partnership.”

Also meeting on November 20, development aid ministers from the EU’s 27 member states, issued a statement which “expressed concern” over the slow pace of the EPA talks in some regions.

The ministers endorsed suggestions by Mandelson that agreements limited to trade in goods should be signed this year, allowing talks on other issues such as investment, competition and services liberalisation to run into 2008.

Caroline Lucas, a British Green member of the European Parliament (MEP), argued that Mandelson is putting pressure on vulnerable countries to open their markets to European goods. The Guardian newspaper in London, she remarked, had reprimanded him this week for “bully-boy tactics”.

But Mandelson, who played a pivotal role in reforming Britain’s Labour Party before being appointed to the European Commission, said he had encountered such charges since the mid-1980s. “The day that Peter Mandelson is not called a bully by The Guardian newspaper, I will throw a very large party indeed,” he said.

Erika Mann, a German Social Democrat MEP, said that some African countries would “have a lot of problems signing a free trade deal with the EU.

“The problem is that they don’t have the capacity to negotiate free trade agreements with other countries elsewhere in the world,” she added.

British Conservative Party MEP Robert Sturdy took Mandelson to task for his readiness to discuss the possibility of deals with some ACP countries that will exclude others.

“Surely the whole point of the EPAs is to facilitate and promote regional integration,” said Sturdy. “This is not about bilateral agreements. President Wade has said that the system proposed by the EU for trade is not acceptable and that EU-Africa relations are broken. It doesn’t sound as though things are going particularly well.”

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

Pushing Free Trade On Africa

Everybody is Pushing Free Trade On Africa

New Vision (Kampala)
OPINION
12 November 2007
Posted to the web 13 November 2007

By John Ochola
Kampala
I am responding to the opinion piece by Peter Mandelson and Louis Michel “Africa: Nobody is Pushing Free Trade, EU Chiefs Argue” The New Vision, October 23, 2007.

There is an old saying: “Give a man a fish and you feed him for a day, teach a man to fish and you feed him for life”.

Economic Partnership Agreements (EPAs) are the equivalent of Europe telling the African fisherman that if he does not give them his fishing net (tariff flexibility) he will not be able to sell any more fish to them (fish exports). In return for the fishing net, Europe promises a European fish (aid) that the fisherman has to apply for and wait for over two years.

Let me explain further. Michel and Mandelson ask: “How can we use trade to help African, Caribbean and Pacific (ACP) countries”? They would do well to go back to the drawing board with regard to their trade relationship with Africa. They could start by reading the excellent book Bad Samaritans by Ha Joon Chang, which deals exactly with the sort of misguided thinking that drives the European Commission (EC) towards pushing the ACP countries to sign a free trade deal.

The EC believes that free trade will encourage development and reduce poverty in Africa. But a free trade deal will create direct competition between European manufacturers and farmers, and their counterparts in poor countries, thus putting people in poor countries out of work and exacerbating their poverty.

The EC article states: “Critics of EPAs claim they will open up ACP markets to EU trade at the expense of local business and local growth – this is not true.” But critics of EPAs take figures from official EPA impact assessments that point to a contraction in regional trade, industry, agriculture and government revenue and list many sensitive products that could be hurt. For example, it is estimated that in Kenya, 65% of domestic industrial products could be vulnerable to unfair competition under EPAs and that a 15% contraction in regional trade would occur because more EU manufactured products would come into the region. In Uganda EPAs is estimated to create an annual loss in Government revenue of $9,458,170.

The article states that the EU is not threatening to raise tariffs for countries like Kenya, rather that “it is doing everything it can to avoid it”. But the EU has refused to look at any options other than EPAs for Africa, has refused to look into another waiver, and has refused to provide a transition period in spite of such a request made by Kenyan trade minister and head of the regional negotiating group for East and Southern Africa, Dr Mukhisa Kituyi.

The EC and the East African Community should take heed of lessons from our national and global economic history. Liberalisation brings about factory closures not start-ups. Witness what happened during structural adjustment policies in Uganda in the 1990s. Since then, other countries like Kenya have strategically raised import tariffs, along with investment, to revive both the dairy and the tannery industry. Just when African countries are realising the power it has to help agriculture and industry develop using tariffs as economic policy tools, these very tools – this ‘fishing rod’ for development – will be removed through signing the EPA.

Countries that are successful today did not start out by liberalising. They started out by using tariffs to protect industries and having the state invest in them. Korea and Taiwan both achieved their phenomenal growth rates by using high tariffs strategically to promote specific industries. China and Vietnam also successfully used high tariffs and state intervention for trade-driven development. The EU itself took many years to develop behind protective barriers before opening up its markets to competition.

If the EC were serious about supporting Africa to trade its way out of poverty, it would drastically change non-tariff barriers into the EU that have seriously hindered the ability of Africa to access the EU market. These include such things as domestic subsidises to EU agriculture, complicated Rules of Origin and Sanitary and Phytosanitary measures, as well as support around private sector standards that have the ability to restrict exports from Africa.

But none of these issues will be part of any final EPA text that may be hastily cobbled together to meet the December 2007 deadline. A goods-only EPA is a reciprocal free trade deal, not a fair trade deal.

The EC argue that the current trade arrangements under Cotonou must change because they are “not compatible with international trade rules” and that “calling for an end to EPA negotiations when there is no credible alternative is playing poker with the livelihoods of those we are trying to help”. But a credible alternative to EPAs exists.

Least developed countries like Uganda already have the option of the Everything But Arms (EBA) scheme. It is as simple as labelling the produce for export differently. Ugandan EPA negotiators should seriously consider making use of the EBA scheme – like other least developed countries in the region are doing — before rushing headlong into another round of liberalisation through EPA. The policy space still exists for Uganda to make use of tariffs under the EBA regime – if it chooses to do so – and to give its industry and agriculture a head start over Europe.

The writer works for EcoNews Africa and represents Civil Society Organisations working on trade at the East and Southern Africa Regional Grouping.

Chaos On Eve of EPA Deadline with Africa

Chaos On Eve of EPA Deadline
Inter Press Service (Johannesburg)

ANALYSIS
8 November 2007
Posted to the web 8 November 2007

By Aileen Kwa
Nairobi
On the eve of the deadline of the finalisation of the economic partnership agreement (EPA) negotiations, chaos reigns.

Ministers of the East and Southern African (ESA) grouping are gathering in Brussels, Belgium, next week for negotiations with the European Union (EU). It remains to be seen whether talks will stall and be carried over to next year, or if an “EPA-lite” will be accepted.

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An “EPA-lite” refers to an interim agreement covering the two components of , on the one hand, market access in goods and, on the other, development.

There is chaos at two levels. Firstly, the 16 country ESA grouping is, at this late stage, splitting into two parts, throwing talks into confusion. The East African Community consisting of Kenya, Tanzania, Uganda, Burundi and Rwanda have a common customs union and have decided to sign their own EPA with the EU.

Indian Ocean states (Mauritius, Seychelles, Madagascar and Comoros) have also decided to negotiate a separate EPA. These countries have spent the last two years negotiating with the EU from a joint ESA text. It is unclear how new texts will be stitched together within the short time available before the end-of-year deadline.

The shifting configuration of country groupings for the negotiations, however, is not even the main problem. There are still major differences between the EU and ESA countries on very basic issues.

First and foremost, there has been no meeting of minds about what constitutes “development”. Both the EU and African countries have agreed that “development” sits at the heart of the EPA negotiations. Yet both sides are worlds apart translating what this means in practical terms.

The ESA countries, defining development as the strengthening of their industrial and agricultural production base, have pushed hard for the EU to commit to a list of development projects, with financial commitments attached.

The EU has not been enthusiastic and has apparently tried to sidestep such conditions. The EU has been successful in persuading the ESA grouping to downgrade their demands.

The implementation portion of the “development chapter” in the EPA text has been converted into a “development matrix”. Now that the matrix has been worked out by ESA, both sides are quarrelling over where to put it.

ESA wants it appended to the EPA text to ensure that it is legally binding on the EU. The EU has declined, indicating that they will only make a reference to it in the text. Now, the EU is backtracking even further. It is unclear if such a reference will even be made in the “development matrix”.

In any case, the EU side has vehemently insisted that they cannot provide financial assistance in the EPA.

According to Jane Nalunga of the non-governmental Southern and Eastern African Trade Information and Negotiations Institute (SEATINI), “When we came up with the negotiating draft, we put in a chapter on development. The EU said no, let us remove it.

“They didn’t say right from the beginning, ‘We won’t consider it’. They said, ‘Remove it and put it in a development matrix. We will make a reference to it in the text.’ Now that we have done that, they say, ‘This is a Christmas shopping list.’ They don’t even want a reference to be made to the matrix in the text.”

Nathan Irumba, SEATINI executive director, argues that “the whole problem is that EU has lured countries into EPAs by promising them that there would be development programmes. That is a lie from the beginning — there will be no development programmes. There is only the EDF (European Development Fund) — and there is no new money there.”

The ESA countries are still angling for a firm commitment from the EU to provide development funding. As one Kenyan trade ministry official noted, “We need support to improve our competitiveness so that we will be able to withstand the liberalisation commitments”.

Disagreement over the much-vaunted (by the EU) “development” dimension of the EPAs could bring the talks to a grinding halt in the coming days.

There is also no agreement on the scope of products that can be exempted from tariff elimination. The ESA countries had initially asked for 57 percent of their tariff lines to be protected. The European Commission (EC) refused to accept the list and have asked ESA to shorten it.

Now the EC is insisting that the exception list should be limited to only 10 percent, while the ESA countries are aiming for 30 percent. According to Nalunga, “In Kenya, with all its tribal sensitivities — different regions and tribes wanting to protect different crops — it will be politically sensitive limiting the protection to only 10 percent.”

A previous assessment by the United Nations Economic Commission for Africa showed that unless the ESA countries protect up to 40 percent of their trade with the EU, it is likely that their industries will be negatively impacted.

In addition, there is also no agreement on the very important issue of the timeframe for tariff elimination. All agricultural and industrial products which are not in the sensitive list will have their tariffs eliminated over time. The EU is insisting on a maximum of 12 years, whilst the ESA countries have asked for 25 years.

Domestic support and export subsidies in agriculture are another area of contention. ESA countries have expressed the fear that their agricultural producers will be displaced by unfair imports of subsidised EU agricultural goods. IPS has learnt that the Europeans have flatly refused to even discuss this. These issues, they say, are an internal affair.

The two sides have also struggled over the issues of review and benchmarking. Both sides agree that there should be an in-built mechanism for review in the EPA text. The ESA countries have identified certain development benchmarks.

They want their liberalisation commitments to be pegged to these benchmarks. If the development benchmarks have not yet been attained by the time of the review, they want to be able to go back on the liberalisation timetable.

The EU has been dismissive of this position, insisting that a mechanism for review should be aimed at expanding the scope of liberalisation and not allow backtracking on those commitments.

With such wide divergences on major issues, it is uncertain if the ESA and the EU will be able to sign on the dotted line by the end of the year.

Africa Yet to Benefit From Trade Talks Under WTO/ EPA

Continent Yet to Benefit From Trade Talks Under WTO
The Herald (Harare)

NEWS
6 November 2007
Posted to the web 6 November 2007

By Victoria Ruzvidzo
Harare
Africa has not benefited from trade talks under the World Trade Organisation and should thus present a common force to confront current challenges if it is to claim a fair share of the global trade, the Trade Policy Training Centre in Africa second annual conference which began here yesterday has heard.

Not much progress had been made to balance trade since the Doha talks of 2000 and the situation could remain so for a long time unless the continent formed a united force to circumvent the difficulties. Presentations during the conference’s official opening ceremony yesterday were in agreement that there had been so much talk about improving the global trade system but these had largely remained in theory.

The North-South trade initiatives, which had been promising over the last few years, had not yielded much to date.

Therefore, such attitudes by the developed world and the past experiences of oppression and exploitation under colonialism needed to engender assertiveness and the resolve to work together among African countries.

In a paper presented on his behalf at the official opening of the conference, Swaziland’s King Mswati III set the tone for the three-day deliberations when he said Africa itself needed to rise up and do something about the situation because the North was reluctant to change the current trade systems that were largely tilted in their favour.

“I dare say that the manner in which the North approaches our situation tends to smack of some resemblance of attitude. Consider, for instance, the resolve and appropriateness with which the North is handling the plight and progress of Eastern Europe.

If Europe and the USA were to tackle our problems in a similar manner, there is no doubt that we would be a different continent today,” he said.

“Suffice to say that the socio-economic situation we are in today as Africans is unacceptable.

“Let me assure that as African leaders we are determined to work together in reshaping the socio-economic situation of Africa. We realise that we have common challenges, a common future and common aspirations,” said King Mswati III in a speech read by Prince Masitsela.

Both the Africa Union summit held in Accra last July and the Sadc summit held in Lusaka in August demonstrated the leaders’ resolve to work as a united front.

East and Southern Africa Management Institute (Esami) director-general Professor Bonard Mwape concurred that Africa needed to be united to push its agenda on global trade talks.

“Rationalisation and globalisation demands that African countries ensure that South-South co-operation produces fruitful developments for Africa,” he said. Initiatives under the African Union, Comesa, Sadc and Sacu, among other regional groupings, were bound to yield results. Furthermore, intra-regional trade was critical to economic development and poverty reduction in Africa and other least developed countries given that regional intergration offered better markets, which created a bigger domestic territory among countries.

“It is imperative that in your deliberations on multilateral, regional and bilateral trade agreements and emerging scenarios and challenges for the least developed countries you should search for common approaches and responses with which our continent can resolve our depressing situation.

“Indeed this conference comes at a time when the regional and multilateral issues are not only key to regional integration, but also dominate the development agenda of many developing countries,” said King Mswati III. Being held under the theme “Multilateral, Regional and Bilateral Trade Agreements: Emerging Scenarios and Challenges for African and Least Developed Countries”, the annual conference seeks to highlight challenges to trade and come up with solutions as regards how the continent can enforce balanced trade on the global arena.

Delegates from East and Southern Africa are attending the meeting together with representatives from the World Trade Organisation, the Swedish International Development Agency, the World Bank, African Union and the United Nations Development Programme, among others.

Zimbabwe is represented by officials from the Ministry of Industry and International Trade and the Zimbabwean embassy based in Johannesburg, South Africa. Issues under discussion will include the Doha Development Agenda, the impact of international trade on developing countries, North-South trade agreements, South-South trade and regional agreements and aid for trade and capacity building needs, among others.

The Trade Policy Training Centre in Africa (Trapca) was inaugurated in December last year to provide training and technical expertise on trade issues in Least Developed Countries.

Based in Arusha, Tanzania, Trapca operates under the auspices of Esami and Sweden’s Lund University.

Africa – Church Leaders’ Statement On Economic Partnership Agreements

Africa – Church Leaders’ Statement On Economic Partnership Agreements
Catholic Information Service for Africa (Nairobi)

NEWS
5 November 2007
Posted to the web 5 November 2007
Nairobi
Full text of a statement issued recently by Church leaders concerned about new trade agreements being negotiated between Europe and developing countries:

Preamble

We the East African Church Leaders meet in Nairobi from 30th – 31st October 2007 to deliberate on the status of the Economic Partnership Agreements (EPAs) negotiations and their implications on people’s socio-economic interests and livelihoods.

As stewards and shepherds of the East African Christian congregation which accounts for many of the East African population, we reiterate that EPAs processes and outcomes should facilitate sustainable human development, regional integration and economic growth in the East African sub-region.

We are aware that our countries together with other countries in the Eastern and Southern Africa (ESA) and Southern African Development Community (SADC) groupings are negotiating the so-called Economic Partnership Agreements with the European Union (EU) to replace the current non-reciprocal trade arrangements.

We are also aware that through EPAs the European Union (EU) is seeking to establish Free Trade Areas with the Africa, Caribbean, and Pacific (ACP) regions. And by so doing, this will fundamentally alter the way of trading between the parties to the detriment of the small farmers and producers of the regions of the South. While the EU is one of the most developed regions in the world, ACP regions are the least developed countries. Consequently, future trade between the EU and ACP under the EPAs arrangement will be more unequal than before. The ACP states will definitely lose out in trading under EPAs.

We are further aware that the EPAs negotiations are to be concluded and signed by 31st December 2007 and be in force in January 2008. Our East African countries (Kenya, Uganda, Tanzania, Burundi and Rwanda), considered as developing and least developed countries, are not ready to sign the EPAs contrary to the assertions by our respective government officials.

Noting that EPAs negotiation processes both at national and regional levels have not adequately and effectively been as inclusive as expected, we urge governments to demand that the proposals already on the table be opened to public debate and scrutiny before they are considered for signing. Regional and national long term development priorities and interests should inform the positions and proposals made by the negotiators.

We are concerned that EPAs if signed will:

Endanger the livelihoods of the small-scale farmers and producers in the East African region.

Undermine the efforts of the East African countries to attain food security and sovereignty.

Reduce governments’ revenue through the reduction and/or removal of tariffs on imports from EU.

Take away the governments’ sovereignty to use policy decisions to leverage the negative impacts of trade liberalization.

Undermine the industrialisation efforts and consolidation of the East African regional markets.

Deepen the[negative] effects of the Structural Adjustment Programmes, among others: poverty, food insecurity, unemployment, and insecurity.

We therefore call for:

The extension of the December 31st deadline in order to address the aforementioned issues and concerns in the agreement.

The accountability of the Ministers for Trade and Industry, as the chief government negotiators, to their respective Parliaments and citizens to ensure that EPAs are well negotiated as an instrument of development and not of exploitation.

A review of the laws and policies relating to the ratification of all treaties, making it mandatory for national parliaments to ratify all treaties.

Respective governments and non state actors to organize sensitisation dialogues where merits and demerits of the EPAs are discussed.

The scrutiny of the EPAs proposals to ensure that national development policies and priorities have been taken on board.

Our governments and the European Union to consider alternatives to EPAs as indicated in the Cotonou Partnership Agreement. Such alternatives should not be oppressive, but instead be fair and just [so to] serve the people.

Stated by Church Leaders from:

All Africa Conference of Churches (AACC)

Association of Members Episcopal Conferences in East Africa (AMECEA)

Building Eastern Africa Community Network (BEACON)

Christian Council of Tanzania (CCT)

Missionaries of Africa

Norwegian Church Aid

National Council of Churches of Kenya (NCCK)

Tanzania Episcopal Conference (TEC)

Uganda Joint Christian Council (UJCC)

Africa And EU May Settle for a Temporary Trade Agreement

Continent And EU May Settle for a Temporary Trade Agreement
Public Agenda (Accra)

NEWS
5 November 2007
Posted to the web 5 November 2007

By Isabella Gyau Orhin
Africa and the European Union may have to settle on other temporary trade agreements come January 2008.

This is as a result of the stance taken by both parties in the Economic Partnership Agreements (EPAs) negotiations.

Speaking to a team of African media personnel in the EU headquarters in Brussels last Tuesday, an assistant of the EU Trade Commissioner Mr. Stephen Adams said negotiations with the Caribbean countries are far advanced and the Caribbean countries may likely sign the EPAs by the scheduled date of December 2007.

“We may just focus on agricultural and manufactured products for the time being with the African countries,” he said.

“What we should remember is that we all agreed in 2001 to change the situation and gave ourselves seven years to do that,” Adams said in a briefing.

Giving a background to the Cotonou agreement which was signed on 23rd June 2000 and revised in Luxembourg in 2005, he said that agreement was based on historical circumstances and the special relationship between the EU and the ACP countries.

Some of the provisions of this agreement he said are in contravention of World Trade Organisation (WTO) regulations which insist that trade relations should be reciprocal.

According to Adams, other developing countries, particularly in Latin America who are outside the ACP have threatened to sue the EU at the WTO if it does not put an end to its preferential treatment for ACP countries.

“This is what we have spent the last seven years doing in order to prevent ourselves from a law suit from the other developing world,” Adams explained.

“The notion here is that the EU discriminates in its trade relations by having different trade arrangements with developing countries,” he added.

He said since the Cotonou agreement is based on preferential access, it does not provide any incentives for the ACP counties to diversify their exports or add value to them.

“We want to use the EPAs to change that,” he said adding, ” at the heart of the EPAs is regional market building so that the EU can negotiate with regional groupings instead of individual countries.”

Mr. Adams also said the EU is not asking ACP countries to liberalize their markets on the same scale as the EU would. “We are just asking them to liberalize just enough to meet WTO regulations,” he said.

According to him, the EU is also guaranteeing increased aid for development assistance although development assistance is not being negotiated as part of EPAs.

Reacting to allegations that the EU is trying to smuggle the Singaporean issues of Investment, Competition and Public Procurement in the EPAs, Mr. Adams said, the EU is not insisting that the Singaporean issues which have been taken off the table at the Multilateral level should be included at all cost in the EPA negotiations.

He also explained that the EU cannot accede to calls by NGOs to give Generalized Systems of Preferences Plus (GPS+) to African countries which even give better assess to countries in terms of trading with the EU.

He said the GPS+ is given to countries that have signed international conventions such as the Kyoto Protocol on Climate Change, the International Labour Organisation (ILO) agreements on Labour Standards and sustainable development, which ACP have not signed.

In an open letter to anti poverty campaigners who appear to have succeeded in convincing ACP governments not to sign the EPAs, EU Trade Commissioner Mr. Peter Mandelson said “by assisting with the creation of regional markets and accompanying the sometimes difficult adjustments these entails the EU is standing by the side of its ACP partners in their drive to adapt to the challenges of globalization.”

He said no question in Europe’s trade development policy is more pressing than how that continent can use trade to help ACP countries build strong economies.

He said ACP countries received 1.6 billion euros in development assistance over the period 2001-2005 through the European Development Fund and the EU budget.

“Not only will these assistance continue and increase but also ACP countries will be major beneficiaries of the decision to increase Europe’s spending on aid for trade to 2 billion euros.

But critics say that is too small considering the fact that China is investing over five billion dollars in the Democratic Republic of Congo alone.

Developing Countries Are Afraid of ‘Rigged Commerce’ Not ‘Free Trade’

Developing Countries Are Afraid of ‘Rigged Commerce’ Not ‘Free Trade’

Business Daily (Nairobi)
OPINION
15 November 2007
Posted to the web 15 November 2007

By James Thuo Gathii

In an editorial on Thursday November 1st 2007, Peter Mandelson, the EU Trade Commissioner and Louis Michel the EU Development Commissioner wrote an opinion piece titled Nobody is Forcing Free Trade on Africa. That piece strongly advocated using free trade to help African, Caribbean and Pacific build stronger economies. There is certainly no doubt that these countries want stronger economies and free trade is certainly one way to build stronger economies.

Their editorial is welcome since these top EU officials now acknowledge that some ACP regions will need more time than the end of this year to conclude new trade agreements with the EU.

These new trade agreements, known as Economic Partnership Agreements, (EPAs), between ACP countries, on the one hand, and the EU on the other, will replace the current preferential trading arrangements. Under these preferential trading arrangements, ACP countries enjoy duty free access for some of their exports to the EU.

These privileged access is not shared by non-ACP developing countries. However, since the WTO waiver allowing the EU to extend this preferential access to the end of this year, the EU and ACP countries committed themselves in the Cotonou Agreement of 2000 to negotiate Economic Partnership Agreements (EPAs) by the end of 2007.

The commitment by the EU and ACP countries in 2000 to negotiate EPAs was premised on several understandings.

First, that EPAs would open up European markets to agricultural products from ACP countries in the same way that ACP countries would open their economies up to those trade items that the EU has a comparative advantage over ACP countries.

This was a necessary assumption since for more than the last 50 years, trade liberalisation in industrial products far out paced liberalisation in agriculture.

In other words, global trade was rigged in favour of industrial products and against agriculture. Industrialised economies like the EU benefited both from their comparative advantage in industrial products and for their agricultural produce – a feat that these countries achieved by highly protecting their agricultural sectors from low cost producers in developing countries.

For example, huge subsidies to high cost EU sugar producers has hurt low cost ACP sugar producers. The EU also subsidises its cotton farmers thereby adversely affecting over 10 million lower cost cotton farmers in West and Central Africa.

The US is a bigger culprit here since it not only has bigger cotton subsidies, but these subsidies have been found to be inconsistent with the rules of the World Trade Organization (WTO), by its highest judicial organ, the Appellate Body.

The EU argues its cotton subsides are much lower than those of the US and that it is the biggest buyer of African cotton. This is exactly where the problem here is. The EU buys African cotton at rock bottom prices because subsidies to cotton farmers in the EU and in the US have depressed the cost of African cotton.

These prices would be much higher for African farmers whose cotton would command the biggest share of the global cotton market in a genuine free trade regime. Today, cotton from the US commands world markets although the US is a higher cost producer of cotton than African countries that produce cotton.

In short, those countries in West and Central Africa that produce cotton would be much better off in a genuinely free trade regime than in the current regime that is woefully rigged in favour of developed countries like those in the EU.

In fact, many economists have shown that such a free trade regime would be much more beneficial to developing countries than all the assistance they receive from developed countries. Unfortunately, EPAs are not addressing the distortions in global trade.

A second premise upon which EPAs were to be negotiated under Article 36 of the Cotonou Agreement was that barriers to trade between EU and ACP countries would be progressively removed.

In other words, EPAs would not suddenly unleash the forces of demand and supply on 1st January 2008. There was a recognition that technologically advanced industrial economies cannot be expected to compete on a level playing field with poor and agrarian societies.

Thus, as much as ACP countries aim to break dependence on trade preferences and commodity trade as the EU brass argued in their opinion piece, ACP countries cannot forget how big economies like the EU keep their markets inaccessible using sanitary and phytosanitary standards.

These standards undermine the preferential access and will undermine any free trade regime that will come into force under the EPAs. For example, the EU has imposed stringent chemical residue content limits in flower and other exports from ACP countries like Kenya.

These limits have not only increased the cost of production but increasingly made the EU market inaccessible especially for small scale farmers who may not be able to afford alternatives to mythl bromide which the EU hates to have traces of in produce entering the EU.

In the meantime, the state of California in the US has been putting up a brave fight to permit it to continue using mythl bromide as farmers in the ACP are forced to abandon using it and in the process losing their share of the EU market.

While the EU has every right to impose whatever sanitary or phytosanitary standards it decides, WTO rules require it to ensure that those standards are based on a scientific justification and a risk assessment showing they pose risks to human, animal or plant health.

ACP countries do not have the resources the US has to challenge EU sanitary and phytosanitary standards as the US has done successfully.

This is a second example of how rigged the application of trade rules are in favour of developed economies and against poor countries. It is notable that among the over 70 ACP countries are 44 of the poorest countries in the world.

Each of these country’s share of global trade is much less than one per cent.

Thus, it seems foolhardy to imagine that for these poorest of poorest countries any amount of transition time to trade on a level playing field with the EU will come some day soon.

This is just the stark reality that even Mandelson and Michel concur with. The Cotonou Agreement and the WTO Agreements contemplated this challenge.

One of the ways in which the Cotonou Agreement sought to address this problem of size was to negotiate trade agreements among six regions of the ACP countries.

Thus rather than negotiate bilaterally, the EU is negotiating with six ACP regions. Building regional markets is certainly an important way of overcoming the small size of individual ACP economies.

Yet, even these regions are nowhere near as muscular as the market power that the EU wields.

Take the Central African region as an example. It includes war torn countries like the Democratic Republic of Congo, Central African Republic and Chad. These countries also have the least capacity to negotiate a complex trade agreement with the EU. Yet, there is word that the Central African Region is one of those most likely to complete an EPA with the EU soon.

On its part, the primary trade treaty of the WTO sought to address this problem of unevenness in the trading relationships between rich and poor countries through the principle of special and differential treatment.

This is the principle that allows the trade preferences that are due to be eliminated by EPAs. Under this principle, developed countries are exempted from the requirement that every time they open their market to a developing country, they have to automatically extend the same advantage to all WTO member countries.

While Mandelson and Michel argue that it is non-ACP developing countries that are loudly protesting EU preferences to ACP countries, they conveniently forget to tell us the big pressure of EU interest groups -including EU farmers and big business -will benefit enormously once the EPAs come into effect.

Global trade is therefore moving away from trade preferences on the false premise that developing countries are now able to compete on the same playing field as the rich countries. This may be true for high (and some low) middle income developing countries. However, this is certainly not the case for the least developed countries.

Least developed countries still require to be treated preferentially because of their innate vulnerability in the global economy.

An overwhelming majority of people in least developed countries live in poverty without access to basic needs like water, health, shelter and education. Thus to suppose a least developed country could compete fairly with a developed economy under a regime of free trade is to suggest that you can treat countries that are so unequal in an equal manner.

Free trade presupposes a somewhat rough parity of conditions among trading partners so that they can produce tradeable goods and services that they can then exchange.

However, in a system where countries have vastly unequal economic power, there ought to be measures to ensure that benefits proportionate to the economic position of each country can be accrued. Without such a rough proportionality in the benefits of a common trading regime, it would be regarded as illegitimate by those left worst off.

Mandelson and Michel’s reassurances that EPA’s will not mean free trade between the EU and ACP countries ‘any time soon’ cannot be gauged from the ongoing EPA negotiations.

While developing countries have been pushing for a more development friendly trade regime at the WTO, the EU is pushing in the other direction with the EPAs.

For example, the EU is pushing for new commitments on government procurement which are not even a negotiating item in the Cotonou Agreement.

In the 2001 Doha Declaration that launched the Doha Round of talks, all WTO members agreed that there would be no negotiations on items such as government procurement unless there was explicit consensus.

There has not been such explicit consensus in the failed Doha Round of WTO talks. So, negotiations on government procurement in the EPAs are an example of the EU seeking to get concessions from ACP countries that the EU cannot get through the WTO.

New commitments like government procurement and competition rules, as good as they sound in theory, are going to involve heavy implementation costs that are likely to outweigh the dynamic benefits that these rules could produce for ACP countries in the long run.

Already ACP countries, like non-ACP developing countries, face enormous challenges implementing the obligations they assumed in the Uruguay Round that ended with several new agreements in 1995.

Kenya for example has yet to formally implement any of the several Uruguay Round Agreements in its national legislation. This situation is so bad that Kenya has to turn to Comesa rules to safeguard its sugar industry from unfair international competition rather than directly resorting to its WTO rights.

This is so because the Kenyan Parliament has yet to pass laws reflecting Kenya’s WTO rights and obligations to counter unfair trade practices by its trading partners.

Thus, while any trading arrangements that would improve ACP product standards while promoting investments and building regional markets are welcome, EPAs also come with their bundle of challenges.

One of these challenges is not whether ACP countries should adopt free trade rules and policies in their trading relationship with the EU.

Rather, a critical challenge is the rigged nature of the global trading regime in general, and the uneven trade relationship between ACP countries and the EU in particular.

Thus, as long as the EU’s cherished common agricultural policy continues to distort global trade patterns in favour of the EU and against its weakest trading partners, EPAs are unlikely to address the development challenges of ACP countries.

In the final analysis, each ACP country will have to establish if the EPA it will sign onto will advance its interests or not. One sure mechanism to do so will be to subject the EPA to a process of parliamentary scrutiny and approval. No ACP country should sign onto an EPA negotiated by trade bureaucrats without the kind of oversight accountable and transparent governance requires.

Without such parliamentary oversight, ACP countries may yet again be railroaded with an enormous package of obligations that would undermine their current efforts to eliminate poverty while spurring economic growth.

Gathii is a Professor of International Commercial Law at Albany Law School, New York. He is currently a Visiting Professor at the School of Law of the University of Nairobi, Parklands Campus.