Multinational Monitor

JUL/AUG 2005
VOL 26 No. 7


Merger Mania and Its Disontents: The Price of Corporate Consolidation
by James Brock

Indigenous People's Power: Global Mobilization Scores Dramatic Gains - With Many Challenges Ahead
by Marcus Colchester

Crisis of Credibility: the Declining Power of the International Monetary Fund
by Walden Bello and Shalmali Guttal

Programmed to Fail: The World Bank Clings to a Bankrupt Development Model
by Walden Bello and Shalmali Guttal

Heartache and Hope in Africa: The Failures of Market
Fundamentalism and Hope for an Alternative
by Soren Ambrose and Njoki Njoroge Njehu

Victories! Justice! The People's Triumphs Over Corporate Power
by Robert Weissman


Offshore: Tax Havens, Secrecy, Financial Manipulation, and the Offshore Economy
An Interview with William Brittain-Catlin


Letter to the Editor

Behind the Lines

The Global Justice Movement

The Front
Bolivia Insurrection -
ICSID Bleeds Argentina

The Lawrence Summers Memorial Award

Names In the News


Heartache and Hope in Africa: The Failures of Market Fundamentalism and Hope for an Alternative

Nairobi — Multinational Monitor was born just as sub-Saharan Africa entered a distinct historical phase. The 20 or so years after most of its countries gained their independence constituted, in hindsight, a relative “honeymoon” phase, if such a term can be applied to an era that saw the rise of Mobutu in Zaire, an exceptionally brutal civil war in Nigeria, the consolidation of the apartheid regime in South Africa and other horrors. The earlier period at least offered a steady rise in living standards in most countries; the next 25 years would be marked by spiraling poverty across the region and the virtual loss of governments’ sovereignty to determine their own policies.

Fumbling steps from dictatorship to democracy, stubborn corruption, the influence of multinationals looking to extract mineral wealth, eruptions of brutal violence, the spread of HIV/AIDS and persistence of other preventable diseases, foreign domination and imposed economic devastation: these are among the themes that have dominated sub-Saharan Africa during Multinational Monitor’s lifespan.

Most of these problems have a long provenance in Africa — they were deliberate characteristics of the colonial project in Africa (though interest in democracy was not indulged until the colonial endgame). At the 1885 Berlin Conference, the major European powers divided up the continent, with scant attention to geographic or cultural boundaries — a jigsaw puzzle of incoherent states that continues to haunt the continent. The formal end of colonialism (for most countries in the period between 1956 and 1964) inspired a burst of energy and confidence, but as it dwindled, it became clear that the post-colonial period was also a neo-colonial period, with systems set up to facilitate the transfer of wealth out of Africa just as efficiently as before. The Cold War completed the analogy, with the United States and the USSR engaged in a new scramble for Africa, each seducing and claiming allies around the continent, with little concern about the corruption they created or the welfare of populations they put at risk.

The Cold War and its Aftermath

U.S. and Soviet largesse in the 1970s and 1980s served essentially as bribes to presidents and their cronies so they would remain reliable allies. The top four recipients of U.S. aid in Africa during the 1980s — Liberia, Somalia, Sudan and Zaire — illustrate how Cold War logic kept some of the most corrupt and brutal leaders in place. The so-called “winds of democracy” or “African renaissance” that Northern commentators began to describe in the early 1990s was largely the result of the corrupting force of the Cold War being broken.

Those rulers who were most dependent on external support began to fall. The horn of Africa, flooded with weapons by the proxy wars waged by the United States and USSR, saw the biggest changes, and not all necessarily for the better. In Sudan, Nimiery fell in 1989 to the extremist duo of Bashir and Turabi. In Ethiopia, Mengistu, deprived of his Soviet sponsors, finally fell to a long-running insurgency in 1991. Eritrea gained its independence from Ethiopia in 1992, but six years later the two countries were embroiled in a senselessly destructive border war that still simmers, and both governments have displayed dangerous dictatorial tendencies. Siad Barre, the U.S. client in neighboring Somalia, was quickly disposed of as well, with the country left to 15 years (so far) of warlord-driven chaos. In Liberia, host of a major U.S. telecommunications facility, Samuel Doe (whom President Reagan publicly referred to as “Chairman Moe”) was allowed to succumb to an array of rebel forces, with the venal Charles Taylor eventually emerging on top. Mobutu in Zaire and the ally who made him key to the United States, Jonas Savimbi, leader of the UNITA rebels in neighboring Angola, managed to use their mineral wealth to survive the end of U.S. support, dragging their countries into ever-deepening turmoil before their demise. The Cold War in Africa only really ended with Savimbi’s battlefield death in 2002.

In francophone Africa, many long-time rulers were forced to submit to “sovereign national conferences” in the post-Cold War period. As promising as they seemed at first, the conferences seldom delivered lasting change. Mobutu was one of many who went through the motions without, in the end, ceding any power. Mali was the most successful; there the national conference evicted military rulers and installed a stable democratic government.

Kenya offers an example of a more subtle way in which the Cold War helped determine a country’s political fate. Kenya served as a faithful U.S. client since independence, and President Daniel arap Moi was able to sustain his dictatorship through some rough patches (including the country’s only attempted coup) in the 1980s in part because the United States was keen to maintain stable allies in the countries surrounding Ethiopia, at the time a hardline Marxist state. At the end of the 1980s, pressure on the government to introduce a multi-party system was building, with donors threatening to withhold funds, the United States loudest among them. But the 1991 Gulf War led to a suspension of the pressure, as the Bush I administration found Kenyan airbases to be particularly useful. Not only did the ambassador quiet down, but the total withdrawal of support for activists whose U.S. connection served as protection from Moi’s wrath exposed many to sudden danger. After the war, pressure resumed, and in 1992 Moi agreed to end the one-party system.

The “war on terror” has in the last three years begun to re-introduce Cold War style logic in Africa.

The campaign for support of the invasion of Iraq in 2003 revealed the levers the United States could use to coerce countries to declare their loyalty. The region’s people were overwhelmingly against the invasion, as were most of its governments. At the end of 2002, when the United States was trying to win a UN resolution authorizing force in Iraq, it put intense pressure on the African countries on the Security Council. One of them, Mauritius, capitulated, apparently out of fear that the United States would invoke a clause of the African Growth and Opportunity Act (AGOA) — which facilitated Mauritian exports to the United States — requiring that beneficiary countries must do nothing to contradict U.S. foreign policy. Fortunately its term on the Security Council ended before a vote could be taken. The three African countries on the Council in 2003 — Guinea, Cameroon and Angola — all withstood U.S. pressure, forcing the United States to abandon its bid. Since then the United States has threatened to withhold military aid from countries refusing to exempt U.S. military personnel from possible extradition to the International Criminal Court, and there are signs that other aid will be conditioned on satisfactory cooperation in combating terror. Just as in the Cold War, levels of assistance may be determined mainly by U.S. strategic priorities.

The IMF & World Bank (and the WTO)

The curtailment of the Cold War had the effect of strengthening the influence of the International Monetary Fund (IMF) and World Bank. Strategically located countries had been able to fudge the harsh conditions on their loans, and countries that got support from the USSR, such as Tanzania, Zimbabwe, Benin and Guinea, now had to submit themselves fully to the same indignities as their neighbors.

And those indignities are indeed substantial. Severely indebted countries, a category that includes most African countries, are unable to get capital or credit from private sources or bilateral agencies. In order to remain part of the global economy — to continue to get loans and grants, qualify for debt rescheduling, and maintain trade relations — African governments have, for the last 15 to 25 years had to commit to implementing “structural adjustment programs.”

The policies associated with structural adjustment programs — virtually identical from one country to the next — include rapid privatization of government-owned enterprises, reductions in subsidies for basic goods and agricultural inputs, hikes in interest rates, budget cuts resulting in public sector layoffs and reduced availability of government services, deregulation of trade and investment rules to entice foreign businesses, and a strong export orientation, meaning an emphasis on agricultural commodities from tropical zones and the cheap labor of desperate people. With most Southern countries producing the same “cash crops” like coffee, cotton, tea, flowers and cocoa, prices are at all-time lows, meaning that the promise of globalization — insertion into and reliance on the international trading system — has failed for African countries: they cannot earn enough to buy the food they no longer grow.

Rather than a prescription for reducing poverty or eliminating debt, structural adjustment programs are instead a recipe for increasing the profits of multinational corporations. In that sense they have succeeded spectacularly. And, since governments have to take out new loans to pay off old debts, the control exerted over countries’ economic policies is self-perpetuating.

To illustrate the impact of structural adjustment programs, consider these recent observations from Kenya:

  • Lifting of tariffs on second-hand shoes and clothing, many of them donated to “charities” in wealthy countries, has pushed the Kenyan textile and shoe industries to the brink of extinction.

  • In public hospitals, budget cuts mean that each bed holds two patients, entire wards are emptied of any supplies, the nursing staff is stretched well beyond its capacity, patients’ families — who at one time were searched upon entering to ensure they were bringing no outside substances — are now told that if they want their relative to eat, they must bring food, and if they want their relative to get medication, they will have to supply it independently. Private health clinics have displaced public ones in many poor communities; although they charge more, they have medications on hand and sufficient staff to see patients in a timely fashion.

  • Unemployment, especially for educated young people, is extremely high. Large numbers of Kenyans between 18 and 40 have moved to Europe and North America looking for gainful employment.
  • No one in Kenya has been unaffected by the HIV/AIDS pandemic sweeping Africa. An estimated 700 Kenyans die each day. With brutal timing, the disease spread just as health care systems across the region had been decimated by IMF/World Bank mandated budget cuts.
  • All too often the eastern and northern parts of Kenya are hit by drought. The most fertile parts of the country, which could be providing food to the arid regions, are instead growing cash crops like flowers for export — even as newspapers report plummeting commodity prices and describe export crops like cotton rotting in warehouses. Meanwhile, the drought-stricken regions are forced to rely on food aid from overseas.
  • The World Bank has pushed the government to commit to privatization of ever more basic services. Questions are now being raised about the Bank’s insistence that in exchange for funds to upgrade Kenya Power and Lighting Corporation, the government should contract a foreign firm to manage the company. Water privatization schemes in Nairobi and other cities have met firm opposition.
  • The IMF and World Bank made convenient scapegoats for the Moi regime, which became the first to have its IMF and World Bank funds cut off because of corruption problems. Moi then fended off criticism by pointing to the heartlessness of the institutions — but kept their policies.
  • Despite the promising return of genuine democracy in 2002, with the end of the Moi dictatorship, economic policies have not changed. It is unclear that President Mwai Kibaki would change the policies — he is an orthodox economist — but the threat of losing aid money discourages such action even from the most radical politicians.
Resource Extraction

Resource extractive activity — especially mining, logging and oil projects — has a long history in Africa. During colonial times, extraction was one of the chief motivations for Europeans to explore and conquer Africa. It remains the main attraction for foreign corporations. The logic of extraction continues to plague Africa: most modern transportation links are geared not to facilitating inter-African trade but to moving raw minerals from the interior to the coasts so that they can be removed from Africa. It is still often necessary for air travelers to go through Europe in order to get from one African country to another.

Once upon a time, Africa’s chief export was slaves. Today the main enticements include gold (Ghana, Tanzania, South Africa); diamonds (Botswana, South Africa, Namibia, Sierra Leone); cobalt and chromium (Democratic Republic of the Congo [DRC], formerly Zaire), copper (DRC, Zambia), and most enticing of all, oil (Nigeria, Angola, Gabon, Equatorial Guinea, São Tomé, Sudan, Chad). Control of these resources has fueled recent and ongoing armed conflicts in many of these countries. Canadian oil companies, for example, were widely accused of helping to prolong the Sudanese civil war by generating profits for the Khartoum government through oil projects that involved massive human rights violations.

Multinationals have generally carried out extractive projects with little or no concern for social or ecological impacts. The most notorious example is Nigeria’s Niger Delta, which has endured the consequences of oil companies’ decision to leave behind the safeguards they use in wealthier countries. Lands and rivers have been ruined by oil spills, 24-hour flaring of gas byproducts makes nighttime brighter than the days, and communities have been plunged into the deepest poverty in the country.

Reasons to be Cheerful

We have painted a somewhat bleak portrait of Africa. Nonetheless, looking forward to the next 25 years, there are reasons to be optimistic, if guardedly so:

  • The role of social movements has become more and more significant. Farmers’ collectives, women’s groups, church groups, and labor unions have gained traction in different countries around the region. One of the pioneering movements, the Green Belt Movement of Kenya, has received tremendous recognition in the last year with the award of the Nobel Peace Prize to its director, Wangari Maathai. Movements from all parts of the continent, including North Africa, have come together in the Africa Social Forum process (part of the World Social Forum process), building bridges between francophone, anglophone, arabophone, and lusophone countries that have historically been absent or underdeveloped.
  • Democracy, in all its flawed manifestations, has taken root in many countries. Fewer countries are ruled by autocratic leaders; those dictators remaining are under increased pressure to step aside.
  • The African Union, founded in July 2002 as the successor to the Organization for African Unity (OAU), has impressed skeptics with its success in taking stronger stands than the OAU had managed, and with its potential as an international platform.
  • Some of the most brutal conflicts have wound down — Sierra Leone, Liberia, southern Sudan, Angola and the regional war in the DRC. Somalia has taken steps toward reinstituting a central government. With Darfur and Mugabe’s Zimbabwe, however, it is clear that much remains to be done.

Africa is making progress in overcoming its recent history of foreign domination, politically if not economically. Broader sections of the population are finding ways to amplify their voices. The dynamism and potential are tremendous, but the challenges are incredible. Africa is mounting serious resistance to the hyper-capitalism of the United States and the rich countries. If a middle ground accommodating African circumstances is not found, Africa may one day soon be faced with a choice between isolation from or total capitulation to the global economy.

The Case of South Africa

No account of Africa in the last 25 years would be complete without recognition of the huge impact of events in South Africa. For decades, schoolchildren in Africa learned about the evils of apartheid; the struggle to end it was quite genuinely adopted as a continental one. The “frontline states” — Mozambique, Zimbabwe, Zambia, Tanzania, and to some extent Kenya — hosted exiles and opposition structures, and boycotted the South African economy, a move which damaged their own economies. The Organization for African Unity (OAU) was united on only a few things; one was the liberation of South Africa. In the 1980s, the movement to end apartheid became an international one, the most vigorous solidarity campaign with Africa in recent decades.

Following Nelson Mandela’s release from prison in 1990 and the transition to a post-apartheid regime, South African firms began to extend their domination over the continent. It is now common to speak of “South African sub-imperialism” in many parts of Africa. South African corporations are buying up many enterprises, especially in anglophone countries (though expansion to francophone and lusophone countries is underway). South African brewing companies have invaded beer markets around the continent, underselling domestic mainstays. In Lusaka, Zambia, the two shopping malls catering to the middle and upper classes are owned by rival South African interests. The attitudes and behavior of South African business and capital are seen as not very different from Europeans or North Americans; resentment is growing, even as a sentimental attachment to liberated South Africa persists.

In recent years, the convergence of the interests of South Africa with those of the United States and other Northern countries has become more apparent. Mandela’s successor as president, Thabo Mbeki, despite his revolutionary history, has cast himself as a U.S.-style business-friendly president. Austere economic policies, imitations of IMF/World Bank programs, have been implemented, and government facilitation of business interests has become a top priority. Mbeki has been the primary champion of the New Economic Partnership with Africa (NEPAD), an economic fundamentalist framework designed to attract support from the G-7 group of rich countries.

The direction taken by the South African government has inspired a significant backlash within the country. Social movements opposed to privatization of basic services and demanding land reform in a country where the minority white population still owns most of the productive land have gathered momentum. The country’s dynamics and strong economy will no doubt continue to have substantial influence on the rest of the region, but the direction of its policies is by no means set in stone.

— S.A. & N.N.N.

Soren Ambrose and Njoki Njoroge Njehu are with Solidarity Africa: Network in Action, based in Nairobi, Kenya.


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