G20: The Second Berlin War Against Africa

“China is there not to fight Africa’s battles, but its own.”

how-europe-underdeveloped-africaGermany holds this year’s presidency of the G20.[1] On 12-13 June, 2017, the German government organized a high-level conference in the historic city of Berlin where Africa was fragmented in 1885. The ostensible objective of the June 2017 meeting was to support private investment, sustainable infrastructure and employment in African countries, as well as contribute to the AU Agenda 2063.[2] The conference’s real effect is to deepen Europe’s colonization of Africa.

The “Compact with Africa”

The background document of the Berlin meeting had all the “correct” sound-bites that we have heard for more than 70 years in various institutions of global economic governance including the IMF, the World Bank, the OECD, the European Union and others.[3]

Listen to the sound-bites of the “Compact with Africa” — what I call the New Berlin initiative. It is expected to:

· Ensure that the investment compacts between African countries, G20 partners and international financial institutions are demand driven;

· Create a sound investment climate in relevant sectors of selected African economies;

· Build on existing regional and international strategies in the context of addressing root causes of migration;

· Strengthen the framework for private finance and investment — including investment compacts, which include a country specific set of measures to improve the macro, business and financing framework for private investment;

· Develop quality infrastructure, e.g. access to renewable energy… climate-related risk finance and insurance schemes… to implement the Energy Access Action Plan (Sub-Saharan Africa).

· Launch an initiative to stimulate employment and income generating opportunities for young Africans including the empowerment of women and girls through digital inclusion — eSkills4Girls.

And so on and so forth — the whole litany of well-meaning phrases that are music to the ears of African regimes but, in reality, aimed at advancing the interests of global corporate capital in Africa.

The G20 at Hamburg: Who is the G20?

The Berlin conference was followed by the G20 Summit in Hamburg on 7-8 July with the whole panoply of the giants of world capitalism — including Trump, Xi Jinping [2], Putin, Modi, Shinzō Abe, and Theresa May. They were greeted by rallies, raves and riots by an army of anti-capitalist street protestors and civil rights movements.

The G20 (the Group of Twenty) is essentially a western creation with participation of some selected countries from the global South. Look at the composition of the G20.

Group 1: Australia; Canada; Saudi Arabia; United States (4)

Group 2: India; Russia; South Africa; Turkey (4)

Group 3: Argentina; Brazil; Mexico (3)

Group 4: France; Germany; Italy; United Kingdom (4)

Group 5: China; Indonesia; Japan; South Korea (4)

Besides the 19 individual countries, there are 2 representatives from the European Union (EU): one from European Commission and a second from the European Central Bank. (That comes to a total of 21, not 20!)

It must be a genius who worked out this remarkable configuration:

· Western countries and their allies (like Japan, South Korea and Mexico) are spread out in 3 groups

· There is no grouping for Africa. The only African presence is that of South Africa (in the mixed bag of Group 2)

· In addition to a minimum of 11 members of the west and its allies (Australia; Canada; Saudi Arabia; United States; Mexico, France; Germany; Italy; United Kingdom; Japan; South Korea), there are two additional members from the European Union — representatives of the EU Commission and the EU Central Bank!

“The only African presence is that of South Africa.”

The G20 is more or less like the green room of the WTO, which makes all critical decisions on behalf of the so-called international Community.[4] However, this body is different from the WTO in some ways that might be important to bear in mind. One is that its decisions are not binding. Second is that while the G20 is a club of likeminded countries from the west (or close allies of the west), there is an increasing influence of China in it. The last summit of G20 was held under Chinese presidency in Hangzhou in September 2016. But at Hangzhou, Africa was sidelined.[5] China is a shrewd player in this game. It is there not to fight for Africa’s battles, but for its own, whilst, at the same time developing parallel institutions (like CAFTA, the China-ASEAN Free Trade Area, and the One Belt, One Road (the new Silk Route), and its own currency.

The financial iron fist of G20

G20 is the larger co-ordinating forum, but let us be clear about this: its real iron fist is its “finance track” which is coordinated by the German Federal Ministry of Finance headed by the dominant figure of Wolfgang Schäuble, the author of the financial package that has reduced Greece to a pauper nation held in captivity by largely German finance capital. The five African countries that were invited to the Berlin meeting in June — Côte d’Ivoire, Morocco, Rwanda, Senegal and Tunisia — wrote letters of appreciation to Wolfgang Schäuble.[6]

Germany is the real financial and industrial hub of Europe. The Compact with Africa was engineered by the German Ministry of Finance. In its essence, its thrust was to force open African doors to European and generally western investments. African governments have been told in no uncertain terms that for them to receive FDIs (foreign direct investments), they need to improve conditions for such investments. To this end, the World Bank, the IMF and the African Development Bank (ADB, which in reality is an extension of the WB, despite its name) produced a joint report that was well received by the G20 finance ministers and central bank governors at their meeting in Baden-Baden. This report proposed a catalogue of instruments and measures Africa should take to improve macroeconomic, business and financing frameworks. Using its financial muscle the west (through Berlin) is waging war against Africa.

“The conference’s thrust was to force open African doors to European and generally western investments.”

Western countries have promised massive funds for Africa: for example, for Agriculture $21bn per year; Energy: $55bn per year, and so on. These are just promises. I can say with knowledge of similar past promises, namely, that none of these would materialize, and if they do, they would be hedged by multiple conditionalities that undermine Africa’s sovereignty and human rights. The irony is that there is a net outflow of capital from Africa. According to the African Union’s High Level Panel on Illicit Flows, chaired by former South African President Thabo Mbeki, Africa loses more than $50 billion every year from such outflows.[7] These are “illicit” outflows. However, if you add the other “licit” or legal outflows — including super-profits that big corporations earn in Africa, and money sent through “transfer pricing” (which involves underpricing African exports and overpricing imports into Africa) — then the outflows from Africa, conservatively estimated, run into over $150 to $200 billion every year.

So what options does Africa have?

Options for Africa

As always, we need to make a distinction between the common people of Africa (and the civil society), and the regimes in control of state power.

At the G20 Hamburg meeting, Africa was officially represented by only one country — South Africa, which was obsequiously behaving like the neocolony that it is. Also present were some invited “guests” from Africa — Guinea, Kenya, and Senegal (why only these were chosen and by whom is anybody’s guess). We have already mentioned the countries that were invited at the July Berlin meeting on finance — Côte d’Ivoire, Morocco, Rwanda, Senegal and Tunisia. The latter, as I said, wrote letters — bowing and scraping — to the king of German finance capital, Wolfgang Schäuble.

This said, I need to add that this is no reason why we who come from the civil society should spurn our regimes. So here are my recommendations.

1. Resource sovereignty

We demand from our governments that the resources of Africa be used for the development of the people of Africa. Of course, this is easily said than done. For over half a century, “independent” Africa has been exploited for its resources (especially oil, minerals and agricultural commodities). It is time for a “global compact” that we write (not the empire), and we (the civil society) strategize amongst our friends in the west on how to upfront “our” global compact for wider discussion among civil societies in the west. [8]

2. Taking advantage of current geopolitical shift

The world is going through a significant geopolitical shift. We need to work out ways of using this to Africa’s advantage. I mention only two of its manifestations. One is the emergence of China as the global leader displacing the USA in many aspects of global economic governance. China (as I said above) is developing parallel institutions to the Bretton Woods structure (like CAFTA, the One Belt, One Road, and its own currency). This is opening space for Africa to play the west against China, and vice versa. There is nothing wrong in this. Also, Chinese investments in Africa are long term and are focused on infrastructural development as well as resource extraction; whilst western investments are focused only on resource extraction. Of course, let me repeat, China is a capitalist state with its own interests. In trying to, for example, reform the IMF and build parallel global economic structures, it does so for its own interests. That is to be expected. The question is how we in Africa can take advantage of this. (I will write more on this another time).

“It is important that we use Trumpism to demand protection of our industries from the dangers of ‘globalization.’”

The second development is the changing political-economy of the United States under President Trump. My advice is that, despite his famously unpredictable personality, we can benefit from his challenge to globalization and his “Make America Great” nationalism. At the G20 Summit in Hamburg, whilst China and India came out against protectionism (the policy of building firewalls of protection for national industries), Trump was in its favor. Trump has threatened, for example, to impose 20% tariff on imports of steel and other products from China, Germany, Canada, and other countries on “security grounds”. Whether he will achieve this is a different matter, but on this issue he is on our side ideologically. Why? It is important that we use this aspect of Trumpism to, also, demand for the protection of our industries from the dangers of “globalization” that has destroyed Africa’s industries (and now also agriculture).

3. Building state capacity to analyze and negotiate on global issues

At the national, regional and pan-African levels, we must continue with our nonviolent struggles for democracy and respect for our human rights. At the same time, we must help — yes, help — our governments to take the courage to stand up to the empire, and where possible to build the capacity of our state officials to analyze global events, and to negotiate in the global organizations for economic and political governance on matters related to trade, investments, and technology transfer and resource sovereignty.[9]

Yash Tandon is the author of Trade is War.

Endnotes

[1] The G20 is a group of twenty major countries that meet annually to discuss issues of global concern. See below for further details

[2] The AU Agenda 2063 is a strategic framework for the socio-economic transformation of the continent over the next 50 years

[3] See:https://www.bmz.de/de/zentrales_downloadarchiv/g20/2017_03_Fact_Sheet_G2… [3]

[4] At the 10th Ministerial meeting of the WTO in Nairobi in December 2015, for example, the green room was convened on the last day which, essentially, laid out the program agreed, first, between the US, Europe and Japan, and laid before the rest of the members selected from the South (including, of course, China, India, and Brazil). None of the countries of the South could overturn the decision made by the imperial countries. Although the chair was held Kenya, Kenya had no influence at all on the outcome. I was present at the Ministerial, and made an appraisal of the outcome. See: http://yashtandon.com/trade-is-war-a-postscript-to-wto-mc10/ [4]

[5] For a critical appraisal of the Hangzhou meeting, see: Aldo Caliari, G20 Hangzhou agreement unlikely to heal global economy’s malaise, SUNS #8316 21 September 2016

[6] Source: Federal Ministry of Finance. Also see: https://www.g20.org/Webs/G20/EN/G20/meeting_ministers/meetings_ministers… [5]

[7] Mbeki panel ramps up war against illicit financial flows. http://www.un.org/africarenewal/magazine/april-2016/mbeki-panel-ramps-wa… [6]

[8] At the 7 June 2017 meeting of civil society representatives from Germany and Africa in Berlin (where I was present) it was decided that those coming from Africa write a “declaration” to be widely disseminated and discussed. Once it is out, I’ll write more on it.

[9] This is what SEATINI (the Southern and Eastern African Trade, Information, and Negotiations Institute) has been doing since its creation in 1998.