Saturday, December 01, 2007

The economic realities of Africa and the New World Order: Africa accounts for 90% of world's minerals but half the pop. live in poverty

“Europe-Africa: the indispensable partnership”

Conference organised by the European Policy Centre

Brussels, 30 November 2007

Europe-Africa: the indispensable partnership

Ladies and Gentlemen,

In a week’s time, the 27 countries of the European Union and 53 African countries will be gathering in Lisbon for an historic summit, a summit that will open up new horizons for the Euro-African partnership.

The subject of my talk here today in the European Policy Centre is to explain why the European Union’s relationship with Africa has to change and why that change is so crucial to both continents:

- The world is changing and Africa’s relationship to the world is changing in the light of the new economic reality and the geopolitics of globalisation.

- Africa is coveted and uses this to its advantage, but its situation is still precarious.

- Europe and Africa have a mutual interest in forging an innovative, global and balanced partnership to exploit the opportunities that the new world order offers and respond to its challenges.

The “new frontier”: the rediscovery of Africa’s geostrategic significance

At the dawn of the 21st century, the world is changing under the combined influence of the globalisation of the economy and the “multipolarisation” of power. And Africa is evolving and changing more than many other regions of the world. Africa is once again being courted by all the global powers, with the United States and China leading the way. It is no longer regarded as a “burden”, but as an opportunity, a “new frontier”.

The renewed interest in the continent of Africa is centred on three sets of challenges: economic challenges, strategic and security challenges, and challenges over power.

Economic challenges:

The increasing globalisation of the economy is reflected in the greater than ever determination of the economic powers – both traditional and emerging – to access the vast resources of the African continent to pursue their continued economic expansion.

Africa thus has a pivotal role in the new geopolitics of energy, driven by high demand for oil and gas. With 10% of the world’s oil reserves, Africa has taken on strategic importance in the race for oilfields and in the diversification of the sources of supply. African countries are seen as “safer” that other producers in the Middle East or Latin America which are quick to use the “oil weapon” for ideological or political ends.

The new geopolitics of mineral resources have brought about another “rush” to Africa because the continent has the biggest reserves of base metals and rare minerals which fuel industrial growth and the rapid expansion of new technologies. Africa accounts for 90% of the proven world reserves of platinum, cobalt and chromium, and more than 60% of reserves of manganese and coltan.

Strategic and security challenges:

Africa has also become a theatre of global strategic challenges, whether they be Islamic terrorism, nuclear proliferation, illegal trafficking or failing states which threaten peace and stability. As home to large numbers of the Arab and Muslim communities, Africa – and in particular the Sahel region and the Horn of Africa – is in the firing line of the effects of the volatile situation in the Middle East and of the stand-off between the jihadist movement and the war on terrorism.

One of the other strategic challenges to bring Africa to the forefront of the international stage is, of course, poverty. Out of a population of over 800 million, Africa has 400 million living in extreme poverty on less than one euro per day. The human development indices (life expectancy, income, literacy, access to health care) of most African countries are amongst the lowest in the world. The war on poverty in Africa has mobilised the international community as never before, whether it be the United Nations, the G8 or, of course, the European Union which is leading the relief effort in Africa.

There is also the problem of global warming, which has led to a rise in the number of natural disasters and, in Africa, a succession of extreme weather events like we saw in 2006 and 2007 with unprecedented flooding following a period of severe drought. The impact has been widespread and serious, and risks ruining years of development: damage to harvests, conflict arising from competition over the dearth of agricultural land, famines, millions of displaced persons.

Challenges over power:

The forces I have just described have now made Africa the scene of a new “Great Game” played out between the powers that shape global geopolitics, with the United States, China, India and Brazil, to name but a few, jockeying for position.

China is the most striking example: Africa-China trade has increased five-fold over five years to stand at more than 50 billion dollars in 2006. The EXIM (Export-Import) Bank, the financial arm of Chinese foreign policy, is planning a portfolio of 20 billion dollars in investment in Africa over the next three years to finance the construction in record time of roads, railways, oil and gas pipelines – infrastructure covering the whole of the continent. China’s five billion dollar loan to the Democratic Republic of the Congo on 17 September is a sign of its new financial muscle: three billion is earmarked for infrastructure (i.e. some 3200 km of railways, 3400 km of roads, 31 hospitals and 5000 units of social housing), and two billion for “mining partnerships“.

China is also seeking to portray itself as a “responsible global actor” in Africa by taking part in United Nations’ peacekeeping operations there (1000 Chinese soldiers deployed), while at the same time adopting a policy of total non-interference in African political governance.

The United States is also back in force in Africa as part of its “global strategic vision“. The US sees Africa as a means to carry out its energy diversification policy: within two years, Africa should account for 25% of its oil supply, against 16% at present. It is also taking a bigger stake in mining activities in central Africa. It regards the continent as one of the frontlines in the war on terrorism, which largely explains the creation in February 2007 of a strategic command for Africa, AfriCom, which will become operational in 2008.

Another emerging power, like China in search of energy and raw materials, India imports gold, wood, oil and minerals to fuel its growth, with the strong support of the Indian diaspora in East Africa.

But does Africa benefit from this “Great Game” for influence and power?

Africa - an emerging power? Strengths and weaknesses

It will not have escaped the attention of regular visitors to Africa that the continent is on the move, both politically and economically.

The wars that ravaged Africa in the nineties are now far less frequent. Coups d’etat, once the norm, are now giving way to democratic governments which, though often fragile and far from perfect, are nonetheless indicative of a positive shift. What is evident above all is the will of the governments and people of Africa to take their fate in their own hands, both within their own countries and on their continent.

Africa would like to be active, not passive. It is seeking to assert itself as an international player of note, and is getting itself organised. The African Union is becoming the institutional framework for governance on the continent. Its agenda no longer just includes internal African problems, but also the major global challenges of the 21st century, such as climate change, energy and the technology revolution. NEPAD (the New Partnership for Africa’s Development), a sort of economic counterpart of the AU, promotes itself as a “vision and strategic framework for Africa’s renewal” and the means for promoting Africa’s integrated socio-economic development.

A further sign of the African political renaissance is the greater strength and diversification of Africa’s strategic continental relations and partnerships. There are of course the traditional partners, like France, the United Kingdom, the United States, even Japan.

But Africa is entering increasingly into “South-South” partnerships with powers like China, a good example being FOCAC (the Forum on ChinaAfrica Cooperation) which brought African and Chinese leaders together for the third time in 2006, and also the Arab League and Latin America, with which Africa held a summit last year.

In fact the African countries which were formerly supplicants are now being wooed themselves. And they are putting this to their advantage to play one off against the other and exploit the situation to the full. African votes in international bodies have probably never been so courted before.

On the economic front, Africa has now entered the era of globalisation. For the first time in more than thirty years, Africa has registered a real GDP growth rate of more than 5% for the fourth year in a row. The last World Bank report highlights Africa’s ability to learn the lessons of the collapses of the 80s and 90s, to improve macro-economic management, to rely more on the private sector and to integrate itself better into the new world economic order.

The signs are encouraging. But the limits and weak points of Africa’s new dynamism should not be underestimated.

On the political front, despite the efforts made by African states in the African Peer Review Mechanism (APRM), governance remains a major challenge.
And there is a strong temptation for many African leaders to give in to the lure of the easy money flowing in. Aid in the form of “unconditional” grants, as in China’s case, carries the risk of dragging the beneficiary countries back into debt.

The attraction of foreign powers to African minerals and oil entails exposure to the risk of the “resource curse“: will the wealth generated be reinvested to diversify the African economy and move it upmarket to higher value-added manufactured products? Will it be used to alleviate poverty and make progress on the Millennium Development Goals? Or will the money be lost through corruption, or be used for high prestige projects that are ultimately worthless, and will African countries remain “rentier” economies?

It is a sobering thought that Africa’s share of world trade has fallen from some 5% in the 1980s to 2% in recent years. And that Africa’s share of total world foreign direct investment is still marginal at 1.8%. African markets are flooded with manufactured products that are “made in China” or “made in India“, in direct competition with local products. We only have to remember the decline in the African textile sector. This demonstrates once again Africa’s relative fragility and how far it still has to go to take full advantage of the globalised economy.

One final thought. There is the risk that strategic global problems, like the war on terror or rivalries between major powers, might turn Africa into a theatre of conflict and introduce divisions and tensions that are foreign to Africa.

But let us now turn to Europe. Where does Europe stand in the African Great Game?

Africa-Europe: a special relationship in need of overhaul

Europe occupies a unique position vis-à-vis Africa, by virtue of its geography of course, but also by virtue of history which has left us a common multifaceted legacy: there are the languages we share and the common, sometimes painful memory of the colonial period; there are the cultural exchanges; and then there is the role of the diasporas which have developed such personal human links between the two continents.

Economically, Europe is not only Africa’s biggest trading partner but, above all, the biggest importer of African agricultural produce. It accounts for 68% of the value of foreign direct investment in Africa. But the other unique factor that strengthens these ties is the steadfast support shown by Europe over 40 years as the leading donor of official development assistance, assistance in the form, need I remind you, of grants and not loans.

However, the European Union and its Member States do not appear to be taking advantage of their unique position. There are a number of reasons for this.

Firstly, there is the attitude of the Member States. The colonial heritage and the power instinct have created a situation where some Member States have strong bilateral links with their African partners. This only serves to complicate Europe’s position as a global partner for Africa.

Then there are those who would live off past dominance. Yet the erosion of European positions in the face of international competition and Africa’s relative shrinkage are clear for all to see. Despite an increase in the international financial flows related to the activities of European contractors from $53 billion to $120 billion since 1990, the proportion of these activities in Africa over the same period has fallen from 15% to 5%…..

Afro-pessimism is still too prevalent in Europe, not just in the circles of power, but in public opinion too. Africa continues to be regarded as a “problem”. In counterpoint to this perception is the moralising, charitable approach that ultimately provides a blinkered view of the relationship with Africa.

For their part the Africans are taking a much more assertive and demanding attitude towards Europeans: African leaders criticise European countries and Europe more frequently for their overcautious, backward-looking approach and make it clear to us that Africa is no longer Europe’s private domain.

But Africans also expect the EU to be ambitious and committed in its approach to Africa. Some days ago in a newspaper article Senegalese President Wade, despite some very critical comments directed at Europe, reminded us of the importance for Europe and Africa to forge a common destiny by laying the foundations of an objective alliance based on our complementarities.

The challenge facing Europe therefore is to change the nature of its relationship with Africa, to create its “strategic revolution” on Africa.

That is what the European Commission started in 2005 when it proposed its strategy for Africa and stated its desire to make Africa one of the top priorities of the EU’s external action. The key to this is to radically re-form the partnership between Europe and Africa.

The new Europe-Africa Partnership - comprehensive, ambitious and sustainable

There are three main components to the new Europe-Africa partnership.

One, a renewal of the principles of our relationship on the basis of a balanced sharing of responsibility between partners with equal rights and duties. We must turn the page on the Congress of
Berlin once and for all. Not to change the maps written at Berlin - which would be irresponsible, but to change the donor-recipient patterns of behaviour which generate on each side paternalistic or supplicant attitudes and reflexes. Together, we should be able to engage in a more honest, a more open political dialogue, where each party assumes its responsibilities.

Getting this Africa-Europe political partnership right, sending a clear signal that Africa-Europe relations are free of complexes and are both interdependent and pragmatic will be the key challenge at the Lisbon Summit.

This clear signal must be reflected in the common political declaration adopted in Lisbon and in our debates on the five topics on which the Summit will focus: (1) governance and human rights; (2) peace and security; (3) migration; (4). energy and climate change; (5) trade, infrastructure and development.

Above all, we should not be defensive on issues such as the Economic Partnership Agreements (EPAs), the situation in Darfur, nuclear energy, migration, Zimbabwe or the International Criminal Court. Yes, these are difficult subjects. But we should not be afraid of friction. Because the quality and strength of our partnership will depend on our capacity to tackle together even thorny issues in a climate of respect and trust, not drama and dogma.

Two, developing our relations around an ambitious, operational agenda.

The Joint Strategy and Action Plan drawn up by the EU and the AU for the Summit embodies this approach. It proposes:

A comprehensive partnership that goes beyond development. What this involves, in addition to the necessary development dimension, is the establishment of dialogue and political and economic cooperation on issues of common interest such as governance, trade, the private sector, culture and new technologies, not forgetting energy, climate change and migration. Africa can no longer be the exclusive preserve of foreign or development ministers.

A comprehensive partnership that goes beyond institutions. The whole of civil society, including the social partners and the private sector, will be fully involved in the implementation of the strategy. The Lisbon Summit will also play host to a large number of forums and conferences, reflecting the depth of this multilayered partnership (business forums, Euro-Africa parliamentary meetings, NGO forums on human rights, meetings between European and African local governments, and so on.).

A comprehensive partnership which is projected outwards. Our cooperation must enable us to define jointly our common interests and to make a joint case for them in international institutions and frameworks, so giving us greater potential influence. Is it so hard to imagine Europe and Africa combining forces at the next conference on climate change in Bali to push for an ambitious post-Kyoto agreement? The other aspect of this outwards projection will be to put Africa more systematically on the agenda of our meetings with other partners active in Africa. Here I am obviously thinking of China, India, Brazil, Japan, not forgetting, of course, the United States.

A comprehensive partnership which is operational and pragmatic. Lisbon will be the starting point of a process. Our partnership is backed up by an Action Plan for 2008-2010, which in turn is structured around eight strategic partnerships designed to achieve action and results.

Africa-EU Partnership for Peace and Security
Africa-EU Partnership for Democratic Governance and Human Rights
Africa-EU Partnership on Trade and Regional Integration
Africa-EU Partnership on the Millennium Development Goals
Africa-EU Partnership on Energy
Africa-EU Partnership on Climate Change
Africa-EU Partnership on Migration, Mobility and Employment
Africa-EU Partnership on Science, the Information Society and Space

- It is a partnership which commits the individual Member States as much as the EU collectively. Member States which wish to do so are invited to assume leadership, singly or severally, for the implementation of some of the partnerships proposed in this first action plan.

Three, a new, up-to-date approach to development in Africa.

Aid is never an end in itself. Only growth, which produces wealth, can reduce poverty effectively and sustainably and achieve the Millennium Development Goals. Development aid should be a way of supporting African countries’ development strategies, not of imposing our charity and our view of development.

The spectacular success of countries like Rwanda or Tanzania makes this clear. These countries have succeeded in combining a clear, long-term national vision of equitable economic development with good governance and substantial, well-structured development aid. It is such virtuous circles that we have to help create and replicate in Africa.

At the urging of the European Commission, the EU has thoroughly revised and modernised its development policy, of which Africa is the leading beneficiary.

First, from the quantitative point of view, the EU took an unprecedented decision to allocate 0.56% of its GNP to development aid by 2010 and 0.7% by 2015. It also pledged that half of the extra €20 billion thus allocated would go to Africa. And we are on track to do this.

Qualitatively, the Commission has mobilised the Member States to make a better division of labour so as to avoid spreading aid too thinly or leaving “aid orphans”. Can we speak of effective aid if, for example, in Tanzania there are no fewer than 600 health projects, each with a budget of less than a million euro, most of them to combat HIV/AIDS, whereas this scourge calls for coordinated action?
We have to avoid a plethora of different approaches, dispersal of resources and an array of tools and conditions. What we need is what I call donors’ governance, something which is vital if African countries are to manage development aid efficiently.

The counterpart of this donors’ governance is improved governance on the part of African countries. Development, poverty reduction and security depend to a great extent on states being able to perform their essential public duties such as providing access to health, education, justice and administration, being able to guarantee and protect individual rights and fundamental freedoms, and manage wealth responsibly and impartially in order to ensure its equitable redistribution. The prime responsibility of African states and leaders is to provide this exemplary governance of the state.

The President of Rwanda, Paul Kagamé, summed up this dual requirement of governance well when he said, and I quote: “actions will only bear fruit when Africa substitutes external conditionality – that is, doing what the donors tell us to do – with internal policy clarity – that is, knowing ourselves what we need to do and articulating this vision clearly to our development partners.”

It is with this in mind that the European Commission has put governance at the heart of our 10th EDF programming exercise with our African, but also Caribbean and Pacific, partners. Our objective is to support and encourage states which want to embark on reform. This calls for a true dialogue with our partners, dialogue that embraces the sensitive issues of respect for human rights, democratic principles, management of natural resources and social governancerelated issues. We offer additional financial resources to those which take this option, resources I have named the “incentive tranche“, which totals €3 billion.

This means at last using development aid to further integration into world trade, because this is the principal engine of growth and will enable us to eradicate poverty on a wide scale. The examples of China and India, and before them South Korea, Singapore and Malaysia, are before our eyes each day.

Any change provokes resistance. It is therefore our common responsibility to overcome such fears and to promote our partnership. It is now up to each one, European or African, to make their choice. It is up to us to seize this opportunity by unveiling at the Lisbon Summit a more responsible and a more political partnership built on greater solidarity. If we fail, Lisbon will remain in the collective memory as a great missed opportunity, and as a triumph of conservatism and the view that development is a form of charity. But I hope and believe that together Europeans and Africans will be able to rise to these historic challenges.

Ladies and Gentlemen, thank you for your attention.

Original article posted here.

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