3rd Annual Baraza
“From Myths to Mobilization: Reframing U.S. Africa Relations”
October 28 & 29, 2005
Show Me the Money: From Relief to Reparations
Even as Africa remains a deeply impoverished continent, the overriding
response of the international community is framed in terms of charity
instead of justice and structural change. Recent international summits
on Africa and celebrity concerts dwelled on the consequences of the continent’s
impoverishment instead of addressing the core of Africa’s economic
plight – a perversely asymmetrical economic relationship with the
rich world, which has entrenched the continent as the world’s most
exploited and impoverished region.
U.S. economic relations with Africa best highlight this asymmetrical
relationship – the richest country in the world pitted against the
most impoverished region. This relationship comprises several elements
- trade, investment, development assistance, and debt repayments.
The U.S. and other wealthy countries insist that integrating Africa into
the global economy through free trade agreements is the
most effective way to promote economic development. However, African governments
and civil society organizations demand structural change and redistribution
of resources. They also charge that the $350 billion rich countries spend
on agricultural subsidies annually remains a serious impediment to the
development of African agriculture and access to markets. Despite the
commitments made at Doha and subsequent World Trade Organization
(WTO) meetings, rich countries will continue to resist changes on contentious
issues that impede Africa’s economic development - such as agricultural
subsidies and intellectual property rights - at the WTO Ministerial in
Hong Kong in December.
Despite the hesitancy of African countries, the U.S.
remains focused on securing bilateral and regional trade agreements that
will promote greater access for U.S. corporations to African markets.
It continues to pursue a free trade agreement with the five-nation Southern
African Customs Union (SACU), which would guarantee preferential access
for U.S. companies to this export market. Since the Clinton Administration,
the African Growth and Opportunity Act (AGOA) has been
the bedrock of U.S. trade with Africa. Initiated to purportedly promote
trade and investment in Africa, AGOA offers negligible benefits to the
majority of African countries, instead reinforcing structural adjustment
programs, and advancing the interests of U.S. corporations. President
Bush extended the Act in 2004 and 37 countries are eligible for AGOA in
2005.
Africa is already a far more significant trading partner for the U.S.
than is widely realized. The continent holds abundant human and natural
resources, as well as large markets for U.S. products. In 2004, U.S. exports
to sub-Saharan Africa and North Africa were 63% greater than those to
Eastern Europe. Two-way trade between the U.S. and sub-Saharan Africa
was about $44 billion in 2004, up from $32.5 billion in 2003.
However, U.S. trade with Africa is highly concentrated on a small number
of major oil producers: Nigeria, Angola, and Gabon. In
2004, oil imports accounted for 73% of all U.S. imports from Africa (amounting
to $26 billion out of $36 billion). Heightened U.S. interest in Africa's
oil supply has served to increase the continent's strategic importance
to the U.S. and its future energy policies.
An enhanced economic partnership between the U.S. and African countries
requires more than expanded trade. The insistence of the U.S. on free
trade and free market solutions to Africa's development challenges fails
to address the structural sources of the continent's poverty. While trade
is certainly one important pillar within the framework of U.S. economic
cooperation with Africa, it is not sufficient to bring about economic
development. Foreign direct investment in Africa remains concentrated
on extractive industries such as oil and mining, and generates low tax
revenues while extracting exorbitant environmental and social costs. Diversified
investment, 100% debt cancellation for all African countries and development
assistance should also be essential components of a just economic relationship
between the U.S. and Africa.
Africa's $300 billion external debt burden is the single biggest obstacle
to the continent's development and diverts money directly from spending
on health care, education and other important needs. This year, largely
due to sustained pressure from global justice activists, the issue of
debt cancellation rose to the top of the G-8’s
agenda. In July, the G-8 Heads of State announced a deal on debt cancellation
for 18 impoverished countries, 14 of them in Africa, which have completed
a long-term program of World Bank/IMF-imposed economic reforms, known
as the Heavily Indebted Poor Countries (HIPC) initiative. The debt deal,
recently approved by the World Bank and IMF, provides debt stock cancellation
estimated at $40 billion. It may include 9 more African countries in the
next 2 years, if they, too, complete the HIPC program.
In addition, debt campaigners in Nigeria have demanded that Nigeria repudiate
its illegitimate debts incurred during the days of military dictatorships.
The lower House of Parliament duly passed legislation calling on the Federal
government to repudiate debt. Following this threat that emanated out
of democratic forces in the country, the Paris Club of 19 rich country
creditors announced an agreement to cancel some of Nigeria’s
external debt even though Nigeria is not among the HIPC countries.
While there seems to be some progress on the issue of debt, it is important
to note that these deals still leave the majority of African countries
trapped under the burden of illegitimate debt. Moreover, the G-8 deal
and the Paris Club deal for Nigeria fail to recognize the odious nature
of Africa’s debt. They further establish the precedent that future
debt cancellation will only be offered to countries that have submitted
their economies to the draconian dictates of structural adjustment policies
imposed by the World Bank and IMF.
African civil society organizations are increasingly moving beyond demands
for debt cancellation and increased aid to demands for their own governments
to repudiate foreign debts. They are also demanding reparations from the
wealthy minority of countries that historically enriched themselves through
the impoverishment of the African continent.
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Show Me the Money: From Relief to Reparations <
