Sunday, 20 May 2007

Supersonic statistics and global asymmetry

20 May 2007
Shangcheng Road
Pu Dong

Dear Confidentialers,

It's been a week of supersonic statistics and global asymmetry here in Shanghai, which this week hosted one of the most successful annual meetings of the African Development Bank (AfDB) to date. Bankers and officials are checking their spreadsheets as they head for the Pu Dong international airport after a week of business negotiations, punctuated by acrobatics and firework displays.

Some numbers stick in the mind. Firstly, that China's Exim Bank will be financing some US$20 billion of trade between China and Africa over the next three years, according to the AfDB's President, Donald Kaberuka. In an interview with Africa Confidential, Kaberuka said that the $20 bn. figure emerged from a series of discussions with Exim Bank Chairman Li Ruogu.

The second figure is that Chinese companies are now winning about half of all state-funded public works contracts in Africa, according to the latest research from the Paris-based Organisation for Economic Cooperation and Development. The third figure is that China's trade with Africa in 2006 was worth $55.6 bn.

Put together, these three figures give an idea of the pace of China's commercial inroads into Africa. Remember that just six years ago Africa-China trade was just under $10 bn. The latest projection is that Africa-China trade will top $100 bn. by 2010.

And now the last statistic, I promise: this year, China's foreign exchange reserves are running at $1.41 trillion (that's a thousand billion) and due to top $2 tn. by 2010. That is why the $20 bn. worth of deals being done with Africa over the next three years looks feasible - and it may turn out to be an under-estimate. Perhaps, the Chinese project funding may not be cheap or transparent. However, Chinese infrastructure projects are often priced at some 20-30% cheaper than Western contractors, which may explain why they're starting to dominate the public sector market. And they don't come with sermons about how to run a government.

Senegal's Finance Minister Abdoulaye Diop told a seminar on Asian trade with Africa that the Chinese 'treat us like adults.' South Africa's Finance Minister Trevor Manuel said that Chinese engagement in Africa had proved much more benign than that of Europe over the past 300 years. Certainly, Shanghai's hosting of the AfDB meeting was an enormously successful marketing and diplomatic operation.

Where's the asymmetry you ask? While the Shanghai meeting was getting on with business, Europeans and Americans were tussling over the leadership of the World Bank in Washington DC, in a public row that has gravely damaged the institution. This might well be the week that irrevocably changes the international financial institutions. European officials in Shanghai spoke openly about switching funding from the World Bank to the African Development Bank.

A bigger issue is at stake. How representative are these financial institutions and how well are they governed? The Paul Wolfowitz saga has reopened questions about the manner in which Europe regards it as having the right to provide the head of the International Monetary Fund, while the United States has the right to provide the President of the World Bank. Oddly, some European ministers want to end the precedent of the USA providing the World Bank's leader but see nothing wrong with Europe benefiting from a similar arrangement at the IMF. They have opened a debate that is likely to mean wholesale reform of both institutions - partly for reasons that were on show in Shanghai this week.

Asia is now a major global player in the politics and economics of development. The G8 rich countries club meeting in Berlin next month wants China and India to sign up to its rules on aid and debt, and contribute more to transparent multilateral aid funds. In exchange, Asian politicians are asking for better representation and more say over policy in these organisations. And after the past week in Shanghai, they're likely to get plenty of votes of support from African officials.

In Africa Confidential this week, I'll be looking at how this backdrop will shape economic and political developments in Africa over the next year and our correspondents across the continent will bring you analysis of the week's main political developments.

Yours confidentially

PS. I must include a correction to the editor's email of last week that touched on the history of slave trade abolition. One of our subscribers, an historian, helpfully pointed out that the reference to the dates of United States' abolition was wrong. When they wrote the US constitution in 1787 '. the drafters included a provision (Article I, Section 9, clause (1)) barring Congress from banning the slave trade until 1808. In 1808, Congress banned it. Slavery, of course, took a civil war in the 1860s. Brazil, by the way, continued to have slavery (as opposed to the slave trade) until the 1880s.'

Monday, 14 May 2007

We don't do apologies

Luxembourg Gardens

Dear Confidentialers,

After sending another Africa Confidential to the printers in the smallish hours of Thursday morning, I jumped on a Eurostar on a mission to see President-elect Nicolas Sarkozy spend an uncomfortable half hour with outgoing President Jacques Chirac at the delightful Jardin du Luxembourg in the heart of the Latin quarter in Paris. The occasion was the unveiling of a statue of a broken chain to mark the abolition of slavery by France in 1848.

That was the Year of European Revolution. Somehow those phlegmatic Anglo-Saxons across the Channel had managed to pass a law barring the participation of Brits in the slave trade 41 years earlier ­ without taking to the streets in the continental way. Several Brits, however, colluded with the likes of Yoruba plutocrat Madame Tinubu to continue their slave-raiding and transporting operations, moving down the coast from Lagos to Ouidah, the capital of the trans-Atlantic slave trade, until Brazil finally abolished it in 1851. It took the United States a little longer and a civil war to follow suit.

The French law went further than than William Wilberforce's law, which was finally passed in Westminster in February 1807, and declared slavery a crime against humanity. Accordingly, last Thursday's event prompted some Gallic breast-beating about the atrocities of the vile trade, well, mainly by the outgoing President, whose emotional outpourings on Africa are unlikely to be imitated by his successor.

Nicolas Sarkozy, ­ like his Anglo-Saxon pal Tony Blair, ­ doesn't do apologies for the slave trade, nor for colonialism, nor indeed for much else. That morning's newspapers in Paris were excoriating Sarkozy and his wife Cécilia for luxuriating on a yacht belonging to corporate raider Vincent Bolloré. Sarko's response was that there was nothing for which to apologise.

He was a shade more diplomatic in the Jardin du Luxembourg at the statue, chatting for a few minutes with his arch-critic, Guadeloupe-born French football international Lilian Thuram. Afterwards, Thuram, who accused Sarkozy of insulting people caught up in the 2005 riots, said social issues were too important to be personalised. Initially, it seems, Sarko is on a charm offensive and he will be advised on African matters by people like his spokeswoman Rachida Data, whose parents come from the Maghreb, and immigration specialist Rama Yade, from Senegal.

Sarko's dear mère, Andrée, is doing better in the French press than his wife Cécilia, who distinguished herself by saying that she was proud that not a drop of French blood flowed through her veins. By contrast, Andrée tried to quell the fears of those who think her son might occasionally spin out of control. 'He was a little excitable when he was a small boy,' she told journalists, 'but these days he's very calm.' Tell that to the metaphorical marines in the Paris suburbs, Maman Andrée.

Sarko's week ended with the arrival in Paris of a freshly resigned Tony Blair, who had earlier feted his friend's election win with a congratulatory broadcast on Youtube in excellent tele-prompt French: Sarkozy would be 'strong leader', able to build a 'good and close relationship' with Britain. That makes the French a little suspicious, particularly when followed by equally fulsome plaudits from US President George Bush.

Much is likely to change in France. Sarkozy said he will try negotiations first; if that doesn't work, it will be the strong arm of the state. His relentless focus on restructuring France's domestic economy and social services has big implications. Immediately, Sarkozy has to raise 30 billion euro: that's to pay for his proposed tax cuts and for the restructuring of France's lavish public services. Africans believe somehow they will foot the bill. Sarkozy has already said that the French economy does not need Africa. Is he about to prove it?

Poor handling of the Paris-Africa axis, pretty wobbly in recent years, could destroy it altogether. Tight on funds, the French Ministry of Cooperation may spend less on development aid. Certainly Sarkozy has pledged to end Françafrique, the self-interested network of Franco-African political and business friendships.

More interesting and maybe more important is Sarkozy's proposal for a Mediterranean Union, bringing all the North African countries and Turkey together with the Southern European states of which France is the biggest economic force. The proposed Med Union will have its own institutions and may have common commissions with the European Union. With all that North African oil and gas sloshing around, it's a clever commercial idea even if the politics may be problematic ­ Sarkozy sitting down with Brother leader Moammar el Gadaffi of Libya, perhaps.

As Sarkozy comes steaming or sailing into power, his pal Blair leaves port in a tightly choreographed adieu ­ well at least until the next time. For Africa, the next time is likely to be pretty soon because, along with climate change and the environment, one of the main focuses of the new Blair Foundation will be African development. Indeed, it's a pity that Blair has booked a trip to Washington to bid farewell to President Bush; he might have learned more if he'd flown east to Shanghai for the African Development Bank Annual Meeting. That's where I'll be reporting from this week on Africa's fast-growing relations with Asia and their economic and political implications.

Before then, don't forget to check our latest edition featuring articles and analyses on: how President-elect Umaru Yar'Adua's transition is working in Nigeria; South Africa's Democratic Alliance party and its new leader; the diplomatic pressure ramping up on Sudan's government over the Darfur holocaust; Mauritania's new President and the challenges ahead; Zambia's ex-President Frederick Chiluba's state-funded haute couture; vulture funds; and an exclusive report on the state of Africa's political parties and parliaments.

Until next time in Shanghai,

Yours confidentially