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David Shinn - Great Decisions

David Shinn

David Shinn is an adjunct professor at The George Washington University’s Elliott School of International Affairs. He previously served as United States Ambassador to Burkina Faso and Ethiopia.

Transcript

What is happening in Africa today on the economic front? What’s changed over the past few years?

The main difference is that you have a growing middle class in Africa coming off of a very small base. And you have a significantly increasing GDP growth rate throughout the continent; now some countries obviously a lot better than others. A lot of it is being driven by oil production. But nevertheless the figures, the statistics, are quite good in the last 5, 6 years.

What about democratic developments, new institutions, and handovers of power; are those increasingly common the continent?

It’s very mixed, you have good news stories and bad new stories, and they frankly just about equal out. Frankly for every good development in terms of democratization, I can point to one where there’s a setback, and the net result is pretty much a wash right now.

Where are we seeing positive developments on the democratic front?

Well, you’ve seen positive developments in Senegal, for example. You’ve seen them in the last several years in Tanzania on a continuing basis; Botswana on a continuing basis; Mauritius on a continuing basis; Kenya is generally positive; Malawi has had a good changeover; Cape Verde has a good record. So there are a number of positive stories; Uganda’s a positive story; you have a number of good case studies.

You mentioned oil, what are other resources that foreign investors are interested in?

The whole range of mineral wealth, everything from ordinary things like iron ore to more exotic minerals like tantalum and platinum. They’re all available in Africa, and usually in large quantities in one place or another on the continent. These are the minerals that countries like China are interested in.

What about agriculture, is that a sector that’s growing across Africa?

Agriculture has the greatest potential for growth, and indeed the African countries should be focusing more on agriculture and improving the nature of the agriculture they currently have through better techniques, better environmental practices, better use of fertilizer, etc. But unfortunately they’re not doing as well with it as they should and in some cases they’re missing a huge opportunity. Many countries that used to be food self-sufficient are now importing food from the outside. That’s a bad trend.

Which countries are interested in Africa and resources?

Well, at the top of the list by far is China, to be followed by India in terms of sheer magnitude; of course these are the two most populous countries in the world so that isn’t surprising. But also Western Europe continues to be a major importer of African resources, and the U.S. is a major importer of oil, in fact it imports more oil from Africa than does China, but not more minerals.

Can it be seen as a postcolonial re-colonization of Africa?

No I think that’s very misleading. I know a lot of analysts using that terminology, I disagree with it. You can make allegations of mercantilism, and there certainly are elements of that. But to me, neo-colonialism suggests outside governmental control and that just simply is not the case. I mean, I don’t know of any outside country, including China, that is trying to exercise any governmental control over any African country. So the whole neo-colonial argument to me is specious.

African populations are growing, do others see Africa as a growing potential consumer market?

Not only is it going to happen, but it has happened. I would argue that one of China’s main interests in Africa, as is the case for other countries in the world including the U.S., is Africa serves as a growing market for their imports. The percentages are very low right now; it’s only about 4% of all of Chinas trade is with Africa, that’s very small. It’s even less for the U.S., about 2%. This is a growing market for Chinese goods and American goods and the country that realizes this sooner is going to take advantage of it.

What are other Chinese interests in Africa?

In addition to using Africa as a market for it’s exports, the first interest is using Africa as a source of its raw materials, particularly oil and minerals, but also increasingly agricultural products. The third interest would be keeping Taiwan, diplomatically, out of Africa. In other words 4 countries in Africa still recognize Taiwan, they’re small countries; but China has this very strict policy of a one China policy, and it does not want any country in the world to be recognizing Taiwan diplomatically. If they want to engage commercially with Taiwan that’s fine, but not to recognize them diplomatically.

The final interest that China has in Africa is you have 54 votes in the United Nations, that’s more than one quarter of the membership of the UN. China’s not stupid, they look at that block, not that it votes as a block, but there is a tendency in the African countries to follow each other in key votes. And they look at those votes and say this is a very important group of countries that we need to cultivate, and they do. And it’s not just in the UN, it’s in the World Trade Organization, it’s in the Human Rights Council, it’s in the UN, and a variety of other organizations.

What amount of investment is China placing in infrastructure and how is that effecting the continent?

You have to make a distinction here between what China is doing to benefit commercially – that is gaining contracts in Africa, that Chinese companies go in and build dams, roads, bridges, etc. And it is the building in Africa today, without parallel; it is doing more infrastructure building than probably all of the other countries in the world combined today. But it’s doing it for commercial reasons. It’s providing large loans to the governments that want these infrastructure projects and the loans have to be paid back; this is not a gift.

Admittedly, the interest rates are quite low, they are very competitive with commercial loans; but then it’s a Chinese company that comes in and builds the project, almost without exception, and oftentimes there will be a Chinese labor component; so they are getting 10, 20, 30, maybe up to 40 percent of the labor on any particular project is Chinese labor, so they’re keeping Chinese employed in some instances.

What about the large loan to Africa recently?

Oh, that was simply an increase. I think it was an increase from 10 billion to 20 billion dollars that was announced at the forum on China Africa cooperation. What’s not clear is how many years that will cover, I think it might be a five-year period. Essentially it’s an extension of Chinese policy, although expanding to some extent the amount of money that China will make available for these low interest loans, which will probably be used for infrastructure projects, but it will be basically more of the same. I don’t see any significant change in that except the amount is somewhat higher.

What about criticism of Chinese workers in Africa?

There are some instances where that has happened, but you have to be very careful when you look at that argument and look at it on a country-by-country basis. Let me take the example of Angola, which I know fairly well. About 40% of the labor component of Chinese built infrastructure projects in Angola is Chinese. The Angolan government has gone along with that, and in many cases you could argue it’s necessary because the Chinese labor has to run heavy equipment; has to do particularly skilled jobs for which there is not an Angolan equivalent.

On the other hand, if some of these Chinese laborers are involved in spreading asphalt or laying bricks, as some of them are, then you have a legitimate reason for criticism that there are Angolans who could do those jobs.

Is China obligated to take human rights and fair wages into consideration?

Human rights gets to be a very controversial issue. The Chinese position is that they don’t engage in political conditionality, period; and that includes human rights issues. They really don’t get involved in human rights. On the other hand, they claim that they will follow all of the local labor laws and safety regulations; and I think in all fairness, the Chinese government tries to do that. The problem is that not all Chinese companies are as careful about adhering to local safety regulations and labor laws as their government would like them to be, even in the case of state-owned companies.

So there have been instances, such as the copper mines in Zambia for example, where there have been some serious abuses of both safety regulations and complying with local labor laws. There have been allegations of similar indiscretions in other cases on the continent. But I don’t think the Chinese government is trying to perpetrate these violations; it’s just they have so much activity that you’re bound to have some instances where it doesn’t work out like it should.

Why are people critical of the Chinese working with corrupt governments?

Well certainly Western countries are very critical of this, and in my view properly so. The dilemma comes when you start talking with African governments, particularly African governments that are challenged from a human rights perspective, whose records are not good. Those governments welcome the Chinese position and in fact I have not forgotten that was made to me during one of my visits to China by a Chinese official. He said, “we have never been asked by an African leader to attach political conditions to our assistance.” Well, surprise, surprise, obviously any government does not want to have conditionality if they can avoid it.

Where the problem really comes though for China is not with the governments in Africa, but with civil society, oppositional political parties, nongovernmental organizations, labor unions that may be pushing for better human rights conditions. They sometimes get pretty cranky when they see the Chinese not taking a stand on grievances that they think should be dealt with.

What’s China’s historic relationship with Africa?

Well, if you go back to imperial China, there actually was trade with China going back more than 2,000 years, which is demonstrated by the Chinese porcelain that is being found on the east African coast. So trade has been there for a long, long time. You had some modest involvement with Africa by the Chinese republican government before the communist government took power in 1949. It was not very intense, it was not very significant, but it did exist and it did have relations with a couple of countries. Of course, there were very few African countries that were independent prior to 1949, so it didn’t give much option for relations with Africa.

Starting in 1949, the Chinese engagement with Africa was rather slow. Obviously, it was preoccupied with domestic conditions inside China. And it was not until the mid-late 1950s that China finally focused on the African liberation movements and decided to support them significantly by providing arms and providing military training to gorilla groups. That’s where China’s real involvement with Africa began. That continued throughout the 1960s, well into the 70s; in the 80s you had a period of drawing back from Africa. In the 90s there was a reengagement, mainly for commercial reasons; this is when China’s economy is starting to grow and they needed Africa for resources and you started to see that with great interest from China’s side by the mid 1990s.

So what does China’s renewed economic engagement mean for the U.S. ?Are we falling behind?

Yes, we are falling behind, and so is the West generally; particularly the former colonial powers. But it’s very important to point out that it’s not just China that is reengaging in Africa; it’s India, it’s Turkey, its countries you would not even anticipate like Iran; it’s Russia reengaging to some extent; it’s Brazil; there’s a whole range of countries that are active in Africa today that were not particularly active 20 years ago. And this is having an impact on the U.S. and on Western policy generally. Essentially these emerging nations are replacing, to some extent, what the West used to do in Africa, so it is of concern.

What are some of the advantages the Chinese have over the U.S. in terms of ability to engage in Africa?

Well, because of the nature of the Chinese decision making process, they can make decisions a lot faster than the U.S. can. The U.S. has to negotiate funding between the white house and congress. This can be a very time consuming arrangement. China can make those kinds of decisions on a dime in total secrecy without anyone really knowing how the decision got made. Most of the larger Chinese companies, are state-owned companies, the Chinese Communist Party, and the Chinese bureaucracy; can in effect direct these Chinese companies to engage in certain parts of Africa where American private companies, for whatever reason, just won’t engage or don’t engage.

Most importantly the link between financing by the Chinese government; and the Chinese companies, both state-owned and private Chinese companies is so close, and there is so much more money available, that they have an enormous advantage when it comes to investing in Africa.

Where are some areas that the U.S. been successful economically, and where can it do better?

It’s obviously been successful for decades with companies like Boeing, because Boeing only has one competitor and that’s Airbus; there’s no Chinese competitor. The U.S. still has higher quality material than China has, and to the extent that Africans realize that higher quality if it’s not too much more expensive, is better for them in the long run, the U.S. has an advantage. The U.S. has a huge lead yet on technology generally, although it’s hard to stay ahead of that because the Chinese can replicate American technology or western technology fairly quickly. The U.S. still has an advantage there.

And the U.S. has an advantage in the eyes of some Africans, not so much governments, but in the other sectors that I mentioned in supporting democratization and human rights, where that’s appreciated. It may not be appreciated with governments very often, but it is often appreciated with civil society.

What about the big economic and trade programs the U.S. has with Africa?

Well again, the problem is China’s situation is so government directed and the U.S. is so privately directed; that if you cannot encourage American private companies to engage, there is not going to be engagement. So Boeing’s obvious, it engages because it does good business and it sells a lot of Boeing aircraft in Africa. But if you look at other American companies, like IBM or Hewlett Packard, I’m not sure I see much engagement there because they just haven’t decided to focus on Africa.

A company like Caterpillar does quite well in Africa, they have very high quality equipment, and they are very well established in Africa, they do good business. But they’re an exception. There are just too many American companies who are not paying attention to Africa, and they will continue to follow that policy at their peril.

And has AGOA [African Growth and Opportunity Act] been a success in your eyes?

AGOA has been a very limited success, if you look at the statistics; they’re not terribly impressive. It was a good initiative, I fully support it; but in terms of what it has actually accomplished, African exports to the U.S. other than oil have not increased very significantly under AGOA. It has been very useful for a handful of African countries, but not particularly useful for probably the majority of African countries. The oil is going to flow to the U.S. with or without AGOA, AGOA doesn’t change that at all.

Do you think the U.S. is too focused on promoting democracy and human rights in detriment to economic engagement?

No, I wouldn’t argue that it’s too focused on promoting democratization and human rights, and sometimes quite frankly American rhetoric gets way out ahead of it’s programming and it’s funding. There isn’t that much funding going into Africa in support of democratization and human rights. I would argue there could be more. The rhetorical level is very high, but not the funding level. The area that I think the U.S. has to be very attentive to is too much attention to counter terrorism; it’s an important topic, it’s one that has to be dealt with, but you can’t let that run your policy.

I think 6,7 years ago there was a tendency for that to be driving U.S. policy in Africa. I’m not sure that was quite the right priority. I think the Obama administration has toned that down a bit, which is good, but it’s very easy for that to get out of control and to drive policy and cause some policy mistakes.