Prof. Patrick Bond: « Obsolete economic ideas and personal corruption are closely linked in Africa »

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Patrick_Bond_d9e7bProf. Patrick Bond. DR. *

Mohsen Abdelmoumen: The G20 will take place soon in Hamburg, in Germany. In your opinion, what will be the strategic issues of this meeting?

Prof. Patrick Bond: There are three areas of extreme danger that we would expect the G20 to address, if they are indeed claiming to be the world’s elite managers of human welfare: geopolitics, economics and environment. They won’t solve the crises brewing in these areas, naturally – because they remain constipated as a group of leaders, lacking the needed tools and ideology to successfully confront and defeat these extreme threats.

Politically, the most complicated armed conflicts are in Syria and the Middle East, with renewed US-Iranian tensions and heightened war in Afghanistan coming; in Ukraine and Poland where Nato over-reached; in Kashmir between India and Pakistan; and in the Korean Peninsula and South China Sea, both involving Pentagon blustering. The G20 contains most of the major state players needed to address these conflicts, but it is abundantly evident that the most unpredictable, dangerous leader, Donald Trump, does not have the attention span to do anything more than promote a banal self-interest for the US military and corporations.

The major wars and extreme civil conflicts the last two years have been in Syria, Afghanistan, Turkey, Pakistan, Mexico and northern and central Africa. There is a close correlation between such conflicts and low levels of ‘well-being,’ identified in the annual Global Happiness Index.

Locations of ongoing conflicts worldwide and happiness index, 2015

happiness index db4adSource: World Happiness Report 2016

Meanwhile, two quite unpredictable processes are in play, centering on Russian and Chinese relations with Washington.First, in Russia, Vladimir Putin was accused by the defeated candidate Hillary Clinton and the US Central Intelligence Agency of assisting Trump to win the November 2016 election, in the hacking and leaking of her and allies’ internal emails. This has not been proven, though the main US media have come to premature conclusions about the allegations in a burst of Moscowphobia unprecedented in at least three decades. As for the WikiLeaks revelations, Julian Assange denied he had direct access to leaked emails from any Russian source. But given Putin’s hatred of the US State Department following its $5 billion putsch in the Ukraine in early 2014 which led to the Crimea invasion, he obviously favoured the election of Trump and had the spy-craft capacity to make an intervention. Trump’s Secretary of State is the pro-Russian oil tycoon, ExxonMobil chief executive Rex Tillerson. But the intense backlash by the Washington establishment seems to have changed the new administration’s power relations decisively, leaving anti-Russians in the National Security Council leadership. But the zig-zags, the confirmation of Deep State power over Trump, and dangers to his survival as President, are together revealing, and dizzying.

The same is true for China, where relations with Washington worsened in the months before and weeks following last November’s election, but with rapprochement in the air. The South China Sea a site of conflict since 2011 given Obama’s “pivot to Asia,” entailing transfer of nearly two-thirds of US naval forces to the Pacific by 2020 and more than 400 American military bases encircling China. In the short term, the conflict with North Korea may overshadow Trump’s concern that trade competition – specifically subsidised Chinese exports and currency devaluation, as well as alleged Chinese commercial computer hacking – is to blame for US deindustrialisation. He backed off on all these charges once Xi visited Trump and made clear to him the Korean sensitivies, and perhaps coincidentally once Ivanka Trump simultaneously won long-delayed trademark permissions. Perhaps the Global Times, a Chinese state mouthpiece, put it best last December, describing Trump as having “no knowledge of what he’s talking about. He has overestimated the US capability of dominating the world and fails to understand the limitation of US powers in the current era.”

Economic crisis (mis)management

As a result, if the Tory government wins re-election in Britain, the dominant G20 alignment appears to be the combination of far-right socio-cultural politics with mega-corporate interests. It became clear immediately after the Trump election in Wall Street’s surge that investors expect military, financial and fossil fuel industry stocks to prosper far more than any others, as the Dow Jones index hit a new record. Trump promises to lower corporate taxes from 35 to 15% and rapidly inject a trillion dollars into what might be called ‘dirty Keynesian’ infrastructure – carbon-intensive airports, roads and bridges – thus heralding a new boom in US state debt. Along with the Federal Reserve’s December 2016 rise in interest rates and the 12% rise in Wall Street prices from November 2016-April 2017, this in turn will draw more of the world’s liquid capital into the US economy, similar to the 2008-09 and post-2013 shifts of funds that debilitated all the emerging market currencies aside from the Chinese yuan.

Given that such economic volatility remains a major threat across the world, we can expect even more extreme uneven development, unprecedented income inequality, excessive financialisation and overproduction. The resulting ‘sectoral stagnation’ is “the defining economic challenge for macroeconomic policy over the next decade,” according to former US Treasury Secretary Lawrence Summers. Although himself discredited – as the main official responsible for the most dangerous financial deregulation (the 1999-2000 ending of the division between investment banking and commercial banking) – Summers now diagnoses a serious deficiency in global economic management, including the G20.

In spite of these dangers, the G20 global economic managers appear incapable of taking decisive action. Various attempts to restore business confidence in most parts of the world appear to be failing. Multilateral institutions lack legitimacy and power. In addition, various kinds of class struggles are breaking out across the globe, revealing very weak redistributive systems. Refugees from poorer regions and war zones are moving at an unprecedented rate to Western borders. As a result, neo-fascist movements have gained strength in the US, UK, France, the Netherlands, Germany and Greece.

This stagnation is evident in what is increasingly being termed ‘deglobalisation,’ which applies not only to xenophobic attacks on migrants and refugees, but declining international economic interactions. One sign is the convergence between falling corporate profits in the G7 and the Brazil-Russia-India-China-South Africa (BRICS) economies, and as a result, a decline in the importance of Foreign Direct Investment (FDI) in the world economy. The peak year for FDI was 2008 with $1.9 trillion, nearly 3.5% of world GDP. But as the US-catalysed crisis spread across the world, FDI fell to $1.2 trillion and just 1.7% of GDP by 2015. Cross-border financial asset holdings fell from a peak 55% of world GDP in 2008 to just 35% by 2015. Various measures of trade also confirm a decline since 2014.

Declining rates of corporate profits (BRICS at top and G7) and of Foreign Direct Investment

corporate profits 46f30Sources: World Bank and UNCTAD 

 Declining cross-border financial assets as % of world GDP and of world trade values

cross border financial assets 0a927 Sources: IMF, BIS, Haver Analytics

Last July, the G20 trade ministers diagnosed the root cause of economic malaise at their Shanghai meeting but simply could not solve it: “We recognise that the structural problems, including excess capacity in some industries, exacerbated by a weak global economic recovery and depressed market demand, have caused a negative impact on trade and workers. We recognise that excess capacity in steel and other industries is a global issue which requires collective responses.”

With such high excess capacity at the global scale, China’s moves to cut steel and coal output have been marginal and merely ameliorative, as shown by continuing low prices, invasive exports and the extremely serious threat to entire national steel industries. Protectionism and tariffs are rising on many borders as a result.

At the global scale, this tendency towards capitalist overproduction can be delayed by artificial financial stimulation – but as we’ve seen since 2008, that strategy adds new contradictions. Loose G20 monetary policy encouraged new financial bubbles, without generating genuine sources of wealth. The $15 trillion in ‘Quantitative Easing’ (QE) paper-wealth printed and sent to the world’s largest banks since 2008 only ultimately trickled upwards to the top 0.1% of the richest societies, i.e. to enterprises where speculation has replaced production. The profits were not reinvested but instead plowed into corporate share buy-backs, which mainly benefit top management.

Thanks to the hollowed-out Western economy that resulted from the repeated QE fix in Washington, London, Brussels and Tokyo, financial crisis is again brewing. Perhaps it will be Deutsche Bank or Italian banks that play the same role that Bear Stearns and Lehman Brothers did in 2008, or maybe it will be a spectacular malware virus or another unexpected financial crisis. But regardless, the G20’s strategy then and today is merely the financial band-aiding of a deep-rooted capitalist cancer.

Environmental chaos

Finally, as for the environment, the G20 – especially the US, China, India, Brazil and South Africa – did practically nothing in the critical 2009 (Copenhagen) to 2015 (Paris) climate negotiations. Their main accomplishments, which we know because WikiLeaks-documented State Department emails and cables implicate Hillary Clinton’s staff, were to outlaw the concept of the ‘Climate Debt’ which the G20 economies owe the rest of the world, and to end the Kyoto Protocol’s insistence on legally-binding accountability for emissions reductions.

As a result, the greatest climate scientist, James Hansen, correctly labelled the Paris Climate Agreement “bullshit,” for the present trajectory of warming is anticipated to break 4 degrees above normal by 2100, with inland Africa heating up by 6 to 7 degrees. Not only are humans threatened, but so too is nearly every living species – biodiversity itself – reliant upon water and a stable eco-system. Trump’s climate denialism is merely the straw that will break the ecological camel’s back. And the areas of the world that contributed least to causing the crisis – small islands, inland Africa, the Himalayas and Andes – will be the ones suffering first and most.

Areas suffering greatest vulnerability to climate change

vulnerability to climate change 0747fSource: University of Texas Strauss Center

Countries most responsible for climate change: greenhouse gas emissions per capita, 2000

Countries most responsible for climate change 1106a

Could you explain to us what the “Compact with Africa” initiated by the G20, is? Isn’t it a form of neocolonialism to bleed Africa even more rapidly?

Yes, it’s a return to the re-scrambling of Africa, this time for the benefit of both Western and BRICS corporations. The first codification of this process was in Berlin, when in 1885 the map of Africa was drawn by the then five big colonial powers (Britain, France, Portugal, Belgium and Germany), with no Africans present. No reparations were ever paid for the subsequent looting, not only until independence from the 1950s-90s, but also in the neo-colonial era.

Why do we see a G20-Africa Compact and other gimmicks such as a ‘Marshall Plan’ now? One reason is that the Compact’s architect, German finance minister Wolfgang Schäuble, probably believes he must assist Angela Merkel with this rhetorical device, in order to justify to voters in the coming election how the million African refugees who entered Germany over the last dozen years can be kept at bay in future.

And Schäuble needs an African ally: the South African finance minister Malusi Gigaba. Sadly, South Africa has only the third largest African economy and sixth most populous society – but claims to represent the entire continent, along with continental bodies like the African Union and its New Partnership for Africa’s Development which are allowed to join as observers. In March, the Compact was unveiled at the G20 finance ministers’ Baden-Baden meeting. Côte d’Ivoire, Morocco, Rwanda, Senegal and Tunisia presented evidence there that they are playing by Schäuble’s rules, as has Greece, to the detriment of their societies.

Global Map 0f11b

In contrast there is a ‘C20’ group of civil society critics whose critique of the Compact is powerful: “higher costs for the citizens, worse service, secrecy, loss of democratic influence and financial risks for the public… and the multinational corporations involved demand that their profits be repatriated in hard currency – even though the typical services contract entails local-currency expenditures and revenues – and that often raises African foreign debt levels, which are now at all-time highs again in many countries.”

The three largest economies in Africa began experiencing serious debt crises in 2016, including South Africa which got a junk status rating by two major credit-rating agencies in April, Nigeria which fell into a deep recession, and Egypt which required an emergency $12 billion IMF bailout. From 2005-07, Sub-Saharan Africa’s foreign debt had fallen from $240 to $200 billion thanks to G7 and Bretton Woods debt relief.

But largely due to new Chinese lending, the sub-continent’s sovereign debt rose to $350 billion by 2014. The economies suffering with the highest 2015 current account deficits (i.e., combining outflows of legal profits, interest payments and trade deficits) included several that were once celebrated during the ‘Africa Rising’ era: Uganda, Malawi, Tanzania, Angola, Senegal, Equatorial Guinea, Burkina Faso, Zambia, Mali, Lesotho, Eritrea, Madagascar and Guinea-Bissau.

Sub-Saharan African debt, imports, exports and current account deficit

Sub Saharan African debt a8681Source: IMF

Worse, while Africa enjoyed world commodity price increases of 380% from 2002-11, these were followed by crashes of more than 50% in 2014-15, to unprofitable levels. As a result, there is a renewed demand from corporations exploiting the extractive industries for state subsidies, including from impoverished African countries. So the new challenge for the G20-Africa Compact represented by Schäuble is that its corporations depend on higher volumes of output – to compensate the lower returns resulting from the lowest prices in a dozen years – so as to cheapen the average extraction cost for minerals and petroleum. That in turn requires more subsidisation of the infrastructure required to get the output of mines and oil wells across vast swathes of unpoliced land, on roads, railroads and bridges or through pipelines, to new ports closer to the markets.

Global price index of all commodities (2002=100)

Global price index of all commodities 968d7Source: IMF

Most of the companies that are risk-averse in Africa are from China. Some are vast, some are relatively unknown. Their 2015-16 capital investments are far lower than in prior years, when Western and South African corporations led the scramble up-continent. The largest recent such investment is not in mining, but in land development near Cairo, by a Chinese developer.

Investment by multinational corporations in Africa, 2015-16

Investment by multinational corporations in Africa ccf3aSource: African Development Bank

Yet in part because of the extreme profiteering and illicit financial flows that these corporations are used to getting away with in Africa, the states that they loot don’t have enough funding to build the supportive mega-project infrastructure. The investment envisaged in strategies such as the African Development Bank’s 2010 Programme for Infrastructure Development in Africa (PIDA) or 2012 Southern Africa Development Community regional master plan has never materialised.

For example, the most ambitious of the PIDA projects was the Inga Hydropower Project in the Democratic Republic of the Congo, which at $100 billion would be the most expensive development project in history. If taken to fruition, it will produce 43,200 MegaWatts of electricity, more than twice the second largest, China’s Three Gorges Dam. But with commodity prices crashing, even China attempted in mid-2014 – on the eve of Obama’s summit with African leaders in Washington – to get US government co-financing support. The Obama administration regularly rebuffed such approaches, even foolishly attempting to sabotage membership in the Asian Infrastructure Investment Bank so as to keep Beijing at bay. The World Bank withdrew its Inga financing commitment on grounds of the managers’ failure to comply with socio-economic and environmental agreements.

So Inga may always remain a dream to the Western mining houses that have been its most enthusiastic backers, since they want the power to dig and smelt more minerals in central Africa. But the world’s largest, BHP Billiton from Australia, once anticipated a massive aluminium smelter on the shores of the Congo, and then after the 2008 crisis, world overproduction forced it to back out. The next major backer, South African electricity parastatal Eskom, is also unwilling for it now finds itself with a huge surplus of electricity due to the decline in local mining and smelting.

Other huge African infrastructure schemes have been cancelled or are not performing. Chinese projects in particular have been criticised, such as Botswana’s failed coal-fired power-plant and Zambia’s disastrous hydro-electricity expansion which suffered allegedly sub-standard Chinese equipment that excessively reduced the Kariba Dam’s water level. China’s $12 billion port at Bagamoyo, Tanzania – supposedly part of the One Belt One Road network – was just canceled. Other notorious mega-project failures, according to the Wall Street Journal in 2014, include China Railways in Nigeria ($7.5 billion) and Libya ($4.2 billion), Chinese petroleum in Angola ($3.4 billion) and Nigeria ($1.4 billion), and Chinese metal investors in the DRC and Ghana ($3 billion each).

The renewal of the Forum on China-Africa Cooperation in December 2015 did nothing to assuage critics of the type of Chinese investment and credits, and their appropriateness in a post-commodity super-cycle environment. It is also well documented, of course, that infrastructure is weak due in part to corruption by the major construction firms operating in Africa, often financed by both Western and BRICS banks and multilaterals including the World Bank, whose standards on corruption remain as low as ever.

But a more general problem for Western and BRICS corporations is that their ‘Illicit Financial Flows’ from Africa are coming under scrutiny. The recent ‘Panama Papers’ and HSBC leaks revealed a great deal, as have studies of individual firms. The United Nations Economic Commission on Africa in 2013 showed how $319 billion was transferred illicitly from Africa during the commodity super-cycle (from 2001-10), with the most theft in Metals, $84 billion; Oil, $79 billion; Natural gas, $34 billion; Minerals, $33 billion; Petroleum and coal products, $20 billion; Crops, $17 billion; Food products, $17 billion; Machinery, $17 billion; Clothing, $14 billion; and Iron & steel, $13 billion.

During this period, African Foreign Direct Investment fell from its $66 billion peak annual inflow in 2008 to a level of $50 billion by 2015. Still, each year, in addition to illicit financial outflows, there were licit flows in the form of profit and dividend repatriation and debt repayments that created extreme balance of payments deficits in many African countries. These outflows of profits and dividends are the main reason that the ‘current account deficits’ in Africa’s poorest countries soared since 2007.

Current account deficits of African, Asian and Island Less Development Countries

 Current account deficits 636edSource: International Monetary Fund

Can the Compact with Africa incentivise multinational corporate investment merely with state supply-side subsidies? My guess is that it won’t reverse those inherent crisis conditions within global capitalism, in which Africa is looted at the most rapid rate. The conditions for making profits from extraction are more difficult each year, as much more resistance and conflict rise in the main sites of mining and oil drilling.

Africa’s resources and conflicts 

Africas resources and conflicts 93f0dSources: Le Monde Diplomatique, Armed Conflict Location and Event Data.

African political elites are often obsolete and corrupt, and obey the neo-liberal roadmap drawn by the likes of Wolfgang Schäuble and Christine Lagarde. Don’t they need to be changed?

Yes, everywhere! Lagarde got quite a taste of that, five years ago. On the last day of December 2011, she had instructed the Nigerian finance minister to remove the internal petrol subsidy that kept fuel relatively cheap for mass consumption, in a country with such vast oil resources. When the price then doubled, poor and working-class people embarked on a huge protest, and very nearly overthrew Goodluck Jonathan’s regime within weeks.

The year before, two very close friends of the IMF’s were tossed out of power in Tunisia and Egypt after imposing neo-liberal programmes. In mid-2010, the IMF told Tunisian dictator Ben Ali to reduce corporate taxes and raise the Value Added Tax on the society, and a few months later the North African uprising began. In Cairo, Lagarde had to instruct her representative to temporarily start using two foreign words, “social justice,” in IMF reports so as to appease the angry populace, as $32 billion in foreign debt taken out corruptly by Mubarak came due for repayment just weeks after he was removed.

So yes, obsolete economic ideas and personal corruption are closely linked in Africa but especially within the G20 financial establishment. Lagarde herself had a close scrape last year after her conviction for negligence in a €403 million payout to a major Conservative Party contributor, Adidas owner Bernard Tapie, when she was French finance minister. Yet she continues in her present job, even gaining a unanimous re-endorsement on the day of her Paris conviction by IMF directors. There was also the extreme sexual corruption that her predecessor, Dominique Strauss-Kahn, visited upon countless unwilling women, or the blatant financial crimes committed by another former IMF Managing Director, Rodrigo de Rato, for which he was recently convicted in the Madrid courts. Schäuble too was expelled as leader of the German Conservative Party in 2000 for accepting and then publicly denying a cash bribe from notorious arms dealer Karlheinz Schreiber.

There is very uneven resistance to these ghastly Western rulers, sadly. Trump is obviously the most corrupt of all. The G20’s typical patronising remarks about African governance will get no sympathy here. Instead we might want to consider more hopeful ways to describe a ‘regime change’ – one not dreamed up in the US State Department to re-impose neo-liberalism with more credibility, but instead driven organically by African activists.

But I retain great optimism, especially because of the anger rising from the continent’s communities and workplaces. The World Economic Forum’s regular Global Competitiveness Reports poll corporate managers to rate ‘Cooperation in labour-employer relations’ in each country on a scale from ‘generally confrontational’ (1) to ‘generally cooperative’ (7). African countries are by far the most militant of the 138 sites surveyed annually, with 28 African proletariats scoring above the world median of militancy, and just four below. Every year since 2012, South African workers (scoring 2.5 last year) have won the ‘gold medal’ in this global class struggle, if this measure is to be trusted. Other African countries with very militant workforces are Chad (3.5), Tunisia (3.6), Liberia (3.7), Mozambique (3.7), Morocco (3.7), Lesotho (3.7), Ethiopia (3.8), Tanzania (3.8), Algeria (3.8), Burundi (3.8), and Zimbabwe (4.0). These dozen were in the top 30 countries in terms of labour militancy.

Labour militancy of national working classes, measured by reputation among corporations

Labour militancy 50ec3Source: World Economic Forum Global Competitiveness Report 2016-17

African protests rise dramatically starting in 2011, led by labour

African protests 9f3b0Source: Sussex University Armed Conflict Location and Event Data (ACLED) Project

Reasons for African protests

Reasons for African protests 3f5f0Source: African Development Bank 

The continent’s urban communities are also increasing their protest rates. Sussex University’s Pentagon-funded Armed Conflict Location and Event Data index and the African Development Bank’s African Economic Outlook report have both documented a dramatic rise since 2010. The latter studies, drawing on press reports, find that while changing government was overwhelmingly the main rationale to protest in the 2011-13 period, since 2014 the combination of demands for higher wages and better working conditions, plus better state services, are more prevalent.

And with that in mind, recall what Frantz Fanon himself complained about in his book Toward the African Revolution: “For my part the deeper I enter into the cultures and the political circles, the surer I am that the great danger that threatens Africa is the absence of ideology.” Not long after, the revolutionary leader Amilcar Cabral agreed:The ideological deficiency within the national liberation movements, not to say the total lack of ideology – reflecting as this does an ignorance of the historical reality which these movements claim to transform – makes for one of the greatest weaknesses in our struggle against imperialism, if not the greatest weakness of all.”

If we take these cautions seriously, it is not only the removal of corrupt, unpatriotic regimes that is needed, though that is a pre-condition. What is now urgent to discuss in many settings growing ripe for revolution, is the replacement of venal African comprador relations with neo-colonialism with a programme of popular political empowerment. Otherwise, without structural change based on ideological clarity, the same conditions will generate the same corrupt African compradors. The forces of resistance may be rising fast – labour, community, environmental, women’s, youth, students and other groups angry about the ‘Africa Rising’ nonsense – but they urgently need to discuss how to implement a set of policies that diverge from the Washington Consensus, in advance of democratisation.

That State Department and Bretton Woods Institution narrative – so successful in narrowing African political discourses since the first democratisation wave of the early 1990s – is simple: achieving a free society means imposing ‘free-market’ (pro-corporate) economics. In opposition, an egalitarian economic argument will be increasingly easier to make now that world capitalism and the dynamics of deglobalisation are forcing Africa towards rebalancing. This will ultimately compel discussion of much more courageous economic policies, potentially including:

• in the short term, as currency and debt repayment crises hit, reimposing exchange controls will ensure control of financial flows, quickly followed by lowered interest rates to boost growth, with an audit of ‘Odious Debt’ before any further repayment of scarce hard currency, along with much better management of imports – to serve national interests, not the interests of elite consumers;

• as soon as possible, the adoption of an ecologically sensitive industrial policy aimed at import substitution (making things locally), sectoral re-balancing, meeting social needs and true sustainability;

• once finances are secure, it will be possible to dramatically increase state social spending, paid for by higher corporate taxes, cross-subsidisation and more domestic borrowing (and loose-money ‘Quantitative Easing,’ too, if necessary, so long as it does not become hyper-inflationary);

• the medium- and longer-term economic development strategies will reorient infrastructure to meet unmet basic needs, and the expand, maintain and improve the energy grid, plus water and sanitation, public transport, clinics, schools, recreational facilities and universal access to the internet; and

• in places like South Africa and Nigeria that have an excess reliance on extraction and burning of fossil fuels, it will be vital to adopt what have been termed ‘Million Climate Jobs’ strategies to generate employment for a genuinely green ‘Just Transition’.

These are the kinds of approaches requiring what the continent’s greatest political economist, Samir Amin, terms ‘delinking.’ He stresses that this is not a formula for autarchy, and certainly would gain nothing from North Korean-type isolation. But it would entail a sensible approach to keeping G20 politicians and corporations as far away as possible.

Even John Maynard Keynes agreed with this strategy. He wrote in 1933: “I sympathise with those who would minimise, rather than with those who would maximise, economic entanglement among nations. Ideas, knowledge, science, hospitality, travel – these are the things which should of their nature be international. But let goods be homespun whenever it is reasonably and conveniently possible and, above all, let finance be primarily national.”

Keynes saw the merits of the deglobalisation of capital, alongside the globalisation of people. So should all G20 critics, instead of agreeing with a Compact with Africa that will make everything worse.

The riches of the African continent, instead of being an asset, especially for the development of countries, are not they rather a curse? For example, my country of origin Algeria, which has not been able to get out of oil revenue, which is totally dependent on imports, and which has not built a varied economy.

Yes, the dilemma of the Resource Curse is quite obvious if we add a corrective feature to the very flawed Gross Domestic Product (GDP) measure called ‘natural capital accounting.’ GDP only counts extraction of non-renewable resources like oil as a positive ‘credit’ in the accounts, failing to recognise that it is a country’s depleted wealth and should also be considered a ‘debit.’

When we do this, we learn that not only has the oil revenue been wasted, but the historic wealth of Algerians – and likewise of so many other Africans – in the form of environmental assets has also been depleted, never to be recovered. The dinosaurs that gave us fossil fuels won’t come back. The patrimony is gone forever.

The resulting economic argument is that by calculating natural resource depletion associated with extraction, and comparing to reinvestment made by the corporations which do the extraction, the overall impact is net negative for nearly all of Africa. So even though the World Bank has traditionally lined up in favour of extraction, including fossil fuels, several Bank staff in the office called Wealth Accounting and the Valuation of Ecosystem Services annually calculate ‘adjusted net savings’ and the implications should subvert that commitment to extractivism.

For example, the Bank’s 2014 Little Green Data Book concedes that “88% of Sub-Saharan African countries were found to be depleting their wealth in 2010,” with a 12% decline in per capita net African wealth that year attributed to the extraction of minerals, energy and forest products (natural capital). With that degree of looting obvious even to an agency committed to further looting, it is long overdue for anti-extraction activists to add an economic logic to their micro-ecological, spiritual, political and social critiques.

The World Bank ‘decomposes change in wealth per capita’, Sub-Saharan Africa, 2010

change in wealth per capita 0d18a

In turn, this kind of measurement of the resource curse Africa suffers can assist in one of the de-cursing processes we desperately need to intensify: ecological debt advocacy. There is an urgent need to punish polluters by considering the formal monetary liabilities – or some approximation, since nature is priceless – so that reparations to environment and affected peoples are sufficiently financed, and so in the process an incentive is generated not to pollute in future. This is the central reason to make at least a rough monetary case for ecological debt payments within courts of law.

For example, of Nigeria’s $11.5 billion claim against Shell for a 2011 oil spill, more than half is meant to compensate fisherfolk. The liability owed to silicosis-afflicted mineworker victims of Anglo American and other gold mining houses has begun to reach payment stage. The South African firms Gencor and Cape PLC had to pay $65 million a decade ago to settle asbestos lawsuits after they lost their last appeal in the UK House of Lords. Similar arguments should be made against the MNCs most responsible for what the UN calls loss and damage due to climate change. Ideally, over time, this strategy would develop as ‘fine-and-ban,’ so that as a corporation makes an egregious error, it is fined punitively for the damage done, and then nationalised and sent packing.

To be sure, there is a danger that if ‘fine-and-ban’ is not the local state policy, then natural capital accounting will lead, instead, to a ‘fee’ for pollution, with the damage continuing, alongside ongoing payment. That would logically result from establishment of a formal market in pollution rights, such as the EU’s Emissions Trading Scheme. Serious environmental activists beginning with the Durban Group for Climate Justice in 2004 have firmly rejected these strategies to ‘privatise the air.’ The distinction should thus be clear, between valuing nature for ecological debt payment purposes (a fine and ban) on the one hand, and on the other pricing nature for market-making (a fee). As Vandava Shiva put it in a 2014 South African talk, ‘We should use natural capital as a red light to destruction, not as a green light.’

The ‘red light’ strategy is an example of a potential rapprochement between two different framing strategies, emphasising technicist analysis in the ecological modernisation tradition as well as being useful to anti-extractivist campaigners who want an economic argument against fossil fuel depletion, but one that allows claims by the Global South – such as climate victims in Nigeria, South Africa, Algeria and other fossil fuel sites. The simple standpoint, which has been explored in the Niger Delta and Ecuador’s Yasuni National Park as amongst the world’s cutting-edge struggle sites, is that oil should be left underground, but the ecological debt that Northerners owe the Global South should be paid, in a way that strengthens local societies, not comprador elites.

The best model of North-South payment I know of is one set up for a few years in Otjivero, Namibia, in a desertifying zone about an hour east of the capital Windhoek. That region suffered Germany’s genocidal displacements of the Herero people more than a century ago. Partly as a preliminary downpayment on paying the social debt owed, as Germans do to Israel for the Holocaust, some Lutherans and their allies arranged a small monthly payment to each resident of Otjivero.

This sample ‘Basic Income Grant’ trial was successful by all accounts, although it was opposed by governments on grounds that it might raise expectations for more citizenries. But that is exactly the point: we need to identify strategies such as natural capital accounting and payment of ecological debt (especially climate debt) that radically redistribute from rich to poor. Along with South Africa, Namibia is the second most unequal country in the world.

But these ideas are microscopic in impact so far, or even outright failures in implementation, such as the Yasuni case. There, former German development minister Dirk Niebel’s stubborn opposition led the Ecuadoran president Rafael Correa to drop the protection and to authorise Chinese oil drilling. So while logical as sites for advocacy, they may be slow to take root, and so far they have tiny constituencies. Yet there is an undeniable urgency to both halting oil extraction to save the climate, and redistributing the world’s wealth in a manner that the most adversely affected are paid directly, not through corrupted aid mechanisms.

Activists in the high-pollution G20 countries who are looking for strategic ways forward, in addition to blockading coal extraction sites such as Ende Gelände in Germany, might listen to visionary peripheral groups like the eco-feminists of Accion Ecologica based in Quito, or the Womin Women in Mining network based in Johannesburg, for guidance along these lines. A film by the GermanWatch NGO called “The Bill” – available on YouTube – helps the anti-G20 activists to make the case that we must become more creative about these huge debts that we owe. (And I speak as a Global North resident of Johannesburg who has a vast carbon footprint and a desire to help pay activist movements – such as at Yasuni and the Fuleni anti-coal campaign in South Africa – for their inspirational work in leaving fossil fuels underground.)

For Africa and for the entirety of humanity, climate change is the most important issue area for us to all increase awareness and activism. It is a crisis that links the workplace, the energy system, transport, agriculture, urbanisation, our lives as consumers, disposal and financing, so all kinds of activities could be considered climate activism. With a global movement that recognises these opportunities, the G20 might become a site that addressed a global crisis with genuine resolve.

Indeed if the G20 ever deserves to have world leadership, it would be because of the ambition to repeat what was accomplished through global governance back in 1987, a year in which the United Nations issued a genuinely progressive report on sustainable development authored by former Norwegian prime minister Gro Harlem Brundtland’s Commission. At that time, there was a major new global crisis: the expanding hole in the ozone layer that protects humans from ultraviolet rays. The main cause was the emission of ozone-depleting CFCs through aerosols and refrigeration.

Since the urgency of the situation required a global response, the 1987 Montreal Protocol was supported by even the US Reagan Administration. It committed national states to ensure their corporations (e.g. Dow Chemicals and General Electric) stop producing and emitting CFCs within nine years. The ban worked and the problem is receding.

But this global-governance success story occurred before the era of neo-liberal state capture. Today, to argue for a Montreal Protocol-type ban on greenhouse gas emissions – with binding emissions cuts, accountability and state control of corporate pollution – is practically unthinkable, notwithstanding impending eco-social catastrophe.

What we need to shift power relations and return as soon as possible to a global governance strategy is the amplification of what Naomi Klein calls ‘blockadia.’ In addition, the ‘divest-invest’ movement against fossil fuel companies is having a major impact on shareholder sentiments, as activists insist that the companies devalue their reserves of ‘unburnable carbon.’

The classic example of this sort of battle is the South African anti-apartheid movement, which called for boycott, divestment and sanctions to complement direct activism. The pressure reached the boiling point when in 1985 protest from below rose just as international solidarity tackled firms supporting the Pretoria regime. The resulting financial crisis was only resolved when corporations (owned by white English-speakers) broke relations with the white (Afrikaner) regime and belatedly supported democracy.

Your career is very rich, both politically and professionally. You have notably accompanied the political process of the end of Apartheid in South Africa, by being a drafter of many policy documents for the government of President Nelson Mandela, including his first White Paper on Reconstruction and Development. Do you think that South Africa is a model of success for other African countries?

We are, sadly, an anti-model, because Southern Africa is still perhaps the most resource-cursed part of the continent, although West African and North African oil-saturated states are certainly close. Southern Africa regularly scores the worst inequality rates on earth, and this is a function in part of deals made by local elites with foreign corporations.

I saw many of those deals unfold, while writing two major policy documents for Mandela and other policies for ministers when I worked in the first democratic government. I still hope they can all be reviewed and in some cases even reversed, including decisions during the 1990s to:

  • repay $25 billion of inherited apartheid-era foreign debt (October 1993)
  • give the South Africa Reserve Bank ‘independence’ in the country’s 1993 interim constitution and 1996 final constitution (November 1993)
  • borrow $850 million from the International Monetary Fund (IMF) with tough conditions (December 1993)
  • reappoint apartheid’s finance minister Derek Keys and South Africa Reserve Bank governor Chris Stals, at the insistence of IMF Managing Director Michel Camdessus (May 1994)
  • join the World Trade Organisation on adverse terms as a ‘transitional’ (not ‘developing’) economy (August 1994)
  • lower primary corporate taxes from 48 per cent to 29 per cent and maintain countless privileges enjoyed by white people and corporations (1994–99)
  • privatise parts of the state and demutualise mega-insurance firms (1995–99)
  • relax the main exchange controls and raise interest rates (March 1995)
  • adopt the neo-liberal Growth, Employment and Redistribution (‘Gear’) macroeconomic policy (June 1996)
  • approve South Africa’s biggest companies moving their financial headquarters and primary stock market listings to London (1999).

Since 1994, largely as a result of these deals, unemployment soared from 16 to 27%, poverty rose from 45 to 63% and inequality rose from a Gini coefficient of 0.59 to 0.69. Mandela is now regularly described by the younger activist generation – as well as by his ex-wife Winnie – as an economic ‘sell-out.’

It was at the Davos World Economic Forum in 1992 that Mandela agreed to drop his own party’s 1955 Freedom Charter, especially its provisions for nationalisation the mineral wealth, banks and monopoly capital. So at the WEF-Africa 2017 summit held in Durban in May, protests were held by grassroots activists, and a ‘People’s Economic Forum’ counter-summit offered alternatives.

Since Schäuble will be relying upon South Africa’s very controversial finance minister Malusi Gigaba to do his bidding in selling the Compact With Africa to the rest of the continent, we can expect a great deal more vibrant debate in South Africa about the G20, especially the need imperialism has for sub-imperialist collaboration. For that analysis, a ‘brics-from-below’ network is busy developing sub-imperialism theory – drawing on the Brazilian Ruy Mauro Marini and City University of New York’s David Harvey – as well as activist sites where sub-imperial projects are being fought by community, labour, feminist and environmental activists.

In South Africa, this will be aided by the left revival in the unions (the SA Federation of Trade Unions was launched in April), in electoral politics (the Economic Freedom Fighters achieved 8% of the vote in 2016 municipal elections and share power in two of the four biggest cities) and in diverse social movements including the #FeesMustFall student campaign (which won major victories in 2015 including a 0% fee increase and the ‘insourcing’ of low-paid university workers). There was hope that a ‘United Front’ network that emerged in 2014 might pull all such progressive forces into alignment. Unfortunately it relied too much on sponsorship by the huge metalworkers union of 330 000 members – whose powerful, class-conscious leadership led labour’s walk-out from the ANC-aligned COSATU trade union federation in 2013-15. But with internecine battles within the unions occupying the leadership, they did not achieve the promised linkage between a relatively well-paid proletariat and the sub-proletariat which so desperately needs material support and ideological coherence. That linkage probably must happen bottom-up, in town after town, as the unemployed masses in shack settlements find unity with workers living in townships, perhaps in socio-economic campaigns.

However, the last year has witnessed these left forces distracted, as an extraordinary elite battle rages over control of the state. On the one hand, there is a clique committed to corrupt accumulation opportunities stemming from President Jacob Zuma’s alliance with India’s Gupta brothers, and on the other, a neo-liberal clique that until April was located mainly in the Treasury and now draws strength from the residual power of the major media houses, the highly-unified financial capitalists, diverse liberal institutions including universities, and the centre-right opposition party (Democratic Alliance).

Most progressive activists – aside from a few centre-left NGOs – are uncomfortable with both these cliques, but nevertheless, substantial protests have been held in the major cities calling for Zuma to resign, and even the formerly Zuma-aligned trade unions and SA Communist Party are now calling for him to quit. However, if he does, the most likely inheritor of the presidency is Zuma’s deputy, Cyril Ramaphosa, who is not just distasteful as a leader to many in labour and social movements due to his collaborative role in the Marikana massacre, but who is seen as the candidate of what is termed ‘White Monopoly Capital.’

If as a result, Ramaphosa fails to secure the party’s support, it is likely that Zuma’s ex-wife Nkosazana Dlamini-Zuma – who until this year served a term as the African Union leader – will take over the party in December and if Zuma himself stays in power for his full term, she would inherit the national presidency in mid-2019. The irony is that due to the personalisation of these distracting battles, there is rhetoric about “radical economic transformation” from the Zuma camp yet Gigaba maintains the same neo-liberal policies as his predecessor because underlying power balances have not shifted in the least. And by maintaining the semi-austerity policies the neo-liberals demand, South Africa’s economy will remain stagnant and the populace will grow angrier, as leftist-sounding slogans from Zuma won’t fill their bellies. And that structural inability of capitalism to meet even the most basic needs is why the left revival is necessary here, and indeed everywhere.

Interview realized by Mohsen Abdelmoumen

Who is the Professor Patrick Bond?

Professor of Political Economy, Patrick Bond combines political economy and political ecology in his research and applied work. He is a professor of political economy at the Wits School of Governance and honorary professor at the University of KwaZulu-Natal School of Built Environment and Development Studies where from 2004 until 2016 he directed the Centre for Civil Society. Prior to that he was a professor at the WSG from 1997 until 2004 and assistant professor at the Johns Hopkins University Bloomberg School of Public Health, and also held visiting professorships at York University and the University of California/Berkeley on sabbaticals. During the 1990s he served at the Johannesburg NGOs Planact and the National Institute for Economic Policy.  Since Nelson Mandela came to power until 2000, Patrick Bond drafted more than a dozen government policy documents for South African government, including the White Paper on Reconstruction and Development.

He earned his doctorate in economic geography under the supervision of David Harvey at Johns Hopkins following (non-degreed) studies at the University of Pennsylvania’s Wharton School of Finance and an undergraduate economics degree at Swarthmore College. He was born in Belfast, Northern Ireland in 1961, was raised in the US states of Alabama and Maryland, and since 1989 has been a resident of Southern Africa.

Patrick Bond has written numerous books, including:Commanding Heights & Community Control: New Economics for a New South Africa (Ravan 1991); Uneven Zimbabwe: A Study of Finance, Development, and Underdevelopment (Africa Research and Publications, 1997); Cities of Gold, Townships of Coal: Essays on South Africa’s New Urban Crisis (Africa Research and Publications, 2000); Elite Transition: From Apartheid to Neoliberalism in South Africa(Pluto Press, 2000);Unsustainable South Africa: Environment, Development, and Social Protest (University of Natal Press, 2002); Fanon’s Warning: A Civil Society Reader on New Partnership for Africa’s Development(Africa World Press, 2003); Talk Left, Walk Right: South Africa’s Frustrated Global Reforms (University of Kwazulu Natal Press, 2004); Against Global Apartheid: South Africa Meets the World Bank, IMF and International Finance (University of Cape Town Press, 2004); Trouble in the Air: Global Warming and the Privatised Atmosphere with Rehana Dada (Centre for Civil Society, University of KwaZulu-Natal and Amsterdam: Transnational Institute TNI, 2005); Looting Africa: The Economics of Exploitation (Zed Books, 2006); The accumulation of capital in Southern Africa : Rosa Luxemburg’s contemporary relevance with H. Chitonge and A. Hopfmann (Rosa Luxemburg Foundation, 2007); Beyond Enclavity in African Economies: The Enduring Work of Guy Mhone (Open Society Initiative of Southern Africa, University of Nairobi Institute of Development Studies,Centre for Civil Society, 2007); Climate Change, Carbon Trading and Civil Society: Negative Returns on South African Investmentswith R. Dada and G. Erion (University of Kwazulu-Natal Press, 2008); Zuma’s Own Goal: Losing South Africa’s « War on Poverty » with Brij Maharaj,Ashwin Desai(Africa Research and Publications, 2011); Durban’s Climate Gamble: Trading Carbon, Betting the Earth (Unisa Press, 2011); Politics of Climate Justice: Paralysis Above, Movement Below (University of KwaZulu-Natal Press, 2012); South Africa – The Present as History: From Mrs Ples to Mandela and Marikana with John S. Saul (James Currey, 2014); BRICS: An Anti-Capitalist Critique (Haymarket Books, 2015); etc.

Published in American Herald Tribune, June 10, 2017:

In French in Palestine Solidarité:

*(Patrick Bond addressing plenary at the Rio+20 Peoples summit, Rio de Janeiro, Brazil. Image credit: CIDSE – together for global justice/ flickr).