allAfrica.com: Africa: The Law's an Asset (Page 1 of 1)

AT THE risk of raising eyebrows I must admit that I am a fan of The Simpsons. Their twisted and satirical outlook on life has given me many laughs over the years, especially when they poke fun at lawyers.

Now you may ask what The Simpsons have to do with exporting. Let me explain. In one of the delightful Halloween specials, Mr Burns, in the guise of Dracula, invites the Simpson family to dinner. Instead of wine, he serves them blood. Marge Simpson exclaims horrified: "This is blood!" But Homer says, licking his lips while the viewers recoil: "Correction, FREE blood."

Well, getting things free does make us do funny things and while, unlike Homer Simpson, we may pass on an offer of free blood, the notion of getting something free does have an immense and seemingly unbreakable grip on us. Those "free" cellphones we get with our two-year contracts are not really free, but despite Virgin Mobile trying their best to show us how it is not really in our best interest, we carry on opting for another two-year deal once the current contract expires because of the fancy "free" cellphone.

But "free" does not only happen with cellphone deals. It happens globally as well, where the consequences are much more far-reaching. I stood somewhat in horror recently watching SA signing co-operation agreements with Venezuelan President Hugo Chavez, essentially because he has alluded to the promise of oil. I didn't hear him say that it would be for free, but even though the price of oil has dropped it is still uncomfortably high and we never know if it is not going to return to the recent sky-high levels. So, to us exasperated motorists the promise of copious amounts of oil, even though it isn't quite free, sounds as good as free even if we have to get it from a questionable international leader like Hugo Chavez.

Closer to home, Angola has just shown most of Africa how to have a peaceful and successful election. Why can't we strike a deal with Angola to get our oil? Currently, Angola exports most of its oil to China and is already one of China's biggest oil suppliers. If this sounds strange, the answer may again be found in "free". In exchange for its oil China builds roads and infrastructure in Angola (for "free", or so they think). I've driven on one of these Chinese-built roads in Angola and the quality is poor. It will soon need lots of repairs (most likely in exchange for more oil).

But what on earth is going on that we feel compelled to side with Hugo Chavez to get our oil from halfway across the globe, and why does Angolan oil have to go even further, all the way to China? SA is the continent's second biggest oil consumer: surely it would make much more sense simply to pump some of our oil needs from Angola. Let Venezuela supply China -- they're much more like- minded.

But, it is not happening like this because "free" infrastructure is as intoxicating for a developing country as the "free" cellphone is for us consumers. China's intentions towards SA have been queried extensively, and not without good reason. Many of its dealings with Africa favour China; complaints are often heard that the Chinese do not use local labour in these multi-billion dollar infrastructure deals but export Chinese workers to Africa and pay their salaries in China.

BBC World even dedicated an entire programme on how a deal between the DRC and China for a copper mine benefits China four times more than it benefits the DRC. The journalist put the Canadian lawyer who drafted the deal on the spot, but the lawyer retorted that the journalist didn't know what he was talking about because he (the journalist) did not factor interest into his calculations.

We all know the power of compound interest, but I have yet to see how compound interest can level the playing fields when one party gets four times as much out of a deal as the other. So when we look at all these benefits for Africa, which are sold as "free" (or as good as free), we see that they are really very expensive.

Critics (like Chavez) of the West and its institutions (the IMF, World Bank, etc) have always accused the West of exploiting the developing world with harsh loans, excessive interest rates and one-sided repayment terms. And this criticism has sometimes been justified. China and Chavez are now stealthily approaching the developing world with a different promise -- "free" oil and economic assistance -- to gain a foothold and thereby blind the developing world to their real intentions.

Emile Myburgh is an international trade lawyer specialising in business in Brazil, Angola and Mozambique.

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