18 November 2008
analysis
Washington, DC — "The problem [with projections of President-elect Obama's foreign policy priorities] is that for a new leader promising change, they have tended to reflect the most traditional sorts of Washington priorities, neglecting other parts of the world that are starving for American moral and political leadership; places where Obama, by virtue of his unique background, offers particularly compelling potential for impact. ... The most obvious and important omission ...is Africa, a continent of nearly one billion people today that according to United Nations projections will count an astounding two billion people by mid-century." - Howard W. French
Reports of widespread jubilation by Africans and friends of Africa around at the world at the election victory by Barack Obama are not exaggerated. Ironically, however, Africa policy is one of the areas in which most observers - including many of those who are rejoicing - are well aware that change may be very slow in coming.
Preoccupation with domestic crises, reliance on the conventional wisdom of Clinton re-treads within the foreign policy establishment, and the overwhelming weight of unilateral and conventional thinking among U.S. policy-makers will severely constrain the more open vision of Obama's inspirational multilateralism. Prospects for different outcomes will depend not only on the incoming president himself, but on pro-Africa initiatives from the continent itself and its advocates in the United States.
This AfricaFocus Bulletin contains three post-election commentaries focusing on different aspects of Africa and U.S. Africa policy in the coming Obama years, by Patrick Bond in South Africa, Mia Couto in Mozambique, and Howard French in New York.
For earlier AfricaFocus Bulletins with a focus on U.S./Africa relations, see http://www.africafocus.org/country/usa-africa.php
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Obama's economic advisors: Will well-tested enemies of Africa prevail?
by Patrick Bond
Nov 11, 2008
[Patrick Bond directs the Centre for Civil Society in Durban, South Africa: http://www.ukzn.ac.za/ccs; the article excerpted below was distributed on http://lists.kabissa.org/mailman/listinfo/debate.]
One of Barack Obama's leading advisors has done more damage to Africa, its economies and its people than anyone I can think of in world history, including even Cecil John Rhodes. That charge may surprise readers, but hear me out.
His name is Paul Volcker, and although he is relatively unknown around the world, the 82 year old banker was recommended as 'a legend!' to Obama by Austan Goolsbee, the president-elect's chief economic advisor (and a professor at the University of Chicago).
Volcker was recently profiled by the Wall Street Journal: "The cigar-chomping central banker from 1979 to 1987, he received blame for driving up interest rates and tipping the US into the deepest recession since the Great Depression."
We'll consider the impact of Volcker's rule on Africa in a moment.
But why dredge up crimes nearly thirty years old?
This kind of reckoning is important, as three current examples suggest:
Reparations lawsuits are now being heard in New York by victims of apartheid who are collectively requesting $400 billion in damages from three dozen US corporations who profited from South African operations during the same period. Supreme Court justices had so many investments in these companies that in May they had to bounce the case back to a lower New York court to decide, effectively throwing out an earlier judgment against the plaintiffs: the Jubilee anti-debt movement, the Khulumani Support Group for apartheid victicms, and 17 000 other black South Africans.
Last month a San Francisco court began considering a similar reparations lawsuit - under the Alien Tort Claims Act - filed by Larry Bowoto and the Ilaje people of the Niger Delta against Chevron for 1998 murders similar to those that took the life of Ken Saro-Wiwa on November 10, 1995.
In Boston last month, Harvard University's Pride Chigwedere released a study into preventable deaths - at least 330 000 - caused by Thabo Mbeki's AIDS policies during the early 2000s. The ex-president has 'blood on his hands,' according to Zackie Achmat of the Treatment Action Campaign, requesting a judicial inquiry.
The same critical treatment is appropriate for Volcker, because of the awesome financial destruction he imposed, within most Africans' living memory. His policies stunted the continent's growth when it most needed internal economic coherence.
Even the International Monetary Fund's official history cannot avoid using the famous phrase most associated with the Fed chair's name: "The origins of the debt crisis of the 1980s may be traced back to and through the lurching efforts of the world's governments to cope with the economic instabilities of the 1970s... [including the] monetary contraction in the United States (the 'Volcker Shock') that brought a sharp rise in world interest rates and a sustained appreciation of the dollar."
Volcker's decision to raise rates so high to rid the US economy of inflation and strengthen the fast-falling dollar had special significance in Africa, write British academics Sarah Bracking and Graham Harrison: "1979 marked a radical change in global economic policy, inaugurated with the 'Volcker Shock' (so called after Paul Volcker, then chairman of the Board of Governors of the Federal Reserve) when the United States suddenly and dramatically raised interest rates, [which] increased the cost of African debt precipitously, since a majority of debt stock was held in dollars.
The majority of the newly independent states had been effectively delivered into at least twenty years of indentured labor. From that point on access to finance became a key policing mechanism directed at African populations."
Adds journalist Naomi Klein in her book The Shock Doctrine, "In developing countries carrying heavy debt loads, the Volcker Shock was like a giant Taser gun fired from Washington, sending the developing world into convulsions. Soaring interest rates meant higher interest payments on foreign debts, and often the higher payments could only be met by taking on more loans... It was after the Volcker Shock that Brazil's debt exploded, doubling from $50 billion to $100 billion in six years. Many African countries, having borrowed heavily in the seventies, found themselves in similar straits: Nigeria's debt in the same short time period went from $9 billion to $29 billion."
...
Elmar Altvater of Berlin's Free University recalls how the world "slid into the debt crisis of the 1980s after the US Federal Reserve tripled interest rates (the so called 'Volcker Shock'), leading to what later has been described as the 'lost decade' for the developing world."
How 'lost'? The British Medical Journal complained in 1999 of orthodox World Bank structural adjustment policies that immediately followed: "According to Unicef, a drop of 10-25% in average incomes in the 1980s-the decade noted for structural adjustment lending-in Africa and Latin America, and a 25% reduction in spending per capita on health and a 50% reduction per capita on education in the poorest countries of the world, are mostly attributable to structural adjustment policies. Unicef has estimated that such adverse effects on progress in developing countries resulted in the deaths of half a million young children - and in just a 12 month period."
A few honest mainstream economists also explain Africa's economic crisis in these terms. "The external shock that might have precipitated the developing country slowdown is the increase in real interest rates after the Volcker Shock in 1979", wrote World Bank senior researcher William Easterly in 2001. "The interest on external debt as a ratio to GDP has a statistically significant and negative effect on growth."
A few blocks away from the Federal Reserve, one of Volcker's closest allies was World Bank president Tom Clausen, formerly Bank of America chief executive officer. As the Volcker Shock wore on, in 1983, Clausen offered his Board of Directors this frank confession: "We must ask ourselves: How much pressure can these nations be expected to bear? How far can the poorest peoples be pushed into further reducing their meagre standards of living? How resilient are the political systems and institutions in these countries in the face of steadily worsening conditions? I don't have the answers to these important questions. But if these countries are pushed too far, and too much is demanded of them without the provision of substantial assistance in their adjustment efforts, we must face the consequences. And those will surely exact a cost in terms of human suffering and political instability."
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