Africa holds great economic potential for foreign investment, however the ongoing local conflicts present a lot of threats associated with the opportunities. Find out what developments are likely to follow as a result of the summit and what's in store for Africa in this edition of Agree or Disagree.
As a continent of great economic potential and strategic importance Africa attracts investors from abroad with the Chinese investment so far being the most aggressive. Some analysts believe that China and the US rivalry over Africa may escalate to the point of cold war.
Radio VR’s Agree or Disagree discusses how justified this view is withGeorge Koo, the founder of Strategic Alliances and Brendon O' Reilly, a journalist and writer for China Outlook. Nearly 50 African heads of state converged on Washington DC to discuss how to strengthen ties between the US and one of the world's fastest-growing regions.
How strategically important Africa is for the US?
Brendan O'Reilly: I think Africa is incredibly strategically important for multiple reasons. What everyone is focusing on now is economic growth. In the wake of the great recession Africa is the continent, which is growing the fastest in terms of GDP. Africa is important strategically in terms of the US’s global war on terror. Right now, we see in Africa lots of local conflicts, oftentimes with the greater transnational Islamist movements. And this is of grave concern to the US.
George Koo: I think they are just beginning to realize how important Africa is, because this summit is virtually the first important summit that the US has had with Africa. The Europeans, the Japanese, the Chinese – they’ve all had African summits years ago.
Discussing the significance of the summit and the potential rivalry of the US and China over Africa. Some may actually say that this rivalry may escalate to the point where the two countries could start a cold war with each other. To what extent do you agree or disagree with this? How justified are these views and thoughts?
George Koo: I think that's the Western perception and the Western understanding, the Western way of looking at things, which is that rivalry and competition must inevitably lead to a war. And that's, unfortunately, the attitude on Capitol Hill and in Washington. I challenge that notion that why should economic competition lead inevitably to war?
In order to have a war it's like clapping hands, you have to have both hands. If only one hand's willing to clap and the other one demur, there may not be war, unless, of course, you make up the provocation, which has happened in the past. The economic competition in Africa should be good for Africa. That means that major economic powers are paying attention and want to get their business.
This is a very positive outlook on things but the reality may actually show otherwise. If we look at China and its foreign policy, and its neighbors first, and its assertion in the Asia-Pacific region, the US is certainly worried about China's expansion there and assertiveness of its policies. That's one region that causes tension between the two countries. And Africa is another one, because the Chinese investment there is very aggressive. Some analysts may be right in saying that the tension really get to the boiling point. Brendon, what are your thoughts, where do you stand on this? Do you agree with what George said or do you think that forecasts like this, saying that the tension between the US and China may escalate in the future, are actually justified?
Brendan O'Reilly: I partially agree with George. I think he is correct in saying that there are major differences, but it is not necessarily going to lead to an open conflict. I think there is a large degree of geopolitical and economic rivalry. Right now, the Chinese foreign policy is not based on ideology, it's essentially based on interests. You look at China's politics not only internationally, but even domestically, I think it has changed a lot since Deng Xiaoping came to power.
Deng Xiaoping very famously said: “It does not matter if it's a black cat or a white cat, the cat that catches mice is a good cat”. That's essentially the Chinese policy around the world. China isn't trying to impose its vision of the ideal society, or the ideal government, or the ideal state on these countries in Africa. China is essentially trying to look out for its own economic interests. And if you look at the military side, there are no Chinese soldiers in Africa, except in some UN peace-keeping missions.
I think that Chinese approach in Africa and globally is just radically different than that of the United States. China is essentially trying to win this conflict by not fighting it.
The interests are more related to business than anything else.
George Koo: In pragmatic terms, China has no interest in taking on the United States militarily. They know that it's a lose-lose proposition, more clearly than, I think, the politicians in Washington. The politicians in Washington do not seem to understand that the United States from a military point of view has a full plate already and can't afford to take on any more. The budget couldn't afford it, it's going bankrupt as it is.
That's right, but then again the complexity of the situation in the region may place more demands on the United States militarily, so we don't know how certain conflicts will pan out.
George Koo: Hopefully, an enlightened leader or two will come along in the United States and smack themselves on the head, and say – oh my god, we can't continue on the course we are going on, we can't continue with being the world's policeman, we have to share the burden, we have to work with others and we have to bring China in as a partner, and not as an adversary. When they get to that point, I think, we really will be getting somewhere, because then everybody is going to be on a win-win path.
Sure, and that's certainly a very constructive way of doing things. We have discussed so far China and the US and their views on Africa and their policies but here I'd like to ask you briefly as well about France. That's another player that has interests in the continent, because France has a lot of colonies there. So, what can you say about France's influence in Africa, compared to China and the United States?
Brendan O'Reilly: I think, France has a lot of cultural influence in Africa and the economic influence. French is in the common language of business in many African countries, due to the history of colonialism. But I don't think you can compare France on equal footing with the United States or Chinese influence in Africa these days. I think France, due to the political pride, still maintains this feeling of influence in Africa. But when you look at the realities on the ground, I don’t think it really is. The total trade between Europe and Africa, the entirety of Europe, last year was about $137bln. And France, I think, has a big chunk of that but you can't compare it with the American or the Chinese influence.
George Koo: I think what Brendon says is true. I do think that France is behaving responsibly towards its former colonies, trying to help them combat terrorism and providing some military assistance. That seems to be obvious in what they are doing in Mali and Algeria and places like that. But they are not a heavy hand. And so, it's not a very highly visible presence, except for when these colonies got into trouble and needed some real help in trying to combat Islamic terrorism that's going on in those part of Africa. France is not the major player, it's really China that has been the major player and the United States that would like to reclaim their position in Africa.
Going back to the summit that took place in Washington recently – it was a three-day event and many called it unprecedented. What sort of expectations do you have? I mean what are the things that will come out and basically what is the significance of the summit and what can we expect to happen afterwards that would be equally beneficial for the US and Africa, and other interested parties?
Brendan O'Reilly: I think, essentially, what has come out of this recent summit, is the economic push. It wasn't just about the United States Government and African governments, but also United States businesses, large multi-national corporations based in the United States that are being encouraged to invest in Africa by the American Government.
As for the long-term effect, I think we'll see an increase of attention in Africa but as far as business side goes, I don't see how the United States can turn things around by this point. As George mentioned, as Chinese trade in Africa has boomed, the United States trade with Africa has actually decreased recently. I think there are several trends and reasons for that. One of them is that you have this increase in fracking and going after natural resources in the United States, so that the United States don’t need to import lots of oil from Africa.
And if you look at what Africa needs right now in terms of economic development, I don't think it's the things that American companies are specialized in anymore. What you are seeing is now large Chinese companies are moving into more stabilized countries, like Ethiopia and Madagascar and set up manufacturing. China has a problem now where the cost of the labour is too high. If you are getting paid making shoes in southern China working on a factory, you can be paid around $400 a month, whereas in Ethiopia they can be paid $40 a month. Africa is at the bottom now and they have an opportunity to really develop their manufacturing. And that's what Chinese companies are experienced in.
George Koo: Clearly when 50 African countries came to this summit, that's clearly an indication of the prestige, that they hold it in the US and that's why they came. You invariably would expect coming away from summits of this kind, of all kinds of declarations, of intentions to do good. And that will be the immediate consequence of the summit.
How much of it will be actualized down the road, as Brendan pointed out, China and the US, what they have to offer is very different. China has the knock off manufacturing that they can inject into Africa. Again, ironically speaking, it's the capitalism-driven situation. It's clearly a classic case of water flowing downhill. If you are the low-cost country, it makes sense for China to go and invest there, provided you can justify it from the productivity point of view.
The US is going to be coming from offering high technology things to the extent that there's a market there, there's an opportunity. One of the things that they talked about at the summit was how US could provide electrification within the infrastructure of electric reed in Africa. Whether that would actually happen is difficult to say, because, again, in China when you move towards Africa, the distances tend to move in concert with the Government.
In the United States the private corporations are not in the habit of moving in concert, in step with the US Government policy. So, a lot of unknowns. It remains to be seen. I think that if the economic opportunity is there, it will attract the private sector.
As George has rightly put it, there are a lot of unknowns at this point and, of course, there are a lot of opportunities that the continent offers and there're also threats associated with these opportunities, and partly because the region is not very stable at the moment, some countries have a very volatile situation politically and economically, and how things develop for the region both economically and politically will depend, of course, on the internal stability. For now, it's very interesting to see how the continent emerges and what opportunities it has on offer for both domestic and foreign investors. Discussing the opportunities that Africa has on offer for US and China and the possibility of rivalry between the two countries over the continent today I had with me George Koo who is a China watcher and founder of strategic alliances and Brendan O'Reilly, journalist and writer for China Outlook.
