Archive | January 18th, 2017

DAYR EL-ZOR: ISIS MELTING AWAY AMIDST HUGE COUNTERATTACKS BY SYRIAN ARMY

NOVANEWS
DAYR EL-ZOR: ISIS MELTING AWAY AMIDST HUGE COUNTERATTACKS BY SYRIAN ARMY AND RUSSIAN AIR FORCE; REPRESENTATIVE TULSI GABBARD IN DAMASCUS!! TAKE THAT MCCAIN

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DAYR EL-ZOR:

The recent attack on the Dayr El-Zor area, especially the airbase, was conducted by an almost all Iraqi and Gulf force led by Abu Ibraaheem Al-‘Iraaqi, a former Saddamist Special Forces operative) and a Saudi by the non de guerre of Abu Shaddaad Al-Jazraawi.  These two have their work cut out for them.  The Syrian Army’s Republican Guard defenders are veterans in every sense of the word.  Not only is the population surrounding the city totally committed to the central government, tribal leaders have made it also very clear that fighters from their ranks are champing at the bit to join the war against the nihilist forces of Wahhabism.

To prove this point, yesterday and today, local defense groups attacked ISIS strongholds in Al-Mayaadeen, Al-‘Ashshaara Village, and Al-Bulayl Village east of Dayr El-Zor City.  They killed 9 ISIS rodents and burned every remnant of their presence in the areas mentioned.  According to my source in Damascus, basing his information on unverified eyewitness accounts, the tribal fighters eviscerated some captured ISIS rodents with their hunting knives.

Over 16 suicide trucks have been pinpointed by SAA scouts and spotters.  These trucks were brought in from the Mosul area during the night of Friday, January 13, 2017.  Each truck has one driver whose job it is to blast a hole in the SAA’s defenses in order to allow certain specialized ISIS units (Inghimaasiyyeen, انغماسيين) to penetrate deep inside Syrian Army positions.  These particular kinds of rodents are former Iraqi Army Special Forces commandos and intensely trained Gulf Arabs who were moved from their bases in Mosul, Al-Raqqa and Palmyra in an effort to buttress the dwindling ISIS forces both east and west of the Euphrates.  The casualties among the rats are startling.  It is now a fight to the finish with the Syrian Army fully at the ready, bristling with arms and defended by swarms of Syrian and Russian bombers.

Witnesses to the frenzied rush to hospitals report, in one instance, convoys of ambulances heading helter-skelter to Al-Bukamaal, a town on  the border between Syrian and Iraq.  Most of the rodents needing immediate treatment are from battles being fought inside the city.

As of right now RG commanders are putting their forces together for a counter-attack which has been described to me as “massive”.

Just today, ISIS began burning tires in a clumsy effort to blind Syrian and Russian bombers.  Evidently, the tires were mostly spares taken from ISIS’ own vehicles leaving them with little chance of saving their vehicles if they get a puncture.

ISIS lies about occupying the cemetery area are exactly that – lies.  They have also not taken over the hill which casts a shadow over that area.  Pure fabrications designed to buoy up the collapsing morale of their rodents.  119 Tank Brigade which borders the Airbase has also not been occupied and remains in the hands of the SAA.  The only areas which have fallen under the artillery control of the devil-worshiping rats is Engineer’s Hill and Junayd Battalion which has temporarily blocked the road leading into the airbase.  I have been informed that steps are being taken now to remove this irritant.

As of today, despite the lies emanating from English propagandists, only 20 Syrian soldiers have been reported killed.  The number of ISIS killers dispatched to Hell is in excess of 1000 since Friday the Thirteenth a fact which could not be overlooked by the ISIS rodent command and which was the impetus for sending the specialized reinforcements to the area.  Also, of interest to our readers, is the lie from England about 10 Syrian soldiers executed brutally by ISIS savages in ways as diverse as running them over with tanks.  In fact, the individuals who have been executed by ISIS were informants for the army and civil servants working for the government.  Syrian soldiers do not surrender to ISIS because they know what their fate would be.

The SAAF and RuAF are blackening the skies over these areas now:  Industrial Quarter,Al-Ta`meen Hill, Al-Saala, Cemeteries, Burook Hill.  In these locations, the rats have lost 2 tanks, a BMP and 7 pickups with 23mm cannons.  Besides these areas, the SAAF and RuAF have been striking Huwayqa, Al-Rushdiyya, Al-Sinaa’ah, Al-Bughayliyya, Al-Hussayniyya, Al-Junayna.

A suicide driver in a truck loaded with TNT and C-4 was stopped dead in his tracks northeast of the airbase.  Sources say he had a madman’s smile as he drove his vehicle straight into the intestines of Hades.

At Burook Hill, the SAA foiled an attack northwest of the city killing 5 vultures.

ISIS has been reportedly moving family members outside the city in anticipation of a savage attack by Syrian Army forces.  Fearing the introduction of Shu’aytaat tribal fighters whose reputation for vendetta is very well known, the rats have decided to send their miserable offspring into the rural areas,  with hundreds of screaming tiny rodents shrilly coughing up their bloody and purulent venom into windows of the vans carrying them into an uncertain destiny where scarabs and scorpions live.

ISIS has named hundreds of its dead on its websites.  The only ones worth mentioning are:

Ibraaheem Shalash

Hammood Al-Naasser

 

ALEPPO:

Al-Mahdood-Dayr Haafer Axis:  10 ISIS pickups with 23mm cannons destroyed near the Air Force Academy.

 

DAMASCUS:

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Image result for tulsi gabbard beach

A developing story.  Our hero, Representative Tulsi Gabbard  (D-Hawaii), has just concluded a meeting in Damascus with many officials. We expect her to make a statement upon her return to her home state.  We will cover this important event.

 

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StWC: Why not Protest durind Obama’s Farewell Address ?

NOVANEWS

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Protest during Trump’s inauguration

Trump has said he will continue with the US military interventionism in the Middle East, engage in mass-scale bombing and steal the oil of Middle Eastern countries, massively increase military spending, (SAME AS UK MILITARY SPENDING)  carry out a military build-up in the Asia Pacific, escalate the tensions with China and Iran,discriminate against Muslims, and expand the use of the Guantanamo Bay prison camp, where people have been held for a decade and a half in appalling conditions and without due process of law.

He has also said that he is prepared to engage in a nuclear arms race with Russia  (HE SAID HE WILL WORK WITH RUSSIA IN REGARD TO THE NUCLEAR ARMS RACE) ??? * and that the US should “greatly strengthen and expand” its nuclear weapons capability. Many of his senior appointees, including his Defence Secretary General “Mad Dog” Mattis, are rabid neocon warmongers.  (OBAMA WAS RABID WARMONGERS DID YOU KNOW THAT ???)* Furthermore, the bulk of the US political and military establishment are unlikely to want any change to relations with Russia, and will probably maintain a high level of tensions.

Britain is keen to remain the US’ closest ally in its never-ending wars. It is spending billions on disastrous wars while the NHS is experiencing what the Red Cross has recently called a “humanitarian crisis”, with cancer operations being cancelled and the majority of urgent ambulance services failing to meet their response targets. We must campaign for an end to these skewed priorities and an end to the murderous “special relationship”.

* CORECTION BY SHOAH

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A new beacon of hope for The Gambia

NMG

For over two decades under President Jammeh, independent views were considered seditious. Secret police were everywhere listening for hints of subversion. Jammeh’s name was spoken only in whispers, unless you were praising him, in which case you genuflected and shouted yourself hoarse at rallies, thanking Allah for loving The Gambia so much as to bless it with a leader of such peerless morality, wisdom and compassion. That is why the people elected Adama Barrow on 1 December 2016.

Democracy is up to the people: A successful democracy does not rely on a single personality or an elected leader. All people need to partake in political processes. Space for citizen participation and the emergence of a civil society, diaspora activism and new media have helped ease Gambia’s transition from dictatorship to democracy.

The turnout in the December 1 elections is a good sign as it reflects the people want to take a more active role in the country’s democracy, suggesting democracy in The Gambia has longevity. It takes time to build a democracy after decades of dictatorship; The Gambia under Jammeh had a rule of law deficit, chronic corruption, complete control of the armed and combined security forces and tribalism.

The Gambian people finally decided to dislodge dictatorship and restore democracy; they want not only procedural democracy but substantive democracy: a functioning democratic system that will reflect in a contest of ideas between candidates, not a contest of financial strength or the ability to smear.

President Yahya Jammeh is the latest victim of coalition opposition politics in Africa. His defeat should send a clear message to other sit-tight, royalist leaders across the continent. The long- term solution to the Yahya Jammeh problem should be the introduction of a constitutional term limit for the Gambian Presidency to prevent another Jammehism from ruling as he wished to rule for “one billion years”.

When Yahya Jammeh conceded defeat after the December 1 presidential elections [he later turned around and rejected the results, throwing the country into a political crisis that still persists –Editors], the gesture was widely hailed and described as an indication of great hope for democracy in Africa particularly for the Gambian people, who Yahya Jammeh ruled with an iron-fist for twenty-two years. This 2016 presidential elections were perhaps the most significant political development in the political history of The Gambia in fifty-two years. The first transfer of power through the ballot box.

President-elect Adam Barrow is a product of a coalition of opposition parties which provided the platform for the people’s yearning for change. Barrow became the symbol of the people’s hopes, and of freedom from Yahya Jammeh’s dictatorship that was the benchmark of brutality, love of witchcraft and egregious human rights violations.

For over two decades under President Yahya Jammeh and his AFPRC regime, independent views were considered seditious. Secret police were everywhere, listening for hints of subversion. Yahya Jammeh’s name was spoken only in whispers, unless you were praising him, in which case you genuflected and shouted yourself hoarse at rallies and in Gamo gatherings, thanking Allah for loving Yahya Jammeh so much as to bless him and his family with a leader of such peerless morality, wisdom and compassion.

Those who demurred at such scurrilous sycophancy found themselves at the old GPMB buildings along Mariana Parade where Bambina is located, torture chambers built by the National Intelligence Agency (NIA). The state became a law unto itself, seizing land and property meant for hospitals, schools and other infrastructure to award its sycophants. If you sang praises like a parrot — as we were encouraged to do — you were rewarded. Many became overnight millionaires. The country’s economic growth rate went negative.

Under Yahya Jammeh’s rule, The Gambia plunged into a crisis of morality. It left a culture in which wealth, no matter how one got it, is a redeeming value. It bequeathed mind-boggling selfishness, as exemplified in our driving immoral habits; it inculcated a culture of mediocrity and short-cuts; it taught us to see the world through tribalism, and to shirk personal responsibility in the execution of public duty.

In a phrase, Yahya Jammeh and his APRC party left a Gambia whose value system must be re-engineered to support a prosperous Third Republic.

The foregoing dictates the kind of president The Gambia needs in Adama Barrow. First, a leader who will stake his personal prestige and sense of accomplishment on achieving the goals set in his campaign. This will mean assembling a team of high achievers irrespective of tribe or party loyalty, and demanding by personal example, total commitment to the task at hand, personal integrity and innovation.

Second, the country will need a leader who is keenly aware of our despotic past and is, therefore, totally committed to fully implementing the Constitution. This will mean acting, appointing, deciding only based on enhancing the aims of the Constitution.

Nelson Mandela understood keenly the human cost of apartheid, and on assumption of the presidency, he went about with a single-mindedness of purpose to banish completely its cultural institutional and legal underpinnings.

A third republic of The Gambia will need a leader who can visualize the society anticipated by the Constitution, and inspire us all to see that vision and work towards it. This will mean re-educating us not to analyze our society through the prism of tribe, thereby creating a new basis for social interaction and political mobilization.

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Après Zuma: Can the African Union save itself?

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The upcoming AU Summit will be “closed”, allowing only the accredited delegations and staff to participate in and witness its deliberations. What is clear is that it will give the current class of Africa’s Heads of State a once-in-a-generation opportunity to re-shape the organization.

The African Union (AU) has until its summit in Addis Ababa at the end of January 2017 to rescue itself from institutional sclerosis. A coincidence of fiscal, succession, diplomatic and governance crises jostling for the attention of its forthcoming summit will afford the bi-annual conclave of Africa’s rulers a rare opportunity to re-invent the organization or risk irrelevance before respectable company. Without a reputation, however, for bold, imaginative decision making, the odds remain slim that the outcome of the summit will be anything more than business as usual. That will be a debacle for the organization and the continent.

A fiscal crisis long in the making

As with many things, the origins of the AU’s crises begin with money. For too long, it has been quite poorly funded. Many sub-regional organisations, including the Economic Community of West African States (ECOWAS) and, for a long time, Colonel Khaddafi’s Community of Sahelo-Saharan African States (CEN-SAD), were much better funded. Despite their fondness for the empty pomp and circumstance of their ritual annual summits, many of the continent’s rulers were always reluctant to pick the tabs for running the organization. As the role of the AU in regional peace and security has grown in the last two decades, much of its appropriations have come from non-African countries in Europe and North America, all too happy to outsource potential African military and diplomatic landmines. The AU has been equally happy to grab the money.

The AU began to look for solutions to this untenable position in in 2001. Ten years later, in 2011, they invited Nigeria’s former ruler, Olusegun Obasanjo, to lead a review of the AU’s funding. After receiving the report of the Obasanjo review, a retreat of Africa’s Presidents and Foreign Ministers in Kigali, capital of Rwanda, on 16 July 2016 agreed “to conduct a study on the institutional reform of the African Union (AU).” Two days later, the AU Summit meeting in Kigali requested Rwanda’s president, Paul Kagame, to lead the study and “report on the proposed reforms and thus put in place a system of governance capable of addressing the challenges facing the Union.” President Kagame’s report will be on the agenda at the Addis Ababa summit.

A crisis of institutional succession

Also in Kigali, the AU was supposed to have elected a successor to the spectacularly inept tenure of the Chairperson of its Commission – as the AU Secretariat is now called – South Africa’s Dr. Nkosazana Dlamini-Zuma. Much of Dr. Dlamini-Zuma’s tenure, sadly, was spent in pursuit of her undisguised ambitions to succeed to South Africa’s presidency. Not content with being inept, she was also distracted. Under her watch, the continent’s priorities marinated interminably, acknowledged episodically in a half-hearted press release or with a shout out on her Twitter handle. The credentials of the candidates on parade to replace her in Kigali were indifferent. Faced with this line up of choice without change, the Kigali Summit decided to kick the can of elections down the road by six months.

Four months later, however, well into his stride on the brief to reform the AU, President Kagame reportedly requested the AU to defer the elections pending the completion and consideration of his report. If his recommendations are adopted, it is argued, they may re-define the structures, processes and person specifications for the job. Many of his peers, however, are already fully invested in the campaign to replace Dr. Dlamini-Zuma. Botswana, Chad, Equatorial Guinea, Kenya and Senegal have candidates. Their presidents and their envoys are criss-crossing the continent, negotiating bargains and grubbing for votes. Few of them seem prepared to suspend their ambitions for continental conquest until President Kagame’s yet undisclosed reform proposals.

The outcome of the Addis-Ababa Summit will hinge on the somewhat procedural issue of what takes precedence: consideration of Kagame’s reform proposals or the elections to the AU Commission. If the Heads settle for the former, the likelihood will be a hold-over Commission, possibly with Kenya’s Erastus Mwencha, the current Deputy Chairperson of the AU Commission, at the helm in acting capacity. This may not be entirely unacceptable to Kenya which has run an energetic campaign on behalf of its candidate. If not, then the Summit will be consumed by election fever. Either way, few will mourn the exit of Dr. Dlamini-Zuma.

A crisis for regional diplomacy and governance

Whether the elections take place or not may hinge on and determine the outcome of Morocco’s application to re-join the continental body that it left in 1984, following the recognition of the Saharawi Arab Democratic Republic (SADR). As an implicit condition for its re-admission, the King of Morocco has personally waged a full-court press garnished with ostentatious royal generosity, asking African countries to throw the SADR out of the continental body. The historical claims of the SADR are well founded in the Charter of the United Nations and the Constitutive Act of the African Union, as well as judicial opinions of the International Court of Justice and the European Court of Human Rights, among others.

To achieve its goals, Morocco needs the votes of two-thirds or 36 member states of the AU, the same number needed to install a new Chair of the Commission. At the Kigali Summit in July 2016, up to 28 countries (out of 54) appeared prepared to vote to exclude SADR from the body.

The leaders who meet in Addis-Ababa may need to be reminded that the first objective of the Organisation of African Unity (OAU), predecessor to the AU, was de-colonisation. Morocco’s mission of perpetually annexing the Saharawi subverts this. As a pre-condition for granting its application, the AU could easily require Morocco to renounce all claims to the territory of the Saharawi. As a stop-gap measure, they could also refer the question of the legal status of the SADR to the African Court on Human and Peoples’ Rights for a judicial opinion to govern the diplomatic and political decisions thereafter.

The other issue is The Gambia. At the end of 2016, Gambia’s mirthless president, His Excellency Sheikh Professor Alhajie Dr. Yahya Abdul-Aziz Awal Jemus Junkung Jammeh, Naasiru Deen Babili Mansa, (Colonel Retired), Commander-in-Chief of The Armed Forces and Chief Custodian of the Sacred Constitution of the Gambia – to afford him his full entitlement to gibberish – conceded after clearly losing a general election whose outcome he could not pre-determine (despite his best efforts). More than a week after his concession, however, Jammeh claimed non-existent powers to annul the election, requisition a fresh one, and sit tight in the interim. Thereafter, he sent soldiers to ransack the premises of the electoral commission, exile its leadership and has generally given regional leaders mediating this manufactured impasse the run-around.

A “closed Summit”

Each of these issues on its own would be very weighty. Together, they add up to a very formidable menu that begs the summiteers in Addis-Ababa not to create a mess. If the Summit accedes to the plan put forward by President Kagame, it could defer the ballot to fill the vacancies in the AU Commission. If not, then a vote will proceed. It’s too early to handicap the process but the early indications are that Kenya’s Amina Mohammed and Senegal’s Abdoulaye Bathily could be ahead. A dark-horse cannot, however, be ruled out. Morocco, still not a member of the AU, is reportedly weighing in with diplomatic savvy in favour of a candidate whom it considers more favourably disposed to its divisive designs. The outcome could hinge on the inclinations of Algeria and Nigeria, both strong supporters of the SADR. If both remain implacable, a hung Summit could ensue.

Many are praying for the Gambian issue to be resolved before the Summit. Effectively, Mr. Jammeh has foisted a classic unconstitutional regime on the country, contrary to the norms and standards of the AU. The Gambia is due to inaugurate a new president next week on 19 January but it is unclear whether this will happen. If it doesn’t, Mr. Jammeh will become an issue for the AU Summit. Should this come to pass, many of his AU peers could be far from well placed to tell Mr. Jammeh what to do because they too have run carts and horses over the will of their people and the rules in their own constitutions.

In the language of the AU, the Summit will be “closed”, allowing only the accredited delegations and staff to participate in and witness its deliberations. What is clear is that it will give the current class of Africa’s Heads of State a once-in-a-generation opportunity to re-shape the organization. It could mark a break with business-as-usual in the AU. But if they prove unwilling or unable to see the opportunities or to take them, few will be persuaded to take the AU seriously thereafter.

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African Union faces turbulent headwinds

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The current efforts to elect a new Chair of the AU Commission have been caught in the crosswinds of the impact of illicit capital outflows, the question of reseating Morocco in the AU and the challenges that Africa will face during a period of the ascendancy of the ideas of Donald Trump and Marie Le Pen. The AU will survive this turbulence. But the rise of the Pan African Movement will likely sweep away the present crop of leaders.

Introduction: Three crossing points

In all countries of Africa, from Egypt to the Democratic Republic of the Congo (DRC) and beyond there are stirrings of the people who want to assert themselves politically in the context of realizing the pan African project of building a peaceful, integrated and prosperous Africa. These stirrings have created massive political tensions and are nowhere more evident than at the seat of the African Union where the poor and oppressed of Ethiopia have demanded a new democratic dispensation that provides real resources to the majority of the people.  Despite the glowing figures of economic growth, averaging 10.8% per year in 2003/04 – 2014/15, exploited Ethiopians have taken to the streets and internationalized their protests at the recent Olympics in Rio.  At state of emergency in Ethiopia confronts the AU about its future in a society of contested politics.

 

The peoples of Africa are responding every day to the global capitalist crisis by stating that the goals of Agenda 2063 cannot be achieved with the crop of current leaders. Genocidal economic relations in the South Sudan, dictators for life, idle threats to withdraw en masse from the International Criminal Court (ICC), war as a business in the so called War against Terror and the illicit capital flight from Africa preserved the interests of a class in Africa that opposed real African Unity. This is one of the top contradictions facing Africa at the crossroad between self-financing and illicit financial flows out of Africa.

In response to critical opposition to the stagnation at the AU Commission, the current leaders promised to ‘reform’ the African Union and to work harder to realize the aspirations of Agenda 2063. The goal of the ‘reform process’ is to transform the AU into a more effective and self-reliant institution. It will be the argument of this short intervention that the African Union is now facing turbulent headwinds.  The current efforts to appoint a new AU Commissioner has been caught in the cross winds of the impact of illicit capital outflows, the question of the reseating of Morocco in the AU and the challenges that Africa will face during a period of the ascendancy of the ideas of Donald Trump and Marie Le Pen. The conclusion will suggest that the Pan African movement will rise to the challenges posed by the current moment and the real push for reconstruction and transformation in Africa will accelerate in this period.

African Union and capital flight

Most of the countries of Africa are now deeply integrated into the international illicit economy that is embedded in looted minerals, bunkering of hydrocarbons, money laundering, illicit funds from fraudulent activities and nonpayment of taxes. In my most recent contribution to Pambazuka, I had outlined in great detail the way in which Kenya is one of the principal beach heads for this global illicit economy. http://www.pambazuka.org/pan-africanism/can-kenya-lead-african-union

Of any major country, Nigeria has probably had the highest percentage of its gross domestic product stolen— largely by corrupt officials—and deposited externally. Since the 1960s, up to $400 billion has been lost because of primitive accumulation, with $100 billion shifted out of the country. In October 2016, the government filed 15 separate suits against 15 oil companies at the Federal High Court in Lagos to recover billions of dollars that have been illegally siphoned from the country. As reported by Sahara News, “the Nigerian government used the consortium of experts for the intelligence-based tracking of the global movements of the country’s hydrocarbons, including crude oil and gas, with the main purpose of identifying the companies engaged in the practices that had led to missing revenues from crude oil and gas exports sales to different parts of the world.”  http://saharareporters.com/2016/10/04/nigeria-sues-shell-companies-407m-…

Future researchers on the state visit of President Buhari to Washington in July 2015 will be able to analyze the call from Buhari for assistance in identifying the more than US$150 billion that has been illegally taken from Nigeria and what Obama informed Buhari of where to look for the money. Such researchers will then be able to connect the travels of President Buhari to Kenya, London and Dubai in search of these funds and how these centers of money laundering rebuffed the Nigerian effort to recover stolen assets. The legal action that has now been taken in Nigeria followed the earlier fine against that of telecommunication firm MTN for nonpayment of taxes is one indication that at the highest political levels in Nigeria there is a commitment to curtail money laundering.  A study by UNCTAD found out that between 1996 and 2014, “under invoicing of oil exports from Nigeria to the United States was worth $69.8 billion, or 24.9% of all oil exports to the US.”

With the release of the Panama Papers in 2016 there is now more evidence of the volume of ‘illicit financial flows’ and the amount of wealth funneled out of Africa every year by capitalists. Reports in the media that the world’s super-rich have taken advantage of lax tax rules to siphon off at least $21 trillion, and possibly as much as $32tn, from their home countries and hide it abroad – a sum larger than the entire American economy – were circulated in early 2016. In these reports, Nigeria, Cote D Ivorie and Angola were at the top of the list of African states with high net worth individuals holding hundreds of billions outside their country.

One major area of future research by progressive pan African intellectuals at home and abroad will be to assess the linkages between political leaders and the opaque world of finance capital to unearth the infrastructures that have been put in place to ensure illicit financial flows from Africa. Discussions on the nonpayment of dues to the AU by member states have been another example of the failure of intellectual and political leadership at the top Commissions of the AU.

The fact that over 70% of the AU Commission is funded by imperialist states (called donors ) is itself one indication of the infrastructure of capital flight. These ‘donors’ actually have the intelligence on how much money is being shipped abroad by African leaders, hence they seek to keep up the fiction of providing ‘aid’ to Africa. One good example of this duplicity was the case of the stolen funds from Zimbabwe. A few weeks after stepping down as Chair of the AU in January 2016, in an interview on March 3, 2016, President Mugabe made the announcement that US$15 billion had been stolen from Zimbabwe over the past 7 years under his watch. Yet, there has been very little exposure of how the Mugabe regime destroyed the economy while his cronies robbed the diamond mines and exported billions. In order to facilitate their export of capital they resorted to using the US dollar as the currency of the society while printing worthless bonds for the people to use as a medium of exchange in Zimbabwe.

Why didn’t Madame Zuma act on the High Level Panel on Illicit Financial flows out of Africa?

British corporations are the most experienced in the business of stealing and looting minerals from Africa. A recent report by the non-governmental organization, War on Want, documents how 101 companies listed on the London Stock Exchange (LSE) — most of them British — have mining operations in 37 sub-Saharan African countries. They collectively control over $1 trillion worth of Africa’s most valuable resources. http://media.waronwant.org/sites/default/files/TheNewColonialism.pdf?_ga=1.3253744.1389028767.1479741089

The details that are presented in this report are the kind of facts that should be studied in every major university and policy think tank in Africa. While this author takes issue with their designation of Sub Saharan Africa, we have witnessed the downgrading of African universities so that NGO’s can produce facts on ‘conflict gold’  but there is no serious research being carried out because the same ‘donors’ starve African researchers of real resources.

The most recent information by UNCTAD on the misinvoicing of minerals in Africa has exposed the fact that the question of gold exports from South Africa involved the pure smuggling of gold,

“The most striking feature of the gold sector in South Africa is the huge discrepancy between the amounts recorded in that country’s official trade statistics and those reported in its trading partners’ records. According to South Africa’s data, the country’s cumulative gold exports were $34.5 billion from 2000 to 2014, whereas according to trading partner data for that period they were more than three times higher, at $116.2 billion. This is indicative of massive export underinvoicing.” In fact, the study reports, the physical volume of exports (using the data from SA’s partners) and export underinvoicing are in “perfect correlation”. “This suggests that export underinvoicing is not due to underreporting of the true value of gold exports, but rather to pure smuggling of gold out of the country. Total misinvoicing of gold exports to South Africa’s leading trading partners was $113.6 billion over the 15-year period. At an average exchange rate of R9 per dollar, this corresponds to over R1 trillion.”

What is true of misinvoicining in South Africa is true for every conceivable commodity exported from Africa. One of the failures of Madame Zuma in her role as Chairperson was to fail to aggressively place the resources of the AU in the area of combatting illicit financial flows and following the recommendations of the Thabo Mbeki high level panel on Illicit Financial Flows from Africa.  http://hdl.handle.net/10855/22695

Was it an accident that the press conference announcing the findings of this high level panel took place in Abuja where former President Mbeki announced that said African countries lose between $50 billion and $60 billion annually through illicit financial flow, IFF? . “Monies for infrastructure and social amenities for the poor African population are being transferred to other countries via illicit financial flows,” said Mbeki at his report on the findings of the panel.This report by the High Level Panel reinforced the research that has been done over the years and reproduced by the UNECA to bring home the reality that Africa lose between $50 billion and $60 billion annually through illicit financial flows. [1]

Capital flight and insecurity in Africa

There is competition between Britain, France, and the United States to decide on which country can produce the most corrupt officials in suborning African bureaucrats into the world of primitive accumulation of capital. The US uses the institutions of the Washington Consensus and the US Africa Command for their corruption, the British seek to be sophisticated and hide behind  the mineral houses and London Bullion Market Association (LBMA) while the French are the most obscene in their corrupt and manipulative politics in Africa. Eva Joly has exposed the role of the French intelligence services and oil companies in those countries that are still dominated by France.

The scandalous relations between France and the puppets in many former colonies are well known and it is these puppets who compete to protect France in the corridors of the African Union. Before its name was changed, the French Elf state oil company, France’s largest enterprise with a turnover of 232.6 billion francs in 1996, had been robbed of over 2 billion francs—305 million euros—by its top executives, largely during the second seven-year term of ‘socialist’ president François Mitterrand (1988-1995).  Serious law schools in Africa need to get a hold of the judgement relating to the criminal activities of Elf. In their 1,045-page indictment and a further 44,000 pages of documents, the investigating magistrates described in detail “a large number of operations carried out on the margins of normal functioning of the group’s structures, and destined… to collect assets off the books”.

The company’s “Mr Africa”, André Tarallo, was jailed for four years and fined €2 informed the court in Paris more than ten years ago that, “

“annual cash transfers totalling about £10m were made to Omar Bongo, Gabon’s president, while other huge sums were paid to leaders in Angola, Cameroon and Congo-Brazzaville. The multi-million dollar payments were partly aimed at guaranteeing that it was Elf and not US or British firms that pumped the oil, but also to ensure the African leaders’ continued allegiance to France. In Gabon, Elf was a veritable state within a state. France accounts for three-quarters of foreign investment in Gabon, and Gabon sometimes provided 75% of Elf’s profits. In return for protection and sweeteners from Elf’s coffers, France used the state as a base for military and espionage activities in west Africa.”[2]

As reported at the time of the trial, ELF had been set up as a  state enterprise by General de Gaulle in 1963 “to ensure France’s independence in oil and which lived, grew and prospered in a special and incestuous relationship with Africa” (Le Monde, November 12, 2003). As Loïk Le Floch-Prigent put it: “In 1962, [Pierre Guillaumat] convinced [General de Gaulle] to set up a parallel structure of real oil technicians. [By creating Elf alongside Total] the Gaullists wanted a real secular arm of the state in Africa…a sort of permanent ministry of oil…a sort of intelligence office in the oil-producing countries.”

Loïk Le Floch-Prigent, CEO of Elf from 1989 to 1993, received a jail sentence of five years and a fine of 375,000 euros. Alfred Sirven, former general affairs executive, also got five years and a 1 million euro fine. André Tarallo, 76, former number-two in the hierarchy and known as “Mr. Africa,” was given four years and a 2 million euro fine. Alain Gillon, former refinery executive, received a three-year jail sentence and a 2 million pound fine. However, their counterparts and underlings have intensified their work in Africa and France has been the most active within the ranks of her colonies and within the Peace and Security Council of the African Union.

The name of the company Elf Aquitaine International may have changed (now Total) but the continuity in practices of theft and bribery are so clear that these elements from France and the EU cannot afford real democratic change in African societies such as Gabon. The corruption of the French capitalists has been well documented by Eva Joly and more needs to be done in relation to the role of France in financing and supporting insurgents in places such as Mali and Central African Republic and then turning around to the Security Council of the UN to lead the fight against terror in Mali and Central African Republic. The Peace and Security Council of the AU has permitted the European Union to set the agenda of what defines terror and terrorism in Africa. Both China and Russia as members of the Security Council of the United Nations have been complicit in giving a pass to France for her activities in Africa. In the case of former President Sarkozy, he particularly worked hard to get the Chinese to be allies in their corrupt practices.

When the funds and minerals are fraudulently taken from African economies, then the foreign banks establish special desks to ensure that the illicit funds flow to offshore bank accounts. None of the reports on illicit flows out of Africa made the connections to the questions of militarism, insecurity, the so called war on terror and the role of international military operators, especially private military contractors. Cameroonian intellectuals who are researching on the expansion of Boko Haram beyond Nigeria are slowly documenting the duplicitous role of France in the enlargement of terror in Central and West Africa

There has been talk of the reform of the African Union and the leadership of this reform process has been placed in the hands of President Paul Kagame of Rwanda. A visit to the largest gold refinery in the Gulf of Arabia will widen the discussion of reform in the AU to implicate the looting of resources from the DRC and to place the mandate of the Peace and Security Council of the African Union in the elaboration of identifying the looters and their chief beneficiaries. How can Kagame lead a ‘reform process’ in the AU when his regime violates the basic human rights of members of the opposition to the point of killings on foreign soil?

At the Kigali summit of the African Union in 2016,  the President of Rwanda announced an impressive team to spearhead the reforms at the African Union so that this Pan African body can be more self-reliant. It was proclaimed that member states will be expected to contribute 0.2 per cent of proceeds from levy on eligible imports to fund operations of the organisation. What remains striking in the proclamation  is the fact that these schemes seem to deflect attention from the ways in which African economies are integrated into the present global economy and that there can be no self reliance until there are serious efforts to control the wealth of Africa. Any study of the looting of the DRC by Uganda and Rwanda will expose their complicity in ensuring that Africa simply digs out minerals and all of the added value is accrued to other countries.

During the Kigali summit, a new funding model was adopted to make AU operations exclusively funded by subventions from member states A few years earlier, a previous high-level panel chaired by former Nigerian president, Olusegun Obasanjo, had been appointed to look at alternative sources of financing for the AU. Then, there was the recommendation that member states raise revenue by imposing a $10 airfare levy on each international flight leaving or entering Africa and a $2 levy per hotel stay in Africa. This levy remained just another proposal with no real effort towards implementation.

Now, Paul Kagame as the lead person for the ‘reform process’ has designated nine prominent to oversee the reform efforts of the African Union. Of these nine, many are aware of the drain of resources because of the absence of processing facilities in Africa. Others have participated in the detailed studies of illicit financial flows out of Africa. It will remain to be seen whether the Chairperson of the Reform process, (Dr Donald Kaberuka, the former president of the African Development Bank (AfDB) and Finance minister of Rwanda) will raise the question of African resources in the global value chain as part of the agenda of how to increase revenues for African peoples, and ultimately for the African Union.

Europe is afraid of the full unification of Africa

The question of the AU budget as discussed in the deliberations about ‘reform’ had steered clear of the questions of capital flight and definitive benchmarks of the African Monetary Co-operation Programme (AMCP) of the Association of African Central Banks. [2] Patriotic Pan African bankers who understood the full impact of external currency domination of Africa had been keen to develop the African Currency Unit as far back as 2002. At the 1963 meeting of the OAU, Kwame Nkrumah had admonished the African leaders that ‘Africa must unite or perish.’  For fifty years the Pan African project was pushed forward by the Lagos Plan of Action and the Abuja Treaty of 1991 establishing the African Economic Community. The former President of Libya had gone ahead with precise plans for the gold reserves of Libya to be used to anchor the African currency. After the NATO intervention in Libya it emerged that the primary motivation for the launch of the war was to halt the process of realizing the Pan African project of a common currency in Africa. Revelations from the correspondence between the Secretary of State of the United States, Hilary Clinton and Nicolas Sarkozy, the President of France in March 2011 revealed that the plans for the NATO intervention were dictated by the following issues:

  • A desire to gain a greater share of Libya oil production,
  • Increase French influence in North Africa,
  • Improve his internal political situation in France,
  • Provide the French military with an opportunity to reassert its position in the world,
  • Address the concern of his advisors over Qaddafi’s long term plans to supplant France as the dominant power in Francophone Africa.https://consortiumnews.com/2016/01/12/what-hillary-knew-about-libya/

Many of the leaders who had retreated from supporting the African Monetary Cooperation Programme are being made aware of the real role of international finance as the more literate follow the rulings of the British court in relation to the resources of the Libyan Investment Authority that had been purloined by Goldman Sachs. The ruling of the High Court in London in favor of Goldman Sachs against the Libyan Investment Authority is only serving to increase the literacy of Africans on the workings of the international financial oligarchy. https://www.judiciary.gov.uk/wp-content/uploads/2016/10/lia-v-goldman.pdf

Recently President Museveni gave notice that the African Union will be working more aggressively to end foreign domination in Libya. Museveni stated that,

“We recently had a meeting in Addis Ababa and told all and sundry that AU intends to rescue Libya and we also made it clear that future attacks on African soil without coordinating with AU are not acceptable, to put it mildly. Can Africa defend African soil?  Very much so.”

This kind of bravado statement of Yoweri Museveni after the AU High Level committee meeting on 8 November 2016 belied the reality that at least three members of the AU committee, Chad, Egypt and the Sudan are partners of NATO in the current destruction of Libya. http://www.peaceau.org/uploads/auhlp-meeting-on-libya-8-nov-2016-en-.doc…

In the book, Global NATO and the Catastrophic Failure in Libya, this author brought out the graphic historical lessons from the destruction of Libya and what lessons that will be learnt when comparing the invasion of Libya to the Italian invasion of Abyssinia in 1935. The PanAfrican movement of that period accelerated the end of colonial domination in Africa.
Lessons from the Italian invasion of Abyssinia

Between 1935 and 1946 the global mobilization against fascism built new alliances internationally and quickened the pace of decolonization in all parts of the world. That anti-fascist internationalism deepened with mass resistance inside of Africa and linked the pan African movement to the Bandung process to cement the South Project. From that moment until now, the Pan African movement has been a central anchor of the South Project, that is the project of creating a new international economic order. Africans are being called upon to rebuild and strengthen this project with calls from the belly of empire to defend black lives. The present generation of youths is being mobilized through new means of communication to realize the goals of real Pan African solidarity from Burkina Faso in West Africa to Bahia in Brazil.

European project shatters in the face of solidarity in the South

The question of the rejoining of the AU by the present Moroccan leadership forms the next major challenge for the future of the African Union.  Since 1984, the political leadership of Morocco had placed its aspirations on the future of the European project, but with the implosion of the European ideal as manifest with Brexit, the Moroccan leadership has decided to rejoin the African Union. In the process, the Moroccan leadership seeks to strengthen the neo-liberal pressures of global capital inside the AU to challenge the anti-colonial stance of the African Union on Western Sahara and all outstanding colonial territories (Puerto Rico, Cayenne, Martinique, Guadeloupe Mayotte, etc).

Progressive Africans have been tracking the economic diplomacy of Morocco in the rest of Africa. As one commentator outlined,

“Morocco is currently courting a number of African countries relentlessly, including Madagascar, Tanzania, Rwanda, and others. Morocco has signed 19 economic agreements with Rwanda and 22 with Tanzania—two countries that traditionally backed the Western Sahara’s quest for decolonization. Nigeria Morocco have signed a total of 21 bilateral agreements, a joint venture to construct a gas pipeline that will connect the two nations as well as some other African countries to Europe. It is easily transparent that the economic agreements with these countries imply ulterior motives for increasing Morocco’s leverage in its campaign to return to the AU and deal a blow to Western Sahara’s aspirations for self-determination. Morocco is waging a similar campaign internationally and in the halls of the U.S. congress by hiring expensive lobbyists and sleazy public relations firms.” [3]

It is in the push by Morocco to play a leading role in the AU that is helping to define the future of the AU in world politics. The political leadership of Morocco has been working through states such as Cote d Ivorie, Gabon and Senegal to promote the interests of the Moroccan leadership but the limits of this alliance with Senegal and Cote D Ivorie were exposed at the heads of state meeting of the 4th African-Arab summit in Equatorial Guinea

The Saharan Arab Democratic Republic (SADR), declared by the Polisario Front in 1976,  is a member of the African Union At the Malabo Summit of African and Arab leaders in  November 2016, Morocco found out the limits of its influence when it tried to force the question of removing the representatives of the SADR from the meeting. When Morocco walked out of the meeting, only the most conservative monarchies of the Gulf – Saudi Arabia, the United Arab Emirates, Qatar and Oman – pulled out of the summit over the participation of the Polisario Front delegation. Many governments such as Egypt and Kuwait who in the past would have been supportive of Morocco decided to stay in the meeting, exposing the diplomatic isolation of Morocco.

This push by the Moroccans is also caught up in the struggles for a new chairperson of the AU Commission. My most recent article on whether Kenya can lead the African Union offered some reasons why the interpenetration of western financial and security interests in East Africa disqualifies Kenya from taking a leadership role.

It is the contention of this intervention that at this historical moment the ideas of the Moroccan leadership confront the aspirations of the Moroccan peoples and thus the question to be posed is not whether Morocco will be part of the AU, but what kind of politics will emerge in Morocco out of the present stirrings of the oppressed citizens of Morocco. The death of a fishmonger in the northern town of Al-Hoceima who was crushed to death (inside a garbage truck as he tried to retrieve fish confiscated by police) exposed another reality of thousands of outraged Moroccans.  The present leadership of Morocco has a shortsighted understanding of world politics and have not yet grasped the seismic shift that has taken place since the imperial interventions in Libya and the war in Syria. Hence, they could not understand why Egypt is not under the thumb of Saudi Arabia as in the past. The turbulence in the revolutionary politics that had been initiated in the streets of Cairo and Tunis may seem to have subsided, but the youths of Africa are assessing the new forms of organizing for the next round so that the decisive blow against neo-liberalism in the next round of revolutionary struggles will sweep away leaders who seek to reverse the gains of popular rebellions.

Reparations and African Descendants.

The third major contradiction for the AU will be how it confronts the growing threat of fascism. The election of Donald Trump in the United States and the rise of the ideas of Marie Le Pen in Europe have brought back the questions of racism and xenophobia to the center of world politics. Repairing humanity from the scourge of racist and genocidal violence has been at the center of Pan African political activity since the days of enslavement. In the last years of the OAU the Reparations question had been high of the agenda with positive interactions between the Global African family in all parts of the planet. The present leaders of the AU who have been silent on the question of the black lives at home and abroad are now faced with a vibrant #Black lives matter social movement that is spreading in all parts of the globe. When Haiti attempted to join the AU in 2016, this African society was rebuffed by a leadership that does not understand the history of Pan Africanism and the centrality of Haiti in the History of Pan African Revolts. Leaders who understand the so called ‘diaspora’ only in terms of remittances are being exposed for their silence on what is happening to Africans on a day to day basis in the face of police killings. The demands for reparations and for respecting Black Lives in the era of Donald Trump will sharpen the contradictions between the EU brand of Pan African partnership and that which comes from ordinary Africans.

There is little reference at the official level of how Agenda 2063 would affect the more than two hundred and fifty million Africans of the Global African Family living outside the geographical boundaries of Africa. At the bidding of their ‘global partners’ that seek to set the tone for research and the agenda in Africa there is emphasis on the SDG goals instead of deepening the understanding of reparations and reparative justice. Slowly, the EU-Pan African partnership is downplaying the aspirations of Agenda 2063 and in its place organizing meetings all over Africa on ‘good governance’ and ‘security sector reform ‘instead on the role of financial houses in money laundering.

On the whole, the present leaders had a different project from the producing classes who believed that the idea of Africa for the Africans at home and abroad should not be a slogan. African intellectuals are torn between these two visions of social and economic change, with a small minority carrying forward the Nkrumahist vision that had inspired the call for full unity. The political upheavals of the current currency wars and the wars on terror will have impacts on the entire process of African unity and one of the challenges for the progressive forces will be how to engage with the popular producing forces to seize on moments to push harder for a common currency and to make legal the idea of the free movement of the people of Africa.

When the AU Constitutive Act was being drafted, it was the conscious effort of the progressive Pan Africanists that the AU would be qualitatively different from the OAU. The Secretary General of the OAU had worked from a Secretariat. The AU has a Commissioner whose powers to intervene are clearly stated in the Constitutive Act. Current leaders such as Yoweri Museveni and Paul Kagame may grandstand on reforms and the capabilities of the African Union but the seriousness with which they will be taken will be determined by the levels of transparency and democratic participation in their societies.  Nonpayment of dues by member states of the AU is itself a statement about where their loyalties are. They have kept foreign banks alive while their people go without basic necessities. It is in Nigeria where there is the largest section of the African working class where one will have to grasp the joint struggles against capital flight and Boko Haram. Two Nigerian leaders were killed when they took assertive action against empire. The psychological warfare against Nigeria is most intense in order to detract from the calls to bring to justice the fraudulent leaders. Both Murtala Mohammed and Chief M.K.O Abiola were eliminated when they decided to stand up for Africa. The late Tajudeen Abdul Raheem had worked hard for the building of Pan African Unity and he had admonished the youth to organize.

Conclusion

This call for organizing is now clearer as the liberal ideas of the West has been shattered with the coming to power of the alt right in Europe and North America. These neo fascist forces have made it clear that there will be no grey areas on the question of racism. It is this same racism that entreats the leadership of Europe and North America to seek the recovery of capitalism on the backs and bodies of the African at home and abroad. The current rebellions in Ethiopia and South Africa demand new engagement with new ideas about transcending neo-liberal capitalism. The same foundations that have supported the leaders in the DRC, Ethiopia, South Africa and the Sudan are busy  organizing meetings to ensure that the rebellions now underway does not really disrupt the looting of African resources.

Kenya remains the model for western foundations of spending peanuts on studies on ‘democratic reforms’ while international capital support a Kenyan ruling class that divides the working peoples on the basis of religion and “tribe”. The corruption of the Kenyan military led to their catastrophic defeat in Somalia in January at the el Ade (comfort base). Somali insurgents fighting against external military presence in Somalia killed 180 Kenyans in January at a camp in el Ade. Eleven months after the killings, the Kenyan military refuse to provide figures as to the numbers killed. Instead, the Kenyan military is promoting their book, Operation Linda Nchi: Kenya’s military experience in Somalia. [4]

Faced with the fact that Kenyans want real information on the deaths in Somalia, the government of Kenya has refused to provide information as to how many were killed. Given the revolutionary potential of the Ethiopian workers and small farmers, the President of the USA has used his authority to enlarge the operations of the US Africa Command in Somalia. On November 27, President  Obama acted to give the legal authority for the expanding war in Somalia using the U.S. Special Ops, AFRICOM, private contractors, and the CIA with the 9/11 Authorization for the Use of Military Force (AUMF) for Iraq.  US military personnel in Somalia can easily be redeployed to Ethiopia when the current revolutionary upheaval matures.

Member states of the African Union have been silent on this expansion of the war when for two decades it was stated in the corridors of power in Washington that it was the presence of US military personnel in Africa that acts as a magnet for misguided youths who are financed by the Wahabists.

At the time of submitting this article, the peoples of Africa were confronted with the clowning refusal of Gambian President Yahya Jammeh to accept the results of the elections of December 1, 2016 when he lost  to the leader of the combined opposition led by Adama Barrow. While the diplomatic dance of the AU and ECOWAS is underway, serious Africans need to engage with the Stolen Asset Recovery Initiative that had been launched in 2007 by the United Nations Office on Drugs. Such engagement will shift the discussions on the question of where to get the resources to fund the work of the African Union.

The renewed confidence of Africans is emerging in the midst of an economic depression in Europe and at a moment when Africans are stating clearly that there must be new values for African unity, for healing ourselves and the world (Maathai 2010). Wangaari Maathai as a feminist and environmentalist in the Pan African Movement had brought the questions of environmental repair to the forefront of the discussions on Pan Africanism. This new brand of Pan Africanism that respects life, health, peace and environmental reconstruction is slowly asserting itself in all parts of the Pan African world. The AU will survive the turbulent headwinds. It is not clear whether most of the current leadership will survive. The three crosscurrents promise to blow many away.

* Horace G Campbell is the Kwame Nkrumah Chair at the Institute of African Studies, University of Ghana at Legon.

End notes

[1] Ajayi and L. Ndikumana (eds.), Capital Flight from Africa: Causes, Effects and Policy Issues. Oxford: Oxford University Press, 2015

[2] Jon Henley, “Gigantic sleaze scandal winds up as former Elf oil chiefs are jailed,”

https://www.theguardian.com/business/2003/nov/13/france.oilandpetrol

[3] Yohannes Woldemariam, Behind Morocco’s New Tango with the African Union, https://www.ghanastar.com/africa-news/behind-moroccos-new-tango-with-the…

[4] Official KDF Account, Operation Linda Nchi: Kenya’s Military Experience in Somalia,  Ministry of Defence, Kenya 2014

 

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China’s Challenge to the World Economic Order

NOVANEWS
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Now well into the second decade of the 21st century, the world is witnessing the true extent of China’s economic, political, and growing military reach. This reach and integration into the globalized world has been gradual, incremental, and quiet over the past three decades. In the shadows, China has accelerated significantly in the past 10 years. What does this mean for the established global order? This paper is a roadmap looking to join the dots on that journey.

China has experienced unprecedented success in recent years in its opposition to the Western-dominated international economic order. These successes, from the establishment of the Asian Infrastructure Investment Bank (AIIB) and the BRICS New Development Bank (NDB) to the rolling out of the One Belt One Road (OBOR) initiative and the internationalization of the Renminbi (RMB) are all part of a grand strategy to achieve economic hegemony.

Our key takeaways are as follows:

  • The domestic economic realignment, very much misinterpreted and still an ongoing process, will assist the country in securing internal confidence to support external aspirations.
  • The BRICS block (Brazil, Russia, India, China, and South Africa) is moving towards veto power in the IMF starting in 2017. Coupled with China’s range of economic initiatives intertwined with their OBOR and globalization strategy and the coupling of China initiated financial mechanisms towards integration of regional economies, China sits in a prime position of influence, power and patronage.
  • The sweeping changes pursued by China today are intended to contribute to the rebalancing of world economic order. They essentially seek to challenge US hegemony and bring about a Eurasian century.
  • The RMB is being positioned to overtake the USD over the next few years as China works from within and without the existing world community to establish a new economic order that it sees as more equitable than the current US-dominated order. If they are prepared, investors do not need to fear this new order.

Introduction

2015 and 2016 have proven to be monumental years in China’s challenge to the global economic order. The approach taken by the sovereign differs dramatically from virtually all other post-communist economic system reform paths seen to date.

As the developing countries of the world have entered into an increasingly globalized market under the rules dictated by the post-Bretton Woods monetary institutions, such as the International Monetary Fund (IMF), the World Bank and, increasingly, the Bank of International Settlements (BIS), each has had to navigate a system composed of rules and regulations of which they had little say in the establishment and in which they enjoy limited influence at best. China stands out as arguably the most successful country at navigating this system, and its four decades of breakneck growth are evidence of this fact.

The Chinese system consists of a peculiar blend of state institutions with strong directional credit towards industry, a growing service sector composed of successful private companies, and Peoples Bank of China and other key banking institutions that remain fully state-owned. While China’s economy has liberalised in many areas, money supply, credit and bond issuance remain mostly a state affair. The Finance Ministry’s approach sheltered the country when hedge fund speculative attacks destabilized the Tiger economies in 1997, and then unexpectedly triggered a default on Russian sovereign bonds in 1998. It was the same type of crisis that previously provoked currency crises in the United Kingdom and Sweden against which the Chinese successfully defended themselves.

The United States is a key enabler of China’s unprecedented economic success, and yet also remains its greatest opponent as the Asian giant seeks to enter global markets. The rivalry is observed in US commentary on Chinese financial policy and currency valuation, what appear to be multiple ongoing ‘proxy’ energy conflicts in Africa and Washington’s outspoken resistance to Chinese participation in Bretton Woods institutions.

As always, China remains committed to a long-term strategy, and this strategy has brought the country critical successes in 2016, the significance of which are little understood outside the financial industry. Importantly, many of China’s successes within the framework of its globalization strategy are interconnected more than most realize. The choreographing of China’s strategy is culminating in what the government has termed the One Belt One Road initiative, comprising the land-based Silk Road and Belt (SREB) and the Maritime Silk Route. This initiative has tightly integrated China’s conceptual approach, whilst simultaneously underpinning the country’s all-important domestic economic realignment.

The SREB and its multiple nodes run through the continents of Asia, Europe and Africa, connecting Eurasia’s Pacific and Atlantic coastal rims via the establishment of economic trade corridors. At one end lies the developed European economic region, at the other the engine of global growth for the next half century – Asia. More specifically, the Silk Road Economic Belt focuses on economically integrating China, Central Asia, Russia and Europe (the Baltics) through trade, thus linking China with the Persian Gulf and the Mediterranean Sea through Central Asia and the Indian Ocean. In tandem with the SREB, the 21st-Century Maritime Silk Road is designed to connect China to Europe with one lane passing through the South China Sea and Indian Ocean, and the other from China’s coast through the South China Sea to the South Pacific.

Chinese President Xi Jinping first announced the SREB concept publicly during a September 2013 visit to Kazakhstan. In a speech delivered at Nazarbayev University, Xi suggested that China and Central Asia cooperate to build a Silk Road Economic Belt. This was the first time the Chinese leadership had shared publicly its strategic vision.

The Big Picture

China’s strategic concept has, as one might anticipate, evolved and mushroomed since its 2013 announcement. The foundations of the strategy, however, remain firm. The Silk Road initiative intends to enable not only the linkages discussed above, but also China’s overarching challenge to the contemporary world order. China has laid the groundwork to achieve this goal incrementally over the last two decades. The world is currently witnessing the galvanization and culmination of those plans. This report seeks to connect the dots that have appeared over the years and explain where this strategy is ultimately heading in regard to Beijing’s game plan for achieving economic hegemony.

The following milestones illustrate just how far China has already come in its plans:

  • 2001 – China granted WTO membership
  • 2002 – Beijing initiates Go West Program to develop its Western regions
  • 2009 – RMB internationalization begins.
  • 2010 – Offshore RMB markets open in Hong Kong.
  • 2012 – Chinese companies start using RMB for trade finance.
  • 2013 – Chinese RMB trade stands at 8% of global currency trading volumes. Over RMB 270 billion in bonds are issued (Dim Sum Bonds), with RMB bank deposits reaching over RMB 100 billion in Hong Kong.
  • 2015 – The initiation of the harmonization of the financial institutions of the Shanghai Cooperation Organisation (SCO).
  • 2015 – An estimated one-third of all Chinese trade is settled in RMB. RMB became the third most traded currency in the world after EUR and USD.
  • 2017/18 – RMB to become a fully-convertible currency. Shanghai is on a clear path to becoming a truly global financial centre.

Contextualizing the path to growth – what petro-dollars’ dynamics finally meant for China

In order to comprehend China’s actions and aspirations related to the global economic system, it is important to understand the system as it currently stands, as well as how this system came into being and China’s role in the system.

China started to liberalize its economy in the 1970’s, coinciding with a crucial time in United States economic history. Much attention has been paid to the geostrategic reasons for the US engagement with China vis-a-vis the Soviet Union, but relatively few analysts acknowledge the role economic considerations played in the historical events of that period.

After the US defaulted on the gold exchange window established at the Bilderberg conference in 1971, then-Secretary of State Henry Kissinger and his team set their sights on a new petro-dollar standard. Conspiracy theories abound regarding the US government’s alleged role in orchestrating the oil supply shock of the 1970s and other catastrophes in order to strengthen the US dollar to support spending on the Vietnam War efforts. An examination of these theories falls beyond the scope of this paper. It is important to note, however, that, regardless of whether or not there is any truth to such claims, the US is widely held in non-American circles to have acted less than virtuously in creating and preserving the current economic order.

This is where China comes in. In order to realise its strategy, the US needed to increase the recycling capacity of the petro-dollar, and this required a much larger market. With the largest untapped pool of cheap labour on the planet, China was exactly what the Nixon administration was looking for. By moving low-skilled production from the US to China, multinational corporations could keep their domestic market filled with goods while greatly increasing margins and, consequently, profits.

The initial support and change by the communist regime was slow; however, Secretary of State Kissinger saw potential:

No doubt, in time, there will be profound changes in this vast social experiment, perhaps the most extensive one in human history, but there are no present indications to that effect.[1]

Kissinger’s observations could not have been more astute. The transformation of communist China from largely an agrarian economy to an autocratic capitalist state, while slow-moving at first, rapidly accelerated in the 1990’s. Small villages throughout the country transformed into megacities, and unprecedented achievements in geo-engineering, commerce and poverty reduction occurred at a rate that outside observers still struggle to grasp. However, this progress came at a cost. The export revenues from the United States came in the form of US Treasury Bonds. This remains the case today, meaning that China has exported its undervalued production in exchange for paper notes for almost four decades, while the majority of profits have remained abroad.

The build-up of Chinese foreign exchange reserves peaked in 2014 around the unprecedented USD 4 trillion mark.

Backed by an aggressive military posture, the United States’ petro-dollar standard has long given it what former French President Charles de Gaulle termed “the exorbitant privilege.”[2]The ability to recycle the Petro Dollar remains one of the top priorities of US foreign policy. Many of Washington’s most controversial foreign policy positions have been, many believe, in part motivated by an effort to preserve the USD’s world reserve currency status. Examples include US opposition to Venezuelan President Hugo Chavez’s plan to trade oil in Euros, to Iraq’s establishing trade ties directly in Euros during the lifting of the failed Oil-for-Food program in the 1990’s, and to the attempt of Muammar Gaddafi’s Libya’s to establish the Gold Dinar in the African Union.

In an email made public by Wikileaks, former Secretary of State Hillary Clinton expressly mentioned the Gold Dinar as the primary reason for invading Libya, as it had the potential to unleash strong economic development in the region. The fact that today’s Libya is a failed state drives home, in the minds of China’s leadership, the very real consequences of US realpolitik regarding the petro-dollar and the importance of China’s own financial reform strategy.

The great financial crisis, a Chinese policy reversal

It is true as it is funny. That deficits increase our money.

In understanding this there lies, the power of States to Stabilize.[3]

China suffers from the Triffin Dilemma, also known as the exorbitant privilege. One of the great ironies of exorbitant privilege is that it cannot be sustained without a permanent deficit economy. Deficits literally create money (credit) – an absolute necessity if it is the currency to be used for world trade. But a permanent deficit economy will eventually default, hyper-inflate, or both; there can be no other outcome long-term. In practice, exporting debt is the export of inflation. Once the flow of currency returns home, given the trade imbalances, the source nation has no choice but to monetize the debt or default.

The United States is no different in this regard, but this simple economic reality is poorly understood and even ignored among financial analysts. This ignorance works in the favour of policymakers, as easily accessible economic debates of such a stark reality in the public sphere could eventually spark a confidence crisis. Historical precedent shows that lack of confidence is often the ultimate tinder that induces debt default. The United States will do all in its power not to let go of its exorbitant privilege voluntarily.

The 2008 global financial crisis that started in the United States and quickly sent shook the entire world had been brewing long before the collapse of the Lehman Brothers, but then the world only became fully aware of it as equity markets collapsed and liquidity in the money markets evaporated.  China’s central bank felt pressured to respond to this alarming economic development.

In 2009, Xiaochuan Zhou, Governor of the People’s Bank of China (PBOC) issued a statement now famous among central bankers, calling for “an international reserve currency that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit based national currencies.”[4] The reserve currency Zhou referred to is the International Monetary Fund’s Special Drawing Right (SDR).

Banking officials in China recognized that the country’s enormous domestic foreign exchange reserves faced the real risk of never being honoured. The exorbitant privilege conundrum was being laid bare, and China had to act. In order to counter this risk, Beijing has undertaken concerted efforts in multiple economic sectors to support the OBOR project and to challenge USD hegemony. These include:

  • Payment system reform
  • Multilateral development banks
  • Bilateral non-USD denominated trade agreements
  • Accumulation of gold reserves and the establishment of the Shanghai Gold Exchange
  • Positioning in the IMF and currency reform

The financial policies pursued by China, as with any country, may often differ substantially from predictions of the mainstream press. This is due, in part, to the independence of central banks which sometimes act in direct contradiction to leading government officials. The sweeping changes pursued by China today are intended to contribute to the rebalancing of world economic order. With this objective in mind, each of the five economic steps listed above aims to help bring about reforms in one of the organizations standing in the way of this global rebalancing, the IMF. They essentially seek to challenge US hegemony and bring about a Eurasian century.

A new payment system: China Unionpay & CIPS, a response to Russian sanctions

One of China’s recent accomplishments in its task of rebalancing the global economic order lies in the realm of payment system reform. In 2002, China Unionpay was established as an alternative to US-owned card payment networks such as Visa and MasterCard. Unionpay quickly grew to become the largest card payment scheme in the world, having surpassed Visa in number of issued cards in 2010. While relatively unheard of in the West until recently, the scheme has seen fast-growing acceptance worldwide, and the Unionpay logo is now seen on main street ATMs throughout the world. International coverage does not compare to the Visa/Master Card acceptance network at this stage, but this only means that there is further room for growth as banks adopt Unionpay and become network issuers within the network in their own right within their domestic markets.

Consumer payments are an important factor in payment networks but, for international banking, only one network reigns supreme. The Belgium based private network SWIFT is the spider in the web of international finance. International bank wires require a SWIFT identification number or BIC code.[5] The organization is so crucial to world finance, that sanctions issued by world government bodies like the UN are technically managed through SWIFT. The importance of this is nowhere more apparent than in the pressure the US and UK governments placed on the SWIFT organization to block Russia from using its network. Had SWIFT given into their pressure, the resulting financial crisis would have been devastating. Russian President Vladimir Putin declared that it would be akin to a declaration of war. In response to this incident, Russia began creating a domestic clearing system and a SWIFT alternative.[6]Additionally, Russia mandated domestic switching of Visa and MasterCard payments, coupled with a USD 3.8 billion security deposit as a requirement prerequisite for these two organizations’ continued operations in the Russian market.[7] Though not referred to as such, this was in practice a ransom to keep the payment networks in line  if they wished to continue to service the Russian domestic market, at least until their government’s domestic alternative was ready. Should Putin not have mandated the switch, the potential damage to Russian GDP could have been catastrophic.

Seeing what happened to Russia and understanding the possibility of such tactics being used against them at some time in the future, China’s leaders followed suit with the creation of the Cross Border Inter-bank Payments System (CIPS). CIPS is currently operational, and in 2015 it launched a trial with Russia.  Success of this network will allow China to sidestep one of the most powerful western tools to control international finance, SWIFT. CIPS and SWIFT signed a Memorandum of Understanding on 25t March 2016, with a goal of connecting CIPS to the international payments network while it is expanding.[8] As China remains the top trading partner for huge swaths of countries in the Asia-Pacific, the CIPS interbank network is aspiring to become a viable alternative for exchanging Chinese RMB in trade-related payments.

Countries with a “positive attitude towards Chinese business” are now being handsomely rewarded for their perspective. Lithuania, a small Baltic state with a population of less than 3 million, landed an agreement with China to become a hub for CIPS. It will act as a settlement centre between China and Europe. Lithuania, not famous for its international banking capabilities, obtained this reward due to the “flexible and broad attitude of Lithuanians, friendly bureaucrats and recommendations of Chinese companies investing in Klaipeda.”[9]

The importance of these above developments should not be understated. With this first phase completed, the second phase is for CIPS to be the operating window towards the Special Drawing Right issued by the IMF. The implications of this are simple – second phase completion will affect the reduction of dependency on the US economic domination with the diversification of clearing and thus trading mechanisms. At the risk of being overly simplistic it will deliver an insurance on bank clearing, an infrastructure China has not had until now. For an SDR reform to be effective in China, a customer eligible for SDR holdings is required in the form of multilateral banks.

China’s multilateral banks: AIIB and BRICS New Development Bank

On 12 March 2015, the Chancellor of the Exchequer announced the United Kingdom’s intention to become a founding member of the Asian Infrastructure and Investment Bank (AIIB).[10]The announcement was a complete surprise and in direct defiance to the US, which had been trying to kill the project from behind the scenes. This was, without question, a strategic victory for China, as UK membership provides substantial global influence. However, given the UK’s tradition to intermittently switch allies according to its self-interest in what the UK refers to as the “great game,” it should not be seen as extraordinary decision.

Despite the heavy-handed but doomed opposition by the US, the foundation was a success and, as of December 2016, 57 member nations have ratified the AOA to join the bank.[11]

The bank’s goal is to engage in “green” infrastructure and development projects, and it has not wasted any time in this regard. On 1 June 2016, the first project was approved in Indonesia, bringing the total to eight authorized projects thus far. An additional six projects are scheduled to be proposed to the board between now and next year.

As a multilateral organization, the AIIB enjoys certain aspects of immunity from nation states and operates internationally in the same manner as the World Bank, European Bank for Reconstruction and Development (EBRD) and others. Each of these forms part of a global network of supranational shareholder-based banking vehicles that hold a key stone in the next phase of global finance governance.

Some commentators propose that AIIB is a direct competitor to the IMF. However, the two organizations are actually very different. The IMF’s structure is towards payments of balance (currency support for countries running deficits), whereas AIIB runs on an infrastructure project basis.[12] There are, however, rumours from people in “the know” that the US was not even invited to participate in the AIIB as a founding member, but there is currently no way to validate this. However, if even partially true, this would imply a Machiavellian approach to the Chinese economic aspirations far beyond Beijing’s current stated goals.

The AIIB is a Chinese-led bank, and China currently holds 28.79% of the voting rights.[13] This percentage is by no means arbitrary. Voting in these types of institutions, including the IMF, is based on a simple or qualified majority, depending on the situation. Simple majority is required for most common decisions while for material votes, such as decisions regarding voting rights, capital allocation and the like, a qualified majority is required. To achieve this, 75% of all votes must be behind a proposal. With China holding 28%, it effectively holds a veto on any decision. This mirrors the position the US currently enjoys in the IMF. It is also noteworthy that 21% of the AIIB’s shares are held by non-regional members. Some of the more notable ones are the UK, Germany, Austria, Scandinavia, France, Poland and Egypt.[14]

In addition to China’s AIIB, the BRICS bloc (Brazil, Russia, India, China and South Africa) founded the New Development Bank, which is a powerful alliance between countries representing five regions that, combined, reserve 40% of the world population and a third of the world’s landmass.[15] Launched in 2014, each founding BRICS member took a subscription of 100,000 shares totalling USD 10 billion, whereof 20% is allocated to capital. The difference in share allocation between these two banks is noteworthy. The BRICS Development Bank is built on equitable balance, a rare occurrence in these types of institutions. The organization has fallen into public obscurity as Brazil has entered into recession and the news has calmed significantly in regard to its formation and potential. This bank represents, however, a challenge to the existing world governance, which former US President George H.W. Bush famously referred to as the New World Order in 1991. The lending undertaken by NDB and AIIB is pursued without conditions. The IMF refers to the conditionality dictum as austerity. The purpose, though not stated as such, is to engage nations in unsustainable debt and recover proceeds through national assets. Greece is a good example to study for more recent evidence of this modus operandi

Together, these two banks are pushing for reform of the IMF in terms of operation procedures and voting rights. Chinas message to the world could not be any more evident.

China’s growing SWAP agreement infrastructure

While China has been actively reforming its payments and banking infrastructure, it has not been idle on Swap and trade agreements. Swap agreements hold significance for China. Since Xiaochuan Zhou’s speech in 2009, the RMB has taken several steps towards internationalization. Various moves included the first pilot scheme between Hong Kong and China for cross border trade settlement. In 2010, foreign financial companies were allowed to invest the RMB surplus into the affectionately named “Dim Sum Bonds.” These, along with other steps undertaken in recent years have led many observers to wonder, whether they will eventually lead to the exchange rate floating on a basket of currencies, liberalization of the equity investment market, and more.[16] The role of the CIPS payment system for the above liberalization of the economy is obvious.

Swap agreements are an ominous sign for the USD. In practice, they are quite straight-forward. PBOC and a foreign central bank, like the ECB, enter into an agreement to freely access up to a fixed amount of respective currency.

This is significant because world trade provides a balance of payment challenge. When a company exports goods for say USD 100,000 over one year, they end up with a large USD asset on their balance sheet. Some of it is required for continued operations such as buying raw materials, energy, or outside services. However, domestically, the USD holds little function for a company so they exchange it for local currency to service salaries and operating expenses. The surplus exchanged ends up on the central bank’s balance sheet. This is what is referred to as foreign exchange reserves. So why not simply use the foreign currency domestically?

Having foreign currency commonly traded or crowding out the domestic currency would provide a direct challenge to the central bank’s sovereign power. Countries that endure this process and become dollarized, essentially end up being modern day vassal states economically subservient to and reliant upon the benevolence of foreign banks. All dollarized countries suffer immensely from economic stagnation. The USD will never hold a place for common trade in everyday activities in China. This is why it always ends up as a reserve rather than domestically stimulating economic activity.

In world trade today, the majority of contracts are denominated in USD. This is true of oil, export agreements, supply agreements, commodities, and most other economic activity. Multinationals must have access to USD in order to buy the services and goods that they need, particularly oil. However, if there is a swap agreement in place, the need for pricing in USD is limited.

When Russia and China enter into a swap agreement, foreign exchange reserves at each Central bank increase with their respective currency. Two companies engaging in cross border business are no longer required to engage in trade denominated in USD as their respective central banks guarantee clearing of the payments at a set rate, thus making the trade more efficient. Essentially, it is like a credit card where instant funding is available for trade. Note that in this scenario the USD has no place. Swap agreements are in practice an effort to decrease the USD global recycling capacity and increase the internationalization of the RMB.

The efforts have been successful. The following chart from Federal Reserve Bank of San Francisco shows the growth of the swap agreement network. [17]

Regional to International …

The Regional Comprehensive Economic Partnership (RCEP) is the South East Asian version of what most western media knows as the TPP, a free trade agreement that encompasses the world’s largest population. Though not complete at this stage, it essentially mirrors the western alternatives that provide supranational support to corporations and puts trade ahead of national borders. All current trade agreements are about transferring power to global multinationals. The efforts are led by the G20 block. Since the deal is still in progress and negotiations continue to be secret, it is better not to explore this agreement in depth.

China’s gold: pet rock or global strategy?

In 2015, the Wall Street Journal famously declared “Let’s get real about gold: It’s a pet rock.”[18]

There is no asset hated more in mainstream media today than gold and silver, also known as the precious metals. Several assassination pieces on the metal have emanated from the leading financial press over the past few years. As always, when media make concerted and collaborative efforts to promote or discredit certain events, be it fake news, the red scare, or the threat of terrorism, there is another motivating factor in the background. This is particularly true about investing. Nobody needs a crowded trade when there is a bargain in the making.

During a testimony with the Bank and Currency Committee of the House of Representatives, J. P. Morgan responded to the following question:

Q. But the basis of banking is credit, is it not?

A. Not always. That is an evidence of banking, but it is not the money itself.

Money is gold, and nothing else.[19]

There is no debate among central bankers whether gold is money or not. Gold always has been and always will be money in its purest form. It does not degrade, is sufficiently scarce, universally accepted, and is easily divisible into practical units. The foremost quality however is that it bears no counterparty risk. In financial speak, it is unencumbered. This quality ensures it will remain the ultimate insurance for wealth preservation. As such, there is not a reputable central bank in the world that does not hold the asset on its balance sheet with one notable exception – Canada.

According to the World Gold Council, China’s official reserves as of December 2016 sit at 1,842.6 metric tonnes. It is well established that this does not reflect China’s true gold holdings. The statistics for Chinese gold reserves did not update monthly until June 2016. After the great financial crisis, China’s gold holdings suddenly surged and then remained unchanged until mid-2016.[20]

Determining the true size of China’s gold wealth is speculative in nature. Jim Rickards, in his book the New Case for Gold, estimates China’s true gold holdings in the region of 4,000 metric tonnes. This is based on import statistics from Hong Kong, Chinese mine production, and similar sources. This would set China as the world’s second biggest gold holder after the United States with 8,100 metric tonnes. Bullionstar, a Singaporean bullion dealer, frequently posts research on China and its gold holdings. They estimate that the size of the Chinese gold market (not PBOC holdings) is in the region of 16,000 tonnes.[21]

However, more speculative reports suggest the true holdings to be in the region of 25,000 to 30,000 tonnes. Whatever the real number is, it is no secret that China is importing as much gold it can get a hold of while also becoming the world’s biggest gold producer. Chinese state media is encouraging gold ownership among the populace as a method to secure wealth.

The Shanghai Gold Exchange started actively trading in 2016. It has one seemingly technical detail that sets it apart from its London and New York counterparties. In order to trade on the Shanghai Gold Exchange, you need to deliver physical gold to the marketplace. This means that in order to have price discovery, you have to first acquire gold, deposit it in Shanghai, and participate. LBMA and Comex are highly leveraged paper markets where over 90% of all trades are settled in cash. The derivative contracts give the option of settling in physical trades of gold, but this rarely take place. Just like a bank, paper markets can easily suffer a run on the exchange in the same manner as the peculiar Camel market crash (Souk Al-Manakh Stock Market) in Kuwait.

With the exchanges working so differently, we should expect a divergence of pricing, also known as arbitrage. As supply is scarce in the Shanghai market compared to the paper counterparties, the price should be higher in Shanghai. If the arbitrage grows too wide, opportunists will invest on the trade, withdraw gold from Comex and LBMA, turn around and sell it on the Shanghai exchange. This would be a serious threat to western power of gold pricing. For this to happen, the arbitrage is required to be sufficiently high to cover for the actual movement of the metal.

Seeking Alpha, an established finance blog, published a piece displaying the arbitrage opportunity. It showed that on the 1st of December 2016, the Shanghai gold was trading USD 37.50 higher than London.[22]

China’s tango with the IMF

The RMB’s position as the third-most used currency and its subsequent inclusion in the IMF’s Special Drawing Rights (SDR) has shifted the balance within the existing framework, which had been in place essentially since the end of World War II. John Meynard Keynes and Harry Dexter White were the authors of the famous Bretton Woods agreement, named after the luxury hotel where the agreement was signed. Ironically, the Soviet Union never participated in the new USD Gold Standard despite being part of the negotiations. The agreement marked the terminal end of the “as good as sterling” era and provided the building blocks for the ascendance of the USA’s hegemonic period.

Keynes had envisioned a one-world currency called the Unitas but he lived before its time. Instead, the compromise of the technocratically named Special Drawing Rights (SDR) was spawned in the IMF. The SDR is a basket flat currency, synthetic in nature and issued by the IMF. The last issuance of the SDR, or world money, was in relation to the financial crisis of 2008. The SDR is not accessible to the average person, but can be mimicked by buying a composition of the currencies in the basket.

On 1 October 2016, China became a member in the global SDR currency basket. This demarks a pivotal achievement by the nation state. A few weeks later, Paul Ryan, Speaker of the US House of Representatives, entered a provision in the US budget bill on increased voting rights for China in the IMF. Outside of financial circles, the news was generally met with a yawn.

The weighting of SDR currencies prior to the inclusion of the Renminbi was as follows:

  • USD – 41.9%
  • EUR – 37.4%
  • GBP – 11.3%
  • YEN – 9.4%

And after 1 October 2016, it became:

  • USD – 41.73%
  • EUR – 30.93%
  • RMB – 10.92%
  • YEN – 8.33%
  • GBP – 8.09%[23]

The RMB is now the third-largest currency in the SDR currency basket, a pivotal achievement as envisioned by Xiaochuan Zhou in 2009. Technically, the RMB does not qualify for SDR inclusion, as it is not yet a world reserve currency, so the inclusion was clearly political. The wide sweeping reforms planned for the global economy cannot be implemented without the support of the world’s biggest export economy, China.

A qualified majority in the IMF requires support from 85% of IMF members. The United states currently hold 16.54% of voting rights and effectively a veto in the organization.

As of the 20th of December 2016, the BRICS nations hold respectively:

  • Brazil – 2.23%
  • Russia – 2.60%
  • India – 2.64%
  • China – 6.09%
  • South Africa – 0.64%

The total voting rights of the economic block represent 14.2%. Worded differently, they only need 0.8% in increased voting power in the next voting reform in order to establish a veto power as an economic block. That change is closer than most realize.[24]

The final communiqué from the 2016, the G20 summit in Hangzhou, China states:

We welcome the entry into effect of the 2010 IMF quota and governance reform and are working towards the completion of the 15th General Review of Quotas, including a new quota formula, by the 2017 Annual Meetings. We reaffirm that any realignment under the 15th review in quota shares is expected to result in increased shares for dynamic economies in line with their relative positions in the world economy, and hence likely in the share of emerging market and developing countries as a whole.[25]

An IMF technical paper, it further states:

Board of Governors Resolution 66-2 states that “Any realignment under the 15th review is expected to result in increases in the quota shares of the dynamic economies in line with their relative positions in the world economy, and hence likely in the share of emerging market and developing countries as a whole.”[26]

In other words, the BRICS bloc is moving towards veto power in the IMF in 2017.

The SDR inclusion of the Renminbi coupled with the BRICS voting block veto will structure a world order wherein which the United States must seek common ground with other trading blocs in order to enact or oppose policy.

Coupled with China’s range of economic initiatives intertwined with their OBOR and globalization strategy and the coupling of China initiated financial mechanisms to integration of regional economies, then China sits in a prime position of influence, power and patronage.

Welcome to the new world order, and China is driving

“Equitable” will be the cornerstone word guiding where world finance will travel in the next two years. The Economist boldly predicted a one world currency by 2018 in its iconic cover from 1988, “Phoenix rising.” Their penchant for mythology implies that a world financial crash, or reset, will spawn a one-world currency. Although some time off, it is difficult to imagine a new world economic order where Russia and China would not have equitable balance.

A global monetary reset is inevitably on the table; however, this paper is focused on identification of the complex shifts taking place leading to such an event, not the event itself. Christine Lagarde, the head of the IMF, spoke about this at length in one of her Bloomberg interviews from the World Economic Forum in Davos.[27] Lagarde talks about the option of a ‘structured reset,’ not one forced by macroeconomic activity. However, resets are panic-based and responsive; reforms do not hold popular support.

It is evident in both action and public statements that Russia and China are moving together towards displacing the USD as the world’s reserve currency and ending the latter’s exorbitant privilege. If the recycling of the petrodollar is finally greatly reduced, a dramatic and painful adjustment must take place in the US economy. An end to the petrodollar would mean increased inflation in the United States as trade could no longer be sustained by the endless demand for USD treasury notes. Reduced deficit spending and higher confiscation of personal wealth remain the only two options. It is a bleak future for the US consumer and corporations. The interim period as the US fights its corner is also a difficult period for developing and emerging markets. The shelves are bare of alternatives, but that is changing; new stock is arriving.

The military approach previously used by the United States to ensure USD dominance in world trade may prove costly. The China-Russia power block is simply too formidable of an enemy to secure a victory within the bounds of acceptable losses. However, it is certain that the United States will not relinquish its reserve currency power status voluntarily. Their hand will have to be forced. Consequently, we expect increased instances of staged crisis events such as the private funded democracy store fronts used to destabilize BRICS governments. We also expect agitation and multiple provocations on various fronts for China, similar to the umbrella movement in Hong Kong, the Maidan square coup in Ukraine, and recent political turmoil in South Africa. The struggle for world power is only warming up.

Lateral thinking: an abbreviated analysis of what is likely to transpire, or challenging conformity

The primary option for China and the G20 countries is a global bank regulatory framework organized around regulation from Bank of International Settlements (BIS), worldwide taxation governed by the OECD organization and the BEPS project. The game plan for the next financial crisis is the ‘Bail in plan and Stay powers’ outlined in detail in the Geneva report, the ‘Financial Stability Board’ and other world government bodies already in late stage of completion among the G20 participants. The resolution mechanism, activated on multiple occasions in Europe, will be a sombre awakening for the average saver as their pensions and savings are ‘utilized’ by the worldwide banking system.

If the SDR is to become the mechanism for a one-world currency then drastic reform would then need to be undertaken in the IMF. For now, the United States has veto power and can refuse or only accept a compromise where they retain ultimate control of the organization. Should this happen, the SDR reform will fail. Even with a US concession, the lack of an anchor (i.e. gold) in the SDR may not restore confidence in world finance in the next global reset. Should the reform be successful, the USD will be relegated to a trade currency among others, forcing a new world order with balanced trade deficits compared to runaway spending as it stands today. US President-elect Trump’s emerging confrontational strategy and position with China on trade may be the first volley in the salvo that is to come. No pun intended, but American protectionism and aggressiveness towards the looming hegemonic challenge may ‘trump’ global stability.

The consequences could be dire beyond the remit of this paper. Nevertheless, China will respond with typically Chinese characteristics. It is imperative to look at these Chinese actions through the prism of Chinese, not Western, lenses.

Trump’s canning of the TTP presents China with additional opportunities in the short-term, but it is all really about timing, the real question is how much of an opportunity does it present and how they execute that opportunity. Within the 19th Party Congress there exists the opportunity to pursue with vigour the outstanding pieces of the domestic economic realignment puzzle in China. The events of the past four years in China since Xi’s ascendency are significantly misunderstood, and massively over simplified by the West. The end game is unquestionably one of control, but the motivation for that control is perhaps what is most misunderstood in the bigger scheme of things. Like a cancer patient the country is riddled with it, but this cancer is corruption, to attain the goal of sustainability the procedures for eradication were severe, and the treatment has yet to conclude. But, it is beyond merely surviving, it is about resurgence after survival. It is about taking up your rightful place before the cancer took hold. Everything happens for a reason. With the Chinese, everything happens for multiple aligned reasons, they do not act on a singular impulsive or reactionary motive, and it is strategic thinking at its best.

What if the interconnectivity of the Chinese strategic thinking is so aligned that even events such as the massive structural reforms in the energy sector and the banking sector, which will unforgivingly kick in in 2017 are actually tied to the abovementioned milestones and mechanisms to attain their global economic positioning? How do they do this? More importantly, what is the relevance to events in the coming few months pertaining to global economic positioning and posturing? Of course they are interconnected. Their responses to US reactions to BRIC ascendency to veto position within the IMF are also interconnected.

There are several tools at China’s disposal should the US stall IMF reforms or a deal is struck that does not meet the Chinese / Russian standards of equitable reform. What if China can announce a gold denominated short-term trade bond used for world trade? This move would shock world economic markets, but can only be successful if the supply (liquidity) of the instruments is on such a scale to support world trade. For this, you need a mechanism to control the world gold price. Enter the Shanghai Gold Exchange. It will be a rudimentary process for China to increase the price of gold as to cause an arbitrage run and eventual default of the western paper gold markets. In such a crisis, the price of gold will run away and anyone not prepared will see the value of his or her paper holdings devalue in a rapid fashion.

What if China and Russia make a surprise announcement of rapidly increased gold reserves to cement confidence in their national currencies? They can also propose a new IMF structure based on the New Development Bank, built on an equitable foundation, as the worldwide solution to monetary order. Of the world’s top gold producers, BRICS represent:

  • Brazil – Number 11
  • Russia – Number 3
  • India – Not a significant amount
  • China – Number 1
  • South Africa – Number 6

With rapid inclusion of key member states, the New Development Bank can become a credible alternative to world financial order or a parallel financial system to the traditional western one.

As pointed out above, Gold always has been and always will be money. For the unprepared and distracted by political theatre, this lesson will be detrimental as we progress towards a global economic order.

Summary

This paper has been written as a roadmap for the uninitiated to what China is planning for its place in the world order. As such, the financial history of China and events leading up to today have been heavily abbreviated. The New World Order is unquestionably in play, but the rules of the game are not being dictated by the writers of the last episode in history. The new contenders in the ‘Great Game’ are defining their own rules. This paper has sought to connect the dots to deliver a narrative of what we see developing. The dots, thus connected, are loosely:

  • 2001 – China granted WTO membership
  • 2002 – Go West Program initiated in China
  • 2009 – RMB Internationalization begins
  • 2010 – Offshore markets start in Hong Kong
  • 2012 – Chinese companies start using RMB for trade finance
  • 2013 – Chinese RMB trade stands at 8% of currency trade. Over CNY 270 billion in bonds are issued (Dim Sum Bonds), RMB bank deposits reach RMB 100 billion in Hong Kong.
  • 2015 – The initiation of the harmonization of the financial institutions of the Shanghai Cooperation Organisation (SCO).
  • 2015 – Estimated that 1/3 of all Chinese trade settled in RMB. The RMB became the third most traded currency in the world after Euro and Dollar
  • 2017/18 – RMB to become full convertible currency Shanghai on a clear path to becoming a truly global financial centre

The critical dots to add:

  • IMF – Inclusion of the SDR / Voting rights
  • Regional Comprehensive Economic Partnership (read Eurasia or Globalisation strategy under the auspices of OBOR)
  • Full convertibility of the RMB
  • Gold – Shanghai Gold Exchange

The timing of the convertibility of the RMB will tell its own tale. The release of so much RMB on the world investment market will be a critical game changer, but where will this unrivalled level of surplus money migrate to? Again, it is all about the timing, as the Silk Road and Belt takes hold and embeds that timing will be critical to attract second level investment to the program, no doubt the Chinese government will encourage a ‘close to home’ approach and support the ‘motherland’ approach, the delay in full convertibility may actually be more orchestrated than first thought.

The end goal of China’s economic policy is increasingly evident. It seeks not to dominate the current petro dollar reserve currency system, but rather have an influential position in the next monetary world order. All the above described efforts are conscious policy to be ready for the next phase in world economic globalization. If China stays on track with its focus on equitable common goal of building the world economy, we may not need to fear China’s new economic order. Perhaps how the United States reacts to this challenge is where the fear should be directed.

Notes

[1]https://wikileaks.org/plusd/cables/1973PEKING00848_b.html, August 1973, Proposal for exchange of exhibitions with PRC in 1976.

[2]  Currency internationalisation: Analytical and policy issues, Hans Genberg. BIS paper No. 61.

[3] Boulding Kenneth. 1950, A reconstruction of economics.

[4] Bank of International Settlements, Working Paper, No 444, March 2014.

[5] SWIFT is not the only clearing network. Fedwire routes all USD denominated transactions in cooperation with SWIFT and UK has CHAPS .

[6] http://journal-neo.org/2015/12/14/china-carefully-moving-to-displace-dollar/

[7] https://www.theguardian.com/world/2014/may/06/russia-security-deposit-visa-mastercard-sanctions-ukraine

[8] https://www.swift.com/insights/press-releases/swift-and-cips-co_sign-memorandum-of-understanding-on-cross-border-interbank-payment-system-cooperation

[9] http://www.baltic-course.com/eng/good_for_business/?doc=124793

[10] https://www.gov.uk/government/news/uk-announces-plans-to-join-asian-infrastructure-investment-bank

[11] http://www.aiib.org/html/aboutus/introduction/Membership/?show=0

[12] Author’s conversations with the Swedish Finance department re: AIIB further confirms this position.

[13] Asian Infrastructure Investment Bank Subscriptions and Voting Power of Member Countries, 22 September 2016.

[14] IBID.

[15] http://www.globaltimes.cn/content/1011813.shtml

[16] http://www.chinausfocus.com/finance-economy/the-rise-and-role-of-the-renminbi-as-an-international-reserve-currency

[17] http://www.frbsf.org/banking/asia-program/pacific-exchange-blog/banking-on-china-renminbi-currency-swap-agreements/

[18] http://www.wsj.com/articles/lets-get-real-about-gold-its-a-pet-rock-1437174733

[19] J. P. Morgan’s testimony, The justification of Wall Street. 18th December 1912

[20] Graphics: www.tradingeconomics.com

[21] https://www.bullionstar.com/

[22] http://seekingalpha.com/article/4028130-gold-price-discovery-shifting-physical-shanghai-gold-exchange-prices-diverge-vs-lbma

[23] IMF Annual report 2016, P15.

[24] https://www.imf.org/external/np/sec/memdir/members.aspx

[25] http://www.g20.org/English/Dynamic/201609/t20160906_3396.html

[26] https://www.imf.org/external/np/pp/eng/2016/080916.pdf

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Canadian Aid to Africa under Justin Trudeau

Trudeau drapeaux

The Canadian government under Justin Trudeau is attempting to alter the narratives about our country’s relationship with the African continent.

Be aware the initiative is largely ideological chimera void of concrete action, but even worse, it is blatant hypocrisy.

Canadian Imperial Aid to Africa

The purported “new agenda” for Africa began with a trip to Nigeria, Kenya and Ethiopia by Foreign Affairs minister, Stéphane Dion in November of 2016.

The following month, in conjunction with a visit by Prime Minister Trudeau to Liberia and Madagascar, the government officially declared that “Canada is Back,” supposedly reviving global relationships that had been ignored or soured under the previous government.

Thus, some have suggested the time is ripe for a renewal of Canada’s foreign policy with the African continent in a manner that could allow us to reset the agenda of Canadian aid to the continent.

It is, however, ridiculous to suggest Canada was somehow absent throughout the Harper years. Canadian public institutions have facilitated and guaranteed foreign investments through a variety of channels, including the recent signing of 10 new Foreign Investment Promotion and Protection Agreements across the continent.

As far as foreign investment is concerned, Canada has never been more involved in Africa, with Canadian mining investments increasing more than 100 fold in a 20 year period. Even when we look at ‘official’ Canadian involvement on the continent we can see that Canada played a central role in the Libyan intervention-turned-invasion. It also supported French operations in Mali, and had military roles in the Congo, Darfur, South Sudan and Nigeria.

Yet, as Dalhousie University Professor, David Black notes, our developmental impact on the continent is marginal, with assistance amounting to a mere 0.28 per cent of GDP (far short of the average among donor countries and way below the UN set benchmark of 0.7 per cent).

Black also suggests there has been little coherence to Canadian policy in Africa in the Harper years. I disagree. The formula was that Canada would provide just enough ‘aid’ to get social license for its corporate engagement, while doing everything it could to protect Canadian investments. Ottawa University Professor, Stephen Brown has described this as the “instrumentalization” of Canadian aid, which was re-directed to serve Canadian business interests, rather than the supposed recipients.

I do not accept the claim that Canada is somehow ‘back’, supporting the idea that Trudeau is supposedly the last “progressive” liberal internationalist standing. Yet I agree it is an important moment to reconsider our relationships with the African continent. Evidence suggests three key ways the Liberal government could significantly help Africa in the coming decade, and two do not even relate to the issue of aid funding.

Honour the Paris Agreement

The greatest contribution we could make to Africa is to meet our Paris Agreement commitments. A 2015 Report by the Africa Progress Panel (APP), led by Former UN General Secretary Kofi Annan, makes it clear Africa will suffer the most from climate change and singled out Canada as one of the countries (along with Australia and Japan) most obstructing progress on carbon reduction. Not surprisingly, African countries are disproportionately among those most at risk of loan defaults as a result (convenient that Canada has given “$50-million to the G7 Initiative on Climate Risk Insurance”). In fact, the consequences of climate change are already seeing the rapid escalation of internal displacement on the continent.

A recent report by the Internal Displacement Monitoring Center claims that 1.1 million were forced from their homes as a result of environmental calamity in 2015, while environmental displacement impacted 14 million between 2009 and 2015. People are also being displaced as a result of wars and development and business projects. As I’ve noted before, these trends follow on 30 years of neoliberal economic policies that have devastated agricultural systems and increased pressures around water sources as commercialization leads to an increasing enclosure of “common pool” resources.

The APP report cited above suggests that for Africa

“To avoid catastrophic climate change, two-thirds of existing [oil] reserves have to be left in the ground, begging the question of why taxpayers’ money is being used to discover new reserves of ‘unburnable’ hydrocarbons.”

Yet, with the Liberal Government approvals of Kinder Morgan and Energy East pipelines, Canada is set to unleash ‘a Carbon Tsunami’, making the chances of meeting our Paris commitments substantially less than zero. At the same time, the country still subsidizes fossil fuel companies to the tune of $3.3-billion this year – far more than the $2.3-billion budgeted to African foreign aid in 2015.

A spousal abuser does not get exonerated of their crime because they bring roses in the morning. When our government allows those pipelines to go through they are not only reneging on their treaty obligations and permanently altering ecosystems First Nations peoples depend upon, they are doing the same thing to millions of Africans. No amount of ‘Aid’ is going to correct this.

Regulate Canadian Mining Companies

Canada could also aid Africans by reigning in the mineral extraction companies that are displacing and fleecing local populations while leaving irreparable ecological damage. It is no secret Canadian mining companies are the worst, for environmental impacts and human rights violations. We also know they list on Canadian stock exchanges to take advantage of our low taxes and lax regulations, to shield themselves from legal accountability and to gain access to diplomatic services. We also know the “corporate social responsibility” strategy established by the previous government fails to improve the conduct of our mining companies. Two of the most disturbing aspects of our mining activity in Africa is that the bulk of it is within countries with the least institutional capacity to take advantage of investments, and it is specialized in gold extraction. The latter not only has enormous environmental consequences; it is largely going to end up in bank vaults of investors trying to protect themselves from the broader crisis of global surplus liquidity. In other words, the rich just have too much money and our government revenues are supporting their hoarding.

For these reasons, the Liberals should stop dillydallying and put in place a mining ombudsperson to investigate claims against Canadian companies abroad and ensure they have mechanisms at their disposal to punish offenders and make them accountable to Canadian courts.

Thirdly, Canada could stop supporting the failed neoliberal model of promoting Public Private Partnerships (P3s) in Africa. This is especially so when one considers its application in “building value chains” in the agricultural sector as a means of purportedly supporting climate change mitigation. A recent study by the Institute for Poverty Land and Agrarian Studies (PLAAS) at the University of the Western Cape examined the impact of such policy orientation in Southern Africa. What they found is that these policies end up subsidizing the wealthiest farmers and agri-business companies. The intention of such programs is to support the development of hybridized seeds specifically bred for local conditions and to increase yields. Yet the results of such programs have seen the grabbing of genetic resources by international seed companies, while local populations are increasingly deprived of common pool resources, see a reduction in the diversity of their diets and see greater class differentiation, with the wealthiest farmers excelling while the smaller are sent into greater poverty. This is largely consistent with the findings of a new study by the UN Food and Agriculture Organization. The evidence strongly suggests that such programs speed up processes of displacement and urbanization and do not promote food security, but contribute to the maintenance of the most unequalsocieties in the world. These are the conditions that lead to militarization and war.

Rather than more Public Private Partnerships, what Africans need more than anything else is serious public investment in social infrastructure; water treatment plants and sewer systems, electrification, public transportation, schools, and hospitals. Canadian companies could theoretically play a role in supporting such infrastructure development, but it should not be designed to channel public funds toward the service of Bay Street investors. The P3 Model has been a failure in every Canadian context and should stop being pushed on African countries (John Loxley of the University of Manitoba describes them as “Ideology Trumping Economic Reality”). Instead, African countries are going to have to rely a lot more on taxing their own populations and the mineral extraction companies that in some instances are getting away with ridiculously low tax rates, especially given the enormous consequences of their activities.

They will of course not accept any of these recommendations without significant social pressure being placed on them. So let’s get too it.

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Trump’s Delusion: Halting Eurasian Integration and Saving ‘US World Order’

trump-élection

The preceding three parts of this series analyzed the mechanisms that drive great powers. The most in-depth understanding of the issues concerned the determination of the objectives and logic that accompany the expansion of an empire. Geopolitical theories, the concrete application of foreign-policy doctrines, and concrete actions that the United States employed to aspire to global dominance were examined.

In this fourth and final analysis I will focus on a possible strategic shift in the approach to foreign policy from Washington. The most likely hypothesis suggests that Trump intends to attempt to prevent the ongoing integration between Russia, China and Iran.

The failed foreign-policy strategy of the neoconservatives and neoliberals has served to dramatically reduce Washington’s role and influence in the world. Important alliances are being forged without seeking the assent of the United States, and the world model envisioned in the early 1990s – from Bush to Kagan and all the signatories of the PNAC founding statement of principles – is increasingly coming undone. Donald Trump’s victory represents, in all likelihood, the last decisive blow to a series of foreign-policy strategies that in the end undermined the much-prized leadership of the United States. The ceasefire in Syria, reached thanks to an agreement between Turkey and Russia, notably excluded the United States.

The military, media, financial and cultural assault successfully prosecuted over decades by Washington finally seems to have met its Waterloo at the hands of the axis represented by Iran, Russia and China. The recent media successes (RT, Press TV and many alternative media), political resistance (Assad is still president of Syria), diplomatic struggles (negotiations in Syria without Washington as an intermediary) and military planning (Liberation of Aleppo from terrorists) are a result of the efforts of Iran, Russia and China. Their success in all these fields of operations are having direct consequences and implications for the internal affairs of countries like the United Kingdom and the United States.

The relentless efforts by the majority of Western political representatives for a successful model of globalization has created a parasitic system of turbo capitalism that entails a complete loss of sovereignty by America’s allies. Brexit and Trump have served as an expression of ordinary people’s rejection of these economic and political regimes under which they live.

In Syria, Washington and its puppet allies have almost exited the scene without achieving their strategic goal of removing Assad from power. Within the American political system, the establishment, spanning from Clinton to Obama, was swept away for their economic and political failures. The mainstream media, spewing an endless stream of propaganda aimed at sustaining the political elite, completely lost their battle to appear credible, reaching unprecedented peaks of partisanship and immorality.

Donald Trump has emerged with a new approach to foreign policy affairs, shaped by various political thinkers of the realist mould, such as Kenneth Waltz and John Mearsheimer. First on the to-do list is doing away with all the recent neoconservative and neoliberal policies of foreign intervention (Responsibility to Protect – R2P) and soft-power campaigns in favor of human rights. And there will be no more UN resolutions deviously employed as cover to bomb nations back into the stone age (Libya). Trump does not believe in the central role of the UN in international affairs, reaffirming this repeatedly during his campaign.

The Trump administration intends to end the policy of regime change, interference in the internal affairs of foreign governments, Arab Springs, and color revolutions. Such efforts, they argue, are ultimately ineffective anyway and are too costly in terms of political credibility. In Ukraine the Americans have allied themselves with supporters of the Nazi Stepan Bandera, and in the Middle East they finance or indirectly support al Qaeda and al Nusra Front. These tactics, infamously branded as ‘leading from behind’, never achieved their desired results. The Middle East is in chaos, with a Moscow-Tehran axis emerging and going from strength to strength. In Ukraine, the government in Kiev not only seems incapable of complying with the Minsk agreements but also of prosecuting a new military campaign with no guarantees from their European and American partners.

There is a wild card that Trump hopes to play in the first months of his presidency. The strategy will focus on the inherited chaotic situation in the Middle East and Ukraine. Obama will be blamed for the previous chaos, it will be argued that sanctions against the Russian Federation should be removed, and Moscow will be given a free hand in the Middle East. In one fell swoop, the future president may decide not to decide directly on the Middle East or on Ukraine, avoiding any further involvement and instead finally making a decision in the national interest of his country.

A sustainable strategy may finally be attained by remaining passive towards the developments in the Middle East, especially on the Syrian front, leaving it firmly in Russian hands, while emphasizing at the same time the effort against Daesh in cooperation with Moscow. Another wise choice would see Kiev falling by the wayside, trashing Ukrainian ambitions to regain the Donbass and recover Crimea. Finally, removing sanctions would allow the next president to strengthen the alliance with European partners (a diplomatic necessity that Trump must make as the new president). Over two years the EU has suffered from economic suicide in the name of a failed policy strategy imposed by Washington. The Trump presidency will seek to normalize relations between Moscow and Washington as well as with European allies more willing to actively collaborate with the Trump administration.

The Middle East will accordingly see a decline in violence, increasing the chances of seeing an end to the conflict in Syria. This plan for the initial phase of the Trump presidency has been widely announced during the months leading up to his election, both by himself or by members of his staff.

The implicit message is to seek dialogue and cooperation with all nations. Probably what lies behind these overtures is actually an explicit willingness to try to break the cooperation between Russia, Iran and China. The motivations for this action stem from the implications for the United States if a full military, cultural and economic alliance between Beijing, Moscow and Tehran is formed. It would almost ultimately consign the United States to irrelevance on the grand chessboard of international relations.

More realistically, Trump aims to shift the focus of the United States from the Atlantic to the Pacific, where the largest US commercial interests will reside in the future; a shift of focus from the Middle East to the South and East China Seas. The geopolitical reasons behind this decision, and the guiding theories behind it, were addressed particularly in the first article of this series. In summary, Trump intends to accelerate Obama’s Asian pivot, bringing about profound changes to US foreign policy. Smoking the peace pipe with Russia will free up resources (to “build up our military” in naval terms) to be focused in the Pacific. He intends to emphasize the importance of bilateral relations between allies (“free riders” Japan and South Korea) to focus on containing China.

The wildcard that Trump hopes to play in breaking the alliance is called Russia. Thanks to previous peace talks developed with Moscow, Trump hopes for a reprise of Kissinger’s strategy with China in 1979, with the addition of a promise of non-interference in the Middle East against Iran and Syria by the United States. In an exchange unlikely to happen, the American administration is hoping to convince the Kremlin that no action will be taken in the Middle East against Moscow and its allies, including Iran, in exchange for help in containing the Republic of China.

With this in mind, Trump’s choice of a very questionable personality to liaise between Washington and Tel Aviv, combined with the strong rhetoric of Trump against the Islamic Republic of Iran, and the equally harsh responses from Tehran to the threats of the future president, seem to satisfy the roles and rhetoric of all parties involved. No actions, only rhetoric. For Tehran and Tel Aviv it is easier to argue that to sign an agreement. The Iranian nuclear deal will, for this reason, continue to be a major point of tension, but also the guarantor of unlikely military action.

The real problem for the future administration in this strategy is offering a consistent plan of non-interference in the Middle East. Putin is well aware, in any case, that Washington is not able to intervene and change the fate of the balance of power that is forming in the Middle East. Trump’s indirect offer not to take action in the Middle East is at best a bluff that will not last long. Trump ignores (or, being a good negotiator, pretends not to want to see) that very few cards in his deck can be attractive to Moscow. The alliance between Moscow, Beijing and Tehran is firm and certified by strategic exchanges in many fields, a trend promising tremendous growth. The war in Syria has shown the results of effective coordination between the three nations. The addition of the Islamic Republic of Iran to the Shanghai Cooperation Organization (SCO) will further strengthen security ties, without forgetting that the north-south corridor between Russia and Iran also ensures stability in an area of the globe where the danger of subversive terrorism is very high..

During the period of sanctions, Russia and China signed the most important and immense trade agreement in history, sealing Moscow’s turn toward the east. Such a move involves a level of strategic planning that goes well beyond the four years of a presidential term. If Trump hopes to achieve cooperation of some kind with Putin to further his grand strategy, he is deluding himself. However, he must out of necessity cooperate against terrorism in the Middle East with Russia and moderate Washington’s allies in the region who support terrorist. He will be forced to remove sanctions and reset the international relationship between Washington and Moscow, freeing the EU from a counterproductive situation in opposing the Russian Federation. He will probably then decide to ignore permanently the matter of Ukraine and Crimea, burying one of the tactics and strategies that was the cornerstone of the neoconservatives, namely an attempt to prepare the Ukrainian army to face the Russian Federation militarily, then drawing in NATO into an all-out war.

Trump knows he is in an inferior negotiating position vis-a-vis Moscow and Beijing. He is well aware that effecting a rupture of relations between China, Russia and Iran is almost impossible. The only advantage, from his point of view, is having more room to negotiate with Moscow, given the abysmal levels of relations between Putin and Obama.

Naturally, if Trump should really embark on such a mission of dividing the Eurasian continent, he is likely to expect very specific guarantees about the future attitude of Moscow towards Beijing. Putin will have very few problems in playing him to his advantage. Moscow has everything to gain from this situation. Trump hopes to have on his side the Russian Federation, then proceed to convince countries like Japan, the Philippines and South Korea that containing China is the only viable strategy for limiting China’s influence and future domination over Asia. These actions will provoke the opposite effects to those intended, thereby promoting further integration of Eurasia (AIIB and Silk Road 2.0), as shown by Obama’s Asian pivot. Any attempt to impose a new Asian pivot will end up in flames, as has been the case with the commercial Trans-Pacific Partnership Agreement.

In the meantime, with the removal of sanctions, many EU countries will finally be able to resume their energy and technology integration with the Eurasian continent, especially with Russia. Japan will in all likelihood be able to sign a peace treaty with Russia without violating its obligations to Washington.

In general, the removal of sanctions on Russia will accelerate many projects placed on hold by tensions between Washington and Moscow. Trump’s attitude, if he decides to have an aggressive posture towards Beijing, will force the Chinese elite to see what lies in store for it. Washington does not intend to have joint relations with Beijing. Trump has repeatedly reiterated the thoughts of Mearsheimer, a prominent contemporary geopolitical theorist, who states that in less than a decade China’s growth will likely pose a threat to the United States as a superpower. Mearsheimer argues that within a few years, thanks to the growth of nominal GDP and demographic increase, the Republic of China will be the first military power in the world to dominate Asia. Trump intends to concentrate all his efforts, in terms of foreign policy, on this factor. To succeed, he understands that he needs to have on his side several regional players (Japan, South Korea, Vietnam, India, the Philippines), especially the Russian Federation, as well as oversee a sea change that will transfer the attention in Washington from the Atlantic to the Pacific .

This period of time will represent for Moscow, Beijing and Tehran a time to make definitive choices, a season in which the national policy-makers of these nations will have to understand what road to embark on. For Tehran, the cards are dealt face up, with a predetermined role as regional power. For Moscow and Beijing the issue is far more complicated. Much will depend on how Beijing intends to oppose openly any hostile action of Trump. Moscow has for many years openly questioned the world order led by Washington.

Beijing understandably seems reluctant to engage in direct confrontation. In all likelihood, Trump and his realist foreign-policy attitude will lead the Chinese elite to understand that Washington considers itself to be the only one entitled to grant world order. The Chinese elites need to understand that the only sustainable path for the future is the construction, with all actors, of a multipolar world that includes Washington, New Delhi, Moscow, Tehran, London and Brussels. Realistically, it is hard to think that the new administration would alter the strategic partnership formed between China, Iran and Russia. After all, Trump would retrace the same steps of his predecessors, simply by changing the angle of approach and trying to further shuffle the cards of international relations. The decision to improve the world through cooperation and mutual respect does not exactly match the aspirations of the American deep state that seeks war, chaos and conflicts.

The big difference we will see with a candidate like Trump is easy. Once all diplomatic efforts have failed against Beijing, instead of doubling down with military or terrorist efforts, the strategy will be abandoned in silence. The strong expressions against Beijing, the feared increase in military spending for the Pacific (to satisfy the industrial-military apparatus), and the rhetoric against Iran (to appease the Israel lobby), will be used to moderate the deep state’s intentions, while Trump will try to focus on economics and security (counter-terrorism) and much less on foreign policy.

Series Conclusion.

This series has sought to invite readers to reflect on the epochal events that are occurring. The global hegemonic project that was supposed to be realized with a Clinton presidency has been stopped. The inevitable military confrontation with Russia, Iran and China has been averted thanks to the preventive actions of these countries together with the defeat of the Democratic candidate. A huge blow has been delivered to the establishment, with its impulse toward globalism and US imperialism.

The emergence of a multipolar world order has altered the way nations interact with each other in the field of international relations. Washington is no longer the only referent, and it is this that represents a pivotal transition from a unipolar world dominated by Washington. The mechanisms that regulate the great powers have varied in form and content, leading to an almost unprecedented international situation. The future multipolar world order, historically unstable, will in fact hold the promise of stability thanks to the actions of opposing nations to the American superpower. United they will stabilize the world.

The key to a sustainable future world order is the synergy between the newly formed Beijing, Moscow and Tehran axis as an economic, military and cultural counterweight to the US. The union and the alliance of these three nations has created a new super-pole, able to balance effectively the often destructive actions of Washington. Rather than a multipolar world order, we are actually faced with a situation of two superpowers, one of which is based on the integration between dozens of nations on more than two continents. It is a new era that will accompany us over the coming decades. The unipolar world is over – forever!

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Pathological Terror? Engineered Protests and “Health Fears” Ahead of Trump’s Inauguration

NOVANEWS
trump

 Ain’t going to let no ego maniac turn me around, turn me around, keep on walking, keep on talking going to build ourselves a brand-new world. Joan Baez, San Francisco, Jan 15, 2016

The City Hall gleamed in the crisp air of an unusually wintry day in San Francisco, where gatherings ahead of the inauguration of the US president are going to take place.  Few from this part of the US intend visiting Washington to grace its presence and acknowledge the President elect, Donald J. Trump.  Those in California are hunkering down for the equivalent of bureaucratic street fights, threatening to keep administrations at the local, state and federal level busy for years.

The atmosphere was captured in by the San Francisco Chronicle (Jan 15), its cover featuring the state’s enraged bear readying for action.  “California,” it went with threatening promise, “prepares to roar on many fronts in effort to preserve billions in federal dollars.”  Never mind that lions tend to roar.

The Chronicle, in a note on the combative spirit seething in California, also informs readers that the Californian legislature has found a legal brief in battling the incoming Trump administration: a Washington, D.C. law firm run by former US Attorney-General Eric Holder.

These protests supposedly touch the tip of a gargantuan iceberg – or so is promised by some media outlets.  There is the now promised Women’s March on Washington.  Punters suggest a quarter of a million to turn up in female-inspired outrage against the Misogynist-in-Chief.  The Untied We Dream group has already been busy with its We Are Here to Stay campaign focusing on immigrant and refugee rights.On January 15, the focus of those gathered before the SF City Hall and some forty other cities was on the American Affordable Health Care Act.  Senator Bernie Sanders had been stringing together some inspiration for its defence, and a few Democrats put aside their beef with him to gather in some discordantly looking act of solidarity.

Illness, fear, bodily pathologies feed into the language of the protest; placards waved with a stunned air of foreboding anticipating the assault on the Obama administration’s healthcare efforts: “Repeal Trump”; “Fix it, don’t nix it”.  To tamper with health care is to inflict death on the US citizen.   House Minority Leader Nancy Pelosi turned out to the protest in SF, insisting that she, alongside SF Mayor Ed Lee, Supervisors Malia Cohen and Norman Yee and Senator Scott Wiener, were there to not only defend the Affordable Care Act but to remember Martin Luther King’s pointed reference that poor health remains one of the more shocking forms of injustice. But this was the old, defeated guard, and the sense of witnessing political cadavers come to life was hard to dispel.

Mayor Lee revealed those concerns that show the complex business notion that has never been extracted from the USmedical health system. In a world of social goods, the idea of health being a profit making measure filled with insurance providers would be obscene.  The sense from Lee, then, was that repealing Obama Care would “start us down the path on the road to chaos in the insurance market and declines in coverage.” Not exactly the spirit of MLK Jr, but the market’s representatives tend to talk, even in these debates.

Most appropriately and insightfully, one protester walked around as a reminder that Trump did have one potential use to the withering fabric of the Republic: “Restoring to the US the right to civic protest.”  Others were quintessentially odd, idiosyncratically delightful. The compound Shaman, a picture of straggly, knotted hair, a hat tall and jauntily placed, and a disproportionately large placard, was the poster boy.

Sad reminders were also present, a form of failed revolutionary sighs. Sanders supporters, kitted out with the material featuring their preferred presidential candidate whom Hillary Clinton railroaded, were noisily entertaining in their desperation.  Their presence lent an air of the inauthentic to proceedings.  The times ahead were serious, but the crushed Sanders camp were still giving a sense that something could be done.

The entire fury and desperation can provide the nutrients for a civic revolution in the United States, though much of the anti-Trump protest movement sporadically moves into the dark, visceral matter he is accused of generating.Hot-headed extremism, not debate, flickers before a single administrative act has taken place. A few protesters did not shy away from hoping that Trump would literally be “erased” prior to the Inauguration, obliterated before raising his pen to sign a single decree.  Trump remains the necessary demon, part of the bogeyman motif so indispensable to the functioning of US politics.

To work, a genuine reformist drive can hardly be one that will leave the traditional Democrat-Republican axis in tact.  The point is to make constructive use of the fury, the indignation, and, importantly, the supposed deplorables.  They, it must be said, will not be going quietly, while those protesters gathered outside City Hall speak to the status quo. With the anger still tingling in the air, the protesters took their banners and anti-Trump paraphernalia and headed through the farmer’s market.  The juxtaposition is worth noting: organic food stalls with fruit and vegetable produce mix in with health concerns and the future of the United States. The stall keepers were making a killing.

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Pan-Africanism and the Global Economic Crisis: African Union Faces Turbulent Headwinds

NOVANEWS
flag-of-the African-Union

The current efforts to elect a new Chair of the AU Commission have been caught in the crosswinds of the impact of illicit capital outflows, the question of reseating Morocco in the AU and the challenges that Africa will face during a period of the ascendancy of the ideas of Donald Trump and Marie Le Pen. The AU will survive this turbulence. But the rise of the Pan African Movement will likely sweep away the present crop of leaders.

Introduction: Three crossing points

In all countries of Africa, from Egypt to the Democratic Republic of the Congo (DRC) and beyond there are stirrings of the people who want to assert themselves politically in the context of realizing the pan African project of building a peaceful, integrated and prosperous Africa. These stirrings have created massive political tensions and are nowhere more evident than at the seat of the African Union where the poor and oppressed of Ethiopia have demanded a new democratic dispensation that provides real resources to the majority of the people.  Despite the glowing figures of economic growth, averaging 10.8% per year in 2003/04 – 2014/15, exploited Ethiopians have taken to the streets and internationalized their protests at the recent Olympics in Rio.  At state of emergency in Ethiopia confronts the AU about its future in a society of contested politics.

The peoples of Africa are responding every day to the global capitalist crisis by stating that the goals of Agenda 2063 cannot be achieved with the crop of current leaders. Genocidal economic relations in the South Sudan, dictators for life, idle threats to withdraw en masse from the International Criminal Court (ICC), war as a business in the so called War against Terror and the illicit capital flight from Africa preserved the interests of a class in Africa that opposed real African Unity. This is one of the top contradictions facing Africa at the crossroad between self-financing and illicit financial flows out of Africa.

In response to critical opposition to the stagnation at the AU Commission, the current leaders promised to ‘reform’ the African Union and to work harder to realize the aspirations of Agenda 2063. The goal of the ‘reform process’ is to transform the AU into a more effective and self-reliant institution. It will be the argument of this short intervention that the African Union is now facing turbulent headwinds.  The current efforts to appoint a new AU Commissioner has been caught in the cross winds of the impact of illicit capital outflows, the question of the reseating of Morocco in the AU and the challenges that Africa will face during a period of the ascendancy of the ideas of Donald Trump and Marie Le Pen. The conclusion will suggest that the Pan African movement will rise to the challenges posed by the current moment and the real push for reconstruction and transformation in Africa will accelerate in this period.

African Union and capital flight

Most of the countries of Africa are now deeply integrated into the international illicit economy that is embedded in looted minerals, bunkering of hydrocarbons, money laundering, illicit funds from fraudulent activities and nonpayment of taxes. In my most recent contribution to Pambazuka, I had outlined in great detail the way in which Kenya is one of the principal beach heads for this global illicit economy. http://www.pambazuka.org/pan-africanism/can-kenya-lead-african-union

Of any major country, Nigeria has probably had the highest percentage of its gross domestic product stolen— largely by corrupt officials—and deposited externally. Since the 1960s, up to $400 billion has been lost because of primitive accumulation, with $100 billion shifted out of the country. In October 2016, the government filed 15 separate suits against 15 oil companies at the Federal High Court in Lagos to recover billions of dollars that have been illegally siphoned from the country. As reported by Sahara News, “the Nigerian government used the consortium of experts for the intelligence-based tracking of the global movements of the country’s hydrocarbons, including crude oil and gas, with the main purpose of identifying the companies engaged in the practices that had led to missing revenues from crude oil and gas exports sales to different parts of the world.”  http://saharareporters.com/2016/10/04/nigeria-sues-shell-companies-407m-

Future researchers on the state visit of President Buhari to Washington in July 2015 will be able to analyze the call from Buhari for assistance in identifying the more than US$150 billion that has been illegally taken from Nigeria and what Obama informed Buhari of where to look for the money. Such researchers will then be able to connect the travels of President Buhari to Kenya, London and Dubai in search of these funds and how these centers of money laundering rebuffed the Nigerian effort to recover stolen assets. The legal action that has now been taken in Nigeria followed the earlier fine against that of telecommunication firm MTN for nonpayment of taxes is one indication that at the highest political levels in Nigeria there is a commitment to curtail money laundering.  A study by UNCTAD found out that between 1996 and 2014, “under invoicing of oil exports from Nigeria to the United States was worth $69.8 billion, or 24.9% of all oil exports to the US.”

With the release of the Panama Papers in 2016 there is now more evidence of the volume of ‘illicit financial flows’ and the amount of wealth funneled out of Africa every year by capitalists. Reports in the media that the world’s super-rich have taken advantage of lax tax rules to siphon off at least $21 trillion, and possibly as much as $32tn, from their home countries and hide it abroad – a sum larger than the entire American economy – were circulated in early 2016. In these reports, Nigeria, Cote D Ivorie and Angola were at the top of the list of African states with high net worth individuals holding hundreds of billions outside their country.

One major area of future research by progressive pan African intellectuals at home and abroad will be to assess the linkages between political leaders and the opaque world of finance capital to unearth the infrastructures that have been put in place to ensure illicit financial flows from Africa. Discussions on the nonpayment of dues to the AU by member states have been another example of the failure of intellectual and political leadership at the top Commissions of the AU.

The fact that over 70% of the AU Commission is funded by imperialist states (called donors ) is itself one indication of the infrastructure of capital flight. These ‘donors’ actually have the intelligence on how much money is being shipped abroad by African leaders, hence they seek to keep up the fiction of providing ‘aid’ to Africa. One good example of this duplicity was the case of the stolen funds from Zimbabwe. A few weeks after stepping down as Chair of the AU in January 2016, in an interview on March 3, 2016, President Mugabe made the announcement that US$15 billion had been stolen from Zimbabwe over the past 7 years under his watch. Yet, there has been very little exposure of how the Mugabe regime destroyed the economy while his cronies robbed the diamond mines and exported billions. In order to facilitate their export of capital they resorted to using the US dollar as the currency of the society while printing worthless bonds for the people to use as a medium of exchange in Zimbabwe.

Why didn’t Madame Zuma act on the High Level Panel on Illicit Financial flows out of Africa?

British corporations are the most experienced in the business of stealing and looting minerals from Africa. A recent report by the non-governmental organization, War on Want, documents how 101 companies listed on the London Stock Exchange (LSE) — most of them British — have mining operations in 37 sub-Saharan African countries. They collectively control over $1 trillion worth of Africa’s most valuable resources.

http://media.waronwant.org/sites/default/files/TheNewColonialism.pdf?_ga=1.3253744.1389028767.1479741089

The details that are presented in this report are the kind of facts that should be studied in every major university and policy think tank in Africa. While this author takes issue with their designation of Sub Saharan Africa, we have witnessed the downgrading of African universities so that NGO’s can produce facts on ‘conflict gold’  but there is no serious research being carried out because the same ‘donors’ starve African researchers of real resources.

The most recent information by UNCTAD on the misinvoicing of minerals in Africa has exposed the fact that the question of gold exports from South Africa involved the pure smuggling of gold, “The most striking feature of the gold sector in South Africa is the huge discrepancy between the amounts recorded in that country’s official trade statistics and those reported in its trading partners’ records. According to South Africa’s data, the country’s cumulative gold exports were $34.5 billion from 2000 to 2014, whereas according to trading partner data for that period they were more than three times higher, at $116.2 billion. This is indicative of massive export underinvoicing.” In fact, the study reports, the physical volume of exports (using the data from SA’s partners) and export underinvoicing are in “perfect correlation”. “This suggests that export underinvoicing is not due to underreporting of the true value of gold exports, but rather to pure smuggling of gold out of the country. Total misinvoicing of gold exports to South Africa’s leading trading partners was $113.6 billion over the 15-year period. At an average exchange rate of R9 per dollar, this corresponds to over R1 trillion.”

What is true of misinvoicining in South Africa is true for every conceivable commodity exported from Africa. One of the failures of Madame Zuma in her role as Chairperson was to fail to aggressively place the resources of the AU in the area of combatting illicit financial flows and following the recommendations of the Thabo Mbeki high level panel on Illicit Financial Flows from Africa.  http://hdl.handle.net/10855/22695

Was it an accident that the press conference announcing the findings of this high level panel took place in Abuja where former President Mbeki announced that said African countries lose between $50 billion and $60 billion annually through illicit financial flow, IFF? . “Monies for infrastructure and social amenities for the poor African population are being transferred to other countries via illicit financial flows,” said Mbeki at his report on the findings of the panel.This report by the High Level Panel reinforced the research that has been done over the years and reproduced by the UNECA to bring home the reality that Africa lose between $50 billion and $60 billion annually through illicit financial flows. [1]

Capital flight and insecurity in Africa

There is competition between Britain, France, and the United States to decide on which country can produce the most corrupt officials in suborning African bureaucrats into the world of primitive accumulation of capital. The US uses the institutions of the Washington Consensus and the US Africa Command for their corruption, the British seek to be sophisticated and hide behind  the mineral houses and London Bullion Market Association (LBMA) while the French are the most obscene in their corrupt and manipulative politics in Africa. Eva Joly has exposed the role of the French intelligence services and oil companies in those countries that are still dominated by France.

The scandalous relations between France and the puppets in many former colonies are well known and it is these puppets who compete to protect France in the corridors of the African Union. Before its name was changed, the French Elf state oil company, France’s largest enterprise with a turnover of 232.6 billion francs in 1996, had been robbed of over 2 billion francs—305 million euros—by its top executives, largely during the second seven-year term of ‘socialist’ president François Mitterrand (1988-1995).  Serious law schools in Africa need to get a hold of the judgement relating to the criminal activities of Elf. In their 1,045-page indictment and a further 44,000 pages of documents, the investigating magistrates described in detail “a large number of operations carried out on the margins of normal functioning of the group’s structures, and destined… to collect assets off the books”.“

Annual cash transfers totalling about £10m were made to Omar Bongo, Gabon’s president, while other huge sums were paid to leaders in Angola, Cameroon and Congo-Brazzaville. The multi-million dollar payments were partly aimed at guaranteeing that it was Elf and not US or British firms that pumped the oil, but also to ensure the African leaders’ continued allegiance to France. In Gabon, Elf was a veritable state within a state. France accounts for three-quarters of foreign investment in Gabon, and Gabon sometimes provided 75% of Elf’s profits. In return for protection and sweeteners from Elf’s coffers, France used the state as a base for military and espionage activities in west Africa.”[2]

As reported at the time of the trial, ELF had been set up as a  state enterprise by General de Gaulle in 1963 “to ensure France’s independence in oil and which lived, grew and prospered in a special and incestuous relationship with Africa” (Le Monde, November 12, 2003). As Loïk Le Floch-Prigent put it: “In 1962, [Pierre Guillaumat] convinced [General de Gaulle] to set up a parallel structure of real oil technicians. [By creating Elf alongside Total] the Gaullists wanted a real secular arm of the state in Africa…a sort of permanent ministry of oil…a sort of intelligence office in the oil-producing countries.”

Loïk Le Floch-Prigent, CEO of Elf from 1989 to 1993, received a jail sentence of five years and a fine of 375,000 euros. Alfred Sirven, former general affairs executive, also got five years and a 1 million euro fine. André Tarallo, 76, former number-two in the hierarchy and known as “Mr. Africa,” was given four years and a 2 million euro fine. Alain Gillon, former refinery executive, received a three-year jail sentence and a 2 million pound fine. However, their counterparts and underlings have intensified their work in Africa and France has been the most active within the ranks of her colonies and within the Peace and Security Council of the African Union.

The name of the company Elf Aquitaine International may have changed (now Total) but the continuity in practices of theft and bribery are so clear that these elements from France and the EU cannot afford real democratic change in African societies such as Gabon. The corruption of the French capitalists has been well documented by Eva Joly and more needs to be done in relation to the role of France in financing and supporting insurgents in places such as Mali and Central African Republic and then turning around to the Security Council of the UN to lead the fight against terror in Mali and Central African Republic. The Peace and Security Council of the AU has permitted the European Union to set the agenda of what defines terror and terrorism in Africa. Both China and Russia as members of the Security Council of the United Nations have been complicit in giving a pass to France for her activities in Africa. In the case of former President Sarkozy, he particularly worked hard to get the Chinese to be allies in their corrupt practices.

When the funds and minerals are fraudulently taken from African economies, then the foreign banks establish special desks to ensure that the illicit funds flow to offshore bank accounts. None of the reports on illicit flows out of Africa made the connections to the questions of militarism, insecurity, the so called war on terror and the role of international military operators, especially private military contractors. Cameroonian intellectuals who are researching on the expansion of Boko Haram beyond Nigeria are slowly documenting the duplicitous role of France in the enlargement of terror in Central and West Africa.

There has been talk of the reform of the African Union and the leadership of this reform process has been placed in the hands of President Paul Kagame of Rwanda. A visit to the largest gold refinery in the Gulf of Arabia will widen the discussion of reform in the AU to implicate the looting of resources from the DRC and to place the mandate of the Peace and Security Council of the African Union in the elaboration of identifying the looters and their chief beneficiaries. How can Kagame lead a ‘reform process’ in the AU when his regime violates the basic human rights of members of the opposition to the point of killings on foreign soil?

At the Kigali summit of the African Union in 2016,  the President of Rwanda announced an impressive team to spearhead the reforms at the African Union so that this Pan African body can be more self-reliant. It was proclaimed that member states will be expected to contribute 0.2 per cent of proceeds from levy on eligible imports to fund operations of the organisation. What remains striking in the proclamation  is the fact that these schemes seem to deflect attention from the ways in which African economies are integrated into the present global economy and that there can be no self reliance until there are serious efforts to control the wealth of Africa. Any study of the looting of the DRC by Uganda and Rwanda will expose their complicity in ensuring that Africa simply digs out minerals and all of the added value is accrued to other countries.

During the Kigali summit, a new funding model was adopted to make AU operations exclusively funded by subventions from member states. A few years earlier, a previous high-level panel chaired by former Nigerian president, Olusegun Obasanjo, had been appointed to look at alternative sources of financing for the AU. Then, there was the recommendation that member states raise revenue by imposing a $10 airfare levy on each international flight leaving or entering Africa and a $2 levy per hotel stay in Africa. This levy remained just another proposal with no real effort towards implementation.

Now, Paul Kagame as the lead person for the ‘reform process’ has designated nine prominent to oversee the reform efforts of the African Union. Of these nine, many are aware of the drain of resources because of the absence of processing facilities in Africa. Others have participated in the detailed studies of illicit financial flows out of Africa. It will remain to be seen whether the Chairperson of the Reform process, (Dr Donald Kaberuka, the former president of the African Development Bank (AfDB) and Finance minister of Rwanda) will raise the question of African resources in the global value chain as part of the agenda of how to increase revenues for African peoples, and ultimately for the African Union.

Europe is afraid of the full unification of Africa

The question of the AU budget as discussed in the deliberations about ‘reform’ had steered clear of the questions of capital flight and definitive benchmarks of the African Monetary Co-operation Programme (AMCP) of the Association of African Central Banks. [2] Patriotic Pan African bankers who understood the full impact of external currency domination of Africa had been keen to develop the African Currency Unit as far back as 2002. At the 1963 meeting of the OAU, Kwame Nkrumah had admonished the African leaders that ‘Africa must unite or perish.’  For fifty years the Pan African project was pushed forward by the Lagos Plan of Action and the Abuja Treaty of 1991 establishing the African Economic Community. The former President of Libya had gone ahead with precise plans for the gold reserves of Libya to be used to anchor the African currency. After the NATO intervention in Libya it emerged that the primary motivation for the launch of the war was to halt the process of realizing the Pan African project of a common currency in Africa. Revelations from the correspondence between the Secretary of State of the United States, Hilary Clinton and Nicolas Sarkozy, the President of France in March 2011 revealed that the plans for the NATO intervention were dictated by the following issues:

A desire to gain a greater share of Libya oil production,

Increase French influence in North Africa,

Improve his internal political situation in France,

Provide the French military with an opportunity to reassert its position in the world,

Address the concern of his advisors over Qaddafi’s long term plans to supplant France as the dominant power in Francophone Africa. https://consortiumnews.com/2016/01/12/what-hillary-knew-about-libya/

Many of the leaders who had retreated from supporting the African Monetary Cooperation Programme are being made aware of the real role of international finance as the more literate follow the rulings of the British court in relation to the resources of the Libyan Investment Authority that had been purloined by Goldman Sachs. The ruling of the High Court in London in favor of Goldman Sachs against the Libyan Investment Authority is only serving to increase the literacy of Africans on the workings of the international financial oligarchy. https://www.judiciary.gov.uk/wp-content/uploads/2016/10/lia-v-goldman.pdf

Recently President Museveni gave notice that the African Union will be working more aggressively to end foreign domination in Libya. Museveni stated that,

We recently had a meeting in Addis Ababa and told all and sundry that AU intends to rescue Libya and we also made it clear that future attacks on African soil without coordinating with AU are not acceptable, to put it mildly. Can Africa defend African soil?  Very much so.

This kind of bravado statement of Yoweri Museveni after the AU High Level committee meeting on 8 November 2016 belied the reality that at least three members of the AU committee, Chad, Egypt and the Sudan are partners of NATO in the current destruction of Libya. http://www.peaceau.org/uploads/auhlp-meeting-on-libya-8-nov-2016-en-.doc

In the book, Global NATO and the Catastrophic Failure in Libya, this author brought out the graphic historical lessons from the destruction of Libya and what lessons that will be learnt when comparing the invasion of Libya to the Italian invasion of Abyssinia in 1935. The PanAfrican movement of that period accelerated the end of colonial domination in Africa.

Lessons from the Italian invasion of Abyssinia

Between 1935 and 1946 the global mobilization against fascism built new alliances internationally and quickened the pace of decolonization in all parts of the world. That anti-fascist internationalism deepened with mass resistance inside of Africa and linked the pan African movement to the Bandung process to cement the South Project. From that moment until now, the Pan African movement has been a central anchor of the South Project, that is the project of creating a new international economic order. Africans are being called upon to rebuild and strengthen this project with calls from the belly of empire to defend black lives. The present generation of youths is being mobilized through new means of communication to realize the goals of real Pan African solidarity from Burkina Faso in West Africa to Bahia in Brazil.

European project shatters in the face of solidarity in the South

The question of the rejoining of the AU by the present Moroccan leadership forms the next major challenge for the future of the African Union.  Since 1984, the political leadership of Morocco had placed its aspirations on the future of the European project, but with the implosion of the European ideal as manifest with Brexit, the Moroccan leadership has decided to rejoin the African Union. In the process, the Moroccan leadership seeks to strengthen the neo-liberal pressures of global capital inside the AU to challenge the anti-colonial stance of the African Union on Western Sahara and all outstanding colonial territories (Puerto Rico, Cayenne, Martinique, Guadeloupe Mayotte, etc).

Progressive Africans have been tracking the economic diplomacy of Morocco in the rest of Africa. As one commentator outlined,

Morocco is currently courting a number of African countries relentlessly, including Madagascar, Tanzania, Rwanda, and others. Morocco has signed 19 economic agreements with Rwanda and 22 with Tanzania—two countries that traditionally backed the Western Sahara’s quest for decolonization. Nigeria Morocco have signed a total of 21 bilateral agreements, a joint venture to construct a gas pipeline that will connect the two nations as well as some other African countries to Europe. It is easily transparent that the economic agreements with these countries imply ulterior motives for increasing Morocco’s leverage in its campaign to return to the AU and deal a blow to Western Sahara’s aspirations for self-determination. Morocco is waging a similar campaign internationally and in the halls of the U.S. congress by hiring expensive lobbyists and sleazy public relations firms. [3]

It is in the push by Morocco to play a leading role in the AU that is helping to define the future of the AU in world politics. The political leadership of Morocco has been working through states such as Cote d Ivorie, Gabon and Senegal to promote the interests of the Moroccan leadership but the limits of this alliance with Senegal and Cote D Ivorie were exposed at the heads of state meeting of the 4th African-Arab summit in Equatorial Guinea

The Saharan Arab Democratic Republic (SADR), declared by the Polisario Front in 1976,  is a member of the African Union At the Malabo Summit of African and Arab leaders in  November 2016, Morocco found out the limits of its influence when it tried to force the question of removing the representatives of the SADR from the meeting. When Morocco walked out of the meeting, only the most conservative monarchies of the Gulf – Saudi Arabia, the United Arab Emirates, Qatar and Oman – pulled out of the summit over the participation of the Polisario Front delegation. Many governments such as Egypt and Kuwait who in the past would have been supportive of Morocco decided to stay in the meeting, exposing the diplomatic isolation of Morocco.

This push by the Moroccans is also caught up in the struggles for a new chairperson of the AU Commission. My most recent article on whether Kenya can lead the African Union offered some reasons why the interpenetration of western financial and security interests in East Africa disqualifies Kenya from taking a leadership role.

It is the contention of this intervention that at this historical moment the ideas of the Moroccan leadership confront the aspirations of the Moroccan peoples and thus the question to be posed is not whether Morocco will be part of the AU, but what kind of politics will emerge in Morocco out of the present stirrings of the oppressed citizens of Morocco. The death of a fishmonger in the northern town of Al-Hoceima who was crushed to death (inside a garbage truck as he tried to retrieve fish confiscated by police) exposed another reality of thousands of outraged Moroccans.  The present leadership of Morocco has a shortsighted understanding of world politics and have not yet grasped the seismic shift that has taken place since the imperial interventions in Libya and the war in Syria. Hence, they could not understand why Egypt is not under the thumb of Saudi Arabia as in the past. The turbulence in the revolutionary politics that had been initiated in the streets of Cairo and Tunis may seem to have subsided, but the youths of Africa are assessing the new forms of organizing for the next round so that the decisive blow against neo-liberalism in the next round of revolutionary struggles will sweep away leaders who seek to reverse the gains of popular rebellions.

Reparations and African Descendants.

The third major contradiction for the AU will be how it confronts the growing threat of fascism. The election of Donald Trump in the United States and the rise of the ideas of Marie Le Pen in Europe have brought back the questions of racism and xenophobia to the center of world politics. Repairing humanity from the scourge of racist and genocidal violence has been at the center of Pan African political activity since the days of enslavement. In the last years of the OAU the Reparations question had been high of the agenda with positive interactions between the Global African family in all parts of the planet. The present leaders of the AU who have been silent on the question of the black lives at home and abroad are now faced with a vibrant #Black lives matter social movement that is spreading in all parts of the globe. When Haiti attempted to join the AU in 2016, this African society was rebuffed by a leadership that does not understand the history of Pan Africanism and the centrality of Haiti in the History of Pan African Revolts. Leaders who understand the so called ‘diaspora’ only in terms of remittances are being exposed for their silence on what is happening to Africans on a day to day basis in the face of police killings. The demands for reparations and for respecting Black Lives in the era of Donald Trump will sharpen the contradictions between the EU brand of Pan African partnership and that which comes from ordinary Africans.

There is little reference at the official level of how Agenda 2063 would affect the more than two hundred and fifty million Africans of the Global African Family living outside the geographical boundaries of Africa. At the bidding of their ‘global partners’ that seek to set the tone for research and the agenda in Africa there is emphasis on the SDG goals instead of deepening the understanding of reparations and reparative justice. Slowly, the EU-Pan African partnership is downplaying the aspirations of Agenda 2063 and in its place organizing meetings all over Africa on ‘good governance’ and ‘security sector reform ‘instead on the role of financial houses in money laundering.

On the whole, the present leaders had a different project from the producing classes who believed that the idea of Africa for the Africans at home and abroad should not be a slogan. African intellectuals are torn between these two visions of social and economic change, with a small minority carrying forward the Nkrumahist vision that had inspired the call for full unity. The political upheavals of the current currency wars and the wars on terror will have impacts on the entire process of African unity and one of the challenges for the progressive forces will be how to engage with the popular producing forces to seize on moments to push harder for a common currency and to make legal the idea of the free movement of the people of Africa.

When the AU Constitutive Act was being drafted, it was the conscious effort of the progressive Pan Africanists that the AU would be qualitatively different from the OAU. The Secretary General of the OAU had worked from a Secretariat. The AU has a Commissioner whose powers to intervene are clearly stated in the Constitutive Act. Current leaders such as Yoweri Museveni and Paul Kagame may grandstand on reforms and the capabilities of the African Union but the seriousness with which they will be taken will be determined by the levels of transparency and democratic participation in their societies.  Nonpayment of dues by member states of the AU is itself a statement about where their loyalties are. They have kept foreign banks alive while their people go without basic necessities. It is in Nigeria where there is the largest section of the African working class where one will have to grasp the joint struggles against capital flight and Boko Haram. Two Nigerian leaders were killed when they took assertive action against empire. The psychological warfare against Nigeria is most intense in order to detract from the calls to bring to justice the fraudulent leaders. Both Murtala Mohammed and Chief M.K.O Abiola were eliminated when they decided to stand up for Africa. The late Tajudeen Abdul Raheem had worked hard for the building of Pan African Unity and he had admonished the youth to organize.

Conclusion

This call for organizing is now clearer as the liberal ideas of the West has been shattered with the coming to power of the alt right in Europe and North America. These neo fascist forces have made it clear that there will be no grey areas on the question of racism. It is this same racism that entreats the leadership of Europe and North America to seek the recovery of capitalism on the backs and bodies of the African at home and abroad. The current rebellions in Ethiopia and South Africa demand new engagement with new ideas about transcending neo-liberal capitalism. The same foundations that have supported the leaders in the DRC, Ethiopia, South Africa and the Sudan are busy  organizing meetings to ensure that the rebellions now underway does not really disrupt the looting of African resources.

Kenya remains the model for western foundations of spending peanuts on studies on ‘democratic reforms’ while international capital support a Kenyan ruling class that divides the working peoples on the basis of religion and “tribe”. The corruption of the Kenyan military led to their catastrophic defeat in Somalia in January at the el Ade (comfort base). Somali insurgents fighting against external military presence in Somalia killed 180 Kenyans in January at a camp in el Ade. Eleven months after the killings, the Kenyan military refuse to provide figures as to the numbers killed. Instead, the Kenyan military is promoting their book, Operation Linda Nchi: Kenya’s military experience in Somalia. [4]

Faced with the fact that Kenyans want real information on the deaths in Somalia, the government of Kenya has refused to provide information as to how many were killed. Given the revolutionary potential of the Ethiopian workers and small farmers, the President of the USA has used his authority to enlarge the operations of the US Africa Command in Somalia. On November 27, President  Obama acted to give the legal authority for the expanding war in Somalia using the U.S. Special Ops, AFRICOM, private contractors, and the CIA with the 9/11 Authorization for the Use of Military Force (AUMF) for Iraq.  US military personnel in Somalia can easily be redeployed to Ethiopia when the current revolutionary upheaval matures.

Member states of the African Union have been silent on this expansion of the war when for two decades it was stated in the corridors of power in Washington that it was the presence of US military personnel in Africa that acts as a magnet for misguided youths who are financed by the Wahabists.

At the time of submitting this article, the peoples of Africa were confronted with the clowning refusal of Gambian President Yahya Jammeh to accept the results of the elections of December 1, 2016 when he lost  to the leader of the combined opposition led by Adama Barrow. While the diplomatic dance of the AU and ECOWAS is underway, serious Africans need to engage with the Stolen Asset Recovery Initiative that had been launched in 2007 by the United Nations Office on Drugs. Such engagement will shift the discussions on the question of where to get the resources to fund the work of the African Union.

The renewed confidence of Africans is emerging in the midst of an economic depression in Europe and at a moment when Africans are stating clearly that there must be new values for African unity, for healing ourselves and the world (Maathai 2010). Wangaari Maathai as a feminist and environmentalist in the Pan African Movement had brought the questions of environmental repair to the forefront of the discussions on Pan Africanism. This new brand of Pan Africanism that respects life, health, peace and environmental reconstruction is slowly asserting itself in all parts of the Pan African world. The AU will survive the turbulent headwinds. It is not clear whether most of the current leadership will survive. The three crosscurrents promise to blow many away.

 

Notes

[1] Ajayi and L. Ndikumana (eds.), Capital Flight from Africa: Causes, Effects and Policy Issues. Oxford: Oxford University Press, 2015

[2] Jon Henley, “Gigantic sleaze scandal winds up as former Elf oil chiefs are jailed,”

https://www.theguardian.com/business/2003/nov/13/france.oilandpetrol

[3] Yohannes Woldemariam, Behind Morocco’s New Tango with the African Union, https://www.ghanastar.com/africa-news/behind-moroccos-new-tango-with-the…

[4] Official KDF Account, Operation Linda Nchi: Kenya’s Military Experience in Somalia,  Ministry of Defence, Kenya 2014

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