China in Africa = EU’s nightmare

April 23, 2020

Europe has since the post-colonialist era played a central role in the African continent, fostering peace and growth through financial and military aid. The EU has also been a major partner in the World Bank’s projects together with the United States and most of this aid has been tracked down in a clear and transparent way. Since 2009 China has been Africa’s main trading partner while European countries have lost their influence in their former colonies. Europe has not been alone in falling behind the fast growth of investments from the East, also other Western countries seem to face the same challenge.

 

European interests in Africa

European countries' aid missions in Africa surged in the 70s driven mainly by paternalistic reasons, with French, Germans, Italians and later the British, in particular, taking advantage of Africa’s inherited affinity to the old continent. With the decline of these special relationships and of their comparative influence vis-à-vis other foreign powers, the interactions between continents went through a period of stagnation and liberalisation of the agenda based mainly on development aid and democratisation policies. Both because of the vestiges of its paternalistic legacies or because of other important issues at stake, like national safety and migration, there is still a strong military presence of France and other countries, mainly in the Sahel region, with the numerous military bases.

 

What about the European Union as a whole? The EU has since its creation tried to preserve the ties of its members with their former colonies, this mainly to protect their economic interest and access to natural resources. The biggest challenge for the EU, though, was to become an international actor in foreign policy vis-à-vis other sovereign states, both in development aid (European Development Fund) and later in preventing and resolving conflicts. Help provided by the EEC (the EU’s predecessors) before the end of the Cold War was almost unconditioned. With the fall of the Berlin Wall political goals like democracy, human rights, rule of law
 led to a rethinking of the EU and ACP (African Carribean Pacific) relationships that led to the Cotonou Agreement in 2000, with a validity of 20 years, establishing a bilateral deal between EU and 77 ACP states.

 

While in the beginning the aid was mainly conditional on democratisation and development, with the rising concern about migration, security and migration control became European priorities over economic growth and development. What Europe is trying to do regarding trade, is to regionalize relationships through Economic Partnership Agreements (EPAs). Those are agreements between the EU and five sub-Saharan economic areas. The problem is that while some EPAs were implemented in 2016, others are still at varying stages of finalisation because of a lack of adherence inside regional areas. What is unclear is whether full regional EPAs are really feasible or even desired by single African and European states: For the Europeans because these agreements are reciprocal but asymmetric (EU members  are to cut all of their tariffs while African countries up to 75%). For African countries because a drop in tariff revenues hits local governments, even if there is some sort of compensation for this loss.

 

What is China after?

Now, what about China? We know little about its foreign aid and how much thereof is actual aid and what part are just loans that will need to be repaid eventually. What is clear is that China has been the African continent’s largest trading partner since 2009, with its detailed African Policy. But trade is not the only reason for China’s interest in Africa, geopolitics is another important issue. China opened its first overseas military base in Djibouti in 2017 and in 2018 it hosted a China-Africa security forum. Djibouti is positioned quite strategically, on the Red Sea, next to the Middle East.Many other western countries opened foreign military bases there. Another geopolitical concern for the US and the EU is Chinese tacit conditionality on UN votes. In a room where every country has one vote, having international partners might help China. Moreover,  friendship with Africa is tied with the strong request to support One China Policy, namely to not recognize Taiwan.

 

Many were the Chinese state officials visits in Africa and many are the infrastructural projects ongoing. While less developed countries generally see China as a benevolent actor, others, like Ghana, view it as a selfish country interested in its own affairs. Indeed, China needs Africa even more than Africa needs China. China has three main issues to solve. Firstly, the lack of resources, mostly oil and minerals but also raw materials for its processing industries. Second, China needs to find a market for its products, mainly the cheap ones, that can be sold in less developed countries where demand is rising.  Finally, China needs to provide work for its own citizens. This latter issue may be the most important one: since the “go out policy” in 1999, China has helped only the top 2% of construction companies to grow and create a monopolistic market domestically, while the others were pushed to find new markets with the help of the state. This policy allowed many workers and engineers to travel abroad and Africa, a region that is facing fast institutional and demographic growth, is obviously a great destination, as it offers plenty of opportunities for Chinese companies.

 

What's in it for Africa?

Given these premises, can the Chinese model help Africa in any way? As far as we know, only about 23% of China’s overseas development program is financed by aid, the other slice comes in the form of loans for African countries or export credits offered directly to Chinese companies. These high risk loans are easily issued; they are not free, though, and their interest, even if low, can worsen the local economy. Even worse is the fact that aid or loans are often tied to the selection of a Chinese construction company, with Chinese high skilled workers employed above African laborers with poor work conditions. Most importantly, Chinese companies also win projects financed by other donor countries as they accept lower profit margins.

Cartoon by Ghanaian satirical artist Bright Tetteh Ackwerh

 

Why is Africa okay with this? There are two main reasons. The first and more obvious one is that loans are not contingent on democratic development policies and directives. Second, African countries don’t negotiate together: even if an African Union does exist, it is hampered by individual countries’ fears and interests. The fears are both that of powerful states worried about losing their bilateral relationships with China and that of smaller states who are worried about being excluded. The interests concern raw materials: China’s global purchases of raw materials help keep commodity prices high. This is advantageous to those African countries that are commodity exporters; the others are negatively affected as Chinese oil consumption drives up the global price and hence the price of their oil imports.

 

Conclusion

While China is advancing its interests well, the EU is lagging behind. Obviously its help is much more difficult to accept, as it entails conditional ties that are often not welcomed, thus harming both Africans states and the EU interests. The European Union is trapped in a dilemma: democratic development or power? While the EU is trying to understand how to keep democratic conditions attached to their help without losing its geopolitical primacy role, it must also consider that other countries such as the United States  are adapting their policies and conditionalities to not lose ground to China. The same goes for post-Brexit Britain, with Theresa May launching an intense Global Britain program that looks at expanding diplomatic networks but also  follows a strict “trade-not-aid” and “aid-for-trade” agenda. Time is running out as the Cotonou Agreement has expired and so far a renewal of the deal seems far away.

 

Cover image: unknown author

 

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