Tichaona Zindoga and Darlington Musarurwa
A couple of days ago, the United States Embassy in Harare posted a tweet with a blog post on, “How US aid avoids ‘debt-trap diplomacy’”.
The intention of the tweet was not well-masked: it was an attempted riposte to the currency of the news about China-Africa relations at a time Beijing was hosting African leaders for the Forum on China-Africa Cooperation (Focac) Summit.
The US and China are seen to be in a new “scramble” for Africa – and well beyond that, to across Asia where the contentious South China Sea disputes have been the metaphor for the geopolitical games involving the world’s two biggest economies.
The article that the US Embassy wanted to draw attention to was written some time in March.
The article begins by stating that the world’s prosperous nations spend hundreds of billions of dollars each year in “foreign aid” – but foreign aid can mean many things.
It then lists US assistance in “emergency response and other forms of humanitarian assistance”, “global health, such as programmes to prevent the spread of HIV/AIDS and other diseases”, “peace and security”, and “good governance, by funding accountability measures, judicial reform and support for human rights” , as categories under which US aid falls.
Then the article hits home: “Others believe that loans and business investment also are forms of aid. This can be true, but sometimes loans and investment come with strings.
“Loans must be paid back. Sometimes a country borrows to build infrastructure, and the donor nation’s own workers get the best construction and other jobs. And aid that does not guard against corruption can hurt rather than help the recipient nation. That’s why some kinds of foreign aid amount to debt-trap diplomacy. Aid recipients can find themselves greatly indebted to a single creditor . . .”
It then cites countries that have allegedly been caught in the trap – from Kenya to India and Sri Lanka.
The US has tried to trash Chinese investments in Africa and the developing world and this piece is scant doubt one of those jabs.
Sam Parker and Gabrielle Chefitz, in a piece in May, provide further amplification of this kind of attack.
They write: “Through its Belt and Road Initiative, China is extending hundreds of billions of dollars in loans to developing countries that often can’t afford to pay them back. In doing so, Beijing may be looking beyond its bottom line, hoping to convert economic loss into geopolitical gain.
“As Beijing accumulates more economic leverage through lending, recent evidence suggests it won’t be shy about using its distinctive state-and-market model towards advancing the ruling party’s global political goals.
“China’s practice of geoeconomics has been as creative as it’s been proactive . . . We believe China could apply this debt leverage as a tool to achieve three long-standing strategic goals: acquiring a string of ports to project power across South Asia; undermining US-led opposition to its contested South China Sea claims; and challenging US naval dominance in the Pacific.”
An analysis – even at a superficial level – will find fault with this attempt to flag Chinese investments in the developing world.
First of all, the developing world – including the African leaders that converged in Beijing – are happy with the approach of China and its philosophy of mutual respect, non-interference and development focus.
The US model has been quite the opposite: it approaches the world as a Big Brother, it is meddlesome and its idea of development is to start by razing whole countries first.
In the latter category, recent examples include Iraq, Afghanistan and Libya, all made to burn to the ground before reconstruction could take place. Not that it has, anyway.
China has showed us that it can perfectly assist in development without elongating its nose to poke into other people’s affairs, or worst of all, destroy them. The developing world needs the critical infrastructure in dams, roads, rail and airports. China is providing these critical foundations for growth – something that also speaks to the fact that China has understood the developing world through its own experiences.
As argued later on in the piece, China understands the need for systematic growth anchored on getting certain fundamentals right, beginning with infrastructure. Forty years ago, China was a backwater – like the rest of us.
Its growth trajectory is as practical as it is inspirational, that is why it is finding takers in the developing world.
The mistake that the US is making is to underestimate the exemplary nature of China and its pragmatism which have led to the Third World seeking the alternative that it offers.
Whose debt trap, anyway?
We now turn to the fact that, away from its present pretences, the US is in fact the author of the debt traps since the 20th century.
Having been conceived at Bretton Woods, New Hampshire in the United States of America (USA) in 1944, the World Bank Group and the International Monetary Fund (IMF) were mainly instruments to facilitate the reconstruction of Europe after a ruinous world war.
However, African countries, which were desirous to improve their economies, were later co-opted, but even after seven decades, these ostensible international institutions have failed to impact positively on African economies.
If anything, most countries on the continent, Zimbabwe included, have been caught up in a serious debt trap from which they are still trying to escape.
It has definitely come as a cost to most economies. Commenting on Nigeria’s debt conundrum in August 2000, then-President Olusegun Obasanjo said: “All that we had borrowed up to 1985 or 1986 was around $5 billion and we have paid about $16 billion, yet we are still being told that we owe about $28 billion. That $28 billion came about because of the injustice in the foreign creditors’ interest rates. If you ask me what is the worst thing in the world, I will say it is compound interest.”
Many scholars, even Western ones, are agreed that the global financial architecture as represented by the World Bank and IMF, is configured to perpetuate the North-South divide, where the South (emerging economies) is perennially dependent and beholden to the North (the developed countries).
There is a curious tendency within the Bretton Woods institutions to extend loans to developing countries, as opposed to infrastructure and development finance, as they did to Europe after the Second World War.
It, therefore, becomes impossible to disagree with the assertion that Bretton Woods institutions have evolved as instruments to maintain the North (US and Europe)’s economic hegemony over the world.
US-based scholar Dr JW Smith in his work “The World’s Wasted Wealth” (1994) concluded that the type of aid extended to poorer countries was different in form and substance compared to support extended to other countries.
“Instead of developing the Third World, it is clear that the Third World dependency is a policy of the major powers, and the world leaders insist on restricting consumer buying power in the
“Third World as a price for what is essentially maintenance loans,” said Dr Smith, adding: “Meanwhile, these same leaders easily agreed that West Germany must put $1 trillion into the former East Germany to simultaneously build industry, social infrastructure, and markets. And when the relatively poorer countries of Greece, Portugal, and Spain wanted to join the Common Market, these leaders ‘implemented a 15-year plan, which included massive transfers of direct aid, designed to accelerate development, raise wages, regularise safety and environmental standards, and improve living conditions in poorer nations.’ . . . Emerging former colonies receive no such care for their economies to become viable.”
But relations between China and Africa is diametrically different to that which exists on the continent, on one hand, and Washington and Brussels on the other.
Before its reform process, which began in 1978, China was an economic backwater, but even then, it continued to morally, technically and materially support the African continent.
For example, in their endeavour to dislodge colonialism, liberation movements, particularly in Zimbabwe, benefited immensely from Beijing’s support.
Incidentally, President Mnangagwa received part of his military training in Nanjing, China, in the 1960s.
Fast forward to 2018, China, which to all intents and purposes has become a global superpower, is now extending financial support to African countries through targeted support “to simultaneously build industry, social infrastructure, and markets.”
Its footprint, through various infrastructure projects such as roads, stadia, airports, dams and power stations, is now visible from Cape to Cairo.
Other than a legacy of ostentatious State houses in various African countries, there hasn’t been any meaningful infrastructure built by former colonialists and their successor institutions for the masses.
Tichaona Zindoga is the Political Editor of The Herald and Darlington Musarurwa is the News Editor of our sister paper, the Sunday Mail.