Paul Staniland on the deep flaws of the pre-Trump “liberal international order”

Paul Staniland has a great piece over at Lawfare on the need to see post-war Pax Americana for what it has been:

Pushing back against Trump’s foreign policy is an important goal. But moving forward requires a more serious analysis than claiming that the “liberal international order” was the centerpiece of past U.S. foreign-policy successes, and thus should be again. Both claims are flawed. We need to understand the limits of the liberal international order, where it previously failed to deliver benefits, and why it offers little guidance for many contemporary questions.

…. analysts have persuasively argued that these accounts create an “imagined” picture of post-World War II history. Patrick Porter outlines in detail how coercive, violent, and hypocritical U.S. foreign policy has often been. To the extent an international liberal order ever actually existed beyond a small cluster of countries, writes Nick Danforth, it was recent and short-lived. Thomas Meaney and Stephen Wertheim further argue that “critics exaggerate Mr. Trump’s abnormality,” situating him within a long history of the pursuit of American self-interest. Graham Allison—no bomb-throwing radical—has recently written that the order was a “myth” and that credit for the lack of great power war should instead go to nuclear deterrence. Coercion and disregard for both allies and political liberalism have been entirely compatible with the “liberal” order.

internationalcommunityStaniland makes great points throughout the piece, especially when he looks at the so-called liberal international order from the perspective of people in the Middle East and Asia. The same would be true if he were to look at it from Africa. The Continent’s Mobutus, Bongos, and Biyas have always been loyal water-carriers for the “liberal international order”, which existed primarily to advance the interests of the “international community” as seen in the image above. For this reason, keen observers from countries not considered to be part of the “international community” have repeatedly argued that the current U.S. administration merely presents a congruence of American rhetoric and action on the global stage. For better or worse, the mystique is dead. Western Ambassadors can no longer claim the moral high ground to give lectures on democracy, human rights, and good governance while also facilitating corrupt contracts for natural resources and security assistance to dictators.

Read the whole thing here.

The Politics of the CFA Franc Zone

This is from the Economist:

Where some see an anchor, others see a millstone. To maintain the euro peg, notes Ndongo Samba Sylla, a Senegalese economist, these very poor countries must track the hawkish monetary policy of the European Central Bank. Since the introduction of the euro, income per person in the franc zone has grown at 1.4% a year, compared with 2.5% in all of sub-Saharan Africa.

More on this here.

People like Cameroonian president Paul Biya love the CFA. With good reason.

Yet elites do rather well out of the system, which makes it easier to send wealth abroad. And a weaker currency would increase the cost of imported goods. The only devaluation, in 1994, sparked riots.

How to avoid the resource curse, or how Norway spends its $882 billion global fund

This is from the Economist:

This week the “Pension Fund Global” was worth Nkr7.3 trillion ($882 billion), more than double national GDP. No sovereign-wealth fund is bigger (see chart). It owns over 2% of all listed shares in Europe and over 1% globally. Its largest holdings are in Alphabet, Apple, Microsoft and Nestlé, among 9,000-odd firms in 78 countries.

In designing the fund, Norway got a lot right. Its independence is not constitutionally guaranteed, but it is protected as a separate unit within the central bank, overseen by the finance ministry and monitored by parliament. It is run frugally and transparently; every investment it makes is detailed online.

Other funds might copy those structures, but would struggle to mimic the Nordic values that underpin them. Yngve Slyngstad, its boss, says growth came “faster than anyone had envisaged”, and that a culture of political trust made it uncontroversial to save as much as possible. A budgetary rule stops the government from drawing down more than the fund’s expected annual returns (set at 4% a year). The capital, in theory, is never touched. Martin Skancke, who used to oversee the fund’s operations from the finance ministry, attributes the trust the institution enjoys to relatively high levels of equality and cultural homogeneity. It also helps that many rural areas recall poverty just two generations ago.

Consider this your regular reminder that the “resource curse” is not a universal phenomenon. See also Botswana, the United States, Chile, Canada, and Australia.

More on this here.

Was the Election in Gabon rigged?

Here is a potential answer to this question:

Thanks to the last minute Haut Ogooué results, Mr. Bongo was able to win by a margin of 5,594 votes, securing 49.8% of the vote to Mr. Jean Ping’s 48.2%. Opposition representatives refused to sign papers validating the results.

According to the electoral commission, 99.9% of Haut Ogooué’s population casted their votes at the ballot boxes, which is a slight anomaly to the rest of the country where the average turnout was 59%.

A career diplomat, Ping, who previously served as the chairman of the African Union Commission, disputes the result. “To use one province to impose a coup in the country could have serious consequences for national unity,” Ping said.

Ping, of course, is the same guy who while at the AU Commission (2008-2012) turned a blind eye to instances of election fraud in several African states. It will be interesting to see where he turns to for help.

Meanwhile protesters burned down the Gabonese Parliament yesterday. Authorities then blocked the internet early Thursday.

The Bongo family has ruled Gabon since 1967. Ali Bongo became president in 2009 following the death of his father Omar Bongo who was president for a staggering 42 years.

Some Africanist inside baseball

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Africa’s looming debt crises

The 1980s are calling. According to Bloomberg:

Zambia’s kwacha fell the most on record after Moody’s Investors Service cut the credit rating of Africa’s second-biggest copper producer, a move the government rejected and told investors to ignore…..

Zambia’s economy faces “a perfect storm” of plunging prices for the copper it relies on for 70 percent of export earnings at the same time as its worst power shortage, Ronak Gopaldas, a credit risk analyst at Rand Merchant Bank in Johannesburg, said by phone. Growth will slow to 3.4 percent in 2015, missing the government’s revised target of 5 percent, Barclays Plc said in a note last week. That would be the most sluggish pace since 2001.

The looming debt crisis will hit Zambia and other commodity exporters hard. As I noted two years ago, the vast majority of the African countries that have floated dollar-denominated bonds are heavily dependent on commodity exports. Many of them are already experiencing fiscal blues on account of the global commodity slump (see for example Angola, Zambia and Ghana). This will probably get worse. And the double whammy of plummeting currencies and reduced commodity exports will increase the real cost of external debt (on top of fueling domestic inflation). I do not envy African central bankers.

Making sure that the looming debt crises do not result in a disastrous retrenchment of the state in Africa, like happened in the 1980s and 1990s, is perhaps the biggest development challenge of our time. Too bad all the attention within the development community is focused elsewhere.

Quick thoughts on presidential term limits and the political crisis in Burundi

The president of Burundi is about (or not) to join the list of African leaders who have successfully overcome constitutional term limits in a bid to hang on to power. Currently (based on observed attempts in other African countries and their success rate) the odds are roughly 50-50 that Mr. Pierre Nkurunziza will succeed. The last president to try this move was Blaise Compaore of Burkina Faso who ended up getting deposed by the military after mass protests paralyzed Burkina’s major cities.

Successful term limit extensions have so far happened in Burkina Faso (first time), Cameroon, Chad, Djibouti, Gabon, Guinea, Namibia, Togo, and Uganda. Presidents have also tried, but failed, to abolish term limits in Burkina Faso (second time), Malawi, Niger, Nigeria, Senegal, Zambia. Countries that are about to go through a term limit test in the near future include Angola, Burundi, Republic of Congo (Congo-Brazzaville), the Democratic Republic of Congo (DRC), Liberia, Rwanda, and Sierra Leone. Heads of State in Benin, Cape Verde, Ghana, Kenya, Mali, Mozambique, Sao Tome e Principe, Tanzania, and Namibia (after Nujoma) have so far obeyed term limits and stepped down at the end of their second constitutional terms.

To the best of my knowledge only Sudan, The Gambia, Equatorial Guinea, and Eritrea have presidential systems without constitutional term limits. Parliamentary systems in South Africa, Lesotho, Swaziland, Ethiopia, and Botswana do not have limits, although the norm of two terms exists in Botswana and South Africa (and perhaps soon in Ethiopia?).

So what we see in the existing data is that conditional on *overtly* trying to scrap term limits African Heads of State are more likely to succeed than not (9 successes, 6 failures). However, this observation doesn’t tell us anything about the presidents who did not formally consider term limit extensions. For instance, in Kenya (Moi) and Ghana (Rawlings), presidents did not initiate formal debate on the subject but were widely rumored to have tried to do so. So it’s probably the case that presidents who are more likely to succeed self-select into formally initiating public debate on the subject of term limit extension, thereby tilting the balance. And if you factor in the countries that have had more than one episode of term-limited presidents stepping down, suddenly the odds look pretty good for the consolidation of the norm of term limits in Sub Saharan Africa.

I wouldn’t rule out, in the next decade or so, the adoption of an African Union resolution (akin to the one against coups) that sanctions Heads of State who violate constitutional term limits.

So will Nkurunziza succeed? What does this mean for political stability in Burundi? And what can the East African Community and the wider international community do about it? For my thoughts regarding these questions check out my post for the Monkey Cage blog at the Washington Post here.

Correction: An earlier draft of this post listed Zimbabwe as one of the countries without term limits. The 2013 Constitution limits presidents to two terms (with a minimum of three years counting as full term (see Section 91).

Why are Kenyan politicians politicizing the military?

Botswana, Gabon, Kenya, Malawi, Namibia, South Africa, Swaziland, Tanzania, Zambia and Zimbabwe are the only continental sub-Saharan African states to have never experienced military rule. Each country has managed to do so via well orchestrated coup-proofing strategies of ethnic balancing and material payoffs to the men and women with the guns and tanks. 

Kenya, in particular, has perfected this art. Because of its fractious ethnic politics, ethnic balancing within the officer corps has been key to Kenya’s coup-proofing. Kenyatta (who spoke Kikuyu) had a bit of a hard time in the beginning with a Kamba and Kalenjin speakers dominated military but eventually succeeded in having his co-ethnics in key positions. But before he did so he ensured Kikuyu dominance over the paramilitary force, the General Service Unit (GSU) to balance the military. Through the 60s and 70s, Kenyatta ensured that the GSU and police could handle their own against the military in case stuff hit the fan. Moi continued along this path, so much so that for a while in the media the typical accent of a security officer – whether police or military – became an accent from the North Rift. Under Moi the Kenyan army became “Kalenjin at the bottom, Kalenjin at the middle, and Kalenjin at the top.”

Beyond the ethnic balancing, Kenya has also coup-proofed by keeping the generals wealthy and OUT OF POLITICS – at least not overtly. The generals in Kenya are probably some of the wealthiest on the Continent. I went to high school with the son of an Air Force Major General whose family was always taking foreign trips to exotic places and always made a big splash on visiting days. The only estimates I could find are from the 1960s when nearly “two thirds of the military budget went to pay and allowances, most of it to officers.” A lot of them also got free land for cash crop farming and lucrative business deals (some illegal) from the Kenyatta and Moi governments. Keenly aware of West Africa’s junior officer problem following 1981 Moi extended land grants to junior officers as well. 

But despite their importance as leaders of a key national institution, most Kenyans, yours truly included, do not know much about the top generals in the army. The one chief of staff that I remember hearing a lot about in my childhood days was Gen. Mahmood Mohamed, the man who played a big role in quelling the 1982 coup attempt. For the most part I only saw these guys in the media on national holidays when they rode on the president’s Land Rover. 

In other words, I think it is fair to say that, contrary to arguments made by N’Diaye, for the most part the Kenyan military has historically been fairly professionalized and depoliticized relative to other countries in the neighborhood. There is no evidence to suggest that ethnic balancing has severely interfered with the process of professionalization. Kenyan presidents’ preferred agents for dirty political work have always been the intelligence service, the police and paramilitary units, but never (to the best of my knowledge) the military. Indeed the US and British militaries have had very close technical cooperation with the Kenyan military through training, material assistance and more recently joint operations, resulting in a relatively highly trained force that has for the most part stayed clear of politics.  

But this consensus appears to be slowly eroding. Before the 2013 General Elections the former Prime Minister Raila Odinga accused the military and the intelligence service of colluding with his opponent, Uhuru Kenyatta, to rig the presidential election. And now the heads of the military and intelligence service are reportedly contemplating suing a former aide to Mr. Odinga for defamation. Increasingly, the military is being dragged down to the level of the marionette-esque GSU and Police, perennial hatchet men for whoever occupies State House.

This cannot end well. 

Coup proofing is hard. And the thing with coups is that once the genie is out of the box you can’t take it back. Coups just breed more coups.

This is why the generals must be left fat and happy and in the barracks, or busy keeping the peace (and hopefully not facilitating charcoal exports) in Somalia’s Jubaland State. Do your ethnic balancing and all, but by all means KEEP THEM OUT OF POLITICS (I am glad the current Defense Minister has no political constituency).

The last thing Kenya needs is a Zimbabwe situation in which there is open bad blood between the military and the opposition. 

Plus Kenya, based on its per capita income, ethnic politics, and minimal experience with genuine democratic government, is still not beyond the coup trap to be able to safely play politics with the military. If you doubt me, go find out the last time Brazil, Thailand and Turkey had generals in charge. 

Africa’s newfound love with creditors: Bond bubble in the making?

I know it is increasingly becoming not kosher to put a damper on the Africa Rising narrative (these guys missed the memo, H/T Vanessa) but here is a much needed caution from Joe Stiglitz and Hamid Rashid, over at Project Syndicate, on SSA’s emerging appetite for private market debt (Africa needs US $90b for infrastructure; it can only raise $60 through taxes, FDI and concessional loans):

To the extent that this new lending is based on Africa’s strengthening economic fundamentals, the recent spate of sovereign-bond issues is a welcome sign. But here, as elsewhere, the record of private-sector credit assessments should leave one wary. So, are shortsighted financial markets, working with shortsighted governments, laying the groundwork for the world’s next debt crisis?

…….Evidence of either irrational exuberance or market expectations of a bailout is already mounting. How else can one explain Zambia’s ability to lock in a rate that was lower than the yield on a Spanish bond issue, even though Spain’s [which is not Uganda…] credit rating is four grades higher? Indeed, except for Namibia, all of these Sub-Saharan sovereign-bond issuers have “speculative” credit ratings, putting their issues in the “junk bond” category and signaling significant default risk.

The risks are real, especially when you consider the exposure to global commodity prices among the ten African countries that have floated bonds so far – Ghana, Gabon, the Democratic Republic of the Congo, Côte d’Ivoire, Senegal, Angola, Nigeria, Namibia, Zambia, and Tanzania.

In order to justify the exposure to the relatively higher risk and lending rates on the bond market (average debt period 11.2 years at 6.2% compared to 28.7 years at 1.6% for concessional loans) African governments must ensure prudent investment in sectors that will yield the biggest bang for the buck. And that also means having elaborate plans for specific projects with adequate consideration of the risks involved.

Here in Zambia (which is heavily dependent on Copper prices), the Finance Minister recently had to come out to defend how the country is using the $750 million it raised last year on the bond market (2013-14 budget here). Apparently there was no comprehensive plan for the cash so some of the money is still in the bank awaiting allocation to projects (It better be earning net positive real interest).

“They are fighting each other. By the time they have projects to finance, they will have earned quite a lot of interest from the Eurobond money they deposited. So, all the money is being used properly,” he [Finance Minister] said.

Following the initial success the country’s public sector plans to absorb another $4.5b in debt that will raise debt/GDP ratio from current ~25% to 30%. One hopes that there will be better (prior) planning this time round.

Indeed, last month FT had a story on growing fears over an Emerging (and Frontier) Markets bond bubble which had the following opening paragraph:

As far as financial follies go, tulip mania takes some beating. But future economic historians may look back at the time when investors financed a convention centre in Rwanda as the moment that the rush into emerging market bonds became frothy.

The piece also highlights the fact that the new rush to lend to African governments is not entirely driven by fundamentals – It is also a result of excess liquidity occasioned by ongoing quantitative easing in the wake of the Great Recession.

I remain optimistic about the incentive system that private borrowing will create for African governments (profit motive of creditors demands for sound macro management) and the potential for this to result in a nice virtuous cycle (if there is one thing I learned in Prof. Shiller’s class, it is the power of positive feedback in the markets).

But I also hope that when the big three “global” central banks start mopping up the cash they have been throwing around we won’t have a repeat of the 1980s, or worse, a cross between the 1980s (largely sovereign defaults) and the 1990s (largely private sector defaults) if the African private sector manages to get in on the action.

African governments, please proceed with caution.

Reason for African Petro-Rulers to be Worried

Africa’s petrorulers (heads of state of Angola, Cameroon, Chad, Congo-Brazzaville, Equatorial Guinea, Gabon, Ghana, Nigeria, South Sudan, and Sudan) may be headed for tough times later this year. According to a piece by (Steve Levine) over at FP, Saudi Arabia – the world’s leading oil producer – is considering flooding the global oil markets with the aim of sticking it to the Russians and Iranians. Saudi action of this nature could lower prices to as low as US $40 a barrel from the current $83.27.

With the exception of Ghana and Cameroon, such a drop in oil prices would almost certainly lead to political unrest in the rest of Africa’s oil producers. Sudan and South Sudan are already facing huge revenue shortfalls due to a dispute over the sharing of oil revenue.

More on “The Coming Oil Crash” here.

what ali ben bongo owes gabon

His father ruled Gabon, an oil and timber rich nation of 1.4 million, for 42 years. The elder Bongo passed away this year and was succeeded by his son Ali Ben after a disputed election. Nobody really expected things to turn out otherwise.

That said, one hopes that Ali Ben will feel the need to make things a bit better for the hundreds of thousands of Gabonese who continue to be shut out of the wealth from oil and timber. Gabon is Africa’s fourth largest oil producer and its second largest timber producer. During Omar Bongo’s 42 year presidency most of this money ended up in private bank accounts – the late president was the subject of an investigation involving Citibank, where he held millions of dollars in a private account.

I don’t have much on the younger Bongo. He seems like a non-starter. If we are to believe the BBC the only notable thing he said after being sworn in as president yesterday was that he wants renewal within the Gabonese elite. May be by this he means more social mobility. The VOA quoted him to have said that he plans to end corruption and injustice – one wonders where he was during his father’s failed 42-year presidency (apologies, the WSWS was the only place I could find a history of the guy). I would have wanted to hear him say something about oil and timber and redistribution of Gabon’s national wealth. I mean, how hard can it be to run a nation of 1.4 million? With all that oil wealth Gabon could give Botswana a run for its money.

Ali Ben owes Gabon a lot. His father stole from the country. He now has a chance to make up for it by putting the nation on the path to decency. This is not too much to ask, is it?

Omar Bongo is dead

Omar Bongo, the president of Gabon and Africa’s longest serving ruler has died. Mr. Bongo had intestinal cancer and had gone to Barcelona, Spain for treatment. He took over power in 1967.

The African state of 1.5 million has considerable oil reserves, timber and manganese deposits and enjoys a per capita income of a middle income country – at US $14,400 according to the CIA Factbook. But due to a high level of income inequality, hundreds of thousands of Gabonese still live in poverty. Gabon was ranked 116th on the 2007/2008 UNDP Human Development Report. Like most mineral-rich African countries, corruption is endemic in Gabon. For instance, earlier this year anti-corruption activists accused president Bongo of buying French property with proceeds from corruption.

According to the constitution of Gabon, the head of the country’s senate will be the interim president until elections are held within 90 days.