China in Africa


An international discourse of China-in-Africa has emerged … China in Africa has more in common with the West than is usually acknowledged; … there are nevertheless notable differences between Western and Chinese presences in Africa

Map of Chinese investment in Africa 2005 (click to enlarge)

African exports to China (click to enlarge)

In December Asia Pacific Journal published:

Trade, Investment, Power and the China-in-Africa Discourse by Barry Sautman and Yan Hairong

They make a number of interesting points about the nature of China’s involvement in Africa.

An international discourse of China-in-Africa has emerged, particularly in Western countries with dense links to Africa: the US, UK and France.

The essence of the discourse then is to cast PRC policies in Africa as promoting human rights violations or “colonialism,” while implicitly comparing them invidiously with high minded US and Western practices. Some PRC activities in Africa do violate the human rights of Africans — not in ways that Western elites claim, but in much the same manner that Western policies do, through disadvantageous terms of trade, the extraction of natural resources, oppressive labor regimes, and support for authoritarian rulers, all common features of the modern world system. These are practices that China’s elites used to denounce, but now come close to extolling as dynamic capitalism. … the path taken by China is “consistent with the logic of market capitalism-liberal trade” and makes China not a colonialist, but “a successful capitalist in Africa.”

The discourse should not be inverted by arguing that China’s presence in Africa is positive and the West’s negative or that problematic Chinese activities in Africa are justified because abuses are shared with the West. The analysis of China-Africa should invoke neither a “win-win” nor dystopic representations; rather, the trees of China’s behavior should be seen as part of a world system forest and the discourse examined using comparative analysis. Our arguments are threefold: 1) given the world system, it is difficult to assess the pluses and minuses of China-in-Africa as a single phenomenon; 2) as a player in the world system, China in Africa has more in common with the West than is usually acknowledged; 3) there are nevertheless notable differences between Western and Chinese presences in Africa; many derive from China’s experience as a semi-colony, its socialist legacy, and its developing country status, features which together make PRC policies presumptively less injurious to African sensibilities about rights than those of Western states.

The US Treasury termed China a “rogue creditor.” Africa remains, however, in a Western-created “debt trap,” owing more than $300b and paying significant interest. Yet, as US Africanist Deborah Brautigam has noted, China “regularly cancel[s] the loans of African countries, loans that were usually granted at zero interest [and] without the long dance of negotiations and questionable conditions required by the World Bank and IMF.” …

OECD researchers have concluded moreover that increased PRC activities in Africa have not deepened corruption among African governments. China’s leaders know corrupt officials will siphon off part of their infrastructure loans, but its packaged loans are less likely than Western aid to being drained by corruption. As a Hong Kong journalist has noted, because China’s loans and aid are tied to infrastructure projects, that is, a large portion of the funds are allocated directly to contractors, “corrupt rulers cannot somehow use it to buy Mercedes Benzes.” A close US observer of PRC activities in Africa has argued that China’s aid is more effective than Western aid because much is used for “hydroelectric power dams, railroads, roads and fiber-optic cables, which have the potential to benefit ordinary people, no matter how corrupt the regime under which they live.”

Despite promoting a rhetoric of transparency regarding African oil-producers, Western states have not bound their citizens and corporations. Bids for oil blocks in Africa typically feature “signature bonuses,” paid to governments, which often run into the hundreds of millions of dollars. Foreign oil firms know host governments skim off large shares of what the companies pay. In a rare instance of disclosure, Western oil firms told the IMF that they paid $400m in 2001 for an Angolan oil tract, but the Angolan government claimed it received only $285m. Presumably the difference went into the pockets of government officials.

Most multinationals refuse to publish what they pay to secure oil rights. Western governments do not compel oil firms that are their own citizens to make disclosures, but “ask the tiger for its skin” (yu hou mo pi), as the Chinese say, by demanding corrupt governments publicize their own corruption.

Western policy interventions have not actually diminished the resource curse.

… oil is capital intensive, creates few jobs, is environmentally damaging and corrupts producing states. People in oil-rich regions, such as southern Sudan and Nigeria’s Niger Delta, receive so few benefits from their patrimony that violent conflict has ensued.

The China-in-Africa discourse will likely continue to focus overwhelmingly on oil in discussing PRC imports from the continent. American analysts particularly see the US as strategically competing with China for African oil. … The US government estimates African oil production will grow 91% in 2002-2025, while global production will grow 53%. Armed forces in a newly established US Africa Command will have as a main task protecting US access to oil.

US prominence in taking African oil is accompanied by its backing authoritarian rulers in almost all oil producing states.

Sautman and Hairong’s article discusses Chinese activities in Africa regarding the textiles and clothing (T&C) industries and also mining, particularly in Zambia. They provide detailed information of T&C in Africa and how it works in different countries.

If the affordability of PRC imports benefits grassroots African consumers, there are in any case only seven countries that receive a significant share (5-14%) of their imports from China. Basic consumer goods do not predominate among PRC exports, but rather “machinery, electronic equipment and high- and new-tech products.” A UK government study found that in only one African country, Uganda, are basic consumer goods more than a fifth of the value of all goods imported from China and that PRC imports into Africa mainly displace imports from elsewhere and have little effect on local production. The PRC government recognizes that some exports are of poor quality. Many Chinese goods are brought to Africa by private Chinese or African entrepreneurs whom the PRC government does not control. It nevertheless has “in place stringent measures to ensure that its goods meet all the minimum quality standards for exports [and] a ministry to ensure low quality goods are not exported.”

WB/IMF-mandated structural adjustment programs (SAPs) were the actual gravediggers of African T&C production. The influx of second-hand clothing from developed countries particularly reduced domestic markets for African T&C producers.

A balance of positive and negative impacts for China’s exports to Africa is not easily drawn. Yet, as to the T&C industry, the balance is less negative than the discourse makes out. Its fixation on Africa’s T&C industry is non-comparative and lacks historical context, as China did not contribute to the steep decline in African T&C through SAPs [structural adjustment programs], while Western states have yet to restrict their used and new clothing exports to Africa.

Most foreign direct investment (FDI) inflows to Africa come from Europe, along with South Africa and the US. These countries together account for more than half of Africa’s FDI inflows. China had only $49 million in FDI in Africa in 1990 and $600m in 2003. Its FDI stock in 2005 was $1.6b, of $57b in global PRC FDI. In 1979-2000, the most recent years for which figures are available, 46% of PRC FDI in Africa went to manufacturing (15% to textiles alone), 28% to resource extraction, 18% to services (mostly construction) and 7% to agriculture. The PRC has said it will encourage investment in Africa’s industrial processing, infrastructure, agriculture, and natural resources.

Investments thus also figure in the China-in-Africa discourse.84 Even more than with trade, the discourse is narrowly focused; its primary focus has been on only one investment by one Chinese SOE, among the more than 800 major PRC enterprises in Africa, 100 of them large SOEs. Western media have devoted hugely disproportionate attention to the Non-Ferrous Company-Africa (NFCA) Chambishi copper mine. The upshot of these reports is that “the Chinese” are Africa’s super-exploiters.

Sautman and Hairong discuss the low wages, no job security, lack of health care and unsafe working conditions for miners in Zambia. Zambian miners had previously enjoyed some health benefits and better wages. The authors point out that the lowered wages, reduced safety, and lack of health care date to the privatization of the mining sector mandated by the World Bank.

In drawing their conclusions they write:

The China-in-Africa discourse in the West for the most part insists that Chinese have particularly positioned themselves to exploit Africa and Africans; for example, by supporting authoritarian rulers in countries like Sudan and Zimbabwe. Several Western states, however, directly support despots by providing military assistance and legitimacy. In fact, US assistance to African rulers for purchases of US arms and the training of African states’ military forces has increased significantly under the Obama Administration. China is thus not likely to fare worse than the West in an evaluation of how foreign investments impinge on development and human rights in Africa.

The modalities of trade examined for development implications commonly involve the import and export of goods. There is also trade in money and people however. Western, but not PRC, banks have traded secrecy and interest to the exporters of 40% of Africa’s private wealth. Western states trade citizenship for the skills of professionals, especially doctors and nurses, trained in, but now largely lost to Africa. These forms of trade likely impinge as much as commodity exchange on Africans’ right to development.

The main problem with the China-in-Africa discourse is not empirical inaccuracies about Chinese activities in Africa, but the de-contextualization of criticisms for ideological reasons. Some analyses positively cast Western actions in Africa compared to China’s activities; others lack comparative perspective in discussing negative aspects of China’s presence, so that discourse consumers see a few trees, but not the forest. Such analysis reflects Western elite perception of national interests or moral superiority as these impinge on “strategic competition” with China. Many analysts scarcely question Western rhetoric of “aiding African development” and “promoting African democracy,” yet are quick to seize on examples of exploitation or oppression by Chinese interests.

To comprehensively interrogate Chinese and Western activities in Africa is to question a global system that has in many respects de-developed Africa and into which China is increasingly integrated. Failing that, one is left with little more than a binary between a Western-promoted new “civilizing mission” on behalf of Africans and activities of the “amoral” Chinese, who refuse to fully endorse that mission by not adopting trade and investment practices wholly compliant with neo-liberalism. China, after all, can and does throw this binary back in the face of its proponents by portraying the West as seeking a new tutelage for Africans and China as eschewing the role of intermeddler, while promoting “win-win” trade and investment. So too do many Africans. The popularity of features of China’s presence in Africa, compared with that of the main Western states, goes well beyond elites. The 2007 Pew Global Attitudes Survey asked Africans in ten countries to compare the influences of China and the US in their own countries. In nine of the ten countries, by margins of 61-91%, African respondents said Chinese influence was good. These percentages substantially exceeded those for the US. One important implication of the Chinese presence in Africa then is that Western states and firms may need to engage in greater self-reflection about their own presence in the continent.

There is much more, I can hardly do justice to this meticulously well sourced article and recommend you read it for yourself: Trade, Investment, Power and the China-in-Africa Discourse.

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China’s development projects in Africa reach from Morocco to South Africa. From soccer stadiums to TV stations and oil rigs …

Students take cultural courses at the University of Nairobi's Confucius Institute (photo: gezidiy.blog.sohu.com)

Students take cultural courses at the University of Nairobi's Confucius Institute (photo: gezidiy.blog.sohu.com)

Africa China bilateral trade, "distinct patterns of trade and exchange between Beijing and African nations have fostered a relationship focused on the future"

Africa China bilateral trade, "distinct patterns of trade and exchange between Beijing and African nations have fostered a relationship focused on the future"

In March 2009 Billy Noiman wrote The Africa Plan. The article contains some excellent graphs and charts, one of which is pictured above. It also contains an interactive map of China’s activities in relation to areas in which there has been conflict. The map is well worth a look. The entire article provides a concise overview of China’s presence in Africa.

From television broadcasts to cultural projects, China’s presence in Africa has been rapidly increasing.

“They are putting in Confucius institutes, where the Chinese are paying for the study of Mandarin, the study of Chinese culture and history,” Powell said. “Just as the French have their programs, the British have the British Council, the U.S. has American libraries, the Chinese are putting in their culture and educational outreach in a very significant way.”

While China is often portrayed as an oil-thirsty giant caring more about pipelines than people, the country’s involvement in Africa is not so cut and dry.

“Contrary to what many assume, China’s large oil companies are not dominant players in Africa’s energy industry. With the important exception of Sudan, where the China National Petroleum Company (CNPC) is the major operator, Chinese oil companies are relatively minor players in Africa,”

Nevertheless, trade is growing exponentially. Total trade between China and Africa reached US$107 billion in 2008, a 45% jump since the previous year. There are now over 800 different Chinese enterprises doing business in Africa. The Southern African reported in January 2009 that Angola recently became China’s largest African trader, with total volume exceeding US$25 billion. With China’s continued drive for natural resources and Africa’s need for infrastructure development, the relationship appears to be a match made in economic heaven.

Carine Kiala, a Senior Analyst for the Centre for Chinese Studies at Stellenbosh University in South Africa, said that in general, “Certain African governments are receiving credit lines and services in exchange for their natural commodities. How this benefits the general population is subject to interpretation.”

The Chinese have become creative in working with African states whose heavy indebtedness makes it difficult for them to get construction loans. China Exim Bank permits such nations to use natural resources to pay for infrastructural development.

Kiala said that the infrastructure projects undertaken jointly by China and the local governments are having a highly visible impact on African societies.

“Most certainly, the infrastructure being put in place will solidify internal and regional linkages, thus facilitating trade and empowering the masses,” Kiala said. “Although job-creation is a direct benefit, African countries need sustainable employment and skills development.” A lack of capacity building – the development of the domestic population’s capabilities as a work force – has been one charge against China’s “resources for infrastructure” trade strategy.

This last is one of the angry criticisms I hear most often against the Chinese presence in a variety of countries.

Besides cultural exchanges and industrial development, China has also played an active role in providing aid for poverty-stricken African countries. In late 2006, President Hu Jintao pledged to provide African countries with US$5 billion in aid including soft loans and credits over the next few years. With this pledge China hoped to bolster trade between the two regions. Others, however, see more harm than good in China’s aid packages. In early 2007, the British government warned Beijing that their assistance agreements and inexpensive loans threaten to drive countries back into debt after just recently beginning to realize the benefits of other debt relief programs.

In discussions with African governments, Chinese officials emphasize the country’s long-term commitment to the relationship. Given the region’s colonial past, several African nations see this as a refreshing change. Furthermore, China’s “hands-off” approach in political affairs is a business advantage. Unlike its Western competitors, the Chinese government has chosen to keep political matters completely separate from business engagements.

Some people worry about it in terms of the Chinese only wanting oil and raw materials, which is true. But they see this as a very long-term commitment.”

On October 8 Richard Ellimah published the following on GhanaWeb, which articulates many of the important questions for Ghanaians regarding the exploitation of oil resources:
Environmental Impact Assessment Of Jubilee Field And Matters Arising

Ghana Oil truck and worker

Ghana Oil truck and worker

The public hearings which are a mandatory part of the processes towards securing a permit to start oil drilling are almost over. At least, all the oil affected districts – Jomoro, Ellembele, Nzema East, Ahanta West, Shama and Sekondi-Takoradi – have had the opportunity to interrogate the Environmental Impact Assessment (EIA) of Tullow Oil and her partners.

Judging from press reportage of the hearings, some critical issues need addressing. First of all, it is obvious that people within the six districts that will be affected barely have enough information about the oil that has been discovered close to them. They therefore are incapable of participating in processes that would help them deal with any possible impacts that will occur. The information they have does not go beyond the rudimentary chorus of “Ghana has discovered oil”. Information is absolutely necessary to enable affected people make crucial choices. Absence of information produces half-truths. As people who will suffer potential impacts of the oil industry, they have a democratic right to information. For instance, to what extent has the district assemblies been updating communities on the impacts of the oil discovery to enable a more coherent response to be prepared? Already, fisher folk in these districts have started suffering some impacts. They have been instructed to steer clear of a particular radius of the oil rig. Incidentally, all the fish appear to have taken cover in areas close to the rig, making it difficult for the fishermen to get them without incurring the displeasure of the navy that patrols our territorial waters.

Furthermore, the public hearings have re-opened debate about environmental impact assessments. Judging from what happens in the mining sector, these are highly technical reports which even the average educated person cannot read and understand, let alone interrogate. The Non-Technical Executive Summary alone of the Jubilee Field EIA is 62 pages. Public hearings are supposed to be an avenue for the oil companies to tell the people how their operations will impact them and the measures that have been proposed to deal with these impacts. At these hearings, the public can question portions of the report that, in their opinion, are unsatisfactory and proceed to make inputs into it. These inputs are then taken onboard in the design of an Environmental Management Plan which the companies are expected to submit to the Environmental Protection Agency (EPA). Unfortunately because capacity is low at the local level, the public most times, make little or no inputs at all into the process. Sometimes, the few educated people may also raise issues which are either over-blown because they have not had time to look at the report and make informed comments, or simply make comments out of ignorance. Probably this calls for a review of the design process of the EIA so that it can be disseminated to community groups in a language they understand, over a period of time so that they will be fully armed to question the process. These one-day public hearings where uninformed people are expected to comment on technical documents do not help. One is tempted to describe the process as being only cosmetic. Simplifying the process is critical to enlightening affected people on the potential benefits and problems. When actual drilling begins, they would therefore have been armed and well prepared for the impacts.

Another major concern is the over-concentration of all activities in the Sekondi-Takoradi Metropolis. Curiously, all literature about the oil find acknowledges Takoradi as potentially the most impacted community. Indeed, the non-technical executive summary of the EIA of the Jubilee Field only acknowledges Takoradi Metropolis and Shama District as the most impacted communities. A comprehensive population profiling has been done for these two communities in the document, curiously leaving out the three Nzema Districts and Ahanta-West District. Though attempts have been made to address this in the main technical document, it is still not enough to assuage this unpardonable error. At this stage of project development, it is dangerous to give any group of people the impression that they are being marginalised. As a result of the undue emphasis on Takoradi and Shama District, interventions have been narrowly designed to address their socio-economic problems. It is undisputable that Takoradi is the major urban centre with all the facilities and services that can support the industry. It also does not take away the fact that other satellite communities need to be developed. The best way to do this is to re-locate some of the functions and activities concentrated in Takoradi to communities like Axim, Essiama, Agona Nkwanta and Half-Assini. This, apart from decongesting the Metropolis will also lead to a spread of infrastructural development in the other districts. This requires a concerted policy direction from government to address the imbalances in settlement development in the region.

The oil companies have committed themselves to undertaking rigorous corporate social responsibility (CSR) as a way of ameliorating the impact of their activities on the communities. There is no doubt that oil drilling will have some socio-economic and environmental impacts, though much of the drilling will take place offshore. Designing a comprehensive, community-sensitive and coordinated corporate social responsibility programme will go a long way to help. Historically, CSR has been a voluntary initiative by industry. Current practice has called for a radical review of the way CSR is conceptualised. For instance, in the mining industry CSR has been used as a balm for soothing community demands for fairness in their dealings with the mining companies. More often than not, companies have undertaken social responsibility projects more as a deliberate attempt at boosting their corporate image rather than a genuine effort to address community concerns about their operations. To make it more practical and relevant, I propose that legislation on social responsibility should be passed. Like happens in the forestry sector, companies wishing to undertake oil exploration and drilling should be compelled to sign social responsibility agreements with their catchment communities. This initiative will serve two purposes. Firstly, it will ensure bottom-up development planning by encouraging the fullest participation of ordinary community people in deciding what kind of development they want. Doing this will ensure that resources are channelled to areas where they are specially needed. Besides legislating CSR in the oil sector, there is also the need for a more coordinated approach to providing projects within the oil catchment areas. The district assemblies in these areas should not under any circumstances be sidelined in the provision of CSR. I propose that every CSR endeavour must find space in the Medium Term Development Plans of the district assemblies. This way, development will be better coordinated and ensure that resources are channelled to priority areas of development.

The other concern that the EIA presents is the human resource requirement for the project. According to the report, 760 people will be employed in the initial development phase of the project. This figure will however, drop to 300 during actual drilling. My concern is not with the number but the fact that 50 percent of this 300 will be expatriates before the percentage drops to 10 percent within four to eight years. What this effectively means is that between 4 – 8 years of the project life, only 150 Ghanaians can be employed in the oil business. The 50 percent expatriate participation is extremely high considering that Ghana has enough capacity to handle some of the middle-level positions that the companies will be requiring. The Ghana National Petroleum Corporation (GNPC) that has been in the oil business for more than 20 years has enough trained Ghanaians who can handle any position in the companies. Some of these Ghanaians have even supported the oil sector of countries like Qatar, Gabon, Angola, Nigeria, United Arab Emirates and Mozambique. We do not need to wait for eight years to put Ghanaians in positions where their expertise can be utilised.

Finally, there is the absolute need for transparency in the oil industry. Transparency here does not only refer to revenues that will accrue to government and other stakeholders but also includes transparency in terms of the disclosure of the content of all agreements our governments have signed with the companies. Full disclosure will clear doubts that the country’s interests have been sacrificed for a pittance. This is where civil society groups must be more proactive. They should not wait for these agreements to be signed and operationalised before raising the red flag. Right from the beginning they should engage the stakeholders to ensure that the country is not short-changed.

Ghana cannot afford the luxury of waiting for another generation to correct mistakes that it has committed in the prudent management of her resources. Next door neighbour Nigeria has a lot to teach us about what can happen if the right structures are not put in place in the management of oil. If Nigeria is too extreme an example, let us consider what over a century of mining has done to the country.

The author is a Development Practitioner and resides in Obuasi. He can be reached on Post Office Box UPO 853, KNUST-Kumasi; or on telephone 0244-514559; and by email on richellimah (at) yahoo.com.
photo credit
* * * end * * *

From the comments on the article:

Ghanaba Papa: Good Comment:

The traditional councils in the impacted areas should also be part of the monitoring and reporting on the effectiveness of the Environmental Management Plans. Also, the impact of the oil activities on agriculture (fishing), as you allude to, nust be fully addressed and mitigated.

Slugger reemphasizs the final paragraph: Way Forward:

Ghana cannot afford the luxury of waiting for another generation to correct mistakes that it has committed in the prudent management of her resources. Next door neighbour Nigeria has a lot to teach us about what can happen if the right structures are not put in place in the management of oil. If Nigeria is too extreme an example, let us consider what over a century of mining has done to the country.

I know: CSR:

The CSR personnel at Tullow are actually not CSR experts. They were put there for political expediency. At best, they are only Public Relations Practitioners, and not professionally trained Social Impact Assessors.

Any good environmental and social impact assessment should profile communities “directly impacted” by the extractive industry, be it mining or oil and gas exploration, construction and production. And the assessment must include environmental, economic, social, cutural, and health impacts, and detail mitigative measures that would be put in place to ameliorate the negative impacts, as well measures to advance income enhancement and community development interventions necessary for sustainable development. These are lacking in the draft EIS.

Reading through the draft EIS,it is apparent that the team is heavily skewed for marine engineers than social assessors. And that is the cause of the flaw.

It is not too late to amend. Otherwise we are heading for another Ogoni!!! Who knows whether it is deliberate. I dont trust these guys, anyway.

Marcus Ampadu: REMEMBER KEN SARO-WIWA:

Environmental groups in Ghana should organize and position themselves to closely monitor the ecological consequences of the oil exploration and drilling in the affected areas. One activity we shouldn’t allow is gas flaring.
We shouldn’t wait for something terrible to happen environmentally to tragically get our version of Ken Saro-Wiwa of Blessed Memory.

There is more in the comments discussing these issues.

Over at Say It Loud Patriot Turncoat writes:

A Model for a Petrochemical Industry in Ghana

Ghana expects to generate about $3.5 billion a year in revenue from the export of crude oil. For a country with a population of 25 million, this translates to only about $140 per person per annum, as compared to some middle-eastern countries where tens of thousands of dollars are generated per person from the mere export of raw crude oil.

In other words, if Ghana were to focus merely on exporting raw crude oil, there would not be enough money to make all Ghanaians happy, so a few would be made happy at the expense of many; a recipe for resentment and political agitation, more so given the high expectations.

We can however make a large number of Ghanaians happy by facilitating and creating the right business environment for the establishment of petrochemical industries to add value to crude oil. Such an industry would provide employment for many while generating higher returns due to the value-add. For the African and world market, Ghana could produce assorted chemicals, insecticides, fertilizers, plastics, engine oil, machine lubricants, power steering fluids, detergents and soaps, paints and varnishes, pharmaceutical chemicals and many more. After all, merely exporting crude would only feed the petrochemical industries of foreign nations, generating more employment for their citizenry while our citizens are left unemployed and destitute.

We are all aware of how exporting raw cocoa, without first adding value, has fed the chocolate industries of developed nations at the expense of our economy. Same applies to other raw material exports. …

Fortunately, Ghana does not have to reinvent the wheel. There are working models all around the world which Ghana could adopt and adapt to address her specific needs.

For example, we could model Ghana’s petrochemical industry after Houston’s Spaghetti bowl which has several miles of pipe-lines connecting salt domes, fractionation plants, chemical plants, and refineries. The pipeline system emerged under private ownership in the 1940s to feed an ethylene production industry, thus paving the way for Houston’s petrochemical industry which provides employment to millions.

Patriot Turncoat has some good ideas, but shows an uncritical faith in free markets. Recent events in global capitalism demonstrate the need for some skepticism and oversight.

Today there are further developments in the issue of the sale of Kosmos’s stake in the Jubilee Field.

Kosmos’s Ghana sale bid “illegal” -GNPC source

ACCRA, Oct 12 (Reuters) – State-run Ghana National Petroleum Corp (GNPC) has told Kosmos Energy that it does not recognise a deal to sell its stake in the Jubilee oil field to Exxon Mobil (XOM.N) as it was illegal, a NGPC source said.

The source, who declined to be named, also said that Ghana had received expressions of interest from the China National Offshore Oil Corp for Kosmos’s stake but the West African state was ready to buy it all and decide later with whom to partner.

The Jubilee field is one of the largest oil finds in West Africa in the past decade and sources said last week that Exxon Mobil had reached a multibillion-dollar agreement with Kosmos to buy its stake in the field. (Reporting by Kwasi Kpodo; Writing by David Lewis)

And this story has also popped up today:

Fight For Ghana’s Oil: Exxon vs China

… China, Ghana petroleum co in talks
… Kosmos To Sell To Exxon Mobil: WSJ
… GNPC says Kosmos sale bid illegal
… Officials in Ghana says no approval yet
… GNPC ready to buy entire Kosmos stake
… Morgan Stanley hired to advice

A Kosmos official confirmed that the energy firm has a “binding deal” in place to sell an interest in the potentially vast Jubilee oil field in offshore Ghana to oil major Exxon Mobil.

The deal — valued at an estimated $4 billion — would mark Exxon Mobil’s largest acquisition in about a decade.

It comes amid reports that China National Offshore Oil Corp. (CNOOC) – see report below – could also bid on assets off the coast of Ghana.

Kosmos Vice President and Chief Financial Officer Greg Dunlevy said in an e-mail to MarketWatch, “I can confirm that Kosmos has entered into an exclusive, binding agreement with (an affiliate of Exxon Mobil) to make a rival bid for Kosmos’ stake in the field, known as Jubilee.”

China National Offshore Oil Corp is in talks with State-run Ghana National Petroleum Corp to bid for a stake in a large oil discovery off West Africa, the Wall Street Journal reported on Monday, citing unnamed sources.

The offer for Kosmos Energy’s stake in the discovery, Jubilee, would rival a $4 billion bid by Exxon Mobil Corp, the Journal said. The paper said CNOOC and GNPC plan to submit a strong competing bid in the next few days, citing one person familiar with the matter.

According to the Journal, the Chinese company sent some senior officials to Ghana several weeks ago, including CNOOC Chairman Fu Chengyu. The paper said CNOOC committed to an equity stake for GNPC in the deal and discussed helping the Ghanaians develop their national oil company.

State-run Ghana National Petroleum Corp (GNPC) believes Kosmos Energy’s deal to sell its stake in the huge Jubilee oil field to Exxon Mobil (XOM.N) is illegal and is ready to buy the stake itself, a GNPC source said on Monday.

Ghana has received expressions of interest from the China National Offshore Oil Corp for Kosmos’s stake, according to the source, who declined to be named. But the West African state is ready and able to make the purchase on its own, and would decide later with whom to partner.

The Jubilee field is one of the largest oil finds in West Africa in the past decade and sources said last week that Exxon Mobil had reached a multibillion-dollar agreement with Kosmos to buy its stake in the field.

“We have formally notified (Kosmos) that we do not recognise whatever agreement they reached with Exxon — we told them we disapprove of it because it’s illegal,” the GNPC source said.

The source said Kosmos had violated Ghanaian laws when it shared confidential exploration data with over 20 companies for its own commercial purposes without giving the GNPC any prior notification.

Ghana is due to start pumping oil from Jubilee in late 2010 and the country’s oil finds and relative stability in a turbulent region are luring investors.

The Wall Street Journal reported on Monday that China’s CNOOC was in talks with Ghana to rival Exxon Mobil’s $4 billion bid for Kosmos’s stake in Jubilee.

The GNPC source confirmed that the CNOOC was interested.

“But as far as GNPC is concerned, that also remains only as an expression of interest, like many other companies … It could be any company — it could be the Chinese, it could be Exxon,” the source said.

Kosmos owns the field with UK-based oil explorer Tullow Oil and Houston-based Anadarko Petroleum ). It put its interest in the field on the market earlier this year.

I want Ghana to get the best deal. A deal that involves jobs for Ghanaians and training, high end jobs, and environmental protection. Neither Exxon, nor the Chinese have good records or reputations in this regard. It is up to the Ghana Government to get and enforce the best deal for Ghana and the Ghanaian people.

So my question is, what, if anything, is going on under the table? Who may be getting paid for what? It is much easier for the Chinese to pay bribes than for Exxon, although Exxon is resourceful. Or is GNPC being revolutionary, and actually looking out for the development interests of Ghanaian citizens, by trying to add value to the deal? I surely hope so. We know the Chinese government is involved. Is the US government involved as well? Given the culture of corruption that was heavily institutionalized by the previous administration, and the tradition of corruption in the oil industry, in which neither Exxon nor the Chinese have clean hands, I fear there are too many people who look at the previous administration and see government service as a path to wealth. I believe President Mills is an honest man who cares deeply about doing the best for Ghana and Ghanaians. I don’t know about his ministers. I reserve judgement about intentions or motives unless I know or can see more.

China’s big oil companies’ (CNOOC, CNPC, and Sinopec) interests across the globe.

China’s big oil companies’ (CNOOC, CNPC, and Sinopec) interests across the globe.

View the interactive version here.

The map was created by China’s Economic Observer. You may note that Sudan is not indicated on the map, although China purchases approximately 64% of Sudan’s oil.  As the description below says: “The above map in not an exhaustive list of all of the overseas oil and gas projects that the three Chinese oil giants have a stake in , but rather a visual guide to the surge in acquisitions that has taken place in the first six months of 2009.”

Mapping the Overseas Expansion of China’s Three Oil Giants
Interactive Map: China Oil Goes Global

Note: The above map in not an exhaustive list of all of the overseas oil and gas projects that the three Chinese oil giants have a stake in , but rather a visual guide to the surge in acquisitions that has taken place in the first six months of 2009. The map includes deals that were finalized before mid-July but does not include, for instance, CNOOC and Sinopec’s recent investment in an Angolan oil field.

With Sinopec’s recent $7.2 billion acquisition of oil explorer Addax Petroleum and rumors flying that China National Petroleum Corp is about to acquire a large stake in Argentinian drilling company YPF SA, it’s obvious that China’s oil companies really are starting to “Go Global.”

The Chinese oil giants have adopted an increasingly flexible and pragmatic strategy, expanding both the scope of the regions that they’re targeting and also utilising more varied methods when acquiring foreign companies and resources.

By aiming at companies whose business are complementary to their own, the oil companies are attempting to become fully-integrated, internationally-competitive global players.

Potential Risks

However, China’s oil giants global expansion is a risky business.

First of all, by purchasing low-return shares at a very high premium, they’ve opened themselves up to liquidity risk in the future.

Also, the recent jump in global oil prices is likely to lift transaction costs and cause problems for future negotiations.

Moreover, most of the already acquired assets are located in politically sensitive and unstable regions, such as Iraq and North Africa.

Finally, if during the process of this overseas expansion, China’s oil companies fail to coordinate with each other, there is the risk that they may end up competing against each other for resources.

Correction: When originally published the map contained two errors – we’ve since reacquainted ourselves with the true location of Ghana and have also scaled down Addax’s daily outout from 1,365,000 barrels a day to the correct 136,500 barrels a day.

On the interactive map, if you mouse over Tanzania you will find it is labeled Ghana, with mention of Chinese interest in Ghana’s Jubilee field.

Nov. 16, 2009 – I notice Ghana has been moved on the map, but is now pictured on the border between Angola and Namibia, still not back in its home location between Togo and Ivory Coast.

china-africa

According to Reuters, China’s investment in Africa continues unabated:

China Marches on in Africa Despite Downturn

Chinese investment in Africa is continuing full-speed ahead, Reuters reports:

Beijing and Chinese companies have pledged tens of billions of dollars to Africa in loans and investments mostly to secure raw materials for the world’s fastest-growing large economy.

That long-term interest remains intact, despite a worldwide economic slump that has hit China’s exports to the rich world and a sharp decline in Africa’s mineral shipments to China.

China-Africa trade has surged by an average 30 percent a year this decade, soaring to nearly $107 billion in 2008.

You can read the full article here.

But an article from the Jamestown Foundation’s China Brief presents a very different picture:

Commodity Flux and China’s Africa Strategy

During the commodity price boom, China invested massively in Africa seeking to lock up as many raw materials as possible. Some in academia spoke confidently of China having a fifty or one hundred year strategy toward Africa. In practice, Chinese entrepreneurs have been the first to leave when the market turned since the global decline in commodity prices accelerated with the collapse of Lehman Brothers in September 2008. For instance, according to interviews the authors conducted in Congo, more than 60 Chinese mining companies have left the mineral rich Katanga the last two months, as cobalt and copper prices have tanked. Over 100 small Chinese operators are reported to have left Zambian mines for the same reason.

A similar retreat may be occurring at the strategic level. In 2007, it was announced that China would lend the Congo $5 billion to modernize its infrastructure and mining sector. Under a draft accord, Beijing earmarked the funds for major road and rail construction projects and for rehabilitation of Congo’s mining sector, while the repayment terms proposed included mining concessions and toll revenue deals to be given to Chinese companies. In simple terms it meant 13 million tons of copper for $5 billion—or (even at today’s depressed prices) $40 billion for twenty-times less [1]. The China-Congo deal, however, has gone very quiet as the copper price has plummeted. The market—not grand strategy—is the main Chinese motivation in Africa.

There is much more in the article, you can see more at the China Brief.

China is still buying up large quantities of land in Africa and in other developing countries around the globe. From The Geopolitics of China:

China is more enclosed than any other great power. The size of its population coupled with its secure frontiers and relative abundance of resources, allows it to develop with minimal intercourse with the rest of the world, if it chooses. …
The weakness of insularity for China is poverty. Given the ratio of arable land to population, a self-enclosed China is a poor China. Its population is so poor that economic development driven by domestic demand, no matter how limited it might be, is impossible.

That is why China seeks trade, markets, raw materials, and agricultural land.

To see where, in which countries, China is grabbing up land, GRAIN has posted a table with over 100 cases of land grabbing for offshore food production as presented in this report. It is available in a separate PDF file:
http://www.grain.org/briefings_files/landgrab-2008-en-annex .pdf
You can scroll through the PDF table and see the entries for China, and for many other countries that are making landgrabs in Africa and around the developing world.

JonesKagame2005

Retired US Marine is to be Obama’s new National Security Advisor. As Rick Rozoff records:

“Jones is expected to play a key role in the Obama administration. According to U.S. press reports, he will be as strong as Henry Kissinger, the all-powerful national security adviser to President Richard Nixon.”

Under Bush:

Jones was appointed to the NATO post of Supreme Allied Commander Europe (SACEUR) and the overlapping, essentially co-terminous one of Commander, United States European Command (COMUSEUCOM) in the first Bush term and is part of the two-thirds of the Obama administration’s foreign policy triumvirate – National Security Adviser, Secretary of State, Secretary of Defense – inherited from the preceding administration.

During his tenure Jones has not been reticent about his intentions:

Jones has been president and CEO of the U.S. Chamber of Commerce’s Institute for 21st Century Energy. Until his Dec. 1 selection by Obama, he also served as a board member of the Chevron Corp.” (Houston Chronicle, December 25, 2008)

Establishing such a group [military task force in West Africa] could also send a message to U.S. companies ‘that investing in many parts of Africa is a good idea,’ the general said.” [U.S. Department of Defense, August 18, 2006)

And, just as candidly, he and his NATO civilian cohort declared:
“NATOs’ executives are ready to use warships to ensure the security of offshore oil and gas transportation routes from Western Africa, reportedly said Jaap de Hoop Scheffer, NATO’s Secretary General, speaking at the session of foreign committee of PACE [Parliamentary Assembly of the Council of Europe]. “On April 30 General James Jones, commander-in-chief of NATO in Europe, reportedly said NATO was going to draw up the plan for ensuring security of oil and gas industry facilities. “In this respect the block is willing to ensure security in unstable regions where oil and gas are produced and transported.” (Trend News Agency, May 3, 2006)

Note that while speaking to those he assumes to be interested and complicit parties, Jones is quite candid in moving his finger across the map of the world and indicating precisely where the Pentagon’s – not the State Department’s, say, or the US Department of Energy’s – priorities lie.

In 2006 Afriquechos reported (machine translation):

Interviewed in his headquarters in Stuttgart in Germany by the “Wall Street Journal”, the boss of the European command of the U.S. Army, General James Jones (photo-against), is categorical. For three years, 70% of his time and all that of his deputy, General Chuck Wald, is devoted to Africa. With three obsessions in mind: radical Islam, energy security and the growing influence of China on the continent. The fact that all three are gathered around the Chadian crisis clearly explains the keen interest shown by American diplomats and military to the latest developments of the situation in N’Djamena.

Jones interest in Africa was reported in the Ghanaian news Insight in 2006, from GhanaWeb:

Marine General James L. Jones, Head of the US European Command, who made the disclosure said the Pentagon was seeking to acquire access to two kinds of bases in Senegal, Ghana, Mali and Kenya and other African Countries.

The new US strategy based on the conclusions of May 2001 report of the President�s National Energy Policy Development group chaired by Vice President Richard Cheney and known as the Cheney report. …

In its efforts to promote greater diversity in oil supplies, the Bush Administration is focusing its attention on six African countries, Nigeria, Angola, Gabon, Congo Brazzaville, Chad and Equatorial Guinea. …

The major risks associated with hosting US military installation include terrorist attacks, the destruction of national culture and more direct US control over the lives of the host people

The picture above, of Jones with with Rwanda’s President Kagame is from this 2005 article about military cooperation between the US and Rwanda.

I just heard Hilary Clinton, as Secretary of State (MSNBC Thursday January 22) talking about bringing the 3 Ds, Defense, Diplomacy, and Development. She was followed on the broadcast by a clip of Vice President Biden also speaking about the 3 Ds, but emphsizing the diplomacy and development angle. The 3 Ds have been touted numerous times by spokepersons for AFRICOM. It will be easy to tell what they mean by this. Look at the budget. Where is the money being appropriated and how is it being spent?

And for anyone who knows African history, 3 Ds sounds like a cynically mocking reference to the 19th century 3 Cs, in which Europe was going to bring Africa Commerce, Christianity, and Civilization. We all know how well that worked for Africa. If you need a refresher see Scramble for Africa, or King Leopold’s Ghost, a saga whose murderous ramifications continue to this day. And if you want to see exactly what 3 Cs, now 3 Ds are doing today, Click here to view the 8 minute video Curse of the Black Gold.  Or read the book Curse of the Black Gold, and look at the pictures.  Considering what happened with the 3 Cs, I am continually surprised to hear US spokespersons speaking as though the 3 Ds are anything other than an insult. As Omotaylor at the AfricanLoft said, upon hearing of the 3 Ds: “I see the 3 Fs in their endeavour, – Foolery, Fallacy and Failure.”

With two of Obama’s three major foreign policy positions going to people who were architects of AFRICOM under Bush, Gates as Secretary of Defense, and Jones as a powerful National Security Advisor, it does not look like there will be much of a change in approach. When it comes to US military designs on the continent of Africa, creating proxy wars, manipulating governments, and recolonizing the people who live there are likely to continue. This will be done for the sake of US resource hegemony. I think Clinton is tough, but I don’t know if her focus and interest are all that different from Jones and Gates. I truly hope I am wrong in all this, that Obama has better intentions.  I’ll continue to watch the evidence.

Nicolas Postal/EPA

Child soldiers from the Mai-Mai militia guard the headquarters of their leader in Kisharu, Democratic Republic of Congo. Photograph: Nicolas Postal/EPA

In the Eastern DRC Laurent Nkunda, mentioned in the previous post, Part 1 of DRC- Minerals, militaries, money and violence, is the leader of the Tutsi militia. There are also Hutu militias, one of the largest of which is the Democratic Forces for the Liberation of Rwanda (FDLR). The Guardian has a couple of image galleries of the people displaced by the violence in the eastern DRC, here and here. All of these militias conscript and indoctrinate child soldiers. From Chris McGreal in the Guardian:

… the extremist Hutu rebels who control large areas of eastern Congo and are among the most important causes of the conflict there that has claimed an estimated five million lives or more over the past decade and continues to kill about 45,000 people each month in Congo through the effects of war – principally starvation and disease.


While the rank and file of the FDLR survives by plundering, their leaders are involved in altogether more lucrative ventures. A 2007 World Bank-funded study estimates that the FDLR leadership makes millions of dollars a year from taking over mines in parts of North Kivu, such as Masisi and Walikale, or from those doing the hard labour through levying “taxes” of gold, coltan, diamonds and other minerals on mine owners.

The study estimates that the FDLR controls half of the mineral trade in the Kivus outside of the main towns, and oversees the smuggling of gold and diamonds for sale in neighbouring countries such as Uganda and Burundi. It is not alone in this. The Rwandan, Ugandan and Burundi armies, as well as warlords and militias, have also carved up the mineral plunder and smuggling rackets.

You can read the entire account of the FDLR with pictures here at the Guardian.

Also as mentioned in the previous post, the World Bank and the IMF have praised both Rwanda and Uganda for increasing their gross domestic product from illegal mining of DRC resources. Both the World Bank and the IMF know neither Rwanda or Uganda has these mineral resources in their own countries. Such praise, and the accompanying financial incentives exacerbate the violence and exploitation.

The violence that erupted last week may be cooling down. Alan Doss, who represents the UN in the DRC, the Democratic Republic of the Congo:

says calm has returned to Rutshuru in the country’s volatile North Kivu province following last week’s clashes between Government forces and armed rebel groups. … The clashes that broke out on 28 August between the Congolese Armed Forces (FARDC) and the National Congress for People’s Defense, known by its French acronym CNDP, was some of the worst fighting since a peace deal was signed by the parties in January.

But there is a new player in town. The Chinese have come into the DRC in a big way with contracts to extract copper and cobalt, and in return build roads, railroads, clinics, schools, and two universities. This 20 minute video from the BBC describes the huge copper and cobalt mine they plan to exploit, and the network of roads, rail, schools and clinics the Chinese have promised to build in return. So far the Chinese seem to be very image conscious. However, this 12 minute BBC video from Zambia describes the Zambian public as highly disillusioned with the Chinese presence, particularly labor practices and safety issues, and Zambians say the Chinese management purposely ran the large clothing factory into the ground so it would not be competitive with subsidized textiles from China. China is doing the same thing the EU and US have been doing, destroy African markets by dumping subsidized goods. And the Zambians say promised schools and training never materialized.

Below is the map from the BBC video on China in the DRC with all the infrastructure promised in the Chinese contract for copper and cobalt in the DRC. The large icons are the promised universities. The second map is the same, but just shows the roads and rail promised.

DRC map with infrastructure projects promised by the Chinese

DRC map with infrastructure projects promised by the Chinese

DRC roads and rail line promised by the Chinese contract

DRC roads and rail line promised by the Chinese contract

In the map the roads run north and south, along the eastern side of the DRC. The rail line runs from east to west.

IF China actually builds the roads, rail, and actually builds schools and the two univeristies called for in the contract with the DRC, that would be quite remarkable and provide a long overdue genuine step to positive development. It would also provide a positive challenge to the west. Mostly the west, when it noticed at all, has bemoaned the fact that people are killing and raping in the DRC, but ignored the ongoing western role in subsidizing and encouraging this violence.

And how will the west react to this Chinese presence? As you can see, the road network is north and south, up and down the mineral rich eastern DRC, and the rail, west to southeast, can take minerals to the coast. Will the US and other foreign business and governments who are profiting from the current situation in the DRC allow the Chinese to build this infrastructure without interference?

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