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Libya: From the Arab Spring to the identity dissolution

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Of all the states of the Maghreb and Mashreq of the Middle East and North Africa that have experienced the phenomenon of the “Arab Spring” resulting, in some of them, with removing the gerontocratic dictatorships, Libya is a country that has known one of the most striking forms of post-revolutionary development: from the internationally supported banishment of the dictator Muammar al-Gaddhafi in 2011, to a democracy sabotaged from its very first stage of germination, by identity conflicts and tribal and caste contradictions. In the period which followed, up to the present stage where, from the first half of 2014, the former Jamahiriya presents itself to the observer as a state of armed militias, of ambitions for power, of anarchy and rapid slippage towards social dissolution and, apparently, by towards misidentification and national fragmentation.

The fratricidal struggles between the Libyans are not recent, they arose when the TV in print media presented the bloodied and death disfigured face of the one who was the “the great leader of the revolution of September 1, an image in which all Libyans saw a sign of victory, but which each understood ac- cording to ambitions, interests, adventurism and aspirations of power and influence groups, families, tribes and clans of the most diverse, in a society whose demography is perhaps more acutely than in the case of the other Arab states, marked by a complicated ethnic and centrifugal plurimorfism which, in addition to Arabs, is composed of other ethnicities: Imazighen (Berbers), Greeks, Maltese, Italians, Pakistanis, Turks, Indians.  In the well-known tradition of faith in predestination and shifting responsibility for what is going on to anyone else but themselves, the Libyans do not cease to accuse the West, unanimously and regardless of the divisions that separate them, for the state in which Libya is today, nearly four years after the removal and trial less murder of Colonel Gaddhafi, in an advanced state of dissolution.

There is no doubt that the Western community and the influential Arab powers have their share of responsibility the “Libyan spring” – which was and certainly will still be examined in the minutest details – but it is equally doubtless that the Libyans themselves have their own and overwhelming responsibility at least to have too easily forgotten their national identity, the values for which they fought with gun in hand and the free future they are entitled to, and this social, mercantile, customary, territorial ideological and confessional frag- mentation is most clearly expressed in the realities of the multitude of “patriots” and “nationalists” who, on behalf of outdated vocal slogans, defend their own fortifications of concepts and interests.  This study aims to present, to the extent allowed by the printing space, a picture of Libya today, viewed from several perspectives – political, security and military – to facilitate a deeper understanding of contemporary Libya and the chaos in which it is struggling.   

A land of independent ”revolutionaries”  Today, the “private” armed militias are making the law in Libya. Their emergence, which coincided with the overthrow in August 2011, of the Gaddhafi regime, has at least two causal reasons: massive and brutal use of the former regime from, the early moments of social unrest, of military repression against the demonstrators, which determined their reaction to retaliate by using weapons, and secondly, limiting the actions taken by NATO regarding the air bombardment of the positions held by the military or by supporters of the former dictator, in parallel with the arming and the financial and logistical support of the protesters, in order to tilt the balance of forces in their favor. Well armed, both the revolutionaries and the military, the police and security forces defeated with the help of the Western military intervention, were organized in militia divided into two hostile camps, so that, in the next three years, amid the chronic political in- stability and the inability of the installed authorities (by the Western coalition leading the “democratic” Libya) to dissolve the extra-institutional and military formations and end the “militia phenomenon”, they grew numerically and from the point of view of the manpower, becoming, in their whole, a political, military and security force even stronger and more active than the governments that have succeeded and even than the national army.  
According to former Prime Minister Ali Zeidan, if in the first days after the fall of Gaddhafi, the number of the “armed” rebels was around 30,000 people, today we speak of the active existence of more than 200,000 “militia” members of various colorations and ideological affiliations. Moreover, with time, the extra-governmental armed formations mosaic managed to impose itself and to substitute the very military institution in the execution of the state security and defense missions normally assigned to the army and police, such as the security and pro- tection of the major importance objectives (port facilities, oil fields, ports, airports, borders etc.).

We are currently experiencing the dramatic situation in which the government itself uses the services of the militia in this sense, as the same procedure is applied to the political parties or alliances engaged in the power struggle or in the liquidation of their political opponents. It is understood that, for their services, the militias require proper rewards which refer not only that the “beneficiaries” satisfy their pragmatic and group claims (of economic-financial nature), but also issues related to the sphere of politics or the interest of national and social unity, as in the case of the request for the establishment of the independent administrative region Brega – the most important reservoir of oil resources of the country – or the monopolization of oil exports out of the control of  any governmental control the requests being supported even by forceful action – the taking over of government and legislative offices, including the parliament building (which was forced, at gunpoint, to adopt the famous law of “political isolation (lustration) of the uncomfortable politicians”, especially those with a Ghaddafist past. In the same category is included  the use of the militias, by the political factors, either to repress peaceful demonstrations calling for reforms and improving the living standards, or for attacking foreign commercial consular or diplomatic representative offices, resulting in hostage taking and even fatalities.  
With the appearance of the retired General Khalifa Haftar on the political-military scene, leader of the inter-militia alliance self-entitled “Karamat Libya” (Dignity of Libya), fierce conflicts and political disputes appeared both within the government coalition and in the parliament, em- bodied, inter alia, by recourse to the support of the “private militias” to resolve political disputes and to organize, in early August, new anticipated elections, which resulted in the establishment of a new parliament and of a new executive disputed by the opponents, so that Libya offers the novelty of a country that has two simultaneous governments and two parliaments which repel each other, not hesitating to support their positions by appealing to strong arguments of the “party and clan militias”.   
The morphology of the military scene the current picture of the Libyan military spectrum dominated by militias is divided be- tween two large groups of armed formations, whose membership we will present in the following lines: It is the alliance that acts as the “Libya Dawn” (Fajr Libya) and its self-entitled adversary “Libya’s Dignity” (Karamat Libya) led by (ret.) General Khalifa Haftar.   

I. The alliance “Libya Dawn” (Fajr Libya) is organized as the oldest structure, consisting of formations encountered in the context of the revolution and the most heterogeneous in what regards the ideological orientations and programmatic objectives. The “alliance” is com- posed of the following main militant currents:  1) The “Shield of Libya” militias (Dar’u Libya) consisting of three regional divisions (central, eastern and western). Having its operational pivot in the Missurata region and city it is, in its great majority, composed of militant-Islamist elements whose ideology and doctrine are inspired and close to those of the “Muslim Brotherhood” movement. 2) “The Libyan Revolutionaries Operations Center”, an Islamist armed militia which acts mainly in the eastern areas of the national territory, fulfilling police specific missions. The formation was constituted in mid-August 2013, in Tripoli, through the merger of several “revolutionary” armed groups.

3) “The Revolutionary Phalanx of Tripoli ” (Katibat Thwwar Tarablus), a rebel formation of Islamist ideological doctrine affiliation, close to Abdel Hakim Belhajj, former leader of the Libyan Is- lamic opposition party “Al-Gama Al- Libiya Al-Muqatila” (the Libyan combat group). “The Phalanx” was founded by a former member of this group, Al-Mahdi Al-Harati (also founder of a Jihadist faction fighting in Syria) and who became after the Revolution … mayor of the capital Tripoli.  4) “The Shoura Council of the Revolutionaries of Benghazi”, appeared on June 20, 2014 as a partnership between several tiny Salafist-Jihadist groups, with the objective of fighting against forces led by (ret.) General Khalifa Haftar and the so-called “Al-Saika Battalion”, made up of former soldiers and officers of the Libyan army.  5) “February 17 Brigade”, considered to be the largest and best equipped formation, created as an “armed arm” of the Libyan “Muslim Brotherhood” movement. It works in the port city of Benghazi in the east. 6) “Al-Sahat Ra’fatallah Detachments” that is also present in the perimeter of Benghazi. Although it has announced its willingness to be integrated into the national army, the group has kept two training camps and its entire armament. It was the first militia which engaged fights with General Haftar’s troops in May this year.

7) The “Group of the Shari’a Partisans” militias (Gama’at Ansar Al-Shari’a). The main and most active Jihadist-Salafist party in Libya constituted, in addition to local Libyans, of thousands of foreign fighters coming, especially from Algeria, Tunisia and the sub-Saharan Sa- hel African countries. The group is on the list of terrorist organizations drawn up by the US Sta- te Department.  8) The group “The First Shield of Libya”, of Jihadist orientation, was established and operates in the city of Tripoli. More recently it has merged with the group “Gama’at Ansar Al- Shari’a”, alongside which it is engaged in confrontations with the armed formations led by General Khalifa Haftar.   
II. The Alliance “Libya’s Dignity” (Karamat Libya) is, in turn, a combination of armed military formations constituted by former Libyan soldiers and national army officers which is present in several conflict regions of the country. Accused by the alliance groups “Libya Dawn” of having “anti-revolutionary” objectives and character, the alliance is created and commanded by (r) Lieutenant General Khalifa Haftar and is composed by the following main entities:  1) “Libyan National Army” Forces, which include about a third of the soldiers and officers of the Libyan military. It is under the direct command of General Khaif Haftar.  2) “Al-Sai’ka” Forces (Thunderbolt), coming from the elite units of the national army and ordered by Colonel Younes Abu Hamadeh.  3) “Al-Sawaiq” Brigade (Lightning), belonging to the family of Al-Zintan – the largest as- sociation of Libyan tribes – well equipped and trained, and similar, in what regards the specific tasks and structure, with the Western private security firms. It is commanded by General- Colonel Mustafa Trabulsi, who is in close relations with the monarchy of the United Arab Emir- ates, from which he receives substantial financial and logistical aid.  4) “Qa’qaa” Brigade (translatable, approximately, by “thunder”, “noise” or “weapon noise”), established in 2011 as an armed militia of revolutionaries who fought against the armed forces loyal to Colonel Gaddhafi. It is commanded by Osman Mleiqta

5) “Warshafana” Battalion, a militia calling itself after the name of the tribal clan Warshfana from the ranks of which come most combatants.  6) “Libyan Tribes Council” Battalion, composed of Warshafana clan warriors and several close and ally tribes, in kinship with it.  7) “Tibou” tribal union forces, in the extreme south of the Libyan territory.   
The polarization of the political scene  In July 2012, were held the first free general election that Libya has experienced in the last half century and which provided a first look at the guidelines and beliefs of the Libyan electorate under the new conditions after the overthrow of Colonel Muammar Al-Ghaddafi and his “Jamahiriyan” regime. At that time, 80 of the 200 members of the new parliament in Tripoli – People’s General Congress – were elected on party lists, while the rest, the majority of 120 MPs awarded a nominal victory on the vote. Unlike other countries that have experienced the phenomenon of the “Arab Spring”, the poll revealed the landscape of the predominant orientation of the citizens towards the political liberal mainstream led by Mahmud Jibril who, with a total of 39 seats in parliament, was invested as the first head of post-revolutionary Libyan government.

At the other extreme, another party which entered the election race, the National Front, member of the political coalition self-named National Rescue Front, succeeded to win only three parliamentary seats. Instead, the Justice and Edification Party, derived from the Muslim Brotherhood movement received 17 seats, while two other Islamist parties – Nation’s Party, a center party led by Sami Saadi and the Center National Party, led by Ali Tarhouni, each obtained only two seats in the parliament.   However, the Libyan political life was to focus, quickly, in a different direction than the one crystallized in the first democratic election ballot, that of a strong centrifugal and multipolar movement, generated, in particular, by party, tribal and personal interests of the Libyan political class, so that, at the moment, the Libyan political map has the following plurimorphous configu- ration:  1. National Forces Alliance formed in the wake of the removal from power of the Gaddafi regime and consisting of a mosaic of the first forces and political trends that Libya knew after decades of dictatorship.

The alliance includes a small number of 41 political parties, hun- dred of independent members and civil society organizations and it is headed by Mahmoud Ji- bril, a former member of the Transitional National Council, formed after the regime change in the country. Proclaiming democracy, national identity and human rights as guiding principles of its program, the Alliance is ideologically characterized as liberal and secular, even though its leader, Mahmoud Jibril, said in July 2012, that the Shari’a Islamic law is the main principle of the Alliance’s actions which, besides the already mentioned guidelines, stands for accepting and encouraging the so-called “mid-moderate Islam”. At the legislative elections of July 2012, the Alliance won 39 seats out of the 200 seats of the Libyan parliamentary forum.   

2. “National Front” Party (Al-Djabha Al-Wataniya) set up in Tripoli, on the remains of the former National Rescue Front (created as a clandestine opposition movement in 1981, au- thor of a failed attempt to overthrow the regime Muammar Al-Ghaddafi by force, in 1984). Be- tween 1987 and 1990, the Salvation Front continued to organize military structures, using for this purpose the territory of the neighboring African country Chad, where they were set up as the “Libyan Patriotic Army”, which was subsequently to be actively involved in armed anti- Gaddhafi confrontations until his removal from power. The National Front, formed after this moment, in 2011, enrolled in its political platform approx. 16 principles and action objectives, including the adherence to the values of democracy, civilian and human freedoms, ensuring the establishment of political plural- ism as an expression of the freedom of opinion, etc. At present, the party is led by Mohammed Mugrif, who was, between 2012 and 2013, the president of the new Libyan parliament (the General National Congress).  

3. The “Muslim Brotherhood” Movement in Libya, which appeared in 1949, but, unlike the Egyptian and Tunisian branches of the “Muslim Brotherhood”, has failed to achieve a significant dissemination in its ideology among the masses, trade unions, and civic organizations, due, mainly, to the draconian repressive measures applied by the Ghaddafi regime. Only on March 3, 2012, did the Movement announce the establishment of a political party of its own, under the name of the “Justice and Edification Party” led by Mohammed Sawwan. Freedoms and human rights, participation of all citizens, without discrimination, to the edification of the society, decentralization and economic liberalization, balanced development of all provinces and regions of the country, reducing unemployment, increasing chances at a job and a life of dignity for all citizens, achieving social harmony and concord, are just some of the objectives of the political program of this party which during the elections in June 2014, won 14 seats in the Legislative forum of Libya.   

4. The federalist political current formed during the revolutionary events of 2011 from the representatives of the Libyan historical provinces Brega and Fezzan, wishing for the cessa- tion of the state of marginalization and underdevelopment that they had experienced during the former regime, claims from the new post-revolutionary authorities to be reintroduced in the na- tional circuit of resources and social and economic values of development. More than one year after the revolution and in response to the indifference with which the authorities in Tripoli have treated these claims, a group of officers led by Ahmed Senoussi Zubeir and several tribal leaders from eastern regions of the country, declared the establishment of a “Council of the Federal Province Brega”, headed by Ahmed Senoussi and having as programmatic objective the “protection and promotion of the province in a federal liberal state”. Simultaneously, another entity led by Ibrahim Jazran, organized as an armed militia, self-proclaimed independent as the “Political Bureau of the Province Brega”, taking control by force, of the oil terminals destined for the Libyan oil exports, as a means of pressure on the central authority to satisfy their grievances, among which the first was the demand for the establishment of the autonomous province Brega within the borders it had during the monarchy period of the Libyan history (from the city of Sirte to Tobruk, near the state border with Egypt). The current is known, in terms of the crises it has caused, and as the “Armed Liberal Current”.   

5. Tibou Movement is the ethnic and tribal groups settled in northern and western part of Chad, in the Tibesti mountain range in the south-eastern oases of Libya, in the far western part of Sudan and northern Nigeria. These are nomadic Bedouin tribes with a total population of approx. 5 million people (of which approx. 400,000 are Libyans), divided into 38 tribes and having as main occupation agriculture and sheep breeding. The Libyan ethnicity of the Tibou group was, starting in 2007, involved in protest and resistance actions against the Gaddafi regime, establishing, in this sense, its own political party the “Tibou Front for the Salvation of Libya”. According to the Tibou leader, Abdel Magid Mansour, the number of the Tibou combat- ants amounts to 1,200.   

The evolution of the internal crisis – main stages  The tensions on the Libyan political and social scene have entered into a process of rapid degradation and violent confrontation with taking control, by the armed militias, of the “field” initiative, which led to continuous pressure put on the policy makers and on the legislative and executive leadership, which progressively amplified the armed confrontations and the regional and international interference in the internal affairs of this country.  – In May 2013, the Parliament adopted the so-called “Law of Political Isolation” aimed at removing the former regime officials and supporters of Gaddafi from the political life. The adoption of the law occurred as a result of the pressure of the armed groups, after they took over government offices, including those of the Ministries of Justice and Foreign Affairs and threatening to extend such actions.  – On August 3, 2013, armed separatist groups occupied major oil fields by force, claiming the autonomy of the province Brega.

The action, also continued this year, has brought huge losses to the national budget by stopping royalties and income from oil exports.  – In the same month, a new actor in the person of General Khalifa Haftar appeared on the political-military fringes along with his military coalition “Libya’s Dignity”, which marked the entrance of the internal situation in a stage of chaos, violent clashes and of personal and group vengeances, all resulting in loss of life and in significant losses and damage to the national economy of the country.  – On 10 March 2014, the then Prime Minister of the Libyan government, Ali Zeidan chose to resign, taking refuge in Germany after a loaded tanker managed to escape unhindered off- shore in the direction North Korea being, however, stopped by US ships patrol and brought back to the Benghazi port. In Zeidan’s place, the parliament invested Defense Minister Abdallah Al Thaniy to lead the Executive, but he also resigned after a few days, due to his inability to form a new national unity government.  – In early May 2014, the General National Congress (the Parliament) appointed Ahmad Moaytiq as Prime Minister, but the appointment was annulled by the Constitutional Court; – In mid-May this year, Gen. Khalifa Haftar ordered the beginning of the “Libya’s Dignity” national scale operation against the Islamist rebel groups and formations. – June 25: gathered in Cairo, the representatives of Libya’s neighboring states called all groups, forces and militias involved in the confrontation to accept the initiation and execution of an extensive dialogue of national reconciliation, promising, at the same time, to refrain from any intervention in the internal Libyan problem. In its turn, the United Nations Security Council adopted a resolution to that effect, warning the imposition of international sanctions if the players on the Libyan fringes do not accept a general cease-fire. – On July 21, the Libyans elected a new parliament dominated by liberals and Islamists.
The United States decided to close its embassy in Tripoli and evacuate the personnel.  – As of mid-July, the Libyan conflict takes on the dimensions and characteristics of a genuine civil war, particularly carried out in Tripoli and Benghazi.  – August 4, 2014: the elected Libyan Parliament held its first meeting at Tobruk, in the absence of the Islamist MPs. At the request of Tunisia, a new meeting of the representatives of the neighboring countries is held in Algiers, to analyze the possibilities of achieving a cessation of hostilities between Libyans. Tunisia, Algeria, Egypt, Mali, Niger and Chad are participating. – August 18 2014: Foreign bombardment devices of unknown identity perform bombing raids on the positions held by Islamist militias and on the international airport in Tripoli. Egypt and the UAE are charged with these actions. Both Cairo and Abu Dhabi reject the accusations.  – August 23: the “Libya Dawn” coalition militias (Fajr Libya) take control on the international airport in the Libyan capital. The Parliament in Tobruk declares the Jihadist groups “Ansar Al-Shari’a” and “Fajr Libya” terrorist organizations. Libya is a country with two governments and two parliaments (Tripoli and Tobruk) who deny each other’s legitimacy. – On August 25, the National General Council (whose mandate had expired since March) appoints Omar Al-Hassi as prime minister. The appointment is challenged by the Coun- cil (parliament) in Tobruk.  – September 4: According to a press release from the UN Human Rights Office in Geneva, about. 250,000 Libyans had fled their homes, finding shelter or in other areas of the country or in the neighboring countries.  

– September 7, 2014: A military transport plane loaded with weapons for the militia coalition “Libya Dawn” is intercepted and forced to land. Sudan’s military attaché is declared persona non grata and expelled in connection with this incident.  – September 22, 2014: the Libyan Parliament elected (in Tripoli) approved the composition of a second government led by Abdallah Al-Thaniy. 13 states (including the US and France) and the UN and the European Union address, in New York, a collective call for “an immediate ceasefire in the Libya immersed in political and security chaos” and the two parallel governments and parliaments each claims their legitimacy. – October 2, 2014: The violent fighting continued in Benghazi, 50% under the control of the Islamist rebels, between the “Shoura Council of the Revolutionaries of Benghazi” militia and units of the Alliance “Libya’s Dignity”, commanded by General Khalifa Al-Haftar, who sought help from the aviation and armor. Five attacks with explosives carried out by Islamist fighters caused the death of more than 50 soldiers from the units of General Haftar. The 15 members of the Security Council addressed a new call to the cessation of the armed confrontation, warning with the imposition of new international sanctions against Libya.  – On October 6, the self-entitled Jihadist movement “The Shoura Council of the Revolutionaries of Benghazi”, member of the “Libya Dawn” proclaimed the city and oil district Derna in the east of the country as “Islamic emirate”, pledging, at the same time, the oath of allegiance and loyalty to the leader of the Islamic State, “Caliph” Abu Bakr al-Baghdadi. It was the first significant penetration of the Da’ish Jihadist offensive in Libya which, in the absence of an urgent national reconciliation dialogue between all parties involved in the Libyan war, “threatens to expand rapidly and make the Libyan territory the third part of the “Islamic caliphate” in Syria and Iraq”, according to Bernardino Leon, the representative in Libya of the UN Secretary General. – 15 to 16 October: the Libyan army and the forces led by General Khalifa Haftar triggered a strong ground offensive, supported by aircraft and armored vehicles, on the positions held by the Islamist militias in the northeast and in the city of Benghazi. News releases, formally belied both by the Ministry of Foreign Affairs in Cairo and by the spokesman of the US State Department referred to the Egyptian involvement in the bombing raids on Islamist parties. The attacking units took control of the quarries in the south and west of the city Benghazi, as well as on the sites and logistics of the militia and self-entitled “February 17 Brigade” – the armed arm of the Libyan movement “Muslim Brotherhood”.  

Libya, which, after the dictatorship of Muammar Al-Gaddafi, went through a “bloody spring” just to come under the dictatorship of gangs, militias and armed tribes, seems to move rapidly towards social dissolution and national and territorial dismantling despite the regional and international community attempts to determine, through dialogue or through penalties and economic pressures, a ceasefire and transition to a national reconciliation process. Such prospects still remain remote, as long as, in addition to the ambitions and interests of the political class, of the “professional revolutionaries” and tribal influences, this situation is maintained by the regional actors, including by funding and support of a political orientation or of one or the other of the armed militias.  Will the new multinational anti-terrorist campaign have a positive influence – be it only as a warning – on this complicated and dramatic situation? Only short-term developments will allow an answer to this question.  

 

First published in “Geostrategic Pulse

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Africa

Losing The Battle: How China is Outperforming the USA in Sub-Saharan Africa

Henry Hama

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Under what conditions could the United States regain its position of strategic dominance in sub-Saharan Africa (SSA) despite increasingly reduced economic support programs as well as a limited-to-no Foreign Military Financing (FMF) grants? With the expansion of China’s economic and military cooperation activities across SSA in the last decade, the United States is increasingly becoming unpopular to much of the region. It is imperative to comprehend that China did not emerge accidentally as a global economic contender. When the United States was engaged in the “Global War Against Terror (GWAT),” following the September 11, 2001 (9/11) terrorist attacks, much of its focus was in Southwest Asia and the Middle East. Most of the West, and particularly the United States, thought SSA countries had never been strategically important enough to make the priority list of geopolitically important countries. Historically, only a handful of African countries mattered to the United States: countries such as Morocco remained important due to military and commercial vessels traversing the Straits of Gibraltar into the Alboran Sea; likewise, Egypt mattered due to the Suez Canal and the Red Sea; additionally, Djibouti has also been an important country due to the Bab al-Mandab Strait. It is reasonable to assess that the United States prioritized these countries due to their proximity to those global choke points, but they still did not constitute a serious prioritization on the part of America.

Over the past half century, following their independence from colonial powers, much of SSA has been ruled by state actors who were predominantly rent-seeking and authoritarian. This is particularly important as it demonstrates the ease with which China ventured onto the African continent and immediately established engaged relations. In an effort to satisfy its need for raw materials due to its exponential population growth and scarcity of indigenous materials, China capitalized on opportunities to perform transactional economic activities while forging new relationships and partnerships across SSA.  For many years the United States underestimated China as a potential economic competitor to reckon with, especially across Sub-Saharan Africa.  China’s economic capacity grew though “race to the bottom” approaches, whereby China flooded African and other world markets with cheaper products, taking away competitive advantage from local businesses. Additionally, while the United States was consumed with fighting two wars in Afghanistan and Iraq post-9/11, China was expanding its economic operations and military cooperation activities across SSA. Even then the US underestimated this new development in global activity, as it saw China’s expansion as unsustainable as well as an insignificant maneuver. The United States was content with its aid packages to SSA, which accounted for less than one percent of America’s Gross Domestic Product (GDP),in addition to HIV/AIDS relief programs. Unfortunately for the US, it became quickly seen at the local level that those aid packages could not come close to the stimulus investment/trade transactions China was conducting throughout SSA.

At first glance, SSA countries viewed China’s activities on the continent as primarily humanitarian in nature. In her book entitled Dead Aid, Dr. Dambisa Moyo stated that China’s African role was wider, more sophisticated, and more business-like than any other country at any time in the post-war period.  She later recanted those statements after realizing that China was in Africa to compete and not necessarily to provide humanitarian assistance. During the initial stages of China’s movement into SSA, the focus was mostly economic and infrastructure development that was also in support of China’s own domestic economic objectives. These moves are seen through China’s development of road and rail networks, which then feed into several air and seaports across the continent to ease the movement of goods inland to seas and airports across SSA. While that was ongoing, China opened its first military naval base abroad in Djibouti, a small but strategically relevant country of 800,000 inhabitants.  Djibouti is also home to several other foreign military bases abroad, including the United States, with approximately 4,500 personnel stationed at Camp Lemonnier, the Combined Joint Task Force Horn of Africa (CJTF-HOA). Other bases include those of the Japanese, Italian, Spanish, and French militaries.

China provides countries in SSA with suitable capital goods and cheap consumer goods, while those countries supply China with the commodities it needs to fuel its continued economic expansion, such as oil, iron ore, cotton, diamonds and timber. The relationship is complementary because both China and SSA gain from the mutual exchanges. The negative aspect, however, is China’s ability to undercut the market for locally-owned small businesses. China is causing a massive economic imbalance in these countries. For example, oil exports to China account for 86 to 100 percent of all oil exports from Angola, Sudan, Nigeria, and Congo. According to Kaplinsky, SSA’s exports to China were less than one percent of its exports to industrialized countries in 1990; by 2006,the same exports had risen to 11 percent.

Along with the surge in trade, China’s foreign direct investment (FDI) has increased exponentially in SSA due to resource and market considerations. The negative impacts of globalization, trade tariffs, and economic structural adjustment programs (ESAP) set by the International Monetary Fund (IMF) on indebted countries in SSA, have prompted many of these developing countries to enter into bilateral agreements with China in order to lessen their hardships. Most of the Chinese FDI in SSA are from companies that are government-owned.  Chinese FDI in SSA is higher than anywhere else in the world; it increased significantly from approximately $20 million per year in the 1990s to over $25billion by 2013. As one travels through SSA, there is high visibility of Chinese infrastructural development projects, which makes it difficult to differentiate FDI from aid.  While the United States is mostly focused on counter-terrorism initiatives and military capacity-building across SSA to counter violent extremism, neglecting economic development and self-sustenance capacity-building in the region basically reverses those former efforts. This is where China exploits the opportunity to address those American shortfalls: its activities in SSA create suitable conditions to be SSA’s preferred partner of choice over the United States.

Formal aid connections between China and SSA were initiated through the Bandung Conference in 1955. However, in October 2000, during the Forum on China-Africa Cooperation (FOCAC) in Beijing, there were agreements to enhance cooperation between China and financial institutions in Africa.  It was also during the FOCAC that China expressed its willingness to reduce Africa’s debt burden, promote investment, and assist in the development of human resources in Africa.    The superb new African Union (AU) Conference and Office Complex built by the Chinese government in Addis Ababa, Ethiopia, free of charge to the AU, demonstrates real partnership between Africa and China.  Within the past decade, China has committed over $75 billion in aid and development projects throughout Africa. Some International Relations analysts argue that beyond the need for natural resources, China’s infrastructural development projects in SSA – trade, FDI, debt relief, and the provision of medical support – are all part of China’s public diplomacy strategy to build up goodwill and international support for the future.  In essence, China has taken advantage to expand its footprint on the resource-rich continent of Africa by providing much-needed aid while developing lasting relationships with SSA that are less punitive than aid from the IMF or USA.

China’s establishment of a naval base in Djibouti, where the United States military has operated in since 2001, was a bold move. China also built and now controls Djibouti’s freight container shipping port, the Port of Doraleh, through which the United States base is resupplied. Djibouti is the only country on the African continent with a United States military base; it is also where the United States projects force into the region, targeting al-Shabab terrorist cells and activities. Obviously, the strategic construction of the Chinese naval base in Djibouti potentially threatens US military and commercial vessels traversing this global choke point, the Bab al-Mandab Strait. Other foreign countries, such as Russia and Turkey, have also expressed interest in foreign bases in Djibouti, but the Djiboutian president cannot part with the $63 million paid by the United States annually to lease Camp Lemonnier. In addition, he also collects rent from the Chinese and Italians also based in the country.

When the United States’ FMF, security cooperation and security assistance (SC/SA) in SSA were drastically reduced and in some cases terminated by the Trump administration, China viewed that as an opportunity to strengthen its military cooperation with SSA countries. Generally, SSA countries prefer American military equipment and training over those of China or Russia. However, due to human rights vetting built into US processes, equipment and training provision to the countries of SSA takes a significant amount of time. China does not have these processes and tends to deliver much faster than the United States. Even though regarded by SSA countries as of lower quality, China delivers the needed equipment and training unlike the United States, which delivers two to three years later and when the operational requirements have become outdated.

If the United States hopes to regain its dominance in SSA, it must change its paternalistic behavior towards African countries and it must regard China as true competition. The United States must discontinue rhetoric to discourage SSA countries from doing business with China, particularly when it is not presenting any alternative options. This will only alienate the United States from the very countries with which it wishes to strengthen bilateral relations.  Instead of attempting to undo progress China has made in SSA, the United States must compliment those works and find ways to build capacity across African countries and sustain those new capabilities.

Africans desire economic independence. However, that can only be achieved through aiding them in the building of their own capacities rather than just making them dependent on the US. America must continue to encourage SSA build strong governing institutions. It is imperative to understand that democracy is more conducive to economic development because of the protection and balance of these various institutions. Developing countries need an institutional framework that supports a market economy, which include distinct institutions that foster exchange by lowering transaction costs and encouraging trust as well as those that influence the state and other powerful actors to protect private property and persons rather than expropriate and subjugate them respectively. The United States must do more to differentiate itself from China and become the preferred partner of choice across sub-Saharan Africa. So far, its strategy seems to be too focused on just criticizing China’s efforts and ignoring the legitimate relationship advantage it has built over the last decade. Unfortunately for America, the time has passed where the countries of Africa automatically will choose the US over all other competitors. The longer it takes America to realize this, and adapt to it competitively, the longer it will remain an African also-ran.

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Africa

South Africa: Better Education & Spatial Integration Crucial for Reduced Inequality, Job Creation

MD Staff

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In an environment of accelerating but still modest growth, government policies that stimulate competition and create the fiscal space needed to build a skilled labor force from the poor population of South Africa, would create jobs and help reduce inequality, according to the South Africa Economic Update released by the World Bank today.

The World Bank expects real growth in gross domestic product (GD) to accelerate from 1.3 percent in 2017 to 1.4 percent in 2018, supported by a rise in confidence, global growth and benign inflation. For 2019, the forecast is 1.8 percent and 1.9 percent in 2020. But despite this modest rebound, growth in South Africa remains constrained and continues to lag behind its peers. Overall, South Africa is projected to remain largely below the average growth rate of 4.5 percent in 2018 and 4.7 percent in 2019 in emerging markets and developing economies.

“This outlook calls for fundamental policy action to turn the economy around through policies that can foster inclusive growth and reduce inequality,” said Paul Noumba Um, World Bank Country Director for South Africa.  “Creating labor demand and fiscal space to finance improved education as well as reinforcing spatial integration will enhance the ability of the poor people of South Africa to participate meaningfully in the economy”.

The special focus section of this 11th edition of the South Africa Economic reviews the evolution and nature of South Africa’s inequality – among the highest in the world– arguing that it has increasingly been driven by labor market developments that demand skills the country’s poor currently lack. It suggests that significantly raising South Africa’s economic potential will require breaking away from the equilibrium of low growth and high inequality in which the country has been trapped for decades, discouraging the investment needed to create jobs.

Simulations assessing the potential impact of a combination of various policy interventions on jobs, poverty, and inequality suggest a scenario in which the number of poor people could be brought down to 4.1 million by 2030, down from 10.5 million in 2017. This would be driven by increasing the skilled labor supply among poor households through improved education and spatial integration as well as increasing labor demand through strengthened competition.

In this scenario, the Gini index of inequality would be reduced from 63 today to 56 in 2030. An additional 800,000 jobs would be created with higher wages for workers from poor households, and cheaper goods and services contributing to these outcomes, according to the report.

In the short term, these policy interventions would include, getting the implementation of the recently granted free higher education right, continuing to address corruption, improving the competitiveness of strategic state-owned enterprises, restoring policy certainty in mining, further exposing South Africa’s large conglomerates to foreign competition and facilitating skilled immigration,” said Sebastien Dessus, World Bank Program Leader.

In the longer term, the report suggests that improving the quality of basic education delivered to students from poor backgrounds and reinforcing the spatial integration between economic hubs, where jobs are located, and underserviced informal settlements, would reduce poverty and inequality and support job creation.

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Africa

Can Insurance Help Low-Income Ethiopians Cope With Risk?

MD Staff

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Photo: Binyam Teshome / World Bank

The loss of crop or livestock as well as concerns about illness and accidents are key financial expenses on the minds of low-income Ethiopians.

Unexpected expenses associated with these issues are relatively common. A third of low-income Ethiopian households experienced at least one major health issue in the previous year, often paying for it out-of-pocket.

In rural areas, almost 50% of households experienced some agricultural loss in the previous year. For three-quarters of these households, these financial losses accounted for more than half of their income in a typical year.

Yet even though these crises affect a large number of the population, Ethiopians don’t have adequate mechanisms in place to cope with the financial hardship they bring.

“People don’t put money aside to deal with risk. Instead, they rely on cash and savings, if they have them, borrow money from family, if possible, or as a last resort, sell livestock to cope with these unexpected shocks,” said Craig Thorburn, a Lead Financial Sector Specialist with the Finance, Competitiveness and Innovation Global Practice of the World Bank Group, and the technical lead for a FIRST Initiative funded project that produced the new report What People Want: Investigating Inclusive Insurance Demand in Ethiopia.

Informally borrowing money is a common coping strategy as loans from formal financial institutions are expensive and hard to get. However, when a crisis, such as drought, affects an entire community, informally borrowing money from relatives isn’t a viable option. And selling livestock may inject rural households with quick access to cash, but this approach ultimately leaves families poorer and less resilient.

Last year, the World Bank Group conducted a demand-research study in Ethiopia to examine risks low-income households face and see whether insurance could be a tool that Ethiopians could tap into to reduce and better manage these financial burdens.

This country-wide survey reached close to 3000 households, totaling 13,000 people, from both rural and urban areas.

“Understanding the needs of underserved populations, including low-income households, is key to developing quality insurance products and expanding insurance markets,” Thorburn said. “Without this knowledge, potential insurers wouldn’t understand the real and perceived risk of this unserved market segment.”

The survey found that people had little knowledge or experience with insurance, and that 50% of surveyed households never heard of insurance. However, people expressed interest in it if insurance products were devised as accessible and inexpensive.

Ethiopians have unserved needs that could be met with affordable products they actually want.

For example, 97% of focus group participants indicated they would buy a proposed prototype crop insurance product if it were available to them, as it would allow them to replace lost income and buy inputs for the next crop cycle.

And for health-related issues, the survey found that while many people fear a high-cost illness, they could manage many basic expenses with their existing resources, with 75% reporting that they were able to fully recover from financial hardship. This indicated that a well-designed insurance product could leverage existing strategies such as savings, and provide peace of mind. Interest in a hospital cash prototype was high, with close to half of participants willing to pay an actuarially sound premium.

This openness to insurance could provide a great opportunity for insurers, particularly if they can customize and tailor their products to suit customers’ needs.

While this initial research indicates that low-income households are interested in insurance, it would require insurers, the government and other stakeholders to work together to develop insurance products that are accessible, affordable and appropriately designed for people’s needs. Other aspects related to extending the insurance market would need to be considered as well. These include adapting the regulatory framework to motivate insurers to enter this market and devise financial education programs to educate people on insurance.

“Ethiopia provides a significant opportunity for insurers to expand their businesses, the government to improve the overall stability of the low-income population, and low-income people to stabilize their economic status,” said Thorburn.

Focus group participants indicated they would be most likely to purchase insurance from formal financial institutions, such as banks or microfinance institutions, which would bring stability and financial capacity. They indicated that they would be less likely to purchase insurance through informal formal groups, such as savings and credit cooperatives or Edirs, which are well-ingrained local community-based organizations created to help cover funeral expenses.

The World Bank is working in Ethiopia to create an enabling environment for inclusive insurance.

These survey findings are part of a broader World Bank study that that looked at supporting more inclusive insurance markets in Ethiopia.

This study and the report were done jointly with MicroInsurance Centre at Milliman and EA Consultants. The study and the report were funded by the FIRST Initiative.

World Bank

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