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Eurasian Integration Could Open Market for Africans

Kester Kenn Klomegah

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Early January, Russia and four other ex-Soviet republics completed finally the creation of a new economic alliance intended to bolster their integration. The Eurasian Economic Union or popularly referred to as EAEU, which includes Russia, Belarus, Kazakhstan, Armenia and Kyrgyzstan, came into existence on January 1, 2015.

It is expected that Kyrgyzstan will become a full-fledged member from May 1, 2015. In addition to free trade, it’s to coordinate the members’ financial systems and regulate their industrial and agricultural policies along with labor markets and transportation networks.

Russia’s changing economic identity with its neighbouring ex-Soviet republics, Armenia, Belarus and Kazakhstan has opened business and economic opportunities despite the inherent teething problems associated with its creation. For instance, President Vladimir Putin said that the new union will have a combined economic output of $4.5 trillion and bring together 170 million people which means a huge potential market for business. “The Eurasian integration is based on mutual benefit and taking into account mutual interests,” Putin said after business talks with his colleagues in the Kremlin.

Some experts say the union members will benefit largely members and other foreign countries if the emerging opportunities are exploited strategically, while other analysts have explained in an email to Buziness Africa that foreign countries such European countries and Asian states, expecially all three major powers of Asia – China, Japan and India are ready to take their share of the new developments. But on the other hand, the experts interviewed for this story are, however, skeptical as to what extent African business leaders, investors and political elites will recognise, interprete and explore the profitability of the new geostrategic economic arrangement in the region.

The key question is who can benefit from EAEU. According to an official statement posted on Kremlin website on Decemebr 23, 2014, “there is growing interest in cooperating with the Eurasian Union among countries in other regions. Thus, the drafting of a free trade agreement with Vietnam has entered its final stage. We are working on similar agreements with Turkey, India and Israel.”

In addition, the Eurasian Economic Commission (EAEC) press office explained in an email query to Buziness Africa media that foreign countries interested in cooperation with the Union have to apply to the EAEC and if all the necessary conditions fit both parties, the consultations about one of the forms of cooperation (e.g. Free Trade Agreement) could be started.

The press office cited in the report sent by email to Buziness Africa that “EAEC has negotiations with Vietnam about Free Trade Agreement. At this time, we have eighth round of negotiations, that were dedicated to existing provisions of the future agreement. The parties believe that they manage to reach a fair balance of benefits for the both of them and provide for necessary tools that would mitigate the risks for entrepreneurs. But the work is not over yet, the remaining issues will be solved in further consultations.”

According to media reports, East African Community (EAC) countries could soon be able to export tea, coffee and horticultural products to the Eurasian Economic Commission (EAEC) member states without going through Western Europe. According to the article based on official statement issued after a meeting by the EAC Ambassadors in the Russian Federation, this was one of the resolutions agreed on during a recent meeting between EAC ambassadors in the Russian Federation, “the meeting was aimed at learning about the EAEC integration process and development of the economic bloc with view of exploring business opportunities for EAC member states.”

EAC diplomats agreed that traders from the region pay custom taxes at only one entry point to the EAEC bloc to boost exports from East Africa. Once in effect, the EAEC bloc will represent a single economic market of 171 million people with a gross domestic product of $3 trillion. The East African Community (EAC) is a regional intergovernmental organisation of the Republics of Burundi, Kenya, Rwanda, the United Republic of Tanzania and the Republic of Uganda, with its headquarters in Arusha, Tanzania.

Last year, a high-powered delegation of officials from the Eurasian Economic Commission also visited South Africa to explore economic relations with SA and Africa broadly. Headed by Tatyana Valovaya, a member of the Board of the Commission responsible for Integration and Macroeconomics, the delegation held discussions with South African business representatives, political actors and academics on significant economic opportunities for South Africa and Africa.

This visit received no media reports or publicity but this does not mean that it was insignificant. The key questions are what is the potential for SA-Russia relations to be the springboard for relations with the whole of Eurasia generally or the Commission area particular? What would be the key drivers and pillars of such relations? What economic and trade potential lies is such relations? How should South Africa’s foreign policy and Russian foreign policy gurus be thinking through this development?

Egypt is one of Russia’s leading trade partners in the Arab world and may soon conclude an agreement to establish a free trade zone with the Eurasian Economic Union (EAEU), according to the Russia’s Chamber of Commerce and Industry. Experts argue that this will contribute to the revitalization of trading activities and develop deeper cooperation in a number of fields between Egypt and member countries of EAEU.

Victor Spasskiy, the director in charge of integration development, said there are initiatives to expand the bloc to include Armenia and Kyrgyzstan. Local business people were encouraged to take advantage of the immense opportunities in the bloc to develop new business ties with the EAEU business community. Possible exports from EAEC include natural resources, human capital, technology in manufacturing industry and farming machinery.

Some experts are skeptical pointing to the teething problems including differences in approach to varying issues in the region. The creation of the Eurasian Economic Union parallels two deepening interrelated crises: the growing rift between Russia and the West over the conflict in Ukraine and the looming economic crisis in Russia.

Since the beginning of 2014 the ruble lost almost half of its value and the inflation in Russia has exceeded 11%. Some of the member-states of the Eurasian Union (Belarus and Kazakhstan in particular) have been growing more and more ambivalent about Russia’s increasingly heavy-handed attempts to reassert its influence in the former Soviet spaces, according to views of Maxim Matusevich, director of the Russian and East European Studies program at Seton Hall University in New Jersey.

Historically, he maintained that African states have been exceptionally sensitive to any real or perceived efforts by “developed” nations to establish neocolonial control in their former zones of influence. And by a number of measures, Russia’s muscle-flexing in the so-called “near abroad” can be perceived as neocolonial.

“I wouldn’t be surprised if some African states responded to such aggressive expansionism with caution or even distaste. So far only Egypt, which under the new military leadership has grown closer to Putin’s regime, expressed any interest in possible closer ties with the EAEU. But there exist far more specific reasons, for which, I believe, the creation of the Eurasian Union will have little relevance for Africa,” the director said.

Matusevich pointed out: “The member-states of the union have little to no manufacturing output, the two pillars of the union (Russia and Kazakhstan) have economies almost entirely based on oil and gas exports. It is not clear what exactly they can offer to African nations, especially in the context of the deepening economic crisis in Russia. I expect that just like during the previous period of economic turmoil in the 1980s and 1990s Russia and some of its post-Soviet allies will cut down on their ties with Africa rather than expand them. Africa, in my opinion, has very little either to gain or to lose from the creation of the Eurasian Economic Union.”

In an address at the Supreme Eurasian Economic Council meeting in December 2014, Putin further explained that Memorandum of Understanding (MoUs) were drafted with ASEAN and Mercosur states. “I am certain that expanding ties with all countries and organisations both in the East and in the West on the basis of equality and mutual benefit meets the interests of our Union as well. There are great new challenges ahead of us. We are to ensure the stable and efficient functioning of the Eurasian Union and continue strengthening its institutional basis,” Putin said assertively.

Among the priorities is the need to make the Union more competitive and attractive for investors, to launch joint projects and create high-technology jobs in the oil and gas sector, in the metals and chemical industries, aviation, machine-building and the space industry. In addition, to remove the existing barriers that impede the free movement of goods, services, capital and labour, and to implement plans to form as of 2016 a common market of pharmaceutical and medical products.

Putin added: “We will also approve a list of services sectors where the common market will become functional on January 1, 2015. This will benefit construction workers, wholesale and retail traders and companies working in tourism. It is important that we do not drag our feet with the mutual approval of licences for these activities issued by our respective countries. This will make it possible for our companies to take full advantage of the benefits of integration right from the start.”

The Treaty on the establishment of the Eurasian Economic Union was signed by the presidents of Russia, Belarus and Kazakhstan on May 29, 2014 in Astana. The agreement is the basic document defining the accords between Russia, Belarus and Kazakhstan for creating the Eurasian Economic Union for the free movement of goods, services, capital and workforce and conducting coordinated, agreed or common policies in key sectors of the economy, such as energy, industry, agriculture and transport. The agreement stipulates the transition of Russia, Belarus and Kazakhstan to the next stage of integration after the Customs Union and the common economic space.

Kester Kenn Klomegah is an independent researcher and writer on African affairs in the EurAsian region and former Soviet republics. He wrote previously for African Press Agency, African Executive and Inter Press Service. Earlier, he had worked for The Moscow Times, a reputable English newspaper. Klomegah taught part-time at the Moscow Institute of Modern Journalism. He studied international journalism and mass communication, and later spent a year at the Moscow State Institute of International Relations. He co-authored a book “AIDS/HIV and Men: Taking Risk or Taking Responsibility” published by the London-based Panos Institute. In 2004 and again in 2009, he won the Golden Word Prize for a series of analytical articles on Russia's economic cooperation with African countries.

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Governance reform could see African economies benefit to tune of £23bn

MD Staff

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The latest edition of PwC’s bimonthly Global Economy Watch has found that African economies could receive a windfall of £23bn if each economy applied similar governance reforms equivalent to those made by Cote d’Ivoire since 2013.

The continent-wide economic analysis modelled the performance of each country across six of the World Bank’s Worldwide Governance Indicators (2013-17), which covers aspects such as regulatory quality, rule of law and government effectiveness.

The analysis has found that if each African economy made an improvement to governance equivalent to that made by Côte d’Ivoire over the past four years, these gains would be worth around $23bn if realised across the continent.

The countries with the largest potential gains are those with a comparatively high GDP per head but a poor track record on governance. Accordingly, oil-rich Libya and Equatorial Guinea would see the greatest increase, with each person gaining an additional $400 and $200, respectively.

Those with lower GDP per capita, such as Niger and Malawi, would see a smaller improvement, despite their governance rank being below the average for the region. By contrast, economies like Rwanda, which have made similar improvements to Côte d’Ivoire, would also only realise a small benefit, with greater gains made through further diversification of their economies.

Regional differences are significant

The forecast also notes strong regional differences in economic growth across the continent. Economic growth has been particularly strong in East Africa (at around 3% a year since 2013). Central Africa, by contrast, saw annual real GDP per capita fall by an average of 1.3% over the period. North Africa and the Southern region experienced very sluggish growth (of 0.4% and 0.8% a year respectively), while West Africa saw faster growth of 1.9% a year.

Mike Jakeman, senior economist at PwC UK says,

‘Given that Africa contains more countries than any other land mass on earth, it is vital that we consider each economy in its own terms. Economic performance has varied wildly in recent years, but the correlation between strong economic growth and improvements in governance suggests a way for all of Africa to grow more quickly.

‘It is important to acknowledge the real benefits that governance reform can bring. Improved governance can also help countries identify other opportunities for growth. Although we should move away from a single narrative about the African economy, we can also acknowledge areas of mutual interest and benefit across regional economies.’

Manufacturing has driven the global slowdown

Looking at the recent performance of the global economy, the report also explores the causes of the slowdown since mid-2018. The weakness appears concentrated in the manufacturing sector, with purchasing managers indices for the US, China and the euro zone, in particular, declining.

Mike Jakeman says, ‘There are two interrelated stories here. The first is the effect of the US-China trade conflict, which is causing disruptions to supply chains suppressing appetite for trade. This is bad news for Europe, especially, which is a big exporter to both the US and China.

‘The second is the Chinese government’s attempt to deleverage its highly indebted corporate sector, which is likely to have exerted downward pressure on its own manufacturing output and those of its main suppliers. However, the cooling effect of the trade war on the economy has led the government to prioritise its GDP target of 6-6.5% over its deleveraging programme.

‘This short-term relaxation of policy, especially if combined with an armistice on trade, could be enough to re-inject some momentum into the global economy in the remainder of 2019.’

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Africa: A Rich Continent and Poor Policies

Mohamad Zreik

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Africa, the land of good, peace and natural wealth that is unparalleled, but under the circumstances, this continent have been under the yoke of foreign colonialism for long and bitter years, suffering from the problems of poverty and deprivation and being classified as “third world.” The situation is even worse with the epidemics and serious diseases that have plagued this continent, in addition to the endless wars, related to religious, political and societal divisions. This bad situation, which is unacceptable in the 21st century, urges the world to take responsibility.

The African continent has been a source of wealth for many who are “not African.” The African continent has been used for many years to build nations outside the African borders and serve the world’s people. In addition to the external hand that dominated and took over the resources of African land, the only thing that is incredible “rich land and a poor and hungry people.”

Africa is rich in gold, diamonds, chromium, cobalt, platinum and uranium. Some African countries such as Algeria, Angola, Congo Brazzaville, Gabon, Libya and Nigeria, for example, rely on the export of crude oil for about 70-95% of foreign exchange. Botswana relies on exporting diamonds for 80% of foreign exchange, as well as Zambia, which relies on copper exports for 80% of foreign exchange. Niger relies on uranium, which accounts for 96% of foreign exchange. But there is another problem: the inevitability of dependence on the outside because of the link between the economy of these countries with import and export, specifically its connection with Europe and America. Talk of full African independence will not be realistic because of the economic ties of the Great Powers.

Africa is also dependent on many foreign countries for its undeniable debt, aid and donations. Africa is not yet ready to pursue a policy of giving up foreign aid and talking about Africa, self-sustaining and not in need of other countries. The debt problem in many countries of the African continent has reached high rates. The average ratio of debt to GDP in sub-Saharan Africa increased from 51% to about 100% during 1982 and 1992.It is therefore necessary to develop an economic strategy for the African continent that makes it a fully sovereign geographical area. Since sustainable development begins with economic growth, all the problems of the continent will be resolved if a viable economic policy is pursued. A large proportion of Africa’s debt comes from the colonial powers themselves, such as France and Britain.

The endless wars in many African countries are a source of constant tension, making the African continent classified as politically and security unstable area, which threatens the tourism sector and the pace of economic growth and makes the investor prefer to invest in other areas more secure and stable. African countries are required to pursue a strict security policy that works to root out extremism and rein in terrorist and subversive groups that have brought destruction, devastation and economic decline to the country.

The extreme poverty that afflicts the African continent is due to unfair policies that do not take into account the criteria of community development in many cases, and most importantly, the accumulated external debt that hinders the process of social and economic development. As the African continent, as mentioned earlier, is a region rich in natural resources, it is therefore important to make use of these resources, and not to leave them to foreign countries, in other words, not to allow the African continent to be an open and unregulated territory.

The most serious diseases in the world today are rampant and widespread in the African region, such as malaria, kidney disease and AIDS, which plague African people. International organizations and bodies such as the World Health Organization are now required to work, move and intensify efforts to reduce the prevalence of these diseases.

The illiteracy rate is very high on the African continent and this is unacceptable nowadays. As there is no way to progress and develop except in education and the dissemination of the culture of science, International educational institutions should focus on the poor and educate them and increase the proportion of schools and universities in bilateral and collective cooperation.

This miserable situation in the African continent has long led many to think of emigration or resort to other countries. But most of them live in difficult conditions in foreign countries, and the phenomenon of asylum and intensive migration leads to the abundance of cheap labor in foreign countries and provides them with difficult jobs that are not easy for the countryman to carry out.

The African continent is rich in natural resources and has surplus labor, which is sufficient to achieve self-sufficiency if accompanied by a sound economic and social policy. Therefore, African governments and the African Union must take unified decisions and not follow the policy of dependency because such a policy will only increase the African continent deficit and economic and social decline.

The governments of the African countries should make their relations with the countries of the world friendly regardless of the financial or military power of the other side so that the African countries will not remain in the position of the weak. All this indicates that African countries are capable and need only to unite and work on sound policy. Poverty in African countries can be solved if natural resources are exploited well and in the interest of African countries and not of other countries.

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Western Sahara: UNSC resolution draft and calls for neighboring commitments

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In view of the adoption of the MINURSO, issues, and circumstances that have been associated with the Issue of the Sahara conflict resolution case have still in processing. Current discussions have studied upon the main functionalism of the forum and its effectiveness and productivity in managing its performances over the conflictual region.

Due to this, the recent budget cost of the UN mission is given as a new financial deposit for MINURSO in Sahara territory. The interests of the UN Security Council resolutions on the renewal of financial process to the conflict is to bring regional stability and securitized MINURSO’s work field under international UN standards, and preserving the safety of its members coinciding with the current political uprising in Algeria and Polisario’s camp. This is quite superficial that the pressure poured by the superpower powers on the commitment to frame up an territory for the settlement, particularly the United State side, which was intentionally supervised to decrease its contribution to the United Nations, and the Secretary-General and his envoy to set a time frame in six months to cope with the Sahara case.

Yes, Resolution 690 had brought the result of the ceasefire and how MINURSO guided the division of the settlement plan process and the observing of the cease-fire. Meanwhile, new missions were added to the adjustment file, especially, the implementation of the voter identification and registration program after the full establishment of the identity confirmation committee to handle the referendum, over the introduction and presentation of the lists and the holding of the proportion.

But the inefficiency and lack of the UN mission to designate a clearly specified scope was the first sign of failure to terminate the file of the Sahara conflict, making the application impossible and contrary to the rules of rational sought to avert anarchy and maintain stability in an open arena on all geopolitical potentials and variables.

As noted, the MINURSO Mission’s relationship with the parties to the Western Sahara conflict has been moved to the sphere of disagreement, and has pushed to Morocco’s call for MINURSO personnel quit and suspend the liaison office of the United Nations Mission in Sahara (UNSMA) in Dakhla, as long as the failure of the approach adopted to hand over different possibilities, scenarios and go beyond the established and beyond-of the Mission, the failure of the latter was seen in mishandling the process of independent human rights monitoring in 2014 that goes beyond the usual tasks of peacekeeping missions. Though this indicates a symbol of its failure to engage in biased approaches, risky alternatives, weak ability to rearrange the process of the settlement, and how to maintain it. And also currently discussed the preparatory talks in Geneva, I and II, with the decisions of the mission and the envoys of the Secretary-General of the United Nations during the past periods, and argued the framework of the settlement plan to be implemented since the resolution 690 and possible alternatives and initiatives proposed, as well as recording abuses and inequality management of the cease-fire since the early nineties of the last century .

To certain extent, the transformations in the international sphere have overcasted the duty of the mission in Western Sahara and the adjustments seen by all the parties engaged in the Sahara issue, both advocating the Polisario Front, particularly after the Kingdom of Morocco back to the African Union and the enhancing of European and Moroccan strategic cooperation, as well as the progress of economic and financial openness with many states such as China, Russia, and India. Algerian leverage declined due to the financial crisis caused by the descend in oil and Gas interests, and the current political situation, with a constitutional vacuum, as an outcome of social mobility. And made it the fully complicated case in Algeria on the road map to be achieved, due to the new role and direct the Algerian party and the Mauritanian in the Western Sahara case as involved in seeking a suitable resolution within the scope of the settlement.

Accordingly, the real motives provided by the MINURSO mission in the Western Sahara in relation to the settlement project and the deterrents encountered in past stations, when they exceed the powers granted to them, the involved parties in conflict thought the Mission officers would be more professional to provide reliable plans and decided to reach rational peace and security over the territory of Sahara region, but it is supposed to evoke the developments and changes taking place in the regional and international environment, which seeks to end up the case, and stop the suffering of many individuals in the Tindouf camps.

In both theory and practice, it is widely held that the applicable existence of MINURSO in the Western Sahara conflict has been focused on two key aspects: First the time framework of the mission, and the mechanism of observing the conflict circumstances over the region, also the manner in which the case is handled by the United Nations, which is based on the quality of the events contained in the decisions of the UN envoy, and the pressure of members of the UN Security Council, particularly the United States. Who given strong positions in the statements of US National Security Advisor John Bolton and Senator Jim Anheoff.

The second aspect is rational, based on the right to develop a settlement policy, move away from rigid unreliable decisions, and take a real understanding of the geopolitical changes in the Sahara region and beyond in order to achieve security and stability of the Northeast region, and more importantly to develop the linkage of solidarity of the Maghreb integration based on institutional charter.

Equally, it is very crucial to understand why Russia and South Africa refused to vote for Sahara resolution text in the UNSC a few days ago, pointing out that the text resolution was prepared tried to ensure the political unity of the members of the Security Council on the subject of Western Sahara. Unlike the permanent and non-permanent members of the Security Council showed their positions after the adoption by the UN Security Council of the extension of MINURSO’s mandate in Western Sahara until October 31, 2019, with the support of 13 members are willing to end up this longstanding conflict in Africa.

Yet, The representative of the United States of America, which is adapting the text resolution, is pleased with the support showed by the UN Security Council for the efforts of Horst Köhler, the UN envoy to Western Sahara, to make a lasting and acceptable solution by both parties to the conflict.

In Foreign affairs doctrine, ” consensus ” refers to the accepted plan in which the adjustment of conflicts towards negotiation is only the legitimate way. The United States sent straightforward strong messages to Algeria. “Neighboring states should cooperate seriously due to achieve a political solution. This strong language has helped to make progress in today’s consultations with The kingdom of Morocco, Algeria, the Polisario Front, and Mauritania,”

For its part, France restated its strong support for the autonomy initiative, which proposes The Kingdom of Morocco to resolve the Sahara conflict, outlining autonomy as “the only basic, realistic, credible and trustworthy solution that can shape the keystone of the forthcoming negotiations.”

True, France showed its regret that the mandate of the MINURSO had not been improved for an entire year instead of six months, calling on the Security Council to renew to the old version of the forthcoming resolutions. France also pointed out the need for the engaged four parties to the conflict to continue in the same format, organizing the third session of the consultations.

South Africa, which abstained in favor of the resolution, showing its disapproval of its contents.”The resolution contains many aspects that are not fit for UNSC resolution. It is also unbalanced and does not accurately reflect the efforts of the parties, Morocco and especially the Polisario Front,” Indeed, South African is known an anti-Rabat stance for any resolution come to settled down Western Sahara conflict. Also, For its part, Cote d’Ivoire praised the efforts and achievements of the Kingdom of Morocco to end the Sahara issue, particularly the autonomy plan, which it characterized as “serious and solid for negotiations among the parties to the conflict.” The Côte d’Ivoire had hoped that the mandate of the United Nations Mission would be renewed for a full year instead of six months.

In effect, this is what the Kingdom has expected the outcome. The Russian position, which fully rejects the UN Security Council resolution, declared its rejection of the text resolution submitted by the United States, on the basis of which the Security Council resolution was passed. The Russian representative highlight that “amendments to the resolution go in an unbiased direction,” calling for “the determination of criteria on the basis of the ultimate aim of self-determination for the peoples of the Sahara.”

Having indicated that it would maintain to play a balanced role among all parties to the conflict in order to reach a mutually rational solution, Russia pointed out that the continuation of the current circumstances in Western Sahara could be used by jihadists groups, which would jeopardize the region militarily and politically.

As a strategically important Arab Middle East countries of Morocco, Kuwait, as a non-permanent member of the Security Council, welcomed the decision of the Security Council and Morocco’s efforts to close the Sahara conflict file. The representative of Kuwait points out that the final resolution of the conflict would give the progress of the peoples of the Maghreb region and upgrade the security and stability of the neighboring States of the region. Therefore, Kuwait also restated its support for the autonomy plan in the Moroccan Sahara, showing the need to respect Morocco’s sovereignty and territorial integrity, describing Morocco’s serious and credible solutions as well as the role played by the National Human Rights Council in Dakhla and Laayoune and Rabat’s cooperation with the UN human rights bodies.

The Security Council resolution highlighted the commitment for a rational, practical and lasting political solution to the case of Western Sahara on the sense of consensus and fully supported the efforts of the Secretary-General and his Personal Envoy to sustain the process of new negotiations to resolve the issue.

So far, the resolution noted the significance of the Personal Envoy to invite the Kingdom of Morocco, the Polisario Front, Algeria, and Mauritania to meet again and welcomed their commitment to keeping to participate in this settlement process in a spirit of commitment and compromise to ensure success.

Additionally, The Security Council called upon the parties to restate negotiations under the supervision of the Secretary-General without preconditions and in good faith, taking into account the efforts made since 2006 and subsequent developments with a view to reaching a just, lasting and mutually acceptable political solution that would guarantee the self-determination of the people of Western Sahara.

Security Council stressed the importance of renewing the parties’ commitment to enhancing the political process, in preparation for deeper negotiations, and encouraged the neighboring countries especially Algeria to make important and effective contributions to the resolution process. In the end, the resolution advocated both parties and neighboring countries to engage seriously with each other ongoing to solve this conflictual issue and promote better implementation of UN mission in Western Sahara territory.

In summary, the classical Security Council resolution draft for MINURSO extension in Western Sahara doesn’t give any realistic solution to the issue, just a postponement. As a matter fact, UNSC needs to updates its time framework and implementation measures through calling all involved conflict parties, especially Algeria and Polisario Front to speed up their commitments and engagement in Moroccan Autonomy plan which is seen internationally more acceptable and more suitable for settling down the Western Sahara conflict.

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