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Iran, China and the Djibouti experience

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With the escalation of US sanctions against Iran after the withdrawal of Donald Trump from the nuclear deal between two countries and lower oil prices in world markets, Iran’s oil revenues, which is the main source of its income, have fallen sharply and has increased inflation and recession in the country. To deal with such problems; Iran is seeking new incomes to expand its cooperation with China and is currently seeking to finalize a 25-year trade cooperation agreement with China.

However, for China, this is an opportunity to consolidate its economic influence in Iran more than before, and more importantly, it may be able to overcome the new trinity of power, which includes India, the United States, and China.

China and India have long sought to expand their markets in Asia. China has already found a place in the markets and politics of the African continent.

China’s is drowning developing countries in debt and. It has had successful responses in countries such as Djibouti and Sri Lanka, and here is a brief look at China’s experience in Djibouti. Where China established its first foreign military base.

The Djibouti experience can give us a prospect of the Iran-China agreement. Djibouti is a small country with a population of nearly one million people located in an area called the Horn of Africa. Djibouti is close to the Middle East, located on energy transit routes and on the shores of the Bab al-Mandel Sea, all of which have made the country geopolitically attractive to the west and east.

On January 8, 1979, China and Djibouti signed an agreement. Since then, China has offered its aid projects to Djibouti in the form of building a stadium, a monument, housing projects, a foreign office building, and several other projects.

Cooperation between the two countries began in 1982, and by the end of 2002, 478 cooperation agreements had been signed. Chinese companies like “the China Civil Engineering Construction Corporation (CSCEC)”, “the China Civil Engineering Construction Corporation”, and some other Chinese companies have involved in the Djibouti projects.

In 1998, China and Djibouti signed a trade agreement between the Government of the People’s Republic of China and the Government of the Republic of Djibouti. The deal increased trade between the two countries to $ 49.83 million in 2002, of which $ 49.81 million was China’s exports and 

$ 20,000 was Djibouti’s exports.

Two months after the opening of the port of Durala, China and Djibouti celebrated again for the completion of another building: China’s first military base outside the country, just a few kilometers from the port of Doraleh. Doraleh military facility built for the People’s Liberation Army (PLAN) navy It is also reported that at least one of the port docks is used exclusively by the Chinese. PLAN is now able to overlook one of the world’s most important trade zones: the Gulf of Aden and the Strait of Bab al-Mandeb, where it is estimated that up to 20% of world trade passes from there.

According to the Africa Report, Djibouti’s spending on port and rail projects is estimated at $ 12 billion, while the country’s GDP in 2017 was only $ 1.85 billion. This variance prompted the IMF to warn about debt stability in the country.

In 2018, Djibouti President Ismail Omar Guelleh called the Djibouti International Free zone, a $ 3.5 billion Chinese-funded investment, the hope of thousands of job seekers.

“Yes, our debt to China is 71% of our GDP,” Djibouti Foreign Minister Mohammad Ali Youssef said in a phone interview during a meeting in New York.”But we needed that infrastructure. It was natural that we increased our cooperation with China; Neither the United States nor Europe was ready to build the infrastructure we needed. We are looking for the progress of the country and the well-being of the people.”

In 2019, the ratio of the country’s total debt to its GDP exceeded 100%. A large portion of these debts was created by China to improve its ports and various investments. Djibouti’s debt to China exceeded what Djibouti could afford it.

Critics of Chinese debts claim that vulnerable and developing countries fall into China’s debt trap, emptying government coffers and creating a generation of taxpayers with giant bills, and In case of non-repayment of debts, Chinese banks will take ownership and control of their structures at strategic points.

Although African governments deny such an occurrence; This is what happened in Sri Lanka. In 2017, Sri Lanka gave the Chinese a large port after failing to pay its debt to them. The Sri Lankan government borrowed $ 1.5 billion from China to develop the port of Hambantota, which failed to repay, and to reduce its debt burden, provided it to China under a 99-year contract, and the company took over the port. CMport is; The same company that contracted to build the port of Doraleh!

Chinese merchants own a 23.5 percent share in a Djibouti holding company related to the Durala port terminal, including the Doraleh dry port and the Doraleh multi-purpose port, the latter of which was built with a $ 580 million loan from the Chinese company Eximbank.

Overall, according to research by Ernst & Young, Chinese companies doubled their investment between 2014 and 2018, spending $ 72.2 billion.

According to Johns Hopkins analysis, African countries have borrowed about $ 130 billion from China since 2000, and the amount of loans has tripled since 2012.

Djibouti officials, however, have always indicated that they have a good ability to repay their loans and will maintain control over these ports.

The head of the Djibouti Ports Fund, Abu Bakr Omar Hadi, said the money came mainly from China, but that we had our assets.

Of course, Djibouti cannot be compared to Iran because Djibouti does not have the capabilities of Iran for monetization and even needs to import to supply its basic needs. While Iran has great potential in many fields like energy, agriculture, tourism, and the like, these days all of these capabilities are overshadowed by unprecedented political relations and unprecedented sanctions, and as Iran’s hostility to the West deepens, it’s become more possible for Iran to trapped in Eastern debt.

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Hydro-projects in Africa: Interview with Vladislav Vasilyev

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As widely known, Russia plans to hold the second Russia-Africa summit in 2022, as a further step to make inroads into Africa – that comprises a diverse collection of countries, each with its own set of development setbacks and challenges. The political culture and investment climate are, in fact, diverse but are also important forces in determining the levels of the economy.

As it aims at raising its economic profile, Russia is strongly encouraging Russian business leaders to prioritize sustainable development-oriented projects as a practical step towards raising the living standard of millions of impoverished population in Africa.

For instance, JSC Institute Hydroproject promises to transfer its experience in advanced and innovative technologies, and efficient use of water resources, especially ways of managing and ensuring reliable hydro-energy supply. JSC Institute Hydroproject can further help in the accelerated social and economic development in Africa. 

In this interview, Vladislav Vasilyev, Head of International Projects Department at JSC Institute Hydroproject, discusses his company’s efforts directed at establishing hydro-projects in Africa, further touched on the state support for Russian business in Africa. Here are the interview excerpts:

– How important is African market for your company, JSC Institute JSC Institute Hydroproject?

JSC Institute Hydroproject has vast working experience in African countries wherein we have done designs of HPPs in Algeria, Angola, Ethiopia, Guinea, San Tome and Principe, Tunisia, Morocco, Ethiopia. We would like to separately emphasize about the masterpiece high class engineering of the Aswan dam on the Nile river in Egypt. JSC Institute Hydroproject management has deep knowledge of the African market.

– What are your expectations from African governments, industrialists and agribusiness directors in cooperating on products and services of your company?

African countries are among the fastest growing in the world. About one and half billion people live there, and that constitute approximately 20% of the world’s population. At the same time, there is a big demand in infrastructure development. Even the United Nations, forming the “Sustainable Development Goals” emphasizes the high development needs of the African region.

The African market is a big challenge in all areas of water use, from land reclamation to large and complex knowledge-intensive industries, not to mention the usual but much-needed electricity generation. In this regard, we see many opportunities for cooperation with governments, industrialists and in the huge agroindustry.

– Do you envisage any key problems and impediments to developing business, especially in the sphere of agriculture in African countries?

Difficulties and obstacles are possible – this is life. However, we can look at things differently, and see the obstacles as opportunities and incentives. For example, the lack of land reclamation networks makes it possible to build and develop a water delivery system that can become a link to strengthen the local neighboring countries and peoples.

The construction of a hydroelectric power station requires a channel with a large water pressure, which means the presence of a water basin, a reservoir. This will not only provide the local region with electricity, but also provide water. Here are a number of issues that are being resolved with the participation of the design and survey and research school of such a company as JSC Institute Hydroproject.

– How competitive do you see African market for Russian companies, generally, and for your company, specifically? From the previous experience, what challenges Russian companies and investors face in Africa?

There are several challenges, which are still in place for Russian engineering companies on African market. Russia is still not a member country of African Development Bank. AfDB announces many tenders, which are closed to companies from non-member countries. Still it is only a few African countries, who signed an agreement on the avoidance of double taxation with Russia.

– Business needs vital information, knowledge about the investment climate and so forth. Do you think there has been an information vacuum or gap between the two countries?

In my opinion we can talk about the rapprochement of the positions of Africa and Russia, the formation of new and strengthening of long-standing ties. This is explicitly noted, for instance, by Russian Foreign Minister Sergei Lavrov, and Head of the National Chamber of Commerce and Industry of Uganda, Olive Kigongo.

Joshua Setipa, Managing Director of the United Nations Technology Bank for the Least Developed Countries, says of the importance of high-tech companies: “It is important for us to continuously develop our partner network and establish cooperation with organizations that can help and support less developed countries with their technological and innovative potential. I am sure that working in Russia and, in particular, at the events of the Roscongress Foundation will help us to use the country’s opportunities for the benefit of others.” He said so at the recent Russia-Africa summit in Sochi.

– In your opinion, does the forthcoming second Russia-Africa summit planned for 2022 hold an opportunity for raising the level of investment and business engagement with Africa?

Russia-Africa summit is unique platform that is expected to bring together corporate business directors and potential investors from both regions – Russia and Africa. We can simply agree that investments are always possible, and Russia is highly interested in them. This is also a state and business interest. Such people and companies are also among our partners. 

According to the achievements of recent years – this is not only the First Joint Russia-Africa Summit, but also during many previous bilateral forums, it is important to say that cooperation in the business sphere is just gaining momentum.

Now there is a lot of work to be done, including a well-structured and well-coordinated policy for Russian business, restructuring foreign policy and supporting economic circles – with African politicians, business people and residents of African countries. It is necessary to cooperate between scientific, technical, humanitarian, information, and digital platforms, and ultimately to develop common approaches for the implementation of our upcoming joint projects.

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Nigeria- Ghana Trade War: Where to from here

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Several months after a series of bilateral talks between the Nigerian government and authorities in Ghana aimed toward addressing the nearly a decade-long controversy that led to the closure of Nigerian traders’ shops in Ghana, the problems have not been resolved. Hundreds of shops belonging to Nigerian traders are still under lock and key; while most of the owners are stranded. A number of them said they beg to feed, as many of them remain reluctant to return to Nigeria despite a window created by the Nigerian government to facilitate their safe return.

What has happened so far?

President Muhammadu Buhari stunned Nigeria’s neighbors when he unexpectedly closed the country’s land borders to goods trade, saying the time had come to crush contraband trade. The land borders with neighboring Benin, Cameroon, Chad, and Niger were closed to goods in August 2019, with partial openings and closings for people prompted by the coronavirus pandemic throughout 2020.

The center of the lingering controversy was a $1 million levy imposed on Nigerian traders and other foreign investors to pay Ghana Investment Promotion Centre (GIPC) before the shops would be opened. The conditions set by the Ghanaian authorities had triggered a debate in Nigeria and within the African sub-region, which many considered as a breach of ECOWAS’ trade protocols.

However, on 19 June 2020, armed men entered the compound of the Nigeria High Commission in Ghana, and destroyed buildings under construction. Nigeria’s foreign minister Geoffrey Onyeama described the vandalism as “outrageous and criminal” and urged the Ghanaian authorities to make sure that they protect Nigerian diplomatic buildings. Nigerian residents in Ghana held a demonstration calling for Nigerian government to take action. Although a piece posted on the Nigerian High Commission website in Ghana places responsibility on a businessperson who had previously claimed he owned the land where the building was being built, Nigerians living in Ghana still took to the streets to protest for their protection. The Ghanaian foreign ministry also promised that security had been “beefed up”.

Flashback on bilateral talks

The Nigerian Minister of Foreign Affairs, Geoffrey Onyeama, had last year summoned Ghana’s Chargé d’Affaires to Nigeria, Ms. Iva Denoo, with whom he discussed the closure of the Nigerian-owned shops in Accra with a view to addressing the problem. Onyeama described the action taken by the Ghanaian authorities as politically motivated. However, his Ghanaian counterpart, Shirley Ayorkor Botchwey, countered his allegation, insisting that the crackdown was on illegal foreign retail businesses in Ghana.

Botchwey, described in a tweet by Onyeama, tagging Ghana’s policy on retail business as a politically motivated move as ‘most unfortunate. She said the Ghanaian government did not target any particular nationality in the exercise. “Countries sometimes take tough decisions in order to enforce their laws, just as Nigeria took a decision to shut its borders to stop smuggling, despite its impact on ECOWAS member countries,” she had said.

Is Ghana innocent?

While it’s easier to quickly point a finger at Nigeria as the aggressor, given it’s the bigger country who opted to shut its borders, therefore creating a ripple effect in the smaller economies, Ghana also has laws that clash with ECOWAS protocol, which ensures the free movement of the community’s citizens, as well as free and fair trade. The 2013 Ghana Investment Promotion Centre Act (GIPC) is one such Act. It prioritizes the interests of Ghanaian traders and business owners by designating certain only its citizens, whereby foreigners wanting to set up shop in Ghana must have a minimum equity capital of $10,000, run enterprises. That alone limits the number of foreigners – particularly from the poorer surrounding West African countries – who can successfully work in Ghana.

Where to from here

While tariffs can result in individual ‘winners’, a full trade war, protectionism, and a reversal of decades of globalization would damage economies across the board, hitting emerging markets particularly hard. COVID-19 has arguably pushed many countries towards concentrating on themselves, as many economies have been negatively affected in an exceedingly shocking manner. Although few expect to see the kinds of tensions witnessed in the 1980s when Nigeria expelled two million undocumented West African migrants, half of whom were from Ghana.

Key takeaways

  • Nigeria border closure weakened trade across West Africa
  • A full trade war and globalization reversal will benefit nobody
  • Nigerian traders have suffered the most; Ghanaians also faces pain
  • Traders have seen big losses.
  • Demolition of Nigerian High Commission building in Accra.

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H.E. President John Mahama Appointed As AU High Representative for Somalia

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The Chairperson of the Commission, H.E. Moussa Faki Mahamat, has announced the appointment of H.E John Dramani Mahama, former President of the Republic of Ghana, as his High Representative to Somalia.

As the High Representative for Somalia’s political track, President Mahama will work with the Somali stakeholders, to reach a mutually acceptable compromise towards an all-encompassing resolution for the holding of Somali elections in the shortest possible time.

In fulfilling his mandate, the High Representative will be supported by the African Union Mission in Somalia (AMISOM), to ensure that the mediation efforts and the peace support operation work together seamlessly.

The Chairperson of the Commission calls on the Somali stakeholders to negotiate in good faith, and to put the interests of Somalia and the well-being of the Somali people above all else in the search for an inclusive settlement to the electoral crisis.

This should usher in a democratically elected government with the legitimacy and mandate to resolve the remaining outstanding political and constitutional issues that are posing a threat to the stability of the country and the region as a whole.

The Chairperson of the Commission also encourages all the Somali stakeholders and the international community to extend every support to the High Representative, who will arrive the country in the coming days.

Ambassador Abukar Arman, a former Somalia special envoy to the United States and a foreign policy analyst says there have previously been interventions from neighbors have not brought Somalia the promised peace.

It is clear that no Somali can pursue a political career in his own country without first getting Ethiopia’s blessings. Already, Ethiopia has installed a number of its staunch cohorts in the current government and (along with Kenya) has been handpicking virtually all of the new regional governors, mayors and so forth.

In October 2010, the African Union appointed Jerry John Rawlings as the AU High Representative for Somalia to “mobilize the continent and the rest of the international community to fully assume its responsibilities and contribute more actively to the quest for peace, security and reconciliation in Somalia.”

That however, Ambassador Arman says the former Ghana president and AU Special Representative for Somalia is now assuming his new post with significant diplomatic capital, mainly resulting from the credible work of his fellow countryman, former president, and Special Envoy to Somalia, Jerry John Rawlings.

“On the other hand, he would be carrying the hefty political burden that comes with the so-called African Solutions for African Problems and its cash-gulping record. The concept is taken hostage by African sloganeers and foreign elements eager to advance zero-sum interests,” he wrote me in an emailed message.

Make no mistake, Somalia is held in a nasty headlock by a neighbourhood tag-team unmistakably motivated by zero-sum objective. It is their so-called African solution (not so much of the extremist group al-Shabaab) that is setting the Horn on fire.

According to AFP news report, Mogadishu had been on edge since February, when President Mohamed Abdullahi Mohamed’s term ended before elections were held, and protesters took to the streets against his rule. But a resolution in April to extend his mandate by two years split the country’s fragile security forces along all-important clan lines.

Soldiers loyal to influential opposition leaders began pouring into the capital. The fighting drove tens of thousands of civilians from their homes and divided the city, with government forces losing some key neighborhoods to opposition units.

Under pressure to ease the tension, Mohamed abandoned his mandate extension and instructed his prime minister to arrange fresh elections and bring together rivals for talks. Indirect elections were supposed to have been held by February under a deal reached between the government and Somalia’s five regional states the previous September.

But that agreement collapsed as the president and the leaders of two states, Puntland and Jubaland, squabbled over the terms. Months of UN-backed talks failed to broker consensus between the feuding sides.

In early May, Mohamed re-launched talks with his opponents over the holding of fresh elections, and agreed to return to the terms of the September accord.

Prime Minister Mohamed Hussein Roble has invited the regional leaders to a round of negotiations on May 20 in the hope of resolving the protracted feud and charting a path to a vote. In the meanwhile, the international community has threatened sanctions if elections are not held soon.

Somalia remains the epicenter of global geopolitical and geo-economic competition. Some of the major ones are in a cut-throat competition that further complicates the Somalia conundrum. With its longest coastline, bordering Ethiopia to the west, Kenya to the southwest and the Gulf of Eden, Somalia has attracted many foreign countries to the region in East Africa.

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