Capitalism advanced at a spectacular rate at the turn of the 20th century, as revolutionary strides in containerised shipping made the geographical dispersal of production facilities possible. Capitalism was transformed through the 20th century into one where the scale of capital needed for investments became so great that the banking system was relied upon to extend credit based on the aggregated wealth of their depositors, since individual firms could not supply it from their own resources. As a result, production came to be dominated by finance. The success or failure of monopolistic firms became crucial to the stability of countries in which they were based. As a result, the state machinery in those countries had to be expanded and developed so that it could protect their trade routes, the continuation of colonialism of the 16th to 19th century referred to by Marxists as “Imperialism”.
Into the 2nd half of the 20th century, improved engineering and the growth in air-freight further expanded capacity for faster growth. Multinational companies developed integrated circuits of production in different countries, with each country undertaking a part of the production process, but not making the whole product. For the western countries, capitalism thrived on top of the era of cheap oil. Technological advance, worldwide deregulation and financial liberalisation “liberating” the flow of capital across the world, with vastly improved telecommunication and computerisation speeding up capital flow – further catalysed turbo-charge capitalist growth.
The structure of the capitalist system remains as it has been for 100 years – a few hundred corporations and a handful of countries having a dominant role in the commandeering of the world’s financial and productive resources. The composition of these top companies naturally varies over time with economic progress of countries and their host companies relative to eachother. In 2017, according to Forbes 2,000 top companies, of the top ten companies in the world, China has 4, including numbers 1 and 3, the US has 5 and the tenth is Japanese (Source: Socialist Fight). However, the capitalist consumer class (the bourgeois) is not nation-specific, with tax havens around the world protecting vast stores of personal wealth, notably including various islands in the Caribbean under Royal protectorate.
The breaking-up of the old colonial empires
As an aftermath of WWII, due to the immense cost of post-war reconstruction, the colonial empires belonging to the main European powers broke up through the success of the national liberation movements of the 1950s and 1960s (Alexander and Renton, p.46), enforcing an economic retreat of these imperialist powers (exhibiting a relative and temporary economic decline). This suited the ex-imperialist nations, as they replaced direct colonial control with indirect neocolonial relations to further their economic and political interests. European colonial powers had to come together and work as a regional block as politically they could not afford to individually maintain their direct control over their own overseas colonies, sharing the trading regimes related to their overseas territories consolidated within a new European Common Market, later enshrined within a new European federalist union. The six founder member-states of the European Union agreed on integrating the overseas territories of France, Italy, Belgium, and the Netherlands into the new “European” Common Market, so instituting the process of neocolonial expropriation (the Lome Conventions of 1975 & 1979 sought to ensure duty-free fair prices for primary producers in this “special relationship” with former colonies – later challenged by the WTO). The underlying fundamentals of the colonial trading system were re-established, whereby a system of bulk-buying of commodities produced in the colonies at discounted prices became the norm, whilst the colonies had to pay fully competitive prices for manufactured goods they had to import which were produced in the industrialised North. This situation of commodity prices being driven down on world markets – primary commodities for which countries in the south were reliant upon as their main source of export earnings – remains the basic blueprint of the international economy as it stands at the start of the 21st century.
(i). The post-war Anglo-American consensus:
The United States overtook the British Empire’s role as the leading economy on the world stage after the end of the Second World War. Up to this point, the British had still been the dominant world power in the highly-sought after oil-rich region of the Middle East. The British had used bombs & gas to control Arab dissent first in Iraq, then Palestine, Aden, Egypt, Sudan, and Somalia between the 20s and 30s. One of the first actions of the British in Palestine involved building the 1st Israeli oil refinery in Haifa in 1918 to process oil from Iraq.
The US entered World War I on the side of Britain and France in 1917 on the condition that her economic and political objectives be met, most notably access to oil reserves. In February 1919, Sir Arthur Hirtzel, a top British colonial official, warned his associates “It should be borne in mind that the Standard Oil company is very anxious to take over Iraq” (originally quoted in “Britain in Iraq, 1914-32” by Peter Sluglett, London, 1974, taken from Becker, 2002). With the overthrow of the Ottoman Empire during WWI, after Britain installed the puppet monarchy of King Faisal in the new state of Iraq, the Sykes-Picot agreement divided the country up between Britain, France, the Dutch and the United States. Iraq’s oil was split five ways: 23.75% to each of the colonial powers, with Iraq retaining just 5% of their own oil production (this was how it was to stay until the revolution of 1958). In 1927, the al-Saud family, with Washington’s backing, conquered much of the neighbouring Arabian peninsula. Saudi Arabia came into being in the 1930s as a neocolony of the United States.
By 1949, financially spent after World War II and realising that her Empire had waned, Britain opted for a special relationship with the United States, so as to ensure that she would still achieve her foreign policy goals – albeit in a subordinate role to the new American Empire – to sustain the common and convergent interest between British and American capital. That “special relationship” has continued to the present day, being most explicitly demonstrated in the Middle East – for instance in the joint MI6-CIA coup in 1953 against the Iranian government which had nationalised the British controlled oil industry, and in Iraq, when after the revolution of 1958 which saw the Abdul Karim Qasim regime pursuing a nationalist foreign policy, nationalising British oil interests, the CIA and MI6 masterminded the February 1963 coup, providing the coup leaders with a list of 5000 people (mainly members of the Iraqi Communist Party) who were hunted down and murdered. After the coup, before Baghdad began operations to quell the rebellion of the Kurdish population in the north of Iraq, Britain approved major arms exports to the new Ba’athist regime, such as artillery ammunition, 22 Hunter fighter aircraft and rockets for Iraq’s existing Hunters. The British embassy noted in July 1965 that “Kurdish casualties have been mainly among the civilian population who are again being subjected to considerable suffering through indiscriminate air attack” – from, that is, the Iraqi airforce’s 27 Hawker Hunters and thousands of rockets and other ammunition supplied by the Douglas-Home and Wilson governments. (Taken from “Unpeople: Britain’s Secret Human Rights Abuses”, by Mark Curtis).
The substance of the US and UK’s strategic understanding spread to the extent that most of America’s brutal interventions abroad were given unconditional support by various British governments – from Guatemala in 1954 to Nicaragua in the 1980s (where the military clampdown against the left-wing forces had been financed by the illegal selling of arms to Iran and Iraq). Of course, the UK was the United States’ key ally on the UN Security Council in Gulf Wars 2 and 3. Britain, herself, engaged in many interventions abroad, with the failed invasion of Suez in 1956 proving to be the turning point for British power globally (Curtis, P.21). However, the Anglo-American relationship has consistently steered the operational agenda of the UN Security Council, whilst hypocritically flouting international law (e.g. continuing diplomatic support for repressive governments, pursuing arms exports), and has been at the heart of the neoliberal mandate, which underpins the world trade system, the Bretton Woods institutions (World Bank and International Monetary Fund) and structural adjustment.
The overall goal of American foreign policy after the Second World War was nothing less than control of the international economy. The justification for the numerous interventions abroad were put down to containment of Soviet influence. US documents reveal the true motivations of US post-war policy. Noam Chomsky: “[The] world system was to take the form of state-guided liberal internationalism, secured by US power to bar interfering forces and managed through military expenditures, which proved to be a critical factor stimulating industrial recovery. The global system was designed to guarantee the needs of US investors, who were expected to flourish under the prevailing circumstances”(Curtis, p.10). US aid was explicitly identified as a key component of America’s foreign policy goals, which was largely seen as a means to support economic stability throughout the world by means of encouraging private investment, to prevent the growth of ‘national or international power which constituted a threat to US security’, and to orientate foreign nations toward the US. US policy statements on this subject were very explicit during this time. Former head of the CIA and Secretary of State John Foster Dulles was quoted as saying: “Our so-called foreign aid programme, which is not really foreign aid because it isn’t to foreigners but aid to us, is an indispensable factor in carrying out our foreign policy” (quoted by Curtis, p-85 and taken from a State Department Memorandum of discussion, 25th October 1956, Vol X, p.118). This latter quote eloquently summed up the position; US aid was essentially a taxpayer subsidy to exporters and investors abroad. This was a main trend within the post-war Marshall plan, and has been ever since. Andrew Young, former US representative to the UN, noted in February 1995 that: “we get a five to one return on investment in Africa, through our trade, investment, finance and aid …we’re not aiding Africa by sending them aid.. Africa’s aiding us!” (quoted by Curtis, p.88 and taken from African Agenda Vol. 1 No.2 “A five to one return”, by Patrick Bond, 1995).
As long ago as 1949, a US government study for the NSC stated that the US should find ways of “exerting economic pressures on countries that do not accept their role as suppliers of strategic commodities and other basic materials” (Chomsky, p.122-123). British priorities in the post-WWII international economy were highlighted in a Treasury memorandum of 1945. Spelt out in this document was how “the UK must devise techniques for bringing influence to bear upon other countries’ internal decisions” (Curtis, p-67).
The post-WWII supremacy of the United States in the world economy has involved a mixture of covert action, military intervention and a range of international economic instruments, through the Bretton Woods institutions. An example of covert action (of which they are countless examples) was the installation of Mobutu by the west in the Democratic Republic of the Congo [DRC] (subsequently renamed “Zaire” for a number of years) occurred after the post-colonial leader Patrice Lumumba was murdered after he was leading his country in an anti-imperialist direction. Mobutu was provided with funds to carry on with his corruption as a form of bribe by the IMF, World Bank and the west. In terms of the Bretton Woods institutions, the USA’s manipulation of World Bank and IMF policies in its favour has been historically possible due to the fact that the US remains the major controlling shareholder on the steering committee of both these global financial institutions. Mohammed Daud Miraki: “As the new centre of global hegemony initially in competition with the geopolitical sphere of influence wielded by the USSR, the USA represented a different face of the old hegemonic imperialist powers hidden under the cloak of a new framework and justification – a more sophisticated institutionalised arrangement to confine the less developed countries under political and economic subjugation” (taken from “THE NEW PARADIGM OF FORCED SOCIOECONOMIC UNDERDEVELOPMENT”).
(ii). Neoliberalism – the Broad Policy Dictate behind the Neocolonial Process:
Mark Curtis: “Whilst the 1970s saw setbacks for the West through a series of anti-Western revolutions in the Third World, the 1980s was a decade of rollback with the debt crisis disciplining the Third World and aggressive Western foreign policies under Reagan and Thatcher; the 1990s sealed the success of this rollback with the unhindered promotion of economic liberalisation in the South, especially through the creation under Northern auspices of the World Trade Organisation” (Curtis 1998, p-4).
The North’s capitalist advancement – led by the USA – occurs at the expense of the Neo-Colonial state, a process which is sustained by the fierce worldwide market penetration of multinationals facilitated by the colonisation of neoliberalism (fiscal discipline, combined with an orientation towards privatisation and blind faith in the imposition of financial deregulation), and the one-way traffic of the global “free trade” architecture of GATT (General Agreement on Tariffs & Trade) which largely favours countries in the North due to the latter’s hijacking of rules written into these trade agreements. The colonisation of neoliberalism has been most easily implemented across the board through the imposition of structural adjustment policies – rigid macro-economic policy prescriptions designed to fast-track economies along the path of neoliberal restructuring to encourage the maximum conditions for the prospering of private capital, which mostly goes to facilitate the further growth prospects for multinational trade. With the domination by multinationals and financial speculators (such as those acting on behalf of pension funds for instance) over global commodity markets (80% of world trade takes place in ‘value chains’ linked to transnationals), it is safe to say that world market prices are largely set in the stock exchanges of the North (by 1999, 66% of developing country exports were destined for developed country markets in the USA, Europe and Japan). Meanwhile, financial deregulation and the removal of barriers-to-entry to financial speculation has taken place largely to serve these multinational financial capital investments abroad.
The broad picture which has become established is that freemarket orthodoxy or “neoliberalism” leads to national economies engaging in constantly cut-throat competition, with each economy trying to “out-compete with one another” for both multinational investment and in the shorter term, favourable market approval by investors on the stock-exchange. The result is a continual competitive race-to-the-bottom across the world, in terms of environmental and labour standards. John Bunzl: “The inherent uncertainty of international de-regulated capital markets tends to engineer a kind of paralysis of national economic policy ensuring governments’ adherence only to policies they can be sure will not displease world markets” (from “The Simultaneous Policy” – New European Publications).
The long-term structural effects of the peonage of “Third world debt” in poor countries across the world:
Since the 1970’s, the ‘Third World’ debt crisis meant that in country after country across the developing world, the overbearing, unrelenting pressure to repay (since the level of spiralling debt in relation to national wealth was usually very high due to compound interest), became the driving force that forced these primary-good commodity suppliers to compete with one another, driving down the price of their goods.
In 1997, the United Nations Development Program (UNDP) stated that, in the absence of debt payments, severely indebted African countries could have saved the lives of 21 million people and given 90 million girls and women access to basic education by the year 2000. The All-African Conference of Churches called the debt “a new form of slavery, as vicious as the slave trade.” After 20 years of SAPs, 313 million Africans lived in absolute poverty in 2001 (out of a total population of 682 million), a 63% increase over the 200 million figure for 1994. It must not be forgotten that after the 2nd World War, Nazi Germany agreed to spend only 3.5% of its export income on debt payments. Germany argued that anything higher would be “unsustainable”. As stated in the previous chapter, up until the summer of 2005, the world’s creditor nations, including Germany, were still demanding (as they had been for years) that the world’s most under-developed nations spend up to 25% of their export incomes on debt payments. For instance, up until 1996, Mozambique has spent US$1O7 million every year servicing its so-called debt. In contrast, Mozambique was spending US$2 per person per year on health and US$4 on education.
After years of prevarication, the 2005 G8 summit in Scotland gave commitment to long overdue respite of 100% debt relief for Burkina Faso, Ethiopia, Ghana, Mali, Mauritania, Mozambique, Nicaragua, Niger, Rwanda, Senegal, Tanzania, Uganda and Zambia in-return for adhering to the ‘Heavily Indebted Poor Countries’ (HIPC) initiative of the World Bank and IMF (go to the section “The legacy of Third-World debt, the myth of trickledown & the maintenance of the status-quo” in Ch-4 for critique of how the HIPC is a fait-accomplie which renegotiates national economies into continued subjugation and ultimately, the continuation of further debt entrapment). But many poor countries in Asia and Latin America (for example, Jamaica and El Salvador) did not have debts written off because their income per capita was too high to meet the IMF and World Bank criteria. Others, such as Bangladesh, did not qualify for cancellation because their debts were seen as sustainable.
Structural Adjustment – neoliberal authoritarianism
The structural adjustment programs (SAPs) imposed by the IMF and World Bank on 36 African countries for over 15 years since 1980 devastated the continent, decimating national economies and health and education systems. SAPs offered loans on condition that governments drastically reduce public spending (especially on health, education and food subsidies) in favour of repayment of debt owed to Western banks, increase exports of raw materials to the West, encourage foreign investment and privatise state enterprises; the last two steps mean selling whatever national assets a poor country may have to Western multinational corporations.
Over 30% of Africans suffer from malnutrition, and around half are without safe drinking water. Health care spending in the 42 poorest African countries fell by 50% during the 1980s. As a result, health care systems have collapsed across the continent, creating near-catastrophic conditions.
More than 200 million Africans have no access to health services, as hundreds of clinics, hospitals, and medical facilities have been closed. This has left diseases to rage unchecked, leading most alarmingly to an AIDS pandemic. More than 17 million Africans have died of HIV/AIDS, which has created 12 million orphans.
Between 1986 and 1996, per capita education spending in Africa fell by 0.7% a year, on average. At least 40% of African children are out of school, and the adult literacy rate in sub-Saharan Africa is 60%, well below the developing country average of 73%. More than 140 million young Africans are illiterate.
SAPs transferred $229 billion in debt payments from sub-Saharan Africa to the West since 1980. This is four times the region’s 1980 debt. Like the wars, SAPs also help keep raw material prices low by enforcing the expansion of such exports to the West. The value of primary African exports has dropped by about half since 1980.
Structural Adjustment Policies – Sapping the Poor
Quote from JUBILEE SOUTH PAN-AFRICAN DECLARATION ON PRSPs Kampala, 10-12 May 2001 (signed by 39 organizations representing several pan-African and regional networks and civil society groups in 15 African countries. It is also signed by the World Council of Churches):
“The World Bank and International Monetary Fund (IMF) have produced their Poverty Reduction Strategy Programmes (PRSPs) within the context of corporate globalisation. This process is being driven by and for the giant transnational corporations (TNCs) and global financial forces. These utilise the economic, political and military powers of their governments, and the World Bank, IMF and World Trade Organisation (WTO) to impose policies on the South and to restructure and run the world to serve their interests“.
The widespread imposition of Structural Adjustment Programmes (SAPs) by the IMF and World Bank have emanated from and have been intrinsically inter-connected with the debt-crisis (i.e. being as they are policies conditional upon re-negotiation of debtor nations’ loan repayment schedules). These rigid macro-economic policy prescriptions, which by the 1980s had become the accepted doctrine of the International Monetary Fund and World Bank, have for a long time been based upon the deregulatory, anti-inflationary austerity policies of “monetarism”- first associated with the Thatcher and Reagan era. The World Bank and IMF largely took over responsibility for most of the “bad debt” incurred by the “Third World” countries by the mid-1980’s. Much of this debt was initially owed to private banks like Barclays, Credit Lyons, Chase Manhattan etc, but the IMF and the WB moved in and ‘loaned’ money to a wide range of countries who were about to default on these loans. This saved the big “private banks” from disaster, and gave the IMF and WB a position of overwhelming power that they have never relinquished.
The austerity programmes of governments and the IMF and World Bank have been based upon a combination of macro-economic deflationary policies of interest rates and fiscal restraint (holding down government expenditure), with holding down exchange rates (so as to encourage cheaper exports and so, improve balance of payments and national wealth). It is a rigid interelationship when one considers that countries rendered more dependent upon certain imports such as manufactured goods (after state-protection of import-substituting industries have been removed), have to withstand unnecessary deflationary pressure to hold down prices, where there is upward pressure on import prices from holding down exchange rates. Or, in other words, inflation targets are sought with the interests of financial capital in mind rather than the domestic economy who could possibly live with abit more flexibility in the policy arrangement. Together with across-the-board privatisation and the enforcement of other neoliberal policies, the crude science of relying on this policy framework as the main platform for economic growth, has been tough-going. However, in terms of the neoliberal agenda and in terms of the ‘one-size-fits-all’ way it has been executed across the globe, it has amounted to a reductionist logic that has been taken to an insane extreme. This was also the case with the way the IMF and World Bank funded more and more projects for cash-crop plantations for countries’ agricultural export sectors whose export values continued to fall as increased production of a narrow-range of agricultural products was pursued across the world and encouraged by the WB and IMF in country after country. Furthermore, the development model being promoted through the World Bank and IMF which discourages state support for protected domestic industrial sectors and land reform is contrary to the example of those countries who have developed fairly successful economies such as South Korea, which have been based on systematic state intervention in the economy.
Back in the 1980s, the World Bank had reasoned that the main obstacle to economic growth in developing countries, particularly in Africa, during the 1970s and first half of the 1980s had been interventionist governments and their tendency to set prices which discriminate against agriculture, plus excessive government expenditure (on items such as government employees, defence and state pensions). In Sub-Saharan Africa, the World Bank identified the cause of the poor long-term economic performance of national economies as being attributed to the gearing of resources to import-substituting industrial sectors, whose productivity levels did not justify the levels of protection they received from taxpayers and which acted as a tax on exporters, by raising the cost of local inputs. This phenomenon stemmed from bureaucratic governments from the cold-war era, lacking in technical, managerial or entrepreneurial skills. In addition to this, the World Bank also cited governments’ interventionist policies in regard to setting prices as being detrimental to the continued growth of the agricultural sector. The World Bank recommended the dismantling of parastatals in the agricultural sector (local marketing boards) which set maximum prices for staple foods and commodities. However, to examine the implications of this policy, observing the case in point of Malawi, a major contributory factor to the extent of the 2001/2002 famine in that country can be traced back to the IMF’s insistence on the privatisation of parastatals that managed national grain reserves to protect people from fluctuations in food production, whereby the new privately-owned National Food Reserve Agency formed in 1999 started out severely undercapitalised, borrowing from commercial banks to meet its running costs (Briefing Paper on the Food Crisis in Southern Africa, by Action Aid UK, 2002). This preceded a chain of events that led to the selling of the whole 175,000 metric tonnes of strategic grain reserves, a few months before the regional drought in Southern Africa kicked in and people started dying of hunger and hunger related diseases (“It’s the Banks wot done it”, by Donald Mavunduse in Red Pepper, Sept 2002). Action-Aid commissioned a report into the underlying causes of the famine in Malawi, concluding that the crisis was the result of “policy failures at the domestic and international level” (“State of Disaster: Causes, Consequences and policy Lessons from Malawi”, by Stephen Devereaux [IDS], June 2002).
Michael Lipton in the Development Policy Review (1987-88): “The World Bank has overstated the economic biases against farm product prices – not recognising that they are only one factor among many that discriminate against rural areas”. Factors such as investment in irrigation, the state of localised institutions of credit, infrastructure and research and development in rural technologies and new plant breeding for non-export cash-crop varieties are also highly important. However, in their advocacy of policies to reduce government spending, the World Bank did not recognise that reductions of expenditure per-say across the board would affect rural areas disproportionately more.
The wholesale squeeze on government spending is made worse by the seepage of debt-repayment, rendering the economic fundamentalism of neoliberalism akin to the treating of a malnourished cancer victim with chemotherapy – in that the squeeze on long-term investment is rather analogous to the killing of some of a cancer patient’s healthy functioning cells alongside the elimination of the cancer, a process which would be far more debilitating and painful for a patient whose biological immunity was not functioning as well on account of his/her not absorbing the minimum daily requirements of nutrition. Such has been this intensive implementation of free-market discipline in these debt-riddled, immaturely developed market economies. At the same time, in terms of the primary sectors which the developing world still depend upon, this wide-sweeping free-trade policy of removal of tariffs, subsidies and import controls (further deepened with WTO rules) as it has been implemented across the developing world, pursued as part of a policy that strives to achieve true competitive par-excellence of a modern neoliberal economy, has been both hypocritical and dishonest in the context of agricultural commodity world markets which are non-free trade as a result of the degree of protection afforded to European nations and the US. “In the village of Kpembe, the chief invited us for lunch. We ate chicken feet, soup and American rice. And yet the Katanga valley, just a couple of miles away, was until recently Ghana’s rice bowl. It now lies fallow. Ghana used to be self sufficient in rice. The World Bank and IMF decreed subsidies had to stop, that poor countries should concentrate their efforts only on what they can export. And yet the US rice industry receives tens of millions of dollars in support. The double standards apply to water. No state help in Ghana, but subsidy aplenty in countries like the US“.
(From The Guardian, “Cash and carry misery in Ghana“, by John Kampfner, Friday February 8th, 2002)
This export-or-die doctrine has served to render those countries in the South prone to unpredictable climatic variability to being fantastically vulnerable to catastrophic problems of food self-sufficiency. Small farmers the world over, from India to Mexico, are constantly economically forced out of farming in the face of dwindling returns on farm income due to downward pressure on prices and/or the flood of cheap imports, as economies-of-scale achieving larger farms are able to afford to stand up to this market pressure, as is the capitalist principle of market concentration which multinational control of world price only further intensifies (e.g. Cargill controls over 70% of the world market in grain supply).
The World Bank’s new ‘Market-Based Land Reform’ is a further policy framework that has recently been added to the structural adjustment regime. This initiative will encourage further concentration of land ownership. These market-reform programmes have also been used to undercut agrarian reform policies based on the expropriation or forfeiture of land held by large landowners.
The intricate combination of indebtedness, Structural Adjustment conditionality and privatisation, and unfavourable terms of trade between economies in the North and countries of the South, then, is structured in such a way that perpetuates the neocolonial subjugation of the majority of the world’s population. Since the 1970’s, the ‘Third World’ debt crisis meant that in country after country across the developing world, the overbearing, unrelenting pressure to repay (as the level of spiralling debt in relation to national wealth was usually very high due to compound interest) became the driving force that forced these primary-good commodity suppliers to compete with one another, driving down the price of their goods.
Naiwu Osahon of the World Pan-African Movement:
“We were told too by the SAP (Structural Adjustment Policy) protagonists that we needed to increase our foreign currency earnings to be able to pay our strangulating foreign debts; SAPs, we were told, ensure increased foreign exchange earnings by liberalising trade and scandalously marginalising the (Nigerian) Naira to enhance our export capabilities. Share jargon because, the liberalising business turned out to be a one way trap. A vicious circle in effect, encouraging us to export more at low prices to import more at high prices because they dictate the prices and no matter what we do, we always end up the debtors“. (Ref: “Just Before We All Die“, by Naiwu Osahon – World Pan-African Movement, June 2001).
(iii). Neocolonialism within Africa for the benefit of Multinational exploitation:
Since World War II, Africa has witnessed a legacy of civil wars, military-coups, and crises of disorder and chaos. Blame for this “disorder” can be largely put at the door of continued imperialist interference in the domestic politics of countries. For example, the cold war situation saw political destabilisation in country after country throughout the African continent, such as in Angola, where the US financed the Unita rebels against the Soviet funded MPLA government (supported by Cuban troops in 1976 and 1988). Post-cold-war imperialist interference has been just as telling, for instance the original US backing of Uganda and Tutsi-Rwandan rebel insurgency in the Democratic Republic of the Congo (DRC) in the mid-1990s owed much to connivance between US imperialism and multinationals to grab control over the region’s vast mineral wealth). Laurent Désiré Kabila was the spearhead of a rebel insurgency involving Tutsi militias from Rwanda and troops from Uganda and Burundi – all backed by the United States. Kabila’s revision of multinational contracts he originally signed up to, one can speculate, displeased certain financial interests who originally backed his coup. By August 1998, the Rwandese wing of the ADFL rebelled against Kabila, and in the resulting conflict, rebels militia from Rwanda, Uganda and Burundi joined the fray, pitted against the countries of Angola, Zimbabwe and Namibia who supported Laurent Kabila’s DRC government in the west of DRC, resulting in Africa’s First World War and the deaths of 3.8 million people. The worst atrocities took place eastern region of the Congo between Sept 1998 and August 1999 by the rebel militias, most notably from Rwanda such as the RCD-Goma militia (and subsequently since then by a cartel of criminal networks) who engaged in genocide of Hutu refugees (as the ADFL had done in 1997) and mass looting, sweeping up that area’s stockpiles of diamonds, gold and timber, and exploited additional supplies of these materials as well as quantities of the precious mineral used in mobile-phones – Coltan (80% of the world’s known reserves of coltan are found in eastern DRC). Corporations implicated in the illegal trade of coltan from out of Rwanda include US mining corporations. There has also been massive destruction of Congo’s socio-economic infrastructure. (Antoine Roger Lokongo).
Multinationals often operate in terms of a cartel to attempt to control the market-price of minerals and other primary commodities on global markets, particularly in Africa. The diamond trade is exceptional in it’s ruthless marketisation. While diamond wholesale prices have shown a steady increase over recent times, the reality on the ground in relative terms is pittance purchase prices by exploitative middlemen which are hovered up by an international cartel who sell on at these wholesale prices to a select coterie of retail outlets in exclusive parts of the world at prices with as much as a 100-200% markup. The cartel – De Beers – has proved to be so successful as a cartel arrangement that over the course of time, while other commodities, such as gold, silver, copper, rubber, and grains have fluctuated wildly in response to economic conditions, diamonds have broadly continued to advance upward in price every year since the 1930s. De Beers Consolidated Mines, Ltd was founded in 1888 when the major investors in the diamond mines “realized that they had no alternative but to merge their interests into a single entity that would be powerful enough to control production and perpetuate the illusion of scarcity of diamonds. Taken from: “Have You Ever Tried to Sell a Diamond?”, Feb 1982, The Atlantic Magazine: Edward Jay Epstein: “In London, it operated under the innocuous name of the Diamond Trading Company. In Israel, it was known as “The Syndicate.” In Europe, it was called the “C.S.O.” — initials referring to the Central Selling Organization, which was an arm of the Diamond Trading Company. And in black Africa, it disguised its South African origins under subsidiaries with names like Diamond Development Corporation and Mining Services, Inc. At its height — for most of this century — it not only either directly owned or controlled all the diamond mines in southern Africa but also owned diamond trading companies in England, Portugal, Israel, Belgium, Holland, and Switzerland.”
The following is taken from the Foil Vedanta report “Copper Colonialism: British miner Vedanta KCM and the copper loot of Zambia“:
“The legacy of extractive colonialism and recent far reaching neo-liberal economic policies (which can be clearly seen as neo-colonialism), is a Zambian state which has been corrupted, bankrupted, disenfranchised and dis-informed. Lack of resources and political conflicts of interest, alongside a concerted effort by mining companies to hide data and manage perceptions, leave the Zambian state with virtually no information on the ownership, operations or production of the mining companies. There is no independent data on the volumes of copper or other minerals they are producing or exporting, or where it is going. On top of this, weak laws (negotiated by the World Bank and IMF programmes), and ill-resourced regulatory bodies mean that tax evasion, fraud, illegal mining, environmental damage and human rights abuses are rarely penalised even if they are known. Most strikingly, two Chinese managers who shot 13 Zambian workers at Collum mine in October 2010, had charges against them dropped a few months later. Meanwhile agencies such as the Zambia Development Agency (previously the Zambia Privatisation Agency) continue to advertise Zambia’s ongoing achievements in economic liberalisation in an attempt to attract more Foreign Direct Investment. The 14th Zambia Review, prepared for the UN World Tourism Organisation 2013 General Assembly in Victoria Falls, to attract investment from attending delegates, notes that mining companies can enjoy lower corporate tax rates than other companies (at 30%) and that 57.3 billion Kwacha ($10 million) ofthe 2013 budget has been allocated to the development of Multi-facility Economic Zones(MFEZs) (in which tax and other legal exemptions apply). The review openly states that:’Investors face no restriction on the amount of interest, profit, dividends, management fees,technical fees and royalties that they are allowed to repatriate. Income earned by foreign nationals may also be externalised without difficulty.’ These kind of policies are leaving Zambia with very little revenue or benefit from the extensive and rapid mining taking place. The highest unemployment rates are in the Copperbelt and in the capital Lusaka, at 24.5% and 22.3% respectively, mostly affecting youth, and prostitution is the only way of earning for many wives of jobless miners in the region” Source: Foil Vedanta
Entering into the 21st century, Africa finds itself at the centre of a new planetary tussle for mineral resources between long established economic powers such as the United States and European powers, and the emerging economic ascendency of China. The stakes are high, as global multinational corporations compete to exploit inroads into establishing operations in areas with substantial reserves. With almost one third of the world’s raw materials, abandoned by the former metropolitan powers, which have been disengaging gradually, both from the point of view of cooperation and of military assistance, African countries have become easy prey of multinational corporations. Facilitation of multinational interests is provided for through the diplomatic service of nation states – such as the United States, whilst China embarks on it’s own investment programme in countries such as the DRC, which guarantees market access to vital resources such as copper.
The Congo has long being considered the most bountiful paradise of riches on the African continent, since when it was colonised by Belgium. Accordingly, the great financiers of this world, in tandem with multinational hunters of mineral resources, have their eyes targeted on Congo, where discovered mineral deposits are still virgin or ill exploited and likely to open markets to big capital gain investments. Congo has coltan (80% of the world’s reserves), which is sought after for the manufacture of mobile phones, laptops, CD-players, camcorders, satellite, in fact everything high-tech. It also has copper and cobalt reserves, which would be the most important in the world for several years. The size of the Democratic Republic of Congo (which is as big as the whole of western Europe), its geographically central position in the heart of the African continent, the sharing of its borders with nine other countries, along with its mineral resources, has destined it as first target and the site of choice for the pursuit of mineral exploitation and extraction by global multinationals, in the newest incarnation of the need to serve the never-ending world demand for mineral resources.
For more on the recent history of the Congo, read here: Congo’s Holocaust & the end-of 20th Century Plunder of DRC
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2). “Britain in Iraq, 1914-32” by Peter Sluglett,taken from “THE BATTLE FOR IRAQI OIL: US CORPORATE SKULDUGGERY SINCE WW1”, by Richard Becker (Workers World, October 31st, 2002).
3). Noam Chomsky: “WORLD ORDERS, OLD AND NEW”, Pluto Press 1994
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5). Mark Curtis: “THE GREAT DECEPTION: ANGLO-AMERICAN POWER AND THE WORLD ORDER”, Pluto Press 1998.
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7). Aufheben 12: “OIL WARS AND WORLD ORDERS – NEW AND OLD”, .
8). Taken from African Agenda Vol. 1 No.2 “A five to one return”, by Patrick Bond, 1995.
9). John Bunzl: “THE SIMULTANEOUS POLICY”, 2000 – New European Publications
10). JUBILEE SOUTH PAN-AFRICAN DECLARATION ON PRSPs Kampala, 10-12 May 2001
11). BRIEFING PAPER ON THE FOOD CRISIS IN SOUTHERN AFRICA, by Action Aid UK, 2002
12). Donald Mavunduse: “IT’S THE BANKS WOT DONE IT”, Red Pepper, Sept 2002
13). Stephen Devereaux [IDS]: “STATE OF DISASTER: CAUSES, CONSEQUENCES AND POLICY LESSONS FROM MALAWI”, June 2002“
14). Michael Lipton in “DEVELOPMENT POLICY REVIEW 1987-88” Journal, SECTION II
15). John Kampfner, The Guardian: (Fri February 8th, 2002): “CASH AND CARRY MISERY IN GHANA”,
16). Naiwu Osahon: “JUST BEFORE WE ALL DIE”, (World Pan-African Movement, June 2001).
17). New Economics Foundation/Jubilee Research, “The US as an HIPC or ‘heavily indebted prosperous country'” April 2002
18). Antoine Roger Lokongo: published on old website” www.congopanorama.info