African window-dressing?
The G-8 offered African economies little more than the usual rhetoric, writes Wael Gamal
The G-8 summit, which ended on Tuesday, in the French town of Evian fell short of the demands of African economies. Although several African leaders were invited to the summit, their hopes were dashed even before the summit ended. Soaring trade competition in the midst of a global recession has stifled any significant developments to boost the continent's economies.
In his speech at the summit, Egyptian President Hosni Mubarak voiced the major concerns regarding African economies -- revitalising the New Partnership for Africa's Development (NEPAD) and trade. "We expect stronger commitments from the G-8 group, jointly and individually, with regard to the efficient implementation of the NEPAD initiative, particularly in agriculture, food crises and developing water resources, which are priorities in our development agenda," Mubarak said.
The NEPAD is an agreement to encourage solid economic policies and democracy in exchange for aid. It is the merger of the Millennium Partnership for the African Recovery Programme (MAP) initiated by South African President Thabo Mbeki and adopted by Nigeria, Algeria and Egypt and the Omega Plan initiated by Senegal. The NEPAD was approved by the G-8 Genoa Summit in 2001
The NEPAD initiative is linked to trade conditions, particularly trade in agricultural products. Assistance does not make sense, however, "if poor countries cannot export their products freely to rich countries", Mbeki told Agence France-Presse (AFP) shortly before the summit.
Each year, rich countries spend more than $1 billion a day supporting their agricultural producers -- about six times the amount they give in foreign aid. The European Union (EU) and the US account for almost two- thirds of total spending. The Financial Times has described the root of the problem in trade in agricultural exports. "The subsidy fest translates into rocketing levels of output, fewer imports and the dumping of vast surpluses on world markets. Farmers in developing countries lose on several accounts. Subsidised exports from rich countries undercut them in local and global markets, while high import barriers shut them out of rich country markets."
These factors are critical to understanding the deteriorating economic conditions in the African continent, which depends primarily on non-industrial production. The most recent annual report issued by the World Bank states, "African development indicators of 2003 give a clear warning that the rapid spread of AIDS, anaemic aid and investment flows, and weak commodity prices threaten the lives of millions in Africa."
Statements made at the summit concerning trade largely echoed NEPAD's general principles without offering any precise measures for progress. Trade competition between the EU and the US largely overshadowed the discussions.
The dollar sank to its lowest levels ever against the euro in recent months, losing 15 per cent of its value. Mahmoud Abdel-Fadil, professor of economics at Cairo University, considers this "a sign of a deteriorating economy and a mark of a new era of international economy ending the domination of the US economy and its currency. The American dollar no longer has the right to be the feudal lord of the international financial system." This provides higher investment incentives in the EU. Decreases in the cost of imported oil further help European economies.
Nevertheless, the rising value of the euro will give an advantage to American exports in the international arena as US exports will be cheaper than their European counterparts. This trade row is deeply connected to the international economic recession hitting both the US and EU countries.
The slowdown in euro-zone manufacturing intensified last month as the surging euro depressed export orders. The Reuters-NTC purchasing manager index, a leading business survey of 3,000 companies, fell to its lowest level in 16 months, well short of the mark that separates growth from contraction. Manufacturing employment levels have fallen for 24 consecutive months. Germany suffered the sharpest decline in output in the last eight months. The US did not fare much better. Figures for the month of May indicate that American manufacturing is down for the third straight month despite the country's military success in Iraq.
Competition between the dollar and the euro may make the creation of open markets a poor decision. It may also adversely affect all economies linked to the dollar. In addition to the decreasing value of the dollar, sliding oil prices after the occupation of Iraq will put further pressure on the already troubled economies of oil exporting countries such as Nigeria and Egypt.
From the perspective of dealing with international poverty and underdevelopment, inviting African leaders to the G-8 summit proved to be propaganda intended to pacify anti-capitalist protesters and little more.
Al-Ahram Weekly Online : 5 -11 June 2003 (Issue No. 641)
Located at: http://weekly.ahram.org.eg/2003/641/in2.htm