Looting Africa

The Looting Machine: Warlords, Smugglers and the Systematic Theft of Africa’s Wealth

Tom Burgis

Harper Collins (2017)

Book Review

This book centers around something global economists refer to as the “Dutch curse.” In 1959, the discovery of oil in the Netherlands led to massive unemployment outside the oil industry. A big increase in dollars generated by oil exports caused major inflation in the local currency. This made imports cheaper than locally produced goods, shutting down hundreds of Dutch businesses and putting thousands out of work.

It’s typical of mineral and oil/gas mining everywhere (including here in New Plymouth) that these industries require vast capital investment but employ only small numbers of workers. According to Burgis, it was the “Dutch curse” that resulted in Russian’s oil-fueled criminal oligarchy prior to the rise of Putin. As the continent richest in natural resources, Africa, which has been ruthlessly exploited by multinational corporations, has a severe case of the “Dutch curse.”

Although multinationals pay far less than market value for oil, gas and precious minerals, they pay corrupt puppet dictators enough that they don’t need to tax their citizens. Burgis maintains this absence of taxation results in a lack of accountability to their citizenry. Instead of holding leaders to account for their failure to provide basic infrastructure, citizens of “resource states” are far more likely to angle for their share of the loot. Retaining power becomes a simple matter of maintain elaborate patronage (payoff) systems and harsh military/security networks.

Burgis also refutes the myth that Africa’s multiple civil wars stem from tribal and religious conflict. Most African wars are pure resource wars (often triggered by CIA and French and British intelligence), with the conflict used as a cover for resource smuggling and even lower net cost to multinationals.

The US government has attempted to crack down on its own corporations via stricter enforcement (since 2000) of the 1977 Foreign Corrupt Practices Act and a section of the 2010 Dodd Frank Act that prohibits the the purchase of Coltan* from armed rebel groups. The new law, which has done little to reduce Coltan smuggling, has opened the door to a Chinese monopoly on the Coltan market.

The Looting Machine presents a detailed country by country analysis, as well as an examination of the Chinese company responsible for most private investment in Africa (there’s less publicly available information about investment by state-owned Chinese companies). Both engage in far more infrastructure development than Western agents do.

• Angola – principle export oil, with 70% of oil ventures owned by Hong Kong billionaire Sam Pa, operating as Queensway Group or Chinese International Fund. Half of Angolan residents get by on less than $1.25/day.
• Congo – second most important produce of Coltan outside of Australia, also gold, tin, tungsten and diamonds. Residents live on less than $1.00/day.
• Nigeria – oil and gas. Cotton/textile industry that flourished in 1980s shut down (causing mass unemployment) by continuous flood of smuggled Chinese counterfeit textiles. Sam Pa and the French oil company Total have teamed up to challenge Shell’s longstanding monopoly on Nigerian oil.
• South Africa – rich gold, diamond and platinum exports financed the creation of the apartheid state, in which a tiny white minority controlled the entire economy. Since the fall of apartheid in 1994, this minority has been joined by a handful of Black entrepreneurs.
• Botswana – diamonds. Somewhat protected from “Dutch curse” by the creation of value added industries that cut and polish their diamonds prior to export.
• Guinea – among world’s richest reserves of iron and aluminum. Bought out by Sam Pa as a result of Western sanctions.
• Niger – rich in uranium and the world’s poorest country. France previously held monopoly on Niger’s uranium industry, being replaced by Queensway group based on agreement to invest in infrastructure development and employ local labor. (In most countries, Chinese investors import Chinese labor.)
• Ghana – gold. Financed by Chinese Investment Fund after IMF tried to impose structural adjustment conditions** to refinance a World Bank Loan.
• Zimbabwe – diamonds, platinum, nickel, gold. Mugabe used revenues from export industries to finance particularly brutal security force. Diamond industry bought out by Queensway as direct result of Western sanctions.

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*Coltan is a rare precious metal in high demand for cellphones and laptops.

**IMF structural adjustment conditions typically require debtor companies to privatize state owned industries, legislate deep cuts in social services and accept extensive foreign investment as a condition of receiving World Bank loans.

 

 

 

 

The Lost Civilizations of Africa

Africa

Directed by Basil Davidson (1984)

Film Review

Africa is a 1984 documentary exploring the great civilizations of Africa. In it, late historian Basil Davidson demolishes the myths Europeans concocted about Africa to justify the 400 year slave trade – these myths concerning a continent of subhuman savages persist to the present day. Davidson reviews archeological evidence, ancient African and Europeans artwork and historical records and contemporary tribal traditions that survive from past civilizations.

The documentary is divided into 8 episodes of approximately 25 minutes each.

Episode 1 Different But Equal – studies the depiction of blacks in medieval and renaissance European paintings to show how the concept of race was created in the 16th century to justify the immensely profitable enslavement of human paintings. He starts with an examination of cave paintings that point to a highly advanced Saharan civilization prior to the Sahara’s desertification (around 7,000–8,000 years ago   and the prominence of black-skinned the 3,000-year  civilization Egypt enjoyed under the pharaohs.

Episode 2 Mastering a Continent – focuses on Kushites and the great Nubian civilization to the south of Egypt. The latter converted to Christianity and persisted until the 11^th century when it was destroyed (by Saracens) during the Crusades.

Episode 3 Caravans of Gold – discusses the vast commercial trade network (extending as far as India) centered in Timbuktu (Mali) and the Ashanti civilization (in modern day Ghana). In the 14^th century, Mali converted to Islam. Under the guidance of Muslim scholars, Timbuktu became a global center of Islamic scholarship in law, literature and science.

Episode 4 The King and the City Within – describes the civilizations of Huaser, Benin and Ethe in modern day Nigeria.

Episode 5 The Bible and the Gun – covers the arrival of the Europeans and the devastating of slavery on long established African civilizations. Over 400 years, the African continent lost approximately 15 million skilled craftsmen and farmers. As the slave trade declined in the 18^th and 19^th century, Europeans opened up Africa’s interior in order to exploit its rich natural resources. As in Latin American and Asia, Christian missionaries played a fundamental role in this process.

Episode 6 The Magnificent African Cake – gives an overview of the extensive European military campaigns that flattened African resistance to colonization. By 1914, Liberia and Ethiopia were the only two countries not under European military control.

Episode 7 The Rise of Nationalism – relates how forced conscription in World War I and World War II radically changed Africans’ view of Europeans and fueled demands for independence. The Gold Coast (later renamed Ghana by President Dr Kwame Nkrumah) would launch the first independence struggle in 1945. Davidson contrasts this with the more bloody independence struggles in Kenya, Algeria and other countries with substantial(European) settler populations.

Episode  8 Legacy – explores how the adoption of European-style Parliamentary systems proved disastrous for many African countries. Davidson blames this on the fact that Parliamentary government is based on a well established class divisions. It worked poorly in Africa owing to the continent’s historic tendency towards egalitarianism.

 

The Economic Recolonization of Africa

Land Rush – Why Poverty?

Directed by Hugo Berkeley and Osvalde Lewat (2012)

Film Review

Land Rush is the story of the recolonization of Africa by foreign interests (US, Britain, China, South Korea, Saudi Arabia) and their collaboration with corrupt governments and tribal authorities to drive subsistence farmers and their families off their land. Their goal: to create massive for-profit industrial farms based on monoculture export crops.

Nearly 60% of remaining arable land is in Africa – the industrialized world has either paved theirs over or decimated their soils through factory farming.

The reason Africa is such an easy target is that only 10% of rural Africans own private title to the land they farm. The rest is traditionally viewed as a communally owned commons.

Lifting Africans Out of Poverty By Seizing Their Land

Land Rush specifically focuses on a US sugar baron seeking to create a giant sugar plantation and processing plant in rural Mali. His goal is to kick start industrialization in Mali and help “lift their people out of poverty.”

Prior to the 2008 economic downturn, the Mali government supported the food sovereignty movement and the right of rural farmers to access land to support their families. This has all changed now, with the government (illegally) selling off more than 30 million hectares of farmland to foreign investors in the last five years.

Farmers are told they must give up their land and either go to work for Sosumar (as sugar farmers) and accept a new plot of land elsewhere. The government’s violent mistreatment of farmers who refuse to leave their land makes them highly skeptical of these promises.

The Food Sovereignty Movement

The documentary also profiles a local organizer linked with the global food sovereignty movement. Informed by disastrous experiences elsewhere (Latin America, India and other parts of Asia) with the wholesale expulsion of subsistence farmers for corporate interests, Africa’s food sovereignty movement is growing by leaps and bounds.

The organizer explains that the constitution and laws of Mali recognize the basic right of food sovereignty, ie that countries have the right to produce their own food rather than depending on an unpredictable global market for their food needs. He maintains that Mali has strict guidelines about involuntary displacement – that the government’s contract with Sosumar is illegal, as was the prior handover of 30 million hectares to foreign corporations.

The film ends on a positive note, thanks to a March 2012 military coup that caused Sosumar to withdraw all their workers  from Mali and their CEO Mima Nedelcovych to target Nigeria as the new site for his sugar plantation.

How Big Oil Dictates US Foreign Policy

The Secret of the Seven Sisters

Al Jazeera English (2013)

Film Review

Despite its length, this documentary should be compulsory viewing. Everyone with an IQ over 90 should see it at least once before they die. It was only in viewing this film that I fully grasped the insane, oil-inspired military aggression in the third world and the US fascination with despotic dictators.

The video below is actually an 8-part series shown over successive nights on Al Jazeera-English. I’ve summarized the highlights of each of the eight parts so you can fast forward to specific segments that interest you.

0.00 – 23.26

Part 1 takes viewers from the founding of the secret Seven Sisters oil cartel in 1928 to the creation of the competing Organization of Petroleum Exporting Countries (OPEC) in 1960. The latter is made up of oil producing countries that have nationalized their oil industries.*

The film begins by describing the secret (illegal) cartel formed in 1928 by the Anglo-Persian Oil Company (which became British Petroleum), Standard Oil (which became Exxon) and Royal Dutch Shell. The goal was to end the cutthroat competition that was eating into profits. At a secret meeting in Scotland the three companies agreed to an orderly division of global production zones, as well as a process for fixing oil prices.

Later Mobil, Gulf, Texico and Chevron would join these three oil giants. The existence of the cartel remained secret until the 1950s, when it became known as the Seven Sisters.

This segment describes the totalitarian control BP exercised over Iran until 1951. A strike for higher wages led to a national uprising that overthrew the Shah and resulted in the democratic election of Mohammad Mosadegh as president. When the latter threatened to nationalize Iran’s oil industry, the British government requested CIA assistance to overthrow Mosadegh and restore the Shah to the throne. In return, the US government won the right for American oil companies to join BP in exploiting Iran’s oil resources.

In July 1956 after Egyptian president Nasser nationalized the Suez Canal (the main route for transporting Middle East oil to Europe), Britain, France and Israel declared war on Egypt. Nasser responded to an aerial bombing campaign by using concrete bunkers to blockade all Suez traffic. For once, the US and USSR collaborated to pressure the three aggressors to withdraw their forces and restore the transit of oil tankers through the canal.

23.26 – 46.00

Part 2 traces how the rise of OPEC worked to gradually erode the dominance of the Seven sisters – with violent repercussions.

In 1972 Saddam Hussein nationalized Iraq’s oil industry, with technical and military support from the Soviets and the French.

By October 1973, when Israel’s Arab neighbors launched the Yum Kippur War, OPEC members controlled 60% of the global oil supply. This enabled them to launch an oil embargo against the US in retaliation for their support of Israel in the 1973 conflict.

In 1978 Iran’s Ayatollah Khomeini, living in exile in Paris, called for a workers strike in the Iranian oil industry that caused a total shutdown of oil production. This, in turn, led the US to abandon their longtime support of the Shah and his secret police. The result was a national uprising, the forced exile of the Shah, the return of Ayatollah and the nationalization of Iran’s oil industry.

Determined to regain American corporate control of Iran’s oil industry, the US government backed Saddam Hussein’s invasion of Iraq in 1980. The sudden onset of peace in 1988 led to a period of “overproduction” and a dangerous drop in oil prices. In response, George Bush senior, whose Zapata oil company had made a fortune via offshore drilling in Kuwait, openly encouraged Saddam Hussein (through ambassador April Glaspie) to invade Kuwait. This would create a pretext for the first US invasion of Iraq in 1991.

In May 2001 (20 months before the US invasion), a secret energy task force headed by former oil executives Dick Cheney and Condoleezza Rice, drew up a plan whereby Exxon, Shell and BP would divide up US occupied Iraq into eight oil extraction zones.

48.00 – 61.00

Part 3 describes the decision by the Seven Sisters to open up Africa to increasing oil exploitation due to their gradual loss of control over Middle East oil.

In 1970, Colonel Omar Gaddafi led a coup against a corrupt Libyan monarchy that was allowing the Seven Sisters to pay 12 cents a barrel in royalties to extract high quality Libyan oil. Gaddafi immediately nationalized the oil industry, raised oil prices 33% and used the funds to finance generous public services for the Libyan world and to fund freedom fighters all over the world (including the Palestinians).

This section also traces the history of the French oil companies ELF and Total in Nigeria. After Algeria won independence from France in 1971, they nationalized their oil industry, and ELF began exploiting oil resources in Nigeria, Chad, Congo, Cameroon, and Angola, where they financed guerrillas and despotic regimes and participated in bribery and embezzlement schemes that massively increased the international indebtedness of these countries. In 2003 the CEO of ELF was sentenced to prison and the company was bought out by Total.

61.00 – 95.00

Part 4 covers the role of the Seven Sisters in stoking Sudan’s civil war (most of Sudan’s oil comes from South Sudan) and the role of Shell Oil Company in Nigeria’s trial and execution of environmental activist Ken Saro-Wiwa.

95.00 – 118.00

Part 5 traces the longstanding battle between Russia and the US oil industry over control of the Baku oilfields on the Caspian Sea. It begins with Lenin’s capture of the oilfields in 1920. Hitler’s primary reason for attacking the USSR in 1941 was to gain control over Baku.

This section also details how a US-Saudi conspiracy to flood the market with oil in the late eighties (dropping the global oil price to $13) ultimately led to the Soviet collapse in 1989. At the time revenue from oil sales was the Soviet’s sole source of foreign currency.

118.00 – 142.00

Part 6 concerns the role of the color revolutions in Georgia, Armenia and Azerbaijan in keeping Caspian Sea oil out of Russian hands and under the control of US oil companies.

It briefly discusses the US role in Boris Yeltsin’s coup against the Russian parliament and his privatization of the Russian oil industry on behalf of the Seven sisters and a handful of Russian oligarchs (Putin has subsequently re-nationalized Russia’s oil industry).

142.00 -165.00

Part 7 discusses the concept of Peak Oil and the current dispute between the Iraqi Kurds and the Iraqi government over the control of the Bakr oil terminal near Bazra. At present it’s illegal for the Kurds to export their own oil. Eighty-five percent of Iraqi oil is processed at the Bakr oil terminal and Iraqi Kurdistan on receives 17% of this revenue.

165.00 – 190.00

Part 8 is about the Seven Sisters exploitation of Mexican and Venezuelan oil prior to the election of Hugo Chavez as president. It also summarizes that status of the countries (Saudi Arabia, Russia, Iran, Venezuela, Brazil, and Malaysia) that have nationalized their oil industry. At present these countries control one-third of oil and gas production, and more than one-third of oil reserves. Despite their role in instigating western military aggression, the influence of the Seven Sisters continues to declines.

At present they control 10% of oil production and only 3% of oil reserves. Their monopoly on exploration, drilling and refining technology gives them disproportionate control over the industry.

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*Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela