Home' Trinidad and Tobago Guardian : August 7th 2014 Contents AUGUST 2014 • WEEK ONE www.guardian.co.tt BUSINESS GUARDIAN
THE ECONOMIST | BG27
America, an exceptional
place, long has stood
out for its willingness
to take big bets on the
rise of others. Postwar
devoted vast amounts
of money, attention
and military might to rebuilding or being the
midwife of economies and democracies in
Europe and Asia, with spectacular results. Of
the country s 15 largest trading partners today,
11 are former recipients of American aid.
Now Africa is set to deliver a fresh asym-
metric shock to the global order, taking its
place as the last great emerging market. Its
population is set to double by 2050, and it
will be astonishingly young. Does President
Barack Obama s America have the patience
and confidence to welcome this change, har-
nessing it for mutual gain? Or is today s Amer-
ica more like an old-world power, risk-averse,
inward-looking and fearful of change?
Africa may seem a sideshow now, but it is
not a bad test of America s standing in the
Speaking to The Economist on his way back
from a speech in Kansas City, the president
acknowledges that global balances of power
have shifted since America "necessarily" moved
to create a postwar order. Now, Obama says,
the global "ecosystem" belongs to everybody.
If that brings greater competition, he argues,
his country still can be "central" to the process
of moving Africa into the next stage of growth.
He lists America s strengths, from the global
standing of its companies to its traditions of
transparency, accountability, the rule of law
and property rights. America s economy is
based on ideas and innovation.
"Our emphasis on developing human capital
is something that Africa very much wants and
we re good at," Obama says.
Finally, he says, Africa has "fascinating"
opportunities to "leapfrog certain technologies
and skip certain phases of development." He
recalls meeting small farmers in Senegal whose
smartphones gave them profit-boosting news
about the weather, market reports, even new
seed technologies. America is "better than
just about anybody else" at such smart appli-
cations of technology, the president says.
America has reasons to bet big. It enjoys
more latent goodwill than ex-imperial Europe:
Former President Nelson Mandela of South
Africa said that the election of Obama, the
son of a Kenyan economist, was proof that
people everywhere should "dare to dream."
America is trusted in Africa more than is
China, whose vast investments at times have
sparked comparisons with colonial exploita-
Nonetheless critics accuse Obama of all but
ignoring the continent, paying his first lengthy
visit as president only in 2013, after his re-
election. Asian and European cities have hosted
numerous summits for African leaders, ending
with ceremonies to sign agreements worth
billions of dollars, but America has not.
From August 4 to August 6, however, Obama
finally is holding his first US-Africa summit,
bringing nearly 50 heads of state and govern-
ment to Washington. Some aid projects are
expected, notably $498 million in public funds
for power projects in Ghana, a country Amer-
ican officials hail as a model for its recent
record of democracy. Such "compacts" with
poor but reasonably well-governed countries
are intended as seals of approval, prodding
businesses to make still-larger investments.
Officials in Washington defend the relatively
modest scale of the projects that American
taxpayers have funded in Africa. Quality trumps
quantity, they insist. American investments
come with promises to obey workplace and
environmental laws, as well as the bribe-ban-
ning Foreign Corrupt Practices Act.
Obama has crafted a summit agenda around
African priorities. It will focus on such issues
as agriculture---helping farmers feed the con-
tinent, after decades of sending hungry
Africans aid---and infrastructure. That means
physical projects: new roads to bring crops to
market before they rot and electricity for a
However, it also involves America pushing
hard for less tangible changes such as more
transparency and democracy to weaken the
grip of kleptocrats, as well as reforms to increase
trade flows globally and internally. Only 12 per
cent of African trade is within the continent.
"It is easier now to send a shipment of
goods from Nairobi to Amsterdam than it is
to send those goods to many parts of Africa,"
The president is proud of Power Africa, his
2013 pledge to double access to electricity in
sub-Saharan Africa, where more than two-
thirds of the population, or 600 million people,
are without it. Sceptics retort that Power Africa
covers only six countries to date, with a focus
on greener forms of power.
An African ambassador is scathing, arguing
that his whole continent needs a vast increase
in electricity production to spark a much-
needed manufacturing revolution, even if for
now that involves coal or huge dams that
arouse the ire of American environmental
groups and some Democratic members of
Congress. America struggles to build renewable
energy at home, the ambassador charges, and
thus has to "export" its low-carbon idealism.
Officials in Washington insist that African
leaders prefer American investments to those
from less squeamish countries such as China.
American firms hire Africans in Africa, they
argue, then promote them and offer them
global careers. Chinese firms stick with their
Obama takes a slightly milder line. When
it comes to foreign investors, the president
says, "the more the merrier": China has deep
pockets, he says, but China s need for natural
resources may color its investments in ways
that are less true for America.
"So my advice to African leaders," Obama
says, "is to make sure that if, in fact, China
is putting in roads and bridges, No. 1, that
they re hiring African workers, No. 2, that the
roads don t just lead from the mine, to the
port, to Shanghai."
Balancing idealism and commerce will be
a theme at the summit. In Washington support
for Africa draws on a curious coalition, span-
ning conservative members of Congress, often
linked to Christian groups active on the con-
tinent, leftist Democrats interested in devel-
opment and pro-business moderates from
both parties. Obama s predecessor, President
George W. Bush, earned his legacy in Africa
by launching the President s Emergency Plan
for AIDS Relief.
President Bill Clinton earned his legacy by
working with Republicans to pass the African
Growth and Opportunity Act, removing tariffs
on most exports to America from about 40
countries. AGOA trade remains small, repre-
senting about 2.0 per cent of American
imports, and is dominated by crude oil. Still,
a few firms do well from it, from Kenyan
clothes exporters to German companies that
build cars in South Africa for the American
Obama s summit will begin with an event
honoring religious activism, and will devote
a whole day to a business forum at which
American chief executives will tell African
leaders which reforms they think are needed
to trigger a surge in investment. A surge is
definitely needed: In 2012 Africa took only 1.0
per cent of America s overall foreign direct
Washington politics may yet complicate
Obama s bold aspirations, however. There is
pressure to revisit the terms of AGOA when
it comes up for renewal in 2015, amid grum-
bling that some countries, such as South Africa,
have offered better trade terms to Europe, for
instance, putting American firms at a disad-
Obama also must hope that Congress reau-
thorises the Export-Import Bank when its
mandate expires in September. The bank, a
once-obscure source of loans, loan guarantees
and credit insurance to foreign buyers of Amer-
ican goods, is under fire from Tea Party con-
servatives who call it "corporate welfare."
Obama is confident that AGOA will be reau-
thorised, though it may need to be "refined."
If the Export-Import Bank is axed, he says,
American firms will suffer as the void is filled
by companies from China, Germany, India
and other countries.
"There is no doubt that a thread has emerged
in the Republican Party of anti-globalisation
that runs contrary to the party s traditional
support for free trade," he says.
With six of the world s 10 fastest-growing
economies in Africa, however, he believes that
business is on his side.
The American public is weary of military
engagements overseas. Veteran Africa hands
worry about what they see as America s inat-
tention to the violence, often tinged with reli-
gious extremism, that grips many regions.
European leaders grumble that America has
done too little to help France and other ex-
colonial powers in some nasty conflicts, as in
Mali. Some Africans complain about American
drones and special forces operating in such
hotspots as Djibouti, Ethiopia and Niger.
Obama says that right now America has
the security balance "about right." He calls
America "the one indispensable power that
is willing to spend blood and treasure" to
defend universal values, but adds that America
"cannot do it alone." America wants to help
African peacekeepers do more, but Obama
also sees a special role for European powers
and the NATO alliance.
"We need to have a much more intentional,
explicit plan for NATO to engage with African
countries and regional organisations," the pres-
ident says. "Not because the United States is
not prepared to invest in security efforts in
Africa, but rather to ensure that we are not
perceived as trying to dominate the conti-
France "obviously" can do some things in
Francophone Africa that America cannot, he
Africa gets a vote, of course. South Africa,
notably, has butted heads with Obama in
defending the brutal regime of President Robert
Mugabe in Zimbabwe. As a big African power,
South Africa can either invest in the kind of
international or regional order that helps ordi-
nary Zimbabweans thrive or face a flood of
migration from that country, Obama says.
"Ultimately, those chickens will come home
to roost," he says.
The president suggests that a culture steeped
in the old "nonaligned" movement stops some
African leaders from intervening in each other s
affairs. It may take "a new generation of lead-
ership" to change that, he says.
Is that enough? European leaders, among
others, worry that Obama is willing to be help-
ful in Africa, and to explain to African leaders
why it is in their interests to follow the liberal,
free-trading principles that America cham-
pions, but that, deep down, he sees Africa as
Europe s backyard, not America s.
Africa policy remains a bit of a backwater
in official Washington. Many in the capital
may notice Obama s summit mostly for
snarling the traffic.
A great global disruption is coming, however.
America has many advantages, from entre-
preneurial drive to its lack of a colonial past,
but the task ahead will require effort and per-
sistence. Asia and Europe were transformed
by their own people and leaders, but also by
the extraordinary things that America did.
It is not at all clear whether a more insular
America will do the same for Africa this cen-
tury, or if it even has ambitions to try.
@2014 The Economist Newspaper Ltd. Distrib-
uted by the New York Times Syndicate
America and Africa:
The next great disruption
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