The State and the CIF

Last week this blog discussed different implications of self interest, the potential for win-win and the resulting need for good governance. This week it will focus on the negative aspects of China in Africa and look to find where responsibility lies.

The first stories featured this week are typical of a great number of news articles surfacing in the African press every week. While Chinese investment has been positively received by African governments, Africa’s press have been less forgiving of China’s record. There are areas of Chinese involvement in Africa which have an undoubtedly negative impact. The press presents dual narratives of, ‘How can Africa learn from China’s growth?’ and ‘how can Africa manage China’s involvement to best advantage’. This is a question of governance and accountability.

Comment tends to focus on whether China is a neo-colonial influence on the continent. The criticism levelled by Somaliland Press is that China lacks responsibility in its engagements. However it is important to draw a contrast between China and the Chinese.

China, the government, is accountable in its actions on the continent, as its actions have repercussions in the international community and its investor image in new markets. China has attempted to protect its reputation as it intends to win more business in the future.

The Chinese in Africa are not necessarily accountable to anyone. Some of the most negative and positive aspects of Sino-African engagement are found in the actions of these privateers. Some have set up successful small businesses employing Africans and bringing improved manufacturing techniques and/or service quality to their various industries. Others have brought irresponsible labour practices, a disregard for the consequences of their trade, in armamentsfor instance, or support for repressive states.

The CIF, a part of the 88 Queensway group of quazi-state supported companies operating out of a Hong Kong address is archetypal of China’s Jekyll and Hyde identity in Africa. It has been argued that the CIF has brought investment to frontier markets like the DRC where their infrastructure investment is greatly needed, and has no substitute. However in doing so the CIF plays on the inadequacies of state governance to secure long term mineral rights under monopsony conditions. Later, more responsible governments can find they inherit large opaque contracts which undervalue the states resources.

Recent stories of CIF involvement have been in Guinea, Madagascar and Zimbabwe. The three countries are linked by figureheads in the CIF hierarchy who have successfully developed networks of well connected political decision makers across the continent. Guinea and Madagascar share Mahmoud Thiam. Thiam was until recently the mines minister in Guinea and before that had a career in New York finance. While Mines Minister he brokered the deal for Benny Steinmetz group to take major stakes in Guinea, and since leaving his post he has become representative for the CIF in country. More recently it was reported that he was acting as a ambassador for the CIF in Madagascar where the organisation were looking to secure long term mineral rights in exchange for immediate investment.

In Guinea and Zimbabwe Sam Pa is the common denominator. Pa is apparently the alias of Xu Jinghua, chairman of the board of the CIF. Media reports this week placed him at the centre of dealings in Zimbabwe where he has been supporting the government in providing security services with surveillance equipment used to monitor internal opposition and dissent. Pa is also rumoured to be behind large CIF investments in Guinea. This evidence of callous attitudes to human rights and national development, negatively impacts on Beijing’s wider goals, but the government has been unwilling to publicly criticise the CIF.

This can be explained in a number of ways. The first might be that Beijing is unwilling to admit a lack of control and therefore encourages the unitary view of Chinese action in Africa. By blaming forces beyond their control China essentially admits fallibility in their ability to retain control over their own people. The second explanation is that Beijing recognizes the positive gains which the CIF offers the country in the long run and therefore tolerates their excesses for the promise of long term resource security. The upper reaches of the CIF are reportedly well connected in the Chinese Communist Party.

As well as the CIF example of partial state involvement, there are other aspects of Chinese State responsibility which have proved troubling, particularly the support and defence of pariah states like Sudan and Zimbabwe. For China to protect states which commit human rights abuses for the sake of economic and political gain is unsavoury, but certainly not unique to China.

China’s government have seemingly set a precedent for supporting governments who violently put down civil unrest. This has gone as far as supporting Kenya in gaining a deferral in the required trials over election violence. Beijing tends to walk a difficult line between showing sympathy for the extraordinary situations in which developing countries operate, while maintaining its active participation in the international community.

Over the past decade the non-interventionist mantra has gradually changed to allow Beijing to abstain from the decision to declare a no-fly zone over Libya, as well as allowing a very active role in negotiations with Sudan. While China did not publicly support the ICC or UN critiques of al-Bashir, they pressured Sudan’s President to make concessions to the international community. Increasingly Beijing plays a middle man role, acting as a friend to pariah regimes, and an intermediary to the requests of the international community.

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