Chinese debt in Africa

By Geoff Hill

Near Nairobi in the lead-up to Christmas, young men with axes, machetes and shovels were busy clearing undergrowth from an old railway line. It was built by the British in 1898 when lions and malaria took a toll on workers. Mosquitoes are still a nuisance but the big cats are gone and the line might have been forgotten had China not suddenly halted funding on a deal to build a new one from the Kenyan port of Mombasa all the way to Uganda. China has already lent more than $6bn for the project, and laid much of the line. Engineers claimed the old track could have been reworked at a huge saving, and local media has been critical of interest payments they say will drain the treasury.

If that’s not enough, in the Victorian era Britain used a wide gauge but the new one is narrow, so where the two meet, goods will need to be offloaded from one train onto another. In November, US secretary of state, Anthony Blinken, made Kenya the first stop on his maiden tour of Africa before going on to Nigeria and Senegal. Without mentioning China, he warned Africans to be “wary of the strings”, that come with foreign loans. Zambia, Angola, Zimbabwe and Kenya are indebted to Beijing at levels economists warn are unsustainable.

Under Clinton, Bush Jnr and Obama, US policy concerned itself with Africa; Trump did not and Biden appears to be going the same way. But there are spots on the continent that can’t be ignored, among them South Africa with its strong voice at the UN, Nigeria, vital in keeping a lid on radical Islam, and Egypt which has for almost half a century been at the forefront of Arab relations with Israel. For Washington, none of these looms so large as the enclave of Djibouti, the former French Somaliland, a country so small you could miss it on the map. Here France, China, Italy, Russia, even Japan each has a military presence along with Camp Lemonnier, the Pentagon’s only permanent base in Africa.

As in real-estate, it’s all about location: Djibouti juts into a narrow strait of water that is the sole route between the Indian Ocean and Suez. The local strongman, Ismaïl Omar Guelleh — referred to by his initials IOG – ranks among the world’s longest-serving politicians and scored 97 per cent in last year’s election. His government sits at the wrong end of every human-rights index, there’s no free press and critics say his rivals are largely in exile. Since independence from France in 1977, the only two presidents have been Guelleh and his uncle. That said, IOG has been a loyal ally of Washington, and tough on terror groups like al-Qaeda and al-Shabaab, but he is equally close to President Xi Jinping of China who, in 2019, received him on a state visit at the Great Hall of the People.

Certainly, relations are not as they were in the days when no secretary-of-state would come to Africa without stopping here. A new Chinese base has barracks enough to house double America’s 3500 troops. And as the war gets worse across the border in Ethiopia, Guelleh has made clear he will not allow soldiers from Camp Lemonnier to deploy there.

It is the first time Djibouti has placed conditions on use of its territory

On his safari, Mr. Blinken pushed the idea of free elections and governments that are accountable to their people at a time when rights groups say freedom is in decline. Africa, he said, needed to show how “democracies can deliver what citizens want, quickly and effectively”. Less than a fortnight later, China held its own event in Senegal, bringing African leaders to the capital, Dakar, in a PR blitz that painted Beijing as a benign partner and lender. Chinese loans to the continent are approaching $200bn and come without any talk of democracy. If Beijing has a rival, it’s not the US or Europe. Within months of the first Covid outbreak, Delhi had air-freighted 150 tons of medical equipment to Africa where trade with India stands at $60bn a year and rising. While the Chinese stock-market has slipped in recent months, Indian shares are soaring, but foreign loans come with a lot more checks and are transparent and within the recipient’s ability to pay.

When Botswana wanted to develop a new coal mine — the country sits on more than 200bn tons of stuff — the contract went to India’s Jindal Steel & Power Limited. The US and China have put a ban on fossil fuel. China’s nemesis, Taiwan, is also funding energy projects and has both a strong currency and an economic surplus. Beijing calls the island, “a breakaway province”, saying it has no right to engage with the world, but last month President Biden included

Taipei in his Summit on Democracy, along with India and Kenya

China, Russia and Djibouti were not invited. In the wake of the catastrophic withdrawal from Kabul in August, Biden made clear the US no longer sought to put boots on the ground in Asia or Africa. So where does that leave Camp Lemonnier? There have long been calls from Congress and the Senate to disengage with Djibouti and its increasingly dictatorial president. Others say America can’t be choosy in an area where it has few friends and IOG is but one tyrant among many: Eritrea, Sudan and Ethiopia are not easy places to live. And if nothing else, he has been merciless not only with terror groups but those who incite hatred of others. The downside is that his secret police use this as an excuse to crush any kind of dissent.

There are options, none of them easy. Next door in Eritrea, President Afwerki has a worse human rights record than Guelleh. Somalia is too unstable, Mombasa too far away and more US troops in the Middle East might un-nerve the Arab states. Then there’s Berbera which, politics aside, beats Djibouti hands down. It is English speaking in neighbouring Somaliland, the only working democracy on the Horn, on the same shipping lane to Suez and just 30-minutes by air from Lemonnier. But where Taiwan has limited recognition, the Republic of Somaliland has none despite more than 30-years of self-rule since it broke with Somalia.

At Berbera, Dubai firm DP World has developed one of the largest ports in the region. The company also ran the harbour at Djibouti until IOG nationalised it in 2018. In a White House increasingly worried by Xi Jinping and the rate at which he seems to be poaching US allies, some fear the lease on Camp Lemonnier could be just as easily revoked in exchange for China letting go the debt owed by Djibouti. Guelleh has assured the Pentagon this will not happen. In 2017, Sri Lanka defaulted on a loan and Beijing took one of its ports instead (both sides insist it was a legal transaction). Could this happen in Africa? And is it reason enough to move a base that has served America so well? These debates have already surfaced in Congress and will do so again under an administration that feels increasingly outspent and out-maneuvered in the developing world.

Having an option on the Horn is also used as an argument by the growing lobby in favour of recognising Somaliland. When Nigerian foreign minister Geoffrey Onyeama held a joint press conference with Mr. Blinken in Abuja, he dismissed the notion that China has a special place in the loan game. “We will go to anybody else who is providing something at a competitive rate,” he said. But is there “anybody else”? Especially for projects of dubious worth. Before investing a penny, a lender conducting due-diligence on the track from Mombasa to Uganda would have to ask why a new line was needed at all, when the old one could have been refurbished at a fraction the cost.

Geoff Hill is a journalist in South Africa.

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Foreign Policy News is a self-financed initiative providing a venue and forum for political analysts and experts to disseminate analysis of major political and business-related events in the world, shed light on particulars of U.S. foreign policy from the perspective of foreign media and present alternative overview on current events affecting the international relations.

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