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From the African Union to the World Economic Forum: The Political Economy of Continuing Dependency

World Economic Forum protest against Trump, Jan. 2018
World Economic Forum protest against Trump, Jan. 2018

Summits in Addis Ababa and Davos represent the ongoing divide between Imperialist states and the developing countries

After the demeaning comments by United States President Donald Trump related to the preference for northern European immigrants over Africans both on the continent and in the Caribbean, is indicative of the post-colonial crisis of relations between global capitalism and the emerging nations in Africa, Asia-Pacific, Latin America and the Caribbean.

This division of wealth, power and influence could not be more glaringly illustrated than character of two summit meetings during the latter days of January. One gathering in Addis Ababa, Ethiopia where the 55-member African Union will meet at its headquarters built by the People’s Republic of China, represents on some level the aspirations of over one billion people who reside on the continent.

Another confab in Davos, Switzerland known as the World Economic Forum (WEF) will be dominated by the industrial and financial magnates of the West along with the heads-of-state of the imperialist governments. African leaders are present in Davos notwithstanding the disadvantageous status they are occupying.

The Addis Ababa gathering is the 30th Summit of the AU, the successor of the former Organization of African Unity (OAU), founded also in the same Ethiopian capital on May 25, 1963. Over the last fifty-five years the AU/OAU has sought in various forms to foster the rapid eradication of colonialism and the unification of Africa.

Another aspect of the AU in recent years has been the development of preferential trade areas, the strengthening of regional organizations such as the Economic Community of West African States (ECOWAS), the Southern African Development Community (SADC), the East African Community, Inter-Governmental Authority on Development (IGAD), among others, while providing mechanism for the resolution of internal conflicts many of which stem from the legacy of European slavery and colonial rule. These initiatives have gained mixed results while although progress has been made in economic growth along with political cooperation, AU member-states remain subject to the international market still controlled by the former colonial powers and contemporary neo-colonial strongholds within Washington, New York City, London, Paris, Brussels, Berlin and Davos.

At the 30th Summit of the AU the focus has been placed on ending corruption within various nation-states. There is also the desire expressed for the organization to become 100 percent self-reliant within another two years.

According to a press release from the AU: “In his opening remarks, the Chairperson of the African Union Commission, Moussa Faki Mahamat commended the quality work done by the Permanent Representatives’ Committee (PRC) with the view to establish appropriate conditions conducive to the success of this meeting of the Executive Council. He further commended the encouraging level of contribution to the Peace Fund aimed at consolidating peace efforts within the continent. The AUC Chairperson expressed the hope that by 2020 AU will be able to finance itself at 100% if we maintain this trend of increasing interest by the Member States willing to contribute substantively on peace keeping in Africa. The Chairperson underlined that the AU Commission can pursue this commitment and resolution and will rely on Member States to support the trend of self-financing.” (https://au.int/en/pressreleases/20180125/32nd-ordinary-session-executive-council-african-union-kicked)

Davos and Capitalist Expropriations through Tax Captures by the Ruling Class

The WEF in Davos is taking place in the aftermath of the tax bill recently passed in the U.S. which is being attributed to the incessant rise in the Stock Market and the prospects for huge profits by the multi-national corporations and banks. Although Trump has alienated many within the business media and government, Wall Street apparently agrees with his thrust towards monumental amounts of public spending being redirected to the capitalist ruling class.

These firms are singing the praise of the Trump program at Davos. Prior to the gathering, large corporations such as Wal-Mart announced raises for its employees who are in the low-wage categories. Even though this makes good propaganda for the theory of trickle-down economics, the fact is that hundreds of retail outlets are slated for closings in the U.S. This downsizing within the malls and other brick and mortars shops has been blamed on the growth within e-commerce. However, no real concrete assessment of the lay-offs of hundreds of thousands of workers has ever been presented to the people in order to explain the redundancies.

The general view in Davos among the capitalist elites is that the tax heist has the potential to stimulate profitability along with enhancing direct investments. This tax legislation, the first tangible bill passed by the Republican-dominated House and Senate, lowers the corporate tax rate from 35 percent to 21 percent. There are provisions which will ostensibly provide incentives for U.S.-based companies to bring money held overseas back into the country. Such a policy prompted Credit Suisse (CS) CEO Tidjane Thiam to suggest that the firm will seek investments in the U.S.

In an article published by CNN Money, it notes that: “Citigroup (C) CEO Michael Corbat predicted the change in tax rules would help power business expansion. ‘Maybe this is the catalyst that takes us from optimism to confidence,’ he said. The executives voiced concerns that with the U.S. economy at full employment, businesses may struggle to fill new jobs that result from this wave of investment. ‘The reality of bringing a lot of jobs back is difficult,’ said Bank of America (BAC) CEO Brian Moynihan.”

Although this notion that the economy in the U.S. is in “full-employment” at 4.1 percent blatantly ignores the reality that the Labor Participation Rate (LPR), the actual indices measuring involvement in actual jobs holdings, stands at only 62.3 percent leaving over one-third of the work force outside the formal labor market. Poverty levels remain high, approximately 43 million people (12.7 percent), and sharply higher within the African American and Latino communities, where the rates of official impoverishment are 23 and 19 percentage points respectively.

The AU and Prospects for Relations with the Imperialist States

Such a situation is not likely to attract substantial foreign direct investment in Africa on terms favorable to AU member-states and their constituencies. Moreover, the racist sentiments reflected in domestic and foreign policies enacted by the Trump administration would clearly give pause to any optimistic view by African leaders in regard to relations with the continent.

Consequently, some African business and political leaders have stated they would walkout of Trump’s speech to the WEF on January 26. The U.S. president has denied referring to African states as “shitholes”, however, admitting that he did use “tough language.”

Other reports indicate that the American head-of-state will meet one-on-one with Rwanda President Paul Kgame, along with other African leaders. The AU collectively and individual states have concurrently demanded an apology for these racist remarks. None has been forthcoming so far, weeks after the alleged offenses occurred.

Even if African corporate and political leaders protest the Trump speech in Davos, the long term questions remain over the relationship between the AU member-states and the world capitalist system. The character of these connections historically has been a by-product of slavery, colonialism and neo-colonialism. The growth over the last decade within African nations has been relative and still dependent upon the prices of commodities determined by international finance capital.

Therefore, several African economies are only now said to be emerging from recession including the Federal Republic of Nigeria, the Republic of South Africa and the Republic of Angola. These nations are producers of energy and mineral resources where prices have declined precipitously in the last four years.

Over the last few months, the oil market has witnessed a rise in prices-per-barrel on the global market. Nevertheless, currency values remain weak and the seeming “recoveries” remain fragile.

Ultimately, Africa must collaborate to a greater degree with other emerging economic regions to establish an alternative monetary and trading system which excludes the U.S. and all imperialist states as dominant forces. Only when this occurs will the sustainable development of the continent and the world be realized.

By Abayomi Azikiwe
Editor, Pan-African News Wire
Friday January 26, 2018

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