The ‘Investment in Libya’ Editorial

In August 2011, when Muammar Gaddafi’s fate as leader of Libya was all but assured, Reuters ran an article with illuminating analysis about potential and pitfalls in post-Gaddafi Libya. Very positive of the future prospects, the missive focused on the wealth to be found on Libyan territory with the usual fears about instability and extrajudicial killings. It was, in simple terms, the kind of thing rife in Africa and other post conflict societies. But hidden in the bowels of apparent reporting was this nugget: ‘If it can hold together, the new [Libyan] government is likely to be friendly toward the West, having come into power supported by NATO air strikes. An official at Libyan rebel oil firm AGOCO [already] said the company may have difficulties working with China, Russia and Brazil which opposed tough sanctions on Gaddafi. So Western companies look well positioned as billions of dollars in oil exploration and construction contracts come up for grabs as part of the reconstruction effort.’

For the record, this paper has nothing against China, Russia or Brazil doing business in Africa. In fact, there’s no doubt that there are countries enjoying the foreign direct investments [FDI] from the BRIC [Brazil, Russia, India and China] nations. However, the difference between doing business with China and the US, for instance, is that the latter will, even halfheartedly, try to push for reforms and even ensure that its multinational corporations respect elements of human security and child labor laws. China does not care about such things. Brazil is, probably, not yet at the level to attract such scrutiny, India, despite being the world’s largest democracy, still has its caste system and Russia is not even pretentiously democratic.

Of course, the West has its own problems. The income disparity between the rich and the poor in the US for instance is alarmingly growing. The global financial crisis of 2008 exposed the underbelly of these two Western exemplars – and certain prestige was lost. However, these two countries [save for this incident with Palestine] have a semblance of order around human rights. Fareed Zakaria articulated this concept best in his liberal democracy treatise. A liberal democracy is a political system marked not only by free and fair elections, but also by the rule of law, a separation of powers, and the protection of basic liberties of speech, assembly, religion, and property. That said, people do not care much for the democratic part of ‘liberal democracy.’ They want the liberal part more than anything else. The lack of liberal things is what led to the martyr who started the Arab Spring in Tunisia. And that is why investment from the West might be better for Africa than investment from the other countries.

Interestingly, a few days ago, the European Union tried to lure China to provide Europe with some of its gazillions of cash. While China is, according to the New York Times expected to demand significant concessions, including financial guarantees and limits on what Beijing sees as discriminatory trade policies, in exchange for any investment in Europe’s emergency stability fund, what is even more important is what this means for China politically. It is a fact that the Middle Kingdom is a world power: but there is also the reality that with power comes responsibility. For starters, the country is not liberal. While this might not matter for the over 250 million middle class Chinese, one has to wonder what it is hiding by failing to allow unlimited access to the World Wide Web. Why does China control the media? Does China need to be a command and centralized economy to ensure its survival? This paper believes that although the communist country’s best days are probably still ahead, China is riding on very thin and slippery ice. The poverty, illiberal aspects or even lack of basic freedoms could blow up in its face. On the other hand, China has an export led growth strategy where it, unfairly, devalues its currency to the chagrin of its biggest trading partners. The country as has a huge number of poor people. We cannot even start to fathom the hundreds of millions of Chinese children that survive on maybe a paltry meal a day.

While we did not mean to get into the details of China, Africa is best served by investment from the West. This point could be debated. However, back to Libya: CNN reports that thanks to the astute financial investments made by Gadhafi’s regime, some experts say money is one thing Libya will not be short of. What Libya lacks is expertise on modern capitalist economies. Thus, if they do not need money, why shouldn’t they look towards the West and find a friend?

Dennis Matanda,
Editor