Aurelia Butler

Welcome back. Scarcely a week passes without political leaders in Europe, the US, China and Russia visiting or hosting their African counterparts. All the big powers want Africa on their side — but Europe is finding it hardest to make new friends and promote its interests. I’m at [email protected], the results of the poll in last week’s newsletter. Asked if President Emmanuel Macron would be able to continue his reforms in France, some 41 per cent of you said yes, 33 per cent said no and 26 per cent were on the fence. Thanks for voting!The competition for Africa’s friendship is heating up. This is not just about securing access to the continent’s immense natural resources. It is about winning the political support of African countries in an era when the US and its European allies are at odds with China and Russia over the apparatus, rules and values of the international order.First and foremost, western governments are dismayed at the reluctance of many African countries to line up with them in condemning the Russian invasion of Ukraine. Ana Palacio, a former Spanish foreign minister, summarises:The west got a wake-up call last March, when 25 of Africa’s 54 countries abstained or didn’t participate at all in a vote on a United Nations resolution demanding that Russia immediately end its military operations in Ukraine . . . For a continent that has all too often watched the world’s great powers use international law to advance their own interests, western criticisms of Russia rang hollow.In an effort to win African hearts and minds, the US and Europe are stepping up their engagement with the continent — but so are Beijing and Moscow. Let’s take a look at who’s been on their travels.Africa: never a more popular destinationAt the start of the year, Qin Gang, China’s new foreign minister, made his debut on the world stage by paying a week-long visit to the African continent. Sergei Lavrov, Russia’s foreign minister, recently visited South Africa, Sudan, Mauritania, Mali and other countries.This week, US vice-president Kamala Harris was on a tour of Ghana, Tanzania and Zambia. Other recent US visitors to Africa include secretary of state Antony Blinken, who went to Ethiopia and Niger, and Treasury secretary Janet Yellen, who was in Senegal, South Africa and Zambia.As for the Europeans, Paolo Gentiloni, the EU’s economy commissioner, travelled to Tunisia this week. In Brussels, commission president Ursula von der Leyen hosted President William Ruto of Kenya.A few weeks ago, French president Emmanuel Macron was in Angola, Gabon, Congo-Brazzaville and the Democratic Republic of Congo — and it was in the DRC, sub-Saharan Africa’s largest state, that we saw Europe’s diplomatic difficulties in sharp relief.Patronising and hypocritical Europe?In this commentary for digital publication Social Europe, Jérémy Lissouba, a Congo-Brazzaville opposition politician, asserts that Macron, while visiting the Democratic Republic of Congo, refused to condemn “Rwanda’s support for M23 rebels causing havoc in eastern DRC — a situation comparable to Russia’s covert support for Donbas separatists in recent years”.Lissouba says Macron compounded this alleged error by lecturing DRC president Félix Tshisekedi on freedom of the press:His outburst brought yet another bitter reminder of Europe’s enduringly paternalistic and dissonant attitude towards the continent.Arguably, Lissouba is too harsh on Macron, who, despite France’s close ties with Rwanda, made it clear he didn’t support the rebels in DRC. “There cannot be a double standard between the tragedy being played out in Ukraine on European territory and that being played out on African soil,” Macron said.Still, Lissouba is correct that African leaders often see Europe’s postcolonial involvement with the continent as a long story of grand promises mixed with inconsistent implementation and missed opportunities at best, self-interest and hypocrisy at worst.Lidet Tadesse Shiferaw, an Ethiopian specialist in African peace and security issues, comments:The EU-Africa partnership is not new to disappointments, certainly for African states. However, the blows from the past few years hit differently. Commitments of the partnership are preceded by pompous branding and high-level fanfare . . . casting doubt on intentions and credibility as well.High hopes, meagre resultsThe EU routinely describes its relationship with Africa as a “key priority”. So what has gone wrong?Underlying everything is the legacy of European imperialism in Africa. It affects not only the attitudes and behaviour of each side, but the structure of their economic relationship.As the chart below shows, the EU in 2021 was still — just — Africa’s largest partner for trade in goods. But raw materials continue to account for most African exports to Europe — other African products face a myriad of non-tariff barriers protecting the EU market.The larger picture is one of many meetings, declarations and action plans — but too few concrete results, as W Gyude Moore and Ovigwe Eguegu explain in this article for the Center for Global Development.The first EU-Africa summit was held in Cairo in 2000. There have been five more since then, most recently in Brussels a year ago. However, the widespread view in Africa is that, 23 years on from Cairo, “little in the relationship has changed for the better”, Moore and Eguegu write.Apart from economic issues, one serious disappointment in recent times is what African states see as a slow and insufficient EU response to the continent’s need for Covid vaccines.Next, African governments are concerned that Europe’s emphasis on supplying military and financial aid to Ukraine is causing it to neglect peace operations in Africa — a problem of which some African policymakers were, in fact, complaining even before Russia’s invasion.Finally, African countries contend that the EU has rowed back on promises of opening pathways for legal migration to Europe, focusing instead on suppressing migrant trafficking and deporting unwanted arrivals.Clearly, the EU has every right, not to mention duty to its citizens, to control its borders. But a common African perception is that the EU and its member states use their combined economic development funds — about €25bn in 2019 for Africa — partly as an instrument for migration control.Limits to Russian influence in AfricaAll this provides opportunities for expanded Chinese and Russian influence in Africa. Giles Merritt, of the Friends for Europe research group, says:China’s involvement tended to be dismissed as the opportunistic asset stripping of raw materials, while Russia was seen as an unscrupulous supplier of weapons to a few tinpot African dictators. Both characterisations are wrong because for many Africans Beijing and Moscow make positive contributions. This European prejudice also underestimates the speed and degree with which Europe’s influence has declined.Over the past two decades, Russia has indeed been the largest arms supplier to Africa, as shown in the chart below, compiled by the Peterson Institute for International Economics.

Russia also benefits from a certain goodwill in Africa as the successor state to the Soviet Union, which provided military and diplomatic support for national liberation movements fighting western colonialism.Some African states are sympathetic to Russian arguments for loosening the west’s grip on the global order, and perhaps even to Russia’s self-proclaimed role as a defender of conservative, traditional values.However, there are limits to Russian influence in Africa. Many of the continent’s leaders are perfectly aware that Vladimir Putin’s war in Ukraine is an example of neo-imperialism in its own right.And as Vadim Zaytsev points out, Russian trade and investment in Africa are considerably smaller than those of the EU, China and the US.China’s search for African alliancesAs for China, it is now well understood in Africa that countries lacking the fiscal capacity and growth potential to service loans from Beijing risk falling into a chronic “financing curse”, as Shirley Ze Yu writes in an London School of Economics blog.But she makes a good case that, from Beijing’s point of view, the aim is not to turn African states into helpless debtors. Rather, it is to forge political alliances that will help it overturn the western-designed global order, and economic partnerships that will secure access to resources and protect China against a decoupling of business ties with the US and its allies.Where does Europe stand in the great power rivalry in Africa? With a lot to do to catch up. As Merritt puts it:Much is made by EU officials and European leaders of close historical ties, but the reality is that the EU and its member states have to seriously up their game.More on this topicRussia’s growing footprint in Africa’s Sahel region — an analysis by Paul Stronski for the Carnegie Endowment for International PeaceTony’s picks of the weekBusiness figures in east Asia linked to organised crime have helped facilitate large, illicit deliveries of oil to North Korea, according to an investigation by the FT in partnership with the Royal United Services Institute think-tankChina’s long march into Russia’s top scientific faculties has advanced in strides since Vladimir Putin’s full-scale invasion of Ukraine, Andrei Soldatov and Irina Borogan contend in an article for the Washington-based Center for European Policy Analysis More

CERNOBBIO, Italy (Reuters) – The European Central Bank (ECB) is monitoring broad risks across the financial sector and will act to preserve stability in the euro area, ECB vice-president Luis de Guindos said in a speech on Saturday.De Guindos provided reassurance on the established banking sector in the single currency zone, saying banks had strong capital and liquidity positions but he warned of wider dangers elsewhere in the system.”…In our view, vulnerabilities in the financial system prevail in the non-bank financial sector, which grew fast and increased its risk-taking during the low interest rate environment,” De Guindos told the Ambrosetti business forum in northern Italy.He said policy reforms to address these vulnerabilities were critical.”Priority should be given to policies that help build resilience in the sector, such as by reducing liquidity mismatch, mitigating risk from leverage, and enhancing liquidity preparedness across a broad range of institutions,” he said.The ECB has been raising interest rates to try to curb rising inflation but there have been concerns that these higher borrowing costs are fuelling turmoil in the financial markets.De Guindos said that headline inflation was likely to decline considerably this year but underlying inflation dynamics would remain strong.”The feedback between higher profit margins, higher wages and higher prices could pose more lasting upside risks to inflation,” he said. More

China launched a review into US chip manufacturer Micron Technology on “national security” grounds, as Beijing retaliates against Washington’s increasing curbs on Chinese access to semiconductor technology. In a statement released late on Friday, the Cyberspace Administration of China said it would review imports of Micron’s products in order to maintain national security, ensure the security of its information infrastructure and prevent risks caused by product problems.Nasdaq-listed Micron Technology is America’s largest maker of memory chips. Its shares fell 4 per cent in the US following the announcement.The semiconductor industry is at the heart of economic decoupling between the world’s two superpowers. In October last year, Washington introduced expansive chip export controls in an effort to slow China’s progress in artificial intelligence and super computers. Since then, the Netherlands and Japan joined the US in imposing more restrictions. The CAC announcement late on Friday marks a retaliatory move from Beijing and adds to the challenges facing businesses caught between the two countries.The Biden administration has intensified economic pressure on China, with a special committee in Washington adding to bipartisan scrutiny on US businesses operating in the mainland. In response, companies in China are exploring how to diversify their supply chains.In September last year, Micron announced it would receive around $320mn in subsidies from the Japanese government to expand co-operation with the US.Despite China adopting a more conciliatory tone to business as it reopens from years of isolation during the pandemic, there are signs there could be more retaliation in response to Washington’s restrictions. Last week, top US business leaders including Apple chief Tim Cook largely kept a low profile at the China Development Forum, an annual opportunity for them to meet top officials in Beijing.The Netherlands and Japan in January reached a deal with the US regarding semiconductor exports, with the latter unveiling restrictions on 23 types of equipment on Friday. The deal is designed to cut off China’s access to advanced chips that could be used in sophisticated weaponry and machines. Tan Jian, the Chinese ambassador to the Netherlands, last month warned of “consequences” if the country went ahead with export curbs.In its quarterly report published in March, Micron said that “the Chinese government may restrict us from participating in the China market or may prevent us from competing effectively with Chinese companies”.

It also warned over the risk of losing access to rare earth materials that are mainly produced in China.“Constrained supply of rare earth elements, minerals, and metals may restrict our ability to manufacture certain of our products and make it difficult or impossible to compete with other semiconductor memory manufacturers who are able to obtain sufficient quantities of these materials from China,” the company said.In a statement provided to Bloomberg following the announcement of the investigation, Micron said it was communicating with the Chinese regulator and co-operating fully. More

VW plans to increase the number of charging posts for electric vehicles in China to 17,000 by 2025, as it planned to invest 15 billion euros ($16.26 billion) in the country on electric mobility together with its three joint ventures by 2024, Stefan Mecha, chief executive of the Volkswagen (ETR:VOWG_p) brand in China, told China’s EV 100 forum in Beijing.”The market is flush with new, highly competitive players but strong competition simply motivates us to constantly innovate and improve,” Mecha said. He added that despite softer short term demand in China, the company is confident that there would be a recovery. In February, Chinese electrified vehicle maker BYD outsold the Volkswagen-branded cars to be the best-selling passenger car brand in the world’s largest auto market for the second month in four. Mecha also urged China to extend a purchase tax exemption on new energy vehicles (NEVs), which include both pure electric and plug-in hybrid cars, beyond this year as part of the policy support for the sector.In September, China extended the tax exemption on such vehicles by a year to the end of 2023. The government is studying policies to promote auto consumption and eliminate backward automakers as China’s NEV market faces challenges of weak domestic demand, Xin Guobin, vice minister at Ministry of Industry and Information Technology, said at the same forum. Xin also urged the industry to enhance capabilities in securing supplies of metals such as lithium, cobalt and nickel as it also faces threats of global trade protectionism. ($1 = 0.9226 euros) More

If people really have begun to believe that prices are going to just keep on rising, then defeating high inflation could require dramatic actions by the Fed to puncture those expectations, Waller said in remarks prepared for an academic conference at the San Francisco Fed.Dramatic Fed rate hikes could slow the economy suddenly and lead to large job losses. But if what’s driving higher prices is a sudden rise in the frequency at which businesses reset their prices — a theory for which Waller said there is some evidence — then “inflation can be brought down quickly with relatively little pain in terms of higher unemployment,” he said. “Recent data are consistent with this story.”More data will be needed to figure out “which story is right,” he said. More

Mexico’s government previously found “serious irregularities” at the factory violating the 2020 United States-Mexico-Canada Agreement (USMCA), the second probe into the plant at the request of the U.S. following worker complaints.Mexico has now agreed to start sanctions proceedings against VU Manufacturing and ensure the firm takes “appropriate action” against human resource personnel who violated worker rights, including the possibility of firing them, the accord said.”The new management must affirm … its willingness to dialogue with all the unions without discrimination or favoritism,” said the agreement published on the U.S. Trade Representative’s website.VU Manufacturing, an unlisted Michigan-based company, did not immediately respond to a request for comment. Workers who recently formed a new union, La Liga, said VU Manufacturing management in the border city of Piedras Negras had repeatedly stalled the union’s efforts to establish the plant’s first collective contract, which would include a salary increase, and intimidated and harassed union supporters. La Liga member Cristina Ramirez said the U.S.-Mexico accord would benefit workers if VU Manufacturing followed through.”After we’ve proved so many violations to our rights, the only true remediation is the signing of the collective contract,” she said.The plant produces car interior parts including arm rests and door upholstery for brands including Toyota, Honda and Chrysler, and pays workers 312 pesos ($17.32) a day.The U.S. said it hoped Mexico’s efforts to fix the issue would discourage other firms from meddling in union affairs.”This will send a strong message beyond this facility,” said Thea Lee, deputy undersecretary for international affairs at the U.S. Labor Department.The VU Manufacturing case is among several labor complaints filed by the U.S. in Mexico under USMCA. Others involve General Motors (NYSE:GM), Stellantis and Panasonic (OTC:PCRFY).($1 = 18.0099 Mexican pesos) More

Australian inflation slowed to an eight-month low in February, data out this week showed, due partly to a fall in holiday travel and accommodation prices, boosting the case for the Reserve Bank of Australia (RBA) to pause its rate-hike cycle when it meets on Tuesday.”It was pleasing the results, the trend going in the right direction this week with the figures but we know cost of living pressures are there,” Albanese told reporters in Melbourne.Inflation remained “a real issue” and “a global phenomenon”, he said, campaigning alongside the Labor Party’s candidate for the federal seat of Aston, in Victoria state, where a by-election was taking place.Stubborn inflation has posed a challenge for the RBA, which last month lifted its cash rate to its highest level in more than a decade.Amid persistent inflation, cost of living has become a key political issue, and was a focus of last weekend’s election in New South Wales, the country’s most populous state. It was won by Albanese’s state Labor counterpart Chris Minns who campaigned in part on providing cost of living relief. The latest Australian Bureau of Statistics data, released on Wednesday, showed the monthly consumer price index (CPI) rose 6.8% in the year to February, the slowest rise since June. That compared with 7.4% the previous month and market forecasts of 7.1%.Investors, in the wake of the data, cut bets of a 25-basis point hike by the RBA at the next policy meeting to just a 5% chance, compared with 15% before.RBA Governor Philip Lowe has previously said the central bank was closer to pausing its rate hikes as monetary policy was now in restrictive territory, and suggested a halt could come as soon as April. More