Guinea Sells Its Soul And Freedom To China For 20 Billion Dollars: They Just Don’t Know It Yet

(THIS ARTICLE IS COURTESY OF GLOBAL VOICES)

 

A 20 Billion Dollar Trade Agreement Between China and Guinea Raises Concerns

Meeting between President Xi Jinping and the Guinean delegation, via CGTN Africa.

Leaders of BRICS nations (Brazil, Russia, India, China and South Africa) gathered in Xiamen, China as the five rising emerging economies for the ninth annual summit held from 3-5 September 2017. Alongside this conference, Ibrahim Kassory Fofana, Guinean Minister of State in charge of public-private partnerships, announced a framework trade agreement between China and Guinea.

This 20 billion dollar agreement will finance significant infrastructure projects over a 20 year period from 2017 until 2036. The deal constitutes an agreement through which Chinese investment will be repaid in exchange for allowing Chinese companies to undertake mining projects in Guinea, raising concerns among Guineans about its terms.

The Office of the President in Guinea has published a press release in an attempt to clarify the terms of the agreement; however, as noted by Diallo Boubacar on the site Africaguinee.com, details have not yet been made known. Several opposition leaders, including François Bourouno voiced their concern:

The trade deal (worth 20 billion USD) signed last Tuesday between Guinea and China has raised some concerns. Although it is anticipated that this deal will, for the most part, finance infrastructure projects in exchange for mining resources over a 20 year period, we, in the opposition party, have our doubts.

“We understand it is a mixed agreement, consisting of loans and gifts. However what we don’t know is what the loans will entail, such as the repayment rates, the terms and conditions, as well as the compensation details. Nor do we know how the gifts will be defined. As such, there are many questions we need to ask.”

In 2016, the mining sector accounted for 98.97% of Guinea’s exports (compared to 84.12% in 2015). Trains carrying ore can comprise up to 120 cars, emitting an infernal noise as well as dust clouds stretching from the extraction site all the way to the port.

Nevertheless, Guineans hope this sector will bring improvements to their living conditions, unlike the farming sector, which has been almost totally neglected. While Guinea has vast agricultural potential due to its varied climate and many rivers, the country is known as a “geological scandal” due to the disparity between the wealth of untapped resources and the poverty of its citizens.

Guinean blogger Jeanne Fofana from kababachir.com has raised doubts regarding additional debt representing more than 50% of the national debt, which already constitutes 48% of the gross domestic product (GDP). She concludes:

Guineans want to see a marked improvement in their living conditions. Simply providing billions of dollars and extolling the virtues of Alpha Condé [The Guinean President], quite frankly, borders on populism: “when talking about these kinds of amounts of money, the average Guinean remains sceptical, and with good cause! Because for them, this does not translate to an improvement in their daily life. The only way to convert this into bettering their lives is by providing employment.” Guineans are feeling deceived.

In an article by Radio France Internationale, RFI, Amadou Bah from the non-governmental organization (N.G.O.) Action Mine Guinée expresses his concerns:

However there has not been, as of yet, any clarification as to the quantity of the resources allocated.

Will this not just discourage investors from other multinationals from seeking concessions in Guinea? Will this be by mutual agreement? Will the value of the infrastructure be equal to that of the minerals to be exported? At the moment, we are hanging on the government’s every word as they negotiate this without providing many details.

Guinean netizens speak out

Guinean citizens have taken to Facebook to voice their doubts. The first bauxite exploitation in Guinea took place in 1937, but Guineans are still amongst the poorest in West Africa. Siradiou Paraya Bah, a resident of Conakry  joins the debate by posting on the wall of influential Guinean blogger Sidikiba Keita to ask what lessons can be learned from the past:

Can we know exactly what these trade agreements between China and Guinea entail?
What can we learn from previous decades of bauxite exploitation in Guinea?
What lessons can we take away from this?

What concerns Demba Thez Mara, a Guinan netizen in Boké, is the need to process the minerals before exportation:

I would like to see us put in place metallurgical and ore dressing plants so that we can process our unrefined products on site. In terms of the enrichment of AI203 (aluminium), China has the best flotation technologies; therefore in order to better develop our mines, we need on site processing, which will also require sufficient energy production.

Law enforcement officers have clashed with protesters at the centre of the main bauxite extraction site in Boké, Guinea in response to the adverse environmental impact of extraction and lack of economic benefits, particularly in terms of employment. Against this backdrop, blogger Sidikiba Keita responds to active Guinean Facebook user Ibrahim Ghussein’s message and warns Guineans:

1. Let’s not delude ourselves. SMB [Société Minière de Boké, in English: Boké Mining Company]’s current operations are on a small scale compared to what we are expecting, as this should increase tenfold, from 30,000 tons/day (t/d) to 300,000 tons/day. The Chinese have a very clear agenda: an all-out reduction in production costs, from extraction to FOB delivery. The EITI [Extractive Industries Transparency Initiative]’s latest report confirms that the Guinean government expects an average return of $4/t of bauxite, whereas CBG [Cie de Bauxites de Guinée] pay more than double that amount, due to their environmental protection measures. The stripping and blasting phases already create a barely manageable pollution issue. On top of this, the transportation phase will undoubtedly be via lorry, as it is currently. In any case, in light of the traumatic experiences endured by the population who live near to the SMB site, this is simply unsustainable, unless the local population are to be moved out in droves.

2. In any case, in light of the traumatic experiences endured by the population who live near to the SMB site, this is simply unsustainable, unless the local population are to be moved out in droves.

In terms of the environmental impact, Tidiane Sylla highlights the potential consequences of over-exporting, which risks flooding the market and causing the price to fall:

Exporting large quantities of bauxite could cause the price to fall on the international market. In the Boké, Boffa and Télimélé regions, more than ten companies are involved in bauxite production. We need to diversify and innovate so as not to saturate the market.

Guinea’s history of public distrust

A lack of public trust around national mining deals emanates from unfair contracts signed by Guinean Mining Minster Mamoudou Thiam during his term in 2009-10. Thiam has been in prison in the United States (U.S.) since December 2016 after U.S. courts found him guilty of laundering 8.5 million dollars in backhanders.

The Africa Center for Strategic Studies, an academic institution created by the U.S. Department of Defense and financed by Congress to study security issues in Africa, published a study in May 2015 entitled The Anatomy of the Resource Curse: Predatory Investment in in Africa’s Extractive Industries, which analyses problems caused by mineral wealth in certain African countries. In the chapter dedicated to Guinea entitled Exploiting a State on the Brink of Failure: The Case of Guinea, the study details how Mr. Thiam was able to illegally line his pockets while in power.

Face It, China Totally Owns The BRICS

(THIS ARTICLE IS COURTESY OF FORBES FOREIGN AFFAIRS)

 

Investing #ForeignAffairs

Face It, China Totally Owns The BRICS

I cover business and investing in emerging markets.  Opinions expressed by Forbes Contributors are their own.

Chinese President Xi Jinping walks with Brazilian President Michel Temer in Beijing on Friday, just two days before the opening of the annual BRICS Summit on Sept. 3. China is far and away the most powerful of the five BRICS. (Photo by GREG BAKER/AFP/Getty Images)

Is it at all humiliating to the Russians, at least a little bit, that the Chinese are far and away the biggest, baddest BRICS nation? Russia used to be a world superpower. It’s a world oil power. A world nuclear power. But beyond that, China is more relevant to the world economy than the Russians.

Brazil. What about them? For years, the commodity bubble made it seem Brazil was on its way to becoming the runaway leader of Latin America, surpassing Mexico, which is basically a U.S. import market. Brazil was, and is, a more diverse economy than Mexico. They weren’t dependent on any one nation, really. Then the commodity bubble burst and Brazil’s purchasing power has dropped, putting it on par with China’s. GDP per capita is also similar. China’s Happy Meal toy making economy has grown up and is home to more new billionaires than anywhere else. And as leaders from Brazil, Russia, India and South Africa meet in Xiamen on Sept. 3, it is clear to everyone watching that China is the leader.

Russia needs China because it is in a never-ending feud with the West. They have two things in common, generally: commodities supply and demand, and a desire for a multi-polar world, though this is probably more Vladimir Putin’s thing than Xi Jinping’s. China is at least as dependent on the U.S. as Russia is dependent on Europe.

Brazil needs China because that’s where all of its soybeans and iron ore goes. Brazil’s agribusiness is vital to the economic recovery now just two quarters young. In May, China and Brazil launched a joint investment fund to increase productive capacity. The fund has an initial sum of $20 billion and will reportedly go to finance investment projects in Brazil (not in China) that are of interest to both countries. Brazil’s president, Michel Temer, is already in China. He wants to convince them to buy airports and participate in other privatization bids as Brazil tries to trim more fat from its federal government.

Following the recent border skirmish, India can probably do without China. India’s main trading partners are the U.S. and United Arab Emirates. But if you include Hong Kong with China, then China is No. 2. More importantly, India’s imports are heavily dependent on the Chinese. Some $59 billion worth of Chinese imports moved into India in 2015, more than the No. 2 Sweden and No. 3 U.S. combined. Bilateral trade volume between China and India also rose by 21.5% year-on-year to $47.52 billion between January and July 2017, Indian customs data show.

South Africa needs China investment and Chinese buyers for its raw materials. China is its biggest export market, accounting for around $12 billion. That beats South Africa’s No. 2 partner, the U.S., with around $7 billion in exports, both based on 2015 figures.

China is a total beast. South Africa, Russia and Brazil are particularly at its mercy.

See: China-Like Wages Now Part Of U.S. Jobs Boom — Forbes

Rio de Janeiro Is A Complete Mess — Forbes

Trump Already Beat India On H1-B Visa Issue — Forbes

Guess Who Is Growing Sick Of Anti-Russia Sanctions? — Forbes

Indian Prime Minister Narendra Modi and Xi Jinping at the BRICS summit in Goa, India last year. India and China have agreed to pull back their troops from a face-off in the high Himalayas where China, India and Bhutan meet, signaling a thaw in the months long standoff. It’s a relationship where China has more Aces up its sleeve than India. (AP Photo/Manish Swarup, File)

Although all five of these countries stand to gain from closer commercial ties, China is the one that will gain the most. China has just about enough money sitting in international reserves to equal the economic output of Brazil ($1.7 trillion)Russia ($1.3 trillion) and South Africa ($295 billion). It’s state owned enterprises have the funding to buy strategic assets abroad, like water and oil and gas infrastructure. And its new billionaires like Jack Ma, founder of the e-commerce giant Alibaba, has his eyes set on being the Jeff Bezos of emerging markets. He basically already is.

The upcoming BRICS Summit will end on Sept. 5 with the usual rhetorical messaging and memorandums of understanding about how they will all accelerate trade, investment and technological know-how. China’s Commerce Ministry spokesman Gao Feng said on Friday that China wants to deepen international cooperation in improving industrial capacity. In convincing their emerging market partners that they need to get more productive, China can sell them their new robotic technologies. All those Chinese workers replaced by automation, can work building the screws and attaching the wires and packaging up new robots to ship to Brazil instead.

A few BRIC country companies have big business in China, too. It is not entirely a one way street. Brazil’s Embraer jet manufacturer has a facility in southern China, and builds planes with their Chinese joint venture partner.

Russian investment bank, VTB Capital, set up shop in Shanghai in 2015.

India’s Tata Group family of companies is in China. IT firm Tata Consultancy Services is there, with the usual tie-up with a Chinese firm.  Tata Steel has two steel mills in China. Tata’s Jaguar Land Rover unit has a JV with Chery Automobile to build the luxury cars in Changshu.

South Africa’s Old Mutual financial services firm used to have a foothold there but are now looking to dump their insurance unit, at least.

Meanwhile, here’s a quick snapshot of what China has accomplished, as outlined on Friday by China Daily:

  • Gezhouba Group announced March 30 that it will spend up to $200 million to acquire 100%  stake of Sistema Produtor Sao Lourenco, a water supply company in Brazil, China Daily first reported.
  • China Investment Corp partnered with Brookfield Asset Management in April to take a 90% percent stake in Nova Transportadora do Sudeste, a natural gas pipeline company owned by Petrobras.
  • Xiaomi enters the Russian smart phone market.
  • Shanghai-listed China Railway Group is building a $2.5 billion high-speed railway in Russia. The deal was announced in June.
  • Alibaba’s Ant Financial Unit opens up Alipay in cahoots with Russia’s VTB Group last month.
  • China Petroleum Engineering & Construction Corp. inked a deal with Russia’s Gazprom in April to build an estimated $15 billion natural gas pipeline into China.
  • Alibaba Cloud, the cloud computing arm of Alibaba, plans to build a data center in Mumbai by the end of next March, the company said on June 9.
  • Oil refiner Sinopec signed an agreement to buy 75% of Chevron South Africa’s assets for $900 million in March.

It is clear who is the big buyer and who is staking claim to turf long term. Brazil is selling; China is buying. South Africa is a seller, too. So when Putin and other leaders meet in China on Sunday, they will all know on many levels, that in terms of global finance and trade, they are no longer equals.

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India, China Agree To ‘Expeditious Disengagement’ of Doklam Border Dispute

(THIS ARTICLE IS COURTESY OF CNN)

 

India, China agree to ‘expeditious disengagement’ of Doklam border dispute

A border dispute between India and China in the Himalayas appears to be deescalating.

Story highlights

  • Dispute is over territory in the Himalayas
  • Had brought back memories of a deadly 1962 border conflict between India and China

(CNN) India and China have agreed to deescalate a months-long territorial standoff in the Himalayas, ahead of a major economic summit involving both countries.

In a statement Monday, India’s Ministry of External Affairs said the “expeditious disengagement of border personnel at the face-off site at Doklam has been agreed to and is ongoing.”
China’s official Xinhua news agency said India had withdrawn its personnel and equipment “that had crossed the border back to the Indian side.”
“Chinese personnel verified this at the scene,” Xinhua reported. “China will continue to exercise its sovereign rights and preserve its territorial sovereignty in accordance with historical border agreements.”
Indian Prime Minister Narendra Modi and Chinese President Xi Jinping are expected to meet at the BRICS summit — alongside leaders from Brazil, Russia and South Africa — in the southern Chinese city of Xiamen later this week.

Diplomacy at work

The standoff between India and China, the two largest BRICS economies, comes as Beijing seeks to expand the five nation grouping to include other emerging nations, many of which are seen as sympathetic to China’s interests, according to Sudheendra Kulkarni, chairman of the Observer Research Foundation Mumbai.
China has invited the leaders of Thailand, Indonesia, Kazakhstan, Egypt and several other nations to the Xiamen conference.
But the quick deescalation of the situation ahead of the summit shows that Modi has withstood Chinese pressure and forced Beijing to back down, said Manoj Joshi, a fellow at the Observer Research Foundation in Delhi.
The summit will provide a good opportunity to solve the two sides’ differences, he said, “provided the two sides understand that the time for posturing is over and diplomacy should be allowed to work.”
Dhruva Jaishankar, an analyst at Brookings India, said Monday’s announcement was a positive sign that “despite differences both sides can resolve their concerns about each other peacefully and through diplomatic channels.”
But Dan Wang, China analyst at the Economic Intelligence Unit, warned the “risk of both sides getting back to military standoff is not eliminated.”
“We are likely to see more spats and conflicts between China and India,” he said, adding that while outright conflict was unlikely, both countries may seek to punish each other economically by placing restrictions on Chinese and Indian firms accessing their respective markets.

Tense stand-off

The Doklam dispute began in July, over a thin strip of land bordering both countries and Bhutan, in the Himalayas. Though not a part of Indian territory, the area is close to the “chicken’s neck,” a strategic corridor that serves as a vital artery between Delhi and its far northeastern states.
The stand-off was sparked after Bhutan accused China of constructing a road inside its territory in “direct violation” of treaty obligations. China, which does not have formal diplomatic relations with Bhutan, denied the accusation, contending that Doklam is part of Chinese territory.
India and Bhutan have maintained historically strong relations. Bhutan co-operates closely with India in determining its foreign policy, and the Indian Army is involved in the training of its armed forces.
Beijing accused India of sending troops into Bhutan, further escalating the dispute. In the weeks since, both countries had upped their military presence in the region, China engaged in live fire drills near the border, and a war of words erupted, culminating in a racist video published last month by China’s official Xinhua news agency in which a Chinese actor wearing a turban and fake beard mocked Delhi for “shooting itself in the foot.”

China and India have been engaged in multiple border disputes in recent months.

Long-running tension

The Doklam dispute is the latest in a long-running series of territorial flare-ups between India and China. In 1962, the two countries engaged in a bloody border war, and skirmishes have continued to break out sporadically in the decades since.
Bhutan quick facts

Bhutan, also known as the Land of the Thunder Dragon, is a small landlocked country in the Eastern Himalayas. It lies on the border between India and China.

With a population of less than a million people, it is the second least populated country in Asia.

The country is officially a Buddhist kingdom, with the King of Bhutam Jigme Khesar Namgyel Wangchuck as its head of state in a constitutional monarchy.

Bhutan is popular for being an exotic luxury holiday destination, with most tourists paying a flat rate of between $200 to $250 per day to experience its untouched natural beauty.

On June 26, China accused Indian border guards in the state of Sikkim of crossing into its territory in southwestern Tibet, in an attempt to obstruct the construction of a new mountain road.
India has not denied its troops were present in the area. According to a statement released by the Indian Ministry of Foreign Affairs, Indian personnel “approached the Chinese construction party and urged them to desist from changing the status quo.”
In response, China blocked religious pilgrims from India from visiting the Manasarovar shrine, accessible only via the Himalayan Nathu La that runs alongside the border between the two nations, “out of security concerns.”
The moves come at a time of steadily deteriorating ties between the two countries, say analysts, who point to Chinese investment in Pakistan-administered Kashmir, and Chinese frustration with India’s unwillingness to join its One Belt One Road (OBOR) development initiative as points of contention.

Chinese president arrives in India’s Goa for BRICS summit

(THIS ARTICLE IS COURTESY OF THE SHANGHAI DAILY NEWS)

Chinese president arrives in India’s Goa for BRICS summit

CHINESE President Xi Jinping arrived in the western Indian state of Goa Saturday for a summit of the emerging-market bloc of BRICS that groups Brazil, Russia, India, China and South Africa.

Leaders of the five countries are expected to discuss BRICS cooperation and other issues of common concern at the Oct. 15-16 summit, themed with “Building Responsive, Inclusive and Collective Solutions.”

A Goa declaration will be issued when the summit concludes Sunday.

Along with Xi, Brazilian President Michel Temer, Russian President Vladimir Putin, Indian Prime Minister Narendra Modi and South African President Jacob Zuma will be attending the summit, the eighth of its kind.

The five leaders will hold dialogues with representatives of the BRICS Business Council and state leaders of BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation) countries at the summit.

The BIMSTEC, initiated to connect South Asian and Southeast Asian countries, comprises Bangladesh, Bhutan, India, Myanmar, Nepal, Sri Lanka and Thailand.

President Xi will also hold bilateral meetings with leaders of other countries on the sidelines of the summit.

This year marks the 10th anniversary of the BRICS cooperation mechanism, which gathers the world’s five major emerging economies.

The bloc members have seen their cooperation growing over the past decade, especially the establishment of the New Development Bank (NDB) and the Contingent Reserve Arrangement (CRA) in 2014.

Despite economic headwinds in the BRICS countries and external skepticism about whether the block is losing its power over recent years, the International Monetary Fund (IMF) said earlier this month in its latest issue of World Economic Outlook that in emerging market and developing economies, the 2016 growth will accelerate for the first time in six years.

China and India, in particular, will continue their relatively fast pace in growth this year and next, according to the IMF projections. Meanwhile, the IMF cut its 2016 growth prospects for advanced economies following a slowdown in the United States and Britain’s referendum vote to leave the European Union.

The five BRICS leaders just met last month in the eastern Chinese city of Hangzhou when China hosted the 11th summit of the Group of 20 (G20) major economies.

At their meeting on the sidelines of the G20 summit, President Xi said that BRICS members should enhance coordination to make emerging-market economies and developing countries play a bigger role in international affairs.

BRICS nations are leaders among emerging-market economies and developing countries, and also important members of the G20, Xi said, noting that they should reinforce coordination to build, maintain and develop the BRICS and G20 platforms.

China has been a staunch supporter for and an active participant in BRICS cooperation, Chinese Vice Foreign Minister Li Baodong told reporters earlier this week.

“We hope the Goa summit can send out a positive signal of confidence, solidarity and cooperation, help deepen our practical cooperation and promote the cooperation level, enhance communication and coordination on major international issues to safeguard our shared interests, and strengthen dialogue and cooperation with other countries in the region,” Li said at a press conference ahead of Xi’s trip.

India is the final stop of Xi’s Southeast Asia and South Asia tour, which has already taken him to Cambodia and Bangladesh.

Before leaving Bangladesh on Saturday morning, Xi laid a wreath at the national martyr monument in Dhaka.