Resource-rich Angola was once known as the scene of Africa's longest-running civil war. Today, life expectancy hovers
around 44 years — not unlike that of an average Briton living in the
1800s. Over 70% of the population lives in poverty, and the country has
one of the highest child mortality rates in the world. And the nation's
lifetime dictator of 30 years, Jose Dos Santos, leader of the
liberation-party-turned-permanent-government, the MPLA, does not appear
to have lost his lust for the throne.
Under Dos Santos's watch, since 1993, Angola's oil reserves have flowed into the coffers of the regime's corrupt wabenzi
elites as well as multinationals via opaquely structured oil-backed
loans. The MPLA initially justified these loans as a means of securing
arms and revenue to fight UNITA, an armed movement led by U.S.-backed
warlord Jonas Savimbi, also aligned with Portugal's secret police and
apartheid South Africa. Today, the corrupt ruling party is devouring
the nation's resources and its future.
Despite the civil war, during which the United States sought to
politically destabilize the government, the MPLA nevertheless provided
the United States with cheap oil via U.S. multinationals like Gulf,
which supplied 65%
of Angola's export earnings during the Reagan years. The MPLA,
meanwhile, invested 60% of its oil revenues into arms and much of the
remainder went into private gain. Presently, oil revenues account for
80-90% of export earnings, with oil chiefly exported to China and the United States. The oil money that flows in and out of Angola remains shrouded in mystery.
Angola is no longer officially a killing field, but the economy remains
dependent on enclave industries, with oil and diamonds comprising 99%
of exports. Though the government has embarked on developing domestic
industries and sectors devastated by war, such as infrastructure and
agriculture, these policies appear to lack the necessary political
will. As such, the profits from exports don't reach the majority of the
population.
Shadowy Transactions
Thanks to accounts located in secrecy jurisdictions, also known as
tax havens and offshore financial centers, Angola's oil transactions
are protected from external investigation — even from branches of the
same bank. Details of transactions are also ring-fenced by Angola's
secretive state-owned company Sonangol, conveniently bypassing relevant
ministries, the central treasury, and parliament. Since 2003, over
$13.5 billion has been sourced
through pre-export financing — largely limited to cash for future oil —
from major banks including Standard Chartered, BNP Paribas, Commerz
Bank, Deutsche Bank, Fortis, West LB, and others.
In theory, the regulatory authorities of specific jurisdictions
monitor these institutions, and are themselves scrutinized by global
bodies such as the Financial Action Task Force (FATF). But the FATF is
merely an advisory body, located in a dusty corner of the Organization
for Economic Cooperation and Development (OECD), and it is controlled
by major high-income countries that depend on access to Angola's
resource and its capital.
Sonangol remains the chief recipient of oil revenues and tax
concessions, but it's also able to subtract bogus losses and
expenditure rents remitted to the state. According to IMF reports, the
state shaved off over 20% of GDP in recent years. Though Angola
overtook Nigeria as Africa's primary oil producer in 2008, Sonangol
continues to conduct secretive audits, punctuated by occasional
transparency and no accountability. Meanwhile, the state maintains the
fiction of a firewall with Sonangol, which allows commercial and
state-owned investors to pretend that they are not dealing with a
human-rights-abusing government that exploits public resources on the
pretext of development. Sonangol remains under the radar by swiftly
repaying debts, even if via refinanced loans. The company traditionally
shied away from the IMF's interference and its requests for financial
transparency. It even paid back $2.3 billion in outstanding debt in
2006 to avoid the prying eyes of outside creditors.
This policy has also worked out well for the multinationals involved. Standard Chartered, for instance, has described Sonangol's performance as "impeccable" and countries like war-torn Angola as ever-sexier "investment environments."
Thirsty China
Through the Export-Import Bank, China has provided
over $24 billion in loans to Africa, chiefly through a barter
arrangement that emphasizes resource extraction. In return, China has
exported skilled laborers and materials and invested in infrastructure
to facilitate the flow of resource back home. In fact, over 50% of all
China loans through its Import Export Bank have been invested
in Africa, spanning 36 countries. These projects range from mega-dams
to railways, ports, and mining facilities. They are specifically
designed to improve the first two links in the commodity chain
— extraction and transportation — with production and distribution
tactically shifted to Beijing, and consumption going to countries like
the United States.
China also claims to
hold 60% of the world's rare-earth metals within its borders. These
strategic minerals — yttrium, holmium, lanthanum, thulium — are
essential for an estimated $100 billion end-user market that includes
many green technologies. Beijing has called for outright bans on the
export of certain minerals and urged quotas on others. This enables
China to retain priority access and dominate markets. But its policy
toward Africa is exactly the opposite.
China's two footholds on the continent are Angola and Sudan. It has extended
over $5 billion in oil-backed loans and revolving credit lines to
Angola. In 2007, for instance, China offered a $1.4 billion operating
loan to Sonangol through the China Petroleum and Chemical Corporation.
Since 2000, Chinese trade with Angola increased
by 14-fold. China's policy of political non-interference — turning a
blind eye to a country's human rights situation, for example — sets
just the tone for a regime like the MPLA.
U.S. Role
Vying for the position of top dog in Africa is the United States.
Through its new Africa Command, the United States has declared plans to
access 25-30% of its imports from Africa by 2015. With the Persian Gulf
in the middle of a politically turbulent region, Washington is eyeing
the Gulf of Guinea as the "new gulf." Already, Africa contributes
almost 20% of the America's crude oil imports, supplied by
oil-producing giants such as Nigeria and Angola, two primary
beneficiaries of the African Growth and Opportunity Act, along with
Chad, yet another petro-state governed by lifetime dictator Idriss Deby.
Military relations between the two countries have grown closer. Last
year, the U.S. Navy ship Elrod landed in the port of Lobito, Angola to
further the naval and military alliance between the two nations. One of
the four main U.S. military arteries in Africa, the International
Military Education Training program has received increased funding
under the Obama administration.
The United States is making other inroads in Angola in agriculture,
economic reform, and health care. One example includes Angola's
partnership with USAID, which uses aid to promote U.S. multinationals
like Chevron and technologies such as genetically modified organisms.
Unlike the oil-rich Niger Delta, Angola lacks the organized, collective
resistance to threaten the powerful combination of state and
multinationals. In contrast to the Delta, where the bulk of extracted
oil is inland, Angola's tapped oil for the most part is safely located
offshore.
During the Cold War, Angola was the site of a proxy war waged by the
United States, Cuba, and the Soviet Union. Today, the superpowers are
still interested in the country, but they are fighting for control of
Angola's vast oil wealth in a different way. Whether Angola can play
the calm offensive of the United States and China off one another to
its own advantage — and whether the already largely mortgaged oil
wealth will ever benefit the Angolan population — remain key unanswered
post-Cold War questions.
Foreign Policy in Focus