Taku Fundira, a Tralac Researcher, asks and discusses the question: South Africa-China Comprehensive Strategic Partnership: dining in the dragon’s lair?
The Sino-South Africa (RSA) relationship has reached new heights since the establishment in 1998 of diplomatic relations between the two countries. To date, we have witnessed considerable achievements in Sino-RSA economic, trade cooperation and increases in bilateral trade. In 2009, China became South Africa’s largest export destination overtaking the US and trade statistics from the World Trade Atlas reveal that total trade between the two countries reached US$ 15 billion in 2009, accounting for 17% of China-Africa trade. This share places South Africa as China’s second top African trading partner after Angola. The most recent engagement between the two countries is the Comprehensive Strategic Partnership (CSP), signed by President Jacob Zuma and his counterpart Premier Hu Jintao on 24 August 2010. This marked the last of a series of state visits by President Zuma to the BRIC nations that began in October of 2009 in Brazil.
38 bilateral cooperation agreements are contained in the declaration, ranging from political dialogues, trade, investment, mineral exploration and agriculture to joint efforts in the global arena, such as in the United Nations and the Forum on China-Africa Cooperation (FOCAC). The signing of the CSP can be viewed as a commitment to further strengthen the bilateral relations between the countries and establish a viable long term relationship which takes into account not only the political, but also the commercial interests of both parties.
For the South African government, this relationship is viewed as a vital strategic foreign policy goal to align itself with the new economic giant. According to Alves and Sidiropoulos (2010), the link between the government’s domestic socio-economic priorities and South Africa’s international relations, is at the forefront. This implies that domestic priorities of enhancing access to quality education, health, job creation and poverty eradication have to be factored in. The complementarities in this case offer South Africa an opportunity to learn from China. For China, South Africa offers among other opportunities a gateway to consolidate and expand its African footprint.
Despite the importance of this south-south configuration from a political and economic view, this relationship is not without its challenges, especially with labour movements which accuse Chinese competition as a key reason for job losses. Furthermore, trade between the two countries mirrors that of South Africa and its traditional north partners, where RSA exports are mainly primary resource based-products and imports are mainly manufactured value added products. The prevalence of non-tariff barriers that exist especially for agriculture further exacerbates the concerns as these are hampering RSA’s penetration of the China market. Despite these concerns and given the current forecasts of China’s future economic size and political weight, the logic of improving relations seems irrefutable.
In tralac’s recent publication on South Africa’s Way Ahead – Looking East, we note that expected losses (employment, wages, and production) in certain sectors will be offset by the opportunities created in other sectors with a competitive potential thus in the long run allowing South Africa to develop and expand trade in its competitive sectors. Affected sectors such as clothing and textiles need to be realigned and adopt new technologies while opportunities exist in the chemicals, plastics and non-ferrous metals sectors.
While South Africa dines in the dragon’s lair, there should be a common understanding amongst South African stakeholders, of China role’s in the global economy. The South African government needs to inform its stakeholders that China’s rise is inevitable, and we should not avoid engaging China effectively on the trade front. Concentrating only on defensive positions, on how to limit China’s impact is counter-productive and will ensure that the Sino-RSA relationship remains skewed in ways that suit the Chinese economy far more than those of South Africa.
http://www.tralac.org/cgi-bin/giga.cgi?cmd=cause_dir_news_item&cause_id=1694&news_id=93462&cat_id=1030
References
Alves and Sidiropoulos (2010), South Africa-China Relations: Getting Beyond the Cross-roads? The Sunday Independent, 29 August 2010, [online] full article
US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/
Wednesday, September 29, 2010
Sunday, September 19, 2010
Commission for Africa - New Report
Commission for Africa today launched its new report – Still Our Common Interest – which calls upon African leaders to step up efforts to convert unprecedented economic opportunities into poverty reduction and development.
The new report, Still Our Common Interest, follows up on the previous report published in March 2005. It looks at what has happened in Africa in the past five years, conducts an audit of progress against each of the recommendations made in the 2005 report and makes recommendations for next steps.
Still Our Common Interest:
Celebrates the progress Africa has made in the past five years.
Calls on African governments to continue to promote growth and channel revenues into poverty reduction and key services.
Calls for donors to increase their support to Africa to take account of new challenges, in particular climate change.
Calls for the international community to support the capacity-building efforts of African governments by, for example, helping them access the best legal advice in negotiating deals for their natural resources.
Five years after it published its original report, the Commission for Africa is calling on African governments to act now to ensure that the region’s unprecedented economic growth and opportunities result in development and poverty reduction for ordinary Africans.
Africa has seen average growth rates of six per cent for most of the past decade and a quadrupling of trade and foreign investment. Some countries in Africa are on track to meet some of the Millennium Development Goals (MDGs), reflecting the progress made since the last report. However, the majority of Africans have yet to experience the benefits of economic growth. Progress towards the MDGs needs to be broader and faster if the continent as a whole is to make significant progress towards meeting the MDGs.
In a short joint statement, the Commissioners said:
“There is much to celebrate. African governments have done more than ever before to promote business and investment. Donors have supported this by boosting their support to infrastructure and providing the aid and debt relief that has allowed African governments to increase their expenditure in key areas such as health, education and agriculture.
But there remains much to be done. Progress on reforming international trade rules has been dismal; donors are still providing less in aid than their commitments; and African governments are still not investing as much as they promised in key areas. That is why we believe this review is timely, and why we believe it is right to renew a number of the recommendations we made in 2005 – because they have yet to be fully implemented – as well as make new recommendations.
Africa’s development requires a range of measures, with African governments in the lead supported by the international community. For example, harnessing international demand for Africa’s natural resources to benefit ordinary Africans will depend on the commitment of African governments to passing on the benefits to their citizens, but also them having access to the best legal advice and a system of international trade that does not disadvantage Africa’s products.”
Still Our Common Interest, the Commission’s review of what has happened in and to Africa since it first reported in March 2005, makes recommendations for what needs to happen next to speed up progress on the continent.
It recommends that African governments:
Continue their efforts to make it easier to do business within and between their countries – including investing in much needed infrastructure.
Ensure that they are collecting the revenues from growth through improved domestic resource mobilisation.
Meet their commitments on spending on health, education, water and sanitation, and agriculture.
Develop and deliver clear strategies to create jobs, reduce poverty and strengthen key services such as health and education.
The report also calls upon developed countries to:
Get behind Africa governments’ own strategies for promoting growth and development.
Help Africa negotiate the best deals possible for the exploitation of its natural resources by supporting a fund to pay for the legal and technical advice to do this.
Kick start long-delayed reform of international trade rules.
Continue to support Africa’s development – including by supporting a Global Fund for Education and providing additional financing to adapt to climate change.
Agree that the G20 will take on the G8’s previous role in making and monitoring commitments to supporting growth and development in Africa.
Still Our Common Interest looks at what has happened against the Commission’s various recommendations.
Summary of key findings
In a number of areas, there has been “substantial progress”, including:
Steps taken by African governments to improve the investment climate and increases in aid and debt relief to the continent.
A substantial increase in investment in infrastructure which has contributed to Africa’s growth.
Progress towards an international Arms Trade Treaty.
Strong international support for the Global Alliance for Vaccines and Immunisations (GAVI) that has enabled 300 million children to be immunised globally.
African governments’ commitment alongside strong donor support that has enabled access to the anti-retroviral treatments for HIV/AIDS to grow from 14% in 2005 to 43% in 2008
More children go to primary school and more get to sleep under a bed net that can protect them from malaria than ever before.
Africa is very close to eradicating polio.
But there are also a few areas where progress has been “disappointing”:
International trade reform is perhaps the area of least progress with no movement towards an agreement in the Doha Development Agenda, the removal of agricultural subsidies or trade agreements between the EU and African countries.
The Commission called for the amount of arable land under irrigation in Africa to be increased by 50% by 2010 – it has grown by just 0.9%.
Investment in higher education has not improved – contributing to a continued shortage of trained teachers, doctors and other key professionals.
Progress on most recommendations has been mixed – with some but limited positive movement:
Advances in expanding enrolment and closing the gap between the numbers of girls and boys in primary school is tempered by a relative lack of progress in improving the quality of basic education and in the number finishing primary school and going on to post-primary education.
The spread of HIV/AIDS in Africa has been halted in many parts of the continent, but sub-Saharan Africa remains the worst affected region in the world.
There has been increased donor support to sexual and reproductive health services but overall underinvestment in reproductive health, contributing to the lack of progress in reducing child and maternal mortality.
There still much to be done to attract investment – including a massive need for better infrastructure.
The 2010 report is being launched at the British Museum on 13th September and will also be launched at the MDG Summit in New York on 20th September.
US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/
The new report, Still Our Common Interest, follows up on the previous report published in March 2005. It looks at what has happened in Africa in the past five years, conducts an audit of progress against each of the recommendations made in the 2005 report and makes recommendations for next steps.
Still Our Common Interest:
Celebrates the progress Africa has made in the past five years.
Calls on African governments to continue to promote growth and channel revenues into poverty reduction and key services.
Calls for donors to increase their support to Africa to take account of new challenges, in particular climate change.
Calls for the international community to support the capacity-building efforts of African governments by, for example, helping them access the best legal advice in negotiating deals for their natural resources.
Five years after it published its original report, the Commission for Africa is calling on African governments to act now to ensure that the region’s unprecedented economic growth and opportunities result in development and poverty reduction for ordinary Africans.
Africa has seen average growth rates of six per cent for most of the past decade and a quadrupling of trade and foreign investment. Some countries in Africa are on track to meet some of the Millennium Development Goals (MDGs), reflecting the progress made since the last report. However, the majority of Africans have yet to experience the benefits of economic growth. Progress towards the MDGs needs to be broader and faster if the continent as a whole is to make significant progress towards meeting the MDGs.
In a short joint statement, the Commissioners said:
“There is much to celebrate. African governments have done more than ever before to promote business and investment. Donors have supported this by boosting their support to infrastructure and providing the aid and debt relief that has allowed African governments to increase their expenditure in key areas such as health, education and agriculture.
But there remains much to be done. Progress on reforming international trade rules has been dismal; donors are still providing less in aid than their commitments; and African governments are still not investing as much as they promised in key areas. That is why we believe this review is timely, and why we believe it is right to renew a number of the recommendations we made in 2005 – because they have yet to be fully implemented – as well as make new recommendations.
Africa’s development requires a range of measures, with African governments in the lead supported by the international community. For example, harnessing international demand for Africa’s natural resources to benefit ordinary Africans will depend on the commitment of African governments to passing on the benefits to their citizens, but also them having access to the best legal advice and a system of international trade that does not disadvantage Africa’s products.”
Still Our Common Interest, the Commission’s review of what has happened in and to Africa since it first reported in March 2005, makes recommendations for what needs to happen next to speed up progress on the continent.
It recommends that African governments:
Continue their efforts to make it easier to do business within and between their countries – including investing in much needed infrastructure.
Ensure that they are collecting the revenues from growth through improved domestic resource mobilisation.
Meet their commitments on spending on health, education, water and sanitation, and agriculture.
Develop and deliver clear strategies to create jobs, reduce poverty and strengthen key services such as health and education.
The report also calls upon developed countries to:
Get behind Africa governments’ own strategies for promoting growth and development.
Help Africa negotiate the best deals possible for the exploitation of its natural resources by supporting a fund to pay for the legal and technical advice to do this.
Kick start long-delayed reform of international trade rules.
Continue to support Africa’s development – including by supporting a Global Fund for Education and providing additional financing to adapt to climate change.
Agree that the G20 will take on the G8’s previous role in making and monitoring commitments to supporting growth and development in Africa.
Still Our Common Interest looks at what has happened against the Commission’s various recommendations.
Summary of key findings
In a number of areas, there has been “substantial progress”, including:
Steps taken by African governments to improve the investment climate and increases in aid and debt relief to the continent.
A substantial increase in investment in infrastructure which has contributed to Africa’s growth.
Progress towards an international Arms Trade Treaty.
Strong international support for the Global Alliance for Vaccines and Immunisations (GAVI) that has enabled 300 million children to be immunised globally.
African governments’ commitment alongside strong donor support that has enabled access to the anti-retroviral treatments for HIV/AIDS to grow from 14% in 2005 to 43% in 2008
More children go to primary school and more get to sleep under a bed net that can protect them from malaria than ever before.
Africa is very close to eradicating polio.
But there are also a few areas where progress has been “disappointing”:
International trade reform is perhaps the area of least progress with no movement towards an agreement in the Doha Development Agenda, the removal of agricultural subsidies or trade agreements between the EU and African countries.
The Commission called for the amount of arable land under irrigation in Africa to be increased by 50% by 2010 – it has grown by just 0.9%.
Investment in higher education has not improved – contributing to a continued shortage of trained teachers, doctors and other key professionals.
Progress on most recommendations has been mixed – with some but limited positive movement:
Advances in expanding enrolment and closing the gap between the numbers of girls and boys in primary school is tempered by a relative lack of progress in improving the quality of basic education and in the number finishing primary school and going on to post-primary education.
The spread of HIV/AIDS in Africa has been halted in many parts of the continent, but sub-Saharan Africa remains the worst affected region in the world.
There has been increased donor support to sexual and reproductive health services but overall underinvestment in reproductive health, contributing to the lack of progress in reducing child and maternal mortality.
There still much to be done to attract investment – including a massive need for better infrastructure.
The 2010 report is being launched at the British Museum on 13th September and will also be launched at the MDG Summit in New York on 20th September.
US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/
Thursday, September 9, 2010
The U.S.overtaken by Sweden and Singapore in the World Economic Forum's competitiveness survey for 2010-11.
The U.S. has slipped to fourth position in global competitiveness this year from the second place it held last year, according to a report by the World Economic Forum (WEF).
Switzerland retains the top position with its excellent capacity for innovation and a very sophisticated business culture, says the Global Competitiveness Report 2010-2011, published on Thursday. Sweden and Singapore have overtaken the US to occupy second and third positions respectively.
The US ranking slipped to second last year with Switzerland making it to the top in global competitiveness.
“While many structural features that make its economy extremely productive, a number of escalating weaknesses have lowered the US ranking over the past two years,” the report said.
“In addition to the macroeconomic imbalances that have been building up over time, there has been a weakening of the United States’ public and private institutions, as well as lingering concerns about the state of its financial markets,” it added.
The report has found deepening weaknesses in certain areas in the US compared with last year.
While quality of institutional environment continues to decline, public's trust in politicians has dwindled.
The business community is concerned about the government’s ability to maintain arms-length relationships with the private sector. It feels that the government is spending its resources relatively wastefully, the report said.
Further, the report points to rising concerns over the functioning of private institutions with a noticeable decline in assessment of auditing and reporting standards including corporate ethics.
Macroeconomic instability in the US is the greatest area of weakness, said the report.
“Prior to the crisis, the United States had been building up large macroeconomic imbalances, with repeated fiscal deficits leading to burgeoning levels of public indebtedness; this has been exacerbated by significant stimulus spending,” the report points out.
In this scenario, the country needs a clear exit strategy to strengthen its competitiveness in future, the report states.
In Eurozone countries, Germany moves up to fifth place from seventh in 2009 while the UK has climbed one position to 12th after witnessing a continuous fall in ranking in recent years.
Among the BRIC economies, China continues to improve its competitiveness with its ranking moving up from 29th to 27th while Brazil (58th), India (51st) and Russia (63rd) have retained their positions.
“While emerging economies have, for the most part, bounced back to healthy growth, advanced economies face continuing difficulties such as persisting unemployment, weak demand, and spiraling debt, while still struggling with reforms in the financial and labor markets, among other challenges,” the report said.
The report measures the competitiveness of 139 countries taking into account various performance parameters like macroeconomic environment, health and primary education, goods and labour market efficiency, financial market development, technological readiness, business sophistication, innovation etc.
US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/
Switzerland retains the top position with its excellent capacity for innovation and a very sophisticated business culture, says the Global Competitiveness Report 2010-2011, published on Thursday. Sweden and Singapore have overtaken the US to occupy second and third positions respectively.
The US ranking slipped to second last year with Switzerland making it to the top in global competitiveness.
“While many structural features that make its economy extremely productive, a number of escalating weaknesses have lowered the US ranking over the past two years,” the report said.
“In addition to the macroeconomic imbalances that have been building up over time, there has been a weakening of the United States’ public and private institutions, as well as lingering concerns about the state of its financial markets,” it added.
The report has found deepening weaknesses in certain areas in the US compared with last year.
While quality of institutional environment continues to decline, public's trust in politicians has dwindled.
The business community is concerned about the government’s ability to maintain arms-length relationships with the private sector. It feels that the government is spending its resources relatively wastefully, the report said.
Further, the report points to rising concerns over the functioning of private institutions with a noticeable decline in assessment of auditing and reporting standards including corporate ethics.
Macroeconomic instability in the US is the greatest area of weakness, said the report.
“Prior to the crisis, the United States had been building up large macroeconomic imbalances, with repeated fiscal deficits leading to burgeoning levels of public indebtedness; this has been exacerbated by significant stimulus spending,” the report points out.
In this scenario, the country needs a clear exit strategy to strengthen its competitiveness in future, the report states.
In Eurozone countries, Germany moves up to fifth place from seventh in 2009 while the UK has climbed one position to 12th after witnessing a continuous fall in ranking in recent years.
Among the BRIC economies, China continues to improve its competitiveness with its ranking moving up from 29th to 27th while Brazil (58th), India (51st) and Russia (63rd) have retained their positions.
“While emerging economies have, for the most part, bounced back to healthy growth, advanced economies face continuing difficulties such as persisting unemployment, weak demand, and spiraling debt, while still struggling with reforms in the financial and labor markets, among other challenges,” the report said.
The report measures the competitiveness of 139 countries taking into account various performance parameters like macroeconomic environment, health and primary education, goods and labour market efficiency, financial market development, technological readiness, business sophistication, innovation etc.
US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/
Wednesday, August 18, 2010
Implementation of SADC Protocols
The highest decision-making body, the Summit of heads of State or Government, of the Southern African Development Community (SADC) met this week in Windhoek, Namibia to take stock among other things of the progress made in the implementation of various legal commitments. SADC was established in terms of the SADC Treaty which entered into force in 1993. One of the objectives of the Treaty is the adoption of policies aimed at the progressive elimination of obstacles to the free movement of labour and capital, goods and services, and of the people of the region among member states.
Consequently, in line with this objective member states adopted the SADC Trade Protocol in 1996. The Trade Protocol came into force in 2000 after ratification by two thirds of the member states. Angola (2003) and Madagascar (2006) acceded at a later stage. Three member states, Malawi, Angola and DR Congo are not currently implementing the SADC Trade Protocol even though Malawi ratified the Protocol in 1999 and Angola is party to it. The implementation of the SADC Free Trade Area started in 2000 and was officially launched in 2008 after a transition period of eight years. The regional block claims to have liberalised 85% of trade in goods that originates among its members. It is envisaged that the SADC FTA will be fully implemented in 2012 with the completion of tariff phase down schedules on trade in sensitive products.
In addition, the member states adopted a roadmap (Regional Indicative Strategic Development Plan) in 2003 for the achievement of deeper regional economic integration and propose the establishment of a customs union by 2010, common market by 2015 and an economic union by 2018. The establishment of the SADC Customs Union has not commenced and will in all likelihood be postponed. Nonetheless the important thing is that members started a process for the integration of their economies even though it might take longer than planned. Despite cooperation on the achievement of economic integration, the member states also cooperate on numerous other issues. This would not have been a problem had the members not allowed dual membership with other regional initiatives with similar aims, objectives and timeframes. This confused and complicated a seemingly clear approach to regional integration.
Countries are for example required to allocate scarce financial and human resources to the implementation of the various integration projects and to the establishment of new institutions in line with their obligations. Almost all government departments are in one way or another involved in the negotiation, implementation, monitoring and evaluation of regional commitments. It also places an additional burden on national legislatures to give effect to obligations through the adoption of new or amendment of existing legislation. The costs of belonging to a regional integration block are duplicated when a particular country is party to multiple initiatives. In some instances these regional arrangements have conflicting obligations creating an implementation nightmare for those individual countries with dual membership.
It is here where the root of the problem lies. The members of SADC have signed not less than 23 protocols and a number of declarations, charters and memoranda of understanding on various matters ranging from illicit drugs and control of firearms to trade, fisheries, mining and finance and investment. All of these protocols have entered into force, even the protocol on the establishment of a tribunal for the adjudication of disputes arising from the interpretation and application of obligations. Unfortunately, many member states do not view their legal obligations with the necessary earnest it deserves because very few, if any, consequences have ever flown from the non-implementation of commitments. Dispute resolution through the adjudicating body has only been used in exceptional cases. Regrettably, a rules-based dispensation has not yet come about. As a result, some states are very slack when it comes to the incorporation of their obligations into domestic law. However, it is important to acknowledge and address these technical problems in the functioning of the regional arrangement. The countries in southern Africa cannot prosper when they view and address problems in isolation. They need each other’s assistance to tackle problems of mutual concern. They also need effective secretariats that can oversee the implementation of regional policies and speak on behalf of the collective.
http://www.tralac.org/cgi-bin/giga.cgi?cmd=cause_dir_news_item&cause_id=1694&news_id=91436&cat_id=1059
US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/
Consequently, in line with this objective member states adopted the SADC Trade Protocol in 1996. The Trade Protocol came into force in 2000 after ratification by two thirds of the member states. Angola (2003) and Madagascar (2006) acceded at a later stage. Three member states, Malawi, Angola and DR Congo are not currently implementing the SADC Trade Protocol even though Malawi ratified the Protocol in 1999 and Angola is party to it. The implementation of the SADC Free Trade Area started in 2000 and was officially launched in 2008 after a transition period of eight years. The regional block claims to have liberalised 85% of trade in goods that originates among its members. It is envisaged that the SADC FTA will be fully implemented in 2012 with the completion of tariff phase down schedules on trade in sensitive products.
In addition, the member states adopted a roadmap (Regional Indicative Strategic Development Plan) in 2003 for the achievement of deeper regional economic integration and propose the establishment of a customs union by 2010, common market by 2015 and an economic union by 2018. The establishment of the SADC Customs Union has not commenced and will in all likelihood be postponed. Nonetheless the important thing is that members started a process for the integration of their economies even though it might take longer than planned. Despite cooperation on the achievement of economic integration, the member states also cooperate on numerous other issues. This would not have been a problem had the members not allowed dual membership with other regional initiatives with similar aims, objectives and timeframes. This confused and complicated a seemingly clear approach to regional integration.
Countries are for example required to allocate scarce financial and human resources to the implementation of the various integration projects and to the establishment of new institutions in line with their obligations. Almost all government departments are in one way or another involved in the negotiation, implementation, monitoring and evaluation of regional commitments. It also places an additional burden on national legislatures to give effect to obligations through the adoption of new or amendment of existing legislation. The costs of belonging to a regional integration block are duplicated when a particular country is party to multiple initiatives. In some instances these regional arrangements have conflicting obligations creating an implementation nightmare for those individual countries with dual membership.
It is here where the root of the problem lies. The members of SADC have signed not less than 23 protocols and a number of declarations, charters and memoranda of understanding on various matters ranging from illicit drugs and control of firearms to trade, fisheries, mining and finance and investment. All of these protocols have entered into force, even the protocol on the establishment of a tribunal for the adjudication of disputes arising from the interpretation and application of obligations. Unfortunately, many member states do not view their legal obligations with the necessary earnest it deserves because very few, if any, consequences have ever flown from the non-implementation of commitments. Dispute resolution through the adjudicating body has only been used in exceptional cases. Regrettably, a rules-based dispensation has not yet come about. As a result, some states are very slack when it comes to the incorporation of their obligations into domestic law. However, it is important to acknowledge and address these technical problems in the functioning of the regional arrangement. The countries in southern Africa cannot prosper when they view and address problems in isolation. They need each other’s assistance to tackle problems of mutual concern. They also need effective secretariats that can oversee the implementation of regional policies and speak on behalf of the collective.
http://www.tralac.org/cgi-bin/giga.cgi?cmd=cause_dir_news_item&cause_id=1694&news_id=91436&cat_id=1059
US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/
Tuesday, August 17, 2010
In South Africa, a Push for Industrial Growth
By MATTHEW SALTMARSH New York Times
To many outsiders, South Africa has long been an unstable business environment with an economy overly dependent on natural resources.
Now, the government and a new breed of entrepreneurs are optimistic that they can change perceptions and climb the industrial ladder.
A group of companies is working in sectors like clean energy, aviation, engineering, military contracting and mining, hoping to benefit from positive growth forecasts for the region.
The state hopes this will lead to job creation and other benefits, and has played its part in some cases by offering direct financing and other sweeteners. It has also backed new university research positions and is trying to promote centers of excellence.
“We are a producer and exporter,” said Naledi Pandor, the minister of science and technology. “Now we’re saying: let’s become an innovator.”
South Africa’s many hurdles — notably unemployment, crime, illegal immigration, corruption, income inequality and health problems — have not disappeared. But executives and officials believe that the environment is improving and that the country’s success as host of the recent soccer World Cup can act as a catalyst.
“There has never been a greater opportunity for South Africa than today,” said Ivor Ichikowitz, a South African of Lithuanian descent who controls and runs an aerospace, security and military contracting company, Paramount Group.
The security obsession and regional conflicts of the apartheid era left an industrial and research legacy — and comparatively strong infrastructure. That, he said, makes South Africa an ideal place from which to make inroads in a continent often neglected by Western companies.
“Africa is the current economic battleground and the last frontier,” Mr. Ichikowitz said recently in Paris, where he was attending a conference. “The Chinese and the Indians are coming in with huge amounts of cheap capital and a very open approach.”
Based near Johannesburg, Paramount makes mine-protected vehicles, sold primarily to African clients for peacekeeping missions. It also refurbishes and upgrades Mirage jet fighters, and finances and supplies security forces.
Created in 1994, it had African countries involved in peacekeeping, like Uganda and Ghana, for its initial clients. More recently, it has signed deals to manufacture vehicles in Jordan, India and Azerbaijan, and it has alliances as far off as Singapore, raising its profile in global procurement bids.
Last year, it added a 19 percent stake in Aerosud, South Africa’s largest independent aerospace company, which manufactures parts for Airbus and Boeing including galleys, fuel supply systems and wing and fuselage components.
Paramount employs 3,500 people and is privately held. Mr. Ichikowitz would not divulge financial data except to say that the group is “very profitable.”
A recent report on the country by Jane’s World Defense Industry said that the military budget has fallen in recent years as the government focuses on social programs. But in 2008, South Africa authorized military export deals worth $2.6 billion, up from $406 million a year earlier, and sold equipment, munitions and components to 96 countries.
The country’s biggest military contractor, Denel, is state-owned. It posted a loss of 543 million rand, or $74.6 million, on sales of 4.05 billion rand last year.
Mr. Ichikowitz, a longtime member of the governing party, the African National Congress, owns a venture capital firm, an oil business, a teddy bear retailer and an exclusive luxury retreat in the bush.
“You cannot be in business in Africa if you are not respectful of the political environment,” he said. “A lot has to do with faith in people, trust and personal relationships.”
The democratic government that came to power in 1994 inherited an economy racked by internal conflict and external sanctions. Yet from 2004 to 2007, gross domestic product grew on average over 5 percent annually. It contracted by 1.8 percent in 2009, affected by energy shortages, slower consumption and the global recession, but it is expected to grow at 3.3 percent in 2010 and 5 percent next year, according to the Organization for Economic Cooperation and Development.
Mining accounts for almost a tenth of output, but in contrast to much of the rest of the continent, South Africa also has well-developed manufacturing, whose output accounts for over 50 percent of exports.
“South Africa’s ambition to climb the value-added chain is valid, justified and doable,” said Andreas Wörgötter, an economist at the O.E.C.D. who wrote a recent study of the country. The main challenges, he said, will be to “broaden economic activity” by creating jobs, moderating wages and improving the regulatory environment.
Unemployment remains a huge hurdle; the O.E.C.D. forecasts it at 24.5 percent this year. Industrial strikes remain a feature, the health and education systems are also troubled and social inequity runs deep. A recent study from the University of Cape Town described the country as “the most consistently unequal economy in the world.”
Corruption is also cited as a drag by executives. South Africa has experienced a number of high-profile scandals within public-sector agencies, provinces and even senior levels of government. The O.E.C.D. criticized South Africa in a report last month for failing to enact any prosecutions for foreign bribery and called for “a more proactive approach.”
Despite such problems, examples of South African regional and global corporate success stories include Standard Bank and Investec in financial services; Sasol in chemicals and fuels; South African Breweries; Steinhoff International in furniture; and De Beers, Anglo-American and Impala Platinum in resources.
But there is a sense that the global breakthroughs have been few, and sometimes — in cases like Anglo-America, now based in London — the benefits can migrate.
“There are lots of good ideas here and a strong history of engineering and design, but we don’t commercialize and build sustainable business — we sell them to others,” said Diana Blake, sales and marketing director at Optimal Energy, which is preparing to produce the Joule, Africa’s first battery-powered car.
Examples of this include the Zebra, an advanced battery developed by a research body in Pretoria but now produced in Switzerland, and thin-film solar panel technology developed at the University of Johannesburg and now produced in Germany.
“Now there’s an enormous drive to keep the value in South Africa,” Ms. Blake said.
Optimal was co-founded in 2005 by an entrepreneur, Kobus Meiring, who was helped by an investment from the national innovation fund; the South African government holds more than 50 percent.
The standard five-seater Joule has a top speed of 135 kilometers, or 84 miles, an hour and a nominal driving range of up to 300 kilometers. It will start retailing at $30,000 to $38,000 — around the same price as the comparable Nissan Leaf.
About 80 percent to 90 percent of sales are expected to come from abroad once the car hits showrooms in 2013; the company hopes to export to Australia, Israel and Europe. Optimal hopes to be making 50,000 vehicles — and a profit — by 2015.
Production will be located in the Eastern Cape, near a Mercedes-Benz plant, and Optimal will work with EDAG, a German specialist in low-volume production, to ensure quality. Once production starts, the company expects to employ 2,300 people directly, with a further 8,000 in support industries.
A smaller company also being helped by the state is Adept Airmotive. It focuses on the design, development and manufacture of fuel-efficient engines for light aircraft and is working on products to run on leaded fuel, unleaded fuel mixes, including ethanol, and even L.P.G.
The company was formed in 2003 and financed by a handful of businessmen and a private equity firm. In 2007, the government took a 25 percent stake, which it eventually hopes to sell.
“I think South Africa probably has one of the best environments for a start-ups anywhere,” Richard Schulz, managing director, said from his base in Durban, South Africa, where he employs seven people in design and subcontracts manufacturing to a number of companies.
“We had planned a slow phase of market entry, but the demand is amazing,” he added, raising the possibility of an initial public offering of shares, stake sale or licensing agreement with a larger player. “There’s a broad spectrum of interest.”
South Africa also hopes to win a bid to host a giant radio telescope project known as the Square Kilometer Array. A collaboration among 19 countries, it would be the most powerful radio telescope ever built, attracting significant related investment in astrophysics and cosmology.
Construction is expected to cost €1.5 billion, or almost $2 billion, and is scheduled to begin in 2013 for initial observations by 2017 and full operation by 2022.
The government hopes that other projects, already established, like the Karoo Array Telescope and the Southern African Large Telescope, will help it to beat Australia in the final decision, due 2012.
“We in South Africa can’t afford to be pessimistic,” said Mrs. Pandor, the science minister. “We came out of such terrible times that we have to believe we can do it.”
http://www.nytimes.com/2010/08/03/business/global/03rand.html?_r=1&ref=africa
US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/
To many outsiders, South Africa has long been an unstable business environment with an economy overly dependent on natural resources.
Now, the government and a new breed of entrepreneurs are optimistic that they can change perceptions and climb the industrial ladder.
A group of companies is working in sectors like clean energy, aviation, engineering, military contracting and mining, hoping to benefit from positive growth forecasts for the region.
The state hopes this will lead to job creation and other benefits, and has played its part in some cases by offering direct financing and other sweeteners. It has also backed new university research positions and is trying to promote centers of excellence.
“We are a producer and exporter,” said Naledi Pandor, the minister of science and technology. “Now we’re saying: let’s become an innovator.”
South Africa’s many hurdles — notably unemployment, crime, illegal immigration, corruption, income inequality and health problems — have not disappeared. But executives and officials believe that the environment is improving and that the country’s success as host of the recent soccer World Cup can act as a catalyst.
“There has never been a greater opportunity for South Africa than today,” said Ivor Ichikowitz, a South African of Lithuanian descent who controls and runs an aerospace, security and military contracting company, Paramount Group.
The security obsession and regional conflicts of the apartheid era left an industrial and research legacy — and comparatively strong infrastructure. That, he said, makes South Africa an ideal place from which to make inroads in a continent often neglected by Western companies.
“Africa is the current economic battleground and the last frontier,” Mr. Ichikowitz said recently in Paris, where he was attending a conference. “The Chinese and the Indians are coming in with huge amounts of cheap capital and a very open approach.”
Based near Johannesburg, Paramount makes mine-protected vehicles, sold primarily to African clients for peacekeeping missions. It also refurbishes and upgrades Mirage jet fighters, and finances and supplies security forces.
Created in 1994, it had African countries involved in peacekeeping, like Uganda and Ghana, for its initial clients. More recently, it has signed deals to manufacture vehicles in Jordan, India and Azerbaijan, and it has alliances as far off as Singapore, raising its profile in global procurement bids.
Last year, it added a 19 percent stake in Aerosud, South Africa’s largest independent aerospace company, which manufactures parts for Airbus and Boeing including galleys, fuel supply systems and wing and fuselage components.
Paramount employs 3,500 people and is privately held. Mr. Ichikowitz would not divulge financial data except to say that the group is “very profitable.”
A recent report on the country by Jane’s World Defense Industry said that the military budget has fallen in recent years as the government focuses on social programs. But in 2008, South Africa authorized military export deals worth $2.6 billion, up from $406 million a year earlier, and sold equipment, munitions and components to 96 countries.
The country’s biggest military contractor, Denel, is state-owned. It posted a loss of 543 million rand, or $74.6 million, on sales of 4.05 billion rand last year.
Mr. Ichikowitz, a longtime member of the governing party, the African National Congress, owns a venture capital firm, an oil business, a teddy bear retailer and an exclusive luxury retreat in the bush.
“You cannot be in business in Africa if you are not respectful of the political environment,” he said. “A lot has to do with faith in people, trust and personal relationships.”
The democratic government that came to power in 1994 inherited an economy racked by internal conflict and external sanctions. Yet from 2004 to 2007, gross domestic product grew on average over 5 percent annually. It contracted by 1.8 percent in 2009, affected by energy shortages, slower consumption and the global recession, but it is expected to grow at 3.3 percent in 2010 and 5 percent next year, according to the Organization for Economic Cooperation and Development.
Mining accounts for almost a tenth of output, but in contrast to much of the rest of the continent, South Africa also has well-developed manufacturing, whose output accounts for over 50 percent of exports.
“South Africa’s ambition to climb the value-added chain is valid, justified and doable,” said Andreas Wörgötter, an economist at the O.E.C.D. who wrote a recent study of the country. The main challenges, he said, will be to “broaden economic activity” by creating jobs, moderating wages and improving the regulatory environment.
Unemployment remains a huge hurdle; the O.E.C.D. forecasts it at 24.5 percent this year. Industrial strikes remain a feature, the health and education systems are also troubled and social inequity runs deep. A recent study from the University of Cape Town described the country as “the most consistently unequal economy in the world.”
Corruption is also cited as a drag by executives. South Africa has experienced a number of high-profile scandals within public-sector agencies, provinces and even senior levels of government. The O.E.C.D. criticized South Africa in a report last month for failing to enact any prosecutions for foreign bribery and called for “a more proactive approach.”
Despite such problems, examples of South African regional and global corporate success stories include Standard Bank and Investec in financial services; Sasol in chemicals and fuels; South African Breweries; Steinhoff International in furniture; and De Beers, Anglo-American and Impala Platinum in resources.
But there is a sense that the global breakthroughs have been few, and sometimes — in cases like Anglo-America, now based in London — the benefits can migrate.
“There are lots of good ideas here and a strong history of engineering and design, but we don’t commercialize and build sustainable business — we sell them to others,” said Diana Blake, sales and marketing director at Optimal Energy, which is preparing to produce the Joule, Africa’s first battery-powered car.
Examples of this include the Zebra, an advanced battery developed by a research body in Pretoria but now produced in Switzerland, and thin-film solar panel technology developed at the University of Johannesburg and now produced in Germany.
“Now there’s an enormous drive to keep the value in South Africa,” Ms. Blake said.
Optimal was co-founded in 2005 by an entrepreneur, Kobus Meiring, who was helped by an investment from the national innovation fund; the South African government holds more than 50 percent.
The standard five-seater Joule has a top speed of 135 kilometers, or 84 miles, an hour and a nominal driving range of up to 300 kilometers. It will start retailing at $30,000 to $38,000 — around the same price as the comparable Nissan Leaf.
About 80 percent to 90 percent of sales are expected to come from abroad once the car hits showrooms in 2013; the company hopes to export to Australia, Israel and Europe. Optimal hopes to be making 50,000 vehicles — and a profit — by 2015.
Production will be located in the Eastern Cape, near a Mercedes-Benz plant, and Optimal will work with EDAG, a German specialist in low-volume production, to ensure quality. Once production starts, the company expects to employ 2,300 people directly, with a further 8,000 in support industries.
A smaller company also being helped by the state is Adept Airmotive. It focuses on the design, development and manufacture of fuel-efficient engines for light aircraft and is working on products to run on leaded fuel, unleaded fuel mixes, including ethanol, and even L.P.G.
The company was formed in 2003 and financed by a handful of businessmen and a private equity firm. In 2007, the government took a 25 percent stake, which it eventually hopes to sell.
“I think South Africa probably has one of the best environments for a start-ups anywhere,” Richard Schulz, managing director, said from his base in Durban, South Africa, where he employs seven people in design and subcontracts manufacturing to a number of companies.
“We had planned a slow phase of market entry, but the demand is amazing,” he added, raising the possibility of an initial public offering of shares, stake sale or licensing agreement with a larger player. “There’s a broad spectrum of interest.”
South Africa also hopes to win a bid to host a giant radio telescope project known as the Square Kilometer Array. A collaboration among 19 countries, it would be the most powerful radio telescope ever built, attracting significant related investment in astrophysics and cosmology.
Construction is expected to cost €1.5 billion, or almost $2 billion, and is scheduled to begin in 2013 for initial observations by 2017 and full operation by 2022.
The government hopes that other projects, already established, like the Karoo Array Telescope and the Southern African Large Telescope, will help it to beat Australia in the final decision, due 2012.
“We in South Africa can’t afford to be pessimistic,” said Mrs. Pandor, the science minister. “We came out of such terrible times that we have to believe we can do it.”
http://www.nytimes.com/2010/08/03/business/global/03rand.html?_r=1&ref=africa
US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/
Wednesday, August 4, 2010
African Trade Hub in China Brings Mutual Profits | The News is NowPublic.com
African Trade Hub in China Brings Mutual Profits | The News is NowPublic.com
US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/
US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/
Monday, August 2, 2010
A Benchmark of Progress, Electrical Grid Fails Iraqis By STEVEN LEE MYERS
BAGHDAD — Ikbal Ali, a bureaucrat in a beaded head scarf, accompanied by a phalanx of police officers, quickly found what she was out looking for in the summer swelter: electricity thieves. Six black cables stretched from a power pole to a row of auto-repair shops, siphoning what few hours of power Iraq’s straining system provides.
“Take them all down,” Ms. Ali ordered, sending a worker up in a crane’s bucket to disentangle the connections. A shop owner, Haitham Farhan, responded mockingly, using the words now uttered across Iraq as a curse, “Maku kahraba” — “There is no electricity.”
From the beginning of the war more than seven years ago, the state of electricity has been one of the most closely watched benchmarks of Iraq’s progress, and of the American effort to transform a dictatorship into a democracy.
And yet, as the American combat mission — Operation Iraqi Freedom, in the Pentagon’s argot — officially ends this month, Iraq’s government still struggles to provide one of the most basic services.
Ms. Ali’s campaign against electricity theft — a belated bandage on a broken body — makes starkly clear the mixed legacy that America leaves behind as Iraq begins to truly govern itself, for better and worse.
Iraq now has elections, a functioning, if imperfect, army and an oil industry on the cusp of a potential boom. Yet Baghdad, the capital, had five hours of electricity a day in July.
The chronic power shortages are the result of myriad factors, including war, drought and corruption, but ultimately they reflect a dysfunctional government that remains deadlocked and unresponsive to popular will. That has generated disillusionment and dissent, including protests this summer that, while violent in two cases, were a different measure of Iraq’s new freedoms.
“Democracy didn’t bring us anything,” Mr. Farhan said in his newly darkened shop. Then he corrected himself. “Democracy brought us a can of Coke and a beer.”
The overall legacy of the American invasion today, like that of the war itself, remains a matter of dispute, colored by ideology, politics and faith in democracy’s ultimate ability to take root in the heart of the Arab world.
Even Iraqis suspicious of American motives hoped that the overthrow of Saddam Hussein would bring modern, competent governance. Still, the streets are littered with trash, drinking water is polluted, hospitals are bleak and often unsafe, and buildings bombed by the Americans in 2003 or by insurgents since remain ruined shells.
What is clear is that Iraqis’ expectations of a reliable supply of electricity and other services, like their expectations of democracy itself, have exceeded what either Americans or the country’s quarrelling politicians have so far been able to meet.
“Iraqi politicians are killing our optimism,” Hassan Shihab said, complaining about blackouts after Friday Prayer at a mosque in Baquba, northwest of Baghdad. Dictatorship, he added, “was more merciful.”
Iraq’s electricity problem is, of course, older than its still-uncertain embrace of a new form of government. Before Mr. Hussein’s invasion of Kuwait 20 years ago this month, Iraq had the capacity to produce 9,295 megawatts of power. By 2003, after American bombings and years of international sanctions, it was half that.
The shortages since have hobbled economic development and disrupted almost every aspect of daily life. They have transformed cities. Rumbling generators outside homes and other buildings — previously nonexistent — and thickets of wires as dense as a jungle canopy have become as much a part of Iraq’s cityscapes as blast walls and checkpoints.
Most of the generators are privately operated, and the cost — roughly $7 per ampere — has for ordinary Iraqis become too exorbitant to power anything more than a light and a television.
“I’ve never seen good electricity from the day I was born,” said Abbas Riyadh, 22, a barber in Sadr City, the impoverished Shiite neighborhood in Baghdad. As he spoke, as if on cue, the lights went out.
Billions of Dollars Later
The United States has spent $5 billion on electrical projects alone, nearly 10 percent of the $53 billion it has devoted to rebuilding Iraq, second only to what it has spent on rebuilding Iraq’s security forces. It has had some effect, but there have also been inefficiency and corruption, as there have been in projects to rebuild schools, water and sewerage systems, roads and ports.
The special inspector general for Iraqi reconstruction, Stuart W. Bowen Jr., said that one quarter of 54 reconstruction projects his office had investigated — including those providing electricity and other basic services — had not been completed or carried on by the Iraqis they were built for.
The United States is now winding such projects down, leaving some unfinished and others, already in disrepair, in the hands of national and provincial governments that so far seem unwilling or unable to maintain and operate them adequately.
“We brought the framework of electoral democracy,” Mr. Bowen said, “but its future efficacy is very much in doubt.”
Iraq does generate more electricity than it did in 2003, but nowhere near enough to match rising demand, driven higher by the proliferation of consumer goods, especially air-conditioners. Democracy, the easing of the country’s isolation and improving security have, paradoxically, created new conditions and demands that the government of Prime Minister Nuri Kamal al-Maliki has been unable to address.
Iraq’s electrical grid remains a patchwork of old power plants and new, supplemented with makeshift and inadequate solutions. Iraq now imports 700 megawatts from Iran. When temperatures soared this summer, it paid for two electricity-generating ships from Turkey to dock near Basra, one of the most badly affected cities, at a cost of hundreds of thousands of dollars.
The country’s transmission and distribution networks are aging and mismanaged by a bureaucracy as sclerotic as it was in Mr. Hussein’s era.
The entire system is hampered by poor planning and by interagency rivalries that, for example, delay fuel to power plants; by a lack of conservation; by continuing terrorist attacks on electrical towers, including four in the last half of July in Baghdad, Anbar and Diyala Provinces.
Corruption — which the special inspector general’s office called “Iraq’s ‘second insurgency’ ” in a report released on Friday — is pervasive. Mr. Farhan, the shop owner, said his landlord had bribed Ministry of Electricity workers to install the pirated cables three years ago. “He couldn’t just connect the cables himself,” he noted.
Fight Against Pilfering
The government campaign against pilfering — which officials said resulted in hundreds of miles of cables removed, with barely discernible effect — followed the public protests, including one in Basra in June that ended with the police opening fire, killing two.
At first Mr. Maliki denounced the protests as the work of foreign agents, an ominous echo of the conspiracy-minded remarks of Saddam Hussein, while the Interior Ministry announced strict limits on public protests.
Then Mr. Maliki, fighting for a second term as prime minister, moved to quell the populist outrage. He fired his electricity minister and ordered cuts in power to the privileged enclaves of ministers and politicians, a practice that began under Mr. Hussein and continues. Few Iraqis believe those cuts have been meaningful or will be lasting.
In Mosul, the troubled northern city, the consequence of the campaign against piracy turned violent in June. When government workers cut an illegal connection from the Nineveh Textile Factory to a restive neighborhood called Mahmoun, insurgents retaliated by shelling the plant.
“I knew it was not safe for me, but I did it anyway,” said a ministry engineer, referring to ordering the cutting of the cables.
“After that, the electricity went back to normal, as it was before, but the reply came quickly when the factory was targeted with mortars. There were many victims of the success,” said the engineer, who would give his name only as Abdullah, Father of Mohammed. Twelve people at the factory were wounded.
Mr. Maliki and his ministers have pleaded for patience, which is clearly running out, especially as the newly elected Parliament remains deadlocked over choosing a new prime minister and government nearly five months after the election.
The new acting electricity minister, Hussain al-Shahristani, said at an investment conference in July that Iraq would add 5,000 megawatts by 2012 but acknowledged that that would not keep up with demand.
“The problem will persist because there is no magic wand or miracle that can solve it,” he said.
He then urged Iraqis to turn off all but one air-conditioner in their homes — and presumably to huddle with their families in that room.
Bureaucratic Hurdles
The government’s inaction compounds the problem. In 2008, Mr. Maliki announced a deal to buy 56 gas turbine generators from General Electric and 16 from Siemens for a total cost of $5 billion. More than two years later the purchase remains stalled because of political quarrels over financing and delays in negotiating contracts to install them.
These types of generators have their own problems. At Baghdad South, a complex of three power plants, two General Electric generators installed in 2005 by the United States operate at about half their 125-megawatt capacity.
The plant director, Abdul Karim Mohammed, said the generators were designed to operate at an optimal efficiency using natural gas, not the fuel oil that the Iraqis use, and when the temperature is 60 degrees. It was 120 the day he spoke.
Already he has been ordered to defer recommended maintenance to keep the machines running at full tilt, with the consequence of wearing them out faster. Needed parts are prohibited by Iraq’s customs rules. Mr. Mohammed has spent a year trying to break through the bureaucracy. “It’s not a technical issue,” he said. “It’s a political issue.”
American diplomats and military commanders respond defensively when pressed on why, after all the American investments and expertise, Iraq still struggles to provide electricity.
They cite challenges that would overwhelm any government trying to fix a country emerging from dictatorship and war: violence, climate, aging infrastructure and soaring demand, which they call a sign of a burgeoning consumer society.
“Are people frustrated by this?” the American ambassador, Christopher R. Hill, asked. “Yes, I think they are.”
He added: “I think that the frustrations were evident on the street, but the solutions are ones that involve timely decision-making. I’m not going to criticize the government on whether it moved fast enough to build more power stations, but I think Iraqi voters are going to look at that.”
The question today is whether voters can force their leaders to act — and whether only moderately functional services will get worse as America continues to disengage. Not all Iraqis are persuaded. Even some senior officials express doubts about the country’s governance, about Iraq’s readiness to function: either on practical matters like electricity or more abstract ones like democracy.
“This is the fault of the Americans,” the deputy minister of electricity, Ra’ad al-Haras, said. “They put in place a big, wide-open democracy after the regime. They went from zero democracy to 100 percent. Democracy has to be step by step. You see the result.”
Reporting was contributed by Stephen Farrell, Khalid D. Ali and Zaid Thaker from Baghdad, and Iraqi employees of The New York Times from Mosul, Baquba and Basra.
http://www.nytimes.com/2010/08/02/world/middleeast/02electricity.html?th=&emc=th&pagewanted=print
US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/
“Take them all down,” Ms. Ali ordered, sending a worker up in a crane’s bucket to disentangle the connections. A shop owner, Haitham Farhan, responded mockingly, using the words now uttered across Iraq as a curse, “Maku kahraba” — “There is no electricity.”
From the beginning of the war more than seven years ago, the state of electricity has been one of the most closely watched benchmarks of Iraq’s progress, and of the American effort to transform a dictatorship into a democracy.
And yet, as the American combat mission — Operation Iraqi Freedom, in the Pentagon’s argot — officially ends this month, Iraq’s government still struggles to provide one of the most basic services.
Ms. Ali’s campaign against electricity theft — a belated bandage on a broken body — makes starkly clear the mixed legacy that America leaves behind as Iraq begins to truly govern itself, for better and worse.
Iraq now has elections, a functioning, if imperfect, army and an oil industry on the cusp of a potential boom. Yet Baghdad, the capital, had five hours of electricity a day in July.
The chronic power shortages are the result of myriad factors, including war, drought and corruption, but ultimately they reflect a dysfunctional government that remains deadlocked and unresponsive to popular will. That has generated disillusionment and dissent, including protests this summer that, while violent in two cases, were a different measure of Iraq’s new freedoms.
“Democracy didn’t bring us anything,” Mr. Farhan said in his newly darkened shop. Then he corrected himself. “Democracy brought us a can of Coke and a beer.”
The overall legacy of the American invasion today, like that of the war itself, remains a matter of dispute, colored by ideology, politics and faith in democracy’s ultimate ability to take root in the heart of the Arab world.
Even Iraqis suspicious of American motives hoped that the overthrow of Saddam Hussein would bring modern, competent governance. Still, the streets are littered with trash, drinking water is polluted, hospitals are bleak and often unsafe, and buildings bombed by the Americans in 2003 or by insurgents since remain ruined shells.
What is clear is that Iraqis’ expectations of a reliable supply of electricity and other services, like their expectations of democracy itself, have exceeded what either Americans or the country’s quarrelling politicians have so far been able to meet.
“Iraqi politicians are killing our optimism,” Hassan Shihab said, complaining about blackouts after Friday Prayer at a mosque in Baquba, northwest of Baghdad. Dictatorship, he added, “was more merciful.”
Iraq’s electricity problem is, of course, older than its still-uncertain embrace of a new form of government. Before Mr. Hussein’s invasion of Kuwait 20 years ago this month, Iraq had the capacity to produce 9,295 megawatts of power. By 2003, after American bombings and years of international sanctions, it was half that.
The shortages since have hobbled economic development and disrupted almost every aspect of daily life. They have transformed cities. Rumbling generators outside homes and other buildings — previously nonexistent — and thickets of wires as dense as a jungle canopy have become as much a part of Iraq’s cityscapes as blast walls and checkpoints.
Most of the generators are privately operated, and the cost — roughly $7 per ampere — has for ordinary Iraqis become too exorbitant to power anything more than a light and a television.
“I’ve never seen good electricity from the day I was born,” said Abbas Riyadh, 22, a barber in Sadr City, the impoverished Shiite neighborhood in Baghdad. As he spoke, as if on cue, the lights went out.
Billions of Dollars Later
The United States has spent $5 billion on electrical projects alone, nearly 10 percent of the $53 billion it has devoted to rebuilding Iraq, second only to what it has spent on rebuilding Iraq’s security forces. It has had some effect, but there have also been inefficiency and corruption, as there have been in projects to rebuild schools, water and sewerage systems, roads and ports.
The special inspector general for Iraqi reconstruction, Stuart W. Bowen Jr., said that one quarter of 54 reconstruction projects his office had investigated — including those providing electricity and other basic services — had not been completed or carried on by the Iraqis they were built for.
The United States is now winding such projects down, leaving some unfinished and others, already in disrepair, in the hands of national and provincial governments that so far seem unwilling or unable to maintain and operate them adequately.
“We brought the framework of electoral democracy,” Mr. Bowen said, “but its future efficacy is very much in doubt.”
Iraq does generate more electricity than it did in 2003, but nowhere near enough to match rising demand, driven higher by the proliferation of consumer goods, especially air-conditioners. Democracy, the easing of the country’s isolation and improving security have, paradoxically, created new conditions and demands that the government of Prime Minister Nuri Kamal al-Maliki has been unable to address.
Iraq’s electrical grid remains a patchwork of old power plants and new, supplemented with makeshift and inadequate solutions. Iraq now imports 700 megawatts from Iran. When temperatures soared this summer, it paid for two electricity-generating ships from Turkey to dock near Basra, one of the most badly affected cities, at a cost of hundreds of thousands of dollars.
The country’s transmission and distribution networks are aging and mismanaged by a bureaucracy as sclerotic as it was in Mr. Hussein’s era.
The entire system is hampered by poor planning and by interagency rivalries that, for example, delay fuel to power plants; by a lack of conservation; by continuing terrorist attacks on electrical towers, including four in the last half of July in Baghdad, Anbar and Diyala Provinces.
Corruption — which the special inspector general’s office called “Iraq’s ‘second insurgency’ ” in a report released on Friday — is pervasive. Mr. Farhan, the shop owner, said his landlord had bribed Ministry of Electricity workers to install the pirated cables three years ago. “He couldn’t just connect the cables himself,” he noted.
Fight Against Pilfering
The government campaign against pilfering — which officials said resulted in hundreds of miles of cables removed, with barely discernible effect — followed the public protests, including one in Basra in June that ended with the police opening fire, killing two.
At first Mr. Maliki denounced the protests as the work of foreign agents, an ominous echo of the conspiracy-minded remarks of Saddam Hussein, while the Interior Ministry announced strict limits on public protests.
Then Mr. Maliki, fighting for a second term as prime minister, moved to quell the populist outrage. He fired his electricity minister and ordered cuts in power to the privileged enclaves of ministers and politicians, a practice that began under Mr. Hussein and continues. Few Iraqis believe those cuts have been meaningful or will be lasting.
In Mosul, the troubled northern city, the consequence of the campaign against piracy turned violent in June. When government workers cut an illegal connection from the Nineveh Textile Factory to a restive neighborhood called Mahmoun, insurgents retaliated by shelling the plant.
“I knew it was not safe for me, but I did it anyway,” said a ministry engineer, referring to ordering the cutting of the cables.
“After that, the electricity went back to normal, as it was before, but the reply came quickly when the factory was targeted with mortars. There were many victims of the success,” said the engineer, who would give his name only as Abdullah, Father of Mohammed. Twelve people at the factory were wounded.
Mr. Maliki and his ministers have pleaded for patience, which is clearly running out, especially as the newly elected Parliament remains deadlocked over choosing a new prime minister and government nearly five months after the election.
The new acting electricity minister, Hussain al-Shahristani, said at an investment conference in July that Iraq would add 5,000 megawatts by 2012 but acknowledged that that would not keep up with demand.
“The problem will persist because there is no magic wand or miracle that can solve it,” he said.
He then urged Iraqis to turn off all but one air-conditioner in their homes — and presumably to huddle with their families in that room.
Bureaucratic Hurdles
The government’s inaction compounds the problem. In 2008, Mr. Maliki announced a deal to buy 56 gas turbine generators from General Electric and 16 from Siemens for a total cost of $5 billion. More than two years later the purchase remains stalled because of political quarrels over financing and delays in negotiating contracts to install them.
These types of generators have their own problems. At Baghdad South, a complex of three power plants, two General Electric generators installed in 2005 by the United States operate at about half their 125-megawatt capacity.
The plant director, Abdul Karim Mohammed, said the generators were designed to operate at an optimal efficiency using natural gas, not the fuel oil that the Iraqis use, and when the temperature is 60 degrees. It was 120 the day he spoke.
Already he has been ordered to defer recommended maintenance to keep the machines running at full tilt, with the consequence of wearing them out faster. Needed parts are prohibited by Iraq’s customs rules. Mr. Mohammed has spent a year trying to break through the bureaucracy. “It’s not a technical issue,” he said. “It’s a political issue.”
American diplomats and military commanders respond defensively when pressed on why, after all the American investments and expertise, Iraq still struggles to provide electricity.
They cite challenges that would overwhelm any government trying to fix a country emerging from dictatorship and war: violence, climate, aging infrastructure and soaring demand, which they call a sign of a burgeoning consumer society.
“Are people frustrated by this?” the American ambassador, Christopher R. Hill, asked. “Yes, I think they are.”
He added: “I think that the frustrations were evident on the street, but the solutions are ones that involve timely decision-making. I’m not going to criticize the government on whether it moved fast enough to build more power stations, but I think Iraqi voters are going to look at that.”
The question today is whether voters can force their leaders to act — and whether only moderately functional services will get worse as America continues to disengage. Not all Iraqis are persuaded. Even some senior officials express doubts about the country’s governance, about Iraq’s readiness to function: either on practical matters like electricity or more abstract ones like democracy.
“This is the fault of the Americans,” the deputy minister of electricity, Ra’ad al-Haras, said. “They put in place a big, wide-open democracy after the regime. They went from zero democracy to 100 percent. Democracy has to be step by step. You see the result.”
Reporting was contributed by Stephen Farrell, Khalid D. Ali and Zaid Thaker from Baghdad, and Iraqi employees of The New York Times from Mosul, Baquba and Basra.
http://www.nytimes.com/2010/08/02/world/middleeast/02electricity.html?th=&emc=th&pagewanted=print
US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/
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