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Date: Tue, 14 Jul 98 10:33:16 CDT
From: rich@pencil.math.missouri.edu (Rich Winkel)
Organization: PACH
Subject: FINANCE: US Treasury Secretary to Push African Liberalisation
Article: 39010
To: undisclosed-recipients:;
Message-ID: <bulk.11690.19980715181538@chumbly.math.missouri.edu>

/** ips.english: 465.0 **/
** Topic: FINANCE: US Treasury Secretary to Push African Liberalisation **
** Written 4:11 PM Jul 13, 1998 by newsdesk in cdp:ips.english **
Copyright 1998 InterPress Service, all rights reserved.
Worldwide distribution via the APC networks.

US Treasury Secretary to Push African Liberalisation

By Abid Aslam, IPS, 10 July 1998

WASHINGTON, Jul 10 (IPS)—U.S. Treasury Secretary Robert Rubin leaves Saturday for Africa, to push financial market liberalisation as the key to boosting investment and economic recovery.

Rubin will visit Cote D’Ivoire July 12-13, South Africa July 14- 15, Mozambique on July 16, and Kenya July 17-18, says a Treasury Department spokeswoman. Accompanying him will be executives from U.S. finance companies Alliance Capital Manager, Good Works, JP Morgan, and Salomon Smith Barney.

The collapse of the South African rand during the past two weeks is expected to dominate talks with Washington’s biggest trading partner in the region. South Africa accounts for nearly half of all U.S. exports to Africa and President Nelson Mandela will be looking for Rubin to issue a strong statement of support for Pretoria’s market-oriented economic policies, say political observers.

Rubin’s trip is billed as a follow-up to President Bill Clinton’s visit to Africa in March. Since then, the U.S. administration has approved two new Africa funds by its Overseas Private Investment Corporation to help finance American investments in infrastructure projects. But the centrepiece of its initiatives, the ’African Growth and Opportunity Act’, has been stalled in the U.S. Senate after being approved by the House of Representatives.

The bill, designed to boost U.S. commercial interests in a region long dominated by former colonial powers Britain and France, would increase the number of African-made goods permitted to enter the United States duty-free and initiate long-term plans for US-Africa free trade zones.

To benefit, African countries must convince Washington that they are not engaged in gross human rights violations and are making continual progress toward establishing a market-based economy.

The latter provision effectively requires African countries to comply with structural adjustment programmes (SAPs) and protect foreign investors and intellectual property rights. Civil society organisations here and in Africa have opposed such criteria as favouring multinational companies at the expense of poor Africans.

This is less about African growth and more about American opportunity, Dorothy Keet of the University of Western Cape told IPS in South Africa. The so-called market access that they are giving us, they are actually going to have to give to everybody over the next 10 years under the (World Trade Organisation). But for a very minimal offer, they are extracting very heavy quid pro quos from us.

SAPs, engineered by the International Monetary Fund, also are the crux of the ’Heavily Indebted Poor Country’ (HIPC) initiative, which aims to reduce countries’ debt burden to levels deemed ’sustainable’. However, in some cases debt servicing will end up higher than at present, according to Oxfam International.

Cote D’Ivoire and Mozambique are not scheduled to receive HIPC relief before 1999. African officials are lukewarm to the programme, citing its onerous conditions and slow pace. The initiative could end up like the mountain that gave birth to a mouse, K.Y. Amoako, executive secretary of the UN Economic Commission for Africa, warned recently.

External debt remains a major impediment to investment, according to the African Development Bank. In 1997, the stock of debt stood at 315.2 billion dollars, with debt service obligations absorbing, on average, about one-fifth of export earnings, the Bank says in its latest ’African Development Report’.

Private capital flows to developing countries exceeded 240 billion dollars in 1996 but almost all went to 12 ’emerging markets’, according to the World Bank. Sub-Saharan Africa—whose only emerging economy is South Africa—garnered only 2.6 billion dollars, says the U.N. Conference on Trade and Development.

Clinton did not visit Kenya during his African safari because of ongoing political problems there.

Administration officials held off-the-record talks with human rights workers here Thursday and voiced broad agreement on needed reforms for Kenya but it remains unclear what steps Washington is willing to take, or whether Rubin would be briefed on the meeting prior to his departure, participants told IPS.

Rubin will try to focus solely on Kenya’s economic crisis, which is very serious. In our opinion, however, it is linked to the political crisis and we’re not hearing from Treasury that he will make that connection, says Adotei Akwei of Amnesty International.

The stakes are high, notes Kenyan human rights and economic activist Njoki Njoroge Njehu. We’ve seen the consequences of U.S. Treasury advice to Indonesia, where it has benefitted a small clique of people while contributing to social and political problems. There are tragic similarities in Kenya, she says.

Rubin should use his visit to say that the rule of law is not only essential for Kenya’s economic transformation but also for political stabilisation (and urge) serious negotiations about constitutional reform, argues Akwei.

Corporations and human rights groups face the same problems, he adds. Businesses have complained about corruption, which in large part is the result of the breakdown of the judicial system, which has no independence. Supreme Court judges’ contracts are written by (Kenyan President Daniel Arap) Moi. That same system is failing to protect fundamental human rights.

Economic ties between the United States and the 48 countries of sub-Saharan Africa are minimal. In 1996, U.S. exports to the region came to only 6.1 billion dollars, or about one percent of total exports. US imports from Africa, mostly oil, amounted to 15.2 billion dollars, or about two percent of all imports. U.S. investment—mostly in South Africa and Nigeria—remains less than one percent of total investment overseas. (END/IPS/aa-gm-