Africa

by Guy Arnold

  The oil dominance achieved by the members of OPEC in the aftermath of the Yom Kippur War was in fact to be short-lived and the turn-around in the market started in 1978 when strikes in Iran against the policies of the Shah began to affect oil production. Furthermore, the West soon recovered from the shocks of 1973–75 once it was realized that the vast accumulations of petrodollars held by OPEC banks had to be spent and that they could only be spent in the West. ‘Recycling’ became the new jargon word, one that was much appreciated in the once-anxious West. The debate, sparked off by the oil crisis, was about underdevelopment and that had a long history, which was the product of imperialism.

  The underdeveloped countries are underdeveloped not by accident but because of the activity and influence of the developed countries. The economic conquest of the ‘underdeveloped world’ began so long ago that few people realize that many present underdeveloped countries were relatively well developed before the onslaught of the West. For example, Chile had a flourishing copper industry in the late nineteenth century that was entirely owned by its own citizens.2

  In fact, within the capitalist world there are vast inequalities of wealth and income that are sustained by basic mechanisms, which ensure that the gap between needs and resources, both within and among countries, will not be bridged. It was to this whole division of wealth and poverty, control and subjection, that Boumedienne and his Algerian revolutionaries were directing their attention.

  In the 1970s Africa was estimated to possess 30 per cent of the non-Communist world’s minerals and 20 per cent of its traded oil yet this was not reflected in its economic standing. At the time of the West’s rapid imperial expansion during the nenteenth and early twentieth centuries the countries that later came to be called collectively the Third World had neither economies nor military power sufficient to enable them to withstand the colonizing process with the result that they were subsumed in the Western empires or incorporated in their spheres of influence. This was the fate of the African continent. Subsequently, foreign companies that extracted minerals and left little of value in their place became a major obstacle to the economic development of the countries in which they operated and though it has been argued that without the big extractive companies even less development would have taken place, the reverse argument is that since what was extracted were non-renewable resources, it would have been better if these had been left in the ground to be developed when the country possessing them became free. Certainly, not much of the wealth accruing to this extractive process was invested in the countries in which the minerals were found. Moreover, in the post-independence period the roles of aid ministries in donor countries, supported by the World Bank and International Monetary Fund, ensured the continued profitability of extraction by the predatory multinationals since these institutions from their inception promoted foreign private investment in mineral ventures to ensure the continuing profitability of the companies and the continuity of supply to the West. Assistance was never offered to the newly independent countries to assist them in breaking the ties that bound them to the West; rather, aid was geared to bind them even tighter into an economic-financial web from which escape was only possible (if not usually practicable) by some form of socialist revolution. The Communist countries at this time did offer an alternative pattern in which mineral resources were nationalized and government policy was to achieve internal self-sufficiency by expanding indigenous supplies. Those African countries that experimented with socialism faced formidable obstacles: the internal ones they could overcome; the external pressures from the West usually, in the end, proved overwhelming and they were forced back into the Western capitalist camp.3

  The pattern of mineral supply and demand at this time can be illustrated by the critically precious metal cobalt which is mainly used for jet engines (approximately 70 per cent of cobalt production goes for super-alloys, magnets and steel alloys) and so was of great strategic importance. The United States then consumed approximately 30 per cent of total world production and imported 98 per cent of its total requirements. Zaïre accounted for 60 per cent of world production while a further 15 per cent came from the Communist countries.4 These facts alone provide a reason for the close support the US always gave to the Mobutu regime in Zaïre. It was never simply a question of where a particular resource was to be found but also of who controlled it. The investment pattern had been established during colonial times: first came the capital inflow and the people with the technological know-how; then the industrial enclave was established and consumer goods (luxuries to the local people) appeared on the scene so that a ‘state’ within a state was created. Meanwhile the raw materials were extracted and exported as were the greater part of the profits. As a result, the economy of the colony (later an independent developing country) became polarized between the extractive enclave and the rest of the country with an increasing gap in living standards growing up between them. This situation had its own psychological impact and helped foster the belief that all technology and luxury goods must come from overseas. Moreover, expatriates took the important economic decisions, thus emphasizing the gap between the indigenous population, even of its more educated members, and the expatriates who effectively controlled the economy. Processing the extracted minerals is the last link in the chain of control and the extracting companies and the countries out of which they operate have done all in their power to prevent the mineral-producing countries from also processing their own minerals, for it is in the processing that the major value is added to the ore. Moreover, when unrefined ores are shipped out of a Third World country they are often found to contain valuable secondary minerals: copper ores may also contain molybdenum, gold or silver and these secondary metals are obtained without cost and used commercially by the firms that process the ore. Quite apart from the value added by processing, the mining multinationals try to keep the producing countries out of processing so as to protect their control of the industry as a whole. As long as Third World countries are unable to process their ores their bargaining power is limited. To a great extent, the power of the multinationals depends upon their ability to control all aspects of the mining process and most especially the final value-adding processing. During the 1970s the World Bank and IMF became increasingly important in the mineral industry.

  Such institutions are increasingly seen by the developed capitalist countries as mechanisms that serve three inter-related goals: first, they reduce the rivalries among the developed capitalist countries and thus prevent an increase in the Third World’s bargaining power. Second, they reduce the power of individual Third World countries by facing them with the power of the whole international capitalist financial and economic community rather than with that of individual mining companies. And third, they keep the Third World countries from developing full control over their mineral resources, either alone or with assistance from the socialist countries.5

  That formidable indictment of the two UN financial institutions that were supposedly set up to work impartially on behalf of all their member countries gives a clear insight into the way the West subverted to its own ends the most effective international instruments to be created after World War II.

  THE OIL REVOLUTION

  Four African countries, of which two were in the Arab north, entered the 1970s as oil producers whose economies were largely dependent upon their oil production. These were Algeria, Libya, Nigeria and Gabon though the latter was only a small producer in world terms. In 1977 the percentage share of oil in their GNPs and exports was as follows:

  Country Share of GNP Share of exports

  Algeria 24 88

  Gabon 35 85

  Libya 60 99.9

  Nigeria 30 92

  After the Mossadegh debacle in Iran during the 1950s no Middle East country attempted to nationalize any important oil operation until the Algerian government seized a majority share of the French operations in Algeria of Compagnie Française des Petroles (CFP) and the French state company Enterprise
de Récherches et d’Activités Petrolières (ERAP) in 1971. Algeria had already nationalized its US concessionaires in 1967 (when Washington broke diplomatic relations) but their operations were small scale and made little economic impact. However, CFP and ERAP were responsible for most of Algeria’s output and were also in a special ‘protected’ position as a result of the 1965 Franco-Algerian Evian Agreement. When it was apparent that the Algerian-French discussions were making no progress, Algeria unilaterally took control of 51 per cent of CFP and ERAP operations on 24 February 1971. France responded with a boycott but in June CFP came to terms with the Algerian government: Algeria paid the company US$60 million compensation while CFP paid Algeria US$40 million back-payments and accepted a higher price. Five months later ERAP also came to terms with the takeover. The Algerian takeover, though it was seen by outsiders as part of an overall post-independence settlement between Algeria and its former colonial power, nonetheless encouraged the other OPEC producers who collectively began negotiations with the companies in Geneva in January 1972.

  Algeria and Libya were the pacemakers in the OPEC revolution of the 1970s. Libya’s role in creating OPEC power was extremely important. Algeria was as radical but, in one sense, was engaged in a battle with France, its former metropolitan power. Libya, by contrast, played the role of ‘jack the giant-killer’ and when it succeeded other Gulf States followed its lead.

  Gaddafi’s determination to take on the major oil companies in the early 1970s, forcing them into a series of deals that both increased the price paid for Libya’s oil and gave Libya a controlling stake in its own resource for the first time, revolutionized the relationship of oil consumers and producers in the Middle East and provided the Organization of the Petroleum Exporting Countries (OPEC) with ‘teeth’. In October 1969 the Libyan Minister of Petroleum and Mines, Ezzidin Mabrouk, announced that the government would reappraise the control of Libya’s oil wealth. Libya would seek agreements with the oil companies that were ‘fair’. In 1970 the government exerted pressures upon the oil companies to accept both higher taxes and an increase in the posted price of crude oil. (The posted price is an artificial rate used for calculating tax and royalties; the market price is lower.) Libya was in a very strong position: it was then the most important single supplier to Western Europe; its geographical location was closer to the markets of the main consumers; and its oil had a low sulphur content which made it especially suitable for refining. Moreover, the government was ready to cut back output, ostensibly as a measure of conservation, as a means of exerting pressure upon the companies. At this time 45 per cent of Libya’s exports went to West Germany and Italy and a further 13.8 per cent to Britain.

  Gaddafi sought to co-ordinate his oil policy with Algeria, and the two countries agreed a common approach to the oil companies in January 1970. Then, following a visit by Gaddafi and his oil minister, Mabrouk, to Algiers on 19 April 1970, they agreed to the ‘creation of a united front to defend their interests in the face of foreign trusts and monopolies’. This was only a beginning. In January 1971 Libya put forward new demands that were equivalent to a further 25 per cent rise in the posted price of oil and the posted price of crude oil was then raised to US$3.45 a barrel. At that time Libya was extracting oil at the rate of 3.1 million b/d. Despite a drop in oil exports during 1971 of 16.7 per cent government revenues had increased by 37 per cent as a result of price increases. The companies now found themselves in a position of constant uncertainty. During the first six months of 1972 they were asked to cut back production the equivalent of 22.3 per cent over the same period for 1971 as a conservation measure. At the beginning of 1973 Libya asked for 50 per cent participation in the Oasis Consortium (Marathon Oil, Continental Oil, Amerada Hess and Shell) and in May, when little progress in the talks had been achieved, the government increased its pressures. On 11 June the government nationalized Bunker Hunt and this move was seen as a warning to the bigger companies. As the government said: ‘No power on earth can take from us the right to nationalize our own oilfields or to stop pumping our oil.’6 On 10 August 1973 terms for a 51 per cent nationalization of Occidental were announced; Occidental had come to terms with Libya on its own. The agreement had a profound impact since Gulf States to that point had been content with 25 per cent stakes. After insisting that the Oasis companies should cut production, they too (though not Shell) came to terms and accepted a 51 per cent deal.

  Libya had played its hand shrewdly for the agreements with Occidental and Oasis had separated the leading independent companies from the larger, worldwide corporations which had only limited interests in Libya: Occidental, Marathon Oil, Continental Oil and Amerada Hess were largely dependent upon their Libyan supplies and, therefore, far more vulnerable than the other companies. By December 1973 when the Gulf producers announced a new posted price of US$11.65 a barrel and Libya went one better by raising its price to US$18.76 a barrel (the highest ever in world terms) the battle between the OPEC countries and the companies had effectively been won. Libya had never wavered in its tough stance and its readiness to halt production (whether or not this was a bluff) had forced the pace.

  At the Islamic Summit Conference held at Lahore in February 1974, Gaddafi advanced the unique proposal that the oil-producing countries should adopt a three-tier pricing system: the lowest prices to be offered to Islamic states, a middle price to developing countries and the highest price to the industrialized states; but the other oil producers were not interested. Meanwhile, Libya pursued its policy of nationalization through 1974 and on 11 February announced the total nationalization of three US companies – Texaco, California Asiatic and the Libyan-American Oil Company – which had refused to accept the 51 per cent Libyan participation deal of 1973. By the end of the 1970s, Libya, like other Arab producers, was affected by depressed market conditions and the coming on stream of North Sea oil. In 1980 Ezzidin Mabrouk, who had been responsible for Libya’s oil for a decade, was replaced by Abdul-Salam Muhammad Zagar because of his failure to speed up the process of total Libyanization. Oil prices peaked in 1980–81 when the spot price for Libyan crude was at a high of US$41 a barrel, but the 1980s were to be a decade of depression in the oil industry and, for example, Libya’s oil income, which reached US$23 billion in 1981, dropped to US$10 billion in 1982. In the confrontations of 1971–74 Libya had determined to show it was as tough in negotiations as Algeria and ahead of the other Arab states, especially Saudi Arabia, and in this respect it had succeeded in setting the pace.

  ISRAEL

  In the late 1950s Israel had initiated an aid programme for black Africa as part of its policy to ‘leap over’ the hostile Arab states that surrounded it and make friends among the new states of Africa. The aid was at government level and consisted chiefly of technical assistance covering agricultural development, military and police training, public health, the utilization of water resources and community planning. In addition, the Israeli government offered a range of training scholarships and by 1972 more than 7,000 African students had attended courses in Israel. At the same time that government aid was being provided, private industry from Israel had begun to invest in black Africa and, for example, the Black Star shipping line was a joint Israeli-Ghanaian venture. Similar joint ventures had been developed with Ethiopia, Kenya, Nigeria and Tanzania. In the aftermath of the 1967 Six Day War between Israel and its Arab neighbours, 12 black African states had voted for a UN resolution condemning Israel as the aggressor, 16 had voted in support of Israel and five had abstained. By 1972 Israel had established diplomatic relations with 32 African states and in general African countries were sympathetic to Israel rather than antagonistic and tended to see its problems as similar to their own although attitudes began to change following the 1967 war. Then, after the October 1973 war between Israel and her neighbours, virtually every African state broke relations with Israel, including previously warm friends such as Ethiopia, Kenya and Nigeria, and Israel found its policy of over-leaping the Arab states to find allies in Africa
in ruins. As Peter Enahoro wrote in Africa (December 1973), ‘The survival of Israel became identified with American power. To be opposed to Israel was to be anti-colonialist, anti-imperialist…’ Moreover, Israel’s growing relations with Pretoria were a mark against it while the cause of the Palestinians came to be equated with the cause of the Southern African guerrillas. Arab pressures upon black Africa to support the Palestinian cause and distance themselves from Israel were intensified during 1972–73, before the Yom Kippur War changed the whole political situation in the Middle East. Libya promised Uganda military and economic assistance and Uganda broke diplomatic relations with Israel at the end of Match 1972. Uganda, under Amin, was something of a special case. There had been Israeli agents in the country since Obote’s time and these were believed to be in touch with his supporters. Amin said he was surprised to find 700 Israelis in the country; he had expected 40 or 50. Military advisers who had been in the country since 1964 left hurriedly in the last week of March when Amin announced the termination of the existing defence agreement with Israel. The Israelis, it transpired, had been employed building highly sophisticated military air bases in Uganda, which could be used for air strikes against Egypt.7 Chad also severed relations with Israel, in its case after Gaddafi had promised to end his support for the Muslim rebels in the north of the country.

  At the November 1973 OAU Ministerial Council meeting, in the immediate aftermath of the Yom Kippur War, the Emperor of Ethiopia, Haile Selassie, overtly linked the occupation of Arab lands by Israel with the occupation of Southern Africa by colonialist and racist regimes: ‘Africa cannot be assured of continued peace and progress,’ he said ‘if any part of our continent remains under foreign domination.’ The same OAU meeting called for oil sanctions against South Africa, Rhodesia and Portugal. However, apart from this oil boycott, the Arab members of the OAU were asked for other forms of help in return for African support. The Kenyan Foreign Minister asked the oil states to sell oil direct to African countries with what he described as ‘fragile’ economies at ‘concessionary rates’ and to channel aid through the African Development Bank.8 However, although in the end almost every African country fell into line and broke diplomatic relations with Israel, some at least did so under protest. The Nigerian Tribune, for example, regretted that Nigeria was not an active participant in the search for peace in the Middle East and condemned the ‘folly’ of breaking relations with Israel. It said: ‘The Middle East crisis is an Arab problem. It is not an African affair. It is not the business of the OAU.’ The Assistant Secretary-General of the OAU, Mr Onu, said that peace initiatives should not be a monopoly of the Great Powers although, unsurprisingly, an Israeli spokesman said that by breaking with Israel the African states had ‘lost their role in any peace settlement’. By the end of 1973 a common African stand had emerged towards events in the Middle East with the near-complete severance of African diplomatic links with Israel in support of the Arab cause and, in return, the Arab promise to suspend the supply of oil to the white regimes in Southern Africa. Even those African countries that were especially well disposed towards Israel – Côte d’Ivoire, Ethiopia, Ghana, Kenya, Zaïre and Zambia – felt obliged to join the mainstream and break diplomatic relations and though at the time it appeared as though Africa was reacting to the immediate Middle East crisis, in fact the build-up to the breaks had begun in 1972. Arab pressure upon wavering African governments was greatly increased at the Non-Aligned Summit which met in Algiers on 5 November when 17 states broke relations with Israel.