As America’s Stake in Africa Fades, Malign Actors Are Filling the Vacuum Amid a Historic Debt Crisis

Western commitments to Africa are deteriorating, while malign actors are making inroads on the continent to extract its resources and aggravate the worst debt crisis the developing world has seen in a generation. That’s the warning from a former president of the World Bank, David Malpass, to fellows at a conservative think tank, the Hudson Institute. In the wake of the Covid pandemic, America and its allies have abandoned their long-held interests in the African continent in response to diminishing political interest. The latest departure took place this week, when President Biden surrendered the Pentagon’s base in Niger, leaving to President Putin the West’s only remaining stronghold in a region that’s increasingly influenced by various jihadist groups.America’s adversaries are now coming onto the scene, promising capital to developing nations while extracting raw materials to fund their own ambitions. The International Monetary Fund reports that 60 percent of low-income developing countries are already at high risk of or in debt distress. “The payout to China is bigger and bigger every year,” Mr. Malpass says, while “each country is sinking pretty rapidly.” Beijing is the largest bilateral sovereign lender to Africa, as well as the biggest trader and diplomatic presence on the continent. “The continent is massively strategically important,” a senior fellow at the Hudson Institute, Joshua Meservey, says. “Our competitors are gaining more and more influence there while American influence fades — not because we’re absent, but because we haven’t been strategic or smart about how we operate on the continent.”The many international economic conferences taking place every year make little progress on debt reduction, Mr. Malpass says. Participants show little interest in finding solutions that actually work when it comes to restructuring debt in countries such as Chad, Zambia, Ghana, and Sri Lanka. Arguments amongst the creditors often lead to stalemate. “The consequence for all of us,” he says, “is investment in the world is not going into the places that need it.”Could foreign aid solve this problem? “Right now, you’d need a huge, giant increase at a time when the advanced economies, in their negotiations, are actually looking to reduce the amount that they’re putting into the countries,” Mr. Malpass says. The world’s 75 poorest countries made some $30 billion in debt-servicing payments in 2023, more than half of which went to Communist China. While the World Bank has dedicated $23 billion in grant money for these countries over three years, it’s a number that Mr. Malpass says will only shrink.This system of debt servicing is unsustainable, Mr. Malpass says. To revise it, there needs to be more transparency in the analysis of debt sustainability and in the numbers on debt itself, he says. This could be achieved under Article IV of the International Monetary Fund’s articles of agreement, which would require countries to disclose how much they owe to their creditors. As of now, Beijing is reluctant to engage with multilateral development banks and Western creditors to help find long-term solutions as their debt-ridden economies deteriorate.Unlike with America and other lenders, China’s contracts have nondisclosure agreements that sideline borrowers. So if China loans money to Angola in exchange for oil, the proceeds are exported to China through an escrow account it controls. It’s as though the American government, in order to issue a Treasury bond, was asked by China or other lenders to hand over control of its road system. “That actually is the norm in many of the developing countries,” Mr. Malpass says, giving “substantial influence” to lenders like China.Mr. Malpass urges America to work with other advanced economies to incentivize China to make productive investments in developing countries — meaning, investments that do not extract merely resources to benefit Beijing. “As long as you have the G20 and the Paris Club dominating the process,” he says, “it’s working heavily in China’s favor.” This matters not only to the international financial system, but also to geopolitics. China has entered agreements with African regimes that could last for decades. Russia, too, is increasingly looking to the continent as a source of diplomatic support, raw materials, and revenue to fund ambitions like the Ukrainian war. Iran has made inroads as it discovers new sources of uranium for its nuclear arms development. America, meanwhile, is increasingly distancing itself from the region — to its own detriment.

As America’s Stake in Africa Fades, Malign Actors Are Filling the Vacuum Amid a Historic Debt Crisis

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