www.africa-confidential.com 25 January 2002 Vol 43 No 2 AFRICA CONFIDENTIAL 3SOUTH AFRICA The generation game At New Year, President Moi backed Crossing the Limpopo KANU’s ‘Young Turks’ and their Zimbabwe threatens the grand African plans of Presidents Mbeki allies in ’s NDP in the and Obasanjo succession race. Two weeks later he switched back to the old From the splendour of Pretoria’s Union Buildings, President ’s vision of a resurgent Africa guarders, and is obscured by the sprawling crisis in Zimbabwe. Almost everything Mbeki wants to do in foreign policy . Neither side seems to know his real plans. – win more foreign capital, get South African companies to invest in mineral-rich Congo- and Angola and launch a continent-wide development programme – is threatened by Zimbabwe. It is the tail wagging the dog. ’s economy is 20 times the size of Zimbabwe’s but it cannot support hordes ANGOLA 4 of refugees heading south across the Limpopo River or bear the collateral damage done to its currency and credit ratings. Russian roulette The Limpopo is crocodile-infested but for many foreign bankers, the border is a technicality; President Luanda’s secret oil-backed loans Robert Mugabe’s Zimbabwe might as well be a troublesome northern province of South Africa. The have derailed its relations with the Chamber of Commerce estimated that by mid-2001, South Africa has lost US$3 billion IMF. An IMF team goes to Luanda of potential investment because of the Zimbabwe crisis. That’s apart from the damage to its private and next month, armed with new data, but there is much concern about a state sector suppliers, such as Eskom (electricity) and Sasol (fuel), to which Zimbabwe owes hundreds mysterious multi-billion dollar of millions of dollars. buyback of Russian debt Zimbabwe will also be – in the eyes of the USA and – a critical test of the New Partnership negotiated by arms dealer Arkady for Africa’s Development (Nepad), an Africa-wide development plan which needs Western financial Gaydamak. support (AC Vol 42 No 14). Central to Nepad is the idea of peer pressure: that African states can be encouraged to liberalise their politics and reform their economies by other African states, rather than by CONGO-KINSHASA 6 overbearing Western-based institutions imposing micro-conditions on loans and aid.

Under the volcano Peer pressure on Mugabe The mile-wide river of lava spewing Crudely put, if South Africa and Nigeria don’t contain the crisis in their back yard, there won’t be much from Mount Nyiragonga last week Western cash for Nepad. That would derail the scheduled summit with the Group of Eight countries in devastated the rebel capital of in July to discuss Western support for the plan. Both Mbeki and his close colleague, Nigerian Goma but didn’t change the President Olusegun Obasanjo, insist that the Nepad philosophy and peer pressure work. Mugabe’s combatants’ entrenched positions in the war. Rebel chief Adolphe Zimbabwe is testing their optimism to the limit. Onusomba insists his movement Some frustrated voices in Pretoria and Abuja argue that much of Zimbabwe’s crisis is unfinished is staying put and rebuffed a rescue colonial business (the failure of land reform) and that Britain’s poor relations with Harare are partly to mission from President Joseph blame. Differences between Europe and Africa over Zimbabwe are set to deepen, with the European Kabila’s government in Kinshasa. Union preparing to impose smart sanctions on the Mugabe government after its meeting on 28 January. Peer pressure for Mbeki and Obasanjo means constructive engagement and quiet diplomacy but AFRICA/ECONOMY 6 emphatically not big-stick tactics, such as sanctions or covert destabilisation. For example, South Africa (which runs Eskom), Zambia (Kafue Dam) and (Cabora Bassa) could jointly cut off more Bear markets than 80 per cent of Zimbabwe’s power if they wanted. They don’t. If Pretoria rejects sanctions of any The new year confirms the description before the elections, that means the Southern African Development Community and the gloomiest of forecasts about (ex-Organisation of African Unity) will do the same. Mugabe values his African Africa’s economies: Nigerians face liberation stance enormously; he would hate to be isolated as a corrupt tyrant who stole an election. So a 50 per cent fuel price hike; South Mbeki believes that diplomatic isolation would be more powerful than sanctions. Africans have a currency crash Plenty of South Africans disagree. Some, predictably, are Mbeki’s die-hard opponents, such as the and Zimbabweans are running out of maize. Democratic Party’s Tony Leon; others are sometime allies, such as the Congress of South African Trade Unions; yet others are even closer to home, such as Mbeki’s brother Moeletsi, who argued in December for Pretoria to pull the plug on Zimbabwe’s economy. Moeletsi is Deputy Chairman of the SA Institute of International Affairs and says he’s completely at odds with his presidential brother on Zimbabwe. POINTERS 8 Mbeki and Obasanjo share the same analysis: there has to be a negotiated rather than a coercive resolution; the Movement for Democratic Change isn’t ready to take over power by itself; and the Benin, Algeria, preferred outcome would be a power-sharing government between ‘moderates’ in the Zimbabwe African Madagascar & National Union-Patriotic Front and MDC. Sudan They agree that a big-stick policy would be disastrous for South Africa. Pretoria would be cast in the mould of post- neighbourhood bully; the African National Congress would be accused of 25 January 2002 Africa Confidential Vol 43 No 2 Managing foreign affairs In 2000 South Africa’s ministries were grouped in ‘clusters’, to rationalise General Alistair Ruiters. The DTI is to cut most foreign postings for its policy-making and eliminate contradictions. The Department of Foreign officials, while its Trade and Investment South Africa Division, whose Affairs is grouped with the Departments of Defence, Tourism, Safety and Chief Executive Officer is Rafiq Bagus, will organise trade missions. The Security, along with Trade and Industry in the International Relations, DTI still intends to place trade negotiation specialists in key appointments Peace and Security (IRPS) cluster, which promotes the New Partnership such as at the Southern African Development Community (SADC) for Africa’s Development (Nepad). Other clusters are , Social headquarters in Gaborone, Botswana, and the mooted Southern African Services, Inter-Governmental Relations, and Criminal Justice. Customs Union (SACU) Secretariat in Lesotho. The civil service Chairman of the IRPS is the outgoing Foreign Affairs Zimbabwe’s crisis has highlighted civil society and business input into Director General, Sipho Pityana. Under Pityana at the DFA are eight foreign policy. Significant think-tanks are the Institute for Security deputy directors general (DDG). The DDG for Multilateral Security and Studies (ISS) in Pretoria, headed by Dr. Jakkie Cilliers; and the South Governance is Abdul Minty, an anti-apartheid stalwart, who is also acting African Institute of International Affairs (SAIIA) at Wits University in DDG for Multilateral Development and Cooperation. The acting DDG for . The SAIIA is chaired by the President of British Petroleum Asia and Australasia is Anil Sooklal, while the DDGs for Europe and the Africa, Fred Phaswana, with Deputies Elisabeth Bradley and Moeletsi Americas/Caribbean are under one acting head, Ndimiso Ntshinga. Mbeki, President Thabo Mbeki’s brother. Day-to-day operations are Two separate chief directorships have been created for Europe: Eastern headed by Greg Mills. and Central under Gert Grobler, Western Europe under Ismail Coovadia The Africa Institute in Pretoria, directed by Eddy Maloka, has drawn – and the Americas: South America under Tom Wheeler, a former closer to government with its constitution subject to an act of parliament. Ambassador to Turkey, and North America under Ntshinga. It is rumoured The SA Foundation, which operated abroad as an informal diplomatic that Grobler and Coovadia are leaving to head missions in Spain and body during the apartheid years, now focuses on local economic and . At the end of 2001, Welile Nhlapo was DDG for Africa and the governance issues and on building trade and investment links. Its Director Middle East, but he too may be moving. Corporate Services are headed by today is Neil van Heerden, the former DFA Director General and E.S.J.S. Hlapolosa, State Protocol byAmbassador Billy Modise. Ambassador to the . A DFA policy planning unit was established under Pityana’s office last South Africa’s growing regional role has spawned academic institutions year, headed by Iaan Basson, while the search for a permanent chief in Cape Town, Durban and Pretoria. Parliament’s role in shaping foreign director is under way. The main research unit in the Department of Trade policy remains limited, since its committees have tight budgets and the and Industry (DTI) is the Chief Economist’s Office of a former University executive is distinct from parliament. of Cape Town lecturer, Dave Kaplan. The Economic Analysis and Nonetheless, the Foreign Affairs Committee, led by African National Research section in the DTI’s International Trade and Economic Congress veteran Ebrahim Ebrahim, the Trade and Industry Portfolio Development division is headed by the former University of Natal academic, Committee under former academic and ANC exile Dr. Rob Davies, and Peter Draper. the Joint Standing Committee on Defence chaired by Ntsiki Mashimbye, Despite the clusters, there remain problems of coordination between the are targeted by non-governmental organisations and foreign donors DFA and the DTI, where the Minister is Alec Erwin and the Director interested in capacity-building.

turning on its former fellow liberation movement and supporter, elections, she came third. Yet, like Obasanjo, Mbeki is his own ZANU-PF. More practically, such a stance would split the SADC. foreign minister. He has a formidable grasp of diplomatic and trade Angola and Namibia would back their military ally in Congo-K, issues in Africa and the West. At last year’s OAU summit in Lusaka, whose government would be yet another regional supporter of he stunned journalists by reeling of a list of the rebel factions in Congo Mugabe’s. Mbeki reckons the cost of splitting SADC and losing any and Burundi and their current military dispositions. hope of pushing ahead with the Nepad plan outweighs the risks of Despite his cerebral demeanour, Mbeki likes grand events if they trying to get a negotiated settlement in Zimbabwe. Pretoria insiders put his country on the map. That’s partly why he wanted to host say there’s no possibility of him changing that view, at least until the September’s World Conference on Racism in Durban. It was hijacked March elections. partly by the parties to the Middle East conflict, and the hosts and the United Nations had lost control long before it opened. They hope to Fiery baptism for Nkosazana avoid similar distractions at the World Summit on Sustainable Zimbabwe is a baptism of fire for South Africa’s post-apartheid Development, due in August-September in Johannesburg. foreign policy. Before Mbeki’s election as President in 1999, former Mbeki puts strategic importance on Pretoria’s Middle East peace Foreign Minister Alfred Nzo had been presiding over an inherited efforts. All of South Africa’s main partners in the Nepad alliance – diplomatic style with a democratic gloss; with Nelson Mandela as Algeria, Egypt, Nigeria and Senegal – have substantial Muslim President, some argued that Pretoria scarcely needed a foreign policy. populations; wooing Middle East investors is another Pretoria In fact, it got several different policies, all at the same time. Mandela imperative. In January, a three-day ‘retreat’ in Stellenbosch involved provided an off-the-cuff policy: flashes of brilliance mixed with booby Palestinian and Israeli negotiators; Mbeki with three of his ministers; traps; Nzo, suffering from periodic ill health, was prey to wilier and some prominent National Party ex-politicians, including ex- regional foreign ministers; and the old apartheid-era diplomatic service Foreign Affairs Minister Roelof ‘Pik’ Botha and ex-Defence Minister was still in place and not keen on changing the foreign policy agenda Roelf Meyer. The Israeli government sent no official representatives. much. Then Deputy President, Mbeki, who was trying to coordinate Pretoria’s big new push is in the Great Lakes. It has been building economic policy, spent much of his time trying to limit the damage. on Mandela’s role in trying to negotiate the late President Mobutu Pretoria’s diplomacy is more under control now, though plenty of Sese Seko’s political exit in 1997. ANC ideologues saw the chance of discordant messages still get out. Foreign Minister Nkosazana a South African-style renaissance in Congo; SA mining houses greedily Dlamini-Zuma is the ultimate insider; she has better access to the eyed the region’s mineral riches. The strategy soured under Mobutu’s presidency than any other minister. She’s also increased her popularity successor, President Laurent-Désiré Kabila, who allied himself with ratings within the ANC; in last year’s National Executive Committee Angola and Zimbabwe, united in their suspicion of South Africa.

2 25 January 2002 Africa Confidential Vol 43 No 2

Uganda and Rwanda, who backed the rebellion against Kabila, were the ruling ANC’s ideological bedfellows. Ugandan President KENYA Yoweri Kaguta Museveni once hosted ANC training camps; and now South Africa is regarded as Rwanda’s closest African ally. Foreign Minister Zuma has steadfastly driven a pro-Kigali policy in the face of regional and local scepticism. However, Pretoria’s biggest and The generation game probably riskiest commitment is its peacekeeping contingent in President Moi gives the grey politicians Burundi. The peacekeepers’ budget of more than US$20 million is another chance in the succession race financed by the EU, mostly Belgium, and their operation is backed by the UN, though they are not formally UN troops. Inscrutable as the Sphinx, President confers favour After Mandela’s diplomatic efforts in brokering the Arusha accords on one faction, then withdraws it the next day. Even his most between Burundi’s warring factions (AC Vol 42 Nos 17 & 21) it was vehement opponents salute his political cunning. As the ruling not surprising that South African troops were brought in. There is a Kenya African National Union squabbles over who will succeed him danger: if the accord fails, they get caught in the crossfire but if it as party and national leader, he sees that the main threat to his succeeds, they will be in demand for bigger and maybe tougher jobs. continued supremacy comes from the party’s insatiably ambitious The obvious next step would be Congo, where South African military presidential praise-singers. He has three options: to stay put via a technicians are already working in the UN team. constitutional device; to hand over to KANU’s old bruisers, such as Nicholas Kipyator Biwott and George Saitoti; or to pass the baton Remaking policy from the roots to the younger generation, such as Wycliffe and For the past two years, the workings of the Department of Foreign . Affairs (DFA) have been distracted by restructuring, leadership At the New Year, it seemed Moi had picked the new generation. tensions, and allegations of racism and misconduct. It has also been His officials insisted he had junked all idea of staying on but wanted a time of trying to reshape policy from the foundations. After Mbeki’s to keep an elder statesman’s eye on politics after retirement. This 1999 victory, Foreign Minister Dlamini-Zuma (former Health Minister would be made possible by an alliance between KANU’s ‘Young and ex-wife of Deputy President Jacob Zuma) and Director General Turks’ and Raila Amolo Odinga’s National Development Party Sipho Pityana took over, replacing Nzo and Jackie Selebi. (AC Vol 42 No 16). The strategy emerged during his visit to the Pityana is an ex-Director General in the Department of Labour (his United Nations General Assembly last October, from discussions brother Barney Pityana is principal of the University of South Africa with his closest advisors: Joshua Chelego Kulei (personal assistant and head of the Human Rights Commission). Sipho was tougher than and relative), Sally Kosgei (civil service head), Hosea Kiplagat his predecessor, setting performance targets and reporting schedules, (nephew and Cooperative Bank of Kenya boss), Uhuru Kenyatta (in and enforcing the rules. Late last year, disciplinary action was taken the wings; son of the late President ). against five senior diplomats. Seven more junior diplomats are said The main concern was how KANU could comfortably win the next to have been charged with various misdemeanours. election despite economic disaster and how Moi could protect Pityana resigned this month, just half-way through his contract; we himself and his family from prosecution and harassment after leaving hear he has been offered a heavyweight job in the private sector at office. The party would go to the elections, due by December, with about five times his state salary. His Deputy Director General for a slate of youngish politicians who could mobilise ethnic support for Africa, the former Ambassador to the OAU Welile Nhlapo, is said to a Moi-friendly transition: Kenyatta (Kikuyu, 41), Cyrus Jirongo be moving to the presidency as special advisor. (Luhya, 44), Julius Sunkuli (Maasai, 43), Raila Odinga (Luo, 57, Confusion over responsibility between the DFA and the 350-strong son of ), (Kalenjin, 50). presidential office may be reduced by the creation of the inter- Kenyatta was nominated to parliament in November. Despite his departmental International Relations, Peace and Security (IRPS) unit. father’s status as Independence leader and Kikuyu hero, Uhuru Two separate teams seem to be responsible for Nepad issues. The cannot win an election in Kikuyuland because he belongs to the presidency’s Nepad team is fronted by Mbeki’s economic advisor, detested KANU. In the 21 November reshuffle, he became Local Professor Wiseman Nkuhlu (a former head of the Development Bank Government Minister, while Jirongo, hitherto a bitter critic of of Southern Africa), with Dave Malcolmson of the DFA. In November, Moi’s, enthusiastically embraced the Agriculture and Livestock the DBSA created its own Nepad Secretariat, headed by the former portfolio. By Christmas, the Young Turks were crisscrossing the Deputy Director General for Energy, Smunda Mokoena, and including country with Moi’s blessing, to campaign for the merger of Raila’s a General Manager for Communications and Marketing, Thaninga mainly-Luo NDP with KANU, in a new party designed to cruise to Shope-Linney. electoral victory, sweeping away the old guard. Pityana’s possible successors include Tutu Mazibuko, currently Moi had encouraged his 40-and-50-somethings by promising not Ambassador to France and former Deputy Director General for Asia, to leave power ‘to old grey-haired people’. The senior ranks of both and wife of Welfare Minister Zola Skweyiya, and the Chief Director KANU and the opposition parties are dominated by males well into for Central Africa, Lindiwe Zulu. We hear Zulu has Dlamini-Zuma’s their sixties. The new generation had underestimated its rivals, such backing, while Mazibuko is well regarded by foreign service as KANU’s salt-and-pepper-haired Vice-President George Saitoti professionals. Deputy Minister Aziz Pahad, a survivor from Mandela’s and his allies. cabinet, stays in his job. In December, some Young Turks (Ruto, Kenyatta and Odinga) The weakness of the rand squeezed the DFA budget last year, when persuaded Moi to approve a four-member technical committee SA had 25 missions in Africa, 23 in Europe, 16 in the Americas, 21 in answerable to himself and Odinga, to accelerate the party merger. It Asia and the Middle East, and four multilateral. Yet new missions are consists of Professor Henry Mwanzi (Luhya, old KANU hack), scheduled to open by 2004 in Lubumbashi (Congo), Libya, Mali, Joseph B. Kibati (retired securocrat related to Kenyatta), Jonah Rwanda, Shanghai (), New Zealand and Romania. Bett (Kalenjin, a Ruto cypher) and Rateng Oginga Ongego (Odinga- 3 25 January 2002 Africa Confidential Vol 43 No 2

loyalist). For different reasons, Mwanzi and Kenyatta are opposed Such squabbles should help the opposition. Yet it is as divided to the vocal KANU Secretary General, John Joseph Kamotho, as KANU. Its one, almost certainly forlorn, hope is that the and his old-guard allies Biwott and Saitoti. However, the KANU-NDP merger will unravel, propelling Odinga and his allies ‘youngsters’ may have overplayed their hand – firstly, by coming back into the parliamentary opposition, whose various parties out strongly against corruption and implicating the old guard in it; emerged with 103 seats after the 1997 elections. Even with its best secondly, by making contact with some of the opposition, as rigging, including the destruction of opposition votes by police, faithfully reported to Moi by the Special Branch. KANU took only 107 seats. That gave the opposition unprecedented parliamentary leverage and a veto on constitutional change. They Healthy competition threw it away. Moi decided it was time to play off the young against the old. Everyone from the churches to the press warns the opposition of Without warning the young team, Moi called a meeting of KANU’s the consequences of its rivalries. They predict that Kenya’s National Executive Committee (NEC) on 14 January. It put elections will be like Zambia’s presidential poll in December (AC Kamotho, Saitoti and Biwott back in charge of organising the Vol 43 No 1) where rival opposition candidates won over two- elusive Moi-friendly transition, with a new 17-man KANU-NDP thirds of the vote but their divisions allowed the governing party ad hoc committee (11 KANU, six NDP) to implement the merger. candidate to squeak home first. Moi couldn’t win half the popular Its head is the retiring Njoroge Mungai (Kikuyu, KANU Vice- vote in the multi-party elections of 1992 and 1997 but was first past Chairperson) once the most energetic minister in Jomo Kenyatta’s the post and won. cabinet (1963-74). Even if a new KANU candidate fared worse than Moi, he could Odinga was surprised. He had seen Moi on the previous day and still win if the opposition failed to agree on a single candidate. In left with the impression the committee was on track. He was, we fact, every opposition leader favours a single candidate, provided hear, just about to announce the NDP’s dissolution when the state it is himself or herself. The main party clusters just now are: radio reported the convening of KANU’s NEC. Before the NDP A. ‘The Big Three’ – , parliamentary group, Odinga had to defend himself against charges (Forum for the Restoration of Democracy-Kenya leader) and of recklessness from his colleagues, who fear KANU might fill Charity Ngilu (Kenya National Party) – have had several breakfast their seats with the old KANU loyalists from Luoland, leaving discussions about selecting a common candidate and have formed them out in the cold. a joint committee. They are also annoyed by the appointment of Mungai, whom B. Backed by some non-governmental organisations, the Social they see as an old Kikuyu hegemonist and an enemy of the Luo, Democratic Party, headed by James A. Orengo and Beth Wambui charges he strongly rejects. Besides Mungai, Biwott and Kamotho Mugo (Uhuru Kenyatta’s cousin) wants to dissolve all opposition are ranking members of the ad hoc committee of 17. Some NDP parties and form a single party to face KANU-NDP next year. dissidents want Odinga to pull out of the merger unless he secures C. , with a large following in Kisii and Kericho guarantees of constitutional reform, including in particular the districts, wants to run under the banner of Ford-People, supported introduction of an executive premiership. They insist that their by Kimani Wanyoike (Kikuyu), who has lost every election he has party should get either the presidency or the premiership after a stood in since 1992. This is a no-hoper and would hurt mostly merger with KANU. Kibaki, not KANU’s candidate. This has widened the chasm between KANU’s generations and In the meantime, the economy has been shrinking faster than sown suspicion among the Young Turks. Yet the crafty Moi ever. Political uncertainty has accelerated capital flight. The need assures each faction that he has its best interests at heart. After a to secure Moi’s unmolested retirement has left no room to deal with meeting with him last week, Odinga emerged brimming with soaring unemployment, crime and ethnic warfare in the old Northern conviction that the technical committee’s recommendations would Frontier region. Hoping to receive a clean bill of health on govern the bigger committee. He then proceeded to Bondo, his corruption before KANU’s old guard leaves office, Moi has birthplace by Lake Victoria, for the eighth anniversary of the death appointed two British consultancy firms, Corporate Risk Services of his father who, he said, had initiated Luo-Moi cooperation. This, and Risk Advisory Group, to detect and eliminate corruption under he said, would be strengthened. the leadership of Graham Stockwell, formerly of ’s The Office of the President has instructed police and provincial Metropolitan Police. The and International Monetary administrators to give full support to rallies organised by Ruto, Fund have hailed the move, though Kenyan courts have not produced Sunkuli and Kenyatta, in support of the Young Turks’ campaign a single conviction from the many cases before them, Goldenberg against the greyheads. The largest rally was held on 19 January at included. The opposition brands the plan an expensive and Kilgoris, deep in Maasai (Trans-Mara) region; the host and local ineffective whitewash. member of parliament, Sunkuli, said: ‘If President Moi retires, youths should take over. It will not be possible for other members ANGOLA of the older generation to remain.’ For his part, Kenyatta harangued older opposition leaders before lavishing praise on Moi for fighting ‘poverty, ignorance and disease’, unlike the opposition parties. He said nothing about the Russian roulette KANU-NDP leaders who accused his father of Kikuyu ‘tribalism’, Unexplained debts and secret accounts alarm theft and land-grabbing. In the meantime, Sunkuli put on show the IMF and deter investors some 50 Maasai councillors, led by Daniel Ole Muyaa, who oppose Saitoti’s efforts to succeed Moi. The group now intends to Before the International Monetary Fund lends money, it needs to know campaign in the Northern Rift Valley, which is Biwott’s bailiwick. about the recipient’s other debts. Angola’s government has borrowed Moi must be laughing. huge sums which are not audited or included in the budget, using 4 25 January 2002 Africa Confidential Vol 43 No 2 future oil exports as security. Bankers and officials say these for-oil swaps in the early 1990s, are again mentioned in connection arrangements are open to abuse to corrupt officials. The Fund with the Russian loan scheme – Gaydamak, Paribas and Glencore. therefore stopped its Angola programme last June and will send another mission in February to see if relations can start up again. Necessary outgoings The most mysterious deal of all is a multi-billion dollar scheme to Luanda has asked for understanding about arms deals linked to oil- buy back Russian debt, negotiated in 1996 under the auspices of backed loans. In 1992 and 1993, the government was seriously Arkady Gaydamak. He is an arms dealer, based in Israel since the threatened by UNITA and could not raise money quickly enough French authorities issued an international warrant for his arrest in through orthodox means. So it resorted to oil-backed borrowing December 2000 (AC Vol 42 No 3). The latest oil-backed loan, for through unconventional intermediaries. The problem for the IMF – US$600 million, was made last July, a few days before an IMF and those trying to establish the government’s financial continence – delegation was due in Luanda, by a group of banks led by France’s is less about links to arms deals and more about how the oil-backed BNP (Banque Nationale de Paris)-Paribas. The debt was to be repaid loans create huge accounting problems between the state oil company, in oil lifted by Glencore, a secretive Swiss-based trader which flourished Sonangol, the central bank and the Finance Ministry. in Nigeria under the late military leader General Sani Abacha. Through these gaps hundreds of millions of dollars have gone The Governor of the Banco Nacional de Angola (BNA), Aguinaldo missing annually. Central bank officials claim to be unaware of Jaime, is a technocrat and former senior official at the African several overseas accounts controlled by officials at Futungo de Belas, Development Bank, who has been trying to reform Angola’s arcane the presidential palace. However, these accounts are of growing public finance system. In mid-January, he visited Washington with interest to Western intelligence agencies (now taking money-laundering Finance Minister Júlio Bessa and his respected advisor José Pedro de very seriously) and the numerous private companies writing ‘due- Morais. Jaime claims that he then told Fund officials about various diligence’ reports on companies and individuals operating in Angola. deals, including the previously secret 1996 Russian debt operation. A number of private Angolan accounts (linked to Futungo de Belas) ‘Everything is clear now... the IMF has finally been able to understand in Monaco were frozen, we hear, on orders from France. This the reasons why the government undertook some financial operations,’ apparently followed some angry communications between Paris and he said on 15 January. Luanda about the efforts of a French investigating magistrate probing The IMF confirms that new information has been provided on the Angolagate scandal. foreign debt transactions, oil revenue flows and an external audit (by Some of Angola’s oil-backed debts are owed to commercial banks, Ernst & Young) of the BNA. Yet suspicions of links to high-level others to traders such as Japan’s Nissho Iwai (often for the purchase corruption remain, although significant information has emerged of oil industry equipment); others arise from bilateral deals with from a ‘diagnostic study’ of the oil sector by the consulting arm of Brazil, Portugal and Spain. An unusual memorandum of KPMG, mandated to examine financial flows associated with oil- understanding was signed in February 2001, during a visit to Brasilia backed borrowing operations, including the Cabinda Trust and the of a delegation led by deputy Finance Minister Abílio Gomes. Soyo-Palanca Trust facilities. The document, under the auspices of the president’s Serviços de Under its previous agreement with the Fund, Luanda had promised Apoio (support services), was sent to António van Dunem, Secretary to phase out the costly and obscure oil-backed loans. The Fund set of the Council of Ministers, as well as to Finance Minister Bessa. It precise quantitative targets for borrowing; if Luanda met them and contained a complex mixture of loans and credits worth $441 mn., to took specific action against corruption, it would again become eligible be repaid in oil cargoes at 20,000 barrels per day, and seems to have for debt relief and low-interest credits from the Fund and World Bank. arisen from a previous memorandum of understanding signed in With oil production rising, Angola has no great need to borrow but August 1995, meant to help settle Angola’s outstanding debts to badly needs the agreement with the Fund, which will give it legitimacy Brazil; it ties Brazilian companies, such as construction giant Odebrecht, when its opponents, civilians and the rebels of the União Nacional into large infrastructure projects in Angola. Twenty per cent of the para a Independência Total de Angola, accuse it of running a callous money flowing from the oil cargoes involved in the February 2001 and corrupt dictatorship. The last elections were in 1992: President deal is earmarked to the Banco do Brasil’s Grand Cayman agency, for José Eduardo dos Santos was ahead in the first round of the ‘swap’ operations involving Brazilian external debt instruments. It is presidential polls but his rival, Jonas Savimbi, led his troops back to not immediately clear what is being done, or why. war before a second round could be held. Dos Santos promises fresh The 1996 Russian debt operation and other oil-backed schemes may elections, in which he will not stand (AC Vol 43 No 1), as soon as have given those involved leverage elsewhere. For example, Gaydamak UNITA is finally defeated. That doesn’t look imminent. brought in his friend Lev Leviev as the main investor in the state Depending on oil prices, it could take three years to pay off the $600 diamond-marketing monopoly, Ascorp. Gaydamak has said that mn. Russian loan made in July. Few in Luanda or Washington know Ascorp was his idea. Arms dealers involved in unorthodox financial what it was for. Some say it represented the final payment under the operations have secured equity in some of the potentially lucrative opaque 1996 debt deal with Gaydamak, though an Angola source says ‘ultra-deep’ offshore oil licences. Gaydamak says the schemes he is much more is outstanding on that arrangement. involved in include an egg cooperative and a fishing project. The World Bank says Angola’s debt arrears fell from $4.2 billion to Another agreement with Russia was signed by President Dos Santos $1.6 bn. in 1996; it does not list debts to Russia separately but they in Moscow in mid-1998, when Angola was slipping inexorably would have accounted for the lion’s share. Financial insiders in towards a new conflict. It seems to have been separate from the 1996 Luanda say that the 1996 deal was fixed by Gaydamak, who bought deal and was supposed to reduce Angola’s debts to Russia partly up most of Angola’s debt to Russia (some $5 bn. to $7 bn.) at around through the grant of diamond industry licences. It is not clear how 30 per cent of face value, against repayment in oil cargoes. Questions much money this deal was worth or how it fits into the overall picture are asked about what guarantees Luanda gave Gaydamak and whether of Angola’s debt to Russia but the main beneficiary seems to have been they are still valid since France issued a warrant for his arrest. Many Russia’s Alrosa diamond company. of the characters named in Angolagate, the French scandal over arms- Such operations may not be criminal but are unorthodox and lack 5 25 January 2002 Africa Confidential Vol 43 No 2

transparency. Their opacity makes Angola’s debt operations a big months and its leaders remained unnamed. After the dialogue a ‘new obstacle to an IMF programme, after which Angola could credibly political order’ would open, annulling both Kabila père’s May 1997 approach the Paris Club of creditor governments about reducing its decree naming himself head of state and the powers taken on themselves overall external debt of $10-12 bn. It is not clear if Gaydamak played by the rebel groups. The Dialogue would name a transitional president a part in the 1998 Russian deal; Alrosa does not always see eye to eye with limited powers, a transitional parliament would represent all with its fellow-Russian company Ascorp, partly because Ascorp pays regions and a Cour des Comptes would control finance. The prime below market prices for almost all its stones from Angola, including minister would be responsible to parliament. those from the Catoca mine, where Alrosa has a share. The constitution, drawn up by parliament and voted on in a referendum, would create a decentralised but unitary state. Six months before the end of the transition would come elections, first local, then CONGO-KINSHASA presidential. Yet before elections must come an electoral law and independent commission, a census and adequate physical infrastructure. The army must be subject to civilian authority and electorally neutral. Under the volcano The three non-signatories to the agreement included the Parti Lumumbiste Unifié (from respect, said its spokesman, Godefroid Even the latest catastrophe in Goma isn’t Moyobo, for the absent parties). Michel said he would nevertheless pushing the combatants into negotiations present the document to Masire, to the Pretoria government and to the The mile-wide river of lava spewing from Mount Nyiragonga last absent Tshisekedi, Olengankhoy and rebels. The response is not likely week devastated the rebel capital of Goma but hasn’t changed the to be warm. Jean-Pierre Bemba’s Mouvement pour la Libération du combatants’ entrenched positions in the war. President Joseph Congo says it does not care about the round-table’s results. The UDPS Kabila tried to score points by offering to send a rescue mission to man in Belgium, François Tshibamba Mpuila, says the participants Goma headed by Foreign Minister Léonard She Okitundu and are ‘juveniles or slaves’, needing a Belgian to speak for them and he Justice Minister Mwenze Kongolo. But Adolphe Onusomba, leader says the necessary work was already done by the Sovereign National of the Rassemblement Congolais pour la Démocratie, which has its Conference in the early 1990s. headquarters in Goma, rebuffed his offer and told him to funnel any help through the United Nations. Kinshasa officials have been locked AFRICA/ECONOMY out of Goma for over three years and the RCD isn’t popular with the locals it rules, either. Visiting foreign ministers (France’s Hubert Védrine and Britain’s Jack Straw) had hoped the erupting Mt. Nyiragonga would win Bear markets attention for their regional peace mission and speed up peace The rich world’s recession hits Africa’s negotiations. The Franco-British duo met Kabila, Rwanda’s President prospects but reform goes slowly on Paul Kagame and ’s President Yoweri Kaguta Museveni but left without any public assurances of troop withdrawals or For many Africans, the new year confirms the most pessimistic demobilisation. Their biggest achievement, officials insist, was to forecasts of economic gloom. Nigerians face a 50 per cent increase in convince Congo’s combatants and their foreign backers that they fuel prices, South Africans must cope with a currency crash, could no longer play Whitehall off against the Quai d’Orsay. Zimbabweans are seriously short of maize. The backdrop is sluggish Just how convinced they are will emerge in the next round of peace or falling economic growth in Europe, the United States and Asia, talks. The much postponed Inter-Congolese Dialogue is to open in cutting demand for the goods that form 80 per cent of Africa’s exports. South Africa on 17 February – at the earliest, according to its Oil is expected to drop by 34 per cent, other commodities by 6 per facilitator, Botswana’s former President Ketumile Masire. To meet cent; even gold stays low. The usually optimistic International this deadline, they’ll still have to resolve the status of the Mai-Mai Monetary Fund and World Bank have downgraded their forecasts. delegates and raise more finance for the meeting. This would run till The IMF thinks Africa’s economic growth in 2002 will rise by 3.5 per the first week of April at least; that is some three weeks after cent; its earlier guess was 4.4 per cent. The Bank’s latest guess is 3 per Zimbabwe’s election, which pits the ruling Zimbabwe Africa National cent. For large swathes of the continent, this means no growth at all. Union-Patriotic Front (militarily backing Kinshasa) against the The biggest economies are likely to tread water. South African Movement for Democratic Change (pledged to withdraw Zimbabwean businesses think the IMF forecast for their economy of 2.3 per cent forces). It is inconceivable that the delegates to the Congo Dialogue growth optimistic, given currency and regional uncertainties. Lower would reach any conclusions before they knew the result of the poll in oil prices and election costs probably rule out real growth in Nigeria. Zimbabwe. The oil slump will dent export earnings in Algeria, Angola, Congo- At least a basis for the talks was laid down in Brussels on 4-17 Brazzaville, Egypt, Equatorial Guinea and Gabon. This creates January, at a ‘round table’ organised by the Belgian Foreign Minister, extra problems for promoters of the New Partnership for African the bristle-bearded Louis Michel. The participants represented most Development (Nepad), who are due to have crucial talks with the of the unarmed opposition and ‘civil society’, and their findings were Group of Eight (G8) industrialised countries in Canada in June. The approved by some traditional chiefs and church representatives. Two initiative’s leaders are Algeria, Egypt, Nigeria, Senegal and South big opposition parties, Etienne Tshisekedi wa Malumba’s Union Africa – all badly hit by low export prices. pour la Démocratie et le Progrès Social and Joseph Olengankhoy’s At least the crisis will concentrate minds on the main issues, market Forces Novatrices de l’Union Sacrée, stayed away. So did the armed access and trade. In the past decade, total aid to Africa has nearly rebel organisations. halved, to about US$11 billion. Winning new increases will prove The papers, prepared by Michel’s staff, didn’t question Kabila’s even tougher than the long battle for debt relief. The United Nations position; it was agreed that the transition would last no more than 30 Conference on Trade and Development (UNCTAD), which helps poor

6 25 January 2002 Africa Confidential Vol 43 No 2 countries develop trade and investment, reckons Africa needs about Fund have rebranded their old Structural Adjustment Programmes and $10 bn. a year to compensate for commodity price losses and to cut made PRSPs the key policy agreements. Unless all sides have poverty. None of the G8 countries are increasing aid (except Britain, confidence in these agreements, donors won’t produce the necessary which merely aims to remedy previous swingeing cuts). hefty aid increases. The downward drift in aid budgets may have halted but there is no The closing outline report from January’s DC poverty conference sign of the massive boost the World Bank says is necessary to meet the emphasises the need for donors to match poor countries’ anti-poverty goal of halving world poverty by 2015. The first test will come in programmes. Research for the conference produced widespread March, at the UN Development Finance meeting in Monterey, Mexico, complaints about donors’ attempts to shoehorn their own priorities whose proximity to the USA (and to Texas in particular) might help it into national programmes. Issues such as rural development, AIDS, to get more American attention. President George W. Bush will want transparency or the environment may be crucially important but donor his ally, President Vicente Fox, to look like a successful host. pressure for this or that project or priority can distort national strategies Trevor Manuel, South Africa’s highly regarded Finance Minister, painstakingly generated from months of local consultation and of has been nominated as UN Secretary General Kofi Annan’s special discussion with the Fund and Bank. Problems have already arisen envoy to the conference, to energise donor support. There is little with the eight countries that have so far completed full PRSPs – convergence between the US and Europe on development funding. Burkina Faso, Mauritania, Mozambique, Tanzania, Uganda, On a recent US visit, London’s Finance Minister, Gordon Brown, Bolivia, Honduras and Nicaragua. Conflicts of priority may sharpen failed to persuade the White House to boost aid. US officials stress as the poverty campaign moves on to less donor-friendly nations. their country’s reliance on trade and market economics but showed at The Bank and Fund will also have to consider how to reconcile November’s World Trade Organisation meeting in Doha, Qatar, that disputes about popular participation in drawing up PRSPs. At a US negotiators are hardly less protectionist than European ones. seminar in Dakar, African governments complained about donors’ In Europe, the ground is shifting. With aid and rhetoric rising, insistence on political conditions. Some non-governmental Britain claims a leading diplomatic role on development, while organisations and donors feel that participation can prolong the France, whose shrinking aid budget is still fatter than Britain’s, also preparation of PRSPs and delay debt relief. Poor-country NGOs, wants to be a leader. Martine Aubry, charged with drafting a 2002 parliaments and ‘civil society’ organisations often grumble that they election manifesto for Lionel Jospin’s Socialist Party-led government, are not adequately consulted. This is a familiar political issue. recently told Le Monde: ‘We want to elaborate a new contract between Finance ministries, used to regarding negotiations with donors as their the countries of the North and the South based, on the one hand, on debt own preserve, do not want to relax their grip. Fund and Bank directors cancellation and increasing development aid, and on the other, on must decide whether to get drawn into the argument. commitments [by poor countries] to fight corruption, respect human Institutional wrangling will come as development issues return to rights and work on the practical living conditions of people’. the global agenda, if the ‘war against terrorism’ cools (AC Vol 43 No Yet Paris is notably reticent about opening up new markets for poor 1). Negotiations on replenishment of the Bank’s International country exporters and could be a drag on the development-oriented Development Association soft-credit fund are nearing conclusion and trade talks launched at Doha. The basis for a compromise is that it the usual difficulties with the USA are expected. There are some might agree to trade liberalisation (but not in agriculture, which is grounds for optimism, though. The aid bureaucrats seem satisfied where it really matters), while the USA increases aid. In 2002, with the principles underlying PRSPs – combining poverty reduction Washington will probably refuse to budge on aid, while Paris blocks and macro-economic targets in a national strategy for each country. European Union trade concessions. They are also pleased, that ‘post-conflict’ countries such as Ethiopia, There has been progress on other initiatives. Trials are under way Guinea-Bissau, Rwanda, even Sierra Leone, have successfully met for a scheme, supported by the World Bank and UNCTAD, to develop the technical and administrative demands of drawing up PRSPs. affordable commodity price insurance for farmers and mining However, the recent row over Whitehall’s decision to licence companies in developing countries. The venture could fairly soon be British Aerospace (BAe) Systems’ supply of a military air traffic operational for Tanzanian and El Salvadorean coffee growers. control system to Tanzania – at a cost of £28 million ($40.2 mn.), Studies are in progress for its extension to Franc Zone cotton producers largely wiping out the expenditure savings achieved through HIPC – and Ghana’s state-owned Cocoa Board, a big exporter that annually shows how easily the effectiveness of debt relief can be undermined mobilises large syndicated loans in the London banking market. by self-interested government decisions in Africa or among donors. The successful entry of such clients would give the scheme crucial momentum and help to spread risk-reduction techniques across Africa. Visit our website at: www.africa-confidential.com Meanwhile, the African Trade Insurance scheme launched in mid- Published fortnightly (25 issues per year) by Africa Confidential, at 2001 (AC Vol 42 No 20) is poised for growth following a cooperation 73 Farringdon Road, London EC1M 3JQ, . agreement with the German credit insurance group Gerling. Tel: +44 20-7831 3511. Fax: +44 20-7831 6778. Copyright reserved. Edited by Patrick Smith. Deputy: Gillian Lusk. World Bank and IMF operations in Africa are set for yet another Administration: Clare Tauben. shake-up, if their boards accept recommendations from a review of their poverty-reduction drive. The report is due in March. The crunch Annual subscriptions including postage, cheques payable to Africa Confidential in advance: will come when their boards receive the findings of an internal review Institutions: Africa £312 – UK/Europe £347 – USA $874 – ROW £452 of the Poverty Reduction Strategy Papers (PRSPs) that are the basis for Corporates: Africa 404 – UK/Europe £425 – USA $985 – ROW £531 their ‘partnerships’ with poor debtor governments. The boards will Students (with proof): Africa/UK/Europe/ROW £87 or USA $125 also be the target of much lobbying by interested parties and will hear All prices may be paid in equivalent convertible currency. We accept the detailed proceedings of a poverty policy conference they hosted in American Express, Diner’s Club, Mastercard and Visa credit cards. Subscription enquiries to: Africa Confidential, PO Box 805, Oxford OX4 Washington earlier this month. 1FH England. Tel: 44 (0)1865 244083 and Fax: 44 (0)1865 381381 This looks like a tussle over dreary technicalities but is fundamental Printed in England by Duncan Print and Packaging Ltd, Herts, UK. to future relations between poor countries and donors. The Bank and ISSN 0044-6483

7 25 January 2002 Africa Confidential Vol 43 No 2

execution during a war when the French view was daily La Croix that Ratsiraka had been a pupil of Pointers that Algeria was part of France. his: ‘I know him well... He’s a bad loser’. Ratsiraka Many of the brutal methods once used by the warns his compatriots that this is the ‘eve of the French military against supporters of the Front de birth of fascism and Nazism’; the head of his BENIN/IMF Libération Nationale have since been used by support committee, Lalatiana Ravololomanana, Algeria’s sécurité militaire against Islamist accuses the Mayor of not paying his taxes and of insurrectionists. Despite the political ups and being the ‘zealous servant of dubious international Bio’s bio downs, relations between the two countries’ capitalism’. The tycoon, widely accused of security services – relations that stretch back to autocracy in his factories, accuses the government Benin’s Finance Minister, Abdoulaye Bio that same war – have remained close. of ‘emptying the public coffers... I swear to you Tchane, will take over as the International France’s new political stance will pay that this money will not go to help the President’s Monetary Fund’s Africa Department chief next commercial dividends in Algeria’s rich oil and family or members of the government because month. He was once tipped as a potential prime gas market. President Jacques Chirac visited in that money belongs to the people’. An even minister but his career at the western Franc Zone’s November, the first French president to do so greater danger is of stirring conflict between central bank in Senegal left him no time to build since 1992. Paris also claims to have led pressure Coastal peoples (Ratsiraka) and Highlanders a political base at home. His promotion might for December’s signing of Algiers’ association (Ravalomanana). have upset the powerful Bruno Amoussou, who agreement with the European Union. Previously, Eurocrats had judged that Algeria’s economic helpfully lent credibility to President Mathieu SUDAN Kérékou’s re-election last year by standing as a reforms and human rights record ruled it out, and no-hoper in the second round after a discouraged its membership of the EU’s Euro-Mediterranean Nicéphore Soglo withdrew (AC Vol 42 No 6). partnership would take years to finalise. In Washington, Bio Tchane succeeds Malawi’s Paris plans a ‘Year of Algeria in 2003’ organised In a word affably effective Goodall Gondwe: his challenges by Bouteflika allies Hervé Bourges and Ahmed The ceasefire for the Nuba Mountains which the included a programme in newly democratic Snoussi. First, Boutef wants Paris and Washington National Islamic Front government signed with Nigeria and qualifying over 20 African states for to push through Algerian membership of the World the Sudan People’s Liberation Army in Highly Indebted Poor Country debt relief. Trade Organisation. These diplomatic successes Bürgenstock, , on 19 January, went After the departure of French Managing worry Algeria’s private and state companies, which (with NIF help) around the world’s headlines as a Director Michel Camdessus and his Ivorian doubt if they can compete with Europe-based ‘peace agreement’. The accord forms part of second deputy, Alassane Dramane Ouattara, companies as the tariff barriers come down. United States’ Special Envoy John Danforth’s Tchane restores the Francophone presence in IMF four ‘benchmarks’ for peace: the ceasefire, other dealings with Africa. He has technical ability and MADAGASCAR ‘temporary ceasefires’ elsewhere (to permit inside knowledge: he worked at the Fund in the humanitarian access); the cessation of bombing of early 1990s. He is an impressive public performer, civilians and the end of slavery (both aimed at the and spoke out for Africa at the 2000 IMF-World Stirring NIF). Danforth had threatened to give up but now Bank annual meeting in Prague. With transparency says he’ll stay on until ‘March-April’. high on the IMF agenda, he has fought corruption Even the Interior Ministry’s provisional results By 22 January, the NIF was already refusing at home and forced the dismissal of senior officials. give President Didier Ratsiraka just over 40 per monitors, supposed to be integral to the accord, if He was also one of few ministers to get out of the cent of the vote, to 46 per cent for his rival, Marc they came from ‘hostile’ countries. Instead, it office and see how policies work on the ground. Ravalomanana (AC Vol 42 No 24). That was in said the army would monitor the ceasefire. A Coming from a Francophone cotton-based the first round of voting, on 16 December. string of past ceasefires in the Mountains and economy, he may subject the Bretton Woods Ratsiraka refuses to acknowledge a second round South have been brief or non-existent, with both enthusiasm for sweeping free market is necessary. And each candidate accuses the sides – but especially the better equipped ‘liberalisation’ of agriculture to sceptical analysis. other of cheating. government – taking the chance to redeploy. His job, and the Fund’s aim, will be to combine Supporters of ‘Marc’, the Mayor of The NIF is indulging in its usual ‘peace initiative poverty reduction with tight criteria for debt relief, Antananarivo, demand that the Constitutional High shopping’, its repeated bid to avoid the central an exercise some compare to squaring the circle. Court, whose verdict was originally expected on issues of the conflict: it agreed both to southern It may prove no harder than eradicating corruption 28 January, say he won, since returns from 13,000 autonomy and to a secular constitution in 1996 in Kérékou’s government. of the 16,000 polling stations gave him 52.15 per and has been backtracking ever since. cent, to the Red Admiral’s 35.67. The revival of SPLA fortunes also worries the ALGERIA/FRANCE The Mayor has asked the Court to disqualify government. Following the 7 January pact between Ratsiraka for ‘multiple infringements of the SPLA boss John Garang and Riek Machar (AC electoral code’. More surprisingly, the incumbent Vol 43 No 1), his ex-deputy who had gone over to L’arbitraire also claims fraud: his supporters have petitioned the government, came an attack on Lundin the Court for over 2,000 recounts; the Court has Petroleum’s installations in Muglad Basin. The In a watershed vote on 15 January, the French referred them to the Comité National Electoral Swedish-Canadian firm, which is in partnership parliament declared 19 March a day of (CNE), which Marc’s supporters accused of in Block 5A with Malaysia’s Petronas, Austria’s commemoration of the victims of the Algerian, presidential bias. Now the Court can’t announce OMV and Sudapet, suspended operations. Sources Moroccan and Tunisian independence struggles. the first-round results till the six-member CNE said a Lundin helicopter had been shot down near President Abdelaziz Bouteflika, fresh from has checked over 100,000 documents. Ratsiraka Leer (near Riek’s headquarters). courting the United States for military and says this could take three months. Last week, the United Nations Commission for diplomatic support after 11 September, is pressing The government of United States President Human Rights held a course for senior security Paris for more security and financial cooperation. George W. Bush, an election expert, has called on officers, presumably in the belief that atrocities France’s decision to admit some culpability for his counterpart to ‘respect the will of the people’. are committed out of ignorance rather than abuses committed during Algeria’s 1954-62 war So have the European Union, Japan and government policy (as the UN’s own reports show). of Independence gives Algiers more leverage. Switzerland. The capital’s archbishop, Cardinal This did not stop journalist Nhial Bol being briefly France’s limited mea culpa coincides with the Armand Razafindratandra, declared on behalf gaoled for accusing the government of facilitating trial of Paul Aussaresses, an 83-year-old retired of the Malagasy Council of Christian Churches slavery and his paper, Khartoum Monitor, being French general accused of condoning torture and that Ravalomanana had won, telling the French fined and threatened with closure. 8