Introduction

Stiftung Wissenschaft und Politik German Institute for International and Security Affairs Co m ments

Angola’s Crucial Foreign Policy Drive Paula Cristina Roque WP S ’s foreign policy is premised on the imperatives of continued influence with key trading partners (, China, Brazil, and Russia), immunity from Western pressures as a result of its petro-power, and retaining influence in Africa through military and commercial agreements. Member states of the European Union (EU) also play an important role in trade and policy issues, although attempts to change the existing dynamics could render the EU- relationship a more constructive and transformative engagement. As it stands, Europe has influence in rather limited areas of Angola’s domestic and foreign policy, although the pressure points exist for the EU to take a more dynamic approach. Through the dynamic expansion of the national oil company’s investments in diverse sectors, Sonangol is slowly but surely building an empire that extends throughout Africa, Europe, and Latin America. Luanda does not engage economically without securing a politically conducive environment – a tendency that will continue, given its need to ensure regime stability and the con- tinued influence of the Dos Santos dynasty.

Between 1975 and 2002 Angola suffered military defeat of UNITA. The MPLA’s vic- one of Africa’s longest and deadliest civil tory essentially gave it the license to mould wars, with only a few intermittent years of the post-war political configuration to suit tense peace. The civil war in Angola was its interests. It therefore proceeded to con- defined as a conflict fought by two mutu- solidate its power and determine the re- ally exclusive ideological, political, and construction and state-building imperatives cultural blocs, aided by external interests. while appropriating the country’s resources The ruling Popular Movement for the Liber- without facing any pressure for accounta- ation of Angola (MPLA) grew out of the bility and redistribution of resources aimed urban centers by left-wing elites in Luanda, at sustainable development. Luanda’s petro- whereas the National Union for the Total leum exploration acceleration propelled Independence of Angola (UNITA) had its the national economy toward double-digit base among the “indigenous rural commu- annual growth rates, making it today one nities.” This internationalized war – involv- of Africa’s most dynamic and important ing Cuba, the United States, South Africa, powerhouses. the Soviet Union, China, and neighboring Foreign investment and attempts to countries – ended only in 2002 with the push for policy changes in key countries in

Paula Cristina Roque is a former senior researcher at the Institute for Security Studies, Pretoria, SWP Comments 15 and is currently finishing her PhD at Oxford University. May 2013

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Africa, where Angola’s footprint is deep, liberal and non-participatory terms. With will need to include some type of engage- a projected crude output for 2016 of 2.18 ment with Luanda. The MPLA government, million barrels a day, Angola will become under Jose Eduardo dos Santos’ presidency, sub-Saharan Africa’s largest oil producer is currently characterized by the needs to and will continue to use this financial clout reinvent the regime’s image abroad and in its foreign policy to determine the rules consolidate its power in the region, and by of engagement. Sonangol, ranked as the its ambition to become a regional power second largest African company behind on the continent. Strategically, greater in- Algeria’s Sonatrach, has taken on a highly fluence on the continent may give Luanda dynamic approach to foreign investment considerable sway with the West and while guaranteeing the political influence Emerging Powers/BRICs as they engage of the Angolan government in any trans- with Africa as competing or cooperating actions. Entering the investment and investors. Angola will also continue to play political space of African countries where a vital role in determining the security Angola has entrenched itself will require landscapes of different regions in Africa by either some clear bilateral agreement to becoming more open to participating in bypass Luanda’s potential interference, or peacekeeping operations. They will also a joint approach with Luanda on sector continue to prioritize bilateral defense development. Angola will continue to play pacts that could derail international efforts a crucial role in Africa as an investment at crisis management and political solu- partner, in terms of military cooperation, tions. Recent comments by Angola’s but also as a diplomatic counterweight Foreign Minister at the Africa Union Sum- capable of exerting direct influence over mit in January 2013 point to a new dispo- governments in the region. Over the de- sition for multilateral engagements. The cades, bilateral military and political rela- international community will need to tions have been fostered with Kinshasa, devise ways to creatively engage Angola’s Brazzaville, Harare, Abidjan, and others ambitions while putting in place important through direct and muscular support for levers to guarantee that its efforts do not their presidents and ruling elites, placing collide with the principles of fiscal trans- Luanda in a position of being the most parency, political accountability, and sus- powerful partner. tainable development. Angola’s foreign policy – run mainly by the presidency and its financial arm, Europe-Angola relations: Sonangol, the national oil company, An opportunity for improvement which until recently operated as a sover- While key member states of the European eign wealth fund – is informed by certain Union engage dynamically with Angola – key imperatives: the survival of the current in particular Portugal, France, Germany, regime in Luanda; an increase of its influ- Netherlands, the United Kingdom, Belgium, ence in Africa and internationally; and and Spain – the EU has yet to consolidate a positioning itself as a model for an internal, working relationship with the government albeit illiberal, state-building combined in Luanda. Although the EU failed to seize with economic pragmatism. The ruling the opportunity of becoming a key recon- MPLA has crafted its own development and struction partner after the end of the war reconstruction path without having any of in 2002, it has become an important donor, the constraining tenets of accountability to with more than $250 million allocated to the international community and donors, the 2008–2013 cooperation program. The given its petro-power and the independence visit by the European Commission Presi- this brings to the government. As a result, dent, Jose Manuel Barroso, in April 2012, it has proceeded to rebuild Angola in il- was an important starting point that saw

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the acceleration of efforts to secure the giving civil society organizations and Joint Way Forward – a cooperation frame- opposition parties platforms to express work signed in July 2012 that could lead to their concerns. a strategic partnership. While this new Portugal and Angola’s relationship will mechanism aims to deepen political dia- continue to strengthen over the years, logue and cooperation in many areas, the given the historical ties of the two coun- EU should not have sent the wrong signal tries, the intertwining of private invest- to the Angolan government by forfeiting on ment, and the mutual outlook of establish- sending an electoral observation mission ing entry platforms: Portugal has become for the August 2012 elections, which were one of Angola’s entry points for investing far from transparent and fair. It seems in Europe, and Portugal may find that its counter-intuitive to have a cooperation presence in Angola opens opportunities agreement that focuses on certain areas for companies to begin branching out into such as governance and institutional re- non-Portuguese-speaking African countries. form, and misses the opportunity to make Luanda has also begun taking steps that serious recommendations on a flawed could potentially lead to its involvement in democratic process that demonstrated the solutions for the economic crisis that is con- MPLA’s willingness to stay in power at all suming Portugal, namely by bailing out cost. The EU can play a vitally important several companies in desperate need of role in developing projects in the areas of capital. By 2010 Angola had invested $2.4 good governance, economic reform, rural billion in the Stock Exchange and development and diversification, poverty held more than 10 percent in Portuguese reduction, and service delivery (areas of listed companies. Angola, via Sonangol, water, sanitation, health, and education). currently owns almost 20 percent of Portu- If the EU succeeds in amending the Trans- gal’s largest private bank, Banco Comercial parency and Accounting Directives, where- Português, making it the largest single share- by member states would need to publish holder. Many Portuguese companies today financial transactions on natural resources, are entirely dependent on the lifelines that it would help curb rampant corruption and their operations in Angola provide them, allow for civil society to hold Luanda to making the economic ties between Lisbon account on its national spending and ex- and Luanda ever more important. In 2008, penditures. The EU has a key role to play Portugal’s foreign direct investment in in guaranteeing that political change in Angola was as high as €775 million, though Angola – which is likely to occur as the Dos those numbers have decreased due to the Santos government reaches the limits of its debt crisis. The expectation that Luanda legitimacy – will be measured and stable, would financially aid Portuguese compa- rather than an explosive situation resulting nies with capital entries will continue in widespread unrest. Notwithstanding the to drive Lisbon’s foreign policy toward existing tenets of the EU-Africa strategy of Luanda, as was noted during Minister Paulo 2007 and subsequent developments such as Portas’ incisive trips in the last two years the Partnership on Democratic Governance to guarantee the operations of Portuguese and Human Rights, the approach to Angola companies in Angola and to secure bilateral should take on different contours than uni- relations in other commercial areas. Since quely soft-power initiatives. Mechanisms of 2011 Portugal has requested a €78 billion pressure could include denying access to IMF-EU bailout to stabilize its finances. properties and investments in Europe and Austerity measures have since been put subjecting partnerships to political condi- into place to guarantee that Portugal is tionality, such as the acceptance of elector- viable and can continue to receive further al observation missions and mechanisms installments of the bailout loans as well as for mediating contested electoral results, a seven-year extension to pay them back.

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Capital power: Investments and loan from the IMF would have brought. The strategic partnerships oil-for-reconstruction deal between the two Angola’s legacy of war has taught it to be partners has reached $10 billion, making weary of external powers and the changing Angola one of China’s main oil suppliers. tides of the international community, but One important alliance that has evaded the process of managing different alliances transparency and oversight is the China has taught Luanda to redefine relations International Fund (CIF), also known as the where it has the levers of control. Through- 88 Queensway Group, and its alliance with out almost three decades of conflict, the Sonangol. In 2005 CIF announced a $2.9 bil- ruling MPLA party has become a resilient lion line of credit to Angola. It is unclear institution accustomed to juggling influ- how Eximbank’s loans and the projects con- ences and converging interests, ultimately ceded to state-owned companies differ from achieving its goals regardless of the rules it those of CIF, making this alliance ever more breaks. In a pragmatic approach, the Dos difficult to hold to accountability. Together Santos government has slowly but surely with its associated companies in Singapore entrenched Angola’s relevance in key in- and Hong Kong, CIF is said to have invested ternational markets and positioned the more than $20 billion in numerous African country as an important petro-partner to countries, with a stated mandate of invest- emerging powers. It has positioned itself in ing in large-scale reconstruction projects. a way that it does not serve one master, and The CIF syndicate and its China Sonangol it has strategically widened its alliances Company have together sought highly with a diverse array of countries that range ambitious deals aimed at dominating the from the United States, China, and South resource sectors of countries such as Zimba- Africa (which were the main supporters bwe (pledging an estimated $8 billion to of its archenemy UNITA) to Cuba, Russia, invest in the diamond sector), Guinea Cona- Brazil, and Portugal. When a much-needed kry (intending to invest $7 billion in infra- international donor conference failed to structure to assist with exploration of iron materialize after the end of the war in 2002 ore), as well as Madagascar, Mozambique, – whereby the United States, the EU, and and Tanzania. The Chinese government’s the World Bank could have taken a guiding approach to key African countries and the role in the country’s reconstruction – Ango- bilateral strategy used by the Angolan la turned to other partners, namely China. government with Harare, Conakry, and For Angola, soft power and diplomacy other capitals seem to be closely aligned mean little without hard currency and po- with these commercial operations. litical relevance. By positioning itself as a Russia’s economic power is rapidly key partner to China in South-South rela- matching its political influence in Luanda, tions and building on this to venture fur- although it dwarfs in comparison to the ther into European and US markets, Angola multidimensional nature of relations be- is guaranteeing its place of importance on tween Luanda and Beijing. In October 2012 the international stage. It certainly sees it- the Russian bank Vneshtorgbank (VTB) an- self as an African leader, and engagement nounced that it would extend credit of $2 with Luanda has served as a precondition billion dollars for the financing of Angolan for many external powers’ initiatives in the private companies. This is an opening for region. companies such as Lukoil and Gazprom to Beijing and Luanda’s bilateral ties have enter the crude-oil sector in Angola. VTB’s been strengthened significantly over the entry into the country was a cautious and last decade. In March 2004 China’s Export- slow process that began in 2007 when the Import Bank (Eximbank) offered a $2 billion bank opened its first VTB Africa branch. oil-backed loan, with very favorable condi- In August of last year, Angola indirectly tions and none of the political restraints a launched a $1 billion bond through VTB,

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at a 7 percent coupon rate, increasing the holding, owned by the President’s daugh- likelihood of it issuing a Eurobond in the ter, Isabel Dos Santos, is also expected to coming years as it simultaneously launches become Sao Tome’s new telecommunica- its stock exchange. tions operator, after winning a tender for the license of a fixed line and mobile tele- communications in March 2013. Sonangol and its investment Luanda’s intentions of stabilizing Guinea policies in Africa Bissau were clearly tied to its interest in re- The Sonangol Group of Angola is one of the surrecting the port of Buba and the bauxite most economically important financial en- mine projects. The port of Buba – a strategic terprises on the African continent. It is a port of great economic interest – and the highly efficient machine that has expanded Boe mine will be linked in a regional explo- and diversified in the last 30 years into ration project, which will include the con- banking, telecommunications, real estate, struction of processing facilities, a railway shipping, air transport, oil recovery and line, and a hydroelectric facility on the deep drilling, seismic data, and other ser- Corubal River. The investment mining com- vices related to the oil and gas industries. pany Bauxite Angola, linked to Sonangol With more than 30 subsidiaries and over- and BAI, has planned to invest more than seas facilities in Brazzaville, Hong Kong, $320 million in this project. There were Houston, London, and Singapore, Sonan- plans to expand the mining project to cover gol’s most successful subsidiaries include reserves in neighboring Guinea Conakry. two full-service banks: MSTelcom and This would take the form of an infrastruc- Sonair. The African Investment Bank (BAI) ture project run by Asperbras, a partner- was ranked by The Banker magazine in 2010 ship between Brazil’s Odebrecht and Ango- as one of the world’s 1,000 largest banks, lan companies. The Angolan mission’s and today it is one of Sonangol’s key invest- retreat may have hampered these plans, ment arms. although efforts to regain political favor Sonangol has begun investing in the in Bissau continue. Gulf of Guinea region in sectors as diverse In addition, the links between the luso- as infrastructure, mining, and oil explora- phone countries (Community of Portuguese tion. In Sao Tome e Principe, the Angolan Language Countries, CPLP) are being explor- oil company’s economic participation will ed further by the partnership between the include concessions on the port, the expan- Sonangol bank Banco Privado Atlantico and sion and modernization of the airport, as the holding company Geocapital of Macau’s well as a partnership in the Sao Tome water Stanley Ho. This partnership is preparing to and power company EMAE and oil company take a stake in Guinea Bissau’s Banco da ENCO, which is already 70 percent owned Africa Ocidental and is exploring the idea by Sonangol. This initiative demonstrates of integrating the banks acquired in the Angola’s newfound pragmatism, which is Portuguese-speaking companies, including put into play when the politics of a partner Cape Verde’s Caixa Economica. The Sonan- country ignore Luanda’s politics and secu- gol-Geocapital partnership is now expected rity. The Trovoada family, now in power to expand operations throughout the Afri- again in Sao Tome, was closely allied to can continent and could see an investment UNITA during the war and never engaged of $40 billion by 2018 in areas as diverse as with the MPLA. Luanda’s interests in Sao biofuel production and real estate. After Tome continue to expand with Sonair – purchasing the Portuguese bank Banco Por- Sonangol’s aviation company – and it tuguês de Negocios for $40 million in 2012, became the majority shareholder of the Sonangol’s Banco Internacional de Credito national air carrier, STP Airways, in mid- (BIC) bank is now planning to use $760 mil- 2012. Angola’s Unitel International lion to expand the number of branches in

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Brazil and to make acquisitions. In addition, stand-by forces. Since 2010, Luanda has BIC, which currently has more than $3.5 actively contributed toward large troop billion in deposits, is planning to expand contingents to the SADC and ECCAS bri- into African markets such as Namibia and gades, participating in joint training exer- the Democratic Republic of Congo (DRC). cises that could eventually see Luanda By the end of this year, Angola is expect- engaging in peacekeeping and humani- ed to have begun joint oil exploration tarian missions, although the priority will projects with Congo Brazzaville – a move be to embed this type of cooperation into facilitated in 2011 by the signing of tax and a wider development agenda. trade agreements. Sonangol might also However, Angola has been reluctant to venture into Zambia if oil is found in the join the SADC’s Free Trade Agreement and Barotse areas that border the Angolan pro- has been slow to respond to the regional vinces of and Cuando Cubango. integration process that established a Plans are already in place for the Lobito Customs Union and envisages a monetary Corridor railroad, which will cross Angola, union by 2016. Luanda could play a large the DRC, and Zambia, making this a more and important role in the SADC’s economic efficient route to reach the copper belt. The project, given the economic complementa- Angolan government will also rehabilitate rity to be anticipated, should the bilateral the Lobito Port at an estimated cost of trade approaches Luanda has with South $1.247 billion in order to facilitate the ex- Africa, Namibia, Botswana, and the DRC port of minerals. This falls into Luanda’s become integrated. However, this would strategy of aiming to become an inter- require that Luanda make compromises re- national mining powerhouse through the garding a development agenda and a politi- exploration of iron, gold, phosphate, and cal architecture that would test the limits copper, in addition to diamond mines. of its “democratic” transformation. Nation- al security and military solutions – as op- posed to negotiated settlements – and the Angola’s influence in regional focus on real power relations are the ele- organizations ments of Angola’s peace and security poli- Luanda has had a tendency to operate in cies in Africa, reflecting its own homegrown isolation, characteristic of its “exceptional- solutions. So far, Angola has participated ist” stance, which prefers a “statist” to a safely in large infrastructure projects in the multilateral consensual approach. Bilateral region, which include the Lobito transport contracts continue to be pursued by the po- corridor (linking Angola, the DRC, and litical elite, although the tendency to com- Zambia), the Trans-Cunene corridor (be- bine diverse partners in the economic and tween Angola and Namibia), and WESTCOR investment spheres may open up new diplo- (which links power systems of five coun- matic paths for Angola. In its relations with tries from Inga in the DRC to the south). In regional organizations, Angola has sought terms of security, Angola has taken impor- to determine the rules of engagement, re- tant steps by joining the SADC Mutual taining unchallenged influence in certain Defense Pact, which provides for collective capitals, and deploying its petro-capitalist intervention, possibly substituting its de- power to avoid placing itself in positions of fense agreement with DRC, Namibia, and political, economic, or military weakness. Zimbabwe – a remnant of its policies from This has been the case in Luanda’s engage- the late 1990s. In addition, since 1999, ment with the Southern African Develop- Luanda has held the executive secretariat ment Community (SADC) and the Economic of the Gulf of Guinea Commission, the Community for Central African States regional oil bloc comprising the DRC, Nige- (ECCAS) – it is a member of both organiza- ria, Congo, Sao Tome e Principe, Gabon, tions and contributes to their respective Cameroon, Angola, and Equatorial Guinea.

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Angola and the African Union – vestment strategy in assisting other petro- Highlights of a policy change states in developing their oil infrastructure, It is important to understand that Luanda thereby securing political allegiance to is not stuck in a static vacuum of petro- Luanda at the expense of Abuja. However, power, in which an unchallenged political Angola and its efficiently run and highly elite has confirmed its absolute power. On trained armed forces will continue to find the contrary, the presidency and elements ways to collaborate during missions on the of the ruling MPLA continue to recognize continent. It will do this in a more cautious the need to adapt to change. Although in manner, as would be the case in its poten- the past Angola has chosen not to commit tial participation in the 2013 SADC mission to certain policy imperatives that could to the DRC. Luanda is prepared to take on a lead to internal contradictions, it has re- much bigger role in peace missions and sta- cognized the newly independent Republic bilization operations but has yet to define of South Sudan, in spite of the Cabindan its approach toward the African Union. At secessionist problem. This could also be an the most recent AU summit in Addis in indicator of Luanda’s new willingness to January 2013, the Angolan Foreign Minis- conform to more mainstream African ter, George Chikoty, called for the creation Union positions and take shelter in the of an AU rapid intervention force to be safety of these political postures while not operational by 2015. Angola has airlift making them a tenet of foreign policy. capacity, which is crucial to any rapid- This change may have been catalyzed by response, humanitarian, or peacekeeping the international embarrassment Angola operations on the continent. The ability of faced after pledging its full support to African states to respond to violent con- Cote d’Ivoire’s Laurent Gbagbo, following flicts, natural disasters, and any other chal- Allasane Ouattara’s victory in the 2010 lenges has been severely constrained by the Ivorian presidential elections. inability to deploy troops and materials in a Luanda has more recently combined its timely manner, in particular to inaccessible military training capacity with its capital- conflict theaters such as the DRC, Darfur, intensive investment policies on the con- and Somalia. The AU has had to rely on tinent. In an unprecedented move, Luanda NATO to overcome these constraints, but a began an extensive program of security- more coordinated approach with countries sector reform in 2010 in Guinea Bissau to that have airlift capacity, such as Angola, create an environment of predictable secu- Algeria, Morocco, and South Africa, could rity and political configuration in the wake radically change the readiness of regional of successive military coups. Guinea Bissau initiatives to intervene. remains a highly unstable country where One interesting and important develop- the security apparatus has a promiscuous ment was the rapprochement of the South proximity to the political running of the African and Angolan military in mid-2012. state, while also being involved in narco- The Chiefs of General Staff, General Geraldo trafficking. Angola’s experience in Bissau Sachipengo Nunda of Angola and General had valuable military and diplomatic les- Solly Zacharah Shoke of South Africa, sons. Luanda understood the importance of signed a bilateral cooperation agreement gaining regional and multilateral backing, in the defense sector and identified as po- which could, as a result, see it taking on a tential cooperation areas staff training, more responsive and active role in strength- peacekeeping, the defense industry, the ening the continent’s security architecture. Air Force, and the Navy. This will bring the In particular, because Nigeria sees Ango- Dos Santos and Zuma governments into la’s move of venturing into its sphere of in- untested waters, as the relations between fluence in West Africa as a threat, especially Pretoria and Luanda were at best frigid when Luanda takes on a more dynamic in- until 2009. Zuma has made significant in-

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roads in collaborating with Dos Santos and ability, and reform in democratic and fi- securing memorandums of understanding nancial terms. This essentially means that for South African companies wanting to European policymakers should actively invest in Angola, but he will have to con- pursue partnerships with Luanda but main- tend with the scrutiny of South African tain focus on fiscal transparency, installing justice organs and civil society watchdogs accountability mechanisms, and ethical concerning any defense deals that lack approaches to investment and business in transparency. developing countries. At every stage of this engagement, the EU should promote its values, despite a reluctance by Angolan Conclusion and recommendations authorities to accept any pressure in this Regarding its sustained influence in Africa, regard. The government in Luanda craves it is important that Europe begin devising international importance and relevance, a concerted policy toward African regional and this opens an avenue for Europe to

© Stiftung Wissenschaft und powers such as Angola that are actively create a common platform that would al- Politik, 2010 pursuing to gain influence over many key low for this, but it would require Angolan All rights reserved countries on the continent. This means companies to operate in an entirely differ-

These Comments reflect that an inclusive approach is required for ent manner. solely the author’s views. engaging Angola on African affairs. This Efforts should also be made to continue

SWP should recognize Luanda’s importance in pressuring Angola to make political re- Stiftung Wissenschaft und order to encourage it to act as a construc- forms, even if this means taking harder Politik German Institute for tive element and not as a spoiler that could positions. The EU failed to send an observer International and frustrate international efforts for peace and mission for the 2012 elections, which were Security Affairs stability. With Luanda’s influence in key revealed to have been fraught with irregu- Ludwigkirchplatz 3­4 countries, such as the DRC and Zimbabwe, larities, despite the acquiescence of the 10719 Berlin where the EU has substantial financial Telephone +49 30 880 07-0 African Union, the SADC, and the CPLP in Fax +49 30 880 07-100 engagements and large missions, it is im- determining them fair, and should now www.swp-berlin.org perative that Luanda be guided into multi- proceed to pressure Luanda on establishing [email protected] lateral approaches to post-conflict countries a new date for local polls. Repression has ISSN 1861-1761 – be it in stabilization efforts, mediation increased in the country and calls for re-

processes, or peacekeeping operations. This form by grassroots organizations are not also requires that European policymakers being heeded by the government. This is an seek to understand key bilateral alliances area where the EU can voice concerns and that Angola has – as with South Africa raise the alert on the consequences of un- more recently – and find ways to engage, democratic governance on national stabili- as well as monitor, their security-related ty and engagement with international part- projects and initiatives so that there is a ners. European policymakers should reach coordination of efforts. out to civil society and the opposition to By the same token, Angola’s financial understand the main challenges that the expansion will need to be considered, with country is facing and steer Luanda toward joint ventures and international partner- a more reasoned approach to governance. ships increasingly becoming more promi- This is vitally important because a lack of nent in Luanda’s African development stra- engagement with national reform forces tegy. Without engagement by key regional may lead to a difficult political future and organizations such as the European Union, turbulent processes in times of political and oversight by multilateral organizations succession. such as the IMF, Angola’s ambitious drive to secure key investment opportunities and political influence in Africa and abroad may harm efforts of transparency, account-

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