China’s New Colonialism
China has sought to differentiate itself from the West in Africa, investing in development instead of relying on the old donor schemes. But the effects of what it's planning -- most recently, in the iron-rich country of Gabon -- will be just as devastating as anything the West has done there.
The resource-based corruption and international greed that has typified so much of the West’s interactions with African countries has now arrived in the tiny and impoverished West African country of Gabon. Only this time, the external predator, working in tandem with a venal, autocratic local ruler, isn’t the West — it’s China. And the tactics are new as well. China, instead of following in the West’s footsteps and setting up donor relationships with cash-strapped African states, is trading development revenue for natural resources, pouring more than $29.3 billion since 2002 into the continent through development projects geared at the exploitation of finite resources, financed by China’s state-owned export-import bank China Exim. This barter system doesn’t just allow China to differentiate itself from the colonialists; it has also redefined Africa’s foreign investment risk profile, leading to a 2007 agreement between China Exim and the World Bank to collaborate on investment via construction projects. But don’t be fooled: China’s goals in Gabon are no less selfish — and the potential outcome is no less disastrous — than any misguided colonial project of the past.
Until 1960, Gabon was a French colony, a focal point of France’s "Africa" policy of Françafrique, composed of secretive defense agreements, multinational corporations, and handpicked governors. Since independence, the country has existed in a state of forced peace, maintained by France’s Marine infantry battalion, which remains stationed in the capital city of Libreville. But class-based conflict is always a potential threat: Gabon’s per capita GDP is relatively high, at $14,000, but the political elite hoard the wealth and keep everyone else in poverty. Seventy percent of the population lives under the poverty line, and state services ranging from health care to sanitation do not exist. Gabon has little to no infrastructure: Only 10 percent of the roads are paved, with 80 percent of the land forested.
It’s this forested region, in the Ogooué-Ivindo province, that is at stake today. Iron ore, billed as one of the world’s last remaining major untapped deposits, was discovered there in 1885. The remote area is estimated to hold 1 billion tons of ore, with iron content of 64 percent. In 2006, Gabon’s then-lifetime dictator, Omar Bongo, awarded a $3.5 billion mining deal to a Chinese consortium. The project, wholly financed by China Exim, includes the $790 million Belinga mining facility; two hydroelectric dams designed to electrify the mine, Grand Poubara and Kongou Falls (the latter with a price tag of $754 million); a 350-mile railway; and a deep-water port at Santa Clara engineered to transport resources from northeast Gabon to the Atlantic — and, of course, on to Beijing. The first shipments are scheduled to leave for China in 2011, with an estimated 30 million tons to be extracted each year.
According to the secretive development agreement, China received a 25-year tax holiday, despite profits projected within the first eight years; 90 percent of the profits thereafter; and some regulatory exemptions, including environmental ones such as alleged cheapened access to forested regions and rivers, as well as significant control over the country’s infrastructure, which the Chinese are to develop.
Earlier this year, Bongo died and his son, Ali-Ben Bongo Ondimba (also known as Bongo Jr.), was elected president at the end of August, an event that will probably just grease the wheels for Chinese investors. Even Bongo Jr.’s personal assistant is Chinese. And Gabon is clearly excited to get its hands on some of China’s money. The country is one of sub-Saharan Africa’s top five oil producers, with oil accounting for 80 percent of its export earnings, but its reserves are dwindling. Production is down from 351,890 barrels per day (bpd) in 1998 to 270,000 bpd now. Gabon holds just 2 billion barrels in proven reserves, not much compared with Nigeria’s 32.6 billion.
Belinga is the country’s great hope for the future. But Gabon is not likely to make as much profit from the mining deal as it would like — and the costs will be dear. Profits from finite resources are largely derived from taxes and royalties (mineral taxes levied on extracted resources), but with China’s 25-year tax holiday, that money won’t materialize for some time. Meanwhile, the promised 26,850 jobs seem similarly fantastical because China tends to export its own labor, except labor for within the mines themselves. The electrification that is a major part of China’s plan will likely bypass towns and villages in favor of mining facilities, given the high cost of hydroelectric transmission lines.
Finally, the proposed Kongou Falls dam, situated in the Ivindo National Park — Gabon’s rain forest, inhabited by unique and endangered species such as the forest elephant and the lowland gorilla — would be disastrous for the local ecology and the lives of Gabon’s indigenous people, directly dependent on ecosystem services such as fisheries. China shows no sign of being invested in the region’s environment. Long before environmental-impact assessments were conducted, China began paving a 26-mile road to Kongou Falls, facilitating poaching, wildlife trafficking, and the logging of one of the world’s last remaining ancient rain forests, part of the Central African rainforest that, along with the Amazon, is a major carbon sink, absorbing 20 percent of the world’s carbon emissions each year.
Ironically, the loans financing Gabon’s socioeconomic and ecological degradation violate China Exim’s own social and environmental guidelines. And the bank is being held accountable, at least to a certain extent. Belinga has inspired a network of local civil society groups called Environment Gabon and headed by Brainforest, a Gabon-based NGO, to rise up. Due to their efforts, China Exim appears to have postponed financing the project until China National Machinery and Equipment Import and Export Corporation, China’s largest state-owned firm handling foreign trade and the leader of the Belinga consortium, is investigated for alleged ecological violations. And concessions initially marked at 5,000 square kilometers have been reduced to the actual size required: 600 square kilometers.
But Gabon’s president remains determined to carry on his father’s wishes: As Bongo Sr. said in 2007, "Whatever happens and whatever anyone says, Belinga will go ahead." Meanwhile, China has been dispatching its predatory investors to other African countries, pushing the construction of megadams in Sudan and Mozambique, $2 billion in oil-backed loans in exchange for development projects in Angola, and a $3.5 billion investment deal allocated to Zambia’s Copperbelt province. Hopefully the dangers posed by Belinga will inspire NGOs and activists across the region to resist such exploitative deals with a new breed of colonialists before it’s too late.