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Friday, February 24, 2006

Angola Involvement Shows China's Africa Strategy


China's great leap into Africa--a rush to invest, lend, and assist ahead of the pack--is paying off for Beijing.

Big-time.

Across Africa, China is widely regarded as more responsive to local needs than Western nations. Over and again, China has proven its ability to build dams, roads, and bridges more quickly and inexpensively than the United States and European countries.

American and European Critics may deride the projects as old fashioned--prestige public works not necessarily serving the needs of the people--but African government and business leaders disagree. They see China as both a powerful friend and possible development model--most of all, a rising global power willing to take real risks in Africa.

China's involvement in Angola, a country ruined by more than two decades of civil war, is a case in point. The country is an oil man's dream and a banker's nightmare. Angola's appeal as sub-Sahara's second largest oil producing nation after Nigeria is overshadowed, financially, by its inhospitable business environment. Widespread land mines still mar the countryside. Subsistence agriculture provides the main livelihood for 85 percent of the population--a population in which only one in six people have known the absence of war. Corruption is rampant.

Enter China. The Chinese have embraced Angola, offering a $2 billion oil-backed credit at a time when Western banks and international institutions have been cautious about lending. An agreement between Angola and the International Monetary Fund has been held up, largely because of IMF concerns about how the government manages its oil money.

Similar misgivings have prevented the holding of an international donor's’ conference.

"The Chinese are offering the loan as an alternative to working with the IMF," says Princeton Lyman, director of Africa policy studies at the Council on Foreign Relations in Washington.

Many believe that the deal is mutually beneficial, as oil-hungry China looks to Africa and elsewhere to satisfy its growing demand for energy.

Angola provides Beijing with crude in return for credit, and also opens the door to possible future exploration prospects.

China already imports around 30 percent of Angola's oil, just behind the United States, which buys 40 percent of production.

But China is late to the production game. The top foreign oil companies operating in Angola are US-based ChevronTexaco and ExxonMobil , France's Total , UK's BP , UK /Dutch Shell, and Italian Agip/Eni Oil Company.

Given Angola's vast untapped potential--Angola ranks third in new oil discoveries behind Iran and Saudi Arabia--it's only a matter of time before Chinese companies join the above list.

1 comment:

bathmate said...

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Bathmate