Written by Angelos Delivorias.
|This is the seventh edition of an annual EPRS publication aimed at identifying and framing some of the key issues and policy areas that have the potential to feature prominently in public debate and on the political agenda of the European Union over the coming year.|
The topics analysed encompass the 2024 European elections, budgeting in times of crises and war, lessons for public investment in the EU from the EU recovery instrument, the fiscal and monetary policy mix, climate
and socio-economic tipping points, the impact of increasing fuel prices on transport, cyber-resilience in the EU, protecting media freedom and journalists, the future of Russia, and geoeconomics in an age of empires
For 30 years after the end of the Cold War, the US was the global military and economic hegemon. As the EU widened and deepened, and great powers such as Russia and China, but also emerging middle powers such as Brazil, India, and Turkey, used economic means to increase their global influence and pursue geopolitical aims, scholars argued that the world was becoming multipolar. The past decade, however, marked the limits of multilateralism (and need for reform), leaving room to growing power rivalry. Countries with regional or great power ambitions have used soft power, but also threats and the use of force, to alter the status quo in their favour. This brought supply chains, critical minerals and great power politics to the centre of conversations, and led some analysts and politicians to support the idea that the world has entered a ‘new Age of Empires’. The competition for power deriving from access to materials and influence through investment and economic advantage becomes particularly striking when narrowing the focus to regions of overlapping involvement of major and middle powers with aspirations of expanding influence. To illustrate this, it is interesting to compare the strategies of three different countries towards Africa, a key partner of the EU and a continent undergoing great changes and with great potential for growth, because of its critical raw materials and the opportunities it presents for infrastructure investments, as well as its vulnerability to food and economic crises.
China has been Africa’s largest trading partner for 12 years and is its fourth-biggest investor. China’s trade with Africa, limited until the millennium, began increasing substantially around 2005 and has kept increasing ever since, reaching US$113 billion in exports and US$78 billion in imports in 2019. In 2019, total Chinese foreign direct investment (FDI) in Africa amounted to US$44 billion (vs US (the top investor) FDI of US$78 billion). One third of Chinese FDI in Africa is channelled to infrastructure and construction, while one fourth goes to mining and extraction of raw materials. Similarly, since the early 2000s, China has emerged as Africa’s largest bilateral lender (62 % of African bilateral debt). Chinese credits to Africa amounted to US$148 billion in 2019, with US$44 billion for investments in infrastructure, US$36 billion to energy, and US$18 billion to mining and extraction. These loans have helped finance large-scale investments but have also resulted in the build-up of debt-service burdens. They also contain clauses that make debt less transparent, making debt estimation, renegotiation and restructuring more difficult. Through its relations with Africa, China aims at accessing the continent’s natural resources, markets to export its manufactured goods, and allies in the diplomatic isolation of Taiwan. Its activities in Africa prioritise economic over political and security interests. Nonetheless, to support its interests, China has also offered military and law-enforcement assistance, and established a naval base in Djibouti. Xi Jinping’s third term should contribute to maintaining the trend. At the same time, the slowing down of the Chinese economy as a result of COVID-19, and the increasing tensions between the US and China may change the Chinese strategy. Similarly, the opaqueness of some Chinese loan deals with African governments and labour issues on the ground may increase African countries’ reticence towards increased ties.
If the 1990s post-Soviet turmoil ended many of Russia’s global ambitions, including in Africa, recent years have seen renewed Russian interest in the continent. Since 2010, Moscow’s strategy and activities have pursued the aim of strengthening its position in the intensifying struggle over access to commodities, transit routes and markets, by developing infrastructure connecting different regions and forging diplomatic and economic links across different continents. Efforts already intensified in the middle of the decade and culminated in 2019 with Russia’s co-hosting (with Egypt) of the inaugural Russia-Africa summit. Russia has modest trade with Africa, (US$20 billion per year), which is heavily imbalanced toward Russian exports of arms and grain (Russia controls 49 % of the overall arms market), and import of minerals, diamonds and oil contracts. Russia has also attempted to negotiate nuclear power deals with several African countries (including Egypt, Nigeria, Ghana and Kenya). Beyond the supply of weapons, Russia is involved militarily in Africa, through its military instructors, its private military companies such as the Wagner group, and through the role played by its navy and air force (deployments, military exercises, basing agreements). While the stated aim is to protect strategic resources and transit routes, there are also allegations (especially for private groups) that they also engage in smuggling and transnational crime. The country also uses credit policy channels (debt write-offs, export credits, credit from its state-owned companies, as well as unpaid USSR claims to African countries it inherited). Going forward, it is difficult to say whether the presence of Russia in Africa will grow or diminish. On the one hand, 25 African states chose not to condemn Russia’s invasion of Ukraine, acknowledging historic ties with the Soviet Union and the Russian presence on the continent. On the other hand, the fallout of food and energy inflation may change the perception of some African countries. Lastly, while scenarios for a post-conflict Russia are still unclear (see issue 9: Russia, quo vadis?), its strategy may change as a result of the significant blow to its economy and the evolution in public opinion, following its invasion of Ukraine.
The primary motivation of Turkey, an emerging middle power, for stronger relations with African countries is economic. Africa has natural resources that Turkey needs for its manufacturing and industrial sectors, including oil and gas. In that context, trade has grown from US$5.4 billion in 2003 to US$25.3 billion in 2021, and Turkey’s president promised in 2021 to double that amount. FDI has similarly increased from US$100 million in 2003 to US$6 500 million in 2021. To further increase trade and to counter the influence on the continent of the Gülen movement, accused of being behind the 2016 failed coup attempt in Turkey, the country also tries to expand Turkish cultural-religious influence on the continent, notably by investing a lot in education projects. Aside from trade and investment, Turkey uses soft power instruments such as humanitarian aid and development assistance programs (e.g. Turkish Red Crescent). Lastly, in 2017, Turkey opened its first military base in Africa, in Somalia. Turkey benefits from the fact that, contrary to some EU countries, it has no colonial past haunting its relations with Africa; in contrast with China, it has not been accused of debt trap diplomacy; and contrary to Russia, it maintains a pro-sovereignty narrative, which resonates in the area. Against possible expansion is the country’s economic crisis. Also, the presidential elections scheduled for June 2023 may result in a change in strategy.
In the aforementioned context, the EU, for which multilateralism is both a foundational principle and part of strategic operational guidance, has positioned itself in Africa through several initiatives, including the European Peace Facility and the Global Gateway strategy, which will mobilise up to €300 billion of investment (half of which has been pledged to Africa) in strategic sectors up to 2027. To maximise results on the continent, it has suggested using the Global Gateway to mobilise finance and tackle the root causes of food insecurity, merging the strategy with the European Green Deal, to mutually reinforce them, or considering debt-for-climate swaps with African countries.
The European Parliament has expressed its concern that, in many areas, Africa has become a new arena of great power competition. It has criticised human rights violations by private military and security companies in Africa, particularly the Wagner group. It called for human rights and the environment to be preserved in fossil fuels projects, stressed the benefits of multilateralism and concerted action at international level, and called for increased investment in Africa to realise the potential for EU-Africa partnership in agriculture and the environment, economic development and sustainable and inclusive growth.
Read the complete in-depth analysis on ‘Ten issues to watch in 2023‘ in the Think Tank pages of the European Parliament.