Obama in Africa: Can US rival China's new clout?
President Obama arrives in Ghana this weekend, but China's booming Africa presence may mean that he'll have less leverage to advance US interests than his predecessors.
When President Obama lands in Ghana's capital, Accra, this weekend for his first presidential trip to sub-Saharan Africa, thousands of cheering fans will welcome him with pro-Obama banners, flags, and road signs, many of them homemade.Skip to next paragraph
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But most of the landmarks his motorcade is likely to pass – Accra's national theater, the Defense Ministry, the presidential palace, and a presidential mausoleum – were built with Chinese money, more often than not by Chinese contractors.
Mr. Obama commands popular adoration in Africa that no world leader can match. But analysts say that he may have less leverage than his predecessors when it comes to advancing US interests – increasing US business involvement in Africa and promoting democracy – in large part due to China's booming Africa presence.
"America needs to know that Africa has options," says Adama Gaye, economist and editor for West Africa magazine. "We are no longer in the unipolar moment [right after] the cold war. Today, America is a bankrupt country, and China appears as a rising power with financial muscle and a properly defined strategy."
Boom in China-Africa trade
China is buying up Africa's resources, breaking into industries that the West has dominated, and others it hasn't, and is complicating Western aid efforts by undertaking development projects with some of Africa's most reviled regimes.
And they are defying some of the economic downturn's gravity: In Ghana, the Chinese are carrying on with commitments like roads, telecommunication lines, and a 400-megawatt hydrodam.
During George W. Bush's presidency, trade between Africa and China jumped tenfold from $10 billion in 2001 to $107 billion in 2008. That commerce has provided a lifeline for internationally ostracized regimes like Sudan's or Zimbabwe's.
China's Exim Bank rises as alternative to World Bank
For many African governments, China's state-operated Exim Bank, now the world's third largest credit agency, has become a compelling alternative to the World Bank, one that doesn't dwell on humanitarian concerns.
The World Bank, US presidential administrations, and other Western powers have long used foreign assistance as a means to prod governments into political reforms.
Across Africa, they are discovering that their soft, conditional loans aren't as coveted as they once were. African governments are increasingly going to Exim Bank instead.
"We spoke to senior aid figures in Accra who said that the World Bank is very worried now because Exim has the resources to outgun the World Bank on major infrastructure projects," said Giles Mohan, a China-Africa relations researcher for Britain's Economic and Social Research Council.
Exim Bank's loans typically come with gentle 1 to 2 percent interest rates and only one major catch: that the governments contract China's state-owned companies to complete the project.
This works well for reform-reluctant leaders, and for China's government, which in many cases directly pays state-owned contractors from state-owned banks, bypassing the host nation altogether. A token amount of the loan reaches the local workforce, or is used to purchase local materials.