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CWA # 858, 19 December 2022
GP Team
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TWTW#194, 18 December 2022, Vol. 4, No. 43
The US: Rekindling relations with Africa at Leaders Summit
Apoorva Sudhakar
What happened?
On 15 December, the three-day Second US-Africa Leaders Summit concluded in Washington wherein US President Joe Biden announced his support to the African Union’s membership at the G20 and an African representative at the UN Security Council. Biden said: “The US is all in on Africa’s future.” He said: “Africa belongs at the table in every room – in every room where global challenges are being discussed, and in every institution where discussions are taking place.” Biden announced that he would visit Sub-Saharan Africa soon, and would also ask the US Vice President, Secretary of State, Treasury Secretary and Commerce Secretary to visit Africa. The White House press release listed initiatives announced in the summit, including establishment of a new diaspora council; expansion of the Young African Leaders Initiative (YALI); an MoU between the US and African Continental Free Trade Area (AfCFTA) Secretariat; establishment of the African Democratic and Political Transitions (ADAPT); and a range of financial support for climate adaptation, food security, and peace and security.
On 14 December, Biden said the US was committed to limiting the increasing influence of China and Russia in Africa. Biden outlined the US goal towards “a new 21st Century Partnership for African Security.” On the same day, China’s Foreign Ministry spokesperson called on the US to “respect the will of the African people and take concrete actions to help Africa’s development, instead of unremittingly smearing and attacking other countries.” The spokesperson said: “Africa is not an arena for great power confrontation or a target for arbitrary pressure by certain countries or individuals.”
On 14 December, Ghana’s President and Chairman of the Economic Community of West African States (ECOWAS) Nana Akufo-Addo met US Secretary of State Antony Blinken and expressed concern over the presence of Russian mercenaries in Africa. Akufo-Addo called on Africa to stop “begging” the West to earn international respect and thereby, change the weak perceptions across the world, about Africa. BBC quoted Akufo-Addo: “If we stop being beggars and spend African money inside the continent, Africa will not need to ask for respect from anyone, we will get the respect we deserve. If we make it prosperous as it should be, respect will follow.”
What is the background?
First, the US-Africa summit. The first US-Africa Leaders Summit was held in 2014 under former President Barack Obama’s presidency. The summit focused on trade, investment, cooperation on gender, health, governance and so on. The 2014 summit was perhaps the first largest interaction the US had with African countries. Following this, former President Donald Trump’s unwillingness to engage with the rest of the world, stagnated the US relations with Africa.
Second, the focus on trade. Throughout both summits, the US emphasized on the need for trade and investment in Africa. Currently, China is Africa's largest trading partner, largest lender and accounts for the highest foreign direct investment. In 2009, China surpassed the US to become Africa’s largest trading partner. Simultaneously, along with trade and investment in Africa, China also worked on its Belt and Road initiative in Africa.
Third, big powers in Africa. Several political leaders have visited Africa in 2022, prior to Biden’s announcement to visit Africa. In July, Russia’s Foreign Minister Sergei Lavrov toured Egypt, Ethiopia, Uganda and the Republic of Congo in July 2022, aiming to convince them that Moscow would not let the Ukraine war affect Africa. Simultaneously, French President Emmanuel Macron visited Cameroon, Benin and Guinea-Bissau amid France’s currently-tumultuous relations with a few African countries. In October, Ukraine’s Foreign Minister Dmytro Kuleba visited Kenya, Senegal, Ghana and Côte d'Ivoire in October to counter the Russian visit. Meanwhile, China has a strong diplomatic engagement wherein for the last 32 years, China’s first diplomatic visit during New Year’s would be to Africa. Since 2000, Beijing has also been conducting the Forum for China-Africa Cooperation every three years.
What does it mean?
First, the second US-Africa Leaders Summit appears to be Biden’s efforts to rekindle the US relations with Africa. The objectives in the first and second summits are similar with a heavy focus on trade. However, the US has to rectify the eight-year gap between the two summits and ensure that commitments in both summits are followed through and do not remain initiatives, just on paper.
Second, by focusing on trade and investment, the US is aiming for the best possible engagement currently. Africa is home to an emerging regional market facilitated by the AfCFTA that would bring forth the economic potential of the continent. Africa is also a competitive market with the engagement of major players like China, India and Japan.
Third, if the US wishes to limit the Russian and Chinese influence in Africa, it has to provide an attractive alternative to the African countries. However, the US decision to not invite countries that witnessed coups over the last two years indicates its unwillingness to engage with non-democratic countries, where Russia and China already have deep inroads. Therefore, addressing this scenario poses a major challenge.
Fourth, the flurry of visits from different leaders indicates that Africa is an emerging key player in global politics. The diplomatic engagements signal efforts of different countries to court African countries and win their support at the international stage; it testifies to the speculations of a new Scramble for Africa. However, to ensure a new and sustained engagement, all players need to treat Africa as an equal player, and not a mere pawn in global politics.
The Bahamas: Former FTX CEO Sam Bankman-Fried arrested
Madhura Mahesh
What happened?
On 12 December, former FTX CEO Sam Bankman-Fried was arrested by the Bahamian police after US officials filed criminal charges against him. He has been charged by the US government with eight counts which include money laundering, misappropriation of consumer funds, intention to defraud FTX users and violations of campaign rules. Separately he has been accused by the US Securities and Exchange Commission and the Commodity Futures Trading Commission of similar charges.
On 13 December, the Bahamas Magistrate Court denied his request for bail and transferred him to the Fox Hill correctional prison until 08 February.
US Attorney Damian Williams described his actions as one of America’s biggest financial frauds. The Bahamian Prime Minister said: “The Bahamas and the United States have a shared interest in holding accountable all individuals associated with FTX who may have betrayed the public trust and broken the law.”
What is the background?
First, the fall of FTX. On 11 November, FTX filed for Chapter 11 Bankruptcy in Delaware, US which led to prosecutors in the US and Bahamas opening an investigation into the finances of FTX, Almeda LLC and Bankman-Fried. The US investigations revealed that FTX was misappropriating customer funds to pay off debts and make investments in the name of Almeda LLC. The investigations further revealed that Bankman-Fried had shown investors false and misleading information about Almeda’s financial condition to draw more investors in.
Second, the US House Committee on Financial Services hearing on the bankruptcy filing. On 13 December, Bankman-Fried along with FTX Chief Executive John J. Ray III were to testify in front of the House Committee on Financial Services on the collapse of FTX, finances of FTX and Almeda. As Bankman-Fried was arrested on 12 December, only Ray testified where he claimed that the FTX’s fall was “one of the worst business failures” he has ever seen. This was reportedly due to the lack of oversight and financial controls, lack of documentation and accountants and poor record keeping. He also accused the Bahamas government of collaborating with FTX to remove over USD 100 million to help Bahamian account holders amid its crash.
Third, FTX and Bankman-Fried’s donations to Republicans and Democrats’ election campaigns. Bankman-Fried routinely donated to both the Republicans and Democrats’ election campaigns making him one of the largest donors. The Democratic National Committee and the campaign arms of the Senate and House Democrats have pegged the donation amount received from Bankman-Fried since 2020 to be around USD 1.16 million dollars. Investigations have revealed that Bankman-Fried has made illegal donations worth “tens of millions of dollars” to electoral campaigns.
What does it mean?
First, extensive investigations were conducted by the US and Bahaman authorities. The charge sheet against Bankman-Fried filled by the US government, the SEC and CFTC was topical and vague which not only shows the extensive nature of the crimes but tells us that more investigations need to be conducted. The ongoing investigations in the Bahamas regarding the liquidation of FTX’s assets in the country also add to the list of investigations against Bankman-Fried. The dearth of information will ensure that the prosecutors and Bankman-Fried’s lawyers will need months to submit admissible evidence to the courts for the trial to actually begin. As Bankman-Fried is currently detained in the Bahamas, the next step for the US government is to apply for his extradition which will be another laborious ordeal.
Second, uncertainty over the return of FTX customer funds. Due to the bankruptcy filing, lack of funds, and the extensive investigations and trials pending, the issue of FTX customers getting their funds back appears to be grim. Currently, Ray and FTX are looking to sell off their assets and international wings of the crypto exchange to recover funds to pay back the debts and customers but are not able to collect enough funds to do so.
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