Category: Interviews

Interview with Alain Le Roy on the summit on financing African economies

Emmanuel Macron at the summit on the financing of African economies on 18 May 2021 at the Elysée Palace surrounded by IMF Managing Director Kristalina Gueorguieva and Senegalese President Macky Sall (right) and Congolese President Félix Tshisekedi. ©LUDOVIC MARIN/POOL/AFP

Alain Boinet for Défis Humanitaires. On Tuesday 18 May, at the initiative of French President Emmanuel Macron, France hosted a summit dedicated to financing African economies to address the serious economic and social consequences of the pandemic and the sharp increase in debt. What was the objective of this summit and what were the main outcomes? There has been a lot of talk about special drawing rights (SDRs). For our readers, in order to measure the interest, could you detail this mechanism and the expected impact?

Alain Le Roy. The main objective of this summit was indeed to respond to the very strong impact of the pandemic on African economies. While Africa had experienced strong and sustained growth over the past 25 years, it experienced a 1.9% recession in 2020 and its growth prospects for 2021 are, according to the IMF, of the order of half the world growth rate. There was therefore an urgent need for action, particularly to reduce the number of people at risk of falling into extreme poverty.

Our basic finding was this. While the economic impact of the pandemic was very strong everywhere, some continents had instruments at their disposal that enabled them to carry out rapid and massive recovery plans; this was true for Europe, thanks in particular to the role of the European Central Bank and its very strong asset purchase policy, which enabled recovery plans in Europe totalling several hundred billion euros. This was also true for the United States, where the monetary policy of the Federal Reserve System (FED) enabled the US government to implement stimulus packages totalling more than 2000 billion.
Africa, however, does not have equivalent instruments and in particular no continental central bank.
Hence the idea of using the IMF and Special Drawing Rights (SDRs) as another way of injecting liquidity into the economy, this time for the benefit of all countries. SDRs are foreign exchange instruments that feed into the balance of payments and thus allow the countries concerned to finance their imports.

This is admittedly a bit technical, but the main point is that, faced with the impact of the pandemic, the international community has agreed on a new allocation of SDRs of up to 650 billion dollars for IMF member countries. This allocation, which will be legally decided by the IMF Board in June, will allow African countries to receive $33 billion directly from September 2021.

And the countries present at the summit agreed that, on a voluntary basis, a significant share of the SDRs accruing to advanced countries would also benefit African countries, through various mechanisms currently being developed, including zero-interest loans.

President Macron has indicated that we are working to ensure that the sum of SDRs that will benefit Africa reaches at least $100 billion.
This is in addition to the impact of the debt relief that is being implemented in the G20 and the Paris Club, as well as the upcoming replenishment of IDA (the World Bank’s window for low-income countries).

DH. Were all the strategic players present at the summit?

Alain Le Roy. Yes, without a doubt. Because of Covid, we were not able to invite all 54 African heads of state, but almost all the African heads of state we had invited were present in Paris on 18 May for the summit; in particular, there were the Presidents of South Africa, Senegal, Rwanda, Ghana, Côte d’Ivoire, Nigeria, Egypt and many others, twenty-two in total, as well as the President of the European Council, the President of the European Commission and several European heads of government. In addition, the Prime Ministers of Japan and Canada participated by video, the United States, through the Secretary of the Treasury, Janet Yellen, the Chinese First Vice Prime Minister Han Zheng, and many other leaders. Also present in Paris were of course the Managing Director of the IMF, the Managing Director of the World Bank, the Secretary General of the OECD, the Director General of the WTO and many other leaders of financial institutions.

All the countries that participated in the summit approved the final declaration of the summit, which can be found on the Elysée website (elysee.fr, under agenda 18 May); this declaration is admittedly very technical, but it does list the various advances made during the summit.

Summit on the financing of African economies, 18 May 2021, Elysée Palace. Judith Litvine, MEAE

DH. The Franco-Ivorian financier Tidjane Thiam declared that the development of Africa was first and foremost the business of Africans, that Africa was not asking for any favours and the President of Senegal, Macky Sall, added that it was necessary to move from a logic of assistance to a dynamic of co-construction. On the African side, what are the essential ingredients of a winning “New Deal”?

Alain Le Roy. The summit did indeed conclude that there was a need for a massive stimulus, to be financed in particular by SDRs, as I have just mentioned, to deal with the exceptional crisis caused by the pandemic, and for strong support for Africa’s main endogenous growth factor, i.e. its very dynamic private sector. During the summit, an Alliance for African Entrepreneurship was launched, an initiative designed to bring together all public and private efforts to strengthen the financing of the African private sector. It is the private sector that will ensure sustainable growth in Africa now and in the medium and long term by attracting a larger share of the abundant international private flows. To this end, the summit made it possible to make progress in the risk-sharing instruments that the international financial institutions are putting in place so that the interest rates of the financing to which African countries have recourse can be significantly reduced.

DH. Another objective of the Summit was the vaccination of African populations, which is still low, even if the number of infected people is fortunately very low. What is the status of the so-called ACT accelerator mechanism and its Covax facility that is to address this? There was also the issue of vaccine production in Africa and the removal of intellectual property constraints. What has been achieved in this area?

Alain Le Roy. This is obviously an emergency that everyone recalled during the summit. The Covax facility, which France initiated with the European Commission, should make it possible to vaccinate 20% of the African population by the end of 2021. With the AVATT facility created by the African Union, the vaccination rate should reach 30% by the end of the year. And we are currently examining various solutions to achieve an immunisation rate of 40% by the end of 2021 and 60% by mid-2022.

And France also strongly supports the initiatives underway to develop vaccine production in Africa. President Macron has just discussed the implementation of this initiative with his counterparts during his trip to South Africa and Rwanda. As for the discussion on the suspension, on an exceptional basis, of intellectual property rights, it is underway at the WTO, but a consensus has not yet been reached.

Mali began its Covid-19 vaccination programme with Health Minister Fanta Siby ©UNICEF/Seyba Keïta

DH. Another part of the Summit was devoted to supporting the private sector, especially SMEs and VSEs, in order to stimulate internal growth and create millions of jobs in the face of the demographic explosion. Was there any real progress in this crucial area?

Alain Le Roy. Yes, clearly. Firstly, by putting this subject at the heart of the summit, as it is essential for the creation of jobs for the very large number of young people in Africa. Then by launching this Alliance for Entrepreneurship in Africa, which can already mobilise a billion dollars, thanks to the support of the IFC (the World Bank’s private sector subsidiary), to invest in the African private sector both in terms of equity and loans. And the European Commission is now also developing important new instruments, with associated funding, to improve the financing of this sector which until now has had great difficulty in finding local funding. This includes increasing the number of venture capitalists, helping to strengthen local banks and African funds, so that finance reaches even the smallest companies. The movement is now well underway.

DH. In addition to macro-economic decisions involving billions of dollars, what is the added value of humanitarian and/or development NGOs given their proximity to the most vulnerable populations, their experience and their long-term commitment?

Alain Le Roy. This summit, which brought together heads of state and leaders of international organisations, was naturally interested in global, macro-economic solutions, given Africa’s very significant current financing needs; the IMF estimates them at nearly 300 billion dollars by 2025. And of course only the heads of state can decide on the allocation of SDRs in the appropriate amounts

But it is clear that there is a need for actors on the ground to ensure that this indispensable global funding ultimately benefits the local populations that need it most. And for this, the role of humanitarian and/or development NGOs is essential, in the long term, to complement the role of public development agencies such as AFD. There is an obvious complementarity between the efforts of States interested in the development of Africa and the efforts of NGOs which ensure the effective relay on the ground and can reach the most vulnerable populations.

DH. Some commentators suggest that there was no firm commitment from all the participants at this Summit and that the President of the Republic, Emmanuel Macron, was now hoping for a political “agreement” at the next G7 or G20. What do you think of the situation, since you prepared and participated in the Paris Summit from start to finish?

Alain Le Roy. There were a lot of firm commitments during the summit, you only have to read the final declaration of the summit, adopted by all the participating countries. But it is true that we would have liked to see a precise figure in the declaration on the amount of SDRs that the advanced countries will reallocate to African countries. President Macron said during the press conference following the summit that we wanted at least $100 billion to reach Africa from the allocation of SDRs, in addition to the tens of billions that the IDA replenishment will bring.

This figure could not be included in the statement because several countries, such as the US, cannot make a legal commitment until the SDR 650 billion allocation has been formally voted on by the IMF Board. This vote will take place in June, which is why the reallocation figures will only be made public in October, at the G20 meeting, with the associated mechanisms that we are working on.

DH. By way of conclusion, what would you like to add?

Alain Le Roy. That this summit, despite all the progress that has been made, is obviously only one stage in the process of giving Africa the means to ensure its long-term growth and to achieve the sustainable development objectives. This year’s forthcoming G7, G20 and COP26 meetings must also contribute to this.

In any case, it was very important to get all the main global players, Africans, Europeans, Americans, Canadians, Chinese, Japanese, etc., around the same table and to commit to greater solidarity with the African continent on the one hand, and to work within a multilateral framework to concretely reduce the divergences between African economies and those of the most advanced countries on the other.

In Goma, Democratic Republic of Congo, people flee under the fire of the Nyiragongo volcano, 27 May 2021. ©GUERCHOM NDEBO / AFP

More information : 

Who is Alain Le Roy ?

 

Alain Le Roy is Ambassador of France and Honorary Senior Advisor to the Court of Auditors. He has been Ambassador of France to Madagascar and Italy, as well as Under-Secretary-General of the United Nations, in charge of peacekeeping operations, and Secretary General of the European External Action Service.

Afghanistan: a predictable defeat

American soldiers going on an operation in a Chinook helicopter.

Interview with Gilles Dorronsoro, author of “The Transnational Government of Afghanistan – Editions Kartala”.

Alain Boinet for Humanitarian Challenges – What is the exact meaning of the title of your latest book “The Transnational Government of Afghanistan”?

Gilles Dorronsoro – The central hypothesis of the book is that under the guise of state-building, foreign operators (IOs, NGOs, NATO, etc.) have in fact governed Afghanistan for 15 years (until the 2014 withdrawal). This transnational government has in fact simultaneously built and deconstructed Afghan institutions, financing the army or development projects, but organising a systematic bypass of the institutions (PRT, militias in particular).

DH – You say that your book was born of an ethical reaction, what do you mean by that?

GD – In the winter of 2001-2002, in a text for the journal Cultures et Conflits, I drew attention to the risks that Western countries were taking in Afghanistan by reinstalling political figures from the 1990s, who had been widely discredited because of their corruption and the violence perpetrated against civilians. Later, I worked at the Carnegie Endowment for International Peace (a Washington think tank) during Obama’s first term, when the surge (a massive infusion of military and civilian resources into the conflict) was being decided. Here again I have tried unsuccessfully to draw attention to the likely consequences of US policy. The blindness of the vast majority of experts, military and politicians to the consequences of the policies pursued created in me an “ethical reaction” or perhaps more simply a form of anger at the human and social cost of these mistakes.

DH – Your book came out after the Doha agreements of February 2020, between the United States and the Taleban, and before the date of evacuation of foreign troops fixed for 1 May 2021, is it already an assessment?

GD – The war is lost, which does not mean that the Taliban have won, but it is time to take stock of this intervention. The negotiations have so far focused on the modalities of the American disengagement. This is now irreversible, which leads me to believe that the time has come to take a critical look at the American moment in the Afghan war.

DH – The subtitle of the book is: “Such a predictable defeat”. Among the causes that can explain it, what seems to you to be the main cause of this defeat?

GD – There are several major inflections in American policy and each time other decisions could have changed the course of things. It seems to me that one of the most decisive obstacles was the obstinacy in thinking of Afghanistan as a “traditional”, “tribal” country, allergic to the state, whereas the demand for a state is apparent from all the surveys. Westerners have missed the evidence of the social and political revolution that has been tearing the country apart for 40 years now. The Taliban have responded in their own way to the demand for statehood by mimicking (or caricaturing) the state, the Western forces have multiplied false moves, starting with the ultra-violent practices of the special forces and the under-investment in justice issues.

DH – Antony Blinken, the US Secretary of State, wrote a strongly worded letter to the Afghan leader, Ashraf Ghani, on the 4th March. An international conference of key countries is being organised under the aegis of the UN, as if peace was being sought outside the country that could not be found inside. There is talk of an interim government between the Taleban and the Afghan government. There is talk of a 90-day ceasefire allowing the evacuation of foreign troops, but there is fear of a new Taleban spring offensive. After so many failures, what do you think is the most likely outcome?

GD – The US is seeking to install an interim government and therefore a ceasefire so that it can withdraw without major humiliation. Ashraf Ghani will most likely be sidelined in such a process, which explains his lack of enthusiasm, especially since he was not in the least associated with the negotiations between the Americans and the Taliban (which were concluded with an agreement in February 2020). Ashraf Ghani, who owes his position to American mediation and not to the verdict of the ballot box, is in a weak position with regard to American diplomacy, so I think it is likely that he will eventually give in. The Taliban, if they get a firm guarantee from the United States for a withdrawal before the end of the year, have an interest in playing the game insofar as they will be able to avoid a war of the cities which would be ruinous.

The Afghan president Ashraf Ghani

DH – After the withdrawal of foreign troops (US and NATO) from Afghanistan, what are the most likely political hypotheses and could we see an acceleration of events?

GD – If we assume that a new government will be formed before the American withdrawal and that it will include the Taliban, the most likely scenario is that the transition will fail for two reasons. On the one hand, the Taliban, after twenty years of war against the United States, cannot accept the risk of being disowned by the ballot box. However, they are clearly a minority in the country, so the most likely outcome is that they will refuse to go to the elections under various pretexts, which could lead to new arrangements or fighting. On the other hand, the idea of a merger or integration between the Taliban forces and those of the regime seems to me to be almost impossible (unless the Taliban form the backbone of the new army, which is prohibitive for the regime’s supporters, especially the Panjshiris).

DH – In the hypothesis of a return of the Taleban to Kabul, they will be confronted with new realities that have appeared in the last 20 years: elections, media, university, status of women, development policy, not to mention the opium culture and how to deal with the opposing forces.

GD – On some issues, drugs, development, compromise is possible. As far as opium is concerned, the Taliban have proved that they know how to do it. For development, they could continue their current practice: political control (and collection), but assurance of security for the NGOs that have agreements with them. On other issues, conflicts are inevitable. For example, elections (other than symbolic ones) seem to me to pose an insurmountable problem, even if the Taliban have renounced the theocratic organisation they had set up in 1996. This directly raises the question of the possibility of independent media, of an opposition and above all of an alternation of power, I am pessimistic on this point because the whole political culture of the Taliban is opposed to it. Similarly, on questions of gender or education, and therefore implicitly the status of the Afghan bourgeoisie, tensions will probably be high (we can fear a major exodus of executives who have worked for international operators).

DH – Is a new generalised civil war a risk to be envisaged?

GD – We are already in a generalised civil war and the Islamic State in its local version will never rally to a political solution. So, for sure, this actor will continue to practice violence (anti-Shiite attacks, targeted assassinations, attacks against institutions). As for the other actors, the Taliban and the maintenance of a resistance in the North can envisage a pessimistic scenario in which the departure of the United States precipitates a major offensive. The duration of the confrontation will then depend, as is often the case in Afghanistan, on the support that the parties obtain. If the Taliban can count on Pakistani support, things are less clear for the groups in the North who could constitute a pole of resistance. The Russians seem to prefer the Taliban option for the moment and Indian support is not a given. The attitude of Western countries, starting with the United States, will probably depend on the Taliban’s attitude towards al-Qaeda.

Talks in Moscow in March 2021 between the Kabul government and the Taliban in the presence of the most concerned countries.

DH – To take a step back, after twenty years of war and faced with political and military failure, could the Taleban not have been involved from the start at the time of the Bonn agreements in 2001-2002 ?

GD – An amnesty and a form of reintegration of the Taliban could have been pronounced after their military defeat, the leadership of the movement seems to have been ready to return to Afghanistan in exchange for some guarantees. Another option was to take a hard line, but this would require decisive pressure on Pakistan, which was probably possible in 2002. But the policy followed was an in-between: neither amnesty nor pressure on Pakistan. The Afghan commanders opposed an amnesty and the American military never understood the Pakistani game.

DH – This website, Humanitarian Challenges, is particularly aimed at humanitarians. What lessons do you draw from your experience in the 1980s and since 2001 and what advice would you give them for the future?

GD – Afghanistan is one of the best places to observe the transformation of the humanitarian sector since the 1980s. To limit myself to one aspect, it seems to me that although humanitarian aid was sometimes amateurish in the 1980s, it was based on an extremely strong commitment and a desire to be with the population. The turning point in the 1990s, but especially in 2000, which is not specific to Afghanistan, is the creation of humanitarian bubbles where expatriates live among themselves with a shocking lack of contact with the population (apart from a few mediators). Moreover, NGOs have become, with a few exceptions, the operators of the large international or national institutions and have lost the role of itching powder that was once theirs, which is probably a pity.

DH – What is your final word?

GD – Perhaps we can underline the evolution of the perception and the commitment of the United States. We remember that a decade ago, during Obama’s first term, NATO forces numbered more than 150,000 men in a fight that was presented as existential for the Western countries. The duration of this war since 2001 makes it one of the most expensive for the US: two to three trillion dollars and thousands of deaths. These facts are neither new nor disputable, but the extraordinary silence surrounding the defeat in Afghanistan raises questions. If we look back at the post-2001 speeches justifying this war, two themes stand out – the fight against the jihadists and the dominant position of the United States on the international scene. On both counts, the US position has clearly deteriorated. In particular, the situation left by Western countries is unquestionably worse than the one they found twenty years ago. Al Qaeda, the main reason given for the invasion, is still, and increasingly, present in Afghanistan. Hundreds, if not thousands, of the movement’s fighters are based in the areas held by the insurgency. If the Taliban have indeed committed (at least since 2012) not to make Afghanistan a place for preparing anti-Western attacks, Al Qaeda fighters now have an impregnable sanctuary.

 

For more information, see Le Gouvernement Transnational de l’Afghanistan. Une si prévisible défaite, published in French.

 

 

 

 

 

Who is Gilles Dorronsoro ?

Gilles Dorronsoro is Professor of Political Science at Paris 1 Panthéon-Sorbonne, PI of the ERC Social Dynamics of Civil Wars, and author of “Le gouvernement transnational de l’Afghanistan, Karthala, 2021