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Angola: Failed yet Successful
AfricaFocus Bulletin
Aug 10, 2009 (090810)
(Reposted from sources cited below)
Editor's Note
"In recent years [Angola's] economy has grown at a feverish annual
rate of 18 percent. Its government has successfully ended 40 years
of violent conflict, consolidated its political base and negotiated
profitable deals with major public and private bodies of the United
States, Europe and China. [Yet oil revenues may begin to decline by
2015] ... the current development model is thus a ticking political
time bomb. The coming decade will reveal whether that bomb will be
defused or not."
In a 38-page paper published by FRIDE, an international think tank
based in Madrid, long-time Angola analyst David Sogge explores the
historical roots and the current prospects of Angola's
contradictions, including the complex intersection of national and
international political economies of oil and governance systems.
Sogge explores not only the present and near-term configuration,
linked to expanding oil revenues, but also the prospect of a
medium-term decline in oil revenues.
That decline, Sogge notes, may begin as soon as 2015, posing new
challenges for the collaborative arrangements between international
capital and local elites and new opportunities to raise questions
about democratic accountability and more inclusive development.
This supplemental AfricaFocus Bulletin, available on the web but
not distributed by e-mail, contains excerpts from Sogge's report,
entitled "Angola: Failed yet successful." The full text, including
footnotes, is available on the FRIDE website at
http://www.fride.org/publication/599/angola-failed-yet-successful,
Another AfricaFocus Bulletin sent out today focuses on recent
forcible evictions in communities in the Angolan capital Luanda, as
well as other recent reports on Angola.
For previous AfricaFocus Bulletins on Angola, visit
http://www.africafocus.org/country/angola.php
For a selection of recommended books on Angola, visit
http://www.africafocus.org/books/southern.php or
http://www.africafocus.org/books/southern_uk.php
++++++++++++++++++++++end editor's note+++++++++++++++++++++++
Angola: Failed yet successful
by David Sogge
April 2009
FRIDE - Fundación para las Relaciones Internacionales y el Diálogo
Exterior
http://www.fride.org/publication/599/angola-failed-yet-successful
For years, as a former Cold War battleground, Angola has stood out
on world league tables of 'failed' or 'failing' states. Yet its
army has a formidable record of domestic and foreign combat. Its
national oil company is of world class. In recent years its economy
has grown at a feverish annual rate of 18 percent. Its government
has successfully ended 40 years of violent conflict, consolidated
its political base and negotiated profitable deals with major
public and private bodies of the United States, Europe and China.
For such a country, how valid is the label 'failed state'?
In light of this seeming paradox, this paper addresses several
critical questions. What are the historical roots of conflict in
Angola, and of its weak and uneven state and political
institutions? How deeply is Angola's political economy integrated
into international systems, and what aspects of that integration
help explain both the weaknesses and strengths of state and
political institutions? What formal and informal forces and
incentives are at work in Angola's territorial political economy
that affect state and political resilience and weakness?
It concludes by suggesting ways European and other international
decision-makers might look afresh at notions of state weakness in
general, and their relevance to the case of Angola in particular.
Executive summary
The analysis seeks to respond to key questions about Angola posed
in the project's guiding purposes and methodology.
These appear in three clusters:
- What are the historical taproots of conflict in Angola, and of
its weak uneven state and political institutions?
- What formal and informal forces and incentives are at work in
Angola's territorial political economy that affect state and
political resilience or weakness?
- What aspects of the integration of Angola's political economy
into international systems may help explain the persistence of weak
state and political institutions?
...
Globalised Angola - the past
What forces have driven Angola's emergence as a nation and polity?
How have they shaped its economy, social identities and politics?
This chapter offers a short overview, laying out the background to
later chapters focused on the main research questions. Conventional
wisdom holds that state fragility in Africa stems chiefly from the
inner drives of elites themselves. They are in the dock as greedy,
corrupt, scornful of sound policy and driven by primitive ethnic
rivalries. Yet in a political economy like Angola's, where Western
interests have set the ground rules and incentives for five hundred
years, the power of such essentialist views to explain anything is
not great.
Angola's polity may be better understood by assessing the interplay
of a number of factors:
- unremitting violence, both overt and structural;
- an economy geared to serve outside interests; * a state apparatus
and politics based on generations of dependent, territorially weak,
militarised, centralised and corrupted processes designed for
colonial purposes and thus ipso facto antidemocratic;
- inequalities generated by uneven and extraverted development;
- public goods and services provided chiefly in response to elites,
and lacking any grounding in transparent, democratic processes;
- a political space for associational life ('civil society') that
is severely confined and largely de-politicised.
...
Conclusion [to section]
Over hundreds of years, Angola's foreign overlords had put in place
a political economy based on overt and structural violence, an
ever-changing but lucrative order serving chiefly a rentier class
in the colonial metropole and consumers in the USA and Western
Europe. Foreign interests built up a 'limited access order' that
restricted privileges and rents to a narrow elite. The state
mirrored social hierarchies based on the restricted allocation of
assets, economic predation and a coercive, militarised approach to
public order. Colonial and post-colonial elites showed no interest
in creating an 'open access order' based on citizenship for all and
competitive markets.
A path was laid down around a weak but autocratic colonial state
dependent on outside powers. Mediocre institutions and underskilled
people were additional legacies. Angolan nationalist movements,
their leaders imbued with norms of a 'limited access order', and
habituated to the use of armed force, had no ready alternatives
when they assumed power
Globalised Angola - the present
...
Oil and geopolitics
In the short run
Oil became Angola's top revenue-earner in 1973, a mere five years
after its first appearance in export statistics and some 18 years
after pumping began at the country's first commercial well. Oil
radically raised the political stakes. It led impoverished Portugal
to cling more violently to her colonies. It encouraged the United
States to promote a devastating war against Angola and at the same
time make money from it. The combined impact of those conflicts,
rising revenues and the massive political influence of the oil
industry in Western democracies have made oil decisive in Angola's
political economy.
Angola's case illustrates the oil industry's geo-political
privileges. It gets a laissez-passer across even the best-guarded
ideological boundaries. Until 1974, western oil firms' revenues
bankrolled the Portuguese war effort. Yet when the Portuguese
departed, those same oil firms effortlessly switched their
allegiance to the triumphant African leadership in Luanda. The
White House worked hard to stop the sharing of oil revenues with
the 'Marxist Leninists', yet American oil companies easily
sidestepped those pressures and had no qualms about cultivating
cordial and profitable relations with the new 'leftist' government.
Indeed, before the US Congress, a senior American oil company
executive defended its tax and royalty payments on grounds that
they enabled the Angolan government to improve popular living
conditions, the very claim the 'Marxist Leninists' made to
legitimate their struggle. Five of the world's eight largest
corporations - Chevron, BP, Exxon/Mobil, Royal Dutch Shell, and
Total - created the hydrocarbon sec tor in Angola. They continue to
expand their s takes there to the present day. Alongside some
smaller ones such as the Italian ENI/AGIP (27th largest corporation
in the world), they wield not only technical but also financial and
political power in Angola and in geo-political spheres in which
Angola is embedded.
Angola's case can be understood in light of the commanding
influence the hydrocarbon industry holds over the political classes
in many Western democracies, especially the United States. That
industry finances political parties, fields thousands of lobbyists
and shapes public debate and opinion through the media and think
tanks.. Also in Western capitals, hydrocarbon-exporting
dictatorships and sheikdoms make their presence felt in spending
power and in regiments of public relations operatives. For their
part, western politicians pay close attention to the wishes of
those autocracies, sometimes blocking probes into their corrupting
influence in Western public life.
According to a leading former oil executive, Western governments
subsidise the hydrocarbon industry to the tune of $200 billion a
year. Oil industry power affects geopolitics via national
governments, but also via the scaffolds of global governance. The
industry codifies and enforces international financial and legal
mechanisms matching corporate requirements. Among crucial
mechanisms are offshore financial centres that shield oil revenues
and personal wealth from taxation. National governments also
promote hydrocarbon investments with World Bank loans. They deploy
naval, air and ground forces to secure oil shipments and to protect
oil-producing client states. Western governments have regularly
promoted oil interests through covert action or open invasions.
In Angola's case, the United States provided very few of its own
forces, opting instead for a covert war by way of national and
regional proxies. In Angola, the political class resides onshore
but is anchored financially offshore. Its power depends on its
partnership with oil corporations and the technical, financial,
diplomatic and military resources they provide directly or
effectively guarantee. Yet the partnership is not one of equal
risks and benefits. For example, the terms of Production Sharing
Contracts cushion oil corporations against price fluctuations,
thereby exposing Angola to most risks of income volatility.
Companies' technical and financial control prevents outsiders,
Angolan authorities included, from knowing with any precision what
actual oil output and profits are. Shielded by national and
supra-national rules crafted through massive lobbying, oil
corporations use transfer pricing and bank secrecy to put their
revenue beyond anyone's tax jurisdiction. An industry expert notes:
'In the Gulf of Guinea, the foreigners pump the oil, and sell it to
themselves (often keeping two sets of books, and squirreling away
the difference in Swiss bank accounts).' An IMF report estimates
that Gulf of Guinea oil exporting governments lose about half the
value of oil actually exported.
A report on tax losses to mineral exporting poor countries
concludes that 'there is plenty of evidence that through a
combination of hard-nosed negotiating tactics and the use of
sophisticated offshore financial products and services, royalty
payments for such resources to developing countries, particularly
in sub-Saharan Africa, have been far lower than they should be.' In
short, Angola may be as much sinned against as sinning. ...
Angola remains outside the Extractive Industries Transparency
Initiative, although in 2004 it began to release somewhat more
information on oil revenues. The largest operators in Angola are
among the industry's worst performers when it comes to publishing
what their operations actually yield in profits or what payments
they make to the government. This basic bargain among elites thus
rests on a mutually assured denial of information to the public.
For their part, oil corporations require a credible sovereign
state, one that is solid enough to comply with contracts as
enforced by international lawyers, judges and mediators and to
exercise a monopoly of coercive power in zones relevant to the
corporations.
Thanks to oil revenues, the Angolan state has become capable of
both. It remains dependent and unevenly developed, but has built
alliances with colluding political and corporate actors abroad. As
discussed below, Angola's political class has used its partnerships
to acquire its own technical capacities in the oil sector, as well
as capacities in military, financial and media realms.
In the longer run
Angola's known oil and gas reserves are relatively modest, being
far smaller than those of Nigeria or Saudi Arabia. Its oil output
is projected to peak in 2010. Between 2015 and 2018, Angola's
petro-dollar-based national budget could flip from surplus to
deficit if no alternative sources of state revenue are found. The
hydrocarbon sector currently absorbs around three-quarters of all
investment but generates only a fraction of one percent of all new
employment. By contrast, the agricultural sector absorbs less than
one percent of recorded new investment18 but could generate massive
new employment.
Should Angola persist in its current pattern of elite-centred
consumption and hydrocarbon-centred production, it will probably
face a serious downturn by around 2020. The revenue shock triggered
in 2008 by falling oil and diamond prices (accompanied in all
likelihood by accelerated capital flight) provides a foretaste of
what may lie ahead. The next decade could see an abrupt end to
rising expectations among urban strata who aspire to stable middle
class lifestyles. The current development model is thus a ticking
political time bomb. The coming decade will reveal whether that
bomb will be defused or not.
...
Integration in trade and investment
By 1985, ten years into the post-colonial period, Angola faced
increasing disorder: more war, further deterioration of basic
utilities and infrastructure, a rural economy in collapse and
volatility of oil revenues. By 1986 these had shattered the dreams
of Luanda's central planners about economic self-reliance,
including the substitution of imports with home-made goods. Once a
major exporter of food, Angola by 1990 was importing more than half
its food needs, as well as many other basic goods. Trade in
imported goods became a key source of profit for rich people and of
informal employment for the rest. Licenses to import provided
access to hard currency credit; they thus became patronage plums,
with military commanders among the first to get the fruit. Informal
commerce with Zaire and South Africa flourished.
Thousands of Angolans became long-distance traders, importing
consumer goods by air from Brazil, Portugal and the Far East. As
illustrated in this chart, foreign direct investment exploded, with
profits and other outflows now surpassing inflows in net terms.
Consumer desires and consumer culture have since mushroomed, fed by
rapidly-growing publicity and marketing industries in which
Brazilian and Portuguese firms dominate. Advertising and consumer
images saturate national print and electronic media, whose content
is largely imported from Brazil, the US and Portugal. Wants, needs
and aspirations are under continual upward pressure as images of
Western lifestyles spread and intensify.
Chinese trade and investment have radically shifted the pace and
direction of Angola's integration. Total trade volume has grown
explosively, reaching US$ 25.3 billion in 2008, roughly 14 times
what it had been in 2000. Angola is now China's number one trading
partner in sub-Saharan Africa. Chinese business presence is
expanding, driven largely by national loans and lines of credit
tied to its national firms and lubricated by elite interchange via
trade fairs and semi official trade promotion agencies such as the
International Lusophone Markets Business Association (ACIML).
Competition among foreign suppliers of goods and services is thus
sharpening, affording Angolan government elites yet more
negotiating power. Portugal remains, however, Angola's chief
commercial supplier, as well as a major investor.
Financial integration
Few countries are more globalised financially than Angola. As of
1998, it was one of only seven economies whose recorded gross
external assets and liabilities exceeded their recorded gross
domestic products. Since 2002, thanks to an explosion of loans,
credits, capital flight and Angolan investments abroad, its
financial integration has only deepened. Angola's engagement with
world capital markets has occurred without the mediation or
blessing of the Bretton Woods institutions; Angola has never taken
an IMF loan.
However, in the late 1980s the government began introducing some
standard Washington Consensus policy formulas, showing particular
enthusiasm for measures favouring upward redistribution. These
included a stop to consumer food subsidies and the sale of public
assets - all important signals to domestic and foreign business
interests that the era of state socialism was at an end. Angolan
financial surpluses have for decades excited the interest of
foreign banks and purveyors of credit - an excitement reciprocated
by Angolans seeking to put their monies discretely offshore.
Collusion between foreign and national elites has made Angola a net
exporter of capital for decades.
From 1985 through to 2004 its estimated capital flight totalled 216
percent of recorded GDP, ranking it among the most severe cases of
financial haemorrhage in sub-Saharan Africa. Outflows take place
through a mix of corporate misinvoicing, bribes and simple
transfers by wealthy individuals. Quantities of capital flight and
uncollected tax revenues are not known with precision. That massive
information deficit is a deliberate outcome of special privileges
granted to offshore financial centres by Western governments, in
large part thanks to hard lobbying and political contributions by
the financial industry. These legal arrangements have helped make
the economic life and public governance more fragile not only in
Angola, but in many other places including Western democracies.
After 2002 Angola became a hot new destination for the financial
industry, backed by enthusiastic officials from Western capitals.
In 2007 the US Assistant Secretary of State for Africa projected
Angola as one of the continent's three main hubs alongside Nigeria
and South Africa. A Western diplomat told a reporter, 'There's a
general feeling that if we are not a player in Angola in the next
five years we will have missed the best opportunity in Africa.'
Official banks and export credit agencies of Brazil, China, France,
Germany, Portugal and Spain have scrambled to extend new credit,
while Angola has settled old debts. Private banks and insurance
companies arrive every year to set up shop.
World Bank assessments of Angola's business climate are not
flattering, but pro-market American think tanks give it relatively
good ratings, chiefly for its mild tax regime and deregulated
trade. The US government approves of its financial integration
measures, such as easy outward transfer of revenues. Indeed, more
money continues to flow out of Angola than goes in, as shown, for
example, in data on foreign direct investment in the period
2005-2007. Where Angola's money actually goes is not publicly
known. But if its revenues follow those of other oil exporters, the
chief beneficiaries are American.
In a study entitled Recycling Petrodollars, three economists of the
US Federal Reserve conclude, 'Although it is difficult to determine
where the funds [from petrodollars generally] are first invested,
the evidence suggests that the bulk are ending up, directly or
indirectly, in the United States.' ... most of Angola's recorded
offshore assets are managed by the state holding company Sonangol.
That company's core business is oil, including major shares in oil
firms in Gabon, Congo and Equatorial Guinea, where it also
furnishes security advice. But it has diversified widely, including
interests in Portuguese energy and banking firms....
Integration - conclusion [to section]
In a continent marked by extraverted political economies, Angola's
is an extreme case. Its main export is produced increasingly
offshore. Most of what it consumes is imported from abroad.
Financially it is deeply tied to Western financial markets, and now
to Chinese banks as well. Political and military leverage at home
and abroad depend on strategic cooperation with foreign suppliers.
In short, Angola's political economy is deeply enmeshed with
external circuits and actors. Under Portuguese rule, its economy
was geared to global markets thanks chiefly to agrarian exports.
That output stimulated consumption, which fed back into investment
and further production onshore.
Oil and war changed all that. They fuelled politics that destroyed
the agrarian economy and displaced the population to urban areas,
which are now the demographic centre of gravity. These urban
enclaves are poorly linked with local production systems; earnings
and investment capital depend on markets driven by consumption
(mainly of hydrocarbons) elsewhere in the world, as well as by
casino-like speculation. Domestic politics therefore have little to
do with reciprocal relations between citizens as payers of taxes or
producers of goods on the one hand, and a political class in need
of those taxes and goods on the other. Crucial sources of political
power stem from Angola's reliance on global systems that supply
revenue, goods and means of coercion - all taking place
increasingly under US diplomatic and military protection.
Integration offshore thus stabilises and shapes a 'limited access
order' onshore, as described in more detail in the following
chapter.
Angola's onshore political economy
...
Military and security systems
For generations Angola has been hammered by war, its history
'irrigated by the blood of the victims'. Angolan and non-Angolan
actors in pursuit of power and wealth have, before trying anything
else, usually taken paths of violence and coercion. The effects
have been cumulative. In response to the 'rollback' war launched
against it, the MPLA threw together, with East Bloc help, a force
that later grew into a competent, battle-hardened army. Thanks to
a US-led crusade against it, to a flow of petrodollars and to a
free market in military goods and services, Angola is today a
highly militarised and 'securitised' place, one capable of
deploying forces affecting politics in other African countries.
Relative to the size of its population, Angola's military, police
and paramilitary forces are the largest in sub- Saharan Africa,
with the probable exception of Eritrea
As of 2005, close to half a million people were on the payroll of
the Angolan Armed Forces, although less than a third of them were
on active duty. Many tens of thousands more serve in regular and
irregular police forces, the Presidential Guard and the secret
services. Alongside those public forces, private security companies
have grown. As of 2004, nearly two hundred private security
agencies employed around 36 thousand people, mainly in Luanda and
in diamond mining zones. These firms have bought and sold in a
shadowy public-private market structured more by political
relationships (the leading security companies having been acquired
by senior military officers) than by open competition.
In formal terms, civilian politicians have always had the upper
hand over the Angolan military and security branches. Informally,
however, their authority has depended on pacts with senior military
officials. ...
... After the war's end in 2002, the security sector absorbed some
of the 130,000 demobilised excombatants. Incorporation of more than
5000 former Unita soldiers and generals into the national army and
police force was an important gesture of reconciliation. Training
and upgrading have followed, often with foreign support. The
leadership has worked to cement officer corps' allegiance by
cultivating personal loyalties based on both formal benefits such
as promotions and pensions and on informal benefits. In the wave of
privatisations of the 1990s, senior military figures acquired urban
real estate and former state farms.
Their routes to accumulation included access to discounted dollars
and to commercial brokerage positions, especially quasi-monopolies
over flows of certain imports or exports - lucrative privileges
obtained through patronage. Backed by substantial spending (some of
it off-budget), clientalist systems keep command structures unified
and loyal. Sub-streams of patronage branching downward help cement
political allegiance in other levels of society. With the important
exception of Cabinda, a modest majority of Angolans claim to trust
the armed forces. Otherwise, overt police coercion has been
directed chiefly toward those lacking all political protection:
migrant workers in diamond zones, low-income residents living on
prime urban real estate and episodic protestors such as students.
These increasingly face 'hybrid' policing - joint operations of
formal police with private security services - a 'privatised'
approach in which information is legally unobtainable, complaint
procedures become dead ends and no officials can be held to
account. Meanwhile, the deployment of secret police and the use of
informants seem to be growing, penetrating even local NGO networks.
Risks to public security in Angola are, at first glance, serious.
In successive waves of demobilisation since 1992, many tens of
thousands of ex-soldiers have been dumped into labour markets,
where very few have found decent jobs. Moreover, Angola is awash
with private firearms: 21 per 100 civilians, one of the highest
ratios in the non-Western world. Violent crime is certainly
present, yet its incidence is well below what might be expected
given the unfavourable equation of firearms-plus-jobless youth. A
2007 survey of Angolan businesses showed much lower incidence and
effects of theft and other crimes than elsewhere in Africa. ...
Politics onshore
Putting formal institutions at the service of informal power
According to its Constitution, Angola is a parliamentary democracy.
It operates through executive, legislative and judicial branches
whose separate powers allow for checks and balances among all
three. In formal terms, the public can make its voice heard through
multiple parties, civil society organisations and public media.
However, this formal framework is only loosely related to the ways
politics actually work. Informal rules and relationships prevail,
usually behind the legitimating fa‡ade of formal arrangements. The
reality is that Angolan politics pivot on the President's office,
'Futungo'. It manages clientalist systems through a state apparatus
welded together at many points with the dominant party, the MPLA.
...
The country's first elections in 1992 gave the MPLA 59 percent of
all seats; those of 2008 gave it 87 percent. For all practical
purposes, the status quo of the pre-1992 one-party system has thus
been restored. Political debate and checks-and-balances thus take
place largely within the precincts of the party/governmental
leadership, behind closed doors. A formal legal system has never
been accessible to ordinary Angolans. Today the judicial branch
remains weak and subordinated to central authorities. Its deficits
in staff and operating systems are gradually being addressed.
Courts enjoy a certain amount of public confidence. But there are
few precedents of citizens bringing suit against the authorities.
...
Through its command of the airwaves and powers to intimidate or
buy off critics, the regime controls and colours the information
available to most of the public. Self-censorship is rampant.
Comparative indexes compiled by Reporters Without Borders and
Freedom House commonly rank Angola's press freedoms among the more
restricted in Africa, though not among the most restricted. A
recent analysis by a veteran media and human rights activist paints
a somber picture of independent media becoming further confined,
drained of staff and eclipsed by state and private media which
churn out pro-regime images and frivolous entertainments.56
The public at large, and probably some in the political class, are
kept in the dark about essential political and economic matters.
Transparency about official budgets is among the most restricted in
the world. In these ways, informed, open politics face major
barriers. ...
Central authorities steer and finance sub-national governance in
layers down to local levels. They appoint all senior sub-national
officials, and create or dissolve institutions (branches of
parastatal companies, funds, commissions, programmes, etc.)
according to their wishes. While a few may consult residents at
local levels, every subnational government is accountable only
upward, ultimately to the top authorities in Luanda. Authority is
centralised, but provincial deputies have occasionally been granted
discretionary powers. In negotiations with Unita, the MPLA
expressed willingness to allow the President's choice of provincial
governors to be influenced by electoral outcomes.
...Since 2005, with Brazilian conceptual and technical advice, a
pilot project for 'decentralisation' has been underway in 88 key
districts, home to about 70 percent of the population. In 2009, all
of Angola's 167 districts are to receive US$ 5 million each to be
spent according to a locally-formulated District Master Plan
approved in Luanda.
A Decree-Law of 2007 mandates public consultation on local
development plans and related issues, thus opening modest official
spaces for citizens' voices to be heard at local levels. However,
forums for politics made by citizens themselves are unwelcome. It
is far from clear that promised electoral competition at local
levels will change that. ...
The territorial reach of state agencies remains weak, but
performance of some key tasks is growing stronger. The collection
of taxes, customs revenues and electricity payments improving, from
a low base. The regime's capacities to get its messages across via
radio, and limit alternative messages, are strong, certainly
contributing to the MPLA's landslide victory in the September 2008
parliamentary elections. Other public sector tasks have seen uneven
advances: road surfaces and water systems have been improved,
especially in the urban zones of salaried strata. Indicators of
formal schooling - number of students, teachers and classrooms -
had by 2008 more than doubled over 2002 levels.
Health systems have also expanded, but results have been mixed. ...
During the war years, the MPLA leadership ultimately overpowered
domestic rivals with both military coercion and material
persuasion. It gained allegiance of former rivals by furnishing
access to perks, property and privileged means of extracting rents
and access to foreign exchange. These measures neutralised more and
more opponents, convincing most to ally themselves to the MPLA
government in an ever broader elite coalition. ...
Aspiring new business, professional or bureaucratic groups thus
face strong incentives to ally themselves vertically rather than
laterally, and to frustrate or quash rivals and their proposals.
...
However Angola's extraverted economy and the post-war surge in
foreign investment big and small are creating new opportunities for
accumulation beyond the purview of the ruling party. These range
from formal sector business licenses and credit lines to informal
sector trading, labour and transport circuits. With external
business partnerships multiplying, some observers thus see
Futungo's control over accumulation onshore as not absolute but
relative.60 Nevertheless, although deals between big Angolan
entrepreneurs and foreign businesses occur regularly, central
authorities work hard to maintain tight, vertical control over
access to main streams of revenue and the assets that underlie
them.
...
Hence onshore consumption and production are hardly a basis for
reciprocal politics binding the political class to citizens. Oil
dependence is commonly thought to make states unstable. The causal
chain is roughly as follows: oil dependence -> breakdown of
citizen-state reciprocity -> political fragility -> war. But the
Angolan case offers no clear confirmation of this hypothesis; on
the contrary it is consistent with statistical studies indicating
that oil wealth tends to prolong and stabilise autocratic regimes.
Most rentier regimes 'have generally avoided the substitution of
oil for statecraft.' An important part of statecraft is the
redistribution of rents to better-off consumers and formal sector
businesses.
This takes place unobtrusively by way of low charges, and in some
cases non-collection of charges, for state-supplied housing, fuels,
electricity, water and air transport. Such de facto subsidies, the
'colonisation' of the civil domain by creating foundations and NGOs
answerable to them. ...
A test of Angola's elite bargains will be that of presidential
succession. As of 2009 there is no evident 'crown prince'. The
choice of successor to President dos Santos will fall to a
'selectorate' of senior political and military figures. Toadying,
back-stabbing and falls from grace have long been part of Futungo
court politics, but current elite pacts appear to be broadly
robust. With no one faction seriously at risk, a smooth succession
process seems entirely feasible
Economic growth, political sociology and state resilience
Economic growth onshore has accelerated since 2002. It has
reproduced some of the polarised and outwardly-oriented patterns of
Angola's colonial past. Guiding it are rules, plans and public
subsidies reflecting preferences of political elites and foreign
investors. The leadership talks frequently of 'sustainable
development' but makes its choices mainly according to 'high
modernist' development models of dubious sustainability seen in
other rentier settings such as the Persian Gulf. There has been a
surge in the creation of consumer needs, and, for some, the
satisfaction of those needs.
Beyond the state/party nomenklatura, the lucky few include members
of business, professional and other advantaged strata whose
spending power, thanks to being reinforced by benefit schemes for
elites (foreign scholarships, medical treatment abroad, etc.) and
choices of investment (shopping malls, multi-lane highways for
Luanda, etc.) underpin their vertical allegiances. Some de facto
subsidies, such as for fuel, also reach low-income urban dwellers,
and thus may blunt some hard edges of inequality in cities.
Crucially, the leadership's patronage systems have included elites
in peripheral zones. ...
The social 'reach' of patronage beyond elites is, however, not
unlimited and may risk falling short of rising expectations of the
poor majority. Earlier surveys of public opinion suggest that only
a minority of people see their lives getting better. Assuming
Angolans see things as do citizens elsewhere in Africa, they
probably sense that poverty as they experience it has worsened. In
mobilising public revenues, onshore production and exchange matter
little in formal terms; indeed, many economic circuits operate
beyond the reach of the authorities.
As in most of sub-Saharan Africa, the unregistered 'informal'
economy accounts for most of the labour force and a sizable share
of spending, saving and investment. Conventionally seen as made up
of self-reliant entrepreneurs, Angola's informal economy is in fact
composed of owners, owner-operators and those earning wages or
commissions. Only a minority of participants in the informal
economy are single, self-employed entrepreneurs. Angola's formal
and informal economies do not exist in separate compartments; they
are better seen as two dimensions of one interconnected whole. Most
unregistered economic circuits are subordinated to the formal
economy.
Participants in the informal economy are not so much excluded from
the formal economy as adversely incorporated into it. Close study
of goods markets in cities reveals complex hierarchies of informal
businesses and workers dependent on formal businesses and agents of
the state. ,,, Poor petty traders, the majority of whom are female,
have always faced bullying and shakedowns by the police,
particularly the 'economic police' (Policia Fiscal).
By contrast, economic agents further up supply chains can expect
deference and cooperation. ... In official utterances, the
authorities are bent on suppressing the informal economy,
particularly its expression in sprawling urban marketplaces. Yet
for the time being the informal economy's existence is not at risk.
There are too many elite interests at stake in its continuation.
Its commercial domains are vital to systems that move imported
goods from wholesale levels controlled by holders of franchises
granted through political patronage to consumers. It serves as a
social buffer or sponge to absorb the majority of work-seekers and
to curb organised, militant activism arising from workers, whether
formal or informal. ...
In 2009 the government launched a modest credit programme for small
commercial farmers, but there are few other signs of official
interest in promoting small or medium enterprises. The political
class may oppose independent banks not only because they would
promote social blocs beyond their control. Formal rules and
informal 'encouragement' by state authorities limit the likelihood
that substantial autonomous business strata could emerge. The
Promotion of Angolan Private Entrepreneurs Law of 2003 adds formal
suasion to informal mechanisms coupling business interests with
state patronage.
The state has taken steps to dominate wholesale commerce, promoting
a parastatal supermarket chain built up with Brazilian corporate
expertise. Elsewhere in Africa, this sector is lucrative and has
given rise to large autonomous business dynasties; perhaps for that
reason in Angola the sector is being cornered in order to reinforce
state/party power, not compete with it. The government puts foreign
business under particular pressure to engage Angolan nationals as
employees, as sources of goods and services and especially as
'partners' in enterprises and projects. In identifying who gets
access to these tasks and 'partnerships', official patronage
systems are always at hand.
...
According to a 2008 survey of public opinion, Angolans have less
confidence in major corporations than any other major institution,
even less than in political parties. Both the state and its
corporate partners worry about each others' public profiles as well
as their own. Displays of corporate philanthropy led the government
to levy a special tax on large corporations called the 'social
bonus'. Until around 2002 these payments went to Sonangol,
thereafter to the central treasury. There are no full public
accounts of either sources or ultimate uses of these funds;
'leakage' to clientalist networks cannot be ruled out.
Oil companies like Chevron and Exxon seek to show 'social
responsibility' through charitable good works in zones where they
operate. Increasingly, however, they are subsidising national
programmes of the United Nations, international NGOs and bilateral
agencies like USAID. Through such patrimonial largesse, foreign
corporations exert influence over agencies mandated to help
eliminate corrupt, unequal influence in Angolan governance.
Informants to this study with experience of oil company
philanthropy in Angola see little value in its approaches or
effects. Their negative views are consistent with findings
elsewhere in the Gulf of Guinea that cast serious doubt on stories
of positive outcomes of oil industry 'social responsibility'. Like
agencies in the official aid system, corporate donors have favoured
projects in health care, education, training and infrastructure
such as roads - purposes that normally would fall to the public
sector. Corporate philanthropies followed the official and
nongovernmental aid agencies in usually failing to engage with the
public sector in constructive ways. The church and its
institutions, and other private service providers, were major
beneficiaries of the aid system.
Towards the end of the war years, it had become clear that aid
agencies had 'played a critical role in the privatisation of the
Angolan state and its de-linkage from society.' Today, despite
interesting projects to reinforce public sector capacities, donors
(including oil corporations) continue to by-pass and substitute for
the public sector. Such initiatives easily win government approval,
as no major state outlays are required yet officials will usually
get a share of the credit. In the longer term, however, such
foreign aid approaches can undermine state resilience. This is
especially so where, as in Angola, they are combined with rising
privatisation and the commercialisation of health, education and
other services. The resulting stratification of services further
dissolves any social contract and can contribute to social
exclusion and the further hollowing-out of public sector
legitimacy.
Conclusion
After nearly four decades of upheaval, Angola has stabilised. War
and rising oil wealth have reconfigured the country's political
economy and demography. Offshore flows eclipse onshore economic
circuits and reinforce a central autocracy whose politics follow a
logic of clientalism legitimised by the rules and procedures of
formal democracy. Despite the pacification of politics and the
undeniable gains in collective self-esteem, there are signs of
continuity, indeed of 'path dependence'. Decades after abandoning
Soviet-style central planning, and embracing supervised but
predatory kind of capitalism, the postcolonial regime today
replicates the dirigisme and external orientation of the colonial
era. In terms of coercive power over national territory, Angola's
state is now more resilient than fragile. The political game may be
played in part by nontransparent, arbitrary and personalised rules,
but there is at present no alternative version of them. The state's
monopoly of coercive power is today virtually complete, having
marginalised putative separatist movements both militarily and
politically. Its publicprivate police system operates effectively,
if sometimes brutally.
Leadership of the security forces has been, with only minor
exceptions, loyal and unified. Given the absence of serious
security threats, the massive size of the military/security
apparatus can be explained in part by its politically stabilising
powers to provide jobs and income and to discourage dissent. In
terms of control over economic life, the state shows resilience in
a number of key respects, although abundant petrodollars may mask
structural weaknesses. Its agents effectively supervise the
allocation of property and sources of rents, capital inflows and
outflows, money supply and inflation, etc.
For a variety of economic, political, and military purposes, the
leadership has built up a large, competent state holding company
with a number of 'shadow state' functions. Over the informal
economy, state powers and motivations are mixed. Officially the
state seeks to curb and strictly control it in urban areas. But
informally the stance is often one of laissez-faire, as some of the
elite's rent- and profit-making activities depend on informal
circuits and the cheap reproduction of a docile labour force
surviving in the informal economy. Predatory systems are thus at
work in labour markets, but potentially more destabilising is the
predatory acquisition of assets, chiefly land, on behalf of local
and foreign private interests.
Capping the appearance of state resilience is the regime's
political legitimacy. As of 2009 that looks unassailable. The
MPLA's triumph in the parliamentary elections of 2008 was too
massive to be attributed only to manipulation of the system and of
ignorant and dissenting voters, though those things certainly
played a part. For memories of war are still fresh; some people
feared a return of instability like that following the last
elections in 1992. ...
The current petrodollar-based development model is not that of a
'developmental state', being too narrowly geared to satisfying the
lifestyle preferences of elites and a few other non-poor strata.
The 'elite bargain' underpinning it could be threatened by
conjunctural factors, such as the further collapse of oil revenues
or severe losses in offshore speculative investments. But in the
longer term it faces structural challenges. New enterprise-based
elites only tenuously subservient to regime patronage are likely to
emerge. The regime may find it hard to block that development.
...
Ways forward
The foregoing pages have looked at state fragility and resilience
in Angola in light of the country's deep integration with global
systems. External players set the stage for and helped fuel four
decades of war and economic upheaval. Yet it was internal ones,
including a stronger army and consolidated political control, that
finally brought that terrible period to an end. Angola's state and
governance are thus a complex amalgam of the weak and the strong,
the domestic and the foreign. Today Angola's politics remain
entwined with powerful outside actors and are still politics of
limited access to assets and privileges.
State/party elites pursue their interests on the basis of
understandings with foreign extractive and banking corporations,
and with foreign governments, not least for assurances of military
protection. Angolan elites harbour social and economic ambitions,
but those do not now include a developmental state pursing a
socially inclusive agenda. Against such a background, and the
relative strength and autonomy of key branches of the Angolan
state, what options are open to Western and international policy
makers?
Coherence in Western policy and global governance
Adopting a coherent perspective is one place to begin. This paper
has presented reasons to see the main issues in Angola as not
confined to its territory but deeply entwined with interests and
systems at supranational levels. It has also noted reasons to see
Angola's current economic boom as something that, as in earlier
episodes in the country's economic history, will go bust. Lenses to
look at Angola's current and future prospects should firstly be
wide enough to include global systems, and secondly be telescopic
enough to see beyond the next few years to include the (not-toodistant)
era when oil revenues begin to taper off.
A wider view
A wider perspective would be more coherent to the extent that it
includes the array of foreign and domestic incentives facing
Angolan elites as well as non-Angolan actors collaborating with
them. Such a view would offer a more realistic understanding of
power and of who really counts in the 'international community'.
...
That perspective would pull into focus the structure of incentives
facing Angolan elites that stem from international circuits of
money, goods and means of repression, and on the institutions
making them nontransparent and otherwise resistant to public
control.
Among other things it would include:
- Offshore financial centres and political arrangements that
perpetuate them;
- Capital flight and the mechanisms, such as misinvoicing, that
perpetuate them;
- Disproportionate influence exercised by extractive industries,
such as through their subsidisation and spending powers in public
life, both in Angola, Western Europe, the USA and perhaps
elsewhere;
- Military arrangements, especially with China and the USA,
- Initiatives to make these and other private supranational flows
(also of arms and military services) transparent and subject to
public control.
The current world economic crisis, with the financial sector at its
heart, has exposed the massive regulatory deficit in national and
global governance. Some political leaders have raised hopes that
this governance deficit is going to be tackled. Yet preferences for
'soft law' and for corporate self-regulation are deeply entrenched.
Political classes in the USA and Western Europe are meeting strong
push-backs from corporations, tax havens and the financial industry
abetted by mainstream media, much of which is in hands of
corporations benefiting from nontransparency rules and other forms
of global bad governance. Angola's involvement in these politics is
not clear, although tough talk from OPEC (of which Angola holds the
presidency at present) suggests its collusion in political
counter-offensives in global forums.
A longer-term view
A longer-term perspective would be more coherent to the extent that
it looks beyond Angola's current oil boom, which is likely to have
passed by 2020. That view would necessarily consider today's
development model and its likely consequences in ten years' time
against a backdrop of more-or-less clear trends, such as
demographic changes, and less predictable but looming risks, such
as water stress due to climate change.
Enabling a responsive state
Foreign governments, business oracles, international financial
institutions and Washington DC think-tanks express enthusiasm about
Angola's 'miracle'. The cautious development economist Paul Collier
speculates optimistically about Angola and the autocratic model he
sees it exemplifying: "It is quite possible that the next quarter
century will see this model of the developmental autocrat ruling a
strong state spreading to countries with better opportunities.
Angola, with its oil and its Atlantic coastline, could well prove
to be another Malaysia."
Angola's state is today stronger than might have been expected. It
beat back a serious Cold War effort to overthrow it, widened its
political base and consolidated itself as a stable autocracy. But
public administration and services remain weak and unevenly spread.
Consumption and investment have shot up, but there is no sign of it
becoming a 'developmental' state.
As long as powerful and poorly-regulated offshore incentives
continue to shape elite motivations and visions of Angola's future,
the prospects for transformation - a broad developmental vision,
state autonomy from special interests, an effective bureaucracy and
entrepreneurial class - look anything but bright.
This conclusion has three implications:
First, as an extraverted polity, Angola's developmental space
extends well beyond the country's territorial borders. The regime
depends overwhelmingly on nontransparent, supranational
arrangements in realms of military and corporate power, including
the management of financial stocks and flows. That extraverted
basis of political power seems likely to continue, even if domestic
interest blocs develop.
However, beyond 2015, after oil output and revenues have peaked and
debt payments begin to fall due, those offshore arrangements could
lose their attractions. Angola's historical pattern of economic
boom and bust, and of successive development models launched only
to end up shipwrecked, appears to be repeating itself. To escape
this pernicious cycle, Angolans themselves must gain the widest and
best informed spaces possible for open discussion. Today, at a time
of unprecedented economic and ecological crisis, the means and
imperatives for an in-depth debate have intensified. Important
tenets of capitalist growth are being critically re-visited.
Alternative models appear more viable and even necessary. It is
time to adopt a new compass and chart another way forward.
Second, and in the meantime, a 'developmental state' along the
lines of Vietnam or Malaysia is unlikely to emerge in Angola. A
pluralist model - a polity based on many competing forces in an
open political arena - is also improbable. More likely therefore is
a scenario of inequitable, unsustainable growth shaped by state
patronage backed from abroad by US military and economic power.
Under these circumstances, a realistic way forward in the short
term is to promote a 'minimally responsive state', one that would
act as chief duty-bearer toward a rights holding citizenry.
As the government rolls out 'decentralisation', formal spaces for
citizen-state interaction may open to some extent. Precedents for
state-society engagement are already present in such areas as the
co-production of health and education services with church bodies
and NGOs, and in consultative platforms of residents and local
authorities, or of parents and school officials.
Third, amidst today's economic crisis, unprecedented opportunities
are at hand to reform supra-systems and incentives that promote and
perpetuate distorted and non-transparent governance both in
countries like Angola and Western democracies.
There is a need for more active engagement by consuming publics,88
by academic and think-tank researchers, investigative journalists
and media gatekeepers, and by officials and public watchdogs. As
the persistence of institutional weaknesses and dangerous
inequities in Angola can be traced to the lack of good public
governance at supra-national levels, today's crisis is an
opportunity for progressive advances both in Angola and elsewhere
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