Wednesday, December 20, 2006

Done Deal with Mittal Steel


We will soon know whether this is a gathering darkness or a new dawn.

Do we welcome Mittal's new deal with Liberia? Yes. This is a time to rejoice, let us drink in the good will and high spirits of the newly concluded deal.

Remember, a half a year ago it appeared that our government officials were about to rush in with approval. Thank goodness, they proceeded with greater caution and deliberation then the previous administration.

Face it, we now have a government better prepared than any in Liberia’s history to make the necessary calculations for the greater good of the citizens. Let us bask in the light of the rhetoric to date. Last week’s dispatch quoted Pres. Johnson-Sirleaf as saying, "With this agreement, which is consistent with the principles that attract and sustain foreign investment in Liberia, it is clear to the international private sector that Liberia is open for business." Mittal Steel now Arcelor Mittal asserted that, "This landmark agreement will bring the country investment of over US$1billion and is expected to generate about 3,500 direct jobs and about 15,000 to 20,000 indirect jobs in Liberia by the time full mining production is realized."

For now, let us suspend judgment and infighting and ignore the gloomy side of the process. The lack of transparency and the contradictory statements from Arcelor Mittal to date have been a little unsettling. The dark side of the deal will soon be exposed to the light of day. Therefore, good faith should prevail for the time being. This is the only foreseeable way for the project to move forward. What is good for the government is good for the people, right? It is remarkable, however, that no mention of environmental protection or sustainability have tempered the statements.

A word of caution: Trust but verify or we will be back to the old growth without development.

God Bless Liberia.
J. Carl DealyEarlyBird Foundation

Sunday, December 10, 2006

Chinafrica (9) Watching for PRC influence in Africa

Beware of Chinese bearing loans! Easy Credit Rip-offs may not be recognized in the midst of jubilations over our new found friends.

A recent article, "China loans create 'new wave of Africa debt," By Alan Beattie in London and Eoin Callan in Washington Published: December 7, 2006, is an inciteful warning; text follows:

Last updated: December 7 2006 22:00 The International Monetary Fund warned on Thursday that China's emergence as an alternative lender was creating a new wave of hidden debt in Africa as it backed its companies' expansion overseas with increasingly aggressive lending. Adnan Mazarei, a director at the fund, said action was needed "to avoid another round of debt accumulation" as emerging lenders such as China became an important source of funds.

An IMF official said that while it was working to strengthen surveillance, the fund did not have precise numbers or details about the amounts borrowed by poor countries. "This is a new situation," said Martine Guerguil, an IMF official. "We have new creditors." A report prepared by the IMF and World Bank shows China is the largest of six new creditor nations. The others are Kuwait, Brazil, India, South Korea and Saudi Arabia. It said lending by China had risen to $5bn in 2004, double the figure 10 years earlier. "The terms of emerging creditors' credits to LICs [low income countries] are not well known," it said. "Many have non-traditional financial structures [including implicit or explicit collateralisation, foreign exchange clauses and variable fees] that hamper the assessment of their impact on debt sustainability."

The fund and World Bank are dependent on voluntary co-operation from China, as it seeks to secure energy supplies and commodities in Africa and elsewhere in the developing world to fuel its conomic growth. James Adams, the World bank's vice-president for east Asia and the Pacific, said in Beijing the bank had proposed to China the idea of jointly financed projects. "We've had constructive discussions and we're pretty confident that we'll be able to find a broad range of activities where we can work together," he said. But Mr Adams said China had insisted it would not attach detailed conditions to its loans to governments in Africa and other developing regions. "Given that position, the challenge is in the areas that they want to work: is there an appropriate framework for investment and will that investment be productive?" he said. Chen Yuan, governor of the China Development Bank (CDB), the world's largest development institution by assets, said last week the bank's lending abroad would rise "very fast" as it backed the overseas push of China's state-owned energy and mineral companies into Africa and elsewhere.

Concern has risen sharply among rich nations' development ministries and international aid agencies that China's push into Africa could reverse their work of the past decade writing off African countries' official debts and making sure that aid was spent well. China has done deals in countries such as Sudan, in which it secured valuable oil concessions, where the World Bank's human rights and environmental safeguard rules prevent it operating. The CDB came under fire last year for its role in plans for a palm-oil plantation in a forested region of Indonesia. Philippe Maystadt, president of the European Investment Bank, an EU-backed financing institution, has said the EIB and other multilateral banks were losing projects in Asia and Africa to Chinese banks because they "don't bother about social or human rights conditions". Chinese officials have argued that China cannot be expected immediately to adhere to the same lending rules as rich donor countries, and that it helps African nations by building roads, railways, hospitals and schools in return for access to natural resources. Copyright The Financial Times Limited 2006


Costly Porcupine


This is based on a true story.

Once their was this country boy. He was always looking for something in the bush. As so many young men, he had an insatiable hunger for life itself and was sure in his knowledge of how to get along.

One day he was walking through his aunt's cocoa farm when he came to a large stand of bamboo. The shoots towered over him to a height of close to 25 feet and it was a long way around.

So the young man was walking along the trail that circled the bamboo stand, and he saw a huge porcupine dash into the bamboo just ahead of him. His first thought was, "man that would make one hellova soup."He ran back to his aunt's kitchen to fetch a chunk of fire coal. He was going to smoke that meat out. When he got back to the place where he first saw the porcupine, he knew he would have crawl into the bamboo bush. With the fire coal in hand he went in as far as he could and set a small fire. Then disaster struck.

Since the bamboo stand was so old there was plenty of dry leaf litter on the ground. The dry leaves caught fire almost immediately, and what a fire! The young man got out as fast as he could. Feeling lucky to be alive, he was helpless to put out the great fire he had started.As the blaze got more intense the bamboo exploded. Pow! Pow! Pow! It was as load as any gunshot. People from miles away could hear it and came running. They witnessed the fire as it was completely out of control jumping from the bamboo to the cocoa farm.

That was one of the most costly porcupines ever eaten! Half the cocoa farm was lost. Not just for that moment in time, but future production as well. From re-planting to producing plants would be another three to four years. From one foolish and impetuous young man thinking only of his own belly and eating for one day a prosperous future wasjeopardized.This brings to mind the situation in Liberia today. Are we to sacrifice our future on some risky scheme for a handful of jobs up at the mine and down at the port? If we stop to think about this in a mature manner, there could be much greater rewards. A clean safe environment, sustainable allied industries and a plan that takes our beloved Country beyond the 25 years of the Mittal Steel deal.

Accounts in the press since August related to the Mittal Steel Contract have discussed and emphasized that the sticking point has been control of Liberia's main port and railway line, which the original deal awarded to Mittal. The main port and railway line are a given in the minds of all Liberians and friends of Liberia. There is much more at stake. Are we going to settle for this concession?

Mittal Liberia chief executive Joseph Mathews has insisted the deal (with the Transitional Government) his company signed was legal. Who can dispute his statement recently in a BBC interview, "We went ahead according to whatever the rules were on the ground at that time." This probably included a backroom deal to transport Guinea's ore for a fee from the Rio Tinto mine across the northern border.

Of course Mittal's drum beat over the last half a year (in case someone is paying attention) is that they will be "Socially responsible". Mr. Mathews continues to say that Mittal is socially responsible and committed to providing health and education facilities, as well as suitable housing, to the people in their concession area. I hope it is true that Mittal will operate to the standards of the global community. Until, we see this in the contract, Mr. Mathews is just another big rusty man in a long line of duplicitous company men.

Here we are in December, and the decission from New York(!?) is due any time. I say that this porcupine is not enough. Could we be so foolish the smoke out this one thing and lose the farm and all the future benefits.

J. Carl Dealy
EarlyBird Foundation