Authors: François Soulard – World Democratic Forum; Guillermo Robledo, Clelia Isasmendi, Eduardo Murua – Pedro Arrupe Wealth Observatory.
As a result of the Anti-CFA Front’s initiative in Africa, on 11 February this year a series of actions will be undertaken in twenty-five countries and three continents to protest at financial colonialism and to debate new proposals. Could these be the seeds of an intercontinental front for a new financial and monetary system?
The world is in turmoil and continues to strip bare almost all the links of our archaic political architecture and global economics. This has been the case in the economic sphere since the financial earthquake of 2007-2008 revealed the extent to which neoliberal logic continues to hegemonize political agendas and blur its contradictions in the form of reactionary, neo-colonial and exclusive projects. The shattering data on world inequalities(1) as seen in the latest OXFAM report go some way to reflect this reality.
However, the transition towards a multipolar world and the contradictions of the capitalist system generate a new return of politics in the terrain of the financial and monetary system. These systems have been continuously embedded in the globalization that began with the economic order agreed on at Bretton Woods in 1945 and in the last forty years of neoliberal globalization. A wave of monetary disobedience is growing at social bases but also at national and regional level, resignifying monetary systems and reorienting them towards new social and geostrategical paths.
One clear example of this movement has been coming to light since late 2016, in a group of fifteen African countries in central and west Africa, where a monetary system inherited from the colonial era is in force. Various activist groups and sectors of the African diaspora have decided to pick up once again the debate about Financial Cooperation in Africa (CFA) which includes three economic blocks.(2) Fifteen countries have formed this sophisticated monetary structure since 1945, with the promise of attaining monetary stability and a quick transition towards economic development. Two mechanisms, well known in other regions, form the basis of this economic colonialism: the emission of debt in association with the restricting of national budgets (orchestrated by the IMF and the World Bank) and monetary “slavery”, both legitimized by a subtle apparatus of communicational and institutional influence, a strategy that renowned African economist Nicolas Agbohou(3) has no hesitation in describing as monetary “Nazism”.
Indeed, the facts show that the financial control implemented over the course of the 1970s is similar to that imposed by the Nazi regime during the Second World War in different occupied European countries. What does that translate to today in these African economic blocs? Essentially, this is a question of an architecture of technical, institutional and legal control, tying at one end the printing of money outside of the jurisdiction of the African countries, at the discretion of French diplomacy; and at the other end the handling of monetary flows based on four mechanisms: fixed parity between the euro and the CFA franc (acting as leverage to generate austerity and programmed devaluation); the centralization of exchange and operation accounts under the protection of the French Treasury (to capture African currencies); the free convertibility of the CFA franc to euros (to neutralize the capacity to issue money without there existing internal convertibility of the CFA franc among the three African economic blocs); and finally, the free transferability of African capitals to Europe (normalizing capital flight at institutional level).
Without going into the small print of this framework, its results can be seen in an evident rupture with the fundamental questions posed to the Sub-Saharan peoples: to become integrated with a project of their own in an unstable multipolar world and create a future for an African population that doubles in size every twenty-five years, with seventy per cent currently below the age of 35. Many of these fifteen countries are at the back of the queue of the world human development index and caught in a spiral of impoverishment, or rather in a sophisticated spiral of extraction of wealth and the subsidizing of the economies of the central countries. Let us remember that in the 1960s, the GDP of these countries was at the same level as South Korea, Cambodia and Vietnam. It is estimated that $50 billion is taken out of Africa every year (the equivalent of 3% of the GDP of Mali, 1% of Senegal, or 6% of Ivory Coast) (4).
Furthermore, Sub-Saharan economies are extremely primarized and balkanized, trapped by the old dogma of controlling inflation, unable to consolidate intra-regional trade relations (15% of economic transactions are internal), and without giving greater consistency to the incipient continental bloc project within the African Union. Ultimately, as highlighted by the African activists involved in this current citizen movement, the swapping of political sovereignty for economic submission at the time of independence ended up watering down that same sovereignty. However, the current cycle of world deflation and devaluation of prime materials is causing even more cracks to appear in this economic pact.
What has allowed such slavery to endure over time when other African countries have been able to show another way is possible? Monetary stability tied to the euro is an important factor. The weight of the post-colonial realpolitik and of the feudal pact of deference in exchange for diplomatic protection is also a key factor. Although various countries temporarily left the monetary union—such as Mali, Togo, Guinea-Conakry and Mauritania (which left for good), the African leaders who rebelled against this colonial order were overthrown by military force or other kinds of pressure. The two last cases were former Libyan president Muammar Gaddafi, who sought to establish a Pan-African project and currency, and Laurent Gbagbo in the Ivory Coast, who promoted the nationalization of the financial system of a country that represents 40% of the monetary mass of the subregional bloc.
But if we return to the analysis of economists Nicolas Agbohou and Bernard Lietaer, it is worth noting that the monetary systems were designed in the last century with a clear conscience of being a factor of homogenization and creation of monopolies at the service of the central power, a conscience that appears today to have been watered down over time for different social actors and citizens in general. Currency is a “total social fact” (relational, economic, political, spiritual) as anthropologist Marcel Mauss suggested. But it is perceived today as an “unidentified institutional object” in African societies, that is, as an abstract element, privatized and self-referential, distanced from the civic and political sphere.
This question in African countries is not exactly new. From the Bandung Conference of non-aligned countries to the processes of independence and national liberation, monetary sovereignty has always been under discussion one way or another. But the African youth, mobile and transnational, now appears to have a new image. Many young Africans educated in Europe or Asia, such as the protagonists of the Arab Spring in 2011, learned to relativize dogmas, to not be satisfied with the fate of geopolitical games, and to know the ins and outs of a system that confiscated their future and their wealth.
This African panorama gives us a good model for understanding the realities of other central and peripheral areas of the global economy. In Latin America, a profound phenomenon of monetary exclusion is still in place, a problem that paradoxically has not penetrated deeper in the agenda of progressive political projects in the last decade, despite the major crises that shook the region in the 1990s and 2000s.
Indeed, most Latin American countries can constitutionally print money through their central banks and the parliament can supposedly regulate budget decisions. There are blocs of political and economic integration with consolidated trade exchanges, such as the MERCOSUR. But the core of the issue is seen in terms of dependence on the dollar as a foreign currency for trade and access to the global market—in the absence of a regional monetary alternative—and that makes the banking system permeable for financial interests organized in production, trade and communication monopolies.
At heart, these monopolies have the power to define and legitimize the prices of the economy in most economic areas, to convert earnings made into foreign currency and transfer it abroad. They can implement this with the complicity or resistance of the state apparatus, with diverse formal nuances, depending on the correlation of political forces and the level of politicization of the financial question. But it is certain that there is a real network for extracting wealth and erodes social justice that bears a resemblance to the African mechanism we saw above.
Historically, Latin America economies have experienced cycles of banking crises that have further weakened the national currencies and generated a concentration in foreign currency, with endless consequences such as de-banking, the loss of national savings, difficulties in accessing loans, and financial speculation. These difficulties have consolidated the economic monopolies. There too the volume of capital flight at regional level challenges common sense: it is established that around $430 000 million leaves the continent(5) every year. In 2015, around $158 000 million entered the continent in the form of investment. In a country like Argentina, the regional champion of bimonetarism, the equivalent of $900 000 million has left the country in forty years of monetary duality reducing by a factor of 12 the value of the State’s tax collection.(6)
Although various popular governments have succeeded in confronting financial and economic monopolies in the period since the defeat of the Free Trade Area of the Americas (ALCA) in 2005, the systematic extraction of capital has been a fundamental factor in the erosion of the State and of economic dynamism. When prosperity fell due to high prices of raw materials, the concentrated economic powers managed to destabilize the three countries of the Caracas-Brasilia-Buenos Aires axis to reinstall submission to neoliberal dogma. Currencies in the region devalued by over 30% on average during 2014 and continue to devalue steadily against the dollar. Large amounts of external debt are once again being taken on, and it is hoped that direct foreign investments will drive investment, furthering the dependence and fragility of the economic system.
It is in this respect that the growing wave of local, complementary currencies emerging in different regions, which increased with the financial crisis of 2007-2008, becomes a crucial movement to dispute the single monetary order. Thousands of local currencies and exchange systems currently prosper in Europe and the world, fully hidden by the mass media and going against the tide of monetary monolithism in place in nation states. A recent study published in the journal Alternatives Economiques about forty experiences of local currencies in Europe shows us how images of the currency are being resignified here and now. The study shows that they are oriented towards reconstruction and territorial reparation (78% of experiences), the consolidation of social ties (61%), environmentally responsible consumption and the productive transition (51%), the democratization of the currency (49%), the stabilization of finances (49%).
The exchange communities created around these currencies are relatively limited, local and also fragile in their capacity to carry out a monetary project over time. Although the economic volumes in circulation are far from matching the financial circuits and their monopolies, the qualitative leap that they bring about is notable. They deeply question the monopoly applied to the imaginary, the common sense and the functions of the currency. Their challenges have to do with the capacity for popular mobilization and the construction of institutional relationships (such as paying taxes or services in the local currency). This micro-monetary movement does not have a centralized leadership, but it already has flexible forms of inter-connection (theoretical, social, territorial.)
Other movements related to this financial disobedience are embodied in the initiatives to occupy banks (Occupy Wall Street, Faucheurs de chaises), the boycott of certain financial groups involved in tax scandals or in the black economy of fossil energies, as well as the leaking of financial secrets (LuxLeaks, SwissLeaks, Panama Papers) and protests at new free trade treaties. These initiatives will continue to grow in the future. However, what we observe in the light of the struggles of the movement for another economy of the last thirty years is that the addition of a multitude of alternative experiences is far from bringing about a systemic change. In the current geo-economic transition, where the de-dollarization of the world economy constitutes an epiphenomenon, civil networks and social movements are called on to push for a new horizon of debate on the production and circulation of wealth.
The current situation is one of a capture of the financial system by concentrated groups and the colonial powers, operating in the legal field and in fact to transfer enormous volumes of a global wealth that has not stopped growing over the years. This system is acting on the population of the global south, which has 80% of the world’s natural resources and on the transnational middle class impoverished in a new cycle of austerity. Let us remember that 42 million people have left the middle class in the industrial countries since the end of the Cold War and that in 30 years the share of wages in the GDP of all the western countries has dropped by an average of 10%. Financial colonialism means that as well as unprecedented levels of concentration of wealth, the people must pay 98% of total taxes while the capital pays 2%.
All peoples are physically richer and at the same time impoverished from a dollar-based monetary system handled by eight foreign banks and 200 transnational companies. As Pope Francis and the African Diaspora boldly affirm again, currency is a central instrument of sovereignty and social justice. It is time to put back on the agenda the imaginary of a new monetary and financial world order by protesting against the main tools for assigning wealth: State budgets, taxes, and the printing of money.
(1) Report An Economy For the 99% https://www.oxfam.org/en/research/economy-99 , January 2017.
(2) The West African Economic and Monetary Union (UEMOA), the Central African Economic and Monetary Community (CEMAC) and the Union of the Comoros (UC).
(3) Le Franc CFA et l’euro contra l’Afrique, Nicolas Agbohou, Solidarité mondiale, 1999.
(4) According to Thabo Mbeki’s report, submitted and adopted at the 24th African Union Summit in Addis Ababa on 30-31 January, 2015, Africa has lost over $1 trillion in illicit financial flows in the last fifty years. http://www.francophonie.org/IMG/pdf/fluxfinanciersillicites_rapport_francais.pdf
(5) Total tax evasion is $350 000 million per year, according to CEPAL data, in addition to $180 000 million legally for transfers of balance of payments.
(6) According to calculations by the Economic Commission for Latin America and the Caribbean (CEPAL).
