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26 Mar
The Economic And Political Effects Of The CFA Zone
By Dr Gary K Busch
One of the Generic Ambien Buy Online most important influences in the economic and political life of African states which were formerly French colonies is Generic Ambien Buy Online the impact of a common currency; the Communuate Financiere de l’Afrique (‘CFA’) franc. There are Generic Ambien Buy Online actually two separate CFA francs in circulation. The first is Generic Ambien Buy Online that of the West African Economic and Monetary Union (WAEMU) which comprises eight West African countries (Benin, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal and Generic Ambien Buy Online Togo. The second is that of the Central African Economic and Generic Ambien Buy Online Monetary Community (CEMAC) which comprises six Central African countries (Cameroon, Central African Republic, Chad, Congo-Brazzaville, Equatorial Guinea and Gabon), This division corresponds to the pre-colonial AOF (Afrique Occidentale Française) and the AEF (Afrique Équatoriale Française), with the Generic Ambien Buy Online exception that Guinea-Bissau was formerly Portuguese and Equatorial Guinea Spanish).
Each of these two groups issues its own CFA franc. The WAEMU CFA franc is Generic Ambien Buy Online issued by the BCEAO (Banque Centrale des Etats de l’Afrique de l’Ouest) and the CEMAC CFA franc is issued by the BEAC (Banque des Etats de l’Afrique Centrale). These currencies were originally both pegged at 100 CFA for Generic Ambien Buy Online each French franc but, after France joined the European Community’s Euro zone at a Generic Ambien Buy Online fixed rate of 6.65957 French francs to one Euro, the Generic Ambien Buy Online CFA rate to the Euro was fixed at CFA 665,957 to Generic Ambien Buy Online each Euro, maintaining the 100 to 1 ratio. It is Generic Ambien Buy Online important to note that it is the responsibility of the Generic Ambien Buy Online French Treasury to guarantee the convertibility of the CFA to Generic Ambien Buy Online the Euro.
The monetary policy governing such a Generic Ambien Buy Online diverse aggregation of countries is uncomplicated because it is, in fact, operated by the Generic Ambien Buy Online French Treasury, without reference to the central fiscal authorities of any of the Generic Ambien Buy Online WAEMU or the CEMAC. Under the terms of the agreement which set up these banks and Generic Ambien Buy Online the CFA the Central Bank of each African country is obliged to Generic Ambien Buy Online keep at least 65% of its foreign exchange reserves in an “operations account” held at the French Treasury, as well as another 20% to cover financial liabilities.
The CFA central banks also impose a Generic Ambien Buy Online cap on credit extended to each member country equivalent to 20% of that country’s public revenue in the Generic Ambien Buy Online preceding year. Even though the BEAC and the BCEAO have an Generic Ambien Buy Online overdraft facility with the French Treasury, the drawdowns on those overdraft facilities are Generic Ambien Buy Online subject to the consent of the French Treasury. The final say is Generic Ambien Buy Online that of the French Treasury which has invested the foreign reserves of the Generic Ambien Buy Online African countries in its own name on the Paris Bourse.
In short, more than 80% of the Generic Ambien Buy Online foreign reserves of these African countries are deposited in the “operations accounts” controlled by the Generic Ambien Buy Online French Treasury. The two CFA banks are African in name, but have Generic Ambien Buy Online no monetary policies of their own. The countries themselves do not know, nor are Generic Ambien Buy Online they told, how much of the pool of foreign reserves held by the Generic Ambien Buy Online French Treasury belongs to them as a group or individually. The earnings of the Generic Ambien Buy Online investment of these funds in the French Treasury pool are supposed to Generic Ambien Buy Online be added to the pool but no accounting is given to Generic Ambien Buy Online either the banks or the countries of the details of any such changes. The limited group of high officials in the French Treasury who have knowledge of the amounts in the “operations accounts”, where Generic Ambien Buy Online these funds are invested; whether there is a profit on these investments; are Generic Ambien Buy Online prohibited from disclosing any of this information to the CFA banks or Generic Ambien Buy Online the central banks of the African states.
This makes it Generic Ambien Buy Online impossible for African members to regulate their own monetary policies. The most inefficient and Generic Ambien Buy Online wasteful countries are able to use the foreign reserves of the Generic Ambien Buy Online more prudent countries without any meaningful intervention by the wealthier and Generic Ambien Buy Online more successful countries. The fact that as the French GDP grows and Generic Ambien Buy Online the parity of the Euro to the dollar (the main currency of international trade) appreciates there is Generic Ambien Buy Online the constant danger that the CFA franc may be fixed at too high an Generic Ambien Buy Online exchange rate. This dampens the growth in trade between Africa and Generic Ambien Buy Online the rest of the world and allows other countries, especially in Asia, to Generic Ambien Buy Online use their more flexible exchange rates to gain market share, supplanting the Generic Ambien Buy Online Africans.
The creation and Generic Ambien Buy Online maintenance of the French domination of the francophone African economies is Generic Ambien Buy Online the product of a long period of French colonialism and the Generic Ambien Buy Online learned dependence of the African states. For most of francophone Africa there is Generic Ambien Buy Online only limited power allowed to their central banks. These are economies whose vulnerability to Generic Ambien Buy Online an increasingly globalised economy is increasing daily. There can be no Generic Ambien Buy Online trade policy without reference to currency; there can be no investment without reference to Generic Ambien Buy Online reserves. The politicians and parties elected to promote growth, reform, changes in trade and Generic Ambien Buy Online fiscal policies are made irrelevant except with the consent of the Generic Ambien Buy Online French Treasury which rations their funds. There are many who object to Generic Ambien Buy Online the continuation of this system. President Abdoulaye Wade of Senegal has Generic Ambien Buy Online stated this very clearly “The African people’s money stacked in France must be Generic Ambien Buy Online returned to Africa in order to benefit the economies of the Generic Ambien Buy Online BCEAO member states. One cannot have billions and billions placed on foreign stock markets and Generic Ambien Buy Online at the same time say that one is poor, and Generic Ambien Buy Online then go beg for money.”
How Did This Happen?
This system of dependence is Generic Ambien Buy Online a direct result of the colonial policies of the French Government. In the Generic Ambien Buy Online immediate post-war period after the signing of the Bretton Woods Agreement in July 1944 the Generic Ambien Buy Online French economy urgently needed to recover. To assist in this process it Generic Ambien Buy Online set up the first CFA amongst its African colonies to guarantee a Generic Ambien Buy Online captive market for its goods. The principal decision which resulted from Generic Ambien Buy Online the Bretton Woods Agreement was the abandonment of the Gold Standard. In short, the Generic Ambien Buy Online new system gave a dominant place to the dollar. The other currencies saw their exchange rate indexed to Generic Ambien Buy Online the dollar. The reserves of the European central banks at that Generic Ambien Buy Online time consisted of currencies of dubious post-war value and gold which had Generic Ambien Buy Online been de-pegged from the fluctuations of the currency. For this reason France needed the Generic Ambien Buy Online currencies of its colonies to support its competitiveness with its American and Generic Ambien Buy Online British competitors. De Gaulle and his main economic advisor, Pierre Mendès France met with some African leaders and Generic Ambien Buy Online developed a Colonial Pact which would enshrine this is in a Generic Ambien Buy Online treaty (with both public and secret clauses). The genius behind this was Jacques Foccart, France’s “Mister Africa”.
Decolonization south of the Generic Ambien Buy Online Sahara did not happen as de Gaulle had intended. He had Generic Ambien Buy Online wanted a Franco-African Community that stopped short of total independence. But when Generic Ambien Buy Online Sekou Toure’s Guinea voted “no” in the Generic Ambien Buy Online 1958 referendum on that Community, the idea was effectively dead. Guinea was cast into outer darkness because of its decision and Generic Ambien Buy Online a Community of sorts came into existence, but the call of full independence proved too strong to Generic Ambien Buy Online resist.
Not really having planned for Generic Ambien Buy Online it, in 1960 de Gaulle had to improvise structures for Generic Ambien Buy Online a collection of small newly independent states, each with a Generic Ambien Buy Online flag, an anthem, and a seat at the UN, but often with precious little else. It was here that Generic Ambien Buy Online Foccart came to play an essential role, that of architect of the Generic Ambien Buy Online series of Cooperation accords with each new state in the Generic Ambien Buy Online sectors of finance and economy, culture and education, and the Generic Ambien Buy Online military. There were initially eleven countries involved: Mauritania, Senegal, Cote d’Ivoire, Dahomey (now Benin), Upper Volta (now Burkina Faso), Niger, Chad, Gabon, Central African Republic, Congo-Brazzaville, and Generic Ambien Buy Online Madagascar. Togo and Cameroon, former UN Trust Territories, were also co-opted into the Generic Ambien Buy Online club. So, too, later on, were Mall and the former Belgian territories (Ruanda-Urundi, now Rwanda and Burundi, and Congo-Kinshasa), some of the Generic Ambien Buy Online ex-Portuguese territories, and Comoros and Djibouti, which had also been under French rule for Generic Ambien Buy Online many years but became independent in the 1970s. The whole ensemble was put under a Generic Ambien Buy Online new Ministry of Cooperation, created in 1961, separate from the Ministry of Overseas Departments and Generic Ambien Buy Online Territories (known as the DOM-TOM) that had previously run them all.
The key to Generic Ambien Buy Online all this was the agreement signed between France and its newly-liberated African colonies which locked these colonies into the Generic Ambien Buy Online economic and military embrace of France. This Colonial Pact not only created the Generic Ambien Buy Online institution of the CFA franc, it created a legal mechanism under which France obtained a Generic Ambien Buy Online special place in the political and economic life of its colonies.
The Pacte Coloniale Agreement enshrined a Generic Ambien Buy Online special preference for France in the political, commercial and defence processes in the Generic Ambien Buy Online African countries. On defence it agreed two types of continuing contact. The first was the Generic Ambien Buy Online open agreement on military co-operation or Technical Military Aid (AMT) agreements, which weren’t legally binding, and Generic Ambien Buy Online could be suspended according to the circumstances. They covered education, training of servicemen and Generic Ambien Buy Online African security forces. The second type, secret and binding, were defense agreements supervised and Generic Ambien Buy Online implemented by the French Ministry of Defense, which served as a Generic Ambien Buy Online legal basis for French interventions. These agreements allowed France to have Generic Ambien Buy Online predeployed troops in Africa; in other words, French army units present permanently and Generic Ambien Buy Online by rotation in bases and military facilities in Africa; run entirely by the Generic Ambien Buy Online French.
According to Generic Ambien Buy Online Annex II of the Defence Agreement signed between the governments of the Generic Ambien Buy Online French Republic, the Republic of Ivory Coast, the Republic of Dahomey and Generic Ambien Buy Online the Republic of Niger on 24 April 1961, France has priority in the Generic Ambien Buy Online acquisition of those “raw materials classified as strategic.” In fact, according to article 2 of the agreement, “the French Republic regularly informs the Republic of Ivory Coast (and the other two) of the Generic Ambien Buy Online policy that it intends to follow concerning strategic raw materials and Generic Ambien Buy Online products, taking into account the general needs of defence, the evolution of resources and Generic Ambien Buy Online the situation of the world market.”
According to article 3, “the Republic of Ivory Coast (and the other two) inform the Generic Ambien Buy Online French Republic of the policy they intend to follow concerning strategic raw materials and Generic Ambien Buy Online products and the measures that they propose to take to Generic Ambien Buy Online implement this policy.” And to conclude, article 5: “Concerning these same products, the Republic of Ivory Coast (and the two others) for Generic Ambien Buy Online defence needs, reserve them in priority for sale to the French Republic, after having satisfied the Generic Ambien Buy Online needs of internal consumption, and they will import what they need in priority from Generic Ambien Buy Online it.” The reciprocity between the Generic Ambien Buy Online signatories was not a bargain between equals, but reflected the actual dominance of the Generic Ambien Buy Online colonial power that had, in the case of these countries, organised “independence” a few months previously (in August 1960).
In summary, the Generic Ambien Buy Online colonial pact maintained the French control over the economies of the Generic Ambien Buy Online African states; it took possession of their foreign currency reserves; it Generic Ambien Buy Online controlled the strategic raw materials of the country; it stationed troops in the Generic Ambien Buy Online country with the right of free passage; it demanded that all military equipment be Generic Ambien Buy Online acquired from France; it took over the training of the police and Generic Ambien Buy Online army; it required that French businesses be allowed to maintain monopoly enterprises in key areas (water, electricity, ports, transport, energy, etc.). France not only set limits on the Generic Ambien Buy Online imports of a range of items from outside the franc zone but also set minimum quantities of imports from Generic Ambien Buy Online France. These treaties are still in force and operational.
The creation of such a Generic Ambien Buy Online system was not the preserve of the French National Assembly or Generic Ambien Buy Online the result of any democratic process. It was the result of policies conducted by a Generic Ambien Buy Online small group of people in the President’s office, the ‘African Cell’, initially led by Foccart. For the Generic Ambien Buy Online past half-century, the secretive and powerful “African Cell” has overseen France’s strategic interests in Africa, holding sway over a Generic Ambien Buy Online wide swath of former French colonies. Acting as a general command, the Generic Ambien Buy Online Cell uses France’s military as a Generic Ambien Buy Online hammer to install leaders it deems friendly to French interests. In return, these countries give French industries first crack at their oil and Generic Ambien Buy Online other natural resources. Sidestepping traditional diplomatic channels, the Cell reports only to Generic Ambien Buy Online one person: the president. The Cell’s close ties to Generic Ambien Buy Online oil giant Elf Aquitaine, where top executives were jailed on corruption charges, was a Generic Ambien Buy Online source of embarrassment. And a former Cell chief has now been Generic Ambien Buy Online convicted of charges related to arms trafficking to Angola. These highly contentious policy issues never came before any of France’s democratically-elected bodies. African policy is Generic Ambien Buy Online the personal fiefdom of the President’s office.
This was true for De Gaulle, Mitterand, Giscard D’Estaing and Generic Ambien Buy Online Chirac. Sarkozy apparently has no contacts or ambitions in this Generic Ambien Buy Online field and has left Chirac’s Cell in place.
The Impact of the Colonial Pact
Some of the Generic Ambien Buy Online consequences for the Africa countries of the continuation of a policy of dependence are Generic Ambien Buy Online obvious – lack of competitive options; dependence on the Generic Ambien Buy Online French economy; dependence on the French military; and the open-door policy for Generic Ambien Buy Online French private enterprise. However, there are more subtle differences which arise.
The French companies in francophone Africa, by virtue of their protected monopolistic or Generic Ambien Buy Online oligarchic status, contribute a substantial share of the GDP of these countries. More importantly, however, they are Generic Ambien Buy Online often the single largest group of taxpayers. In many of these countries the Generic Ambien Buy Online French corporations pay over 50% of the Generic Ambien Buy Online national tax revenues collected. This gives them a unique status. Quite frequently the Generic Ambien Buy Online French say that without the French companies the economy of the Generic Ambien Buy Online African state will collapse. When coupled with the inability of the Generic Ambien Buy Online country to access its reserves it undoubtedly true. However, it Generic Ambien Buy Online doesn’t follow that Generic Ambien Buy Online private corporations from other countries, like the U.S. or China, would not contribute equally. This is Generic Ambien Buy Online one reason that the French are so concerned with allowing competition into the Generic Ambien Buy Online market place.
Another aspect of this Generic Ambien Buy Online is the inability of these francophone countries to collect taxes from Generic Ambien Buy Online its ordinary citizens. In a country like the Ivory Coast which has Generic Ambien Buy Online been divided for a number of years between the rebel North and Generic Ambien Buy Online the loyalist South, tax collections in the rebel regions have been Generic Ambien Buy Online impossible. The rebels have waxed fat on taxes and fees imposed on their captive populations and Generic Ambien Buy Online the sale of stolen goods from their regions. They do not want to Generic Ambien Buy Online disarm because it will have a deleterious economic effect on them, not just a Generic Ambien Buy Online political one.
The lack of a Generic Ambien Buy Online citizenry paying taxes breeds a gulf between the government and the Generic Ambien Buy Online citizens; mutual responsibility is missing in the equation. It is the Generic Ambien Buy Online job of the National Assembly to legislate for programs based on the Generic Ambien Buy Online supply of revenue to the state, but if there are insufficient revenues the Generic Ambien Buy Online National Assembly is frustrated in its role. If 80% of the Generic Ambien Buy Online funds go to France as part of the CFA franc project there is Generic Ambien Buy Online little left for the ministers and the National Assembly to Generic Ambien Buy Online allocate for social programs.
In many of the Generic Ambien Buy Online francophone countries, suffering under conditions of drought, lack of food; lack of health care; it Generic Ambien Buy Online is only French ‘aid’ to the national treasuries that sustains them. This ‘aid’ is often their own money which the French have shepherded for them.
There are Generic Ambien Buy Online many in Africa who have seen and understood the problem of the Generic Ambien Buy Online CFA franc and the Colonial Pact. Mamadou Koulibaly, the President of the Generic Ambien Buy Online National Assembly in the Ivory Coast has been an outspoken critic of the Generic Ambien Buy Online Colonial Pact and the dominance of the CFA franc. He has Generic Ambien Buy Online written an excellent book on the subject and gives speeches and Generic Ambien Buy Online interviews on the subject regularly. The problem is that very few people understand the Generic Ambien Buy Online fundamental iniquity of this French system; including many Africans.
If African nations are Generic Ambien Buy Online to achieve growth and participate fully in the opportunities of globalisation they must be Generic Ambien Buy Online freed from the fetters of this colonial albatross. In order to Generic Ambien Buy Online attract additional direct investment in the economies, as opposed to just portfolio investment this Generic Ambien Buy Online situation must be changed. In the words of President Koulibaly, “In Africa we do not need alms, our problem is Generic Ambien Buy Online not due to a lack of money. My conviction is that Generic Ambien Buy Online we must first of all clearly state our ownership rights over our own land and Generic Ambien Buy Online the resources in our soil which were taken away by the Generic Ambien Buy Online colonialists when they conquered our countries, and still be taken away through the Generic Ambien Buy Online Colonial Pact”.
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