GLOBAL CRISIS: Africa can be optimistic: Jacques Attali in an exclusive interview with The Courier

Jacques Attali, the former President of the European Bank for Reconstruction and Development (EBRD), is an economics expert highly regarded worldwide for his analyses and forecasts as well as the human, intellectual and aesthetic perspective he brings to economics. He believes Africa will fare better in the slumping global economy because its economy is less integrated.

© Pierre Holtz/IRIN

Attali was an advisor to former French President François Mitterrand and is currently a professor of economics at several universities, a novelist, a dramatist, a music critic, a pianist, a conductor and an essayist on the music industry amongst other things. He is also the chief executive of A&A (Attali et Associés), a consultancy firm specialising in strategy, financial engineering, mergers and acquisitions and economic and financial analysis. He has been described as the 21st century equivalent of an 18th century gentleman. His CV includes a degree with honours, a doctorate in economics, an engineering degree from the Ecole des Mines de Paris (MinesParisTech) as well as qualifications from the Institut d'Etudes politiques de Paris (Paris Institute of Political Studies) and the Ecole Nationale d'Administration (National School of Public Administration). Attali crosses boundaries as a matter of course. A socialist at heart, he prepared a report for the current French President Sarkozy, heading a committee of experts on a strategy to stimulate French economic growth.

As a political advisor and in his economic and sociological analyses, Attali has often underlined the negative global impact of the division of the world into a protectionist rich bloc that leaves the remaining countries out in the cold. He was one of the founders of the non-governmental organisation Action against Hunger, and in 1998, he set up PlaNetFinance, a non-profit organisation that has helped to create thousands of micro-finance institutions in around 60 countries. As part of his solution to the current financial crisis, he is proposing the effective participation of poor countries in future global governance which he considers vital because the economy is global. Various other proposals include that of a minimum global wage.

In terms of the impact of the present economic crisis on the countries of the ACP Group (in particular Africa), while acknowledging collateral effects such as a decline in recovery and the weakening of sectors like tourism, he believes that Africa will fare better because its economy is less integrated into the slumping global economy and because of its comparative advantages to the rest of the world.

Will poor countries in regions such as Africa, the Caribbean and the Pacific be badly hit by the crisis?

After the food crisis and the energy crisis, we now have a financial crisis. There is going to be a recession which will gradually affect the world’s economies. All of the poor countries will therefore be hit. Strangely, the African countries will perhaps be less badly hit than other countries and some will withstand it better, but it is still too early to know.

Is this because the African countries are not integrated into the global economy or because they have comparative advantages which will help them withstand the downturn better?

For both these reasons. They are only integrated into the global economy to a small extent except for the export of raw materials, which will continue even though this will be hit by the fall in the price of oil. They also have many comparative advantages. On the one hand there is the fall in demographic growth and on the other an internal economy geared towards themselves. They are not faced with problems linked to financial mismanagement as they were only involved in the financial system to a small extent. The countries that will suffer are primarily those which accepted foreign capital, strongly recommended to them, which the stock market and companies depended on.

What about countries in the Caribbean and Pacific which rely on tourism?

All of those countries directly dependent on developed countries, through tourism or flows of migrants, will be hit because migrants are the first to be affected by the crisis.

Can you foresee potential global catastrophes such as the weakening of democracy, even in Europe?

There is a risk of that, but I think that we will succeed in overcoming it because we have dealt with crises before and our democracies are well established and stable. However, violent movements linked to social minority groups cannot be ruled out in some countries in the event of a more precarious situation caused by unemployment.

Will the weakening of buffer countries between rich and poor states, such as China, have severe consequences for Africa?

China relies greatly on African countries for raw materials. I don’t think it will abandon its investments in Africa as it has lots of money and will want to continue strategically important activities.

In your positive forecasts, you foresee the establishment of a system of global governance similar to what the economist Keynes envisaged, but its introduction could be some way off, up to a century away. Your optimism is tempered by caution?

Yes, I don’t think mankind is ready for that yet. It will take some time. If the crisis was extremely bad, I believe it would speed the process up, but I hope this crisis doesn’t turn out to be extremely serious.

Isn’t there something inherent in human nature and nations which prevents global governance?

Listen, in Europe we have succeeded in establishing various systems of governance after a great deal of endeavour. It is just a matter of achieving on a global scale what has been achieved on a European scale, but that is no easy task. This shows the extent of the challenge.

What steps have to be taken to succeed?

I think the first step would be to merge the G7 and the UN Security Council and put the International Monetary Fund and the World Bank under the control of the Security Council. This is the first reform in a series of reforms which I describe in my book.* All of these institutions have to be reformed to ensure China as well as Africa and Latin America are represented.

Europe is in a position to act as a catalyst for such reform, but isn’t it too tentative when it comes to influencing the USA? We have seen disagreements between the French, British and German governments in recent years.

We urgently need to establish a Franco-German agreement. This is vital. Nothing substantial can be achieved in Europe without a Franco-German agreement and I hope it is reached soon. It is so important. I think common sense will prevail. The euro group already constitutes a European economic power and this needs to be strengthened. Then, the conditions need to be put in place to ensure this euro group is politically strong. Ideally, we would have a real European prime minister as Europe cannot be effective without political power. It will not succeed if it is just an economic power. The euro needs political power.

What about the refusal of important countries like Denmark and Great Britain to adopt the euro?

Well, we’ll have to do it without them. We can’t force them to join if they don’t want to.

Africa was proving very attractive as a business location before the crisis. There was a glimmer of hope. Won’t the crisis limit its appeal even if it hits Africa less hard?

No. I feel that if Africa is able to avoid civil war, it has great potential. Nigeria, for example, has huge promise. Civil war stops many people’s activities through hold-ups etc. If the situation in Somalia was to spread throughout Africa, all hope would be lost. If Africa could establish the rule of law, that would change everything. It just needs to do that.

There has been an upturn in Africa owing to internal growth geared towards itself, the initial establishment of the rule of law and the decline in demographic growth. The continuation of these key factors is important as well as the set-up of an efficient financial system for savings. If these conditions are met, there will be a lot of hope for Africa.

Lots of investors are currently showing an interest in Africa. I was at a meeting there yesterday about investment in Africa. There appears to be great demand.

That’s good news then?

Yes, good news for Africa.

* Jacques Attali, essay La crise, et après? (The crisis and beyond), Fayard, November 2008 (latest analysis of the financial crisis taking account of developments up to the end of October 2008 setting out solutions, the most significant of which is a system of global governance)

Hegel Goutier