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RIDING THAT TRAIN, HIGH ON COCAINE: Standard Gauge Railways In Kenya and Tanzania

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China colonises Africa
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Kenya has both narrow and standard gauge railways running in parallel between Mombasa and Nairobi. Tanzania is gearing up to build a standard gauge line to Morogoro and beyond while it goes ahead with rehabilitating the existing metre gauge line. The SGR is portrayed as an ambitious regional policy linking the six EAC countries, but without unprecedented cross-border cooperation and financial commitments, it is likely to end up as two costly unfinished initiatives: Luxury passenger trains from Mombasa to Nairobi and Dar to Morogoro and (maybe) Dodoma. As collateral damage, these politically driven projects sound the death knell of the existing railway networks, including moribund branch-lines, which have suffered from decades of neglect and poor management.

For better or for worse, most cross-border freight will continue to be transported by road thanks to the private fleets of trucks built up during the post-liberalisation years in Kenya, Tanzania and Uganda

For better or for worse, most cross-border freight will continue to be transported by road thanks to the private fleets of trucks built up during the post-liberalisation years in Kenya, Tanzania and Uganda. The political influence of the trucking lobbies will help keep the roads in a reasonable state of repair. In theory, China’s One Belt One Road initiative includes the EAC-wide SGR, but in practice the rollout of the new railway will depend on intra-EAC politics, the availability of Chinese loans, or other funding, such as a sovereign “railway bond.” Going further down this route would be a recipe for disaster.

KENYA: A NEW ‘LUNATIC EXPRESS’?

“In terms of industrialisation and job creation, the impact of the SGR will be massive.”[1]

On May 31, President Uhuru Kenyatta inaugurated the Madaraka Express, thus fulfilling one of his 2012 election promises ahead of the 2017 election. If as seems likely, he retains the presidency, he will be looking for funds to continue the Express to Naivasha and beyond. The government has sold Kenyans the notion that SGR is preferable in all respects to the existing metre gauge. It is modern, faster, safer and capable of carrying greater loads, Kenyans are told. The country’s overused and murderous roads will be given a breather as freight and passengers revert en masse to rail.

Implausibly large increases in freight are required to justify the costs involved, particularly if the SGR is to extend beyond Nairobi. At $3.8 billion, the first section of the SGR is considered highly overpriced

More sober analysis suggests that, beyond short-term gains in terms of greater customer convenience, the SGR is likely to be economically and financially unviable. Implausibly large increases in freight are required to justify the costs involved, particularly if the SGR is to extend beyond Nairobi. At $3.8 billion, the first section of the SGR is considered highly overpriced.[2] To continue the line from Nairobi to the Ugandan border would cost an additional $7.2 billion, nearly double the cost of the Mombasa-Nairobi stretch.[3] Speed is not a key issue for freight, which is where the potential profits lie. What matters is cost, predictability and reliability.[4] For the projected freight volumes and axle loads, upgrading the metre gauge would have been quite adequate, some argue, at a fraction of the cost of SGR, and could have been entirely financed through the Railway Development Levy on imports.[5] SGR’s purported advantages over other gauges have been over-hyped: Brazil and South Africa move much more freight than the EAC is ever likely to with metre gauge and Cape Gauge respectively. As to being modern, the standard gauge has been around since the 1840s, when the US government declared it as the standard to be followed in all future railway construction for interconnectivity purposes.[6]

Currently, 95% of the freight leaving Mombasa goes by road and three-quarters of all freight is destined for Nairobi. Extending the SGR beyond Nairobi is unlikely to be economically viable. Trains cannot compete with trucks for scattered destinations in Kenya and further afield.[7] Last, anything near the cost of the Mombasa to Nairobi line ($5.6 million per kilometre) would be difficult to sell to Kenyans or potential financiers, and a more reasonable construction cost per km would lay bare the rip-off of SGR Part 1.

Qalaa Holdings, the main Rift Valley Railway (RVR) concessionaire, are rightly worried that the SGR will put them out of business. In 2014, RVR received a $70 million loan from a consortium of international financing agencies, as part of their $287 million financing plan for the period 2011-16. Though progress has been slow, RVR has at least increased its freight volumes, from under a million tonnes in 2012 to 1.5 million tonnes in 2014.[8] In April, Kenya Railways Corporation served RVR with a termination notice for failing to pay fees and missing performance targets.[9] Uganda is also terminating its agreement with RVR, who are likely to sue the GoK /GoU for the loss of business occasioned by the opening of the new line.[10]

By the standards of political corruption in Kenya, the SGR arguably represents considerable progress. Whereas the Goldenberg and Anglo-Leasing scams involved simple looting of the Kenyan Treasury over largely bogus projects, the SGR gives Kenyans a spanking new railway

There is a view that KRC and Uganda Railways Corporation were never happy with the privatisation of the “lunatic express,” which was heavily leveraged by donors, and that the SGR will serve to kill it off once and for all. If this happens, there will be no freight service to Kampala until the SGR is extended. Moreover, all the narrow- gauge branch lines that could have been rehabilitated will be closed down once and for all.[11]

By the standards of political corruption in Kenya, the SGR arguably represents considerable progress. Whereas the Goldenberg and Anglo-Leasing scams involved simple looting of the Kenyan Treasury over largely bogus projects, the SGR gives Kenyans a spanking new railway that will whizz them between Mombasa and Nairobi in double quick time with (hopefully) minimum risk to life and limb. No wonder wananchi are cheering. Even if the railway is (say) a billion dollars (Ksh100 billion) overpriced, that’s still a snip compared with the cost of Goldenberg (an estimated 10% of GNP)! Unfortunately, the cost of running uneconomic services may in the long-run exceed the cost of Goldenberg and Anglo-Leasing combined.

But equally sobering is the fact that just to build the Mombasa to Kampala SGR would cost in the region of a quarter of Kenya’s 2015 GDP at present estimates. There must be other priorities.

TANZANIA: PLAYING CATCH-UP?

“The new train is expected to travel at high speed of 160 kilometres per hour…”[12]

President Magufuli’s SGR initiative is his flagship infrastructure development project, but finding finance has proven problematic.[13] In January 2014, the SGR process was endorsed enthusiastically by the Davos World Economic Forum, attended by President Jakaya Kikwete. An agreement signed in May 2015 with the China Railway Materials Group proposed a standard gauge line from Dar es Salaam to Mwanza, Kigoma and Msongati in Burundi costing $7.6 billion. China’s Exim Bank would fund 10% of the project, which was partly justified as a means of accessing large mineral deposits in Tanzania and Burundi, while Tanzania was tasked to find the balance from private sources. Rothschild, one of the world’s largest financial advisory groups, was hired as a contract advisor, and it was hinted that a consortium of private financiers was being assembled. No such consortium emerged, and there has been no more talk of private finance. [14] In February 2016, Minister of Finance Philip Mpango “set the record straight,” declaring that “Tanzania cannot afford financing the SGR project using our own funds.”[15]

Why did Tanzania decide that it too wanted to go SGR when the experts warned that it was not a good idea? In a 2009 study, Canadian Pacific Consulting Services concluded that the benefit of replacing metre gauge by standard gauge in East Africa would be ‘marginal.’

Consequently, the contract with the Chinese was cancelled over alleged irregularities in the tendering process. Seeking alternative finance, President Magufuli unsuccessfully approached South African President Jacob Zuma for a loan from the BRICS bank, and the World Bank president Dr Jim Yong Kim for an IDA credit.[16] Turkish President Recep Erdogan was also lobbied during an official visit.

In April this year, Magufuli settled for a Phase 1 SGR from Dar to Morogoro (194km) costing Tsh1 trillion ($450 million), to be financed out of the country’s development budget. The contract was awarded to a Portuguese-Turkish consortium, said to have been the only bidder.[17] Phase 2 should see the line extended from Morogoro to Dodoma (263km), for an additional Tsh1.5 trillion ($675 million).

Why did Tanzania decide that it too wanted to go SGR when the experts warned that it was not a good idea? In a 2009 study, Canadian Pacific Consulting Services concluded that the benefit of replacing metre gauge by standard gauge in East Africa would be “marginal.” The conversion of the rail backbone to standard gauge was considered “cost prohibitive” using “even the most optimistic” traffic and income projections. [18] In a 2013 study, the World Bank concluded that rehabilitating existing lines was the most promising option, with a cost of $0.18 million per km compared with $3.25 million per km for standard gauge, or 18 times more.[19] But earlier feasibility studies claimed the SGR was viable. For example, in 2003, the African Development Fund financed a feasibility study for a standard gauge line from Isaka in Tanzania to Kigali and Bujumbura (1,435km) that declared the project feasible and “attractive to private investors.” This and subsequent detailed engineering proposals costing millions of dollars were based on the assumption that the new line would be built from Dar to Isaka (953km)![20]

Like Kenya, Tanzania has a poorly performing railway linking Dar to the rest of the country.[21] In November 2016, Prof Makame Mbarawa, Minister of Works Transport and Communications, told a transport sector meeting of officials and donors that the government planned to both rehabilitate the existing Central Line and start the construction of the SGR. On June 2, Reli Assets Holding Company Ltd (Rahco), issued tender documents to rehabilitate the existing railway from Dar es Salaam to Kilosa, a distance of 283km, using funds from the World Bank’s $300m Tanzania Intermodal Rail Development Project (TIRP). Launched in 2014, TIRP has had a hard time getting off the ground. It appears that while Rahco was negotiating the rehabilitation project with the World Bank, discussions were also going on with the Chinese for an SGR loan. While rehabilitating the Central Line makes sense, and is long overdue, doing this and launching the SGR concurrently makes no sense at all.[22]

While rehabilitating Tanzania’s Central Line makes sense, and is long overdue, doing this and launching the SGR concurrently makes no sense at all

Tanzania aspires to replace Kenya as the largest economy in the region, and this rivalry spills over into reciprocal trade restrictions and disagreement over the Economic Partnership Agreement with the European Union that hinder rather than promote regional integration. Inter-regional trade is said to be declining.[23] It is to be hoped that the two countries will not get involved in a wasteful beggar-thy-neighbour competition over who can build the swankiest SGR to capture the modest business in the region, especially freight, including that of their landlocked neighbours.

EAC: CO-OPERATION OR COMPETITION?

The completion of the Mombasa-Nairobi section of the SGR does not guarantee that the remainder of the Kenyan portion to Kisumu and then on to the Ugandan border will be financed, let alone the Ugandan and Rwandan sections. Though China’s Exim Bank has financed the major part of the construction to date, it appears reluctant to advance further credit without guarantees that Uganda is committed to the project.[24] Both Rwanda and Uganda are weighing up the pros and cons of the Kenyan and Tanzanian SGR options.

The early promoters of the SGR sold the project as a major step towards East African integration and economic development, including stimulating mineral exports from the EAC, DRC and elsewhere. But the above discussion suggests that, far from constituting a co-ordinated strategy to promote EAC economic integration, the two SGRs in progress are competing for much of the modest cross-border freight business. Dar and Mombasa ports compete for transit traffic. When Dar announced in 2016 that it planned to impose VAT on goods in transit, importers switched to Mombasa.[25] Realising its mistake, the Tanzanian government removed the VAT, and now hopes to attract business back from Mombasa, helped with a $150 million loan from China to upgrade the port’s handling capacity.[26]

The completion of the Mombasa-Nairobi section of the SGR does not guarantee that the remainder of the Kenyan portion to Kisumu and then on to the Ugandan border will be financed

Two-thirds of the cargo arriving in Dar port stays in Tanzania, most of the rest heads for DRC, Zambia, Burundi and Rwanda. Most Mombasa cargo stops at Nairobi, as already pointed out. Thus, given the modest volume of freight destined for landlocked countries, the justification for an EAC-wide SGR cannot be based on facilitating cross-border trade, or its likely increase in volume in the foreseeable future. SGR apologists simply ignore the economics of the huge investments required to capture such little business. If one SGR is less than obviously viable, then two can only be disastrous.

KEEP ON TRUCKING?

One key element rarely discussed in all this is the robustness of road transport throughout the region. Since trade liberalisation, Uganda, Tanzania and Kenya have built up impressive fleets of trucks carrying both fuel and containers, and road haulage has largely replaced rail, reflecting the dynamism of the private trucking sector compared with the inefficiently managed and undercapitalised state railways. Pro-road policies have been lobbied for by business associations with the support of ruling elites, themselves involved in trucking. Passengers have also migrated to privately owned buses.

The question from an EAC transport policy perspective is how state-owned railways can claw back enough trade from the trucking industry to become profitable without state subsidies, the use of force, or additional taxes. In an age where commercial activities are overpoweringly undertaken by the private sector, the move to SGR looks suspiciously like an attempt to replace relatively efficient, competitive private enterprises by state-owned monopolies. Already, importers are getting ready to resist any attempts by the GOK to force traffic onto the SGR.[27] According to one commentator on Tanzania’s proposed SGR, President Magufuli will “have to deal with the truck cartels… that have succeeded for over 40 years in keeping the government out of railway construction and maintenance.”[28] Though perhaps an exaggeration, the concern is real for all three EAC giants. Arguably more important, aid agencies have poured billions of dollars into road construction and upgrading throughout the region, much of the work undertaken by Chinese contractors.

Since trade liberalisation, Uganda, Tanzania and Kenya have built up impressive fleets of trucks carrying both fuel and containers, and road haulage has largely replaced rail, reflecting the dynamism of the private trucking sector

To plan implementable Community-wide infrastructure initiatives for the EAC rather than ad hoc bits and pieces would require an empowered EAC Secretariat with both technical competence and a delegated political mandate. SGR initiatives to date reveal that neither condition holds.[29] In March 2017, Fred Mbidde, the chair of the East African Legislative Assembly’s Committee on Communication, Trade and Investments, complained of “minimal collaboration between the regional projects.”[30] So we can expect more of the same: Dar competing with Kenya for transit trade and economic dominance, while the landlocked countries blow hot and cold on which rival to support, if any.

Politics trumps economics, as is often the case

Our presidential ruling elites are not driven to endorse major investment decisions involving private or state capital on the basis of techno-economic arguments. Their decisions are driven by short-term political considerations. When people like Kiriro wa Ngugi,[31] David Ndii[32] and John Githongo[33] blow large holes in the claims of the SGR apologists on technical, fiscal/financial and governance/corruption grounds, they are met with threats, not evidence-based counter-arguments. “No one and nothing will stop us from building the railway…” stormed Deputy President William Ruto in response to critics.[34]

For the most part, our ruling elites think short-term. Long-term concessional finance for large capital investments is attractive because the current incumbents will be retired by the time the bill arrives for the reckless projects they are committing us to today

For the most part, our ruling elites think short-term. Long-term concessional finance for large capital investments is attractive because the current incumbents will be retired by the time the bill arrives for the reckless projects they are committing us to today.[35] This helps explain why mobilising state power behind the SGR may even appear to undermine the elite’s own business interests in trucking. As long as politics is in control, elites and their supporters are confident that their trucking interests will not be threatened.

WHITE ELEPHANTS IN A CHINA SHOP?

As part of its One Belt One Road initiative, China is busy funding infrastructure, including railways, across Asia, worth up to a trillion dollars. East Africa’s SGRs are perhaps the end of the One Belt line. Beyond this, China is building long-haul and urban railway systems in 35 African countries.[36] Is China overreaching itself? The strict conditions placed on further loans for the Kenya-Uganda line suggest that China is becoming increasingly circumspect in its lending practices, worried perhaps that borrowers will start defaulting on their loans. For Africa, this wouldn’t be the first time. The Africa-wide debt crisis at the end of the last century was the result of decades of borrowing from the World Bank, IMF and other official sources, much of it on uneconomic and unsustainable projects. The debts currently piling up through soft loans from China and other sources are potentially fuelling a second debt crisis that will in turn trigger another round of debt relief. But the Chinese terms for a bail-out are unlikely to be as generous as those of the donors at the end of the last century.[37] Tying debt rescheduling to commodity exports to China, including food, is one imaginable scenario should defaults become an issue.

East Africa’s enthusiasm for the SGR solution to infrastructural constraints, for which China ultimately bears responsibility, is not going to significantly improve the region’s overall transport system or competitiveness, and at tremendous cost

Without an efficient “intermodal’” transport system in place in the region – including ports, roads, and railways – economic dynamism is seriously compromised. East Africa’s enthusiasm for the SGR solution to infrastructural constraints, for which China ultimately bears responsibility, is not going to significantly improve the region’s overall transport system or competitiveness, and at tremendous cost.

The challenge is how to temper politically motivated, short-term decision-making with a strong dose of economic and financial rationality. In this respect, for the moment, the EAC, and most of its external supporters, are failing badly.

By Boyce Sarokin
Mr Sarokin is an independent researcher based in Arusha, Tanzania

 

ENDNOTES

[1] Kenyan Cabinet Secretary for Transport and Infrastructure James Macharia quoted ahead of the opening of the SGR from Mombasa to Nairobi. See: Xinhua 2017. “Kenyans upbeat ahead of new railway launch,” Guardian, 31 May.

[2] http://www.bbc.com/news/world-africa-40171095.

[3] Allan Olingo 2017. “Through Beijing, East Africa is upgrading its roads, railway and ports,” The EastAfrican, May 20. Different sources give different cost estimates.

[4] ‘Freight traffic operations are much more dependent on price and service delivery (predictability of time of arrival at the destination) than on actual speed between stations. The extra speed capabilities of SGR therefore provide limited advantage over a metre gauge operation.’ Africon Ltd 2011. “The East African Trade and Transport Facilitation Project, Part II: Transport Strategy,” East African Trade and Transport Facilitation Project, EAC, November, page 61. The estimated cost (EARMP 2009) of upgrading the entire EAC railway network to SGR was between $13 billion and $29 billion.

[5] See Kiriro wa Ngugi at: https://www.youtube.com/watch?v=IgbARMS1pyY.

[6] https://www.youtube.com/watch?v=hMUP_XMi434. The first commercial train, George Stephenson’s Rocket (1824), ran on what was to become the US standard gauge. http://www.custom-qr-codes.net/history-steam-locomotive.html

[7] Rail costs need to be 15-20% lower than trucks to compete. Unlike trains, trucks provide door to door services on demand.

[8] http://www.railjournal.com/index.php/freight/rail-freight-traffic-increases-in-kenya.html?channel=000.

At its peak in 1973, the railway transported 4.4 million tonnes.

[9] http://www.businessdailyafrica.com/news/Kenya-to-review-RVR-termination-notice/539546-3884948-xjptjf/index.html.

[10] The concession gave RVR a 25-year monopoly of railway services.

[11] Claims to the contrary by the GOK notwithstanding. See: Allan Olingo 2017. “Kenya to maintain sections of metre gauge rail linking old stations with SGR,” The EastAfrican, June 10.

[12] Florence Mugarula 2017. ‘Far reaching socio-economic benefits of SGR’, Business Standard, 18 April.

[13] Samuel Kamndaya 2015. ‘Sh60tr needed for mega projects’, Citizen, 3 September.

[14] Brian Cooksey 2016. ‘Railway rivalry in the East African Community’, GREAT Insights Magazine, Volume 5, Issue 4. July/August 2016 http://search.ecdpm.org/?q=*&fld_posttype=GREAT+insights+magazine&fld_author=Brian+Cooksey

[15] Christopher Majaliwa 2016. ‘High costs stymie standard gauge plan’, Daily News, 6 February.

[16] http://www.theeastafrican.co.ke/business/Tanzania-struggles-to-finance-SGR/2560-3935412-rggugq/index.html

[17] Athuman Mtulya 2017. ‘Issue sovereign bond to fund railway project, govt advised’, Citizen, 30 April.

[18] CPCS 2009 ‘East Africa Railways Master Plan Study’, East African Community Secretariat.

[19] World Bank 2013. ‘The Economics of Rail , Gauge in the East African Community, Africa Transport Unit, August.

[20] Craig Mathieson 2016. ‘The political economy of regional integration in Africa: the East African Community’, ECDPM, January, http://ecdpm.org/peria/eac.

[21] Managed separately, the Chinese-built and heavily indebted TAZARA railway from Dar to Zambia uses the 3ft 6in Cape Gauge. Jointly owned and managed by Tanzania and Zambia, TAZARA had accumulated debts of USD787m in 2016, blamed on ‘weaknesses in management’. See: Jaston Binala 2016. ‘Plans underway to revamp Tazara railway’, East African, 14 May.

[22] To prepare the way for the SGR, many legal commercial structures and over 250 houses in Dar es Salaam worth billions of shillings have been summarily demolished without warning or compensation. See Hellen Nachilongo 2017. ‘Tears, heartbreak as houses near railway line demolished’, Citizen, 12 March; Mwassa Jingi 2017. ‘Why the latest demolitions in Dar were illegal’, Citizen on Sunday, 19 March.

[23] James Anyanzwa 2017. ‘EA states looking outward for trading patners as local ties sour’, East African, 1 July.

[24] Frederic Musisi 2017. ‘Tanzania Starts Construction of Railway Line Link to Uganda’, Monitor, 16 April

[25] Abduel Elinaza 2016. ‘Dar Port in massive transit cargo traffic volume slump’, Daily News, 3 April.

[26] https://eblnews.com/…/china-inks-multimillion-dollar-deal-expand-dar-es-salaam-port

[27] ‘Cargo transportation should be based on what the importer wants, not what the government wants.’ See: Njiraini Muchira 2017. ‘Mandatory SGR use causes unease among importers’, East African, 11 March.

[28] Attilio Tagalile 2015. Blessing and hatred from Chinese aid’, Guardian, 13 December.

[29] Craig Mathieson 2016, op. cit.

[30] Zephania Ubwani 2017. ‘EA states faulted on railway project’, Citizen, 11 March.

[31] https://www.youtube.com/watch?v=IgbARMS1pyY; https://www.youtube.com/watch?v=rk4lJKgB4RU.

[32] https://www.kenya-today.com/politics/david-ndii-jubilee-spent-sh4-5b-19th-century-old-school-chinese-locomotives.

[33] https://www.standardmedia.co.ke/article/2000218960/eurobond-sgr-heists-to-finance-2017-election-campaigns-claims-githongo.

[34] Quoted in Cooksey op. cit. In Tanzania, neither civil society nor the media has challenged SGR decision-making.

[35] ‘The loan … from EXIM Bank of China comprised of a concessional loan of USD 1.6 billion and a commercial loan of USD 1.63 billion. The concessional loan is for 20 years and has a grace period of 7 years and an interest rate of 2% per annum while the commercial loan is for 10 years and grace period of 5 years…’ http://bankelele.co.ke/2017/05/funding-the-sgr.html.

[36] According to SMARTRAIL WORLD: ‘the most crucial factor in the developing African rail industry is … the influence of China, who despite warnings on their own domestic economy, are continuing to invest huge sums in the continent.’ See: Smartrail World 2016. ‘Special report: How five major African rail projects are supported by China’, 10 November. https://www.smartrailworld.com/five-major-african-projects-supported-by-china.

[37] That is, prepare and implement Poverty Reduction Strategy Papers, underwritten with more aid.

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Mr Sarokin is an independent researcher based in Arusha, Tanzania.

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John Magufuli: The Death of a Denier-in-Chief

Late president John Magafuli never was the anti-corruption saviour international media claimed.

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John Magufuli: The Death of a Denier-in-Chief
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Tanzania, a country that produced Julius Nyerere, is a country tottering on the precipice of a pandemic catastrophe. The philosopher-president ruled for 23 years and put the nation on the international map as a frontline state that stood up to Apartheid South Africa and helped liberate modern Uganda by ridding it of Idi Amin.

With the abrupt death of its populist president John Magufuli on March 17, 2021, ostensibly from a COVID-19 related ailment, Tanzania finds itself at a crossroads, insofar as tackling the devasting disease is concerned. Magufuli who was the commander-in-chief of the armed forces, became the denier-in-chief of COVID-19. The disease has decimated scores of Tanzanians, including top government officials.

Magufuli was hailed as a tough anti-corruption crusader, as he entered state house in 2015. Ordinary Tanzanians initially saw him as their saviour in the fight against institutionalised state corruption. The international media also saw him as a man keen on tackling state corruption, “but Magufuli was all about optics,” said a Tanzanian journalist. “He wasn’t fighting state corruption pers se, what he was doing was to get rid of Jakaya Kikwete’s (immediate former president) networks in the government and replace with his own. So, it was just a matter of time before Tanzanians and the world realised Magufuli was just interested in musical chairs.”

Magufuli was re-elected on October 28, 2020 in one of the most controversial post-Nyerere’s Tanzania elections with a whopping 84 percent. His “true colours” revealed themselves after Benjamin Mkapa’s death in July 2020. After mourning the ex-president, Magufuli turned his attention to the business of crippling the opposition.

Magufuli was a protégé of Mkapa who served as president between 1995–2005. It was Mkapa, who in 2015, prevailed on the ruling Chama Cha Mapinduzi (CCM, ‘Party of the Revolution’) national executive council (NEC) to pick newcomer Magufuli as its flagbearer for what was to be a hotly contested general election in October 2015. Magufuli was then primed to run against Edward Lowassa, a CCM stalwart, who had bolted to Chama Cha Democrasia na Maendeleo (CHADEMA), after not clinching the CCM ticket, in which he was touted as one of the hot favourites.

The “true colours” was the ruthlessness with which Magufuli pursued the opposition in the lead-up to the presidential elections. That massive victory came in the backdrop of President Magufuli’s continuous campaigns since being inaugurated as the fifth president in 2015. “Magufuli never stopped campaigning,” said a Tanzanian journalist: “He rode on the wave of populism – dishing out money and favours to select supporters and well-choreographed individuals wherever he went.”

The 2020 Magufuli campaigns were a mirror-image of his mentor’s similar campaigns in 2000. Just like Mkapa’s mission was to presumably pulverize the nascent opposition, Magufuli’s mission 20 years later was similarly to ensure that the “irritating” opposition is no more and is, literary ran out of town. Mkapa in the October 2000 elections unleashed so much violence on the opposition that many of its supporters sought exile in neighbouring Kenya, after the elections.

Mkapa’s use of unmitigated force by Jeshi la Polisi (Tanzania has a police force, as opposed to a police service) and Field Force Unit (FFU), a paramilitary outfit much like Kenya’s dreaded General Service Unit (GSU) was unprecedented in Tanzanian politics. Just like Magufuli, it seems Mkapa’s “true colours” were revealed only after his mentor’s death the previous year on October 14, 1999. Mkapa was a protégé of the founding father Julius Kambarage Nyerere.

It was Nyerere who held Mkapa’s hand in 1995, after influencing his nomination by CCM, and single-handedly campaigned for him throughout the country. Tanzania held its first multiparty general elections in 1995, pitting CCM against a disparate opposition for the first time since its formation in 1977.

He dished out money and favours to select supporters.

Revisiting this unparalleled violence orchestrated on fellow Tanzanians, Mkapa, the former journalist-turned-diplomat-turned-president in his memoirs: My Life, My Purpose – A Tanzanian President Remembers published in January 2019, regretted the 2000 election ordeal. To some Tanzanian journalists and political analysts, Mkapa and Magufuli are today referred to as the chief advocates and perpetrators of state violence in post-independent Tanzania.

Both the presidential elections of 2000 and 2020 happened under a cloud of America’s own election problems: In 2000, it was the “Florida fiasco.” Florida was then governed by the Republican’s presidential candidate, George Bush’s brother, Jeb Bush. Bush was running against the Democratic Party’s Al Gore. Jeb was allegedly accused of rigging on behalf of his elder brother.

Like the Americans say, the electoral college vote was too close to call: the vote was not only going to determine who was going to be the winner of the states’s 25 votes, but the next president after Bill Clinton. A recount was called by the Democrats and for a brief moment, the democrats believed they had taken it, only for the Republicans to also ask for their own recount. Bush won with a razor thin win vote. The democrats were not persuaded. To cut a long story short, the sunshine state’s case found itself in the supreme court, where the republican-led court declared George Bush the eventual winner.

In 2020, with both the Tanzania and US elections being held days apart, America once again came under the world spotlight after the “Pennsylvania problem”, in which President Donald Trump claimed his votes had been tampered with and paid for a recount. The MAGA Republican Party candidate was defending his seat against “sleepy Joe” a derogatory tag given by Trump to Joe Biden.

The citing of both examples here is to emphasise that America in 2000 and 2020 could not claim a moral compass to the Tanzania government’s excesses in its elections. Covering the 2000 elections, I remember in Dar es Salaam, a CCM top official telling us journalists that America could not lecture Tanzania on matters election – “they should first deal with their own election rigging in Florida, before accusing us of unleashing violence and rigging the islands’ results.”

Nyerere had always been opposed to the twin islands of Pemba and Zanzibar’s divorce with the mainland Tanganyika – a sticking sore thump between the mainland and the islands, since the republic turned to plural politics. But he never advocated state violence, instead, he sued for dialogue and persuasion.

Magufuli was determined to put the opposition in its place this time round: In a parliament of 261 members, the opposition only won seven. “By the time I’m through with Tanzania, there’ll be no opposition in the country,” said the deceased in one of his campaign rallies.

There is not a doubt that he loathed the opposition, so much so that he warned the regional commissioners and election officials, “I don’t pay you so that you can allow opposition to win.” Tume la Uchaguzi (National Election Commission) flatly refused any presidential debates and told the opposition it could debate among itself if it so wished.

In Tanzania, CCM ni tasisi,” a local journalist reiterated to me. Literary it means the ruling party CCM is an institution. Figuratively it means, CCM is Tanzania and Tanzania is CCM. Anybody going against the “wishes of the party” would be crushed. The CCM’s propaganda machinery against the leading opposition figure Tundu Lissu of CHADEMA was geared to pulverize all his efforts of running a successful campaign. “He was being hunted down like a wild animal,” said the journalist.

Magufuli claimed Lissu was a supporter of LGBTQ and that he was a tool of the West being used to campaign for mashoga, homosexuals’ rights. Several African presidents during their re-election campaigns have turned the hot-button issue of LGBTQ, their favourite bogeyman: In the terribly conservative African societies, nothing evokes emotions of antipathy like suggesting gay-ism could be mainstreamed. Yoweri Museveni has done it, John Magufuli did it, just like Robert Mugabe did it before him.

CCM being Tanzania and Tanzania being CCM, not even the bravest of private media would dare report on the opposition or against Magufuli and CCM. “There was total blackout on the opposition by the media. All what Tanzanians could read and listen to, on politics, was on the ‘indefatigable Magu’ and his infrastructural developments,” said my Tanzanian journalist friend. Hence, Tanzania media did not report on politics – it reported on Magufuli, the person.

By the time I’m through with Tanzania, there’ll be no opposition in the country

Being heavy users of social media, Tanzanians turned to VPN – virtual private network. Found as an app in many smart phones, it protects one’s communication from snoopers like government agencies and hackers. What VPN does when activated is to bypass the conventional internet service providers (ISP) when connecting to the internet. In the case of Tanzania’s government shutting down its ISP, tech savvy Tanzanians resorted to VPN to access facebook and especially Twitter, to fend off the states’s eavesdropping.

This is the reason why Magufuli ordered all social media outlets shut, said the journalist. All what the Tanzania Communication Authority needed was a nod from Magufuli. A consumer of foreign news outlets, Tanzanians also resorted to BBC, Deutsche Welle (Sauti ya Ujerumani) and VOA, to stay informed on their country’s politics. “This is how many of them were informed and kept tabs on Lissu’s campaigns,” said the journalist.

Even after being sworn-in for the second term, President Magufuli pursued the browbeaten opposition. Chief opposition figure Lissu had to escape the country a second time. “Run or be run over, these people are not joking,” Lissu was ostensibly warned by his intelligence team. In September 2017, Lissu had survived an assassination attempt in Dodoma, that saw his vehicle sprayed with bullets by “unknown” assailants, as he left parliament for his house for lunch. On November 7, 10 days after the elections were over, he hid at the German embassy, then onwards to Brussels, where he had been recuperating for three years after treatment in Nairobi.

The former MP for Arusha Urban Godbless Lema also skipped the country and sought refuge in Kenya after claiming government people were after him. Lema, with his family was granted asylum in Canada.

Nyerere’s CCM may have operated in the one-party era during the cold war, but many Tanzanians of the post-independent generation remember those days with nostalgia. “The party was more democratic and free, unlike today,” said a former CCM mkereketwa (party diehard).

Magufuli’s populism was laced with autocratic tendencies. He told fellow Tanzanians msinijaribu mimi ni jiwe (don’t try me, I’m as tough as a rock), meaning he prided himself in being tough-headed.

“Magufuli’s CCM in the era of multiparty brooks no dissent, is dictatorial and dangerous, while Nyerere’s CCM preferred a palaver type of democracy where party issues were discussed until it arrived at a consensus,” said a University of Dar es Salaam don.

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South Africa: A New Politics From the Left?

Assuming today’s socioeconomic crisis benefits the Left is folly. That will only happen if we have the political vision to make class the fault line of social polarisation, and for that we need to face the challenge of constructing a new party.

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South Africa: A New Politics From the Left?
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Over the last decade, the Left in a number of Western countries has undergone a historic transition from “protest to politics,” to borrow the words of the late Canadian Marxist Leo Panitch and his frequent co-author Sam Gindin. From Podemos in Spain to Sanders in the United States, a new wave of parties and electoral coalitions have emerged and made rapid gains. Despite setbacks and defeats, Panitch and Gindin’s indispensable analysis of these events in The Socialist Challenge Today, casts them in an unambiguously positive light. None of the examples they study offer formulas for resolving the vexing dilemmas facing the socialist movement in our globalised present.

But in their determination to take state power seriously they constitute an unmistakable step forward, after decades in which the Left’s confinement to episodic instances of mobilisation left the electoral field wide open to the parties of business. Part of this “new new” Left’s success stems from a willingness to shake free of its own past. Building a viable socialism of the 21st century, they argue, requires dispensing with the outmoded parts of the Leninist model, like its wager on insurrection, while retaining that which still holds value, like its internationalist spirit.

These developments hold important lessons for us on the South African Left. Just under a decade ago it seemed that we were on the verge of effecting a similar transition “from protest to politics.” During the first decade and a half of democracy, a socialist opposition had found a locus in the so-called “new” social movements—like the Anti-Privatisation Forum—which grew in reaction to various parts of the ruling African National Congress’ neoliberal agenda.

These waged a number of important defensive struggles and scored a few key victories but fundamentally did nothing to loosen capital’s grip on policymaking. By the end of the 2000s most were a spent force. It became clear to a growing segment of the Left that lasting gains would not be achieved unless social agitation were more effectively linked with efforts to seise governing power. The ability to think these more ambitious terms received a major boost when the National Union of Metalworkers South Africa (NUMSA), the nation’s largest manufacturing union, appeared to redraw the political map of the country by breaking from the ANC, amidst a wave of working class militancy.

Of course for the “official” left which NUMSA represented there had never been any turn away from politics as such. But decades of compromise had bred a form of politics that had become completely unmoored from the guiding thread of class antagonism. NUMSA’s move thus constituted a kind of mirror image transition—from a back-room corporatism to a politics more grounded in the methods and spirit of “protest”. This is what imbued the “NUMSA moment” with such hope—it promised to re-connect the two sides of South Africa’s bifurcated Left, and supply the strategic elements that had been missing from each. By matching the militancy and class-independence of the social movement Left with structural and organisational might of the “official” Left, it seemed possible that a mass socialist movement could be rapidly brought into being.

That was not to be. From today’s vantage it’s impossible to regard the NUMSA moment as anything but an abject failure. The political party which eventually issued from it is the farthest cry from the unifying force that so many had hoped for. While the international left has been able to advance by breaking with its shibboleths, the Socialist Revolutionary Workers Party (SRWP) has fallen back on a slavish appropriation of Bolshevik ideology, almost comical in its extremes.

Despite enormous resources, a large part supplied by a US-based billionaire, the party ran a dismal general election campaign in 2019 where it failed to get even a tenth of NUMSA’s own membership to vote for it (it ultimately only amassed 25 000 votes nationally, below the threshold to obtain one seat in Parliament). It’s since never recovered, joining a host of other failed socialist parties on the margins of political life. Marginality seems in turn to have degraded the internal culture of the party, which now resembles closely the Stalinism of the ANC-aligned South African Communist Party in all its worst aspects.

The floundering of the NUMSA moment is a terrible blow. But the setback inflicted on us will far greater if we fail to draw the correct lessons from it. Perhaps the most worrying outcome is that it precipitates a slide back into movementism, and shuts the window that we’ve had to execute the transition from “protest to politics.” Party politics acquired a bad name during the era of “protest” in South Africa, and many on the Left already feel that the SRWP’s example vindicated their worst suspicions.

But what the SRWP actually reveals to us is are not flaws inherent in the party-form as such, so much as the limits of a certain kind of party, one founded on a hidebound Leninism. If the Left were to abandon party building altogether there would, quite simply, be no socialist future. All visions of radical change that eschew parties and an active takeover of the state suffer from a principal defect in that they misconceive the nature of class formation—the process by which individuals become aware of their class position and begin to articulate their politics through it. This is presented as a quasi-automatic effect of the capitalist class structure.

But history offers no support for such a view. Class is impactful because it frames the options we have over so many major decisions in our lives—but not so narrowly as to make resistance to one’s employer, or the system behind him, inevitable. Indeed, the extreme vulnerability of workers under capitalism means that individualised modes of coping tend to be more commonplace than collective action. That’s why socialist consciousness has been the exception rather than the norm in the global history of capitalism, and exceedingly rare in the absence of a well-organised party. As Panitch argued with the force of a life’s work—parties make classes as much as they are made by them.

Thankfully, an outright repudiation of the party-form is not really where we are at in South Africa. The variant of movementism which took hold here, and which has revived in the aftermath of the NUMSA moment, was not really this more extreme kind, which denies the ultimate need for a party. Rather what it advocates is a downgrading of the role of party building or its deferral to some indefinite future.

What seems to be the common premise for this position is that party building can only succeed when perfectly timed to the right “objective conditions” —conditions which are only likely to form in the wake of a rupture moment defined by intensified street-level mobilisation. Only the transformation of mass consciousness brought about by such an episode of struggle can furnish the base for a party. Moreover, efforts to “impose” a party on the working class before this are liable to be rejected by its most conscious and active layers. Cut off from nourishing energy of grassroots movements, they are likely to grow in authoritarian directions. The task of socialists in the present, therefore, is devote ourselves to strengthening movements, and hope that a party may gestate from within them in some future context.

Related but distinguishable from this, is an ingrained hostility on the South African Left towards electoral politics. This view tends to draw a sharp line between the electoral arena and movements. While movements unlock popular power by sensitising their participants to their potential for collective action, elections offer no such platform for consciousness-raising. Instead, they tend to reproduce the atomisation of liberal democracy, and to fortify the myth that progress is possible within it. Moreover, movements which take the electoral road subject themselves to debilitating pressures. The logic of getting the vote tends to conflict with the logic of grassroot mobilisation, and all too often to overwhelm it.

Movementist positions contain many insights. It is wise, for example, to be attuned to the importance of ruptural breaks—the likelihood that we will ever get to a mass party simply through a molecular accretion of our ranks is slim. But the contention that movement building alone is the best way to prepare for such a rupture fails to take seriously the inherent weaknesses of social movements.

Of the numerous movements which sustained the first era of “protest” in post-Apartheid South Africa virtually none remain (barring one major exception). New ones have of course cropped up, and a tide of less organised community protests has continued unabated across the country. But these show equally little likelihood of autonomously cohering into anything bigger or more resilient.

It’s now very hard to avoid the conclusion that their failures resulted from internal rather than external factors. The model underpinning them rested on localised mobilisation around immediate demands, while actively eschewing efforts to politicise a leadership layer. Some of their more excitable proponents portrayed them as crucibles of anti-capitalism, in which the mere experience of collective decision making offered a form of political education beyond what traditional forms of Left organisation could hope to match.

But in doing so they exhibited the same fallacious thinking about class formation that informs all ventures aimed at “changing the world without taking power.” Much less a break with capitalism, it’s not clear that social movements even succeeded in getting most of their members to question their loyalty to the ANC. That left them prone to demobilisation and disorganisation when circumstances changed, when defeats where incurred or when key individuals drifted off or were co-opted.

One strategic upshot of this critique is that the trade-off between movement and party building posited by movementists is a false one. It’s likely that there is no winning formula for transforming single issue mobilisations into lasting, mass organisations without NGOifying them. But what we can do is to ensure that the small advances made by movements each time they arise are not dissipated. After all—the notion that struggle develops consciousness is not a false, what movementists get wrong is overstating the extent to which it does so organically. Virtually every movement throws up militant leaders, who stand to become tribunes for socialist politics if they can be identified, recruited and supported appropriately. This is work that a party is best suited to undertake.

But facing up to the limits of social movements should lead us to even stronger conclusions than this. It should lead us to question the overwhelming strategic significance that they have been accorded in the politics of the “independent left.” If movements are tough to sustain and to politicise, they may not be the vehicles best suited to bringing about a political rupture or ensuring that it outcome favors the Left.

Of course this was a strategic orientation that was largely foisted on us by circumstance. The stranglehold that the Tripartite Alliance (whose third member is the Congress of South African Trade Unions) exercised on organised labour and mass politics generally left little room for an alternative. But the situation has changed. The factionalisation of the ANC, the split in COSATU and the emergence of its rival, the South African Federation of Trade Unions, have created an opening for a more militant socialism to regain a foothold in organised labour. This ought to be the clear priority of socialists.

For all its infirmities, the union movement still presents a much more promising site for grounding socialist politics in a mass base. Although this may not hold for much longer, unions remain mass membership organisations with considerable resources. Most importantly, and most differently from social movements, they have access to structural power (i.e, the power to withdraw labour and shut down the economy). Here is one insight of Leninism which time has not invalidated– that our project will most likely fail unless that structural power is at its center.

If organised labour is once again to become our strategic focal point, this strengthens the case for not consigning the party to an intangible future. The synergies between party-building and organisation building are arguably stronger in the case of unions than social movements. At a fairly abstract level, one reason for this is that union building (or revitalisation) typically relies on a few individuals being prepared to take bold action out of moral conviction. Marxists have often argued something very different—that shopfloors collectivise as soon as workers wake up to their material interests. But narrow self-interest is unlikely to ever motivate someone to take the first steps towards organising their co-workers, since doing so incurs enormous risks but yields no extra benefit—the essence of the “free-rider” problem.

Thus, it’s not a coincidence that so often in history, socialists of various stripes have been significantly overrepresented among the “militant minority.” The values that draw people to the banner of socialism are often the same as those that move them to action against workplace injustices. It’s also not a coincidence that a militant minority is more likely to take shape when socialist ideas are more prominent in the public realm.

Arresting the decline of South African unions, and returning them to their proud history of worker control and grassroots democracy will require a herculean organising effort. At the simplest level this is why we need an organisational vehicle that at  least broadly resembles a party. Without one we have no real means of translating strategic debates into action—of coordinating our energies towards the tasks most likely to yield long-term gains.

There’s therefore a case for not delaying in building a fighting organisation, that tries to cohere leading militants from workplace and community struggles around a socialist program. But such an organisation should do more. As soon as it has the numbers needed, it should seek to involve itself in elections. In all likelihood it would have to start at the local level, and logic would dictate that it seeks out community and social movement partners in doing so. But as quickly as possible is should seek to graduate to the national stage. South Africa’s unusually proportional representation electoral system (which was in fact designed to provide space for smaller parties), makes this a reasonable short-term goal.

Arresting the decline of South African unions, and returning them to their proud history of worker control and grassroots democracy will require a herculean organising effort. At the simplest level this is why we need an organisational vehicle that at least broadly resembles a party.

The first thing that sceptics of this strategy tend to get wrong is that they overstate, or misunderstand, the legitimacy problem facing formal political institutions. The SRWP seems to think that any worker with lingering attachments to electoral politics is suffering from “false consciousness.” But in our current circumstances, there is nothing the least bit irrational about remaining invested in the electoral arena, even while recognising the severity of its class bias. The simple reason for that, is that there is no existing social force capable of challenging state power while remaining entirely outside its institutions, nor does one show any prospect of coming into being in any foreseeable horison. Worker organisations in SA are locked a desperate defensive struggle—not preparing to set up a parallel state.

It’s not a failure of dialectical imagination that causes people to conflate politics with elections, but an appraisal of our situation that is more accurate than the one provided by the apostles of imminent revolution.

It’s thus not surprising that despite the tremendous alienation produced by decades of neoliberalism, electoral movements in the West have been able to engineer a political realignment that was much deeper than what post-2008 movements were able to achieve on their own. Their location within the domain of mainstream politics provided both visibility but also a kind of credibility—they promised to take over the institutions in front of us, rather than replace them with ones we can’t see and can’t yet imagine. Several of these examples stood the movementist model on its head. Rather than an electoral breakthrough growing out of a period of intensified movement activity, it was the electoral arena itself that has delivered the rupture moment, the energy from which can then be filtered down to social and labour struggles.

In the process they challenged another fallacy of movementism—that the electoral arena is entirely inimical to a politics of struggle. Sanders, Corbyn, and others imbued their campaigns with a spirit of insurgency that succeeded in appealing to many otherwise turned off by politics, particularly among younger generations. Rather than sucking energy from the streets, these examples provided a renewed model of “class struggle elections” —not their own invention but one that had faded from the Left’s repertoire during the era of movementism.

Class struggle elections seek to deliberately leverage electoral campaigns, and political office itself, to bolster movements. They use every platform available to raise awareness of, and encourage solidarity with, labour and social struggles. In doing so they try to inculcate the understanding that radical policies can only be won with an inside-outside strategy, in which legislators are supported and pushed forward by powerful movements. At the same time they use campaigns as tools of organisation building.

They recruit and deploy a mass of activist to spread a socialist message, and simultaneously try to develop those activists by building political education into their activities. Done properly, this can bridge the gaps that supposedly separate movement from electoral organising, infusing the latter with a powerful sense of collectivity. That’s why so many thousands of young Americans (to pick a recent example), were politically activated through their involvement in the Sanders campaign, which became a gateway to organising in their workplaces, campuses and communities.

Note that this is completely different to the SRWP’s narrowly propagandistic approach to elections which didn’t promote social struggles so much as fantasies of revolution, whilst denouncing ‘bourgeois democracy’ as a sham and doing nothing to actually win. After a predictably disastrous outcome, the party chose to compound the embarrassment, and feed into a profoundly dangerous trend by denouncing South Africa’s independent election management body and claiming the result was rigged.

It’s not a failure of dialectical imagination that causes people to conflate politics with elections, but an appraisal of our situation that is more accurate than the one provided by the apostles of imminent revolution.

Contrast its subsequent marginalisation with the early trajectory with the Economic Freedom Fighters (now South Africa’s third-largest party), which leveraged the electoral know-how of its ex-ANCYL cadre and Malema’s media savvy to run an enormously successful first campaign. It then built on the success, steadily expanding its vote share each cycle, while using parliamentary office to bolster its national profile. Sadly it drifted off the orbit of the Left along the way. But the two diverging cases provide an obvious lesson: if elections are to be useful to us, we have to show that we are capable of succeeding in them. If we can’t, how on earth will we convince anyone that we’re capable of transforming society from its roots up?

None of this is to suggest that the concerns movementists raise about electoral politics are meritless. Its unquestionably true that electoral competition imposes its own logic, which can be ruinous if it totally subsumes the party’s strategic purview. We can trace the decline of many a worker’s party, at least proximately, to misguided efforts to capture middle-class votes by abandoning a politics of class antagonism. But all socialist strategising in our dismal conjuncture is the consideration of perilous alternatives. Far better for us to confront the dangers of succumbing to a narrow electoralism than the near certitude of permanent marginalisation should we choose to abstain from mainstream politics altogether.

The NUMSA moment may have come and gone. But the many elements of the broader conjuncture which produced it, and which seemed to augur a new direction for socialist politics, persist. The Alliance coalition is in the doldrums. Expecting its inevitable demise is of course a pastime of which we “independent leftists” should now be wary. But the material facts this time really are different. The state faces a fiscal crisis that President Cyril Ramaphosa has neither the wherewithal nor the institutional tools to escape from. His factional opponents preach a “radical economic transformation” that offers nothing whatsoever to workers.

Social strains look set to keep accumulating. But assuming that any crisis they produce will automatically redound to the Left’s benefit would be folly. That will only happen if we have the political vision and the organisational capacity to ensure that class becomes the fault line of social polarisation. And for that we need to face up to the challenge of constructing a new party.

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Is a Plutocratic America in Terminal Decline?

We may not be aware of it yet, because of the hold the nation has on global media, but America’s decline appears to be terminal.

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Is a Plutocratic America in Terminal Decline?
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As President Joe Biden begins to get comfortable in the White House, there are those who might say that America, under a democratic system of government, has once again allowed the voice of her people to be heard, and that they have elected a new leader into office. Some might go so far as to say that the world’s most affluent democracy has once again proved that government of the people, by the people, for the people is alive and well.

But just below the surface, there are questions deserving of a deeper examination. One is how narrow the margins of victory were. For while it is true that President Biden won the highest number of votes in American electoral history, it is also true that President Trump won the second-highest number of votes in American electoral history; 10 million more people voted for President Trump in 2020 than did so in 2016. Mr Biden’s margin of victory in Georgia was 0.48 per cent, while that in Arizona was 0.63 per cent. Further, even as the Democrats belatedly won a majority in the Senate, again by the finest of margins, the Democratic majority in the House of Representatives actually narrowed. Why, if the choice was so clear, were margins so narrow?

The regrettable truth is that the US is not a democracy – not merely because true democracy has never existed, but because even that imperfect form of democracy that characterises modern politics long perished in America. The United States today is in fact a corporatocracy; mega-corporations rule the country, a polite way of saying that that nation is now a plutocracy. This development is not really new – wealth has always, eventually, determined leadership, in America and elsewhere.

This article attempts – colossally log-in-eye, and at a distance of thousands of miles, admittedly – to furnish proof of the existence of this plutocracy; to demonstrate the effects of this plutocracy on American life and politics; and to establish whether there is any way out of the present morass.

That America is a plutocracy

A total of US$14 billion (KSh1.4 trillion) was spent on campaigns in the US this year, twice as much as in 2016. Where is this money coming from?

In 2010, the US Supreme Court handed down a decision called Citizens United that allowed unions, corporations and associations to spend unlimited amounts in elections provided they would not coordinate their efforts with a candidate. As a result, political action committees (or PACs – private organisations established to raise money in support of a candidate or an issue) morphed into Super PACs that could receive unlimited amounts of money for campaign purposes. The effect was immediate: in 2012 non-party outside spending tripled 2008’s total and topped US$1 billion for the first time. Of that amount, Super PACs spent more than US$840 million.

The regrettable truth is that the US is not a democracy.

Yet the amounts spent in 2012 pale in comparison with spending during the 2020 campaign; in October 2020 alone, outside spending by super PACs and other big-money groups totalled nearly US$1.2 billion. President Joe Biden alone raised US$1.6 billion. President Trump raised US$596 million, itself a significant haul. Given the closely fought nature of the presidential election, it would not be wrong to conclude that money helped tip the scales in favour of the new president. Nor was this true only of the presidential race; it was true across the ballot. Eighty-nine per cent of House races and 71 per cent of Senate races were won by the better financed candidate. The conclusion is clear: money – corporate money – wins American elections.

The effects of the plutocracy on American life

It is all very well and good to conclude that corporate money runs and wins American elections. The issue is what the effect of all this money is on American life. If corporate hegemony is harmless – even beneficial – arguments can be made that it should be left alone. If it is not, however, then that fact should be exposed, and reform commenced.

The American mega-corporation has achieved a number of victories (from a corporate standpoint) that have constituted assaults on the wellbeing of the American people and populace. For example, these corporations have been allowed to outsource American manufacturing jobs to China and other nations. The iPhone, signature product of America’s second largest company by market valuation (Apple), is assembled in Shenzhen. Nike began outsourcing manufacturing in the 1970s; today it has plants in Vietnam and South Korea as well as China. IBM now has more workers in India than in the US. As of April 2012, Walmart’s supply chain included some 30,000 Chinese factories, producing an estimated 70 per cent of all of the goods it sells. This trend has gone on so long that there now exists a portion of the northeastern US, formerly known as the Manufacturing/Steel/Factory Belt, that is now known as the Rust Belt, owing to industrial and economic decline occasioned by outsourcing and the automation of jobs.

Meanwhile, for those jobs that have escaped being shipped overseas, the average wage has been stagnant for 40 years. A generation has now arisen in America that will be the first in modern American history to end up poorer than their parents. To make up for stagnant incomes, American citizens are drowning in private debt (US$14 trillion worth) including mortgages (US$9.44 trillion) and student loans (US$1.5 trillion). Indeed, absolute US household debt was higher in November 2019 than prior to/during the great recession, although the debt-to-income levels during the great recession were higher than the 2019 levels (83 per cent to 73 per cent). High house prices, supported as they are by mortgage lending, coupled with student loans, together mean that new graduates are experiencing “failure to launch”, i.e. the inability to leave one’s parents’ home and start one’s own family.

(We should pause here to note, parenthetically, that the level of any nation’s private debt, and America’s in particular, is a very important metric. The level of private debt was the key indicator that enabled Professor Steve Keen, one of the Bezemer 12, to predict the North Atlantic financial crisis of 2007-8, a prediction mainstream/neoclassical economics, quite criminally, failed to make.)

The US$14 trillion of private debt that American citizens owe is owed to the very same mega-corporation class whose wage stagnation has necessitated the need for lending (since the early 1970s, the hourly inflation-adjusted wages received by the typical worker have barely risen, growing only 0.2 per cent per year). Most unfortunately, this wage stagnation is not uniform: the ratio of CEO-to-worker earnings has soared from 21-to-1 in 1965 to 320-to-1 in 2019.

A generation has now arisen in America that will be the first in modern American history to end up poorer than their parents.

Has the American mega-corporation been censured by the political class for these excesses? Hardly. In fact, the large American corporation, while using American infrastructure, using some degree of American labour and selling to Americans, is allowed to pretend that it operates outside America, by invoicing from nations with low tax rates, such as Ireland, thereby avoiding paying federal taxes on its income. From 2009-2018, for example, Amazon paid an effective federal tax rate of 3 per cent on profits totalling US$26.5 billion. In 2018 alone, the company received a tax relief of US$129 million dollars on profits of US$11.2 billion. Such is the scale of tax avoidance by American corporations that by 2016 a staggering US$2 trillion in untaxed corporate profits was stashed outside the US, according to the New York Times. (What makes this doubly lamentable is that the Internal Revenue Service tells the American citizen in unambiguous terms that “Your worldwide income is subject to U.S. income tax, regardless of where you reside.”)

Corporations, therefore, enjoy egregious advantages. It is in order to keep them that they are so willing to fund political campaigns. In other words, corporations will do everything to avoid paying the taxes that would improve American infrastructure and healthcare (to their own benefit) but spend billions on political campaigns to inoculate themselves from losing the unfair advantages they have carved out for themselves.

The effect of the plutocracy on American politics

The shock election of President Donald Trump in 2016 can be seen as a response to the deleterious effects of corporate hegemony on the American political and economic life. Candidate Trump campaigned as an outsider, promising to “drain the swamp”, even though, ironically, he was himself a self-styled billionaire who shipped jobs to China and paid very little in taxes. America was suffering economically. He claimed that the blame for this could be placed squarely on the shoulders of China and immigrants. In an illuminating two-part, three-and-a-half hour 2019 interview with PBS, key Trump campaign advisor Steve Bannon (who was arrested for fraud and then pardoned by President Trump on his last full day in office) stated that the cost of the 2008-09 bailout was loaded onto the American middle class, and that American gig economy millennials are nothing but 19th-century Russian serfs. Many may disagree with Mr Bannon’s political views, but his statement had its finger on the pulse of post-bank-bailout America. The genius of the Trump campaign was its ability to identify these pain points; to incorrectly but convincingly blame foreigners – locally (immigrants) and abroad (China) – for what were and continue to be the excesses of the plutocracy; to identify the existence of a swamp in Washington and characterise Hillary Clinton as the personification of these ills; and to ride that wave all the way to the White House. The lesson – a lesson seemingly yet unlearned by mainstream politics – is that it actually worked.

Candidates however, campaign in poetry; rulers, on the other hand, govern in prose. During Trump’s presidency Faustian bargains, in Steve Bannon’s words, were made; here again the power of the corporatocracy made itself felt. One of the early indicators of the direction and tenor a presidency will take is a president’s cabinet picks; Steven Mnuchin, yet another ex-Wall Street executive, was placed in charge of the Treasury. While President Trump did not drag the US into another war – in spite of the assassination of Iranian Major-General Qassim Soleimani – his presidency did not up-end Washington in ways meaningful to the nation’s citizenry. Readers may recall the US$2 trillion of untaxed corporate profits mentioned earlier; President Trump’s signature legislative achievement was to open new windows for tax rebates for major corporations, reducing taxes on the wealthy. This legislation resulted in the repatriation of US$777 billion in 2018, but the Federal Reserve noted that “the strongest effect of repatriation was on share buybacks” by corporate America. This particular episode is a textbook example of the plutocracy at work.

Trump does not greatly differ in this way from the way in which Candidate Obama contrasts with President Obama. Candidate Obama campaigned on Change We Can Believe In. Yet, once elected, he bailed out the banks (the abiding question on this, some wonder, is why citizens did not retain their houses if the banks’ losses were made good). Obamacare, a very significant advance in the fight for decent healthcare for Americans, did not include a public option although it could have. Nor did President Obama succeed in extricating himself from American warmongering abroad: in a particularly sad and tragic episode he helped end the Libya Gaddaffi had created. Libya under Gaddaffi was a nation that had free university education, free healthcare, no external debt and reserves of US$150 billion – all ideals that America, ironically, declares it wants but has yet to achieve despite its claim to being the richest nation in history. Allied “intervention” replaced that Libya with today’s bombed-out nation, in which incessant internecine strife went on for a decade. This in Africa, the land of Obama’s fathers. Only two years previously, at a location just two hours from Benghazi by air, the new President had given his “A New Beginning” speech in Cairo, which speech contributed to his winning the Nobel Peace Prize later that year.

In these two presidencies, we see, microcosmically, the effects of the plutocracy at work: the lofty ideals of the campaigning candidate and the searing needs of the masses, once office is assumed, are replaced by a kind of neutered, ineffective pragmatism, as far as the wellbeing of American citizens is concerned, and a sly and insidious effectiveness where corporate welfare is concerned.

The 2020 campaign

Perhaps the defining characteristic of the 2020 campaign is that it took place against the backdrop of a global pandemic. The cost of this pandemic – in the gruesome currency of American lives – has been more than 500,000 dead Americans and counting, nearly 10 times the number of US soldiers who died in the Vietnam War, and more than the number of American lives lost in World War II.

Uniquely among developed nations, the structure of America’s healthcare system is such that very often one only has healthcare if one is employed. So that when 44 million Americans filed for unemployment during the pandemic, they lost their medical cover at precisely the time they most needed it. The pandemic therefore threw into sharp focus the critical importance of having a healthcare system that is not based upon employment.

(Nor is the state of health insurance all that is wrong with American healthcare – in several tragic articles it has been reported that American diabetics have been driving to Canada in caravans to buy insulin – some driving up to 5 hours one way. Price-gouging by pharmaceutical companies means that the drug is ten times cheaper in Canada than it is in America.)

The bipartisan response to the pandemic was to pass the Coronavirus Aid, Relief, and Economic Security (CARES) Act that – while it gave individuals with less than US$99,000 a year annual income a check of US$1,200 a month – also gave further tax cuts to the wealthy. According to the nonpartisan Joint Committee on Taxation, just 43,000 individual tax filers covered by one of the Act’s provisions would see their tax liability fall by a combined US$70.3 billion in 2020 (or about US$1.7 million each). This is the America that corporatism has created.

And yet, mid-pandemic, was healthcare on the national ballot? How, when pharmaceutical and health product industries have spent a total of US$4.7 billion on lobbying the federal government, US$877 million on state candidates and committees, and US$414 million in the 20 years to 2018? Indeed, by the time he won the nomination, Joe Biden had already said he would veto a Medicare for All bill if it landed on his desk (a colossal if, it must be said), proposing a public option instead.

So what was on the ballot? Democrats, choosing to characterise Trump’s presidency as the problem, instead of seeing it as the natural consequence of the decades of wage stagnation, high healthcare costs, inordinately high levels of private debt, etc., campaigned on the platform of “restoring the soul of America”. The president’s narrow margins of victory perhaps find an explanation here: the problems Americans face were not really on the ballot. And they were not on the ballot because the corporations that stump up the money to fund electoral campaigns benefit from providing privatised solutions to the problems Americans face.

Is there hope?

There is an American constituency that is in broad agreement on the issues raised above: a Fox News exit poll, for example, showed that 72 per cent of Americans were at least somewhat in favour of changing to a government-run healthcare plan. Florida, a state President Trump won, voted to increase the state’s minimum wage to US$15 an hour.

However, it is unlikely that this broad constituency will be allowed to unite under the current political system. The reality is that the US is a de facto one-party state. If that party were to be honestly named, it might be named the Megacorp Party, or, slightly more genteelly, the Corporatist/Establishment Party. It has two wings: a supposedly left-leaning Democratic wing and a supposedly conservative Republican wing. Under the framework of Citizens United these two wings will continue to swap power ad infinitum. Yet, even as the presidency bounces from party to party, a president from one party will bomb Iraq; the next president, from the other party, will campaign on the platform that he never voted to go to war in Iraq, only to subsequently bomb Libya. These tragic contradictions find their resolution in the fact that this war activity happens at the behest of the military-industrial complex.

Political consultants will keep finding new, misleading ways of “framing the political argument,” creating false choices and developing narratives such as restoring the soul of the nation. Meanwhile, the money that pays them will continue to fortify itself against the needs of the people; the rich will get richer, the poor will get poorer and power will remain with the wealthy.

As long as this continues, we can expect two outcomes. The first is that the issues that Americans need solved will not be solved. (We are now reading, for example, that the US$15 dollars/hour minimum wage President Biden promised (during a presidential debate), is unlikely be included in the US$1.9 trillion-dollar stimulus package President Biden intends to bring to Congress.) The second is that, as a result of the failure to resolve these issues, America will, in the words of Robert Reich, continue to produce candidatures like Donald Trump’s as far as the eye can see. The American political system does not contain within itself the mechanism to correct the current malaise. As a result, money will continue to win out: it will continue to select which issues are on the ballot, and it will continue to choose which candidates win. America’s long decline, therefore, is likely to continue.

The corporations that stump up the money to fund electoral campaigns benefit from providing privatised solutions to the problems Americans face.

We may not be aware of it yet, because of the hold the nation has on global media (the concentration of media ownership in America is yet another triumph of the plutocracy), but America’s decline appears to be terminal.

I return to the beginning – this article is written colossally log-in-eye. As a Kenyan I know we have major, pressing domestic issues to resolve. If or as we make a detour to examine the American political situation, let our contemplation resemble our use of a mirror, and let our aims be those of helping us to avoid the problems others have experienced, in order to more wisely and speedily resolve our own.

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