Two recent developments involving sub-Saharan Africa’s largest nation showcase how Cold War II is shaping up—with a key difference from Cold War I. The implications for developing nations could be profound.
Felix Tshisekedi, president of the Democratic Republic of Congo, visited Beijing three weeks ago in part to pressure China to step up investment in his country. Days earlier, the White House had announced that the US is looking at financing a rail link from Congo to an Atlantic port in neighboring Angola.
During the original Cold War, huge swaths of the developing world served as venues for proxy wars on behalf of the US and Soviet Union (indeed, Angola was one such place). During 20th century decolonialization and its aftermath, rivalries between independence leaders in Africa and Asia enabled the two blocs to foment mass bloodshed in the name of geopolitical advantage—while avoiding global thermonuclear war.
But Cold War II is different. It seems difficult to envision a slew of proxy wars between the US and China in developing nations that have largely worked out their post-colonial structures. Instead, these two blocs are competing on the economic battlefield—which could be great news for investment flows to poorer nations, as Congo is now witnessing.
If developing nations play their cards right, a successful strategy could well be playing the two great-power blocs off each other, to lure maximum capital.
In Congo’s case, Tshisekedi is pressing Beijing over a $6.2 billion minerals-for-infrastructure deal that’s seen—according to Kinshasa—less than one third of the pledged development funds disbursed to the African nation.
Talks on reworking the 2008 accord are going “wonderfully” and should be completed by the end of the year, Erik Nyindu Kibambe, Tshisekedi’s spokesperson, told reporters in Beijing late last month.
Meantime, the Biden administration said the US’s International Development Finance Corp. is reviewing $250 million in financing for the Lobito Atlantic Railway Corridor between Angola and Congo.
Of course, there are plenty of potential pitfalls. Many previous investments have been tainted by corruption.
Audits in Congo indicated that some of the tolls paid along a key road built by a Chinese company flowed to a prominent politician’s family. And the now-gone lender Credit Suisse was involved in a scandal in Mozambique that saw $2 billion of debt deals come under scrutiny for fraud.
There’s also the risk of developing nations taking on excessive debt for dubious projects, as was the case in Sri Lanka. It defaulted after taking on large-scale loans from China for a port and other developments that failed to generate sufficient revenue.
Nevertheless, as China and the US compete over high technology, securing sources of key inputs is the strategic goal. Lithium, nickel and cobalt are critical to military and commercial advantage—and developing nations have a lot of all three.
Indonesia is one example of a nation that appears to be making the most of this opportunity, driving deals with China to process its raw materials domestically while last month hosting a major US trade delegation.
And rather than the proxy wars of Cold War I, what’s emerging in CWII is an emphasis on the value of peacemaking, or at the very least the value of looking like a peacemaker.
China under Mao Zedong inspired Latin American revolutionary movements such as Peru’s Shining Path. But under Xi Jinping, Beijing lately has positioned itself as a conciliator, brokering a deal between Saudi Arabia and Iran, and now even aiming to reconcile Israel and Palestine. All the while, of course, showing up the US, which used to occupy the role.
“Regardless of results, there is reputational value in making visible efforts to solve global crises,” Trivium China analysts wrote in a note this week on Xi’s efforts in the Middle East. Washington appears to have concluded the same, with its recent outreach toward Iran.
Once manipulated by the great powers, the nations that make up what has come to be called the Global South have suddenly been blessed with a golden opportunity to exercise some leverage of their own.
Source: Bloomberg