For the past few months Guinea has been ruled by a young army captain who led a successful coup. Not that you'd necessarily know about it: the regime has only hit the world news twice. The first time was for shooting 150 pro-democracy demonstrators: international protest at this abuse has now escalated into an arms embargo. The second time was when the regime signed a $7bn resource-extraction deal with the Chinese. This infusion of money has made a mockery of international pressure.
But to grasp the deeper affront, the sheer scale of the deal must be appreciated. Guinea is currently a no-go area for reputable resource-extraction companies and so the Chinese faced no competition. If under these conditions they are prepared to pay $7bn for the rights to resource extraction, it is reasonable to suppose that they are worth much more. Yet the national income of Guinea is only $3bn. These natural assets, vast relative to its income, were the society's lifeline out of poverty. They have been disposed of in haste by a regime without legitimacy.
Guinea is an extreme instance, but the disregard of the Chinese for standards of governance in winning resource-extraction contracts has become a leitmotif. The result has been not only a scramble for Africa, but a race back to the bottom. After decades of shaming behaviour, by the Millennium the major resource-extraction companies of the OECD were being pressured into decency. New legislation across the OECD ensured that if they bribed, they committed a criminal offence within their home country. They became subject to scrutiny from NGOs. New awareness among young people ensured that employees expected their companies to behave in a socially responsible manner.
Read Full Article »