Friday, 30 May 2014

Do Economic sanctions work?

DO ECONOMIC SANCTIONS WORK? Evidence suggests that victims of sanctions, who were in first place recalcitrant, emerge from their ordeal stronger, more- self-reliant and stubborn. Consequently, those who impose sanctions create independent and stubborn nations.

Take the example of Zimbabwe. Sanctions have not brought Mugabe down. In Kenya during the Moi era, Sanctions simply created a nation of self-reliant and independent thinkers. For decade between 1993 and 2003, donor funding in Kenya declined to almost nil. The country learned to get up by its own bootstraps and to day, she funds more 90 per cent of her US$ 14 billion budget from taxes.

 In a similar manner, the west has just made China a world Power. In fact the west’s habit of imposing sanctions on anyone they differ with has sent them to China’s waiting hands. Sanctions are imposed on the assumption that one is the only source of something someone else needs. But where there are competing sources of the same, sanctions are ineffective and in most instances, worthless. Used recklessly as the West does, sanctions can turn against the imposer.

The most recent lesson was the case of Russia. While the West is still wondering what sanctions would be severe, Russia has moved east signing a huge gas exports contract with China. This means that by a stroke of a pen, Russia does not need Europe nearly as much as Europe needs Russia. A day later, China and Russia shot down a UN Security Council vote on Syria sponsored by the West. That appears to be the first warning shot. The next round could be to freeze Europe during winter. In effect, Russia now has the upper hand fighting Nato-Just Freeze them.

The Russian tactic has become common in the world: Whenever the west pushes some country around, they respond by turning to China. Thus China is emerging as a reliable alternative to the West-something of a hiding place.

In Africa, the trend is the same: Push us a round and we turn east is the new foreign policy mantra. So the west is beginning to look foolish in the eyes of many people in the world. No one is kneeling before the West anymore.

Consequently, where sanctions prove ineffective, or are an inappropriate weapon, the west resorts to sabotage. This is what is happening in Kenya’s tourism sector. “This is economic sabotage.” That is how Kenyans reacted to travel advisories by Western Countries- Britain, USA, France, Germany and Australia. Britain underpinned the travel advisory with an evacuation of 200 British tourists lending credence to the Kenyan view of the advisories. The idea was to hit Kenya’s tourism sector by spreading the fear of terrorism.

Ironically Britain did not evacuate the British Terror suspects languishing in Kenyan custody. Neither did it tell us where Samantha Lewthwaite alias the White Widow,” a British citizen said to be the mastermind of terror attacks in Africa is.

Also not evacuated are British Military in Nanyuki, British Industrialists in Nairobi and Tullow oil which has spear headed the discovery of oil in Kenya. And Kenya ns through the social media wondered why these Britons were not viewed to be under threat of terrorists. Perhaps worried about these sentiments and the unspoken demand for retaliation by Kenya, the British High Commissioner in Nairobi denied the charges of sabotage, a whole week after the sabotage. Also it was a whole week without any terror incident anywhere in Kenya.

The travel advisories came just a few days after Kenya signed a total of 17 bilateral trade agreements with China. The flagship agreement was the signing of the US$ 3.8 billion to build a 500km Standard Gauge Railway line from Mombasa to Nairobi. This says observers, annoyed the West whose influence in Kenya is waning hence the retaliation.

Many believe that the West was sending a signal that although China has the capital to finance infrastructure projects, the West still has the wherewithal to hit the economy’s under belly-tourism.

If the idea was to remind Kenya of the West’s economic might, then it risks backfiring. Kenya did not respond by rushing to plead with the West. The government simply said it will shop elsewhere- China, Ghana, South Africa and Nigeria. South Korea and Japan are also on the radar. How the shift to Africa and Asia impacts tourism in Kenya remains to be seen.

This much is certain though, China is slowly but surely elbowing the West out of Africa. According to a Reuters report, China’s fuel import bill will rise to half a trillion dollars a year by the end of this decade.  This makes china the world’s top net oil importer having elbowed the US from the top perch. Much of this Crude exported to Asia comes from the Middle East and West Africa. East Africa, which is also emerging as a major oil and gas producer is also eyeing the Asian market.

And China is liberally building transport infrastructure in the region including Pipelines to transport LNG and crude oil from this region too.

The growth of China as the leading market for crude oil is threatening the Western futures markets as crude oil price could be bench marked on oil from elsewhere rather than the North Sea Brent crude and West Texas crude. Competition generally is a good thing for consumers and a not so good thing for producers who lose some clout especially in pricing.

The threat to futures contracts coupled with the fear of China’s growing presence in East Africa has the west scampering for exploration licenses. Oil majors such as BP and Shell are now even looking for exploration rights in volatile Somalia ignoring the dangers there. BP and Shell are said to be eyeing blocks they had won before the Barre regime fell 24 years ago security concerns notwithstanding. American Oil Juniors are also said to be nosing around for exploration blocks in Somalia.

At this point, we ask; since sanctions are by their nature short-term and cannot be sustained over the long term, what other weapon is the West likely to employ to retain its supremacy in world affairs? Can the West sit back and watch its influence being whittled down? A number of events come to mind.  Among these are the six-month Rebellion in Thailand; the western backed activists’ coup in Ukraine and the al-Qaeda led coup in Libya. Some will backfire as in Thailand where the army took power. Others will resort in chaos as in Libya. There is bloodshed in Ukraine and no one call tell where it will all end.

Intelligence circles in Africa warn that the West could foment similar disruptions in Africa. The fall of Libya to anarchy was not just internal rebellion-a push for democracy- but was fomented to curtail Chinese presence in the Maghreb region. That fall was catastrophic to both Libyans and Africa as a continent. It cut continent wide growth by about 0.8 per cent, economic reports show.


In Libya, China had a multi-billion dollar oil concession with the government of the late Muammar Gadhaffi. The West wanted to disrupt both the growing Chinese influence in the Maghreb and also to disrupt the growing economic boom. Could the same plot be in the offing for east Africa?

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