Mali: Prime Minister Ousted by Military

David O. Kuranga, Ph.D.

The author is the Managing Director and Principal of Kuranga and Associates, a full-service investment, political and economic risk consultancy, and asset management firm that specializes in Africa. He is also the author of The Power of Interdependence with Palgrave Macmillan Press.

The military junta in Mali, arrested and ousted the countries Prime Minister and his entire government earlier today. The move will be condemned by regional leaders who are already holding emergency talks over the development. Further it will likely serve to hasten the deployment of regional troops that has already been authorized by the regional organizations, ECOWAS an AU. The delay is largely attributed to the UN Security Council that was originally believed to be a supportive partner in the process but has actually delayed intervention already by months. The move by the military junta is also a serious indictment of the UN Secretary General and his special envoy for Mali, Prodi who have recently downplayed the need to act urgently in Mali. France recently called for an urgent resolution authorizing action in Mali. However their ambassador in Bamako had recently softened their proactive stance. Regional troops will soon be in Mali regardless of what the UN Security Council does in New York. Regional leaders will soon have an emergency summit on the matter, after which a concrete decision will be take to move forward. While it believed that the force would not arrive till 2013, it is not possible that forces will arrive before the end of the year.

The military in Mali has been closely watching the development surrounding the intervention force, something that the junta members still serving in the military have resisted. The lack of support shown by the United Nations, including the Secretary General and his special Envoy Prodi, and the United States to the urgent appeals of ECOWAS and the AU likely encouraged them to take this step. Not only did the Secretary General say that military intervention was not a priority he also questioned the comprehensive plan put forth by ECOWAS, ridiculing the only major authority that has kept the military in check in Mali. The United States and its Department of State also sought to undermine ECOWAS by somehow unilaterally appointing Algeria as the “leader” in negotiations in Northern Mali. The lead negotiator, appointed by ECOWAS, is the President of Burkina Faso. He has been effective in gaining concessions from two of the groups operating in Northern Mali. The steps to undermine ECOWAS by the UN and the US will be futile. Algeria will not be the lead negotiator and the Secretary General’s attempts to delay military intervention will also not materialize. The key power in the West African region is ECOWAS, ultimately their agenda as they have prioritized it, will prevail. As this happens all other stakeholders will fall in-line, eventually.

Moving forward, watch closely for ECOWAS decisions as this will indicate the direction of the multilateral mission. For details of the process behind multilateral missions see my book The Power of Interdependence.

Kuranga and Associates Global Consultancy is a political and economic risk management firm with a principle practice area of Africa. To learn more about Kuranga and Associates go to www.kaglobal.net. © Copyright 2012 David Kuranga. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

David O. Kuranga; Ph.D. Managing Director Kuranga & Associates Global Consultancy Phone: 212.363.0936 david.kuranga@kaglobal.net https://kurangaandassociates.wordpress.com http://us.macmillan.com/thepowerofinterdependence/DavidOladipupoKuranga

ANALYSIS: The Power of Interdependence and the Euro Debt Crisis

David O. Kuranga, Ph.D.

The author is the Managing Director and Principal of Kuranga and Associates Global Consultancy, a political and economic risk management firm that specializes in Africa. He is also the author of The Power of Interdependence with Palgrave Macmillan Press.

The Greek election this past weekend underscores key elements of the emerging global order that differs substantially from the system that was created after WWII. Many in Europe and around the world were closely watching an election this past weekend in a country of just around 10 million. The situation in Greece impacts institutions and people well beyond the borders of this relatively small country. Europe and certainly the entire world has become interdependent and thus highly integrated with each other to the point that nothing really happens in isolation. Given this situation do the Greek people really have a choice as far as policy moving forward? What power an influence do those that are impacted by the situation in Greece hold? How do those that are closely tied with Greece affect their desired policies in the domestic affairs of that country? The answer to all these questions and many others are the focus of my new book, The Power of Interdependence with Palgrave Macmillan Press.

Everything from the “Arab Spring” discussed in a previous article, to the Euro Debt crisis I wrote about in a recent piece demonstrates how what happens in one country can impact the entire region and possibly the world. These prominent events demonstrates the condition of interdependence that exists in our world today. The level of interdependence today far exceeds what existed after WWII when the current global system was formed. Since the conditions have changed over the last 60 years, the institutions have also changed and evolved. Today all major regions of the world have at least one regional organization that was established to address interdependence among members of a region. These organizations have become borderless in many areas where visas are no longer required for nationals and goods and services flow freely.

What has not been done in global affairs and international relations is to measure the impact these new interdependent arrangements have on the countries and their people that are party to them. The Power of Interdependence is a comprehensive study that looks into this issue and seeks to provide answers to the pressing questions and issues that are currently in our world today. The Power of Interdependence lays out a formula to measure the impact of interdependance within a region or an international system and thus predict the outcome of events such as the Greek election or the intervention in Mali I discussed in a piece recently. For decision-makers and policy-makers this is very beneficial becuase rather that sitting, biting your nails, and watching the news, you can actually take simple steps to analyze and acurately predict the outcome of a given situation even better than many of the supposed experts and correspondents that dominate mainstream print and televised media.

In a situation such as Greece, it is highly unlikely that decision-makers will be able to deviate from a policy framework that is not supported by the majority of other countries that are also impacted by these decisions especially those within the region. They serve as a constituency that did not necessarily vote in the election, but are still most likely to win every vote and major decision depending on the issue and how closely dependent the countries are to one another in that area. This variable is too often overlooked, which is why so many supposed experts and mainstream media outlets this weekend wasted so much time over-hyping the vote and pandering over the election outcome in Greece, and not the real issues which is the capacity to address the core problems. In any major issue ask yourself, who else outside this country is directly impacted by this? How are they linked to the country in focus? What is the level of interdependence between them? Once you answer these questions, you will know the outcome long before it takes place, and can turn of the ill-informed mainstream media correpondents, pundits, and analysts, and focus on what you need to do to address the real issues that will remain once the actually predictable outcome occurs.

Kuranga and Associates Global Consultancy is a political and economic risk management firm with a principle practice area of Africa. To learn more about Kuranga and Associates go to www.kaglobal.net. © Copyright 2012 David Kuranga. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

David O. Kuranga, Ph.D.
Managing Director

Kuranga & Associates Global Consultancy
Office: 212.363.0936
New York, NY
david.kuranga@kaglobal.net
https://kurangaandassociates.wordpress.com/
http://us.macmillan.com/thepowerofinterdependence/DavidOladipupoKuranga

What does the Euro Debt Crisis Mean for Africa?

David O. Kuranga, Ph.D.

The author is the Managing Director and Principal of Kuranga and Associates Global Consultancy, a political and economic risk management firm that specializes in Africa. He is also the author of The Power of Interdependence with Palgrave Macmillan Press.

Reports of a possibly uncontrollable tidal wave of defaults in the Euro Zone of countries, first with Greece, then Spain, and finally Italy (possibly Portugal) has sent ripples throughout global financial markets. Exchanges across Europe, North America and Asia have seen a great deal of volatility depending on the outlook of debt rescues underway in Europe. As Greece is set to vote this Sunday between a far-left party that pledges to cancel the multilateral Euro debt agreement or a right of center party that pledges to uphold it despite its unpopularity in Greece. There is a very real possibility that Greece will exit the Euro-zone since there is not much room to renegotiate the unpopular austerity measures that came with the bailout package Greece received. If that were to happen, Greece will soon default on its sovereign debt, further Greek businesses that took loans in the Euro would also default due to the fact that they would be forced to repay double what they borrowed due to currency devaluation. Inflation will also climb to over 30% in the net-importing country.

A default in Greece will trigger great concerns that Spain and Italy will also default. Similar to the way the collapse of the Thai Baht in 1997 triggered the Asian Financial Crisis that rippled across Asia in a contagion and subsequently was felt throughout global financial markets. A collapse in Greece will make banks, creditors, and financial institutions that hold European debt to become concerned of the prospect of a default by another Euro-zone country, notably Spain, Portugal, and Italy. If Euro-zone leaders are not able to provide suitable lines of credit to those countries the cost of credit in those countries will skyrocket, making growth and fiscal recovery virtually impossible. Spanish banks have already been pledged 125 Billion by European countries, the need there will be much greater than this if Greece defaults as the government will also need additional lines of credit. In a self-fulfilling prophesy, both Spain and Italy, and likely Portugal will also default on their sovereign debt. In the case of Italy, sovereign debt totals a massive sum of over 1 trillion USD. In the meantime, given that many banks in Europe hold sovereign debt from these same European governments, average depositors in Europe will make a run on banks. Liquid capital in many financial institutions across Europe will dry-up quickly, banks could easily fail.

While much has been said on how this potential collapse in Europe will impact North America or Asia, not much has been written on what impact this will have on Africa. The country in Africa that is most exposed to European financial woes is South Africa. during the 2008 Global Financial Crisis (GFC) South Africa actually experienced negative growth. Trouble in Europe will undoubtedly spell immediate trouble in South Africa. Other countries directly linked to South Africa through trade and investment will also feel the impact of the crisis. The rest of Africa has limited exposure to the global financial system thus the impact of crisis in Europe will not be as severe. However, commodity prices on raw materials will plummet as global demand for such goods declines. This will inevitably have an adverse impact on many African economies that rely heavily on the export of these unprocessed commodities.

African governments that have been borrowing will find it difficult to access credit and a wave of austerity measures will hit even some of the basic rudimentary social services available in Africa. Controversial petroleum subsides in Nigeria will be scrapped, in other countries other programs in healthcare and education are also likely to suffer. The degree of cuts in Africa will depend on how long it takes European decision-makers to wrestle the debt crisis. Talks of a collective Euro-bond have increased as a way of issuing sovereign debt backed by all members. There is also the possibility that the IMF could step in an offer emergency credit to the block if global leaders can agree.

The rapid growth, now seen in many countries in Africa will slow, and some countries in Southern Africa, particularly South Africa could see economic declines as was the case in 2008. While the effects of a European crisis will be greater in Africa than the 2008 GFC, with the exception of South Africa the impact will not be as great in the region as other regions that are more exposed to default risk in European financial markets. Still, African leaders cannot afford to ignore the developments of Greece this weekend. If indeed Greece does default, governments in Africa will need to immediately begin to reduce spending and look for ways to diversify trading partners within the region and with other nations in the developing world.

Kuranga and Associates Global Consultancy is a political and economic risk management firm with a principle practice area of Africa. To learn more about Kuranga and Associates go to www.kaglobal.net. © Copyright 2012 David Kuranga. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

David O. Kuranga, Ph.D.
Managing Director

Kuranga & Associates Global Consultancy
Office: 212.363.0936
New York, NY
david.kuranga@kaglobal.net
https://kurangaandassociates.wordpress.com/
http://us.macmillan.com/thepowerofinterdependence/DavidOladipupoKuranga