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Angola: Failed yet Successful

AfricaFocus Bulletin
Aug 10, 2009 (090810)
(Reposted from sources cited below)

Editor's Note

"In recent years [Angola's] economy has grown at a feverish annual rate of 18 percent. Its government has successfully ended 40 years of violent conflict, consolidated its political base and negotiated profitable deals with major public and private bodies of the United States, Europe and China. [Yet oil revenues may begin to decline by 2015] ... the current development model is thus a ticking political time bomb. The coming decade will reveal whether that bomb will be defused or not."

In a 38-page paper published by FRIDE, an international think tank based in Madrid, long-time Angola analyst David Sogge explores the historical roots and the current prospects of Angola's contradictions, including the complex intersection of national and international political economies of oil and governance systems. Sogge explores not only the present and near-term configuration, linked to expanding oil revenues, but also the prospect of a medium-term decline in oil revenues.

That decline, Sogge notes, may begin as soon as 2015, posing new challenges for the collaborative arrangements between international capital and local elites and new opportunities to raise questions about democratic accountability and more inclusive development.

This supplemental AfricaFocus Bulletin, available on the web but not distributed by e-mail, contains excerpts from Sogge's report, entitled "Angola: Failed yet successful." The full text, including footnotes, is available on the FRIDE website at http://www.fride.org/publication/599/angola-failed-yet-successful,

Another AfricaFocus Bulletin sent out today focuses on recent forcible evictions in communities in the Angolan capital Luanda, as well as other recent reports on Angola.

For previous AfricaFocus Bulletins on Angola, visit http://www.africafocus.org/country/angola.php

For a selection of recommended books on Angola, visit http://www.africafocus.org/books/southern.php or http://www.africafocus.org/books/southern_uk.php

++++++++++++++++++++++end editor's note+++++++++++++++++++++++

Angola: Failed yet successful

by David Sogge

April 2009

FRIDE - Fundación para las Relaciones Internacionales y el Diálogo Exterior

http://www.fride.org/publication/599/angola-failed-yet-successful

For years, as a former Cold War battleground, Angola has stood out on world league tables of 'failed' or 'failing' states. Yet its army has a formidable record of domestic and foreign combat. Its national oil company is of world class. In recent years its economy has grown at a feverish annual rate of 18 percent. Its government has successfully ended 40 years of violent conflict, consolidated its political base and negotiated profitable deals with major public and private bodies of the United States, Europe and China. For such a country, how valid is the label 'failed state'?

In light of this seeming paradox, this paper addresses several critical questions. What are the historical roots of conflict in Angola, and of its weak and uneven state and political institutions? How deeply is Angola's political economy integrated into international systems, and what aspects of that integration help explain both the weaknesses and strengths of state and political institutions? What formal and informal forces and incentives are at work in Angola's territorial political economy that affect state and political resilience and weakness?

It concludes by suggesting ways European and other international decision-makers might look afresh at notions of state weakness in general, and their relevance to the case of Angola in particular.

Executive summary

The analysis seeks to respond to key questions about Angola posed in the project's guiding purposes and methodology.

These appear in three clusters:

  1. What are the historical taproots of conflict in Angola, and of its weak uneven state and political institutions?
  2. What formal and informal forces and incentives are at work in Angola's territorial political economy that affect state and political resilience or weakness?
  3. What aspects of the integration of Angola's political economy into international systems may help explain the persistence of weak state and political institutions?

...

Globalised Angola - the past

What forces have driven Angola's emergence as a nation and polity? How have they shaped its economy, social identities and politics? This chapter offers a short overview, laying out the background to later chapters focused on the main research questions. Conventional wisdom holds that state fragility in Africa stems chiefly from the inner drives of elites themselves. They are in the dock as greedy, corrupt, scornful of sound policy and driven by primitive ethnic rivalries. Yet in a political economy like Angola's, where Western interests have set the ground rules and incentives for five hundred years, the power of such essentialist views to explain anything is not great.

Angola's polity may be better understood by assessing the interplay of a number of factors:

  • unremitting violence, both overt and structural;
  • an economy geared to serve outside interests; * a state apparatus and politics based on generations of dependent, territorially weak, militarised, centralised and corrupted processes designed for colonial purposes and thus ipso facto antidemocratic;
  • inequalities generated by uneven and extraverted development;
  • public goods and services provided chiefly in response to elites, and lacking any grounding in transparent, democratic processes;
  • a political space for associational life ('civil society') that is severely confined and largely de-politicised.

...

Conclusion [to section]

Over hundreds of years, Angola's foreign overlords had put in place a political economy based on overt and structural violence, an ever-changing but lucrative order serving chiefly a rentier class in the colonial metropole and consumers in the USA and Western Europe. Foreign interests built up a 'limited access order' that restricted privileges and rents to a narrow elite. The state mirrored social hierarchies based on the restricted allocation of assets, economic predation and a coercive, militarised approach to public order. Colonial and post-colonial elites showed no interest in creating an 'open access order' based on citizenship for all and competitive markets.

A path was laid down around a weak but autocratic colonial state dependent on outside powers. Mediocre institutions and underskilled people were additional legacies. Angolan nationalist movements, their leaders imbued with norms of a 'limited access order', and habituated to the use of armed force, had no ready alternatives when they assumed power

Globalised Angola - the present

...

Oil and geopolitics

In the short run

Oil became Angola's top revenue-earner in 1973, a mere five years after its first appearance in export statistics and some 18 years after pumping began at the country's first commercial well. Oil radically raised the political stakes. It led impoverished Portugal to cling more violently to her colonies. It encouraged the United States to promote a devastating war against Angola and at the same time make money from it. The combined impact of those conflicts, rising revenues and the massive political influence of the oil industry in Western democracies have made oil decisive in Angola's political economy.

Angola's case illustrates the oil industry's geo-political privileges. It gets a laissez-passer across even the best-guarded ideological boundaries. Until 1974, western oil firms' revenues bankrolled the Portuguese war effort. Yet when the Portuguese departed, those same oil firms effortlessly switched their allegiance to the triumphant African leadership in Luanda. The White House worked hard to stop the sharing of oil revenues with the 'Marxist Leninists', yet American oil companies easily sidestepped those pressures and had no qualms about cultivating cordial and profitable relations with the new 'leftist' government.

Indeed, before the US Congress, a senior American oil company executive defended its tax and royalty payments on grounds that they enabled the Angolan government to improve popular living conditions, the very claim the 'Marxist Leninists' made to legitimate their struggle. Five of the world's eight largest corporations - Chevron, BP, Exxon/Mobil, Royal Dutch Shell, and Total - created the hydrocarbon sec tor in Angola. They continue to expand their s takes there to the present day. Alongside some smaller ones such as the Italian ENI/AGIP (27th largest corporation in the world), they wield not only technical but also financial and political power in Angola and in geo-political spheres in which Angola is embedded.

Angola's case can be understood in light of the commanding influence the hydrocarbon industry holds over the political classes in many Western democracies, especially the United States. That industry finances political parties, fields thousands of lobbyists and shapes public debate and opinion through the media and think tanks.. Also in Western capitals, hydrocarbon-exporting dictatorships and sheikdoms make their presence felt in spending power and in regiments of public relations operatives. For their part, western politicians pay close attention to the wishes of those autocracies, sometimes blocking probes into their corrupting influence in Western public life.

According to a leading former oil executive, Western governments subsidise the hydrocarbon industry to the tune of $200 billion a year. Oil industry power affects geopolitics via national governments, but also via the scaffolds of global governance. The industry codifies and enforces international financial and legal mechanisms matching corporate requirements. Among crucial mechanisms are offshore financial centres that shield oil revenues and personal wealth from taxation. National governments also promote hydrocarbon investments with World Bank loans. They deploy naval, air and ground forces to secure oil shipments and to protect oil-producing client states. Western governments have regularly promoted oil interests through covert action or open invasions.

In Angola's case, the United States provided very few of its own forces, opting instead for a covert war by way of national and regional proxies. In Angola, the political class resides onshore but is anchored financially offshore. Its power depends on its partnership with oil corporations and the technical, financial, diplomatic and military resources they provide directly or effectively guarantee. Yet the partnership is not one of equal risks and benefits. For example, the terms of Production Sharing Contracts cushion oil corporations against price fluctuations, thereby exposing Angola to most risks of income volatility.

Companies' technical and financial control prevents outsiders, Angolan authorities included, from knowing with any precision what actual oil output and profits are. Shielded by national and supra-national rules crafted through massive lobbying, oil corporations use transfer pricing and bank secrecy to put their revenue beyond anyone's tax jurisdiction. An industry expert notes: 'In the Gulf of Guinea, the foreigners pump the oil, and sell it to themselves (often keeping two sets of books, and squirreling away the difference in Swiss bank accounts).' An IMF report estimates that Gulf of Guinea oil exporting governments lose about half the value of oil actually exported.

A report on tax losses to mineral exporting poor countries concludes that 'there is plenty of evidence that through a combination of hard-nosed negotiating tactics and the use of sophisticated offshore financial products and services, royalty payments for such resources to developing countries, particularly in sub-Saharan Africa, have been far lower than they should be.' In short, Angola may be as much sinned against as sinning. ...

Angola remains outside the Extractive Industries Transparency Initiative, although in 2004 it began to release somewhat more information on oil revenues. The largest operators in Angola are among the industry's worst performers when it comes to publishing what their operations actually yield in profits or what payments they make to the government. This basic bargain among elites thus rests on a mutually assured denial of information to the public. For their part, oil corporations require a credible sovereign state, one that is solid enough to comply with contracts as enforced by international lawyers, judges and mediators and to exercise a monopoly of coercive power in zones relevant to the corporations.

Thanks to oil revenues, the Angolan state has become capable of both. It remains dependent and unevenly developed, but has built alliances with colluding political and corporate actors abroad. As discussed below, Angola's political class has used its partnerships to acquire its own technical capacities in the oil sector, as well as capacities in military, financial and media realms.

In the longer run

Angola's known oil and gas reserves are relatively modest, being far smaller than those of Nigeria or Saudi Arabia. Its oil output is projected to peak in 2010. Between 2015 and 2018, Angola's petro-dollar-based national budget could flip from surplus to deficit if no alternative sources of state revenue are found. The hydrocarbon sector currently absorbs around three-quarters of all investment but generates only a fraction of one percent of all new employment. By contrast, the agricultural sector absorbs less than one percent of recorded new investment18 but could generate massive new employment.

Should Angola persist in its current pattern of elite-centred consumption and hydrocarbon-centred production, it will probably face a serious downturn by around 2020. The revenue shock triggered in 2008 by falling oil and diamond prices (accompanied in all likelihood by accelerated capital flight) provides a foretaste of what may lie ahead. The next decade could see an abrupt end to rising expectations among urban strata who aspire to stable middle class lifestyles. The current development model is thus a ticking political time bomb. The coming decade will reveal whether that bomb will be defused or not.

...

Integration in trade and investment

By 1985, ten years into the post-colonial period, Angola faced increasing disorder: more war, further deterioration of basic utilities and infrastructure, a rural economy in collapse and volatility of oil revenues. By 1986 these had shattered the dreams of Luanda's central planners about economic self-reliance, including the substitution of imports with home-made goods. Once a major exporter of food, Angola by 1990 was importing more than half its food needs, as well as many other basic goods. Trade in imported goods became a key source of profit for rich people and of informal employment for the rest. Licenses to import provided access to hard currency credit; they thus became patronage plums, with military commanders among the first to get the fruit. Informal commerce with Zaire and South Africa flourished.

Thousands of Angolans became long-distance traders, importing consumer goods by air from Brazil, Portugal and the Far East. As illustrated in this chart, foreign direct investment exploded, with profits and other outflows now surpassing inflows in net terms. Consumer desires and consumer culture have since mushroomed, fed by rapidly-growing publicity and marketing industries in which Brazilian and Portuguese firms dominate. Advertising and consumer images saturate national print and electronic media, whose content is largely imported from Brazil, the US and Portugal. Wants, needs and aspirations are under continual upward pressure as images of Western lifestyles spread and intensify.

Chinese trade and investment have radically shifted the pace and direction of Angola's integration. Total trade volume has grown explosively, reaching US$ 25.3 billion in 2008, roughly 14 times what it had been in 2000. Angola is now China's number one trading partner in sub-Saharan Africa. Chinese business presence is expanding, driven largely by national loans and lines of credit tied to its national firms and lubricated by elite interchange via trade fairs and semi official trade promotion agencies such as the International Lusophone Markets Business Association (ACIML). Competition among foreign suppliers of goods and services is thus sharpening, affording Angolan government elites yet more negotiating power. Portugal remains, however, Angola's chief commercial supplier, as well as a major investor.

Financial integration

Few countries are more globalised financially than Angola. As of 1998, it was one of only seven economies whose recorded gross external assets and liabilities exceeded their recorded gross domestic products. Since 2002, thanks to an explosion of loans, credits, capital flight and Angolan investments abroad, its financial integration has only deepened. Angola's engagement with world capital markets has occurred without the mediation or blessing of the Bretton Woods institutions; Angola has never taken an IMF loan.

However, in the late 1980s the government began introducing some standard Washington Consensus policy formulas, showing particular enthusiasm for measures favouring upward redistribution. These included a stop to consumer food subsidies and the sale of public assets - all important signals to domestic and foreign business interests that the era of state socialism was at an end. Angolan financial surpluses have for decades excited the interest of foreign banks and purveyors of credit - an excitement reciprocated by Angolans seeking to put their monies discretely offshore. Collusion between foreign and national elites has made Angola a net exporter of capital for decades.

From 1985 through to 2004 its estimated capital flight totalled 216 percent of recorded GDP, ranking it among the most severe cases of financial haemorrhage in sub-Saharan Africa. Outflows take place through a mix of corporate misinvoicing, bribes and simple transfers by wealthy individuals. Quantities of capital flight and uncollected tax revenues are not known with precision. That massive information deficit is a deliberate outcome of special privileges granted to offshore financial centres by Western governments, in large part thanks to hard lobbying and political contributions by the financial industry. These legal arrangements have helped make the economic life and public governance more fragile not only in Angola, but in many other places including Western democracies.

After 2002 Angola became a hot new destination for the financial industry, backed by enthusiastic officials from Western capitals. In 2007 the US Assistant Secretary of State for Africa projected Angola as one of the continent's three main hubs alongside Nigeria and South Africa. A Western diplomat told a reporter, 'There's a general feeling that if we are not a player in Angola in the next five years we will have missed the best opportunity in Africa.' Official banks and export credit agencies of Brazil, China, France, Germany, Portugal and Spain have scrambled to extend new credit, while Angola has settled old debts. Private banks and insurance companies arrive every year to set up shop.

World Bank assessments of Angola's business climate are not flattering, but pro-market American think tanks give it relatively good ratings, chiefly for its mild tax regime and deregulated trade. The US government approves of its financial integration measures, such as easy outward transfer of revenues. Indeed, more money continues to flow out of Angola than goes in, as shown, for example, in data on foreign direct investment in the period 2005-2007. Where Angola's money actually goes is not publicly known. But if its revenues follow those of other oil exporters, the chief beneficiaries are American.

In a study entitled Recycling Petrodollars, three economists of the US Federal Reserve conclude, 'Although it is difficult to determine where the funds [from petrodollars generally] are first invested, the evidence suggests that the bulk are ending up, directly or indirectly, in the United States.' ... most of Angola's recorded offshore assets are managed by the state holding company Sonangol. That company's core business is oil, including major shares in oil firms in Gabon, Congo and Equatorial Guinea, where it also furnishes security advice. But it has diversified widely, including interests in Portuguese energy and banking firms....

Integration - conclusion [to section]

In a continent marked by extraverted political economies, Angola's is an extreme case. Its main export is produced increasingly offshore. Most of what it consumes is imported from abroad. Financially it is deeply tied to Western financial markets, and now to Chinese banks as well. Political and military leverage at home and abroad depend on strategic cooperation with foreign suppliers. In short, Angola's political economy is deeply enmeshed with external circuits and actors. Under Portuguese rule, its economy was geared to global markets thanks chiefly to agrarian exports. That output stimulated consumption, which fed back into investment and further production onshore.

Oil and war changed all that. They fuelled politics that destroyed the agrarian economy and displaced the population to urban areas, which are now the demographic centre of gravity. These urban enclaves are poorly linked with local production systems; earnings and investment capital depend on markets driven by consumption (mainly of hydrocarbons) elsewhere in the world, as well as by casino-like speculation. Domestic politics therefore have little to do with reciprocal relations between citizens as payers of taxes or producers of goods on the one hand, and a political class in need of those taxes and goods on the other. Crucial sources of political power stem from Angola's reliance on global systems that supply revenue, goods and means of coercion - all taking place increasingly under US diplomatic and military protection. Integration offshore thus stabilises and shapes a 'limited access order' onshore, as described in more detail in the following chapter.

Angola's onshore political economy

...

Military and security systems

For generations Angola has been hammered by war, its history 'irrigated by the blood of the victims'. Angolan and non-Angolan actors in pursuit of power and wealth have, before trying anything else, usually taken paths of violence and coercion. The effects have been cumulative. In response to the 'rollback' war launched against it, the MPLA threw together, with East Bloc help, a force that later grew into a competent, battle-hardened army. Thanks to a US-led crusade against it, to a flow of petrodollars and to a free market in military goods and services, Angola is today a highly militarised and 'securitised' place, one capable of deploying forces affecting politics in other African countries. Relative to the size of its population, Angola's military, police and paramilitary forces are the largest in sub- Saharan Africa, with the probable exception of Eritrea

As of 2005, close to half a million people were on the payroll of the Angolan Armed Forces, although less than a third of them were on active duty. Many tens of thousands more serve in regular and irregular police forces, the Presidential Guard and the secret services. Alongside those public forces, private security companies have grown. As of 2004, nearly two hundred private security agencies employed around 36 thousand people, mainly in Luanda and in diamond mining zones. These firms have bought and sold in a shadowy public-private market structured more by political relationships (the leading security companies having been acquired by senior military officers) than by open competition.

In formal terms, civilian politicians have always had the upper hand over the Angolan military and security branches. Informally, however, their authority has depended on pacts with senior military officials. ...

... After the war's end in 2002, the security sector absorbed some of the 130,000 demobilised excombatants. Incorporation of more than 5000 former Unita soldiers and generals into the national army and police force was an important gesture of reconciliation. Training and upgrading have followed, often with foreign support. The leadership has worked to cement officer corps' allegiance by cultivating personal loyalties based on both formal benefits such as promotions and pensions and on informal benefits. In the wave of privatisations of the 1990s, senior military figures acquired urban real estate and former state farms.

Their routes to accumulation included access to discounted dollars and to commercial brokerage positions, especially quasi-monopolies over flows of certain imports or exports - lucrative privileges obtained through patronage. Backed by substantial spending (some of it off-budget), clientalist systems keep command structures unified and loyal. Sub-streams of patronage branching downward help cement political allegiance in other levels of society. With the important exception of Cabinda, a modest majority of Angolans claim to trust the armed forces. Otherwise, overt police coercion has been directed chiefly toward those lacking all political protection: migrant workers in diamond zones, low-income residents living on prime urban real estate and episodic protestors such as students.

These increasingly face 'hybrid' policing - joint operations of formal police with private security services - a 'privatised' approach in which information is legally unobtainable, complaint procedures become dead ends and no officials can be held to account. Meanwhile, the deployment of secret police and the use of informants seem to be growing, penetrating even local NGO networks.

Risks to public security in Angola are, at first glance, serious. In successive waves of demobilisation since 1992, many tens of thousands of ex-soldiers have been dumped into labour markets, where very few have found decent jobs. Moreover, Angola is awash with private firearms: 21 per 100 civilians, one of the highest ratios in the non-Western world. Violent crime is certainly present, yet its incidence is well below what might be expected given the unfavourable equation of firearms-plus-jobless youth. A 2007 survey of Angolan businesses showed much lower incidence and effects of theft and other crimes than elsewhere in Africa. ...

Politics onshore

Putting formal institutions at the service of informal power

According to its Constitution, Angola is a parliamentary democracy. It operates through executive, legislative and judicial branches whose separate powers allow for checks and balances among all three. In formal terms, the public can make its voice heard through multiple parties, civil society organisations and public media. However, this formal framework is only loosely related to the ways politics actually work. Informal rules and relationships prevail, usually behind the legitimating fa‡ade of formal arrangements. The reality is that Angolan politics pivot on the President's office, 'Futungo'. It manages clientalist systems through a state apparatus welded together at many points with the dominant party, the MPLA.

...

The country's first elections in 1992 gave the MPLA 59 percent of all seats; those of 2008 gave it 87 percent. For all practical purposes, the status quo of the pre-1992 one-party system has thus been restored. Political debate and checks-and-balances thus take place largely within the precincts of the party/governmental leadership, behind closed doors. A formal legal system has never been accessible to ordinary Angolans. Today the judicial branch remains weak and subordinated to central authorities. Its deficits in staff and operating systems are gradually being addressed. Courts enjoy a certain amount of public confidence. But there are few precedents of citizens bringing suit against the authorities.

...

Through its command of the airwaves and powers to intimidate or buy off critics, the regime controls and colours the information available to most of the public. Self-censorship is rampant. Comparative indexes compiled by Reporters Without Borders and Freedom House commonly rank Angola's press freedoms among the more restricted in Africa, though not among the most restricted. A recent analysis by a veteran media and human rights activist paints a somber picture of independent media becoming further confined, drained of staff and eclipsed by state and private media which churn out pro-regime images and frivolous entertainments.56

The public at large, and probably some in the political class, are kept in the dark about essential political and economic matters. Transparency about official budgets is among the most restricted in the world. In these ways, informed, open politics face major barriers. ...

Central authorities steer and finance sub-national governance in layers down to local levels. They appoint all senior sub-national officials, and create or dissolve institutions (branches of parastatal companies, funds, commissions, programmes, etc.) according to their wishes. While a few may consult residents at local levels, every subnational government is accountable only upward, ultimately to the top authorities in Luanda. Authority is centralised, but provincial deputies have occasionally been granted discretionary powers. In negotiations with Unita, the MPLA expressed willingness to allow the President's choice of provincial governors to be influenced by electoral outcomes.

...Since 2005, with Brazilian conceptual and technical advice, a pilot project for 'decentralisation' has been underway in 88 key districts, home to about 70 percent of the population. In 2009, all of Angola's 167 districts are to receive US$ 5 million each to be spent according to a locally-formulated District Master Plan approved in Luanda.

A Decree-Law of 2007 mandates public consultation on local development plans and related issues, thus opening modest official spaces for citizens' voices to be heard at local levels. However, forums for politics made by citizens themselves are unwelcome. It is far from clear that promised electoral competition at local levels will change that. ...

The territorial reach of state agencies remains weak, but performance of some key tasks is growing stronger. The collection of taxes, customs revenues and electricity payments improving, from a low base. The regime's capacities to get its messages across via radio, and limit alternative messages, are strong, certainly contributing to the MPLA's landslide victory in the September 2008 parliamentary elections. Other public sector tasks have seen uneven advances: road surfaces and water systems have been improved, especially in the urban zones of salaried strata. Indicators of formal schooling - number of students, teachers and classrooms - had by 2008 more than doubled over 2002 levels.

Health systems have also expanded, but results have been mixed. ...

During the war years, the MPLA leadership ultimately overpowered domestic rivals with both military coercion and material persuasion. It gained allegiance of former rivals by furnishing access to perks, property and privileged means of extracting rents and access to foreign exchange. These measures neutralised more and more opponents, convincing most to ally themselves to the MPLA government in an ever broader elite coalition. ...

Aspiring new business, professional or bureaucratic groups thus face strong incentives to ally themselves vertically rather than laterally, and to frustrate or quash rivals and their proposals.

...

However Angola's extraverted economy and the post-war surge in foreign investment big and small are creating new opportunities for accumulation beyond the purview of the ruling party. These range from formal sector business licenses and credit lines to informal sector trading, labour and transport circuits. With external business partnerships multiplying, some observers thus see Futungo's control over accumulation onshore as not absolute but relative.60 Nevertheless, although deals between big Angolan entrepreneurs and foreign businesses occur regularly, central authorities work hard to maintain tight, vertical control over access to main streams of revenue and the assets that underlie them.

...

Hence onshore consumption and production are hardly a basis for reciprocal politics binding the political class to citizens. Oil dependence is commonly thought to make states unstable. The causal chain is roughly as follows: oil dependence -> breakdown of citizen-state reciprocity -> political fragility -> war. But the Angolan case offers no clear confirmation of this hypothesis; on the contrary it is consistent with statistical studies indicating that oil wealth tends to prolong and stabilise autocratic regimes. Most rentier regimes 'have generally avoided the substitution of oil for statecraft.' An important part of statecraft is the redistribution of rents to better-off consumers and formal sector businesses.

This takes place unobtrusively by way of low charges, and in some cases non-collection of charges, for state-supplied housing, fuels, electricity, water and air transport. Such de facto subsidies, the 'colonisation' of the civil domain by creating foundations and NGOs answerable to them. ...

A test of Angola's elite bargains will be that of presidential succession. As of 2009 there is no evident 'crown prince'. The choice of successor to President dos Santos will fall to a 'selectorate' of senior political and military figures. Toadying, back-stabbing and falls from grace have long been part of Futungo court politics, but current elite pacts appear to be broadly robust. With no one faction seriously at risk, a smooth succession process seems entirely feasible

Economic growth, political sociology and state resilience

Economic growth onshore has accelerated since 2002. It has reproduced some of the polarised and outwardly-oriented patterns of Angola's colonial past. Guiding it are rules, plans and public subsidies reflecting preferences of political elites and foreign investors. The leadership talks frequently of 'sustainable development' but makes its choices mainly according to 'high modernist' development models of dubious sustainability seen in other rentier settings such as the Persian Gulf. There has been a surge in the creation of consumer needs, and, for some, the satisfaction of those needs.

Beyond the state/party nomenklatura, the lucky few include members of business, professional and other advantaged strata whose spending power, thanks to being reinforced by benefit schemes for elites (foreign scholarships, medical treatment abroad, etc.) and choices of investment (shopping malls, multi-lane highways for Luanda, etc.) underpin their vertical allegiances. Some de facto subsidies, such as for fuel, also reach low-income urban dwellers, and thus may blunt some hard edges of inequality in cities. Crucially, the leadership's patronage systems have included elites in peripheral zones. ...

The social 'reach' of patronage beyond elites is, however, not unlimited and may risk falling short of rising expectations of the poor majority. Earlier surveys of public opinion suggest that only a minority of people see their lives getting better. Assuming Angolans see things as do citizens elsewhere in Africa, they probably sense that poverty as they experience it has worsened. In mobilising public revenues, onshore production and exchange matter little in formal terms; indeed, many economic circuits operate beyond the reach of the authorities.

As in most of sub-Saharan Africa, the unregistered 'informal' economy accounts for most of the labour force and a sizable share of spending, saving and investment. Conventionally seen as made up of self-reliant entrepreneurs, Angola's informal economy is in fact composed of owners, owner-operators and those earning wages or commissions. Only a minority of participants in the informal economy are single, self-employed entrepreneurs. Angola's formal and informal economies do not exist in separate compartments; they are better seen as two dimensions of one interconnected whole. Most unregistered economic circuits are subordinated to the formal economy.

Participants in the informal economy are not so much excluded from the formal economy as adversely incorporated into it. Close study of goods markets in cities reveals complex hierarchies of informal businesses and workers dependent on formal businesses and agents of the state. ,,, Poor petty traders, the majority of whom are female, have always faced bullying and shakedowns by the police, particularly the 'economic police' (Policia Fiscal).

By contrast, economic agents further up supply chains can expect deference and cooperation. ... In official utterances, the authorities are bent on suppressing the informal economy, particularly its expression in sprawling urban marketplaces. Yet for the time being the informal economy's existence is not at risk.

There are too many elite interests at stake in its continuation. Its commercial domains are vital to systems that move imported goods from wholesale levels controlled by holders of franchises granted through political patronage to consumers. It serves as a social buffer or sponge to absorb the majority of work-seekers and to curb organised, militant activism arising from workers, whether formal or informal. ...

In 2009 the government launched a modest credit programme for small commercial farmers, but there are few other signs of official interest in promoting small or medium enterprises. The political class may oppose independent banks not only because they would promote social blocs beyond their control. Formal rules and informal 'encouragement' by state authorities limit the likelihood that substantial autonomous business strata could emerge. The Promotion of Angolan Private Entrepreneurs Law of 2003 adds formal suasion to informal mechanisms coupling business interests with state patronage.

The state has taken steps to dominate wholesale commerce, promoting a parastatal supermarket chain built up with Brazilian corporate expertise. Elsewhere in Africa, this sector is lucrative and has given rise to large autonomous business dynasties; perhaps for that reason in Angola the sector is being cornered in order to reinforce state/party power, not compete with it. The government puts foreign business under particular pressure to engage Angolan nationals as employees, as sources of goods and services and especially as 'partners' in enterprises and projects. In identifying who gets access to these tasks and 'partnerships', official patronage systems are always at hand.

...

According to a 2008 survey of public opinion, Angolans have less confidence in major corporations than any other major institution, even less than in political parties. Both the state and its corporate partners worry about each others' public profiles as well as their own. Displays of corporate philanthropy led the government to levy a special tax on large corporations called the 'social bonus'. Until around 2002 these payments went to Sonangol, thereafter to the central treasury. There are no full public accounts of either sources or ultimate uses of these funds; 'leakage' to clientalist networks cannot be ruled out.

Oil companies like Chevron and Exxon seek to show 'social responsibility' through charitable good works in zones where they operate. Increasingly, however, they are subsidising national programmes of the United Nations, international NGOs and bilateral agencies like USAID. Through such patrimonial largesse, foreign corporations exert influence over agencies mandated to help eliminate corrupt, unequal influence in Angolan governance.

Informants to this study with experience of oil company philanthropy in Angola see little value in its approaches or effects. Their negative views are consistent with findings elsewhere in the Gulf of Guinea that cast serious doubt on stories of positive outcomes of oil industry 'social responsibility'. Like agencies in the official aid system, corporate donors have favoured projects in health care, education, training and infrastructure such as roads - purposes that normally would fall to the public sector. Corporate philanthropies followed the official and nongovernmental aid agencies in usually failing to engage with the public sector in constructive ways. The church and its institutions, and other private service providers, were major beneficiaries of the aid system.

Towards the end of the war years, it had become clear that aid agencies had 'played a critical role in the privatisation of the Angolan state and its de-linkage from society.' Today, despite interesting projects to reinforce public sector capacities, donors (including oil corporations) continue to by-pass and substitute for the public sector. Such initiatives easily win government approval, as no major state outlays are required yet officials will usually get a share of the credit. In the longer term, however, such foreign aid approaches can undermine state resilience. This is especially so where, as in Angola, they are combined with rising privatisation and the commercialisation of health, education and other services. The resulting stratification of services further dissolves any social contract and can contribute to social exclusion and the further hollowing-out of public sector legitimacy.

Conclusion

After nearly four decades of upheaval, Angola has stabilised. War and rising oil wealth have reconfigured the country's political economy and demography. Offshore flows eclipse onshore economic circuits and reinforce a central autocracy whose politics follow a logic of clientalism legitimised by the rules and procedures of formal democracy. Despite the pacification of politics and the undeniable gains in collective self-esteem, there are signs of continuity, indeed of 'path dependence'. Decades after abandoning Soviet-style central planning, and embracing supervised but predatory kind of capitalism, the postcolonial regime today replicates the dirigisme and external orientation of the colonial era. In terms of coercive power over national territory, Angola's state is now more resilient than fragile. The political game may be played in part by nontransparent, arbitrary and personalised rules, but there is at present no alternative version of them. The state's monopoly of coercive power is today virtually complete, having marginalised putative separatist movements both militarily and politically. Its publicprivate police system operates effectively, if sometimes brutally.

Leadership of the security forces has been, with only minor exceptions, loyal and unified. Given the absence of serious security threats, the massive size of the military/security apparatus can be explained in part by its politically stabilising powers to provide jobs and income and to discourage dissent. In terms of control over economic life, the state shows resilience in a number of key respects, although abundant petrodollars may mask structural weaknesses. Its agents effectively supervise the allocation of property and sources of rents, capital inflows and outflows, money supply and inflation, etc.

For a variety of economic, political, and military purposes, the leadership has built up a large, competent state holding company with a number of 'shadow state' functions. Over the informal economy, state powers and motivations are mixed. Officially the state seeks to curb and strictly control it in urban areas. But informally the stance is often one of laissez-faire, as some of the elite's rent- and profit-making activities depend on informal circuits and the cheap reproduction of a docile labour force surviving in the informal economy. Predatory systems are thus at work in labour markets, but potentially more destabilising is the predatory acquisition of assets, chiefly land, on behalf of local and foreign private interests.

Capping the appearance of state resilience is the regime's political legitimacy. As of 2009 that looks unassailable. The MPLA's triumph in the parliamentary elections of 2008 was too massive to be attributed only to manipulation of the system and of ignorant and dissenting voters, though those things certainly played a part. For memories of war are still fresh; some people feared a return of instability like that following the last elections in 1992. ...

The current petrodollar-based development model is not that of a 'developmental state', being too narrowly geared to satisfying the lifestyle preferences of elites and a few other non-poor strata. The 'elite bargain' underpinning it could be threatened by conjunctural factors, such as the further collapse of oil revenues or severe losses in offshore speculative investments. But in the longer term it faces structural challenges. New enterprise-based elites only tenuously subservient to regime patronage are likely to emerge. The regime may find it hard to block that development.

...

Ways forward

The foregoing pages have looked at state fragility and resilience in Angola in light of the country's deep integration with global systems. External players set the stage for and helped fuel four decades of war and economic upheaval. Yet it was internal ones, including a stronger army and consolidated political control, that finally brought that terrible period to an end. Angola's state and governance are thus a complex amalgam of the weak and the strong, the domestic and the foreign. Today Angola's politics remain entwined with powerful outside actors and are still politics of limited access to assets and privileges.

State/party elites pursue their interests on the basis of understandings with foreign extractive and banking corporations, and with foreign governments, not least for assurances of military protection. Angolan elites harbour social and economic ambitions, but those do not now include a developmental state pursing a socially inclusive agenda. Against such a background, and the relative strength and autonomy of key branches of the Angolan state, what options are open to Western and international policy makers?

Coherence in Western policy and global governance

Adopting a coherent perspective is one place to begin. This paper has presented reasons to see the main issues in Angola as not confined to its territory but deeply entwined with interests and systems at supranational levels. It has also noted reasons to see Angola's current economic boom as something that, as in earlier episodes in the country's economic history, will go bust. Lenses to look at Angola's current and future prospects should firstly be wide enough to include global systems, and secondly be telescopic enough to see beyond the next few years to include the (not-toodistant) era when oil revenues begin to taper off.

A wider view

A wider perspective would be more coherent to the extent that it includes the array of foreign and domestic incentives facing Angolan elites as well as non-Angolan actors collaborating with them. Such a view would offer a more realistic understanding of power and of who really counts in the 'international community'. ...

That perspective would pull into focus the structure of incentives facing Angolan elites that stem from international circuits of money, goods and means of repression, and on the institutions making them nontransparent and otherwise resistant to public control.

Among other things it would include:

  • Offshore financial centres and political arrangements that perpetuate them;
  • Capital flight and the mechanisms, such as misinvoicing, that perpetuate them;
  • Disproportionate influence exercised by extractive industries, such as through their subsidisation and spending powers in public life, both in Angola, Western Europe, the USA and perhaps elsewhere;
  • Military arrangements, especially with China and the USA,
  • Initiatives to make these and other private supranational flows (also of arms and military services) transparent and subject to public control.

The current world economic crisis, with the financial sector at its heart, has exposed the massive regulatory deficit in national and global governance. Some political leaders have raised hopes that this governance deficit is going to be tackled. Yet preferences for 'soft law' and for corporate self-regulation are deeply entrenched. Political classes in the USA and Western Europe are meeting strong push-backs from corporations, tax havens and the financial industry abetted by mainstream media, much of which is in hands of corporations benefiting from nontransparency rules and other forms of global bad governance. Angola's involvement in these politics is not clear, although tough talk from OPEC (of which Angola holds the presidency at present) suggests its collusion in political counter-offensives in global forums.

A longer-term view

A longer-term perspective would be more coherent to the extent that it looks beyond Angola's current oil boom, which is likely to have passed by 2020. That view would necessarily consider today's development model and its likely consequences in ten years' time against a backdrop of more-or-less clear trends, such as demographic changes, and less predictable but looming risks, such as water stress due to climate change.

Enabling a responsive state

Foreign governments, business oracles, international financial institutions and Washington DC think-tanks express enthusiasm about Angola's 'miracle'. The cautious development economist Paul Collier speculates optimistically about Angola and the autocratic model he sees it exemplifying: "It is quite possible that the next quarter century will see this model of the developmental autocrat ruling a strong state spreading to countries with better opportunities. Angola, with its oil and its Atlantic coastline, could well prove to be another Malaysia."

Angola's state is today stronger than might have been expected. It beat back a serious Cold War effort to overthrow it, widened its political base and consolidated itself as a stable autocracy. But public administration and services remain weak and unevenly spread. Consumption and investment have shot up, but there is no sign of it becoming a 'developmental' state.

As long as powerful and poorly-regulated offshore incentives continue to shape elite motivations and visions of Angola's future, the prospects for transformation - a broad developmental vision, state autonomy from special interests, an effective bureaucracy and entrepreneurial class - look anything but bright.

This conclusion has three implications:

First, as an extraverted polity, Angola's developmental space extends well beyond the country's territorial borders. The regime depends overwhelmingly on nontransparent, supranational arrangements in realms of military and corporate power, including the management of financial stocks and flows. That extraverted basis of political power seems likely to continue, even if domestic interest blocs develop.

However, beyond 2015, after oil output and revenues have peaked and debt payments begin to fall due, those offshore arrangements could lose their attractions. Angola's historical pattern of economic boom and bust, and of successive development models launched only to end up shipwrecked, appears to be repeating itself. To escape this pernicious cycle, Angolans themselves must gain the widest and best informed spaces possible for open discussion. Today, at a time of unprecedented economic and ecological crisis, the means and imperatives for an in-depth debate have intensified. Important tenets of capitalist growth are being critically re-visited. Alternative models appear more viable and even necessary. It is time to adopt a new compass and chart another way forward.

Second, and in the meantime, a 'developmental state' along the lines of Vietnam or Malaysia is unlikely to emerge in Angola. A pluralist model - a polity based on many competing forces in an open political arena - is also improbable. More likely therefore is a scenario of inequitable, unsustainable growth shaped by state patronage backed from abroad by US military and economic power. Under these circumstances, a realistic way forward in the short term is to promote a 'minimally responsive state', one that would act as chief duty-bearer toward a rights holding citizenry.

As the government rolls out 'decentralisation', formal spaces for citizen-state interaction may open to some extent. Precedents for state-society engagement are already present in such areas as the co-production of health and education services with church bodies and NGOs, and in consultative platforms of residents and local authorities, or of parents and school officials.

Third, amidst today's economic crisis, unprecedented opportunities are at hand to reform supra-systems and incentives that promote and perpetuate distorted and non-transparent governance both in countries like Angola and Western democracies.

There is a need for more active engagement by consuming publics,88 by academic and think-tank researchers, investigative journalists and media gatekeepers, and by officials and public watchdogs. As the persistence of institutional weaknesses and dangerous inequities in Angola can be traced to the lack of good public governance at supra-national levels, today's crisis is an opportunity for progressive advances both in Angola and elsewhere


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