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This bailout starts off with an initial pot of one trillion Euros from which Greece can borrow to pay off its debts. The hope is that similar debt crises in Portugal, Spain and Italy can be averted by a show of strength in the Greek crisis.

This agreement was not reached in an amicable discussion among the wealthier European states. The Germans, who provide the bulk of the cash, were bludgeoned into agreement by Sarkozy of France who twice threatened to pull France out of the Euro zone if the Germans wouldn’t go along with the plan. This is very important as France is not playing only with its own money. To a large degree it is cushioned by the reserves it holds from francophone Africa as part of the integration of the CFA francs into the Euro zone.

By Dr. Gary K Busch
Original Source: Ocnus.net

As we read of the current crisis in Greece and the emergency bailout of the European Union of the Euro it is may seem a little unclear as to the effect this will have in Africa. However, Africa, and francophone Africa in particular, is likely to be hit hard by the falling Euro and the diversion of national reserves in Europe to the propping up of the Euro zone. This bailout starts off with an initial pot of one trillion Euros from which Greece can borrow to pay off its debts. The hope is that similar debt crises in Portugal, Spain and Italy can be averted by a show of strength in the Greek crisis.

This agreement was not reached in an amicable discussion among the wealthier European states. The Germans, who provide the bulk of the cash, were bludgeoned into agreement by Sarkozy of France who twice threatened to pull France out of the Euro zone if the Germans wouldn’t go along with the plan. This is very important as France is not playing only with its own money. To a large degree it is cushioned by the reserves it holds from francophone Africa as part of the integration of the CFA francs into the Euro zone.

There are actually two separate CFA francs in circulation. The first is that of the West African Economic and Monetary Union (WAEMU) which comprises eight West African countries (Benin, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal and Togo. The second is that of the Central African Economic and Monetary Community (CEMAC) which comprises six Central African countries (Cameroon, Central African Republic, Chad, Congo-Brazzaville, Equatorial Guinea and Gabon), This division corresponds to the pre-colonial AOF (Afrique Occidentale Française) and the AEF (Afrique Equatoriale Française), with the exception that Guinea-Bissau that was formerly Portuguese and Equatorial Guinea, formerly Spanish.

The WAEMU CFA franc is issued by the BCEAO (Banque Centrale des Etats de l’Afrique de l’Ouest and the Bank of the Central African States (BEAC) controls the CEMAC CFA franc. These currencies were originally pegged at 100 CFA for each French franc but, after France joined the European Community’s Euro zone at a fixed rate of 6.65957 French francs to one Euro, the CFA rate to the Euro was fixed at CFA 665,957 to each Euro, maintaining the 100 to 1 ratio. It is important to note that it is the responsibility of the French Treasury to guarantee the convertibility of the CFA to the Euro.

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2010, French Africa commemorates 50 years of non-independence from France.

It comes with lies that smell of roses and champagne.

Our commentary on the CFA Franc, which in our considered opinion is a crimimal set-up, has been one of our most popular pieces. We re-visit this piece, published in 2008 in The Frontier Telegraph:

Ladies and Gentlemen: Welcome to the Communauté Financière de l’Afrique ( CFA ), where this is how things have been working for over sixty years. The January 2008 edition of the pan-African magazine, New African, reports that “the tale of this currency is extraordinarily mind-numbing!” and inspires this special commentary.

The CFA was created in 1945 by Gaullist officials in Paris. The CFA franc remains the currency of eight west African countries: Benin, Burkina Faso, Côte d’Ivoire, Guinea Bissau, Mali, Niger, Senegal and Togo (UMEAO) and six central African countries: Cameroon, Central African Republic, Chad, Congo-Brazzaville, Equatorial Guinea and Gabon (CEMAC). In west Africa, the Banque Centrale des Etats de l’Afrique de l’Ouest (BCEAO) issues the currency, while in central Africa, it is the Banque des Etats de l’Afrique Centrale (BEAC).

Reporter, Regina Jere Malanda, begins the New African exposé on the CFA franc thus:

“If you think it is bad enough that the majority of the former French colonies in Africa fall in the “Bottom 50″ of the least developed countries in the world, spare a thought for this fact: Poor as they are, they have, for over six decades, been depositing 65% of their foreign reserves in the French Treasury in Paris – thanks to an archaic colonial arrangement linking their local currency, the CFA franc , to the French franc and now the euro.” Later on, it is learned that “another 20% of reserves [go] to cover financial liabilities.”

Our largely English reading audience now gets to understand that this is an essential component of being a francophone in Africa. This is a critical underlying factor that maintains the crushing poverty in this sphere we happen to find ourselves as non-francophones. For this archaic arrangement, to have survived for so long, in part, is responsible for unending dictatorships with presidents for life, tyranny, coups and even genocides in francophone Africa.

Read the whole piece here: Slavery By Another Name: CFA Franc

The financial crisis has accelerated the discrediting of the international financial institutions and deepened the crisis of legitimacy of the neoliberal system. This offers Africa a unique opportunity to free itself from the influence of the neoliberal ideology and the control of these institutions. African countries should have the courage and political will to break with failed and discredited policies. Never before did they have such an opportunity and strong reasons to explore alternative policies. It is time for Africa to reclaim the debate on its development and take responsibility for it. Examples from other regions of the global South provide important lessons that African countries could learn from and use to their benefit.

By Demba Moussa Dembele
Director-Forum for African Alternatives
Original Publication: Pambazuka News

As the international financial crisis points to the collapse of laissez faire economics and discredits market fundamentalism, Africa and the global South should break free from failed neoliberal policies and the institutions that have promoted them and define their own paths to development, writes Demba Moussa Dembele, director of the Forum for African Alternatives.

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By Franklin Cudjoe*

There is undoubtedly so much economic pain in the world today, just as there has been staggering solutions proffered, not least, by some economic Nobel laureates. For instance, the 2008 Nobel Laureate for Economics, Paul Krugman has said the $780bn stimulus bonanza President Obama got from Congress is way too small to make impact on the American Dream. Never mind, if as President Obama has hinted with his “Buy America” pledge, we are going to see good old protectionism’s flag hoisted by the richest nations on earth. Our worry, though, is the rippling effect such centrist policies have on the poor in the developing world.

We do not have all the answers, but there is young Swedish thinker who has learnt not to sell edicts to governments, and certainly not to poor people. John Norberg is Libertarian, but not an ideologue. As our associate editor, June Arunga said in her introduction to Norberg’s book, In Defense of Global Capitalism, Norberg does not “tell people what they ought to think. He asks them what they think. And asking the poor who have been given opportunities to engage in trade, either as traders or merchants or as employees of enterprises involved in international trade reveals things that the official pontificators miss.”

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The creation and maintenance of the French domination of the francophone African economies is the product of a long period of French colonialism and the learned dependence of the African states. For most of francophone Africa there are only limited powers allocated to their central banks. These are economies whose vulnerability to an increasingly globalised economy expands daily. There can be no trade policy without reference to currency; there can be no investment without reference to reserves. The African politicians and parties elected to promote growth, reform, changes in trade and fiscal policies are made irrelevant except with the consent of the French Treasury which rations their funds. There are many who object to the continuation of this system. President Abdoulaye Wade of Senegal has stated this very clearly “the African people’s money stacked in France must be returned to Africa in order to benefit the economies of the BCEAO member states. One cannot have billions and billions placed on foreign stock markets and at the same time say that one is poor, and then go beg for money”

This system of dependence is a direct result of the colonial policies of the French Government. In the immediate post-war period after the signing of the Bretton Woods Agreement in July 1944 the French economy urgently needed to recover from the several disasters of the Second World War. To assist in this process it set up the first CFA amongst its African colonies to guarantee a captive market for its goods.

The principal decision which resulted from the Bretton Woods Agreement was the abandonment of the Gold Standard. In short, the new system gave a dominant place to the dollar. The other currencies saw their exchange rate indexed to the dollar. The reserves of the European central banks at that time consisted of currencies of dubious post-war value and gold which had been de-pegged from the fluctuations of the currency. For this reason France needed the currencies of its colonies to support its competitiveness with its American and British competitors. DeGaulle and his main economic advisor, Pierre Mendès France met with some African leaders and developed a Colonial Pact which would enshrine this is in a treaty (with both public and secret clauses).

By Dr. Gary K. Busch
Ocnus.net*

One aspect of the effects of the global recession has been the strong pressures impacting on the monetary arrangements of the Economic Community of West African States (ECOWAS) or in French the Communauté Économique des Etats de l’Afrique de l’Ouest (CEDEAO). This regional grouping of fifteen African states (Benin, Burkina Faso, Cape Verde, Côte d’Ivoire, The Gambia, Ghana, Guinea, Guinea Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone, and Togo) contain both Francophone, Anglophone and one Lusophone states.. These nations joined together in the Treaty of Lagos in 1975 in an effort to construct an economic and monetary union which would promote growth, stability and the integration of the economic development in the region. ECOWAS was also designed to become part of an even larger union, the African Economic Community.

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