Advisor in Angola

LUANDA/HAMBURG |

LUANDA/HAMBURG (Own report) - Overshadowed by the German military incursion in the Democratic Republic of the Congo (DRC), German business circles are making efforts to strengthen their position in resource-rich Angola, the DRC's southwestern neighbor. Accordingly the Africa Association in Hamburg will be continuing its efforts with a meeting of experts on Friday July 7. Angola is Africa's second largest oil producer, south the Sahara, and disposes of abundant other natural resources, whose marketing has created a rapid economic recovery, following decades of civil war and has therefore opened up possibilities for lucrative follow-up contracts for foreign enterprises. A prominent politician of the Christian Social Union Party of Bavaria (CSU) is serving as an "advisor" to the Angolan government. German companies, which nearly overslept the Angolan boom, are now competing with enterprises from the People's Republic of China. Beijing obtains from Angola more than one quarter of its African imported goods. The struggle for the raw materials and the follow-up contracts of the country is embedded in the global rivalry around finite assets and markets, which has dramatically become more acute and, as, for example, in the case of the northern neighbor, DR Congo, is in an increasing number of states taking on warlike forms.

Market for the Future

The Federal Agency for Foreign Trade (BFAI) indicates that the German government "should" attribute due importance to the long neglected Angola in accordance with its "strategic (...) significance, not only for Southern Africa".[1] Angola is considered, at present, to be the strongest growth market on the entire continent. The basis for the boom are the natural resources. Angola is, after Nigeria, the second largest oil producer south the Sahara and disposes of extensive deposits of iron ore, copper and gold. In 2003, this Southwest African nation ranked fourth on the world scale for its diamond supply. Numerous resources have been located in provinces, bordering on the Democratic Republic of the Congo - where, currently, the deployment of European troops is accompanying the allocation of mining concessions. The Angolan government uses the income from the raw material business, to finance the country's reconstruction after decades of civil war. This process is estimated to last "at least two decades" and offers in numerous sectors, possibilities in both export and investment, according to the BFAI.[2] A nationwide demand for investment in the energy sector alone, is estimated at approximately US dollar 20 billion. Angola is considered a "market for the future".

Economic Promotion

German business noticed the upswing in Angola only very late. Still in 2004, the bilateral volume of trade only reached 80 million Euros. It was only after an investment protection and promotion agreement was signed, as well as after the renewal of government promotions (Hermes warranties) that the commercial exchange rapidly rose, reaching - from January to November 2005 - nearly 155 million Euros - tendency rising. The German Africa Association has, since some time, been organizing trips by delegations, to facilitate the expansion of German business to Angola. For Friday, July 7, a meeting of experts to study the competitive situation in this Southwest African nation has been announced. Even the intensification of German Development Assistance payments, which could spread German influence, is not considered impossible.

Challenge

In Angola German companies are competing particularly against the People's Republic of China, which has strongly expanded its economic activities over the past few years. Berlin is keeping these activities under close scrutiny. The German Institute for International and Security Affairs (SWP) ascertained last August, that Beijing bought access to an Angolan oil field with a two-billion-dollar credit. At least 70 per cent of the orders financed by the credit must be assigned to Chinese companies.[3] China's decision to make "the Angolan, state-owned, Sonangol Oil Company a partner in its oil extraction in Argentina (...) is less economically motivated" and is meant above all to consolidate China's position with Angola. "The rapid expansion of Chinese influence in Africa represents (...) a central challenge to the German Africa policy (...)", concludes the SWP.[4] In fact the competition with Beijing in the meantime takes place in several states, among others in Zimbabwe [5] but particularly in Sudan [6], ranging from open confrontation to military conflicts.

Copper Corridor

The USA is also becoming more strongly implicated in the competition. Angola is an important oil supplier to the US, which seeks to increasingly draw its energy sources from Africa, to reduce its dependence upon the crisis ridden area around the Persian Gulf. In the meantime, Beijing has also entered the Angolan oil production market and acquires nearly as much oil as Washington from Luanda. Angola, also as a transit state, is threatened to become an object of the rivalry. The U.S. Trade and Development Agency (USTDA) seeks to finance a rail line, that will assist in transporting Zambia's extensive copper deposits westward over Angolan territory ("Copper Corridor").[7] Beijing had, by 2005, invested approximately US $170 million in Zambian copper and coal mines.

Unnoticed

In view of the sharp rivalry, German prospective investors are benefiting from the fact that the government in Luanda has employed a German "advisor". He is Erich Riedl, a politician of the Bavarian CSU Party. A former parliamentary undersecretary of state in the Ministry of Economics, he was suspected, in the 90s, of being implicated in a bribery scandal concerning the export of German NBC armored reconnaissance vehicles to Saudi Arabia. Already years ago, Riedl emerged as a member of the advisory board of the Gauff engineering company in Nuremberg [8], which was accorded a two million Euros contract in Angola last year. For 20 million Euros the German company is renewing the water supply in the capital, Luanda and organizing for 22 million Euros, the reconstruction of a communication road, south of the capital. Those profitable activities of the former undersecretary of state ("Tank Riedl") and its political implications, go unnoticed in Germany.

[1] Angola steht hoch in der Gunst der Investoren. Gute Chancen für die deutsche Wirtschaft; Bundesagentur für Außenwirtschaft 29.03.2006
[2] Wirtschaftstrends kompakt Angola 2006; Bundesagentur für Außenwirtschaft 22.02.2006
[3], [4] Die Afrikapolitik der Volksrepublik China; SWP-Studie S 20, August 2005
[5] see also Ein krimineller Plan
[6] see also Nucleus of a Germ and "Wie im Kongo"
[7] Sambia plant "Kupfer Korridor" durch Angola; Bundesagentur für Außenwirtschaft 12.05.2006
[8] Wirtschaftstag Nahost in Leipzig; Wirtschaftsforum Nah- und Mittelost 6/2002