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After the successful completion of US-Africa Summit, the news was dominated by Ebola explosion that ferociously and perilously stole the thunder from the rosy aftermath analysis of the summit. But wait a second; I still have some reflections on the historic summit:
When I read on the pages of New York Times on President Obama summoning his African counterparts for the US-Africa Summit in Washington DC; my first reaction was purely based on cost analysis, specifically on the venue of the summit. Why is it necessary for all the leaders to gather in Washington DC to see President Obama? Is it not more logical to hold the convention in Africa in the deference to the opportunity cost of logistic and travelling cost?
My perspective was perfected due to the accrued cost of transportation, accommodation and traveling expenses, for it should be more commonsensical to hold the summit in African soil. Moreover, a tele/video conference is just as good as a face-to-face summit. My thinking was based on the money, for cost of traveling could be better utilize to provide a health clinic and running water in a remote village in Africa.
But when I put on my diplomatic and international politics cap, it dawned on me that it made more political sense for the summit to hold in United States. The Washington DC was appropriate for two principal reasons. First and foremost, the proximity to the American business community is utmost important. It makes American business, diplomatic and political community more accessible to the visiting African leaders. Secondly, the publicity and dissemination of the news on the significance of the summit can be in the better hands of American news machine.
Next time, if there is going to be another Africa-US Summit; Africa is the most appropriate venue especially in Abuja, Addis Abba or Pretoria. Please do not me why I pick those venues in Africa, the reason is self-evident. Abuja is capital of Nigeria, which is the most populous and largest economy in Africa, Addis Abba is the headquarter of African Union while Pretoria, capital of South Africa, is the second largest economy and perhaps the most developed economy with modern infrastructures in the continent.
Africa is richly endowed with both human capital and natural resources that can make it competitive with rest of other continents, but intellectual lethargy and psychological set-down made Africa to become independent to other exterior economies. Take for instance Nigeria has more resources than Britain and France combined yet Nigeria has a lesser GDP than Britain and France respectively. Britain has a population of 60 million with GDP of 2.435 trillion USD, and French population 65.7 million with GDP 2.613 trillion USD; Nigeria has a population of 170 million with over half trillion GDP. Nigeria with more resources and with more engineers and technologists would have been richer, but rather she recorded lower GDP and income capita per head. And “If Britain were to join the United States, it would be the second-poorest state, behind Alabama and ahead of Mississippi,” while Nigeria with a well managed economy will fare better.
The US-Africa Summit is a significant development for it introduced a dynamic and equal relationship between Africa and United States. But the reality and factuality is that Africa has all it need to develop its economy and emerged as industrial and rich continent. Africa must first and foremost realize that her destiny is in her hands and not in the galaxy and Milken way.
United States should encourage elimination of corruption in Africa and beyond the shores of the continent. The responsibility of fighting corruption is too complex and gigantic to be left for one party. Both Africa and West must partake in the fight against corruption. The West must enact banking laws that will fish out bankers that accept laundered money and tainted wealth from corrupt African leaders and bureaucrats. Ill-gotten wealth must be returned to Africa without much ado, while the culprits must be exposed and prosecuted.
The West must work together with African governments on the war against corruption and bribery. Corporations and Transnational companies operating in Africa must not induce politicians and bureaucrats with bribes in their quest for contracts.
“African Union estimates that the continent loses as much as $148 billion a year to corruption. This money is rarely invested in Africa but finds its way into the international banking system and often into western banks. The proceeds of corrupt practices in Africa, (which the African experts group recommended in 2002 should be classified as a ‘crime against humanity’ because of its impact on ordinary people), are often laundered and made respectable by some of the most well-known banks in the City of London or the discreet personal bankers of Geneva and Zurich," including secret Swiss and off-shore accounts
Swiss traders’ alleged corruption on the buying of Nigeria and Africa’s crude oil without transparency and accountability was reported by SWISSAID:
“In Nigeria, Swiss companies bought oil worth $37 billion over the three years, an amount equal to more than 18 percent of the national government’s revenues. Payments of this scale that affect the development prospects of poor countries require public oversight, which has been largely missing in most of the scenarios described in this report. Transparency provides citizens with a tool to hold their government to account for the management of their country’s most valuable asset. To achieve transparency, we recommend the following: • Oil-producing governments and NOCs should adopt rules and practices that encourage integrity in the selection of buyers and determination of the selling price, including detailed public disclosures on how the state’s share of production is allocated and sold.
Switzerland should accept its responsibility as the world’s leading commodity trading hub and pass regulation that requires Swiss companies producing or trading in natural resources to disclose all payments made to governments and state-owned companies, including payments associated with trading activities. In a 25 June 2014 report, the Swiss federal government indicated a preference to exclude trading-related payments from future regulation of this kind. If that position holds, the payments described in this report would remain secret.”
US-Africa Summit is a good start for better relationship for trade and commerce, but Africa must not think that America must do for her what she must do for her-self. Africa must stand up and be counted lest the voices of the prophets of doom will proclaim her irrelevancy and subsidiarity.
Emeka Chiakwelu, Principal Policy Strategist at AFRIPOL. His works have appeared in Wall Street Journal, Huffington Post, Forbes and many other important journals around the world. His writings have also been cited in many economic books, publications and many institutions of higher learning including tagteam Harvard Education. Africa Political & Economic Strategic Center (AFRIPOL) is foremost a public policy center whose fundamental objective is to broaden the parameters of public policy debates in Africa. To advocate, promote and encourage free enterprise, democracy, sustainable green environment, human rights, conflict resolutions, transparency and probity in Africa.
As African leaders gathered in Washington DC on the invitation by President Obama for US-Africa summit, the focus of the summit was centered on trade not aid. But the elephant in the room or in the minds of the summit participants is China. It is there for everybody to see that China’s business and commercial tempo in Africa is rising and rising. China is now the largest trading partner to Africa. Five years ago China surpassed the United States as Africa’s largest trading partner, with Beijing’s trade quantifying at the excess of $200 billion (150 billion euros).
“In 1980, the total Sino-African trade volume was US$1 billion. In 1999, it was US$6.5 billion and in 2000, US$10 billion. By 2005, the total Sino-African trade had reached US$39.7 billion before it jumped to US$55 billion in 2006, making China the second largest trading partner of Africa after the United States, which had trade worth US$91 billion with African nations. The PRC also passed the traditional African economic partner and former colonial power France, which had trade worth US$47 billion. In 2010, trade between Africa and China was worth US$114 billion and in 2011, US$166.3 billion. In the first 10 months of 2012 it was US$163.9 billion.
There are an estimated 800 Chinese corporations doing business in Africa, most of which are private companies investing in the infrastructure, energy and banking sectors. Unconditional and low-rate credit lines (rates at 1.5% over 15 years to 20 years) have taken the place of the more restricted and conditional Western loans. Since 2000, more than $10bn in debt owed by African nations to the PRC has been canceled.”
In addition “One-third of China's oil supplies comes from the African continent, mainly from Angola. Investments of Chinese companies in the energy sector have reached high levels in recent years.[when?] In some cases, like in Nigeria and Angola, oil and gas exploration and production deals reached more than $2 billion.[clarification needed Many of those investments are mixed packages of aid and loan in exchange for infrastructure building and trade deals.”
Economist magazine reported, “When it comes to trade, America trails in second place to China, which has long held summits with African leaders and hosted individual meetings (unlike President Obama). Still, America hands out about five times more aid to the continent than China, and invests considerably more too. Meanwhile, European countries still enjoy colonial ties, as the healthy level of trade, aid and investment attests. In recent years emerging powers like India and Brazil have increased their links to the region—but only in terms of commercial flows, not philanthropic ones.”
Former President Bill Clinton exchange ideas with Aliko Dangote (right), CEO of Dangote Group, and Jeff Immelt, the head of General Electric (left) after a panel discussion at the US-Africa Business Forum
Although aid maybe needed now and then, but the key for Africa’s growth must be centered on trade and not aid. Trade is the engine of commercial, economic and industrial development. No industrial nation has emerged on the global stage because of aid. Africa must shunned aid and must focus primarily on trade.
“No nation has been more aggressive in Africa than China. Its direct investment in sub-Saharan Africa has jumped from virtually nothing in 2002 to $18.2 billion in 2012. China is hungry for oil, coal and other resources and eager to develop the roads, bridges and ports needed to pull them out of Africa.
Africans tend to favor doing business with China in part because it’s less likely than Western nations to demand economic and political reforms to accompany trade and development deals.
“Investors from the U.S. and Europe have tended to be large investors who demand all kinds of facilitation, who expect all kinds of conditions,” says Frederick Golooba-Mutebi, a Rwanda-based researcher and honorary fellow at the University of Manchester. “I do not see Europe and the U.S. catching up with China.”
Indeed, this week’s summit is seen as an American effort to regain some of the influence lost in the region to China over the past decade. Next year, the United States hopes to expand a 14-year-old free-trade deal with Africa.
On Tuesday, the Obama administration announced $14 billion in commitments from U.S. businesses to invest in Africa — money to be plowed into construction, clean energy, banking, information technology and other sectors. The money includes a $2 billion investment by General Electric by 2018, $200 million by Marriott and a $66 million commitment by IBM to provide technology services to Ghana’s Fidelity Bank.” – Associated Press
In addition, "Coca-Cola and its African bottling partners announced an investment of $5 billion, rising to $17 billion Coca-Cola’s investment in Africa from 2010 to 2020.”
Credits: AP, Wikipedia
Deputy Department Spokesperson, Office of the Spokesperson
June 23, 2014
US Department of State (press release)
The United States commends the people of Ekiti State, Nigeria, who turned out to vote in the June 21 gubernatorial election. U.S. Embassy and international observers assessed that the process was credible and efficient, and that security forces collaborated effectively in providing a safe environment free of major incidents. We congratulate Mr. Ayo Fayose on his election, and commend Governor Fayemi on graciously accepting the results. We urge all parties to accept the outcome as representing the will of Ekiti’s voting public.
As we look towards the August 9 Osun State gubernatorial election and the national elections in February 2015, the process in Ekiti should lend confidence to the Nigerian public and the international community that INEC, the security forces, and the political parties have the capacity to conduct themselves in a manner that strengthens Nigeria’s democracy and gives political voice to its population.
The U.S. government is accusing the debt rating agency Standard & Poor's of fraud for giving high ratings to risky mortgage bonds that helped bring about the financial crisis.
The government filed a civil complaint late Monday against S&P, the first enforcement action the government has taken against a major rating agency related to the financial crisis.
S&P, a unit of New York-based McGraw-Hill Cos., has denied wrongdoing. It says the government also failed to predict the subprime mortgage crisis.
But the government's lawsuit paints a picture of a company that misled investors knowingly, more concerned about making money than about accurate ratings. It says S&P delayed updating its ratings models, rushed through the ratings process and was fully aware that the subprime market was flailing even as it gave high marks to investments made of subprime mortgages. In 2007, one analyst forwarded a video of himself singing and dancing to a tune about the deterioration of the subprime market, with colleagues laughing.
Ratings agencies like S&P are a key part of the financial crisis narrative. When banks and other financial firms wanted to package mortgages into securities and sell them to investors, they would come to a ratings agency to get a rating for the security. Many securities made of risky subprime mortgages got high ratings, giving even the more conservative investors, like pension funds, the confidence to buy them. Those investors suffered huge losses when housing prices plunged and many borrowers defaulted on their mortgage payments.
This arrangement has a major conflict of interest, the government's lawsuit says. The firms that issued the securities could shop around for whichever ratings agency would give them the best rating. So the agencies could give high ratings just to get business.
The government's lawsuit says that "S&P's desire for increased revenue and market share ... led S&P to downplay and disregard the true extent of the credit risks" posed by the investments it was rating.
For example, S&P typically charged $150,000 for rating a subprime mortgage-backed security, and $750,000 for certain types of other securities. If S&P lost the business – for example, if the firm that planned to sell the security decided it could get a better rating from Fitch or Moody's – then an S&P analyst would have to submit a "lost deal" memo explaining why he or she lost the business.
That created sloppy ratings, the government said.
"Most rating committees took less than 15 minutes to complete," the government said in its lawsuit, describing the process where an S&P analyst would present a rating for review. "Numerous rating committees were conducted simultaneously in the same conference room."
According to the lawsuit, S&P was constantly trying to keep the financial firms – its clients – happy.
A 2007 PowerPoint presentation on its ratings model said that being "business friendly" was a central component, according to the government.
In a 2004 document, executives said they would poll investors as part of the process for choosing a rating.
"Are you implying that we might actually reject or stifle `superior analytics' for market considerations?" one executive wrote back. "...What is `market perspective'? Does this mean we are to review our proposed criteria changes with investors, issuers and investment bankers? ... (W)e NEVER poll them as to content or acceptability!"
The lawsuit says this executive's concerns were ignored.
A 2004 memo said that "concerns with the objectivity, integrity, or validity" of ratings criteria should be communicated in person rather than through email.
Also that year, an analyst complained that S&P had lost a deal because its criteria for a rating was stricter than Moody's. "We need to address this now in preparation for the future deals," the analyst wrote.
By 2006, S&P was well aware that the subprime mortgage market was collapsing, the government said, even though S&P didn't issue a mass downgrade of subprime-backed securities until 2007. One document describing the performance of the subprime loans backing some investments "was so bad that analysts initially thought the data contained typographical errors," the government lawsuit said.
In March 2007, one analyst who had conducted a risk ranking analysis of 2006 mortgage-backed securities wrote a version of "Burning Down the House": "Going - all the way down, with/Subprime mortgages."
A video showed him singing and dancing another verse in front of S&P colleagues, who laughed.
Another analyst wrote in a 2007 email, referring to ratings for mortgage-backed investments: "The fact is, there was a lot of internal pressure in S&P to downgrade lots of deals earlier on before this thing started blowing up. But the leadership was concerned of p(asterisk)ssing of too many clients and jumping the gun ahead of Fitch and Moody's."
The government filed its lawsuit in U.S. District Court in Los Angeles. The government charged S&P under a law aimed at making sure banks invest safely, and said that S&P's alleged fraud made it possible to sell the investments to banks. .
If S&P is eventually found to have committed civil violations, it could face fines and limits on how it does business. The government said in its filing that it's seeking financial penalties.
The action does not involve any criminal allegations. Critics have long complained about the government's failure to bring criminal charges against any major Wall Street players involved in the financial crisis.
Criminal charges would require a higher burden of proof and carry the threat of jail time.
McGraw-Hill shares rose 25 cents to $50.55 in Tuesday's premarket session, after plunging nearly 14 percent the day before on the expectation that a lawsuit would be filed.
Shares of Moody's Corp., the parent of Moody's Investors Service, another rating agency, rose 31 cents to $49.45 before Tuesday's opening bell, after closing down nearly 11 percent on Monday.
US planning to establish a drone base in Africa for better surveillance of region’s militants
Plans to base unarmed American surveillance drones in the African nation of Niger highlight the Obama administration’s growing concern about extremist influences in the volatile region. They also raise tough questions about how to contain al-Qaida and other militant groups without committing U.S. ground forces in yet another war.
In the short run, a drone base would enable the U.S. to give France more intelligence on the militants that French troops are fighting in neighboring Mali. Over time it could extend the reach not only of American intelligence gathering but also U.S. special operations missions to strengthen Niger’s own security forces.
The U.S. and Niger in recent days signed a “status of forces agreement” spelling out legal protections and obligations of American forces that might operate in Niger in the future.
Pentagon spokesman George Little acknowledged the agreement, but declined Tuesday to discuss U.S. plans for a military presence in Niger.
“They expressed a willingness to engage more closely with us, and we are happy to engage with them,” Little said, adding that the legal agreement was months in the making and saying it was unrelated to the recent fighting in Mali.
The U.S. has found some of its efforts to fight extremists hobbled by some African governments, whose own security forces are ill-equipped to launch an American-style hunt for the militants yet are reluctant to accept U.S. help because of fears the Americans will overstay their welcome and trample their sovereignty.
At France’s request, the U.S. has flown 17 Air Force transport flights to move French troops and their equipment to Mali in recent days, Little said. U.S. aircraft also are conducting aerial refueling of French fighter jets based in Mali, he said, and those operations will continue.
Other U.S. officials said the Pentagon is planning a new drone base in northwestern Africa — most likely in Niger — but the plans are not yet complete. It would provide more extended U.S. aerial surveillance of militants in the region without risking the loss of air crews. The main U.S. drone base in Africa is in Djibouti in East Africa.
Niger has accepted the idea of hosting unarmed U.S. drones as well as conventional and special operations troops to advise and assist Niger’s military on border security, but it has not endorsed armed U.S. Predator strikes or the launching of U.S. special operations raids from their territory, according to a senior U.S. military official briefed on the matter. The official spoke on condition of anonymity because the official was not authorized to speak publicly.
Africa is increasingly a focus of U.S. counterterrorism efforts, even as al-Qaida remains a threat in Pakistan, Yemen and elsewhere. The recent terrorist attack on a natural gas complex in Algeria, in which at least 37 hostages and 29 militants were killed, illustrated the threat posed by extremists who have asserted power propelled by long-simmering ethnic tensions in Mali and the revolution in Libya.
"As a nation, we are firmly committed to turning the tide on the 30-year-old fight against AIDS. That’s why I proudly announced last year that creating an AIDS-free generation is a new policy imperative for the United States. To be clear, we still face enormous challenges. Far too many people are dying from this disease. We need
to reach more people with both prevention and treatment services. But today, thanks to remarkable scientific discoveries and the work of countless individuals, organizations and governments, an AIDS-free generation is not just a rallying cry—it is a goal that is within our reach.
At the International AIDS Conference this past July, I asked our Global AIDS Coordinator, Ambassador Eric Goosby, to prepare this blueprint outlining our path to helping create an AIDS-free generation. I want the next Congress, the next Secretary of State, and all of our partners here at home and around the world to understand everything we’ve learned and to have a road map for how the United States will contribute to an AIDS-free generation.This blueprint should make one thing clear: the United States is and will continue doing our part. But creating an AIDS-free generation is too big a task for one government or one country. It requires the world to share in the responsibility. We call on partner countries, other donor nations, civil society, faithbased organizations, the private sector, foundations, multilateral institutions and people living with HIV to join us as we each do our part.
Together, we can deliver a better future to millions across the globe. A future where children are not born with HIV… where teenagers and adults are at far lower risk of contracting the virus… where those who do have the virus get lifesaving treatment. A future where every child has the chance to live up to his or her God-given potential."
- Hillary Rodham Clinton, United States Secretary of State
Pepfar Blue Print http://www.pepfar.gov/documents/organization/201386.pdf
Since the 1973 oil embargo imposed on United States by Arab oil producing nations, United States has not relented in pursuit of strategies to make America energy secured and sufficient. The energy security was paramount to United States because of its dependency on foreign oil especially in the troubled Middle East. American modern industrial complex is run on oil and she cannot afford to be vulnerable to the instability in Middle East, its primary source of oil. Finally, the formulated strategy is bearing fruit in a big way and United States has apparently reached the promised land of energy sufficiency and it will soon export crude oil by 2014.
Earlier, United States strategic interest was extended to Nigeria where the supply of sweet ebony crude oil was more reliable. Nigeria was a good alternative to Middle East where political insecurity and instability are threat to oil shipment to United States. The energy policy makers and business community in America does not want to rely solely on the Middle East oil. Therefore looking beyond Middle East was a smart strategic move, not that they abandon oil supply from that part of the world but they diversify their sources of oil supply to include Mexico, Canada, Nigeria, Venezuela and many other places in southern hemisphere.
But even with the myriad sources of oil supply to America, it has not abandon oil drilling and exploration within continental America. It is a goal and principal task among oil explorers in United States to make a quantifiable difference in supply of energy for internal consumption. With innovative technology, strategic planning and implementation, they are beginning to win the battle. The technology and cost that hampered local exploration of oil deposits have been improved and scientifically uplifted. The cost of production is managed brilliantly with insight and innovations that are now bearing fruits.
With intensive research and development, United States has struck gold with discovery of fracking process for recovery of ‘lost’ oil embedded on rock formations in deep underground. Since 1951 US discovered a large oil deposit at Bakken formation which is at the landscape which encompassed Montana, North Dakota, and Saskatchewan. But the rock formation was difficult to extract oil from but with fracking procedure US will soon become an oil exporting nation that will rival Saudi Arabia and OPEC. The 1920 Mineral Leasing Act which restricted oil export in United States may be abrogated.
Chris Swann, Reuters Breaking views columnist, writing on this subject put it this way:
“America’s energy boom is spurring a clash between the realms of politics and economics. Meaningful exports of oil have been banned for almost a century. But with output surging and crude fetching a 20 percent discount at home, producers want to ship it overseas. BP, Royal Dutch Shell and four others have applied for limited licenses to do just that. Unblocking trade could benefit everyone.
The 1920 Mineral Leasing Act allows producers to sell only tiny amounts of black gold abroad. Even shipments to Canada require a special license – BP has just secured one. At present America exports just 47,000 barrels a day, against imports of over 8 million barrels. Yet production has shot up 32 percent since 2008.
The output surge has been gradually helping to make America more energy self-sufficient. The only drawback is that there’s not as much demand at home for the light sweet crude generated by new fields – and many U.S. refineries are configured to process heavy sour crude. On top of that, the pipeline network for transporting domestic crude is inadequate.”
At the Bakken formation there is a reliable crude oil deposit up to 4.3 billion barrels and together with other oil spots in America, there will be no need for America to import sweet light crude from Nigeria because the land mass at Bakken Formation contain essentially sweet light crude.
At the present United States imports 15 percent of its oil from Nigeria and it was projected to import about 25 percent of its oil consumption from Nigeria by 2015. But with discovery of fracking process and with the large deposit of crude oil at Bakken, Nigeria has to look for another market for its oil export and consumption.
Energy security and sufficiency has been United States priority and it can now join the family of oil exporting nations. United States did a great job in energy conservation, together with Natural Liquefied Gas, and other energy alternatives in a mix; it propelled US to achieve energy sufficiency.
Nosedive of price and oil glut
Nigeria policy makers and National Assembly were squabbling over $75 pegging of oil benchmark for 2013 budget but they come short of realistic strategic econometric forecasting of oil price by 2014. In the next couple of years the price of oil will come down but no expert can say for sure how much it will be but there are chances that price of oil will dramatically nosedived with United States exporting oil and competing with OPEC on the world stage.
Another leverage United States will enjoy over Nigeria and OPEC nations is its ability to refine its own crude oil. Although, many of the oil refineries in United States were technologized to process high sulfur oil; but US will overcome the shortcomings by building refineries geared for sweet light crude refining, while simultaneously getting a helping hand from nearby Canada.
Nigeria will feel the heat and may lose more than other OPEC members because she failed to diversify her economy and leverage oil generated revenue for development. The Nigeria’s economy still depended on oil for 95 percent of its foreign exchange; the economy is not diversified but rather ridden with 'chop chop' corruption. The economy lacks the incentive that it needs to attract a large and enduring capital that will make a difference in the life of an average Nigerian. The core social and physical infrastructures that enable the wealth creation to be sustainable are absent because Nigeria failed to have a clear cut priority. Buying private jets, drinking expensive wines and siphoning money abroad will not cut it. Nigeria cannot boast of uninterrupted supply of water and electricity for a full day. That is incredible!
Nigeria does not have seasoned leaders and patriots to turn the country around. As the President Jonathan said, one person cannot do it alone but at same time Nigerians must not be waiting to be invited to build their own nation.
Nigeria‘s future Market
The appropriate thing to do is to look for market in Far East especially in China, Japan and India. These nations are already doing business in Nigeria; China for one is not a stranger in Nigeria, where she is playing an important role in oil exploration. This can also be said of India; the truth is that things are going to change because United States will not abandon those markets for Nigeria and OPEC nations. With all the internal insecurity bubbling in Nigeria: the kidnappings, killings, corruption, unreliability; China and India may even prefer to buy oil from United States that is more reliable, without rancor and instability.
Therefore Nigeria must stop and look at internal market for its energy consumption especially within Nigeria and West Africa. But, first and foremost, building more refineries are quite essential to cease refining oil abroad. Nigeria has the internal market for its energy consumption. Building electricity plants that are run with its own energy which are in ample supply is the way forward. The good thing coming out of this, is that the time has come for Nigeria to look inward and appease the energy demand in the economy rather than sending those resources off shore.
Department Spokesperson, Office of the Spokesperson
January 24, 2012
The United States strongly condemns the terrorist attacks in the city of Kano and Bauchi state in Nigeria over the past several days. We extend our condolences to the families and loved ones of the victims of this senseless violence. We call for a full investigation of the attacks and for those responsible to be held accountable.
This is a time for all Nigerians to stand united against the enemies of civility and peace. Nigeria’s ethnic and religious diversity is a source of strength for the country and those who seek to undermine that strength with divisive tactics cannot succeed.
The United States remains strongly committed to working with Nigerian officials to find a way to bring peace to the north through both security and political responses and to work with the Nigerian government and others in the international community to promote greater economic development and long-term growth throughout northern Nigeria. We reiterate the importance of protecting innocent civilians in any law enforcement response to such attacks. These issues are at the center of the regional security cooperation working group meeting taking place in Abuja January 23-24, as a part of the U.S. – Nigeria Binational Commission.
Echoing the words of the late President J. .F Kennedy, "We will go to the moon and do other things, NOT because they are easy but because they are HARD." In a nutshell that is what raising United States debt limit is all about, if it was an easy issue there will be no need for the politicians to be scrambling for more favorable positions. It may not be as difficult as going to the moon but it may require same willpower.
The economic impact of not raising debt ceiling and subsequent default by United States may have domino effect on Nigeria and Africa as a result of AGOA and NEPAD. Most African countries have their reserve in US dollar which may depreciate in value if United States's AAA credit rating is downgraded. Many African countries receive foreign assitatnce from United States which may be slashed or be cut off when economic hardship continues in America. The key aspect of this is that America is a major trading partners to Nigeria and South Africa in particular and Africa in general.
The elected politicians of both Republican and Democrat parties can politicized the issue of debt limit from Washington to Timberakutu, but the reality is that there is no easy solution. One thing for sure, debt limit will be raised and failing to so come with untold hardship that will shake American economic foundation. Another thing is not just raising the debt limit but there is also a time factor. It is must be raised at the due time which was said to be August 2.
There is time and place for politics but this one in particular is not for it. Hey, no one can blame the politicians for not trying but it is time for them to quit dancing around and sit down and do the business of the people. Politicians are looking back at their constituencies and home base to determine what and how to negotiate. That is all good and dandy to seek support from your base, but in finality an elected politician be it the president or the speaker must make the tough decision. That is why they were elected in the first place to represent the people and make decision that is good for the country.
The die is cast and the Federal debt limit must be raised at the allotted time and failing to do so will come with economic ramification that will thicken economic hardship for the American people. Both the Wall Street and Main Street will not escape the economic woes that results due to the failure to raise the debt limit. Even the political elites – the elected politicians in Washington DC will not escape the frustration of the American people when they failed to deliver on debt limit. The voting public will definitely start once again with a clean slate by throwing away most politicians in 2012 election.
American greatest economic asset is the confidence that global economic players have in it. Investors are always trusting in putting their scarce resources in America by buying T bills and bonds knowing quite well that it will be redeem at the due time. Therefore when United States defaults on their financial obligations by not servicing and paying interest on their debt that will be a great disappointment, a big blow and the end of trust.People have come to take this for granted the confidence they and rest of the world have in US economy. But this confidence was not built in day; it takes years of accumulated hard work and sacrifices by great men and women of this country, framers, leaders and hard working tax payers who endeavor assiduously to solidify and consolidate this confidence and trust.
United States economic wellbeing might be at stake when Moody Rating and Standard & Poors’ downgrade the credit rating of the country if United States defaults. The AAA rating US has enjoyed since 1917 that justify American Super power economy may be downgraded. What it actually means that it be more difficult for American government to borrow money. In this case to borrow money the United States has to induce prospective buyers of treasury bills and bonds with higher interest rates. The greatest peril with such a scenario is that US cannot afford to pay higher interest rates on debts because they do not have the money and with $14 trillion debt, the debt servicing will take a big chunk of the budget expenditure. That in turn will threaten the welfare programs provided by the government. The American people will be faced with shift austerity measures as a result of downgrading of the credit rating. Subsequently, most of the programs offered by the government will be terminated or greatly slashed and cut down drastically.The government will resort and compel the Federal Reserve Bank to print more money and that is a fertile ground for higher inflation.
The greatest disaster that will come with the inability for the government to raise the federal debt limit will be a rising inflation resulting from printing of paper currency (dollars) in order for the government to meet its financial obligations. The making of higher inflation with lower credit rating will make life difficult for American people as it comes with higher unemployment, higher interest rates on credit cards and depreciation of standard of living.
Momentarily, the heat of inflation is beginning to show is ugly face gradually. But when the raising of debt limit falls apart, the surging inflation will make life difficult because dollar will worth less for domestic consumption. In this case employers will let go of more workers as result of economic slowdown and households with fixed incomes will not meet up paying their bills and providing for their loved ones. Economists are predicting a fresh recession not just double dip. All the gains made by this administration will fall apart and economic suffering will mightily increased.
Compromise is the Answer
In actuality lifting the debt ceiling is more of a fiscal problem than political but it needs political management. The executive and legislative arms of the government must do something real fast and come to some sort of agreement. There should be a meeting of the minds and there must be the ‘c’ word which is compromise.
President Obama and Speaker Boehner playing golf
President Obama and Speaker Boehner must find a common ground to strike a deal in order to avert the ramification that will come with the inability to raise the debt limit. This is a serious business and compromise is the answer. Politicians from both parties must be willing to leave their comfort zones and loosen their ideological nets to make the great compromise and save the day.