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Is Germany too powerful for Europe?

Category : Business

Twenty years ago, Germany’s economy was stagnating. Today, as the eurozone crisis deepens, this giant is keeping Europe afloat. But what does it want in return? Stuart Jeffries talks to German sociologist Ulrich Beck, who believes that his country has become a political monster

In his novel Fatherland, Robert Harris envisaged a hellish scenario – Hitler won the second world war. Decades later, the Greater German Reich extends from the Rhine to the Caspian Sea. The rest of Europe, though notionally consisting of independent states, is really under the Nazi jackboot.

Sound familiar? Of course not. That nightmare never came to pass. Happily, Germany does not rule Europe. Or does it? Munich-based sociologist Ulrich Beck argues in his new book that the eurozone catastrophe has given birth to a political monster: a German Europe. When, on 1 July this year, Croatia becomes a member, the European Union will contain 500 million people and be the largest market and trading bloc in the world.

“The new German power in Europe is not based as in former times on force,” writes Beck in German Europe. Which is a consolation. “It has no need of weapons to impose its will on other states,” he says. “It has no need to invade, and yet is ubiquitous.”

His homeland’s latest iron chancellor Angela Merkel rules Europe, imposing German values on feebler client nations, bailing out southern Europeans with their oversized public sectors, rampant tax evasion and long lunches. “In the countries most harshly affected by the crisis, many people think they are losers because the austerity policy pursued jointly by Berlin and Brussels deprives them of their means of livelihood – and also of their human dignity,” argues Beck.

Other Germans, naturally, don’t see it quite that way. The official line from the German embassy in London is that Germany is helping other European economies to become globally competitive and more able to take on emerging markets. “Germany was among the first to have started this endeavour and therefore might temporarily be a little ahead of others,” says spokesman Norman Walter. “Our main political drive over the last few years has been to increase competitiveness in all eurozone and EU member states.”

To get a different perspective on German domination of Europe, I consult a standup comic: Henning Wehn, a German comedian who is tired of being called an oxymoron by Britons, and is in the middle of a UK tour. The blurb for his show goes: “According to Henning, there’s no shortcut to success, hard work will eventually pay off and there is no shame in paying tax.” How this transmutes into comedy is anybody’s guess, but it seems to suggest that Wehn believes slacker Europe needs a German economics lesson. “Well, economically Germany is mainly dominant because it is the country with most people,” says Wehn. “It also has several things that explain its economic success and from which others can learn – our system of apprenticeships, our building societies that help entrepreneurs. When David Cameron spoke about strivers and skivers, that reminded me of a Swabian saying: ‘Schaffe, schaffe, Häusle baue!’ It means: “Work, work, build your little house!’ That sort of striving is deep in German identity.”

The worry is that Germany thinks of itself as a nation of strivers bankrolling a continent of skivers. “German money [is being] thrown away on the bankrupt Greeks,” ran a headline in the tabloid Bild, while Focus magazine had a cover image of the Venus de Milo giving the finger to the world. “If Ireland and Greece sank into the sea tomorrow, Germany would be quietly relieved,” says Simon Winder, publishing director at Penguin and author of Germania: A Personal History of Germans Ancient and Modern. “Germany today reminds me of the British Empire, burdened with non-lucrative colonies that it has to defend when all it’s really bothered about is India. The problem for Germany is that it has no India just, as it were, lots of Sierra Leones.”

The latest euro crisis over Cyprus bears out Beck’s analysis. According to Newsnight’s Paul Mason, the Germans want to “avoid creating a moral hazard, rewarding a country that has sold itself as a rule-free playground for Russians who want to keep their money”. For German politicians, and not just those of Merkel’s ruling Christian Democratic Union, that irresponsible nonsense can’t go on for ever: it’s time for Cyprus to wake up and smell the austerity. Beck argues that Germany is teaching Cyprus a moral lesson, namely that, as he puts it: “Suffering purifies. The road through hell, the road through austerity, leads to the heaven of economic recovery.” It’s a very German lesson, borne of the philosophies of Martin Luther and Max Weber and based on the protestant work ethic. That doesn’t play too well in Nicosia: hence all those “Merkel – Kaput” banners waved by soon-to-be redundant employees of Cyprus’s Popular Bank.

But what are the Germans getting out of teaching allegedly slacker Europeans how to run their economies? For Beck, Germany’s European dominance has given the nation a new sense of identity after decades of Nazi guilt, and provides liberation from what he calls the “never again syndrome” – never again a Holocaust, never again fascism, never again militarism. After the second world war and the Holocaust, he argues, Germany was in ruins morally and economically. Now, in both senses, it is back.

The origins of German economic dominance predate our current crisis. More than 20 years ago, Germany made a sacrifice for Europe at Maastricht when it agreed to put the deutschmark to the sword so that another currency could be born. “The tragedy for the Germans is that they viewed the euro as their great, healing gift to the rest of Europe, an act of self-denial in which they cashed in their totemic deutschmark for the continent’s greater good,” says Winder. Since the fall of Hitler, it has been Germany’s self-imposed obligation to help build a Europe where the petty nationalisms that had ruined the continent in two world wars could be definitively overcome.

It’s all about Vergangenheitsbewältigung, which means (roughly) the struggle to come to terms with the past – and, in particular, a Nazi past. (Maybe Britain will some time undergo its own Vergangenheitsbewältigung for its imperial shame, but that’s another story.) “The Germans no longer wish to be thought of as racists and warmongers,” Beck says. “They would prefer to become the schoolmasters and moral enlighteners of Europe.” It’s a moot question whether the rest of Europe wants to be on the receiving end of German enlightenment. “Germany’s chorus of I-want-to-teach-the-world-to-sing doesn’t play too well in Tring or Extramadura,” says Winder.

But that’s the Teutonic song: two decades ago, Germany after reunification was once as Greece is today, with a stagnating economy and five million unemployed. But, thanks to neoliberal austerity and taking on the Protestant notion that “suffering purifies”, the Germans were able to realise a jobs miracle. Now, Beck argues, German reunification is being used as the template for German crisis management in Europe. As head of the continent’s strongest economic power, Merkel is in a position to dictate the terms under which struggling eurozone nations can apply for further credit, eroding the democratic autonomy of the Greek, Italian and Spanish parliaments. Beck calls her Merkiavelli – after Machiavelli – to highlight the political nous with which she has run rings around other leaders.

He suggests that she is the uncrowned queen of Europe. Queen Merkiavelli the First of Europe, perhaps, demands that Germany’s new colonies save in the interests of stability – a formula based on the good housekeeping practices of a woman who sometimes casts herself as a sensible Swabian housewife. Beck’s chancellor sounds like Margaret Thatcher, who also prudently approached the balancing of government accounts as though they were a household budget. “There is one important difference,” Beck says. “Thatcher was doing to Britain something the British electorate had voted for. What Merkel is doing to Europe has no democratic mandate.”

Viewed thus, Germans are power-crazed anti-democrats using economic crisis to stage a furtive putsch on a supine continent. Aren’t we witnessing a German power grab? “Heavens, no. They have no imperial bone left in their body,” argues Winder. “They are colonists, but incredibly reluctant ones. There is no smoke-filled room filled with sausage-eating Germans who want to dominate Europe. There is no conspiracy.”

“I think that’s an incredibly silly point to make,” says Wehn. “German dominance in Europe is not anti-democratic. There are parts of Europe that are economically ahead of other parts. It’s just the same in Britain: London is economically ahead of the north-east of England. So should London leave sterling? That’s obviously a silly answer. The same is true in Europe. There are fishing villages in Greece that are going to be economically negligible, while Germany is dominant. Does that mean we should leave the euro? No! A strong Europe needs a strong Germany.”

There is, though, a paradox in Germany’s European domination. It is economically supreme, but culturally negligible. Some of us are enjoying the Wagner bicentenary, but it can hardly be argued that his music indicates the virility of German cultural exports in the new millennium. Nobody is wearing lederhosen in Glasgow or Warsaw. Next to nobody is learning German as a foreign language. Your next box set might well be in Danish but nobody’s will be in German. Fatih Akin, Christian Petzold, Hans-Christian Schmid and Ulrich Köhler have one thing in common: few have heard of these alleged icons of German new wave cinema outside Germany. Yes, the Tate’s website did crash briefly when it was announced that tickets were available for the Kraftwerk gig at the Turbine Hall, but that’s the exception that proves the rule.

“They’re living on empty, culturally,” says Winder. “There’s no German novel I’m looking forward to, and no German film. But it’s the same throughout Europe. Europe is culturally null. Britain is the cultural dynamo of Europe by a million miles.”

Why is Germany failing to export its cultural goods with the success of, say, its car, machine tool or optics industries? “There’s one simple reason,” replies Wehn. “Bismarck didn’t believe in colonies.” What Wehn means by that is that the 19th-century German chancellor, who presided over a vast and recently unified people, decided not to emulate Britain, Spain and France in their imperial land grabs. As a result, German never became a global language; English became the world’s most widely spoken tongue. “The English language is dominant because of Hollywood and that helps British culture,” says Wehn. In a recent survey by Monocle magazine, Britain was found to be the world’s leader in what’s called “soft power” – a country’s ability to make friends and influence people not through military might but through culture, education, language and values. “In short, the things that make people love us rather than fear us,” says John Worne, the British council’s director of strategy.

Germany, by contrast, is feared for its economic dominance. At the same time it seems culturally insular. What a shame we don’t get more German culture here. After all, the British and Germans are, one world cup and two world wars notwithstanding, simpatico. Germanophile 19th-century historian Thomas Carlyle wrote of Germany “speaking the same old Saxon tongue and thinking in the same old Saxon spirit with ourselves”, while George Orwell wrote that during the first world war “the English working class were in contact with foreigners to an extent that is rarely possible. The sole result was that they brought back a hatred of all Europeans, except the Germans, whose courage they admired.”

Norman Walter at the German embassy argues that the case for his homeland’s cultural nullity is weak. “Well, we’re not exactly world champions – but we aren’t that bad either.” Ingeniously, he quotes back at me a string of Guardian arts stories that seem to suggest German culture thrives here. Last year’s gig by heavy-metal band Rammstein in 2012 sold out within minutes and Dave Simpson’s five-star review described it as “the rock show of the year”. Judith Mackrell argued that Tanztheater Wuppertal’s London retrospective World Cities was “revelatory”. Similarly, the Economist noted that “British enthusiasm for modern German culture is quietly growing” and that “a new breed of artists is changing British tastes in German culture”. And today there’s Kurt Schwitters at Tate Britain, Rosemarie Trockel at the Serpentine Gallery. Nobody even mentions the great German art on show at the Northern Renaissance exhibition at the Queen’s Gallery, but they really should.

Yes, but visual art and music are the most readily exportable cultural products. Hardly any German literature makes it into the bestseller lists here. In Germany now, the bestseller lists are dominated by Timur Vermes’s novel Er is wieder da (He’s back), which is about Hitler. The führer awakes in Berlin in the summer of 2011, having fallen asleep in 1945. Hitler becomes a media celebrity before entering politics where he campaigns against dog muck and speeding. The book has sold more than 400,000 copies in Germany, but is as yet untranslated here. A shame: it’s a popular account of German Vergangenheitsbewältigung that deserves to be read in Britain. Maybe more Britons should learn German.

And what about German TV? Why, I ask Wehn, are there no German TV series filling BBC4′s 9pm Saturday night Euro-drama subtitle-a-rama slot? He contends that we aren’t missing much, apart from a cop show called Derrick, which finished broadcasting 15 years ago. But why is there no German rival to Denmark’s The Killing, Sweden’s Wallander, Italy’s Inspector Montalbano or France’s Spiral? “In Germany there’s no incentive to sell TV content abroad. The BBC makes a lot of money from selling foreign rights, which explains why so much of its content is shown overseas. In Germany, the contracts aren’t like that – and the domestic market is huge so there’s no incentive.”

What does a German Europe mean for the economically bumbling yet allegedly cultural dynamic Britain? “It is drifting into irrelevance,” replies Beck. “There is already a two-speed Europe, with a pioneer Europe in the eurozone that the rest of Europe, especially Britain, doesn’t really take part in decisions about. Cameron doesn’t realise there’s a shifting power base in Europe but instead focuses on withdrawal from Europe.” Folly, he argues. “Europe isn’t across the Channel. For the first time every European citizen existentially depends on Europe.” But that too is a German perspective: Britons have rarely gone for continental things such as existentialism, still less a cosmopolitan transcontinental menage.

Unsurprisingly, as a good German committed to the end of petty nationalisms, Beck counsels more powers to the European Union to bring the undemocratic reign of Queen Merkiavelli to an end. In the past, budgetary credits were tied to austerity and neo-liberal reform: in the future, Beck argues, they should be linked to a readiness to support a new, continent-wide social contract set up to defend job security, extend freedom and promote democracy.

Good luck with all that, Professor, I say. “It may well sound hopelessly utopian and naive,” he replies, “but why not be utopian and naive? Look at the alternative.” Maybe only Germans, thanks to the darkness of their 20th-century past, have such sunny hopes for this benighted continent. It’s a different kind of German Europe from the one Beck indicts and one that nobody need fear: not one premised on Teutonic austerity, but filled with a European idealism you get hardly anywhere else on this cynical continent, least of all in Britain.

VIDEO: How a liquor brought down EU barriers

Category : Business

The EU seeks to protect one of its core principles – the single market – which aims to offer a level playing field for businesses across the continent.

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EU ministers set for horsemeat talks

Category : Business

European Union agriculture ministers are to meet in Brussels, with the continent’s growing horsemeat scandal high on the agenda.

The rest is here: EU ministers set for horsemeat talks

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European downturn hits steelmaker

Category : Business

The world’s biggest steelmaker, ArcelorMittal, says it will write down the value of its European business by $4.3bn because of the continent’s economic problems.

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Kweku Mandela Amuah: ‘We need to inspire the younger generation’

Category : Business

The founder of Africa Rising on how the continent is changing – and living up to his family name

How do you think the image of Africa is changing?

For the past two decades, there has been a renewed interest in African development and that’s come mainly from its own people. But there’s a lot of work to be done. When you ask people from other continents about Africa, they mostly think of famine and drought and HIV. That’s why we started Africa Rising [an organisation that supports Africans rising to their continent's challenges] to relate to young people and break down these stereotypes and misconceptions.

We’re now seeing great strides in countries such as Kenya and, to a certain degree, Sudan. But, of course, progress is hindered by a few people who don’t want to see the majority prosper.

In the period immediately following decolonisation and independence, there was a great spirit of optimism in Africa that the reality didn’t match. How are things different now?

What I see right now that is unique is an entrepreneurial spirit. If there aren’t jobs available, create jobs yourself. Find the gap in the market. That’s what Taiwan and South Korea did; Africa has to do the same. We tend to be a bit conservative; we can be reluctant to invest in new things in the way that the Asian countries did. We need to inspire the younger generation to follow their dreams, wherever they may be.

Do you think South Africans still have the same positive outlook that the end of apartheid brought?

There’s still a spirit of optimism, based on the acknowledgment that we are only 18 years into a real democracy. We have our political freedom but economic freedom takes a lot longer. Given the amount of time we’ve had, we’ve done well. There have been mistakes, but nothing that can’t be rectified with hard work. I think people around the world have become more detached from their leaders since the days when my grandfather was president and you had Tony Blair and Bill Clinton. There’s a general sense of political distrust.

There are conflicting ideas about aid. Some economists, such as Dambisa Moyo, suggest that it has created a moribund dependency, others believe that it is necessary to lift Africa out of poverty. Where do you stand?

I agree with Moyo that aid is a handicap that breeds a sense of entitlement. But you have to look at the various contexts. A drought is something nature brings upon us

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Afua Hirsch: Our parents left Africa – now we are coming home

Category : Business

As a child in London, Afua Hirsch was embarrassed by her African roots. Then, in February, she became a ‘returnee’, choosing to live in her parents’ birthplace, Ghana. Her story is echoed across the continent: attracted by economic opportunity and a new sense of optimism, the African diaspora is starting to come back …

When I was a teenager, my mother overheard me telling my peers that I was Jamaican, a clearly absurd statement from a half-Ghanaian, half-English girl whose first name is one of the most common in a major African language.

My mother, born and raised in Ghana, was mortified. Although in part I was living out the now well-documented struggle of mixed race youngsters to grasp their identity, mainly I was just embarrassed. It wasn’t cool to be African in those days and in my ignorant teenage way, I was acting out a much bigger crisis of confidence, one that had been swallowing Africans and spitting them out as permanent economic migrants in Europe and America ever since the end of colonialism.

My family left Ghana in 1962, and in those days, leaving was permanent. Flights were few and expensive and spare cash was instead sent back home, establishing a remittance economy that exists to this day. Life abroad, in London in the case of my mother’s family, meant access to a stable income, reliable healthcare, plentiful food and a credible education. Meanwhile, many African states began falling apart.

The 90s, when I was so quick to deny any association with Africa, was the decade when wars from Sierra Leone to Rwanda formed one of the most lethal periods in African history since the end of the slave trade. It culminated in the Economist dedicating a notorious cover in 2000 to what it described as “the hopeless continent”, claiming that across Africa “floods, famine… government-sponsored thuggery, and poverty and pestilence continue unabated”.

Revolving door alternations between civilian and military rule continued in countries ranging from Nigeria to Burundi, Chad to Congo. The World Bank was offering financial bailouts, but with the condition that countries accepted the humiliating label of “highly indebted poor country”. In Ghana HIPC, as it was popularly known, became a term of derision and a symbol of battered pride.

The sparkling literary talent Chimamanda Ngozi Adichie has said: “If I had not grown up in Nigeria, if all I knew about Africa were from popular images, I, too, would think Africa was a place of beautiful landscape, beautiful animals and incomprehensible people fighting senseless wars, dying of poverty and Aids, unable to speak for themselves and waiting to be saved by a kind white foreigner.

“The consequence of the single story is this,” Adichie continues. “It robs people of dignity.”

For many Africans, the whole ideology that the western world was more sophisticated became internalised into a kind of inferiority complex. One of my uncles, when he returned to London after a period of schooling in Ghana, simply exclaimed: “Back to civilisation.” Anyone who could left and the subsequent brain drain only served to make matters worse.

The flight of Africans from their own nations fuelled cartoon-like perceptions of the continent abroad, in which the Economist was far from alone. And this was the context in which I grew up. Pretending to be Jamaican seemed a sensible solution at the time.

For my mother, that was the wake-up call she needed to organise our first trip to the west African land of her birth, an essential re-education in our roots. In 1995, we visited the Ghanaian capital, Accra, for the first time. I remember the usual things that people comment on when visiting equatorial African nations for the first time – the assault of hot air when stepping off the plane, which I confused with engine heat, the smell of spice and smoked fish on the air, and – most significantly for me – the fact that everyone was black. It sounds obvious but I had never really seen officials in uniform – immigration authorities, police, customs officers – with black skin. I don’t think I had realised that there was a world in which black people could be in charge.

That first trip shaped my future in ways I could never have imagined. In the almost two decades that followed, I have moulded all educational and professional decisions into the form of a road that would lead me back to Africa. I devoured African literature, studied African politics, wrote my thesis on African women and political power, worked in development, law and now journalism, all with a focus on Africa. A decade ago, a job with an international development foundation led me to Senegal, where I lived for two years. Then, in February, I moved to west Africa for the second time, now setting up shop in the city of my very first trip to the continent, Accra.

Friends and relatives in the UK, even those who share my Ghanaian heritage, have repeatedly expressed astonishment at my desire to live in Africa. But the view from Ghana could not be more different. Far from being original, I find myself part of a narrative told with increasing fluency, as a steady stream of other European and American passport holders of African descent arrive at Ghana’s Kotoka International airport, collect their worldly possessions from shipping containers at Tema port and search for homes in Accra’s popular residential areas – Cantonments, East Legon and the Spintex Road.

They pay up to two years’ rent upfront in dollars, at London prices, and find jobs with the growing number of international companies and professional service providers in Ghana or, more commonly, start their own business. At some point, this ceased to be an individual journey and instead became a phenomenon with its own label – “returnee”.

There is a symmetry to the journey that returnees are making, which speaks volumes about the state of Africa today. Our parents left – exactly 50 years ago in my case – fleeing deteriorating economic conditions and limited opportunities at home. Now their children are forming an exodus from the crisis-ridden eurozone, four years of recession and the dogged perception of inequality and discrimination in the west. “Who needs the glass ceiling when you could be running your own business in one of the world’s fastest-growing economies, enjoying the warm weather and surrounded by your own people?” one returnee to Ghana told me. “There is no contest.”

The facts about Africa’s change in fortunes are dazzling. Dubbed the “next Asia” for its rapid growth, the IMF forecasts that seven of the world’s fastest-growing economies over the next five years will be in Africa; Ethiopia, Mozambique,

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Compulsory Items for Driving on the Continent

Category : Stocks, World News

MANCHESTER, UNITED KINGDOM–(Marketwire – Aug. 20, 2012) - Owning a caravan or motorhome allows users the freedom to travel when and wherever they like and venturing on to the continent is a favourite destination for the more adventurous traveller.

Continue reading here: Compulsory Items for Driving on the Continent

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China in talks to buy 74% stake in African Barrick Gold

Category : Business

Shares in African miner leap on speculation of $2bn move amid concern over China’s pursuit of resources across continent

China is in talks to buy a 74% stake in the African arm of Barrick Gold, the world’s largest gold miner, amid soaring demand for jewellery from an increasingly wealthy middle class. However, the $2bn (£1.3bn) move is likely to revive concerns about the country’s expansionist role on the continent.

Shares in the London-listed African miner soared 13% after China National Gold said it was in a “preliminary stage of contact and discussion” with the company, which has mines concentrated in Tanzania.

Rapid industrialisation has led to an enormous demand for grain, oil and precious metals in China, triggering a surge in acquisitions throughout Africa, a continent rich in natural resources.

China is the world’s largest producer of gold and is poised to replace India as the biggest buyer of the metal as it snaps up an expected 850 tonnes this year. The commodity is used mainly for adornment but is increasingly being held in bar form as an alternative to cash and other investments.

Barrick Gold, the Canadian company that owns African Barrick Gold, said discussions were at an early stage, adding “there can be no certainty that these discussions will result in the acquisition of all, or part of, Barrick’s holding in African Barrick Gold”.

Barrick Gold has recently seen its share price fall to its lowest level in three and a half years amid lower profits, rising costs and a succession of questionable acquisitions. It ousted its chief executive two months ago and the new boss, Jamie Sokalsky, has said he wants to streamline the business by disposing of non-core assets.

African Barrick Gold, whose share price before Thursday’s surge, was a third lower than the price it was listed at on the London Stock Exchange in 2010, has also experienced difficulties including an attack on its North Mara mine by 200 villagers who caused $15m of damage.

On the basis of the current share price, a 74% holding in African Barrick would be worth $1.9bn. Analysts said there was only a small possibility that other miners such as Randgold would trigger a bidding war.

From the archive 4 August 1973: Gnome truths in a summer of violent unrest

Category : Business

Johnny Europe is not laughing at us as much as we think because they have plenty of troubles of their own

If you want to hear praise of Britain, you have to ask a foreigner. Not the fellows who compile reports in Brussels, or even the much-maligned gnomes of Paris and Zurich, but the kind of people one meets on holiday.

Some newspapers would have you believe that the whole continent is having a good laugh at our troubles. “Poor old Britain,” they allegedly proclaim every time the pound has a slight relapse. Well, I have just spent a month on the continent – mostly in Italy – and I never heard it once.

The reason is simple: they are far too busy fretting about their own formidable problems. We didn’t invent inflation or high interest rates.

France has just put up its bank rate to a record 9.5%, and Italy this week announced a further sharp rise in the cost-of-living index. Even in Germany – the country we are all supposed to envy – people are complaining bitterly about costs and business conditions.

Italy has been trying to cope with a rate of inflation which is even worse than ours. Food prices have soared and so have rents. Businessmen, including hoteliers, complain that “no one wants to work any more.” Absenteeism has become a major problem and strikes are an everyday affair.

Bank clerks, teachers, firemen, hotel porters, pilots – they are all liable to drop tools without warning and go home to watch the telly. Holiday makers are quite likely to find themselves carrying their own luggage to the plane home – as I did.

By comparison, Britain seems a model of perfection. Our government is praised for its firmness, and my Italian friends envy both our economic boom and lack of serious industrial disputes. They are amazed to hear British visitors talk about “the breakdown of the democratic system”, just because the trade unions argue with Mr Heath. In Rome and Milan political violence is commonplace.

Heaven forbid that we should become like Italy. I mention it simply because I cannot help feeling that we frequently get things out of perspective. The first publication I picked up on holiday, after a week’s respite, was the New Statesman. The main article asked “Is Britain Finished?” I didn’t bother to read the answer.

I hold no brief for Mr Heath, and I have no wish to minimise the seriousness of inflation and other problems. We face a rough autumn. But Britain isn’t “finished”. Not by a long way.

China offers $20bn of loans to African nations

Category : Business

Chinese president Hu Jintao announces doubling of funds, cementing alliance that appears increasingly hostile to the west

China has offered $20bn (£12bn) in loans to African countries over the next three years, cementing an alliance that appears increasingly hostile to the west.

Hu Jintao, the Chinese president, promised the credit line – double the amount China pledged for the previous three-year period in 2009 – on Thursday during the opening ceremony of the Forum on China-Africa Co-operation in Beijing.

China’s non-judgmental approach to business continues to gain traction with African governments, who say they will no longer tolerate being lectured by a hypocritical west that includes their former colonial masters.

Criticism that Africa is allowing its natural resources to be exploited, and that China is content to bolster dictators and ignore human rights abuses, merely feeds the partners’ anti-western sentiment.

Hu brushed aside such concerns in his speech at the Great Hall of the People, attended by leaders from 50 African states including South Africa’s Jacob Zuma and Equatorial Guinea’s Teodoro Obiang Nguema, widely condemned by western activists as a brutal and corrupt dictator.

“China and Africa should increase co-ordination and co-operation in international affairs,” Hu said. “We should oppose the practices of the big bullying the small, the strong domineering over the weak and the rich oppressing the poor.”

He continued: “China wholeheartedly and sincerely supports African countries to choose their own development path, and will wholeheartedly and sincerely support them to raise their development ability.”

China will “continue to steadfastly stand together with the African people, and will forever be a good friend, a good partner and a good brother”, he added at the summit, which is held every three years since 2000.

Hu said the new loans would support infrastructure, agriculture, manufacturing and development of small and medium-sized businesses in Africa. He also pledged to “continue to expand aid to Africa, so that the benefits of development can be realised by the African people”.

Africa is increasingly portrayed as a microcosm of the shifting global balance of power: three years ago China overtook the US as the continent’s biggest trading partner.

Zuma did little to diminish the sense of rivalry with remarks that doubtless flattered his host.

“Africa’s past economic experience with Europe dictates a need to be cautious when entering into partnerships with other economies,” the South African president said.

“We are particularly pleased that in our relationship with China we are equals and that agreements entered into are for mutual gain. This gathering indicates commitment to mutual respect and benefit.

“We certainly are convinced that China’s intention is different to that of Europe, which to date continue to attempt to influence African countries for their sole benefit.”

China’s alliance with Africa dates back to the 1950s, when Beijing backed liberation movements fighting to overthrow western colonial rule. In the past decade, China says its trade with Africa jumped from little more than $10bn (£6.35bn) in 2000 to $166.3bn in 2011, driven by Chinese hunger for resources and African demand for cheap Chinese products.

Western critics say China supports governments with dubious human rights records. The Asian country’s biggest African trading partners in 2010 were Angola, ruled by one man for 33 years, South Africa and Sudan, whose president is wanted by the international criminal court.

China is also accused of importing labour to build roads and hospitals and extracting raw materials for processing at home, leaving little for local economies. During a visit to Zambia last year, the US secretary of state, Hillary Clinton, warned against a “new colonialism”.

China bridles at such attacks and argues that China-Africa economic co-operation and trade now drives around a fifth of the continent’s economic growth, while China has aided 600 infrastructure projects across the continent.

In a recent speech at South Africa’s Institute of International Affairs in Johannesburg (pdf), the Chinese ambassador, Xian Xuejun, said: “Chinese and African people harbour simple but friendly sentiments towards each other. But there is a lack of in-depth understanding. Some western politicians and media also tend to make irresponsible remarks on China-Africa relations, attempting to mess up our co-operation.”

Xian insisted that China has a “non-interference policy” with “no political conditions attached” because Africans know their own situation best.

“We have never pointed fingers to African countries concerning their independent and own choice of political system because we have never drawn lines according to ideological differences.”

Chinese officials claim it is all about business. Gao Xiqing, the vice-chairman and president of the China Investment Corporation, the country’s sovereign wealth fund that invests in more than 100 countries, said: “We grew up studying Karl Marx, Lenin, Chairman Mao. Karl Marx said the workers have no motherland and in fact today capital knows no boundaries of state. Wherever there’s profit to be made, capital will go there. There’s not that much difference for Chinese capital, as compared to any capital in the world.”

But Gao said China still had a long way to go to rival western investment in Africa. “We don’t compete with Americans,” he told the New York Forum Africa conference in Gabon last month.

“If you count your investment as the percentage of the capital market, the United States accounts for almost half of all the world’s capital markets, so how do you compete with that? Americans have been in this continent for a long time.

“Despite all the income investment in Africa, China only accounts for a few percentage points, whereas the western powers have been here forever and they account for more than 90%, especially the minerals and resources investments. So we don’t compete; we come here to co-operate.”