|Maldevelopment - Anatomy of a Global Failure (United Nations University)|
|4. complexities of international relations: Africa's vulnerability and external intervention|
In addition to the special relations the African continent enjoys with the EEC, France has retained, in most of its former sub-Saharan African colonies, a position that is unmatched anywhere else in the Third World. The monetary system of these countries is, in effect, based on the principle of free and absolute movement of capital at a fixed exchange rate (subject to change by common agreement) guaranteed by the metropolis. In return for this guarantee the local central banks are permitted to support African treasuries only within very narrow limits. Furthermore, the main commercial banks operating in these countries are branches and subsidiaries of metropolitan banks, and can therefore always counter the monetary policy that the local central banks want to pursue, in the event that this policy is not attractive to them, by the simple expedient of transferring funds to or from their Paris headquarters. There is no lack of examples of this: local banks have been known to make massive transfers of their capital to France to take advantage of higher interest rates. In these circumstances the country's monetary integration in the metropolitan finance economy is total, equivalent to that of a metropolitan province; the local central banks do not deserve the description as they are no more than issuing houses circulating a French Franc printed with an unusual design: there is only one central bank for the whole of the Franc zone: the Banque de France. We have suggested calling this system the 'zone of the Franc' rather than the Franc zone. For the African countries in question, IMF membership makes no sense, and is something of a legal fiction: and the IMF interventions make no more sense, as the metropolitan system is responsible for the monetary administration of these countries.
As can be seen, the system is that of total liberalism that the 'theories' made fashionable under Reagan, proposed as a model on the world scale. To the extent that France is wide open to the worldwide financial system, this total liberalism has no boundaries. The theory of the market on which it is based is, in turn, a manifestation of the assumption that the only development 'possible' requires the open door. A malicious mind would note that the African countries in question belong to the group of least developed countries; consequently, reasoning on the basis of the correlation to which the advocates of these economic theories are so partial, would show the opposite of their assumption as the widest open door is associated with the least satisfactory performances.
In fact even on the view that the structures of the centres-peripheries imbalance are not based on monetary integration, which is only a consequence, and after the illusion is dropped that there can be a 'monetary solution' to this profound imbalance, it has still to be admitted that the forms of this monetary integration are an additional severe handicap to any attempt at autocentric national or regional development. All the African states that did hope to guide their development in this direction had to break out of the yoke of the Franc zone. If they have sometimes 'become bankrupt', and have even sustained the monetary illusion we are criticizing, the reasons have nothing to do with an inevitable failure of national monetary management.
The monetary management of African countries in the Franc zone is, as has been shown over and over again, 'passive', in the sense that the currency issue is adjusted to the needs of the system's reproduction without giving it any power to play any significant part in its qualitative evolution. It follows 19th century style financial orthodoxy, which has no match in other Third World countries, or in modern developed capitalism, including metropolitan France, again despite the assertions of the fashionable Reaganite-lMF theology. This systematically deflationary policy at local level does not prevent the automatic importation of possible inflation from the metropolis. We add that the organic ties between the local banks and the old colonial trading monopolies, who own the industrial plants in most of the countries in question, provide a de facto privilege to the economic interests of the metropolis that is no less obvious, however difficult to quantify.
The inherent faults of this system are such that it seemed to be on the verge of explosion in the 1970s. Reasonable reform proposals were put forward, to allow more substantial monetary and financial co-operation with local treasuries (for development purposes) and the expansion of productive activities, plus flexible controls over transfers. Moreover, the proposals in question were for the purpose of maintaining regional monetary unions, while taking into account the variety of situations inherited from unequal regional development; they therefore contradicted the argument currently advanced that the Franc zone was a 'factor for unify' in Africa. The general drift the African economies have suffered since the end of the 1970s put a stop to these proposals. The Franc zone in its most traditional form is again flying high, has regained some of the countries that had left and is attracting new members. This innovation is part of the widespread compradorization under way.