Tags

, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Further investigation into the June 25th, 2024 storming of Kenya’s parliament by “protestors”, and setting it afire, would probably help clarify the ways in which Russia and China are working together internationally. This storming of the parliament appears to be Russia’s playbook going back to late 1917, when Bolshevik Communists stormed the former St. Petersburg “Winter Palace”, where the provisional government of the newly proclaimed Republic of Russia was meeting. The Russian Communist Revolution was over 30 years before the Chinese Communist Revolution and the Kremlin was the parent to Communist China. Now, Russia’s the tottering old father and China the middle aged son. While the Kremlin-USSR refused to pay back most of the lend-lease loans that the United States had provided during World War II, they were lending $300 million to the Communist Party of China (June 27, 1949) https://digitalarchive.wilsoncenter.org/document/memorandum-conversation-between-stalin-and-ccp-delegation North Korea was also created by the Kremlin, making it another son with whom Putin’s reconnecting.

“Titanium and zirconium concentrates account for 60% of Kenya’s exports to China in the past five years” See: “Overview of Kenya–China bilateral trade” By Sherillyn Raga, Maximiliano Mendez-Parra and Dirk Willem te Velde December 2021 ODI–FSD Kenya emerging analysis series http://cdn-odi-production.s3.amazonaws.com/media/documents/Overview_of_Kenya-China_bilateral_trade_ZYpLGy1.pdf (The chart provided seems to indicate that for the 2015-2019 period, this was 59%).

Recents agreements between the US and Kenya appear to undermine Chinese influence, by allowing Kenya to help replace China in the US supply chain, as well as allowing Kenya to be less dependent upon China. Additionally, Kenya is trying to restore stability to Haiti. Haiti is one of the only countries that recognizes Taiwan as China, rather than Communist China. https://miningawareness.wordpress.com/2024/06/25/protestors-storm-and-breach-kenyas-parliament-and-set-it-on-fire-apparently-trying-to-destabilize-kenya-and-undermine-its-place-on-the-world-stage/

A week ago, Kenya had changed the tax-finance bill in response to protests, but the rioting only got worst and culminated in the storming and burning of the parliament: “Among the scrapped tax hikes was a proposed 16% value-added tax (VAT) on bread, as well as proposed taxes on motor vehicles, vegetable oil and mobile money transfers, according to Kuria Kimani, the chairman of Kenya’s Finance and National Planning Committee.” (“Kenyan government scraps elements of controversial tax bill amid protests” By Caitlin Danaher and Larry Madowo, CNN Published 2:29 PM EDT, Tue June 18, 2024 https://web.archive.org/web/20240618185212/https://edition.cnn.com/2024/06/18/africa/kenya-rethinks-tax-bill-protests-intl-latam/index.html )

After the storming of parliament by a few thousand people, Kenya’s President said that he won’t sign the bill and that they will start again with a new finance bill. This isn’t a serious way of handling things. A few thousand rioters do not necessarily represent an entire country. Either the bill was good or not. The rioting should not make an influence. This is mob rule. Rioting, storming the capital and setting it afire, should not be a means of making policy.

The debt to China has a variable, rather than fixed, interest rate and is in US dollars. So, as Kenya’s money has devalued, and interest rates increased, this has increased the debt to devastating levels.

“Kenya Among Top 5 Countries With Huge Debt to China” by DERRICK OKUBASU on Sunday, 23 June 2024 – 12:48 pm https://www.kenyans.co.ke/news/101928-kenya-among-top-5-countries-huge-debt-china

“Kenya-China relations strained as new government grapples with a debt crisis: China’s influence in Kenya is heavily felt in the country’s economy
Written by Njeri Wangari, Global Voices, Posted 15 March 2023 18:36 GMT
A recent incident involving the shutdown [1] and then reopening of the operations [2] of a Chinese trade shop in Kenya has brought to the forefront straining relations between the two countries. The Chinese Embassy in Kenya issued a statement [3] in reaction to the closing of China Square on March 1. Following several engagements between the Kenyan government and the Chinese Community in Kenya, the retail store resumed operations.

In February, a group of Kenyan traders in Nairobi organized a demonstration [4] against Chinese traders who they claimed were engaging in unfair trade practices and taking business away from local entrepreneurs. The traders marched to the deputy president’s office demanding an end to what they called a “China invasion”: 

“Thousands of Kenyans protested in the streets demanding Chinese retailers and manufacturers leave the country.” https://x.com/wanjunxie/status/1631094462737776641 [See video at link.]

Kenya’s current relationship status with China can aptly be described as, “It’s complicated.”

Only days after the store was closed following a directive by Cabinet Secretary for Investments, Trade, and Industry, Moses Kuria, the Chinese Embassy in Kenya released a statement [5] via their Twitter handle. The statement urged the Kenyan government to protect the legitimate rights and interests of Chinese enterprises and citizens, and create an inclusive and friendly business environment. Shortly after that statement, Kuria backtracked on his directive and the store reopened [6]

The Chinese store row is now at the heart of a simmering strained [7] relationship that has previously only been happening [8] behind closed doors as Kenya struggles to restructure [9] its Chinese debt.  

China’s Belt and Road Initiative in Kenya

When the newly elected Kenyan president, William Ruto took over power last year, he inherited a country that is now drowning in public debt [10] to the tune of approximately US $56 billion with China as the single largest bilateral lender.[11]

Kenya became the third country in Africa after South Africa and Egypt to sign on to the China Belt and Road Initiative (BRI) [12] in 2017 under President Uhuru Kenyatta. The BRI is a massive infrastructure project launched by China in 2013 that aims to connect Asia with Europe, the Middle East, and Africa through a network of ports, railways, highways, and other infrastructure projects.

The Chinese loans (financed by China Exim Bank) [13] facilitated the construction of the Standard Gauge Railway (SGR), a major railway line connecting the port of Mombasa to Nairobi and eventually to neighbouring countries such as Uganda, Rwanda, and South Sudan. 

The SGR was seen as a critical piece of infrastructure that would help boost Kenya’s economy and increase regional trade. Chinese entities also constructed other colossal infrastructure projects including the Inland Dry Port in Naivasha Town; an upgrade of the Mombasa port; the construction of the Lamu deep sea port; and the development of the Naivasha inland dry port.

However, towards the end of his term, former Kenyan president Uhuru Kenyatta came under heavy criticism [14] over his administration’s debt spree and the country’s public debt to China which currently stands at US $82 billion.

During his campaign trail, Ruto promised [15] to review the country’s geo-economic relations with China, by making public the government infrastructure projects, and by deporting Chinese nationals working in Kenya illegally. His administration is now grappling with [16] the reality of actually addressing these campaign promises.

China index: https://china-index.io/country/kenya

China’s grip on Kenya’s economy has become a nightmare for Ruto whose grand promises are now coming back to bite him as the reality of the complexities of bilateral relations dawns on his administration. Issues related to China’s Belt and Road Initiative have been the terms of Chinese loans with agreements skewed against the borrower, and the lack of transparency and accountability. 

According to the recent China Index — a report measuring China’s presence across the world — China’s influence in Kenya is heavily felt in virtually all key sectors such as the economy (54.5 percent), media (52.5 percent), foreign policy (50 percent), technology (45.5 percent), and academia (43.8 percent). https://china-index.io/country/kenya

Reports of inflated costs and corruption [17] in the construction of the Standard Gauge Railway (SGR) led to accusations that Chinese contractors and officials are skimming off the top of the project’s budget [18]. Additionally, there have been concerns about the environmental impact of Chinese-funded projects, such as the proposed Lamu coal plant [19], which has faced protests from environmentalists [20] and local communities.

Last November, Ruto made true his campaign promise to publish documents [21] related to $4.7 billion USD  in loans for a controversial Chinese railway built under his predecessor. As he noted, many of the deals surrounding the infrastructure projects that the funds were borrowed are shrouded in opaqueness.

Growing tensions

In addition to the issues related to China’s BRI, the recent protests against the Chinese [22] store by Kenyan traders have further strained the geoeconomic relations between the two countries. According to 2022, Beijing’s Global Media  Influence report by Freedom House [23], the Chinese diaspora in Kenya is relatively small, estimated at between 20,000-36,000 individuals.    

The incident, though, highlighted growing resentment among Kenyan traders towards Chinese businesses operating in the country. Many Kenyan business owners have complained that Chinese companies enjoy preferential treatment [24] and are able to operate with lower costs and fewer regulations, putting local businesses at a disadvantage. 

The move by Ruto’s officials to back down on the store row is a reflection of broader tensions in the relationship between Kenya and China, as the two countries navigate issues related to trade, investment, and development. 

As President Ruto seeks to assert greater control over its economic relationship with China and ensure that it benefits the interests of Kenyan citizens, the optics of its administration’s handling of the China store matter have left many Kenyans with fading hopes [25]in his ability to deal with the debt crisis.
Categories
* East Asia, Sub-Saharan Africa, China, Kenya
* Development, Politics, China’s Belt and Road Initiative: Deal or steal? https://globalvoices.org/special/belt-and-road-observatory/
Notes
[1] https://www.the-star.co.ke/news/2023-02-26-china-square-closes-down-indefinitely/
[2] https://www.capitalfm.co.ke/news/2023/03/china-square-reopens-after-talks-between-govt-chinese-community/
[3] https://twitter.com/ChineseEmbKenya/status/1630965330838159360
[4] https://www.aa.com.tr/en/africa/kenyan-traders-protest-against-chinese-competitors-for-pushing-them-out-of-local-markets/2833701
[5] https://twitter.com/ChineseEmbKenya/status/1630965330838159360
[6] https://www.citizen.digital/news/china-square-resumes-operations-after-standoff-with-cs-moses-kuria-n315577
[7] https://thediplomat.com/2022/08/what-kenyas-presidential-election-means-for-chinas-belt-and-road-initiative/
[8] https://www.voanews.com/a/kenya-denies-it-defaulted-on-debt-to-china/6790020.html
[9] https://www.the-star.co.ke/business/kenya/2022-01-31-china-remains-boss-as-kenyas-debt-hits-a-record-sh8-trillion/
[10] https://www.businessdailyafrica.com/bd/economy/uhuru-defends-jubilee-s-sh6-7-trillion-debt-spree-3835802
[11] https://carnegieendowment.org/2022/09/15/will-u.s.-china-competition-shape-kenya-s-trade-trajectory-pub-87919
[12] https://globalvoices.org/special/belt-and-road-observatory/
[13] https://en.wikipedia.org/wiki/Exim_Bank_of_China
[14] https://www.businessdailyafrica.com/bd/economy/uhuru-defends-jubilee-s-sh6-7-trillion-debt-spree-3835802
[15] https://www.standardmedia.co.ke/politics/article/2001449245/what-william-ruto-promised-kenyans
[16] https://www.thecitizen.co.tz/tanzania/news/east-africa-news/kenya-s-president-ruto-in-major-u-turns-on-poll-promises-as-reality-sinks-in-3994010
[17] https://globalvoices.org/2022/06/07/kenyas-controversial-expressway-speeds-past-budget-while-displacing-thousands/
[18] https://www.businessdailyafrica.com/bd/economy/how-china-contractors-drove-kenyan-firms-out-of-mega-projects–2137652
[19] https://www.bbc.com/news/world-africa-48771519
[20] https://www.greenpeace.org/africa/en/blogs/11885/lamu-coal-plant-a-bad-energy-source-for-kenya/
[21] https://www.business-humanrights.org/en/latest-news/kenya-discloses-part-of-standard-gauge-railway-contract-with-china-in-bid-to-increase-transparency/
[22] https://www.africanews.com/2023/02/28/kenyan-traders-protest-against-chinese-competitors//
[23] https://freedomhouse.org/country/kenya/beijings-global-media-influence/2022#:~:text=Chinese%20diaspora%3A%20The%20Chinese%20diaspora,estimated%20between%2020%2C000%2D36%2C000%20individuals.
[24] http://ke.china-embassy.gov.cn/eng/zkgx/sbjw/201210/t20121012_9838821.htm
[25] https://www.theafricareport.com/271278/kenya-stop-harassing-me-over-campaign-promises-ruto-tells-opposition/ “ Creative Commons-BY-3.0: https://globalvoices.org/2023/03/15/kenya-china-relations-strained-as-new-government-grapples-with-a-debt-crisis/ https://creativecommons.org/licenses/by/3.0/

Additional Reading-Blog Notes

Recents agreements between the US and Kenya appear to undermine Chinese influence, by allowing Kenya to help replace China in the US supply chain, as well as allowing Kenya to be less dependent upon China. Additionally, Kenya is trying to restore stability to Haiti. Haiti is one of the only countries that recognizes Taiwan as China, rather than Communist China:

“A New Chapter in U.S.-Kenya Relations Links Silicon Valley and Silicon Savannah
Ruto’s state visit to Washington resulted in a historic foreign policy moment with technology cooperation at its core. Now, the Kenyan president has the enormous responsibility to capitalize on these opportunities”. By Jane Munga Published on June 13, 2024 https://carnegieendowment.org/emissary/2024/06/kenya-us-tech-cooperation-silicon-savannah?lang=en

“Will U.S.-China Competition Shape Kenya’s Trade Trajectory? Kenya’s notable progress in securing regional and international trade deals is positioning the country as an important trading economy”. By Zainab Usman and Aline Abayo
Published on September 15, 2022 https://carnegieendowment.org/posts/2022/09/will-us-china-competition-shape-kenyas-trade-trajectory?lang=en

While the Kremlin-USSR refused to pay back most of the lend-lease loans that the United States had provided during World War II, they were lending $300 million to the Communist Party of China:
“June 27, 1949
Memorandum of Conversation between Stalin and CCP Delegation
Excerpt: “Whereupon Cde. Stalin turned to the discussion of the questions raised by the delegation.

1. About the credit. Cde. Stalin said that the VKP(b) CC decided to provide to the CCP CC a credit of 300 million dollars. With this, he remarked that this is the first time in history that such an agreement is being concluded between [the] two parties.

A credit of 300 million dollars with one percent annual interest will be provided to China in the form of equipment, machines, and various kinds of materials and goods by equal parts of 60 million in the course of 5 years.

Repayment of the credit by China will take place in the course of 10 years after the full appropriation of the credit. With regard to this Cde. Stalin said that Cde. Mao Zedong, in a telegram addressed to [Stalin], expressed the opinion that 1% annual interest is small for such a credit, that one should increase it….” https://digitalarchive.wilsoncenter.org/document/memorandum-conversation-between-stalin-and-ccp-delegation

Russia’s refused to pay its external debt in 1918, leaving investors, including middle class French retirees, penniless. They had been misled into believing that Russia was a safe place to invest: https://en.wikipedia.org/wiki/Repudiation_of_debt_at_the_Russian_Revolution The Kremlin also refused to repay most of the US “lend-lease” aid to Russia-USSR. Russia paid back the equivalent of less than 1% half a century late. Russia got even more debt write off in the early 2000s: https://miningawareness.wordpress.com/2023/03/03/on-russias-refusal-to-pay-debt-london-club-debt-write-off-seemingly-endless-us-aid-to-russia-us-congressman-gilman-2000/

Even though he was a leftist in his younger days, Donald Harris appears to have outgrown this. He warned Jamaica not to become dependent upon China. Unfortunately they ignored him. “Jamaica’s Debt-Propelled Economy: A Failed Economic Strategy and Its Aftermath” Donald J. Harris https://web.stanford.edu/~dharris/papers/Jamaica’s%20Debt-propelled%20Economy,%20a%20Failed%20Economic%20Strategy,%20SALISES,%202010.pdf Unfortunately he’s not a US citizen, as he would have made a far better US Vice President or US President than his socialite daughter. He’s a family member who could be useful in the White House.