This article appears in the June 28, 2019 issue of Executive Intelligence Review.
African High-Speed Rail Finance Requires LaRouche Four-Power Pact
Yet having “enough money” is not the problem it seems to be: The principle of Hamiltonian credit—credit extended by government, on the strength of nothing but the skills of the population, and earmarked for projects sure to produce leaps in productivity—has been known in theory and practice for 200 years, even if suppressed by the business schools.
Individual African governments, however, do not have enough leverage against the British monetary system and its banks to travel this most efficient path to industrialization in the freedom of sovereignty. It is the world system that must change to favor this path, and for that, Lyndon LaRouche’s prescription for a Four Power Agreement—among China, Russia, India and the United States at least—is the practical answer, incorporating a new Bretton Woods system, very different from the one we have known. It must be, rather, the one that U.S. President Franklin Roosevelt—the enemy of the British Empire and of all empire—had intended before his untimely death in 1945.
AU Vision: A High-Speed Rail Network
Railroad planners, specialists and government officials met in Kenya, April 10-11 under the aegis of the African Union Development Agency (AUDA, formerly NEPAD) to chart the way forward for construction of the African Integrated High-Speed Railway Network, a system to connect all 54 national capitals and all major economic centers on the African continent. This objective is meant be achieved by 2063.
A modern, integrated Africa-wide rail system is visionary. But the plan approved by the African Union (AU) transport ministers in Malabo, Equatorial Guinea in 2014 goes even further. It specifies a high-speed rail system—the “HSR” in AIHSRN. “High speed” is defined by the AU as a design speed (maximum speed) of at least 240 kilometers per hour (150 mph). Most trains in Africa today run on tracks of one of the old colonial narrow gauges, and most can only travel at 50 km/h (31 mph) or even less. This proposed jump from today into tomorrow is what China calls technological “leap-frogging,” and the AU has adopted the concept. Perhaps the last shall be among the first.
AIHSRN is not a master plan for all rail transport in Africa. It is, rather, a plan for rapid rail transport across long distances. And Africa has long distances. To go from Cairo to the Cape of Good Hope by road or rail is more than 10,000 kilometers (6,200 miles)—the equivalent of going from New York to San Francisco and back again.
Yet with the AIHSRN, an express train could depart from Cairo at 6:30 a.m. on Monday morning, travel at an average of only 220 km/h (137 mph), make only five half-hour stops—at Khartoum, Nairobi, Dodoma (Tanzania), Harare, and Johannesburg—and arrive in Cape Town in time for an early breakfast on Wednesday. The east-west trip from Addis Ababa in Ethiopia to Dakar, Senegal—“only” 8,100 km—will be quicker. The implications of such speed for the African economy—and for African integration in all respects—are enormous.
The continental plan is for six west-east routes from the Atlantic to the Indian Ocean/Red Sea, and four routes that run from north to south—a 6x4 grid (see Figure 1). Because of their high speeds, the trains must run on dedicated, standard gauge lines that will not usually accept traffic from other, slower lines of the sometimes denser, surrounding rail network.
The plan includes the construction of railway manufacturing industries, parts suppliers, maintenance facilities, and the building up of railway training academies.
The AIHSRN is part of the African Union’s Agenda 2063, a fifty-year plan for the economic, social and cultural development of the entire continent, born in 2013. The attending physician at the birth of Agenda 2063 was Nkosazana Dlamini-Zuma, MD, who chaired the African Union Commission at the time. The newborn came at full term—after a succession of studies from varied sources that go back at least to the OAU’s Lagos Plan of Action for the Economic Development of Africa (1980). Dr. Dlamini-Zuma personally conceptualized what Africa should look like in 2063 in the poetic prose of her “E-Mail from the Future,” written in January 2014.
‘The Scope of Its Beauty and Modernity’
The AIHSRN plan is not the whole story. The execution of the plan so far is a mixture of good news, on one hand, and unsolved problems on the other. Two well-known success stories are the recently completed Addis Ababa-Djibouti line and the Mombasa-Nairobi line. These are recognized as elements of the AIHSRN and they are fast trains, but their maximum speeds are 120 to 160 km/hr—half to two-thirds of the 240 km/hr maximum specified as the bottom line in the AIHSRN plan. We will address the question as to why so slow, a little further along. The only high speed train on the African continent is the 320 km/hr (200 mph) Moroccan line Al Boraq from Casablanca to Tangier, inaugurated in November 2018. The 323 km electrified line—which has double-decker passenger cars—will be extended to 1500 km (930 miles). It, too, forms part of the AIHSRN.
Like Ethiopia and Kenya, Nigeria is among the African nations building standard-gauge rail lines that permit travel at only about 120 km/hr. Some of these lines are on the AIHSRN map, and some go beyond the plan. Nigerian President Muhammadu Buhari strongly supports rail modernization, and his Transport Minister, Chibuike Rotimi Amaechi, is personally strongly committed to the standard-gauge projects (see Figure 2), of which a major line—from Lagos, the commercial capital, through the national capital, Abuja, and on to Kano in the far north—may be completed next year. Indeed, it seems that Nigeria has caught railroad fever. Newspaper publisher Dr. Yemi Ogunbiyi, who accompanied Minister Amaechi on several construction inspection trips on the 158.5 km section from Lagos to Ibadan, waxed lyrical over what he witnessed. In his April 28 Vanguard article, “The Challenge of a New Nigerian Railway,” he wrote in part:
Those inspection trips, taken together, had a tremendous impact on me and opened up for me vistas of new possibilities in my assessment of the future of our country.
He wrote of—
the scope of its beauty and modernity. The sheer joy of watching before our very eyes, Chinese and Nigerian engineers ploughing through thick and swampy equatorial forests, cutting down giant vegetation, and painstakingly laying state-of-the-art rail sleepers [ties] with skill and dexterity, and then proceeding to roll out air-conditioned passenger coaches in a record two-year time, was a sight to behold.
The raw details of the project, quantities and all, testify to an engineering feat of considerable proportion. The entire project involved some 24.26 million square meters of earth work. There are thirty-one different categories of bridges in all, . . . The specially manufactured refrigerated freight locomotives, and livestock locomotives and wagons are as modern as any, anywhere. Details of the contract include the supply of adequate spare parts for the rolling stock and the supply of maintenance equipment for a substantial period of time.
The contract details even go further. In order to ensure knowledge transfer and the localizing of the manufacturing process, President Buhari, on the advice of Rotimi Amaechi, insisted on the immediate implementation of two other aspects of the contract from inception, namely, the take-off of the training of young Nigerian undergraduates in Railway Engineering and other important transport-related disciplines, in China, under a scholarship scheme to be paid for by the Chinese, and the establishment of a Transport University in Nigeria. . . . Messrs. CCECC Nigeria Ltd have established a Transportation University in Daura, Katsina State.
But in his conclusion, Dr. Ogunbiyi made this pointed remark:
In the era of speed trains, we should be looking beyond the refurbishment of antiquated narrow gauge trains and the construction of slow-moving Standard Gauge lines. And fast trains are already here with us. We should take full advantage of the latest rail transport technology and be driven by the same objectives that characterize the best prototypes of modern rail travel today: speed, comfort, safety and cost-effectiveness. [Emphasis added.]
Yet high-speed rail lines are much more expensive than “slow-moving Standard Gauge lines.” For example, to ensure sufficient stability, the trackbed may require more work. Track segments may have to be welded end-to-end. The curves must be gentler (larger turning radii), have steeper banking, or both. Signalling communications equipment must be of higher quality and reliability. The rolling stock must also be built to higher standards.
High-speed rails are expensive to build and maintain, but the pay-off comes in the greater integration of the economy. A broken machine in a rice-processing or textile factory in Kano will be able to get replacement parts and possibly a repairman, from Lagos, quickly. The greater political and cultural integration of the country, the continent, and the world are priceless.
Where Is the ‘Money’?
The problem of financing such large projects has broken out in dramatic ways in recent months. In Nigeria, Transport Minister Amaechi told a discontented Senate, in November and December 2018, that the construction of two of the major lines—Port Harcourt to Maiduguri and Lagos to Calabar—would have to be postponed, because there was no room in the budget for them. The China Civil Engineering Construction Corporation (CCECC) is already at work on the remaining sections of the major, double-track line from Lagos to Abuja to Kano, dubbed the Speedline (1,316 km), and the contribution from the Nigerian budget to go with the loan from China for this project, is not small.
The good news, as of late May, is that the Nigerian government and its collaborator in China have together come up with 20% of the money needed to build the Lagos-Calabar line, so that project can get underway. And, Minister Amaechi announced that there was money to build a standard gauge connection from the capital, Abuja, to Itakpe in iron ore country, where a standard gauge line to coastal Warri is already functioning. He said the construction of a seaport at Warri is also approved. A deep seaport at Bonny in the Niger Delta (crude oil is lifted there), and an inland dry port at Ibadan had already been announced. The ports are not as costly as the rail line.
Such good news does not dispose of the problem, “Where is the money?” especially for countries that are not oil rich like Nigeria.
The problem has emerged in Kenya and Uganda. On May 8, Kenyan Transport and Infrastructure Minister James Macharia announced that, while the next leg of the Kenyan standard-gauge line from Nairobi to Naivasha is on schedule for completion in August, the subsequent segment to the Ugandan border—to meet planned standard-gauge construction on the Ugandan side—will not be built: It will be built “eventually,” he said. A financing deal for that segment with China had seemed imminent at the time of the April 10-11 AUDA meeting in Nairobi. Instead, Kenya will “modernize” the existing colonial-gauge rail line along that route and transship freight and passengers at Naivasha. An unnamed private sector partner will carry out the colonial upgrade through a public-private partnership, and will operate the line to recover its investment.
Uganda, meanwhile, has decided to follow suit and will carry out a colonial upgrade of the line from its capital at Kampala to the Kenyan border at Malaba, instead of building the planned standard gauge line, with encouragement from the European Union—for old colonial times’ sake. The EU is contributing $32 million to the project. Whatever anti-China pressures and threats had come from the European side are therefore not to be spoken of. Uganda had been in negotiation with China for a loan for the standard-gauge project.
The prioritization study presented at the April AUDA meeting had put the Nairobi-Kampala line among its three highest-priority pilot projects, based on a weighted combination of factors favorable to early success.
The South African Problem
South Africa should be making an especially large contribution to developing Africa, including its rail development. It has an industrial economy—the only full-set economy on the continent—and has been operating two nuclear power reactors for 35 years. South Africa has a much larger number of people with some degree of technical qualification per 1,000, than other African countries. South Africans working in manufacturing, construction, and utilities amount to almost 6% of the total population. The equivalent figure for Nigeria and Kenya is not quite 1% in each case. The electricity consumed per capita in South Africa is 27 times the Nigerian, and 22 times the Kenyan per capita consumption. It is indicative of this difference in industrial level, that South Africa’s state-owned Transnet operates existing rail lines in Nigeria under contract, and now heads the consortium to rehabilitate and operate Nigeria’s 3,500 kilometers of narrow gauge railways.
But today, South Africa is not on Africa’s leading edge. In President Cyril Ramaphosa’s State of the Nation Address (SONA), delivered June 20, he did say,
We want a South Africa that has prioritized its rail networks, and is producing high-speed trains connecting our megacities and the remotest areas of our country. We should imagine a country where bullet trains pass through Johannesburg as they travel from here [Cape Town] to Musina, and they stop in Buffalo City on their way from eThekwini back here.
“We want . . . We should imagine . . .” He has no plans. South Africa has actually done nothing to move toward fast, standard gauge rails since 2012, when Gautrain, the 80 km shuttle between Pretoria and Johannesburg, was completed. Gautrain is South Africa’s token standard gauge project. Despite Ramaphosa’s airy language, the South African policy is still where it was in 2009, when the Department of Transport’s Rail Gauge Study Report recommended against conversion to standard gauge—unless eventually forced to do so by developments in Africa at large.
It is noteworthy that Ramaphosa made no mention of the urgent development of the Moloto Rail Corridor to open an economically crucial bottleneck between the provinces of Gauteng, Mpumalanga, and Limpopo. He made no mention of the Durban-Pretoria-Gaborone rail corridor—which had received extremely high marks in the prioritization study presented at the April AUDA meeting in Nairobi, in terms of both physical-economic and revenue criteria, and in many other respects.
South Africa is being held back by the enemies of its own development and that of the continent—the banks and mining companies whose allegiance is to the British neocolonial empire. The empire had been guiding South Africa into deindustrialization for years—until President Zuma came close to breaking out, with Russian and Chinese help. For that, the corrupt footstools of the British lords ran a years-long campaign of vilification that led to his forced resignation. Now, with Cyril Ramaphosa as president, the British are working at speed to accelerate deindustrialization and its eventual corollary, depopulation.
There is, of course, continuing opposition to these policies within the ruling party and indeed within Ramaphosa’s cabinet. The British reminded President Ramaphosa of their policy prescriptions in the weekly Chatham House bulletin of May 23, including the break-up and privatization of Eskom, the government electricity monopoly. But Ramaphosa was unable to speak of moving in that direction in his SONA because of that domestic opposition, saying instead that “Eskom is too vital to our economy to be allowed to fail.” That is not a very solid reassurance: At the beginning of his address, he had bowed deeply to the British policy outlook: He endorsed the radical green deception and the radical agenda for reducing baseload electricity production—now associated with poster child Greta Thunberg—in saying,
The extreme weather conditions associated with the warming of the atmosphere threaten our economy, they threaten the lives and the livelihoods of our people, and—unless we act now—will threaten our very existence.
If Eskom is not supported and strengthened, and its nuclear power capacity is not increased, South Africa will retard Africa’s development in all respects, railways included.
The Hamiltonian Solution
African governments complain that they cannot find the money to build to the AIHSRN standard.
They are willing to spend from their budgets. They may also follow the example of Egyptian President Abdel Fattah al-Sisi, who successfully appealed to the patriotism of the citizenry to buy up a savings bond issue for a specific major project—expanding the Suez Canal. Bond issues of this kind can also be promoted to the nation’s diaspora.
And Daniel Osiemo, CEO for AUDA in Kenya, revealed last month a major missed opportunity in the practice of African government finance, which can now be exploited. At the April AUDA meeting in Nairobi, he exclaimed, “Look at the pension funds—all over the continent we have pension funds that have been established, but which have not been channeled to productive investments. So, if these are harnessed and put into this kind of investments, in a little time to come, they will be able to pay everybody. It will be a win-win for everybody.”
What happened to those pension funds is easy to imagine, since it happened everywhere: The fund managers were persuaded by the bankers to go for the high-yield, high-risk speculative investments, which were never in the business of building roads, rails, and harbors!
Governments can—and are—borrowing successfully from China. There is no China “debt trap,” as EIR’s investigators and others have shown. But not all loans from China are—or can be—concessional.
All of these options are understood. What is missing is the principle of Hamiltonian finance—an expression of Alexander Hamilton’s understanding of physical economy found in his famous four economic reports to the U.S. Congress. A sovereign government has the power to issue paper currency on the strength of the skills and mental powers of its people—the ultimate basis of all wealth. Such issues do not have to be tied to stores of gold, provided the currency is used by the government solely for investment in infrastructural, agricultural, industrial and other “great projects” that are sure to produce for the nation more wealth (typically much more wealth) than the nominal amount of the currency itself.
The government of U.S. President Abraham Lincoln did not have enough money to fight the Civil War to the finish—until he issued currency, called Greenbacks, on the credit of the nation. Some of the economists who were behind this Greenbacks project intended the use of the Hamiltonian principle to continue—for purposes of general national development—after the end of the war, and so it did for a while, until Wall Street regained enough control over the government to stop it. This history is documented in A Resource of War—The Credit of the Government Made Immediately Available (1869, re-issued 2018) by Elbridge Gerry Spaulding, Chairman of the Congressional Ways and Means Committee during the Civil War. Even so, in the Great Depression of the 1930s, President Franklin Delano Roosevelt used the principle of the national credit to bring the backward Tennessee Valley into the 20th Century, without having the “money” to do it.
Most so-called economists have difficulty with the Greenback principle, but normal people do not: People, and their skills and mental powers, are the basis of wealth, not money or gold bars. Credit can therefore be issued on the strength of the availability of those mental powers for projects that benefit the common good and support the expanded reproduction of those mental powers. With proper sequencing of the projects, such credits are not inflationary.
There is urgency—the Hamiltonian principle of credit generation is needed now. The success, so far, of China’s intervention for the development of Africa, is no reason for complacency. The British-steered mass media around the world are building up hostility toward China for reasons that include British outrage that China is enabling Africa’s industrialization. The British formula for aid to Africa has been support—limited support—for health, education, and democratic institutions, but never industrialization.
African governments are aware that the World Wide Fund for Nature (WWF)—and its eventual offspring, the UN Framework Convention on Climate Change (UNFCCC)—are demanding deindustrialization and depopulation. But Africa’s ability to resist is limited. The banks pressure governments to build wind mills and solar farms as a condition for loans, and so the governments try to build the wasteful and expensive “renewable” facilities and new baseload power plants. At the UNFCCC meetings of the climate COPs, Africans and others think they can call the bluff of “the West” (really, the British world system) by agreeing to do their part if the “West” will do its part. But now “the West” is increasingly doing its suicidal part. This is not coming from the outlook of businessmen motivated for profits. It is the oligarchy—the old families—who have power and therefore need not worry about the money, who steer governments from behind the curtain and control the speculative banks. They fear that their control will be lost if the living standards—and the conceptual powers—of the majority of people rise.
The whole world needs Africa in the fight, and Africa needs the transition to a new system as much as any other part of the world.
The Necessary Four Power Agreement
African governments, unfortunately, do not have the kind of leverage against the British neo-colonial system of London and Wall Street that would be necessary to make use of Hamiltonian methods. The British system’s oligarchs have no intention of giving up their control—or even their inflated interest payments. Their “friendship” was graphically and irrevocably exposed—for those who needed a picture drawn for them—in John Perkins’Confessions of an Economic Hitman, and even he, with his prescription of windmills and solar panels, presented no concept of a viable pathway to economic justice and development.
The solution lies in a new world system of sovereign national states—states that implement national banking and create the kind of anti-imperial Bretton Woods arrangements that U.S. President Franklin Delano Roosevelt intended, but did not live to implement. That system can be created through an initial, powerful combination of four nations—China, Russia, India, and the United States—a combination capable of squeezing out the British system. What the four have in common, in varying degrees, is a history of orientation towards physical economics, rather than toward accepting monetary price as a measure of value. Lyndon LaRouche was aware of this affinity when he formulated the Four Powers solution in a May 26, 2007 presentation.
The history of the United States embodies a long struggle between advocates of physical economics to serve the common good, on the one hand (Benjamin Franklin, Alexander Hamilton, John Quincy Adams, Friedrich List (both a German and an American), Henry C. Carey, Abraham Lincoln, Elbridge Gerry Spaulding, and Franklin Roosevelt, among others), and on the other, British agents and agents of influence, including Hamilton’s assassin Aaron Burr, and several U.S. presidents, including such pro-slavery presidents as Andrew Jackson and James Buchanan. The enormous growing strength of the United States since its inception, despite setbacks, continued until the assassination of President John Kennedy in 1963, when the descent into insanity in both domestic and international policy began, and increased at an increasing rate.
In China, since the death of Mao Zedong, Friedrich List’s National System of Political Economy has come to command respect among economists, and Lyndon LaRouche is well received. In post-Soviet Russia, LaRouche is recognized as a leading, or the leading economist opposing the British; LaRouche collaborated with Russian economists beginning in 1994. India’s post-colonial history has included socialist impulses inspired by the Soviet system and the direct collaboration between Indira Gandhi and Lyndon and Helga LaRouche. The LaRouches have had the long view. The Four Power Agreement is not a new form of geopolitics. Rather, it reflects a difference in the concept of the human being.
In the United States today we have—for a change—a President who is not a creature of the British system. It is an opportunity not to be missed. A Four Power Agreement is not only necessary. It is also thus possible.
To get there, we could take inspiration from the “can do” spirit of Wole Soyinka, the famous Nigerian poet and playwright. In February of this year, at age 84, he spoke at the inauguration of the Lagos-Ibadan segment of the Nigerian Speedline standard gauge railway, which took place on land he said had once been his hunting grounds. He very much approved of the new rail line and said, to applause: “One of these days, from this very platform, a rocket will go to the next planet.”
[fn_2]. Initially, passenger and freight transport may both run on the same tracks, even though freight rail speeds are much slower. At bypass points, freight trains can let passenger trains go by. Container freight cars can also be included in passenger trains, but with some loss of speed. Some segments will have double rails for concurrent travel in both directions; elsewhere, single rails will have to suffice—for now.
Although it is much less expensive to power trains via electric lines alongside, the initial expense of laying on electric power over the long distances is great, and diesel engines will be used for the time being in most cases. [back to text for fn_2]
[fn_3]. A summary of some of the railway planning history, leading to AIHSRN, has been published by Cziranák Ráhel in her 2017 article on the website of the Pallas Athene Geopolitical Research Institute, titled “Prospects for African Railway Development in the Light of China’s Engagement.” The article is posted in Hungarian, but an option to machine-translate is provided.
Extending the New Silk Road to West Asia and Africa by Hussein Askary and Jason Ross (Schiller Institute, 2017) provides a broader scope of African transport history and current developments at the time of writing, in especially its Introduction and Chapter 7. [back to text for fn_3]
[fn_4]. The meeting in Nairobi on April 10-11 released a working paper that gave highest priority to three projects: Kenya and Uganda in the East (Mombasa-Nairobi-Kampala), South Africa-Botswana in the South (Durban-Pretoria-Gaborone), and Côte d’Ivoire-Burkina Faso in the West (Abidjan-Ouagadougou). It provides extensive, Africa-wide data as a basis for prioritization of these and other projects. [back to text for fn_4]
[fn_5]. For example, “Why Accusations Against China for ‘Debtbook Diplomacy’ Are a Hoax,” by Hussein Askary and Jason Ross, in EIR Sept. 7, 2018 and “Philippine Journalist Refutes the ‘Debt Trap’ Story,” EIR Daily Alert, Sept. 30, 2018. [back to text for fn_5]
[fn_6]. Spaulding’s book is reviewed in two parts in EIR, April 12 and April 19, 2019, under the title, “What Is America’s National Credit? Can We Use It for Real Economic Growth?” by Paul Gallagher. [back to text for fn_6]
[fn_7]. Roosevelt’s fights with Churchill during World War II on the subject of empire are recorded by an eyewitness, his son and intermittent aide-de-camp, Elliott, in Elliott’s 1946 book, As He Saw It. He records, for example, one of Roosevelt’s August 1941 meetings with Churchill: “Churchill . . . brandished a stubby forefinger under Father’s nose. ‘Mr. President,’ he cried, ‘I believe you are trying to do away with the British Empire. Every idea you entertain about the structure of the postwar world demonstrates it. But in spite of that . . . we know that you constitute our only hope. And’—his voice sank dramatically—‘you know that we know it. You know that we know that without America, the Empire won’t stand.’ Churchill admitted, in that moment, . . . that British colonial policy would be a dead duck, . . . and British ambitions to play off the U.S.S.R. against the U.S.A. would be a dead duck. Or would have been, if Father had lived.” (pp. 41-42) And there is much more. Elliott wrote the book after his father’s policies had been reversed and suppressed by his successor, the British-steered President Harry Truman. [back to text for fn_7]