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paranoid theory of the week :: are african countries still paying a colonial tax to france?

that's the sort of headline that's liable to make one throw up in one's mouth a little, isn't it? i mean we all know that former colonies still pay a hefty price for colonisation, but i think we all hope that that doesn't mean a direct outflow of money to their former overlords that involves nothing in return. it's a crazy theory, right? it has to be. there's no way that... well, i figured that it warranted a look, at least.

the theory :: 
fourteen african countries, all former french colonies, continue to pay a tax to france based on fees paid during the colonial period.

the origin ::
this popped up everywhere in the last couple of weeks, but one of the original articles on it is found on the website silicon africa. i did find a slightly earlier piece here, but it doesn't have the annotations of the silicon africa article, which makes it more difficult to fact check.

the believers ::
the story seems to have been limited thus far to sites specifically dedicated to african news and culture [and to a couple of 'fringe' political sites], which means that very few people who aren't already interested in africa would have heard about the story.

the bad guys ::
france. [and more broadly, all former colonizers who continue to profit from their misdeeds.]

the evidence ::
one of the most challenging things about evaluating a case like this is that the rules of international finance seem to be constructed specifically to stop anyone from being able to hold anyone responsible for anything.

there are several points in the silicon africa article about the relationship between france and the states which were once its colonies. the question of whether or not those former colonies continue to pay taxes to the french government is point #2 of 11, so there is clearly a greater issue here than just taxes, but for now, we'll focus on that.

to start in as basic a way as we can get, let's look at this definition of a "tax", provided by dictionary.com :

noun
1. a sum of money demanded by a government for its support or for specific facilities or services, levied upon incomes, property, sales, etc.
2. a burdensome charge, obligation, duty, or demand.

what's being alleged is that that the french government is holding from 50-85% of foreign reserves of fourteen african nations, under the terms of an agreement that was reached during the transitional period between french control over these countries and independence. that might meet the second part of the definition of a tax given above, but it does not meet the first and it is that first definition that most people would understand to be a tax. while the first point in the silicon africa article does allege that there are amounts being paid to france for rental of long-term purchase agreements on the benefits of colonial rule [buildings, roads, railways, etc.], the author himself states that he hasn't been able to research this claim adequately, so we can't evaluate it here. so as far as the description of what's being done is concerned [and the title of the article], no, there is not a tax being paid.

however, the investment of billions of dollars of foreign reserves seems like it might be a little hinky, so let's take a closer look at that.

it is absolutely true that the french central bank holds foreign reserves of fourteen former african colonies. the current amount is 50%, but that has decreased steadily. it used to be 100%. that money is held at a nominal rate of interest [0.75% in 2012]. the deposit rule is a condition of using the cfa franc, a currency which is guaranteed by the french government.

the advantage to using a common currency is that it provides a certain level of stability and encourages financial investment. compare that to the situation in zimbabwe, where government corruption and financial involvement in wars in congo saw the country reach 79,000,000,000% inflation. that sort of instability makes the 2008 housing crisis look like a hiccough.

the disadvantage to using a common currency, as greece has found out in the last few years, is that it limits your flexibility to act in your own national interests. that's tricky enough in the eurozone, but the west and central african monetary union has an extra level of difficulty baked in: the cfa franc is pegged to the euro. as the euro fluctuates, the cfa franc moves right along with it, which means that monetary policy for these fourteen african countries is de facto being set by the european union. that does sound rather colonial, doesn't it?

at any given time, a country can withdraw up to 15% of its reserves from the french central bank, at which point they would be able to collect the small amount of interest due and use the money themselves. and there is no law compelling them to use the cfa franc. they're all free to use whatever currency they want, so their obligation extends only so far as their desire to have their money backed by the bank of france. [as the minimum required deposit of foreign currency with the central bank has decreased, we can assume that all of the countries involved have repatriated some of that money, but as a result, they've also lost the interest they would have gained had they invested it somewhere else. [for that matter, each of these countries could have simply broken the money up into smaller parcels, placed it in bank accounts with many different banks and made a great deal more interest than they've collected, because for the vast majority of the time this arrangement has been in existence, interest rates on deposits have been much higher than they are now.]

this is where we run headlong into the legal term "duress". let's go back to dictionary.com :

noun
1. compulsion by threat or force; coercion; constraint.
2. law. such constraint or coercion as will render void a contract or other legal act entered or performed under its influence.
3. forcible restraint, especially imprisonment.

so the question before us now is whether or not those countries using the cfa franc are doing so, or started to do so, under duress. the silicon africa article argues that france used the implied threat of force in order to coerce former colonies to join the french community in the 1950s, specifically by making an example of guinea, the one country of the group that elected not to join, but to declare outright independence. author philip muehlenbeck concurs, noting that the french police torched their barracks, scholarships awarded to guinean students were immediately revoked, the banks were simply shut down and one american reporter ended up stranded at a border crossing for two weeks because the french soldiers who manned it locked the gates and left with the keys. that all sounds more than a little punitive. [it also makes payments required from other countries look a little bit like a protection racket. "give us money or we'll burn your newborn country to the ground."]

the silicon africa author also implies that the french simply assassinated those who tried to stand up to them, starting with sylvanus olympico, the first president of togo. olympico resisted pressure from french-allied politicians within his country to allow them to run a full-fledged military and decided to withdraw from the currency union. indeed, while the circumstances may have been a little more complex on the domestic front, olympus was killed by a former french legion member who favoured a closer military alliance with france, and who himself ultimately became togo's president.

of course, it wasn't uncommon for african men to join the french military and there were plenty of african leaders who felt that remaining closely allied with france was a good idea in the early years of independence. that doesn't mean that the french government was involved in the coup in togo, or any other coups carried out by africans who had trained with the french military. no one has ever proven that. what can be said is that france had a remarkable run of good fortune when it came to who led successful coups in the fourteen west and central african countries using the cfa franc, because those leaders were most often amenable to french policy demands.

so, do these early examples constitute duress? were the first african leaders of the post-colonial era convinced that refusal to comply with french demands would result in the ruin of their country or their own deaths?

the likelihood :: 7.5/10
i'm cutting away a few points because saying that the current financial arrangement is a "tax" is an oversimplification that, ironically, serves to confuse the issue. also, the source materials grossly overstate the amount of money currently being held [and don't provide citations if the amount is supposed to reflect the total paid into the french central bank since the arrangement was first put in place]. i'm also suspicious that there are other statements in the silicon africa article that may be misleading, including the fact that the author has chosen to translate only the first half of the embedded video where former president chirac admits that france has gained much of its current wealth from exploiting africa. [he goes on to say that france must be willing to take the necessary steps to redress this, not out of a sense of generosity, but because it is the proper thing to do and the only way to prevent greater problems further on.]

but the fact is that despite those flaws in the source material, there is something highly questionable happening with france and its former west and central african colonies. the arrangement stinks like the most appalling of french cheeses left out in the african sun. there are certainly circumstances that would indicate that the participating countries were coerced into supporting policies not in their own interests when they agreed to join this union and that the threat of instability and withdrawal of foreign investment may continue to constitute a form of duress. those who continue to use the cfa franc unquestionably cede their financial autonomy to europe.

so while there isn't a colonial tax, there is most definitely still a colonial relationship.

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