The 258 civil society organizations (CSOs) that sent an open letter to the World Trade Organization (WTO) and its members could not be more concerned. On April 17, 2020, when they asked the WTO to stop all trade and investment treaty negotiations during the COVID-19 outbreak and refocus on access to medical supplies and saving lives, the virus death toll surged past the 150,000 mark.

Trade and health: a prisoner’s dilemma

On the same day, the WTO organized a virtual meeting, in which its director general stressed the importance of “maintaining open markets for trade in laying the groundwork for a strong recovery.” The virtual meeting also discussed if the WTO members “would be open to formal decision-making through virtual meetings or written procedures until traditional in-person gatherings can resume.”

The letter’s endorsers that represent social movements in 150 countries, such as the United States, Brazil, India, Australia, many European countries and Tunisia, said they were shocked by “the business as usual” attitude of the WTO. For them, not only does the institution’s agenda ignore technological deficiencies of some developing countries, but it also diverts the efforts and resources from the most important purpose of combating the virus.

Many of these CSOs, such as the Third World Network, Oxfam, Greenpeace, Arab NGO Network for Development and the Tunisian Observatory of Economy, have been advocating for a fair distribution of world resources and fighting against the adverse impact of free trade on social welfare, especially in the Global South.

The Covid-19 pandemic just seems to revive these concerns. Indeed, access to affordable medicine often stumbles on the binding rules of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs). Adopted in 1994, the latter expanded the scope of intellectual property rights, especially in terms of patent protection and conferred more powers to patent holders.

Despite its binding effect, TRIPs offers flexibilities such as compulsory licensing for public health purposes. Barr al Aman has recently stressed the importance of this flexibility and urged the Tunisian government to use compulsory licenses if the prices of health products are excessively expensive and / or if the quantities made available to Tunisia are not sufficient to cover the urgent national need.

Soigner le COVID-19, l’urgence d’une licence obligatoire

However, for many countries the use of the flexibilities is not that easy. According to a study conducted by the WHO and the South Center in 2005, “a number of provisions in recently concluded FTAs between developed countries (essentially the US) and developing countries, pose a real risk of undermining an effective use of TRIPs flexibilities in developing countries for public health purposes.”

Therefore, besides the discrepancy in the priorities scale of both its issuers and its receivers, the open letter brings back governments, drug companies and the public opinion back to an essential question: will intellectual property hinder the access to the potential COVID-19 medicines and other vital medical supplies?

“From the point of view of intellectual property, of course, a tension exists – and it is a tension that exists around access,” Francis Curry, the director general of the World Intellectual Property Organization (WIPO) said back in 2015, at a symposium on innovation and access to medicine held jointly with the WTO and the World Health Organization (WHO) in Geneva.

Curry then added: “on the one hand, what intellectual property does economically is making access a salable commodity, and that is the basis of markets in technology and creative works. But on the other hand, access as a salable commodity… raises questions about the cost and possibility of access.”

A deep-rooted paradox

The roots of this paradox are deep and old. Since the enactment of the first modern patent law in Venice in 1447, there has been a heated debate over the moral and philosophical foundation of patents and other forms of intellectual property such as copyright, trademarks and trade secrets.

As explained by the Stanford Encyclopedia of Philosophy “patent protection is the strongest form of intellectual property protection, in that a twenty-year exclusive monopoly is granted to the owner over any expression or implementation of the protected work.”

The idea of monopoly over ideas was endorsed by philosophers like John Locke (1632 – 1704) and G.W.F. Hegel (1770 – 1831).

The English theorist claims that individuals are entitled to control the fruits of their labor (including their intellectual labor).

The German thinker has rather a personality-based justification as he argues “that individuals have moral claims to their own talents, feelings, character traits, and experiences.”

Another philosophical justification for intellectual property is to be sought in utilitarianism. The utilitarian point of view was explained in the Virginia law review, by Jeanne C. Fromer Associate Professor at Fordham Law School. “Copyright and patent laws are premised on providing creators with just enough incentive to create artistic, scientific, and technological works of value to society at large by preventing certain would-be copiers‘ free-riding behavior,” she wrote.

Do these arguments hold up when the patented intangible work is the formula of a saving-life drug?

Dr. Yusuf Hamied’s answer would be no. When Harvard Business School (HBS) interviewed the founder of the Indian pharmaceutical company Cipla in 2013, he said:

There should be no monopoly… [we are] willing to pay the originator [of drugs] a suitable compensation and India should not be deprived of newer drugs and be at the mercy of the innovators.”

If the HBS featured Dr. Hamied for its Creating Emerging Markets Project, it is because of the man’s exceptional battle against the human immunodeficiency viruses (HIV) that causes acquired immunodeficiency syndrome (AIDS).

Back in 2001, Cipla mixed three molecules– Nevirapine, Didanosine and Zidovudine and came up with a new anti-HIV drug. Dr. Hamied then gave his antiretroviral therapy (ART) to humanitarian organizations and poor Asian and African governments for $350 a year.

That price was thirty times lower than market prices. Suddenly, big multinational pharmaceutical groups were left with their useless patents and with financial shortfalls of billions of dollars. Full of wrath at seeing their monopolies collapse, western multinationals had to lower their AIDS treatment prices by 80%.

While western business groups and media accused Dr. Hamied of piracy, the United Nations organizations described him as India’s Robin Hood of drugs.

When Dr. Hamied gave that interview, the world was still dazed by the 2009 swine flu pandemic and its estimated death toll of 284,000 victims. So, he intuitively evoked the example of the Oseltamivir; the antiviral drug used to prevent and treat swine flu, other subtypes of influenza A and influenza B.

The patent on the Oseltamivir in the US was then held by the Swiss multinational Roche. An epidemic before the patent’s expiry date (2016) would have meant, according to Dr. Hamied, that the destiny of the world would have been in the hands of one company.

In a concluding remark that encapsulated his business philosophy, the Indian scientist said:  “I am a firm believer that if you are in the health care business like supplies, it is not a business per se; it is a business plus you are saving lives. So it has to have a humanitarian angle to it.”

Santé: la bataille autour de la transparence sur le prix des médicaments

It took a fight between the leaders of two (former) colonial powers to remind us once again of the anomaly of a situation that has been going on for decades.
Last January, Luigi Di Maio, then Vice-President of the Italian Council of Ministers, attacked French President Emmanuel Macron, accusing him of aggravating the migration crisis by continuing to loot Africa. “He first makes the moral, then he[Macron] continues to finance the[French] public debt with the money he plunders from Africa,” he had assailed. For the leader of the 5-star Movement, the means of depredation is none other than the CFA franc, through which Paris “continues to colonize dozens of African countries”.

The French then retaliated by assuring that the attack on Rome was only for internal political purposes. Di Maio’s thesis concerning the CFA franc does not, however, lack arguments: arguments of common sense, arguments of values, arguments by the absurd and, then, the implacable facts of history.

The Italian-French battle is reminiscent of the 1900s. By that time, the colonial powers had completed sharing Africa and deploying their currencies. Africans who had initially adapted their traditional payment methods to the colonizers’ systems had ended up, by the middle of the 20th century, totally abandoning their currencies in favour of francs, marks and shillings.

This history of colonial currencies is told by Régis Antoine, a university specialist in colonial studies, in review of Historia published in February 1988. In his article, the French academic goes back to the early days of Portuguese colonization in Africa and Asia, before going through the centuries. In his journey through time and space, he does not fail to recount the most surprising assaults of the Caribbean freebooters and the most cruel lootings, such as the looting of the treasure of the Dey d’Alger, during the capture of the city by the French colonizers in 1830.

Régis Antoine also recounts the competition between European colonizers to impose their respective currencies on African colonies. Thus the French franc had to face the English shilling in Dahomey[present-day Benin], which had been a territory invested mainly by British traders. In the Kamerun colony lost by Berlin following its defeat in the First World War, French copper-nickel coins had ousted the German marks in just a few months.

In the generalized colonial outbreak of the 1900s, he wrote, the rupees of Queen Victoria, the African pfennigs of William II, the colonial reis of Portugal, the francs of French Africa and the centesimi of Italian Africa, the Belgian francs of Leopold, finally the king of the independent state of Congo (sic) circulate the buns of the rulers and the helmets of the kaisers, the effigies of white republics, the portraits of navigators and peacekeepers.

Of this blatant cavalcade, it was the French franc that had best survived the hecatomb of the two World Wars and the decolonization waves of the 1960s.

Indeed, the CFA franc, or franc of the French Colonies of Africa, as well as the franc of the French Colonies of the Pacific (CFP franc) had been created on 25 December 1945. As a result of the devaluation of the metropolitan franc, the two new currencies enabled the city to revive its ruined economy by continuing to draw comfortably on the rich soil of its colonies for its raw materials.

The metropolitan franc thus devalued against the two new colonial currencies forced the colonies to import cheap products from the metropolis.
A few years later, forced to bend to the irreversible course of history, the French government had not given everything to the countries that were to gain sovereignty. Thus, on the economic and monetary level, Paris had done everything to keep maximum control over its former colonies. A change in the name of the CFA franc had made it possible, among other things, to preserve France’s colonial privileges and the franc zone had remained hermetically sealed.

Today, the CFA franc is no longer the franc of the French Colonies of Africa.

In the West African Economic and Monetary Union (WAEMU), composed of Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo, the acronym CFA is formed by the initials of the African Financial Community.
And in the Central African Economic and Monetary Community (CEMAC), which includes Cameroon, the Central African Republic, the Republic of Congo, Gabon, Equatorial Guinea and Chad, the CFA franc is called the franc of Financial Cooperation in Central Africa.

A dossier on the Bank of Central African States (BEAC) published in the weekly magazine Jeune Afrique in March 1982 sets out the mechanism for the CEMAC zone issuing institution to be subject to the French Treasury.
Indeed, in accordance with the monetary cooperation agreements signed on 22 and 23 November 1972 in Brazzaville by the BREAC Member States, among themselves and with Paris, the value of the CFA franc is determined in relation to the value of the French franc. In addition, this parity is fixed. Thus, 1 CFA franc was worth 0.02 French francs on that date. Since the creation of the currency of economic and monetary union, formed within the European Union in 1999, 1 euro has been worth 655.957 CFA francs.

Apart from this fixed parity, there are no restrictions on capital movements and current transactions. This is the principle of free transfer, to which is added a third attribute: unlimited convertibility.

So what is the counterpart of these three principles?

“In order to ensure the value of their common currency,” says Jeune Afrique, “BEAC member states agreed in Brazzaville to pool their foreign exchange reserves (foreign exchange and gold reserves are the guarantees of a currency) and deposit them in a current account with the French Treasury, called the operating account. This is a pledge of the unlimited guarantee given by France to the currency issued by BEAC”.

The French Treasury is an agency responsible for managing the State’s debt and cash position.
“The convertibility,” explains the pan-African weekly, “between the CFA franc and the French franc resulting from this guarantee is automatically done through this operating account: it records capital movements linked to international transactions between the BEAC zone and abroad. The conversion of the CFA franc into currencies (foreign currencies) and vice versa is done automatically through the fixed parity linking it to the French franc.

More on the Franc CFA with Hannah Cross: The new monetary policy consensus and the CFA Franc: a labour-focused approach. [Podcast/Eng]

If this dossier entitled “Let’s get to know the BEAC”, which could well apply to BCEAO; the UEMOA central bank, seems to adopt a technical vocabulary coupled with the lexical field of guarantee, stability and insurance, Fanny Pigeaud and Ndongo Samba Sylla’s book, on the other hand, is a vibrant account. L’arme invisible de la Françafrique, a story of the CFA franc that the two authors (a journalist and an economist) presented on 6 November in Tunis is a book that combines history, economics, geopolitics and journalism to explain not the functioning of a currency but the workings of a neo-colonial political economy system. A system that maintains the African economies’ staggering debt burden while depriving them of any room for manoeuvre when designing public policies.

The book, which dates back to the pre-colonial period, is almost sonorous, you can almost hear the sound of drums and the banging of boots of French soldiers in the plains of Upper Volta and along the beaches of Côte d’Ivoire. It emanates from it the echo of the voice muffled in blood, of Sylvanus Olympio, President of Togo and Thomas Sankara, President of the National Revolutionary Council of Burkina Faso. The two men, like countless African voices, had dared to challenge France’s control over the continent and its people.

Through the two hundred pages of the book published in September 2018 by La Découverte, it is not difficult to imagine the French Treasury’s safes full of gold and currency bullion and the empty boxes in Bangui, Niamey or Bamako. It is also possible to see the large, noisy, overcrowded and underdeveloped African cities, in contrast to the opulence of the French metropolises.

What about the future of the CFA franc? The answer is certainly not easy. But what is certain is that the next episode of the saga will be largely written by the 160 million Africans who seem increasingly aware of their rights to sovereignty and prosperity.

Is indebtedness really irredeemable? And can monetary sovereignty as defined by Modern Monetary Theory (MMT) settle African states problems with their creditors? These questions, among many others, have been debated in a 4-day conference held in Tunis, under the theme “The quest for economic and monetary sovereignty in 21st century Africa”.

From November 6th to 9th, economists gathered by The Rosa Luxembourg Foundation, the Global Institute for Sustainable Prosperity (GISP) and the Politics of Money/DfG Network have examined the history of Africa’s debt and analyzed its political, economic and social implications for the continent’s 54 states.

Africa’s debt: a burden of the past

When examining sovereign debt through the lens of history, many speakers first identified the moment of independence (1950’s – 1960’s) as a turning point. African countries then moved from wealth-generating colonies to theoretically independent countries. But the yoke of political and military colonization had been replaced by the burden of an increasingly growing public debt.

The freshly independent states inherited a heavy colonial debt. This debt transfer has been described as “illegitimate” and “illegal” by several civil society movements in Africa and around the world.

Since its creation in Belgium in 1980, the Committee for the Cancellation of the Third World Debt (CADTM) has been denouncing the “collusion” between ex-colonizers and IFIs.  “The World Bank is directly involved in some colonial debts. In the years 1950’s and 1960’s, it granted loans to the colonial powers for projects allowing them to maximize their colonies exploitations”, Robin Delobel, member of CADTM-Belgium wrote earlier this year.

Also read (FR) : Franc CFA: Saga d’une monnaie (néo) coloniale 

In his article entitled “When will reparations for colonial debt be made?” the activist pointed out that “debts contracted with the World Bank by the Belgian, English and French authorities for their colonies were then transferred to the countries that gained their independence without their consent”.

There came the advent of neocolonialism.

Then came the 1970’s, a decade of massive developments plans. African governments undertook large-scale projects and borrowed heavily to finance the construction of dams, ports, hospitals, railroads and schools. It was promoted by IFIs that external finance would grant prosperity. However, by the mid 1980’s, most governments found themselves overwhelmed by debt and debt service that had to be paid in foreign currency.

Besides, not all the loans were used to build infrastructure and generate growth. Many post-colonial governments were ruled by the military and armed conflicts were recurrent in several regions of the continent. A study published by the Stockholm Peace Institute in 1971 and quoted by the monthly magazine Africa, showed that during the period between 1950 and 1969, Egypt’s major weapon imports reached 1500 million US dollars. That was more than half the total arm imports of all other African countries during the same period. Corrupt regimes and dictators have also contracted debt for their own benefit.

It was promoted by IFIs that external finance would grant prosperity. However, by the mid 1980’s, most governments found themselves overwhelmed by debt and debt service that had to be paid in foreign currency.

Faced with this risk of insolvency, and in an unprecedented neoliberal intransigence, IFIs, such as the International Monetary Fund (IMF), began to impose Structural Adjustment Plans (SAP) on their debtors. In order to benefit from IMF’s loans and finance, their teetering budgets and balance of payments, indebted governments were forced to liberalize their markets and privatize several state-owned companies. But these so-called reforms, which first meant to enforce payment, were paradoxically (enough) constraining any possible future debt settlement.

The trap of indebtedness

Tunisia is one of the countries that have been stuck in this trap. Since the 1970’s, the government has become literally obsessed with foreign direct investments. It adopted laws (in 1972, 1993 and 2016) that granted generous tax and financial incentives to foreign, yet low added-value, investments.

Tunis has thus deprived itself of a huge amount of tax revenue. “We identify these tax incentives as tax expenditures, because it is a shortfall for the state,” said Amine Bouzaiane, the Tax Justice Officer at the Tunisian NGO, Al Bawsala.

Tax incentives proved to be ineffective and costly, even by the IMF, as foreign investors would have invested even without these incentives.

“Experience shows that there is often ample room for more effective and efficient use of investment tax incentives in low-income countries. Tax incentives generally rank low in investment climate surveys in low-income countries, and there are many examples in which they are reported to be redundant—that is, investment would have been undertaken even without them”, the Washington-based institution stated in a report published in October 2015.

Another self-inflicted constraint is the money lost due to free trade agreements (FTAs) and the “so called Tunisia’s open trade policy”. “Before the first SAP in the 1980’s, tariffs duties represented 25% of Tunisia’s tax revenues, in the 2020 draft finance bill the rate is about 5%”, Bouzaiane told law students at a lecture held earlier this month in Tunis.

Read More (FR) : ALECA/Tunisie: Quel impact des prêts UE sur les négociations? (Interview)

These unfavorable terms under binding FTA’s and investment treaties have been criticized worldwide by activists and economists like Prabhat Patnaik, Professor Emeritus at the Center for economic studies and planning at Jawaharlal Nehru University, New Delhi.“If governments have a popular mandate, they should withdraw from these treaties”, he told Barr Al Aman.

Over the last decade, Tunisian authorities have been overwhelmed by new dilemmas. The government responded to the outrage over unemployment by massively hiring in the public sector, which led to an inflated wage bill. Besides, corporate tax revenues have been shrinking as companies have been less productive. The country’s phosphates revenues have also declined due to protests over employment, transparency and fair development in the mining region.

In 2010, the state budget deficit was about TND 650 million (1% of GDP). In 2018, it amounted to TND 5.2 billion (10% of GDP). To fill the gap, the State has to borrow, and loans have to be contracted in dollars and euros.

On the other hand, the budget allocated in hard currency to the repayment of the foreign debt, of the principal and interest for the first half of 2019 represented almost one-quarter of all government expenditure.

In short, if a cartoon could summarize Tunisia’s debt ordeal, it would depict the country as a helpless Sisyphus who borrows continually to pay an ever-growing debt.

MMT’s prescriptions

So how can MMT help countries like Tunisia break free from this prison? “Through monetary sovereignty”, replied Fadhel Kaboub, associate professor of economics at Denison University, Ohio, and President of the Global Institute for Sustainable Prosperity (GISP).

A monetarily sovereign government, as he told Barr Al Aman, is a government that issues its own currency, collects taxes in that same currency, only issues bonds denominated in its local currency and operates under a flexible exchange rate regime.

Except from countries using the CFA Franc, which do not have monetary sovereignty at all as they have to deposit a share of their reserves at the French Treasury, the majority of African countries meet the first and second conditions of monetary sovereignty. The problem lies with the two last requirements.

Watch (AR) : What is MMT? / السياسة النقدية: ثورة في المنوال الاقتصادي؟

Tunisia, for instance, mainly borrows in foreign currencies that help the central bank build up its reserves and get access to more favorable interest rates and lengthier maturities.

As Tunisia’s local currency, the dinar, is very weak, paying down external debt and financing imports become more expensive, and thus lead to more deficit.

Beyond issuing bonds in local currencies and operating under flexible exchange rates, Kaboub added that energy and food sovereignty are the other two essential components of MTT.

Indeed, investing in renewable energies would not only drastically reduce the very expensive oil imports, but also mitigate climate change impacts. Agriculture, when directed at self-sufficiency rather than export, would minimize the exorbitant food imports, he said.

According to Mehdi Ben Guirat, professor of economics at Laurentian University, Ontario, “such measures would limit developing economies’ exposure to exogenous shocks, which will lead to less external debt and less conditional loans”.

Ben Guirat agreed with Kaboub on the need for developing countries to solve the “survivalist issues” of food dependency and energy deficit. He also stressed the importance of “champions programs”. In these programs, as he put it, the government identifies and finances priority sectors that have spillover effect and would therefore pull up the whole economy.

“There needs to be an ideological shift in terms of how the government operates”, he said.

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Mohamed Haddad, Hoang-Xuan An & Nada Trigui contributed to this paper.