TY - JOUR
AU1 - Workneh, Téwodros, W.
AB - Abstract Since its inception in 1894, Ethiopia's telecommunications sector has been characterized by a vertically integrated market run by a state-owned enterprise outside the realm of competition. Although the monopolistic model still persists, the Ethiopian government has awarded multibillion-dollar contracts to Chinese telecommunications multinationals Zte and Huawei in the last decade. Based on analyses of interviews with policymakers and officials, this essay explores the implications of Sino-Ethiopian partnerships in Ethiopian telecommunications from a critical political economy perspective. The analysis shows that China's motives for investing in Ethiopia are predominantly economic and provide opportunities for millions of citizens. However, China's policy of noninterference and other factors make the partnership particularly attractive for Ethiopia's anocratic government, which has used China's resources to bolster its power. The rise of neoliberalism in the 1970s and 1980s after the crisis of Keynesian capitalism replaced other forms of economic thinking despite notable resistance in some countries (Chomsky, 1999; Shefner & Fernández-Kelly, 2011). Different scholars have attempted to explain this turn toward market fundamentalism, although David Harvey's conceptualization of the shift provides a particularly extensive framework. For Harvey, neoliberalism represents “a theory of political economic practices that proposes that human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills” through “an institutional framework characterized by strong private property rights, free markets and free trade” (2005, p. 2). The role of the state in this model is to create optimal conditions for free markets to thrive, while making sure state intervention in markets is “kept to a bare minimum” (p. 2). Although neoliberalism as a dominant economic and political ideology has endured, the beginning of the 21st century brought new hybrid economies that embraced market-led globalization, on one hand, and an interventionist state model, on the other (Becker, 2013; Silvius, 2014). The problem for the United States and its partners, however, was that these emerging economies did not simply clone the neoliberal blueprint. They modified it to fit their political and economic programs, essentially enabling them to actively participate in the global capitalist economic order while maintaining their independence from Washington (Overbeek & Apeldoorn, 2012). Emerging market nations' newfound power and economic leverage is significantly challenging and changing dominant structures and hierarchies in international relations. While Brazil, India, and Russia are examples, no other country took the global economy by storm as much as China has in the past 2 decades. From the United States to Angola and from Iran to Australia, the inevitability of Chinese omnipresence in the global marketplace is today not contested. This article investigates the growing influence of China by looking at the Horn of Africa country of Ethiopia, specifically Sino-Ethiopian relations in telecommunications infrastructure development. While China's active participation in global telecommunications, a multitrillion dollar industry, is not surprising given the soaring profitability of the sector, its infiltration into the historically insular Ethiopian telecommunications market is germane in shedding light on why the Chinese approach to development and international relations is so popular in many countries in Sub-Saharan Africa. In the past 2 decades, the Ethiopian state has notoriously resisted the neoliberal construct of the Bretton Woods institutions, particularly the International Monetary Fund (IMF) (Stiglitz, 2002). Although not a self-declared communist party as its predecessor the Derg, the current ruling party of Ethiopian People's Revolutionary Democratic Front (EPRDF) is known to be sympathetic to Marxist–Socialist ideals of development economics, and maintains strong regulation, albeit claiming to practice a free market economy (Gill, 2010). Government regulation is most evident in the telecommunications sector. In many instances, leading officials of the EPRDF have ruled out the privatization of Ethio-Telecom, the only state-owned telecommunications provider for Ethiopia's 94 million people. Today, Ethiopia's telecommunications industry remains a monopoly run by an uncontested state-owned enterprise (Temesgen, Negi, & Ketema, 2010). It is against this background that I ask why the Chinese approach has been attractive to a government and a sector that historically shunned deregulation and privatization. Through an analysis of Sino-Ethiopian partnerships in the Ethiopian telecommunications sector, this essay aims to demonstrate how the “Chinese alternative” has decisively attracted Sub-Saharan Africa, a region that has been dominated by the West's structural adjustment entrapments. In doing so, I also explore whether there is validity in the argument of scholars such as Halper (2010), who contend that given a choice between market fundamentalism and its freedoms and market authoritarianism and its high growth prospects, the majority in the developing world—as well as many middle-sized, non-Western powers—prefer the latter. Approaching global neoliberalism through critical political economy The tension between the IMF and the Ethiopian state in the regulation–deregulation debate regarding the Ethiopian telecommunications sector represents a tension between the neoliberal agenda of aggressive privatization and that of an independent nation state's policy of the so-called developmental statism and market regulation. Amidst a prevailing profit-driven global capitalist order, it is hardly surprising that the global communication infrastructure is increasingly becoming privatized (Thussu, 2007; Winseck, 1998). It is in this context that a critical political economy approach is essential to understand the global telecommunications domination race and the motives of the stakeholders involved, including China. Mosco defines political economy as “the study of the social relations, particularly the power relations, that mutually constitute the production, distribution, and consumption of resources” (1996, p. 25, emphasis in original). Expanding on this definition Babe (1995) notes that the relationship between power relations and the market is quite complex and that it is the goal of the political economist to clarify the nature of this relationship. The political economy of communication, then, entails the study of power and its relationship between the production, distribution, and consumption of communication. Communication in this circumstance is defined as a social process of exchange where the product of that exchange is information, which contains within it the embodiment of social relationships (Mosco, 1996). There is a wealth of literature that uses the political economy of communication approach to examine the possible impact of treating the production and distribution of media content as a privatized commodity in an increasingly free market capital system. For example, Mosco (1996) summarizes the basic tenets of the neoliberal perspective, which views the privatization of media in free market economies as a stimulant to the production and distribution of a wider variety of media content, thereby providing consumers with endless amounts of information that will help society progress toward Western modernity. Critics of this view, however, argue that the race for privatization can have a dystopian effect on society by concentrating the control of media production and distribution within a small select group that only produce content to benefit themselves (Bagdikian, 2004; Herman & Chomsky, 1988; McChesney, 1997). This is particularly consistent with the Marxist and institutional perspectives of political economy (Fuchs, 2011; Horkheimer & Adorno, 1972; Marx & Engels, 1967; Murdock & Golding, 1973; Smythe, 1977; Wasko, 2004). The increasing supremacy of capitalism and globalized markets is at the center of the neoliberal agenda. With the expansion of capitalism, it is inevitable that, as Wasko, Murdock, and Sousa (2011) point out, “the tension between private interest and public good has been significantly exacerbated” (p. 2). The powerful influence capitalist agents exert on governments leads to the weakening and eventual irrelevance of public policies. The weakening of state regulation and governance facilitates increased privatization where “the abuse of private power is blatant and commonplace” (Wasko et al., 2011, p. 2). Where neoliberal political economy fails to address, among other things, the sustainability of the public good, the importance of Marxist and institutional approaches cannot be stressed enough in analyzing contemporary global media industries. Contextualizing Ethio-Chinese relations in Ethiopian telecommunications Although Ethiopia's excellent relationship with China can be attributed to a host of different factors, EPRDF's foreign relations policy is a good place to start in contextualizing this growing bilateral collaboration. EPRDF has a complex relationship with the West, one that is characterized mainly by the former's apprehension of Western inspired democratic and economic reforms. The West's push for Ethiopia to open up its political space and liberalize the “commanding heights” of its economy has been problematic for EPRDF, which saw these pushes as potential threats to its hegemonic rule beginning 1991. It is to curb this influence that EPRDF has aggressively fortified its ties with China and likeminded partners in the past decade. EPRDF's methods are based on the assumption that the government in Beijing always refrained, unlike Western donors, from demanding democratic reforms in Ethiopia and other countries in Africa (Alden, 2007; Brautigam, 2009). Economically, EPRDF sees an opportunity to minimize the West's clout in the development strategy of Ethiopia by working independently from Western donor preferences. Put simply, Chinese “noninterference” is held in high regard within the ruling elites of the Ethiopian state (Hackenesch, 2011). If there is one sector that epitomizes EPRDF's resolute stance on “noninterference” and the notion of “state-led development,” it is telecommunications (Tsigie & Feyissa, 1999). The EPRDF controlled government views the telecommunications sector as a strategic asset for the economy and national security, which the state cannot afford to “let go” just yet. In spite of EPRDF's vehement rejection of liberalization and privatization, the Ethiopian telecommunications sector—a pioneer in the African telecommunications landscape—has remained pitifully incompetent in the past 2 decades (Skjerdal, 2014). With dissatisfied customers who would jump to a competitor and foreign investors ready to buy the sector should the market be liberalized, EPRDF understood it had to find a partner that would boost the country's telecommunications service efficiency without compromising state ownership. When this realization became clear to government officials, a drastic course of action in foundational telecommunications infrastructure investment was inevitable. After the Ethiopian government's call for proposals for the construction of a backbone network in Global System for Mobile Communications (GSM), Code Division Multiple Access (CDMA), and other technologies covering the entire country, ZTE Corp. was selected as a strategic partner for telecommunications infrastructure development in 2006, resulting in a framework agreement that would see the Chinese company aggressively upgrade the national telecommunications network to be run by Ethio-Telecom. This historic agreement saw the Federal Democratic Republic of Ethiopia (FDRE) sign a deal with the Chinese telecommunications giant of $1.5 billion, a credit as big as the total worth of the Ethiopian telecommunications monopoly (Whelan, 2009). In 2013, Ethio-Telecom signed a network expansion deal worth another $1.6 billion with Huawei and ZTE, with the two companies sharing 50% of the project each. For this latest project, Huawei and/or ZTE, pending further negotiations, are contracted to deliver fourth generation (4G) technology for the capital city of Addis Ababa allowing customers to have browsing speeds of 100 mb per second. The Chinese companies are also expected to expand the existing infrastructure of cellular networks and introduce 3G services in the 11 infrastructural zones set up by the Ethiopian state. The Ethiopian government sees the project as an implementation phase of its 5-year economic program also known as the Growth and Transformation Plan (GTP) that ends in 2015. The project aims to increase Ethio-Telecom's mobile subscription capacity from 23 million to 50 million (Maasho, 2013). Method As stated earlier in this essay, the proliferation of Chinese multinational corporations in the Ethiopian telecommunications sector cannot be understood without an assessment of the historical tensions between the Ethiopian state and international financial institutions like the IMF, between regulation and liberalization, and between state intervention and neoliberal capitalism. This article's inquiry therefore offers an evaluation of institutions, policies, and ideologies. Mainstream economics, despite their centrality in policymaking and academic scholarship, are content to describe the status quo of the global capitalist economic order without providing critical analysis. Critical political economy, on the other hand, is less concerned with “neutrality” and more concerned with critically examining the various elements and intricacies of the capitalist system, media industries, and the role of the state. Regarding the global telecommunications industry, the writings of Gentzoglanis and Henten (2010), Lee (1995), Mansell (1993), McChesney (1995), Wilson (2000), and many others offer important perspectives on issues ranging from institutional analysis to regulatory practices. In highlighting the significance of critical inquiry in communications, McChesney (2013) points out that such an approach “examines the institutions, subsidies, market structures, firms, support mechanisms, and labor practices that define a media or communication system” on one hand, and “studies and assesses how communication policies have been debated and determined, and it has a strong historical component looking at how media policies and systems were created in the past,” on the other (p. 64). Both these modes of inquiry are central to understanding the relationship between Chinese multinational corporations and the Ethiopian state in the Ethiopian telecommunications sector. Most of my data are generated from interviews that are complemented by document analysis. Documents such as policy papers and newspaper articles gave me preliminary data to design my interview questions in an informed manner. Conversely, interviewing policymakers and government officials gave me useful insights into the processes and the logic behind the measured, oftentimes “polite,” data gathered from documents. Policy documents show end products; interviews illuminate the processes leading to the end product. While the strength of documents lies in their richness as repositories of public and published information (Lincoln & Guba, 1985), interviews offer opportunities to explore the thinking process that guided carefully worded, filtered, and “politically correct” institutional/ideological records (Seidman, 1998). As Schrøder, Drotner, Kline, and Murray (2003) comment, the interview may be “the best choice for a researcher who wishes to illuminate a sensitive issue, located beyond the discursive range of the socially acceptable or the politically correct” (p. 153). While policies shape people's attitudes, it is important to note that people and their political, social, and economic predispositions formulate policies as well. In this sense, interviews play a quintessentially unique role in aiding insight into the human agency that fuels policymaking and governance. I conducted seven individual in-depth interviews at different intervals between December 2013 and March 2014 with high-ranking Ethiopian government officials, telecommunications infrastructure development advisors, and consultants to the Ethiopian government, and international relations researchers and scholars.1 The interviews—most of which needed to be transcribed and translated into English from Amharic—were categorized and labeled thematically and in a manner that would address the driving questions of this paper.2 When reporting the interviews, I had to maintain a balance between “letting the data speak for itself” and analyzing the material in the context of critical political economy. In using interviewees' responses, my approach is to limit excerpts to the most relevant verbatim quotes.3 Chinese Mncs in the Ethiopian telecommunications sector Financing schemes and malleability When the Federal Democratic Republic of Ethiopia (FDRE) government decided to radically upgrade its telecommunications capacity in 2006, it simply did not have the money to finance the project. In addition to the hindrance of securing foreign currency, Ethiopia's GDP at the time, which totaled close to $15 billion—a relatively low income even by African standards—could not support this massive project. It is, therefore, in the context of EPRDF's aggressive schemes in state-led infrastructure development and the FDRE's bottlenecked thirst of foreign currency4 that there is logic in Ethio-Chinese relations, particularly in the telecommunications sector. Debretsion Gebremichael, Minister of Communication and Information Technology and Deputy Prime Minister of Ethiopia, explains why his government finds the Chinese partnership valuable: It has been some time now since we started using Chinese resources. The Chinese approach doesn't compromise our sovereignty. It doesn't interfere with our policy. It doesn't deploy a prescription. It is purely business. The partnership we have with them is not only free from political conditionalities but also from business conditionalities. It is a very attractive deal that allows us to develop our capacity to implement our development policies. (D. Gebremichael, personal communication, 12 December 2013) While Chinese nonintervention policy in the internal matters of its partner states has been a key factor in Beijing's success in Africa, this trajectory is especially indispensable when dealing with EPRDF and its unbending development policies and political economy. China understood this dynamic thoroughly and responded to the then Ethiopian Telecommunication Corporation's (ETC) vendor-financing scheme with capital that FDRE could not have acquired from traditional creditors5: It is important to remember that we got about $1.5 billion at once from these guys [the Chinese]—just for telecom development. ETC [now rebranded as Ethio-Telecom] did the discussions on the terms of the loan from our part; it didn't even involve the central [Ethiopian] government. Nobody has given us this amount of money even at a national level. The maximum we can get from the likes of the World Bank is between $200-300 million after arduous article-by-article negotiations. (D. Gebremichael, personal communication, 12 December 2013) Many indicators suggest that the vendor-financing scheme involving Ethio-Chinese collaboration in the Ethiopian telecommunications sector is a win–win scenario for the parties involved. For EPRDF, the Chinese alternative constitutes emancipation from “Washington fatigue,” a sense of exasperation shared by many political leaders in the developing world borne out of conditions placed by the World Bank or the IMF on the usage or distribution of finances lent. From the FDRE's perspective, Chinese vendor-financing arrangements therefore have three major benefits: economic and development policy autonomy, low interest rates and generous grace period, and infrastructure development with warranted profit-making capabilities.6 Such substantially inexpensive vendor-financing arrangements are as beneficial to China as they are to Ethiopia. Vendor-financing is a deliberate strategy employed by the China Development Bank (CDB) and other state-owned financial institutions that are designed to boost competitive global advantages of multinational corporations such as Huawei and ZTE. As Lococo, Harrison, and Forsythe (2011) highlight, CDB's support companies such as Huawei is the pillar of China's “going out” policy. Cheap financial resources are, therefore, made possible by the systemic symbiosis of Chinese state-owned banks and Chinese multinationals. This results in low-interest loans that “dwarf those offered by U.S. and European development agencies, helping Shenzhen-based Huawei and crosstown rival ZTE Corp. increase market share” (Lococo et al., 2011). While the logic of vendor-financing schemes in countries like Ethiopia may seem to represent a win–win situation for the parties involved, there are critical questions about the nature of such deals. Although Chinese development banks provide capital for a much-needed infrastructure investment in Ethiopia, the long-term effects of these lending practices in areas ranging from good governance to sustainability remain unclear. David Shinn, Adjunct Professor of International Affairs at the George Washington University's Elliott School of International Affairs and Former Ambassador of the United States to Ethiopia and Burkina Faso, warns that Ethiopia might find it difficult to repay these huge loans, especially considering its enormous trade deficit with China: What China is doing is offering the use of multi-billion dollar loans, which in theory will have to be paid back. Their terms are quite attractive in terms of interest rate but the fact is they are loans and, theoretically, they [the Ethiopians] are supposed to pay them all back. The idea was that Ethiopia was to ship certain products to China to pay down its loans but Ethiopia's trade with China is a one-way proposition. It is China selling products to Ethiopia, not Ethiopia sending much to China. I just don't see how they are going to pay down those loans by shipping sesame seed and goat and cattle skins to China. It takes a long time to pay a multi-billion dollar loan that way. (D. Shinn, personal communication, 28 November 2013) In addition to questions about the sustainability of the vendor-financing model, there is a widespread perception of Chinese products in the Ethiopian marketplace being “cheap” and “of low quality” among consumers (Geda & G/Meskel, 2011, p. 28). A more significant concern is the lack of genuine technology transfer to Ethiopian experts, hence creating an operational dependency on Chinese telecommunications manufacturers and service providers (Geda & G/Meskel, 2011). An informant who works for ZTE as a technical trainer to end users explains that the quality of products and services involving Chinese multinationals like ZTE has more to do with the competency of buyers than with the companies themselves. According to the informant, the marketing and operational strategies of ZTE and other Chinese companies are usually formulated based on an analysis of the level of expertise and expectation of the client. The informant believes Ethio-Telecom finds itself at a disadvantage in this regard because of the implicit reluctance of ZTEs technical experts to optimally train their Ethiopian counterparts, which in turn creates operational dependency on the Chinese multinational even after the lifespan of the project has phased out: Normally once a system gets operational, you have to wait and observe it live in order to make sure it is stable. If the system is stable, the work should be transferred to local technicians unless there is a maintenance agreement in the deal. In many different circumstances after finishing my training, I get frowned upon by my superiors when I make arrangements for local staff to take over. It looks as if they want to sustain some form of dependency. You can see this in Ethiopia, where, long after Ethio-Telecom approved ZTE's completion of the project, it is still Chinese technicians that are running the network. (M. Fanta, personal communication, 10 December 2013) It is also common practice, according to the informant, that ZTE brings fresh college graduates with no work experience. This not only includes engineers and information technology professionals but accountants and other human resources that are easily available in the Ethiopian labor market: Local staff at Ethio-Telecom are hardly getting any benefit from this arrangement. Chinese junior expatriates get all the experience and financial reward, after which they will go and work in other projects with senior positions. In this aspect, I am of the opinion that ZTE has made a mockery of the country. (M. Fanta, personal communication, 10 December 2013) Mereid Bekele, IP Next Generation Network (NGN) Project Consultant at Ethio-Telecom, concedes there might have been some setbacks in the transfer of know-how to local professionals, but not to the extent and for reasons stated above: There are two types of training components—offshore and onshore—offered by ZTE to Ethiopian personnel in all the nine sub-projects involving mobile, fixed line, billing, etc.7 In addition, a team from ETC was involved in every work from design to implementation. So, in principle, all the right conditions were set for knowledge transfer to take place … I suspect there might have been attitudinal and operational gaps when it comes to actually running the system. For example, most Ethio-Telecom personnel have good expertise on Nokia and Ericsson systems.8 When ZTE came, it introduced a different standard that required a new set of skills. In this regard, there may have been circumstances where some personnel believed studying Chinese products wouldn't benefit their careers. Regardless, we remedied these issues. Currently, ETC personnel who participated in the trainings are actively involved in upgrading and updating the system without Chinese assistance. We may still need assistance in advanced operations but Ethiopians carry out basic operations. (M. Bekele, personal communication, 28 November 2013) For Ethio-Telecom project consultants such as Woldeloul Kassa, the Data and Network Design Consultant at Ethio-Telecom with more than 30 years of experience working for some of the big names in the information communication technology industry in Silicon Valley (such as Cisco Systems and Apple), there are unfounded stereotypes associated with Chinese multinationals operating in Ethiopia. Kassa admits that he had his doubts about the Chinese before he got the opportunity to work with them in the ZTE project. He now describes the Chinese as “formidable practitioners” with proven global experience: [The Ethiopian project] was not a guinea pig. They [ZTE] didn't begin to do it here. They have done it in France, Sweden, Russia, Iran, India and whatnot. Your satisfaction comes from the extent to which you met your objectives. The rest of it is your personal bias and prejudice. (W. Kassa, personal communication, 15 December 2013) In this sense, the image problem and quality concerns associated with Chinese telecommunications companies operating in Ethiopia may be part of the colonial narrative of associating everything good with Western business practices and relegating alternative models to a substandard levels. The assumption that Chinese telecommunications multinationals are in Ethiopia simply because of the political clout that they enjoy within the ruling party, and not because of their competence and smart business strategy, is therefore unfounded. In reflecting on the level of his office's satisfaction on the work done by ZTE, Bekele explains as follows: Our goal is not comparing ZTE with Western telecom companies. Our key question was: Are the specific targets and requirements we designed met? It is true that we occasionally encountered some problems. Sometimes there were features that were not supported by ZTE. Other times there were things that needed upgrading or replacement. But at the end of the implementation, yes, we have got what we wanted to get from them and we are content. (M. Bekele, personal communication, 28 November 2013) Another important theme that emerged repeatedly in my conversations with key figures in the Ethiopian telecommunications sector related to the experience of working with ZTE is the extent to which Ethiopia appreciates the willingness of the Chinese to work flexibly beyond contractual agreement stipulations. This factor, according to Kassa, has helped Ethio-Telecom get more than what it aspired to harvest from the project: It terms of deliverables, it met our objectives by in large. We regimented them in a way we wanted them to do it. That is what we are proud of. Although we had constraints of time, scope and budget that we probably stretched a lot, we not only met our objectives, but also exceeded them in some areas. (W. Kassa, personal communication, 15 December 2013) The view from the FDRE government complements Kassa's observations by indicating that the malleable manner in which the Chinese operated throughout the lifespan of the cellular network expansion project not only delivered more than twice the intended objectives but also brought a sense of mutual understanding that is hard to come by when dealing with “other” vendors: The completed project had a goal of creating capacity of 8.5 million cellular lines as stated in the contact. Without adding any money, we were able to raise this number to 22–23 million through internal negotiations only by making some design changes. In every sense we found this business deal to be remunerative. We sought each other and we respected each other. We were not treated as equals in our business ventures with others. (D. Gebremichael, personal communication, 12 December 2013) The making of a surveillance state While the introduction of 4G networks in Addis Ababa and the rollout of 3G services across the rest of the country through the ZTE and Huawei projects promise to bring much-needed data and mobile broadband Internet access, the surveillance capacity these technologies render to the Ethiopian state cannot be ignored. Of course the fear of increased surveillance as a by-product of increased connectivity is not exclusively the bearing of the authoritarian or quasi-democratic state. Growing concerns in cyber security have made even the most free-market-oriented democratic states exercise implicit and explicit control over telecommunications operations (Comor, 1994; Janczewski & Colarik, 2008; National Research Council, 2008; Traynor, McDaniel, & La, 2008). Between 2010 and 2012 reports emerged that indicate the Ethiopian state's utilization of technologies both to exercise targeted electronic blackouts and to carry out widespread online surveillance. Rapid7, a global security solutions company with regional headquarters in Boston, London, and Hong Kong, reported that Ethiopia was among a group of 10 countries that possessed the commercial spyware toolkit FinFisher, a surveillance suite made and sold by a subsidiary of the UK-based Gamma Group (“Analysis of the FinFisher,” 2012). What makes Gamma an interesting actor in these dynamics is the company's so-called Tactical Comms Monitoring package that provides governments and law enforcement agencies with “tactical off-air monitoring” through “identifying, locating and intercepting targets within 2G/3G/4G Networks” (“Tactical Comms Monitoring,” n.d.). By bringing data and broadband Internet capabilities to their mobile users, 3G and 4G technologies allow governments using technologies such as Gamma's to have unprecedented access to the information and activities of a wider public. Given the increased activities linking the Ethiopian government to digital surveillance and the state's monopolistic control of telecommunications service provision, there is precedent to argue impending 4G and 3G capabilities will only assist the proliferation of the practice. Here, it is important to account for the emergence of 4G and expansion of 3G networks following Ethio-Telecom's adoption of some advanced technologies to monitor its traffic. In 2012, Tor, a network of virtual tunnels that allows people and groups to improve their privacy and security on the Internet, reported that Ethio-Telecom has started testing or applying Deep Packet Inspection (DPI) of all Internet traffic passing through its facilities (“Ethiopia Introduces Deep,” 2012). Following the introduction of DPI, Tor claimed its services stopped working in Ethiopia. It is important to note that although telecommunications operators and providers commonly use DPI for different functions ranging from advanced network management to network security, it can also be utilized for eavesdropping and censorship purposes.9 Fears of surveillance are also supported by the growing list of legal policies ratified by the Ethiopian government between 2009 and 2013 that equip the government with an unprecedented power to monitor targets. The Ethiopian Anti-Terrorism Law of 2009 gives the National Intelligence and Security Services (NISS) the authority to “intercept or conduct surveillance on the telephone, fax, radio, internet, electronic, postal, and similar communications of a person suspected of terrorism,” and to enter any premise to install and intercept communications after obtaining a court warrant (OpenNet Africa, n.d.). In November 2013, the Ethiopian parliament endorsed a new proclamation giving the Information Network Security Agency (INSA), FDRE's cyber security and intelligence agency, the power to investigate suspected computers, networks, Internet radio, television, and social media platforms like Facebook. The agency is vested with “the power to conduct an information or computer-based critical infrastructure security audit at any time, and provide, for those that meet the criteria, a security standard approval certificate or delegate other bodies to perform such functions” (Abiye, 2013). In the same year, the Ethiopian government announced the reestablishment of NISS into an autonomous federal government office with extended powers to “lead intelligence and security work both inside and outside Ethiopia, formulate national security and intelligence policies and establish and run intelligence and security training institutions” (“National Intelligence and Security,” n.d.). Although the Ethiopian government reiterated the purpose of these legal frameworks in providing a much-needed upgrading in guaranteeing “national security,” critics fear these tools will continue to be used against citizens and groups that are critical of the government. Some of these concerns, amidst the reported rise of surveillance sponsored by the Ethiopian government, are exacerbated by the growing presence of external—in this case Chinese—assistance in the telecommunications sector. According to Freedom House (2013), the provision of equipment, software, and training related to jamming, blocking, and surveillance operations by the Chinese to the Ethiopian government in the past cast doubt on whether ZTE and Huawei are solely in Ethiopia for telecommunications infrastructure development: Given allegations that the Chinese authorities have provided the Ethiopian government with technology that can be used for political repression—such as surveillance cameras and satellite jamming equipment—in the past, the new contracts have led to increasing fears that the Chinese may also be assisting the authorities in developing more robust internet and mobile phone censorship and surveillance capacities. (p. 7) The problem is compounded because both ZTE and Huawei have been linked with some security threats and surveillance patterns in different parts of the world. In October 2012, the Intelligence Committee of the U.S. House of Representatives strongly urged American firms including AT&T and Verizon Wireless to discontinue their business relationship with Huawei and ZTE because of espionage allegations that warned the two Chinese telecommunications giants are being used by Beijing for spying on U.S. communications and vital systems (Committee on Intelligence, 2012). Both Huawei and ZTE strongly denied the accusation, suggesting that the report's findings were politically motivated. Britain's BT Group that has close ties with Huawei also defended the Chinese multinational, asserting Huawei “does not have any intelligent or processing components in BT's core network” (Lee, 2012) In spite of this, the American narrative of framing the Chinese telecommunications multinationals as spying instruments has persisted. For example, Michael Hayden, former head of the NSA, claimed that Huawei had “shared with the Chinese state intimate and extensive knowledge of the foreign telecommunications systems it is involved with” (McGregor, 2013). With multiple legal frameworks endorsing mass surveillance, growing evidence of ICT-assisted government monitoring of dissidents, and the proliferation of telecommunications equipment providers with a global track record of selling surveillance products and services, the concern over ZTE's and Huawei's role in the Ethiopian telecommunications sector is plausible, if not warranted. Nonetheless, there is a need to refrain from attributing surveillance as a product or service inherently to with China and Chinese multinationals. Technologies and know-how of surveillance are commodities that are traded in an intricate chain of the demand–supply (or supply–demand) global economy. In this sense, Chinese multinationals, like everyone else, are participating in a global market with a heightened thirst for surveillance technology. It is then safe to argue that Huawei and ZTE are not necessarily pushing any particular agenda themselves. Rather, they amplify and operationalize, just like any other multinational corporation in the sector, whatever interest the given client expresses. As unfortunate as it may be, the reality is that if the Ethiopian government cannot buy surveillance technology from China, it will shop for it from UK-based Gamma International, Germany's Trovicor, the French firm Amesys, or many other suppliers in the industry. Therefore, if ZTE and Huawei end up building surveillance infrastructure for the Ethiopian government, it is fundamentally because they are making profit out of the project10; it is not because the act is of an intrinsic Chinese mold. It should be noted that Nokia/Siemens sold surveillance technology to the Iranian government that let them monitor calls and track activists (Dehghan, 2009). Similarly, Cisco, Blue Coat, the now defunct Nortel, and many other major telecommunications equipment providers have had a history of selling network technologies to repressive regimes (Deibert, 2013). Therefore, the determining factor in the makeup of the surveillance state is primarily the buyer's raison d'être in institutionalizing the practice, and less conjectural hypotheses that some providers in the industry are suspected of surveillance practices more than others. The fact of the matter is that the marketplace of surveillance technologies operates within the demand–supply chain of global capitalism. For dissidents in authoritarian regimes like Ethiopia, the marriage of ICTs and surveillance is likely to make ICTs advanced tools for control rather than channels of free speech. In making this declaration, however, it is important to keep in mind, for a sparsely connected country like Ethiopia, framing Ethio-Chinese partnerships in the Ethiopian telecommunications sector only through the lens of surveillance overlooks the benefits that ordinary Ethiopians are getting as a result of this arrangement. The criticisms directed toward the Ethiopian state for its repressive use of ICTs are unapologetically justified. Regrettable as this circumstance is, one should not lose sight of how the mere presence of communication infrastructure can have a profound impact on ordinary citizens. Consequently, extreme care should be taken to avoid the trap of framing existing ICT-enabled oppression of free speech in Ethiopia, be it Chinese-assisted or otherwise, as the most salient outcome of past, present, and future 4G and 3G network developments. Cellular technology has given Ethiopian users connectivity that is improbable to attain through other means in a shot period of time. To borrow the words of one commentator, “even if political speech is kind of controlled [in Ethiopia], other kind of speech is enabled” (“Pros And Cons,” n.d.). With more than 80% of the population rural and a less than 1% fixed line penetration, it is not reasonable to that argue FDRE's focus on cellular technology is misplaced. The danger of surveillance in Ethiopia is not a natural outcome of the proliferation of ICTs—3G and 4G technologies in this instance—but rather the structural alignment of regulatory, legislative, and service provision components of the telecommunications industry that makes it difficult to hold the state accountable. Conclusion The aim of this study was to investigate the pros and cons of Sino-Ethiopian relations in telecommunications infrastructure development, particularly in the area of cellular technology, in Ethiopia. Although the focus is on Chinese multinationals' role in mobile network capacity building in Ethiopia, the examination of financial and political processes involved in these projects has broader implications in our understanding of the growing presence of China in the African economy. China's reputation for forging effective collaborations with African political and business interests is not an accident. It is a result of China's deliberate political, diplomatic, and economic engagement with African countries that is radically different from past relations with the West. China's targeted debt relief, cheap loans linked to infrastructure development, and political “noninterference” in the internal policies of African countries have made Beijing a solid alternative to the Washington Consensus in the past decade. This approach is exemplified by vendor-financing schemes with low interest rates involving Chinese multinationals and the Chinese government in the cellular network capacity-building projects in Ethiopia. To the frustration of EPRDF, the push to liberalize the telecommunications sector and/or privatize Ethio-Telecom was a key sticking point in securing loans from multilateral organizations such as the IMF and the World Bank. It is in this sense that the Chinese proposition not only quenches the financial thirst of the Ethiopian state in telecommunications infrastructure development but also staves off external deregulation pressures. The Chinese vendor-financing proposition has not only brought EPRDF independence from liberalization and privatization pressures. EPRDF officials have publicly disclosed their rationale for their monopolistic approach arguing that market forces work contrary to the government's intent in achieving universal access and universal service in telecommunications. The notions of universal service and universal access are important to uphold if the poor are to be served and if equitable development is to be realized. Although the Ethiopian case may be an anomaly, it does demonstrate that notions such as national sovereignty are not yet as blurred or weakened as global capitalism paints them to be. Nevertheless, EPRDF has equally made it clear that the telecommunications sector is a “cash cow” that generates huge amounts of revenue for the state. Remaining the sole telecommunications service provider for Africa's second most populous country is bound to generate significant revenue, except that monopolistic arrangements are prone to complacency and unaccountability. In this sense, EPRDF's dogmatic creed of state monopoly of telecommunications in Ethiopia needs serious rethinking. While the arguments for universal access and universal service are important to uphold, they can be achieved through a nonmonopolistic arrangement involving public–private partnerships. Although it is not the aim of this article to assess the benefits or harms of state monopoly of telecommunication in Ethiopia, it is, nonetheless, critical to note that Chinese financial and technical assistance provides a major endorsement for EPRDF to maintain complete control of the sector. So long as the Chinese vendor-financing assistance option is on the table, it is very unlikely EPRDF will consider alternative models to its monopolistic control of the sector. This article also raises important issues about the proliferation of surveillance technologies in Ethiopia. Given the Ethiopian government's documented track record in the past few years, there is little doubt that the danger of ICT-assisted surveillance is real. Concerns over whether the Ethiopian government would use growing 3G and 4G technologies to service its surveillance machine are legitimate.11 However, considering that 80% of Ethiopians are farmers who probably would not have a chance for connectivity without the intervention of cellular technology, the need for nuance in analyzing the pros and cons of the Sino-Ethiopian partnerships in the Ethiopian telecommunications sector is clear. Simply put, if the discussion on communication infrastructures in poorly connected countries like Ethiopia is to solely focus on surveillance, there is a risk of reducing the debate to an unhelpful elitist discourse. In retrospect, there is precedent to argue that the consolidation of a state monopoly of telecommunications that is boosted by Chinese assistance will only deplete an already condensed political plurality. EPRDF's culture of flexing state control of telecommunications services for party purposes, like when it shut down short messaging service (SMS) in 2000 in order to thwart opposition groups' mobile-based election campaigns, compounds the ill effects of the current model. In addition, the number of reports that link EPRDF's appropriation of state resources to serve its hegemonic ruling credo provide legitimate concern that more connectivity would result in a negative relationship with political freedom and plurality. What is not a reasonable proposition is to single out the Chinese partnership as the cause for Ethiopia's stifled political space. While China's own repressive regime actively uses censorship, blocking, jamming, content filtering, and surveillance technologies, its external engagement is primarily driven by the capitalistic logic of profit. What China is doing is adapting to the unique political and economic conditions of the countries it deals with, with a strict code of noninterference in internal matters. It is no surprise today that Huawei is already the largest telecommunications equipment maker in the world while ZTE is one of the major smartphone manufacturers globally, both boasting lucrative revenues from their global sales and operations. For China and its multinationals, the Ethiopian telecommunications market is no different. They approach it with the aim of incorporating a new buyer to increase their global market share and profit margins. In doing so, like any other competitor in the market, they provide services that the buyer requests, including technologies that can potentially end up monitoring users. It should be noted that the technologies of surveillance are fast becoming enablers of authoritarianism not because of specific suppliers. It is rather the logic of the global capitalist order that creates the commodification of surveillance both as a service and a product that can be exchanged for monetary value. In this sense, China, like its Western predecessors and existing competitors, is yet another actor in the surveillance technology global marketplace. Inevitably, when it comes to deciding what to do with the increased cellular network capacity of Ethio-Telecom, the onus is on the Ethiopian state, particularly EPRDF, not China. Finally, even though this article examines one case study in a plethora of transnational telecommunications projects involving different actors, there are theoretical lessons to be drawn, particularly when it comes to the “Chinese alternative.” The Chinese approach in the Ethiopian project is capitalistic at its core, executed by leading global multinational corporations in the industry with profit-driven ethos. The involvement of the Chinese state in providing financial assistance through its banks is as much about helping its multinationals become dominant players in the global marketplace as it is about the oft-cited Chinese public diplomacy effort to woo countries in Africa. Chinese approaches that involve such “attractive” bundles as low interest rates, vendor-financing schemes, and technical assistance are first and foremost business strategies, not acts of benevolence, and are meant to infiltrate the historically insular Ethiopian telecommunications industry. The Chinese approach, therefore, is not a rejection of the neoliberal construct. It is rather a manifesto that sees the systematic intervention of the state more as an auxiliary force to gain access to markets and less of a disruptive agent as neoliberal purists would argue. It is in light of this that the significance of critical political economy is even more crucial today in understanding how neoliberalism is evolving in new contexts, and more importantly, how this reincarnation is affecting the promise of political and economic equality. Acknowledgments The writer would like to acknowledge Leslie Steeves for her valuable feedback in the writing process of this article. Notes 1 " This essay is part of a larger project that examined, in addition to Ethio-Chinese partnerships, different aspects of the telecommunications sector in Ethiopia, including the historical evolution of the industry, relations with the International Monetary Fund, and legal frameworks. Accordingly, the interview excerpts in this essay are selected based on their thematic relevance for the questions addressed here. Other interviewees include Debretsion Gebremichael, Minister of Communication and Information Technology and Deputy Prime Minister of FDRE; Jan Mikkelsen, IMF Resident Representative in Addis Ababa, Ethiopia; David Shinn, former U.S. Ambassador to Ethiopia and Adjunct Professor of International Affairs at The George Washington University's Elliott School of International Affairs; Josefita Pardo de León, Legal Affairs Officer, Accessions Division, World Trade Organization; Mereid Bekele, IP Next Generation Network (NGN) Project Consultant at Ethio-Telecom; Woldeloul Kassa, Data and Network Design Consultant at Ethio-Telecom; Me'aza Fanta, Technical Trainer, ZTE (name changed at interviewee's request for anonymity). See Workneh (2014). 2 " As the interviews generated a number of unexpected themes, these were categorized accordingly as well. Having categorized the responses from all the interview transcripts, I consolidated these thematically. 3 " See Note 1 above. 4 " In the past few years, the Ethiopian economy has been hit by a chronic foreign currency shortage that limited the country's import capacity to a matter of few weeks. In one instance, the National Bank of Ethiopia (NBE), the state institution endowed with the authority of regulating financial sectors, notified importers that the state can no longer provide foreign currency (Merhatsidk, 2013). According to the IMF, gross official reserves in April 2012 decreased by almost $1.2 billion to 1.8 months of projected imports for 2012/2013 (International Monetary Fund, 2012). In light of this foreign currency shortage, the Ethiopian government's options to undertake massive telecommunication infrastructure projects have been limited. This in turn makes Chinese financing very attractive. 5 " The contract signed with ZTE involves a long-term loan package to be paid over a 13-year period with interest of less than 1% (Maasho, 2014). A look into Ethiopia's lending experiences with Western loaners puts the Chinese deal in perspective. For example, when Ethiopia got its last telecom infrastructure development US$40 million loan from the World Bank in 1983, the interest rate was 12% (World Bank, 1984). 6 " According to FDRE's Ministry of Finance and Economic Development (2013), the contracts with ZTE and Huawei, worth US$ 800 million each, are to be paid over 13 years. The interest rate for these contracts is 0.75% with an additional variable of 0.18% over the years. To put this in perspective, the interest rate for the last World Bank funded telecommunications infrastructure project in Ethiopia, completed in 1993, was 12% (World Bank, 1993). 7 " Note that the 2006 Ethio-Telecom–ZTE project mainly involved the creation of a fiber-optic transmission backbone across the country and the expansion of the cellular GSM network to an estimated 8.5 million new connections. This analysis focuses on the latter aspect of the project. 8 " The informant's reference to Ethiopian technicians being knowledgeable about Nokia and Ericsson systems is related to the training the technicians received from the specified companies that built the original cellular systems of Ethio-Telecom that involved Ericsson and Nokia between 1999 and 2003 (Girma, 2004). 9 " To further explore the relationships between DPI and surveillance, see Parsons (2008) and Ohm (2009). 10 " Even if some observers are skeptical of Ethiopia's capability to return its loans, note that this is unlikely to affect ZTE and Huawei. This is primarily because the vendor-financing arrangements involve Chinese state banks that negotiate with the Ethiopian government. For example, ZTE's 4-year contract to build a backbone mobile phone network in Ethiopia in 2006 was possible only because the China Development Bank (CDB) handed ETC a 13-year, US$1.5 billion loan to finance the project. 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TI - Chinese Multinationals in the Ethiopian Telecommunications Sector
JF - Communication Culture and Critique
DO - 10.1111/cccr.12129
DA - 2016-03-01
UR - https://www.deepdyve.com/lp/oxford-university-press/chinese-multinationals-in-the-ethiopian-telecommunications-sector-gymJJOpAFj
SP - 126
VL - 9
IS - 1
DP - DeepDyve
ER -