How France Maintains a Secret Empire

The age of imperialism came to a creeping end shortly after World War 2 since the conflict drained European powers of their wealth, military might and political influence. This led to the eventual emergence of new independent states in Africa and Asia who were free to choose their own destiny after previously being dominated and exploited by their colonial overlords. Or at least that is the official reading of history that we have all been taught. There is, however, one big exception to the conventional narrative – France!

On the 26^th of December in 1945, a few days after the French ratification of the Bretton Woods Agreement that led to the creation of a new global monetary order, France created two new currencies. These were known as the CFA franc and the CFP franc with the CFA franc later being further split into two, one for West Africa (XOF) and one for Central Africa (XAF). Despite the different names, these currencies were essentially the same, interchangeable and pegged to the French franc (and later to the euro) at an unfavourable rate. These were also, subsequently, imposed on French colonies in West and Central Africa, as well as in the South Pacific, with Charles De Gualle making adoption a condition of decolonisation.

Since the French franc was devalued in order to have a fixed exchange rate with the US dollar as part of the Bretton Woods Agreement, these new currencies were launched to soften the impact of the devaluation. It was argued that the adoption of these currencies by former French colonies in sub-Saharan Africa, would ensure monetary stability and keeps inflation rates low. The French Finance Minister at the time, Rene Pleven, presented this as a benevolent act, stating “In a show of her generosity and selflessness, metropolitan France, wishing not to impose on her faraway daughters the consequences of her own poverty, is setting different exchange rates for their currency”.

In practise, this “generosity” meant that it was cheaper and easier for France to export goods to the likes of Ivory Coast, Senegal, Cameroon and Chad whilst it was much harder for goods to flow the other way. Or in other words, France was able to import raw materials at below market prices and export manufacture goods back at above market prices, crushing export competitiveness and stunting internal growth and development amongst CFA members. This is because the CFA was pegged to the franc at a rate that was lower than the African average and could be devalued at any time, as was the case in 1994 when it was devalued by 50%. The European power was also able to maintain preferential access to African resources, since French companies were able to repatriate funds without any foreign exchange risk.

A fixed exchange rate is deflationary, but it also limits the amount of money in circulation which, in turn, leads to fewer credits, fewer investments and a very limited amount of development and economic diversification. Such a system is anti-democratic and anti-meritocratic since it primarily benefits the elite who are able to maintain their power and privileged status. By limited opportunities for the masses through restricted credit and a devalued currency, whilst being able to rely on France for support in the event of a popular uprising, the corrupt elite can hang on to power to the detriment of the population at large.

Furthermore, CFA members have to deposit half of their foreign exchange reserves with the French treasury and another 20% for ‘financial liabilities’, meaning they only have access to 30% of their foreign reserves. It is estimated that France extracts around 500 billion from the CFA franc zone each year and because the money is held in France, African nations are not able to use it as collateral to secure loans and, thus, have limited liquidity. During the financial crisis in 2008 these nations had to borrow money at commercial rates from France rather than being able to tap into their own reserves. French officials also have de facto veto power on the boards of the two central banks within the CFA franc zone.

This means that 14 African nations, with a combined population of 193.1 million, have no control over their monetary policy since their currencies are controlled by the French treasury. Whilst there are some advantages in this arrangement, this is, ultimately, de-facto colonialism, since if a nation has no control over its monetary policy it does not have economic sovereignty and, therefore, is not a free nation at all.

The French post-war recovery was built on a wealth transfer from Africa and the maintenance of a secret empire that essentially continues the economic exploitation of the pre-war era. French prosperity has been built on African impoverishment and this was quite openly acknowledged by former French president Jacques Chirac in 2008 when he remarked “We have to be honest and acknowledge that a big part of the money in our banks comes precisely from the exploitation of the African continent. Without Africa, France will slide down [to] the rank of a Third World power”.

Thus, French policy in Western and Central Africa since the war has been focused on seeking to maintain this currency based empire, with local leaders who were supportive of the currency being offered statehood and support from the 1960s onwards. France has militarily intervened in Africa on over 40 occasions in recent decades with view to maintaining this arrangement, crushing revolutions and any forces that could threaten the cosy status quo.

In 1958, the West African nation of Guinea rejected the CFA with its leader, Ahmed Sekou Toure, declaring “Guinea prefers poverty in freedom to riches in slavery”. Relations between the newly independent African nation and France became strained, and the former colonial power set out to make an example of Toure. French colonialists destroyed infrastructure as they withdrew, even unscrewing lightbulbs, burning medicines and poisoning food stocks, whilst France stopped paying pensions to Guinea’s World War Two veterans and tried to block the country’s accession to the United Nations.

In early 1960, France launched ‘Operation Persil’, insultingly named after the washing detergent, in order to cultivate political instability and economic collapse. This involved flooding the country with forged currency to create hyperinflation and arming opposition groups to create a civil war. The country did experience significant economic instability as a result but the civil war failed to materialise after weapon shipments were intercepted by Senegal. However, the point had been made – the consequences of rejecting France’s advances would be high.

The leader of Togo, Sylvanus Olympio, was less lucky since his plan for an independent monetary policy was thwarted when he was assassinated by a group of military personnel trained by France in 1963. The man who pulled the trigger, Etienne Gnassingbe Eyadema, become the president and ruled until his death in 2005 and during that time Togo remained firmly in the CFR franc zone.

Change may now be on the horizon since in recent years numerous West African countries have begun talking about alternatives with a new currency called the eco (named after the Economic Community of West African States), becoming a popular option. This currency would not be tethered to French control, would not require reserves to be held by France and, thus, could restore a degree of monetary sovereignty. However, the conditions for entry make it quite difficult for many African nations to join whilst differing monetary agendas amongst member nations, as well as objections from Anglophone nations such as Nigeria, could also act as hurdles to the adoption of the currency across the region.

Critics of the eco have labelled it a re-branding exercise since it would still be pegged to the euro with France remaining the guarantor of its convertibility. It is difficult to envisage a scenario in which France would just walk away from its African gold mine that it has spent so many decades cultivating and protecting. A cosmetic change, to assuage critics and reduce rising anti-French sentiment in Africa, does seem like a more likely option. As they say in France “Plus ça change, plus c'est la même chose”.