by Arguably one of the easier calls for us to make after 37 years in power was that President dos Santos would find ways of affording himself another 5 years in. Like any ‘effective’ leader, Mr. Santos made sure the final deal to do just that was stitched up long before the Party Congress formally convenes in Luanda, with a lower level MPLA ‘Central Committee’ already rubber stamping his name in mid-August. That also happened to be alongside large numbers of newly minted committee members, all loyal to the Santos clan (including family relations no less) to secure his overall patronage base. All that now remains is the relatively trivial issue of winning the actual 2017 Presidential election, where Santos maintains a monopoly over all MPLA power and positions via rigged PR lists. For most observers it’s pretty tempting to stop writing about Luanda there as an ‘open-closed’ Santos case, but the real political subplot to watch next year is who actually wins the Vice Presidential nomination alongside Mr. Santos. Why? Because it plays directly into longer term succession plans. The ‘official line’ – at least for those who buy it – is rather than seeing out another full term to 2022, Santos will step down in 2018, passing the baton to the new VP.
Topics:
Eugen von Böhm Bawerk considers the following as important: Angola, Bawerk, China, commodities, Crude Oil, Energy, Featured, Fernando Dias, Geopolitics, global macro, Jose Filomeno, Manuel Gonclaves Lourenco, newsletter, oil price, OPEC
This could be interesting, too:
Eamonn Sheridan writes CHF traders note – Two Swiss National Bank speakers due Thursday, November 21
Charles Hugh Smith writes How Do We Fix the Collapse of Quality?
Marc Chandler writes Sterling and Gilts Pressed Lower by Firmer CPI
Michael Lebowitz writes Trump Tariffs Are Inflationary Claim The Experts
Arguably one of the easier calls for us to make after 37 years in power was that President dos Santos would find ways of affording himself another 5 years in. Like any ‘effective’ leader, Mr. Santos made sure the final deal to do just that was stitched up long before the Party Congress formally convenes in Luanda, with a lower level MPLA ‘Central Committee’ already rubber stamping his name in mid-August. That also happened to be alongside large numbers of newly minted committee members, all loyal to the Santos clan (including family relations no less) to secure his overall patronage base. All that now remains is the relatively trivial issue of winning the actual 2017 Presidential election, where Santos maintains a monopoly over all MPLA power and positions via rigged PR lists. For most observers it’s pretty tempting to stop writing about Luanda there as an ‘open-closed’ Santos case, but the real political subplot to watch next year is who actually wins the Vice Presidential nomination alongside Mr. Santos. Why? Because it plays directly into longer term succession plans. The ‘official line’ – at least for those who buy it – is rather than seeing out another full term to 2022, Santos will step down in 2018, passing the baton to the new VP. After nearly 40 years of Santos sclerosis, Angola finally turns the corner. Historic stuff.
Angolan Kwanza vs. Oil Price
The only snags in that are our two major caveats we have for that ‘post-Santos story’. The first is that we don’t necessarily believe any of it. While it’s entirely true the Angolan economy remains in deep trouble, the Kwanza has collapsed, with a serious fiscal squeeze being felt on state budgets, but that’s hardly grounds for Santos magically making way for new blood after 37 years of entrenched rule from 1979. Just like 2001 when Santos previously said he’d retire, cynics think this remains another good ruse to secure another Presidential term, purely on the pretext of relinquishing power within 12 months, but then never actually follows through to leave office. Worse still, it gives Santos the chance of ‘smoking out’ any serious political opposition for the VP slot, purely so he can sideline them later, tightening his grip on MPLA / Presidential power. That’s precisely what he did in 2001, with some of the current leading names for the VP position, ranging from his own son, Jose Filomeno, through to Manuel Gonclaves Lourenco, the more reform minded Manuel Vicente, and back to Fernando Dias dos Santos again, all well aware that that game could be in play. Our take isn’t probably quite that brutal, given Santos ultimately understands he can’t go on forever. But at no stage do we see this as a ‘straight line’ succession issue. It’s much more a case of Mr. Santos creating the ‘necessarily conditions’ for him to leave at a time of his choosing. Politically translated, that means securing familial patronage networks (beyond formal office), and most of all, securing Santos related rent. |
Angolan Kwanza vs. Oil Price(see more posts for Oil Price)  Click to enlarge. |
That underpins our second reservation on a ‘post-Santos’ Angola. At no stage expect to see serious structural economic reforms in Luanda. If anything, a protracted succession story will merely see the Santos clan hijacking as many rent related vehicles as they can for patronage ends. That’s exactly why they rejected a $4.5bn IMF loan in June to start getting Angola’s house in order, and it’s exactly why he’s left his son in charge of Angola’s $5bn sovereign wealth fund. Rather more importantly, it explains why his daughter, Isabel dos Santos has taken control of the ailing national oil company, Sonangol, that’s currently struggling to maintain 1.7mb/d production. As with other hydro-carbon rich states, reforms are being dressed up as market based ‘efficiency gains’, with long overdue spin offs designed to lighten the parastatal load. But those on the inside track know exactly what this is; a brazen Santos power grab to secure dwindling rents. Indeed, the parastatal is technically already insolvent from feeding endless Santos / MPLA patronage vehicles all kept ‘off books’. The only thing keeping Sonangol afloat right now remains Chinese cash, where Beijing has locked down massive 1.2mb/d offtake from increased equity stakes in Angola over the years, mostly offsetting domestic Daqing depletion in the Mainland. Sure, the Chinese will be more than happy to keep the Santos party going, provided the family doesn’t get too greedy putting Beijing’s investments at risk. $2bn was stumped up in 2015 for infrastructure loans, with a follow on $6bn tranche into 2016. But the real litmus test whether Santos is ultimately willing to go quietly in 2018 isn’t just about Chinese cash, or indeed VP politics at the top. Rather it’s whether Mr. Santos starts wielding very heavy sticks with the Casa Militar, the Political Bureau, and security forces against opposition forces to cement his rule in a lower price environment. Our regrettable take is old habits are going to die very hard for Santos. Expect the succession saga to go on (and on). The only real question is how much long term damage it ultimately inflicts on the former Portuguese colony.