President Biden Needs To Ensure His Faith In The Private Sectors Role In Foreign Policy Pays Off – Analysis

Executive Summary

According to President Biden, the United States seeks a more secure, more equitable, more prosperous world for all people, and he has committed to leveraging the private sector especially for infrastructure investments in Latin America, Africa and South East Asian countries. We want to strongly encourage President Biden to also set the highest standards for community development in the U.S. government’s support for private sector initiatives. Otherwise, the outcomes may be negative. In African countries, infrastructure development particularly in railroads are often designed to facilitate extractive industry exports. All too often extractive industries leave the communities in which they are implanted worse off economically, often leading to youth alienation and even violent extremism. It is imperative that the U.S. government set the highest standards for community development for private sector companies that it is leveraging to obtain its development objectives. Engaging communities through participatory approaches commonly used in the field of Social and Behavior Change will help to ensure effective community development and measurable human-centered outcomes.

We draw upon our past research on the situation in Mozambique’s Cabo Delgado Province where the American petroleum company, Anadarko, and the British ruby-mining firm Gemsfield seriously underperformed in their relations with the local communities, thus helping to give rise to a Islamist violent extremist organization (VEO) that led to the intense suffering of the local populations and the failure of Anadarko (and its successor company TotalEnergies) from achieving its goal of constructing a $20 billion Liquified Natural Gas facility. The U.S. government once touted the LNG project as the largest ever private sector investment in Africa. This is, by the way, a project for which the U.S. Export Import Bank made a direct loan of $5 billion dollars during the Trump administration in spite of the fact that the VEO had already been active for two years. The terrorist attacks unleashed by the Islamist VEO forced TotalEnergies to stop its operations and declare Force Majeure, which means that TotalEnergies does not have to adhere to its contractual obligations, and it informed the Export Import bank that it had ceased operations.

A Stronger Bottom-up Approach to U.S. Foreign Policy is Needed

The US government under President Biden faces a complex world in disorder, where the challenges of climate change, the erosion of democratic values, and international economic and military rivalries especially with China continue to mount. Addressing these problems requires innovative thinking and a clear-headed vision of the type of world new order that must be put into place if communities everywhere are to buy into the emerging new vision offered by the United States.

In his speech to the 2023 United Nations General Assembly, President Biden articulated his foreign policy vision for a more constructive way forward. He pointed to a strong role for private sector investment in his foreign policy vision, especially in infrastructure development: Through strategic, targeted public investments, we can unlock enormous amounts of private-sector financing, more than $30 billion to date.  

President Biden highlighted his administration’s support for one such infrastructure project extending the Angolan Lobito railway into mineral rich regions of the Democratic Republic of the Congo and Zambia. Private sector investment in infrastructure, including this one, is often designed to support the export of valuable minerals especially to counter China’s established advantages in controlling these resources, especially those needed to make the transition to more climate-friendly economies. 

We want to caution President Biden, however, that despite the potential benefits of international private-sector investments, such investments can easily backfire unless they are accompanied by a commitment to promote community development centered on proven community empowerment approaches. Our study of the failings of American and British investments in the extractive industry in Mozambique indicate that private sector investments can fail miserably, to the detriment both of the corporations and of local communities. It is critical to learn from such past failings to prevent similar negative outcomes in the future. 

President Biden and his administration need to require U.S. international corporations to engage in community empowerment best practices as they implement their investments in disparate communities. Above all, private sector representatives must overcome top-down thinking that too often carry with it cultural biases that distort investors’ perceptions of the priorities of local communities. 

Community empowerment approaches contribute to the upliftment of people everywhere and will counter the growing stigmatization of western investors including U.S.-based corporations as only concerned with shareholder profits. Concern for communities when supporting private sector investment in foreign lands will be critical to adding a bottom-up perspective to U.S. foreign policy that too remains largely top-down. 

One of the exceptions to the top-down foreign policy approach, which contains a lot of elite and cultural biases, is the United States Agency for International Development (USAID). Very often, USAID personnel and implementing partners assure that public investment in the development arena are bottom-up with considerable emphasis on monitoring and evaluation to ensure improved outcomes. This bottom-up perspective also needs to be consistently adopted as part of the private sector’s corporate social responsibility practices as wells as part of U.S. foreign policy more generally.

One thing is clear: U.S. foreign policy cannot repeat the same policy formulations expecting different, more positive outcomes. Foreign service personnel will also need to re-examine the way that foreign policy decisions are made so that they are more inclusive of a bottom-up vision. However, a shift to more effective foreign policy approaches may be particularly difficult to achieve. In part, this is due to the fact Washington insiders often engaged in group think reinforced by bureaucratic structures — with a hesitancy of foreign service personnel to question the policy decisions of higher ups. 

The foreign policy establishment would likely benefit from adopting stronger Red Teaming approaches such as those used by the U.S. military that seek to recognize and mitigate the negative effects of insider group dynamics, including, but not limited to, Groupthink and the Dunning-Kruger effect, which is a cognitive bias in which people with limited competence in a particular domain overestimate their abilities. Obviously, we as authors need to be held to the same standards in our analysis.

Learning from Past Investment Mistakes in Mozambique

We have investigated and studied in depth the impact of U.S. and other western investments in Mozambique’s northernmost province of Cabo Delgado, and it is clear that private-sector investment strategies that neglected the perspectives and needs of the local populations contributed significantly to the rise and expansion of a violent extremist jihadist movement. The emergence of this Violent Extremist Organization (VEO) known locally as the Machababos or “The Youth” led to intense suffering of the local population. More than 1,000,000 people have been internally displaced, economic and social life gravely disrupted, and an estimated 4,000 lives lost, over 40% of which are civilians. 

The emergence of violent extremism in Cabo Delgado occurred against a backdrop of increasing foreign economic engagement in the region, particularly by the British firm, Gemsfield, and the U.S. petroleum company, Anadarko, both of which alienated communities that they impacted.

Surprisingly, the intense suffering of the local communities had already been well established when in early 2020 a U.S. government official during the Trump administration heralded the investment by Anadarko in Mozambique as the largest investment ever on the African continent ($30 billion). The Acting Undersecretary for International Trade Administration, Joseph Semsar, stated the Anadarko deal would drive growth and job creation in Mozambique, other African countries, and in the United States. Semsar highlighted the role of the U.S. Commerce Department in supporting major elements of the LNG project. 

Anadarko had obtained concessions from the Mozambican government to construct and operate one of the world’s largest Liquified Natural Gas (LNG) plants to be fed by offshore gas production and the development of a port capable of harboring vessels specially designed to transport LNG. As part of its engagement, Anadarko said that it sought to have a positive impact for the local communities so that the company could enjoy good community relations, contribute positively to the stabilization of the region, and enjoy a more secure work environment. 

However, something went terribly wrong; neither Sesmar’s nor Andarko’s rosy prognostications came true. Conversations with local community members painted a different picture. The social disruptions provoked by land appropriation and population resettlement investments by Anadarko became drivers of VEO recruitment.  

The development of the LNG project entailed the resettlement of thousands of farmers and fishing people from the Afungi peninsula in the Palma District of Cabo Delgado Province. Anadarko’s stated goal was to oversee resettlement in a way that restored or improved the standard of living of those displaced. Despite these stated good intentions, interviews with civic leaders in Palma District revealed that some of the “resettled” youth joined the ranks of the Machababos.  

Interviewees in the city of Palma spoke of widespread dissatisfaction with the implementation of the resettlement program and the impact this had on communities in the area. Local community leaders complained of the diversion of funds intended to assist the displaced population, inadequate payment for land, and no compensation for their investment in fruit-producing trees. Moreover, resettled households were mixed in with communities that they did not know – with huge negative implications in the local cultural context. Those interviewed also reported that those engaged in fishing were often settled inland and as a result lost their source of livelihood.

Accordingly, despite the billions of dollars invested by this major American oil and gas company in the region, the perception was that there has been little benefit to the local community members, most of whom are Muslim. Instead, resettlement efforts precipitated negative sentiments and heightened both short-term and long-term security risks.

We brought to the attention of a high-ranking Anadarko representative working in Mozambique the fact that the resettlement project was having a negative impact on the local population. We also underscored the importance of adopting a community participatory approach to the resettlement process. The Anadarko representative -an American – responded by saying that that sounds expensive and that perhaps USAID would be better suited to carry out such an approach down the line.

While Anadarko began to implement its resettlement plans in 2017, human rights abuses attributed to private security forces hired by Gemfields, which holds a ruby-mining concession, reportedly fueled the armed Islamist group’s first attacks in the town of Mocímboa da Praia in October 2017. In Montepuez District where Gemfields ruby mining concession is located, private security actors working on behalf of Gemfields’ interests allegedly destroyed property of artisanal miners operating in the concession area and tortured and killed some residents, many of whom were artisanal miners, to force them to leave the company’s concession area. That district is home to the world’s largest ruby reserves. It should be noted that in accordance with Mozambican laws, Mozambicans living on their ancestral lands have no legal title to these lands and the Mozambican government can concede the lands to business interests like Gemfields and Anadarko.

According to an Imam in Mocimboa de Praia, the Machababos were able to take advantage of the violence of the private security forces to initiate recruitment for its own violent actions. Those espousing a radical jihadist ideological narrative in the region were able to capitalize on alienation especially of youth and the violence committed by private security forces by transforming these very real grievances into narratives of revenge that gave rise to violent extremist actions. In several other African contexts, VEOs have exploited the victims of violence often by state actors into a posture of vengeance to provide a moral justification for violent acts against others. It should also be noted that Gemsfields’s top executive reached out to us to deny that there was any linkage between events in their concession area and the rise of violent extremism.

The London-based law firm, Leigh Day, filed a lawsuit against Gemfields in British courts; the lawsuit was brought by 273 artisanal miners over accusations of abuse at the Gemsfields’ ruby mine. Gemfields settled the case in 2019 by agreeing to a payout of £5.8 million to the aggrieved miners, while denying liability.  

In 2019, the insurgent leaders pledged allegiance to Islamic State, though the linkages with the international movement often appear tenuous at best.

Foreign Investment, Force Majeure and Foreign Military Interventions

To make a long story short: Another American firm, Occidental Petroleum, acquired Anadarko Petroleum in 2019; Occidental then sold Anadarko’s African assets in the same year to the French firm, Total– later called TotalEnergies. In the deal, TotalEnergies inherited the Anadarko LNG project as well as the insecurity of Cabo Delgado Province.

The onshore LNG project taken over by TotalEnergies suffered from actions by the VEO in the nearby town of Palma in March 2021. Nearly 1,200 local residents and around 55 Total contractors were killed, according to a journalistic investigation of the impact. In response TotalEnergies stopped all its operations and declared a Force Majeure – a legal principle that allowed TotalEnergies from fulfilling its contractual obligations due to unforeseeable circumstances. While this article was being written, TotalEnergies was indicating that it would resume operations in Cabo Delgado sometime in early 2024, then a week later, it was reported that development of the LNG would begin afresh in July 2024, and more recently it announced that operations would not begin again before the end of 2024.

From the beginning of the insurgency, the Mozambique government’s response to the deteriorating security situation focused on finding a quick military solution, but the government soon realized that its army and local police forces lacked sufficient capacity to suppress or defeat the extremists. The U.S. Army has provided limited training to the Mozambique military in an effort to improve its fighting capacity. Meanwhile, looking for a quick solution, by 2019 the Mozambican government called upon and accepted offers by a litany of private military companies (PMCs) that failed miserably to help the Mozambique government to counter the Machababos extremist threat.

Given this operational environment, Erik Prince, founder of the American PMC, Blackwater, and owner of the China-headquartered Frontier Services Group (FSG) sought to provide a force in Mozambique to assist the military in fighting the insurgents. By mid-2019, Erik Prince supplied two helicopters and support crews for the Mozambican military. Our informants tell us that in addition to payments, Prince was reportedly seeking land concessions from the Mozambican government for the military support he was hoping to supply. However, at the same time, the government was already considering Russia’s private mercenary force, the Wagner Group for help. In September 2019, it was reported the Wagner Group secured the contract after winning a “bidding war” that included Erik Prince’s FSG and various other contractors. As a result, Erik Prince withdrew his helicopters in mid-September 2019 before being replaced by nearly 170 Russian Wagner Group fighters. At that time, Yevgeny Prigozhin headed Wagner Group; he was the St. Petersburg oligarch who at the time was so close to the Kremlin that he was known as President Vladimir Putin’s “chef,” that is, until his 2023 assassination in Russia following a Wagner rebellion against the Russian government in the context of Russia’s aggression in Ukraine.

The full Wagner contingent arrived in September 2019; this was the same month the U.S. Export Import Bank approved its $5 billion loan. Prigozhin forces included nearly 200 fighters, trucks, drones and a Mi-17 helicopter gunship.  Soon after their arrival, Wagner forces were plagued by setbacks which included sustained casualties from Machababos ambushes. By November, the Wagner Group’s inability to combat and contain the Machababos insurgency led to their humiliating withdrawal from the region, having suffered a reported nine fatalities. Later, John Gartner, CEO of a small South African PMC, OAM, made an unsuccessful bid to the government of Mozambique, and commented that that the Wagner Group failed due to their lack of knowledge of the area and “bush-fighting” techniques. 

By April 2020, the government of Mozambique hired the South African Dyck Advisory Group (DAG), a PMC, owned by Lionel Dyck, to provide air support to Mozambique’s defense forces in the fight against the extremists in Cabo Delgado. However, within two weeks into their deployment, the insurgents managed to shoot down two DAG helicopters. Given this poor start, it appears DAG operations had not done any better than other, previous, PMCs. But by July 2020, the Mozambique government renewed DAG’s contract and expanded it to include training ground troops. 

In March 2021, DAG found itself in serious trouble, facing allegations of violating humanitarian law. A March 2, 2021 Amnesty International report accused DAG of firing indiscriminately at civilians and dropping hand grenades from the helicopters that it deployed. The report also stated that any failure, by those conducting the attacks, to distinguish between civilians and fighters “is a violation of international humanitarian law and may constitute a war crime.” Other reports stated that the DAG forces dropped improvised bombs on civilian populations. On March 23, 2021, the Mozambican Center for Democracy and Development — a civil society organization — called for DAG’s contract not to be renewed. On April 6, 2021, DAG ended its involvement, including its helicopter support.

After April 2021, another South African defense contractor with headquarters in Abu Dahbi, the Paramount Group provided helicopter air support to the Mozambican military helicopters that were flown by Mozambican pilots trained by Paramount and its partner company, Burnham Global.   

The failures of the PMCs such as Erik Prince’s FSG, Wagner, DAG, Paramount, and even the Mozambique military to counter or contain the Machababos’s ambitious insurgency became quite evident to the government of Mozambique. This led Mozambique to adopt by late 2021/2022 a more regionally coordinated and comprehensive approach to counter the insurgents in hopes of applying a more successful strategy to defeat or counter the extremist insurgents. In response, the Southern African Development Community dispatched a regional fighting force composed largely of some 1,500 South African troops. In a separate effort, Rwanda deployed a 3,000 combat-ready force that appears to focus on creating an operationally secure zone for the French TotalEnergies onshore LNG facility. 

Many observers believe that the French government played a major role in securing Rwanda’s protection for TotalEnergies facility. In this context, the French government worked to overcome its strained relations with the Rwandan government. President Macron visited the Rwandan capital, Kigali, made up with his Rwandan counterpart, and announced 370 million euros in fresh French development aid to Rwanda. In addition, with strong French backing, the European Union Peace Facility Fund has provided 35 million euros in support of the Rwanda and Southern African forces operating in Cabo Delgado.

The South African and Rwandan forces appear to have managed to contain the VEO’s actions, but in the coastal area. It is often difficult to ascertain the security situation because of limitations placed on independent journalists and civil society groups that might report on events in Cabo Delgado. Yet, sources on the ground and most recently Vatican News reported an uptick in violent acts by the Machababos in 2024. And there are reports that of insurgent activity spreading south into Nampula Province.

Regardless the current state of the insurgency, the VEO has had a serious impact on this $20 billion investment. For instance, as TotalEnergies announced its plan to end the Force Majeure and return to operations, the Indonesian state oil company Pertamina took advantage of the Force Majeure to cancel its 20-year contract to purchase liquid natural gas (LNG) from TotalEnergies-led LNG project. According to press reports, Peramina was to have imported one million tons of LNG per year from the Cabo Delgado facility. In addition, in October 2023, survivors and relatives of victims of the 2021 insurgent in Palma filed a complaint against TotalEnergies for negligence and indirect manslaughter, saying the company had failed to ensure the safety of subcontractors. TotalEnergies rejected the allegations, saying they were “inaccurate.”

The instability in Cabo Delgado has also on occasion brought to a halt the mining and transport of graphite, much of which is destined for Tesla’s electronic vehicle battery facility located in the U.S. state, Louisiana. An Australian firm, Syrah, is mining the graphite destined for Tesla; the graphite production in Syrah’s Cabo Delgato mine is critical for breaking China’s near monopoly over the supply of minerals for EV battery production, so much so that in September 2023, the U.S. government’s International Development Finance Corporation gave tentative approval of a $150 million loan to a Syrah subsidiary operating in Mozambique.  

Corporate Social Responsibility Requires Proven Development Methodologies

If the US government intention is to leverage the private sector for development in lower- and middle-income countries for both the upliftment of the host economies and for American manufacturing, the U.S. government must ensure that these corporations adopt social responsibility approaches that are truly effective.

To minimize the chances of private-sector investments fueling alienation, discontent and conflict, it is important to apply evidence-driven best practices for community engagement and social investment as part of a conflict prevention strategy. Proven methodologies from the field of Social and Behavior Change Communication, structured on community participation approaches, have proven quite capable of restoring trust between governments and society, and of improving development outcomes. Local traditional leaders, women’s groups, youth groups and other civic organizations must be at the table when decisions about community development such as access to quality healthcare delivery, education, economic infrastructure, access to markets, employment, etc. are made. Indeed, such techniques have been used in the past in Cabo Delgado to effectively combat the illegal timber industry through community buy-in into the effort.

Our study of the conditions that have given rise to violent solutions to addressing social and economic grievances indicates that to restore trust in public institutions and loyalty to the state, it is necessary to invest in developing capacity of communities to manage their affairs, especially through community participation in the delivery of public services such as healthcare, education, agricultural/fishing extension and access to markets for goods. Communities must be involved in the design, implementation and monitoring of interventions that are supposed to benefit them.  In addition, leaders from affected local communities have to be involved in finding enduring solutions to the social conflicts that have arisen. 

It appears that in Cabo Delgado Province the unsuccessful strategies of companies and non-government organizations contracted to facilitate sustainable development in communities impacted by corporate investment have either not used or unsuccessfully implemented informed, evidence-driven practices and methodologies. The adoption of state-of-the-art techniques including rigorous monitoring and evaluation (M&E) methods can help assure that objectives are being reached, and if not, corrective actions can be taken. Sharing M&E findings with governments and in-country non-governmental organizations contracted to help corporations meet their social responsibilities goals will help keep all pertinent actors on track and on the straight and narrow.

With the private sector implementing these proven approaches, national and local governments can be held to higher standards. It will help to ensure that the revenues provided to governments by the private sector are delivering goods and services to communities. This will help ensure that funds are not diverted into the hands of members of the political elite but rather benefit the public. 

Without international investors, the international donor community and state actors applying a community participatory approach to public service delivery and creation of livelihood opportunities, local resistance and conflict are likely to undermine achieving the desired results. The intentional application of evidence-driven practices reduces the risk of project under-delivery both from an economic and reputational perspective for all parties.

The Risk that Outsider Interests Will Leverage Local Alienation and Insurgencies

In addition to the suffering of local communities and corporate setbacks, the emergence of a VEO that derives from failed corporate social responsibility efforts creates the opening for outside state and non-state actors as well as factions of a country’s political elite to leverage VEOs of all kinds to achieve specific political and economic goals to the detriment of investing firms. For instance, the withdrawal of the oil majors from onshore petroleum and gas exploration in Nigeria’s Niger Delta is an example of how local and international interests, including Russian enterprises, combined to exploit and foment local grievances to drive out Western companies.

In the case of Mozambique, the Islamic State – a non-state actor — laid claimed the Machababos as part of its organization and takes credit for Machababos “successes.” It may be also important to point out that there have been unconfirmed rumors that a Middle East petroleum producing country has provided financial support to the Machababos as a means of preventing the LNG project from becoming operational so as to stop the LNG project’s considerable future output from contributing to a lowering of global LNG prices. 

Responsible private investment requires proven community participatory approaches, and the Biden Administration could set a strong example by insisting upon the application of effective community development approaches in order to receive U.S. Government support for private sector investments.

About the authors: Gregory Pirio and Robert Pittelli are the President and Associate of EC Associates, respectively. 

• Gregory Pirio has a doctorate in African History. Dr. Pirio has been a global leader in the use of communications for constructive social change. Dr. Pirio has been the architect of numerous radio, TV and media training initiatives in Africa, Asia, the Caribbean, Europe and Latin America with a focus on peacebuilding, conflict resolution and public health, including youth media projects in conflict and post conflict societies. He authored The African Jihad: Bin Laden’s Quest for the Horn of Africa and was editor of Rebuilding Shattered Nations and Lives: Post-Conflict Reconstruction and Development in Africa (UNHCR), for which he wrote the introduction, “African Conflicts in Historical Perspective.”
• Robert Pittelli is a former information operations intelligence analyst with over 38 years of experience with both the U.S. Department of the Army and the Air Force. Mr. Pittelli spent over 15 years focusing primarily on various African and Middle Eastern problem sets with a strong focus on East Africa and the African Sahel regions. He served eight years as the primary information operations Africa intelligence analyst.