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Africa: Debt at Genoa
Africa: Debt at Genoa
Date distributed (ymd): 010714
Document reposted by APIC
Africa Policy Electronic Distribution List: an information
service provided by AFRICA ACTION (incorporating the Africa
Policy Information Center, The Africa Fund, and the American
Committee on Africa). Find more information for action for
Africa at http://www.africapolicy.org
+++++++++++++++++++++Document Profile+++++++++++++++++++++
Region: Continent-Wide
Issue Areas: +economy/development+
SUMMARY CONTENTS:
Despite the overwhelming consensus among African countries,
analysts and non-governmental organizations that the debt crisis
has not been solved by the creditors' limited debt relief efforts
to date, press reports indicate that the G-8 - meeting in Genoa
next week - have no plans for any new initiatives. Although the
creditors may be tired of talking about it, Africa's debt still
cripples efforts to address the AIDS pandemic, the wider health
emergency and other development goals. That is why the issue will
be not conveniently disappear, and why the spotlight is focusing on
the unwillingness of the rich countries to address the largest
remaining portion of that debt - that held by international
financial institutions.
In this posting, you will find the most recent statement by Jubilee
South, as well as brief excerpts and references to other recent
reports and on-line discussions on the debt crisis, from Drop the
Debt, World Development Movement, Comite pour l'Annulation de la
Dette du Tiers-Monde, Worldwatch Institute, and Eurodad. A related
posting also sent out today contains excerpts from a new position
paper released by Africa Action as part of our campaign for
Africa's Right to Health. The full position paper is available
at: http://www.africapolicy.org/action/debtpos.htm
For suggested actions in the US at the time of the Genoa meeting,
see also http://www.j2000usa.org/july-action.htm
+++++++++++++++++end profile++++++++++++++++++++++++++++++
BREAK FREE!
Another World is Possible
[Jubilee South statement from http://www.jubileesouth.net. Group
endorsements of the statement can be sent to [email protected].
Jubilee South can also be contacted at the Johannesburg Office of
the Alternative Information and Development Centre (AIDC), 3rd fl
COSATU House, cnr Leyds and Biccard Streets, Braamfontein, South
Africa; Postal address: 60 Isipingo Street, Bellevue East 2198,
South Africa; Tel during office hours: 27 11 339 4121; Fax: 27 11
339 4123; Tel after office hours: 27 11 648 7000; Email:
[email protected]]
15-21 July 2001
Global Week of Protest Against Debt
The peoples of the world are on the march against neoliberal
globalisation. Building on decades of struggle, Jubilee 2000
mobilized 70,000 people to protest the 1998 G7 Summit in Birmingham
and a festival of resistance shut down the WTO meeting in Seattle
in December 1999. These and other actions signal that not only is
another world possible but, as demonstrated by thousands of
ordinary people from a diverse range of movements coming together
at the World Social Forum in Porto Alegre, another world is indeed
being built.
Central to building this new world is the struggle to break free
from the vicious system of debt currently enslaving the peoples and
nations of the South.
Don't owe, won't pay!
This debt is illegitimate, immoral, unjust and fraudulent. It
functions not as a means of transferring assets or technology but
as usury, entrapment, control and domination. The need for
creditors to make money on their capital and poorly conceived
"development" projects had much to do with the origins of the debt
whose repayment is now being exacted from the peoples of the South.
Billions of petro-dollars were off-loaded on to the unsuspecting
South by unscrupulous bankers who guaranteed their profits at any
cost. The unilateral increase of interest rates in the 1980s
together with worsening terms of trade accelerated the accumulation
of an unpayable debt that drove many countries of the South into
structural adjustment entrapment.
Yet the debt has been paid many times over. In 1980, the total debt
stock of South countries stood at US$567 billion. Since then,
US$3,450 billion has been repaid in interest and principal -- six
times the 1980 level. Nonetheless, Third World debt currently
stands at US$2,070 billion.
This plunder exacts an enormous social cost. Each day, 19,000
children die as a consequence of debt-related problems. Funds for
vital infrastructure--housing, clinics, roads etc.--are siphoned
off to debt payments. Uruguayan writer Eduardo Galeano sums up the
mathematics of debt domination very succinctly: "the more we pay,
the more we owe, and the less we have".
Furthermore, part of debt service pays off loans made to private
companies, pocketed by corrupt officials, or used in projects
destructive of peoples and the environment.
Perhaps the biggest part should be repudiated outright, according
to the Doctrine of Odious Debt first developed by the United
States. This doctrine rejects debts incurred by dictatorships or
for strengthening dictatorships as harmful to their people and
institutions and therefore not the responsibility of successor
democratic governments. How much of the debt of Argentina, Brazil
and other Latin American countries falls under this criteria? And
the Philippines and Indonesia? What about the apartheid debt of
Southern Africa? What about Rwanda, Zaire, Nigeria, and so many
others?
The South pays much more than dollars and cents. Sinking deeper in
the trap, indebted nations have been forced to accept crippling
conditionalities to get loans to repay their debts. Structural
Adjustment Programmes (SAPs) of the IMF and World Bank imposed
export-led growth, financial and trade liberalisation, fiscal
austerity, privatisation and deregulation on the economies of the
South. These policies have reduced economies to sources of cheap
raw materials and pools of cheap labour for the interests of the
industrialized North, in effect hiking food prices, increasing
levels of unemployment, reducing government services, and
intensifying poverty and environmental destruction. They further
undermine national sovereignty and possibilities for democratic
participation and government accountability.
Organise, mobilise and resist
In mobilising for the Week of Protest, the anti-debt movements join
others around the world in challenging capitalist globalisation. To
the G7 Summit in Genoa, we deliver this message:
We are not here to deliver petitions and to lobby as if it were
possible to persuade you through argument and facts to halt
corporate enrichment on the one hand and mass impoverishment and
resource pillage on the other. Your cynical response to our demands
at the Cologne and Okinawa Summits was instructive. Keeping the
people of the South in perpetual indebtedness while the richest
countries monopolize wealth is indefensible. Nonetheless you
rejected the call of millions of people to do the right thing by
meeting the challenge of Jubilee and canceling the debt.
What lies exposed is the failure to fulfill even your own meager
promises. Information previously buried under the balance sheets
and obscure financial statements of the international financial
institutions is now clear for all to see: just 1.2 percent of the
debt of the most impoverished countries has been cancelled and even
that, with few exceptions, is accompanied by unacceptable
conditions.
In an attempt to hide the real score, you now promote a new
fiction: the so-called Poverty Reduction Strategy. Civil society
"testing" of this strategy shows that PRSPs are but another attempt
by the World Bank and the IMF to continue imposing SAPs on the
South.
The struggle for debt cancellation and repudiation is a struggle
against an unjust world economy and above all against
re-colonisation. It requires us to harness the strength of social
movements, popular, political, and faith-based organizations to
organize against debt and domination and to resist the G7.
The Global Week of Protest from July 15-21 is another chapter in
this effort to construct a new world premised, not on profit and
greed, but on fulfilling people's human rights, protecting and
respecting the environment, and upholding human solidarity.
Break free from the illegitimacy of debt payments. Cancel the debts
now!
Break free from the illegitimacy of odious, onerous and fraudulent
debts. Don't owe, won't pay!
Break free from the illegitimacy of the use of debt and so-called
debt relief as leverage for imposing structural adjustment programs
and other conditionalities. End all conditionalities!
JUBILEE SOUTH
Drop the Debt
http://www.dropthedebt.org/home.html
Excerpts from News Release July 12, 2001
"Pressure builds on G8 leaders in Genoa after finance ministers
meeting in Rome ends with no progress on debt"
http://www.dropthedebt.org/news/finance0707.shmtl
12 July 2001
Pressure builds on G8 leaders in Genoa after finance ministers
meeting in Rome ends with no progress on debt.
G7 finance ministers opened the official meetings of the 2001
summit in Rome last weekend, but failed to make any progress on
debt cancellation. ...
On debt, finance ministers reiterated their commitment to the
Heavily Indebted Poor Countries initiative (HIPC) but said formal
announcements would be made in Genoa. But behind the scenes,
treasury staff were briefing that no agreement on moving beyond
HIPC had been reached. Debt campaigners said that the poorest
countries could not afford to wait another year for the G7 to face
facts and take steps to increase the amount of debt cancellation on
offer.
Under HIPC, the poorest countries are getting on average just a 27
per cent cut in their annual debt service payments, leaving the
majority of those that qualify spending more on debt than health.
...
African leaders have steadfastly asked for further debt
cancellation at recent meetings on health issues, to support the
fight against diseases. "The circumstance and the situation of
HIV/AIDS underscore our call for total cancellation of Africa's
debts in favour of investment in the social sector" said Nigerian
President Obasanjo at the United Nations last month. ..."
President Obasanjo will present the Millennium Action Plan for
Africa (MAP) to the G8 in Genoa on June 20, alongside President
Mbeki from South Africa, and Algerian President Bouteflika. MAP
will set out the issues that African countries need support on
such as further debt cancellation, increased aid and technical
assistance, alongside commitments from African leaders to fight
corruption, provide better governance, and work to end regional
conflicts.
Despite the call of African leaders, the G8 are divided over the
need to do more on debt cancellation. Paul Martin, the Canadian
finance minister, said in his press conference in Rome that Canada
wanted to move beyond the HIPC initiative to cancel more debts,
but that this had not received support amongst the rest of the
finance ministers.
Other Recent Reports
(1) World Development Movement
"The Vicious Circle: AIDS and Third World Debt, June 25, 2001"
PDF only.
http://www.wdm.org.uk/cambriefs/debt/vicircle.pdf
Includes tables and diagrams illustrating effect of structural
adjustment policies on spread of AIDS and effect of AIDS on
economies.
(2) Comite pour l'Annulation de la Dette du Tiers-Monde
(COCAD-CADTM)
"Guarantee the fulfillment of basic human needs for all and get out
of the vicious circle of debt" by Eric Toussaint and Arnaud
Zacharie.
http://attac.org/genes2001/documents/docdet5en.htm
[Includes concise section explaining judicial basis for debt
cancellation, including "odious debt," based on the illegitimate
origin of the debt, and "force majeure," based on changed
circumstances.]
Odious debt: State debts contracted against the interests of local
populations are judged unlawful. According to Alexander Sack, who
theorized this doctrine, "If a despotic power contracts a debt not
in accordance with the needs and interests of the State, but to
strengthen the despotic regime, to repress the population who are
combating it, this debt is odious for the population of the whole
State. This debt is not an obligation for the nation: it is a
regime's debt, the personal debt of the authorities which
contracted it; consequently, when the regime falls, the debt
becomes null and void." (Sack, 1927).
Force majeure: contracts requiring the fulfilment of a succession
of future commitments are subject to the condition that the
circumstances should remain unchanged. "Force majeure" quite
clearly applies to the debt crisis of the 80s. Indeed, the
fundamental causes of the debt crisis from 1982 were two exogenous
factors: the dramatic rise in interest rates imposed worldwide by
the United States government from the end of 1979, and the drop in
export prices for the Periphery countries from 1980 on. Both these
factors were instigated by the creditor countries. They are cases
of "force majeure" which fundamentally modify the situation and
prevent the debtors from fulfilling their obligations.
(3) Eurodad, "Debt Fatigue Sets In" by Ted van Hees and Jonathan
Wolsey
http://www.debtchannel.org/views/opinion/eurodad210501.shtml
"Indeed, there seems to be among governments a sense of debt
fatigue. ... But European (and other) governments are not the only
ones tired about debt. In fact, World Bank and IMF staffs seem to
feel the same.
For instance, a senior official at the Bank has recently told us
that despite oncerns over the long-term debt sustainability of
HIPCs, the Bank had no plans to move beyond the current framework.
This, he stresses, is especially unlikely given the reticence of
bilateral donors. His team (focusing on debt) is meanwhile
shrinking. Time to move to something else. ...
Against this background, what is needed is to wake up all these
fatigued people."
(4) The Worldwatch Institute, "Still Waiting for the Jubilee"
http://www.worldwatch.org
"However, the initiatives only attack the symptoms of debt crisis.
Largely designed by and for creditors, they do little to highlight,
much less address, the underlying causes. As a result, they will
almost certainly invite fresh crises in the poorest nations. Rich
governments have made important financial contributions to the
development of poor nations: they have stamped out smallpox, funded
family planning programs that have dramatically slowed population
growth, and built rural roads and schools. But as long as lending
and borrowing occur in ways that invite trouble, loans from
foreign governments will probably do as much harm as good.
Several major problems lie at the heart of the debt crisis. All
reflect hard economic and political realities. Rich countries
restrict imports of crops and clothing and other exports of poor
countries, effectively demanding loan repayment while refusing the
goods offered as payment. Official agencies often lend to poor
countries for reasons that have little to do with aiding their
development and assuring their ability to repay loans, and
everything to do with winning geopolitical allegiances - or sales
for Lockheed Martin and Caterpillar. Loans proffered with more
genuine intentions of aiding the borrower run into another
problem: they are supposed to be repaid regardless of results, even
though failure is to be expected in the difficult business of
development. Finally, both the agencies that lend and the ones that
borrow are often insulated from the consequences of their actions.
This insularity gives free play to bureaucratic tendencies toward
arrogance, over-optimism, the pursuit of growth in lending and
borrowing for its own sake, and even corruption."
Additional excerpts from the Roodman report are available from the
Worldwatch web site, but to download the full report requires a
payment of $5.
On-line Discussions
(1) Worldwatch Institute Online Forum
One week: July 18-25
Discuss with author David Roodman and others the new Worldwatch
Institute report "Still Waiting for the Jubilee: Pragmatic
Solutions for the Third World Debt Crisis"
http://csf.colorado.edu/sustainable-economics/third-world-debt
"In addition to the 41 countries designated as HIPC by the World
Bank, David Roodman, Senior Researcher at Worldwatch, has
identified six countries that meet the benchmark conditions of
poverty and indebtedness defined by the World Bank. The result is
the Worldwatch 47. Three of the additional countries, Indonesia,
Nigeria and Pakistan, are more indebted than any of the HIPCs. The
HIPC Initiative excludes these three countries on the grounds that
they have the capacity to repay their debt. But credit agencies
such as Moody's and Standard and Poor's rate them less creditworthy
than many countries in the original HIPC list.
Roodman estimates that at least two-thirds or approximately $291
billion of the $422 billion owed by the Worldwatch 47 countries is
unpayable. Official recognition of the nonpayability of debt
requires political courage, but canceling unpayable debt has no
economic costs nor does it free up resources for human development
needs.
Roodman's careful and extensive research cogently demonstrates that
most third world debt must be recognized as nonpayable -- the
sooner we engage in responsible accounting the sooner the crisis
can be resolved."
To subscribe, please send a blank e-mail message to
[email protected].
[For a brief excerpt from report see above]
(2) Oneworld.net and Eurodad, online discussion "Debt Cancellation
for Heavily Indebted Countries: What Can and Should Be Done Now?"
July 18 - 12 October
Sign up on http://www.debtchannel.org, the Oneworld portal on
international debt.
This material is being reposted for wider distribution by
Africa Action (incorporating the Africa Policy Information
Center, The Africa Fund, and the American Committee on Africa).
Africa Action's information services provide accessible
information and analysis in order to promote U.S. and
international policies toward Africa that advance economic,
political and social justice and the full spectrum of human rights.
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