UNIVERSITY OF PENNSYLVANIA - AFRICAN STUDIES CENTER
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
Region: Continent-Wide Issue Areas: +economy/development+
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
Another World is Possible
[Jubilee South statement from http://www.jubileesouth.net. Group endorsements of the statement can be sent to firstname.lastname@example.org. 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@example.com]
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!
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.
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.
[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
"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.
(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 firstname.lastname@example.org.
[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.
Message-Id: <200107141426.KAA23746@server.africapolicy.org> From: "APIC" <email@example.com> Date: Sat, 14 Jul 2001 11:20:21 -0500 Subject: Africa: Debt at Genoa
Editor: Ali B. Ali-Dinar
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