UNIVERSITY OF PENNSYLVANIA - AFRICAN STUDIES CENTER
Africa: World Bank Bonds Boycott Date distributed (ymd): 011119 APIC Document
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+ +health+
This posting contains a press release, statement, and sample resolution from Africa Action in support of the World Bank Bonds Boycott, issued on the eve of this weekend's meeting of the World Bank and International Monetary Fund in Ottawa.
A posting also sent out today includes excerpts from the Africa sections of the latest World Bank / IMF reports on global economic prospects.
Notably, despite the sober tone of their own projections, and statements emphasizing the particularly severe impact of September 11 on developing countries, the international financial institutions offered no new initiatives to address the grave economic and health crises in Africa and other developing regions.
The official communiques from the meeting can be found
A joint statement by the IMF Managing Director and the World Bank President on supporting low-income countries is at: http://www.imf.org/external/am/2001/o/imfcstat/joint.htm
A World Bank response to four demands from the coalition Mobilization for Global Justice, written in September, is at: http://www.worldbank.org/html/extdr/pb/pbfourdemands.htm
A Civil Society rebuttal to the World Bank response is at: http://www.50years.org/action/n18/response.html
Additional background on the World Bank, health, structural
adjustment, and the World Bank Bonds Boycott is available
November 16, 2001
FOR IMMEDIATE RELEASE
Contact: Vicki Lynn Ferguson, (202) 546-7961 Aisha Satterwhite, (212) 785-1024
Africa Action Tells World Bank: Cancel Debts, End Structural Adjustment to Respond to Africa's Health Crisis
New effort launched among the African American religious community to boycott the purchase of World Bank Bonds
Friday, November 16, 2001 (Washington, DC/New York City) - On the eve of this weekend's rescheduled World Bank and International Monetary Fund meeting in Ottawa, Canada, Africa Action has issued a statement calling on these financial Goliaths to cancel Africa's debts and end harmful "structural adjustment" policies.
These actions, the statement said, were essential to allow African countries to mobilize their own resources against the HIV/AIDS pandemic and the wider health emergency of which it is a part.
Africa Action's executive director Salih Booker said, "While the World Bank boasts of providing new loans for Africa's health and other social sectors, its demands for debt repayment are suffocating the continent."
The Rev. Dr. Molefe Tsele, General Secretary of the South African Council of Churches, supported the Africa Action statement saying that, "The role of the World Bank in Africa is a critical ethical issue. As a matter of conscience, people should take action to register their disapproval with the World Bank's policies by boycotting their bonds!" Dr. Tsele is in the US to attend two consultations with Black American clergy on the east and west coasts organized by Africa Action.
Africa Action is increasing its support for the World Bank Bonds Boycott Campaign. Africa Action calls on all those who support Africa's right to health to boycott World Bank bonds in order to put pressure on the institution to cancel Africa's debt and end the imposition of economic policies harmful to health.
The organization's statement stressed that Africa has already lost more than 17 million people to AIDS. More than 7,000 Africans die of the disease every day. The pandemic feeds on and accentuates structural inequalities and other societal divisions. It threatens to overwhelm African efforts to set the continent on a path towards greater human security and a just share in today's interconnected global economy.
November 16, 2001
Statement on the World Bank and International Monetary Fund (IMF) and the State of Africa's Health
On the Occasion of the Meetings of the Development Committee and the International Monetary and Financial Committee in Ottawa, Canada, November 17-18, 2001
This weekend, in Ottawa, Canada, the Development Committee and the International Monetary and Financial Committee of the World Bank and International Monetary Fund (IMF) will hold their annual meetings, originally scheduled to take place in Washington, DC at the end of September and postponed following the September 11th terrorist attacks. As these important committees now convene to assess the state of the world economy, Africa Action calls on the Directors of the World Bank and IMF to respond to the continent's health crisis as a matter of the greatest urgency.
There is no greater single threat to Africa's stability and to its social and economic development than the HIV/AIDS pandemic and the broader health emergency of which it is a part. Africa has already lost more than 17 million people to AIDS, and the continent is home to 25 million of the 36 million people worldwide living with HIV/AIDS. More than 7,000 Africans die of the disease every day. The pandemic multiplies the impact of other major diseases such as malaria and tuberculosis. It undermines fragile health systems and positive initiatives in all sectors. It feeds on and accentuates structural inequalities and other societal divisions. This threat to the fundamental right to health threatens to overwhelm African efforts to set the continent on a path towards greater human security and a just share in today's interconnected global economy.
It is no coincidence that Africa is at the epicenter of the global AIDS pandemic. Africa's health crisis is intimately related to the dynamics of an international system that has long marginalized the African continent and trapped it in a cycle of dependency and underdevelopment. The role of the World Bank and IMF in this international system has been pivotal. Over the past two decades, the policy prescriptions of these institutions have exacerbated the social and economic crises facing African countries. They have denied Africa's people the right to health and deprived them of resources necessary to cope with the current health crisis.
Africa Action calls on the World Bank and the IMF to take the following essential steps to allow African countries to mobilize their own resources against the current health crisis: 1) Cancel all debts owed to the World Bank and IMF by African countries; 2) End harmful "structural adjustment" conditions and similar policies.
We also call on the United States' Executive Directors to the World Bank and IMF to use their significant voting power within these institutions to push for the realization of these demands.
The World Bank and IMF in Africa
The World Bank and IMF have become immensely powerful institutions in Africa. When economic crisis hit the developing world in the late 1970s and early 1980s, African governments, desperate for funds to meet their growing external debt obligations and their critical domestic needs, turned to the World Bank and IMF for financial assistance and were forced to accept the conditions attached to their loans. The World Bank and IMF used this leverage to dictate economic policies to African countries. As the debt crisis worsened through the 1980s and into the 1990s, Africa became even more dependent on the World Bank and IMF. These institutions thereby gained an increasing degree of control over African economic policies.
These policies have had terrible economic and social consequences. Average incomes across the continent have declined, and the percentage of the population of sub-Saharan Africa subsisting on less than $1 per day has increased, now reaching almost 50%. Conditions of poverty have worsened in most countries, providing fertile ground for the spread of the AIDS pandemic and other infectious diseases. The persistent economic crisis faced by African countries, compounded by the massive burden of debt to the World Bank, IMF and other external creditors, have denied them the resources they need to respond to the new health crisis and related challenges.
In recent years, following criticism of the negative social impact of their involvement in developing countries, the World Bank and IMF have adopted a public stance of support for "poverty reduction" and social development programs. The World Bank, in particular, boasts that its lending priorities have changed dramatically and that it is now the largest funder of health, education and HIV/AIDS programs.
We welcome those actions that reflect a shift towards prioritizing social development. We also welcome the greater focus on HIV/AIDS prevention and care programs, and the genuine engagement of many Bank personnel in efforts to contribute to the solution of particular problems. However, World Bank resources to address HIV/AIDS and other needs still come as loans rather than grants. The new focus on "poverty reduction" further increases the complexity of loan conditions and allows even greater intrusion into the domestic policies and priorities of African countries. Most importantly, new initiatives by the World Bank and IMF to address Africa's health crisis and socioeconomic challenges cannot succeed while other actions by these institutions continue to undermine the prospects for development.
Africa Action calls on the World Bank and IMF to demonstrate their commitment to Africa's social and economic development, and to the fight against the AIDS pandemic, by immediately taking the following crucial steps:
1) Cancel all debts owed to the World Bank and IMF by African Countries
The countries of sub-Saharan Africa spend $13.5 billion a year servicing the debts they owe to rich country governments and to the World Bank and IMF. Most of these loans are of questionable legitimacy, based on the circumstances under which the debt was incurred and the purposes for which it was used. Yet the creditors of the debt still insist that the money be repaid. Over the past two decades, African countries have spent more on debt repayments than they have received in development assistance or in new loans. The consistent diversion of resources from spending on health care to debt repayment has had disastrous effects on health care systems in many African countries.
The current international debt relief framework, the Heavily Indebted Poor Countries Initiative (HIPC), launched by the World Bank and IMF in 1996 and "enhanced" in 1999, was presented by creditors as capable of providing a lasting solution to the debt crisis for the world's most impoverished countries. Despite claims that this scheme is providing adequate debt relief to those countries that qualify, it is clear that it has failed. In the 24 countries that have qualified for HIPC debt relief to date (including 20 in sub-Saharan Africa), governments still spend more on annual foreign debt repayments than they do on health care for their own populations. On average, these countries have seen a reduction of less than one-third in their annual debt repayments. The reality is that HIPC is designed to serve creditors by squeezing the maximum possible in debt payments from the world's poorest economies, while only cancelling what is not being paid in any case. This leaves them still subject to overwhelming debt burdens.
Recent independent studies have shown that the World Bank and the IMF can afford to cancel the debts of the world's poorest countries from their own resources, without negatively impacting their credit ratings. We call on the World Bank and IMF to immediately cancel all debts owed to them by African countries.
We also call on these institutions, and on the World Bank in particular, to provide grants rather than loans to tackle the AIDS crisis and other development challenges. Further loans to African countries add to the indebtedness that has trapped them in a cycle of dependency.
2) End harmful "structural adjustment" conditions and similar policies The austere conditions imposed on African countries by World Bank and IMF "structural adjustment" programs over the past two decades have had devastating social consequences in African countries, and particularly in the area of health care. The imposition of cutbacks in government spending on health care has led to the closure of hundreds of clinics and created severe shortages in medical staff and supplies across the continent. The privatization of health care services, and the introduction of "user fees" for basic health care, both mandated by the World Bank and IMF as part of "structural adjustment" lending, effectively created a "two-tier" health system in which the poor majority have been denied access to basic care and treatment. At the same time, the health of Africa's people has deteriorated because of deepening poverty, widespread malnutrition and epidemics of infectious diseases.
"Structural adjustment" lending and related policies have undermined the right to health of Africa's people, directly contributing to the current health crisis and to the inability of African governments to mobilize resources in response. We call for an immediate end to imposition of these policies.
In recent years the World Bank and the IMF have responded to critics by changes in language, additional programs in social sectors, and declarations of openness to dialogue. However, these institutions have firmly resisted change in the fundamental policies they have imposed on African and other developing countries. As long as these institutions remain resistant to this change, outside critics must continue to expose the flaws of bank- imposed policies. We must also reinforce the incentives for change by actions that impose real penalties on these institutions for their intransigence.
Africa Action therefore reiterates its support for the World Bank Bonds Boycott Campaign, an initiative that targets the World Bank's primary source of funding (the sale of its bonds).
In the same way that the divestment movement grew to break the power of the apartheid regime in South Africa, communities, socially responsible investment firms, trade unions, churches and other institutions are deciding to exclude World Bank bonds from their investment and retirement portfolios until the World Bank makes fundamental changes in its policies.
We encourage all those concerned for Africa's Right to Health to join this effort, and, in particular, to insist that investment in World Bank bonds be conditioned on cancellation of Africa's illegitimate external debt and an end to imposition of harmful structural adjustment conditions on African countries.
We call on the World Bank and IMF to act upon the demands laid out in this statement, as a necessary prerequisite for constructive action in support of Africa's right to health and sustainable development.
We call on the US Executive Directors to these institutions -- Carole Brookins at the World Bank and Randal Quarles at the IMF -- to use their influence in favor of directing these institutions to address Africa's devastating health crisis through acting on these demands.
Africa Action Sample Resolution - November 2001
World Bank Bond Boycott
WHEREAS, the World Bank, officially known as the International Bank for Reconstruction and Development, is one of the most important financial institutions in the world and the single largest source of development financing for African countries; and
WHEREAS, the World Bank is controlled by the world's richest countries -- the U.S., the U.K., Canada, France, Germany, Italy and Japan -- and these countries set its agenda, directing that the World Bank act in their interests and promoting a model of economic growth that benefits the wealthiest countries and their private sectors; and
WHEREAS, the World Bank uses the loans it provides to African countries as leverage to prescribe policies and dictate major changes in the economies of these countries; and
WHEREAS, the World Bank has undermined democracy in impoverished countries throughout Africa and the developing world by removing fundamental decisions on economic and social policy from the effective control of democratically elected legislatures; and
WHEREAS, the World Bank's operations in Africa over the past twenty years have resulted in a decline in average incomes and an intensification of poverty and underdevelopment across the continent; and
WHEREAS, Africa is the epicenter of the global AIDS crisis, home to 25 million of the 36 million people worldwide living with HIV/AIDS, and the AIDS pandemic takes the lives of more than 7,000 Africans every day; and
WHEREAS, through its lending, the World Bank, together with its sister institution the International Monetary Fund (IMF), promotes the privatization of social services, including health care and water systems, and these and other conditions of its "structural adjustment" loans undermine the health and human security of people in Africa; and
WHEREAS, the World Bank's promotion of "user fees" for primary health care in African countries has put health care out of reach for millions of Africans and has directly contributed to the current health crisis on the continent; and
WHEREAS, the Directors of the World Bank refuse to cancel the debts of the most impoverished countries, although they can afford to do so without impairing the Bank's credit rating, and they continue to use this debt as leverage to retain external control over the economic and social policies of these countries; and
WHEREAS, the World Bank's insistence that African countries prioritize external debt repayments, even when this cuts into spending on health care, denies African governments desperately needed resources to fight the AIDS pandemic and the wider health emergency it represents; and
WHEREAS, most World Bank funds come from the sale of World Bank bonds to institutional investors, including city and state government pension funds, union pension funds, universities, parishes and religious institutions, and these resources are used to carry out the aforementioned destructive policies;
THEREFORE, BE IT RESOLVED, that (this institution) pledges not to purchase bonds issued by the World Bank until such time as the World Bank cancels 100% of the past debt claims against impoverished countries, and stops destructive "structural adjustment" lending and similar policies.
BE IT FURTHER RESOLVED, that (this institution) will communicate its support for the boycott of World Bank bonds to its employees and agents who manage or administer any funds held by (this institution), to institutions and groups with which (this institution) is affiliated, to Members of the United States Congress, and to the news media.
Message-Id: <200111191630.LAA13196@server.africapolicy.org> From: "Africa Action" <firstname.lastname@example.org> Date: Mon, 19 Nov 2001 12:20:06 -0500 Subject: Africa: World Bank Bonds Boycott
Editor: Ali B. Ali-Dinar
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