Civil society commemorating global action against debt

The second half of the month of October coincides with several “Calls for Action” all related to the quest for the alleviation of the status quo of people in the developing world.  October 15 is the anniversary of the death of former Burkinabe president Thomas Sankara who called for a cancellation of debt, on the 16 of October, the world celebrates World Food Day. The United Nations has since 1992 recognised October 17 as the International Day for the Eradication of Poverty and on this day last year over 23 million people in 87 countries “stood up” against poverty. October 20 is World Youth Day and on October 20-22, Washington will host the Annual Ministerial Meeting of the International Monetary Fund (IMF) and the World Bank. All these significant dates and actions that would be taken by citizens around the world to commemorate the days relate to one crucial issue that affects the lives of people in the south, poverty.

Africa South of the Sahara in particular experienced an increase in its debt burden, from approximately $ 60 billion in 1980 to about 230 billion in 2001. During this period, approximately $300 billion was repaid, but there continues to be a geometric increase in the debt, as a result of what Patrick Bond (Director of the Centre for Civil Society, University of KwaZulu-Natal, South Africa) considers to be high rates of interest imposed on the amounts owed. A great proportion of the debt owed by the south is “illegitimate” and “odious,” because to start with, the funds did not trickle down to the very people who need them most. Given that developing countries owe more than $ 500 billion to International Financial Institutions (IFS) and other western governments, I find it important to pose the question: Will some of these countries ever be able to pay these debts?  Some countries in Africa pay as much as $ 100 million a day as interests on loans. The debt question is closely associated with the inhibition of poverty especially when one takes into cognisance the targets set in the Millennium Development Goals (MDGs). If developing countries are to achieve MDG 1 of halving poverty by 2015, the international community needs to seriously implement most of the promises made, related to debt relief and reduction, as several countries in Africa actually spend more money servicing debts than they do for health and education. According to OXFARM New Zealand, a country like Zambia spends $150 million more on debt servicing than they do on education and Ghana spends more on debt, than for example, on health.  According to EURODAD, a European Network on Debt and Development “because the International Financial Institutions enjoy ‘preferred creditor status,’ even extremely impoverished countries face strong pressure to divert resources to pay multilateral debts.”

As a result of much pressure on the west and IFS following the realisation that some countries will never be able to pay their debts, the Highly Indebted Poor Countries Initiative (HIPC) was initiated in 1996 and in 2005 the HIPC initiative was enhanced by the Multilateral Debt Relief Initiative (MDRI) that called for a principled 100% relief of debts by countries that meet the conditions of the HIPC Initiative and for only a handful of the international financial institutions-the International Monetary Fund (IMF), the International Development Association of the World Bank, the African Development Bank and later on the Inter-American Development Bank as well as the Asian Development Bank.  The HIPC Initiative called for the cancellation of about 50% of debts of countries deemed to be very poor and highly indebted and these countries were selected based on a select economic criteria and had to proceed with the implementation of strict conditionalities in order to qualify for debt relief. These initiatives have not been able to resolve the debt crisis because: firstly, they are accompanied by certain economic conditions which sometimes include privatization of certain state corporations/enterprises and services, retrenchments in key sectors and the liberalization of trade as well. Secondly, some countries that desperately need to have their debt cancelled so as to be able to achieve the Millennium Development Goals by the target date are excluded from these initiatives.  Thirdly, the European Network on Debt and Development notes that the initiatives do not include the complete cancellation debts owed by the selected countries. And lastly, the institutions directly involved are just four in number- the IMF, the Development Association of the World Bank, the African Development Bank and the Inter-American Development Bank, these excludes other western countries and organisations.

The resolutions undertaken during the 2005 Gleneagles G8 Summit on debt, not to mention trade and aid were just a fraction of the many other unfulfilled promises made to the developing world. The G8 leaders agreed in principle to cancel about $ 40 billion of debt for highly indebted countries in Africa as part of their “renewed commitment to Africa,” but two years after Gleneagles, the debt crisis is being aggravated by what EURODAD terms “vulture funds.” The total amount of debt owed by countries in sub-Saharan Africa is above  $300 billion while about 2.4 trillion is owed by the entire developing world. The G8 leaders have not been completely able to practice the democracy they preach in terms of promises made to the South, this comes at a time when it is becoming increasingly evident that some world leaders have misplaced priorities, especially when one takes into consideration the fact that the United States spends over $4 billion a month on military operations in Iraq, not to mention the over $ 400 billion -a-year military budget, while there is the persistence of  extreme poverty, the HIVAIDS virus , malaria and tuberculosis affecting the lives of millions of men women and children in the developing world.     

Civil society organisations around the world as well as member countries in the developing world, together with citizens in the west are therefore standing up to say Pacta sunt servanda, promises which have been made by the international community should be fulfilled before more commitments are made.

The imposition of economic conditionalities should be reviewed because they do not take into account the domestic priorities of states and some have adverse repercussions on the very poor. Instead, developing states should have the flexibility of charting their own development priorities.

The 100% debt relief promises advanced by G8 leaders in Gleneagles is not at all reflective of the status quo because the debt relief package does not include total debt relief and just 18 countries are to date included in the package, while those clamouring for the cancellation of debts say the actual number of countries should be no less than 60. 100% debt relief should include all countries which are heavily indebted, total debt relief for all the countries and debt owed to the international community as a whole and not just to the four International Finance Institutes that are part of the HIPC Initiative.  

The international community must take full responsibility for the cumbersome nature of the international financial system as we all rise up on October 17 to say “we stand up against poverty” and the time to act is long overdue.

References

• EURODAD, “Debt Overview,”  www.eurodad.org/debt/?d=110
• EURODAD, “Week of Global Action Against Debt and IFIs 2007-10-05” www.eurodad.org/debt/article.aspx?id=1148&item=01702
• EURODAD, “Multilateral Debt,” www.eurodad.org/debt/?id+112

• EURODAD, “Illegitimate Debt,”  www.eurodad.org/debt/?id=14

• Patrick Bond, “A Review of Progression and Regression in Debt, Aid, Trade Relations, Global Governance and the MDGs,” AFRODAD Occasional Papers, Issue No 3 February 2006, p.4.