The size of relief
John Pender wonders whether the World Bank has really become a friend of the poor
'Smash the chains' wrote an impassioned UK chancellor Gordon Brown in December, as he introduced his debt relief proposals. His cry echoed the 'Break the chains' slogan of third world debt campaign Jubilee 2000, and was heralded by headlines proclaiming 'Britain ends third world debt'.
But the debt relief proposals on offer do not end third world debt. An outright cancellation of the debt of the poorest countries in the world would make a massive difference. Debt repayments are a significant drain on scarce resources. The stringent demands of the World Bank and the International Monetary Fund (IMF) have, for the past 20 years, distorted the development of the poorest societies towards generating income to repay debt, rather than concentrating on developing the industry and infrastructure that could generate self-reliance through economic growth and social development.
Unfortunately, neither Gordon Brown nor Jubilee 2000 is suggesting that this debt should be cancelled outright. Rather, they concur that the debt of some of the poorest countries in the world, like Uganda and Bolivia, should be reduced to a level that these countries can afford - a 'sustainable' debt level. The bulk of the debt to be relieved is that which could not be repaid anyway. No significant extra resources will be generated. Given the destitution which these countries find themselves in, this seems like an extraordinarily uncharitable suggestion.
Western leaders are not so concerned with providing extra resources as they are with directing how the poorest countries should use their limited resources. Here, the message of Jubilee 2000 - that the benefits of debt relief must be channelled to benefit the poorest sections of society - fits well with Western leaders' interests.
The new priorities of 'poverty reduction' are the talk of the policy offices of the World Bank, the IMF, Western governments and aid agencies. James Wolfensohn, president of the World Bank, has courted Jubilee 2000 members, and Michel Camdessus, the managing director of the IMF, has undertaken an almost evangelical conversion to the values of poverty reduction. Once the bane of third world activists, he has now started handing cards to his visitors imploring them to do their bit to combat global poverty. Out have gone structural adjustment programmes, and in has come the poverty reduction and growth facility. Even Oxfam acknowledges the shift in the values of the World Bank and the IMF: 'poverty reduction is intended to be the "front and centre" of all IMF/World Bank operations, including macroeconomic policies.' Western institutions have been at the forefront of supporting the Ugandan 'Poverty Action Fund', part of which aims to ensure that all children in Uganda receive primary education. As a consequence of the programme, enrolment in primary schools has risen from 2.9 million in January 1997 to 6.5 million in May 1999.
For those concerned about the extent of world poverty, this emphasis on 'the poorest of the poor' appears to be a positive step forward. But the price paid by the countries on the receiving end is high. To gain relief from debt, they are forced to accept increasing intervention into their affairs by Western governments and international bodies. Gordon Brown and Clare Short are clear that even partial debt relief should only be granted to those poor countries which start to reorganise their societies around the priority of 'poverty reduction'. By maintaining a 'sustainable' level of debt the richer industrialised countries will continue to enjoy powerful leverage over the policy priorities of the poorest countries. Ann Pettifor, director of Jubilee 2000 UK, argues that countries not prioritising the poorest should be penalised by having their aid and new loans suspended.
The grand gesture of writing off debt that will never be repaid has allowed Western governments to get away with a staggering level of interference into the affairs of the poorest countries, with the blessing of radical campaigns like Jubilee 2000. No wonder there has recently been an unsavoury scramble by Western leaders to one-up each other with debt relief announcements. Announcing debt relief for countries which prioritised poverty reduction, US president Bill Clinton wrote in November that, 'It is this great nation's moral imperative to extend the circle of prosperity and opportunity to those in need'. Announcing similar UK debt relief a month later, Gordon Brown told a packed congregation in St Paul's Cathedral: 'We...dare to believe that all people should have food every day....We dare to believe that all children everywhere in the world have the right to education.' The Sermon on the Mount is certainly seductive, and who could disagree with an ideal of poverty reduction? But this language hides a more grim reality.
Western leaders' interference in the poorest countries could almost be forgiven if the measures they proposed were likely to improve the lives of people in the third world. But the spirit of restraint behind these charitable words is both revealing and chilling. In evidence to the parliamentary select committee on international development, secretary of state for international development Clare Short argued that for a poor country to spend money on a hospital building programme or university education is effectively 'unproductive' because it favoured 'elites' and would detract from her priority - providing poor people in rural areas with basic education and basic healthcare. It is clear that behind the optimistic-sounding concept of poverty reduction lies a substantially lowered ambition for poor countries.
By shifting the emphasis of policy towards prioritising the poor, Western policy goals have been reversed from growth to restraint. The World Bank and the IMF, which have effectively dictated economic policy to most of the world's poorest countries for the past 20 years, are fast abandoning their emphasis on poor countries developing rapidly into middle-income countries. The government of any poor country which aspires to growth will be curtailed by the Western insistence on prioritising the poorest. This new mood will effectively abandon the poorest countries to mere survival.
It will not just be the poorest who suffer from this lowering of horizons. It has already been suggested that even middle-income countries like India and Brazil should be compelled to prioritise the poorest. How long before British economic policy is formulated around the central objective of providing the homeless with a basic education, a modest home and a kennel for the dog?
Reproduced from LM issue 127, February 2000