19 May 1998
The Big Debt Relief Scam
John Pender from Africa Direct was at the Jubilee 2000 jamboree in Birmingham
Up to 70,000 people converged on Birmingham, England last weekend to form a
human chain around the city centre on the occasion of the G8 meeting to
demand international action against third world debt. The protest, probably
the biggest ever UK demonstration on this issue, was organised by Jubilee
2000 - an umbrella organisation of church groups and aid agencies,
including Christian Aid, CAFOD, Tearfund, the World Development Movement
and Oxfam. Its campaign has won influential support from the Guardian
newspaper and the all-party Commons International Development Committee.
After years of campaigning for debt relief, the momentum now seems
unstoppable. Yet this momentum has not been generated by debt relief
campaigners, and the particular form of debt relief being called for is
making matters for people in the world's poorest countries far worse.
'Cancel the debt!,' read the placards. But the real message was 'Cancel the
unpayable debt if our conditions are met!'. Bill Peters, former British
high commissioner to Malawi and co-founder of Jubilee 2000, speaking at the
day's Cancelling the Debt debate called for a "comprehensive cancellation
of unpayable debt [decided] on a case by case basis". What does this mean?
Jubilee 2000's charter calls for an "unrepeatable one-off remission of
unpayable debts," conditional upon a country's record on "economic
management, social policies and human rights record", and "upon governments
utilising the financial resources that become available, for investment in
basic human needs."
The momentum for action on 'unpayable' debt was in fact initiated by
directors of the World Bank and the International Monetary Fund (IMF) in
the early 1990s. Their concern was the problem of 'unsustainable debt'.
Such was the burden of debt on the world's poorest countries that there was
a rapid growth in defaults in scheduled debt repayments. Simply unable to
pay, governments were forced to reschedule debt on over 8,000 occasions
between 1984 and 1992. The World Bank and the IMF recognised that a new
mechanism had to be found if the credibility of the whole third world debt
repayments system was to be preserved. The specific problem was therefore
that element of debt which would never be paid off, the 'unpayable' debt.
The resulting mechanism formulated by the World Bank and IMF is called the
Heavily Indebted Poor Countries initiative (HIPC). Rather than write off
the debt, the World Bank/IMF HIPC plan involves firstly working out what it
believes a country can afford to pay and then holding it to those payments.
By creating a trust fund it pays off the unpayable element of debt as it
falls due in return for a country's compliance with comprehensive World
Bank/IMF economic policy prescriptions.
Debt relief is therefore conditional on protracted and ongoing compliance
with World Bank/IMF policy prescriptions, which have since the early
eighties themselves resulted in the build up of massive debt arrears.
Oxfam have celebrated and trumpeted the experience of Uganda, the first
country to benefit from the HIPC initiative. Yet Eurodad, an aid agency
think tank, believes that Uganda will, as a consequence of the loss of
other aid from the World Bank, "be in exactly the same financial position"
as before the initiative. It also states that "Uganda will remain heavily
dependent on external financing for human development." The country's
Universal Primary Education initiative was funded predominantly by a USD75m
World Bank grant in 1997 and will therefore be heavily influenced by the
World Banks insidious educational priorities. Far from releasing funds for
the government's own priorities, it has given external powers more
influence at a deeper level in Ugandan society. Uganda is flavour of the
month in Washington and London for the degree of its acquiescence to
Western policy priorities, including its role as a key player in the
invasions of Rwanda and former Zaire, now engaged in backing rebels in
southern Sudan against their government. The benefits of the HIPC
initiative pale in comparison with the human effects of the requirement of
compliance with the West's agenda.
Jubilee 2000 are making the situation worse by redefining the debt issue
into one of 'unpayable debt'. Bill Peters said that one the unpayable debt
issue had been resolved, the debt question would be a "done deed". In fact
the problem is all the debt - payable and unpayable - owed by these
countries, because it is the political leverage of the creditors that is
very much at the heart of the problem. Where HIPC is implemented it will
signify a country's utter subservience to western policy prescriptions,
utterly disempowering the people of those countries from any control over
What has given contemporary momentum to the debt relief initiative in
Britain is the way that it has become one of the themes around which
Britain is attempting to carve out a role for itself as a moral force in
international politics, and to give a positive new identity to what it
means to be British. Indeed third world debt relief is now up as a
candidate to be 'the big idea', the central theme of the Millennium Domeproject. Tony Blair, Robin Cook and Clare Short have all been emphasising
how Britain has been at the forefront of promoting the HIPC initiative,
criticising other countries lack of commitment to the plan and to the
Jubilee 2000 has very much become a non-governmental form of popularising
this new British foreign policy and lending legitimacy to Britain's
civilising mission. While praising Britain's record on the HIPC, Oxfam is
taking Germany, Japan and Italy to the United Nations alleging that their
failure to back the HIPC is in contravention of their commitment to the UN
convention on the rights of the child. Anybody who is serious about
defending the world's poor, will oppose the HIPC, and certainly reject the
idea that Britain can ever be a moral force for good in the third world.
Africa Direct can be contacted at email@example.com or by
telephone: +44 (0) 973 326302
Join a discussion on this commentary