Norm Dixon: ‘Africa Needs Justice Not Charity’

Casual readers of the newspaper headlines could be forgiven for believing that the leaders of the richest and most powerful countries have had a miraculous change of heart. If the papers are to be believed, the key decades-long demand of the global justice movement — debt cancellation — had been agreed to, thanks to an unlikely alliance between Tony Blair’s British Labour government, leading aid agencies and pop “legends” Bob Geldof and Bono. However, the devil is in the details, as Green Left Weekly’s Norm Dixon discovers.

“$55-billion debts write-off agreed”, declared the June 11 British Guardian. “Debtor nations freed of burdens”, the Los Angeles Times announced on June 12. “Victory for Millions”, trumpeted the June 12 British Observer. “Blair, Bono Win One for Africa”, cooed the June 13 Christian Science Monitor. “Debt deal just the beginning, says Geldof”, assured the June 13 Sydney Morning Herald.

The hype was in response to a June 11 agreement by seven finance ministers from the Group of Eight industrialised countries (G8 — United States, Japan, Italy, Canada, Britain, France, Germany and Russia). The ministers agreed to immediately cancel all the debts owed by 18 mainly African countries to the International Monetary Fund (IMF), the World Bank and the African Development Bank (AfrDB). According to the British government, this amounts to US$40 billion. In practical terms, it should save these countries $15 billion in debt payments, spread over 10 years.

The deal must be approved by the G8 leaders’ summit being held in Gleneagles, Scotland, on July 6-8.

The June 12 LA Times lavishly claimed the deal “fulfilled a decades-old dream of anti-poverty activists”, reporting that US Treasury Secretary John Snow had hailed the arrangement as “an achievement of historic proportions”. The June 13 Christian Science Monitor’s article began: “It’s been a long campaign of persistent persuasion by British Prime Minister Tony Blair and Irish rock star Bono. But finally ... they won a victory for the world’s poorest continent.”

Most newspapers quoted a gushing Geldof: “Tomorrow 280 million people will wake up for the first time in their lives without owing you or me a penny from the burden of debt that has crippled them and their countries for so long. Money we didn’t even know we were owed, and never wanted in the first place, and money they could never pay.”

Also widely reported was Brown’s grandiloquent description of what had been achieved: “It is the intention of world leaders to forge a new and better relationship — a new deal — between the rich and poor countries of the world and I believe that the advances that we have made can be built upon ... This is not as time for timidity, but a time for boldness, and not a time for settling for second best, but aiming high.”

Stirring words indeed, but tragically the hype does not match the reality.

The huge figures most often quoted by the press, $50-55 billion, include IMF, World Bank and AfrDB debts owed by around 20 of the other poorest Third World countries, which may become eligible for debt cancellation in the future; possibly nine more in 12-18 months, and another 10 or so at some undetermined date.

While the $1.5 billion a year made available will certainly be of use for the 18 poverty-stricken countries, it will only boost their collective budget by about 6.5% per annum. The modest sum illustrates that the Western media’s backslapping over their governments’ “generosity” is more than a little exaggerated and somewhat premature. Those 18 countries account for only 5% of the population of the Third World, and if all 38 countries become eligible in the future, it will still only affect around 11%.

Britain’s annual contribution to the debt write-off will amount to between $70 million and $96 million, which is much less than the Blair government spends on its occupation of Iraq each year, and just a shade more than the $67.1 million it forks out each year in payments to maintain Queen Betty Windsor and her dysfunctional family.

Washington will need only find between $130 million and $175 million a year, which is almost three times less than it spends each year just to run its Baghdad embassy. The total 10-year cost for the US is around what Washington will spend to build a new embassy in the Iraqi capital. Washington alone spends $2 billion a month to wage war in Iraq.

If those figures call into question the “historic” scale of the West’s benevolence towards Africa and the Third World, compare them to the US annual “defence” budget, which will be more than $441 billion in 2006 alone. Or to the G8's spending $350 billion year on subsidies to its agribusinesses, which allows the of flooding Third World markets with cheap produce that has devastated local producers. Or compare it to Britain’s income from arms sales to Africa, which topped £1 billion (US$1.8 billion) in 2004. Or to US President George Bush’s cutting taxes for the richest Americans by $200 billion a year.

It should be also noted that debts owed to the Inter-American Development Bank and the Asian Development Bank are not included in the deal, nor are the Third World countries’ huge bilateral debt burden (that is, debt owed to individual rich countries).

Even if all 38 nominated countries eventually have their multilateral debts wiped, it will still represent just 18% of Africa’s total external debt of $300 billion, and a tiny part of the Third World’s total debt, which is estimated at a staggering $2.4 trillion!

Pain outweighs benefits

But surely, it’s a step forward? Not according to African anti-debt campaigners. African Jubilee South (AJS) pointed out on June 14 that to qualify for the G8 scheme, the initial 18 countries have had to pass what is known as the Highly Indebted Poor Country initiative’s “completion point”.

The 1996 HIPC was the rich-country governments’ last much-hyped, now largely forgotten, “debt forgiveness” scheme. The 1999 G8 summit in Cologne promised that it would lead to the cancellation of $100 billion in bilateral debt. Just a quarter of that was actually delivered and the HIPC countries are now poorer than when they began the program.

To reach the HIPC completion point, explains AJS, “involves the implementation of stringent free market reforms such as [health and education] budget cuts, financial and trade liberalisation, privatisation and other reforms” that ensure, as the G8 finance ministers stated explicitly on June 11, “the elimination of impedients to private investment, both domestic and foreign”. “Twenty other countries may qualify”, AJS pointed out, “but only if they are prepared to go through the same pain that the 18 countries have already endured.”

In Tanzania, 45,000 public sector jobs have been lost due to privatisation. In Zambia, the figure is 60,000. To reach the HIPC “completion point” Tanzania and Ghana were both required to privatise their urban water supplies. Mali was forced to agree to privatise its railways and cotton industry. The World Bank insists that Mali’s state cotton company pay producers the “world market price”, which is a big drop in income.

Mali’s railways are now owned by a Canadian-French consortium, which has shed 600 jobs, closed two-thirds of the stations and decimated passenger numbers, sharply curtailing the livelihoods of thousands who relied on the lines as a source of customers and a way to get their products to markets.

The AJS statement declared: “The costs of structural adjustment programs and creditor-imposed conditionality far outweigh the amount of debt to be cancelled. Are we to cheer when these additional promises can go the same route of other G8 pledges, i.e. unfulfilled? Should we applaud when the 18 countries affected represent a tiny fraction of the world’s poor? Are we to praise the [G8] when these debts are not being serviced in any case (because of the countries’ inability to pay), and when they would have been repudiated a long time ago as illegitimate debts if our governments had real political and economic independence. The illegitimacy of the debt resides in that they were incurred by dictatorships of various kinds, were used in consolidating and furthering their undemocratic regimes against the interests of their people and in implementing policies that have put millions of lives at risk.”

The Southern African People’s Solidarity Network on June 17 bluntly stated: “the so-called debt cancellations ... will lead to further accumulation of debts [because] these countries still have to toe the line and respond to demands to open up their economies for more exploitation, capital flight and other related imbalances that come with further liberalisation”.

Aid

While the July G8 summit is almost certain to endorse the debt deal, other proposals floated by the British government, formulated by its Commission for Africa in an attempt to meet a series of United Nations poverty-reduction targets known as the Millennium Development Goals, will be frustrated by opposition from the US, Japan and Canada.

In what Gordon Brown refers to as a “Marshall Plan for Africa”, European Union countries have promised to increase their aid budgets from the present EU average of 0.33% of GDP to 0.56% by 2010 and 0.7% by 2015. If achieved, it would increase annual aid to Africa from $25 billion to $75 billion in 2015.

As big-hearted as this might seem, this has been a UN goal since 1970, yet Western countries today are further away from achieving than ever. It was a key recommendation of former West German Chancellor Willy Brandt’s 1979 North-South Commission.

However, the Bush administration is refusing to boost its aid budget as a proportion of GDP, which is currently a miserable 0.16%. Washington’s annual African aid budget is $3.2 billion, which is about four days’ worth of Pentagon spending. In contrast, Israel alone received $3.7 billion in “aid” from the US in 2003. The European Union spends $10.8 billion a year on Africa.

Third World revolt

Why is the West now attempting to be seen to address African and Third World poverty? In the short term, it is being driven by soon-to-retire Tony Blair’s opportunistic wish to go down in history as something better than George Bush’s “poodle”. Blair’s heir-apparent Gordon Brown also wants to begin his reign with the mantle of a visionary Labour reformer, not a Blairite warmonger.

However, more importantly, Blair, Brown, Bush and the G8 realise that a Third World revolt against neo-liberalism is a distinct possibility and need to act to defuse it. African Jubilee South summed it up when they noted that the imperialist powers need to “give some extra financial breathing space for the affected countries, while ensuring their continued adherence to the dictates of the rich industrialised countries and the plunder by their foreign multinational corporations. Not just through the exploitation of our natural resources but through profit repatriation, declining terms of trade, access to increased financial and tax incentives.”

The resistance is most advanced in Latin America. In Bolivia, one of the countries that will “benefit” from the G8 deal, millions of Bolivians have flooded the streets almost continuously for months, demanding the reversal of the privatisation of their natural gas and oil reserves, which was forced on La Paz a decade ago by the dictates of the IMF. The Bolivian people are demanding that the wealth be utilised to benefit the people. In Venezuela, a revolutionary government has rejected neoliberal austerity, and the people are mobilising to demand the benefits of the country’s oil wealth.

The G8 leaders fear that sentiment could spread to the rest of the Third World, including Africa from which Western corporations continue the plunder of the continent’s massive mineral and oil resources.

The signs are there. In February, Mozambique defied an IMF-imposed cap on government wages spending by hiring a further 5000 teachers. In May, Tanzania repudiated the water privatisation contract with the joint venture led by British company Biwater, after the company failed to deliver services and investments on time. In June, three Biwater executives were unceremoniously deported. Mali has delayed the final privatisation of its cotton industry, against World Bank orders, until 2008.

Kenyan MP Paul Muite, angered that Kenya was not included in the G8 debt relief package despite having abided by all debt obligations, has proposed that Kenya refuse to pay its annual $1.2 billion external debt repayments for five years and “redeploy the money to needy sectors such as education, health and infrastructure... We need to take radical steps to re-energise our economy. One such step is to suspend repayment of foreign loans”, he told the June 12 East African Standard.

‘Justice not charity’

For Africa to escape the nightmare in which it has been plunged by centuries of slavery, colonialism and imperialist exploitation requires a new, just and equal system of international economic relations. Western governments deliberately confuse the symptoms of African poverty with its causes in order to obscure a fundamental feature of the world capitalist system: that the advanced industrialised countries continue to derive much of their great wealth from the extreme exploitation of the vast majority of the world’s population, who reside in the Third World, and the plunder of their natural resources.

As the United Nations Conference on Trade and Development’s 2004 report reveals, “the continent received some $540 billion in loans and paid back some $550 billion in principal and interest between 1970 and 2002. Yet Africa remained with a debt stock of $295 billion”.

African Jubilee South and other Third World anti-debt campaigners propose some fundamental demands, that are “a matter of justice and fairness, not charity”:

The unconditional and immediate cancellation of all African and other Third World countries’ debt.

An immediate increase in Western aid budgets to 0.7% of GDP, to be provided without strings attached.

The abolition of all IMF and World Bank conditionalities, under any guise, and reparations for the costs of structural adjustment programs. It is obvious that economic recovery in Africa is incompatible with these institutions’ conditionalities.

An immediate end to Western pressure to open up Third World markets to subsidised First World goods and produce. African countries want trade agreements that allow them to choose if, when and how to open their markets, and to implement any measures they feel necessary to protect and develop their home industries. Western countries should provide long-term preferential access to their markets for African and Third World goods.

The repatriation of all the wealth stolen from the African people and kept in Western countries in the past, and that resulting from corporate plunder of Africa’s natural and mineral resources today. The restitution of that wealth to its rightful owners, the African people, would send the right signal to all potential looters and help Africa in its recovery.

African leaders and policy makers must abandon destructive neoliberal policies and explore genuine people-centred development, economic and trade policies. Africa needs to reclaim its sovereign right to decide on its priorities and its own path to development.

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