[stop-imf] S.Booker: To Help Africa Battle AIDS, Write Off Its Debt

[Robert Weissman]

To Help Africa Battle AIDS, Write Off Its Debt

By SALIH BOOKER
Salih Booker is the executive director of Africa Action.

Los Angeles times
May 20 2002


When U.S. Treasury Secretary Paul H. O'Neill travels to Africa this
week, he 
will see the consequences of Africa's debt bondage. O'Neill will spend
10 days in
Ghana, South Africa, Uganda and Ethiopia, accompanied by Irish rock star
Bono for
part of the trip. According to a Treasury press release, O'Neill is
"ready to
listen to those on the front lines" in the struggle against poverty.
What he should
hear is an emphatic call to cancel Africa's debt.

Last fall, O'Neill spoke to African finance officials in Washington and 
downplayed the continent's debt crisis. But on this trip, as he comes
face to face
with African realities, he will see that Africa's external debt is a crippling
barrier to action against AIDS or progress against poverty on any front.

African governments are forced to spend more money servicing their
foreign 
debts than they are able to spend on the health or education of their people.
Though African leaders have agreed to spend at least 15% of their
budgets on
health, meeting this target is impossible while they are forced to pay
nearly $15
billion a year to foreign creditors. What is at issue is the backlog of
old debts
that rich-country creditors insist on collecting, even though these
debts were
largely illegitimate to begin with. Many loans were given for strategic purposes,
to prop up repressive and corrupt regimes in the context of the Cold
War. During
the 1970s, when Western banks were flush with oil money, loans were
pushed on
African governments with little thought to their purpose or to their recipients'
capacity to repay.

African governments are being held liable for the cost of failed and
often 
grandiose development projects pushed by creditors. Now Africa's people
are 
expected to repay huge debts that were largely incurred before their
time and that
did not benefit them. For example, South Africa is still paying debt
over apartheid
measures. South Africa's white minority regime accumulated more than
$18billion in
foreign debt in the 15 years before apartheid fell. South Africa's neighbors
incurred more than $26billion in debt during this same period, much of
it a result
of Pretoria's regional war. Today, victims of apartheid are forced to
pay the costs
of their own previous repression. Interest payments on these kinds of
loans are
still sucking resources out of Africa, even though the principal on the
debt has
already been repaid.

The current framework for debt relief--designed by creditors and called
the 
Heavily Indebted Poor Countries initiative--has failed. Even studies
from the World
Bank, one of the HIPC authors, reveal that this plan will not provide an
end to
Africa's debt crisis.

O'Neill's third stop, Uganda, is often touted as a HIPC success story,
having used
debt relief for poverty-reduction programs. But because the price of
coffee--Uganda's principal export--has dropped by 60% in the past two
years, the
country's debt payments have gone back through the roof.

Critics have long said that HIPC projections were based on wildly 
over-optimistic estimates of future export earnings. In guarded
language, the World
Bank now admits that the critics were right. Export growth for 2001 for HIPC
countries was less than half of what the World Bank had predicted.

Instead of tinkering with a failed debt relief framework, it is time to
write off
the debt overhang. Details should be worked out not by the creditor
cartel but by
independent debt arbitration, as proposed almost two years ago by U.N.
Secretary-General Kofi Annan. This process must also include large debt-burdened
countries such as South Africa and Nigeria, which are excluded from the HIPC
initiative.

The failure to resolve Africa's debt crisis means thousands more lives
lost 
needlessly every day to AIDS and poverty conditions.

The United States has the power to change this at little cost. Most of Africa's
debt is owed to the World Bank and the International Monetary Fund, in
which the
U.S. is the dominant shareholder.

After looking into the eyes of Africa, O'Neill should not be able to
look away. He
should understand precisely how wrong he was to have discounted the devastating
impact of Africa's debt burden. His first order of business upon his
return to
Washington should be to use U.S. influence to cancel Africa's debt.