[stop-imf] LA Times: Cancel Iraqi Debt? What About Africa?

[rob@essential.org]

>LA Times: Cancel Iraqi Debt? What About Africa?
>
>With forgiveness plans stalled, advocates say the West puts a low
>priority on the continent's needs.
>
>By Robyn Dixon
>Times Staff Writer
>January 26, 2004
>
>JOHANNESBURG, South Africa =F3 The almost instant success that James A.
>Baker III has had in his international lobbying to have Iraq's debt
>forgiven raises an uncomfortable comparison: how little has been done
>to relieve the African debt that cripples some of the world's poorest
>countries.
>
>Since the mid-1990s, advocacy groups have been pushing for the
>cancellation of the debt that has left African countries starved of
>funds to fight AIDS, address poverty and improve education and health
>systems.
>
>Yet it took Baker, a former head of the State Department and the
>Treasury, just weeks as President Bush's special envoy to win
>promises of debt reduction for oil-rich Iraq.
>
>"It's a huge contradiction," said Neville Gabriel of the Southern
>African Catholic Bishops' Conference, a leading force in the Jubilee
>debt-relief movement.
>
>The amount of debt forgiveness the United States is seeking for Iraq
>has not been announced, but reports suggest the target would be two-
>thirds of its $116-billion obligation.
>
>Baker succeeded in persuading many of the countries that opposed the
>war in Iraq, such as France, Germany, Russia and China, to offer what
>was termed "substantial" relief. In this scenario, those countries
>and Japan would cut Iraq's debt and restructure remaining payments so
>that the country could spend future oil revenue on reconstruction,
>not debt service.
>
>A major difference between Iraq's $116-billion debt and Africa's
>aggregate $300-billion debt is the creditors. Iraq's is owed mainly
>to various countries. Africa's main lenders are the International
>Monetary Fund and the World Bank, which have strongly resisted public
>pressure for debt cancellation, arguing that it would compromise
>their ability to lend to poor countries in the future and collect on
>debts. The United States is the biggest shareholder in both
>institutions.
>
>Activists charge that the contrast between progress on Iraqi debt and
>the paralysis of debt-relief programs for Africa reflects the low
>priority Western nations often accord Africa.
>
>"When we started the global Jubilee movement in 1996, the analysis
>was that debt cancellation happens largely for political reasons,"
>Gabriel said. "That was one of the things we wanted to challenge. We
>should not have debt cancellation for political interests or out of
>shallow charity. We were saying this is a question of justice, not
>charity."
>
>Last year, Bush traveled to five African nations touting his global
>anti-AIDS initiative =F3 a five-year, $15-billion plan to help 14 of
>the hardest-hit nations in Africa and the Caribbean. Yet critics
>complained that the aid program fell far short.
>
>Some groups that push for African debt cancellation worry that once
>the world's economic powers have cut Iraq's debt, Africa will be left
>on the back burner. Others are more optimistic. Salih Booker of the
>U.S. lobbying group Africa Action said it will strengthen Africa
>supporters because the U.S. would not want to look hypocritical.
>"I think the prospects are good to achieve some greater initiatives
>[on African debt] because it's becoming clearer that this is
>unsustainable debt. And also there is a political question: Is the
>U.S. practicing a double standard against the poorest countries in
>the world?"
>
>Russia has indirectly linked Iraqi debt relief with access to
>reconstruction or oil contracts. Many debt-relief activists see that
>as a prime reason for the generous promises of creditors.
>"In the case of Iraq, the U.S. is exerting its influence and pressure
>that these countries swallow the cost and cancel the debt," Booker
>said. "But the U.S. has failed or refused to use its significant
>influence in the World Bank and IMF to reduce African debt."
>African countries had to rely on the IMF and World Bank because of
>other lenders' reluctance to risk funds.
>
>"That doesn't change the fact that it's odious debt and the
>institutions =D6 made loans knowingly to regimes that were
>kleptocracies, such as to Mobutu in Zaire," said Booker, referring to
>the late Mobutu Sese Seko, who seized power in 1965. Now called the
>Democratic Republic of Congo, the nation is carrying debts of $16
>billion.
>
>"It's clear that the Congolese people should not have to use their
>scarce resources to pay back this interest," Booker said.
>Interest payments often trap countries in a debt cycle, with some
>repaying the original borrowings twice over yet still facing steep
>debt servicing costs.
>
>Some analysts, such as prominent economist Jeffrey Sachs of Columbia
>University, have called on African countries to unilaterally redirect
>all debt servicing to the fight against acquired immune deficiency
>syndrome. In September 2000, U.N. Secretary-General Kofi Annan called
>for a moratorium on African countries' debt payments and for an
>independent group to define which debts were legitimate and which
>were not.
>
>But there was resistance from industrialized countries. In 1996,
>facing global pressure, the World Bank and IMF created a debt-relief
>program called the Heavily Indebted Poor Countries Initiative. It
>assessed what poor, primarily African, countries could pay and
>offered reductions to those who followed the institutions'
>directives. But assumptions about the countries' future export
>earnings, on which debt relief calculations were based, were wildly
>optimistic.
>
>The initiative was expanded in 1998, and by 2003 more than $36
>billion in debt had been written off, but that was less than a third
>of the $110 billion promised for the world's 53 poorest countries.
>Meanwhile, aid to those countries fell sharply. Jubilee research
>suggested that aid flows fell from $6.26 billion in 1998 to $4.36
>billion in 2000.
>
>Albert Mwenda, program officer with the Nairobi, Kenya-based
>Institute of Economic Affairs, said canceling Iraq's debt would be
>unlikely to assist Africa's cause.
>
>"If you look at the figures, not only the amount of money they're
>writing off but also the amount of money the U.S. is putting into
>Iraq, it means there will be less and less for Africa."