- The Washington Times - Wednesday, September 14, 2005

Despite the high-profile push for African aid that dominated July’s Live 8 rock concerts and the Group of Eight summit of wealthy nations in Scotland, the world’s poorest continent remains mired in debt.

The question — said Salih Booker, executive director of Africa Action, a Washington-based advocacy group — is: “Who owes whom?”

Mr. Booker is at one end of a sharp debate over how to deal with a massive debt load that cripples Africa’s ability to liberate itself from extreme poverty, illiteracy and the scourge of HIV/AIDS.

“Our repeated calls to cancel Africa’s debt fell on deaf ears, although we are asking for justice, not charity,” Mr. Booker said.

The issue got rare high-level attention at the G-8 summit, when leaders of key industrial nations promised to write off $40 billion amid a global set of rock concerts seeking to eliminate Africa’s debt entirely.

But the Bush administration warned that the plan to cancel $40 billion of debt owed by poor countries could come unglued if attempts are made to significantly change it.

The debate is likely to figure prominently at the annual meetings Sept. 24 and 25 of the 184-nation World Bank and International Monetary Fund (IMF).

The G-8 agreement would initially cancel debt repayments that 18 poor countries owe to the two international lenders. At the end of last year, the world’s poorest countries owed a combined $144 billion to multilateral lenders, such as the World Bank and IMF, to other countries and to private banks.

Corruption festers

Governance is the problem, not debt, said Roger Bate, a resident fellow with the American Enterprise Institute (AEI).

He pointed to the period between 1989 and 2002, when 38 of the world’s poorest nations, most in Africa, received $40 billion in debt forgiveness. In the same period, the same countries took on $93 billion in new debt.

Nor will an increase in foreign aid from wealthy nations do much to ease African poverty, he argued.

“For example, Angola has a wealth of oil and a corrupt regime, and most of its foreign aid is being stolen,” Mr. Bate said.

William Easterly, a development economist who spent years at the World Bank, has tallied nearly $600 billion — adjusted for inflation — dispensed in foreign aid to Africa between 1960 and 2003.

Still, Africa’s per-capita income has declined 13 percent since the 1980s, and the number of Africans living in “extreme poverty,” which is defined as having less than $1 per day, has doubled, Mr. Easterly said.

President Bush has promised to increase U.S. aid, but only to those African countries that meet standards of good governance, pro-market policies and anti-corruption measures.

“Partnership means that we have obligations, and so do the people we’re trying to help,” Mr. Bush told the Times newspaper of London June 28.

Mr. Booker of Africa Action said, “Corruption needs two partners to exist.

“The United States during the [Cold War era] supported repressive African regimes and provided money to its allied leaders who used the money for their own personal gain,” he said.

Mr. Booker cited U.S. collaboration with the Congolese army in the 1960 ouster of elected Prime Minister Patrice Lumumba, leading to the dictatorial rule of Mobutu Sese Seko for more than three decades.

Mobutu, who changed the name of the country to Zaire, was reported to have accumulated $4 billion in private Swiss banks accounts before he died in 1997.

Agenda setting

Debt-relief advocates say the dependence of African countries on loans from the World Bank and the IMF has given those institutions leverage to impose pro-market economic policies, undermining the role of the state and expanding private development at the expense of public health and education spending.

Mr. Booker said the World Bank president and the IMF director — customarily an American and a European, respectively — do not reflect the interests of African debtor countries, an arrangement he called “global apartheid.”

World Bank and IMF loans come with heavy conditions and are “designed to benefit the interest of the wealthy countries,” he contends.

“For instance, the policy to privatize local resources like water and electricity has led African countries to lose their sovereignty,” Mr. Booker said. “In order to get money, they have to do what the World Bank tells them.”

John Page, chief economist with the World Bank’s Africa Region section, defended the record of multilateral lenders in the face of an extremely difficult problem.

“We are here to help, not to lead. However, we can’t write a blank check and hand it to African countries,” he said.

“We would be irresponsible if we didn’t put our views and policies on the table for economic development in Africa. However, we are very careful in being respectful to the wishes of national governments and finding that balance between their views and our views.”

The World Bank and IMF in 1996 began a debt-relief program for “heavily indebted poor countries” — the HIPC Initiative — to formulate joint agreements between international lenders and low-income debtor countries.

To date, 27 countries have received major debt relief under the HIPC Initiative, but activists say the program has not done nearly enough. Even U.N. Secretary-General Kofi Annan publicly questioned in 2003 whether the program was too heavily tilted toward the interests of lenders to bring real debt relief.

Mr. Page defended the record of the HIPC Initiative, saying a number of African countries are among those who have improved their debt standing under the program.

“We have seen a definite shift in those countries toward improving their health and education conditions,” he said.

Mr. Bate of the AEI rejected the claim by debt-relief activists that IMF and World Bank loans are intended to keep Africa down.

“I don’t agree with the claim that the policies of bilateral and multilateral institutions are aimed to fail Africa. The loans have been given in good faith, but those institutions weren’t careful in monitoring the loans,” he said.

Similarly disappointing loans have been made in other underdeveloped regions, such as Latin America, he added.

African countries spend almost $15 billion each year repaying debts to international creditors. Africa Action supports a complete cancellation of that debt, which Mr. Booker called the single biggest obstacle to the continent’s development and to the fight against HIV/AIDS.

Mr. Bate of AEI said it is vital that future loans be made through a “programmatic approach” rather than a “sympathetic one.” He said the United States has been very open about the conditions that should be met for an increased aid flow to Africa, including democratic reforms and individual rights.

Dialogue needed

He criticized the G-8 summit in Gleneagles, Scotland, for failing to make real progress on reducing agricultural subsidies in the developed countries — which leave African farmers unable to compete.

But he said the G-8 leaders had done a good job in writing off unpayable debts and linking future aid to democratic reforms.

“British Prime Minister Tony Blairand his colleagues can be very pleased with the outcomes of the G-8 summit in terms of debt relief and aid to Africa. However, with regard to market access and trade reforms, the summit was a disappointment. More forceful recommendations should have been made,” Mr. Page said.

Mr. Page said the World Bank is considering providing funds to African countries that demonstrate good governance, accountability and transparency.

“However, the critical point remains: What should we do with the people who are less fortunate and have bad governance? This a dialogue we have to continue to have with different partners so vulnerable populations in Africa won’t be deprived of social and economic growth.”

Mr. Booker called the United States inconsistent when it pressed international creditors to write off Iraq’s $120 billion in loans after it led the military campaign to oust dictator Saddam Hussein in 2003. Administration officials said the Iraqi people and the new government should not be obliged to repay loans that were never used for their benefit.

“There is a double standard here as the U.S. is working hard for Iraq, but failed to do so to Africans. The victims of repression are being forced to pay back the bankers who financed their repression,” Mr. Booker said.

Mr. Bate agreed that some African debt should be written off, but said much of the debt burden is the result of misguided Marxist and socialist policies by numerous governments, not theft by dictators.

“Africa is a continent that is no different from any other part of the world. It has the resources and means to flourish,” he said.

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