first step in a long journey


The LIVE 8 concert and Make Poverty History campaign have succeeded in pushing for the cancellation of debt in eighteen African countries, and got us looking beyond the latest Domayne and Harvey Norman catalogues to important issues of equity and justice for the majority world. Currently, indebted governments spend billions on loan repayments for projects that often failed if they happened at all. This money is desperately needed for areas such as health and education, and canceling debts will free up this cash. Only the most cynical would not support such a campaign.

Thanks to Leahy at the Courier-mail

Thanks to Leahy at the Courier-mail

Debt cancellation by the G8 countries is clear recognition that their development policies have failed to address the key issue of poverty alleviation, which continues to blight the majority of the world’s people. However, a closer examination of the G8 deal reveals a worrying ‘business as usual’ approach on behalf of donor nations. There is still a great distance to go before there is a level playing field for the world’s poorest countries.

There are four main areas of the debt relief deal that need to be adequately addressed before it will have any significant impact.

First is the issue of ‘conditionalities’, which is the term given to conditional clauses in development agreements, among them the popular catch-cry of ‘good governance’. While conditionalities are typically promoted as necessary to combat corruption, in fact they are very often geared toward benefiting donor countries’ economies. British activist and commentator George Monbiot writes: ‘When the finance ministers say ‘good governance’ and ‘eliminating impediments to private investment’, what they mean is commercialisation, privatisation and the liberalisation of trade and capital flows. And what this means is new opportunities for Western money.’ Such conditions are neatly contained within the G8 statement and need thorough examination before they can be supported.

Secondly, the debt cancellation deal leaves out the majority of indebted countries. The deal will be offered to just eighteen African countries – those that have complied with the World Bank’s aforementioned conditions. This list may increase by a further nine countries, also mostly in Africa.

Over sixty countries throughout the world continue to suffer crippling debt repayments. Indonesia, for example, has a foreign debt of $US131 billion. Although there is a freeze on repayments at the moment due to the tragic impacts of the tsunami, eventually this sovereign debt will need to be repaid. In fact, due to the concessional loans offered by the World Bank, the Asian Development Bank, and Australia, this debt will actually be greater when the repayments do begin in 2015. Indonesia, like the majority of countries that suffer overwhelming debt, will not benefit from the G8 deal.

Thirdly, although there is much talk about the need for ‘good governance’ on behalf of the eighteen nations benefiting form the deal, there has been little focus by the G8 on the role that they have played in causing the present situation. The institutions from which the debt is being cancelled are groups such as the World Bank, the International Monetary Fund and the African Development Bank. These organisations are run on a shareholder basis: the amount of money you invest is the amount of control you have. The rich nations, embodied in the G8, are the ones with a controlling interest in how all of these institutions conduct their affairs, as they are the main contributors (and their companies the main beneficiaries). Many in the majority world believe that the lenders are culpable for these debts, not the recipients.

To return to Indonesia as an example: the World Bank has admitted it continued to give money to the Suharto dictatorship when it was aware of enormous problems of corruption, repression and a collapsing financial system. Over a thirty year period the World Bank, largely controlled by the US and other G8 nations, gave over $24 billion to the Suharto regime, and these loans continue to accrue interest as part of Indonesia’s sovereign debt. There are many other such examples of the so-called ‘development banks’ being free and easy with their credit – particularly when it suited the governing members’ own strategic interests. Alarmingly, there is no talk of governance reform at these institutions. Surely some of the responsibility needs to be shouldered by the lender and not just the borrower? Apparently not, as these international lenders, to which you and I contribute through our taxes, continue to operate on a ‘business as usual’ basis.

The final point was well summed up by Ghanian debt campaigner Kofi Malawi Klu when he said ‘nothing about us without us’. While Bono and Bob have been the public face of the campaign, there has hardly been an African in sight – except of course for the young Ethiopian woman’s quaint little trot with Madonna. Visit any donor, NGO or multilateral development bank and they will fall over themselves explaining to you how they work closely with local communities and involve them in every step of the decision making and implementation process. They make this claim because (despite how real this involvement may be) it is widely understood in the development world that projects only work when there is community ownership. There doesn’t seem to have been much ownership of this recent campaign by anyone who is likely to be affected by it. Such inappropriate footings raise real concern about the sustainability of the campaign.

Make Poverty History has refocused the international eye on the tyranny of debt and inequity. While there are problems with the initial outcome, it must be remembered that this step is the first in what will be an ongoing journey leading up to the Millennium Development Goals in 2015. If the popstar-led movement can involve, at its core, those who are directly affected by these issues, and bring their voices to the table, there is hope of considerable success.

If we can sustain this momentum, but include with it increased and more effective aid in combination with a fairer trading system, there is enormous potential for the majority world to be able to shake off the cloak of oppression. For as Nelson Mandela recently said: ‘this is not an issue of charity, this is an issue of justice.’

Launched in 2004, New Matilda is one of Australia's oldest online independent publications. It's focus is on investigative journalism and analysis, with occasional smart arsery thrown in for reasons of sanity. New Matilda is owned and edited by Walkley Award and Human Rights Award winning journalist Chris Graham.