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Privatisation as a condition for "Debt Relief"
By
George Monbiot
14 Jun 2005
A truckload of nonsense. The G8 plan to save Africa comes with conditions that
make it little more than an extortion racket
George Monbiot, June 14, 2005, The Guardian
http://www.guardian.co.uk/Columnists/Column/0,5673,1505927,00.html
An aura of sanctity is descending upon the world's most powerful men. On
Saturday the finance ministers from seven of the G8 nations (Russia was not
invited) promised to cancel the debts the poorest countries owe to the World
Bank and the International Monetary Fund. The hand that holds the sword has been
stayed by angels: angels with guitars rather than harps. Who, apart from the
leader writers of the Daily Telegraph, could deny that debt relief is a good
thing? Never mind that much of this debt - money lent by the World Bank and IMF
to corrupt dictators - should never have been pursued in the first place. Never
mind that, in terms of looted resources, stolen labour and now the damage caused
by climate change, the rich owe the poor far more than the poor owe the rich.
Some of the poorest countries have been paying more for debt than for health or
education. Whatever the origins of the problem, that is obscene.
You are waiting for me to say but, and I will not disappoint you. The but comes
in paragraph 2 of the finance ministers' statement. To qualify for debt relief,
developing countries must "tackle corruption, boost private-sector development"
and eliminate "impediments to private investment, both domestic and foreign".
These are called conditionalities. Conditionalities are the policies governments
must follow before they receive aid and loans and debt relief. At first sight
they look like a good idea. Corruption cripples poor nations, especially in
Africa. The money which could have given everyone a reasonable standard of
living has instead made a handful unbelievably rich. The powerful nations are
justified in seeking to discourage it.
That's the theory. In truth, corruption has seldom been a barrier to foreign aid
and loans: look at the money we have given, directly and through the World Bank
and IMF, to Mobutu, Suharto, Marcos, Moi and every other premier-league crook.
Robert Mugabe, the west's demon king, has deservedly been frozen out by the rich
nations. But he has caused less suffering and is responsible for less corruption
than Rwanda's Paul Kagame or Uganda's Yoweri Museveni, both of whom are
repeatedly cited by the G8 countries as practitioners of "good governance".
Their armies, as the UN has shown, are largely responsible for the meltdown in
the eastern Democratic Republic of Congo (DRC), which has so far claimed 4
million lives, and have walked off with billions of dollars' worth of natural
resources. Yet Britain, which is hosting the G8 summit, remains their main
bilateral funder. It has so far refused to make their withdrawal from the DRC a
conditionality for foreign aid.
The difference, of course, is that Mugabe has not confined his attacks to black
people; he has also dispossessed white farmers and confiscated foreign assets.
Kagame, on the other hand, has eagerly supplied us with the materials we need
for our mobile phones and computers: materials that his troops have stolen from
the DRC. "Corrupt" is often used by our governments and newspapers to mean
regimes that won't do what they're told. Genuine corruption, on the other hand,
is tolerated and even encouraged. Twenty-five countries have so far ratified the
UN convention against corruption, but none is a member of the G8. Why? Because
our own corporations do very nicely out of it. In the UK companies can legally
bribe the governments of Africa if they operate through our (profoundly corrupt)
tax haven of Jersey. Lord Falconer, the minister responsible for sorting this
out, refuses to act. When you see the list of the island's clients, many of
which sit in the FTSE 100 index, you begin to understand.
The idea, swallowed by most commentators, that the conditions our governments
impose help to prevent corruption is laughable. To qualify for World Bank
funding, our model client Uganda was forced to privatise most of its state-owned
companies before it had any means of regulating their sale. A sell-off that
should have raised $500m for the Ugandan exchequer instead raised $2m. The rest
was nicked by government officials. Unchastened, the World Bank insisted that -
to qualify for the debt-relief programme the G8 has now extended - the Ugandan
government sell off its water supplies, agricultural services and commercial
bank, again with minimal regulation. And here we meet the real problem with the
G8's conditionalities. They do not stop at pretending to prevent corruption, but
intrude into every aspect of sovereign government. 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.
Let's stick for a moment with Uganda. In the late 80s, the IMF and World Bank
forced it to impose "user fees" for basic healthcare and primary education. The
purpose appears to have been to create new markets for private capital. School
attendance, especially for girls, collapsed. So did health services,
particularly for the rural poor. To stave off a possible revolution, Museveni
reinstated free primary education in 1997 and free basic healthcare in 2001.
Enrolment in primary school leapt from 2.5 million to 6 million, and the number
of outpatients almost doubled. The World Bank and the IMF -which the G8 nations
control - were furious. At the donors' meeting in April 2001, the head of the
bank's delegation made it clear that, as a result of the change in policy, he
now saw the health ministry as a "bad investment".
There is an obvious conflict of interest in this relationship. The G8
governments claim they want to help poor countries develop and compete
successfully. But they have a powerful commercial incentive to ensure that they
compete unsuccessfully, and that our companies can grab their public services
and obtain their commodities at rock-bottom prices. The conditionalities we
impose on the poor nations keep them on a short leash. That's not the only
conflict. The G8 finance ministers' statement insists that the World Bank and
IMF will monitor the indebted countries' progress, and decide whether they are
fit to be relieved of their burden. The World Bank and IMF, of course, are the
agencies which have the most to lose from this redemption. They have a vested
interest in ensuring that debt relief takes place as slowly as possible.
Attaching conditions like these to aid is bad enough. It amounts to saying: "We
will give you a trickle of money if you give us the crown jewels." Attaching
them to debt relief is in a different moral league: "We will stop punching you
in the face if you give us the crown jewels." The G8's plan for saving Africa is
little better than an extortion racket. Do you still believe our newly
sanctified leaders have earned their haloes? If so, you have swallowed a
truckload of nonsense. Yes, they should cancel the debt. But they should cancel
it unconditionally.
________
The above article came
from Peter Myers' newsletter -
Date: Tue, 14 Jun 2005 05:13:49 +0100
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