Time to write off the developing world's debt
In Piccadilly Circus, London, a clock is ticking down the number of days to the new Millennium. It was placed there by the Jubilee 2000 campaign, to draw attention to the need for a substantial remission, or 'forgiveness', of the international debt of the world's poorest nations. Jubilee 2000 calls for this to be achieved by the Millennium.
Debt forgiveness hardly features in Western political debate, yet it affects the lives of more people on the planet than almost any other issue. Over a billion people in the developing countries suffer from the burden of debt repayments to the West, for loans incurred during the heady days of the 1970s when Western banks were awash with petrodollars.
So great is the debt that, today, many African countries pay three times as much in debt remissions to the West as they receive in aid. The net flow of funds is from the South to the North, from the poor to the rich. In the twelve years from 1980 to 1992, developing countries paid off US$1.3 trillion. Yet the total debt of all developing countries is still estimated to stand at over US$1.3 trillion.
Each year India, whose international debt stood at US$94 billion in 1995 (the latest available figure), pays back some US$13 billion, of which US$4.5 billion goes to multilateral organisations such as the World Bank and the International Monetary Fund. India's annual debt repayment is more than a quarter of her entire export earnings.
In Africa, the figures for individual countries may be smaller. But their situation is dire. The debts that some sub-Sahara African countries owe are as great as their entire net earnings. These nations are, in effect, bankrupt. In practical terms this means that schools, houses and hospitals are not built, and the poorest of the world's poor continue to suffer in abject poverty.
The Archbishop of Cape Town, Njongonkulu Ndungane, points out that individuals or businesses can have their debts written off when they go bankrupt. But no such mechanism exists in international law for whole nations. His country, South Africa, labours under a US$70 billion debt burden, incurred by the apartheid regime. Interest repayments alone account for the nation's second highest budget expenditure after education.
To his credit, Kenneth Clarke, Britain's former finance minister, was one of those who pushed hardest for the world community to take action. Yet multilateral organisations like the IMF and the World Bank, and donor nations such as Japan, one of the largest creditors, have dragged their feet.
Meanwhile children starve.
Verah Chiluba, wife of the Zambian President, was among those who attended a recent public forum in London on debt forgiveness, organised by For A Change magazine. Martin Dent and Bill Peters, the co-founders of the Jubilee 2000 campaign, called for 'a fresh start for a billion people'. They outlined the argument for writing off the unrepayable debt of the poorest countries, on a case by case basis. 'Our business is to create the political will', said Mr Dent, a Fellow of Keele University, who has spent many years in Nigeria. It was a question of 'justice, compassion and solidarity'.
Mr Dent, whose ancestor was the antislavery campaigner Thomas Fowell Buxton, compared debt forgiveness with the liberation of slaves in 1834. What was needed now was the same public opinion to turn the tide.
Some 50 nations, most of which are in sub-Sahara Africa, were still burdened by debt, he said. African countries were paying US$6 billion annually on the interest alone, and the total debt of African and Latin American countries amounted to 'A3500 billion.
Bill Peters, Britain's former High Commissioner in Malawi, stressed that there was a 'palpable advantage to creditors' in abolishing debt. He outlined several reasons why creditor nations and multilateral bodies should abandon their 'rigid financial rectitude'. Acute poverty contributes to conflicts within developing countries; poverty accelerates emigration and turns people into refugees; farmers are forced to grow cannabis and poppy cash crops in order to survive, contributing to the world's drugs trade; rain forests are being cut down to meet the debt, increasing global warming and environmental damage; and, above all, 'a global economy cannot be healthy if two fifths of it are not functioning'.
With the removal of debt a 'beneficent cycle could begin', he continued. Shared blame for the creation of debt in the 1970s, due to credit oversupply, 'should require shared sacrifice. So far the sacrifice has been carried entirely by the debtors', said Mr Peters. When a questioner from Africa asked what responsibility remained with the debtor countries, Mr Peters acknowledged that conditions for debt remission should be placed on the countries.
The argument against debt remission has been that the original loans were misappropriated by corrupt regimes. But as Archbishop Ndungane points out, the ordinary people of these countries 'were unaware that they were being dragged into a mire of foreign debt that would lead them into a sea of poverty'. It is their plight which demands a positive response from creditors.
The Jubilee 2000 campaign is mounting an international petition to gather signatures of support from across the world. They hope it will be the world's largest ever petition. For the sake of the poorest, it deserves to be.
Michael Smith, Managing Editor, 'For a Change', London