>X-Sender: [EMAIL PROTECTED] > Third World Debt after Okinawa: the G7 is unmasked! > > > Third World debt is really a mechanism for > transferring wealth from the South to the North. > > > Each year sub-Saharan Africa reimburses almost $15 > billion, i.e. four times more than it spends on > health and education. > > > France and Japan are lying outrageously! > > > >From: "Eric Toussaint" <[EMAIL PROTECTED]> >To: <[EMAIL PROTECTED]> >Subject: Third World Debt after Okinawa: the G7 is unmasked! >Date: Mon, 7 Aug 2000 19:56:40 +0200 > > >For info, >this article can be reproduced. > >Best, >Comit� pour l'Annulation de la Dette du Tiers Monde >Committee for the Cancellation of the Third World Debt >29 rue Plantin >1070 Bruxelles >tel (322) 527 59 90 >fax (322) 522 61 27 >[EMAIL PROTECTED] >http://users.skynet.be/cadtm > >The Third World Debt after Okinawa: the G7 is unmasked! > >Eric Toussaint (*) [EMAIL PROTECTED] > >After the G7+1 summit which took place in Okinawa in July 2000, it's time to >check on the status of promises concerning the cancellation of Third World >debt. More than a year ago, in June 1999 in Cologne, the Jubilee 2000 >coalition handed the G7 leaders a petition with 17 million signatures >calling for them to cancel the debt of 50 Third World countries. The G7 >seemed to respond positively and committed to rapid cancellation of up to >90% of the debt of 41 heavily-indebted poor countries (HIPC), making the >fight against poverty a priority. $100 billion were to be devoted to this >"generous" initiative, which was widely covered by the media. > >Public announcements echoed round the world. Standing in front of the IMF >and World Bank Assembly Michel Camdessus read out the letter written by the >two young men from Guinea who died in the landing gear of a Sabena Airlines >plane and he declared that their appeal had been heard thanks to the Cologne >Initiative. In September 1999, President Bill Clinton announced that his >country would unilaterally cancel 100% of the poor countries' debt. He was >followed by Gordon Brown, Great Britain's Chancellor of the Exchequer, by >Jacques Chirac etc. > >At the time, the Committee for the Cancellation of Third World Debt (COCAD) >cried out that this initiative was a sham and called for real solutions to >be implemented. > >So, what is the situation a year after Cologne? > >Of the $100 billion announced, barely $2.5 billion have materialized. That >represents about 1.2% of the debt of the HIPC. (The figure is $2.07 billion >if ex Eastern-bloc countries are excluded). This is a far cry from the 90 or >100% cancellation announced! Whatever discussion there might be on just how >much effort has been made, everyone now agrees that very little has been >achieved. > >The world's richest countries are really stingy. The US Congress has >allocated $63 million to debt reduction in 2000, $69 million in 2000, i.e. >1/4 of one-thousandth the $280 billion annual US defense budget. This is in >the context of a budget surplus expected to amount to around $100 billion >over the next decade. One can guess that both the Capitol and the Pentagon >intend to spend part of this on the anti-missile shield project (so loved by >Ronald Reagan in the 1980's) rather than on canceling Third World debt. > >Our calculations show that none of the creditor nations of the North will be >contributing more than 1% of their defense budget to debt relief. Thus, the >Belgian government plans to allocate BF800m. (about Euro 20m.) to Third >World debt reduction. Furthermore, it should be pointed out that most of >this sum has not yet been handed over. At the rate of BF800m. per annum it >would take a century to cancel the BF90bn that the HIPC owe Belgium. It is >also worth stating that the sums that industrialized countries allocate to >debt relief are used to compensate private German, French and Belgian >companies that participated in white elephant projects in countries that are >now crushed by the burden of the debt (especially installations unsuited to >local needs such as the Inga Dam in the Lower Congo or the Kl�ckner Iron and >Steel Works in Cameroon). These white elephants were bought by regimes that >were paid commissions by these companies for accepting "turnkey" packaged >solutions that included both the projects and the loans. The contracts >involved were gigantic and the companies involved were aided and abetted by >western governments that wanted to keep close ties with their ex colonies >(France, Great Britain, Belgium, Germany, Spain and Portugal) or that wanted >to open up new markets by forming strategic alliances (United States). Most >of the HIPC debt originated in the 1970's and 1980's. > >An equally serious matter is the fact some of the funds allocated to >compensating private sector creditors are drawn from development aid >budgets. In short, the funds announced by the governments of the North >aren't reaching the people of the South; they are public funds that are >being used in part to the advantage of private firms despite the fact that >they are largely to blame for the disastrous situation in the Third World. >One can rightly ask why it's necessary to compensate private sector >creditors who have already made substantial profits from juicy contracts >with debt-laden countries as well as having received subsidies from >governments of the developed countries. > >Moreover, France and Japan are lying outrageously when they pretend that >they are canceling the debts owed to them by the HIPC. The truth is that >they are demanding that the debt be repaid. On receipt of the >reimbursements, France and Japan will donate the funds, which is not the >same thing as debt cancellation at all. Japan specifically demands that when >the funds are handed back to the developing countries they be used to buy >goods and services supplied by Japanese companies. In short, the debt does >indeed have to be repaid and the funds that are "given" end up in the >coffers of the "donor" country's corporations. > >The announcement made in Okinawa, on the 23rd July 2000, that Japan was >making a $15bn "effort" in favor of Internet development in the Third World >should be viewed in the light of this. This is yet another example of tied >development assistance that induces the beneficiary countries to buy >Japanese computer equipment and technlogy. France is a little more discreet >on this because, for several years now, significant progressive movements >have been strongly critical of tied development assistance. However, it >should be remembered that President Jacques Chirac has been offering debt >relief to the HIPC for several years on the condition that they privatize >their public sector to the advantage of French multinationals. Bouygues, >Vivendi and other large French multinationals have bought whole sectors of >the economies of the old French African colonies at discount prices thanks >to this policy. > >Finally, we must not forget that all these debt relief initiatives are >linked to structural adjustment programmes imposed by the creditor nations >which, even if they now refer to them as "Poverty Reduction Strategy Paper", >force the countries concerned to continue opening their markets to goods >from developed countries and extend fiscal policies that place the burden of >taxation on the poor (VAT rates in Western Africa are in the range of 18 to >21% whilst, pretexting the need to encourage private investment, capital is >not taxed directly). These policies also lead to widespread privatization of >the water and energy sectors (Vivendi applauds this), the continuation of a >policy of exporting at any cost which has detrimental effects on food safety >(food crops are abandoned in favor of crops that can be exported) and is >preventing the conservation of natural resources (deforestation and extreme >exploitation of raw material and fuel resources), the privatization of >communal land, the further lowering of public sector starvation wages, in >short the application of hard-line neo-liberalism with a sprinkling of >targeted subsidies for those in "abject" poverty. > >In conclusion, the current initiatives are either totally inadequate or >quite simply unacceptable. > >If real solutions are to be implemented it will be necessary to lift the >veil of secrecy that's hiding the truth concerning Third World debt: the >debt is really a mechanism for transferring wealth from the South to the >North. The latest figures from the World Bank show that in 1998 the 41 HIPC >transferred $1,680 million more to the North than they received (cf World >Bank: "Global Development Finance, Net flows and transfers on debt" table, >April 2000). That's massive. The reality is that the HIPC are making the >richest countries even richer. > >If we widen the debate to cover all the developing countries then the >scandal takes on outrageous proportions. In 1999 these countries transferred >a net sum of $114.6 million to the creditor nations in the North (op. cit. >p. 188)! That's at least equivalent to the Marshall Plan but transferred in >a single year. > >Another indicator: in total the developing countries reimbursed (in capital >and interest) $350 billion in 1999 (op. cit. "Tables" p.24), i.e. seven >times more than the total for Public Development Aid which amounted to $50 >billion that year! > >What are the real solutions? > >The starting point must be to meet the basic human needs guaranteed by the >Universal Declaration of Human Rights. Rather than speaking grandiloquently >about the advantages to be gained by developing countries from access to >financial markets and the supposed benefits of globalisation, it should be >bourn in mind that each year sub-Saharan Africa reimburses almost $15 >billion, i.e. four times more than it spends on health and education. >Meanwhile, according to the United Nations Development Program, a budget of >$40 billion dollars per annum over ten years would allow universal primary >education (there are currently 1 billion people suffering from illiteracy in >the world), guarantee access to potable water for the 1.3 billion people who >are deprived of it, provide medical care to 2 billion people who don't have >access to it and ensure basic food needs for the 2 billion people suffering >from anemia. > >If we really want to see durable human development social justice then >several urgent steps must be taken. > >1. Cancel the Third World's public external debt (it has already reimbursed >more than four times what it owed when the debt crisis exploded in 1982). >This external public debt amounts to around $1.6 trillion, i.e. less than 5% >of global debt that currently stands at about $40 trillion. The US public >debt (for a population of 275 million) amounts to $5 trillion, i.e. more >than three times the total exterior public debt of all the Third World's >countries. The French public debt amounts 750 $ billion, i. e. more than >three times the total exterior public debt of all sub-Saharan Africa >(population 600 million). Canceling the Third World debt would require >demanding that all the various creditors wipe out 5% of their accounting >assets. That's not too much to ask. > >2. Start and successfully conclude judicial proceedings to end the impunity >of those who got rich illegally on the backs of their citizens as well as >their accomplices in developed countries. The late Mobutu's fortune is >believed to amount to at least $8 billion whilst the Democratic Republic of >Congo is in debt to the tune of $13 billion. These illegally-gained assets >must be expropriated and handed back to the plundered population via a >democratically-controlled local development fund. > >3. Abandon the structural adjustment policies that are so disastrous for >Third World populations. > >4. Apply a tax like the Tobin Tax and devote the majority of its resources >to socially just and ecologically sustainable development projects. > >5. Deliver on the promises made by countries in the United Nations by >raising Official Development Assistance (ODA) to 0.7% of the Gross National >Product of developed countries (at the moment it's only 0.24% for the OECD >GNP as a whole). The entire ODA should be bestowed as a donation (currently >part of it is granted in the form of loans). > >6. Stop deregulating trade because this impacts Third World populations >directly. > >These proposals certainly aren't enough to solve all the injustices of >North-South relations but they are necessary if human development and >justice are to be given a chance. > > >--------------------------------------------------------------------- >(*) Eric Toussaint is president of the Brussels-based Committee for >Cancellation of the Third World Debt (COCAD, CADTM in French) and author of >"Your Money or Your Life: The Tyranny of Global Finance" > >Three different editions in English: >1) by Pluto Press, 1999, London - UK (ISBN 0 74531414 0 pbk) and Mkuki na >Nyota Publishers, Dar es Salaam - Tanzania (ISBN 9976 973 54 3 pbk) 322pp >2) by VAK Vikas Adhyayan Kendra, 1999, Bombay - India, 302pp >3) by Labour Party Pakistan Publications, 2000; Lahore � Pakistan, 346pp > > > > > > > > ............................................. > Bob Olsen, Toronto [EMAIL PROTECTED] > ............................................. > > > __________________________________ KOMINFORM P.O. 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