(Background:
http://ccs.ukzn.ac.za/files/Bond%20IMF%20and%20WB%20in%20Palestine%20and%20North%20Africa.pdf
_
Tunisia leading the fight against 'odious debts'
<http://triplecrisis.com/tunisia-leading-the-fight-against-odious-debts/>
Leonce Ndikumana <http://triplecrisis.com/author/leonce-ndikumana/>
*Tunisia in the headlines... again*
Tunisia has featured perennially in the headlines in economic
development reports as one of the African leading economies in terms of
economic performance and political stability over the past decades. It
has consecutively ranked among the most competitive
<http://www3.weforum.org/docs/WEF_GCR_Africa_Report_2011.pdf> and
diversified economies in the continent.1 It enjoyed moderate but steady
growth (averaging 4.5% over the last ten years), which is a major
achievement in a continent where growth is highly volatile. Poverty
rates are low, education levels high, infrastructure and services are
plentiful and of good quality. To most external observers, there was
also substantial agreement that Tunisia enjoyed political stability
under the last two regimes (under Habib Burguiba and Zine El-Abidine Ben
Ali).
But starting from January 2011, Tunisia took the limelight for
completely different reasons. The country witnessed an unprecedented
regime change, a genuine revolution. Unlike so many other regime changes
in African history, the change in Tunisia was led by unarmed civilians
claiming their right to political freedom and a decent economic life.
This set off the Arab Spring that would subsequently sweep through North
Africa and the Middle East, toppling strong regimes in Libya and Egypt.
The events proved that one can suppress people's demands for some time,
and even a long time, but that no regime can silence the people forever.
Since mid-2012 Tunisia is back in the headlines again. This time, the
country is catching the media's attention because of the tough stance
taken by the new Government regarding the debts inherited from the Ben
Ali regime.2,3 President Moncef Marzouki has demanded an audit of
Tunisia's external debts, to establish whether the funds benefited the
people of Tunisia by financing bona fide development programs. The audit
would thus distinguish between debts which are legitimate and therefore
should be honored, and those which served the interests of the former
rulers and their associates and therefore should be repudiated.
In signaling such a stand about external debts, the new Tunisian
government is setting a historic precedent in Africa that would serve
the interests of not only the people of indebted African nations but
also those of Africa's creditors and donors. In fact Tunisia stands the
best chance on the continent of scoring such a historic achievement
given the domestic and international context.
*In the name of the wellbeing of future generations*
Challenging the legitimacy of past public debts is naturally an arduous
route for any government, let alone a new national leadership seeking to
consolidate post-revolution democracy and peace. Yet it is strong proof
of the new leadership's commitment to the wellbeing of the country and
its future generations. Although Tunisia is not a heavily indebted
country in absolute terms, it still faces relatively heavy costs of
servicing past debts in terms of foregone public spending on health,
education and rural development as stressed by President Marzouki. The
public's expectations of 'revolution dividends' are running high;
Tunisian people expect jobs and social services. Therefore the social
opportunity costs of paying past debts are indeed very high. Hence it is
reasonable for the new government to seek assurance that the debts to be
paid are legitimate. Paying debts that served to line up the pockets of
former rulers and their domestic and foreign acolytes would unjustly
mortgage the welfare of future generations.
As soon as Ben Ali was deposed, the media was flooded by discoveries of
massive amounts of wealth held by himself, his family relatives and
close associates both in the country and abroad, including Switzerland,
Canada, United Kingdom, Luxembourg, the Middle East (Qatar), and Latin
America (Brazil and Argentina). The debt audit requested by the new
Government would establish whether this wealth was not fueled by
embezzlement of borrowed funds, in which case such loans would be
illegitimate and consequently 'odious'. By taking a stand against
servicing 'odious' debts, the new Government is choosing to protect the
wellbeing of future generations even at the risk of making Tunisia's
creditors nervous. But in fact there is no reason why creditors should
worry, for the new President has made it crystal clear that legitimate
debts will be honored.
*Some promising signs of goodwill*
Governments in developed countries where stolen wealth is amassed have
shown some goodwill in freezing some of the assets in the wake of the
fall of the regime in Tunisia, Libya and Egypt. The government of
Switzerland blocked EUR 48.7 million <http://triplecrisis.com/>
belonging to Tunisian former ruling family and it is cooperating with
the Tunisian government in tracking down illicit wealth.4 Belgium has
declared that it will cancel all the debts that will be found to be
odious following the debt audit. European Union Deputies have called for
a moratorium on debt payment and an immediate audit of Tunisian debts.5
The United Nations are leading efforts to reform lending and borrowing
to increase transparency and accountability and ensure that loans are
effectively used to finance development. The Principles on Responsible
Lending and Borrowing
<http://triplecrisis.com/principles-for-prevention-of-sovereign-debt-crises/>
seek to accomplish this goal.
At the continental level in Africa, a High Level Panel has been set up
by the United Nations Economic Commission for Africa under the
leadership of former South African President Thabo Mbeki to provide
suggestions on ways to stem capital flight and on strategies for
repatriation of Africa's stolen assets. The success of these efforts at
the continental depends critically on strong commitment by national
leadership.
In this respect the case of Tunisia is an opportune 'natural
experiment'. The country has a new leadership with no 'excess luggage'
and therefore with no intrinsic interest in covering up the misdeeds of
past governments. It has a clean state to establish new, transparent
relationships with the country's creditors and donors on the one hand
and with the Tunisian people on the other hand. In other countries in
Africa, the question is whether the incumbent governments are ready and
willing to take this historical move and be on the side of the people
and the future.
*But there is deafening silence in the 'havens'*
Despite these positive signs of goodwill internationally and even with
determined leadership in Africa, there is still a major challenge, and
this is the big elephant in the room, namely the opacity of the shadow
international financial system. Tracking down illicit financial flows
from Africa and repatriating stolen wealth requires cracking safe havens
and breaking down the culture of baking secrecy that facilitates illicit
financial. Thus far, banks in offshore financial centers have remained
silent. But this is hardly surprising. After all they are in the
business of making profit on money. Enforcing responsible behavior by
banks requires governments in receiving countries to use their legal
systems to enforce the laws on anti-corruption and anti-money laundering.
For Africa to win the fight against illicit financial flows it needs
cooperation from governments on the other side of the river. By helping
Africa keep more of its resources onshore, the global community will
also reap the benefits arising from a more sustainable international
financial system.
***
*Activists March to Cabinet to Protest IMF Loan*
Tagged: Business, Egypt, External Relations, Governance, International
Organisations, North Africa
29 August 2012
A number of political movements participated on Wednesday evening in a
march to express their rejection of the International Monetary Fund's
(IMF) loan Egypt aims at acquiring.
Participants marched from the Egyptian stock market headquarters in
Cairo headed to the cabinet headquarters where they chanted slogans such
as "We will not be ruled by the IMF". They also held banners that are
anti- "policies impoverishment and dependence".
Dozens of activists participated in the march.
Several parties and movements including the Revolutionary Socialists,
the Egyptian Socialist Party, the Popular Alliance Party and the
Egyptian Communist Party participated in the march which "Mina Danial
Movement" called for.
In a statement distributed during the march, the participating parties
called for rejecting the IMF loan and steering away from policies of
borrowing from countries or international institutions that enshrine
dependence.
The march criticized what it called a governmental insistence on moving
towards market economy and the domination of businessmen and
international companies on the national economy and the local market,
stating that these policies "impoverished the people".
The statement called for pursuing national solutions for pushing the
production wheel and put strategic plans to support agricultural and
industrial production. It also called for renewing the infrastructure,
establishing new housing projects that curb the effects of the crisis
and employ idle forces.
***
Statement by IMF Managing Director Christine Lagarde at the Conclusion
of Her Visit to Egypt
Press Release No. 12/295
August 22, 2012
Ms. Christine Lagarde, Managing Director of the International Monetary
Fund (IMF) made the following statement at the conclusion of her visit
to Cairo, Egypt, where she met with the authorities:
"It has been a great pleasure to be back in Egypt, for the first time as
Managing Director of the IMF. I was pleased to see firsthand how the
country is managing the transition and to meet with President Mohamad
Morsi, Prime Minister Hesham Kandil, Finance Minister Mumtaz Said, and
the rest of the economic team.
"I congratulated President Morsi on his election and thanked him and
Prime Minister Kandil for their kind invitation. I took note of their
strategy and ambition for Egypt's economic and social future, and I
assured them of our continued commitment to support Egypt and its people
during this historic period of transition. The IMF will accompany Egypt
as it undertakes this challenging journey.
"The IMF has maintained a close dialogue on economic policy with the
Egyptian authorities since the start of the transition and provided
considerable technical assistance upon request from the government.
"The authorities have indicated that Egypt would like the IMF to support
Egypt's economic program financially to help the country recover and to
lay the foundation for strong growth that benefits all. We are
responding quickly to this request. A technical team will be arriving in
Cairo in the early September to work with the authorities on their
program and discuss possible forms of financial support from the IMF.
"Egypt faces considerable challenges, including the need to restart
growth and reduce budget and balance of payments deficits. Getting the
country's economy back on track and raising the living standards for all
will not be an easy task. The Egyptian people have legitimate
expectations for a better life and greater social justice. We at the
IMF, stand ready to help."
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