------- Forwarded Message Follows ------- >Southern Africa: Apartheid Debt >Date distributed (ymd): 980727 >Document reposted by APIC > >+++++++++++++++++++++Document Profile+++++++++++++++++++++ > >Region: Southern Africa >Issue Areas: +political/rights+ +economy/development+ >+security/peace+ >Summary Contents: >This posting contains a briefing "The Debt of Apartheid" and >excerpts from a report entitled Paying for Apartheid Twice, >from Action for Southern Africa (ACTSA) and the World >Development Movement (WDM). The documents are in aid of a >campaign to urge the cancellation of UKP28 billion in >apartheid-caused debt owed by the countries of southern >Africa. > >Printed versions of the briefing (50p each; 30p each for 10 or >more and the report (UKP1 each) are available from ACTSA, 28 >Penton St., London N1 9SA, UK (Tel: 171-833-3133; fax: 171- >837-3001; e-mail: [EMAIL PROTECTED]). The full text of >both documents will be available on the Africa Policy Web Site >(http://www.africapolicy.org/docs98/debt9807.htm). > >For additional on-line references on African debt, see >http://www.africapolicy.org/action/debt.htm > >+++++++++++++++++end profile++++++++++++++++++++++++++++++ > >Action for Southern Africa > >Action for Southern Africa (ACTSA) campaigns for the >international support vital to fulfil the hopes of change in >Southern Africa. Formed in 1994, it is the successor to the >Anti-Apartheid Movement. > >ACTSA lobbies decision-makers in Britain and Europe to win >better policies for all the countries of Southern Africa. It >keeps the concerns of the region in the public and political >spotlight. It builds links between people here and in Southern >Africa > >World Development Movement > >The World Development Movement is the UK's leading >organisation campaigning to improve the lives of the world's >poorest people. Through our national network of members and >local groups, WDM tackles issues including multinational >companies, debt, the arms trade and aid. > >WDM is not a charity. We do not give aid. But our campaigns do >change the policies of governments and companies which keep >people poor. > >************************************************************** > >THE DEBT OF APARTHEID > >When Nelson Mandela walked out of prison, rich countries and >banks handed him and the people of Southern Africa a bill for >UKP28 billion. > >Apartheid wrought destruction across Southern Africa. Now it >is time to rebuild. But the financial institutions and >countries which lent during the apartheid war are demanding >repayment. The victims of apartheid are being asked to pay >again. > >Paying twice for apartheid > >The apartheid regime not only oppressed its own people, but >waged a full-scale war against Mozambique and Angola, made >raids into all the neighbouring states, and imposed an >economic blockade on Lesotho, Botswana, Zambia, Zimbabwe and >Malawi. > >The suffering was immense. This was a war against ordinary >people, in which schools and health posts were primary targets >and civilians were massacred on buses and trains. At least two >million Mozambicans and Angolans died in the war South Africa >waged against them; millions more had to flee their homes. > >The people of Southern Africa paid a terrible price in blood >and suffering. A whole generation never went to school because >of apartheid. Mothers and children died because the apartheid >state destroyed health centres in Mozambique, or never built >them in South Africa itself. > >Apartheid is ended, but the people of the region cannot >celebrate, because they are being asked to pay again. > >Making Mozambique poor > >Apartheid helped to make Mozambique the poorest country in the >world. South Africa's apartheid war cost Mozambique more than >UKP11 billion in damage and lost production. In an attempt to >smash Mozambique's economy, South Africa, and the Renamo proxy >army it backed, targeted sugar mills, tea-processing >factories, sawmills, and mines, which were blown up, burned or >ransacked. Half of all hospitals and schools were destroyed or >closed. > >Faced with a sudden loss of income and the need to protect its >people, Mozambique had to borrow for projects including >railways, electricity lines, and a major textile mill. Many of >these were later destroyed in South African attacks. > >Mozambique borrowed UKP4.5 billion because of apartheid. >International agencies like the IMF and the World Bank, as >well as rich countries' governments, have agreed to write off >some of Mozambique's debt. But they still insist Mozambique >pays back much of the debt. > >Mozambique has been forced to delay universal primary >education until 2010 because it has to repay the >apartheid-caused debt. > >Attacking transport > >The bridge over the Zambezi River is one of the longest in >Africa and once carried the railway from Malawi to the port of >Beira in Mozambique. South African-backed forces blew up the >bridge, as well as many smaller ones and also destroyed 30 >miles of railway line near Inhaminga in Mozambique. Five years >after the end of the war, this railway is still closed; >Mozambique has no money to repair it. > >South Africa cut both of Malawi's links to the sea, so that >goods had to travel an extra thousand miles, via South Africa. >The cost to Malawi was catastrophic. As well as human >suffering, Malawi had to borrow more than UKP700 million to >pay the extra costs of having to feed its people. One rail >link to the sea has been reopened. But Malawi is being forced >to repay the apartheid-caused debt before it can spend money >on rebuilding. > >Malawi was not the only country that was blockaded. Angola, >Zimbabwe, Zambia, Tanzania, Botswana and Lesotho have all >suffered at the hand of apartheid. Their apartheid-caused debt >exceeds UKP11 billion. > >Handing Mandela a bill > >When Nelson Mandela walked out of prison, the international >banks handed him a bill for UKP11.3 billion. In 1996, South >Africa paid an incredible UKP2,300 million in interest and >debt repayments. This money was taken away from >reconstruction. It was enough to give free health care to the >entire population, build 300,000 new homes, and have money >left over to build schools. > >According to international law if a loan is "used against the >interests of the local populace" then it is "odious" and need >not be repaid. In 1973 the United Nations began to describe >apartheid as a crime against humanity. Nevertheless, the >international financial community continued to make loans. The >Archbishop of Cape Town has said that South Africa's debt >"should be declared odious and written off". > >After other wars > >Angola, Mozambique, Tanzania and Zambia have had some debt >cancelled under a new initiative called the Highly Indebted >Poor Country Initiative (HIPC). But in practice the actual >amount they have to pay is the same as before - at least one >fifth of what they earn. After World War I, the victorious >powers demanded that Germany make reparation payments of less >than 15% of its earnings. This was seen as too much and as an >important cause of World War II. After World War II Germany >was asked to pay only 3.5 per cent of its earnings, whilst >Britain had to pay 4 per cent. > >It was argued that it was better to spend money rebuilding >rather than on debt payments. But now the international >community wants Southern Africa to make massive debt >repayments instead of rebuilding. Today Mozambique and Malawi >are being asked to pay 23 per cent of their earnings - five >times as much as Britain and Germany. > >Break the chains of debt > >The poor of Southern Africa are saddled with UKP28 billion in >apartheid-caused debt. This is UKP210 for every woman, man and >child in the region. > >Whilst this seems a lot to cancel, in fact it is only two >thirds the amount that the UK, Germany, Italy and Spain plan >to spend on buying new fighter planes. > >Southern Africa's debt burden is taking funds away from >schools and clinics. It is making it harder for the countries >of the region to work together to overcome the legacies of >apartheid. > >The people of Southern Africa fought for decades to end >apartheid; millions died or were made homeless. Apartheid has >ended and the people of Southern Africa want to rebuild. >Instead, we are asking the victims to pay again. > >Apartheid Debt million UKPounds Debt payments as % of total >trade earnings > >Angola 6,432 17 >Botswana 152 5 >Lesotho 91 6 >Malawi 724 21 >Mozambique 4,545 42 >Swaziland 0 3 >Tanzania 492 23 >Zambia 1,905 25 >Zimbabwe 2,273 24 > >sub-total 16,614 >South Africa 11,345 12 > >Total 27,959 > > >************************************************************ > >PAYING FOR APARTHEID TWICE (excerpts only) > >Introduction > >... > >This report estimates "apartheid-caused debt" at UKP28 >billion. That is the UKP11 billion that South Africa borrowed >to maintain apartheid, and the UKP17 billion that the >neighbouring states borrowed because of apartheid >destabilisation and aggression. This is 74% of the present >regional debt of UKP38 billion. > >... > >After the Second World War, the United States allowed Britain >to repay debt at a very low rate so that it could rebuild. In >1953, the victorious allies met in London to cancel most of >Germany's debt, so that it could rebuild. Now the nations of >Southern Africa want to rebuild a post-apartheid society, but >the creditors of today are not willing to offer them the space >Britain received from the US and the Allies gave to Germany. >Instead they are demanding that the states of Southern Africa >pay three to five times the level that Britain or Germany paid >after World War II. > >1. What is 'apartheid-caused debt'? > >In this report, we first define "apartheid-caused debt", >looking separately at South Africa and at the neighbouring >states, and then we argue the case for cancelling this debt. > >We group two very different kinds of loans into what we define >as "apartheid-caused debt". This framework forms the basis for >the estimated figures we set out below. > >The debt of Southern Africa > >The apartheid regime defended itself not only by oppressing >its own people, but by suppressing the people of the >neighbouring states as well. It waged a full-scale war against >Mozambique and Angola, made raids into all the neighbouring >states, and imposed an economic blockade on Lesotho, Botswana, >Zambia, Zimbabwe and Malawi. > >... the neighbouring states had to take out loans as a result >of South African destabilisation. These were largely loans >made by governments and by international financial agencies >such as the World Bank. They were often "concessional" loans >with low interest rates; ... > >Nevertheless, the cost of destabilisation was so great that >loan repayments now account for a substantial expenditure - >more than is spent on health and education in many of these >countries. The repayment of these loans is now delaying >reconstruction after the apartheid war. ... > >The debt of South Africa > >White South Africa took loans from international private banks >to fund apartheid, because by the 1980s governments and the >international financial agencies refused to lend. These >private lenders took a risk in lending to the white regime >when it was already a pariah state. These are also >"apartheid-caused debts". > >We argue below that in international law, the new government >of Nelson Mandela is not liable for these "odious debts" and >that the international community should say that South Africa >need not pay them. > >It is not straightforward to define the precise amount of >"apartheid-caused debt", in part because of what financial >analysts call "fungibility" - the fact that money lent for one >purpose, in practice frees up funds for other purposes. > >Thus banks did not lend money to apartheid South Africa >overtly to allow it to wage war on its neighbours, but money >loaned to South Africa to build dams and power stations >released other money which could then be used by the military >- and the banks that refused to impose financial sanctions >knowingly colluded in this. Similarly, the World Bank did not >lend money to Mozambique so it could defend itself against >apartheid, but those loans were essential to keep Mozambique >alive under the apartheid onslaught. > >Creditors are not demanding that money be taken away from >health and education to repay the debts - but they know that >social services are such a large part of government spending >that debt service requires cuts in these services. > >This is the essence of "fungibility" of money. Loans are >labelled in ways that avoid reference to "unacceptable" >expenditures. We pretend that debt repayments come from a >different pocket than social spending, and thus do not demand >health spending cuts. But in reality, it is all money going >into and out of government budgets. > >In the appendix, we show how we estimated "apartheid-caused >debt" and the related cost of destabilisation. In summary, >these costs are: > >Cost of destabilisation million UK Pounds Apartheid Debt >million UK Pounds > >Angola 22,727 6,432 >Botswana 379 152 >Lesotho 227 91 >Malawi 1,629 724 >Mozambique 11,364 4,545 >Swaziland 152 0 >Tanzania 985 492 >Zambia 3,788 1,905 >Zimbabwe 6,061 2,273 > sub-total 47,311 16,614 > >South Africa 11,345 > >Total 47,311 27,959 > >... > >3. South Africa's 'odious debt' > >... > >This concept of "odious debt" has a long history, arising >initially from the United States' capture of Cuba from Spain >in 1898. Spain demanded that the US pay Cuba's debts, and the >US refused on the grounds that the debt had been "imposed upon >the people of Cuba without their consent and by force of >arms." Furthermore, the US argued that in such circumstances >"the creditors, from the beginning, took the chances of the >investment." The concept of "odious debt" was upheld and >formally entered international law in the 1923 judgment of US >Chief Justice Taft in the case of Great Britain vs Costa Rica. > >South Africa is a prime example of a country that has had >governments that systematically oppressed the majority of its >people. In 1973 the United Nations began to describe apartheid >as a crime against humanity. Nevertheless, the international >financial community, aided and abetted by the National Party >government, continued to make loans to Pretoria, particularly >in the 1980s, for which the new government is now held >responsible. ... > >The Archbishop of Cape Town, the Most Reverend Njongonkulu >Ndungane, speaking at Southwark Cathedral on 24 April 1997 >noted that "as we approach the new millennium, the time has >come to invoke the Doctrine of Odious Debt. ... In the case of >South Africa, its foreign and domestic debt was incurred, by >and large, under the apartheid regime, and should ... be >declared odious and written off." > >South Africa's foreign debt > >... The World Bank estimates that when the new government took >over in 1994, it inherited a debt of UKP11 billion. ... Most >of the debt is in the form of bonds and other marketable >foreign debt, particularly syndicated loans denominated in >dollars or ECUs and issued by European and US banks in the >early 1980s. There are no outstanding loans to international >financial agencies (IMF and World Bank) which predate the >release of Nelson Mandela. > >4. Why debt should be cancelled > >We have argued that the apartheid-caused debt is odious and >should therefore be cancelled. It should also be cancelled >because it is siphoning off much needed resources. Nelson >Mandela has promised that South Africa will pay its debts. >Mozambique continues to pay its debts, even though debt >service means that it has been forced to cut its education >budget. Southern Africa made UKP3.8 billion in debt service >payments in 1996, which is more than the region spent on >health. > >The Southern African Development Community (SADC) Executive >Secretary, Kaire Mbuende said recently: "There is no good >reason why the debt of these states should not be written off. >... " Mbuende said repeated debt rescheduling had failed to >help SADC countries because it: "pushes them even deeper into >debt ..." > >After other wars > >Under the World Bank/IMF HIPC Initiative, poor countries are >expected to make debt repayments equivalent to 20% of their >export earnings. Mozambique will pay 17 per cent in 1998, >falling to 13 per cent in 2000 under the new agreement. South >Africa paid 12 per cent in 1996. This is a much higher level >than was expected of war-torn Europe. > >After World War I, the victorious powers demanded that Germany >make reparations payments of less than 15% of its exports , >and this was considered so excessive that it restricted >Germany's post-war rebuilding and was seen as an important >cause of World War II. This view was accepted by the allies >who negotiated a new debt repayment agreement with the then >new Federal Germany in London in 1953; this required Germany >to pay only 3.5% of exports. Similarly, in order to allow >Britain to rebuild, in 1945 the United States agreed that >British debt repayments should be limited to 4% of exports. > >In both cases, it was argued that Europeans needed to spend >money on post-war reconstruction rather than debt repayments. >Yet now the international community wants Southern Africa to >make massive debt repayments instead of rebuilding. Why should >Mozambique, Malawi, or South Africa be asked to pay 12 to 20 >per cent when Britain and Germany only had to pay four per >cent? ... > >If Southern Africa is to be peaceful and prosperous, and also >a growing trading partner with Europe, it should spend its >money to rebuild, and not to pay debt service. As Europe >learned, this is an investment in preventing war. ... > >************************************************************ >This material is being reposted for wider distribution by the >Africa Policy Information Center (APIC), the educational >affiliate of the Washington Office on Africa. APIC's primary >objective is to widen the policy debate in the United States >around African issues and the U.S. role in Africa, by >concentrating on providing accessible policy-relevant >information and analysis usable by a wide range of groups and >individuals. > >Auto-response addresses for more information (send any e-mail >message): [EMAIL PROTECTED] (about the Africa >Policy Electronic Distribution List); [EMAIL PROTECTED] >(about APIC); [EMAIL PROTECTED] (about WOA). Documents >previously distributed, as well as the auto-response >information files, are also available on the Web at: >http://www.africapolicy.org > >To be added to or dropped from the distribution list write to >[EMAIL PROTECTED] For more information about material cited >from another source please contact directly the source >mentioned in the posting rather than APIC. > >For additional information: Africa Policy Information Center, >110 Maryland Ave. NE, #509, Washington, DC 20002. Phone: >202-546-7961. Fax: 202-546-1545. E-mail: [EMAIL PROTECTED] >************************************************************ > :::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: Lori Pottinger, Director, Southern Africa Program, and Editor, World Rivers Review International Rivers Network 1847 Berkeley Way, Berkeley, California 94703, USA Tel. (510) 848 1155 Fax (510) 848 1008 http://www.irn.org ::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::
