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Date: Mon, 26 Feb 2001 18:39:17 EST
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Subject: [AfricaMatters] Don't forget the debt
Financial Times; Feb 26, 200, COMMENT & ANALYSIS:
Don't forget the debt: Eliminating child poverty is a laudable ambition but
the process should begin with more debt cancellation, argues Bob Geldof
By BOB GELDOF
The summons from the chancellor of the exchequer to almost everyone who is
anyone in international finance to today's meeting in London on eliminating
child poverty is the familiar mark of a moral man in a hurry. In Gordon
Brown, we have someone who moves faster, is bolder, and acts more radically
on behalf of the world's poor than most of his mainstream political
contemporaries.
But the first bullet point on the chancellor's flip chart before the
assembled greats today should be clear: you cannot address the issue of
child poverty seriously without, in equal sincerity, returning to the
problem of debt reduction.
The year 2000 has passed and the frustration for the supporters of Jubilee
2000 now reconvened under the banners of Drop the Debt and Jubilee Plus -
one a frontline lobbying group, the other a long-term strategy group - is
that the battle is not yet won. The public perception of victory is false.
The 22 countries helped so far by the deal agreed by the Group of Eight in
Cologne will have their annual debt payments reduced by just one third, from
Dollars 2.9bn (Pounds 2bn) to Dollars 2.1bn. That is nearly Dollars 1bn more
every year for these countries to invest in health and education. In Uganda,
Mozambique, Senegal, Mali and other countries these savings are being used
to train teachers and improve healthcare.
But most of these countries will still be spending more on debt payments
than on health. Add to that the emerging tragedy in Africa of HIV/Aids,
which has made orphans of 13m children already, and the need for deeper
action becomes a dire emergency. The African countries that have benefited
from partial debt cancellation will still pay Dollars 1.4bn each year to
creditors.
This is precisely the amount of money that UNAids, the joint UN programme on
HIV/Aids, estimates the same countries need to increase their effort against
HIV/Aids to a realistic level. So it follows that if debt were eliminated,
the poorest countries would have money to spend on the central areas of
children's lives, their health, education and food. Debt cancellation alone
is not enough, of course, but it is the primary weapon in the war against
poverty.
If progress so far has been so modest, why the mismatch between public
perception and reality? The rich nations of the Group of Seven have agreed
to cancel all debt for many countries. The World Bank and International
Monetary Fund, pleading poverty, have not, stopping at less than half. As a
result, those two public institutions remain as the outstanding debt
collectors from the world's poorest nations. If they followed the G7 lead,
countries would finally be able to invest more in the health of their people
than they waste on debt payments.
The World Bank and the IMF can produce a hundred reasons not to do this. At
the top of the list is cost. Drop the Debt argues that for the 22 countries
so far in the debt relief process, full cancellation would cost the World
Bank less than Dollars 200m a year, and the IMF less than Dollars 300m. The
IMF has vaults full of gold and cash reserves too. The World Bank makes an
annual surplus of close to Dollars 2bn, on top of reserves and other
provisions of Dollars 28bn.
It is wise to understand one's opponents' arguments in detail - but foolish
to argue on the same bureaucratic terms. One forgets, getting bogged down in
their impenetrable detail, that debt cancellation is easy. It is also
correct. To keep mugging the weak like some global ghetto loan-shark is an
act of institutionalised international thuggery.
The cumbersome structures that are in place to deal with debt need to be
reformed. Why not ask an independent accounting firm to test the argument
that the World Bank and IMF are too poor to play their part in righting the
historic injustice of debt? Artificial firewalls within these institutions
and lack of understanding in the wider world of how the institutions work
cannot stand in the way of a necessary moral and economic course.
This is a natural agenda for the new US administration. The American record
so far on debt is an honourable one. With a new call to the World Bank and
IMF to fall in line, George Bush can clearly signal his willingness to
engage with the world on the basis of compassionate conservatism and sound
banking principles. The abolition of debt, by the US as well as Britain, has
cross-party support.
The G8 summit in Italy this July is the chance to sign off a better deal.
Many of the world's financial leaders would love to be distracted by some
worthy, "sometime-in-the-future" statement of intent on general poverty. The
fact is, they need to slash debt further, wider and deeper - to do something
with immediate benefit to the poorest.
Ending child poverty is the right target but it is a long way off. Aim for
the distant goal - but keep both eyes on the ball at your feet. The process
begins with deeper debt cancellation and the process must continue at Genoa
in July.
The writer is a businessman and supporter of the Drop the Debt campaign
Copyright: The Financial Times Limited
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