why the debt should be cancelled : Illegitmate debt

Background The main actors Why the debt should be cancelled Human Rights HIV / AIDS SAP's Illegitmate debt How the debt should be cancelled

Cold War Lending - Illegitimate Debt

The country formerly known as Zaire was ruled for decades by Mobutu Sese Seko, a man for whom the word kleprocrat was coined as he ruled by theft. It is estimated that he stole more than $10 billion, while he kept the people of his country in fear and poverty. Despite widespread knowledge about his corruption, the IMF lent Mobuto over $600m in the early 1980s while the World Bank provided $650m. Western governments lent over $3billion during the same period. Mr Mobuto had the good sense to support the West in the Cold War and to allow the exploitation of Zaire’s extensive mineral wealth by multinational companies.

President Marcos of the Philippines was another dictator who impoverished his country whilst amassing a personal fortune of over $10 billion. The Philippine Freedom from Debt Coalition (FDC) is the longest running campaign for debt cancellation in the developing world. The title of the FDC newsletter, People Against Immoral Debt (PAID)exposes their unwillingness to repay odious debts incurred by Marcos.

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The external debt of the countries of the South has been repaid several times over. Illegitimate, unjust and fraudulent, debt functions as an instrument of domination, depriving people of their fundamental human rights. We demand unconditional cancellation of debt and the reparation of historical, social and ecological debts.

As well as debts incurred by corrupt or despotic regimes, questions could be asked about loans that were given for specific projects, which were chosen and designed by the creditors. The World Bank plays a major role in design, implementation and monitoring of the projects that it funds. A World Bank evaluation of 18 agricultural projects funded up to 1986 in Tanzania, found that 12 produced negative economic rates of return. The World Bank simply cannot attribute sole responsibility to the Government of Tanzania for these and other project failures.

A World Bank review of its programme in Zambia concludes that the predominance of adjustment lending in Zambia in the 1980s and 1990s was a mistaken approach. Looking at 18 projects approved during 1980-1995, only three were rated at likely to be sustainable. An external review of the IMF programme in Zambia, pointed out that IMF policies resulted in high levels of inflation with heavy social costs attached. Between 1991and 1993 public expenditure halved as a share of Gross Domestic Product.

In recent years much has been done to highlight the fact that many countries cannot pay back the debts they owe. It is now time to point out clearly that it is not simply a matter of an inability to pay. Some debts should not be paid. As the slogan of Jubilee South campaigners puts it -"Don’t owe- wont pay".

Neither the G8 nor the IMF/WB have admitted to any responsibility whatsoever for the plight of impoverished countries. Many of the lenders acted irresponsibly if not criminally; western governments armed and supported several dictatorships. The west raised interest rates to astronomical levels in the early 1980s making repayment of debt impossible. IMF and WB programmes pushed on the poor countries were often ill-conceived and damaging. All of these factors are conveniently glossed over and ignored by the creditor countries and institutions.

Ireland has been a member of both organisations since 1957 and has been party to their actions since that time