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A bold proposal for poor African nations: Forget the debt
By John Donnelly, 4/8/2002
Boston Globe
WASHINGTON - With AIDS pummeling sub-Saharan Africa and a famine threatening the lives of millions of people in the southern part of the continent, many development specialists are calling on donors to take the unusual step of canceling the countries' staggering debt payments of $14.6 billion each year.
But some analysts, doubting that will happen, have a more provocative
idea:
Why don't African countries simply stop paying?
On its face, the idea may sound outrageous. Africa, more than any other part of the world, can ill afford to incur the wrath of the hand that feeds it. But there is historical precedent for a reasoned decision not to pay debt. In the 1980s, Bolivia and Poland made that choice, and because the two countries used that money for social causes both were later able to win debt forgiveness.
The stop-payment idea gained traction at an AIDS summit in Africa for religious leaders in June, and then again at the 14th International AIDS Conference in Barcelona last month. The Barcelona meeting is viewed by many as a long-sought watershed in the AIDS movement, in which all the arguments about why people shouldn't be treated in Africa because of expense and the lack of a health system were thrown offstage, and people instead explored how treatment can begin.
From that new platform, activists now expect bold ideas on solutions, like the one to transfer debt payments into health, education, and social programs that help poor people.
''We got absolutely nothing at the last G8 meeting,'' said Kwesi Owusu, executive director of Southern Links, a network of antipoverty groups in the Southern Hemisphere, referring to the June summit of industrialized nations in Alberta, Canada. ''Famine is consuming southern Africa, 38 percent of adults in Botswana are HIV infected, a massive crisis is escalating. And we have no new significant aid inflows, while the rich countries are prolonging the debt agony.''
At the meeting of religious leaders, Hajai Katoumi Mahama, president of the Women Muslim Association of Ghana, pleaded, ''We call on our governments to ...immediately withhold debt servicing payments to the World Bank, IMF, and wealthy G8 governments, and to commit these resources to eradicate poverty and implement HIV/AIDS interventions.''
Several African and US non- governmental organizations have since begun to push the stop-debt-payments idea. Economist Jeffrey D. Sachs, a special adviser to UN Secretary General Kofi Annan on poverty-related issues, suggested it in Barcelona - if only after African countries meet with donors and request that the remaining debt be turned into poverty-fighting grants.
Sachs should know how it works: He persuaded Poland and Bolivia to take that route.
''If you try to collect the debt, you are killing millions of people,''
Sachs said in an interview. ''If the countries pay the debt, they can't
meet their developmental needs. There should be an international understanding
of this. If there is no international understanding, many countries in
duress
in history have taken a unilateral action. That is important for African
leaders to understand.''
He continued: ''It's not outlandish or irresponsible for African leaders to put the survival of their people first.''
Of course, there are many reasons to believe they won't stop making debt payments. In fact, African leaders are the greatest skeptics. Asked about the possibility, many have either laughed or physically recoiled. They point out that their governments survive because of donor funding and it would be foolhardy to jeopardize that support.
''If I stopped paying debt service, all my poverty-reduction money would stop from the World Bank and IMF,'' Mozambique Prime Minister Pascoal Mocumbi said in an interview in Barcelona. ''Fifty percent of our budget is from donors. I can't not pay. The country would stop.''
But Mocumbi also said that he was at a loss for how to begin a frontal attack on HIV and AIDS without hundreds of millions of dollars. ''Every day I receive information on the number of people who died the day before of AIDS. It is unbelievable. Every one is under the age of 40. If nothing is done to stop this trend in the next decade, we will lose all our capacity to run this country,'' he said.
Stephen H. Lewis, Annan's special envoy on HIV/AIDS in Africa, said that African leaders are ''right to be cautious'' of a backlash if they stop paying debts. (Some African countries are currently in arrears, including nations in conflict such as Liberia, Sudan, and the Democratic Republic of Congo.)
But Lewis said that if the countries took the debt money and used it to save lives, ''there are some donors who would be privately pleased, although they would never publicly take this stand.''
The African leaders aren't the only ones balking. Many in the aid industry dismiss the idea because they believe redirected debt payments would be lost to corruption. Lenders point out that while 90 percent of loans are from multilateral organizations or countries, some of the creditors, such as Iraq, China, and Libya, would not take kindly to cancellation of debt.
Also, a senior official at a creditor organization said that if there were large-scale cancellation, multilateral donors fear that would mean less money for poor countries, and their organizations' livelihood would be at stake.
Senior UN officials, not surprisingly, object as well.
''It would be an absurdity for countries that are so dependent on financial
assistance to go unilaterally and poke the donors in the eye,'' said Mark
Malloch Brown, administrator of the UN Development Program, who said that
Sachs does not speak for the UN system.
''We're pushing deepening debt relief. We will continue to press for negotiated
solutions, to broaden and deepen HIPC.''
HIPC stands for the Heavily Indebted Poor Countries Initiative, a program begun in 1996 and expanded in 1999 to provide debt relief to 42 of the poorest countries in the world. Several countries hard hit by AIDS such as South Africa, Nigeria, Kenya, and Botswana, don't qualify. In all, the HIPC countries save more than $1 billion a year from debt relief. They are required to cycle 60 percent of those savings into poverty-reduction programs; it is too early to judge results.
But global AIDS activists believe all objections still pale compared with the magnitude of the problem. Paul S. Zeitz, head of the Global AIDS Alliance, acknowledged that corruption is a problem, but said there is a way to address it: earmark most of the debt payments into the Global Fund to Fight AIDS, Tuberculosis and Malaria.
''Who could argue with them putting the money into the Global Fund?'' Zeitz said. ''They would be applauded.''
So far, the Global Fund has $2.1 billion in pledges. Senior UN officials estimate that a minimum of $13 billion annually is needed from the fund, the World Bank, and bilateral sources to start reversing the infection rates for the three diseases.
Sachs, who advises several African countries on economic issues, including Nigeria and Malawi, said debt reduction or elimination talks should begin immediately. The AIDS conference, where UN officials estimated that nearly 70 million more people could die of the virus in the next 20 years, left no doubt about the urgency of the crisis, he said.
''We left Barcelona understanding again that the money for AIDS control is at a dreadfully low level,'' he said. ''We have countries like Nigeria where debt service is three to five times higher than health budgets. It's a life or death issue.''
This story ran on page D1 of the Boston Globe on 8/4/2002.
© Copyright 2002 Globe Newspaper Company.
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