I don’t want to rain on anyone’s parade, but there’s something fishy about the recent announcement proposing debt relief for Africa’s poorest nations. When the G8 leaders announced the plan, it was greeted with almost universal delight, as well it should.
Crippling debt is an enormous problem for impoverished nations and wiping that debt out is something to be encouraged, lauded, and celebrated. In fact, I’d love to hold hands with Bob Geldof, Bono, and the G8 leaders and sing Kumbaya — okay, maybe not all the G8 leaders, but you know what I mean. I like happy news.
But there’s a problem with the G8 announcement. There are nefarious strings attached — conditions set by the International Monetary Fund (IMF) and World Bank, whose president is neo-conservative Paul Wolfowitz, one of the chief architects of the Iraq invasion.
These conditions have the potential to make the relief worse than the debt itself.
While the idea of debt relief is something to celebrate, we need to inform ourselves about the tactics and pitfalls hinted at in the wording of the announcement so we can keep these leaders true to the spirit and goals of the plan. Here’s a summary of the plan from CNN:
“LONDON, England — Finance ministers from the world’s wealthiest nations have agreed to a historic accord to cancel up to $55 billion worth of debt owed by the world’s poorest nations.
“The Group of Eight (G8) ministers — meeting for a second day Saturday in London — backed a deal that calls for an immediate scrapping of 100 percent of the debt owed by 18 countries.
“Those countries — many in sub-Saharan Africa — owe about $40 billion to the World Bank, the International Monetary Fund and the African Development Bank.”
The problem is with the “conditionalities.” These are described as bringing governments into compliance, stopping corruption, and making the countries open to trade and investment. Again, all worthy goals when taken at face value, but what do the G8 leaders mean by these phrases?
We don’t have to guess. They have been using this same wording for a long time and we have ample evidence of what they intend, as well as precedent on how it has worked out.
World Bank has a program, started in 1996, with guidelines that spell out the details. It’s called the Heavily Indebted Poor Country initiative, or HIPC. Countries have to meet standards for “good governance” to be granted HIPC status. The Bretton Woods Project, an independent British network that tracks monetary affairs, states:
“The HIPC initiative has been heavily criticised by NGOs [non-governmental organizations] for delivering too little debt relief too slowly and for imposing damaging conditions requiring liberalisation and privatisation.”
What’s this? Liberalisation and privatization aren’t at issue here, are they? No one said anything about privatizing anything, did they? Research reveals that’s because they call it something else now — either public-sector participation (PSP) or public-private partnership (PPP).
Here’s what happened when Uganda, considered a model client by World Bank, was given HIPC status. From The Guardian:
“To qualify for World Bank funding, our model client Uganda was forced to privatize most of its state-owned companies before it had any means of regulating their sale. A sell-off that should have raised $500m for the Ugandan exchequer instead raised $2m.”
Okay, but did it stop corruption?
“The rest was nicked by government officials.”
Hmmm, but what in the world could we want from these impoverished sub-Saharan countries?
“Unchastened, the World Bank insisted that – to qualify for the debt-relief program the G8 has now extended – the Ugandan government sell off its water supplies, agricultural services and commercial bank, again with minimal regulation.”
Water is becoming a major global issue and corporations have their rationalizations all worked out:
“Private water companies view federal financial assistance for water and wastewater infrastructure as a “subsidy” that gives cities an unfair competitive advantage over private water companies. They oppose increased federal funding for water and wastewater systems, in the hope that the more financially troubled a city’s system, the more receptive city leaders will be to ceding control over that system to a private operator.”
You may have heard rumbles about this before. Maybe something about there being a water war in Bolivia, one of the pilot countries for the HIPC initiative. World Bank and IMF have been having their wicked way with our neighbors for a long time and that situation hasn’t worked out so well.
“In early April the often-forgot country of Bolivia, tucked away in the Andes, grabbed the world’s attention when the city of Cochabamba erupted in a public uprising over water prices. In 1999, following World Bank advice, Bolivia granted a 40 year privatization lease to a subsidiary of the Bechtel Corporation, giving it control over the water on which more than half a million people survive. Immediately the company doubled and tripled water rates for some of South America’s poorest families.”
Bechtel had to pull out of Bolivia due to the popular uprising, leaving the United States without a major player in the water business. The major players now are the two countries pushing the current debt relief plan — Britain has RWE/Thames, and France has both Suez/ONDEO and Vivendi (now Veola).
“Cochabamba, Bolivia — Five years ago the issue of water privatization exploded here when massive public protests forced out the California engineering giant, Bechtel. Within weeks of taking over the city’s public water company, Bechtel hiked up rates by as much as 200%, far beyond what the city’s poor could afford to pay.
“Now a new Bolivian water revolt is underway 200 miles north in the city of El Alto, a growing urban sprawl that sits 14,000 feet above sea level and is populated by waves of impoverished families arriving from the economically desperate countryside.
“As in Cochabamba, the public water system of El Alto and its neighbor La Paz, the nation’s capital, was privatized in 1997 when the World Bank made privatization of water a condition of a loan to the Bolivian government. The private consortium that took control of the water, Aguas del Illimani, is owned jointly by the French water giant, Suez, and a set of minority shareholders that includes, among others, an arm of the World Bank.”
The G8 countries, World Bank, and IMF are up to their eyeballs in helping multi-national corporations pillage poor countries — sad but true. When they announce a plan to help which includes the very program which has been facilitating the pillaging, it bears watching.
Right now, they’re basking in global goodwill over the debt relief announcement. If they later squeeze those countries dry, they’ll try to do it quietly.
It’s up to us to watch, listen, and make a splash if it happens.
