There was a time, some decades ago, when
analysts could write of "aid as imperialism". Today, when official
aid is all but defunct, it is more correct to describe the current tendency
of debt-forgiveness as imperialism. There is much that is appalling about
imperialism today – the dastardly occupation of Iraq which has brutalised
the entire society, is but one particularly telling example. But the militaristic
and resource-grabbing aspects of imperialism may be distracting from other
deep and continuing features which are also doing great damage to countries
across the world.
What is even more obscene is when imperialism is not naked in its violence,
but disguised as charity and empathy for the oppressed, and when the rest
of the world is made to applaud the benevolent concern expressed by the
great powers. This is what has been happening around the recent G-8 Summit
meeting, which made it a point to continue despite the London bombings,
in order to push through what it claimed was a "historic" and
"unprecedented" debt relief package for some of the poorest
countries of the world.
This was accompanied by a concert extravaganza of the trendiest "feel-good"
pop stars around, such as Bob Geldof and Bono, to provide entertainment
to accompany the good deed, as well as a media blitz supported by almost
the entire world's press and television. So much so that even otherwise
well-informed and progressive people in the developing world were fooled
into thinking that, for a change, the leaders of the core capitalist countries
were actually thinking about doing some good for people desperately in
need of it.
Unfortunately, a more cynical perspective is actually the correct one.
The G-8 debt relief deal is actually a paltry and niggardly reduction
of a small part of a debt that has grown to gigantic proportions more
because of adding on unpaid interest than because of any recent flows
of fresh resources. And this pathetic amount is being traded for yet more
major concession made by the debtor countries, in terms of sweeping and
extensive privatisation of public services and utilities, which is about
all that is left for governments to sell in these countries, as well as
large increases in indirect taxes which fall disproportionately on the
poor.
Consider the main elements of this "generous" deal. To begin
with, only 18 countries are to "benefit" from the G8's so-called
generosity. They are all countries that have been through this before
– most recently through the highly publicised HIPC initiative (for heavily
indebted poor countries) launched in 1996. The HIPC initiative, which
was greeted with similar if less musical fanfare, has since failed utterly,
either in relieving the burden of debt or improving conditions in the
countries concerned. Estimates by UNCTAD suggest that the 27 HIPC beneficiary
countries, for example, will be making bigger debt repayments in 2005
than in 2003.
Even for these 18 countries, the debt relief is very partial and is nowhere
near complete cancellation. It mainly concerns only some bilateral debt
and the debt held by the World Bank and the African Development Bank,
which amounts to a very small proportion of the total debt of the concerned
countries. The British proposal only intended to take over repayments
between now and 2015.
The total financial burden on the G-8 of the entire operation would amount
to some $2 billion a year, which should be compared to the estimated $350
billion annually devoted by the G8 to farming subsidies or the $700 billion
spent by the G-8 on military expenditure. The annual amount spent by all
these G-8 countries put together for the announced cancellation is less
than half of the amount the US government spends every month on its continued
illegal occupation of Iraq. Even this trivial amount for the US would
be financed through the US development aid budget, reducing aid provided
elsewhere and not involving any additional resources.
It is true that the current deal is an improvement on the HIPC initiative
in that what has been agreed upon is a real cancellation that would bear
on the principal of the debt, rather than simply a financial contribution
towards the debt service paid to multilateral institutions. But even so,
the announced cancellations would not even amount to a complete cancellation
of debt for these 18 countries, who would still have to deal with a large
amount of multilateral debt.
What do the recipient countries have to provide in return for this munificence
which will not even be noticed in the budgets of the governments of rich
countries? The answer is that they will have to further sell their natural
resources, their public assets, and deprive their people of the basic
conditions of a decent life, in order to advance the profiteering by large
corporations from the G-8 countries and elsewhere.
The G8 decision represents a continuation of the HIPC initiative, which
insisted upon the imposition and intensification of heavily neoliberal
policies that have already ravaged poor debtor countries. Consuder some
of the main elements of the conditionalities:
• privatisation of natural resources and of strategic economic sectors
to the benefit of large multinational corporations;
• higher cost of health care and education, directly affecting the access
of the poor to these basic socio-economic rights;
• increases in VAT, a regressive tax, which means increased costs and
lower real incomes of ordinary people;
• free flow of capital, which leads to great volatility of exchange rates
and capital flight by the elite;
• lower tariff protection, which leads to thousands of small and middle
producers losing their livelihoods because they cannot compete with imported
goods.
It is not hard to see that this is a deal designed to further the economic
interests of imperialism, which has once again been sold across the world
as a huge concession made to the world's poor. In the words of the poet,
"After such knowledge, what forgiveness?"