the poor
Ros Coward in London
Madagascar, former colony and popular tourist destination, is close to an epidemic of the Black Death – 187 cases have been diagnosed in one city, after the collapse of organised rubbish collection was followed by a plague of rats.
In the 1960s, Madagascar was a confident country with a burgeoning middle-class intent on improvements. Now, only 23% have access to safe water and Madagascar’s international debt runs at $340 per person, one-and-a-half times the gross national product.
The World Bank does not think that Madagascar is even a particularly critical country, but its international debt and decline are typical of the growing gulf between the first and third world. Many African countries now return three times as much in debt repayment to the West than they receive in aid. Others spend four times more repaying international financiers than they do on health. These debts have led to destabilisation, conflict, disease and collapse. Some countries, like Zambia, have reverted to subsistence economies.
>From this perspective, the millennium has a sense of foreboding rather than anticipation, and widening inequalities suggest an impending disaster. So I was surprised when I stumbled on one campaign which, with simplicity, uses the idea of the millennium to address global reality. The Jubilee 2000 campaign in Britain wants the millennium to be celebrated by the cancellation of the unpayable debts of the world’s poorest countries.
Jubilee 2000 is hosted by the charity Christian Aid and supported by a wide range of church people – evangelicals, Catholics and Anglicans. Outside the church this campaign is virtually unknown, which is hardly surprising. After years of divisiveness, introspection and reactionary politics, few expect the church to take any initiative, let alone an important one. There is a danger the campaign could be used to evangelise about the “truth” of the Bible – the origin of the Jubilee idea of cancelling debts and freeing slaves. But the idea of wiping the slate clean has larger resonance.
Many aid agencies have long argued for ending third world debt. Oxfam, for example, has campaigned for debt relief for 10 years and regards 1996 as a victorious year, since in September, the International Monetary Fund (IMF) and World Bank acknowledged that certain countries had “unsustainable” levels of debt, and agreed to a framework for debt reduction.
But this victory seems hollow. To qualify for debt reduction, countries have to undertake “structural adjustments” – the usual IMF combination of devalued currency, increased interest rates, cuts in government spending and an end to subsidies to local producers. Measures are required to regulate chaotic economies, but these remedies are inappropriate.
Basic infrastructure is in ruins and needs government spending before a private sector can develop. Existing production is concentrated in the primary sector, where prices are so low in the world market that any free trade charter only favours already rich nations. The IMF-World Bank agreement also contains a Catch 22. Some countries will take six years to qualify: how can they survive that long if their level of debt is now unsustainable?
As Ann Pettifor of Jubilee 2000 points out, these countries are declaring themselves bankrupt, and the IMF and World Bank are operating as both creditors and receivers. When countries go bankrupt, there is no insolvency procedure. If creditors propose solutions that in the long run benefit not the poor producers but the protected trade of the West, the downward spiral continues. (This sounds paranoid, but their solutions do not have an impressive record. Rwanda’s plight can be traced back to a disastrous IMF intervention after a 1989 collapse in the price of coffee, its key export.)
It is hardly surprising, then, that Jubilee 2000’s objectives seem idealistic. Outright cancellation of debts might pander to regimes that borrowed to spend money on arms, or support chaotic economies; it does not solve long-term problems of unfair trade. But all these would be outweighed by the constructive nature of cancelling the debt; it is a step towards a better future and other proposals to celebrate the millennium are parochial.