Debt relief for poor countries at the G8 summit: First step towards a real solution or a cunning exercise in image building?

As the G8 summit approaches the focus of the entire world is on Third World debt. G8 leaders are expected to announce the cancellation of debt for 18 of the world's poorest countries. Will this gesture actually achieve anything, or is it simply an attempt on the part of the imperialists to clean up their image?

Next week our TV screens and radios will be flooded by a massive campaign that will try to convince us that the superpowers really are great saviours. With great ostentation Blair and Bush will cancel the debts of some of the poorest countries during the G8 summit. The G8 is of course composed of the United States, Great Britain, France, Germany, Japan, Italy, Canada and Russia. With the help of a whole lot of “progressives” they will try to brush up their image, which has been damaged over the last few years.

On June 10 the British Chancellor of the Exchequer Gordon Brown announced that the G8 would cancel the national debts of the 18 poorest countries in the world, i.e. Benin, Bolivia, Burkina Faso, Ethiopia, Ghana, Guyana, Honduras, Madagascar, Mali, Mauritania, Mozambique, Nicaragua, Senegal, Tanzania, Uganda and Zambia (strictly speaking these are not the 18 poorest countries in the world, which raises doubts about this whole stunt). These countries do not have to pay back their debts to the International Monetary Fund (IMF), the World Bank and the African Development Bank.

Many charity organisations see this 33.9 billion Euros gift as a step in the right direction towards solving the problem of world poverty. The mass media talk about an “historical step”. So-called progressives praise Blair, Brown and Bush to the skies. What are we to think when U2 singer Bono describes Tony Blair and Gordon Brown as “the John and Paul of the global development stage”? After his conversation with George W. Bush, Bono told the world that the American President is “passionate and sincere” in wanting to solve the problem of world poverty. Bob Geldof, the other big wheel in the battle of the superstars against poverty, even thinks the Texan oil cowboy “has done more for Africa than any other American president”. It really takes some guts to say this.

What makes Bush and Blair really “passionate and sincere” about solving world poverty is their ability to bring naïve superstars into action for their own glory and the continuation of their destructive policies in the interests of the rich. In fact this concession on the part of the superpowers to cancel a few debts is only a manoeuvre that will allowed them to shamelessly continue their neo-liberal policies. After all, Bush and Blair have a small problem. Because of their policies they may have filled the pockets of a small clique of capitalists, which entitles them to a very generous pension from countless Boards of Directors of big companies after their political careers have ended. However, they did not realise that their ultra-capitalist policy would act as an impetus to a renewed movement against imperialism. Public opinion has become much more critical as a result of the war in Iraq. Hence it is time to brush up their image with an impressive media stunt – debt cancellation.

Facelift for gluttonous fat cats

This is clearly about public relations, as the previous pompous promises of the G8 prove – promises which were later “forgotten”. Indeed, the main aim had been achieved: ordinary people had the impression that the world’s leaders do indeed care about the poor. What is pompously announced today is in reality a miniscule amount of money. The joint national debts of the 18 poorest countries amount to a mere 33.9 billion Euros, whereas last year worldwide military expenditure reached a staggering US $1000 billion. In other words, this is no more than a storm in a teacup.

Moreover, these debts are completely unjustified since we are talking about national debts that have been built up and maintained by Great Britain and the United States among others, who now assume the image of great benefactors. In the 1960s most colonised countries became “independent”. They were no longer subject to the military control of their colonisers but they became subjected to a much more aggressive form of control – economical control. The capitalist class in these countries was (and still is) very weak and is completely dependent on their imperialist masters. The superpowers “granted” their ex-colonies a combined loan of $59 billion with an interest rate of no less than 14 percent. During the great energy crisis in the 1970s many Western institutions again offered a gigantic amount of money to the ex-colonies. Because of the enormous corruption a lot of these funds, allegedly intended to stimulate the economy, ended up in private Swiss bank accounts of dictators who were on very good terms with the West. They used this money for matters of prestige (“white elephants”) and of course for the expansion of their armies to defend their wealth. Through this conditional aid Western companies were able to fill their pockets as well – and this was not a mere pittance.

Today this process is still on the order of the day. Belgian development funds, for example, mainly finance Belgian companies that lobby for contracts in the Congo. Road construction for instance serves the interests of the economic giants. In the words of Eduardo Galeano, the road network extends like the fingers of a hand that ransacks the land for the benefit of Western multinationals. Multinationals have also made a lot of money through arms trafficking. Blair and Brown may pose as saviours but British arms trafficking to Africa amounts to more than 1 billion pounds (1.5 billion Euros), a threefold increase compared to 1999!

The population of the ex-colonial countries does not see anything from these loans, yet they have to pay for them through austerity measures on social services. Malawi pays more interest on its debts than it spends on healthcare, despite the fact that 15 percent of its population has HIV. Unfortunately for them they are not on the list of the 18 “lucky ones” whose debts will be cancelled. However, Malawi is still allowed to buy arms from Great Britain, about 3.6 million pound worth last year (The Observer, 12/06/05). Since the 1980s these countries have been almost exclusively paying back interest on their loans. Nigeria for example (which does not figure on the list of the18 “lucky ones” either) borrowed $5 billion until 1985. In the meantime they have already paid back $16 billion but they still have a debt of approximately $28 billion. The G8 cancel debts that have already been paid back long ago.

Conditional aid

These countries have been squeezed for years and years by monstrously high interest rates. This has created deep wounds that will not be healed by 33.9 billion Euros. For years debt payments served to cripple social services. In some countries money spent on debt payments was nine times higher than the money spent on healthcare, education, etc. In Cameroon for example (again a country which does not figure on the list of the 18 “lucky ones”) the proportion is 4 percent for social services as opposed to 36 percent for debt payments (figures published by the Committee for the Abolition of the Third World Debt). As a consequence medical and social services are severely lacking, which in turn leads to the outrageously high price of medicines. Illnesses that do not kill people anymore in the West take away millions of lives in the Third World. Each year 611,000 people die from measles. Malaria kills 1.3 million people every year and TBC 1.6 million. Every year 1.8 million people die from diarrhoea. Pregnancy leads to the death of 2.5 million women and 2.8 million people die from the complications AIDS and HIV bring with them. Bronchial infections kill no less than 4 million people. And yet all this is very easy to avoid. On the whole 15 million people die every for the sole reason that they have been squeezed by a handful of greedy bankers.

This extortion is now supposed to end. Nothing could be further from the truth. The piling up of national debt is a vicious circle. Without a doubt, for all cancelled debts there will be new debts to pay off. After all, these countries remain chained by the shackles of imperialism. Usually they are dependent on the export of one or two products, with the advice of the World Bank and the IMF they “coincidentally” owe money to as well. These international institutions use the existence of debts as a pretext to impose policies in the interest of the big owners. Things are no different this time, as the G8 has said that they will only cancel the debts of these 18 countries on condition that all barriers to private investment are swept away. In other words, on condition that they pursue ultra-liberal policies. Both Bolivia and Nicaragua figure on the list of 18 receivers. If a left-wing government comes to power tomorrow – which is probable in both countries – they can forget about the debt cancellation since investors do not like left-wing governments.

In essence everything that the international institutions (the G8, IMF, World Bank, WTO, etc.) undertake only serves one goal: to service the gluttony of a small minority of super rich people who own big companies and financial institutions. The hotel where the meeting of the G8 takes place is owned by a liquor company that invests massively in the plundering of Africa - Diageo (the owner of Smirnoff, Guinness, J&B, Johnnie Walker, Baileys). The left-wing journalist John Pilger puts it this way:

 “At present, for every 1 dollar of "aid" to Africa, 3 dollars are taken out by western banks, institutions and governments, and that does not account for the repatriated profit of transnational corporations. Take the Congo. Thirty-two corporations, all of them based in G8 countries, dominate the exploitation of this deeply impoverished, minerals-rich country, where millions have died in the "cause" of 200 years of imperialism. In the Cote d'Ivoire, three G8 companies control 95 per cent of the processing and export of cocoa: the main resource. The profits of Unilever, a British company long in Africa, are a third larger than Mozambique's GDP. One American company, Monsanto - of genetic engineering notoriety - controls 52 per cent of the maize seed in South Africa, that country's staple food. Blair could not give two flying faeces for the people of Africa. Ian Taylor at the University of St Andrews used the Freedom of Information Act to learn that while Blair was declaiming his desire to "make poverty history", he was secretly cutting the government's Africa desk officers and staff. At the same time, his "department for international development" was forcing, by the back door, privatisation of water supply in Ghana for the benefit of British investors. This ministry lives by the dictates of its "Business Partnership Unit", which is devoted to finding "ways in which DfID can improve the enabling environment for productive investment overseas and... contribute to the operation of the financial sector". Poverty reduction? Of course not.” (New Statesman, 22/06/05)

Bono dances Blair’s tune

In principle, only $80 billion a year for the next ten years is needed to fulfil the basic necessities (access to medical treatment, obstetrics, decent education, clean drinking water, etc.) of all people in the Third World. Even if the meagre 33.9 billion Euros the G8 so “generously” grants were to contribute to this aim, giving money would be no solution because capitalism simply does not work for the majority of the world’s population. The fact that 2 billion people have to survive on 2 dollars a day proves this every day. Every solution within the framework of capitalism is in reality no solution at all.

Hence the unconditional debt cancellation of the whole Third World is only a first step. The big companies and banks must be nationalised and put under the control of the workers in order to begin a harmonious plan of production, based on production for need, not profit. Socialism is the only way to drag the ex-colonial countries out of poverty and misery and bring the Third World onto the path of real development. Debt cancellation in itself does not mean the end of capitalism and imperialist domination, so it offers no real solution.

We should not be fooled by the media choir singing the generosity of Blair and his friends. A colossal and pricey machinery has been put into action to brush up the image of the imperialists. Parts of this apparatus are the big-headed pop stars, who because of their old ideals probably feel a bit uncomfortable with their wealth. Despite their nice words and tears they have been on the other side for a long time. Bono founded his charity for Africa (DATA) jointly with multibillionaires Bill Gates and George Soros, two of the most cunning men in the ranks of Capital. The same goes for many NGO’s that have swallowed their critique of Blair & Co. in their “Make Poverty History” campaign in exchange for cash (just read Stuart Hodkinson’s eye-opening article Inside the murky world of the UK’s Make Poverty History campaign).

The paternalism of these NGO’s goes hand in hand with the agenda of imperialism. That is why the verdict of African activists is devastating. The conclusion that Kofi Maluwi Klu from Ghana draws is clear: ““We have a saying in the African liberation movement – ‘nothing about us, without us'. Make Poverty History is a massive step backwards in this regard, even from Jubilee 2000. The campaign is overwhelmingly led by Northern NGO’s and its basic message is about white millionaire pop stars saving Africa 's helpless. The political movements still fighting for liberation on the ground are completely erased”.