An aura of sanctity is descending upon the world's most powerful men. On Saturday
the finance ministers from seven of the G8 nations (Russia was not invited) promised
to cancel the debts the poorest countries owe to the World Bank and the International
Monetary Fund. The hand that holds the sword has been stayed by angels: angels
with guitars rather than harps.
Who, apart from the leader writers of the Daily Telegraph, could deny that debt
relief is a good thing? Never mind that much of this debt - money lent by the
World Bank and IMF to corrupt dictators - should never have been pursued in the
first place. Never mind that, in terms of looted resources, stolen labour and
now the damage caused by climate change, the rich owe the poor far more than the
poor owe the rich. Some of the poorest countries have been paying more for debt
than for health or education. Whatever the origins of the problem, that is obscene.
You are waiting for me to say but, and I will not disappoint you. The but comes
in paragraph 2 of the finance ministers' statement. To qualify for debt relief,
developing countries must "tackle corruption, boost private-sector development"
and eliminate "impediments to private investment, both domestic and foreign".
These are called conditionalities. Conditionalities are the policies governments
must follow before they receive aid and loans and debt relief. At first sight
they look like a good idea. Corruption cripples poor nations, especially in
Africa. The money which could have given everyone a reasonable standard of living
has instead made a handful unbelievably rich. The powerful nations are justified
in seeking to discourage it.
That's the theory. In truth, corruption has seldom been a barrier to foreign
aid and loans: look at the money we have given, directly and through the World
Bank and IMF, to Mobutu, Suharto, Marcos, Moi and every other premier-league
crook. Robert Mugabe, the west's demon king, has deservedly been frozen out
by the rich nations. But he has caused less suffering and is responsible for
less corruption than Rwanda's Paul Kagame or Uganda's Yoweri Museveni, both
of whom are repeatedly cited by the G8 countries as practitioners of "good
governance". Their armies, as the UN has shown, are largely responsible
for the meltdown in the eastern Democratic Republic of Congo (DRC), which has
so far claimed 4 million lives, and have walked off with billions of dollars'
worth of natural resources. Yet Britain, which is hosting the G8 summit, remains
their main bilateral funder. It has so far refused to make their withdrawal
from the DRC a conditionality for foreign aid.
The difference, of course, is that Mugabe has not confined his attacks to black
people; he has also dispossessed white farmers and confiscated foreign assets.
Kagame, on the other hand, has eagerly supplied us with the materials we need
for our mobile phones and computers: materials that his troops have stolen from
the DRC. "Corrupt" is often used by our governments and newspapers
to mean regimes that won't do what they're told.
Genuine corruption, on the other hand, is tolerated and even encouraged. Twenty-five
countries have so far ratified the UN convention against corruption, but none
is a member of the G8. Why? Because our own corporations do very nicely out
of it. In the UK companies can legally bribe the governments of Africa if they
operate through our (profoundly corrupt) tax haven of Jersey. Lord Falconer,
the minister responsible for sorting this out, refuses to act. When you see
the list of the island's clients, many of which sit in the FTSE 100 index, you
begin to understand.
The idea, swallowed by most commentators, that the conditions our governments
impose help to prevent corruption is laughable. To qualify for World Bank funding,
our model client Uganda was forced to privatise 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. The rest was nicked
by government officials. Unchastened, the World Bank insisted that - to qualify
for the debt-relief programme the G8 has now extended - the Ugandan government
sell off its water supplies, agricultural services and commercial bank, again
with minimal regulation.
And here we meet the real problem with the G8's conditionalities. They do not
stop at pretending to prevent corruption, but intrude into every aspect of sovereign
government. When the finance ministers say "good governance" and "eliminating
impediments to private investment", what they mean is commercialisation,
privatisation and the liberalisation of trade and capital flows. And what this
means is new opportunities for western money.
Let's stick for a moment with Uganda. In the late 80s, the IMF and World Bank
forced it to impose "user fees" for basic healthcare and primary education.
The purpose appears to have been to create new markets for private capital.
School attendance, especially for girls, collapsed. So did health services,
particularly for the rural poor. To stave off a possible revolution, Museveni
reinstated free primary education in 1997 and free basic healthcare in 2001.
Enrolment in primary school leapt from 2.5 million to 6 million, and the number
of outpatients almost doubled. The World Bank and the IMF -which the G8 nations
control - were furious. At the donors' meeting in April 2001, the head of the
bank's delegation made it clear that, as a result of the change in policy, he
now saw the health ministry as a "bad investment".
There is an obvious conflict of interest in this relationship. The G8 governments
claim they want to help poor countries develop and compete successfully. But
they have a powerful commercial incentive to ensure that they compete unsuccessfully,
and that our companies can grab their public services and obtain their commodities
at rock-bottom prices. The conditionalities we impose on the poor nations keep
them on a short leash.
That's not the only conflict. The G8 finance ministers' statement insists that
the World Bank and IMF will monitor the indebted countries' progress, and decide
whether they are fit to be relieved of their burden. The World Bank and IMF,
of course, are the agencies which have the most to lose from this redemption.
They have a vested interest in ensuring that debt relief takes place as slowly
Attaching conditions like these to aid is bad enough. It amounts to saying:
"We will give you a trickle of money if you give us the crown jewels."
Attaching them to debt relief is in a different moral league: "We will
stop punching you in the face if you give us the crown jewels." The G8's
plan for saving Africa is little better than an extortion racket.
Do you still believe our newly sanctified leaders have earned their haloes?
If so, you have swallowed a truckload of nonsense. Yes, they should cancel the
debt. But they should cancel it unconditionally.