October 19, 2000
Knight-Ridder/Tribune Media Services, October 19, 2000
Star power had boosted the movement to cancel the debt of the world’s poorest countries, even if there is still little to show for its efforts. At the International Monetary Fund and World Bank meetings in Prague last month, the most interesting speaker was U2’s Bono, who held a press conference with World Bank President James Wolfensohn at his side. Bono was articulate and charming as a spokesman: “You’ll have to excuse my shyness,” he began. “I’m not used to speaking to crowds of less than 70,000 people.”
Bono lauded Wolfensohn for starting the debt relief process four years ago but firmly insisted that now was the time to finish it. He noted that 19,000 children are dying each day, and their lives could be saved with the money that their governments now pay in debt service to wealthy foreign creditors. If these children were dying on the streets of London or New York or Paris, he said, it would be considered a holocaust. But they are in Africa and in poor countries elsewhere, so the Fund and the Bank do not feel any great urgency to act.
Wolfensohn sat quietly through Bono’s speech but later told reporters that he did not agree with the rock star’s demand, put forth by Jubilee 2000 and religious groups worldwide, for cancellation of the poor countries’ debt. And indeed the IMF and the World Bank offered no new initiatives for debt relief at the Prague meetings. Instead they simply repeated the promises made last year to increase the number of countries getting relief under their plan for Heavily Indebted Poor Countries (HIPC).
But the HIPC initiative was launched in 1996, and of 41 countries promised debt relief, only one– Uganda– has actually seen its debt service payments reduced. And for those who might follow, the conditions attached to any debt relief could well cause more economic destruction and misery than the debt itself.
One of these conditions has been to impose “user fees” on formerly free public services such as primary education and health care in impoverished countries. According to a World Bank review of the its Health, Nutrition, and Population lending program, 75 percent of these Bank projects in sub-Saharan Africa either established or expanded user fees.
Such fees are a horrible policy, as evidenced by the enormous increases in school enrollment when they are removed: for example in Malawi, whose per capita income is less than $200 per year, primary school enrollment jumped by 50% when a small school fee was eliminated in 1994. Poor people have also suffered and even died when these fees have been imposed at health clinics. Advocates for the world’s poor have taken their battle from the streets to the halls of Congress, in a full court press to abolish these requirements. Over 120 non-governmental organizations– including the AFL-CIO, the Presbyterian Church, and Jubilee 2000 USA– have joined in. But the Treasury Department has not yet agreed to legislation that would require the United States to oppose such mandated user fees within the World Bank.
This requirement would not guarantee the end of user fees. But the chances are good that it would force the Bank and the Fund to stop inflicting this particular form of pain on the school children, as well as citizens in need of medical attention, in poor countries.
On the larger question of debt relief, we are still a long way from meaningful reform. The $435 million appropriation now making its way through Congress, which goes mainly to the HIPC initiative, will do very little to ease the burden of debt on the world’s poor. Even if all the promised relief were to materialize, most of the recipient countries would remain saddled with debt payments that constitute an enormous drain on their economies. And in the mean time, the hoops and hurdles and strings attached will drag out the process indefinitely, while more destructive economic policies are imposed.
The US Treasury Department, which effectively controls the creditors’ cartel headed up by the IMF and the Bank, tipped its hand last month: one of its officials told the New York Times that the latest promises to speed up debt relief were “largely ‘window dressing’ designed to placate protesters.” But a growing movement is demanding more than window dressing, and is building the organizational and political muscle to win it. Two weeks ago San Francisco’s Board of Supervisors voted unanimously to boycott World Bank bonds, joining an international effort modeled on the successful divestment campaign that helped bring down apartheid in South Africa.
The days of minority rule at these powerful institutions may also be numbered.