22nd, 23rd of July

Would Debt Relief Help the Poorest Countries?

Karl Ziegler, Director of the Centre for Accountability and Debt Relief

The main reason why unconditional debt relief to the world's over-borrowed nations will not help their poorest citizens, is that those citizens will never experience the benefits of such relief.
Most over-borrowed nations are dominated by ruling elites; familial, tribal or military, whose first priority is to feed their offshore bank accounts and provide sustenance and support to the military or police forces that maintain them in power.
Indeed, some of the world's "poorest" over- borrowed countries include Nigeria, Democratic Republic of Congo (formerly Zaire), Zimbabwe, Tanzania and Zambia, inherently wealthy countries.
A recent hurricane placed Nicaragua and Honduras on the list of troubled borrowers. These nations, and most of the others on the current World Bank list of unsustainably indebted nations, have corruption as a recurrent theme in their political and economic management.
In most cases, the total debt owed by the nation's could be repaid immediately if monies, stolen by rulers and their cronies and nestled into offshore tax havens, were returned to the nations from which they had been exported illegally.
The highly visible and "successful" Jubilee 2000 campaign has attracted support from the majority of religious groups, aid charities and some leading religious, sports and entertainment personalities. This well funded effort has essentially attracted well meaning supporters based on intellectually dishonest arguments. Debt, per se, does not starve children in Africa or elsewhere, but corruption does have that effect.
In recent months some of the leading well funded charities have begun to realise that the essentially unfunded arguments of our Centre for Accountability and Debt Relief can do more to help the poor in many of these over borrowed and criminally exploited nations.
Our recommendation is simple:
(1) Have international auditing firms assigned and paid - to supervise locally and daily what the realised savings from debt service relief is applied to - e.g. education, health and infrastructure programmes over a period of 10 or more years.
(2) The daily auditors would be placed in the nation's key ministries to continually oversee financial transparency and accountability, while the debt principal would be amortized (forgiven) over a 10 year or longer period.
(3) Part of the nation's savings from forgiven debt service payments would be used to pay the auditors (perhaps 10 resident auditors would cost the borrowing nation $1 million per year).
(4) If, at any time, the auditors should be sent home or, they report on financial scandals which are not immediately put right, the unexpired debt principal and attendant debt servicing would be immediately reimposed.
(5) In Uganda, as the first recipient of debt relief under the current programme, is now receiving some $40 million annually in debt relief, such a cost would not be onerous to the government and it would further endorse the historical probity of its President Museveni.
(6) As that country has not in fact invited the full auditing contingent into its ministries as originally envisaged, it has recently become entwined with a continuous barrage of corruption scandals. Such an outcome clearly does not provide the maximum benefit to Uganda's poor.
(7) The situation today on debt relief represents a turning point. The U.K. Chancellor recommended that auditors be installed into the new Nigerian Government's Central Bank, the State owned Oil Company and the Ministry of Finance - a recommendation long discussed by our Centre with President Obasanjo.
(8) Should that precedent take hold in wider World Bank and IMF policy initiatives elsewhere in over borrowed nations, the world's poor would surely benefit, and the Jubilee 2000 campaign would finally be put on the right track.

SHORT VIDEO:

 First World Obligation 
You are going to debate the correctness of the following statement: First World countries have an obligation to help Third World countries with funds and assistance in cases of hunger and poverty. It is important to remember that you have been placed in your group based on what seems to be the opposite of what you really think. Use the clues and ideas below to help you create an argument for your appointed point of view with your team members. Below you will find phrases and language helpful in expressing opinions, offering explanations and disagreeing.
Opinions, Preferences:
I think..., In my opinion..., I'd like to..., I'd rather..., I'd prefer..., The way I see it..., As far as I'm concerned..., If it were up to me..., I suppose..., I suspect that..., I'm pretty sure that..., It is fairly certain that..., I'm convinced that..., I honestly feel that, I strongly believe that..., Without a doubt,...,
Disagreeing:
I don't think that..., Don't you think it would be better..., I don't agree, I'd prefer..., Shouldn't we consider..., But what about..., I'm afraid I don't agree..., Frankly, I doubt if..., Let's face it, The truth of the matter is..., The problem with your point of view is that...
Giving Reasons and offering explanations: To start with, The reason why..., That's why..., For this reason..., That's the reason why..., Many people think...., Considering..., Allowing for the fact that..., When you consider that...
For Extensive Responsibility

  • First World has always exploited Third World
  • Creates dens of international or global community
  • Promotes cross-cultural understanding
  • Raises First World awareness of Third World plight
  • The importance of humanitarian deeds
  • Promotes economic stability
  • Raises standard of living for Third World populations
  • Reflects acceptance of First World responsibility for past historical actions
For Limited Responsibility 
  • Every nation is responsible for its own people
  • Long term affects of sustained "charity" are negative on the whole
  • Makes Third World countries even more dependent on First World countries
  • Imports First World cultural values into Third World context where they do not necessarily belong, or apply
  • Creates cultural homogenization
  • Past history of corruption and ineffectiveness of such "help" programs
  • Need for real economic opportunities rather than charity
  • Hurts national pride and confidence in the leadership of the Third World countries involved
  • Help can be made dependent on certain political or economic conditions imposed by First World countries
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