Friday, January 14, 2005

Why India didn't took donations from Paris Club ? One should read this

Disaster donations may well end up servicing the Third World Debt!

By Damien Millet and Eric Toussaint (*)

Ever since the earthquake that struck off the coast of Indonesia on
26th December there has been a profusion of figures in the headlines,
increasing remorselessly: the number of victims, the cost of the damage, the
amount of international aid. And a succession of meetings involving the major
powers: the Jakarta conference, a G7 meeting, a session of the Paris Club ...
Let us pause to comment on some little-known facts and figures that should
be at the heart of the debate.

Eleven countries are affected: Indonesia, Sri Lanka, India, Thailand,
Somalia, the Maldives, Malaysia, Burma, Tanzania, Bangladesh and Kenya.
A mixed bag, including countries from Africa and from Asia, countries
with emerging economies and very poor countries, countries repaying colossal
amounts on their debts and others which have suspended payments.
However Nature made no distinction between these countries, so it would seem
all the more shocking to grant to some what others might be denied.

At the end of 2003, the total external debt of the eleven countries
came to 406 billion dollars [1]. Their economic performance varied greatly, as
did their creditors [2]. Promising countries like India and Thailand have a
debt mainly to private lenders, contracted on the finance markets or
with big banks. Poor countries like Sri Lanka or Bangladesh have a mainly
multilateral debt, held by the World Bank, the Asian Development Bank
and the IMF. More internationally isolated countries like Somalia have a
mainly bilateral debt contracted with rich countries.

In 2003, the eleven countries repaid a total of 68 billion dollars to
their foreign creditors, as compared to 60 billion the preceding year. Their
governments alone repaid 38 billion dollars [3]. It is an enormous
drain on their resources: between 1980 and 2003, repayments totalled eleven
times the amount owed in 1980, while at the same time, that original debt had
increased fivefold [4].

The amount of international aid so far pledged is estimated at 6
billion dollars, 4 billion of which will come from official institutions.
Without wishing to discourage the wave of generosity, which relieves the
donors' consciences long before it reaches the victims, it is urgent to point
out that the eleven countries shell out six times that much in debt
repayments each year. So the grossly over-publicised generosity, even when it is
sincere, remains a very subtle mechanism for sucking the wealth of the
populations of the South towards their rich creditors. If only
December's tragedy could serve to highlight that other tragedy, going well beyond
the eleven countries hit by the tsunami: the debt. Because of it, and with
the complicity of the local ruling classes who have a personal interest in
keeping their countries indebted, States do not guarantee the
fulfilment of their people's basic needs; poverty and corruption are widespread;
political and economic sovereignty have become meaningless concepts for
dozens of countries; natural resources are pillaged or sold off to
powerful multinational corporations; farmers are forced to grow cash crops for
export to the detriment of subsistence crops. The debt is the
particularly vigorous nerve centre of a predatory and oppressive economic model.

What creditor would dare declare publicly that they still intend to
obtain repayments from such badly damaged countries? Nevertheless, none has
definitely given up. The long-awaited Paris Club meeting, (17 days
after the quake) attended by 19 rich countries, should fool no one. The
creditors are ready to suspend repayments, with no significant cancellation of
the debt, all the better to lay down strict conditionalities enforced by
the IMF. Yet this is the same IMF which already distinguished itself during
the 1997-1998 crisis with remedies worse than the disease.

As a mater of conscience, all creditors can decide to renounce their
debts. Without delay. It has already happened in recent years for geopolitical
reasons [5]. Hundreds of social movements present in the region,
particularly the CADTM and Jubilee South networks, have called for
cancellation, showing the objective solidarity that exists among all
those who have first-hand experience of the tyranny of the debt. A moratorium
or simple reduction will not do. Only the total and unconditional
cancellation of the external public debt of the stricken countries, with local
citizens' control over the money thus freed up, can be an adequate response to
the scale of the tsunami disaster. Otherwise, the only purpose your
donations will serve, in the end, is to help the devastated countries to repay
their debt - a debt that has become immoral.

(*) Damien Millet, president of CADTM France, and Eric Toussaint,
president of CADTM Belgium (Committee for the Abolition of the Third World Debt).
They co-authored the book "The Debt Scam", published by VAK, Mumbai,
2003 and "Who Owes Who?" published by Zedbooks, London, 2004.


[1] Authors' calculations based on World Bank figures.

[2] 47 % are private, 27 % bilateral and 26 % multilateral.

[3] Of which 16 billion were due to the multilateral institutions (7 bn
for the World Bank and 4 bn for the IMF); 9 billion to the rich countries;
13 billion to private investors.

[4] Authors' calculations based on World Bank figures.

[5] Egypt and Poland in 1991, Russia in 1998, Yugoslavia and Pakistan
in 2001, Iraq in 2004.

Translated by Vicki Briault CADTM France.


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