Activists Stunned by U.S. Debt Forgiveness Plan for Iraq

"It's clearly self-serving," said Soren Ambrose from the 50 Years is Enough network. The U.S. government has steadfastly opposed cancelling debts in the rest of the world, he added, "even in cases as egregious as the apartheid government's debts in South Africa and Mobutu's debts in Zaire (known now as Congo)".

Activists Stunned by U.S. Debt Forgiveness Plan
Emad Mekay - IPS 4/11/03

WASHINGTON, Apr 11 (IPS) - Finance ministers and development activists gathered here Friday for meetings to discuss the world economy, poverty and reform of the world's financial institutions were stunned when a U.S. official suggested that global creditors should forgive Iraqi debts.

U.S. Treasury Secretary John Snow, whose government often sets the tempo for meetings such as this weekend's gathering of the International Monetary Fund (IMF) and World Bank, took the place by storm when he said Iraq's whopping debt - estimated at between 100 and 300 billion dollars - must be cancelled.

Snow said he expected to have substantive conversations during the two-day meeting with ministers from the G7 most industrialised nations on "how our nations and international institutions can work together to help the Iraqi people recover ¡ not just from 25 days of conflict, but from 25 years of economic misrule".

Activists said they were elated that a U.S. official had recognised that debts left from corrupt and repressive governments are intractable obstacles to re-developing a country like Iraq, and that officials should apply the same logic to other nations suffering under worse conditions than Iraq. But some doubted that would happen.

"It's clearly self-serving," said Soren Ambrose from the 50 Years is Enough network.

The U.S. government has steadfastly opposed cancelling debts in the rest of the world, he added, "even in cases as egregious as the apartheid government's debts in South Africa and Mobutu's debts in Zaire (known now as Congo)".

Ambrose said it would be a highly political matter if the choice were made to save the Iraqis alone. "It's an absolute travesty," he said.

But other activists said they would welcome the move as it might set a precedent for forgiving illegitimate debt accrued by dictators.

"We would definitely criticise the U.S. as hypocritical, but this would still be a good start," said Ann Kathrin Schneider with Germany's World Economy Ecology and Envelopment in Berlin. "We think a step is taken now. It's hypocritical, but at least something is being done."

Snow said that the Bank, IMF and other global institutions should be prepared to offer their "expertise and technical assistance as soon as possible" to Iraq.

But activists told reporters that the bodies, whose policies they blame for rampant poverty and inequity in the developing world, would only worsen poverty, environmental devastation and international conflict.

''For more than two decades, the IMF and the World Bank have imposed damaging economic austerity programmes emphasising free trade and private profit over basic human rights on indebted and impoverished countries,'' said Demba Dembele of the Forum for African Alternatives in Senegal.

The semi-annual gathering of the Bank and IMF were already under pressure from U.S. officials to push Iraq onto the agenda at the expense of development issues, a proposed debt restructuring mechanism, poverty and governance of the two organisations often targeted by civil society groups.

The Iraq issue was further complicated when Deputy U.S. Defence Secretary Paul Wolfowitz told Congress on Friday that France, Germany and Russia, countries that opposed the U.S.-led invasion of Iraq, could only assist in rebuilding the country if they forgave billons of dollars of debt owed to them.

"I hope, for example, they'll think about the very large debts that come from money that was lent to Saddam Hussein to buy weapons and to build palaces and to build instruments of repression," he told the Senate's armed services committee.

That is the height of hypocrisy, Ambrose said.

"Going in this nearly unilateral fashion and conquering a country half-way around the world, devastating its infrastructure even more than it already was, is in a sense saying that 'we are now responsible for Iraq and countries are expecting us to finance its development, so now we are going to make the same demand that others have been making of us'."

Among the main reasons why scores of activists will take to the streets here this weekend to protest the policies of the U.S. government, the Bank and IMF is that in much of Africa and other developing countries people are held hostage by suffocating debt burdens - spending far more on repayments than on health care and education.

Uganda's Finance Minister Gerald Ssendaula said Friday some African countries have to pay some 80 dollars towards debt on each 100 dollars generated locally.