Minor debt relief will not end poverty for millions

The recent 2005 Comic Relief Red Nose Day raised over £60 million, much of it earmarked for projects in Africa.

This followed on from the massive £300 million donated by mainly working class people across Britain to the Indian Ocean Tsunami appeal. The donations to charities have highlighted the instinctive solidarity and internationalism that exists among working class families in the West to those suffering hunger, disease and poverty across the world. All of this is in sharp contrast to the leaders of the richest nations representing the interests of international capitalism. The leaders of the G8 countries who are meeting in Scotland in July have pledged to make Africa and debt relief a priority. But what is the likelihood of real action to tackle the horrific levels of poverty and debt?

Debt relief for Africa?

Gordon Brown and Tony Blair are trying to portray themselves as champions of debt relief for Africa. Brown and Blair used the recent Africa Commission report to support the: “doubling of foreign aid to Africa and making fighting Aids a priority.” They even set a goal for “100% debt cancellation” and urged rich nations to drop trade barriers that hurt poorer countries. But even a doubling of aid to $50 billion would fall well short of what is required.

But these calls are nothing new. Gordon Brown has called on people to march on the “Make Poverty History” demonstration in Edinburgh in July. At the same time Brown, alongside the international capitalist community, has supported and pursued the very same neo-liberal policies that have increased indebtedness and poverty for the majority of African nations over the last 20 years.

Gordon Brown admitted at the launch of the Africa Commission report that the Millennium Development Goals (MDG) drawn up in 2000, which aimed to halve African poverty by 2015, would not be met. Neither would targets to reduce infant and maternal mortality by 50% by 2015. In fact it would take more than 150 years at current rates to achieve such goals. Against the background of the 4 million children in Africa who die before the age of 5 this literally means that hundreds of millions of lives would be lost.

As it is the G8 has only promised to write of $100 billion of the $375 billion debt of the worlds 52 poorest countries. That was 5 years ago. To date less than half of that debt has been written off. In all, 88% of the 52 poorest country’s debt, most of them in Africa is still being paid back. That’s £30 million a day or £11 billion every year that flows into the coffers of capitalist governments and the world’s financial institutions. For every $2 in aid Africa receives $1 paid back in interest payments. Sub–saharan Africa pays back in debt repayments 100% of the aid it receives each year.

Malawi spends more on servicing its debt than it spends on health. This is at a time when 20% of Malawians are HIV positive. Capitalism thrives on the indebtedness of Africa and other poor nations. No wonder they are so reluctant to genuinely tackle the problem.

The aid rip-off

Thirty five years ago the United Nations set a target for all industrialised nations to pay 0.7% of their GDP in aid to the “developing” world. Only 5 countries have achieved that target. They include Luxembourg, the Netherlands and Denmark. The USA pays only 0.15% of its GDP in aid. In total, high-income countries pay only 0.25% in aid. Almost all of that is in loans that poorer countries can barely afford to pay back the interest on. It means an ever-spiralling debt burden.

Scandalously, “high income” countries that agree to write-off debt to poorer countries can have that counted towards their 0.7% target.

This is supported by Brown and Blair as is maintaining “economic conditions” to countries before they would qualify for debt write-off. This effectively means agreeing cuts in public spending and the opening up of their economies to foreign multinationals.

The UN estimates that £195bn a year in aid is needed to halve world poverty within 10 years, which would still leave more than 500 million people in extreme poverty. Only £20 billion a year is pledged at present. £40 billion would provide clean water, sanitation, adequate food and basic health care for those who require it. The richest 1,000 people in the world have a combined wealth of $2.2 trillion.

How capitalism keeps Africa in chains.

Almost the entire African continent has been a colony of one or other of the imperialist powers at some time. Britain, France, Belgium among many others, had powerful colonial interests in Africa. They consciously prevented African countries from developing their own industries, making them totally reliant on imports from the West. To make matters worse those products produced in African countries have their prices determined by the richer nations and multinationals who drive down their prices in order to increase their own profits. At the same time they force those same countries to buy imported goods from the West at a price determined by the West. For example mobile phone companies have seen a rise in sales to Africa recently. This is partly due to the fact that there is virtually no landline phone network. But in most cases using a mobile phone is as expensive in Africa as it is in Britain.

This led to neo-colonial countries having to take out loans from the same capitalist powers that held a vice-like grip on their economies. Of course the West set the interest rates. The local African elites and corrupt governments have stolen much of the aid while unloading the burden of debt onto the backs of the poor masses. The IMF and other organisations demanded cuts in health, education and the privatisation of industries in order to qualify for loans in the first place.

Even debt relief and rescheduling has been dependent on countries agreeing to open up their economies to privatisation from multinationals in the West and agreeing to carry out neo-liberal policies. For example in Angola, water, which was free, now has to paid for, which has led to disconnections and a subsequent increase in dysentery, cholera etc. While in Malawi the World Bank advised the government to sell off its surplus grain as part of a debt restructuring deal, despite widespread starvation in the country. Military spending however has increased in Africa with Western arms companies finding lucrative markets in both Africa and other neo-colonial countries.

Only by ending the domination of the African continent by world multinational companies and the abolition of institutions like the IMF and the World Bank can Africa develop its real potential. That would require the nationalisation of the multinationals under democratic working class control and management to lay the basis for a socialist planned economy in the West. This is turn would be linked to a mass movement of the African working class and poor masses to overthrow the corrupt capitalist and feudal regimes throughout the continent. This would allow the 1 billion strong African people, one-half of whom exist on less than $1 a day, to be free from poverty, hunger and disease.

Immediate write-off of the debt burden.

Aid to poorer countries to be based on grants instead of loans.

End the neo-liberal conditions attached to aid and debt write-off

For an immediate increase in aid to the levels needed.

For democratic control of aid and its distribution by elected committees representing the working class, trade unions and the poor.

Imperialism out of the neo-colonial world.

Support for the working class and poor masses in their struggle to overthrow the corrupt pro-capitalist governments of the neo-colonial world.

Abolish the IMF, World Bank, WTO and other international capitalist institutions.

Bring into public ownership the 500 major multinationals and transnationals that dominate the world economy under democratic working class control and management.

Make capitalism history. For the building of a socialist planned economy internationally to abolish poverty, hunger and disease.

This article first appeared in the April edition of International Socialist, newspaper of the CWI in Scotland

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