Indian ocean tsunami: Cancel all debts now

Debt payments far bigger than all aid pledges

The catastrophe in Asia has unleashed an unparalleled feeling of global solidarity. Millions of people around the world have given donations to the people and the countries in need.

This global solidarity and the willingness to help and assist have forced western imperialism to promise aid and to offer a temporary freeze on debt repayment.

While working people around the globe show genuine sympathy there are reasons to show no trust in the promises given by capitalists and political representatives of imperialism.

The Bush administration regards its aid effort as a, "Crucial weapon in a battle for the hearts and minds of Muslims in southern Asia and in much of the rest of the Muslim world, nudging their sentiments in America’s favour", wrote the San Francisco Chronicle of January 6.

The government’s first response to the crisis was slow and "stingy", but the scale of the disaster and ordinary people’s rapid and generous response compelled the same governments to change their initial reactions. Huge sums have now been pledged, probably more than has ever been promised to countries in desperate need. Governments try to overbid each other in what Simon Jenkins of the London Times called, "A tidal wave of hypocrisy". [January 7, 2005]

At the one-day meting (January 6) in Jakarta, the capital of Indonesia, total aid pledged for disaster relief doubled to $5 billion. But pledges are one thing, to deliver aid another. In general, only half of what is pledged by governments will be delivered.

At the summit in Jakarta, world leaders hinted that there would soon be a temporary freeze of debt repayments with debt write-offs possible later. A decision on a moratorium is expected to be announced at a meeting of the so-called "Paris Club" of the richer countries ON January 12.

Indonesia alone "owes" $48 billion to the "Paris Club" and is due to repay $4.5 billion this year. Indonesia is one of the world’s most indebted poor countries. In total it "owes" $132.2 billion (external debt) and last year 35 percent of government spending was for debt repayment, while only 10 percent went towards health and education.

The debt burden of the countries affected by the tsunami totals $300 billion and last year Sri Lanka, Thailand and Indonesia paid out more than $20 billion on debt repayment – four times the amount so far pledged in total for tsunami relief.

Without a debt moratorium, Indonesia will end up paying more on debt repayment that the aid it has been pledged over the tsunami. This is obscene and is fuelling popular demands that there should be no repayment of the debts in the midst of suffering.

It is of course absurd that poor countries hit by disasters should spend huge amounts of money on repaying debt to the main capitalist countries (governments, banks and imperialist organisations such as the IMF and World Bank). But a temporary freeze or moratorium is not the same as the cancellation of the debt – immediately and unconditionally.

There has to be no trust in the capitalist world leaders. For many years, starting already in 1996, they have promised debt relief and debt cancellation for the most Heavily Indebted Poor Countries (HIPCs). Yet even those countries that have qualified for debt relief are still paying $2.8 billion a year to their creditors, 15 percent of their revenues and in many cases more than they spend on education and health. The G8 group of the main capitalist powers, including the US, has promised to cancel $100 billion, out of the $375 billion total debt of fifty-two indebted poor countries. Less than half ($46 billion) has actually been cancelled so far.

"The failure to deal comprehensively with the debt crisis meant that poor nations now face a situation in which they will pay more back through protracted debt-service arrangements than they originally borrowed", according to an Oxfam International report published December 2004 called: "Why rich countries must invest now in a war on poverty".

On top of that, when poor countries have actually experienced debt relief it has been accompanied by hard conditions including privatisations and cuts in subsidies on basic necessities. The capitalists and their governments are using aid and debt relief as a political and economical tool.

"The US-led war in Iraq was highly unpopular, particularly among Asia’s vast Muslim population. Playing a leading role in the current crisis – more money, more debt relief – could bolster US businesses… Given Asia’s economic potential and the countless millions of dollars in profit executives can expect to earn here, more aid may be in order," said the International Herald Tribune in a very revealing comment.

There can be no trust in imperialism and its agents. They will give with one hand and take back much more with another, particularly when the TV cameras have been switched off and they do not feel the same pressure from the public.

The CWI fights for an immediate and unconditional cancelling of the debts of the tsunami-hit countries and all the poverty-stricken countries in the world. Our struggle to break the stranglehold of oppression of debt and repayment is part of the struggle for a socialist world.

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January 2005