Posted on 11-8-2002

Africa Can't Pay, Won't Pay?
By John Donnelly, Toronto Star, Aug. 6, 2002

WASHINGTON — With AIDS pummelling sub-Saharan Africa and a famine
threatening the lives of millions of people in the southern part of the
continent, many development specialists are calling on donors to take the
unusual step of cancelling the countries' staggering debt payments of $14.6
billion (U.S.) each year. But some analysts, doubting that will happen,
have a more provocative idea: Why don't African countries simply stop paying?

On its face, the idea may sound outrageous. Africa, more than any other
part of the world, can ill afford to incur the wrath of the hand that feeds
it. But there is historical precedent for a reasoned decision not to pay
debt. In the 1980s, Bolivia and Poland made that choice, and because the
two countries used that money for social causes both were later able to win
debt forgiveness.

The stop-payment idea gained traction at an AIDS summit in Africa for
religious leaders in June, and then again at the 14th International AIDS
Conference in Barcelona last month. The Barcelona meeting is viewed by many
as a watershed in the AIDS movement, in which all the arguments about why
people shouldn't be treated in Africa because of expense and the lack of a
health system were thrown offstage, and people instead explored how
treatment can begin. From that new platform, activists now expect bold
ideas on solutions, like
the one to transfer debt payments into health, education, and social
programs that help poor people. "We got absolutely nothing at the last G-8
meeting," said Kwesi Owusu, executive director of Southern Links, a network
of antipoverty groups in the Southern Hemisphere, referring to the June
summit of industrialized nations hosted by Canada in Kananaskis, Alta.
"Famine is consuming southern Africa, 38 per cent of adults in Botswana are
HIV infected, a massive crisis is escalating. And we have no new
significant aid inflows, while the rich countries are prolonging the debt
agony."

At the meeting of religious leaders, Hajai Katoumi Mahama, president of the
Women Muslim Association of Ghana, pleaded, "We call on our governments to
. immediately withhold debt servicing payments to the World Bank, IMF,
and wealthy G-8 governments, and to commit these resources to eradicate
poverty and implement HIV/AIDS interventions." Several African and U.S.
non-governmental organizations have since begun to push the
stop-debt-payments idea. Economist Jeffrey Sachs, a special adviser to U.N.
Secretary General Kofi Annan on poverty-related issues, suggested it in
Barcelona — if only after African countries meet with donors and request
the remaining debt be turned into poverty-fighting grants.

Sachs should know how it works: He persuaded Poland and Bolivia to take
that route. "If you try to collect the debt, you are killing millions of
people," he said in an interview. "If the countries pay the debt, they
can't meet their developmental needs. There should be an international
understanding of this. If there is no international understanding, many
countries in duress in history have taken a unilateral action. That is
important for African leaders to understand. Of course, there are many
reasons to believe they won't stop making debt payments. In fact, African
leaders are the greatest skeptics. Asked about the possibility, many have
either laughed or recoiled. Their governments survive because of donor
funding, they point out, and it would be foolhardy to jeopardize that
support. "If I stopped paying debt service, all my poverty-reduction money
would stop from the World Bank and IMF," Mozambique Prime Minister Pascoal
Mocumbi said in Barcelona. "Fifty per cent of our budget is from donors. I
can't not pay. The country would stop."

Canadian Stephen Lewis, Annan's special envoy on HIV/AIDS in Africa, said
African leaders are "right to be cautious" of a backlash if they stop
paying debts. (Some African countries are currently in arrears, including
nations such as Liberia, Sudan, and the Democratic Republic of Congo.) But
Lewis said if countries took debt money and used it to save lives, "there
are some donors who would be privately pleased, although they would never
publicly take this stand."

African leaders aren't the only ones balking. Many in the aid industry
dismiss the idea because they believe redirected debt payments would be
lost to corruption. Lenders point out while 90 per cent of loans are from
multilateral organizations or countries, some creditors, such as Iraq,
China and Libya, would not take kindly to cancellation of debt.

Senior U.N. officials, not surprisingly, object as well. "It would be an
absurdity for countries that are so dependent on financial assistance to go
unilaterally and poke the donors in the eye," said Mark Malloch Brown,
administrator of the U.N. Development Program, who said Sachs does not
speak for the U.N. system.