Make naivety history
Rod Liddle says debt forgiveness would merely entrench the power of corrupt Third World governments ‘My friend Kevin says that it’s as if we’re all living with an elephant standing in our livingrooms — but we just don’t see it!!’ — Richard Curtis, author of The Vicar of Dibley.
So are you blind, or what? The elephant in your living-room to which Richard’s friend Kevin refers is the monstrous grey pachyderm of Third World debt. It is trumpeting its wicked halloos right over there by the sideboard. Can you see it yet, you callous bastards? No? Hell, maybe it’s hiding, then. Temperamental creatures, elephants.
What you will certainly have noticed, on the other side of the living-room, on your television screens, is an endless procession of stars and superstars and megastars and the fabulously rich and famous all wringing their hands over the Third World debt burden, over all those poor people in terribly impoverished countries who are forced, through the iniquities of Western capitalism, to hand over their meagre earnings to the evil international debt collectors. The procession is led by Bono, the lead singer of the popular, if pompous, Irish rock group U2. Bono is much fêted by politicians and by the great and the good. He has audiences with the Pope and the President of the USA and Blair and Brown, and he lectures them on the urgent need to write off Third World debt. And, mystifyingly, they listen to him, this rock singer. Now, more and more celebs and pseudo or crypto celebs are getting in on the act demanding much the same thing. They’ve banded together under the catchy heading ‘Make Poverty History’ — because, of course, that’s exactly what would happen if you wrote off all that debt: poverty would just disappear. But let me hand you back to Mr Richard Curtis for a moment.
Richard’s epiphany came when he was unfortunate enough to be hit in the stomach by that famous Boxing Day tsunami. He was on the beach in the Maldives with his girlfriend when the wave — and then, or maybe simultaneously, the thought hit him. Do you know, he asks us all now, that 30,000 people die needlessly every day? They die as a result of poverty or through illnesses which we in the West would not so much as lose a day of work over. It’s incredible, isn’t it?
‘Every day of the year we watch the news and they forget to add that item. “Chelsea win again — oh, and 30,000 people died who didn’t have to.”’ And so there’s a big campaign to increase overseas aid and slash or indeed write off the debt burden. In order to emphasise their point, some demonstrators wrapped a white bandage around Nelson’s Column. No, I’m not sure what it signified, either.
But all of this is fair enough. We live in a democracy. Celebrities have as much right to get exercised by things as plumbers, traffic wardens and insurance loss-adjusters. The worrying thing is that somehow the celebrities have succeeded in persuading everybody that they’re right and it looks as if we are going to — at the least — reschedule the debts for the world’s poorest countries, even more than we’ve rescheduled them already. And we’re going to bung Africa loads more aid. If all this meant that the poorest countries would end up much better off, or even a little bit better off, then we might all sign up alongside Bono and Richard. But quite a lot of people — not, so far as I’m aware, any members of the cast of The Vicar of Dibley, but economists and people who work in the debt industry — think it might make the poor countries substantially worse off. And those views are not being heard, or listened to.
There are several moral conundrums in the issue of debt repayment. One perspective is simply that it is wrong to force impoverished countries to pay interest on loans — payments which frequently outstrip the entire public expenditure budget of the countries concerned. That seems to me a reasonable argument, if that were as far as it went. There is, of course, the counter moral and practical point that countries (or people, or companies) should pay what they owe or financial chaos will ensue. And the further moral point that letting some countries off the hook is unfair on those nations which have made strenuous efforts to pay off their debts. (Incidentally, there seems to be a very strong correlation between countries which meet their debt repayments and later, longterm strong financial performance.) But then there’s this. According to Brian Hammond of the OECD, cancelling or rescheduling debt repayment would immediately affect the country’s credit rating and, further, would leave that country vulnerable to higher interest rates on future loans. This point seems to me almost incontestable. Indonesia, which owes a total of $132 billion, has had its credit rating hit three times in such a way. Françoise Nicolas, Asia expert at the French Institute of International Relations, suggests that debt rescheduling would be beneficial to none of the countries hit by the tsunami save for Sri Lanka (because of the nature of its debt).
Indeed, some of the world’s poorest countries — including Laos — are vehemently opposed to rescheduling their debts for this very reason. But maybe Bono and Dawn French haven’t visited Vientiane yet.
The United States treasury department has argued that countries have a tendency to use debt relief as a platform to borrow more from international financial institutions and that therefore debt relief actually increases debt at an almost exponential level.
There is then the thorny question of governance. Even when it is not used as a basis to borrow more money, debt relief rarely guarantees that a country will begin to develop its economy, unless economic power is redistributed from the incompetent or corrupt elites which incurred the debt in the first place. In fact, to forgive the debt is effectively to forgive the dictator and entrench him in power.
Nobody who knows a thing or two about Third World debt, be they on the Left or the Right, thinks it quite as simple as Bono and the Vicar of Dibley appear to believe. Even Clare Short, once the government’s most persuasive advocate of overseas aid, is, at best, equivocal on the subject. ‘Debt relief alone won’t help Africa,’ she said. ‘We need to focus on conflict resolutions. If some debt owing to the World Bank is written off, there is less money to give to others. There are some very poor countries without debt — so you have to be careful about being fair.’ It is but a short hop, skip and jump from the huge elephant of Third World debt in the living-room to the fairly large hippopotamus of overseas aid hanging out by the breakfast bar — to use Richard’s friend Kevin’s allusion one final time.
Of course, if aid were the answer, we would give it, as Richard and Bono and their hangers-on so demand. But it isn’t. Specifically, it isn’t the answer for Africa and most of those in the know reckon overseas aid has been counter-productive. There are scores of reports which suggest that the net impact of aid on Africa has been negative; that it has damaged the capacity of each individual country to govern its own affairs, but allowed despotic elites to borrow more money and wage war against their neighbours.
Carol Lancaster has worked in the aid industry all her life, and she served in the Carter administration. Believe me, she ain’t no hard-headed supply side übermoppet. She has this to say: ‘Aid may have unintentionally encouraged the misrule that led to collapse and civil conflict.’ And here’s Michael Edwards, formerly of the Ford Foundation and the World Bank: ‘Africa’s crisis is really one of governance,’ adding that almost all public development in Africa is paid for by overseas aid. In fact the 1996 World Bank Report made this observation: ‘Almost every African country has witnessed a systematic regression of capacity in the last 30 years. The majority had better capacity at independence than they now possess.’ There have been so many reports run ning along the same lines that there’s now quite a healthy, or unhealthy — depending upon your point of view — neocolonialist movement taking root. In the same year as that World Bank Report, Robert Wheelen from the Institute for Economic Affairs suggested a different approach to helping the stricken continent: privatise all the countries and allow Western multinational corporations to run them under a 21-year lease. Now how about starting a campaign for that, Bono?
Almost everybody is agreed that it is not the greedy, grasping and callous West which is to blame, nor that aid is in any sense the answer. Conflict resolution or, to paraphrase Ms Short, stopping mutton-headed despots spending vast sums of money attacking each other — and, as we’ve heard, incompetent and corrupt rulers in general come rather nearer the top of the list.
But even that won’t sort things out. In Africa a change of regime means one of three things: a regime just as bad as the one before, or one a tiny bit better, or one rather worse. The real problem is the way in which the state — and politics — is perceived in Africa; as a means of accruing vast amounts of personal wealth. And so the state is forever vulnerable to attack by predatory, money-grabbing elites. More aid won’t solve that, or even help to. Shove that up your elephant, Richard.
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