The world - or rather, the mainstream media - has gone ecstatic about the "Debt-Cancellation" to the Sub-Saharan countries by the finance ministers of the G-8 countries (actually, G-7 countries, since Russia was not invited to the meeting in Gleneagle last week). From the reported news, this seems such a noble gesture - almost like a fairy tale... The milk of human kindness flows, and all is well with the world...
...till one actually reads the text of the ministers' statement. After a paragraph or two of the nice sounding motherhood statements, the text comes to the main point - the "conditionalities" attached to the "debt cancellation"
"...in order to make progress on social and economic development, it is essential that developing countries put in place the policies for economic growth."
These include, among others,
So, in a way, nothing has really changed as far as these 'forgiven' poor countries are concerned... To get the debt forgiveness, they are expected to eliminate "trade-distorting" agricultural subsidies, while the same does not apply to their creditor nations. They may get a respite from paying $40bn - from a overall $231bn debt - if they accept the inevitable, and, as Confucious is supposed to have said, enjoy it.
Perhaps the most revealing part of the joint statement by the G-7/8 Finance Ministers was their endorsement of IMF-supported "reforms" in Nigeria:
"Nigeria is key to the prosperity of the whole continent of Africa... We welcomed Nigeria's progress in economic reform as assessed in the IMF's intensified surveillance framework... and encouraged them to continue to reform." In turn they said "we are prepared to provide a fair and sustainable solution to Nigeria's debt problems in 2005."
So what happened in Nigeria?
Well, it is unfortunate for Nigerians that Nigeria is oil-rich - it is world's 6th largest oil producer. About a decade back the people of Niger demanded that they be compensated for the land which has been taken away from them - and given to a western oil companies. The company turned to government, and the Nigerian military suppressed the people... 10 years later, 70 percent of Nigerians still live on less than $1 a day and foreign oil-companies continue to make huge profit... And Nigeria imports oil for its own use!!
The story is same elsewhere also: Equatorial Guinea, which has a major oil deal with ExxonMobil got to keep a mere 12 percent of the oil revenues in the first year of its contract....
It is not surprising that according to World Bank's 2003 Global Development Finance report, the Sub-Saharan Africa, the poorest place on earth - comprising of majority of the countries which have been the beneficiaries of this act of kindness from the G-7/8 countries - offers "the highest returns on foreign direct investment of any region in the world."
Another interesting part of the conditionality is the demand by the creditor nations to increase "transparency essential to tackle corruption."
On the face of it, this looks a reasonable demand, till one looks at the list of those nations, who have ratified the UN Convention on Corruption. Signing and ratification of this Convention makes it obligatory on the country to take action against its doemstic companies, if they are found to be indulging in corrupt practices on foreign soil.
123 nations signed it, 27 have ratified it - none of the G-8 countries feature among these 27!!!