Re: Africa Debt Cancellation
The G8 deal to wipe out $40bn (£23bn) of debt owed by 18 of the world’s poorest countries has been hailed by some as a great act of western philanthropy.
Campaigners complain that donor countries are using the debt relief package to force privatisation and a liberal economic agenda.
Few can forget the floods that devastated Mozambique five years ago.
Television pictures showed people clambering up trees to escape the rising waters. One woman even gave birth while she waited to be rescued from the tree-tops.
What most concerned viewers would not have realised was that Mozambique’s water system was privatised the previous year at the World Bank’s behest.
To gain Highly Indebted Poor Country (HIPC) status - to qualify for aid and debt relief - the country had to privatise its urban water supply.
In 1999 the Aguas de Mocambique consortium, headed by the French firm Saur, took on a 15-year contract.
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But after huge swathes of the country were left under water, at an enormous cost, Saur announced it was pulling out.**
No reason was given but reports at the time said the increasing returns on which the consortium’s business plan was based were not realised.
The firm still will not comment on the reason for its withdrawal.
But such a pull-out would not have been an option for a state-owned utility.
War on Want campaigns director John Hilary explains: "To qualify for debt relief and have the opportunity to tackle poverty, countries have to do these sometimes very damaging thin
In May, two years after signing a deal with consortium City Water, led by British firm Biwater, the Tanzanian government stripped the firm of its contract, saying services had deteriorated.
The government’s decision to ditch the company was seen by many Tanzanians as long overdue, according to the BBC’s Noel Mwakugu, in Das es Salaam.
“What’s worse,” said Mr Hilary, " is that the Tanzanian government had to take out a whole tranche of loans to get the system ready for privatisation."
So far 18 countries have been judged to have reached HIPC “completion point” by the World Bank. A further nine are expected to do so soon.
But for development campaigners like George Mombiot, commentators need look no further than the second paragraph of the G7 finance ministers’ statement on the deal back in mid-June.
This says developing countries must “tackle corruption, boost private sector development, and attract investment” and remove “impediments to private investment both domestic and foreign.”
For Mr Mombiot the enforced liberalisation and privatisation the deal contains “are as onerous as the debt it relieves.”
But the Treasury says this is simply how economies grow and not an attempt to enforce privatisation.
Another case, where the World Bank encouraged Mozambique to increase its user charges for health care, shows just how damaging liberal economics can be, he says.
“In this case if you don’t pay - you don’t get the services. It actually kills people.”
G8 = Always a catch whatever we say don’t belive us what we really mean is we will rip you off as much as we can because we are the capitalist Mafia!