Thursday, June 09, 2005

African Debt and Hypocrisy

Crumbs for Africa: The NY Times says most Americans believe 24% of the US budget is spent on aid to poor and developing countries. The actual figure is less than a quarter of one percent. That's less than 0.25%!

Bush said he tripled aid to Africa. At a press conference on Tuesday, he announced $670 million, but this is money that was already approved. This is also emergency assistance, and is development money or earmarked for debt cancellation.

Why is debt cancellation so important? To begin with, the imense debt that African countries hold ($300 Billion) is mostly illegitimate. It is largely from loans that were made to unrepresentative African governments during the Cold War years. Often the money went right into the pocket of dictators who were helped into power by the CIA (such as the former Zaire's Mobutu). This money never benefitted the people, but yet they are on the hook for paying it off. They have been servicing the debt over the years, but with compounded interest, the debts continue to accumulate. These debts have been paid off several times over, but it keeps growing because of the interest.

$15 billion each year leaves Africa to go the IMF, World Bank and wealthy private creditors. That's far more money than is going into Africa in either new loans, assistance, or foreign investment. "So you have this tragic irony where the poorest region of the world is in effect subsidizing some of the wealthiest institutions and economies in the world." (Watch, listen or read this interview at Democracy Now.)

To put this in a human perspective, the UN estimates three million children will die because of famine in sub-Saharan Africa as a result of the global community's failure to meet its promises of aid. They are dying because the money that their own citizenry could use to feed themselves is being used to service this odious debt. Bush talks out of one side of his mouth about aid, while sending in the wolf(owitz) to help squeeze out even more.

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