Debt "Forgiveness" and Food for Crocodiles

Here's a good reason to cancel the debts of impoverished countries: in many cases, their populations never chose to borrow the money in the first place.

This is a supposedly radical notion.  Lots of institutions and global actors, from the World Bank and IMF to western politicians to non-profit organizations, talk about “debt relief,” but very few talk about the legitimacy of the debt to begin with.  Debt relief or forgiveness is packaged as a sympathetic bit of charity from the West to the world’s poor, an act of kindness that is usually attached to demands made of the recipient government.  Those demands range from the hypocritical (“stop subsidizing your farmers…only we get to do that”) to the patronizing (“demonstrateto us in writing how you will properly spend your own money that we are allowing you to keep”) to the counter-productive (“commit to austerity…”).    

Even those actors sympathetic to the cause of debt relief because of the impact it could have, including increased spending on health, education, and infrastructure and the accompanying decline in preventable mortality, often shy away from making the claim that debt relief should be a right and not a privilege.  This not only lets numerous people off the hook who should not be let off the hook, it is a complete distortion of history.  And history matters.

In Africa, the vast majority of debt was accrued in the 1970’s and 1980’s under dictatorships, many of which were tossed from power in the 1990’s.  The lending that created this debt financed many things, but was almost universally processed through un-democratic channels.  In many cases, it financed the dictator’s personal consumption habits.  In many cases, it financed the repressive organs of the state, which in turn suppressed dissent and preserved the dictator’s power.  In many cases, it was used to dispense patronage to internal actors who might otherwise have challenged the status quo.  In the end, this lending helped perpetuate the rule of tyrants while doing significantly more harm than good for the populations subjected to that rule.  It funded weapons that killed children, “development” projects that destroyed communities, and further enriched some of the richest people on earth at the expense of some of the poorest.  This is the debt that developing nations are being asked to pay back today.

In fact, the story of debt in Africa is so uniform across so many countries as to allow for the discernment of a system at work.  Foreign nations help a dictator take power for political reasons, and then fund his regime to ensure it can repel any attempt at a change in government.  Lending funds the security services, the patronage network, and the dictator’s personal spending habits, which become very lavish, very quickly.  Resource extraction is streamlined at the expense of the domestic economy and to the benefit of multi-national corporations while structural adjustment programs imposed as part of debt restructuring agreements crater the middle class and the civil service.  With the economy in free fall, money starts to flow outward in the form of capital flight, further draining the economy and obliterating the tax base.  Protests are squashed with external support.  Banks lend money knowing full well it will be stolen because they make money off the lending anyway.  Governments send arms and soldiers to assist brutal tyrants.  And then, when it’s finally all over and the nightmare of dictatorship is somehow broken by the will of the people, the banks and the rich governments and the multi-lateral institutions cough loudly and ask to be paid back.

Speaking of Africa as if it is a single place is, of course, absurd; this is a massive continent of enormous ethnic, religious, racial, social, and cultural diversity.  And yet this same scenario played out over and over again.  It happened in South Africa, where western institutions now demand that the ANC repay the debts of its Apartheid predecessors.  It happened in Rwanda, where France systematically armed and supported the genocidal regime around President Juvenal Habyarimana; today, Rwanda’s government, whatever its faults, continues to pay off the debts of its murderous predecessor.  It happened in Somalia, where a brutal dictatorship armed alternatively by the Americans and the Soviets was replaced by two decades of famine and anarchy, and where the newly emerging government is being lectured by the IMF to pay back what “it” “owes” to the West. 

And, on an unimaginable scale, it happened in the Democratic Republic of the Congo, where America’s favorite “anti-communist” dictator, Mobutu Sese Seko, looted his country for more than thirty years, leaving it in ruins.  Mobutu stole billions during his time in office, funneling money from kickbacks, loans, fraudulent development projects, and even straight from the country’s budget into his own pocket.  He spent state money to take his inner circle to Disneyworld and to ferry, on multiple occasions, a number of sheep from Venezuela to his personal farm in the DRC.  When asked if it was true, despite the suffering of his people, that he was the fourth richest person in the world, Mobutu became indignant and proclaimed, “no, no, no! I am the third richest man in the world!”  When the rebel Rwandan Patriotic Front began to advance on his good friend Habyarimana and his genocidal Hutu Power clique, Mobutu lectured him by saying “I told you not to build any roads…building roads never did any good…I’ve been in power in Zaire for thirty years and I never built one road.  Now they are driving down them to get you.”  This is the man George H. W. Bush invited to the White House before any other African leader (he had at least 45 other options).  This is the man Ronald Reagan declared was a “consistent voice of good sense and good will.”   

When Mobutu was forced from power, the DRC was more than $12 billion in debt, while the former dictator was rumored to have as much as $8 billion in personal wealth stashed abroad.  The new Congolese government set about to recover this wealth, claiming correctly that it belonged to the Congolese people, but Swiss banks were sadly unable to recover much of it.  In Malawi, a similar situation unfolded after the death of autocrat Hastings Banda.  The banks told the Malawian government that they would be happy to investigate Banda’s riches if the government could simply produce a death certificate.  Sadly, this certificate went “missing.”  None of this should be surprising.  After all, if Swiss banks just handed over their clients’ money simply because it was stolen from orphans and teachers and farmers, they wouldn’t be Swiss banks. 

The creditors (banks, governments, multi-laterals) bear much of the responsibility for this system, of course, a fact I covered in more detail here.  But if we are keeping up the charade that these debts are owed to somebody, then the people who need to pay them back are the Mobutus and Bandas of the world.  Their money is somewhere, and somebody is profiting from it.  To claim that these debts are somehow legitimately tied to the people of Malawi or the DRC is nonsensical.  To say that these dictators represented their people in any way that carries any validity in the real world is equivalent to suggesting that Stalin was the legitimate representative of post-war Poland.  When you conquer a country and subjugate its people, does it really matter whether you live there yourself or not?

Jubilee USA is one organization that gets it.  While advocating for the one-time cancellation of all debts, a concept with biblical precedence, Jubilee also argues consistently that much of the debt owed by developing nations is illegitimate, a fact that puts phrases like “debt relief” and “debt forgiveness” into a very different light.  The fact that Jubilee is an incredibly effective organization run on a tiny budget lends additional moral credibility to its calls for change.  Donations are helpful, of course, but there are lots of ways to get involved with Jubilee’s work.  

Hastings Banda once called his political opponents “food for crocodiles.”  Margaret Thatcher once called Banda’s government “one of our closest friends.”  In short, the West helped feed Africa’s people to the crocodiles, then peered inside the belly of the beast and yelled “don’t forget to pay us back for all the money we spent raising crocodiles!”  In fairness to the creditors, they are owed quite a bit of money.  After all, as Mobutu taught the world so vividly, one can spend an absolute fortune flying sheep around the world on private jets.