You think politicians don't matter? She knows better

Oxfam report attacks the West's unbending and self-serving approach to Third World debt
Click to follow
The Independent Online
Western politicians and the International Monetary Fund have been attacked for obstructing policies that could save the lives of more than 3 million children in Africa and Latin America.

Oxfam yesterday criticised both the IMF and leaders from the Group of Seven industrial countries for lack of vision, because of their efforts to block reductions in the payments that some of the poorest countries in the world must make to the very richest.

The aid charity said that the IMF, along with the German, Japanese and American Governments had been "systematically undermining" financial relief for countries such as Uganda and Bolivia, even though they had an excellent record of economic reform.

It praised Britain for its efforts to reduce their developing world debt burdens: Kenneth Clarke is the politician who has done more than anyone to get the debt issue onto the world's agenda. But generally, British politicians have been silent during the election campaign about the future of our contributions to the developing world.

The Conservative manifesto does not mention aid, while Labour's affirms its commitment in principle to spending 0.7 per cent of national income on overseas aid. But both the main parties are committed to spending plans that cut the overseas aid budget.

The total cost of the faltering plan to reduce debt interest payments to the IMF and World Bank by desperately poor countries like Uganda, Ethiopia, Rwanda and Mozambique, is between $5.6bn and $7.7bn - equivalent to the annual spending on running shoes in the US, or the sum by which Britain's Treasury got its forecast for last year's government borrowing wrong.

These modest debt relief proposals, agreed despite IMF objections in Washington last October after a two-year British initiative, were due to come into effect early this year, for the countries with the best economic records. But officials admit that none of the heavily indebted developing countries is now likely to benefit before the end of next year. Many will have to wait at least six more years.

According to Oxfam's calculations, this will mean Uganda making extra interest payments amounting to six times its national health budget this year, or more than the cost of providing primary education for four children in every family.

A 12-month delay will cost Bolivia twice its health budget, or 17 times its planned spending on clean water and sanitation.

The heavily indebted very poor countries have the lowest human welfare indicators in the world, according to UN statistics.

The plan to reduce the burden of debt repayments has run into trouble because of a change of heart on the part of the US Government. It has decided to demand extra free market reforms along the lines the of the "shock therapy" the IMF has put into practice in Eastern Europe as a condition of reduced interest payments .

This switch by its biggest shareholder puts those opposed to early debt relief in a majority on the Fund's board. The plan, pronounced a "done deal" by IMF managing director Michel Camdessus, last October, is now in danger of collapse.

British officials will continue to push for rapid implementation, but the general election campaign means no minister will be present in Washington for the Fund's mid-year meeting at the end of this month.

Sources close to Mr Clarke said he remained committed to seeing the debt package get through. Clare Short, shadow Minister for Overseas Development, said: "The international financial institutions must not be allowed to renege on commitments to the world's poorest countries."

The World Bank is also keen to prevent a delay. Its president, James Wolfensohn, has staked his reputation on doing a better job of alleviating poverty.

Officials at the two Washington-based institutions speak privately of serious, "high level" tension between the Bank and the Fund.

The latest obstacles will not hold up a bigger debt relief package agreed by individual rich country governments with their impoverished debtors. But it is important because the IMF has tied its agreement to tough economic reform programmes.

Politicians in the debtor countries say that unless they get the extra relief as soon as possible, support for socially painful reforms could evaporate.

Oxfam warned: "The rest of the world will not be immune to the humanitarian and economic consequences of dealing with a growing number of Zaires, Liberias and Rwandas."