Debt relief for the Third World is not enough

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The Independent Online
ONE THING that all people of goodwill can agree on is that we are against anyone starving, especially in the Third World. My entire generation was raised on the notion that one sign of decency, if not piousness, was to pop a penny in the tin for starving children in Africa.

I will leave aside the inconvenience that if you looked like an African in those days, people might treat you too as a poor soul in need of Christian charity, and concentrate instead on the value of this goodwill to the people of the Great Continent. For debt-forgiveness is a good thing in principle, just as it was in the Sixties when it was first mooted. But is it enough in a world where the economies of individual nations are no longer controllable from within their own boundaries?

It should be no surprise to hear that the case in favour of debt-forgiveness is being made so strongly at the G8 summit by a child of the Sixties who carries strong religious convictions into his politics. The Prime Minister no doubt believes that this is the sort of thing he is in politics to do.

To some it is slightly more surprising to see that the Dome Secretary, Peter Mandelson, has added his name to the petition organised by campaigners for debt relief. However, this probably reflects more the fact that the Minister Without Portfolio belongs to a generation where, whatever your politics, ending Third World poverty is an article of faith in the civilised world. So it's hard to fight back the instinct to cheer when you hear the stirring speeches in favour of forgiving developing country debts. It's a celebratory gesture worthy of the millennium.

This is not just an issue about money; it is also about democracy, and the right of nations to make their own mistakes. It is not just the debt to which the developing world objects; it is the fact that it allows the developed world to tell even democratically elected governments what to do. The IMF even now imposes detailed economic and social policies as the price of its help. No one says that governments cannot make a priority of health care, but any that do seem to find the water just a little rougher when it comes to negotiations over debt rescheduling.

However, there are difficult questions which the campaigners don't raise, and that the summit would do well to consider. For one, how do we deal with the fact that, even if you take the decision to forgive debt, that won't feed a single child by itself? Relieving debt will not by itself build new dams, modernise farms or provide viable businesses that offer regular jobs. To tackle that we may need to look closely at an uncomfortable fact: the only agency that may have the power to dig the developing world out of its hole is the one everyone distrusts most and likes least - global capital.

The most significant players in many developing countries are not governments or aid agencies: they are the global concerns that bestride the world, in effect buying the assets of nations. Take for example the country from which my own family comes, Guyana.

It is the size of England and Wales, but has a population of less than a million. GNP per head is less than pounds 400, and infant mortality is around 60 per thousand live births - a figure not known in Europe since the Middle Ages. Its debts total over a billion pounds. And it is doing well, by the standards of most.

Its people work hard, its government is pretty much democratic and its financial management is of the Gordon Brown prudency school. Not much wrong here, except that the place is falling apart with one hope of rescue. The one ray of light shines through the virgin rainforest that covers four-fifths of the country, and which is highly prized by the massive international logging concerns.

For over a decade now, Guyana has literally had to sell itself, bit by bit, to transnational corporations. If nothing changes, sooner or later, it will return to its pre-colonial status: a territory formally constituted as a state, but for all practical purposes, in truth a glorified company town.

As a child, when sugar was king, and the West Indies were a monoculture which existed on that one crop, the country was more or less owned by Bookers, who owned Tate & Lyle. It was a steady relationship; we elected the government, they reported to the colonial administration, who made Guyana do whatever Bookers needed. Few people objected; as in all company towns, a home, a school and a regular pay cheque quelled most people's revolutionary instincts.

We are returning to those days. It may be inevitable, and it may well be the only way to feed the people. But if these countries are to become company towns the role of politics must be to impose some rules. Otherwise debt-forgiveness will have a simple unintended consequence.

Governments with their creditworthiness restored will, rightly, want to attend first to their infrastructure needs - new roads, railways, telephone systems, irrigation. Will the people benefit? In the medium term, maybe; but not as soon or as the construction and telecoms companies who will pile in to spend the revenues freed from the burden of debt.

In the end the people who must be praying hardest for the debt relief campaign to succeed are not the liberal politicians and do-gooders; it is the accountants and the marketing men in giant utility and building companies, scouring the world for new ways to extend their reach.

It's a difficult dilemma for the G8 leaders. Can democracy, debt relief and global commerce work together? If they don't, I'd lay odds that democracy will go out of the window first. But there are steps they can take.

One should be to ensure that no nation becomes a one- company town. Bananas may be the only industry on your island; but must it always be Geest and only Geest which rules the roost? Second, as the South Africans have insisted, should there not be some semblance of local participation? Governments in developing countries may well be subject to economic blackmail, but surely part of the price should be representation on local subsidiaries for local people.

There is no reason why the debt agenda should not be pursued powerfully and passionately. But by itself, it is no longer enough. Alongside forgiveness, some hard decisions have to be made about how to deliver the developing world from some of the evils that await it.