The logic of debt relief is simple. It can be written off at the stroke of a pen, releasing from poverty a billion people, a sixth of the world's population who survive on $1 a day. Slowly but surely rich governments, the World Bank and the International Monetary Fund are realising that debt relief for the poorest countries in the world is essential if they are to win the fight against the ills of poverty.
Writing off debt, in the words of one Oxfam official, could mean the simple difference between going to school or not going to school in Nicaragua, Bolivia or Mali.
This week President Clinton offered to waive the $5.7 billion debt owed to the US by 36 poor countries provided the money saved was used on healthcare, education and basic human needs. Whether the US Congress will sanction Clinton's proposal is another matter, but Britain's Chancellor, Gordon Brown, has now offered to match the US on a case-by-case basis and the British International Development Secretary, Clare Short, also announced this week an extra £31 million in debt relief for the poorest countries. This move followed the IMF's decision last month to raise $2 billion for debt relief by revaluing its gold stocks rather than selling them on the open market.
Brown told this week's Labour Party conference that Britain, as the largest single contributor to the Highly Indebted Poor Countries (HIPC) initiative which aims to cut debt burden, would play a bigger part in relieving more than two-thirds of the debt of the world's poorest countries.
"The money now spent on servicing debt will be invested not in military weapons or bureaucratic waste," he said, "but where the money should always have gone, educating the young, healing the sick and relieving the suffering of the world's poor."
It is two years since Cardinal Basil Hume wrote about the "profound theological resonance" of the new millennium, sensing as he did the chance it provided to mobilise global public opinion to relieve the debt of the world's poorest countries.
Hume rightly pointed the finger at many of the debtor countries and previous administrations and said they must share the blame for their debt problems. Corruption, mismanagement and war had wreaked havoc on fragile economies. But creditor countries had to share the greater burden of responsibility since they had often handed out money irresponsibly, imposed impossible repayment conditions and then put the final nail in the coffin by sanctioning the trade in arms to repressive regimes.
Yet despite the fact that the debt problem has been around for a long time it is only now that the effort to mobilise global public opinion is showing signs of progress.
The assessment of those countries deemed to be the poorest in the world is characterised by several factors. Qualifying criteria are based on estimates of child mortality rates and debt burden compared with the value of government revenues.
Fifty-two countries in the world have unsustainable debt burdens - 37 are in Africa - and the combined value of their debt is estimated at over $354 billion, according to Jubilee 2000, a coalition of 100 charitable agencies dedicated to raising awareness of debt in the poorest countries.
The debtor countries include Jamaica, which has a total debt burden of $3,913 million, and Guinea Bissau, with about $921 million. Christian Aid estimates that the current debt of all developing countries is $2.5 trillion.
About half of all the debt is owed to individual governments, mainly those comprising the G7 group such as Britain, the US, Japan and France. A third is owed to the IMF and the World Bank and about 15 per cent is being paid back to private banks around the world. In the 1980s Lloyds Bank and the Midland Bank in Britain were exposed as major creditors to the Third World, but offloaded the debt on to the taxpayer when public opinion mobilised against them.
When it comes to debt and poverty, inevitably it is the poor man and his wife and child who suffer. In Mozambique, for example, the value of its total bilateral (government-to-government) and multilateral (World Bank and IMF) debt in 1997 was $5,526 million. The arrears amounted to some $1,395 million, yet its GDP per capita was only $140. In 1997 infant mortality in Mozambique was estimated at 116 per 1,000. In Tanzania, many schoolchildren are turned away from school because their parents cannot pay the fees.
The origin of the loans gleefully dished out by Britain, the US and France, to name but a few, lies in huge economic growth in those countries in the 1970s and 1980s and in the outstretched hands of newly independent Third World governments. Surplus cash rolling about in the treasury accounts in the West left the money-lenders wondering what to do with it.
They turned their eyes on the Third World where they had enjoyed colonial status in the past, and in some cases still did, and saw the advantage in politically strategic lending policies which, at the height of the Cold War, would provide them with a lever against socialism.
Massive US loans to President Mobutu in Zaire, for example, buttressed his regime at a time when that part of Africa was a Cold War battleground, but Mobutu continued to receive IMF loans long after evidence was produced that he had siphoned off aid for his country into a Swiss bank account. The theory that developing countries could not be allowed to go bankrupt and should not be allowed to slide into civil war had its advantages for both sides in the creditor-debtor relationship, but often produced devastating results. The fault lay with both sides, and often the bigger the project the likelier it was to fail.
Grand schemes, such as dams, schools and hospitals, which had at their heart the wish to improve the lot of local people, were easier to map out on paper than on the ground. Shoe factories that were never opened soon followed, because insufficient local planning meant the factories didn't have enough power to operate the machines. Schools, hospitals and sanitation systems were never built, loans directed into the foreign bank accounts of corrupt government officials went unchecked and mounting interest repayments meant debt spiralled out of control.
Of course, many local schemes have been successful, such as the great improvement in education in Uganda facilitated by overseas loans. Yet in the three years since the IMF launched its Heavily Indebted Poor Countries (HIPC) initiative, only two countries, Uganda and Bolivia, have qualified for help. Even when countries have qualified, the amount of debt relief has been painfully small and slow. It has been estimated that Mozambique will save only $11 million on a total debt-service bill of $120 million a year.
For developing countries, paying back the crippling debts incurred in the 1970s and 1980s is a hopeless cycle of repayments, arrears, more repayments and interest rates that often outstrip the value of the original loan. Costa Rica borrowed less than £4 million from Britain in 1973, yet it has paid back more than £7 million on the loan because of interest payments and still owes more than £1 million.
The people of the developing world need "measured wisdom" from the creditors, not the closed door of indifference. Corrupt governments, badly managed development schemes and profligate lending have served to multiply debt, but as more and more children are born into poverty, organisations such as Jubilee 2000 - to which Bono, Bob Geldof and the Pope have lent their support - have cried out to the creditors not to turn their backs on their responsibilities.
Even if the debt is written off developing countries will continue to look to the developed world for loans to open schools and hospitals which will help local people.
In particular cases, such as Burma, there is little doubt among aid agencies that governments will use the funds freed up by eradicating the debt burden to buy arms and big cars. Christian Aid is not keen to see Burma's debt relief written off for that reason and advocates closer monitoring of British companies selling arms abroad.
One of the suggestions offered by aid agencies, and increasingly by governments, to ensure newly released funds go to the right people is to tie debt cancellation to directly improving people's lives by adding the rider that education and health schemes must be implemented as a result.
In Jubilee 2000's view, if more and more people in the developed world benefit from education as a direct result of debt being written off they will demand the same "wisdom" from their own governments in relation to local spending. It may be an idealistic argument - some argue it smacks of neo-colonialism - but Jubilee 2000 believes it is preferable to the status quo.
"Give people the power to hold their own governments to account and they will do it," says Angela Travis of Jubilee 2000.
"If they are told to wait and wait until next year because we are worried about what governments will do with the money it will never happen. This is the time to write off the debt. We are certainly not for benefiting corrupt dictators but there are many, many ways to make sure the money goes to the right people. These countries have been under the IMF's arm for so long but people in these countries are very hungry to play the citizen's role. We have to blow the whole thing open."
Other links: www.jubilee2000.com is the debt abolition campaign Website
