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Date: Feature Week of November 14, 2004
Topic: Black Press Business/Economic
Author: William Reed
Article ID: article_ema111404

COLIN POWELL TO HEAD WORLD BANK?

What Will He Do About Africa and Its Debt?

Is the first African American U.S. Secretary of State about to become the first black to head the World Bank?  The buzz in the nation’s capital among business and finance circles is that Colin Powell could become the next president of the World Bank, the largest and most influential development agency in the world.  The World Bank is master of some $20 billion in loans each year to the world's poorest countries.

Though its scope is world-wide, the president of the 60-year-old World Bank is appointed by the U.S. government.  If Powell becomes head of the World Bank one of the main issues he will have to confront is a 50-year-old geo-political problem: debt cancellation for African nations.  If Powell takes over the World Bank in June 2005, many want him provide African nations more of a hand up than a handout.

For example, if the U.S. government was unable to pay teachers, health care workers or civil servants for nine or 10 months at a stretch because it had to hand over its limited funds to the world's wealthiest nations, how long do you think it would be before all hell broke loose?  This is the scenario all over Africa.  It is made even more desperate by the AIDS/HIV pandemic, which threatens to turn the continent into a land of orphans and old people with no one left to feed them.  "It is morally reprehensive for the developed world to continue to demand repayment when we have a crisis on the continent of Africa," says the archbishop of Capetown, South Africa.

It is due to Western powers that Sub-Saharan Africa, so rich in human and natural resources, remains the economically poorest region of the world.  Half of its people live in poverty, and in many countries economic conditions have been getting worse for the last 20 years.  The greatest barrier to African economic recovery is the overwhelming $230 billion debt burden.  Thirty-three of the region's 44 countries are designated heavily indebted poor countries by the World Bank; most of the rest nearly qualify for that ranking.  Up to now, creditors - chiefly the International Monetary Fund (IMF) and World Bank – have imposed the harsh economic conditions.

Politically, Africa is run by black leaders but they are hardly independent from Western powers.  Western banks, multinationals and governments control Africa, but their methods have moved from the direct occupation used in the colonial era.  The new system is neo-colonialism. Since the fifteenth century, when western governments, businessmen and their military first set about invading Africa, Africans have not had the freedom to determine how they should govern themselves or what kind of economy to run.  African governments do not decide what policies to follow; the IMF and World Bank make those decisions for them.  In some sub-Saharan nations, loan payments cost up to 25 percent of their national budgets.  Powell will take over a system of Western imperialism which causes more of African nations’ money to go to repay debts to Western powers than to domestic education, health care and social programs.

Much of the debt accumulated by African countries was built up during the 1970s, a time of reckless lending by banks and international agencies, and was agreed to by undemocratic governments.  In many cases, the population of the borrowing country realized little benefit from the loans as money disappeared in failed infrastructure projects, corrupt schemes, or unwise investments.  The debt has continued to grow since then as governments take out new loans to pay off old ones.  In 1996, Sub-Saharan Africa paid $2.5 billion more in debt servicing than it got in new long-term loans and credits.

Powell’s work at the World Bank will have more global impact than did his activities at the State Department.  Three billion people, half of all humanity, live on under $2-a-day, the majority of who are in Africa.  Debt subjects African countries to the mandates of the IMF and World Bank.  Debt diverts resources from health and education spending.  And debt is what inhibits productive investment.  If Powell becomes the first black to head the World Bank, any effort he might make to benefit Africa must include comprehensive debt cancellation for Sub-Saharan Africa.

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© 2000-2004 William Reed - www.BlackPressInternational.com

 

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