By Prof. Jose Maria Sison
Chairperson, International Coordinating Committee
International League of People’s Struggle
5 July 2005

The G8 summit scheduled for July 6-8, 2005 in Scotland is being promoted by the big corporate media of the imperialist countries with much fanfare. The G8 promise of cancelling debts of some $40 billion for 18 Most Indebted Poor Countries (MIPC), upon the fulfillment of certain conditionalities, is being hailed as a “historic” deal and a “victory for millions.”

The amount of debt promised to be cancelled is a tiny fraction of the USD 2.4 trillion total debt (2003 computation) of the “southern countries” or “third world countries” of Asia, Africa and Latin America. By merely making a promise of token debt cancellation, the imperialist creditors try to conceal their criminal responsibility for overloading the dominated countries with onerous anti-development loans, misrepresent themselves as charitable to the poorest countries which they in fact continue to squeeze and make acceptable the neocolonial system of exploiting the overwhelming majority of countries through international usury and “free trade”.

It is misleading and in fact wilfully criminal for the imperialists themselves and their camp followers to praise the G8 summiteers as being engaged in “debt relief” and “poverty reduction”, as “making poverty history” and as providing charity to the MIPC for education, health, anti-AIDS campaign, disaster relief and infrastructure. For praising and praying to the G8 and seeking to deceive the people, the social democrats, the bourgeois liberals, the Trotskyites and NGO racketeers expose themselves as hired hacks of their imperialist masters.

False Promises of G8 Countries

G8 countries have repeatedly made false promises. But they have always failed to deliver even the little that they promise. In March 1999, Canada’s Prime Minister, Jean Chrétien, said that Canada would act alone on debt relief if other G7 countries failed to respond to the needs of the severely indebted countries. US President Bill Clinton in September 1999 said that the United States would try to forgive all the debt that poor countries owed the US. Britain announced a plan in December 1999, to cancel 100% of the debt owed by 26 poor countries. None of these promises have been kept.

The latest G8 proposal is a big swindle because it carries with it conditionalities that prevent full availment of the debt cancellation. The character and scope of such conditionalities have precisely caused underdevelopment, poverty and further indebtedness in the countries the G8 are supposedly desirous of rescuing from poverty. These conditionalities include so-called measures against corruption and reforms that are designed to impose and apply neoliberal prescriptions of further investment and trade liberalization, privatization and deregulation. The client economies are further opened to foreign monopoly capital, which precisely causes underdevelopment, poverty, deficits and ceaseless local and foreign borrowing by the client state.

The G8 promise of debt cancellation being hyped by the big corporate media is calculated to make the monopoly capitalist countries look good while they lay the blame for poverty and misery on the people of the underdeveloped countries themselves. The culprits blame the victims for the crimes committed against them.

Many of the G8 countries have been responsible for the colonial rape of the countries of Africa, Asia and Latin America. They plundered the human and natural resources of these countries in their primitive accumulation of capital. Since direct colonial rule became largely a thing of the past, the former colonial powers (which had since industrialized using the wealth from colonial plunder) have continued the exploitation of these countries through neocolonialism using such subservient local stooges as the big compradors, landlords and bureaucrat capitalists who are given part of the spoils to perpetuate their control and dominance.

The G8 countries have a big responsibility for corruption in their client states. Aside from their historical role in creating the corrupt local ruling classes, the multinational firms and banks have been the sponsors and supporters of such corrupt politicians as Marcos, Mobutu and the rest of them for the behest loans and supply contracts that have thrust these countries into the vicious debt cycle. A large part of the borrowed money always ends up in the bank accounts of the puppet rulers, be these openly dictatorial or seemingly democratic. These puppets can “pay back” by taxing their people dry and begging for more loans at more onerous terms imposed by the G8 countries, the IMF and World Bank.

Foreign monopoly firms are efficient at corrupting the politicians in client states in order to capture juicy public works contracts and arms deals. The British government is even known to reward these firms by giving them tax breaks on these “commissions” paid abroad which are considered deductible expense.

In 1970, roughly 60 countries classified as low-income by the World Bank, owed $25 billion in debt. By 2002, this was $523 billion. Over the three decades from 1970 to 2002, $550 billion has been paid in both principal and interest on $540 billion of loans, and yet $523 billion dollar debt burden remain.

The Crushing Debt Burden of Africa

The following is a quote from the President of Nigeria: “All that we had borrowed up to 1985 or 1986 was around $5 billion and we have paid about $16 billion yet we are still being told that we owe about $28 billion. That $28 billion came about because of the injustice in the foreign creditors’ interest rates.”

The effects of the debt trap on the people of the third world are staggering. According to UNICEF data as many as five million children and vulnerable adults may have lost their lives in sub-Saharan Africa as a result of the debt burden since the late 1980s. Some 11 million children below five years old die each year around the world, not just Africa, due to similar conditions of poverty and debt.

The IMF and World Bank require poor countries to pay around 20 to 25 percent of their export earnings for debt repayment. Yet, no European country including Britain, France and Italy is repaying its loans at levels higher than 4 percent because they consider it unsustainable and bad for their economy.

Many of the proposals on debt relief coming from the imperialist countries and their instruments such as the G8, WEF and IMF and World Bank are a sham. The real solution is repudiation and cancellation of all the outstanding debts owed by third world countries. The reason is simple: these debts have been repaid many times over.

The “carrot” of debt cancellation is being dangled as a bargaining chip to wring more concessions on trade and investments. Debtor countries are told that they can only avail of debt cancellation if they institute neoliberal reforms such as trade and investment liberalization. These “reforms” have already wreaked havoc on the economies of these debtor countries.

In Senegal, tomato production used to provide peasant families with some kind of livelihood. After liberalization, the price for tomatoes was halved and tomato production fell from 73,000 tons in 1990 to only 20,000 in 1997 leaving many peasants without a cash crop. In Kenya, cotton production fell from 70,000 bales a year in the mid-1980s to less than 20,000 bales in the mid-1990s. Employment in textile factories fell from 120,000 people to 85,000.

Manufacturing industries have also been hit hard by trade liberalization. In Zambia, employment in manufacturing fell by 40 percent in just five years of trade liberalization. In Ghana, employment in manufacturing fell from 78,700 in 1987 to 28,000 in 1993. In Malawi, textile production fell by more than half between 1990 and 1996. Many firms producing soap and cooking oils went bankrupt and the poultry industry collapsed in the face of cheap imports.

Trade liberalization in third world countries follows this pattern. When trade is liberalized, imports of consumer goods rise sharply. Local producers are priced out of their markets by cheaper imports. Exports also tend to grow but not as much. Besides, third world countries tend to export similar primary commodities that flood the world market and result in the ever worsening prices for their exports. Over-all production falls as both producers for the local market and for export cannot stand the cutthroat competition. Any short-term gains to consumers from cheap prices are wiped out in the long term as their incomes fall and unemployment rises.

According to one study, sub-Saharan Africa lost $272 billion in twenty years of trade liberalization. This would have been enough to wipe out the debt of all the countries in sub-Saharan Africa estimated at $204 billion with still enough money to have every child in the region vaccinated and sent to school.

The oppressed peoples of the third world cannot pin their hopes on so-called solutions being offered by their oppressors. These do not solve their problems but aggravate them.

Solutions to the Debt Problem

The only solution is for the oppressed peoples and nations and the underdeveloped countries to uphold and exercise political independence and economic sovereignty against the impositions of the imperialists and their local puppets. They must resist the dictates and bullying of the imperialist powers who wish to impose social and economic policies through such imperialist instruments as the IMF, World Bank and WTO. They must repudiate and cancel all the odious and onerous foreign debts.

They must conserve the natural resource and use them wisely for national development. They must carry out national industrialization and land reform. They must thereby develop the economy, generate employment and expand the domestic market. They must satisfy the basic needs of the people. They must break away from the unequal exchange of their raw materials with the manufactured goods of the imperialist countries. They must set themselves from the superprofit-taking and international usury of imperialism.

We must expose the sham solutions being hyped by the imperialist governments and the imperialist media. We must also struggle against the erroneous ideas being peddled by the social democrats, bourgeois liberals, Trotskyites and NGO racketeers and reformists that try to make imperialism appear benevolent, reformable and palatable.

The oppressed peoples and nations are being incited to rise up in armed revolution by the fact that imperialism has reduced them to a life of poverty and misery, due to superprofit-taking and international usury. Half of humankind or 3 billion people live on less than $2 per day and 1.1 billion of them live on less than one dollar day. To keep the people of the world captive, the US is spending $500 billion this year on its military forces, while $15 billion is estimated to be enough to alleviate poverty in the worst-case countries. Under the worsening conditions of oppression and exploitation, the proletariat and people of the world are bound to rise up in order to overthrow the system of imperialism ###