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Socialist Democracy Aug - Sept 2005

 

THE PARIS CLUB "DEBT RELIEF" PACKAGE

A Big Con

Every aspect of Obasanjo's government economic policy is decidedly anti-poor and pro-rich. More accurately, the central thrust of the economic policies of the civilian government headed by Obasanjo is primarily pro-big business, and for that reason, slavishly pro-imperialism.

Under the guise of helping Nigeria to become "debt free", the G8 capitalist countries with the active connivance of Nigeria's capitalist elite have put together a very deadly package, being promoted as "debt relief". From the point of view of the living conditions of the working people and the basic requirements of a sustainable economic growth and development, every aspect of the conditionalities put up by the Obasanjo government is counter-productive. Far from being a relief, the Paris Club offers, severally and collectively, if implemented, will only help to deepen the mass misery and at the same time give a big boost to the second colonization of the country by the capitalist west.

Before examining the conditionalities which Nigeria must meet in order to enjoy the so-called debt relief, one point should be stressed, that Nigeria, most especially its long suffering people seriously needs a "debt relief", "debt write-off", "debt pardon" or whatever it is called so long this actually means easing or removing the excruciating pains being inflicted on the people as a direct consequence of crippling financial commitments involved in servicing the country's debt. Sadly however, the Paris Club debt package in issue will only worsen Nigeria's situation in all ramifications.

DEADLY CONDITIONALITIES

Firstly, Nigeria, at a go, has to pay a whooping sum of $6bn upfront in order to enjoy the much-touted relief! For an economy reeling under gross under-development and decay due to absence of insufficient capital investments; for a country without the basic social infrastructural facilities such as transportation, communication, electricity, pipe borne water, health care and educational services etc; for the country whose over 70% of its population live below poverty level, the requirement that Nigeria should pay, at a go, a whooping sum of $6bn (at least by Nigeria's standards) to overfed financial sharks in the G8 countries is to say the least, outrightly callous. In addition, it should be stressed that only those who feed fat on peoples misery can describe this outright robbery as a relief.

This is not all. If Nigeria pays the requested $6bn, the Paris Club says it will thereafter write-off about 60% of the country's debt, leaving a balance of about $8.5bn out of the $31bn claimed to be owed to the club. In order to avoid a situation where this balance will balloon to a bigger debt in the nearest future, the club has therefore kindly demanded that Nigeria "buy back" this outstanding balance at "a discount market rate". Most estimates by financial analysts put the actual sum Nigeria may have to immediately pay in this respect at a minimum of $6bn!

The Policy Support Instrument (PSI) put forward by the Paris Club says that its relief package is directed to provide "an enabling environment for growth" and "member’s poverty reduction". Sadly to stress however, it is the exact opposite that will happen. To get out of the prevailing decay and stagnation which envelop the industries and agriculture to develop necessary social infrastructures needed for a sustainable growth to develop functional and affordable health care, to give functional and qualitative education for all, to substantially mob up employment, to give decent living and working conditions to the working masses, each and every one of these will require capital investments in billions of dollars. Therefore, the only reasonable and rational way Nigeria can be helped at this point in time is to inject billions of fresh dollars on the real sectors of the economy. Any deal that expects Nigeria to part with its own dearly needed cash is nothing but an outright fraud and sell out of the masses interests.

Of course the Minister of Finance, Ngozi Okonjo-Iweala and other capitalist/pro-imperialist elements argue that this is the best strategy to ensure growth and development. According to the minister, once the Paris Club "debt dealing" is finally implemented, Nigeria will from 2006 no longer have to pay $1bn annually as it has been paying in the past 6 years to the Paris Club as debt repayment and services. This $1bn reprieve, for all those who believed the minister will now be channelled towards the development of infrastructure and other social needs. What an ingenuous calculations! Nigeria will first part with $12bn and in return gain $1bn! For a minister seconded from the World Bank (a leading imperialist body) and especially one who gets her salary in dollars, Okonjo-Iweala has, no doubt, performed "a feat" which might in the nearest future fetch her a Noble Prize in finance! This is however a big problem. Her deal practically means the continuation of the current economic decay and mass poverty.

Secondly, it is important to stress that the "debt relief" in issue demands that "Nigeria must secure approval from the IMF boards for its economic reforms and submit itself to continuing economic monitoring".

Plainly put, this means that Nigeria must be prepared to continue with the current neo-liberal capitalist policies of privatisation and liberalization of the economy. For the past six years or so, President Obasanjo's government and that of his colleagues at the states level have been busy selling at cheap prices the commanding heights of the economy and resources to private corporations and individuals. This strategy, we were told is the best way to service the chronically sick economy and at the same time ensure its sustainable growth. Once prices of goods and services like fuel, health care and education etc are solely determined by market forces, then, Nigeria will have signalled its giant entrance into the club of great developed countries.

According to President Obasanjo, this is not just a Nigerian strategy but rather that of the entire Africa which has, in the wisdom of the African Union (AU) leaders, adopted a New Economic Policy and Partnership for Africa Development (NEPAD) for the continent. The central thrust of NEPAD's strategy is an economic agenda where the private sector under the supervision of the capitalist west is, expected to lift Africa's economy out of its historic backwardness and associated mass poverty.

But this is as far as theory goes. In practice, the opposite has been the case. The neo-liberal policies in areas of healthcare and education have been an absolute disaster with most publicly owned schools virtually destroyed while private ones charge fees that are beyond the incomes of most parents and students. This is without stressing the fact that a large layers of elements that should be in schools are not there because of absence of opportunities and resources.

So far, the incessant hike of fuel prices has only achieved the opposite of what were promised. In the wake of every increment, more companies often fold up with workers retrenched in thousands. The small scale, self employed businesses had never fared better with many of them folding up rapidly due to high cost of energy and poor patronage as a result of mounting unemployment of the vast majority of the people. Sadly, this is what the Paris Club, IMF and the local capitalist elements will like to preserve.

Even if Nigeria were to meet the onerous conditionalities put forward by the Paris Club, the rising anti-peoples economic policies will still be in the place. If not, why should the Paris Club insist that Nigeria must submit itself to "continuing economic monitoring" when its "debt deal package" is supposed to make Nigeria "debt free" at least to the Club?

Government spokespersons however tell us not to worry as they would never accept any dictate from Paris Club or the IMF. Early August 2005, the Director General of Debt Management Office (DMO), Dr. Mansur Muhtar, had said "In our negotiations with the Paris Club, NEEDS was non-negotiable, there was never any question of us having an IMF program". Thus, according to Muhtar, the National Economic Empowerment and Development Strategy (NEEDS) was what government based its deal with Paris Club on! But before anyone can shout Up Nigeria, Muhtar himself inadvertently (may be) revealed the truth that the so-called NEEDS itself has been fashioned after the IMF paradigm. Hear him: "The Policy Support Instrument (PSI) which will provide the basis of this deal is simply a formalization of what we have been doing for over a year asking the IMF to cast an eye over our economic policies, over which we have 100% control is a way of reassuring our creditors"! (Muhtar quotations were taking from This Day of August 7, 2005 Pg. 25).

Nothing however shows better, the self-serving nature and the pro-imperialist character of the regime than its attitude towards the whole debt problem abinito. While it is admitted by government that the total sum borrowed from the Paris Club was $13.5bn and that the country has made a repayment of about $42bn to the Club yet, as imperialist lackeys, they could not query how Nigeria can still be said to be owing the Club a whopping sum of $31bn! For their own selfish interests, the local capitalist elements could not stand up to imperialism by repudiating this unjust debt. Instead they are prepared to handover cash which should be used to better the lot of the masses to the international finance capital so long as their own share of the loots and acceptability by the capitalist west leaders are guaranteed.

Finally, the point must be stressed that the debt crisis itself is the expression of the inability of the local capitalist class to lay foundations for a viable economic development needed to guarantee the basic needs and aspirations of the working people. This explains why little or no positive results was achieved despite the fact that the country has earned over $400bn from oil alone since 1960 and why no tangible, positive results came out of the money originally borrowed from the Paris Club and other so-called creditors.

To solve the problem of chronic economic underdevelopment, to drastically tackle the problem of mass poverty and to get out of imperialist debt trap, it will be imperative to overthrow capitalism with its unjust socio-economic relations. Towards this end, we in the DSM demand and fight for: total cancellation of Africa's debt stock with no strings attached; repatriation of all Africa's stolen wealth stashed in foreign banks by the corrupt pro-West leaders; Africa's resources to be totally committed to guarantying food, housing, health care, education, decent jobs, etc to the African masses; a mass working peoples' party with genuine socialist programme; a workers' and poor peasants' government; public ownership of all the commanding heights of economy and main resources of nature firmly placed under the democratic management and control of the working people themselves; or a united democratic socialist confederation and, when possible, Federation of African countries in a world socialist order.

Socialist Democracy Aug - Sept 2005