Debt cancellation worth $40 billion to 18 countries

UPDATED: Added Ghana, Guyana, Honduras, Madagascar

Paul Wolfowitz made a surprise announcement late Sunday that the international Monetary Fund of which he is chairman had garnered the approval of its membership to cancel $40 billion in debt to the world's 18 poorest countries. The agreement was not expected as there were some objections to some of the debt relief from some member nations. However, Wolfowitz managed to bang enough heads together to get it done. What cleared the way for the breakthrough was a pledge Friday from the G-8 the United States, Britain, Canada, France, Germany, Italy and Japan "to cover the full cost to offset dollar for dollar," the loan payments that would be lost.

The 18 countries, 4 in Latin America and 14 in Africa, are as follows: Benin, Bolivia, Burkina Faso, Ethiopia, Ghana, Guyana, Honduras, Madagascar, Mali, Mauritania, Mozambique, Nicaragua, Niger, Rwanda, Senegal, Tanzania, Uganda and Zambia. Apparently, everyone from B to Z.

Bob Geldof, again revealing his naivete, said, "This ... is only a beginning. But what a beginning. The deal should be implemented without delay with no strings attached save that countries use the money transparently to tackle poverty, hunger, disease and illiteracy." Oh, OK. The only strings attached are that the countries whose debts were canceled use the money responsibly. Ha ha ha ha, what a hoot. If the so-called leadership in those countries was capable of responsible money management in the first place, they wouldn't be needing the charity of the world's developed nations, now, would they? Let's take a look at some of these innocent poor who are staggering under the weight of usurious interest payments.

Benin.

The African kingdom of Dahomey originated in Benin. By the 17th century, the kingdom, ruled by an oba, stretched beyond the borders of present-day Benin, covered a large part of West-Africa. The kingdom was prosperous and established slave trading relations with the Europeans (mostly Portuguese and Dutch) who first arrived in the late 15th century. The coastal part of the kingdom became known as the Slave Coast.

Independence from France in 1960. 31 years ruled by Marxist-Leninist military governments, 14 years by elected politicians. Total foreign debt: $1.6 billion. Total budget revenues: $869.4 million. So Benin's debt exceeds its income by a factor of 1.84:1. Benin also receives some $400 million in foreign aid annually. Benin spends about $100 million annually on its military, or more than 10% of its income.

Voodoo is thought to have originated here. Voodoo economics?

Bolivia:

Bolivia, named after independence fighter Simon BOLIVAR, broke away from Spanish rule in 1825; much of its subsequent history has consisted of a series of nearly 200 coups and counter-coups. That would about explain it all, wouldn't it?

Bolivians own a total of 900,000 televisions, about the number of TV's sold in the United States every day. There are 48 TV stations for those 900,000 TV's, or 18,750 customers per TV station. Sounds like 48 little Air Americas doesn't it?

World's third-largest cultivator of coca (after Colombia and Peru) with an estimated 28,450 hectares under cultivation in June 2003, a 23% increase from June 2002 - business is boomin'!

The Bolivians did capture and execute Ernesto Guevara Lynch and for that I guess we do owe them something. That incident occurred in 1967, however, and that's 38 years ago.

Burkina Faso:

Achieved independence from France in 1960. Its first military coup occurred in 1966, then returned to civilian rule in 1978. There was another coup, led by Saye Zerbo in 1980, which in turn was overthrown in 1982. A counter-coup was launched in 1983, which left Captain Thomas Sankara in charge. The current president is Blaise Compaora, who came to power in 1987 after a coup d'etat that killed Thomas Sankara.

A poor country even by West African standards, the landlocked state of Burkina Faso has suffered from recurring droughts, matched in number only by the military coups it has endured, especially during the 1980s.

Ethiopia:

Unique among African countries, the ancient Ethiopian monarchy maintained its freedom from colonial rule, with the exception of the 1936-41 Italian occupation during World War II. In 1974 a military junta, the Derg, deposed Emperor Haile SELASSIE (who had ruled since 1930) and established a socialist state. Torn by bloody coups, uprisings, wide-scale drought, and massive refugee problems, the regime was finally toppled in 1991 by a coalition of rebel forces, the Ethiopian People's Revolutionary Democratic Front (EPRDF).

Ethiopia was historically called Abyssinia. The name "Ethiopia" is sometimes thought by Westerners to derive from a Greek term meaning "burnt visage", but this etymology is problematic. Ethiopian sources state that the name is derived from a son or grandson of Cush, son of Ham, brother of Canaan, father of Nimrod and grandson of Noah, mentioned in the "table of nations" in the Book of Genesis (X. 60) and in I Chronicles (I. 8). Hmmm.

The early 20th century was marked by the reign of Emperor Haile Selassie I, who undertook the rapid modernization of Ethiopia -- interrupted only by the brief Italian occupation (1936 - 1941). British and patriot Ethiopian troops liberated the Ethiopian homeland in 1941, and Ethiopia's regained sovereignty was recognised by Britain upon the signing of the Anglo-Ethiopian Agreement in December 1944.

Haile Selassie's reign came to an end in 1974, when a pro-Soviet Marxist-Leninist military junta, the "Derg", deposed him and established a one-party socialist state. The ensuing regime suffered several bloody coups, uprisings, wide-scale drought, and a massive refugee problem.

After the 1974 revolution, the economy of Ethiopia was run as a socialist economy: strong state controls were implemented, and a large part of the economy was transferred to the public sector (government owned), including most modern industry and large-scale commercial agriculture, all agricultural land and urban rental property, and all financial institutions. And the government promptly ran it all into the ground.

Corruption is worsening in Ethiopia and the levels are higher than in previous years, according to the anti-graft watchdog Transparency International (TI). "Corruption is a serious problem in Ethiopia," Jeff Lovitt from TI told IRIN. "There is a problem in developing countries because they lack strong public services."

Ghana:

Formed from the merger of the British colony of the Gold Coast and the Togoland trust territory, Ghana in 1957 became the first sub-Saharan country in colonial Africa to gain its independence. Ghana fell victim to corruption and mismanagement soon after independence in 1957. A long series of coups resulted in the suspension of the constitution in 1981 and a ban on political parties.

In 1966, its first president and pan-African hero, Kwame Nkrumah, was deposed in a coup. In 1981, Flight Lieutenant Jerry Rawlings staged his second coup. The country began to move towards economic stability and democracy. President John Kufuor came to power in the presidential ballot in December 2000, marking the first peaceful, democratic transfer of power in Ghana since independence. He succeeded the long-time ruler Jerry Rawlings.

Well endowed with natural resources, Ghana has roughly twice the per capita output of the poorer countries in West Africa. Even so, Ghana remains heavily dependent on international financial and technical assistance. Look at these numbers; Budget revenues: $2.17 billion, Foreign aid: received $6.9 billion in 1999 alone, Expenditures: $2.56 billion; Where did $6.5 billion go? That has to be a typo.

Major transit hub for Southwest and Southeast Asian heroin and, to a lesser extent, South American cocaine destined for Europe and the US. Widespread crime and money laundering problem, but the lack of a well-developed financial infrastructure limits the country's utility as a money-laundering center, so there is that. Almost 50 years and Ghanians have yet to develop financial systems that can even support money laundering let alone, you know, finance.

Ghanaian chieftaincy remains strong throughout the country, particularly in the areas populated by members of the culturally - and politically-dominant Ashanti tribe. The Ashanti's chief, known as the Asantehene, is perhaps the most revered individual in the central part of the country. Like other Ghanaian chiefs, he wears bright Kente cloth, gold bracelets, rings and amulets, and is always accompanied by numerous ornate umbrellas (which are also a symbol of the chieftaincy itself). The most sacred symbol of the Ashanti people is the Golden Stool (no, it's not what you're thinking), a small golden throne in which the spirit of the people is said to reside.

Oh, yes, Kofi Annan is from Ghana.

Guyana:

Jim Jones, Leo Ryan, Kool Aid. Lots of people think that Guyana is in Africa, possibly because its former name was British Guiana. It is easy to confuse Guyana, Guiana, Ghana and Guinea. It's in South America. Originally a Dutch colony in the 17th century, by 1815 Guyana had become a British possession. The abolition of slavery led to black settlement of urban areas and the importation of indentured servants from India to work the sugar plantations. This ethnocultural divide has persisted and has led to turbulent politics. Guyana achieved independence from the UK in 1966, but until the early 1990s it was ruled mostly by socialist-oriented governments. In 1992, Cheddi Jagan was elected president, in what is considered the country's first free and fair election since independence. Upon his death five years later, he was succeeded by his wife Janet, who resigned in 1999 due to poor health. Her successor, Bharrat Jagdeo, was reelected in 2001. He is a Russian trained economist. That's certainly good news.

Transshipment point for narcotics from South America - primarily Venezuela - to Europe and the US. The 1856 British Guiana 1c magenta stamp is considered the rarest in the world, with only one copy known to exist.

Political instability, inter-ethnic tension and economic mismanagement have left it among the world's poorest countries, with an infrastructure that is barely able to support its population. By 1995, 94% of revenue went to service external debt, while today it is down to "just 20%".

Following national elections in March 2001, demonstrations, assaults, road blockages, vandalism, looting and confrontations with law enforcement authorities occurred both in Georgetown and outlying areas. These events have continued on a sporadic and unpredictable basis and may increase in the run-up to the 2006 elections. Georgetown in particular suffers from violent crime, including home invasions, kidnappings, carjackings and shootings. Criminals may act brazenly, and police officers themselves have been the victims of assaults and shootings. Sounds just like Mexico.

Honduras:

Once part of Spain's vast empire in the New World, Honduras became an independent nation in 1821. After two and a half decades of mostly military rule, a freely elected civilian government came to power in 1982.

Honduras fought a war with El Salvador in 1969 that lasted 100 hours. It was called the Football War (the Soccer War by the US). Existing tensions between the two countries were inflamed by rioting during the second qualifying round for the 1970 Football World Cup. The war is often cited as the last occasion on which piston engined fighters fought each other - both sides deploying former World War II American types. P-51 Mustangs, F4U Corsairs, T-28 Trojans and even Douglas DC-3s converted into bombers saw action.

Honduras is sometimes called the original banana republic. It's history from 300 years of Spanish rule through the usual multi- constitutions, coups, revolts, political assassinations, foreign interventions (British, Nicaraguan, El Salvadoran, Mexico, US, William Walker) and general banana republicanism has led to its sorry state today. It needs yet another bailout by richer countries.

Madagascar:

The world's fourth largest island, formerly an independent kingdom, Madagascar became a French colony in 1896, but regained its independence in 1960. During 1992-93, free presidential and National Assembly elections were held, ending 17 years of single-party rule. In 1997, in the second presidential race, Didier Ratsiraka, the leader during the 1970s and 1980s, was returned to the presidency. The 2001 presidential election was contested between the followers of Ratsiraka and Marc Ravalomanana, nearly causing secession of half of the country. In April 2002, the High Constitutional Court announced Ravalomanana the winner. Ravalomanana claimed the election was rigged, and in Feb. 2002 he declared himself president. In response, Ratsiraka proclaimed martial law and set up a rival capital in Toamasina. Madagascar in effect found itself with two presidents and two capitals. After a recount in April, the High Constitutional Court declared Ravalomanana was the winner with 51.5% of the vote. Ratsiraka, after first refusing to accept the outcome, fled to France in July, and Madagascar's six-month civil war ended.

Having discarded past socialist economic policies, Madagascar has since the mid 1990s followed a World Bank and IMF led policy of privatization and liberalization. This strategy has placed the country on a slow and steady growth path from an extremely low level. Agriculture, including fishing and forestry, is a mainstay of the economy, accounting for more than one-fourth of GDP and employing 80% of the population. Exports of apparel have boomed in recent years primarily due to duty-free access to the United States. Deforestation and erosion, aggravated by the use of firewood as the primary source of fuel are serious concerns. President Ravalomanana has worked aggressively to revive the economy following the 2002 political crisis, which triggered a 12% drop in GDP that year.

In Oct. 2004, the World Bank and the International Monetary Fund agreed to write off half of Madagascar's debt. Now they've written off the rest. Madagascar is the home of five percent of the world's plant and animal species, 80 percent of them unique to Madagascar. Among its most notable examples of biodiversity are the lemur family of primates and its baobab trees.

In 1817, the Merina ruler and the British governor of Mauritius concluded a treaty abolishing the slave trade, which had been important in Madagascar's economy. Madagascar and Mauritania are the only countries in the world not to use decimal-based currency. Both nations instead use multiples of five.

The Malagasy economy took a brief downturn during the 1980s when Coca-Cola, the world's leading purchaser of vanilla, switched to the New Coke formula that contained synthetic vanillin. The situation reverted itself when the company reintroduced its classic formula.

To be continued.

TAGS: IMF, debt relief, Wolfowitz, mismanagement, corruption