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Liberia: Debt Cancellation Overdue
AfricaFocus Bulletin
Feb 9, 2007 (070209)
(Reposted from sources cited below)
Editor's Note
Demonstrators delivered over 10,000 Valentine cards to the U.S.
Treasury this week asking the U.S. Treasury Secretary to "have a
heart" and cancel Liberia's debt. With the Liberia Partners' Forum
in Washington scheduled for next week, even the International
Monetary Fund (IMF) has stated that the debt is unsustainable. But
more than a year after President Ellen Johnson-Sirleaf took office,
Liberia is still being asked to repay arrears on accumulated debt.
This AfricaFocus Bulletin contains a press advisory on the
demonstration and the campaign to collect Valentine cards,
supported by the named groups as well as by others such as Africa
Action; excerpts from a background paper on Liberia's debt from the
Jubilee USA Network, and from a "Report Card" issued by nongovernmental
organizations on the international response to Liberia
over the last year.
For previous AfricaFocus Bulletins on Liberia, as well as
additional background and links, visit
http://www.africafocus.org/country/liberia.php
For previous AfricaFocus Bulletins on debt, visit
http://www.africafocus.org/debtexp.php
++++++++++++++++++++++end editor's note+++++++++++++++++++++++
Advocates to US Treasury: Have a Heart and Cancel Liberia's Debt
Center for Democratic Empowerment (Liberia) * Friends of the Earth
* Institute for Policy Studies * International Labor Rights Fund *
Jubilee USA Network
Press Advisory
February 7, 2007
[excerpts]
Contact:
Institute for Policy Studies, 240-603-7905, joia@ips-dc.org (Joia
Jefferson Nuri); Jubilee USA Network, 202-783-0215,
debi@jubileeusa.org (Debi Kar)
Washington - Today Wednesday, Feb. 7th leading advocates for
impoverished country debt cancellation will call on U.S. Treasury
Secretary Henry Paulson to "Have a Heart and Cancel Liberia's
Debt." Advocates will deliver more than 10,000 Valentines with this
message to Paulson, one week ahead of the Liberia Partners Forum,
an international donors' conference in Washington. Advocates have
also today released a report card assessing progress by the donor
community in aiding Liberia's new president in her first year.
...
President Ellen Johnson-Sirleaf of Liberia, Africa's first female
head of state, is working to overcome the devastation caused by two
decades of dictatorship and a civil war. Much of Liberia's debts
were incurred by the undemocratic regimes of dictators Samuel Doe
and Charles Taylor between 1980 and 2003.
After one year in office, President Johnson-Sirleaf continues to
face numerous challenges with 85% of the country's population
unemployed and more than 75% of Liberians persisting on less than
$1 per day. The country's massive debt burden severely restricts
Liberia's capacity to combat poverty: the debt totals more than
$3.5 billion. Liberia's annual budget is less than one fortieth of
that amount, and interest continues to accumulate.
President George W. Bush recently named debt relief as our "best
hope for lifting lives and eliminating poverty" in his State of the
Union address. Debt relief campaigners are urging his
administration to immediately and completely cancel Liberia's debt,
rather than forcing the country to be tied up for years in the
strings of the International Monetary Fund (IMF) and World Bank's
debt relief program, which requires the country to pay off $1.5
billion in arrears, or interest and penalties accrued under the
past brutal and undemocratic regimes of Samuel Doe and Charles
Taylor, prior to obtaining partial debt relief or full
cancellation.
The Institute for Policy Studies, Jubilee USA Network, Friends of
the Earth, Africa Action, Center for Democratic Empowerment
(Liberia), and International Labor Rights Fund among others have
collected these Valentines as part of an effort to draw attention
to Liberia's debt crisis. These groups have today jointly released
a report card assessing the impact of the donor community,
especially the U.S., in the areas of development aid, debt
cancellation, investment in workers' rights, environmental
sustainability, and HIV prevention and care.
Fact Sheet: Liberia's Debt
October 2006
Jubilee USA Network
http://www.jubileeusa.org
"Liberia, as it stands simply cannot pay this debt. We just have to
look it right in the eye and say so. This is the reality. We urge
the international community to take the right steps and to cancel
this debt." - George W. Wallace, Jr., Liberian Minister for Int'l
Cooperation & Foreign Affairs
Africa's 'first republic' has returned to democratic rule after two
decades of dictatorship and civil war. There is much hope that
Liberia's newly elected president, Ellen Johnson-Sirleaf, will
restore stability to Liberia. But the country's economy faces many
challenges, first among them an illegitimate and unsustainable debt
burden.
Years of civil war have had a devastating impact on Liberia's
population over the last decade. A recent United Nations human
development report on Liberia found that more than three quarters
of the population lives on less than $1 day, while the unemployment
rate is as high as 85 percent. Life expectancy is less than 50
years and only slightly more than a third of the population is
literate. At least eight percent of the population is infected with
HIV/AIDS. According to the UN's human development index, Liberia
ranks as among the most impoverished countries in the world.
Recent History
Liberia's recent history is one of brutal leaders and civil
conflict. Civil war broke out in 1989 after Charles Taylor took
power and lasted for 14 years in two distinct phases of fighting.
It is estimated that the conflict killed 270,000 people and
displaced almost one million Liberians. Human rights groups
documented the forced recruitment of child soldiers who were made
to carry out massacres at the behest of Taylor's army. The country
currently faces the aftermath of war with badly damaged
infrastructure, including limited or no access to clean water or
electricity for the majority of the population.
Despite a conflict-ridden past and enormous challenges,, the people
of Liberia are moving forward with hope and determination. Africa's
first woman president, Johnson-Sirleaf, and her new administration
recently established an emergency power grid to enable hospitals to
have electricity and to provide a handful of streetlights for a
small area in the capital city of Monrovia. The international
community is rallying around Johnson-Sirleaf's administration, with
promises of aid and other support to her administration.
Liberia's Ballooning Debt
Unfortunately, the new government inherits not only a war-ravaged
country, but an economy hamstrung by an enormous, unjust, and
unpayable debt burden. Liberia's external debt stands at $3.7
billion, a sum which represents almost eight times the country's
annual GDP. During the years of civil war, debt servicing was all
but abandoned, resulting in ballooning arrears which now comprise
most of the debt burden. Creditors expect Liberia to begin
servicing its debts at a cost of $80-100 million per year. Since
Liberia's annual government budget stands at $80 million fully
servicing these debts means that the country's entire budget would
have to be given over to debt service.
Much of Liberia's current external debt is comprised of arrears --
interest and penalties accumulated due to non-payment of past debt
service obligations. Both new debts and arrears accumulated over
the last twenty-six years, beginning with the autocratic regime of
Samuel Doe from 1980-1989. Doe was lent money by the United States
and other G-8 (Group of 8) rich countries in exchange for the
country's support of US efforts against Libya's Momar Qaddafi in
the 1980s. When Charles Taylor took power in 1989, he continued to
rack up debt to rich country creditors and international financial
institutions. Meanwhile his government failed to make payments on
existing debt, resulting in further arrears. It is estimated that
Liberia's arrears to the International Monetary Fund (IMF) and
World Bank alone amount to around $1.5 billion.
The debts and subsequent arrears contracted by Doe and Taylor
should be classified as odious and illegitimate, as the monies
loaned to these unaccountable dictatorial regimes were clearly not
used for the benefit of the Liberian people. The people of Liberia
should not be held responsible for interest and penalties resulting
from the mismanagement of debts contracted by past autocratic and
brutal regimes.
Debt Today
In recognition of the severity of Liberia's debt crisis, the IMF
and World Bank include the country in their debt relief program
(the Heavily Indebted Poor Country or HIPC Initiative). However,
under the terms of the IMF and World Bank's HIPC program, Liberia
is expected to pay the institutions its arrears in full, before
obtaining any access to partial debt relief or full cancellation.
Given the desperate needs of Liberia's people, especially in the
areas of education and health services, international financial
institutions should take immediate action to cancel Liberia's
odious debt, without first demanding the payment of illegitimate
arrears. The country's debt now stands at almost $3.7 billion and
counting. At this rate, over 40% of all export earnings would be
required to service the debt, in a country where the average annual
income is $83.
Debt Relief Works
The last decade of impoverished country experience with debt relief
has shown that release of these in-country resources spurs social
sector spending. The UN has identified that such social sector
investments are urgently needed for Liberia to prevent a back-slide
into conflict. Debt relief granted in 2006 has allowed Zambia to
hire 4,500 new teachers and abolish fees for rural healthcare. In
Ghana, the money saved is being used for basic infrastructure,
including rural feeder roads, as well as increased expenditure on
education and health care. Equivalent support for social services
is desperately needed in Liberia.
Demanding that the new Liberian government pay off illegitimate and
odious arrears to international financial institutions before it
can be considered for debt cancellation is not acceptable. The UN
has determined that what Liberia requires most is national capacity
building -- a goal that would not be served by draining the
government's budget for years to come at the behest of servicing
illegitimate debts and arrears. The IMF and World Bank should
immediately and completely cancel Liberia's debt, without imposing
harmful economic conditions.
International Donor Community Report Card; Investment in Liberia's
Future
[Excerpts from section on debt. Full report available on
http://www.jubileeusa.org This report card was produced by a
network of US based individuals and organizations including the
Institute for Policy Studies, The International Labor Rights Fund,
the Jubilee USA Network, Friends of the Earth-US, Global Aids
Alliance, and the Corporation for Economic Opportunity and Rajesh
Panjabi, University of North Carolina School of Medicine.]
.
A Historic Moment
February 13-14, 2007 in Washington, DC an international donor's
conference will take place with a focus on building partnerships
with the West African nation of Liberia. In conjunction with this
conference US based civil society organizations have collaborated
and issued an International Donor Community a Report Card on
Liberian Investment as a vehicle to assess the efficacy of many of
the projects of the international donor community which are touted
as supporting the reconstruction and rebuilding of Liberia.
Years of civil war have had a devastating impact on Liberia's
population. According to the UN's human development index, Liberia
ranks as among the most impoverished countries in the world. ...
Peace and a new Government
Despite a conflict-ridden past and enormous challenges, the people
of Liberia are moving forward with hope and determination. Since
the signing of the Comprehensive Peace Agreement (CPA) in August of
2003, the international donor community has sought to assist
Liberia in its' post conflict reconstruction. The Liberian
government has constructively engaged the international donor
community to assist in expanding capacity and creating an enabling
environment for peace, economic prosperity and reconstruction.
In January of 2006 the Johnson-Sirleaf government came to power in
Liberia after two decades of dictatorship and civil war. With this
new government came too, a renewed interest from the international
donor community. Since January of 2006 there have been a myriad of
conferences directed at ensuring robust investment in Liberia.
International Partners in Reconstruction
To date the United States is the largest single bilateral donor in
Liberia, followed by the European Union, the World Bank, the United
Kingdom, Germany and Japan. Denmark, Sweden, Norway, the
Netherlands, Ireland Spain, France, Italy, and the People's
Republic of China are also significant players in international
investment. In addition, a growing number of multinational
corporations, non-governmental organizations, the Roman Catholic
Church and other religious organizations are acting as
private-sector donors in Liberia.
...
Issue Area: Aid for Development
Grade: C-
Promises Made and Not Kept
In February 2004, the United Nations held a two day donor's
conference on Liberia where UN member states pledged $500 million
to rebuild Liberia. To date, only a fraction of those funds pledged
have been appropriated.
...
Development Aid is Paltry and Misdirected
Of the 2006 monies promised from the U.S. an estimated $100 million
of these funds have been allocated to the US private military
company DynCorp to train and equip 2,000 Liberian soldiers. With an
illiteracy rate close to 80 percent and the increased vulnerability
of women and children to disease and HIV/AIDS, Liberia desperately
needs resources for the core building blocks of development: health
and education, not for training and equipping an army.
The World Bank Group's investment is critical and should have
positive impacts on Liberia and Liberians. Unfortunately the World
Bank Group is clear that its investment is predicated on "doing
business with Liberia" and will likely benefit international
corporations that operate in Liberia more than the people of
Liberia. ...
Issue Area: Debt Cancellation
Grade: C-
International Indebtedness: A Story of Odious and Illegitimate
Borrowing
Today Liberia's economy is hamstrung by an enormous, unjust, and
unpayable debt burden. During the years of civil war, debt
servicing was all but abandoned; resulting in ballooning arrears,
interest and penalties accumulated due to non-payment of past debt
service obligations, which now comprise most of the debt burden.
During the autocratic regime of Samuel Doe (1980-1989), U.S.
military aid to Liberia, often in the form of loans, increased
10-fold. The Doe Regime racked up enormous international debts in
an effort to fix elections, bribe politicians and build their
machinery of repression.
When Charles Taylor took power in 1989, he continued to rack up
debt to rich country creditors and international financial
institutions while failing to make payments on existing debt,
resulting in further arrears.
Liberia's People Carry the Burden
Liberia's external debt stands at $3.7 billion, a sum which
represents almost eight times the country's annual GDP. At this
rate, over 40% of all export earnings would be required to service
the debt. The country's current per capita debt is $1000 per
person. The per capita annual income is only $83.
Creditors are demanding that Liberia pay $1.5 billion in "arrears"
or back payments and accumulated interest, before being allowed to
access any debt relief. Creditors expect Liberia to begin servicing
its debt and arrears at a cost of $80-100 million per year.
Liberia's annual government budget stands at $80 million which
means that to fully service these debts the country's entire budget
would have to be given over to debt service.
The Shortfalls and Broken Promises of the International Donor
Community
The International donor community has not delivered this year on
promises of helping Liberia to emerge from its debt trap. In 2004,
a senior US Treasury official promised 100 percent cancellation of
debts claimed by the US as well as support for cancellation of
Liberia's debts to other international institutions.
Despite assurances from rich country donors and their international
financial institutions that Liberia would be assisted towards
obtaining debt relief and ultimately full cancellation, Liberia
remains at "pre-decision point" in the International Monetary Fund
(IMF) and World Bank's debt relief program. This means the country
cannot yet access any amount of debt relief.
The continued demands for debt payment are unjust, and runs counter
to the supportive rhetoric of creditors towards Johnson-Sirleaf's
administration. While World Bank President Paul Wolfowitz and
others have acknowledged the damage done by the civil war and the
harmful role of Charles Taylor, rich country creditors continue to
demand repayment of monies irresponsibly lent to his and Doe's
regimes. President Wolfowitz decried Taylor's actions in a July
speech to the Liberian legislature, calling Taylor's impending
trial at the UN as "rendering justice." Where is this talk of
justice from donors in the context of Liberia's odious debts?
In 2007, one year into the Johnson-Sirleaf administration and
nearly three years after the pledges, these promises remain
unfulfilled. Particularly given President Johnson-Sirleaf's
experience as a former senior loan officer of the World Bank, there
couldn't be a better time to negotiate the complete cancellation of
Liberia's illegitimate debts.
Recommendations to the International Donor Community
- The debts and subsequent arrears contracted by Doe and Taylor
should be classified as odious and illegitimate, as the monies
loaned to these unaccountable dictatorial regimes were clearly not
used for the benefit of the Liberian people, and completely
cancelled within the next six months.
- The Bush administration should also cancel the 10 percent of
Liberia's crippling $3.7 billion debt that is claimed by the United
States.
Issue Area: Labor Rights/Employment
Grade: C
Job Creation as Peacekeeping: Liberia Emergency Employment Program
With an extremely high unemployment rate, the government of
President Johnson-Sirleaf faces a major challenge to create fair
jobs throughout Liberia. The availability of stable and dignified
jobs is a vital component of ensuring peace and prosperity in
post-war Liberia.
As an immediate plan to address this important concern, the
Ministry of Labor began a job program called the Liberia Emergency
Employment Program (LEEP) in July 2006. While the goal for the
project is to employ 50,000 people in the next two years, only
about 500 workers have been hired since the program began. ...
In addition to providing immediate employment, offering a living
wage is an imperative for the new government. Civil servants have
been subjected to very low wages and the new jobs created under
LEEP are still roughly $3 a day, which is not enough to cover
living expenses. In the summer of 2006, the government passed a new
budget which increased the salaries for civil servants, but it is
still a poverty wage. The issue of civil servant wages clearly
connects to issues like debt cancellation since the government is
sending money which could be used to supply living wages to Western
governments and financial institutions. ...
Issue Area: Environmental Sustainability
Grade: C
Environmental Neglect and Exploitation
Liberia's forests constitute the largest remaining blocks of the
Upper Guinean Forest Ecosystem a threatened global hotspot for
biodiversity. They also play a vital role in the nation's economy,
generating up to 60% of the nation's foreign exchange earnings and
providing homes and livelihoods to more than 7,000 people.
Between 1983 and 1993, Liberia lost 13.2% of its forested and
woodland areas due to commercial logging, firewood cutting, and a
government land-clearing. In that period Liberia's logging
activities were controlled by a small group of multinational
corporations that were known to employ indiscriminate clear-felling
practices, with no concern for their environmental or social
impact. Most of the revenues generated through commercial logging
prior to 2003 were used to fund armed conflict in the region which
resulted in UN sanctions in 2003. ...
The Farmington River is also being polluted due to the continual
dumping of waste from the nearby Firestone Rubber Plantation, a
holding of Bridgestone/Firestone North American. Liberia's coastal
waters have been polluted by oil residue and the dumping of
untreated sewage and waste water.
...
Issue Area: HIV Prevention and Care
Grade: C in urban centers/ F in rural areas.
...
Liberia's Burgeoning HIV Epidemic
... Years of social disruption, interrupted disease control efforts
and sexual violence have compounded chronic poverty to produce what
may be West Africa's largest HIV epidemic. Country-wide prevalence
estimates average 5.9% to 8.2% and could be as high as 12.4%.
The International Donor Response
In the light of harrowing gaps in HIV prevention and care, the
response of Liberians and their international partners, including
donors, has been deficient, particularly in rural areas. The recent
move by the Global Fund for AIDS, Tuberculosis and Malaria (GFATM)
to fund Liberia's Round 6 HIV proposal, developed with assistance
from the Clinton Foundation, is welcomed support. ...Unfortunately,
most of these funds will only support hospital-based treatment,
leaving the majority of rural Liberians ,,,
AfricaFocus Bulletin is an independent electronic publication
providing reposted commentary and analysis on African issues, with
a particular focus on U.S. and international policies. AfricaFocus
Bulletin is edited by William Minter.
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