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Africa: World Bank Bonds Boycott
Africa: World Bank Bonds Boycott
Date distributed (ymd): 011119
APIC Document
Africa Policy Electronic Distribution List: an information
service provided by AFRICA ACTION (incorporating the Africa
Policy Information Center, The Africa Fund, and the American
Committee on Africa). Find more information for action for
Africa at http://www.africapolicy.org
+++++++++++++++++++++Document Profile+++++++++++++++++++++
Region: Continent-Wide
Issue Areas: +economy/development+ +health+
SUMMARY CONTENTS:
This posting contains a press release, statement, and sample
resolution from Africa Action in support of the World Bank Bonds
Boycott, issued on the eve of this weekend's meeting of the World
Bank and International Monetary Fund in Ottawa.
A posting also sent out today includes excerpts from the Africa
sections of the latest World Bank / IMF reports on global economic
prospects.
Notably, despite the sober tone of their own projections, and
statements emphasizing the particularly severe impact of September
11 on developing countries, the international financial
institutions offered no new initiatives to address the grave
economic and health crises in Africa and other developing regions.
The official communiques from the meeting can be found at
http://www.worldbank.org/html/extdr/devcom2001
A joint statement by the IMF Managing Director and the World Bank
President on supporting low-income countries is at:
http://www.imf.org/external/am/2001/o/imfcstat/joint.htm
A World Bank response to four demands from the coalition
Mobilization for Global Justice, written in September, is at:
http://www.worldbank.org/html/extdr/pb/pbfourdemands.htm
A Civil Society rebuttal to the World Bank response is at:
http://www.50years.org/action/n18/response.html
Additional background on the World Bank, health, structural
adjustment, and the World Bank Bonds Boycott is available at:
http://www.africapolicy.org/action/wbank.htm
+++++++++++++++++end profile++++++++++++++++++++++++++++++
Press Release
November 16, 2001
Contact:
Vicki Lynn Ferguson, (202) 546-7961
Aisha Satterwhite, (212) 785-1024
Africa Action Tells World Bank: Cancel Debts, End Structural
Adjustment to Respond to Africa's Health Crisis
New effort launched among the African American religious community
to boycott the purchase of World Bank Bonds
Friday, November 16, 2001 (Washington, DC/New York City) - On the
eve of this weekend's rescheduled World Bank and International
Monetary Fund meeting in Ottawa, Canada, Africa Action has issued
a statement calling on these financial Goliaths to cancel Africa's
debts and end harmful "structural adjustment" policies.
These actions, the statement said, were essential to allow African
countries to mobilize their own resources against the HIV/AIDS
pandemic and the wider health emergency of which it is a part.
Africa Action's executive director Salih Booker said, "While the
World Bank boasts of providing new loans for Africa's health and
other social sectors, its demands for debt repayment are
suffocating the continent."
The Rev. Dr. Molefe Tsele, General Secretary of the South African
Council of Churches, supported the Africa Action statement saying
that, “The role of the World Bank in Africa is a critical ethical
issue. As a matter of conscience, people should take action to
register their disapproval with the World Bank's policies by
boycotting their bonds!” Dr. Tsele is in the US to attend two
consultations with Black American clergy on the east and west
coasts organized by Africa Action.
Africa Action is increasing its support for the World Bank Bonds
Boycott Campaign. Africa Action calls on all those who support
Africa's right to health to boycott World Bank bonds in order to
put pressure on the institution to cancel Africa's debt and end
the imposition of economic policies harmful to health.
The organization's statement stressed that Africa has already lost
more than 17 million people to AIDS. More than 7,000 Africans die
of the disease every day. The pandemic feeds on and accentuates
structural inequalities and other societal divisions. It threatens
to overwhelm African efforts to set the continent on a path
towards greater human security and a just share in today's
interconnected global economy.
November 16, 2001
AFRICA ACTION
Statement on the World Bank and International Monetary Fund (IMF)
and the State of Africa's Health
On the Occasion of the Meetings of the Development Committee and
the International Monetary and Financial Committee in Ottawa,
Canada, November 17-18, 2001
This weekend, in Ottawa, Canada, the Development Committee and the
International Monetary and Financial Committee of the World Bank
and International Monetary Fund (IMF) will hold their annual
meetings, originally scheduled to take place in Washington, DC at
the end of September and postponed following the September 11th
terrorist attacks. As these important committees now convene to
assess the state of the world economy, Africa Action calls on the
Directors of the World Bank and IMF to respond to the continent’s
health crisis as a matter of the greatest urgency.
There is no greater single threat to Africa's stability and to its
social and economic development than the HIV/AIDS pandemic and the
broader health emergency of which it is a part. Africa has already
lost more than 17 million people to AIDS, and the continent is
home to 25 million of the 36 million people worldwide living with
HIV/AIDS. More than 7,000 Africans die of the disease every day.
The pandemic multiplies the impact of other major diseases such as
malaria and tuberculosis. It undermines fragile health systems and
positive initiatives in all sectors. It feeds on and accentuates
structural inequalities and other societal divisions. This threat
to the fundamental right to health threatens to overwhelm African
efforts to set the continent on a path towards greater human
security and a just share in today's interconnected global
economy.
It is no coincidence that Africa is at the epicenter of the global
AIDS pandemic. Africa's health crisis is intimately related to the
dynamics of an international system that has long marginalized the
African continent and trapped it in a cycle of dependency and
underdevelopment. The role of the World Bank and IMF in this
international system has been pivotal. Over the past two decades,
the policy prescriptions of these institutions have exacerbated
the social and economic crises facing African countries. They have
denied Africa's people the right to health and deprived them of
resources necessary to cope with the current health crisis.
Africa Action calls on the World Bank and the IMF to take the
following essential steps to allow African countries to mobilize
their own resources against the current health crisis: 1) Cancel
all debts owed to the World Bank and IMF by African countries; 2)
End harmful "structural adjustment" conditions and similar
policies.
We also call on the United States' Executive Directors to the
World Bank and IMF to use their significant voting power within
these institutions to push for the realization of these demands.
The World Bank and IMF in Africa
The World Bank and IMF have become immensely powerful institutions
in Africa. When economic crisis hit the developing world in the
late 1970s and early 1980s, African governments, desperate for
funds to meet their growing external debt obligations and their
critical domestic needs, turned to the World Bank and IMF for
financial assistance and were forced to accept the conditions
attached to their loans. The World Bank and IMF used this leverage
to dictate economic policies to African countries. As the debt
crisis worsened through the 1980s and into the 1990s, Africa
became even more dependent on the World Bank and IMF. These
institutions thereby gained an increasing degree of control over
African economic policies.
These policies have had terrible economic and social consequences.
Average incomes across the continent have declined, and the
percentage of the population of sub-Saharan Africa subsisting on
less than $1 per day has increased, now reaching almost 50%.
Conditions of poverty have worsened in most countries, providing
fertile ground for the spread of the AIDS pandemic and other
infectious diseases. The persistent economic crisis faced by
African countries, compounded by the massive burden of debt to the
World Bank, IMF and other external creditors, have denied them the
resources they need to respond to the new health crisis and
related challenges.
In recent years, following criticism of the negative social impact
of their involvement in developing countries, the World Bank and
IMF have adopted a public stance of support for "poverty
reduction" and social development programs. The World Bank, in
particular, boasts that its lending priorities have changed
dramatically and that it is now the largest funder of health,
education and HIV/AIDS programs.
We welcome those actions that reflect a shift towards prioritizing
social development. We also welcome the greater focus on HIV/AIDS
prevention and care programs, and the genuine engagement of many
Bank personnel in efforts to contribute to the solution of
particular problems. However, World Bank resources to address
HIV/AIDS and other needs still come as loans rather than grants.
The new focus on "poverty reduction" further increases the
complexity of loan conditions and allows even greater intrusion
into the domestic policies and priorities of African countries.
Most importantly, new initiatives by the World Bank and IMF to
address Africa's health crisis and socioeconomic challenges cannot
succeed while other actions by these institutions continue to
undermine the prospects for development.
Priority Actions
Africa Action calls on the World Bank and IMF to demonstrate their
commitment to Africa's social and economic development, and to the
fight against the AIDS pandemic, by immediately taking the
following crucial steps:
1) Cancel all debts owed to the World Bank and IMF by African
Countries
The countries of sub-Saharan Africa spend $13.5 billion a year
servicing the debts they owe to rich country governments and to
the World Bank and IMF. Most of these loans are of questionable
legitimacy, based on the circumstances under which the debt was
incurred and the purposes for which it was used. Yet the creditors
of the debt still insist that the money be repaid. Over the past
two decades, African countries have spent more on debt repayments
than they have received in development assistance or in new loans.
The consistent diversion of resources from spending on health care
to debt repayment has had disastrous effects on health care
systems in many African countries.
The current international debt relief framework, the Heavily
Indebted Poor Countries Initiative (HIPC), launched by the World
Bank and IMF in 1996 and “enhanced” in 1999, was presented by
creditors as capable of providing a lasting solution to the debt
crisis for the world’s most impoverished countries. Despite claims
that this scheme is providing adequate debt relief to those
countries that qualify, it is clear that it has failed. In the 24
countries that have qualified for HIPC debt relief to date
(including 20 in sub-Saharan Africa), governments still spend more
on annual foreign debt repayments than they do on health care for
their own populations. On average, these countries have seen a
reduction of less than one-third in their annual debt repayments.
The reality is that HIPC is designed to serve creditors by
squeezing the maximum possible in debt payments from the world’s
poorest economies, while only cancelling what is not being paid in
any case. This leaves them still subject to overwhelming debt
burdens.
Recent independent studies have shown that the World Bank and the
IMF can afford to cancel the debts of the world's poorest
countries from their own resources, without negatively impacting
their credit ratings. We call on the World Bank and IMF to
immediately cancel all debts owed to them by African countries.
We also call on these institutions, and on the World Bank in
particular, to provide grants rather than loans to tackle the AIDS
crisis and other development challenges. Further loans to African
countries add to the indebtedness that has trapped them in a cycle
of dependency.
2) End harmful "structural adjustment" conditions and similar
policies
The austere conditions imposed on African countries by
World Bank and IMF “structural adjustment” programs over the past
two decades have had devastating social consequences in African
countries, and particularly in the area of health care. The
imposition of cutbacks in government spending on health care has
led to the closure of hundreds of clinics and created severe
shortages in medical staff and supplies across the continent. The
privatization of health care services, and the introduction of
"user fees" for basic health care, both mandated by the World Bank
and IMF as part of "structural adjustment" lending, effectively
created a "two-tier" health system in which the poor majority have
been denied access to basic care and treatment. At the same time,
the health of Africa's people has deteriorated because of
deepening poverty, widespread malnutrition and epidemics of
infectious diseases.
"Structural adjustment" lending and related policies have
undermined the right to health of Africa's people, directly
contributing to the current health crisis and to the inability of
African governments to mobilize resources in response. We call for
an immediate end to imposition of these policies.
Conclusion
In recent years the World Bank and the IMF have responded to
critics by changes in language, additional programs in social
sectors, and declarations of openness to dialogue. However, these
institutions have firmly resisted change in the fundamental
policies they have imposed on African and other developing
countries. As long as these institutions remain resistant to this
change, outside critics must continue to expose the flaws of bankimposed
policies. We must also reinforce the incentives for change
by actions that impose real penalties on these institutions for
their intransigence.
Africa Action therefore reiterates its support for the World Bank
Bonds Boycott Campaign, an initiative that targets the World
Bank's primary source of funding (the sale of its bonds).
In the same way that the divestment movement grew to break the
power of the apartheid regime in South Africa, communities,
socially responsible investment firms, trade unions, churches and
other institutions are deciding to exclude World Bank bonds from
their investment and retirement portfolios until the World Bank
makes fundamental changes in its policies.
We encourage all those concerned for Africa's Right to Health to
join this effort, and, in particular, to insist that investment in
World Bank bonds be conditioned on cancellation of Africa's
illegitimate external debt and an end to imposition of harmful
structural adjustment conditions on African countries.
We call on the World Bank and IMF to act upon the demands laid out
in this statement, as a necessary prerequisite for constructive
action in support of Africa's right to health and sustainable
development.
We call on the US Executive Directors to these institutions --
Carole Brookins at the World Bank and Randal Quarles at the IMF --
to use their influence in favor of directing these institutions to
address Africa's devastating health crisis through acting on these
demands.
Africa Action Sample Resolution - November 2001
World Bank Bond Boycott
WHEREAS, the World Bank, officially known as the International
Bank for Reconstruction and Development, is one of the most
important financial institutions in the world and the single
largest source of development financing for African countries; and
WHEREAS, the World Bank is controlled by the world's richest
countries -- the U.S., the U.K., Canada, France, Germany, Italy and
Japan -- and these countries set its agenda, directing that the
World Bank act in their interests and promoting a model of economic
growth that benefits the wealthiest countries and their private
sectors; and
WHEREAS, the World Bank uses the loans it provides to African
countries as leverage to prescribe policies and dictate major
changes in the economies of these countries; and
WHEREAS, the World Bank has undermined democracy in impoverished
countries throughout Africa and the developing world by removing
fundamental decisions on economic and social policy from the
effective control of democratically elected legislatures; and
WHEREAS, the World Bank's operations in Africa over the past twenty
years have resulted in a decline in average incomes and an
intensification of poverty and underdevelopment across the
continent; and
WHEREAS, Africa is the epicenter of the global AIDS crisis, home to
25 million of the 36 million people worldwide living with HIV/AIDS,
and the AIDS pandemic takes the lives of more than 7,000 Africans
every day; and
WHEREAS, through its lending, the World Bank, together with its
sister institution the International Monetary Fund (IMF), promotes
the privatization of social services, including health care and
water systems, and these and other conditions of its "structural
adjustment" loans undermine the health and human security of people
in Africa; and
WHEREAS, the World Bank's promotion of "user fees" for primary
health care in African countries has put health care out of reach
for millions of Africans and has directly contributed to the
current health crisis on the continent; and
WHEREAS, the Directors of the World Bank refuse to cancel the debts
of the most impoverished countries, although they can afford to do
so without impairing the Bank's credit rating, and they continue to
use this debt as leverage to retain external control over the
economic and social policies of these countries; and
WHEREAS, the World Bank's insistence that African countries
prioritize external debt repayments, even when this cuts into
spending on health care, denies African governments desperately
needed resources to fight the AIDS pandemic and the wider health
emergency it represents; and
WHEREAS, most World Bank funds come from the sale of World Bank
bonds to institutional investors, including city and state
government pension funds, union pension funds, universities,
parishes and religious institutions, and these resources are used
to carry out the aforementioned destructive policies;
THEREFORE, BE IT RESOLVED, that (this institution) pledges not to
purchase bonds issued by the World Bank until such time as the
World Bank cancels 100% of the past debt claims against
impoverished countries, and stops destructive "structural
adjustment" lending and similar policies.
BE IT FURTHER RESOLVED, that (this institution) will communicate
its support for the boycott of World Bank bonds to its employees
and agents who manage or administer any funds held by (this
institution), to institutions and groups with which (this
institution) is affiliated, to Members of the United States
Congress, and to the news media.
This material is distributed by Africa Action (incorporating the
Africa Policy Information Center, The Africa Fund, and the
American Committee on Africa). Africa Action's information
services provide accessible information and analysis in order to
promote U.S. and international policies toward Africa that advance
economic, political and social justice and the full spectrum of
human rights.
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