The issue of development cooperation especially aid can be traced back to the United Nations resolution 2626 of 1970 on the international development strategy for the second United Nations development decade where rich countries pledged to give 0.7% of their gross national products as development assistance after recognising the role that aid could play in fostering development in developing countries. The next 30 years that followed saw aid being manipulated and used to meet political ends such as recruiting and rewarding southern allies during the Cold War. The question of aid for development seems to have taken a lull in this period and only surfaced again after the signing of the Millennium Declaration.

The financing for development conference held in Monterrey in 2002 that followed sought to examine the internationally agreed development goals adopted during the past development decade, and the Millennium Development Goals (MDGs) that originated from the 2000 Millennium declaration, for their financial implications and to indicate ways of mobilising the financial resources needed to achieve them. The outcome of the conference on financing for development was a turning point in international economic cooperation. The adoption of the Monterrey consensus at the summit level on 22 March 2002 not only signalled a new partnership in international economic relations but also reaffirmed the advantages of the new approach toward consensus building taken by the international community.

In February 2003, leaders of the major multilateral development banks and international and bilateral organisations, donor and recipient country representatives gathered in Rome for the high level forum on harmonisation. They committed to take action to improve the management and effectiveness of aid and to take stock of concrete progress, before meeting again in early 2005. The high level forum concluding statement, the Rome declaration on harmonisation, sets out an ambitious programme of activities, which includes among other things agreements to streamline donor procedures and practices, ensure that donor assistance is aligned with the development recipient's priorities and most importantly to implement the good practices principles and standards formulated by the development community as the foundation for harmonisation.

The Paris Declaration of March 2005 represents a landmark achievement that brings together a number of key principles and commitments in a coherent way. It also includes a framework for mutual accountability, and identifies a number of indicators for tracking progress. There is a general recognition that the Paris declaration is a crucial component of a larger aid effectiveness agenda that could engage parliament, gender groups, civil society actors, new lenders, global funds and foundations in a more direct manner. In the Paris declaration, donors and partners committed themselves to monitoring their progress in improving aid effectiveness against 56 specific actions, from which 12 indicators were established and targets set for 2010 (OECD 2007).

Although the international post Paris process has represented a significant amount of work (in terms of surveys, analysis, consultation process, evaluation of the Paris declaration etc), there still remains the need to ensure that the Accra agenda for action is more ambitious, securing strong input and impact, reaffirming the Paris commitments, reflect on the midterm review of the Paris commitments, and include guidance on areas where further progress is needed.

THE PARIS DECLARATION

The purpose of the 2005 Paris declaration on aid effectiveness is to improve aid delivery in a way that best supports the achievement of the MDGs by 2015.

Africa's development indicators are a worrying sign that progress towards the MDGs is lagging. Unconditional cancellation of all debt, the commitment of greater resources to the continent by rich countries, a reformed international trading system and the voices of African people at the centre of the process will all be essential to reinvigorating progress towards the MDGs, says Charles Mutasa.

It is no secret that many developing countries, donors and non-governmental organizations have made reaching the MDGs their top priority, but as the world reaches the 2005 MDGs review there are worrying signs of stagnation and reversal. Although rapid advances by some countries do show that the MDGs are achievable, Sub-Saharan Africa is yet to mobilise resources, political and financial support to meet specific global challenges, especially the fight against HIV/AIDS.

A 2003 UNDP review of sub-Saharan Africa's social development indicators provides a bleak picture of the region's progress towards the MDGs. The number of Africa's population living on less that $1 a day is increasing. It is also true that while most of the world made significant progress in the fight against hunger during the 1990s, the prevalence of underweight children remained at nearly 50% in South-central Asia and Sub-Saharan Africa.

The debt crisis, unfair international trading practices, tied aid interwoven with endless conditionalities, HIV/AIDS, conflicts, problems associated with economic indiscipline, lack of sustainable democracies and poor governance are among the host of stumbling problems to Africa's ability to attain the MDGs. Nowhere are the signs more ominous than in Sub-Saharan Africa, the world's poorest and least developed region. Africa entered the new millennium with the highest poverty and child mortality rates, and the lowest school enrolment figures in the world.

Looking at Uganda as a case in point, the debt stock soared from US$800million to US$4.3billion in 2003, continuing to be a heavy burden for a population of approximately 26 million. 75% of Uganda's debt is owed to the World Bank and the International Monetary Fund. Most African countries, more so Heavily Indebted Poor Countries (HIPCs) graduates, continue to spend more on debt servicing than on health and education.

A number of African countries still need to customize the MDG targets to reflect national circumstances and priorities, which will increase the sense of national ownership and adapt development objectives to the socioeconomic and political realities of each country. For example, countries facing an acute HIV pandemic cannot be expected to achieve the same levels of progress as those not confronting one. In Southern Africa, for instance, there is a severe health crisis, with nine of its member states featuring in the ten African countries with the highest HIV/Aids prevalence rates. Malaria and tuberculosis also continue to wreak havoc in the region, leading to reduced economic productivity, high infant mortality rates and plummeting life expectancy. The problem of insufficient funding and red tape in the release of much-needed donor funds continues to hamstring progress in fighting health and social problems.

One of the problems with the goals is the inconsistency in reporting whether countries are on track to meet the MDGs. UNDP and national MDG reports have shown considerable differences, raising concerns about the reliability and credibility of indicators being used. Global, regional and national frameworks, strategies and processes must be harmonized so that accurate predictions and evidence-based policy decisions can be made.

The outcomes of the G8 on debt, aid and trade have been minimal indeed, failing to meet the desired expectations of many economic justice activists and governments in the South. The UN Millennium Campaign points out that many developing countries are saddled with such high levels of debt that paying off just the annual interest costs more than what is spent on health care and education combined.

While the Scotland G-8 debt deal is a step forward and sets an important precedent in terms of granting a 100% cancellation of debt to all severely indebted poor countries, which is what civic activists have long advocated for over years, the deal only represents one eighth of what Africa needs in terms of debt cancellation, as this means canceling only US $40 billion out of Africa's burgeoning debt stock of over US$330 billion. The $40 billion to be cancelled represents less than 10% of debt cancellation required for poor nations to meet the MDGs in 2015. The plan does not include middle-income countries that are heavily indebted and impoverished. Globally, the 18 countries that qualify immediately represent less than a third of countries (at least 62) that need full cancellation to meet the internationally agreed MDGs.

The G-8 debt agreement does not address the real global power imbalances. The question of creditor-debtor co-responsibility of the South's debt remains unresolved, as issues of odious and illegitimate debts continue to be swept under the carpet. It is not a lasting solution in which all stakeholders - debtors and creditors - have a say. It is just a piecemeal measure that seems to deal with the symptoms of the problems and not the causes.

It is important to note that the MDGs reinforce each other; progress on one front has positive spill-over effects on other variables. For instance, a breakthrough on Goal 8's debt question will definitely lower income poverty and increase household income in Africa which will then facilitate higher school enrolment levels, while better access to clean water reduces the toll of disease, and affects school drop-out rates.

The desire to attain the MDGs among development partners in a given country has had its positive impacts in Africa. In Uganda, for example, bilateral donors are now channeling about half of the country's aid into budgetary support, instead of funding individual projects. This reform gives governments more flexibility in spending decisions, reduces time and paperwork, and helps to align donor programmes with national development priorities. Uganda has in recent years recorded high school enrolment rates, though the quality of education is something still debatable.

In Tanzania, with the MDGs came the concept of donor harmonization, alignment and result based development planning which seems to be yielding results by reducing transaction costs, donor missions per year, corruption and procurement hick-ups.

As global targets the MDGs are as much applicable to countries in conflict or emerging from conflict as they are to countries that are not in the throes of civil unrest. Responses to conflict in Ivory Coast and Sudan's Darfur region demonstrate that the international community has the ability to unite against conflict and its associated ills as long as the political will to fostering a world free of civil unrest is there.

If Africa and other developing regions are to make significant and sustainable progress, far greater resources will have to be generated from all sources - debt relief, overseas development assistance, foreign direct investment, trade, and domestic investment and savings. As the UN Secretary General, Kofi Annan, rightly noted, apart from developing countries setting national strategies for the attainment of MDGs, "we will also need more convincing action from the developed countries to support those strategies by phasing out harmful trade practices, by providing technical assistance, and by increasing both the volume and quality of aid to levels consistent with the goals."

There is need for total unconditional debt cancellation from both multilateral and bilateral donors in order to give Africa a new start and a chance to attain the MDGs. Debt service in Africa continues to tear down schools and clinics without which MDGs will not be attainable.

Creditors and donors need to commit themselves to a timeline on which to fulfil the long overdue 0.7% of their GNP promised at Monterey's Financing for Development Conference. One of the most important challenges regarding the achievement of the MDGs is that co-operation between rich and poor countries must not turn into a recital of broken promises. The need for increased co-operation among donor governments, NGOs, pharmaceutical companies and African states to increase drug accessibility and strengthen health infrastructure cannot be over-emphasized.

Aid needs to have no strings attached; untied aid will help build local capacities in African countries which are a prerequisite to attaining the MDGs. Many a times local human resource capacity remains undeveloped as donors insist on their countrymen coming to work in the name of technical assistance without necessarily building local capacities.

MDGs will only become reality when those living in poverty have their voices heard. A human rights based development approach in which local grassroots people in Africa are the claim holders, holding their governments and donors accountable for their actions and obligations will foster development. In a nutshell, it is crucial for development practitioners to realise and acknowledge that people are not developed but they develop themselves.

The international trade regime needs to be democratized if Africa is to attain the MDGs. The failure of the World Trade Organization meeting in Cancun in September 2003 was a further setback to Africa's development prospects. This has been worsened by the Economic Partnership Agreements (EPAs) that the European Union is promoting. Trade that removes subsides to European farmers and opens markets for African products is a great stride towards the MDGs in Africa.

There is urgent need to end all World Bank and IMF policies that hinder people's access to food, clean water, shelter, health care, education, and the right to organize. Pursuit of the MDGs could well be undermined in the future, as it has been in the past, if there is no change in structural adjustment policies. These policies include user fees, privatization and economic austerity programs forced upon recipient countries in the south, Africa being the chief victim.

Last but not least, political will, social action and the ability to galvanise resources for the MDGs is key. Partnership between the North and the South must be genuine, local participation and ownership of development at grassroots levels should not be cosmetic but real and meaningful. Attaining the MDGs require radical structural, institutional and policy changes at national, regional and global levels. Half baked solutions and measures will only leave Africa in deeper poverty.

* Charles Mutasa is a research and policy analyst and currently the acting coordinator of the African Forum and Network on Debt and Development (Afrodad).

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Global apartheid, like globalisation, is a buzzword that has evolved to describe a new global paradigm. Put simply, global apartheid is an international system of minority rule that promotes inequalities, disparities and differential access to basic human rights, wealth and power. Global apartheid is the opposite of global democracy. People like South Africa's president Thabo Mbeki, Fidel Castro of Cuba and the scholars Ali Mazrui, Richard Falk, and Patrick Bond, among many others, have used this concept in an effort to describe the global or economic injustice of our time.

Current manifestations of global apartheid are exhibited in the dominance of bilateralism and the hegemonic behaviour of the United States, the unbalanced and undemocratic processes in the World Trade Organization (WTO), and the disproportionate power of multinational corporations and the Washington-based International Financial Institutions (IFIs).

In today's world apartheid is reflected in 'who gets what, when and how?' in the global system. Global apartheid offers explanations for the North-South polarization, the peripherization of Africa, the breakdown of WTO trade talks in Seattle (1999) and Cancún (2003), terrorism, endless conflicts and wars, problems with the free movement of labour between the South and the North, increased wealth in rich countries while resources are drained from poor countries, as well as the denial of life saving medicines and care for people living with AIDS.

Debt and Global Apartheid

Debt oppresses poor countries and it has taken on proportions so as to render its repayment almost impossible. The debt has become a self-perpetuating vicious circle where new loans are taken to pay off the interest on standing ones. It is clearer than ever that the debt is not an economic problem, but a political one, and it is as such that it must be resolved.

Global apartheid through the bondage of debt fuels cycles of poverty and plagues many poor countries in Africa. The debt issue is no longer confined to the economic and financial spheres; as is demonstrated through the application of conditionalities attached to loans and debt relief. These conditionalities were historically introduced through World Bank structural adjustment programmes (SAPs) that were 'designed to rescue debtors', but were in reality driven by the desire to assure that ailing debtor economies did everything possible to pay back their debts.

Like apartheid in South Africa, SAPs entrenched great disparities in wealth, living conditions, life expectancy and eroded national sovereignty in the majority of Sub-Saharan Africa. The introduction of conditionalities such as higher user fees in public facilities, subsidy cuts and lowering of budgetary allocations to social services has resulted in increased poverty and unemployment.

In fuelling global apartheid, the IMF and World Bank have special functions to play: they police and facilitate global apartheid while they simultaneously assist governments in adapting to the process of globalisation, helping them cushion the impacts of these policies felt by the poor. One chief economist was quoted saying “it is important to send the “ambulances” (social programs) after the “tanks” (SAPs) have rolled through a country.” If a government strays from the path of globalisation the 'seal of approval' to borrow from public and private creditors is withdrawn by IMF and World Bank, causing the governments' sources of credit to eventually dry up.

Countries that implemented SAPs became accustomed to operating under an 'external policy command', which discourages national dialogue on societal reform. This process has destroyed the 'social contract' fundamental to ensuring government policies work effectively. Like former apartheid policies in South Africa, SAPs have been imposed upon the marginalized and materially deprived citizens of the Global South, eroding the capacity to develop their own development programs.

Debt has eroded the hard earned independence of African states. A crushing debt burden hampers poverty reduction and constrains development. Africa's debt crisis absorbs resources and energies that should be used to tackle urgent social problems.

Oloko Onyango's 1993 study of Uganda reveals that technocrats in the Ministry of Planning drew up national budgets that had to be endorsed by donors before their own parliament examined them. But even then, parliament merely acted as a rubber-stamp. Since the introduction of SAPs as a way of resolving the debt crisis, independent policy-making and national economic management has diminished and narrowed considerably. Like in apartheid South Africa, in which blacks had no say in the rules that governed their country, global apartheid strips autonomy from the state and its people.

International Financial Institutions continue to put pressure on African development through their conditionalities, using development aid and loans as a lever to impose the neo-liberal paradigm of privatisation and deregulation, liberalization and increased interest rates to control inflation. Under the newer Poverty Reduction Strategy Papers (PRSPs), set up to replace the old SAPs, they impose the same neo-liberal framework through the Poverty Reduction and Growth Facility (PRGF).

Studies done by AFRODAD on the PRSP process demonstrate how the IMF and the World Bank imposed their macro-economic framework on the process. This meant that the PRSPs could not be reshaped at the level of macro-economic policy as the framework was already fixed. Thus the link between PRSP and SAPs is a continued imposition of the neo-liberal macro-economic framework. Segregation in policy formulation and standards of living was a key feature of the apartheid system in South Africa. This is reflected in the current global apartheid paradigm with unrealistic IFI conditionalities, stifling African development goals, especially when now-developed countries in the North used the very strategies now prohibited for their own development process.

Many development agencies and sceptics have expressed widespread doubts regarding the Heavily Indebted Poor Countries Initiative (HIPC) launched in 1996 to achieve the promised objective of a “robust exit from the burden of unsustainable debts” for developing countries. Problems associated with the design and implementation of the initiative suggest that the HIPC initiative has not succeeded in providing adequate response to the Third World's debt overhang. The segregated and selective nature of apartheid is also seen in HIPC. It is interesting to observe that although Nigeria's debt stock is the largest in West Africa and the country is experiencing growing poverty, the country is not recognized as a HIPC eligible country simply because it produces oil.

Despite the many arguments against the conditionalities attached to multilateral lending and development assistance from bilateral donors, the conditions have intensified. It has become increasingly clear that there is a hidden agenda for control by those who propagate such conditionalities. This cannot be anything less than global apartheid. The whole process has been much slower than expected and the HIPC initiative is suffering from problems of under funding, excessive conditionality, inadequate debt relief and cumbersome procedures and eligibility restrictions. Creditors have not put sufficient political will, resources and serious analysis into the debt reduction operations.

Aid and Global Apartheid

Within global apartheid structures and systems, aid has always been connected to politics. During the Cold War, for example, investment flows, development efforts and humanitarian assistance tended to reflect the changing pattern of superpower alliance and competition. It has been pointed out that tying aid to politics translates into “choice less democracy.” Thus, aid is a means of inducing policies and programs favourable to the donor countries, even though promoting economic performance of recipient countries is the given rationale for doing so. According to a World Bank report, “Aid can be the midwife of good policies.”

Aid to developing nations has not always been targeted towards genuine economic development efforts. Rather, in most cases, it has been given as an instrument of control under the global apartheid system. The current aid regimes undermine governance at the national level and impose conditionalities that lead to human rights violations. Adding to this, it is reliably estimated that for every dollar given in official development aid, three go back to the rich countries in debt service payments. Under the auspice of mandating policies for the good of the countries, aid actually decreases the level of control the government has over domestic expenditure allocation (both domestic and external).

Conclusion

The world has enough resources for everyone if we find the political will to eradicate poverty and hunger as well as put human life before profits. The debt must be cancelled to free up resources for equal development in both the North and the South. Kofi Annan's 21st Century Action Plan speech summed up what it will take if we are to replace global apartheid with global democracy, when he said:

“I would go a step further and propose that, in future, we consider an entirely new approach to handling the debt problem. The main components of such an approach could include immediate cancellation of the debts owed by countries that have suffered major conflicts or natural disasters; expanding the number of countries in the HIPC scheme by allowing them to qualify on the grounds of poverty alone.”

In the name of global democracy, the international community needs to negotiate new measures that go beyond existing initiatives in order to resolve Africa's debt crisis and end global apartheid. The debt is unpayable and rescheduling will only postpone the problem. The debt bondage is the new face of colonialism or even slavery. Debt is used as an instrument of domination. It is also an instrument used to plunder and exploit indebted countries' resources. Ultimately, debt is at the heart of the unequal power relations between the North and the South.

Recommendations

1. The total cancellation of third world illegitimate debts (as proposed for Iraq by the US) is a starting point in ending global apartheid.

2. There is an urgent need to address issues of unfair trade within the World Trade Organization.

3. Europe and the United States should stop using aid as a means of neo-colonialism or advancing their selfish ambitions.

4. There is a need to treat people of different geographical locations, race and origin equally when it comes to addressing global issues.

5. America's hegemonic wings need to be curtailed to ensure that it works within the framework of the United Nations.

6. The World Bank and the International Monetary Fund's role needs to be revisited and redesigned so as to make these institutions people centred and pro-poor in their economic development policies. There is need to put an end to the co-modification of human lives through imposition of neoliberal policies that value markets/ profits before people.

* Charles Mutasa is Research and Policy Analyst at the African Forum and Network on Debt and Development (AFRODAD). Please click on the link below for references to this article.

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“Democracy is an ideal that I would like to live for, it is an ideal that if necessary I am prepared to die for”-Nelson Mandela.

It is an intriguing and powerful message that has sunk into the African Union that there is now a growing understanding that the political leadership alone cannot determine the continent’s destiny. People need to be masters of their own destiny. Top-down approaches emanating from the razzmatazz of summits without the people will not change the face of Africa. Today there is rich body of literature emphasizing the rights based approach to development grounded in ownership and effective participation by the intended beneficiaries. The African Union cannot afford to remain an exception to the norm.

The third summit of the African Union held in Addis Abba, Ethiopia in the second week of July 2004 saw African leaders opening their arms to the effective formal participation of the wider civil society organizations (CSO’s) in Africa and the Diaspora by approving the Statutes of the Economic, Social and Cultural Council (ECOSOCC). The establishment of ECOSOCC under the provision of Articles 5 and 22 of the African Union Constitutive Act is a confirmation and assurance that popular participation in the activities of the African Union (AU), as enunciated in the African Charter for Popular Participation, is a prerequisite for its success.

The ECOSOCC process is a historical opportunity for the formulation of a new social contract between African Governments and their people. Involving CSO’s in African Union endeavours is a positive move and is a way of involving ordinary citizens of Africa in decision and policy-making processes of issues that concern their daily lives.

More to this is that involving CSO’s is key considering the role they would be expected to play as watchdogs of their governments and that CSO’s have the ability to reach out to grass root level people in African communities.

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The World Social Forum is one of the most significant civil and political initiatives of the past several decades. Since the first World Social Forum (WSF) was held in Porto Alegre in January 2001 in Porto Alegre, Brazil, as a counterpoint to the World Economic Forum held in Davos, Switzerland, its call for ‘Another World is Possible!’ has been echoing as an alternative to challenge the neoliberal order. This year’s gathering in Mumbai, India, between 16-21 January was the fourth edition.

Official statistics estimate that about 80 thousand people represented by 2 660 organisations from 132 countries participated. Others put the number of participants at 150 000. The Mumbai gathering was different from the previous WSF meetings. First, Mumbai as a venue was no place to romanticize about poverty, unlike Porto Alegre, where poverty can be hidden. Despite the fact that it is India’s financial capital, two-thirds of Mumbai's people live in indescribably dirty shantytowns, where there are no water, taps or toilets in most homes. Taking a walk through Mumbai, one could not afford to ignore the signs of a sick economy.

Secondly, bringing the WSF to India afforded an opportunity for most poor Asians who could not in the past meet the cost of flying and living in the rather posh Brazilian city of Porto Alegre to have a feel of what happens at such world jamborees. One can safely say the majority of those who attended were from India and its neighbouring countries. Besides the usually refined criticism about the lack of transparency and democracy in the World Trade Organisation, International Monetary Fund and World Bank that characterizes these meetings, this time the majority, mostly Asian delegates, came, spoke, sung, danced, marched and denounced problems associated with the caste system, war, cultural imperialism, deep social and economic injustices and capitalism. They condemned the “Bushes and Blairs” of this world for the allied forces’ presence in Iraq, hailed socialism/communism and condoned Dalitism, as well as denounced the apartheid regime of Israel. Issues about dwelling rights and liveable cities, the caste system and “untouchable” Indians, the unsustainable situation of debt in poor countries of the world, and the coercive use of force by governments, multinational corporations and international financial institutions dominated the discussions.

The third difference was the African Social Forum (ASF) scenario. Of prime importance, Africans made a break-through in terms of their numbers at the WSF. Compared to the past three gatherings I attended, the Mumbai edition recorded the highest attendance of African civil society activists in the history of the WSF. I think around 350 to 400 Africans residing and working in Africa were in Mumbai. This was a big enough group to put the continent’s problems across. The ASF under the leadership of its secretariat in Senegal produced a daily paper, Africa Aflame, that captured and took into consideration Africa’s uniqueness and issues.

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Debt relief has become a prominent issue in recent discussions about development, poverty and the relationship between developed and developing countries. The debt problems of the poorest countries have attracted the attention of development agencies that fear that the crisis may worsen poverty and economic decline in which the indebted nations are trapped. The inability to serve external debt by the severely indebted low-income poor countries is vividly reflected not only in massive build-up of arrears but most importantly by the number and frequency of rescheduling. Thus the debate on debt relief is no longer confined to economic and financial spheres; it is transcending every human domain - health, education, agriculture and industry.

Many development agencies and skeptics have expressed widespread doubts regarding the Heavily Indebted Poor Countries Initiative (HIPC) - launched in 1996 - and its successor the Enhanced Heavily Indebted Poor Countries Initiative's (EHIPC) ability to achieve the promised objective of a “robust exit from the burden of unsustainable debts” for developing countries. Problems associated with the design and implementation of the initiative suggest that neither of the two HIPC versions has succeeded in providing an adequate response to the Third World debt overhang. An analysis of key debt indicators shows that external debt and debt-servicing problems are most severe and persistent in the heavily indebted poor countries (HIPCs), the target group of the HIPC Initiative.

Throughout the process, creditors failed to put sufficient political will, resources and serious analysis into the debt reduction operations. Debt reduction targets were set and reset arbitrarily - writing off 30 percent, then 50 percent, and so on - rather than based on serious assessments of the needs of each country. Despite claims of success by creditors for their Heavily Indebted Poor Countries (HIPC) initiative for debt reduction, the IMF estimated that Africa's debt service payments would only go as low as 17.1 percent of export earnings in 2001 (down from 20.3 percent in 1999), before rising again to 18.4 percent in 2002. The process has been much slower than expected and the initiative is suffering from problems of under funding, excessive conditionality, and restrictions over eligibility, inadequate debt relief and cumbersome procedures.

The Overall Picture of the Process

There has been disagreement over what constitutes 'sustainable debt' in the HIPC initiative. Sustainability is subject to the determination of export performance and many debt campaigners fear overly optimistic calculations will reduce the amount of debt reduction and may mean that countries fall back into the debt trap.

It seems the International Financial Institutions are only interested in the Third World debt crisis when it reaches proportions that threaten the poor countries' ability to service their debt to Northern creditors. Thus sustainable debt to the Bretton Woods institutions is when a country reaches a level where it can meet its current and future repayment obligations in full. Debt relief has not managed to ease domestic expenditure constraints and the curbing of investments.

The 22 African countries that have so far qualified to receive some relief are still required to pay almost $2 billion each year in debt repayments to wealthy creditor countries and institutions, mainly to the World Bank and IMF themselves. African countries' efforts to address urgent domestic priorities, from poverty reduction to the fight against HIV/AIDS, continue to be undermined by their persistent debt burden. Most African governments still spend up to three times more on debt repayments than on health care for their own people Not only are some countries spending more on debt payments after they receive debt relief, but they are overshooting the World Bank and IMF's own definitions of debt sustainability. Uganda, the first HIPC graduate, currently has debts of over 200% of the debt-to-exports ratio. This will be the third time Uganda has exceeded its debt sustainability after reaching completion points. Surprisingly, the World Bank and IMF have changed definitions of debt sustainability to include liquidity as the operative criterion.

The HIPC initiative is further flawed because it is tied to controversial economic adjustment measures. In his speech to the International Monetary and Financial and Development Committees in Prague on September 24 and 25, 2000, Canadian Finance Minister Paul Martin develops a critique of the current HIPC process, including Poverty Reduction Strategy Papers (PRSPs), especially the overburdening of countries with a huge quantity of conditions to fulfill before receiving debt relief. Martin cites the problem of overburdening the HIPCs with "unrealistic conditionalities", and an excessive concern among creditors with the "quantity of conditionality rather than its quality."

It is interesting to observe that although Nigeria's debt stock is the largest in West Africa and the country is experiencing growing poverty, she has not been recognized as an HIPC eligible country. Debt relief has been more successful in protecting the interests of the creditors than the debtors. It is actually designed and controlled by creditors to extract the maximum possible in debt repayments.

According to the UN Secretary General's report of 2000 there are 18 least developed countries that are not included in the HIPC category, and some of them are considered severely or moderately indebted according to the World Bank classification. For instance, most of the debt-distressed African countries are classified as moderately indebted middle-income countries such as Zimbabwe while Gabon and Nigeria are both severely indebted yet excluded from the HIPC initiative.

The HIPC Initiative obfuscates the illegitimacy of most of Africa's debt. As such, it fundamentally undermines the strong imperative for debt cancellation. It sanctions the continued exploitation of indebted countries by rich creditor nations and institutions. Many of the loans that are being re-paid were made during the Cold War to repressive regimes and corrupt leaders, who used the money to strengthen their rule or to line their own pockets. Many more loans were made without attention to the viability of planned projects or to the capacity of the recipient country to make repayments.

Out of 20 HIPCs that have already reached HIPC decision point, four countries (Mali, Niger, Sierra Leone and Zambia) will have annual debt service payments due in 2003-2005 which will actually be higher than their annual debt services paid in 1998-2000. Five countries will be paying almost as much in debt service payments as before HIPC (Ethiopia, Guinea-Bissau, Honduras, Nicaragua, Uganda). In six countries, a modest $15 million in 2003-2005 will reduce annual debts serviced. Over half of the HIPCs are spending more than 15% of their government revenue on debt servicing.

Despite modest recovery in some countries, poverty has intensified, and human development indicators - life expectancy, infant mortality, and school enrolment have worsened. The export basket remains un-diversified. Since the start of the HIPC process the fragile industrial base has shrunk even further (de-industrialisation) in many countries. In short, HIPCs worsened the crisis on a number of scores. The debt under HIPCs strongly and negatively affects economic growth, threatens the sustainability of reforms, and prevents the development of a capable and functioning state due to the fiscal crisis that it engenders.

Recommendations:

1. The way in which debt relief is calculated for each country needs to be reviewed and alternatives adopted. The reliance on a debt-to-export ratio to calculate debt relief packages, based on World Bank and IMF projections, is flawed.
2. There is a need for an independent panel of experts not unduly influenced by creditor interests to reassess the debt sustainability, eligibility for debt reduction, and the amount of debt reduction needed, conditionality and financing of developing countries.
3. Future reviews of debt sustainability should also bear in mind the impact of debt relief on progress towards the achievement of the development goals contained in the Millennium Declaration.
4. Reform of the international strategy regarding official debt of poor countries should address the problems of debt distressed low-income countries that are not currently eligible for special treatment accorded to the HIPCs.
5. Third World governments should be afforded the chance to determine their own approaches to poverty reduction, in consultation with civil society groups and other partners - not to have these prescribed to them by external powers.
6. Needless to re-iterate, the idea of all countries caught in the debt trap forming a cartel to maximise the effectiveness of an international campaign of debt repudiation has been around for some time.

Conclusion

The analysis above shows that there are serious flaws in the HIPC initiative's approach to the Third World debt crisis. Levels of debt repayment after HIPC initiative are far too high, undermining the necessary investment needed to accelerate poverty reduction. In the absence of radical reform, HIPC will join a long list of failed poverty reduction initiatives. Past and present initiatives at international debt relief are increasingly acknowledged to be inadequate and flawed. The creditors should not monopolise decision-making on debt resolutions and there is a need for the debtor countries to come up with their own initiatives.

The IMF and World Bank are off-track on meeting their performance benchmarks in the HIPC initiative. Any solution to the debt crisis must move beyond debt relief and conditionality, to consider debt within the wider context of equitable and sustainable development. It should address socio-economic and developmental relations between debtor and creditor countries. Needless to state again that if global efforts to reduce poverty and fight underdevelopment are to be successful, Third World debt must be canceled outright.

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