Aid is a tool of the core capitalist countries in their struggle to control and exploit the weaker peripheral countries. While we are told in public about the moral imperatives our leaders feel to help their African brothers and how they give aid from the goodness of their hearts a different story is told in private.

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From Revolutionary Perspective 36,
Magazine of our sister organisation the Communist Worker' Organisation British Affiliate of International Bureau for the Revolutionary Party

The Great African Charade

Aid and Debt Relief

Introduction

In 2004 Blair set up a commission for Africa which produced a report in March this year calling for an extra $25bn in additional annual aid for Africa together with debt relief for the poorest countries. By setting up this commission, the UK government was able to present itself as the leader of the anti-debt, anti-poverty lobby. In particular, the Blair government found in the "Make Poverty History" organisation a perfect sounding board for a new campaign of lies, this time about global capitalism and African poverty. "Make Poverty History" is an umbrella organisation of some 400 charities, churches, trade unions and other groups led by millionaire rock stars and entertainers. It grew out of the anti-debt protests at the 1998 G8 summit in Birmingham and was only officially launched in January of this year.

At the conclusion of the G8 summit in July, Blair was able to announce that the group had agreed to provide additional aid to Africa which should reach $50bn annually by 2010 and that there had been agreement to write off $40bn of African debt. He was thereby able to announce that the figures of the Africa commission had been achieved and the whole process had been a great victory for justice and morality. The true meaning of the figures is highly questionable and will be considered below.

Two points are, however, indisputable. The first is that the condition of Africa is desperate and has been recognised as likely to cause massive problems for global capitalism if nothing is done. The second is that this agreement will not fundamentally alter anything. If anything the grip of global capitalism on Africa will tighten and the situation for the continent's poor will deteriorate.

Desperate state of Africa

Today the domination of Africa is so complete and the burdens placed on it are so severe, that the real question for the bourgeoisie is whether the present relationship between Africa and the capitalist centres of North America, Europe and Japan is actually sustainable [1].

It is clear that for the leading members of the capitalist class the present relationship is not seen to be sustainable. As we pointed our in Revolutionary Perspectives 31, Africa's share of world trade had declined from 7% in the mid-'70's to 1% today, foreign direct investment has collapsed, and, for the poorest countries, income has declined by 25% in the last two decades. Today, 340 million people in Africa live on less than $1 per day. In addition Africa has become a net exporter of capital to the core capitalist countries. For every $1 received in aid, $3 are paid out to banks, financial institutions and governments. Africa is sinking into a state of debt peonage where its debts can never be repaid and it can only fall into deeper debt. The exploitation of Africa by the core countries is leading to a state of collapse where state structures are weakened to the point of implosion, and countries degenerate into civil war and become divided between warlords.

The core capitalist countries, whose representatives are the G8, need the minerals, raw materials and oil of Africa. While they are desperate to continue the savage exploitation of sub-Saharan African countries, they do not wish to see the state structures which manage this exploitation collapse. A collapse in a country which is economically unimportant, such as occurred in Somalia, allows the enemies of the US, e.g. Al Qa'eda, to base themselves there and launch attacks from this base. The G8 does not want more Afghanistans. A collapse in an economically important country, such as the Democratic Republic of Congo (DRC), threatens vital supplies of minerals and raw materials. It is for these reasons that the US and its allies are now trying to end the wars which have ravaged the continent for the last two decades. The peace deals in the DRC and in Sudan, both countries with strategic raw materials, are examples of what has been achieved.

The means of containing the explosive situation in Africa is what is in question for the G8. The military interventions in countries such as Somalia, the great lakes region, Liberia, Sierra Leone, Côte d'Ivoire, etc., have proved costly and not very effective. Although they have contained the collapse, intervention on a far greater scale would be required to impose the solutions desired by the imperialist countries. The present initiative is to try and address the economic conditions which have brought this state about. Although the capitalist class recognises the problems, it is literally unable to do anything significant about them without undermining the fundamentals of the global economy. This is the real reason that the measures announced at the G8 are largely cosmetic.

Aid and imperialism

Aid is a tool of the core capitalist countries in their struggle to control and exploit the weaker peripheral countries. While we are told in public about the moral imperatives our leaders feel to help their African brothers and how they give aid from the goodness of their hearts a different story is told in private. In 1958, a memo from the Foreign Office bluntly stated that:

Aid is a weapon in the armoury of foreign policy [2].

A more recent document from the Department for International Development (DfID) states that:

... most recipients of aid are... commercially important to the business sector, not just as export markets, but for sourcing inputs and raw materials, for foreign investment and joint ventures [3].

Aid, by the bourgeoisie's own admission, is for securing markets, raw materials and theatres of capital investment. We could add that since these are precisely the reasons for going to war "aid" really is seen by the capitalist class as one weapon in a series of weapons which they use to achieve their imperialist aims.

After 50 years of "aid" following decolonisation, the penetration of capital from the core countries in Africa is massive in scale. A few will illustrate this. In the DRC, for example, the strategic mineral extraction is controlled by 32 corporations all of them based in the G8 countries. In Côte d'Ivoire, 98% of the cocoa processing is controlled by G8 companies. Unilever, the UK company operating in Southern Africa, has profits greater than the total national income of Mozambique, while another company, Monsanto, controls over 50% of the maize seed used in Southern Africa [4]. Oil extracted from Nigeria Angola, Chad and the entire seaboard of the Gulf of Guinea is controlled by oil companies of the G8.

It is, therefore, quite incorrect to argue, as Blair and his choir of saints do, that aid is intended to develop countries industrially or improve conditions for the people living there. Aid is part of the machinery of extracting profits from these countries. In the last 50 years, Africa has received $1000bn [5] in aid and yet many countries are today poorer than they were at the end of the colonial period. What aid has achieved is to produce a continent where the domination by the imperialist centres is greater than at any period since colonisation, where African countries are unable to develop their own national resources, where many countries have their budgets and development plans drawn up by the IMF and where the local governing elites have become agents of the imperialist centres.

The present proposals will not reverse this. They will, in fact, make little difference and the present situation is destined to continue.

At present the aid to sub-Saharan Africa is $79bn annually. Although the additional $50bn announced at the G8 summit should increase the total aid to $129bn, this is not the case. The debt relief package is to be deducted from the new aid pledged and much of the new aid is actually existing aid disguised in some way. It is estimated that only $15bn of this aid will be delivered as aid [6] and that assumes G8 members fulfil their non-binding pledges. Similar pledges made at all the recent G8 gatherings have not been honoured. Although all the aid organisations have criticised the proposals for being too small, in the final analysis, the amount of aid is not the real issue. The issue is its function, and this function will remain the tightening of the grip of international capital on the continent.

Debt and financial capital

The debt relief of $40bn announced at the G8 summit applies only to the highly indebted poor countries, and only those who carry out the so called structural adjustment programmes prescribed by the IMF. These include opening the country to international capital, privatising state assets, cutting state expenditure, in particular social services, deregulation of prices and wages and floating the currency. These conditions are so onerous that some of the poorest countries have refused to accept debt reduction on these terms. Of the 38 countries worldwide who qualify only 12 are in Africa. Some of the poorest countries don't qualify, e.g. Malawi or Burundi, because they have not implemented IMF structural reform programmes.

As in the case of the aid package, the figures presented at the end of the G8 summit were a wild exaggeration. When the figures are worked through the combined amount that all the countries involved will save is only $1.5bn annually [7].

An example of how the debt relief is likely to be operated to the benefit of the core capitalist countries is provided by the recent debt relief to Nigeria provided under this agreement. $18bn of a debt of $31bn was written off on condition that arrears of $6bn on repayments were paid together with payment of the remaining $13bn. Nigeria is able to make some immediate payments because of the current high price of oil. The entire agreement is, of course, subject to the certification by the IMF that the structural reform programmes which it prescribed have been carried out. In addition, Nigeria has to agree to continued monitoring of its economy by the IMF. This illustrates how these manoeuvres are resulting in even the strongest countries in Africa falling under the control of the imperialist centres and their agencies such as the IMF. The fact that Nigeria is an oil-producing country and almost half the agreed debt relief is going to it, indicates the real motives of the G8 are their own profits from Africa, not the interests of the impoverished. It is worth noting that another country which has recently been granted significant debt relief, this time $30bn, is Iraq. This again illustrates that imperialist motives underlie debt relief.

A further point about the debt relief, which is seldom mentioned, is that because it is to be financed out of future aid, those to whom the debts are owed, the banks, finance houses and other lending organisations, are, in effect, having their bad debts paid out by the states involved. Thus debts to poor countries which were not being serviced are to be redeemed from taxes. This amounts to a subsidy by the state to banking and finance capital and consequently strengthens their position.

Conclusion

What we have seen enacted at the G8 summit are moves to contain Africa's crisis, not to solve it. Africa's decline will continue to be a threat to global capitalism. The moves which have been taken, will inevitably result in the increased domination of imperialism over Africa. To seriously tackle the debt problem would entail undermining the international structure of global capitalism. Just as capitalism is quite unable to 'make poverty history', as explained in a separate article in this edition [8], it is unable to solve the debt crisis. The only way the problems of Africa can be solved is by eliminating their root cause which lies in the capitalist system of production. The horrific consequences of maintaining capitalism are clearly visible in Africa where the collapse of states and resulting wars have killed more people in the last two decades than were killed in World War I.

CP

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1. Quoted from Revolutionary Perspectives 31, "Africa, Showcase of Capitalist Decline"
2. Quoted in Independent, 9th July 2005, "Brown's Doleful Role at Gleneagles"
3.Ibid
4.Quoted in New Statesman, "G8 Summit Fraud and Circus"
5. See Financial Times, 9th July 2005, "Campaigners Divided on Aid Promises for Africa"
6. Ibid
7. See Financial Times, 8th July 2005
8. See "Only Communism can make Poverty History" in this issue

CWO -- August 2005

Internationalist Workers' Group, Canadian affiliate of the International Bureau for the Revolutionary Party

Email: can...@ibpr.org