Bible Studies
Written by Jim Jordal   
Wednesday, 22 November 2006


By Jim Jordal

Liberia is a small independent nation on the Atlantic coast of Africa. It was founded by freed American slaves in the mid-1800s as the first republic in Africa. Although extremely poor, Liberia managed to survive as a free nation until 1980 when autocratic leader Samuel Doe gained power. Renegade Charles Taylor replaced him in 1989, igniting a civil war killing approximately 270,000 people and leaving over a million refugees. Dictatorship under Taylor lasted another 14 years during which the regime became noted for documented instances of the recruitment of child soldiers forced to commit monstrous atrocities against the civilian population. By the time Taylor was driven from power, the country had endured over 20 years of extreme suffering and destitution.

During this period of instability and dictatorial rule, international lenders led by the World Bank and the International Monetary Fund (IMF) loaned Liberia large amounts of money. Unfortunately, the funds went, not to the people, but largely into the pockets of the dictators and their cronies. The loans were in return for Liberia's support of the United States in its struggle against Libyan autocrat Momar Qaddafi.

Now Liberia has a free government headed by Africa's first woman president, newly elected Ellen Johnson-Sirleaf. The nation now looks forward to renewed life and opportunity. But unfortunately the debt remains, even though immorally, if not illegally obtained by dictators for their own aggrandizement. At present Liberia's foreign debt is $3.7 billion, a sum representing almost 8 times Liberia's annual Gross Domestic Product (GDP). Since Liberia ceased debt service during the civil war period, the present debt consists mainly of interest and penalties for non-payment. Creditors now expect Liberia to begin servicing its debt to the tune of $80-100 million per year, even though that amount equals or exceeds the entire annual government budget of $80 million.

So the nation is essentially bankrupt and in dire need of debt relief. But the lending agencies have determined that no debt relief will be forthcoming until Liberia begins to service its debt, no matter what that does to the people and the country.

Liberia is an almost classic example of how rich G-8 (Group of Eight) nations led by the World Bank and IMF act to enslave and impoverish desperately poor Third World nations. The scenario goes something like this:

First, the country needing aid must be poor enough not to be able to significantly help itself. Therefore, charity, foreign aid, or loans become its only possible sources of help.

Second, it helps if the country is ruled by autocrats, since under dictatorial rule the public does not need to be consulted over the quantity, terms, or uses of the forthcoming loans.

Third, greedy, often-cruel foreign autocrats are lured into accepting these loans by what are called "economic hit men." These manipulators are employees of foreign lenders or international construction companies. Their job is to wine, dine, entertain, lure, and even threaten local leaders to take these loans, whether really needed or not. The loans then disappear into greedy local hands, or are disbursed to large international construction companies such as Bechtel, Halliburton, and Brown and Root for massive but unnecessary infrastructure projects (dams and resource-extraction facilities) that have no result other than to devastate the local ecology and to place the recipient nation further into debt.

Fourth, Western lending institutions impose few requirements as to how the loan will be used, but massive requirements as to how it must be repaid. These take the form of the dreaded "structural adjustment policies," also called "conditionalities." Under the guise of helping the debtor country gain funds to service its loan obligations, these policies forcibly structure national priorities, almost always to the detriment of the poor. For example, exports must be encouraged in order to raise money, even though farmers are often forced into raising crops suitable only for export, not for feeding the local populace. So, localized hunger results. Some loans mandate up to 100 of these conditions.

Fifth, when the debtor government finally faces default, the creditors jump in with debt-relief packages in the form of new loans and increased conditionalities--all of which further imperil the poor country. Perhaps this is better than what we used to do--send in the marines to seize assets of the debtor nation--but I doubt it.

So, back to Liberia. What they need is for their debts to be declared both "odious" and "illegitimate" since they were incurred by dictators without popular consent and were never used for the benefit of the people. But what has happened is that the World Bank and IMF have demanded that Liberia pay its arrears in full before any partial debt relief or full cancellation will be granted. So once again the almighty dollar trumps justice, mercy, or even decency!

The UN has identified that debt relief results in startling improvements in local education, health care, poverty relief, and small-scale infrastructure development. So why in the name of humanity do Western financial agencies not grant what they can well afford and what poor countries most need--debt forgiveness? Go figure.

Note: On October 16 and 17 Jubilee USA in its efforts to sponsor debt relief encouraged a phone blitz by concerned persons. World Bank president Paul Wolfowiz no doubt received thousands of messages urging debt cancellation for Liberia. Now we'll see what happens.

Sources: Jubilee USA, World Bank, International Monetary Fund, Afrodad, Eurodad, UN, and Foreign Policy in Focus.