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Wednesday, March 4, 2015

Combating The Spread Of Extremism In The Third World (Part II)

Links A. Impact of The Repudiation Of Third World Debt
          B. Council On Foreign Relations Comments Regarding Terrorism And Debt

(Part II)

I'm not an economist, though I have followed up on the arguments for and against the dissolution of all foreign debt in Africa.  From my simple perspective, I imagine that the elimination of all debt will loosen up capital for job creation, education reform, infrastructure development, hydro-electric projects, and much more.  Some individuals more cynical than myself, have argued for conditions on any debt relaxation agreement.  The concern is that once the constraints are removed, the inmates will be uncontrollable.  And why would that development automatically be considered a negative?  We want uncontrolled growth.  Granted, certain European and North American commodities might face some unexpected competition in the international marketplace.  Another concern is that providing African nations with control of so much of their own revenue (without that revenue automatically disappearing in loan payments) will encourage a return to the days of political despots.  The concern being, that if you remind the Africans of just how much wealth they have, that inevitably tribal conflict will return, along with the Idi Amins, Mobutu Sese Sekos, Jean-Bedel Bokassas, and the Robert Mugabes (wait a second....that crazy old rooster is still around, isn't he?).  I say, "Racist much?"  This type of thinking proceeds on the assumption that congenitally, the blacks of Africa (regardless of tribe, heritage or language), are unable to learn enough from the errors of the recent pass to avoid repeating those mistakes.  Having spent a decent amount of time in Africa (by the way, six months living in the leafy Pretoria suburbs of Waterkloof or Brooklyn, shopping at the conveniently located Checkers and Menlyn Park Mall, and dining at Priva Gastrolounge, does not constitute "Africa" in my book), I think the people of this continent are ready for a change.  And I don't think they will hesitate to remove anyone who tries to turn back the clock to the days of  endemic corruption.  The world is much smaller, and our leaders are much more accessible.  Africans (especially the younger generation) are ACHING for the opportunity to start with a "Coup de Torchon", a clean slate.  Most the these young people don't remember Daniel arap Moi, Kenneth Kaunda, or PW Botha.  The amazing advances in communication technology has revolutionized education on our planet.  Young people receive lessons in Cultural Geography and Social Studies every time they access the internet on their phone.  In the past, the list of options regarding future employment was limited by many factors.  Today, young people are beginning to accept the idea that they can achieve anything that they're willing to sacrifice and work for.

One particular argument against eliminating the debt of African nations is that it will discourage lenders from getting involved in Africa.  Who wants to make a loan that can be erased twenty years down the road?  No doubt Africa needs continued access to loans from wealthy countries, and its easy to understand how this decision could impact African nation's access to international currency.  But lets approach this dilemma seriously.  If the decision were made to dissolve all debt currently owed by African countries (including to each other), it would be a decision that could only be repeated again by the same group of people/organizations.  If there was a legitimate concern that this one isolated decision would create some contagion effect, removing debt from Latin America  (I already have a solution for Latin America...just dump everyone's debt into Christina Fernandez Kirchner's bank account) being next on the list, I would oppose this initiative.  But as long as rational thought properly influences the decision making process of everyone involved, I believe that a one-time elimination of all African debt, would not create expectations of the same decision being made in other places.  No one can convince me that Africa would become "persona non grata" with the international banking community.  Companies exist for the sole purpose of negotiating international loan agreements.  Personally, I would consider Africa to be one of the safest places to make a loan, if the international community had just agreed to a one-time elimination of all African debt.  Certainly that event won't be repeated in our lifetimes, so any new investment would be safe.  The idea that African countries would no longer have access to the IMF and the international banking community is bogus.  Africa will continue to provide endless opportunities for making money, and plenty companies and organizations looking to make a profit, will line-up to loan money to African nations.

My opinion on this subject has evolved.  When I was younger, I had a strong conviction regarding agreements between people.  Someone's word, and someone's signature, had to be worth something.  I believed that since countries had borrowed (and spent) the money, that they should pay it back.  A bit of research later, and I had discovered that many African countries were using new loans to pay the interest on previous loans.  Reminds me of me in my younger days.  Its all become a bit of a mess.  But technology has given Africans new hope for the future.  Nigeria, Equatorial Guinea, Sao Tome and Principe, Mali, and an encouraging number of other African nations are discovering oil reserves (mostly off the coast).  The process of fracking has also started to have an impact on a continent that has always been dependent on energy imports.  Once again, thanks to technology, we have confirmed that West Africa is home to more deposits of Gold and Diamonds than previously thought.  And I haven't even mentioned all the sensitive metals and minerals that sit under the African soil.  If African nations are relieved of the repressive debt obligation, then they would be better-positioned to create their own exploratory companies to access all of this hidden wealth. But some players in the game don't want self-sufficiency in certain market places.  They want to locate, dig, retrieve, and sell whatever particular resource of the moment, and pass back to the host nation a modest one-time payment.  That is the way it has always been done.  An elimination of African debt might just provide the impetus that encourages Mali to explore the north of the nation for oil on its own, not under the foot of a French company.  Wouldn't it be something if Guinea and Botswana cleaned and processed diamonds themselves, instead of relying on Dutch and Israeli companies?  In truth, I'm getting ahead of myself here.  I'm grasping, folks.  I'm looking for an opportunity to be excited for the future.  With Islamic Extremism expanding so rapidly, I welcome any change of circumstances.  Relieving Kenya of its international debt, will allow Nairobi to institute immediate job creation programs in the slums of Kibera.  The government of Kenya can win the battle against Al-Shabaab/Al-Qaeda for the hearts and minds of its young people.  The same argument can be made in Uganda and Nigeria.  Young people will gravitate to a legitimate opportunity to create a successful career, before they will agree to picking up an AK-47 and randomly killing people.  Call me foolishly optimistic, but this is what I believe.

The international banking community, including the IMF, should immediately institute a blanket forgiveness of all African debt, to include Mauritania, Ethiopia, Eritrea, Djibouti, and South Sudan.

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