An attack on the poor, South
International Viewpoint #265 April 1995 and North by Michel Chossudovsky
Since the early 1980s, the "macroeconomic stabilisation" and "structural adjustment" programmes imposed by the IMF and the World Bank on developing countries (as a condition for the renegotiation of their external debt have led to the impoverishment of hundreds of millions of people. Contrary to the spirit of the Bretton Woods agreement which was predicated on "economic reconstruction" and the stability of major exchange rates, the structural adjustment programme has largely contributed to destabilising national currencies and ruining the economies of developing countries.
Internal purchasing power has collapsed, famines have erupted, health clinics and schools have been closed down, hundreds of millions of children have been denied the right to primary education. In several regions of the developing World, the reforms have been conducive to a resurgence of infectious diseases including tuberculosis, malaria and cholera. The restructuring of the World economy under the guidance of the Washington based international financial institutions increasingly and the newly created World trade Organization (WTO) denies individual developing countries the possibility of building a national economy: the internationalisation of macro-economic policy transforms countries into open economic territories and national economies into "reserves" of cheap labour and natural resources. The State apparatus is undermined, industry for the internal market is destroyed, national enterprises are pushed into bankruptcy.
The massive compression of the standard of living resulting from a structural adjustment programme (S.A.P.) implies a corresponding reduction in labour costs; therein lies the "hidden agenda" of SAPs: the compression of wages in the Third World and E. Europe supports the relocation of economic activity from the rich to the poor countries. The globalization of poverty endorses the development of a cheap labour export economy; the possibilities of production are immense given the mass of impoverished workers throughout the
World. The development of this global cheap labour economy is central to an understanding of the World social crisis.
Increasingly, the same macroeconomic therapies are being applied in the developed countries. While the underlying policies tend to be less brutal than in the South and the East, the theoretical and ideological underpinnings are broadly similar. In Europe and North America, "economic stabilisation" measures (in principle adopted "to alleviate the evils of inflation") have contributed to depressing the earnings of working people and weakening the role of the State: under the sway of monetarism, public expenditures are trimmed and social programmes are undone. With high levels of public debt, economic and social policies are increasingly dictated by the State's creditors. The neo-liberal agenda promotes the deregulation of the labour market: deindexation of earnings, part-time employment, early retirement and the imposition of so-called "voluntary" wage cuts... In turn, the practice of attrition (which shifts the social burden of unemployment onto the younger age groups) bars an entire generation from the job-market. The rules of personnel management in the United States are: "bust the unions', pit older workers against younger, "call in the scabs", slash wages and cut company paid medical insurance".
Many of the achievements of the Welfare State are repealed, State policies have also encouraged the destruction of
Copenhagen summit small and medium sized enterprises including the family farm. Low levels of food consumption and malnutrition are also hitting the urban poor in the rich countries...South, East and North, a privileged social minority has accumulated vast amounts of wealth at the expense of the large majority.. This new international financial order feeds on human poverty and the destruction of the natural environment. It generates social apartheid, encourages racism and ethnic strife, undermines the rights of women and often precipitates countries into destructive confrontations between nationalities. Moreover, these reforms —when applied simultaneously in more than one hundred countries are conducive to a "globalization of poverty", , a process which undermines human livelihood and destroys civil society in the South, the East and the North.
Since the mid-1980s, the impact of structural adjustment including the derogation of the social rights of women and the detrimental environmental consequences of economic reform have been amply documented. While the Declaration and Programme of Action of the World Summit for Social Development has acknowledged the "social dimensions of adjustment", no significant shift in the formulation of economic and social policy is contemplated. 1. The Neoliberal Agenda
The Declaration and Programme of Action of the Social Summit seeks a consensus on broad humanitarian and social principles while neglecting to analyse the root causes of the social crisis. It broadly endorses the neo-liberal policy agenda and the World Bank's focus on "the social safety net". According to the Declaration and Programme of Action (henceforth referred to as the Declaration). "free trade" and "structural adjustment" constitute the required "solutions"
The Declaration accepts neo-liberal policy prescriptions as the sole basis for the formulation of social policy. The dramatic consequences of IMF-World Bank sponsored devaluations, budgetary austerity and trade liberalisation measures
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Copenhagen summit * are not the object of serious debate. The overall validity of the "economic model" is not questioned.
While the Declaration contains a number of important statements pertaining to the goals of social equity, sustainable development, women's rights, the rights of indigenous people, etc, these objectives remain abstract and divorced from a meaningful debate on policy alternatives. The statements are largely rhetorical, they tend to blur one's understanding of key social and economic issues. Devoid of operational content, they cannot constitute the basis for a genuine Programme of Action.
The international community including the representatives of governments, non-governmental organisations and citizen's groups are called upon to endorse the Declaration at Copenhagen. Endorsement of this document is tantamount to providing legitimacy to the Bretton Woods institutions and the newly created World Trade Organization, including the interference by these organisations in the internal affairs of sovereign states. Many developing countries fear that failure to endorse the Declaration will be conducive to a tougher stance on the part of the G-7 and international financial institutions pertaining to debt rescheduling and the granting of foreign aid. 2. Implementing the Final Act of the Uruguay Round
Amending the Declaration without questioning its fundamental propositions does not modify its main thrust and commitment to the Neoliberal policy agenda. According to the Declaration, the system of global trade and macroeconomic reform is conducive to "sustainable development": "Globalization ... opens new opportunities for sustained economic growth and development of the world economy, particularly in developing countries. Globalization also permits countries to share experiences, to learn from one another's achievements and difficulties and a cross-fertilization of ideals, cultural values and aspirations". (14)
The impact of trade liberalisation on national societies including the new regime of intellectual property rights under the articles of agreement of the new World Trade ation (WTO) is not addressed. The Declaration fails to recognize that at the heart of the global economic system, lies an unequal structure of trade, production and credit which defines the role and 30 position of developing countries in the global economy.
The actual workings of the global market mechanism and the extent to which it is manipulated by powerful economic and financial interests is not addressed. The deterioration of the terms of trade since the 1980s and the impact on the direct producers is not analyzed.
The Declaration fully endorses the new trade order, it calls (without analysis) for the implementation of the Final Act of the Uruguay Round of Multilateral Trade Negotiations including the complementary provisions specified in the Marrakesh agreement, "in recognition of the fact that broadly based growth in incomes, employment and trade are mutually reinforcing taking into account the need to assist African countries and least developed countries in evaluating the impact of the implementation of the Final Act so that they can benefit fully." This unequivocal endorsement of the emerging system of global trade is unacceptable. The GATT agreement violates fundamental peoples' rights, particularly in the areas of foreign investment, biodiversity and intellectual property rights. 3. "Global Surveillance" and the Coordination of Macro-economic Reform
The Declaration calls "for the coordination of macroeconomic policies at the national, sub- regional, regional and international levels. In this regard, the Declaration broadly accepts the new "triangular division of authority" between the IMF, the World Bank and the World Trade Organization (WTO). In this context, the IMF had called for "more effective surveillance" of developing countries' economic policies and increased coordination between the chines international bodies. The relationshi the Washington based institutions an national governments is also ao be redefined.
"Enforcement" of IMF-World Bank: policy prescriptions, therefore, will no longer hinge upon ad hoc country-level loan agreements (which are not legally binding" documents). Henceforth, many of the clauses of the structural adjustmen programme (eg. trade liberalisation and the foreign investment regime) will become permanently entrenched in the articles of agreement of the new World Trade Organization (WTO). These articles (which have received the endorsement of the Declaration) will set the foundations for "policing" countries (and enforcing "conditionalities) according to international law.
The Declaration acknowledges that "the gap between rich and poor has increased" including the gap between developed and developing countries, yet the underlying causes of these disparities concepts. People are "placed at the centre of development", economies are to be directed to "meet human needs more effectively" (25,26). The accumulation of wealth is not seen as a factor which generates poverty.
The Declaration is notoriously repetitive, the same themes return in each of the sections, no analytical review or reference to concrete country realities is put forth. The Declaration fails to acknowledge the existence of a global economic crisis, it fails to recognize that poverty is the consequence of a process of national and global economic restructuring,
The Declaration calls for policies which enable "small enterprises,
International Viewpoint #265 April 1995 cooperatives and other forms of micro enterprises to develop their capacities for income generation and employment creation", yet it fails to acknowledge the massive displacement of small scale enterprises in both developed and developing countries which have resulted from the macro-economic and trade reforms. The lifting of tariff barriers → which is fully endorsed by the Declaration— has also contributed to destroying productive activities in the informal sector. 4. Distorting the Balancesheet of Global Poverty
World Bank poverty indicators are accepted outright by the Declaration, no independent assessment of global poverty is devised. The World Bank "estimates" that 18% of the Third World is "extremely poor" and 33% is "poor". The upper poverty line" is arbitrarily set by the World Bank at a per capita income of one dollar a day. Population groups in individual countries with per capita incomes in excess of one dollar a day are arbitrarily identified as "non- poor".
Double standards in the "scientific measurement of poverty": the World Bank "estimates", for instance, that in Latin America and the Caribbean only 19%of the population is "poor": a gross distortion when we know for a fact that in the United States (with an annual per capita income of $20,000) one American in five is dramatic deterioration of social conditions and the rise in unemployment in the South, the North and the East since the onslaught of the global debt crisis. It fails to identify the causes of this deterioration.
The Declaration points to improved levels of life expectancy, literacy and primary education, access to basic health care and lower infant mortality in developing countries. Yet recent evidence confirms that these achievements of the post-war period have largely been reversed. In many regions of the developing World, the evidence points unequivocally to an increase in the levels of infant mortality and child malnutrition and a decline in life expectancy.
5. The "Social Safety Net"
While recognising the
"social dimensions of adjustment"
including gender and environmental issues, the
Declaration carefully avoids discussing and assessing the impact of precise instruments of macro-economic reform
(eg devaluation,
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The Declaration replicates the World Bank approach by calling for the establishment of "a social safety net" to be incorporated in the economic reform package (ie. as part of the loan conditionalities). No concrete evaluation or justification of the "social safety nets" is presented in the main document.
The Social Emergency Funds (set up under "the social safety net") support the objective of debt servicing. The SEFs are token initiatives predicated on budgetary austerity. The Social Emergency Fund officially sanctions the withdrawal of the State from the social sectors and "the management of poverty" (at the microsocial level) by separate and parallel organisational structures. It is worth noting that "poverty eradication" and the "social
JE NE SAIS PAS COMMENT VOUS REMERCIER PLONTE defined (by the Bureau of the Census) to "I don't know how to thank you enough" be below the poverty line.
In other words, through the blatant manipulation of income statistics, the World Bank figures represent the poor in developing countries as a minority group thereby justifying the notion of "targeting in favour of the poor". The Declaration broadly follows the World Bank methodology: it presents poverty in developing countries as a problem pertaining to so-called "vulnerable groups".
A quantitative assessment of poverty in the developed countries is totally lacking. Poverty in the ghettoes and slum areas of American (and increasingly European) cities is in many respects comparable to that prevailing in the Third World. No concrete analysis of these phenomena is presented in the Declaration.
The social data base used by the Declaration is flawed, the statistical information provided in support of the Declaration's commitments is scanty. The Declaration fails to acknowledge the tariffs, budgets, privatisation, etc.
The Declaration calls for "[r]eview [of] the impact of structural adjustment programmes on social development including, where appropriate, by means of gender sensitive social impact assessments and other relevant methods, in order to develop policies to reduce their negative effects and improve their positive impact; the cooperation of international financial institutions in the review could be requested by interested countries; The Declaration disregards the evidence and the numerous specialised studies (including those conducted by UNICEF) pertaining to the social impact of macroeconomic reform.
The report endorses the mainstream economic model. Token provisions for monitoring the social consequences of adjustment programmes are included. While the Declaration acknowledges the "negative social effects", these are largely considered as "social costs" to be balanced against the "economic benefits" of structural adjustment.
safety net" are invariably included as conditionalities of World Bank loan agreements.
Various non-governmental organisations (NGOs) funded by international "aid programmes" have gradually taken over many of the functions of local level governments whose social expenditures had been frozen as a result of the structural adjustment programme.
The Declaration calls upon the Bretton Woods institutions to provide support "in the design, social management, assessment of structural adjustment policies and in implementing social development goals and in integrating them into their policies, programmes and operations" It does not envisage any formal mechanism providing for IMFWorld Bank accountability. It entrusts the Bretton Woods institutions with the task of designing social policy. 6. Alleviating Poverty at Minimum Cost to the
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International Viewpoint #265 April 1995
Copenhagen summit Creditors
Poverty is analyzed in the Declaration by centring on the individual and the household, by focussing on low productivity, low levels of education, etc. The structural causes of poverty are not mentioned. How is poverty generated as a result of low prices paid to farmers, exceedingly low industrial wages in the Third World's manufacturing enclaves...?
The report affirms its commitment to accelerating the economic, social, and human resource development of Africa and the least developed countries...". This objective is to be achieved through the implementation "at the national level [of] structural adjustment policies, which should include social development goals, and effective development strategies that establish a more favourable climate for trade and investment...".
The Declaration essentially endorses the World Bank concept of "sustainable poverty reduction". The latter is predicated on slashing social sector budgets and redirecting expenditure on a selective and token basis "in favour of the poor". The "social emergency funds" established (on the Bolivia-Ghana model) in developing countries and Eastern Europe are intent on providing *a flexible mechanism" for "managing poverty" while at the same time dismantling the State's public finances.
The Declaration is committed to the concept of "targeting", it tacitly denies the principle of universality in the provision and funding of basic education and health, it endorses the process of budgetary contraction. Yet is also puts forth (without any examination of funding requirements) a set of abstract goals to be achieved by the year 2000. These pertain to basic education and health, lite expectancy, infant mortality and maternal mortality, child malnutrition, etc. The Declaration does not say how the objective of "reducing inequalities, and eradicating absolute poverty by a target date" are to be achieved.
The report calls for the promotion of "basic social programmes and expenditures, in particular those affecting the poor and the vulnerable segments of society and protect them from budget 32 reductions while increasing the quality and effectiveness of social expenditures". In does not however question the foundations of these budget reductions. 7. Deregulating the Health Sector
The Declaration points to communicable diseases as "a serious health problem in all countries" (22) yet it fails to acknowledge the collapse of preventive and curative health care in developing countries amply confirmed by the WHO. The shortage of funds allocated to medical supplies as well as the price hikes (recommended by the World Bank) in electricity, water and fuel have been responsible for the collapse of health clinics and hospitals.
The structural adjustment programme seeks to deregulate the health sector. It also calls for the disengagement of the State from the distribution of essential drugs leading to dramatic hikes in the prices of pharmaceuticals (including antimalaria drugs). A recent report by the WHO points to significant hikes in the price of pharmaceuticals which followed the devaluation of the CFA franc in early 1994 on the instructions of the IMF and the French Treasury.
Throughout the developing World, there has been a dramatic resurgence of malaria, tuberculosis and cholera. In India, for instance, the outbreak of bubonic and pneumonic plague in 1994 was the direct consequence of a worsening urban sanitation and public health infrastructure which accompanied the compression of national and municipal budgets under the 1991 IMF-World Bank sponsored macroeconomic reforms. In Vietnam, malaria mortality tripled in the four years following the deregulation of the health sector under the structural adjustment programme. 8. "Appropriate Attention" to Laucation
While the Declaration calls for "[s]trengthening [of] the educational system at all levels... and ensuring universal access to basic education and life-long educational opportunities", no analysis of the educational system including tendencies in primary and secondary school enrolment, is presented According to the Declaration, "appropriat attention" should be given to ed The modalities and the budgetary implications, however, are not diso
The Declaration fails to acknowledg the closing down of schools and the drop out rates observed in developing countries. In Somalia instance, where the structural ady programme was first adopted in 1981. school enrolment declined by 41 percent (despite a sizeable increase in the population of school age), textbooks and school materials disappeared from the class-rooms, school buildings deteriorated and nearly a quarter of the primary schools closed down. By 1989, teachers' salaries had declined to three dollars a month under the government's austerity programme.
Freezing the number of graduates of the teacher training colleges and increasing the number of pupils per teacher are explicit conditions of World Bank social sector adjustment loans. The educational budget is curtailed, the number of contacthours spent by children in school is cut down and a "double shift system" is installed: one teacher now does the work of two, the remaining teachers are laid off and the resulting savings to the Treasury are funnelled towards the Paris Club of official creditors...
These initiatives are still considered to be incomplete: in Sub-Saharan Africa, the donor community has recently proposed a new imaginative ("cost-effective") formula which consists in eliminating the teachers' meagre salary altogether (in some countries as low as 15-20 dollars a month while granting small loans to enable unemployed teachers to set up their own informal "private schools" in rural backyards and urban slums. Under this scheme, the Ministry of Education would nonetheless still be responsible for monitoring "the quality" of teaching...
International Viewpoint #265 April 1995
9. Pursuing the Goal of "Free Markets"
While recognising the possibility of "market failure" ', the "free market" is considered by the Declaration as the most effective instrument of poverty alleviation. The solution resides in promoting "dynamic, open, free markets, while recognizing the need to intervene in markets to prevent or counteract market failure". Poor people should have better access to the market. According to the
"[plublic policies are necessary to correct market failures, to complement market mechanisms, to maintain social stability and to create a national and international economic environment that promotes sustainable growth on a global scale..."
The Declaration fails to identify the concentration of wealth and decision making power in the hands of some 700 global corporations and commercial banks. How will the activities of these global economic actors be monitored on behalf of civil society? The issue of wealth accumulation and its social impact is not mentioned.
None of the key issues pertaining to economic restructuring are analyzed: eg. the massive delocation of industry in the developed countries to cheap labour havens, the phasing out of entire areas of manufacturing, the dislocation of small farmers, the impact of the technological revolution, the destruction of the informal sector, etc. 10. Assisting "Eastern Europe in Transition"
The Declaration suggests that there "are also serious social problems in countries with economies in transition" Until recently, Eastern Europe and the Soviet Union were considered as part of the developed "North", -ie. with levels of material consumption, education, health, scientific development, etc. broadly comparable to those prevailing in the OECD countries. Whereas average incomes were on the whole lower, the international community (including the relevant specialised agencies of the UN) had nonetheless acknowledged the achievements of the Eastern block countries particularly in the areas of health and education. The evidence confirms in this regard that the collapse of the standard of living and the demise of social programmes was largely the result of the macro-economic reforms imposed by external creditors. The Declaration does not explicitly acknowledge the collapse of social programmes in Eastern Europe. 11. Creating an , "Enabling Environment"
The Declaration outlines a number of commitments: it seeks the establishment of a so-called "enabling environment" "We commit ourselves to create an enabling economic, political, social, cultural and legal environment that will enable people to achieve social development." According to the Declaration, the international community should strive to "providing a stable legal framework, transparent and accountable governance and administration and the encouragement of partnership with free and representative organizations of civil society"
The concepts of enabling Since the early 1980s, grain markets are deregulated under the supervision of the
World Bank, and U.S.
grain surpluses used more systematically than in the past to desand destabilise the peasantry national food agriculture. environment" and "governance" are those of USAID-World Bank. International consultants will be contracted by the donors and multilateral institutions to redraft constitutions, land legislation, etc. US bilateral aid rather than being channelled into capital formation is increasingly allocated in the form of technical assistance in support of the "enabling environment". A free market for land will be established, invariably through the derogation of traditional land rights. Alongside the development of the free market, political institutions are to become "free and competitive" yet the fundamental issue of debt and policy conditionality which constrains developing countries' sovereignty is not addressed. The "enabling environment" at the national level is to be complemented by the creation of a supportive external economic environment, inter alia, through cooperation in the formulation and implementation of macroeconomic policies, trade liberalization...". In other words, the Declaration is firmly committed to the mainstream macroeconomic and trade agenda. 12. The "Empowerment" of Local Communities
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Civil society is to perform many of the functions previously undertaken by ministries. The presumption is that it is "more democratic" for local communities to run their own programmes with their own meagre resources. "Reinforce as appropriate the means and capacities for people to participate in the formulation and implementation of social and economic policies and programmes through decentralization, open management of public institutions, and strengthening of the abilities and opportunities of civil society and local communities to develop their own organizations, resources and activities"
Under this scheme, local communities are "empowered" to raise the money, ie. the debts of the State are transferred to the local communitities. According to the World Bank, user fees for education and primary health care are to be exacted both on the grounds of "greater equity" and "efficiency". The enabling environment is predicated on reducing the role of the State and transforming social services into marketable commodities. Communities could also participate in the running of the primary health care units by substituting the qualified nurse or medical auxiliary (paid by the Ministry of Health) by an non-professional, untrained health "empowerment" signifies withdrawal of the State and collapse of the formal health care sector. Savings to the Treasury are channelled to debt servicing. Social policy is developed in accordance with the interests of the State's creditors. 13. Alleviating Famine
"Efforts should include: the elimination of hunger and malnutrition, the provision of food security, education, employment and livelihood, primary health care services, including reproductive health care, safe drinking water and sanitation, adequate shelter and participation in social and cultural life." What policies are to be adopted, what financial resources are to be committed? The Declaration does not say.
The elimination of famine appears in the Declaration as a commitment, but the causes of famine are not mentioned. The destruction of food self-sufficiency at the local level is not analyzed.
The underlying realities of international agri-business are not addressed in the Declaration. Throughout the developing World, food security is undermined, trade barriers are removed, subsidies to farmers are erased and the peasantry is subordinated to the
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The international community would like to wish you good luck !
International Viewpoint #265 April 1995
Copenhagen summit requirements of the global food monopolies. Global trade under the WTO also derogates plant breeder's rights in favour of international agri-business. Famine is no longer a consequence of "a shortage of food." On the contrary, famines are spurted as a result of a global oversupply of grain staples. Since the early 1980s, grain markets are deregulated under the supervision of the World Bank, and US grain surpluses used more systematically than in the past to destroy the peasantry and destabilise national food agriculture. 14. Distorting the Causes of Global Unemployment
The Declaration's third Commitment pertains to employment: "We commit ourselves to promoting the goal of full employment". The Declaration stresses *the creation of employment, the reduction of unemployment, and the promotion of appropriately and adequately remunerated employment..". The obstacles to achieving these goals are not outlined.
The unemployment figures included in the Declaration are misleading and grossly out of context. The Declaration fails to include relevant ILO data, it fails to acknowledge the fact that official data is heavily biased. The report seriously underestimates the extent of global unemployment (in excess of 800 million according to the ILO's most recent estimate). 15. Debt Relief
The Declaration is exceedingly vague and rhetorical in regard to debt relief: "Ensure urgent implementation of existing debt-relief agreements and negotiate further initiatives, in addition to existing ones, to alleviate debts of the poorest and heavily indebted low-income countries at an early date. Where appropriate, these countries should be given a reduction of their bilateral official debt sufficient to help enable them to exit from the rescheduling process and to enable them to resume growth and development".
The Declaration says "substantial debt reduction is needed to enable developing countries to implement the Declaration and the Programme of Action", but it endorses the status quo: it points to "progress" achieved under the auspices of the G7 and invites *the 34 international financial institutions to continue to explore ways of implementing additional and innovative measures to alleviate substantially the debt burdens of developing countries."
The Declaration looks to "the possibilities of debt-swaps for social development, with the resources released by debt cancellation or reduction invested in social development programmes... without prejudice to more durable
In Bolivia, severance payments to redundant miners (laid off under the IF-
World Bank privatisation of the mining industry) were invested in the acquisition of land in the coca producing areas. solutions such as debt reduction and/or cancellation". It is worth mentioning that the debt swaps enable donors to reduce their "aid" commitments to social programmes (by swapping aid for debt relief). 16. Curbing Illicit Trade
The Declaration calls for the adoption of "effective and environmentally sound national strategies to prevent or reduce substantially the cultivation and processing of crops used for the illegal drug trade". No consideration, however, is given to the structural causes of illicit trade.
In a global economy characterised by surplus output, World prices for legal primary commodity exports have tumbled. In turn, "alternative" exports unfold within the spheres of the illicit economy. With legal commodity prices often below the costs of production, illicit trade and the narco-economy often become the main source of the country's foreign exchange.
The Declaration also fails to recognize that the macro-economic reforms applied in countries involved in narcotics production (eg. Peru and Bolivia), invariably destroy the possibility of "an alternative development". In Peru and Bolivia, the peasant economy was undermined as a result of the devaluation and the hikes in the prices of fuel and farm inputs. The economic reforms encouraged the migration of impoverished peasants to the coca producing areas. In Bolivia, severance payments to redundant miners (laid off under the IMF-World Bank sponsored restructuring and privatisation of the mining industry were invested in the acquisition of land in the coca producing areas.
As the legal commodity economy declines as a result of the macro-economic and trade reforms, illegal commodity exports are used to generate revenues required to service the debt. The recycling of "dirty money" towards debt servicing is a necessary consequence of the weakening of the legal economy and the incapacity of developing countries to service their debr from shrinking export revenues. 17. Ine Repatriation of Capital Flight
The Declaration calls for the creation *in African countries and least developed countries, of an enabling environment that ... induces the return of flight capital". This "enabling environment" consists in reforms of the banking system and the foreign exchange regime which facilitate the repatriation of "dirty" and "black money" deposited in offshore accounts. It thereby provides the privileged elites with a convenient mechanism: capital flight is repatriated in the form of foreign exchange and used to purchase State assets or land put on the auction block under the World Bank sponsored privatisation programmes. In turn, the repatriation of capital flight serves the interests of the creditors: the foreign exchange proceeds of these sales are channelled towards the national Treasury where they are earmarked for debt servicing.
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