Lenders should be held accountable for providing irresponsible loans to developing countries, writes Nessa Ní Chasaidein Nairobi
This week campaigners from around the world are converging on Nairobi, Kenya, for the largest meeting of anti-poverty activists to take place this year.
One of the main issues being discussed is the debts owed by impoverished countries to rich governments and international creditor institutions.
Participating activists from Asia, Africa and Latin America are voicing the belief, held also by the Debt and Development Coalition Ireland, that vast amounts of the debts owed by their countries to rich governments and creditor institutions are illegitimate and should therefore be cancelled immediately.
Many readers will remember the achievements of the 2005 Make Poverty History campaign, which secured some debt cancellation for impoverished countries. The deal, however, did not go far enough, affecting too few countries and targeting only a limited number of creditor institutions, leaving many impoverished countries with huge debts to repay.
For example, a country such as Peru, which has high poverty levels, has been excluded from debt cancellation despite having unsustainable debt burdens - even by World Bank definitions.
While debt cancellation was achieved for a few more countries in 2006, much more needs to be done.
It is also crucial to acknowledge that many of the countries included in the latest debt cancellation packages have already been forced to undertake damaging World Bank and International Monetary Fund (IMF) conditions, which have lead to further devastating impacts on the lives of their impoverished citizens.
Vast amounts of the remaining debts owed by impoverished countries have not benefited the people of those countries in any way, and are therefore illegitimate. This is because many of these loans were contracted for ill-conceived development projects which failed, never got started, or were given to corrupt political leaders who stole the money or used it to oppress their people.
Take the example of the Philippines, where in the 1970s a loan financed the building of a nuclear power plant on the Bataan peninsula.
It was a project that was riddled with corruption, wildly over budget, built by a US company and strongly supported by the US government.
The Bataan plant was never opened due to major safety concerns, including the plant being built near an earthquake fault line.
The Bataan plant is just the tip of the iceberg. Many other cases exist where creditors provided or pushed loans in the full knowledge that the funds would not be used for development purposes or that the project in question was likely to fail.
Banks in rich countries have even provided safe havens for loans stolen by corrupt dictators.
There are some signals from within the creditor community that consciences are being pricked. In recent months, the Norwegian government cancelled debts owed to it by five countries in the global south to the tune of $80 million (€62 million).
The Norwegian government acknowledged their "shared responsibility" for the debts, which resulted from failed profit-driven lending in the 1970s and 1980s.
This represents a ground-breaking acknowledgement from within the creditor community that lenders should be held accountable for providing irresponsible loans.
The Irish Government is also implicated in the issue of illegitimate debts through its membership of the World Bank and the IMF. While it responded swiftly to the 2005 debt cancellation deal by frontloading its payments toward the package, it can still do much more to achieve the cancellation of illegitimate debts.
The Ministers for Finance and Foreign Affairs can show leadership by voicing support for the recent actions of the Norwegian government and by therefore supporting the concept of creditor co-responsibility.
They should also call for the development of a collective UN definition of illegitimate debt, and they should call for a public inquiry examining the developmental impact of World Bank and IMF loans.
Kenya, the venue for the World Social Forum, is a poignant reminder of the urgent requirement to release the much-needed resources that are being taken up to repay debts.
More than 55 per cent of the population struggles to survive on less than $1 a day, and each Kenyan has a life expectancy of 48 years.
Kenya is littered with failed creditor-funded projects, from the hydro-electricity to agriculture sectors.
But despite these factors, it was left out of the recent debt cancellation deals and is currently paying more than $504 million per year in debt service on its $5.8 billion publicly-guaranteed debt.
Campaigners from Kenya and from across the global south who are meeting in Nairobi are actively working to hold their governments to account for the loans they accept.
It is time for governments in the enriched world, including the Republic, to show a similar level of responsibility and to demonstrate their commitment to a more just world through the full cancellation of illegitimate debts.
Nessa Ní Chasaide is co-ordinator with the Debt and Development Coalition Ireland