In 1980, the Government of Liberia that contracted the loan was removed by force of arms. Samuel Kanyon Doe became Head of State. We know the rest of the story: after the coup d’état, came the civil war and the virtual collapse of the Liberian state.
What are vulture funds? They are “private equity or hedge fund that invests in debt issued by an entity that is considered weak or dying.” Like the vulture itself, these companies are said to be “patiently circling, waiting to pick over the remains of a rapidly weakening” country or institution. International anti-debt groups such as Jubilee/USA describes vulture funds as a “company that seeks to make profit by buying up debt in default on the secondary market for pennies on the dollar, then trying to recover up to ten times the purchase price, often by suing impoverished countries in U.S. or European courts.”
Even more disturbing according to Jubilee/USA is the fact that “these companies operate with little transparency; as shell companies (a company set up exclusively to pursue one goal – in this case, poor country debt).” They usually “set up tax havens such as the British Virgin Islands to avoid financial constraints and oversight. Because of this, most funds have limited or no information on who manages them and their actions.”
Jubilee/USA points out that these companies prey on countries that embrace the IMF/World bank imposed policy known as the Poverty Reduction Strategy Papers, which the Liberian Government has slavishly embraced. The IMF and the World Bank compelled countries who are seeking debt relief to undertake this economic reform package as the solution to their debt problems. Countries which are referred to as the Highly Indebted Poor Countries (HIPC) such as Liberia must under-take this one-size-fits-all economic dictate.
In 2007 the very institution – that is the IMF - that urged this failed policy on Liberia reported that almost half of HIPC countries, where survey was conducted, have fallen victims to Vulture Funds. Of the 46 different vulture funds that have sued HIPC countries, 25 of them received about US$ 1 Billion on loans worth under US$ 0.5 billion. In the liberal economic framework that is touted by the powers that be in Liberia, this is good business. It is called the free-market system. I am not sure what is free about an opaque entity called Vulture Funds that gleefully seeks to deny poor people the opportunity to rise out of their impoverished conditions.
Yet, we have always been told that “where the leaders do not have vision, the people perish”. No doubt, the President of Liberia worked at a senior level in the Ministry of Finance in 1978. She may have known that this loan was contracted. By the way, she is among those who set up the Liberia Petroleum Refining Company. Was this undertaken part of that loan deal? Thus, it may not come as a surprise to her that she now has to fork out US$ 20 million to pay a loan of only $6 million. If this money is paid, the leaders who run Liberia will not lose any of their privileges: they would still be able to fly abroad for medical check-ups and send their children abroad for a good education, in addition to attending their graduation, when they complete. It is the poor people of Liberia who will be denied health care, education and an enabling environment that would have made it easier for them to lift themselves out of the crippling and horrifying poverty to which they have been condemned.
When the IMF and World Bank began their forays into Liberia after the end of the war, some, among us, argued that Liberia’s debt fell within the orbit of the “odious debt” regime. Our debts were contracted by governments which were not duly elected by the Liberian people and the money was spent in ways that did not improve the material conditions of our people. During the True Whig Party reign, only people with titled deeds had the right to vote. There was no universal suffrage. Therefore, President Tolbert did not enjoy any legality, or is it legitimacy, in terms of his governance of the Republic. President Doe stole the 1985 elections. He, as well, did not have any legitimacy to run the Republic. What is more, the money he may have borrowed not only did not improve the material conditions of the Liberian people, he used the money to terrorize (yes I am using the word), harass, humiliate and kill the Liberian people. So who owes whom? The illegitimacy of these two Presidents was known to all and sundry. It was manifestly clear that no improvement happened as a result of the contracted loans; so why hold the Liberian people responsible for making a bad loan to the wrong people?
The poverty of public policy formation in Liberia has Government officials embracing frameworks, which ultimately harm the best interest of the people of Liberia. Liberia’s Poverty Reduction Strategy Papers (Guerilla leader, Jolo Wylie, calls it Liberia’s Poverty Reproduction Strategy Papers) will not reduce poverty; it has not done so in any African country, where it has been implemented. No doubt there are improvements in Liberia in terms of rebuilding hospitals, schools and market places, roads and bridges are being repaired. None of these have had a significant impact on Liberia’s unemployment problems. The private sector, which the government sees as “engine of growth” will not deliver the jobs that Liberians have to have in order to improve their material circumstances.
After World War II, Germany’s debt was cancelled because it was argued that Adolf Hitler had used the debt to oppress the German people. The first time the “odious debt” concept was applied. Former Secretary of State, James Baker told the world community that Iraq’s debt should be cancelled since Saddam Hussein did not use the money to improve the conditions of Iraqis. Tolbert and especially Doe borrowed money that was not used to improve the lives of Liberian poor majority. You will think that “what is good for the goose, is good for the gender.” Not so; the vulture funds are getting richer and the Liberian people are getting poorer. Thanks to the fact that our leaders are not making the crucial decisions that need to be made in order that the livelihood of the Liberian people is made dignified. The global anti-debt campaigner continues to remind us that the poor people of the global south “Don’t Owe, Wont Pay.”
© 2010 by The Perspective
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