CAMBRIDGE: When poor, heavily indebted countries are struggling to make their way from dictatorship to democracy, the actions of rich countries can be decisive. If rich countries insist on debt repayments and austerity measures, they are likely to destroy the social stability needed for a new democracy to take root.
Greed, short-sightedness, and general unconcern among rich countries, however, should never be underestimated. In recent weeks, European countries – and apparently the IMF – have been rejecting the pleas of Nigeria's new democracy to grant it debt reduction. Instead, they say, Nigeria should increase its debt servicing this year, and should abandon its call for debt reduction. The French Government, as organizer of the creditor committee of governments (the so-called Paris Club)bears most responsibility for this egregious policy, but many other governments and international agencies share the blame.
You would think that France, the United Kingdom, the United States, and the IMF would be more aware of recent history. Seven years ago, Nigeria was on a rocky and treacherous course to democratization. A caretaker government was charged with overseeing the transition to national elections in early 1994. Yet in late 1993, the IMF and World Bank pressured Nigeria to eliminate subsidies on domestic petroleum products as part of austerity moves insisted on by its creditors.
The timing could not have been worse. Elimination of fuel subsidies caused riots and widespread strikes against the transition government, which gave an excuse for Nigeria's generals to re-assert military control. It would take six long years under rapacious military rule before Nigeria received another chance at democracy.