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Former External Affairs Minister, Prof. Bolaji Akinyemi, speaks with ADENIYI ADESINA on the implications of the Paris Club's decision to write off a large chunk of Nigeria's foreign debt. Excerpts:

WHat do you make of Nigerians' reaction to the news of the cancellation of $18 billion dollars of Nigeria's debt by the Paris Club?

First of all, let's give credit to whom it is due and on what the credit should be. However, I think that it is premature celebration that we have had over the past two weeks in this country. On this issue, we have mixed up a lot of things. The president and his team deserve a lot of credit. They have brought into diplomatic financial vocabulary, this language of debt relief, debt forgiveness, debt cancellation or whatever you may want to call it. Although, the call for debt relief has been as old as 15 to 20 years, no world leader has pursued it with such tenacity, such single mindedness as President Obasanjo in the past six years.

Such has been a determination that he has forced the rest of the world to adopt it as an item on the agenda and this then is where the first note of caution must come in especially when the big powers in the world are forced to focus on an agenda. Because they can no longer ignore that agenda, what they invariably do is to take on that agenda and receive it along their own plans which may not necessarily, in fact, which invariably will not coincide with your own terms.

Let us now look at why the celebration is premature. First, the announcement by the Paris Club is not a blank agreement. In fact, there is still a lot ahead that we will still need to negotiate. Negotiation has lots of road bumps that still lie on the way especially when it comes into the details. Therefore, we should not be talking about having an agreement. If you like, we have an agreement to talk but not yet ready for signature.

Secondly, I hate to see a country like Nigeria being given the profile of a beggar. Yes, there are some African countries that absolutely need their debt to be written off if they are not going to go comatose, if they are not going to go bankrupt. But Nigeria is not in that category and unfortunately they are now all being lumped together. I watched a programme on CNN in which the producer, probably trying to show the international community those conditions in Africa that should attract pity to justify all the talk about debt relief, showed children with flies all over them in Darfur, in Ethiopia all kinds of places. To the rest of the world, this is Africa, no differentiation. As I said, it grips my guts for Nigeria that has about 13 months reserves, when in fact, what we need is even less than half of that according to the World Bank requirements, for us now to be seen as a beggar country.

But the creditor-nations distinguish between the highly indebted poor countries and the others including Nigeria, as a result of which they had different deals with the two groups?

To the man on the street in the international community, a debt is being written off. They don't want to know weather it is on the Naples terms - this is the one that applies to us - or weather it is under the Highly Indebted category. We are all put as debtor countries that cannot pay and therefore, must be bailed out. It doesn't make a difference to the man on the street.

If rather than paying even under the terms that are on the table within six months, we will be paying roughly $12 billion whereas under the normal term of debt repayment, if our debt is not forgiven, we will be paying $1billion a year. I know that people are going to say having paid that $12 billion, they will write off 60 per cent but I would rather pay my debt if I can pay. If it then means that for the next 15 years or for the next 30 years, I will be paying $1 billion a year. You will be making a statement as well that I can pay my debt rather than we forgive you your debt. You play with a weak hand when you go to the table as a beggar. We, as Africans, should know that in any African village, in an African setting, even an old man who is known as a debtor has less status than other old men who rather don't owe or pay their debts.

There is that little item there about the role of the world financial institutions. The World Bank and the IMF officials, what roles they would have to play in terms of monitoring what we do financially and domestically. Then, we are back to IMF conditionality, a debate we had way back in 1985. Is this then cause for rejoicing? Let us call a spade a spade. It is going to give the World Bank and the IMF some supervisory functions over government decisions in Nigeria. Is this a cause for rejoicing?

So, how should Nigeria approach this issue?

In a country like Nigeria, we should be using the resources and the market to fight what I will call trade liberalisation, so that our industries can pick up, so we can develop a viable domestic, vibrant industries, we are now going to have to implement the globalisation aspect of trade. This simply means opening our market to goods coming from industrialised countries thereby weakening our own nascent industrial base.

If we are to go by the past, the so-called debt forgiveness which the West is talking about could in fact be that in writing off the debt, they would replenish their books by deducting from the aid they already committed to African countries. In other words, if there are aid programmes in place under which X million would have been pledged to, say Angola now, instead of Angola getting the X million, Angola is going to get X minus Y million and that Y represents a deduction that is going to be made from aid promised in order to balance their book on what they said is the debt being forgiven.

And I read something in the Financial Times of London that there are countries which would have been better off getting aid and continuing with their debt payment because at the end of the day, there will still be a net flow of hard currency, whereas under this debt forgiveness, debt write-off proposal, more money would have being deducted from the aid promised them in order to balance the book because there is no free lunch.

The money they said they are forgiving you must be got from somewhere to balance their books. They may ask the World Bank to forgive you. But the World Bank uses the interest on loans to give out new loans, so, if they forgive you the debt and there is no more interest rate, then, the World Bank can not give out new loans to others who are just as deserving. That worries me.

Are you not painting a gloomy picture?

No, let me say this.

There are a few diplomatic struggles Nigeria is in the middle of. One of these is fighting for a UN seat and yet we are going as a beggar profile, as somebody who can not pay his debt. Somehow, it doesn't rhyme. This is why I say jubilation may be premature until we see the fine print and at the end of the day, I am still not persuaded that it is not better off for us to continue to make the regular payment and have a better profile internationally

Are you saying that getting debt relief can affect Nigeria's push for a seat in the UN Security Council?

When you go to campaign, you go with your positive attributes. That is what you put forward. And if having a beggar profile diplomatically is an albatross on your neck, then, that is like running a relay race with one of your legs tied when the others are free to run at their full capacity or strength. And I think Gadhafi was right when he was warning the African states not to develop this beggar profile.

Why can't we Africans say ‘just pay us the money that our corrupt politicians have deposited in your banks.' Why couldn't we have asked them to just return to us our money lying in their banks or even use the money to pay off our debts. The money doesn't belong to them. It's our money stolen but being kept in their banks. If they return that money to us, we can pay our debt and even have surplus.

But what is the evidence that these governments even know about the existence of these so-called stolen monies?

Forty years after the end of the Second World War, the Jews still succeeded in tracing their money siphoned to Europe. They cannot say they don't know all the intelligence agencies in the world. Money always leaves a paper trail. When they want to keep the money, they ask you to come with proof. It is not that they don't know. Even if you have carried the money in Ghana-must-go bags, cocoa bags, or groundnut bags, unless you've dug a hole under the ground in London or Paris or Zurich and buried the money there, the moment you take that money to a bank, there is a paper trail. These Western countries also denied that they were holding on to Jewish funds. Switzerland denied until the United States, using its diplomatic weight, said if Switzerland did not cooperate, there would be repercussions. All of a sudden, Switzerland was able to discover the money.

I would have preferred Nigeria standing tall and straight and saying ‘we want funds stolen from us, which are lying in Western banks. Return that money to us so that we would pay our debt,' that would have been one of national pride.

I know that at the recently concluded AU summit in Libya, the leaders made references to increase in trade, and the opening up of industrialised markets to African goods, but I think more noise, more energy, had been dissipated on this debt rescheduling than to trade terms which would be of benefit to Africa.

What do you foresee at the end of the negotiations with the Paris Club creditors?

Whatever scenario we arrive at, the impact will be felt all over the national life of Nigeria. If we reach an agreement on the terms that they put down, we know what some of the consequences would be and if the negotiation breaks down, we can continue the way we are by repaying our debt conveniently without damaging our economy. If we take that route, there will be consequences and even if we refuse to take any decision, there will be consequences. Any way you shoot the penalty, there will be consequences.

The PunchTuesday, July 12, 2005