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The Legacy of Odious Debt and the Future of the Congo

At the beginning of 2006, Doctors Without Borders listed "Congolese Ravaged by War and Disease” as one of its ten most unreported stories of the year – something it had done for seven consecutive years. Despite the ending of war in 2003 and national elections coming in 2006, the Democratic Republic of the Congo remains a devastated country. Infant mortality rates are among the highest in the world, tens of thousands are displaced, and even regions not currently threatened by violence have little access to health care. It is the site of the largest UN peacekeeping force in the world. Yet in 2005, the three major U.S. television newscasts carried only six minutes of coverage of the Congo.

In 2003 the World Bank and the International Monetary Fund (IMF) announced $10 billion in “debt relief” for the Democratic Republic of the Congo, out of an estimated $12 billion foreign debt. In 2006, according to IMF estimates, the debt still stood at $5 billion. The country was due to pay more than $200 million in debt servicing in 2006, including almost $50 million to the World Bank alone.

Yet Congo, of all countries, has one of the strongest cases for full cancellation of debt and indeed for reparations from the lenders. This giant country of 55 million people in the heart of Africa is emerging from a war featuring wholesale robbery of the country’s mineral wealth by a host of external as well as internal culprits. The wealth of former dictator Mobutu Sese Seko, subsidized for decades by Congo’s creditors, has disappeared into foreign banks with few traces. And those are only the most recent phases in a century of predation.

No reckoning of who owes whom can rightly ignore this history. Congo is a classic case of “odious debt” and of historical crimes still awaiting acknowledgment and reparations.

A Century of Predation

Before colonial conquest, the area now known as Congo was one of the regions of Africa most devastated by the slave trade. In the European scramble for Africa, the King of Belgium took the Congo as his private property with the full complicity of other major powers, including the United States. The atrocities then, as recently recalled in Adam Hochschild’s book King Leopold’s Ghost, were among the worst of the nineteenth century. During the two decades of his reign, millions of Congolese were slaughtered or mutilated for failure to meet rubber production quotas. A worldwide campaign of exposure ended Leopold’s personal empire, but forced labor continued under Belgian colonial rule.

After Congo’s independence in 1960, the U.S. is widely known to have orchestrated the assassination of the country’s first elected leader, Patrice Lumumba—a crime never officially acknowledged by the U.S. government. He was replaced with CIA client Joseph Mobutu (later Mobutu Sese Seko), who ruled from 1965 until he fled into exile in 1997. Mobutu repeatedly played the Cold War card to gain more Western support. He siphoned off billions in personal wealth while the country’s economy and social services decayed.

Odious Debt

Creditors often argue against debt cancellation by saying that, if this were done, future borrowers would also expect not to pay. Of course, we all agree that under normal circumstances everyone should pay their debts. But why should Congo’s people suffer for cynical deals made between lenders and a former dictator? Nobody should expect such loans to be repaid.

In fact, those debts were illegal to start with, under the legal principle of odious debt. This doctrine regards debts as illegitimate when the creditor is aware that loans to governments are made without the consent of the people and not spent in their interests. The U.S. was the first to use this doctrine. After conquering Cuba in 1898, it canceled Cuban debts to former colonial power Spain because the loans never had the consent of the people. The U.S. is now using the same argument for Iraq.

In the case of Congo, the U.S. and other lenders had to know that their loans amounted to personal bribes to Mobutu. They also had to know the Congolese people never consented or received benefits. Indeed, in 1978 the IMF appointed one of its own—German banker Erwin Blumenthal—to run Congo’s central bank. After two years he resigned and wrote a scathing report that said there was “no chance, I repeat no chance, that [Congo’s] creditors will ever recover their loans.” Congo’s foreign debt then stood at $5 billion. In the 1980s, the World Bank, IMF, and Western governments lent Mobutu almost $5 billion more. In a case such as this, it is the creditors, not the people, who should take the losses. By the time Mobuto fled into exile in 1997, the debt stood at more than $12 billion.

Looking to the Future

"Most Congolese lack basic social services. High morbidity, mortality, and HIV rates combined with low access to education and services attest to a catastrophic humanitarian crisis.” That’s how the UN summarized its humanitarian appeal for Congo for 2004. That catastrophe continues today: The World Bank itself notes that at least one million Congolese are living with HIV/AIDS. Meanwhile, thirty-seven percent of the population has no access to formal health care.

Jubilee Research, an international debt and finance program and successor to Jubilee 2000 UK, estimates that $2.4 billion a year is needed to meet minimum development goals in Congo. Yet the government’s projected revenues (including “aid”) are less than $500 million a year, with $200 million going to service the debt. It is in this context that the World Bank uses the carrot of partial debt relief to enforce its control over the country’s economic policies.

Congo’s people need and deserve support to consolidate peace, construct democracy, save lives, and rebuild their country. Creditors like the World Bank and the U.S. government should not be using old and illegitimate debts to drain more money from the country. Instead, these creditors should be compensating Congo for past damages and contributing their fair share to build a world free of poverty. The need and the obligation are clear. What is lacking is the political will.

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