゛S A P, ISN'T AN ARBITRARY IMPOSITION ?"

       
Fr. Peter Toshihiko Nishiyama

゛The journey of all SAPed nations is the same - they all go from more poverty to poverty, misery to misery,
from debt to debt ; from hunger and deprivation to greater hunger, despair, anarchy and other snowballing destructive consequences. The individual becomes pathological and neogenic ... The 38 African countries now under the yoke of  IMF / World Bank SAP induced dependency, can only count their SAP blessed-sufferings and indignities." (1:p.131)

      As opium, money, or prayer, become good or bad according to the frame of reference, so SAP becomes self-reliant or arbitrary according to the varied viewpoint. Here to be pointed out is a proposition how arbitrary is the SAP ECONOM ICALLY both according to [�T] the code of conduct of the prevailing market-system, as well as [�U] the ideal free-market-system based on egalitarian partnership.               

[�T]  How to be judged the SAP according to the code of conduct of the prevailing 
       market-system ?

  1.  By what reason SAP has been imposed on debt-crisis countries ?

       SAP, the structural adjustment program, has been imposed on debt-crisis  38  out of  48  Sub-Saharan Countries in Africa according to self-reliance, the code of conduct of free-market-system. The goal is simple, to increace revenues and to reduce expenditures, or, to reduce domestic consumption and to increase exports. The most frequently imposed means are ゛devaluation of the currency ; drastic reduction of government expenditure,  particularly social spending and elimination of food and other consumption subsidies ; privatization of government enterprises and / or increases in prices charged by them (electricity, water, transportation, etc. ) and the abolition of prices controls ; ‘demand management’ through caps on wages, along with restriction of credit, and higher taxes and interest rates in an effort to reduce inflation."  (2:p.52) The main feature of entire policy is an unsuspicious confidence in free-market-mechanism.

  2.  Aren't the SAPed African Countries in state of bankruptcy ?  　

       In Table [�T] listed are some indices concerning financial state of 8 SAPed African Countries I recently visi- ted. The GNP per capita, 1995, was from  $120 of D.R. of Congo to  $660 of Côte d'Ivoire. The external debt as percentage of exports of goods and services ranked from 224.3 of Senegal to 467.1 of Mali while the debt service
ratio as the same percentage was from 5.9 of Chad to 23.1 of Ghana and Côte d'Ivoire. The GNP p.c. of  low-
income-countries as a whole is $430, just above one US dollar par day and their debt service ratio as an avera-
ge amounts to 15.4 percent. Not to mention, the smaller the economy-size, the heavier the burden is. One has
to admit, without reservation, in this developed state of free-market, an economy of $430 is NOT FUNCTIONING
at all, practically in a state of  BANKRUPTCY. Yet, it is believed, the only way to pay back the debt  OUT OF  
DIRE DESTITUTION is the way to get undeveloped country developed, and dependent country independent eco-
nomically. For a criterion to judge whether  15.4 percent is too heavy a burden or not, Alan García Peréz, the  
President of Peru, 1985, and Sese Soko Mobutu, the President of Zaire, 1986, have declared, they would limit th-
eir debt payments to 10 percent of their export revenues, (3) while the United Kingdom, leading developed count-
ry in war-wretched 1947, agreed with US, the massive credit-coutry, upon dispensation, not a re-schedule, not to pay any amount surpassing 2 percent of exports of goods and services in each fiscal year. (4)   
         

  3. On whose obligation the bankruptcy has to be solved ?

゛Some people still entertain the quaint notion that capitalism - free enterprise, 
if you will - involves risk-taking. This in turn ought to mean that entrepreneurs, including banks, well assume responsibility for their mistakes, just as they will reap the profits when they get it right. Assuming responsi- bility according to this old-fashioned doctrine, means accepting losses and, upon occasion, failure." (2:p.38)

　　　In capitalism, where there are winners and losers at the same time, insolvency is almost inevitable for which the solution provided is the bankrupt law. This law presupposes responsibility of not only the borrowers but of the lenders, and, in time-sequence, prior to bankruptcy the borrowers are obliged mainly while after the bankruptcy the lenders. This is a law imposing code of conduct in prevailing free-market-system.

 4. Project loans on infrastructure cannot meet cost-return-criterion. 

      Either official or private a great amount of the assistance has been lavished, as the project loans, on infras- tructure which are thought 　゛‘if  not the engine’ then ‘wheel’ of economic activities." (5:p.14)   By economic infrastructure are meant dam, canal, power, telecommunications, piped water supply, or, railways, road, port, ･･･, and airport. ゛A sample of developing countries shows that infrastructure typically represents about 20 percent of total investment and 40 to 60 percent of public investment. In round figures, public infrastructure investment ranges from  2  to  8  percent of  GDP  and transport alone commonly absorbs  5  to  8  percent of total paid employment. Even these shares understate the social and economic importance of infrastructure, which has strong links to growth, poverty reduction, and environmental sustainability." (5:pp.13-14)
      Important though as they may be infrastructure cannot meet feasibility assessment mainly for two reasons ; 1) within own country ゛among public utilities in developing countries, gross revenues typically cover costs only in telecommunications while in all other sectors the gap between revenues and costs implies a government subsidy to users ranging from 20 percent for gas 70 percent for water",  and 2) beyond the country ゛most of the infras- tructure services cannot be exported and so do not directly generate the foreign exchange earning necessary to repay foreign currency loans." (5:p.90)  Yet in international loans the feasibility assessment has been totally neg- lected wittingly as S. George states clearly ;

゛The borrowers' shaky financial structure was not, however, grounds for refusing a loan. Whereas you are trained in domestic banking to make sure a company has enough assets to cover its debts, in international banking you are told to forget about that. The trick, when you know full well the company is not creditworthy but you are under pressure and determined to place the loan anyway, is to ‘shift responsibility to a third perty’ through a ‘guarantee’ or a ‘stand-by letter of credit’, preferably from a central bank or from the government itself." (2:p.31) 

゛A World Trade Center in downtown Kinshasa, an underground parking lot, a fleet of jet aircraft, an elaborate airport next to the head of state's native village, plus hugely swollen imports of food, automobiles and, of course, arms" (2:p.33) whatever the bankers may have thought they were financing, they have financed them on account of the official guarantees. Thus accumulated was the debt of which responsibility the governments of debtors had to assume. This is almost a fraud across the countries, much worse than present day money laundering around the drug traffics. Professional presumption has taken place, at least, if not a plain malignancy. After the bankrup- tcy bids the code of conduct of the free-market-system that the lenders, the financing banks or the developed countries, have to take financial obligation and not the borrowers, the developing countries.

 5. The entire financial system is in danger, or individual banks ?

      ゛In 1984 all of the nine largest US banks had placed over 100 percent of their shareholders' equity in loans to Mexico, Brazil, Argentina and Venezuela alone. Only one of the American majors, however, tops the exposure of Lloyds in Britain, which had engaged 165 percent of its capital in loans to these four debtors." (2:p.33) 
      To solve the counter-crisis the attention has been diverted, menacing in large voice ゛We have a major prob- lem with a capital P.  We didn't say the problem was a perticular debt but the whole international financial struc- ture. We said it was everybody's problem. ... Indeed it was. Mexico at that time held $80 billion of debt, and the exposure of  US  banks was huge. ...  a crisis of confidence could well ensue and trigger world-wide financial panic." (2:p.41)  So it was made the matter of the governments entangling unwilling foreign banks for greater cause and diverting private loans to official ones. Thus the obligation of the commerical banks has been dispensed in the disguise of safeguarding world-wide financial confidence. The world-wide, here means, the protection of private banks, or at the best, the interest of developed countries to be obtained at the cost of bread and blood of destitute SAPed countries and their impoverished citizens. Where is gone the code of self-reliance and the market- principle ?

[�U] How to be judged the SAP according to ideal free-market-system based on equal 
      partnership ?

      The nature of the prevailing market-system has to be questioned, next, because, not the code of self- reliance, but the confidence of the free-market-system was the real reason why SAP has been imposed. ゛Is the on-going system truly free or not" is the point, and the IMF lives in

゛a never-never-land of perfect competition and perfect trading opportunities, where dwell no monopolies, no transnational corporations with captive market, no protectionism, no powerful nations getting their own first, and, of course, no decline in commodities's prices." (2:pp.56-57)

Just the opposite is the view held by Susan George unmistakably stating ;

゛I'll call it FLIC, or Financial Low-Intensity Conflict, ... Third World Debt is now, ... dialectical FLIC waged against the South, a permanent global struggle exactly like LIC but played out on another terrain." According to the words of Luis Ignacio Silva, better known as ‘Lula’,  ゛This war is tearing down ... practically all the Third World. Instead of soldiers dying there are children, instead of millions of wounded there are millions of unemployed ; instead of destruction of bridges there is the tearing down of factories, schools, hospitals, and entire economies ... It is a war over the foreign debt, one which has as its main weapon interest, a weapon more deadly than the atom bomb, more shattering than a laser beam ... " (2:pp.233-234)    

Without equal partnership a market could not be said free, worthy to be the rule of fair play. A tree is judged by its fruit ; the fact that there are opulent developed countries on one side and abjectly destitute developing countries on the other and the unsurmountable gap between indicates much has to be done in order to establish truly free-market-system. (6)

  Few Addenda : If the infrastructure is an indispensable condition of economic activities and, therefore, economy has to be developed for the sake of human right and dignity, and if human right is equal everywhere regardless to race and place, construction of infrastructure itself is a universal mandate of entire mankind. Another point to be specified is that the financial obligation to be assumed by the creditors after bankruptcy and the moral responsibility of all the agents concerned are not to be confounded.

To conclude out of arguments [�T] and [�U] the SAP imposed on 38 Sub-Saharan Countries is a plain ECONOM- IC injustice contradicting all mandates of market-principle and has to be rejected as a simple anomaly concocted amid world-wide power structure.