Obasanjo offers to step down if creditors cancel debt

President Olusegun Obasanjo, accused by opposition parties of rigging last year's elections to remain in power for a second term, has offered to resign if that would persuade Western governments to cancel Nigeria's US$30 billion external debt. He said in a speech on Saturday that the debt, on which Nigeria has been charged heavy penalties for the non-payment of arrears, was simply unpayable. Obasanjo made the apparently joking offer to step down after protesting that the world superpowers were using debt forgiveness as a blunt instrument of foreign policy, rather than as an incentive to good governance. He pointed out that much of Pakistan's external debt was cancelled after its government allowed the United States to use Pakistani air space during the US invasion of Afghanistan. He also noted that much of Iraq's foreign debt would be wiped out by Washington and its European allies to placate Iraqis following the overthrow of Saddam Hussein. Obasanjo said in a speech to mark the fifth anniversary of his election to power in 1999, that Western creditor nations were now using debt repayment as an issue to put political pressure on Nigeria, the biggest oil producer in sub-Saharan Africa. "They [the creditor countries] hold the debt over us like a sword, so it has become another means of intimidation and control. We reject it," Obasanjo said. Since his election ended 15 years of draconian and increasingly corrupt military rule, Obasanjo has waged a so far unsuccessful campaign to obtain debt forgiveness for Nigeria. "Debt relief, debt cancellation is a political, not economic issue,” he said bitterly. In April Washington cancelled a third of Pakistan’s US$3 billion debt to the US government. And since the US-led invasion of Iraq in 2003 toppled Saddam Hussein, the Paris Club of western creditor nations and other major international lenders have expressed a willingness to write off a substantial portion of Iraq’s sovereign debt, which runs into hundreds of billions of dollars. “If the downfall of someone is what it takes, I volunteer to step down if our debt will be written off,” Obasanjo said to loud cheers from the audience. More than 80 percent of Nigeria’s external debt is owed to the Paris Club, an informal group of 19 permanent member states which usually takes the lead in renegotiating the government-to-government debts of Third World countries. The remainder is owed to members of the London Club - which negotiates on behalf of private sector trade creditors. Obasanjo said Nigeria’s original debt stock of about US $10 billion had been paid “twice over” if one included the “penalty for not paying and...penalty for the penalty”. “This is ridiculous,” he said. “The debt that is being held against us [Nigeria] is unpayable and unsustainable if we really want to have an equitable world.” According to Mansur Muhtar, head of Nigeria’s Debt Management Office, the Nigerian government has paid out US $35 billion to service its external debt over the past 20 years - more than its present accumulated debt of $30 billion. Continued debt servicing is directing resources away from badly needed social spending in this country of nearly 130 million people where 66 percent of the population live on less than US$1 per day, according to the World Bank. A total of US$ 1.4 billion, more than Nigeria's combined budget for health and education, has been set aside for debt servicing in 2004.