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Disclose the Debt!

If you’re into curling up with a cup of coffee and an 85-page report on Chinese lending, you can’t go wrong with AidData’s How China Lends: A Rare Look into 100 Debt Contracts with Foreign Governments (PDF).
 
One of the most striking findings in a report full of eye-popping ones is the premium China places on secrecy. Many of the 100 examined loan agreements don’t only keep the terms of the agreement hidden – they even put disclosing the existence of the loan itself off-limits.
 
This level of secrecy is corrosive. It undermines the trust of citizens in governments and the ability of governments to have a real conversation about financial planning. It’s also bad for the creditors, providing a false impression of countries’ debt resilience. It’s even bad for China, in that it feeds into the (quite dominant) perception in regions like Africa that all government deals with China are shady and corrupt, and that despite Beijing’s endless South-South bromides, they’re really up to no good. The fact that the debt trap narrative ran for so long despite being endlessly debunked, isn’t Mike Pompeo’s fault alone. China fosters these perceptions through its pressure for secrecy.
 
Things don’t have to work this way. The research team’s benchmark contracts were from Cameroon, which published all the project-related loan contracts it entered into with foreign creditors from 1999 to 2017. The report also points out that many Chinese loan agreements make provision for public disclosure if mandated by recipient governments.
 
This is where the crux of the issue lies. Pressure on China to conform to Paris Club standards seems to me doomed to failure because it simply backs into wider tensions around how Western powers will or won’t accommodate China’s rise. Once the Global South is on that playing field, all is lost, because we’re at a moment when harping on the differences between the West and China plays well to domestic constituencies on both sides. This sets us up for a stalemate.
 
More importantly, it feeds into the idea that Paris Club rules are somehow the best way infrastructure financing can function, which is risible. China’s current prominence in Global South lending is at least in part the result of the weaknesses of that system. Calling for China to simply conform to these rules feeds into the idea that the Paris Club’s way of doing business is the gold standard for Global South development needs – itself a relic of the 20th century.  
 
Instead, reform will have to be driven by the borrower countries, and a massive first step would be for governments across the Global South to take Cameroon’s example and commit to radical transparency. The more these governments lock the full disclosure of foreign loans into their national legislation, the more unsustainable China’s current insistence on secrecy will become. If the Global South comes together to demand disclosure, China will have to adjust.
 
Those living in the Global South will probably roll their eyes at this suggestion, because everyone knows that there are few actors more addicted to this secrecy than Global South governments themselves. This feeds into the trust gap between governments and publics which is one of the most prominent features of the China-Africa relationship.
 
The pressure to disclose the details of loan agreements will therefore have to come from civil society, from the UN, from journalists and the Global South public at large. These loans are increasingly locking generations of young people into repayments on shady terms, frequently for debts they don’t even know exist. This is unacceptable.
 
Say it with me:
Disclose the Debt
Disclose the Debt
Disclose the Debt

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