By BBC News Online's Virginia

Ethiopia: Is debt to blame?

April 14, 2000- By BBC News Online's Virginia, Gidley-Kitchin


Ethiopia is one of the world's poorest and most indebted countries, which makes it particularly vulnerable to natural disasters such as drought.


This raises the question of how far Ethiopia's debt burden has contributed to the current famine.


In a report released on Friday, Oxfam said that poverty was the underlying cause of Ethiopia's famine, and that famines would continue to recur there until the country's poverty was addressed.


Oxfam said the war with Eritrea had diverted resources and attention from development, while also making it harder for Ethiopia to secure foreign aid.


Debt payments


But Oxfam said debt service was also an important cause of Ethiopia's poverty.


It said that in 1996, Ethiopia's foreign debt amounted to more than $10,000m, more than ten times the value of its exports.


As a result, it said, more money was spent on debt service than education and health.


Oxfam said that, exacerbating the problem, international aid to Ethiopia fell from more than $1,000m in 1991 to about $600m in 1997, according to the United Nations.


Western approval


 Analysts say that donors cut aid to African governments in general during the 1990s, in part because of disenchantment over corruption.


 Patrick Gilkes, an expert on Ethiopia, says that, compared with other African countries, Ethiopia probably did reasonably  well because the new government of Meles Zenawi, which overthrew the Soviet-backed regime of Colonel Mengistu in 1991, followed policies that won approval in the west.


It introduced elements of political liberalization and regional autonomy, and pursued market-oriented economic policies such as privatising inefficient state enterprises and encouraging foreign investment.


Helped by a run of good harvests, this did indeed help the economy to grow.


During the period Ethiopia won several loans from the International Monetary Fund, and Meles Zenawi himself was seen as one of the United States's main African partners, the so-called "new leaders", like President Museveni of Uganda.


That changed in 1998, when the war with Eritrea broke out. Britain was one of a number of countries which cut off development - but not  humanitarian - aid to Ethiopia as a result.


Defending the decision, International Development Secretary Clare Short said: "I do not believe that anyone in the UK believes we should be providing long-term assistance to a country which is increasing its spending on arms, year on year."


Some argue that this is unfair to Ethiopia because other African countries involved in wars, like Uganda which has forces in the

Democratic Republic of Congo, have not been similiarly penalised.


There have also been allegations, so far unproven, that Ethiopia has been diverting food aid to its troops.


High moral ground


There have been the usual arguments over which side started the war and who is blocking the peace, but there seems little doubt that the coincidence of war with the famine has cost Ethiopia the high moral ground in the eyes of donors.


Ethiopia, for its part, blames a slow international response to its appeals.


No-one can dispute that a heavy debt burden has made it harder for Ethiopia to generate economic growth.


And it can be argued that Ethiopia deserves favourable treatment on debt relief because much of the debt was incurred by previous regimes who wasted the money.


And, the argument goes, until the war broke out, Ethiopia's current government had adopted policies designed to promote economic growth and reduce poverty.


Somalia's case


But debt in itself can hardly be considered a cause of the famine.


Neighbouring Somalia, with no government in  existence to service its debt, has also been badly hit by drought and food shortages, and it almost certainly receives even less aid despite severe need.


What is clear is that debt has weakened the economy overall, and the war has made matters worse.


 So that when the drought hit Ethiopia, it was once again unable to cope without help that was slow to come.