Nicholas Jepson in Phenomenal World:
At the start of her three-nation tour of Africa this January, US Treasury Secretary Janet Yellen spoke to the Associated Press in Senegal, bemoaning the “piling, unsustainable debt” that, she said, “plagued” many African countries. This was a problem, she argued, “related to Chinese investments in Africa.” Two days later Yellen was in Zambia, a country which, having defaulted on its external debt in 2020, was still trying to clinch a final deal with creditors more than two years later. In 2021 the G20 had agreed on the Common Framework, a vague set of guidelines meant to smooth such restructuring talks among low-income debtors and a variety of creditors, each with sometimes contradictory demands. If successful, Yellen stressed, such negotiations would unlock much needed disbursements from a $1.3 billion International Monetary Fund (IMF) loan. The problem, according to Yellen, was that China had become a “barrier to concluding the negotiations.” Back in the US, World Bank President David Malpass told Bloomberg that “China is asking lots of questions in the creditors committees, and that causes delays, that strings out the process.” The following day, the Chinese Embassy in Lusaka released a statement defending China’s role in the Zambian talks, chiding Yellen over US debt ceiling uncertainties and advising that “the biggest contribution that the US can make to the debt issues outside the country is to act on responsible monetary policies, cope with its own debt problem, and stop sabotaging other sovereign countries’ active efforts to solve their debt issues.” In this context, it is hardly surprising that ex-Zambian trade minister Dipak Patel has complained of his country becoming a pawn in a “Common Framework Cold War.”
Global sovereign debt crises are not a new phenomenon. They date as far back as the Panic of 1825, when a wave of defaults by newly independent Latin American states contributed to a financial crisis in London that came close to collapsing the Bank of England.
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