Albion Monitor /News

U.S. Might Write Off $14 Billion in Bad Military Loans

by Thalif Deen

(IPS) NEW YORK -- The U.S. is owed a hefty $14 billion in outstanding military loans by countries which used the easy credit to buy U.S.-made fighter planes, helicopters, warships, missiles, battle tanks, and armored personnel carriers.

"The bulk of it may now have to be written off," predicts Tom Cardamone, editor of Arms Trade News, a monthly publication of the Washington-based Council for a Livable World (CLW).

The major purchasers of U.S. arms who owe money to Washington include Israel ($6 billion), Turkey ($3.2 billion), Greece ($2.9 billion). Four African countries together owe close to half-a-billion dollars.

"Direct link" between U.S. military financing and the countries "now engulfed in chaos"
Data released by the Pentagon shows that Liberia, Somalia, Sudan, and Zaire owe $434 million in arms sales loans, of which more than half -- $231 million -- is currently in arrears.

These countries are "ripped apart by war" and are unlikely to be able to pay back their loans to the United States, Cardamone said.

According to the Pentagon data, the loans by these four countries date back to the early 1980s, when successive U.S. administrations used them to counter Soviet political and military influence in Africa.

Noting that both the United States and the former Soviet Union used Africa as "an ideological battlefield," Dan Volman of the Washington-based Africa Research Project says that U.S. loans to Africa went to "some of the most corrupt" countries in the region.

And there is "a direct link" between U.S. military financing and the countries "now engulfed in chaos," Volman told Arms Trade News.

Volman says that Washington may eventually be forced to write off these African debts by converting them into outright grants. "It has been done before," he said.

Volman says there is a predominant view in the U.S. administration that in the post-Cold War era, the African continent is of little or no strategic value. "In sub-Saharan Africa, foreign military financing has almost entirely been eliminated," he points out.

In a report released last year, both the U.S. State and Defense departments said Washington had "relatively few security interests in sub-Saharan Africa." But they admitted that the United States "does benefit from military access, overflight and landing rights in a number of (African) states."

Africa is not expected to make any significant arms purchases in the late 1990s or by the turn of the century, according to military analysts. The only exceptions would be countries such as South Africa and Nigeria, and the North African countries of Tunisia, Morocco, and Libya, they say.

Israel, the biggest single debtor, has loans which go back to 1976
Despite several ongoing military conflicts, some African countries have been forced to reduce defense spending for political and economic reasons. The International Monetary Fund (IMF) has identified at least three African countries -- Ethiopia, Mozambique, and Namibia -- that have voluntarily cut down on their military expenditures.

Meanwhile, Cardamone is skeptical that Israel, the biggest single debtor, will pay off the loans which go back to 1976. No repayments have come from Israel for "quite a while," he says, adding that loans to that country between 1976 and 1984 have been refinanced several times since 1988.

The United States, which has provided a staggering $1.8 billion in outright military grants annually to Israel since the 1979 Camp David peace accords, has also been doling out loans for arms purchases. Washington has also provided $1.3 billion in annual outright military grants to Egypt since the accords.

Other Third World debtors include Pakistan ($292.5 million), South Korea ($150.7 million), Jordan ($163.8 million), the Philippines ($84.4 million), Morocco ($82.7 million), and Thailand ($64.0 million). In Latin America and the Caribbean, the major debtors are El Salvador ($43.1 million), Honduras ($27.8 million), Peru ($21.2 million), Colombia ($18.6 million), and Ecuador ($17.2 million).

Comments? Send a letter to the editor.

Albion Monitor May 3, 1997 (

All Rights Reserved.

Contact for permission to reproduce.

Front Page